House of Representatives
21 November 1957

22^nd Parliament · 2^nd Session

QUESTION
- INTEREST RATES
QUESTION
- RAIN-MAKING
QUESTION
- GOVERNMENT LOANS AND FINANCE
QUESTION
- POLIOMYELITIS
QUESTION
- PENSIONS
QUESTION
- COAL
QUESTION
- HOMES FOR THE AGED
QUESTION
- ST. MARY’S FILLING FACTORY
QUESTION
- SALES TAX ON INFRA-RED RAY LAMPS
QUESTION
- WHEAT
QUESTION
- TOYS
QUESTION
- VACCINE FROM RUSSIA
QUESTION
- TELEPHONE SERVICES
QUESTION
- FREE MILK FOR SCHOOL CHILDREN
QUESTION
- COMMONWEALTH PROPERTY
QUESTION
- CONSTITUTION REVIEW COMMITTEE
QUESTION
- VACCINE FROM RUSSIA
QUESTION
- WATERFRONT EMPLOYMENT
QUESTION
- INTER-PARLIAMENTARY UNION
LOAN (HOUSING) BILL 1957
RESERVE BANK BILL 1?57
- Second Reading
CIVIL AVIATION AGREEMENT BILL 1957
ANSWERS TO QUESTIONS
- Trading Banks
- Trading Banks Profit
- Trading Banks Special Acounts
- Commonwealth Trading Bank
- Commonwealth Bank
- European Immigrants

Mr. SPEAKER (Hon. John McLeay) took the chair at 10.30 a.m. and read prayers.

page 2385

QUESTION

INTEREST RATES

Dr EVATT:
BARTON, NEW SOUTH WALES

– Yesterday, the Prime Minister, in reply to a question asked by my colleague, the honorable member for Darling, said he would procure from the Treasurer, and supply to-day, information about certain increases in the interest rates charged by the associated banks. Is the information available?

Mr MENZIES:
Prime Minister · KOOYONG, VICTORIA · LP

– I regret that the information is not yet available. It has been impossible so far to discuss the matter with the Treasurer, but I expect to do so during the course of the day and I will then make the information available.

page 2385

QUESTION

RAIN-MAKING

Mr HOWSE:
CALARE, NEW SOUTH WALES

– During the absence of the Minister in charge of the Commonwealth Scientific and Industrial Research Organization, I asked the Minister who was acting for him whether the C.S.I.R.O. rain-making experiments had been restricted through lack of aircraft and shortage of funds. I now ask the Minister: Is it a fact that the Royal Australian Air Force has loaned to the C.S.I.R.O. all the available DC3 aircraft, but such aircraft are readily available from the United States of America, TransAustralia Airlines and the Ansett-A.N.A. organization? Are rain-making experiments being conducted on a modest scale because of lack of funds? If so, will the Minister declare rain-making experiments an emergency programme and obtain additional aircraft and qualified men to conduct these experiments?

Mr CASEY:
Minister for External Affairs · LP

– There is no lack of scientists, aircraft or funds. Perhaps I may briefly explain the artificial rain-making work. We are not yet completely satisfied as to our ability to make rain fall over an area greater than that over which it would fall in the normal course of events. I believe - and my advisers believe - that for all practical purposes the matter is solved; but we have yet completely to satisfy all concerned that this is in fact the case. That means controlled experimental work over a specific area, year after year for two or three years, with every form of control, physical and statistical, that can be devised.

That work has been going on in the Snowy River region in two areas each 50 miles square. We are now in the third year of our experiments. Certain scientific matters still remain to be solved, one being the peculiar deterioration of silver iodide when exposed to sunlight. I believe that problem will be solved. It has been investigated over the last six or nine months, and I believe it to be capable of solution. I stress the fact that it is a matter of very strictly controlled experiments in a given area. Some little time ago, as honorable members know, we diverted aircraft to potential drought areas in Queensland, New South Wales and Victoria. Some rain certainly did fall, but it cannot be scientifically or statistically claimed to be proven that that rain did fall as a result of the seeding. We do not want, unless in a case of absolute emergency, to divert aircraft or scientists from the strictly controlled experiments which will lead us, I believe, in due course to a real determination of whether rain-making can or cannot be achieved. I believe that in an emergency, of course, the Government would be willing to take a chance and send aircraft to gravely drought-stricken areas in an effort to make rain. But, after all, the whole of this science - if I may call it that - of artificial rain-making is less than seven years old. lt has been pursued actively in the United States and, I think, even more actively in Australia. I believe we are further advanced in this work than is any other country, but we still have, intellectually and practically, to convince ourselves and everybody else that rain-making is practical and economic.

Mr Calwell:

– Could you not say that in a few words?

Mr CASEY:

– I do not think it could be said in fewer words than I am using. These are the reasons why there is a certain resistance to diverting aircraft to experimental work in other than the areas in which controlled experiments are being carried out.

page 2385

QUESTION

GOVERNMENT LOANS AND FINANCE

Mr BIRD:
BATMAN, VICTORIA

page 2388

QUESTION

TELEPHONE SERVICES

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– I desire to ask the Prime Minister a question relating to the recent reports of a committee of Privy Councillors on the practice of telephone tapping in the United Kingdom and, in particular, to the conclusions and recommendations of that committee. Is the right honorable gentleman prepared to give an undertaking that, in accordance with those recommendations, telephone tapping will not be carried on in Australia except in cases of suspected criminal or subversive activities, and then only upon the issue of a warrant for a specified period, which warrant, at the end of the period, will have to be renewed before the tapping can continue? Will he also undertake that the name of any person, the tapping of whose telephone has been authorized, will be supplied to the Prime Minister, personally? Will he introduce legislation to make it a criminal offence for any person to tap a telephone, or to open letters in the course of their transit through the post, other than in accordance with the proceedings to which I have referred?

Mr MENZIES:
LP

– Naturally, the honorable member does not expect me to make a statement of Government policy on a question of that kind, but he very properly directs attention to this important and valuable report made by three Privy Councillors, one of them being Sir Norman Birkett, a former Lord Justice of Appeal, another being the former Sir Walter Monckton, now Lord Monckton, and the third, the Right Honorable Patrick Gordon Walker.

Mr Whitlam:

– Who dissented.

Mr MENZIES:

– We have read the report, thank you. 1 did not know that the honorable member would want to suppress the name of the Right Honorable Patrick Gordon Walker, who is a very well known man in the United Kingdom Labour party. On most of the matters with which the committee dealt, it presented a unanimous report, but on one or two quite material matters Mr. Gordon Walker registered dissent and, I think, in quite impressive and reasoned terms.

The full report has only just reached me. It was unfortunately very heavily summarized in the cables, although a great deal of attention had been directed to it at the time of the Marrinan case. I have had an Opportunity of reading it carefully, but probably none of my colleagues has yet had a similar opportunity. However, I propose to have the report examined by my colleagues in the Cabinet with a view to considering whether either the aspects on which there was agreement, or those on which there was disagreement, should promote in us a desire to produce in Australia some statutory basis for this matter.

page 2389

QUESTION

FREE MILK FOR SCHOOL CHILDREN

Mr BUCHANAN:
MCMILLAN, VICTORIA

– My question is addressed to the Minister for Defence, who is acting for the Minister for Primary Industry. Will the honorable gentleman have his departmental experts carefully examine the case for flavouring the milk that is supplied for free distribution to schools in order to increase the percentage of children who take advantage of the Government’s beneficial scheme?

Sir PHILIP MCBRIDE:
Minister for Defence · WAKEFIELD, SOUTH AUSTRALIA · LP

– I shall certainly have the departmental officers investigate this matter.

– That is what you are doing.

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– I point out to the right honorable gentleman, who comes from New South Wales, and who has, I hope, some interest in matters in that State-

Dr Evatt:

– Of course I have some interest; more interest than you have!

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– Not only was the whole of the shipping of the port of Sydney held up yesterday but, as I shall explain before I conclude, most of the port is also held up to-day. I stress the fact that the right of appeal existed. It was not exercised on this occasion. Instead, the union used what I can only term the device of asking for an inquiry. Mr. Justice Ashburner had this matter before him and pointed out that, as the parties were not able to agree to his conducting such an inquiry, and as he had no jurisdiction in the matter, both aspects - the questions of deregistration and of assault, on which charges and counter charges were made - could be resolved if the matter were taken to the Commonwealth Industrial Court. Therefore, if the union wanted an inquiry, an inquiry was available to it. In addition, the man concerned has certain legal remedies open to him if he wishes to press any charge of assault. He has the normal rights of any citizen to institute either civil or criminal proceedings for any assault that he alleges. Not only did the right of appeal exist but, indeed, even when the time in which an appeal could be lodged ran out, the authority said, “ We will support you in an application to the court for a waiver of the requirement of time if you wish to lodge an appeal either in respect of the man originally deregistered or any of those who have been suspended because they have refused to work with the three foremen who have been declared black “.

I go into these points in some detail because the waterside workers of this country are being asked to back the union on a request now being made for an inquiry. What must be made abundantly clear is that every opportunity has been given for an inquiry to be conducted by the appropriate tribunal and that, if this Government or the authority is to by-pass the elaborate machinery already established for conducting inquiries into these matters, then we destroy any prospect of discipline on the waterfront. The only other development to which I refer - and I mentioned this earlier - is that to-day gang after gang has been assigned for work on the ship that has been declared black. I understand that some hundreds of men, having been rostered in this way, have refused the assignment from the authority. The authority, I am informed, is now considering what courses are open to it in this matter in order to keep the port working. The Government is also considering the courses of action open to it.

Dr EVATT:

– I should like to ask a supplementary question of the Minister arising from his ministerial statement. Is it not a fact that the situation on the waterfront has been provoked to a great extent by the Minister’s statement, under protection of privilege in this House, in which he imputed a long list of offences or alleged offences to the person in question? Was not that obviously calculated to prevent an early settlement of the dispute? Further, with regard to the list of charges made by the right honorable gentleman, does he still assert that all those charges are correct, as stated in this House? Thirdly, and more positively, instead of the authority looking around for new forms of procedure to meet this emergency, will the right honorable gentleman, in lieu of taking the matter to the court, which apparently has no jurisdiction, consider the appointment of a conciliation commissioner or a conciliation officer to endeavour to settle this dispute between the union and the employers, instead of going on with these procedures that have not been particularly successful in this case?

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– The right honorable gentleman asks me three questions. The first question is whether my own statements in this House have not led to this stoppage, or at least aggravated the trouble. I point out that this dispute has been running since the date I mentioned - round about 21st October. It can hardly be said, seeing that my first statement on the matter was made towards the end of last week, that the dispute has been provoked by me. What I have tried to do is to bring clearly before the great body of waterside workers in Australia and the people generally the issues which 1 consider have been raised in this dispute, and some of the implications of the action being taken by members of the federation. I/have also directed attention to the very significant article which appeared in the September issue of the “ Communist Review”, counselling in effect the very course of action now being followed by the union officials in this matter.

The right honorable gentleman also asks me whether I still believe the record of this man, as stated by me in the House, to be accurate. I have no reason to believe it to be other than accurate. Nobody, officials of the union or anybody else, has sought to challenge its accuracy. The right honorable gentleman also asks me whether a conciliation commissioner might be appointed because, he said, the court had apparently no jurisdiction. I have pointed out that the court has jurisdiction, and has had jurisdiction at all stages of this matter. The member of the presidential commission does not have jurisdiction, as he pointed out on 7th November. I understand that the judge pointed out that the opportunity existed to go to the industrial court in this matter, not to him, unless the parties agreed. Although the industrial court might now be said to lack jurisdiction because the appeal has not been lodged within the time allowed, I am given to understand that the court has a discretion in these matters, and the authority has informed the union that it will support an application by the union for the court to waive any requirement of time so that the issues can be fully, fairly, and impartially examined by the appropriate body.

page 2392

QUESTION

INTER-PARLIAMENTARY UNION

Mr LUCHETTI:
Macquarie

– by leave - I lay on the table the following report: -

Inter-Parliamentary Union - Forty-fifth Conference held at Bangkok, November, 1956 - Report of Austraiian Delegation. and move -

That the paper be printed.

I ask for leave to continue my remarks at a later stage.

Leave granted; debate adjourned.

page 2392

LOAN (HOUSING) BILL 1957

Bill returned from the Senate without amendment.

page 2392

RESERVE BANK BILL 1?57

Second Reading

Debate resumed from 19th November (vide page 2315), on motion by Sir Arthur Fadden -

That the bill be now read a second time.

Mr GEORGE LAWSON:
Brisbane

– The four bills now being debated are in my opinion, and I feel sure in the opinion of the majority of the electors of Australia, the most important measures to come before this House for many years. They are important because, first, they involve a revolutionary change in the structure of the Commonwealth Bank; and secondly, insofar as they concern the central bank, which has always been called the Commonwealth Bank of Australia. The deeds of that bank are well known to the people of Australia. It has maintained leadership in financial operations, and bears a proud name. The bills also concern the Commonwealth Trading Bank, which was formerly the general banking division of the Commonwealth Bank when the bank was first brought into being. In my opinion the Commonwealth Trading Bank will be detrimentally affected by these measures. Thirdly, the Commonwealth Savings Bank, which has been proved to be one of the greatest institutions ever established in any country of the world, is also involved.

This House has to decide why these measures have been introduced. I believe their introduction is the result of a direction by the private banking companies to the Government. That is well known, because the Prime Minister (Mr. Menzies) some months ago made a public statement to the effect that he was having a conference with the private bankers in order that their views could be ascertained and their requirements satisfied if possible. The Prime Minister also said that the Government was going to bring down measures to amend the Commonwealth Bank Act 1945. Honorable members know that he was forced to meet the private banking companies in conference and to carry out their directions.

When it was made known after the conference that the Government intended to bring down these measures, the people of Australia found a considerable amount of dissatisfaction existing in the Government ranks, and particularly in Cabinet. The Treasurer (Sir Arthur Fadden) made no bones about the fact that he was opposed to the proposed alteration in the structure of the bank as agreed upon between the Prime Minister and the private banks. Indeed, not only the Treasurer opposed the amendment; we are led to believe that the majority of Australian Country party members also opposed it. That dispute continued for quite a considerable time, and at one period the people believed that the Australian Country party, led by the Treasurer, had sufficient influence with the Government to prevent any interference with the great institution of the Commonwealth

Bank of Australia, which is known as the people’s bank. Nobody except the Treasurer, and probably other members of the Australian Country party, know the reason why he changed his mind and agreed to the introduction of these four bills.

The Treasurer, in his second-reading speech, stated -

There is one main reason why the Government has decided to separate the central bank from the rest of the Commonwealth Bank group - and it is entirely a practical reason. Experience has shown that there cannot be full harmony within the Australian banking system, nor that close cooperation which ought to subsist between the central bank and the trading banks, unless and until this separation is effected.

That statement by the Treasurer, to my mind, proves the contention of the Opposition that the measures now before the House were brought down at the direction of the private banks. This Government has time and time again tried to impress upon the people that it believes in private enterprise and competition; but according to the Treasurer, whose remarks I shall repeat, that does not appear to be the case. He said -

Experience has shown that there cannot be full harmony within the Australian banking system, nor that close co-operation which ought to subsist between the central bank and the trading banks, unless and until this separation is effected.

So, evidently, he and the Government are desirous of having the Commonwealth Bank become just a tame-cat bank for the private banks. They want the Commonwealth Bank not to be competitive with the private banks, but to work hand in glove with them. The Treasurer went on further to say -

This points to a major difficulty inherent in our banking system as we have known it hitherto. The private banks have consistently maintained that they cannot enter into fully confidential relationships with the central bank so long as it has, under its control and operating as an adjunct to itself, a major trading bank that is a competitor of theirs.

So there again is proof that the Treasurer and the Government have no intention of allowing the Commonwealth Bank to be a competitive bank as we have for a long time believed it to be, and as it was intended to be when it was established by the Fisher Labour Government 46 years ago.

The Commonwealth Bank, as everybody knows, has rendered wonderful service to the Australian people. I do not know where Australia would have been during the two world wars, particularly during World

War I., had it not been for the Commonwealth Bank. Notwithstanding what has been said, and what will probably be said, by honorable members opposite on this subject, the fact is that the private trading banks to-day have failed miserably to make credit available for home-building and other developmental purposes. The people have looked to them to provide such credit. At one time credit was made available fairly freely by the Commonwealth Bank for such purposes but, as a result of the credit restrictions imposed by this Government, not only the Commonwealth Bank but also the private banks refuse to make credit available for home-building and developmental purposes. The private banks are now engaged in a much more lucrative project which yields them higher interest rates and thus greater profits than they would derive from loans for home-building.

Over the last few years they have entered the field of hire purchase, and are using their surplus funds in that field in the interest of their shareholders alone. Many complaints have been made to honorable members and in the press, and many questions arising from such complaints have been asked in this House, about the way in which the hire-purchase companies of Australia treat the workers who wish to purchase goods on terms. The large interests in hire-purchase companies held by private banks are well known. The National Bank of Australia Limited holds a 40 per cent, interest in Customs Credit Corporation Limited. The Bank of Adelaide holds a 40 per cent, interest in Finance Corporation of Australia Limited. The English, Scottish and Australian Bank Limited subscribed £2,000,000 to the capital of Esanda Limited. The Commercial Bank of Australia Limited has a 45 per cent, interest in General Credits Limited. The last move into this field was made by the Bank of New South Wales, which acquired a 40 per cent, interest in Australian Guarantee Corporation Limited. Those facts illustrate why it is so difficult for people to get advances for home-building and for carrying out very necessary developmental work. These banks have gone into the hire-purchase business because it yields higher profits than they would get by lending money for homebuilding at 5 per cent, or 6 per cent. Everybody knows that the shares held by the private banks in hire-purchase companies are bringing in interest of 10 per cent., 15 per cent, and, in some cases, 20 per cent. So the private banks to-day are doing extremely well. They are doing too well as far as the people of Australia are concerned, because they are getting interest on interest as a result of the profits from the shares that they hold in hire-purchase companies.

There is no doubt that the Commonwealth Bank has proved a boon to the people of Australia, and I feel that it would be worth my spending a few minutes in relating what the bank has done for Australia, because I am satisfied that there are some members of this Parliament who have no idea of the ramifications of the Commonwealth Bank and of the value it has been to us since it was established.

The Commonwealth Bank was founded under legislation of which the Labour party is very proud, and I suppose that the bank has been the best institution ever established in this country. The Labour government which introduced that legislation included King O’Malley, now dead. As far back as 1904, King O’Malley endeavoured to have a Commonwealth Bank Act placed on the statute-book. That was during the time of the, unfortunately, short-lived Watson Labour Government, and nothing was done at that stage to implement King O’Malley’s idea and foresight. It was not until 1911 that Andrew Fisher introduced the first Commonwealth Bank bill. When that bill was before the Parliament the political predecessors of the gentlemen who now occupy the Government benches strenuously opposed it. In fact, the bill was opposed clause by clause at the committee stage.

It is interesting to know that, notwithstanding the great work the Commonwealth Bank has done since its establishment, the original provision for the capital of the bank was for only £1,000,000. When it was decided that the bank should commence operations, under the chairmanship of the late Sir Denison Miller, it was found that only £10,000 was required to enable it to do so. This was all that was required to purchase premises and to finance all the other initial operations necessary to enable the bank to operate. Since then the bank has done a wonderful job. I venture to say that no other bank in Australia was commenced with such a small amount of capital. The bank has, however, made tremendous profits, notwithstanding the fact that it was hampered and handicapped for a great number of years. In the period between 1924 and 1927 the Commonwealth Bank legislation was amended by the BrucePage Government, and all the competitive activities in which it had indulged under its original charter were denied to it. It was not until after the Labour governmentcame to power in 1941 that the bank was again given the opportunity of functioning as it should function, as the people’s bank.

According to the latest figures available, since the bank was established in 1911 it has made profits amounting to £88,964,648, which, together with profits on the note issue of £94,976,841, give a total of £183,941,489. Just imagine what the other banks would have done had they had the opportunity of raking in those profits. Fortunately, the profits were made on behalf of the people, because the Commonwealth Bank has been recognized as a people’s bank. Out of the profits that it has made, the Commonwealth Bank has contributed £28,909,000 to the National Debt Sinking Fund. What contributions have the private banks made to this fund? The private banks have done very little to assist this great country to progress as it should do. Notwithstanding that the bank was handicapped considerably by legislation brought in by a government of similar political complexion to the present Government - I refer to the Bruce-Page Government-

Mr Edmonds:

– It could not have been as bad as this Government.

Mr GEORGE LAWSON:

– That is problematical, but I do say that this Government has played havoc with the Commonwealth Bank, to an even greater extent than did the Bruce-Page Government. Of course, as time went on, the private banks realized that something would have to be done.

The Commonwealth Bank has assisted Australia’s war effort in both world wars. The bank was in its infancy when World War I. broke out, but it proved to be the salvation of Australia during the period when that war was being waged. In addition to making profits which were used to assist the war effort, it was of great assistance in another way. The Common wealth Government decided, during the war period, to assist primary industry by establishing pools of wool, wheat and other primary products, through which all these products had to be sold. This, of course, was of great assistance to primary producers. The Commonwealth Bank financed those pools, on behalf of the Commonwealth Government, to the extent of more than £437,000,000. That is what the bank did for the primary producers of Australia during the war period. Where would we have been had we not had the Commonweath Bank during that period? I ask honorable members of the Country party: Would the private banks have come to the assistance of the Government and the primary producers by financing these pools to the extent of more than £437,000,000?

The Commonwealth Bank progressed so well and so rapidly that the private banks became very dissatisfied with the position, and they made representations to the Bruce-Page Government. That Government brought in legislation which greatly restricted the competitive activities of the Commonwealth Bank. However, it continued to prosper and to compete successfully, although on a limited scale, with the private banks. During the election campaign in 1949 the private banks supported the present Government and spent hundreds of thousands of pounds in order to defeat the Labour government, which in 1945 had amended the banking legislation to restore to the bank the charter it had enjoyed when it was established in 1911.

The Labour party is very proud and very jealous of the Commonwealth Bank and of the great work that it has done for the people of Australia. We know that in 1949 the private banks gave great financial support to the Liberal and Country parties. They had male and female members of their staff canvassing for weeks before the election for support of candidates of those two parties. The result was that the Labour government was defeated, after a promise had been given to the private banks by the present Government that it would amend the banking legislation to suit them. The legislation now before the House is a pay-off for what the private banks did for the Government. We say very definitely that the people of Australia will not stand for this interference with the Commonwealth Bank and will demand that the Government keep its hands off the people’s bank. As a matter of fact, it is well known that when the bank was established, all these things were said. The Opposition of those days claimed that the establishment of the Commonwealth Bank would mean that the then Labour government would seize the savings of the people. Of course, the contrary has proved to be the case. Far from the Government taking the people’s savings, the people have increasingly placed their savings with the bank. We say to the Government, “ Hands off the people’s bank “, because that bank has done such a wonderful job for the people of Australia.

Mr BURY:
Wentworth

– I rise to support this very significant legislation, the central feature of which is to establish in Australia, for the first time, but a generation late, a fully fledged central bank, able to take its proper place at the head of our monetary and financial system, completely untainted by competitive rivalry with the institutions which it is supposed to lead. I believe that this is a most significant development and one that is long overdue. As the honorable member for Barker (Mr. Forbes) ably pointed out in his speech, our experience has not been so very different from that of other countries. That is, that a smooth-working banking system is impossible with a central bank which conducts trading bank functions. This is something which has been found out by many countries and is almost universally recognized. It has been my lot on many occasions to produce all the arguments I was able to muster in favour of our present hybrid system in attempting to explain away what has long been regarded by all central banking and other competent authorities in the world as being extremely queer. At least we are getting away from what, in a court of law, would be unity between a judge and one of the parties.

Those who complain about this arrangement to establish a new central bank, are basically supporting a historical accident. Naturally, like many historical things, it has gone on too long because of the natural inertia which comes over governments successively occupying power and causes them to hesitate to make the necessary moves.

But, in fact, the reason why we have the present set-up is nothing better than an historical accident. It so happened that we established a governmental bank and, because it was a governmental bank, as and when other functions came along which might properly be performed by a central bank, we have performed a series of skin grafts on an existing body. But do not let us be misled by talk that we, by these measures, will be dismembering the people’s bank. In fact, those in the Commonwealth Bank who are engaged in central bank activities are extremely few in number, and the main, large, broad functions of the Commonwealth Bank are, as they always have been, that of trading and savings bank activity. By these measures we shall, in the aggregate, not dismember the Commonwealth Bank, but add a great deal to it. In fact, from it will emerge a new, tri-legged monster which will tower over any other institution in the rest of the banking system, which cannot hope to enjoy the potentialities of expansion which will be the lot of the Commonwealth Banking Corporation.

The first time that an attempt was made by Mr. Theodore in the early ‘thirties to bring in a central bank it was defeated. That was not because it was not a good idea or because Mr. Theodore was not extremely clear-headed about it, but for the simple reason that opinion in Australia at that time was behind that of other countries, and the very idea of a central bank was resisted very bitterly. But it was not because it was unsound to have a central bank separate from the Commonwealth Bank; it was resentment of the very basic idea of central banking. We continued, largely as a consequence, throughout the ‘thirties to have our monetary and financial policies determined not by regard to the state of employment and economic activity, which is now accepted as the proper criterion, but very largely by the ebb and flow of our London funds. This development of a central banking system did not really come about until the war, and the temporary war-time legislation has since been embodied in a series of acts, none of which has been at all satisfactory to large numbers of people engaged in the banking system, or to informed opinion outside.

Now, for the first time after all these years, a really genuine comprehensive effort has been made to tidy up the matter.

For the first time - let us make no mistake about this - we have a central bank with the teeth necessary to control the system in a way which has been lacking hitherto. We can at least grant the Leader of the Opposition (Dr. Evatt) his point that on a number of occasions since the war, some of the trading banks - not all - have not followed the proper leadership of the Commonwealth Bank and have run down their cash and liquid resources to quite unjustified levels. This will be virtually impossible under this new legislation. If, as the Leader of the Opposition has said, there is a delay of 45 days for supplementary calls to the basic deposit which has to be kept, that is because of the peculiarities of our particular financial system. We are not, as in countries like the United States of America and Great Britain, in a position to operate indirectly through a well-established money market. Moreover, under our system, advances are made in the form of limits and there is no control, except over quite a long period, of the cheques which people throughout the country will draw, thus increasing their advances and in turn increasing some one else’s deposits. The cash ratio can thus be altered considerably without any action on the part of the banks in a shorter period than 45 days, so making it extremely difficult within that period to adjust our financial affairs.

It has been mentioned that the Royal Commission on Monetary and Banking Systems, which made its inquiry and reported in 1937, recommended that the Commonwealth Bank’s trading wing should continue. At that time there were arguments which were very much stronger than any such arguments would be to-day; but any arguments there might have been at any stage in favour of the idea of the central bank having a trading wing were completely defeated when the Commonwealth Bank was exhorted, by legislation, to compete actively with the rest of the trading bank system. It has been said by the Opposition that some officials in the Commonwealth Bank are not very keen to have this legislation. That may or may not be true but since it has been mentioned I propose to pick up the point.

There is, of course, a natural inertia on the part of officials of a government bank, a central bank, or any similar institution. Naturally, they do not wish to see changes unless things are in a very grievous condition and some action becomes imperative. But at least it could be said that, probably, for every one person in the Commonwealth Bank who does not like this change, there must be many more who favour it. There can be no doubt whatever that those who engage in the Commonwealth Trading Bank will welcome this opportunity to be free, at last, from the inhibiting environment of a central bank, so that their institution will be able to compete on equal terms with other trading banks which, at the moment, enjoy very considerable advantages. So, despite any reluctance on the part of some officials to see this change, there will be many who favour it.

Another view is that officials in institutions such as treasuries and central banks see problems only from the viewpoint of those who make the rules and lay down what others should do. They do not see them from the viewpoint of those who have to carry out their edicts. That is a basic difference of a viewpoint which does more than account for any sluggishness on the part of those who are said to oppose the change.

If, indeed, as is constantly pressed by the Opposition, this is a move to favour the private trading banks, I would remind the House that the private trading banks will, in fact, pay quite a heavy price. In the first place, they will, henceforth, be under much tighter central bank control. Most of them have carried out faithfully whatever the central bank has required of them, although, a few years ago, there may have been some exceptions. But from now onwards the legal power to control them will be very much closer. In addition, under the new dispensation, they will face quite uninhibited competition from- the Commonwealth Trading Bank. Up to this point, the Trading Bank has been inhibited by its association with the central bank and also because those who have run it, the governor and the board, have not been primarily occupied with trading bank activities. Besides facing uninhibited competition from a first-class institution, the Commonwealth Trading Bank, the private banks will face competition from a new institution, the Development Bank, although that bank may function only on the fringes of their fields of operations, and not do the things that they would do themselves.

I trust that, when the new system is set up, satisfactory relationships will develop between the new central banking system and the Treasury. This relationship has proved extremely critical to central banking and to financial operations all over the world. There is apt to be a conflict of interest between the government of the day which is beset by immediate political pressures, and the central bank whose real job it is to keep the rest of the economy, outside the governmental sphere, in good shape and on an even keel.

It is a true generalization that wherever the independence of the central bank in relation to the treasury has been greatest, inflation has been least. A standard example of this may be found in the federal reserve system of the United States of America. That country has been extremely successful in setting up an institution which is entirely responsive to public interest as seen through the most expert eyes of any persons engaged in economic and financial work anywhere, but at the same time reasonably free from political pressure. The federal reserve system is controlled by people who in this sphere have no peer in the world. Ever since they were given relative freedom from direct treasury control and edict, the economy of the United States of America has been on the most even keel in the whole of its history.

Finally, there is a point on which agreement can never be expected from the Opposition in this type of legislation. For a party whose professed objective is to nationalize the means of production, distribution and exchange, obviously the banking system is the key point. Any government which h£S monopolistic and absolute control of the whole banking system is in a position to control almost the whole economic life of the country. The only way in which people, under these circumstances, could escape the complete surveillance of the Government would be by carrying around large wads of notes in their pockets and trading in cash which, in the modern world, would be quite fantastic.

So this legislation does, in fact, run to the core of our financial and economic system. Private parties, trading as individuals with business establishments, depend finally, for the secrecy of their transactions and for their economic freedom, upon the existence of many institutions, not only one which would be operated by the Government and would be completely under its detailed surveillance. The way in which the public interest in controlling the volume of credit at proper levels can be reconciled with the existence of different institutions, each looking after the convenience of their clients, is by having a completely separate central bank, divorced from trading bank functions, and not competing with other institutions, and under the central bank a large number of flourishing independent concerns which, together with the government bank, can keep the financial system on an even keel and maintain a liberal economy.

