17th Parliament · 3rd Session
The President (Senator theHon. Gordon Brown) took the chair at 3 p.m., and read prayers.
– In the preparation of the Estimates for the present financial year, will the Minister for Health give sympathetic consideration to the expanding needs of the National Fitness Council?
SenatorFRASER. - I shall do so.
Releases - Detention Camps - Waterfront Employment
– Is the Minister for Trade and Customs aware that, because of Government Order of the Day, No. 9, on the business paper, honorable senators are prevented from discussing a matter of vital importance, namely the release of men with five years’ service in the fighting forces? Will he consider bringing this order to the top of the notice-paper in order to enable a discussion of this subject to take place? Failing that, will the Government makea statement clarifying the position of men with five years’ service, and in the event of such a statement being made, will the Parliament be given an opportunity to debate the matter immediately?
– A statement on the subject will be made either to-morrow or the following day.
– Will the Parliament have an opportunity to discuss it?
– Referring to my previous questions regarding the appointment of a royal commissioner’ to investigate conditions at detention camps in Australia, and in view of the trouble that has arisen recently at Grovely camp in Queensland, and Tamworth in New South Wales, and at Lae, in New Guinea, can the Minister representing the Minister for the Army say when a royal commissioner willbe appointed to investigate the methods adopted, and conditions generally, at detention camps throughout Australia and in New Guinea?
– As I intimated on a previous occasion, we have had some difficulty in securing the services of a judge to carry out this investigation. However, I understand that a judge will be available for the purpose in the near future.
– I ask the Minister representing the Minister for the Army whether he has seen a statement published in the Sydney Daily Telegraph under the heading “ Soldiers Protest on Working Conditions”, which states that members of the Army were often forced to work on the wharfs in Sydney when they were ill? It is also pointed out that when that statement was brought to the notice of the Minister he replied that he had nothing to say. Will the Minister investigate this report, and. if it be proved to be true will he rectify the position? If it is not true, will he see that the same publicity is given to a. correction as has been given to the statement?
– I shall bring the article to the notice of the Minister for th e Army.
– Is the Leader of the Senate aware that considerable delay occurs in some departments in supplying answers to questions asked upon notice by honorable senators, whilst frequently, answers on the same subjects are supplied to members of the House of Representatives and given publicity before such questions asked by honorable senators are even answered in this chamber? Will the Minister take steps to ensure that prompt replies are supplied to questions asked by honorable senators?
– I shall give immediate consideration to the matter raised by the honorable senator.
asked the Minister representing the Prime Minister, upon notice -
With reference to the bill atpresent before Parliament, designed, inter alia, to provide for the welfare of the natives of New Guinea -
Is it proposed to bring down similar legislation to secure for the aborigines of Australia conditions governing - (a) Housing; (b) Hours of labour; (c) Wages;(d) Recreation leave; (e) Social services?
If not, why not?
– The Prime Minister has supplied the following answers : - 1 and 2. The honorable senator will appreciate the fact that the control of aborigines in the various States of the Commonwealth comes within the jurisdiction of the State governments and not the Commonwealth Government. Only in the Northern Territory does the Commonwealth Government have control of aborigines.
The question of giving the Commonwealth Government control of all aborigines in Aug-, tralia was submitted to the electors in the last referendum but was rejected.
It is not competent, therefore, for the Commonwealth Government to bring down legislation on the lines suggested by the honorable senator in respect of the aborigines in the States.
A satisfactory policy for the welfare of aborigines in the Northern Territory has been In operation for some years but the outbreak of war has rendered it impossible to implement that policy to the extent desired.
Immunity from Bombing.
asked the Minister representing the Prime Minister, upon notice -
– The Prime Minister has supplied the following answers : - 1 and 2. The article has been brought to my notice.
asked the Minister for Trade and Customs, upon notice -
What is the total quantity of eucalyptus oil exported from Australia during the past two years ?
– The answer to the honorable senator’s question is as follows : -
The total quantity of eucalyptus oil exported in those two years was 130,553 gallons - 62,823 gallons in the year 1943-44 and 67,730 gallons in the year 1944-45.
asked the Minister representing the Minister for Works and Housing, upon notice -
– The Minister for Works and Housing has supplied the following answers: -
Regarding the fourteen bulldozers alleged to have been lying idle in Brisbane since Christmas, further information will be furnished if details could be supplied as to the location of such equipment.
asked the Minister for Trade and Customs, upon notice -
– The following information is supplied: -
Debate resumed from the 20th July (vide page 4342), on motion by Senator Keane -
That the bill be now read a second time.
.- The objects of this bill have been carried out, in the main, for a considerable time, under the National Security Regulations. It is rather extraordinary that this ‘bill and the Commonwealth Bank Bill have occasioned such an outcry against this Parliament dealing with the two phases of banking. I regret the absence through sickness of the Acting Leader of the Opposition (Senator Leckie), because it somewhat circumscribes what I intended to say. 1 feel that the’ difficulties he has encountered in trying to carry out his additional duties have made him ill. But Opposition members have continually used extravagant language about these two bills. Sometimes their words have indicated that they could hardly have been in their proper senses. There is an old saying, “ Whom the gods destroy, they first make mad “.
– That is what we think is happening to the Government.
– I am not suggesting that Opposition senators are quite mad or even that they are silly, but there is the possibility of a slight mental affliction. They see that there is to be restriction and control of the people they represent in the main in this Parliament, hence they- use the language of men suffering from temporary mental aberrations. From such persons such words as “ unsound “, “ rotten “ and “ robbery “ which have been used by honorable senators opposite might bc expected.
– It is only a repetition of what one hears from the Government side.
– Even if that be so, I hold no brief for that son of thing. What I am trying to bring out is that because of that mental aberration there is no sound reasoning in the consideration of these bills by honorable senators opposite. Instead of making absurd allegations about the Government’s intentions, those honorable senators should study the relationship of this legislation to the Australian economy. For instance, the amount of food available to a community generally, is directly related to the national debt of a country. That is particularly so in Australia. As the national debt rises, greater purchasing power is spread amongst the people, and they are able to purchase more of the necessaries of life such as food, clothing and shelter; but debts carry interest payments which also have an important bearing upon the well-being of a community. The Government’s banking legislation is the foundation of a plan to tackle the problem caused by the mounting national debt of this country.
That problem must be tackled some time or other. Things cannot continue as they are at present, with huge sums being placed -annually on the debit side of the ledger, and a substantial proportion of the production of the country ‘being required to meet interest commitments. These cognate banking bills are an attempt to provide a formula by means of which the national debt will be reduced. Credits will be advanced against the production of the country. At the same time, the bills provide for control of interest payments. That is a starting point. So long as we retain the old method of financial control by the private banking institutions - a system which, apparently, is quite acceptable to the Opposition - we shall not progress, t have no quarrel with the banking institutions or with those who control them. The private banks have done a good job up to date, but .so far as national advancement is concerned, their policy is wrong. In the past, the system followed has been that depositors have placed money in the banks, and that money has been the basis of credits issued by the banks to applicants in the form of loans, at interest. I remind honorable senators that at one stage of the last war, the hanking institutions held up the war effort of this country by demanding an increase of interest rates before they would support war loans.
The Royal Commission on Monetary and Banking Systems has indicated clearly the part that the banks played and that they should have played during the depression. In those years, the hanks delayed the economic recovery of this country to some degree and, at least, were responsible for the hardship which was suffered by the people. This legislation will ensure that that state of affairs shall not occur again. In future, assets in the form of deposits placed in the banks will be used through the central bank to make credit available to the Government, and interest on those credits will go back to the people and not to the private banking institutions. That means that we shall be building up a fund in addition to a sinking fund which will enable us gradually to reduce the national debt. It means also that it will be possible to control interest rates. Instead of the control being in the hands of private institutions as in the past it will be in the hands of the Commonwealth Parliament. We all know that high interest rates affect production in this country.
– This bill makes no provision for increased production.
– Obviously, the honorable senator has not understood what has already been said. His interjection convinces me that some people seem to suffer from temporary mental aberration. This .bill, together with the Commonwealth Bank Bill, makes provision to use such funds of the private banks as wall be deposited with the central bank to increase production by various methods. It will also enable interest rates to be controlled. Instead of interest rates being raised, as in the past, thereby curtailing activities throughout the country, the rates will be reduced, and the result will be an expansion of industry. That will be possible when the control is in the hands of. the Commonwealth Parliament. Opposition senators seem content to deal with trivialities instead of facing the fundamental issues which confront the nation. Those issues must be faced sooner or later. The method adopted to overcome the problems that faced the country .in the depression years led to further difficulties. The present Government is adopting new methods altogether. Honorable senators opposite may say that we on this side are fanatics, but there is nothing fanatical about the transference of powers from private individuals to the Government of the country. The Government’s proposals will still leave the private banking institutions in existence, although they will be subjected to certain restrictions. We shall still have the Loan Council, consisting of representatives of the Commonwealth and State Governments to control subsidiary governmental bodies. Under the Government’s proposals the banking institutions of the nation will in future be used to increase the country’s production; it will be possible also to control interest rates and to build- up a fund which will gradually eliminate the national debt which under the existing system is getting out of control, and therefore, I hope that the bill will have a speedy passage.
– I see sinister motives in the Government’s banking legislation which Senator O’Flaherty does not see. The honorable senator said that this bill and the Commonwealth Bank Bill will lead to greater production in this -country. That may be so, but such increased production will be at the expense of other businesses which are already providing for greater production. The only difference will be that instead of advances to aid production being made by private banks they will be made by the Commonwealth Bank. It is problematical whether the Commonwealth Bank can make advances more suitably, or that such advances will stimulate production more, than if assistance were given by private banks and private enterprise generally. In my opinion private enterprise, working in conjunction with private banking institutions, would create more employment in the community, and would do more to expand industry than will the methods proposed by the Government.
– Private enterprise failed badly in the depression years.
– That is not so. During the depression years the private banks advanced more money than previously.
– I referred to private enterprise.
– It is true that in the depression years private enterprise could not take up the slack of unemployment or expand their businesses, but it is problematical whether this country could have done better under a semi-socialized form of industry. . The Commonwealth Bank Bill, with which we have already dealt, paved the way for the legislation now before us. In its application to private banking institutions and to industry generally, this bill is more drastic .than its complementary measure, for it places in the hands of the Government the power to nationalize banking, and gradually to take control of industry throughout the Commonwealth. It has been truly said that finance is the life-blood of industry.
That statement is as true to-day as it was in the past. “With this legislation in operation, the normal flow of that lifeblood will be stemmed. At the last elections the Government did not receive a mandate for the socialization of industry or the nationalization of banking.
– The Government is not doing so.
– It is. The form of control provided for under this bill and the Commonwealth Bank Bill has not been submitted to the people as an issue at any general election. In fact, the late Prime Minister gave a pledge that the Government would not attempt to implement Labour’s socialization policy during the war. At the height of the controversy upon that subject he was reported in the Sydney Morning Herald of the 1st May, 1945, as follows: -
Mr. Curtin denying that the Government had attempted to socialize Australia, said, “We do not intend to do it just because we are at war . . . Such interferences, restraints and adjustments as we make will be made only because they are necessary, effectively, to prosecute the war.”
It cannot be said that the Governmentdoes not possess sufficient powers under the National Security legislation to do all of the things for which provision is made under its banking legislation. This legislation is not necessary on the ground that it will enable the Government to prosecute our war effort more effectively. Therefore, we must seek the reason for its introduction in violation of the pledge given by the late Prime Minister that the Government would not attempt to implement Labour’s socialization policy during the war. Labour’s platform includes the following provisions : -
It is clear to any one who reads this measure and the Commonwealth Bank
Bill that this portion of the Labour party’s platform is embodied in the two measures.
– And those planks of our platform have been known to electors of Australia for many years.
– The point I make is that the late Prime Minister gave a pledge that Labour’s socialization policy would not be implemented during the war. Now, however, despite that pledge, effect is being given to that policy under this measure and theCommonwealth Bank Bill. It is interesting to note that at the sixteenth annual conference of the Australian Labour party held in Melbourne in December, 1943, four months after the last general elections, instructions were given to the Government to proceed with the party’s banking programme. We can only conclude that the Government has introduced its banking legislation as the result of those instructions. As I have already pointed out, the Government possesses under the National Security legislation all of the powers which it seeks under its banking legislation. This measure and the Commonwealth Bank Bill are designed for peace-time conditions. That has been admitted. Therefore, under this legislation the Government is making its first attempt to perpetuate in peace-time the controls which were instituted solely for the purpose of prosecuting the war. Our people have submitted to these controls in war-time because they have been imbued with the spirit of patriotism, and have realized that in order to fight effectively a totalitarian enemy we must to some degree adopt totalitarian methods. I warn the people that if our parliamentary system of government is to survive, they must scrutinize carefully the powers which any government seeks to take to itself in peace-time. It is in that light that we on this side of the chamber approach this legislation. The powers embodied in this measure and the Commonwealth Bank Bill will enable the government of the day to change completely our economic and industrial way of life, and, indeed, to completely socialize life in this country. In those cir cum stances, we should be forced into abandoning the ideals for which our men are still fighting. Are those ideals to go by the board? Are the people prepared to allow the Government completely to socialize life in this country? When I was speaking on the Commonwealth Bank Bill, I drew attention to the necessity for a banking system sufficiently flexible to meet Australian conditions. I pointed out that whilst Australia is as large in area as the United States of America, our country is only partially developed. Indeed, our coastal belt is practically the only portion of our continent which can be said to be developed, and the great bulk of our small population is located in our capital cities. Our climatic conditions are most varied. Our country embraces snow lands and tropical areas. We have to contend with droughts, floods and bushfires. Within recent years, we have experienced devastating bushfires. We have not yet seen the end of probably the worst drought in our history, the losses of which have been estimated at £61,000,000. We also have to combat stock disease. Pioneering entails hardships and poor living conditions in areas far removed from not only the ordinary amenities of life, but also essential medical services and hospitals. All those conditions require a banking system of the utmost flexibility. That flexibility is provided by the private banking system that has developed hand in hand with the industries of this country. Under the heading “ Advances and Investments “ in Division 5 of this bill, we find provisions that are the very reverse of flexible. Clause 27 provides - (1.)Where the Commonwealth Bank is satisfied that it is necessary or expedient to do so in the public interest, the Commonwealth Bank may determine the policy in relation to advances to be followed by banks and each bank shall follow the policy so determined.
Penalty: One thousand pounds. (2.) Without limiting the generality of the last preceding sub-section, the Commonwealth Bank may give directions as to the classes of purposes for which advances may or may not be made by banks and each bank shall comply with any directions so given.
