9th Parliament · 2nd Session
The Deputy President (Senator Newland) took the chair at 11 a.m., and read prayers.
– Yesterday, Senator Wilson furnished me with an answer to a question regarding Mr. J. P. Dunk, the ex-munition worker. In that answer was the following statement: -
In spite of this he has twice applied to the courts on the grounds that the compensation was inadequate.. In both cases judgment was given against him.
Is it a fact that a claim under the Workmen’s Compensation Act made by Mr. Dunk against the Government had to be referred to the Supreme Court, and the judge refused the application on account of its unfairness to Mr. ‘Dunk?
– Personally, I am not conversant with the facts of the case, but I shall submit the question again to the Minister concerned in the form in which the honorable senator has now put it.
– Is the Leader of the Senate able to supply an answer to-day to my previous question in regard to the pension claimed by P. J. Farrell ?
– No, but I hope to be able to obtain an answer by Wednesday next.
– Has the Leader of the Senate noticed . a statement in the press to-day to the effect that quite a number of people have been refused admission to the United States on account of the Australian and New Zealand quotas having been completed? These people now have to return to Australia or New Zealand, find they have suffered much inconvenience and expense. Is it possible for the Minister to make some arrangement with the American Consul so that, before passports are issued to passengers to the United States of America, it may be ascertained whether or not the quota is complete ?
– I have not had sufficient time this morning to give the matter close and careful study. Owing to the hour at which the Senate adjourned this morning, I have been unable to give my usual close attention to the news in the morning press, and I, therefore ask the honorable senator to give notice of the question.
asked the Leader of the Government in the Senate, upon notice -
When will the report of the Royal Commission of inquiry into the operation of the Navigation Act be available?’
– I am informed that the Royal Commission to inquire into the operation of the Navigation Act expects to present its report in the course of the next few days.
asked the Minister representing the Minister for Trade and Customs, upon notice -
– The information is being obtained.
Bill received from House of Representatives, and (on motion by Senator Wilson) read a first time.
In committee (Consideration resumed from 31st July, vide page 2696). Clause 11 -
Section 30 of the principal Act is repealed and the following section inserted in its “30.- <(1.) The not profits of the bank in each half-year shall be dealt with as follows: -
Upon which Senator Grant had moved by way of amendment -
That the following words be inserted at the beginning of paragraph (b) : - “ After the amount granted by the Commonwealth has been refunded.”
– The clause, as drafted, provides for the disposition of the net profits of the bank in two directions - one half to the Bank Reserve Fund, and the other to the National Debt Sinking Fund. If the Minister for Home and Territories (Senator Pearce) is in favour of the continuance of the Commonwealth Bank as a live institution, he should be prepared, to accept my amendment. The Government should not pretend that it is in favour of the continuance of the bank, when it proposes to rob it annually of half its net profits. It would be most discouraging to any institution to find that, after working twelve months, its staff doing overtime without being allowed tea money, and permission to open new branches being refused, the Government had robbed it of half its profits. There is no sense in granting £6,000,000 to the bank, and then robbing it of probably anything up to £100j000 per annum. It seems that no serious effort is being made to put the bank on a paying basis. For several half-yearly periods after its establishment it made no profit, but it soon had a balance on the right side of the ledger.. Up to the end of December 1923, of the total profits distributed, £2,263,666 was allocated to the reserve fund, and £2,201,993 to the redemption fund. It is now proposed, out of this total, to place £4,000,000 to the reserve fund of the bank, and I think it is a good suggestion. The affairs of the bank should be so conducted that it would be able to depend upon its own resources. It is humiliating to find those engaged in the pastoral industry coming to the Government for assistance in exporting cattle. If a government enterprise of that nature had failed, honorable senators opposite would be loudest in their condemnation. The clause before the committee does not embody a proposal of exactly that description, but it is a proposal to prevent the bank from performing the functions it was intended to discharge. This is an attempt to rob the bank of the sinews of war. The bank, notwithstanding its prestige, cannot get buildings erected without paying its workmen for doing so. It cannot get architects to design the buildings unless they are paid, and I suppose it cannot get its solicitors to draw up legal documents for the transfer of land for such buildings unless they are paid, for their services. Although there is- a widespread opinion that the operations of the bank should be extended to every important centre in Australia, the Government, by robbing the bank of one-half of its net profits, is preventing an extension of that business. If the Government wants to liquidate the national debt, surely it may do so in some other way. I do not suppose, Mr. Chairman, that I would be in order if I reminded the Minister of an additional source of revenue.
– The land tax?
– Qf course. The system mentioned by Senator DrakeBrockman would produce almost any amount required to: liquidate the national debt.
– The honorable senator is not in order.
– I quite agree with you, sir, and I would- not have mentioned the matter had I not been invited to do so by Senator -Drake-Brockman. I am hostile to the Government’s proposal, and I shall leave nothing undone to ensure that the .bank will have a fair and reasonable chance. Its profits during- the last half-year were substantially less than in the previous half year. This extreme proposal should not be countenanced by any intelligent body of men, and certainly by no one who professes to be in favour of the extension of the operations of the bank.
– This clause has been the subject of considerable thought on the part of the Ministry, and therefore it is an important part of the structure of the bill. Senator Grant’s amendment proposes a violent and revolutionary change. I am sure the honorable senator does not expect the Government to accept it. The matter was canvassed in the Cabinet whilst the bill was in course of preparation, and the honorable senator may be quite sure that it was carefully considered. If I do not continue the debate now the honorable senator will, I hope, understand it is not because I do not regard it as an important matter, but simply because it has already received the attention of the Cabinet, and. we believe that the scheme in the bill is the best. I may remind. Senator Grant that there are one. or two proposals of considerable importance to be dealt with, and as our time is. somewhat limited, I hope that he will, if possible, curtail his remarks.
.- If I am in order, I suggest to the Minister that ifwe are to continue the business of the committee with the present panel of temporary chairmen, it may be advisable to take certain action.. Last night, when we were dealing with this measure in committee, there was on temporary chairman present. Had it been necessary to give him relief the Deputy President, who is our Chairman of Committees, would have been called upon to take his place. I suggest that between now and our next meeting the Government should consider the advisableness of electing a second Chairman of Committees to act during the absence of the President in South Africa. With the business ahead of us next week, I can foresee the possibility of. a continuous sitting from the day of meeting untilthe end of the week.
-I shall have the matter looked into. Some consideration has already been given to it.
– Perhaps I may be permitted to explain that when I left last evening I had no idea that consideration of private members? business would be postponed, and that there would be an all-night sitting, devoted exclusively to Government business.
– I had no intention of reflecting upon the Temporary Chairman. I merely offered the suggestion in order to assist the Government in the conduct of the business.
Clause agreed to.
– I move-
That the following new clause be inserted to follow clause 11 : - “11a. Section 34 of the principal act is amended by omitting from sub-section (2) thereof the word ‘governor’ and inserting in its stead the word board.’ “
Sub-section 2 of section 34 reads -
Nothing in this section shall prevent the bank, in carrying on the business of banking, from making advances to a customer on any security which thegovernor thinks sufficient.
The object of the amendment is to strike out the word “ governor” and insert the word’ “ board,” for the obvious reason that the responsibility must be upon the board.
– Are we to understand that the amendment proposes to take from the management and place in the hands of the board responsibility for making advances ? The Minister might very ‘ well take to himself the advice which he tendered to Senator Grant. He assured us that the measure had been carefully considered. Therefore he should be quite satisfied that the amendment he is now urging will not interfere with the intention of the bill. In ordinary banking business the management is responsible for advances.
– A manager reports, and makes his recommendation to a board.
– What sort of a general manager are we likely to get if, when it is a question of making an advance to a client, he has to wait until he can get the board together to agree to his proposal?
– In the ordinary course of business these matters are dealt with by the executive of the board, but the board is held responsible.
– There would, of course, be a delegation of authority in regard to minor matters.
– I should like to be quite sure that theproposed amendment will not hamper the management of the bank.
– I understand that the procedure suggested is adopted by private banks, and that the board of management is really responsible for advances.
