16th Parliament · 1st Session
The President (Senator the Hon. J. Cunningham) took the chair at 11 a.m., and read prayers.
– I notice that one of the great members of the Brown family is now in Sydney, where he is doing good work in assisting to entertain soldiers on leave from the battle-fields. Will the Leader of the Senate endeavour to prevail upon him to visit the parliamentary battle-field, at Canberra, as most of us would like to meet him ?
– A great deal of important business awaits the attention of the Senate, but if the honorable senator will see me privately, I shall be prepared to discuss the matter with him.
asked the Minister representing the Attorney-General, upon notice -
In connexion with proposed alterations to Commonwealth of Australia Constitution Act, when may an answer be expected to pargraph 3 of question No. 2 asked in this chamber by Senator Collett on the 28th January last
– On behalf of the Attorney-General, I stated on the 28th January that the information was being obtained, and would be supplied as soon as it was complete. The details requested, however, are not yet available, and the honorable senator may be assured that they will be conveyed to him immediately they are received from the AttorneyGeneral.
asked the minister representing the Minister for Defence, upon notice -
– The answers to the honorable senator’s questions have been supplied to him.
asked the Minister representing the Minister for War Organization of Industry, upon notice -
– The Minister for War Organization of Industry has supplied the following answers: -
Purchase of Treasury-Bills - Surplus Deposits
asked the Minister representing the Treasurer, upon notice -
– The Treasurer has supplied the following answers -
In committee : Consideration resumed from the 17th March (vide page 1860).
Clauses 3 and 4 agreed to.
– As I indicated in my speech on the second reading of the bill, I intend to move an amendment to this clause, because, under it, the Government of the day is obliged to pay £30,000,000, or a sum equal to one-fourth of the amount received in each financial year as income tax from individuals other than companies, whichever is the less, into the proposed national welfare fund. Members of the Opposition have no objection to the Government submitting social welfare proposals , and, if they are acceptable to the Parliament, the Treasurer of the day must make money available to finance the services authorized. Therefore it should not be incumbent upon the Government to impose taxes upon the people in excess of the actual requirements. I move -
That all the words after the word “fortythree,” be left out, with a view to insert in lieu thereof the following words, “ such sums as are necessary to meet the cost of social services approved by the Parliament “.
Acceptance of the amendment would remove the obligation upon the Treasurer to transfer a fixed sum from the Consolidated Revenue Fund to the national welfare fund, but he would naturally place in that fund the revenue necessary to meet the cost of services approved by the Parliament. I know that the highest motive of the ‘Government is to establish a fund which will afford a sense of security to people who expect to benefit under social service measures approved by this Parliament, but that sense of security is illusory. The proposal of the Treasurer is that no money in the fund shall remain idle. Indeed, he pointed out in his financial statement that the balances would be invested, thus providing a useful source of temporary finance for war purposes. He also stated that they would be replaced by moneys obtained from long-term borrowing when funds were required later for welfare purposes. How the moneys are to be made available by long-term borrowing I do not understand, because the contemplated benefits are not distributed in the form of long-term investments, but in the currency of the country. As I stated yesterday, I should have no objection to this procedure if the Government had surplus funds, but the shortage of funds is greater now than it has ever been in the history of Australia. Although taxes are levied at the highest rates in our experience, the revenue is insufficient to meet the calls upon it. Consequently the money which will be taken from the Consolidated Revenue Fund and placed in the National Welfare Fund will mostly be used immediately for war purposes, but that which is paid out of the fund to meet social services will be replaced by treasury-bills for purposes of war expenditure. Built up in this way, the fund will be a mere travesty of what it ought to be, because it will consist merely of I O Us which will have to be redeemed later. When the moneys have to be replaced by longterm borrowing, the Government of the day will have a first-class problem in the conversion of the unfunded debt with which the country will then be burdened. If, with the country at war, and the people, actuated by a sense of duty and patriotism, in subscribing to loans, the Government finds it difficult to raise money, how can it be expected to succeed in raising large amounts when the war is over ? No stability will be given to social services inaugurated under this proposal. The Treasurer has rightly stated that the fund will be subject to the provisions of the Commonwealth Audit Act. For the information of honorable senators, I point out that under that act the Treasurer of the day will have, at any time, the right to close the fund, discharge the liabilities entailed, and place the balance in Consolidated Revenue. That is perfectly apparent from a reading of sub-section 4 of section 62a of the act, which provides -
The Treasurer may direct that any trust account be closed, and thereupon the moneys standing to the credit of the account shall, after all liabilities of the account have been met, be paid in to the Consolidated Revenue Fund.
– That removes the need for the amendment.
– It removes the need for the bill, and destroys the camouflage employed by the Government in order to delude the people as to the security they are likely to have; because, as I have said, the Treasurer may close the fund at any time.
– In order to comply with the act, he would have to reopen it on the following day.
– He will merely have to pay into the fund each year an amount of £30,000,000, or less. He could close it and open it repeatedly, but there will not be in it an accumulated surplus which will provide security for any social services which may be sanctioned by this Parliament. Are we to assume that the body of responsible men who constitute this Parliament will pass legislation for the inauguration of social services for which finance cannot be provided ? I cannot accept such a proposition. When schemes of social benefit are brought forward, we believe that they can be financed, and that those on whom it is proposed to confer benefits will, in fact, be benefited. To suggest that the Government entertains any doubts in the matter, is to reflect on it. If the Government considers that certain social services are necessary, surely it has no doubt of the ability of this country to meet the cost of them! When invalid and old-age pensions, child endowment, widows’ pensions, and repatriation benefits were instituted, was it suggested that this country would not be able to meet the cost of them? Such a suggestion would be a reflection on this Parliament. What has been done has been intended to give a semblance of security to proposals which the Government has not yet placed before this Parliament, but which I have no doubt it will eventually introduce, in order to encourage the people to believe that benefits will be provided for them which it will be beyond the capacity of this country to finance. If, in any year, the revenue should be insufficient to meet the cost of any scheme passed by this Parliament, the Government of the day would have to raise, by loan if necessary, whatever amount was needed to implement the scheme; but no social service can be financed permanently with loan moneys. To suggest that a welfare fund consisting entirely of I 0 Us will afford greater security than the procedure ordinarily adopted in the financing of such schemes, is merely to employ camouflage. I hope that the Government will agree to the amendment because, if adopted, it will place the proposed national welfare fund, and the whole of its social proposals, in proper perspective.
.- The Government cannot accept the amendment, because it is a complete negation of the abjective of the bill.
– It exposes the Government’s camouflage. (Senator KEANE. - It would destroy the whole of the intentions of the Government. The debate, as I said last evening, has revealed that some misunderstanding exists. Stated in a few plain words, the purpose of the bill is to set up a fund as a guarantee of the Government’s declared intention to proceed step by step with a comprehensive plan of welfare services, which will be brought to complete fulfilment after the war.
– There is not the slightest guarantee of that.
– ‘Commencing from the 1st July next, an amount of £30,000,000, raised by taxes on incomes, will be placed in the fund, to be applied to the social services inaugurated under the scheme. It is essential that a balance shall be built up to meet heavy commitments. If the honorable senator reads clause 6, he will find that the proposals contained in clause 5 have been guaranteed, and that his objective has been met. He has made scathing comments regarding what is to be done with the £30,000,000 pending its use upon social services. The money standing to the credit of the trust fund may be invested by the Treasurer in the following ways : - (o) in any securities with, or guaranteed by, the Government of the Commonwealth or of any State - consequently; the investment will be a sound one - or (b) on deposit in any bank. If the balances are invested in Government securities, a useful source of temporary finance for war purposes will be provided. The securities would be realized as the money was required for social welfare purposes approved by the Parliament. Interest on the investment of any money standing to the credit of the National Welfare Fund will be credited to that fund. I believe that all of us look to other nations for a lead in regard to big national work3. We British people look to the Mother of Parliaments. Precisely the same thing has been done in Britain.
– Nothing of the sort.
– In Britain, by the middle of 1944, an amount of £550,000,000 will have .been invested, which will earn in interest £15,000,000 a year. When any moneys have been invested in one of the ways I have mentioned, and are needed, how will their return be effected? Three ways will be open to the Government - sales of securities to the public, to the Commonwealth Bank, and to other trust funds.
Therefore, the scheme is not so fragmentary as the honorable senator would wish us to believe. It would be stupid to place in a fund £30,000,000 raised by taxes, and allow it to remain idle when there is a good investment for it. The best investment, at the moment, is in the production of means for waging the fearful struggle in which we are engaged. Such an investment would ensure that practically every section of the community was contributing to the national effort. I frankly admit that so far that has not been the position. The base of the scheme of national welfare will be the National Welfare Fund. The amendment, if adopted, would be disastrous to the bill. Honorable senators have already been given sufficient assurances - but these will be repeated, if necessary, on clause 6 - of the necessity for the National Welfare Fund, if a scheme of social services is to be implemented. It must be borne in mind that only a small moiety of the total welfare scheme will be contained in the three measures which will reach the Senate next week from the House of Representatives. The big features of the scheme are the sickness benefits and the unemployment insurance scheme. The latter will certainly be needed at the termination of the war even though it may not be required at the moment.
– Is it to be an insurance scheme?
– When I used the expression “ insurance scheme “, I adopted the language of Senator Leckie. Works for the alleviation of unemployment will have to be undertaken. I agree with Senator Leckie that neither this nor any other government can completely rid the country of unemployment, because of the divers factors which cause it. Some men are unemployable. Certain work is beyond the capacity of others; whilst there are still others for whom work cannot be found. It is the wish of the Government, that when such a cloud descends on Australia, parents and little ones shall at least be assured of the existence of a fund from which they may receive assistance that will not be eleemosynary in character. The matter of unemployment will be covered by the post-war plans of reconstruction. Either this Government or any government that may be in office will have to undertake big works in order to absorb those who, in the change-over, will leave munitions establishments, because of the complete cessation of employment of that type. It will be impossible- to reassemble, at short notice, the many small businesses that have been closed. The principal factors, as I have said, are unemployment insurance and sickness benefit. The payments by way of maternity allowance and on account of funeral benefits for the invalid and old-aged, will probably increase only slightly.
Summarized, the clause makes provision for a definite fund, without which there could not be a scheme of social welfare. The implementing of the scheme, as we have already emphasized, will not be an easy matter. Senator Cooper, who is a member of the Social Security Committee, knows what investigation of the subject is needed. The job is a long one. It must be done properly, otherwise it will be abortive. I urge the committee to reject the amendment. I give the assurance that, as moneys are needed, legislation will come before this Parliament for its consideration of the matter in every detail.
.- The amendment of Senator McBride is sound. The Government proposes to establish a trust fund into which approximately £30,000,000 a year is to be paid, yet it is proposed to draw only about £2,000,000 during the first year from it. The Minister for Trade and Customs (Senator Keane) says that the amendment would destroy the bill, but I cannot see that that is so. The Joint Committee on Social Security recommended that the whole of the social services of the Commonwealth should be brought within the scope of the fund. As the Minister for Trade and Customs pointed out in an excellent speech yesterday, clause 6 provides that moneys standing to the credit of the National Welfare Fund shall be applied to making such payments as are directed by any law of the Commonwealth to be made from the fund in relation to certain, services and benefits. All that the Government has to do, in order to fulfil the requirements of the amendment, is to bring invalid and old-age pensions and existing social services which, total about £30,000,000 a year into this fund. There can be no objection to that. If that were done, the Government would get what it seeks in this bill - a national welfare fund of approximately £30,000,000 a year - and any further social services which may be authorized by the Parliament from time to time could be brought within the scope of the fund. That would meet the claims of the Opposition, and should be satisfactory to the Government also.
– The speech of the Minister for Trade and Customs (Senator Keane) avoided the real points which have emerged from this discussion. The establishment of a trust fund is a proper step to take. The Minister endeavoured to show that the National Health and Pensions Insurance Fund is sacrosanct - that the money placed in that fund is still there, or has been invested in sound securities such as government bonds. The beneficiaries of the fund will want to know that this fund will remain sacred. I offer no objection to the money being invested in safe securities which are authorized by the Audit Act, but it amazes me that there is no .provision to prevent a needy Treasurer from dipping into the fund and transferring money from it to the Consolidated Revenue Fund. Such things have happened before in Australia, and there is nothing in the measure to say that it shall not be done in connexion with this fund. I suggest that it is only fair that the fund should be made inviolate, and not capable of being drawn upon to swell Consolidated Revenue. The section of the Audit Act to which reference has been made should not apply to this fund; there should be no risk of any Treasurer of the .Commonwealth’ balancing his budget by drawing on the trust fund to be established under this legislation. A fund into which will be paid either £30,000,000 a year or onefourth of the revenue derived from a tax on the incomes of individuals is to be established. It has been suggested that the money may be invested in government loans and employed for war purposes. To that the Opposition offers no objection. Clause 6 does not go far enough because it does not negative section 62a of the Audit Act. We should place be yond all doubt that the money in this fund shall not be at the mercy of any needy Treasurer.
– Will not the purposes for which the money is to be set aside be government commitments ?
– Does not Senator Large appreciate the effect of the provision to which Senator McBride drew attention? Under it, the Treasurer of the Commonwealth - not the Government, or the Parliament - may, of his own free will, close a trust fund and pay any balance into Consolidated Revenue. I should have thought that the supporters of the Government, who appear to be desirous of establishing a fund to enable social benefits to be conferred on the people, would have some regard for the sacredness of the trust fund to be established for that purpose, and would not leave the money subject to the whim of any Treasurer, whatever his political associations may be. We all know the difficulties which sometimes confront Treasurers when trying to balance budgets. If the Government is really anxious to protect those for whom the fund is being established, it should accept the amendment, because it will secure the maintenance of the fund for that purpose. Even though the money be invested in bonds, or in other ways authorized by the Audit Act, it will still be there, and some one will have to account for it. If the money in the fund may, at any time, at the whim of the Treasurer of the day, be paid into Consolidated Revenue, we may have a repetition of what happened in Great Britain with the Lloyd George Insurance Scheme Fund; we may find that the amount to the credit of the fund will not be sufficient to meet liabilities. It is almost farcical to pass the bill and say that the money in the fund may be invested in certain ways authorized by the Audit Act, and then place the fund at the mercy of the Treasurer of the day. I appeal to the Minister in charge of the bill, who has a mind capable of understanding financial matters, and is, I think, anxious to provide security for those who will become beneficiaries under this legislation, to consider whether section 62a of the Audit Act should apply to this fund. I shall not willingly place any Treasurer, whatever his political associations, in a position which will enable him to take action to cause a sinking fund established under legislation passed by this Parliament to disappear. In Great Britain it was found that a fund which was established without the safeguard which we seek to provide was tending towards insolvency, and a grant of about £300,000,000 had to be made. If a fund is to be established in order to provide social security for those whom this bill seeks to cover, let us protect them in reality, by freeing it from the provisions of section 62a of the Audit Act. Even if the amendment foe carried in the form in which it has been moved, the position will not be improved, unless action is taken in respect of section 62 of the Audit Act. Senator McBride aims at maintaining parliamentary control over the funds established under measures approved by the Parliament. Let us suppose that the Parliament continues to approve legislation providing for additional social services. In that event, is the Senate, as a responsible branch of the legislature, to allow a fund which should be regarded as sacred to be at the whim of any Treasurer who may be in office? “Whatever else we may do with the bill before us, let us ensure that parliamentary control of the fund which it seeks to establish shall be maintained. The point raised by Senator McBride is of first class importance, and is worthy of the most careful consideration by the Government. If we leave this fund exposed in the way that has been indicated, we shall do a great disservice to the people whom the Government is seeking to protect.
– Honorable senators opposite seem to think that if the bill is passed in its present form the money in the trust fund which it seeks to establish will be used for different purposes altogether, and will not be available when it is required for the purposes set out in the bill. Senator A. J. McLachlan said that he would not give that power to any Treasurer. That was a strong statement. Does he think that any Treasurer of the Commonwealth will be dishonorable that he will use public moneys wrongly? It has been suggested that the money in the fund may be used for war purposes. I remind the Senate that all revenues of the Commonwealth, whether used for war purposes or to provide social security for the people, must come out of the pockets of the people. If a man has to provide £100 for a certain purpose, and he has £100 in each of two pockets, what does it matter which pocket he dips into ? Does Senator A. J. McLachlan think that there is no honour among Ministers, and that no Treasurer can be trusted to do the right thing? I have no doubt that when the money is required for the purposes set out in the bill it will be available. No honorable senator has a right to make the statements which the honorable senator made here this morning.
– A similar provision to that which is contained in this bill is embodied in the National Health and Pensions Insurance Act 1938,. which has not yet been proclaimed. Sections 111 and 112 of that act read - 111. For the purposes o,f this Act, there shall be a Trust Account, to be called, the National Insurance Trust Account, which shall be a trust account within the meaning of section sixty-two a of the Audit Act 1901-1934. 112. The moneys at any time standing to the credit of the National Insurance Trust Account shall, subject to and in accordance with this Act, :be paid and applied for the purposes of this Act.
