20th Parliament · 1st Session
The Deputy President (Senator George Rankin) took the chair at 3 p.m., and read prayers.
– I desire to preface a question to the Minister for Trade and Customs by inviting attention to the fact that under our existing system of parliamentary procedure Ministers in one House act as the representatives of Ministers in the other House of Parliament. Ministers who act in a representative capacity are called upon to pilot bills through the House of which the responsible Minister is not a member. Such representative Minister cannot, and cannot be expected to, give all the information which is sought by honorable senators or honorable members in another place and this circumstance is not conducive to the efficient conduct of the business of Parliament. Will the Minister for Trade and Customs cause earnest consideration to be given to a proposal for the business of Parliament to be facilitated and conducted in a more efficient way by the adoption of a system whereby the responsible Minister could take charge of his bills in either House of the Parliament and give honorable senators or honorable members a full elucidation of legislation and supply any information which may be sought at the committee stage of the bills? On such an occasion a Minister need have no voting power unless he were a member of the House in which he was introducing the bill. Is it a fact that a similar system is in operation in some other countries?
– I am not aware whether the system to which the honorable senator has referred operates in other countries, but I am prepared to accept his assurance that it does. I suggest that the honorable senator write to me, giving full details of his proposal, which I shall be happy to put before the Government for its full consideration.
SenatorCRITCHLEY. - I wish to address a question to you, Mr. Deputy President. Can you inform me what portions, if any, of Parliament House come exclusively under the control of the President of the Senate? Can you also inform me what jurisdiction, if any, has Mr. Speaker over any portion of Parliament House which comes under the personal jurisdiction of the President of the Senate ?
The DEPUTY PRESIDENT. - I have to inform the Senate that I have taken notice of a resolution passed by the House of Representatives last Friday upholding the claim of Mr. Speaker to expel a member of that House from the entire Parliament building. I take the view that such a claim should not be recognized insofar as the precincts of the Senate are concerned, as the Senate is not bound in matters of this kind by the practice of the House of Commons. A proposed standing order similar to the House of Representatives Standing Order I was rejected by the Senate, by a majority of eighteen votes to five, on the 12th August, 1903, videHansard, page 3440 of 1903, when it was decided that the Senate should build up its own rules, forms and practices. Insofar as the joint departments of the House are concerned, in my opinion this is a matter which should be covered by Joint Standing Orders requiring the agreement of both Houses. I suggest to the Government that steps be taken to this end at a convenient opportunity. In my opinion, the Senate and no one else has complete control of the Senate chamber and the precincts of the Senate.
– In further elucidation of the question asked by Senator Critchley, I ask you, Mr. Deputy President, to say whether, in the event of a member of this Parliament being expelled or suspended from the sittings of either House, joint action both by the President of the Senate and Mr. Speaker would be required to eject him from the parliamentary refreshment rooms if he wished to dine there.
– The question is entirely hypothetical and out of order. If, unfortunately, such a circumstance arose, it would be considered, I trust, entirely upon the merits of each case.
– In my opinion, the question is not out of order. It deals with the power of the President of the Senate and the Speaker of the House of Representatives.
The DEPUTY PRESIDENT. - Order! It is contrary to the Standing Orders to discuss matters that have occurred in another House. I am quite sure that the House of Representatives is capable of dealing with its own members just as the Senate is capable of dealing with honorable senators.
– My question has to deal with the Senate. I hold quite strongly that the Senate must control its own affairs. If an honorable senator was suspended from service in this chamber’ and was removed beyond the precincts of the chamber, would it be beyond your power, Mr. Deputy President, to have him ejected from the parliamentary refreshment rooms if he wanted to have a meal there? Would not the authority of the Speaker of the House of Representatives and the President of the Senate be required to eject him? That is a question that deals with this chamber and with the House of Representatives, and I believe that it is in order.
The DEPUTY PRESIDENT.- The matter is simply and entirely one for the Senate to deal with when it occurs. We should cross our bridges when we come to them. I believe that the Senate is capable of dealing with its own affairs.
– I hope so. I also hope the Senate will not be dominated by Mr. Speaker.
The DEPUTY PRESIDENT. - The House of Representatives may deal with its members and enforce such penalties as it thinks fit. Similarly, we in this chamber would be in order in imposing penalties by a motion of the Senate and we have the power to enforce such penalties.
– Can you inform me, Mr. Deputy President, whether there is any way in which an honorable senator can determine what is meant by the precincts of the Senate outside this chamber? If I incurred your displeasure and was removed from the chamber, could I partake of a meal in the dining-room or go to my office? What constitutes the privileges of the Senate?
The DEPUTY PRESIDENT.- That is a matter for determination by the Senate itself, presumably on a motion by the Leader of the Senate. The matter may arise in clue course, and when it does, it will be dealt with.
– Then you are unable to tell me, Mr. Deputy President, whether I would be treated as a first offender or as a hardened criminal, having in mind the severity of the penalty that I might receive from the Leader of the Senate?
The DEPUTY PRESIDENT.- It would be wise for the honorable senator to have something over his head when a decision was being made.
– In view of the publication of a reliable report that within the next five years it will be possible to generate electric power from atomic energy and in view of the projected development of hydro-electric schemes in the Snowy Mountains area and Tasmania, is the Minister for National Development kept fully informed of developments in regard to the use of atomic energy, so that future plans for hydroelectric schemes will be viewed in the knowledge of their being possibly outdated ? Will the Commonwealth ensure that the Tasmanian Government, which is expending a large proportion of its loan money on a hydro-electric scheme, shall be kept informed of the latest developments in relation to the use of atomic energy to generate electric power?
– Although my colleague, the Minister for Supply, administers the Atomic Energy Commission, I shall try to answer the honorable senator’s questions. During my recent trip abroad I had an opportunity to go to Harwell and Chalk River, and to see the atomic energy establishments there. It is true that it has been generally reported that electric power will be generated by atomic energy within the next five years, but that is over-simplification of the position. I think it is meant that the five-year period is the period that it will take to construct and erect the plant. With a new development such as the harnessing of atomic energy, it is reasonable to think that although plant may be completed in five years, as a result of the progress in science many alterations and improvements will be effected, and there will, perhaps, be some failures with the first plant. This factor needs to be taken into consideration. I have occasionally discussed the matter with the Commissioner of the Snowy Mountains hydro-electric undertaking, which comes within my portfolio. We must take into consideration a number of factors in connexion with the generation of electricity. By and large, it is accepted that the capital cost of hydro-electric generation is greater than is the capital cost of thermal power generation. On present indications, the capital cost of atomic energy generation will be very substantially in excess of the cost, of thermal power generation, unless science evolves a short cut. Other factors must be kept in mind also, such as whether a supply of uranium will be available for industrial purposes and whether it would be cheaper for a country to use its natural resources of water or coal. One might hazard a guess about so important a topic. I think that in the final analysis it will probably be determined upon economic stresses. I am quite certain that the Atomic Energy Commission will distribute to Tasmania the information and knowledge that it obtains, in the same way as it makes such information available to the other States.
– Can the Minister for Shipping and Transport say whether an inquiry has yet been held into the causes of the recent derailment on the Trans-Australia railway between Zanthus and Karonie? If such an inquiry has been held, will its findings be made public ? Does he consider that the terrific speed at which the new diesel trains travel imposes too great a strain on the track? Is the track at present being adequately maintained by the depleted gangs now employed on the line? In the interests of public confidence and public safety will he assure the Senate that every safeguard is being taken with respect to this new service ?
– As a result of preliminary investigations that have been conducted into the matter to which the honorable senator has referred, I have been advised that the accident was not due to any deficiency in the railway track. The most thorough investigation is being made, and I hope to be furnished with the final report in the near future. When I receive it, I shall consider what information I shall make available. At this juncture, I assure the honorable senator that the track is in good order and that every effort is being made to maintain it in a condition that will enable it to take trains travelling at the high speeds at which the diesel trains have travelled during the last few months. As soon as I receive the final report, I shall furnish the honorable senator with further details.
– Is the Minister for Shipping and Transport in a position to inform the Senate what progress has been made in the work of replacing fish-plate joints with electrically welded joints on the TransAustralia railway? I point out that all experts agree that electrically welded joints are far superior to fish-plate joints for speeds at which the new diesel trains travel on that line.
– I appreciate the honorable senator’s technical knowledge about the matter that he has raised. I shall obtain the latest information and furnish it to him. I inform him that on the new railway to Leigh Creek all rails are being electrically welded.
– I preface a question that I address to the Minister for Trade and Customs by pointing out that the Kellog Construction Corporation which has undertaken the contract for the construction of the oil refinery for the AngloIranian Oil Company at Kwinana in Western Australia is purchasing large quantities of tools and equipment which are included in category A under the import restriction regulations and imports of which are thus restricted to 70 per cent. of imports in the base year. I understand that the construction company is acquiring most of its tools in Western Australia, and that because of the quantity that it requires the stocks of hardware shops are being bought out. Merchants in Perth are now ordering to supply future requirements of the Kellog organization in the hope that special releases in respect of such equipment will be granted. Subject to an end-use declaration being supplied by the Kellog Corporation in support of applications for licences, will the Minister instruct the Deputy Collector of Customs at Fremantle to grant additional special quotas for these goods?
– I realize the importance of the matter that the honorable senator has raised, but I believe that on further reflection he will agree that it would be both unwise and impracticable to give a blanket cover for the importation of articles of any kind. I can assure him that no action on the part of the department will impede the carrying out of the important work to which he has referred or will embarrass in any way the people of Western Australia.
– I address to the Minister representing the Minister for the Interior a question which relates to the official Australian War History. I understand that the first two volumes of that history are now available for publication, but in Western Australia practically no publicity has been given to that fact. I am sure that many people in that State are unaware that the history is now available. Will the Minister ensure that further and more adequate publicity is given to this matter in Western Australia ?
– I shall be pleased to discuss this matter with my colleague, the Minister for the Interior. I thank Senator Vincent for bringing it to my attention.
– Can the Minister for Repatriation supply me, in due course, with details concerning the portions of .the Re-establishment and Employment Act 1945 which are still operative and of benefit to those who took part in World War II. and who were discharged shortly after the conclusion of that war?
– I shall be glad to obtain the information for the honorable senator and let him have it at an early date.
asked the Minister representing the Prime Minister, upon notice -
– The Prime Minister has supplied the following reply to the honorable senator’s questions: -
As the honorable senator will appreciate, an answer to his question involves a survey of the whole administrative field. Work on this, however, is well in hand and I shall furnish a reply as soon as the’ necessary information has been compiled.
asked the Minister representing the Minister for Social Services, upon notice -
Is it a fact that age and invalid pensioners in Western Australia are receiving large accounts for hospital treatment which are beyond their capacity to pay; if so, will the Minister consider giving some financial help to such persons, this assistance to be in addition to the 12s. a day already granted by the Commonwealth which covers little more than one-third of the cost of in-patient treatment in public hospital wards, .which is 35s. a day?
– The Minister for Social Services has supplied the following answer : -
As the honorable senator is aware, the Commonwealth pays the full hospital benefit of 12s. a day in respect of the treatment of pensioners and their dependants in public hospitals. This benefit is deducted from any fee that may be charged to the pensioner for hospital treatment. Pensioners are not required to join a hospital benefit organization to be eligible for the full Commonwealth hospital benefit. The Social Services Consolidation Act makes no provision for the grant of assistance to help pensioners meet their hospital expenses. The question of Commonwealth assistance to pensioners for this purpose is part of the general scheme of hospital benefits and comes more properly within the jurisdiction of the Minister for Health. Your request has therefore been brought to his notice. I suggest, however, that the State governments are not without responsibilities in this direction. The question of the fees to be levied upon pensioners and their dependants in respect of their hospitalization in Western Australia is a matter for the appropriate authorities in that State, and they might reasonably be expected to have regard to the resources of pensioners, and others in indigent circumstances, when determining those fees.
Motion (by Senator O’Sullivan) - by leave - agreed to -
That leave of absence for one month be granted to SenatorMattner on account of illness.
Bill received from House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator McLeay), read a first time.
.- I move-
That the bill be now read a second time.
The purpose of this bill is to introduce amendments to the existing wool use promotion legislation. These amendments originated primarily as the result of representations made to the Government by the Australian Wool Board, the Australian Wool-growers Council and the Australian Wool and Meat Producers Federation. The Government’s decision to introduce the amendments was made in an atmosphere which showed increasing awareness of the possible danger to wool from increased production of synthetic fibres and the resultant effects on Australian wool-growers and on the economy as a whole. It was for this reason that the Government gave very careful consideration to the representations which it had received from the wool industry. In particular, it recognized the need for an intensified wool promotion campaign and for this reason acceded to the industry’s suggestion that the wool tax should be increased from 2s. to 4s. a bale for the year ending the 30th June, 1953. This proposal was made effective in legislation passed last year. The legislation, again at the request of the industry, also provided that the annual rate of tax would be flexible within the limits of 2s. and 5s. a bale.
In addition to thus ensuring an adequate annual income of approximately £680,000 for the board in 1952-53, the Government decided to transfer to the board the unspent balance in the Wool (Reserve Prices) Fund and that portion of the balance in the Wool Contributory Charge Trust Account which will remain after the purchase of the wool stores owned in Australia by the Joint Organization. It should, perhaps, be mentioned that these funds were, in the first instance, contributed by growers or represented income from the investment of moneys contributed by growers. The resources of the board will thus be increased by about £2,750,000, and, in addition, the Government has decided that the Australian Wool Board should receive a portion of the annual income derived from the rental of the stores. Apart from their suggestions on finance, the Australian Wool Board also made a number of other suggestions which in its view would assist the Australian Wool Bureau in carrying out its functions. Briefly, the board asked that the bureau should be free from government control of its activities and that its functions should be enlarged to include the taking of measures for the encouragement of research and for the improvement of the production of wool in Australia. The Australian Wool Bureau is the new name suggested for the Australian Wool Board.
In order that honorable senators will have an appreciation of the board’s approach and of the Government’s decisions, I propose to deal briefly with the history of the Australian Wool Board. The board was first established under the Wool Publicity and Research Act of 1936 and, during the currency of that act, the board laid down the basis of a wool use promotion campaign, particularly in overseas countries through the agency of the International Wool Secretariat. Under the 1936 act, the Australian Wool Board was free from government control as far as the exercise of its powers and the expenditure of the proceeds of the wool tax were concerned and, moreover, it was permitted to engage in research and to take measures directed towards improving the production of wool. In 1945, a more comprehensive plan of woolpublicity and research was inaugurated with the passage of the Wool Use Promotion Act. Under the plan, promotion of the use of wool remained the responsibility of the Australian Wool Board, but its wool research responsibilities were transferred to the Commonwealth Scientific and Industrial Research Organization. The Wool Use Promotion Act of 1945 subjected the Australian Wool Board to a degree of ministerial control from which the board had previously been free. The funds available to the Australian Wool Board were also increased in 1945 by raising the rate of wool tax from 6d. a bale to 2s. a bale. The resultant annual income of approximately £340,000 per annum enabled the Australian Wool Board to enlarge it* promotional activities in Australia and especially overseas. The International Wool Secretariat was able to increase the range and intensity of its publicity work and what is most important, in conjunct tion with American wool interests, to set up the Wool Bureau Incorporated to concentrate on wool publicity in North America, where the competition from synthetic fibres is greatest.
It will be obvious, therefore, that the representations received from the Australian Wool Board and the wool industry have required a thorough review of the 1945 legislation. The Government agreed, inter aiia, to the industry’s request that the title of the Australian Wool Board should be altered to the Australian Wool Bureau. The Government also decided that, so far as its promotional publicity functions are concerned, the Australian Wool Bureau should be entirely free from ministerial control or direction. The Government is satisfied that its own views will be adequately represented on the Australian Wool Bureau by the Commonwealth Wool Adviser. The Government has also agreed that the Australian Wool Bureau may, as one of its functions, take steps for the improvement of the production of wool in Australia and for the encouragement of research. .However, in respect of these functions the Government felt it should not deprive itself of authority, through the Minister, of ensuring that the Wool Bureau does not duplicate similar activities undertaken by other authorities in these fields. It is for this, reason that the bill provides that the Minister should have a reserve power of direction over the board in its exerciseof these functions. The Australian Wool Board desired that the new Australian Wool Bureau should have complete autonomy in determining the terms and conditions of employment of its staff, but the Government considered that these should be determined by the bureau with the approval of the Public Service Board. This procedure is already followed in the case of other statutory authorities associated with the Department of Commerce and Agriculture and has proved satisfactory. I am sure that honorable senators will agree that the Government has a responsibility for preserving uniformity as between the various statutory authorities financed out of moneys raised by the Government from a tax on .the industry. The Government decided that the Wool Consultative Council set up under the Wool Use Promotion Act of 1945 should be discontinued and an effective replacement set up by administrative action. The abolition of the council was urged by the Australian Wool Board and the wool-growers’ organizations on the grounds that it was redundant and had never served any useful purpose. In reviewing the activities of the council, the Government came to the conclusion that, for one reason or another, the council had not functioned successfully and, accordingly, no provision has been made in the bill for its continuance.
Under the bill, the Minister is empowered to appoint a Deputy Wool Adviser to assist the Commonwealth Wool Adviser - a position set up under the 1945 act. The Australian Woolgrowers’ Council has sought the abolition of the position of Commonwealth Wool Adviser but the Government feels that it is important that there should be an officer with the special responsibility of performing all those duties which are implicit in the title of Commonwealth Wool Adviser and that he or his Deputy should represent the Government on the Australian Wool Bureau.
