House of Representatives
11 March 1953

20th Parliament · 1st Session



Mr ‘Speaker (Hon. Archie Cameron) took the chair at 2.30 p.m., and read prayers.

page 812

QUESTION

LONG RANGE WEAPONS ESTABLISHMENT

Mr KEKWICK:
BASS, TASMANIA

– Hag the attention of the Minister for Supply been drawn to the result of the recent State general election ballot at Woomera, where the vote for the Communist candidate was almost^ 25 ner cent, of the total votes cast ? Is the Minister satisfied that security arrangements ut Woomera are adequate to prevent espionage, or to prevent valuable or secret information from falling into the hands of the enemies of this country?

Mr BEALE:
Minister for Supply · PARRAMATTA, NEW SOUTH WALES · LP

– It is true that out of 540 votes oast .at Woomera, 107, or about 25 .per cent., were cast for a Communist candidate, there being no Liberal candidate offering ‘himself .for election. At first blush that appears to be a little disturbing, but inquiries have been made and we have discovered that Mr. Riches, the successful Labour candidate, said himself that his .success was due to the fact that he ivaa a known Labour roan in the district, and that many people would not have known that Mr. Johnson, the Communist candidate, was a Communist. Consequently, a good proportion of the votes would be against Mr. Riches and not for Mr. Johnston as a Communist. Neither party campaigned in Woomera, Mr. Johnson was never there, and, I believe the election feeling in the district was very apathetic. We have ascertained that some people who voted for Johnson did in fact believe that they were voting for a Liberal-Country League candidate. For what it is worth, it is .perhaps -worth .noting that Mr. Johnson’s name was higher than Mr. Riches’s name on the ballot-paper. As to the -remainder of the honorable member’s question, there are very strict security arrangements rat Woomera with respect to any persons who have access, or who can get access, to classified or security infor mation .and I .am not in .anxiety about this matter. However., it is better to be quite -sure, *nd- therefore I have .given immediate instructions for an examination to be made by. the security people .on the .spot ito see whether .any tighter security arrangements can be made.

Dr Evatt:

– The Minister is making a molehill out of a mountain,

Mr BEALE:

– Also at the very first opportunity I propose to go myself to Adelaide to discuss the whole matter ‘with tho officers there. I agree with the Leader of the Opposition. In this case a mountain is being made out of a molehill.

page 812

QUESTION

OLYMPIC GAMES

Mr BIRD:
BATMAN, VICTORIA

– Has tho Minister for Health received any further information from the committee controlling preparations for the proposed Olympic Games .in Australia which will enable him to reach a decision whether overseas torses will be admitted into Australia for participation in the 1956 Olympic Games?

Sir EARLE PAGE:
Minister for Health · COWPER, NEW SOUTH WALES · CP

– No. Arrangements have been made for information to be .seat to me -about this matter, hut it .has not yet arrived.

-COMMUNISM.

Mr GULLETT:
HENTY, VICTORIA

– Will lie Minister acting for the Minister for the Interior state whether it is true that a deputation, described as a Communist deputation by the Prime Minister, which came to Canberra ‘to-day, has been given the use of the Commonwealth-owned Albert .Hall. If so, why! Is it also a fact that the special Commonwealth bus services have been arranged to transport the members of the deputation from the railway station to the Albert Hall? If so, why ?

Sir PHILIP McBRIDE:
Minister for Defence · WAKEFIELD, SOUTH AUSTRALIA · LP

– As far as I am aware, not any .of the amenities mentioned by the honorable member have been made available to the deputation. I shall ascertain the facts and advise him as early as possible.

Mr WENTWORTH:
MACKELLAR, NEW SOUTH WALES

– My question is addressed to the Prime.Minister. Has the Government .given any attention ‘.to legislation that would exclude -members of the Communist party from the Public Service and the defence forces:?

Mr SPEAKER:

-The question raises a matter of policy.

Mr MENZIES:
Prime Minister · KOOYONG, VICTORIA · LP

– The subject-matter of the question has received a great deal of attention by the Government. But, as you have rightly said, Mr. Speaker, it raises a point of policy. Therefore, 1 cannot answer it at this stage.

page 813

QUESTION

GOODRADIGBEE RIVER BRIDGE

Mr FULLER:
HUME, NEW SOUTH WALES · ALP

– I address a question to the Minister representing the Minister for National Development. Is the Snowy Mountains Hydo-electric Authority planning the route of a power line to Canberra with an accompanying road to service the construction work, and is it true that a high level bridge is to be constructed over the Goodradigbee River to provide access? If so, will the Minister make inquiries and indicate to tho House where the bridge is to be located.

Sir PHILIP McBRIDE:
LP

– I shall advise the Minister for National Development of the question and ask him to reply to it as early as practicable.

page 813

QUESTION

AIR FORCES MEMORIAL AT RUNNYMEDE

Mr BLAND:
WARRINGAH, NEW SOUTH WALES

– Is the Minister acting for the Minister for the Interior aware that the secretary of the Imperial “War Graves Commission in Melbourne is inviting parents of airmen who lost their lives in Britain to attend the unveiling by Her Majesty the Queen of the Runnymede memorial in October next ? Because of the cost involved, will the Minister consider giving selected parents assistance to help them to travel to England for the unveiling ceremony?

Sir PHILIP McBRIDE:
LP

– This matter is being considered, but as far as I am aware no decision has been -made in regard to it. I shall .take into consideration the suggestion made by the honorable member..

page 813

QUESTION

HEALTH AND MEDICAL SERVICES

Mr COSTA:
BANKS, NEW SOUTH WALES

– I direct a question to the Minister ‘for Health regarding the additional 4s. a day Commonwealth ‘hospital ‘benefit paid to patients who are members of an ‘approved hospital insurance organization. Does the patient, upon joining an insurance organization, become immediately entitled to the 4s. a day, or is there a qualifying period?

Sir EARLE PAGE:
CP

– The only qualification for the payment of the hospital benefit is that the patient is insured with an approved hospital insurance organization. The payment of the benefit becomes immediately available to the patient even if a waiting period is imposed by the insurance organization of which he is a member.

Mr ROSEVEAR:
DALLEY, NEW SOUTH WALES

– Some months ago, I asked the Minister for Health a question about certain organizations which have decided that they will not provide hospital benefits for persons whose illnesses become chronic. Is the right honorable gentleman yet in a position to announce that a’ll of the organizations operating under the terms of the hospital benefits scheme recognize chronic sickness as a ground for the payment of benefit ?

Sir EARLE PAGE:

– This is one of the anomalies associated with the insurance scheme and it is due to the fact that the insurance systems concerned with the hospital benefits scheme must be actuarially -sound. Some of the insurance companies have overcome the problem by increasing the rate of premium. By taking this course of action, they ‘have been able, first, to eliminate waiting time, and, secondly, to include chronic sickness cases. This ha3 not been done generally as yet. About ten organizations in New South Wales are handling the matter in the way that the honorable mem ber hassuggested. ‘, 1

Mr FAIRBAIRN:
FARRER, NEW SOUTH WALES

– I ask the Minisi’ter for Health to inform honorable mem”’ bers of the steps that have been taken to’ induce private medical practitioners to practise in the Northern Territory in’ order to supplement the Government medical scheme.

Sir EARLE PAGE:

-Inducements’ have been thrown out to try to get private’ practitioners to go to the Northern Territory, and I am certain that they will be successful.

Mr. DAVIES. Is the Minister for Health yet in a position to indicate to the House when his medical scheme will be brought into operation and when he will be able to give us some details of the scheme?

Sir EARLE PAGE:

– I hope that the information will be available during the next week at the very latest.

page 814

QUESTION

SUGAR

Mr DAVIDSON:
DAWSON, QUEENSLAND

– My question, which is addressed to the Minister for Labour and National Service, refers to his recent visit to North Queensland sugar ports for the purpose of inquiring into the position on the waterfront and the steadily deteriorating position in regard to sugar removals. At the end of his visit the Minister made a statement on what he had discovered, and the impression has been gained in the areas concerned that he attributed the unsatisfactory position that exists, and which is likely to exist during the coming crushing season, to factors other than those that exist on the waterfront itself. Is that impression correct? If not, is the Minister prepared to comment on the matter?

Mr HOLT:
Minister for Immigration · HIGGINS, VICTORIA · LP

– I am afraid that some misconception developed as the result of what may be regarded as an unbalanced report on the radio of some comments I made when leaving Brisbane. The radio report tended to suggest that the factors which led to the unsatisfactory loading rate for sugar are not directly related to the work of the waterside workers themselves. I welcome this opportunity to put the matter into proper perspective. What I said at the time was that there is at present an undoubtedly unsatisfactory loading rate on the wharfs. The rate laid down by Conciliation Commissioner Morrison some time ago, of 4 tons an hour for each man, has rarely if ever been reached and has certainly not been maintained for any considerable period. Consequently, it must be admitted that the rate now being worked on the wharfs is unsatisfactory. However, I went on to say that other factors must be looked into if we are to get satisfactory handling of the forthcoming sugar crop. There will need to be a co-ordinated effort on the part of the mills, the railways and the shipping companies to ensure the even flow of sugar from the mills to the ports, and its subsequent shipment. Recent developments since I was there confirm this view. Cairns, the one port which appears to present a serious problem in regard to the removal of the carryover of last season’s sugar before the reception of the new season’s crop, has had a labour surplus, on an average, of approximately 150 men a day over the last ten days, because the number of ships in the port is insufficient to make full use of the available labour. I had that position in mind when I made my comment, and I feel that more is required than mere criticism of the waterside worker. An effort by all the interests concerned is needed.

Mr BRUCE:
LEICHHARDT, QUEENSLAND

– Did it come to the notice of the Minister for Labour and National Service, during his recent visit to Queensland, that, although there was no industrial trouble at the port of Brisbane, ten coastal freighters and two river boats were tied up at that port? Does he know that this occurred although thousands of tons of sugar await transport from north Queensland before the new season’s crop, which may be a record, starts to come in? Unless accumulated stocks of sugar can be removed from north Queensland before the new. crop is brought in there will be a breakdown in the chain of supply between the producers and consumers of sugar.

Mr HOLT:

– I am not aware of the shipping position in the port of Brisbane. I understand, however, that coastal ships are available for the traffic to which the honorable member has referred if suitable arrangements can be made by the shipping companies concerned. In fact, it having come to my notice that there is surplus labour in the port of Cairns at present, I have taken up with the Minister for Shipping and Transport the matter of ensuring greater continuity of shipping to and from that port. It is the one port at which the carryover position in relation to sugar is serious and is likely to interfere with the new season’s crop. For that reason I think that special measures should be taken to ensure regularity of shipping services to serve that port. I shall examine the availability of shipping to see whether any of the shipping that the honorable member alleges is idle in Brisbane can be used for the transport of sugar.

Dr EVATT:

– My question to the Minister for Labour and National Service is supplementary to the question asked by the honorable member for Leichhardt. Will the Minister prepare a report for presentation to the House about the causes for the hold-up of ships or the absence of shipping from north Queensland ports, especially Cairns? Will he inform the House about the attitude that has been adopted by private shipping companies in contrast with the attitude that has been adopted by the Commonwealth line of ships, in order that honorable members might ascertain whether any attempt has been made to hold back a most important national service? Will the Minister give the House a full statement of his views about this matter?

Mr HOLT:

– It would be of some advantage if an opportunity could be provided for me to make a statement covering the general matter of the movement of the anticipated record crop of sugar from Queensland, the handling of it on the wharfs and the movement of it by ships from northern parts. I learned a great deal that was of interest and value to me on my recent visit to the north, andI should welcome an opportunity to say something about that to honorable members. In doing so, I should try to cover the matter raised by the Leader of the Opposition, but I should point out that one of the reasons why overseas shipowners in particular have been reluctant to send their ships to the northern ports of Australia has been the slow rate of handling of cargo and, consequently, the slow turn-round of ships at those ports. There has also been an abnormal number of industrial stoppages in those ports compared with the number of stoppages in other ports of the Commonwealth.

Dr Evatt:

– Freight charges also come into the matter.

Mr HOLT:

– There are a variety of factors which could be covered in a statement of the type that I have mentioned, and I shall see whether it can be prepared.

Later:

Mr ERIC J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– I lay on the table the following paper : -

Sugar - Protocol relating to the International Sugar Agreement (signed in London, 30th August, 1952).

The protocol was signed in London by representatives of the Governments of the Union ofSouth Africa, Commonwealth of Australia, Belgium, Brazil, Cuba, Czechoslovakia, DominicanRepublic, FrenchRepublic, United Kingdom, Haiti,Republic of Indonesia, Mexico, Netherlands, Peru,Republic of the Philippines, Poland, Portugal, United States of America and the Federal People’sRepublic of Yugoslavia. This protocol differs from those signed earlier, in that it extends the agreement for a period of three years ending on the 31st August, 1955, whereas protocols in recent years had each extended it for one year at a time.

Mr SPEAKER:

– Order! The Minister is making a statement. He has not asked for leave to do so.

Mr ERIC J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– I am merely explaining the protocol, a copy of which I am laying on the table.

Mr SPEAKER:

– Order ! The Minister should ask for leave to make a statement if he wishes to explain the protocol.

Mr ERIC J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– I ask for leave to make a statement on the subject.

Mr SPEAKER:

– Is leave granted?

Leave granted.

Mr. ERIC J. HARRISON (Wentworth - Vice-President of the Executive Council and Minister for Defence Production) . - by leave - The longer period was suggested by the American delegation to the International Sugar Council, as the practice of renewing the agreement annually gave rise to procedural difficulties and added to the already heavy legislative duties of the United States Senate Foreign Relations Committee, which resulted in unavoidable delays. In approving of the three-year extension, the International Sugar Council, at the request of the Australian delegate, Mr. D. J. Muir, agreed to include appropriate wording in minutes and press releases in order to avoid creating the impression that the council considered a new international sugar agreement was unlikely before 1956.

The protocol also differs from previous protocols, in that it contains a provision for withdrawal by giving six months’ notice. That provision was inserted in view of the longer period covered by the agreement. The protocol provides that certain articles of the original agreement, particularly those which relate to the limitation of sugar exports, and the numbers of delegates and advisers, shall be inoperative. This is in accordance with previous practice. Signatories to the protocol recognize that revision of the agreement is necessary and negotiations towards a new agreement have now reached the stage where the International Sugar- Council has requested the United Nations to convene an international sugar conference to discuss a new agreement. The conference is expected to be convened later this year in London.

page 816

QUESTION

LAND SETTLEMENT OF EX-SERVICEMEN

Mr DUTHIE:
WILMOT, TASMANIA

– I address a question to- the Minister acting for the Minister for the Interior. I point out, by way of explanation, that certain- representations have been made to me by exservicemen who wish to settle on the land, and particularly want to get single unit farms. I have been informed, though not officially, that the Government has abandoned the purchase of single-unit farms. Can the Minister inform me whether or not that is so?

Sir philip Mcbride:

– i can assure the honorable member that the Government has not, as a matter of policy, abandoned the purchase of singlesunit farms for the settlement of exservicemen. Certain conditions attach to the purchase of such farms, but provided they are complied with, the purchases are continuing.

page 816

QUESTION

TOBACCO

Mr FREETH:
FORREST, WESTERN AUSTRALIA

– Can the Minister for Commerce and Agriculture indicate whether Western Australian tobacco* growers will be assisted to sell at a reasonably adequate price the unsold portion of last yea-r’s leaf? Can the Minis ter give me any information about the present stage o£ the discussions which were to take place between growers and manufacturers on the subject of uniform grading and better marketing arrangements for Australian tobacco leaf?

Mr McEWEN:
Minister for Commerce and Agriculture · MURRAY, VICTORIA · CP

– -The position in Western Australia at the moment is that some 40 tons of tobacco- leaf from last year’s crop are not yet sold. In Queensland, more than 500 tons of leaf are unsold. My departmental officers and I have been engaged in protracted negotiations with the Queensland Tobacco Leaf Marketing Board and tobacco manufacturers with a view- to establishing a set of circumstances that will result in the satisfatcory disposal of the unsold leaf in Queensland-, and also- in the devising of marketing arrange^ ments calculated to ensure satisfactory sales in future. I believe that if this problem can be solved in Queensland, the solution can be applied in Western Australia, and will be acceptable in that State. The Government has agreed to the request of the Queensland Tobacco Leaf Marketing Board to make an advance to that authority so that if may make advances to the growers on the unsold leaf in that State in certain circumstances, which have been described and which are highly satisfactory to the growers and the board. Whatever is done in Queensland, the Government will be equally prepared to do in respect of this year’s unsold- leaf in Western Australia.

Later:

Mr McEWEN:
CP

– I wish to correct a slight mis-statement that I made earlier. I said that the Government would make an advance to the Queensland Tobacco Leaf Marketing Board. The fact is that the Government has arranged that the Commonwealth Bank shall make the advance.

page 816

QUESTION

WOOL

Mr DRURY:
RYAN, QUEENSLAND

– I ask the Minister for External Affairs, as Minister in charge of the Commonwealth Scientific and’ Industrial Research Organization, whether recent experiments conducted by the organization ito connexion with byproducts from the wool clip have shown any positive results. If so, are there any plans for the development of these byproducts on a commercial basis with a view to increasing the national income?

Mr CASEY:
Minister for External Affairs · LP

– Yes, the Commonwealth Scientific and Industrial Research Organization has been engaged for some time on exploratory work in connexion with the production of wool wax and other derivatives of wool. It has advanced so far that a pilot plant has been established which is producing wool wax on a commercial scale. A company, which was’ recently formed, is already in operation and is producing, I believe, some tons, of wool wax each week. This project is a direct result of the original work done by the Commonwealth Scientific and Industrial Research. Organization, and I understand that it has important commercial potentialities. I need scarcely say that the results of research work done by the Commonwealth Scientific and Industrial Research Organization will be made available to any interested body. I understand that the organization has already received many inquiries about its work from various parts of Australia and overseas-.

page 817

QUESTION

DRIED FRUITS

Mr LESLIE:
MOORE, WESTERN AUSTRALIA

– Is the Minister for Commerce and Agriculture aware of the grave concern that exists amongst producers of dried vine fruits as a result of the decision of the Australian Agricultural Council to recommend that the acreage devoted to vine production be increased? Have any representations been made to him on this subject ? If so, has he taken any action, or does he propose to take any action, in order to alleviate the genuine fears of the growers regarding the future economic stability of their industry?

Mr McEWEN:
MURRAY, VICTORIA · CP

– The area that may be planted for the purpose of the production of dried vine fruits is a matter entirely within the authority and jurisdiction of State governments. The Commonwealth is concerned in the matter only when it provides funds for that purpose in connexion with the war service land settlement scheme, or acts as a coordinating authority. The danger of an over-production of dried vine fruits has been recognized, through the years. A joint Commonwealth and State instrumentality, known as the Irrigation Production. Advisory Committee, forms a judgment upon the matter and makes reports to the respective governments and the Australian Agricultural Council. I assure the honorable member that the Commonwealth will neither encourage nor be a party to an expansion of the production of vines for this purpose beyond a degree which it is convinced is prudent, having regard to the structure of the industry and immediate and longterm marketing opportunities.

page 817

QUESTION

CIVIL AVIATION

Mr FITZGERALD:
PHILLIP, NEW SOUTH WALES

– Has the Prime Minister received an urgent telegram from the Woollahra Municipal Council protesting against the transfer of the Ansett flying boat base from Brisbane to Bose Bay, and also against statements made in this House to the effect that it is not possible to transfer the Rose Bay flying boat base to another place? Will the right honorable gentleman give consideration to the views of the Woollahra Municipal Council? Will he. receive a deputation from that body, so that differences of opinion can be resolved and obligations entered into by the Government and the council can be honoured with the least possible delay?

Mr MENZIES:
LP

– I am not familiar with the details of this matter, but I understand that the Minister for Civil Aviation, who is temporarily indisposed, has agreed to receive a- deputation upon it.

page 817

QUESTION

COAL

Mr SWARTZ:
DARLING DOWNS, QUEENSLAND

– Can the Minister for Labour and National. Service inform the House of the position of coal reserves in Australia at the present time? Will he indicate whether that position will have any affect upon employment, in the coalmining, industry? How many members of the miners’ federation are eligible for long service leave this year ? Have satisfactory arrangements been made for such leave to be taken ?

Mr HOLT:
LP

– Pull details of our coal reserves could be supplied by the Minister for National Development. As I understand -the position, coal stocks in Australia now have reached the highest figure in our history. About 2,500,000 tons of coal is held in the hands of consumers, and a little more than 1,000,000 tons is held at grass by the Joint Coal Board, in connexion with its stockpiling programme. It is a fact that the operations of the more efficient mines have had some effect upon employment in the industry, but the effect has not been felt as severely as it might otherwise have been felt, because the Government took action to bring forward into the present year the operation of the long service leave plan in the industry. In co-operation with the Joint Coal Board and the miners’ federation, satisfactory long service leave quotas have been worked out for the various States. This year, about 4,400 miners will enjoy long service leave under those arrangements. Undoubtedly, that has had a stabilizing effect upon employment in the industry.

page 818

QUESTION

COMPULSORY ACQUISITION OF PROPERTY

Mr ROBERTON:
RIVERINA, NEW SOUTH WALES

– Will the Prime Minister say whether there are any steps that the Australian Government could take to protect the people of New South Wales from the inevitable consequences of the recent decision of the High Court, which upheld the right of the New South Wales Government to acquire land on 1942 values, which means, at a fraction of its current value? Is the exercise of that right likely to be exclusive to a minority of the people of New South Wales who are large land-owners and who cannot defend themselves, or is it likely to apply to all people and all property ?

Mr MENZIES:
LP

– The matter to which the honorable member has referred is within the complete control of the Parliament and the Government of New South Wales. The Commonwealth’s own concern in relation to the acquisition of property is that it has power to acquire, for the purposes of the Commonwealth, not on behalf of the States, and when it so acquires it must acquire on just terms. T think that that distinction was made clear in the court decision referred to by the honorable member. The procedure indicated by the court cannot be taken by the Australian Parliament or Government. It can be taken by the Parliament and Government of New South Wales, if that Parliament and that Government think fit to acquire property at below its true value.

page 818

QUESTION

EDUCATION

Mr J R FRASER:
ALP

– Will the Prime Minister consider the position of some students, holding Commonwealth scholarships, who failed in their first year examination’ in the faculty of medicine in the University of Melbourne in 1951, who then, in accordance with the terms of their scholarships, repeated that year successfully in 1952 at their own expense, and who have now been debarred by the University of Melbourne from continuing their course, and are thus deprived of the benefits of their scholarships? As Commonwealth moneys are made available through these scholarships, and in other ways, to the University of Melbourne, will the Prime Minister vue his endeavours to ensure that those students will not be doubly penalized?

Mr MENZIES:
LP

– I am bound to say that what has been called the Commonwealth scholarship system, but which might more accurately be called the Commonwealth bursary system, is extraordinarily liberal. A great number of people come within the scheme who would not under ordinary circumstances be regarded as scholarship winners. The honorable member realizes that. If he is suggesting that the conditions should be made easier, I shall certainly consider his request, but I shall do so with some reluctance because I believe that they are remarkably easy at present. If, on the other hand, his question involves some discussion with one of the universities on how it is regarding somebody whose scholarship is being maintained, I shall . investigate the matter.

Mr MULLENS:
GELLIBRAND, VICTORIA

– Will the Prime Minister inform honorable members whether the Australian Government subsidizes, either directly or indirectly, the University of Melbourne? If so, is the right honorable gentleman aware that there is neither a chair of medicine nor a chair of surgery at that university? Would he not agree that it is a sad deprivation for a city the size of Melbourne that it should depend on the voluntary efforts of certain experts in clinical schools and elsewhere?

Mr MENZIES:

– The Commonwealth does indirectly subsidize the University of Melbourne through its universities grant to the States which, as the honorable member knows, amounts to more than £1,000,000 a year. The second part of the honorable member’s question is calculated to give a misleading impression. What the internal arrangements of the University of Melbourne are in respect of medicine and surgery, and what lecturers or professors may be called I do not know, because I do not speak by the book on that matter. However, on the evidence of people from many parts of the world, the teaching of medicine and surgery in Melbourne is in world class and has been for a long time.

page 819

QUESTION

QUESTIONS

Mr MULCAHY:
LANG, NEW SOUTH WALES

– My question to you, Mr. Speaker, refers to a question asked earlier by the honorable member for Mackellar. In view of the fact that you are very impartial and are not associated with any political party in the House, how is it that you can say that an honorable member’s question concerns a matter of government policy?

Mr SPEAKER:

– I rely on my native wit, reinforced by my long experience.

page 819

QUESTION

LEPROSY

Mr KEON:
YARRA, VICTORIA

– Will the Minister for Territories make a statement about the appalling incidence of leprosy among the aborigines in the Northern Territory and other northern parts of Australia, and ! explain the action, if any, that has been taken by the Government since that appalling state of affairs was disclosed early this year?

Mr HASLUCK:
Minister for Territories · CURTIN, WESTERN AUSTRALIA · LP

– Because of the interruption of governmental programmes caused by the war, and because of the complete neglect of the problem by the previous Labour government, this Government has discovered that in the Northern Territory there is a grave incidence of leprosy. It stands to the credit of the present Government that that serious incidence has been discovered and is now being given attention. The position would not be so bad as it is but for the neglect that occurred during the war and post-war years. The present Government is giving close attention to the treatment of lepers and their isolation in a new leprosarium. The construction of a new leprosarium in the quarantine area of Darwin has already started.

page 819

QUESTION

TAXATION

Mr CREMEAN:
HODDLE, VICTORIA

– I ask the Treasurer whether any representations have been received from charitable institutions in Victoria and elsewhere about the crippling nature of the entertainment tax that is levied on the proceeds of racing meetings and other functions conducted exclusively for charitable purposes. If so, what were the nature of the representations and the nature of the reply given to them by the right honorable gentleman ?

Sir ARTHUR FADDEN:
Treasurer · MCPHERSON, QUEENSLAND · CP

– I have received no representations of the kind indicated by the honorable member.

page 819

QUESTION

EMPLOYMENT

Mr MORGAN:
REID, NEW SOUTH WALES

– Will the Minister for Labour and National Service state whether the Government has any definite plans to take up the slack in employment, or does it propose to let things run their course ?

Mr HOLT:
LP

– The Government’s programme is designed to encourage private industry, and the resourcefulness and initiative of our community, to go ahead with the healthy development of Australia. I am certain that all honorable members who follow with interest the progress of employment in Australia will be pleased to know that during recent weeks there has been a marked improvement noticeable in employment, and that the last figures relating to the unemployment benefit have shown, as my colleague pointed out yesterday, a substantial reduction. For the last month the figures reveal a reduction of about 8,000 in the number of people receiving the unemployment benefit.

page 819

QUESTION

COMMONWEALTH EMPLOYEES’ FURLOUGH ACT

Mr COSTA:

– My question to the Prime Minister concerns the Commonwealth Employees’ Furlough Act. Is it the intention of the Government to introduce legislation during this sessional period to amend that act ?