– In private banks the board of directors does not deal with this kind of advances at all. The board only appears in large financial transactions. All ordinary advances are dealt with by the management in the day’s business. In the circumstances I ask the Minister to give the amendment more than a passing thought. I. always like our legislation to be quite clear. In this case we may get as manager of the bank the type of man who conscientiously believes that he cannot make any advance without the approval of the board of directors, and we have been told that this bank board will meet, perhaps, twice a month. It is possible, therefore, that, in certain cases, while the provision in. the act lays down a certain definite course of action, common sense will dictate another. A manager of the type I describe would certainly consult his own convenience, even if he inconvenienced a client and acted, perhaps, to the detriment of the bank. The Minister should consider the possibility of his amendment tying the hands of the management in regard to ordinary banking business.
Question - That the proposed new clause be inserted (Senator Pearce’s amendment) - put. The committee divided.
Question so resolved in the affirmative. Proposed new clause agreed to. Clauses 12 to 15 agreed to.
Section 60 of the principal act is amended by omitting the word “.board “ and inserting in its stead the words “ Note Issue Department.”
.- I move-
That after the word “ amended “ the letter “(a)” be inserted, with a view to adding a new sub-clause 6.
This amendment will not change the meaning of the clause in any way, but the subsequent amendment will do so, and I propose, therefore, to explain the matter fully when I move it, for it is then that debate may occur.
Amendment agreed to.
– I now move -
That at the end. of the clause the following words be added: - ; and (6) by adding at the end thereof the following^ proviso: - “Provided th;at Australian notes shall not be issued to the bank without the approval of the Treasurer.”
The section in the principal act which it is proposed to amend reads as follows : -
For any Australian notes required by the bank on deposit or for the purposes of its ordinary business the bank shall make to the Note Issue Department payment, or shall give credit to the board upon the same terms and conditions as those applicable to any other bank.
The clause in the bill leaves out the word “ board “ and inserts in lieu thereof the words “ Note Issue Department.” The adoption of this amendment will make the section read as follows: -
For any Australian notes required by the bank on deposit or for the purposes of its ordinary business the bank shall make to the Note Issue Department payment, or shall give credit to the Note Issue Department, upon the same terms and conditions as those applicable to any other bank.
Provided that Australian notes shall not be issued to the bank without the approval of the Treasurer.
The object of the Government is to give Parliament, through the Treasurer, con- trol over the issuing of tee notes that are required for the purposes of the Commonwealth Bank. If the board of directors decides that in the interests of the bank an issue of notes is advisable, it must obtain the consent of the Treasurer to the issuing of them. The Treasurer will be answerable to Parliament for refusing or agreeing to the board’s recommendation.
– I take it. that this does not apply to notes that will be issued by the board for the purposes of other banks, for we shall discuss that matter later.
– This amendment refers only to notes which the board of directors may desire to issue for the purposes of the Commonwealth Bank.
– I think it provides a very healthy safeguard.
– That is so, for before any such notes can be issued the consent of the Treasurer of the day must be obtained.
– I am astonished that even the docile following of the Government is willing, without comment, to permit the bank to be brought under absolute political control, but I am rather glad that the Minister has openly admitted’ that he proposes that it shall, at all times, be subject to such control. We are faced with the extraordinary proposal that the Note Issue Department shall be empowered to issue an unlimited number of notes for the purposes of the private banks, but shall not be given authority to issue any notes for the purposes of the Commonwealth Bank until (he consent of the Treasurer is obtained. I do not know anything about the disputes. that have occurred between the present Treasurer and the Note Issue Board, but it is not difficult to gather from the speeches that have been delivered by some honorable senators opposite that distinct disputes have occurred. The acceptance of the amendment will enable the Treasurer to cripple the bank,, and that is the very thing that honorable senators on this side of the committee have been grievously afraid’ of from the first day that this bill was . introduced. Every amendment that the Government has proposed is designed to hobble and hamper the bank. The Government is willing to give the board of directors unlimited power to issue notes to the private banking companies, and will not authorize it to issue them to its own bank. It is straining at the gnat but swallowing the camel. It would be wise to make provision that the Treasurer should be informed when the Note Issue Department proposed to issue notes, but I certainly do not agree that he should have power to prevent such an issue. I understand that the supporters of the Government have decided to accept the Minister’s proposal that the board shall issue notes upon what I will term the rotten security of credits held in London. The Note Issue Department is to be unlimited in that respect, but when it comes to meeting the needs of the business of the bank in Australia the Treasurer will be able to override the board. This bill strengthens the bank on the one hand and weakens it on the other. Strength and authority should go hand in hand in these financial matters, and Ave should not permit even a casual interference with the proper control of the institution by the board. If it is not possible for us to constitute a bank and a board in which we have every confidence, we should not constitute them at all.
– Does not the Note Issue Department require to obtain the consent of the Treasurer before it issues notes to private banks?
– No; it has complete control of the note issue in that respect.
– That is the substance of my> complaint. Unlimited authority is to be given to it to deal with private banks, but it is to have no freedom to deal with the requirements of the Commonwealth Bank. Although, in my opinion, the Government should be acquainted with what notes are issued for l&e purposes of the bank, I do not think that it should possess a power of veto in the matter. If the amendment is accepted the Treasurer will be able, if he so desires, to prevent the board of directors from making even ordinary business arrangements with other banks and commercial institutions. We shall do wrong if we accept such a proposal, and we shall certainly undo what we did yesterday.
– Whilst I am not prepared to vote against the amendment, I think the position might very well be left as it is. But when all is said and done, the proposal amounts to this : that the secretary to the Treasury, who will be ex officio a member of the board, will inform the Minister that the Note Issue Department of the bank proposes to issue so many thousand or million notes to the bank, and requires permission from him to do so. The Treasurer would naturally accept the recommendation of the board. He would be a braveTreasurer, indeed, who would veto such a recommendation.
– “What will happen ifthe representative of the Treasury on the board of directors differs from the rest of the board? Will one man be in a position to control the majority?
– In those circumstances the Treasurer must accept the responsibility.
– I was about to say that that might possibly happen, and that if it did it might be very prejudicial to the interests ofthe bank. On the other hand,there is thegrave danger, which I have no doubt the amendment is designed to prevent, that the unrestricted issue of notes to the Commonwealth Bank would give it an altogetherunwarranted advantage over private banking institutions. I dare say that is why the Government have suggested an alteration which places the final responsibility on the Treasurer of the day. Objections may be urged to either course, but possibly the balance is in favourof the suggestion nowmade by the Minister.
Amendment agreed to.
Clause, as amended, agreed to.
– I move-
That the following new clause be inserted:- “ 16a. After section sixty O of the principal Act the following sectionis inserted : - 60oa. The board may issue Australian notes to the bank or to other banks in Australia in exchange for money or securities lodged with the London branch of the bank.’ “
During the second-reading debate it was announced that the Government intended to introduce this amendment, and reasons for its inclusion have already been given. It is a very necessary provision, particularly at the present juncture. Of course, the power given by the proposed -section will have to be used with great caution, and we trust that the board will exercise that caution. I understand that the term “ money “ embraces anything by which a debt can be discharged inLondon.
– It means, for instance, legal currency.
– Or a cheque marked by the Bank of England and lodged with the London branch of the Commonwealth Bank.
– Is it proposed to issue notes on a security of that kind?
-Yes. A cheque’ coveredby theBank of England is as good a -security as can be obtained at any time. If this method will, as it is hoped, do something to alleviate the exchange difficulty which is so pressing at the present time it is very necessary to put it in operation. I think the board can be trusted to see that the power given to it is used with a clue regard to the security, and in a way that will not unduly inflate currency in Australia. ‘These are essential safeguards. The objectof the amendment is to endeavour to alleviate, and to some extent, overcome the exchange difficulty which is now operating against Australia.
– Thisis the most farreaching proposal we have had before us in connexion with the bill. Like Senator Pearce, I do not pose as a banking authority, butI am conservative enough to believe thatgrave dangers confront any country that endeavours to pay debtsandsettle accountsby the issue of papercurrency unless the basis of that currency issuchthat it gives absolute safety. There is a great contrast between the methods of. the Labour party and those of the National party as applied to the issue of notes. If the Labour party had proposed to issue notes against securities lodged in a bank in London, there would have been a howl of indignation from all in Australia who claimed to be financial authorities. We had for our notes issue a better security than gold. We had behind our notes all the money of the taxpayers of the Commonwealth whichwe could call up. Notwithstanding that enormous security and -that great : guarantee for safety, we provided, in the teeth ofthe opposition of the verypeople who arenow proposing this strange method of issuing notes against credits inLondon, thatnot more than £3 in notes should be issued for every sovereign held.
