12th Parliament · 1st Session
The President (Senator the Hon. W. Kingsmill) took the chair at 3 p.m., and read prayers.
In reference to Determination No11, of 1931, by the Commonwealth Public Service Arbitrator relating to the five-day working week, whichwas laid upon the table of the Senate on the 10th June,and the accompanying opinion of the Attorney-General on Minute No. 93 of 1 931 that the determination is not in accord with Commonwealth Public Service Regulations No. 9, is it the intention of the Government to amend Commonwealth Public Service Regulations No. 9, and if not, whynot?
– Is the Leader of the Senate yet in a position to comply with the resolution of the Senate that the correspondence between the
Commonwealth. Bank and the Government regarding the approved payment of 3s. f.o.b. on wheat authorized hy the Wheat Advances Act be laid upon the table?
– As I have previously intimated, the Government has written to the Commonwealth Bank asking if the correspondence can be made available.. No reply has yet been received to that communication, or to a further communication to the bank on the subject.
– Is it the intention of the Leader of the Senate, on behalf of the Government, to make a statement of the intentions of the Government in relation particularly to matters arising out of the Premiers Conference? I understand that a statement is being made in another place.
– I have no statement to make on the subject.
– So far as I know there has been no change in the Government.
– A Minister has recently resigned.
asked the Minister representing the Minister for Markets, upon notice -
– The desired information is being obtained.
asked the. Minister representing the Treasurer, upon notice -
If he will have agricultural lime exempted from the sales tax, as in the cases of other fertilizers ?
– The matter will be considered.
asked the Minister representing the Prime Minister, upon notice -
Is it the intention of the Government to lay upon the table of the Senate a copy of the Sugar Agreement?
– I hope to be in a position to table a copy of the agreement at a later stage to-day, when copies will be available to honorable senators.
asked the Minister representing the Treasurer, upon notice -
Has the Wiluna Gold Mines Limited, ot Western Australia, met its obligations so far due to the Midland Bank, us provided for in the agreement between the Commonwealth Government and the Government of Western Australia?
– The first payment by the company to the bank under the agreement is not yet due.
Bill received from the House of Representatives; Standing and Sessional Orders suspended, and bill read a first time.
.- I move-
That the bill be now read a second time.
In April last the Senate rejected a bill designed to authorize the GovernorGeneral to require the. Commonwealth Bank to hand over to tho Treasurer gold held in the Australian notes reserve, subject to the gold being required for the discharge of the indebtedness of the Commonwealth in London. Under that bill all the gold could have been requisitioned provided it was necessary for the discharge of Loudon indebtedness. The measure also set a limit of £60,000,000 -to the amount of notes which could be “issued in Australia, that limit being :approximately four times the gold then held by the bank.
The position in regard to London indebtedness to-day is practically the same as when the previous bill was rejected.
The total short-term indebtedness in London remains unchanged, as recurring obligations are being met from the exchange pool. The short-term debt in London, therefore, remains unchanged at £38,075,100. The only change in the nature of the indebtedness is that treasury-bills have been issued to the Westminster Bank to cover an overdraft of £5,000,000 at that bank in the names of the Governments of New South Wales, Victoria, and Western Australia. The details of the short-term debt are set out in the following table: -
The short-term debt includes £5,000,000 of treasury-bills held by the public and maturing on the 30th of this month. The other short-term debt is not so pressing. The bills and debentures held by the Commonwealth Bank and the Australian trading banks, though issued for short periods, are being renewed from time to time. The bills held by the Westminster Bank mature on the 30th September next.
The immediate need is to find means for dealing with the treasury-bills maturing on the 30th June. It has been known for a considerable time that difficulty would probably be met with in renewing these treasury-bills. Until March last, the total of the treasury-bills held by the public in London was £10,000,000. This amount represented two issues, namely, a first issue in September, 1929, and maturing in September, 1930, and a second issue in November, 1929, and maturing in June, 1930. The second issue was renewed in July, 1930, and matured on the 31st December last. This second issue was then again renewed and now matures on the 30th of this month. The first issue was renewed for six months from September, 1930, and matured on the 2nd March last. As it was impracticable to renew the March bills in the open market, they were paid off by the Commonwealth Bank.
In March last the Commonwealth Bank, in a letter dated the 6th March, notified the Government that it was not in possession of funds to meet the treasury-bills falling due on the 30th June. The bank then asked the Government to give consideration to these maturing bills, and to take such steps as it deemed necessary to meet the position. As a result, the Government introduced the bill to which I have already referred.
After the rejection of the first bill by the Senate a letter, dated the 15th May, was forwarded to the chairman of directors of the Commonwealth Bank, asking the board what action it considered should now be taken to cover the treasury-bills maturing this month. The text of the letter was as follows: -
I desire to invite your attention to the difficult position now existing in regard to the treasury-bills for £5,000,000 falling due in London on the 30th June next. For the last three months it has been clear that difficulty was likely to be encountered in renewing these bills. A warning to that effect was contained in your letter of the 6th March, as well as in advices received by the Commonwealth from London.
As you are aware, the Government some time ago introduced an amendment of the Commonwealth. Bank Bill to enable gold held in the Australian notes reserve to be used for discharging Government liabilities in London, in the event of such a need arising. This bill would have provided means of paying off the bills maturing on the 30th June if it proved to be impracticable to renew those bills.
Last weekthe Senate called you as a witness to give evidence regarding the Commonwealth Bank Bill. I do not desire to traverse that evidence, but wish to refer only to your statements to the effect that it would, undoubtedly, bo better to ship the gold rather than to default, and to your statement that there is a third alternative.
The Senate has now rejected the bill which would have provided means for paying off the June bills by the use of gold in the notes reserve. As a result, the plans made by the Government for the redemption, if necessary, of the June bills cannot be put into operation.
The Leader of the Opposition in the Senate (Senator Sir George Pearce), after referring to the evidence given by you before the Senate, stated, inter alia -
Assuming that no gold is shipped, default can only occur if (1) The money or credit being available in Australia, the Australian banks from cash or credit resources at their command in London, cither cannot, or will not, provide the requisite exchange facilities: or (2) The money or credit not being available in Australia, or the Australian banks being unable to provide exchange facilities, the credit of Australia is such that no financial assistance of any kind, or forany period, is available from any sourcein London, notwithstanding that its refusal means default by the Commonwealth.
As the Senate rejected the bill after hear ing evidence from you as Chairman of the Com monwealth Bank, I shall be glad if youwill be good enough to advise me whether, inthe opinion of the Commonwealth Bank Board,it is possible for the Government to providefor the treasury-bills maturing in Londonby adopting either of the courses of actionreferred to in the above extract from SenatorPearce’s speech in the Senate on the 13th May.
In view of the evidence given by youbefore the Senate, I should also appreciateadvice as to the course of action which the Commonwealth Bank Board considers should nowbe taken by the Government tocover the treasury bills in question.
It is perhaps unnecessary for me to stress the urgency of this matter, and to ask that it should be given immediate consideration by the bank.
I may add that the treasury-bills for £5,000,000, which mature in London in June, were arranged on behalf of Australian Governments as follow: -
Edward G. Theodore, Treasurer.
In its reply, the board stated that it would be preferable for Parliament to authorize the shipment of £5,000,000 in gold rather than default. The board also indicated it was unable to see any solution to this treasury-bill problem through any of the alternatives that had been suggested. The board stated, too, that if Parliament authorized the shipment of £5,000,000 gold, the board could arrange for paying off the bills on maturity. The text of the board’s reply to the Treasurer is as follows: -
I have to acknowledge your letter of the 15th instant with reference to the treasurybills faling due in London on the 30th June next, amounting to £5,000,000.
My board has given consideration to your communication, and it is desired that I convey to you the following, as representing the views of my board: -
The board refers you to my letters (2) of the6th March, and desires to say that, in so far as the bank is concerned, the position remains unchanged in respect of the inability of the bank to take up these bills, and, further, adheres to the view that the matter is one for government action.
The position in regard to these bills cannot be disassociated from the whole question of national finance in respect of which my board has called the attention of the Government on many occasions over a long period.
Neither I, nor my board, propose to enter upon discussions which took place in the Senate, nor to traverse the evidence submitted by me before the Senate. The board supports me in the view expressed before the Senate that it would be preferable for Parliament to authorize the shipment of £5,000,000 gold rather than default. The alternatives to this course which I had in mind, I purposely refrained from indicating when before the Senate, for the reason which is obvious to everyone, that it would involve myself and my board in matters touching on government policy and, therefore, assuming political aspects.
In view of the position, therefore, and the absence of any likelihood of alternatives referred to being practicable as matters now stand, my board is unable to see any solution of this immediate problem through the mediums suggested in your communication. Assuming, therefore, that Parliament decides that £5,000,000 gold be shipped to meet this obligation, my board is in a position to say that, acting with the authority of Parliament, the Bank Board could arrange for the necessary assistance in London to meet the bills, pending the arrival of the gold in London; such gold to be definitely hypothecated by the Commonwealth Bank for the purpose of discharging the obligations incurred by such temporary assistance. To carry this into effect, it will be necessary for Parliament to create the authority for disposal of the gold prior to the middle of June.