It will be seen that a previous government, of which Senator A. J. McLachlan was a Minister, passed legislation containing a provision similar to that which the honorable senator now condemns. Section 62a of the Audit Act exists for a definite purpose. There are numerous funds in existence, and when the Treasurer of the day considers that there is no longer necessity for any fund, that section of the Audit Act provides that the balance standing to the credit of the fund may be paid into Consolidated Revenue. With all respect to the honorable senator, I say it is too stupid to suppose that, while the Government has in mind a considered welfare scheme of the kind which will be launched with the passage of this bill, it would do anything like he has suggested. I see no reason for the amendment, and the Government will not accept it.
– If the Senate were to accept Senator McBride’s amendment it would bring the hill more into line with the recommendations of the Social Security Committee. Senator Keane was himself a member of that committee for some time, and is aware that it collected a great deal of evidence upon which it has issued five unanimous reports. Its recommendations embody three main principles. In regard to finance, it recommended that social security schemes should be financed by a graduated tax on income. The Government has adopted that recommendation, and I support it, though I may have advanced other views to the committee itself. Another recommendation was that all existing social service legislation should be combined in a comprehensive social service act. In the first report, which was issued on the 24th September, 1941, the committee, in paragraph 29, states -
That a Commonwealth Social Security Act to be administered by the Department of Social Services be passed by the Federal Parliament, the scope of the act to be sufficiently comprehensive to embrace all Commonwealth social legislation, including those measures now in existence and those to be enacted from time to time as part of a social security plan in Australia.
I realize that the report of a parliamentary committee is not binding on the Government, but the Government has, in fact, accepted one of the principal recommendations, while refusing to accept the others. It refuses to accept the recommendation that the proceeds of the tax should be placed in a special fund, -from- -which- all disbursements for social welfare would be made. The amendment is in accordance with that recommendation. Yesterday, I suggested that the Government could immediately apply the principle of an all-embracing social security act by disbursing funds up to the amount of £30,000,000 among the social services already operating. In this way, the fund would be placed upon a sound basis, and the Government would have the honour of introducing a comprehensive social service scheme of which it would have reason to be proud. The Government would not lose any: thing by accepting the amendment, and our social service legislation would be improved.
.- I support the amendment chiefly because it puts this bill in its proper perspective. This is not a bill to provide £30,000,000 for social welfare; it is a bill which pretends to provide £30,000,000 for that purpose, while, in fact, providing only £2,500,000, and I should like to see that clearly stated. The Minister has completely failed to answer . the criticism of Senator McBride which he based on the .provisions of the Audit Act. He told us that the bill was a guarantee, and in a measure that is true. It is a promise that something willbe done in the future1. No considered social welfare plan is provided for in the bill, and the only justification for the measure is that it provides the Government with an opportunity to say to the public, “ We are putting aside £30,000,000 which is secured for the purpose of something that we propose to do in the future “.
– It is not secured at all.
– The truth is that it is not secured. Members of the Labour party must be very gullible if they believe that the form of words used in the bill constitutes a guarantee that the fund will continue to exist and will be used for the purposes described in the bill. Under the bill the Treasurer is to’ pay £30,000,000 into a special account. He is required to do that, but the very moment he has done so he may, under the provisions of - the Audit Act, take it out again, seeing that there is in existence no social welfare scheme.
– Why does the honorable senator keep on repeating a statement which we have denied?
– I do not care how often it has been denied; the fact -is that there is no social welfare scheme in existence at the present time.
– That is not true.
– There is no scheme in existence other than that which is outlined in the three bills that are to be introduced.
– That is correct.
– And those bills will provide for the expenditure, not of £30,000,000, but of £2,500,000.
– And there is a guarantee regarding the balance.
– There is no guarantee that the money will be kept in the fund even until such time as the scheme is brought before Parliament. The Treasurer is empowered to close the account at will. So long as there is in existence no scheme requiring the expenditure of money over and above £2,500,000, what does the guarantee amount to.
– The Treasurer cannot close the account while there is in existence an act with an objective such as we have stated.
– I do nor. agree with that, but even if it were true, the fact is that there is no such act in existence at the present time. There is only a proposal to introduce three bills which will, provide for the expenditure of £2,500,000. I do not agree that a few paltry measures providing for an increase of the maternity allowance and for some slight variation in the matter of widows’ pensions constitute a scheme of social insurance. If that is the best the Government can do in the way of a social security scheme, the sooner it gives up the job the better. When I speak of a social welfare plan I have in mind something comprehensive, something which would have regard to the social ills of the community, and which would seek to remedy them, or to alleviate evils arising out of them. I repeat that there is nothing before the Senate or even in the three bills referred to, which can, by any stretch of the imagination, be regarded as a plan for social welfare. Ear from there being anything of the kind, what the Government has so far placed before us is nothing more than a hotch-potch. According to the Government’s proposals, some social services are to be financed out of the special fund, while others are not, but we have not been told why. I regard invalid and old-age pensions as part of a comprehensive social service scheme, but they are not included in the Government’s plan. Apparently the ‘Government is not concerned to provide what it calls a guarantee m respect of invalid and old-age pensions. Honorable senators opposite probably remember that the Scullin Government had to reduce the rate of invalid and old-age pensions, so they do not want to tie themselves to a guarantee in relation to such pensions. For that reason, invalid and old-age pensions are not to be included in this scheme. No guarantee is sought under the bill in respect of the cost of invalid and old-age pensions, which amounts to over £20,000,000 annually, or the cost of child endowment, which amounts to £12,000,000, or in respect of the millions of pounds expended annually on other social services. The guarantee now sought by the Government is in respect of the sum of £2,500,000, which is required for maternity benefits and funeral benefits for invalid and old-age pensioners. But even in respect of that small amount, the Government is not prepared to state its proposal frankly; it pretends that it is providing £30,000.000 for new social services.
– The arguments advanced by honorable senators opposite in this debate could emanate only from persons with Fascist and Nazi temperaments. Honorable senators opposite contend that no scheme is set out in the bill. That is “ imaginitis “. The purpose of the bill is to provide & fund for purposes which are briefly stated in it and to implement other bills which are to be introduced. I have no doubt that any proposal to place this money in the hands of trust companies, of which the right honorable member for Kooyong (Mr. Menzies) was a director when he was a Minister, and from which directorates he resigned a few years ago, would be supported by honorable senators opposite. In the near future, we must provide proper dwellings fox the poorer sections of the community. If that be not done, existing slum areas will become even worse. It is possible that portion of this fund will be used to afford relief to soldiers of the last war who were settled on the land under various schemes, and were starved off their holdings, and to-day are in need. The history of soldier settlement schemes in New South Wales commenced with the acquisition of a large estate at Coolah by a member of the New South Wales Parliament, who bought that land for £4 an acre, and the same land was sold to the New South Wales Government for £8 an acre. To-day, not one of the original returned soldier settlers remains on that land. The bill definitely states that money standing to the credit of the fund to be established under it shall be applied in making such payments as the Government determines. The measures under which such benefits will be specified must be dealt with progressively.
– 1 ask the honorable senator to confine himself to the clause before the Chair.
– Obviously, honorable senators are endeavouring to belittle the measure in order to hinder the Government in undertaking progressive schemes designed to help people who are most deserving of assistance. The amendment, if it be adopted, will mean that only £2,500,000 will be paid into the fund. Senator McBride, who has moved the amendment, knows that in one State alone as much as £9,000,000 a year was required to provide the unemployed with a dole which was only sufficient to enable them to purchase a loaf of bread a day. Therefore, it is useless to provide so small a sum for the provision of any social service benefits. Any fund for this purpose must be sufficient to assist our people when they are in distress.
– The main cause of the misunderstanding which has arisen in respect of the establishment of the proposed national welfare fund is due to the manner in which the Government has presented this and cognate bills to the Senate. We were asked to deal first with taxation proposals associated with this proposal. Although honorable senators opposite said that there was no connexion between the two measures, the Prime Minister (Mr. Curtin) stated definitely that they were complementary. The Government should have submitted this bill before asking us to deal with the measure for financing this scheme. In addition, it should set out its scheme clearly and in detail. Once Parliament has agreed to the establishment of such a scheme it is obliged to raise in some way the funds necessary to implement it. However, in this instance, the Government has put the cart before the horse. We have already dealt with the taxation measure by which the welfare scheme will be financed, and now we are dealing with the bill covering the scheme itself. Even that would be acceptable if the bill clearly set out the details of the scheme. We have not been told what class of benefits are to be provided. We are asked to take a leap in the dark. No difference of opinion exists between honorable senators on this side and the Government with respect to the wisdom of providing social services. Indeed, honorable senators on this side have given proof of their bona fides by supporting past governments which have established the majority of our existing social services. One could almost say that all parties have competed with each other in their desire to provide essential social services.
– I ask the honorable senator to address himself to the clause before the Chair.
– The Government should set out clearly in the bill the scheme which it has in mind.
.- Honorable senators on this side have been endeavouring to ascertain exactly the purposes for which the fund proposed to be established under the measure will be used, but so far we have not received a satisfactory answer. We have been told that some of the money will be used to provide maternity allowances, but the amount required for that purpose will be but a very small proportion of the total fund. The clause dealing with the purposes of the fund is couched in vague and shadowy terms. It does not indicate exactly what is in the mind of the Government. However, Senator Arthur, who, I presume, has some knowledge of what is in the minds of the Ministers, has just informed us that some of the money will be used for housing schemes.
– The fund, definitely, will not be used for that purpose.
– I am glad to have that assurance from the Minister; because if one of the purposes for which the fund is to be used is the provision of housing, the amount proposed to be set aside would be entirely inadequate to finance social’ services. The Opposition does not desire to defeat the measure. We wish to improve it. Indeed, the provision of social service benefits is dear to the heart of every honorable senator on this side. Our concern is that the Government should not fail in any respect in dealing with this matter. Honorable senators opposite have reiterated that the Government can finance social services out of loan money and still maintain solvency. The fact is that any government which does not finance Social services out of ordinary current revenue is heading for disaster. The bill will bolster up the opinions of honorable senators opposite, who are always saying that whilst we have always been able to find millions for war purposes, we have failed to find the money necessary to finance ordinary social services. That statement has been constantly repeated not only in this Parliament but also in the country.
– It is a “ winner “.
– I know; but it is false.
– If a government does not finance social ‘benefits from current revenue, it is working on false premises and misleading the people. I desire to dispel any belief that, a permanent scheme need not be paid for out of current revenue.
– But the Government proposes to meet the cost of the scheme out of current revenue.
– Unless a country lives upon its earnings, it is heading for disaster. The purpose of the amendment is to improve the bill and to ensure the stability of the fund. The Senate and the country should not be deceived by vague and meaningless schemes. More serious still, the Government i3 fostering the belief that social services can be provided out of loan money, and that is the worst form of fallacy. I support the amendment.
– The contentions of the Opposition in support of the amendment are a repetition of the general objections that honorable senators opposite raised to this clause during the debate on the motion for the second reading of the bill. They must be aware that the Government has consulted with the Treasury regarding the administration of the fund. Surplus moneys in the fund will be invested, and interest accruing on them will be placed to the credit of the fund. If the Government had agreed to bury the money in a jam tin in a suburban garden, the Opposition would have been well content. Honorable senators have even questioned the Audit Act.
– To every proposal advanced by the Government, the Opposition raises constitutional impediments. If a United Australia party government were in office, it would receive the same advice as the Labour Government is now receiving from the Treasury.
– But the United Australia party government would not be obliged to accept that advice any more than is the Labour government.
– Honorable senators opposite have questioned the right of the Government to make provision for the post-war period, but they ignored the recommendations of the Joint Committee on Social Security, which was appointed, not by the Labour Government, but by the Menzies Government two years ago. That committee is representative of all political parties in this Parliament. After exhaustive inquiries, it has submitted recommendations for the provision of social services generally, and those matters are covered by the bill. The time is now opportune to plan for the future, and that is the object of the Government in establishing the proposed national welfare fund. True, only a small amount of the money paid into the fund will be expended immediately on social services; but the remainder will be invested in gilt-edged securities. This is not the first occasion on which moneys in trust accounts have .been invested on behalf of the Commonwealth Government.
– It will be the first occasion on which a trust account has been ravaged.
– The Opposition has raised no valid objection to the bill. I do not suggest that honorable senators opposite resist the establishment of social services for the people. The division of opinion occurs on the appropriate time for providing the necessary finance.
The Government considers that the present time is opportune, because every one is now in employment. The Opposition has also overlooked the value of building up the morale of the people in these critical times. The establishment of the proposed national welfare fund will assure to the people protection against financial depressions and the dole. The bill will guarantee to them a measure of social security. I ask the committee to reject the amendment.
Question put -
That the words proposed to be left out (Senator McBride’s amendment) be left out.
The committee divided. (The Chairman - Senator Brown.)
Question so resolved in the negative.
Clause agreed to.
Clauses 6 and 7 agreed to.
Preamble and Title agreed to.
Bill reported without amendment; report adopted.
Motion (by Senator Keane) proposed -
That the bill be now road a third time.
– Earlier, the Opposition indicated that it was most desirous of having the amendment to clause 5 accepted, and some misunderstanding has occurred in an endeavour to carry it. I am anxious that no reflection shall be cast on the Leader of the Senate (Senator Collings). Hansard shows that last Friday Senator Crawford was paired with Senator Aylett. The vote was taken on a motion to change the order of business, so as to bring this bill before the Senate for immediate consideration. A report appeared in the press this morning to the effect that Senator Crawford had not telegraphed to me; but I have in my possession a telegram from Brisbane, sent at 4.42 p.m. on Tuesday, the 16th March last, which reads as follows: -
Have wired Collings as follows : - “ Advised you have paired me with Senator MacDonald; regret I cannot agree to this arrangement “. - Crawford.
Since then I have received another telegram from Senator Crawford, stating that he had advised Senator Callings that he would support the Government on the amendment, and that he had left the pairs to Senator Collings’ discretion. I wish those facts to be placed on record, so that there may be no misunderstanding. I very much regret that Senator Crawford changed his mind, because I obtained a pair for him in order to allow him to go to the Sugar Conference in Queensland - and it was necessary that he should be there. I regret also that a reflection is now cast upon Senator Allan MacDonald owing to his absence from this chamber, because he told me that if he could not get an unconditional pair he would not leave here to go to Western Australia to say good-bye to his children and attend to urgent private business before he leaves for England. I regret the circumstances that have arisen, but the Opposition has been defeated on the amendment, and the matter is now closed.
– I regret that I was absent from the division on Senator McBride’s amendment, because I was particularly anxious to vote for it. I happened to be out of the chamber for two or three minutes. I had a most important appointment with the secretary of one of the Ministers, and I did not hear the bells. As I have said, I particularly wanted to support the amendment, because I thoroughly endorse what Senator McBride said. I am sorry that the amendment was not carried, and [ regret the incident very much.
Question resolved in the affirmative.
Bill read a third time.
Sitting suspended from 12.34. to 2.15 p.m.
Debate resumed from the 11th March (vide page 1507) on motion by Senator Fraser -
That the bill be now read a second time.
– I have had an opportunity to consider the second-reading speech made by the Minister for External Territories (Senator Fraser) on this measure, and I propose to support the bill. It is only fair to state that, in war-time, one could not expect the Government to establish a more elaborate mortgage institution than the proposed mortgage bank department of the Commonwealth Bank provided for in this measure. However, I consider that there is some merit in the view expressed by Senator Allan MacDonald, who dissented from the recommendations of the special committee which examined this matter, that, having regard to the serious financial strain that is imposed upon this country to-day owing to the war, the time is not opportune for a measure of this kind. I should like to make it quite clear, however, that the principle of a national mortgage bank department has no greater supporter than that honorable senator.
The setting-up of a mortgage bank department of the Commonwealth Bank involves an important principle. There is no doubt that long-term loans can be of immense value, particularly to those individuals who are starting out in industry. Every man who has had some business experience realizes that there is some foundation for the criticism that, in effect, private banks give to a businessman an umbrella when it is dry, and take it away when it is raining. I know from my experience of the last depression that the most difficult time to get an overdraft is when it is really required. Of course, our private banking institutions are business undertakings. They are holding the money of their shareholders and depositors, and they have to impose adequate safeguards in their business dealings. If any institution should lend money on a long-term basis at a reasonable rate of interest, it is the Commonwealth Bank, and although the limitations imposed under this measure may cause some disappointment in certain quarters, at least it is an important step in the right direction so far as our national bank is concerned. It is a foundation, and, as I said earlier, one could not have expected the Government to have done much more in time of war.