Mr MENZIES:
LP

– I cannot answer dogmatically on that matter. The act is under immediate consideration. I hope very much that legislation on the subject will be introduced, but I cannot say positively whether that will be so or not. Perhaps I may be able to inquirebetween now and to-morrow, and so put myself into a position to give the honorable member a more definite reply.

page 820

QUESTION

PUBLIC SERVICE

Mr KEON:

– Will the Prime Minister state whether it is the practice in the Commonwealth Public Service, when a public servant has committed a breach of the regulations which is also a breach of the criminal law, not only to have the offending public ‘servant brought before a criminal court, but also, if he is acquitted by the court, to hale him before the Public Service Board and try him a second time for the offence? If so, will the right honorable gentleman give consideration to the need for providing that an offending public servant shall be tried once and onceonly forwhatever offence he may have committed?

Mr MENZIES:
LP

– I am not aware of the procedure. I shall ascertain it and advise the honorable member.

page 820

EMPLOYMENT OF WOMEN

Mr.HOLT (Higgins - Minister for

Labour and National Service) . - by leave - On Thursday, the 5th March, the Leaderof the Opposition asked me a question concerning action taken, or proposed to be taken, on the International Labour Organization convention on equal remuneration. As honorablemembers will recall, this is one of a number of conventions and recommendations adopted by the 1951 session of the International LabourConference. When, on the 21st November, 1951, I tabled in the House the reports of the Australian delegates who attended that conference, I indicated that I would table, at a later stage, a report on the action taken, or proposed tobe taken, by the Government concerning the con ference conventions and recommendations: As theconventions and recommendations also concern the States, the States are being given an opportunity to comment on the contents before the report is finally settled. I shall table the report as soon as practicable after the views of the States have been considered.

HEARD ISLAND AND McDONALD ISLANDS BILL 1953.

Motion (by Mr. Casey) agreed to -

That leave be given to bring in a bill for an act to provide for the Government of Heard Island and McDonald Islands.

page 820

APPLE AND PEAR ORGANIZATION BILL 1953

Second Reading

Mr. McEWEN (Murray - Minister for

Commerce and Agriculture) [3.17]. - I move -

That the bill be now read a second time.

The main purposeof thebill is to amend the procedure for determining the terms and conditions of employment of the staff of the Australian Apple and Pear Board. The Apple and Pear Organization Act provides that the salaries and conditions of employment of persons employed by the board shall be as prescribed by regulation. This provision has made it necessary to go through the machinery of promulgating regulations to cover all variations of salaries and allowances, and any proposed variations, such as costofliving adjustments, cannot operate until the necessary regulations have been promulgated. Likewise, superannuation adjustments cannot be effected until the necessary regulations have been promulgated. This procedure is cumbersome and, at times, involves unavoidable delays.

Some statutory authorities which have been constituted under acts passed since 1945 operate under arrangements whereby the terms and conditions of employment of their staffs are determined by the respective authorities, subject to approval by the Public Service Board. No regulations are required. Bythis means variations may be made effective without delay andthis arrangement has operated satisfactorily.The amendment of the act now proposed is in accordance with the policy adopted by this Government and previous governments,that variations of salaries and terms of employment ofemployees of statutory authorities should be approved by the Public Ser- vice Board. The principal act provides that salaries, fees and expenses payable to members of the Australian Apple and Pear Board and the terms and conditions applicable to overseas representatives shall be prescribed by regulation. An opportunity has been taken in this bill to dispense with the necessity for the promulgation of regulations to cover all variations in fees, salaries and allowances payable to board members or overseas representatives.

The other amendments proposed in the bill do not alter the substance of the provisions of the principal act. They are designed solely to bring the principal act up to date and to bring its provisions into line with the drafting of more recent legislation. It is the Government’s policy to have the provisions of Commonwealth marketing legislation uniform to the extent that that is possible. I commend the bill to the consideration of honorable members.

Debate (on motion by Mr.Calwell.) adjourned.

page 821

CANNED FRUITS EXPORT CONTROL BILL 1953

Second Reading

Mr. McEWEN (Murray - Minister for

Commerce and Agriculture)[3.20]. -I move -

That the bill be now read a second time.

This bill provides for amendments to theCanned Fruits Export Control Act 1926-1952, which are identical inmost respects with the amendments to the Apple and Pear Organization Act that are contained in the Apple and Pear Organization Bill 1953 which has just been before us. I have already explained these in my second-reading speech on that bill. The mainprovisions relate to the procedure for determining the terms and conditions of employment of staff of the Australian Canned Fruits Board, the fees andexpenses of members of the board and certaindrafting amendments to bring the principal act into line with more recent legislation. In addition, however, this bill provides for a further amendment in relation tothe remuneration and expenses of members of the Commonwealth or State parlia ments who may be members of the Australian Canned Fruits Board. A similar provision already appears in other marketing legislation.I commend the bill to the consideration of honorable members.

Debate (on motion byMr. Calwell) adjourned.

page 821

DRIED FRUITS EXPORT CONTROL BILL 1953

Second Reading

Mr. McEWEN (Murray - Minister for

Commerce and Agriculture) [3.22] - I move -

Thatthebill be now read a secondtime.

This bill is designed to effect amendments to the Dried Fruits Export Control Act 1924-1952, which are identical with those contained in the Canned Fruits Export Control Bill 1953. I explained them in my second-reading speech on the latter bill a few moments ago. I commend the measure tothe consideration of honorable members.

Debate (on motion by Mr. Calwell) adjourned.

page 821

WINE OVERSEAS MARKETING BILL 1953

Second Reading

Mr. McEWEN (Murray - Minister for

Commerce and Agriculture) [3.23.] - I move -

That thebill be now read a second time.

This bill provides for amendments to the Wine Overseas Marketing Act 1929-1945, which are practically identicalwith those contained in the Apple and Pear Organization Bill 1953. [Quorum formed.] I have just a few minutes ago explained those provisions in my second-reading speech on thatbill. They relate to the determination of terms and conditions of employment of the staff of the Australian Wine Board, the remuneration and expenses of members of the board and oversea representatives, and the redrafting of certainprovisions of the principal act to bring them in line with more recent legislation. I commend the bill to the consideration of honorable members.

Debate (on motion by Mr. Pollard) adjourned.

page 822

BANKING BILL 1953

In committee: (Consideration resumed from the 10th March (vide page 761).

The bill.

Mr TOM BURKE:
Perth

.- The Banking Act 1945 put into legislative form banking regulations that were in operation during World War II. The Opposition asks the Government to explain how this bill will strengthen the central banking structure of Australia. The Government claims that it believes in the maintenance of a strong central bank. It should certainly hold that view, because such a view is accepted in financial circles throughout the world. The Government also claims that it believes that the activities of the Commonwealth Bank should be fostered, and honorable gentlemen opposite have spoken in glowing terms of the work and achievements of that financial institution. Opposition members, in their second-reading speeches, have invited the Government to indicate how it is proposed to strengthen the Commonwealth Bank as a central bank or as a financial institution that undertakes ordinary banking activities. So far, the Government has not responded to our invitation. The Prime Minister (Mr. Menzies) and his supporters have not explained how the bill will strengthen the central bank, develop banking as a whole in Australia, or ensure that this country shall have a more stable economy in the future.

The Government also claims that this bill provides for the maintenance of fair competition between the Commonwealth Bank and the trading bank. I invite honorable members opposite to elaborate that bald statement, and indicate whether competition between the Commonwealth Bank and the trading banks has been unfair in the past. All we have been told so far is that this bill will protect the shareholders of the private banks, and establish a safeguard against the nationalization of banking in the future.

Mr Jeff Bate:

– That statement is not worthy of the honorable member.

Mr TOM BURKE:

– I should like the honorable member for Macarthur (Mr. Jeff Bate) to state whether he considers that this bill will meet the basic tests that should be applied to any banking legislation in order to determine its value.

Mr Jeff Bate:

– The honorable member would not understand such an explanation.

Mr TOM BURKE:

– If my failure to understand the speech of the honorable member for Macarthur last night is an indication of lack of intelligence on my part, I plead guilty to the charge. The honorable member resents the snub that was administered to him by the Prime Minister, as a result of which he was not able to proceed with an amendment that he had circulated. He now gives lukewarm support to the bill.

The CHAIRMAN (Mr. Adermann).Order! Will the honorable member address the Chair?

Mr TOM BURKE:

– Opposition members have consistently contended that Australia has not a strong central bank to minimize the effects of booms and slumps in business. The worst effects of an economic depression can be mitigated if the central bank is strong and able to enforce its will, and if the private trading banks are willing to lend a sympathetic ear to the wishes of the central bank, and, in the last resort, to carry out deliberate instructions given to them. The Minister for Health (Sir Earle Page), who is a former Treasurer, has stated that Australia has had a central bank since 1924. The right honorable gentleman claims credit for having established a central bank. He is not entitled to do so because a central bank in its final form has not yet emerged in Australia. In order that he may understand the position, I propose to quote from Banking in the British Commonwealth, the latest work available on the subject of banking.

Mr Turnbull:

– Tell us all about it.

Mr TOM BURKE:

– I shall be glad to do so, but I am unable to say whether the honorable gentleman will be able to understand or appreciate my explanation. This book contains a full and searching survey of Australia’s trading bank and central bank systems. Referring to the establishment of the central bank, the author wrote -

This task was undertaken by the Bruce-Page Government in 1924. … It was foolish in the extreme to attempt to establish in Australia and without modification institutions which had been developed in a totally different environment.

Mr Turnbull:

– Who wrote that?

Mr TOM BURKE:

– It will be a waste of time to tell the honorable member, but I shall do so in the hope that I shall achieve some good results. The volume to which I am referring contains what I consider to be the most searching survey of private and public banking in Australia in as brief a compass as has ever been made. Furthermore, it is the most up-to-date work on the subject that is available. It was published last year. The book contains two lengthy articles on Australian trading banks and the Commonwealth Bank of Australia by J. S. G. Wilson, Reader in Economics (with special reference to banking and currency) at the University of London. The articles were edited by R. E. Sayers, also of the University of London. The author obviously is well acquainted with his subject, and his comments include references to the recent double dissolution of the Australian Parliament following which the general election campaign was fought on the banking issue. He wrote—

What, on a. bil lance of considerations, should our fi nui judgment be? It must be recognized that banking to-day is an activity so vital to the welfare of the community that, in the view of the present writer, effective control is not possible without wide powers. Moveover, it may be argued that in Australia the method of control adopted ie eminently suited to local conditions, since the narrowness of the security market, despite its expansion since 1 939, and the relative immaturity of financial institutions do not permit the effective use of the sophisticated methods of credit control worked out for the more mature economics of the United Kingdom and the United Status of America.

The author reached this conclusion -

Nevertheless, Australian experience has served to underline the limitations of credit policy in an open economy and must qualify considerably the faith placed in the 1945 legislation.

All of these comments confirm with telling force the arguments “ that have been used by the Opposition against the measure now before the committee.

Notwithstanding all the powers given to the Commonwealth Bank as a central bank and the co-ordination of its func tions in a single general framework, the experts who are most qualified to comment upon our banking system consider that the Labour Government fell far short of the method of control best suited to Australia’s needs and in line with central banking practice throughout the world when it framed the banking legislation of 1945. Yet this Government has produced a measure that must weaken the structure of the Commonwealth Bank. It has done a disservice to Australia and to our central bank. Time may well prove also that it has done a disservice to the private banks, which it now tries so zealously to protect. Should a further grave economic crisis beset Australia, the trading banks will be forced to rely upon the central bank. The strength of the central bank, in the final analysis, is the strength of the trading banks. During the last economic depression, even the great private banks had to appeal to the Commonwealth Bank for financial support. The National Bank of Australasia Limited, for example, had to do so. With the increasing use of credit in the modern economy, future depressions are likely to be even more extreme in their effects than was the last depression. Therefore, if the private banks continue with their present practices, with little regard for sound banking principle.?, by investing in longterm securities, which are virtually frozen-

The CHAIRMAN:

– Order! The honorable member’s time has expired.

Mr HAMILTON:
Canning

.- The honorable member for Perth (Mr. Tom Burke) has criticized the Government on the ground that it is endeavouring to destroy the banking system that has been in force in Australia for thy la3t eight years, but he has not produced any evidence to show that this measure will, in fact, weaken the structure of our banking system. He has spoken only in general terms. I am strongly reminded of the debate that took place in this chamber on the Labour Government’s banking legislation of 1945. Mr. Dedman, who then ranked fourth or fifth in the Labour Ministry, made a lengthy speech on the subject of Labour’s proposals at that time. Apparently, his remarks were of the true essence of Labour policy because the

Prime. Minister o£ the day,. Mr. Curtin, moved that the Standing’ Orders be suspended in order that. Mr. Dedman might complete his; speech without interruption. In those circumstances, we are entitled to regard- Mr. Dedman’s. pronouncements as clear declarations of Labour’s banking policy. However, those pronouncements are not in agreement with the views that have been expressed by the honorable member for Perth. In fact, the suggestions made by Mr. Dedman fall closely into line’ with the action that has been taken by this Government. Hansard of the 22nd March, _ 1945, at page 79s), records the following statement by Mr. Dedman : -

I consider that it ought to have at its apex a central bank, under which there should be functioning the various banks that undertake trading activities.

I draw attention particularly to the words “ various banks- “. Mr. Dedman went on to say -

The alternative would be, of course, to have only one bank undertaking the activities of the central bank and monopolizing the whole field of trading banks as- well. That could, perhaps, be described as nationalization or socialization of the banking system. The Government has not selected that system, but proposes an alternative which it thinks is better fitted to this country.

That was another occasion on which the Labour party tried to mislead the people and confuse their minds on the banking issue. “We have been told during the discussion of the bill that is now under consideration that the people of Australia endorsed the policy of the Labour party in 1946 by returning it to office; That is only partly true. It was in that year that the rot set in for the Labour Government. The Labour party lost four seats at the general election of 1946, and, when it faced the people under its true colours in 1949, it was almost annihilated. The Labour Government in 1945 did not tell the people that section 48’ of the Banking Act was deil.ibera.teiy implanted in the measure by the planners in order to cause confusion. The truth is that that Government and its advisers proposed that, on the day when the Treasurer declared that government and local government authorities must transfer their business to- the

Commonwealth Bank and that the- private banks must cease to handle governmental business, full-blooded nationalization of banking should come into effect. The present Government parties have declared repeatedly that they will endeavour to protect the banks against future attacks of that kind. This bill and a related measure will separate the trading bank functions of the Commonwealth Bank from its central bank functions and will strengthen both the central bank and the trading, banks so that the people may continue to have a choice of banks. Let me quote other remarks of Mr. Dedman. They were endorsed’ by the Prime Minister of that day; otherwise, the right honorable gentleman would not have gone to the trouble of moving the suspension of Standing Orders to permit Mr. Dedman to complete his speech without interruption. By that action, he admitted that he was in favour of the policy enunciated by his colleague. Criticizing the present Prime Minister (Mr. Menzies), who was then the Leader of the Opposition, Mr. Dedman said -

To leave the banking system as it is would be to have a structure in which the central bank would continue to engage in trading bank activities in which private banks were also engaged. Does the right honorable gentleman think that the system as it stands, with the central bank also undertaking trading bank activities, is the one that should continue in Australia? Apparently he does, from his speech, because he did not indicate any alteration of the present system which he would make. I suggest to the House that, from tho point of view of the trading banks themselves, it is a better proposition for them to have the activities of the central bank entirely separated from the trading bank activities ot the Commonwealth Bank than to have the two combined as they are now.

Those words were spoken by a man who had said repeatedly in this Parliament that he was one. of the greatest socialists who had ever lived in Australia. They were spoken in 1945 to lull the people into a sense of false security, and to lead them to believe that the Labour party’s policy of bank nationalization or socialization would not be implemented. Therefore, it was no wonder that, in 1946, the people of Australia endorsed the policy of the Labour party. If my memory serves me correctly, the Labour party did not enunciate a policy then at all. The laic Mr. Chifley said that he would make no promises, and ‘that -he would ask the people to judge his Government on its -record. In 1946, the La’bour party did not say .a word about its real intentions -when it secured the passage of the 1945 banking legislation, section 48 of which was the key to bank nationalization.

This Government, in proposing that the activities of the Commonwealth Trading Bank be separated from those of the central bank, is doing exactly what Mr. Dedman in 1945 suggested should be done. It is doing something that Mr. Curtin believed in, because, on the occasion to which I have referred, he moved that Standing Orders be suspended to permit Mr. Dedman to continue his speech without interruption. By so doing, he endorsed the policy enunciated by Mr. Dedman. After Mr. Curtin had died, the real purpose of the Labour party was brought to fruition. It is worth while to quote the words of Mr. Dedman again. He said-

It la a better proposition for them to have the activities of the central bank entirely separated from the trading bank activities of the Commonwealth Bank than to have the two combined as they are now.

The honorable member for Perth has said that we are doing nothing to strengthen the banking system of this country. At least, we are going further along the road away from bank nationalization, and if the Labour party comes into .power again - I understand it is very hopeful that it will do so in the near future - it will have a much more difficult task to introduce the system that it would like to see in operation. In future, a Labour government will not be able to say to the private banks, “ Pay up, or you will go out of business “. In such circumstances the private banks would be put out of business even if they did pay up. The action that has been taken by this Government will put that power further from the reach of the Labour party. We shall not awaken one bright morning to find, as we found in 1947, that an attempt has been -made to nationalize the banks of this country. Bank nationalization is not a dead horse. It is a part of the policy of the Labour party, and honorable gentlemen opposite intend to implement that part of their policy if ‘they get an opportunity to do so.

Let me -quote .a few more of -the remarks that were made by Mr. Dedman in 1945. He said.

If one bank should come into operation, the toll that the financial institutions would levy on manufacturers and traders generally-

The CHAIRMAN:

– Order ! The honorable gentleman’s time has expired.

Mr CREAN:
MELBOURNE PORTS, VICTORIA · ALP

– I expected that during the committee stages of this measure Government members would give some consideration to the proposals embodied in it. During the second-reading debate, the Opposition argued that the bill did not deal at all with the nationalization of banking, and was .a measure which would remove many of .the safeguards embodied in the 1945 banking legislation. But, so far, the Government has .advanced no valid reasons why that legislation should be amended. It has been suggested that it is necessary to alter the existing special accounts provisions because of the so-called high uncalled liability that hangs .as a threat over the heads of the private trading banks. But it has been pointed out by the leader of the Opposition (Dr. Evatt) and other speakers on this side of the chamber that that high liability, if it exists, is virtually a creation of this Government, which permitted the special accounts to run down from the high level of £590,000,0.00 to a mere £150,000,000. Under this measure, the uncalled liability would be frozen at a figure which, in many respects, would be very low for the purposes of control of the activities of the private trading banks by the central bank. It has been stated that, under Labour administrations, the special accounts provisions were used by the central bank, not as a bludgeon but wisely and discreetly to regulate the volume of money circulating in the Australian community.

For the .-benefit of members of the committee, I :shall .read some extracts from an article that was published in a very representative English journal called .the Banker. In .the issue of September, 19.52, an Australian correspondent contributed an article entitled “‘Credit Control in Australia”. In it, he illustrated the operation of the present special accounts provisions between June, 1945, and June, 1951. He stated-

From June 1945 to June 1951, the advances of all cheque paying banks rose from £252,000,000 to £078,000,000.

During those six years, there was an expansion of credit by over £400,000,000. En the article, he described the methods that were employed by the central bank to enable the increases of advances to take place. The methods that were used then are methods that could be used by this Government, even under the existing legislation. The author of the article wrote -

In the first place, calls to special accounts in this period were no longer roughly equated to the increase in bank assets, but only to a proportion of them. Between June 1945 and June 194S, for example, the amount so called represented only about 45% of the increase in trading bank assets, although, of course, the potential liability to calls to special accounts for the full increase in assets since 1939 remained.

Dealing with the second method by which an increase in advances was made possible, he stated -

In the early post war years, those banks that found that calls to special accounts prevented them from increasing advances by as much as they wished, were able to raise finance by reducing their holdings of Government securities.

Now we have this third method, which was used in the years between 1945 and 1951, to which I wish to draw the attention of the committee. The writer says of it -

There remained one other source from which the increase in advances could be financed. To assist those banks, whose’ security holdings had been reduced to low levels, to continue to meet demands for advances for approved purposes, the central bank extended short period loans to them . . . These central bank loans were made available at 3J% per annum, and as the maximum rate for advances then stood at 4A%, the margin of their profitable employment was narrow.

In other words, instead of releasing amounts from special accounts, as the Commonwealth Bank Board has done in the last six to eight months, if the private banks were short of cash the central bank made loans to them at a fixed rate of interest, and in turn the banks were able to pyramid their advances by the release of credit; but, as the writer rightly points out, the margin between the rate of interest charged by the central bank and the rate that could be secured on overdraft, both rates being controlled by the central bank, was only very narrow, and there was no great inducement for the private banks to indulge in a reckless advances policy. I suggest that what has taken place during the last six or eight months indicates the difference between the policy that the Government seems to applaud, and which it pursues, and the policy that was followed in the previous period. That change has occurred because, as we have pointed out, ostensibly the private banks said that they required a release of £400,000,000 of additional credit in order to finance their ordinary business. I think that we have satisfied any intelligent person that that was not necessary, because a study of the movement in the assets of the banks in that time shows that a change has taken place, not in the aggregate of bank assets, but in their nature, in that amounts which were previously frozen in the special accounts are now placed in a disposable form in the hands of the private banks. The purpose of the special accounts provisions was to immobilize money, or place it under the direction and control of the central bank, where it ought to be, but once it is released and the banks are allowed to use it to purchase investments, treasury-bills, government securities or stock exchange securities, that amount which was formerly immobilized and controllable by the central bank as part of its policy is thereby freed. That change has already taken place.

The Government need not have released the special accounts to the banks, as it has done. If there were need to do so - and it has not been demonstrated that there was - the release of credit could have been made by the central bank itself, on its own terms, as a loan, and could have been withdrawn also as the central bank determined. That procedure is no longer possible, because the amount that has been released will be frozen, as it were, by this legislation. A certain level will be set as the starting- point for the new special accounts provisions, and will be adjusted month by month, and then at the end of every August. Whatever the position may be at the end of a year, it will be adjusted for the new starting-off figure.

Funds that were previously immobilized for the benefit of the community have now been released, and the effect of this measure, when it becomes law, will be that they will be released beyond recall. In future ,the private banks, and not the central banking system, will have the disposition of those assets, which were formerly immobilized. This is the kind of searching question that the Government should answer but, instead of answering it, it is falling back on nebulous phrases, and tirades of abuse about the nationalization of banking-

The CHAIRMAN:

– Order! The honorable gentleman’s time has expired.

Mr. WENTWORTH (Mackellar) [3.56 1 . - I suppose we must accept the honorable member for Melbourne Ports (Mr. Crean) as an earnest inquirer into the banking business, even if his understanding of such matters is not always very deep. He contends that the special accounts provisions worked all right in the past, and asks why we do not leave them alone. That question omits consideration of one very important factor in the situation. Honorable members will recall that the Chifley Government endeavoured to nationalize and destroy the trading banks as such, and that its attempt to do so was foiled only as a result of a court action that was not concluded until shortly before that Government went out of office. The Chifley Government, therefore, had no opportunity to try the second, or administrative, method of bank nationalization, which undeniably the Labour party would like to use, having failed to achieve its goal by the direct method. One must repeat, and remind honorable members, that the nationalization and centralization of banking is a fundamental plank of the Labour party’s platform. I notice, for example, that at page 262, of the report of the Royal Commission on Monetary and Banking Systems, issued in 1936, Mr. Chifley emphasized that point. It also must be remembered that other members of the Labour party have subsequently pointed out that, having failed to nationalize banking by the method of direct assault, their next scheme is to do it by administrative action. I refer the committee particularly to a speech made on the 11th October, 1950, in this chamber by the honorable member for Melbourne (Mr. Calwell), who is the Deputy Leader of the Opposition. It is recorded in Hansard, at page 633. He said -

In the course of time, the Commonwealth Bank will be the only bank in Australia. By competition it will force the private banks out of existence, and thus the private banking system will be nationalized without the necessity of paying compensation to the private banks. The Government has chosen to have it in that way, and it will get it in that way.

An. honorable member on this side of the chamber interjected -

That is a threat?

The reply of the honorable member for Melbourne was -

It is a promise.

There is no doubt, in view of that statement, that the Labour party’s desire is to nationalize the banking system by administrative action, as it failed to do so by direct assault.

Mr Joshua:

– The honorable member for Melbourne said the Commonwealth Bank would do it by competition.

Mr WENTWORTH:

– Yes, but if the terms of competition can be dictated so that it is not fair competition, although it is called fair, then it is in point of fact nationalization by administrative action, which is what the Labour party plans to achieve, although it does not dare now to come out into the open and admit it.

I was interested in the argument of the honorable member for Melbourne Ports, who protested against the release of funds in special accounts. I remind him that if that release had not been made we should have had a credit contraction that would have beggared description. It had to be done, and it was done by this Government, but it does not follow for one moment that an incoming Labour government would follow the same rule because, if the act were left unamended, it could be used in the hands of a Labour government to break entirely every private bank. The mechanism would be simple. Suppose people withdrew their money from private banks by reason of an efflux of funds overseas such as we experienced last year, and the deposits in the banks were reduced for that reason. In order to pay out, the private banks have to get cash. But they have already deposited it in special accounts with the central bank, and, unless they could get that money out, how could they meet the claims of their’ depositors who want to withdraw ? They must have the right to withdraw that money, but under the present legislation they have no such right to withdraw money from the special accounts under any conditions at ail. Section 21 (1.) of the Banking Act 1945 reads -

Except with the consent of the Common-

Health Bank, a Bank shall not he entitled to withdraw any sum from the special account established by it under this provision.

If there had been a Labour government in office last year, when it became necessary to release over £300,000,000 from the special deposit accounts, every private bank could have been made bankrupt by government action. The Labour government could have refused to allow the money to be withdrawn. I have no doubt, in view of the statements of honorable members opposite, that the private banks would have been prevented from withdrawing their money from the special accounts. Therefore, the repeal of this section of the Banking Act 1945 and the revision of the, system of special deposits, as- contemplated by the bill, inadequate though it. is, will tremendously improve the- banking system. If a Labour government had been in office, last year every private trading bank in Australia would have been already nationalized, because under existing section. 21 (1), which will now be. repealed, any government has the power, in effect, to nationalize private trading banks by refusing to allow withdrawals. I again remind the committee that, the Labour party would have, nationalized the banks by that method as soon as the. opportunity arose. The bill will also repeal section 57 of the Banking Act 1945. That section reads -

Where any offence against this Act or the regulations has been committed by any body corporate, the chief executive officer in Australia of the body corporate shall be liable to the penalty provided’ in respect of that offence, but nothing in this section shall affect the liability of the body corporate.