The bill provides that in certain circumstances the Commonwealth Wool
Adviser may employ staff. This is a new provision, which has been included primarily to meet a situation in which it may be decided that the Wool Statistical Service, formerly operated and financed by the Australian Wool Realization Commission, should be administered by the Commonwealth Wool Adviser. The statistical service previously provided by the commission has proved of tremendous value to the wool industry and to the Commonwealth, particularly during international discussions when the basis of wool selling was at issue. In those discussions the authentic and unchallengeable analyses of the Australian wool clip provided by the Australian Wool Realization Commission were largely responsible for preserving the auction system in Australia. It is believed that satisfactory results can be obtained by the continuation of the statistical service on a somewhat modified scale, now that its operations are not directly geared to the requirements of the Joint Organization. At the present time something in the nature of a trial run is being conducted with a view to determining whether appraisals by the various broking houses could produce data which, from a statistical point of view, would be reasonably comparable -with data which would result from the appraisals of the commission’s valuers. The results of this trial run will determine whether, in future, the appraisals should be carried out by the broking houses rather than by a staff of valuers attached to the statistical service. The arrangements for administrative control of the Wool Statistical Service have not yet been decided. To a degree, they depend on the outcome of the trial to which I have referred, and there will also need to be some further consultation with wool-growers’ organizations on the point. One suggestion has been that the statistical service might be associated with the new Australian Wool Bureau. The bill will enable that to be done. Another suggestion has been that the statistical service might be placed under the Commonwealth Wool Adviser. It is for this reason that the Wool Adviser is being empowered to employ staff. It will be noted, however, that, as a result of an amendmentthat was introduced in the House of Representatives, the Wool Adviser may employ staff only for this purpose, and only for such time as he is responsible for controlling the statistical service.
In general, the Government has been able to meet substantially the representations of the Australian Wool Board and the wool-growers’ organizations. The few major points of difference between the Government and the board have already been indicated, but my references do not cover exhaustively the full list of industry suggestions which have been adopted by the Government and implemented in the bill. The new Australian Wool Bureau will be entrusted with a major responsibility directed to combating the threatof synthetics to our wool industry, and I have every confidence that it will not fail in its endeavours. I commend the bill to honorable senators.
Debate (on motion by Senator Courtice) adjourned.
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator McLeay) read a first time.
Senator McLEAY (South Australia -
Minister for Shipping and Transport) [3.45]. - I move-
That the bill be now read a second time.
The main purposes of this bill are to amend the procedure for determining the terms and conditions of employment of the staff of the Australian Egg Board, and to delete that section of the act which enables the Minister to veto or alter decisions of the board if the chairman dissents from any decision of the board. The Egg Export Control Act provides that the salaries and conditions of employment of persons engaged by the board shall be as prescribed by regulation. This provision makes it necessary to go through the machinery of promulgating regulations to cover all variations of salaries and allowances, and any proposed variations, such as cost-of-living adjustments cannot operate until the necessary regulations have been promulgated. Superannuation adjustments cannot be effected under the existing procedure until the necessary regulations have been promulgated.
It is the policy of this Government, as it was of previous governments, that salaries and other remuneration payable to employees of Commonwealth statutory authorities should carry the approval of the Public Service Board, and some authorities which have been constituted under acts passed since 1945 have, in fact, been operating under such arrangements. These authorities determine the terms and conditions of employment of their staffs, subject only to approval by the Public Service Board. No regulations are required, and variations of salaries or other conditions of employment may be made effective without delay. It is proposed that this should apply as standard procedure for all Commonwealth marketing authorities, and the amendment of the act, as proposed in the bill, will make that procedure operative as far as the Australian Egg Board is concerned.
The bill also provides that the Minister’s power to veto or alter decisions of the board, contained in section 9 (8.) of the 1947 act, shall be deleted. The egg industry considers that this provision constitutes an unwarranted intrusion into the affairs of the board. The Government is in agreement with the industry on this point, and considers that there is ample protection of Government and industry interests in the remaining sections of the act, in that the major powers of the board will still be subject to the direction of the Minister.
The principal act provides that salaries, fees and expenses payable to members of the Australian Egg Board, and any variations, shall be prescribed by regulation. The opportunity has been taken to include a provision in the bill to dispense with the necessity to promulgate regulations for those purposes. All other proposed amendments contained in the bill are designed to bring the principal act up to date and in conformity with the Government’s policy to make the provisions of Commonwealth marketing legislation uniform as far as possible. These amendments are only procedural, and do not affect the substance of any provisions of the principal act. I commend the bill to the consideration of honorable senators.
Debate (on motion by Senator Courtice) adjourned.
Debate resumed from the 12th March (vide page 941), on motion by Senator Spooner -
That the bill he now read a second time.
.- I support the bill, which implements theGovernment’s policy that fair and just banking services shall be provided to thepeople of this country by both the public and trading banks. Before I proceed to deal with the provisions of the bill, I should like to refer to the claim that has been made by Senator O’Flaherty to the effect that the chairman of the Bank of Australasia stated at the annual meeting in 1950 that the bank had contributed £500,000 to the campaign to defeat Labour at the 1949 general election. In the heat of the moment, I made a very unparliamentary interjection, for which I apologize to Senator O’Flaherty. However, I have before me the annual reports and .balance-sheets of the Bank of Australasia for the years 1949 and 1950, and the annual reports and balance-sheets of the Australia and New Zealand Bank Limited - its successor - for the years 1951 and 1952. Although I have perused them very carefully, I have been unable to find any such statement. The honorable senator’s contention was ridiculous.
I propose to examine the five main objections that members of the Opposition have raised to this measure. Those objections were: First, the separation of the General Banking Division from the central bank is opposed to the recommendations that were made by the Royal Commission on Monetary and Banking Systems which was appointed in 1936 and whose report honorable senators opposite have quoted on many occasions; secondly, the Commonwealth Bank Board, in its report for the year 1952, urged that the General Banking Division should be retained within the framework of the Commonwealth Bank as a central bank as a source of important information to the central bank; thirdly, under the present set-up the Commonwealth Bank has not discriminated against the private trading banks, and as no Government supporter has given any instance of such discrimination there is no need for this measure; fourthly, the bill has been introduced solely for the purpose of damaging the trading section of the Commonwealth Bank in favour of private banking interests; and, fifthly, that nationalization of banking is a dead issue and, therefore, the community has no need for further fear in that respect.
Members of the Opposition have declared that no government is justified in departing from the recommendations that were made by the Royal Commission on Monetary and Banking Systems. Coming from members of the Australian Labour party, that argument is rather interesting because the first recommendation that that commission made was that the Commonwealth Bank should be governed by a governor, a deputy governor and a board of six members. The commission recommended that the governor should be the chairman of the board and that the six directors, other than the governor and the Secretary to the Department of the Treasury, should be appointed for a period of six years. A government which honorable senators opposite supported introduced a measure which completely ignored that first recommendation of that supposedly allseeing commission. I refer to the 1945 act. Having regard to the fact that that act was passed only nine years after the commission was appointed, on what ground can honorable senators opposite claim that to-day, seventeen years later, this Government should not depart from the recommendations of that commission? In this instance, members of the Opposition adopt the attitude “ Do as I say, not as I do “.
Secondly, honorable senators opposite claimed that the Commonwealth Bank Board, in its report for the year 1952, urged that the trading bank section should be attached to the central bank because of the day-to-day information that it could supply to the central bank. I submit that that principle is being observed under this measure insofar as it provides that the present Governor, Deputy Governor and Commonwealth Bank Board shall control the proposed Commonwealth Trading Bank. Therefore, the bill meets the second objection that honorable senators opposite have raised. Their third objection is that the Commonwealth Bank has never discriminated against the private trading banks and, therefore, the introduction of this measure is unjustified. In raising that objection honorable senators opposite have completely overlooked the fact that the 1945 act required the private trading banks to lodge a certain percentage of their assets and deposits in the special accounts with the central bank in which these funds were frozen.
– What was wrong with that?
– I agree that that was in accordance with sound central bank practice, but I point out to the honorable senator that whilst that obligation was placed upon the private trading banks no similar obligation was placed upon the .trading bank section of the Commonwealth Bank. Clearly, that was an act of discrimination against the private trading banks. There have been other instances of discrimination against them. Under the 1945 act, an attempt was made to compel every local government authority to do its banking business with the Commonwealth Bank only. -The obligation that was placed upon the private banks to make lodgments in the special accounts was a major discrimination because under that provision the sum of £700,000,000 of the private banks’ funds could have been compulsorily held in those accounts. That sum represents a liability which the private banks w.ere to have at call. Obviously, no private banking institution could afford to be deprived of the use of such funds. Under this measure that liability will be partially removed. No business in Australia should be subjected to such discriminations.
The next point which honorable senators have raised is that this bill has been introduced only in an attempt to damage the Commonwealth. Trading Bank of Australia. I should say that the facts are entirely against that contention. The Commonwealth Savings Bank was separated from the general bank in 1928 and has gone from strength to strength since that time. Since this Government has been in office, the General Banking Division of the Commonwealth Bank has increased its turnover by 50 per cent. The number of its customers has increased by almost the same percentage. In the last three years the General Banking Division has made great strides in the banking business of Australia. To suggest that this bill is being presented with a view to damaging this great bank is absurd. No honorable senator on this side of the chamber has the slightest wish or intention to do anything than to ensure fair and just competition between the trading banks of Australia. Indeed, the Royal Commission on Monetary and Banking Systems, upon which honorable senators opposite set such store, stated on page 252 of its report, that -
The system which we contemplate is one in which a strong central bank regulates the volume of credit, and pays some attention to its distribution. We are of opinion that the adoption of our recommendations will place the Commonwealth Bank in that position. Wc ure satisfied to leave the distribution of credit to privately owned trading banks, working for profit, but regulated in the manner indicated in out recommendations.
That is the system which we have set out to institute. The facts prove that the suggestion of honorable senators opposite, which has been made for purely party political reasons, is absurd.
The Opposition now pretends that nationalization of banking is dead. It says that, in view of a decision of the Privy Council, such a step could not be taken legally. I do not pose as a lawyer, but there are many eminent authorities in Australia who have said without equivocation that although the legislation to which the Privy Council decision referred was unconstitutional because of some of its worst features, the Commonwealth Parliament has power over banking in Australia. They are of opinion that, but for some sections, that legislation might well be constitutional. I believe that there is still a great danger to the private banking system of Australia from the fact that nationalization of banking is still a plank in the platform of the Australian Labour party. It does not matter what honorable senators opposite say, even in good faith. If nationalization is still a part of the general policy of the Australian Labour party, the twelve just men and true who comprise the party’s central executive may well say to them, “ It does not matter what you say in the Parliament. You must vote in a certain way.” The puppets opposite will then do as they have done on other occasions in this chamber.
I suggest that the real reason for the opposition to this bill is that honorable senators opposite can see that it proposes to prevent any back door approach to nationalization of banking. “With the passage of this legislation, the only way in which nationalization could be tackled would be by means of the introduction of a bill in the Parliament, in which event the people of Australia would become clearly aware of the proposal. Both the 1945 and the 1947 acts made nationalization of banking possible by means of regulations. That possibility will disappear with the passage of this bill. In my opinion, this legislation honours one of the undertakings made to the people by the Government parties in 1949, and again in 1951, that they would introduce fair and just competition between public and private banks in Australia. That is what they set out to do, and that is what they have done. I therefore keenly support the bill.
.- Senator Henty has referred to objections which, he said, had been submitted by honorable senators on this side of the chamber to the bill before the Senate. Only one honorable senator on this side of the Senate has so far expressed his opinions on the measure. It is, therefore, reasonable to assume that Senator Henty was only pretending to himself that certain honorable senators had expressed objections to the measure. Honorable senators on this side of the chamber have expressed.no objections because they have not yet. had an opportunity to do so. In my opinion, only one of the matters to which the honorable senator referred* is worthy of note. When mentioning some of the objections which he wrongly said had been made by members of the Opposition, he stated that they had claimed that there had been no discrimination against the private trading banks to the advantage of the General Banking Division of the Commonwealth Bank. The honorable senator contested that claim by saying that the private trading banks are required by the central bank to lodge deposits, in special accounts, whereas the General Banking Division of the Commonwealth Bank is not required to do so. He instanced that as an example of discrimination. I think that I may be able to satisfy him that no discrimination occurs in that respect. In order to prove that there is nothing in his contention, it is only necessary to outline briefly the functions of a central bank. The primary function of such a bank is to regulate the amount of money in the community in such a way as to permit the ordered development of economic resources without affecting disadvantageous^ the private banks or working to the advantage of the General Banking Division. The central bank has other powers. It can indicate how its member banks shall operate. If they are too liberal, it can charge a higher rate of interest on loans from the central bank. It can grant lower interest rates to expand credit, and it controls the note issue. It can buy and sell government securities and regulate exchange rates. But the main point is that the central bank had under its jurisdiction the General Banking Division of the Commonwealth Bank. It knew all about its activities. It was not necessary for it to call upon that bank to provide it with a special account because, in the course of general administration of banking matters, it could cause the General Banking Division to do the very things that it required the private trading banks to do. Therefore, the disadvantages that Senator Henty imagined the private banks to have suffered do not exist.
The bill expresses very clearly the wishes and intentions of the Government. The first is to sever the General Banking Division from the Commonwealth Bank and turn it adrift to do the best it can for itself. It will not extirpate outright the General Banking Division. It will cut it away from the General Banking Division, appoint a manager and still leave it under the jurisdiction and control of the Commonwealth Bank Board. The only difference will be that the General Banking Division will be quite separate, and will have its own offices and be required to furnish special accounts to the central bank. If the Government had been as forthright with the General Banking Division as it has been with other government instrumentalities, it would have put it on the auction block and sold it to the highest bidder. But that is almost an impossibility in view of the way that the bank is constituted. Its accounts and operations have become interwoven with the Commonwealth Bank. Senator Henty referred to the granting of credit. He said that the private trading banks could not do as they wished. That was not because the General Banking Division was an integral part of the Commonwealth Bank. It was due to the fact that this Government introduced a selective credit policy in recent years. It prevented the banks from expanding credit facilities. That was Government policy. If the private trading banks have suffered during the past few years as a result of anything that has been done by the Commonwealth Bank, they have suffered from the deliberate policy of the Government with regard to the granting of credit.
Reference has been made by Government supporters to equitable trading conditions for the trading banks and the General Banking Division. The Government appears to be more concerned about equitable trading conditions for the private trading banks and does not care for the General Banking Division, which is to become the Commonwealth Trading Bank. It would be better if the Government eliminated the Commonwealth Trading Bank now rather than leave it to suffer a humiliating death later, because I am convinced that the aim of the Government is to destroy the General Banking Division. It is preparing for its destruction and has made no provision for it to survive.
– Just as the Government has destroyed it over the past three years and doubled its business ?
– I shall tell the Minister for National Development (Senator Spooner) how the Government has destroyed the bank as well as other instrumentalities that it has put on the auction block. There are several ways in which honorable senators can -ascertain whether the favorable conditions that the Government is seeking will be in consonance with the general provisions of the legislation. We must bear in mind that this is only an amendment to the Commonwealth Bank Act. Three of the purposes of the act are to protect the stability of the currency of Australia, ensure the maintenance of full employment and the prosperity and welfare of the people of Australia. Honorable senators on the government side might be able to explain how the amendments will support those objectives. I should like to know how their proposals will be to the advantage of Australia. The Government is responsible to the people. The bank belongs to the people. The parties that support this Government have opposed the progress of the Commonwealth Bank over the years. They took no part in the establishment of the bank in 1911. A Labour government established the bank and Labour has supported it ever since, but the Government parties have always impeded the bank’s progress. In 1924 they established a bank board and so virtually passed the government of Australia over to the Commonwealth Bank Board. With every turn of the political wheel, the Government parties have introduced amendments dealing, with the Commonwealth Bank. They have titivated the act several times since 1949. Even now the Government is not satisfied with what it has done to the principal act, and I am sure that it will change the act again if it gets the opportunity to do so. In 1951, the Government reappointed the Commonwealth Bank Board. Remarkably enough, one member of the board is a Melbourne gentleman who was reported to have advocated unemployment. In an address to a public body in Melbourne he said that unemployment was good for us because it disciplined us and taught us respect for authority. The gentleman’s name is, I understand, Grimwade. At least it was “ Grim “ something, and truly enough, since the bank board was re-established things have become grim, not only for wage-earners in Australia, but also for business people. I have no doubt that Mr. Grimwade has used his influence with the board to bring about a measure of unemployment in this country.
When certain legislation was passing through this chamber towards the end of last year, we heard a lot about “ rationalization “. There was to be “ rationalization “ of air services, fares and freights. In addition the carriage of air mails was to be “ rationalized “. In other words, Trans-Australia Airlines was thereafter to carry only a portion of the mails. I have no doubt that if the business now being done by the General Banking Division of the Commonwealth Bank could be “ rationalized “ with that of the private banks, the Government would unhesitatingly take that action, but, because of the ramifications of the Commonwealth Bank, the Government finds that course impossible. Therefore, it is severing the General Banking Division from the vest of the bank. The Commonwealth Trading Bank will be under the control of the Commonwealth Bank Board, which will be able to regulate, for instance, the scope of the bank’s credit -facilities. The board will determine the policy of the Commonwealth Trading Bank, and that policy will not necessarily be to extend the bank’s activities. Indeed, the board could instruct the Commonwealth Trading Bank not to accept certain classes of business. The board could also determine the interest rates that were to be charged by the bank. In short, the entire policy could be not one of expansion, but one of restriction. There would be nothing to prevent the board from insisting upon the adoption of a policy which would force the Commonwealth Trading Bank to close its doors within two or three years.
One of the responsibilities of any government is to protect the interests of the people and to safeguard public assets. What is this Government’s record in that connexion in its three years of office? Its aim has been to liquidate the people’s assets wherever possible. The
Commonwealth line of ships is for sale. The line has been a source of worry to the Government, not because it has not made profits or has not been providing a good service to primary producers and merchants, but because it is a governmentowned enterprise. This Government could not even undertake the mining of Australia’s uranium deposits. It has had to enter into an agreement with a private company for that purpose. We have been told what the Government will do to protect the interests of the Commonwealth Trading Bank; I am drawing attention to what the Government has clone with other public undertakings. We may assume that the Government’s attitude towards the General Banking Division of the Commonwealth Bank is the same as its attitude towards other public assets. The Government’s interest in both Amalgamated Wireless (Australasia) Proprietary Limited and Commonwealth Oil Refineries Limited have been liquidated, and I have no doubt whatsoever that, if the Government could sell the General Banking Division of the Commonwealth Bank to the highest bidder to-morrow it would do so. The Government has betrayed the trust that was reposed in it by the people of Australia in 1949 and 1951. It has dissipated the people’s assets, and now it is seeking to destroy the people’s bank.
