6th Parliament · 1st Session
The President took the chair at 3 p.m., and read prayers.
page 4065
Assent reported.
page 4065
Food Ration, Western Australia - Naval Forces: Separation Allow- ‘ANCE - Deceased Soldiers’ Personal Effects - Captain NORDMAUN
– Last week I asked the Minister of Defence certain questions about the feeding of the troops at the training quarters in Western Australia. I understand that he has received, a reply, and I beg to repeat my questions.
– The honorable senator asked me the following questions : -
The answers to the questions are given in the form of a statement, -which reads -
The daily ration of the troops of the Australian Imperial Force consists of: - li lbs. bread, H lbs, fresh meat, J oz. coffee, 1-32 oz. pepper, 8 oz. mixed vegetables or 2 oz. cheese, 1 lb. potatoes, 3 oz. sugar, i oz. salt, i ox. tea, i lb. Jam.
Its distribution into the three meals of breakfast,, dinner, and tea, depends largely on circumstances, viz., the nature of the training which the troops are undergoing at the time, which probably varies from day to day, and the individual tastes of the men themselves. In the initial stages of training, when soldiers arc being principally exercised at’ drill, the meals can be arranged and distributed into three regular portions, the principal meal, a hot one, being usually partaken of in the middle of the day. When engaged in manoeuvres, field training or musketry, the principal meals would usually be breakfast, and a hot meal at tea-time, the midday ration being carried in the haversack
It would be almost impossible, mid certainly injudicious, to lay down hard and fast lines as to the distribution of the entire ration into three proportionate parts for breakfast, dinner and tea. Adequate provision is always mode for one hot meal, in addition to breakfast, whether it be cooked at mid-day or in the evening, but some men prefer to have the whole of the residue of their meat ration at breakfast, whilst others like to retain a portion for the tea time. The full ration is considered ample for the men’s wants, and it lias been found best to allow sonic little latitude as to its apportionment.
The above-mentioned procedure would doubt- less obtain in the case of troops training in Western Australia. The Commandant of that district has been instructed by lettergram to furnish detailed information in this connexion, with a view to ascertaining whether any unusual departure from the recognised procedure in regard to the distribution of meals has obtained in his command.
– Is it the intention of the Defence Department to place naval men on the same basis as military men as regards separation allowance to married men during war time, and if not, why!
– This matter is being inquired into, and is under consideration at present, but I hope to be able to make a statement in a few days’ time.
asked the Ministor of Defence upon notice -
What action does the Defence Department propose to take regarding the disposal of the personal effects of deceased soldiers?
– The answer is-
The following action has been approved in regard to the disposal of the kits and personal effects of deceased and missing members and prisoners of war of the Australian Imperial Force : -
Officers. - Messrs. Cook and Sons will arrange for their personal effects to bo de spatched to the Military District concerned and delivered to the next-of-kin - a list showing the names and number of packages, belonging to each officer, and copy of inventory being sent to this Department and to the Military Commandants concerned.
Other Banks. - Personal effects of sentimental value will be forwarded by Cook and Sons as above. The kit of the soldier and any personal property which is not desirable to send away will be sold or otherwise disposed of. The effects of soldiers missing or prisoners of war will he dealt with as in the case of deceased soldiers. In the event of kits being unsaleable the ordnance section at the base will take over the military articles of use at their unexpired value for re-issue when cleaned. When the next-of-kin resides in the United Kingdom or -Europe, the foregoing procedure will be carried out through the High Commissioner’s office.
asked the Minister of Defence, upon notice -
– The answers are -
page 4066
Manufacture of Munitions. Senator Lt.-Colonel Sir ALBERT GOULD. - Can the Minister of Defence give any further information about the manufacture of munitions of war beyond that which has appeared in the daily press! I do not know whether it is intended to make a statement as to the position, but I saw that it was alleged that a statement was to be made in the other House.
– The better course for me would be to make a statement on this question, and I ask permission to do so.
Leave granted.
– The present Government took office in September last. Up to that time no action had been taken to inquire into the possibility of manufacturing shells or guns in the Commonwealth. On assuming office, and very shortly afterwards, I took up the question, and on 29th September, 1914, we asked the Prime Minister’s Department to despatch the following cablegram to the Secretary of State for the Colonies for transmission to the War Office: -
Commonwealth Government desire that full details of manufacture of 18-pounder quick- firing gun and ammunition, including fuses, be sent as soon as possible. Desire to be informed also whether foremen of works could be supplied.
The Prime Minister forwarded that message on the 30th September. On the 29 th we forwarded the following telegram to the External Affairs Department for transmission to the High Commissioner : -
Following telegram sent to the Secretary of State for the Colonies : - “ Commonwealth Government desire that full details of manufacture of 18-pounder quick-firing gun and ammunition, including fuses, be sent as soon as possible. Desire to be informed also whether foremen of works could be supplied.” Ascertain and telegraph whether foremen of works who understand manufacture of fuses, shells, cylinders, and guns could be obtained from the trade.
On the 3rd October the External Affairs Department informed us that the message was sent on the 30th September. On the 8th October, the following cablegram, dated London, 7th October, was received from the Secretary of State for the Colonies : -
Referring to your telegram, 30th September, Army Council states that they would take very long time to prepare full details of manufacture of quick-firing gun, 18-pounder, and ammunition, and that it would involve detailing a special officer, whose services cannot be spared at present, to ilo this work. Army Council regret that they cannot spare services of any foremen. In the circumstances, it is suggested that best course for your Ministers will be to send deputation to this country to study whole question, and, incidentally, to lay out for and obtain plant which will be necessary. Despatch follows by mail.
Acting on that, and seeing that it would take some time to send a deputation from this country, and that we had two very able officers in England - Major Watts and Captain Coghill - one an armament officer and the other a gunnery officer, we sent the following cablegram to the High Commissioner on the 13th October: -
With reference to your telegram of 7th October re manufacture 18-pounder shells, please see Secretary of State’s reply of 7th October. Impracticable send deputation, but Minister approves Watts and Coghill being instructed, thoroughly study question, and report necessary steps soon as possible. Ask War Office to assist.
The officers referred to are Major B. A. G. Watts and Captain A. J. Coghill, armament officer, at present doing duty in the Supply Branch in the office of the High Commissioner. Both officers have had considerable war experience. On the 18th November the following despatch was received from the War Office : -
I am commanded by the Army Council to acquaint you that the Chief Superintendent Ordnance Factories reports that to give full details of the manufacture of an 18-pounder gun, which would be of value for gun-making purposes, would mean the writing of a treatise, which would take a very long time to do. He lias nobody that he could detail to do this, nor, if lie had, could his services be spared in the present pressure. The same applies to the ammunition question, but, the parts being smaller, he could supply parts 18-pounder shell and cartridge case at various stages of manufacture, and samples, empty and filled (dummy), of the 80 fuse. These, with specifications and drawings, would doubtless be of assistance to one who had studied their manufacture; but previous study would certainly be essential. As regards foremen, he has not enough for his own services, .and could spare none to go to any colony at present. Under these circumstances, it is suggested that the difficulties . . . to send a deputation to study the question.
On the 9th November the High Commissioner cabled -
With reference to your telegram, 30th September, manufacture of guns and ammunition, have consulted with trade-
That is outside the War Office -
No foremen of works available. Owing to present crisis, every qualified man urgently required this country. Coghill and Watts will make little progress in obtaining details owing to pressure of work preventing experts having time to advise.
On the 17th November I minuted the file that neither time, nor energy, nor money must be spared in placing the Commonwealth in a position to make artillery ammunition. On the 18th November, 1914, the assistant manager of the Small Arms Factory - who, I may say, has had previous experience in supervising the installation of a plant in America - was instructed to get out an estimate of what he considered it would cost to instal a plant in Australia for the manufacture of 18- pounder ammunition. On the 18th November he sent forward an estimate of £83,175 for the cost of machinery, and £15,000 for buildings- a total of £98,175.
On the 21st November the High Commissioner was again cabled as follows: -
Reference to your cablegram of 9th November, desired that every endeavour be made overcome obstacles in the way of obtaining information asked for in telegram, 30th September. Coghill and Watts to report progress monthly. This urgent.
On 26th December a cable was received from the Secretary of State to say that facilities to visit Royal factories had been given to Coghill, but the Army Council wished to utilize the valuable services of Captain Watts until the end of the war. The High Commissioner was cabled on the 31st December to obtain quotes for the “manufacture of a complete plant for the manufacture of 18-pounder ammunition, 200 rounds daily, forging and finishing, fuse making, power plant not included. Payment made on turn out of first 100 rounds.” A reply was received from the High Commissioner stating that the work was in hand. On the 10th April a cable was received from the High Commissioner that Prat and Whitney had submitted a brief outline and estimated cost, £51,000, f.o.b. New York, six months from date of order, the detailed proposition to be submitted by post. On 10 th May a letter was received from the High Commissioner attaching an offer from W. Todd, Ohio, for specifications of forging process and a blue print of same. On 29th May a cablegram was despatched to the High Commissioner, asking him to forward, as soon as possible, specification of steel manufacture, and drawing 18- pounder high explosive and shrapnel shell. Now I want to say that the statement has been made that, until the press agitation commenced in Australia - which was since the beginning of the present month - it had never dawned on meto take any action with regard to utilizing local engineering works for the manufacture of munitions; but I would point out that on the 22nd February, 1915, Mr. S. McKay, of McKay Brothers, had an interview with me, and told me that he thought they could manufacture shells in their works. I was pleased to hear that, and told him that we had been making certain inquiries. I asked him to see the Chief of Ordnance, who was dealing with this matter. Mr. McKay did see the Chief of Ordnance, and took away certain information. Later on he saw me and told me that, after investigating the information he had, he had come to the conclusion that it was a very stiff proposition, and that more information would be required before he could definitely say that he could commence the manufacture of shells in Australia. He also told me that, going on the information that he then had, he was cabling to his London agents with the idea of seeing if additional plant could be obtained to carry out that work. From that time, not only Mr. McKay, but a number of other manufacturers, had inquired about this matter, before ever this press agitation had begun at all, and each of them was given the same facilities as Mr. McKay was given. Now the statement, was made that Mr. McKay was prepared to take a contract for 20,000 shells from the War Office. In fact, it was hinted, that he had already been given a contract, but I may say that Mr. McKay never at any time told me that he was in the position to make shells yet. He never at any time told me that hehad a contract. He has told me that seeing that’ the firm proposed to go into the matter, he had instructed their London agent to make inquiries in order that they might be able to say whether they would be in a position to make shells if the War Office gave them an order. It will be remembered that during the period over which these communications extended, not only was there no suggestion from Parliament, or from any member of it, that we should commence this work, but there was no suggestion that the Allies were short of munitions of war. That suggestion was of a very much more recent date than December of last year. It will be seen that, not only did I go into the matter thoroughly, but I dealt with it as an urgent matter. The cables I have read from the Army Council show that they practically told us that, owing to the pressure in Great Britain, they were unable to give us the assistance we require. From time to time we have received reports from Captain Coghill, . based upon information he had obtained from the Royal Gun Factory, and also from the catologues of various business firms. The position was that, up till the end of last year, I was pursuing my inquiries with a view to the establishment at the earliest possible moment of the manufacture of shells and guns in the Commonwealth. As soon as Mr. McKay came to me to suggest that it might be possible for local firms to assist in this matter, I cordially met all his advances, and those of other firms, and gave them all the information I had to give them. Up to the present no firm in Australia has been in a position to say that they can, or will, make shells for us, or for the War Office. On the strength of the information we have received I have submitted to the Government a proposition, which is now under consideration, for commencing the manufacture of shells and guns in Australia.
-Colonel Sir Albert Gould. - With existing plant?
