22nd Parliament · 3rd Session
The “PRESIDENT (Senator the Hon. Sir Alister McMullin) took the chair at. 11 a.m., and read prayers. ‘
page 263
– J direct my question to the Minister for Shipping and. Transport. Did he, while in Perth, make a statement to the effect that the Australian Road. Safety Council should conduct a. campaign encouraging the voluntary use of British standard safety helmets’ by motor cycle riders and pillion passengers? If he made such a statement, will he take steps to see that import restrictions on helmets of that particular type are lifted so that they may be obtained on request by people in Western Australia? Members of the’ Australian Road Safety Council have reported to me that the helmet is in demand as it is a most efficient ‘protection for motor cycle riders and pillion passengers, but it cannot be supplied because an import licence cannot be obtained.
– It is true that at the recent conference of the Australian Transport Advisory Council in Perth consideration was given to the provision of safety helmets for motor cycle riders and pillion ‘passengers.. It is. also true that the council asked me, as Minister for Shipping and Transport,- to take up the matter, with the Department of Trade to see that any hindrance to the supply of these helmets is removed. I propose to confer with the Minister for Trade in the near future in order to ascertain to what extent action by the department has hampered the provision of the helmets, and, if necessary, what action can be taken to ease the import restriction on these helmets. ‘
page 263
– I ask the Minister representing the Treasurer whether he has seen’ a statement by a leading American hotel owner, at present in Sydney for the purpose of investigating tourist hotel development, to the effect that more American capital investment would come to Australia if there were some’ lifting of the restriction on the movement of overseas funds. Will the Minister ask the Treasurer to issue a statement setting out the present procedures operating between the United States of America and Australia in this regard for the information of honorable senators?
– I will be pleased to do what the honorable senator suggests. I should not like to give an answer off-the-cuff because ‘ of the issues that are concerned; but whilst I would not be prepared to answer the question off-the-cuff, I should not like it to be thought that there are irksome regulations on the movement of capital in and out of Australia at the. present time. At least it is more than evident that overseas investors ‘ do’ not consider them to be irksome, as illustrated by the very substantial overseas investment in industrial enterprises in Australia at the present time.
page 263
– I should like to ask the acting Leader of the Government in the Senate the following questions, without notice: Is the Minister aware” that some years ago Sir James Barr, president of the British Medical: Association, stated at a medical convention held in Droitwich. England, that 95 per cent, of the ailments that doctors are called on to treat are the direct result of errors of diet? Has the Commonwealth Scientific and Industrial Research Organization any department of anthropology for the study of man? If it has not, does the Government consider it advisable to establish a nutrition section to investigate the subjects of food and diet, with special reference to the effect on the health of Australian citizens, both mentally and physically?
– I have heard the statement which the honorable senator attributes to Sir James Barr. Indeed, I have heard it repeated on. so. many occasions that I myself sometimes think.it is true. As to whether the Government would be prepared to ask the C.S.I.R.O. to undertake the task suggested, I hesitate to express an opinion because I think it is so much bound up with what the States are doing in the field of research and hospital activities that it might well be more appropriately done at that level. However, I shall make some inquiries and I will ask my colleague, the Minister for Health, to let the honorable senator have a letter setting out his views and the views of his department on the matter.
page 264
– My question, which is addressed to the Minister representing the Minister for Primary Industry, concerns a reference made in a leading daily newspaper this morning to the ban that the Federal Government is expected to impose on the importation, after 31st May. next, of cud-chewing animals. This is in consequence of a recommendation of the Australian Agricultural Council to ban the importation of cattle and sheep, and it followed the world-wide spread of the deadly disease blue-tongue. That disease has spread throughout the United States of America, Africa, Spain; France and other parts of Europe. It kills sheep within 48 hours, but does not affect cattle which, nevertheless, are carriers of the disease. Is the Minister in a position to make a statement to the Senate on this matter? .If the position is as I have stated, why should Australia be exposed to the ravages of this disease for a day longer than is necessary? If a ban on the importation of stock, is to be imposed, why is it necessary to wait until 31st May to impose it?
– I have not seen the newspaper report that the honorable senator has mentioned. If he will be good enough to put the question on the noticepaper, I shall ask the Minister for Primary Industry to chew the cud on it.
page 264
– Will the Minister representing the Treasurer inquire into the advisability of removing, or reducing, sales tax on electrical installations, including lighting fittings in order to reduce the cost of home construction and equipment?
– I shall convey the honorable senator’s request to my colleague, the Treasurer, with a suggestion that it be placed with others that will be reviewed at Budget time.
page 264
– My question is addressed to the Minister representing the Minister for Primary Industry, I should like to say that the Minister for Primary Industry recently made a statement dealing with the negotiations currently taking place between himself and the Australian Wheatgrowers Federation on the question of a new wheat stabilization plan. Will the Minister inform me whether the new plan will be for a further period of five years? Has the Division of Agricultural Economics concluded its field survey of the current economic and physical structure of the wheat industry, and has its report been presented to the Minister? Will the plan be submitted to a poll of growers as in the past, following the passage of necessary legislation by the Commonwealth and State Parliaments. If so, what will constitute an affirmative vote?
– The honorable senator was good enough to indicate that he proposed to ask this question. The Minister for Primary Industry informs me that he met the special committee of the Australian Wheatgrowers Federation in Melbourne on Friday, 14th March, to discuss details of a possible new stabilization scheme, to commence with the 1958-59 crop - when the present plan concludes. The Minister has also supplied the following information in answer to the questions asked by Senator Pearson.
The Australian Wheatgrowers Federation has proposed that the new plan should be for a further period of five years. The Division of Agricultural Economics has concluded the collection of data in the field. The processing of the schedules and the analysis of the data are on the verge of completion. The information obtained is being studied by the Wheat Index Committee, comprising the director of the division and representatives of the. Australian Agricultural Council and the Australian Wheatgrowers Federation. The committee will’ submit, its report to the Minister. The question of the submission of a plan to a poll of growers will need to be resolved in consultation with the State Governments.
page 264
– My question is directed to the Minister representing the Minister for the Interior. I understand that, some time ago, the Commonwealth Government purchased a property in Collins-street, Hobart, in order to erect thereon a central block of Commonwealth offices. The intention is that’ all Commonwealth offices will be located in one major building, both, for the convenience of the public and in the interests of administrative efficiency. In view of the need to foster public works and take up the slack in the Tasmanian building trades, will the Minister advise me whether plans have been approved for the new offices, whether a specific date has been set.’ for commencement, and what is the estimated completion date? If plans have not been approved, will the Minister give an assurance that he will press for Cabinet approval to expedite this urgently needed building programme?
– The Minister’s plan to provide Commonwealth offices in every capital city is coming to fruition in Melbourne and Sydney especially. I do not know the position in Hobart. If the honorable senator will put his question on the notice-paper I will obtain the information that he requires.
page 265
– My question of the acting Leader of the Government concerns the combating of juvenile delinquency on a Commonwealth level. The States have been acting independently in this matter, and the Victorian Juvenile Delinquency Committee, under the chairmanship of Mr. Justice Barry, submitted a report on the subject to the Victorian Government in 1956. This is such an important national problem that I ask the Minister whether, in view of the increase in juvenile delinquency through the United States of America and Australia, he will consider following the example of the United States of America and move for the appointment of a special Senate committee to conduct an extensive inquiry into the highly complex problems of this social evil.
– The honorable senator has not asked me an easy question. I know the great interest that she takes in this matter, and share her views concerning its importance. I am sorry to say that I am not au.fait with recent developments in the United States of America. In view of the nature of the question, and my own doubt about the attitude of State governments - within whose purview this matter perhaps more properly lies - I shall mention the matter to the Prime Minister arid will subsequently write to the honorable senator telling her of his initial views on the subject.
page 265
– Last week, I asked the Minister representing the PostmasterGeneral a question on the provision of telecast facilities for Canberra, in view of the direct telecast from Canberra during the visit of the Queen Mother. Has the Minister received the information he told me he would obtain?
– I have not yet received an answer to the honorable senator’s question. I shall get in touch with the Postmaster-General’s Department and see whether I can have the answer supplied speedily.
page 265
– Is the Minister for Shipping and Transport aware that the most modern deep-sea port in Australia is nearing completion at Portland, Victoria? Does he know of the great developmental potential in western Victoria, eastern South Australia and southern New South Wales if rail links were provided to connect those areas with Portland? Will the Minister confer with the Victorian Government to plan a positive programme designed to ensure that the utmost national developmental value will be secured from this project?
– I am well aware of the work that has been done at Portland on the development of a very modern port there. The provision and use of rail links with that port - especially links with South Australia and New South Wales - are, I imagine, matters about which the Premiers of those States - particularly the Premier of South Australia, if I may say so in parenthesis - have some very firm opinions.
– I am sure of that.
– I am glad that my opinion is reinforced by that of Senator Hannaford. The Minister for Railways in Victoria may have some views on the effect of the development of Portland on the Victorian railways. Nonetheless, as opportunity offers I shall be pleased to discuss this matter with the Victorian authorities. I assure Senator Wade that I am aware of the really great work that has been done at Portland. I visited Portland and was most impressed with what I saw there. I have been told by my technical experts that the work is first-class and that Portland will be a splendid port. Officers of the Department of Shipping and Transport are watching the development quite closely. I understand that representatives of the Australian National Line have had a look at the port and have shown their interest in it. I have no’ doubt that representatives of the’ private shipping lines are watching the development with equal interest.
.. TRADE WITH JAPAN. .,
– My question is directed to the Minister representing the Minister for Trade. Has the Minister seen a report that the Japanese Ministry of Trade proposes to reduce raw wool imports from 480,000 bales- -for- the period AprilSeptember; of last year to 350,000 bales for the period April-September this year? How does the Minister reconcile this action by Japan with the assurances this Government gave about how. the Japanese Trade Agreement would protect and -expand Australian export markets? Will the Minister indicate the likely effect of this drastic’ Cut in our wool imports by Japan upon our income from the export of wool? . …
– I am sorry to say I have-not seen the newspaper report to which the honorable senator refers. My recollection is that the Japanese Trade Agreement did no more ‘ than contain an undertaking that the Japanese Government would ensure that there, was no restriction on the amount of foreign exchange made available for the purchase of Australian wool; but, apart from that, there would be competitive bidding, and the wool would be sold on the world market. I think the question is a good one which warrants a considered answer, and I therefore ask that it ‘be put on the notice-paper so that it may be answered in an adequate way.
page 266
– Has the Minister for Shipping and Transport noticed in to-day’s Sydney “ Daily Telegraph “, under the heading “ Beginning of a new era; 40,000 tonner plan “, reference to the projected activities at Whyalla in South Australia of Broken Hill Proprietary Company Limited shipbuilders? ‘ Are the Commonwealth legislation and the practice of his department -geared to give immediate financial encouragement to the project of building at Whyalla such a’ mammoth ship for use in bulk carrying on the Australian coast?
– Yes, I have noticed with considerable’ interest the account of what happened in Sydney yesterday. I may say here that I personally regret ‘very much that ‘circumstances’ prevented my being present on that occasion, described in the newspaper, which I regard as a milestone in thehistory of shipbuilding .in Australia…. As has. been indicated continually, the Commonwealth Government stands prepared and ready to help the Australian shipbuilding, project’ at Whyalla and any other efficient yard in’ Australia. .
page 266
– I direct to the Minister for National Development, in the absence of the Leader of the. Government in the Senate, a question relating to the European -free market. I hope that to-day he will give me a better answer than I have had from the Leader of the Government in the past. This is a very serious matter which .affects not only primary producers but the whole of the Commonwealth. Referring to my oft-repeated questions relating to the free trade area and common market which is contemplated in Europe, is the Minister aware that- these farreaching proposals are: now -unlikely to come into operation at the end of this year? The English newspapers .have .published ‘comprehensive reports relating to the discussions which, took place .in Paris :last week, with particular, reference-to the counter-proposals now submitted by the Government of France:- - Can the Minister tell the people of Australia whether -these new French proposals will be more disadvantageous than the original proposals to producers and exporters of Australian products- not only primary . products but also other products - which play a big part in helping to maintain an equilibrium in our balance pf trade with Europe and the, United Kingdom?
– The honorable senator’s question is ^extremely difficult to answer offhand. The only .way to .answer it, really, is by making a speech, but I do not propose to do that. I suppose this trade proposal- is the most important commercial development that has occurred since the Ottawa Agreement back in the 1930’s. What has happened is that the Messina group of countries in Europe have evolved what they call’ a common market. Their aim ‘is to eliminate, over a period of time, tariff . barriers between themselves and to have a common external tariff barrier. The scheme was of -such- great significance to the United Kingdom in her trade relations with the Continent that she put forward an alternative which is called an industrial free trade area in Europe. The difference between the two arrangements is that, under the Messina plan, or the customs union, there would be common tariff barriers against the world, whereas with the free trade area each country would retain its own tariff schedules against outside countries. The pith of the problem, so far as Australia is concerned, is in the effect that these arrangements will have on. our markets, principally those for our primary products, but also those for our secondary products, in Europe as well as in Great Britain. There may be a common external tariff under the Messina plan, or, under the free trade area arrangement, each country concerned may give effect to its own ideas about tariff barriers to external trade.
The big point at the moment is whether we should protect our markets in Great Britain. In this connexion the United Kingdom Government, with all the difficulties that it is facing, has gone on record as saying that, in any arrangement that is made, it will retain power to continue to give effect to British Empire preference.
– As far as possible.
– I do not remember that reservation. Of course, the maintenance of economic stability in the Old Country presents a tremendous problem, for the United Kingdom Government. Whether it can be maintained in the circumstances remains to be seen, but I think that not only our minds but also our hearts are with the people of Great Britain in their search for a successful determination of this, problem, which means so much . tq them as well as to us.
page 267
Senator - SCOTT. - My question is addressed to the Minister for National Development. The Minister may remember that recently I referred to the urgent need for the Government to construct a nuclear reactor for the generation of power in Australia. He appeared to be interested in this suggestion, particularly when I said that, .owing to the -fixed price of gold and rising costs, one way of helping the goldmining industry would be to supply “IF with cheap power. Can the Minister advise me whether the Government is considering the construction of a nuclear reactor in Australia? If it is, will the Government have regard” to the urgent needs of Kalgoorlie, in Western Australia?
– I thought that we would get round to Kalgoorlie before the question was finished. I shall reply in general terms. First, I believe that atomic power will find its level in accordance with the economics of its production. Much will depend on whether it is cheaper than thermal power. Present indications are that, except in isolated areas, the day of atomic power has not yet arrived. The indications also are that it is the big inland mining communities which, within a few years, will make a start in- this field. I’ am not going to say to the honorable senator that the Commonwealth Government will take action in this matter, because responsibility for the generation of power rests with the various States.. . .
– What about the Snowy Mountains “ scheme?”
– An exceptional set of circumstances operates in regard to the Snowy Mountains scheme, but generally speaking, the generation of power is a State responsibility. I. suppose thai more money is spent on the generation of power throughout Australia than on any other single activity. I make that statement with a little hesitation, but I think that it may be accurate. Therefore, for the Commonwealth to say that it is intended.’, to step into the field of power generation ‘ would involve a very big decision indeed, one which I am not prepared to sponsor.
page 267
– I direct to the Minister .for Civil Aviation the following questions: Is. it a fact that the delivery of a number of. American Boeing- 707 aircraft to Qantas Empire Airways Limited for operation., on international , air routes will begin next year and that those aircraft will eventually operate, from most Australian capital city airports and their alternative aerodromes? Will the new agreement with the United States of America, which grants mutual use of air routes across the two continents, Australia and North America, mean that American companies, using highspeed jet aircraft with a very high wing loading, will, according to Dr. Bradfield, need large new and reconstructed runways that will cost between £20,000,000 and £30,000,000? Has the Government any plans to carry out major aerodrome construction work in anticipation of the use of these heavy American aircraft in Australia? In view of the great expense involved, will the Minister consider postponing the use of Boeing 707 aircraft for Qantas operations and substitute for them the British-built Comet IV.’s, which are currently being used by the British Overseas Airways Corporation and which can use the present runways in Australia, and so give more time for an overall study of the economics of international air transport?
