23rd Parliament · 1st Session
Mr. SPEAKER (Hon. John McLeay) took the chair at 10.30 a.m., and read prayers.
- Mr. Speaker, it is expected that the Minister for External Affairs will be leaving shortly on a brief visit to Japan, Korea and Singapore. Immediately after this, he will attend the meeting of the Seato Council in New Zealand. The Attorney-General will act as Minister for External Affairs from 21st March while the Minister for External Affairs is absent - until about 11th April. For the same period, Senator Gorton will act as Minister-in-Charge of the Commonwealth Scientific and Industrial Research Organization and the Attorney-General will represent him in this House.
– Yesterday, my colleague, the Deputy Leader of the Opposition, asked the Treasurer a question in relation to the recent loan floated by the Commonwealth Government in London. Will the Treasurer elaborate his answer to that question, and state, as far as possible, the surrounding circumstances of the loan and any special reasons for the results? Perhaps the right honorable gentleman will state what type of investors came in and what type did not. I suggest that some such statement is needed to supplement the answer which the Treasurer gave yesterday.
– I do not think there is very much that I can usefully add to what I said yesterday except to suggest to honorable members that they do not try to read too much into this result. Certainly, no one in London is reading anything dramatic into the result. The loan opened at a small discount but was still showing rather more favorable terms, from the Commonwealth Government’s point of view, than either of two earlier loans which had been raised. It is only in comparatively recent times that the Commonwealth Government has been able to return with prospects of success to the London market. That is no reflection upon the Commonwealth Government because the Government has, on my information, been able to approach the market on more favorable terms than any other country outside the United Kingdom itself.
The firm which represents the Australian Government in these financial arrangements in London is a very well known and highly regarded firm. The terms of the loan in question were discussed with that firm at some length. It was felt, at one stage, that because of the uncertainty of the market, arising out of the international developments to which I referred yesterday, the loan should be postponed. But there are problems about that in the United Kingdom. There are many borrowers on the London market, and normally, in conjunction with the United Kingdom financial authorities, a time-table is worked out and one cannot just pick and choose the dates according to one’s wishes. Had we decided to postpone the loan operation we would have had to do so, perhaps, for an indefinite period and, for all we know, the international situation could become worse in that period. There might also be economic developments which would cause our loan raising opportunities to be less favorable. In addition to the international arrangements to which I have just referred, was the fact that the financial administration in the United States of America increased the bank discount rate there, and that had some repercussions.
– That is not very convincing.
– Order! The honorable member for East Sydney must remain silent.
– I do not know what atmosphere the honorable member for East Sydney is seeking to create, but as far as we are concerned we know that our credit stands high, and not merely on the London market. No country, with the possible exception of Canada, enjoys today a higher credit rating on the money market in the United States of America than Australia enjoys.
– What about the-
– Order! The honorable member for East Sydney will cease interjecting.
– I do not believe that too much significance should be read into these developments. That is certainly the view being taken by our financial advisers and by our High Commissioner in London. Finally, I would remind the House that all matters such as the terms and conditions of this loan operation in London and, indeed, the timing of it and other arrangements, were unanimously agreed upon by the members of the Australian Loan Council, which includes senior representatives of all the State governments.
– My question, addressed to the Minister for the Army, relates to representations which I made to him earlier this week. Can he yet say whether the Army is able to alleviate the present acute traffic difficulty at Toowong by supplying a Bailey bridge for temporary use? Does he agree that the erection of a Bailey bridge at this busy centre would be a useful exercise for the Army as well as a very helpful and valuable contribution in the present situation? As I explained to the Minister, present traffic congestion is causing considerable loss to the business community and inconvenience to many hundreds of local residents.
– I am not yet in a position to tell the honorable member that the Army can help in this matter, but I have inquiries afoot in relation to it. As the honorable member knows, the Army on many occasions has assisted, and is very willing to assist, in cases of dire emergency, but, of course, we have a very limited number of the Bailey bridges in Australia. Their principal purpose is for training young Army engineers and it is only in extreme circumstances that we use them for other purposes. If it is possible to do so, we shall certainly help in the way the honorable member asks. I understand that the present problem at Toowong has been brought about by some error of judgment on the part of the local government authority. However, that is by the way. If a dire emergency exists and we can help to relieve it. we will do so. T will let the honorable member know as soon as possible.
– I ask the Minister for Territories whether, in view of the decision of the Minister in charge of the war service land settlement scheme not to extend the provisions of the act to ex-servicemen in the Northern Territory he will now introduce a scheme similar to that recently brought into being in New Guinea under which ex-servicemen receive assistance along lines similar to the land settlement scheme now operating in the States of Australia.
– As the honorable member for the Northern Territory knows, there are two credit schemes available in the Northern Territory at the present time, one designed for the resident pastoral lessee and one for the small agricultural enterprise. Although no advantage has been taken of the scheme for the pastoral lessee, considerable advantage has been taken of the scheme for the small agricultural enterprise. I will have the officers of the department examine the honorable member’s suggestion, in conjunction with officers of the other departments concerned, to see whether there is any way in which these credit schemes can be extended in order to help ex-servicemen and the agricultural development in the Territory.
– Will the Treasurer consider the introduction of amending taxation legislation to provide for the granting of concessional rebates in respect of gifts to technical training institutions?
– I can give the honorable member the same assurance as I have given to other members who have sought taxation relief in respect of matters which call for some consideration. That assurance is that, as we approach the time for the preparation of the Budget, submissions of this character will be closely examined against the background of the general economic circumstances of the country.
– I desire to direct a question to the Prime Minister. Is it correct that Mr. Ansett, the head of certain airline interests, is to-day to interview the Prime Minister regarding the importing of another Electra aircraft? Will the Prime Minister safeguard the public interest by indicating that the future requirements of this airline organization shall not be allowed to cause the organization to incur any further obligation on public funds? Will not the right honorable gentleman agree that the time has arrived when this airline, which runs in competition with the Commonwealth’s own airline, Trans-Australia Airlines, must stand on its own feet? If funds are not being sought by the airline will the Prime Minister elicit the information as to how the purchase of this Electra aircraft is to be financed, and by whom?
– I am sorry that my friend was put to the trouble of asking all that part of his question after the first sentence, because I am not seeing Mr. Ansett. This is a matter for my colleague, the Minister for Civil Aviation.
– I direct to the Prime Minister a question that is prompted by the fact that residents in certain areas of northern New South Wales early this week suffered serious loss through severe thunderstorms and cyclonic winds. Will the right honorable gentleman inform me of the conditions under which those who suffered may secure financial assistance in the provision of which the Commonwealth will participate?
– Matters of this kind are dealt with in this way: The State Government reports the matter to the Commonwealth and indicates that it is prepared to make a provision for dealing with cases of personal hardship. It has been our practice to reply to that by matching that provision. In some circumstances other items can be looked at. I cannot say offhand what are the procedures for ascertaining the circumstances, but if it will assist the honorable member I shall have a precise statement on these matters prepared and made available.
– I direct a question to the Minister for Health. Is the Minister aware that there is widespread concern among chronic asthma sufferers who are compelled to use cortisone to alleviate this distressing illness, at the high cost of this vital drug? Will the Minister take the necessary steps to secure the inclusion of this life-saving drug in the list of drugs provided free by the Government?
– Cortisone and its derivatives are available as pharmaceutical benefits for treatment of the condition known as status asthmaticus. As the honorable member knows, it is not open to the Minister for Health to make additions to the list of pharmaceutical benefits unless such additions are recommended by the Pharmaceutical Benefits Advisory Committee, which consists of people in close touch with medicines and the practice of medicine. So far, the committee has recommended only that cortisone and its derivatives should be made available for treatment of this particular form of asthma, and until those gentlemen who are, I suggest to the honorable member, especially well-qualified to make the necessary judgment, recommend the inclusion of the drug for use in cases additional to those now covered, we have no power to include it in the list.
– I direct a question to the Minister representing the Minister for Civil Aviation. It is supplementary to the question asked by the honorable member for Bonython. Is it a fact that the Ansett-A.N.A. airline has asked for permission from the Government to import an extra Electra aircraft? Is it also a fact that, in order to make this importation, the airline has cancelled an order for two Viscount aircraft, one of which is already partly built? If the Ansett-A.N.A. organization is allowed to purchase this extra Electra, will consideration be given to allowing Trans-Australia Airlines to purchase the Caravelle aircraft which it has always desired to purchase?
– T think I must follow the line taken by the Prime Minister. I have no knowledge of this particular proposition, or of whether Mr. Ansett has approached the Government. The Prime Minister says that Mr. Ansett has not approached him. I undertake to convey the honorable member’s question to my colleague in another place and see that a reply is furnished to the honorable member.
– Has the Prime Minister any knowledge as to the accuracy or otherwise of a report which is circulating to the effect that an official of the English cricket team, which recently visited Australia, brought illegally into this country a quantity of cricket bats which he then proceeded to retail to members of the Australian public? Is it a fact that the English official concerned and a formerly prominent Australian cricketer were interrogated by Customs officials regarding this matter? If the Prime Minister has no personal knowledge of the incident, will he have inquiries made and make the result known to the Parliament?
– I have no knowledge of it. I shall tell my colleague, the Minister for Customs, about the question.
– Is the Attorney-General aware that the schedule of exemptions from jury service set out in section 6 of the Juries Act 1956 of the State of Victoria does not include honorable members of this House or of the Senate, although members of both Houses of the State Parliament are expressly exempted? ls there any federal legislation which exempts honorable members from jury service in the States? If not, will the Attorney-General take action to correct this omission?
– I am not sure whether the honorable member’s question is asked in the interests of litigants or in the interests of members. It raises a very pleasant prospect that litigants might have to litigate their affairs before some honorable members, and it also raises a very pleasant prospect for the Whips, in that, by dint of a jury summons, we could alter the majorities. However, I can assure the honorable member that the Commonwealth has paid attention to this matter and that there is a statute of this Parliament, the Jury Exemption Act, which saves senators and members of the House from the trouble of being summoned to serve on juries - and protects litigants.
– Will the Prime Minister examine the Hatch Act of the United States Congress to see whether Australia should follow the American practice of requiring lobbyists to register with the clerks of the House of Representatives and the Senate, to give .the names of their em ployers and the amount of their pay and expenses, and to file each quarter a sworn report of all money received and expended by them during the preceding quarter in carrying out their lobbying work?
– I am indebted to the honorable member for the suggestion. I will have a look at it. I must say that, having regard to the description he gave, the name, Hatch Act, seemed to me to be singularly happy.
– My question is addressed to the Minister for Trade. Can the right honorable gentleman inform the House what is being done to implement the arrangements to export to Ceylon 100,000 tons of flour, and further quantities that he mentioned later, and particularly whether the millers have privately to make arrangements, if they can, with the Ceylon authorities for the sale of this flour, or whether the arrangements will be made through the Australian Wheat Board or some Government authority? I would point out that, in South Australia, there is great disappointment at the continuing deterioration of the flour-milling industry. The employees are much concerned, and wonder why they hear nothing at all about flour from the State being supplied, in view of the statements that we have heard about the sale of flour to Ceylon.
– I will try to get some specific information for the honorable member, although I think that the details will come from my colleague, the Minister for Primary Industry. Broadly, the fact is that, after negotiations on this matter were taken up with the Ceylon Government, that Government contracted to buy 30,000 long tons of Australian flour in the last calendar year, and did so. I assume that that flour has been delivered. Then, pursuant to the terms of the arrangement under which Ceylon was to buy at least 100,000 long tons of flour in each of the next two calendar years, a representative of the Ceylon Department of Commerce and Trade came to Australia in February, conducted negotiations with the Australian Wheat Board and signed a contract to purchase 50,000 tons of flour. That was done about three or four weeks ago, and the arrangement is that further negotiations will be undertaken, I think within two or three months, to dispose of the purchase of the second 50.000 tons of flour during this year.
– Does the Minister know how it is allocated?
– No, I do not know that, but I do know that the Australian Wheat Board, on which there is a representative of the Australian flour millers, has been the negotiating authority.
I will consult with my colleague, the Minister for Primary Industry, and supply to the honorable member, who, I know, has always been very interested in this matter, details of the orders that have gone to South Australia as a result of these arrangements.
– I desire to ask the Minister for Trade a question also. Is it a fact that Australia has a very adverse trade balance with the United States of America, and that part of the reason for this is the heavy tariff of 25 cents per lb. against Australian wool and another heavy duty against imported woollen cloth? Has the Australian Government put the strongest possible pressure on the United States Government to reduce or abolish these tariffs, as they appear to be killing the wool trade in the United States?
– I do not know that the situation mentioned could be described as explaining the adverse trade balance with the United States of America, but the points that the honorable member has made are correct. There is a substantial duty against our wool, and a duty on woven woollen materials which recently has operated more severely against United Kingdom woollen manufacturers, I think, than against our own. The Australian Government has, over a long period - as, I would say, did our predecessors in office - made strong representations to the United States Government in respect of these wool duties. A reduction was negotiated by our predecessors in office, I think in 1946. There has never been any abatement of our effort to secure more advantageous entry of Australian woollens to the United States. We will continue that effort, but I am afraid that I cannot be optimistic at this stage.
– I ask the Prime Minister whether he will give a lead to the wool industry by convening a conference of representatives of wool-producing organizations with the object of achieving a uniform approach to the industry’s problems. Further, will the right honorable gentleman take .action to deal on a national basis with restrictive trading practices?
– My colleague, the Minister for Primary Industry, of course, is in constant contact with all the organizations concerned. I do not at the present time see any reason for substituting my activities in that field for his. There is no lack of communication and co-operation with these organizations.
– My question is addressed to the Postmaster-General. Some months ago I asked the Minister whether any surveys had been undertaken by the Australian Broadcasting Control Board to ascertain the effects of television on the studying, reading and sporting activties of young children. Subsequently the Minister informed me in writing that various organizations were carrying out such surveys. I now ask him whether these surveys have been completed. If so, what were the findings, and will he make information obtained by means of these surveys available to the House?
– I remember the honorable member for Lang directing this question to me some time ago, and also my reply. This morning, he has asked me whether the surveys that I mentioned in my reply have been completed. My reply is that they have not been completed. In explanation of that statement, I should like to point out that the Australian Broadcasting Board has co-operated with certain research bodies in the universities of Sydney and Melbourne which are carrying out their own research into social problems. These bodies are looking into a number of problems associated with the development of television, The studies are of such a nature that they cannot be finished off in just a few months. They will be directed continuously to all aspects of the problems over a number of years.
At the same time, studies of other matters are proceeding. For instance, the effect of television on family life and habits is being studied, particularly in Sydney and Melbourne, where it is possible now to study the impact of television because of the knowledge of family habits before and since the introduction of television. It is proposed to carry these studies into rural areas when television is extended to those areas, and preliminary investigations are now being made of this aspect. It will be remembered that some time ago reference was made in this House by my colleague who is now the Minister for Immigration to a new feature that was being introduced into television, the use of what is called subliminal advertising. That also is a subject of the studies which these groups are carrying out as a result of co-operation between the university research bodies, the Australian Broadcasting Control Board and the Australian Broadcasting Commission.
The commission and the board are contributing certain funds for the purpose of these university studies. The position is that the studies are primarily carried out by the university groups, and such portions of their reports as have a bearing on the board’s operations or on the operations of television are made available to the board and are used by it in determining its attitude towards the various problems. For instance, already there has been an examination of the report on the effect of the normal type western film, as a result of which the board has been able to confer with the Commonwealth Film Censor as to what standards should be observed in the censoring of such films.