– No; it will be necessary to import the plant. I have submitted a proposal to the Government that we should get the necessary plant, erect the buildings, and commence ourselves the manufacture of shells and guns. This would be in consonance with the general policy of the present Government. But I want to say that if any firms in Australia are able to do this work, we intend in the present crisis to assist them to the utmost of the ability of the Defence Department, realizing as we do that, with their existing plants or with some modification of them, they would be able to turn out shells very much earlier than we could hope to do from the Government establishment I have suggested. Inorder that the information obtained from time to time might be thoroughly sifted, and might be made available not only to the Department, but to any private firm that wished to take up this matter, I some time ago instructed the Chief of Ordnance to get into touch with the officers of his own branch, with the managers of the Broken Hill Proprietary Steel Works, and with Mr. McKay, who, as a local manufacturer, had taken a leading part in the inquiries, and at the earliest possible moment to submit reports as to what might be done in this regard. Colonel Dangar, the Chief of Ordnance, had a number of interviews with a representative of the Broken Hill Proprietary Company, and I believe that as a result of their being approached in the matter, they cabled to their representative in London to discover the composition of the steel from which shell cases are made. They received information by cable from their representative, which he in turn obtained from the War Office, as to the composition of the steel. But I am in a position to say that they still have to await the arrival of the mail for a letter giving fuller particulars than those contained in the cable. They are unable, with the information they have at present, to give us a guarantee that they will be able to make the steel required for the manufacture of shells.
-Colonel Sir Albert Gould. - When is their letter likely to be received ?
– I presume by the next mail. It was only last week that the cable they received was shown to us. The Departmental Committee to which reference has been made has been put into a more formal shape during the last week by the appointment of an expert officer from the naval side as well as from the military side. The Committee now consists of the Second Naval Member, who is an experienced gunnery officer; the Director of Naval Ordnance, an experienced ordnance man; the Chief of Ordnance on the military side; and Mr. Bell, the chemical adviser to the Defence Department. Mr. S. McKay and a representative of the Broken Hill Proprietary Company have been appointed consultative members of the Committee.
– I think it is a pity that Mr. Gray, a manufacturer of steel in Melbourne, who would be a very suitable man, was not also appointed to the Committee.
– Mr. Gray has also been in touch with the Department in connexion with this matter. The Committee will have full power to consult with any one. The instructions given them were -
That they shall consider from the point of view of the Government the following questions : -
The Committee shall consult with sectional trade committees which may be formed or with individuals.
Those are the instructions given to the Committee, who are, to my knowledge, daily consulting firms and individuals possessing special knowledge of this kind of work. I may say that it has been discovered that in Melbourne there are engineers and others who have been employed in works of this character in England. They are coming before the Committee from day to day to give them the knowledge they possess. The Committee are able to sift it and make use of what is valuable. I may add that since the cables to which reference has been made were sent, urgent cables have been despatched to the High Commissioner and the War Office asking for expedition in the despatch of information, and I hone that as a result of what has been done we shall very shortly be in a position to utilize, first of all the services of private manufacturers in Australia in turning out shells to the utmost capacity of their works, and, secondly, to establish a Government factory for the manufacture of shells and guns.
– As a matter of privilege I should like, sir, to find out from you whether in the circumstances I should be in order in moving that a copy of the statement which has just been made by the Minister of Defence should be sent to the Melbourne Age and other organs of public opinion-
– The honorable senator is not in order.
– I have not yet stated what I desire to move.
– The statement made cannot be debated at this stage.
– The question I desired to ask was whether I should be in order in moving that a copy of the statement be sent to the Melbourne Age as a memento of its originality and foresight in suggesting action nine months after it had been taken.
-Colonel Sir ALBERT GOULD (New South Wales) [3.28].- The statement made by the Minister of Defence was very interesting to honorable senators, but I recognise that it cannot now be debated. I am not clear whether the Minister first approached private firms, or whether they first approached him in this matter. I understand that Mr. S. McKay approached the Minister in the first instance.
– The honorable senator cannot argue the matter.
-Colonel Sir ALBERT GOULD. -I wish only to ask the Minister a question. Will he say whether he first approached the private firms or they first approached him ?
– Before I approached any private firm in connexion with this matter, Mr. S. McKay approached me.
– And other firms also?
– Other firms approached me subsequently, and amongst them, I think, a representative of the firm of Gray Brothers, mentioned by Senator de Largie. But this was subsequent to February, 1915.
– Can the Minister say what was the date of the declaration of war, and the date on which the present Government assumed office?
– Will the Minister at the same time state whether it is the intention of the Government to go on with the referenda questions in the near future, and whether there is any connexion between shellmaking and the referenda ?
– The date of the declaration of war was 4th August, 1914. The date of assumption of office by the present Government was 17th September, 1914.
– And between those dates there was a general election.
– I would say, in answer to Senator de Largie, that I do not think it requires a very keen student of cause and effect to see the connexion between the two matters.
page 4070
The following papers were presented : -
European War: Extracts from Report to
Admiralty by Vice- Admiral Commanding H.M. Australian Fleet.
Public Service Act 1902-1913.- Appointments, Promotions, &c. -
Prime Minister’s Department. - Promotion of E. W. Daddo as Examiner in charge, 2nd Class, Auditor-General’s Office, Queensland.
Postmaster-General’s Department. - Appointment of L. Luscombe as Officer in charge, Class E, Professional Division, Wireless Telegraph Station, Roebourne, Western Australia.
Lands Acquisition Act 1906 - Land acquired under, at -
Ardlethan, New South Wales- For Postal purposes.
Kalgoorlie, Western Australia - For Railway purposes.
Rose Bay, New South Wales - For Postal purposes.
South Melbourne, Victoria - For Postal purposes.
Victor Harbor, South Australia - For Postal purposes.
page 4071
– On behalf of the Chairman of the Joint Library Committee, I beg to lay on the table the report of the Joint Library Committee for 1915.
page 4071
Report of the Parliamentary Standing Committee on Public Works on the proposed increase of plant at the Small Arms Factory, Lithgow, presented by Senator Lynch.
page 4071
asked the Minister representing the Prime Minister, upon notice -
How much extra revenue would be produced from each State by amending the Federal land tax so that the existing graduation shall not .apply to the different portions of the value of large estates, and that the maximum of the tax shall not be less than Is. in the ?1, while maintaining the existing exemption of ?0,000?
– The answer supplied by the Commissioner is as follows : -
It is understood by the Commissioner that the question means, how much extra revenue would be produced from each State - (1) by fixing the rate of Federal land tax at a figure which would give an increment of tax of Is. on the last ?1 of a taxable balance of ?75,000, and taking that increment of tax as a flat rate applicable to the whole taxable balance of ?75,000; (2) by working from the amended rate thus ascertained in order to calculate the increment of tax on the last ?1 of any taxable balance and utilizing such increment as a flat rate applicable to the whole of the taxable balance.
Under the most favorable circumstances, it would not be possible to make a calculation of the extra tax that would be received under such a scheme within a period of at least six months, as it would be necessary to make complicated calculations in connexion with each taxable estate now assessed under the Act.
An estimate of extra tax could not be given at present.
page 4071
asked the Minister representing the Treasurer, upon’ notice -
– The answer is: -
The Government of New South Wales agreed on 5th November, 1914, to borrow ?7,400,000 from the Commonwealth Government, and not to borrow otherwise during a period of twelve months, except for renewals of existing loans falling due, and except by way of sales of Treasury-bonds to an amount not exceeding sales in a normal year. On the 24th February, 1915, the Treasurer of the Commonwealth agreed that, in addition to the loan of ?7,400,000, the Government of New South Wales should be at liberty to borrow in all ?1,950,000 up to the 30th of November, 1915. On the 10th March, 1915, the Commonwealth Treasurer informed the various Premiers that, as it was understood that the British Government proposed to support State loans to be placed on the London market during March, the Commonwealth would not insist on the clause in the agreement limiting the borrowing operations of the States.
page 4071
Report of Administrator
asked the Minister representing the Minister of External Affairs, upon notice -
When will the Annual Report of the Administrator of the Northern Territory be laid on the table of the Senate?
– The answer is -
A change has been made with respect to the Administrator’s reports .concerning the Northern Territory, so that in future they will refer to the financial year ending 30th June, and not as hitherto to the calendar year. Consequently the current Administrator’s report which, in the ordinary course, would have referred to the year ending 31st December last will on this occasion deal with the eighteen months expiring 30th instant. As soon as it is received copies will he laid on the table.
page 4071
Debate resumed from 11th June (vide page 3961), on motion by Senator Gardiner -
That this Bill be now read a second time.
– We are entering a new arena of Commonwealth legislation with this Bill. I hope that, although it has met with a good deal of friendly criticism from supporters of the Government, it will be the first of a series of measures dealing with this important subject.
– The criticism from Government supporters has been more destructive than friendly.
– I admit that it has been stringent and thoroughly live criticism, but when the arguments of these friendly critics are summed up, it will be seen that the fault they find with the Bill is not so much that it contains any inherent defects as- that it is such a little bantling so far as insurance legislation is concerned, and does not go far enough to suit their views, especially the views of Senator Senior.
– That is hardly correct. It is because it embodies bad principles to be found in the various State Acts.
– If the honorable senator contends that some of the principles of the Bill arc not sound, I think the Government will be prepared in Committee to take into consideration any arguments adduced against particular clauses, so that if any of these alleged evils are in the Bill they may be removed.
– My complaint is that there is nothing in the Bill.
– Then let us put something in. I am desirous at all times, not only to protect the interests of the companies - and it was one of Senator Senior’s many arguments that the Bill did this - but to protect the interests of the general public. I would remind the honorable senator that a good many companies in Australia arc founded on the mutual principle. We have to remember that a great many of the working people of Australia are interested in these companies.
– Will this Bill confer any advantages upon an insurer?
– I believe that in some respects it will, and during its progress through Committee I think that fact will be established. I am of opinion that any Bill which will enable an insurance company to conduct its business more efficiently and more expeditiously cannot but be of benefit to its policy-holders. There are a great many workers in Australia who in perfect good faith have taken out policies in various insurance companies.
– Because they had nowhere els© to go.
– I admit that that has been their misfortune. I hope that this Parliament will no longer be open to that reproach. The Bill will make for the more efficient control of insurance companies, and in that respect it is worthy of our commendation.
– Is that a condemnation of the States for having failed to exercise a more efficient control over the insurance companies under their charge?
– If the States have erred at all, it has been on the side of the companies,- and not on that of the share -holders. As a matter of fact, the insurance legislation enacted by the different States has been enacted at the instance of the party represented by my honorable friends opposite. This is the first occasion upon which a Parliament elected on the most democratic franchise in the world has been able to exercise its legislative functions in respect of insurance.
– And the Bill has slavishly followed the example set -by the States.
– I do not think so. In the course of his extremely interesting speech the other day, Senator Senior referred to this measure as a “ flimsy “ one, and as “a ramshackle structure.” I scarcely think that these were fair similes. I regard the Bill as one which provides us with a rather sound foundation. I do not think that it can reasonably be regarded as a superstructure. It represents but the beginning of insurance legislation. It provides us with a sound, almost, perhaps, a conservative foundation, but one upon which we can construct an edifice of national insurance - an edifice which, I hope, will be crowned with the cupola of social insurance, and which will give us an insurance system from which the people will derive great benefits.
It is scarcely fair for Senator Senior to argue that because a Bill does not go far enough it is necessarily bad. I would remind him that many Bills have been introduced into this Chamber, which honorable senators upon this side have supported as an instalment of reform with a view of securing a better and more far-reaching measure in the immediate future. Coming to Senator Senior’s chief complaint - that this Bill does not deal with compulsory insurance - I would point out that, from information supplied to me by competent constitutional authorities, there is at any rate a doubt as to whether we can constitutionally enact legislation providing for a complete and comprehensive system of national insurance. That is the opinion which I have formed after consulting the best authorities upon this matter. Some of them think that we can institute such a system. But even these point out that, as on numerous other occasions, the High Court might take an entirely contrary view, with the result that a Bill providing for such a system might be adjudged to be partially ultra vires. On the other hand, there are those who frankly maintain that we have not the power to do what the honorable senator suggests.