Chairman of the Board of Directors.
The latest advices from London are that it is impracticable to renew the bills which mature on the 30th June. As there is no source, other than the gold reserve, from which the bills can at present be paid off, the Government now seeks authority for the use of £5,000,000 gold for that purpose. The new bill definitely limits the amount of gold which may be used to £5,000,000, and provides also that the only purpose for which gold can be used under the authority of the bill is the discharge of the treasury-bills maturing on the 30th June.
The gold reserve on the8th June totalled £15,234,000. At that date the notes issued amounted to £50,653,000. As the law stands, a reserve of 25 per cent. of gold must be held against the issue of notes required to carry on the industries of the country. Therefore, the limit to the issue of notes on the basis of the present gold holding is approximately £60,000,000. It is not desirable that this limit should be disturbed, as the Bank Board must have some margin beyond the present note issue. If the gold reserve be reduced by £5,000,000 the limit of note issue under the present provision of a reserve of 25 per cent. would be approximately £40,000,000. This would not meet requirements. It is, therefore, provided in the bill that the percentage of gold which must be kept in reserve shall be reduced from 25 per cent. to 15 per cent. With a reserve of 15 per cent. the limit of the note issue will still be approximately £60,000,000. The bill thus is not designed to increase or decrease the limit of the note issue.
Provision is also made for gradually restoring the gold reserve to 25 per cent. The maturing treasury-bills in London were issued on behalf of Australian governments as follow: -
The position regarding these treasurybills has been carefully considered by the Loan Council at its recent meetings. After very full discussion, the Loan Council, on the10th June, unanimously passed the following resolution : -
In view of the responsibility of the Loan Council in respect of the conversion, renewal and redemption of public debts of the Commonwealth and the States, and of the difficulties existing in regard to the renewal of £5,000,000 of treasury-bills maturing in London on 30th June, 1931, the Loan Councilis of opinion that, if it is found impracticable to renew the said treasury-bills, authority should be obtained to enable not more than £5,000,000 of the gold held in the Australian notes reserve to be made available for the purpose of meeting the said treasury-bills.
Less than two weeks remain before these London treasury-bills mature. If Parliament grants authority for the use of gold, some little time will be necessary to enable the Bank Board to make the necessary arrangements. The board has suggested that the authority would be required prior to the middle of June. The Government, therefore, desires the Senate to deal with the matter as one of great urgency, so as to enable it to give the necessary authority to the Commonwealth Bank Board to make whatever banking arrangements are needed, in order that the claims of those who hold these treasury-bills will be met on the 30th June in the manner usually adopted in financial transactions of this character. That is the purpose of the measure. It must be patent to honorable senators that the matter is one of urgency. A great deal has been said within recent weeks regarding the financial circumstances of our country, and, if the matter be handled quickly and determinedly, it will be a gesture that will go a long way towards disillusioning those who may have any doubts with regard to the preparedness of Australia to honour its obligations. I commend the bill to honorable senators, and urge that it be given as speedy a passage as possible.
Senator Sir GEORGE PEARCE (Western Australia) [3.23]. - At the outset of my remarks, I wish to take strong exception to a statement that has been made by the honorable the Treasurer (Mr. Theodore), to the effect that this bill is the same as that which was previously rejected by the Senate. Far from its being the same bill, there are very vital differences between the two measures. Were it the same, it would have no more chance of passing the Senate than had the previous bill. I do not know what object underlay the making of that statement, unless it was a desire to mislead the public and to make it believe that the Senate adopted an unreasonable attitude towards the last bill, and was now being asked to recede from the position that it then took up. The statement has been made on more than one occasion, and I therefore publicly assert that, if this bill were the same, there would be no chance of its passing the Senate.
To show how vitally this measure differs from the last, I need merely say that under the latter it was proposed that the Treasurer should be made the sole judge of whether or not gold should be exported from Australia, and that he should have the right to ship away at his sweet will the whole of the gold reserve. Such action was not linked up in any way with the approval or consent of the Bank Board. Parliament has constituted that board the trustee of the gold reserve. The previous bill sought to remove that power from the board and to place it in the hands of the Treasurer.
– That provision could have been amended in committee.
– I am not saying what could have been done. I object to the public being told that this bill is the same as that last introduced, because, in my judgment, that is an attempt to place in a wrong light the attitude adopted by the Senate. I cannot see any other motive for the statement.
– This bill also provides for the restoration of the gold reserve to 25 per cent, of the note issue.
Senator Sir GEORGE PEARCE This bill provides for a gold reserve, but the other bill sought to remove that stipulation from the act. I make this position clear, because there must have been some motive behind the statement to which I have taken exception. No one can be more aware than the Treasurer of the differences between the two bills.
– We believe that the principle is the same in each case.
Senator Sir GEORGE PEARCE.Being aware of those differences, it is beyond my comprehension why he should make such a statement. The necessity for Parliament authorizing the shipment overseas of £5,000,000 of gold, I believe can. be demonstrated. In that connexion I wish to say that the Opposition, at the suggestion and with the consent of the Prime Minister, communicated direct with Sir Robert Gibson, the Chairman of the Commonwealth Bank Board, and also with Mr. G. D. Healy, Chairman of the Associated Banks, Victoria, both of whom regretfully admitted that this action was necessary at the present juncture. But there was a period when, had appropriate action been taken by the Government, this would not have been necessary. That was clearly indicated when, in giving evidence before the Senate, Sir Robert Gibson said that there was another alternative to the shipment of gold overseas. The Government, however, neglected to adopt that alternative until it was faced with the prospect of immediate default, and there are now before another place certain measures which are necessary to give legislative effect to that alternative. There is clear indication that had those steps been taken earlier this particular action would not have been necessary. That is shown by the appreciation that occurred in Australian credit when the determination of the Commonwealth and State Governments to take the necessary steps towards economy was announced.Asaresultofthatannouncement, Australian stocks’ Appreciated in London to a total value of £30, 000,000 in one day. Had such steps been decided upon and an earnest attempt made to put them into operation at an earlier date, judging by the effect of the recent announcement on the London Stock Exchange, I venture to affirm that it would not havebeen necessary to ship this gold abroad.
– Is not therighthonorable, gentleman sorry that Ms Government did not take some action that would have prevented or minimized our existing difficulties.
– I am very glad that that Government did not propose action along these lines, and that the position while it was in office did not warrant such action. Had that Government remained in office the necessity to ship gold abroad would not have arisen.
Itis unquestionable that the continued neglectof the Government over a period of twelve months to implement the’ decisions of the August conference in’ Melbourne, despite the fact that the financial position of Australia was drifting, drifting, drifting m6nth by month; Has made this action inevitable. It is not a good advertisement for Australia that it has td be taken. It is a desperateresort, and I deeply regretthat it has become necessary. Only as a last resort; and only becauseof the inevitability of default if this action is not taken, do I refrain from opposing this bill. If I were not convinced of that I would oppose the bill, because I am a firm believer in the principle of a gold reserve, and think that the percentage should be that which is recognized the world over as necessary. The fact that Australia accepts a lower percentage than is accepted by the foremost civilized countries of the world is indeed a bad advertisement for us: I am glad to find that since this bill was introduced the Government has seen its way to embody in it a promise that we s’hall aim at the’ restoration of a gold reserve of 25 per cent. within a specified period, arid that the measure also prbvides for the approval df the Commonwealth Bank Board as well as that of the Government to enable this shipmentof gold to be made. I regret the necessity for themeasure,and alsoregretthatourfinancialposition has been allowed todrifttosuchanex- tentthatthiscoursehastobeadopted, I donot intend to oppose’ the second readingofthebill.
. -I am not going to oppose the bill ;butasfaras my vote is concerned I shall assist its passage with the greatest reluctance. After’ all is said and done, that which isof vital concern, and which if is the sacred duty of this Parliament to protect, is the’ credit of Australia. Credit is one of the’ most delicate instru- mentsknown to monetary science. Let me give’ a brief quotation, which sums up the doctrine I have just enunciated, from a book entitled Applied Business and Finance, by E. E. Lincoln. On page 369 of that work, the following paragraph appears: -
Credit is a very delicate instrument which’ must be handled with the greatest caution; It is Strengthened most by conserving it not by. straining or abusing it. Credit is difficult to establish easy to lose and almost impossible to regain.
– Does the writer make any reference’ to the creation of credits?
– No. If I may be permitted to digress for a moment I may say that onesof the most notable features’ of the English language is the way in which’ the same word is usedto express different ideas. The credit which ismentioned in the paragraph which I have read is hot the credit to which the Leader of the Opposition (Senator Pearce) has just referred. In this instance, credit is used in the sense of con- fidence.We have credit meaning belief, creditmeaning confidence,and also creditmeaningtheissueof credit in the form of monetary obligations. There arevarious other uses of the word, and very often it is abused in the most extraordinary way.