Penalty: One thousand pounds.
In the explanatory memorandum circulated by the Treasurer, it is claimed that these provisions follow the recommendation of the Royal Commission on Monetary and Banking Systems, but that is not so. Paragraph 620 of the royal commission’s report reads -
We have indicated in Chapter VI. that the Commonwealth Bank “ should pay some regard to the distribution by the banks of the volume of credit amongst different countries “. We consider that as the Commonwealth Bank develops its intelligence service, and has at its disposal a body of useful information, it should be in a position to advise the trading banks as to the directions in which it is desirable, in the national interest, that advances should be made. For example, when it has regularly before it the analysis of trading banks’ advances according to industries, together with information as to economic trends at home and abroad, it should be in a position to indicate industries which should be encouraged to expand and others which should not. We do not suggest that the Commonwealth Bank should interfere in any way with the granting of particular advances by trading banks, but rather that it should advise as to the genera) direction of advances.
Paragraph 621 reads -
We recommend -
In order to promote a wise distribution of credits, the Commonwealth Bank should equip itself with all possible facilities for ascertaining economic trends in Australia and abroad, so that it can advise trading banks as to the directions in which it is desirable in the national interest that advances should be made.
That report, which was furnished in 1937, was based on the assumption that the Commonwealth Bank would continue to be administered by a board of directors that would work in close co-operation with the private banks. That has been the, policy of the bank up to the introduction of this legislation. Moreover, the royal commission, which recommended throughout that the Commonwealth Bank should “ advise “ the private banks, contemplated nothing mandatory, whereas this bill provides that the Commonwealth Bank shall direct the private banks to do certain things, and provides heavy penalties for disobedience. The set-up contemplated in this legislation is entirely different from that envisaged by the royal commission. The Board of Directors is to be done away with, and the bank will be virtually under political control, because the Treasurer will have the last say on what the Commonwealth Bank’s policy shall be. That means that the Treasurer, through the Commonwealth Bank, will direct the policy of the private banks. The relationship between the Treasurer and the private banks will be exactly the relationship between the Treasurer and the Commonwealth Bank - that of master and servant. The controls and restrictions provided for in these bills will not inspire confidence in the Government’s financial integrity. The people with savings will be able to choose a government savings bank or a private trading bank, but the Government will be able to direct through the Commonwealth Bank what shall be done with their savings. A direction may be given that deposits shall be transferred from the private bank in which they have been placed, to the Commonwealth Bank. When the Commonwealth Bank Bill was under discussion, an admission was made that under the industrial finance provisions, the people’s savings .could be used to assist industrial ventures approved by the Government. That, I believe, will cause a feeling of insecurity amongst the general public, and will result in a lack of confidence in many industries, in which the relationship between the banker and his client is more personal than business. Very often a private bank will back an individual, not so much upon the security which he has to offer, as upon personal grounds. This close relationship between client and banker will not be possible in the new Commonwealth Bank organization. In the Commonwealth Bank Bill, advances are limited by regulations. Under the clauses of this measure with which I am dealing at present, the ‘Commonwealth Bank will have power to take over the financing of any industry. That could be done by issuing instructions to the private banks that no advances were to he made to a particular industry. If such a direction were given, those engaged in the industry would have no option but to transfer their business to the Commonwealth Bank. For instance, such a direction might be given in regard to the wool industry, which ‘ plays a big part in our national economy and overseas trade by making available substantial credits in other countries. 1 believe that after the war the wool industry, by the extension of woollen manufacturing activities, will provide even more employment than it has done in the past. On the raw material side that industry in the past has been financed chiefly by the private banks and wool broking firms. These organizations know the business thoroughly and they appreciate the seasonal difficulties with which pastoralists have to cope. Anyone who did not have a thorough knowledge of that industry might think that the percentage of overdraft accounts amongst wool-growers was extraordinarily high, whereas those who know the industry realize that when better seasons are experienced, overdraft obligations will be met, and accounts will return to the normal level. It would be most unfortunate if the financing of an industry of such enormous value to this country as the wool industry were taken over practically overnight by the Commonwealth Bank by means of an instruction from the Treasurer that no further advances were to be made available to it by the private banks. In that way, of course, theCommonwealth Bank could take almost any industry out of the hands of the private banking institutions and finally could close down those institutions altogether. That is where the danger lies. In effect, this legislation which honorable senators opposite claim will be of such benefit to the country, will empower the Commonwealth Bank to assume control of the business of the nation.
I come now to clauses 11 to 15, which provide the machinery for conducting any banking institution that may be taken over by the Commonwealth Bank. Clause 11 provides -
Itshall be the duty of the Commonwealth Bank to exercise its powers and functions under this Division for the protection of the depositors of the several banks.
Clause 13 states - (1.) A bank which considers that it is likely to become unable to meet its obligations, or is about to suspend payment, shall forthwith inform the Commonwealth Bank. (2.) Where a bank -
My interpretation of that provision is that the Commonwealth Bank could take over the business of such a bank. Whilst I agree that depositors should be given protection, and that their interests should come first, shareholders should not be exposed to the danger of having their assets taken from them by occurrences over which they do not have any control. The six trading banks which have head offices in Australia and whose total capital amounts to £27,500,000. have 34,068 shareholders with an average holding of £178. Shareholders with holdings under £500 represent 74 per cent. of the total shareholders of those banks; It will be seen that those persons are not so enormously wealthy as supporters of the Government would have us believe. Three other banks which operate in Australia, but have their head offices in Great Britain, have 18,830 shareholders whose holdings are under £500, and average £205. They represent 75 per cent. of the total shareholders of those banks. Those figures show clearly that the great majority of the shareholders of the private banks operating in this country are not wealthy people. Section 55 of the Constitution provides for the acquisition of property by the Commonwealth, but it distinctly lays down that property, may be acquired only on just terms. Had the Government decided in a straight-forward way to nationalize the banks and to take them over) it would have been obliged to acquire their assets on just terms. A policy which aims at the gradual strangulation of the banks cannot be said to comply with section 55 of the Constitution. In other words, this bill is an attempt by the Government to evade the provisions of the Constitution. I cannot see why the shareholders of the private banks should be doomed to lose practically the whole of their savings.
– That is an exaggeration.
– Can Senator Sheehan say that the assets of the private banks will be acquired on just terms ?
– The shareholders will not lose all their savings, and the honorable senator knows it.
– I do not know it. Clause 13 provides that, in certain circumstances, the Commonwealth Bank shall assume control of and carry on the business of private banks. Should the Commonwealth Bank take overthe business of a bank, what guarantee is there that a fair price will be paid for that bank’s assets? I should like an assurance from the Minister that, in the event of the assets of a private bank being taken over, a fair price will be paid for them. I do not see any such provision in the bill; on the contrary, I see in this measure an intention to strangle the private banks. Should a private bank be forced to wind up its business it will be taken over by the Commonwealth Bank. Let us consider the situation which would arise in the event of only one bank operating throughout the Commonwealth. In my opinion, such a state of affairs would lead to the creation of hundreds of small dictators. Honorable senators who have lived in country districts know that when a primary producer fails to arrange for an overdraft with one bank, possibly because its manager regards his business methods as unsound or his character as unsatisfactory, he approaches one or more other institutions, until eventually he is given the financial accommodation that he seeks. But should there be only one bank in the district, its manager would have all the powers of a dictator, and would be able to make or break people engaged in primary production or in other business. I fail to see that such a state of affairs will improve business conditions or stimulate industry. Under this legislation that freedom which is essential for the development of a young country will not exist. The aim of the Government is to socialize any industry that it desires. When the demobilization of the men in the fighting services takes place, from 80 percent.to90percent.ofthemwill l ook to private enterprise for employment. If private enterprise is to be handicapped, the chief sufferers will be the men who have fought for their country. Before the Government launches out on any large-scale plan for the socialization of industry, it should have regard to the experience of Queensland in connexion with State enterprises.
Between 1915 and 1919 the Government of Queensland launched 23 State undertakings, the majority of which were colossal failures, although a few of them proved successful. According to the report of the Queensland Auditor-General, the net loss on six State enterprises to the 30th June, 1939, was £1,930,557, made up as follows: -
The Government of Queensland embarked on a number of State enterprises which included several State stations, a state produce agency, a State fish supply, the Irvinebank treatment works, a State arsenic mine, six State coal mines, a State cannery, the Hamilton cold stores and the Ohillagoe State smelters. There were also State butchers’ shops, railway refreshment rooms, a State hotel, State timber mills, State coal mines at Bowen, as well as a State insurance department. It may be contended that the existence of those State enterprises kept prices down, but that certainly was not so in connexion with the Queensland State butcher shops.
– The only regulated fish industry in Australia is in Queensland. That is the only State in which fish can be bought at reasonable prices.
– The State fish supply resulted in a loss of £31,000. It is true that the Government of Queensland has made a success of its insurance business. It commenced in a small way to deal with workers’ compensation, but gradually it undertook all classes of insurance. I admit, too, that the railway refreshment rooms of Queensland have been successful. It is significant, however, that although there has been a Labour government in Queensland for a number of years, it has not attempted to re-open the State enterprises which were closed down in 1929 and 1930. The Labour Government in that State has not only practically vacated the field of private enterprise but has also handed over the contruction of large public works to private enterprise. The Storey Bridge, for instance, was constructed by private enterprise; and workers’ dwellings are being built by private enterprise under the contract system. The failure of State enterprises in Queensland refutes entirely the arguments of honorable senators opposite in connexion with government participation in industry.
– How does the honorable senator relate his remarks to the bill?
– Under clause 27, which deals with advances and investments, the Government will be enabled to take control of industries of all classes, because the private banks are to be restricted in making advances to private enterprise. I hope that before taking action under that clause, the Government will thoroughly investigate the disastrous results of State enterprises in Queensland. That was a costly experiment, for which the taxpayers of that .State are still paying. At the committee stage, I shall deal in detail with the more important clauses of the measure.
Senator HERBERT HAYS (Tasmania; [4.17]. - This bill is complementary to the Commonwealth Bank Bill. We should! have been wiser had we discussed both measures concurrently. Much that was said during the second-reading debate on the Commonwealth Bank Bill applies with equal force to this measure. Whilst the Commonwealth Bank Bill dealt with the framework and reconstruction of the Commonwealth Bank, this measure will provide machinery to enable the Commonwealth Bank to control the private banks. When speaking on the Commonwealth Bank Bill, I said that in view of the importance and far-reaching effect of the Government’s banking proposals on the lives of the people and on our economy as a whole, it was unfortunate that the Government did not refer those proposals to a joint committee of both Houses representative of all parties in the Parliament. It must be abundantly clear to the Government that all members, regardless of party political affiliations, have the interests of the nation at heart. Since federation, governments politically akin to the parties now represented by the Opposition in this Parliament have occupied the treasury bench. Does any honorable senator opposite suggest that any of those governments in any way hampered the development of this country, or injured its citizens in their ordinary lives ?
– Yes. I remind the honorable senator of the action of the Senate in 1930 in rejecting the Scullin Government’s proposal to issue fiduciary notes to the value of £18,000,000.
– The Minister for Trade and Customs (Senator Keane), like his colleagues, imaginesthat a government can by magic create £18,000,000 worth of money, and that the debt so incurred will disappear like the morning dew. Had the fiduciary issue which he mentioned been made, this country would have been saddled with a liability to that amount. Whether that was a wise proposal is now beside the point. The fact remains that Australia was the first country to emerge from the depression. That cannot be denied; and the financial expert who directed our recovery by evolving what later became known as the Premiers plan was invited by other countries in Europe and in South America, to make proposals to restore their financial equilibrium. That gentleman, Sir Otto Niemeyer, was invited to this country, and his formula was unanimously adopted by the State governments and the Commonwealth Government. He was <a financial genius ; and the Scullin Government which was in office at that time, accepted the remedy which he proposed, and which, ultimately, solved our financial difficulties. Senator O’Flaherty contended that this measure would enable the Government, ultimately, to liquidate the nation’s accumulated debts. However, a bald statement is not necessarily true.
– I did not 3ay that.
– The honorable senator said that our national debt was increasing so rapidly that unless we did something about it, we would ultimately, be unable to meet our obligations.
– That is so.
– This measure will not in any way help us to liquidate our national debt.
– It will.
– The honorable senator should know that in respect of every loan, provision is made for its repayment by the establishment of a sinking fund which is controlled by commissioners, who utilize that fund to buy bonds and thus eventually liquidate the loan. I fail to find in this measure any provision which will enable us to liquidate our national debt. The honorable senator also dealt in sheer speculation when he said that this measure would be the means of stimulating industry, and enabling the country to blossom as a rose in early spring. It must be clear to everyone that this measure implements the Labour party’s policy of socialization. It is, at any rate, an experiment in that direction. The Government now possesses under the National Security legislation full power to do any of the things which it proposes to do under its banking legislation. I repeat that this is a peace-time measure. We believe in democratic principles, and particularly the rights qf the individual.
– Honorable senators opposite do not believe in those principles.
- Senator O’Flaherty believes that the individual has no rights. He believes in total regimentation of the people to the complete exclusion of individualism. Honorable senators on this side of the chamber- do not share that view. Surely, honorable senators opposite are not blind to the progress and development of the ‘Commonwealth Bank, first, under the control of a Governor, and in more recent years under a system of board control. Does the Minister in charge of the bill contend that the private banks have in any way hampered the progress of this country, or the development of the Commonwealth Bank? The power of the private banks is insignificant compared with that exercised by the Commonwealth Bank. In such circumstances, no reasonable person can be deceived by the contention of the Government that this legislation will establish such control over our financial structure as will enable governments in the future to prevent depressions. That is the object of this bill, which will become law because the Government has the numbers. It is of little use for us to move amendments, except as protests.
– I am glad the honorable senator realizes at least that.
– I would not seek financial education from the honorable senator if the views he expressed to-day are his real thoughts. In a democracy, the individual has the full rights of citizenship, and, provided the exercise of those rights does not cut across or take away from the rights of other individuals, he has full liberty to exercise them. That is the essence of a true democracy. We all know that the first plank of the Labour party’s platform is the socialization of the means of production, distribution and exchange, but no specific reference was made during the last general elections to the Government’s intention to legislate in order to put that policy into effect. Moreover, since the Government, under National Security regulations which will remain in force until six months after the war ends, has all the powers provided in this legislation, there is no need for this action. It is not proper that this legislation should be introduced in the absence on active service of hundreds of thousands of our men and women. It is most undemocratic that when the minds of the people are fully occupied with the task of defending this country, the Government should introduce legislation that will filch the rights of citizens by fundamentally altering the financial structure of Australia. I challenge the Minister for Trade and Customs (Senator Keane) to tell me and the country in his speech in reply that what we have said about the purposes of this bill is exaggerated. It is plain that its purpose is to implement the policy of socialization, because. I repeat, it has no war-time significance, as national security regulations empower the Government to control the private banks, pastoral companies and>, in fact, all the industries of this country. No undertaking has been given by the Government, that, by means of this legislation, the control over Australian industry exercised for war purposes will not be carried permanently into the time of peace.