– Therefore, in great fear, do nothing.
– I am not putting forward that view as an argument.
– But as a defence 1
– No. I believe there is a stronger reason why a compulsory insurance system should not be undertaken at the present juncture. Senator Senior himself probably put the position with more force than I can do. He affirmed that before a Bill providing for social insurance was introduced, a comprehensive inquiry should be conducted, and the whole of the available data’ studied, with a view to the drafting of a measure which would be acceptable to the Democracy of Australia. Senator Guy expressed a similar opinion. Indeed, that, opinion is generally held by honorable senators upon this side of the chamber. Senator Guy has had a large experience of the work of friendly societies - work which in its incidence is closely allied to that of insurance companies. In Tasmania, indeed, these organizations have notably contributed to the welfare of the workers. Senator Guy stated that we ought to conduct an exhaustive inquiry into the question before introducing legislation providing for compulsory insurance.
– I admit that.
– Surely my honorable friend did not expect that a measure’ providing for a complete and scientific system of social insurance would be submitted for our consideration at this juncture.
– There is not a suggestion that any such Bill is likely to be brought forward.
– I do not expect the Government to essay such a difficult task until we have solved the more immediate problems with which we are confronted in this time of stress. This Bill is largely in the nature of a machinery measure which is based upon State Acts, and which, at any rate, will provide ‘us with some meed of progress. It is a consolidating Bill, the effect of which will be to put all matters relating to insurance upon a more business-like basis.
– Benefiting the larger insurance societies, and crippling the smaller ones.
– That is a point which my honorable friend mentioned in his speech, and one on which I will be pleased to hear him again at the Committee stage. In speaking of national insurance a large number of matters occur to one’s mind. There is no question of the woeful waste which goes on at present. My honorable colleague from Tasmania stressed that point in his speech, and it was mentioned, too, by the VicePresident of the Executive Council in introducing the Bill. Senator Guy pointed out pithily that, in England, 10s. per annum is the average charge for a £10 industrial insurance policy. Surely that is a very heavy and a very wasteful premium ! On this subject, I have had conversations with friends who are interested in insurance questions. They told me that a similar state of affairs pervades Australia; that industrial insurance is not only highly costly, but is a class of insurance which necessitates a duplication of organizations by the various companies.
– I see an ablebodied man collecting 6d. or Is. fortnightly from perhaps twenty or thirty men a day in this city.
– Probably one will find half-a-dozen men on the same errand in the one street.
– It is a waste of energy.
– That is so. If we could organize, as we could with a system of national insurance, there is no doubt that great savings could be made in that direction. I believe that this measure will do something to pave the way for the introduction of social insurance. I hope, too, that it will cause friendly societies, and persons who are more directly concerned in insurance legislation, to take an ever increasing interest in social insurance. If the addresses of my honorable friend Senator Guy and other senators who have spoken, have that effect, I think that good will come out of the measure there, because we certainly have to work, as far as possible, in’ consonance with the views of friendly societies, in introducing legislation such as social insurance. Their help and assistance, and I make bold to say experience, will be of immense value to us. Before leaving this phase of the subject, I turned up a valuable report by Mr. Knibbs on social insurance. He gives such a splendid summary of the benefits of social insurance that I cannot refrain from quoting his words. Under the heading of, “ The Desirability of State Insurance,” he sets out the advantages so lucidly that no words of mine could assist to convey their meaning more clearly. He says -
If freed from the prevailing circumlocutory methods, a State institution would have manifest advantages over those privately organized and managed, (a) In the first place, it could offer security impossible to be obtained by a private corporation, and this security could be attained without the accumulation of any reserve. The State must endure through all ordinary vicissitudes in political and financial affairs. (6) Secondly, the State, subject to the same proviso, could provide insurance at a minimum cost, being able to gain the attention of working men without the expenses of agents’ commissions, .advertising, fees, &c. Further, a Government institution docs not require to make profits, (c) Thirdly, the actuarial questions involved in a scientific system of social insurance are difficult and intricate, and require the mathematical analysis of complicated statistics. These statistics the State is best qualified to procure with economy and accuracy, and to prepare reliable tables of mortality, morbidity, and accident-frequency. Already the Commonwealth is partially equipped for such work, and procures for other purposes some of the data required. With the exorcise of the full powers conferred by the Constitution Act in respect of statistics, and a careful determination of the scope of the data required, all other necessary particulars could readily bo collected. (<Z) Fourthly, the workman requires to have the minimum cost of insurance authoritatively stated. The individual knows but little of the actual risks which assail him or of what the proper cost of insurance against any class of risks would be. No other agency or source of information could command as great confidence as a properly organized State bureau, (p) Fifthly, State insurance affords facilities for the collective insurance of workmen by the employers. For example, it is difficult for any but the largest employers of labour to attempt to create a system for insurance against accidents; the State, therefore, offers to small employers an institution conducted on the most economical and scientific lines, and in which all the necessary arrangements for management and abstruse actuarial calculations have already been made. (/) One of the greatest advantages offered by the State institutions is the facility afforded for the organization of compulsory social insurance.
– With all that I thoroughly agree, and that was my reason for criticising the Bill.
– The Government, I take it, will agree with every word of that summary, and at’ the proper time I hope to be able, as my honorable’ friend does, to support a Bill in that direction.
– But it is premature at this stage.
– I think so. That lias been the trend of my argument. I would point out that even compulsory insurance has to be watched very carefully, and subjected to the closest scrutiny by Labour members before it is introduced. In his speech, Senator Senior stated that in England the worker contributes 3d. per week, the employer 3d. per week, and the State Id. per week when the daily wage is over 2s. 6d.
– -No: when it is over 2s. and under 2s. 6d.
– What is the position as regards the payments? It is most unsatisfactory to me as a supporter of Labour. In England I have heard of many Labour leaders who criticise strongly the legislation and the basis of the scale of payments. Why ? It has been, and still is, pointed out that under our present economic wage system practically the whole of that 7d. per week falls on the shoulders of the worker. Why does it? The payment of his own contribution of 3d. per week he cannot escape. The 3d. per week which the employer pays is promptly passed on in the shape of increased profits. Any person who is acquainted with mercantile economy and has had experience of a costing system is aware that when an employer of labour, or a manufacturer, or a business man, makes up the cost of an article there is always so much per cent, added for every contingency which is likely to arise, even fire insurance.
– Would it not be fairer to say that, instead of 3d. being passed on, the amount is nearer 5d. ?
– As my honorable friend interjects, an additional 2d. is passed on to the consumer, and, therefore, the worker pays the whole 6d., and sometimes an extra profit of 3d. Surely the system is Dot as economically sound as we would wish, especially when we remember that, in addition, the bulk of the money which is contributed by the State is derived largely from taxation paid by the workers. The probability is that the worker pays the greater share of the penny. When the time comes to deal with the question of national insurance, we ought to look very carefully into the contributory basis, because that is the very bedrock of the scheme. The closest investigation should be made, because, to my mind, this is one of the most important points of the whole system. One is tempted to speak on this very fascinating subject at some length.
Coming to the provisions of the Bill, I wish to refer to one or two matters which arise out of certain clauses. It has been, stated to me by representatives of fire insurance companies whom I happen to know that more than one set of returns will have to be made under the measure. They may not be right in their view, and, as I- read the Bill, they are not right. It is provided very clearly in clause 5 that various State Acts shall, subject to this measure, cease to apply in relation to insurance business; but an impression has got abroad that the companies will have to make returns to the States as well as to the Commonwealth, though I do not think so.
– Certainly not under any of the State Acts which will be superseded by this measure. But there may be some» other Acts of the States not directly called Insurance Acts which require certain returns from insurance companies.
– The representatives of these companies might have been referring to that point. One of the advantages of the measure is the codification of the State laws and the simplification of the duties of insurance societies. In future the societies will only have to deal ‘with one authority, instead of with six conflicting authorities. But I think it ought to be made clear that the companies will only have to deal with one authority. I desire to get a little light in regard to clause 17. When I was engaged in business I had some little connexion with fire insurance, being the representative for various companies. The clause reads -
That is a very excellent provision so far as life policies are concerned. Eire policies are of short duration, sometimes lasting only three months. They are continually lapsing, and continually being taken up again ; there is no continuity about such policies. Will a fire insurance society have to give notice of amalgamation to every one of its policy-holders? I take it that under the Bill it will. I hope that the Vice-President of the Executive Council will look into this point, because I do not think that the companies should be required to serve all these notices on persons who are only taking up policies for very short periods, and continually allowing them to lapse, and taking them up again.
– A man would have the right to receive a notice if the amalgamation was to take place before the maturity of his policy.
– That is the question, seeing that some of these policies are of very short duration.
– The shareholders referred to in the clause would only be the members of proprietary companies.
– There is no mutual principle in regard to the holder of a fire insurance policy. He is really dealing with a business company. I cannot see why a fire insurance company should be compelled to send a notice to every little policy-holder. It has been represented to me by some of the insurance offices concerned that clause 41 will be harassing to companies not Australian. I do not hold a brief for such companies. I think that Australian companies should get preference over foreign companies every time, but there is a little provision which ought to be looked into carefully to see if it will work well in practice. Subclause 4 of clause 4 reads as follows : -
Each original account, abstract, statement, or return, signed as required by this section, and at least six printed copies thereof, shall be lodged with the Commissioner within three months after the expiration of the financial year in the case of returns and statements required to he furnished annually under sections 35, 30, 37, 38, of this Act, and within six months after the date of the investigation in the case of the abstract and statement required under sections 30 and 40 of this Act.
That means that an English company within three months of the expiration of the financial year will have to send a return, giving the details as provided for in this Bill. I think we ought to allow at least three months after the annual meeting, for the companies do not always hold their annual meetings at the end of the financial year. They may hold these meetings a little later, but, according to this Bill, they will be required to furnish returns within three months after the expiration of the financial year, and within six months after the date of investigation in the case of the abstract and statement, they will be required again to bend returns in. I think that, in Committee, we might very well consider the advisability of altering the clause by inserting the words, “ three months after the annual meeting,” instead of the words, “ three months after the expiration of the financial year.” That would be fairer to the companies concerned.
– You would have to provide that their annual meetings should be held within a specified time, too.
– Yes. Looking through the Bill, I find that clause 60 requires some attention. That clause states -
I have had some experience of fire offices, and I know that some companies have agreements in their policies to refer matters in dispute to arbitration. That is a wise provision, and particularly wise so far as small policy-holders are concerned, for there are many policy-holders who are not in a position to go to law, because of the expense. Let me read sub-clause 2 again -
No stipulation in the policy, or any agreement relating to the policy which deprives or intends to deprive the policy-holder of the benefit of this section, shall have any force or effect.
When both parties are willing to go to arbitration, I think we ought to allow them to do so, and, if necessary, we ought to add a sub-clause to provide that nothing shall prevent any disputants in a claim from settling their dispute by arbitration. That would be a reasonable protection to the policy-holder, and if the Vice-President of the Executive Council thinks there is anything in the point, I would like to see the Bill amended in that direction.
– There could not be a contract inserted in a policy to prevent anybody from going into a Court of competent jurisdiction.
– - I am not concerned with what Court it may be. I am concerned with the fact that the small policyholder, when faced with law costs, will often take anything before he will resort “to the Court.
– But this does not deprive him from going to arbitration.
– 1 take the view, as a layman, that it does, but I shall be glad to submit the matter to the VicePresident of the Executive Council.
– It will do no harm to have it mentioned, anyway.
– If the VicePresident of the Executive Council says that the clause is clear, I will be satisfied.
– This clause only applies to companies formed outside the Commonwealth.