– The position in relation to the purchase of Boeing aircraft for Qantas Empire Airways Limited is that a firm order has been placed and delivery will commence, I think, early in 1959. I have not seen the statement that has been attributed to Dr. Bradfield to the effect that airport improvements costing £30,000,000 will have to be undertaken in Australia to accommodate these aircraft. It is true that improvements will be necessary at some airports; but, in the main, the airports at Sydney, Brisbane and Perth, where, I understand, only minor alterations will be necessary, will be able to take the Boeing aircraft. Senator O’Byrne doubtless will remember that, when replying yesterday to a question that was asked by Senator Hendrickson, I said that the Melbourne airport was presenting something of a problem but that, in conjunction with the Victorian Department of Lands, surveys are now being carried out there and that soon we will have a decision on what we shall do in relation to that airport. In view of the fact that these aircraft have been firmly ordered, there is no prospect now of an alteration being made by Qantas to its plans and of having the kind of aircraft mentioned by the honorable senator, or any other aircraft, substituted for the Boeings.
page 268
– My question, which is directed to the Minister for Customs and Excise, relates to a statement that he made yesterday in reply to a question that was asked by Senator Vincent. Has theMinister read the report of his statement in the Sydney “ Daily Telegraph “? Is he correctly or incorrectly reported in the final paragraph, which reads -
In future any book that is banned will be published in the “ Commonwealth Gazette “ ? 1 suggest that that would infringe copyright.
– Two mistakes appeared in the “ Daily Telegraph “. In one. place, the operative word “ not “ was left out.
– That was not in the “ Daily Telegraph “.
– I am sorry. That wasin the “ Sydney Morning Herald “. In the other case, I was corrected by an honorable senator opposite who pointed out yesterday when I was speaking that the title of the book and not the book itself would be published in the “ Commonwealth Gazette “.
page 268
– I preface my question, which is directed to the Minister for Shipping and Transport, by saying that I was very pleased to note yesterday what has happened in regard to the construction of a new tanker. I know that Australian shipbuilders are eager to build that kind of ship, and I offer my congratulations to a company which is so Australian in outlook as to build in Australia. I ask the Minister: Are permits to build ships overseas given without any qualifications? If there are qualifications, what are they? In view of the difficulty that is being experienced in the Australian shipbuilding industry, what incentive does the Government offer to shipbuilders other than the payment of a subsidy to try to reduce the cost? Does the Government offer any other incentives to firms to enter the shipbuilding industry and keep this vital industry alive in Australia?
– The arrangement which exists between the Government and prospective shipbuilders in respect of the placement of orders overseas is that tenders are called from overseas shipbuilders and compared with Australian tenders for the same ships. Permits are given only when it is established that the cost of building a ship in Australia is in excess of the overseas price to the extent that if the Australian tender were accepted a continuing additional operating charge would be imposed upon the Australian ship sufficient to make it non-competitive with the overseas-built ship.
asked what encouragement is given by the Australian Government to Australian shipbuilders. We have increased the subsidy to 331/3 per cent., which, although it has been availed of in recent times by only two companies, is slowly having an effect, and 1 am hopeful that in the future we shall attract orders from other private ship-owners.
The shipbuilding industry in Australia is in a reasonably good position. Unfortunately, it is a fact that one yard in Queensland is not placed advantageously because it is handicapped by its ability to build ships only up to a certain tonnage by virtue of its location. .
As the responsible Minister, I am not despondent about the shipbuilding industry Indeed, recent developments have indicated quite strongly that the shipbuilding industry has a future in this country.
page 269
– My question of the. acting Leader of the Government in the Senate is incontinuation of that asked by Senator Hendrickson concerning the European common market. I have a great interest in this matter; I spoke about it during the debate onthe Address-in-Reply. It is apparent that the establishment of a European common market will have some effect on Australia. Our trade willprobably suffer to some extent. It is obvious that, with our increasing production, new markets will have to be found for our products. Whilst considering these matters will the Government give thought and attention to the possibility of increasing trade with Asian countries, and consider the advisability of enlarging our trade delegations to, and connexions in, those countries, and of appointing trade representatives in countries in which we have no representation at present?
- Senator Wordsworth’s remarks may, by events in the future, turn out to be a sober, factual appraisal of the position. There is,however, another side of the coin. The banding together of continentalnations and the conclusion of some satisfactory arrangement whereby Great Britain continues to maintain its continental market and, at the same time, its trade arrangements with Australia, may create circumstances which will benefit Australia. We may obtain a greater volume of trade with Great Britain and the continent, but that remains to be seen. The whole matter is the subject of the most intense negotiation and consideration at the present time. Whatever the outcome may be, it cannot be denied that Australia should, in every set of circumstances, endeavour to extend its markets in Asia and South-East Asia. My colleague, the Minister for Trade, is constantly preoccupied with that matter. If my. recollection is not at fault, a trade delegation, led by his Parliamentary UnderSecretary, Mr. Swartz, is to go overseas in the near future. If that is so, that is illustration enough of the importance attached to the matter by the Minister.
page 269
– I preface my question to the Minister for Civil Aviation by saying that his department has provided rest rooms with suitable cold water fountains at most of the coast airports on the north-west coast of Western Australia. Will the Minister examine the possibility of providing, before next summer, similar facilities at Onslow airport which handles a fairly large volume of transit passenger traffic? The temperature at Onslow frequently reaches 110 degrees.
– I learned with some surprise that a cold water fountain is not provided at Onslow Airport. I’ shall be pleased to look into the matter to see why that is so.
page 269
– Can the Minister for Civil Aviation say whether the Government has received any particular request from K.L.M. Royal Dutch Airlines for additional landing facilities in Australia? If such a request has been made, has the Government arrived at any decision?
– As has been stated in the press and widely publicized, a Dutch delegation is at’ present in Australia seeking improved service frequencies and traffic rights. The Government has given some consideration to the request made initially, and I understand that further discussions are proceeding between the Dutch delegation and the Australian authorities in Melbourne this morning.
page 270
– I direct my question to the Minister representing the PostmasterGeneral. In view of the world-wide problem of juvenile delinquency, does the Minister consider it advisable to bring only suitable programmes into the homes of the people of Australia by means of television and radio? As television has now completed a full year of operation in two Australian States, will the Minister arrange an investigation into the number of sessions, and the time of their presentation over the past year, that have dealt with crimes and brutalities in such a way as to have an undesirable effect on teenage children? What proportion of such films has been produced in Australia and what proportion has been imported from overseas? What is the country of origin of films so imported? What proportion of these films has been shown on national and commercial channels?
– I shall bring the honorable senator’s question to the notice of my colleague, the Postmaster-General, and obtain a reply.
page 270
– My question to the Minister for Shipping and Transport is supplementary to that asked by Senator Arnold. Will the Minister inform the Senate of the basis of computation of the amount of subsidy paid on a ship built by the Commonwealth and on a ship built by a private company?
– The basis of computation of the subsidy by the Commonwealth is the same for a ship built by a private owner as for a ship built by the Australian National Line. It is a maximum of 331 per cent., as the honorable senator is well aware, and the actual subsidy paid is a percentage of the cost designed to bring the final cost of construction of the ship into line with the cost of a comparable ship overseas.
page 270
– I ask you, Mr. President, whether any action can be taken against a pressman who takes it upon himself to abuse the privilege that the press enjoys in this chamber? Usually I regard pressmen as a very decent body of men. Have you any power to take action when this privilege fs abused to such an extent as to allow a pressman to make a malicious,, lying statement about a member of the Senate, or another place, for the purpose of damaging his reputation and character?
– The honorable senator may raise the matter as a breach of privilege. If he can give me any specific instance of an abuse of privilege, his complaint will be investigated. In the absence of a specific complaint, I do not think I can do very much about the matter. The press will continue to make such statements as it chooses. Senators and honorable members have the right to answer those statements in the Parliament.
page 270
– I direct a question to the Minister representing the PostmasterGeneral. Has the Minister seen a report in the “ West Wimmera Mail “ of a municipal council meeting during which it was alleged that the installation of automatic telephone exchanges in some country areas had resulted in the cost of telephone services to subscribers being increased by about 500 per cent.? Is there any substance in the allegation? If the answer is in the affirmative, will the Minister undertake to examine the reasons for the higher cost, and reduce charges to bring them into line with city calls of comparable distance?
– I have had an opportunity of reading the statement in the “ West Wimmera Mail” and I have been informed by the Postmaster-General’s Department that the installation of automatic exchanges does not result in an increase in the fee charged for each local or trunk-line call or in rental charges. Trunk-line fees are related to the radial distance between the originating and terminating exchanges, while the rental is determined by the number of subscribers connected to the exchange serving the subscriber. These charges are common throughout Australia, Therefore, the statement made at the council meeting is surprising. If the honorable senator would like more details .in relation to the financial implications of the matter,’ I shall be glad to ask my colleague, the PostmasterGeneral, to furnish him with a detailed reply.
page 271
– The question that. I address to the Minister for National Development is supplementary to the question asked by Senator Willesee yesterday relating to a comparison, between the taxation concessions granted to mining concerns in Australia and Canada. Is the -Minister prepared to make.. a… short statement to the Senate giving an up-to-date comparison of the taxation concessions granted by each government to the mining industry?
– I never refuse a challenge, but I very much doubt the practicability of making a statement contrasting taxation provisions in two countries because of the complexity of the subject. However, I shall give consideration to the request and let the honorable senator .know my decision.
page 271
-On “27”fh ‘February, Senator Buttfield asked me, in my capacity as Minister representing the Minister for Territories, a question, regarding rice growing in the Northern Territory, and I said that I would ask my colleague for a detailed reply. The Minister for Territories has now supplied the following answer:-1 -
page 271
– On 12th March, Senator Tangney asked the following question: -
I direct my question to the Minister representing the Minister for Health. Is he aware of the growing tendency of mothers to have their babies born at home rather than- in maternity hospitals? In view of the increased .expenditure involved by the ‘ employment of a trained nurse’’ in the” home, and the release of a bed in a maternity hospital, which institutions are ‘at present’ seriously overcrowded,” will’ the” Minister ‘consider the payment of some financial benefit to those ‘‘mothers similar to that allowed patients ‘in ‘approved hospitals? What form of assistance is at present available to mothers in such cases?
The Minister for Health has now furnished the following reply: -
The question of - including benefits for home nursing services in the Commonwealth Medical and Hospital Benefits Scheme has been carefully considered but it is not proposed to extend the scheme in this direction at this stage. At the present time, many registered health insurance organizations provide fund benefit for ancillary services such as home nursing and members of these organizations would be eligible to receive such benefits. The Commonwealth already pays a generous maternity allowance under the Social Services Consolidation Act to provide financial assistance towards the expenses associated with the birth of children. In addition, under the provisions, pf the Home Nursing Subsidy Act, payments are being made to approved home nursing, organizations in respect of the employment of additional nursing sisters, to enable” those organizations to expand their activities. Approved home nursing services are also subsidized by the various State governments.
page 271
– On 11th March, Senator Seward asked me the following question: -
My question, which is directed to the Minister representing the Postmaster-General, relates to a recent press statement that more liberal terms were being offered in connexion with the erection of country telephones.- Will the Minister for
Repatriation ask the Postmaster-General to make a fuller explanation of the more liberal departmental work that it is proposed to carry out in the erection and installation of privately-owned telephones in rural areas?
The Postmaster-General has now advised me in the following terms: -
The statement issued recently by me was to the effect that more assistance is to be given by the department in future in the erection and maintenance by residents in rural areas of privatelyowned sections of telephone lines, the object being to help applicants and existing subscribers to upgrade the standard of their construction and thus improve the quality of transmission on the trunk line system to the advantage of users generally. Summarized, the new procedures to operate throughout the Commonwealth are -
The proposed route of the privately-owned section will be inspected, without cost to the applicant, by a departmental officer who will advise him of the best route, materials and methods of construction.
Upon completion of the line a close inspection will be made by the department and the subscriber will be charged only the actual cost with a maximum of £2 in any case.
The telephone will be installed by the department without charge and not by the applicant as at present.
Private sections of lines will be inspected at regular intervals without charge and the subscriber advised of any necessary improvements.
Where a fault occurs on a service the department will assist the subscriber to locate and remedy the trouble on the private section.
Inspections of part-privately erected lines will be made at appropriate intervals without charge to the subscribers who will be advised of any improvements necessary.
page 272
– On 13th March, Senator Wardlaw asked me the following question: -
My question is addressed to the Minister representing the Minister for Health. Has his attention been drawn to a statement made by a leading Melbourne specialist drawing attention to the extraordinary value of cortisone in the treatment of dermatitis and arthritis, and the fact that in cases where a long course of treatment is needed the cost, to the patients is all but prohibitive? A correspondent, referring to the statement; draws attention to the fact that the price of cortisone in Adelaide is slightly more than one-half the price in Melbourne and, further, that the same quantity of a brand of cortisone costing 25s. in Melbourne can be purchased for 8s. in Sarawak. “Will the Minister investigate the accuracy of the statement as to prices charged and submit a report to the Senate? Will he advise whether the Minister for Health will consider granting a Commonwealth subsidy on cortisone?
The Minister for Health has now furnished the following reply: -
Cortisone is provided as a’ pharmaceutical bene fit for the treatment of certain specified diseases where its use is most valuable. When it is so provided the full cost is met by the Commonwealth. The price charged for cortisone, when prescribed other than as a pharmaceutical benefit, is not within the control of the Commonwealth.
page 272
– by leave- For the information of honorable senators, I should like to read a statement made by the Prime Minister earlier this morning in the House of Representatives. It is as follows: -
Honorable members will recall that, on the appointment of the Honorable Howard Beale to the post of Australian Ambassador to the United States of America, the Minister for Immigration, the Honorable Athol Townley, was appointed to be Minister for Supply and Minister for Defence Production while continuing to be Minister for Immigration. It was not, of course, intended that he should continue to administer these three portfolios indefinitely, and he has to-day, by arrangement, resigned the portfolio of Minister for Immigration. His Excellency the GovernorGeneral has concurred in the appointment of the honorable member for Angas, Mr. Downer, to this portfolio, and he will be sworn in as Minister by the Governor-General at a later hour to-day. Mr. Townley will continue as Minister for Supply and Minister for Defence Production. As soon as arrangements for the amalgamation of these two departments have been completed, he will administer the new joint department.
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Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
– I move -
That the bill be now read a second time. Honorable senators will need little reminding of the circumstances surrounding the rejection by the Senate, during the last session, of the Government’s banking proposals. A series of bills relating to a proposed re-organization of the banking structure had been received from the House of
Representatives, where they had been given intensive consideration, but each of them was rejected by the Senate on the motion for its first reading. Consequently, the measures were rejected without any debate at all in this chamber of the merits of the proposals and honorable senators had no opportunity of expressing their views on the proposals - a situation which could scarcely be regarded as satisfactory in view of the importance of the Government’s proposals and the nature of the consideration that had been given them in the House of Representatives.
The Government attaches great importance to its banking proposals, which were evolved after months of careful thought and the implementation of which it considers essential to the harmonious and fully efficient operation of the Australian banking system. It therefore decided to re-submit its banking proposals to the current session of the’ Parliament, and the’ bill now before the Senate is the first of fourteen bills which were re-introduced in the House of Representatives in accordance with that decision and which have now been passed by that House.
The chief purpose of the Reserve Bank Bill 1957 is to establish the central bank for the Australian monetary and banking system as an institution which will not be directly associated with the conduct of banking business in competition with the private banks. The present central bank - the Commonwealth Bank of Australia - is to be re-named the Reserve Bank of Australia. The Reserve Bank will conduct the central banking functions now carried on by the Commonwealth Bank, and its powers for doing so are provided for in this bill and in a bill for a revised banking act with which I shall be dealing later.