The honorable member will see, I hope, that this is not such a matter that I can say to him now, “ Here is a big report for you to read.” The studies are proceeding, and they will continue over a period of years. But any preliminary information that the board has is readily available to the honorable member. If he or any other honorable member wishes to look at such information as the board has. I will see that the opportunity is given to him to do so.
– My question is directed to the Attorney-General, representing the Minister in charge of the Commonwealth
Scientific and Industrial Research Organization. Is it a fact that the production of rubber from the Mexican guayule plant, as envisaged by the Western Australian Government, would be more costly than production from present sources of natural and synthetic rubber? If the world demand for natural rubber decreases, is it a fact that the guayule plant, if commercial production were abandoned, could become a plant pest in Western Australia similar to the prickly pear and mesquite? «ir GARFIELD BARWICK.- I am sure that the honorable member will not mind my saying that I have never heard of this plant and that I have not much knowledge of world demand for rubber. However, I will certainly make due inquiry and let the honorable member know what I find out.
– I ask the Minister for Trade a question arising from the question asked by the honorable member for Farrer. In August last, I asked the Minister whether he was aware that vast quantities of synthetic fibres were being freely introduced into Australia from America to the detriment of our overseas dollar position and of our wool industry, and whether any action would be taken. The right honorable gentleman will remember that, in reply, he said that a group of people was advising the Department of Trade on this matter, that the Government was acting in accordance with directions and, in effect, that everything in the garden was lovely. Is the Minister aware that the chairman of the wool board, a Mr. G. Hunter, has pointed out that synthetics in vast quantities, bought with dollars borrowed from America, come into this country, free of all taxation, to the detriment of the wool trade? Will he do anything to prevent this unfair competition with both secondary and primary Australian industries?
– The honorable member has reminded me of a question which he asked some months ago. I remember the question, but I do not think that my answer followed exactly the lines he has indicated. However, I do not want to argue on that. I shall put the honorable member right on one fact immediately: Mr. G. Hunter is not chairman of the wool board.
– Tell the “ Sydney Morning Herald” that!
– Well, you tell it. The chairman of the Australian Wool Bureau, which is the chosen body representative of the two major organizations of Australian woolgrowers - the Australian Woolgrowers Council and the Australian Wool and Meat Producers Federation - is Mr. William Gunn. The Australian Wool Bureau, if we are to speak of statutory boards, is clearly the body to express a view on such a point as that raised by the honorable member, but it has never suggested to the Government that a duty should be imposed on orion and similar fibres; nor am I aware that any authoritative body of woolgrowers has made such a suggestion. I do not brush off this issue; it is quite validly the subject of different points of view, but I point out to the House that, if there is one commodity which, in Australia’s interests, should have free access to all markets, it is wool. It is not consistent that we should obstruct the entry to our market of a competitor for wool and at the same time argue that no country should obstruct the entry of our wool to its market.
This is, I will admit, a controversial issue and not an easy one to decide. However, 1 put this to the House: If, for instance, Japan, which may well develop as a highly important supplier and exporter of synthetics, were to find that we had placed an embargo on or raised an impossible barrier against the entry of synthetics from Japan to this market of 10,000,000 people, how could we complain if Japan then raised a similar barrier against the entry of Australian wool to her market, not only for her 90,000,000 peoples but for the great re-export trade which Japan has in wool? I make it quite clear to the House that this is not an easy matter, and there is no evidence that the Australian wool industry, which is very conscious of all these things, believes that in the long term, it would be in its interest to support this kind of competitive exclusion of textile fibres.
Finally, if there ought to be a duty on these yarns or fibres, then it is competent for those who regard their interests as at issue to ask for a hearing before the Tariff Board, and their request would be granted immediately. That is the way Australian tariff adjustments are made and, in the opinion of the Government, that is the way they ought to be made.
– I direct a question to the Postmaster-General. As the Minister is aware, the broadcast interviews conducted by rural officers of the Australian Broadcasting Commission are appreciated and are of value to primary producers. To render this service successfully, rural officers have to cover great distances. Will the Postmaster-General give consideration to supplying motor vehicles for the transport of these officers so that this rural service may operate at the highest level of efficiency?
– Actually, my friend, the honorable member for Mallee, has asked me for something which is rather outside my sphere or capacity. As he knows, the Australian Broadcasting Commission has its own authority under the Broadcasting and Television Act and, apart from the fact that I am responsible for putting its annual proposals to the House, the commission itself decides how the money made available to it in each year shall be expended. This question of the supply of motor vehicles to rural officers who have to travel considerable distances in rural areas collecting information and news has been engaging the attention of the commission, and I have had quite informal discussions about it with the chairman of the commission. I know that the A. B.C., sets out to provide its rural officers with adequate means of transport so far as it can within the limit of its own finances. The honorable member can be assured that this matter has been under consideration, and will continue to receive consideration from the commission.
– I preface a question to the Prime Minister by directing his attention to the fact that official figures published to-day indicate that in the last seven months, Australia’s export income from wool has fallen by £75,000,000 compared with the income for the corresponding period last year. In view of that fact, and in view of the fact that decisions reached by the Australian Woolgrowers’ Council on 28th February indicate that it is engaging in procrastination and delaying tactics concerning a decision of the wool- growers as to whether they want a change in the wool selling system, will the right honorable gentleman convene or arrange for a conference of State Premiers or a meeting of the Australian Agricultural Council so that action may be taken urgently in the national interests to remedy this disastrous state of affairs?
– I always regard any proposal put forward by my honorable friend with great interest. I do not go beyond that. I will think about what he said.
– My question is directed to the Minister for Trade. Is the Minister aware that the New Zealand Dairy Products Marketing Commission has arranged a direct shipping service from New Zealand to South America every two months for dairy produce in an endeavour to foster the kind of market that can only be established when a regular shipping service is in force? Will the Minister investigate the possibility of arranging for a similar regular shipping service from Australia to this potentially important market in South America?
– I can inform the honorable member that, not particularly in respect ‘ of dairy produce, but generally, in the hope that Australia’s trade with South America may expand, some investigations and inquiries are proceeding at the present time - largely on my own suggestion - by officers of the Department of Trade to discover what better regular shipping service may be arranged from Australia to South American ports.
– Can the Minister for the Army inform the House whether a committee has been set up to consider the pay and retiring allowances of permanent members of the Australian forces? Will the Minister advise me whether that committee, if it has been set up, has considered this matter, and if so, when its findings will be made public?
– I think that the honorable member knows that a committee is actively considering this matter at present. The result of the committee’s consideration is not yet available.
– Is the Postmaster-General aware that some sponsors of television programmes are using canned advertising material, imported in the main from the United States of America? Two such programmes are sponsored by “ Marlboro “ cigarettes and “ Sunbeam “ electrical appliances respectively. Does the honorable gentleman agree that this practice, if allowed to extend, could be detrimental to many Australians engaged in the advertising industry?
– The honorable member’s question raises a subject that has been discussed quite often in this House, namely, the use of Australian-produced film material and advertising material in television programmes. As I have said before, this is a matter-
– I was not referring to programmes. I was concerned with television advertising.
– The two kinds of material are interlocked. As far as advertising alone is concerned, I can inform the honorable member that my latest advice is that practically all of the film material required for advertising is produced in Australia. If the honorable member knows of some instances where this is not so, and gives me definite details, I shall have inquiries made.
The problem of providing material for use on television can only be solved by establishing conditions in which the Australian content of programmes can be steadily increased. A continuous effort to achieve this is being made by the Broadcasting Control Board and, in spite of what some honorable members opposite have said from time to time, it is also the concern of the television station licensees. I point out to honorable members that as the use of television extends, so the market available extends and the advertising value of the medium extends. This, in turn, will afford more scope for the building up of an Australian industry that will enable costs to be reduced and more people to be employed in the industry. These results can be achieved by maintaining steady progress; they cannot be achieved in a moment.
– I ask the PostmasterGeneral a question. Will the honorable gentleman consider giving new schools a higher priority for telephones than is given to them at present?
– The question of the supply of telephones to schools, particularly country schools, has engaged the attention of the Postal Department from time to time. Certain priorities are laid down for the installation of telephone services and top priority is given to such essential users as doctors, hospitals, nurses, the Red Cross and ambulances.
– And members of Parliament.
– Yes, members of Parliament as well, because many members make application to me for the urgent installation of telephones, and those requests are always met by the department. However, the normal procedure in relation to schools is that the committee which is generally responsible for handling the affairs of a school applies for a telephone and looks after it when it is installed. I cm assure the honorable member that, conditional upon the availability of such things as cable, overhead lines and exchange equipment in the area, the department will sympathetically consider any application for a telephone to be installed in a school.
– Mr. Speaker, could I answer, very briefly, a question which the honorable member for Werriwa asked without notice on 11th March? The honorable member will recall having asked me about payments under the Commonwealth Employees’ Compensation Act for hospital treatment. I have made some inquiries and it would appear that the honorable member has been misled. There is no ruling - to quote what he said at the time - “ that an employee must not be paid more than public ward rates, even if his doctor can secure prompt and proper treatment only in a private or intermediate ward “. In the only recent ruling on this subject, the commissioner advised his delegates that payment of any increased costs due to the admission or transfer of an employee to an intermediate or private ward should be authorized only if treatment in such a ward is reasonably necessary in relation to the injury or the disease suffered by the employee, that is, where suitable treatment cannot be given in a public ward or where public ward accommodation is not available. I think it follows from the commissioner’s ruling that, in those circumstances, treatment in the other type of ward could be paid for.
Motion (by Mr. Harold Holt) agreed to -
That the House, at its rising, adjourn until Tuesday, 7th April, at 2.30 p.m.
Motion (by Mr. Hasluck) agreed to -
That leave be given to bring in a bill for an act to amend the Northern Territory (Administration) Act 1910-1956.
Motion (by Mr. Hasluck) agreed to -
That leave be given to bring in a bill for an act to amend section five of the Northern Territory Representation Act 1922-1949.
In committee: Consideration resumed from 17th March (vide page 698).
– This is the second of the measures dealing with the dismembering of the existing structure of the Commonwealth Bank. This bill, as it were, cuts up the body into three sections, although admittedly they will remain under one corporation. The three sections are the Commonwealth Trading Bank, the Commonwealth Savings Bank and the new institution to be called the Development Bank. All these will be embraced under one general management but, underneath, will be a hierarchy of boards and executive committees which it is rather difficult to follow. I am sorry that the Treasurer (Mr. Harold Holt) did not have mimeographed the very convenient plan in which the former Treasurer had this new organization displayed in his office. On one occasion, he showed me on his wall a chart which showed quite clearly the structure and management and committees of the new banking corporation.
The Opposition believes that whilst the new Commonwealth Banking Corporation will be a vigorous body, it will not be in a position to perform as efficiently under the new management as it did under the old. We repeat our view that the central bank activities which are no longer contained within this structure will suffer because they have been severed from the new corporation.
During the last debate, Mr. Chairman, a great deal seems to have been expected by Government members from this new body, the Development Bank. As Opposition members stated in their second-reading speeches, we believe that this organization, as it is now set up, is, in a sense, not a bank at all. In fact, certain back-bench supporters of the Government have done their best to restrict its activities as a bank. In a sense, this body will be only a lender. It will have very few sources of new finance other than the £5,000,000 that is being provided under this legislation. It is true that it will take over the existing assets - and of course the existing liabilities - of the Industrial Finance Department and the Mortgage Bank Department. Their assets, 1 think, aggregate £15,000,000 at the moment, but, for the most part, that £15,000,000 is already utilized. Therefore, the new money will be only in the region of £5,000,000. It is hard to know how this very limited amount will be able to perform the functions that the Australian Country party and some Liberal members believe that this new Development Bank will perform.
There is not any doubt that, historically, there is a considerable gap in the Australian financial structure in the provision of what is relatively long-term credit for rural activities and for new industrial ventures. It is a gap that occurs in other economies, as well. Many years ago there was a monetary inquiry in Great Britain. I think that the name of the present Prime Minister of Great
Britain attaches to the phenomenon that was pointed to there - what is popularly called the “ Macmillan gap “. This is a gap in the structure of financial institutions in the providing of finance for undertakings that can be expected, over a long term, to be successful, or rural undertakings that can be expected over a period of years to be productive but which may not immediately give any great returns. That sort of gap was pointed to by the Rural Reconstruction Committee which sat in Australia during the 1940!s. As recently as December, 1956, in the “ Review of Marketing and Agricultural Economics “ published by the New South Wales Department of Agriculture, an observation is made in an article on rural credit policy for rural development by P. C. Druce, the principal economics research officer for the New South Wales Department of Agriculture.
He said -
That there should be doubts about the adequacy of existing rural credit facilities in Australia is hardly surprising in view of the fact that the credit structure has remained largely unchanged since Federation.
Recently, Dr. Coombs, in a paper which was delivered at the 1959 annual conference of the Australian Agricultural Economics Society pointed also to the situation as he finds it in Australia at the moment. He said -
The real question of the adequacy of rural credit is therefore one of deciding whether rural industries get a reasonable share of the available resources or whether a greater increase in productivity could be obtained by diverting to the rural economy some of the credit at present provided for other sections of the economy.
He points out, as must be observed in an economy where all the resources are being fully utilized, that it might be possible to give additional credit to the rural side of the economy only at the expense of the other side of it. But whether that is the circumstance in Australia at the moment is arguable. He went on to say -
There does seem to be some weakness in the Australian rural credits system when it comes to the provision of finance for farm improvement, development and for increasing productivity. I believe there is, therefore, need for a specialized institution or institutions designed to satisfy this need. It will not, however, bc a simple institution to administer.
I think those words were quoted by the honorable member for Mitchell (Mr. Wheeler) the other evening. I commend the Governor of the Commonwealth Bank for occasionally making statements as he does about the functioning of banking in this country. I am pleased that the Prime Minister (Mr. Menzies) at least answered the criticism that was raised by members on the Government side that “ public servants “, as they call them, should be making important statements. The Governor of the Bank is in a particular and peculiar position which nobody else enjoys, and he is able to provide often illuminating information for the benefit of all sections of the community. I trust that instead of retreating further into his ivory tower he will come out more and more in the making of public statements apart from his annual report. In this lecture he said -
It may be that the new Development Bank proposed by the Government will be able to contribute to the filling of this gap. I hope, however, that too much will not be expected of it.
I direct the attention of the honorable member for Wannon (Mr. Malcolm Fraser) to that.
Order! The honorable member’s time has expired.
.- I regret that the honorable member for Melbourne Ports (Mr. Crean) did not have time to finish, because I was enjoying his remarks very much as I agree with most of what he said. I do not know what conclusion he will come to. We will have to wait to hear it. I would say that the Rural Reconstruction Commission to which he referred and which recommended the establishment of an institution, pointed out, first of all, the existence of a gap in the credit structure of the rural sector of the economy. That commission was set up by a Labour government. Although it made that recommendation in its report published as early as 1944 or 1945, no provision for the rural sector of the economy was made in the very extensive banking legislation which was introduced by the Labour government between 1945 and 1949.
– There was, of course, the Mortgage Bank Department of the Commonwealth Bank.
– It established that department. To me the important part of the Development Bank activities is the terms on which credit will be made available.
Clause 73 of the bill which has been included only in respect of the Industrial Finance Department, provides that - (1.) In determining whether or not finance <shall be provided for a person, the Development Bank shall have regard primarily to the prospects of the operations of that person becoming, or continuing to be, successful and shall not necessarily have regard to the value of the security available in respect of that finance.