– That is so; and I would point out that these are the companies I am referring to. A great many of the fire companies are outside the Commonwealth.
– They are principally English companies.
– That is so, and I do not want to see anything inserted in this Bill that will force a poor man into, a Court of Law. A provision of this nature should not be put into the Bill by a Democratic body such as the Senate is. Now there is another clause to which I desire to refer. I think Senator Guy touched on it, and also Senator Millen and Senator Senior. Clause 80 provides -
Penalty: One hundred pounds.
Who is to determine that matter? I want to see in this Bill some provision which will deal with companies, and prevent them from combining to exploit the public; but, looking at this clause every way, I cannot see who is going to determine whether a rate is reasonable or unreasonable.
– What standard will you measure by?
– That is the whole point. To whom are we to leave this matter ? Are we going to allow one Court to determine it in one instance, and another Court to reverse the decision? Is there to be no standard by which we can measure it? While I do not want to see the power of the clause whittled away, I want it made definite and clear who will determine what is a reasonable rate.
– It is an actuarial question.
– Yes, and it is also a legal question. As the clause stands at present, it is altogether too vague. There is another clause that I want to refer to. Clause 88 states -
Penalty: Fifty pounds.
Here, is a proposal by which the assessors will have to register, and satisfy the Commissioner that they are competent to deal with claims. That looks right, as far as it goes; but I would point out that in many small country districts of Australia small fires occur, the damage ranging, say, from £50 to £150 or £200. In such cases, are the companies to send a registered assessor all the way out to the country to do this work ?
– At the insurer’s expense.
-Colonel Sir Albert Gould. - At whose expense?
– At the insurer’s expense, as my honorable friend has put it. All these charges have a habit of coming back on the policy-holder.
– But we are told this is a progressive Bill, and therefore you should not criticise it.
– I am sure it is not considered so progressive that it cannot be altered in this respect. I know that in the case of many country fires the local agent is accepted by both parties as a reliable assessor. He lives there, he knows the conditions, and the value of everything in his particular district. Why not allow him to assess damages if he is accepted by both parties ? I know that in some cases the local policeman acts as assessor, and very often he is well qualified to undertake that task. It appears to me that the clause in its operation will be harassing to the companies; and, further, it might fall unduly on the policyholders. The Bill largely is one for Committee. Whatever its de* tractors may say, from “a business stand-point, I welcome it; and, as a shareholder myself in three mutual life assurance companies in Australia, I welcome it. It will make the law, I hope, clearer. It will make the law, in some respects, more definite; and it will be * start on the road of progress on which I feel sure this party, once it has put its hand to the plough, will long continue.
Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [4.20].- I have comparatively little to say in criticism of this Bill. I recognise that, on broad general principles, it is very desirable that the law governing fire and life insurance should be of universal application in the Commonwealth, and that there should be no provisions of the law peculiar to any one State. I gather from the debate which has taken place that certain honorable senators are tinder some misapprehension as to the purpose of the Bill. I have read Senator Senior’s very interesting address upon the second reading, and the honorable senator will pardon me for saying that a very great deal of it was scarcely applicable to the Bill now under the consideration of the Senate. It was applicable, however, to a principle of insurance legislation which we are not called upon to consider at the present time.
– It was applicable to the subject of insurance.
– I do not wish it to be supposed that I criticise Senator Senior’s address in any hostile way at all. I realize, however, that it is the purpose of the Bill now before us to recognise the position with which we are confronted to-day in dealing with the large number of fire and life insurance companies that are doing business throughout the Commonwealth. We have not yet taken up the question of. national insurance which was contemplated by Senator Senior. That is a question which must be dealt with sooner or later, and probably the sooner it is dealt with the better it will be for the community at large. I know that a great many men have given close attention to that question. I think it was mentioned in a Governor-General’s Speech, some time ago, that a national system of insurance was one of the questions upon which the Government of the *day proposed to legislate. That system of insurance, however, stands quite apart from the matters we are called upon to deal with in this Bill. We are here asked to decide how existing fire and life insurance companies shall carry on their business, and the object ‘is to bring all carrying on business in any of the States under.one comprehensive Act. For one class of insurance a certain deposit is required in Victoria, whilst in New South Wales companies carrying on the same class of insurance are not called upon to make any deposit at all. Should there be a deposit in such cases? If we decide that there should, the provision ought certainly to be applicable to every insurance company carrying on that business in any part of Australia. So far as fire insurance is concerned, I take no exception to the amount of the deposit required under this Bill. A fire insurance policy may be looked to not only as a means of obtaining the value of property destroyed by fire to the extent covered by the policy, but as a mercantile commodity. If the owner of a house goes to a financial institution to raise money upon it, he is asked whether it is insured to the full extent of the advance which he requires. People lending money are very keen to see that the office issuing a policy upon the property offered them .as security for their advances is one which will be in a position to make the policy of value in the event of the necessity of realization.
– Mortgagees often insure a property at the expense of the mortgagor.
– Every honorable senator will agree that a man advancing money upon a property requires to be satisfied that the insurance policy upon it has been issued by a company that will be able to make it good. He will not be satisfied if the property is insured in a new office in a small way of business, but will look for a policy issued by an established fire insurance office that has disclosed the soundness of its position by its balance-sheets. I have no objection to established insurance companies being called upon to put up a reasonable deposit, but I should like to direct attention to the provision in this regard for companies newly established. In clause 21 it is provided that in the case of a new company desiring to carry on business the rates of deposit shall be -
if it desires to carry on life insurance business - Two thousand pounds;
if it desires to carry on life insurance business and other insurance business - Four thousand pounds.
If a small insurance company were started to-day, and this Bill came into force to-morrow, the company would be called upon, under clause 19, to make, within six months a deposit of £20,000; but if the company were started the day after the measure came into force it would, under clause 21, be called upon todeposit only £2,000 in the first instance, and then 25 per centum of its premium- income. I think that discretion might be given to the Commissioner to permit the registration of a new company upon. the payment of a comparatively small deposit in the first instance, requiring, as provided for in the Bill, the subsequent payment of 25 per cent, of the premium income until the deposit had reached a reasonable amount. The question has often arisen of the possibility of establishing fire and life insurance companies upon the purely mutual and co-operative basis. I am afraid that clause 20 of this Bill would have the effect of strangling a proposal of that kind at its very initiation. I speak with some knowledge and experience on this matter. I had an opportunity some time ago of listening to & very interesting and instructive address by His Excellency the Governor of Victoria, who has taken a great deal of interest in the co-operative movement in the Old Country. He mentioned that in his county in England it was desired to establish a co-operative fire insurance company, but those concerned were confronted with the difficulty that they were unable io give the public any assurance that their policies would be made good. Twenty, thirty, or 200 farmers might come together and be satisfied that a proposal for a mutual business would be all right, but the moment they went to any one to borrow money they were confronted with the difficulty that they had no subscribed capital. The result was that His Excellency, with others interested in the movement, undertook to provide debenture capital to the extent of £10,000 or £20,000, on which they were guaranteed interest at 5 per cent. They -did so with a desire to assist in the establishment of the co-operative business rather than with a desire for a remunerative investment of their capital. Any proposal to establish a co-operative insurance company here would be met with the same difficulty. Some one would have to advance capital by way of debentures, or .an arrangement would have to be made with an established company to carry the smaller mutual concern upon its shoulders until it could stand alone. Taking this into consideration, it would, I think, be well to reduce the deposit required from such companies to the smallest possible amount. Of course, the Commissioner would have to be satisfied before registering a company that one or two email fires would not destroy it. I admit that the matter is one of great difficulty, but we should look to the establishment, if possible, of insurance companies upon the mutual or co-operative principle. When ‘ we come to consider life insurance, we have before us an entirely different matter. A fire insurance policy last3 but for one year, and is realized upon if the property insured is destroyed by fire during the year, but in the case of a life insurance policy the man who takes it out continues it during the whole period for which it was taken in the first instance.
– Otherwise the policy lapses, and the person insured forfeits the premiums he has paid.
– That is not always so, because in these days the companies permit a policy to be kept in force so long as the premiums can be paid out of the surrender value. When the surrender value of the policy is exhausted by the payment of the premiums it must, of course, lapse. Under clause 19, a company doing life insurance business only is compelled to put up a deposit of £20,000. One of the most successful insurance offices, not only in Australia, but in the British Dominions, is the Australian Mutual Provident Society. That has been a purely mutual life insurance office from the commencement to the present time. There are no holders of debentures in that company to whom special sums are paid by way of interest upon capital advanced. A limited number of gentlemen who, more than fifty years ago, believed in the cooperative or mutual principle, established this company. From very small beginnings it has grown to the magnificent position it occupies to-day. I mention it because it is the oldest and strongest of the Australian life insurance companies. With the exception of one of two small companies, all the life insurance companies that have since been started in Australia, such as the National Mutual Insurance Company, a great company doing business in Victoria, and others have been started on the mutual principle. Every large office that we have to-day in Australia of colonial origin is a purely mutual office.
– It would be impossible to start a company like the Australian Mutual Provident Society under this Bill.
– Exactly. If we take some of the great American offices that are doing business here, we are told that they are mutual offices, and. distribute bonuses regularly, but in most cases they have an initial capital of £20,000, on which they are compelled to pay a certain rate of interest. The persons who contributed this capital are stockholders, who control the company. In the case of a purely mutual company, every policy-holder has a voice at the meetings of the company to decide the way in which its business shall be carried on. The history of insurance business in Australia has proved that the mutual principle is a safe and sound principle on which to work. There is not the same prospect of a realization upon’ the face value of the policy in any given twelve months with regard to life offices, because the whole of the life business is done upon an actuarial basis. Although individual life is uncertain, the actuarial tables are so absolutely certain that it can be relied on that, within a few thousand pounds, a certain number of claims in each individual year will be made upon the funds of the company. The premiums are so regulated and weighted that there can be no difficulty or doubt as to the safety of the policy, once the company is on an established basis, although there is a certain amount of risk in the earlier stages. It may be asked why large premiums should be charged by purely mutual companies, but where these are in excess of the amount required for the conduct of the business and the keeping up of reserve funds, every penny is returned to the policy-holders themselves. There can therefore be no complaint that men are not getting full value for their money. If a man pays £10 for his policy, and only £7 is actuarially necessary, the other £3 is utilized to pay the expenses of the business and establish reserve funds to insure the stability of the company, the balance being returned in the shape of bonuses to the policy-holders.
Senator Senior__ In the case of a weighted policy, the individual who is weighted alone pays it, but the rest of the policy-holders benefit by the weighting.
– The loading is always put upon the policy in order to meet expenses, provide for reserve funds, and meet contingencies, with the provision that everything not required for the purpose shall be returned to the policyholders in the shape of bonuses. Not only the individual, but all the other policy holders in the company, must be protected. My life might, according to actuarial tables, . be worth twenty-five years ; but a defect might reduce its value to twenty years. The policy would therefore be loaded; or I might, if I chose, take out a policy for a smaller sum, subject to the larger amount being paid if I attained a certain age. That is the disadvantage which must be suffered by a man who is not sound and healthy, but it is only fair and just to all the other policy-holders.
– You would not care to be in a company under any other arrangement.