That most iniquitous provision throws the personal liability for any offence.- that may hara been, committed, whether by- default, or inadvertence, upon somebody who may have had no knowledge whatsoever of the matter and have had no responsibility for it. Yet the section was inserted by the Labour party that hypocritically speaks about onus of proof when it comes to dealing with its friends the Communists, whom it protects. The Labour party makes no pretence to any sense of right or justice when it comes to deal with other sections of the community.

Mr Chambers:

– I rise to order, Mr. Chairman, I object to the statement made by the honorable member for Mackellar (Mr. Wentworth) that the Labour party protects the Communists.

The CHAIRMAN:

– Order ! Rulings have already been given on matters such as that. The honorable .member for Mackellar may proceed..

Mr WENTWORTH:

– I gratefully acknowledge that there are honorable members opposite who, personally, are opposed to communism. I wish them well and I hope that they, will be more successful than they have been in the past in turning the Labour party away from the actions that it has taken to help communism. I shall not embarrass honorable members opposite, so I shall say no more about that particular matter. Section 48 (1.) of the principal act, which will also be repealed by the bill now before honorable members, reads -

Except with the consent in writing of the Treasurer, a bank shall not conduct any banking business for a State or for any authority of a State, including a local-gover.ning; authority.

All “honorable members- remember the legal questions that, have arisen with regard to that section, and it is a very good thing that it is now to be repealed. It was an unwarrantable socialistic invasion of the rights of the States by the Chifley Government, which had determined to destroy the States as well as all private enterprise.

The CHAIRMAN:

– Order ! The honorable member’s time, has expired.

Mr JOSHUA:
Ballarat.

.- It is remarkable that the honorable member’ for Mackellar (Mr. Wentworth) should deal with section 57 of the- principal act, because obviously- he- is not qualified in any way to> direct any remarks! to that section. He does’ not know what, he is talking about. The Prime Minister (Mr. Menzies), when speaking about section 57 of the principal act, said-

There is a provision in the principal act of a rather sadistic kind, which provides that if a. bank commits a sin against any of the rules on banking - which might not be difficult, because they are extremely complex - then the chief executive officer of the bank is personally responsible for the offence. We think that that provision adds a new horror to being a chief executive officer and that there is no reason for it in common sense, because any offences that may be committed by a branch or sub-branch may never come within the jurisdiction of the. chief, executive officer, who should not. bc made responsible for all offences committed by a bank. Therefore we propose to repeal that provision.

Now let us consider the matter in the light of some knowledge of it. The chief executive officer of a. bank is in many cases a man who has risen from the ranks and has undergone the discipline of the bank. The discipline of a bank is very severe, and causes a great deal of heartburning at times among the staff. In most cases the general managers of banks have had much personal experience of this discipline. By the time they have reached the exalted position of general manager, at a salary of about £10,000 a year, they ha.ve been very well disciplined and know how to. look after their jobs. I do not believe for a moment that they do not accept full responsibility for everything that goes on in their banks, includ-ing the actions of their officers. Not only do they impose a great- deal, of discipline themselves, but they have the. whole resources of the bank at their disposal so that they can ensure that their actions are proper and legal at all times. It is ridiculous for the honorable member for Mackellar to say that the general manager of’ a bank cannot accept responsibility for- something that may be done in a branch or sub-branch. The general manager- is paid, to accept such responsibility, and, in fact, he accepts it. I suggest that- there is nothing sadistic in this provision at all. To say otherwise is complete rubbish.

The. real purpose of putting a penalty on the, shoulders , of the general manager of? a bank is, to ensure that he will use his- best endeavours to make.- certain, that the pro.vis.ions> of the banking legislation shall be. carried out. If this, provision is repealed, as the bill contemplates, that responsibility will be- lifted from the general manager.. What happens among the controlling authorities of a. bank may be well imagined by honorable members. There is a meeting of the directors - and the real villains and jackals of the banking system are the directors of banks - and they give orders to the general manager. They proba.bly tell him to take certain risks and not to worry about the law because a profit will accrue to the bank. Under the present legislation the general manager then has to tell them that he could not take such an action because he would be liable to a penalty. The directors do not like having to argue about these things, and so they told their friends in the Government to repeal this section. I’ say that section 57 should not be repealed, and that the Government should continue to have the co-operation of the general managers in ensuring that the banks carry out the law. If this bill is passed, in the future the integrity of general managers will not be utilized. In fact, the repeal of section 57 would be a gratuitous insult to general managers. Honorable members have not been informed that the general managers of private banks have asked the Government to repeal this section, and in fact. I do not believe that they have. I consider that the repeal of the section has been asked for by the directors of the private banks in order that they may be given a completely free hand.

The other provisions of. the bill indi. cate that the directors are to be given an opportunity to carry out- banking in their own way, without being subject, to the present- supervision by the Commonwealth Bank. The honorable member for Mackellar mentioned special deposits. The previous Labour Government made no use of its administrative powers under the Banking Act to. try to embarrass the private, banks.. It has not been stated in this debate that; at the time the Chifley Government was defeated, in. 19.49, the amount of uncalled liability in respect of the trad. ing banks was. £159,00.0,000. The Chifley Government, could have, called, up, that liability, and, possibly,, put many banks out of business. The maximum liability under this measure in respect of special deposits at the September adjustment will be £115,000,000. However, when Mr. Chifley went out of office the liability was £159,000,000, and it is pertinent to ask why, if he wanted to put the private banks out of business, he did not use the administrative weapon to do so. He did not do it because he had common sense and because whatever he did was for the good of Australia.

The honorable member for Oxley (Dr. Donald Cameron) and the Prime Minister gave honorable members a stereotyped reason why Mr. Chifley did not take this action - a reason also given to the press. The reason was that the administrative weapon was not then used because the Labour Government was too preoccupied in trying to carry out legislative action against the banks. Everybody knows that when Mr. Chifley relinquished office he had no legislative action pending, had not legislated against the banks for some time and had not used the administrative weapon against the banks. It is ridiculous to say that he would have used that weapon if he had had more time. That is completely absurd. “We must apply a little common sense to this matter. The previous Labour Government is the only government that has ever shown any ability in handling banking for the benefit of the people. The honorable member for Mackellar said much about what would have happened to the banks last year if a Labour government had been in office. I say that if the Labour party had been in power last year our financial position would have been much different from what it is to-day, and that the banks would now have been in a much sounder condition.

Mr CHAMBERS:
Adelaide

.- The title of this measure is -

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.

It is difficult to understand, after the present Government has been in office for almost three years, why legislation is now being introduced to protect the currency of the Commonwealth. Honorable members opposite have had the greatest diffi culty in relating their speeches to the subject-matter of the bill. The majority of them attacked opposition members whom they accused of being socialists who, if given the opportunity, would again be guilty of actions that we rrinimical to the interests of the Australian people. The results of recent State elections and of Commonwealth by-elections clearly “show that the people have confidence in the platform and policy of the Australian Labour party. I find it difficult to understand the psychology of honorable members opposite which impels them to endeavour to inculcate in the minds of the people a belief that they have anything to fear from the return to office of a Labour government in the Commonwealth sphere. The people have been completely unmoved by the spurious appeals made to them by honorable members opposite.

This bill constitutes a very serious interference with the provisions of the 1945 banking legislation, which came into operation during the administration of the Chifley Labour Government. It is realized by unbiased observers that that legislation has benefited the people as a whole. In the period between 1945 and the date upon which the Chifley Government went out of office, Australia enjoyed an economy that was probably the most prosperous in its history. After the war ended hard-headed international business men came to Australia and, after examining our economic conditions, expressed the opinion that we enjoyed the grandest economy in the world. Indeed, they were so impressed by Australian economic conditions that they made huge capital investments here. “When the Labour Government left office in 1949 the 1945 banking legislation was not questioned by the people. Australian business men at no time believed that the Labour Government had acted wrongfully or unwisely in its relations with the private banks. On the contrary, they knew that the 1945 banking legislation enabled the Labour Government, with the assistance of the Commonwealth Bank, to’ give practical effect, for the first time in the history of Australia, to a policy of full employment. In 1949, when the Labour Government left office, not one man or woman who needed a job was unemployed. These were accomplishments of which any government and any nation may well be proud.

This Government, which has been responsible for the administration of the affairs of the country for almost three years, has attempted to destroy the 1945 banking legislation and the Commonwealth Bank. While giving lip service to a policy of full employment, it has established a pool of unemployed. It is closing down our great secondary industries and preventing the States from continuing their public works programmes. After meetings of the Australian Loan Council the Premiers invariably return to their States and announce drastic reductions of developmental works because of the refusal of the Commonwealth to provide the requisite money with which to finance them. Honorable members opposite will never convince the people that this legislation is necessary in order to protect the currency of the Commonwealth. They will have the greatest difficulty in selling that story to the people and they will have the greatest difficulty in convincing the people that this legislation was introduced principally to prevent future Labour governments from nationalizing tho private banks. It is apparent to the Opposition and to the people that this legislation is merely the pay-off to those who helped the anti-Labour forces to destroy the Chifley Government in 1949. It is in conformity with the promise made by the Government to the financial interests of Australia that the powers of the Commonwealth Bank would be stultified in order to permit a larger share of banking business to go to the private banks.

Mr Hulme:

– The honorable member is romancing.

Mr CHAMBERS:

– The present economic position of Australia cannot compare with the economic position that existed during the administration of the Labour Government.

Mr Hulme:

– The honorable member is still romancing.

Mr CHAMBERS:

– Honorable members opposite claim that the purpose of this bill is to protect the currency. What we want more than the protection of the currency is the protection of the Aus tralian people and a guarantee that they will be employed. That protection was given to the people by the provisions of the 1945 banking legislation which was introduced by the Labour Government.

Mr BROWN:
McMillan

.- The honorable member for Adelaide (Mr. Chambers) made a very good electioneering speech but it had little reference to the bill before the committee. He made some extraordinary statements about the investment of capital in Australia, the degree of employment and the economic conditions that existed when the Labour Government was in office, but unfortunately he completely omitted to relate his remarks to any clause of the measure before us. The honorable member for Ballarat (Mr. Joshua), who poses as an expert on banking, treated the committee to a lecture on the subject, but his sole contribution to the debate was to tell us that the real villains in the Australian economy are the private banks. He made it clear that the Labour party would destroy the private banks and vilify and malign those who control them. Beyond that, his contribution to the debate was completely valueless.

The honorable member for Adelaide said that the bill would destroy the Commonwealth Bank. Nothing could be further from the truth. The existing uncalled liability of the private banks is approximately £540,000,000. The purpose of this bill is to limit the liability of the banks so that it shall have some basis of reality. Opposition members made a great song and dance about the fact that when the Labour Government was in power it did not call up the full liability of the banks because it realized that, if it had done so, even under the benevolent guidance of Mr. Chifley, the private banks might have been destroyed. If the Labour Government did not call up the full amount of the liability of the private banks, is it not plain common sense that we should place a limit on the uncalled liability of the banks so that they may know precisely what they are responsible for?

The Treasurer (Sir Arthur Fadden) in his second-reading speech on the bill last night, pointed out that if the formula provided in this bill had been applied during .the life-time of the Labour Government or since this Government has been in office, at no time would the formula amount .have been called up. The amount of uncalled liability has invariably been lower than that allowed by the formula. In the past the Commonwealth Bank has had no difficulty in obtaining all the money that it has needed to .finance its operations. The honorable member for Melbourne Ports (Mr. Crean), who waved a minatory finger at us and said that we do not understand things as he understands them, told us that he favours a completely nationalized monetary currency. He spoke of the glorious condition of Australia with huge amounts of money in a Commonwealth Bank socialistically controlled by the people. The honorable member for Adelaide threw other statements into our faces in .an attempt to prove that this is a bad .bill. He said that investments of capital that took place in Australia between 1945 and 1949, when the Labour Government was in office, amounted to hundreds of millions of pounds.

Mr Chambers:

– The honorable member is romancing now. I did not mention hundreds of millions of pounds.

Mr BROWN:

– The honorable member said that hard-headed international business men went round the world to find the most .suitable country for investment of money and that when they came to Australia they were satisfied that this country offered them the best opportunity for investment. What are the facts? During that period investment in Canada, which was not controlled by a Labour government, was on a -very much heavier scale .than was investment in Australia. Investment in Canada was not influenced by the fact that that country had on its statute-book banking legislation similar to that on .the Australian statute-book. Hard-headed international business men depended on the ultimate good sense .of the British, Canadian .and Australian people to remove any threat of bank nationalization. In 1946, they knew that, sooner or later, the spurious socialistic talk of members of the Australian Labour party -would f righten the people of Aus.tralia who ‘would reject any suggestion of bank ‘nationalization. The impudent order .that was issued to the ‘Melbourne

City Council in 1946 Ito transfer its accounts from the Union Bank of Australia Limited to the .Commonwealth Bank was a deliberate attempt .to destroy the private banks.. When the order was contested in the courts it was declared to be unconstitutional. If the legality of the order had been upheld, the Commonwealth Bank would have had power to order every municipality, every State instrumentality and, ultimately, every government contractor to trade with the Commonwealth Bank. Fortunately, that attempt to destroy the .private banks was foiled.

Mr W M BOURKE:
Fawkner

– This bill has two main objects. First, it brings the Commonwealth Trading Bank under the control of the central bank:. The Commonwealth Bank Bill 1953,, which was passed by the House last week, provides that the trading bank division of the Commonwealth Bank shall be set up as a separate legal entity. The new Commonwealth Trading Bank is now expressly declared by the legislation to be subject to the general controls which the central bank possesses, by virtue of the Banking Act 1945, over the trading banks. The two main controls which the central bank exercises over trading banks are, first, the special account procedure, whereby the volume of credit which may “he released to the community is controlled, and, secondly, the advance policy, whereby the central ‘bank may direct the trading banks to pursue a selective or restrictive advance policy in certain respects. The report .of the Commonwealth Bank for the year ended the 30th June, 1952, contains the following passage: -

The Bank recently announced that changes had been made in the assets structure of the General Banking .Division. Firstly, the Division has opened in the books of the Central Bank a Deposit Account with a balance approximating what would be required were it ‘subject to -the Special Account provisions of the Banking Act. This represents a change in the form of the Division’s liquid assets which were previously held -predominantly in Treasury Bills.

Apparently, .during the last twelve months, the General Banking Division of the Commonwealth Bank voluntarily deposited an amount equivalent “to the sum that would have been required had the- bank been subject to the special account provisions of the Banking Act. Now, as the result of the establishment of the Commonwealth Trading Bank as a separate legal entity, legal force is given to this control over it by the central bank.

The second main provision of this bill is contained in division 3, which consists of the complicated’ sections that deal with the special accounts. The procedure for the special accounts, as determined by the Banking Act 1945, provided that the whole- of the increase of the assets of a bank since July, 1945, could be called to special account. Under the Banking Bill 1953, an involved formula, which covers pages of the bill, will replace that procedure. The general effect of the change will be to decrease the liability of the banks to have their money called up for lodgment in the special accounts. The amending provisions change the basis from an increase of assets to an increase of deposits, and provide for an annual adjustment of the liability. The broad result is to decrease considerably the liability of the banks.

The main argument adduced by Government supporters in favour of these provisions is that the trading banks are subject to a large uncalled liability which at one time last year amounted to more than £500,000,000-. Government members claim that the fact that such a large uncalled liability existed meant that abuses could take place. Propositions were submitted that the liability could be called up, and that, therefore, the trading banks could be ruined if an administration desired to nationalize them, or squeeze them out of existence by administrative action. It is significant that no allegation has been made in this debate and, so far as I know, no allegation has been made by the chairmen of the trading banks at their annual meetings, that the great powers which the central bank undoubtedly possesses under the Banking Act 1945 to call up the surplus deposits of the banks into the special accounts have been abused, or misused, at any time. That authority has not been exercised improperly in any respect. It is also significant that the Prime Minister (Mr. Menzies), in his. second-reading speech, specifically stated- that there was no cause1 for belief that the Commonwealth Bank had not exercised its powers under the act to promote economic stability or meetit’s central bank responsibilities. When we examine the exercise of those powers over a period, we find that, in reality, the authority of the Commonwealth Bank to call up the funds of the trading banks into the special accounts has operated to strengthen the position of the trading banks, and that these provisions have been of benefit to those institutions. That position was amply illustrated last year during the crisis which arose over the adverse trade balance. I shall discuss the matter briefly.

In 1951-52, our adverse trade balance was £576,000,000. As the result of the flood of imports which reduced our overseas credits, bank deposits declined tremendously, and at the same time bank advances increased. Many importers were “ caught “, and had to obtain heavy financial accommodation in order to pay for their stock, and to meet the commitments into which they had entered. So the banking institutions were confronted with, a critical situation, because while deposits fell sharply, the demand for advances increased. During 1951-52 the deposits in the main trading hanks declined by £115,000,000; and during the same period advances increased by £182,000,000. Those movements meant that the ratio of liquid assets to deposits fell from 53 per cent, in June, 1951, to 36 per cent, in June, 1952. The figures clearly indicate that the Australian banking system was confronted with a severe financial crisis. Had it not been for the fact that substantial sums had accumulated in the special accounts, the banking institutions would not have been in a position to satisfy the requirements of their customers, and provide the finance that the business community needed for its activities in this critical period.

The special accounts had risen steadily since the 1945 act came into force, and at the beginning of June, 1952, had- reached the substantial figure of £552,000,000. It was fortunate for the community that such a substantial sum of money was held in the special accounts. When, the liquid position of, the banks was affected, the central bank was able to release considerable sums from the special deposits. In the twelve months ended the 30th June, 1952, the lodgments in the special accounts fell from £552,000,000 to £244,000,000.

The TEMPORARY CHAIRMAN (Mr Mcleay:
Minister for Shipping and Transport · BOOTHBY, SOUTH AUSTRALIA · LP

– Order! The honorable member’s time has expired.

Mr EWERT:
Flinders

.- When the honorable member for Mackellar (Mr. Wentworth) was attempting to justify the release of reserves from the special accounts by administrative act of this Government and the Commonwealth Bank Board, he made a peculiar statement. He said that unless those special accounts had been released from reserve, there would have been a contraction of credit. I point out to him that as the result of the release of deposits from the special accounts, there was an increase in credit. The increase in advances from May, 1951, to June, 1952, was no less than £195,000,000. The balance of the special accounts, amounting to £412,000,000, was used during the same period to maintain the liquidity of the banking system and finance imports. That policy also caused a reduction of deposits. Therefore, we find that at the one time, deposits were falling and advances were increasing. The Government, by its policy, spurred the inflation that it had promised, during the general election campaign in 1949, to control.

Our London funds declined by £400,000,000 in one year, because imports were introduced, unwisely and unnecessarily, into Australia. Many persons, particularly employees in textile factories and the clothing trade generally, lost their jobs. Credit was being released for imports and unemployment was increasing until the Government eventually was compelled to reverse its policy. In the meantime, Australia had lost not only its reserves against any dangerous deflation that might occur in the future, but also £400,000,000 of its London funds. By administrative action, the Government also gave away the necessary safeguards of central bank control. That is my reply to the uninformed ranting of the honorable member for Mackellar who ven tured to discuss an economic problem that he apparently did not understand.

Government supporters have claimed that the control exercised by the central bank has been excessive. I point out that the private banks now have power to carry out an advance policy independently of any action that the central bank may take. Section 28 of the Banking Act 1945, which is repealed by the Banking Bill 1953, provides that, without the consent in writing of the Commonwealth Bank, the trading banks may not invest in securities of the Commonwealth, a State, or local governing bodies, or in securities listed on a stock exchange in Australia. That section did not mean that the private banks were forbidden to invest in securities. It merely meant that those institutions could not invest in securities of the type I have mentioned in a way calculated either to counteract the policy of the central bank or to introduce inflation or deflation into our economy. As I have stated, that provision has been repealed. Our open market, as it is called in Australia, has not developed in the way that the open market dealings of central banks have developed in other nations, but it could develop in the future, if the central bank is permitted to use its powers. Unfortunately, the necessary authority has been removed by the repeal of section 28 of the Banking Act 1945.

Division 3 of Part II. of the 1945 act, which deals with the special accounts, is to be repealed and replaced by new provisions. It is a significant fact that this Government, by administrative act during the early period of its life, permitted the use of £200,000,000 of the liquid reserves of the private banks, instead of transferring them to the special accounts, in a way that caused inflation. Furthermore, during the last eighteen months it has released vast sums from the special accounts in order to finance needless imports, a policy which has had the effect not only of throwing people out of work but also of taking away from the Commonwealth Bank the power which should have been used, and which would be very valuable in the future, to counteract any dangerous degree of deflation. Thus, the Government has pursued two dangerous courses of action. In the first place, it set a new level of special accounts far below the level that was set in 1945, when the nation was developing and was not yet at a peale of inflation or approaching a stage of dangerous deflation. In the second place, by adopting a limiting and inflexible special accounts formula, it has restricted the capacity of the central bank either to forestall deflation or to prevent the rise of inflation. With only a little more than £160,000,000 in the special accounts, it will use this formula to limit calls on trading bank funds in the future.

The special accounts will now be based upon deposits. Previously, the assets of the private banks were used as a gauge. As the assets, and the lending capacity, of the banks increased, additional funds equivalent to the amount of the increase could be called to the special accounts. In future, deposits will be the base of any increase or decrease in the special accounts. A significant feature of this system is that, if the private banks choose to increase their advances, the inflationary effects will not appear in the amount of their deposits until later. In other words, in these circumstances, deposits will reflect events after they have occurred. Another significant feature is that there will be no guarantee in future that deposits will increase even when secondary inflation is imminent. In fact, it is conceivable that deposits could decrease or remain stable. This means that the central bank will not have power to call money into the special accounts to be used under its control and guidance sufficient to prevent any further spurt of inflation. The simple truth is that the special account central banking powers so badly needed in a nation such as Australia, which is heavily dependent upon overseas influences, have been transferred by this Government to the uneasy hands of the private banks, which, after this bill becomes law, will be able to use them without regard for the welfare of the people and to initiate action independently of any policy that the central bank may determine.

Mr JOSHUA:
Ballarat

.- Government supporters obviously are still floundering about and wondering what results this .bill will achieve. Their bewilderment is evidenced by their reluctance to say anything about the the measure. I direct attention particu larly to the provision for the amendment of section 49 and section 13 of the principal act. An examination of the intricate provisions of clause 20 and clause 5 respectively shows that the sections I have mentioned will be amended to provide that the Commonwealth Bank Board may recommend to the Treasurer (Sir Arthur Fadden) that the Auditor-General bc required to make an investigation of the affairs of a trading bank and prepare a report upon which the board may act in order to take control of that bank. This is a devious arrangement. Apparently the Government hopes that, should the Commonwealth Bank Board recommend such an investigation, somebody in the chain of command will veto any action against the trading bank concerned. The scheme suggests that the Government expects that some banks will break the law. The result will be that, if some private bank makes a “ blue “, itwill be possible to prevent action from being taken against it. Therefore, these provisions should be struck out of ‘ the bill. The proper course for the private banks to pursue is to keep strictly within the law and to avoid any questionable conduct. The Treasurer has power to ensure that the central bank shall be obeyed, and he should carry out his obligations without indulging in the sort of duck-shoving for which the bill provides. Furthermore, the Auditor-General should not be muzzled in this way. He should be allowed to act as he thinks fit and should not be restrained by a hampering network of red tape.

The bill will repeal section 28 of the Banking Act and thus will restore to the trading banks the power to buy and sell securities. This power should be retained exclusively by the central hank, because it carries with it the power to increase or decrease the flow of money. The private banks, if they have this power, may take joint action to offset any action that may be taken by the Government for the benefit of the people, and it is a notorious fact that the private banks work in combination. Thus, the Government’s proposal represents a serious departure from good banking principles. It is easy to see that the quid, pro quo for the deletion of this section of the act is to be that the private banks, having the right to buy government securities, will be able to help the present Government, which is embarrassed for funds, by lending it money. It is clear from the events of the last eighteen months that the banks have agreed to help the Government, provided that the Government raises the interest rate high enough for them. The Government has already engaged in a series of manoeuvres which have raised the interest rate to 4£ per cent. The banks will be prepared to lend money to the Government at that rate. They are willing to play if they can make profits. They are not interested in the welfare of the community. The obvious purpose of this legislation is to restore the private banks to the position that they occupied prior to World War II. They then had the power to buy and sell securities. It is to be given back to them. The power to fix interest rates, although it will not be interfered with by this bill, is not exercised by the Treasurer.

Sir Arthur Fadden:

– There is no need to exercise it. The power can be invoked if the agreement to maintain the interest rate is not honoured.

Mr JOSHUA:

– We know that th». interest rate on overdrafts was increased by an additional $ per cent, last year, and I am willing to bet that it will be raised a further -j per cent, within a few months. The Treasurer is not using his power to fix interest rates in the interests of the people. The right honorable gentleman also is not using his power to control advances by the private banks. The banks may do as they please, as they did before World War II.

I shall not discuss the amount by which the Government has reduced the special accounts, but obviously it has no intention of using the provision in relation to the uncalled liability of the private banks. It will not restrain the private banks during the period of expanding bank credit which is about to commence. They will be free to pursue their own ends as they were “before the war, when the rate of unemployment for ten years averaged 15 per cent, and never was less than 8 per cent. We shall be forced to return to those conditions. I shall conclude by discussing the Government’s statements about competition between the Commonwealth Bank and the private banks. The honorable member for Melbourne (Mr. Calwell) made a speech, which has been mentioned repeatedly in this chamber, in which he said that the Commonwealth Bank would secure business from the other banks by means of active competition. He forecast that the private banks would be forced to go out of business. Many businesses have been forced out of existence by competitors, and there is no reason for us to shed tears about their fate. I am sure that Government supporters have never done so. The whole purpose of this legislation ia’ to enable the Government to obtain an immediate advantage. Obviously, if the Government is thrown out of office eighteen months hence, that measure can be repealed. The Government, in its desire to obtain this brief advantage, has done everything possible to hamstring the people’s bank so that it will not be able to take the best possible advantage of the period of expanding bank credit for the benefit of the people.