The Senate, as I see it, is faced with the choiceof either agreeingto the bill or of theCommonwealth facing default in London: We have to adopt a course which is likelyto be the least detrimental to the credit of thiscountry. Would defaulton the 30th June dogreater damage to our credit than would a reduction of the gold reserve behind our note issue at the present moment? I think that the Senate, in the circumstances which confront us, has to say that the course which it is proposed to adopt will be the least harmful to the credit of this country. I shall return to that phase of the subject a little later on, when I am dealing with the policy of the Government as reflected in this measure, and in the first bill which the Senate rejected some weeks ago. Before doing so, I should like to say a word or two concerning the policy of the Government as enunciated from time to time by the Treasurer (Mr. Theodore). So far as I have been able to follow the Treasurer’s public pronouncements, he did not come into the open, as to his real policy in relation to a gold backing to the Australian note issue, from the time when he made his notable speech on the original bill in which he proposed to take over the reserves from the private trading banks, until he spoke at the Parkes byelection. It was then that he unmasked his guns to those who had eyes to see. On that occasion, he stated in the most definite terms that he saw no reason why Australian currency should be tied to English sterling. His definite announcement was that as far as he was concerned he did not believe in the gold standard as applied to. the Australian monetary system. The final development of this is to be found in the two bills which this Senate rejected - the Fiduciary Notes Bill and the last measure dispensing with the whole of the gold reserve behind the note issue. I was in another place for several hours, yesterday, following the debate on this measure, and it was easy to recognize fr vin the interjections which came in storms from those supporting die Government that the members of the Labour party have abandoned all intentions, if they are allowed to put their policy into operation, of continuing to back the note issue with gold.
– That is nonsense.
– I can only reply that the honorable senator should have heard what was said during the debate in another place.
– The honorable senator says that the members of the Labour party are opposed to a proper backing of the note issue.
– Unquestionably that is so. If positive and definite proof of that is needed it is to be found in the amending Commonwealth Bank Bill introduced by the Government some “weeks ago, and rejected by the Senate. In that measure the Government asked the Senate to agree to the removal of the whole of the gold behind the note issue.
– The Government did not ask the Senate to do anything of the sort.
– If Senator Daly is prepared to show that that is so, I can only say that words have lost their meaning. That is the deliberate policy of the Treasurer. It may be that Senator Daly is not in sympathy with that policy and that it is for that reason he no longer sits on the front ministerial bench. That the Treasurer of the Commonwealth definitely holds that view, and that the Labour party as a whole also holds it, is abundantly manifest from a study of the bill which was previously introduced by the Treasurer, and which he, as the Leader of the Opposition has pointed out, has endeavoured to convince the country was the same as the measure now before us.
– The present Government was the first to provide a bounty on the production of gold.
– If the honorable senator suggests that his interjection is an answer to my charge, it only shows the confusion that exists in hig own mind in regard to this subject. The mere production of gold is in no way connected with the gold reserve behind the note issue. Australia might produce gold to the value of £100,000,000 per annum and yet not have one penny of gold backing behind the note issue.
– Since it assumed office, the present Government has sent away £32,000,000 in gold.
– That was necessary because of the actions of previous governments.
– I do not desire to discuss further the policy of the Treasurer. It is clear for all to read..
If honorable senators care to study the various speeches made by the Treasurer on what he is pleased to call his “new monetary system,” they will see running through them all his definite intention to abandon the gold standard for this country.
– The Treasurer boasts that Australia is no longer on the gold standard.
– We all know that that is the position.
– I am well aware that in responsible circles in Europe there has been considerable discussion as to the proper use of gold. With that subject I do not desire to deal this afternoon, except to say that whatever may be the views of leading financiers of other lands - whose experience in these matters is much greater than that of any person in Australia - they are in perfect agreement first, that any alteration in the general percentage of statutory reserves or the precise use of gold must be taken simultaneously by all the great gold-using countries-
– They are considering that now.
– And, secondly, that gold must be so used as to maintain the parity level as between various countries on the gold basis. On that point they are most emphatic. Whatever may be the method employed to use gold in the world’s financial system in the future the effect must be that every country on the gold standard will have its price levels determined in relation to a. common standard. In some way it is hoped that it may be found possible to use gold more effectively.
The caution with which these authorities approach the subject is demonstrated in many ways. I have here a short extract from a speech made by Sir Otto Niemeyer at a gathering in London, which was called to discuss ways and means for exercising economy in the use of gold. The conference discussed, among other questions, the possibility of all the countries in the world which are working on a gold standard reducing-
– Many countries have a gold standard different from that of Australia.
– I propose to give to the Senate particulars of the principal central banks in the world. With one exception, other countries insist on having a greater reserve of gold behind their note issue than the reserve which has heretofore been fixed by Australia as the minimum allowed by law.
– And only one exception.
– Not only so, but they also carry enormous surpluses of gold beyond the statutory requirements. At the conference to which I have referred, the gold exchange standard was discussed at length, as was also the question of the reserves which the various gold standard countries maintained. One leading economist, who was not a banker, ‘ suggested that it would be possible to take concerted action, through the instrumentality, in the first place, of the Bank of International Settlement, to reduce the statutory requirements of those countries by a certain percentage. Among those who addressed the conference on that proposal was Sir Otto Niemeyer, who said -
But I admit to mc it lias always seemed much more difficult, as a practical operation, than some of my friends think. Let us envisage what would happen. Supposing it wore thought safe to substitute 25 per cent, for 33 pei’ cent, as the normal kind of cover.
I ask honorable senators to observe the caution with which Sir Otto Niemeyer approached the subject. He went on to say-
That would mean altering some fifty bank statutes: or, if you leave out the smaller countries and say it is enough to take the leaders, then it would bc some ten bank statutes. That means in the case practically of every country getting thu consent of the shareholders of the note-issuing banks in question to an alteration of the bank statutes. More than that, I think it means, almost without exception, legislation by legislative bodies who are not particularly well-informed as a rule, or particularly sympathetic on currency questions. Moreover, it would mean doing that in a great many countries which in fairly recent times have had shocks to their currency, and where currency legislation is naturally regarded as dangerous, and where the arguments for prudence and doing nothing may seem very strong. Not only would you have to obtain such legislation firstly by the banks then by the legislature in a large number of countries, but you would have to obtain that legislation more or less simultaneously. I must confess that seems to me a very difficult proposition. Can one really contemplate Congress in America readily legislating on that subject, or even the House of Commons in
England ? What central bank is going to be iiic first to say: “ The pace is too hot “? is not it going to be afraid that by saying that it is. exposing its credit and the credit of its currency t
Sir Otto Niemeyer made it clear that no one can arbitrarily interfere with the reserve behind a note issue without materially affecting the credit of tha country or the bank concerned. The report of his speech continues -
It seems to me that the difficulties of dealing by legislation with all these various countries or even the important ones, in order to reduce ratios, aru enormous. Therefore I must confess I always have thought that possible solution is a very difficult one. It may be that the B.I.S. would provide a place for hatching such a universal conspiracy as I think would be necessary; but, even then, political difficulties would remain. T feel, therefore, that that particular method, the method of altering ratios, if one were driven to it. and if one thought it were sound in itself, does present very great practical difficulties
I make this quotation to show how a banker of Sir Otto Niemeyer’s standing regards such a proposal to vary the gold percentages. He says that even the saving of gold by reducing the reserve behind a note issue is in itself an operation so delicate that no country, not even England or America, would be the first to do it, because of the fear of what would happen to its credit. Credit, of course, is ‘largely a psychological matter, and one which it is very difficult to explain. It may be possible in the course of years of education to persuade the public that gold can be used in a better way and more effectively for world use, than by being held behind note issues, but until such action can be taken internationally, more or less simultaneously, any country that interferes with the gold backing behind its note issue is at once exposed to an attack on’ its credit; any country that is foolhardy enough to do it exposes its credit to a tremendous blow which will necessarily and naturally react against it.
I have in my possession an extract from a memorandum by Mr. C. H. Kisch, CB., a gentleman whose work was quoted before the Select Committee on the Central Reserve Bank Bill, and who, in association with Mr. Elkin, wrote a book from which lengthy extracts appear in the report of that select committee. I quote from his memorandum the following interesting information, which will enable honorable senators to see the manner in which other countries comply with the statutory requirements of their gold reserves, and the manner in which the new banks created under the aegis of the League of Nations Finance Committee by the most modern legislation are proposed to be built up : -
The present position has arisen entirely, I think, from the deliberate action of the Government: from its deliberate vacillation in tackling the financial difficulties of the country, and its endeavour to give effect to the definite and expressed policy of the Treasurer of the day. Provided the Commonwealth Bank finds it necessary to ship overseas as much as £5,000,000, and I hope it will not be found necessary, we shall have practically £10,000,000 worth of gold left iu Australia. We have been told by the Leader of the Senate (Senator Barnes) that there is another obligation falling due to the Westminster Bank in London on the 30th November. I am under the impression that the date is the 30th September, and I think that my information is right.