– Certainly not. I should feel that I was not in a very safe position. We ought to reconsider in Committee whether life insurance companies should be required to put up any sum. If we demand a deposit of £20,000, not another purely mutual insurance office will be established in Australia. This may not matter very much, but people should certainly be allowed the opportunity to establish other mutual offices if they think fit. We should also be very careful as to the amount of money we require from a newly-established fire insurance company, or from any other fire insurance offices which are honestly and bond fide endeavouring to work, as far as they can, on a co-operative or mutual principle amongst those who insure with them. There are certain methods of getting over difficulties, but these are not always quite satisfactory, and may create a good deal of doubt in people’s minds as to whether they are being worked fairly and justly. It should not be forgotten that in Australia nearly every fire office is what is called a tariff office. Certain tariffs are established; but Senator Ready urged that it was difficult to determine whether a particular tariff was fair and reasonable. They are fixed from time to time by insurance men, who take into consideration the risksunder particular policies and in particular localities. If a Melbourne business man wishes to effect a fire insurance policy ona property in Flinders-lane, he will pay a much heavier rate than if the property is in Lonsdale or Latrobe street, or evenin Bourke or Collins street. There are certain fire zones where the history of thelast forty or fifty years has shown that. the risks are much more pronounced. That is the way in which one must determine what is a fair and reasonable rate. Any honorable senator who visits an insurance office and sees their maps and books, will find that the city of Melbourne is divided into zones, some of which are regarded as more dangerous than others, the premiums being correspondingly higher.
– Is it not a fact that there is no competition among the bigger fire insurance companies in Australia? They mutually fix the rates themselves.
– There is competition. Senator BARKER - They stamp it out.
.- They do not. There is competition amongst the insurance offices.; but they do one thing which is of great benefit and value to the people, and which is done all over the world - they effect reinsurances amongst themselves. If an insurance office issued to the honorable senator a policy for £20,000 over his stock in business premises, they would not hold the whole risk themselves, although they would be primarily responsible to him for it. They would distribute it amongst other offices, who give and take. In this way the risk is distributed, it is made much more easy for the companies to meet their obligations when the time comes for repayment, and there is no possibility of an office being wiped out.
– Where, then, is the competition t
– Competition is created by the existence of one or two non-tariff offices which endeavour to do business; but the honorable senator will find that their premiums are not much lower than the others. Some of the big companies do not effect their re-insurances with the other offices here, but have agreements with offices in other parts of the world, who very often hold the great bulk of the insurance^.
– That is not competition. I have paid the same rates in different companies for years, and I have been in four or five.
– If the honorable senator could get the various fire insurance offices into direct competition with one another, he would soon have failure after failure, in stead of the whole of them conducting safely the business intrusted to them. Under the conditions of which he speaks, the honorable senator might approach one office, which would stipulate for a premium of 5s. or 10s. per cent., and another office, anxious to get the business, might offer to do it for 2s. 6d. instead of 5s., or for 7s. 6d. instead of 10s. If, then, a big blow came to that office, it might not be in a position to meet the whole of its engagements. That sort of competition degenerates too often into cut-throat competition, and it is much safer to have the one rate throughout the ‘whole of the offices. The honorable senator would like to see the State monopolize the whole of the fire insurance business; but he must realize that certain rates would have to be fixed that would reasonably recoup the State for any loss it might make. Unless one great fund w,as created, and the State was not allowed to utilize the money for any other purpose, it would inevitably go into the Consolidated Revenue, or into some fund or other where it would not be readily accessible in the event of great destruction entailing heavy repayments.
– In the aggregate, the fire insurance companies make 80 per cent, out of their insurances. It would pay any State to take over that class of - business.
-Sir ALBERT GOULD. - Can the honorable senator produce any balance-sheet showing where 80 per cent, profit has been made by an insurance company? Some time ago Mr. Justice Hood and Mr. Knibbs, who was very favorably quoted to-day by Senator Ready, were appointed a Royal Commission to investigate the question of insurance. With regard to tariff associations, they say in their report -
From the replies received from the representatives of the various companies in response to a query concerning the method by which fire insurance premiums payable in the Commonwealth were’ determined, it appears that the major portion of the business is conducted on rates determined by tariff associations. These rates represent the combined experience of the offices connected with the association, which, in the absence of a complete scheme of classification and tabulation of risks and losses, such as that referred to in section 24 above, appears to furnish a fairly satisfactory method of determining a reasonable basis of operations.
An objection which is sometimes urged against such an association is that it tends to maintain rates at an unduly high level,” and that if there were unrestricted competition amongst the offices the public would benefit.
That is the suggestion now made, by interjection -
Your Commissioners are of opinion that this view is largely erroneous, and that under the supervision of the Insurance Commissioner, guided by data collected in accordance with section 24 above, the possibility of injustice to the public arising from agreement amongst the companies as to rates of premium would be negligible.
– That is not borne out by their balance-sheets.
– The Commissioners, who not only brought to bear on the subject their own knowledge and reading, but examined very carefully the records of fifteen or twenty insurance offices, state -
In the event of the Commissioner becoming satisfied nt any time that such’ agreement between the fire insurance companies was inimical to the interests of the public, your Commissioners are of opinion that powers should be conferred on him to cite the various companies before the High Court or the Supreme Court to show cause why their rates should not be reduced.
There is in the Bill a provision to give effect to the above recommendation ; but the Commissoners’ report plainly shows that, in their opinion, after making a careful investigation of the whole subject, we are justified in believing that under present conditions we are upon the soundest and safest basis available.
Upon the subject of State and municipal fire insurance the report says -
Your commissioners have given considerable attention to the question of State and municipal fire insurance, and find themselves unable to recommend the adoption of cither class of insurance in any form. By the terms “ State fire insurance “ and “ municipal fire insurance,” may be meant one or other of two things, namely, cither -
the assumption by the State or by the municipality of the fire risks of its citizens on lines similar to those on which such risks are now taken by fire insurance companies; or,
the assumption by the State or muni cipality of the fire risks on its own property either with or without the creation of a special fire insurance fund.
Your commissioners are of opinion that trie lack of distribution of risks and the consequent heavy loss which might result from a single fire are such that any scheme prepared on this basis is essentially unsound in respect of the fundamental principles of fire insurance.
– One point is omitted there. The risks would not be concentrated, but would be very much distri buted, and consequently there would not exist a danger to the State.
– If the objection outlined by the Commission applies to the State as a whole, obviously it must apply to the individuals comprising the State. It merely serves to emphasise how undesirable it is to concentrate business in the hands of the Government.
– That contention is not sound logic. It means that the parts are better than the whole.
– The distribution of a risk amongst a hundred persons is manifestly better than is the centering of it in one individual.
– The volume of business is the same in any circumstances. It is not increased or decreased.
– My point is that under a system of national insurance the risks would be distributed over the whole of the Commonwealth.
– The honorable senator means that in case of fire every person in the Commonwealth would, to an extent, be an insurer. But the fact remains that all the funds would be in the hands of one body. The report goes on to say -
Your commissioners are strongly of opinion that the only sound method of fire insurance is that which is based upon very widelydistributed risks of relatively small amounts, and in their opinion such a method would be impossible under any practical system of either State or municipal fire insurance which did not involve co-operation with private insurance companies for the purpose of widely distributing the risks by re-insurance…..
As the result of inquiries made by the Prime Minister, at the instance of your commissioners, information has been received from the Premiers of the several States, which indicates that the general practice at present obtaining is for the Government in each case to carry its own fire risks, usually without the provision’ of a special fire insurance fund, and this no doubt has influenced the Commonwealth Government in adopting the policy indicated. Nevertheless, for the reasons specified above, your commissioners consider that the practice is unwise: and that, even if it were possible to so arrange that Commonwealth and State Governments should contribute to a common fund to cover any losses that might arise by fire to the properties of any of them, the large amounts which would necessarily be concentrated in single risks are such as to render inapplicable the basic principle of averages unless extensive re-insurances were effected. . . . From these replies, it appears that in many cases the maximum amount carried alone on a single risk docs not exceed £5,000, and in 80iiib instances is much lower, while in no case was a higher amount than £15,000 mentioned as being so carried.
I would remind honorable senators of what happened many years ago when a great fire practically destroyed the city of Chicago. That conflagration resulted in the downfall of a large number of fire insurance companies, which had not distributed their risks, and which collapsed like the veriest house of cards. On that occasion the insured found themselves in exactly the same position as those persons who had never insured.
– That is a good argument in favour of State fire insurance.
– I think otherwise. It would be a fatal mistake on our part to undertake the fire insurance risks of the whole community, even if it were possible for us to do so. We must recollect that there will always be some persons who would prefer to insure with private insurance companies which distribute their risks.
– I presume that the honorable senator is aware that in certain European countries the State insurance offices have actually wiped out the private insurance offices?
– That is what has occurred in Italy.
– I think that the Government are acting wisely by providing in this Bill, which is a consolidating measure, for the solvency of private . insurance companies. So far as life insurance companies are concerned, we want to give a little more play to our people in their dealings with them. We do not want to encourage the establishment of insurance offices, which, in their conduct of business, would create a large number of additional offices of profit and also reduce the bonuses that would be payable to policy-holders under the mutual system. If it ‘ is desired to establish reserves they should be established from the premiums which are payable each vear. These reserves will then be visible to the people generally. There is a large number of small firms in the city which establish insurance funds within their own ambits. There is no doubt that the Bill will press rather heavily upon them.
– Under it they will exist no longer.
.- That may be so. On the other hand, they may find that it is more advantageous for them to deal with insurance companies which are doing business here at the present time. We know that before any company can underwrite an accident insurance in Victoria, it must establish its solvency to the satisfaction of the Government of this State.
– I think that provision is operative in every State. It certainly is in Queensland.
– I do not think it is operative in New South Wales. I desire to know whether under the operation of this Bill an insurance company will have to establish its solvency to the satisfaction of the State Government, in addition to putting up the sum of £20,000 ? We know that both fire and life insurance companies underwrite accident insurances.
– Accident insurance is not provided for in this Bill.
– But it is covered by the term “other insurance.” Allusion has been made to a good many matters upon which I do not propose to touch. My object in rising was to speak only on the broad principles of the measure, leaving its details to be dealt with in Committee. If those details do not evoke a good deal of discussion in this chamber they certainly will do so in another place. It frequently happens that the public do not voice their opinions upon measures which originate in the Senate, until after those measures have gone to another branch of the Legislature, which is then bombarded with all sorts of objections to them. The result is that honorable senators are deprived of an early opportunity of expressing their opinions in respect of the views held by insurance experts. I hope that this Bill will emerge from Committee in a form which will commend it not only to honorable senators, but to the public, and also to the insurance companies. I have no doubt that those companies recognise that it contains very valuable provisions which must add to their stability, particularly in the case of fire insurance companies. I think that “n the event of branches of foreign insurance companies being established in Australia, provision should be inserted in the
Bill requiring them to have adequate funds within the Commonwealth to meet their obligations in connexion with underwriting either fire or life insurance, <o that it shall not be necessary for any person to follow their assets to. other Darts of the world in order to insure the payment of his just dues.
– I intend to reply briefly to the criticism offered to the Bill. Broadly speaking, honorable senators have recognised its usefulness and its value. It received a vigorous criticism from Senator de Largie, and, shall I say, a vigorous or a venomous , criticism from Senator Senior?
– Not venomous.
– I felt that I was using rather a strong term when I asked the question.
– I knew that you did not mean it.