The Commonwealth Bank, as everybody knows, made remarkable progress after the end of World War II. during a period in which there was no release of bank funds. Everything possible was done during that period to restrict bank lending and keep the amount of credit issued as low as possible. The Government now proposes to release a considerable volume of credit. Normally, this would enable the people’s bank to engage in active competition with the trading banks and take away a large slice of their business. But the Government does not want that to happen. Therefore, it has drafted this legislation so that the capital of the Commonwealth Bank will be reduced. My tip is that, notwithstanding this action by the Government, the bank will take the best possible advantage of the new circumstances and will serve the people well. However, it will not be able to do the job that it should be allowed to do for the community. The Commonwealth Bank should be allowed to make funds available for projects that will benefit the people but which the private banks do not regard as attractive propositions. This legislation will reduce its ability to expand its “business to the degree that would he possible under proper management and unhampered by restrictions.

The CHAIRMAN:

– Order! The honorable member’s time has expired.

Mr TURNBULL:
Mallee

.- Two related measures on the subject of banking would be under discussion at this stage but for an objection raised by the Leader of the Opposition (Dr. Evatt), which has obliged us to deal with them separately. Everything that can be said about both bills has already been said over and over again. It is amusing to hear the honorable member for Ballarat (Mr. Joshua) and other honorable members opposite speak about fair competition, because we know that the aim of the Labour party is to destroy competition among banks in Australia, and to have only one bank in operation. Honorable members opposite know that this measure is designed to prevent then, from attaining their objective of a bank monopoly by indirect means after they have failed to attain it by direct means.

This measure will place a limit upon the sums that private trading hanks can be called upon .to pay into special accounts. When an honorable member on this side of the chamber pointed out that, under the present system, banks could be required to pay such large sums into special accounts that they would be forced out of business, the honorable member for Ballarat, by way of interjection, asked whether that had ever been done. That was a ridiculous interjection. I am prepared to admit that it has not been done yet, but everybody knows that there is a first time for everything. There is not the slightest doubt that if the Labour party were in power and believed that, by calling up the uncalled liabilities of the private trading banks, it could achieve something that was, in effect, bank nationalization, it would do so. The special accounts provisions are the most important provisions of the measure. In touching upon other matters, honorable members opposite were trying only to fill in time. They were not attempting to deal with the most important provisions of the bill and .the reasons why they oppose them. The bill has been introduced because the Government believes in fair competition. Honorable members opposite are opposing it because they believe that the Commonwealth Bank should have a monopoly in banking.

The honorable member for Flinders (Mr. Ewert) said that money that the private banks were not called upon to place in special accounts was used by this Government, in the early days of its life, in such a way as to create inflation. Have honorable members ever heard of anything so ridiculous as that statement? Does not the honorable member know that before this Government came into office inflation had not only begun but had reached such gigantic proportions that we were unable to check it until very recently? Experts in finance have said that inflation does not spring up’ overnight, but is the result of years of mismanagement by governments. If any honorable member wants an illustration of the truth of that statement, let him consider what happened in Australia after the war, when the Labour party was in power. Inflation occurred because there was a scarcity of goods and an abundance of money in circulation and nothing was done about it.

I am pleased ,to support the bill, because I believe that it is to private enterprise that this country owes its present economic stability and its sound primary and secondary industries. Australia was built by private enterprise, and we must look to private enterprise for the maintenance of our stability. This country will be able to maintain its place in the world only if we ensure that our private enterprises will not be faced with unfair competition. This measure will ensure that the Commonwealth Bank - which, in its right place, we favour - will compete with the private banks on a fair and reasonable basis.

Mr BRYSON:
Wills

.- The honorable member for Mallee (Mr. Turnbull) served at least one useful purpose by addressing the committee this afternoon. He showed conclusively that lie knew nothing about the bill. I have believed that to be so for some time, but now I am convinced of it The value of his contribution to this debate was just as great as was the value of his contributions to other debates in the past. Almost the only reference that he made to the bill-

The CHAIRMAN:

– Order ! I suggest to the honorable member for “Wills (Mr. Bryson) that he tell me what he knows about the bill.

Mr BRYSON:

– I believe that I am entitled to reply to statements made by the speaker who preceded me. The honorable member for Mallee said that the bill was designed to prevent a future Labour government from taking certain action in connexion with banks. Let me remind the honorable gentleman - although, probably, it will not sink in - that legislation passed during the regime of one government can be repealed by legislation introduced by another government. For instance this measure provides for the repeal of certain sections of an act passed in 1945, when a Labour government was in office and for the substitution of other sections.

To my mind, the provisions relating to special accounts are the most important provisions of the measure. It is proposed chat the existing provisions be repealed and that a new system be introduced. That was explained by the Prime Minister (Mr. Menzies). Under the present legislation, payments may be made, and in certain circumstances must be made, to the special accounts. Those special accounts are made up, first, of the sum that was held in them on the 21st August, 1945. The present Treasurer (Sir Arthur Fadden) admits that he has some responsibility for that portion of them, because he has claimed that he was one of .the persons responsible for the institution of the special accounts in the early days of the war. He has said that at that time he believed the system to be a good one. In addition, the whole of the increase since July, 1945, of tho Australian assets of banks in this country must be paid into the special accounts, if the Commonwealth Bank so demands. But, as the Prime Minister has revealed, the whole of such an increase of Australian assets in any one year has not been called up. In a memorandum issued by the right honorable gentleman, the following passage appeared: -

At the end of October last, the private banks, under these provisions’, could have been required to hold a total amount of £702,000,000 in their special accounts. The total amount actually held, however, was only £157,000,000.

So the private banks’ total uncalled liability was then £545,000,000, or 52 .per cent, of their average deposits in September, 1952.

The memorandum shows the position very clearly. It proves that, under the administration, first, of the Governor of the Commonwealth Bank, and secondly, of the Commonwealth Bank Board, no undue demands have been made upon private banks for- payments into the special accounts. Apparently, the private banks are satisfied with their treatment in this connexion. Indeed, we have been told that in the last eighteen months or two years the bulk of the money paid into the special accounts has been repaid to the private banks.

The Government has adduced no evidence that it is necessary to alter the present system. If it could be shown that either the Governor of the Commonwealth Bank or the Commonwealth Bank Board had at any time acted harshly under the existing provisions, it would be reasonable to a3k the committee to consider some alteration of them, but both the Prime Minister and the Treasurer have admitted that neither the Governor of the bank nor the Commonwealth Bank Board, since it has had control of the bank, has acted unfairly or unjustly to the private banks. Despite the fact that the private banks have been treated fairly and honestly in this matter, the Government has proposed that the present system be abolished and that an entirely new system be abolished for it. Under that system, the central bank will not be able to require the trading banks to make payments into the special accounts in accordance with increases of their assets. Payments will be made upon the basis of increases of deposits. Under the new system, either more or less money will be paid into the special accounts. I expect that less money will be paid into them and that, consequently, the control that the central bank will be able to exercise over the finances of this nation will be considerably less than at present.

History proves that it is necessary to exercise some measure of control of private banks. “We have had many sad and sorry experiences of the operation of private banks without some form of governmental control. “We remember the boom of the 1890’s and the subsequent bank crash. Many people have not yet recovered money that they deposited in banks that crashed in 1893. Those hanks crashed because the government of the clay had not instituted a system of control to prevent them from making excessive advances. In a period of boom, some banks saw an opportunity to make enormous profits, and they did not consider the consequences of their actions. The depression of the 1930’s has been mentioned on a number of occasions during this debate. The private banks and the Commonwealth Bank - which, at that time, was under private control, not government control - must accept a great deal of the responsibility for the poverty, misery and destitution that existed throughout Australia in the early 1930’s. Although the banks were not entirely responsible for that depression, they must accept a share of the responsibility for it. When banks had an opportunity to alleviate the depression, they took no action of any kind to do so. On the contrary, they ran for cover to protect the interests, not of their depositors or of the people who had overdrafts with them, but of their shareholders. It is natural that the managers of any private enterprise, whether it be engaged in banking or another type of business, should try to protect the interests of their shareholders.

The CHAIRMAN:

– Order! The honorable gentleman’s time has expired.

Mr ROBERTON:
Riverina

.- The longer I listen to the debate on this bill and the one that preceded it, the more certain do I become that there is no gainsaying the fact that countless thousands of people in this country, who have a passionate faith in free enterprise and the public trading bank institutions, believe that the Commonwealth Bank can properly be described as a tiger striped with the socialistic banking legislation of 1945-47. I am convinced of that from my own personal experience. They believe that they have cause to fear the tiger, and that fact, largely, led to the introduction of this bill and the Commonwealth Bank Bill. To a degree, of course, the views of those people have been shared by the honorable member for Melbourne (Mr. Calwell) himself, who, in a most revealing speech, which he has not since qualified, made no secret of the intention of the Labour party to destroy the private trading banks in what he described as a “constitutional way “. That “ constitutional way “ has been referred to variously as a policy of squeeze and other expedients to which resort could be had to achieve the same purpose. He went on to say that the trading banks were terrified “ of the domination of the central bank “. I SUPpose that statement is true, since the passage of the socialistic banking legislation of 1945 and 1947. He described this bill and the Commonwealth Bank Bill as an attempt to “ maul “ the central bank. That unhappy verb “ maul “ was of his own choosing, but I direct the honorable member’s attention to the fact that it is not easy for people to maul a bank, or for a government to maul a bank, but, on his own submissions, it is comparatively easy for a bank to maul people and even to maul a government. Indeed, his entire speech was devoted to that very argument. He cited, as did the honorable member for Wills (Mr. Bryson), the mauling processes alleged to have taken place -during the depression. The honorable member for Melbourne referred to the mauling process that was alleged to have destroyed the Scullin Government.

Is it any wonder that there are countless thousands of people who believe that they have cause to fear the Commonwealth Bank, not for what it was, or what it is, but for what it might become under a socialist government, dominated by gentlemen like the honorable member for East Sydney (Mr. Ward), and the honorable member for Melbourne, and the Leader of the Opposition (Dr. Evatt) himself? I say frankly that, as far as I am in a position to judge, this bill and the Commonwealth Bank Bill are designed to pare the claws of the tiger, and have no other purpose. This particular tiger was never intended to be dangerous. It was introduced into the menagerie - in the teeth of bitter opposition from the Labour party at the time - because no modern menagerie can be said to be complete without a tiger of this description. But it was expected to take kindly to the established order of things, and so for years it did, helped by that versatile genius, the Minister for Health (Sir Earle Page), who to a large degree lifted the Commonwealth Bank to the status of a central reserve institution. Until he took that decisive action the Commonwealth Bank was just another bank. It is as the result of his foresight and intimate knowledge of banking in other parts of the world that the status of the Commonwealth Bank was lifted from that of an ordinary trading bank to that of a central reserve institution. The socialists, however, promoted the growth of the tiger’s claws in order to achieve their own political ends. Not only did they foster the growth of the claws, but they also whetted them by the banking legislation of 1945 and 1947. It was the socialists who provoked the tiger to madness when much of that legislation was judged by both the High Court and the Privy Council to be invalid. But for that madness we should never have known that the tiger was dangerous. But for that judgment by both those legal authorities the trading banks as we know them would have been destroyed. That is an accurate statement of the position so far as I am able to judge, and contains the real reason for the introduction of the two bills. This middle-of-the-road government, as it has been so aptly described by the Minister for External Affairs (Mr. Casey) amended the 1945 legislation, and repealed the 1947 legislation, but it still has to deal with the claws of the tiger. That is why the two bills were introduced. There are people who believe that the only satisfactory way to protect our democratic institutions - and it is folly to imagine that banking is the only democratic institution that is in danger - is to destroy the tiger. Experience, however, has shown that we need the Commonwealth Bank, and it is better to have the tiger we know than the tiger we do not know. There are also people who believe that the tiger should be reduced to impotence, that it should be chained up, that it should be isolated under a guard and kept away from those who are likely to provoke it for socialistic purposes. Obviouslv it would be easier and more humane to destroy the tiger, but it is our experience that we have need of a tiger of this description to range the more hazardous fields of banking for governments and people alike. I do not think it has even been disputed that the Commonwealth Bank is necessary for these purposes. The Government, therefore, has brought down these bills, not to destroy the tiger, not to reduce it to impotence, but to pare its claws and restore the confidence of the community in an institution that was never intended for terror. The bills have no other purpose.

The need for a central bank is not in dispute, and never has been in dispute, although it is well to rem ember that the Commonwealth Bank was not originally designed as a central bank. I again remind the House that it was the Minister for Health, who for so many distinguished years led the Australian Country party, who was largely responsible for raising the status of the bank to that of a central reserve institution. The necessity for the Commonwealth Bank to engage in ordinary trading bank operations is not in. dispute, since it has functioned in that way since its inception, and it is interesting to note that the bank has made its greatest progress - indeed, its only progress - during the years when Labour was out of office. The only matter in dispute is the intention of the Government to separate, as far as is thought to be practicable at the moment, these two functions in the interests of the people, and in the interests of the bank itself. It is that intention which the Opposition is contesting so bitterly.

The CHAIRMAN:

– Order! The honorable gentleman’s time has expired.

Mr DUTHIE:
Wilmot

.- The part of the speech of the honorable member for Riverina. (Mr. Roberton) that I could understand dealt with the old bogy of the socialist tiger. That bogy was raised 50 years ago by Sir George Reid, and the Government must be sore put to it to convince the electors that it should return to office again, when it has to draw the bogy out again and again. The honorable member had something: to say about the Labour party’s intention to maul the private banks. This bill and the Commonwealth Bank Bill show that the heavy hand of toryism is mauling the Commonwealth Bank out of recognition. It all dates back to 1945, when the high-watermark of the Commonwealth Bank’s operations and administration was reached. At that time the present Prime Minister (Mr. Menzies) and the present Treasurer (Sir Arthur Fadden) made some startling comment.? about the 1945 banking legislation. “J shall refer to .some of their dire predictions in order to show whether or u< i they came to pass. The Prime Minister said that the 1945 legislation was reactionary and unsound and would weaken the central bank. He said that there was a chance that it would destroy the currency. Have any of those predictions come true?

Sir Arthur Fadden:

– No, because we established the Commonwealth Bank Board to protect the currency.

Mr DUTHIE:

– That was more than a year after we left office.

Sir Arthur Fadden:

– No, we appointed the board within a few months of our election to office.

Mr DUTHIE:

– The Treasurer said that the 1945 legislation was a sentence of death on the private banks. He described it as a revolutionary measure, yet his leader had described it as a reactionary measure. They were not quite sure which way they were going then. He said that it would have an adverse effect on overseas loan conversion operations. He said it could lead only to instability and lack of confidence. Has that happened? It had not happened up to the time we left office.

Sir Arthur Fadden:

– It has not happened only because we appointed a bank board to prevent it from happening.

Mr DUTHIE:

– No, the Treasurer cannot get away with’ that statement, because the system, established in 1945, was in operation for four yen rs before the present Government took office, and there is not one bit of evidence that can be produced to Drove any of the wild predictions that theTreasurer made in 1945 has come to pass. T*i° Treasurer said that the currency would become the plaything of politics. Did it become the plaything of politics in those four years ?

Six Arthur Fadden. - The High Court stopped it from becoming so.

Mi-. DUTHIE.- It is obvious that the statements that the Treasurer made at that time have been proved to be pure eye-wash. In 1950, the Treasurer .set out to lop off one wing of the Commonwealth Bank by re-establishing the board system, and now the Government has introduced two more bills to ‘weaken the bank still more, against all the advice that was contained in the report of the Royal Commission on Monetary and Banking Systems and against the advice of leading middle-of-the-road bankers. The 1945 banking act represented the high-water mark of the Commonwealth Bank’s power and influence. That act proved it3 value in the four years before the Labour Government was defeated and until the present Government established the Commonwealth Bank Board, which, after all, is only a sop to the private banks. Proof of that statement is contained in the fact that although under the 1945 legislation the Commonwealth Bank has controlled interest rates, that power is to be removed from its hands, and therefore from the hands of the government of the day. The administration of that power by the Commonwealth Bank prevented primary producers and other people from being robbed, as they were before the war, when they* were under the domination of the private banks. The Commonwealth Bank has provided short-dated treasury-bills at very low rates of interest ranging from 1 per cent, down to § per cent, at present. Whenever the Government required temporary advances to carry on the administration of the country it did not have to go to the private banks and pay, as it did when the Minister for Health (Sir Earle Page) was Treasurer, an interest rate of o-£ per cent, on three-month treasury-bills. Does any one suggest that private banks did not make reasonable profits during the war ? Does any one suggest that they have, not had all their bad debts r, aid off, and advances repaid that, in other circumstances, would not have been paid off perhaps for twenty years? During the war years the farmers paid about £90,000,000 off their mortgages. At the peak period of borrowing the Australian Government owed the Commonwealth Bank £343,000,000 on treasury-bills. That sum had been advanced by the Commonwealth Bank at low rates of interest so that the then Government could carry on the war and the business of this country. The private banks would have made millions of pounds profit if they had supplied that money.

During the period Mr. Chifley was Treasurer the debt of £343,000,000 was reduced to £195,000,000. During and since the war the Commonwealth Bank assisted the Treasury to float loans, but not one penny was subscribed by a private bank because the Labour Government would not allow private banks to contribute to national loans. It is true, of course, that small savings banks subscribed. The war was financed at a low rate of interest. Not one penny was borrowed from the private banks, and no interest was paid to them. That was a remarkable achievement for a government during the difficult war years and the years that followed the war. However, now the interest rates are being altered. Interest rates have increased since the last Labour Government relinquished office, and every one well knows that once interest rates commence to increase the general welfare of the community begins to decline. During the depression the interest charged to farmers and others by private banks was 5 per cent., 6 per cent., 7 per cent. and even 8 percent. I speak from personal experience about the financial difficulties of farmers during the depression because my father was one of those affected.

Honorable members on the Government side say that socialization and nationalization are great evils. Most of what they say is merely rubbish. The Commonwealth Bank is a socialized institution at present because it is the people’s bank. There was no dictatorship more severe than the dictatorship of the private banks up to 1939. That dictatorship was far more ruthless than any monopoly bank dictatorship could be, because it was a dictatorship of private interests and was completely uncontrolled by the people. The Government did not govern Australia at that time; the private banking systems did. The Banking Act of 1945 restored the power of the Australian Government to govern the country, but this Government is trying to whittle away governmental power and put it back into the hands of the private banks. Seventy years ago there were 56 private banks in Australia; to-day there are only seven. Surely that indicates how the private banks have tended more and more to become monopolies. The Labour party opposes with all its power any private monopoly of banking. During the fruitful years before the war, £500,000,000 was owed to private banks at high rates of interest. Never before was so much owed by so many to so few.

The CHAIRMAN:

– Order! The honorable member’s time has expired.

Mr OSBORNE:
Evans

.- From the apparently innocent lips of the honorable member for Wilmot (Mr. Duthie) has come an interesting exposition of claptrap and hatred against the private banking systems, such as is constantly produced by the Labour party in order to build up fear and create suspicion against the present monetary system in Australia. However, I cannot let one of his statements pass without challenge, although it has nothing to do with this bill. He spoke contemptuously about some reference by the honorable member for Riverina (Mr. Roberton), and mentioned the “ bogy “ of communism. I assume that he does not believe that there is such a thing as a Communist menace in Australia. If that is so, then he is dangerously wrong. The great issue that now confronts the world is whether imperialistic communism will prevail, or whether democratic freedom will be able to defend itself against the onslaughts of the Communists.

Mr Duthie:

– I rise to a point of order. The honorable member for Evans (Mr. Osborne) is doing an injustice to his own colleague, who never mentioned communism in his speech.

The CHAIRMAN:

– Order! The honorable member can deal with that matter by way of personal explanation at the end of the debate.

Mr OSBORNE:

– The great issue confronting the world to-day is whether communism will prevail or whether democracy will survive. To talk of a Communist bogy at the present time is very dangerous.

The honorable member for Wilmot said that he remembered what members of the Liberal party said at the time the 1945 Banking Act was being debated, that it would wreck the banking system. He then asked tauntingly whether it had done so. It did not do so only because it was prevented hy action in the courts. The Chifley Government, under the 1945 Banking Act, gave notice to every governmental and semi-governmental institution, including all local governing bodies, in Australia that they had to deal with the Commonwealth Bank only. That was a clear attempt to take from the private banks a very important part of their business in an attempt to destroy them in pursuance of their policy.

Mr Calwell:

– A very small proportion.

Mr OSBORNE:

– No, a considerable part. That was the clear intention of the legislation of 1945. It sought to place the whole of the Australian monetary system in the hands of the Commonwealth Bank. Surely that was a direct move for the destruction of private banking in Australia. [Quorum formed.) By those notices under the 1945 Banking Act, the Chifley Government showed its determination to destroy the private banking system and to do all the harm that it could to local government. For years the private banks have been supporters of local government. It would be hard to call to mind a more calculated gesture to destroy the banking system than those notices under the Banking Act of 1945. The provisions of the act under which the notice was given were held to be invalid, and then, in a fit of pique, the Chifley Gocvernment . said, “Well, if we cannot do that we shall nationalize the whole lot “ ; and it passed the 1947 legislation. Surely the honorable member for Wilmot, in view of those facts, will not say that the 1945 Banking Act was not an attempt to destroy the banking system. It is idle for him to say that the 1945 legislation operated for four years and did not destroy the banking system, because it operated only after the courts had held that one of the principal instruments contained in it for use against the private banks could not be legally used.

The present bill before honorable members is the second leg of an important banking reform. The first leg was contained in the amendment of the Commonwealth Bank Bill which this committee has already debated. The most important reform contained in this bill to amend the Banking Act has reference to the special accounts system. It will first cancel the enormous uncalled liability of the trading banks under the 1945 Banking Act through which the private banks may be called upon to deposit at any time a sum exceeding £540,000,000. It is high time that that liability was repealed. This measure will fix a basic liability for each trading bank, and will then provide that in future 75 per cent, of the increase of deposits in any one year may be called up by the Commonwealth Bank. It is not a cumulative liability, and if the amount is not called up in one year, the liability will not carry over until the next year. This is a most important reform and I welcome it almost without reservation. I would have preferred the further safeguard to the private banks that the central bank must treat all the private banks alike in fixing the proportion of deposits to be called up to the. special accounts. It is unfortunate that the bill does not make such a provision. It is not possible to discuss the reforms envisaged by this bill independently of those contemplated by the similar bill. that has just been passed by this chamber, but I consider that it is unfortunate that we are not providing two entirely independent institutions - a central bank and a Commonwealth Trading Bank. This legislation contemplates that the Commonwealth Trading Bank, which is divided at a certain point from the central bank by these measures, will be controlled by a general manager who will be responsible to the Governor and the Commonwealth Bank Board. The same governor and the same board will control the central bank, and will also control the Commonwealth Trading Bank under the system provided by these bills. I would have preferred two completely separate institutions, because until the central bank exists in Australia without any functions other than those of central banking, it will not have the confidence of the trading banks and other institutions concerned with banking.

The CHAIRMAN:

– Order! The. honorable member’s time has expired.

Mr TOM’ BURKE:
Perth

.- The honorable member for Evans (Mr. Osborne) has taken the honorable member for Wilmot (Mr. Duthie) to task,, aird has alleged that section. 48 of . the 194’5- Banking Act was a sinister attempt to nationalize the banks-. ‘ The present Government, in- all its major activities on banking, now takes the advice of the Commonwealth Bank Board. Before a general manager is’ appointed to the Commonwealth Trading- Bank the Government will seek its advice, and before any other major’ moves take place the Government will confer with, the Commonwealth Bank Board. This measure will have no effect on the. advice of the Commonwealth’ Bank: Board. Section 48. was inserted in; the Banking’ Act 1.945 on! the advice of the board., As I mentioned! during an earlier debate, a questionnaire was submitted to the board’ (luring the; period, when the Royal Commission on, Monetary and Banking Systems was: pursuing its investigation’s. The. board was. asked, “‘Do you believe; that it; is a part: of the functions of the. central bank to hold the accounts of the State; governments ? “ The. board replied, “ Yes and it: added, gratuitously;, because it: had) not been asked to elaborate, its; reply,. “ and,, we believe, of local governing bodies1 and all statutory authorities: as well “.. The primary purpose of. the provisions of section 48 was to immobilize large cash deposits made by- those organizations which provided the added cash upon which a compound expansion could- take place. if the amounts were held by the private banks, and were not- effectively controlled, great inflation’ could take place at particular times. As< payments were made at particular times the- cash basis on which the private trading bank® ordinarily operate. would be. reduced and a contraction of overdrafts; would take place, probably at the wrong time. It is. important to remember that section 48 was inserted in the Banking Act 1945- at. the request of the Commonwealth Bank Board, which consists of representatives of business, agriculture and other activities in the community and which was established under a measure drafted by an antiLabour government.. The board was appointed by an anti-Labour government. If the: honorable member for Evans alleges that that provision was an attempt to nationalize the banks, he should level the charge not at- the Chifley Government but at the Commonwealth Bank Board and, in particular, at Mr. Armitage, who was, I think, the chairman of the board at. that time. The royal commission was- told that without, the controls, vested in the> board by section 48 the- power of the Commonwealth. Bank to function as- a central bank would be extremely limited. The truth of that statement is borne out by the judgment of Mr. Justice Owen Dixon, the present Chief Justice, who said that it was the normal function of the central bank to hold the accounts of State governments-, local government bodies and similar institutions.

Mr Bland:

– Such a power could’ be used to destroy the federal system.

Mr TOM BURKE:

– What is. more likely to destroy the federal system is. a federal administration of the present type which, causes the State, governments, to be at constant loggerheads, with the Australian Government.

Mr ERIC J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– That is a most specious., argument.,

Mr TOM BURKE:

– Not at all. In the long period1 since the establishment of federation the Constitution has never creaked so’ badly , as; it has in the last three years. If the existing bad working’ of the. Constitution does’ not strain its very base and make possible its destruction, I should’ like to- know what would do- so; The Vice-President of the Executive Council (Mr. Eric J. Harrison), from the lofty heights’ which he temporarily occupies, contends1 that the federal system is threatened’ by the actions of the State- governments. The governments of the- States’ insist, upon their right to have sufficient money made available to enable them to carry on their programmes) - to employ their people, to develop their economy, to provide water supplies and even to give effect to war. service land settlement schemes. The VicePresident of the Executive Council contends that because the States dare to ask that money be provided for that purpose-

Mr ERIC J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– It should be provided from loan funds and not from revenue.

Mr TOM BURKE:

– Because the States dare to ask for money for these purposes, the Vice-President of the Executive Council contends that they are responsible for the present creaky state of the Constitution.

The CHAIRMAN:

– Order! The honorable member is getting very wide of the bill.