– “Who held the power before?
– Which power ?
– The power over the finances of this country.
– The citizens of this country.
– Rot !
– Nevertheless, my statement is true. The Commonwealth Bank has been controlled by a board of directors that represents the people of this country because it was chosen from a cross-section of the people. Whether the directors were appointed by this Government or the previous Government, the bank was administered in accordance with the wishes of the people.
– Within its limited charter, yes.
– What have the associated1 banks done or failed to do that honorable senators opposite believe they have not played an equal part with the Commonwealth Bank in the development of this country in days of peace and in the protection of the country in days of war? Some honorable senators opposite are prejudiced against the associated banks for reasons unknown to me and best known to themselves. Why they regard the associated banks as enemies of this country is unfathomable. The private banks are operating by charter under the laws of the State. Their articles of association must be approved. All their activities are, in a measure, under control. Whose money do they use but the shareholders’ money? The idea tha* the private banks are companies controlled by an aggregation of a few rich people holding this country in their grip is ridiculous, because shares of the banks are sold on the open market. Senator Sheehan may smile, hut he cannot deny that.
– What is the total subscribed capital of the private banks?
– Their shares are quoted on the open market. Much of the capital has been invested by trustees on behalf of beneficiaries under wills because the investment is regarded as safe. We can be proud of what the private banks have done for this country. They have met all their obligations. Before the Commonwealth Bank was established, they carried the financial structure of Australia to the credit of themselves and the advantage of the nation. Not for a moment do I use that as an argument against the Commonwealth Bank, the creation and development of which I welcome, but I do not regard the control of the Commonwealth Bank by a politically-controlled .governor instead of an independent board of directors as a reason why the private trading banks should be crushed out of existence. I do not object to legitimate competition between the Commonwealth Bank and the private banks. If by offering better terms, the Commonwealth Bank is able to drive the private banks out of business that may be unobjectionable, but exception must be taken to the enactment of legislation under which, by the transfer of control of the Commonwealth Bank to a political instrument, the Treasurer, the private banks will. be so shackled as to be rendered, in the course of time, absolutely’ inoperative. No honorable senator opposite will deny that this legislation is an effort by the Labour party to carry out the first plank of its platform. If the Government chooses by force of numbers to supplant the Commonwealth Bank Board with a governor, who will be the tool of the Treasurer, let it go ahead, but it has no justification for taking away the rights and privileges-
– That is better - privileges !
– I say the rights and privileges of the citizens of this country. I should like to know the reason for the honorable senator’s prejudice against everything that belongs to the individual. I am sure there is a reason. I leave it at that and return to “my theme. The Government has no right to take advantage of the absence on service of so many thousands of our men and women. The right thing for it to do would be to allow this matter to be the great issue at the next general elections. In committee we will take the opportunity provided to move amendments in order to test the bona fides of Government supporters. They will have the opportunity to show whether they are caucus-bound or free citizens by. voting according to the merit of the amendments that will be moved.
.- I do not propose to make a long speech on this bill because if I did so I should be repeating what I have already said on the Commonwealth Bank Bill. I am surprised at the silence of Government supporters, only two of whom have spoken in this debate. Senator Lamp gave a dissertation on Douglas Credit and the creation of money and indulged in the idealistic theorizing practised by many members of the Labour party.
– The bill speaks for itself.
– Then it must be completely dumb. Senator O’flaherty made one of his usual frank speeches. He said that he was determined that the policy of the Labour party should be carried out, that the private banks should be controlled by the Commonwealth Bank, that the finances of this country should be organized by the Government, and not by the private banks, and that the profits which the private banks were making at present should revert to the people. I admire the honorable senator’s frankness ; but other supporters of the Government are dumb on this subject. We do not know what their individual opinions are. For the information of their constituents they should state clearly where they stand on this legislation. Do they intend to sit inarticulate in their places, and merely vote upon this measure? .At least, honorable senators on this side of the chamber have expressed their views freely and openly.
The bill is a candid admission that the banks are to be controlled, not in such a way that they will be able to compete with the Commonwealth Bank on equal terms, but so that the Commonwealth Bank will have an unfair advantage over them. The Commonwealth Bank Bill lays down certain general principles ; this measure supplies the details. As Senator Herbert Hays pointed out, we are not dealing now with the money of shareholders in the private banks, but with the savings of the people of this country amounting to £500,000,000 or £600,000,000. That money belongs mostly to the working classes.
– We do not have any say in the policy of the private banks.
– I admit that, but, if these savings were not handled in a proper manner, the people would soon take action. A depositor is at liberty to transfer his account from one private bank to another, and may, if he so desires, take his account to the Commonwealth Bank. At present, the opposite is the case. Depositors are being driven from the Commonwealth Bank to the trading banks because of more favorable conditions. This measure will not prevent the private banks from lending money; but intending borrowers will not be able to obtain loans from the private banks without the authority of the Treasurer. In that way, the individual will be penalized, and his business activities hampered. That will be the effect of this legislation. I should like to know what is meant by the term “ trading banks “. No attempt has been made to define those words. Under this bill, every private bank will have to apply for a licence to continue its operations, but what concerns me, as I said in my second-reading speech upon the Commonwealth Bank Bill and during the committee discussion of that measure, is the effect that this legislation will have, upon organizations such as pastoral companies which carry on general trading activities. These organizations’ have already advanced £36,000,000 to primary producers of this country.
– And they have very good security for it.
– In some cases they have practically no security. . Their security in the form of live-stock has been lost owing to the drought. ‘Conditions in the pastoral industry are as Senator Cooper has described. Droughts occur at intervals with resultant adverse effects upon the finances of wool-growers. The Minister for Trade and Customs (Senator Keane) gave an assurance that the activities of pastoral companies and other similar organizations would not be affected by this bill ; but in his secondreading speech he said -
Pastoral companies, building, societies, and other institutions or persons who do not desire to carry on the general business of banking, but wish to undertake some banking business, tire covered by the bill.
– There is no doubt about that.
– But the Minister has said that they would be independent. The Treasurer’s explanatory note to clause 10 of this measure states -
Pastoral companies, travel agencies and other firm’s often conduct, in conjunction with their main business, certain banking transactions for their customers. It is not intended that authority to carry on the general business of banking shall be granted to persons whose main business is not banking. The clause permits examination of these cases and the granting of exemptions from any or all of the provisions of the Act where considered desirable by the Treasurer. Exemptions may he subject to conditions.
It appears that the organizations to which I have referred are to be refused permission to continue banking operations. The practice to-day is for pastoral companies to make advances on wool. As soon as a man has shorn his sheep in one year, a pastoral company will grant him fin advance on his sheep for the next year. The wool-grower probably draws his cheques upon that firm. The company advances money to him, and accepts credits.
– What rate of interest do those companies charge?
– It is very low, and they pay a fair rate of ‘interest upon deposits. Thousands of graziers carry on business with these companies. For instance, in Victoria, all auction sales are conducted on a cash basis. If a farmer wishes to buy some sheep, and he has not, sufficient money to pay for them, he can go to a pastoral company or to a stock and station agent and obtain the necessary finance.
– There is nothing in this bill to stop that.
– The bill provides that these semi-banking institutions shall not lend money without the consent of the Treasurer. How long will it take to obtain that consent? One can readily imagine the red tape which will be encountered when an application is made. [ am very alarmed about the effect of this legislation upon those organizations which are financing the people in the back country.
– Would these companies not have to secure the consent of their bankers before making advances ?
– No. I have seen men buy thousands of sheep at sales with money made available to them by pastoral companies. I hope that the Minister will make a statement upon this matter, because hundreds of pastoralists will be very concerned if there is to be any curtailment of the facilities offered by wool-broking organizations.
Certain provisions included in this legislation lead one to believe that .the Government expects bank failures to occur. Why ?
– It is the honorable senator who apparently is expecting failures.
– No. I am expecting great difficulties with the semibanking institutions to which I have referred, but it would appear that the Government expects some banks to be unable to continue in business and, therefore, has provided machinery for taking them over. This measure provides that a bank which is in difficulties must notify that fact to the Treasurer, who apparently will arrange for the transfer of the business of that bank to the Commonwealth Bank. Why is that provision being made? In the last 50 years there has been only one bank failure in this country.
– To which bank .is the honorable senator referring?
– The Government Savings Bank of New South Wales.
– The State Savings Bank of Western Australia also failed not many years ago, not under a Labour government, but under a nationalist administration.
– Did it not meet its obligations?
– The Commonwealth met its obligations for it.
– I come now to the part of this measure which deals with special accounts. This is a most complicated provision, and so far we have been given very little information in regard to it. Speaking on the Commonwealth Bank Bill, the Minister said that these special accounts would not be operative in the Commonwealth Bank. I ask the Postmaster-General (Senator Ashley) if that is so. Will these funds not be used? It seems most unlikely that the bank would allow £250,000,000 to lie idle, and pay £2,000,000 annually in interest upon it. The bank is to pay three-quarters per cent, interest upon that money, and I believe that the money will be loaned at 4 per cent., thus showing 300 per cent, upon the deal. If these funds are used, what; hope will the trading banks have of competing against the Commonwealth Bank ? The Commonwealth Bank will be lending money upon which it pays only three-quarters per cent., whereas the tradings banks will be paying 1-J per cent. That is very unfair.
– The Minister in charge of the bill will make a statement in his speech 111 reply in regard to that matter.
– The Commonwealth Bank will not permit the trading banks to invest their money in war loans. Instead,, they have to put their funds into those special accounts upon which they receive only three-quarters per cent. That is not fair competition. The whole arrangement is loaded against the private banks. In reply to a question by Senator Lamp, the Minister for Trade and Customs (Senator Keane) said that these special accounts represented investable funds.. If they are investable funds, they cannot be securities. They must be money, in which case if they are to be idle, they will gradually absorb all the currency of the country. I feel certain that this money will be used. Clause 23 provides that certain moneys must be lodged in sterling. What is meant by sterling?
– Sterling is defined in clause 26 as currency which is legal tender in the United Kingdom.
– I remind the Senate that recently a case in which an insurance company had undertaken to pay in sterling on the maturity of a policy was decided in an Australian court. When the beneficiaries claimed payment in sterling,, the insurance company took the matter to the High Court which held that Australian, currency was sterling. Are there to be two different standards - British sterling and Australian sterling? If so, when referenceis made in this bill to sterling, does ir refer to Australian sterling or British sterling ?
– In my reply to the second-reading debate I shall answer that point, and also the point raised by the honorable senator in connexion with pastoral companies.
– I am pleased to have that assurance. Another clause provides that the Commonwealth Bank shall lay down the policy to be followed by trading banks. That is unfair, because it removes all competition, and destroy s the incentive to increase production and to borrow money at low rates. Under Part V. interest rates are to- be fixed. The Commonwealth Bank will have the power to fix the interest rates to be charged by trading banks.
– It is time- that such a provision existed-.
– Where there is greater risk it should be possible to charge a higher rate of interest. If interest rates are to be fixed, some people who would be given financial accommodation at higher rates of interest, will be refused such accommodation altogether.
– It will lead to “ black market “ borrowing.
– Under existing conditions, banks differentiate between customers; a person with a good character is regarded as having satisfactory personal security and may get money at a lower rate of interest than would be charged to a less satisfactory customer. The difference may be as much as 1 per cent. It is wrong that the Commonwealth Bank should lay down the rate of interest to be charged by trading banks.
– I gave the reason when I said that the greater the risk the higher the rate of interest which should be charged. A bank manager should not advance money to a business which is not well managed on the same terms as he would advance it to a well-managed concern. The greater the efficiency and the better the- personal standing of the borrower the lower should the rate of interest be. The Commonwealth Bank will have great difficulty in discriminating between borrowers.
The bill also provides that the trading banks must furnish the Commonwealth Bank with particulars of their business. 1 1 is unfair that they should be forced to disclose their affairs to a competitor, particularly as bank officers, unlike officers of the Taxation Department, are not sworn to secrecy.
– That point will he covered by an amendment.
– I am glad to health at. As Senator McKenna takes a keen interest in financial matters, I shall await with interest his remarks- on this bill.
– The debate on the Commonwealth Bank Bill, with which the Senate has already dealt, and on this measure has covered almost every phase of banking, and I shall not go over the same ground at length. I repeat what I said in my second-reading speech on the Commonwealth Bank Bill, that the Government’s policy in connexion with banking amounts to wholesale bank robbery. It is probably based on the activities of a noted bushranger who held up one bank or branch’ of a bank at a time, but the Government has gone further, for it proposes to hold up all the private banks simultaneously. I was glad to hear the assurances given to Senator Gibson by the Minister for Trade and Customs (Senator Keane), particularly his promise to make clear what persons and companies are to come within the scope of this legislation. As Senator Gibson pointed out, many pastoral companies make advances to primary producers; and despite the criticism that has been levelled against such companies the fact remains that many primary producers who have eventually made good can attribute their success to the assistance given to them by pastoral finance companies. One of the companies I have in mind is also a co-operative concern.
– The honorable senator does not suggest that these companies are charitable institutions?
– No. They engage in business not only to help those who come to them for assistance, but also in order to make profits for themselves. They are not greatly different from the hon orable senator who grows sugar not only that the people may be fed, but also that he may increase his income. In his reply I hope that the Minister will make clear what the effect of this legislation would be on trustee companies and public curators, as well as those legal (firms which specialize in trust funds.
The bill provides that the decision of the Commonwealth Bank in regard to private banking institutions shall be final, and that there shall be no right of appeal. In committee, I propose to move amendments to give to the private banks the right to appeal to a justice of the High Court against decisions of the Commonwealth Bank, which, in practice, will be decisions made by the Treasurer of the day should he disagree with the decision of the bank. As Senator Gibson has said, a large sum of money is involved, because on present-day figures, the surplus funds of the private banks amount to about £250,000,000. Those funds, which belong to depositors and traders with the banks, have been deposited with the .Commonwealth Bank, but so far we have not received any definite information as to how they will be used. In the absence of a satisfactory explanation from the Minister, it seems wrong that the Government should arbitrarily decide that the funds of the private banks shall be pegged at the 1939 level. It cannot be denied that other activities in our midst have expanded enormously since 1939, yet the funds of the banks are to be fixed- at the pre-war level. That is done in accordance with the Government’s plan to strangle the private banks. The growth of the Bank of New South “Wales has been mentioned. That institution started in a humble way sixteen or seventeen years after the first colonists reached Australia, but from that small beginning it has grown until it has become intimately associated with the life and development of the nation. Despite the criticism that has been directed against the Bank of New South “Wales, that institution has done much for the development of Australian industries, particularly primary industries. The Queensland National Bank and other banks are in the same position. It is strange that at a time when a greatly increased population and increased trade and development generally are being advocated, the private hanking institutions are to be pegged at the 1939 level. Not only are the private banks to be deprived of their surplus funds, but also those funds will be used by the Commonwealth Bank to compete against the private banks. Obviously, there could be no other reason.