It is regrettable that, as has been the case with many other important national projects, the establishment of a mortgage bank department of the Commonwealth Bank has been made the plaything of party politics. For the last fifteen years, politicians and would-be politicians have been saying what a wonderful help a national mortgage bank department would be. I have said it myself in the course of many election campaigns ; but if any criticism is to he levelled, it should be aimed at those irresponsible individuals who have advocated something that is ridiculous and ludicrous. For instance, Senator Darcey has said on many occasions in this chamber that the recommendation contained in paragraph 504 of the report of theRoyal Commission on Monetary and Banking Systems should be adopted and that the Commonwealth Bank should lend money free of interest.
– To the Government and not to others.
– I realize that that was the recommendation of the royal commission, but that does not mean that the Commonwealth Bank should he so stupid as to accept it. I presume that Senator Darcey, like most business men, has had the experience of borrowing from the Commonwealth Bank upon his assets. Would the honorable senator be prepared to borrow money from that institution to-day at 4¼ per cent., and then lend it to some one else free of interest?
– I have never advocated that.
– Many individuals who have supported the findings of the royal commission in this regard have advocated something along those lines. In the House of Representatives when this measure was under discussion, we had the sorry spectacle of one of the Government’s satellites, anxious to make political capital out of long-term lending, advocating loans for a period of 40 years at 3 per cent, or less. Surely that honorable gentleman must know that no bank could trade on such terms and break even, far less make a profit. It would definitely lose money. How could the bank possibly pay 3£ per cent, on loans, and then lend the money out on a long-term basis at 3 per cent., meeting at the same time all the expenses attached to its activities, bad debts, and so on? Such a proposition obviously would be unsound business, with the exception that in order to assist individuals to get a start in industry, it might be advisable to advance money at 3 per cent. It is of no use fooling ourselves or endeavouring to fool the people that the Commonwealth Bank can lend money at 3 per cent., unless it takes it out of somebody else’s pocket. The obvious thing to do is to make long-term loans available at the lowest possible rate of interest which will enable the bank to conduct its business on sound lines. Experts who gave evidence before the special committee which considered this measure stated that 4 per cent, was about the lowest figure at which the mortgage department could break even, and I am pleased that the Government has not included in this measure any specific rate of interest.
– Much depends on the value.
– Yes, and on future conditions. Assistance should be given to sound business and industrial undertakings, or to individuals starting out with new propositions, at the lowest possible rate compatible with sound business principles. If assistance has to be given to an industry that is experiencing bad times, the correct method is for the Government to pay a subsidy, either by means of a direct contribution, or by the fixation of a payable price based on the cost of production.
Much loose criticism is levelled at the private banking system in Australia, but it is interesting to know that the majority of the shareholders in private banking institutions are persons in receipt of very small incomes. In respect of some of the banks as many as 70 per cent, of the shareholders have incomes under £500 a year. These people have used their money in making what they consider to be safe investments. My experience of the private banks is that they are sound and honorable, and those conducting them are highly respected citizens. In the depression of 1931, all of the private banks in Australia honoured their obligations, but that cannot be said of some banks in other parts of the world. It cannot be said of one bank in Australia, because of the actions of a well known Labour man, who had views on banking which were similar to those held by Senator Darcey. Much loose criticism is heard about the profits made by the private banks, but if a person invests his money in a business he is entitled to make a profit. If he obtains too much profit, the Government should tax him, but there is not a great deal of profit to be made in investments in banks in Australia today. I am proud of the service which the private banks of this country have rendered to the community. I have made comparisons between those banks and the government-owned banks, and the losses sustained by some of the government banks in Australia during the last twenty years give no cause for pride. It has been proved many times that, in 99 per cent, of cases, private enterprise can do a job, even in the realm of banking, better and more cheaply than can a government undertaking. Some honorable senators, who have examined costs during the war, have noticed that some private firms have produced articles’ at one-half of the prices charged for similar articles produced by government-owned undertakings. The cheap criticism levelled against the private banks is unjustified. I quite approve of having a Commonwealth Bank which is looked upon as a central bank. Such an association with the private banks has worked exceedingly well, and I hope that the Government will not allow the Minister for War Organization of Industry (Mr. Dedman), and other cranks who have theories about a new order, to destroy the private banking system. If honorable senators opposite think that, by nationalizing the banks and resorting to the use of bank credit, all will be well in Australia, they are only fooling themselves.
I regret that the Minister for External Territories (Senator Fraser) is not in the chamber, because I desire to convince him that some of the statements made by him in connexion with the advances to farmers are entirely wrong. The wheat-farmers in this country will not be saved by long-term loans free of interest. The only thing that will save them is a payable price, having regard to all of the circumstances. What has been the practice and policy of the Curtin Government over the last two years? It has set up a Women’s Employment Board to ensure that those engaged in certain industries are paid a reasonable wage, including cost-of-living adjustments and a war loading. I believe that all employees are entitled to reasonable industrial conditions, but conditions should be determined by experienced judges of the Arbitration Court. Yet the Government, for political reasons, is most anxious to spoon-feed a section of the people whom it regards as its own political supporters. The members of trade unions contribute a certain sum to the Australian Labour party to enable elections to be won. This Government has looked after the interests of its own political supporters, but has similar consideration been shown to the growers of wheat, barley, grapes, potatoes and blue peas? We have had the spectacle of the Government being prepared to buy the support of those who it hopes will vote for its candidates at the next general elections. The Government decided to set up a tribunal to fix the wages of men employed in the harvesting of the wheat crop sown in 1942. The board was politically picked and loaded against the farmers. It was not competent to deal with the evidence submitted to it, but within two days it made an award as to the wages to be paid to the men employed in harvesting work. It awarded 3s. 3d. an hour, which worked out, with keep, at about £9 6s. a week of 48 hours, with time and a half for overtime.
– The honorable senator is quoting only the rates applicable to skilled workers.
– It was once my job to be a stacker of hay. Although, stacking did not require as much skill as driving a reaper, I was not paid at the rate of £9 6s. a week and time and a half rates for overtime. Many sons of farmers are fighting overseas at 6s. 6d. a day and keep, and without any payment for overtime. Let us see what the present Government has paid to the wheat-farmers during the two years that it has been in office.
– There is nothing in the bill about wheat-farmers.
– I hope to convince the Government that a further payment to the wheat-farmers for the wheat delivered by them would help them more than the establishment of a mortgage bank department of the Commonwealth Bank. On a number of occasions the prices paid to farmers for their wheat have been discussed in this chamber. I have taken the opportunity to obtain official figures from the Department of Commerce and Agriculture in this matter, and I propose to give them to the Senate. For the wheat harvested in 1939-40, the average price paid to farmers was 3s. Bid. a bushel at country sidings, after deducting 4£d. a bushel for freight. The following year, 1940-41, farmers received 3s. 6¾d. a bushel at country sidings for their wheat. For the first year that the Curtin Government was in office - the season 1941-42 - the farmers received payment at the rate of only 2s. 7½d. a bushel for the 153,000,000 bushels of wheat that they delivered.
– That rate was arranged by the previous Government.
– It was not. Two years have elapsed since that wheat was delivered and farmers have been called upon to pay accounts relating to that period. If the Government wishes to keep wheat-farmers solvent, it will assist them more by making a further payment in respect of wheat already delivered than by establishing a mortgage bank department of the Commonwealth Bank, because at the prices paid for their wheat, they would not have sufficient security on which to borrow money.
– What has the honorable senator to say about the difference between the payment for the first 1,000 bags this year and last year?
– I shall deal with that point later. I propose to deal with this matter in an orderly way. Although I do not say what further amounts should be advanced in respect of the 1941-42 crop, I point out that the Minister for Commerce and Agriculture (Mr. Scully) has said that a payable price is 4s. a bushel.
– .What have the honorable senator’s remarks to do with the bill?
– They have a great deal to do with the bill. A payment of 2s. 7-Jd. a bushel does not cover the cost of producing the wheat. An Australian standard has been established for workers in industry, including women workers, but payments to farmers for their wheat are less than the cost of production, thereby forcing wheat-farmers to accept a coolie standard of living. I have received so many requests for a further payment in respect of wheat already delivered that during the next recess I propose to visit various wheat-growing districts in order to tell farmers how they have been treated by the Curtin Government. Should Senator Clothier, who professes to know so much about the wheat industry, regard my statement as a challenge, I am prepared to visit any wheat district in Western Australia and discuss the subject on the same platform with him.
– The honorable senator is not confining his remarks to the bill before the Senate.
– This year, the Government has agreed that 4s. a bushel is a payable price for wheat, but that rate is to be paid in respect of only the first 1,000 bags of wheat delivered by any grower. Seventy per cent, of the wheat-growers of Australia produce less than 1,000 bags of wheat. For wheat delivered by any grower in excess of 1,000 bags 2s. a bushel, which is below the cost of production, will be paid. It has been said that the farmers will receive an additional payment when the balance of the wheat in the pool has been sold.
– What is wrong with that?
– I do not suppose that a great deal of wheat is grown in the Bankstown district in which the honorable senator is so interested. Every wheat-grower who delivers more than 1,000 bags of wheat will get only 2s. a bushel for the additional quantity. Should a man deliver 8,000 bags of wheat, the average price which he will receive for it will be only 2s. 3d. a bushel. I ask the Government to bring all payments for wheat up to 4s. a bushel.
– The honorable senator is exceeding his privilege by discussing a subject which is beyond the scope of the bill.
– I propose to connect my remarks with the cost of interest under loans advanced by the mortgage bank department of the Commonwealth Bank. The amount of advances is limited to £5,000. The honorable member for Wimmera (Mr. Wilson) has suggested that the rate of interest should not exceed 3 per cent. This measure is the price which the Government is paying for the support of that honorable member. I propose to show that it is practically worthless. It does not represent any substantial benefit to the wheat-farmers. If loans up to £5,000 were made available to farmers free of interest, the saving to the farmers on the basis of interest at the rate of 4 per cent, as set out in the bill would amount to £200. Yet, despite the attempt by the honorable member for Wimmera to obtain some saving for the farmers by limiting the rate of interest on advances made by the mortgage bank department to 3 per cent., he supports the Scully wheat plan. Under that plan a price of 4s. a bushel is guaranteed in respect of the first 1,000 bags, and in respect of all production in excess of 1,000 bags, a price of 2s. a bushel is guaranteed. If the honorable member supported our contention that the guaranteed price of 4s. should be applied to all production he would save a farmer who produces 2,000 bags of wheat £300 in respect of the second 1,000 bags. I have already said that the price of 2s. a bushel represents only 50 per cent, of the amount which the Government itself considers to be a payable price. Honorable senators can work out for themselves the substantial savings which would be effected by growers who produce over 2,000 and up to 8,000 hags. Therefore, when the honorable member for Wimmera and the Minister for External Territories claim that this measure will save the wheat-farmers, they are simply endeavouring to mislead them. The same observation applies to producers ofbutter, barley and other products. Those producers can best be helped by the provision of a payable price for their commodities.
– They ask for a payable price, and the Government gives them an act of parliament.
– For the reasons I have given, I shall support the measure; but I again appeal tothe Government to give a greater measure of assistance to our primary producers by guaranteeing payable prices for their products. I urge it to make to farmers a further advance in respect of wheat delivered in 1941, for which they have received on the average only 2s. 7½d. a bushel. It could thus do something really worth while to help the wheat-farmers. I admit that this legislation will help the farmers to some small degree, although it will not solve their problems.
.- I do not propose to givemy blessing to this measure. The primary producers will receive very little assistance under it. Obviously, it has been brought down for the reason mentioned by the Leader of the Opposition (Senator McLeay), namely, in order to satisfy what one newspaper has described as the Government’s synthetic majority. I am not satisfied with the proposals embodied in the bill. The assistance provided will not be made available to the man who really needs it. Under the Government’s original (proposal, producers could not apply for advances from the mortgage bank department unless they had a 40 per cent. equity in their property. I point out that any man who has a 40 per cent. equity in his property is in fairly good circumstances, and can obtain advances from many private sources at 4 per cent. He can have such loans spread over any term he wishes. He does not have to tie himself to a term of 40 years, but can pay off such loans over any period he wishes. At the same time, hundreds of wheat-farmers in the Mallee district in Victoria and in Western Australia do not possess 40 per cent. equity in their properties. Therefore, they will not be able to apply for assistance under this scheme, which compares most unfavorably with that which has been in operation in Victoria for the last 30 years. Under that scheme, a producer can obtain an advance up to 80 per cent. of the value of his property, and additional advances in respect of improvements. The proposal under this measure, however, simply slams the door in the face of any producer who receives advances up to 70 per cent. of the value of his property. Repayments under the Victorian scheme, to which I have referred, can be spread over 40 years, and are made in equal half-yearly instalments, the interest being at the rate of 4 per cent., and at the rate of 1 per cent. in respect of the sinking fund. Under that scheme, any producer who has received advances on up to 80 per cent. of the value of the property can obtain further advances against his improvements and plant. This bill will force farmers into the hands of stock and station agents and the machinery merchants. We know that the latter charge interest at rates up to 16 per cent. on the price of machinery bought on the hire-purchase system. The Victorian scheme is designed to prevent such exploitation. The Minister for Trade andCustoms (Senator Keane) has repeatedly stated that the Commonweal th Bank was hamstrung by the Bruce-Page Government; but I point out that the Commonwealth Bank has had absolute freedom to make advances to producers up to any amount it deems advisable. If it so desired, it could make advances to producers up to 100 per cent. of the value of the asset, and spread the loan over any period, at whatever rate of interest it decided. Under this measure the Government will hamstring the Commonwealth Bank. The same provisions to which I have just referred also applied in respect of the Commonwealth Savings Bank. Neither of those institutions will now be able to advance money to producers on the liberal terms which they were able to do in the past if they would. Any producer who cannot repay a loan over a period of 40 years would be far better off working for wages; otherwise he would simply be a slave. After receiving advances from the mortgage bank department to the limit provided in the bill a farmer will have to look elsewhere for finance to enable him to increase hL stock, or to effect additional improvements on his property. Once the stock and station agents know that a farmer is tied up with the mortgage bank department under the conditions set out in this measure, they will refuse to sell the stock to that farmer and will call in for sale any stock held, but not purchased, by the farmer. The result will be that many sheep-raisers will be obliged to sell their stock just when they are reaching a marketable condition. Ear from conferring a blessing on primary producers, this scheme will be regarded by many as a curse. Under this measure, the farmers will not be able to obtain finance for the improvement on their holdings. The man who has the equity that the Government stipulates could get his money anywhere for 4 per cent, to-day, but for the fact that the State Parliaments have passed moratorium acts which will not permit money to be lent. There is any amount of money available at 4 per cent., but the banker lends not on the asset, but on the borrower and his system of management. That is why some people make a success of life and others do not. The difference between the 4 per cent, proposed and the 2£ per cent, suggested is a mere bagatelle on a loan of £3,000, and would not mean ls. an acre, but the margin between success and failure is so slight that, in effect, one drought will wipe a man’s business out of existence. The whole system that the Government has laid down in this bill is entirely wrong. I shall not oppose it because I believe that every member of the House of Representatives supported it. Of course, that is no reason why I should support it, but I shall not vote against it.
– That is in case .the honorable senator’s angle is wrong.
– I believe that my angle is entirely right. I know something about farming and about the man on the land, and I am positive that this proposal is not in the interests of the man whom it is intended to assist.
– When I heard the Leader of the Opposition (Senator McLeay) describe a banker as a man who will lend one an umbrella when the weather is fine, and send for it when it looks like rain, I almost thought that I had made a convert, because that just describes bankers and the banking system as I know them. When, however, the honorable senator went on to ask the Senate how the Commonwealth Bank was going to .pay depositors interest on their money whilst lending it out interest free, I could see that he did not understand the real position. I have never at any time asked the ‘Common wealth Bank to lend money to private individuals. We own the Commonwealth Bank, and its profits go to the nation. The only object for which I ever advocated the use of national credit is public works, which are quite different. If I asked the Commonwealth Bank to lend me money I should have to put up my security and pay the usual rate of interest as a private citizen, but we are here to look after the interests of the nation, not to pay the private banks, as in the past, scores of millions of pounds in interest. That is no longer necessary when we have our own Commonwealth Bank which can issue credit free of cost. -The Leader of the Opposition should know that the banks do not lend money at all. What they do is to create credit. My authority is The Story of the Commonwealth Bank by D. J. Amos, and the authorities that he quotes are: The Commonwealth Bank Acts 1911-1927, The Official Year-Books 1910-30, the Commonwealth Bank balance-sheets, 1912-32, Parliamentary Debates 1911-27, Dun’s Gazette, 1926-29, the Argus, 1924-25, The Commonwealth Bank of Australia by C. C. Faukner, and Facts and Theories of Finance by the late F. Anstey, M.P. Therefore I hope that no one will question the statements’ which I am about to make. We are told that the Commonwealth Bank was not” affected in any way by the act passed by the Bruce-Page Government to amend the Commonwealth Bank Act, and that it is still just as easy to borrow money from it as it was before that act was passed. Let me show how the Bruce-Page Government favoured the private banks. Mr. Amos states -
During the war, the private banks had been granted the privilege of getting three fi Australian notes for every £1 in gold they deposited with the Treasury, so that they were thus enabled to increase their cash reserves by three -
Anybody who knows anything about hanking will realize that the cash reserves of a bank represents its purchasing or lending power - and therefore their loans, which were based upon their cash reserves, by a similar figure. The private trading banks, I might mention, do not fend out their cash deposits at interest.