Mr TOM BURKE:

– The Opposition has tried to indicate the purposes for which the special accounts system was established. The clear and concise explanation given by the honorable member for Flinders (Mr. Ewert) last night should have left no doubt in the minds of honorable members opposite concerning the purposes of the system. The honorable member reminded us that special accounts form the very .basis of the lending operations of the private hanks. The primary function of the central bank is’ either to increase the liquid funds of the banks, by buying securities on the open market when they want to expand their operations, or to decrease their liquid funds by selling securities on the open market at a time when they Want to contract advances. In order to make this system work the central bank must hold all the short-term funds of the trading banks. By operations on the open market it should be able to reduce or increase the liquid funds of all the private banks that operate in our economy. If it cannot do that, it cannot function effectively as a central bank. If £40^000,000 or £400,000,000 of the liquid funds of the private banks be placed in the central bank and a similar amount remains outside its control, the activities of the central bank are completely nullified.

Mr Hulme:

– Nonsense!

Mr TOM BURKE:

– The honorable member for Petrie (Mr. Hulme), who is a protagonist of bank reform, says “ Nonsense ! “. Government supporters have made no attempt to answer the case submitted by the Opposition in regard to this legislation. Even apart from the fact that it is vitally important that the central bank should hold all the ready cash and liquid resources of the private trading .banks, for the protection of the private banks themselves, the special accounts system must be preserved. Let me remind honorable members opposite, who laugh inanely at my remarks, of the factors that brought the federal reserve bank system into being in the United States of America. In 1911 the reserves of the American banks far more than equalled the amount of their deposit liability, but they were scattered throughout the country. It was proved that no matter how much cash the banks possessed to meet their liabilities, unless it could be concentrated at points where it could be made readily available, it was insufficient to preserve their existence. ‘ Because of that, the federal reserve bank system came into being. The banks were required to operate under certain conditions. . They had to lodge cash reserves with the central bank so that it could concentrate them wherever a run was threatened. The reserve .bank system has proved its efficacy wherever it has been’ adopted. In Great Britain, where similar action could be taken more effectively, the system operated exceedingly well. That proves the truth of the contention of the Opposition in regard to this matter.

Mr OSBORNE:
Evans

.- With ‘ regard to the proposal to separate the functions of the central bank from those of the Commonwealth Trading Bank, as envisaged in this bill, I should have preferred separation to be complete because only complete separation Would engender confidence in the central bank. In my second-reading speech I said that the limited separation proposed under this hill was not as desirable as complete separation. Some misunderstanding has arisen over the amendment to the last measure which was forecast last week by the honorable member for Macarthur (Mr. Jeff Bate). The purpose of the foreshadowed amendment was to enable this or a future government, byexecutive act, to establish a separate board to control the Commonwealth Trading Bank. I, and others in the same position as myself, have stated that we would have preferred complete separation. Some doubt appears to have arisen as to whether we were sincere in expressing that view. I wish to place my views on the foreshadowed amendment on record. In the first place, I did not support the move intended to be made by the honorable member for Macarthur because I thought that it would be ineffective. It proposed to give the Government power to establish a separate board for the Commonwealth Trading Bank by executive act. It was not mandatory; it was merely a power to enable the Government, by order of the Governor-General in Council, to establish a separate board. I point out that anything that has been done by executive act can also be undone by executive act. If the amendment had been moved and agreed to it would have enabled the Government to establish a separate board for the Commonwealth Trading Bank, but it would also have enabled a future government to abolish the board by a similar executive act.

My next objection to the proposal was mentioned by the honorable member for Mitchell (Mr. Wheeler) this afternoon when he pointed out that if the foreshadowed amendment had been accepted a new board would be set up to control the Commonwealth Trading Bank and the existing governor and board would be left in control of the central bank. The foreshadowed amendment also provided that no member of the existing Commonwealth Bank Board should become a member of the board of the Commonwealth Trading Bank. As the honorable member for Mitchell said, it might be very much better to have the members of the existing Commonwealth Bank Board and perhaps the Governor of the Bank in control of the Commonwealth Trading Bank rather than of the central bank.

The CHAIRMAN:

– Order! The honorable member is dealing with a measure that has already been dealt with by the committee.

Mr OSBORNE:

– It is not possible effectively to discuss one of these bills without reference to the other. Both bills have been consistently dealt with throughout this debate.

My third reason for having failed to support the proposal foreshadowed by .the honorable member for Macarthur was that it was doomed to failure because it had not received the support of the Government. As any one with any parliamentary experience knows, it is only with the support of the Government that private members can get effective political action taken in order to have the reforms in which they are interested placed on the statute-book.

The CHAIRMAN:

– Order! The honorable member is not in order in discussing in detail the reasons why he failed to support a proposal foreshadowed by another honorable member.

Mr OSBORNE:

– I defer to your ruling, Mr. Chairman. I shall not pursue that matter any farther. In conclusion 1 should like to re-affirm the statement, which I made in my second-reading speech on another measure, that I believe very firmly in the need for an entirely independent central bank in Australia - a bank entirely free of trading functions and of control of such activities as the Mortgage Bank Department and the Industrial Finance Department of the existing Commonwealth Bank. Only o when such an independent central bank is established will it gain the confidence of the private banks and other financial institutions, which is essential for the successful functioning of the central bank. I hope to remain in politics long enough to see such a central bank established. I intend to work towards that end. The way to achieve it is clear. It is our duty to convince the members of our own party of the need for, and the practicability of, such a reform.

Sitting suspended from 6 to 8 p.m.

Mr. CREAN (Melbourne Ports [8.0]. - I propose to devote some attention to clause 10 of the bill, which repeals section 28 of the Banking Act 1945. That section reads as follows: -

A bank . . shall not, except with the consent in writing of the Commonwealth Bank, purchase or subscribe to -

securities of the Commonwealth or of a State, or of any authority of the Commonwealth or of a State;

securities of any local -governing body in Australia; or

securities listed on a Stock . Exchange in Australia.

This afternoon, the honorable rnember for Perth (Mr. Tom Burke) discussed in some detail the power which clause 10 grants to the private banks. I point out that, even without this bill the private banks made hay while they could with respect to the acquisition of government securities. Last January, the trading banks held £157,800,000 worth of treasurybills. When the Treasurer (Sir Arthur Fadden) presented his budget to the Parliament last year, the rate of interest on treasury-bills was increased from¾ per cent. to 1 per cent. The short-term rate has important repercussions on the whole interest structure throughout the community. This subject can only be considered alongside the general power to control interest rates which, theoretically, has remained in the Banking Act 1945 until the present time. However, the operation of that power has been suspended by this Government.

The honorable member for Ballarat (Mr. Joshua) has suggested that the long-term rate, or overdraft rate, will be increased in the not distant future. Incidentally, the existing figure of 5 per cent. is an increase of½ per cent. on the rate ruling before the 1st August, 1952, when direct control by the Commonwealth Bank was relaxed. I suggest that before long, the short-term rate, or the rate offered on treasury-bills, will be increased. In my opinion, the large increase in the holdings of treasury-bills by the private banks is rather sinister. I shall analyse in some detail what the treasury-bills are.

Treasury-bills are simply amounts which the Commonwealth Bank originally has lent to the Government because for the time being the Government’s expenditure exceeds its revenues. Treasury-bills are essentially loans from the central bank to the Government. The effect of the issue of treasury-bills is to increase the total amount of money in circulation. Regarding the amount of money in circulation, it does not make any difference inessence whether the treasury-bills areheld by the central bank or the trading banks. However, it makes a great deal of difference to the earning capacity of the trading banks, because instead of having, as before, an amount immobilized in the special accounts or at short call deposit with the central bank, they now hold the money in the form of an earning asset.

From June, 1952, to January, 1953, the value of those securities held by the trading banks rose from £20,000,000 to £157,000,000. I agree with the honorable member for Perth that there is no reason why the private banks should hold £1 of treasury-bills or £1 of government securities. They are not necessary to the conduct of the functions of private banking in Australia, but they give to the private trading banks power to manipulate the money market. That power should properly reside with the central bank. All that the private banks need, apart from the passage from cheques between themselves or the central bank, is sufficient cash in their tills to meet the comparatively small demands that their customers make on them. In reality, those demands amount to less than 10 per cent. of their total transactions.

Whilst the total deposits of the trading banks amount to £1,100,000,000, the amount of cash held by them is only about £78,000,000. In the last analysis that amount is all that the banks require. If they need more cash from time to time as economic activity increases, they can get it from the central bank. There is no reason why the private trading banks should hold either treasury-bills or government securities. I invite the Treasurer to explain why the Government has seen fit to alter the existing power whereby the central bank can control the amount of the securities that the private trading banks may hold. Why does the Government consider it necessary to remove that control and give the private banks the right to determine whether certain assets shall be held in cash, treasury-bills, government securities or in special deposits? In strict logic, the difference between the graduation from actual cash at one end of the scale to treasury-bills, government securities and special deposits at the other end of the scale is simply one of degree. It is agreed in the banking world to-day that, by and large, cash has virtually gone out of existence except for very minor transactions.

It is an anachronism that the interest rate determines whether a bank makes a profit. Banking, like many other services, should be regarded as a service rendered by the banks to their clients. In the past, the service has been linked with the power to control interest rates, and a bank, ostensibly because it derives its profits from the interest earned on its advances and investments, has been able to manipulate the whole financial machinery through the medium of control of the interest rate. That matter was taken out of the hands of the banks by proper central bank control. However, this bill goes a fair way towards restoring certain powers to the trading banks.

At this stage in my speech, I want to deal briefly with disposable assets. I use that expression in the sense that a bank itself, rather than the central bank, is able to determine whether its assets shall be held in one form or transmuted to another form.

The CHAIRMAN:

– Order! The honorable member’s time has expired.

Mr WENTWORTH:
Mackellar

– Generally when I hear the wellmeaning honorable member for Melbourne Ports (Mr. Crean), I recognize more and more clearly that he does not realize the direction in which his arguments lead him. He is so concerned with the operations of the money market that he does not realize that he is advocating, in its place, a system of control which is virtually the system of the black market. He is so eager to take from the trading hanks everything that he can that he does not realize that, when he says they should not be permitted to hold government securities, he is countenancing unemployment, which could occur as the result of the consequent restriction of credit to government instrumentalities.

I propose to suggest a couple of relatively minor amendments which I hope the Treasurer (Sir Arthur Fadden) will consider favorably. The first is to clause 5, which reads as follows: -

Section thirteen of the Principal Act is amend ed by omitting gnu-section (2.) and inserting in its stead the following subsection: - “ (2.) Where-

a bank informs the Commonwealth Bank - the Commonwealth Bank may -

assume control of and carry on the business of that bank.

I ask the Treasurer whether he is prepared ‘ to consider the insertion in proposed section 13 (2.) (e) the stipulation that such control shall not be assumed without the consent of both Houses of the Parliament. I consider that it is most important to place restrictions, as far as we can, by legislation. Of course, no government can legislate against an incoming government, which has control of both Houses, but as far as we can, we should place restrictions upon the tendency of the Commonwealth Bank to gobble up the trading banks one by one. This afternoon I pointed out that under the conditions that existed last year, a Labour government would have been in a position to close every trading bank under the provisions of the Banking Act 1945. I believe that we should place, as far as we are able, impediments to that process. In my opinion, it would not be wrong for us to stipulate that the powers referred to in proposed section 13 (2.) (e) should not be exercised without the approval of both Houses of the Parliament.

Proposed section 46 (2.), in substance, re-enacts the provisions of the existing section. I believe that those provisions, although they have been quite satisfactory in their application, are not sufficiently defined. In other words, I consider that the existing provisions should be amended in order to preserve the practice that has applied hitherto. The section provides that the Commonwealth Statistician shall prepare and publish in the Gazette certain statistics in relation to the activities of the trading hanks. I ask the Treasurer to consider the advisability of amending that sub-section -so that the Commonwealth Statistician shall, “with all reasonable expedition “ prepare and publish these statistics. On one or two occasions in the past, a complaint has been made about delays. I do not think that honorable members want such delays, and

I do not see any reason why the subsection should not be amended as I have suggested. The additional words would only express more clearly the intention of the Parliament implicit in the subsection.

I also direct attention to the fact that proposed section 46 (2.) requires the Commonwealth Statistician to prepare and publish in the Gazette the average of the liabilities and assets of banks in Australia for each month. The practice hitherto has been to publish not only the totals of those liabilities and assets but also the various items that are set out in form D and form J. We should make the intention of the legislation clear so as to preserve that practice. Proposed new section 47a, which is a repetition of section 47 of the present act, will enable the Treasurer, by instrument in writing, to exempt any bank from the obligation to supply those statistics. Advantage has been taken of this prevision in the past, very properly in order to cover such periods as the Christmas break when the information is not readily available. I believe that we should limit the operation of the provision so thai: banks cannot be exempted from the necessity to supply the figures but may be permitted by the Treasurer to defer the submission of returns for six weeks, or some such reasonable period.

The next matter that I raise has more substance than the matters I have already discussed. The new provisions in relation to special deposits, unfortunately, will preserve the principle that the Commonwealth Bank may make unequal demands upon the trading banks. I fully realize that the circumstances of the Australian banking system, with large seasonal fluctuations of bank commitments that are related to external trade, demand flexibility. Nevertheless the provisions ‘ as they stand are dangerous. I refer the committee to paragraph 589 of the report of the Royal Commission on Monetary and Banking Systems, which contains the following recommendation : -

We recommend -

t) ) The Commonwealth Parliament should legislate to provide that the Commonwealth Bank Board, with the consent of the Treasurer, may require every trading bank to keep with the Commonwealth Bank a deposit of an amount not less than a percentage, specified in the requisition, of the liability of that bank to its depositors in Australia.

That important recommendation is not adequately fulfilled by the existing legislation. I do not suggest that the bill be amended at this stage, because it is a complex proposal that requires a great deal of consideration. However, the principle is important. We can readily see what is in the wind under present conditions. The Commonwealth Bank, by its power of patronage, can bring the trading banks to heel one by one if it wishes to do so. It can strike a bargain with this or that general manager of a trading bank by saying to him, “If you are a good boy, we shall reduce the percentage of your deposits that you are required to lodge with the Commonwealth Bank “. By playing one bank off against another and being always in a position to offer a concession, the Commonwealth Bank Board, little by little, could bring the trading banks to heel and reduce them to a condition of complete subservience. This danger was foreseen by the royal commission when it made the recommendation that I have quoted, but the Government has not paid sufficient attention to the possibility. I urge the Government, therefore, to consider amending the Banking Act so as to provide for equality of treatment of the trading banks in relation to such deposits. Rigid equality need not be preserved, but there should be substantial equity of treatment.

The CHAIRMAN:

– Order! The honorable member’s time has expired.

Mr PETERS:
Burke

.- The honorable member for Mackellar (Mr. Wentworth), like various other Government supporters, has harped upon the complexity of the issue that is before the committee. In fact, honorable members opposite have tried so hard to make the matter appear more and more complicated that I doubt whether even they understand what they have said. I shall endeavour to simplify the matter. The currency of Australia, in effect, consists mainly of coinage, hank notes and cheques. We are told by experts that the volume of currency in circulation and the speed of its turnover determine whether our economy shall be stable or whether we shall suffer from inflation or deflation. The volume of coinage and bank notes in circulation and their rate of turnover can be easily regulated by a government. But the coinage and bank notes represent only a very small fraction of the currency used in Australia. Most of that currency consists of cheques, or the equivalent of cheques. “Who determines the amount that shall be represented by those cheques and the uses to which it shall be put? The answer is, “ The private banking institutions “. It was the recognition of this fact by the experts who advise the Treasurer (Sir Arthur Fadden) that caused the right honorable gentleman, whether he realizes it or not, to take control of the deposits in the private banks in 1941 by giving the Commonwealth Bank power to call up those deposits and immobilize them. The truth is that the deposits themselves d-“> not cause trouble; the cheques issued against those amounts are the cause of inflation or deflation in the community.

The Government has determined, by means of this bill, to whittle away the ability of the Commonwealth Bank to exercise control over the cheque-issuing power of the private banks. In effect, it has said to the private banks, “ You shall have greater power than you had during the war “. The provision that will determine the degree of control that the Commonwealth Bank may exercise over the deposits of the private banks is framed in terms that hide the real intentions of the Government. It contains a formula which the Prime Minister (Mr. Menzies), when he introduced the bill, said that he could not explain within the limited period nf time at his disposal. The right honorable gentleman undertook to provide honorable members later with a series of illustrations that would make the purpose and effect of the formula clear. The truth is that the Government wishes to conceal from the people the fact that it proposes to give to the private banks greater power over the currency than they have had up to date. That power, of course, may be used for the good or ill of tho community, but it has been nsp.d t” the disadvantage of the community on two memorable occasions at least. I shall refer to those occasions for the purpose of illustration.

The first occasion was the last great economic depression. At that time, the prices of commodities overseas shrank. Before the effect of this shrinkage could be felt in Australia, the private banks naturally and inevitably sought to protect their shareholders. They realized that reductions of overseas prices for primary products would lead to reductions of the prices obtainable in Australia for real assets, such as land. Therefore, they ceased to grant advances and they also recalled advances. By this means they reduced the capacity of the people who wished to obtain advances, or whose advances were recalled, to spend money and employ workers. The effects of this course of action were cumulative. Confidence was undermined and the whole economic structure of our society was almost destroyed. Primary and secondary producers became bankrupt, and hundreds of thousands of people trudged the country roads and the city streets in a hopeless quest for work. I do not blame the private banks for what they did. Their primary object was to protect their shareholders. Banking was competitive at that time, and each bank decided that it could not afford to advance a greater amount upon real estate security than other banks would advance. The result was that the banks depressed the value of real assets and, consequently, the value of the currency, with the result that deflation ensued. That occurred in 1930.

The second illustration of the misuse of power by the private banks occurred in 1951, when they boosted inflation. In that year, as the Leader of the Opposition (Dr. Evatt) has pointed out, the banks acted on the advice of and with the connivance of the Government. The Treasurer said in 1951 that the special account procedure of the private banks arid the Commonwealth Bank would be operated in such a. way as to aid and encourage importations.

The banks, acting under the direction of the Government, issued huge advances to one section of the community, the section that was interested in importing vast quantities of goods.

Mr BERRY:
GRIFFITH, QUEENSLAND · LP

– That stopped black marketing.

Mr PETERS:

– It threw 100,000 Australians out of work. Factories that had been established throughout the country centres of Victoria under the administration of the Chifley and Curtin Labour Governments were forced to close. Finally, the Prime Minister was forced to warn the nation in March, 1952, that the importation of goods into this country had so endangered our overseas funds that our national solvency was at stake and that our people would have to suffer hardships and difficulties under a system of drastic import restrictions.

The CHAIRMAN:

– Order! The honorable gentleman’s time has expired.

Mr THOMPSON:
Port Adelaide

– The most important provision of this bill is that which relates to the special accounts system. It is obvious that the honorable member for Mackellar (Mr. Wentworth) is not satisfied with the measure, because in the closing stages of his speech he said that, unless the bill were amended in the way that he had indicated, the private banks could gradually be squeezed out of existence. That statement was remarkable, because not very long ago we were told that if a Commonwealth Bank Board were appointed, it would formulate the policy of the Commonwealth Bank and the Treasurer would have power to direct it to amend its policy if it acted in a manner that he considered to be inimical to the best interests of the country. Although the Commonwealth Bank Board has been re-established, the honorable member for Mackellar has said that, unless the bill be amended in the manner that he has indicated, the Commonwealth Bank will be able to squeeze the private banks out of business, one by one; It appears that the measure has been “introduced to meet, to a degree, the views of some of the back-benchers on the other side of the chamber. I believe that the Treasurer (Sir Arthur Fadden) was quite satisfied that, under previous legislation that he had introduced, the Commonwealth Bank had been put under proper management; but Government supporters said that the bank had too much power, because it could require the private banks to pay so great a proportion of their deposits into the special accounts as to render them insolvent. Therefore, this measure provides for a limitation to be placed upon the proportion of the deposits of private banks that can be called up in that way.

I believe that, from our experience of finance, we all recognize that the economic stability of this country depends upon the degree of control of credit that can be exercised by the Government or the Commonwealth Bank. In the years before such control was exercised, the banks of this country could advance to borrowers as large a proportion of their deposits as they liked. In good times, they pushed advances upon people who did not really require , them, and in bad times, when people needed finance, they called in overdrafts. In my opinion, if the proposed alteration of the special accounts system is made, we shall see a return of those days. I do not propose to repeat the figures that have been cited from .time to time by the Treasurer and other honorable members opposite, but I remind the committee that during the last two years an immense proportion of the deposits of the private banks that were held by the Commonwealth Bank was returned to the banks, which were able then to make large advances. The statements that have been made during the course of this debate to the effect that, if the Commonwealth Bank were to call up the money that it could call up under , the existing legislation, the private banks would not have the resources to meet that demand, show that the private hanks have utilized that money.

Honorable members are aware that during and after the last war the special accounts were used to finance exports. The money was not used to bolster the policy of the Labour party, or for any socialistic purpose, in the generally accepted sense of the word. It was used to assist Australian primary producers. Some primary products were held in this country for a long time before they were exported, and in many instances payment for goods exported was not made for some time. Those transactions were financed from the special accounts held by the Commonwealth Bank. Honorable members opposite have said that we want to use the special accounts system for socialistic purposes, and to enable us to squeeze the private banks out of existence, but we did not do those things when we were in office. The Chifley Government used the special accounts, first, to prevent too much money from being out into circulation and increasing inflation, and secondly, to make payments to primary producers in respect of goods sent overseas for which payment was not made for some time.

I am amazed when I hear honorable members opposite say that they want the bill to be passed, not because they are frightened of what this Government may do, but to prevent a future Labour government from using the existing legislation to implement the policy of the Labour party.

Mr OSBORNE:

– What is the policy of the Labour party ? One-half of the Opposition say that it is nationalization, and the other half say that it is not.

Mr THOMPSON:

– I am not talking, about nationalization. If any honorable member opposite wants to know my view on that matter, let him read the report of a long, speech that I delivered when the bill to nationalize the banks was before the Parliament.

Mr Osborne:

– What is Labour’s policy ?

Mr THOMPSON:

– The policy of the Labour party is to ensure the welfare of the people as a whole, not to protect vested interests. Three years ago, this Government came into office after it had promised that it would cure inflation and put value back into the £1. Now, at almost every election that is held, the people show that they are sick and tired of the Government’s policy, and they reject the candidates of the Government parties; The point that I want to make is that, although the Government has said that one of the purposes of the bill is to prevent a future Labour government from doing certain things, the people want to put the Labour party back into power, so that it can do the things that it did three or four years ago. The people believe that our policy is the best policy. Before very long, we shall have a majority not only in this chamber but also in the .Senate and we shall be able to implement our policy. To my mind, honorable members opposite are indulging only in wishful thinking, or are attempting- to hoodwink the people, when they say that the object of the Government in introducing this measure is to protect the people against a future Labour government. A Labour government will amend this legislation in future if it believes- that it is not operating in the best interests of the county or has caused a return of the days when bankslent money to people when they did not need it, and called if in when they required it. The: result of that policy was that men became insolvent, and many primary producers and small businessmen were ruined.

The CHAIRMAN:

– I call the honorable member for Blaxland (Mr. E. James Harrison).

Mr Tom Burke:

– Nobody on the other side of the House is game enough to defend the bill.

Mr E JAMES HARRISON:
BLAXLAND, NEW SOUTH WALES · ALP

– I agree that honorable members opposite are not game enough to defend the measure, because they know very well that it is one more blunder by the Government. The Prime Minister (Mr. Menzies) explained that the purpose of the measure was to ensure fair and equitable competition between the Commonwealth Bank and the private banks. To-day at the instigation of the employers; this country is facing a great change of economic conditions. If the Commonwealth Arbitration Court accedes to the. application By the employers for an alteration df the basic wage, thousands of returned servicemen and thousands of workers-

The CHAIRMAN:

-Order! The Commonwealth Arbitration Court, and its functions are not relevant to the question before the Chair.

Mr E JAMES HARRISON:
BLAXLAND, NEW SOUTH WALES · ALP

–I shall only make a passing reference to the Court. If the application of the employers is acceded to, unless money is made available at a much lower rate- of interest than the private banking system is prepared to make it available at the present time, thousands of returned servicemen will find that everything that they fought for has been wrecked, and thousands of ordinary citizens who have invested their life savings in their houses will lose their money. That happened on a previous occasion in Australia. We know that the policy of this Government is to prevent the Commonwealth Bank from entering into ordinary competition with the private banks. Does not the Government realize that, in a time of crisis, which could arise as a result of the decision of the Commonwealth Arbitration Court in the basic wage case, the private banking system of this country could not find the money that even the War Service Homes Division required?

Mr Bland:

Mr. Bland interjecting,

Mr E JAMES HARRISON:
BLAXLAND, NEW SOUTH WALES · ALP

– The honorable member for Warringah (Mr. Bland) should know that what I am saying is correct, because, as a result of the inability of this Government to keep prices in Australia at a reasonable level, house-builders will require a great deal of assistance at some time, possibly in the near future.

The Commonwealth Bank is the people’s bank. It was established to serve the people in the way in which they wanted to be served. Honorable members opposite have gibed at us about the socialization of banking, but the policy of the Labour party was made crystal clear when the Commonwealth Bank was established. It was established to give the people access to credit for their protection and the improvement of their welfare. What did it do in World War I., when it was not tied in the manner in which this Government intends to tie it ? Was not the Commonwealth Bank, before the intention of its founders was defeated in 1924 by the present Minister for Health (Sir Earle Page) daring his term as Treasurer, created for the very purposeof giving assistance to farmers and others?Unfortunately farmers do not occupy the Australian Country party benchesin this chamber, which are occupied by people other than farmers who do not understandwhat the Commonwealth Bank did for primary industry in World War I. and up till 1925.

Was it not the people’s bank that forced down interest rates on loan moneys in World War I., before our central banking system existed? Is it forgotten that it was the people’s bank that forced the private banks to cut their interest and overdraft rates ? Surely if ever there was a time when a government should be careful not to destroy the people’s bank, having regard to the urge in this country to reduce costs so that we can compete actively in trade within the sterling bloc, this is that time, and the 1945 legislation should at least be held intact, or even strengthened, in the interests of the people generally. I repeat that this is just another error of judgment on the part of the Government. In its haste to frame the Commonwealth Bank Bill and this bill it did not go far enough to suit its own back-benchers in the direction of giving effect, in some way, to the policy of its backers, the private banking institutions, which demand every ounce of their pound of flesh, and which demanded the recent increase of interest rates, to which the Commonwealth Bank Board, appointed by this Government, agreed. That increase of interest rates has cost returned servicemen an additional £200 in respect of every war service home that has been constructed in the last five years. The Government has given way to these people so as to destroy the people’s bank and prevent it from doing what it should do. We know the history of the great work performed by the Commonwealth Bank. We’ know what the Labour party intended it to do. We know that Labour intended that this bank should give to the people protection against any form of attack, and against the adversities that beset the people, particularly the homebuilder, the small f armer and small businessman, from time to time. Knowing these things the Labour party would be failing in its duty if we on this side of the chamber did not direct attention to what could happen on the day that the Commonwealth Arbitration. Court hand’s down its decision in respect of the application that the employers have before it at present.