The bill provides that the Commonwealth Trading Bank will be able to absorb other banks. Conversely, I suppose, some other bank would be entitled to absorb the Commonwealth Bank. What a situation we should have then! It would be a complete sell-out and a quiet death for the Commonwealth Trading Bank. I have no doubt that is the Government’s intention. The General Banking Division is to be severed from the Commonwealth Bank, and after a few years of operation under the direction of the Commonwealth Bank Board, further capital will be required. Then we shall find the Commonwealth Trading Bank amalgamating with one of the private trading banks, or worse still, being absorbed by a private bank.
How will this legislation benefit the people of Australia ? Surely the primary functions of all governments in this country is to further the welfare of the Australian people. I invite honorable senators opposite to tell me in what way the people of Australia will be better off if this legislation be passed. The public is interested in this matter. We have been led to believe that the business of the private banks has been languishing in recent years because of the conditions under which they have had to operate since the 1945 Banking Act became law; but that view is not supported by banking statistics. I shall cite figures from the balance-sheets of all the private banks with the exception . of the Bank of Adelaide. In omitting the figures for the Bank of Adelaide I intend no affront to South Australians. Unfortunately I have not been able to obtain the latest balancesheet of that bank. The English, Scottish and Australian Bank Limited ended the year 1951-52 with a net profit of £237,520 and was able to pay a dividend of 6s. a share. The balance carried forward to the current financial year was £367,951. The Commercial Bank of Australia Limited had a net profit of £340,562 in the same year. Its -preference shareholders received 4 per cent, on their stocks and ordinary shareholders 10 per cent. The National Bank of Australasia Limited earned a net profit of £616,965. The net balance for the previous year was £258,000. The Bank of New South Wales earned a net profit of £997,768 for the year ended the 30th June, 1952. That profit included recoveries from debts previously written off as bad, but was made after making provision for rebates on current bills, interest on deposits, income tax, land tax and other taxes, depreciation in the value of bank premises, bad and doubtful debts, fluctuations in the value of investment securities and other contingencies. An interim dividend was declared at the rate of 8s. a share for the quarters ended the 31st December, 1951, the 31st March, 1952, and the 30th June, 1952. The Australia and New Zealand Bank Limited also had a successful year. Apparently it did not suffer any disadvantage from the operations of the General Banking Division of the Commonwealth Bank. After charging all expenses, providing for taxation on profits earned and making transfers for reserves and provision for contingencies including diminution in the value of assets, the profit of the Australia and New Zealand Bank Limited for the year ended the 30th June, 1952, amounted to £701,608. After paying all expenses of management and making provision for taxes and for rebates on current bills and accrued interest on fixed deposits and for bad and doubtful debts and other contingencies, the profit of the Commercial Banking Company of Sydney Limited for the year ended the 30th June, 1952, was £443,843. An interim dividend for the half-year ended the 31st December, 1951, was paid at the rate of 8 per cent, per annum.
The profits of the six banks to which I have referred for the year ended the 30th June, 1952, totalled £3,338,266. Those profits were paid in the form of dividends to shareholders, many of whom did not reside in Australia. It is often asked why the Labour party supports the reform, of the national credit system and advocates that the Commonwealth Bank should have complete control of credit in Australia. There is the answer. If the total net profits of the trading banks had been returned to the credit resources of Australia they could have been used by primary producers and others. But in the course of a year the sum of £3,338,266 was taken out of industry and paid to private shareholders. The average profit made by the six banks that I have mentioned was £556,377 for the year ended the 30th June, 1952. Yet, honorable senators opposite have alleged that the private banks are labouring under a disadvantage because they are not trading under equitable conditions. I submit that the figures that I have cited show that the private trading banks have done quite well for themselves.
The Government must recognize that it cannot ignore the importance of loans granted by the private banks to individuals for the purpose of expanding their interests, whether primary, manufacturing or commercial. The private trading banks and the Commonwealth Bank grant loans to all types of groups in the community and it is essential that Australia should have a banking system which, under proper guidance, will make credit available so that the economy of
Australia can be developed. I should not be surprised if, at some future time, the Commonwealth Trading Bank is absorbed by one or more of the present private trading banks ; and if the present Government is in office at that time I should not be surprised if an agreement was entered into with those banks by the Government providing that no similar bank would be constituted by the Australian Government for another 100 years.
– I support the bill before the chamber, which I believe is important and timely. Senator Benn endeavoured to show that no discrimination had been exercised against the private trading banks and that it was not likely to be exercised in future. I could not help asking myself why, if his contention was correct, not only the private banks but bank officers were very perturbed about the possibilities of the existing banking legislation. If there has not been and if there is not likely to be discrimination against the private banks why are these people so perturbed? The people of Australia have always resisted determinedly any attempt to interfere with the private trading banks. I am not surprised that the Opposition is opposing this legislation. I am surprised, however, at the degree of its hostility. So far the Leader of the Opposition (Senator McKenna) has not participated in this debate, but I imagine that if he does address himself to this measure he will be very violent in his objections to it.
– He is not a violent man. He is more peaceful than Senator Pearson.
– I was about to say that the Leader of the Opposition is normally a very peace-loving person. His conduct in this chamber is always exemplary. Honorable senators know that he seldom sees fit to interject. But when the Minister for National Development (Senator Spooner) was addressing the chamber on this bill the Leader of the Opposition interjected at least four times, showing that he most violently disapproved of this measure. Consequently, I look forward to his contribution to the debate.
SenatorBenn madethefantastic suggestion that honorable senators supportingtheGovernment would allow ‘the Commonwealth Trading Banktooperate for a few years only andt hen seek an opportunity to dispose of it to private interests. That suggestion is absurd. Under this bill the Commonwealth Trading Bank will have to compete for the business that is offering. But the Governmenthas not sought to destroy the GeneralBanking Division of ‘the CommonwealthBank. Ithas simply proposed that it shall compete on the same terms and conditions as those under which theprivate banks operate. The Government parties believe in fair competition as they have shownby their support for other legislation-
SenatorArmstrong. -Such as that in relation to Trans-Australia Airlines!
– I had intended to refer to that legislation. It is the belief of honorable senators on this side of the chamber that privateenterprise should not existunder the threat of unfair competition. Australian National Airways . Proprietary Limited was under a threat of annihilation by strangulation. The same shadow hangs over the private trading banks at present.In introducing this bill the Government has fulfilled one more promise to the people. If the Standing Orders permitted me to do so, I should like to devote half an hour or more toref erring indetail to the many promises that thisGovernment has fulfilled.
– What about the promises that ithas not fulfilled ?
– Itwould not take me long to deal with the promises that have not been fulfilled. The Prime Minister (Mr.Menzies) stated during the . 1949 general election campaign -
We will continue the tradingbank activities of the Commonwealth Bank in fair competition with the other banks.
There was mo suggestion that that section oftheCommonwealth Bank wouldbe sold.
– This is the first occasion since thepresentGovernment came tooffice that the Prime Minister’s policyspeech hasbeen mentioned in this chamber..
– Thebill now before the chamber will implement that promise. Despitethe statements that have beenmade to the contraryby interjections from the other sideofthe chamber,all air-minded people admit readily that the newCommonwealth TradingBank willbe required, and instructed, to compete for businesson the same terms asthose of the private trading banks and that it will be expected to conform to thesame trading conditions as those banks.Despite the contentionsof Senator Benn andSenatorO’Flaherty, competitionhas not beenfair in the past. There has been a degree of discrimination against the private trading banks.
– In what way?
- Senator Henty has already mentioned some discriminatory factors. At a later stage Ishall showclearly that there has been discrimination against the private trading banks. If Senator Armstrong were to discuss this aspect ofthe matter with employees of the private trading bankshe wouldfind that they are considerably perturbed, because they consider that there is a threat hanging over their heads at present. Some honorable senators opposite have stated that thisGovernment seeks to destroy the efficacy of the trading section of the Commonwealth Bank by propping up the private trading banks. That opinion is not shared by the private banks, which have criticized the Government very severely in this connexion and contend that this legislation does not go far enough. They arevery concerned about the existing provisions in relation to private trading banks.
The Governmenthopesthat this measure will prevent the extermination of theprivate trading bank by any future Labour government bya back-door method. The Australian Labour party hasadmitted that it is its policy to nationalize banking if and when it has another opportunityto do so.
SenatorO’Bryne. - When the people giveus thenecessary authority.
– I am indebted to SenatorO’Byrne for that interjection, becauseit is well ‘knownthat Labourdid not seek the authority of the people when it attempted to nationalize banking in this country. I think that it is a fair inference that Labour still believes in the nationalization of banking. The opponents of the Government in another place have stated that they will tear up this legislation when they are returned to office. As any future Labour government would be unable to nationalize banking in this country by the direct method, it would endeavour to do so by an indirect method. It has already been shown that there are substantial barriers in the way of nationalization of banking by the direct method, but it could be achieved, probably more effectively, by an indirect method. The Leader of the Opposition in the House of Representatives (Dr. Evatt) has referred to the constitutional difficulties in the way of the direct nationalization of banking. I bow to his knowledge of the subject. Honorable senators will recall that when certain provisions of the Banking Act 1947 were challenged in the High Court of Australia, the right honorable gentleman appeared on behalf of the Commonwealth. Subsequently, he argued for 40 days and 40 nights - or thereabouts - before the Privy Council which, however, upheld the decision of the High Court that certain provisions of that legislation were invalid. I agree with Senator Henty’s assertion that the High Court has never stated that banking does not come within the power and jurisdiction of the Commonwealth. No court has ever said that. I am convinced that it would be competent for the Leader of the Opposition in another place, and other learned gentlemen associated with him, to frame a measure to nationalize effectively the private trading banks of this country, which would not be in conflict with the Constitution. However, at the moment, I am more concerned with directing the attention of the Senate to the fact that this measure will make more difficult the nationalization of banking by any future Labour government by an indirect method. The nationalization of banking has been a plank in Labour’s platform since 1921. It was watered down slightly in 1951. The triennial conference of the Australian Labour party that was held in Adelaide in January last con- sidered the following resolution of the South Australian branch of the party -
That the Australian Labour party should warn private enterprise that it will, on return to office, pursue its socialist policy and resume control of those means of production, distribution and exchange sabotaged by the Menzies Government. . . .
– Was the motion adopted ?
– No. The conference ruled that the subject of the motion was already covered by the socialist objective of the Australian Labour party’s platform.
– Hear, hear !
– The South Australian Branch of the Australian Labour party is a most aggressive socialist body, and it considered that private enterprise should be warned that Labour, if returned to office, would pursue its policy in order to resume control of the means of production, distribution anl exchange. Foremost amongst Labour’s means of implementing this policy is the proposal to nationalize banking, credit and insurance. Therefore, any future Labour government could be expected to make a further attempt to nationalize the private trading banks of ‘this country, either by direct or indirect methods. The Government considers that it should protect the private trading banks from such a premeditated attack, and it believes that by so doing it is carrying out the wishes of the Australian people. Whenever the people have spoken on this issue they have given a resounding “ No “ to any attempt by Labour to interfere with the private trading banks.
Following the nationalization of banking, credit and insurance, Labour’s policy is to nationalize monopolies, shipping, public health, radio services, and sugar refining, &c. It is for that reason that the employees of the trading banks have made representations to this Government to protect their interests. Although the Leader of the Opposition in this chamber and other members of the Opposition have a better knowledge than I have of the constitutional position, I believe that had not the Playford Government of South Australia been returned to power recently, with an absolute majority, the way would have been clear for the six States to transfer to any future Australian Labour government any additional powers that it needed in order to obviate its legislation to nationalize banking from being challenged.
– Could they abrogate section 92 of the Constitution?
Senator- PEARSON. - I have stated my belief. It cannot be disputed that the Constitution provides for the transference of power to the Commonwealth, and if a Labour government was in office in this Parliament as well as in the six States, the difficulties at present barring the way of direct nationalization of banking could be resolved by the States ceding the requisite power to the Commonwealth. That direct approach, of course, has been blocked because at present a Liberal government is in office in one of the States. Under this measure the trading bank activities of the Commonwealth Bank will be separated from the central bank and its other sections and will be carried on by the proposed Commonwealth Trading Bank as a separate entity. The central bank will be retained perfectly intact and unimpaired and will discharge the functions that should truly be performed by the central bank and have been exercised by it 3ince it was established. The Rural Credits Department, the Industrial Finance Department and the Mortgage Bank Department which are three important branches of the Commonwealth Bank will not be disturbed in any way. All that this measure seeks to do is to establish the General Banking Division as a separate entity. In effect, the Government will say to the proposed Commonwealth Trading Bank that it is its business and duty to trade under the same conditions as the private banks do at present.
asked me to cite an instance of unfair discrimination against the private trading banks. I shall do so. The present method of calling a proportion of a bank’s assets into special account, if it were applied to’ the limit permitted under the existing legislation, would work to the detriment of the private banks. Without going into that matter at length, as it relates to the Banking Bill, I point out that under the Banking Act the private banks could be required to lodge in special accounts an additional amount of £500,000,000 to a total of £700,000,000. That money is callable, although it has not yet been called. Until the Banking Act is amended, the private banks can be obliged to lodge that sum in a special account merely after having been given from eight to ten days’ notice. Such action would force the private banks out of business for all time. If that is not an unfair discrimination, I do not know what is, because that obligation is placed upon the private banks but not upon th’3 Commonwealth Bank in its trading bank section. I cannot think of anything that could act more to the detriment of the private banks than such a provision. Hanging over the heads of the private banks is the threat that a future government could - I am not saying that it would -call up that amount of £700,000,000 from the private banks into special account and thereby completely destroy those institutions. If I am wrong in making that statement, I invite any member of the Opposition to correct me. On this point, an eminent banker stated - The act was only a few months old-
He was referring to the Banking Act 1945- when the maximum deposit prescribed by the act became impractical-
He was referring to the formula for the calling up of moneys into special accounts - and the Commonwealth Bank Governor had to use the discretion given in the act to call lesser amounts from the trading banks. For over five years the level of special accounts has been arbitrarily fixed by use of such discretion. For a long time the banks were not informed of the basis used in fixing the level of special accounts. A year or so ago-
This statement was made over twelve months ago - a presumably new basis was adopted and is still in use. It is a percentage of deposits, not the whole or part of the increase in assets since October, 1941, as mentioned in the act-
Under this measure the banks will be required to lodge in special accounts a percentage not of assets but of deposits - This percentage of deposits is apparently varied at will, so that banks have no more thanfromeighttotendays,daysnoticeofwhat fundswillbecalledtospecialaccount.Atthe presenttime,withbankassetssomefour timesasgreataspre-war,itisapparentthat thebankswouldbehopelesslycrippledifthey wererequiredtodepositinspecialaccountall oftheincrease,i.esomewhereaboutthree- quartersofallassets.Thefearofarbitrary administrativeactioninthisdirectionis constantly with the banks.
Thatbears out fully what I have been endeavouring to put to the Senate.
– It does not clear up the statement of the Treasurer (Sir Arthur Fadden) who contradicted that opinion.
– I believe that all fairmindedpeople,bothinsideandout- sidetheParliament,willrealizethatthe viewthatIhavejustpresentedtothe Senateisfairandlogical.Ifmembers oftheAustralianLabourpartysaythat the private banks really have nothing to fear because of the threat that these uncalled liabilities may be called to special account,letthemsaystraightoutthatno LabourGovernmentwillevercallupthose amounts.Letthemalsodeclaretothe peoplethattheywillnot,bydirector indirectmethods,nationalizetheprivate banks.Letthemtellthepeoplethatthe AustralianLabourpartyisabouttowipe off its No. 1 objective which is the nationalization of banking. If the members of that party desire to convince the people that it has totally abandoned every idea of nationalizing the private trading banks, let them follow the course that I have suggested.
-We shall do so on the 9th May next.
-I have noticed thatduringanelectioncampaign candidatesoftheAustralianLabourparty neverrefertonationalization,whichis themainplankoftheirparty’splatform. IchallengeSenatorO’Bryne,forin- stance,totellthepeopleofTasmaniathat theAustralianLabourpartynolonger believesinnationalizationoftheprivate banksandhasthusforsakenthatplank. Ishouldbeveryinterestedtohearthat thehonorablesenatorhasmadeastate- menttothateffect.Iamsurethatifhe doesso,itwillbegivenwidespreadpubli- cityinthepressandeveryonewillbe aware of it. If the Australian Labour partywillundertaketoremovethatthreat totheprivatetradingbanksandtothe employeesofthoseinstitutions,letitdo soatthefirstopportunity.Letthe LeaderandDeputyLeaderoftheOppo- sitionintheHouseofRepresentatives- thepeoplewouldrequirebothofthemto speakwithonevoiceonthismatter-and leadersoftheAustralianLabourpartyin thischambersolemnlydeclaretothe peoplethatonceandforalltheirparty hasremovedthatplankofitsplatform. Ifthosehonorablemembersandhonor- ablesenatorswouldfollowthatcourse therewouldbenoneedforenactment ofthismeasure.However,until suchadeclarationhasbeenmadeI,as ahumblememberofthepublic,sub- scribetothefeatthatarisesfromthis threatthatstillhangsovertheheadsof theprivatebanks.Therefore,Iregard thismeasureasonemeansofprotecting thoseintitutions.Underthisbill,the Governmentisnotgivingthemany specialprivilege,butsimplyisseekingto enablethemtosurvive.TheGovernment believethatnotonlytheemployeesof privatebanksbutalsothepeople demandthatitshalldosomethingto removethisthreatwhichhangoverthe privatebanksto-day.Thepeople,as theyhaveshowninthepastand,Iam sure,willshowagaininthefuture,will notstandforanyattempt,director indirect,onthepartofanygovernment toestablishamonopolyinbanking;but thatisstilloneofthemainobjectives of the Australian Labour party.
SenatorSANDFORD (Victoria) [5.10] Istronglyopposethebill.Inmyview,it isanotherselloutonthepartofthis Governmenttointereststhatsupport it.Althoughthisdebatehasnotpro- cededveryfar,wehavenotyetheard anyGovernmentsupporteradvanceone argumenttojustifyitsintroduction. SenatorPearsondevotedmostofhis timetoacriticismofthepolicyofthe AustralianLabourparty.Hedidnot telltheSenateanythingaboutthe measureatall.Hemerelysaidthatits introductionwastimelyandthatitwas animportantbill.Certainly,itisimportant from the viewpoint of the private banks; and it is certainly timely because, as this Government will not remain in office for very long, its supporters must take time by the forelock. The honorable senator let the cat out of the bag when he said that the private banks were perturbed about whether the Government would introduce this measure-. Clearly, in introducing the bill, the Government is acting- on the instructions of those institutions. Even children in kindergartens know that during the general election in 1949 the private banks financed the present Government parties to the tune of hundreds- of thousands of pounds in order to defeat the Chifley Labour Government.