SenatorGREENE. - That safeguardstill remains.
Senator- Gardiner - I know that it does’; But T want Senator Greene to explain whether if is not proposed to give the board’ of directors of the Commonwealth Bank the right .to issue, notes’ beyond’ that proportion of three to one on securities held, in London.
– It is- not.
– Then why is the proposal put. forward.
– Senator Greene’s reply needs a little qualification. Gold backing.- will” still be required!
– That- is what I meant.
– T know what the honorable senator meant; he intended to cloud the issue, whereas I intend to strip it of all shams, and Have- it f aced as if should be faced! If the proposal means anything, it’ means that the Government, and the bank are not satisfied’ that the power to issue notes on -gold Held by the Treasury gives them sufficientscope for the business upon which they propose to embark. Therefore, they propose that notes shall be issued, not only on the basis of three for every sovereign held, but also on credits lodged in the London branch of the Commonwealth Bank. Surely that is a wildcat method of issuing notes. I have heard honorable senators opposite attribute the high cost of living: to an inflated paper currency; they have said this so often that some of them believe it to be true;’ but they do not care how high they make the Australian co3t of living, so long as the English buyer may be accommodated at’ the expense- of the Australian taxpayer:
– It is the Australian seller, and not the English buyer, who is suffering at the present time.
– Oh the pretence that the Australian seller is suffering; we are to give the English buyer money to buy our goods by advances made on doubtful security. My chief objection is that this security will’ be Held where Australia will have absolutely no control over it. Credits issued in Australia are under the control, of the people of Australia, but” credits issued against money deposited , in a London bank can be recovered’ only by recourse to British courts’. The present Government is the first in Australia to depart from a safe basis for the issue of notes-. It is: issu-ing them on the most flimsy basis ever-‘ heard- of, namely, credits- in a country where our laws do not operate. As the dangers of a paper currency are apparent to all honorable senators, the responsibility for this innovation rests upon all of us: Sections of the press that express the opinion of honorable senators opposite are always ready to declare that the Labour party is not to be entrusted with power because it will set machines going to print notes. Yet to-day Ave have another party proposing to do so. I do not know whether it wasan oversight on. the part of the Minister, but he has not proposed any limitation on the amount of notes that maybe issued. If the Government will not permit the. Commonwealth Bank to issue notes to itself without the approval, of the Treasurer, surely- a. responsible officer of the Government, should be held responsible for the amount” of notes issued, on credits deposited’ in, the London- branch, of the Commonwealth. Bank. Surely the people should, know to what extent notes are to be issued on such flimsy securities. Is the issue to be unlimited* - depending entirely upon what securities are held in London? The question is so important, and the method proposed is of such an infernal character, that? I find it exceedingly difficult to deal with it without displaying some heat. The Minister has stated, that the issue of notes in. Australia is protected by gold in the Treasury, but to what extent will the issue of notes against securities held in London be protected.?
– They are- not to be issued against securities in London in. the manner the honorable senator suggests. The gold standard will apply to notes issued in this as in other instances.
– Gold is- held against notes issued owing’ to the superstition which has come down to us through the ages, and notes issued on that basis- are accepted in the liquidation- of debts-. In issuing, notes against a gold basis we have- a proportion of gold available, and whatever the demand may be, we estimate that in the event of the most unexpected rush Ave would have sufficient gold to pay over the counter. If Ave issue notes against securities held in London, and a run commences, what is likely to happen? The Minister has stated that these notes will be issued to enable British buyers to purchase in Australia. Let us suppose that they do. I have heard it stated that there is £70,000,000 of capital locked up in England which cannot be profitably transferred to Australia. Some have said that the amount is £60,000,000, others £20,000,000, and recently there were letters in the press to the effect that such statements are all moonshine. What is the exact position ? I am unable, of course, to say who is right, but evidently the Minister thinks that there is a large amount of credit in London that is not coming freely to Australia. Let us suppose for the sake of argument that the Commonwealth Bank issues £20,000,000 worth of notes against credits in London, and notes representing that amount find their way into the hands of the Australian people who sell £20,000,000 worth of wheat, wool, butter, or other primary products. What is to happen if an attempt is made at once to obtain gold for the notes ? They cannot be cashed because the gold basis will be inadequate. The. credits against which they are issued will remain in the London branch of the Commonwealth Bank. This is wildcat finance in the extreme. Honorable senators opposite do not wish to study the position. Senator Greene, for instance, is working in the interests of the private banking institutions in Melbourne, but it is questionable if the Sydney banks favour the proposal. I could quote the statement of the general manager of a big banking institution in Sydney, Mr. Cohen, who was mentioned by the Minister. Mr. Cohen said that the change will end in disaster. Some one has met the Treasurer (Dr. Earle Page) in secret conference, and he has agreed to submit an amendment in this form. I can only enter my protest, point out the difficulties surrounding the whole situation, and” direct attention to the weak spot in connexion with banks controlled by governments issuing paper currency without a sufficient gold basis to support it. If the Minister will assure me that the notes will not be issued beyond the proportion laid down in the principal act the position will be slightly better.
– That act will still operate. Section 60k (1) reads -
The Board shall hold in gold coin and bullion a reserve of an amount not less than one-fourth of the amount of Australian notes issued.
– That was the position until this amendment was submitted. The proposal in the Commonwealth Bank Act is a safe one, and if that is not to be affected in any way, or the gold basis reduced, what is the advantage in submitting this proposal? Is it to give added security to the private banks? This is a make-believe effort to maintain credit, and one in which the measure of safety is not very great. Some of the private banks, which are in a weak condition owing to war trading operations, are now asking the Commonwealth Bank to back their securities in London.
– The honorable senator has exhausted his time.
– I have listened to the Leader of the Opposition (Senator Gardiner) with a good deal of interest. If the position were as . he has -represented it to be, there would be no term of denunciation which he would not be justified in using. The position, however, is not as he has represented it, and I trust he will pardon my saying that I do not think he has realized exactly what was done originally under the powers conferred by the Australian Notes Act. He proceeded to say that if the Government issued the notes, as is proposed, and demands were made for immediate payment in gold, the Government could not comply with the request. That was true of the first Australian note issue. The moment notes were first issued by the Government, of which Senator Gardiner was a leading supporter, the position was the same. It is also true of other note issues. The only difference between the position as it was then, and as it is today, is that the proportion of gold which is held to-day is materially larger than that originally held. Let us look for a moment at what it is really proposed to do. Section 60& of the Commonwealth Bank Act, as taken from the old Australian Notes Act, still remains. The actual reserve to be held is there provided for, and it is impossible for the board to issue notes in excess of the statutory limit laid down. If notes are issued in the manner for which the amendment provides - if they are issued against securities held in London - the gold basis of 25 per cent, must still be preserved. In practice, the reserve has always been greater than that provided by law, and at present it is actually greater - there may be a difference of 1 per cent, or 2 per cent. - than it has ever been. A considerable portion of the reserve, apart from that held in gold, has been in securities. They have been Australian securities.
– Government securities.
– Yes, and if Senator Gardiner refers to the act which I mentioned at an earlier stage of the debate, he will find that the Government which was responsible for the passage of the Australian Notes Act’ contemplated a certain amount of the reserves being held in other than Australian securities.
– Commercial securities were never included.
– No, and that is not contemplated in this instance. They must be either in money or securities such as are provided for in the act. Those are the only securities that can be held against Australian notes. The exchange difficulty, which has been intensified very largely owing to the abnormal conditions prevailing, arises principally from the fact that gold is not free. If the conditions were normal to-day, it would be quite easy to overcome the whole exchange difficulty by increasing the gold reserve in Australia, and immediately proceeding to issue credits based upon the additional gold reserves. That would be a simple way of cleaning up the whole matter, and it could be undertaken under normal conditions at a comparatively small cost. I think it could be done, even now, at a very much larger cost, in that way, ‘and possibly it would be justifiable to use the profits of the note issue to clean up the whole situation. This is a matter which the Treasurer might have had exhaustively investigated by a royal commission. He is primarily responsible for the difficulty which has arisen. I do not mean that he is responsible by reason of any overt act, but the primary responsibility of its solution naturally rests upon his shoulders. The exchange difficulty we are experiencing is costing the primary, producers of Australia £3,000,000, and probably more, a year, and that being so the Government, might very well have expended £1,000 or £2,000 upon a royal commission, in order to ascertain the best means’ of adjusting the difficulties.