– It is.
– I cannot say what action my colleagues will take under the the circumstances, but the Government has between now and the 30th September in which to prepare to meet those bills falling due in London. If it comes back to the Senate in three months’ time and tells us that it wants another £5,000,000 worth of gold to ship overseas, my vote will not enable it to be done.
– I do not think that the Government will need it.
– That may be.
– There is another reason for that.
– Possibly. But if the Government cannot see its way so to put its house in order that it can meet the bills falling due in London when they fall due, the sooner it gets out of the way and lets some other government take control the better.
– To create another mess for Labour to clean up.
– I am not concerned with that, but I say that if the Senate consents to this raid upon the gold reserve behind our note issue it will have gone to the absolute limit that is justifiable. I should not vote for it but for the amendment providing for the gradual restoration of the reserve. Instances can be quoted to show that it has been the practice of all the central banks created under the aegis of the Financial Committee of the League of Nations, gradually to build up gold reserves in various countries, starting with 20 per cent, and building up to 35 per cent, or 40 per cent., as the case may be. Providing the matter is handled here as it should be, and the banks in the ordinary operation of banking, and properly supported by the Treasurer, are left alone to implement that banking policy which they believe to be the best for the economic salvation of the country, there is nothing to prevent our gold reserve being re-established once more. The incorporation in this bill of the two amendments for which the Opposition in another place was responsible, will do much to make this bitter pill, which is inevitable in the circumstances, a little more acceptable to those who have any regard for Australia’s credit.
– In addition to the sentiments so well expressed by Senator Greene, there are one or two matters to which I should like to draw attention. From 1929, when the Senate, at the urgent request of the government of the day, decided to allow the gold in the hands of private individuals in this country to be commandeered, the present
Government has absolutely, and, it may be, because of the .well-known views held by the Treasurer, deliberately mismanaged the gold’ of this country. If there is one thing above another which will establish our credit, not only abroad, but also internally, it is the building up of a gold reserve. According to a return furnished in answer to a question asked by an honorable senator, the present Government since it has been in office has shipped overseas £32,000,000 in gold. That amount of gold, which could have been used for’ creating a much larger credit than the actual payment of the gold to our creditors overseas has provided, was shipped overseas simply to enable the Government to stave off the evil day, which is now upon us - to enable it to move along the even tenor of its way regardless of the trouble into which the country was drifting.
– Surely there is no objection to sending abroad ordinary gold that is not backing up the currency.
– When gold is sent abroad for the payment of debts, we have parted with the control of it, and have parted for ever with the power to arrange finance upon it.
– Is it not far better to arrange finance with it overseas ?
– But we have no longer any control of gold once it has been used to meet obligations overseas. If it had been used in other directions, it would have stabilized the credit of Australia, particularly overseas. The misunderstanding that arises in the minds of some is that once gold has been used to liquidate a debt it has been used for a good purpose. As a matter of fact, it has not been used as effectively as it could have been in connexion with our national credit.
– That is a reflection on the Commonwealth Bank, which controls the gold in London.
– It is a reflection on the Government that would notface the position. Had it done so, there would not have been what I regard as a wastage of our gold reserve. In any case, I care not upon whom it reflects. Parting with our best asset is a short-sighted policy, particularly when it is done to enable some other nation, institution, or body to use it for the purpose of enhancing its own credit. It is, however, of no use to cry over spilt milk; but if a measure of this character had come before us in ordinary circumstances, without the urgency of the national interests so prominent at the present moment, I should not have voted in favour of it. If our gold holdings had been maintained at the standard cited by Senator Greene, there would not have been a misapprehension in the minds of creditors as to the ability of Australia to meet its obligations. We should have been able to obtain ample credit and loan money. But the Government parted with that gold and now asks the Senate to agree to a. reduction of the gold reserve to 15 per cent. of the note issue, thus bringing the Commonwealth to the status of certain countries, which have been a jibe and byword in our own mouths in recent years.
It is difficult to define the financial policy of the Government. At no time has the Treasurer indicated definitely that he is prepared to abandon the gold standard ; but it is true that certain legislation has been sent up from another place to which the Senate could not give its support. I devoutly trust that no portion of the existing gold reserve may ever havetobe moved from Australia. The fact that Parliament approves of this bill may restore confidence abroad, and possibly some financial institution will come to the rescue of the Commonwealth in respect of the treasurybills which mature on the 30th June. But if the gold must be sent to Great Britain I suggest that the Government should take insurance cover in London instead of in Australia. I know it has been the habit in the past, because I have had some experience in the matter, for the insurance cover to provide that any loss shall be made good in Australia. If the insurance for this shipment does not provide for London cover there would be a loss of at least 30 per cent. to Australia in the event of any untoward happening. The moving of gold is not a matter upon which any banking institution cares to enter lightly. It has been noised abroad that the Commonwealth is about to ship £5,000,000 worth of gold to London, so it is advisable that every safeguard should be taken for its safe transit. I know that this is always done, and my observations on this point are merely offered by way of suggestion to the Government through the Leader of the Senate. I shall vote for the bill with the greatest reluctance - I might almost say, shame.
Senator Sir HAL COLEBATCH(Wesern Australia) [4.9]. - My chief objection to the measure, which I do not intend to oppose, because, in the circumstances, it seems impossible to do other than accept it, is that it has been introduced at such short notice that we are unable to give it that mature consideration which its importance warrants. We are told that it must be passed at once, so that the best use may be made of the gold and Australia prevented from defaulting in London. This seems to me to be a very wrong way of carrying on the business of the country. I fear that the shipment of this portion of our gold reserve may lead us into an infinite amount of trouble. I remind the Senate that the first bill brought down by the present Government concerning our gold reserve was that submitted and passed in 1929. On that occasion the Senate was informed of a letter which had been written by the chairman of the Commonwealth Bank Board to the Government, in which the chairman stated -
My board is of the opinion that the last resource which should be adopted would be any course which meant even temporary departure from the operation of the gold standard on the part of Australia. Such measure would reflect most adversely against Australia in respect of oversea credit, and incidentally have a most serious effect upon our abilities to raise loans abroad. As a measure which would very materially help the position in the meantime, and in addition, having regard to precedent would, in the opinion of the board, be a sound measure of permanent legislation, my board definitely recommends your Government to consider immediately the bringing in of legislation on similar lines to that which now exists and is operating in England. I do not propose to traverse the effect of such legislation, as perusal of the acts will fully acquaint you with the position; but I might briefly say that such legislation would place the Commonwealth Bank in immediate control of all gold in Australia, by whomsoever held. As a matter of fact the Government did introduce, and the Senate was induced to pass a bill containing provisions in no way resembling those contained in existing acts of Great Britain. That legislation did what the board said ought not to be done. To all intents and purposes it took Australia off the gold standard.
I am wondering what is the meaning of clause 2 of the bill, and what is the need for it. There is no provision in the existing act to prevent the Commonwealth Bank from exporting gold for the settlement of Australia’s overseas indebtedness. As a matter of fact the board has been sending gold abroad, at periodical intervals, during the last two or three years, and altogether it has exported bullion to the value of approximately £31,000,000. It is clear, therefore, that the bank does not require authority from this Parliament or even an instruction from the Treasurer to export gold. But the intention of the bill is clearly indicated in clause 3.
– The bank might require notification from the Government as to its needs.
– Nevertheless there is no need for the passing of a bill to do what the Minister has suggested. The Government may, at any time, advise theCommonwealth Bank concerning its overseas obligations, and certainly there is no needfor this legislation to enable the bank to ship gold. But we know that further inroads upon the existing gold reserve will interfere with the statutory requirement concerning the minimum of reserve to be held against the note issue. The bill provides that the amount of gold to be shipped under this authority shall be limited to £5,000,000, but there is nothing in existing legislation to prevent the Bank Board from shipping any amount of gold, so long as it retains the statutory minimum of gold reserve against currency.
There is another point which I wish to make clear to the Senate. When moving the second reading of the bill the Leader of the Senate (Senator Barnes) stated that with the present gold reserve of £15,000,000 the Commonwealth Bank was, under existing legislation, authorized to issue notes to a total of £60,000,000 on a 25 per cent. gold backing. He said further that if the bank shipped £5,000,000 of the existing reserve, and the minimum is reduced to 15 per cent., it would still have authority to issue notes to the same amount, namely, £60,000,000. I suggest that the figures furnished by the honorable gentleman were very rough indeed. It is true that on a 25 per cent. basis, and with a reserve of £15,240,000 the paper currency may be increased to £61,000,000 ; but if the statutory requirement concerning the minimum gold reserve is 15 per cent., and if the reserve is reduced to £10,240,000, the bank will have authority to issue notes to the value of approximately £68,000,000 or more than £7,000,000 in excess of the existing authorization. This is a point which I think the Senate should have had time to consider carefully.