– Does the honorable senator blame the people for having defended themselves against the onslaughts of that Government?
– The members of the Australian Country party are merepolitical hitch-hikers, who are prepared to jump on to any band wagon.. Senator Pearson- said that the Government would say to the proposed Commonwealth Trading Bank, “Go out and get the business “. Did non-Labour governments say that to the Commonwealth Bank during the period from 1924 to 1945 ? No. During those years the Commonwealth Bank was actually prohibited from competing with the private banks. If and when this measure is passed,, it will be a dagger pointed at the heart of the Commonwealth Bank.. Senator Pearson made much of the view expressed by the private banks that the Government has not gone fa,enough under this measure. Surely, no honorable senator would expect those institutions in unison to applaud this measure and say, “ This is exactly what we want “. It is obvious that the private banks would criticize the measure, but is is purely synthetic criticism and used for “ cover-up “ purposes. I should like to know exactly why the Government has introduced this, measure. Government supporters have yet to givethat information to the Senate. They have not pointed to a single instance in which’ the Commonwealth Bank, since- 1945,. has failed to operate efficiently and’ efficaciously for the’ community. Has not the Commonwealth Bank done yeoman service for Australia’? Is these r.ny just fication for separating the functions of the bank, as this legislation proposes to do? I think that it was Senator O’Flaherty who said, during the debate, that the danger, in this legislation lies in the fact that it will relieve the private trading banks of the obligation to deposit their surplus fund’s in special accounts with- the Commonwealth Bank. If that is so, the large sums of money that will be released will tend to increase the inflationary trend. At the same time,, the industrial section of the Commonwealth Bank, which has done so much for the people of Australia, particularly small business people and those who need finance hurriedly for industrial purposes, will be almost crippled. When this legislation was first introduced,, the Prime Minister (Mr. Menzies) said -
I urge upon, all concerned that they should closely study these proposals. The matters involved are of great importance and deserve a cool and balanced judgment.
If this bill is of such great importance, why has not some honorable senator on the Government side of the chamber told us why it is necessary to introduce it at this time? It seems to me that the important thing, as far as the Government is concerned, is to protect the private trading banks, because it is committed to do so. This bill is really only a part of the sell-out of which the Government parties have been guilty since 1949.. They are concerned only with the interests of the private trading banks, not with the welfare of the people of Australia. The Government wishes to buttress those banks. Honorable senators opposite have said that if and when the Australian Labour party gets back into power it will endeavour to nationalize the banks. Such a claim is merely an attempt to set up a fear psychology. The Government is completely discredited. In by-elections and State elections it has been beaten and belted! ali over Australia during the last eighteen months.. Apparently, it knows that the writing is- on; the wall and that it will be defeated at the first .opportunity that the people have to pass judgment on it. It is, therefore, rushing this legislation, through the Parliament to. fulfil a promise to the private trading banks isa. return for the assistance which those- institutions gave to the Government parties in 1949. The gallup poll, in which honorable senators opposite are great believers, should indicate to them the unprecedented feeling against this Government. Sixty per cent, of the people are opposed to the Government, and that percentage is increasing all the time.
Senator Pearson stated, by implication, that there is no unity amongst the members of the Australian Labour party. The honorable senator said that he would like to see a joint statement by the Leader of the Opposition in the Souse of Representatives (Dr. Evatt) and its deputy leader there, the honorable member for Melbourne (Mr. Calwell). There has always been unity in the Australian Labour party. Its deputy leader has never stabbed its leader in the back, as happened in the Government parties a few years ago. This Government has not the courage to face the electors at present. Instead, it is sending its senators out, like guinea pigs, to a Senate election in May. It is always talking about having a mandate for all sorts of things. If the Government is so sure that the people of Australia are behind it, particularly in relation to its banking legislation, why does it not say, “ We shall obtain the endorsement of the people at a general election on the 9 th May “ ? I suggest that it is the most discredited Government in the political history of Australia. It has sold out the people all along the line. It has not redeemed one pre-election pledge. Senator Pearson stated that he would tell the Senate about some of the promises that have been honored by the Government, but he neglected to do so. I suggest that the only promise which it will fulfil during its career is that which is made to the private banks in this measure.
The Government, like a defeated military force, is adopting a “ scorched earth “ policy. It has sold the people’s assets in Commonwealth Oil Refineries Limited and disposed of their assets in Amalgamated Wireless (Australasia) Limited. It has given away the Glen Davis shale oil project and has virtually strangled Trans-Australian Airlines. It is hawking the Commonwealth line of ships around the world and is now talking about getting rid of the Commonwealth- owned whaling ships. In addition, it is attempting to cripple the Commonwealth Bank. I suggest that if it thought any one would bid, it would try to sell the Parliament as a going concern. The Government parties have masqueraded under various names throughout the years. In 1924, the infamous BrucePage Government virtually gave over control of the Commonwealth Bank to the private banks. In the ‘thirties, the then Commonwealth Bank Board, which represented the private banks of the country, dictated policy to the elected Government. In 1938, when the present Minister for External Affairs (Mr. Casey) was Treasurer, legislation was introduced, the effect of which would have robbed the people of control of the Commonwealth Bank. Fortunately, there was such a public outcry that it was never enacted. We should remind ourselves of those matters when we look at this legislation. It is certain that the people of Australia will receive nothing from the present Government parties.
Senator Henty referred to “ Labour puppets “ doing as they are told. How many times in this chamber have we seen the “little Sir Echoes” on the other side staging sit-down strikes because they had been instructed not to say anything? We had an experience of that only last week when the television legislation was being debated. Honorable senators on this side of the chamber had to endeavour to provoke those on the other side into explaining why that legislation had been introduced. The supporters of the Government on that occasion sat like mummies.
I have already said that the private trading banks will probably criticize this legislation because they will not openly admit being completely satisfied that it is going far enough. Those are the banks that the Government parties are so eager to protect and about which they are so concerned. They are the banks which, in 1S93, repudiated their liabilities to the tune of millions of pounds to thousands of people. They robbed thousands of depositors of their money and never repaid any of it. We often hear of political interference in banking. In the State of Victoria, when the banks repudiated their liabilities to their customers in 1893, they clamoured for and obtained political assistance. Special ‘ legislation was passed by the Victorian Parliament in order to protect them. The Commercial Bank of Australia was the most notorious of the defaulting banks. It declared a 12 per cent, dividend and then closed its doors upon 30,000 depositors and millions of pounds of deposits. It then appropriated one-third of the deposits as preference capital and gave receipts for the two-thirds balance. Other banks followed its example, and thousands of depositors were left penniless, and were compelled to sell their deposit receipts and their shares for a fraction of their face value. The directors of these fiduciary institutions had cross-loaned to-one another enormous sums of other people’s money. “While they were pushing other people to the wall they conspired together and met in secret to wipe off their mutual obligations for a few pence, or one farthing in the £1. They kept their assets, gave one another clean receipts, and persuaded the legislature of Victoria to pass an act of parliament making it an offence for any person or newspaper to give publicity to their scandalous conduct. On the funds on which they foreclosed they again borrowed in order to purchase the scrip and deposit receipts of the thousands they had ruined. Thus, these financiers, the trusted custodians of other men’s money, emerged from, the struggle wealthier than ever. That was in 1893. Honorable senators opposite will no doubt say that that was a long time ago, but the private banks of to-day would do the same if they could get control.
– But they have not got control.
– They will get it. Even this legislation will give them a great deal of control. I think it was Senator O’Flaherty who pointed out that persons who obtain overdrafts from the Commonwealth Trading Bank of Australia may, under the provisions of this bill, bank with any other banking institution. By interjection, an honorable senator opposite asked, “ “What is wrong with that?” Can any one imagine a private bank giving a person an overdraft and allowing him to do his banking business with another bank? Yet honorable senators opposite say that the Government has no intention to ruin the Commonwealth Trading Bank of Australia ! “When the Commonwealth Bank was first founded in 1912, it was said by the then Government parties and supporters who were of the same political colour as the present Government, that the bank was “ conceived in idiocy and doomed to failure”. Its bank notes were spoken of as “ Fisher’s flimsies “. In 1924, when the infamous Bruce-Page Government was in office and took control of the Commonwealth Bank, the trading banks showed their true colours. They refused to .finance the Australian wool clip except on their own terms. The press of the day, including anti-Labour newspapers, told the story. Melbourne Sun said that it was a financial hold-up. The Commonwealth Bank Board and the government of the day went into secret conference. The private trading banks issued an ultimatum and declared that they would not finance the wool clip except on their own conditions, and the private banks won on every point.
During the depression in the following decade, the policy of the government of the day was dominated by the Commonwealth Bank Board which acted under instructions from the private financial institutions. During a debate in another place, I heard a senior Minister interject that during the period of misery and starvation that accompanied the depression, a Labour government was in power. Such a half-truth is worse than an untruth because the most important part of the story is left unsaid. I know that an atomic weapon would be needed to penetrate the skulls of some honorable senators on the Government side, but the fact is that a Labour government was not in power during the depression years although one was in office. The antiLabour majority in the Senate frustrated every effort that was made by the Scullin Government to alleviate distress in that period. Honorable senators on the Government side cannot deny the truth that the banks dictated the policy in those years. The Prime Minister in 1932 was Mr. Lyons, and he madethisstatement at a public meeting in Adelaide -
It is only because thebankshave confidence in my Government that we are able to carry on.
Yet the Government parties try to protect the private banks. In 1932, the Premier of New South Wales was Mr. Bertram ‘Stevens, who has since been knighted. Speaking at Deniliquin on the 19th November, 1932 he stated : -
My Government is endeavouring to cope with unemployment in the State of New South Wales as courageously as the banks will allow.
Is , any further evidence needed to support the statements that have been made by honorable senators on the Opposition side that the private banks will impose their policy even to the extent of causing unemployment? This Government is in favour of a pool of unemployed. It has gone out scientifically to form one, and the private banks will give it every assistance as they have done in the past. A report of the Bank of New South Wales published in 1932 stated -
It is evident that no proposal for further borrowing will he approved unless it is accompanied by definite indications that the Governments are doing all things necessary to reduce their expenditure in keeping with the condition of the time. This would involve a reduction in their establishmentswith consequent additions to unemployment, but the problem of resultant unemployment is secondary and should not deter governments from taking necessary action towards balancing their budgets.
Is that not further proof that the private banks are out to impose their will upon the people even to the extent of causing unemployment ? In 1938, legislation was introduced into this Parliament to issue debentures. It would have had the effect of removing the control of the Commonwealth Bank from the people. Yet this discredited Government will do everything that it can to pass legislation that is designed, according to its supporters, to protect the private trading banks even against future governments if that is possible. The second-reading speech of the Minister for National Development (Senator Spooner) showed the way to Government supporters in its presentation of political propaganda on this matter. In his second-reading speech the Ministersaid -
TheGovernment concluded that the present law containsa number of importantpowers whichgofarbeyondtherequirementsof propercentralbankcontrol.Inthehandsof agovernmentbentupondominatingthe centralbankforitsownpoliticalends,these excessivepowerswouldbeapotentweapon forattackingthecompetitivenatureofthe Australianbankingsystem.Greatpolitical issuesareinvolvedinthesebankingmatters. Thisgovernmentispledgedtopreservecom- petitiononafairandequitablebasisasan essentialingrediantofthebankingsystemin thiscountry.Eventshaveshownthatthis policyhasthesupportoftheoverwhelming majority of the Australian people.
He knows that the Government has not the support of the Australian people. That is why the Government is endeavouring to rush the bill through before it goes into political oblivion. Honorable senators must hot forget the machinations of the private hanks in the past. The Commonwealth Bank Act of 1945 places the Commonwealth Bank in the position it occupies to-day. It restored control of the Commonwealth Bank to the Parliament and in turn the Parliament is answerable to the people. As soon as the Labour party gets an opportunity, it will restore control of the Commonwealth Bank to the Australian people. Not one Government supporter, either in this chamber or in another place, could offer any adverse criticism of the functions of the Commonwealth Bank since the 1945 legislation was introduced. If the Commonwealth Bank has acted properly, why bring in this legislation? Government supporters have referred to the possible nationalization of the banks. From the point of view of the Constitution, that matter has been settled finally. It was taken before the High Court of Australia and the Privy Council,and the Government knows very well that under the Constitution we cannot nationalize the private trading banks. Yet this legislation is supposed to be framed to protect the private banks against action by some future Government for the further control of the banks. Surely this Government does not seek totie posterity to decisions that it makes? Having regard to the fact that the private trading banks have always been eager toget rid of theCommonwealth Bankas a competitor, the Opposition views with concern any attempt thatis made by this Government or any other Government to interfere with the Commonwealth Bank through which such valuable service has been given to the people.
At the last meeting of the Australian Loan Council, this Government pleaded that it did not have sufficient money to grant the States all they required, and because it lacked the confidence of the people, it starved the States of finance that was needed for education, housing, hospitals and other works. With the Commonwealth Bank operating as it should under a responsible Government, any gap- that existed between the funds available from ordinary sources and legitimate requirements of the States should be closed through the Commonwealth Bank by national or bank credit. Government supporters claim to see dangers in national credit but the dangers are greater if education, hospitalization and housing are neglected. Conditions in the States from the point of view of those necessities have never been worse. Education is in a perilous condition. The housing shortage is acute. Hospitalization is tragic. Yet this Government is introducing legislation to protect the private trading banks.
Sitting suspended from5.45 to 8 p.m.
– I repeat that this legislation is the repayment of the Government’s debt to the private banks for their colossal financial assistance during the 1949 election campaign. One Government supporter this afternoon spoke of election promises that the Government had fulfilled. Its promise to repay the private banks for their support is certainly being fulfilled now. The Government’s election promises to the people, however, have been forgotten. In spite of the propaganda disseminated throughout Australia in 1949 and again in1951, this Government may be likened to aflock of geese because neither geese nor the Government stick to their propaganda. In every period of economic crisis the private banks have been absolutely ruthless in imposing their terms upon governments. In pursuance of the Government’s scorched earth policy it is now destroying the only institution that can save us from ruthless financial dictatorship again in the future. Let us not be under any misapprehensionabout the ruthlessness of the private banks. In 1893, and again in 1924 and in the depression years of the early 1930’s, the banks caused misery throughout the length and breadth of Australia. I am not telling the Senate this for fun. These are historical f acts. Let me recall to the minds of honorable senators the conditions that were endured by our own kith and kin during the last depression. The circumstances that I shall relate applied to an unemployment camp in New South Wales, but they were typical of conditions that were to be found throughout the Commonwealth. In those days, tens of thousands of Australians were starving simply because the banks were able to dictate the financial policy of the then governments. As I said earlier, both Mr. Lyons, who became Prime Minister when the Scullin Government was defeated and Mr. Bertram Stevens, the United Australia party Premier of New South Wales, admitted’ their inability to take any action that was not sanctioned by the banks. The banks had already refused to make financial accommodation available to the Scullin Government. The following press report tells its own story. To have a full appreciation of the conditions, we must realize that the country town in which the unemployment camp was situated has an elevation of 4,000 feet and is one of the five coldest towns in New South Wales. The report states -
Camp situated about 20 miles from Oberon, near Jenolan Caves. Country very mountainous and intensely cold. The men employed are single and married men from the metropolitan area, and work two weeks in eight.
Most of these men were supplied with two blankets up to two or three years ago, and have since been issued with one more blanket. The cold is so intense that these blankets are totally inadequate, and the men, suffer torture from the intense cold.
Men who have not the necessary clothes and bedding are leaving the camp becauseof their inability to stand the cold. Menare ill, but, in order to get their wages, are working on. Complications may easily develop, which would endanger their very lives.
The men sleep in tents and huts. It can be imagined how cold the tents would be. The hutsareevenworse, as they, are madeofjust bare iron, without any lining whatever, and with cold earth floors. The galvanized iron roof sweats, and water dripsoverthemen.
Let the following passage sink into the thick skulls of honorable senators opposite : -
The men’s clothing is totally inadequate, lack of good woollen garments having its effect.
Men who lose time through sickness on this job (and there has been a number of them; have to wait until their next period, a matter of six weeks, before they cam make up the time lost. In the last .period men lost up to a full week through contracting influenza in camp. This means they have to live seven weeks on one week’s wages.
Those are the conditions that the Government wants to see back in this country. They were caused by the financial manipulations and ruthless dictatorship of the private banks, and as I have said, this bill is designed primarily to foster the interests of the private banks. The report continues -
Food supplied to the men on the last period was so bad that the nien had a meeting and decided to only pay 17s. Gd. for the week’s food, instead of the 22s. fid. charged. The matter was eventually settled by the camp restaurant-keeper giving the nien a promise that there would be an improvement. Even then he allowed them 3s. off the 22s. Cd.
It really is impossible to describe what this camp is like- One has to really go there for a fortnight to understand the conditions under which half-starved men have to live and work.
I wish to emphasize as much as possible the dangers inherent in this legislation which the Government is rushing through the Parliament before it faces the wrath of the electors on the’ 9th May. The Government knows that it is discredited. State elections and by-elections have shown clearly that the people of Australia are definitely disillusioned and disgusted by its impotence. The Government has apparently decided to take time by the forelock and do what it can before it loses control of this chamber in May. The bill has been produced at the behest and at the direction of the private banks. Its only purpose is to destroy the Commonwealth Bank as it was reconstituted by Labour in 1945. “When this bill becomes law, the Commonwealth Bank will be purely and simply a bankers’ bank. One has only to remember the periods of economic crisis in this country to realize that the private banking monopoly is always ready to impose its will on the Australian people. The strength and determination of the financial oligarchy is well known to any one who is prepared to listen and to learn. There is ample verification of that in The United States of America Bankers’ Magazine of the 26th August, 1924. The magazine stated -
Capital must protect itself in every possible manner by combination and legislation. Debts must be collected, bonds and mortgages must be foreclosed as rapidly as possible. When, through a process of law, the common people lose their homes they will become more docile and more easily governed through the influence of the strong arm of government, applied by a central power of wealth under control of leading financiers.