– When a royal commission was proposed the honorable senator opposed the proposition.
– That was a royal commission to inquire. into the Commonwealth Bank Bill. I suggested to the Government that a royal commission on the exchange question could in a. short time clear up the whole position. At present the banks hold accumulated funds in London. It is immaterial how these funds have accumulated. It is extraordinary, in view of the fact that during the last four years there has been a surplus of visible imports over visible exports of approximately £33,000,000. On top- of that the Treasurer stated in answer to a question submitted the other day, that the total amount of Commonwealth and state borrowing in London during that period had been short by £750,000 of the actual interest payments that Australia had had to meet in London. Notwithstanding that we have the extraordinary situation that these credits have been built up in London.
– That statement has been made many times, but nobody has yet stated with definiteness or accuracy the amount that stands to the credit of Australia in London.
– The amount which the banks normally keep in London to meet current engagements is approximately from £10,000,000 to £11,000,000. I have very good grounds for believing that that amount is at present exceeded by from £30,000,000 to £35,000,000.
– Do the published statements of the bank disclose that that amount of gold is. held in London ?
– It is not gold, it is money that is owing to Australia, but is held in London. The honorable senator, I have no doubt, understands that when wool buyers come to Australia they bring credits which enable the banks to negotiate drafts on London to the extent allowed by those letters of credit. The banks have to credit their customers in Australia with the result of the sales, but the money for the credits is paid in London. The present difficulty has been brought about because of the accumulation of those funds in London, owing to the fact that the amount paid in London is greater than that owing by Australia to London. The banks have portion of that money on deposit in the Bank of England. There can be no greater security than that, because the Bank of England has behind it in effect the security of England itself, and is as stable as the Commonwealth Bank could ever be with the credit of the people of Australia behind it.
– Why will the Bank of England not give credits to these buyers in London?
– They do. I have endeavoured to explain that the .banks in Australia have to give cash to the sellers of the wool, the butter, or the wheat, in the shape of bank deposits in Australia, but payment to the banks is made in London. That is the manner 1111 which these accumulations .have come .’about in ‘London. The money .in (London is .held by the banks .either on de.posit with the Bank of England or in government -securities such as .treasurybills. All that this proposal provides :is that, instead of the Notes Issue .Board or the Commonwealth .-Bank holding only Australian securities against .the issue of -the motes, a certain amount shall be held in government securities or Bank of England securities in London. The net result will be that the banks will be able to negotiate the letters of credit in Australia, make payment to the sellers ‘in the notes that they receive here, .and in return for those notes hand over to the Notes Issue Department of the Commonwealth Bank .a certain proportion .of the securities held by them or cash held on their behalf by the Bank of England. The important point is that the banks in Australia will be able to give the credits to ‘their customers on the “basis of those notes without imperilling their banking position by not keeping . an adequate cash reserve against their total liabilities, represented by the credits they give to -their customers. I hope -that I have made the matter clear.
– It is quite clear to those who want to see.
– This proposal is not, as Senator Gardiner has suggested, ai desperate attempt to render assistance to the banks. It certainly is an attempt to help the banks, but the people that the Government is endeavouring to help, and for whom I have been battling the whole of the time in my effort to get this provision incorporated in ‘the hill, are .the .primary producers .of .Australia, who, in existing circumstances, are -penalized, and are threatened with an absolute :hold-up because the banks have not -sufficient cash to place against their liabilities. The banking position of Australia would ‘have become dangerous had the “banks .continued giving credits to their customers in the absence of additional cash reserves while at the same time piling -up their credits in London. Therefore, we have :been urging that the ‘Notes ‘Issue Board should issue the extra cash in Australia and, instead of holding the whole of -their reserves ‘in Australia, hold. a certain amount in London. T would not for a single moment support the (proposal, of which notice ‘.has been given, ,to make it mandatory for .the .Notes Issue Board to issue, notes .against : securities held in London. that would .be a most dangerous .thing to .do, ..because it would create a definite legal right that would .enable the banks to. metaphorically hold a pistol .at the head of the Notes Issue .Board and to say, “ We .have .so much money in London ; on .that .security .you must -.give .us the notes that we require in Australia.” .The matter must be “handled with caution. In :the exercise of its .discretion .the Notes Issue Board .may require .the .payment of .a .certain rate of interest on .the notes issued .against securities ‘held “in London. I should .not object to that. .It .may provide the best possible -check that can be devised against carrying this policy too faa:.
-(Senator Kingsmill). - The honorable senator las exhausted :his time.
.- Having listened to Senator Greene I am convinced that a fundamental , alteration is required. That is, that ‘the amount of gold held as security against the issue -of notes must be increased. .As it is -proposed to accept London securities, a gold ‘.backing -of .25 per cent, will not :b.e sufficient. Senator Greene has stated that he desires .to .help the primary .producers. This ^proposal -of <the ‘.Government will help them for one -year only; it will not cure the financial difficulties in which
Australia in common with other countries is at present placed. Some other system must be adopted, and in my opinion, the only safe system is for Australia to sell more and to buy less. So long as goods continue to be sent to! Australia as payment for our products, our difficulties will increase.
– That, theoretically, is the position. The honorable senator is quite right in his contention.
– I can well remember the time in Australia when the grocer, the baker, and the butcher, issued their own notes. Those notes were not made legal tender, but they were honored by other establishments. That system of currency existed in Australia in my boyhood. Even at the present time there is a shipping company .which issues its own notes, that are recognized as legal tender throughout the islands of the Pacific. If that company “were called upon ‘to provide a certain ‘gold standard for its notes it could not possibly issue them. If we could induce the labour Government in Great Britain to send to Australia gold to the -value of millions of pounds, instead of sending credits, we would be placed in a much better -and safer position. America did not accept credits from ‘Great Britain or from any other nation during the war. In America today there .is more gold than that country desires to have. In one shipment £50,000,000 worth of gold was sent to America from Great Britain. Australia has borrowed too extensively on the London market for the requirements -of the Commonwealth Government, the governments of the states, and numerous municipalities throughout the Commonwealth. When loans are raised on the London market .not one -golden sovereign is sent across .the seas. We work on those little pieces of paper that are known ,as credits, which, in a time of -crisis, are -absolutely valueless-. If money must be borrowed for municipalities and state governments loans should be floated on the Australian market. The late governor of the Commonwealth Bank, Sir Denison Miller said on one occasion that we had only scratched the surface of lie wealth of Australia. That, also, is my opinion. When the Melbourne and Metropolitan Board of Works recently set out to float a loan locally the investing public shivered in the cold from 4 o’clock until 9 o’clock in the morning waiting for the doors to open so that they could participate in the loan. They had no actual money to invest ; they simply passed on to this institution the credits that they held, and thus became entitled to receive interest at a rate of 6& per cent, or 7^- per cent. If the Government is anxious to assist the primary producers for years to come it will have to adopt a policy different from that which is embodied in this bill. All borrowing will have to be restricted, and whatever loans are floated’ must be floated on the Australian market. It will then establish credits in this country, and the primary producers will be able to sell their products to those who are engaged in the industrial life of the Commonwealth. By increasing the vigour and scope of our industrial enterprises, we shall be able to ‘overcome the financial troubles that have resulted from the late war. When the Commonwealth. Bank Act was passed and Commonwealth notes were issued, there was no war in progress, and yet the Government maintained a 25 per cent, gold standard. If that standard was necessary at that time, the percentage of gold to notes should be twice as large to-day. 1 have studied the subject of economics to some extent, and in my humble opinion the present position is due to borrowing on the London market instead of in the Commonwealth. Only by building up the industrial life of the community can Ave maintain Australian credit. The palliative proposed by the Government will be of no permanent avail.
i - The .proposal of the Government is to make more cash reserves available so as to ease the financial stringency. Fault has been found with the method favored .by the Government, for instead of insisting upon a certain percentage of gold being deposited as a backing for the note issue, it is -desired to substitute for gold securities lodged with the Commonwealth Bank in London. If this means .granting more credit in this country, I venture to sa-y that it will be an unwise course ‘to adopt. There are different opinions, in sharp contrast with one another, as to the real cause of the financial stringency in Australia. It is agreed by all that money is scarce, and that credit is at a low ebb. In my opinion, the banks have over-traded to an extent that they do not care to admit. Senator Greene did not put the case against the banks, but I intend to do so. I shall show that instead of the financial stringency being due to the London exchange rate being against Australia, the real cause is that the banks here have extended credit too freely, and are not willing to have the blame placed on their own shoulders. A report issued by Edward Dyason and Company, of Melbourne, based on the figures of the Commonwealth Statistician, shows that the total liabilities of the associated banks in 1914 amounted roughly to £168,000,000, and in 1923 had increased to £312,000,000, or had nearly doubled. Instead of trading under normal conditions the banks have strained credit to a rather unjustifiable extent. The ratio of bullion and Australian notes to the total liabilities amounted in 1914’ to 24 per cent., whereas last year the ratio was only 16 per cent., showing the extraordinary reduction of 8 per cent, in a comparatively short period.
