23rd Parliament · 1st Session
The PRESIDENT (Senator the (Hon. Sir Alister McMullin) took the chair at 3 .p;m., and read prayers.
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Address-in-Repiy: Acknowledgment by Her Majesty the Queen.
– I have received from His Excellency the Governor-General the following communication in connexion with the Address-in-Reply: -
Mr. President,
I desire to acquaint you that the substance of the Address-in-Reply which you presented to me on the 18th March, 1959, has been communicated to Her Majesty the Queen.
It is the Queen’s wish that I convey to you and to honorable senators Her Majesty’s sincere thanks for the loyal message to which your Address gives expression.
J. SLIM
9th April, 1959. Governor-General.
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– I direct a question to the Leader of the Government in the Senate. Having regard to the statement in the Governor-General’s Speech to the effect that the Constitution Review Committee would be immediately attended to, and that it would proceed with its work, I ask the Leader of the Government whether he can make any statement regarding the reason for the delay of nearly two months. Is he in a position to indicate what the Government proposes to do in the matter of re-constituting this committee?
– My recollection is that the Government parties, both in another place and in the Senate, have elected their representatives to serve on the committee. My recollection also is that some difficulty has been encountered because some members who were previously on the committee have since been included in the Ministry. It has yet to be decided whether new members could subscribe to a report to which they were not parties, or whether the committee should commence its sittings de novo. An alternative arrangement might be made whereunder those former members of the committee who are now in the Ministry could serve for a period on the committee. The question is under consideration by the AttorneyGeneral. There has “been some pressure of events in another direction which has rather delayed a decision. I .am not able to say when that decision will be made, but I anticipate that it will not be long before it is made. ^Senator WRIGHT. - I desire to ask a question of the Leader of the Government, following upon that asked by the Leader of the Opposition. Can the Minister indicate whether any course has been mapped out for considering or dealing with the interim report of the committee?
– The report has not yet come before the Government. One of the factors causing the present difficulty is that the committee has not advanced its reasons in support of the findings that it has made. I hope I interpret the position correctly in saying that there is an unwillingness on the part of the Government to consider the report without seeing the reasons which actuated -the committee -in making its recommendations.
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– I ask the Minister representing the Minister for Immigration the following questions: - Has the Minister for Immigration discretionary powers to grant naturalization to a person who has not been a resident of this country for the stipulated period? “If he has, will he use that power in a deserving case that I shall place before him? If he will not use that discretionary power, will he ask the Parliament to allow naturalization to take place? I refer to the widow of the engineer of the ill-fated vessel “ Willwatch “. She has been left unprovided for as a result of her husband’s untimely death. She has five children, but is unable to get a widow’s pension because she has been in the country only two years.
– The question raised by Senator Cole is one for decision, of course, by the Minister for Immigration. If the honorable senator places his question on the notice-paper, I shall bring it to the .notice of my colleague, and I am sure it will receive every consideration within the .terms of his jurisdiction as Minister for Immigration.
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– Has the Minister for Civil Aviation, while travelling between the Kingsford-Smith airport at Mascot and the city of Sydney, detected the unpleasant smells that invade part of the route? Will he consult the New South Wales Government and the relevant municipal authority to see whether this nuisance can be eliminated?
– Yes, I am aware of the matter referred to by the honorable senator. In fact, I was aware of it as recently as yesterday when I was in Sydney. 1 shall be pleased to take it up with my officers in Sydney and to ask them to confer with the relevant authorities to see whether any improvement can be effected.
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– Has the attention of the Minister for the Navy been directed to reports in to-day’s press about the buzzing of the Seato naval force by two Russian-built Indonesian-owned M.I.G. fighter planes? Is there any truth in the suggestion that the planes were used to take intelligence photographs of the naval force? Is the Minister free to disclose to the Senate the circumstances in which our naval forces would be permitted to use deterrent fire power against this kind of activity?
– Yes, I have noticed the report in the press to which the honorable senator refers. In its use of the word “ buzzing “, the report considerably exaggerates what in fact took place. What in fact happened was that the combined British and Australian fleet was, on the morning of 24th March, in the Java Sea, en route to Singapore, some distance off the Indonesian mainland. Two M.I.G. planes appeared. They in no way buzzed the fleet but stayed quite clear of it. They circled it and then departed with what is described as a friendly waggle of their wings. I do not know whether or not these planes were taking photographs of the vessels in the fleet. I should think it extremely unlikely, because “ Jane’s Fighting Ships “ contains photographs of every component of the fleet, and the people in the planes would only have to look at pictures in that publication if they wanted to see what ships were there.
I do not know for sure the circumstances in which a fleet would be able to use deterrent fire power, but I should say that they would be if the fleet commander considered an aircraft was acting in a way which could properly be construed as an attack.
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– My question, which relates to the gold subsidy, is directed to the Minister representing the Treasurer. As he knows, the existing subsidy will expire on 30th June, and there is some interest, particularly in Western Australia, in whether the subsidy will be renewed. Can the Minister inform the Senate whether a decision has yet been made by the Government to take legislative action prior to 30th June with respect to renewal of the subsidy?
– It is anticipated that the matter of the expiry of the gold bounty and its possible renewal will very shortly be under the active consideration of the Government, and it is further anticipated that any legislation that may be required will be passed during the current sessional period of the Parliament.
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– Has the
Minister for Civil Aviation seen advertisements in daily newspapers in which AnsettA.N.A. claims that more people fly by Ansett-A.N.A. than by any other Australian airline? Is it a fact that for the last financial year, 1957-58, Ansett-A.N.A. carried 44,520 passengers fewer than TransAustralia Airlines? Has the Minister power to prevent Ansett-A.N.A. from making false and fraudulent claims in its advertising matter?
– I must confess that I am not intimately aware of what is contained in the advertisements inserted on behalf of the Ansett-A.N.A. organization. I think that the honorable senator is right when he says that during the last financial year more passengers were carried by T.A.A. than by Anse*t-A.N.A. on the overall route pattern in Australia. I shall have a closer look at the advertisements inserted by Ansett-A.N.A. to see precisely what the company is saying. I should think that, if it is making a claim of the kind referred to by the honorable senator, the probability is that it is a reference to the passenger figures on the MelbourneSydney services at this moment of time.
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– I address a question to the Minister representing the Postmaster-General. By way of explanation, 1 refer to a session on the national broadcasting stations which is broadcast to schools. Amongst the subjects discussed recently was the origin of margarine and details of its manufacture. This subject was presented in the form of a mother speaking to her children at the family breakfast table. She expanded on the merits of margarine as a spread, boosting its value as a table commodity in lieu of butter which, she said, was too expensive to buy. Although I appreciate that the matter of broadcasts to schools is one for the State education departments, my point is that the medium of a national broadcasting service is being used to boost and advertise a product which is in competition with a commodity of great national importance to our economy. Is the Minister aware of the nature of these broadcasts? If he is, does he consider that they are in the best interests of dairy-farmers and of the production of a national commodity so important to our economy?
– In common with the honorable senator, I think that these matters need looking into. Therefore, I ask him to put the question on the notice-paper so that I can obtain for him a full reply from the PostmasterGeneral.
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– My question is directed to the Minister representing the Minister in charge of the Commonwealth Scientific and Industrial Research Organization. In view of the decision of the Tasmanian Government to refuse to grant permission to a commercial enterprise to exploit the Macquarie Island sanctuary by killing seals, will the Commonwealth Government give early consideration to declaring to be sanctuaries for seals, penguins, &c, those portions of Antarctica on which colonies of these animals and birds exist and which come under the jurisdiction of the Commonwealth of Australia?
– I shall have pleasure in conveying the honorable senator’s suggestion to my colleague, Mr. Casey.
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– I should like to direct a question to the Minister for Civil Aviation. Is it correct that trouble has arisen between the United States air authorities and Qantas on the right of the Australian company to transport passengers across the United States under the terms of the recently negotiated agreement? Can the Minister inform the Senate of the points of difference, if any, and what steps are being taken to resolve the difficulties?
– There has been a matter in dispute between the American civil aviation authorities, on the one hand, and Qantas on the other hand. It concerns a rather involved aspect of what is known in the airline industry as international traffic between domestic points. The particular matter in dispute was the on-carriage of passengers who had been dropped in American territory and were to proceed through American territory and beyond. As an example, I point out that a passenger may have been flown from Japan to Honolulu by Japan Airways. Qantas regarded the uplift of that passenger as a legitimate exercise of its rights, if that passenger was going on beyond America to Europe or to some other country. The hearing was a protracted one, lasting many months, and the attitude taken by Qantas was supported by the American international airline against the American domestic airlines. A finding has just been issued, which is against the Qantas claims. I have not yet seen the judgment - it is a 47-page document - but as soon as I do see it I will put it under close examination and see what further steps can be taken.
– What was the authority?
– The American civil aviation authority, which has power of control in the United States.
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– My question is addressed to the Minister representing the Minister for Trade. Has his attention been directed to a statement that was made during the last few days by a representative of New Zealand, in which he suggested that it might be possible for New Zealand to build up a trade with Australia by exporting firstclass butter from New Zealand to Australia? Is the Minister prepared to reassure the dairy-farmers of Australia that no such agreement will be entered into with New Zealand for the sending of her butter to Australia while any of our butter remains unsold?
– I did not see the statement to which the honorable senator has referred; Not having heard it discussed in governmental circles, I cannot advise him of any decision. I am not able to make statements about Government decisions upon matters- that have not been considered. All I. can do is to express the personal opinion that it is highly improbable that any such arrangement would be arrived at.
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asked the Minister representing the Postmaster-General, upon notice -
– The
Postmaster-General has provided the following answers: -
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Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Sir Walter Cooper) read a first time.
[3.24]. - I move -
That the bill be now read a second time.
This bill, together with a bill amending the Northern Territory Representation Act, is intended to bring about constitutional reform in the Northern Territory. The main elements in that reform are as follows: - First, a strengthening of the Legislative Council for the Northern Territory and changes in its structure and membership designed to make it more widely representative, of the. Northern Territory community and to end. the official majority in the Council. Secondly, changes in the procedures in respect of assent to and disallowance. or non-disallowance of ordinances of the Legislative Council for the Northern Territory. These changes will give increased opportunity for this Parliament to carry out its responsibilities, will facilitate the working of the Legislative Council, and give an opportunity for the reconsideration by the council of bills which, under the present system, could only be rejected outright by either the Administrator or the Governor-General.
Thirdly, there is a proposal to associate the elected, members of the Legislative Council more closely with the Executive in the Territory by forming an administrator’s council, on which non-official members will assist, and advise, the Administrator in the performance of executive acts in the Territory. Fourthly, in a separate bill, it is intended to give certain voting rights to the member fox the Northern Territory in the House of Representatives. As is well known at the present time, that member has no voting rights of any kind.
The Government also considered a fifth reform which was intended to give a measure of financial control to the Legislative Council for the Northern Territory, including the submission to the Council of the estimates for the Territory. Because it was found necessary that certain constitutional points should be further examined, it was not possible for the Government to proceed to a decision on this proposal. Although it was hoped that all proposals for territorial constitutional’ reform mightbe introduced in one piece, it was thought that the measures on which a decision had been reached by the Government were so substantial that their introduction should not be delayed by reason of the need for further consideration of the request in regard to the finances of the Territory. Nevertheless, I think it would be desirable to make two points at this stage. First, I should make it clear that the Government has not completed its examination of the proposals on finance and, therefore, it would be wrong for any one to assume either that they have been rejected or that they have been accepted. Secondly, in an examination of the other proposals now introduced in respect of reform in the Legislative Council for the Territory, it should be borne in mind that the question of financial control is as yet unresolved, but, so long as the possibility remains that the Legislative Council may be given increased functions in respect of financial matters, that possibility has to be taken into account. It will be obvious to honorable senators that the. question of the structure of. the. Legislative Council is inseparable from the question of the powers of the Council.
Before proceeding to a detailed description of the proposals outlined above, I should like to say a few words about the historical background to these measures and also a few words about the situation which this Parliament is called upon to examine. During the term of the present Government, consistent efforts have been made to improve the functioning. of the Legislative Council for the Northern Territory so that it may develop with the growth of the Territory itself. From time to time, bills have been introduced in this Parliament making minor reforms in the Legislative Council. Contrary to some views which have been popularly held, the Government has also attempted to see that in the working of the Council full value is given to the participation of elected members. It is- an historical fact that over the past eight years; the Legislative Council has a record that disproves the statements that are sometimes made that government legislation is steam-rollered through the Council. Steps have been take to ensure that members have adequate notice of bills and opportunities to study them. In all cases of major legislation, the procedure has been, adopted of moving the second reading at one session of the Council and adjourning the debate until a subsequent session. The successful moving of amendments by private members in the Council compares very much more than favorably with the practice in the Commonwealth Parliament or any of the Parliaments of the States. The opportunity for the introduction and passage of private members’ bills has been better than in most legislatures in Australia. lt has- become part of the campaign tor constitutional change to represent the present Council in a light which is far worse than the record of the Council really deserves-. Nevertheless- it can be conceded that there is a case for change in order to make the Council more fully representative of the Northern Territory community and in order to associate it more closely with the tasks of the Executive in the Territory. The Government itself has helped to promote such a change. It was at the suggestion of the- Government, and with Government encouragement, that two select committees of the Legislative Council were appointed by the Council. Only the second of these committees reported, and when it reported the Government immediately gave the most careful and earnest consideration to its recommendations. It was not found possible to accept the recommendations in the form in which they were presented by the select committee. The matters presented, by the select committee raised questions of. far greater complexity than had perhaps been appreciated by all members of the committee. A good deal of close and technical study of the issues involved was required. Eventually, in July, 1958, a meeting was arranged between representatives of the Government and of the members of the Legislative Council for the Northern Territory in order to discuss the second select committee’s report. That discussion was both informative and constructive and the Government hopes that these proposals will be examined with the thoughtfulness and care that were then shown. We share the desire to do what is best for the Territory. Having certain responsibilities as a government, we also have to think closely about what is practicable.
I should now like to refer briefly to the situation with which we are dealing in the Northern Territory and the problems presented to this Parliament by that situation. Broadly speaking, the population of the Northern Territory has doubled during the last decade and the production of the Territory has probably increased four-fold. Public expenditures have increased at least seven-fold. Among the major elements in this progress - a progress far greater than the Northern Territory has seen in any previous decade - have been investment from outside the Territory in both the pastoral and mining industries and in a great agricultural experiment, and vastly increased expenditures by the Government or semi-governmental instrumentalities. The fact is that for the present, the progress of the Northern Territory still depends in a very large measure on investment from outside the Territory, and on public expenditures of moneys raised outside the Territory and voted by this Parliament. Those who hope for even greater development in the Territory in the future must base those hopes on the attracting of much greater investment than the north of Australia has hitherto known. The making of such investments will depend, on the one hand, on calculations to be made carefully regarding the resources of the Territory in relation to world prices. On the other hand they will depend, in part, on the confidence of the investor in conditions in the Territory itself no less than in the whole of Australia. In particular, the investor will need to have confidence that the laws of the Territory, particularly those governing the conditions under which land or mining rights can be obtained, will not be lightly changed after he has made his investment.
Although the Territory has seen great progress, its total population at the present time consists of approximately 20,000 citizens and about 16,000 full-blood aborigines who, although they have the prospect of eventually achieving citizenship, are at present under the protection of the Government as wards committed to the care of the Government. The 20,000 population yields a total constituency of something over 8,000 voters, more than half of whom are located in the Darwin area, and a very considerable portion of whom are on the Government pay-roll. A proportion of the wage and salary earners has made the Northern Territory their home permanently. Others are there on appointments for a fixed .term and a number are persons whose period of residence in the Territory is uncertain. I mention these facts, not by any means to suggest that the voter in the Northern Territory is in any way less intelligent or less responsible than the voter anywhere else in Australia, but to make a comparison between the nature of the constituency considered as a whole compared with what might be regarded as a normal constituency in other parts of Australia.
As I have said, a great deal of the progress in the Territory and its increased prosperity are directly due to the fact that more investment, particularly in mining and the pastoral areas, has been attracted to the Territory in recent years and to the fact that annual spending of public moneys has greatly increased. If expenditure on defence, civil aviation and semigovernmental enterprises is added to the expenditure under the control of the Department of Territories, something of the order of £12,000,000 per annum is currently being provided in the way of public expenditure from outside the Territory. The greater part of that sum, if not the whole, is being voted by this Parliament, and the Government is accountable to this Parliament for the way in which it is spent.
I have mentioned this general situation simply to underline one point. In considering the question of constitutional reform in the Northern Territory, this Parliament has to be aware of the way in which the community in the Northern Territory, the economy of the Northern Territory and the prospective development of the Northern Territory are still, in fact, dependent on elements outside the Territory. We also must be aware that within the Territory itself - a vast region which extends over approximately 1,000 miles from north to south and approximately 600 miles from east to west - there are wide disparities in conditions. Just as there is a contrast between the conditions in the
Territory as ,a whole and the conditions in a metropolitan centre such as Sydney or Melbourne, so there is also a disparity between the conditions in the area closest to Darwin, and most thickly populated, and the remote and, administratively speaking, comparatively neglected areas of small population elsewhere in the Territory, lt is our responsibility as a Commonwealth Parliament to try to make arrangements which will take account of these unusual conditions. The argument is not that the individual Australian citizen in the Northern Territory is any different in his capacities or his rights from the individual citizen elsewhere in Australia but that the Territory as a territory, and the whole community as a community, are still in fact - to speak with the frankness that is required - a dependent area and a dependent community. That is not to the shame of the Territory; it is to the shame of a nation that has allowed such a condition to prevail for so long. But it does exist and we have to face the fact that, in order to bring about the greater development that we all wish to see, the Territory will have to rely for some time to come on both private and public sources outside its own boundaries.
So, in approaching this problem of constitutional reform, the Government was impelled, on the one hand, by the motive of giving the people of the Territory a fuller share in the management of their affairs and of increasing the representative character of the Territory Legislative Council. On the other hand, we had to be mindful of our responsibility in the Commonwealth Parliament in respect of the development of this part of Australia and the welfare of its people, both those who are citizens and those who are under our protection. May 1 now deal in detail with the reforms proposed in the bill before the Senate.