The following extract is from a letter written from London by Rothschild Brothers, the well-known international bankers, to their New York agents : -
The few who can understand the system will either be so interested in its profits, or so dependent on its favours, that there will be no opposition from that class, while, on the other hand, that great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burden without complaint and, perhaps, without even suspecting that the system is inimical to their interests.
There is little more that can be said from this side of the chamber. I realize that honorable senators opposite do not like hearing the truth. Most of them are too unintelligent to understand the truth when they hear it. They are a lot of “ Little Sir Echoes “, meekly acquiescing in everything that the Government proposes.
– Of course, the honorable senator would not acquiesce in anything that a Labour government did!
– At.least we, on this side of the chamber, have some initiative. However, my time, like the Government, is expiring. I realize that the Government is acting under the direction of the private banks. I was told by a leading banker who does not have to be a “ Little Sir Echo “ that for many months oast the air services between Melbourne and Sydney particularly have been heavily patronized by private bankers travelling to and from conferences about this legislation. I hear a little .chuckle from the cuckoo party - I refer, of course, to the Australian Country party - which apparently is prepared to sit in any political nest. But the seriousness of the matter is not diminished by idle giggling. It is quite apparent to the electors, and they are only awaiting their opportunity to throw the Government out neck and crop. I warn the Government that it is playing with fire. The wrath of the people will descend upon it, starting on the 9th May. We shall start a fire at the Government’s feet. Perhaps the Government will see the light when it feels the heat on the 9th May. If the Government has the welfare of the people at heart it will leave untouched and untrammelled that great institution founded by the Labour party, the Commonwealth Bank of Australia.
– This bill has one aim only and that is to separate the trading bank section of the Commonwealth Bank from the remainder of the bank. We have listened for an hour to a very interesting speech from Senator Sandford, but he failed to say one word about the real issue that the bill raises. I repeat that the purpose of the measure is to give separate corporate existence to the trading bank section of the Commonwealth Bank. Its consequential provisions relate to that bank. The most important one of these is the provision that the new trading bank must conform to central bank policy. In other words, this bill seeks to place the General Banking Division of the Commonwelth Bank on equal terms in all respects with private trading banks. The real issue before the Senate is whether the Commonwealth Trading Bank should be placed in a competitive position in relation to private trading banks.
I can quite understand why the Labour party is not supporting this measure. It is well known that in 1947 the Chifley Government introduced a bill with the object of nationalizing the private trading banks. It is equally well known that that legislation was subsequently declared unconstitutional. That is past history. One is often asked why, in view of the fact that the Privy Council declared the 1947 legislation unconstitutional, the Government has bothered to introduce this bill. The answer is that there is another method whereby a Labour government could nationalize the private trad ing banks, namely by using the powers that are now vested very properly in the central bank. Sir Earle Page did not introduce the measure for the establishment of the central bank for the purpose of ruining the private trading, banks. But by an abuse of the powers contained in banking legislation a government could strangle every private trading bank in Australia. I expect that the Opposition will strongly deny that it is the intention of the Labour party to take action through the central bank under the 1945 legislation to ruin the trading banks. Opposition senators have denied that that is their purpose again and again and most of them will probably continue to deny it. No honorable senator opposite, for example, will dare to state that it is the policy of the Labour party to nationalize the private banks. But some gentlemen in the Labour party occasionally let a statement slip out about the intentions of their party. Two or three weeks ago the honorable member for Melbourne (Mr. Calwell) said in another place that if a Labour government were given nine years of office it would change the whole face of Australia. The only reason for this bill is to prevent a Labour government from nationalizing the private banks. Senator Sandford wanted to know why this bill had been introduced. That is the reason for its introduction.
I now desire to deal with the question of whether or not the separation of the two divisions of the Commonwealth Bank as provided for in this bill will be effective. I have heard it said that the method of separation provided in this legislation will not have the effect thai the Government intends. It has been contended that the Commonwealth Trading Bank will still have an unfair advantage over the private trading banks after this bill is passed. I suggest that there is no real merit in that argument. The possibility of unfair competition between the Commonwealth Trading Bank and private trading banks can only be determined as a political issue. Let us suppose that two bank boards were established, as has been advocated in some quarters, in order to govern the two sections of the Commonwealth Bank - the Commonwealth Trading Bank and the central bank. Both of these boards -would be subject to policy directions from the government of the day. If the Labour party were in office it would be immaterial whether there was -one board controlling the two banks, or two boards, each controlling a bank. They would both be subject to the policy of the Labour government. Therefore, I suggest that , the matter of separation is not so important as the policy of the Government relating to the Commonwealth Trading Bank. The present Government has put its policy into effect by the introduction of this Jull. -Sub-clause (-3.) of clause 2 of the bill reads as follows: -
The .Board shall, in determining the policy of .the .Trading Bank, determine that policy in such a manner as not to conflict with the policy of the Commonwealth Bank in relation to the Commonwealth Bank acting as a central bank.
That is ‘the main point of this measure. The -Government has simply put its policy into operation by the introduction -of this bill and .every succeeding government, including Labour governments, will be bound by that policy which is based on a belief in fair competition amongst all trading banks.
But -one may well ask whether or not this clause -could be ‘repealed by a Labour government. Of course it could be repealed. But that is not quite the point. The point is that if this bill does not become law a Labour government could use the 1545 legislation quite lawfully in order to strangle the private banks through the medium of a central bank. And it could deny that it was taking that action while surreptitiously continuing with* such a policy. No Labour government could take such action while this legislation .remains on the statute-book. The important sub-clause :(3.) of clause 2 will prevent any .government from preferring the Commonwealth Trading Bank to the private trading banks. So if a Labour .government introduces a .measure for the repeal of this clause I suggest that the , people will .immediately .realize the purpose :of that -government. ‘They will be .correct in assuming that the Labour Government .has every intention, not only to -nationalize ;the private trading banks, but also *o attack industry generally pursuant to Labour’s socialistic policy.
I shall now put three questions ‘to the Leader of the ‘Opposition .(Senator McKenna). In view of the fact that .a Senate election will soon be (held I shall be most interested to hear the answer to them. I first ask the Leader -of the Opposition whether it is Labour’s policy to nationalize private banks if it is elected to office? That is a straightforward question. My second question is whether it is not a fact that it will not l)e possible to nationalize “the private trading banks or put them out -of business except hy an amendment of the ‘Constitution or the repeal of this measure? My third question is whether the Labour party will advocate the repeal of this bill and its associated legislation if it is elected to office’? Those are three simple questions and I invite any -honorable -senator opposite, but more particularly the Leader -of the Opposition, to answer them in a straightforward ‘manner.
Opposition senators have claimed that the separation of the functions of (Die Commonwealth Bank will embarrass, to some extent, the .new Commonwealth Trading IBank. I .suggest to the Senate that any -argument to the effect “that the trading bank activities of the Commonwealth Bank will -be placed in a better or -worse position -under this legislation is ‘quite specious. The Commonwealth Trading iBank will carry on -exactly as the General Banking Division of the Commonwealth iBank has operated before. “What is to prevent it from .doing that? Its policy, powers and capital -will .remain completely unaltered. Sub-section (3.) of proposed new section 17 of ‘the ‘Commonwealth Act reads -
The Trading Bonk shall -carry on general banking business.
That .-sub-section is similar to the previously .existing -provision relating to “the General Banking Division of the Commonwealth Bank. Sub-section (4.) of proposed new section 17 reads -
The Trading Bank shall have such powers is .are necessary ‘for the ;purpose of -carrying on general hanking .business .and shall, .without limiting .the generality .of the foregoing., .have a’ll ‘the powers referred to in paragraphs (6) to fi;) (inclusive-) of section ‘thirteen of this Act ;and the power to ‘do anything incidental to any of those powers.
That is a provision that has remained unaltered. Thepowers referred to in that sub-section were possessed by the General BankingDivision of the Commonwealth Bank. Proposed new section 18 (1.) reads -
It shall be the duty of the trading bank to develop and expand its business.
Sub-section (2.) reads -
The Trading Bank shallnot refuse to conduct bankingbusinessfora person by reasononly of thefact that to conduct that business would have the effect or taking awaybusiness from another bank.
Does any Opposition senator suggest that the newtrading bank will be embarrassed in using the powers with which it has been provided in these provisions? If the Government wanted to curtail the activities oftheCommonwealth Trading Bank it could have abolishedthe General Banking Division of the Commonwealth Bank in the same way as the Labour Government endeavoured toabolish the private trading banks in 1947, an action which would have been perfectly constitutional. Alternatively it could have adopted more subtle methods. For example it could have abused the powers of the central bank in relation to the Commonwealth Trading Bank, but if the Government wished to use such methods why would it insert in this bill a provision whereby the Commonwealth Trading Bank shall be placed oil the same basis as the private trading banks insofar as the implementation of central bank policy is concerned ? That shows conclusively that this Government is not endeavouring to embarrass the proposed Commonwealth Trading Bankor to curb its powers.I regard the contentions ofsome honor able senators opposite in this connexion as sheer poppycock. They are not sincere. Honorable senators opposite know perfectly well that the Government does not intend, by this measure, to curb the activities of the Commonwealth Trading Bank. They should apply a different method of opposition to this measure. If they sincerely wish to debate the real merits of the bill, they should argue the merits of nationalization of banking.
I shall give two good reasonswhy Labour has not debated the merits of the bill. The first is, that as an elec tion is very close at hand, they have not the courage to doso. Although I have listened attentively throughout the debate not one word has been spokenbyhonorable senators opposite during to-day’s sittingabout thereal issue-whether or not there should benationalization of banking in this country. The second very good reason why they have refrained from debating the real issue is contained in theCentral Reserve Bank Bill1930.Several clausesof that bill readas follows:-
The Reserve Bank shall, inaddition to any other powers conferred orlimitations imposedbythis Act, have power -
Those powers are almost identical with the powers of the present central bank. The full title of the bill was “ A Bill for an Act to provide for a CentralReserve
Bank of Australia and for other purposes and the preamble read -
Whereas it is desirable to maintain stability and security in the monetary and credit system of the Commonwealth of Australia.
The bill was received from the House of Representatives and read a first time in this chamber on the 18th June, 1930, during the regime of the Scullin Government. With another bill, which was distributed but not introduced, it made provisions similar to the provisions that are contained in the bill that is now before us. Briefly, the bill of 1930 provided for the establishment of a CentralReserve Bank of Australia, and for the severance of the trading section of the Commonwealth Bank from that organization, to be run by a separate board.
I have before me a book by Professor Giblin entitled The Growth of a Central Bank. Some members of the Senate will recollect that Professor Giblin was appointed adviser to a previous Labour government in connexion with matters relating to the economy of this country. During 1930, when the Scullin Government was in power-
– In office.
- Mr. Scullin was then Prime Minister of Australia. Surely Senator Critchley does not suggest that the right honorable gentleman was not in power. When commenting on the growth of central banking in Australia in the ‘thirties, Professor Giblin stated -
The ostensible objection to reserve banking was that the Commonwealth Bank was also a trading bank and might use the reserves of the trading banks to compete against them.
One could almost imagine that that observation was being made now. He continued -
Some of the banks were easy on this score but not all. As the Commonwealth Bank had command of the note issue and of gold reserves sufficient almost to double it, it is hard to believe that any bank could think that the Commonwealth Bank was restrained from aggressive competition by lack of resources. However, this fear of competition was formally advanced by some of the banks for refusing to join in reserve banking. The obvious remedy was to separate trading from central banking activities in the Commonwealth Bank. It was proposed, therefore, to split the institution into a Central Reserve Bank without trading functions and a Commonwealth Bank, which would be a purely trading bank, with the same powers and subject to the same control as other trading banks . . . The Central Reserve Bank Bill had its first reading in the Representatives on 2nd April 1930. A Bill to amend the Commonwealth Bank Act was circulated at the same time, ready to be formally introduced, when the other Bill had been dealt with. The Reserve Bank Bill separated out the central bank functions, of the Commonwealth Bank and supplemented them with certain provisions of orthodox central banking.
That was a very interesting observation. It is exactly what the legislation now before us seeks to do. Professor Giblin went on -
The Commonwealth Bank Act was then to be amended to adjust the Bank to its shorn powers and put it under the management of a single Governor. . . . The Bill had a very fair reception in the House . . . The Government’s chief difficulty was with the apostles of a rather crude credit expansion on its own side, but the Opposition, though it emphasized its uneasiness at some of the opinions expressed, refrained from making more than reasonable political capital out of the “ family quarrel “. The second reading was carried without dissent.
Apparently every member of the Australian Labour party in this chamber in 1930 supported the severance of the central bank from the trading bank. Professor Giblin continued -
The Board of the Reserve Bank was to consist of not more than nine persons.
During the last two years honorable senators opposite have used the most dreadful epithets to express their opinions of bank board practice. Yet, in 1930, the Scullin Labour Government endeavoured to establish that principle by legislation. This is a most amazing circumstance. Professor Giblin went on to state that the nine persons were to be - the Governor, not more than two Deputy Governors, the Secretary to the Treasury and five persons appointed by the Governor-General, who were or had been actively engaged in agriculture, commerce, finance, industry or labour.
One could almost be quoting from the banking legislation that was brought down by this Government two years ago. He went on -
These five would normally be appointed for five years and would retire in rotation. The Governor was to be Chairman of the Board, to avoid the embarrassing possibility of a separate” dominating personality “ as Governor and Chairman. The bill was put forward by the Government and accepted by the Opposition as a genuine attempt to strengthen central banking in Australia on moderate and even conservative lines.
The passage that I have read to the Senate from Professor Giblin’s book provides a very good reason why Labour has not come out into the open and stated the real reason for its antagonism to this measure. Labour introduced a similar bill on its merits in 1930. Yet, now, 23 years later, it is not prepared to accept the bill before us. The only possible explanation for that change of heart is that at some future date the Australian Labour party wants to socialize banking in this country.
The principles enunciated in the bill are in accordance with a promise that was made to the people about eight years ago. The present Prime Minister (Mr. Menzies), who was then Leader of the Opposition in the House of Representatives, when speaking during, the second-reading debate on the Commonwealth Bank Bill 1945, as reported in Hansard, volume 181, at page 759, stated-
A certain scepticism has arisen in Australia in the public mind - I do not wonder at it - about opposition to bills. Members of the public have seen bills opposed in Parliament in the past, and after general elections have taken place they have seen all too frequently these measures left on the statute-hook, unamended and untouched. Therefore, on behalf of my colleagues and myself, I desire to make quite clear to the House and to the people that when we, on this side of the chamber are returned to office, we shall take prompt steps to restore board control to the Commonwealth Bank, free from political interference, and to secure a complete restoration of parliamentary authority in this matter. In every other respect we shall hold ourselves obliged instantly to review the working of this legislation with the object of bringing it into line with what we believe to be the stable requirements of the people. I make that statement publicly, here and now, because it will be well that when the people of Australia come to pass judgment upon this matter, they should know exactly what is the issue, and where we all stand upon it.
That promise was incorporated in the right honorable gentleman’s policy speech in 1949, when he stated -
We will continue the trading bank activities of the Commonwealth Bank in fair competition with the other banks.
As is well known, the anti-Labour parties were successful at the 1949 general election. The same subject was the cause of the double dissolution of the Parliament in 1951, and this Government won the subsequent general election. No man can say that we have not a mandate for this measure, or that the bill before us is not in accordance with our election promise. I support the bill wholeheartedly, and I believe that while it remains on the statute-book democracy and free enterprise will not vanish in this country.
– -The Minister for National Development (Senator Spooner), in his second-reading speech, reviewed the banking position in this country since August of last year. He said that the underlying purpose of that review was to frame amendments of the present law in order to ensure the preservation of the Australian banking system on the basis of fair competition. The Minister throughout his secondreading speech used the words “ fair competition “ ad nauseam. Apparently, he thought that the more he repeated .them the greater would be the likelihood that his statements would be believed. The Prime Minister (Mr. Menzies) also said that the object of this measure was to ensure the preservation of the banking system on the basis of fair competition. In my judgment there is no such process as fair competition, and there never has been. On the contrary, an uncompromising conflict is going on all the time for economic, financial and political supremacy. Senator Sandford referred to the collapse of the banks in 1893. I remember the incidents of that period very well. Whereas at that time there were 23 banks operating in Australia, to-day there ‘ are only seven in this country apart from a few small banks in certain localities. Down through the years, the stronger banks have either displaced or absorbed the weaker banks. That process is going on all the time, and the real object of this bill is to place the private banks in a position in which they will be enabled to subordinate the Commonwealth Bank to their purposes. The words “ fair competition “ are merely a verbal soporific, and are used in order to mislead people who do not know better.
This is not the first attack that has been made upon the Commonwealth Bank. A very strong attack was made upon it in 1924, during the period of adjustment following World War I. At that time, small business people and the workers particularly paid a very heavy penalty. Following the death of Sir Denison Stiller who was the first Governor of the Commonwealth Bank, theBruce-Page Government decided to amend the banking legislation in order to place the private banks in amuch stronger position at the expense of the Commonwealth Bank. I recall the controversy that took place at that time. The issues were clearly and convincingly placed before the public by Mr. Stanley Allen, a chartered accountant of Sydney, and Mr. Frank Anstey, who was then the honorable member for Bourke. In parentheses, I remind honorable senators that the proposal to establish the Commonwealth Bank in 1911 was bitterly but unsuccessfully attacked by the private banks. During, World War I., the Commonwealth Bank proved its worth. It survived, and succeeded, whereas the private banks practically failed. Dealing with the Bruce-Page Government’s decision to amend the act in 1924. Mr. Stanley Allen had this to say. -
Soon after the war, a group of politicians and financial interests made plans in order that the then people’sbank might eventually be converted into a Banker’s Bank, and in 1920 steps were taken which prepared the way for the Commonwealth Bank to become that bank. It was then decidedto remove the note issue from the control of the Treasury to a) special department of the Common wealth Bank, under the direction of the Governor, of the Bank, an officer of the Treasury, and two Directors.
In 1923, Sir Denison Miller died, and from then on serious alterations were made in the management. The control was then vested in a Board of Directors and the Governor.