There is also this further feature which should be borne in mind : The act of 1929 authorized the Commonwealth Bank to acquire the gold holdings of all private banks, and also all the gold mined in Australia. Assuming that production amounts to £2,000,000 a year, the Commonwealth Bank, under this bill would be authorized to issue a further £12,000,000 of notes each year against the gold so acquired.
To my mind, there are many directions in which this bill may prove dangerous. Although the act of 1929 was passed, ostensibly to enable the Commonwealth Bank to concentrate the gold resources of Australia in order that it mightbe put to the best use in the interests of the nation, the act has, in effect, been used to enable this Government to continue a course of extravagance which otherwise would not have been possible. But for that legislation, the motive of which was good, this Government, several months ago, would have been compelled to face the position which it is up against to-day, and I suggest that it would have been infinitely better for the people of Australia if, many months ago, it had taken the drastic action now contemplated. The Prime Minister, in a speech delivered the other day, admitted that for over twelve months he and his Government had been fighting against the necessity to make reductions in governmental expenditure. The 1929 act, I repeat, permitted the Government to continue with its extravagant administration much longer, with the result that the difficulties with which we are confronted to-day are infinitely greater than they would have been if action to check the drift in public finance had been taken at the proper time.
We are informed that the shipment of this £5,000,000 of our gold reserve is the only satisfactory arrangement that can be made for the discharge of our overseas obligations on the 30th June. I shall refrain from voting against the bill, but I shall do so with a very uneasy conscience, and with a feeling that the passing of the measure will probably bring as much trouble in its train as did the legislation which we passed in 1929.
– Senator Colebatch has challenged the need, for the insertion of clause 2. It occupies its position of priority for the convenience of draftsmanship. The policy of the Government is to ease the financial position from the point of view of the gold standard. Obviously the Ministry could not ask the Commonwealth Bank to accept responsibility for the shipment of gold which forms part of our statutory backing for the note issue. When Sir Robert Gibson, Chairman of the Commonwealth Bank Board, appeared at the bar of the Senate recently he indicated to the Senate, and subsequently, in a letter to the Treasurer, that it was not the function of the board to dictate government policy. He made it clear that the responsibility for the issue of notes for internal currency on a gold backing less than the existing minimum by £5,000,000 must rest with the Government. The Government, having accepted the position, it was necessary to insert a provision in the bill to give effect to its policy. Senator Colebatch must realize that in the domain assigned by the legislature to the Commonwealth Bank, the Bank Board is supreme. This Parliament cannot fetter in any way the discretion of the Commonwealth Bank unless and until it is prepared to do so by statutory enactment. The Commonwealth Bank has said to the Government : “ There is your statutory legislation, enacting that we shall hold against the note issue of this Commonwealth a certain amount of gold. It is your job, not ours. It is your policy, not ours. You define your policy, you enact your laws, and we shall obey them “. The Government has agreed to adopt that particular course, and, if an agreement is arrived at between it and the Opposition in regard to policy, there is not one clause of the bill that is not absolutely essential.
I am rather surprised at the manner in which the bill has been received by honorable senators opposite. For some reason or other that I cannot fathom, there appears to be a feeling in their ranks that anything which touches the present Treasurer of the Commonwealth must be regarded as contaminated. The right honorable the Leader of the Opposition alleged that the Treasurer had made a certain statement regarding the bill. What the Treasurer, in fact, said, was that a similar bill was introduced a “few weeks ago.
– It was not a similar bill.
– It is impossible for me to understand that contention. The principle behind the bill of a few weeks ago was identical with that which underlies this bill, namely, to enable the Treasurer to ship gold to London to discharge the indebtedness of the Commonwealth in London.
– The first bill was to enable him to ship all the gold held by the Commonwealth Bank.
– Adopting that reasoning, if the Government were to introduce a bill providing for a bounty of 3s. a bushel on wheat it would not be similar to one providing for a bounty of 4s. a bushel.
The Leader of the Opposition has sought to draw a distinction that cannot be drawn. This measure does not give the Treasurer the right to ship the whole of the gold to London for any purpose. It does precisely what the other bill proposed to do, namely, it gives to him the right to ship this gold to London, if necessary, to discharge the indebtedness of the Commonwealth in London.
– If the Commonwealth Bank agrees to do so.
– The last bill made the following provision: -
The Governor-General, may, from time to time, by notice in writing addressed to the board, require the board to hand over to the Treasurer such amount of gold held by the bank or by the board as is specified in the notice as being necessary for the discharge of the indebtedness of the Commonwealth in London.
The bill that we are now considering, reads -
The Treasurer may, from time to time, notify the board in writing that it is, in his opinion, desirable that the board use for the discharge of the indebtedness of the Commonwealth in London in respect of treasury-bills maturing on the 30th day of June, One thousand nine hundred and thirty-one, such amount of gold held by the bank or by the board as is specified in the notice, and the board may, if it agrees with the opinion notified to it, cause the gold specified in the notice to be so used accordingly, and the Treasurer shall, in exchange for any gold so used, issue to the bank Commonwealth securities to an equivalent amount.
– Could not that have been done without any legislation ?
– I think that it could not.
– Is it not a fact that the clause, as originally drafted, proposed to enable the Treasurer to compel the bank to send the gold abroad ?
– The clause, as originally drafted, proposed to enable the Treasurer to secure from the Commonwealth Bank sufficient gold to satisfy certain obligations of the Commonwealth in London ; but the Commonwealth Bank, through the mouth of Sir Robert Gibson in this chamber, said: “If you desire to ship gold to London, it is your responsibility isd not the responsibility of the bank “. How was the Government to indicate its intention to the Bank Board? The board would say : “ The Treasurer certainly desires that this money shall be shipped to London for the purpose of satisfying our London obligations, but how do we know that such a request has the imprimatur of Parliament?” The Government, in an endeavour to act in the manner dictated by the banking institutions, has brought down this measure. Senator Colebatch must realize tha’t, unless that particular provision was inserted, even though this Parliament might agree with the policy, the Commonwealth Bank Board would take up exactly the same attitude as it has adopted all along. This bill is the creation, not of the Treasurer alone, but of the Cabinet and the Government. The Government, having agreed upon the policy, it was a question of introducing legislation that would give effect to it.
I also resent very strongly the suggestion that the Senate is agreeing to this measure now because it is a matter of extreme urgency, but that the urgency might have been avoided had the Government taken certain other action.
– That is quite right.
– Apparently, the only action that would have created a feeling of confidence in the breasts of honorable senators opposite was to reduce pensions, wages, and interest.
– No; the Government should get out.
– Neither the banking institutions nor the Premiers Conference have said that, as a condition precedent to the creation of confidence in this country, the Government should get out. On the contrary, the Premiers Conference, which was representative of all the leaders of political thought in Australia, decided upon a policy that would keep the Government in office. It evolved a plan - for what reason? Was it not designed to keep this Government in power, so that it might put it in operation? It is idle for the honorable senator to suggest that any rightthinking man, of any school ©f political thought in Australia, would make such a suggestion. I sincerely trust that, in the interests of the movement that I have the honour to represent in this chamber, the Government will remain in power. Honorable senators who have any sense of justice will admit that one experience equivalent to that through which the Government has passed is sufficient in the lifetime of any average politician.
– What party in the movement does the honorable senator represent ?
– There is only one party in our movement. It has been left to the Labour movement on this, as on a previous occasion, to clean up a mess that was caused by a preceding government. I repeat that I hope the Government will remain in power, and that it will progress to such an extent as to prevent another government, similar to the last, from reaching the treasury bench and bringing about conditions similar to those which confronted us when we assumed office./ The honorable senator knows in what state the finances were when we were given control over them. He is aware, moreover, of the warnings that were issued to his Government by Sir Robert Gibson-
– What about the warnings that this Government has had in the last eighteen months?
– When we came into power we found that there was a mess that had to be cleaned up. That mess could have been avoided had the warnings which Sir Robert Gibson gave to the previous Government been heeded.
– The honorable senator knows that no warnings were given to the previous Government.
– Warnings were given to the previous Government. Nobody knows that better than some members of the previous Ministry. If the honorable senator has not heard of them, inquiry will prove to him that my statement is absolutely accurate. Had those warnings been heeded, Australia would not have been in the mess in which the present Government found it when it took over the reins of office.
– It is in a worse mess now.
– An epidemic of measles, unfortunately, spreads. We could have avoided the epidemic had the previous Government adopted the precautionary measures suggested by its financial advisers. We were unfortunate in that we came into office when the epidemic was well established, and from that time on we have been attempting to minimize its ravages.
– And the Senate will not allow the Government even to erect a quarantine station.
– As Senator O’Halloran aptly remarks, the Senate has refused to allow the Government to erect a quarantine station for the purpose of wiping out the epidemic.