– I never do anything to connect myself with measures before the Senate. I am responsible, of course, for the measures I introduce, and I will stick to that responsibility ; but, so far as criticism is concerned, I let a measure take the criticism, and, of course, the sting is then all the easier for me to bear. Senator de Largie said he was disappointed with the Bill because it was not sufficiently progressive, and, therefore, he desired the appointment of a Select Committee to inquire into the whole matter, and make the. Government better acquainted with what the Commonwealth should receive at the present time”. I did hope that I had made it quite clear that this was a measure to deal with existing companies - that is, to bring the companies transacting business in all the States under the control of the. Government, and, therefore, of the Parliament of the Commonwealth. When we hear an honorable senator say that doing that is not doing enough, we are amazed. To my mind, if we do a little well, and do it in the manner in which it should be done, it is better than to rush in some great measure dealing “with matters so farreaching that they would be discussed during the whole life of a Parliament, and nothing would be done. Senator de Largie was quite fair in his criticism and quite candid, but I venture to say that his disappointment was due to the fact that the Bill did not foreshadow a Government insurance proposal to come into competition with existing insurance companies. He concluded his remarks by saying that possibly the Government had such a proposal in mind. I do want honorable senators to understand our attitude. I hope that, instead of proclaiming promises ahead, instead of making fine promises, we will do good work. I hope that, instead of saying what we are going to do, we will do something, and when it comes to do the next thing we will do it in the same methodical, matter-of-fact way, without making any loud proclamation of what our intentions are in this or that direction. I make that statement because as regards the business of the Government, both Senator Senior and Senator de Largie know just as much about what our intentions are with regard to this particular matter as- 1 do. I do not complain of my honorable friends’ criticism, but I do think that Senator Senior’s might have been couched in milder and kindlier language. I suppose that a stranger reading in cold print his references to the Government and the Bill would not imagine that it was ‘a generous supporter, as we know him to be, who was levelling the criticism. But that is a matter for the honorable senator himself to consider, and not for me to complain of. Senator Keating, following Senator de Largie, made a remarkable criticism, which to some extent might mislead honorable senators. He sought to show * that with regard to the making of regulations, we were taking exceptional powers which had not been taken in other measures. I can only regard it as evidencing one of the infirmities of a great mind when I have regard to the fact that in the Arbitration Act, the Census Act, the Excise Act, the Australian Notes Act, the Copyright Act; the Coinage Act, the Electoral Act, the Immigration Act, and other Acts, we find the identical wording to which he takes exception in this measure.
– I grant that, but still it is legislating by regulations, and not by clauses.
– My honorable friend will understand that in a factory where Bills are being turned out. if there is one suitable pattern which will fit all the time, it is the pattern which is used. In this measure, we are not asking for exceptional powers with regard to regulations, we are sticking hard and fast to the same phraseology as is contained in the Acts I enumerated, and possibly in all other Acts. I make these remarks in order to disabuse the minds of honorable senators of the idea that exceptional powers are being asked for.
– The tendency is to make the Cabinet a Super-Parliament.
– There is no such tendency in connexion with this measure, because we simply use the same clause as has been used in other measures.
– It is a continuation of a questionable practice.
– Senator Keating did not put it in that way. I do not know that I should make further reference to Senator Senior, except, perhaps, to quote some of the phrases he used. Referring to myself, he said, for instance -
If he had said that this was a Bill preliminary to a national scheme he would have led me to very much tone down my remarks.
The honorable senator, of course, will remember making that statement. I presume that we may conclude from his language .that if any reasonable excuse had been given by my own remarks, it would not have been so severe as it was. The whole tenor of his speech was a complaint that we had not introduced a national insurance scheme, or, as he phrased it, a Bill to deal with the widows, the maimed, and the sick. It ill-becomes any one to taunt the present Government with having forgotten the invalid, the old, the maimed, and those who are unable to look after themselves. Because, if ever there was a party in the Commonwealth, or any other part of the world, that deserved well at the hands of the unfortunates, it is the party of which I am a representative. Not only have we not forgotten these people, but we have taken a foremost stand, and introduced legislation which has placed unfortunate persons on as good a footing as they are in, I venture to say, in any other part of the world. We have led the way with progressive legislation. With our old-age pension, our invalid pension, and our maternity allowance, we have set an example which will be followed by any civilized nation. Yet, on a Bill of this kind, we are taunted with neglect of duty to those classes. Senator Senior quoted a state ment I made that the Bill would benefit the companies. There was quite a tone of triumph in his voice as he pointed out that it would benefit all companies, and he wanted to know if it would benefit any one else. I am rather pleased with his reference to the benefit which this legislation will be to the companies, because most of them are mutual companies.
– Not all, not by any means.
– I know that; the largest number of the insurance companies are mutual companies, When we make more profitable the good working of the companies; when we regulate the companies, and prevent them from being exposed to unfair competition; when we take care of the securities of the companies, and say that those which are well managed, and well directed, shall be well protected, I am proud to be in a position to say, as I did say before, that this Bill will be of immense benefit to the companies, and, incidentally, to the policy-holders, who represent a huge proportion of the population of Australia.
– Many of them are only mutual in name.
– Even if that were so, Senator Senior asked -
Does it beneficially affect one soul in Australia except indirectly through the insurance offices? Does it not benefit the latter immensely ?
If we benefit the insurance offices, that should be a very good reason why the honorable senator ought to be found supporting the measure because those offices are worked for the benefit of a large number of our population.
– You plead that the Government should neglect their duty because somebody else takes it up.
– The honorable senator also said -
I looked forward to the introduction of a useful measure, which would confer a great benefit, and be a distinct gain to the maimed and the wounded, to the widows and the orphans of the toilers of Australia. I am very sorry that the honorable sena-tor has been disappointed in that respect; but the Bill has not been hurriedly drafted. This measure, or one very similar to it, was in the hands of Senator Pea’rce about twelve months ago.
– It has been on the stocks for about four years, I think.
– There has been no hurry, and the only thing which is wrong with Senator Senior is that, instead of anticipating a good useful measure, which would bring into existence one Commonwealth Act and put out of existence quite a number of State Acts, and be of immense benefit to the whole of the people of the community, he was anticipating a system of legislation which would confer some benefit on the maimed and the poor. I am sorry that he made the mistake.
– It excludes many mutual offices, which are doing useful work to-day, because of the provision requiring a deposit.
– I venture to say that there never was a Bill introduced yet in which the mind of man could not suggest some huge improvement. But this is a real hard, practical business measure, to bring all those insurance companies whose business comes so much in touch with the daily life of the people of Australia under the control of whom ? Of one Parliament, elected by the people of Australia on the broadest franchise imaginable. If that is not progress, I do not know what progress is. Senator Senior said that “ the Bill would- benefit not one soul in Australia.” I see an immediate benefit to the insurance companies; I see a great improvement in the practice of the companies, and a great advantage to the policy-holders in them, and, above all that, I see an Insurance Bill that will be controlled by a Government which is controlled by the Democracy of Australia. That may be no benefit or no gain at present, in the opinion of Senator Senior. Then, as regards national insurance, or matters of that kind, I venture to say that when this Bill is passed, and all matters of insurance are placed in the hands of this Parliament, its business, when the time is ripe, will, be to take whatever steps it desires, and let it go so far as it will, it will not go further than I am willing to go, in the direction of improving the conditions of insurance, making it much cheaper, more profitable, and more beneficial to the citizens of this country. But even if it is desired to do that, the foundation work has to be done first. The complaints of Senator Senior remind me of the complaint of the man who went to look at a house to be built, and who, when he saw the men taking out the foundation, said, “ Instead of building a house, they are digging a hole.” That, I think, sums up the criticism of the honorable senator. This is constructive legislation. I venture to say that when the honorable senator has time to read Hansard, he will find that his was a most interesting speech on national insurance.
– That is what I wanted ; and once more I say that there is a tide even in the affairs of a Government which, taken at its flood, leads on to fortune.
– I am not saying that the honorable senator does not want national insurance, or that he cannot find a majority of the Senate, or of this Parliament who favour national insurance; but, even so, surely he is not going to take exception to my conduct because I introduce a measure to bring under one control the whole business of insurance in Australia! I am not complaining of his criticism, except that it was levelled in a wrong direction. Instead of dealing with the principles of the Bill, he dealt with something not in the measure, and something, to my mind, which is better left out of it. The introduction, of national insurance would not be expedited by dealing with the subject in a Bill of this kind.
– This is foundational legislation.
– Yes. I am digging for the foundation upon which the edifice of a National Insurance Act will be reared, and I hope that before we are through Committee we shall have erected a structure that will prove exceedingly valuable. I have no objection to honorable senators airing their views on national insurance, but I do ask them not to too closely connect me with their criticisms.
– I never charged the Minister with being opposed to national insurance.
– The Government are not opposed to any suggestions for improvement of the measure. Only yesterday a deputation from the fire insurance companies waited on the Government in connexion with this matter, and I recognise that some of their suggestions must receive consideration. The Bill has not been hurried. It is more than six weeks since it was introduced, and the debate was adjourned to suit the convenience of honorable senators, and also ‘to give those people who are deeply interested in the measure an opportunity of considering the legislation we are introducing. I know from what has occurred that they have taken an intelligent interest in the matter, and, just as we have had the views of the fire insurance companies placed before us, I venture to say we will have the views of the life insurance societies. When the measure becomes law, I feel sure we shall have a first-class Act, consolidating for the first time in our history the whole of our insurance laws, and also providing for control by this Parliament and this Government. Of the criticism of the measure itself by Senator Millen, Senator Senior, and Senator de Largie, I think Senator de Largie was the first to point out the indefiniteness of the clause dealing with what was a just and reasonable rate. With a larger experience of the matter, I think we shall have to be more definite, and say what we mean by what is just and reasonable. Wherever improvements can be made, I will not be backward in accepting them if convinced that they are improvements.I can assure honorable senators that I will not refuse to accept amendments simply for the sake of standing to the Bill as it has “been printed ; but if I am satisfied that an improvement can be made I will accept it from whatever quarter it may come. I have endeavoured to make myself acquainted with the Bill, and to see how the amendments will work in. IfI have omitted to mention any matters referred to by honorable senators in the debate, I hope, when we come to the clauses in the Bill, they will call my attention to them - because this is one of those Bills which we can best deal with in Committee - and they will be carefully discussed . I thank honorable senators - even Senator Senior for his criticism, severe as it was - for the manner in which they have received this Bill, and I hope, when it goes into Committee in a pro formd manner, we will adjourn it in order to allow another measure to be dealt with. I hope, also, that when we get to the Bill again we shall so deal with it that eventually we will have a very valuable measure placed on the statute-books of the country.
Question resolved in the affirmative.
Bill read asecond time.
In Committee:
Clause 1 agreed to.
Progress reported.
page 4087
In Committee (Consideration resumed from 18th December, 1914, vide page 2249) :
Clause 2 -
Section 3 of the Spirits Act 1906 is amended -
by omitting from paragraph a of the definition of “ Australian Standard Malt Whisky” the word “thirty five “ and inserting in its stead the word “forty-five”; and
by omitting from paragraph a of the definition of “ Australian Blended Whisky “ the word “ thirty-five “ and inserting in its stead the word “ forty-five.”
Section proposed to be amended -
In this Act, unless the contrary intention appears - “ Australian Standard Malt Whisky “ means whisky which complies with the following requisites : -
It must have been distilled -wholly from barley malt by a pot still or similar process at a strength not exceeding thirty-five per cent. overproof; “ Australian Blended Whisky “ means whisky which complies with the following requisites : -
It musthave been distilled partly from barley malt and partly from grain, and must consist of not less than twenty-five per cent. of pure malt whisky which has been separately distilled by a pot still or similar process at a strength not exceeding thirty-five per cent. overproof. . .
– I was present when progress was reported on this measure, and, if my recollection serves me correctly, the Minister in charge submitted the purpose and object of it, but I think there was a general feeling in the Committee that it was not properly understood. Members of the Senate did not seem to be in agreement as to what would be the effect of the provision, if carried. Since then, a considerable interval has elapsed.
– There was a desire to misrepresent the object of the measure.
– Speaking for myself, I can say that nothing was further from my mind. I was not at all clear about the purpose and object of the measure.
– A question was raised about whisky, and that was the end of it.
– I know I was not at all clear about the matter. Perhaps the Minister will now briefly explain to us again what is the purpose and object of the Bill.
– I have no objection to do that. The Bill is not one in which any great principle is at stake. It is purely and’ simply a- departmental measure. There was a desire, when granting protection to Australian whisky, to secure an absolutely pure article. That is a very laudable intention, no doubt, but I want to draw attention to the fact that, in the desire to establish the distilling industry in Australia for the production of pure whisky, the standard was so set as to be almost impossible of attainment. The distillers have not been successful in extracting, perhaps, the principal ingredient, fusel oil, with the result that, the standard being so high, there is a prejudice against Australian whisky. “Senator BAKHAP. - Is it not correct that the Australian whisky distillers - I do not know if there are many of them - have made representations against this Bill ?