– The objective is to prevent those funds from being used in war-time.
– Exactly; the objective originally was to prevent those funds from inflating the currency by permitting them to be used in the scramble for goods in limited supply in war-time. No objection was raised by the banks to that proposal.
– Those funds were made available to the Government as the result of negotiations between the Treasurer of the day and the private banking institutions; and legislation was introduced to confirm that arrangement. Not for a moment did anybody believe that any government, having secured the use of those funds in war-time, would at any time, and much less before the war was over,, introduce legislation to confiscate them permanently. All sections of the community are submitting to controls during war to which they would not agree in peace. Men are prepared to lose their lives in the defence of their country. Our people generally are prepared to be directed to employment, and submit to the pegging of wages as war-time measures, but nobody would suggest that any one in the community would tolerate such controls in peace. Yet the Parliament which passed that legislation as a war-time measure, in order to provide for the purchase of defence equipment, now proposes to hold those funds permanently. Bluntly, that is what the Government proposes to do under this measure, and there can be no reason for such a proposal other than that the Government is setting out to strangle the banks by turning all banking activity into the one channel of Government banking. Senator O’Flaherty has spoken frankly on this matter. We certainly know on what ground he stands, because, in effect, he said he would have none of the private banks, and that he would like to see all private banks go out of existence to-morrow leaving all banking in the hands of the Government. God help the people of this country if ever that state of affairs arises ! Judging by the time it now takes the Government to consider simple requests, the average person would go broke before he could arrange an overdraft under those conditions.
– It takes a fortnight to obtain an answer to a simple question.
– If the present competition among the’ private banks is eliminated, the average person will find it very difficult to obtain finance. Honorable senators opposite contend that there is no competition among the trading banks, but one knows that when an individual is refused accommodation at one bank, another bank soon gets to hear of that fact and is prepared to provide the accommodation he seeks so long as the security is adequate. This competition will disappear when the Government takes complete control of banking in this country. That is the object of this bill. As Senator Cooper has said, it implements the Government’s socialization policy which the Minister for Trade and Customs (Senator Keane) said has been part of the Labour party’s platform for years.
– And known for years to the electors.
– But on the eve of each general election since the outbreak of war, the leaders of the Labour party have assured the people that, if returned, a Labour government would not implement its policy of socialization. Indeed, that was the feature of speeches of Labour candidates during the last general election campaign. I remind honorable senators of the speech made by the Attorney-General (Dr. Evatt) on his return from abroad about a fortnight before polling day. He was met by the comrades, and when he asked them about the party’s prospects, they said, in effect: “ This is a bit sticky, all- this talk about socialization and wiping out of private enterprise. It may be all right for O’Flaherty or others who are in safe seats to advocate socialization, but it is dangerous for us fellows who are contesting borderline electorates.” And “ Bert immediately got to work. He made his famous speech in which he assured the people that the Labour party realized the great part that private enterprise could play in Australia’s development. He said, in effect : “ Take no notice of O’Flaherty and his mates. They do not really represent us. Their views are all right in some quarters such as Port Adelaide, for instance, but they are no good in Strathfield.” “Bert” made it clear in that speech that private enterprise would not be interfered with. He urged the people to forget all the talk about the socialization of banking and the nationalization of airlines. He said, in effect, “ Look at us. We are just plain, honest to goodness fellows the same as you are yourselves. There is nothing sinister about us. Look at me. Do I look like a cove who would take away Holyman’s business, or upend the Bank of New South Wales?” The thing that struck me most about that speech was the fact that so many supporters of anti-Labour parties “ fell “ for it. Their reaction was : “ All your talk about private enterprise being wiped out goes by the board. Look what Dr. Evatt said “. Later, leaders of the Labour party were questioned at their election campaign meetings about socialization and they replied, in effect, “ Oh, forget about socialization, we are at war. We are fighting, and our first consideration is the winning of the war. Forget about socialization”. What was the result of this propaganda? Half of the seats that were won by Labour candidates at the last general elections were won on the assurance given by leaders of the party that the policy of socialization would not be implemented during the war. However, almost as soon as the elections were over and the comrades were safely back on the treasury bench, the boys outside began to apply the pressure. They asked, “ What about a bit of socialization ? The Government now has a majority in both Houses “. “ Bert “ then said, “ We have not the power to implement socialization, and if the people do not give us that power we are constitutionally bankrupt in relation to such reforms”. Eventually, the referendum was held, and we know the clear decision which the people gave.
– I ask the honorable senator to connect his remarks to the bill.
– I have described the circumstances which led to the introduction of the Government’s banking legislation. This legislation is a direct negation of everything promised by leaders of the Labour party at the last general elections and of the decision of the people at the referendum.
– Will the Opposition repeal this measure should it be returned to power?
– The Leader of the Liberal party has stated clearly the action which the Opposition will take after it has been returned to power at the general elections to be held next year. No right of appeal to the High Court exists in respect of clauses which deal with authority to carry on banking business I have circulated an amendment to claus*. 8 to provide for an appeal. There is no definite obligation upon the Government to make available to the private banks any of their surplus funds held by the Commonwealth Bank. Everything is to be decided at the whim of the Commonwealth Bank. However, private banks may find it essential to apply for the use of such funds for the purpose of meeting their depositors’ commitments. The Commonwealth Bank - that is, the Treasurer, who will be the real ruler of the bank - will have power deliberately to withhold funds from a private bank. It is not mandatory upon the Commonwealth Bank to come to the aid of a private bank which may find itself in temporary difficulty; but the Treasurer of the day may, for political reasons, deliberately withhold from such a bank its own funds, and thus juitify the Government in saying that the bank is not able to carry on, and, therefore, should be taken over by the Commonwealth Bank.
– Does the honorable senator really believe that the Commonwealth Bank would act along those lines?
– I believe that some Treasurers would without hesitation take such a course. It is possible that the present Treasurer would do it if pressed hard enough by the caucus, because he, like all the other Labour leaders, does what caucus tells him to do. This bill gives power to the Government to break any bank in the country, and, though honorable senators opposite say that it would not exercise that power, the Government would do anything to put its socialist policy into effect in the interests not of the country, but of the Labour party.
– That is the interests of the country.
– Not always. I can picture the central bank refusing to repay tq a private bank the money needed to meet the demands of its depositors and then putting its inspectors into that bank on the ground that it had not met its obligations. That bank could be taken over by the Commonwealth Bank in pursuance of the powers conferred on it by this legislation. One by one the private banks could be absorbed by that process. In committee, I propose to move an amendment providing that if the Commonwealth Bank considers that a private bank needs the money in its special account, the money shall be repaid in order to maintain its solvency. Other. wise, the central bank will have tie power to make every other bank insolvent in pursuance of the Labour party’s policy that banking must be nationalized. I hope that the Minister will not be so adamant as he was in relation to amendments moved to the Commonwealth Bank Bill. [ am at a loss to understand the reason why the bill arbitrarily fixes the rate of interest to be paid on the private banks’ surplus funds. When Senator Cooper moved an amendment to the Reestablishment and Employment Bill designed to fix the rate of interest on advances to ex-members of the forces at 2 per cent., the Minister, in refusing to accept the. amendment, said that it would be ridiculous to fix an .arbitrary rate of .interest because it was impossible to know what the state of the money market would be at any time. Yet this bill fixes the rate of interest to be paid on money in the special accounts at the arbitrary rate of 17s. 6d. per cent. It would be far more sensible to leave the rate unspecified because at any time it may be necessary or advisable for the Commonwealth Bank to pay a higher rate.
– The interest to be charged by the trading banks on loans is also to be fixed.
– Yes. The interest rates that the private hanks may charge on loans is also to be fixed by the Commonwealth Bank. These severe controls on the private banks will operate against the interests of the people, because the more they will have to restrict their dealings with the public. Hitherto, the trading banks “have been able to make riskier advances for such purposes as the purchase of stock. Many men in the western district have been saved because they have been able to buy stock passing through with money advanced at short notice by a private bank. In many of those instances, the banks may have charged higher than the normal rate of interest because of the extra risk involved. That business will be completely ended if the Commonwealth Bank fixes inflexible interest rates. (Senator Keane. - Does the honorable senator not agree that low interest rates are in the interests of the community?
– Yes. One way in which the Commonwealth Bank can keep interest rates low is by competition. The Commonwealth Bank has always charged a lower rate of interest than have the private banks. In my own experience, it has not charged more than 4J per cent, on overdraft. I am a modest operator, but I have never been charged more than that
– The security was good.
– The Commonwealth Bank has been satisfied with it so far. A splendid feature of Australian wartime finance is the low interest rates. I remind the Government that that was made possible by the right honorable member for Kooyong (Mr. Menzies) when he was Prime Minister at the outbreak of war. It was he who pegged interest rates and introduced prices control.
– Hear, hear! Quite right !
– Even his most violent critics must give him credit for that. Provision is made in this bill that all government and semi-government institutions shall bank with the Commonwealth
Hank. The Government of New South Wales, which banks with the Bank of New South Wales, is the only State Government that does not bank with the Commonwealth Bank. I have never heard of any complaints about the way the Bank of New South Wales carries out the banking of the Government of New South Wales. I believe the large volume of business that that bank has handled as the banker for the Government of New South Wales has enabled it to provide very good terms for its other clients. It is carrying the principle that governmental banking should be done through a governmental bank too far to say that every municipality must also bank with the Commonwealth Bank. The ratepayers in the various shires and municipalities elect the councils. Why should every local governing body, regardless of its political beliefs, be compelled to bank with the Commonwealth Bank? Many municipalities owe much of their progress to the assistance received from private banks. I assume that the Government ha.? the constitutional authority to compel semi-governmental bodies as well as State governments to bank with the Commonwealth Bank, but it seems unreasonable. Will the next step be that all the borrowing by local governing bodies will be subject to the approval of the Loan Council?
In committee I intend ‘to move an amendment in relation to the investigations that, it is proposed, shall be made by the Auditor-General of the accounts of private banks. In view of the distance the Government has gone in this legislation, no one could object to the AuditorGeneral periodically examining the books and accounts of the private banks, although the foolproof audit systems of the banks make it unnecessary. What I object, to is the possibility that the Auditor-General can investigate and make public the transactions of the customers of the private banks. Clause 50 contains a safeguard against that, but a similar safeguard should be included in clause 49, which gives power to the Auditor-General to inspect the books of the private banks. One would imagine that the provisions of the bill were directed against mushroom organizations like some of the insurance companies that the- Minister for
Trade and Customs (Senator Keane) referred to in moving the second reading of the Life Insurance Bill - legislation which should have been placed on the statute-book long ago - instead of the nine private trading banks, founded in most cases a century or more ago, which are substantial organizations, and the joint stock companies, which have to publish annual balance-sheets and make known all their financial transactions. It amazes me that the Government should consider it necessary to authorize the Auditor-General te snoop round those banks, unless it be that “the Treasurer desires to be able to obtain for political purposes, as the result of that snooping, some information that would be otherwise unavailable to him. One would think the Government needed power to deal with some secret organization, whereas we know that the private banking houses are required by State company laws to supply full particulars of their transactions. The accounts of every one of them are audited by a reputable firm of auditors. This bill does two things: First, it gives to the Treasurer power to cause every form of irritation to the private banking organizations, and so to make their activities as difficult and as limited as possible. Secondly, by pegging business at the 1939 level, and impounding surplus funds, it makes expansion of the private banks impossible. The purpose of these restrictions, of course, is to create a government banking monopoly. We on this side of the chamber made our position quite clear when the Commonwealth Bank Bill was under consideration. Whilst we do not object to reasonable control of the banking system, we do object most strenuously to a government banking monopoly.
– There should be fair competition.
– That is so. The Opposition has never criticized the operations of the Commonwealth Bank. In the past the Commonwealth Bank has competed against the private banking institutions on fair terms; but to satisfy the wishes of those members of the Labour party who wish to see a policy of socialization applied in this country, the Government has introduced this legislation aimed at destroying the private banking institutions. I realize that it is hopeless to endeavour to change the Government’s mind at this stage; nevertheless, I hopethat when the bill is in committee the Minister will not refuse reasonable amendments moved by honorable senators on this side of the chamber.
Sitting suspended from 5.48 to 8 p.m.
– The purpose of this bill is to regulate banking and to protect the currency and the public credit of the Commonwealth and for other purposes. It is complementary to the Commonwealth Bank Bill with which the Senate dealt a few days ago. Although some members of the Opposition have imputed all sorts of motives to the Government as the reason for the introduction of this bill, they will agree that for some time the control of currency, not only in Australia, but also in other parts of the world, has engaged a good deal of attention. Attention has been directed to this subject largely as the result of the war of 1914-18 and the depression which followed it, and also because of the present war and the necessity to make provision for the situation which will exist when hostilities cease. The bill is divided into seven parts as follows: -
Part I. - Preliminary.
Part II. - Provisions relating to the carrying on of Banking Business.
Division 1. - Authority to carry on Banking Business.
Division 2. - Protection of Depositors.
Division 3. - Special Accounts.
Division 4. - Mobilization of Foreign Currency.
Division 5. - Advances and Investments.
Part III. - Foreign Exchange.
Part V. - InterestRates.
Part VI. - Statistics.
Part VII. - Miscellaneous.
Very little constructive criticism has been offered by honorable senators opposite. Some of them have criticized the bill rather severely; others have suggested amendments, but whether such amendments will be good, bad or indifferent, they did not indi cate. I await with pleasurable anticipation the amendments which honorable senators opposite will move, because if they have no more substance than the second-reading speeches of Opposition senators indicated, I do not think that they will be acceptable to a majority of honorable senators. Some criticism was indulged in by honorable senators opposite in respect of the power to control persons or corporations carrying on the business of banking, but in my opinion those provisions are wise. A perusal of the measure indicates no intention on the part of the Government to deny to those institutions which are now carrying on the legitimate business of banking a franchise to continue their operations, but when plans for the future control of banking are being made, as is the position now, it is necessary that those bodies or institutions to which shall be entrusted such an important function as the conduct of banking business should be subjected to controls. Objection has been taken to clause 10, but if honorable senators study the measure they will realize that their objections are ill founded. Senator Gibson said that certain institutions’, such as pastoral finance companies, render valuable service to their clients.