Mr CHAMBERS:
Adelaide

– History is repeating itself during this debate on the banking bills. When the original Commonwealth Bank Act was introduced, the debate that followed took place in the House of Representatives, in Melbourne. To-day, the bills have been introduced, and the debate is taking place, in Canberra. Honorable members should try to visualize the scene and the events surrounding the introduction of the original legislation in 1911. The bills that were introduced recently in this Parliament by a LiberalAustralian Country party Government have the purpose, I believe, of depriving the nation of the great advantages that it has derived from the realization of the dreams of the Australian Labour party for a Commonwealth Bank. As we know, in 1911 a Labour government, led by the late Andrew Fisher, graced the treasury bench of the Commonwealth Parliament.

One can almost recapture the atmosphere that surrounded the events of those days by noting the statements that have been made by honorable members in connexion with the measures now before the House. I think it is worthwhile to repeat some of the things that were said of the Labour government which introduced the original legislation, because similar comments are being made to-day, by the supporters of the present Government parties, about the Labour Opposition. Some of the words used in 1911 are identical with those that are being used to-day. During the secondreading debate on the Commonwealth Bank

Bill that was introduced in 1911 for the. purpose of establishing a national bank, members of Parliament and of the press, who were in opposition to the measure, said, sarcastically, that henceforth there would be sovereigns for all. There was talk of a “ socialistic tiger “ being abroad. lt was said that “ red-raggers “ would utilize the bank to destroy the financial structure and to ruin the country’s credit. It also was said that the bank would involve the Treasury in heavy losses.

We have heard similar statements in recent times. It was said, in 1911, that the homes and the savings of the people would be confiscated, and that chaos would reign. In fact, every conceivable bogy was raised to obstruct the passage of the legislation. Despite all the things that were said, can any Australian truthfully claim that the slogans that were used and the statements that were made about the establishment of a national bank have been borne out by events? I suggest that, on the contrary, history will show that this Commonwealth Bank, which was established by a Labour government, has stood by Australia in its darkest hours ever since its establishment, and that particularly during World War I. and in the years following it, the bank played a magnificent part in our economy. In this respect, I think it is of interest to refer to the speech made by Sir Denison Miller, then Mr. Denison Miller, who was appointed the first governor of the bank. He indicated what he expected, and also what the Government and the nation expected of the original Commonwealth Bank legislation. On 20th January, 1913, when the bank commenced general banking business in all State capitals, in the course of a speech delivered at the head office of the bank at Stanway House, Kings-street, Sydney, Mr. Miller defined the policy of the bank in words that should become a part of our history. He stated the true functions of a national bank in this way -

The bank is being started without capital, as none is required at the present time, but it is backed by the entire wealth and credit of the whole of the Commonwealth of Australia. It is intended to conduct the business on sound lines, and at the same time to extend every reasonable facility to meet the growing requirements of our trade and commerce, and the development of our national resources in a way which should alike commend itself to the people and gain their con fidence arid support. Its success, in the measure we hope and anticipate, will, to a large extent, depend on the continued prosperity of the States of the Commonwealth, and the support of the people, whose bank it is, and in whose interests no efforts will be spared to make this national institution one of great strength and assistance in maintaining the financial equilibrium on safe lines, so that its expansion will be concurrent with an ever-increasing volume of wealth of the Commonwealth of Australia. It must become an important factor in dealing with the finances of the States and Commonwealth, and there is little doubt that in time it will be classed as one of the great banks of the world.

The bank that was established at that time, due to the vision of the Australian Labour movement, was intended to be at all times for the use of the people, and to contribute to the development of this great country.

We have heard, earlier this morning, of the achievements of the Commonwealth Bank during World War I. At that time, it financed our war effort. It also financed schemes for the disposal of our primary products. It assured to the primary producers a reasonable return for their efforts. After World War I., this great financial institution was responsible for restoring to the Australian community a peace-time economy. Is it any wonder, Mr. Acting Deputy Speaker, that the Australian Labour party, realizing the great asset that the Commonwealth Bank of Australia proved to be for this nation in the period of war and rehabilitation, in the early stages of the bank’s growth, is deeply concerned at any attempt to reduce the scope of the activities of that institution? The Australian people and the Australian Labour party are ever mindful of the situation that arose in Australia some years after World War I., when the Hughes Government, which had succeeded the third Fisher Government in 1915, was defeated and the Bruce-Page Government assumed office. In 1924, shortly after the death of Sir Denison Miller, the Bruce-Page Government took the Commonwealth Bank - the nation’s bank, and an instrumentality for the development and betterment of Australia - out of the control of the Governor, and placed it under the control of a board, known as the Commonwealth Bank Board. In view of those events, is it any wonder that everything possible is being done to prevent this legislation from being placed on the statutebook?

As I have already indicated, during World War I. and the rehabilitation period that followed, the Commonwealth Bank provided the wherewithal to send overseas the Australian Expeditionary Force, which fought magnificently and contributed substantially to a great victory, and then provided the funds needed for the rehabilitation in civilian occupations of those who returned. Unfortunately for Australia, a few years afterwards, Labour went out of office, and the control of the bank was taken from the Governor and placed in the hands of the Commonwealth Bank Board shortly after the death of Sir Denison Miller.

This change was of great significance in view of what was to happen during the depression. The Australian Labour party and the Australian people are deeply concerned to prevent a repetition of what happened in the depression of the 1930’s. I will always claim that it was a man-made depression. It may be said that it was world-wide. I cannot say from personal experience what was the situation in other parts of the world, but I lived through the depression in this country, and I can speak of what happened here. Wheat was in abundance at a time when many thousands of Australians went hungry. I saw citizens of Australia going cold and ill-clad although an abundance of wool was available. I saw many thousands of people homeless although labour and materials were available in abundance for the construction of all the homes needed to house the population that Australia had in those days. Yet, when the Scullin Labour Government appealed to another House of the Commonwealth Parliament for approval of an advance of £20,000,000, its appeal was rejected, although, during World War I. and the rehabilitation period that followed, hundreds of millions of pounds had been provided for war and rehabilitation purposes! The tragedy of it all was that, in the desperate times of the depression, a high percentage of the unemployed men walking the streets seeking employment wore the badge of men returned from service in World War I. Again I ask: Is it any wonder that the Australian Labour party, and the people generally, are fearful of a return of similar conditions?

If, as one Government supporter has stated, the Commonwealth Bank will be left intact, and not interfered with, why is this legislation now before us? If the Government does not intend to interfere with the Commonwealth Bank and its instrumentalities, why are we now asked to consider this legislation? I can think only that the Government is determined, as it was determined in 1951, and as its predecessors were determined when they appointed the first Commonwealth Bank Board, to curb the activities of the Commonwealth Bank and to return to the private banks the control over the financial system that they desire to have. There can be no other reason for the Government’s present proposals, and it amazes me that common-sense men cannot see through them. I do not believe for a moment that all the Government’s supporters in this Parliament do not understand the implications of these proposals, and have no sympathy with the people.

What can be the real reason for the introduction of these bills? The Commonwealth Bank was established by a responsible government. Is there any one in this House, or elsewhere in Australia, who would claim that the Andrew Fisher Labour Government was not a sane and responsible government? Would any one claim that the late Jim Scullin and the Labour government that he led were not sane and responsible? Would any one claim that the Curtin Labour Government, which, with the able assistance of the Commonwealth Bank, geared Australia for World War II., was not a responsible government? Would any one claim that the Chifley Labour Government was not a responsible government, and that it did not have the interests of the Australian community at heart? Of course it had the interests of the people at heart.

The late Ben Chifley was determined that the people of Australia should never again be forced to walk the streets seeking work in a time of mass unemployment, and that, never again, should parents be forced to shame themselves, and submit relief orders to food stores in order to obtain subsistence for their families. For those purposes, and for no other purposes, the Chifley Government wanted to assure the Australian people that they will never again be forced to be hungry in the midst of plenty, to be cold when we have the wherewithal to clothe them, and to be homeless when we have the labour and material to construct homes for them- not a mere 9,000,000 or 10,000,000 people but 30,000,000 Australian people. “They were the objectives that inspired the -Labour Prime Minister in those days, and it is a tragedy to hear the suggestion that the Chifley Labour Government wanted to destroy Australia and the Australian economy. 1 was a young man in those days. Naturally, I came from a working-class “family which faced the difficulties of those days and which had faith and confidence in political Labour. As the years have gone by, the Labour governments have had at the back of their minds only the one great desire - to build Australia into the country that it could be and should be. The method “they would use to make Australia a great country, and to develop it, is to use national credit through the Commonwealth Bank - the people’s bank. It is only natural, therefore, that we on this side of the House should fear the situation to-day; we do not want the Commonwealth Bank destroyed. We want it to remain the edifice of the people. We want to retain it as a memorial to the great Labour stalwart Andrew Fisher and those who followed him - Jim Scullin, John Curtin and Ben Chifley. We want it as an everlasting memorial to what Labour can do and to what Labour means.

I look to the day when this Labour party will again have the confidence and the backing of the electors, and when it will once more grace the treasury benches of this Parliament. If these measures become law - I have no doubt they will - when Labour is again in office it will repeal them and place the Commonwealth Bank in the same position as it occupied in 1911 when it came into existence through the thoughts, dreams and hard work of Labour over the earlier years. I hope that Labour will march forward, that it will get rid of its difficulties and that it will get rid of those who are impeding its progress. It is still a great party and it can continue to be a great party. All it needs is to get rid of those who are hindering its progress and prosperity so that it will, all the sooner, become a Commonwealth Labour government determined to place back on the statute-book legislation to enable the Commonwealth Bank to occupy its original, its rightful and its intended place in the community.

Mr JOSKE:
Balaclava

.- One cannot but feel sympathy for the honorable member for Adelaide (Mr. Chambers).

This is supposed to be a free country and one is supposed to be able to voice one’s criticism freely, openly and honestly, and, if necessary, to criticize one’s leader. But in the great Australian Labour party, if one dares to criticize one’s leader, one is purged, and the honorable member for Adelaide, despite the fine and honorable work that he has done for the Australian Labour party over the years, was forced out of the party because in a moment of honesty he ventured to criticize his leader.

Mr ACTING DEPUTY SPEAKER:
Mr. Makin

– Order! May I .intervene and say to the honorable gentleman that that is not the subject being considered by the House at the moment.

Mr JOSKE:

– The honorable member for Adelaide made an appeal to the House in traditional Labour fashion. He was trying to get back into the Labour party by showing what an honest, honorable Labour man he was, and his speech was merely the traditional Labour speech. In his endeavour to show what a good Labour man he was and to get back into the party, I venture to say that his voice was as the voice of the infant crying in the night, with no language but the cry. In criticizing his speech, I say that one must take it with the proverbial grain of salt, because there was a very great motive behind what he said and, as I say, I sympathize with him.

Mr Chambers:

– You are wrong. That is unfair to me. That was not my thought at all.

Mr JOSKE:

– The true position with regard to the bills now before the House was expressed by the honorable member for Wentworth (Mr. Bury), who preceded the honorable member for Adelaide. The honorable member for Wentworth pointed out that the effect of this legislation would be greatly to strengthen the structure of the government banks. He spoke with a degree of knowledge and authority on this subject that probably is not excelled by any other honorable member. The present Commonwealth Bank has grown up over the years. It originally started merely as a trading bank, but over the years it has gradually become a central bank. That curious form of growth has brought about the present weakness in the structure of the Commonwealth banking system which these bills aim to cure.

In a very long and discursive speech which the Leader of the Opposition (Dr. Evatt) made on these bills, he pointed out weaknesses in the present central banking system in Australia. This legislation has become necessary because those weaknesses exist, lt is not a question, as so many Opposition members seem to think, of endeavouring to weaken the structure of the governmental banking system. On the contrary, the effect of this legislation, as the honorable member for Wentworth pointed out, will be greatly to strengthen the structure of the governmental banking system. The honorable member for Adelaide and many Opposition members did not seem to realize that when they made their speeches, because they said, “ What is the need for this legislation? “ They imagine it is an attack on the Commonwealth Bank. So far from this legislation being an attack on the Commonwealth Bank, the honorable member for Wentworth pointed out that it will greatly strengthen the governmental banking system.

In his speech, the Leader of the Opposition pointed out the weaknesses in the present central banking system. It is accepted to-day that for a government of a great country to have stability in the economy it is necessary to have a central banking system. The central banking system must be a fair system if it is to bring about stability. If it is a system which favours one bank or a number of banks at the expense of other banks, it will not operate efficiently and smoothly and it will not be satisfactory. That is what has been happening. The Leader of the Opposition pointed out that the present set-up of the Governor of the Commonwealth Bank and the Commonwealth Bank Board has resulted in preference being given to the private banks at the expense of the Commonwealth Trading Bank; that the private banks have been given benefits and have not been subjected to the restrictions to which the Commonwealth Trading Bank has been subjected. Indeed, said the Leader of the Opposition, it seemed that the central bank was bending over backwards in favour of the private banks.

As the right honorable gentleman rightly pointed out, that type of conduct does not lead to stability in the banking system. It does not bring about confidence in the central banking system. Therefore, it is a bad thing and should be remedied. But what the right honorable gentleman failed to point out was the reason why the central bank favoured the private banks at the expense of the Commonwealth Bank. What the right honorable gentleman said was no new discovery. It has been abundantly apparent over the years. It has been the subject of comment by business people, economists, and others. It is commonly accepted that there has been this favouritism. But the reason why the favouritism exists - and this also has been publicly commented upon - is because of the embarrassing position that the Governor of the Commonwealth Bank and his board are placed in by reason of the fact that they are both in control of the central banking system and therefore have a responsibility for that, and also at the same time they are put in the position of being in active competition with the private trading banks. In that embarrassing position they have endeavoured to be fair to the private banks. Not only have they been fair, but they have gone too far the other way, which is the natural thing that any decent body of men would have done. I am not criticizing them at all for doing it. But looking at it from a national point of view, from the point of view of the central banking system and its value to the community as a whole, it has led to instability.

In his speech the Leader of the Opposition pointed out that willing co-operation between the private banks and the central bank was lacking. Every one will agree that willing co-operation between the central bank and the private banks is of the essence of a strong and worth-while central banking system. But again, what the Leader of the Opposition failed to point out was the reason for this lack of willing co-operation. That, again, is due to the present situation in which the Commonwealth Bank, which is in a position to know all about the business of the private banks, is able to find out the position of the private banks, what they intend to do, what their funds are, and so on, and as an active trading competitor to use that information against them. How can that possibly lead to any willing trust and confidence by the private banks in the central bank? How can it possibly bring about willing co-operation between the private banks and the central bank? That is the weakness of the present system. The

Leader of the Opposition knows that: He stated those points. Those points are well known to writers, economists, and businessmen.

It is that weakness of the present banking system which needs to be remedied, and the remedy has been sought for years. The remedy is being applied in this present legislation by separating the Commonwealth Bank as a central bank from the Trading Bank and the other parts of the governmental banking system. In that way we shall have a Commonwealth Bank at which the finger of scorn cannot be pointed, and about which it cannot be said, either by Government or by Opposition, that it is leaning over backwards in favour of some particular individual. There is no power to discriminate: That is to be removed. The private banks, the Commonwealth Bank and the Commonwealth Savings Bank are to be put on the same basis. Surely that is right. Surely that is as it should be. Surely that will bring about confidence in the banking system. The central bank will be strengthened, as also will the Commonwealth Trading Bank, because there will no longer be any reason for the central bank to discriminate against the Trading Bank in favour of the private banks.

I visualize that the honorable member for Wentworth had this well in mind when he said that the effect of this legislation would be to increase greatly the strength of the governmental banking system. If it is said, as was put by the Leader of the Opposition, that these changes have been engineered by the private banks - well, the private banks will find that they will have plenty of competition and plenty of opposition in the future. But it will be fair competition. It will not be competition in which the private banks can say to the Commonwealth Trading Bank, “ You have certain unfair advantages and because of those unfair advantages we will not willingly co-operate with you “. The competition will be such that the private banks will say, “ This is good, because we are on the same level; we are prepared to cooperate with you because we are able to compete fairly “. The Commonwealth Trading Bank, for its part, as I have pointed out, will be placed in the position where it can say, and say rightly: “ We have been strengthened. We are now in a much better position to compete with these other banks.

We will not be subjected to the unfair discriminations that we have been subjected to in the past “.

Sitting suspended from 12.45 to 2.15 p.m.

Mr JOSKE:

– The central bank does not deal with the public directly nor does it operate in competition with trading banks. It is a bankers’ bank. That is the generally accepted notion of a central bank. The object of a central bank is to implement government policy, control the volume and direction of credit, and maintain the stability of the economy and a sound national currency. I pointed out to honorable members this morning the reasons why the central bank, under the present set-up in Australia, is not operating efficiently, and that these measures are aimed at rectifying that position. The attack upon them by the Opposition is based on a complete failure to realize what the bills aim to bring about. I dealt with that matter this morning, and honorable members opposite who were not present can read what I said in “ Hansard “.

Opposition Members. - Hear, hear!

Mr JOSKE:

– There is no need for honorable members opposite to make ribald remarks. The other points of opposition are based on theories. A theory was advanced by the Royal Commission into the Monetary and Banking Systems many years ago to the effect that it was essential for the central bank and the Commonwealth Trading Bank to operate together because it was thought that the Commonwealth Bank would thereby be assisted in controlling the volume and direction of credit. It is now fully realized, however, that the powers of the central bank are so wide that it needs no assistance whatsoever from the point of view of the control of the volume and direction of credit. The central bank has ample power to do that without any outside assistance. Indeed, the Governor of the Commonwealth Bank who has been called in aid by the Opposition does not put forward in his views on the matter the reasons that were advanced by the royal commission. His reasons expressed in 1954 for maintaining the old set-up - because it is some years ago since the statement which has been quoted was made by him - are reasons partly of sentiment - we have always had sentiment in this country - and partly of minor convenience.

I do not think that sentiment can be allowed to stand in the way when a system is completely outmoded. As far as reasons of minor convenience are concerned, such as, the two banks can operate in the one building and have a common staff and so on, those reasons cannot operate at all in any sense against the substantial reasons for making this change, which I dealt with this morning and which indicate positively and clearly that the central banking system in this country has been proved to be weak and in need of strength. Because of the fundamental weaknesses in the set-up here, it has not the strength that exists in the central banks in other countries.

What is the position in other countries? Let us see how these text-book objections are answered by results in other countries. In the United Kingdom, United States of America, Canada, South Africa and New Zealand the central bank’s functions are entirely separate from any trading functions. Indeed the central banks in those countries do not have any trading functions. So far as the younger countries in the British Commonwealth are concerned, the Bank of England is ensuring that the set-up shall be one of purely central banking without trading functions being intermixed or intertwined. If one turns to the text books - and I say this because there are so many doctrinaire people on the other side of the House who poke their noses into these text books and cannot see any further - there is no established text book on central banking system which upholds the idea that a central bank must have trading functions.

The objection to these measures by the Opposition is based upon the theory that we should have socialization of banking. That theory is apparently put to one side by the Leader of the Opposition (Dr. Evatt). I say “ apparently “ because he says it cannot be done by leglisation; and I emphasize his use of the word “ legislation “. Let it not be forgotten that he did attempt to bring it about by legislation, and failed. In his speech in this House he emphasized that any attempt to bring about socialization would lead to a financial and banking crisis. That would have been the effect in 1947 had he been able to do it by legislation. Although he now says it cannot’ be done by legislation, he does not say what can be done by strangle and squeeze or the methods of the thug.

It is clear that the Opposition is stills determined at all costs to bring about socialization of banking. It knows perfectly well that then, by having complete control of banking and credit in this country, it would be in a position to establish the totalitarian state, which is its objective. What does the honorable member for Melbourne (Mr. Calwell) say? His plainly stated ambition is to establish only one bank in. Australia. What does the honorable member for East Sydney (Mr. Ward) say? He says that socialization of banking still remainsLabour party policy. What does the honorable member for Hindmarsh (Mr. Clyde Cameron) say? He says that given theopportunity the Labour party will socializethe seven private banks.

Opposition Members. - Hear, hear!

Mr JOSKE:

– The real objection of the Labour party to this legislation, therefore, is that it will prevent the Opposition from carrying out its policy of socialization of the private banks. We have heard so often in this debate the expression, “ the people’s bank “. Under a purely totalitarian system, which would result if there were only one bank in this country, there would be a servile state. Instead of supporting what it calls the people’s bank, the Opposition is supporting what is known as the servile state. The trams and trains are run by the people in the sense that that form of transport is controlled by the Government, but in the event of a strike of employees engaged in public transport we do not hear honorable members opposite saying, “ This is an attack on the people’s transport “. They forget that it is the people’s transport system then, because it suits them to support the strike. “ The people’s bank “ is a mere phrase used so easily by the Opposition in the same sense as the phrase, ‘’ The people’s democracy “ is used by the Soviet Union. It is a sheer mockery.

In the Parliamentary Library is a book entitled “ People’s Capitalism “ which is a more appropriate phrase because nowadays, under the system of private enterprise, people are able to invest their money in private enterprise and ensure that part of the profit returns to their pockets and part is ploughed back into their business for the purpose of expansion and making more employment available. That is the type of system that this country is asking for, and under which this country is thriving.

I desire to make two further comments regarding the point of view that it is essential not only that the private banking system be maintained, but also that it be maintained in accordance with conditions of free competition, with a strong central bank and strong private banks. It is only right that people should be able to decide where and with whom they will bank. That is a fundamental liberty of every citizen, a very precious liberty indeed, and with only one bank in existence, as Labour wishes, that liberty would have gone.

My second comment is that if the private banks were to go, many thousands of honorable citizens would be thrown out of work. That is what the Labour party attempted to do in 1947. Many thousands of bank officials who are as entitled to the fine title of workers as are the workers in any other industry, would lose their jobs. Those people opposite who prate so often about their love for the workers are the very people who are seeking to put out of work this magnificent band of men who work in the private banks. It would be an outrageous thing if that were to happen. But under this present form of legislation, not only will that not happen, but, also, the whole banking system of Australia will be greatly strengthened.

Mr WHITLAM:
Werriwa

.- To-day there have been two contributions from Government supporters in favour of the bills we are now discussing. The first was made by the honorable member for Wentworth (Mr. Bury) who, if I may say so, did not speak with his usual sincerity and conviction. We need not be surprised at that, because the honorable gentleman confessed that four years ago, when this Government last tampered with the banking system, he was responsible for providing the arguments which the Government then used. He has said that, as a Treasury officer at that time, he had no conviction in the job that he was doing. I suggest that on this occasion he showed no more conviction in the job he was doing than he had on that previous occasion.

The second contribution came from the honorable member for Balaclava (Mr. Joske) who, very naturally, warmed to the subject of divorcing the central bank from the Commonwealth Trading Bank. Both honorable members put forward an argument in favour of what they called the classic central banking system. There is an argument that can be put forward for isolating the central bank - for putting it in an ivory castle, lt loses much of its force, however, when one recollects that the earliest, and the classic, example of a central bank, the Bank of England, is not, in fact, so isolated. The Bank of England is in contact with the public through the discount market and open market operations. In Australia, where there is virtually neither market, up to now the central bank has kept in contact with the public through the Commonwealth Trading Bank. But apparently honorable members opposite wish the Commonwealth Bank to be in a position of greater isolation from the public than is the Bank of England. If we must be technical about these matters, let us recall that the Bank of England does have private depositors as well as public depositors. In May, 1953, the deposits in the Bank of England, by bankers, were £260,314,855, and in other accounts £70,960,282. I quote these figures from Norman Macrae in “The London Capital Market”.

Mr Hulme:

– You heard what the Prime Minister read out of that book?

Mr WHITLAM:

– Yes, I heard the right honorable gentleman read a statement which was supplied to him, undoubtedly, by the successors in the Treasury of the honorable member for Wentworth. The Prime Minister glossed over that position. He would like the public to be unaware of the fact that nearly a quarter of the depositors in the Bank of England are private depositors.

Mr Bury:

– A negligible percentage.

Mr WHITLAM:

– Seventy million pounds may be negligible to the honorable member. The honorable member for Balaclava cited the example of other Commonwealth countries. He mentioned South Africa. That country, in fact, has the same central banking system as we have. The South African Reserve Bank carries on trading functions just as the Commonwealth Bank has carried on trading functions in active competition, over the last twelve years, with the private banks. The honorable member for Balaclava cited the position, without giving the names, of other

Commonwealth countries that are setting up central bank systems. I believe their systems approximate more closely to the tradition that has obtained in Australia hitherto than it does to the position that the honorable gentleman is now advocating.

The real argument for the present measures is rarely put. It is not put in this House, but it is put outside by the people who support honorable members opposite. An argument can be made out, albeit a weak one, in favour of the separation of banking functions, but the motive of honorable members opposite in this case is the suppression of competition. There is an argument - and it can be a good one in certain cases - for free competition between various organizations in a community, including financial organizations. But in Australia, competition between financial organizations has not been between the seven private banks themselves, but between those banks on the one hand and the Commonwealth Trading Bank on the other hand. The arguments we have heard here are sheer rationalization. The private banks do not want the classic central banking system. They never wanted any central banking system. They have resisted the idea ever since a royal commission in Australia reported in favour of it twenty years ago. They have done their best to belittle the system, and they have done their very successful best to bypass it ever since it was introduced in statutory form in 1945. As I hope to show presently, they have continued their dirty work ever since the legislation was last tampered with in 1953.

The astonishing thing is that honorable members opposite who now acclaim the virtues of the classic central banking system denied them in 1953 when the honorable member for Macarthur (Mr. Jeff Bate) was the only honorable member on the other side to support these virtues. He was allowed to stand in solitary gaucherie in his place on that occasion. Not a single member on the Government side who now supports the idea was prepared to support the honorable member for Macarthur in 1953, and the reason is that the private banks had not at that stage conditioned the public, or raised the inducement sufficiently, to get away with this further weakening of their only true competitor. It is to suppress competition that we are faced with these morbid details of the divorce in these bills - .this petty idea that the staff, the accommodation and everything else connected with the central bank and the trading bank must be separated. That is the real reason, because, however you bring about greater public control over, or responsibility for, such a vital sector of the economy, there is no question that it must follow, as the night the day, that a public competitor in trade will overcome private competition unless the public competitor is restricted and hobbled in ways such as we are now seeing in this legislation, and as we have seen in the last few years in regard to transport undertakings like Trans-Australia Airlines and the Australian Coastal Shipping Commission. Public undertakings must inevitably prevail over their private competitors because their profits go to build up assets, whereas private investors are interested in an activity only for what they can make from it. They are not unselfish enough to devote to the public interest the proportion of their profits which the publicly owned enterprise can, and does, devote from its profits to that objective.

Mr Hamilton:

– So you would nationalize the banks!

Mr WHITLAM:

Mr Fox:

– The honorable member is confusing the rate charged on motor cars and farm implements with the rate charged on refrigerators, washing machines and home appliances.

Mr WHITLAM:

– I thank the honorable member for yet another helpful interjection. From 1st March last year the Industrial Finance Department discontinued the financing of the purchase of passenger vehicles, even if the passenger vehicles were required by the man on the land. The man on the land needs his passenger vehicle to help him carry out all his transactions - with his woolbroker, banker and so on. But he cannot obtain financial assistance to buy a car. If he chooses to buy a utility or a tractor, he cannot obtain assistance from the private trading banks, but can get it from the Industrial Finance Department. Honorable members can well see the attitude of the Commonwealth Bank - the responsible bank - towards hire purchase through its Industrial Financial Department as compared with that of the private trading banks, through their hire-purchase affiliates, if they compare the amounts which have been made available by the two systems, the interest which has been exacted by the two and the facilities which have been made available by the two.

I come, next, to the other form of investment which the private banks have entered into since 1953. Late in 1955 these banks commenced to invest in savings banks. Those savings banks could not carry on business unless they obtained authority from the Treasurer. Shortly before the elections they asked for that authority but, very prudently, the Treasurer did not give it until after the elections. I suppose the Government parties did not suffer, in a financial sense, as a result of that delay. Accordingly, before the Parliament met on 9th February, 1956, authorities were published in the “ Gazette “ for the Bank of New South Wales Savings Bank and the Australia and New Zealand Savings Bank. In June of last year a similar authority appeared for the Commercial Banking Company of Sydney Savings Bank. These authorities provided that not less than 70 per cent, of the amount deposited with the private savings banks should be devoted to certain forms of investment, and up to 30 per cent, to housing on Credit Foncier terms or to building societies finances. That was the great inducement which was held out to the public by the private trading banks. But try as we may, we have been unable to discover how much money they have actually put into housing.

I have been fairly persistent in asking the Treasurer about this matter. On 15th May, 1956, I pointed out to him, in a question, that the Bank of New South Wales Savings Bank had accumulated over £20,000,000 in deposits. It thus had £6,000,000 for housing, but had not yet made any advances for this purpose. The Treasurer said that he would give me a considered reply. He said that he was not in a position to say what proportion of the depositors’ funds is, in fact, being applied to housing loans by the Bank of New South Wales Savings Bank Limited. I gave him a year to think the matter over, and in April of this year he gave me an answer to a question on notice. It contained the information that the private savings banks had accumulated £96,166,000 in deposits. That meant that they could have made available up to £29,000,000 for housing. The amount they had made available was only £11,750,000. I asked the Treasurer a few other questions - on notice, of course, so that he could give a considered reply - but he said that he was unable to give further information. He said there were technical difficulties in tabulating the information, but that methods of doing so were being considered.

On 11th September last, after the Treasurer had had an adequate opportunity, I asked whether those difficulties had been resolved and whether it was possible for honorable members and the general public to have access to statistics from which they could regularly ascertain for themselves whether these private savings banks were abiding by the spirit and the letter of the licences which the Treasurer had granted to them nineteen months before. I asked -

In particular, is it possible for the public, and us to find out what percentage of their deposits has been translated into dwelling houses and municipal works and what portion has been deposited with their parent banks?

The Treasurer replied that the question of publication of suitable statistical information concerning the operations of savings banks is one of the matters which is receiving attention in connexion with the preparation of amending banking legislation. He added that he thought I would find that these proposals would meet objectives of the kind I had in mind. I find that clause 38 of the Banking Bill provides -

A savings bank shall, at intervals of not more than three months, inform the Reserve Bank of its policy in relation to loans and investments including, in particular, its policy in relation to loans for housing purposes.

There is no provision for the public to be told, or for members of Parliament to ascertain this information; and we have been given no figures, even at this stage. This is one of the most contemptible confidence tricks in the sphere of public finance. 1 do not blame the Treasurer for it. The private banks have let him down. They said that they would make up to 30 per cent, of the funds of their savings banks available for housing, but they have done nothing of the sort.

Mr Bury:

– When did they say that?