The first proposal in the bill is for changes in the structure and membership of the Legislative Council for the Northern Territory. The present Council is composed of the Administrator, seven official nominated members and six elected members. The bill provides for a reduction in the number of nominated official members, other than the Administrator, who is President of the Council, from seven to six; an increase in the number of elected members from six to eight; and for a new category of non-official nominated members, to the number of three. Therefore, the total membership of the proposed new Council will be seventeen on the floor of the Council, with the Administrator as President. Of the seventeen on the floor of the Council six will be official members, and eleven non-official members, eight of whom will be elected and three nominated. Whereas at present it is possible for the Administrator to ensure the passage of legislation by the support of his seven official members, in future it will become necessary for him to obtain the support for the legislation of some of the non-official members.
At the present time, six elected members are returned from five electoral districts, the electorate of Darwin returning two members. The bill provides that there shall be eight electoral districts each returning one member. The present act defines the boundaries of the electorates in a schedule. The bill proposes that a Distribution Committee consisting of three persons shall be appointed and that it shall be formed and function in much the same way as the distribution commissions created under the Commonwealth Electoral Act. It is proposed that the Distribution Committee will consist of three members, one of whom shall be the Chief Electoral Officer for the Commonwealth or a person having similar qualifications, and one of whom shall be the Surveyor-General for the Territory or a person having similar qualifications. In drawing boundaries of electorates the committee will give due consideration to distribution of population, community or diversity of interests, means of communication and physical features. Before it makes its report it will exhibit a map and description of the proposed boundaries of electoral districts at post offices in the Territory and a month will be allowed for the lodging of objections or suggestions with the committee. The committee will make its report lo the Minister, and the boundaries of the electorates will be prescribed by regulation. In case there should be major shifts of population before any further fundamental reform is made in the Legislative Council, there is a provision that the Minister may at some future date direct that a further redistribution of districts shall be made by the same process. This provision, however, only applies to the total of eight electoral districts. If, in the future it is necessary to increase the number of electoral districts, or to make any other changes in representation on the Council, that matter will necessarily come back to the Commonwealth Parliament.
As the result of the increase in the membership of the Legislative Council the principal act is also being amended to raise the quorum of the Council from seven to nine and to provide that nine members instead of seven as at present can request the holding of a session of the Council. In a Council with a total membership of fourteen the figure was seven and in a Council with a total membership of eighteen the figure becomes nine.
The second proposal for constitutional reform concerns the procedure relating to the assent to and disallowance of ordinances that are passed by the Legislative Council. Under the present procedure, when the Administrator or the GovernorGeneral withholds assent from an ordinance that is the end of the matter. In the bill it is proposed that, instead of withholding assent, either the Administrator or the Governor-General may return an ordinance to the Council with suggested amendments. This provision is broadly similar to section 58 of the Constitution in its application to laws passed by this Parliament. Similarly, the Governor-General, instead of disallowing an ordinance, will be able to return it to the Council with suggestions for amendment. The bill also provides that ordinances from which assent has been withheld, or which have been disallowed, shall be tabled in both Houses of this Parliament as well as ordinances which have been assented to. By this means this Parliament will be able to maintain a scrutiny not only over those ordinances which become law but over those ordinances which, to use a popular term, have been vetoed. When an ordinance has not received assent or when an ordinance has been disallowed by the Governor-General the document will be tabled in each House of the Parliament together with a statement (explaining the reasons for the withholding of assent or the disallowance. Those procedures are exactly in accordance with proposals which emerged from the conference between the members of the Legislative Council and the Government in Canberra last July. They should assist considerably in the better functioning of the Legislative Council and assist this Parliament in the discharging of its responsibilities towards the work of the Legislative Council.
The third major proposal in this bill is for the creation of a body to be known as the Administrator’s Council, which will share the functions of the Executive within the Territory. The Administrator’s Council will consist of the Administrator, two official members of the Legislative Council and three other members of the Legislative Council, none of whom shall be official members and of whom at least two shall be elected members. The members of the Administrator’s Council will be nominated by the Administrator. In practice this means that he will seek to find two or possibly three of the elected members or alternatively two elected members and one non-official nominated member to sit on equal terms with him and two official members on the Administrator’s Council. The Administrator’s Council will advise the Administrator first on any matter referred to it by the Administrator and secondly, on any other matter which is confided to the Administrator-in-Council by ordinances of the Legislative Council for the Northern Territory. In order to give full effect to this proposal, some supplementary legislation in the Territory itself will be necessary.
It is also proposed that Territory ordinances will be amended so that certain statutory powers now exercised by the Administrator and some statutory powers now exercised by the Minister will be exercised by the Administrator-in-Council. As an indication of the sort of matters which might very well be confided under ordinance to the proposed Administrator’s Council, I cite a few examples of what the Government has in mind. All the regulationmaking powers of the Administrator might be transferred to the AdministratorinCouncil together with his powers in relation to the making of by-laws; the powers of the Administrator under Territory ordinances in respect of the declaration of health areas, licensing districts, water control districts, gold or mineral fields, roads and streets, stock quarantine areas, the declaration of closed seasons, shopping hours, sitting of courts, holidays; the declaration of dangerous drugs, noxious weeds, poisons, pests; declarations in respect ot schools; declaration of various rates and charges, and the remission of fees. It is expected that, from time to time, as the Legislative Council itself passes laws applying within the Territory, it will itself make decisions on which matters are appropriate for handling by the Administrator-in-Council.
While this Administrator’s Council does not in itself constitute a full executive council for the Territory in the strict meaning of that term - and for reasons which I shall mention later, it is not possible at this stage to create such an executive council - the provisions in this bill do create the first opportunity that the elected Legislative Councillors have ever had to be associated closely with the tasks of administration in the Territory. We believe that this is the beginning of a change which, as the Territory progresses, can become more and more far-reaching.
The Administrator’s Council will have no function in respect of the preparation of legislation or prior approval of bills before they are introduced into the Legislative Council, because it was thought that elected members would not wish to commit themselves firmly in advance to legislation before its introduction into the legislature; and, as in fact they cannot occupy a place comparable to that of a cabinet, it was thought that if they were given functions in respect of the scrutiny of legislation before its introduction to the Legislative Council, that practice would be an abrogation of the functions which properly belong to the Legislative Council itself. The Legislative Council is a parliamentary body, and could properly take objection to any proposal that created a body that .had the nature of an inner legislative body while not being a committee of the Council itself. The Administrator’s Council cannot, at this stage of the constitutional development, be regarded as a committee of the Legislative Council, answerable to the Legislative Council and responsible for its actions to the Council. Nevertheless, it will be open to the Administrator at any time, when he is considering the preparation of draft legislation on any matter, to seek the advice of the Administrator’s Council on any of the matters of substance which might be under consideration by him.
The working of the Administrator’s Council will, if and when instituted, be watched keenly and with the hope that it may prove a means for blending local experience and wisdom with official responsibility and bringing about a better understanding of local conditions and Territory interests in all phases of the administration of the Territory.
The fourth reform relates to the voting powers of the member for the Northern Territory in this Parliament and will be discussed on the second reading of another bill.
In commending these proposals to the Senate, I ask honorable senators to look at them not as the definitive action by this Parliament on the subject of constitutional progress in the Northern Territory, nor as the last word of the Government on proposals for reform, but as one step in what we hope will be a continuing process of change for the good of the Territory. There are undoubtedly some advocates of change who would like this bill to go further than it does. On the other hand, there will be some senators who will think that it probably goes too far. As a Parliament, we have to try to achieve a balance between satisfying the demands of those residents of the Territory who have clamoured for constitutional reform and meeting our own continuing responsibility in respect of the good government of the Territory.
Until the Territory achieves responsible government, neither the Government nor the Parliament can abandon its responsibility. This point can be illustrated by a few brief references. So long as this Parliament votes the major part of the public funds in. the Territory, it will assert a right to scrutinize the way those funds are spent. So long as this Parliament retains its character as a superior legislature over the Northern Territory and members have the right to examine and criticize everything that is done in the administration of the Northern Territory, so long will the Government, which is accountable to this Parliament for what happens, be required to retain some authority over what is done. Until such time as the public servants who take part in the administration of the Territory can be made answerable to a Minister who is held accountable by a fully elected legislature in. the Northern Territory, they have to remain answerable to a Minister who is himself held accountable to this Parliament. 1 suggest, in passing, that it is rather paradoxical that some persons who, in another context, are almost vehement in their attacks on the power of the so-called bureaucracy, should have entered in this case on a course of argument which would in effect tend to hand the government of the Northern Territory completely over to bureaucratic rule by a corps of officials free from ministerial control and subject to no other restraint than the influence of opinion in a partly elected Legislative Council.
In creating the Legislative Council for the Northern Territory as a subordinate legislature in 1947, the Commonwealth Parliament saw clearly that the smallness of the Territory’s population and the inadequacy of its resources, apart from any other questions that might arise relating to the constitutional difficulties, precluded the inauguration of responsible government in the Territory. One question we have to ask ourselves is this: Is the Territory ready for responsible government now? I think we have to admit that the growth in population and resources of the Territory is not yet sufficient to enable us at this stage to create responsible government, assuming we could do so. I understand that the members of the Legislative Council in their discussion with the Government accepted that point. That being so, our task was to devise a measure of representative government suited to the existing fact that for the time being the responsibility still rests in this Parliament. That is what we have tried to do. In this bill we have tried to give to the Legislative Council for the Northern Territory the largest measure of representation of the community that we can, and in reaching an opinion on that point we have had to bear in mind constantly the responsibility of the Government itself and the responsibility of this Parliament.
In an attempt to find the largest possible measure of representation for the community we reached the opinion that an electorate of approximately 8,000 voters could not support more than eight elected members. We believe, however, that we can extend the measure of representation of the community by the addition to those eight elected members of three nominated non-official members. Although no categories are mentioned in the bill and it would be inadvisable to mention any categories of nominated members, we think that this provision affords an opportunity of adding to the membership of the council men of standing in the Northern Territory community; men with long experience of its problems. They will be private citizens unconnected with government, and will not be under instruction by the Government in any way. We believe such members can make a significant contribution to the working of the Council. We have already had a number of years of experience of such a system in the Territory of Papua and New Guinea where three non-official nominated members, sitting alongside the elected members, have made an outstanding contribution to the work of the Council. Our experience, which we hope will be paralleled in the Northern Territory, is that these nominated non-official members lose neither independence of mind nor frankness of criticism by reason of the fact that they have been appointed on the nomination of the Administrator. At the same time, they have brought an impartiality and breadth of interest which has been of real service to the deliberations of the Council. The quality of independence of mind is in the man rather than in the means by which he obtains his position in the Council.
One important point to be remembered in judging the significance of the changes proposed is that in future the Administrator, in introducing legislation to the Legislative Council, will be required to obtain the support of non-official members of the Council before that legislation can be sassed.
This bill, and the Northern Territory Representation Bill, which is to come before the Senate, deal with all of the representations for constitutional development put forward by the legislative councillors except those relating to the public finances of the Territory. As I have already said, a decision on that proposal has been postponed pending the examination of certain questions arising from the Commonwealth Constitution.
The changes that are contained in this bill are the result of a genuine attempt by the Government to understand fully the viewpoint of the citizens of the Territory andto give to them as great an influence on the Territory administration and as large a part in the making of Territory laws as it is possible to give, having regard to the present state of development and population of the Territory, and having regard to the inescapable responsibility of the Commonwealth Government and the Commonwealth Parliament at the present juncture.
Should any honorable senator feel that the Government has not gone far enough, I would ask him to consider the issues fairly, and to give full weight to the consequences of the generally accepted view that at this stage of its development the Territory could not accept the responsibilities of self-government. I would ask him also to remember that in our tradition, constitutional change is a thing of gradual development. It is largely because of this that our institutions and system of government are sound, and able to meet the demands and endure the strains of a modern society. 1 commend the bill to the Senate.
Debate (on motion by Senator McKenna) adjourned.
page 717
In committee: Consideration resumed from 9th April (vide page 690).
– The committee is now about to embark on its consideration of the four major banking bills. I suggest, Mr. Chairman, that it might meet the convenience of the committee and expedite consideration of the bills if honorable senators were to indicate to you the particular clauses about which they wanted to speak. You might perhaps then put all the preceding clauses to the committee, securing a decision with regard to those clauses before proceeding with the particular clauses upon which honorable senators wanted to speak.
– I appreciate the desire of the Minister to get some order into the proceedings, but I say at once that there may be members of the committee who are not in the chamber at the moment and who cannot now indicate to you, Mr. Chairman, the particular clauses in which they are interested. You might find, Sir, that having apparently settled the matter once, you were compelled to disrupt the arrangement again and again. It would suit my convenience if the bill were taken in parts. The Opposition, of course, is basically opposed to the whole concept of which this bill forms a part. Although we of the Opposition propose to raise for consideration certain individual clauses, we do not want to be deemed to be giving approval to the clauses that we do not mention. We shall merely refer to a number of them - so far as 1 am personally concerned, not a very large number. I think that the desire of the Minister to expedite the proceedings without interfering with the rights of any honorable senator might be met if we were to take this bill part by part. Then, any of the particular clauses that related to the part being considered could be dealt with.
I think that the Minister will appreciate that there is a very close nexus between this measure and the other three major banking bills, and I think that there might be a certain tolerance in the matter of reference throughout the course of the debate. If that tolerance is shown, it may well shorten debate on the latter three main bills. I regret, Mr. Chairman, thatI cannot speak for the members of my party, because I have not had an opportunity to ascertain their wishes, but I indicate that it would suit me if you took the bill part by part. If you put that proposition to the committee, there may be no objection to it.
The CHAIRMAN (Senator the Hon. A. D. Reid). - Is it the wish of the committee that the bill be considered Part by Part?
Honorable Senators. - Yes.
Part I. - Preliminary.
– I should like the Minister to explain what is intended by sub-clause (2.) of clause 5.
– Sub-clause (2.), which parallels section 5 (2.) of the present Commonwealth Bank Act, is necessary because the powers and responsibilities which the Reserve Bank will have in relation to regulation of the affairs of other banks are contained in the
Banking Bill. The sub-clause is of particular significance in connexion with clauses 10 and 11. of the -Reserve -Bank Bill, which deals with determination of the Reserve Bank’s policy.
Part I. agreed to.
Part II. - Constitution, Policy and Management of the Reserve Bank.
.- I am somewhat intrigued by the use of the expression “ the Government “ in clause 11. Might I be informed whether that term is the subject of any statutory definition? If not, whether it is commonly used in statutes to indicate the constitutional government or the GovernorGeneral. I am a bit indefinite in my understanding of what is intended.
– I am a bit curious about this clause because of the ambiguity of the word “Government” in clause 11 (1.). I know what I think is intended here but as honorable senators know, the word “ Government “ has various meanings. Here I presume it refers to the executive part of the Government, but the questions that Senator Wright has asked are quite relevant. Is this a term that is definitely definable? It is not defined in the bill. Whether it is a term that the courts know how to deal with, .1 do not know. Therefore, I merely ask .for information.
The other point is contained in subclause (1.) of clause 11, which reads -
The Board shall, from time to time, inform the Government of the monetary and banking policy of the Bank.
There is no provision that somebody shall inform somebody else in writing. Would the requirement be met if the governor rang a representative of the Government and said “This is the policy to be adopted by the Bank “. Would the governor be sufficiently informed if a statement were published and available for everybody to read? Can this clause be enforced in any way? If it cannot be enforced, why is it in the measure? Is not the matter covered sufficiently by various following clauses which say that the governor or somebody else shall write to the Secretary to the Treasury? I feel that this clause is so loose as to be meaningless, except as a public ^statement.
– I desire to refer to clauses 7 and 11. .Clause 7 is the one Which changes “ Commonwealth Bank of Australia “ to “ ‘Reserve Bank of Australia “. ‘It provides that,. despite the repeat of the Commonwealth Bank Act by clause 4 of this bill, the Commonwealth Bank of Australia is to continue as a corporate entity, but under the name Reserve iBank- of Australia. To that, the Opposition takes the strongest .possible exception, as has already been indicated at another stage of .the bill now before us. After all is said and done, the name “ Commonwealth Bank of Australia “ has been the name of a bank which has grown in stature and tradition throughout the last 40 years. It saw Australia through two world wars and played a part in many economic vicissitudes. It is the focal point of the intangible : loyalty of the staff of the bank. The bank is known throughout the world under the title “ The Commonwealth Bank of Australia “ .and must re-introduce itself throughout the world under a new title. The Opposition regards it as completely wanton on the part of the Government to discard a name so well and favourably known and which, I repeat, is the focal point of the loyalty of a vast staff scattered throughout Australia and with representatives aboard.
I come now to clause 11, which has been mentioned by Senator McCallum. Subclause (1.) reads -
The Board shall, from time to time, inform the Government of the monetary and banking policy of the Bank.
Senator McCallum has criticized the lack of detail of the word “ inform “. No mode of informing the Government is prescribed; it might be either orally or in writing. It might be, perhaps, per telephone. That is let alone; it is indefinite. Senator Wright has asked for information on the meaning of the term “ Government “, as it appears in sub-clause (1.). I cannot imagine anything that is more indefinite and vague. I repeat, the sub-clause reads -
The ‘Board shall, from time to time, inform the Government ….
What does that mean? Does it mean whenever the board thinks fit? Does it mean that every .change in policy must be communicated? Why does the Government not reserve to the Treasurer or to itself the right to require this board to inform it whenever the Government or the Treasurer so desires? It seems to me well enough to leave the board in the position where it may, at its discretion, advise the Government, because a duty is cast upon it by the bill to inform the Treasurer whenever the Treasurer seeks information. I think that the sub-clause is exceedingly loosely drawn. It ought to be looked at again; and in saying that, I am not to be taken as giving any support to the proposition that there should be a board at all. I am criticizing the drafting of the sub-clause.
– I refer, first of all, to the explanation of the use of the word “ Government “. I am informed that this has no statutory definition, but the clause itself requires the Reserve Bank Board to inform the Government from time to time of the bank’s monetary and banking policy and makes provision for resolving any difference of opinion that may develop between the Government, on the one hand, and the Reserve Bank, on the other hand, as to what the policy should be.