– One of the Government’s foreshadowed amendments covers that point.
– Clause 10 will not deny to those people the right to carry on their legitimate business, although certain restrictions will be placed on them. As I read clause 10, it refers to pastoral companies, travel agencies, and other organizations which, in addition to their main business, carry out certain banking transactions for their customers. It is not intended that authority to carry on the general business of banking shall be granted to persons whose main business is not, banking. The clause permits an examination of those cases, and the granting of exemptions from any or all of the provisions of the measure if considered desirable by the Treasurer of the day; or such exemptions may be granted subject to conditions. All honorable senators will agree that it is wise to provide that persons who engage in this form of banking shall be subject to conditions, and also that, should they fail to conduct their business .properly, the Treasurer shall have the power to withdraw his permission to them to carry on. I can see nothing objectionable in such a provision. In an effort to discredit the bill, one honorable senator opposite suggested that its provisions for the protection of depositors with private banks were not necessary. That is strange reasoning, in view of the fact that honorable senators opposite have drawn attention to the vast sums of money belonging to depositors which are in the coffers of the private banks. Why should they object to this measure making provision for the protection of those deposits? Senator Gibson suggested that the capital subscribed’ by the shareholders of private banks was the money with which they conducted their business.
– I did not say that.
– On reflection, those who hold that view will agree that it is wrong, because the capital subscribed by shareholders would not be sufficient for a bank’s purpose. The funds deposited with the private banks enable them to grant credit to institutions and individuals, but the depositors who place their money with a private bank have no say as to how it shall be invested. Should the directors of a bank make a bad bargain which results in the bank being unable to meet its liabilities, its depositors may lose their money.
– That does not happen.
– It has happened in the past, and it may happen in the future.-
– It may happen with the Common-wealth Bank.
– Should the Commonwealth Bank fail, it will mean that Australia will have ceased to exist as a self-governing country, and its Parliament will have lost the right to make laws for the peace, order and good government of the Commonwealth. The Commonwealth Bank is the bulwark of the nation. For the first time in the history of this country, the Parliament is laying down a plan under which banking shall be conducted. I cannot understand why objection should be taken to the provision in this bill that should a private bank be unable to meet its com mitments, it must advise the Commonwealth Bank. That is a provision which should be welcomed by honorable senators opposite, who probably are more representative of the investing section of the community than we on this side are. Instead of criticizing such a provision, honorable senators opposite should be pleased that the Government has introduced legislation to protect the funds of depositors. The bulk of the people whom we on this side represent belong to the wage-earning class, and are in the low income groups in the community. Such people usually place their savings in a savings bank. Instead of indulging in such criticisms and fears, honorable senators opposite should give the measure their fullest support. One honorable senator questioned the advisability of empowering the central bank to retain the surplus investable funds of the private banks. The reason for such a provision is obvious to any one who has studied our present economic position. As the result of our vast ‘war expenditure, and the consequent prosperity of the community as a whole, it is wise to provide for the control of surplus funds. They are to be placed in special accounts. If it is necessary to make such provision in time of war, it is equally necessary to make similar provision in peace. If experiences after the war of 1914-1918 are repeated, we shall experience a period of prosperity, and, in the absence of controls of this kind, people with surplus funds will invest them in all sorts’ of concerns with the one desire to get rich quick. The advancement of the country depends upon the development of its economy on a scientific basis. The government of the day, which is responsible for the development of the country and must provide full employment for ex-service personnel upon their discharge and the transfer of persons now’ engaged in war industries to peacetime occupations, must ensure that all surplus investable funds are used to the best advantage. We cannot allow this matter to be decided at the whim of individuals. Some control over advances and the investment of funds is imperative if we are to develop Australia on the right basis, and ensure that mistakes made in the past are not repeated. From what I have said, it is clear that the criticism of honorable senators opposite in this respect is groundless. Most of the provisions of the bill give effect to recommendations made by the Royal Commission on Monetary and Banking Systems. Those recommendations have been approved by eminent economists and bankers who have been struggling with the problem of providing proper control of the nation’s currency. Several honorable senators opposite referred to the control of interest rates. I was surprised to hear them argue that the ‘Commonwealth Bank should not be given power to regulate interest rates. What institution in this country is better qualified to determine the interest rates which shall be charged to those who receive accommodation and are anxious to develop industries or establish businesses? Honorable senators opposite who have criticized this provision would prefer that the directors and controllers of private financial institutions should control interest rates. Senator ‘Gibson and Senator Cooper, who are closely identified with pastoral interests, were emphatic on that point. I am amazed at their solicitude for the private banking institutions.
– :We speak from personal experience.
– Possibly, those honorable senators hold that view because of their long, association with such institutions. Because they have been unable to approach other financial bodies, they are perfectly satisfied with the’ service they have received from the private banks. ‘Consequently, to-day, they do not know a “good thing” when they see it. They have been associated for so long with the private hanks that they look upon them as fairy godmothers. They overlook the fact that had they not possessed gilt-edged securities their relations with the private banks would not have been so happy. Notwithstanding their statements that they have received a fair deal from the private banks, I have found during my travels throughout the- country, particularly during bad seasons, that many primary producers have complained that the rates of interest charged by the private banks were exorbitant; and that that fact was mainly responsible for their financial difficulties. I know of no section of the community which has applauded the establishment of the Mortgage Bank Department with greater satisfaction than the primary producers and pastoralists and they look forward to the day when this legislation also will be put on the statute-book.
Most of the criticism of the bill uttered by honorable senators opposite is without foundation. Senator Foll, for instance, said he was apprehensive with regard to the provision whereby the Commonwealth Bank will control the gold reserve. Why should not the nation’s bank control gold? Why should it not be the instrumentality to decide whether gold shall be exported, or whether it shall be sold ? If a provision of this kind were not made we should witness all sorts of practices.
– I contend that Parliament should have some say in the control of gold reserves.
– At the general elections at which the Scullin Government was defeated, and at which I was a candidate, the party which the honorable senator supported indulged in propaganda to the effect that the Scullin Government, if returned, would dispose of our gold reserve. Our opponents on that occasion declared that the people must return their party to office in order to preserve our gold reserves. They won that election, but no sooner did the Lyons Government take- office than it sent our gold reserve abroad. Therefore, Senator Foil’s statements that he would like Parliament to exercise control over the gold reserve and that this Government is likely to do something with the reserve with which he would not agree, come from him with very bad grace. That is the sort of humbug that has been voiced by honorable senators opposite in this debate. They have not adduced one substantial argument against this measure. Senator Cooper spoke of sinister motives on the part of the Government, which he said intended to socialize industry. He referred to the plank of the Labour party platform which provides for the socialization of the means of production, distribution and exchange. The Labour party is not ashamed of that objective. It ha? appeared in the party’s platform for many years. We have stated exactly the party’s objective in that respect. Even if socialization were put into effect it would not be so disastrous as honorable senators opposite fear. One has only to look at world affairs to-day to realize that all countries are slowly but surely moving away from the old order. Would it not be better that this trend towards the “ left “ should proceed in an orderly manner, rather than that matters should be allowed to drift? Whatever our economic set-up in the future may be, is it not better that we plan our economy rather than let conditions be determined by violent revolution?
When honorable senators opposite indulge in the scare cry of socialization for the purpose of frightening timid people, I am reminded of the arguments used by their political predecessors in days gone by. Honorable senators opposite personify those people who, since the beginning of time, have always endeavoured to stem the tide of progress. Only during the last week-end I read in the literary supplement of the Melbourne Age an article dealing with the strenuous efforts involved in the introduction of wages boards in Victoria in order to abolish the intolerable sweating conditions that then existed in industry generally. To honorable senators opposite, and the thousands of our young workers who do not know the struggle that was made to enable the nation to progress, I commend that article. It will reveal to them the conditions under which their fathers and mothers laboured. The article asked why the legislation had not been passed long before, 50 years having passed since the need for it had been brought under notice. The reason was that vested interests were in control of the Legislative Council of Victoria. When it was claimed that the wages and conditions of workers should be determined by an independent tribunal the representatives in the Legislative Council of the Employers Federation declared that wages boards would be the tombstones of Victorian industry. Whenever progressive ideas have been advanced in the interests of the country the conservatives have cried “ Backward ! “ or “ Stay where you are ! “ Even the creation of the
Commonwealth Bank was opposed by the elements represented on the Opposition benches to-day. So, now, when, for the first time, it is proposed to harness the economy of the nation in the national interest, we meet with the same cry, “ Await another day ! “ Honorable senators opposite have claimed that this legislation should be delayed until after the next general elections. That is in keeping with the overripe conservative policy of “Do not do it now, it will bring ruin “. Buin was to follow early closing and the Saturday half-holiday, but the opponents of those reforms would be the last to revert to the old system. I regard as empty the threat of the Leader of the Opposition in the House of Representatives (Mr. Menzies) that his party when returned to power would repeal certain provisions of this legislation. Should this country again suffer the misfortune of a government of the right honorable gentleman’s supporters it would not consider for a moment serious interference with this legislation. I remember the old Nationalist party threatening that it would repeal the Maternity Allowance Act introduced by the Fisher Government, but that threat was never carried out.
My honorable friends opposite complain that this legislation will regiment the private banks. Just fancy the Opposition deploring regimentation .’ Even if it should be true that this bill provides for the regimentation of private banks and the regimentation of the resources of this country, is it not better that we should regiment the currency in order that it may be used for the national benefit than that we should regiment human lives as they were regimented in the depression? The Labour party is determined that the conditions of the depression shall not recur. I remember as though it were yesterday the Labour Opposition on the eve of a Christmas vacation beseeching the then government to provide the paltry amount of £250,000 to supplement the miserable sustenance pay that was allowed by the State governments to the workless in order that they and their families might have a little extra money during the great Christian festival of Christmas. We were told that we were wasting our time as well as that of the Government because we well knew that no money was available to give effect to our desire. In those dreadful days, bread-winners were regimented. Single men were regimented. I saw them hunted from place to place in Victoria unable to find work. Thousands of young men found their first jobs in the forces when war broke out. They offered their bodies willingly for the protection of the country that hai treated them so badly. So I say that the Labour party is determined that the legislation of this Parliament shall make another depression impossible. Ear better that we should regiment the currency for the benefit of the people than that the people should suffer the agonies of another economic catastrophe like that which blighted their lives in the ‘thirties. Honorable senators opposite and all other critics of this banking legislation deplore the world-wide tendency to swing from the old order. They brand the Labour party with being associated with communism. When it suits them to do so, they say the Communists are the driving force in this community. If that be so, why is it? Responsibility for the growth of communism and the destruction of democratic institution:! like this Parliament, should it happen, will be * due to giving effect to the very beliefs that the Opposition espouses, and the resultant creation of another depression in which the people will be deprived of the food, clothing, and shelter that are their right. As surely as we are sitting here to-night communism will then advance, as it has advanced under similar conditions in the older countries. It is useless for honorable senators opposite to deplore the advancement of communism when they use every means within their power to prevent the passage of progressive legislation. Their arguments against this bill show no valid reason against its passage. They have claimed that because the referendum proposals were defeated this legislation should not have been introduced, but they know as well as I do that the referendum had no more to do with banking legislation than with the man in the moon. They know that since federation it has been constitutionally possible for the Commonwealth Parliament to legislate in respect of banking. I marvel that the conservatives of those days were so wise in their generation as to provide in the Constitution for the Commonwealth Parliament to enact uniform banking legislation, but I do not doubt that it was because they were living in days that had been darkened by bank failures, when banking practice was at its worst. We should be proud of this legislation, which will enable the development of Australia on proper lines through the harnessing of the currency. It will enable the private banks to render effective service to the community. No one need be afraid of this legislation. It will provide the means whereby we shall be able to meet the future with confidence. Would we not be foolish if we neglected, while we have time, to prepare for the changes that will come after this war? Who can foretell what the conditions will then be? As Senator Cooper has said, finance is the lifeblood of the nation. We should be unwise if we did not ensure that the lifeblood of the nation was healthy and adequate to meet all contingencies. We must treat our nation as we would our own bodies. How foolish we should be if we, knowing that a fatal disease was likely to overtake us, neglected to seek medical attention in order that it might be warded off. It is imperative that we ensure that the currency that circulates through our economy shall be as healthy as we desire the blood to be that circulates through our bodies. Having given consideration to the opinions of eminent economists and bankers in other parts of the world and to the report and recommendations of the Royal Commission on Monetary and Banking Systems, which investigated the position in Australia, the Government framed this bill to give effect to all those opinions’ and recommendations for the better conduct of the nation’s affairs. I hope, therefore, that the bill will receive a speedy passage so that itshall soon become law for the benefit of Australia.
– Owing to the anxiety of the Minister in charge of this bill that measure should reach the committee stage, I would not have spoken but for the kind invitation to do so of my honorable friend, Senator Gibson. I dealt at considerable length in my second-reading speech on the Commonwealth Bank Bill with the need to control banking in the national interest. All I then said is relevant to this bill and I do not intend to repeat it. The bill, amongst other things, confers upon the Commonwealth Bank in its central banking capacity statutory powers in matters which previously were the subject of agreement with and depended upon the voluntary co-operation of, the private banks. The powers conferred by the bill are certainly wide, but in considering them one must have regard to the task of the draftsman in its preparation. He must bear in mind not only what he thinks is likely to happen, but also he must provide against events which conceivably might happen. In other words, he is concerned with possibilities rather than with probabilities. Most honorable senators have had at some time or other entered’ into an employment or a partnership agreement. In these documents they would have provided for what should be done in the event of the conviction for a crime by one of the parties, or the insolvency or death of one of the parties. Very elaborate pro visions would have been made to cover these contingencies, but nobody would suggest that those provisions were a reflection upon the character, sanity or health of any of the parties. That I suggest .is the explanation of the wide powers conferred by this measure. Many of the powers, if not most of them, will be dormant, and will be used only should, an emergency arise. I refer in particular to Part IV. of the measure dealing with gold, and Part III., dealing with foreign exchange. Honorable senators will find that the provisions of Part IV. come into operation only when the Governor-General issues a proclamation. Clause 30 reads - (1.) This Part shall not he in operation except as provided in this section. (2.) Where the Governor-General is satisfied that it is expedient so to do, for the protection of the currency or of the public credit of the Commonwealth, he may, by Proclamation, declare that this Part, or such of the provisions of this Part as are specified in the Proclamation, shall come into operation, and this Part, or the provisions so specified, shall thereupon come into operation.