Mr WHITLAM:

– I cannot rely on newspaper reports, of course, but everyone who wants to do so can recall the housing promises in the weeks before the private savings banks received their licences. I shall give examples of subsequent conduct by the private banks. The Australia and New Zealand Savings Bank has taken over from its private parent body that body’s advances to its officers for housing, with the express purpose of padding and bolstering up the figures of its loans for housing. That is a further contemptible confidence trick, but it is in keeping with the conduct of the private banks over the last few years. Secondly, one has only to recollect - as the Treasurer condemned in a reply to a question by me last April - the fact that they are touting for savings bank business. The New South Wales Savings Bank gets retired officers and officers on leave to go to resorts such as -are located on the north coast of New South Wales where, traditionally, everybody has had a Commonwealth Savings Bank account. They take out a ready typed form and ask people to transfer their accounts from the Commonwealth Savings Bank to private -savings banks. In my suburb the manager of the “ Wales “ spoke to some people who were waiting for a Commonwealth Bank teller and asked them to transfer their business to his savings bank. Again, the private trading banks have been using their clearing houses in the city to get further business. When any private company or public instrumentality pays the salaries of its employees into their Commonwealth Savings Bank accounts, the clearing house informs the nearest private trading bank manager to get in touch with the recipient of the salary cheque and suggest that he transfer his account to the private trading bank.

To give a fourth example of the conduct of these people whose insistence and contributions have brought about this legislation by the Government, there is the position of the national savings groups. The last report of the Commonwealth Bank shows that there were 68,000 members enrolled in such groups with the Commonwealth Savings Bank and their deposits, last financial year, amounted to £7,000,000. In order to have these groups, it is necessary to obtain the co-operation of the employer, who makes the services of his accountant available to deduct from the employees’ salaries the amount to go into the national savings group at the savings bank. Once again, the A.N.Z. Bank - it might apply to the other banks also - has refused in many cases to extend overdrafts to employers unless they discontinue such deductions in favour of the Commonwealth Savings Bank. At the same time, they put on the gentle pressure by saying, “ We are prepared, however, to continue such deductions if your national savings group is transferred to our private savings bank “.

Let me conclude by pointing out that the last banking amendments in 1953 opened the way to abuses by the private banks and weaknesses in our banking system which the present legislation does nothing to correct. The hire purchase investments of the private banks have enabled them to avoid central bank policy and to profiteer in new fields. By contrast, the Commonwealth Bank is now being further restricted in its hirepurchase activities, to the advantage of its competitors and the exploitation of the public. The private savings banks have not carried out the spirit of their charters, because there is now less, not more, money for housing and that at a higher interest rate. The Government is yielding to the blandishments, material as well as rhetorical, of the private banks in this legislation. It is helping people who have never believed in central banking control, who have most reluctantly complied with it and who, by their touting in the savings bank and trading bank fields, and by their unethical practices in these matters, have not deserved the consideration which a pliant government is now giving.

Mr ANTHONY:
RICHMOND, NEW SOUTH WALES · CP; NCP from May 1975

.- In making my initial bow before this House to-day, and before speaking on these banking bills, I should like to express my thanks to honorable members. I want to thank the members of the Government parties and of the Opposition for the help that they have given me during the last month and, particularly, for the cordial and friendly way in which they have received me in this House. I only hope that when the day of my swan song comes the atmosphere will be as warm and friendly as the one that exists to-day.

I should also like to thank the parliamentary officers for the help that they have given me by explaining parliamentary procedure, and the departmental officers for their assistance in connexion with the problems of my constituents. If those who have ill thoughts of public servants could come here and go through the experiences that I have been through in the last month, their opinions would change, because we have excellent administrators in the departments.

We were all elected here on our political views. We go to the people and express our views and, if we are lucky, we are elected. Therefore, no matter what a person’s political views may be, we must respect him for those views. We may disagree with a member’s political views, but that need not prevent us from being his friends and I certainly hope that I shall be friendly with political allies as well as political foes. In every parliament one must offer his own views on which he was elected. But in doing so he should set his target at national development and security rather than personal achievement. For that reason, I have decided to talk on this very momentous banking legislation because I feel that its impact on our national economy will be very far-reaching. As many members have- spoken on these measures, they have left me little to say, but I shall state four salient reasons why I think that this legislation is good’.

First, it aims to achieve a stronger and more efficient central bank. I shall explain that statement later. Secondly, it will bring about fair and even competition between the government banks and the free enterprise banks. Thirdly, it will ensure greater protection for the private banks against possible socialistic nationalization or, in more modern terms, democratic socialist suffocation. Fourthly, the creation of the Development Bank will fill a gap in our present banking system.

I take point No. 1 - the Reserve Bank. For the first time in the history of Australia, we shall have a true central bank. Hitherto, we have had a species of central trading bank, very similar to Dr. Doolittle’s animal called Pushnu-Pullyn. This animal had two heads, one at each end and it did not have a tail. When one head wanted to do one thing it had to pull the other, and if that head wanted to go its way it had to pull back the first one. We are hoping to cut this object in the middle and let each part go in its own direction in order to give more efficient service to the people of Australia. We also hope that we can give each a tail in order to express their appreciation for what we are doing.

For years, the board and Governor of the Commonwealth Bank have been in a very ambiguous position, like PushnuPullyn. On the one hand, they deliberated on central banking policy with eyes turned upwards to face lofty principles of national credit policy. On the other hand, they deliberated on Commonwealth Trading Bank policy, with eyes turned downwards to more lowly principles of how to win friends and influence people to trade with the Commonwealth Bank. It is a very good thing that this anomaly has now ended.

We can now have a sound central banking policy conducted by men who are concerned with nothing else but central banking. Also, we shall have a genuine Commonwealth Trading Bank, which will give fair and honest competition to the private banks. I welcome the new central bank because it will focus greater attention on the supply of national credit and on the problem of inflation. Inflation couldwreck our economy very easily and it does not have to go much further to do it.

Probably, I am unduly concerned about inflation because I come from an electorate where inflation is tending to bring about commercial stagnation. I. represent a butter-producing area and we cannot produce butter and export it overseas at a profit. According to figures supplied by the Dairy Industry Investigation Committee, our internal costs have gone up so high thatit costs 514s. a cwt. to produce butter and, on the English market, we are lucky to get 300s. a cwt. for it. One cannot blame inefficiency of dairymen for this. Figures that I have taken from “ Picks Currency Year Book “ show that the purchasing, power of money in Australia has gone down more than in the other countries most closely allied to us - by 15 per cent, in the United States of America, by 34 per cent, in the United Kingdom, by 33 per cent, in New Zealand and by 52 per cent, in Australia. This shows that great attention must be given to the problem of inflation.

Fortunately for the butter-producer, the Government stabilization programme has bridged the gap between the cost of production and the price obtainable on the overseas market. It has been a very successful scheme which has allowed the gap to be filled, partly from the price paid by the Australian consumer and partly from a government subsidy. We in this country, who are so highly dependent on export income for internal stability and prosperity, cannot afford to see this prosperity and stability whittled away by rapidly increasing costs, or by gradually rising costs. It is a difficult problem at any time to determine, how much credit is enough and how the volume of’ credit should be varied to offset fluctuations in economic activity caused by export prices, droughts, a variation in the volume of our primary products, and by a host of other minor variants.

This bill, however, recognizes that the board controlling the central bank, the governor, and the chief officers of the bank need to devote their full attention and energy to problems such as those of credit management. Upon the skill with which they do the job will depend our ability to maintain a high and stable level of employment and to develop the strength and resources of Australia. Bound up with this matter, Mr. Speaker, is the equally important problem of maintaining the stability of Australia’s currency in international exchange. Many people have become light-hearted about this subject, and are irresponsible enough to suggest that it is of no great moment, and that exchange rates can be varied in times of emergency.

I am no expert on international exchange rates; I am merely a layman, but a superficial reading of the history of currency depreciation in other countries indicates to me that such action is to be dreaded as a snare and a delusion. It is always a temporary expedient, a shot in the arm, as it were, that is followed by a very painful let down and re-adjustment. Furthermore, stability of exchange is essential to international trade. How can we ever expect to negotiate trade agreements with other countries if those countries cannot be sure that we are going to maintain the stability of our currency? In point of fact, international monetary agreements, such as the Bretton Woods Agreement, which we recognize and with which Australia has identified itself, impose upon us both a direct and an indirect obligation to respect the integrity of our currency in international exchange. Therefore, any idea of depreciating our currency is just nonsense. Indeed, it would not be honest, in the light of the agreements into which we have entered.

Any serious mistake made in respect of our internal credit policy could imperil the stability both of our currency and of employment. These matters clearly require the undivided attention of the most competent authorities in this country. I hope that we will have such attention when we have the proposed Reserve Bank Board, which will consist of the Governor of the Reserve Bank, the Deputy Governor, the Secretary of the Treasury and seven other persons, five of whom shall not be bank officers or public servants. It is to be hoped that those five will be chosen from the most competent people in this country in exchange and central banking policy.

Over-supply or under-supply of credit leads to a whole series of evil consequences, ranging from the evils of over-employment to the evils of under-employment. Mistakes in credit policy can lead either to internal cost inflation, or the opposite condition, deflation. In Australia, the chronic danger that has beset us in the post-war years has been internal cost inflation. This has begun to ham-string a large section of our food-producing industries which, to an increasing degree, are finding themselves at a disadvantage in competing on the markets of the world. Their capacity to produce profitably for export is being whittled away, and this is imperilling our total export income, 90 per cent, of which is derived from primary production.

We are already at a stage at which recurrent fluctuations and falls in export prices are depleting our export income, so that our overseas balances, upon which the stability of the exchange rate depends, are falling heavily. For remedy, we are thrown back on the artificial expedient of imposing credit restrictions, which have to be adjusted from time to time as conditions change. In the next twelve months, falls in overseas prices for our major export products, and diminution of the volume of available exports due to the drought that we are now experiencing, may result in something like £100,000,000 being subtracted from our normal export income, causing a heavy drain on our overseas balances. In the face of this, how should credit be adjusted? Should we expand terms of credit and thereby inflate the demand for imports, for which we shall be unable to pay, or should we contract credit and risk unemployment? To these problems, no text-book can give the answer, nor can any ready-reckoner do so. There is no pink pill which will cure pink people of pink eyes all the time.

The only thing we can do is what this Government is in fact doing. It is setting up a special central bank authority to consider finance policy. It proposes to appoint a board, consisting of the most competent and experienced men, to give its judgment on this situation and to strike a sound ^balance in the day-to-day decisions which it makes concerning the way in which -credit policy should be adjusted. There is no more momentous issue than that of credit policy. As I see it, the problems involved require the undivided attention of the Reserve Bank, and also that of those who are responsible for formulating the policy of the bank. The only way in which “this policy can be adjusted is by daytoday decisions. I want to make it clear that nobody can determine a policy that is going to last for a year, because so many factors are involved that it must, of necessity, be varied. That is point No. 1. I come now “to point No. 2.

This bill aims to bring about fair and even competition between the Commonwealth Trading Bank and the private banks. First, the Government proposes to do that -by imposing taxation on the Commonwealth Trading Bank, or the Commonwealth Banking Corporation, as it is to be -called, at the same rate as that imposed on the private trading banks. I do not “think there is anything unfair in that. Secondly, we propose to give uniform treatment in the matter of statutory reserve deposits. We are going to treat the Commonwealth Bank in exactly the same way ;as the private banks are treated. Thirdly, we propose to place a limit on the amount -of capital that the Commonwealth Bank -will have. Some people say that this will weaken the Commonwealth Bank. I inform honorable members that the present capital of the Commonwealth Bank is £5,429,000, to which we propose to add an additional £2,000,000, or an increase of 37 per cent. If that means weakening the “bank. I do not know the meaning of the word “ weakening “. I have heard it said that companies have been over-capitalized and have had to go into liquidation. Per”haps that is what is meant by those who say that the Commonwealth Bank will be weakened, when we are giving it more capital.

Honorable members opposite have stated that it is the policy of the Government to sell out government instrumentalities, and that this legislation represents a step towards the eventual selling out of the Commonwealth Bank. To support their argument, they have referred to the sale of the assets of the Australian Whaling Commission, the Glen Davis shale oil plant, Amalgamated Wireless (Australasia) Limited, Commonwealth Oil Refineries Limited, and the Commonwealth Handling Equipment Pool. Yes, it is government policy to sell instrumentalities that are producing goods which private enterprise can produce, but it is not the policy of the Government to sell instrumentalities that are providing services for the people, such as airlines and radio and television stations. In this connexion, I invite the attention of the House to what has happened in connexion with television. Was it not this Government which introduced national television? Surely we did not do that just to be able to sell government television services!

My third point is that this legislation will ensure greater protection for the private banks against possible, or probable, socialistic nationalization or democratic socialist suffocation. I could continue to discuss this subject, but as I am speaking more or less under privilege, I think that perhaps I should pass on to a discussion of my fourth point, which concerns the Development Bank. Perhaps I shall be able to speak about the other matter when my opponents have a fair chance to reply.

My fourth point concerns the proposed Commonwealth Development Bank, which this Government intends to establish now to fill a gap in our banking system. As the Treasurer (Sir Arthur Fadden) pointed out, our banking system has had an Achilles heel. It has had one great weakness. People with experience, judgment, character, and everything else that they need for success on the land, cannot finance properties because they have no security and cannot get any one to guarantee them. When the Development Bank is established, a person will be able to establish himself, even if he has very little capital, provided that the industry he wishes to establish is an essential industry that will increase our flow of exports, and provided that he can convince the bank that he understands the industry into which he wishes to enter. If he can do those things, the bank will lend him the necessary money. I have seen cane-cutters, farm labourers, council workers, taxi drivers, and a host of other men, who would like to go on the land, but who cannot get the money to do so because they cannot put up security for it. As far as I can see, the only criticism that Opposition members can make of the proposal to establish this new bank is that the Government now intends to take people out of the employee class and put them into the private-ownership class, thereby turning them into small capitalists, a class of people whom I know they do not like.

A further feature of the proposed Commonwealth Development Bank is that it will assist people already established in industries such as farming, of which I am thinking particularly, because it is the one that I know best. Many men already in the farming game cannot get sufficient capital to farm their land in the most efficient way. Many farmers who are keen, and have sound ideas for making their farms more efficient, cannot obtain the money that they require for expenditure on up-to-date machinery, irrigation schemes, fertilizers, pasture improvement, subdivision and a host of other things that are necessary nowadays for efficient production. We live in a modern world that requires the use of a great deal of capital for machinery.

I can see, also, that the new bank will enable young people who wish to establish themselves on properties to obtain the necessary finance. There are many young people in junior farmer organizations, for example, who have all the qualifications required of a good farmer, but who have no chance of getting the necessary capital. The Development Bank will enable them, on the basis of their junior farmer qualifications and experience, to obtain thev money that they need, and to enter into farming activities. Recently, the New South Wales Government conducted an economic survey of low-production farms in my electorate. The results indicated that the reason for a great deal of the inefficient farming there is due to the fact that there are too many old people in the industry. The Development Bank will help to eliminate the inefficiency due to this cause, because it will enable more young people to establish themselves in the industry.

I realize that there are probably many people who will say, “ This idea of lending money without any security is just a harum-scarum idea “. I would remind such people of the money that has been advanced bv this Government, in a similar fashion, under the provisions of the Reestablishment and Employment Act. Under the terms of that act, funds have been advanced to ex-servicemen without any security. Advances for agricultural purposes have been made to 15,980 ex-servicemen, to a total of £11,880,869, of which £7,838,381 has already been repaid. The bad debts that have been incurred amount to only £9,081. Those advances were made over long terms at low interest rates, as we hope will be the case with advances made by the proposed Commonwealth Development Bank. Men have been judged by nothing more than their character, and hardly any of the money advanced has been lost. I hope that the Development Bank will be as successful as that, and in time, somehow or other, it will entice the trading banks into the same field, just as the Commonwealth Savings Bank has enticed them into the savings bank field.

In conclusion, Mr. Speaker, having discussed these points, I should like to say that any one who says that I was nervous in addressing this House for the first time would be guilty of a. gross understatement. I thank honorable members for their courtesy in listening to my remarks in silence and without interjection.

Mr BEAZLEY:
Fremantle

.- I am sure that the House will join with me in congratulating the honorable member for Richmond (Mr. Anthony) on having come through the ordeal of his maiden speech in this place. He said that it would be an understatement to say that he was nervous. I should like to say that he can be congratulated on his ability to keep his nervousness extremely well concealed. Members of this Parliament, regardless of their political faith, remember with a great deal of respect his father, whom - he succeeds as member for Richmond. The honorable member’s father had a very keen sense of justice, and, when he believed that justice had not been done, and that personal liberty had been infringed, we saw exhibited in this House qualities of a true fighting heart. If the son is like the father in these things, whether or not we agree with him, he will make a real contribution to the proceedings in this Parliament.

Any one listening to the remarks of Government supporters would think that there was almost no case for public banking.

Yet the two major bills now before us have enshrined in them the experience that Australia has had of two tremendous failures of the private banking system - the failure of 1890, and that of 1930. However much Government supporters may eulogize private banking, the legislation that they now support contains clauses, to which I shall direct attention in a moment, that are based entirely on the experience of the failures of the private banking system. Surely the case for public banking is that banking should be conducted against the trade cycle. It is a feature of private banking that it moves with the trade cycle, and not against it - that, when there is a slump, and business is bad, the private banks, motivated by the desire to safeguard their shareholders’ funds, tend to become cautious about issuing new credit in the bad situation, and tighten up; and that, when there is a boom, and business is good, they take the view that they can safely make liberal advances. In other words, instead of lifting the trough of the slump, they push it down further by credit contraction; and instead of holding down the top of an unhealthy boom, they aggravate the boom by a liberal advances policy. “ Smith’s Weekly “ once made the humorous statement that a private bank was an institution that offered one an umbrella when the sun was shining, and asked for it back when there was rain. There is a certain amount of truth in that statement, as is indicated by the history of the Australian banking system.

In the 1890’s, there was a widespread collapse of the banking system. Division 2 of Part II. of the Banking Bill 1957, which is entitled “Protection of Depositors “, contains clauses 12 to 16 inclusive, which empower the proposed Reserve Bank of Australia, which, in effect, is at present the Commonwealth Bank of Australia, to take over the business of a private bank, and meet the needs of its customers. When banks collapsed in the 1 890’s, many of their customers were defrauded of large sums of money, which were never repaid, even when the banks later became prosperous. Therefore, let us not talk too much about integrity. The Reserve Bank may take over a private bank and safeguard its depositors’ funds. Later, by direction of the High Court of Australia, the Reserve Bank may be required to return to the former owners the business of the bank that had fallen into difficulties. That is based on the experience of the 1890’s.

In the Commonwealth Banks Bill, clause 11 deals with another principle for which the Australian Labour party has always stood - the final power of the Treasurer to direct the policy of the bank. King O’Malley and the earlier figures of the federal Labour party, out of their experience of the bank collapse of the 1890’s, fought for the establishment of a Commonwealth Bank guaranteed by the resources of the Commonwealth as a safeguard to the whole banking system. Its establishment was opposed by private banking interests. In the 1930’s, there was another tragedy in the whole banking policy of the Commonwealth. The Commonwealth Bank had been passed over by the Government to a board which very largely represented private interests. In the depression crisis which struck the country, the then Treasurer, the late E. G. Theodore, believed that in a situation in which there had been a collapse of purchasing power and in which there was a glut of unsaleable goods, the remedy was not further contraction of credit but an expansion of purchasing power. He was unable to direct the Commonwealth Bank to follow that policy because the Commonwealth Bank, governed by a board of directors with the private business obsession that the correct action was to contract in a depression - they did not realize that this would further aggravate the depression - refused to accept any such directive and his attempt to achieve the same result by his fiduciary notes bill failed because of his lack of a majority in the Senate.

Economists do not question now that the correct policy in a depression is to expand purchasing power; not to go with the slump down in the trough but to lift the bottom of the trough by an expansion of purchasing power. Now we have recognized in this legislation, as we have recognized in all legislation since 1945, that that basic thesis of the Labour party during the depression was correct and that in the last resort the Commonwealth Treasurer must have the power of direction over the Commonwealth Bank.

I wish now to direct attention to the comments of the Treasurer (Sir Arthur Fadden), in his second-reading speech, about the alleged fear that the private banks have of a government hostile to their interests. The Treasurer dealt with several contentions and then said, referring to the private banks -

They do, however, consider the Trading Bank to gain unfair advantages from its connexion with the central bank and they fear the use thai might be made of a trading bank, so linked with the central bank, if a government hostile to their interests came to power.

The private trading banks have no guarantee in this legislation against a government hostile to their interests coming into power. Nothing in this legislation can bind any future parliament. It may suit the political interests of the parties now in power to make these constant suggestions that somehow or other they are able to extend guarantees into the future for the interests that they support, but, in point of fact, any guarantees that the private banks believe that they are being given in this legislation against a future hostile government, are illusory. What guarantees have the private banks? The first is the guarantee of the Constitution, so long as it is interpreted by the High Court and the Privy Council as it is interpreted now. The essence of that interpretation is section 92, which guarantees that trade, commerce and intercourse between the States, whether by land carriage or ocean navigation, shall be absolutely free. The words “ trade, commerce and intercourse “ are, not surprisingly in my view, held to include banking. The private banks have that guarantee.

The second guarantee that they have is the support of public opinion for their continued existence. I have no doubt in my mind that the attempt to nationalize banking was a factor, if not the major factor, in the fall of the Labour government in 1949. In other words, the private banks had the goodwill in the community which enabled them to mobilize an immense amount of political support. That is not permanent, but it is their guarantee. Their guarantee is public esteem. In the last resort, I should think that that is the guarantee of everything, including the continued existence of parliaments. In circumstances where parliaments have lost public esteem, as with the Weimar Republic of Germany, they have been abolished and replaced by something else. In the instance I cite, the parliament was replaced by the Hitler regime. Those are the only guarantees that the banks have in this country - the Constitution and goodwill. Any additional guarantees that may be suggested are purely illusory. It is patently dishonest to suggest to the private banks that anything in this legislation will stop a future government from reversing it. 1 want to make one brief reference to what may seem an unimportant subject, and that is the change of the bank’s name. It is no longer to be the Commonwealth Bank but the Reserve Bank. I think that the point about a bank’s name is that it should express what the bank is. The “ Commonwealth Bank “ is a simple, dignified and accurate term conveying to the mind that it is a bank which is backed by the resources of the Commonwealth - the resources of the Commonwealth Government and the whole resources of the Commonwealth. That is what the Commonwealth Bank, as it exists to-day, is, and that name should not be altered. “ Reserve Bank “, I believe, is a deliberately undignified title which alters the name from an accurate expression to an inaccurate expression.

Every bank tries to dignify itself by conveying to the public that it is what it is not; that is to say, that it is territorial or national. The Bank of New South Wales is not backed by the resources of the State of New South Wales. The Australia and New Zealand Bank Limited is not backed by the resources of Australia and New Zealand. The English Scottish and Australian Bank Limited is not backed by the resources of England, Scotland and Australia. Among the very few banks which have taken an accurate title is the Commercial Banking Company of Sydney Limited. That is a complete and accurate description of what the bank is, without any attempt to dignify itself by appropriating national or territorial titles. The “ Commonwealth Bank “ was an accurate title to be given to the Commonwealth Bank, and the present title conferred upon it is a belittling title.

The changes that are made in this measure have not been demanded by the public. If Government supporters believe that a succeeding government which reversed this legislation would be the subject of great public indignation, they are deluding themselves. There would be no public indignation if the whole of this legislation were reversed. The public certainly opposed the nationalization of banking; the records of the election in 1949 show that. But before that, the parties which are now in government attempted to whip up public indignation over the 1945 Banking Act which enormously strengthened the Commonwealth Bank vis-a-vis the private trading banks, but their attempt failed completely. I believe that in the present state of public opinion, the people believe in the private banks, but they believe much more in having the counter-poise of a powerful but not exclusive Commonwealth Bank. If, for instance, in the future a Labour government - as I hope it will - changes the title from Reserve Bank back to Commonwealth Bank, there will be no public demonstrations in the streets. If the Labour party re-unites the Commonwealth Trading Bank functions to the central bank, there will be no surge of public indignation. If the Commonwealth Bank enters the hirepurchase field and forces down the grossly extortionate interest rates which are charged on hire-purchase transactions, there will be no public indignation. So the complete reversal of all this legislation is unlikely to be of major political importance to the Australian public, just as I do not believe that this legislation will loom very large in the minds of the Australian public, either.

The Government, among its activities, is virtually guaranteeing the hire-purchase finance companies against the competition of any financial authority which is motivated, not by a private interest, but by a public interest. The Industrial Finance Department of the Commonwealth Bank has had wide powers to engage in hirepurchase business, both for producer and consumer goods. Until 1951, it used these powers to finance the purchase of cars - though not other consumer goods - for nonbusiness purposes. In that year, it voluntarily withdrew from this field, but it has retained legal power to re-enter it. The Commonwealth Banks Bill limits the new Development Bank by law to hire-purchase finance “ to acquire goods for use in the course of business “. That is, as the Treasurer pointed out, “ only for the purchase of producers’ equipment “.

This is surely undesirable. The lack of constitutional Commonwealth powers of control over hire-purchase finance has been recognized as a major problem in recent years. Competition by the Development Bank in the rate charged might prove a practical means of indirect control over the finance companies. This provision of the bill gives a legal guarantee against such competition, and the legal guarantee is the most mischievous point about it. lt is one thing for the Commonwealth Bank to be directed not to enter this field but to retain the legal right, because the potential threat of competition is a weapon of discipline, but to give a legal guarantee that it will not enter this field is to abandon deliberately a weapon of discipline. That, I think, is a mistake on the part of the Government.

The Government parties contend that the fusion or the link between the Commonwealth Trading Bank and the central bank is undesirable. They have based their case on the psychology of the private banks. Dr. Coombs has made a case for the opposite point of view by the actual working out of the economy. Dr. Coombs says -

The Commonwealth Bank is in a position to influence the policies of the Commonwealth Savings Bank and the Commonwealth Trading Bank as well as its own specialised departments. These two banks - the Commonwealth Savings Bank in particular - are major sources of funds for two groups of activities which exercise a significant effect on general levels of activity and employment, i.e. semi-government and local government works expenditure and housing. While, over a period of years, the funds available for these purposes are determined by the flow of new deposits and the claims of alternative investments, there is room for modest variation from year to year in the light of the availability of funds elsewhere and the state of activity in the constructional industries. Thus, in 1952-53, the finance for housing from the Commonwealth Savings Bank, with some assistance from the Commonwealth Trading Bank, was the greatest on record. Similarly, in these years maximum support both directly and by underwriting was given to semi- and local government loans. In these ways the constructional industries were sustained at a time when other sources of funds had largely dried up and so the stability of the economy was promoted.

Since December 1953, as the economy moved again towards full employment and funds became more readily available, it has been possible to reduce the funds allocated to these purposes without any slackening in the total activity in these industries.

It is important to realise that, by the direct influence which the Commonwealth Bank exercises over the family of banks of which it is the head, it is able, within limits imposed by their commercial - (and, in the case of the Commonwealth Trading Bank, competitive) character, to influence their policy so that they contribute directly to the achievement of the objectives of central bank policy - (a) the stability of the currency; (b) the maintenance of full employment.

There can be little doubt that this direct Jink gives to the Commonwealth Bank a source of strength which can be of particular value in times when the economy is threatened with declining activity and employment.

That direct link which the Governor of the Commonwealth Bank says can be of particular value in a slump is the direct link that this legislation destroys.

The Commonwealth Trading Bank is to be subject to income tax. The Government makes a case for the fairness of this by contending that the Commonwealth Trading Bank is being placed on the same footing as the private banks. That case is a specious one. The Commonwealth Trading Bank already pays half of its profits to the Treasury, which is more than the private banks pay in taxation. The private banks, it is true, must pay dividends to their shareholders, but they can obtain new issues of capital by giving new share issues or by approaching the loan market. The Commonwealth Trading Bank depends entirely on undistributed profits for its capital. If the Commonwealth Trading Bank pays half of its profits into the Treasury to reduce the National Debt Sinking Fund, and is then taxed on what remains, the amount of capital available to the Commonwealth Bank for reinvestment will be reduced. Under this legislation the Commonwealth Bank is not put on an equal, competitive footing with the private banks. It is put on an inferior footing.

The Commonwealth Savings Bank investments under this legislation represent a problem that I find difficult to analyse. Professor Arndt has commented on the Commonwealth Savings Bank investments and the change of control introduced by this legislation. He says -

The control which the central bank has in the past been able to exercise over the investment (especially in Government securities) of the very large funds of the Commonwealth Savings Bank has been an important aid to central banking; it has been the main channel through which the central bank has conducted open market operations. The new legislation recognizes this fact in two ways: (a) The Secretary to the Treasury will be ex officio a member of the Executive Committee of the Commonwealth Savings Bank; (b) all savings banks will be required to inform the Reserve Bank of their policies in relation to loans and investments. But there is no provision for any direct control of Commonwealth Savings Bank investments by the central bank.

It would appear that the general effect of the new provisions will be to transfer major influence on Commonwealth Savings Bank investments from the central bank to the Treasury. I have some doubt whether this is a good thing. The Treasury’s bias is liable to be to subordinate Commonwealth Savings Bank operations to the immediate interests of the bond market and loan programme, which may well be in conflict with the requirements of overall monetary policy.

I submit that Dr. Coombs and Professor Arndt have made points, which the Government should have been answering when it made its case for separation of the central banking and other banking functions of the Commonwealth Bank.

I believe one factor in this proposed legislation constitutes deceit of the private banks. I do not know whether they are deceived by it or whether the Government has deceived itself; but honorable members will remember that the Treasurer was at pains to get rid of this awful factor of knowledge which gives the Commonwealth Trading Bank an advantage over the private trading banks. He said, “ If there is a link with the central bank the private banks would have to report their affairs to that bank. The central bank, through its connexion with the Commonwealth Trading Bank, would then acquaint the Commonwealth Trading Bank of the affairs of its competitors. This knowledge is undesirable and unfair, so somehow or other, by a magic process, we have to destroy knowledge passing from the central bank to the Commonwealth Trading Bank “, Although this proposed legislation is supposed to do that, it does not, because there is a common factor in both bank boards, namely, the Secretary to the Treasury. I do not know how that officer, who receives his information when he is on the Reserve Bank Board as to the affairs of the private banks, is to put himself into the position of “ unknowing” that information when he takes his place on the other bank board. The Government has never explained how that position is going to be achieved.

Tt is inevitable that the knowledge in his mind will be carried to the other bank, that, as Secretary to the Treasury, he will be a respected figure in the Commonwealth Banking Corporation, and that the tenor of his advice will undoubtedly be influenced by the knowledge he has gained on the board of the Reserve Bank. If the private banks are being led up the garden path by the suggestion that no knowledge will pass between the two banks, I think it is rather a pity that they are being deceived. The position cannot be otherwise. On the other hand, if the Secretary to the Treasury is deliberately left ignorant of the affairs of the private banks - he being the main adviser to the Treasurer - the Government also would be ignorant of the position; and it cannot be. If the Secretary to the Treasury is not to be left ignorant of the affairs of the private banks, the Government is misleading those institutions by saying that this divorce of knowledge will take place. That is another respect in which this proposed legislation, to my mind, does not achieve the objective claimed for it.