That is confirmed by the statement, which I quoted here before, of the manager of the Canadian Government Bank. They lend against their deposits as I have been telling ‘honorable senators opposite for five years, but there is none so blind as he who does not want to see -
They keep them to meet any demands for cash made upon the banks, and give credit for from nine to twelve times the amount of these cash deposits. Therefore, if the private banks got £300 cash in Australian notes for £100 in gold, they could give credit for about £3,000 instead of £1,000-
Do honorable senators realize that the banks can lend against at least eight times the amount of their deposits? and so earn three times the amount of interest they were doing before - a very profitable arrangement for the private banks. The additional £2 was treated as a loan to the banks (at rates varying between 3 -per cent, and 4 per cent.), and was repayable not later than twelve months after the end of the war.
That is the arrangement that the BrucePage Government made with the private banks -
This three-to-one arrangement was later reduced to two-to-one, and war bonds were deposited by the banks as security for the additional £1 loaned; but the banks in many cases did not draw the additional notes - they traded on their “ rights “ to these notes as if they actually possessed them, and .so avoided paying interest to the Government.
I have explained here more than once that the private banks had the right to draw against the notes under the arrangement made with the Bruce-Page Govern ment, which was just the same as presenting them with £30,000,000. Whilst they had that right, the notes could still remain in the vaults of the Commonwealth Bank and the private banks could lend against them, increase their deposits by 1,000 per cent., and then buy war bonds with them, which they deposited with the Commonwealth Bank as security -
These “ rights to draw “, according to Anstey, amounted to £8,000,000 on the 23rd June, 1923, and the Commonwealth Bank, which now controlled the note issue, demanded that the banks should exercise their “ rights “, draw the notes, and pay the interest thereon. With one voice the private banks refused, and prepared for battle. Sir Denison Miller had died in June, 1923 - mourned as few public men in Australia have been mourned - so that their most formidable adversary had been removed from their path, while a Liberal government, the Bruce-Page Administration, was now in power. Early in 1924 the private banks demanded that their “ rights to draw “ should be extended by another £3,000,000.
That placed £3,000,000 more in cash in their coffers which they could lend against -
The chairman of the Notes Board of the Commonwealth Bank described- the proposition as “ madness “, and the Treasurer upheld that view; but the banks’ demand was conceded. The hour of the private banks had struck, and they also struck - below the belt. They used the Commonwealth Government to strangle the Commonwealth Bank.
Senator Gibson said that nothing was done to interfere with the Commonwealth Bank. The new governor who succeeded the late Sir Denison Miller would have carried on in the same able way in the interests of the people, but he was removed, and this is what happened -
In June, 1924, the Bruce-Page Government brought in a hill to amend the Commonwealth Bank Act by taking the control of the Commonwealth Bank out of the hands o,f the new governor and placing it in the hands of a directorate consisting of the governor of the bank, the Secretary of the Treasury, and six persons actively engaged in agriculture, commerce, finance, and industry, to be appointed by the Governor-General (which in practice meant the Bruce-Page Government) for different terms of years. The bill provided that the governor of the bank should be merely the chief executive officer of the directorate, which should elect its own chairman, who should have a casting vote. (The effect of these clauses was to place the bank absolutely under the control of a body of men who might be bitterly opposed to any competitionwith private banking.) The bill also provided, among other things -
1 ) That the new directorate should control the notes issue department of the bank.
That out of the profits standing to the credit of the bank, £4,000,000 should be transferred to its capital account, which was increased to £20,000,000. ofwhich £6,000,000 might be loaned at interest by the Government, and what was needed to make up the £20,000,000 might be raised by the issue of debentures. One-half of any profit the bank should make was to be paid into the National Debt Sinking Fund. (The effect of these “capital “ clauses, when put into effect, would have been to impose such a tremendous drain of interest upon the bank that they were never carried out in their entirety. The capital account of the bank was increased to £4,000,000, but no further money was borrowed from the Government, or raised by the issue of debentures.)
– I rise to order. The honorable senator is not addressing himself to the bill which deals with the establishment of a mortgage department of the Commonwealth Bank; he is discussing the general constitution of the Commonwealth Bank as it was some years ago.
– On a number of occasions recently, I have allowed the honorable senator considerable latitude when discussing financial measures. He must confine his remarks to the measure before the Chair.
– I bow to your ruling, Mr. President. I was merely endeavouring to reply to misstatements made by Senator Gibson and the Leader of the Opposition (Senator McLeay). Such misstatements should not be permitted to go unchallenged. In rebuttal of the allegations made by these honorable senators I have cited the most eminent authorities available. The Leader of the Opposition referred to men supporting financial ideas similar to those that I have expounded so often in this chamber as a body of cranks. In spite of what Senator Gibson has said, I shall support the bill. The honorable senator spoke of going to private banking institutions and borrowing money at 4 per cent. for long periods, but he knows quite well that unless a special arrangement is made, a bank overdraft is carried on only from day to day. The establishment of a mortgage bank department of the Commonwealth Bank will be particularly valuable to the primary producers as it will tide them over bad seasons. The Leader of the Opposition said that the private banks had been of great assistance to Australia generally, and particularly to primary producers, but I can prove conclusively that those institutions have not been the friends either of the Government or the people. The depression of 1929-31 was deliberately caused by the private banks. Thousands of primary producers were ruined, and our primary industries have not yet recovered from the blow that they suffered. To those who say that it is impossible to lend money to primary producers free of interest, I point out that in 1930 the Lyons Government was forced to come to the assistance of our primary industries, and a measure was, passed making a straight-out grant of £12,000,000. Of course, when that was done the private banks merely created the £12,000,000 out of nothing, and then assessed the liabilities of the wheatgrowers to the banks only, disregarding debts to storekeepers, &c. The banks then issued cheques which eventually were returned to them, so that in actual fact no money went out of the banks at all ; yet we have been paying 5 per cent. on that money ever since. That is the banking system that the Leader of the Opposition says has been of great help to this country.
I support this measure because it is definitely a better one than that introduced on the 25th November, 1938, by the then Treasurer, Mr. Casey. That measure was introduced at the instance of the private banks, in their own interests, and to the detriment of the Commonwealth Bank and the people of this country generally. It was proposed to sell inscribed stock and debentures to finance the new mortgage bank department, whereas all that was required then, as is the case now, was to establish a mortgage department of the Commonwealth Bank. Many people speak of a mortgage bank as though it were a new idea, but every bank is a mortgage bank; that is how they flourish. They make their profits on overdrafts
Banks do not lend money; they monetize the real wealth of the people. That is why we started this war with a national debt of £1,200,000,000. When the previous mortgage bank legislation was introduced by an ex-Treasurer, Mr. Casey, I travelled all over Australia speaking in opposition to it. Eventually we succeeded in destroying the measure. This bill represents an honest attempt to assist the primary producers, and I am surprised at the attitude that has been adopted by Senator Gibson, although I suppose that it is impossible for a conservative mind to change, although conditions may change. I do not claim that this bill is better than the Victorian legislation, but at least it will operate throughout the entire Commonwealth.
– Why not adopt the Victorian system throughout the Commonwealth ?
– I do not approve of many things that this Government does in regard ,to finance. No section of a community is so badly treated as our primary producers. They have to fight against the weather, and the markets. Any one who examines the economics of the situation will not wonder, as Senator Latham does, why the price of wheat fell to ls. a bushel in this country during the last depression. The reason is obvious, and it has a direct relation to the measure now under discussion. Senator Gibson claimed that the amendment of the Commonwealth Bank Act made by the BrucePage Government did not harm that institution; such a ‘suggestion is ridiculous.
– It did a lot of good.
– It ruined tho primary producers of Western Australia and brought down the price of wheat to ls. a bushel. After the private banks secured rights to draw £30,000,000, they raised the interest rate to 1 per cent. They asked for this right ostensibly to help the primary producers, but the results were disastrous. Price levels are governed by available purchasing power, and when purchasing power was withdrawn in huge sums when the private banks called in overdrafts in 1929-30, little purchasing power remained in the hands of the people and prices slumped very quickly. It is true that in the interests of self-preservation many European countries which previously had imported wheat from Australia and Argentina grew their own wheat. That was part of their preparation for this war. Honorable senators opposite deride my financial theories, but in the first speech that I made in this chamber I said that the present monetary system had caused nothing but poverty and chaos, and that we were rapidly being drawn into a. war which might destroy civilization. Referring to paragraph 504 of the report of the Royal Commission on Banking and Monetary Systems, Senator Gibson said that the commission had not directed the Government to adopt that recommendation; but what power has a royal commission to tell any government what it must or must not do?
– The report merely said that the Government could adopt that course ; it did not say that it should.
– Obviously, a royal commission has no power to direct a government as to what it should do. Had it not been for the composition of the Commonwealth Bank Board at that time, that recommendation would have been adopted. Recently, I drew attention to the fact that when the royal commission made its report, the directors of the bank were all representatives of the private banking institutions. Obviously, men who were former managers of private banks or were associated with the biggest money lending institutions of this country could not be expected to adopt such a proposal. It was not until Sir Denison Miller died that the private financial institutions had the courage to attempt to interfere with the Commonwealth Bank. I remind honorable senators that when the Bruce-Page Government amended the Commonwealth Bank Act the rate of interest was doubled immediately. When Mr. Bruce visited Hobart on one occasion, I told him that his amendment of the Commonwealth Bank Act was the greatest piece of political treachery ever perpetrated on the people of this country. It caused the interest rate to rise immediately to 1 per cent., and in 1924 primary producers had to send to the Co-operative Wholesalers Society of Great Britain to obtain finance to export their produce. Surely Senator Latham is well aware of that.
– They had been doing that for some time.
– They had not been borrowing money at 7 per cent.
– What interest did they pay to the Co-operative Wholesalers Society?
– That was the only way they could get the money. I have already told Senator Latham that, when a motion was submitted in the Legislative Assembly of Western Australia, in which he was Leader of the Opposition, in order to help farmers who were walking off their holdings, he opposed the motion. He would sooner see them walk off the land than give assistance to them,
– The honorable senator knows nothing about the subject on which he is now speaking.
– I have appeared before the economic faculties of the universities of Melbourne, Sydney, Brisbane and Adelaide, and I am a member of the Economic and Financial .Society of London.
– The honorable senator must connect his remarks with the bill.
– .When I am continually interrupted, should not those who interrupt also be called to order?
– If honorable senators are disorderly, I shall exercise the authority given to me under the Standing Orders to call attention to the fact, but the honorable senator is provocative. He invites criticism, and is in the habit of indulging in tedious repetition.
– Lt is said that drops of water can wear away stones. Seeing that it is necessary for me to refer constantly to the greatest authorities in the world in support of my statements, I should not be jeered at for my remarks. I listened to the debate in this chamber yesterday for six hours, and no honorable senator broke new ground.
– The honorable senator must connect his remarks with the bill.
– I am replying to your criticism, Mr. President, that I am guilty of tedious repetition.
– The honorable senator is not in order in carrying on a conversation with the Chair.
– There is a chance of some help being given to the primary producers under this bill, but that was impossible under the measure submitted in 1938 by the Government with which the former honorable member for Corio, Mr. Casey, was associated. It proposed to establish a mortgage bank department by issuing £30,000,000 worth of debentures, but Senator Spicer knows that if debenture holders were dissatisfied, they would simply take over the bank. Under the measure submitted by the Government of which Mr. Casey was a member, the debenture holders were expected to make a profit, and if they were not satisfied, they could take over the bank, but, under the present Government’s proposal, the position is much more satisfactory, because the matter will be in the hands of the Government. Therefore, I believe that, under this bill, the primary .producers will be assisted to some degree. The farmer can grow wheat, but he cannot grow the money with which to buy food.
Regardless of what the Government does in the way of helping the farmers, if the private banks call up overdrafts, the farmers will have no opportunity to obtain a satisfactory price for their wheat. That was proved in 1929. I think that Senator Latham should have been called to order for saying that I knew nothing about financial matters. I sit here with a “ poker “ face and can see nothing to laugh at, but honorable senators opposite laugh and jeer. There has been no change in the attitude of honorable senators in this chamber towards the monetary problems of this country, notwithstanding our serious financial position. What has brought the world to its present deplorable state but incompetent and corrupt governments ? The people elect parliamentarians to manage the business of the country, but they have returned representatives who support the financial system which has brought about the present war.
– The honorable senator must discuss the bill.
– The bill is good, so far as it goes, in helping the .primary producers.
– It does not help them at all.
– It may not assist Victorian farmers so much as those in other States. When the farmers were asked to grow more wheat, the private banks volunteered to make the necessary advances available to them for that purpose, but soon afterwards they called up their overdrafts. I know a man who had a large dairy farm in North Queensland. He was improving it, and when the banks called up his overdraft in 1929, he lost the farm, which comprised 14,000 acres. His only son, who expected to inherit a valuable property, had to work at breaking in horses at 10s. a week. Yet we are told how great a debt we owe to the private banks, which have put thousands of people into their graves and a large number into lunatic asylums. Nobody has been able to prove that my statements on financial subjects are incorrect. On one occasion, an official of this Parliament told me that he was surprised that, with my knowledge offinance, I had not taken up some work in connexion with financial matters. He was an officer of this chamber. I said, “ That is what brought me to Canberra “. Finance is the most important phase of government, but it is a subject which is sadly neglected. I have said these things many times, and, in order to vary my remarks a little, I have quoted different authorities in support of my argument. When Mr. Casey was Treasurer of the Commonwealth and a loan of £10,000,000 was being considered by the Loan Council, he was asked how so great a sum was to be raised. He replied, “ In the orthodox way “. I support the bill and have given good’ reasons for so doing.
– We have waited so long for this bill that I thought that when it came before us it would be of great assistance to farmers. The measure before us is not without merit, but if it is to be administered strictly some farmers will have cause to be greatly disappointed. I suppose that the object of the bill is to enable farmers to own their farms. Under present conditions farmers, especially those engaged in farming in a small way, have not much chance of owning their properties. Usually they have a short- term mortgage, and the general experience is that, instead of getting out of debt, they get farther into debt as the years pass. This bill does provide for a long-term mortgage on a 30 per cent. margin. That is a gilt-edged security, because any one who owns 30 per cent. of his property can probably get the money from other sources without much difficulty. The bill should encourage farmers to own their own farms. Provision is made for a 1 per cent. sinking fund, so that a farmer may purchase his property in 41 years. That term is provided in order to make the annual payments as small as possible. It is not always a kindness to extend the period of repayment over too long a term. The same mistake is frequently made in legislation to assist persons to own their homes. It is not a kindness to give a man 41 years to purchase his farm.
– He can pay off the balance at any time after five years.
– That is not done frequently.
I do not agree with some honorable senators who have said that the mortgage bank department of the Commonwealth Bank should be run on strict business lines, and standard rates of interest charged. The interest rate ought to be as low as possible. If the Government were to charge 1 per cent. less interest, and put an equivalent amount into a sinking fund, the farmer would get out of debt in half the time. A long period would elapse after this bill comes into operation before the amount of advances would total £50,000,000. Interest at the rate of 1 per cent. on that amount would be only about £500,000 a year to be provided by the taxpayers generally. If a government were to introduce a social security scheme, or some welfare scheme estimated to cost £500,000 a year, or even as much as £3,000,000 a year, the Parliament would not hesitate to support it. What better social service could we provide than a measure which would benefit small farmers by enabling them to own their farms within a reasonable period? These small farmers are the most industrious and thrifty persons in the community. They are performing a most useful service, yet they are the worst paid section of the community. Under successive governments the legislation of this Parliament has been mostly in the interests of people who live in the cities. Although that legislation has helped the farmers in some degree, they have not benefited as have the city dwellers. That is shown clearly by the fact that for many years people have been flocking from country districts to the cities.
– That is the effect of the Government’s decentralization policy !
– That drift has been going on for a great many years. It is due not to the policy of the present Government, but to the policy of Parliaments. It is the result of the industrialization of this country. I do not say anything against the establishment of secondary industries, but our industrial prosperity has been gained largely at the expense of country districts. What is needed is a comprehensive scheme which will benefit all sections of the community and restore the balance between country and city.
– This bill will help the farmers to obtain security of tenure.