I ask honorable senators to note the following passage: -
The effect of this move was to place the Bank absolutely under the control of a body of men who mightbe opposed to the Bank’s original policy, which subsequently proved to be the case, and was an important link in the chain binding the Bank to private interests.
On October 10, 1924, the Commonwealth Bank Amendment Act was proclaimed, anda secret session was held between the BrucePage Government, the Associated Banks, and the Commonwealth Bank Board.
I heard recently that a secret conference took place between this Government and the banks in relation to the introduction of the measure now before the Senate. Mr.. Stanley Allen continued -
Followingthis secret session, the newspapers announced that the Associated Bankshad delivered their “ ultimatum “, and “ won on every point “.
The Associated Banks from then on obtained the right todraw Commonwealth notes without gold payment or deposited security.
That was the extent to which the Commonwealth Bank was capitalized by the Bruce-Page Government in the interests of the private banks. Mr. Anstey went into greater detail, and his remarks at the time are worth recalling in relation to this measure. He said: -
On June 23, 1923, these “Rights to Draw” totalled £8,000,000. The Board made a demand that the banks should exercise their “ Rights “ - draw the notes, and pay interest thereon - the banks refused.
Early in 1924, the banks made a demand that these “ Rights “ should be extended by another £3,000,000. The Chairman of the Board, Mr. John Garvan, stated that these “Rights “ were equivalent to an issue of notes to the banks without interest. He described the proposition as “ madness.” The Treasurer, Mr. Earle Page, upheld that view, but the bank demand was conceded.
Later in the year the banks made a demand for another £5,000,000. It was refused. Thereupon the banks pulled in overdrafts, restricted credi ts, imposed increased charges on export, placed a banking boycott on industrial and commercial expansion, and caused a general economic slow-down - unemployment doubled.
In August 1924, the Associated Banks notified the Wool Councils that sales would not be financed without additional notesor “ Rights” to same. They promised released credits and reduced rates. The Note Issue Board capitulated. In September, the “ Right to Draw” another £5,000,000 was conceded. Credits were not released - they were tightened. Rates were not lowered - they were raised.The newspapers announced that, at the Adelaide sales, “ the price of wool dropped, because buyers could not obtain bank credits, no matter on what security.” The Sydney Telegraph described the situation as - “ A Financial Hold Up.”
The banks responded to the outcries by a demand for an additional £10,000,000, promising abundant credits and lower rates if conceded.
On October 10, 1924, the Bruce-Page Government “ proclaimed “ the Commonwealth Bank Act. Under this, the Bank and the Note Issue were combined, under the chairmanship of John Garvan.
Next day, the Bank Board, the Bruce-Page Government, and the Associated Banks went into secret session.
On October14, the newspapers announced that the Associated Banks had delivered their “Ultimatum”, and “won onevery point.” They announced the terms imposed bythe banks: - 1st - Associated Banks to have the “ Right to Draw “ another £10,000,000. 2nd - No interest to be paid for the “Right to Draw”. Fourper cent. to be paid on notes actuallydrawn. On this date (October14,1924), the Melbourne Herald stated that traders and others were - “Unable to obtain credit, on the most adequate security, at any rate of interest.”
Theapologists for the Associated Banks announced that- “ The Associated Banks will now release credit to the public at reduced rates.”
The day after securing the £10,000,000 concession, the banks increased their rates by another 10s. per cent. This meant an additional levy upon Australian exports of £ 750,000 per year. The Melbourne Sun of October 17 said:- “ The demand rate on London is now 77/0 per £100. That is to say, a bank advances money here at that rate, and receives it in London in30 days’ time.The chargetherefore works out at 46½ per cent. per annum.”
The “ Industrial Australian”of November 20,1924, said the primaryproducers “for a long, time past have been, and still are being, mercilessly exploited . . . and victimized of millions sterling.”
In all, the private banks obtained the right to draw of £26,000,000 on the Commonwealth Bank. Without payment of that sum they lent out that money at interest to their customers. That was the first attempt that was made to subordinate the Commonwealth Bank to the interests of the private banking institutions. Let us see what happened in 1938. Dealing with the position that a rose a t that time, Mr. Stanley Allen had this to say -
In addition to the previous moves to checkmate the Commonwealth Bank’s effectiveness, we had another “ Commonwealth Bank Amendment Bill.”. This was quietly brought before the Federal Parliament by the Lyons Government (Mr. Casey being then Treasurer) in: the closing stages of the session in 1938.
At first sight this appeared an innocent looking measure, but it was found to contain provisions which, if carried, meant serious consequences for the people of Australia,
While the attempts were being made to force the measure through. Parliament, it was disclosed that the whole of the Commonwealth Bank’s assets (including all departments) exceeded its liabilitiesby over nineteen million pounds and its annual profits were over one and a half million.
Those seeking to protect the banks asked “ Would any business undertaking ever dream of suggesting the issue of Inscribed Stock or Debentures to outsiders in a concern that showed such a surplus of Assets overliabilities and such a profit?
The object was to make it possible for private banks to buy up the debentures and inscribed stock. Incidentally, it is notnecessary to make public who buys inscribed stock unless the purchaser agrees that his or her name should be stated.
First,therewasopposition to the Commonwealth Bank in 1911 ; then there was anattemptin1938 to make it possible, in effect, for the private banks to buy out the Commonwealth Bank. The struggle has been going on all the time. Now, the Governmentspeaks of faircompetition between the private banks and the Commonwealth Bank. The Minister statedduringhis second-reading speech that thebank is doing really good business. He used the following words : -
Between December, 1949, and December, 1952, there has been an increase of no less than 50 per. cent. of deposits with the General Banking Division of the Commonwealth Bank, while the number of the division’s customers has increased in very much the sameproportion.
If the business of the bank had been declining, I suggest that this bill would never have seen the light of day. We have this bill because the bank has prospered, despite all opposition and the fact that anti-Labour governments are determined to establish and maintain a private banking monopoly in order to control the whole of the credit resources of the country. The legislation appears to be quite innocuous. It is such a seemingly innocent proposition that the average man or woman may not suspect that there is any ulterior motive behind it and may not appreciate what is intended until after the damage is done. In my opinion the Opposition would be remiss if it did not oppose the legislation and expose the intention of the Government. It is all very well for honorable senators opposite to speak about fair competition. AsI have already pointed out, there is no competition in banking or in primary and secondary production. During the debate on the land tax abolition legislation I pointed out to the Senate that farms in Australia are becoming fewer in number and larger in area. It is becoming more and more impossible for people to commence farming operations ina small way. Insecondaryproduction, monopolies are also fewer in number. As honorable senators .are aware, it is not possible to open a baker’s shop, a hotel or a restaurant unless permission is first obtained from the monopoly interests. Where ia the fair competition in those instances? Fair competition disappears to the degree’ that private ownership, in collaboration with the private banks, continues to expand and strengthen at the expense of the weaker competitors. To a far greater degree than ever before, and contrary to the intention early in the nineteenth century, the banks are coming more and more into the field of primary and secondary production. Their objective, ultimately, is to establish a monopoly in those fields. That is the reason why this legislation is now before the Senate.
The sale of Commonwealth Oil Refineries Limited, and the government interest in Amalgamated Wireless (Australasia) Limited, the closing down of the Glen Davis shale oil project, and the proposed sale of the Commonwealth line of ships and the whaling fleet all indicate quite clearly that the intention of the Government 13 to do everything possible to establish and maintain a private banking monopoly, plus a monopoly of primary and secondary production. If honorable senators opposite are sufficiently optimistic to think that the Government will succeed in that objective, they are making a great mistake, because, as has already been stated in the Senate, public feeling is strengthening against it. That feeling is not engendered by the fact that a majority of the people understand the techniques peculiar to banking or commercial transactions but by the fact that they are noticing the effects of increasing prices, for example.
The Government says that it is opposed to prices control, although it knows that such control in fact operates in the community. It is not the Government but the monopolies which control prices. The choice which Australians have to make is whether they will have a government, directly responsible to the people, controlling prices, or whether they will allow the banks and the production monopolies to do so. Almost every day announcements appear in the newspapers that the prices of commodities, such as potatoes and eggs, are to be increased. The next thing will be that something drastic will have to be done, as in the 1930’s. We shall be told, as we have already been told by supposedly-expert but in fact very ignorant persons, that we are living beyond our means ana that the time has come when wages, salaries and pensions must be reduced in order that we may be able to balance the budget. On the 6th March, the London Economist, in a twelve-page supplement told the people of Australia that they must adjust or balance their economy. That is exactly what the private banking interests in England did in the 1930’s.
This bill represents just another expedient adopted by the Government to strengthen, as far as it can, the position of the private banks should another depression occur, in which event I suggest that there will be a repetition of what took place in the ‘thirties - the representatives of the associated banks will meet in secret session with the Commonwealth Bank Board and will issue an ultimatum to the effect that wages, salaries, pensions and so on must be reduced. The result will be that thousands of workers will be deprived of their means of livelihood, many will lose the equity in their homes, and many more will be reduced to living on the dole. The members of the Opposition would be recreant to their duty if they did not refer to these matters. Persons of my age will remember that in 1893 thousands lost their homes and their employment and were obliged to migrate from other States to Western Australia to look for gold. I was one of those migrants.
In the ‘twenties there was also a crisis caused by the private banks. After we went off the gold standard during the twenties a depression occurred that lasted from 1930 to 1939. Then war broke out and it was found that thousands of workers who were living on the dole suddenly became indispensable. Money was forthcoming to provide them with food, clothing and other essentials, although there was none for such things in time of peace. I do not wish to be associated with any action which may result in the people of Australia going through another depression.
We cannot escape the consequences of our acts, and if the Government forces the country into such a position, as I think it may, the Australian people generally will have to pay the penalty. One of the surest signs of approaching economic difficulties is the demand that has been made by British creditors that our economy should be balanced. In addition, American creditors have demanded that our costs of production should be reduced. That, in effect, would amount to a reduction of wages. The fact is that the real costs of production have never been lower than they are to-day, whereas the costs in terms of inflated currency have never been higher. The private banks, acting in conjunction with the Commonwealth Treasury, are responsible for the inflation. They are exchanging mere scraps of paper for countless goods and services. They are in the same category as a forger or counterfeiter who, as the circulation of his notes increases, buys in everything he needs. He ultimately unloads at a profit, provided that he is not detected. If he is detected he goes to gaol, but if the banks are found out, they make terms with anti-Labour Governments and are permitted to do the same thing again. The difference between the two is that one acts inside the law and the other acts outside it. Both use the same fraudulent and corrupt methods.
Inflation has the effect of reducing even savings. It has been said that the deposits with the Commonwealth Savings Bank amount to approximately £920,000,000 at the present moment. To the extent that the purchasing power of the pound is reduced by inflation, the value of savings is also reduced. Superannuation pensions and the surrender value of insurance policies, for example, are also reduced. All savings are reduced in value as part and parcel of a fraudulent and technical process of robbing the workers from the cradle to the grave. This Government is actually assisting in that process. “When the history of Australia is written, posterity will no doubt say that most of the members of this Government and their predecessors should have been gaoled for the action which they took in connexion with the
Commonwealth Bank from the time of its establishment in 1911 until the present. It is of no use for the Government to say to persons like myself that it wants fair competition between the banks, although it says it so smoothly and suavely that a number of people appear to believe it. The same old story is repeated by the press and in the reports of the banks. It is a sort of bed-time story. The Government trusts the banks to do the right thing. They promised that they would do so and the Government and the people then pay the penalty for trusting them.
Ever since the private banking system came into existence in England in the sixteenth century, it has been a fraudulent process. The kings of those days debased the gold with copper. Subsequently, paper currency was introduced. Before the 1914-18 war, a £1 note could be converted into a sovereign, but to-day it is difficult to determine to what extent the currency has been inflated. A calculation based on the price of gold, before and after World W’ar II., however, indicates that four £1 notes are needed now to buy goods that could be bought for £1 in 1939. That is an indication of the extent to which the currency has been inflated by the bankers. Since 1924, the Commonwealth Bank has been no better than the others. The Commonwealth Bank actually gave the other banks three £1 notes for each sovereign during the 1914-18 war so that they were able to lend out £3 at 6 per cent, instead of £1 at 6 per cent. Since the process of banking began, it has been used by anti-Labour forces to facilitate the exploitation and impoverishment of the working classes. I feel bound, as one who has devoted considerable time to reading the records of this ingenious and profitable system to say, in justice to those I represent, that I regard this bill and the other bill dealing with banking, as fraudulent bills designed to accomplish exactly what the banks did in the ‘thirties.
– It is my intention to return to a consideration of the bill that is before the Senate. The purpose of the bill is to separate the trading bank ‘business of the ‘Commonwealth Bank from the central hank functions of the organization, .and to set it up as the medium by which the Commonwealth Bank’s trading bank business shall be carried on in future. It will be a new organization with an individual corporate existence to be called the Commonwealth Trading Bank of Australia. A second and not less important purpose is to place the new organization in a position which is, as far .as possible, analogous to that of the other trading banks in Australia. In its new position, it will be encouraged to compete with the other trading banks.. Indeed, by this bill it will be instructed to do so. But it will compete on terms of equality and in its new position there will be no possibility of it receiving any competitive advantage by virtue of its association with the central “bank.
– Will there be any competitive disadvantage ?
– None at all. In the terms of an associated measure which will be discussed by the Senate shortly, the new Commonwealth Trading Bank will be required to lodge in special deposit an amount comparable with the amounts that are required to be lodged by every other trading bank that is now operating. Consequently, the new Commonwealth Trading Bank, in respect of special deposit procedure, will be on the same basis as other banks for the purposes of central bank control. The reason for these alterations in banking legislation springs from a very real fear that under the existing law, some socialist government of the future may use the Banking Act as it now stands to employ central banking powers and credit for the elimination of private hanking. Those fears are well founded. It can be fairly said that the Labour party stands now, and has always stood, for the eradication of the private banks and the establishment of a government banking monopoly. The fact that the bank nationalization act of 1947 was declared invalid does not mean that the Labour party has abandoned its nationalization plank or modified it in any way. It simply means that the particular method that was envisaged in that legislation has been found to be unconstitutional and .other methods of nationalization will have to he sought. The Labour party will now cast around for other methods of nationalization. I suggest that an obvious course for it to follow is the use of the central bank powers which could be used and directed to the destruction of the private banks. By employing through the trading hanks the vast resources of the central ‘bank, a government could indulge in cripping competition with the private trading banks. Thus by a slower but equally effective process it could achieve the nationalization of banking without compensation. That would be nationalization on the cheap. it is interesting to recall that there has always existed within the Labour party a substantial school of thought which believes that that is the best method of gaining control of banking in Australia. As recently as 1947, when the subsequently invalidated banking legislation of that year was in preparation, a large body of Labour members of the Parliament said, in .some cases publicly, that they considered that their leader, the late Mr. Chifley, was adopting the wrong approach to bank nationalization. They argued that active competition by the use of central bank credit, extended through the trading arm of the Commonwealth Bank at. uncompetitive rates would ultimately, though more slowly, bring about the capitulation of the private trading banks. The bank grab of 194*7 having failed, it is only natural that there should now be a reversion to, and a more ready acceptance of that point of view, which, as I have said, is not new in the Labour party.
Honorable senators on this side of the chamber believe that our best national interests can be served by a banking system which includes private banks and a government trading bank. While there is ample room within the system for a government bank operating on fair and equal terms, the first and most important function of the Commonwealth Bank lies in its central bank activities. Those activities should he so employed as to implement the policy of the government of the day, with the important qualification that where differences of opinion exist .between the bank and the government, the policy to be followed must be approved or rejected by the Parliament. It should not be decided by the government or by the Treasurer, as is the Labour party’s policy, but in the sweat fresh air of this ‘Senate and in the not so sweet fresh air of another .chamber. To be seen in their correct perspective, the amendments that axe now being discussed should be considered against the history of the development of banking in Australia, and more particularly against .the history of the development of the Commonwealth Bank as a central bank. Honorable senators will .recall that in the early days of banking, the private banks went about their business completely uncontrolled .and unhindered; there was no central bank. In 1911 the Commonwealth Bank was established. It operated almost exclusively .as a trading bank. Although much had been .said when the bill was before the Parliament about the desirability of establishing a central bank, and although the long-range view of its original Governor, Sir Denison Miller., was directed towards its development as a central bank, the fact is that at that time there were very few fixed ideas about the functions or purposes of a central bank.
– They are not altogether fixed yet.
– Admittedly so, but at least at .this stage the development of two groups -of th ought .can be seen. Possibly there is a third group with a rather nebulous idea. The Senate will agree that .the position to-day is not comparable with feat which existed when the Commonwealth Bank was in its infancy. In its early .years, the few central bank functions that were undertaken by the Commonwealth Bank seemed to have been attached to it more as a matter of convenience than for any other reason. This .central bank, .as it was so called in its early years, -did not even settle its own daily .exchanges with other banks. That business was conducted through the medium of the Bank of .Hew South “Wales. During World War I. the Commonweal th Bank undertook suc cessfully the flotation of Australia’s war loans, but at that time and immediately thereafter, its central bank functions seemed to have been virtually non-existent. It was not until 1924 that, as a central bank, it assumed control of the note issue by virtue of legislation that was passed in that year. Tie interesting .stage in central bank development came, I believe, with the depression. I .refer particularly to the year 1931. This exciting stage of our history - if one can ever apply the adjective “ exciting “ to banking - brought new ;and pressing problems to the world of banking. These were highlighted in 1931 by the crisis caused by the exhaustion of London funds. During the previous year, the Bank of New South Wales, particularly, in an endeavour to meet .the outside market which had developed and was growing for sterling exchange, had progressively lifted its .exchange rate. Although the Commonwealth Bank in that year had accepted the principle of exchange manipulation as a necessary though temporary corrective of our local economic ills, U was peculiarly reluctant to do anything. In January, 1931, a private bank, the Bank of New South Wales, fixed the exchange rate of £130 Australian to £100 sterling. On the following day, the nominal central bank, the Commonwealth Bank, followed suit. It might also be said as a matter of interest and in complete fairness that the Melbourne banks followed the lead of the Bank of New South Wales, but with some reluctance. In March, 1931, the mobilization agreement on London funds became effective and that, I believe, when history is written, will possibly be seen as the most important point up to that time in the development <of the central bank.