Mr HULME:
Petrie

.- I join with the honorable member for Fremantle (Mr. Beazley) in extending my congratulations, and, I believe, the congratulations of all honorable members on this side of the House, to the honorable member for Richmond (Mr. Anthony) on the occasion of his maiden speech. In prospect, the ordeal of a maiden speech is rather frightening, but the honorable member for Richmond this afternoon did not give any indication of the nervousness which he mentioned towards the end of his speech. We look forward to the many contributions of great significance that he will make to debates in this Parliament in the future. He bears an honoured name, and I believe that he has commenced service in this House in the traditions of that name which is revered by all honorable members who knew his father when he was a member and a Minister in this Parliament.

I found it impossible to follow the speech delivered by the honorable member for Fremantle and to understand the lines upon which he endeavoured to address this House. When he goes back to the 1893’s and talks in terms of the depressions of those days and the failure of some of the banks, he refers to times which neither he nor any other honorable member actually knew. I think all honorable members appreciate the fact that the experiences of the 1893’s and the depression years of the 1920’s and 1930’s form one of the main reasons for the development of a central bank in Australia, and the desire of this Government to make that central bank as strong as possible follows the experiences which have come down through history.

The honorable member for Fremantle mentioned the income tax which is to be levied on the Commonwealth Trading Bank, and suggested that it was not reasonable for this income tax to be charged because it would put the Commonwealth Trading Bank at a disadvantage in relation to the private trading banks. The main tenor of his argument appeared to be that following the income tax charge and the distribution of profits to the Government, the point would be reached where the trading banks could easily obtain more capital from their shareholders whereas the Commonwealth Trading Bank would not be in a position to increase its capital. As a private trading bank can appeal to its shareholders for additional capital, so this Government will be fully cognizant of the requirements of the Commonwealth Trading Bank in relation to capital; and it is within the province of the Parliament from time to time to make such additions to the capital of the bank as may be considered necessary.

The honorable member then referred to the deceit of the private trading banks by the Government because the Secretary to the Treasury is common to both the Reserve Bank Board and the Commonwealth Trading Bank Board. I do not understand the honorable member’s real objection because, as he knows, each board comprises ten members, and I think it would be completely wrong if the Treasury were not in possession of the facts concerning both the Reserve Bank and the Trading Bank. I would not for one moment suggest that the present Secretary to the Treasury, or those who may hold office in the future, would be dishonorable in discharging such a responsibility.

As we are now approaching the closing stages of this debate, one is entitled to look back and endeavour to analyse the proposals and contributions made by the Opposition as compared with the arguments advanced by the Government in respect of this proposed legislation. Opposition members know that there is very little substance in the arguments they have advanced. So, they have indulged in catchcries in the hope that some people, not understanding - and I believe there are many people in the community who will not clearly understand the contents of these bills - will accept the catch-cries and flock to the support of the Labour party. We have heard such expressions as, “ The Government is selling out the Commonwealth Bank “, “ The Government is out to destroy the Commonwealth Bank “, “ The Government wants to smash the Commonwealth Bank “, “ The Government wants to clip the wings of this institution “, “ Hands off the Commonwealth Bank “, “ Hands off the people’s bank “, and “ The Government is set on weakening the bank prior to its annihilation “. I regard that as completely melancholy nonsense and believe the people of Australia will treat those catch-cries in the same way as they treated the Labour party’s nationalization proposals in the past.

The important factor about the Opposition’s attitude in this debate is that before it saw these measures or received any explanation as to what they contained, it made up its mind to oppose them from beginning to end. Without having seen the bills they decided that that would be their approach to them. Following that decision they have set out to find abstract reasons for their opposition to this legislation and, mainly, those abstract reasons have been contained in quotations from the writing of people like Professor Arndt. I remind the House that from the moment the honorable member for Barker (Mr. Forbes) produced expressions of opinion by Professor Arndt which were the complete opposite of those of his opinions quoted by the Leader of the Opposition (Dr. Evatt), the Opposition completely, ignored Professor Arndt, until a few minutes ago when the honorable member for Fremantle (Mr. Beazley) mentioned him.

Honorable members opposite have quoted, ad lib, statements made by Mr. Chifley. I suggest that it would be equally possible for members on this side of the House to quote the statements of many people in support of the contention that the central bank and the trading bank should be separated. I believe that if we are to depend on quotations in order to make our judgment on these measures we shall be adopting a very impractical approach to the legislation. I say quite deliberately that this is not negative legislation, as the Labour party suggests. It is very positive legislation, and I think it deals with the modern concept of what, in Australia, is essential - that is, a central bank and, side by side with it, a banking corporation controlling the Commonwealth Trading Bank, the Commonwealth Savings Bank and, as the third part of the trio, the Development Bank.

The Labour party has asked on many occasions what is the reason for this legislation. I do not intend to traverse all the reasons which have been given by members on this side of the House. I think that we had to-day from the honorable member for Wentworth (Mr. Bury) and the honorable member for Balaclava (Mr. Joske), some of the very excellent reasons for this legislation. But I want to go just a little further, because I think that there are one or two special reasons. The people who sit opposite to us in this chamber are part of the reason for this legislation. Of course, I include with honorable members opposite all those people in the community who espouse the socialistic doctrine and I do not exclude in any circumstances the revered ex-Prime Minister, Mr. Chifley, in this regard, for it was he who initiated the idea that Labour believes in and endeavoured to put into practice - the nationalization of the private banks.

I think everybody knows the history of the legislation which was brought in by the Labour government in 1947 in an attempt to nationalize the trading banks. The right honorable member for Barton now endeavours to brush aside the idea of nationalization on the ground that the Labour government’s legislation was invalidated by the Privy Council. But that is only one side of the story. There is another side to it, and that is the judgment of the people themselves. I want to take members of the House back to a recollection of mine - something that most of them will know little, or nothing about. Wednesday, 11th August, 1948, was People’s Day at the Brisbane Exhibition. On that day the announcements about ring events at the exhibition were interrupted in order to enable the announcer to inform the spectators that the High Court had declared invalid certain vital sections of Labour’s banking legislation, and the people at the exhibition rose to a man to shout acclaim for the decision of the High Court. They cheered that decision to the echo, and thereby expressed their opposition to what the Labour party had attempted to do. I want to say that that reaction carried through, as the honorable member for Fremantle has admitted, to the 1949 general election. It went even further; it carried through to the1951 general election which followed the double dissolution that resulted from the Labour-controlled Senate’s failure to pass this Government’s banking legislation at that time. No government has ever had a stronger mandate from the people of Australia for legislation than this Government has for this legislation.

My position is quite clear in relation to this matter, and, lest honorable members opposite suggest that I said something in 1953 and am saying something entirely different in 1957, I shall quote one or two brief extracts, from volume 221 of “ Hansard “, of what I said in the debate on the banking legislation of 1953. I said -

The central bank and the Trading Bank should each function under a separate board and a separate manager, and the policy of each section should be determined by its board, and each board should be independent of the other.

I hope the day will come when we shall have an opportunity to rectify that omission.

The day has come, and I am very gratified to be able to congratulate the Government and the Treasurer (Sir Arthur Fadden) on the legislation before us. I also went on to speak about the discriminatory power which was included in the legislation of 1953, and I made the following comment: -

A socialist Treasurer probably would not make any call up on the trading section of the Commonwealth Bank, but would demand from the private bank the full amount of its liability.

That is one reason for this legislation - the fear of what would be done by Labour if it were in office and, therefore, in control of the Commonwealth Bank. Until the 1953 legislation no Commonwealth Trading Bank money had been called into special account, and the position in 1951 was that, although nothing had been called into the special deposits account from the Common’ wealth Trading Bank, 43 per cent. of the deposits of the other trading banks had been so called in. At the same time the ratio of advances to deposits was 57 per cent. for the Commonwealth Trading Bank and only 42 per cent. for the other trading banks. Obviously, under the 1947 legislation the trading banks were finding themselves under a crippling disability because of the large amounts they were required to put into special account, as against the

Commonwealth Trading Bank, which did not have to deposit such amounts. Since 1953 there has been no discrimination, and I believe that under this Government there would not be discrimination in favour of the Commonwealth Trading Bank. However, I am pleased to see that the bill removes the discriminatory provisions. It also makes another very important change in that it replaces the special accounts provision with the reserve deposits system. I want to read to the House the official explanation of how the amounts in relation to special accounts are arrived at. It reads -

the balance in Special Account as at the end of the previous September . . .
plus the uncalled liability as at the end of the previous September … or 10% of deposits in August of the previous Special Account year . . ., whichever is the less . . .
plus (or minus) 75% of the increase (or decrease) in deposits from August in the previous Special Account year tothe month prior to month in respect of which the calculation is made.

One of my colleagues interjects, “ Clear as mud “, and that is the position. This legislation simplifies the whole of this reserve deposits process. It provides for the depositing of a simple percentage based on total deposits, as against the previous system, the official explanation of which cannot be understood by any one who hears it read. The right honorable member for Barton (Dr. Evatt) has raised only one objection in relation to this question of reserve deposits. It relates to the provision for 45 days’ notice. The Prime Minister (Mr. Menzies) dealt with this matter to some extent when he spoke last Tuesday evening, but I want to make one additional point. There is no trading bank which, when told that it will be required to pay an additional amount - and let us deal with the amounts in excess of the first 25 per cent. - into the reserve deposits exceeding that 25 per cent. after the expiration of 45 days, will not immediately commence to take action to have such funds available at the end of that period. Let me give the House some figures regarding the distribution of deposits of the various trading banks, including the Commonwealth Trading Bank. I shall give the figures for the month of August, 1957. The proportion of deposits in special accounts was 22.2 per cent.; in cash it was 4.6 per cent., in treasury-bills 1.5 per cent., in Commonwealth and State Government securities 13.2 per cent., and in advances 56.8 per cent.

Mr Thompson:

– Did those figures represent an average for all of them?

Mr HULME:

– They were taken from the monthly business statistics issued by the Commonwealth Statistician’s office. They represent a total of all the trading banks, including the Commonwealth Trading Bank. Where will those banks get the 5 per cent. or 10 per cent. additional amount to be called up? There is not sufficient cash to meet a call-up. There is a large enough amount in Commonwealth loans, but since the proportion of 13.2 per cent. under that heading represents about £200,000,000, an endeavour by the banks to sell those securities at short notice will cause a substantial drop in the market value of Commonwealth securities. Therefore I suggest that the only way in which the banks could find the additional money called up would be by reducing overdrafts outstanding.

Mr Cairns:

– It need not be transferred in cash.

Mr HULME:

– The honorable member for Yarra says that it need not be in cash, but it may be in cash, and the point is that if the banks have to provide the cash the position will be as I have described it. The figures I have given indicate clearly that 45 days is not an unreasonable amount of notice for such a call-up.

I have previously advocated that our banking legislation should contain greater safeguards for the Australian people against attempts by the Labour party to implement its stated policy. The legislation before us gratifies my wish. I now ask the question: Is there any substance in Labour’s catch-cries concerning this legislation? Honorable members opposite have said that we are attempting to destroy the Commonwealth Bank. That allegation, perhaps, summarizes their objections to the legislation. They have not produced any evidence to support this claim. They have not studied the savings bank statictics. Let me cite some figures for honorable members opposite, so that they may realize how the position has developed since this Government came to office. In 1950 depositors’ balances in the Commonwealth

Savings Bank were £480,000,000. They have now grown to £721,000,000. Active accounts in 1950 numbered 4,100,000, and by 1957 they had increased to 4,700,000. In 1950 there were 4.642 offices, branches and agencies of the bank, and by 1957 this figure had increased to 6,207. Having those figures in mind, how can the Labour party say that we are endeavouring to destroy the Commonwealth Bank?

Let us now look at the statistics for the Commonwealth Trading Bank, which I have obtained from the statistical journal that I mentioned earlier. In 1950-51 deposits in the bank, according to the average weekly figures, were £109,000,000, and in 1956-57 the figure was £185,000,000. This shows an increase of 70 per cent. In August last the average weekly figures relating to deposits had increased by a further £10,000,000 to £195,000,000. The average weekly figures showed advances at £62,000,000 in 1950-51, and £106,000,000 in 1956-57, representing an increase of 71 per cent. I suggest, therefore, that the claims of the Labour party are ridiculous, particularly when we have in mind the fact that advances by private trading banks increased in the relevant period by only 60 per cent.

It is clear that by means of this legislation the Government is strengthening and not weakening the Commonwealth Bank structure. There is no substance in the assertions of the Labour party. If we need further evidence to this effect, we have only to consider the establishment of the Development Bank and its functions, as set out in clause 72 of the Commonwealth Banks Bill. This bank will, I suggest, fill a long-felt want in the community. Its functions are set out in the bill as follows: -

to provide finance for persons -
1. for the purposes of primary production; or
2. for the establishment or development of industrial undertakings, particularly small undertakings, in cases where, in the opinion of the Development Bank, the provision of the finance is desirable and the finance would not otherwise be available on reasonable and suitable terras and conditions; and
to provide advice and assistance with a view to promoting the efficient organization and conduct of primary production or of industrial undertakings.

I suggest that when one compares what has been said by honorable members on this side of the House, and particularly by the Treasurer, with what has been said by Opposition members, one must unhesitatingly conclude that the Government is fully justified in bringing down this legislation. While I agree with the honorable member for Fremantle (Mr. Beazley) that there can be no guarantee in the legislation against change by another government, no one has been hoodwinked with regard to that aspect. The banks certainly have not been. I suggest to the honorable member that if the Labour party is returned to office at some distant future time and endeavours to introduce any suggestion of nationalizing the banking system, it will experience exactly the same reaction as when it tried to do so in 1947 and 1948. I remind the honorable member that while a Labour government can, if it has sufficient strength in both Houses of the Parliament, repeal this legislation and introduce contrary measures, it will carefully consider all aspects of the matter before it does so, because it will have in mind what happened when a Labour government made, an attempt towards nationalization in 1947.

Mr L R JOHNSON:
HUGHES, NEW SOUTH WALES · ALP

.- At the outset 1 should like to convey my congratulations to the honorable member for Richmond (Mr. Anthony) on the occasion of his maiden speech. It is significant that the honorable member is a comparatively young man, and I have no doubt that he, like myself, was anxious to participate in this debate, because it is clear that matters under discussion now will be the subject of political controversy in this Parliament for many years to come. As the youngest member of the Opposition I would like to place on record on this historic occasion my own views with regard to this historic measure. I feel sure that these thoughts have been in the mind also of the honorable member for Richmond. It is not so long ago that I made my own maiden speech, and I am well able to appreciate the trepidation of the honorable member. I realize that he must have felt a great sense of honour and responsibility, which he has discharged in an impressive way.

The honorable member for Petrie (Mr. Hulme), on the other hand, has failed to impress the House to anything like the same extent. It is well known that maiden speeches are always heard in silence, but most honorable members will avail themselves of the first opportunity to even the score. I intend to try to do so in replying to the honorable member for Petrie. The honorable member for Petrie made his maiden speech a long time ago. He is now an “ old maid “. Perhaps, he could be more properly described as the “ honorable member for humour “, but that might be regarded as a misrepresentation. He suggested that the Opposition has failed to produce clear evidence of the Government’s intention to destroy the Commonwealth Bank by this proposed legislation. Of course, it is difficult to produce such evidence because the body is not yet available. It is clear, however, that it is being vigorously assaulted. It is being tied down, and in the not distant future its strangulation will be completed. It is important to make the fact clear that the Australian Labour party’s attitude to this proposed legislation has not just been casually or suddenly acquired; it has a well-established historical background.

It is pitiful, at times, to hear honorable members on the Government side eulogize the names of great Labour leaders now departed. It is a notorious fact, however, that those honorable members always fail to acclaim the virtues of Labour leaders while they are alive to appreciate such praise. During the course of this debate we have heard many references to the late Ben Chifley and also the late John Curtin. I want to refresh the minds of honorable members about the fact that the late Ben Chifley had very decided views on this matter, and I want also to convey a clear understanding that Labour’s policy has not changed since his time. In respect of the Royal Commission on Monetary and Banking Systems, which covered the period from 1935 to 1936, the late Ben Chifley, as is well known, dissented from the majority in his report. In his dissent, reservation and addenda, he wrote -

Banking differs from any other form of business, because any action - good or bad - by a banking system affects almost every phase of national life. A banking policy should have one aim - service for the general good of the community. The making of profit is not necessary to such a policy. In my opinion the best service to the community can be given only by a banking system from which the profit motive is absent, and, thus, in practice, only by a system entirely under national control.

The Opposition refuses to be stampeded by the fact that Government members consider they are scoring a victory by continuously contending that the Opposition takes the view that banking should be under national control. Of course, that is the attitude of the Australian Labour party to-day, as it was in the past and will be in the future. I want to concern myself, for the moment, with the remarks of the Treasurer (Sir Arthur Fadden), which he made in his second-reading speech on 24th October last. He said -

There is one main reason why the Government has decided to separate the central bank from the rest of the Commonwealth Bank group and it is entirely for a practical reason. Experience has shown that there cannot be ; full harmony within the Australian banking system nor that close co-operation which ought to subsist between the central bank and the trading banks unless and until separation is effected.

The Treasurer’s main reason is the alleged need for harmony. He goes on to propose the price of harmony and reminds me of the elimination of disharmony between a cat and a mouse. When the cat has consumed the mouse the trouble is eliminated. That has been the attitude of the Treasurer in presenting these measures. It may be nauseating to watch the cat consume the mouse, but from the cat’s point of view the temporary discomfort is more than off-set by the long-term benefits it gains. The nuisance is consumed. The Treasurer’s proposals are that the alleged disharmony in the present banking system should be eliminated by the insidious, systematic destruction of the measure of economic control which is exercised in Australia to-day by the people’s bank.

Where is this alleged disharmony? The central bank has not complained of the existing arrangement nor has it asked that its functions be separated from the other functions of the Commonwealth Bank. We of the Labour party do not complain. It is noteworthy that Mr. Chifley’s attitude was most decided on this matter also. He said -

In my opinion the objectives of a monetary and banking system for Australia, as outlined in the report, can only be achieved with the Commonwealth Bank functioning in the following way. -

as a central bank controlling the volume of credit and currency.

The central bank to have a trading bank department through which this volume is distributed direct to industry.

The savings bank department of the Bank. to continue as an adjunct to its central bank activities.

There should be a mortgage bank department for the provision of fixed and long-term lending.

There should be an industrial bank department to assist in providing capital: for developing industry.

In isolating the central bank, the Government is setting the stage for the ultimatedestruction of the remaining units of the Commonwealth Bank. It is important torealize that the Government is intent upon setting aside functions which cannot by any stretch of the imagination be considered asbeing in the domain of private enterprise. If the Government is successful in divesting the Commonwealth Bank of such functions as currency control and the actual provision of currency, the bank as it will remain will be similar in most respects to an ordinary trading bank and banking institution. Having done that, it will then be possible for the Government to facilitate the subtle intrusion of trading bank subscribed capital into the structure of the Commonwealth Bank. By that means the Commonwealth Bank can ultimately be completely annihilated.

It is perfectly clear that the Government cannot convince any one that it wants to retain a bank owned by the people when it has shown its great enthusiasm for the destruction of so many other great instrumentalities of the people. The Government’s policy is decentralization, and that policy has been invoked many times. The instrumentalities which have been subject to this denationalization policy are many and varied, and they have been referred to during this debate. They were referred to by the honorable member for Richmond in his maiden speech. I believe they cannot be mentioned too often. If the people of this country knew the sorry stories of this Government’s sell-outs to private enterprise they would show their indignation by sweeping the Liberal-Australian Country party lackeys of big business from the treasury bench. I refer to the sale of its interests in Commonwealth Oil Refineries Limited, Amalgamated Wireless (Australasia) Limited, its whaling station at Carnarvon, the Commonwealth Handling Equipment Pool, which was one of the most recent instrumentalities to be sold, and the proposed sale of the Newstan and Newcom collieries, which are jointly owned by the Joint Coal Board and the New South Wales Government. Those are some of the instrumentalities which have fallen prey to this Government’s policy of denationalization. Of course, there are many others. It is becoming evident that the functions of the Postal Department are being dissipated, and we will see this trend developed in the not far distant future. Then there is the Commonwealth shipping line. Surely it is possible to justify the retention of a strong, virile Commonwealth shipping line. But, as every honorable member knows, this line has been made subject to the domination of a commission which is principally concerned with sacrificing the people’s line to serve private shipping concerns.

There is no reason to believe that the Government has any separate and distinctive banking policy. Many other examples could be produced to demonstrate conclusively that this Government does not believe in the people owning anything. I offer the prediction that, unless a change of government is effected in the near future, the principal remaining instrumentalities - Trans-Australia Airlines, the Commonwealth Bank and the Postmaster-General’s Department - will be similarly destroyed. So far as the Commonwealth Bank is concerned, the first step is to isolate the central bank functions. As I have mentioned, when these have been separated there will be no justification for interference. The Treasurer gave his reasons for separating the central bank from the activities of the Commonwealth Bank. Having given my reasons, I completely deny the authenticity of his. This is what the Treasurer put forward in his second-reading speech on the Reserve Bank Bill -

Since there will no doubt be a great deal said about the attitude of the private banks, I think I should state explicitly the point of view they have put to the Government. It is this -

they recognize the need for a strong central bank and they say that, if it functions as a true central bank, they are prepared to accept its leadership;

They do not object to the competition of the Commonwealth Trading Bank as long as it is fair competition;

they do, however, consider the Trading Bank to gain unfair advantages from its connexion with the central bank and they fear the use that might be made of a trading bank, so linked with the central bank, if a government hostile to their interests came to power.

It is important that those three principal arguments which have been put forward by the Treasurer on behalf of the trading banks should be carefully examined. If they cannot stand examination, the case for separation falls with a clatter to the ground. First, the private banks say that they recognize the need for a central bank, and if it suits their scheme of things they will be prepared to accept its leadership. On this side of the House we have an entirely different stand-point. The acceptance of the central bank by the private banks is very gratifying but, with all respect, we on this side of the House claim that if the elected representatives of the people consider that a central bank should exist and function in a particular way its leadership should be required to be recognized. The trading banks say that they are prepared to accept the leadership of the central bank, but have they concealed it in time of economic crisis? On occasions when leadership has been desperately required, when there have been inflationary and deflationary trends and the central bank has spoken out, has there been enthusiastic co-operation on the part of the trading banks?

The year 1954 was a good example. On that occasion, a stimulated demand for advances was evidenced, and it was obviously an occasion for level-headed bank administration. Although, on a less buoyant occasion, the trading banks had entered into an agreement with the central bank that liquid assets and government securities should not fall below 25 per cent. of total deposits, this agreement was repudiated by all the trading banks except two. The consequences, of course, have never and can never be properly calculated, but there is every likelihood that they adversely affected the welfare of business firms and of many Australian individuals.

The important central bank requirement that liquid assets and government securities should maintain a 25 per cent. ratio to deposits was completely abandoned. The L.G.S. ratio, as this principle is known in banking jargon, fell as low as 6.4 per cent. in one case, while only the Commonwealth Bank and the Commercial Banking Company of Sydney Limited fulfilled the 25 per cent. requirement. The lure of easy money by quick turn-over of assets, made possible by the stimulated demand for loans, was too much for the trading banks. They succumbed to the temptation that they were offered. The Treasurer said that the trading banks recognize the need for a strong central bank and that they will accept its leadership. But in time of crisis, when inflation rears its ugly head, or deflation is the order of the day and the people’s assets are threatened, the private banks safeguard their own welfare and disregard the common good.

The second point made on behalf of the trading banks by the Treasurer was this -

They do not object to the competition of the Commonwealth Trading Bank as long as it is fair competition;

The Treasurer’s speech to which I refer was delivered on 24th October, and it is now 21st November. Almost a month has passed during which many speakers have participated in this debate. I think it is fair to say that not one speaker from either the Liberal-Australian Country party side of the House or the Australian Labour party side has made any suggestion that the Commonwealth Trading Bank has been anything but a fair and reputable competitor.

Has the Commonwealth Trading Bank any advantage over -its competitors? The view has been widely held by many irresponsible people that the Commonwealth Trading Bank’s success is due to the fact that it is not required to pay taxation on its profits. We have heard that argument peddled on many occasions. While it is true that the bank has no taxation obligations, its other commitments are heavy and may exceed, relatively, the liability of the trading banks. The fact is, of course, that the Commonwealth Bank Act of 1953 provided that 50 per cent, of the Commonwealth Trading Bank’s profit should be directed to the bank’s reserve while the remaining 50 per cent, should be deposited with the Commonwealth Treasury for Commonwealth purposes. The Treasury’s share of the profits greatly exceed, on a relative basis, the percentage of profits paid in taxation by the private trading banks. It is clear that there is no advantage to the Commonwealth Bank from the nonpayment .of taxation.

The other matter to which I want to refer is access to the central bank funds. Another baseless view which has been widely circulated is that the Commonwealth Trading Bank has access to funds deposited in special accounts by the private trading banks. I do not see why that should not be the case, but here is Mr. Chifley’s view on this very important matter -

It has been mentioned, as an objection to the extension of the trading bank activities of the Commonwealth Bank, that the funds deposited with that bank by the trading banks may be used to compete with them. 1 think it would be unfair to make such a use of these funds, and also that it would be unnecessary. These funds should, and easily could, be separated from the funds of the trading bank section of the Commonwealth Bank.

That statement by Mr. Chifley is to be found in the report of the royal commission of 1935-36. One wonders whether it is part of the insistent and insidious plan of the private banks to initiate these erroneous allegations with a view to discrediting the Commonwealth Bank.

Of course, this contention is wholly without foundation. I believe it is becoming increasingly well known that the Commonwealth Bank is subject to the same special accounts provision as any other bank. In any case, if there is any need for the central bank to subsidize the Commonwealth Trading Bank it could, as the manufacturer or creator of the country’s money supply, achieve this end without recourse to special accounts held by the central bank. Since there are no genuine factors to show that the Commonwealth Bank is anything but a fair competitor, I have taken several points which are generally used to advance this argument and I feel that each has been successfully countered.

I come to the third point made by the trading banks, a matter that was referred to by the Treasurer in his second-reading speech when he said -

They do, however, consider the Trading Bank to gain unfair advantages from its connexion with the central bank . . .

I have listened very intently to the debate for some substantiation of this point of view, but none has been forthcoming. This is one of the principal arguments in favour of the separation of the central bank from the other Commonwealth Bank functions, and it deserves careful consideration.

Is there, in fact, any substance for the loose contention being circulated, that the Governor of the bank and the bank board, by virtue of the privileged position they hold in the central banking sphere, gain some advantage for the Commonwealth Trading Bank? If the answer to this question is in the affirmative, the problem surely will not be solved by separation of the functions of the bank, since it always will be possible, even under the new banking proposals, for the Treasury to pursue this advantage. After all, the new Reserve Bank will be answerable to the Treasury, as the central bank is at the present time, and as the Commonwealth Trading Bank has been, and will be in the future. In other words, the Treasury is the common denominator of the central bank and the Trading Bank while they are in association, just as it will be the common denominator of the proposed Reserve Bank and the Commonwealth Banking Corporation, in .which the Trading Bank will be incorporated. If a problem existed, in that a knowledge of central banking had assisted the Commonwealth Trading Bank in the past, then the problem will persist to the same degree under the new arrangement, despite the separation of the central bank from the other banking functions. But in any case, there is nothing to show that this third point has any foundation.

The views of Professor Arndt on this matter are worthy of comment. He is known not only as the Professor of Economics at the Canberra University College, but also as an outstanding exponent of central banking techniques. He is internationally known in that regard, and is a great expert on Australian banking principles. On this subject, Professor Arndt said -

There is no evidence of any attempt by the Board to use the knowledge it obtains in its Central Bank functions to push the interests of the Trading Bank. On the .contrary, it is quite clear from the evidence that under the present system the Trading Bank’s competition has been restrained by the Bank Board an the interests of national monetary policy.

I express the hope that, if the Commonwealth Trading Bank is relieved of its excessive sense of responsibility, it will go on unrestrainedly, within the ordinary limits imposed by the central bank, to capture an increasingly large proportion of the available banking business.

The three points that were made by the Treasurer were not sound, and .cannot be considered to be sufficiently important to sustain a case for interference with the existing structure of the Commonwealth Bank. Of course, the real reasons for this interference are clearly apparent. Naturally, they have not been expounded by the Treasurer, or by those who support the case that he has presented, but they are clear to any one who knows the history of banking in this country or, for that matter, in other countries. The Commonwealth Bank has never enjoyed the support of the LiberalAustralian Country party coalition Government. Its continuance as a strong, virile competitor of the banking cartel of this country is being threatened because of its cheap money policy which embarrasses the banking cartel, intent as it is on high interest rates, such as those that obtain in the hire-purchase field.

The trading banks are restless to free themselves of the shackles which restrain them from making even higher profits at the expense of the Australian people. On 30th October last, the Sydney “ Daily Telegraph “ printed an account .of a farewell party given to a Mr. Calder, who is the New South Wales manager of the English Scottish and Australian Bank Limited, on the eve of his departure overseas. Under the heading “ Wonderful “, Mr. Calder was reported to have said in his farewell speech -

In 1911 banks were having a really wonderful time. There was no Commonwealth Bank, no Central Bank and no credit restrictions. Bank notes were really bank notes. They were issued only by the private banks, and they were actually signed by two of the banks’ officers.

What a really wonderful time the banks had in 1911, with no Commonwealth Bank, no central bank, and nothing at all to restrain them! Many of us recall the dreadful way in which they disturbed the financial equilibrium of the average Australian citizen whenever the opportunity presented itself. Those were the good old days, according to Mr. Calder, and he and his colleagues, in common with the supporters of the Government who are looking so uninterested in these proposals, are longing for their return.

I think it was Shakespeare who said, “ He who owns the means whereby I live owns my life “. There is truth in that. It .is the eternal hope of those who control the Australian private banking system, as it is of those who control .private banking systems throughout the world, to be able to rule the lives of the ordinary people to an everincreasing degree. Since the flow of credit is the means whereby the community lives, we must decide whether our destiny is to be controlled by the trading banks or by the elected representatives of the people. We must choose which we prefer to dominate our affairs. It is my firm belief that if the Australian people had a full appreciation of the real concepts and issues involved in the bills before the House, their choice -would be control by their representatives and not, as the Government would like it to be, control by those who represent overseas big “business, cartels and monopolies.

The Commonwealth Bank is a great institution. A periodical known as the J’ American Banker “ has gone to a great deal of trouble in a recent issue to list the world’s best 500 banks. It is interesting to note that the Commonwealth Bank of Australia is placed 115th on the list, and that no other Australian bank qualifies for inclusion. The Commonwealth Bank is miles ahead of its opponents, and all Australians may well feel proud of the great progress that it has made since its inception, as the people’s bank, by a Labour government.

Mr. ACTING DEPUTY SPEAKER (Mr. Timson). - Order! The honorable member’s time has expired.