Sub-clause 3 then provides that when the Governor-General is satisfied that the emergency has passed he may repeal the proclamation. When reference is made to the Governor-General, honorable senators will realize that under the Acts Interpretation Act, the meaning is that the Governor-General shall act with the advice of the Executive Council and that, in effect, means the Cabinet or the Government of the country. Exactly the same position obtains in regard to the foreign exchange powers contained in Part III. Clause 29 states- (1.) Where the Governor-General is satisfied that it is expedient so to do, for the protection of the currency or of the public credit of the Commonwealth, or in order to conserve, in the national interest, the foreign exchange resources of the Commonwealth, he may make regulations, not inconsistent with this Act, making provision for and in relation to the control of foreign exchange . . .
The clause then proceeds to set out the particular things that he may do. Again, this is not a matter of the Commonwealth Bank, or the Treasurer, making those regulations. They will be made by the Executive acting in association with the Governor-General and will be subject to disallowance by Parliament.
– Why has paragraph / been included?
– That paragraph gives power to the GovernorGeneral to issue regulations in relation to the prohibition of the importation or exportation of goods, unless a licence to export or import these goods is in force.
– The Government has that authority already under its trade and customs power.
– One honorable senator opposite has said that under this provision the Governor of the bank would supersede the Minister for Trade and Customs and the Parliament. Quite obviously that is wrong. This is not a matter for the Commonwealth Bank, but for the Executive, and I suggest to the honorable senator who has interjected, that this clause, and in fact, all the provisions of Part III. contemplate a state of emergency when rapid action will be necessary to protect the currency, or the public credit of the Commonwealth. It refers particularly to conserving the foreign exchange resources of the Commonwealth in the national interest. At some time or other it may be necessary temporarily to impose a prohibition on the importation or exportation of goods in order to conserve our foreign resources, or to enable Australia to avoid default in its overseas commitments. Again I emphasize that the whole of that part deals with an emergency rather than with day-to-day occurrences.
– But it also gives power to the Governor of the Bank to override the trade and customs laws.
– No; it does not give any power to the bank. It is a matter entirely for the Executive.
I shall deal briefly with Part II. of the bill which relates to the control of banking business. That part provides that in. future, only corporate bodies may carry on banking. In this case also, the authority is given to the GovernorGeneral, which, in short, means the Cabinet acting in association with the Governor-General. Not only is the granting of licences to banks already in existence compulsory, but their licences must also ‘be granted without conditions. That is clear, and the Leader of the Senate has circulated a proposed amendment which will make that position even clearer. If any new organization seeks to enter the banking field, the granting of a licence will be at the discretion of the Executive, and a licence may be granted subject to conditions. I should like to make two comments at this stage: first, this type of control was recommended by the Royal Commission on Monetary and Banking Systems in paragraph 666 of its report; and secondly, the war-time control regulations to which the banks themselves subscribed readily in the national interest, also provide for the licensing of banks. All that Part II. of this measure seeks to do, is to give permanent effect to a practice which has been in operation during the last six years, and to carry out the recommendation of the royal commission. One honorable senator made the comment that the object of this legislation was to destroy the private banks. I contravert that statement very strongly, and in support of my case, I have only to draw attention to the fact that the names of all existing private banks are included in the schedule to this bill, thus entitling them to a licence as a right. The fact is that the position of the private banks, as an integral- part of the Australian banking system, will be consolidated. That is supported by the fact that although this legislation has been before the public for the past few months, bank shares instead of showing a deterioration, have actually risen in value.
Apart from “the provision which consolidates the position of the private banks, clause 10 gives to the Treasurer power to exempt from the operation of this legislation pastoral companies, travel agencies and other similar organizations, the future of which caused some concern to Senator Gibson. The activities of these organizations vary. Some of them are engaged in banking to a minor degree, and others to a somewhat greater degree; but- none of them carries on this business in any great volume.
Following upon what Senator Sheehan has said, I should like to say a few words regarding the provisions in the bill for the protection of bank depositors. Money deposited in the banks may properly be regarded as trust funds, and I conceive it to be a national duty of this Parliament to ensure that the savings of the people of Australia shall be fully protected. Again I emphasize that depositors whose funds are used extensively by the private banks to make profits, have no voice whatever in the management or policy of those banks. That is an additional reason why depositors are in need of some protection from the Commonwealth Parliament. It is a national duty which devolves upon us. Under this legislation, the Commonwealth Bank will have power to investigate the financial stability of the private banking institutions, and, where necessary, to assume control of a. bank until depositors are paid or amply protected. Also, except with the consent of the Commonwealth Bank, private banks will be compelled to keep in Australia tangible assets at least equal to the deposit liabilities of the banks. Surely that is a provision to which no exception can be taken, and one which should have the applause of everybody interested in bank deposits. The final provision under the heading “Protection of Depositors “ is that in the event of liquidation Ihe assets of the hank held in Australia must be available to meet that bank’? deposit libilities in Australia with a priority above all other liabilities. If my view that bank deposits are trust funds be correct, that is a very natural and appropriate provision. One honorable senator opposite suggested that these provisions amounted to an impugning of the solvency of the private banks. On the contrary, 1 suggest that nothing could, be more conducive to confidence than the knowledge that the Commonwealth Bank will keep an eye on the private banks, and that the Auditor-General has a duty to investigate these institutions and, where necessary, to report upon them to the Treasurer. Publication of their accounts in a clear and readily comparable form will enable every one to understand the position.
I pass now to a brief consideration of the provisions relating to special accounts. There has been a great deal of misunderstanding on this matter. It will be agreed that these deposits represent the savings resulting from the extraordinary war expenditure that the Commonwealth has had to incur.. I do not think that anybody will deny that these funds could, if liberated, have a most explosive effect upon prices and upon the national economy. The banks themselves have recognized that, and it is only fair to say that at the outset they informed the Commonwealth Government that they had no desire to make profits from funds which resulted solely from war expenditure. The banks concurred very readily in the immobilization of these fundi by their lodgment with the Commonwealth Bank. It is well known to all honor- able senators that any. hank acting as a central bank must have deposits from the various trading banks that operate under it. The royal commission made a recommendation on these lines. Certainly that recommendation has not been followed by the Government in this bill because it was to the effect that a percentage of the deposit liabilities, varying from time to time, according to circumstances’, should be deposited from time to time with the central hank. It has been found, as the result of experience daring recent, years, that the system of special accounts has operated satisfactorily. The Government, therefore, prefers to adhere to that system. There is provision to transfer funds amounting to about £240,000,000 to special accounts in the central banking department of the Commonwealth Bank. In addition, the Commonwealth Bank may direct the private banks, to transfer to a special account any further increases of their funds. Honorable senators will note that the word used is “ may “ ; it is a permissive authority. “Whether or not that will be done by the Commonwealth Bank will depend on circumstances, but I do not think that any honorable senator will controvert the proposition that the Commonwealth Bank will act in the interests of the nation, and therefore will act fairly in determining whether or not it should call for those further funds. Although those funds may be withdrawn only with the consent of the Commonwealth Bank, it is unthinkable that that bank would follow the course which one honorable senator suggested, and refuse funds to a bank which was badly in need of them to meet calls from its depositors.’ I admit that it is a possibility, but I have no misgiving in the matter. I do not fear that the Commonwealth Bank would abuse its powers under that heading. The rate of interest to be paid on such deposits is low, being only 17s. 6d. per cent.
– The Commonwealth Bank need not pay any interest.
– Th at is so. The Bank of England in its centra”1, banking activities pays no interest on the funds deposited with it by the trading banks.
– .Does it use those funds?
– I think they are immobilized. They are probably used, and made available to the government of the day on short-term bills or treasury-bills at a nominal rate of interest. There is another excellent reason why there need be no payment. An examination of bank deposits shows that whilst fixed deposits have increased little during the war years, the amount deposited on current account, and therefore at call, has risen by approximately £240,000,000. It is admitted that banks do not pay interest on current accounts, and accordingly they show a clear profit of many millions of pounds on those deposits. Even in wartime and despite the low rate of interest paid, the banks receive from the central banking department of the Common- wealth Bank nearly £2,000,000 per annum as interest on their deposits.
– Assurances have been given that such moneys will not be used, but that cannot be so.
– I do not speak on behalf of the Government, but, in my opinion, the money will be used. I should say that it will be used to finance treasury-bills, not only of the Commonwealth but also of Great Britain. That has been done at an exceedingly low rate of interest - about 1 per cent.
– If the money were not used, the whole of the currency of the country would be “ frozen “.
– I believe that the money is being used in that way at the present time.
– I agree.
– I have not heard any criticism of the proposals for the mobilization of foreign currency. It’ is, of course, necessary that the Commonwealth Bank shall be able to control foreign currency in order to meet our overseas commitments. As I see the position, it is far more important that the Commonwealth Bank should be able to do that and not jeopardize the public credit of the Commonwealth, than that any private bank should have funds available to finance the private interests of any individual or group of individuals. I do not expect any controversy on that point.
The control to be exercised over investments is a problem that will face us in the immediate post-war period. The bill provides safeguards in that there can be no direction in respect of advances to any particular person. The policy will be laid down broadly, and the trading banks will be obliged to follow it. Clause 27 (3.) provides that -
Nothing in this section shall -
authorize the Commonwealth Bank to make any determination or give any direction with respect to an advance made, or proposed to he made, to any particular person.
That puts the matter beyond doubt. A very controversial point is the prohibition against any bank purchasing Commonwealth or State securities or the securities of local governing bodies, or securities listed on the Stock Exchange without the consent of the Commonwealth Bank. I interjected when one honorable senator opposite said that that made bonds and other securities worthless and that no bank would lend money on them. The prohibition imposed by clause 28 relates solely to the purchase of those shares or , subscriptions for them. It does not prohibit the lending of money on such securities or in the event of a foreclosure, it would not prevent a bank from selling securities or shares. The provisions dealing with interest rates are necessary and desirable. It is interesting to note that the Commonwealth Bank alone has no say in that matter. It is provided that the Commonwealth Bank, with the Treasurer’s approval, may make regulations providing for the control of interest rates. If I judge the position correctly, what will happen will be that the Commonwealth Bank, with the consent of the Treasurer, will fix certain maximum rates applicable to deposits for varying periods. It will be competent for any bank which wishes to pursue a competitive policy to fix rates of interest lower than the maximum rates. There will be ample room for competition. I have no hesitation in saying that the Commonwealth Bank would certainly not fix one maximum rate for the private banks and another maximum rate for itself ; we may be sure that the Commonwealth Bank, with its high traditions, will still do the right and honorable thing. I should imagine that in deciding to control interest rates the bank would take into account all factors, and would have regard to emergencies which might arise. A provision which at first sight looks harsh is that regulations may be issued to- prohibit the payment of any interest on deposits. That provision is in the bill for the sole purpose of preventing a bank from varying its own procedure after regular fixed rates of interest have been determined. Rates of interest will probably be fixed for deposits for three, six or twelve months. After those rates, have been fixed a bank could decide to pay interest on current accounts or on fixed deposits for one month or two months. The provision is necessary to prevent trickery of that kind.
One provision of the bill which relates to statistics is important. In the national interest it is very desirable that regular information regarding trends in industry and employment, and in the economic life of the nation generally, should be readily available to the people charged with the responsibility of safeguarding the nation. In the hands of. competent officers of the Commonwealth Bank and the Treasury there will be valuable information gleaned from statistics regularly presented, and supported by statutory declarations, and prepared on a uniform basis. Such returns from the banks will be readily comparable. It is provided that the Treasurer may exempt any bank from the necessity to supply such statistical information. I understand that the Treasurer is concerned not to impose any undue burden on the private trading banks during the present emergency. The supply of that information would enable a far more intelligent direction of the Australian economy to be given than has been possible hitherto.
I have been brief in my discussion of this measure, partly to make amends for a recent lapse in the opposite direction. I emphasize that the Commonwealth Bank is not an irresponsible body; nor is it incompetent, or likely to act unfairly. I submit also that the Treasurer of the Commonwealth is not an irresponsible person. He is a member of the Cabinet, which is responsible to the Parliament. Ultimately, the Treasurer and the Cabinet are responsible to the people to whom an appeal is made every three years. The Governor-General who is the third party who may exercise powers under this bill is, in practice, the Federal Executive ; and I do not think any honorable senator will say that the members of the Federal Executive are not responsible and are not concerned with the interests of the nation. I agree with Senator Sheehan regarding the need for controls in the immediate post-war period. Obviously, if the vast funds- which are available to-day were liberated, human nature would prevail, and people would manufacture all sorts of luxury goods, which carry higher rates of profit than can be made from the supply of such basic needs as food, clothing and shelter. “We would, have, as Senator Sheehan pointed out, an unbalanced economy following a balanced economy under which no one has been hungry, unclothed, or without shelter. Once the danger of inflation is over, I believe that the controls provided for in this bill will be removed, and will remain dormant until the need for them arises again. I believe, too, that when that need does arise, the controls will be exercised wisely and in the national interest. I have pleasure in supporting the bill.
– in reply - In replying to the comments of honorable senators I submit, first, that the charge that in this legislation the Government is acting contrary to the will of the people as expressed at the referendum cannot be sustained. As Senator Sheehan has said, the Parliament has always had power over banking, and therefore the control of banking was not a matter submitted to the people at the referendum. Moreover, the Government’s policy in respect of banking has been known to the electors for a number of years. I am prepared to leave the ultimate fate of this measure to the people at the next general elections. I am satisfied that .after this legislation has then been in operation for a year, the people will see that all the adverse publicity given to the Government’s banking proposals has been groundless. The stand which I and older members of the Government party in this chamber have taken on banking throughout our political careers is well known. “We have always said that Opposition parties could always command money from the banks. Honorable senators opposite might say that that is a loose generality.
– We have never had a “bean” from them.