– The private banks at all times refused to disclose their London holdings.
– Not at .all times. ‘Those holdings have been disclosed .since 1931. The mobilization agreement, which was voluntary, was completely honored by the banks, although there was, I admit, & varying -degree of enthusiasm about it. Late in 19’31, the Commonwealth Bank, now (apparently accepting its new responsibility ;as a central bank, and no doubt taking encouragement from the mobilization agreement, took its first positive step in connexion with the exchange rate. Without prior agreement with the trading banks, it fixed the exchange rate at -£125 Australian to £100 sterling. That, I suggest was a momentous step in the development of banking in Australia. By that time, largely as the result of the abandonment of the gold standard a few years earlier, the trading banks were voluntarily keeping more and more of their funds with the Commonwealth Bank. The Royal Commission on Monetary and Banking Systems of 1936 added further interest to banking generally although, very strangely, it does not appear that the desirability of setting up a central bank was urged by any one - including even the Commonwealth Bank - with any degree of real vigor.
During World War II. central banking in Australia received its greatest spurt forward. In 1941, the special accounts procedure of which we now hear so much was voluntarily introduced by arrangement between the then Treasurer, now Sir Arthur Fadden, and the trading banks. Some months later this arrangement, which had been established on a voluntary basis, was incorporated in National Security Regulations. That was done when Labour came to office. The end of the war found the Commonwealth Bank in a position of great responsibility and great power. Not only was it fulfilling the machinery functions of a central bank, but also by virtue of its control over gold, its control of London funds which also had been embodied in National Security Regulations, and its control of the surplus investable funds of the private banks, it was virtually exercising complete suzerainty over the whole credit base of the nation. The Commonwealth Bank emerged from the war as a fully fledged central bank. Its trading activities had also expanded. Its Rural Credits Department, which had been established in 1925, was year by year, assuming greater importance to the economy. The Labour party in 1945 sought to exploit by legislation the legitimately acquired strength of the Commonwealth Bank and to direct that strength toward the destruction of the private banks. In other words, the legitimate strength of the central bank was to he used not as a buttress for the banking system, but as a weapon with which to destroy that system. Some of the provisions of the legislation that the Labour Government caused to be passed in that year are fresh in the minds of many honorable senators to-night. It was provided, for instance, that 100 per cent, of the asset increases of the trading banks should be lodged with the Commonwealth Bank. Labour senators will remember with some nostalgia the provision under which all municipalities, road boards, shire councils and other semi-governmental bodies could be compelled to bank exclusively with the Commonwealth Bank. The Commonwealth Bank Board was abolished and control of the bank was vested in a single Governor. The policy of the bank was virtually to be at the dictation of the Treasurer without reference to the Parliament. All the circumstances that surrounded that legislation indicated that at any time a squeeze might be exerted to divert business from the trading banks to the Commonwealth Bank.
– Now the Government wants to apply compulsion in the opposite direction.
– No. If the honorable senator believes that to be so he is obviously not conversant with the subject. The London funds of the banks were under control. The Commonwealth Bank was in a position to call up the investable funds of the trading banks so that it would be impossible for them to increase or even to maintain for any period of time the levels of advances then existing.
– Does the honorable senator consider that we should return to the 1930 position in connexion with London funds?
– No. I have no quarrel with the legitimate exercise of central bank functions ; but the Labour party deliberately tried to put those legitimate powers to a completely illegitimate use. The legal challenge issued by the Melbourne City Council as the result of the direction of the then Commonwealth Labour Treasurer to transfer its account to the Commonweatlh Bank was upheld, and, as a result, the Labour -Government took its now historic decision to nationalize the banks. All the world knows the result of that decision. The measure was declared invalid and at two successive elections the Labour party was despatched to the wilderness where it will remain for many years to come.
On its election to office, the present Government set about introducing banking reforms and, so far as possible ensuring that the existence of the private banks would not again be placed in jeopardy. An earlier amendment of our banking legislation reestablished the Commonwealth Bank Board in the face of bitter opposition from the Labour party. The achievements of the bank since that board was re-established spell their own record of success. The Minister has referred to the vast increase of banking business that has occurred since the board was re-established. I suggest to those honorable senators who are really interested in banking that they should compare the growth of the Commonwealth Bank with that of other banks, and then form a new opinion about the efficacy of board control. By administrative action, the General Division of the Commonwealth Bank has been compelled to lodge amounts with the central bank. The provisions of the bill now before the Senate will not in any way detrimentally affect the progress of the bank. It will only ensure that progress will be made while competing on equal terms with the other banks.
I wish to say something now about some criticism that has been made of the fact that the Commonwealth Trading Bank will be, for the purposes of policy, under the control of the Commonwealth Bank Board. It is contended by some people that the Commonwealth Trading Bank should have its own board, and, presumably to design its own policy. It would appear to me to be a first necessity that if the central bank is to conduct a trading bank as an appendage, the trading bank should be conducted in complete harmony with central banking policy, and that in the general banking sphere, it should give continuing leadership and guidance as well as a practical expression of central bank policy. It is very necessary, too, that this relationship should. exist so that the central bank may be constantly and immediately advised of any trends or changes in trends within the general banking sphere. I believe it is also of first importance that we should have this relationship so that the available resources of the bank may be- directed as required into projects of national importance.
– Even although they may be uneconomic.
– I do not say that. If the honorable senator will refrain from anticipating my remarks he will hear all the answers. Unlike the Labour party, we conceal nothing. The Minister has mentioned housing as one project. There are many others that will suggest themselves to the honorable senator. It surely must be regarded as a function of the Commonwealth Bank to undertake that particular kind of business which is not regarded as ordinary banking business. I do not mean that it should be unprofitable business. I refer particularly to that type of business which because of the inability of a borrower to tender suitable security or which arises from his inability to enter into an undertaking to make certain repayments within a stipulated time although in every other respect he may have a profitable and sound business which will fulfil a national need. It is the function of a government bank to provide for that type of business.
Although I welcome the amendments that have been incorporated in this bill I do not regard them as final. Changing circumstances such as increasing development are likely to alter the banking requirements of Australia rapidly. I believe that these amendments .will be adequate to meet the demands of the immediate future but I believe that it will be necessary to examine this legislation from time to time and make whatever changes may be necessary. I have in mind particularly the position of the Industrial Finance Department of the Commonwealth Bank which has comparatively limited capital and rather vaguely described functions which appear to limit it to the financing of smaller enterprises. In the United Kingdom, the Bank of England has established two large finance corporations in order to meet the needs of industry for additional resources In the United States of America theReconstruction Finance Corporation and the Federal Deposit Insurance Corporation, both of which are financed largely by government funds, fulfil this purpose. I suggest that in the course of time the Industrial Finance Department of the Commonwealth Bank might be enabled to provide the same service as the corporations to which I have referred which render invaluable assistance to primary and secondary industries in the United Kingdom and the United States of America.
It lies within the competence of any future government to introduce a bill to repeal or amend this legislation. Admittedly, in attempting to repeal it, a government would have to reveal its intentions to the public and take its chance on how the people would react to any proposed change. But without a doubt it would be possible for any future government to introduce repealing legislation. This bill will provide no irrevocable protection for private banks. The people of Australia must realize that eternalvigilance is the price of freedom. They could lose their freedom overnight if the private banks were nationalized and their protection lies, not in the legislation before the Senate, but in their own action in keeping from the treasury bench those socialists who are bent upon nationalizing the banks.
– Honorable senators have been fortunate in hearing a very in teresting survey of the banking system. However, I cannot agree with all that has been said andI should like to examine some aspects of the matter. The Senate is under an obligation to Senator Paltridge who has gone to some trouble in dealing with this bill. His speech was very interesting. The Senate is considering a bill for an act relating to the Commonwealth Bank of Australia, the Commonwealth Trading Bank of Australia, theCommonwealthSavings Bank of Australia and for other purposes. The bill has; Been printed on 47 pages. But after having heard the speech of the Minister for National Development (Senator Spooner) it seems to me that the whole purpose of the bill is to change the name of the Commonwealth Bank to the Commonwealth Trading Bank and to separate its trading activities from its central banking activities. My first objection to the bill is the enomous expense that will be thrust on the Commonwealth Bank in order to make this change which, as Senator Paltridge has said, will provide no safeguard for the private banks. Because this bill may be repealed by subsequent legislation it will give the private banks no security for the future and it will impose commitments on the Commonwealth Bank amounting to between £500,000 and £1,000,000 for the purpose of changing its name. I have been informed that at least 27 senior officers of the Commonwealth Bank have been wholly engaged for some weeks in making the preparations necessary to give effect to the provisions of the bill. I suggest that that heavy commitment should not be placed on the shoulders of the Commonwealth Bank. If this legislation costs the Commonwealth Bank a £1,000,000 it will result in the Commonwealth Treasury losing £1,000,000.
I suggest that the Government should adopt a proposal which was published in the press a few days ago to the effect that it should not change the name of the General Banking Division of the Commonwealth Bank to the Commonwealth Trading Bank but that, if necessary, it should change the name of the central bank so that extensive internal reorganization would not be necessary. The trading bankcould then be known as the Comm on wealth Bank and a Commonwealth central bank could perform the functions to which Senator Paltridge has referred. It is interesting to notice the national names that have been taken by the banking institutions of the world. I suppose there is no law against the banks taking these names. But, as honorable senators know, the governments of Australia and New Zealand have not the minutest interestin the Australia and Now Zealand BankLimited. We know also that the Government of New South
Wales plays no part in the management of the Bank of New South Wales which is an ordinary trading company engaged in banking. When a bank takes the name of a State as the Bank of New South Wales has done it gives the institution a standing which cannot be justified. In my opinion the change of name proposed in this bill will involve a scandalous waste of public money which might well be avoided.
Senator Partridge’s survey of the history of the banking system was interesting. But he must forgive Opposition members if they closely scrutinize any proposition that comes before the Senate in relation to the Commonwealth Bank. The history of anti-Labour governments concerning the Commonwealth Bank is a sad one. For instance, when the Commonwealth Bank was founded its establishment was not assisted by the anti-Labour parties. On the contrary, the Commonwealth Bank was founded amid turmoil which was caused by the opposition of political parties which did not agree with Labour policy. Since 1911 the Commonwealth Bank has met with consistent opposition. Senator Paltridge said that the Commonwealth Bank had grown considerably since ‘the establishment of the bank board. He said that the bank had continued to go forward. I ask the honorable senator whether he knows how many branches of the Commonwealth Bank were opened in 1951. Three branches were opened in that year. ‘That was not very great expansion. In 1952, nine branches were opened and one was closed. It is interesting to compare the position of the Commonwealth Bank with that of the trading banks- From July, 1952, to January, .1953, the liabilities of the General Banking Division of the Commonwealth Bank were reduced by £27,000,000 and its assets declined by £38,000,000, according to the Commonwealth Statistician. During the same period the liabilities of the trading banks increased by £71,000,000 and their assets increased by £30,000,000.
After comparing the activities of the Commonwealth Bank with the activities of the trading banks during the last three years l am not very certain that -the Com.monwealth Bank has been progressing. An anti-Labour government has never yet introduced banking ‘legislation which did not eventually injure the Commonwealth Bank. In 1920 the Commonwealth Bank had 32 branches. In 1925 it had 70 branches. During the next five years, when the Bruce-Page Government was in office, another eight branches were added, bringing the total to 78. The Scullin Government added 183 branches. The Commonwealth Bank has always been impeded by anti-Labour governments and encouraged by Labour governments. From 1932 to 1939., fourteen branches were opened. But from that time up to 1949 another 140 branches were opened. It is interesting to consider where those branches are established. For instance, is not Canberra entitled to more than ona branch and one agency? Is not Tasmania entitled to more than seven branches of the Commonwealth Bank? Queensland has a relatively good record. In that State there are fourteen more branches of the Commonwealth Bank than in Victoria, which is more prosperous. It is facts such as these which make one wonder whether the legislation before us is genuine. If, during the last three years, there had been an expansion of the Commonwealth Bank comparable with its expansion during the regime of the former Labour Government-
– It has been doubled !
– Yes, but with inflationary money. I remind the Minister for National Development (Senator Spooner) that the basic wage in New South Wales has risen from £6 9s. a week in 1949, when the present Government came into office, to £11 18s a week to-day. The Minister takes refuge, in the fact that the deposits of the bank have doubled. If the Government had arranged for deposits of German marks, as we knew them in the ‘twenties, or Chinese yen, it could have multiplied the deposits in the bank a hundredfold, but the increased deposits would not indicate increased prosperity. It is hard to paint the picture, in view of our increased population and inflation of the currency. The
Commonwealth Bank has always expanded during periods of Labour administration, and it is now a very important institution in this country. Even supporters of the Government who have strongly opposed the Commonwealth Bank in years gone by now realize that it has become an integral part of our economic life. The Government has not given one sound reason for introducing this bill. Some honorable senators opposite have stated that its intention is to make harder the nationalization of banking by a Labour government of the future, but Senator Paltridge has admitted that the measure will not be a. safeguard in that connexion, because any future government could repeal the legislation. I have before me the report of the Commonwealth Bank of Australia and the Commonwealth Savings Bank of Australia for the year ended the 30th June last, which is signed by Dr. H. C. Coombs. Under the heading “ Trading Activities “ the report states -
There are four trading departments of the Bank, the General Banking Division, the Mortgage Bank Department, the Industrial Finance Department and the Rural Credits Department.
F-ach of these trading departments has its own capital, reserves and borrowing powers, and each keeps its accounts and transactions separate and distinct from those of the other departments. Between them, they offer a wide range of banking services to the public - the General Banking Division acts primarily as a trading bank and, as such, competes with the private banks, but the other departments arc essentially of a specialized nature offering some facilities not adequately provided by other institutions.
I am reading to the Senate the Commonwealth Bank Board’s official survey of that institution. The statement goes on -
This concentration of activities under the control of the Central Bank is unique in central banking but affords strength to the Central Bank. Through the trading departments the Central Bank has been able to maintain contact with business and- the market and to give its staff a wide and diversified banking training. Further, through the direct lending operations of these departments, and through the Commonwealth Savings Bank, the Central Bank is able to exercise a positive influence on the economic situation.
I remind honorable senators that this report became available only during the last few months. It is therefore up to date.
The Royal Commission on Monetary and Banking Systems in 1936 reported that -
The present structure of the Commonwealth Bank, consisting as it does of a Central Bank with trading bank powers and a Savings Bank, is, in our opinion, essential to the official exercise of its functions as a Central Bank.
I remind honorable senators that the members of the royal commission were selected from a widely separated set of interests. What is the necessity now to effect the proposed change? Nobody in the Commonwealth Bank has advocated a change, and no member of the royal commission that I have mentioned suggested any such change. I am convinced that the only reason for it is the tremendous pressure that has been brought to bear on the Government by the private trading banks. Some supporters of the Government have claimed that the trading banks have been at a disadvantage compared with the Commonwealth Bank, because of unfair trading practices, but no evidence to support that contention has been forthcoming. On the other hand, we can produce evidence of the Commonwealth Bank having been completely handcuffed in the past.
Honorable senators opposite are the champions of free enterprise. Should not the customer of a private trading bank have the free enterprise right to transfer his account at any time to the Commonwealth Bank? I recall a period during which even members of the Parliament, who could ventilate the matter, were prevented from transferring their banking accounts from the private trading banks to the Commonwealth Bank. Why should a member of the public, who was not receiving a fair deal from a private trading bank, be prevented from transferring his banking business to the Commonwealth Bank? I remember a definite direction being issued to branch managers of the Commonwealth Bank that they must not accept new business at the expense of the private trading banks. In view of the history of nonLabour governments in this Parliament, there are grave doubts on what may be done once the present structure of the Commonwealth Bank is altered. I for one view with the utmost suspicion any step towards changing or altering the present structure of the Commonwealth Bank. Even during the last twelve months it has acted as a strong bulwark against the economic collapse of this country. Over the years the frozen deposits in the Commonwealth Bank rose to about £550,000,000. Then an amount of about £365,000,000 was returned to the private trading banks, about £200,000,000 of which was needed to finance the rush of imports that was stopped only in March of last year. All of the goods that the people of this country suddenly came to regard as essential, and which came flooding in, were subjected to a 25 per cent, shipping surcharge. Possibly, also, insurance premiums were increased. In the absence of those reserves the banking system of this country could not have withstood the impact of that flood of imports. Had not an amount of £200,000,000 of the frozen deposits been released, Australia would have been faced with a tremendously serious situation. However, we were able to “ coast “ through that difficult period, and it seems that the worst is now over. That is evidence of the value of the Commonwealth Bank.
The development of the Commonwealth Bank has been encouraged by Labour Governments of the past, which realized, in simple terms, that the strength of Australia is directly proportionate to the strength of the Commonwealth Bank. Labour will fight all along the road any interference with the Commonwealth Bank because, “after all, the strength of our country is the influence that animates all that is good in us. If our country is strong, we, too, are strong. Despite the assurances of the Minister in his secondreading speech, the Opposition is supremely doubtful of this measure. It suspects that once it becomes law shackles will be placed on the Commonwealth Bank. We believe that the further development of Australia is dependent, in a large measure, on the strengthening of the Commonwealth Bank.
– It is a melancholy fact that if members of the Opposition have an opportunity to say a true thing or a damaging thing, most of them choose to say the damaging thing, whether or not it has any relevance to the bill before the chamber. Several members of the Opposition, including Senator Armstrong, have touched on the provisions of this bill, but most of the speeches from the other side have merely been a dreary reiteration of established Labour propaganda.
– Why does not the honorable senator set the standard ?
– There was a time when, if criticism such as has been uttered from the other side to-night, had been voiced against previous governments, it would have been true, but honorable senators opposite, including Senator Critchley who has just interjected, have merely stated what would have been true in those days, but is completely untrue to-day.
– I have not yet spoken on this bill.