– It was caused to a great extent by the enormous increase in the trade figures. There has been over £20,000,000 from Bawra
– But it is clear that the one thing that a bank has to rely upon is its bullion, together with its liquid assets. The banks are not justified in claiming that the position in London is responsible for the financial stringency. As Senator McDougall said, the only way is to balance trade and make the currency of the country equal to its face value. If we want to right the exchange position, we must buy less and borrow less abroad, and simultaneously produce more and sell more goods, and not put the country to the expense of paying out interest, which is only another way of increasing our imports. Last year the balance standing to the credit of Australia, in London, from all sources was reduced to something like £6,000,000, although Senator Greene stated that it might be £10,000,000 or £11,000,000 normally, and might even run up to £30,000,000.. The statement in the Melbourne Argus by Mr. Butchart challenges the allegation as to the large sums held in London, if we may rely on the figures of the statistician, as quoted in the report to which I have referred. If it be true that the banks’ method of trading is responsible for the present position, the blame should be placed on the right shoulders. The position in London can only be set right by balancing our imports and exports, and by keeping our currency at its full face value.
– The board will be able to look into all such questions later on, and will be able to satisfy itself before making advances under this clause.
– I ask whether the committee would be justified in clothing the banks with power to advance more notes to ease the present tension. If the proposal of the Minister will result in greater inflation of the currency, which is already inflated to the extent of 10 per cent., I shall find difficulty in accepting it. This gets us back to the position which I outlined earlier in the debate. If we can provide that the securities held by the banks shall amount to one-third of the. total liabilities, we shall check overtrading by the banks, and get at the cause of the present financial stringency in Australia. I am inclined to risk the experiment in the belief that the securities tendered to the Commonwealth Bank will be of such a character that they will be as good as gold. It is an experiment that will arm the board with extraordinary powers. Whilst I do not commend it as part and parcel of a permanent and approved policy for the bank, still in the .circumstances I am prepared to accept it in the belief that should the banks abuse the principle, Parliament will be able to take away the right.
– How could Parliament do that?
– If Parliament approves of the issue of notes by the board against securities, in London, surely Parliament can take any .action that may be necessary in the event of the ‘ principle being abused ?
– But how would that meet the situation if the damage had already been done ?
– :If the principle is abused by the bank, Parliament will have the right to step in and put things right.
-r- The honorable senator’s time has expired.
– I gather, from recent information which I have obtained, that the notes in circulation amount to £52,182,093 10s., whilst the gold coin held against the issue is £24,882,107 10s., representing about 42 per cent. It is now proposed to increase the note issue, notwithstanding the fact that the public decline to utilize the notes already in circulation,’-‘ the major portion of which are in the hands of the banks. There is already an ample supply of notes. On the 30th June last, the notes held by the banks totalled £34,518,406, and the notes in the pockets of the people totalled £22,371,799. In the face of these figures I fail to see the necessity for the proposed further issue. The Minister, speaking on api amendment which I submitted a little while ago, said it was revolutionary in its character. To met it seemed to be a very tame idea, and one that was easily understandable even by the Minister himself. This clause is a complete departure from the established practice with regard to the note issue, but the Government has the numbers, and I have no doubt that it will be carried. It will not solve our . difficulties, except for a limited time. Owing to the volume of Australian credit in London the banks are unable or unwilling to transfer money to Australia. There is nothing to show that the proposal now before the committee will not very greatly accentuate the difficulty. At one time these adverse balances were adjusted quite easily, because we had not then gone in for this great and glorious national policy of protection, and had not made a futile attempt to prevent goods from low-wage protectionist countries from coming to Australia. Notwithstanding all our efforts in this direction, however, the Customs authorities for the year just closed collected revenue to the extent of £36,000,000 on importations from foreign countries.
– Will the honorable senator support a proposal to increase the duties in order to keep out goods from low-wage countries?
– There is no such intention. No protectionist in the Commonwealth is of the opinion that foreign goods should be excluded. The idea is to have the tariff duties sufficiently high to produce the maximum amount of revenue. It is called a protectionist tariff. but, as a matter of fact, it is a revenue producing tariff. I have no desire to harass the Government. This proposal, apparently, is the best that can be put forward. It was not included in the bill originally. It was inserted as the result of a rebellion amongst a limited number of Ministerial supporters, and rather than risk referring the bill to a royal commission, th© Government hastily decided to force this new clause through. In my opinion, it will substantially increase the cost of living in the Commonwealth, because it will swell the volume of pa,pei money in circulation. We are not able to ascertain whether the amount proposed to be issued against London credits will be large or small, but it will, as I have stated, have the effect of substantially increasing the cost of living, and this added burden will be felt by all employees who are paid weekly or monthly salaries. The cost of living will go up, but salaries will remain stationary. In my opinion the Government, if this clause is incorporated in the bill, should bring in amending legislation to provide that where wages aire fixed by Arbitration Court awards or wages board tribunals, the amounts paid to employees should rise on a sliding scale in proportion to any increase in the cost of living brought about by this legislation. sitting suspended from 1 to 2.S0 p.m.
Proposed new clause agreed to. Senator PEARCE (Western Australia - Minister for Home and Territories) [2.31]. - I move-
That the following new clause be inserted: - “ 16b. Section 60p of the principal act is repealed.”
Section 60p provides -
The Governor-General may, whenever in his opinion any emergency has arisen which renders it desirable in the public interest so to do, by proclamation authorize the transfer, from the board to the Treasurer, for such period as is specified in the proclamation, of the control of and responsibility for the whole or part of the Australian note issue.
The provision also empowers the GovernorGeneral, by proclamation, to authorize the re-transfer of the note issue to the board. As Parliament has vested the note issue in the board of directors, we feel that it should not be possible for a government, merely by proclamation, to take the control of the issue out of the hands of the board, but that it should be done by act of Parliament. In a case of emergency, Parliament can easily be called together to- pass the- necessary legislation.
Proposed new clause agreed! to;
Clause 17 -
After section 60ab of the principal act the following sections are inserted in Part VII..- “60AC On and after the thirty-first day- of
January One thousand nine hundred and twenty-five, such corporations as are specified by proclamation, which carry on the business of banking, shall settle, as between themselves, by means of cheques drawn on and paid into the Commonwealth Bank, the balances arising between those corporations out of any customary general clearance effected in any capital city in Australia.
Penalty: Fifty pounds.”
. “ 60AD (J.)- .
“(7.) In this section the word ‘Bank’ means a person oi* corporation carrying on the business of backing, and includes any person or corporation which rcceiv.es deposits from the public and which is proclaimed by the GovernorGeneral to be a bank for the purposes of this section.”
.- I move-
That the words “ the thirty-first day of January, One thousand nine hundred and twenty-five proposed new section 60ac, be left out, with a view to insert in. lieu thereof the words “a date to be fixed by proclamation “.
As the date mentioned in the proposed new section may not be suitable, it is proposed to bring this provision into force on a date to be- proclaimed.
– What is the purpose of the provision ?
– To enable the Commonwealth Bank to act as a clearing house for other banks.
– Why is a penalty provided?
– To ensure that the provision is observed.
, - This is a peculiar clause. Evidently pressure is to be brought to bear on private bonks to compel them to deal with the Commonwealth Bank. It seems to me to be in the nature of a nationalization proposition.
– It is- merely to enable the Commonwealth Bank to- carry out its function as a central bank.
-Will not that end be: achieved, if- conveniences- are provided to en able the- private banks to utilize the Commonwealth! Bank, as - a central bank?
Senator- Pearce - One bank may stand’ out.
– A bank that stands- out will do- so- to its own disadvantage.
Amendment agreed’ to.