This bill, however, is not to be considered as an isolated measure. It is one of four measures which, taken together, will aim to re-organize and reconstitute the Commonwealth group of banking institutions, and therefore to explain the bill I find it necessary to outline the scheme of measures as a whole and show the connexions between them. I propose also to state why the Government considers measures of this kind to be necessary. In addition it will be necessary for amend ments to be made to ten other acts as a consequence of the proposals in the four main measures.
At present, the Commonwealth group of banking institutions includes the Commonwealth Bank of Australia, which acts as a central bank and which has, as special departments, the Rural Credits Department, the Mortgage Bank Department and the Industrial Finance Department. The group also includes the Commonwealth Savings Bank and the Commonwealth Trading Bank. These several institutions are all constituted by the Commonwealth Bank Act 1945-1953. They all come under the control of the Commonwealth Bank Board and the Governor of the Commonwealth Bank. They have a common staff and they operate, for the most part, in the same premises in various centres.
Briefly, the proposal is, as I have indicated, to separate from this group the central banking element (including the Rural Credits Department) and set it up as the Reserve Bank of Australia; and then to reconstitute the other elements, each with its own functions and responsibilities, under a new organization to be known as the Commonwealth Banking Corporation. At the same time, the Banking Act, which is the law that governs generally banking matters coming under the jurisdiction of the Commonwealth, is proposed to be re-enacted in an amended form. The principal amendment to that act will substitute a system of reserve deposits for the present system of special account deposits.
There is one main reason why the Government has decided that the central bank should be separated from the rest of the Commonwealth Bank group - and it is entirely a practical reason. Experience has shown that there cannot be full harmony within the Australian banking system, nor that close co-operation which ought to subsist between the central bank and the trading banks, unless and until this separation is effected.
The question whether a central bank ought to engage, directly or indirectly, in trading bank activities, has been a matter of active controversy, here and elsewhere, for very many years; and there has never been anything like a consensus of opinionon it. Various authorities who have studied the matter closely have reached widely differing views. We should perhaps remember that many past judgments and beliefs on the subject were formed in contexts very different from that of to-day and often on the basis of abstract principle rather than of experience. The Government, on the other hand, has had to judge the matter as a strictly practical, present-day issue, and it has done so in the light of the very considerable experience we have now had.
We believe - as indeed most people believe nowadays - that there must be a strong central bank to regulate trends in monetary and banking conditions. But we also believe that the private trading banks have a vital part to play in the Australian banking system and the Australian economy; and there can be no doubt either that the great majority of Australian people believe this too. They have believed it all the more strongly since, for a period in 1947 and 1948, they faced the prospect of a totally nationalized banking system.
If, however, a system which includes both a government-owned central bank and a number of private trading banks is to work smoothly and effectively in the national interest, certain fundamental conditions must be fulfilled. One condition is that the central bank should have a foundation of adequate legal powers; but that by itself is not enough. There must be mutual understanding between the central bank and the private banks, mutual confidence and a will to co-operate. These elements are just as vital as legal powers for the central bank
And it is quite certain that, if they are lacking, no legal powers or contrivances can fill their place.
– Does the Minister contend they are lacking now?
– The Government does not bring down important legislation like this without being fully aware of the considerations involved. This points to a major difficulty inherent in our banking system as we have known it hitherto. The private banks have consistently maintained that they cannot enter into fully confidential relationships with the central bank so long as it has, under its control and operating as an adjunct to itself, a major trading bank which is a competitor of theirs.
Since there will no doubt be a great deal said about the attitude of the private banks.
I think I should state explicitly the point of view they have put it to the Government. It is this - .
The private banks have made it plain that they do not criticize the way in which the central bank has used the powers and functions it has under present legislation. On the contrary, they have been at pains to commend the competence, integrity and impartiality of the central bank. They say that their complaint is simply and solely against the banking legislation as it stands, and that their fears relate wholly to the wrong uses that might be made of that legislation. Their objections centre on two main points. One is the link between the central bank and the trading bank. The other is the special account system which they also believe could be used to damage them in vital ways. On this latter point, I shall say more presently.
There can be no doubt that, in a more general form, these apprehensions on the part of the private banks are shared by many of their customers who, of course, represent the great majority of people engaged in trade and industry throughout Australia. This is a highly important aspect of the matter. Although these people may not enter deeply into the technical merits of the issue, they nevertheless feel that they have a great deal at stake in the banking system, as indeed they have; and they also feel that there is still something unsatisfactory about the system. They have lively memories of the nationalization proposals, which they saw as an attempt not only to take over the banks themselves but also to take over their own banking business. That peril was averted, but the customers of the private banks are much alive to the thought that it could come upon them again - perhaps in a form less direct and obvious than the proposals of ten years ago but still leading to essentially the same results.
This lack of confidence in the present structure on the part of the private banks and their customers is undoubtedly the crucial fact in the whole issue. Even though some would argue that there is no essential reason why, under the present system, there need be such lack of confidence, we cannot .deny that it exists; nor can we deny that, while it exists, it must constitute a barrier to the achievement of a truly satisfactory banking system.
The Government has to consider the matter from the stand-point of the national interest as a whole. As our economy grows and becomes more complex we have greater need than ever for an efficient banking system and if, in the system as it stands, there is some element of weakness, some structural flaw, which bars the way to full efficiency and harmony, there is a clear obligation on the Government to remove it. As I have said, the need for a strong central bank is not in question. But we have to ask ourselves whether the central bank is in fact stronger or weaker for its association with the Commonwealth Trading Bank. It can be argued that the central bank gains something in capacity from that association. It can be said to gain from the first-hand contact with the business world which the Trading Bank has, from the opportunities for staff recruitment and training which the Trading Bank provides, and from the magnitude and variety of operations which the Commonwealth banking group carries out. These may be substantial advantages of the association and yet, even from the standpoint of the central bank, they may be greatly outweighed if the association debars it from attaining close, effective and cordial relationships with the private banks and the full confidence of their many customers.
Considerations such as these have become clearer and more insistent as time has gone on. In our 1953 legislation we went part of the way towards separating the Trading Bank from the central bank, but it became evident that this had not removed all the difficulties created by the association. By degrees we have come round to the belief that only by completely separating the central bank from the rest of the Commonwealth Bank group will the source of friction be eliminated and the way opened for a lasting settlement of the issue. To do this, however, is far from easy. It is far from being a simple matter of taking one bank away from a number of other banks and setting it up on its own. A great many other conditions have to be met and the Government has been determined not to make a move in any one direction until it had a generally adequate solution for this problem as a whole.
In the first place the Government has been resolved to ensure that separation will not lead to any weakening of the basic powers of the central bank and, in particular, of the powers to regulate the total volume of bank credit. The private banks, as I mentioned earlier, have expressed fears about the use that could be made of the present system of special accounts under which the central bank can call upon them to deposit with it amounts up to 75 per cent, of any increase in their deposits over a given period and they have put forward proposals for alternative methods of control. We have recognized that there should be safeguards against arbitrary action of a destructive kind in this field, but we have also been concerned to ensure that the central bank will always have adequate capacity to deal with the wide and sudden fluctuations in basic monetary conditions that are apt to occur in our economy. The whole subject has been thoroughly studied in the light of our past experience and in the knowledge of methods employed in other countries. Eventually the private banks submitted revised proposals which, while not wholly satisfactory from our stand-point, did offer a basis on which we could create a new system in place of special accounts, a system which would provide safeguards of the kind the banks desire and, at the same time, give ample scope and flexibility for credit control action by the central bank. I shall be explaining the proposed new system in detail later when dealing with a bill to replace the present Banking Act but I may say briefly here that, under this system, the Reserve
Bank will be able, on one day’s notice, to require the trading banks to pay into statutory reserve deposit accounts with it amounts up to 25 per cent, of their Australian deposits. On giving 45 days’ notice, it will be able to increase this ratio above 25 per cent. There will be a proviso to the effect that any ratio exceeding 25 per cent, may not remain in force for longer than six months unless notice of an extension is given at least 45 days before the end of the period. There will also be provision for uniform treatment of all the major trading banks, including the Commonwealth Trading Bank. The banks regard requirements as to notice as a vital protection against sudden and arbitrary action which might gravely disrupt their business and that of their customers. On the other hand, the proposed new system will undoubtedly give the Reserve Bank wide scope for effective credit control action.
With these new provisions and, of course, the other great powers and resources it commands, the Reserve Bank should be amply equipped to perform its key role in the Australian monetary and banking system. And if, with the separation of the central bank from the Trading Bank and the rest of the Commonwealth Bank group, the path is cleared for full co-operation with the private banks, the central bank should have a chance to reach even greater influence, authority and prestige than it has had hitherto.
If we have been concerned to uphold the standing and capacity of the central bank we have been equally concerned not to impair the other institutions which belong to the present Commonwealth Bank group. We believe that the Commonwealth Trading Bank should continue to be, as it is now, a strong, active, competitive bank, capable of expanding its business and the services it renders to our growing economy. We also believe, certainly no less strongly, that the Commonwealth Savings Bank should be given an assured position and capacity for growth. The Savings Bank is, in its own right, a very great institution and some millions of Australian people have a direct interest in its progress and welfare. The Government has been resolved from the start that, whatever changes might be made in the banking structure, the future of the Commonwealth Savings Bank would be completely safeguarded. Then there are the special Departments of the present Commonwealth Bank, namely, the Rural Credits Department, the Mortgage Bank Department and the Industrial Finance Department. Each of these institutions has proved itself to have a useful role in the monetary system and the practical question was essentially that of ensuring that they were appropriately fitted into the new structure.
These objectives of a separate central bank and an assured status and function for each of the other component institutions in the Commonwealth Bank group have had to be reconciled with the fact that, up until now, the Commonwealth Bank group has, in point of staff, premises, and certain other administrative matters, operated as a closely integrated organization. Clearly there could be no thought of setting all these institutions up separately, each with its own staff and premises, even if, for other reasons, it were thought desirable to do so. The dislocation would be tremendous and so would the Com of accommodation. There would also be a great sacrifice of economy in administrative expenditure. The most that is practicable - and that is by no means easy - is to separate the central bank itself, physically and in point of staff, from the remainder of the Commonwealth Bank group. This is possible only because the central bank as such operates in no more than a few centres, mainly the capital cities, and requires a relatively small staff. .The other institutions must in the nature of things continue to operate with a common staff service and in the same premises.
The Government considers that the scheme, which is embodied in the bill now before the Senate and in its other three proposed banking measures, will provide an adequate and workable solution for this problem. As I have said, the central bank taking with it the Rural Credits Department but separated from the other institutions, is to be established as the Reserve Bank of Australia, and the present Commonwealth Bank Board is to become the board of the Reserve Bank. The other institutions will be brought under the general control of a new corporation, to be called the Commonwealth Banking Corporation, which will have a board of directors and which will provide a common staff for the several institutions.. These institutions will comprise the Commonwealth Trading Bank, the Commonwealth Savings Bank and a new institution to be named the Commonwealth Development Bank. In the Development Bank the present Mortgage Bank and Industrial Finance Departments of the Commonwealth Bank will be amalgamated, given a specific charter to provide developmental finance for primary and secondary industry, and provided with more capital and wider borrowing powers.
Although these three institutions are lo be under the Banking Corporation and will have a common staff, great care is being taken in the legislation to preserve their separate identities. We have considered this to be of the greatest importance if each institution is to retain vitality and to give the best service of which it is capable in its own particular field, lt is accordingly being provided that each institution will have a charter of its own and a general manager who will be the subject of statutory appointment. The conduct of each institution will be supervised, under the control of the board of the Banking Corporation, by a separate executive committee of the board. These arrangements are designed to achieve a balancing of interests and to ensure that, while working together, each institution will be able to pursue its own well marked purposes without the risk of becoming merged with or being dominated by another. 1 shall, of course, elaborate on these provisions when 1 explain the bill dealing with the Commonwealth Banking Corporation and the three banks coming under it.
This, then, is the broad pattern of the banking measures that are proposed. It is to be considered as a total scheme of which each part is necessary to the rest. A tremendous amount of careful thought has been given to it and we have had at every stage the single purpose of creating, on a basis that will endure, a system that will serve the best interests of Australia and its people.
I shall now deal in rather more detail with the main provisions of the Reserve Bank Bill. Under this bill the body corporate hitherto known as the Commonwealth Bank of Australia is continued in existence as the Reserve Bank of Australia and is formally constituted as the central bank of Australia. It is given wide banking powers of a general character, such as the Commonwealth Bank now has, but there is a provision that it shall not carry on business otherwise than as a central bank. Like the Commonwealth Bank, it will control the note issue and it will also have important responsibilities under the Banking Act. These will include administration of the statutory reserve deposit provisions, exchange control, acquisition and sale of gold, protection of depositors in other banks, determination of advance policy to be followed by trading banks and savings banks and, subject to the approval of the Treasurer, the regulation of bank interest rates. Except for the substitution of statutory reserve deposits for the present special accounts, these are all functions now discharged by the Commonwealth Bank and, with some changes in detail which I shall explain when the bill to replace the present Banking Act is before us, the duties and powers of the Reserve Bank in relation to them will be the same as those of the Commonwealth Bank.
The Reserve Bank will take with it the Rural Credits Department, the function of which is the making of advances to statutory bodies and co-operatives to assist the marketing of primary produce or the processing or manufacture of primary produce. The department requires very large amounts of seasonal finance for the performance of its important function, and must rely for the most part on advances from the central bank for its financial requirements. We have for this reason decided that the Rural Credits Department must continue to be attached to the central bank. So as to strengthen its capital structure, the department’s capital is to be increased by £2,000,000 from central bank reserves, bringing its capital to £4,714,000.
The present Commonwealth Bank Board will continue in existence as the Reserve Bank Board, and the legislative provisions relating to the constitution of the board will be the same as in the present Commonwealth Bank Act. That is to say, it will comprise the Governor of the Reserve Bank, who will be chairman of the board, the Deputy Governor who will be deputy chairman, the Secretary to the Treasury, and seven other members of whom at least five shall be persons who are not officers of the bank or of the Commonwealth Public Service.
The board will determine the policy of the Reserve Bank and will ensure that this policy is carried into effect. The duty is laid upon the board, as it is now laid upon the Commonwealth Bank, to ensure within the limits of its powers that the monetary and banking policy of the bank is directed to the greatest advantage of the people of Australia, and that the powers of the bank are used to promote the stability of the currency, the maintenance of full employment and the economic prosperity and welfare of the people of Australia. There are also provisions, similar to those in the present act, which require the board to keep the Government informed regarding the monetary and banking policy of the bank and, in the event of a difference of opinion between the board and the Government on that policy, give the Government an ultimate power to determine the policy of the bank. Under the board, the Governor will manage the bank. He will, as I have said, continue to be chairman of the board.
The bill constitutes a staff service for the Reserve Bank. Provisions for the allocation of members of the present Commonwealth Bank Service between the Reserve Bank Service and the Banking Corporation Service and for the preservation of existing rights of such officers will be contained in a bill which will deal with the transition from the present banking structure to the new. I may say that the very greatest care has been given to the drawing up of these provisions because the Government has recognized that there is a deeply human element in this problem. The present staff of the Commonwealth group of banks comprises a large body of people who have given competent and devoted service to these institutions, and the Government has been most anxious that their welfare should not be jeopardized by the structural changes it has been found necessary to make. Along with these aspects of the problem, the Government has had to consider the special staffing requirements of the Reserve Bank. As a highly specialized institution it will need, particularly in some of its sections, staff of exceptionally high calibre and standards of training. At the same time, it will not be able to draw freely, as it can now, on a large staff service such as the Commonwealth Bank now has at its command. Therefore it seems necessary to give the management of the Reserve Bank fairly wide and flexible powers of staff recruitment and management, and the bill provides accordingly.