Mr IAN ALLAN:
Gwydir

.- There are two main aspects of the massive and intricate bills which the House has been discussing for the last few days. The first is a re-arrangement of the machinery of the central bank, and the second, the creation of something entirely novel in Australia - the Development Bank. So far as the first aspect is concerned, I believe that the provisions contained in the bills before the House will effect a very substantial improvement, because they will preserve the spirit of mutual trust and confidence that is absolutely necessary in the banking system. It is no secret that, for quite a long time, the private banks have been concerned because the central bank has been operating in the premises of the government trading bank, with officers of the government trading bank in close association with the officers of the central bank. The private banks have expressed a fear that their hands would be tied, and their business jeopardized, by this close association of the central bank with a government trading bank that competes with them. But not one specific case of unfair treatment of a private trading bank, or of partisan treatment favouring the Commonwealth Trading Bank at the expense of a private trading bank, has been brought forward. Nevertheless, the fear in the minds of the private bankers was evidently very real. I am glad to see that this legislation will remove that fear, and that both government and private banking activities will be conducted in a spirit of trust and confidence. That is very important, because our financial system is based on trust and confidence.

The establishment of the proposed Commonwealth Development Bank will confer tangible benefits on the Australian people, and, as this debate has progressed, I have been surprised to hear the carping criticism that has been directed at the details of some clauses of these bills, and, in some respects, at the way in which they have been drafted. I have heard very little general recognition of the dramatic effects that the Development Bank will have on the Australian economy when it is fully operative. This bank is a wonderful conception. It will fill a very real need, which has been growing much more acute in this country in recent years. The satisfaction of that need is of great importance to the wealth and the welfare of the entire community, because Australia’s prosperity depends, ultimately, on our balance of trade, which will be favorable only if we maintain a high level of export income.

In recent years, the rise in internal costs, coupled with the fall in external prices, has gripped the primary producer as in a vice. The savings that he used to be able to set aside for the development of his property, and the production of commodities for export in order to increase our export earnings, have been reduced, and credit restrictions, brought about largely by the very fact that we are not receiving so much income from overseas, have prevented him from borrowing funds for development as freely as he would have been able to do in the past. The primary producers are suffering from the effects of a vicious cycle. Export earnings are not keeping pace with Australia’s development, and, therefore, the funds available for developmental works needed to expand primary production, on which we depend to increase our exports, are being restricted.

This is an absurd situation, and the creation of special credit facilities, such as will be provided by the Development Bank, is long overdue. The problem has been dealt with in various ways overseas. In 1946, Canada enacted legislation specifically to deal with it, and under legislation enacted in the same year, the United States of America established the Farmers Home Administration, which has since lent approximately 300,000,000 dollars to farmers for development work, and for the acquisition and improvement of rural properties generally.

Another effect of the restriction of finance on production is not so readily seen. The restriction of funds has hit the younger generation of primary producers much more severely than it has hit the older generation. Young men who have family commitments, and heavy personal expenses, usually have very little left out of their capital after establishing themselves on a property, and usually can save very little out of income, and are unable to engage in developmental programmes over periods of five or ten years, as they would like to do. The long-term developmental work of pasture improvement and of conservation of all kinds, is left to the older generation of producers. The proposed Development Bank will cater for the younger men. It will fill the present void, and will enable the capabilities of the younger generation of primary producers to be fully used. Nowadays, those capabilities are substantial, because we live in revolutionary times where primary production is concerned. All sorts of new and effective techniques have been developed. The younger men on the land are fully aware of them, and they are very anxious to put them into practice.

In order to give one illustration of the dramatic results that developmental investment in primary production can have within a year or two, I shall refer to the views of the Division of Agricultural Economics, which estimates that, over the next quarter of a century, the production of wool could be increased by about 86 per cent, with existing price-cost relationships. Wool makes up one-half of our exports, and is responsible for more than one-half of our dollar earnings. Yet survey data collected by the division suggest that farm incomes over a sizable sector of the sheep and wool industry in the high rainfall zone were not enough in 1952-53 - a year of satisfactory wool prices - to permit a level of savings out of income sufficient to finance a vigorous programme of development. The high rainfall zone referred to extends over parts of the eastern States and Western Australia. All the reliable authorities say that the wool market will be sound in the long run, and we should be foolish indeed if we did not take advantage of the opportunity now offering to increase our income from wool. An effective way of taking advantage of that opportunity will be provided by the proposed Development Bank.

This brings me to the only doubt that I have about the proposal to establish the new bank: Will it function satisfactorily as the Government intends it to function? I know what the Government intends to achieve, and the bill sets out how it proposes to achieve its objective; but will that objective in fact be achieved? Tt is all very well to provide the machinery and capital for this bank, but the bank will need a small army of extension officers to supervise the appraisal of loans and to give a general advisory service to primary producers. Very often primary producers are reluctant to borrow money. A programme will need to be worked out by extension officers in cooperation with producers to show producers how they can benefit from loans. Once loans are made, they must be supervised by some competent man. That staff is not provided for in detail in the bill. One would not expect it to be, but we leave it to the bank when it is established to create that force for disbursing money in the proper direction, to the proper people and where it can produce returns effectively. I hope that will be done.

The Commonwealth Bank has shown in the past that it appreciates the peculiar problems of the primary industries. Only this year, it staged a school for bankers on pasture improvement at the University of New England, and that school was outstandingly successful. All the bankers agreed that more finance was needed for the wool industry, especially for pasture improvement in the high rainfall areas. That was evidence that the Commonwealth Bank, as it is constituted now, under the governorship of Dr. Coombs, is aware of this problem, and I hope that we can rely on the new Development Bank to find the machinery necessary to lend money to carry on this work and to see that pasture improvement is given the injection of finance that it needs. However, if the Development Bank does not carry out a vigorous programme within a reasonable time, I urge the Government to do what it can to induce the private banks to come into this field and to introduce a competitive atmosphere.

The Government must be vigilant to see that its intentions are carried out by the Development Bank. If they are carried out, we can look forward to an expanding rural economy with consequent benefits for the whole of Australia. We must have more people on the land, more productivity and more efficiency. In that way we will earn more money overseas and so improve our balance of trade position and strengthen the economy of this country.

Mr DALY:
Grayndler

.- The honorable member for Gwydir (Mr. Ian Allan) expressed certain doubts about some aspects of this legislation. It is interesting to note that a member of the party to which the Treasurer (Sir Arthur Fadden) belongs sees in the proposed legislation certain measures which may not fulfill even the Government’s idea on a particular subject. Certainly, we on this side of the House have grave doubts about the legislation in toto. As the Leader of the Opposition (Dr. Evatt) said in the course of his speech, this is a revolutionary attack on the functions of the Commonwealth banking institution. Honorable members who have been here over the years have had an opportunity to see the growth and development of the Commonwealth Bank and to debate at length legislation introduced from time to time on the most important function of any government - the control of finance in the Commonwealth. Over the years, those in the forefront of reform and those who have wished to see money administered and controlled in the interests of the people, rather than of the profiteers and those who control the private banks, have been members of the Australian Labour party. I was one of the members on this side of the Parliament who voted for the nationalization of the banks. That reform is a fundamental of Labour policy and will ultimately, no doubt, be implemented in this country through sheer necessity because of the control that private banks are exercising to-day over the lives and the welfare of the people and generally over the nation.

In his speech on the nationalization of banking on 15th October, 1947, the then Prime Minister, Mr. J. B. Chifley, gave what I consider to be a clear outline of Labour policy on banking. I shall read what he said so that honorable members will know the attitude of Labour on this question and so that they will know the fears that we have regarding these proposals which envisage drastic changes in the structure of the people’s bank. The late Ben Chifley said -

The Labour party has maintained for many years that, since the influence of money is so great, the entire monetary and banking system should be controlled by public authorities responsible through the government and Parliament to the nation. On this principle the Labour party has held further that, since private banks are conducted primarily for profit and therefore follow policies which in important respects run counter to the public interest, their business should be transferred to public ownership. For this view the strongest reasons can be stated. In the absence of control, private banks can expand or contract the volume of their lending and so vary within wide limits the supply of money available to the public. They can also determine when and where they will lend and on what terms; and in these operations they are guided primarily by the interests of those who own and control them. Whatever regard they may claim to pay to the wider concerns of the nation, their policies are dictated in the last resort by the desire to make profits and to secure the value of their own assets. Experience of the past has been that private banks increased their lending in good times and contracted it in bad times, lend always where the profits seemed largest and most assured, and charged the highest rates they could obtain for their loans and general services.

I have read that passage to show that in his speech on the nationalization of banking at that time, the then Prime Minister clearly outlined the guiding principle of the private banking interests of this country, which is “ Profits before the general welfare of the people “. Since this bankers’ government was elected in 1949, the private banks have been pressing those members whose campaign funds they paid on that occasion to bring about the reforms that they consider necessary to take away from the Commonwealth Bank the power to control finance in the interests of the people and to take it out of the competitive field of those who control the private vested interests in this country.

It is true that certain Government supporters did not want this legislation. They realized that it was an attempt to whittle down the power of the Commonwealth Bank and to destroy it as such. However, the Australian Country party members should be the last to attack the Commonwealth Bank. When all is said and done, the primary producers on one occasion were saved by the Commonwealth Bank in the face of much opposition from the private trading banks. We find to-day that Liberal party members are forced to support this legislation because the Commonwealth Bank has grown in power and influence under legislation introduced by the Chifley Government in 1945. Since then, the Commonwealth Bank has proved to be a real bone of contention for the vested interests of the private banks.

Under Labour’s legislation, interest rates were kept down, but under this Government they have galloped to a high level. In addition, under this Government’s legislation, the private banks are now glorified hire-purchase companies. People are denied the money necessary to build homes and to provide for their families, but at the other end of the counter they can obtain unlimited funds to buy any luxury at exorbitant rates of interest. That policy is adopted so that greater profits will be returned to those who control the private banks. People in my electorate have told me that they are paying up to 25 per cent, interest on money borrowed to pay a deposit on a home, and that the banks will not lend them any money except on a hire-purchase basis. This Government does not do anything about that situation! The Commonwealth Bank should make money available at reasonable rates of interest to people who want to purchase homes. It should make money available for the purchase of homes in preference to financing hire-purchase companies.

It is all very well for this Government to make revolutionary changes in the structure of the Commonwealth Bank, but if it really believes in doing something worth while for the Australian people it should see that money is made available through the Commonwealth Bank at such a rate as will force the private banks to compete with it by making an equivalent amount available. No matter what the Government says, the history of banking in this country has been one of profits before the general welfare. The records show that, in the days of Sir Robert Gibson, the government of the day was held to ransom and dictated to by the private banks of this country. Thousands of people suffered because those who controlled the private banks refused to provide money so that the people could get work. The profits were not great enough. Yet, immediately war broke out, even the Liberal party said, “ We must have money “. But in times of peace, this Government restricts the availability of money through banking institutions and forces people to the wall. It denies them homes. People who fought for this country urgently require homes, and they are told that there is no money available except at exorbitant rates of interest.

The late Mr. Chifley, speaking on the proposal to nationalize the banks, said that in time of war there was adequate finance. Ample money was available to provide for the defence of Australia. Then he added that while he was in Parliament he would never stand by in time of peace and see people in need of homes when the finance should be provided through the Commonwealth Bank and other banking institutions. Those matters are fundamental, but this Government is throwing the Australian people to the financial wolves. Exorbitant rates of interest are charged to people urgently in need of finance. The banks have become hire-purchase companies to the detriment of the people. The Government is whittling down the power of the Commonwealth Bank, taking away any control it might have over the banking system of this country, and in every way possible destroying it as an effective opponent of the private banks, just as the Bruce-Page Government tried to do.

This is another attempt to destroy a government instrumentality. The Government has already sold the Commonwealth Oil Refineries Limited. It has endeavoured to destroy Trans-Australia Airlines. Amalgamated Wireless (Australasia) Limited has gone. The next step is for the private banks to force this Government to curtail the activities of the Commonwealth Bank, and completely destroy it as an effective competitor with the private banks. I know that the Government has to do what the private banks wish. The Government got its instructions in 1949. When the bank nationalization proposals were under discussion in 1947, I received 20,000 sponsored letters. Throughout the country at that time a sponsored campaign by the paid agents of the Liberal party endeavoured to take from the people their right to control finance through the Commonwealth Bank. (Government supporters interjecting) -

Mr DALY:

– Government supporters are paid to interject. I remember that, during the 1949 elections, 1 was addressing a meeting at which a bank officer was present. I said to him, “ It is all right for you to interject; you are getting double time to come here “. The bank officer said to me, “ That is not right; I am only on time and a half”. He, and others like him, were paid agents. They were the representatives of those who control this Government. They put this Government into power to destroy the Commonwealth Bank. To-day, members of the Government sit like puppets while the Treasurer goes his merry way, because the interests behind the Government have demanded these radical changes.

I am sorry that my time to-day is limited. I wanted to place these views before the Government so that it would know that this challenge to the authority of the Commonwealth Bank, this destruction of its principles and its methods, was something that would not go unnoticed by the people of Australia. The people are sick and tired of high interest rates. Have Government supporters ever tried to pay off a house at interest rates of 10 per cent, or 15 per cent.? I remember when Mr. McLeod was the member for Wannon in this chamber. He used to tell how, after World War I., he obtained a soldier settlement farm at interest rates fixed by the banks with the approval of the then government. He worked it out that he would have to live 1,500 years in order to own his place, so small was the rate of reduction of his loan per annum. In other words, he would have had to be as old as Methuselah. People who are buying homes under this Government’s banking proposal will be in the same position. That will be the experience of all people who are paying exorbitant rates of interest. In Great Britain, the interest rates have gone up to a flat rate of 7 per cent, or more. In this country,, even ex-servicemen have to pay 25 per cent, interest in order to get part of a deposit on a home; yet Government supporters say that this is sound banking practice, and should be supported. These matters need ventilating.

This Government has a shabby record in banking. Of all the government instrumentalities that have been sold, of all the efforts to dispose of government instrumentalities over the years, this challenge to the Commonwealth Bank, one of the greatest and most powerful banks in the world to-day, is something of which the Government should be truly ashamed. Ultimately, the people will pass judgment on the Government for its action, because the Commonwealth Bank is recognized as the people’s bank, the small man’s bank. Yet, throughout the years, the Government has endeavoured to retard the bank’s progress. It has endeavoured to stop the bank from doing the things banks should do, and this further attempt on the Commonwealth Bank at the behest of the private banks is something that the Government will not live down.

Together with other honorable members on this side of the House, I condemn the proposals in this legislation. The Labour party will fight the measures through this House and through another place, because we believe that the Government is taking a retrograde step. It is attempting to destroy the Commonwealth Bank as a people’s bank. The bills deserve to be condemned. I hope ultimately that the Labour party will be able to give effect in this Parliament to the legislation that was initiated by the Chifley Government in days gone by, and that we shall be able to incorporate into this country’s banking legislation those reforms that will mean so much to the Commonwealth Bank and to the people of Australia. So far as I am concerned, while ever I am a member of this Parliament, I will oppose the establishment of a bank board similar to that presided over by Sir Robert Gibson, and I will play my part in endeavouring to ensure that the people of Australia have a people’s bank, that they have a Commonwealth Bank which is not controlled by private interests, and that the Labour party defeats as soon as possible a government that represents only the private banks in this country, a government evidently dedicated to the destruction of the Commonwealth Bank as such.

Mr KILLEN:
Moreton

.- I think it is pretty clear that the pre-occupation of the honorable member for Grayndler (Mr. Daly) with his pre-selection has seriously -affected his judgment. He has given to the House this afternoon a rather casual review of historical facts, and he has made -a somewhat quaint and odd resume of contemporary facts. The honorable member -adverted to the bank nationalization proposals, and I am delighted that he did so, because that is the main reason why I have risen to speak on this bill. The honorable gentleman, in trying to convince himself - I think it is essential that we recognize that :fact - and also in his efforts to make some -sort of a showing in the House, referred to -the fact that 20,000 people in his electorate wrote to him during the controversy on the bank nationalization proposals. The simple reason why there was such white-hot public opinion in Australia at that time was because a fundamental change to the whole structure of this nation’s economy was involved. Their main complaint was that they had not been consulted about the proposals. In previous election campaigns Labour members never suggested to the electors of Australia that if returned to power they proposed to introduce bank nationalization. On the contrary, their attitude was stealthy and characterized by snide tactics.

That particular facet of Labour’s bank nationalization proposal is interesting when one reads the observations made some years ago by the right honorable member for Barton when he was Mr. Justice Evatt of the High Court. Dealing with the question of the fundamental changes in the Australian economy in his book “ The King and His Dominion Governors “, which I earnestly commend to honorable members opposite, Mr. Justice Evatt said -

But, on the whole, parties now seem to be agreed that consultation of the electorate is an essential condition to great and important changes in the law. In other words, the main principle of the “ mandate “ is almost universally accepted.

That was the voice of the constitutionalist and democrat, Mr. Justice Evatt. But what was his attitude, and that of his supporters, in this Parliament? Did they say, “ The honorable gentleman now tells us in substantial form the view he expressed some years ago in theoretical form? “ No! The simple truth of the matter is that the people of Australia were denied the opportunity of expressing their views on the Chifley Government’s bank nationalization pro posals. That was one of the reasons why the honorable member for Grayndler and other honorable members opposite received 20,000 letters of protest. 1 do not propose to advert to any of the technical facets of these measures, but I shall refer to one issue that has been brought out in boldest relief during the course of this debate - a very dreary debate, too, as far as speeches of honorable members opposite are concerned - namely, that bank nationalization remains the policy of the Australian Labour party. When I interjected during the speech of the honorable member for East Sydney (Mr. Ward) and asked in my characteristic polite fashion, “ Is it your intention to nationalize the banks? “ the Deputy Leader of the Opposition (Mr. Calwell) said, “ Of course it is his policy; and it is mine too “. When the honorable member for Balaclava (Mr. Joske) challenged honorable members opposite and asked whether bank nationalization was their policy, there was a ripple of “ Hear, hears! “ from the Opposition benches.

It is imperative that the people of Australia realize that the attachment of the label “ democratic socialism “ to the Australian Labour party has not banished from its platform the objective of bank nationalization. That remains a basic tenet of their policy. Against that, we have the somewhat curious attitude of honorable members opposite who have said, “ But we cannot nationalize the banks because the Privy Council has said we cannot “. It seems a very odd attitude of mind to retain a completely impracticable objective. The great Edmund Burke enunciated the precept “That which is not practical is spurious “. Are honorable members opposite holding fast to an idea, a policy and a platform that they know is impracticable and incapable of implementation? Of course not! Their policy is for everyone to see, and it remains their intention to implement that policy.

I do not propose to canvass the full character of the problem as to how that part of their policy can be implemented, but in passing I shall refer to one or two aspects. Dealing, first, with the legal problem of bank nationalization, the argument is, “The Privy Council has said that we cannot nationalize the banks”. It is also the policy of the Australian Labour party to invest the High Court of Australia with final jurisdiction, and to destroy the Australian federal system. The honorable member for Werriwa (Mr. Whitlam), in a carefully considered speech on another subject some days ago, stated quite clearly and without heat that that was the intention of the Australian Labour party. It is a legitimate point of view, but the destruction of federalism in Australia predicates the establishment of a form of authority in the National Parliament which would be capable not only of investing the High Court with final jurisdiction in all Australian cases but also of snuffing out the light and the life that has existed for 57 years in the form of section 92 of the Constitution. In the destruction of the Australian federal system we will also see the elimination of the legal difficulties that now prevent the implementation of bank nationalization. I further submit that a strong-minded leftist government in Australia - and as I gaze across the chamber I see the elements that would fit admirably and readily into the concept - would stack the High Court if it believed that its proposals for bank nationalization would be destroyed. The Labour party’s policy, programme and platform is to achieve bank nationalization and destroy the Australian federal system.

This problem is fundamentally political and not legal. Bank nationalization represents the pivotal point of the whole policy of the Australian Labour party. Opposition members know perfectly well that if they achieve bank nationalization they will achieve the great majority of their aims and objectives. Some honorable members might ask, “Why is bank nationalization the pivotal point of their programme? “ To answer that question I shall turn to a person to whom I have referred on many occasions in the past and to whom I shall no doubt refer again in the future in order to understand the real significance of the Labour party’s policy. I quote from Lenin himself, who said -

We are all agreed that the fundamental first step in this direction must be such measures as the nationalization of the banks and the trusts. Let us put into practice these and similar measures, and we shall see. . . We cannot at once nationalize the small consumers’ concerns - i.e., those with one or two employees - nor can we at once place them under a real workers’ control. But the role of these small men can be made small to the vanishing point, and through the nationalization of the banks they can be tied hand and foot.

There, unveiled, is the significance of my submission that bank nationalization is the pivotal point of the policy of the Australian Labour party. These measures that have received the devoted attention of the Treasurer (Sir Arthur Fadden) provide another legislative barrier against bank nationalization, and that is what upsets honorable members opposite. That is what disturbs them, and that is one of the reasons that prompt their chagrin. This legislation, as well as providing a legislative barrier against bank nationalization, provides, in itself, for a measure of greater efficiency in the Australian banking structure and the Australian economy.

I come back now to the point on which I commenced, which is that this debate has proved, and has crystallized to ready examination and to ready demonstration, that the policy of the Australian Labour party remains bank nationalization. Democratic socialism has not worked as a lustration upon the Australian Labour party. Bank nationalization is Labour’s programme, it is the pivotal centre of its entire policy. The Australian Labour party, I submit, is still controlled, is still obeying unflinchingly, and without any regard for what may happen, the one command, the one direction, “ By the left, march “.

Mr KEARNEY:
Cunningham

.- First, I wish to congratulate the honorable member for Richmond (Mr. Anthony) on his maiden speech. This new member has arrived here, however, at a crucial period of our history. He will witness, in a matter of minutes and, unfortunately join with his colleagues in this House in striking a felon’s blow at Australia’s grandest institution, the Commonwealth Bank.

The details of this legislation have already been thoroughly dealt with, and the Government’s real intentions have been exposed by Labour speaker after Labour speaker. The honorable member for Moreton (Mr. Killen) has made an affirmation that the Labour party, if returned to office at the next general election, would immediately nationalize banking. Certainly that is Labour’s platform and policy; but we have on record the statements of our

Leader, who has affirmed that the Commonwealth Parliament has no power, without reference to the people in a referendum, to nationalize coal, shipping, iron, steel, or any other business. The essential thing is that the Labour party will go to the electors of Australia and will seek their sanction to bring about bank nationalization with the full strength of public opinion behind it. There will be no stealth in Labour’s approach to this matter.

Bank nationalization has been on the platform of the Labour party since the party was formed. There need be no vague notion about Labour’s policy in respect of the banking institutions of this country and banking and finance generally. Reference can easily be made by any one who wants to know the position in that regard to the details set out on page 59 of the printed copy of the Labour party’s platform and policy. Undoubtedly those details are well known to every student of politics, and there is no fear that, as the honorable member for Moreton has averred, a Labour government will propose to do anything in respect of this matter, or any other matter, by stealth. After all, the Labour party is founded on a basis of democratic organization which is unparalleled in this country in any other political party. Our objectives are clear. Our organization is wide. Everybody, down to the humblest person in the community, has the opportunity to enter the Labour party’s organization and there to help propound and design Labour policies which may become legislative enactments of this Parliament. In that way we are unlike the Liberal party. We develop our policies ourselves. That has always been the way of Labour.

It is important to note, in regard to legislation immediately before us, that very shortly we will see the Government using its numbers to smash to the ground and roll in the dust one of the ideals of the people of Australia, namely, a strong Commonwealth Bank functioning in the interests of the people and not in the interests of big business or any other particular section. This action by the Government will not be taken on the ground that all its members and its appendage, the Australian Country party, are in conscientious agreement with the legislation, nor will it be taken because of any weakness in the Labour party’s case. It will be taken because the Government, from the Prime Minister down to the most humble backbencher, is tied firmly to the chariot wheels of powerful financial interests which seek desperately not only to hold what they have in terms of money power, but also to further entrench their base interests at the expense of the Australian people.

Mr Cope:

– They cannot deny it.

Mr KEARNEY:

– They cannot deny it. Quickly following upon the introduction of the banking legislation now before us, the Leader of the Opposition made Labour’s attitude to these regressive measures clear. He said -

The Labour Party is irrevocably opposed to the Government’s plan, which is clearly to divide and weaken the Commonwealth Bank, and procure its dismemberment as the supreme financial institution of the Australian people.

The most vicious feature of the legislation is that the private bankers have combined to cripple the Commonwealth Bank, to aggrandise their own profits, to get a domineering interest in the new Reserve Bank and, finally, to destroy the Commonwealth Trading Bank. ft is these powerful financial interests that dominate the present Government, which shows complete indifference to public interests and public opinion as well.

I repeat that Labour will fight all the way against the Government and its masters, who are the private banks.

In this House that fight has been waged nobly. It will be carried on in another place and if, by sheer weight of numbers, the Government puts these measures on the statute-book, the legislation will be fought in the electorates of Australia to bring about the return of a Labour government. The forcing of these bills through the Parliament will be a blot on the record of the legislature. The Australian Labour party, which was bora to fight on behalf of the masses of this country, and which has the support of the combined trade union movement, has made clear its policy of complete and unfettered control of banking and credit through the Parliament - in short, nationalization. It has also made clear that that issue will be fought only through a proper approach to the people. But a different position exists in relation to Government members, because on this issue, as on all issues, they represent reaction in this nation; they represent the cartel, the monopoly, the company, the jugglers of finance - in short, they represent the thimble and pea men in the banking world, whose orders they are obeying to-day, as they will demonstrate by their votes in about fifteen minutes.

We proclaim to the people that the great Commonwealth Bank, which maintained our war efforts during two world conflicts, and won the respect of the Australian people, is now to be bashed into crippled helplessness by the political press gangs called the Liberal-Australian Country party Government. Members of the Australian Country party, including the honorable member for Hume (Mr. Anderson), who is interjecting, should always remember that the man on the land in New South Wales was saved by the New South Wales Labour government’s moratorium legislation in the days of the depression. It is Labour’s policy to help the country man, and that policy will be continued.

The late, esteemed Ben Chifley, when speaking in this House in 1950 on other banking legislation, had something to say which gives us a clue to why we have the present legislation before us, and why members of the Liberal party are standing shoulder to shoulder on it. Mr. Chifley said that millions of pounds were involved. There are many more millions of pounds involved in this deal. A hard bargain has been made over this legislation. The private trading banks are prepared to pay for it because they will get untold wealth from it. In 1950, Mr. Chifley said -

It is idle for honorable members opposite-

The honorable members to whom he was referring, of course, being of the same ilk and kidney as the honorable members at present opposite me - to deny that huge funds were made available to them, because I can produce evidence to show the source of funds . the amount subscribed . and the purpose of the subscriptions.

The situation is clear to the people at large. They know full well that the private trading banks are directly involved, that they have initiated this legislation and have given the necessary impulse to the Government. They are well represented in this chamber. They have sent representatives here from time to time to execute their wish and will in respect of financial matters that arise. These representatives are the counsels of the Liberal party and members of the Government. They have been well paid, although some reluctance has been shown, due to political demands within the Liberal party, in doing what theGovernment parties have been paid to. do. However, we are now witnessing th& fulfilment services for moneys invested in the. Government by the banks on the instalment plan. The Government provided oneinstalment in 1951, with legislation that resulted in the emasculation of the Commonwealth Bank. Another instalment waspaid by the legislation of 1953. Now in- 1957 we see a further instalment, being paid. If the Government is left in power for another term, what can we expect to be its next step in shovelling to the private banks their share of the financial cake? lt is very clear that if the Government, by some freak of chance, is returned to the control of the Parliament for another three years after the next elections, the Commonwealth Bank will be effectively destroyed and taken over by the private trading bank interests. That is the proposal that has been put to the Government, and the history of this Government shows that its purpose is to give effect to that proposal.

In my opinion we must have another royal commission on banking, to probe the matters that were examined in 1936-37. A royal commission must be appointed to inquire into this graft on a national scale which is represented by the pay-off by the Government of the private trading banks monopoly. The exposure must, in national decency, be complete. The people must know the whole sordid story, and the fakers of the parties opposite must be revealed to all men.

The attitude of the Government as shown by its slaughter of government instrumentalities has become a by-word in this country. The whaling enterprise at Carnarvon, in Western Australia, has been sacrificed on a pay-as-you-wish basis. As has been correctly stated, the enterprise was given away. The people’s money was used to establish the industry, and when it became a fruitful enterprise and was making worthwhile profits it was handed over on a silver platter to big business interests. The undertaking should have been retained and the profits given to the people, rather than that they should be diverted into the pockets of the few. Similar remarks apply to the disposal of the Commonwealth Handling Equipment Pool, which served Australia very well in the vital war years and the immediate postwar years. That handling equipment pool has been ruthlessly sold out to private interests. The Commonwealth interests in the successful Commonwealth Engineering Company have also been sacrificed. So the Government goes on, sacrificing Australian interests and the people’s enterprises which, after having been pioneered with public money, are ferociously destroyed. This attitude of the Government is indecent and un-Australian. It is proper that a government should invest money in order to stimulate various enterprises. It is also proper that having taken the risk it should harvest the crop. It should remain in control and absorb into the coffers of the Government the profits that flow from the original investment.

The old tories of 1911 bitterly opposed the formation of the Commonwealth Bank.

Dr Evatt:

– Fisher’s flimsies!

Mr KEARNEY:

– Yes. To-day their counterparts, the tories of 1957, are bent on the pursuit of the same reactionary policies. The legislation before us, which will shortly be implemented by this Government, is aimed at crippling and financially destroying the Commonwealth Bank as we know it. The people will be shocked to learn that already administrative action is taking place within the Commonwealth Bank to give effect to the terms of this legislation. The patient has not yet been certified as dead, but the last rites are being feverishly performed. The indecent way in which the Government is pushing this legislation forward must cause grave public concern, and for it the Government stands condemned.

It is the avowed aim and stated policy of this craven Government to destroy government instrumentalities completely, including the Commonwealth Bank and Trans-Australia Airlines. In fact, the very profitable sections of the Postal Department might well be considered by the Government as suitable for the hoisting of the red “ for sale “ flag. No less important a Government figure than the Minister for Trade (Mr. McEwen) stated during the debate on the sale, at a pepper-corn price, of the whaling station at Carnarvon -

The Government’s intention is to get out of business, whether it be successful or otherwise.

The Minister later contradicted this statement, but it is recorded on page 56 of “Hansard” of 16th February, 1956, that the Minister said, speaking on behalf of the Government and not merely giving his own views -

I said several years ago that the Government believed that there was no purpose, other than that which could be derived from a socialistic doctrine, in the Government continuing to operate either a whaling station or a wheat farm.