That clause was taken more or less holm bolus out of the previous legislation relating to the Industrial Finance Department of the bank. It was first included by the Australian Labour party in its banking legislation, I think in 1945. Not only did the Mortgage Bank Department have very small capital, but that particular provision was not included in respect to it. Although the Mortgage Bank Department provides longterm finance, it maintains the same security requirements which are asked by the trading banks in making either short or longterm loans. That is why I feel it is worth while emphasizing the importance of the Development Bank to the rural sector. Admittedly, it applies also to exactly the same degree to industrial undertakings to which it applied in that respect previously through the Industrial Finance Department. In this legislation that important principle has been extended by clause 73, which I have just quoted, to the rural sector of the economy.
That, to me, is vitally important. It justifies our describing the Development Bank as introducing a new era in the sphere of rural credit). Despite statements to the contrary, ! am sure that some ‘metropolitan members of this committee, some of them among my colleagues, are doubtful of the wisdom of setting up the Development Bank. I have heard honorable members opposite, particularly the honorable member for East Sydney (Mr. Ward), make the point that the Development Bank, according to its definition, will have as customers the nohopers, the bad risks, and it will necessarily become the subject of log rolling or boondoggling. I cannot see why it should. The difference in the organization of the structure of primary industry compared with that of secondary industry must always be borne in mind in considering this matter.
The structure of secondary industry is such that it can generally raise capital on the open market for its developmental needs. Only a very small sector of rural industry does that. By far the overwelming proportion of rural industry has a structure which makes it impossible, for it to raise its developmental capital in that way and, therefore, it has to turn elsewhere for developmental capital. If we take the analogy a little further, we may ask: What criterion does the investor adopt when declining to take up ordinary shares designed to enable a company to expand or develop its operations in industry? Does he try to make sure that if the company goes broke he will get his money back? Of course he does. He concentrates on the earning capacity of the development project and the skill of the management. Surely that is precisely what the Development Bank is designed to do. I do not believe that it will lend money to a no-hoper or a farmer who is likely to go broke any more than it will to an investor in a company that is likely to go broke. The whole tradition of the Mortgage Bank Department and the Industrial Finance Department of the Commonwealth Bank lead us to believe that a prudent policy will be followed. I do not think that any of us on this side of the House would seriously suggest that the Development Bank should do otherwise. All we say is: Let us adopt a different standard of security requirements in relation to developmental projects. Security would still be required, but instead of the borrower having to have the security in assets and cash, let the security be the income which will come from the development financed by the loan. In other words, the bank backs the skill and the character of the person concerned, together with the soundness of the project for which he asks finance. If the project is not sound, the loan is not granted. That is the point which was made very clearly by the honorable member for Wannon (Mr. Malcolm Fraser), and I agree with everything he said.
I think we would be failing in our responbilities if we were to suggest that the Development Bank should provide finance for development purposes in the rural sector for projects not likely to succeed. Every one of us who represents a rural electorate can testify to the fact that there are perhaps hundreds of projects in each electorate which meet the sort of criteria that would be required by the Development Bank before making a loan. They are sound projects that are waiting to be undertaken as soon as the finance is available on the kind of terms which, I hope, will be available from the Development Bank. There are plenty of such sound projects available without the bank’s having to take chances on projects that are quite unlikely to succeed - the shaky sort of projects which many people seem to believe the bank will finance. I should like to say, Sir, that I fully support the establishment of the Development Bank.
– Order! The honorable gentleman’s time has expired.
– If I may complete the quotation from the statement by Dr. Coombs that I was giving earlier, I think it may add to the understanding of the honorable member for Wannon (Mr. Malcolm Fraser) of this matter. The quotation continued -
I hope, however, that too much will not be expected of it.
He was referring to the Development Bank. I ask the honorable member for Wannon to mark that. Dr. Coombs went on to say - and I think this ought also to be noted -
Although I believe that this specialized task calls basically for a specialized institution there is still much that can be done within the structure of the existing banking system.
That is the belief of this side of the House - that you do not need to create a separate Development Bank. Nobody is questioning the need for a new kind of financing method, or a new kind of approach, but I suggest that, if certain objectors on the Government side to the scope of this Development Bank were to examine their hearts closely they would agree that what they really object to in this new institution is, as it were, the new concept of banking under which the existing assets of a borrower will not be the test of whether a loan is made, and loans will be made on the basis of faith and hope, perhaps tinged with a little charity. This is an entirely new concept, different from that adopted normally by bankers.
The honorable member for Barker (Mr. Forbes) referred to rural reconstruction and asked us why we did not alter our legislation in 1945 to provide for this kind of financing in the rural sector. There are several answers to that question. First, the Mortgage Bank Department of the Commonwealth Bank was created at that time and, secondly, the war service land settlement scheme was then being inaugurated and was placing a heavy burden upon the existing financial capacity. The Labour government had its hands full with that scheme, which took a long time to come to fruition, as honorable members know. In 1945, the Rural Reconstruction Commission pointed out something which I think is still true. It said -
In this regard the Commission is of the opinion that the trading banks do not give sufficient consideration to -
projects which are in the development stage;
farmers with small capital resources;
the tenant-farmer and the share-farmer.
I suggest that the strictures that are made there with regard to farming can also be made in the industrial field with regard to small entrepreneurs. They, too, do not get the sympathetic consideration that they ought to get from the banking system, the reason being that their prospects are greater than their assets. The point is that if this great need existed then, it still exists, as honorable members have stated. Does anybody think that the Development Bank, as envisaged in this measure, with its limited initial capital, its limited right to increase capital, and its inability to augment its resources through the normal channels open to any other bank, can obtain the money that will be needed? Bankers always claim that all they really do is lend other people’s deposits; but this legislation will virtually restrict the access of the Development Bank to deposits. Where is the money to fill this great gap to come from? With all respect to the provision which will allow the appointment of trading banks as agencies of the Development Bank, I doubt whether this is the proper approach to the problem.
I was rather interested to read of the experiments, as Dr. Coombs called them, that the trading side of the Commonwealth Bank has undertaken in New England and Queensland. Dr. Coombs said that the bank had taken ten dairying properties and eight pastoral properties which it believed capable of development. It had chosen the people carefully, and had made advances averaging only £500 to the dairy-farmers, but nearly £25,000 to the pastoralists. He said that so far the experiments seemed to be going successfully. I suggest that something similar could be undertaken by the private banks with regard to that kind of activity, and that a new kind of organization is not really needed. All that is needed is this combination of faith, hope and a little charity, and the taking of such risks as the private banks have always said they are willing to take, but actually eschew as often as they can. What will be the nature of the transactions envisaged for the Development Bank? The honorable member for New England (Mr. Drummond), who, I hear, is unfortunately ill, cited the Canadian Industrial Development Bank, which is not a rural bank but a bank for industrial development. That bank’s last annual report, which is for the year ended June, 1958, shows that during the year it made 564 new loans, totalling nearly 36,000,000 dollars. The important point about it is that the average loan was over 70,000 dollars, so it is not small stuff that is being handled. Of those loans 234 were under 25,000 dollars, which is approximately £10,000 Australian, but 330 of them were in excess of that sum. So the Canadian organization, which was cited as an example of what this Development Bank might be, is not a small undertaking. I do not know what sort of client will be fostered by the Development Bank, as it is envisaged by the Country party and by country members of the Liberal party. After all, in Australia to-day, when we leave dairying and get into the field of pastoral undertakings, even £10,000 does not go very far. It takes quite a sum of money, as the soldier settlement schemes show, to settle one man on a farm that can yield him an income which will provide him with a reasonable standard of living.
Government supporters ought to have given us more illustrations of the kind of projects likely to be fostered by this bank. I think the words of Dr. Coombs ought to be noted, and not just observed critically, as they were by the honorable member for Mitchell (Mr. Wheeler). Dr. Coombs said, “ It will not be a simple institution to administer. I hope too much will not be expected of it.” He pointed out that the fruits are not likely to be immediate and that it might be some years before one could point to anything and say that it flowed from the bank. 1 also stress to the committee and to the private banking institutions that Dr. Coombs believes that more can be done within the structure of the existing banking system for the kind of project that can be embraced by the Development Bank. We do not deny the need for finance and credit to be given to certain kinds of institutions and people in the community, but we do deny the need to create a new organization altogether. Much more could have been done within the old structure of the Commonwealth Bank. A great deal was done by the Industrial Finance Department and the Mortgage Bank Department for small people beginning to make their way in projects which would ultimately be successful, although not bearing positive fruits for a few years. Such people have to be given some kind of assistance to carry on. The old banking practice has largely been that if one is already in possession of assets he can get a loan, but the man who can bring along only willing hands, a strong back and, in these days, a certain amount of machinery, does not necessarily get assistance, although in the long run he may be the man who is most worthy of it. Therefore, the new approach to banking is to be welcomed. It is not that loans should be given to the already reasonably successful but that they should be given to those persons who can convince the organization that they will be successful. At least, this indicates a new approach to banking and I suggest that, basically, that is what some of the critics fear most.
– Order! The honorable member’s time has expired.
– I thank the honorable member for Wannon (Mr. Malcolm Fraser), who received the call before me, for allowing me to precede him. It may assist his own discussion of this matter if I explain in rather more detail than was possible in the course of my second-reading speech some of the aspects which the Government sees in the proposed Development Bank. The other clauses of the bill before the committee are much more familiar to honorable members. The Development Bank, which has attracted most of the discussions so far. is the novel aspect of this measure, and I want to comment in quite some detail upon it.
Basically, the Development Bank will be an amalgamation of the Mortgage Bank and Industrial Finance Departments of the Commonwealth Bank. It is, however, to be provided with additional capital of £5,000,000, and it is to have functions that are different from those of the Mortgage Bank and industrial Finance Departments in some important respects. The present Mortgage Bank Department has power to make a loan to a primary producer on the security of land. I would like to remind the committee that the legislative provisions relating to the making of such loans, as they have been made in the past, are that the borrower must use the loan in connexion with his operations as a primary producer; a first mortgage over the land must be provided as security; a loan may not be made for a period of less than five years or more than 41 years; the maximum amount of a loan is 70 per cent, of the bank’s valuation of the land or £10.000, whichever is the less; and repayment must be effected by equal half-yearly instalments of principal and interest, subject to certain provisions relating to repayment before maturity.
The present Industrial Finance Department has a statutory function of providing financial and other assistance “ for the establishment and development of industrial undertakings, particularly small undertakings “. The department has power to provide finance for these purposes on such terms and conditions as it determines, subject only to the following: First, the department may not provide finance unless it is satisfied that the industrial undertaking being assisted has reasonable prospects of continuing to be, or of becoming, a profitable undertaking; and secondly, in determining whether or not to provide finance, the department is required to have regard primarily to the prospects of the industrial undertaking continuing to be, or becoming, a profitable undertaking, and not necessarily to have regard to the present value of the assets of the undertaking.
The functions and responsibilities of the Development Bank are defined with greater precision than those of the two existing departments which I have just mentioned. The statutory functions of the Development Bank, apart from the provision of technical advice, will be to provide finance to primary producers and to industrial undertakings, particularly small undertakings, in cases where, in the bank’s opinion, provision of the finance is desirable but would not otherwise be available on reasonable and suitable terms and conditions. In other words, the Development Bank’s role will be to supplement, but not to take the place of the other sources of financial assistance that are available to primary producers and industrial undertakings through ordinary commercial lending institutions. Further, the Development Bank will be prohibited under the bill from providing finance for the purchase of goods otherwise than for use in the course of the borrower’s business, and all of its resources will therefore be devoted to productive purposes.
Within these limitations, which are designed to keep the Development Bank to its given field, the bank will have ample opportunity for worthwhile service to -the community, particularly to those persons who would have good chances of making a success of a farming or industrial venture but who lack sufficient security to obtain initial finance through the usual channels. With this kind of person in mind, it is provided that the Development Bank shall, when determining whether or not to make a loan, have regard primarily to the prospects of the borrower’s operations being successful and shall not necessarily have regard to the security available. This, I suggest, closes, to some extent at any rate, the gap which exists in our banking structure at the present time. In order to permit the Development Bank to adjust the terms and conditions of its lending to particular requirements, the bank is not made subject, as the Mortgage Bank Department now is, to restrictive provisions relating to the types of security it may accept or the period and maximum amount of loans it may provide. This freedom should enable the Development Bank to provide a wider range of assistance in the agricultural field than can be provided by the present Mortgage Bank Department.
The capital funds of the Development Bank, on its establishment, will consist of the capital and reserves of the Mortgage Bank and Industrial Finance Departments, amounting to some £15,000,000 on the basis of June, 1958. figures, plus an additional £5,000,000 of capital to be provided by the Reserve Bank. The Government has already stated that it will watch the position closely from the viewpoint of the possible need for a further increase in the bank’s capital later, in the light of the bank’s operating experience. Like the Mortgage Bank and Industrial Finance Departments, the Development Bank will retain all its profits and will not be subject to income tax.
The bank will have an appropriate place within the structure of the banking system and will be endowed with the banking powers and the resources necessary for it to carry out its allotted functions. The provisions which have been made for these purposes have been misconstrued in some quarters and have given rise to representations from the private banks. In general terms, the fear has been expressed that the Development Bank will be endowed with excessive powers and privileges and that it could step outside its given role and become a serious competitor with the private banks on unfair terms. More particularly, criticism has been directed at its unrestricted power to accept deposits from the public and its freedom from the reserve deposit provisions of the Banking Act and from the limitation to be imposed by that act on the amount that a savings bank may deposit with trading banks. Accordingly, suggestions have been made to the effect that some specific restriction should be placed upon the level of deposits that it may accept and/ or the total level of its advances.
The general answer to this kind of criticism is that, although the Development Bank is established -as a bank, with the normal banking power to accept deposits - this is necessary for constitutional reasons into which I shall not go in detail, because I think that most honorable members are familiar with that problem - it is precluded by the terms of the bill from exercising its banking powers except in the performance of its statutory functions, and, as I have indicated, these functions are precisely defined in the bill. Moreover, apart from the reserve deposit provisions, the Development Bank will be subject, under the Banking Act, to the same central banking controls as are the trading banks. These controls include those that relate to advance policy, interest rates, the protection of depositors, the provision of statistics, investigations by the Auditor-General, and the supply of information to the central bank.
The following further comments are applicable to the more detailed points of criticism that have been made. Dealing with the power to accept deposits: Although it has been necessary to give the Development Bank the power to accept deposits, it is not expected that it will either attract deposits from the public on any significant scale or seek to rely on such deposits as a major source of funds. Because its loans will mostly be made on a long-term basis, it would be inappropriate for it to rely on such funds. In any event, it is unlikely that the Development Bank, which will not be able to offer the wide range of facilities to depositors that trading banks provide, will be able to attract deposits from the public to any significant extent.
As to its freedom from the reserve deposit provisions of the Banking Act: The Development Bank will not be subject to the reserve deposit provisions of the act. It has not been made so liable because it will be a special institution, quite unlike trading banks as they are generally understood, and the level of any deposits with it will not be affected to anything like the same extent by the influences that cause the trading banks’ deposits to rise and fall. Its business could be inconvenienced without warrant, if, for instance, it were required to participate in a call to reserve deposits brought about through an increase in trading bank deposits in which it did not participate.