By comparison with the existing legislation, the bill provides for certain changes of detail which experience has shown to be desirable. But these do not involve major questions of policy and they can better be explained when we reach the committee stage of the bill. I should perhaps mention here the provision that the head office of the Reserve Bank shall be in Sydney and that, after a reasonable period of time, it shall not be in the same building as the head office of any other bank, or of the Commonwealth Banking Corporation.
– How the Government would like to smash it up!
– Has the honorable senator heard the story of King Canute trying to hold back the waves? That is what his interjections remind me of. Finally, I draw attention to a provision whereby the Reserve Bank Bill, and the three other associated bills, will come into operation on a date to be fixed by proclamation. This provision is necessary because, after the passage of the legislation, a great deal will have to be done - including such things as the appointment of the Commonwealth Banking Corporation Board and arrangements for separation of staff - before it will be possible for the new structure to be brought into operation.
– There will be some disappointment there after Thursday next.
– There will be some disappointment on that side of the chamber, too. I have now given a broad account of the structure that will emerge from this bill and the other three related measures. I have described the proposed Reserve Bank, its constitution, powers and responsibilities, and I have shown how it will stand in relation to the other banks in the Commonwealth group and the banking system generally. There remains one thing to say. With reconstruction on these lines and freed from earlier sources of conflict, the system ought to work more smoothly and effectively, and we expect it so to work. This will be assured if those directly responsible for the various parts of the system set out to make it work and I have every reason to believe that they will. They are conscious of the responsibilities they have to the community and they will also, I am sure, perceive the great opportunity that lies before them. High though its standards of competence and traditions of service have been, the Australian banking system has long suffered from certain internal frictions and divisions of counsel and spirit. The present opportunity is to achieve a new approach, putting co-operation foremost and leaving old discords behind with the past.
Debate (on motion by Senator O’Flaherty) adjourned.
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Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
– I move -
That the bill be now read a second time.
This bill is the second of the four main banking measures that I referred to in my speech on the Reserve Bank Bill. It provides for the re-constitution of the banking elements of the present Commonwealth Bank group, other than the central bank and the Rural Credits Department, under a new corporation to be called the Commonwealth Banking Corporation.
I have already explained, in my speech on the Reserve Bank Bill, the reasons why the Government has decided to establish a Commonwealth Banking Corporation. It would not be a practical matter, even were it so desired, to separate the Trading Bank and the Savings Bank in point of staff and premises, and so these institutions must continue to work with a common staff and accommodation. At the same time the Government has been most anxious to preserve the separate identities of those banks and the Development Bank which it is proposed to form and to give to each body a role and status of its own and adequate scope for expansion. The Commonwealth Banking Corporation will therefore be the controlling body for the Commonwealth Trading Bank, the Commonwealth Savings Bank and the Commonwealth Development
Bank, the last of which is to take over the present Mortgage Bank and Industrial Finance Departments of the Commonwealth Bank. The board of the corporation is to have power to determine the policy of the three banks and to control their affairs, and the corporation is to provide a common staff for conducting the business of the three banks.
The board is to be under a statutory duty, within the limits of its powers, to ensure that the policy of the corporation and the banking policy of the three affiliated banks are directed to the greatest advantage of the people of Australia and have due regard to the stability and balanced development of the economy of Australia. In line with the provisions under the present Commonwealth Bank Act and the Reserve Bank Bill, the board of the corporation will be required to keep the Government informed of the policy of the institutions it controls, and there is provision whereby, in the event of a difference of opinion between the Government and the board as to whether any such policy is directed to the objectives laid down, the Government will have an ultimate power of direction over the board after following certain procedures.
The board is to comprise eleven members. The managing director and deputy managing director of the corporation and the secretary to the Treasury will be ex officio members, and the other eight members, of whom one will be the chairman and’ another the deputy chairman of the board, will be persons who are not officers of the Commonwealth Public Service or directors, officers or employees of a bank (including the Reserve Bank and the corporation and its three constituent banks).
I expect it to be said by the Opposition that the inclusion of non-official members on the board is an attempt to hand the corporation and its constituent banks over to private interests. As a sufficient reply to that, I need only recall that exactly the same thing was said of the present Commonwealth Bank Board when it was established, and that it has since proved to be completely untrue. The activities of the corporation and its constituent banks will be wide as the Australian economy itself. Obviously, therefore, its directing body should be drawn from the widest possible field, bringing to its task the best available ability and a diversity of knowledge and experience. As to whether the governing authority will put the interests of the corporation foremost we need have no fear whatever. All past experience has shown that authorities of this kind quickly identify themselves with the institution they serve and develop strong enthusiasm for it.
There will be an executive committee of the board for each of the three constituent banks. The executive committees will have the duty of taking such action as is necessary to ensure that effect is given by their respective banks to the policy laid down for those banks and to any directions given by the board in relation to the affairs of those banks.
Each executive committee will consist of five members of the board appointed by the Treasurer after consultation with the board. The chairman of the board will not be a member of any executive committee, but will have the right to attend any meeting of an executive committee. To ensure a proper degree of integration of the operations of the executive committees, the managing director will be a member of each committee and the deputy managing director will also be eligible for membership. The Secretary to the Treasury will not be eligible for membership of the executive committee for the Trading Bank or the Development Bank, but he will be eligible for membership of the committee for the Savings Bank.
We are providing for the establishment of these committees for two reasons. One is that, since a considerable amount of detailed business can be expected to arise in connexion with each bank, and, since the nature of this business will vary a good deal as between the several banks, there ought to be a separate executive group for each ‘capable of giving its affairs the necessary time and attention. The second is that we think the provision of a separate committee for each bank will assist towards the objective of preserving its identity within the group and, indeed, of upholding its particular objectives and interests. It will be seen that these purposes are in line with the general conceptions we have followed in devising the framework of the corporation.
Each of the three banks will have its own general manager who will be appointed by the Governor-General on the recommendation of the corporation board. The three general managers will, under the managing director of the corporation, manage their respective banks in accordance with the policy laid down for those banks and with any directions of the board or of the executive committees.
I shall now explain the provisions in the bill as they affect the three constituent banks themselves.
The Commonwealth Trading Bank of Australia will be continued in its present form. It will carry on general banking business and will continue to have the duty of developing and expanding that business. As in the present act, it is laid down thai the Trading Bank shall not refuse to conduct banking business for any person by reason only of the fact that to conduct that business would have the effect of taking away business from another bank. This is wholly consistent with our intention of maintaining the Trading Bank as an active competitor in the trading bank field.
To provide for certain transitional costs, particularly those arising from the fact that the head office of the present Commonwealth Bank group is owned by the central bank, the Trading Bank is to be supplied from central bank reserves wi.h additional capital of £2,000,000. This will bring its capital to £7,429,000. In addition, the Trading Bank has a reserve fund which at present stands at £2,735,000, so that the Trading Bank will start out under the Commonwealth Banking Corporation with combined capital and reserves of over £10,000,000. In addition, of course, there are the amounts that have been set aside over the years as provisions for contingencies.
It is also proposed, in a separate bill that I shall be dealing with later, to amend the Income Tax Assessment Act for the purpose of making the Trading Bank liable to income tax from the beginning of the financial year in which the proposed Commonwealth Banks Act comes into operation. Since one of the central aims of the legislation is to ensure that the Commonwealth Trading Bank is placed on an equal footing with its private trading bank competitors, it is manifestly proper that the Trading Bank be required to pay tax like its competitors. The Trading Bank’s net profits after tax will continue to be distributed on the basis of one-half to the bank’s reserve fund and one-half to the Commonwealth.
The Trading Bank will, of course, continue to be subject to the same central banking controls as those applicable to the private trading banks. I shall say more on this matter later when dealing with the bill to replace the Banking Act 1945-1953.
With regard to the Commonwealth Savings Bank we have, as I said in my speech on the Reserve Bank Bill, been most anxious to maintain the integrity of that institution, safeguard the interests of its very many depositors and ensure for it the opportunity of further expansion. It will be expressly provided as the duty of the Savings Bank that it should encourage saving and promote the interests of its depositors. As at present, the profits of the Savings Bank will be exempt from income tax and will be divided each year equally between the reserve fund of the Savings Bank and the Commonwealth. There will be a general manager for the Savings Bank appointed by the GovernorGeneral on the recommendation of the board and he will, under the managing director, manage the Savings Bank.
I think I should mention here an important provision that is being included in the Banking Bill. The provision in question will ensure that not more than a specified proportion of the deposits of the Commonwealth Savings Bank or of any other savings bank coming within the scope of Commonwealth legislation shall be made available to other banks. We have deemed this necessary to ensure that, in the main, the funds of savings banks shall be applied only to those traditional forms of investment which on the one hand afford undoubted security and, on the other hand, meet social purposes of high importance, such as the finance of housing. All savings banks within the ambit of the provision will be put on equal terms.
– On low interest rates.
– All savings banks within the ambit of the provision will be put on equal terms. 1 repeat that sentence as a reply to the interjection about low interest rates. That is one of the primary purposes of savings banks, to use the funds in that direction. It will not be possible for any large proportion of the funds of either the Commonwealth Savings Bank or the private savings banks to be diverted to purposes of ordinary commercial banking.
A further particular aspect I should like to mention here concerns housing loans. Part VI. of the bill now before the Senate contains special provisions for the making of housing loans - to individuals on Credit Foncier terms and to building societies - by both the Trading Bank and the Savings Bank. There are similar provisions in the present Commonwealth Bank Act, but they apply only to the Trading Bank. They are now being extended to apply also to the Savings Bank.
The Development Bank is to be formed, basically, by amalgamating the present Mortgage Bank and Industrial Finance Departments of the Commonwealth Bank and it will take over the present business of those two institutions. It will, however, be given some additional resources and specific functions for assisting primary producers and industrial undertakings. As departments of the Commonwealth Bank, these two institutions have undoubtedly proved their worth, and there is good reason to think that they are capable of meeting a somewhat wider range of needs. It has seemed to the Government that they will have the best opportunity of doing this if they are combined into a single institution and placed under the control of the Banking Corporation and its board. There the Development Bank will be served by the common staff of the Corporation but, like the Trading Bank and the Savings Bank, it will have a separate identity, a charter and a general manager of its own.
The Development Bank will operate over the fields of both primary and secondary industry. Its function will be to provide finance to assist primary production or the establishment or development of industrial undertakings, especially small undertakings, in cases where in its opinion the ‘ provision of finance is desirable and the finance would not otherwise be available on reasonable and suitable terms and conditions. The range of facilities it can offer will be fairly wide. For example, it will provide term loans just as both the Industrial Finance Department and the Mortgage Bank Department do now and, like the present Industrial Finance Department, it will also provide hire-purchase facilities. The Government has decided, however, that finance shall be provided only for the purchase of producers’ equipment or, as it is expressed in the bill, to acquire goods for use in the course of business.
To give somewhat greater flexibility as to the kind of arrangements which the bank may make with clients, it has been decided to remove the limits which now apply on the maximum amount and the period of loans which the Mortgage Bank Department may make, and we have also included a special provision which ought to be of considerable value, especially to people starting out on the land or establishing new industrial enterprises. This provision, which formerly applied only to the Industrial Finance Department, is to the effect that, in determining whether or not finance shall be provided in any case, the Development Bank shall have regard primarily to the prospects of the enterprise becoming, or continuing to be, successful, and shall not necessarily have regard to the value of the security available. We have had very much in mind here the position of people who would have good chances of making a success of farming or some other form of production but who cannot get sufficient initial finance because they cannot offer the requisite amount of security.
The Development Bank will take over the present capital and reserve funds of the Mortgage Bank and Industrial Finance Departments. These amount in total to more than £14,300,000. It is proposed to supply a further £5,000,000 by way of capital from the reserves of the central bank. The Development Bank will not be subject to income tax and the profits it makes will go to its Reserve Fund.
The borrowing powers of the Development Bank will be fairly wide but it will not be able to borrow overseas without the consent of the Treasurer, and there will be a limit of £2,000,000 on the amount which it can borrow from the Reserve Bank without the consent of the Treasurer. The bank will have power to accept deposits from the public but it is not envisaged that the bank will rely on deposits as a major source of funds. The Treasurer will have power to make advances to the Development Bank out of moneys appropriated by the Parliament for the purpose.
It is intended that the Development Bank will provide advisory services, along the lines of those now supplied by the Industrial Finance Department, with a view to promoting technical and administrative efficiency in farming or industrial undertakings. This kind of service has proved to be a very valuable feature of the work of the Industrial Finance Department.
All in all, the Government considers that, established on these lines, the Development Bank will find ample scope for useful activity. Its role will be essentially that of assisting new people to start in industry and farming, of helping to promote new forms and methods of production and of adding to the productivity of existing enterprises. We do not intend that, in this field, it will cut across existing financial institutions to any significant degree but rather that it will cooperate with them and supplement the types of finance they provide.
The provisions of the bill relating to the Commonwealth Banking Corporation Service are, for all practical purposes, identical with those which now apply to the Commonwealth Bank Service and I do not need therefore to explain them here.
I have then great pleasure in commending this bill to the Senate. In it we have provided for the continuance, unimpaired, of great institutions which have already given splendid service to the Australian community. But we have done much more than that. Within a general framework of overall control we have been able to provide each one of those institutions with a realm of opportunity for still greater and more vital service and achievement. Well founded in experience and designed in a constructive spirit, this measure will, I confidently believe, prove to be a landmark in the development of the Australian banking system.
Debate (on motion by Senator McKenna) adjourned.
Sitting suspended from 12.58 to 2.30 p.m.
page 283
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
Senator SPOONER (New South WalesMinister for National Development) [2.30J. - 1 move -
That the bill be now read a second time.
This bill is designed to replace the Banking Act 1945-1953, which is the act regulating generally the conduct of banking business in Australia and embodying the general powers of the central bank in relation to the banking system.
As compared with the present Banking Act, the bill has two chief purposes. The first is to replace the special account provisions with a system of statutory reserve deposits. The second is to recast the act so as to make adequate provision for the regulation of savings bank business, having regard to the emergence of private savings banks. A further subsidiary purpose of the bill is to make provision for the position of the new Commonwealth Development Bank in the banking structure. The opportunity has also been taken of making a few minor amendments of a technical nature.
In its approach to the question of introducing a system of statutory reserve deposits, the Government has been particularly concerned to see that the Reserve Bank has adequate power to exercise its fundamental function of regulating, in the national interest, the overall volume of bank credit. The proper exercise of this function is if the utmost importance to the health of the Australian economy, being as it is subject to wide fluctuations in the balance of payments and, hence, in the volume of money. Nowadays it is universally accepted that effective central bank control of the level of banking activity is essential, and that the central bank must have adequate powers effectively to discharge its highly important responsibilities in this respect.
The special account provisions in the present act are highly complex. The essential feature of the system, however, is that the central bank has power to require trading banks, virtually without notice, to lodge in special accounts with it the amounts held in special accounts as at October, 1952, plus up to three-quarters of the increase since then in their Australian deposits. The purpose of the system is, of course, to enable the volume of money generated through the activities of the banks to be regulated in the light of economic conditions prevailing from time to time.
The private banks have contended that, under the present system, the central bank has the power to take sudden and arbitrary action against them to an extent that goes beyond proper credit control requirements, and that this could have the effect of gravely disrupting their operations. Although they emphasize that they have no criticism of the manner in which the central bank has exercised its powers in the past, they are most concerned about the scope which they see in the provisions for unfair attack on them. They point, also, to the fact that the law does not provide for uniform treatment of the Commonwealth Trading Bank and the private trading banks - or, in other words, that the provisions as they stand could be used as an instrument of unfair discrimination against them in favour of the Commonwealth Trading Bank. In addition, they argue that the special account provisions are unnecessarily complicated and hard to understand and that they should be replaced by more simple provisions of a kind that are in operation in a number of other countries.
In view of the general considerations to which I referred in my speech on the Reserve Bank Bill, the Government has decided that a system of reserve deposits should be introduced.