Why, then, should the Government hesitate to destroy the Commonwealth Bank and sell the organization, finally, to private enterprise? The whole reason for the Government’s existence is to remove any government enterprise that takes fi profit for the people instead of giving it to certain selected interests. That is the whole purpose of the Government, as is well realized by the people. There is little doubt that when we approach the polls again destruction will face this Government because of its un-Australian attitude in these matters.

Reference has been made to the housing situation in Australia. It is true, as was stated by the president of the Rural Bank, Mr. McKerihan, that with a system under which banks are pouring their wealth into the financing of hire-purchase companies, a black market must exist. Persons who approach the front door of a private trading bank for housing finance are sent to the rear door where hire-purchase finance is available. In the electorate of Richmond, which I visited some time ago, I found banana farmers who were unable to obtain finance on overdraft from the local banks for the purchase of necessary farm implements, but who were invited by those banks at Tweed Heads, Grafton, and other places, to apply to hire-purchase companies, from which they could obtain finance at 15 per cent, or 20 per cent.

Dr Evatt:

– The honorable member’s speech contained an attack on the Government.

Mr KEARNEY:

– Of course it did, and I hope that in view of certain advertisements in the local press in the Richmond electorate we will see some more sincere efforts to obtain a better deal for the farming community, not only in that electorate but in other parts of Australia. The housing situation is a classic example of the way in which the Government has placed strait-jacket restrictions on certain forms of credit, thus causing untold hardship to thousands of our people. The strait-jacket will become even tighter when this legislation becomes law. Fortunately, however, Labour will regain the treasury bench and unquestionably we will destroy this legislation and restore the Commonwealth Bank to its proud position as the people’s bank. This Government is committing a sacrilege when it seeks to destroy that bank.

Question put -

That the bill be now read a second time.

The House divided. (Mr. Speaker - Hon. John McLeay.)

AYES: 56

NOES: 32

Majority . . . . 24

AYES

NOES

Question so resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 to 6 - by leave - taken together.

Sitting suspended from 5.52 to 8 p.m.

Mr CREAN:
Melbourne Ports

.- The committee is dealing with clauses 1 to 6 of this bill. Clause 1 reads as follows: -

This act may be cited as the Reserve Bank Act 1957.

Clause 4 involves the repeal of the following acts: - The Commonwealth Bank Act 1945, the Commonwealth Bank Act 1948, the Commonwealth Bank Act 1951 and the Commonwealth Bank Act 1953. In fact, this clause provides for the dismemberment, in the name of the dogma of the Liberal party, of the Commonwealth Bank as we have known it. The central bank portion of the Commonwealth Bank is to be given a new name. As the honorable member for Fremantle (Mr. Beazley) suggested this afternoon, it is to be given the entirely misleading and un-Australian name of the Reserve Bank.

At this stage the Opposition demands of the Treasurer (Sir Arthur Fadden) and the Government that they give more information than has been given as to the reasons for these changes. It seemed to me pathetic last night that the Prime Minister (Mr. Menzies) should state one of the principal reasons for the bill now before us in the following words: -

The first question is this: Is the central bank, the Reserve Bank, weakened by this legislation in the performance of its essential duties

Thus, from the very beginning of the naming of this institution, the name, Reserve Bank, has been chosen. I think that the

Opposition has the right to know why this name, Reserve Bank, has been selected. This question was raised a moment ago by the honorable member for Port Adelaide (Mr. Thompson), and the Treasurer (Sir Arthur Fadden), in endeavouring to answer him, merely said that the name had been decided upon by the Cabinet. We all know that that is so, but other things have been going on and other matters, which have not been thought of by the Cabinet, have found their way into this legislation. That being so, we have a right to wonder whether the name, Reserve Bank, originated with the private trading banks.

As the honorable member for Port Adelaide has said, it would be quite logical to include in the name of this central bank of Australia the word “ Commonwealth “. We know that the word “ Australian “ cannot be included, nor can we call it the Bank of Australia, because a private bank already has a right to the title of Bank of Australia, the kind of thing that one might expect to happen in this country, where private banks have obtained monopolies, not only of public rights, but also of public names.

We have had our attention directed by the Prime Minister (Mr. Menzies), in his recent speech during the second-reading debate, to the similarity which is supposed to exist between this Reserve Bank and the Bank of England, but, of course, the differences between the two banks immediately become apparent. The Bank of England has been known by that name since 1694. It has now become the national central bank of the United Kingdom. Our national central bank, however, is to have the unimpressive and shoddy name, Reserve Bank. I think that, perhaps, such a shoddy name is not inappropriate in view of the shoddy methods that have been adopted by this Government in connexion with this legislation.

I suggest, further, that the term, Reserve Bank, is a misnomer, because if this bank is to fulfil the function of a central bank it must be more than a reserve bank; it must be more. than a receptacle into which the surplus funds of the trading banks, which are not required as a basis for the creation of further credit, may be poured. The title, Reserve Bank, therefore, is not adequate for a bank which, it is hoped and believed, will carry on the full functions of a central bank. I suggest, Mr. Chairman, that Central Bank would be a better title thanReserve Bank. It would be interesting toknow the name of the rather academic publication reproducing private banking ideas - from which this name, Reserve Bank, which has become so popular with the Cabinet, was taken. I am sure that it must haveoriginated from some such source.

I suggest that the naming of this bank isan indication of the totally inadequate thinking that has gone on behind the scenesin relation to these measures. When werefer to clause 4, which is one of the six clauses that we are discussing at this stage,, we find that four existing Commonwealth. Bank acts are to be repealed by that clause. This indicates that the banking legislation which is in the process of being enacted is, in fact, founded on the 1945 Banking Act of this Parliament. I suggest that it is relevant at this stage to say that were it not for the 1945 banking legislation, designed by the Australian Labour party, and some of which is being swept aside by clause 4 of the Reserve Bank Bill, the structure of Australia’s banking legislation, which appears in principle in the bills we are now debating, would not in fact exist in the Commonwealth. The repeal of the Commonwealth Bank Act 1945 by clause 4 adds nothing to the essential structure of Australian banking. In fact, it takes away something that was in that aci. At the second-reading stage, a number of Government supporters told us that-

The CHAIRMAN:

– Order! The honorable member should know that, in committee, he cannot answer arguments that were advanced at the second-reading stage.

Mr CAIRNS:

– I think that the point that I was about to make is relevant to clause 4, Mr. Chairman.

The CHAIRMAN:

– Order! The honorable member may make his point, but he should not deal with matters that were dealt with at the second-reading stage.

Mr CAIRNS:

– The complication that is supposed to exist in the Australian banking structure can be seen to exist in the Commonwealth Bank Act 1951 and the Commonwealth Bank Act 1953 - two of the acts that are now to be repealed. If any unnecessary complication has been introduced into this country’s banking laws, it was introduced by those two acts. I, personally, am quite pleased to see them repealed. If clause 4 provided only for the repeal of those two acts, I should have no objection. However, I do object to the rest of the clause. We could be very thankful indeed for the repeal of the Commonwealth Bank Act 1951 and the. Commonwealth Bank Act 1953, if the clause did no more than repeal those two measures.

The first six clauses of the bill being the foundation of this measure, we are entitled to say, when we think of the name of the new central bank of the Commonwealth of Australia, which has been defined in clause 5, and when we consider the repeal of the Commonwealth Bank Act 1945, which is being effected by clause 4, that these six clauses provide for a sharp severance of the future of public banking in Australia from its history up to the present time. The name Commonwealth Bank of Australia will be gone forever. It will be struck out by these six clauses. If I were in the position of the Treasurer, 1 would not be proud of my association with these provisions, which remove the name Commonwealth Bank of Australia forever, and destroy the position of the bank. This action represents a great break in a tradition that has become an essential part of the Commonwealth of Australia, in which there has developed no prouder institution that the Commonwealth Bank of Australia. The name, the significance, and the spirit of that institution are being brought to an end by this bill. Knowing the Treasurer for a good Australian, as I do, I cannot understand how he can take any pride in being associated with the blow at the name and spirit of the Commonwealth Bank of Australia that is being struck by these six miserable clauses, which are full of the draftsman’s jargon.

The CHAIRMAN:

– Order! The honorable member’s time has expired.

Sir ARTHUR FADDEN:
McPhersonTreasurer · CP

– I think that I can shortcircuit the discussion, if the best argument that the Opposition is able to advance with respect, to the name of the proposed bank has already been put. I direct the attention of Opposition members to the title of the bill, which reads -

A Bill for an Act relating to the Reserve Bank of Australia, and for other purposes.

In clause 5 the following definition appears: - “ thi; Bank “ or “ the- Reserve Bank “ means the Reserve Bank, of Australia;

Clause 7 (1.) provides -

Notwithstanding the repeal effected by subsection (1.) of section four of this Act, the body corporate established under the Commonwealth Bank Act 1911-1943 and continued in existence under the Commonwealth Bank Act 1945-1953, under the name Commonwealth Bank of Australia -

is preserved and continues in existence as a body corporate under and subject to the provisions of this Act, under the name Reserve Bank of Australia, but so that the corporate identity of the body corporate shall not be affected;

– Does not the Treasurer hate the name Commonwealth Bank of Australia?

Dr EVATT:

– I said that the Treasurer detests the name, and I shall prove that it is part of the scheme of this bill to exclude forever the name Commonwealth Bank of Australia as the name of an existing Australian banking institution. The Treasurer cannot deny that. I refer the committee to clause 7, which was cited by the right honorable gentleman. That clause is not at present before the committee, but we shall come to it later. The essence of that clause is that it preserves the Commonwealth Bank of Australia as a body simply for the purposes stated in that clause - not to continue the Commonwealth Bank of Australia in existence as such, but to preserve the rights that have been acquired by the Commonwealth. It is a mere carry-over provision, and similar provision must be made in every act of Parliament.

I return now to clause 1, which provides that this measure shall be cited as the Reserve Bank Act 1957. Of course, the proposed bank is the Reserve Bank of Australia. In every banking institution, or branch of a bank, established under the Government’s new plan, which, admittedly, has been adopted at the order and behest of the private bankers, the name Commonwealth Bank of Australia - the historic name of a great institution that the people of Australia admire and revere - will be treated as of no importance. Why? It is because the very name Commonwealth Bank of Australia is indicative of success. Therefore, it is said that that name should be eliminated. Why should not the proposed Reserve Bank be called the Commonwealth Bank of Australia? If we are to have a Reserve Bank with limited powers, separated and segregated from every other activity of the Commonwealth Bank, why not still give it the name Commonwealth Bank of Australia? There is no point in doing away with the goodwill that attaches to that name, and is an essential part of its value.

Mr Ward:

– The name has a sentimental value.

Dr EVATT:

– The value is partly sentimental, I admit, but it is very largely real. Under the name Commonwealth Bank of

Australia, the Reserve Bank, or central bank, by whatever term one likes to describe it, would be known by all the banking institutions of the world. But that name is to be excluded. What right has the Government to exclude it? It did not ask the people for authority to exclude it.

I think that I have proved the case made by my colleagues. Of course, point is lent to this argument - I add this only by way of illustration - by clause 4. The Government’s sinister intentions are indicated by the repeal of four acts provided for in that clause. The first of these is the Commonwealth Bank Act 1945. The present Government parties have always detested that act, which was the work of the Labour government. The Commonwealth Bank Act 1948 is to go. The Commonwealth Bank Act 1951 is to go. The act was the work of the present Government. The Commonwealth Bank Act 1953 is to go simply in order to get rid of any association in the Australian banking system in the future with the name Commonwealth Bank of Australia.

I ask the Treasurer, even at this last moment, to consider the argument that I have advanced. It is only a question, in one sense, of a name and goodwill, but it is important. If the Treasurer wants to improve the bill - though it would be almost impossible to effect any improvement - let him forget the name Reserve Bank and retain the name Commonwealth Bank of Australia. Is there any answer to that argument? None has been produced. All that the Treasurer has pointed to is clause 7, which says -

Notwithstanding the repeal effected by subsection (1.) of section four of this Act, the body corporate established under the Commonwealth Bank Act 1911-1943 and continued in existence under the Commonwealth Bank Act 1945-1953, under the name Commonwealth Bank of Australia -

is preserved and continues in existence as a body corporate . . . under the name Reserve Bank of Australia. . .

– The private trading banks, which finance the Liberal party, have directed the Liberal party to change the name of the Commonwealth Bank of Australia to the Reserve Bank, so that the people in Australia and outside Australia who have learned from experience to respect and to revere the great and proud name of the Commonwealth Bank of Australia will no longer be able to look at that bank for the protection that they have had in the past, lt is like compelling Rolls-Royce to change its name to Holden or to the name of some other inferior make of car. It is like compelling some organization with a record and a trade name of which it is proud to change its name to something that does not carry with it the reputation built up by the organization through past services to the community.

The Leader of the Opposition (Dr. Evatt has at last forced a Minister to admit that the Reserve Bank is now a banker’s bank. The Opposition has been saying for the last fortnight that it is no longer a people’s bank. Those were the Minister’s words, and they will appear in “ Hansard “. It is no longer a people’s bank; it is a bankers’ bank. That is the Opposition’s objection to this bill, and that is why we oppose it - because the Reserve Bank will operate in the interests of the bankers rather than the interests of the people.

Mr HULME:
Petrie

.- Seldom have honorable members heard such arrant nonsense in this House as we have heard from the honorable member for Hindmarsh (Mr. Clyde Cameron) in the last few minutes. He displays his complete ignorance when he talks about the Reserve Bank being a bankers’ bank rather than a people’s bank. A few nights ago, the Prime Minister (Mr. Menzies) clearly stated the purpose of a central bank. In doing so he indicated why it is termed a bankers’ bank. If that did not impress Opposition members, then it is purely lack of education in a matter of this sort which causes them to rise in their places and make comments of the kind made by the honorable member for Hindmarsh.

I believe that, in choosing a name, due regard should be paid to sentiment provided that, at the same time, the name gives an indication of the purposes of the institution, and I suggest that the name, Reserve Bank of Australia, gives a clear indication of the purposes of this bank as a central or reserve bank. If we were to call it a central bank it would be, presumably, the Central Bank of Australia as against the Commonwealth Bank of Australia. When we call it the Reserve Bank of Australia, it is still a reserve bank carrying out the functions of a central bank. But in either case it would be impossible to retain the name Commonwealth Bank of Australia, because that does not give any indication whatsoever of the purposes of this particular bank. That is why it must be called the Reserve Bank, because that gives a clear indication of the kind of activity to be undertaken by it as distinct from the activities of the other banking sections of the Commonwealth Bank. It also gives a clear indication of the facilities that are provided. Opposition members have said nothing so far in the debate on these clauses that would in any way justify applying to the central or reserve bank the name, Commonwealth Bank of Australia, as distinct from the name given to it in this bill.

Mr MAKIN:
Bonython

.- I should like to add my voice to those of other honorable members who have spoken on these clauses with regard to the name of the Commonwealth Bank. This committee is entitled to know why the Government feels disposed to eliminate from Australia’s great financial institution the name which has been associated with it since its inception in 1911. As the Leader of the Opposition (Dr. Evatt) has rightly pointed out, much goodwill attaches to the name of this bank, and goodwill is vital to any institution undergoing reconstruction. It is essential that such an institution should retain its good name. The alteration of the name could cause very serious confusion. Already a great amount of concern and confusion exists in the community because of the change of the name “ Commonwealth Bank “ to “ Commonwealth Trading Bank”. If you eliminate altogether the word “ Commonwealth “ from the principal part of this financial structure that has been known as the Commonwealth Bank, then indeed we do a great disservice to that institution. You discount its position; you deny and destroy the effectiveness of its standing; and at the same time you change the outlook and policy governing this particular phase of banking business.

In dealing with these six clauses now before the committee we are dealing with the policy that is to govern the operations of the Reserve Bank. With respect to paragraph 1 of clause 5, honorable members should realize the significance of what they are being asked to agree to. The committee has not been given anything like adequate explanation of the Government’s action in seeking to emasculate the Commonwealth Bank by decreeing that in future it shall be known as the Reserve Bank, with nothing to indicate adequately the great strength of this institution that governs the financial well-being of the nation.

As has been stated by honorable members on this side of the House, the name of the bank is, no doubt, being changed at the behest of those who are the masters of the Government, namely, the private banking institutions. Until such time as we learn the real purpose behind the Government’s intention of doing something of this character, it cannot be surprised if we recognize in the efforts now being made something very sinister and something that requires a great deal of explanation.

I feel that the Treasurer is not aware of the danger that is attached to what the Government is doing, even under the clauses we are now considering. Surely, he cannot feel satisfied that an adequate explanation has been given. The committee has the right to expect from him, and not from some ill-informed Minister, the real reason behind this measure. Naturally, the Opposition resents the implication that the term “ Commonwealth “ is not good enough to be embodied in the title of the central bank. The term is indeed worthy to be included in the name of a great institution. However, if this bank is to be a bankers’ bank, if it is to express the ideas of the private banking institutions which will largely determine and dictate its policy, honorable members will understand why the Government is seeking to eliminate the term “ Commonwealth “ in this instance. The Government should heed the appeal being made by the Opposition on behalf of the people of Australia that the present name of this great national institution be retained.

Several honorable members rising in their places,

Motion (by Mr. Harold Holt) put-

That the question be now put.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 51

NOES: 30

Majority . . . . 21

In division:

AYES

NOES

Question resolved in the affirmative.

Mr. Makin. - I rise to order, Mr. Chairman. Do you rule that because it was agreed that clauses 1 to 6 should be taken together, and were discussed together, the vote just taken automatically covers all those clauses? Does not the committee still retain its right to vote upon each of the clauses in the group of six? (Mr. Roberton interjecting) -

Question put -

That clauses 1 to 6 be agreed to. (The bells having begun to ring)-

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 51

NOES: 30

Majority . . . . 21

In division:

AYES

NOES

Question so resolved in the affirmative.

Clauses agreed to.

Clause 7 (The Reserve Bank of Australia).

Question put -

That the clause be agreed to.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 50

NOES: 29

Majority . . . . 21

AYES

NOES

Question so resolved in the affirmative.

Clause 8 (General powers).

Mr CAIRNS:
Yarra

.- This is a most important clause because it illustrates the very considerable and significant contradiction in the attitude taken by the Government to this measure as a whole. The clause contains all the powers that could conceivably be given to a bank. It is almost identical with section 13 of the Commonwealth Bank Act 1945 which was passed by the Chifley Labour Government. That section was designed in that year to provide all the banking powers that were required by the Commonwealth Bank at that time. It contained a series of twelve powers which were necessary to be exercised by the central bank, the trading section of the Commonwealth Bank, the Commonwealth Savings Bank, the Rural Credits Department and the Industrial Finance Department of the Commonwealth Bank. Those powers were provided for the control of the complex operations of the bank.

Clause 8 of this bill practically reproduces those powers for a bank which is to be emasculated. Why does the Government consider it to be necessary in 1957 to provide this set of powers for a bank which is now to be only a central bank? This set of powers was designed in 1945 for a bank which had all the divisions and departments that I have outlined. This contrasts greatly with the definition by the Prime Minister (Mr. Menzies) in this chamber, the other day, of the powers that he considered essential for the central bank to exercise in future. He said that one of the functions of the central bank in future would be-

To act as banker to the Government; to be the lender of last resort to the trading banks;

No one is sure what that means, in the Australian situation. The right honorable gentleman went on - to regulate banking policy in respect of advances, interest rales, and so on; and to regulate the note issue and foreign exchange transactions.

That is a narrow group of powers which are normally exercised by a central bank, operating in a very narrow field of activity. But this bill gives the new central bank power to do everything that a trading bank, a savings bank, a mortgage bank, or any other kind of bank would do. The bank will have power to receive money on deposit; to borrow money; to lend money; to buy, sell, discount and re-discount bills of exchange, promissory notes and treasurybills, to buy and sell securities issued by the Commonwealth and other securities; to buy, sell and otherwise deal in foreign currency, specie, gold and other precious metals; to establish credits and give guarantees; to issue bills and drafts and effect transfers of money; to underwrite loans; and to do anything incidental to any of its powers.

In other words, although the bank has been seen by the Prime Minister as having very limited powers - those of a very narrow central bank acting as a reserve bank or a bankers’ bank - under clause 8 it will have the widest possible set of powers that any bank, in imagination or in actuality, could be given. Does this mean that it is intended that the central bank shall develop a money market? Is it intended that it shall discount bills of exchange for ordinary commercial interests? Is that what is envisaged in the future? If so, I think that the committee deserves an answer from the Treasurer.

On the second reading of the bill, the Prime Minister referred to the Bank of England. I want to tell the committee something of what the Bank of England does. I shall quote from “ Banking Systems “, a book edited by Benjamin Beckhart and published only this year. Mr. Beckhart states -

From the outbreak of hostilities until November, 1951, the discount market had been accorded all the funds it needed from the Bank of England through the “ back door “, that is, from the discount house which acts as the bank’s market agent, at about the same terms as were offered by the commercial banks.

Is it envisaged that the Australian central bank will compete in the discount market with the commercial banks? If it is not, what is the purpose of giving the central bank, in clause 8 (d), the power to buy, sell, discount and re-discount bills of exchange, promisory notes and treasury-bills? In this country, where there is no developed money market, it would be most difficult for the central bank to do this but, as this practice has not been developed, what is the purpose of the Government in reproducing in clause 8 provisions which were designed in 1945 to give the Commonwealth Bank, as it existed then, the widest possible range of powers to act, not only as a central bank, but as a trading bank and a savings bank, and any other kind of bank? Does this mean that the Government does not quite understand what it is doing in this legislation? If the Government does understand what it is doing, does it intend only that, in future, the new central bank, in its pristine separation from all contamination by the trading world, will not use any secrets it might obtain in the course of its trading activities against the interests of the private trading banks? Is there some more sinister purpose in the mind of the Government? Or has not the Government a mind on this question?

In order to put the position clearly and give the Treasurer an opportunity to answer a straight question I ask him specifically: Why has the Government reproduced, in clause 8, a set of powers which were provided in 1945 for the Commonwealth Bank which existed then and which were designed for the purpose of allowing the Commonwealth Bank to carry out trading activities, savings bank activities, mortgage business, and to discount bills of exchange and rediscount them? Why is the Government reproducing in this legislation that wide range of powers for a bank which, on the Government’s own statement, will be very restricted in its activities?

The fact that the Government has not seen fit to examine this contradiction which is apparent in the legislation leads me to think that the Cabinet did not think too carefully about the proposals which were put to it by the trading banks and which are, in fact, the backbone of this legislation. That being the case, I suggest that the Government, instead of having its advisers from the Treasury in the chamber, might have, sitting on benches adjacent to it, advisers from the private trading banks so that it can come to grips with this legislation and give us the truth about what is involved. It seems to me that clause 8 is a remarkable contradiction. It repeats the full range of powers that were necessary for the Commonwealth Bank as it existed in 1945. The Government is again providing those powers for a bank which, on the Prime Minister’s own statement, as reported at page 2289 of “ Hansard “, has very restricted functions.

The CHAIRMAN:

– Order! The honorable member’s time has expired.

Sir ARTHUR FADDEN:
McPhersonTreasurer · CP

– Under ordinary circumstances, I would not take any notice of the ridiculous statement made by the honorable member for Yarra (Mr. Cairns), but I want to put the record right. I shall answer his question by asking him one: Does he contend that the Reserve Bank should not have adequate and comprehensive power to operate as a central bank? The clause to which he has referred takes no more power than did the act of 1945. The powers that are taken under this clause are the continuous powers that were taken in 1945. They are the minimum powers for a central bank. The specific sections relating to their operation are to be found in other clauses of the legislation.

Mr CAIRNS:
Yarra

.- Mr. Chairman-

Motion (by Mr. Harold Holt) put -

That the question be now put.

Mr Webb:

– I rise to order. The Treasurer asked the honorable member for Yarra to reply to certain points that he raised. Now the Leader of the House has moved that the question be put. I suggest that the honorable member for Yarra should have the right to reply.

The CHAIRMAN:

– Standing Orders provide that when the motion, “ That the question be now put “, is moved, the Chair must put that question.

Question put. The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 49

NOES: 30

Majority . . 19

AYES

NOES

Question so resolved in the affirmative.

Clause agreed to.

Clause 9 (Establishment of Reserve Bank Board).

Mr CALWELL:
Melbourne

.- The Australian Labour party has always objected to the control of the Commonwealth Bank, or any part of it, by a board. The unhappy experiences of the depression years have not been forgotten. We of the Labour party are just as much opposed to a board to-day as we were when the Commonwealth Bank Board was first established in 1924. The Commonwealth Bank was established by the Fisher Labour Government in 1911, and was placed under the control of a Governor. The Labour party always has believed that there should be a governor in charge of the activities of the Commonwealth Bank. If this Government wishes to destroy the unity of the bank and to divide it into portions, then we think that every portion should be governed by one person. Many of my colleagues on this side of the chamber were out of work during the depression years because of the actions of the Commonwealth Bank Board and, as I have said, because the unhappy events of the depression years have not been forgotten, we are still opposed to control of the Commonwealth Bank by a board.

The proposal in this legislation is that the Reserve Bank Board shall consist of a number of people, of whom no more than five may be public servants.

The CHAIRMAN:

– Order! The committee is considering at the moment, whether or not there should be a board. The constitution of the proposed board may be discussed when we are dealing with Part III.

Mr CALWELL:

– Yes, Mr. Chairman, but I submit that I may make passing references to this aspect to show why we object to a board. If it were to be a board of public servants, under the control of the Treasurer, it would be less objectionable than a board in respect of which outside influences were allowed to operate. Our fear is that the Government will select a board determined by the Melbourne Club, the Union Club and the Adelaide Club, and that the Reserve Bank will be harmed accordingly.

Sir Arthur Fadden:

– That disqualifies us, because we do not belong to any of those clubs.

Mr CALWELL:

– The Treasurer (Sir Arthur Fadden) says that he does not belong to those clubs, but because we have what Carlyle would have called a r< preternatural suspicion “ that he is under the control and direction of those bodies, we are not prepared to trust a board.

The board that operated in the days of the depression, which was the equivalent of the board proposed to be established under this legislation, consisted of people who were not bankers. If there is to be a board, we want one that will be composed of people who know somethting about banking. But what did Sir Robert Gibson know about banking? He was a bedstead manufacturer, and he made hard beds for many people to lie on during the depression. What did Mr. McComas, a squatter who hated the Labour party, know about banking? What did Mr. Drummond, another member of the Commonwealth Bank Board, know about banking? He, too, was a landowner. It is in the records of this Parliament that Mr. Beasley, who left us and went to the Lang Labour party, and Mr. Fenton, who also left us and went to the United Australia party, both stated in this Parliament that Mr. Drummond, as a member of the Commonwealth Bank Board, said that he would not do anything to help the Labour government of the day. Those are the sort of people that we fear may control the people’s bank again.

Then we come to Mr. Ashton, whose only claim to fame and importance was that he was a good polo player. I do not reflect upon Sir Clive Mcpherson as a citizen, of course, because I think that he is a very eminent man. We have no faith in boards of any kind, because they will be loaded against the bank. We want to protect the bank against a situation that arose in the past and could arise again. Sir Clive Mcpherson left the board of the National Bank of Australasia Limited to become a member of the Commonwealth Bank Board. When the Labour Government got rid of the Commonwealth Bank Board, he immediately returned to the board of the National Bank of Australasia Limited. We think that that sort of thing is all wrong.

We are opposed to the whole principle of government by boards on which the government has not a majority. We are opposed to the control of any part of the bank by a board, even if the government has a majority. If there must be a board, we would prefer the government to have a majority, but we think that the ideal form of control is that which obtained from 1911 until the Bruce-Page Government, of unhappy memory, mauled and mutilated the Commonwealth Bank of Australia, and established the Commonwealth Bank Board in 1924. Between 1924 anc! 1945, under the control of the board established by the Bruce-Page Government, there was no real activity by the Commonwealth Bank, and that great institution ceased to compete with the private banks. The Commonwealth Bank Board was, in effect, a board to preserve the interests of the private banks. Labour will never agree to that kind of board, and when its chance comes, as it inevitably will, it will reverse the situation and go back to the form of control that was provided for in the Commonwealth Bank Act 1945. I would go further than that. On the urgent pleas of Mr. Armitage, who was the Governor of the bank, the Labour Government, in the 1945 act, provided for a board to advise the Governor on monetary and banking policy. We do not need even an advisory board. I see no reason why the Commonwealth Bank should not be controlled by a governor, who is, in effect, the permanent head of the bank, under the direction of the Treasurer of the day, just as the head of a depart- ment in Canberra can control each of the administrative sections under the control of a responsible Minister.

Mr R W HOLT:
DAREBIN, VICTORIA · ALP

.- Clause 9 can hardly be discussed without reference to Part III. to which it refers. Without wishing in any way to anticipate discussion of Part III.. I should like to point out that there are certain features of it that are vital to the Australian Labour party’s opposition to this bill. As the Deputy Leader of the Opposition (Mr. Calwell) has emphasized, the kind of control provided for is sufficiently important - even if it is not the most important cause of the Australian Labour party’s opposition to the bill - for a considerable amount of time to be provided for the committee -to consider it, with advantage both to the Government and to the people. Those of us who are old enough to recall the position that prevailed in 1931 will realize the importance of a determination made by Sir Robert Gibson, who was at the time chairman of the Commonwealth Bank Board. In February, 1931, in a letter to Mr. E. G. Theodore, who was then Treasurer, Sir Robert wrote -

Subject to adequate and equitable reductions in all wages, salaries, and allowances, pensions, social benefits of all kinds, interest and other factors which affect the cost of living, the Commonwealth Bank Board will actively co-operate with the trading banks and the Governments of Australia in sustaining industry and restoring employment.

In the light of such a severe indictment of the Commonwealth Bank Board, and its composition, the question of whether the bank should be controlled by a board or a general manager, and the question of the composition of the board, if control is to be by a board, are vital to the consideration of the prospects of success or failure of the Reserve Bank of Australia or the Commonwealth Central Bank.

A board can be comprised only of individuals, and considerations relating to the board cannot be dissociated from considerations relating to the individuals who comprise it. Taking a purely hypothetical case with respect to the interests that could be represented on a board, we can see real danger in the substitution of control of the bank by a board for control by a governor. I concede the interest of the Liberal party, both financially and politically, in this question. If it is vital that the Liberal party, or the Government, should have on the board representatives of the monopolies, and of the financial interests that Government supporters represent in this House, the Government will automatically seek to appoint to the board those persons who have the most influence in the community financially. Therefore, it will appoint those who serve the interests of the few and not those of the many. If the Government may appoint to the board men who have a financial interest in banking institutions, the question of their interest in the private trading banks is most relevant to the consideration of this measure, because that interest will have a paramount bearing on the decisions that those men will make.