As to its borrowing powers: Like any other bank, the Development Bank will have fairly wide borrowing powers. It will, however, require the Treasurer’s consent to any borrowings in excess of £2,000,000 from the Reserve Bank and to any borrowings from overseas. And as to this latter, it is the normal practice, as honorable members are aware, for borrowings overseas to have been given the prior approval of the Australian Loan Council, on which all the State Premiers are represented. With regard to the making of loans to the Development Bank by the Reserve Bank, it is to be remembered that, under the provisions of the Reserve Bank Bill, the Reserve Bank will be able to make loans to the Development Bank, or to any other bank, only for central banking purposes. In other words, the Reserve Bank will be able to make such loans only in the traditional central bank capacity of lender of last resort, if they are needed for the purpose of supporting a bank’s liquidity position. It has always been the intention that the Development Bank would, like other banks, be able to call on the Reserve Bank only if there arose a need for its liquidity to be supported, and the Government is satisfied that the provisions in the legislation relating to such borrowings go no further than to give effect to this intention. In relation to borrowings by the Development Bank from the Treasurer, the Treasurer’s power to make loans to or deposit moneys with the bank will be subject to the appropriation of moneys by the Parliament for the purpose.
Then there is the point about freedom from application of the formula in the Banking Act limiting the amount of deposits a savings bank may lodge with a trading bank. The Development Bank is not, by its nature, a trading bank. Further, it will undoubtedly have to look to the Commonwealth Savings Bank as a major source of borrowed funds. It will inherit from the Industrial Finance Department an initial indebtedness to the Commonwealth Savings Bank of some £16,000,000 to £17,000,000, and it could be virtually crippled from the outset if it were classed as a trading bank for the purpose of the formula. The application of the formula, as honorable members will recall, means, on present figures, that the Commonwealth Savings Bank would be able to have approximately £20,500,000 on deposit with trading banks. As the Commonwealth Savings Bank, as a matter of necessary convenience, holds some £8,000,000 with the Commonwealth Trading Bank to compensate the latter for providing till money, officers’ homes advances and clearing facilities, it is clear that the funds available to the Development Bank would come under immediate pressure if the formula were applied to Commonwealth Savings Bank loans to that bank.
The bank has been freed from taxation and provision has been made for it to retain its profits. It is placed in the same position in these respects as are the present Mortgage Bank and Industrial Finance Departments. Having regard to the nature of the Development Bank’s charter and its essentially non-competitive role, the Government has decided that it should be permitted to retain all its profits for the purpose of financing the expansion of its operations.
The comment has been made that the Development Bank is, in effect, being provided with a gift of £20,000,000 from public funds with which to start its operations. The bank will take over the capital and reserve funds of the Mortgage Bank and Industrial Finance Departments, amounting to a total of £14,900,000 as at 30th June, 1958. It will take over, also, outstanding loans by the two departments, amounting to £32,200,000 as at 30th June, 1958. And the legislation provides for £5,000,000 of additional capital for the bank to be supplied by the Reserve Bank.
As a. final safeguard against the possibility that the Development Bank may discriminate between the trading banks in the choice of its agents, it has been provided, in clause 83, that any trading bank which so desires shall be appointed as an agent of the Development Bank for the receipt and transmission of applications for assistance. This provision is consistent with the whole concept of the Development Bank, namely, that it should supplement and not replace other forms of lending. It should ensure the continuance of present arrangements whereby the trading banks commonly refer to the Mortgage Bank and Industrial Finance Departments applications which are not suitable for trading bank loans, but which the trading banks feel would be considered by more specialized institutions.
Mr. Chairman, I have offered these explanations because I think they meet substantially criticisms which have been directed to the role of the Development Bank, criticisms which in most instances have been based either on imperfect knowledge or a misconception of the Government’s policy in relation to this institution. We think, as other speakers have said, and as I mentioned earlier in the course of my own comments, that this Development Bank will fill, to a degree at any rate, a gap which has existed for some time now in the facilities available through the financial institutions of this country.
It is prudent, I believe, to express some cautionary word as to the role it has to perform. I do not think it will be able to do all the things that some of the more optimistic commentators have suggested. On the. other hand, I feel confident that it will be able to go a good deal further than the two institutions which are being absorbed in the process of the legislation before us.
Although in my comments I have referred to some criticisms which have come from the private banks, it would be quite a wrong assessment of the attitude of the private banks generally to believe that they are opposed to this institution. They have not expressed themselves, so far as I am aware, to the Government as being opposed to it, and, indeed, comments which their spokesmen have made and which have been published from time to time make it quite clear that they recognize the value of an institution of this kind. They see that it can function usefully as a supplement to their own banking activities, and their concern has been not that the Development Bank should exercise a useful role in filling the gap between what they are able, to do at present and what others may desire from the banking system. Their concern has been lest the Development Bank will depart from that role and, in effect, become just another bank in competition with them, but on rather more favorable terms.
It might be worth mentioning in this connexion, as an illustration of the general attitude of the private banking representatives, that earlier this year at the summer school of the Adult Education Board of the University of Western Australia, Mr. F. A. S. Holt, who, while enjoying the same name as myself does not possess any blood relationship so far as I am aware, delivered an interesting address, entitled, “ A Banker Speaks “. He analysed the present role of the private banks, and time will not permit me .to go into the details of his analysis.
– Was he for ‘em or agin em?
– He was a representative of .the private banks, of course. After speaking of that role he made this general observation -
Short term finance on a reducing basis is therefore the primary role of the Trading Banks in all forms of lending including that for rural industry.
He had earlier referred to some of the limitations which exist on the capacity of the private banks to lend long-term to those engaged in rural industry. At a later stage in his comments he said -
From the list just given of the sources of finance for rural industry it will be clear that adequate arrangements for long-term loans for development purposes are conspicuous by their absence.
He said later -
A suggestion which has much to commend it is that a Development Bank such as is envisaged in legislation now under consideration by the Commonwealth Government should undertake the responsibility for providing long-term finance for rural development, using funds from Government sources.
I have quoted his remarks because I believe them to be reasonably typical of the general attitude of expert representatives of the private banks, who see this Development Bank as a useful supplement, particularly for those engaged in rural occupations, to the other financial sources to which they can turn. If it fulfills that role in the future, then I believe we will, in this series of banking reforms, have incorporated a valuable institution, able to serve the progress and development of Australia.
.- I think the Treasurer (Mr. Harold Holt) has performed a very excellent function in the speech he has just delivered. He told us that there had been concern lest the Development Bank should become a competitor of the private banks in an unfair manner. He told us that the trading banks had made representations to the Government to ensure that the Development Bank should not become such a competitor. I think the Treasurer has convinced us this morning that the fears of the trading banks must have been completely put at rest. The Goverenment must have satisfied the private trading banks that the Development Bank will not in any way become a serious competitor with them.
The Treasurer indicates, I think, the conflict or dilemma that exists, as between the powers of the Development Bank on the one hand and its functions or resources on the other. Certainly so far as this legislation is concerned, the Development Bank has all the powers of a trading bank and all the powers that would be necessary for it to carry ot’t every aspect of banking in the normal sense of the word. But it is pretty clear that the Development Bank, under the administration of the Government at any rate, is not going to have the functions of a bank nor the resources of a bank.
The Treasurer told us that the trading banks had asked that some restriction be placed on the power of the Development Bank to accept deposits. The Development Bank, under the bill that we are discussing, has power to accept deposits from the public or from anyone. It has all the powers of a bank, and this was the position when the legislation was before the Parliament last year. The Development Bank had these powers and it appeared from the debate last year that it was going to exercise them. But now we have been told by the Treasurer that it is not anticipated that the Development Bank will accept deposits from the public, and that it will not rely on such deposits for a substantial portion of its funds. He said that it is a special institution, quite unlike a trading bank. This has come about because of representations made by the trading banks last year that the Development Bank should have power to make them its agents. As a result clause 83 was inserted in the legislation, empowering the Development Bank to make the trading banks its agents. This means that the Development Bank from then onwards will become substantially a fund and not a bank.
The Treasurer has told us this morning that the Development Bank will not accept deposits. A bank is not a bank unless it accepts deposits. By the making of advances and the acceptance of deposits a bank really establishes its essential functions. It is able to operate to the extent to which it can make advances and receive its share of deposits. But what will happen in this case is that the Development Bank will provide funds from its £20,000,000 of capital, if it has that much available for this purpose, and from any additional amount that it might receive, for the trading banks, and perhaps the Commonwealth Trading Bank as well, to act as its agents and to lend to primary producers from those funds. The deposits resulting from that process will be deposits held by the trading banks and not by the Development Bank.
– By what reasoning do you work that out?
– The Treasurer just said that. If the honorable member for Wannon has not been listening, I inform him that the Treasurer said that it is not anticipated that the Development Bank will accept deposits from the public; it will not rely on deposits as a substantial part of its funds.
– You said it will not receive deposits.
– The Treasurer said that.
– No, I said it is necessary to provide that it can receive deposits, otherwise there would be some constitutional problem.
– I think that when we refer to the record of the debate, that is what we will find in it. I took a careful note of it at the time.
– The honorable gentleman has been misled, if that is his impression. I said that it is necessary to provide that the bank shall receive deposits. We do not think that in practice deposits will be a major source of funds, because it cannot provide the same sort of facilities for clients as other banks can, and so it is less likely that deposits will be attracted to the bank.
– The result is the same whichever way you put it. If the Development Bank is not going to accept deposits, its ability to lend will be severely restricted. Its ability to lend will depend on its ability to attract deposits.
– No, there are other sources of finance, which I have mentioned.
– Precisely, but limited to the amount of capital that it is able to acquire, either under this bill or from later additions.
– Appropriations by the Parliament.
– Precisely, but this is not a banking process; this is not a bank.
– Money raised by the Commonwealth Savings Bank is available, without restriction.
– This is essentially the creation of a fund; it is not a bank. If the Government anticipates that the Develop ment Bank will not accept deposits from the public, it will not be a bank; let us have that point clear. The situation, as I see it, is that we will have around the Development Bank a ring of trading banks which will do the essential banking business, as far as any is done. Those trading banks in turn will make the loans and accept the deposits, and that is essentially where the banking procedure will take place.
– They will act only for the receipt and transmission of applications, and nothing more than that.
– This is something that could have been done under the legislation as it already exists. In the discussion that has already been mentioned, the Governor of the Commonwealth Bank said that, although he believed that this specialized task called basically for a specialized institution, there was still much that could be done within the structure of the existing banking system. What is being proposed in the creation of this fund could certainly have been done within the existing banking system. The justification for a Development Bank is that it will develop personnel capable of dealing with projects of the sort that such a bank is needed to handle. But the situation will be that the people who are dealing face to face with these problems will be the people in the existing private banking structure. Substantially, they will determine whether loans will be made, and, if so, what the conditions of repayment will be. A new staff will not be created to develop a new kind of developmental attitude to the work. The present members of the staffs of banks will be used for this purpose. In this sense, nothing new is being created.
The view of the Opposition is that in principle a bank of this sort, provided it is a bank, can be of great value. If it has the ability to lend and to accept deposits in a field of this sort, it can be of great value to the economy. But our criticism is that that is not what will be done. In fact, the Government is setting up a fund limited to £20,000,000, or something less than that because some of the money has been used already, plus subsequent appropriations. A banking institution is not being created for this purpose. Our second objection is that, whatever this could be used for - make no mistake, under a Labour government it would be used much more extensively than it will be used under this Government - this piece of legislation, which could have advantages to the Australian economy, is coupled to a great deal more legislation which we believe has nothing in its favour. We cannot accept legislation of this sort for two reasons: First, it is included in a series of bills which are harmful, we believe, in every aspect; and, secondly, this legislation does not set up a bank but in fact sets up a fund. Let me briefly summarize my reasons for saying that. They are that this institution will not accept deposits but will simply be a fund.
– Order! The honorable member’s time has expired.
.- The honorable member for Yarra (Mr. Cairns) made two significant comments. He said correctly that the Development Bank has all the powers of a bank. If we read the legislation carefully, we find that it can perform all but one or two small functions of banking. He remarked also that under a Labour government it would certainly be used. I do not think that any one on this side of the chamber would have any quarrel with the intentions of this Government in regard to the Development Bank. As far as I know, the proposal has the wholehearted support of all honorable members on. this side. The only concern that we may feel is in relation to the way the powers that are given it may be used, or misused, by another government. If the honorable member for Yarra were in another position, one could well visualize a certain degree of misuse.
The honorable member for Melbourne Ports (Mr. Crean) raised the point about the resources of the Development Bank. It will, of course, draw on the Savings Bank. The Savings Bank will be the main source of operating funds for the Development Bank, and, up to a point, that is a very legitimate use of savings bank funds. The Savings Bank is a big .institution which will continue to suck in deposits throughout the whole of the banking system in Australia, and these funds will be available without any statutory limit for the use of the Development Bank. The Treasurer (Mr. Harold Holt) pointed out that the formulae that apply to savings banks in relation to their advances to other banks do not apply to advances by the Commonwealth Savings Bank to the Development Bank.
Any quarrel that honorable members on this side of the chamber may have with these provisions is not that the Savings Bank funds on even quite a large scale should not be used for the purposes of financing the operations of the Development Bank, but that there is no effective limit. The Commonwealth Savings Bank has assets of about £750,000,000, all of which could be used for this purpose if the government of the day so chose. Nothing that the Treasurer has said precludes a development of that kind. His own intentions, of course, are honorable, but the fears that some have expressed are that, if the government of the day is given the power to use the whole of the Savings Bank’s funds for this purpose, the way is open to misuse. Normally, when banks or other institutions are created they are provided with capital and some limit is imposed. For instance, a limit is imposed on the similar Canadian institution. When it becomes necessary to lift the ceiling on the limit, the authority goes before Parliament and obtains the necessary money or permission to raise it. But after this Development Bank is launched, there will be no limit at all to its operations. It will be empowered to go right beyond the intentions of the Parliament, unless the Parliament takes some specific steps to curb it. The Treasurer also referred to clause 84 in relation to the powers of the Development Bank to borrow from the central bank. As to blocking off the Reserve Bank lending to the Development Bank, the right honorable gentleman relies on clause 26 (c) of the Reserve Bank Bill, which provides that the Reserve Bank must operate in accordance with normal central bank practices. This might legitimately be regarded as blocking long-term loans1 by the Reserve Bank to any other bank. It might well be that that is right, but the fact is that the central banks of other British Commonwealth countries - Great Britain, Canada, South Africa and India - do in fact make long-term loans to provide long-term finance in one way or another for developmental institutions. Whether or not this will be precluded by clause 26 (c) is, of course, highly uncertain. No one can say, and there is certainly no means of bringing the Reserve Bank to heel if it chooses so to do. These are the gaps, and they remain.
– I do not want to interrupt, but I think the honorable member conveyed the impression that the whole of the savings banks deposits could be made available to the Development Bank. He is aware of the limitation which does exist apart from the practical considerations?
– The regulations under clause 37 of the Banking Bill, of course, will apply to all savings banks so far as the build-up of their portfolio is concerned; that is, 70 per cent, in government securities and so on. But they are regulations. These things are regulated at present in the case of the private savings banks only under licence, but the provisions governing this matter are only in the form of regulations and will be in that form in future. If these provisions were applied in their present form they would limit what could be lent to the Development Bank to about 30 per cent, of some £750,000,000. Of course, nobody suggests that anybody would want to lend the whole of this sum to the Development Bank. The fact is that the process is unlimited and will be outside the control of Parliament. These may be fanciful fears. I do not want to build them up unduly to detract from a measure which is absolutely sound and should contribute to the welfare of the country.