– The honorable senator might have been unlucky, or possibly he was left out df “ the joke “. [ happen to know - the information came to me surreptitiously - that whenever an election was about to take place in Victoria, the chief officer of the National Union would go to a certain bank, the name of which I ‘shall not give, and say, in effect, to its manager, “ There is an election coming, and you know what the return of the Labour party means. We have got you down for £2,000 or £4,000 “. That amount, invariably, was paid without argument. It is clear that those in control of private banks have something to conceal in their fear of control by the Government. There is not the slightest doubt about that. iSo soon as this legislation was foreshadowed, the press of Australia was flooded with very costly hostile advertisements, and letters of all kinds were circulated through the organization of the private banks to practically every one of their depositors and all individuals having dealings with them, inviting active opposition to the Government’s proposals. The private banks do not undertake such campaigns at so great a cost merely for the good of their health. Their objective was to create a sinister atmosphere in relation to this legislation. As I said when I was speaking on the Commonwealth Bank Bill, I do not require anything more than the history of the private banks of this country to convince me that this legislation is long overdue. I refer again to the period from 1929 to 1931. When we know what happened in that period, it is useless for honorable senators opposite to say that the private banks did their work in the interests of the nation at that time. Senator Sampson knows that they did not. He knows that the private banks, in concert with the employing interests, determined that 5,000 men should be put off in this industry, and 3,000 men put off in that industry. When the Scullin Government at that time assumed office, but not power, our London credits were gone. We could not raise a “ bean “ in London because for some years previously preceding governments had raised loans at an average rate of £38,000,000 annually. The prices of primary products had dropped very low to an unpayable level, and over 500,000 of our workers were without jobs. The man on the land was having a raw deal. Senator Sampson said that at that time the private ‘banks did not call up overdrafts. Those bodies in an organized move called up all credits, and thus caused unemployment. My experience as a member of the House of Representatives in that period makes me welcome this legislation. But some honorable senators opposite still say that at that period the private banks acted in the interests of the nation. The fact is that they helped to defeat the proposal ,of the Scullin Government to issue fiduciary notes to the value of £18,000,’000, although Great Britain in the same year had issued fiduciary notes to the value of over £400,000,000. Honorable senators opposite know that they did the wrong thing in bringing the .late Sir Robert Gibson to the bar of the Senate on that occasion in order to defeat the Scullin Government’s proposal. Thousands ;of our people were starvingMen w’ho had fought in defence of this country, were sent out fossicking for gold at 6s. a week.
Yet honorable senators opposite want us to apologize for this legislation which will ensure that those conditions will not recur in this country. They have raised the cry of socialization. Whether this legislation be socialization or not, if it will achieve what I think it will, I shall be satisfied with it. I repeat that the banks had their chance, but they did not do their job. Private enterprise also had its chance, in 1929-31, but did not do its job. I am not one of those who say that private enterprise should not play the biggest part in the employment of our people. I support private enterprise in that respect; and T have never “ squared off “ on it. I made statements to this effect when I was in the United States of America, and I say so here. However, the Government is hopelessly trammelled by its lack of power under the Constitution. We tried to make good that lack at the recent referendum. We asked for power to enable us to utilize assets in which the Government had invested £90,000,000 for war production. We shall now not be able to make the best use of those assets because the stupid people of Australia refused to give to the Commonwealth power to engage in industry. However, we shall deal with these matters in due course. Our immediate problem is to lay a foundation. This we seek to do in this legislation which is eminently fair. For many years past we have advocated the proposals embodied in this measure, but for the first time in 25 years a Labour Government is now in power as well as in office. I am satisfied that after this legislation has been in operation for a year the people of Australia will come to the conclusion that the Parliament did a very good job in enacting it. The people can rest assured that the members of the Government, the Governor, Deputy Governor, or advisory officers of the bank will not do anything stupid. They are reputable men, like the members of the existing Bank Board, against whom I have nothing to say. But those gentlemen have no monopoly of banking knowledge. They have no greater knowledge on this subject than Treasury experts. I do not admit that they possess exceptional skill. What makes a banker? A man who is discreet, and has adequate business knowledge will make a successful banker. The successful banker is a careful, good living man, who has had actual experience of banking. To some degree I had experience of that kind when I was eighteen years of age; and I did my work at that time on a salary of £180 a year. The Commonwealth Bank Bill was debated very thoroughly, and most of the ground with respect to the Government’s proposals under this measure has been amply covered. The objectives of the bill are set out as follows: -
To regulate banking, to make provision for the protection of the currency and of the public credit of the Commonwealth.
These objectives are sub-divided under the following heads : -
Authority to carry on banking business.
Will that interfere with anybody?
Protection of depositors.
The Commonwealth Government will be authorized to say that a person or body shall not carry on the business of banking except under certain conditions, the main purpose being to protect the interests of the people who put their money into banks. At the committee stage I shall give a lucid explanation of the provisions dealing with special accounts.
Other headingsin the list of objectives are -
Mobilization of foreign currency.
Advances and investments.
Those matters have been discussed at length -
Control of foreign exchange is necessarily the main job of the nation’s bank. These provisions are now in operation. There is nothing new about them. Senator Sheehan has dealt thoroughly with the provisions concerning gold. The Commonwealth Bank is the only authority to fix the price of gold. All the old ideas about gold backing died in 1931. Surely honorable senators opposite will agree with that statement. I shall not say that it was the issue on which the Scullin Government, of which I wasa supporter was defeated ; but it was one of the issues at the following general election. However, the Lyons Government no sooner took office than it sent the whole of our gold reserve to London. Previously, our bank-notes bore the notice that the amount shown on them was payable in gold at the seat of government; but, to-day, the notes do not carry any mention whatever of gold. The issue in this respect is known to every elector in this country.
I shall now deal with some of the arguments adduced by honorable senators opposite. The Acting Leader of the Opposition (Senator Leckie) said that the bill provides that the private banks shall not be permitted to increase their business beyond 1939 levels. Later he said that the banks would not be permitted to withdraw funds from special accounts without the consent of the Treasurer. The bill provides that a trading bank shall not be required to lodge in its special account with the Commonwealth Bank an amount which would cause the balance in that bank’s special account to exceed the sum of the amount transferred from that bank’s war-time special account, and the increase in that bank’s assets since the commencement of this division. In effect, the maximum amount which any bank may be required to lodge in its special account is the amount by which its assets in Australia increase beyond the average of its assets in Australia in August, 1939, that year being selected as the base year. However, no minimum amount which a bank must lodge in its special account is stipulated in the bill. Further, the Commonwealth Bank, not the Treasurer, is empowered to exercise its discretion in permitting a trading bank to withdraw amounts from its special account.
The Acting Leader of the Opposition also stated that under clauses 40 and 50 the whole of the accounts of the customers of a private bank must be disclosed to the Commonwealth Bank. None of the forms specified in subclauses a to g of clause 40 provides for the furnishing of information concerning individual customers’ accounts. Sub-clause i of clause 40 provides for the submission of “ such additional statements as are prescribed “. It is not intended to prescribe any statement that would oblige a bank to disclose information concerning accounts of individual customers. Any statement required must be prescribed by regulation. Under section 48 of the Acts Interpretation Act, a resolution for the disallowance of such a regulation could be moved in either House of the Parliament. Further, if the resolution be not disposed of within fifteen sitting days, the regulation would automatically be disallowed. Parliament, therefore, has ample power to prevent the prescription of any statement under clause 40 i that would require the disclosure of information concerning the account of an individual customer. Sub-clause 2 of clause 50, to which Senator Leckie also referred, provides specifically that -
A direction under this section shall not require information to be furnished with respect to the affairs of any individual customer.
At the committee stage I shall move for the insertion of an additional sub-clause 2 of clause 49 in order to make it clear that the Auditor-General has no authority under that clause to furnish a report with respect to the affairs of any individual customers of a bank.
The Acting Leader of the Opposition said that clause 28 would prevent the trading banks from accepting as collateral security against an advance the security specified in that clause. Clause- 28 prohibits trading banks from purchasing or subscribing to specified securitieswithout the consent of the Commonwealth Bank. It will not in any way prevent trading banks from accepting such securities as a security . against an advance or from selling such securities if necessary. Senator Leckie also said that,, as the nearest branch of the Commonwealth Bank might be 200 miles from the office of a local governing body, clause 48, by preventing a private bank from< keeping the account of any State Government or local governing body without the consent of the Treasurer, would1, create difficulty for such bodies. It isnot intended that the requirements of clause 4S shall cause any inconvenience to States or authorities of a State inconducting their normal banking transactions. Clause 48 makes it clear that,, until a commencing date is published in. the Gazette, there will be no general prohibition against private banks conducting banking business for a State oran authority of a State. Until the commencing date is published, the prohibition will apply only to the businessspecified by the Treasurer by notice in. writing. Further, even when the general prohibition is in operation, the Treasurer may permit the continuance of existing: arrangements where individual circumstances justify it. These provisions willenable the necessary transfer of businessto be effected gradually. The Government does not intend to compel private- banks to close the accounts of any suchState authority until the Commonwealth; Bank is in a position to offer equivalentfacilities.
Senator Leckie stated that the Commonwealth Bank would have power toveto entirely any advance made by any bank to any organization.
This not so. Sub-clause 3 of clause- 27 provides -
Nothing in this section shall -
authorize the Commonwealth* Bank to make any determinations or give any direction with respect to an advance made, or propose* to .be made to any particular person..
The authority of the Commonwealth Bank under this section is limited to that of giving directions as to the purposes for which advances shall, or shall not be made by banks. This provision gives statutory effect to the suggestion of the banking commission in paragraph 62.1 of its report that the Commonwealth Bank should advise the trading banks as to the general direction ofadvances, without interfering with the granting of particular advances. The only difference between this provision and the recommendation of the. royal commission is that the Commonwealth Bank is to be empowered to make its advice effective.
Senator Gibson was very anxious to know the position of certain organizations, such as pastoral companies, under this legislation. The purpose of this bill is to provide a legal framework, uniform throughout Australia, for regulating banking within the meaning of section 51 (xiii) of the Constitution of the Commonwealth. The bill provides that the general business of banking may not be carried on without authority from the Governor-General. The existing institutions to which this provision will apply are those specified in the first schedule to the bill. A distinction is made in the first schedule between trading banks and savings banks. To the former the legislation will apply in its entirety. The latter will be exempted from certain provisions of the bill. such as those relating to special accounts procedure, limitation on purchase of securities, and furnishing statistics in accordance with Part VI. A further distinction is to be made in the case of pastoral companies, building societies and other institutions that do not desire to carry on the general business of banking but wish to undertake some limited banking business. It is not proposed to issue to those institutions an authority under Part II. of the bill. To do so would make them subject to all the provisions of the legislation, some of which would be inappropriate in view of the limited and special nature of the banking business being conducted. It is, therefore, intended to grant pastoral companies, building societies and other institutions that desire to carry on some limited banking business an exemption under clause 10 of the bill. The order of exemption will be published in the Gazette and will specify the provisions of the bill in respect of which the exemption is granted. The order of exemption may also be made subject to conditions. The provisions of the legislation from which an exemption is granted and the conditions imposed, if any, will be decided according to the circumstances of each case. This procedure gives a flexibility, which is essential in view of the varied nature of the banking business conducted by pastoral companies, building societies and other institutions.
Several honorable senators have asked for an explanation of the manner in which special deposits made with the Commonwealth Bank by the trading banks, at present amounting to about £235,000,000, are held. So far as the Commonwealth Bank is concerned, the special deposits made with it by the trading banks are a liability differing from the other deposit liabilities of the Commonwealth Bank only as to the conditions under which they may be withdrawn and the rate of interest to be paid on them. The aggregate liabilities of the Commonwealth Bank, which include the special deposits of the trading banks, are balanced by an equal amount of assets, and, in accordance with customary central banking practice, the major individual items in these assets are -
In considering the position at any one time, therefore, it is true to say that the special deposits of the trading banks are invested by the Commonwealth Bank in assets mainly composed of the foregoing items. A more complete understanding of the position, however, can be obtained by considering the manner in which the special deposits of the trading banks have come into being. The financing of war expenditure by the Commonwealth Bank has caused a large increase of both the deposit liabilities and cash resources of the trading banks. This increase of the cash resources of the banks has been immobilized in special accounts to prevent its use as a base for inflationary expansion in trading bank advances and investments. In financing government war expenditure, the Commonwealth Bank, exclusive of the Note Issue Department, has increased its holdings of government securities, including treasurybills, by £238,000,000 since the Banking Control Regulations came into force. Over the same period, the special wartime deposits of the bank have increased by £235,000,000. The correspondence between the increase of special accounts and the increase of the Commonwealth Bank’s holdings of Government securities would not generally be as close as this, because special accounts are affected by other factors, as, for example, by the purchase of London funds by the Commonwealth Bank. Nevertheless, the principal use of the special accounts has been the taking up of Government securities by the Commonwealth Bank. In effect, the special accounts were invested in treasury-bills and London funds, although this, perhaps, puts the position round the wrong way.When the special war-time deposits appeared in the accounts of the Commonwealth Bank as a liability, the assets corresponding to this liability - Government securities or London funds - had already been acquired. The other points raised by honorable senators will be dealt with in committee where I propose to move eight amendments. I understand that the Opposition intends to submit sixteen amendments. I think three of those proposed amendments will be covered by those I shall submit.
Question put -
That the bill be now read a second time.
The Senate divided. (The President - Senator the Hon. Gordon Brown.)
Majority . . . . 5
Question so resolved in the affirmative.
Bill read a second time and committed pro forma) progress reported.
Message received from the House of Representatives intimating that it had agreed to the amendments made bythe Senate in this bill.
Bill received from the House of Representatives and (on motion by Senator Fraser) read a first time.
Bill received from House of Representatives and (on motion by Senator Keane) read a first time.
Dairying Industry: Collection of Milk - Salaries and Pensions : Overseas Payments - Railwaytrucks fob Stock - Western Australian War-time Industries : Engineering Facilities- Service Awards - Australian Forces : Leave - Potatoes : Tasmanian Production - Dehydrated Vegetables.
Senator KEANE (Victoria - Minister for Trade and Customs [9.46].- I move -
That the Senate do now adjourn.
Last session Senator Mattner asked me a question regarding restrictions said to prevent lorries in South Australia when picking up milk, from entering upon the farm. I have made exhaustive inquiries into the matter, and now wish to assure the honorable senator that there are no such restrictions imposed by any Commonwealth authority.
Earlier to-day Senator Amour asked the following questions, upon notice: - 1.Is it a fact that the Commonwealth Government pays exchange on the salaries of Australian officials in England and other countries ?
The answers to the honorable senator’s questions are as follows: -
Where officers are transferred to fill a position overseas or to perform official duties and the period of absence will be not less than twelve months, the Commonwealth pays exchange on the salary and allowances paid overseas to that officer while on such duty.
Australian warpensions are assessed in Australian currency and recipients abroad are paid the equivalent amount of British or foreign currency. It follows that where pensioners live in countries with a currency depreciated below the Australian level a benefit accrues to the pensioner, hut where the currency is not at apremium in terms of Australian currency, the pensioner bears any loss.
The Government cannot agree to the payment of exchange on war pensions to overseas recipients. The pensioner chooses to reside abroad of his or her own volition. To all intents and purposes he or she has severed connexion with Australia and has no financial responsibility to this country. On the other hand, the Australian official is sent abroad for a temporary period and retains liabilities in Australia for income tax on his salary, superannuation, &c. He is therefore entitled to be protected against any loss arising from an adverse rate of exchange.