We hope that we shall never see looming in the future a period in which conditions will be similar to those that were experienced in 1931. If, unhappily, those conditions should occur again - and (heir return is possible, and, indeed, highly probable, if this Government continues its present economic policy - the proposed Reserve Bank Board, may make decisions inimical to the interests of the public and directly favouring the interests of private profiteers. We know that the sole object of a central bank is to serve at all times the interests and the welfare of society as a whole. In other words, for a central bank, the public interest must come first. The Oppositon asks: Would not a bank board, comprised of persons owing allegiance not to the public interest but to the interests of private enterprise, be likely to act in the interest of the class that they represent - the class that controls 80 per cent, of the wealth of the nation? Under the control of such a board, the policy of the bank would inevitably favour the sectional interests - the big financial interests - represented by the members of the board. The public interest would be of secondary consideration.

No better indication of the need for the resolution of such a conflict between public and private interests can be found than that contained in the quotation that I have just read from Sir Robert Gibson’s letter written in 1931. The lives and the physical health of good Australians were prejudiced by a decision made by a bank board, the members of which regarded private profit as the main consideration.

Since that was their main consideration, it is not to be wondered at that they allowed men, women, and children to die of starvation. We on this side of the House have a very real fear that circumstances may again emerge in which a similar decision will be made. If a bank board is placed in control of the Reserve Bank, we believe - and in view of past performances we have every justification for believing - that men, women and children will again die of starvation if private financial profits are to be the sole consideration in reaching decisions.

The position is so fraught with difficulty and danger to the people that one would have thought that the Government would have given the people at least the benefit of the doubt and attempted to show some bona fides in its avowed but empty intention to govern in the interests of the people as a whole. I ask that the Government accede to the demands already made by members of the Australian Labour party that the board be abolished. Even at this stage, the Treasurer (Sir Arthur Fadden) can show his good faith by abolishing the board. By all means, give it an advisory function, but not an executive function. I appeal to the Treasurer, who has shown more human consideration on this subject than the Prime Minister (Mr. Menzies), sitting at his side, and ask him to consider at this late stage the very real human plea made by members of the Australian Labour party who comprise Her Majesty’s Opposition in this chamber.

We ask the Treasurer to concede the strength of our case, in true democratic style, and to remove from the people the fear that in the future the interests of the few and not the good of the people will be the prevailing consideration. Those of us who have seen death caused by starvation in the past-

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– Death by starvation?

Mr R W HOLT:
DAREBIN, VICTORIA · ALP

– The Minister for Labour and National Service may sneer and scoff, but if he had been in one or two homes in 1931, as unfortunately I was at a young age, while still attending school, and seen a child die of malnutrition, he would heed our plea.

The CHAIRMAN:

– Order! The honorable member’s time has expired.

Mr ANDERSON:
Hume

.- Years ago, when I was previously a member of the Parliament, the same speeches and arguments as we have heard to-night were trotted out day after day on the question of the bank board. I recall the Deputy Leader of the Opposition (Mr. Calwell) asking, “ What possible knowledge of banking can a bedstead manufacturer have? “ The same argument applies now; what possible knowledge can an engine driver have of banking?

The honorable member for Darebin (Mr. R. W. Holt) implied that nobody other than a member of the Australian Labour party can represent anybody in this country. On the honorable member’s reasoning, nobody could possibly represent any interest other than his own personal interest on a bank board. Again on the honorable member’s reasoning, no honorable member on this side of the chamber can really justify his existence here. How we ever came to be here, goodness only knows, because we cannot represent anybody except the very wealthy people - the very narrow interests. If that is so, something is seriously wrong with our electoral system. When we get down to brass tacks and examine the rubbish put over by Opposition members, we realize how stupid it is to waste the time of the National Parliament on such arguments as they advance. They say that nobody except a member of the Australian Labour party can possibly represent any national interests. That is ridiculous! I support the clause.

Mr BIRD:
Batman

.- The Australian Labour party would be recreant to its trust if it did not oppose this clause. This proposal by the Government involves a delegation of its power and an evasion of its responsibilities. If a government wants to exclude itself from the framing of monetary policy - and that is what this clause means in fact - then all I can say is that such a government is prepared to govern in a secondary degree.

The appointment of this board, the composition of which is specified later in the bill, is not in the interests of the people as a whole but is in the specific interests of certain sections which are behind this bill - the private banks. I am very fearful that history will repeat itself. I do not make any assertion that the members of the board will be actuated by any conscious bias against the people’s interests or against the Commonwealth Banking Corporation. I do not impugn the integrity or ability of members of the banking board appointed by the Government, but because of their affiliations I question their capacity. Because of their affiliations, I am certain that they cannot make the wisest decisions in the interests of the people. I do not question their business talents. I am willing to concede that they may have been successful in their individual businesses. They may be captains of industry capable of Herculean attainments in their own fields of industry and commerce. However, that is not to say that their attitude to banking will be towards the conservation and preservation of the interests of the Australian people.

Labour’s attitude in opposing the appointment of a board, to which the Government will, more or less, hand the conduct of the Reserve Bank, is based upon its inflexible determination never again to tolerate the arbitrary action of a bank board in enforcing a policy which caused untold misery in the past. I should like to say to honorable members, particularly the honorable member for Hume (Mr. Anderson), that from the past we glimpse the future. There is nothing new under the sun and history has the unhappy knack of repeating itself. When we look at the actions of the bank board in the past, we discern that the interests of its members in very many instances have been diametrically opposed to the interests of the Australian people. Therefore, I suggest that a board, no matter how much the individual members may be actuated by the best intentions, will operate in a way that will react to the detriment of the people.

Another reason I have for opposing the appointment of a board is this: In private industry, a board has to submit a report of its activities to the shareholders every twelve months. If the shareholders do not like the way it has operated or doubt that it has acted in their interests during the preceding twelve months, it can be displaced. However, under this legislation, once the board of the Reserve Bank is constituted, it is there for a specific time. Irrespective of its policy, which may be against the interests of the people, it can continue that policy. As the honorable member for Darebin (Mr. R. W. Holt) has already stated, a policy of the bank board could bring untold misery to the people.

One is led to the inevitable conclusion that the history of bank boards connected with any functions of the Commonwealth Bank has by no means been very happy. The golden days of the Commonwealth Bank were the days when the governor of the bank, in close consultation with the Treasurer of the day, directed the policy and the fortunes of the bank. Never at any time under that system did we find that the bank’s policy was open to any serious criticism. On the other hand, during the years when the board has been in charge of the bank’s interests and has formulated the policy to be followed by the bank, many unhappy incidents have occurred which come readily to the minds of honorable members on this side of the chamber. 1 therefore suggest that if the Government wishes to do the right thing for the people of Australia, it should not proceed with this clause.

Several honorable members rising in their places,

Motion (by Mr. Harold Holt) put -

That the question be now put.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 51

NOES: 30

Majority . . . . 21

AYES

NOES

Question so resolved in the affirmative.

Question put -

That the clause be agreed to.

The committee divided, (The Chairman - Mr. C. F. Adermann.)

Question so resolved in the affirmative.

Clause 10 (Functions of Reserve Bank Board).

Mr WARD:
East Sydney

.- I shall read to honorable members the extraordinary provisions contained in clause 10- (1.) Subject to this Part, the Board has power to determine the policy of the Bank in relation to any matter and to take such action as is necessary to ensure that effect is given by the Bank to the policy so determined.

The Reserve Bank, as it is to be called, will exercise enormous powers, and I should imagine that in a country that claims to have democratic government matters to be dealt with by the bank would be determined in the first’ instance by the Government. Why should the policy of the Reserve Bank, which controls the economic life of the nation, be in the hands of private bankers or the representatives of private bankers who constitute the board that governs the Reserve Bank? According to the bill, the board is only obliged to report to the Government from time to time. Then, if a difference of opinion arises, as provided in a later clause, eventually the decision of the Government will prevail. But what happens to the economy in the meantime? The Government should determine the policy of this bank which will make decisions affecting the livelihood of the people of Australia, and the bank should carry out the policy determined by the Government.

The Reserve Bank is not an ordinary trading bank. According to the Government, it is now being made a bankers’ bank. It is not suggested that the Government should deal with the everyday administration of a trading bank. This is a reserve bank which will deal with questions of national economic policy which should be determined by the Government and not by the board. I was rather interested to note - I do not know whether it was due to frankness or stupidity - that the Minister for Territories (Mr. Hasluck) announced that this bank could no longer be regarded as the people’s bank; it had now become the bankers’ bank. If that is so, then neither the name suggested by the Government nor the name previously applied to this institution aptly describes its functions and position in the banking structure of Australia. Why does not the Government give the bank its correct name and call it the “ Private Bankers’ Reserve Bank “? That would describe it accurately.

Therefore, this is a most serious provision. The Government will be acting merely as a proxy for the private bankers and monopolists, who will control the bank board, the members of which will not be elected by the vote of the people and will not in reality be appointed by the Government, because it will merely carry through the process of nomination of appointees by the private bankers. There can be no doubt in the world that this measure is a private bankers’ measure.It was pointed out clearly in earlier debates that this was the type of legislation desired not by the Government but by the bankers. On 12th February, 1957, the Prime Minister (Mr. Menzies) and the Treasurer (Sir Arthur Fadden) had a private conference with the bankers. In a statement prior to that conference the Prime Minister said that he was going to ask the bankers to lay down what they desired to have incorporated in future banking legislation. There can be no doubt that these people, exercising such great power over this Government, will refuse to surrender the opportunity of controlling national policy which they propose to do through the bank board, which will be representative of big business and monopolistic interests in this country. The board will be the real government of Australia.

I repeat that the Government is capitulating to private banking interests because if we believe in democratic government all matters of national policy - and surely reserve bank policy is of national concern - should be determined by the Government and not by the privately controlled bank board. The Opposition takes this opportunity of pointing out to the nation the dangers inherent in this particular type of legislation. No longer can we claim to have democratic government. In future, arguments can be advanced in this Parliament as to the economic policy to be adopted, but the bank board will have the opportunity of obstructing the efforts of the Parliament to have that policy carried out.

I do not expect the Government - because it is merely the tool of monopolistic interests - to vary the decision it has made at the behest of big business, but I hope that the Australian people, when they have the opportunity of passing judgment on the actions of this Government, will recognize it for what it is - the political mouthpiece of big business - and eject it and replace it with a Labour government which will restore the Commonwealth Bank as the people’s bank, a bank to serve the national interest and the welfare of the nation generally.

Mr HAROLD HOLT:
Minister for Labour and National Service · HIGGINS, VICTORIA · LP

[10.291. - The point of substance raised by the honorable member for East Sydney (Mr. Ward) with regard to this bill is identical with the provision which existed in the legislation introduced by the Labour Government in 1945 of which he was either a supporter or a Minister. That being so, Mr. Chairman, I think the public can form some idea about all the humbug and this filibustering campaign which is being carried out to-night in the committee. In those circumstances, I suggest that the question be now put, and I shall move accordingly.

Mr Webb:

– Are you suggesting that we instituted the Commonwealth Bank Board?

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– No. I move-

That the question be now put.

Question put. The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 50

NOES: 29

Majority 21

AYES

NOES

Question so resolved in the affirmative.

Question put -

That the clause be agreed to.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 50

NOES: 29

Majority . . . . 21

In division:

AYES

In this aspect of the legislation we see the great difference between this and the old position. Under the old legislation the Governor was to manage the bank, and. in a sense, he was an officer closely connected with the Government and the Treasury, and there was effective consultation at that level. Now a board of ten persons comes into the picture, only three of those persons being dissociated from outside interests or from outside responsibilities or pastimes. The first is the Governor, the second the Deputy Governor, and the third the representative of the Treasury. They have personal and direct relationship. On that foundation are superimposed seven other members.

The point that I put to the Treasurer is this. It may be that Government policy will prevail if there is an anti-Labour Government, but it may be that Government policy will not prevail, under the board system, if there is a Labour Government. That has been the history of the banking system in this country. In the case of matters dealt with by the royal commission on banking, it was shown that there was an acute difference of opinion between the Government of the day, with responsibilities to the people and power in this Parliament, and the board. The board adopted a policy of deflation at a time when the proper policy was the opposite. Nothing could be done about it. I admit that that situation was possibly curable, but I think, the stage has been reached when we should review the matter and look at it from the point of view that it is the Government’s duty to lay down the policy and the duty of the board to follow it. That means, of course, that the board is not a necessity at all. If the Government lays down the policy, it should arrange for the most efficient procedure for the carrying out of that policy. The most efficient method has been proved to be one in which a governor has charge. This bank worked at its best when there was no board.

No one knows what the composition of the board will be. No one knows what will be the views of the particular members, and there is no way of finding out. It is not a satisfactory system.

Although in one sense this is not the primary question that arises under this clause of the bill, let me say that I entirely agree with the comment of the honorable member for East Sydney that the idea of a dispute being settled in the way set out in the bill must be abandoned. Not one case has occurred in which a matter in dispute has been referred to the Parliament. I do not accept the suggestion that there has never been a difference of opinion of the kind that should come before the Parliament. I think there is much force in the view that banking and monetary policies should receive the positive assent of the Parliament, rather than that they should come before the Parliament only in the rare case of a dispute, which, after a careful series of steps have been followed, is referred to the Parliament. Under that system, Parliament has no responsibility of a direct kind over banking policy. Think of all the great questions that have been decided during, say, the last few years. There was the matter concerning securities issued to the people of Australia at low rates of interest - the cheap money policy securities, for which so many people contributed. There was an attempt made, to which the board was clearly a party, to withdraw support from the bonds. That partly resulted in the falling of the price of the bonds and an increase of interest rates. The only persons who profited in that case were those in control of the private banking companies, which made millions of pounds as a result of the increase of interest rates. If a policy is decided upon with which we agree, that is all right, but is it not a matter for Parliament to decide?

These are matters that occur to me in connexion with clause 11. The Labour party is opposed to the board system as applied in the case of the proposed bank. Above all, if there is a board system, the Government must lay down a policy for the board rather than simply settle a particular dispute, would be on a narrow point. The happening is most abstract and unlikely. Why, there has not been one case in the whole history of the previous provision. The reference by the Minister for Labour and National Service to the earlier provision being substantially what it was when the Labour party passed its legislation in 1945-

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– I did not say that.

Dr EVATT:

– The Minister says he did not say that. At least, he does not contradict what I say, and the position as I have outlined it is the true position. The situation when there is a board is quite different from what it is when there is a governor vested with power to manage the bank.

Sir ARTHUR FADDEN:
McphersonTreasurer · CP

– This clause reproduces section 10 of the present act and makes the board subject to the final authority of the Government and the Parliament in the determination of the monetary and banking policy of the Reserve Bank. It requires the Reserve Bank board to keep the Government informed of the bank’s monetary and banking policy and, in the event of disagreement between the board and the Government as to whether any policy is directed to the greatest advantage of the people of Australia, empowers the Government, subject to the provisions of subclauses (4) and (7), to issue directions to the board.

The Leader of the Opposition stated such authority should not be given to the board, that the direction should be the other way, that the Government should direct the board. Is that so?

Dr Evatt:

– Yes.

Sir ARTHUR FADDEN:

– In the 1945 act, which was passed by the Labour government, of which the present Leader of the Opposition was Attorney-General and the honorable member for East Sydney (Mr. Ward) was a senior minister, there was no provision for a board. An advisory committee was set up. That committee was associated with the bank, so that the definition of “ bank “ in that act is really the equivalent of the definition of “ board “ in this bill.

Dr Evatt:

– No.

Sir ARTHUR FADDEN:

– Section 9 of the Commonwealth Bank Act of 1945 required the bank, from time to time, to inform the Treasurer - not the Government. The position to-day is that the board has to inform the Government. In the event of a difference of opinion between the Government and the board whether the monetary and banking policy of the bank is directed to the greatest advantage of the people of Australia, the 1945 act provided that the Treasurer and the bank were to endeavour to reach agreement. Sub-section (3.) of section 9 reads -

If the Treasurer and the Bank are unable to reach agreement, the Treasurer may inform the Bank that the Government accepts responsibility for the adoption by the Bank of a policy in accordance with the opinion of the Government and will take such action (if any) within its powers as the Government considers to be necessary by reason of the adoption of that policy.

Under sub-section (4.) of section 9 of the 1945 act, the bank was then required to give effect to that policy. Where is there any reference to Parliament? Where is there provision for the voice of Parliament? What arrant humbug the Opposition brings forward in connexion with this particular matter! Why, under our legislation we give Parliament the ultimate say in connexion with any dispute that might arise between the board and the Treasurer, as the representative of the Government. The Labour party’s legislation did not provide for such reference to Parliament. Under Labour’s legislation, the matter had to be decided, firstly, by the bank, which then advised the Treasurer of the monetary and banking policy being followed, and if the Treasurer disagreed, the Government - not the Parliament - had the ultimate say.

Several honorable members rising in their places,

Motion (by Mr. Harold Holt) put -

That the question be now put.

Question put. The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 49

NOES: 28

Majority . . . . 21

AYES

NOES

Question so resolved in the affirmative.

Question put -

That the clause be agreed to.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 49

NOES: 28

Majority . . . . 21

AYES

NOES

Question so resolved in the affirmative.

Clause 12 (Management of the Bank).

Mr BRYANT:
Wills

.- Obviously, the Treasurer and the Minister for Labour and National Service are unable to grasp the difference between the position of the Labour party on this matter and their own position. There is a fundamental difference between our approach to these problems from that of the Government.

The CHAIRMAN:

– Order! The committee is now dealing with clause 12, which deals with the management of the bank. It provides for a governor and a deputy governor.

Mr BRYANT:

– Sub-clause (2.) provides that -

Subject to sub-section (1.) of section ten of this Act, the Bank shall be managed by the Governor.

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– As clause 12 is identical with the clause which the Labour government inserted in the 1945 act, I move -

That the question be now put.

Mr Bryant:

– Mr. Chairman-

The CHAIRMAN:

– Order! The Minister for Labour and National Service has moved that the question be now put.

Question put. The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 48

NOES: 28

Majority . . . . 20

In division:

AYES

NOES

Question so resolved in the affirmative.

Question put -

That the clause be agreed to.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 48

NOES: 28

Majority . . . . 20

AYES

NOES

Question so resolved in the affirmative.

Clause 13 (Governor and Secretary to Treasury to establish liaison).

Mr CLARK:
Darling

.- Clause 13 provides -

The Governor and the Secretary to the Department of the Treasury shall establish a close liaison with each other and shall keep each other fully informed on all matters which jointly concern the Bank and the Department of the Treasury.

I want the Treasurer to inform me whether the Secretary to the Treasury is to act as the nominee of the Treasurer and keep him advised of his discussions with the Governor of the bank, in order to keep the Treasurer informed on banking policy? If he is to act on behalf of the Treasurer, I should like to say that there are some aspects of the Government’s policy at the present time with which I certainly do not agree, and I feel that the Treasurer should show more concern because those aspects materially affect the overseas trade balances of Australia.

The latest banking reports show a substantial reduction in the solid or gold and dollar content of Australia’s reserves. The financial editor of the “ Sydney Morning Herald “ points out that gold and dollars fell from 26 per cent. of the total in 1956 to only 14 per cent. of the total in 1957. He points out that gold reserves were £73,200,000 in 1956 and only £51,700,000 in 1957, that dollars rose from £21,800,000 to £26,700,000, and that other foreign exchanges increased from £260,000,000 to £488,100,000. He went on to say-

A sale of £25,000,000 of gold to the Bank of England, presumably for sterling securities, had disadvantages for Australia.

He pointed out -

A depreciation of sterling would reduce the real purchasing power of our reserves. Oddly, the same kind of risk is not run by the U.K. itself, since its reserves are, of course, held in gold and hard currencies.

Australia is running very grave risks indeed in transferring its overseas reserves from gold and more solid currencies to the uncertain currencies of the sterling area and other foreign sources. If devaluation should take place, Australia is likely to lose substantially in its trade balances. If there is consultation between the Secretary to the Treasury and the Governor of the Commonwealth Bank, and if the Secretary to the Treasury is acting for the Treasurer, the Treasurer has been remiss in his duties in not seeing that the overseas trade balances are kept in a sound and solid condition.

Clause 13 provides that the parties to this liaison shall keep each other fully informed on all matters which jointly concern the bank and the Treasury. There is a matter that has been brought to my notice and which I have raised in this chamber. The Prime Minister (Mr. Menzies) has submitted that he has no knowledge of what is taking place in this connexion. I understand that interest rates on advances on wool to be paid for at the port to which it is shipped will be increased on 2nd December from 6 per cent. to 8 per cent. If there is a liaison between the Treasurer and the Commonwealth Bank, the Treasurer should be able to inform the House why this rate is being raised and whether the wool industry is again being singled out as it was some years ago-

The CHAIRMAN:

– Order! The honorable member knows that policy relating to the wool industry does not come into this clause. The clause provides for a liaison between the Treasury and the bank. The honorable member cannot discuss financial policy generally at this stage.

Mr CLARK:

– The point I am making is that the liaison at present is very unsatisfactory if the Government is not fully informed of what is taking place. I have been told that the Government has no knowledge of what is taking place. If there is a liaison, it must be completely ineffective and we can expect little improvement under this legislation. Does the Government take any interest in what the Secretary to the Treasury has to say to the Governor of the Commonwealth. Bank? Does he act on his own behalf or on behalf of the Treasury? If he acts on behalf of the Treasury, the Treasurer should be informed and should act accordingly.

Sir ARTHUR FADDEN:
McPhersonTreasurer · CP

– This clause deals with the liaison between the Governor of the Reserve Bank and the Secretary to the Treasury that will be necessary to maintain close co-operation and an exchange of information. Such liaison has been carried out during the whole time of my Treasurership. I can assure the committee that there is the closest liaison. There are continuous conferences. I do not intend, however, to reply in detail to the honorable member for Darling (Mr. Clark). It suffices to say that the liaison that is taking place between the Commonwealth Bank Board, through its Governor, and the Treasury is one of the ingredients in the receipt for the sound economy that we enjoy to-day. I move -

That the question be now put.

Question put. The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 47

NOES: 28

Majority . . 19

AYES

NOES

Question so resolved in the affirmative.

Clause agreed to.

Clause 14 - (4.) A member appointed under paragraph (d) of sub-section (1.) of this section who is not an officer of the Bank or of the Public Service of the Commonwealth shall, subject to the next succeeding sub-section, be appointed for a period of five years, but is eligible for re-appointment upon the expiration of his period of office.

Sir ARTHUR FADDEN:
McPhersonTreasurer · CP

– I move -

In clause 14, omit sub-clause (4.), and insert the following sub-clause: - “ (4.) A member appointed under paragraph (d) of sub-section (1.) of this section who is not an officer of the Bank or of the Public Service of the Commonwealth -

shall, subject to the next succeeding subsection, be appointed for a period of five years but is eligible for reappointment; and

holds office subject to good behaviour.”.

In section 13 of the present Commonwealth Bank Act relating to the appointment of board members, there is a provision that board members appointed by the GovernorGeneral shall hold office during the periods of their appointment “ subject to good behaviour “. This provision was deleted in the drafting of clause 14 of the Reserve Bank Bill and was replaced by a new provision in sub-clause (1.) of clause 18 empowering the Governor-General to terminate the appointment of a board member on account of misbehaviour. This change was made purely as a drafting measure, in accordance with current practice in this respect. It has been suggested, however, that the change might have a significance that was not intended, in that it could operate to enable a board member to be removed from office more readily than is the case under the wording used in the present Commonwealth Bank Act. This possibility arises because, unlike the position under the present act, it is doubtful under the wording of sub-clause (1.) of clause 18 of the bill, as it stands, whether a board member who was removed from office allegedly on account of misbehaviour but who was subsequently held by the court not to have been guilty of misbehaviour would have the right to be reinstated. It could be that his only redress would be to seek damages for wrongful termination of his appointment.

The effect of the amendment now proposed, together with the omission of subclause (1.) of clause 18 of the bill - which I propose to move shortly - is to restore the wording of the Commonwealth Bank Act and so to put it beyond doubt that the position regarding termination of a board member’s appointment for reasons of misbehaviour remains the same as it now is in the case of members of the Commonwealth Bank Board.

Mr CREAN:
Melbourne Ports

– This clause, of course, goes to the root of the whole objection of the Opposition to the board. It provides that the composition of the board shall include seven members, at least five of whom shall be persons who are not officers of the bank or of the Public Service of the Commonwealth. It means, in effect, that up to seven people can be political appointees, and they will, of course, constitute a majority of this board of ten and will dominate the board whose duty it is, by reason of the clauses that have just been passed, to control the whole monetary and banking policy of the Commonwealth of Australia.

For the reasons that have been given earlier by my colleagues, the Opposition regards this as a dangerous clause. We have reason to believe that since the establishment of the board in 1951 - we have had six years of it now - the Commonwealth Bank has not been as sensitive an instrument in administering the banking and monetary policy of this nation as when it was administered by a single Governor.

The bank is supposed to have the duties of maintaining full employment and the stability of the currency of Australia. No one could suggest that there is stability of the currency of Australia because inflation is higher in this country than in any other democratic country in the world. It has risen very rapidly during the period of this board. Similarly, this basic factor of full employment is threatened at a time when there are thousands of people in this community able and willing to work, and an abundance of things necessary to be in the community. Unemployment is, figuratively, crying out day after day. Therefore the board, upon whom these important duties have been cast, is not operating in the interests of the general welfare of the Australian community. We believe that this is attributable to the nature of people on the board.

At least under the old act the responsibility for management was theoretically cast upon the bank. Now, by reason of the clauses we have just passed, it is cast deliberately upon the board. I have no doubt that the Government will endeavour to apportion the seven appointees among the various political and social interests that it claims to represent, and therefore the board will be too narrow to represent the whole of the interests of the Australian community at the one time.

In the original 1945 act provision was made for an advisory body of outside people only, who could, on occasions, bring some point of view but had no power whatever in determining and moulding the banking and monetary policy of this country. As was well indicated earlier by my colleague, the honorable member for East Sydney (Mr. Ward), that is a function which should rest primarily with the Government itself. It is not accepting that responsibility and is shielding behind a board which, ultimately, is responsible to nobody, except on very rare occasions when there is a difference of opinion between it and the Government. After all, it is not likely that there will be such differences of opinion, because the board is the creature of the Government.

We regard these political appointments as dangerous. Later we will be dealing with another board - a new board - mentioned in other legislation, which I cannot traverse at this stage. All these appointments are statutory, which really means they are made by whichever party happens to form the government of the day. In this case, the appointments will continue even after the fall of the present Government, which we hope may be very soon.

I would suggest that, in fairness, progress should be reported so that the Opposition can contemplate the implications of the amendment. It seems to me to be a very poor way of dealing with such important business. The amendment was moved shortly before 11.30 p.m. and we will be asked by ten minutes to twelve, at the outside, to decide intelligently whether or not we approve it. We do not approve of the clause, in any case, regardless of whether the amendment makes it better or worse. I say to the Leader of the House (Mr. Harold Holt), as a reasonable man, that when amendments like this are brought before the committee the Opposition should not be expected to adjudicate on them as quickly as this. I know that he has reasons - they are concerned with another place - for trying to hasten the passage of this bill, but this is a banking measure, and banking and financial matters are primarily the concern of this chamber. We should be given adequate opportunity to discuss these amendments. The Leader should have circulated them a week ago if it was found that certain clauses were not drafted in accordance with similar clauses in other bills. Greater courtesy should have been shown to the Opposition. These amendments were not available to us until an hour or two ago. It is not possible for a political party to gather itself together and decide so quickly whether it will accept new proposals, and whether they make the clause better or worse.

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– But this amendment seeks to restore the position that exists at present.

Mr CREAN:

– That may be so, but I suggest that it is still no way in which to transact the business of the country. After all, we are dealing with matters in respect of which there is a wide difference of opinion between honorable members on this side of the chamber and those on the other side. We on this side view the whole of this legislation, particularly the provisions which relate to the establishment of a Reserve Bank Board, with suspicion. I am sure that the Minister for Labour and National Service (Mr. Harold Holt) is not surprised that we are suspicious of the Government when it seeks to incorporate an amendment so quickly. Sometimes when that is done, there is more in it than meets the eye.

I wish to record the objection of the Labour party to this procedure. The reasons for our objection to the Reserve Bank Board were stated earlier, during the discussion of clause 9. The fact is that seven members of the board could be appointed by the government of the day and, according to my arithmetic, seven out of a total of ten members would represent a majority of government appointees on the board.

Mr WENTWORTH:
Mackellar

Mr Calwell:

– But he has not withdrawn, the remark to which I objected.

The CHAIRMAN:

– Order! There has. been so much disturbance on my left that I have not been able to take the necessary action. I ask the honorable member for Mackellar to proceed.

Mr Calwell:

– In those circumstances, I move -

That the honorable member be notfurther heard.

Question put. The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 28

NOES: 45

Majority . . . . 17

AYES

NOES

Question so resolved in the negative.

Motion (by Mr. Harold Holt) put -

That the Chairman do report progress and ask leave to sit again.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 47

NOES: 28

Majority . . . . 19

AYES

NOES

Question so resolved in the affirmative.

Progress reported.

Friday, 22 November 1957

Declaration of Urgency.

Mr. HAROLD HOLT (Higgins- Minister for Labour and National Service. - I declare that the Reserve Bank Bill 1957 is an urgent bill.

Question put -

That the bill be considered an urgent bill.

The House divided. (Mr. Speaker. - Hon. John McLeay.)

AYES: 48

NOES: 28

Majority . . 20

AYES

NOES

Question so resolved in the affirmative.

Allotment of Time.

Mr HAROLD HOLT:
Minister for Labour and National Service · HIGGINS, VICTORIA · LP

– I move -

That the time allotted in connexion with the bill be as follows: -

For the committee stage -

to the end of clause 25, until 1 a.m., Friday, 22nd November;

to the end of clause 55, until 4.15 p.m., Tuesday, 26th November;

to the end of clause 65, until 4.45 p.m., Tuesday, 26th November;

remainder of committee stage, until 5.30 p.m., Tuesday, 26th November.

For the remaining stages, until 5.45 p.m., Tuesday, 26th November.

I regret that it has not been found practicable to conduct an orderly and reasoned consideration of this important measure in committee. It has been quite clear to the committee, and to the House, that, from the outset, Opposition members, apparently in order to create some public impression that they are resisting and opposing this measure-

Mr Curtin:

– I move -

That the Minister be not further heard.

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– The honorable member’s action merely confirms what I have been saying.

Mr. SPEAKER (Hon. John McLeay).Order! Such a motion is out of order. The Minister may proceed.

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– The point is whether the time that has been allotted is adequate for a consideration of the remainder of the bill. I have sought to point out - and I am sure that any one who has followed the discussion quite objectively will agree - that the principal points that were taken earlier not only were argued fully but have been repeated on a number of occasions. Having regard to the manner of earlier debate, the Government is still of the opinion - I am sure it is the opinion of the majority of honorable members - that the allotment of time until 1 o’clock this morning and again on Tuesday until 5.30 p.m. will provide a reasonable opportunity for adequate debate by the committee of any substantial matters that remain to be discussed.