– The honorable senator will be vaccinated before long.
– There will be no question of vaccination. I understood that that word had been removed from the vocabulary of honorable senators opposite, and that they were familiar only with the term “ vacillation “. There has been no vacillation on the part of this Government. It has attempted to carry out the policy upon which it was elected: but in this hour of Australia’s need it has been compelled to admit that it cannot give effect to the promises that it made to the electors. I cannot see that there is any discredit in that. Now that the Government can no longer resist the demands of the Opposition, and can no longer dictate the terms upon which it shall legislate, the Opposition ought to be generous enough to refrain from referring continually to the actions of the Government, especially in view of the fact that, as every honorable senator opposite well knows, Australia’s position to-day is due to the gross incompetence and misgovernment of the previous administration.
– I cannot allow this measure to pass without entering a very strong protest. We are asked to swallow a very bitter pill, and the knowledge that this measure would have been unnecessary had proper action been taken increases its bitterness. I would remind Senator Daly that the right honorable the Prime Minister (Mr. Scullin), when speaking at the conference of Commonwealth and State Ministers in Melbourne, clearly and distinctly stated that the measures that might have been adequate two or three months ago to ensure a return to financial stability were totally inadequate to-day.
– Hear, hear !
– I am glad to have Senator Daly’s approval of that statement. It was a clear admission by the Prime Minister that had the necessary action been taken a few months earlier the course now proposed would have been unnecessary. It is the strongest possible condemnation of the Government’s failure to carry out the policy which the Prime Minister agreed to support in August last.
– But the Senate would not pass the Fiduciary Notes Bill.
– The introduction of such a measure was not mentioned at the August conference or in the agreement which the Prime Minister signed. Apparently the right honorable gentleman at the time had not the slightest intention of giving effect to such a policy as in writing to a conference of trade unionists in Sydney he said, “For twelve months I have resisted this thing and I can no longer do it.” We are now being asked to take this action because, on the admission of the Prime Minister himself, he has failed to do his duty, and in neglecting to do so has betrayed the Commonwealth. Senator Daly charged the previous Government with extravagance, and with having disregarded the warning of its financial advisers. I would remind the Senate, and Senator Daly in particular, that at a conference of Commonwealth and State Ministers held prior to the last elections the then Prime Minister told the delegates that we were on the edge of a dangerous precipice and that in view of the difficult financial period which was approaching. Australia would have to recast its financial policy. He went to the country on that issue, and Senator Daly and every other member of the Labour party told the electors not to take any notice of the warning then given.
– The late Prime Minister went to the country with the abolition of the federal arbitration system as the principal issue.
– One of the issues was the abolition of the federal arbitration system, the existence of which involved unnecessary overlapping between State and Federal activities, which naturally increased the C03t of government.
– What percentage of the last loan raised by the Bruce-Page Government in London remained ‘in the hands of the underwriters?
– Last night I heard an honorable member supporting the Government in another place say that this Government could not borrow five “ bob “.
– I ask honorable senators to discuss the subject-matter of the bill, and suggest to them that interjections, although disorderly, should at least be relevant.
– I am answering the charge of Senator Daly, that the responsibility for our present financial position rests with the late Government. The supporters of the present Government went from one end of Australia to the other telling the people to disregard the warnings of the ex-Prime Minister. They declared that the Government of which he was the leader was out to slash wages, and to crush the working men and women of Australia. Similar statements have been repeated during State election campaigns. To-day, the position is almost intolerable and we are now asked to adopt a course which is repugnant to the good sense of every man and woman in Australia. We are advertising to the world that we are hopeless and helpless derelicts; thatwe are down to our last shilling, and that as a result of the vacillation, twisting and turning of this Government we can meet our obligations only by depleting the gold backing to our paper currency. I enter my most emphatic protest against this proposal to do something which I abhor.
– Several weeks ago the Government introduced a measure somewhat similar to that now under consideration. At that time it was the desire of the Government to secure control of the £15,000,000 worth of gold held by the Commonwealth Bank in order to meet certain of our commitments in London. After hearing the evidence of the Chairman of the Commonwealth Bank Board, Sir Robert Gibson, the Senate, very properly, rejected that measure. The Treasurer now submits a request for £5,000,000, but I venture to say that if this amount is made available it will nol be long before a similar measure is introduced. Like Oliver Twist, the Treasurer will be asking for more, until the whole of our gold reserve is exhausted. The financial position of the Commonwealth is the same to-day as it was six weeks ago when Sir Robert Gibson gave evidence with respect to the shipment of our gold reserve to London. At that time, Sir Robert was asked if apart from default there was an alternative to the shipment of gold, and he said in terms which resounded throughout the whole Commonwealth, “ There is an alternative.”
– What is that alternative?
– The objective would have been achieved if the advice given by Sir Otto Niemeyer in August last had been acted upon. All Australia knows, and no one better than the members of the Ministry, and particularly Senator Daly, that the policy he proposed was that of living within our income. Up to the present, such a plan has not been adopted. It is true that the Government is now talking of adopting it, but I venture to say that no definite decision will be reached until the conference of representatives of the Labour movement, which is now sitting in Canberra, has concluded its deliberations. We do not know whether the alternative referred to by Sir Robert Gibson will ever be put into operation, but I am sure that it will not while the present Government is in power. We are now asked to approve of a part of a policy which on the advice of the Chairman of the Commonwealth Bank Board we very properly refused to accept six weeks ago. The only difference between the measure rejected and that now under consideration is that the former gave the Treasurer access to the whole of the £15,000,000 in gold held as a backing to our note issue while this measure is to provide for the release of only £5,000,000 worth of gold. If this bill is passed, I believe that further similar measures will be introduced. I strongly object to the insidious methods adopted by the Treasurer in seeking to accomplish his own ends by different means. The Treasurer will not take “no” for an answer. In this case he comes up with the same request in another form. If this measure is passed, it will be an invitation to our other short-term creditors in London to press us while there is still a “ shot in the locker “ in the form of the remaining £10,000,000, which the Treasurer previously tried to obtain. This measure constitutes another step towards the objective of the Labour party, which is to place our note issue on a fiduciary basis. It is a proposal to reduce the gold reserve from 25 per cent, to 15 per cent, of our currency, and by passing it the Senate will approve of a course of action which for months past it has been telling the people of Australia should not be adopted. I have no faith in the promises of this Government, even if incorporated in the bill, to restore the gold backing to its present basis within a specified period. I am opposed to the measure, and intend to vote against the second reading if afforded an opportunity to do so. My experience in Parliament has been that bills are only rushed through Parliament when they will not stand careful deliberation. There is generally a “ nigger in the wood pile.” I object to the measure in toto, and particularly to the manner in which it is being rushed through both Houses of Parliament.
.- I should not have spoken on the second reading of this measure but for the unseemly interjection of the honorable senator who was once the Leader of this Government in the Senate.
– I rise to a point of order. I take strong exception to the use of the word “unseemly”. It cannot by any stretch of imagination be said that anything that I have said in this chamber is unseemly. The honorable senator’s remarks are also a reflection upon you, sir, because if my language had been unparliamentary you would have called me to order.
– If the word “unseemly” is objectionable to the honorable senator, I withdraw it, and shall say that it was unbecoming.
– That is just as objectionable. I am not permitted to make an unbecoming interjection.
– I still hold the view that the attitude adopted by the honorable senator was unbecoming in view of the fact that he charged the present members of the Opposition with accepting a measure that we rejected some weeks ago. It is well known that the honorable senator does not take the trouble to closely study the bills that come before the Senate; if he had done so on this occasion he would not have made such a statement. This measure is totally different from that which was rejected some weeks ago.
– Not totally different.
– It is. The bill that we rejected provided the Treasurer with unlimited power to instruct the Commonwealth Bank Board to ship abroad the gold reserve held as a backing of our note issue. No limit was placed on the power of the Treasurer to deal with the gold reserve. For the information of Senator Daly, and in the hope that he will see the wisdom of discontinuing his present attitude, I shall read clause 2 of the Commonwealth
Bank Bill, No. 2, which was rejected by the Senate. That clause reads -
After section 7 (d) of the principal act the following section is inserted - 7. (e) The Governor-General may, from time to time, by notice in writing addressed to the board, require the board to hand over to the Treasurer such amount of gold held by the bank or by the board as is specified in the notice as being necessary for the discharge of the indebtedness of the Commonwealth in London, and the bank shall, upon the receipt by the board of any such notice, cause the gold specified in the notice to be so handed over accordingly in exchange for Commonwealth securities of an equivalent amount.
Any honorable senator who reads that clause intelligently, and compares its provisions with the bill now before the Senate, must admit that the two measures are entirely different.
I regret the necessity for the introduction of this measure, for, with other honorable senators, I hold that it would be well if we could prevent our gold reserve from being depleted. Unfortunately, however, we are faced with a crisis which would not have occurred had the agreement entered into at the conference of premiers held in Melbourne in August last, and accepted by the Prime Minister, been put into operation. In my opinion, the present critical situation is due entirely to the non-observance of the agreement then entered into.