Mr Turnbull:

– I thought the honorable member supported the Commonwealth Arbitration Court system.

Mr E JAMES HARRISON:
BLAXLAND, NEW SOUTH WALES · ALP

– I certainly do, but, more than that, I support the requirements of the people. I know that I and other honorable members on this side of the chamber will have the job of giving effect to the court’s decision, and that is the reason why I am uttering this word of warning about what can happen as a consequence of this legislation. Surely even the members of the Government must have some apprehension if they ponder on what the future may hold for this country. They must surely know that if the private banking system is to be asked to carry the burden that will have to be carried, whatever government might be in office, it will face a tremendous task. We might be fortunate enough to have a Labour government in office before the court’s decision is given, and in that event the people will have no fears because the Labour government will protect them. If homebuilders and returned servicemen who have built war service homes are to be thrown to the wolves of the private banking system by this Government, then retribution will surely fall on the heads of those responsible. I do not profess to be an economist, but I did see 500 people walk out of their homes on a previous occasion, and I do not want to see it again.

The CHAIRMAN:

– Order! The honorable gentleman’s time has expired.

Mr TURNER:
Bradfield

.- It was not my intention to speak at the committee stage, but I have heard so much bunkum and balderdash poured out in a turgid stream by honorable members opposite that I am impelled to speak. We have heard a great deal from the Opposition about the people’s bank. That is a delightful phrase, the sort of thing that is expected to bring plaudits from the multitude, but it is a vague phrase, which does not bear examination. In what sense is it the people’s bank? Is it the place where the people put their money, the bank which the people trust above all other banks ? If that is what is meant, I direct the attention of honorable members to the fact that, as at last January, the people had placed £1,147,000,000 of deposits in the private banks and only £120,000,000 of deposits into the Commonwealth Bank. If we are to give any precise meaning to the term “ people’s bank “, if it means the bank, or banks, in which the people repose the most confidence, then plainly the people’s banks are the private banks. But, perhaps, the term the “people’s bank” refers to the ownership of the bank. In what sense do the people own the Commonwealth Bank? Does the term mean that any citizen can walk into the Commonwealth Bank and say “ This is my bank. Give me some money because, as this is my bank, the money in it is mine “ ? Certainly it is not the people’s bank in that sense. When we come to examine what is meant by the term. “ people’s bank “, we find it is only a phrase that is designed to mislead.

There are two principles involved in this legislation. The most important parts of this bill, and of the Commonwealth Bank Bill, deal with the separation of the trading functions and the central banking functions of the Commonwealth Bank, and the calling up of special deposits. We have heard a great deal from honorable members opposite about unfair competition with the Commonwealth Bank. They have contended that this legislation will make it possible for private banks to grind the Commonwealth Bank into the earth. The conditions of competition between the Commonwealth Bank and the private banks may be grounds for criticism by the private banks, but hardly for criticism from the Opposition. Honorable members opposite have no room to complain in that respect, because an examination of the position shows that the reverse of the Opposition’s contentions is the real position. When it comes to unfair competition, the Commonwealth Bank has the advantage, in the first place, of not having to make a profit. The private banks are at a disadvantage in that respect. The banking legislation of the Chifley Government was challenged because it sought to compel all local government bodies to open accounts with the Commonwealth Bank. Was that fair competition ? Quite plainly the Commonwealth Bank has enjoyed a very great advantage over private banks, and will always enjoy that advantage, when it is under the patronage of governments. So let us be fair about the aspect of fair competition and realize that the private banks and not the Commonwealth Bank are at a disadvantage, and that the position is diametrically opposite to what honorable members opposite claim it to be. We might well have State Labour governments laying down the condition that contractors who carry out State public works must have accounts with the Commonwealth Bank. Once again we find that governments, whether Commonwealth or State, that are under Labour control, will be able to exercise their patronage in favour of the Commonwealth Bank. When honorable members opposite complain that the legislation makes it possible for the private banks to compete unfairly with the Commonwealth Bank, that is precisely the opposite of the truth.

We have had some honorable gentlemen suggesting that, it will be impossible now for the central bank so to control “the economy as to prevent recurrent booms and depressions. I cannot imagine that any central bank in the world has greater power to control the volume and direction of credit than the central bank in Australia, has enjoyed, and will still enjoy in spite of this’ legislation. What more powerful whip could any central bank possess than the Commonwealth Bank now possesses? I do not think that central banks in other parts of the world possess in the same degree the power of calling up into special accounts the deposits made in the private banks. No more powerful weapon could be wielded by any central bank, yet honorable gentlemen opposite claim that this legislation, will deprive the Commonwealth Bank of the means to control the volume of credit. Under the provisions of the measure the Commonwealth Bank will be able to call up 75 per cent, of the increase of deposits in private banks from time to time if it desires to restrict credit and damp down booms. In addition to that, the central bank enjoys the right to fix interest rates. If it is desired to release money to encourage industry in a time of recession, the central bank can release credit from frozen accounts and it can fix low interest rates in order to stimulate loans to industry. Similarly in a time of boom, the Commonwealth Bank has the right to call up the deposits of private banks, under the special accounts provision, so as to reduce the supply of money in the community. It can also raise interest rates so as to discourage people from borrowing too freely. It can control the direction in which credit shall be used. If the central bank believed that too much money was being used for forms of commerce and industry in which it ought not to be used, it could cut off or restrict the flow of credit into that form of industry. It is absurd to suggest that the Commonwealth Bank does not possess these great powers under this legislation. I do not suggest that because of its possession of these powers we shall not have any more depressions or booms, but I believe we are committed to a great experiment and that the system that prevailed in the past, under which private banks might be carried away by undue optimism in times of boom, or unduly cast down by pessimism in times of recession, is ended. We are committed to the system of central bank control. Honorable gentlemen opposite, who are always starry-eyed, believe that this new system must prevail. We are committed to it, and I believe that it could succeed. I also believe, however, that in human institutions there is always the possibility of failure, and I do not believe that all our problems are yet over. I foresee political pressures that may be brought to bear to defeat the very objects that all honorable members have in mind. A Labour government in office might be induced to embark on inflation in a big way by carrying out the inflationary economic policies put forward by the Opposition in recent months. Honorable members opposite have advocated policies that involve the issue of treasury-Mils on a scale far beyond the present scale. There will always be that temptation on the part of a needy Treasurer, pressed upon on all sides by groups-

The CHAIRMAN:

– Order ! The . honorable gentleman’s time has expired.

Mr DALY:
Grayndler

.- In the debates of this committee I seem destined to follow the honorable member for Bradfield (Mr. Turner). As I listened to him to-night, I could not but feel that we should be grateful that he was elected rather than his independent opponent at the last Bradfield by-election. In view of his contribution to the debate on this measure it is apparent that he will not worry the Opposition as much as his independent opponent would have if he had been elected to the Parliament. The honorable member for Bradfield said that if a Labour government assumed office in this country it would embark upon an inflationary programme. I point out to him that the present Government, a member of which is the Treasurer (Sir Arthur Fadden), whom he had criticized, has already inflated our currency by the issue of £200,000,000 worth of treasurybills. I suppose that that is the first instalment of a further inflationary scheme of a government that includes the honorable member for Bradfield among its supporters. The honorable member also criticized the system of special deposits required to be lodged by the private banks in the Commonwealth Bank. Is he not aware that the special deposit system was originated by an anti-Labour government? The present Treasurer introduced the system when he was a member of a previous government, and his idea was merely carried on by Labour governments. Therefore, the honorable member for Bradfield has criticized a Labour government for doing exactly what the Treasurer did on a previous occasion.

The honorable member also went to great pains to show that the Commonwealth Bank need not make profits. Any man who represents the private banks and the vested interests, as does the honorable member for Bradfield, would naturally hold up his hands in horror at the thought of a bank not making any profits. He should remember that almost without exception private banks use their financial resources to exploit the people and to bring in dividends irrespective of the effect of their actions upon the community. During the last depression, when people walked the streets looking for work, when industries were closing clown and businessmen going bankrupt everywhere, and when huge developmental programmes were needed in this country, the private banks called up overdrafts by the thousand, crushed farmers, bankrupted industry and exploited the sufferings of the people for the express purpose of making profits. The Labour party does not believe that it is wrong to make a profit, but honorable members should remember that the life-blood of the community is money. The sorry records of the private banks show that they should be controlled by the people’s bank, properly administered and under the control of the Parliament, irrespective of the political party in power. The honorable member for Bradfield should revise his views on banking, because the dead-beat tory line that lie is sponsoring has gone for ever and will be replaced by the new order that Labour hopes to establish in this country. The policies that he has enunciated on behalf of the private banks will only add further thousands to the queues of unemployed that now exist in this country, and will still further restrict the finance that industry so badly needs. It is important that we should carefully scrutinize the advance policy of governments, and that we should always know the exact financial position of our government.

It is significant in this debate that the contribution of the honorable member for Bradfield was outstanding for two reasons. One is that for some hours he was the only honorable member from the Government side who supported the policy of the Government, and the other is that he sponsored a policy of profits for the private banks at all costs. Why is it that when important legislation, that will affect the lives of every member of the community, is before this Parliament, the Australian Country party sits silently by and apparently does not care what happens, while even members of the Liberal party point to its alleged shortcomings and dangers? It is very well for the Treasurer to sit and smile at what I am saying, and for an occasional honorable member from the Government side to speak about the measure, but the Labour party would like to know what the great majority of honorable members on the Government side really think about the legislation. Are they like the honorable member for Mitchell (Mr. Wheeler) and others, whom we know disagree with the bill?

The CHAIRMAN:

– Order I The committee would like to know what the hon.orable member for Grayndler (Mr.

Daly) thinks about the bill, not what he thinks about other honorable members.

Mr DALY:

– I appreciate your ruling, Mr. Chairman. My views will become quite well known shortly. So that I may fairly criticize the views of the Government I was saying that I would be interested to know the views of the great majority of the supporters of the Government. Division 5 of the measure deals with advance and financial policy generally. The financial policy of the banks, particularly that of the Commonwealth Bank, touches the welfare of the community and of all individuals in it. After this measure has been passed, will the Commonwealth Bank make money available only at a profit on behalf of the vested interests who indirectly control it through the Commonwealth Bank Board ? What money will be available for the great developmental works that will have to be carried on, and what financial restrictions will be imposed on the private banks? Will the Commonwealth Bank make money available for people to buy houses, or even to pay deposits on houses ? Will co-operative societies and other housing organizations be given the money that they need, and will the thousands of people now looking for homes he any better off under this legislation? I suggest that this Government believes that the people’s bank should be completely destroyed, and that this legislation is one more step towards nullifying the Commonwealth Bank as a force in the community. This measure is a sell-out to the people who worked to put the Government into office in 1949. It is only now at the point of a gun, prior to its defeat at the next general elections, that the Government is taking a major step to destroy the Commonwealth Bank as a’ useful, financial force.

Honorable members on the Government side do not know the real implications of this measure. The Treasurer is the only honorable member who realizes the sinister influence that it will have on the economic life of the community. I condemn the measure as an attack on the Commonwealth Bank, I condemn the Government for introducing it and I condemn honorable members on the Government side for their failure to support their own Government. The Opposition wants to know why this change of function was necessary if it is not an attempt to destroy the Commonwealth Bank, because the Prime Minister (Mr. Menzies), in introducing the measure, stated that the powers of the Commonwealth Bank had been properly used. In this legislation the Government has made it clear to the world that it is now determined to introduce once again into this community the bitter days of the last depression.

The CHAIRMAN:

– Order! The honorable member’s time has expired.

Mr BIRD:
Batman

– I listened attentively to the remarks of honorable members on the Government side in an effort to find out why this bill was introduced. I have heard no good reason given why it was introduced except that it has been brought forward to prevent a future Labour government from nationalizing the banking industry. Such a statement indicates gross ignorance of the functions of the Parliament, because a future Parliament can always alter the legislation of this Parliament. I suggest that this is one step along the road towards complete subjugation of the people’s bank. This Government; is developing a plan for the future, and each step that it takes will diminish the power and influence of the Commonwealth Bank. Unfortunately for the Government, it has a number of immature and impetuous supporters. The Government is not moving fast enough for them, and they want the introduction of far more reactionary policies. They want measures introduced immediately to take all power away from the Commonwealth Bank.

Honorable members on the Government side, in an attempt to justify the measure, made a number of statements that do not accord with fact. The honorable member for Mallee (Mr. Turnbull) said that under the Chifley Government’s financial policy, inflation raced apace and that this Government had to stabilize the economy. Unfortunately for the honorable member the statistics and the facts do not support his statement. Between 1945 and 1949, during the Labour regime, the price level in this country increased by only 19 per cent. Under the administration of the present Government, from December, 1949. to July, 1952, the price level increased by no less than 53 per cent. That proves that far from successfully tackling the problem of inflation this Government has allowed it to grow apace. The Government seems to have taken an unholy delight in attempting to amend the successful legislation of the Chifley Government.

The CHAIRMAN:

– Order! The honorable member must direct his remarks to the bill.

Mr BIRD:

– I am endeavouring to point out that this legislation will alter the Labour legislation that has proved successful for many years. The Government has stated that the amount of money in the special accounts is a threat to the banking structure, and that it constitutes a future menace to the private banks. A future Labour government would not need to diminish the special reserves ; the administration of the present Government has done that. As a result of the policies applied by this Government the special account balances diminished very considerably in a short space of time. Excessive imports that were allowed to flood the country imposed a very severe drain on the special accounts. In May, 1951, the total amount of the special accounts was £575,000,000. By October, 1952, it had decreased to £163,000,000. The advances policy of the banks was altered to suit importers, who had a veritable field day .in the early period of office of this Government. They were forced to borrow money from the Government to pay for imports which, in turn, resulted in the loss of employment by no fewer than 150,000 Australians. In June, 1951, advances amounted to £509,000,000. By October, 1952, they had risen to £673,000,000. That tremendous increase proves conclusively that the policies applied by the Government were at variance with the interests of the people. The Government’s mishandling of the affair’s of the nation resulted in great unemployment.

The Labour party makes no apology for attacking the provisions of this bill. We realize that control of credit literally means power over the lives of the people. Such a power should not be vested in a small group of monopolists who are responsible only to their shareholders; it should be exercised by the Commonwealth Bank, which is directly responsible to the Parliament. Upon the credit policy applied by the nation depends the livelihood of its workers. Opposition members cannot be accused of advocating a revolutionary idea when they say that such a power, which affects the destinies and the prosperity of hundreds of thousands of Australian citizens, must be exercised only by a government instrumentality which is responsible to the elected representatives of the people. It is no exaggeration to say that Australia’s economic progress is bound up with the administration and functioning of the Commonwealth Bank. Therefore, we oppose any move that is calculated to weaken the influence of the bank on the economic life of the community. As the provisions of this bill will undoubtedly weaken the influence of the bank on the daily life of every member of the community, the Labour party makes no apology for opposing it withall the strength at its command.

I have been amazed by the contention of Government supporters that the financial policies applied by Labour governments led to inflation, and that future Labour governments may worsen inflation by interfering with the special accounts system. What caused the sudden spurt of inflation during the regime of the present Government? Is it not a fact that the abolition of capital issues control worsened inflation until it finally got out of control ? After fourteen or fifteen months of freedom from control of capital issues luxury industries of all kinds sprang up in the community and unbalanced our economy. Has not the policy of the Government in regard to the issue of treasury-bills also caused inflation? The honorable member for Bradfield (Mr. Turner), in an unconvincing speech, contended that a Labour government would still further increase the issue of treasury-bills. I remind him that the Labour Government made successive reductions in the amount of treasury-bills issued whereas this Government has issued treasury-bills to the amount of £200,000,000.

The CHAIRMAN:

– Order! The honorable member’s time has expired.

Mr WARD:
East Sydney

.- The people of Australia are divided into two camps - those who favour nationalization of the private hanks and those who favour the control of the private banking institutions. Very few people would have the audacity to suggest that the private banks should be free to inflict their will on the community. Members of the Government do not believe either in nationalization or control of the banks. They have set out to destroy almost completely the controls that were established by the Banking Act 1945, which was placed on the statute book during the regime of the Labour Government. They want the private banks to be restored to the position they enjoyed prior to the passing of the 1945 act. A few days ago [ read a speech that was delivered during World War I. by the right honorable member for Cowper, the present Minister for Health (Sir Earle Page), in which he trenchantly criticized the activities of the private banks during the period of World War I. He said that the banks were mindful only of their own interests. They have not changed. They are still only concerned with their own interests. We must delve deeply in order to ascertain why the Government is determined to place the banks in their former position. It is a legitimate question to ask the Government who requested the changes proposed in this legislation. No deputations of citizens have waited upon the Government and asked for the changes to be made.

Mr ROBERTON:

– Oh yes, they have.

Mr WARD:

– We would be interested to know what matters were discussed at the secret conference that took place between representatives of the Government and the private bankers. The Treasurer (Sir Arthur Fadden) has admitted during this debate that such a conference took place. It is obvious that the bankers exercise great influence over the Government. It would be interesting to learn the nature of the deliberations and what proposals were advanced by the representatives of the private banks.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– And also how much money was contributed by the private banks to the Liberal party’s campaign funds?

Mr WARD:

– It was undoubtedly a substantial amount. The introduction of the measure now before us probably means that the Government parties will have adequate funds with which to fight the Senate election campaign. This is not the first occasion on which an antiLabour Government has consulted the private banks. In 1938, when the present Minister for External Affairs (Mr. Casey) was Treasurer in an anti-Labour government, he presented to this Parliament as one of the most impudent pieces of legislation that has ever been introduced into this House under which it was proposed that the Commonwealth Bank should issue inscribed stock and debentures, which could be taken up by private interests thus allowing outside control of the Commonwealth Bank. The measureproposed to permit the bank to borrow up to £34,000,000, which would haveallowed private investors to rake off the profit made by the bank. The legislation was not proceeded with because of the great public outcry against it. Those moves show how the Government would like the Commonwealth Bank to pass to the control of private interests.

In 1938, the then Treasurer, the present Minister for External Affairs, evidently thought it was proper for an anti-Labour government to consult the private banks in regard to impending banking legislation. We were told at the time that the Government proposed to introduce legislation to give effect to some of the recommendations of the Royal Commission on Monetary and Banking Systems, which had been established by the Lyons anti-Labour Government. The Sydney Morning Herald, on the 31st March. 1938, had this to say about the conference -

The Federal Treasurer, Mr. Casey, said last night that the meeting of Bankers over which he presided in Sydney had been very useful. There had been a very frank exchange of views, but obviously he could not divulge the nature of the discussions. The Conference was arranged to discuss the Report and Recommendations of the Royal Commission on Bankins, with the object of assisting the Federal Ministry in framing amending Banking legislation.

The CHAIRMAN:

– The honorable member may not discuss the report of a conference that took place in the ‘thirties. It has nothing to do with the bill before the committee.

Mr WARD:

– It has this to do with it, Mr Chairman. These are the interests which to-day are secretly influencing the Government in the formulation of its banking legislation. If I can “show that the private banks in the past have worked against the interests of the Australiancommunity, my comments are relevant ti this discussion.

The CHAIRMAN:

– Order ! The honorable member may not debate my ruling.

Mr WARD:

– I am not attempting to do so. I am merely reading a report which appeared in the Sydney Morning Herald. On the 7th April, 1938, the same journal-

The CHAIRMAN:

– Order! . I shall not allow the honorable member to read the newspaper statement.

Mr WARD:

– I do not intend to debate it.

The CHAIRMAN:

– It is not relevant to the bill, and, accordingly, it is out of order.

Mr WARD:

– I am dealing with the influence exerted .by the private banks on the Government.

The CHAIRMAN:

– Order! The Chair does not see any connexion between what a newspaper reported in April, 1938, and the bill before the committee. The honorable member must return to the bill.

Mr WARD:

– I think, Mr. Chairman, that if you will be patient for a little longer while I develop my argument, you will see that it is relevant.

The CHAIRMAN:

– Order! The Chair will not permit the honorable member to continue along those lines.

Mr WARD:

– All right; I shall not proceed further with the matter. I shall merely confine my remarks to the statement that the government of the day admitted that it compromised with the banks and amended its legislation in order to meet their wishes. That was made clear from the newspaper reports of the day. That is exactly what is happening on this occasion. There fora, we should like to have an opportunity to peruse the minutes of the conference held with the private banks, if minutes of the discussion were taken, and we should also like an authoritative report from the Government on the matters that were discussed by the conference.

I have said that this Government does not believe in control of any description of the activities of the private banks. Let us examine the provisions of the legislation of 1945 in order to ascertain how they are affected by this bill. The 1945 legislation, which was passed during the regime of the Chifley Labour Government, was designed for the purpose of imposing controls on the private banks, and for no other purpose. Its purpose was to control the advance policy of the private banks, to regulate the payment of interest, to regulate investments of the private banks, and also to establish the special account system to which a great deal of attention has been devoted in this debate. What has happened since that legislation was placed on the statutebook? The advance policy of the private banks is no longer controlled under the administration of this Government. Everybody knows that it is controlled in name only, and that, in fact, there is no effective control of the advance policy of the private banks. Control over interest rates has now passed back to the hands of the private banks. The Government has told us that .it has made a gentleman’s agreement under which the private banks will not exceed a certain rate of interest; but interest rates have been considerably increased since this Government came into office. I should be interested to hear what honorable members opposite have to say in favour of increased interest rates, and on what basis it is claimed that increased interest rates will benefit the community. Will increased interest rates benefit the home purchaser or the home builder? Will they benefit the man on the land who has to pay more for the accommodation he receives from the private banks? The only interests in the community that can possibly benefit from such a policy are the private banks themselves.

Let us consider the regulation of investments of the private banks which, in my opinion, is tied to the Government’s policy of reducing the liability of the private banks to deposit to special accounts. The Government has repeatedly said that it is opposed to the use of treasury-bills to finance public works. What does it propose in that, regard? Under the Banking Act 1945. the private banks were excluded from investments of certain types. They were prohibited from investing their money in government securities generally, unless they secured the approval of the Commonwealth Bank. That restriction has now been completely removed.

The CHAIRMAN:

– Order ! The honorable member’s time has expired.

Mr ROBERTON:
Riverina

.- I had no intention of speaking again during the committee stage of this bill, but I consider that it is necessary for someone to refresh the memory of the honorable member for Port Adelaide (Mr. Thompson) who has indulged in violent and ill-considered criticism of the economic and social policy of this Government. I quote the following extract from Hansard in October, 1950 : -

I am really perturbed and indeed alarmed at the growing spiral of inflation in this country, and for that matter in other countries. Neither this Government nor any other government can be blamed for the inflationary elements . . . Every man in public life-

I should like the honorable member for Port Adelaide particularly to hear these words - who has a sense of responsibility must give serious consideration to this country’s honour, economy, prestige and standing abroad and tei the heritage of its future citizens.

I emphasize the last few lines -

I hope the Government will do something to correct the present disturbed state of our economy, whether that ‘action be popular or unpopular.

That passage occurred in a speech delivered in this chamber by the late Mr. J. B. Chifley. I say to honorable members opposite, and particularly the honorable member for Port Adelaide, that if this Government has to pay a price in terms of popularity for the priceless privilege’ of protecting the honour of this country, it will pay that price, no matter what it may be. If this Government has to pay any sort of price at all for restoring the economy of this country, it will pay that price, too. Last of all, if this Government has to pay a price for restoring the prestige and standing of this country abroad, it will gladly pay that price. It is idle for any man who has even an elementary knowledge of the situation that developed in Australia after a major war, after a troubled post-war period and after eight years of socialism, when all sorts of palliatives and expedients were tried, to ignore the fact that this Government has taken positive action, unpopular though it may have been, to improve from month to month and year to year the economic situation of Australia.

This afternoon, I said that the necessity for a central bank to function in this country was not in dispute. Everything that has been said by speakers on both sides of the chamber substantiates that statement. The necessity for a central reserve bank is not in dispute. Nor is the necessity for the Commonwealth Bank to engage in normal trading operations in dispute. The only matter that is in dispute in this debate in the methods that have been used in the interests of the people, the Commonwealth Bank, and the public trading banks to .separate the operations of the central bank from those of the Commonwealth Trading Bank. It is that separation which is being contested so bitterly by honorable members opposite, who want the central bank and the Commonwealth Trading Bank to be a complete, powerful and predatory entity, not for the purpose of improving the banking services, but in order to destroy the public trading banks. Every speech that has been made by Opposition members during this debate has, to a varying degree, covered that point adequately. The Labour party has never improved, the services of the Commonwealth Bank. Honorable members opposite want the central bank and the Commonwealth Bank to be a powerful and predatory entity for the confessed purpose of destroying the public trading banks, as they are so euphoniously called, by the process of attrition, since they cannot be destroyed by an act of Parliament.

The allegation that the Commonwealth Bank is exclusively the people’s bank was adequately answered a few minutes ago by the honorable member for Bradfield (Mr. Turner). The idle boast of Opposition members that the Commonwealth bank is the “people’s bank”, and the claim that the responsibility for its establishment belongs to the Labour party, which has husbanded it through many troubled years, and has done much to advance its influence in the banking world generally, will not bear examination. The Australian Labour party has never done anything to advance the Commonwealth Bank. From 1922 to 1942, the influence of Labour policy in federal politics was practically negligible, and the Commonwealth Bank increased the number of its branches from 92 to 275 - an increase of 200 per cent. In the same period, the bank increased its assets from £134,000,000 to £421,000,000, again an increase of 200 per cent. During those two decades, the bank increased the number of its staff from 1,600 to 6,400 persons, an increase of 300 per cent. In the same period, the profit of the bank moved from £400,000 to approximately £1,000,000.

Those figures prompt me to say that the Commonwealth Bank, either as a central bank or as a trading bank, has nothing to fear from the changes proposed in this legislation. Nor have the people or the public trading banks anything to fear from it. The only fears stem from the socialist party, which sees in this change a diminishing prospect of using the Commonwealth Bank to smash the public trading banks within the law. The purpose of these bills is to protect the people of our country, the central bank, the Commonwealth Trading Bank and the public trading banks. In passing, I point out that the public trading banks were inaugurated in this country by the lowly men and women who subscribed capital for them. Of course, some of the public trading banks were inaugurated by lowly men and women in other parts of the world who subscribed their capital. This legislation will protect these demo- cratic institutions which have served us so well.

The CHAIRMAN:

– Order! The honorable member has exhausted his time.