The question is raised whether it is appropriate for the Reserve Bank to inform the Government rather than a particular Minister of State, such as the Treasurer, of its monetary and banking policy. Generally, it is legislative policy to require a statutory body to report a matter to a particular Minister of State and not to the Government. It is then left to:the Minister to determine, in the light of any relevant Cabinet decision, whether or not he will bring the matter before the Cabinet. The bill could have followed this legislative practice and left it to -the Treasurer to inform the Cabinet when the Reserve Bank Board informed him of a change of policy. However, the Government took the view that banking and monetary policy is of such importance that there should be expressly written into the legislation the requirement that Reserve Bank monetary and banking policy shall be reported to, and consequently- considered by, ‘Cabinet from time to time rather ‘than to have it appear that under the bill the change need only be reported to and considered by the Treasurer.
The procedure under the clause would be as follows: - The Reserve Bank would, in accordance with the existing practice, fulfil its duty under sub-clause (1.) by reporting its monetary and banking policy to the Treasurer, who would then submit that policy to the Cabinet for its consideration. If the Cabinet disagreed with that policy the Treasurer, as a representative of the Cabinet, would, in accordance with subclause (2.) discuss the policy with the board and endeavour to bring into line Cabinet’s views and the board’s views as to the proper policy. If these discussions failed to achieve that objective, the Treasurer would report again to the Cabinet, and the Cabinet would determine the policy to be adopted by the bank. The determination would be given the formal legal effect as provided in sub-clause (4.) by the making of an order in council. It is not the practice to refer in legislation to the Cabinet. However, my advisers do not consider that the term “ Government “ is appropriate in the circumstances .1 have outlined in connexion with the bill. Senator McCallum raised the further question of the meaning of the word “ inform “. The method of transmitting information is not specifically limited. There may be times when it is more convenient, and faster - when speed is necessary - to inform verbally and .confirm by letter. The use of the word “ inform “ ensures that the most suitable method in the particular circumstances may be used. The Leader of the Opposition (Senator McKenna) has also questioned the use of the term, “ from time to time “. In a consideration of this matter one must have regard to the fact that banking policy, and the circumstances surrounding banking in all its forms, are such that there must be provision in the legislation for a continuity of exchange .of view and information as this becomes necessary. I am informed that, in describing a circumstance such as that, the use of the .expression, “ from time to time “ is not unusual.
The last point to which the Leader of the Opposition addresses himself is the proposed change in name from “ Commonwealth Bank of Australia “ to “ Reserve Bank of Australia “. He indicates, with some nostalgia, that by the use of this newname the place of the Commonwealth Bank, and indeed its stature and reputation, might suffer or to some extent be forgotten. 1 would suggest with great respect that that will not be the case. It is true that for many years the Commonwealth Bank has existed in that name. However, its functions have changed over the years. It started off with a much narrower objective. From time to time changes have been made until, to-day, a position has been reached when it has become necessary to establish a central bank in its true form. For that purpose, we have divided the various functions of the bank and have set up, as the central bank, the Reserve Bank of Australia, a name which, I might add, is applied to banks of this sort not only in Australia but also in many countries of the world. There is nothing unusual about that. Indeed I think it is something of an advantage to be able to use that term and thus indicate to all who are interested in this country that we have a banking system at the head of which stands a central bank - a reserve bank which is a reserve bank in every sense of the word. The name “ Commonwealth Bank “ will continue to be associated with other functions and I am sure that the lustre which it has drawn unto itself in the past will be perpetuated in the new branches; that the bank will meet the needs of the Australian people with the same efficiency and care that it has displayed in the past.
.- I am not an expert on banking, but I am also not altogether happy about the explanation given by the Minister in regard to sub-clause ( I .) of clause 1 1 . That sub-clause states: -
The Board shall, from time to time, inform the Government of the monetary and banking policy of the bank.
The clause then sets out the procedure for dealing with a difference of opinion. In bringing this matter forward I am actuated by my recollection of a time, which no doubt other honorable senators will also recall, when the relationships between the Commonwealth Bank Board and the Government of the day were very bad. Let us envisage a situation at some time in the future when relationships are not good - in a period of grave national crisis, for instance. Suppose the board takes it upon itself not to inform the Government of a particular matter. What procedure will the Government adopt to insist that it receives official information for the purpose of setting in motion the machinery for settling a difference of opinion? What will happen if the board says, “ We are perfectly happy with what we are doing. We do not want politicians meddling with this serious situation and we will just go ahead.” The Government is in the position of having to receive the necessary information before it can press its point of view. The board may say, “ We have to give the information from time to time. This is not the time when we propose to give it.” How then will the Government proceed to settle the difference of opinion? There may be provisions elsewhere which cover that situation. It may be that some honorable senators will say that such a position could not arise, but I have seen a most remarkable relationship between a Commonwealth Bank Board and the government of the day. Who can say that that will not occur again? Believing that it is necessary for the Government to have a procedure by which it can insist upon being given information on a matter of importance, I ask the Minister where such procedure is provided for in the legislation.
– There should be a specific clause directing a procedure by which information will be sent to a specific Minister. The Minister says that it is not customary to use the word “ Cabinet “ in acts of Parliament. I assume the reason is that the term is not known to the Constitution. The same applies to “ Government “ in this sense of the word. 1 think that its use here is a popular use. Its meaning must therefore be vague and should not be employed in an act of Parliament. The Americans never use it in this sense. If one referred in the United States to the “ Government “ no one would think that he was referring to the party in power. That would be called the “ Administration “. Candidly, I cannot find anything justifying support in this clause. It seems to me to be superfluous or, possibly, mischievous. I ask the Minister, specifically, in what way it would affect the working of the board if the clause were omitted from the bill.
I can support Senator McManus’s contention from my own recollection. The late Mr. Scullin told me that at one period, at the height of the financial crisis, he suddenly jumped into a motor car and went down to see Sir Robert Gibson. 1 do not think that any Prime Minister of the future will be placed in that position. I think that these bills make sufficiently clear the relationship between the Government and the board, but I think that there should be no room for mistake about the fact that, in the final resort, the Prime Minister and the Treasurer are supreme in relation to the Governor of the Reserve Bank.
– I am obliged to the Minister for addressing himself to the explanation of the words “ from time to time “. I put it that his explanation leaves a very serious gap. For instance, the board could say, “ We shall notify the Government once a year - every December “, or, “ in a particular month “. It might be a year of economic crisis. I ask the Minister what steps the Government may take to ensure that it knows what the board is doing. I realize that the Secretary to the Treasury is a member of the board. 1 take it that the members of the board are bound in secrecy as to their proceedings. I should like to know whether the Secretary to the Treasury is free to convey to his Treasurer what goes on.
– Do you suggest there is an obligation of secrecy?
– I suggest that there might be in connexion with the proceedings of the board itself. I think the Minister himself, during his second-reading speech, adverted to the fact that central banking operations had, of necessity, to be kept secret. And I think that would be true. As they are moving to a particular position because of a variation in policy, I think it would be most unwise if their move were foreshadowed from time to time.
– But is not clause 13 designed to ensure that the Secretary to the Treasury has full information?
– The bill does seek to establish a liaison between the Governor of the Bank and the Secretary to the Treasury. There is liaison there, but that does not cover the proposition I put. Under this bill, is the Secretary to the Treasury completely free to report to the Treasurer upon all things that happen at board meetings? In that connexion, I turn to clause 82, which says -
The Bank shall furnish to the Treasurer such periodical statements as are prescribed.
Apparently it is intended that the regulations will set out what statements are to be supplied.
– But they are not statements on policy.
– I recognize ‘hat they are not statements on policy. I am merely posing the question to the Minister. Will clause 82 authorize the making of regulations requiring the board to supply copies of its minutes to the Treasurer? Would that be a proper exercise of the power contained in clause 82? In any event, and quite apart from that, is there any provision in the bill under which the board may be obliged by the Treasurer to supply to the Treasurer copies of the minutes of its proceedings?
Quite obviously, there is a big gap if you use a loose expression like “ from time to time “ without defining it with any precision, and simply leaving it to the board to please itself. The difficulty can be cured so easily by adding after the words “ from time to time “ the words “ or at the request of the Treasurer “. Surely, for beginning the whole of the procedure under clause 11. there ought to be a, clear starting point, as indicated by Senator McManus, to get the machinery under way at the instance of a government. That seems to me to be the crux of the matter.
.- I wish to speak briefly before the Minister replies. My remarks are addressed to the argument we have just heard. I share Senator McCallum’s anxiety as to the wisdom of the use of the term “ Government “. As to the proposition put forward that we should have specific times and statements for this interchange of information to take place, the view I should like to put is that we are dealing with the representative of the Government of the Commonwealth on the one hand and a great national officer representing the Reserve Bank Board on the other. I should think that this is one of the occasions when conception of duty should be left” to the very high-standing officer concerned. Abuse and misbehaviour in the conduct of the office would warrant coming to Parliament, but we can expect of occupants of such high offices, I hope, the most candid and continuous indication of bank policy to the government of the day even though a statute expresses the duty in these general terms.
Under clause 25, the Governor-General may terminate the appointment of the governor or deputy governor on account of misbehaviour. Any substantial omission from information so as not to present fully the complete fact, and. certainly any misstatement in the way of information, would amount, I should hope, to misbehaviour. Nobody would expect that in respect of such a high officer that provision would ever be invoked; I simply point out that the power is there, not so much as a deterrent, but as a solution for the unfortunate situation that may, in the odd case, arise. But in respect of the usual transaction of business, I submit that we should leave to an officer of the stature of the Governor of the Reserve Bank, the greatest realm of independence consistent with the responsibilities of the Treasury; and so, for my part, I express the view that the indefiniteness of prescription of the duties is, in this instance, an advantage.
– Before the Minister replies, I should like briefly to express the contrary view. I think the probability is that the responsible governor or deputy governor of the bank will, in the spirit of the term “ from time to time “ keep the Government well advised of each substantive change of policy. But when drafting matter of this kind, we do not merely provide for probabilities; we should provide for possibilities.
The possibility would be that the board would be recalcitrant. That has happened in the past, so it is not a remote possibility. The initiative and control in this matter should, from the beginning, and at all times, remain ultimately in the hands of the government of the day. That is at the very base of the policy in banking always enunciated by the Labour Party.
The gap may be closed very simply by providing that the board shall, from time to time, or, at the request: of. the Treasurer, supply this information! What could be the objection to that?. What exception, could be taken to that? It is- in the event of the remote- possibility happening that the. board was recalcitrant and: declined, to supply, information at a time when it could reasonably be expected- to supply such information: If my suggestion were adopted, the Treasurer- would have the statutory right to demand it. Surely that is a proper thing to do. I think it is dangerous to leavethe matter where it is - entirely in the discretion of the board - and where ultimate control does not’ vest in the Government.
.- I wish to raise, a matter upon which the Minister has not satisfied me. I refer to the proposed change of the name from Commonwealth Bank to Reserve Bank of Australia. For many years now, the great Commonwealth Bank, of which- every Australian has been proud up to date, has carried out the services of a reservebank of Australia. It has also carried out the services- of a central bank of Australia, and the Minister says- it will be doing so in the future. This bank has become known far and wide, both inside and outside Australia, as the Commonwealth Bank of Australia. Why is there need to change the name now simply because it is- proposed to curtail the responsibilities and functions that have been carried out to date by the central bank, or reserve bank of Australia, whichever one wishes to call it, while operating as the Commonwealth Bank of Australia? I hope the change is not being made because members of the Government are prejudiced against the name “ Commonwealth Bank “, because it was established to give to Australia the services of a reservebank and a central bank and because Labour governments have amended the legislation from time to time to give it more powers in these fields. I can see no reason whatever for these proposed amendments although the Minister has claimed that they are necessary. Neither can I see that the Commonwealth Bank will be strengthened in any way by the proposal to change its name. How can the bank be strengthened if it is to be robbed of the name under which it has functioned successfully in the past? Why is the bank not allowed to remain untouched for the future? The
Minister must, not be unmindful of the fact that, the amendments he. proposes may be amended again in the not distant future. 1 am not satisfied that the Minister has given an adequate reason for robbing the bank of the name of which everybody, with the probable exception of the. Government, is so proud.
– When Senator McManus re-opened this matter and spoke of the situations which arose in the past, I think he had in mind a particular situation which, however, applied to a completely different set of circumstances - to a time when the government of the day had no power over the bank and when no provision existed in the act for the bank to inform the government of its operations. This legislation now before us has a completely different idea behind it. To try to over-formalize the relationship which should exist between the government and the. bank would be a. mistake. Under the proposed legislation there will be constant and continuous consultation between the government and the bank.
To take the view that Senator McKenna takes means that one must assume that the bank board will be comprised of men who will not be completely aware of their responsibilities, either to the government or to the bank. The fact that the clause is- couched in its present language introduces the very atmosphere in which the type of consultation which is to be encouraged shall take place. I can imagine, in a situation in which, there will be regular - possibly weekly - consultations, what would happen in the event of the board not taking part, on one occasion, in that consultation or in offering information to the Treasurer. Clause 13 provides that the Governor and the Secretary to the Department of the Treasury shall establish a close liaison with each other and shall keep each other informed on all matters which jointly concern the bank and the Department of the Treasury. I suggest that that clause goes rather further than imposing a requirement to inform on matters of policy exclusively. In its present form the clause meets all requirements, and no real case for amendment has been presented.
As to the use of the word “ Government “, to which Senator McCallum referred, I remind the honorable senator that the word “ Treasurer “ was altered to the word “Government” in 1951 when the bank board itself was established by the first banking legislation introduced by this Government after its election in 1949. That action was taken after the deepest consideration, and had particular regard to the importance of creating the idea that banking was a matter of such magnitude that the government itself, rather than one of its Ministers, should be informed.
– What exactly comprises the government to-day?
– The Government is not statutorily defined, but the meaning of the word “ Government “ cannot be misunderstood - it means the Government of Australia. This clause means that, the Government of Australia shall be informed, not a Minister.
– Does the Governor of the bank send a communication to every Minister?
– No . The proposal is that he will send a communication to the Treasurer, and the Treasurer, as the relevant Minister, will then relay the matter to the Government. It is quite clear that in the event of the Treasurer not doing so steps will be taken to inform other Ministers.
– In view of the doctrine of the indivisibility of ministerial responsibility, if the Governor sent a communication to the Minister for Territories could he be held to have fallen down on his obligation, under this proposed section, to give information to the Government?
– I should think that the Governor’s first obligation would be to advise the Treasurer.
– That is exactly what we are saying - that the procedure should be so expressed. If that were done, the Government would constitutionally identify a definite recipient of the information.
– I can only repeat that the advice tendered to me is that the word “ Government “ is appropriate in these circumstances.
– In 1951, no distinction existed between Cabinet and the full
Ministry. To-day such a distinction exists. Has that matter been considered?
– In 1951 the Government was the Government of Australia; in 1959 the Government is still the Government of Australia.
.- Without pressing the Minister too much, I ask that before the debate closes he ascertain from his advisers information as to whether the statutes, other than the amendment of 1951, include the term “ Government “. If the proposal represents a new idea in the expression of legislation I, with other persons interested in constitutional development, should like to know whether there is any precedent for use of the word “ Government “.
.- The Minister has not answered the questions I have asked. Am I to assume, therefore, that my submissions are correct? I stated that I could see no justification for replacing the name “ Commonwealth Bank of Australia “ with “ Reserve Bank of Australia “ because, prior to this legislation coming before Parliament, the Commonwealth Bank carried out all the functions of banking that are proposed for the Reserve Bank. If you read them, you see there is not one of them that the Commonwealth Bank was not carrying out. Let us have a look at them. The first is, “ to receive money on deposit “. The Commonwealth Bank was doing that, and doing it very efficiently. We go further down the list to the item, “To lend money”. The Commonwealth Bank has done that very efficiently. Especially has it assisted primary producers in times of crisis. It has assisted the nation generally in some very grave periods of crisis. I could go on for half an hour mentioning many more functions which the Commonwealth Bank has carried out efficiently. Another is, “ To buy. sei!, discount and re-discount bills of exchange, promissory notes and treasurybills “. The Commonwealth Bank has been doing that all the time.
– You would not know what that is.
– I admit that I would not know if I had a mental capacity like yours. Another function is, “To buy and sell securities issued by the Commonwealth, and other securities “. The Commonwealth Bank has been doing that all along, carrying on as a Commonwealth bank. The next is, “ To establish credits and give guarantees “. The Commonwealth Bank has been doing that all along, as a Commonwealth bank. Then we come to another function - “ To issue bills and drafts and effect transfers of money “. The Commonwealth Bank has been doing that all along, is still doing it, and will do it as a reserve bank. The final functions of the new bank are, “ To underwrite loans; and to do anything incidental to any of its powers “. The Commonwealth Bank has been doing that all the time, as a Commonwealth bank.
It has been able to do all these things as a Commonwealth bank, and now it is going to do them as a reserve bank. Why the necessity to rob it of its name? Why the necessity to take away a name of which millions of people have become so proud? An honorable senator opposite who interjected just now said that I would not know what something was, but if I had his mental capacity I would never have been allowed into this place. Let me say to the honorable senator who interjected then that hundreds of Australians know full well everything that is stated in this bill and know full well also that the Commonwealth Bank has carried out these functions. The bank cannot carry them out more efficiently if it is called the Reserve Bank than it carried them out as the Commonwealth Bank. . Indeed, as a result of the curtailment of its powers in other directions, probably it will carry out the functions less efficiently as the Reserve Bank than it carried them out as the Commonwealth Bank.
Therefore, as the functions to be carried out by the Reserve Bank are broadly the same as those carried out by the Commonwealth Bank, I am at a complete loss to know why - unless it is due to prejudice on the part of the Liberal Party - the name is to be changed. Anticipating what may be said, I point out that Senator Henty has expressed such prejudice on many occasions in this Parliament when he has spoken about the Commonwealth Bank. At this juncture, I am prepared to say that it was the name, not the functions, of the bank about which he was so bitter in the speeches he made.