To-day, Senator Sheehan asked me, as Minister representing the Minister for Transport, the following questions, upon notice : -
Has the Minister noticed a statement by Mr. H. McLellan, president of the Newmarket Producers Association, appearing in the Melbourne Herald to the effect that, according to the advice he had received, three weeks’ notice was required by the New South Wales railway authorities in order to provide trucks to transport fat stock from central New South Wales to Victoria?
If so, and in view of the possibility of a very acute shortage of fresh meat in Victoria, will he urge the New South Wales Railway authorities to provide trucks as early as possible so as to prevent the development of afresh meat famine in that State?
The answers to the honorable senator’s questions are as follows: -
The Minister for Transport advises that he has not read the statement referred to, but on inquiry from the New South Wales Railways, it has been indicated that the demand for fat-stock wagons is at present unprecedented, and after providing for the use of all trucks available for a period of three weeks there is an accumulation of orders totalling 2,000 sheep vans and 400 cattle wagons. The stock trucks are allocated to give a fair share to all applicants, and the allocation for Melbourne is 200 sheep vans and eight cattle wagons per week.
The Minister has been assured that every stock truck in service is being used to the fullest extent, but very long haulages are involved because the majority of fat-stock orders for Victoria are from the northern parts of New South Wales, where stock have been forwarded for agistment during the recent serious drought period. This means a very long haul and consequent delay in the turnround of live-stock tracks. The position is rendered difficult because of the heavy demand for trucks for the approaching lambing season, a large number of orders for the return of starving stock to their original pastures, and very heavy orders for restocking properties recently denuded of feed by the drought, but which have recovered consequent upon the recent beneficial rains. The Minister for Transport said he has been assured that the very best is being done with the rolling stock available to meet the position.
– For a long time I have been interested in the war-time industries of Western Australia. At one time I was chairman of the committee appointed by the Menzies Government to investigate that subject and to make recommendations with respect to those industries which, after the war, might be of use in the development of that State. Associated with me on that committee was the late Prime Minister (Mr. Curtin) and Professor F.R. Mauldon of the University of Western Australia. We made a unanimous report which, in part, has been implemented by government action. That report was presented in 1941.Now Iam informed that the Department of Aircraft Production contemplates the early closing of its shops at Bayswater, Western Australia. These were established some time ago and have since developed and, if I remember correctly, the Minister fully justified their existence. Primarily, the works provide a universal machine shop which means that the class of machine tool, smithing, heat treatment and electro-plating are not single purpose, but capable at a minute’s notice of producing any mechanical requirements within the capacity of the set-up of the works. Then again it is at present used to produce aircraft spare parts and this means the maintenance of tolerances to one ten thousandth of an inch and also postulates that highly trained operatives compose the staff. This establishment has done and, I understand, is still doing work for the three services, the PostmasterGeneral’s Department, the Allied “Works Council, the Department of Civil Aviation and other subsidiary government activities. It also has many demands made upon its resources by the Royal Navy and the Royal Australian Navy patrols. It gives employment to a considerable number of hands - assembled not without difficulty - whose training cost both time and money. I know that with the contraction of the war area there must be an equivalent contraction of war factories and kindred activities; but in this case we have a machine shop providing very much needed facilities for the engineering industry of “Western Australia that cannot be found elsewhere in the State except at the Government Railway Workshops at Midland Junction. This is a potent argument for its retention in a State with growing secondary industries. I ami told that the Department of Aircraft Production, on this side of the continent, is letting work out to private contractors, and further, that work is being sent from Western Australia to Adelaide and Melbourne for execution. I should like the responsible Minister to examine the position closely and at the same time to bear in mind that the Royal Navy and the Royal Australian Navy operating from the western coast will be dependent for some time on these works for much of their minor but important repairs and replacements. As a most desirable form of employment nothing can be said against it.
– I wish to draw attention to a matter which is causing considerable concern to some members of the Australian Imperial Force, namely, the conditions governing the award of the 1939-43 Ribbon, and the Africa Star. Originally, the 1939-43
Ribbon was awarded for service in the Middle East, but outside the African continent, whereas the Africa Star was for service in Africa. Since these conditions were laid down, the 1939-43 Ribbon has become the 1939-45 Ribbon, and, in fact, is now almost a general service ribbon. This matter closely concerns several Australian Imperial Force units including the 2nd/3rd Machine Gun Battalion, most members of which were taken prisoner in Java, and the 2nd/2nd Pioneer Battalion. These units served in Syria in a campaign which, although not given a great deal of publicity, was by no means a “ Sunday school picnic “. All the members of these units volunteered for the Australian Imperial Force in 1940, most of them offering their services in the first few months of that year. They are now entitled to wear the 1939-45 Ribbon; but the newest universal trainees who have served with a militia unit for six months in the Pacific area, are also entitled to wear that ribbon. I realize that comparisons are odious, but to emphasize the anomalous position that has arisen I propose to cite two hypothetical cases. First, let us take the case of soldier “ A “ who, in March, 1940, volunteered for active service anywhere in the world. He first met the enemy in June, 1941. Some of his mates were killed and some wounded; others were taken prisoner in February, 1942, and now, in July, 1945, are still prisoners of war. Others came on to Australia. A few of them were given leave, which, in some cases, was as little as six days, whereas others did not have any leave at all.
– Can the honorable senator give me the names of such men?
– They were then sent to New Guinea to fight the new enemy, the Japanese. Now, in July, 1945, they, are still fighting Japanese. Then there is soldier “ B “ who was deaf to the call in 193? or 1940, or contended that he should be kept at home to fight for Australia, even though, at that time, there was no talk of Japan entering the war. He stayed at home during 1940, 1941, 1942, and 1943, living in security and comfort, making plenty of “ dough “ and enjoying the protection of war industry. In December, 1944, he decided to “ have a go “, and either joined up or was called up in the Militia. He went to
New Guinea on the 1st January, 1945, and saw active service until July, 1945. This soldier is now entitled to wear the same ribbons as soldier “A”. In other words, there is no recognition of soldiers who although not in Africa, fought in Syria, Crete, or Greece. It is these men with whom I contrast soldier “ B These conditions amount to gross injustice, and with every justification are causing wholehearted resentment amongst the men concerned. Service in Syria. Greece and Crete should be sufficient to make a soldier eligible for the award of the Africa Star. These campaigns were as much a part of the African operations as were the campaigns in Abyssinia, Eritrea, Kenya and Sudan, or, indeed, the series of operations in the Western Desert. The award of an emblem to the 1939-43 Star as has been suggested in some quarters, would not meet the case. How would the Western Desert campaign have ended if the Germans had occupied Syria? Prisoners of war who have been languishing in Japanese prison camps since the fall of Java will feel aggrieved about this treatment, and I hope that the matter will be given further consideration by the Minister for the Army (Mr. Forde). I know that there are difficulties. The distinction between conditions governing awards caused difficulties in the Great War and the Boer War; but the line of demarcation must be drawn somewhere. I hope that an endeavour will be made to rectify the anomalies to which I have drawn attention.
.- I have received a communication in relation to the award of the Africa Star from the Welfare Committee of the 2nd/3rd Machine Gun Battalion claiming that there is no recognition for service in the Syrian Campaign. The battalion was sent to Java in February, 1942. A perusal of the conditions for service awards in all theatres of war shows the omission of important operations. Service in Syria, Greece and Crete does not count for the Africa Star. As the matter stands, men who enlisted with the Australian Imperial Force in 1939 and early in 1940 and fought through the Syrian Campaign and in Java will be given no more recognition than the newest universal trainee in a militia battalion, who serves six months in the Pacific Area. This is a gross injustice to the original members of the battalion, the majority of whom are now prisoners of war in Japanese hands. I believe members of the 2nd/2nd Australian Pioneer Battalion and an artillery regiment are similarly placed. One suggestion is that service in Syria, Greece or Crete be included in the eligibility for the award of the Africa Star. It is considered that those campaigns were as much a part of the African operations as were the campaigns in Abyssinia, Eritrea, Kenya, the Soudan and the series of operations in the Western Desert. Another suggestion is the award of a separate Star for service in Syria, Greece and Crete. The men concerned consider that the suggestion that an emblem, apparently to be worn with the 1939-43 Star, is totally inadequate. I shall be glad if the Minister representing the Minister for the Army (Senator Fraser) will inquire what can be done to remove the anomaly.
– Recently I referred to the marketing of the potato crop in Tasmania, particularly the early varieties. I thank the Minister for Health (Senator Fraser) for his statement to the Senate on this subject in which he said -
It is incorrect to state that last year growers were especially requested to increase the area of Bismark potatoes.
As I pointed out before, the Bismark is an early cropper. Whilst I do not say that the Government encouraged growers to plant Bismarcks, I do say that in making contracts with the growers, the Potato Control Board allowed them to plant early varieties late in the season, so that those varieties came into competition with the main crop, which consisted of Brownells. I pointed out that, whilst it was true that there was no apparent deterioration of the early potato crop, which was a big one, there was in fact a deterioration. Immediately the Brownell potato came into production, the earlier varieties were at a discount. I said that it was not good policy to encourage the planting of the early varieties so late in the season. That policy has resulted in a great injustice being done to the growers of potatoes. My point is that there has .been deterioration and that the Government, not the growers, decided what varieties were to be planted. For the present season’s planting the Government has restricted the quantity of Bismarks to be sown; only a half of the quantity planted last year is to be planted. That makes it clear that this is a matter for which the Potato ControlBoard is responsible.
– I endorse the remarks of Senator Herbert Hays. Growers of potatoes in Tasmania are experiencing great difficulty in disposing of their crops. If their crops could be assessed, and the growers paid 75 per cent, of their value, that would be of great assistance to them. I know that they have been promised that they shall not suffer any loss, and that where there is evidence of great deterioration the potatoes will he assessed and paid for. Last week when r was in Tasmania, I saw 18,000 bags of potatoes in pits on one man’s farm. Among them were 7,000 or 8,000 bags of Bismarcks, which is an early variety. The potatoes had been well pitted and stored ; the man who grew them is a careful farmer. I opened the pits and examined the potatoes, and I found that the Brownells and Up-to-Dates were ‘ in excellent condition. Many of the Bismarcks also looked good, but considerable numbers of them had long shoots. When the shoots on a Bismarck potato are knocked off the potato looks good, but it is of less use for cooking. In addition to the 18,000 bags which that grower had in pits, there were 2,000 bags of potatoes in the ground, not dug. Potatoes cannot be stored from season to season. The growing of potatoes is expensive, and therefore I urge the Government to assess crops and pay to the growers something on account. With potatoes worth £12 a ton, it will be realized that a crop of 18,000 bags not paid for is an important matter to the grower. I urge the Government to assess crops and make advances to growers.
In order to provide vegetables for the troops, the Government undertook the dehydration of vegetables of various kinds. Dehydration factories were estab lished, and, in the main, they are turning out good products. I am aware that there have been strong differences of opinion as to the quality of the dehydrated vegetables which reached the men in the front lines. In order to satisfy myself regarding the quality of dehydrated vegetables I obtained samples and had them cooked at home. I found them equal to fresh vegetables. On a number of occasions I have suggested to the Government that some of the dehydrated vegetables sent to the troops should be brought back to Australia, and returned to the factories which produced them, in order that manufacturers could obtain reliable information as to their keeping qualities, and thus he able to remedy any defects that may be found. It would not cost much to bring back samples for testing. I do not know whether my suggestion has been acted upon. At the present time most of the dehydrated vegetables are sent to forward operational areas, but when the war is over that outlet will be closed. I should like some of these factories to continue in production after the war. I believe that there is a market in our big cities for dehydrated vegetables of good quality at reasonable prices. It has been said that if the people can obtain dried vegetables they will not want to buy green vegetables, but there are times of the year when green vegetables are scarce and exorbitant prices are paid for them. Dehydrated vegetables will keep for six months, and they could be made available when fresh vegetables are .difficult to obtain. If a market could be found for the dehydrated product during the season when fresh vegetables are scarce, it would be of great assistance to growers. If this trade is to be encouraged something must be done immediately. It will be of little use to wait until the present outlet for dehydrated vegetables is closed and then try to find markets for them. Cabbages for the troops are packed in tins containing 5 lb.; that represents about 1 cwt. of green cabbages. No housewife wants to have the equivalent of 1 cwt. of cabbages in the house, and. therefore, I suggest that cabbages be packed in 1-lb. tins for household use. I have discussed this matter with the people concerned and I believe that a valuable market can be developed. In addition to helping farmers this trade would give employment to numbers of operatives. Moreover, the Government has large sums of money invested in dehydration plants, and it would be a pity not to utilize them after the war. Excellent results have been obtained from the dehydration of cabbages, potatoes, carrots, parsnips, and other vegetables. I suggest that the Government should start now to encourage people in the cities to buy dehydrated vegetables, which should be available in tins containing supplies suitable for the average household. I ask the Minister to give this matter his earnest consideration.
SenatorFRASER (Western Australia - Minister for Health and Minister for Social Services) [10.15]. - Senator Sampson said that some men who had returned from service overseas had been sent to New Guinea without leave, and that others had been given only seven days’ leave. When he was speaking, I interjected that I would be pleased if he would supply me with the names of the men to whom he referred. The Government is not aware of such instances as he has mentioned. All of the long-service men now returning to Australia are being discharged if they so desire. I recall that Senator Brand raised a matter dealing with the treatment of six returned soldiers with respect to employment’ and social service benefits. I asked him to give me the names of the soldiers he had in mind, but he has not yet supplied the information. It is useless for honorable senators to make statements which they do not substantiate with evidence. I remind Senator J. B. Hayes that the Government has not the power to embark upon the production of dehydrated vegetables. It sought that power unsuccessfullyat the referendum in order that it might be enabled to utilize the factories which it had set up for the production of war-time requirements. With the lapse of the National Security legislation it will cease to have power to operate such factories. Therefore, I regret to inform the honorable senator that it will not be possible for the Government to give effect to his desires in this matter.
Question resolved in the affirmative.
The following papers were presented : -
Lands Acquisition Act - Land acquired for Commonwealth purposes -
Pats River, Flinders Island, Tasmania.
National Security Act - National Security ( General ) Regulations - Orders -
Manufacture of domestic furniture (No.5).
Prohibition of non-essential production. (No. 17).
Senate adjourned at 10.16 p.m.
Cite as: Australia, Senate, Debates, 24 July 1945, viewed 22 October 2017, <http://historichansard.net/senate/1945/19450724_senate_17_184/>.