There is another limitation which the Treasurer mentioned in passing; the power of the Development Bank to borrow from abroad. I hope it will not be prevented by any Treasurer from borrowing abroad. It is a potential inlet for capital from the International Bank for Reconstruction and Development to provide funds for rural development and for the development of industrial undertakings in Australia. This process should not be subject to the Australian Loan Council. I think the Commonwealth authorities should be able to carry on this process unimpeded by anybody outside, because the facts of life will limit this flow to reasonable amounts far less than the desirable limit.
It was indeed an improvement when the honorable member for Melbourne Ports (Mr. Crean) put away Professor Sayers’s book and either returned it to the Parlia mentary Library or lent it to the honorable member for Yarra (Mr. Cairns), and quoted some other people. Other documents to which he turned included the report on rural reconstruction which is well worth reading in this connexion. He also quoted the Governor of the Commonwealth Bank, and I share his views on this matter. It is proper that the Governor of the Commonwealth Bank should comment on the financial issues of the day. The powers of the central bank are wide. They affect the whole life of this country, and the more enlightenment we can get as to the views of the Governor of the Reserve Bank on matters of economic significance, the better. This procedure is followed by the governors of central banks everywhere - by Lord Cobbold of the Bank of England, Mr. Martin of the United States Federal Reserve Bank and Dr. De Kock of South Africa, to mention a few.
All give notable leads to public opinion from time to time by well-considered statements, and among them I would mention that to which the honorable member for Melbourne Ports referred - the lecture that was given recently by the Governor of the Commonwealth Bank in Melbourne to agricultural economists. This is an excellent guide to and an assessment of the prospects of the Development Bank, and no doubt such statements reflect much of what the Government has in mind. Provided the Development Bank is kept along those lines it will in fact make a useful contribution.
In the limited time available to me, I want to refer to one other matter which is not related to those that have been discussed so far; that is the provisions relating to the employment of women. In this respect, our Public Service as a whole lags behind the rest of the civilized world. The barriers against the employment of women and particularly of married women-
– Order? The honorable member’s time has expired.
.- The fears of honorable members on the Opposition side about the future of the Development Bank have not been dissipated after hearing the explanation given to us this morning by the Treasurer (Mr. Harold Holt). As a matter of fact, after hearing his explanation,
I am definitely satisfied that the policy of the Government under existing conditions is to stultify the Development Bank because of pressures by outside interests, namely, the private banks. The first great drawback that the Development Bank will have to face is the lack of capital. Whilst it will have a nominal capital of £20,000,000, the fact remains that £15,000,000 of that sum is already out, and it will be given £5,000,000 by the Reserve Bank to start off. Unless some extraordinary deposits are made by the taxpayers - and according to the Treasurer not much is expected from that source - I fail to see how, within a comparatively reasonable space of time, the capital of the bank can be increased to such an extent that the bank will be able to give satisfaction to the large number of people who will seek accommodation from time to time.
Members of the Australian Country party who were so enthusiastic during the secondreading debate about the good purposes that would be achieved by the Development Bank must have had their feelings considerably dampened when they heard the Treasurer this morning. He admitted that the high expectations held out by some honorable members about what the bank could do in the interests of the country community would possibly not be realized. Obviously, the Treasurer is aware of the restrictions that are to be placed on the bank, and he does not expect wonders from it.
If the Development Bank were given a free hand, I am satisfied that the outlets for its activities would be practically unlimited. If it could be given its rightful place in the banking structure and the necessary capital, and was freed from the restrictions imposed through the oversight of the private banks as provided in this legislation, in a very short space of time it would make a formidable mark in the banking structure of the Commonwealth. The remarks of the Treasurer this morning have satisfied me that the Development Bank will be a pale, anaemic imitation of what should be a live, healthy and vigorous institution. This bank has all the potentialities to play an important part in the future economic life and progress of Australia, but because we have a government in office with the quaint and odd philosophy that there must not be any competition between private and public banks, as that would be unfair to the private banks, the people who need the services of the Development Bank will be sorely disappointed.
If the Government were really concerned about encouraging development in every sense of the word, in addition to providing finance for primary producers and small business concerns it would have provided finance for another sector of the community which is most important to the progress of this country. It is of no use for a banking service to encourage small farms and small factories if public authorities cannot keep up with the demands for roads, sewerage, water, and other services. Everybody knows that local government to-day is fast dying because it cannot obtain the finance necessary to carry out urgent public works.
If the Government is sincere in its desire to develop Australia, why has it not provided financial accommodation for local government authorities, as well as providing accommodation for small primary producers and small business men? Local government services to-day are literally being starved for funds. Recently, Melbourne newspapers have published statements that a further 500 to 1,000 houses in Melbourne will not be sewered for another five or ten years. To-day, in Melbourne, 68,000 homes are without sewerage, and that is a state of affairs that did not exist before the war. Melbourne to-day needs a further 400 miles of water reticulation, but the public authority concerned cannot carry out that work. Thousands of miles of new roads are needed in Melbourne also.
A clause should be inserted in Part VII. of the bill, which deals with the Commonwealth Development Bank, to provide for adequate finance to be made available to local government authorities. The Government has missed the bus in this regard. The Government is not awake to the real needs of the community. There is a vacuum in the banking system to-day as far as local government finance is concerned. If the Government were prepared to grasp the nettle firmly with both hands and set up a development bank worthy of the name, it would have inserted a clause in the bill to ensure that local government bodies did not go short of funds. These bodies are conducted by men who act in an honorary capacity, and to-day they are at the end of their wits trying to find money for public works. If the legislation made some provision for resolving this difficulty it might have been worth while. I am sure that it must be disappointing to honorable members of the Australian Country party, who waxed so enthusiastic earlier in the debate.
I want to refer now to the proposal to set up the Commonwealth Banking Corporation Board which will take over the duties now performed by the Commonwealth Bank Board. The Commonwealth Banking Corporation Board will consist of the Managing Director, the Deputy Managing Director, the Secretary to the Department of the Treasury, and eight other members. I do not object to the appointment of the first three members mentioned, but I do object to that part of clause 14 which says that the board shall also consist of -
Eight other members, who shall be appointed by the Governor-General in accordance with this section.
The Labour party is totally opposed to bank boards of this description. We are opposed to them because of unhappy experiences in the past. We are satisfied that the Government’s proposal to appoint a board on this occasion, as in 1951, is a delegation of its powers and an evasion of its responsibilities. The Government wants to refrain from framing financial policy, and in so doing it is prepared to govern in a secondary degree. The appointment of the board is not in the interests of the people, but in the specific interests of the people responsible for this organization - the private banks.
The Labour party has always contended, and always will contend so long as it remains a party in the Australian public life, that the appointment of outside interests to the management of the Government bank is a breach of Labour principle. The Labour party firmly holds the view that outside interests should have no voice in the control of the people’s bank. That is a principle to which we strongly adhere, and our beliefs are reinforced by our experience of the Commonwealth Bank Board over the years. In an attempt to make out that appointees to the board will be impartial, the Government has disqualified from membership directors, officers, and employees of the private banks, but the clause does not prevent shareholders in the private banks from being members of the board. I am informed that in many cases the directors of the private banks hold comparatively few shares in the banks, whereas the larger shareholders are content to sit back and leave the management to others. A man could have any number of shares in a private bank, but so long as he was not a director he would not be disqualified from taking his place on the proposed Commonwealth Banking Corporation Board.
Order! The honorable member’s time has expired.
Sitting suspended from 12.41 to 2.15 p.m.
.- Mr. Chairman, this afternoon, I want to deal primarily with clause 104 of this bill which may be described as a marriage bar. Before doing so, as this is the first opportunity I have had of speaking on the banking bills, I want to say that I wholeheartedly support the general principles contained in the three interlocking bills. Three great reforms are made in these bills. The first is the establishment, for the first time, of a separate central bank, or reserve bank, free from all other banking duties and entrusted with the responsibility, within the limits of its powers, of so directing the finances of this country as to ensure full employment, economic prosperity and the stability of the currency.
The second great reform deals with the establishment of a stronger and better Commonwealth Trading Bank which will be able to compete fairly and freely with the private trading banks, having no privileges over the private trading banks and being subject to no disabilities that the private trading banks are not subject to. This bill will preserve to the people the freedom of choice as to bankers. The worst possible thing that could happen to this country would be the establishment of a banking monopoly, whether a government monopoly or a private monopoly. These bills make sure that free competition will be maintained between the banks, whether government banks or private banks.
The third great reform is the establishment, for the first time, of a Development Bank. I pay tribute to the wonderful job done by the managers and officers of the private banks and the Commonwealth Bank in relation to the development of this country. But they have been restricted and hampered because their functions have been the functions of a banker. The normal function of a bank is to borrow and lend money. Obviously, security must play an important part in deciding what advances they shall make. Under the new Development Bank, the managers will look at each project with different eyes. Their approach will be: What are the prospects of this industry being successful? If it is a new industry they will have to assess the prospects of its establishing itself on a profitable basis. If it is an existing industry, they will have to assess whether the additional money provided will enable greater development or greater expansion of the industry. Security will either take no part at all in their approach to the problem, or, if it does, purely a secondary part. I believe that these three bills are a milestone in the history of Australia and will enable us to develop to a far greater degree than we have been able to develop in the past.
My one criticism of the bills concerns clause 104 of the Commonwealth Banks Bill. I would certainly vote against this clause if I were not confident that, in the near future, the Government will take steps to remove this marriage bar. Clause 104 reads as follows: - (1.) A married woman shall not be appointed to the Service except in special circumstances. (2.) A female officer shall cease to be an officer on her marriage unless the Corporation is satisfied that there are special circumstances which make it desirable that she should continue in the Service.
The private banks are not subject to this restriction. Therefore, on the principles enunciated by the Government and private members on- the Government side, clause 104 should be deleted. I understand that the reason for its inclusion is one of uniformity with the Public Service, generally. It is a relic of the dark, dim days. It is a relic of the time when it was the exception rather than the rule for women to be employed. Nowadays, almost all women seek employment and they have played a very big part in the development of this country. Why should this bank, after it has trained experienced officers, be compelled to dismiss those officers, just because they marry?
This matter was examined recently by a very expert committee presided over by that great Australian, Sir Richard Boyer. It was called the Committee of Inquiry into Public Service Recruitment. The committee’s report was presented to the Prime Minister (Mr. Menzies) on 21st November, 1958, and tabled in this chamber a few weeks ago. The committee examined provisions in the Public Service Act which were identical with those in this clause. This is what the committee said -
It is probable that a substantial proportion of women employees would resign on marriage even if this were not compulsory. But when the Service is short of qualified people, even the small proportionate losses entailed by the present section are scarcely justifiable, while there is an unknown additional loss of potential recruits from among married women and from single women who are deterred by a knowledge of this section from seeking a career in the Service.
If we substitute “ bank “ for “ service “, we have the actual position in relation to the Commonwealth Bank. The report goes on -
This is at a time when increasing numbers, of women are gaining professional or other qualifications for employment, and when employment is increasingly sought by. married women, especially those without children, whose children have grown up, or- who need’ to be breadwinners on their own account.
Apart from these considerations, section 49 reads strangely in a country which has adhered to the I.L.O. Convention for equal employment rights for men and women. We have also been told that a U.N. Economic and Social Council Report, prepared for the Commission on the Status of Women in 1951,-
Order! The honorable member’s time has expired.
.- I wish to refer to some of the clauses of this bill. The honorable member for Sturt (Mr. Wilson) referred to clause 104, but I wish to refer to clause 103 which is much more important. It deals with the question of excess officers in the Commonwealth Bank after these mutilating bills have been passed. Clause 103 lays down the procedure to be followed when officers of the Commonwealth Bank are told that there is no more work for them. The Government has claimed that the purpose of this legislation is to help the Commonwealth Bank. As a matter of fact Ministers have said that the intention of the legislation is to increase the. trading activities of the bank. If that is so why have they included a provision to deal with officers who will be thrown out of work once the legislation has been passed? I make a protest about this clause.
– Did the Commonwealth Bank ask for this?
– The Commonwealth Bank did not ask for this legislation to be introduced, and neither did its officers. The Government has introduced the legislation, and the people who will suffer under it will not be the employees of the private banks but the employees of the Commonwealth Bank. Their positions are to be declared redundant. Sub-clause (2.) of this clause reads -
If no position is available for the officer, the Corporation may retire him from the Service.
Sub-clause (3.) says -
An officer shall not be retired from the Service under this section unless he has been given at least one month’s notice or is paid salary in lieu of notice.
This bill is alleged to protect the Commonwealth Bank! It is a bill to mutilate the bank. The title of the bill ought not to be “ The Commonwealth Banks Bill “ but “ A Bill to strangle the Commonwealth Bank “.
– Before the honorable member whips himself into too much of a passion, I hope that he has not overlooked the fact that this clause is identical with the provision in the legislation passed by the Labour Government in which he was a Minister.
– It is not as the
Treasurer suggests. We made provision for an extension of the services of the Commonwealth Bank. The only period in which the Commonwealth Bank has really been allowed to flourish and expand has been from 1945 to 1950.
– It has not been stagnating in the last ten years.
– Ever since this Government has been in office it has been interfered with in one way or another. In the matter of hire purchase the Commonwealth Bank was allowed by this Government to advance £15,000,000. At the time that sum was fixed the total amount of hirepurchase advances was about £90,000.000. To-day, the total advances for hire purchase are something over £300,000,000, but the Commonwealth Bank is still pegged down in its advances for hire purchase to the original limit of £15,000,000. Yet the Government talks about its supposed record in extending the activities of the Commonwealth Bank!
Professor Arndt, whom, I hope, the Government will not object to when he is quoted as an authority, had a good deal to say about this matter. I have thrown out a challenge, but the Minister does not accept it because Professor Arndt was the author of the plan which he and some six or seven economists signed and which was the basis of the little horror Budget of 1956. Did we ever before hear, in the history of this country or of any country, of seven or eight economists agreeing not upon one particular item only but on a whole blueprint to put the economy on what they believed to be a firm basis? But we see how the economy is going by the failure of the two loans in London yesterday.
– What about the oversubscription of the recent Commonwealth loan by £35,000,000?
– The Treasurer has made a great song about that, but he has not said a word about the failure of the two loans in London yesterday. Already, he has failed as badly as a tragic Treasurer - the right honorable member for Cowper - failed some 30 years ago. Now let me quote Professor Arndt, approvingly. In his book, “The Australian Trading Banks “, he wrote -
It was to enlist their-
That is, the private trading banks’ - good will and in conformity with prevailing canons of central banking that the Commonwealth Bank-
Meaning the Commonwealth Bank Board - -decided in 1928 to abandon all active competition for trading bank business.
The Labour government altered all that in 1945, but this Government is setting the position back again. The London “ Economist” of 7th December, 1957, in an article headed “ Commonwealth Bank Impasse “, said -
If this ogre-
That is the Commonwealth Trading Bank - cannot be entirely banished there is everything to be said at least for dissociating it absolutely from the central bank in order to promote harmony, trustful co-operation and sheer self-respect among the trading bankers.
Is not that in keeping with the nonsense we have been listening to here, ad nauseam, from previous speakers on the Government side, from the honorable member for Sturt, who preceded me, to the honorable gentleman who occupies the seat nearest the door of the chamber, the honorable member for Mackellar (Mr. Wentworth)? “ Rydge’s “ in December, 1957, said this under the heading of “ Commonwealth Bank Legislation “-
It took the Federal Executive of the Liberal party to force most Liberal Ministers to support the proposals and even then the Country party was sulky.