– I moveThat after the word “ public,” sub-section 7 of proposed new section 60ad, the words “ and allows interest thereon “ be inserted.
The provision relates to the furnishing of statistics. Certain co-operative concerns accept deposits from the public, but do . not pay interest on them. They are, properly speaking, not banks,, and statistics furnished by them would not really be banking- statistics-. Therefore, it is proposed to limit the: requirement to furnish these1 statistics to persons or corporations receiving deposits from the public and paying interest thereon. . Amendment agreed to.
Clause; as amended’, agreed to;
After section 62 of the principal act the following sections are inserted : - “ 62b. Notwithstanding anything contained in this or any Act it shall be mandatory that all architectural work of the Commonwealth Bank of the value of Five thousand pounds and upwards shall be open to the competition . of all architects in Australia,”.
– I have an amendment to move to this clause. -I am surprised that the Government should give the directors of the bank great financial power and then set. out to restrict their operations in regard to the manner- in which their architectural work is carried out. The proposal is a direct attack upon an intellectual giant, now dead, who, following the practice of other corporations, gave the architectural work of the Commonwealth Bank to a certain firm of” architects. The practise is- for a corporation or firm of any standing: to enter into- an arrangement with an. architect to conduct all its building operations. The private . banking institutions, throughout the Commonwealth do nob ask architects to submit competitive designs, of buildings which they propose toerect but secure the services of the firm which they consider competent to undertake the work which they require Plans and specifications are submitted, and tenders are then called. It is unreasonable to provide in this bill that the board of directors shall be compelled to obtain competitive designs for all work the value of which exceeds £5,000. If the amount stated in the proposed new section were increased to £50,000 there might be some justification for such a provision. The firm of architects to which exception has been taken by some persons is carrying out work in various parts of the Commonwealth, to a value of over £1,000,000, in open competition with other architects, whichproves conclusively that the action of the late governor of the bank was fully justified. I move -
That the proposed new section 62b be left out.
– The Government were not responsible for the insertion of this provision in the bill. It was included on the motion of a private member in another place, and I do not intend to defend it if the committee is of the opinion that it should not remain in the bill. I certainly shall not divide the committee on the amendment.
– The bill is presented to us as a Government measure, and the Government must take the responsibility for what it contains. I know the proposed new section was inserted on the motion of a private member in another place, and I am surprised that it was accepted by the Government.
.- Instead of deleting the proposed new section, I would suggest that the amount of £5,000 mentioned should be increased to at least £10,000 or £15,000. I think it desirable that work undertaken by the Commonwealth Bank should be distributed amongst architects who may be anxious to do it instead of being confined to one firm as it was owing, it is alleged, to certain influences.
– I cannot follow Senator Elliott’s argument. The clause to me is absurd, inasmuch as it provides that it shall be mandatory that all architectural work of the Commonwealth Bank of the value of £5,000 and upwards shall be open to the competition of all architects in Australia.If competitive designs haveto be called for every building valued at £5, 000 or over, which the Commonwealth Bank, intends to erect, one naturally wonders what the result will be. Thewhole thing is grotesque. If. the amount mentioned in the proposed new section were £100,000 or over, one could understand it, but to have competitive designs for the architectural work of buildings, the estimated cost of which would be £5,000 or over is the height of absurdity.
.- The Minister, (Senator Pearce) said, in effect, that the Government did not insert this provision in. the bill. If that is the case by whom was it inserted ?
– It was inserted on the motion of a private member. The honorable senator has assisted in this chamber in inserting amendments which the Government opposed.
– A private member has no chance of embodying an amendment in a bill, particularly one of this character, unless the proposal has the approval of the Government. The Government approved of this proposed new section being inserted in another place.
– Then a vote was not taken on the amendment. Ap- parently the Government did not object to it. They approved of it being inserted in the bill in another place, and will not object to its deletion in this chamber. Are we to understand that the Government approved of it without understanding what it really meant? The Minister and other honorable senators know that strong reasons were advanced why such a provision should be embodied in the bill. Senator Elliott said, incidentally, that it was inserted because it was alleged that influences were exercised in favour of a certain firm, which obtained most of the work of preparing designs for Commonwealth Bank buildings. We understand that it is a matter of competitive designs.
– In what way can there be competition?
– It is desired, I should say, that when bank buildings are required, Australian architects shall be made aware of the fact, and it shall be open to. them to submit plans and specifications. The work should not be confined to one firm. Is there anything objectionable in the provision ? According to statements made, the field was not open to- other architects, and strong- exception was taken by some honorable members in another place to the manner in which certain work had been done during the last few years. It is bad from the people’s point of view that there should be associated with this Commonwealth institution an atmosphere which has created doubt’ in the minds of some people as to whether the Commonwealth is getting the best service. In order to relieve this doubt, what objection can there be, when buildings are required to meet the developments of the bank’s activities, if the architects of Australia are given an opportunity to submit plans and specifications? The objection which a number of architects have apparentlyraised concerning the practice adopted in the past would be removed if the provision were allowed to stand.
– I am sorry that Senator Findley suggested that because a new provision was inserted in another place it should be accepted here. If that is to be our guiding maxim, it means that what is inserted in a bill in another place should remain, and what is left out in another chamber should not be inserted in the Senate. If that be so, where is the responsibility of this chamber? Where will our individuality as a chamber rest? Simply, I suppose, on the shaky foundation that because we receive a bill we must accept it in toto. I do not think Senator Findley meant anything of the kind. I believe he prefers to judge every question’ on its merits. I ask the honorable senator to realize what it would mean if such a limitation were imposed on the board of the Commonwealth Bank. In the first place, it would involve calling for competitive designs for every building, the cost of which would be £5.000 or over. As Senator Findley knows a moderatesized hotel in any of our second-class towns would cost at least that amount, and to impose such a condition would be against the best interests of the bank. Whilst the intentions of the mover of the amendment in another place are com mendable, we* have to look at the other side and see if the provision will not involve an unnecessary interference with the management of the bank. I quite believe, as the Minister stated, that eight directors will see that they do not do anything which will give an undue advantage to any private individuals or firm of architects. The interests of the bank should be considered before individuals. I think it desirable to give the board of directors a free hand.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 19 agreed to.
Postponed clause 4 consequentially amended, and, as amended, agreed to.
Postponed clause 8 -
After section 16a of the principal act the following section is inserted : - “16b. - (1.) Where an officer of the bank is affected in his employment by the action of any authority of the bank other than the board, the officer may, within the prescribed time, suBmit in writing an appeal to the board. “ (2.) An appeal under this section shall state fully the action appealed against and the grounds of the appeal. “ (3.) The board shall consider and determine any appeal made to it under this section, and shall notify’ the appellant of its determination, which shall be final and’ conclusive.”.
Upon which Senator Duncan had moved by way of amendment -
That proposed new section 16b be left out, with a view to insert the following new sections (vide pages 2682-84).
– I appeal to Senator Duncan to ask leave to withdraw his amendment. I shall then move -
That sub-section (3) be left out with a view to insert in lieu thereof the following subsections : -
The board shall refer the appeal to an appeal board consisting of three members, two of whom shall be appointed by the board and one of whom shall be elected 6y the officers of the bank in the manner prescribed.
the appeal board shall consider any appeal referred to it under this section, and shall submit its report thereon to the board, which shall determine the appeal and notify the appellant of its determination, which shall be final and conclusive.
Regulations will have to be drawn up to deal with the election of the board and with its procedure. I give the committee the undertaking that I shall recommend to the Treasurer that, in the composition of the board, as there will be a representative of the employees, the Governor should nominate a representative, and the .board should .select as the third member some person who will represent neither the Governor nor the employees. Such a board would then consist of a representative of the Governor, who had taken the action against which an appeal was being made; a representative of the employee, who was dissatisfied with that action, and was appealing against it; and an impartial individual who was not concerned either with the appeal or with the action that had caused the appeal.
– Would the third member be an officer of the bank ?
– I should say that he would not. It has been suggested that it is necessary that -somebody other than the elected representative of the employees should appear on behalf of an appellant.
– If necessary.
– That would be entirely unnecessary, because it would be the duty of the elected representative of the employees to watch the interests of an appellant. The Governor would not have some one else appearing on his behalf; his case would be put before the board by the person who was nominated as his representative. The employees should not ask to be placed in a better position than that’ occupied by the Governor. I have not yet had time to consult the Treasurer, but I shall recommend to him that the regulations should be drafted in the manner that I have indicated.