I again ask the Minister whether there is any reason why the name should be changed. Will it give any great benefit, or any benefit at all, to the Australian people or the Australian banking institutions to rob the Commonwealth Bank of its name? Is there any reason why the bank carrying out these functions should be called, not the Commonwealth Bank, but the Reserve Bank? As was stated by the Minister, and as is stated in the bill, the Reserve Bank will be carrying out the functions of a central bank which the Commonwealth Bank has been carrying out throughout the years.
– The point made by Senator Aylett, of course, is one which the Opposition has been making for some time. The Opposition has said that the name of the Commonwealth Bank holds a very high place in the thoughts of the people of Australia. No one in any way disputes that. The Commonwealth Bank is well known to the people of Australia and is very highly thought of. The honorable senator said that I had made many speeches in this chamber in opposition to the Commonwealth Bank and critical of it. That statement shows that he has never read or heard my speeches, because at no time have I ever criticized the Commonwealth Bank or spoken of it in derogatory terms.
The point that the Opposition makes is a valid one, but let us consider those sections of the bank which will come into contact with the public. They are the Commonwealth Trading Bank, the Commonwealth Savings Bank and the Commonwealth Development Bank. The public will not be coming into contact with the Reserve Bank of Australia. The Reserve Bank will be a bankers’ bank. It will advise all the trading banks in Australia, including the Commonwealth Trading Bank. It will be there for that very purpose. It will be of tremendous help to the banking institutions of Australia, both public and private.
The point is that the Commonwealth Bank has not lost its name. The trading section of the Commonwealth Bank will be known as the Commonwealth Trading Bank. Of those who put their few shillings away each week, some will prefer to deposit their money with the Commonwealth
Savings Bank rather than with, say, the Launceston Savings Bank or the Hobart Savings Bank. The bank with which they deposit will be known as the Commonwealth Savings Bank. Those who obtain loans from the new Development Bank will know that bank as the Commonwealth Development Bank. The people of Australia will still deal with these three sections of the Commonwealth Banking Corporation - the Commonwealth Trading Bank, the Commonwealth Savings Bank and the Commonwealth Development Bank. The goodwill of the Commonwealth Bank has not been touched in any way at all. Its goodwill lies with the people. The people will deal with the Commonwealth Trading Bank, the Commonwealth Savings Bank or the Commonwealth Development Bank. The name is there for those whose goodwill it has, and whose goodwill it will continue to have.
The idea of calling this central bank the Reserve Bank of Australia is something for which we have fought for nine years, so that we could have in Australia, as in other countries, a reserve bank which had the full confidence of the private and public banking systems and which could advise them, and keep them advised, on central banking matters. The goodwill of the Commonwealth Bank with the people has not been touched. The Commonwealth Bank will continue as such, and it will grow. I think I have answered the honorable senator’s comments.
.- At last I have the clear admission which I have been seeking. I can see very clearly now why there is to be no Commonwealth Reserve Bank. Senator Henty has told us in no uncertain manner that the Reserve Bank is to be a bankers’ bank. We have that clear admission. I have a very clear recollection of a bankers’ bank in 1924 and 1925, when a Liberal government amended the Commonwealth Bank Act. Until the time of that amendment of the Commonwealth Bank Act, the Commonwealth Bank had been functioning in the interests of Australia. It had helped the primary producers, and during the first world war had assisted in every aspect of Australian life. In 1924 or 1925 a Liberal government amended the Commonwealth
Bank Act and made the Commonwealth Bank purely a bankers’ bank. The Government curtailed the activities of the Commonwealth Bank until it became a pawn in the hands of the associated private banks of Australia.
During the war years, the Labour government of the day, under its defence powers, took control of the finances of this country and controlled them as it thought fit, and it was not until 1945, when we could see that the war would soon come to an end, that we decided to make the Commonwealth Bank a true Commonwealth Bank and not a bankers’ bank as it had been for decade after decade as a result of the action of a ‘Liberal government. Now Senator Henty has indicated in no uncertain manner what are this Government’s ambitions for the future. It was a Labour government that made the Commonwealth Bank a central bank and made it function for the people. of Australia. It is all very well for Senator Henty to say that we will still have the Commonwealth Trading Bank. The activities of that bank are considerably .curtailed when compared with its powers .under the 1947 legislation.
Now, in 1959, ‘the reason given why the present title of the Commonwealth Bank is to be removed is that it is to be a bankers’ bank just as it was, regrettably, in the past until such time as a Labour government amended the banking legislation. There is not one of the alterations that the Government seeks to effect under the current legislation which could not be effected under the 1947 legislation. The legislation now before us seeks to curtail certain activities of the Commonwealth Bank and to grant certain privileges to the associated private banks by making the Commonwealth Bank a bankers’ bank and a pawn, a servant, in the hands of the private banks. That is why Senator Henty does not want the present name of the bank to be retained. -7 give him due credit for saying why he does not want the present name to be retained. Once the central bank becomes a purely bankers’ bank, it is no longer a central bank. Why did not the Minister for Shipping and Transport say the same as Senator Henty said? That is one aspect of the legislation about which he did not want to tell the people of Australia.
I repeat that once the central bank is made a bankers’ bank for the convenience of the private banks, it will no longer be a Commonwealth Bank. If it could be regarded as being a Commonwealth Bank, there would he nothing to .prevent its being called the Commonwealth Reserve Bank, just as the trading section is described as the Commonwealth Trading Bank. I thank Senator Henty for his clear admission. What he has admitted is what we have been afraid of all the time.
– I am in some difficulty in trying to identify the particular point of criticism that Senator Aylett has attempted to make. I gather that he takes some objection to the proposed name. of the central bank
– That is it.
– He .complains about the fact that it is not to be known as the Commonwealth Reserve Bank. I do not think the bank will lose anything on that score. If the honorable senator looks at his .copy of the .bill, he will find that it is to be called the Reserve Bank of Australia. Obviously, there are reasons why the bank should be so described. Those reasons have been referred to by my colleague, Senator Henty, to whom I am indebted. The Commonwealth Banking Corporation is to be established. It will control its three great branches - the Commonwealth Trading Bank, the Commonwealth Savings Bank, and the Commonwealth Development Bank. Alone and in isolation, as it always should have been, will stand the Reserve Bank of Australia.
Senator Aylett proceeded from that point and thanked -Senator ‘Henty for informing him of the fact that it is to be a bankers’ bank. Then he went on to say it would be - I am not too sure .of the term he used - either the pawn or the prawn of the private trading banks! As a central bank, the Reserve Bank of Australia - I should have thought that my friends on the Opposition benches would have informed themselves of this - will require the private trading banks to keep with it certain moneys as special reserve deposits. The Reserve Bank will also impose rates of interest on the private trading banks, and will direct their financial policy. Perhaps when Senator Aylett has more time at his disposal he will be prepared to describe to the committee how such a bank could be regarded, even by him, as being a pawn or a prawn of the private banks.
.- Mr. Chairman, I shall be delighted to do as the Minister suggests. Even though he suggests that the Reserve Bank is to be under the complete control of the Government and its activities are not to be governed by the associated private banks, I have very just grounds for my fear that it will be a bankers’ bank and will be a pawn in the hands of the private banks. If we care to ascertain who will control every section of the Commonwealth Banking Corporation, we will find that outsiders will be brought in from every direction. It will be they, and not the Government, who will decide the rates of interest and what the policy of the private banks shall be. The Minister spoke about the control of the Reserve Bank over the private banks. Let us get it quite clear that the Reserve Bank will have no control over the private banks.
– I rise to a point of order. I submit, Mr. Chairman, that in the part we are now considering there is nothing relating to the name of the batik or any of the other matters about which Senator Aylett has spoken while I have been in the chamber.
– Have a look at clause 7. That deals specifically with the name.
– Order! The point of order is not upheld.
– I had not intended speaking just at this stage, but I accepted the invitation of the Minister for Shipping and Transport to reply on the point he raised. If I have strayed, he certainly has strayed too. So we are both in the same boat. The Reserve Bank will have no control over the associated private banks, because indirectly they will be controlling the Reserve Bank. That is why I said that it will be a pawn in the hands of the private bankers, just as it was under the legislation of 1924 or 1925 that was introduced by a Liberal government.
Part II. agreed to.
Part III: - The Reserve Bank Board and the Governor and Deputy Governor of the Bank.
.- There are two matters that I wish to raise on this part and they are, I submit, substantial. The first concerns an old principle for which I and a number of others on this side of the chamber have striven, and it arises under clauses ‘15 and 14(2.). Clause 15 deals with the way in which remuneration of a member of the Reserve Bank Board shall be -fixed. With that I am not so much concerned, but, in passing, I notice that it is contemplated that the remuneration of various members of the board may be different, and that as to some of them there may be -no remuneration at all. Clause T5 refers to “ remuneration (if any)”. Such a provision probably is inescapable, Mr. Chairman, in regard to the appointed members of the hoard. I have no doubt that there will be some high-ranking civil servants and other part-time members in respect of whom I should think there would be uniformity; but as to all of them, the Governor-General is the person to determine their salaries. I am not going to focus my attention on that aspect, so I turn now to clause 24 (2.).
In relation to the Governor and the Deputy Governor of the Reserve Bank, their salaries and allowances shall be determined by the Governor-General. This is a matter, I submit, in which the Parliament should not allow the Executive to have authority outside the scope of parliamentary cognizance. The Governor and the Deputy Governor of the Reserve Bank will be two of the most important and independent officers in Australia. Until the last four or five years, it was current constitutional knowledge that a parliament lost its power in a substantial degree unless it required submission to it of proposals to alter the salaries of such very highly placed and significant salaried officers. If the GovernorGeneral may determine the salary from time to time by Executive Council minute, the fact of such determination will never come before the Parliament, except as an item obscured in a conglomerate Budget which this Senate has no power to amend. It is inconceivable that the Parliament, except on critical occasions, would reject such :a determination merely because it thought there had been some undue meddling with the salary of the Governor of the Reserve Bank.
It is as clear as daylight, Mr. Chairman, that the principle for which I speak is a vital one and one on which the Parliament should insist. This Senate, as a section of the Parliament, should insist with special tenacity on upholding it. I hope that on the occasion of this committee consideration, the Minister will see his way clear so to amend clause 24 that the salary and allowances with which it deals will not be subject to determination by the government of the day, but shall have the security and the fixity that come from their being determined by the Parliament. That is the position still with the salaries of such officers as the Commissioner of Taxation and other high officials and that position has not been altered over the last six or seven years. I hope that it will be conceded that the man who has to carry the responsibility of governorship of the Reserve Bank should have behind him the security that his emoluments and salary are fixed by the Parliament and not by the government of the day.
.- I support Senator Wright’s contention. As you know, Mr. Temporary Chairman, the independence of the judges was established in the time of William III. by the Bill of Rights, which laid down that their tenure was permanent except by a vote of both Houses of Parliament. The office of Governor of the Reserve Bank is a new one, but it should be dealt with on the analogy of the judges and other independent officers, such as the Auditor-General. This is not an ordinary Public Service appointment. The real power and the influence of the Governor of the Reserve Bank will be enormous, and it may grow. He will be one of the most important functionaries in the whole of the community, and I do not think that the Parliament should allow the determination of his salary to go out of its hands. I ask the Minister, if he cannot make up his mind now, not to press on with this clause but, if necessary, to report progress. I hope, at any rate, that full consideration will be given to this matter and that the determination of salary finally will be left in the hands of the Parliament.
– I refer to clause 14, which deals with the membership of the Reserve Bank Board. Paragraph (d) of sub-clause (1.) provides that the board shall consist of “ seven other members, who shall be appointed by the Governor-General in accordance with this section “, in addition to the members who are named. This matter, Mr. Temporary Chairman, seems to be tied up with the matter about which I spoke a few moments ago. Will these seven other members of the board be representatives of the private associated banks of Australia, or will they be representatives of wool brokers, graziers, industrialists, captains of industry, or the trade union movement of Australia? Could the Minister indicate the interests that those members will represent?
I am very much afraid that this Reserve Bank will be a real bankers’ bank, as Senator Henty said it would be, because the way is paved by this provision to make it such a bank. The way is open to appoint to the board a majority of representatives of the associated banks. I venture to say that, through the direct or indirect influence that those banks exert, that is virtually what will happen. I again thank Senator Henty for his frankness in telling the people of Australia that this bank is going to be a bankers’ bank, run by the private associated banks for their benefit.
The matter does not end there. I am also a little concerned with the question raised by Senator Wright, and may I say that it is not very often that I find myself in the honorable senator’s company. Clause 15 states -
A member of the Board shall be paid by the Bank such remuneration (if any) as the GovernorGeneral determines.
Therefore, it could be possible for the seven members of the board who shall be appointed by the Governor-General to represent wholly and solely the private associated banks, because although the clause refers to the Governor-General, in effect it means the Government or the inner Cabinet. Those members of the board could be appointed on very high salaries or on no salaries at all. There is a danger that they could be appointed to hand out plums to somebody who had done a service for the government or one of the government parties. We know that plums will have to be handed out by the associated banks in return for this legislation, and appointments to the board may present such an opportunity.
The members of the Reserve Bank Board have still to be appointed. Their remuneration will be determined, not by this Parliament, as Senator Wright would like to see, but by the inner Cabinet. That is where the danger arises of the creation of a bankers’ bank, of which Senator Henty seems to be so proud. Can the Minister give us an indication of the callings from which persons appointed to the bank board will be taken? Will the Trades and Labour Council or the Australian Council of Trade Unions be represented on the board? Can the Minister give the committee any indication of the remuneration that will be paid to the members of the board for their services?
– 1 am not proposing to deal with the question of salaries and allowances for the members of the board, the governor and the deputy governor. 1 have heard enough about salaries and allowances to-day to last me for a long time. But I do concern myself with clauses 14 and 17 of Part 111. The setting up of a board to control the Commonwealth Bank was a great bone of contention between the Government and the Opposition back in 1950 and 1951. We voiced then our bitter objection to incorporating in the control of the Commonwealth Bank outside private interests, and the Government itself recognized that there should be some safeguard in respect of the type of person to be eligible to sit on the Commonwealth Bank Board. This board has been functioning since 1951. That is the board to which we objected.
– The bank has not gone back under the board.
– It has not gone back, but it is also fair to indicate that there was nothing wrong with the bank before the appointment of the board. The bank was progressing exceedingly well under the charter it got in 1945 to go out and compete. Since the honorable senator interjects, it is fair to hazard this question: How much better might the bank have done without the incubus of the board on its back? We object entirely to a board, no matter how it is constituted.
But 1 want to refer in particular to clause 17, which sets out the persons who are not eligible for appointment to such a board or to continue to act as members of the board. Paragraphs (a), (b), and (c), in effect, make perfectly sure that there shall be no liaison between the family of Commonwealth Banks, on the one hand, and the board of the Reserve Bank of Australia on the other hand. That is completely excluded. A member of the Commonwealth Banking Corporation Board is not eligible; the managing director, the deputy managing director or an officer or employee of the Commonwealth Banking Corporation is not eligible; the general manager of the Commonwealth Trading Bank of Australia, the Commonwealth Savings Bank of Australia, or the Commonwealth Development Bank of Australia is not eligible. All are debarred from membership of the board.
Now we come to the question of directors and officers from private banks. The ones who are forbidden are set out in paragraph (d) which reads -
A director, officer or employee of a corporation (other than the Bank)-
That is, the Reserve Bank - the business of which is wholly or mainly that of banking.
Look at what is possible under that particular provision. It is completely competent for a director of a private trading bank, or an officer or employee of that bank, to resign from his position on one day and be appointed on the next day to the board of the Reserve Bank. That is completely possible. That could obtain in the case of the general manager of a private trading bank. I understand that years ago a director of a private bank resigned one day and was appointed next day to the Commonwealth Bank Board, and when in due course the board was abolished he immediately went back to his directorship of the private trading bank.
– Sir Denison Miller did the same, you know.
– That has actually happened. I am merely indicating objectively to the Minister what can happen under this clause. So what purports to be a provision against private interests pervading the Commonwealth Bank Board is nothing of the kind. It is obvious that the
Government, if it wants to ensure that the Reserve Bank Board was not so permeated, has merely to add to paragraph (d) the words “ who in the last four years - or five years- has been so engaged “, assuming there was a hiatus between his engagement with the private bank and the time of the possibility of his appointment to the Reserve Bank Board.
There is another aspect of the matter. I think it would be reasonable to require that a person who is being projected into the Reserve Bank Board should have shown some interest in the national bank prior to his appointment, ls it not reasonable to specify that a person to be considered for appointment to the important position of a member of the board should have been for a period of years a depositor with the Commonwealth Bank, that he had not preferred the opposition, or that he had shown some interest in the national bank, the Commonwealth Bank?
– The honorable senator thinks that he should be qualified for membership of the board if he had been a depositor in the Commonwealth Bank?
– I think it would be reasonable. At least it would be in his favour that he had shown some interest in the national bank. Look at the position of a person who takes his business to a private bank as a matter of choice, as it were, between the Commonwealth Bank and the private banks. On the face of it, a person who is interested enough to be a depositor in the national bank is more likely to be concerned about the welfare of that bank than would a person who has banked with a private bank. Why should not there be a prohibition on the appointment to the board of a person who is heavily indebted to a private bank? He may be heavily indebted to a private bank and subject to coercion financially. Would it not be proper, in considering the qualifications of a person to be appointed, to have all these matters in mind? The Government has made no attempt by provisions of that nature to ensure, as far as can be ensured, the reasonable independence of the men appointed to this board.
We regard the board itself as an atrocity. The manager and the Governor and Deputy Governor - the highly competent executives that- the; Commonwealth Bank has always had;- have been able to steer the bank very well. I recall an appointment that was made to the board in 1951. The man said that he had had no experience of banking and that he would have to learn. I think he was a grazier. He made his admission publicly when he heard the news of his appointment. What could he contribute to a solution of the economic problems of the Commonwealth and the framing of the policy to be pursued? We fear that people who will be under duress from outside the bank will be appointed to the board. The Government pretends that the Reserve Bank is to be divorced from all commercial activities, but whilst doing so it is importing into the control of the bank private commercial interests. The thing does not add up in logic or in common sense. I merely rise to repeat, first, the objections the Opposition has to a board and, secondly, to indicate the inadequacy of the provisions of the bill to ensure that only persons who are not interested in the private banks shall be appointed to the Reserve BankBoard.