– That plan could not be put into operation.
– I am aware that no plan can be put into operation by the Government unless it has the approval of the majority of the caucus.
– That applies to the party to which the honorable gentleman belongs.
– It does not. The party of which I am a member does not restrict the liberty of action of its members as does the Labour party. I repeat that the introduction of this measure has been rendered necessary by the wilful negligence of the present Government, and its disregard of the warning given by the previous Prime Minister (Mr. S. M. Bruce) in May, 1929.
– He did not act; he merely told the people certain things.
– He had no opportunity to act.
– I ask the honorable senator net to take any notice of irrelevant interjections.
– In view of the information now in the possession of honorable senators it is imperative that something be done immediately if the good name of Australia is to be upheld in financial circles. Honorable senators who support the Government must accept a large share of the responsibility for the distress and privation so prevalent in Australia to-day. Any one who reads the records of the Labour party, whether in the parliamentary or in the industrial sphere, must conclude that most of the present distress is the outcome of the advice tendered by Labour leaders, before and since the present Government came into office. Our first duty is to prevent Australia from having to say to its creditors that the country cannot meet its obligations.
– What about the adverse trade balance?
– That question is not now before us. Our present duty is to decide whether Australia intends to meet its obligations or to make default. Evidence tendered before the Senate a few weeks ago made it abundantly clear that default was inevitable unless a certain course was followed. This bill provides for the taking of action which will, at least partially, restore confidence in Australia. Later, we shall have before us other measures to give effect to the decisions of the extraordinary conference recently held in Melbourne. Before Australia will again be in a sound financial condition, we shall have to get down to bedrock. We must investigate the causes of the present troubles and do everything possible to prevent their recurrence. This bill and the other measures which have been foreshadowed will, after all, be more in the nature of palliatives than remedies. We must work for the elimination of the causes of the present trouble if we are to ensure that they shall not recur in the future.
The alterations which have been made in this bill since its introduction in another place, will materially safeguard the future solvency of the note issue. Clause 3, which deals with the gold reserve, is most important. Clause 2 limits the export of gold to a certain amount, and a specific purpose. It also provides that the temporary shortage in the present statutory gold reserve shall be made up within a certain period. I do not know whether the period prescribed is too long or not; but I should say that, with careful administration and due regard to the necessity of living within our incomes, we ought, within a reasonable time, to be able to retrieve the position brought about by the export of this £5,000,000 of gold. Although I regret the necessity for this measure, I feel compelled to support it in order- to maintain the good name of Australia. If another way of retaining that good name could be found I should do what I could to defeat this bill. Having heard the arguments put forward in favour of the measure before us, I am convinced that the proposals contained in it are made only as a last resort, and that therefore the Senate is justified in passing it.
Question resolved in the affirmative.
Bill read a second time and passed through its remaining stages without amendment or debate.
Senator Sir GEORGE PEARCE (Western Australia) [5.4]. - I move -
That Statutory Rules 1831, No. 72, Waterside Employment Regulations, be disallowed; and that the Senate enter an emphatic protest against the making, during the present session of Parliament, of any further regulations’ of the same or similar import or intent, on the grounds that the making of such further regulations would be derogatory of the equal law-making power of the Senate with the House of Representatives provided for in Section 53 of the Constitution, and destructive of the right of the Senate to disallow regulations as provided for by Section 10 of the Acts Interpretation Act.
I do not propose to speak at length on this motion, seeing that the views of the Opposition regarding the issue of regulations in the circumstances in which these regulations were made have been expressed on a number of occasions and should be well known. A majority of the Senate has protested in another form against the issue of new regulations in place of regulations similar in substance which have been disallowed, and it now puts forward this proposal in the hope that the Government will desist from making frequent attacks on the authority of the Senate.
– Many involved principles have been emphasized by Senator Pearce, if not to-day, at any rate in debates on a similar subject on many other occasions. It may be true that an omission from our legislation has created the situation to which the right honorable senator has drawn attention, but I must oppose this motion on the ground that the Senate cannot claim the right to hamstring every piece of legislation brought forward by a government whose policy has just been endorsed by the country. That, however, is an argument upon which I have no desire to enlarge to-day. The Government has given expression to its desire, and will continue to do so. On the other hand, the Senate will no doubt continue to exercise the right of disallowance it claims to possess. But the matter has already been talked to death on five or six occasions, and as I have no wish to resurrect the dead, I dismiss it with the statement that I am in strong opposition to the motion.
– I am not prepared to east a silent vote on the disallowance of any of these regulations dealing with the waterside workers, and I protest against the Senate’s attempt to interfere with the Government’s action towards the workers on the waterfront. Honorable senators, as a whole, do not represent the body of men whom Senators Hoare, Kneebone, O’Halloran and I represent in South’ Australia. They are therefore not aware of the relief that these regulations have afforded to men on the waterfront who are legitimately engaged to work under them. I also protest against the action the Senate is taking at this time when the Government is seeking its cooperation. And I protest against its attempt to flout the power that Parliament has delegated to the Executive to make regulations. When Parliament delegated that power to the Executive, it took the full responsibility for its action.
– But it retained the power to disallow.
– Quite so; but it was never intended that a regulation should be capriciously disallowed or that the Parliament should fetter the control of this particular executive action. It is an insult to the Government for the Senate, without any argument or discussion, and without advancing any reason, to disallow that which the Government has enacted by regulation, and it is adding insult to injury by tacking on to its verdict a rider. Indeed, it is as great an affront to His Majesty’s Government as was the address of the Senate to His Majesty’s representative.
– That was not a reflection upon any one.
– It was a reflection upon His Excellency’s knowledge of constitutional law. This is the rider that the Senate has tacked on to its verdict -
That the Senate enter an emphatic protest against the making, during the present session of Parliament, of any further regulations of the same or similar import or intent.
The Senate must admit the right of the Executive to make regulations, but this is a sweeping instruction to the Government not to issue any such regulations on the grounds - that the making of such further regulations would be derogatory of the equal lawmaking power of the Senate with the House of Representatives.
What have regulations to do with the law-making power of the Senate or the House of Representatives? Both Houses have delegated to the Government the power about which the Senate is now complaining. I sincerely hope that the chamber will allow these regulations to continue in operation, and I fervently hope that if the Opposition is still adamant on the point, the Government will be equally adamant, and will, upon the disallowance of these regulations, regazette others.
– The honorable senator has had the temerity to say that he and his colleagues from South Australia represent, more than do other honorable senators, the interests of persons affected by these regulations. I try to represent the interests of people who have been very badly injured by the action of the Waterside Workers Federation prior to the Transport Workers Act coming into operation. The honorable senator also had the temerity to say that the Senate had disallowed these regulations capriciously and without discussion. I cast that accusation back into his teeth. There has been no caprice about the action of the Senate. Several times during the session these regulations have been fully discussed. If there be any caprice, it is on the part of the Government in restoring regulations immediately after they have been disallowed. It is time the Senate took up a determined attitude on the point. Year after year for several years prior to the passing of the Transport Workers Act, Tasmania was so penalized by the attitude of the Waterside Workers Federation that many people were reduced to a state of penury. Since the passing of the Act, we have had no interruption whatever in the steamship service between the mainland and Tasmania. For the first time in the last ten years, we can recall three years of uninterrupted service, where previously there was interruption brought about, as honorable senators are well aware, by the total disregard and defiance of the law by an organization which brought pressure to bear upon the units comprising it, the great bulk of whom wished to continue at work but were prevented from doing so. I shall be no party to the suggestion that we should allow the matter to rest. I know that it appears to many of the public that this is a fight between the Government and a majority of the Senate. It is nothing of the kind. It is a fight by the Senate to maintain its constitutional power to disallow a regulation of which it does not approve. The same power is given to the other branch of the legislature. At any time it can disallow a regulation, which thereupon becomes null and void. The Senate is merely exercising the power conferred upon it by the law. It is common knowledge that no bill can become an act unless it has the approval of both Houses. The same principle applies to a regulation. The Acts Interpretation Act lays it down clearly. In those circumstances I cannot understand Senator Daly’s statement. It is quite contrary to a commonsense reading of the law.
– That is a layman’s opinion.
– Very often a layman can confuse a member of the honorable profession to which the honorable senator belongs.
– That is true.
– While in Tasmania recently I moved about among the business section of the community and among people who gain their livelihood through work available for the waterside workers in the different ports, and in the course of my investigations I did not hear one individual express opposition to the continuance of the provisions made in the Transport Workers Act, which, as I have already said, have ensured uninterrupted service for the last three years between Tasmania and the mainland. The people of Tasmania - not a section of them only - resent very strongly the unworthy action of the Government in declining to recognize that the Senate is only within its rights in disallowing a regulation which it feels sure if put into effect would lead before long to a recurrence of that state of turmoil, unrest, and deprivation of employment, which was so noticeable before the Transport Workers Act became law.