– -Would the Minister go so far as to say that the third member of the board should be a properly qualified person ?
– I do not know what the honorable senator means by “ a qualified person.” I would not recommend that he should be a police magistrate. He should have common sense, and be capable of considering impartially the merits of any case placed before him. The fact that the regulations would have to be laid before Parliament for approval or disallowance, would constitute a safeguard. A motion for the disallowance of any regulations would take precedence of all other business. If the employees were dissatisfied with any regulation they could easily have it altered or disallowed. -.Senator DUNCAN (New South Wales) [3.8]. - The Minister’s suggestion, I ani .informed by those chiefly interested in the matter, is quite satisfactory so far as it goes, but it does not entirely meet the position. It is felt that something more is necessary. I am glad that the Minister has not maintained towards this proposal the attitude that he took up when I first placed the matter before the committee. He then urged two main objections to the course that I proposed.. He said that if an appeal board were set up in this case it would create a somewhat dangerous precedent. He specially mentioned the employees of the Commonwealth Railways Service, who, he declared, did not possess a board of appeal, and were quite satisfied with existing conditions.
– 1 said that those employees had the same right of appeal as that possessed by the employees of the bank - they could approach the Arbitration Court.
– The Minister ridiculed the proposal to appoint a stipendiary magistrate as chairman of the board-. For his information I shall rea’d section 53 of the Commonwealth Railways Act, No, 31. of 1917. It provides - (1.) Any employee appointed to a permanent office may in the prescribed manner appeal against any decision of the Commissioner dismissing him or reducing his grade or rate .of pay for incapacity or misconduct. (2.) The appeal shall be to a board of three persons, in this part known ns the Appeal Board. (3.) The Appeal Board shall consist of a chairman (who shall be a police stipendiary or special magistrate) to be appointed from time to time by the Minister……..
– There is no similarity between that provision and the honorable senator’s amendment.
Senator DUNCAN__ Those are the very principles that I sought to embody in the bill. I realize that my amendment is rather cumbersome, and I am prepared to accept the Minister’s suggestion and ask leave to withdraw it. At the proper time, -however, I propose to move -
That the following new sub-section be added : - “(5.) The appellant may nominate any officer of the Bank Officers Association, or any other person, to appear before the Appeal Board on his behalf.”
– This matter cannot properly be debated unless the honorable senator’s amendment is withdrawn.
– -I ask .leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Amendment (by Senator Pearce) proposed -
That sub-section (3) of proposed new section ,1An be left out, with a view to insert in lieu thereof the following .subjections : - “(3) The board shall refer the appeal to an Appeal Board consisting of three members, two of whom shall bo appointed by the board, and one of whom shall be elected by the officers of the bank in the manner prescribed. “(4) The Appeal Board shall consider any appeal referred to it under this section, and shall submit its report thereon to the board, which shall determine the appeal and notify the appellant of its determination, which shall be final and conclusive.”
– I suggest an amendment which the Minister -may accept, and which may also meet with the approval of Senator Duncan. We ask him to submit the proposed new sub-section 3 in the following form: -
The board shall .refer1 the appeal to an appeal board consisting- of three members, one of whom shall ‘be appointed by the ‘board, and one of whom shall be elected by the officers of the bank in the manner prescribed, with an independent chairman.
– If the .suggestion is to be adopted it will be advisable to add at the -end of the sub-section ‘the words, “ One of the two members .appointed by the board shall be the chairman of the board.” It has been pointed -out to me that the Treasurer takes the view that there might be circumstances in which it would .be ‘extremely undesirable to appoint an outsider, because in the hearing of the case it might be necessary to refer to documents that the bank regarded as confidential. The charge might have relation to the account of a client, and , there would be o’bjection to such business ‘being revealed to an officer of another hank. Probably some mem’ber of the board of directors would be appointed chairman of the appeal board.
– Would not any .bank officer have to take the same oath ;as the permanent chairman?
– It is hoped that appeals will be ‘ only ‘occasional, and that it will not be necessary to have a permanent chairman. It is not intended that the chairman of the appeal board shall be a person involved in the dispute-. In practice it would probably be found that the chairman was some member of the board other than the “Governor.
.- I do not think that the words “” in the manner prescribed, with an independent .chairman,” would prevent the board from appointing some independent officer in the service of the ‘bank.
– The honorable senator should add after “ chairman “ the words “ appointed “by the board.”
– I agree to that. .Senator PEARCE. - Then I .accept the honorable senator’s proposal.
– That will satisfy me.
Amendments of the amendment -(by Senator GARDINER) agreed ‘to -
That the word “” two,” sub-section (3), be left out, with a view to insert in lieu thereof the word “ one “.
That after the -word “^prescribed,” subsection (3)., the words “ with .an independent chairman appointed by .the board “ be inserted.
.- I move-
That the amendment be amended by adding following new -sub-section : - “.5. The appellant may nominate any officer of the. Bank Officers Association, or’ any other person, to appear before the appeal -board on his behalf.’”
The Minister has told us that the member of .the .appeal board -elected by the officers would .be the proper .person to represent any officer of the bank in any .appeal.
– It would not be wise to allow .-am outsider to ^examine confidential documents. ‘Sena-tor DUNCAN. - I do not suggest any thing of the sort. A member of the Bank Officers Association “would not be an outsider. I desire to secure endorsement of the .principle that a member of the staff making an appeal should be properly represented. It would be impossible for the board to :go to the appellant wherever he might be located, and therefore it would be necessary for the appellant to have some one .to state his case before the appeal board.
– Does the honorable senator wish .the appellant to he represented by counsel?
– No. But he should be represented by a member of the Bank Officers Association, who would probably be a member of the bank staff, and “who would be trained in stating .cases before an appeal board.
– As a member of the (Railway Appeal Board in South Australia for six years, I always conducted the cases on behalf of the men.
– It would be unfair to expect a young officer, who would probably be inexperienced in such matters, .and whose -whole career might hang in the balance, to conduct “his own case. The representative of the Governor would be a roan of experience.
.- The (Bank Officers Association comprises officers of the Commonwealth .and state banks, as well :as the private banks and it might easily happen -that the officer appointed ‘to appear .was a/n officer of ‘another -bank. The charge against the appellant -might :be that -he had committed some breach in ‘connexion with a customer’s account. The person appearing on “behalf -of ‘the appellant could demand that particulars of -the account be produced, thereby obtaining information which the “bank “had -sworn to keep secret. That appears to -me to be a fatal objection to the amendment. ‘Senator DUNCAN - The officer could be sworn to secrecy.