– I shall have no hesitation in asking the taxpayers generally to pay something towards meeting the interest bill of farmers so that they may be able to remain on their holdings. Heavy interest bills make successful farming most difficult. We need to do something to make the conditions in the country more like those in the metropolitan districts. At present, most of the advantages are enjoyed by city dwellers. If we were to go into any high school and ask the boys how many of them wished to be farmers, clerks or professional men, not many of them would hold up their hands to indicate that they wished to be farmers. Some say that people flock to the cities because they can go to the pictures, attend race meetings, and sports gatherings, but, in my opinion, that is not the reason. They go to the cities because it is easier to make a living there than in the country. That is the result of our legislation. A comprehensive scheme to’ counteract the drift to the cities is necessary. After all, Australia is a primary-producing country, although many people say that it is an industrialized country. I have nothing to say against our secondary industries. Up to a point, the more of them that we have the better. Some time ago I read a report of a meeting of the shareholders of one of the biggest emporiums in Australia. The managing director said proudly that 75 per cent, of the goods sold by the company were made in Australia.. It would not be a big step to increase that 75 per cent, to 100 per cent. After the war is over, we shall find that our secondary industries will be able to supply all our requirements of many articles. But what will happen then? We shall not be able to export manufactured goods to any great degree owing to our high costs, and so we shall be driven back to primary production, where we ought to have been all along. We must help our primary producers. It has been said in this chamber to-day that we can help them by fixing the prices of their products. I believe that that would help them, but it is not so easy to fix the prices of primary products as of the products of our secondary industries. A manufacturer makes only as many articles as the market will absorb, but the primary producer cannot always dispose of his products. If there is a good season, there will be a glut of the commodities which he produces. Should the season be poor, there will be a shortage. We shall have to do something in the way of fixing the prices of primary products to enable farmers to make a fair living. Parliament is not unwilling to do so, as for some time it has indicated clearly its desire to help the primary producers. It is true that millions of pounds have been advanced to assist the wheat industry, but the farmers did not ask for assistance until they were in the depths of despondency. Fruit-growers also have been granted assistance by way of bounties, but the word “ necessitous “ was added in their case. More recently, the dairymen have been assisted by a grant of £2,000,000. I read in the newspapers recently that in New South Wales dairymen had, as a result of that grant received 5/7d. per lb. more for their butter. What is the use of talking about such an amount when an industrialist raises the prices of his goods by 25 per cent, if his costs increase? Yet the Government asks the butter producers to be satisfied with such a small increase. This problem must be tackled by people who know something about it. Perhaps, boards consisting of primary producers could be asked to devise a scheme to deal with the problem. In the meantime, however, we are simply ~ “drifting.” “We” are” doing everything possible to assist secondary industries, and, at the same time, neglecting our primary -industries. The result of such a policy must be that our secondary industries, when they are able to produce all of our manufacturing requirements, will be up against a dead-end, because we shall then have very few farmers left. The bill has some merits. However, even at the risk of losing on the scheme, the Government should be prepared to make the rates of interest as low as possible. That is not an unreasonable request to make in view of the millions of pounds which have been made available in the past for other things. By providing another £500,000 under this measure the Government would do the job completely, and would enable the majority of the farmers to rehabilitate themselves in one half of the time that they would otherwise take. The farmers are more in need of assistance than any other section of the community. The Government should at least place those engaged in primary industries on a basis equal to those engaged in secondary industries. If it incurs a loss in so doing we must put up with that loss. Indeed, it would be well worth our while doing so. We have voted millions for the provision of social services; but T do not know of any social service more valuable than that which would help our primary producers to make a fair living.
.- I support the bill. It is long overdue. It will alleviate the burden of interest being carried by the farmers. At the same time, however, it will not help to solve the problem of over-production. It is true to say that in the past, conditions in primary industries have been such that the farmer could say to himself, “ The more I grow the more I owe “. The problem of over-production can be solved only by the guarantee of payable prices for farmers’ products. The Government should fix a minimum and a maximum price for all products in order to guarantee a fair living to the producers. I agree with Senator J. B. Hayes that primary production forms the real basis of secondary production. If our primary industries are stabilized, secondary industries can confidently be built up on the basis of the markets provided by those engaged in primary industries. Not long ago in Tasmania, half-grown calves were selling at 3s. and 3s. 6d. each ; potatoes, in a period of over-production, were being sold at as low as 4s. a bag; whilst no market could be found for pumpkins, melons, garden produce, and apples. The problem of over-production can only be overcome by guaranteeing a minimum price to producers. I do not intend to discuss the merits of this bill because I am not competent to do so.
Some time ago I read a report of a statement made by Mr. E. C. Biddle, the Governor of the Commonwealth Bank, at a luncheon with the Fellows of the Royal Empire Society in London, in which he said -
Private trading banks have been advised that if they placed their reserves with the Commonwealth Bank they would not be used in competition with them for ordinary business. That promise has been faithfully kept.
On the 28th May last I asked a question with the object of ascertaining whether the ‘Commonwealth Bank was really prepared to compete with private banks for ordinary banking business. It is deplorable if the Commonwealth Bank does not do so; otherwise, it will not fulfil the purpose for which it was established. Now, I am concerned as to whether the mortgage bank department will compete actively with the private banks for the class of business dealt with under this measure. In reply to the question I asked, the Treasurer (Mr. Chifley) stated -
By virtue of existing Commonwealth legislation, the conditions under which the Commonwealth Bank shall accept general banking business are entirely within its own jurisdiction. It is understood, however, that the Commonwealth Bank accepts all general banking business, such as current accounts and the issue of drafts, &c, without question, and only consults with a trading bank when it is a question of taking over an advance.
I know that the Commonwealth Bank does not accept general trading business unless applicants have been refused accommodation by private banks. I ask the Minister in charge of the bill to state definitely whether the mortgage bank department will actively compete with the private banks with the class of business dealt with under this measure.
. - I support the bill because it will afford a measure of relief to at least a section of primary producers who are carrying a very heavy burden, and are able to qualify for advances under the conditions set out in the bill. The nightmare of many producers with respect to short-term loans, say, for from three to seven years, is that very often the loans fall due at a time when the producers have experienced bad seasonal conditions, or when prices are most unfavorable. However, many of our producers will be disappointed with this measure, particularly those who, as the result of loose talk about easy money on the part of the supporters of the Government, have been led to anticipate much greater benefits. N o doubt the Government will be severely criticized by such people ; but the Government has only itself to blame for such criticism. With the exception of the Minister for Trade and Customs (Senator Keane), honorable senators opposite have flirted in that fashion with the primary producers. They have given the impression to the producers that the Government will make money available to them for nothing. The Treasurer (Mr. Chifley) has emphasized that the mortgage bank department must be conducted strictly on business lines. Indeed, he pleaded with supporters of the Government not to reduce the rate of interest below 4 per cent., because if that were done the scheme would be wrecked. The Treasurer has thus shown that when the Government is confronted with practical issues it cannot yield to the idea of providing easy money. However, that is the responsibility of the Government, which has stated that the new department is to be conducted on banking principles. The Minister’s speech indicated that the total indebtedness of farmers was about £400,000,000. That is a large sum of money, but it is not altogether owing to bad business methods of farmers that that state of affairs exists. The average price of wheat between 1910 and 1930 was approximately 5s. a bushel, but between 1920 and 1930 it was approximately 6s. a bushel. It is difficult for a young farmer to make a start without some financial assistance, and farmers’ sons generally know no other occupation, being trained only in farming pursuits. Many transactions which were quite legitimate business deals at that time, after 1930 became impossible business propositions and the fault was not altogether that of the person who incurred the debt. It was because he had to produce on the Australian standard and sell on the world’s standard. In 1930 and 1931 the price of wheat was reduced to about ls. a bushel and remained at approximately that figure for two or three years. Ever since then the producing community generally, owing to the high cost of living, has been up against it. The policy embodied in this bill will be of great benefit to those who can come within its provisions, but they will represent only a small percentage of those who are more or less in financial difficulties. There are others beyond the limits of the bill worthy of consideration. They are men who really need loans up to 85 or 90 per cent, of the value of their properties, and who possibly over a period of years could get out of their trouble if they had some security of tenure. Consideration might be given to them at some time. An honorable senator referred to the desirability of bringing into production certain lands in good rainfall areas. That is really a life-time job. In such instances, some financial assistance on a long-term basis would be of great benefit to the community. I have in mind country in South Australia and the southern districts of Western Australia, where there is a good rainfall, and portions of Victoria. The Government might consider some scheme in those areas with perhaps easier conditions of security. I do not suggest any specific limit, but the proposal is worthy of consideration. Of course, if this is to be an ordinary banking scheme, the Government must tread very warily. Whilst there is room for legislation such as this, I do not think we should enter into competition with the other financial institutions, such as the State savings banks, insurance companies, agricultural banks and various other organizations, including the trading banks, which lend money on reasonable terms. “We should do nothing to upset that class of business, because those institutions are really lending people’s savings, and if a bank that will compete with them is established it will probably tend to upset the whole financial fabric of the country. The Government would be wise to watch that aspect. The Leader of the Opposition (Senator McLeay) dealt fully with the interest rate, and suggested the fixing of a payable price for produce. In that respect, I support him. He indicated that that was the angle from which this matter should be approached. If the Government would pay to the wheat-farmers what is due to them on the 1941-42 crop, plus the price that was promised in respect of this year’s crop it would relieve farmers much more than a mortgage bank scheme. I appeal to the Government to give some consideration to that aspect of the question. Whilst I agree with the proposal embodied in the bill, and am prepared to support it, because it will give a measure of relief, I remind the Government that it will not give the relief that a great number of people were inclined to expect from it. That trouble is of the Government’s own making, because Ministers talked about easy money, and they must bear the consequences, which I can assure them will possibly be very severe in some districts, where I know that people are greatly disappointed with the bill. However, the Government has definitely stated that it is not a bill to rehabilitate farmers who are heavily in debt. That is the Government’s own responsibility.
One clause provides that -
The bank may with the consent of the Treasurer enter into an agreement with any authority of a State or with any savings bank for the performance by that authority or savings bank of such of the functions of this bank under this part as are specified in the agreement.
I understand that by that provision the Government intends to establish a system through which State instrumentalities will do the administrative portion of the work. If the Government wishes to achieve success in this proposal, that aspect of the administration should be very carefully watched. Local advisory boards should be set up in each State. Local managers should be given power to approve advances, say, up to £1,000, subject to the approval of the local board, and applications for over £1,000 could be dealt with first by a local board and then forwarded to the head office. If those methods were adopted and men who understood the different seasonal conditions and characteristics of the land in the various States were appointed to executive positions, it would facilitate the success of the new department. If that is not done, great delay will result because everything will have to be sent to head-quarters in Sydney, where the men in control may be competent bankers but will not know the difficulties or the peculiarities of applicants in the different States. I hope that the Government will take that matter into consideration. Nothing is said in the bill or in the Minister’s speech about the manner in which the cost of mortgages, valuations, and other incidental charges are to be met. I presume that these costs will be provided for in the ordinary way.
I support the bill, because I consider that it will be of benefit to certain sections of the farming community.
Senator TAMES MCLACHLAN (South Australia) F3.561. - As one who has had a long association with politics, I believe that the establishment of a mortgage bank has been discussed for the last thirty years.
– But nothing has been done.
Senator JAMES McLACHLAN.Very little is being done now, although action along the right lines has been taken in several States. For instance, Victoria has introduced a system under which much more liberal terms than those provided for in this measure are offered. The Minister for External Territories (Senator Fraser) could have commenced his second-reading speech upon this measure with the familar words used in fairy tales, “Once upon a time”; and that would take us back to the occasion when the Fadden Government introduced into the House of Representatives the budget which brought about the defeat of that administration. The Fadden Government was defeated not because it had failed to fulfil the pledges that its supporters had given to their constituents, but because certain individuals put their private interests before the interests of their country and decided to support the then Opposition. Naturally, the Government would be ungrateful it’ it did not recognize the assistance that it received on that occasion, and this measure is a tangible token of that recognition.
– There is nothing in the bill about that.
– ] remind the honorable senator that there are many things relating to this measure that are not specified in it. To substantiate that statement, I point out that the Government does not regard this as a very important matter. The bill was introduced into the House of Representatives last September, and after some discussion it was decided to refer it to an all-party committee. That was done, and another bill based to some degree upon the recommendations of that committee, has been placed before us. However, the Government still does not think that it is a matter of urgency, and it would not be unduly perturbed if the bill were not passed.
– We want the bill as soon as possible.
– It may be that the Government desires to have the measure passed through both Houses of Parliament, but it is noticeable that it reserves to itself the right to proclaim the measure when it so desires. Therefore, I maintain that the Government is merely holding this legislation out as some sort of a reward for services rendered by certain individuals. The honorable member for Wimmera (Mr. Wilson) no doubt was anxious that these proposals should be brought to fruition, and we cannot blame him for that. He had a perfect right to put whatever price he liked .upon his vote.
– I rise to order. The words used by Senator James McLachlan in regard to the honorable member for Wimmera (Mr. Wilson) are offensive, and I ask that they be withdrawn.
– I draw the attention of honorable senators to Standing Order No. 418, which reads -
No senator shall use offensive words against either House of Parliament or any member of such House, or of any House of a State Parliament, or against any Statute, unless for the purpose of moving for its repeal, and all imputations of improper motives and all personal reflections on members shall be considered highly disorderly.
I ask Senator James McLachlan to withdraw the statement that the honorable member for Wimmera (Mr. Wilson) had a perfect right to put whatever price he liked upon his vote. That is a reflection upon a member of the House of Representatives.
– In deference to you, Mr. President, I withdraw the remarks to which objection has been taken. I shall say, instead, that the honorable member for Wimmera, as a private individual, has a perfect right to use his discretion as to what he should do in political and private matters.
There are two outstanding points relating to this measure. First, it will make available long-term loans, principal and interest being repayable concurrently, over a period of years; secondly, many people have been under the impression that the establishment of a mortgage department of the Commonwealth Bank, would result in money being made available at extremely low rates of interest. Long-term loans, of course, have many advantages. It is of great benefit to a borrower to receive a loan for a fixed number of years, so that if he happens to encounter bad seasons he is able to carry on and retain his property, whereas sometimes private mortgagees, including both banks and individuals, take advantage of the position of their clients. In regard to the rate of interest, the Government was well advised to accede to the suggestion made in the House of Representatives. The suggested rate of interest is reasonable, and in view of the security that is offered, mortgagors will be prepared to pay that rate. It will be agreed that there is a limit to the level to which interest rates can be reduced.
If interest rates be reduced to such a degree that money has little value, there will be no incentive to save; in effect, a restriction will be placed on thrift. A man will say to himself, “ Why should I save £100 when I shall be paid only £1 a year on it ? “ For that reason the Government was well advised in leaving interest rates at the figure mentioned.
This measure will not grant to primary producers or to any one else benefits that they have not enjoyed before. In fact, after a careful examination of this proposal, I find that it restricts a borrower from using his loan as he pleases. A person who borrows money under this measure will be told that loans obtained through the mortgage bank department are not intended to provide working capital, as it is considered that ample provision is already made for short-term advances. It is ridiculous to suppose that the lender of money should dictate to the borrower as to what he should do with it. In the first place, the money will not be advanced unless substantial security is offered. Therefore, once the money is lent, the borrower should be permitted to use it to what he considers to be the best advantage. The borrower is also restricted, because the measure provides that if a borrower misuses money lent to him by the bank, it becomes due and payable on demand. I suppose that an inspector would be permitted to say to a borrower : “ As you are not using this money in the way we expected, you must repay it to the bank.” Long-term loans are desirable, but, ever since 1927, the Commonwealth Bank Board has had power to do all that is contempl ated in thebill before us.
– It has never done it.
Senator JAMES McLACHLAN.Not only has it had that power, but this bill actually restricts the power of the bank. The Commonwealth Bank Act 1911-1932 distinctly sets out the powers of the bank to lend money. Section 34 of that act states -
Thebank may invest any moneys held by it-
I draw the attention of honorable senators to the fact that the Commonwealth Bank may make advances to customers on any security which it thinks fit. Will the security required under this bill be different from that required by the Commonwealth Bank Board under the present law?
– There is definite provision in the bill as to the security that may be accepted and the rate of interest that may be charged.
– This bill restricts the powers of the Commonwealth Bank Board, because at present it can lend on any security and on any terms. The words of the section are, “ on any security which the board thinks sufficient “. Let us consider the powers of the Commonwealth Savings Bank. Section 35w of the act under which that hank operates, provides that -
The savings bank may invest any moneys held by it -
For the purposes of paragraph (d) of the last preceding sub-section, primary products mean wool; butter; grain; cheese; meat; fish; fresh, preserved or dried fruits; hops; cotton; sugar and such other products as is prescribed.
This bill restricts the present powers of the Commonwealth Bank Board.
– It creates a special department of the bank, in order to do a special job, and it provides the necessary machinery to do it.