– I’ wish now to direct the attention of the committee to another question, since Senator McKenna has imported into the discussion an allied subject. It concerns the provisions as to the interests of members of the board in the banking business. I ask the committee to examine clauses 18, 23 and 25. Clause 18 provides that the office of a member of the board may be terminated on account of misbehaviour - where the member becomes permanently incapable of performing his duties, becomes bankrupt, resigns, is absent, except on leave granted by the Treasurer, from all meetings of the board held during two consecutive months, or fails to comply with his obligations under clause 23. If the committee would be so good, I would ask it to examine, quite critically, clause 23. It provides - (1.) 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 twenty-five persons, 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. (2.) A disclosure under the last preceding subsection shall be recorded in the minutes of the Board and, after the disclosure, the member of the Board -
Clause 25 provides for the termination of the appointment of the governor or the deputy governor on account of misbehaviour on the grounds set out in paragraphs (a), (b), (c) and (d) of sub-clause (1) of clause 18. There is no provision in clause 25 which is analogous to paragraph (e) of sub-clause (1.) of clause 18. That paragraph renders the member’s seat forfeit if he fails to comply with his obligations in relation to an interest, direct or indirect, in a contract. I regret that the proposed statute takes two clauses to do what could much more neatly have been done in one, but I suppose that that course does emphasize the differences.
May I ask the committee to concentrate its attention upon this question of interest on the part of the member of the board, and interest on the part of the governor or deputy governor. Where is the provision disqualifying the governor or deputy governor from continuance in office if he participates in a contract in which the board is interested and does not disclose that fact? Secondly, though paragraph (e) of sub-clause (1.) of clause 18 disqualifies the ordinary member of the board if he is interested in a contract and does not disclose that fact, I ask the Minister to accept the view that that disqualification is too narrow if limited simply to contracts with the bank. I remind the committee of the very disquieting transactions associated with the Bank of England last year which required a royal commission. Any one who has had an opportunity of reading, even to a small degree, the evidence as it appears in the London “ Times “ and in the report of Lord Justice Parker, will see that when we insist upon the inclusion, in a board of this responsibility, of men of private business experience, we must be very careful to fortify the legislation so as to prevent, not merely its actual abuse, but also the appearance that it is being abused. I have in mind transactions which are so close to the line of condemnation that they give rise to disquiet, and diminish theconfidence which people dealing with the Reserve Bank wish to accord it.
Honorable senators will recall that the transaction to which I have referred concerned a resolution of the Bank of England to alter the bank rate of interest. That, I suggest, would not be a contract with the bank at all. I submit that what we want is a disqualification through interest, direct or indirect, on the part of any member of the board, or the governor, or the deputy governor, not merely in a contract with the board but in any resolution, transaction or decision of the board.
I submit that we have been led into a weakness here by, perhaps, copying this provision from provisions dealing with ordinary government boards. Such boards make their impact upon commercial interests by contracts, only, but the Reserve Bank makes its impact upon commercial interests by decisions and resolutions which affect the conditions in which other government boards and commercial companies make their contracts. I think that it is imperative for the success of this structure to have it so fortified against the possibility of any interest affecting decisions that those who sit opposite us, and intuitively distrust the introduction of private interests to such a board, will be satisfied that there is no possibility of a situation arising that is in the least degree questionable - a situation in which a member of the board, or the governor, or the deputy governor may be shown to have an interest in a resolution or vote of the board.
I should be glad - if the relevant provision has escaped me - for any honorable senator to point out that I am wrong, but I cannot find that the office of governor or deputy governor will be terminated if either of those officers has an interest in a contract and fails to disclose the same. On the contrary, paragraph (e) of sub-clause (1.) of clause 18 requires the office of the ordinary member to be terminated if he has a prohibited interest in a contract and does not disclose it.
I think that we should go further and extend the scope of the term “ contract “ to include, “ resolution or decision “. It is not clear that the member of the board - including the governor and the deputy governor - should be considered to have discharged his whole obligation just by disclosing his interest, lt is difficult to go further and say that he should withdraw, because the interest may be of great variety, but I present that thought for the consideration of the Minister. I should hope that the remedy for the first two matters would be applied while the bill was before us. The third matter is, I know, somewhat vague, difficult and indefinite, but I mention it for subsequent consideration.
– Let me deal first with the remarks made by Senator Wright and Senator McKenna relating to the fixation of the salary of the governor and the deputy governor. Senator Wright was good enough to indicate to me a day or two ago that he felt some concern about this provision, and I have had the opportunity to give considerable thought to it. I regret that I cannot accept the amendment which he has in mind.
This matter appears to me peculiarly one for the Executive. Administratively, it is a much more flexible and satisfactory arrangement to be able to appoint at a salary determined by the Government than to have to return to Parliament for the purpose. Although I have given consideration to what was put to me by Senator Wright, I regret that I am unable to accept his point of view in this matter.
Senator McKenna, not surprisingly, referred to the establishment of the board, and its composition, and expressed himself as being greatly disappointed, to say the least, al: the fact that there was to be a severance of the Reserve Bank from the other arms of the new Commonwealth Banking Corporation. Of course, that is the whole sense of an independent central bank. The whole purpose of the legislation under discussion i<> the setting up of a central bank completely severed from the Commonwealth Bank and all other banks. In a word, it is to be completely independent of those banks.
I confess that I failed to follow Senator McKenna’s idea when he advanced the view that, when appointments are being made, consideration should be given to someone who had displayed his interest in the Commonwealth Bank to the point of having, for a period, maintained an account at the Commonwealth Trading Bank. Under the system of a reserve bank with trading banks beneath it, the Commonwealth Trading Bank is in the same position in this respect, as an ordinary private trading bank. As I understood the argument advanced by Senator McKenna, he was most concerned that anyone who had even the slightest interest in a private trading bank could be appointed to the Reserve Bank Board, yet he suggested that in his view the appointee should have shown sufficient interest in the affairs of the Commonwealth Bank to maintain an account at the Commonwealth Trading Bank.
The first point made by Senator Wright with respect to clause 18 (1.) (e) and clause 25 was that clause 25 contains no provision for the vacation of office by the governor or the deputy governor for failure to comply with their obligations under clause 23. I suggest that this point is covered by clause 24 (1.) (c) which provides that the governor and the deputy governor shall hold office only subject to good behaviour. Clearly, anything envisaged by clause 18 (1.) (e) as being applicable to a member of the board other than the governor or the deputy governor would constitute an act of misbehaviour which would qualify the governor or deputy governor for dismissal. I point out also that clause 23 applies to ail members of the board.
– Including the governor and the deputy governor.
– Including the governor and the deputy governor.
– But clause 18 (1.) (e) does not apply to the governor or deputy governor, and that is the clause which covers the acts which constitute noncompliance with clause 24 (1.) (c).
– Clause 24 (1.) (c) has the same effect on the governor and deputy governor as clause 18 has on all members of the board other than the governor and deputy governor.
– If they do not comply with clause 23 it would be an offence under clause 24.
– That is so. Senator Wright also suggested that clause 23 (1.) (e) was narrowed in its application to a member of the board who was directly or indirectly interested in a contract made or proposed to be made and that it should be widened. The suggestion opens up a wide field for study and comment. I would be inclined to the view that the drafting of this measure had taken into account those things about which Senator Wright expressed such great concern, but I confess that, as is not unusual, I have been most impressed by the arguments he has advanced. Although 1 am not prepared at this stage to accept an amendment, 1 am sufficiently interested in what Senator Wright has said to tell him that I will take the argument advanced by him back to the Treasurer and ask for a closer examination of the view put by him. I have no doubt that if it is then found desirable to amend the legislation to provide for the situation which Senator Wright envisages, the Government will give very sympathetic consideration to the matter. I am not prepared to accept an amendment now. I am prepared to put to the Treasurer the opinions presented by Senator Wright and ask him to consider them with a view possibly to an amendment of the legislation at a later stage.
Sitting suspended from 5.45 to 8 p.m.
.- Prior to the suspension of the sitting I had endeavoured to obtain from the Minister some information as to the seven members to be appointed to the board, and the interests they will represent. Should any of those seven members be involved, directly or indirectly, with any private bank, will they be disqualified from holding office? Under what terms will they be appointed to the board, and what remuneration will they receive? Will these members comprise representatives of the industrial section of our community as well as representatives of the captains of industry? The industrial section of the community, as represented by such organizations as the Australian Council of Trade Unions and the Australian Workers Union, comprises men as well versed in accountancy and finance as employees of the private banks. Will the Minister give an assurance that the members to be appointed to the board will not have any direct or indirect association with the private banks?
– Before the Minister replies, 1 should like to remind him of clause 17 which is in these terms -
A person who is -
a director, officer or employee of a corporation (other than the Bank) the business of which is wholly or mainly that of banking, is not capable of appointment or of continuing to act as a member of the Board.
I had put the proposition that unless a person had been a depositor in the Commonwealth Bank for a period he should not be appointed to the Reserve Bank Board. The Minister has expressed himself on that and I do not ask him to do so again. However, 1 put two other propositions. The first is that in addition to prohibiting a director, officer or employee of a private bank from appointment to the Reserve Bank Board, no person who has, within a period of, say, five years, occupied such a position, should be eligibile for appointment to the board. Will the Minister comment on that proposition? If he is not prepared to accept my suggestion, will he give his reasons? My second proposition is that no person who is indebted to a private trading bank should be eligible for appointment to the Reserve Bank Board. With the spate of matters that have been placed before him, the Minister could quite well have overlooked the two propositions to which I have referred. 1 should like to have his comments.
– In general terms, possibly I can answer at the same time the queries raised by Senator Aylett and by the Leader of the Opposition when I say that it is not the Government’s intention to appoint any person to the board as being representative of any particular section of the community. It is not the Government’s intention, for example, to select a man as being representative of the captains of industry, nor is it the Government’s intention to select a man as being representative of the trade union movement. It is the Government’s intention to select, from the men available within Australia, those men who will bring to their positions as directors of the board a broad judgment, uninfluenced by any association.
Senator- Aylett. - In that case the appointees will be retired judges.
– The honorable senator may nominate whom he wishes. However, within Australia we have the required number of men whose public duty, public service and qualifications amply equip them to fill the positions on the board without their being representatives of the trade union movement, of industry, or of any other section of the community. There is no need to approach this problem with any feeling of apprehension that one section or other of the community will have a predominating influence on the board.
Senator McKenna has asked for an assurance that a man who, in the conduct of his business or domestic life may have become at some time in the past or, in fact, be at the time of selection indebted to a bank, should not be considered for appointment to the board. I answer the honorable senator in this way: Any prospective member of the board who is indebted to or involved with any one, be it a bank or any other body, to such an extent as to affect his judgment, will disqualify himself from appointment to the board. It is not the Government’s intention to appoint any one to the board to peddle the interests of any particular person or group of persons. The Government is confident that within Australia the seven men we require can and will be found.
.- It is somewhat of a relief to note that owing to surrounding circumstances the Senate can pursue the purposeful business of the country in such solitude. Before the suspension of the sitting the Minister was good enough to direct attention to the provisions of clause 24 of the bill which have been amended since this legislation was before us in March, 1958. He also referred to clause 24 (1.) (c) which states that the governor and the deputy governor shall hold office subject to good behaviour, and asserted that the clause contains sufficient safeguard to ensure that the officers mentioned vacate office when they become interested in any contract, decision or transaction in which the board is concerned. I rise only because I have some doubt as to that proposition.
I direct the Minister’s attention to clause 23 which is to the effect that the obligation of disclosure arises only after a member of the board has had the relevant facts brought to his notice. In these days of complicated commerce a man may be a director of several companies, and the case could arise of a member of the board genuinely overlooking the fact that some transaction of the board impinges upon the interests of a company of which he is a director. This is so especially in the case, not of a contract, but of the general application of the decisions of the Reserve Bank. I would contest with a good deal of strength the proposition that in all cases noncompliance with clause 23 amounts to a breach of the condition of holding office expressed in clause 24 (1.) (c) - good behaviour. That is not my own untutored opinion. I have guiding me to that result the provisions of the bill as it was presented to this Parliament in 1958. If the Minister would be so good, if not now then on a future occasion, to look at the terms of clause 18 of the bill presented in 1958 - the bill on which I worked then, on which I have continued to work and on which I am working now - he will see that the draftsman of that day expressed clause 18, sub-clause (1.) in the terms that the Governor-General could terminate on account of misbehaviour, the appointment of a member of the board, appointed under paragraph (d). Sub-clause (2.) provided that if a member of the board appointed under paragraph (d) became permanently incapable of performing his duties, went bankrupt, resigned his office, was absent without leave or - this was paragraph (e) - failed to comply with his obligations under section 23 of the act, the Governor-General would terminate his appointment. It is quite obvious that whoever contributed to the penmanship of that clause did not think he was writing subparagraph (e) as a mere futility. He wrote in sub-clause (1.) that the member of the board should have his office terminated in the case of misbehaviour, and he particularized in sub-clause (2.) as one of the instances where, in addition, the member would have his office terminated, a breach of section 23 of the act.
I submit that that is sufficient to confirm my doubt as to whether the contention that is at present advanced on clause 24 (1.) (c) that the provision that the governor and deputy governor hold office subject to good behaviour is sufficient to ensure that the office shall be vacated if either of those officers acquires an interest, direct or indirect, in any contract or decision of the bank.
– In the 1958 draft was there any clause similar to or identical with clause 24 of the present bill?
– Yes. Clause 24 was in these terms in the 1958 bill - (1.) The Governor and the Deputy Governor -
It will be seen that there has been added the requirement that they shall hold office subject to good behaviour.
– They have taken it out of one clause and put it in another, in a slightly different form?
– They have ceased to apply the disqualification of misbehaviour to an ordinary member. It is only the disqualification applied to the governor and the deputy governor.
My proposition is not asserted as a final conclusion. That is not the prerogative of a private member, unadvised and relying on his own judgment. Sufficient is it for me to say that I am disquieted. I have no confidence in the view that the provision for disqualification of the governor or the deputy governor simply on the grounds of, so to speak, not good behaviour, means that he must terminate his office if he has an interest in a contract or a resolution that he. does not disclose at a meeting. As a matter of legal interpretation, that is a proposition that is too narrow to cover the evil to which I have referred.
I was much indebted to the Minister for what he said before the suspension of the sitting, namely, that the argument had brought to his attention some anxiety as to whether these provisions had sufficient strength to guarantee the purpose for which they were introduced. I rise only to reinforce that proposition, so that in the consideration which, I know, on the
Minister’s undertaking, will be given to the matter, this further matter will not be lost sight of.
– When I look at the small numbers in the chamber to deal with this vital banking legislation which we are considering, I share the feeling of wonder to which Senator Wright gave expression. I wonder whether a large number of my brother senators may be in another place, listening to matters which apparently they think more important.
With regard to the reply by the Minister on the question of the possible appointees to the Reserve Bank Board, I agree that the Minister is entitled to say on behalf of the Government that it has no intention of appointing people to represent particular interests. However, I still feel that the Government should have regard to what most people in the community would feel to be very desirable, namely, that appointees should represent a wide range of interests. The Minister says that persons will not necessarily be appointed because they are captains of industry. That is a very desirable point of view, but most of us would feel that it is practically certain that more than one of the representatives will be a person whom we could describe as a captain of industry, or very close to it.
The Minister says that a person will not necessarily be appointed to represent the trade union movement. I express the wish that the Government will give consideration to the fact that the appointment of a representative of the trade union movement would be highly desirable. A person with experience in that field would, in my opinion, be a highly desirable member of the board. I recall that in 1929 the Scullin Government appointed Mr. Maurice Duffy, who was known to me for many years, to the Commonwealth Bank Board. I believe he was a valuable appointee in spite of, or because of, the fact that he had experience in the trade union field and could express the views of a considerable section of the community. Apparently it was felt that he was a desirable member of the board because, although originally appointed by a Labour government, he was re-appointed to his position by non-Labour governments over a period of years. 1 recall that later, when the question of an inquiry into banking arose, the Government of the day appointed the late Mr. Chifley, who could be regarded, perhaps, as a political appointee, but also as a representative of the trade union organizations. I suppose that Australia to-day is the most highly organized country from the point of view of trade unionism. The trade unions’ point of view will not be put forward in the deliberations of the Commonwealth bank boards by many of the appointees, who will undoubtedly be chosen from the ranks of business. While I think that no exception can be taken to the statement of the Minister that the Government will not necessarily appoint people who represent various sectional interests, I express the view that in choosing the members of the boards the Government should endeavour to cover as wide , a range of community interests as is possible. I think there are very good arguments why, in looking for members of the board, it should examine the qualifications of persons who have had experience in the industrial field, particularly in the trade union movement. Just as the Lyons Government saw that the trade union movement was represented, I hope the Menzies Government will see that it, as well as the big industrial undertakings of Australia, is represented on the Reserve Bank Board.
– I join issue with my friend, Senator McManus, when he says that he favours representation of sectional interests on a body such as the Reserve Bank Board. I remind him that banking is only another business, and it has been so determined by authoritative courts in this country. If we have regard to that fundamental truth, surely the argument that a board must include a representative of sectional interests becomes a rather dangerous and somewhat peculiar proposition. When all is said and done, the Broken Hill Proprietary Company Limited is a business; its business is that of making steel. The Bank of New South Wales is a business; its business is that of lending money. I have yet to learn that any one has suggested at a meeting of the shareholders of B.H.P. that the board of directors should be representative of sectional interests. I have yet to learn of any one getting up at a meeting of the shareholders of the Bank of New South Wales, which is a very large bank and is larger in fact than the Commonwealth Trading Bank, and suggesting that there ought to be a representative of the shipping industry on the board.
– It is already represented.