– No.
– Some representations reached me in the form of a circular.
– They were favorable to the measure.
– Is the Assistant Minister quite sure?
– I am sure of it. Might I point out that when the Tariff Commission recommended that “ thirtyfive per cent, overproof “ be established as the regulation quality, the desire was undoubtedly to produce a good whisky, but it has been found that, despite the fact that the whisky was held in bulk for two years - which is considered the world over as a reasonable time to mature - it was still full of fusel oil, which made it, if not unsaleable, an unpalatable ‘article. This has led to Australian whisky being seldom sold as such. It is sold in large quantities, but is blended with other whiskies. I do not hold any brief for the whisky industry - far from it - but I say that if our people are to consume whisky, they might as well consume Australian whisky, provided it is not in any way inferior to imported whiskies. I have one or two quotations to make to show that a mistake was made here in fixing the standard for Australian whisky at 35 per cent, overproof. In a paper upon “ The Establishment of Standards for Whisky in Western Australia,” I find the following: -
The restriction of the strength at which whisky may be distilled to 35 deg. O.P. would entirely eliminate some of the finest Irish pot still whisky, and certainly also some of the grain or patent still whiskies. While the Royals Commission (final report of the Royal Commission on whisky and other potable” spirits, 1000, page 8) came to the conclusion that the materials from which whisky might be made should be restricted to malted and unlimited grain, they refused (page 21) to place any restrictions on the processes by which whisky might be produced. In my opinion the proposed restriction of the distilling strength to 35 O.P. is entirely arbitrary and without justification.
The Tariff Commission appointed by this Parliament, and consisting of members of both political parties, set out with the desire to establish a very high standard for Australian whisky.
– It was on their report that the existing Act was based.
– That is so; but even when that report was presented there was considerable difference of opinion amongst manufacturers in Australia as to the percentage overproof to which it was possible to go and still produce a marketable article. In a report from the InterState Commission I find the statement -
Messrs. Henry Brind and Company, distillersof Ballarat, ask that the maximum strength of distillation be increased from 35 per cent, to 45 or 48 per cent. The Commission does not consider it advisable that the request should be granted.
This shows that certain manufacturers believe that the maximum strength of distillation should be increased beyond the standard now fixed. In the “ Final Report of the Royal Commission on> Whisky and other Potable Spirits” presented to the Imperial Parliament, I find a reference to the matter in connexion? with the distillation of whisky in Scotland..
– That is whisky !
– Without admitting too great a familiarity with thewhisky . trade, I may be allowed to saythat Scotchmen are usually considered good judges of what a .real whisky is..
The Commissioners, in their report to the Imperial Parliament, say: -
In some distilleries in Scotland the whisky is produced from three distillations; this practice is very general in the Lowlands; the spirit is then run at 40 to 45 degrees O.F.
The Commissioners further report: -
Again, apart from the fact that pot stills differ so much that a comprehensive legal definition would be difficult to frame without either excluding certain types of still which are now commonly recognised as pot stills, or including other types which are not now looked upon as legitimate variations of the pot still, there are strong ‘objections to hampering the development of an industry by stereotyping particular forms of apparatus.
That is to say that the pot still is no more essential to the production of a good whisky than it is that a suit of clothes should be made by hand rather than by a machine. Drinkers of whisky insisted upon distillation in a pot still because, with long use, that became popular; but there is no more reason why the tools of trade of the whisky industry should be restricted than the tools of trade of the engineering or any other industry. The Commissioners further reported -
Finally, we have received no evidence to show that the form of still has any necessary relation to the wholesomeness of the spirit produced.
– What is the data of the report?
– It was presented to the Imperial Parliament in 1909, and is signed, I say rather regretfully, by the late Mr. H. J. Gladstone. We. can all sympathize with the desire that whisky produced in Australia should be pure and of good quality; but those who fixed the standard at 35 O.P. rather overstepped the mark, with the result that the industry cannot be established so long as the existing standard is maintained. No standards are fixed for whisky produced in England, Scotland, or Ireland. We can protect Australian whisky consumers, because we have power under the Pure Foods Act and the Excise Act to insure compliance with a standard of purity before whisky manufactured here is sold to the public. I trust that honorable senators will permit the measure to go through. It has already been passed by the House of Representatives, and will really form a part of the Excise Tariff. When all is said and done, it deals with a purely technical matter, and is approved of by the experts of the Customs
Department and by the local manufacturers of whisky.
– I have listened with interest to what the Minister has had to say in support of this Bill, and I confess that I know more about it now than I did when it was presented to us in December last. I have received a circular, which I presume other honorable senators have also received, from Messrs. Joshua Brothers on the whisky duties. I find that a great deal of what the Assistant Minister has . said is confirmed by the statements appearing in it. The information it contains, I think, justifies us in passing this Bill. In 1906 we passed a Spirits Act, in section 3 of which we provided for an “ Australian Standard Malt Whisky,” and also an “ Australian Standard Blended Whisky.” In each case we provided that they must have been distilled wholly from barley malt by a pot-still or similar process, and at a strength not exceeding 35 per cent, overproof. This measure is designed to increase the strength of distillation from 35 to 45 per cent. At first blush I thought that the effect of that would be to render the whisky stronger and more intoxicating, but I find, from what the Minister has said, that that is not the case. I find that an increase of the percentage overproof reduces the fusel oil, which is probably one of the worst concomitants of whisky. In their circular, Messrs. Joshua Brothers begin by saying -
Since last we addressed you on this subject, the Inter-State Commission has issued its report, and has certainly paid us some fine compliments, thus: - “ The purity of Australian whisky has never been questioned….. A very large amount of capital has been invested by manufacturers in this industry, and the fact that their operations have not been profitable is not due to want of equipment, or of raw material, or of the most modern appliances.” The report further admits the truth of our contention that there is practically no sale for pure-malt, pot-still whisky, and never likely to be.
Later on they say -
You have now seen what one Commission in 1906 recommended as the only “ true “ whisky, and the only sort worthy of encouragement, another Commission in 1915 admits to be practically unsaleable.
The moral is not likely to be overlooked.
Since the attempt to stereotype a new process of whisky-making has clearly failed of its object, it might be well in the future to leave to practical distillers such technicalities as the due proportion of malt-whisky in a blend, the advantage or otherwise of the “ patent “ over the “pot” still, and the question of distilling at low strengths, i.e., retaining the fusel oil, or at high strength, i.e., leaving it out.
– The question is practically whether or not we should eliminate the fusel oil.
– That is so. The higher the strength the purer the spirit. This paragraph of Messrs. Joshua Brothers’ circular has a very distinct bearing upon the Bill now before us, and, I think, supports it, although it was issued with reference to the Tariff, and not with reference to this measure at all. The circular further says -
It is now some time since any one with a reputation to lose has asserted that crude, potstill whisky (35-45 O.P.) is as wholesome as the highly rectified article, and as to “taste,” consumers the world over have clearly indicated that they prefer the more refined spirit distilled at Co’ to 65 overproof. It is less intoxicating.
That being the case, we are perfectly justified in passing this Bill, which will be for the benefit of those concerned in the trade, as well as of consumers of whisky. It is our duty, when the opportunity is offered as it is by this Bill, to do what we may to make whisky less intoxicating and more pure.
Clause agreed to.
Title agreed to.
Bill reported without amendment; report adopted.
Bill read a third time.
page 4090
– I move -
That the Senate do now adjourn.
Were it not that a Supply Bill is expected to-morrow, I should have moved the adjournment of the Senate until next week. I believe the understanding is that the Bill is to go through another place tonight
– Last week, when Senator Bakhap was making a very interesting speech, he implied that while the Liberal party allowed its members freedom of action the members of the Labour party were not allowed the same freedom. I interjected that I heard the honorable senator make a statement in the Tasmanian Parliament that both parties were equally bound. The honorable senator denied this. I admit that one cannot remember everything one says over a lengthy period, but I remembered the incident well, and said I could produce it in print. The Tasmanian Parliament has no Hansard, and has to depend for the records of its debates on the reports in the two daily papers. These are cut out, and an official of the House of Assembly pastes them in a scrap-book, which constitutes the only record of the debates of the Tasmanian Parliament. I sent to Hobart for a copy of the Daily Post of 5th July, 1912, and in it the following appears: -
– He was an advocate of elective Ministries and ventured to say that the electors of Tasmania did not desire another election.
The subject before the Chair was a noconfidence motion -
But he wished to see both parties in the House unite in the carrying out of the business of the country. Theoretically, all are free; practically, there was not one free man in this House. There were times when he might have to remember that for the honour of the Administration he would have to vote for certain measures for which otherwise he had little or no sympathy.
The following is an extract from the Mercury of the same date : -
– He was in favour of elective Ministers. He did not believe elective Ministries would spoil the principle of party government.
– If you and I were in the one Ministry there would be rows.
– I am afraid the Leader of the Opposition does not comprehend what I mean.
Sir Elliott Lewis. ; Who would be Minister for Mines? (Laughter.)
Mr. Bakhap said the electors of Tasmania did not desire another election. If the fetish of dissolving Ministries was going to take them before the electors, he intended going on every platform, and advocating the adoption of the elective principle. He did not like party government, though he thought it could be said that he was a good party man, and worked with the tools which came to his hand.
A Labour Member. - You don’t like the crack of the whip.
– Theoretically they were all free; but practically no member of Parliament was free, because they had sometimes to accept measures which a party or Ministry had collectively promulgated. He had, therefore, sometimes to vote for a measure to keep a Government in power, though it did not altogether agree with his views. Would it not be better if they could all come into the House and vote as their consciences directed them?
Those reports exactly confirm my statement.
– I had no conception that my utterances were deemed so important by Senator Guy as to cause him to burrow in the musty archives of Tasmanian parliamentary history in order to resurrect them ; but he need not imagine that T am at all appalled by the discovery ho thinks he has made. Last week, when. I was speaking, Senator Guy made an interjection to the effect that the nature of the obligations which bound together the members of the two parties into which Australia is divided at the present time were exactly similar, but I was endeavouring to make it quite clear that the organization of the Liberal party did not enjoin upon its members absolute adhesion to any programme promulgated by the Leader of the party. I was justifying some criticism which I said I intended to advance on the attitude of my leader in connexion with certain debates that had transpired in another place. I made a statement regarding the internal organization of the party, and I again maintain its absolute accuracy. Senator Guy, very cleverly I suppose from his own stand-point, now “ rings in “ some paragraphs from a debate on a no-confidence motion in the Tasmanian House of Assembly. The motion was moved very early in the history of a new Parliament, in which the tenure of office of the Government depended upon the attitude of one member. The conditions were such as are not very frequently presented in any Parliament where the system of party government and more particularly the system of dissolving Ministries, obtains. I said that the system of elective Ministries would to a large extent do away with party government, and permit every member to vote in absolute accordance with his convictions on any measure, because then the fate of the Ministry would not be involved. When I alluded to the fact that practically every member of that Legislature was not in a position to vote as his conscience dictated on any measure brought before the House, because the fate of the Government was involved, I was dealing with the position of parties in the
House itself, and was not alluding in any way whatever to the internal organization of the respective parties outside. If Senator Guy cannot see the difference, I do not feel called upon to make any apology for or further explanation, of my utterances of two or three years ago.
.- I congratulate Senator Guy on having resurrected this musty statement by Senator Bakhap.
– I have not resurrected it; I heard it.
– Senator Bakhap is the gentleman who has accused us more than any other politician in Tasmania of being a caucus-bound party.
– Which, is quitecorrect.
– We admit it.
– I say the Liberal party is not caucus-bound.
– The honorable senator said in the Tasmanian Parliament that he had to vote for measures in which he did not believe.
– So has the honorable senator.