The provisions for a system of statutory reserve deposits are contained in clauses 17 to 31 of the bill. Briefly summarized, they provide as follows: -
As 1 have said, these provisions will give the Reserve Bank ample powers of control over bank credit and at the same time will remove the objections that the private banks see in the present special accounts provisions.
The main restriction of substance on the Reserve Bank’s power is the requirement to give 45 days’ notice of a determination of a statutory reserve deposit ratio in excess of 25 per cent. The Government believes that this affords the trading banks reasonable protection against sudden and arbitrary action of a kind that could disrupt their affairs and constitute an unfair attack on them. As to the adequacy of the 25 per cent, figure, I would mention that at no time since the special accounts system was revised in 1953 has the amount in special accounts exceeded 25 per cent, of the banks’ deposits. I would also mention that the central bank has over recent years administered special accounts in such a manner that each major trading bank has had the same percentage of its deposits on deposit in special account, and the inclusion of a uniformity provision in the statutory reserve deposits system will present no difficulty in the effective administration by the Reserve Bank of its credit control powers.
It needs to be remembered that the trading banks must necessarily maintain a measure of liquidity in their own hands. The amount of liquid assets which they themselves hold in the base for credit control action by the central bank irrespective of whether that action is taken under a system of special accounts or of reserve deposits, or for that matter, under any other type of credit control system. The trading banks some time ago agreed, within the context of the special accounts system, to maintain a certain minimum level of liquidity in their own hands, and they have reaffirmed that under the reserve deposits system they will continue to observe the liquidity convention now in operation or such other ‘liquidity convention as may in the future be agreed between them and the Reserve Bank. The other principal difference between the provisions in the bill and those in the present Banking Act relates to savings banks. The present act did not contemplate the operation of private savings banks and it is necessary to amend the act so as to provide for the emergence of competitive banking in the savings bank field.
The conditions under which the private savings banks operate are laid down in the authorities which have been granted to them to carry on banking business. These conditions provide that the private savings banks may not accept deposits from a profit-making company or body and may noi permit cheques to be drawn on an account except by certain societies, bodies or clubs. The private savings banks may invest their depositors’ funds only in deposits with banks, public securities, loans to guaranteed building societies and loans for housing or other purposes on the security of land. They must maintain at least 70 pei cent, of depositors’ funds in the form of cash, deposits with the central bank and public securities. Superimposed on this is a requirement, which was laid down to ensure the maintenance of adequate liquid funds, that the savings banks must keep treasury-bills and deposits with the central bank amounting in total to not less than 10 per cent, of depositors’ balances.
The Commonwealth Savings Bank is not at present subject to the same detailed investment conditions as the private savings banks - although the Commonwealth Savings Bank has in practice observed the same conditions. Particularly in view of the fact that the Commonwealth Savings Bank will no longer be directly associated with the central bank, it is obviously desirable for the law to contain standard provisions for the conduct of savings bank business.
Accordingly, clauses 37 and 38 of the bill contain special provisions with respect to savings banks. So as to avoid the inflexibility that would be caused if the detailed provisions relating to the conduct of savings bank business were incorporated in the Banking Act itself, there is a provision requiring conditions on matters of a kind now covered by the authorities of the private savings banks to be prescribed by regulation. The regulations to be promulgated under this provision will supersede the “ conditions “ in the authorities of the private savings banks - although it is envisaged that the regulations will follow the same pattern as in the present authorities. There is a further provision that the regulations must apply uniformly to the Commonwealth Savings Bank and the private savings banks.
Another provision of particular interest is a requirement that, within the framework of the regulations, a savings bank may not maintain deposits with trading banks to an amount exceeding £2,000,000 plus 2-i per cent, of the savings bank’s depositors’ balances. The purpose of this provision is to ensure that an undue proportion of savings bank business is not channelled into ordinary commercial banking uses. The provision will, of course, apply uniformly to the Commonwealth Savings Bank and the private savings banks.
I might say at this point that throughout its consideration of the banking measures the Government has given very close attention to the issue that arises by virtue of the immense importance to the Australian economy of the manner of investment of the huge resources of the Commonwealth Savings Bank. We have come down in favour of giving the Savings Bank a charter of its own, the nature of which I explained in my speech on the Commonwealth Banks Bill, and ‘ of placing the Commonwealth Savings Bank in the same position as the private savings banks in regard to the investment of its funds. However, so as to ensure that the Reserve Bank is kept fully aware of the investment policy of both the Commonwealth. Savings Bank and the private savings banks and is in a position to advise on savings bank investments, a provision has been included in the bill requiring the various savings banks to keep the Reserve Bank informed of their policies in relation to loans and investments, with particular reference to their policies in relation to loans for housing purposes.
In other respects the bill includes amended provisions concerning the operations of the Commonwealth Savings Bank and the private savings banks. There is, for instance, a requirement for savings banks to furnish statistical information about their affairs on a comparable basis to the trading banks. There are also provisions to bring the Commonwealth Savings Bank, along with the private savings banks, within the scope of reserve bank jurisdiction in respect of matters such as protection of depositors, mobilization of foreign currency, advance policy and interest rate policy.
Finally, I shall refer briefly to the provisions of the bill as they affect the Commonwealth Development Bank. We have seen that the Development Bank will perform special functions of a kind not performed by the trading banks, and it is not proposed to make the Development Bank subject to the reserve deposit provisions or to treat the Development Bank as a trading bank for the purposes of the £2,000,000 plus 2i per cent, formula which I mentioned earlier. The Development Bank will, however, be made subject to the provisions relating to protection of depositors, mobilization of foreign currency, advance policy, interest rate policy, supply of statistics, and furnishing of information to the Reserve Bank.
I am confident that the measures in the bill, combined with those in the Reserve Bank Bill and the Commonwealth Banks Bill, will ensure that the banking system is based on thoroughly sound principles. I am sure also that the reconstructed system will work efficiently in promoting the development of the national economy and that it will endure in the best interests of the people of Australia. It is in that spirit that I commend the Banking Bill to the Senate.
Debate (on motion by Senator McKenna) adjourned.
page 286
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
– I move -
That the bill be now read a second time.
At its name implies, this bill contains provisions relating to the changeover from the present banking structure to the new. As such, it necessarily deals with matters having a relation to each of the three main bills I have already dealt with. Except for the provisions reconstituting the present Commonwealth Bank Service into two new staff services, the bill contains provisions of a machinery and technical nature, not involving issues of principle. I shall briefly explain these machinery provisions before dealing with the staff provisions.
There is firstly provision to enable the Reserve Bank to carry on without interruption as successor to the Commonwealth Bank. Its statutory responsibilities as the central bank of Australia are, of course, set out in the Reserve Bank Bill and in the Banking Bill. The bill now before the Senate, however, ensures that these respon sibilities will be taken over from the Commonwealth Bank without any change of step.
This applies particularly to the establishment of the statutory reserve deposits system to replace the special accounts system. Under the bill, the Commonwealth Bank may, on giving the appropriate notice, determine a statutory reserve deposit ratio which will come into force on the commencing date of the new system. Thus, although the Commonwealth Bank will, on that day, necessarily refund to the banks concerned all the amounts held by them in special accounts, an appropriate amount will simultaneously fall due for lodgment in statutory reserve deposit accounts. The provisions in the Banking Bill relating to statutory reserve deposits will then apply from that point onwards.
It is also provided that the Banking (Foreign Exchange) Regulations, which were promulgated under the Banking Act 1945-1953, may be continued in force without interruption, and that certain directions given by the Commonwealth Bank in relation to the sale and purchase of gold will remain in operation.
The Note Issue Department and the Rural Credits Department of the Commonwealth Bank are expressly continued as departments of the Reserve Bank. On the other hand, the assets and liabilities of the Mortgage Bank Department and the Industrial Finance Department, which are to be amalgamated in the Commonwealth Development Bank, are transferred to that bank. The effect of these last provisions is merely to ensure that the Development Bank is the full legal successor of the two departments concerned, and there is nothing in them which calls for special comment.
I come now to the staff provisions of the bill. In formulating these provisions, the Government has constantly had in mind the vital necessity both of meeting the requirements of efficiency and of safeguarding the legitimate interests of officers of the present Commonwealth Bank Service. The officers of the present service will all be allocated either tq the Reserve Bank Service or to the Commonwealth Banking Corporation Service, and the necessary allocation will be made jointly by the governor of the Reserve Bank and the managing director of the Commonwealth
Banking Corporation. Then is no avoiding a provision of this nature; the responsibilities of both services will be of national importance and the Government has a plain duty to ensure that they will be fulfilled. This is far from saying, however, that the desires of individual officers will not be taken into account. On the contrary, in the allocation of staff every effort will be made by the authorities concerned to meet the wishes of individual officers as far as it is possible to do so having regard to the essential requirements of both services.
Careful thought has been given to the avoidance of too precipitate an allocation of officers to their respective new services, perhaps before some officers have had sufficient time to appreciate where their true interests lie.
The bill therefore provides for a three months’ period after the initial allocation of officers, during which transfers may be effected, with the agreement of the governor and the managing director, from one service to the other, with full preservation of rights.
Under the bill, all present officers of the Commonwealth Bank Service are assured that there will be no reduction in. their remuneration on allocation to their new service. They will lose no seniority for any purpose and their rights to superannuation, accrued recreation leave, long service leave and sick leave are all expressly preserved. As has already been explained to the Senate in connexion with the Commonwealth Banks Bill, officers appointed to the Commonwealth Banking Corporation Service will be employed under statutory provisions which are, to all intents and purposes, the same as those in the present Commonwealth Bank Act. The. Reserve Bank Service will operate under more flexible provisions, but special steps have been taken in this bill to ensure that Commonwealth Bank officers who are allocated to the Reserve Bank Service will retain the protection of tenure of office. It is specifically provided that such officers may not, except for incapacity or misconduct, be retired or dismissed before age 60 - 55 for females.
It would, of course, be idle to think that Commonwealth Bank officers will feel no pang of regret that the Commonwealth Bank Service, which has given outstanding service in the past, is now being divided into two separate services. This is a natural feeling and one from which the Government itself is not immune. On the other hand, everything possible has been done in the legislation both to safeguard the welfare of the officers concerned and to ensure that the tradition of efficient and loyal service will be perpetuated.
This completes the general explanation of the four banking bills. Later, however, I shall explain the ten further small measures that are proposed for the purpose of amending other acts which require special amendment as a result of the introduction of the new banking structure.
In conclusion, I would like to emphasize again that the Government has given very great thought over a long period to the many complex issues that are involved in the reconstruction of the banking system. The measures embodied in the legislation I have explained have been adopted after mature consideration and in the firm belief that they will establish a sound and lasting banking structure which will operate with hamonious efficiency and which in the course of time will result in removal of banking from the area of political controversy. If that purpose is achieved, a great service will have been performed for the nation.
Debate (on motion by Senator McKenna) adjourned.
page 287
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first, time.
Senator SPOONER (New South WalesMinister for National Development) [2.581 - I move -
That the bill be now read a second time.
As I explained during the course of my second-reading speeches on the main banking measures, the establishment of a new banking structure will necessitate consequential amendments to a number of other acts of Parliament. The acts in question do not themselves deal with banking as such, but contain certain banking references which will be affected by the new banking legislation.
I might say that the establishment of the Reserve Bank of Australia as the central bank in place of the Commonwealth Bank of Australia will not mean that all acts containing references to the Commonwealth Bank will have to be specifically amended so as to alter the references to the Reserve Bank. There is a provision in the Reserve Bank Bill (hat, except in specified cases where it would be inappropriate to do so, all references in Commonwealth laws to the Commonwealth Bank are to be read as references to the Reserve Bank. The acts that are being specially amended are those requiring amendment in other respects as a consequence of the new banking legislation.
The bill now before the Senate relates to the first of the ten acts that have to be specially amended, and its purpose is to make a consequential amendment to the Audit Act 1901-1955.
Under section 70b of the Audit Act 1901- 1955, the Treasurer has power to guarantee repayment to the Commonwealth Bank, or to the Commonwealth Trading Bank, of loans made for the purposes of the Commonwealth by either of those banks. By the amendment now proposed, the Treasurer will be empowered to guarantee the repayment of such loans to the Reserve Bank, the Commonwealth Trading Bank or the Commonwealth Development Bank.
The Development Bank is being added since loans made at present by the Mortgage Bank or Industrial Finance Departments of the Commonwealth Bank for Commonwealth purposes may be guaranteed by the Treasurer, and under the new banking legislation the Development Bank will be taking over the functions of those two departments. It will be seen that the amendment is of a purely machinery nature, and I commend the bill to the Senate.
Debate (on motion by Senator 0’Flaherty’ adjourned.
page 288
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
– I move -
That the bill be now read a second time.
The Commonwealth Bank has always operated its own scheme of long service leave benefits for its officers and employees, and consequently when the Commonwealth Employees’ Furlough Act was enacted in 1943, officers and employees of the Commonwealth Bank were excluded from its operation. This bill merely serves to continue the present position. The Reserve Bank and the Commonwealth Banking Corporation, like the Commonwealth Bank before them, will operate their own long service leave schemes, and the purpose of the bill is simply to provide for this by excluding persons to be employed under the Reserve Bank Act and the Commonwealth Banks Act from the operation of the Commonwealth Employees’ Furlough Act.
Debate (on motion by Senator 0’Flaherty’ adjourned.
page 288
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
– I move -
That the bill be now read a second time.
The purpose of this bill is to make a minor amendment to the provisions of the Crimes Act 1914-1955, which is the act relating to offences against the Commonwealth. The Crimes Act at present defines “ Commonwealth officer “ to include any person in the service of any public authority under the Commonwealth, and specifically to include an officer of the Commonwealth Bank. It also defines “ public authority under the Commonwealth “ to mean any authority or body constituted by or under any act, and specifically to include the Commonwealth Bank.
It is, of course, intended that officers of the two new staff services for the Reserve Bank and the Commonwealth Banking
Corporation will continue to be Commonwealth officers for the purposes of the Crimes Act, and that the authorities constituted under the new legislation will continue to be public authorities under the Commonwealth for the purposes of the act.
The appropriate amendment of the Crimes Act is to omit from the act the references to the Commonwealth Bank in the definitions of “ Commonwealth officer “ and “ public authority under the Commonwealth “, and this is what the bill proposes, lt is not necessary to substitute for them references to the Reserve Bank and the Commonwealth Banking Corporation and its three affiliated banks because all of these institutions will unquestionably be authorities constituted under an act and as such will automatically be covered, together wilh the officers employed by them, by the definitions in the Crimes Act without express mention of them in the act.
The opportunity is also being taken to amend section 2 of the Crimes Act so as to include references to section numbers in the explanation of the division of the act into parts. This amendment gives effect to standard procedure that has been followed in other acts, and is purely machinery in nature.
Debate (on motion by Senator O’Flaherty) adjourned.
page 289
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
– I move -
That the bill be now read a second time. This bill proposes amendments of a purely formal nature to certain provisions of the Gold-mining Industry Assistance Act 1954- 1 956, as a consequence of the main banking measures. References in that act to provisions in the present Banking Act are being altered to references to the corresponding provisions in the proposed new Banking Act. and a reference in the Gold-mining
Industry Assistance Act to the Commonwealth Bank of Australia is being changed to a reference to the Reserve Bank of Australia.
The bill should be read in conjunction with clause 28 of the Banking (Transitional Provisions) Bill, which makes the necessary provision for gold delivered to the Commonwealth Bank under the relevant section of the Banking Act 1945-1953 to be eligible for subsidy after this amending bill has come into effect. The amendments clearly do not give rise to any issues of substance, and do not affect the conditions governing the payment of subsidy under the act on the production of gold in Australia and the Territory of Papua and New Guinea.
Debate (on motion by Senator O’Flaherty) adjourned.
page 289
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion of Senator Spooner) read a first time.