– Those directors are there exclusively in the bank’s interests. if they are not there exclusively in the interests of the bank, they are not doing their job. That is the only reason why such people are to be appointed to the board of the bank. That is the only reason why any director is appointed - to further the interests of the organization and not of somebody else. I repeat that, if he is not doing so, he is not doing his job as a director and ought to be sacked. One may as well advocate that on the Bench of the High Court of Australia there should be a representative of the trade union movement to further the interests, in the pursuit of justice, of that movement. What an absurd proposition that would be! I submit that it is just as absurd to suggest that sectional interests should be represented in an organization carrying on the business of banking, or any other business. Surely such representation would cut right across the whole purpose and function of the board, which is appointed, as I have asserted, in the best interests of the bank.
How can a director who is appointed to further the interests of a section of the community give his full time and attention to, and loyally serve, the bank? The thing becomes a contradiction in terms, and I think we are just confusing ourselves as to the proper purpose of these directors when we rise and suggest that they should be there for any purpose other than to develop the bank and to act in its best interests, irrespective of what other interests are affected.
Part HI. agreed to.
Part IV. - Central Banking.
.- I rise only to direct attention to clause 26. which is the keystone of the bill. That clause reads -
The Reserve Bank -
is the central bank of Australia;
shall carry on business as a central bank; and
subject to this Act and to the Banking Act 1959, shall not carry o» business otherwise than as a central bank. 1 hope that 1 shall not make too great a draught upon the benignity of the Minister when 1 invite him to shed a flood of light upon the committee as to the full meaning of the term “ central bank “. 1 remind him of the statement of Mr. Justice Dixon when dealing with the notorious bank nationalization legislation of the Chifley era, the significance of which seems to have rolled away but which thoughtful people should ever keep before their minds as a recurring menace should political power fall into the wrong hands. His Honour dealt with a simple proposition involved in the interpretation of the expression “ banking “ as contained in section 51, placitum (xiii), of the Constitution, and said -
While I reject the limitations it was sought to place upon par. (xiii), I shall not attempt to state affirmatively what is the extent of the power it confers. To give an inclusive and exclusive definition of such a conception as banking is almost impossible. Dr. Walter Leaf begins his little book on the subject by saying that ft is quite impossible; that the theory and practice of banking have varied from age to age and still vary from country to country. He does, however, bring himself to give a definition of English banking and defines a bank in terms of its deposit business, saying that a bank is a person or corporation which holds itself out to receive from the public deposits payable on demand by cheque.
I have said sufficient to indicate that the most learned minds feel some element of doubt in fully grasping the connotation of the term “ banking “.
We here make clause Z’6 the pivotal clause of the bill for the purpose of separating the Reserve Bank from the ordinary trading activities of the Commonwealth Bank organization. The clause provides that the Reserve Bank is to be the central bank and shall carry on business as a central bank. Then, just as a witness in the witness box is called upon to tell the truth and the whole truth and is then thoughtfully admonished to tell nothing but the truth, so clause 26 proceeds to provide the Reserve Bank shall not carry on business otherwise than as a central bank.
I do not want to intimidate anybody with the prospect of perjury, but I ask the Minister, out of that benignity to which we have been accustomed from him, whether it be in the wrath of debate or the enjoyment of the support of numbers, to shed upon us that light for which we search.
– Senator Wright has posed a question as to the meaning of central banking. 1 note that the Government has particularly avoided the query in the bill now before us, probably for the very good reason that the task of defining the term would be beyond it. I understand, however, that, at least, the Reserve Bank will be responsible for directing the advance policy of the various private trading banks and will control their interest rates. Its third great responsibility will be that of obliging the private banks to deposit amounts with it in order to condition the rate of advances. Those are three great factors.
I carry to another stage the point that Senator Wright has taken, by posing for the Minister the question whether there is any constitutional power at all for what we understand as central banking, leaving that term to be defined with precision. After all is said and done, the placitum refers, as Senator Wright indicated, to “ banking “, and the High Court has held that that falls into the category of trade and commerce, that it had to do so in order to apply section 92 of the Constitution to it.
The question is whether central banking, a theme not envisaged when the Constitution was written, but which has evolved very slowly and is still evolving, is included in the concept “ banking “ posed by the Constitution. I raise a doubt. I think that there is a real doubt and I put to the Government that if it were concerned really to strengthen the central bank, the Commonwealth Bank, or the Reserve Bank, as it is now to be, one of the first approaches would be to assure a firm constitutional base.
– The honorable senator is not suggesting that the statute should attempt to define banking, is he?
– The point I am making at the moment relates simply to the constitutional base for central banking. Let me elaborate a little. If the central bank, the Reserve Bank, is to tell the private trading banks how they are to condition the flow of their advances to their customers, it may well be argued that that is a form of capital issues control, and I think that it is. If the central bank says to the private trading banks, “ You are not :to make advances to X industry, but you are to make free advances to another industry “, surely and basically that is a form of .capital issues control. That field the Commonwealth enjoys, in the view that I take, only in the extreme emergency of war.
– Or in banking.
– Yes. I merely pose the matter to the Minister in order to ask whether the Government has considered that aspect.
Again, in calling up compulsory advances from the private trading banks, as the central bank is authorised to do under other legislation, it may well be argued that that is acquisition of property, and that when this legislation lays down that the rate of interest is to be such as is determined by the Treasurer, the question arises whether that constitutes just terms. If there is a possibility of regarding that as an acquisition - and an acquisition includes not only permanent acquisition, but temporary acquisition as well - the question of just terms immediately arises. I mention these things simply to show that central banking is a thought that was not in the minds of the founders. It has gradually evolved. There is no judicial decision that upholds it as part of the concept of banking, and it may well be regarded as a new form of economic control for which there is no true constitutional basis.
– The honorable senator is not suggesting, is he, that the constitutional base will be more or less secure under this legislation than it has been up to this time?
– I think that that possibility has been there all the time. I suggest that the matter is at least open to intelligent challenge. Some case - perhaps a good case - could be made out. The level at which I present the point to the committee is that it is not beyond the possibility of doubt.
Coming to the merits of what is done in this provision, again I agree with Senator Wright that here is the key section of this whole plan of bills. The whole purpose is to put the central bank, the Reserve Bank, quite apart from any trading activity. The first point I make is that the Government breaks its own principle as soon as it sets it up, because it keeps to its Reserve Bank What is, after all, a pure banking facility, in the ‘Rural Credits Department. I am not complaining about that; I am simply putting that the Government, in saying that the Reserve Bank should have no trading activities, is immediately breaking the principle it affirms when it gives to that bank “the Rural Credits Department to operate. The -whole purpose of this, according to the Government, is to make for goodwill with the private trading banks; they are uneasy that a central bank, or a reserve bank, capable of directing them in this field and other fields, should at the same time be competing with them through the Commonwealth Trading Bank.
From the viewpoint of the private trading banks, when this legislation is through their position will not be any better in fact or in principle, because what now hap.pens is that the Government of Australia is in a position, under this very legislation, to direct the central bank as to the policy that it shall follow. There is no argument about that. Secondly, it has the power to direct the new trading activity, the Commonwealth Banking Corporation, as to the policy that it shall follow. So, the private trading banks just go from one position to a similar one. At the moment, they claim that the central bank that directs them should not be competing with them. If they are logical, they will carry their objection the next step and say, “The Government, which directs us through the central bank and has that power by statute, should not be able to direct competition in the Commonwealth Trading Bank against us “. The position will not be improved. Logically, what the Opposition sees is that the next step of the private trading banks will be to say, “ If the Government wants to create harmony for the private trading banks it should get out of the private banking field and not compete with us “. When the Government accepts the principle that it has accepted in this measure, what is its answer likely to be to such a suggestion?
There is substance in the basic fears we have had all along regarding the steps that have been taken by this Government, first at a cost of £200,000 to the Commonwealth Bank, to lift the trading section and make it a separate corporation, as it did some years ago, and now to take it further away and put it under a board of private interests. I couple those two steps with the principle affirmed by Senator Spooner and not repudiated by him, despite my invitation, that governments should get out when private industry is able and willing to enter a trading field. What is this trading of the Commonwealth Bank, and how does Senator Spooner’s principle apply to it? I merely indicate that our fears are not baseless. We see one step after another Whereby first the trading section is cut off and put into a separate corporation, and next, a private board is imported and pro jected on top of the bank’s very successful management, against which not a word can be said by the Government.
We have very real fears that presently the Government will stand up here one day and affirm the principle that it should get out of trading activities. We have put that view before, and 1 merely take the opportunity to summarize it here. When it was put to Senator Paltridge quite recently in this chamber his answer was, not a denial that the Commonwealth Government might ever dispose of the Commonwealth Trading Bank activities, but that there would have to be legislation for the purpose.
– No!
– That was his answer, and of course there would have to be legislation for the purpose. I shall be very comforted if Senator Paltridge, who is representing the Treasurer and is in charge of this bill, will to-night give us a positive statement of Government policy in relation to that matter and deny that the Government has any such intention or has ever considered it, and that he is prepared to repudiate Senator Spooner’s principle in that connexion. We of the Opposition have eternally been disturbed about this matter. We have made a very real issue of the question, and there is nothing we want to hear more fervently from the Minister than an assurance on that point.
– I hope that no Senate colleague of mine will ever accuse me of trying to introduce into the debates that take place in this austere chamber an unnecessary spirit of levity. But sometimes, Mr. Chairman, I am moved to think as I sit here in my ignorance of the law and all that the law means, whether the shafts that come in from my right flank and the shafts that come from in front of me are deliberately made just to see how long the senators who launch them can go without breaking into a spirit of levity. I shall pursue my honest course, trying as I go along to get the knowledge that possibly I should have been equipped with before I came to deal with a bill of this sort.
The Leader of the Opposition (Senator McKenna) raised a constitutional question when he said that central banking was not envisaged at the time of the establishment of the Constitution, but I notice that the powers of the Commonwealth Parliament are to include banking other than State banking, and also banking extending beyond the limits of the States concerned, the incorporation of banks, and the issue of paper money. I suggest that such a power, containing as it does a limitation only as to State banking, must include the power of central banking. If that is not so, well of course, as I shall be saying to Senator Wright in a minute, the whole situation becomes open to legal challenge as to definition, and I myself would be very much surprised if the Labour Party were in the van of a challenge as to the power of the Commonwealth in respect of central banking, particularly insofar as the 1945 act made provision for a central bank with less definition than we attempt to write into this legislation.
I want to clear up one point immediately. Senator McKenna seems to consider that he is in a situation of being able to badger me to deny or affirm the Government’s intentions as to the sale of the Commonwealth Bank, or, if I may be permitted to say, another sale of the people’s assets. Sir, the Government has no intention of disposing of the Commonwealth Bank. The policy is clearly stated. It has been stated for ten years and no amount of nonsense - I use that expression with respect - spoken by the Leader of the Opposition or by any one else can disguise the policy of this Government. On this occasion we attempt to do a number of things. We do a number of things. We set up - and here is the rub - a real central bank, and we set up a Commonwealth Banking Corporation with specific power in respect of trading banking, savings banking and developmental banking. We go to no end of trouble to produce that system. Having gone to that amount of trouble, and having pursued our tortuous political way for nine years to achieve this objective, we are not going to sell the Commonwealth Bank, nor has the sale of the Commonwealth Bank ever been considered by the Government. That is only a simple statement, but if it would dispose for all time of this nonsense, at least I will draw some comfort from it.
– Will the Minister elaborate the term he used? Does he mean the central trading bank?
– If there is any doubt as to the unqualified nature of my statement, let me detail it: Neither the Reserve Bank, the Commonwealth Banking Corporation, nor any of its three agencies.
– That is definite.
- Senator Wright has raked me on my right flank. In his Puckish way - I hope he does not take offence at these words - he knows how to disconcert even the most knowledgable legal student. He asked, “ What is central banking? “ I should like to be in the position of reversing the situation and saying to my colleague, “ You tell me “.
– You might concentrate on clause 26 (b) and ask, “ What is central banking not? “
– Yes. But at least in terms of this bill we have endeavoured to give it powers and to say what central banking is in fact. Turning to my note, I read this -
Since it would be an extremely difficult, if not impossible, matter to define in the law precisely what is and what is not central banking, it was decided after much thought that the appropriate provision is the one contained in paragraph (c). The phrase “ subject to this Act and to the Banking Act 1959 “ -
Which 1 might add in passing disposes of the rural argument introduced by Senator McKenna - has been included to make it quite clear that the provision cannot operate so as to raise doubts about whether any functions entrusted to the Reserve Bank under the provisions of the Reserve Bank Bill - in particular, the operation of the Rural Credits Department - or of the Banking Bill are proper functions for a central bank to carry on.
If it were contended that any particular form of business carried on in the future by the Reserve Bank was outside its power to operate as a central bank it would be a matter, if appropriate proceedings were brought, for the High Court to determine whether or not the business in question was legitimate central banking business.
And I repeat, with a lack of knowledge that always frightens me, that that is as much as can be said on the subject even by those who have made an intense study of the law and have reached, as has been shown by my colleague, Senator Wright, points at which there is a great deal of variance between the conclusions drawn by those people who are students of central banking and the law as it applies to central banking.
– I am obliged to the Minister for his observations upon these matters. Let me go on and say that my interest was heightened in my study of Part IV. of the bill by reference to clause 87 of the 1958 measure, which I trust is still the same. The clause reads -
The validity of an act or transaction of the Bank shall not be called in question in any legal proceedings on the ground that any provision of this Act has not been complied with.
I have spoken with a little levity, which I would hope would not become infectious in this chamber. On some occasions levity is perhaps forgivable. One would hope that it would lighten the task of understanding these matters; of giving one a riveted understanding of them; of resolving whether they be pregnant of meaning, or of meaninglessness.
I do not stand here in any spirit of censure or criticism but rather of observation, gleaning those straws of knowledge which come to me as the committee, through its consideration, reveals the full meaning of the measure. All I want to note is something that the Minister himself has been good enough to observe - that in clause 26 we are considering a provision which is pivotal in nature. It is, however, of very uncertain content, when judged by those principles which are the guarantee of individual rights and liberties in this country - the principles observed by a court of justice according to law.
I do not blame the authors for not attempting a more precise definition. That is not the spirit in which I speak at all. When I want to express that spirit I trust that I shall be capable of doing so, but to-night 1 merely wanted to comment upon the great indefiniteness of the term “ central banking “. Senator McKenna has added to that the doubts that exist as to the constitutionality of legislating for that type of structure. It is a tremendously provoking field, especially for the liberal. 1 might add to the discussion by referring to clause 87 and pointing out that we do not want to leave this measure with the impression that we have forged there a steel structure based soundly upon the rock of constitutional law, the transgression of whose boundaries will mean that one is stepping into the field of certain illegality. We who have been so zealous in the erection of an independent reserve bank might take time to consider whether that proposition is justifiable or not. I gather from the speech of the Minister that it is. That gives me no comfort, and the disquiet that the situation causes me I shall nurse.
Part IV. agreed to.
Part V. - The Note Issue.
– I should just like to ask the Minister a question concerning the full effect of clause 51, which reads - (I.) A person shall not, without the authority of the Bank, make or have in his possession -
– Though I have every sympathy for the person described by the honorable senator, it is nevertheless an offence to have a photographic copy of an Australian note.
– I think I have seen photographs of notes in text books explaining the banking system and other matters. Has an offence been committed in those cases?
– I am reminded that the Commonwealth Bank at one time conducted for school children a course describing the currency and the working of the Australian banking system. The bank may still do that. Copies of the notes were printed on placards.
– No samples are provided.
– I am afraid not. That was done under the authority of the bank, and the copies were clearly marked “ Specimen “ or something of the sort.
Senator WRIGHT (Tasmania) [8.57J.- I merely rise to express my gratitude at seeing the old-fashioned safeguard which is embodied in clause 54 - that one must go to a justice and obtain his authority for the issue of a search warrant. I hope that that provision will be introduced in income tax and other tax legislation which at present permits an invasion by officials of private homes and properties without a requirement that a justice’s warrant be obtained. It is so rarely that one comes upon a gem of old-fashioned freedom that I hope I shall be forgiven for taking up such time as has been necessary to enable me to express my gladness of heart and uplift of spirit.
Part V. agreed to.
Part VI. - Rural Credits Department.
Senator WRIGHT (Tasmania) [S.58J. - I rise to inquire as to the enigma presented in sub-clause (4.) of clause 57. As we know, the bill deals with the provision of rural credits and for finance to assist the marketing, processing or manufacture of primary produce, and reads in sub-clause (4.)-
For the purposes of this section, “ primary produce “ means goods specified in the Second Schedule to this Act and includes prescribed primary produce and prescribed goods associated with the production of primary produce.
The committee will see - unless the second schedule has been altered - that “ primary produce “ does not include wheat, potatoes, oats, .apples or pears, “ Fruits, fresh, preserved or dried “ would cover apples and pears.
– And “ grain “ would cover wheat and oats.
– What of potatoes?
– They would be covered by “ vegetables “.
– I am very interested in clause 62, which reads, in part - (1.) The Rural Credits Department shall have a fund (to be called the Rural Credits Development Fund), . . .
I should like to ask the Minister what amount is at present standing to the credit of that fund because it is of importance when considering sub-clause (l.)(a). I should also like to know whether the Minister can give me some idea of the amount that is likely to be coming to that fund under clause 63, which says that half the net profits of the Rural Credits Department in each year shall be placed to the credit of the Rural Credits Department Reserve Fund and one-half to the credit of the Rural Credits Development Fund. Apparently the Rural Credits Development Fund is to be used in such manner as the bank determines for the promotion of primary production. I should like to know what the Minister has in mind as to the set-up. Who, in the bank, will determine this? Will any specialists be appointed to determine the destination of this important fund? I feel that here the Government has an excellent opportunity to do a great service to the Commonwealth provided the fund is properly administered, and I should like some information as to how it is contemplated that the moneys in this fund shall be spent.
I am grateful to Senator Wright for focusing the committee’s attention on the Second Schedule which determines the meaning of the term “ primary produce “. I presume that the items referred to under that heading give a lead to the meaning of the words “ primary production “. I should like some assurance from the Minister on that point because I am rather alarmed to see that fish in the natural state - that is, swimming fish - are not listed under the heading “ primary produce “. I should imagine that this very interesting fund could well be used in the promotion of fishing.