– But an officer of the Commonwealth Bank would not have the corresponding advantage of .becoming acquainted with the ‘business of a private ‘bank. There is this further objection : It “is not fair that .an appellant should have any advantage over the officer against whom he is appealing. The governor would have no advocate “before the appeal board, so why should the -employee “be represented in that manner ? Tie employee will be represented by a .member of the board .who .will ‘be entitled to state his case. In the circumstances I ask .Senator Duncan not to press his amendment ‘Senator -GARDINER (New South Wales) [3.31]. - I thinE.-the Minister’s conception .of the constitution of -the appeal board is quite wrong. My idea, of an appeal board is a body representative of the service with an independent chair man, and not that any representative on the board shall be both judge and advocate. As Senator Duncan has put it, an employee may have the best case in the world, ‘but ‘because of his lack of experience he may fail in “his appeal, whereas if he had ‘the advantage of a man trained in ‘stating cases before the board, he .would secure justice. I speak from long experience of th« working of appeal boards in New South “Wales. In that state quite a number of professional men appear before the Railways Appeal Board on ‘behalf of men employed in the railway service, with the result that ‘the hearing of cases is expedited to a considerable extent. “The professional representatives -materially assist “the Railways Commissioners, because -the cases, ‘being properly prepared, .are disposed of quickly. In the railway service in New .South Wales there have been thousands of .appeals. iSo satisfactory , has the practice of .employing solicitors proved that the Railways Commissioners .themselves approve of the system. The Minister’s objections to the proposal are, I think, unfounded. My idea is to- have a ‘board that will give satisfaction to the staff of Che bank and be a source of strength to the management. .Senator FINDLEY (Victoria) [3.35].- *‘.I .think the committee would -be entirely misled with respect to its conception >of -what ;an -appeal board should be, if it endorsed ‘the remarks of the Leader of the “Senate (Senator Pearce). An appeal board should be .a ‘thoroughly ‘impartial tribunal. If -an -employee so desires he s’hould ‘ha.v,e the right to appear .before the board, but if he does not wish to appear personally, he should be entitled to ‘be .represented “by the secretary of the organization to which ‘he belongs. The Minister has taken strong exception to this (proposal. He said that the general secretary .of the United Bank Clerks Association might be an employee of .the private banks and .that, .assuming he were appointed to represent an employee -before the appeal board, he should not have -access to documents belonging to the bank. In the first place- the secretary of that association is not .an employee of the associated banks. So far .as I know, he is a permanent secretary receiving a certain remuneration, and .he is outside .the service of either the associated banks or the Commonwealth Bank. I do not share the
Minister’s apprehension as to the possibility of confidential information being disclosed by the adoption of the principle affirming the right of employees .to be represented before the appeal board by the secretary of the association. This practice is followed in connexion with appeals under the Public Service Act. Although the secretary to the Public Service Association is not in the Public Service, he is recognized by the Government, which has permitted him to appear before appeal boards. In the Commonwealth Treasury there are employees who are handling important documents and who have access to secret information, and yet I expect they have grievances, occasionally, and at times have appeared before the appeal board, either personally or through the secretary of the association acting on their behalf. No harm has been done, and no reason has been advanced why the secretary of this organization should not have the same right. I did not know on what lines Senator Duncan intended to move his amendment. As a matter of fact, I did not know that he intended to submit one at all, and accordingly I had prepared an amendment in somewhat similar terms, although mine goes further. As now proposed, the appeal board, in my opinion, will not be a proper appeal board. The members of the board should be impartial and fair-minded judges, not advocates. The amendment which I intended to submit was as follows : -
If the applicant so desires he shall be heard before the Appeal Board either alone or with a nominee who is an officer of the bank or the secretary of the Commonwealth Bank Branch of the United Bank Officers Association.
There is nothing in the amendment submitted by the Minister to indicate that the appellant will have the opportunity of appearing in person before the board. I do not think the Government desires that he should. If I followed the Minister, he said that the representative of the employees sitting on the board would put the case for the appellant. I do not want that. I want the employees of the bank to have the same privileges, and no more, that members of the Public Service have under the present Public Service Act. I hope Senator Duncan will not recede from his first proposition, but that, on the contrary, he will accept mine, which is on all fours with the provisions of the Public Service Act.
– I think that perhaps it will save time if I say at once that if the further amendment proposed by Senator Duncan be carried, the Government cannot possibly accept this clause. We have given full consideration to the proposal, and I think the committee must recognize that we have gone as far as possible in the direction of meeting the wishes of honorable senators. We have gone to the limit. I feel that I must tell honorable senators that to press this further amendment will be to endanger the whole position. A fair compromise has been arrived at. I am satisfied that if the proposal is given a trial it will work satisfactorily.
– Would it meet the Minister’s objection if the bank also had a representative to state its case?
– We think that we have fairly met the wishes of honorable senators. Senator Newland told us that, when he was a representative of the employees on the railways appeal board in South Australia, he advocated their case. The same thing happened in Western Australia. The committee should be reasonable, and accept the compromise to which the Government have agreed. If Senator Duncan’s amendment of the amendment is pressed he will stand the risk of losing the whole provision.
– In view of the serious statement of the Minister (Senator Pearce), I should be prejudicing those interests I am seeking to serve by pressing my amendment of the amendment at the present time. I have not obtained, by any means, what I hoped to get, but I have at least got a properly constituted appeal board, which was not provided for in the bill. Should it turn out in actual practice that the officers of the bank are not getting a fair deal from the board, it will be possible for Parliament to make whatever amendments are necessary to ensure that fair deal being given to- them. However, in view of the risk of losing the whole provision, my only course is to ask leave’ to withdraw my amendment of the amendment, and, if necessary, that is to say, if the board as now constituted proves unsatisfactory, bring the matter forward later on, when perhaps I may make a better job of it.
Amendment of the amendment, by leave, withdrawn.
– Out of consideration for Senator Needham, who has unfortunately been put out of action owing to the fact, that he was obliged to be here all night, I desire at this stage to move an amendment of which he has given notice. I move -
That the amendment be amended by adding the following sub-section : - “ (5) In all cases before the board the officer n fleeted may be represented by any one appointed for that purpose by the United Bank Officers Association, and the bank may be represented by any person appointed by the.’ Governor, but no barrister or solicitor” shall be allowed to appear.”
I offered no objection to Senator Duncan withdrawing his amendment, although I was disposed to do so, because acquiescence in the withdrawal of an important proposal indicates that honorable senators choose to run away from something they ought to stand by. The committee is under no obligation to Senator Pearce for any concession. A belated proposal to constitute a fair board of appeal cannot be regarded as a concession to the committee. Provision for such a board should have been made in the bill as introduced. I do not like Senator Needham’s proposal to prevent barristers or solicitors from appearing on appeals. My opinion is that men who are skilled in putting cases before tribunals are most useful in having matters dealt with expeditiously. The Minister (Senator Pearce) has just announced that the force behind the Government will prevent the committee from coming to a reasonable decision. He has actually made use’ of a threat. He may frighten his own supporters, but he will certainly not browbeat or frighten mo. In any case, his methods will not expedite- matters. Fortunately there is, in another place, a sufficient number of honorable members to force a division on the question. If the Minister is willing to have a fair board of appeal, why should he jib at a proposal to allow the facts of a case to be placed before that board by men who are trained to put cases before tribunals f I have no desire to prolong the discussion. I simply move this further amendment of the amendment on behalf of Senator Needham
Question put. The committee divided. . Ayes … … … 7
Majority … … 7
Question so resolved in the negative. Amendment of the amendment negatived.
. I move -
That the amendment be amended by adding the following sub-section : - “ (5) If the appellant so desires he shall be heard before the appeal board, either alone or with a nominee who is an officer of the bank or secretary of the Commonwealth Bank branch of the United Bank Officers Association.” I do not anticipate that the Government will accept this amendment, but I emphasize the point that a similar provision is embodied in the Public Service Act. The secretary of the Public Service Association, who is not an officer of the Commonwealth Service, has the right to appear before am appeal board, even in cases affecting Treasury officials. These officers are charged with very responsible duties. Some of them are bound to secrecy. There are documents in the Treasury that are private and confidential. What is good for the Commonwealth Service ought to be good for the .employees of the Commonwealth Bank, and I leave it to the committee to provide for the latter a right which has been given the former.
Question put. The committee divided. Ayes … … 6
Question so resolved in the negative.
Amendment of the– amendment negatived.
Amendment’ agreed to.
Clause as amended agreed to.
That T do now leave the choir and report to the Senate.
Question resolved in the negative. Schedule and title agreed Jo. Bill reported with amendments.
PAPERS. The following papers were presented: - Meat Export Bounties Act - Return of Subsidies paid on Frozen Beef, Canned Beef, and Lire Cattle exported from the Commonwealth.
Public Service A’ct - Regulation amended - Statutory Rules 1924,. No. 103^-No. 104 -No. T05 -No. 112:
– In moving. -
That the Senate do now adjourn;
I wish to intimate to honorable senators that on Wednesday next we intend to deal first with a formal bill relating to- the payment of a certain sum’ into, a trust fund for war pensions. The second reading of the Defence Equipment Bill will then- be moved, and later- consideration will be given, to the Public Service Bill.
– As- only one clause of the Public Service Bill has been recommitted, I would suggest’ to the Minister (Senator Pearce) that the Senate be given an early opportunity to consider that measure. The bill is- of great importance to a number of public servants, and I promise that I shall not unnecessarily delay the Senate.
– If I have an opportunity to bring the matter before Cabinet on Tuesday, and a decision iB arrived at, the Public Service Bill shall have precedence.
– In speaking, on the motion for the adjournment, I am not sure whether I shall bo in order-
The DEPUTY PRESIDENT (Senator Newland) - The honorable senator- is doubtless aware that, under the sessional orders, on Fridays the question “ That tho Senate do now adjourn “ must be put at. 4 p.m.
Question resolved in the affirmative. Senate adjourned at 4.7 p.m.
Cite as: Australia, Senate, Debates, 1 August 1924, viewed 22 October 2017, <http://historichansard.net/senate/1924/19240801_senate_9_107/>.