.- Notwithstanding that this matter has been before the Senate on many occasions, I desire to offer a few observations concerning it. I resent Senator Daly’s statement that the Senate is not representative of the people. Honorable senators represent States and not a section of individuals, as does the honorable senator who made the objection. I also deprecate the statement made recently by the AttorneyGeneral (Mr. Brennan) that the Senate has more dignity than capacity. It would be well for that dignity to be carried into some other channel. Senator Daly knows better than anyone else that the continual re-gazetting of regulations which have been disallowed by the Senate, is contrary to the spirit of the law. It is time the Government ceased this childish policy. Prior to the passing of the Transport Workers Act, members of the Waterside Workers Federation had a monopoly of all work on the wharfs, and from time to time they held up- the trade and commerce of the country. This condition of affairs obtained for a considerable time, but finally the patience of the people was exhausted and the BrucePage Government introduced legislation, known as the Transport Workers Act, the effect of which was to ensure peace on the waterfront. These regulations are designed to give again to members of the Waterside Workers Federation a monopoly of all waterside work. Is it fair that any small section of the community should have the right to all work that is available on the public wharfs? Although I do not believe in the principle, I should be prepared to concede preference to members of the Waterside Workers Federation if Senator Barnes, when next he addresses members of that organization, succeeds in persuading them to open their books to all volunteer workers. But, as we know, the Waterside Workers Federation is a restricted organization. It has closed its books to outside applicants by demanding prohibitive fees. In this way, it has become a dangerous monopoly. If the federation opened its books to every man who wished to join it, many of the objections which honorable senators on this side have to the principle of preference to unionists would be dispelled. Although the AttorneyGeneral has a capable staff, I suggest that if this business of gazetting regulations is persisted in the limitations of the English language will eventually prevent the issue of fresh regulations. But, speaking seriously, the Government should bow to the will of Parliament and cease the gazetting of regulations only to have them disallowed by the Senate.
– Why not allow these regulations to stand and permit members of the Waterside Workers Federation to do the work?
– Members of that organization get their fair share of the work now. They are not prohibited from taking out licences under the act and applying for the work in the ordinary way. It is idle for Senator Daly to imply that members of the Waterside Workers Federation at Port Adelaide are models of propriety in trade union ethics, or have never been provocative in their attitude towards other workers. It is well known that they have always been the most rebellious section of the Waterside Workers Union in Australia. However, I hope that the Government will now accept the position and obey the letter and spirit of the law.
Question - That the motion be agreed to - put. The Senate divided. (President - Senator the Hon. W. Kingsmill.)
Majority . . 16
Question so resolvedin the affirmative.
In committee: Consideration resumed from the 17th June (vide page 2693).
Clauses 2 and 3 agreed to.
Clause 4 (Preservation of rights of officers and commissioners).
– Yesterday the right honorable the Leader of the Opposition (Senator Pearce) expressed a doubt whether the bill preserved the rights of certain members or officers of the North Australia Commission. I have made inquiries, and I am advised that this clause ensures that every person, who was a member or officer of the North Australia Commission and had rights by virtue of section 13 and 14 of the Northern Australia Act, will have those rights preserved. The right honorable gentleman referred to the fact that paragraph c of proposed new section 17a applied only to members or officers who were continued in employment, and stated that he desired to be assured that members or officers who were not continued in employment would also have their rights preserved. The position of members or officers who had rights but were not being continued in employment was fully considered by the Minister for Home Affairs, who directed that such officers were also to have their rights preserved. The Crown Law authorities advised, however, that there was no necessity to mention such officers in the bill, as they preserved their rights by virtue of section 8 of the Acts Interpretation Act, which provides, inter alia, that where an act repeals a former act, the repeal shall not affect any right,privilege, obligation, or liability acquired, accrued, or incurred under any act so repealed.
The bill does not propose to confer any rights on members or officers of the commission who had no rights under the Northern Australia Act. Mr. Hobler is the only member of the commission who had rights, and his rights were in respect of leave and superannuation. Those rights are preserved to him, and will be honoured by the Government. Only four officers of the commission have any rights, viz., Messrs. Moyes, Shepherd, Pigott, and Binet. Mr. Moyes, who is not being continued in employment, has the right to return to the Commonwealth railways service, from which he was appointed to the commission. That right is preserved to him by virtue of the Acts Interpretation Act, and arrangements have already been made for him to return to the Commonwealth railways. The other three officers are being retained in employment, and their rights are preserved by clause 4 of the bill now under consideration. The Leader of the Oppotion referred to Mr. Easton as a member of the commission who had rights by virtue of his State service. I am advised that Mr. Easton was at one time employed by the Government of Western Australia in various temporary capacities, such as surveyor, lands inspector, &c, but was not on the permanent staff of the Western Australian Government. When the Land Board of the Northern Territory was being constituted, Mr. Easton was appointed to the position of chairman of the board, as a nominee of the pastora- lists. Hisappointment was for a period of five years, and was not a permanent appointment. On the coming into force- of the Northern Australia Act, Mr. Easton was appointed a member of the North Australia Commission for a period of five years. He has no State or Commonwealth accrued rights, except rights in connexion with leave as a member of the North Australia Commission, and the right of tenure of office as a member of such commission until the 31st August, 1931. Mr. Easton is not being continued in employment, but is being granted all accrued leave due to him, payment for which will extend beyond the 31st August, 1931, the date on which the appointment of the commission w.ould have expired had the Northern Australia Act not been repealed. One of the most important factors in the decision to dispense with the services of Mr. Easton was the necessity to make provision for officers with rights. The Minister had to give consideration to the financial effect of the retirement of officers with rights. It was decided that officers with such rights should be given preference in employment in the positions for which they wer.e suitable, over officers who had no rights.
Clause agreed to.
– I move-
That the following new clause be inserted: - “ 5. Section eighteen of the Northern Terri tory (Administration) Act 1910-1926, as amended by the Northern Territory (Administration) Act 1931, is repealed, and the following section inserted in its Btead: -
– (1.) The Supreme Court of North Australia shall continue in the Territory as the Supreme Court of the Northern Territory and the Supreme Court of Central Australia is hereby abolished. (2.) Any action or legal proceeding pending, at the date of commencement of this act, in the Supreme Court of North Australia or the Supreme Court of Central Australia, shall, by virtue of this section, be transferred to the Supreme Court of the Northern Territory. (3.) Until other provision is made by or under any law of the Commonwealth -
all other courts of justice in existence in North Australia or Central Australia shall continue in the Territory as courts of the Territory; and
the jurisdiction, practice and procedure of any court which continues in pursuance of this section in the Territory shall continue as the jurisdiction, practice and procedure of that court.”
Section 18 of the Northern Territory Administration Act 1910-31 was inserted in the principal act by an amendment that was made in 1931. It provides that all courts of justice in existence in North Australia or Central Australia shall continue as courts of justice of the Northern Territory. Prior to the repeal of the Northern Australia Act, there were two supreme courts in the Northern Territory, one in North Australia and the other in Central Australia. It is not clear that section18 abolishes both of those courts and re-establishes one court for the whole of the Northern Territory; The proposed new clause makes it clear that the Supreme Court of Central Australia is abolished and that the Supreme Court of North Australia is continued as the Supreme Court of the whole of the Northern Territory.
Proposed new clause agreed to.
Title agreed to.
Bill reported with an amendment.
Standing and Sessional Orders suspended; report adopted.
Bill read a third time.
Motion (by Senator Barnes) agreed to-
That the Senate, at its rising, adjourn till Thursday next at 3 p.m.
The following paper was presented: -
Sugar - Agreement made between the Government of the Commonwealth of Australia and the Government of the State of Queensland - dated 1st June, 1931.
.- I move-
That the Senate do now adjourn.
Ten advance copies of the sugar agreement are now available for those honorable senators who desire to peruse them. Other copies will be made available as speedily as possible.
Senator Sir GEORGE PEARCE (Western Australia) [5.43]. - The Leader of the Government has intimated to me that when the Senate reassembles next week, it will have before it a supply bill. Can he inform us of the period for which it is proposed to ask for supply? I do not know whether it has yet been determined, but I suggest to the honorable gentleman that he should convey to his colleagues the view that in times like the present it is inadvisable, nay scarcely right, to ask for supply for a lengthy period.
– I understand that the matter referred to by the right honorable the Leader of the Opposition has been under the consideration of the Government. Although I can make no definite statement from the information that is in my possession, I believe that it is not intended to ask for supply for what might be considered a lengthy period. The term may be one month or, at the most, two months.
Question resolved in the affirmative.
Senate adjourned at 5.45 p.m.
Cite as: Australia, Senate, Debates, 18 June 1931, viewed 22 October 2017, <http://historichansard.net/senate/1931/19310618_senate_12_130/>.