Mr CALWELL:
Melbourne

– The Opposition offers the strongest possible protest to the time-table that is set out in this “ guillotine “ motion. The time-table provides for another hour’s discussion to-day and two and a half hours on Tuesday next - a total of three and a half hours in which to dispose of 76 clauses of a most important piece of legislation which vitally affects the economy of this country. It is outrageous for any government to apply the “ guillotine “ and to say that the Parliament shall dispose of so many important clauses in such a short space of time.

I think I am in order in saying to you, Sir, that the legislation which the bill proposes to repeal was the subject of lengthy debate on other occasions. The 1945 bills were debated in committee for 43i hours, whereas the total time that will be allowed for this bill, including the five hours that will have expired at 1 o’clock, will be eight and a half hours. The 1947 legislation was debated for 22i hours, and the 1950 legislation, which was just as important as is this legislation, was debated in committee for 28i hours.

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– Wait until we have finished the other thirteen bills.

Mr CALWELL:

– But the Government might gag debate on them. If the same consideration relatively is given to the minor bills as is to be given to the major bills, there will be no discussion at all of the minor bills. If a government that is drunk with power and is strengthened by numbers can do this sort of thing, democracy will die in this Parliament; but it will die only for the time being. Another day will come! Let those who exert their power to-night and abuse their authority remember that another government might do the same thing at some other time.

Mr. WARD (East Sydney [12.15 a.m.]. - I believe that it would not be in order for me to answer all the argument that the

Leader of the House (Mr. Harold Holt> tried to adduce in support of the motion that seeks to limit debate upon this very important measure, but in my opinion it must now be evident to every member of the Australian community-

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– I rise to order. Is the Minister for Supply in order in eating fish and chips in the chamber?

Mr SPEAKER:

– Order! The honorable member for East Sydney will proceed.

Mr WARD:

– It must be evident to every reasonable and thinking man of the Australian community that what we have, in effect, in Australia to-day is a totalitarian government that is controlled by big business and the monopolists of this country. We are not being given adequate time to discuss what may be described as probably one of the most important measures that the Parliament has had to deal with.

What the Government is seeking to do, Mr. Speaker, if you are not aware of it, is to establish a control of economic affairs outside the Parliament. Now the Government, hoping to secure the passage of this measure which has been introduced at the behest of its champions and masters, the private bankers, wishes to stifle the voice of democracy as represented by the Labour Opposition. The Government may use its numbers to gag the Labour party and to prevent argument being advanced against this scandalous piece of legislation but, thank goodness, it has not yet, at least, the power to gag Labour men outside the Parliament who will go into the electorates. The people will want to know why such an important piece of legislation was not properly considered by the Commonwealth Parliament. The Deputy Leader of the Opposition (Mr. Calwell) has made it quite clear that the time to be allowed will not permit proper consideration of the measure.

Even before the Government introduced the “ guillotine “, debate on almost every clause was gagged. What is the Parliament becoming? It is becoming a farce! While Labour men are speaking, Government supporters, who should be listening to our objections, drift over to the bar to regale themselves with liquor. I offer the most emphatic protest against this infringement of the democratic rights of the elected representatives of the people. We demand the right to be heard in this chamber. The imposition of the “ guillotine “ at this stage in such an important debate is a public scandal.

Mr CAIRNS:
Yarra

.- The Minister for Labour and National Service, when submitting this motion, attempted to analyse what had already taken place in this chamber to-night. He has tried to assert that the opposition that has been shown to this measure has not been genuine, and that the arguments advanced have not been logical and relevant. The Government has endeavoured to convey the impression throughout the debate that there is no real opposition to the measure and that the Labour party is not really concerned about it. The Opposition has had sufficient points to raise on all the clauses that have been considered; but debate on the clauses has been gagged, with the result that we have not been able to advance the submissions that we were ready to advance.

On two occasions to-night the Minister made a mis-statement of fact and immediately afterwards, before the mis-statement of fact could be discussed, gagged the debate. I wish to direct attention to those two mis-statements of fact. He said that clause 10(1.) was substantially the same as the corresponding provision in the 1945 legislation.

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– I did not.

Opposition Members. - You did.

Mr CAIRNS:

– The Minister did say that, and I think that reference to the records of the Parliament will demonstrate the fact. It is only too clear that clause 10(1.) is not in any way similar to any provision in the 1945 legislation.

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

– And I did not suggest that it was.

Mr CAIRNS:

– It is necessary and relevant to point out that in 1945 there was no board with power to determine the policy of the bank. The only authority in 1945 that corresponded to the board was the Governor of the bank. Section 25 of the 1945 legislation provided that the bank should be managed by the governor, not that the governor shall have any power to determine the policy of the bank. Of course, there is no similarity between the two clauses. The Minister gave the impression that there was a similarity, and immediately moved the “ gag “ so that his statement could not be contradicted. I shall now take the clauses that he has alleged in his recent submission to the House were improperly discussed by the Opposition. Clause 12 (1) provides -

There shall bc a Governor of the Bank and a Deputy Governor of the Bank, who shall be appointed and hold office as provided by Part III.

Question put -

That the motion (vide page 2470), be agreed to.

The House divided. (Mr. Speaker - Hon. John McLeay.)

AYES: 50

NOES: 28

Majority . . . . 22

AYES

NOES

Question so resolved in the affirmative.

In committee: Debate resumed.

Mr WARD:
East Sydney

.The amendment proposes a vital departure from the terms of the bill. Taking my line from the argument used by the honorable member for Mackellar (Mr. Wentworth), I say that this is a deliberate attempt by a dishonest government to anticipate the decision that may be given by the people at the next general election. What is the purpose of the amendment? It provides that the period of appointment of members to the board may be seven years, but the bill as now drafted provides for a five-year period. Why seven years? The Treasurer interjects. It is obvious that he does not understand what the amendment involves. He has not read it. The Government could appoint the members of this board for a period of seven years. That means that the board could be entrenched during the life of three parliaments.

It is obvious that the Government is thinking along the lines of what would happen if the Government parties lost control of this chamber but held on to control of the Senate. In those circumstances, Labour would be prevented from securing either the repeal or the amendment of the legislation. A Labour government would be powerless to make any changes in the membership of the board, composed of representatives of big business and monopolistic interests carefully selected by this Government. Even if the majority of the people returned to the House of Representatives a majority of Labour members, Labour, unless it could at the same time get control of the Senate - changes in the Senate are not easily effected under proportional representation - would be unable to alter the composition of the board. If the present Government parties maintained control of the Senate, it might take three elections before the position could be changed.

Honorable members opposite are supposed to be in favour of democratic government. The honorable member for Mackellar talks of the possibility of a dishonest Labour government coming into office. What we are witnessing now is the spectacle of a dishonest Liberal-Australian Country party Government looking ahead and trying to prevent the possibility of any damage being done to its friends in the event of the return of a Labour government.

This is a completely dishonest proposal. The Government had secret conferences with the private bankers, conferences from which Dr. Coombs, the Governor of the Commonwealth Bank, was excluded. The Treasurer cannot deny that. After those secret conferences, a five-year period was determined for members of the board. Who decided suddenly thereafter that the term should be seven years? This Government will appoint the members for seven years. The use of the word “ may “ affords no protection. When the Government has carefully selected the members of the board, the appointments will be made for seven years.

We see that there is a reference to the occupants of these positions on the board holding office subject to good behaviour. The question whether any member has been guilty of misbehaviour will have to be determined by a vote of each House of the Parliament. If, after the next election, the Government parties maintain control of the Senate, or even if numbers in the Senate are equally divided, they will be able to prevent the government of the day from making any changes in the membership of the bank board under that procedure. Even if it is decided that a member has been guilty of misbehaviour, there is, as the honorable member for Mackellar has said, a right of appeal to a court.

It can be seen that what the Government has set out to do is to construct obstacle after obstacle so that when a Labour government is returned to office, it will be very difficult, if not impossible, for that government to make the changes that will be essential to enable it to give effect to its policy. The Government parties hope that they will be able to keep Labour in that position until the political pendulum has swung the other way - until Labour has been cast out of office and they have come back into the saddle. That is not our opinion of democratic government. When the people are foolish enough to return a Liberal-Country party government, the Labour party accepts that as their decision and as being the type of government they want. But when the people decide that they have made a mistake and they return a Labour government they are entitled to have a Labour government and Labour policy. What this Government is trying to do is give the people the right to return a Labour government but to hog-tie it so that it can do nothing to implement the policy approved by the electors. That is dishonest, but I do not expect the Government to change its policy because it is only acting as the proxy for big business and the monopolistic interests in this country. The Government has its orders. If it wanted to change its policy it could not do so. I hope that when the people have an opportunity they will give Labour a majority in both Houses of the Parliament; and we will then see that this damage to our national welfare is repaired.

Sir ARTHUR FADDEN:
McphersonTreasurer · CP

– I desire to correct the statement made by the honorable member for East Sydney (Mr. Ward) in a very important respect. In the first place, this amendment only seeks to put back into the bill what is in the present act with regard to qualifications, disqualifications, and the period of appointment. There is no alteration. The seven years referred to by the honorable member relates to the terms of appointment of the Governor and Deputy Governor, and that is the period prescribed at present. No alteration of those terms is being made. There is no deception whatsoever. The amendment will reinsert the provision contained in the present act, because a decided weakness was discovered in the clause as drafted.

Mr CAIRNS:
Yarra

.- I direct the committee’s attention to the proposed composition of the board as set out in sub-clause 2 of clause 14. I desired earlier to deal with clause 9 which provides for the establishment of the board, but owing to the application of the “ guillotine ‘” I was unable to do so. My remarks are equally relevant to sub-clause 2 of this clause, which provides - (2.) Of the seven members appointed under paragraph (d) of the last preceding sub-section, at least five shall be persons who are not officers of the Bank or of the Public Service of the Commonwealth.

The Opposition believes that the interests of the private banks will be served through the appointment of those five persons to the Reserve Bank Board. There is strong evidence to support that contention. A board was established by legislation passed by this Government in 1951. It is in the interests of the private trading banks to gain the maximum freedom in lending money. The trading banks create money, and it is in their interests to be able to lend as much as possible. In confirmation of my statement that the trading banks can create money and are only limited by central bank policy, I refer to a lecture given by Dr. Coombs, in Brisbane in 1955, in which he said -

The last source-

That is, money borrowed from a bank - differs from the first three because when money is lent by a bank it passes into the hands of a person who borrows it without anybody having less. Whenever a bank lends money there is, therefore, an increase in the total amount of money available.

It is in the interests of the trading banks to be free to lend as much money as they can and to take it back through deposits and re-lend it. The institution of the system of control by the central bank was supposed to limit that. Statistics show that up till 1951 this was effectively done; but in 1952, immediately after the appointment of a board, with the private trading bank interests coming into that board, the Treasurer said that we had had a grim experience of inflation up till 1952. 1 suggest that the appointment of the Commonwealth Bank Board and that grim experience of inflation spoken of by the Treasurer were pretty closely connected. But up till 1951, according to statistics provided in an answer to a question asked on notice, and which has not yet been published in “ Hansard “, the ratio of special accounts to deposits in the case of the trading banks was in the vicinity of 40 per cent.

That was at a time when inflation was being properly controlled in this country. The appointment of a board to control the Commonwealth Bank in 1951 was immediately followed by a relaxation of credit restrictions. The statistics to which I have referred show that for one quarter of 1952 the ratio of special accounts to deposits in the case of the Bank of New South Wales fell to 14.7 per cent., the ratios in respect of the other banks being Commercial Banking Company of Sydney Limited 13.2 per cent., National Bank of Australasia Limited 13.8 per cent., English Scottish and Australian Bank Limited 14.4 per cent., an l Commercial Bank of Australia Limited 14 per cent. That was the order of the change. I suggest that this dramatic fall in the ratio had something to do with the influence that came into the Commonwealth Bank Board through appointments of the kind we are now discussing. The Treasurer himself recognised this, and I refer him to his Budget speech in 1955, when he said, reviewing the situation I am now discussing -

There has been a formidable upsurge of spending.

Of course, we had that very formidable upsurge of inflation which this Government proved incapable of handling. The Treasurer, looking at that formidable upsurge of spending, said -

It has been facilitated by a far too generous expansion of credit on the part of the banking system together with a rapid growth of hirepurchase finance. Here unquestionably is the chief reason for the tensions and pressures in our economy.

If the Treasurer himself, speaking in- 1955, said that the chief reason for the tensions and pressures in our economy was a too rapid expansion of credit on the part of the banking system, why did not the Government take action to stop that far too rapid expansion of credit? Was it because of the appointments made to the Commonwealth Bank Board, which had occurred in 1951? Under the influence of those gentlemen on the Commonwealth Bank Board, on whom the Governor of the Commonwealth Bank has very little influence, the amount of trading banks’ money that the central bank held and by that means was able to control the level of their re-lending and their influence on inflation, has consistently fallen. The figures provided in the answer to my question will demonstrate the extent of that fall. Before the appointment of the board in 1951, the average ratio was about 40 per cent. Since then, in 1955, 1956 and 1957, the average has been below or in the vicinity of 20 per cent. If that is not a policy that is serving the interests of. the trading banks 1 have yet to see one. One would have to be particularly naive to take any view other than that it had been brought about as a result of the appointment of the bank board. This is the fundamental question. The interests of the trading banks have been recognized. They were dealt with by the late Mr. Chifley, who said that their interests were to feed the boom in times of apparent prosperity. The trading banks, the money lenders, the people who sell money for the highest interest return, have a definite economic interest in feeding in as much money as they can get. They wish to resist the power of the central bank to control the amount of money that they can in fact lend. It is clearly in their interests to do that. I suggest that, ever since 1951, when the board was appointed, the trading banks have gradually increased their power over the central bank directorate and have gradually achieved this condition, which I suggest is fundamental to this legislation. The interests of the private banks are served by breaking down public control, and they have succeeded in doing that. This Government has permitted them to do so. The members of the board were drawn from commercial interests with a social background identical to the conservative background which characterizes the trading banks.

I am not suggesting that there is any dishonesty in this kind of thing. It is merely a matter of looking at it from the point of view of the social class and economic interest which you represent. The people appointed to the Commonwealth Bank Board represent an economic interest and a social class that are not concerned with the welfare of the people of this country. The small section of the community to which I have referred is, by its very position, concerned to make as much money as possible by lending as much as possible at the highest possible interest rates, thereby feeding the boom. Unless the Government will appoint to the board people who will stop this kind of thing, Australia will have to face a continuing inflationary problem. I believe that the Government is behind this move. It has not genuinely tried to stop inflation or put on the Commonwealth Bank Board people who are willing to do so. The trading banks have been allowed to get away with it for the last five years. Therefore, it is completely wrong to continue in existence a bank board, if its members will do what I have just described. Such people should not be on a board.

Mr WENTWORTH:
Mackellar

– It is fascinating to listen to the honorable member for Yarra (Mr. Cairns). [Quorum formed.] I repeat, it is fascinating to listen to the honorable member for Yarra advocating fierce credit restrictions and deploring the fact that we have not, in that way, spread unemployment throughout the economy. Unless the honorable member is talking economic nonsense, that is what he meant when he called for a restriction of lending, a tighter control of credit.

I want to address my remarks to those which came from the honorable member for East Sydney (Mr. Ward) earlier in the debate. Of course, he made a fool of himself by not realizing that the five-year term was to remain unchanged. However, I shall not pursue that because he did a service to the committee by revealing his own state of mind - his desire to be given the opportunity to commit an act of dishonesty. What did he say? I ask the committee to consider this carefully and in detail. He was objecting to the inclusion in the legislation of the old provision which was in the Chifley act, and is in the existing act. I think that it was even in the older acts also. He was doing that so that he could make a false accusation and get away with it. Under the existing act a member of the Commonwealth Bank Board who misbehaves may be removed by appropriate court action.

Mr Ward:

– I move -

That the honorable member be not further heard.

NOES: 48

Majority 20

AYES

NOES

Question so resolved in the negative.

Question put -

That the amendment (Sir Arthur Fadden’s) be agreed to.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 48

NOES: 28

Majority . . . . 20

AYES

NOES

Question so resolved in the affirmative.

Question put -

That clause 14, as amended, and clauses15 to 25, and the circulated amendments of the Government, be agreed to.

The committee divided. (The Chairman - Mr. C. F. Adermann.)

AYES: 48

NOES: 28

Majority . . 20

AYES

NOES

Question so resolved in the affirmative. [Circulated amendments -

Clause 18 - (1.) The Governor-General may terminate the appointment of a member of the Board appointed under paragraph (d) of sub-section (1.) of section fourteen of this Act on account of misbehaviour.

Amendment. - Omit sub-clause (1.).

Clause 24 - (1.) The Governor and the Deputy Governor shall be appointed by the Governor-General and shall hold office, subject to the next succeeding section, for such period, not exceeding seven years, as the Governor-General determines, but are eligible for re-appointment.

Amendment. - Omit sub-clause (1.), and insert the following sub-clause: - “ (1.) The Governor and the Deputy Governor -

General determines but are eligible for re-appointment; and

Clause 25 - (1.) The Governor-General may terminate the appointment of the Governor or the Deputy Governor on account of misbehaviour.

Amendment. - Omit sub-clause (1.).]

Progress reported.

page 2479

CIVIL AVIATION AGREEMENT BILL 1957

Bill received from the Senate.

Motion (by Mr. Harold Holt) put -

That the bill be now read a first time.

The House divided. (Mr. Speaker - Hon. John McLeay.)

AYES: 49

NOES: 28

Majority . . . . 21

AYES

NOES

Question so resolved in the affirmative.

Bill read a first time.

House adjourned at 1.22 a.m. (Friday).

page 2479

ANSWERS TO QUESTIONS

The following answers to questions were circulated: -

Trading Banks

Mr Cairns:

s asked the Treasurer, upon notice -

What was the (a) total of trading deposits, (b) deposits in Special Accounts, (c) “ uncalled liability “, and (d) percentage of trading deposits represented by Special Account deposits, of each of the trading banks at the end of each three months from the 1st January,1950, to the present date?

Sir Arthur Fadden:
CP

– The answers to the honorable member’s questions are as follows: -

The information requested by the honorable member is set out in the following tables relating to the major trading banks: -

Mr Cairns:

s asked the Treasurer, upon notice -

What were the taxable incomes of each of the trading banks as shown in reports of the Commissioner of Taxation in each year between 1945 and the present date?
What were the profits of each of the trading banks as shown in their accounts in each year between 1945 and the present date?
What were the shareholders’ funds of each of the trading banks in each year between 1945 and the present date?
What was the amount of capital actually paid up in the case of each trading bank at the end of each year between 1945 and the present date?
What percentage did (a) taxable income and (b) profit of each trading bank represent of (c) shareholders’ funds and (d) paid-up capital, at the end of each financial year between 1945 and the present date?

Sir Arthur Fadden:
CP

– The answers to the honorable member’s questions are as follows: -

The taxable incomes of individual trading banks are not disclosed in reports of the Commissioner of Taxation and he is under a statutory obligation not to publish such information. 2 to 5. Insofar as question 5 seeks information concerning the taxable incomes of each of the trading banks see answer to 1 above. The remaining information requested is set out in the following tables prepared by the Commonwealth Statistician: -

Trading Banks Profit

Mr Cairns:

s asked the Treasurer, upon notice -

What were the recommendations of the Royal Commission on Monetary and Banking Systems in relation to the disclosure of bank profits?
What is the difference between (a) taxable income and (b) profit of each of the trading banks in each of the financial years between 1945 and the present date?
Do these figures indicate that undisclosed reserves have been built up in these years?

Sir Arthur Fadden:
CP

– The answers to the honorable member’s questions are as follows: -

The conclusions and recommendations of the Royal Commission on Monetary and Banking Systems in relation to the disclosure of trading bank profits are contained in paragraphs 625 to 650 of the Royal Commission’s report. 2 and 3. As indicated in the reply being given to-day to another question by the honorable member, the taxable incomes of individual trading banks cannot be disclosed. Answers cannot, therefore, be given to these questions.

Trading Banks Special Acounts

Mr Cairns:

s asked the Treasurer, upon notice -

What are the maximum amounts which could have been called up into Special Accounts for each of the trading banks under the Banking Act 1953, at the end of each quarter since January, 1954?
What are the maximum amounts which could have been called up into Statutory Reserve Deposit Accounts for each trading bank, had the provisions of Division 3 of the Banking Bill 1957 been in operation, for each quarter since January, 1954?
What are the maximum amounts which could have been called up for each trading bank under each of these provisions for the last date for which figures are available?

Sir Arthur Fadden:
CP

– The answers to the honorable member’s questions are as follows: - 1 to 3. The maximum amounts which may have been required under the Banking Act 1945-1953 to be to the credit of the Special Account of each major trading bank at the end of each quarter since January, 1954, and the latest available month are shown in the following table. Under the provisions of Part II., Division 3, of the Banking Bill 1957, there is no statutory limit to the percentage of a trading bank’s Australian deposits that the trading bank may be required to have on deposit in its Statutory Reserve Deposit Account: -

Commonwealth Trading Bank

Mr Cairns:

s asked the Treasurer, upon notice -

What amounts have been available to the Commonwealth Trading Bank for capital development from net profits each year since 1945?
What amounts would have been available to the Commonwealth Trading Bank for capital development from net profits each year since 1945 if the provisions of Part IV. of the Commonwealth Banks Bill 1957 and the Income Tax and Social Services Contribution Assessment Bill (No. 2) 1957 had been in operation?

Sir Arthur Fadden:
CP

– The answers to the honorable member’s questions are as follows: -

Under the Commonwealth Bank Act, one-half of the net profits of the Commonwealth Trading Bank each year is retained by the Bank and credited to its Reserve Fund. The balance of £2,735,390 standing to the credit of the Commonwealth Trading Bank Reserve Fund as at 30th June, 1957, has been accumulated from such annual transfers from the net profits of the Commonwealth Trading Bank (General Banking Division prior to 3rd December, 1953) as shown in the following tables: -

In addition, under the Commonwealth Bank Act 1951, amounts totalling £1,429,000 were, between 1952 and 1956, transferred from the profits of the Commonwealth Bank to the capital of the Commonwealth Trading Bank (bringing the amount of the capital to £5,429,000).

For technical and other reasons it would be impracticable to make a hypothetical calculation of this nature.

Commonwealth Bank

Mr Cairns:

s asked the Treasurer, upon notice -

Will he seek the viewpoint of the Governor of the Commonwealth Bank upon the separation of the trading and central bank sections of the Commonwealth Bank, as provided in the 1953 and 1957 legislation, and state that viewpoint as soon as possible?

Sir Arthur Fadden:
CP

– The answer to the honorable member’s question is as follows: -

The function of the Governor of the Bank, under the Commonwealth Bank Act 1945-53, is to manage the bank “ in accordance with the policy of the Bank and with any directions of the Board “ - and, of course, in accordance with the provisions of that legislation. They do not include the public expression of views on the wisdom of the Government’s legislative proposals.

European Immigrants

Mr Whitlam:

m asked the Minister for Immigration, upon notice -

With what countries does Australia have bilateral migration agreements or arrangements through the Intergovernmental Committee for European Migration?
How many persons arrived on assisted passages and on full-fare passages from each of these countries in 1955 and 1956?
What were the occupations of (a) assisted migrants, and (b) full-fare migrants, from each of the countries in 1955 and 1956?

Mr Townley:
Minister for Immigration · DENISON, TASMANIA · LP

– The answers to the honorable member’s questions are as follows: -

Australia has bilateral migration agreements with the United Kingdom, Malta, the Netherlands, Germany and Italy. Arrangements have also been concluded with the Intergovernmental Committee for European Migration to assist financially the movement of selected migrants from Austria, Greece and Denmark. In addition, Australia offers unilateral financial assistance to selected migrants from Switzerland, United States of America, Eire, Norway, Sweden and Finland.
The numbers of nationals of the foregoing countries who arrived in Australia on assisted passages in 1955 and 1956 are shown in the column headed “ assisted passage “ below. The corresponding numbers of immigrants arriving on full-fare passages are not recorded by the Commonwealth Statistician as the necessary data is not available. However, the column headed “ full-fare “ shows, in respect of these countries, the numbers of nationals other than assisted migrants, who arrived in Australia in the years concerned intending to remain one year or more. The numbers of assisted passages shown in the table vary in some degree from those furnished in answer to the honorable member’s question of 2nd October last. The explanation for this is that, having regard to the nature of that question, those previously supplied related to “ sailings “ from overseas ports during the calendar year, while those now furnished refer to arrivals in Australia during the calendar year.

Occupational details of persons arriving in Australia are recorded (a) on the basis of scheme in respect of assisted migrants, and (b) on the basis of nationality in the case of ali persons arriving for one year or more, including assisted migrants. In respect of (b) occupations of the most numerous nationalities only are recorded.

The main occupational groupings of immigrants arriving under assisted passage schemes and in the main nationalities were as follows in 1955 and 1956. In respect of certain nationalities mentioned in Table B, occupational details are available only from July, 1955, onwards.

Cite as: Australia, House of Representatives, Debates, 21 November 1957, viewed 22 October 2017, <http://historichansard.net/hofreps/1957/19571121_reps_22_hor17/>.

View PDF View XML View in Voyant

House of Representatives21 November 1957

QUESTION

INTEREST RATES

Dr EVATT:BARTON, NEW SOUTH WALES

Mr MENZIES:Prime Minister · KOOYONG, VICTORIA · LP

QUESTION

RAIN-MAKING

Mr HOWSE:CALARE, NEW SOUTH WALES

Mr CASEY:Minister for External Affairs · LP

Mr Calwell:

Mr CASEY:

QUESTION

GOVERNMENT LOANS AND FINANCE

Mr BIRD:BATMAN, VICTORIA

Mr MENZIES:LP

Dr Evatt:

Mr MENZIES:

QUESTION

POLIOMYELITIS

Mr STOKES:MARIBYRNONG, VICTORIA

Dr DONALD CAMERON:Minister for Health · OXLEY, QUEENSLAND · LP

QUESTION

PENSIONS

Mr RUSSELL:GREY, SOUTH AUSTRALIA

Mr ROBERTON:Minister for Social Services · RIVERINA, NEW SOUTH WALES · CP

QUESTION

COAL

Mr BRAND:WIDE BAY, QUEENSLAND

Mr HAROLD HOLT:HIGGINS, VICTORIA · LP

QUESTION

HOMES FOR THE AGED

Mr CHAMBERS:ADELAIDE, SOUTH AUSTRALIA

Mr ROBERTON:CP

QUESTION

ST. MARY’S FILLING FACTORY

Mr OPPERMAN:CORIO, VICTORIA

Mr BEALE:Minister for Supply · PARRAMATTA, NEW SOUTH WALES · LP

QUESTION

SALES TAX ON INFRA-RED RAY LAMPS

Mr MINOGUE:WEST SYDNEY, NEW SOUTH WALES

Mr MENZIES:LP

QUESTION

WHEAT

Mr DRUMMOND:NEW ENGLAND, NEW SOUTH WALES

Mr MENZIES:LP

QUESTION

TOYS

Mr BRYANT:WILLS, VICTORIA

Mr McEWEN:Minister for Trade · MURRAY, VICTORIA · CP

QUESTION

VACCINE FROM RUSSIA

Mr MACKINNON:CORANGAMITE, VICTORIA

Dr DONALD CAMERON:Minister for Health · OXLEY, QUEENSLAND · LP

QUESTION

TELEPHONE SERVICES

Mr CLYDE CAMERON:HINDMARSH, SOUTH AUSTRALIA · ALP

Mr MENZIES:LP

Mr Whitlam:

Mr MENZIES:

QUESTION

FREE MILK FOR SCHOOL CHILDREN

Mr BUCHANAN:MCMILLAN, VICTORIA

Sir PHILIP MCBRIDE:Minister for Defence · WAKEFIELD, SOUTH AUSTRALIA · LP

QUESTION

COMMONWEALTH PROPERTY

Mr BARNARD:BASS, TASMANIA

Mr Menzies:

Mr BARNARD:

Mr Menzies:

Mr BARNARD:

Mr Menzies:

Mr BARNARD:

Mr Beale:

Mr BARNARD:

Mr MENZIES:LP

QUESTION

CONSTITUTION REVIEW COMMITTEE

Mr FAIRBAIRN:FARRER, NEW SOUTH WALES

Mr MENZIES:LP

QUESTION

House of Representatives
21 November 1957

Dr EVATT:
BARTON, NEW SOUTH WALES

Mr MENZIES:
Prime Minister · KOOYONG, VICTORIA · LP

Mr HOWSE:
CALARE, NEW SOUTH WALES

Mr CASEY:
Minister for External Affairs · LP

Mr BIRD:
BATMAN, VICTORIA

Mr MENZIES:
LP

Mr STOKES:
MARIBYRNONG, VICTORIA

Dr DONALD CAMERON:
Minister for Health · OXLEY, QUEENSLAND · LP

Mr RUSSELL:
GREY, SOUTH AUSTRALIA

Mr ROBERTON:
Minister for Social Services · RIVERINA, NEW SOUTH WALES · CP

Mr BRAND:
WIDE BAY, QUEENSLAND

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

Mr CHAMBERS:
ADELAIDE, SOUTH AUSTRALIA

Mr ROBERTON:
CP

Mr OPPERMAN:
CORIO, VICTORIA

Mr BEALE:
Minister for Supply · PARRAMATTA, NEW SOUTH WALES · LP

Mr MINOGUE:
WEST SYDNEY, NEW SOUTH WALES

Mr MENZIES:
LP

Mr DRUMMOND:
NEW ENGLAND, NEW SOUTH WALES

Mr MENZIES:
LP

Mr BRYANT:
WILLS, VICTORIA

Mr McEWEN:
Minister for Trade · MURRAY, VICTORIA · CP

Mr MACKINNON:
CORANGAMITE, VICTORIA

Dr DONALD CAMERON:
Minister for Health · OXLEY, QUEENSLAND · LP

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

Mr MENZIES:
LP

Mr BUCHANAN:
MCMILLAN, VICTORIA

Sir PHILIP MCBRIDE:
Minister for Defence · WAKEFIELD, SOUTH AUSTRALIA · LP

Mr BARNARD:
BASS, TASMANIA

Mr MENZIES:
LP

Mr FAIRBAIRN:
FARRER, NEW SOUTH WALES

Mr MENZIES:
LP

Dr DONALD CAMERON:
Minister for Health · OXLEY, QUEENSLAND · LP

Mr ASTON:
PHILLIP, NEW SOUTH WALES

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

Mr HAROLD HOLT:
HIGGINS, VICTORIA · LP

Mr LUCHETTI:
Macquarie

Mr GEORGE LAWSON:
Brisbane

Mr BURY:
Wentworth

Mr CHAMBERS:
Adelaide

Mr JOSKE:
Balaclava

Mr ACTING DEPUTY SPEAKER:
Mr. Makin

Mr WHITLAM:
Werriwa

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

Mr ANTHONY:
RICHMOND, NEW SOUTH WALES · CP; NCP from May 1975

Mr BEAZLEY:
Fremantle

Mr HULME:
Petrie