It has been the practice of this Government to give the term “ fishing “ a wider meaning in recent years. I refer in particular to the amendments made to the taxation act last year when “ fisherman “ was included in the definition of “ Primary producer “. I should like to know whether the promotion of fishing would come under the heading “ promotion of primary production “. I draw the Minister’s attention to the fact that “ primary produce “ includes fish, canned or preserved, but I think that the gathering of fish might not come within that designation. It would appear to me that it would be limited more to canned or preserved fish.
– In other words, dead fish?
– Yes, swimming fish that have been caught. I should like to know more about this fund because I do not feel that there is a great future in using the profits made by this section of the Bank in the promotion of primary production.
– Answering the last part of Senator Laught’s query first, I inform him that “ primary produce referred to in the schedule, can be added to by regulation. I am informed that if an application is made by an organization of fishermen to have fish, either pelargic or sedentary, included in the list, the application would be listened to very sympathetically. The fact that it is not now listed merely means that it has not made the list in the past, most probably because no application has been made.
The balance in the fund at 30th June, 1958, stood at £113,000. The amount transferred to the fund last year was £93,000. Further, grants totalling £103,795 were made from the Rural Credits Development Fund to 35 organizations engaged in research and extension work on the promotion of primary production. Projects supported by the grants included research into brown rot in canning fruit, fruit fly, myxomatosis, small dam construction, pasture improvement and agricultural economics. The total of grants made from the development fund since its inception in 1925 now stands at over £1,100,000. In addition to those projects on which money was spent last year, support was given from time to time to junior farmers’ organizations and a number of forms of agricultural research institutes.
Part VI agreed to.
Part VII- The Reserve Bank Service.
.- I desire to refer to the fact that, according to clause 66, the Reserve Bank Service is to be made up of such officers as are necessary for the purposes of the act. It is also provided that the officers appointed shall constitute the Reserve Bank Service and that they shall hold office on such terms and conditions as the bank determines, subject to this part of the bill and to the regulations. The bill contains another reference to regulations later and therein determines the terms and conditions of service.
It will be remembered that recently a bill dealing with appointments to the service of Trans-Australia Airlines removed from the act the provision relating to appointments by examination. In the bill now under consideration there appears to be no provision for the appointment of officers of the Reserve Bank except that apparently they are to be appointed at the discretion of the administration. On looking at the clauses dealing with the Banking Corporation, I notice that there are many references to appointments, examinations, promotions, and reclassifications. In those provisions, we find all the apparatus that has been considered necessary by previous Parliaments to avoid the possibility of political patronage in appointments to the bank’s service. In the case of the Reserve Bank Service, none of those conditions is set out. I ask the Minister this question: What* is the exact position? Pending his answer, I shall not continue but shall reserve my right to rise again to discuss this matter.
– As was explained at some length in the second-reading speech, it has been found desirable to give to the Reserve Bank, at least initially, fairly wide and flexible powers in respect of staff and staff management. The bank will be a highly specialized institution and will need, particularly in some sections, staff of exceptionally high calibre and standards of training. In other words, a man who may, by virtue of his training, experience, and knowledge, do a first-class job of work in a general bank, may not be suited for engagement - or for immediate engagement - in a reserve bank which calls for special knowledge and training. At the same time, the Reserve Bank no longer will be able to draw freely on the staff of the Commonwealth Trading Bank and the Commonwealth Savings Bank. Those two banks, together with the Development Bank, will of necessity have to be adequately and efficiently staffed. The Reserve Bank, therefore, to a large extent will be denied that reservoir of staff. The bill proposes that the Reserve Bank will have considerably wider powers in staffing matters than the Commonwealth Bank now enjoys.
Part XIII. of the existing act embodies provisions similar to those that apply to the Commonwealth Public Service in the matter of appointments, promotions, retirements and dismissals. On the other hand, Part VII. proposes that the Reserve Bank will be subject to legislative direction on such matters. However, should statutory provisions become necessary or desirable at a later stage, clause 69 contains a provision enabling the promulgation of regulations regarding the terms and conditions of employment of officers of the Reserve Bank. Part VII. of the Reserve Bank Bill should be read in conjunction with Part V. of the Banking (Transitional Provisions) Bill which provides for the allocation, without loss of seniority or any reduction in remuneration, of members of the present Commonwealth Bank Service to the Reserve Bank Service and the Commonwealth Banking Corporation Service. Officers transferred to the Reserve Bank will be given the protection of tenure of office, and their accrued rights of superannuation, leave and furlough will be expressly preserved.
.- Having heard the Minister’s explanation, I register my protest at what is the second very serious invasion, within a week, of the rights of employees of the Commonwealth. I was an employee of the Crown and I know the long and arduous campaign that we had to fight against political patronage and for the right of appeal in cases in which officers were unjustly passed over for appointment to a position, or for promotion. Whatever may be said about the necessity to obtain employees of high qualifications for the Reserve Bank, there can be no justification whatever for creating a state of affairs in a Commonwealth service in which people can be chosen by administrative officers for appointment or promotion, and in which an officer who considers that he is better qualified than the person appointed will have no right of appeal.
A promotions board, consisting of a chairman appointed by the GovernorGeneral, an officer appointed by the managing director and an officer appointed in the prescribed manner by officers of the service will be set up. Why should an officer of the Commonwealth Bank Service have the right of appeal while an officer seeking employment in or employed in the Reserve Bank Service, who considers that he is better qualified, has no right of appeal against a person who is chosen for appointment or promotion by an administrative officer?
People may say as often as they wish that such action is justified because of the existence of certain special conditions associated with the particular organization, but the fact remains - I have had experience of it - that some people like certain people better than they like others. Circumstances always will arise affecting the situation in which an administrative officer has the right of choice knowing that there can be no appeal against the choice he makes.
In the first one hundred years of parliamentary government in this country one of the battles that had to be fought was the battle against political patronage, the battle against the right of people to obtain jobs because they knew somebody or because they came from some particular place. I regret that twice in a week Commonwealth instrumentalities have taken the stand that they intend to reintroduce the old system of political patronage. That system lends itself to very grave abuse. Some honorable senators may say that there must be a freedom of choice. They may even go to the extent of saying that an administrative officer may select the person whom he thinks is best qualified for appointment or promotion, but how can any one justify a system in which an officer, who considers that he has a better claim to a post than the appointee, has no right of appeal?
– Employees in private enterprise do not have any right of appeal.
– From that point of view I do not regard private enterprise as an example to be followed by this Government. In private enterprise, because it is private enterprise, people select for appointment their friends, those who wear the old school tie and those with other qualifications. I know some people engaged in private enterprise who have been bitterly aggrieved because they have been passed over for appointment for reasons that should never have been brought into consideration in filling a particular job.
What is the objection to setting up an appeal board in the Reserve Bank organization? What safeguard has a man who believes that he is better qualified for a job than the man chosen by the departmental head? What redress has he? If the Minister replies that unfortunately one cannot obtain justice everywhere, I say we should at least try to provide that justice shall be done.
In the legislation before us last week dealing with airlines, the previous system of appointment was abolished and the way was opened to political patronage. In the legislation now before us, the safeguards against political patronage again are removed, and we are told that officers will be appointed to positions according to the whim of the people on top. That is my interpretation of the Minister’s statement, lt is the only interpretation I can give to it. I am not impressed by the suggestion that if things do not go well, the Government will remedy the position by regulation later on. I am deeply concerned at this trend. If it develops very much further, we will find that the position here is similar to that in a country on the other side of the Pacific, where, after elections, a number of people in Government positions are turned out of office because they belong to a defeated political party. The party coming in replaces them by people holding its own political views. I cannot, for the life of me, defend under any circumstances a system under which a person can be appointed to an important government post and a man who thinks he has a better claim to the post has no right of appeal.
.- I join with Senator McManus in objecting to the proposal that there shall operate in the Reserve Bank the system that was provided for another organization in legislation we considered less than a week ago. Can the Minister tell the Senate of any occasions, prior to this bill being submitted, when the existing system has operated unsatisfactorily? If he can show that the existing system has worked unsatisfactorily, by submitting certain cases, that may change the whole of my thoughts, but I do not think he can. I think the Government is taking a very dangerous step. I am not so much concerned about political patronage as I am about the old school tie. That worries me a lot. 1 believe that appointment to positions in the Reserve Bank should be on the ground of merit. Young men will join this service. Young men will be trained to carry out the functions of the Reserve Bank. How are they to be chosen? If, as the Government doubtless desires, the bank is to be run efficiently, there will need to be a fair system for recruiting young people who can gradually work their way up through the various departments and become just as efficient as those who operated the bank prior to the passing of this bill. If anything will give great concern to a number o.’ people in this country, it is the fact that this Government is abolishing a competitiveentrance examination system for the Reserve Bank. Some of us appreciate the grave difficulties that are liable to occur. Why put temptation in the way of people?
We gathered from the second-reading speech of the Minister that the CommonWealth Bank had done its work effectively and well. Now, for some reason, the Government is doing away with the entrance examination system for the Development Bank, although it is retaining that system in other organizations. Why the difference? I submit that the Government is turning the clock back. Over a long period of years people in this community have been desirous of filling governmental and semi-governmental positions by competitive examination. Why should not competitive examinations operate for entrance to the Reserve Bank when they are to operate for entrance to other banks? It must be admitted that young men will be recruited for this bank.
– A good many mature people will be wanted in the Reserve Bank.
– I admit that. Possibly people will be selected who are already in the service of the Commonwealth Bank. It is natural that that should be so. No one expects that the Government will start this bank from scratch. All that I am concerned about is that the recruitment of young men should be on a competitive examination basis, prescribed by the people who will run this bank on behalf of the Commonwealth. That is not asking for much. By acceding to our request, the Government will avoid any chance of criticism. Honorable senators opposite cannot tell me that favouritism and patronage do not operate in a number of spheres. Why bring back - particularly by a bill such as this - a system that was obnoxious to a number of parents not so many years ago? I see no reason for it.
I do not think the Minister himself was happy with the answer he gave to Senator McManus. It did not ring true, like the answers he gives normally. He seemed to feel that he was in a bit of a difficulty and that he had better find the easy way out. His answer did not ring true. At this late hour, realizing the difficulty the Minister might have in amending the bill, I ask him to give an assurance that he will speak to the Treasurer (Mr. Harold Holt) and point out that the system for which Senator McManus and other honorable senators are asking will not in any way adversely affect the working of the Reserve Bank but will, at least in our opinion, make it more efficient in the future. Such a system would be fair to young men who desire to make the service of the Reserve Bank their career in life.
– I feel that the alteration of the entrance examination system is unnecessary. My mind goes back to the time when Labour was in power. Within the Labour Party, we have, of course, always placed an emphasis on the Commonwealth Bank. In 1943 Labour made a very important amendment to the banking legislation, providing that entry to the service of the Commonwealth Bank should be on ability. Up to that time there had undoubtedly been political patronage in bringing young people into the bank. One of the very first things that the Curtin Labour Government did was to make entry into the bank’s service subject to examination. What has been the result? Has the standard of the personnel of the Commonwealth Bank deteriorated because of that system? The only reason why the Government would wish to change the method of entry would be that it has some evidence that since then the standard of the personnel of the Commonwealth Bank has deteriorated - in other words, that the standard is not as good as it might have been if the staff had been recruited by some other method.
In my opinion, the employees of the Commonwealth Bank are more highly qualified than those of the Commonwealth Public Service or of other Commonwealth instrumentalities. I do not think they can be equalled in other sections of the Commonwealth service. What is more important, they cannot be equalled by those of the private trading banks. I say that with a good deal of background and experience. One has only to talk to top business men in the great capital cities of Australia whose business has taken them to the Commonwealth Bank to learn that, whether or not they have been successful in their approach to the bank, they agree that the calibre of the employees of the Commonwealth Bank is extraordinarily high. So, why change the present method of recruitment? Why introduce a system that should have died, and which we thought had been killed away back in 1943?
If, in the Commonwealth Bank organization, you want relatively senior men, there are plenty available; but when you want to recruit men, why turn back the pages of history and adopt a system that was followed years ago? As Senator McManus has said, perhaps it was just a question of bank officers liking certain men more than others - a personal preference. I am reminded of a suggestion I heard in the early days of the war. It was said that, if one went to a certain member of the bank board and said he could ride a horse, there was very little difficulty in being appointed to the Commonwealth Bank, because a certain person on the board reckoned that the ability to ride a horse made a man of one. But I was never quite sure whether that ability made a banker of a person.
Having left behind the days when patronage and the old school tie mattered, why turn back the pages of history? Have employees of the Commonwealth Bank organization let the Government down in some substantial, or even some minor, degree? I do not think they have. The right young man has the ability to prove that he is better than another applicant and to get to the top of the tree, not because he happens to be nicely dressed on the day of the examination or because his parents have money to present him for examination, but because he can pass that examination. The good young man of to-day will be the good old man who ultimately will help to run the Commonwealth Bank Service, whether he be employed by the Reserve Bank or in any other section.
Why should there be any discrimination between the Reserve Bank and the other branches of the Commonwealth Bank organization which, under the existing system, have proved to be eminently successful? I repeat that, from my experience and all the reports I have heard, the ability of the personnel of the Commonwealth Bank is outstanding. I also repeat the other point I made at the commencement of my speech - that is, that in my opinion and in the opinion of countless thousands the employees of the Commonwealth Bank organization are better informed and better trained, generally speaking, than are those of the private banking organizations. I ask the Minister: Why change the organization? His background is one of struggle, and not one of patronage, lt is difficult for him I suggest, to sell this idea to the committee.
.- 1 rise to speak, because I believe that all the clauses of this bill and of the other measures we will consider later relating to bank service are insufficient. They are not only unsatisfactory in my view, but will also be unsatisfactory in the view of the public. If we make a brief comparison of the relevant clauses dealing with the establishment of the Commonwealth Banking Corporation Service and those of the bill now under consideration, we will find that there is a great difference. One of the conditions to govern the appointment of a person to the service of the Commonwealth Banking Corporation will be that the applicant must have passed, in open competition a prescribed entrance examination. May I say at this stage that 1 am not satisfied with that requirement, because no provision is made for the preparation of a seniority list following the examination. However, that clause will be considered later. 1 shall deal now with the relevant clause affecting the Reserve Bank Service. My objection to it is that it does not make provision for an equitable system for the recruitment of staff- My friends on this side of the chamber have said that it is open to officers of the bank to exercise discrimination. Does any honorable senator say that the people of Australia will tolerate that? It may pass at the present time and for the next twelve months, or even the next two or three years; but sooner or later this provision will become more widely known and it is then that the wrath of the people will be directed towards the Government. People will not tolerate what their children will have to experience as a result of the passing of this legislation. To-day, parents do the very best they can for their children; they send them to secondary schools. If the bill contained provision to the effect that those children would have to pass the senior university examination or gain their leaving certificate and then submit themselves to examination conducted by the bank, there would be no objection whatever. But with the bill as it stands, it is wide open for the high officers of the Reserve Bank Service to select willynilly any youth, any juvenile, for whom they have some regard.
The Reserve Bank will be a Commonwealth instrumentality, irrespective of whether or not it is separated from the Commonwealth Banking Corporation. That being so, I submit that under the Constitution of the Commonwealth, further provision must be made for the employment of staff. Any arrangement that is made must be equitable; it must have the elements of fairness. We know that patronage is exercised in private employment. No one in this chamber knows more about juvenile employment than I do, and I know of the discriminations that have been practised in various industries. I could narrate them all. It is because I am aware of those things and because the Reserve Bank will be a Commonwealth instrumentality that I raise this matter. In this measure the Government has made no provision for safeguards against unfair discrimination. I am disgusted with the bill, and 1 am confident that every other citizen of the Commonwealth will be equally disgusted when he learns of its provisions.
I have nothing to add beyond saying that it is not too late for the Government to reconsider this aspect of the matter. The bill could be easily amended and drafted on the lines of the Public Service Act.
– I want to say that I support what has been put from this side of the chamber. I speak very briefly to indicate that, in the Public Service of this country, in which there are many tens of thousands of people, there is a system, of proper selection. Great safeguards are taken to prevent favouritism and nepotism of any kind. All that is possible in relation to tens of thousands of people. In this series of bills the Government takes the Commonwealth Banking Corporation staff, covering the staffs of three banks - the Commonwealth Trading Bank, the Commonwealth Savings Bank and the Commonwealth Development Bank - numbering about 10,000 people, and in respect of those persons it provides all the safeguards regarding examinations, promotion and the rest. That is done in order to uphold a very proper principle.
Surely, the Minister must recognize that if the Public Service can carry those safeguards, and that if the Commonwealth Banking Corporation can carry them, there should be no difficulty about applying them to the relatively minor staff of the Reserve Bank. The number of persons involved is something like 1,100, I understand, whereas the staff of the Commonwealth Banking Corporation will number some 10,000. The Minister must recognize that the Government is not consistent in saying, in relation to the greater staff, that all the safeguards may apply, and in relation to the minor staff, that the safeguards are not to apply.
The Government obviously has second thoughts in the matter, because as the Minister pointed out a short while ago, clause 69 provides that regulations may be made relating to the terms and conditions of employment of officers. After the initial settling down, apparently it is contemplated that something will be done. But that is not good enough, I put to the Minister. Either there is a principle that there should be safeguards against nepotism, or there is not. If there is such a principle, it should be laid down and given effect now. 1 know that there is an interregnum period, which may run up to the end of the year, in which the members of the present Commonwealth Bank Service are to elect whether they will remain with the corporation or go to the Reserve Bank.
No doubt the Reserve Bank will take the greater part of its staff from the Commonwealth Bank. I submit that that is the obvious and the proper source on which to draw, because the Commonwealth Bank Service, from beginning to end, has the great advantage, for the purpose of the Reserve Bank, that its thinking in the banking field has been continuously directed to the national good. It thinks nationally and it functions nationally. It is not concerned with the narrower concepts before the eyes of private trading banks which are not primarily concerned with national issues and national policies, their formulation and execution.