– I move -
That the bill be now read a second time. The chief purpose of this bill is to give effect to the intention, which I explained during my second-reading speech on the Commonwealth Banks Bill 1957, of making the Commonwealth Trading Bank liable to income tax from the beginning of the financial year in which the new banking structure comes into operation. The bill provides that, as from that time, the Commonwealth Trading Bank will pay income tax at the rates applicable to a public company - that is, on the basis of the rates for the current financial year, at 6s. 6d. in the £1 on the first £5,000 of taxable income and 7s. 6d. in the £1 on the balance.
The central aim of the banking legislation is to create a central bank which is not directly associated with the conduct of banking business in competition with the private banks, and it is obviously an important corollary of that central aim to ensure that the Commonwealth Trading Bank takes its place in the competitive trading bank system on an equal footing with the private trading banks. Since the private trading banks are liable to income tax as public companies, it follows that the Commonwealth Trading Bank should also be so liable.
I might mention that the principle involved has already been approved by Parliament in the case of the Australian National Airlines Commission and the Australian Coastal Shipping Commission, both of which are required by Act of Parliament to pay income tax on the same basis as their private enterprise competitors. The position of these two commissions vis-a-vis their private enterprise competitors is on all fours with that of the Commonwealth Trading Bank under the new banking structure vis-a-vis the private trading banks.
I expect it to be said that it is unfair to subject the Commonwealth Trading Bank to income tax in addition to continuing to require it to pay one-half of its net profits to the Commonwealth. Some will no doubt argue that, since income tax represents the only payments made by the private banks to the Commonwealth, the Commonwealth Trading Bank should be treated in the same way and should not be required also to pay to the Commonwealth a proportion of its profits after tax.
– Why not make the private trading banks pay one-half of their profits to the Commonwealth? The nation gives them their wealth.
– Wait until we follow the argument through. The kind of argument to which I was alluding is quite fallacious.
– Let us have a vote.
– In spite of what may happen to the nation or what evil consequences may follow, all you say is, “ Let us have a vote “. The argument to which I was referring ignores the fact that the private banks, like all other companies, distribute a substantial proportion of their net profits after tax to their shareholders. The Commonwealth stands in the same relation to the Commonwealth Trading Bank as the shareholders in the private banks stand in relation to the private banks. It would patently be wrong in principle to permit the Commonwealth Trading Bank to retain all of its profits after tax since to do so would confer an unfair advantage on the Commonwealth Trading Bank as compared with the private trading banks.
As I indicated in my speech on the Commonwealth Banks Bill 1957, it is not proposed to make either the Commonwealth Savings Bank or the Commonwealth Development Bank liable to income tax, and accordingly the provisions in the bill now before the Senate do not affect either of these banks.
After careful deliberation, the Government has decided that it would not be appropriate to subject the Savings Bank to income tax in addition to requiring it to pay one-half of its net profits to the Commonwealth. The Savings Bank is a very special kind of national institution in that it is the depositary of the savings of millions of Australian people, and it is being given a statutory duty to encourage saving and to promote the interests of its depositors. 1 was waiting for some one to say, by way of interjection, “That being so, the private savings banks should be placed in the same position as the Commonwealth Savings Bank “. But I did not hear any such interjection.
The Government believes that it would be inconsistent with the conception of the Savings Bank in the new banking structure to make it liable to income tax. It has, moreover, to be remembered that, under the terms of agreements with the States of New South Wales, Queensland and Tasmania, the Savings Bank is required to pay the States concerned one-half of the profits it earns on its business in those States, and the Savings Bank would be placed in an unduly onerous position if it had to pay income tax in addition to the payments it is required to make to the States and to the Commonwealth.
The Government has also decided that it would not be appropriate to require the Commonwealth Development Bank to pay income tax. The Development Bank will have specialized functions in assisting primary and secondary industry, and the Government considers that the Development Bank should be permitted to retain any profits it earns as a means of strengthening its capital structure and enabling it to expand the facilities it will be providing for the assistance of primary and secondary industry. Retention by the Development Bank of its profits will continue the position that has hitherto obtained in the case of the Mortgage Bank and Industrial Finance Departments of the Commonwealth Bank.
– Will the Development Bank be enabled to engage in hire-purchase transactions?
– That will be set out in the provisions governing the operations of the bank. I should not like to answer that rather important question when it is asked by way of interjection. I thought the honorable senator was going to say that, as it was proposed that the Development Bank should be free of income tax, the private trading banks also should enjoy that privilege.
Finally, I should perhaps mention that clause 4 of the bill proposes a minor amendment to section 23c of the Income Tax and Social Services Contribution Assessment Act. This section relates to the exemption from tax of certain income derived by a company from the sale of gold, and the amendment that is proposed is purely consequential on the establishment of the Reserve Bank as the central bank as the successor of the Commonwealth Bank.
Debate (on motion by Senator O’Flaherty) adjourned.
page 291
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
– I move -
That the bill be now read a second time.
This bill is designed to amend section 6 (1.) of the National Debt Sinking Fund Act 1923-1950 by substituting the Governor of the Reserve Bank for the Governor of the Commonwealth Bank as a member of the National Debt Commission. The amend ment is intended to operate from the day on which the proposed Reserve Bank Act 1957 comes into operation and is, of course, purely consequential upon that act.
Debate (on motion by Senator O’Flaherty) adjourned.
page 291
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
– I move -
That the bill be now read a second time.
This is a further bill that is consequential upon the proposed banking legislation. The Northern Territory (Lessees’ Loans Guarantee) Act 1954 empowers the Treasurer to guarantee repayment of a portion of a loan made by a bank to the holder of a pastoral homestead lease or an agricultural lease in the Northern Territory for the purpose of financing the improvement of his property. The banks at present specified under the scheme are the Commonwealth Bank, the Commonwealth Trading Bank and the private trading and savings banks.
The effect of the proposed amendment is to remove the Commonwealth Bank and to add the Commonwealth Development Bank and the Commonwealth Savings Bank to the specified banks. The Reserve Bank is not being included because it will function only as a central bank and will not be making loans of the type in question. The addition of the Development Bank is proposed because, as successor to the Mortgage Bank Department of the Commonwealth Bank, the making of loans by it to Northern Territory pastoralists will be entirely consistent with its functions. The Commonwealth Savings Bank is being included so as to place it in the same position as the private savings banks, which are already eligible banks for the purposes of the scheme. Again, no issues of substance arise under the proposals in the bill.
Debate (on motion by Senator O’Flaherty) adjourned.
page 292
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
– I move -
That the bill be now read a second time.
The bill proposes two routine amendments to the provisions of the Officers’ Rights Declaration Act 1928-1953. The general purpose of the Officers’ Rights Declaration Act is to preserve the existing and accruing rights of officers of the Commonwealth Public Service who are appointed to positions with statutory authorities of the Commonwealth.
The first of the proposed amendments is to delete from the act a reference to Commonwealth public servants who became officers of the Commonwealth Bank prior to 1928. There are no longer any officers of the Commonwealth Bank in this category, and consequently there is no need to retain the reference in question.
The second of the proposed amendments is to delete from the act a reference to persons employed under the Commonwealth Bank Act 191 1-1927. There are specific provisions in both the Reserve Bank Bill 1957 and the Commonwealth Banks Bill 1957 preserving the existing and accruing rights of ex-Public Service employees of the Reserve Bank and the Commonwealth Banking Corporation, and it is not necessary to make express provision for these employees in the Officers’ Rights Declaration Act. The procedure being followed in this respect is consistent with standard procedure which has been followed in the case of other statutory authorities of the Commonwealth.
The two proposed amendments have no policy significance and I recommend their adoption.
Debate (on motion by Senator O’Flaherty) adjourned.
page 292
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
– I move -
That the bill be now read a second time.
The purpose of this bill is to make a machinery amendment to section 98 of the Re-establishment and Employment Act 1945-1956. The Re-establishment and Employment Act is the act that relates to the re-establishment in civil life of members of the forces. Division 3 of Part VI. of the act provides for the making of re-establishment loans to discharged members of the forces, and section 98 provides that agreements may be made with specified authorities for the performance by the latter of functions under Division 3.
The specified authorities referred to in the present section 98 include the Commonwealth Bank and the Commonwealth Trading Bank. The effect of the proposals in the bill is to delete the Commonwealth Bank as a specified authority and to substitute for it the Commonwealth Development Bank. The existing reference to the Commonwealth Bank contemplated the performance by the Mortgage Bank and Industrial Finance Departments of the Commonwealth Bank of functions in relation to the making of re-establishment loans, and since the Commonwealth Development Bank is to take over these departments it is appropriate that the reference in section 98 to the Commonwealth Bank be changed to a reference to the Commonwealth Development Bank.
The amendment is, of course, a purely routine consequence of the proposed establishment of the Commonwealth Development Bank, and has no other significance.
Debate (on motion by Senator O’Flaherty) adjourned.
page 293
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
– I move -
That the bill be now read a second time.
The effect of the proposals in this bill is to exempt the Reserve Bank from the payment of sales tax on goods used by it. The Commonwealth Banking Corporation and its three affiliated banks will, however, be subject to salestax. Under the present Sales Tax (Exemptions and Classifications) Act, goods produced by the Commonwealth Bank are exempt from sales tax, but goods purchased for the use of all institutions in the existing Commonwealth Bank group are subject to sales tax. These provisions are out of line with accepted principles relating to the payment of sales tax by statutory authorities of the Commonwealth, and require amendment in the light of the proposed new banking structure.
The normal principle is that a statutory authority which does not conduct a business undertaking in the sense of producing goods or services for sale, is not required to pay sales tax. Authorities in this category perform functions of a governmental nature, and in common with government departments no good purpose would be served in requiring them to pay sales tax. On the other hand, a statutory authority which operates a business undertaking supplying goods or services for sale, whether in competition with private enterprise or not, is normally required to pay sales tax on all goods used by it that are ordinarily subject to sales tax. lt is, of course, only proper that any business undertaking of this kind, whether public or private, should have to pay sales tax as an ordinary item of operating expenditure.
Application of these principles to the banks referred to in the proposed new banking legislation means that the Reserve
Bank should be exempt from sales tax and that the Commonwealth Banking Corporation and its three affiliated banks should be subject to sales tax in the same way as other banks. The bill now before the Senate embodies proposals to this effect.
The practical significance of the proposals is small. The Reserve Bank will be exempt from sales tax on all goods and equipment used by it and not only on goods produced for its use in its note printing branch. As far as the Commonwealth Banking Corporation group is concerned, the only practical effect of the proposal is that any printing work done for the group in the future by the note printing branch of the Reserve Bank will, instead of being exempt from sales tax, be subject to sales tax at the rates ordinarily payable on commercial printing.
Debate (on motion by Senator O’Flaherty) adjourned.
page 293
Suspension of Standing Orders.
– by leave - I move -
That so much of the Standing Orders be suspended as would prevent the bills relating to banking, viz., Reserve Bank Bill 1957, Commonwealth Banks Bill 1957, Banking Bill 1957, Banking (Transitional Provisions) Bill 1957, Audit Bill 1957, Commonwealth Employees’ Furlough Bill 1957, Crimes Bill 1957, Gold-Mining Industry Assistance Bill (No. 2) 1957, Income Tax and Social Services Contribution Assessment Bill (No. 2) 1957, National Debt Sinking Fund Bill 1957, Northern Territory (Lessees’ Loans Guarantee) Bill 1957, Officers’ Right Declaration Bill 1957, Re-establishment and Employment Bill .. 1957, and Sales Tax (Exemptions and Classifications) Bill (No. 2) 1957, being debated simultaneously on the motion for the second reading of one of them.
In other words, Mr. President, what is contemplated is that the second-reading debate on one of the bills will cover all the bills relating to Banking which have been introduced to-day.
page 293
In committee:
Bill agreed to.
Bill reported without amendment or debate.
Motion (by Senator Spooner) agreed to -
That the bill be re-committed.
In committee (Recommittal):
Clauses 1 to 3 agreed to.
Clause 4.
.- The purpose of this clause is to repeal section 13 of the principal act and to insert several new sections in its stead. I submit that it is desirable for this type of legislation to be moulded into a form that is appropriate to a modern commercial community in relation to public corporations, and that it is also desirable that uniformity be observed in relation to Commonwealth corporations.
According to my recollection, which I have not had an opportunity to confirm in this respect, the Aluminium Industry Act does not contain any disqualifying provisions such as are contained in proposed new section 13. It will be remembered that, in the original Atomic Energy Act, we did include provisions such as this. Subsequently, when the Export Payments Insurance Corporation Bill was before this chamber, a very interesting debate took place, as a result of which a provision was formulated similar to the form that has been adopted in proposed new section 13.
The first thing I want to point out is that these provisions have been adopted for the very purpose of prescribing a standard of commercial integrity that is so necessary, of course, in the guardianship of public funds and for the purpose of preventing any departure from the practices of commercial integrity that may creep into the relationship between a commissioner and his corporation. In that respect, I would have thought that it would be a very useful course if those charged with the responsibility of framing this sort of provision were to look to the modern legislation which many parliaments have thought modern commercial conditions required to be enacted in relation to commercial companies. I shall have more to say in this connexion in a few minutes.
Proposed new section 13 provides that where certain members of the commission do certain things the Governor-General shall, by notice in the “ Gazette “, declare the offices of the members vacant, and thereupon the offices shall be deemed to be vacant. Senator Gorton will be reminded that it was on an amendment that he suggested when the Export Payments Insurance Corporation Bill was before us that the word “ shall “ was introduced, because the Senate had set its face steadfastly against permitting the Executive to have a discretion as to whether a disqualification did take place. I have no doubt that the Senate adopted the words “ the Governor-General shall, by notice in the Gazette ‘, declare that the office of the member is vacant . . . “ in the belief that that was a fully obligatory provision.
I simply want to put before the committee an observation, which I think will not be contested in law, that there is no procedure whereby performance of that obligation by the Governor-General can be compelled. It is my understanding that, due to the particular prerogative that the Sovereign has under our Constitution, no court will contemplate the possibility of compelling performance of a duty by the Sovereign, or the Sovereign’s representative. That, therefore, leaves the matter in the same legal position as if it were a statement that the Governor-General “ may “ declare the office of a member vacant, because the sanction against the contravention of that provision where we say “ shall “ is simply a political sanction. My remarks are intended to be objective, and not to refer to any particular persons, but governments come and go. Therefore, the Parliament is wise if it so moulds its legislation that it is not necessary for the Governor-General to insert a notice in the “ Gazette “ before a vacation of office occurs. I do not propose to move an amendment to that effect, but I mention it in the hope that it, and the other matters thatI shall mention, will receive thoughtful consideration.
One of the disqualifying circumstances is set out in paragraph (d) - a member of the Commission fails to comply with his obligations under the next succeeding subsection,
This refers to proposed new section 13 (2.1, which reads -
A member of the Commission who is directly or indirectly interested in a contract made or proposed to be made by the Commission, otherwise than as a member, and in common with the other members, of an incorporated company consisting of not Jess than twenty-five persons, shall, as soon as possible after the relevant facts have come to his knowledge, disclose the nature of his interest at a meeting of the Commission.
Sub-section (3.) specifies that the disclosure shall be recorded in the minutes, and that (the said member shall not take any further part in the deliberations of the commission, and shall be disregarded in the formation of any quorum in respect thereof.
I ask honorable senators to note that existing section 13 takes a somewhat similar form, with the exception that the place of a commissioner is deemed to become vacant immediately he contravenes the provision - without further action on the part of the Governor-General being deemed necessary at all. To that extent, the new bill weakens section 13 of the present act. If one looks at the Companies Act of England 1948 one finds that, when an obligation is imposed upon a director of a commercial firm to disclose the nature of his interest in any contract made, or about to be made, by his company, he is guilty of an offence if -he fails so to do - and his offence is punishable, just as is any other offence. Moreover, it is clear that he is under a civil obligation to restore to that company any profit that he may make by reason of his interest in the contract. Further, one disclosure is sufficient to avoid disqualification. For instance, if I am a director of Broken Hill Proprietary Company Limited and sit on the Australian Atomic Energy Commission
– But the B.H.P. has more than 25 members!