– No, I have not. There is a vital distinction between the policy of this party and the other.
– I have never voted for a measure in which I did not believe, but I said that under the system of party t government, and in the position in which the Tasmanian House then stood, it was possible for such a thing to happen.
– No apology or equivocation will get the honorable senator out of the hole in which his ownspeech has landed him. The Labour party is elected on a platform in which we all believe, and which we advocatebefore the electors. We are bound on all questions affecting the platform to sit. solidly together as one party. That applies to all details of the platform to which we unitedly subscribe. We are pledged only on the details of the platform, but nt> Labour man or Government supporter will admit that we are pledged to vote for measures in which we do not believe. We are entirely free on all matters outside our platform. Senator Bakhap’s admission which Senator Guy has resurrected clearly shows the position which the members of the Liberal party are in, while they accuse us of being’ caucus-bound.
– Senator Bakhap will be haled before the Liberal caucus for this
– He will get into trouble like Mr. Pullen is in to-day in Tasmania. We know that Senator Bakhap was once a Socialist.
– He is a Socialist now, but of quite a different type from you gentlemen.
– He used to write to the press letters that nearly scorched the paper they were written on, so advanced were they. We know also that he was coquetting at one particular time to get selected as a Labour candidate for Parliament.
– On a point of order, 1 unhesitatingly affirm that I never sought selection as a Labour candidate.
– Order ! That is not a point of order.
– I desire a retraction of the honorable senator’s statement, on the ground that it is incorrect. If he wishes to know the facts, I may tell him that, unsolicited, many years ago, before the Labour party was in its present state-
– Order I The honorable senator is not entitled to make a statement at this stage, but as he claims to have been misrepresented, and takes exception to Senator Ready’s statement, and as the Standing Orders compel ana honorable senator to accept the word of another honorable senator, I now ask Senator Ready to accept Senator Bakhap’s assurance that what he says is incorrect.
– I accept the statement of Senator Bakhap, but it is a wellknown fact that the honorable senator was in communication with certain people in the Labour movement-
– They communicated with me, and offered me a seat if I would stand for it. I refused the invitation because, as I explained to them, I was not a Labourite.
– That is the honorable senator’s statement. My statement is that the honorable senator was in communication with certain persons in the Labour movement, and it is well known that on a certain occasion he wrote to a Radical newspaper - The Monitor - with whose articles the only fault he found was that they did not go far enough in advocating Socialistic principles.
– Was he an I.W.W. man ?
– He was a red.flagger. He sat with Senator O’Keefe at a conference of miners, .at which nobody waved the flag more enthusiastically than he did.
– The honorable senator seeks to bring forward mining questions arising out of a mining conference as an illustration of the accuracy of his statement. That circumstance evidences his sense of discrimination, and demonstrates his unfair attitude.
– I was not connecting my statement with the incident referred to. .1 was merely showing that the honorable senator was at one time an advanced Radical, and that he has gone back on his principles. My honorable friend, Senator Guy, has rendered the Senate a service by showing people, who do not wish to be judged by the utterances of partisans, that accord- inn- to his own statements, Senator Bakhap is worse than a member of the caucusridden Labour party, because he is the bondslave of a fetish, of a capitalistic party that advocates certain things which he has to support irrespective of whether he believes in them or not.
– The same party to which the honorable senator referred dissolved six months later because of the very thing to which I have alluded.
– I desire to bring under the notice of the Senate an article which is published in the Argus of this morning. It is headed, “ Boot’s for Soldiers,” “ Wholesale Rejection,” and “Incompetent Inspectors.” With the permission of honorable senators I should like to read two or three paragraphs from it. They are as follow: -
Recently statements were made in Brisbane that boots of a very poor quality were being supplied to members of the Australian Imperial Force. The allegation was made by a manufacturer, who spoke of what he himself had seen. That his statements were justified is shown by the fact that at least one consignment of boots, consisting of 600 pairs, had been rejected, and- returned to Australia from Egypt. Probably other consignments have shared a similar fate. Large quantities of these rejected boots are now being sold in Melbourne and various other parts of Victoria.
No official statement has yet been made, although it is known that the allegations have been investigated, and a report forwarded to the Minister of Defence (Senator Pearce). It lias been found that certain Victorian manufacturers have sold to the Defence Department boots of a very inferior type. Nor is the quality the most important aspect of the affair. These rejected boots have been found to be positively injurious to troops on active service. One of the strange features of the matter is that the rejected boots were passed by the Defence Department’s own inspectors, all of whom are members of the Australian Boot’ Trade Employees’ Federation.
The article concludes -
Last night, a representative of the Argus was shown a boot, bearing the stamp of an inspector, the first sole of which, when slightly wet, became so spongy as to appear almost useless. “ This,” said the manufacturer who showed it, “ is only one of thousands.” This leather would hold water. Yet this boot has been passed. This boot is also riveted with nails, and is capable of crippling a soldier. In England these nails alone would be quite enough to insure its rejection.”
When investigations were made by skilled men, the incompetence of the Government inspectors concerned was severely criticised. While the inquiry was proceeding, boots were returned to the makers every day. One result was that three of the inspectors were discharged. Others were severely censured for having passed serious defects in workmanship and low-quality material. An employer in a section of the boot trade stated that he, personally, know one man who, with only a limited experience in repairing boots, was appointed as an inspector. “ Men who have not the ability to hold a position in a factory,” he’ continued, “were, through political influence at the Trades Hall, given these jobs.” To all intents and purposes, these so-called inspectors were appointed by the secretary of the union. Competent men would have stopped the whole business at the outset.
The article speaks for itself, and I have no desire to labour the matter. But in the interests of the taxpayers, who are providing colossal sums of money u) properly equip our troops at the front, .1 think that we have a right to .know whether these statements are true or false.- I have already spoken to the Minister on the matter; and I ask him whether he can offer a satisfactory explanation in regard to these allegations.
– Before the Minister replies, I wish to invite attention to the very unsatisfactory answer which I received this morning to a simple question that I addressed to the Land Tax Commissioner. At the head of that branch we have a highly -paid official. So far as I can ascertain, there has been no limit placed on the number of employees whom he can call to his aid. Yet when he is asked a simple question as to how much revenue an alteration in the Federal land tax will produce, he is unable to answer it. That is a condition of affairs which oughtnot to be permitted to continue for H single day longer than is necessary. L wish to know whether the Minister is prepared to give that officer more assistance, so that when information is required by members of this Parliament it may be made available to them in a less period than that indicated in the answer which has been supplied to me. He says that under the most favorable circumstances he could not reply to my question in le3S than six months.
– What was the question?
– I desired to ascertain how much extra revenue would he produced from each State if the Federal land tax were amended so that the existing gradations would not apply to the different portions of the valued estates, and if the maximum tax were not less than Is. in the £1, whilst maintaining an exemption of £5,000. Of course I wish to see the Government- take the necessary steps to increase the land tax at an early date. The object of my inquiry was to ascertain what additional revenue would be obtained under the scheme which I have outlined, a scheme which was suggested by a gentleman from Tasmania some time ago.
I strongly protest against the time of the Senate being occupied in digging up historical records relating to Senator Bakhap. They are of not the slightest importance to me, whereas questions of the character which I put to the Land Tax Commissioner are of immense importance. Here is a wenequipped Department which is unable to answer a simple question in less than six months. What has the Minister to say in regard to it?
– Of course the Land Tax Commissioner himself has assigned some reason for his inability to answer Senator Grant’s question in less than the time indicated. I will bring tue remarks of the honorable senator under the notice of the Prime Minister. In regard to Senator Maughan’s statement, I wish to say that there were two articles published by the Argus. Perhaps the honorable senator missed the other article. It was exceedingly instructive.
One article was written by a mau who was specially sent out to gain information. That information having been obtained, the leader writer founded a leading article upon it. That leading article states that “ the most definite fact “ is that a consignment of 600 pairs of boots has been sent back from Egypt as being unfit for wearing. I have made inquiry as to the truth of this “ most definite fact,” and I have learned that the Department has no information as to any boots having been sent back from Egypt. Prom the allegation of the Argus as to this “most definite fact” honorable senators may judge of the reliability of the whole statement.
– It is a bulk sample.
– Exactly.
– Can no action be taken by the Government against a newspaper for publishing statements of this kind?
– I may tell honorable senators that 300,000 pairs of boots have been tendered for and accepted by the Defence Department. Obviously in the supply of such a large quantity “of boots a number will be rejected, and some boots will pass the inspectors which are not quite up to sample. A little time ago some boots did come under our notice which were not up to sample. These were reported on by the inspectors. On the report from Queensland, whither they had been sent, we ascertained what inspectors were responsible for passing them, and those inspectors were discharged. It must be remembered that the supply of boots we have accepted prior to this year did not represent oneeighth of the quantity we have had to accept since the outbreak of the war. As a result we have had to immensely increase our staff of temporary inspectors. In taking on these temporary inspectors, the Government have adopted the principle of preference to unionists. It is that fact which is worrying the Argus, and not the question of the quality of the boots supplied to the soldiers. That can be plainly seen by the contemptuous reference to the ability of these inspectors at the end of the article. What is the charge against these inspectors? It is that they are men who worked at a trade. That is a nice thing to urge by way of disqualification of an inspector. If there are any persons who should know something about boot3, obviously they are the men who have made boots.
– People should pay no attention to the Argus.
– Every man appointed was a member of the Bootmakers Union. Consequently he had either to he a man who was earning his living by making boots by hand, or one who was employed in a boot factory. Now, a boot repairer knows more about boots than does a man who works in a boot factory. Obviously the best inspector we can get is a boot repairer, because he makes all parts of boots, whereas an employee in a factory may not make all those parts. Yet the Argus trots that man out as an instance of the inferior class of men who have been appointed as inspectors.
– He is only a cobbler.
– He is a cobbler, but he is the man who is required for the position. We have other information on this subject. We have the report of a General Officer Commanding which was1 sent to the Department just before he took his troops to Gallipoli after a test had been made, and he reported that the boots and uniforms were splendid. It was a most glowing report as to the equipment, and the way it stood the test. Again, we have the report of the war correspondent of the Times, who was sent to Egypt, and reported that the Australian equipment was better than any equipment he had ever seen, and he wrote after he had had experience of the regular armies of Great Britain and other countries. There is this point to be borne in mind - and I am quite conscious of it - that we are obtaining our boots more cheaply than boots are being obtained in the Old Country. It may, perhaps, be brought forward as a striking tribute to the success of the Protectionist policy of Australia that our manufacturers are able to turn out boots, although they pay higher wages, more cheaply than is done in England, and even in New Zealand. There has been an increase in the price of leather, and the question as to whether we should increase the price of boots is now under consideration. With the increase in the cost of the raw material it has been represented by the manufacturers that the price of the boots should increase proportionately, and that question ib being investigated by experts in the Department. Considering the magnitude of the contracts we have had in hand - 300,000 pairs of hoots - I think that the inspectors have done marvellous work, and very valuable work, too. They have absolutely justified the policy of the Government in picking practical men for the positions, rather’ than resorting to the old system of selecting men who followed clerical occupations. We have obtained .in that way over 100 inspectors, and it is a tribute to that method that we have had to discharge only three or four of them. If I found an inspector passing inferior boots I would not hesitate for one minute to discharge him.
– Not only to discharge him. but to send him to gaol if you can.
– And- to send him to gaol if necessary. The fact remains that of the 100 men supplied by the unions for the positions, we have only found it necessary . to discharge three or four. The. tributes of praise which have been passed on the equipment are the best justification of the way in which the inspectors have carried out their work.
– No complaints have come from the front f
– There have been no complaints from the front at all.
Question resolved in the affirmative.
Senate adjourned at 6.24 p.m.
Cite as: Australia, Senate, Debates, 17 June 1915, viewed 22 October 2017, <http://historichansard.net/senate/1915/19150617_senate_6_77/>.