– This bill is a statesmanlike attempt to legislate for the good of the people of Australia, not merely for the good of the private trading banks or the Commonwealth Bank as an institution. Many of its clauses follow in close detail the recommendations of the Royal Commission on Monetary and Banking Systems of the ‘thirties. Some’ of the provisions depart from those recommendations only because circumstances have changed. It is- not true that this bill will in any way weaken the Commonwealth Bank. Opposition to the measure comes from various quarters. We are surrounded by critics, many behind us, and others in front of us. The criticism of those behind us, who are more penetrating students of this bill than honorable senators opposite, has been to the effect that the bill does virtually nothing, and that it will be ineffectual. How can a measure that is relatively ineffective do serious damage to anything? Honorable senators opposite may have it one way or the other, but two directly contradictory statements cannot both be true, although both may be false. That is an axiom of logic. In spite of the enlightenment provided by Senator Critchley, I should’ like to say, very humbly, that the criticism of this measure is false, that those who are attacking the Government from behind are just as wrong as are those who are attacking it from the front. It is simply not true to say that the Government has framed this bill to suit the private banks. It is not true to say that the private banks, or their leaders are very satisfied with it. Do not members of the Opposition read the newspapers? Have they not read the criticism of this bill that has been voiced by the general manager of the Bank of New South Wales and the general manager of the Commercial Banking Company of Sydney? This bill is an honest and, I repeat, a statesmanlike, attempt to bury the hatchet between the private banking system and the Commonwealth Bank. I reiterate that statement. I can quite understand the cry of horror with which it has been received by honorable senators opposite, because if this attempt succeeds nobody will be less happy than members of the Opposition, who willthereby have lost one of their unfailing rallying cries that something terrible is being done to the people’s bank, that the people’s bank stands in deadly opposition to the private banks, that in relation to the private banks, as an old Labour leader once- said, it stands with a dagger ever ready to be plunged into its breast. The truth about the banking system in Australia, as it affects the ordinary citizen, is that we have a public as well as a private banking system. We have a mixture of public and. private banks, and it is in the interests of the ordinary citizen that that system shall be maintained and that there should not be this conflict, which has brought in the past, and which members of the Opposition hope will bring in the future, so much political kudos to their party. Senator Paltridge, in, the best speech that I have heard in this chamber on the subject of banking, retailed some facts that he obtained from Professor Giblin’s The Growth of a Central Bank. If honorable senators opposite had read that, book we should not have heard the utter rubbish that we heard from Senator Sandford, not one syllable of whose remarks had. anything to do with the bill. Senator Critchley might derive some benefit from reading that book, which, if it leans to either side, leans towards the side of the Commonwealth Bank. Professor Giblin was not an enemy of the Commonwealth Bank. But he was sincere, and looked at the problem of banking, not as something which should provide an eternal battle ground for politicians, but as something which should serve the interests of the people. I approach this bill in exactly the same spirit. This is an attempt to bury the hatchet, to compose differences and to establish a banking system that will no longer be a battleground for politicians. If this measure errs in any direction, it does so, not in the way in which it treats the Commonwealth Bank, but, perhaps, in failing to give to the private banks the complete security to which they are entitled. I do not say that that is so because I do not think that one can take a text-book, ora set of abstract principles, and construct a measure upon them.
The Commonwealth Bank, as we know it to-day, is not the creation of the Australian Labour party. It is quite true that the measure under which the first government bank was set up was introduced by the Government of which Mr. Andrew Fisher was the head. That wasthe germ from which the whole thing has sprung. But when one peruses the first Commonwealth Bank Act and reads the speeches that were made on that measure, one finds that many of the ideas which have led to the growth of the Commonwealth Bank simply were not evolved at that time. I doubt whether they were present in the minds of any of the legislators of that day. Certainly, they were not in the mind’s of Mr. Andrew Fisher, or of Mr. King O’Malley, who, by the way, was not a socialist. I do not know whether Senator Paltridge thought that he was. He was the most completely individualistic person who ever lived. When one reads about his private activities - he is still alive and can contradict me if I am wrong - one finds that he was a shrewd businessman. His intention was that there should be a government bank. His idea was based partly upon the experience of Australia in the nineties but largely upon the experience of the United States of America before the American banking system was reformed. American banking was not, until recently, on anything like the same footing as was Australian or British banking. We should give credit both to those who wanted to set up a government bank as a counterbalance to the private banks and those who wanted to retain the best featuresof the private banking system. It is true that during the last century many honest people were ruined because of the failure of the private banks; but it is not true to say the bank crash was a part of a plot. Imagine the banks being prepared to ruin themselves as a part of a plot against the public! I cannot understand anyone entertaining such an idea for one moment. The financial failure in this country in the ‘nineties was due to failure of Australia generally and specifically to the failure, not of banks, but of business organizations. It would be invidious for me to mention in this connexion the private banks by name, but those who wish to study the history of the banks in. this country will find that it is not true that every private bank in New South Wales closed its doors at that time.
– All of the banks in Victoria did.
-That is so, because the difficulty started in that State and the position was worse there than elsewhere. That was due not to any fault on the part of the banks but to the collapse of mushroom organizations that had started, in that State and had borrowed, heavily from the banks. The whole system was wrong, but that fact cannot be cited as an argument against the private banks in a comparison with the public banking system. That is a wrong, moral to draw from that disaster. The proper moral, which has been drawn by those who would put this legislation on the statute-book, is that the private banking system is legitimate and we need it.
To-day, we need public banking also to do certain specific tasks; and the whole system shouldbe controlled by a public bank.
SenatorTangney. - The people’s bank. SenatorMcCALLUM. - I realize that the term “people’s bank “ has an enor mous emotional attraction. I advise Senator Tangney to indulge in those terms on the hustings. All banks that serve the people are public banks. I have no prejudice in this matter. I bank with the Commonwealth Bank, and I have in my hand my cheque book from that bank. There is no reason whatever why I should not bank with the Bank of New South Wales, or the Commercial Banking Company of Sydney Limited, or any other private bank, and receive from it a service just as good as that which I receive from the Commonwealth Bank. It is just a matter of officials with whom one deals and the way in which they carry on their business. The reason why I bank with the Commonwealth Bank is that I know the officers. They are always attentive to my. wants, and I have no intention to take my business away from that bank simply because of some punctilio or a feeling that I might be charged with political bias if I did not do so. It is not true to say that in their work, those people give better service than do the private banks. So far as staffs are concerned, the banks are on the same level.
Senator Armstrong tried to prove that the Commonwealth Bank was not expanding. He cited, with some degree of derision, the comparatively small number of new branches that have been opened in recent years. He destroyed his own argument because Labour governments were in office during a part of the period to which his figures related. At the same time, he admitted that the number of branches was increasing, I think two new branches have been opened since the figures from which he quoted were compiled. But why should the Commonwealth Bank grow except in fair competition with the private banks? That is the point. As Senator Vincent pointed out, we have laid down in proposed new section 18 that it “ shall be the duty of the Commonwealth Trading Bank to develop and expand its business “. That gives the complete lie to the claim that the Government, under this measure, is attempting to destroy the Commonwealth Bank. It may be true that some administrations with which I and other honorable senators on this side had no connexion, instructed the Commonwealth Bank that it was not to seek to expand its business. But Senator Armstrong’s statement that the Government is continuing that policy is completely destroyed when we read the provisions of the bill itself. Subsection (2.) of proposed new section 18 reads -
The Trading Bank shall not refuse to conduct banking business for a person by reason only of the fact that to conduct that business would have the effect of taking away business from another bank.
I remind honorable senators that every officer of the proposed Commonwealth Trading Bank will be bound by the law. There has been a lot of loose talk on the part of members of the Opposition to the effect that this bill is futile because, ultimately, the Governor of the Commonwealth Bank and the Commonwealth Bank Board will retain an overriding authority over the Commonwealth Trading Bank. The point I make is that the Governor or the Commonwealth Bank Board cannot override the law. The bill provides that the general manager of the proposed Commonwealth Trading Bank shall do certain things. He shall be obliged to do them, and he will find that the law will support him. Some honorable members opposite may remember that when a gentleman in New South Wales named Lang, whom some of them slavishly followed at one time but have now deserted, tried to override the law, another gentleman in that State said, “ No sir, my duty is laid down by Statute and I must follow it “. He refused to override the law, and the courts upheld him. If we lay down in this measure that there shall be a Commonwealth Trading Bank and appoint a general manager to control it, he will be obliged to obey the law. Therefore, it is idle for honorable senators opposite to say that his position will be that of a mere underling. The Commonwealth Bank Board will not have the power to order him to disobey the law. Within the ambit of this legislation, the board will lay down the policy that the proposed trading bank must follow. That is all that the board can do. The proposed trading bank will be distinct from the other sections of the Commonwealth Bank.
The DEPUTY PRESIDENT (Senator George Rankin). - Order! In conformity with the sessional order relating to the adjournment of the Senate, 1 formally put the question -
That the Senate do now adjourn.
– I wish to bring to the notice of the Minister representing the Minister for Health a matter which relates to hardships being experienced by sick people. One day last week I asked the Minister a question in this connexion, but no facts were supplied. My question related to persons suffering from complaints who are not able to join insurance schemes which would entitle them to additional hospital benefits. If such people are not age or invalid pensioners they are left out in the cold. I bring to the notice of the Minister the case of a young man who served for four or five years during World War II. and is not eligible “for a repatriation pension because the Repatriation Commission considers that he was subnormal before he went into thu forces. The commission claims that the condition arose from his domestic affair*-. However, he has now divorced his wife, so that his domestic affairs have been ironed out. In any event, he was not married at the time he went into the forces. He is suffering from nerve and head trouble. He has received some treatment in hospitals, but will not now be accepted for further treatment in public hospitals. A member of the British Medical Association, no doubt a friend of the Minister for Health (Sir Earle Page), advised him to go to an asylum, where he could obtain treatment. He went voluntarily to an asylum, but because no sane person likes such institutions, he got out in a couple of days and went back home. He came and told me his story. I rang the doctor concerned and asked him had he certified this man. The doctor said, “ No, I have not, but I advised him to go to the asylum, where he can get treatment free “. I asked, “ Cannot he obtain treatment here?” He replied, “Oh yes, but the hospitals do not want him because he cannot pay “.
The man has applied for an invalid pension, and although he has a doctor’s certificate to the effect that he is an invalid and cannot work, he is still not eligible for a pension. He has now received a final notice from the hospital to pay bis hospital debt. It is on blue paper and gives him fourteen days in which to pay. Being of a nervous disposition, he was naturally upset when he received this demand and rushed to me. I said, “ Leave it with me. You have no property. Let them jump in the lake. You cannot pay £11 to the hospital from your unemployed benefit “.
That is only one case of many. Thi9 man’s condition has been aggravated by the fact that the hospital has chased him up and is dogging him for payment of his debt, although it is impossible for him to pay. I know that the Minister will say that this is a State concern and has nothing to do with him, but I point out that that was not the position prior to 1949. It was not the case before the Minister for Health introduced his hospital benefits scheme, which has since been eulogized in a little booklet which has been circulated to employees in industry. The scheme has been responsible for persons who urgently need medical treatment not being able to obtain such treatment. The effect on the ex-serviceman to whom I have referred is serious, and he has no redress. In my opinion, thu fault lies with the Minister for Health because he has taken away a completely free hospital scheme, which was being paid for by the people, and has put in its place a scheme which enforces a “ quiz session “ in relation to the means test.
Recently I received a letter from a lady whose husband is on the basic wage and whose little boy of five or six years of age has been stricken with poliomyelitis. He was taken to hospital, where he stayed for two months, and when he returned home his mother received a bill for £65. She did not know what to do and was naturally very worried. I suggest that this kind of thing is adding to the sick list every day. I was also told of three other people who received final notices in respect of hospital fees and who cannot pay. And so the great health scheme of the present Minister for Health operates ! I should like the Minister for Repatriation (Senator Cooper) to have a talk to the Minister for Health. I do not say that there is any criminal intent on the Minister’s part, but the effects of the scheme are most serious because they are driving desperate people into the position where they will do anything.
I now wish to bring to the attention of the Minister for Repatriation a matter concerning his own department. I refer to the case of an ex-serviceman who served for several years during World War II. and was granted a totally and permanently incapacitated pension. He entered a repatriation hospital and had a piece of bone taken out of his leg and grafted on to his hip, thereby locking the hip. He was discharged from hospital a complete invalid. Incidentally, I was concerned in another such case which was dismissed by the repatriation tribunal, although the ex-serviceman ultimately received a full pension. The man about whom I am complaining at present had his pension reduced in January, a few months after he came out of hospital, eight weeks after the specialist recommended that it should be reduced. His pension was reduced by 70 per cent. The recommendation was made that he should do light work. He had been used to nothing but heavy manual work all his life. I point out to honorable senators that many men are walking the roads of Tasmania at the moment looking for manual work and are unable to find it. Yet he is supposed to pick up a light job. Even if he did find a job he would have difficulty in getting to and from his work because he cannot walk except with great difficulty and the aid of a stick. He would probably need a sitting-down job, and such jobs are not obtainable. His pension has been reduced from £17 10s. a fortnight to £5 12s., although he is a complete invalid and cripple.
I rang the Deputy Commissioner of Repatriation in order to see whether some mistake had been made. Apparently it is not possible for the man to appear before an appeal tribunal until April. This is the kind of thing that is being metedouttothemenwhofoughtinthe last war.Ifanyhonorablesenator has seena person withhishiplockedand bonegrafted onto ithewill know that someyears mustelapse beforetheperson concernedbecomessufficientlyactiveto workagain. Itisonly afew weekssince the manto whom I have referredhad the grafting operationperformed, and he is still hobbling around on a stick. Isthe Minister awarethat this is notan isolated case, but that in the same district a number of ex-servicemen have had their pensions slashed,includingthe worst case I have known in the fifteen years thatI have been a member of this Parliament. If the Minister is ofthe opinion that a mistake has been madehe maybe able to exercisehis powers in such a way that an immediate investigation will be made. If he desires any further details, I shall be pleased to supply them to him privately.
– Iwish to draw the attention of the Minister representing the Prime Minister to what I consider is a veryserious anomaly in connexion with the administration of Commonwealth scholarships for university students. I refer to the fact that payments made toa student for work performed during university vacations are subtracted from the value of the scholarship which the student receives. Such action affects students seriously, particularly those who are taking medical courses orcourses which involve living away from their home State, as in the case of students from Western Australia whoare proceeding to a medical degree. It is not possible for Western Australian students to complete the medical course inthatState ;they must go to a university in one of the eastern States, generally eitherSouth Australia or Victoria. As honorable senators are no doubt aware, themedical course is much more expensive than is the arts or science course, which may be undertaken at the local university. Where, for instance, a student receives a grant of £156for theyear and goesto work during the long vacation in order to help out the family orto help with his own incidental expenses, the money that he earns is deducted from the value of his scholarship. I am aware ofan instancein whicha student worked for eight weeks at £5 a weekandsubsequently found thathis scholarship was reduced bythe £40 whichhehadearned. In thefirstcaseI am toldthatthe student lost£80. Lastyear when a similarposition arosehelost £40. When a student showssufficientinitiativeto getworkduring vacations, Ithink that he deservesbetter treatment. This student isbrilliant,buthis f amily isgoing without manythingssothathe mayhavehis chance attheuniversity.Eventually they will get their money back, but in the meantimemuchhardship is being inflictedupon the family. I have knowledge of another student who has a scholarship for Trinity College, Melbourne, for £35. If he takes advantage of ittheCommonwealth grant is cut bythe same amount. If he had the
Commonwealth grant, plushis vacation earnings,hecould study without assistance from his family.I ask the Minister to investigate these complaints. Iftheposition is as it is stated to be, I think that it is wrong that studentsshould be penalized if they obtain work during their vacations. If a studenthides thefact that hehas been working, no penalty is imposed uponhim. The student who gets a job, and whose standardof university work is not affected by it and who is honest enough to notify the authorities, should not be penalized.
SenatorO’SULLIVAN . (QueenslandMinisterfor Trade and Customs) [10.48.]. - The matter to which Senator Tangneyhas referred ismost important. Representations have beenmade to me with regardtothe matter and I was under the same impression asSenator Tangney, but the information thatI have now indicatesthat ifa student earns £10 or £15 a week during vacation, the amountthat heearns is not deducted fromhis scholarshipbut that during the periodthat he is earning more than his allowance, he is notpaid the allowance.
– I was referring to earningsduring vacation.
SenatorO’SULLIVAN. - That is so. Supposing that a student receives£156 ayear as an over-allscholarship allowance at £3 a week. If he works for six weeks for £10 a week in vacation, he does not lose £60 but £18. The reason is quite sound. Ifhe is earning £10 a week, he does not need the allowance of £3. He forfeits the amount of his allowance during the period when he earns more than his allowance. Senator Tangney should not take that as an official statement. That is my recollection and I believe that it is correct, but if the honorable senator writes to meI shall give her a considered reply.
– In reply to Senator Aylett, I shall deal with the last portion of his question first. I do not believe that the honorable senator can be sincere in his sympathy for the ex-servicemen. If he had been sincere he would have come to me immediately he returned to Canberra.
– I brought the matter up the moment I reached here. I did not arrive in Canberra until to-night.
– The honorable senator has mentioned no names and he has given no particulars.
– I did not wish to make those details public at this stage.
– The record of this Government with regard to repatriation compares more than favorably with that of any other government that has been in office since the Repatriation Act was brought into operation. That is not my opinion only, but it comes from the exservicemen’s organizations throughout the country. I take objection to the honorable senator bringing forward something that he cannot substantiate. Why did he not call upon me? He knows that my door is open to him and. to every other member of the Parliament, hut he wastes time. The soldier is in such a position that he deserves prompt attention.
– I have been active all day investigating the matter.
- Senator Aylett wastes a day and I believe that his sympathy for returned soldiers is purely political.
Question resolved in the affirmative.
The following papers were pre sented : -
CoalIndustry Act- Joint Coal Board- Fifth Annual Report, and Auditor-General’s report on accounts, for year 1951-52.
Commonwealth Railways Act - Report on Commonwealth Railways operations for year 1951-52.
Lands Acquisition Act - Land acquired for Postal purposes - Tuncurry, New South Wales.
Public Service Act - AppointmentsDepartment -
National Development - W. J. Buckridge, C. A. Van der Waal.
Supply- C.F. Bareford, C. E. Kerr, B: F. Palmer.
Works- S. K. L. Wallace.
Senate adjourned at 10.52 p.m.
Cite as: Australia, Senate, Debates, 17 March 1953, viewed 22 October 2017, <http://historichansard.net/senate/1953/19530317_senate_20_221/>.