– I thank Senator Laught for reminding me of that. If I were a director of B.H.P. I must still - even though that company has more than 25 members - disclose that fact. It is only when my interest in B.H.P. is purely that of a member - and the company has more than 25 members - that I am excepted from the obligation to disclose that fact. We should not forget the very awkward results for every one associated with this Parliament, with the defence of Australia, with the Ministry, and with the Australian Aluminium Production Commission of the failure to pay regard to these standards of commercial integrity. Honorable senators will recall that dredges were bought by the commission from a company in which the chairman was interested. According to the Auditor-General, they were bought at a price which seemed to be very favorable to the vendor company.
The Senate ought to consider very carefully whether it should not include in this legislation the obligation, which the English legislature has imposed upon commercial directors, of either disclosing an interest, or becoming liable as for an ordinary offence. I may say that my comments are made entirely without consideration for the dignity, integrity and trustworthiness of the present members of the Australian Atomic Energy Commission. They are made objectively and with the intention of helping to produce legislation which will safeguard the independence and integrity of Crown public corporations. Naturally, I cast no j reflection upon the present very worthy ‘ members of the commission.
When the trouble arose over the Australian Aluminium Production Commission, the Public Accounts Committee of this Parliament probed the matter very thoroughly indeed. I think that I have previously drawn the attention of the Senate to the opinion of the present Solicitor-General, which appears in Appendix No. 7 of the 21st report of the committee, furnished in 1954-55. I have read, and re-read, it and am of the opinion that it clearly states that a member of a public statutory corporation of this kind is immune from the equitable obligation borne by a company director - that if he has made any profit out of a contract with a corporation in which he has a fiduciary interest as a director or commissioner, he is not liable to restore the profit so made to the Australian Aluminium Production Commission, or to the particular corporation of which he is a commissioner.
– When you refer to an “ equitable obligation “ do you mean an obligation in equity, or a statutory obligation?
– I refer to the commonly accepted meaning of equity.
– But you have quoted the English Companies Act, which imposes a statutory requirement.
– That makes it an offence not to disclose the interest. The second aspect is that the director of a commercial company who has an interest in a contract which he makes, or participates in making, on behalf of his company is bound, if he has received any profit or advantage to disgorge it in favour of his corporation. As I read the opinion of the Solicitor-General, which is to be found in the records of the Parliament, such a person is not under a civil obligation to do that. The opinion contains sixteen paragraphs, and L shall content myself with reading only one of them. In paragraph 9 the Solicitor-General says -
Nor do I’ myself think that the equitable rules which govern the relation of a director to his company can be said to extend also by analogy, as u matter of law, to the member of a public corporation, in his relations with the corporation itself. The fiduciary position of a director under i he Companies Acts springs from his subordination to the shareholders, by whom the directors are usually elected and with whom in general meeting lies commonly the ultimate authority in the company. There is no real parallel in the case of the public corporation, for while the members (Commissioners or as the case may be), actually constitute the public corporation, it is the shareholders and not the directors who constitute the ordinary company. I do not find it hard to accept the proposition that a member of a statutory public corporation has fiduciary duties. But they are I think, owed to the Crown, or in personal terms to the Minister, not to the corporation of which he himself is a part.
I have read that paragraph because I think it deserves the Minister’s careful consideration.
The CHAIRMAN (Senator the Hon. A. D. Reid). - Order! The honorable senator’s time has expired.
– Before we pass from clause 4, I should like again to ask the Minister to explain the functions of the executive member mentioned in the clause. I hope, Sir, that you will allow the Minister a little latitude in doing so, because the information I seek goes beyond this clause. The executive member is referred to in other clauses, some of which have been considered already. I am not clear as to why it has been found necessary to provide for the appointment of an executive member and to give him functions which, apparently, were exercised by the chairman under the original legislation. I think this information is vital to an understanding of the whole bill. As T said last night, T think the matter should have been explained in the second-reading speech.
.- I am obliged to Senator McCallum for interposing those few remarks and so giving me an opportunity to resume. 1 wish to put this proposition before the Senate in the hope that we will evolve a model piece of legislation that will properly safeguard the public interest in regard to public corporations. I have quoted paragraph 9 of the Solicitor-General’s opinion with very great respect, but in the hope that it will be given serious reconsideration. If, on reflection, the Government accepts the SolicitorGeneral’s advice as sound advice, I submit that that will demonstrate the need for us to impose, by statute, upon occupants of executive positions in public corporations a civil liability to repay to their corporations any advantage or interest which they acquire by making a contract, if they have an interest, either directly or indirectly, in that contract. That is a principle that is as old as equity, as old as the notion of fair play itself. There is no principle more respected in the courts of equity than the principle that a fiduciary who has made a profit out of a position of trust shall not be permitted to retain that profit, but must disgorge it in favour of his principal.
The third point is of lesser importance, but one which, I hope, will receive some attention. As I listened to the secondreading speeches on the banking bills to-day, I wondered what uniformity there was with regard to provisions relating to appointees to various public corporations. If the Minister will be good enough to look at clause 18 of the Reserve Bank Bill, he will see the provisions with regard to vacation of office and he will find that in that case there is no question of the Governor inserting something in the “ Gazette “ and thereupon terminating an appointment. The clause provides that, if certain events occur, the Governor-General shall terminate an appointment. The measures are not uniform. That is the point I wish to make.
The obligation to disclose interest in contracts is contained in clause 23 of the Reserve Bank Bill. The provision is to the effect that a member of the board who is directly or indirectly interested in a contract made, or proposed to be made, by the bank, otherwise than as a. member, and in common with other members of an incorporated company consisting of not less than 25 members, shall disclose the nature of his interest.
Down to that point, the provision in the Reserve Bank Bill is the same as that in the Atomic Energy Bill that I am discussing. But the clause in the Reserve Bank Bill goes on to provide that the member shall disclose the nature of his interest at the first meeting of the board at which he is present after the relevant facts have come to his knowledge. As 1 have said, in the English Companies Act of 1948 there is a specific provision which, after requiring disclosure, makes it clear that one disclosure of an interest in a company is sufficient. If honorable senators look critically at the Atomic Energy Bill, they will find, in clause 4, which seeks the insertion of proposed new section 1 3, a provision that a member of the commission shall - as soon as possible after the relevant facts have come to his knowledge, disclose the nature of his’ interest at a meeting of the Commission.
Having regard to the thoughtful nature of the provision in the English act of 1948 and bearing in mind the different language in the Reserve Bank Bill, k is with great respect suggested that a forfeiture would be incurred if, at any meeting when a contract is made or proposed to be made with a company in which a member has an interest, he fails to disclose that interest and have it recorded in the minutes.
– Suppose he was not there and did not hear about it.
– I think the provision proceeds on the basis that the member is present at the meeting.
I have mentioned these matters because I submit they make imperative a thoughtful review of all these provisions so that they can be made uniform. That would facilitate tremendously the working of this sort of legislation. I cannot for the life of me understand why there is not a stock draft of such provisions. I cannot understand why there are not model provisions which have been hammered out, after taking all the advice that could be taken. We should try, not only to safeguard public moneys, but also to bring these provisions up to date in accordance with modern commercial practice. Over the last 50 years experience has compelled modern legislatures to tighten and strengthen provisions of this nature. When companies were left to themselves, they introduced into their articles provisions which gave their directors all sorts of excuses for not disclosing their interests in other companies with which contracts were made. In England in 1929, and again in 1948, the legislature provided safeguards. State legislatures in this country are bringing their provisions up to date, making it an offence not to make a disclosure of an interest. I submit that, in the interests of commercial integrity, and in the interests of the integrity of public finance, these matters deserve most thoughtful and thorough consideration.
There is only one other point that I wish to mention in this connexion. The question arises, “ To whom should the disclosure be made? “ In a recently published book on the English legislation, 1 find this statement -
Secondly, to whom must disclosure be made? In marked contrast with the basic equitable principle, the disclosure required is not to the general meeting but to the board. It hardly seems over-cynical to suggest that disclosure to one’s cronies is a less effective restraint on self-seeking than disclosure to those for whom one is a fiduciary.
A perusal of the English legislation will show that now in all balance-sheets and circulars to shareholders the interest of directors, intentions, and special contracts as to remuneration must be disclosed to the people whose money is being obligated by reason of those commitments. I ask the Senate to observe that, in the legislation under consideration, the disclosure has to be recorded in the minutes of the commission. I suggest to the Minister that he consider the addition to that provision of the words, “ and transmitted to the Minister “. I make that suggestion because I submit that such safeguards prevent misunderstanding and departure from the standards of commercial integrity. >
I repeat that these observations are not intended to apply particularly to the corporation under review. I make them because the precedent that was set by the Export Payments Insurance Corporation Act is being adopted in this instance, although I do not look upon that as a compliment to the Senate because it weakens sections 13 of the 1953 act. But as some thought is being given to. making these provisions uniform, I wanted to point out that in my view they are capable of vast improvement still. I hope that even if the Minister does not choose to delay the passing of this measure and amend it in accordance with my submissions, or in a way that the debate might suggest ultimately, that at least k will be taken into thoughful comprehensive review at an early date.
– I shall reply first to the point that is easy of explanation. I refer to the matter raised by Senator McCallum relating to the need to appoint an executive member of the commission. The facts are that the first chairman of the Australian Atomic Energy Commission, Sir Jack Stevens, was an administrator. Upon his retirement, we reconstituted the commission and appointed Professor Baxter part-time chairman. That was done for a number of reasons. One very dominating reason was that we had reached the stage at which the functions of the commission were changing, as we had committed ourselves on a matter of policy and had embarked upon large capital expenditures, totalling nearly £6,000,000, upon the research reactor at Lucas Heights. That rather changed the functions of the Atomic Energy Commission to those of a scientific research establishment with a need for a scientist as chairman, and with an equally great need for an administrative officer at the back of the chairman and at the top of the commission’s organization.
We solved the problem by increasing the size of the commission, contemplating that, of the two new members, one would be a scientist of outstanding capacity whom I am certain will be accepted by all, and the second an administrative officer, also a man of high standing who will be very well known to all honorable senators when the time is appropriate for making a public announcement.
We believe this will give the commission the necessary strength. We shall now have the part-time services of Professor Baxter playing the leading, guiding and dominating role he has played up to this stage, strengthened by the services of another scientist and backed by an executive member - an administrative officer who will control what are very large commercial transactions within the ambit of the commission’s work. 1 come now to the more difficult part, that of trying to deal methodically with the points raised by Senator Wright. I feel that if I am to answer them in a satisfactory way 1 should first make the point that the matters mentioned by him seem to me to fall under two main headings. The first heading relates to the points that are within the compass of the Atomic Energy Commission itself and that fall within the ambit of the Atomic Energy Act. The second relates to points of a general nature, points such as common drafting of all legislation, points which fall more within the purview of the Attorney-General (Senator O’sullivan),, and the Treasurer (Sir Arthur Fadden) than the Minister charged with the responsibility of administering the Atomic Energy Act.
As to those points which relate specifically to the Atomic Energy Commission and the way in which it functions, I can only say that I shall ask the commission to examine what Senator Wright has said. I shall ask it to obtain legal opinion upon, the view Senator Wright has expressed; I shall ask the commission to place that legal view before me so that I may examine it and make a more effective and leisurely decision than I can be expected to make while on my feet during the debate. In other words, I do not want to defer the legislation; I want to push on, have these appointments made and the commission reconstituted.
Having said that, let me go further and try to show whether I have grasped in detail the points raised by Senator Wright. The first point I understood him to make was that there was no way in which the Governor-General could be compelled to perform the duty cast upon him under this provision. Is that a weakness? Or have I forgotten or misunderstood the earlier debate in the Senate? Was not the point thentaken that it was undesirable that any discretion should remain in the Executive? As I see it - perhaps incorrectly - either the Governor-General has statutory responsibility to do something, or alternatively, there is a discretion in the Government, or, alternatively again, we get back to the situation about which I understood the Senate to be most concerned. I refer to a lack of certainty, that upon certain events happening other events followed but there was nothing on record to show that anybody had noticed the happening of the first event. In other words, the honorable senator was referring to circumstances in which a member of a commission had done something which rendered him liable to dismissal, but which had not been noticed at the time. If I remember the tenor of the previous debate, one of the big objections raised was that there would be uncertainty of the position if, years later, some one found out about that action. I put the accompanying point of view that it cannot but be assumed that a government will do what it is legally bound to do. In drafting legislation, I think we must proceed on the assumption that the government in power, whatever its nature, will do what it is called upon to do.
A further point raised by the honorable senator related to the question of disclosure. While I found the discussion very interesting, I must say that it left me with some reservations, as debates of this kind always do, because I fear that I may not accurately take the point that has been made and fail to reply correctly. The main point to which my advisers have directed my attention concerns the provisions of the 1948 British Companies Act, to which Senator Wright referred. The honorable senator quoted the provisions of that act dealing with disclosure, but it has been pointed out to me that the British Government has not adopted the course that Senator Wright suggested should be adopted.
– Not in its Atomic Energy Act of 1954. That is so.
– In the Atomic Energy Act, and in the legislation in respect of the transport and mining bodies, the British Government, for whatever reason, has differentiated between membership of a statutory commission and membership of a company.
In relation to the third point made by the honorable senator, I must confess that the water gets a bit too deep for me. He referred to the views of the Solicitor-General, Professor Bailey, regarding the Australian Aluminium Production Commission case. My problem is that there is a conflict of opinion between the views expressed by Senator Wright and those of the officers of Professor Bailey’s department. In other words, Professor Bailey’s officers say that Professor Bailey did not say what Senator Wright says he said.
– That was why I read the relevant paragraph - so that it could be considered.
– In those circumstances, all I can say is: Who am I to interfere? So far as the Crown Law officers are concerned, their view is that Professor Bailey has gone on record as expressing the view that there could be circumstances in which a member of a commission would be liable. Indeed, they take the matter a stage further and say that it is not only a matter of Professor Bailey saying that there could be circumstances in which a member of a commission would be liable, but that, in truth, the High Court has defined specific circumstances in which a member would be liable. We do not want any one to think that we are on the defensive in regard to this issue. Summing the matter up, what we say in reply to the arguments that have been advanced is that, first, the provision in the legislation which calls upon members of the commission to disclose their contractual interests is of some consequence and goes a long way towards meeting the view that Senator Wright has expressed. Secondly, it is by no means certain that the existing provision does not meet all the views that Senator Wright has expressed.
– Surely not in relation to punishment for an offence!
– Did Senator Wright advocate punishment?
– No, he did not advocate it, but he instanced what was done in England in relation to punishment of directors for breach of the duty to disclose.
– I shall let that one pass over my shoulder. It certainly would be difficult to put into accurate words what Senator Wright proposes.
I put in another way the last point made by Senator Wright. As I have already mentioned, we are dealing with this matter from two angles. The first concerns the provisions of this specific legislation. Secondly, we seem to be going along the track towards adopting what 1 shall call a common rule - although that is probably the wrong term - or a common form for all Commonwealth legislation. So far as the Atomic Energy Act is concerned, T undertake to consider the matter. We shall obtain legal advice, and I will examine it. As to the general question, I merely say that I shall bring the substance of the debate to the notice of the AttorneyGeneral (Senator O’sullivan).
.- I hope that I do not need to apologize for continuing the debate. There is another aspect of this matter that I want to raise. I ask the Minister for National Development (Senator Spooner) to tell us the salaries that are paid to the members of the commission at the present time and the salaries that it is proposed to pay to the new appointees, having regard to the specific injunction of the bill that the executive member shall be a full-time member, in contradistinction to the other members, who shall be part-time. I mention this matter because the salaries payable for part-time service would be no indication of what the Government thought the appropriate salary for the newly-appointed executive member should be. My interest in this matter is growing and is galvanizing me into action.