Mr CLAREY:
Bendigo

.- I confess that I have had some difficulty in understanding the argument propounded by the honorable member for Riverina (Mr. Roberton). For his information, I explain that the “ people’s bank “ is the bank that is owned by the people themselves, as is the Commonwealth Bank. The people’s bank was established by the people of Australia, through their representatives in this Parliament, for the express purpose of providing a financial institution the capital and influence of which would be used for the proper development of Australia and in order to assist the Government to fulfil its role. The Australian Labour party, which was responsible for the establishment of the Commonwealth Bank, is keenly interested in the progress of that institution. Any expression of opinion to the contrary is not supported by the speeches of a number of honorable members opposite who declare that the Labour party desires to make the Commonwealth Bank the only bank in Australia.

I propose to direct attention to one feature of the bill that has been almost overlooked in the second-reading debate and during the discussion to-day in committee. One of the fundamental provisions of the Banking Act 1945 deals with n bank that is unable to meet its obligations. For the first time in the history of Australia, and, indeed, of many other countries, the security of deposits in the private trading banks was guaranteed by the Government. When that revolutionary step was taken, a great responsibility was immediately thrust upon the government of the day, and the Commonwealth Bank was required to make certain at all times that a -private financial institution conducted its business with due caution and prudence. In short, the Parliament decided that the people of Australia would never again suffer the misery that followed the bank failures in the 1890’s, and, unfortunately, in the 1930’s.

I thought that the Government, when it introduced legislation to amend the Banking Act, would facilitate investigations by the Commonwealth Bank into the standing of the private trading banks. However, proposed section 13 (2.) makes the role of the Commonwealth Bank more difficult. The act now provides - (1.) A bank which considers that it is likely to become unable to meet its obligations, or is about to suspend payment, shall forthwith inform the Commonwealth Bank. (2.) Where a bank -

  1. so informs the Commonwealth Bank;

    1. becomes unable to meet its obligations or suspends payment; or
  2. in the opinion of the Commonwealth Bank, is likely to become unable to meet its obligations or is about to suspend payment, the Commonwealth Bank may -
  3. appoint an officer of the Commonwealth Bank to investigate the affairs of the bank concerned; and
  4. assume control of and carry on the business of that bank.

That provision is essential because the responsibility for meeting the demands of the depositors, in such circumstances, falls upon the Government through the Commonwealth Bank. It empowers the Commonwealth Bank to take control promptly of any bank that finds itself in difficulties. I was astonished to find in clause 5 a proposal to amend section 13 by omitting sub-section (2.) and replacing it with a provision that will make it extremely difficult for the Commonwealth Bank to act with the rapidity that would be necessary in order to prevent a bank from closing its doors upon becoming unable to meet its obligations. The proposed new sub-section provides that the Commonwealth Bank can only assume control of the business of a trading bank if, after receiving a report from the Auditor-General upon the affairs of the bank, it is of opinion that the bank is likely to become unable to meet its commitments or is about to suspend payment. The Auditor-General may take so long to make an examination and prepare a report that the very result that the Government is supposed to be anxious to prevent may occur before the report can be submitted.

Mr Tom Burke:

– A state of panic could arise.

Mr CLAREY:

– Of course. The mere fact that the Auditor-General had been called in by the Commonwealth Bank to investigate the affairs of a trading bank would naturally cause a financial panic, which is exactly what the Government wishes to avoid. There would be a rush upon the bank by depositors, a feeling of insecurity would develop in the commercial community, and we should be involved in a crisis that everybody would be most anxious to avoid. The only reason given in support of the Government’s proposal is that the present provision is rather harsh.

The CHAIRMAN:

– Order ! The honorable member’s time has expired.

Mr CLAREY:

– As no other honorable member has risen, I shall take my second period now. It is easy to say that the Commonwealth Bank should not have the power to act harshly or quickly and that some check should be placed upon it, but I remind honorable members who have said so that the Prime Minister (Mr. Menzies), in his second-reading speech, clearly expressed his confidence in the integrity of the Commonwealth Bank. He said that, throughout its history, it had acted with propriety and absolute fairness. He added -

I want to say at once, because it is as well that, as far as possible, we should fight this matter out on clear ground, that in my opinion there is no cause for believing that the Commonwealth Bank has used its powers under the act otherwise than in promoting economic stability and carrying out its other central bank responsibilities. This is not a question of accusing somebody in the past of bad faith.

We all agree that, when an institution like the Commonwealth Bank is entrusted with the power to protect the Government against such a contingency as would arise if a trading bank failed to meet its liabilities, that institution should command the implicit trust of the government of the day. The Commonwealth Bank has conducted its affairs faithfully and efficiently for 40 years, and has survived the vicissitudes of two world wars, a period of great economic depression, and the recent difficult post-war reconstruction period. Having regard to that record, one can reasonably argue that it has established the right to be trusted. There is no justification for depriving the bank of a power that it has never abused merely because somebody thinks that, at some time in the future, it may act harshly. It is essential that the Commonwealth Bank be permitted to act without delay if one of the trading banks appears to be likely to become unable to meet its commitments. Such a situation would demand emergency action. The delay that would be involved in obtaining a report from the Auditor-General could lead to the most regrettable results. Therefore, I suggest that clause 5 is bad and will serve no good purpose. The new provision will imperil the interests of the Australian people and, in practice, may cause grave injury to our banking system.

The next matter that I propose to discuss is so important that it should be mentioned on every possible occasion. The honorable member for Riverina (Mr. Roberton) praised the Government’s plan to separate the General Banking Division from the Commonwealth Bank as a reserve bank so that henceforth the two institutions will be individual authorities. I believe that the alteration will restrict the power for good of the Commonwealth Bank. Up to the present the Commonwealth Bank, as a central bank, has had at its command the General Banking Division and three other departments, all of which have carried out its policies. They could not have done otherwise. The Governor has had complete control of a unified banking system with a single general policy. The private banks, of course, had to be subjected to some form of control, such as the calling up of special accounts, because they were entirely separate units, controlled by separate boards of directors, working for different groups of shareholders, and pursuing policies which were bound to clash from time to time with central bank policy. They had to be brought into line by means of some legislative authority such as the Banking Act. The separation of the General Banking Division from the Commonwealth Bank will weaken the banking structure of Australia instead of strengthening it.

Mr McMahon:

– The Labour Government’ in 1945 intended to establish a separate central bank.

Mr CLAREY:

– But conditions then were entirely different from conditions to-day. I am sure that the Minister for Air (Mr. McMahon) has changed his views considerably with the passage of. the years. We should be very poor citizens if we failed to profit by experience.

The next important subject that I shall discuss is that of interest rates. I greatly regret that this bill will abolish the maximum rate of 17 s. 6d. per cent. which was fixed in the Banking Act 1945. There will be no ceiling on interest rates under this measure. One of the greatest advantages of having a maximum central bank interest rate is that it gives a lead to other banks and helps to keep interest rates generally down. There can be no doubt that the holding down of interest rates so as to make money cheap is absolutely essential to the expansion of investment, the development of the nation, and the encouragement of private industry. Unfortunately, the increase of interest rates during the last two years has retarded development and has aggravated the unemployment situation. The security and confidence of all sections of the community seem to have departed. Progress has ceased, and Australia is in the doldrums. Unfortunately, the tendency for interest rates to rise will be accelerated by the amendment of the act proposed in this bill. If the Government takes the view that interest rates should not be subject to a ceiling limit, and that the Commonwealth Bank should be permitted to fix any rate of interest it likes, it will be embarking upon a ‘most dangerous financial policy.

The CHAIRMAN:

– Order! The honorable gentleman’s time has expired.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

Mr. Chairman-

Motion (by Mr. Eric j. Harrison) put -

That the question be now , put.

The committee divided. (The Chairman - Mr. C.F. Adermann.)

AYES: 0

NOES: 0

Majority . . . . 6

AYES

NOES

Question so resolved in the affirmative.

Question put -

That the bill be agreed to.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 54

NOES: 48

Majority . . . . 6

AYES

NOES

Question so resolved in the affirmative.

Bill reported without amendment; report adopted.

Bill -by leave - read a third time.

page 866

ADJOURNMENT

Housing - Bank Advances - Olympic Games - Long Range Weapons Establishment - Communism - Security - Employment - “ The Brisbane Line “ - Manus Island - Civil Aviation

Motion (by Mr. Eric J. Harrison) proposed -

That the House do now adjourn.

Mr BRYSON:
Wills

.- I wish to refer to a matter which is, I understand, a matter of Government policy. It relates to advances by the Commonwealth Bank to co-operative housing societies. The easiest way in which to state my case will be to relate the experience in recent months of a member of a co-operative housing society. Three years ago, the man to whom I shall refer, joined a co-operative housing society known as Coburg No. 3 Society. The society was formed under the provisions of an act of the Victorian Parliament, and for a number of years obtained all its finance from the Commonwealth Bank. About eighteen months ago, the man commenced to build a house. He applied to the society for a loan of £1,620. That loan was granted to him. After he had begun to build his house, he discovered that, owing to increased costs, he required additional financial accommodation. He made an application to the secretary of the society and was told that when he knew how much more money he wanted, the society would advance it to him. He discovered that he required another £300. When he applied to the society for the additional loan, he was informed by the secretary that it could not be provided because the society could not obtain further money from the Commonwealth Bank. He made inquiries into the matter, and eventually he was told that, because of government instructions, no further loans upon houses would be granted by the Commonwealth Bank through co-operative housing societies.

After eighteen months of building operations, the man’s house is approximately three-quarters finished, but it is not yet fit to live in. He cannot get the further advance of £300 that he requires, and he cannot move into his house. At a time when materials and man-power are readily available, a house that is almost completed is lying idle. The delay in completion is due to the fact that the Commonwealth Bank, apparently acting under government instruction, has refused to provide the necessary additional money. For a number of years it had advanced a great deal of money for that purpose. I cite that case, only as an illustration. There are possibly hundreds of young people in my electorate who have recently married, or are about to be married, who are clamouring to join co-operative building societies so that they can get their homes built on reasonable deposit conditions with a loan at reasonable rates of interest from the co-operative building society. However, because of this delay activity in the co-operative housing field in Melbourne is reaching the state where it will not be long before that kind of home-building for the workers will cease entirely, because it is dependent upon credit, and such credit has formerly been obtained from the Commonwealth Bank. The Victorian Government has guaranteed such loans, and has not asked the Commonwealth Bank to take any unnecessary risks. Because of the policy that is being adopted people who have started to build homes, or who want to build homes, are being frustrated. I know that at present building materials are freely available, and that building tradesmen are seeking jobs in Melbourne. The bousing boom has ended and houses can be built at more reasonable prices than was formerly the case. Here is an opportunity to get houses built. I bring this case forward in the hope that the Treasurer will have the matter investigated and see whether the former policy cannot be continued, and money be made available by loan to co-operative building societies, as was done until recently.

Sir ARTHUR FADDEN:
McPhersonTreasurer · CP

– The matter raised by the honorable member for Wills (Mr. Bryson) is entirely under the Commonwealth Bank’s administration. I can assure him that no instructions have emanated from the Government about what loans should or should not, be granted for the purposes that he has mentioned. I shall have the matter investigated, but I am positive that the society that the honorable member has mentioned, or the honorable member himself, has been misinformed of the reason for the difficulties experienced by his friend, which are not due to any instruction from the Government in connexion with banking policy, which is under the administration of the Commonwealth Bank Board.

Mr Bryson:

– Can the Treasurer make any recommendation to the board in that respect ?

Sir ARTHUR FADDEN:

– No.

Mr HAWORTH:
Isaacs

.- I wish to direct the attention of the Government to the present position regarding parklands in Melbourne. During the last war, the Australian Government took over, as an urgency measure, large playing areas in Melbourne. Some of these lands have been given back. For instance, Royal Park was handed back to the “Victorian Government, which is still using some of that area for an emergency housing settlement. However, Albert Park has not been handed back to the people, but is still retained by the Australian Government for the housing of certain defence services. The citizens of Melbourne, and particularly of my electorate, are keen to have those parklands returned to the people for use as playing areas, the use for which they were originally designed. There is at present a great need for suitable sporting areas in the environs of Melbourne, and sporting clubs have been endeavouring to obtain more playing space. The position is becoming serious. Normally probably more sports are played in Albert Park at one time than in any other playing area in the Commonwealth. The Army has decided to re-build the Watsonia camp as permanent quarters for army personnel, and no doubt other accommodation is envisaged by the Government to provide space for the services now accommodated at Albert Park. I believe that such accommodation is available at Broadmeadows, which is on the suburban transport system of Melbourne. I ask the Government to make available the playing areas that were taken over in the war-time, and to set a final date by which they will be handed over. I believe that only the setting of a final date for the removal of the services from such playing areas will prevent their occupation by the services from continuing indefinitely. I suggest that a suitable date of removal would be 1957, because that year has some significance, to which I shall refer later. The tremendous space available at Albert Park is used by only about 2,000 people. The use of 500,000 square feet of building space is extravagant for the accommodation of only 2,000 people, as at present. The buildings now at Albert Park would be ideal for use as an Olympic village. The present Victorian Government does not seem to be capable of solving the problems that arise from the prospective holding of the Olympic Games in Melbourne, in 1956, and will not’ help the Olympic Games organization to find quarters for the contestants who will take part in the games. It is playing politics with the Olympic Games. The people of Melbourne are becoming fed up with the State Government in that respect. It will be impossible to stage the Olympic Games in Melbourne unless the contestants can be accommodated in and around the city. I suggest that the Australian Government should come to the assistance of the Olympic Games organization and should show the Victorian Government which has the power, but not the wish, to help, that it is willing to help that organization. Albert Park is ideal for the site of an Olympic village because not only is it in the centre of the city, but it is also on the direct transport system to the Melbourne Cricket Ground which is to be the site of the games. It is surrounded by excellent practice fields of all descriptions and its close proximity to the suggested housing centre will make it even more suitable than any other place I know of for use as the site of an Olympic village. It would cost a negligible sum of money to convert the present wooden barracks into accommodation for Olympic contestants. The site has all the necessary amenities and facilities within easy access. It has excellent roads and footpaths, as well as a sewerage system, electric light, and proximity to the transport system. The St. Kilda cricket ground is opposite it and there is a number of other playing areas nearby. At the completion of the Olympic Games the buildings could be removed and the area handed back to sporting clubs and to the Albert Park Trust for use for the original purpose for which it was intended. I think that the Government “ would be doing a tremendous lot of good by vacating such playing areas, which were designed for sport and for breathing spaces in congested residential areas. It would also give some help to the Victorian people, who are trying to organize the Olympic Games, but do not seem to be able to obtain any assistance in that respect from the Victorian Government, which has done nothing during its term of office but throw spanners into the works. I appeal to the Government to consider this important matter.

Mr CALWELL:
Melbourne

– I desire to say a few words on a remarkable disclosure that in the polling at the Woomera Long Range Weapons Testing Establishment, the top priority secret undertaking in Australia, during the South Australian general election last Saturday, 107 people out of a total of 537 voters voted for the Communist candidate. The Minister for Supply (Mr. Beale) made a statement yesterday which was supposed to lull the Australian people once more into a feeling of security. I propose without any assistance from any member on the Government side, including those who are now interjecting, to make my comments on the Minister’s statement. He said -

Our screening arrangements for men engaged on all secret and classifiedwork at Woomera are very thorough, and there need be no anxiety that Communists or their sympathisers have access to these secrets.

Then he added - and I take this as a piece of insufferable impertinence -

There were many men on labouring and other jobs at Woomera, but they were not in contact with any secret projects.

That is as much as to say that there can be no communism, or no dangerous Communists, at work in Woomera because the workers are not allowed near the secrets. There are more Communists in the universities of this country than there are in the trade unions. The Minister’s statement is an affront to the workers engaged at Woomera, who have nothing to sell but their labour power, and earn only the basic wage, or a little more, and who are less interested in communism than are a lot of people who are products of universities. I remind the House that Dr. Alan Nunn-May and Dr. KlausFuchs were not members of any trade union in England when they engaged in a certain nefarious conspiracy for which they received gaol sentences. I am not attacking the scientists who work at Woomera, but I am expressing my resentment of the attack that the Minister made by implication on the workers engaged on that project when he insinuated that they are the only people at Woomera who could possibly be dangerous to security. The significant fact is that 107 people, or about 20 per cent. of the people who voted at the establishment, voted for the Communist candidate. Outside Woomera, which is the top secret undertaking in this country, the Communists can never poll more than 2 per cent. of the votes at a general election. In the N.S.W. general election recently they polled 1.62 per cent. which was nearly 100 per cent. above the percentage of votes that they had received at the previous general election. This was due, of course, to the worsening economic conditions of the past two years for which this Government is responsible. The members of the Liberal party and the Australian Country party now in office had a good deal to say about the Chifley Government and the screening and other security measures taken by it when it was in office. They actually said that America would not trust us with any secrets because the Chifley Government itself was not to be trusted. They said that the Chifley Government was suspect.

Mr McMahon:

– That was quite true.

Mr CALWELL:

– It was quite untrue, and the Minister for the Navy (Mr. McMahon) was one of those who said it. He was also one of those who cheered the Prime Minister (Mr. Menzies), who in his policy speech said -

The day has gone by for treating communism as a legitimate political philosophy. Our attitude has been one of great tolerance. We conceded freedom, and were rewarded by a series of damaging industrial disturbances with no true industrial foundation.

Then, proceeding to discuss the Long Range Weapons Establishment, he said -

The Government was temporarily stung into action by Communist attempts to hold up the rocket range projects, attempts which were described by the Attorney-General (the present Leader of the Opposition) as made “ in the interest of a foreign power “.

There was never any suggestion that the Woomera Long Range Weapons Establishment was overrun by Communists then, and that the number there was one out of every five. The preceding Labour Government was criticized for not taking a strong attitude towards Communists and their activities at the Long Range Weapons Establishment. We stopped the Communists’ attempt to prevent the building of the range, but this Government has not prevented the infiltration of Communists into the heart of the establishment. The Treasurer (Sir Arthur Fadden) who was at the time the leader of the Australian Country party, said in his policy speech, which merely was a pale echo of that delivered by the Prime Minister (Mr. Menzies) a short time before -

The measures which will be taken by the Country and Liberal Parties against Australian Communists will, we are confident, eradicate these foul and dangerous individuals who know neither decency nor Christianity.

We will enforce both existing and contemplated legislation against Communists so rigorously that their effort to establish a foreign controlled Godless dictatorship in Australia will bc promptly frustrated.

They were apparently merely words, words, words. The Government has not only done nothing about the matter of Communists, but it also has allowed the Communists to infiltrate the Long Range Weapons Establishment at Woomera. The Minister for Supply (Mr. Beale) delivered an explanation of this matter at question time to-day, but that explanation did not get the Government out of its difficulties. The Minister said that the persons who voted for the Communist candidate were people who did not know that Mr. Johnson was a Communist, or, alternatively, that they were Liberals who voted for the Communist candidate because they preferred a Communist to a member of the Labour party. It would be natural enough for the people to say that, but I do not believe that either of the explanations by the Minister suits the situation. I believe that those who voted for the Communist candidate at the Woomera Long Range Weapons Estab lishment voted deliberately for him well knowing him to be a Communist. Such people are at the establishment in large numbers. The Government which used to tell us that America would not trust us with scientific secrets, now has to explain to Washington and London why our top secrets at the Woomera Long Range Weapons Establishment are now in danger. The secrets may not yet have been given away, but they could have been given away because there are enough Communists there to get them.

I wonder what those people who attacked the Chifley Government so venomously and vindictively will say to the British Government and President Eisenhower’s cabinet about their failure to protect the only top secret undertaking in Australia. It is up to them to say where they stand. I believe that at least since Saturday last the Communists now have a. new anthem entitled, “ Home on the Range”..

Mr BEALE:
Minister for Supply · Parramatta · LP

– It is very encouraging to discover that the honorable member for Melbourne (Mr. Calwell) has seen the light and is now coming before the people as a very Paladin of democracy and an opponent of the Communists. Only a few months ago, when the Government was seeking to bring forward legislation against the Communists and to get the approval of the nation to it, he was loudest, shrillest and most raucous in his attempts to have that legislation rejected. The honorable member abused this Government’s anti-Communist legislation from one end of Australia to the other. But even a death-bed repentance is better than no repentance at all, if it is sincere. It is doubtful however, whether the honorable member is really attacking the Communists or whether he is merely attempting to damage this Government as he has tried to do without success more than once. What is more ugly is his attempt to damage Australia in the eyes of its allies in other parts of the world. Once again he is at loggerheads with his own leader, because it was quite obvious in the House this morning that the Leader of the Opposition (Dr. Evatt) pooh-poohed this matter, played it down, and suggested that it was of no importance. Apparently his leader’s policy does not suit this would-be ouster or pusher-out of his leader. As usual, whatever the Leader of the Opposition says the honorable member for Melbourne say the opposite. In this way he indicates more and more freely to the people how the rift in the Labour party is widening. In playing up this incident at Woomera, the honorable member for Melbourne is gravely injuring Australia unless he is able to show that there is really a damaging and dangerous state of affairs at our Long Range Weapons Establishment. It is well known to everybody, however much it may be denied by the honorable member for Melbourne, that when this Government assumed office two years ago it discovered that Australia’s allies would not give us certain information because of the way in which the affairs of this country had been conducted by the Labour Party when it held office. It has taken us two long and bitter years to get back the confidence of our allies after it had been destroyed by the previous Labour government through its handling of Communists and traitors in this country. Now the honorable member for Melbourne seeks to destroy that confidence in a moment by playing up this incident.

One hundred and ten out of 558 people, or 20 per cent, of the voters at the Woomera Long Range Weapons Establishment, voted for a man named Johnston, who presented himself for election as a Communist candidate at the recent South Australian general election. We are expected by the honorable member from Melbourne to draw the inference that the 110 persons must have been Communists. It is very interesting to hear what other people have said about this incident. Mr. Riches, the Labour candidate at that election, said that the reason for the high percentage of Communist votes at Woomera was that many people did not know that his opponent was a Communist. Mr. Riches said that as he had held the seat for a number of years, ho was probably well known as a Labour man, and that that might have induced Liberal supporters to vote for Mr. Johnston in the belief that he was an antiLabour candidate.

Me. Keon. - What is the Minister’s authority for making that statement?

Mr BEALE:

– My authority is contained in a lettergram sent from Adelaide a few hours ago which quoted Mr. Riches. It is not often that I have the privilege of agreeing with the honorable member for Hindmarsh (Mr. Clyde Cameron), hut on this occasion I am delighted to adopt his very words. It was reported to-day that>-

Mr. Clyde Cameron who participated in the South Australian campaign, said to-day, “ I don’t believe there is a communist at Woomera. I have sponsored several people for employment on the range. Even those whose political background has been impeccable have had to wait up to nearly three months before they were accepted for employment. Security went right through their history and, where they had interstate associations, checked back the whole way. . . . Besides, nobody is going to tell me the communists are stupid enough to reveal their hands “.

I can also quote a prominent Labour party representative in Adelaide who said much the same thing yesterday. There is plenty of support for the view of those two- gentlemen, and that support is to be found in two. facts. The first is that Mr. Johnston’s name was on the top of the ballot-paper. The second is that most people at Woomera would not know that Mr. Johnston was a Communist. They would not be aware of his party affiliation because there was no how-to-vote card issued by Mr. Johnston, he made no canvass, he never even visited the range, he conducted no campaign, there was almost complete apathy about the elections and there was a great deal of ignorance about the candidates. For example, in Woomera West, mainly nien voted, whilst in Woomera Village, mainly housewives voted. Yet, in Woomera Village three times the number of votes were cast for the Communist candidate that were cast in Woomera West. Is it to be said that the housewives of Woomera are Communists? I suggest that the whole thing is absurd. No Liberal candidate stood at this election, and some people have already told us that they did not know that Mr. Johnston was a Communist when they voted for him. It should also be remembered that Woomera is a very isolated community and, if I may quote

Tennyson, “ The world echoes are remote “. I suggest that political echoes are particularly remote from Woomera, and more especially remote are State political echoes because most of the people employed at the . Long Range Weapons Establishment are not South Australians although they have qualified to vote by six months’ residence in the State. The chief superintendent of the establishment is a distinguished English scientist from the British Ministry of Supply, and he is steeped in security tradition. The superintendent of the range is GroupCaptain Pither, who is also steeped in security tradition. I have complete confidence in those two gentlemen, and to suggest that they are not doing their very utmost is completely ridiculous. We have our own security organizations working from Melbourne and Adelaide in close association with our own officers on the spot. They work in conjunction with the Australian Security Intelligence Organization. It is my view, and the view of General Stevens, the head of the Department of Supply, that the security arrangements at the Long Range Weapons Establishment are very good indeed. Every one who visits Woomera is security checked, and every one who has or can have access to secret or classified information is checked in the most rigid way possible. Pontecorvo, Fuchs, Berger, and Maclean have proved the necessity for such rigid security measures. That is why our checking is 3o complete. Nevertheless, in view of all that I have said, instructions have been given that the security services, in conjunction with the Australian Security Intelligence Organization, should make an examination to ascertain whether we can tighten up our security arrangements still further, and the Secretary of the Department of Supply and myself will visit Adelaide as soon as possible to examine this whole matter.

It is a grievous thing to put this matter on the level of a purely party attack. It is injurious to Australia at a time when we want the confidence of nations overseas. The people in America and England are fully aware of the nature” of our security arrangements, and they have confidence in us and are sending information to us. If the irrespon sible attacks that have occurred to-night continue, Australia will lose the priceless benefit of their confidence. If the honorable member for Melbourne is too irresponsible to heed what I have said, I appeal to other honorable members in this House to exercise restraint. For our part, we will ensure that no Communists are sent to Woomera if we can possibly help it.

Mr SPEAKER:

– A very important matter has been raised, and certain honorable members advised mc a few days ago that they wished to speak about it. In accordance with my usual practice I consider that we should deal with one matter at a time. Does any honorable member wish to speak about the matters mentioned by the Minister for Supply?