In January, 1958, “Rydge’s” had this to say -
Backbenchers have been fighting for three to four years to obtain some change in the laws governing banking in Australia. The reward for their efforts at party meetings was thinly veiled abuse and ridicule from the leader they were pledged to support. It took a meeting of the Liberal Party Council - the party’s most powerful body - to pass a motion - in face of a personal appeal against it by the Prime Minister - before he changed his attitude.
– He did as he was told.
– Exactly! There is the justification for our claim that the Government has surrendered to the Liberal party and, through the Liberal party, to the bankers. This is not good legislation. These bills are not brought forward to reform the banking legislation but to deform and mutilate the Commonwealth Bank. If honorable members on the Government side were only partially honest with themselves and with the country they would say that what they want is the complete destruction of the Commonwealth Trading Bank as a competitor with the private banks.
– It is true. The honorable member for McMillan protests too much. He makes that exclamation today because he knows that if he took an honest attitude he would not hold the seat of McMillan any longer. The people of Australia want the Commonwealth Bank. The figures which I quoted the other night proved that, on the occasion of the last election, 51 per cent, of them voted for the Australian Labour party and the Australian Democratic Labour party, and both of these parties made it clear that they were opposed to this banking legislation.
All that the Government could muster for itself and the “ peasant “ party by way pf votes was 45 per cent, of the Australian people’s support. Where is the mandate the Government boasts about? I repeat the charge and the challenge I made earlier: Let us have a referendum on this question and then see what the Australian people want.
– We just had one.
– The honorable member for Kalgoorlie is a complete dolt if he does not understand what I have already said, that is that 51 per cent, of the people voted against the Government’s banking proposals. Let us have a referendum of the people to find whether they are for or against this legislation. If, according to the honorable member’s peculiar form of reasoning, the last election was a referendum, we will have another referendum in 1961 and as a result we will restore the 1945 legislation in its entirety. Banking has always been a problem in democratic countries because those in control of the money power have always wished to squeeze the people in their grasp. The history of banks in America is a notorious one. All the great Americans had to fight these predatory institutions in their turn. President Andrew Jackson, the seventh President, and President Abraham Lincoln, the sixteenth President, had to do so and justify their actions in language which is now historic.
– Order! The honorable member’s time has expired.
.- The honorable member for Melbourne (Mr. Calwell), like other honorable members opposite, keeps on claiming falsely that something like 55 per cent, of the electors voted against the Government in the general election. Unless my memory is at fault, at least 53 per cent, of the electors voted against the Australian Labour party, and thus against their policy of nationalization, and all the other mischievous things that a Labour government would do.
The honorable member for Melbourne said he would challenge the Treasurer (Mr. Harold Holt) on this occasion, but he had already done this repeatedly and after each occasion on which his arguments had been discredited he had issued a further challenge in the same terms. The Opposition keeps on and on with such verbal repetitions, producing allegations which would make one think that, as a result of some vague process of reasoning in the minds of honorable members opposite, the Labour party believes it actually had a majority at the general election when, in fact, it was soundly defeated.
It is strange that the honorable member for Melbourne should take so much trouble over this legislation, because what he and his fellow members really want to do is to get rid of the private banks altogether - to nationalize the banking system. They tried to do it before, and I assume that they will try to do it again if they are returned to office. Why should the honorable gentleman worry about these provisions when he can only, apparently, utter generalities about them?
I should like now to add something to the remarks made by the honorable member for Sturt (Mr. Wilson) concerning the employment of married women in the Commonwealth Banking Service. There is no doubt that in this particular matter Australia lags well behind other countries. Disabilities on the employment of women have been imposed by successive governments, Labour and otherwise, and continue to be imposed by this Government. They are repeated in clause 104 of the Commonwealth Banks Bill, in a provision which means that when a girl employed on the Commonwealth Bank staff gets married, she will get the sack, even if she wishes to work two or three years after marriage so as to have the money to help to form a household for herself and her husband until her family begins to arrive. As far as my inquiries show this is a disability not imposed upon women by other banks. The trading banks do. in fact, allow most of their girls to stay after marriage, and they form a very useful part of the staff. Of course, more than banks are concerned in this matter of the employment of women. Like the honorable member for Sturt, the only reason I would not vote against this provision is that the Government has before it the report on Public Service recruitment which recommends the abolition of these penal discriminatory clauses. Therefore, the matter may be better dealt with in relation to the whole of the Public Service.
Apart from the disability in clause 104, there are other disabilities against women. For instance, there is the disability implied in clause 91 of the Commonwealth Banks Bill which enables the Commonwealth Banking Corporation to prescribe the sex and age of entrance examinees. This kind of provision may be interpreted as meaning that there are certain jobs in a bank which are reserved for men only, and from which women are excluded. There is a sound practical reason in the banking world for admitting women to ordinary banking service, and this practice is followed in America. A deadly part of banking service is the number of years members of the staff must spend in comparatively menial duties. Many of such duties can well be performed by women who, after a few years, will marry. When these duties are performed by women who mainly marry and leave, vacancies are created which make the careers of the remainder of the staff much more attractive. Of course, the Reserve Bank is not subject to this provision in regard to women, and there is a very wise and sound reason for this. Much specialized work will be required from the staff of the Reserve Bank.
I think that the dangers mentioned by the honorable member for East Sydney (Mr. Ward) are quite unreal. He complained of the shortness of the period provided under this legislation in which members of the Commonwealth Bank staff have to decide whether to join the staff of the central bank or the staff of the Commonwealth Trading Bank. Of course, members of the Commonwealth Bank staff have been poring over this legislation for a very long time. Most of them would have made up their minds on the matter a year or so ago, when the previous legislation was before us. So, the fear expressed by the honorable member for East Sydney is unreal.
There is a very sound reason for not circumscribing too closely the nature of the staff that the Reserve Bank would be able to recruit. Normally a reserve bank gains very much by having people with it for a short period of service of from, say, three to five years - people who have had experience in particular directions, very often in other countries and sometimes in other professions. They may be academic people or people who have been employed in activities other than banking, but their services can be extremely useful and valuable to a reserve bank, which is concerned sb’ much with the vital monetary policy which affects the whole country so closely. Itf is; important that the Reserve Bank should be able at any time to consult with the very best brains available to it. I repeat that the only reason I would not vote against clause 104, at this stage, is the fact that we shall in the next few months deal with this prob lem in relation to the whole of the Public Service.
Mr. DUTHIE (Wilmot) 12.42].- Honorable members on this side of the chamber are more and more amazed as this legislation, consisting of 400 or 500 clauses, goes through, and it becomes more apparent that the deliberate aim behind it all is the disintegration of the Commonwealth Bank as we have known if for more than 40 years. The legislation is to create a very fine-sounding instrument to be known as the “ Commonwealth Banking Corporation “. The term “ corporation “ is an American term, as is the term “ Reserve Bank “ and similar terms which are creeping more and more into Australian legislation under this American-minded Government.
This corporation is to be superimposed on all sections of the present Commonwealth Bank. It will control the policies of the Commonwealth Trading Bank, the Commonwealth Savings Bank and the Development Bank. The existence of such a monolithic structure will, as I tried to point out last night, widen the distance between the Commonwealth Bank and the people. It will make banking in Australia far more involved. The more I talk to people outside about this legislation the more I find that they are disgusted with it and unable to understand it. I have talked to folk in different walks of life, and have been told by them that they have given up listening to this debate because the legislation is so involved.
My first criticism of this section of the legislation concerns the creation of this Commonwealth Banking Corporation to control the destinies of the Commonwealth Trading Bank. My second criticism is that the legislation will lead to an increase of bureaucracy in Australian banking, and my third criticism is that the high cost of this dissection of the Commonwealth Bank has quite- obviously not been considered by the Government. Each of these new banks to be created by the legislation will have a general manager, a deputy general manager, and several board members, each of whom will be paid servants of the bank. Therefore, when it is all cut and dried, and a final balance-sheet is presented, the cost of disfiguring and disintegrating the Commonwealth Bank will be found to be enormous. This will make confusion worse confounded in Australian banking. In order that the officials of these three divisions of the corporation will know one another, they will need arm-bands with initials on them - B.C. for those who work for the banking corporation; T.B. for those who work for the Trading Bank; S.B. for those who work for the Savings Bank; D.B. for those who work for the Development Bank; and R.B. for those who work for the Reserve Bank. If they all met in a room without their arm-bands, they would not know to which bank the others belonged. It is utterly ridiculous to disintegrate a bank to such a degree, and to impose such a superstructure on these three sections of the Commonwealth Bank. That is the first criticism that I make.
Another board, the Commonwealth Banking Corporation Board, is to be established to run the corporation. It will consist of the managing director, deputy managing director, the Secretary to the Treasury, and eight other members, who will be appointed by the Governor-General. This will increase the remote control of banking referred to by my colleague, the honorable member for Batman (Mr. Bird), before the suspension of the sitting for lunch, and will further push away control from the people of Australia and from the Parliament in particular. I mentioned this angle last night in a speech on the Reserve Bank Bill, when I prophesied that the five members of the Reserve Bank Board, who are to be appointed from outside banking circles altogether, will be some of the moguls of private enterprise in Australia. When I made this statement, the honorable member for Wentworth (Mr. Bury) interjected “ Quite right “. It was interesting to hear from him confirmation of a suspicion that these five members of the Reserve Bank Board will be moguls of private enterprise. Likewise the eight outside persons who are appointed to the Commonwealth Banking Corporation Board will be bigshots of private enterprise.
This is a further step in disintegrating the power and prestige of the Commonwealth Bank. It is putting the board in the hands of men who have no experience of banking, let .alone of the Commonwealth Bank, which is a socialized bank. These will be men who are interested in private enterprise. As the honorable member for Batman asked this morning, what is to stop the shareholders of private banks from being appointed to the Development Bank Board? If they are appointed, the tie-up of all the boards will be beautiful. They will be run by men from private enterprise, whose sympathies lie with private banking, and not with Commonwealth banking or social banking.
An interesting point is that these eight persons are not to include members of the Reserve Bank Board, officers or employees of the corporation, other than the managing director or deputy managing director, the general manager of the Trading Bank, the Savings Bank, or the Development Bank, officers of the Public Service of the Commonwealth, or directors, officers or employees of a corporation the business of which is wholly or mainly that of banking. In my opinion, that is an astounding provision. It is just the same as preventing a dairyman from serving on a dairying board because he happens to be interested in dairying. It is like preventing a wheatfarmer from being a member of a wheat board because he happens to grow wheat, or a tobacco-farmer from being a member of a tobacco board because he happens to grow tobacco. It is just utterly fantastic that men from outside the field of banking and not connected with it can be appointed to a board the purpose of which is to do something which is very important to this country. This board will determine the policies of the corporation, the Trading Bank, the Savings Bank, and the Development Bank. Men who are not even connected with banking will be deciding that policy. This means that the control of finance in Australia is moving further out in ever-widening circles from the people and the Parliament of this nation.
I wish to refer to another point in regard to savings banks. The Commonwealth Savings Bank, which will be controlled by the Commonwealth Banking Corporation Board, is having a terrific fight to maintain its clients, four private banks having entered the field of savings bank business. This, of course, was another move in the long-range plan to destroy and cripple the Commonwealth Bank. In the last twelve months Commonwealth Savings Bank deposits declined by £1,000,000, and the deposits of the four private savings banks increased by about £3,000,000. There we see evidence of a deliberate, gradual reduction in the business of the Commonwealth Savings Bank, which has done magnificent service in Australia by lending to municipal councils for sewerage and other development in country towns.
I should like to refer also to the excellent radio session sponsored by the Commonwealth Savings Bank. It is called “ Life with Dexter “. That serial has done a tremendous amount of good in Australia in holding the custom of the Commonwealth Bank and, here and there, increasing it. I should like to commend the bank on its expenditure on this excellent radio session. It is one of the best sessions on the air anywhere in Australia to-day. It is also one of the cleanest, most humorous and most effective presentations of the life of people in ordinary homes such as those throughout the Commonwealth.
– Order! The honorable member’s time has expired.
– I wish to refer to one or two matters of detail. I support the honorable member for Wentworth (Mr. Bury) in his remarks in regard to the employment of married women. I ask the Treasurer (Mr. Harold Holt) to have a look at Part VI., which relates to housing loans. There are in this a couple of matters of detail which might merit a little attention. Clause 63 (3.) provides that the owner of an estate or interest in land upon the security of which a loan has been made shall not, without the consent of the Trading Bank or of the Savings Bank, obtain another loan upon it. I am not quite certain of the reason for that clause. Clause 66 provides that the amount of a loan shall be limited to 90 per cent, of the bank’s valuation, and therefore, by reason of the normal practice of banks, it would be a good deal less than a 90 per cent. loan. The Credit Foncier loans are, of course, reduced during their currency. Why should a person who has an equity in a house and is in need of money - this deals only with small people - not be able to get a further loan upon his security? I would ask the Treasurer to have a look at that. Perhaps he could give an assurance to the committee - that would be sufficient - that the consent of the bank would not be unreasonably withheld, so that people who happened to be in difficulties and needed small loans could get the maximum benefit from the banking service.
I draw the Treasurer’s attention also to clause 56, which is also in the part dealing with housing loans. The clause reads -
In making loans under this Part, the Trading Bank and the Savings Bank shall give preference to loans for the erection of homes and for the purchase of newly erected homes. 1 think that is a good provision at a time when there is a housing shortage and in a place where there is a housing shortage. New South Wales is the State in which, unhappily, almost the entire housing shortage in Australia has become concentrated, and at present, in that State, there is a reason for this provision, but the housing shortage may not be with us always. However, this is a permanent measure. It is not meant just as something transitory. At some time in the future, the housing shortage will go in New South Wales, just as it has gone already in other parts of Australia.
– It will not end in New
South Wales under a Labour government.
– Not under a Labour government. When it does go, clause 56 will be redundant in respect of that State, just as it is already redundant in respect of a number of States. Why should a small person who wants to obtain a home be precluded from buying an old house, which may be perfectly good, because, as we know, many of the older houses are the best in their areas? Why should such a person be precluded from buying an old home which may suit him better? I do not suggest that the bank should advance more than 90 per cent, of its own valuation, but why should not the small man - and we are talking now only of the small man - get a fair go in order to buy a home which will best suit his family and his needs? I agree that this clause has merit in respect of States in which there is a housing shortage, for so long as there is a housing shortage, but I think that it is a little out of place in a permanent measure, and perhaps the Treasurer will have a look at it by the time the bill reaches another place. 1 turn now. Sir, to clauses 120 and 121. I was delighted when the Treasurer promised last evening to have another look at these audit provisions. Perhaps there will be an opportunity for an amendment to be moved in another place, following the more considered study which the Treasurer will have given to this matter. If the Auditor-General, who has full power to make all such investigations as he may require, and is not compelled to bring in a half-baked report, certifies that a serious and substantial breach has occurred, such a breach, I repeat, should not be covered up. Tt should be brought to the attention of the Parliament and of the country. The covering up by the Treasury and the banking service which is made possible under the terms of this bill as it stands is something which we should not tolerate. I fear that, in the drafting of this measure - I do not, of course, impute anything against the present Treasurer in this regard - there has been something of a competition in empire building between the Treasury and the Governor of the Commonwealth Bank. I think that the Cabinet from time to time, perhaps without realizing what has happened, has been the victim of this competitive empire building by skilled and experienced bureaucrats.