Senator JAMES McLACHLAN.But the machinery is not so liberal as that already provided. At present, the bank can lend any sum, at any time, on any security it is willing to accept, and on any terms it imposes. I challenge contradiction on that statement.
– “When this bill becomes law, will not the board be able to lend money for the purposes mentioned in section 35w, which the honorable senator has read?
– Under the present act, there is no restriction at all, but under the bill the powers of the Commonwealth Bank Board will be restricted. The bill distinctly provides that an advance may not exceed 60 per cent, of the valuation of the security, but, Hinder the Commonwealth Bank Act, loans may be advanced up to any amount.
– Does not the honorable senator appreciate the difference between bank overdrafts and long-term leans?
– I am not talking about overdrafts. I say again that, under the principal act, the bank can lend any sum the board thinks fit, on any approved security. I have that act before me, and what I have said is set out plainly. Without any mortgage bank department of the Commonwealth Bank the terms were more liberal between the bank and the borrower than they are to-day.
– The honorable senator is quite wrong.
Senator JAMES McLACHLAN.What I have said is set out in the act, but if the Leader of the Senate prefers to put his own judgment against the act I must leave the matter there.
– I am not an authority on banking. I have lived for 58 years, but I have never drawn a penny by way of interest in my life. I have not had many dealings with banks, except for other people. Senator James McLachlan says that this bill limits the functions of the Commonwealth Bank, but, speaking without a full knowledge of the act, I should say that the matter which he has brought up relates to certain facts whereas the bill before us deals with other facts. Under the existing banking practice a person who has assets may obtain an overdraft. I have never had an overdraft, but I understand that at any time a banker may say to a borrower. “ I want my money back “, and it must be repaid. I think that Senator Darcey will bear out what I am saying. The bill before us does not deal with overdrafts but with the specific matter of granting loans for a period.
– I was dealing with loans, not overdrafts.
– If I went to a bank and borrowed £1,000 and had not a deposit with the bank, the £1,000 would be a loan to me, repayable to the bank at call. That is my understanding of the situation ; it is based on my experience of transactions on behalf of other people. The measure before us is one to assist primary producers to obtain loans which are repayable in 41 years. Such loans may not exceed 70 per cent, of the value of the property.
– To-day, a man may borrow money over a term of 60 years if the banker will lend it to him.
– That may be. It is proposed in this bill to set up a special department to deal with loans to farmers who mortgage their property to the bank.
– It is a good thing.
– And therefore I suppose the honorable senator will support the bill?
– Of course I will.
– Under this measure a farmer may go to the mortgage bank department and obtain a loan. I should like to go further than that. Workers in industry should be able to borrow money from this source. All the time that I have been a member of this Parliament I have listened to honorable senators describing the troubles of the farmers. I know that their troubles are many, but I know also that assistance has been given to them, and rightly so. Why not let the workers borrow money from the same source? Honorable senators opposite have been remiss in their duties for a number of years in not forcing the governments which they have supported, and which have been in control of this country for many years, to establish a mortgage department of the Commonwealth Bank.It is true that the right honorable member for Cowper (Sir Earle Page) has advocated such a bank for a great many years. He may be regarded as an expert in this matter. If Senator James McLachlan is right, why should Sir Earle Page advocate the establishment of a mortgage bank department to assist farmers? The honorable senator says that such a department is not necessary, but Sir Earle Page, Mr. S. M. Bruce and other leaders in Australian politics have said that such a bank is necessary. Were they all wrong? Is it correct that all these years farmers could have gone to the bank and obtained all the finance that they ‘needed on better terms than are set out in this bill?
– That is so.
– Then, Sir Earle Page must be wrong. He must have been in a mental mess all this time. In June, 1924, the right honorable member made a speech on banking that occupied 30 pages of Hansard. Senator James McLachlan must admit, however, that Sir Earle Page is a man of intelligence who knows something about banking. I hold in my hand the Launceston Examiner of Friday, the 1st October, 1937. It contains the following report of a speech delivered by Sir Earle Page on this subject : -
Sir Earle Page States the Country Party Policy.
A Better Spread of Industries in the Smaller Stales and Towns.
Grafton (N.S.W.), Thursday. The Leader of the United Country party (Sir Earle Page) delivered his policy speech here to-night. Among the many things he emphasized was the determination of the United Australia party-United Country party Government to establish a mortgage bank corporation to provide for long-term lending to farmers. “T he Banking Commission reports that there are two gaps still in the hanking structure,” said Sir Earle Page. “ One is the absence of specific provision for long-term lending, especially in connexion with the purchase of farms, and the report suggests the creation of a mortgage banking corporation.”
That was said in 1937, yet Senator James McLachlan said here to-day that such a department is not necessary, because farmers could already get all the money they wanted on better terms.
– Why does not Senator James McLachlan tell Sir Earle Page that he has been wrong, because all these years the Commonwealth Bank could have lent to any farmer who had assets all the money that he needed for as long a term as he liked, and at as low a rate of interest as he liked?
– There is no certainty that the bank would lend the money.
– This bill provides that a department of the Commonwealth Bank will be set up so that farmers with assets may obtain money on loan.
– It does not say anything of the sort.
– What does the bill provide ? Even the Leader of the Opposition (Senator McLeay) proposes to support it. Yet Senator James McLachlan says that the bill is useless and will be of no service to the farmers. Am I talking to a lot of lunatics? No. Honorable senators opposite are sensible men.
– I did not say that it was useless.
– The honorable senator is hopeless. I am reminded that “ Comrade “ Cameron described his tory comrades in the South Australian Parliament as a hopeless, helpless, shapeless, aimless mass of political plasticine. Perhaps he was right. The right honorable member for Cowper went on to say -
This the Government proposes doing. It proposes to provide not merely for long-term lending,but also for the lowest possible rates of interest by the provision of a certain amount of interest-free capital as was provided for the Rural Credits Department out of the profits of the bank itself.
That is another point. Senator James McLachlan contended that if interest were not paid, it would be detrimental to moral and economic thrift.
– I did not say anything of the sort.
– If that inference cannot be drawn from the remarks of the honorable senator, I am becoming hard of hearing, and my brain is getting soft. The statement continues -
The second gap which the Government proposes to fill is the absence of specific provision to enable the small secondary industrial man to get the capital to properly equip and carry on his undertaking. The Government is appointing a small committee of three to work out, in active association with the Commonwealth Bank, the details of such a scheme, which can then he enacted when the Government is returned to power.
The right honorable member for Cowper made that statement on the 1st October, 1937, and the Government which his party supported was in power until eighteen months ago. Evidently, the right honorable member realized that sufficient power did not reside in the Commonwealth Bank to give effect to his proposals.
– Neither it did.
– Therefore, it is essential to give that power to the bank. The Government proposes to do so under this measure by establishing a mortgage bank department to which farmers, and others engaged in pastoral and agricultural pursuits, will be able to mortgage their properties for the purpose of raising money, such loans to be repayable over a period up to 40 years in very small instalments at the rate of interest to be decided by the bank itself. I should like to see such revolutionary changes effected in our present banking system as would place the entire business of banking in this country under the control of the people’s bank. I should like to see every mortgage taken over by -that bank. I should like to see -the millstones of ‘interest, which have hung around the necks of the primary producers for so many years, removed, by that institution, by charging rates of interest simply sufficient to cover administrative costs. Just as the Lord chased the money-changers out of the temple, and just as the early Christians fought usury, so I would fight that evil to-day. The present system is the means of enabling one ‘section of the community to exploit other sections. In attempting to reform our present monetary system, however, we must be careful not to destroy the rights of many humble people who have saved some of their money. The Labour party is anxious that the people’s savings deposited in the banks shall be safeguarded. This Government does not wish to do anything inimical to the interests of those thrifty people. Our aim should be to safeguard the interests of all our people, and to prevent any one section from exploiting another section. The aim of monetary reformers is to eliminate usury and interest mongery. Senator Darcey has just handed me a statement made by the Treasurer (Mr. Chifley), which supports all that I have just said. The Treasurer made this statement in the minority report which he presented a3 a member of the royal commission appointed by the Lyons Government to inquire into monetary and banking systems -
In his opinion, the Trading Section of the Com mon wealth Bank should be extended with the ultimate aim of providing the whole of the services now rendered’ by private banks, and that banking should be conducted without profit-making considerations.
That is a most desirable objective. It is intelligence applied to our economic circumstances. As we develop our powers of production, the time approaches nearer when interest as we know it to-day will bo abolished. I admit that, in the past, it has been necessary to encourage the people not to expend their money on consumption goods, and to transfer the labour so released to the production of capital goods. With the development of capitalism, it was essential to get as much labour as possible to develop the capital section of the economic machine, and to extend factories and exploit our mines. Therefore, by means of loans, on which interest was paid, we limited the production of consumption goods in order to transfer more labour to the production of capital goods. That happened in Russia, where the Soviet authorities raised loans and paid interest on them in order to encourage the people not to consume goods, but to release workers who otherwise would have been making consumption goods for the purpose of building up capital goods. When any country reaches the surfeit stage in the intense production of goods, so that itproduces more than it requires, it is absurd to ask the people to save money to produce more goods than are really needed. Therefore, if we have all the goods that we need for consumption, it is absurd to ask people to save. I should like to put certain questions to honorable senators opposite who continually decry and smile at Senator Darcey, and look with suspicion on me. - The first is : Should the supply and control of credit be in the hands of private companies? If it be right that the supply of credit should be in their hands, is it not just as feasible that the supply of water also should be in the hands of brewery companies? “We say that the credit of the nation, which is its lifeblood, should be completely controlled by the people acting through their representatives in this Parliament.
– As a matter of fact, the supply of “ water “ is in the hands of the brewing companies.
– No; the reservoirs are owned by the people. There may be here and there a private supply of water, but in the main it is owned and used by the people. It is as feasible to say that we should hand over our reservoirs to the brewing companies as to say that private companies should control the supply of credit. The next question is: Should industry close down because of the lack of money or credit? It would be as sensible to say that we must cease fighting the Japanese because there is a lack of money. We shall continue to fight the Japanese while we have the men and material, and until we secure victory over them or they defeat us. The war will not terminate owing to lack of money, neither should industry cease for the same reason. Another question is : Is it not true that hundreds of thousands of people have been out of work because of the private control of money? Honorable senators opposite can think over those questions during the week-end. Another point with regard to the power of the Government to issue money is this: If the private banking system had the right to issue credit based on the power to tax the people, what amount could it issue? The Government of the country has the power to tax the people, and therefore it should be the authority which has the power to issue credit. In those questions there is material for many hours’ debate. I advise honorable senators opposite to study this subject not from the narrow viewpoint of private capitalism but from a broad outlook in the interests of the nation. I hope that this bill will do some good, but so far as I am concerned it does not go far enough. When the Labour Government is in full and complete control of both Houses of the Parliament, I believe we shall have a reform of the banking system so effectual that we shall be able” to utilize all our economic powers and forces for the good of the nation as a whole, and not for the aggrandizement of the few.
.- I congratulate the Government on the introduction of this bill, which is a distinct advance upon anything it has produced up to the present, because the bill, although it will not do any good, will not do any harm. The usual feature of this Government’s bills is that although they do no good many of them do incalculable harm. This bill, therefore, is a distinct advance on anything that the Government has yet introduced. I am afraid that the primary producers of Australia are going to be very disappointed, because it will not help them. One has only to read the Minister’s speech to determine how circumscribed is the area in which the bill is to operate. First loans made by the mortgage bank department are to be upon first-class security only. The Minister also said -
I would make it clear to honorable senators that this is not a proposal for the rehabilitation of primary producers who are in financial difficulties.
The bill, therefore, is not going to help anybody who has been getting “ into the soup “. His third statement is remarkable. I cannot altogether reconcile it with the bill, but this is what he says -
Loans through the mortgage bank are not intended to provide working capital.
What does the Minister mean by “provide working capital”? Is plant working capital? Are fences, sheep or cattle on the property working .capital? If a man’s harvest is garnered only once a year - he needs money to pay the storekeeper in the interim - is the accommodation that he gets working capital? It seems to me that there is a distinct misunderstanding regarding this bill. A man cannot carry on his farming operations unless he has working capital.
– He must have one mortgage for one purpose and a second mortgage for another.
– But he is forbidden under this bill to give any second mortgage without the consent of the first mortgagee. How is he to carry on his transactions if he cannot borrow money to work his farm? I am only taking the Minister’s speech at its face value, but I find it a little difficult to interpret.
– The honorable senator will admit that the measure will have to be wisely administered.
– If the new department of the bank is specifically forbidden to lend money for working capital, the measure will be of no use to any one on the land. His sheep and cattle, plant, machinery, horses and drays are part of his working capital. I may omit his house, because that I presume would be the subject of a mortgage in the first pla’ce, but there is his right to buy superphosphate, and cornsacks for his wheat, to pay for cartage to the station, and so on, and he is forbidden by the bill to borrow for any of those purposes, because that money would be working capital. People producing wool or wheat have their harvest once a year, and have to carry on in the meantime, paying for what they get as they go along, or finding some one to give them credit during the year. If money used for those purposes is not working capital, I’ do not know what is. Yet the bank is forbidden to lend money to provide working capital. In these circumstances, a farmer who had. mortgaged his property to a bank would be in serious difficulties. His activities would be restricted considerably, and I am sure that any one who was acquainted with this provision in the bill would think three or four times before mortgaging his property. I realize that the intention is good and that it is aimed at conferring certain benefits on a particular class of the community, but I am afraid that, despite the Government’s intentions, certain provisions in this measure are rather unwise. If the measure is to fulfil the Government’s desires, it will be necessary to amend certain portions of the bill. In spite of the promises that the Government has made, and of the fact that the primary producers of this country have been looking forward eagerly to such a measure in the hope that it would lighten the financial burden that is placed upon them, I am afraid that they will be rather disappointed. The establishment of a mortgage bank department of the Commonwealth Bank will not solve their problems to any great degree, and before long the Government will be forced to introduce more liberal provisions. However, I give the Government credit for its good intentions, and I earnestly hope that the bill will produce the results that the Government seeks.
I intended to say much more in answer to the questions that Senator Brown asked this morning, but I have no wish to delay the passage of the measure. I assure the honorable senator that I have a perfect answer to many of his rather complicated questions, and that at the appropriate time I shall be pleased to Jet him have them. While I am prepared to give the Government every credit for good intentions in framing this measure, I am afraid that the primary producers will be disappointed with it.
– Many people will be pleased that the Government has introduced this measure. For many years farmers have complained about the financial difficulties under which they have been labouring, particularly in relation to overdrafts and short-term loans from private banking institutions, and the establishment of a mortgage bank department of the Commonwealth Bank will fill a long-felt want. It will enable primary producers to fund their debts, and look forward to the future with a greater feeling of security. No longer will they have to fear the calling in of overdrafts by private banks. The Government is to be commended for introducing this bill, particularly at present. Like many members of the Opposition, I do not consider that this measure is all that could be desired, but at least it is a sincere attempt on the part of the Government to tackle first things first, and it is a practical illustration of the Government’s desire to do what previous administrations only promised to do. As experience of the working of this measure is gained, it may be found necessary to effect improvements, and I feel sure that the Government will be prepared to take whatever action it considers to be desirable. I do not expect that the establishment of a mortgage bank department will bring about the rehabilitation of primary industries, that is not the function of a mortgage bank. The soundness of a banking institution depends upon its ability to carry on its activities in a practical and economic manner; by that I mean that all such institutions must conform with certain established business principles. The Commonwealth Bank is fundamental to the welfare of the Australian nation, and I should hesitate to make the Commonwealth Bank a plaything of political parties and so risk its destruction owing to unsound financial transactions. I contend that what is proposed in this measure will not only be acceptable to the primary producers, but also will conform with sound banking practice. If it be necessary to assist the primary producers, that problem should be tackled in some other way.
– How could it be done?
– There are many ways in which it could be done; for example, by fixing a fair price for commodities. The point I wish to make is that the functions of a mortgage bank department are clearly defined, and that the proposed department of the Commonwealth Bank has been- designed to carry out those functions. This Ls only one of a series of measures which will assist in the rehabilitation of primary producers. It is the basis on which other legislation, will be built. I am hopeful that in the coming months the Government, will continue to put its proposals into concrete form, and will proceed with its plans to rehabilitate not only the primary producers but also the masses of the people throughout Australia. I am confident that in the near future many more measures such as this will be passed. When this bill becomes law, it will do much to place the farmers of this country on a sound financial footing. I support the bill because I consider that it will fill a long-felt want.