Mr WARD:
East Sydney

.- Yes, I do. I can understand the agitation of the Minister for Supply (Mr. Beale), who is responsible for the situation that exists at the Long Range Weapons Establishment to which the honorable member for Melbourne (Mr. Calwell) has directed attention. When Mr. Churchill and President Eisenhower receive a copy of the Minister’s apology, I wonder whether it will be acceptable to them. It is most important that those gentlemen should be satisfied about the situation at the Long Range Weapons Establishment. It was interesting to hear the Minister quoting Labour supporters to bolster up his case, and, as a matter of fact, I was amused at the sarcasm of the honorable member for Hindmarsh (Mr. Clyde Cameron). Apparently the Minister did not understand his remarks in that sense. It would seem that the Government lacks any defence when it has to depend on statements made by Labour supporters about the situation at the Long Range Weapons Establishment. I have not been astonished by the great increase of communism in this country as evidenced not only by the voting at the Woomera establishment, but also by recent votes for ‘Communists in general. Is that not exactly what we said would happen under an anti-Labour government? We opposed the misnamed Communist Party Dissolution Bill, more popularly known as the red bill, because that legislation sought to aim a blow at democratic government in Australia and to destroy the principle of freedom of speech. The blow was aimed more particularly at the Labour party than at the Communist party, which was only a negligible quantity. Who is astonished by the growth of communism in Australia? At the recent New South Wales State elections the Communist vote represented 1.62 per cent, of the total number of votes polled, or practically double the percentage at the previous State elections. It is true that the Communist vote in Australia has increased remarkably, not because a great many people have been converted to communism but because the people are desperate. The number of desperate people in Australia is growing daily because of the mismanagement of the affairs of the nation by this Government. How can tho Government expect communism to do anything but grow when approximately 150,000 people are unemployed and are expected to exist on the miserable pittance it is handing out to them? Let me give an illustration of what is happening. The Minister for Labour and National Service (Mr. Holt) told us a few days ago that lie had difficulty in getting men to accept work that was offering. On every occasion on which I have sent men. to Commonwealth employment authorities, particularly to those in the Sydney metropolitan area, I have been astonished when one of them has been placed in a .job because in almost every instance, they have been told that it is impossible for the Government to place them in suitable employment. The case of a British ex-serviceman has been brought to my notice. I mention his case because it is typical of that of many other immigrants who are unable to obtain work. The man concerned, whose name I shall supply to the Minister if he desires me to do so, served for fifteen years in the British Army. He was one of the veterans of Dunkirk. He arrived in Australia seventeen months ago as an assisted immigrant since when he has had only five months work. To-day, he and his wife and nine year old son have no fixed place of abode. They have not even been provided with accommodation in one of the British immigrant hostels. They are forced to sleep on railway stations or wherever they can find a place to lay their heads.

Mr SPEAKER:

– Order ! I understood the honorable member to say that he wished to discuss the matter that was raised by the honorable member for Melbourne.

Mr WARD:

– That is the matter which I am discussing. I am endeavouring to show that the explanation given by the Minister for Supply is incorrect and that communism is growing in Australia solely because of the mismanagement of the affairs of the nation by this Government. If hungry and desperate people are not receiving consideration from this Government we can understand why they are turning to the political philosophy of the Communists.

Mr SPEAKER:

– Order ! The honorable member for East Sydney must comply with his undertaking to deal with the growth of communism at the Long Range Weapons Testing Establishment at Woomera and not elsewhere.

Mr WARD:

– I contend, Mr. Speaker, that I should not be restricted to that subject alone. I point out that the House is discussing, not a bill, but the motion for the adjournment of the House, upon which an honorable member is entitled to raise any matter that he deems to be of public interest and concern. If I care to develop my argument by showing the reasons why there has been an increase in the Communist vote in Australia, I should be permitted to do so on the motion for the adjournment of the House.

Mr SPEAKER:

– I asked honorable members specifically if they wished to speak on the matter raised by the honorable member for Melbourne. Three honorable members rose and indicated that they wished to do so. The honorable member for East Sydney was one of them.

Mr WARD:

– I am directing my remarks to that matter. I leave it to the House to decide whether I have done so or otherwise.

Mr SPEAKER:

– The only opinion that counts at the moment is my own.

Mr WARD:

– That may be so, but I contend that the standing order which relates, to the discussion of the motion for the adjournment of the House permits an honorable member to raise any matter which he has not had an opportunity to raise during the normal proceedings of the House.

Mr McMahon:

– It is a question of the honorable member’s honesty. He said specifically that he wanted to speak on the subject raised by the honorable member for Melbourne.

Mr WARD:

– The question of my honesty does not arise. I have said that the Government’s explanation of the increased Communist vote at Woomera will not be accepted by those in authority in the United States of America and Great Britain. The Minister for Supply talked about the playing of party politics and appealed to us to put the national interest first. I well recollect the attacks that were made on the administration of the Chifley Labour Government and the fact that members of the then Opposition produced no evidence to prove their allegation that the authorities in the United States of America and Great Britain had refused to make secret information available to the Chifley Government because they were not satisfied that adequate steps had been taken to prevent leakages. We deny that this allegation had any foundation.

Mr ERIC J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– It did exist.

Mr WARD:

– I invite the VicePresident of the Executive Council (Mr. Eric J. Harrison) to produce the evidence upon which he based his allegations against the Chifley Government. Honorable members opposite are always making allegations without producing evidence to support them.

Mr ERIC J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– Even about. “ the Brisbane line “ ?

Mr WARD:

– We could discuss “the Brisbane line “ if the honorable gentleman wanted to do so. The right honorable gentleman knows full well that many accepted authorities in the world to-day admit the existence during the war of “ the Brisbane line “ strategy in Australia. General MacArthur mentioned it, as did also Sir Leslie Wilson, the former Governor of Queensland. If the Vice-President of the Executive Council wants a public dis cussion on “ the Brisbane line “ strategy and those who- were responsible for it, 1 should be delighted to meet him some night in the Wentworth electorate, and allow his own electors to decide the issue on the facts presented to them. The right honorable gentleman knows that a. proper inquiry into the allegations I made in this Parliament and elsewhere was very cunningly avoided by concentrating on a statement I had made to the effect that a certain document was missing from a departmental file. On no occasion was either he or his colleagues anxious to discuss the question whether or not a “ Brisbane line “ strategy ever existed. I prefer to take the word of General MacArthur and of Sir Leslie Wilson, rather than that of the Vice-President of the Executive Council or the inexperienced Minister for the Navy (Mr. McMahon) on that matter.

Mr SPEAKER:

– Order! The honorable member’s time has expired. Before I call another member to speak on this subject, I want an assurance from him that he will deal with the growth of .communism at the Long Range Weapons Establishment at Woomera and with no other subject.

Mr WENTWORTH:
I give you such an assurance, Mr. Speaker. We all sympathize with the gallant efforts made by the honorable member for East Sydney (Mr. Ward · Mackellar; [10.55].

to keep the gloat out of his voice when he referred to the’ increased Communist vote at Woomera - not quite a successful effort, but nevertheless a very gallant one, which accords well with his pronouncement that Australia should begin to think on Soviet lines.

Mr Ward:

– When did I say that?. That is completely untrue.

Mr WENTWORTH:

– This Woomera affair is a serious matter which should not be treated on party lines. I felt a good deal of sympathy for some of the things that were said by the honorable member for Melbourne, although I did not agree with his motives in saying them or with the conclusions that he drew from them. The Long Range Weapons Establishment at Woomera holds many secrets. They are not merely Australian secrets; they are secrets that belong to the free world. They not merely contribute to our international prestige. They are secrets that contribute to our national survival along, with the survival of the other countries in the free world. We should guard them with the greatest circumspection. When one considers the kind of information which an enemy would want about the guided weapons testing range - and this is germane to the question under discussion - one naturally concludes that he would want the fullest detailed information that he can obtain. What an enemy is really interested in Ls not the classified information on the project, but information concerning the type of range that is being used - whether it is a short or a long range. On that information he will decide whether or not we are in the position at present to subject Soviet territory _ to rocket attack. That is something which is paramount in his desire to pierce the net of our security. The information is to be gleaned from the labourer or the labourer’s wife, the manager or the manager’s wife, or some other person in thi? establishment or in the Woomera area. Therefore, the question of security goes right beyond the classified available information, because so-called classified information is not the vital information that the enemy requires at this moment. He wants to know how far wa have gone with our rocket experiments. The vital information which he seeks is whether we are using a short or long range and the general pattern of our activities. If this is so, and I am afraid that it is so, it is of no use for us to think that a compartment of classified information is sufficient. I agree with the honorable member for Melbourne that the most dangerous Communist is not always in the trade unions, but may be in the university and the propaganda sphere. I agree with the Minister for the Navy (Mr. McMahon) that too much reliance cannot be placed on the figures relating to the Communist role. What is of more significance is the fact that there is at Woomera a body of people who are inclined towards communism. They are not necessarily Communist agents. If one looks at the pattern of communism in other parts of the world one sees that the Communist method of working is to create a body of sympathizers, and on that fertile soil to plant the seeds of treason. We must beware of that.

Here, I part company with the Opposition, although I hope that I do not part company with it as much as I fear I do. I believe that the time has come when we should take much more definite action than we have taken in the past against those people. Such action is overdue. If the Government has made a mistake, it has made the mistake of not differing from the policy that was laid down by its predecessor, the Labour Government. I feel that at this moment we should be taking thought and cognizance of ways in which to exclude members of the ‘ Communist party from the Public Service and its agencies. When I make that statement I am not referring to Communist sympathizers. Of course, we must exclude Communist, sympathizers from such places as the Long Range Weapons Establishment at Woomera, but I consider that the Communist sympathizer is mainly dangerous because he is, if I may adopt a Communist phrase, “ the transmission belt by which the activities of the party are transferred to the masses.” If we can eliminate the party itself, and thi.pledged members of it, the “fellow travellers “ become of much less significance and danger, although we have the present position in which the party, because it is in being and in operation, has its effect through the influence of the “ fellow travellers “. f

I hope that if and when legislation is introduced into this House to deal with members of the Communist party in the Public Service, there will come from members of the Opposition the support which seems to be indicated by their brave words to-night. I can only wish that their brave words to-night belie their deeds in the past. I also hope that if the Government has been tardy in action, the explanation is that it has been, in a constant fear of criticism whenever it has foreshadowed effective action against communism. Members of the Opposition have talked in general terms of the necessity to do something against the Communists, but whenever anything effective and concrete is put before them, they suddenly find scruples and say, in effect, “ Oh, we could not- do that. It is all right in principle, but do not do this thing.” The last two lines of the old rhyme -

Hang your clothes on the mulberry bush,

But don’t go near the water seem to describe the attitude of the Labour party to communism hitherto. I hope that this national matter will be treated on national and not on party lines, and that the Labour party will change the attitude which it has shown to the problem in the past. I also hope that the Government will show greater vigour, and will not be frightened, as perhaps it has been, by Labour criticism when it has considered taking effective action against communism.

Mr. Galvin rising in his place,

Mr SPEAKER:

– Order ! Does the honorable member for Kingston wish to speak on the same subject?

Mr GALVIN:
KINGSTON, SOUTH AUSTRALIA

– Yes.

Mr SPEAKER:

– Then I shall call the honorable member, and after him, I shall call the honorable member for Blaxland (Mr. E. James Harrison), who desires to raise another matter.

Mr GALVIN:
Kingston

.- I visited the Long Range Weapons Establishment at Woomera frequently before I became a member of the Parliament. Indeed, I was the first trade union official who went to Woomera. In the circumstances, I feel that I should take the opportunity, if it is necessary, to defend the workers at Woomera against any accusation that the votes for a Communist candidate in the South Australian election last Saturday were cast by some of their number. I assure the House that, in spite of the statement of the Minister for Supply (Mr. Beale) there is no apathy at Woomera on political matters. For a long while, active interest has been displayed in politics, particularly by members of the Labour party. The statement that many people at Woomera would not know that Elliot Johnston was a Communist would be made only by a person who had no knowledge of South Australia in general, and Woomera in particular. It cannot be claimed with truth that Woomera is so isolated that the residents there had no knowledge of issues and personalities in the State election cam paign. The two newspapers that are published daily in Adelaide circulate at Woomera, and considerable publicity was given in them to the election. Mr. Johnston had space in the newspapers, and almost every one at Woomera would have known that he was the Communist candidate and that Mr. Riches was the Labour party candidate. I know that the workers at Woomera have voted solidly for the honorable member for Grey (Mr. Russell) on every occasion.

It is possible, as has been mentioned, that the votes for the Communist candidate at the village at Woomera were cast by housewives. Perhaps some of those women are so disgusted with the policy of this Government that they are turning to an extreme political party. They may have been forced to do so by the high cost of living. They may believe that stern action of that kind is required in order to stir up this Government. I have not the slightest doubt that some votes recorded at Woomera for the Communist candidate were cast by supporters of the Liberal party, who hate the Labour party more than they hate the Communist party. I was associated for a long time with the workers at Woomera before I became a member of this Parliament, and I have since been in constant communication with most of them, and I am satisfied that not one man who is engaged on the construction and maintenance work there voted for Mr. Johnston. In my opinion, the votes for the Communist candidate were cast, as they have always been cast, by the supporters of the Communist party, who are members of the Liberal party.

Mr E JAMES HARRISON:
BLAXLAND, NEW SOUTH WALES · ALP

– I rise to expose the failure of the Minister for Air (Mr. McMahon) to provide this House with accurate answers to questions addressed to him about mail services to members of the Royal Australian Air Force stationed at Manus Island. On the 25th February last, I asked the honorable gentleman whether he was aware of the discontent among servicemen on Manus Island, and their wives and relatives in Australia, because the mail service to the island was restricted to one delivery weekly. On their behalf, I asked for a service thrice weekly. In reply, the Minister claimed that my question was based upon a misunderstanding of the facts, and said there was a bi-weekly service to Manus Island at that time. On the 4th March, I directed another question to the Minister on the same subject. I pointed out that his reply to me had caused resentment and asked that I be furnished with information about the days on which the mails arrived at and left Manus Island. The Minister, in his reply, took exception to my statement that resentment existed among members of the services. He said he spoke from a knowledge gained during a personal visit to the island, and he claimed that his conversations with the men in every mess and at every parade showed, in his view, that there were no complaints about the mail service. He suggested that I should be wise to check my facts and he assured me there were two mail services each week to Manus Island. He also charged me with having adopted a wrong attitude to the matter, because I had raised it in this House, and had created the impression that discontent existed about the mail service. A Sydney morning newspaper briefly reported the incident, and said that I had been chided by the Minister. However, the wife of one of the servicemen concerned, who does not live in my electorate and is a complete stranger to me, has since written to me on the subject. I quote the following extract from her letter : -

After reading last Thursday’s Daily Telegraph and finding you are interested in our servicemen at Manus Island, I have a request to make on behalf of myself and all wives and mothers who have loved ones serving with the E.A.A.F. on Manus Island. Many have received letters from their loved ones complaining of their discontent at only receiving one mail each week. I read in Thursday’s paper that Mr. McMahon said they receive two mails weekly. However, there is only one mail received each week by the K.A.A.F. members and that is on Fridays.

My request to you is, will you please do all in your power to improve the mail situation and so make our boys more contented and happy.

This Australian wife of a serviceman has also sent to me four personal letters that she nas received from her husband. Some passages in the letters are underlined to show the view that this member of the Royal Australian Air Force is expressing on behalf of the servicemen at Manus Island. I now propose to quote from these letters in order to prove that my approach has been right and to demonstrate just how little the Minister knows about the conditions of servicemen directly under his control, even after he had made a personal visit to the area. The first letter from which I quote, was written by the serviceman on the 18th November, 1952. It reads as follows: -

The Minister for Air was here in the mess room and we really gave him a doing about the mail situation. I can say that it is the main cause of dissension here. The fact that at least one kite a day lands here and we only get one mail a week, and officially can only send one a week, has the boys really hostile. However, he tells us that things will be better in the near future.

I refer now to a letter that was written on the 21st December - four days before Christmas - at least one month after the Minister had visited Manus Island. It states -

There was a letter received by one of the lads from a W.O. S.P. who was up here for a couple of weeks and is now back in Townsville. He asked that the letter be read out in the mess. He said that there were stacks of Christmas parcels at Townsville and some cove there had refused to allow them to be sent by courier, and that most of the things had been returned to the senders as there is no other transport. It made every one in the mess beaut and happy. If they could have got hold of this chap they would have torn him to pieces. We are trying to get a copy of the letter to send it to the papers in Aussie and let people know just what is going on with the tilings they aTe trying to send up here.

I proceed at once to quote from a third letter, which was written on the 18th January, two months or more after the Minister had visited the island. It reads -

I wouldn’t get into trouble if you complained to the papers about the mail, you are a civilian and can say what you like, but I am tied with red tape and if I complain I would get into trouble. You could tell them that Wing Coin mander Lings told us that when he gave us the address “Admiralty Islands” that the mail would come on every kite but so far there is absolutely no difference. You could also tell them that it is the main complaint up here. If the boys were getting their mail they would be much happier. I cannot see any reason why the public shouldn’t know how the boys are being treated, this seems to be the forgotten legion up here.

My last quotation is taken from a letter written by a Royal Australian Air Force serviceman to ibis wife on the 25th February, the very day when I first questioned the Minister on this subject. The writer stated -

We had a visitor from Townsville in the mess last night, he is in charge of the services police in the northern area, and we have hammered him about the mail position. He said when he goes back that he will do all that he am to get the .position improved. He said that he would report that if nothing was done that there was every possibility of a revolt up here. I don’t think that he is far wrong as the boys tempers are beginning to get frayed, what with working the six days, then having to do their washing on Sundays, and only getting letters once a week, they have just about had it.

I hope this chap’s report in addition to this reports that have gone in previously will make certain people down there realise that we ari: entitled to at least the same treatment ag the Navy, who get their mail three times a week, and they are only ten miles away from us and have to pick up the mail from the kite that lands right here on our strip, in fact the crews of the kite cat here in our officers’ mess. It’s just about time that someone received a well deserved kick in the pants, and that we received the letters that mean so much to vis.

It is not my custom to ask questions of Ministers unless I am convinced that they are based on facts. Therefore, I resented the manner in which the Minister passed off my original question and attempted to make a joke of it with his colleagues when he returned to his seat. The writers of the letters that I have quoted to-night were unknown to me at that time.

Mr Haworth:

– I visited Manus Island.

Mr McMAHON:
LOWE, NEW SOUTH WALES · LP

– The honorable member for Blaxland (Mr. E. James Harrison) was given an opportunity to go there himself.

Mr SPEAKER:

– Order ! I shall take action if honorable gentlemen do not cease interjecting.

Mr E JAMES HARRISON:
BLAXLAND, NEW SOUTH WALES · ALP

– The point is that the Minister visited Manns Island and accepted an .assurance given to him by somebody there, but failed to check it after he returned to Australia. There is a great deal of unrest at the island because a promise that was made by the Minister has not been put into effect. The Minister may be entitled to accept the word of >the officer -from whom he received the assurance, but I point out to him that an honorable member who asks a question about a matter of public importance that affects servicemen and their wives is entitled to have the matter checked. Such inquiries should not be brushed aside as the Minister brushed aside my question. I ask that the complaints of these men, who are rendering great service to the community, be given the attention that they deserve. Their wives, also, are entitled to have the benefit of an improved mail service, especially as the men who fly the aircraft which carry mails for naval men at Manus Island actually have their meals at the Royal Australian Air Force station there. There is no reason why the members of the Air Force should not be provided with a service at least equivalent to that provided for naval men. I repeat that I knew nothing about the letters from which I have quoted when I asked my first question on this subject. The information on which I based that question came to me from another source. The letters confirm the information that was supplied to me originally, and I now repeat my plea on behalf of men and women who cannot come to this chamber to plead for themselves.

Mr McMAHON:
Minister foi the Navy and Minister for Air · Lowe · LP

; - I knew that the honorable member for Blaxland (Mr. E. James Harrison) was greatly disturbed about this matter and that his feelings had been hurt. However, I remind him now that some time ago a group of members of this Parlia-ment was invited by the Royal Australian Air Force to go to Manus Island and investigate any complaints that Navy and Air Force personnel there might raise. The honorable member for Blaxland was not chosen for inclusion in the delegation, but later, in deference to the wishes of the honorable member for Melbourne (Mr. Calwell), I made a seat specially available for him and invited him to go to the island so that he could investigate the problems of the men for himself. However, his feelings had been hurt then and he refused to go. As he would not go to the island to make an examination for himself, he should not come here now and complain that all is not well. Members of all parties represented in .this House visited the Royal

Australian Air Force station at Manus Island and attended parades, but they did not hear any significant or really valid complaints. They did not complain to me when they returned. They reported mainly that they had found conditions in general to be good and that most of the men on the unit were as happy and contented as could be expected at a remote defence post of that kind. Subsequently, I visited the post myself and tried to discover the nature of the men’s complaints. One of the complaints, in truth, was that the Navy was receiving two deliveries of mail a week but that the Air Force was not receiving the same service. I arrived back in Sydney on the 15th December, and shortly afterwards wrote to the Air Force authorities and instructed them that the unit at Manus Island was to be provided with the same mail deliveries as were provided for the naval station.

I am glad to say that I have a note here from the Department of Air to inform me that my instructions have been carried out. There are four mail services each week to Lae. The Royal Australian Air Force courier service goes to Momote every Friday and always takes mail from Lae, if there is any there. In recent weeks there have been at least two additional flights weekly from Lae to Momote. This has meant that sometimes there has been no mail for the Royal Australian Air Force courier to collect at Lae. The courier takes mail out of Momote every Thursday and, as I have already indicated, two additional aircraft weekly have carried mail from Momote recently. These aircraft have operated on varying days. Therefore, there is good evidence that one regular service and two irregular services are provided both in and out of Manus Island each week.

Mr Calwell:

– But the Minister spoke previously of two regular services.

Mr McMAHON:

– I said that there was a service twice weekly. I did not use the word “ regular “. This is the first occasion on which I have spoken of regular services. I repeat, for the benefit of the honorable member for Blaxland, that when an inquiry disclosed that the Air Force unit at Manus Island was not receiving the same mail service as was provided for the naval unit, instructions were issued immediately that the Air Force unit should be placed on the same basis as the naval unit. Although I am not perfectly satisfied with what has been done, the fact is that the best that can be achieved in the circumstances has been achieved.

There is one difficulty that affects the Air Force unit. Because of the large number of naval men stationed at H.M.A.S. Tarangau, the Postal Department decided to establish a permanent post office at that base. However, because considerably fewer Royal Australian Air Force men were stationed on the island - as the honorable member for Blaxland probably knows, there is only a satellite airfield there - the department would not agree to provide a post office for them. The Government has decided that the naval and air force bases shall be completed by the end of 1954 and has authorized the expenditure of a large sum of money for that purpose. In accordance with their decision, an air-field construction group was formed largely from personnel who had been engaged on the construction of the air-field at Cocos Island and who were later sent to Manus Island. They were just coming in at the time that I left Manus Island and had not then arrived in force. The Postal Department has now decided to provide a post office as soon as housing accommodation is built. When that is done a much more, regular service will be provided. I make it clear that the Air Force, of its own volition, is proceeding to give the best service that it is capable of giving.

Mr E JAMES HARRISON:
BLAXLAND, NEW SOUTH WALES · ALP

– Every Friday?

Mr McMAHON:

– The honorable member is referring to the position that existed prior to Christmas and before I visited the area. If he visited the area and investigated the present position, he would find that the air-field construction personnel are unanimous in their enthusiasm. When I asked them if they were contented - I was contemplating taking their families out of the area - they replied, “This will be a paradise for us. We will be happy to stay here for some time “.

Mr KEON:
Yarra

.- Complaints have been made in this chamber about political attacks upon Australian National Airways Proprietary Limited. If that company is prepared, as, apparently it is, to use political means to further its own interests it must take what comes to it. It cannot have it both ways. It cannot use political influence to push its own interests and then claim to be exempt from politics when political attacks are made on its interests. I raise this matter because Trans-Australia Airlines, as a result of effective advertising and managerial initiative, arranged to take DCS planes from British Canadian Pacific Airlines to make four special charter flights over the Easter period. These flights had been completely booked up and the persons concerned fully expected that they would be able to travel in big and fast aircraft. However, after Trans-Australia Airlines bad arranged to conduct those flights, Australian National Airways Proprietary Limited insisted ‘that it should be given two of the four flights and, as a result of intervention by the Government, TransAustralia Airlines was instructed to relinquish two of those flights to it. Consequently, Trans- Australia Airlines’ complete schedule over the Easter holidays has been completely disrupted, and persons who believed that the flights would be made in fast, modern DC6 aircraft will now find that they will be obliged to travel in smaller and less modern aircraft. Because Australian National Airways Proprietary Limited was too slow to make a similar arrangement on its own initiative, or because its advertising was not sufficiently effective, it is to profit from Trans-Australia Airlines.

Mr Beazley:

– Australian National Airways Proprietary Limited took legal action with the object of preventing Trans-Australia Airlines from taking these flights, on charter from British Commonwealth Pacific Airlines.

Mr KEON:

– That is so. Here is an instance of political interference in the management of Trans-Australia Airlines in order that some preference shall be given to Australian National Airways Proprietary Limited. The Government, as a result of representations by Aus tralian National Airways Proprietary Limited, intervened to prohibit fair competition between these two organizations in -order to give to Australian National Airways Proprietary Limited a special advantage to which that company is not entitled.

Mr Hulme:

– How does the honorable member know that?

Mr KEON:

– I am positive that Trans- Australia Airlines was directed by the Government to transfer two of the four charter flights to Australian National Airways Proprietary Limited and if Australian National Airways Proprietary Limited uses political influence to prevent Trans-Australia Airlines from gaining an advantage by the exercise of superior initiative, the private organization has no cause to squeal if other people say, in effect, that if it is good enough for it to use political influence for that purpose it is good enough for other people to use political influence to ensure that Trans-Australia Airlines, in its turn, shall gain an advantage. This matter calls for urgent consideration by the Government. The House is entitled to be supplied by the Government with a statement explaining its reason for interfering in the management of Trans-Australia Airlines in order to prevent fair competition between these two organizations to the detriment of the government airlines.

Question resolved in the affirmative.

page 879

PAPERS

The following papers were presented : -

Coal Industry Act - Joint Coal Board -

Fifth Annual Report and financial accounts, for year 1951-52.

Report of the Auditor-General of the Commonwealth on the Accounts of the Joint Coal Board, for year 1951-52.

Defence Transitional (Residual Provisions) Act - National Security (Industrial) Property ) Regulations - Order - Inventions and designs.

Lands Acquisition Act - Return of land disposed of under section 63.

Wool Products Bounty Act - Third Annual Report for 1952.

House adjourned at 11.26 p.m.

page 880

ANSWERS TO QUESTIONS

The following answers to questions were circulated-: -

Oats.

Mr McEwen:
CP

– The answers to the honorable member’s questions are as follows : - 1 and 2. I am not aware of the source of the honorable member’s, information, but J am advised that the shipment referred to was probably incorrectly reported to be oats, whereas in fact it was barley. I am not aware of any oversea market that would pay 12s. 9½d. a bushel for oats in recent times.

  1. The f.o.b. price for Victorian oats in January ranged from 6s. 9d. to 5s. 9d. a bushel on a falling market.
  2. See answer to 1 and 2.

Cite as: Australia, House of Representatives, Debates, 11 March 1953, viewed 22 October 2017, <http://historichansard.net/hofreps/1953/19530311_reps_20_221/>.