I think that the greatest tragedy in all this series of bills is the dismemberment of that great Commonwealth Bank Service, in which the best men could be picked for the top jobs, and where the most fertile recruiting ground existed for the Reserve Bank. The brightest men could be picked out from time to time for training or for top executive jobs. To close the door and to leave those in charge of the bank to please themselves, with no rules at all, is, I think the Minister must agree in his heart, a very dangerous thing to do.
As I think Senator McManus stated, the principle involved here was assailed the other day in relation to Trans-Australia Airlines. All that we said then we repeat now with even greater emphasis, because the Reserve Bank is a body that will need vast research and a high standard of training for its personnel, particularly for the top flight men. It is a pity that the great, fertile recruiting ground of the Commonwealth Banking Corporation, as it will be in the future, will be no longer available for the top jobs in the Reserve Bank. I feel that the Minister must sense that there is a very great principle at stake in this matter and that, on proper consideration, he will agree that a bad mistake has been made in writing this new principle into the bill.
– I do not want to delay the committee for any length of time, but I wish to say a few more words upon a subject which is of vital importance and one which, I assure the committee, has been given the closest attention by both the Government and the Commonwealth Bank. I appreciate, I do not hesitate to say, the approach of the Opposition to this problem. I go so far as to say that I think I understand that approach; but there comes a point at which a rigid system that is applicable to the Public Service is not applicable to a specialized organization commencing its business career for the first time.
– But it is scarcely doing that.
– Perhaps the honorable senator will permit me to continue. The position is that the Government, in reviewing the staffing situation, has taken the step - and it has been commented upon - of preserving for the Commonwealth Banking Corporation a system which has prevailed for many years and which has the approval of the Opposition.
The position regarding the Reserve Bank, however, is another matter. The bank is, I repeat, a specialist organization requiring, in many cases, specialist appointments, lt is quite impossible to apply anything in the nature of the rigid system that exists in the Commonwealth Bank itself, especially in the initial stages. In my second-reading speech, and in my earlier comments on the clause itself, I made it clear that, while this provision should apply to the initial stages, there would no doubt come a time when the system would have to be revised, and provision has been made in the bill for the promulgation of regulations to modify the system in a manner more akin to the one to which we have become accustomed.
There is, I suppose, a good deal of political advantage to be obtained from drawing the long bow about this matter. I can only say to the committee that it is not the intention of the bank, or of the Government, to see appointed to the
Reserve Bank either jockeys or huntsmen, but it is the intention to see appointed to it men who, by their capabilities and their qualifications, can best serve the purposes of the bank. For that reason, this step is being taken. I repeat that, as opportunity offers, regulations will be promulgated to modify the system and bring it more into line with the system we know.
– I am certainly obliged to the Minister for his explanation. His argument would have some basis in validity if a Reserve Bank staff were being set up for the first time. When all is said and done, the people who have been conducting the central hanking division of the Commonwealth Bank have been there for years and years. It is not a matter of building up a staff for the first time in a new activity. I take it that every one of the staff has come to the Commonwealth Bank Service by way of competitive examination and has served the bank satisfactorily. There would be validity in the Minister’s argument if many experts were suddenly required for economic and banking purposes, but that is not the case. There is an interim period during which officials are entitled to exercise some choice as to whether they go to the Reserve Bank or remain with the corporation. Here is a staff that is mature, that is settled. We hear no argument about its adequacy or skill. Many people do not have to be recruited at once, and at the moment a choice is to be made by men in the Commonwealth Bank Service. Here is a welldeveloped, well-settled and thoroughly competent staff. Why not let the principle that operates in the bank service be affirmed? Other experts can be picked up without any trouble. If a person outside the bank service, with certain qualifications, is required the position could be met by the issue of a certificate to the effect that nobody in the service had those qualifications. Whilst I appreciate the action of the Minister taking the trouble to put his line of argument to us, I suggest that it is based upon completely false terms. Obviously, it was in his mind that something new was to be started, because I felt obliged to interrupt him when he was talking in order to state the position. But the Minister must appreciate that here is a staff that has been functioning-
– Not as a separate Reserve Bank.
– The Minister must acknowledge that there has been a central banking division with its own capital and its own staff, and it will not operate differently after this bill becomes law from the way in which it has operated for years. There is no change. Why should there be a staffing problem? Why does the Minister pose that there is a staffing problem at this time? There will be no change of activity, no sudden accretion of staff, and there is the right for the Reserve Bank to handpick men in future from the Commonwealth Bank Service. I cannot imagine the circumstances in which the need for a dangerous open go would be less required. I think the Minister ought to justify the Government’s very grave decision in this matter far more adequately than he has been able to do to date.
– The Minister has had a very tiring job and I do not wish to detain either him or the committee unduly, but I point out that many of the senior officers of the Reserve Bank will not be any more senior or highly qualified than are many of the senior officials of the Department of the Treasury. In many instances, they will do a similar job, and they will need to have similar qualifications. Officers of the Treasury, and many other departments, are subject to a board for promotion, classification and the rest. For the life of me, I cannot see why at this stage in the setting up of the Reserve Bank when many of the officials are already available, a position should be allowed to arise where there is nothing to prevent certain officials from picking whomsoever they like. I am purposely being brief. In my opinion, there can be no justification for the denial of an appeal board.
If we are going to select people, no one can justify a system where a man who says, “ I am qualified and I am senior and I want to appeal against so-and-so “ will be told that he cannot appeal because the Government has resolved to introduce a system in which the departmental head will make the final decision. It is contrary to all the conditions of service that have operated in the Public Service over the years. It leaves the way open to all kinds of patronage and nepotism - all kinds of things that ought to be kept out of the Public Service. As I said before, when that happens twice in a week I am very greatly disturbed over the situation.
. = - In common with Senator McManus, I realize that the Minister has had a very tiring day, but T regret that he saw fit to Say that this submission has been made for political purposes. I assure him that that is not so. This case has been put up for reasons far more than political reasons. It has been advanced to ensure that a young boy who has brains but not much of this world’s goods will get the same go as a lot of men got who to-day occupy important positions in the Public Service. In many instances, their families were not endowed with a lot of this world’s goods. I regret also the Minister’s statement that the Government will not appoint jockeys, although I acknowledge that he was speaking possibly in jocular vein.
– The suggestion came from Senator Armstrong.
– 1 heard the Minister say so when speaking on another clause. I should like the Minister to assure me that he will have a talk with Treasury officials about this matter, because it is far more important to me than political votes or anything of the kind.
Part VII. agreed to.
Part VIII. - Miscellaneous.
– I wish to direct the attention of the Minister to Clause 74 (1.) which provides -
The head office of the Bank shall be at Sydney in the State of Nev/ South Wales.
The Commonwealth Bank has grown up with its head office at Sydney, and it is quite natural that the new Banking Corporation and the Development Bank and the Savings Bank should still have their head offices there, but I am not convinced that the head office of the Reserve Bank should be there.
Some years ago, a Senate select committee recommended, amongst other things, that the head offices of all government departments and of various organs and agencies of government should be in the National Capital. An immediate transfer to Canberra was not envisaged; we recommended a gradual transfer. The select committee recommended that the head office of the central bank - I think that was the term that was used in the report - should be located here. I should like the Minister to pay particular attention to what I am saying because I intend to move an amendment. I do not think it is self-evident that the head office of the central bank should be in Sydney, and therefore I object to that provision being made in the bill. If that clause were struck out, the Government or the bank would be left free to place the central agency where it liked. I do not want to do that.
If we turn to clause 78 (2.), it is seen that after the expiration of a reasonable time the head office of the bank shall not be in the same building as the head office of any other bank or of the Commonwealth Banking Corporation. If we pass the clause in this form it will indicate that the Government intends that the head office of the Reserve Bank shall be situated at Sydney indefinitely. I think that that would be a wrong intention in view of the policy of the Government, and the recommendations of the select committee to gradually make Canberra a real national capital. Accordingly, I intend to move -
At the end of sub-clause (1.) of clause 74 add, “ until the Parliament otherwise provides.”
I understand that the effect of the addition of those words on the present banking policy will be nil, but that is not a reason for saying that they are unnecessary. It may be that many other agencies of government will have to be outside the National Capital, depending on convenience and various other things, but I think that should always be with the express sanction of the Parliament. If these words are added in the sub-clause, the principle will be laid down that this is the Federal Capital, the place where all central organs and agencies should be located unless there is a very special reason for placing them elsewhere.
I should like the Minister to let the committee know where the Reserve Bank of the United States of America functions. Is it in Washington or in New York? He might consider precedents set in other countries. The paramount consideration is, of course, the convenience of the banks which deal with the central bank, and ofthe Government also.
I move -
At the end of sub-clause (1.) of clause 74 add, “ until the Parliament otherwise provides.”
That will permit a full debate to take place.
– 1 have listened with a good deal of interest to what Senator McCallum has had to say and, up to a point, I am in full agreement with it. However, I do not approve of his amendment because it leaves the Government free to establish the bank anywhere at all. I believe that if it is to be removed from Sydney - as I think it should - it ought to be brought to Canberra.
– That is what I have said.
– Any amendment ought to be in positive terms. The words, “ until the Parliament otherwise provides “ are inadequate. The Parliament may not “ so provide “ for another one hundred years; there would be no change. The amendment should state some place in definite terms. Moreover, it must impose a time limit, or the whole proposal will be meaningless. I would wholeheartedly support that because an examination of the clause reveals that agencies of the bank can be established wherever thought necessary. I could not support the amendment because to me it is meaningless. I do not intend to waste time even discussing it.
– Perhaps the Minister will explain the difference between the present position and the position sought by the amendment. The Parliament can decide at any time whether it wants to place the bank at Sydney, at Melbourne, the financial capital of Australia, or anywhere else. I believe that the amendment is quite nebulous.
– I find myself in complete agreement with Senator Henty on this matter. The words proposed to be inserted really add nothing to, and take nothing from, the existing provision, which specifies that the head office of the bank shall be at Sydney. The location can be varied at any time that the Parliament wishes. The one virtue that might attach to the addition of the proposed words is that later it could be argued that some change was in contemplation.
– That is the intention of the amendment.
– But, of course, the Parliament could change its mind on that matter at any time. I should like to hear the Minister justify the choice of Sydney. I imagine that it is because most of the head offices of the private trading banks are in Sydney. There is also the consideration that a site has been bought in Martin Place for the erection of a reserve bank, and that the siting of the bank is not the sort of thing that can be changed readily. My own feeling would be that I should vote against the amendment and leave the sub-clause as it is.
The Opposition is more concerned about sub-clause (2.), which provides that upon the expiration of a reasonable time after the commencement of the act, the head office of the bank shall not be in the same building as the head office of any other bank or of the Commonwealth Banking Corporation. I should certainly like the Minister to justify that extraordinary provision. It seems to me to be an attempt to cut the Reserve Bank off from actual physical contact with the other banks.
– Under the Standing Orders we should dispense with the amendment before proceeding to discuss other matters.
– I oppose the amendment because of the practical considerations attaching to the siting of the head office in Sydney. The Government did consider transferring the head office of the Reserve Bank to Canberra. It made inquiries of the private trading banks, and of the Governor of the proposed Reserve Bank, on the merit of the proposal. Though I was initially attracted by the idea, practical considerations of a very wide nature are involved. The private banks were the first to make them known to the Government. They answered a flat, “ No “. They said, “ We want the Central bank to be situated at a point where we can have contact with it and with its officers from day to day - more than once a day, if necessary. It is not only a question as between the Reserve Bank and ourselves or decisions on broad policy matters but there do arise very frequently through the week administrative matters which ought to be settled on the spot “. That is a view which the governor of the bank also held - if anything rather more emphatically than the private banks themselves. For that reason it was decided that the head office of the bank should be in Sydney.
– That would suit the people in Sydney, but what about those in the other capitals?
– Sydney is the centre of most of the private trading bank head-quarters. As I indicated earlier, the private banks expressed themselves emphatically and said that, from their point of view, Sydney was the most suitable site. Having regard to those considerations, a decision was taken and written into the legislation. I think that the case for the sub-clause is unanswerable.
Amendment negatived.
– My concern is with clause 74 (2.) which provides as follows: -
After the expiration of a reasonable time after the commencement of this Act, the head office of the Bank shall not be in the same building as the head office of any other bank or of the Commonwealth Banking Corporation.
There seems to be an attempt physically to separate the new Reserve Bank from the Commonwealth Trading Bank. That is a very costly business because a bill relating to transitional provisions makes it plain that the central bank’s reserves are to be raided to the tune of £2,000,000 to cover the transitional costs involved. I presume those costs include the setting up of this new separate bank building. The various mutilations of or changes in the bank made at the instance of the private trading banks have been a costly business for the Commonwealth Bank. The last change, that made in 1953, which involved merely changing the name, and the incorporation of the Commonwealth Trading Bank of Australia as a separate entity, cost that bank £200,000.
– Where does that figure appear?
– I directed a question to the Minister representing the Treasurer in the Senate on 11th November, 1953, relating to the cost involved, and 1 received this reply -
The Commonwealth Bank has advised that the costs to date of effecting the transfer of the general banking activities of the Commonwealth Bank to the Commonwealth Trading Bank are £188,000 (other than those which have been absorbed in the ordinary operating costs of the Commonweatlh Trading Bank), it is expected, however, that further costs over the next year or so on account of registration fees on the discharge of securities vested in the Commonwealth Trading Bank will bring this figure to approximately £200,000.
The whole of this additional cost will be borne by the Commonwealth Bank.
The main items making up the total cost were salaries, overtime, additional printing and stationery. lt is quite certain that all that will be gone through again in connexion with salaries, overtime, additional printing and stationery, only to a very much greater extent because in this instance four bodies - the Reserve Bank and the three banks under the corporation - are involved. There will be vast changes in printing, stationery and the transitional arrangements, and, above all, there will be the heavy capital cost of a new building. 1 have seen the argument that in any event the Commonwealth Bank needs to have more room and that something needs to be done about a building, but it is quite obvious that this might not have happened but for the Government’s acceding to the demands of the private trading banks in this matter. It is childish to provide that the Reserve Bank is not to have its head office alongside any other bank. I should think that it would be the height of convenience to be as close to the other banks as possible. They would not be contaminated by contact, and, if they did want contact, what is to prevent it? There are such things as telephonic communication and personal contact. The mere physical removal of the bank a few doors up the street does not prevent telephone communications, or personal arrangements that may be sought. After all, the Commonwealth Bank has grown up in a building occupied simultaneously by the Sydney branch of the Commonwealth Trading Bank and its own head office. I should like this provision to be justified, because the then Treasurer, Sir Arthur Fadden, said in relation to this matter on 24th October, 1957-
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.
He went on to say -
Although they emphasize that they have no criticism of the manner in which the central bank has exercised its power in the past, they are most concerned about the scope which they see in the provision for unfair attack on them.
Those are the words of the former Treasurer. He has admitted that there is not the slightest complaint about unfairness or impartiality on the part of the central banking division of the Commonwealth Bank, nor will there be in relation to the same body reconstituted as the Reserve Bank of Australia.
So there is no objection in principle to the central bank being in the same premises as another bank, and I should like the Minister to explain - apart from the fact that things in the Commonwealth Bank building in Martin-place may be getting crowded - the need for this colossal expense of £2,000,000. Certainly an asset will be acquired with some of it, but, if this change is to be effected at the request of and for the alleged benefit of the private trading banks, why is not the financial burden, or some of it cast upon them?
– Before the Minister replies, I would like to dissociate myself from the view that Senator McKenna has put forward. There is obviously great advantage to be gained from the physical separation of the Reserve Bank from the Commonwealth Bank units. But I rise to indicate the efficacy of the provisions of clause 74(2.). All that is enjoined by that sub-clause is that the head office of the Reserve Bank shall not be in the same building as the head office of any other bank, or the head office of the Commonwealth Banking Corporation. l do not know whether “banking” includes the three chickens of the Commonwealth
Banking Corporation - the Savings Bank, the Trading Bank, and the Development Bank.
I notice that under clause 5 “ bank “ means a person carrying on the business of banking, and includes each of the three units of the Commonwealth Banking Corporation. So what is enjoined is simply that the Reserve Bank shall not have its head office in the same building as the head office of any other bank or the head office of the Commonwealth Banking Corporation. But I suppose it could move up to the next corner of the street where the Commonwealth Trading Bank is carrying on trading business, and such a move would be pure futility. If the Reserve Bank were operating in the upstairs portion of a building and the Commonwealth Trading Bank was carrying on its trading functions on the ground floor of the same building, this clause would not be breached. Those who have had some experience of the neverfailing but still futile efforts of divorcing bookmakers from hotels in Tasmania have learned that it is necessary to go at least 50 yards to have effective separation, and it would not seem to me that much purpose is served by having two buildings in juxtaposition with each other if you want to achieve the physical separation of the Reserve Bank from the other banks.
– When Senator McKenna was speaking, I was moved to ask myself what might be the attitude of the Opposition if it found that it was intended to house the new Reserve Bank in the top floors of the Bank of New South Wales building in Sydney and whether, in that circumstance, the same point of view would have been presented by Senator McKenna.
Obviously, as my colleague, Senator Wright, has said, there is advantage in the separation of the head office of the Reserve Bank from the head office of any of the private banking institutions. 1 suggest that it is completely desirable that the personnel engaged in reserve banking functions should not be in direct contact nor the intimate contact that arises from being placed in the one building. There are, of course, other reasons of a practical nature which make this separation desirable. Senator McKenna has acknowledged the fact that the Commonwealth Bank building in Sydney, which is to become the head office of the Commonwealth Banking Corporation, is rapidly reaching the stage at which it is too small to house all of its activities. In that circumstance, it is only natural to move the Reserve Bank out of that building and place it in the physical isolation to which it is entitled as a reserve bank. That is a quite natural extension of the declared policy of this Government, which is that an independent reserve bank should be moved physically from the premises occupied by either the Commonwealth Bank or any private trading bank.
Part VIII. agreed to.
First and Second Schedules agreed to.
Title agreed to.
Bill reported without amendment; report adopted.
Bill read a third time.
Senate adjourned at 10.23 p.m.
Cite as: Australia, Senate, Debates, 14 April 1959, viewed 22 October 2017, <http://historichansard.net/senate/1959/19590414_senate_23_s14/>.