– I have given quite a lot of consideration to this measure, and I am wondering to what degree we can make use of it. I do not think for one moment that it will provide very much relief in the immediate future, although that may be its effect at a later date. For instance, I cannot imagine the Commonwealth Bank Board taking over some of the existing liabilities of the farmers, and if that is not done, there will be keen disappointment amongst farmers who to-day are carrying a tremendous financial burden. I agree with Senator Arnold that there is considerable difficulty in providing relief from that burden. That problem is not an easy one. I have given the matter careful consideration for a long time in an endeavour to find the best way in which assistance may be given to primary producers. It is a difficult problem. Immediately the price of a commodity is fixed at a payable figure, production of that commodity which already may be in over-supply, will increase. The only advantage I can see that the bill provides is that the mortgage bank department may be availed of when a man -desires to purchase a property or obtain an advance with respect to a property he is holding which is not already subject to a mortgage, but a long time may elapse before any great use will be made of the department. ‘Commenting on the statement by Senator Brown about the value of the measure, I point out that there is nothing in the bill to compel the Commonwealth Bank Board to make an advance of one penny. From what I know of that board it is fairly conservative. When the associated banks were making advances against rural securities, the Commonwealth Bank would not do so. In Western Australia I found it difficult to get any advance at all from the Commonwealth Bank.
This bill provides for the establishment of another department of the Commonwealth Bank for making advances. First, there is the section under the original act; secondly, there is the savings bank section; and, thirdly, the rural advances section which is limited to loans of twelve months’ duration. Now we are adding another department which will provide for a 40 years’ mortgage. That is not a fixed mortgage. If a borrower gets in arrears to the extent of a year or six months, provision is made for calling up his advance. Therefore, the bill does not provide for the security that honorable senators probably think will be afforded because of the fact that the period of the loan has been fixed at 40 years. I have had some experience with associated banks and I object to honorable senators condemning them. Many farmers, and many business men in Australia, have a lot for which to thank the banks. After all, they do not make advances for the purpose of dispossessing men of their land. Their business is to obtain interest upon advances made and to see that the necessary security is given to ensure the return of the loan. I have never met a bank manager who, with any degree of pleasure, has foreclosed on a property. Neither do the owners of land desire that, because foreclosures immediately reduce the value of properties in the neighbourhood.
It is proposed under the bill to give authority to the board to make advances up to 70 per cent, of the value of the property. That value will not be static, but will vary from time to time according to the value of production. From 1921 to 1928 the values of land increased tremendously, but from 1930 to 1934 they greatly depreciated. In many parts of Australia so many properties have been abandoned to-day that even the values of holdings that are being worked have been considerably reduced.
– What will land be worth where the growers are receiving only 2s. a bushel for wheat in excess of 1.000 bags?
– Any person possessed of an ordinary amount of common sense and business acumen would hesitate before advancing money to farmers operating in a large area in Australia. I visited the western part of New South Wales recently and saw people leaving their farms. That is a sad sight.
– I gave the reasons for it.
– -The honorable senator has said that he does not interject. I object to being associated with a statement which is untrue and a figment of the honorable senator’s imagination. The people who are now on the land will be keenly disappointed not because of what this Government has done but because of what they are expecting it to do.
– This bill represents a good beginning.
– No. Would the honorable senator say that the people in the Newdegate area in Western Australia will find a remedy for their troubles under this bill. In every State a bank of some kind has made advances for the purpose of opening up country. In Western Australia very good work has been done by means of the State Agricultural Bank We have produced an immovable asset that will be of benefit to the people of that State for centuries to come, but the condition of most of the men on the land to-day is such that their industry is not an attractive one, and the provisions of this bill will not be used to relieve them. The ‘Commonwealth Bank Board will not make advances to people in such areas because it will not take over the debts of people who cannot be relied upon to meet their interest payments from year to year. The board will want its interest the same as the associated banks do, and the same as any private individuals or any lending authority would do.
– Wise and sympathetic administration is required
– No administration could make any difference. Anybody who uses money for the purpose of getting an income from it has to take the greatest precautions in making advances, because they run a risk of losing not only an income but also their capital. I could trust even Senator Darcey with the administration of a department of this kind, and I venture to say that he could not make a success of it with the primary industries in the condition in which they are to-day. People engaged in those industries have had to ask for financial assistance year after year, and this bill will not help them at all. The limitation of the advance to 70 per cent, will provide a problem for the Commonwealth Bank Board, and, in consequence, the advances will not amount to anything like 70 per cent, of the valuation because that is the maximum. set down. Ta probability is that the bank will start off with 50 per cent, of the valuation. If interest is in arrears it will probably get a better deal than if it advanced money up to the full amount allowed by the present law.
In Western Australia there are two problems that have to be faced. I do not know any members of the Commonwealth Bank Board, but they are probably better acquainted with the conditions in the primary industries in Victoria and New South Wales than in the rest of Australia, as they have been residents of those States for a long time. Personally, I know enough of Australia to appreciate the variation of conditions in Queensland and Western Australia and in the intervening areas. Any man would require a wide knowledge if he were to legislate for the whole of those areas. The problem is not an easy one, and therefore I hope that, if additional appointments are to be made to the Commonwealth Bank Board, in order to deal with the mortgage department of the bank, representation will be given to those States which are not now represented. Speaking from memory, I should say that in Western Australia, the area of which is one-third of that of the Commonwealth, there are five branches of the Commonwealth Bank. That is not a great number. Two of them in the city area and two others are within 100 miles of Perth, so that leaves only one in other portions of the State. The situation could possibly be met by appointing travelling inspectors, but even Western Australia would present difficulties for any person who had to make valuations for the purpose of advances.
– That is the only way to make the department successful.
– I mention this because I desire to be helpful. I believe that a fixed term for a mortgage is better than any other basis, but my experience, which is also the experience of others, is that there have not been so many foreclosures a3 honorable senators opposite would have us believe.
I was keenly disappointed with the report of the committee appointed by the Parliament to consider this bill.
It would appear that the committee’s investigation was rather superficial. The proposals in respect of advances for the industries mentioned in the bill cover a wide scope - from cottongrowing in the north of Australia to butter production in the southern districts. They could cover all commodities for which there is a prospect of additional markets and could apply to areas which are now devoted to crops for which no market can be found.
It is proposed in this bill that interest shall be paid half yearly. As the producers of wheat and wool receive payments for their products once a year they should be allowed to pay their interest once a year instead of half yearly. About March would be the most satisfactory time for their. payments. The Minister might ask the board to consider this suggestion. lt is somewhat galling to hear honorable senators say how useful the Commonwealth Bank has been to the farming community of Australia. The bank’s transactions have always been on a business basis. Interest is charged on all advances. The Commonwealth Bank has not lost money through assisting the farming community.
I had hoped that the bill would aim at improving the home life of the people on the land. We must have a balanced economy in this country if we are to progress. It is useless to think that we shall become a great nation merely by expanding our cities. We must develop our back areas. I warn the Government that when the men in the fighting services return, and the girls engaged on various forms of war work change their uniforms for civilian dresses, many of them will not want to go back to hum-drum country life. In our cities every home has its electric light, which has only to be switched on at a door, but in most of our country homes the illumination is by means of a paraffin lamp, and the atmosphere is somewhat dull and uninviting.
– That is not so in Tasmania.
– I know that in various parts of Tasmania, as in many country districts of the other States, homes are lighted by electric light, but it is true, nevertheless, that paraffin lamps are used extensively in country districts. I should like money to be advanced to make country homes more attractive. For instance, I should like to see a refrigerator in every country home.
– Every home should have one.
– The provision of these amenities would provide employment after the war. In addition to supplying electric light to every home, I should like to see water laid on .to every property, so that persons living in country districts may be able to obtain a bath as easily as their fellow citizens living in the metropolitan area.
– The honorable senator should come over here.
– I should not be comfortable sitting among honorable senators with the advanced ideas held by some on the Government benches; but there are many things on which we agree.
– Every home should have a telephone.
– A previous Commonwealth government did a great deal to improve country telephone services, but there is room for a great deal more to be done in that direction. This afternoon Senator Brown made some references to the right honorable member for Cowper (Sir Earle Page). I wish that the right honorable gentleman had had an opportunity to do more than he did for our country districts. Do not let us say that we cannot afford to make country life more attractive. We cannot afford to have a badly balanced population. No country which allows large areas of its land to remain idle can be great. We must populate this country if we hope to defend it. Much has been done to make life in our cities attractive. Indeed, although I love the country, I am beginning to like the cities also. This bill does not instruct the Commonwealth Bank Board to make advances ; that matter is left entirely to the discretion of the board. All that we have done is to limit to £5,000 the amount that may be advanced. We have not even fixed the rate of interest, although I agree that high interest rates are a heavy burden.
– The honorable senator will have to come over here.
– I told the Leader of the Senate (.Senator Collings) some time ago that he would find that I held moderate views. Nevertheless, I think that I would have a long way to go before I could accept some of the advanced ideas of honorable senators opposite. Senator Darcey has continually referred to our banking system. Motions in accordance with the views he has expressed in this chamber have been submitted in the Legislative Assembly of Western Australia. The purpose of such motions has been that the Government should provide money free of interest. They had the support of people affiliated with the organization which has spread in Australia within the last few years under the leadership of Major Douglas, who visited this country a few years ago. In one motion it was proposed, not only that the Government should provide loans free of interest, but that it should also buy up all the debts of the farmers and transfer them to the Commonwealth Bank. Supporters of that proposal apparently imagine that debts can be liquidated by a wave of the hand. Throughout the many years I have ‘been in public life, I have never attempted to persuade any people that something can be done which I believe cannot be done. Nothing that Senator Darcey can say will persuade me that his theories are sound. If they were sound I fail to understand why governments throughout the world would not have implemented them years ago. All attempts which have been made to put such theories into practice produced fatal results.
– No government has yet attempted to implement the principles which I have expounded.
– Such attempts were made in Russia, Germany, Austria and France. Probably France came out of the experience better than the other countries, but even in that country those attempts produced certain evils. I, and several other members, voted against the proposal which was submitted in the Legislative Assembly in Western Australia. I have been associated with farming people all my life, and I have always endeavoured to render real assistance to the man on the land. I hope that the Government will not consider this measure as the last word in dealing with this problem. Our main problem is to provide relief for our primary producers who, year after year, have provided the goods by the .sale of which on the markets of the world we have been enabled to meet our overseas commitments. Up to date, those people have not received a fair deal. I am hopeful that we shall gain experience under this measure which will enable us to render more effective assistance to the primary industries which are the backbone of the country. Perhaps, the measure may be used as a basis to assist persons to buy farms, provided they have some capital. As Senator Leckie has pointed out, however, the bill is defective in so far as it prohibits advances for working capital. In many cases it is difficult to separate ordinary capital from working capital. I should like to know whether the mortgage bank department will be separated entirely from the bank itself. “Will the amount which a man has at credit in the bank be taken into consideration in connexion with the intereston an overdraft with the mortgage bank department and in that way have the interest on his overdraft reduced? The Agricultural Bank of Western Australia is an advances bank solely, the advances being made for periods up to 30 years. During such a period a farmer might frequently have a considerable balance to his credit in an associated bank on which he is not earning interest, but, under the Western Australian scheme, he is unable to use that balance to reduce the interest on his overdraft. Farmers who receive advances from the mortgage bank department and who have a credit balance in another account should be charged interest only on their actual daily debit balance. Interest charges should be calculated on the basis of the combined accounts. Because of the restriction I have pointed out, many farmers withdrew their business from the Agricultural Bank of Western Australia. They found it much cheaper to deal with an associated bank which charged interest only on the actual debit balance. I support the measure.
– The Minister in charge of the bill, in his second-reading speech, said -
I would like to make it clear to honorable senators that this is not a proposal for the rehabilitation of primary producers who are in financial difficulties.
However, sub-clause 5 of clause 1 of the bill proposes to add the following new section : - 60abv - ( 1 . ) Subject to this Part, loans may be made by the Hank through the Mortgage Bank Department to any person engaged in farming, agricultural, horticultural, pastoral or grazing operations, or in such other form of primary production as the bank thinks fit, upon the security of a mortgage to the Bank of an estate or interest in land in the Commonwealth used or to be used primarily for farming, agricultural, horticultural, pastoral or grazing operations or in such other form of primary production as the Bank thinks fit.
I should imagine that any man who applies to the mortgage bank department for a loan must be in financial difficulty, or must foresee such difficulty. I wish to know whether a farmer who, owing to bad seasons, is placed in difficulty can apply to the mortgage bank department for an advance in order to rehabilitate himself.
– If his property is not already mortgaged he can do so.
– And in that case he can obtain accommodation from any bank.
– Many men whose property is not encumbered in any way may, nevertheless, be in financial difficulty. In such circumstances will a farmer be able to obtain an advance from the mortgage bank department; or is this measure designed to benefit only people who wish to purchase farms? Further, can a person whose property is mortgaged, say, up to 20 per cent, of its value, apply to the mortgage bank department for an advance to pay off his mortgage, and an additional amount, say, up to 10 per cent, of the value of his property? If the mortgage bank department is not to be permitted to make advances in such circumstances, I consider the bill to be inadequate. However, it is a step forward; and, as (-Senator Brown said, the Government, when it has a majority in both Houses, can introduce a comprehensive measure for the purpose of completely rehabilitating our primary producers. To-day our primary object should be to assist persons who have had experience on the land and who know their job, despite the fact that they get into financial difficulty. We should ensure that experienced people are retained on the land. That policy will prove far more profitable than helping inexperienced persons to purchase farms. Such persons are more likely to make a failure of it than the man who has been and still is on the farm and just wants to be helped owing to a small financial difficulty. I hope that the Minister will explain the position to which I have referred, because I am sure that some people will be misled by the statement which has been attributed to him, that the bill will not be used to rehabilitate farmers who are in financial difficulties.
Senator HERBERT HAYS (Tasmania) [5.26J. - I am sure that keen disappointment will be expressed by primary producers when they know the provisions of this bill, which I expect will soon become an act. I can find nothing in it or in the Minister’s speech to encourage the belief that it will assist in attacking the real problems of the man on the land. It provides for doing certain things which are already provided for by other money-lending institutions. The only exception is that advances may be made for a long term. The period fixed by the bill is 40 years, but does any one really suggest that it is necessary to lend money to a farmer for such a long term? Would it not be a greater kindness to him to provide for a more substantial sinking fund, and give him a greater incentive, or place upon him the obligation to “ make hay while the sun shines “ and whilst he is still a young man?
– He could pay the mortgage off.
– He might do so.
– He need not wait for 40 years, if he can pay it off earlier.
– We know the conditions that operate in regard to time-payment. Many people adopt that method of obtaining goods when they could quite well afford to pay cash for them, because they prefer the system of making small weekly or monthly payments. The average age at which a man goes on the land is, I should think, 30, and so, under the terms of this bill, he may be over 70 years of age before he pays off a mortgage. That is an invitation to him to delay repayment. It would be infinitely better to reduce the terms to 20 or to 25 years, and, if necessary, double the sinking fund contribution. That might cause periods of hardship, in which the borrower would have to deny himself for a year or two, but in a normal year he could pay off 2 per cent, or more. The obligation should be placed on him to liquidate the debt in a much shorter period than 40 years. A borrower is to be allowed to use the money to pay off an existing mortgage, but how far will that be helpful to him if his land is over-mortgaged and other money lenders are pressing him to clear off at least a portion of his indebtedness? We know that the Commonwealth Bank Board is a conservative body in regard to making advances, and we have no reason to believe that the new department will be more liberal.
– The new department will not be of much use if it is not more liberal.
– Is the new mortgage department to have a different policy from that of the present board ?
– It will be an entirely separate department, separately officered.
– But the supreme control will be exercised by the Commonwealth Bank Board. In those circumstances, how can the new branch be used to advantage in helping a farmer to pay off an existing mortgage? If the Commonwealth Bank Board will take over the mortgage, there is no reason why other money-lending institutions should not. I support the second reading of the bill, but all it does is to create another competitive bank, lending on practically the same terms as all the other banks. It may serve the useful purpose of keeping rates of interest down, and making the associated banks alter their policy by granting advances for longer periods. At meetings of the Rural Industries Committee, witnesses have been asked again and again, “ What is your conception of what the mortgage bank department of the Commonwealth
Bank should be, and how do you think it will operate ? “ With few, if any, exceptions, each one has replied that it would be of great assistance because it would provide cheap money by means of liberal advances at a low rate of interest for long terms. This bill does not provide for anything of the kind, nor did I ever believe that it would, because the new department is to be a business undertaking. It does not even compare favorably with what the States have done by means of their agricultural banks or Advances to Settlers Acts. The landholder, if he is hard up and cannot raise the money elsewhere, can get it from a State agricultural bank or other such institution, which has really been established to assist him by making advances so as to provide him with sustenance and help him to clear his land, and to buy stock and implements to work it. Whilst the States have lost money in that way, they have indirectly benefited greatly by keeping settlers on the land. I am not prepared to say whether that should be the function of this new department, but, if we want people to stay on the land and be contented, and to implement a real land development policy, the time has come to deal with the whole subject in a comprehensive way. This bill may make a small contribution towards that end, but we must have a complete survey and stocktaking, so that the Commonwealth may introduce a comprehensive policy which will rehabilitate many of these men, at the same time giving the people in rural districts a standard of living approaching that which obtains in the cities. That is the great problem which Australia must face. Although to-day prices in the main are reasonable, it is clear from sworn evidence and from figures issued by the Commonwealth Statistician about three months ago that costs of production have risen by about 40 per cent. So, while this bill is a step forward and a token of the Government’s earnest desire to do something for our primary industries, it is not entirely what was expected by many people. Actually the mortgage bank department will be merely another competitive banking institution, the only difference between it and existing banks being that it will make available longterm loans. However, as I have said, this measure establishes a principle, and I shall support it. I desire only to draw attention to its weaknesses and to express the disappointment which will be felt by many people who have been expecting assistance, but who will gain little benefit from the scheme.