I hope that the Senate will resolve the problems involved in matters of this kind on an appropriate occasion. I remind honorable senators that, some time ago, we had a most interesting debate in this chamber on this question in relation to the Commonwealth Grants Commission, a body with a very special constitution. Only a few weeks before that debate, we had allowed to go to the boundary without fielding it, a provision in the National Capital Development Commission Bill whereby the Government reserved the right to fix the salary of the National Capital Development Commissioner. I indicated at the time that I was prepared to leave such discretion to the Government in the case of the appointment of a purely executive commissioner, and that the Government should be allowed to fix his salary, even though the Parliament would lose a measure of control over these things. Because of the restrictions that operate, both in law and by reason of political circumstances, perhaps that is inevitable when we deal with such a matter simply as one of a composite mass of figures in the Budget. But I take leave to say that experience of the exercise by the Government of that discretion in relation to the National Capital Development Commission prompts every thoughtful member of this chamber to think again about the whole problem. Even in relation to theappointment of a purely executive member of a body such as the National Capital Development Commission, a salary of £6,000 per annum has been fixed. The eventual appointment of the National1 Capital Development Commissioner followed an incident that involved the PublicService of Tasmania and which, I should say, was one of the most extraordinary incidents in public administration within the last few years. Negotiations were entered into with the chairman of the Tasmanian Hydro-electric Commission, and1 the Government of that State felt impelled to raise his salary to £7,000 a year to retain him. I hasten to add that I do not detract in the slightest degree from his worth as an official in receipt of that salary; but, having regard to the range of Public Service salaries, the impact of that decision upon both Commonwealth and State public administration is yet to be felt.
If we are to have a situation in which a Minister is entrusted with the fixation of the salary of a commissioner, and if £6,000 a year is to be paid to the commissioner who is responsible for the development of Canberra, it is about time that the Parliament took into its own domain the fixation of these important executive salaries, even though they are purely executive, so that any alteration of them specifically can come before the Parliament. These are the important points at which the Parliament retains its control over, not merely the purse, but also the personnel and the power of these heads of executive government.
I just mention those matters. I do not intend to move in this connexion, because we have left in the act the provision that the salaries shall be determined by the Government. But I ask the Minister to tell the committee what these salaries are and what it is proposed they shall be.
– The present chairman of the Australian Atomic Energy Commission, Professor Baxter, is remunerated at the rate of £1,500 per annum. The deputy chairman, Dr. Raggatt, who is secretary of the Department of National Development, being a public servant, receives no remuneration other than his salary. The new executive member, who will be appointed after this legislation is passed, is a high ranking Commonwealth public servant. He will transfer to his new position with the commission at exactly the same remuneration that he is now receiving. The other two members of the commission will receive £1,000 per annum.
– Will the Minister tell us what will be the salary of the executive member? There should be no hesitation about giving that information.
– I prefer not to. A disclosure of the salary might automatically disclose to those who take an interest in these matters who the appointee will be. I think it would hardly be appropriate to disclose this information before the appointment is made. I shall have no hesitation in informing the honorable senator and the Leader of the Opposition (Senator McKenna) who the appointee will be and what will be his salary, but I do not wish it to be included in the record.
Clause agreed to.
Clauses 5 and 6 agreed to.
Clause 7.
. -I refer to proposed new section 26 (1.), which reads -
Subject to this section, the moneys of the Commission shall be applied only -
in payment or discharge of the expenses, charges and obligations incurred or undertaken by the Commission in the performance of its functions under this Act;
I refer also to a report of the Australian Atomic Energy Commission which states that in 1956-57 the commission paid rewards totalling £25,000 for the discovery of uranium on the Mary Kathleen leases. Prospectors who go into the outback looking for uranium report their discoveries to either the Atomic Energy Commission or the Bureau of Mineral Resources and, after the area has been inspected by a person from the Bureau of Mineral Resources, they make their application for a reward to the Minister for National Development. In Appendix I. of the publication “ Prospecting and Mining for Uranium in Australia “, and under the heading “ Rewards for the Discovery of Uranium-bearing Ore Deposits “, the following paragraph appears: -
In accordance with Section 36 of the Atomic Energy Act No. 31 of 1953, all discoveries of prescribed substances, including uranium-bearing minerals must, within one month of the discovery, be reported in writing. The report, which should include particulars of the location of the discovery, should be sent to: -
The Secretary,
Australian Atomic Energy Commission.
The appendix proceeds to set out the method of applying for a reward. Paragraph (7) provides -
An officer or employee of the Crown (whether in the right of the Commonwealth or a State) who makes a discovery of a deposit of uranium ore in the course of his official duties as an officer or employee will not be eligible for the grant of a reward.
Sometimes prospectors in the outback of Australia, particularly in the Northern Territory, discover uranium-bearing ores, or what they think are uranium-bearing ores, at distances of up to 100 miles from any white inhabitant. After spending some months in the area, they return and make a report to the Bureau of Mineral Resources, which has its offices in Darwin. An officer of the bureau then says to the prospector, “Will you guide us to this deposit? We will pay you “. That trip may take a week or even a fortnight. The prospector does not know anything about the reward, so he agrees and goes on the pay-roll. The officer accompanies the prospector to the site and, should a new area of uranium be discovered, the prospector makes application for the reward, but it is refused on the ground that he is the holder of an office of profit under the Crown.
– Has the honorable senator known that to happen?
– It may have happened in one particular case I have in mind. Although I have not any conclusive proof at this stage, I have fairly good reason for believing that it did.
– Which discovery is referred to in the case instanced by the honorable senator - the first discovery by the prospector or the re-discovery when the officer is present?
– The actual discovery is made when the prospector, searching for, say, copper, thinks he may have found uranium in the same area.
– But the prospector was not a servant of the Crown at that time.
– That is correct. He was not a servant of the Crown at that time.
– In that case the prospector must be entitled to the reward.
– All I am saying is that the particular prospector I have in mind, after having been in the outback for some time, reported to the officer of the Bureau of Mineral Resources and asked him to inspect the deposit.
– I think some one is pulling the honorable senator’s leg.
– That may be so, but in this instance I think there is some ground for complaint. Will the Minister consider altering paragraph (7) of the general conditions governing rewards to read -
An officer or employee of the Crown (whether in the right of the Commonwealth or a State) who makes a discovery of a deposit of uranium ore in the course of his official duties as an officer or employee, other than a person receiving remuneration while acting as a guide, will not be eligible for the grant of a reward.
If this were done, those prospectors who go to the bureau, state that they have found a deposit which they think is uranium, and ask that an officer accompany them to the deposit, will not be disqualified from receiving a reward for the discovery of uranium because, for the period of a week or ten days, they have received an allowance while showing the officer the deposit and are so classified as people holding an office of profit under the Crown.
– I cannot believe that the payment of the allowance referred to disqualifies the prospector from receiving the reward. I think the first notification of the discovery must carry with it the right to the reward, which could hardly be taken away by the subsequent employment. Rather than amend the act, I suggest that the honorable senator inform me of the circumstances of the particular case which is causing him some concern and I shall have the matter investigated.
Clause agreed to.
Clause 8.
– I should like the Minister to inform the Senate why it is found necessary to repeal sections 30 and 31 of the principal act. The proposed new sections appear to be much more elaborate and detailed than are those in the existing legislation. I should have thought some of the details would have been covered already by the general duties of the Auditor-General, which I presume are laid down in the act under which he is apointed. It is merely insatiable curiosity that prompts my question.
– Before the Minister replies, I wish to bring to the attention of the committee the annual reports of the Auditor-General for the years ended 30th lune, 1956, and 30th June, 1957. Those reports prompt the suggestion that all that might have been said for the information of the committee in the second reading speech has not been said. What are the reasons for the provision to remodel the accounting obligations of the Commission? I do not suggest that the Commission’s accounts are not kept in accordance with the rules, but if one looks at the 1 Supplementary Report of the Auditor-General for the year 1956-57, it will be seen that he comments to this effect as to the cost statements submitted to the Combined Development Agency: -
Owing to the delay in the completion of the terms of the Supplementary Agreement, the statements have not been presented for examination by the Auditor-General. The same factor is preventing the Commission preparing appropriate financial statements, as instructed by the Treasury, to show the overall financial position of the Rum Jungle operations.
He then refers to a contract for the erection of laboratories and ancillary equipment on a cost-plus management fee basis, and states -
In respect of this contract, whilst it has been necessary for the Audit to make certain suggestions to the Commission as to the ways in which the internal control and check may be improved, the accounting and control over costs have been generally satisfactory.
The Auditor-General then refers to stores and associated asset accounting and states that there are particular difficulties with regard to those matters of radio-active materials. In referring to revised procedures as still being unsatisfactory, be continues -
Further representations have been made to the Commission. As the stores procurement for the Research Establishment has been proceeding for some time without adequate procedures and appropriate controls, it is essential that the Commission take prompt action in this respect.
The report to which I have referred follows the 1956 report in which the Auditor-General mentioned certain forms not being prescribed by the Treasurer, and, therefore, delaying accounts. He also mentioned certain unsatisfactory features attributable chiefly to the lack of appropriate accounting instructions and procedures. This kind of language is becoming tediously familiar to us having regard to the annual reports of the Australian Aluminium Production Commission and the St. Mary’s filling factory. I observe, too, that the reports of the Auditor-General are being couched in progressively vague language. I hope that in future reports the Auditor-General’s remarks will be conveyed without ambiguity.
According to these provisions, the Auditor-General’s chief addressee is the Minister. I would prefer the AuditorGeneral’s obligation to be expressed in the form that he is bound to report directly to Parliament. I mention these matters in a spirit of unfailing faith and persuasion. It is no use honorable senators putting a veneer on these great constructional programmes of the highest national importance. We, as a chamber, want to know why it is necessary to amplify and make explicit the ordinary obligations of the commission. Experience over the last five years should make these revisions unnecessary.
Before I sit down - for the final time on this bill, I hope, Mr. Temporary Chairman - may I say that I fully acquit the Minister of the obligation to tell us the salary of the executive member of the commission, as that might amount to a premature disclosure of the identity of the person; but honorable senators are interested in the classification, from the point of view of remuneration, of the executive member. Surely, atomic research is the most important task in which the country is engaged to-day, and the Atomic Energy Commission which undertakes that function is to consist of five members, yet we think fit to constitute the Reserve Bank Board of ten members and the Commonwalth Banking Corporation Board of eleven members. These are matters for the judgment of each honorable senator. I submit that we are entitled to know the details in ordinary circumstances.
Finally, I express my gratitude to the committee, and particularly to the Minister, for having re-committed the bill after it had been considered and reported from committee without amendment during the one and a half minutes that it was necessary for me to speak on other business in the corridor outside the chamber.
– Senator Wright made his own point and his own arguments, and then contradicted himself. After drawing attention to matters in respect of other authorities that have been the subject of critical inquiry in the past, the honorable senator asked, in effect, why it is proposed to specify in greater detail the accounts of the Atomic Energy Commission.
– No. Why did not the
Minister’s second-reading speech explain in greater detail the reasons, coming from experience, for these provisions?
– That is a different point. Obviously the Treasury, like ourselves, is gaining experience from the events that have happened. The Treasury, as these various statutory bodies come before it, lays down conditions, not necessarily stringent, but uniform and modern conditions for the presentation of accounts in more modern ways than they have been presented in the past. There has been a tightening up of the provisions relating to the Auditor-General by placing upon him an obligation, in addition to reporting annually upon accounts, to bring quickly to the notice of the Minister events that are discovered during the course of an audit and which should be brought to the attention of the Minister as the administrative head of the commission. In other words, as I interpret the matter, the Treasury is bringing the provisions relating to the Auditor-General more into line with commercial practice in relation to continuous audits. Prompt reports are to be furnished on things that are discovered during the course of the audit, and there is placed upon the Minister an obligation to present the accounts to the Parliament together with the Auditor-General’s report thereon.
Clause agreed to.
Clause 9 agreed to.
Title agreed to.
Bill reported without amendment; report adopted.
Bill read a third time.
page 304
Debate resumed from 13 th March (vide page 173), on motion by Senator Spooner -
That the bill be now read a second time.
– One of the reasons and arguments that were advanced for bringing about federation was the need to provide for the service and execution of process originating in one State in any other State. There was a complicated system of reciprocal arrangements between one State and the other States in that matter, and it is interesting just to quote the head of power in section 51, placitum (xxiv) of the Constitution, which gave power to the Parliament to make laws with regard to the service and execution throughout the Commonwealth of the civil and criminal process and the judgments of the courts of the States.
It is rather interesting to know, too, that the original act in this matter was one of the earliest acts passed by the Federal Parliament. I think it was act No. 11 of 1901. There was a crying need for it, but with that accomplished we have heard very little of the act since; it has hardly been amended. But it has operated very well and, I might add, it is very extensively used.
The amending bill is the product of the thought that section 16 of the act provides that courts, and bodies of that nature, can originate the service of subpoenas in other States. The section provides that on payment of proper conduct money and rather rigid proof of service, the service should be effective. It is a very necessary ingredient of law in the Commonwealth.
It transpired that attention was directed to the matter by Senator Vincent, 1 understand, who pointed out that while section 16 applies generally to judicial officers of varying degrees in the issuing of subpoenas, it does not permit a coroner who is not engaged in either a civil or a criminal proceeding to issue such a subpoena. The bill simply purports to expand the provisions of section 16 of the act, to enable a coroner engaged in a coronial inquiry to issue a subpoena that should be effectively served in some other State if he wishes to bring a witness from that other State.
Having regard to the speed with which Australians circulate in the Commonwealth in motor cars and aeroplanes and the rest, it is quite conceivable that a person from another State may be involved in an accident involving death which attracts the coroner’s attention. The power for which provision is made in the bill seems to the Opposition to be necessary. We have no objection to the measure. I agree with the statement of the Minister for National. Development (Senator Spooner), in his second-reading speech, that it is probable that coroners’ subpoenas have been acted on for many years without protest. However, once the matter is elevated to the stage of consideration by this Parliament we may find - if the gap is not closed - that lawyers will take advantage of the point that Senator Vincent has raised. For that reason, the Opposition offers no obstruction to the passage of this measure.
I should imagine that a royal commission would be in very much the same position as is a coroner, in that it would have no power to issue a subpoena - as authorized by a State Parliament - which would have effect in another State. I am not expressing any view on whether a royal commission should be specially empowered, as are coroners under this bill, and merely draw attention to the fact that the question might be raised at any time. The position of the royal commission is not before us, though a rather similar principle does apply in both cases.
– Does any point arise as to whether either is in court, so far as the Constitution is concerned?
– As the honorable senator has pointed out, it goes further than the judgments of the courts. It is a service and execution, throughout the Commonwealth, of the civil and criminal process. That raises the very interesting point that a coroner’s activity, being neither civil nor criminal, may not come under the head of the placitum at all.
– But we are going to give it a fly!
– That is the position as I see it. It may be giving the lawyers a field in which to play around a little, but the Opposition feels that the proposal is one of convenience and, on that broad base, offers no objection to it.
Question resolved in the affirmative.
Bill read a second time.
In committee:
The bill.
– Under clause 4, section 16 is to be amended by the deletion of certain words and the insertion of certain oth r words, including the expression “ by or out of a Court … . “ Could the Minister explain that expression?
– I am told that the expression “ out of a Court “ means “ out of an office attached to the Court “.
Bill agreed to.
Bill reported without amendment; report adopted.
Bill read a third time.
page 305
– I lay on the table reports of the Tariff Board on the following subjects: -
Automotive industry.
Metal working shaping machines.
Textile dyeing, bleaching and finishing. The reports do not call for any legislative action. The board’s recommendations have, in each instance, been adopted by the Government.
Senate adjourned at 4.55 p.m.
Cite as: Australia, Senate, Debates, 20 March 1958, viewed 22 October 2017, <http://historichansard.net/senate/1958/19580320_senate_22_s12/>.