Now. Sir. I want to deal specifically with clause 121. under which the AuditorGeneral will have a duty to report, first, whether the annual statements of the Commonwealth group of banks are in agreement with the accounts and records, and show the financial position fairly. Secondly, he will have a duty to report on matters “ arising out of the statements “. I think that the phrase “ arising out of the statements “ is an unfortunate limitation which should not be there, because it will tie up the Auditor-General and prevent him from revealing to the Parliament or to the country at any time misfeasance which does not arise out of the statements. At present, as the bill stands, you have a secret system - because banking matters are secret - on which the AuditorGeneral will not be permitted to report. I think that the wording of clause 121 is a drafting error, and that when the Treasury has another look at it it may feel that the removal of the words “ arising out of the statements” is feasible and will not in any way entail undesirable consequences.
I draw the attention of the committee to the form in which the Auditor-General discharges his responsibilities under the existing act. Honorable members may see it in the small footnotes, to the tables in the accounts of the Commonwealth Bank which are from time to time laid on the table in accordance with the act. They will see from these that the Auditor-General - I think quite rightly, in terms of the present act, which is defective in this respect - interprets his duty as simply to make a formal report, and does not find it necessary to reveal or discuss any matters of substance in the way that, indeed, he does, and is entitled to do, in respect of his audit of other parts of the government accounts.
In the short time that remains at my disposal, Sir, I should like to turn to the Commonwealth Development Bank. I was fascinated by the excursus of the honorable member for Batman (Mr. Bird), who said that this bank would pursue a better course-
– Order! The honorable member’s time has expired.
.- Mr. Chairman, it is now more than 47 years since the Commonwealth Bank of Australia was instituted under legislation brought in by the Fisher Government. During that 47 years, the bank has, unfortunately, been a political football and has been kicked about by the various governments that have occupied the treasury bench from time to time. In 1911, the Liberal party of the time strongly opposed the formation of the bank, and did its level best to prevent it from coming into operation. From that time to the present, opposition to the Commonwealth Bank has continued in some form or other. So, after 47 years, we now have presented to us for consideration a series of bills that effects almost revolutionary changes in the Commonwealth
Bank, which, for 47 years, so ably, with great credit to itself, and with great satisfaction to the people of Australia, carried on the functions of reserve banking, of trading and savings banking, and of the Mortgage Bank and Industrial Finance Departments, with much satisfaction to its customers and to the people of this country, at the same time making great profits which assisted the Commonwealth. After 47 years, we have this series of bills which will make radical changes in the structure of the bank.
I want to express my opposition to the measures now before us, because I believe that they will not strengthen the Commonwealth Bank. They will not strengthen it in its reserve banking functions, they will not strengthen the Commonwealth Savings Bank, and they will not give to the banking institutions or the people of Australia the advantages which the Government has proclaimed will be the result of the operations of the bank in its new forms. The determination to split asunder what is now the Commonwealth Trading Bank and to make it into three separate banks - a Trading Bank, a Savings Bank and a Development Bank - each under its own general manager, and each carrying out its functions in accordance with the policy of its general manager, who will be subject to the Commonwealth Banking Corporation Board and its chairman, will, in the opinion of myself and the Opposition generally, result in a cumbersome, complex and burdensome kind of management, which, by its very nature, will prevent the banks from functioning as they should function.
One cannot understand this proposal. In the whole of the debate that has taken place on these bills, I have not yet heard a satisfactory reason why this change should be considered necessary. Nothing has been said to show that in the past the Commonwealth Bank, with all its varied functions, has failed to carry out the functions required of it by the Parliament. During its 47 years of existence the bank has grown in every direction and has been able to give greater and more valuable service. One therefore asks why at this particular time it is thought necessary for the bank to be dismembered, to be cut up into four divisions, one of which is to be entirely separate from the other three, those three, as I said previously, being subject to a most complicated and complex management.
One can only think that this legislation has been introduced for the express purpose of weakening- the Commonwealth Bank. Let me point out that we, as a people, believe in democracy. When we speak of democracy we mean that the people are supreme and paramount. The people elect Parliament and have the right to dismiss Parliament. As a consequence, they are supreme and paramount. It logically follows that those things which are possessed by the people as a whole are also supreme and paramount, rather than similar things that are not possessed by all the people. It is the function of the Parliament to ensure that what the people own and possess shall be strengthened in every direction, and shall have rights over those institutions that are owned only by a portion of the community. What is owned by a portion of the community should not receive greater consideration than that which is owned by the people as a whole. The Commonwealth Bank structure is the people’s structure. It was created in the interests of the people. It is the duty of Parliament, as a democratic institution, to see that its assets and interests are preserved, and preserved against the encroachment of other interests in the community.
One cannot escape the conclusion that this legislation has been introduced for the purpose of assisting the trading banks in their competition with the Commonwealth Bank. I remind honorable members that this legislation will certainly result in disabilities being suffered by the Commonwealth Bank and the various sections of it. Let me mention, as an instance, the Commonwealth Savings Bank. In the past the Trading Bank and the Savings Bank have functioned together. They have been complementary to one another. They have been under the control of the one management. Under this legislation they will be separated and each will have its own management. The legislation does not contemplate, however, that the same process should be carried out with respect to the trading banks, which also carry on savings bank activities. This means, of course, that the management of the Commonwealth Savings Bank will be unfairly discriminated against, as compared with the savings banks that are operated by the private trading banks. This seems to me to indicate that wherever handicaps can be imposed on the people’s bank they will be so imposed.
I also suggest that quite a number of unnecessary provisions are contained in this legislation. The mere fact that clause 103, dealing with the retrenchment of bank officers, and clause 104, which has to do with the employment of married women, have been included in the legislation indicates a statutory effort to limit the power of the management of the bank, which should be able to conduct the business of the bank in the way that it considers to be in the best interests of the banking system or of the people.
I do suggest that it would have been far better if these bills had not been introduced. Looking back over the 47 years of the bank’s existence we find that when it was hardly three years old, as a trading bank and as a savings bank, it was able to deal with all the complex problems that arose as a result of the first world war. It was able to float all the Government loans and to finance the various pools of primary products that were created because of war conditions. It saved the Commonwealth hundreds of thousands of pounds in the floating of loans, and ensured that the financial structure of Australia remained intact and undamaged at the conclusion of the war. It was evident that the people had created an institution that was able to build up the financial strength of the Commonwealth.
It was not until 1924 that any alteration was made in the structure of the Commonwealth Bank. Before that time there was no bank board. A general manager controlled the bank very satisfactorily. After the new type of management was introduced in 1924 we had some very tragic experiences, because the board appointed to manage the bank showed itself to be particularly weak in the enforcement of policy, and tragically lacking in leadership in the time of the depression, when a central bank should have come to the assistance of the Australian community because of the economic conditions then existing.
.- I wish to reply to one or two comments made by the honorable member for Bendigo (Mr. Clarey). He started off by saying that the Commonwealth Bank had been in operation for 47 years and had served the community well. It must be remembered that nonLabour governments have been in office for most of those 47 years. The longest period of office of a Labour government during that time was eight years, from 1941 to 1949. Outside of that term, Labour governments have held office for less than three years at any one time, and mainly for less than eighteen months at a stretch. In the aggregate, the total time spent in office by Labour governments has been only about one-quarter of the total of 47 years referred to by the honorable member for Bendigo.
The honorable member has pointed out that during its 47 years of existence the bank has been growing in strength. This is quite true. Honorable members on each side of the House have said in their speeches during this debate that this has been the case. It is a matter of record. We all know it to be so. The Commonwealth Bank was established by the Fisher Government, but since that time the non-Labour governments must have assisted the Commonwealth Bank to a large extent in its continual progress. They could have done nothing calculated to bring about the downfall of the bank, as has been suggested by the Opposition, because the bank continues to grow. The separation envisaged in this legislation was never contemplated until the Labour party really showed its hand and decided that there should be a government monopoly and that the banking system should be nationalized. When this was made clear it became necessary - and this is one of the main features of the legislation - to provide every possible protection for the private enterprise banks against the threat of nationalization. Of course, the Labour party takes a very dim view of the objections expressed by the private banks to nationalization.
– What is wrong with that?
– I am asked what is wrong with that. What is wrong with the private banks having so many more clients than the Commonwealth Bank? Nothing, whatever! We believe that if a citizen wishes to bank with the Commonwealth Bank, that is all right and we should give him every encouragement. But if the citizen wishes to bank with one of the private banks, that also is all right. Of course, we believe in giving the people the choice and the right to bank where they wish. That is why this Government, representing the people, at this stage in our history is most anxious to preserve the private banking system so that the people will have a choice. If the Commonwealth Bank in the past has been such a great success - and not one Labour member has said anything about its progress being disrupted in 1945 or 1953 or at any other time - why is it that all the people who want to put money in a bank do not clamour to go to the Commonwealth Bank? If the people regarded the Commonwealth Bank in the way that Opposition members say they do, it would have almost all the banking business in Australia. But that is not so. It has been said that members of the Commonwealth Banking Corporation Board will dictate the policy of the Trading Bank and of the Savings Bank. The honorable member for Grayndler nods his head.
– I said that.
– Who does he think should dictate the policy?
– We should!
– The honorable member for Wilmot says, *’ We should “. That, of course, is the real story - Labour wants to dictate what should be done with these banks. That is why the honorable member says, “ We should “.
– The Parliament should.
– He now interjects, “ The Parliament should “. Let us examine that interjection. Labour thinks it should always be in government and that it should always set the policy.
It has been shown that in the past, nonLabour governments in appointing people to boards have selected some of the most worthy men in the community. In doing so, we expect that they will give us a fair deal, and we are sure we will get it. The honorable member for Wilmot said that clients are leaving the Commonwealth Savings Bank and are going to the savings banks that have been formed by the private banks.
– Not clients, deposits.
– All right, then, not clients, but deposits. We get all sorts of technical points such as this. If it is deposits, it is clients, because, after all, the clients make the deposits. The honorable member does shift his ground; he is on the same ground all the time, although he takes a technical point. Whether it is clients or deposits, the deposits are building up in the private savings banks at the expense of the Commonwealth Bank. If that is happening, the clients of the private banks, who make those deposits, are also increasing in number. What is the reason for that; are they getting a better deal?
– You tell us.
– I will tell you. I would say very definitely that they are getting a better deal. Of course, savings bank interest has only recently been increased and, goodness knows, this interest has been so low that it was time something was done about it. It has, of course, now been increased. Does the honorable member for Wilmot, or anybody else, disagree with that? After all, these deposits are chiefly made up of the savings of what are called the small people in the community. Since interest is not paid on deposits exceeding a certain amount in the savings bank, does the honorable member not think that the mass of the people should get a fair interest on their money, or does he think that interest should only be paid to people with large sums of money? Of course, the people should get a better deal and that is why they are changing over. They are offered certain incentives. People do not go to a business haphazardly; they go where they get service. If, as a motorist, I know that if I go to a certain service station an attendant will wipe the windscreen and check the tyres, whereas at another garage that will not be done, I will go to the one where I get service.
The honorable member for Bendigo said that the people’s bank, or some public monopoly, should be preserved against other instrumentalities in the community. I wrote down his words. The banks should get exactly the same deal, because this is a free country and we have private enterprise. The same deal should be given to the public banks and to the private banks. But Labour does not care much about the rights of the individual; that is the point. Labour believes in collective instrumentalities, and not in the rights of the individual. That has been proved in many instances. I do not want to enter the New South Wales election campaign, but it is a fact that the rights of the individual are not considered there. That has been instanced by land acquisitions at prices so low that it was like taking the land away from the people.
We stand for the rights of the individual. As far as the Commonwealth Bank is concerned, we believe that it should be allowed to operate fairly and that the people should be allowed to deposit their money with it if they wish to do so. We hope that the Development Bank will be of great benefit to the farming community and that it will facilitate development such as the singleunit farms under the war service land settlement scheme.
– Order! The honorable member’s time has expired.
.- I do not think that many points in the remarks of the honorable member for Mallee (Mr. Turnbull) require an answer at this stage. He belongs to a group of people in this chamber who are continually making statements about private enterprise, freedom of the individual and other abstract ideals, but who supports governments and political parties which act contrary to these principles when in power. Yesterday, you, Mr. Chairman, pointed out that perhaps this was not the time to canvass that part of the subject, so I shall leave it until a later time.
This afternoon, I had the exhilarating experience of being able to agree with some of the remarks of the honorable member for Mackellar (Mr. Wentworth). I knew that, if I stayed here long enough, such a situation would eventually arise. On this occasion, he addressed his remarks to the housing position. I direct the attention of honorable members to the housing loan provisions which are contained in Part IV. of the bill. Here, the duties of the Commonwealth Bank in the field of housing are outlined. This is one of the most important and vital matters in the community. If we speak of development in the way in which the honorable member for Sturt (Mr. Wilson) spoke of it, I should say that housing is the most important national development that we have. It is the right of the individual to develop his property and eventually to have the private ownership of his house. This is fundamental, and is the view of the Labour party.
Therefore, 1 look at this part of the bill and consider my own experience with housing. I consider also the troubles of the average young person to-day in getting a home. I can say only that the general approach to housing in this legislation - unfortunately this has also been the position in the past - is unimaginative in the extreme. Let us consider the clauses which have restrictions in them. The honorable member for Mackellar mentioned clause 56 which, as it were, precludes the purchase of standing homes. What does this mean? In great sections of the community, such as in country towns, people cannot deal with this branch of the Commonwealth Bank if they want to purchase a home. This is a serious matter. In a small country town of perhaps 150 to 200 houses, there is no field for the constant building of new homes. A new resident in the area can purchase only a standing home. That is logical. It is economical to purchase only a standing home. But a new resident is unable to turn to this section of the Commonwealth Bank to obtain finance to do so. I say definitely that it is one of the principal duties of the Commonwealth Bank to see that any citizen can house himself under its auspices. The Treasurer might be surprised to know that I am supporting the honorable member for Mackellar in his plea to have him attend to this matter when the bill goes to another place.
Clause 65 of the bill provides that the amount of loan under this division shall not be for a period of more than 35 years. The War Service Homes Division seems to be operating very satisfactorily with a longer term than that.
– Is the honorable member suggesting that clause 56 should be altered?
– That clause refers to loans for new homes. The argument in favour of that is logical enough as it im plies that we want to force people to build new homes, but in great sections of Australia it is not logical to try to erect new homes. For example, I might cite country towns; and, secondly, I refer the Treasurer to my own electorate where there are no more than 800, or 900, blocks where new homes could be erected.
– I understand that these provisions are rather more liberal than those in the 1945 act.
– I am glad of that. I was not here in 1945 or I would have attended to that matter then. I have held this opinion ever since I began to build my own home when I returned from war service. There is a particular jinx, or jinni, in the housing system which makes sure that it is difficult for the ordinary citizen to get through the administrative procedures in building a home. I wish to revert now to clause 65 which provides for the time for which a loan may be granted. Well-built houses will stand for perhaps 100 years, and the limitation of the period of a loan to 35 years may be an unnecessary burden as many sections of the community have meagre incomes. They have little money available to purchase homes so they are driven to rentals.
Clause 66 provides that the amount of loan shall not exceed 90 per cent, of the value of the estate or interest in land on which the loan is secured or the prescribed amount, whichever is the less. The banks are always conservative in their valuation of homes. But the provision in clause 69 is even worse. It states -
A person indebted to the Trading Bank or the Savings Bank in respect of a loan made under this Division may, at any time after the expiration of five years from the date of the mortgage, repay the balance of the loan . . .