Senator CLOTHIER (Western Australia) [5.38 . - I am confident that, generally speaking, primary producers will thank the Government for this measure. In years gone by legislation such as this was promised by various governments, but nothing was done. It has been left to this Government to take action, which I consider is particularly commendable in view of war-time conditions. In his second-reading speech the Minister for External Territories (Senator Fraser) said -
The establishment of a mortgage bank is an objective which has been approved by all political parties. Such a bank has long been considered necessary in order to provide longterm loans to rural producers at reasonable rates of interest and at the same time give borrowers protection against pressure for repayment in difficult times of short-term loans or loans callable on demand. It is hoped that the activities of the now mortgage bank will thus, at least in some measure, relieve the financial position of such primary producers.
That in itself is sufficient justification for supporting this measure. Farmers will be freed from the anxiety usually associated with overdrafts from private financial institutions. This measure is particularly opportune in view of the need to impress upon the people the fact that the wheels of industry in our metropolitan areas could not turn if it were not for the primary producers, and that the man on the land must be granted every possible assistance to enable him to remain in production. For many years past, primary industries have been sweated industries. I agree that wages have increased in recent years owing to the shortage of man-power, but there is still room for advancement. Usually a farmer has to work long hours and to call upon the assistance of his wife and children in . order to make his land pay. This measure will assist the farmer to obtain what he most earnestly desires, namely, the freehold of his property. Obviously, it is much more desirable that a farmer should own his property, rather than let it remain in the hands of a financial institution. I know a large number of farmers in Western Australia who are eagerly awaiting the promulgation of this legislation. I am pleased that the Government has seen fit to introduce the bill, and I take great pleasure in supporting it.
– In reply to a. point raised by Senator Latham, I wish to state that the proposed mortgage department will be a separate department of the Commonwealth Bank, separately staffed and separately controlled.
In reply to Senator Aylett I may state that this proposal differs entirely from the ordinary method by which farmers obtain money, because the mortgage department will be empowered to make long-term loans, and to grant a considerable reduction of the interest rate, provided that the security is satisfactory. The honorable senator asked also whether it would be possible for the mortgage department to lift a 20 per cent, mortgage which farmers already had on their properties; that also may be done provided the security is satisfactory. With regard to the suggestion made by Senator Herbert Hays, in regard to the term of loans, I point out that the term specified will be the maximum, and that there will be no limit upon the rate at which a borrower may repay the principal.
Question resolved in the affirmative.
Bill read a second time.
– Clause 3 provides that there shall be a rural credits department, and a mortgage department of the .Commonwealth Bank. The point that I endeavoured to make previously was that if the Commonwealth Bank were used by fi.n individual for ordinary banking purposes, would he be permitted to offset the amount of money in his ordinary account against his indebtedness to the mortgage department. Obviously, a bank manager would be very pleased to know that a client of the mortgage department was also using the Commonwealth Bank for ordinary banking purposes, and unless depositors are credited with the amount that they have lying idle in their ordinary accounts I am afraid that that practice will be discouraged.
– The point raised by Senator Latham meritsan answer. I have studied the bill very closely and I cannot find any provision covering the case mentioned by the honorable senator. I should like to know from the Minister whether the Commonwealth Bank Board will have power to make such an arrangement. It is a very important point and as I have no wish to delay the passage of the measure, I suggest that, in the absence of the Minister for External Affairs (Senator Fraser) the Minister for the Interior (Senator Collings) should give to the Opposition an assurance that he will bring the matter before the Government. The second point I wish to make is this : The establishment of a mortgage department is a very important step. For some time, I have considered that it is not desirable that the constitution of the board should be such that all of its members are residents of New South Wales and Victoria. I do not blame the present Government for that representation, because the fault lies equally with previous administrations. Under the present proposal for long-term loans to people in outback and isolated areas, it is of the utmost importance that these matters should be considered by menwith experience of the conditions in States such as Queensland and Western Australia. In making future appointments to the board, will the Government consider the wisdom of selecting men with wide experience in those States?
– In reply to Senator Latham, I draw his. attention to sub-section 2 of proposed new section 60abaa -
A person indebted to the Bank in respect of a loan made under this Part may, at any time, pay to the Bank any portion of the loan (beingTen pounds or a multiple thereof) and theBank shall credit to that person, half-yearly, interest on the amounts so paid at the rate, of interest payable under the mortgage.
Attention will be given to the point raised by the Leader of the Opposition (Senator McLeay), but I draw his ‘attention to the fact that the management of the mortgage department would have access to the advice of experts in the various States.
– I am aware that a person may reduce his indebtedness to any amount he desires, and clear off the debt in five years; but, if he has a credit in his current account with the Commonwealth Bank, will that be taken into consideration in connexion with his debit at the mortgage department? I desire that he shall not pay interest on the whole of his debt while he has money lying idle in his current account. I should like the Commonwealth Bank to encourage clients of the mortgage department to have a current account with the Commonwealth Bank, but under the bill no such encouragement is given. The borrower may deal with any bank he likes. It is a safer investment, from the point of view of the Commonwealth Bank, for the whole of the transactions of a farmer to be carried out through the local branch of the bank.
– My answer to Senator Latham is that the borrower can pay back ally amount he likes, and an interest adjustment will be made.
Bill agreed to, and reported without amendment; report adopted.
Bill read a third time.
Motion (by Senator Collings) agreed to -
That the Senate, at its rising, adjourn to Tuesday next, at. 3 p.m.
Acquisition of Primary Products - Films of South-West Pacific Battles - Road Transport in Tasmania - Commonwealth Bank : Lending ov Interest-free Money. Motion (by Senator Collings) proposed -
That the Senate do now adjourn.
– On the 10th March, in answer to -a question by Senator Herbert Hays with regard to the acquisition of blue peas, I stated that the Attorney-General (Dr. Evatt) had advised that he would make a statement at an early date covering this subject. He has now supplied me with the following statement: -
In Tonking’s case, the actual amount of compensation to which the plaintiff was untitled was a minor issue, so far at least as the court was concerned. The main issue was a general question of constitutional law - whether a grower had a right to have his just compensation assessed by a court, and not exclusively by the authorities (the Minister acting on the recommendation of the board) which were at that time prescribed by the regulations. The main issue was decided in favour of the grower. The High Court held that the Constitution gave the grower the right of access to the court. The court, therefore, had itself to proceed to assess the compensation to which the plaintiff was entitled. At the trial of the original action, no evidence had been given as to the basis upon which growers were being compensated de facto’ under the regulations. In consequence o,f this, the court held that Mr. Tonking was entitled to the net proceeds of sale (which in this particular case were identifiable) of the actual fruit he had produced. But members of the court emphasize the fact that additional evidence might possibly have Icd them to assess the compensation altogether differently. It is wrong to assume that Tonking’s case lays down a final and irrevocable rule as to the method of assessing compensation for products compulsorily acquired and pooled.
The court did say in Tonking’s case that the grower is entitled to the full value of his fruit; that this alone would be the “just terms “ for which the Constitution provides. But to translate these general propositions into pounds, shillings and pence is a task that cannot finally or satisfactorily be accomplished unless account is taken of the aims, methods and results of the acquisition by the Commonwealth of the commodity concerned. Each scheme depends upon its own organization and methods of compensation. Without going into detail, I observe that, in considering the “ full value “ of a commodity that has been acquired, a clear distinction must be dram, between what may be called the “ individual “ and the “ mass “ acquisition of property. Where the Commonwealth acquires a particular building or piece of equipment, the acquisition generally leaves the market undisturbed. But the very object of a “mass” acquisition is to deal with a threatened shortage or a threatened glut, to create an altogether new, fair and stable market, and to prevent profiteering on the one hand or the collapse of an industry on the other. “Joist terms “ in such circumstances cannot be fixed merely by endeavouring to ascertain what price a grower would have obtained for his commodity in an open market. Very often the market has been disturbed, or even destroyed, by the exigencies of war.
The matter that calls for particular mention is the position of what is called “ quota “ wheat - a grower’s first 3,000 bushels - for which a price of 4s. a bushel is guaranteed. 1 do not think there is anything whatever in the judgments in the Tonking case which throws doubt’ on this arrangement. Doubt must rest, I think, on an entire misconception about the facts. They are these: An advance of 4s. a bushel is paid on the quota wheat. On the residue, an advance of 2s. only is paid, but, as sales take place, further advances will be made. In making payments from the pool, the necessary adjustments are made for variations in the quality of the wheat supplied. Additional payments are made to the actual grower concerned, in respect of the small quantity sold aspremium wheat. For sub-standard wheat, deductions are made from the amounts payable to the grower concerned. The vital point is that the wheat pool (which, by the way, includes the proceeds of the flour tax) will in any event pay in respect of all wheat, both quota and surplus wheat alike, the net proceeds of realization neither more nor less. If the selling price of wheat is insufficient to repay the full 4s. advance on the quota wheat, the difference will be made up from general revenue. Surplus wheat will therefore not have to subsidize quota wheat. On the other hand, if the price rose so high as to exceed the guaranteed price plus costs of handling, quota wheat would not have to subsidize surplus wheat. The net proceeds of realization would still be paid by the pool to the grower.
In most cases of general acquisition, the industry has been faced with a substantial export surplus, for which the war has closed the customary market overseas. Acquisition has been resorted to in order to avert the disorganization and collapse arising from a glut on the home market. Field peas, to which Senator Hays referred, are an instance of exactly the opposite process, the acquisition of a commodity in short supply. The local demand, especially for army purposes, has rapidly expanded. The crop is small - too small, indeed, to meet in full Australia’s wartime needs. Acquisition was resorted to in order to ensure supplies for service needs, and to regulate the marketing of any surplus available for civilian use. Price-control alone would have prevented profiteering, but would not have secured the other important objectives. The terms ofacquisition -15s. a bushel to thegrower- were fixed by the Commonwealth Prices Commissioner.
A court is not necessarily bound to hold that aprice fixed by the Prices Commissioner willconstitutejust terms of acquisition.
But the appropriate administrative authority has taken the view that this particular price was just. The price before the war was certainly not more than 8s. a bushel. Growers themselves know that the price now fixed is both reasonable and payable. They could have got higher prices, no doubt, in an uncontrolled market; the merchants could certainly have got higher prices. Buyers, it is known, had to pay up to 30s. a bushel in the year before the acquisition took place. It is not to be assumed that the Constitution makes the Commonwealth powerless to check profiteering in a case where considerations of defence make it necessary to acquire a commodity that is in short supply. “ Just terms “ are not necessarily synonymous with yetting the very utmost that competition can squeeze out of the necessities of the nation in time of war.
The commodities I have mentioned may be taken as typical of the mass or general acquisitions put into operation in order either to rectify the ill effects of shortages in war conditions or to avert the consequences of over-supply. There are, however, a number of other commodities in which the Commonwealth has not itself acquired and marketed a whole crop, but has obtained large supplies for service purposes, under contracts with processors whose own supplies are controlled by the Commonwealth, at prices fixed by the Prices Commissioner. Tomatoes and citrus fruits belong to this class of commodities. I do not wish now to repeat or amplify the statement I made to the House on this class of transactions as recently as the 26th February.
The principles upon which the Commonwealth has acted in carrying out plans for the “ mass “ acquisition of commodities have been laid down by successive governments representing all parties in Australia and have been supported in each case by representatives of the industry concerned. The position arising from the High Court’s decision as to the damages awarded in the apple and pear case may have to be clarified in subsequent proceedings. Apparently the decision lays down no mechanical rule of universal application in the ascertainment of just terms of acquisition. It may well he inapplicable to other circumstances and other commodities.
Summing up, it may fairly be said -
On the motion for the adjournment of the Senate on Tuesday, Senator Lamp referred to an announcement that the Department of Information had secured films depicting the Battle of the Bismarck Sea, and that they were to be released in a news-reel at an early date. He suggested that a special screening should be arranged in Canberra in order to enable honorable senators and members of the House of Representatives to see the film, as well as a news-reel dealing with the Wau battle-front.
I am pleased to announce that arrangements have been made for a special screening, at the Capitol Theatre, Canberra, at 10 o’clock next Wednesday morning, of newsreels of The Bismarck Sea Battle, which is to be released in all metropolitan centres tomorrow; the Timor Commandos, and the Fighting at Wau. The screening will last until approximately 10.30 a.m.
.- I have received from the Minister for Transport (Mr. George Lawson) an answer to the complaints which I made in the Senate on the 10th March with regard to the administration of road transport by the Deputy Director of Emergency Road Transport in Tasmania, Mr. M. S. Wilson. I take strong exception to the terms in which the reply is couched. The Minister stated -
The statement made by Senator Aylett is composed of a series of ill-considered and unjustified personal attacks upon Mr. M.S. Wilson. . . . This violent and completely unwarranted attack upon Mr. Wilson is very deeply regretted by me as the responsible Minister.
All I did was to bring before the Senate certain facts which show that Mr. Wilson is failing to enforce the regulations made by the Prime Minister (Mr. Cur tin) as Minister for Defence. Therefore, the Minister’s action in describing my remarks as “a violent and completely unwarranted attack” on that official is completely unjustified. I repeat that this official has granted permits for the transport of racehorses and greyhounds to race and dog meetings. In another instance, he has permitted the use of a motor hearse on an 80-mile return trip, when a motor hearse was available in the town where the funeral took place. I stated plain facts. Further, when I was discussing this matter with the Minister he said to me, “Any one can get up on a stump and draw a crowd by making a lot of complaints “. I assure the Minister that I do not indulge in that practice to which, apparently, he has become accustomed in Queensland. I repeat my offer to accompany any officer whom the Minister might appoint to investigate the complaints I have made, and substantiate every allegation. Indeed, I consider that my remarks concerning Mr. Wilson were very mild. At many race meetings in Tasmania, one can count up to 150 cars, none of which is fitted with a gas-producer. Much more petrol, rubber and man-power can be saved in that State. The Minister also stated, “ This gentleman has the confidence of the community of Tasmania “. I should soon disabuse the Minister of that view if I were to read the numerous telegrams which I have received since I made my remarks on the 10th March. The Minister also said that this official was performing his duties in an honorary capacity. The Minister overlooks the fact that Mr. Wilson receives a salary of £2,000 a year from the Tasmanian Government. The Minister has launched a violent attack upon me. I can give many instances to show that this official is breaking the regulations which he has been appointed to administer. Those regulations have been made by the Prime Minister as Minister for Defence, and, consequently, they must be necessary.
– - Does the honorable senator wish that the matter be looked into further 1
– It hurts me very much to have to bring this matter forward in this way; but the Minister’s reply to me has been featured in the press of Tasmania, which has played it up as an attack by a Minister upon one of his colleagues. Should the press fail to publish my reply, I shall have it printed and circulated. I repeat that I have proof of every allegation which I have made in this chamber against this official. I can show that, in many instances, this man has flouted the regulations he has been appointed to administer, and has given preferential treatment to certain sections of the community.
– Honorable senators opposite have so misrepresented the views which I have expressed with regard to the functions of the Commonwealth Bank that I take this opportunity to make my position xd. the matter quite clear. I have never said that the Commonwealth Bank should advance money interest free to all and sundry. I have said that it should advance money interest free to the Commonwealth Government The Commonwealth Bank is the people’s hank, and the Government represents the people. There would be no sense in the Government paying interest on some service which it rendered to itself. However, honorable senators opposite have ridiculed the views I have expressed, and have attributed to mc statements which I have not made. Paragraph 504 of the report of the Royal Commission on Monetary and Banking Systems states clearly that the bank can lend interest-free money to the Government. I should not he perturbed if the Commonwealth Bank charged the Government interest, because all the profits of the bank revert to the Government.
Question resolved in the affirmative.
The following paper was presented : -
Customs Act - Proclamation prohibiting the exportation (except under certain conditions) of - Bitumen, &c. (dated 10th March, 1D43).
Senate adjourned at 6.12 p.m.
Cite as: Australia, Senate, Debates, 18 March 1943, viewed 22 October 2017, <http://historichansard.net/senate/1943/19430318_senate_16_174/>.