Why has the nominated period been limited to five years? I suppose in the end we will see regulations under which a person may repay a loan after paying a premium. What is the basis of this provision? It is commercialization run riot, because the first social duty in a community is the provision of homes. I refer to these clauses as examples of the unimaginative approach of the Government to this problem. The Treasurer has said, by way of interjection, that some of the terms are more liberal than those under the 1945 act. That act was probably a little more liberal than the legislation of 1934, or 1924 or 1910. I suggest that we should have a completely new approach to housing finance. Imagine the magnitude of the problem in Australia. The honorable member for Mackellar has said that there is no housing shortage. I do not know where he lives or to what section of the country he was referring, unless he spoke of the remote areas of central Western Australia; but all over this continent people are waiting for homes and they have few facilities to get them. Recent Statistics show that there are 2,800 marriages every week and about 1,300 houses are built each week. In the big cities there are numerous old houses, and if people had the opportunity they would rebuild or remodel them. There are no facilities for the owner of a standing home to get funds from the Commonwealth Bank to improve his property.
The Commonwealth Government itself participates in housing finance to a great extent. There are three fields in which we in this Parliament deal directly with housing. They are the War Service Homes Division which provides £35,000,000 a year, the Commonwealth and State Housing Agreement under which £36,000,000 is provided and the Commonwealth Bank itself which, according to its report, is providing £15,000,000. So that of a total of several hundreds of millions provided as capital for housing each year, £86,000,000 or thereabouts is the direct responsibility either of this Parliament or the institutions created by it. Therefore, we should have the greatest amount of initiative when it comes to a solution of the housing problem.
One aspect that has intrigued me since I have been studying this problem is the great profits that can accrue, particularly to the Commonwealth Government, from housing finance. Honorable members are probably aware that a great proportion of the revenue paid for war service homes comes through this place. It is mostly interest-free as we get it, but as a grateful country, we lend it to the ex-servicemen at 3i per cent., or 31 per cent. If honorable members will examine the tables which were published in answer to a question that I put to the- responsible Minister in 1957, and recorded at page 914 of “ Hansard “, they will see that repayments of interest over and above repayments of principal and the cost of administration of the War Service Homes Division since its inception in 1919-1920 had shown a total profit to the Commonwealth of nearly £37,000,000. That was nearly two years ago, and I presume that the profit is now a great deal more. So I put the point that the Parliament of the Commonwealth has used housing finance as a matter of profit. All these various fields of Commonwealth finance for housing should be brought under the Commonwealth Bank. It should be used in a much more liberal and imaginative way to allow people to purchase and erect homes.
– Order! The honorable member’s time has expired.
.- The honorable member for Bendigo (Mr. Clarey) who spoke earlier said that ever since this Government had been in office it had shown opposition to the Commonwealth Bank. He proceeded to say that this Government had been weakening the Commonwealth Bank since it came to office. Both statements are completely untrue. Ever since this Government has been in office it has- given tremendous support to the Commonwealth Bank. Not only have the deposits and advances of the Commonwealth Bank expanded tremendously in that time, but the ratio of deposits held by the Commonwealth Bank to the deposits held by the private banks has also increased, showing that, relatively, the Commonwealth Bank has gone from strength to strength while this Government has been in office. This Government believes in a strong Commonwealth Bank. It believes in strong private banks and in free and. fair competition. If you have a strong Commonwealth Bank competing with strong private banks, you will have the widest choice for the citizens of Australia and the most efficient banking system.
When my time expired previously in the committee stage, I was dealing with clause 104 which has been referred to as “the marriage bar “. I said I thought the inclusion, of. this clause in the bill was antiquated and that it. should be omitted. The only reason for its inclusion is that it has been in the Public Service Act ever since 1902. Under modern conditions, there is no justification for forcing an employee of the Commonwealth Bank, or of the Public Service for that matter, to resign merely because she is married. Nor should there be a complete bar on the employment of married women. This matter was dealt with by the Boyer committee, which inquired into Public Service recruitment last year. In paragraph 243 of its report, the committee said -
Apart from these considerations, section 49-
That is the identical provision in the Public Service Act - reads strangely in a country which has adhered to the I.L.O. Convention for equal employment rights for men and women. We have also been told that a U.N. Economic and Social Council Report, prepared for the Commission on the Status of Women in 1951, indicated that at that time Australia was one of only five countries out of 44 supplying information, which had a “ marriage bar “ in their public service legislation. The United Kingdom Civil Service removed the “ marriage bar “ in 1946.
The committee later said -
We recommend, therefore, that sub-sections (1) and (2) of section 49-
That is the same as sub-clauses (1.) and (2.) of clause 104 of this bill - be repealed, and replaced’ by a sub-section providing that married women shall be eligible for permanent or temporary employment in the Service on such terms and under such conditions as are prescribed.
I ask the Minister for Immigration (Mr. Downer), who is at the table, to raise this matter in Cabinet so that our practice can be brought up to date, as waa recommended by the Boyer committee, which grappled with this problem only last year. Its report was presented to the Prime Minister (Mr. Menzies) last December, and was tabled in Parliament a few weeks ago.
Now that men and women have virtually equal rights in almost all spheres of life, there is no justification for discrimination in the Public Service. Nor is there any justification for discrimination in the Commonwealth Bank. The Commonwealth Bank is asked to compete on even terms with the private banks. The private banks do not have to dismiss their valuable ser vants merely because they marry. So I ask the Minister for Immigration to raise this matter in Cabinet and endeavour to see that the recommendations of the Boyer committee are given effect. As I mentioned earlier, I would oppose this part of the bill were1 I not confident that the Government will, in the near future, consider the recommendations of the Boyer committee, and remove the marriage bar from all its legislation.
.- I wish to deal with matters other than those referred to by the honorable member for Sturt (Mr. Wilson), although I should like to preface my remarks by referring to the statements, he made in reply to the honorable member for Wills (Mr. Bryant). The honorable member for Sturt said that the present Government had, over the years, given every consideration to the Commonwealth Bank and to the extension of the services provided by that great institution for the people of this country. I say at once that the Government’s actions, and the measures now before honorable members, indicate quite clearly that the Government aims initially to cripple the Commonwealth Bank, and ultimately to destroy it. I think that the Leader of the Opposition (Dr. Evatt)- and other Opposition speakers conclusively proved that point in their speeches on the second reading of the bills.
Mr. Temporary Chairman, the bill before the committee deals primarily with the Commonwealth Banking Corporation. With the passage of the Reserve Bank Bill the Government has effectively destroyed the competition that existed between the Commonwealth Bank, through its trading bank and savings bank activities, and the private trading banking system of this country. The separation of central banking activities from trading bank and savings bank activities will give the private banks a great advantage over the Commonwealth Bank.
Although the Reserve Bank Bill has brought about this separation, the Rural Credits Department will remain under the control of the Reserve Bank. The Commonwealth Savings Bank and the Commonwealth Trading Bank will in future have separate staffs. That,. I submit, is in conflict with the view expressed by the Prime Minister in 1953, when he spoke on bank- ing reform. In his second-reading speech on the Commonwealth Bank Bill 1953, the Prime Minister said -
We do not believe that it is desirable that those officers, who are now in the service of the Commonwealth Bank, should be put to a final election as to whether they are on the central bank side or the trading bank side.
That is what the Prime Minister said in 1953 when he was offering reasons why the Commonwealth Savings Bank and the Commonwealth Trading Bank should not be separated from the central bank. He said -
The Government believes that it should preserve the greatest fluidity of promotion among the Commonwealth Bank’s officers, because the experience gained in both sections of the bank will be of great value . . . Consequently, there will be one service and one series of avenues of promotion, which is a result that the Government considers very desirable.
The Opposition agrees with that point of view. As was provided in the 1945 banking legislation, a person who entered the employment of the Commonwealth Bank should be able to perform central bank activities. At the same time, if he so desired, he could engage in trading bank activities and savings bank activities. In that great institution the staffs had the right of promotion, and could participate in any one of the activities of the central bank and its associate departments. But under the legislation now before the committee there will be two separate staffs. One staff will handle the savings bank section and another will handle the trading bank section. There will be very little scope for promotion. In other words, no officer of this great institution as we know it to-day will have the right to decide for himself whether he should engage in trading bank activities or central bank activities. So, only six years after it introduced legislation to amend the 1945 legislation, the Government has moved in direct contradiction to the considered opinion of the Prime Minister and therefore, I submit, in direct contradiction to the considered opinion of the government of the day. There will be two separate staffs and the members of one staff will have little opportunity to transfer to the other staff.
Mr. Temporary Chairman, the legislation before honorable members, having provided for the dismemberment of the central bank as we know it to-day, provides primarily for the establishment of the Commonwealth Banking Corporation.
At this stage the Opposition reiterates what it has said on this matter during previous debates. We are completely opposed to a board for the Commonwealth Bank. We disagreed with the establishment of a board in 1951, when the Government introduced amendments to the 1945 legislation. Now, there are to be two boards, one to control the -Reserve Bank, and one to control the Commonwealth Banking Corporation, which will consist of three separate institutions, the Development Bank, the Trading Bank and the Commonwealth Savings Bank. The latter board will comprise a managing director, a deputy managing director, and the Secretary to the Treasury, as well as eight other members, all selected by the government of the day. I suggest that at least ten of the eleven members of the board will be political appointees of this Government.
In addition, the Government has imposed definite restrictions in relation to membership of the board. It has said, in the first instance, that members cannot be former employees of the Commonwealth Bank. At the same time - and with this point I agree - it has stipulated that no person engaged in private banking activities shall be a member of the board. However, the Government overlooks the fact that there is nothing to prevent any member of the board from having some direct association with the private banking system. Neither does the bill prevent any member of the private banking system from resigning his association with a private bank, if necessary, only a few days before his appointment to the board. It is obvious that the Government intends to select members who will be sympathetic to the private banking system. That is the stipulation which the Government has made under the bill. It has placed intolerable restrictions on employees of the Commonwealth banking system. It has said, in effect, “We intend to establish a corporation, the members of which shall not have any association with, or knowledge of, banking in this country “. I suggest that what Opposition members said in 1951 in respect of the bank board applies in 1959. Unlimited powers will be given to the members- of the Commonwealth
Banking Corporation board who will have control of the Commonwealth Savings Bank, the Commonwealth Trading Bank and the proposed Development Bank.
Order.’ The honorable member’s time has expired.
.- Mr. Deputy Chairman, I shall continue where I left off my previous speech. I should like to refer, again, to one phase of this legislation which is most unfair. The Commonwealth Trading Bank is to be separated from the Savings Bank and two distinct executive committees will control the two organizations. Private trading banks have not been put in that position. Each private bank which has recently undertaken savings bank business will be able to conduct both savings and trading business in the one building and under the same management. Why has the Government deliberately made this distinction between Government and private banking? The Government is not prepared to answer that question. It has not yet answered many of the pertinent questions that have been asked from this side of the chamber.
This is further evidence that the Government is determined, through the legislation of a democratic parliament, deliberately to restrict and confine the functions of the Commonwealth Bank. We know the old slogan, “ Divide and conquer “. It is easier to control several sections than one whole. So the Commonwealth Bank will be forced, through this legislation, to have two distinct authorities controlling two phases of its activities - trading bank business and savings bank business. It is most unjust. It is a most unfair restriction. It is a most unfair discrimination between the private banks which will not be touched and the Commonwealth Bank.
Evidence is piling up during this debate that this legislation is designed, not to improve banking generally throughout Australia, but to make absolutely sure that never again will the Commonwealth Bank be in the strong position that it has held in years gone by. The Government is doing this, not by regulation, but by legislation which it intends shall be passed through the two Houses of the Federal Parliament. The Commonwealth Bank will be cut to ribbons. Private banks, on the other hand, will be given every encouragement, help and assistance.
Government supporters talk about private enterprise! They talk about private enterprise having a free rein and having all restrictions removed from it in order to compete with the Commonwealth Bank - the socialized bank. It is interesting to hear this argument because during the regime of the Menzies Government private enterprise has been delivered some real body blows. Years ago, we really had free enterprise as between man and man. To-day, free enterprise means monopolist enterprise in which groups of individuals combine to defeat other groups of individuals. In other words, we have the “ dogeatdog “ principle in private enterprise reaching a stage it has never reached in this country before.
The old days of free enterprise have gone and in its place we have monopoly growth and combines. This will ultimately defeat the purpose of a free enterprise economy. This Government gives much lip service to the old gospel of free enterprise. That has gone long ago and has been replaced by this rugged, ruthless, jungle law in our economy. These bills will give a monopoly to private enterprise “which will have great power over the lives of individual Australians.
Another matter that I wish to mention is housing, for which finance is provided by the Commonwealth Savings Bank. That bank provides loans to building societies and private individuals for house construction. Never was a phase of the Commonwealth’s activities more in need of a financial injection than housing. Every State has this problem. Day after day and year after year members of the Federal Parliament and of the State parliaments find that the toughest request that anybody can make of them is to find a house. We feel helpless when folk who need houses come to us for assistance.
In my State of Tasmania, at the moment, the building societies, the Launceston Bank for Savings, and the Hobart Savings Bank are experiencing the seriousness of this situation. A person who wants to build a house worth £3,000 has to have a deposit of £1,500. How many people can afford a deposit of £1,500? It wipes out the possibility of 90 per cent, of the ordinary folk of the community buying a home. We need an instrumentality which is prepared to lend money at a low cost and on hardly any deposit. In Tasmania, the Agricultural Bank has amongst its functions the building of homes for the Tasmanian people. Incidentally, no deposit is required. It is the only organization in Australia which requires no deposit to build a home worth from £2,700 to £3,000 and offers terms of rental repayment of £4 10s. £4 5s. or £4 a week. Applicants go on a rent purchase basis on a 53-year term. These repayments are applied to the purchase of the home.
We need something like that on a Commonwealth basis. On a State basis it is good, but it is needed on a Commonwealth basis also. If only this new banking set-up would allow for something of that nature I believe that we could get people housed at a much faster rate than is happening to-day. I refer to people needing houses who cannot afford deposits and so need help. I am pleased to see this aspect of the trading bank activities emphasized in the bill in clauses 55 to 64.
The Development Bank is another phase of the split-up, and a clause which is very attractive to me is 73. It reads - (1.) In determining whether or not finance shall be provided for a person, the Development Bank shall have regard primarily to the prospects of the operations of that person becoming, or continuing to be, successful and shall not necessarily have regard to the value of the security available in respect of’ that finance.
That is a good clause. It shifts the emphasis on security away from the value of the security asset towards security of employment or of business. Any provision which can do that is helpful. I am reading this clause in relation to the work of the Development Bank. That bank is designed to help primary production, the development of industrial undertakings, particularly small ones, and to give other assistance to private individuals. This clause is a definite instruction to the bank not to look at the value of security as a first consideration but at the security of the applicant’s employment. I hope that this clause will be implemented to the great benefit of people applying for assistance.
When I was speaking of banking monopolies a while ago I forgot to mention that the number of private banks has been reduced from 70 in about 1850 to nine to-day. That tendency has continued throughout the whole economy during the regime of this Government.
Order! The honorable member’s time has expired.
.- I move- [Customs Tariff Amendment (No. 2).]
Cite as: Australia, House of Representatives, Debates, 19 March 1959, viewed 22 October 2017, <http://historichansard.net/hofreps/1959/19590319_reps_23_hor22/>.