Senate
3 November 1927

10th Parliament · 1st Session

  1. Senate
  2. 10th Parliament
  3. 1927

The President (Senator the Hon. Sir John Newlands) took the chair at 3 p.m., and read prayers.

page 912

QUESTION

ACOUSTIC PROPERTIES OF CHAMBER

Senator GRAHAM:
WESTERN AUSTRALIA

– No doubt, Mr. President, youfind it very difficult to hear honorable senators on either side, andI should like to ask if anything can be done to improve the acoustic properties of the chamber?

The PRESIDENT:

– The matter to which the honorable senator has drawn attention has not been overlooked. Efforts are being and will continue to be made to improve the acoustic properties in both chambers. Experts, whose services have been called in, believe that ultimately they will be able to effect a considerable improvement.

page 912

QUESTION

BROADCASTING SENATORS SPEECHES

Senator GRANT:
NEW SOUTH WALES

– In view of the widespread desire on the part of listeners-in to hear the speeches of honorable senators delivered here and of the very scant attention paid to our speeches by the press of the Commonwealth, will the Leader of the Government in the Senate take steps to have all honorable senators’ speeches broadcast?

Senator Sir WILLIAM GLASGOW:

– As it would appear from the reception given to the honorable senator’s question by the majority of honorable senators that there is no desire on their part to have their speeches broadcast, the Government does not propose to do what he suggests.

page 912

DISTINGUISHED VISITOR

Right Honorable L. C. M. S. Ambry, M.P

The PRESIDENT:

– My attention has been called to the fact that the Right Honorable L. C. M. S. Amery, M.P,, Secretary of State for Dominion Affairs, is within the precincts of the chamber, and

I propose, with the consent of the Senate, to ask this distinguished visitor to take a seat on the floor of the Senate.

Honorable Senators. - Hear, hear!

Mr. Amery thereupon entered the chamber, and was seated accordingly.

page 913

QUESTION

COUNTRY WIRELESS SERVICE

Senator ANDREW:
VICTORIA

asked the Minister representing the Postmaster-General, upon notice -

  1. Is the Government aware whether extremely unsatisfactory conditions exist . in country districts for the reception of wireless broadcasting, owing to the lack of relay stations ?
  2. Is it a fact that for several months of the year owners in country districts obtain practically no benefits from their receiving sets, and in many cases are obliged to discontinue the use of them, owing to the unfavorable conditions for reception over long distances, which conditions do not exist within a reasonable distance of transmitting stations?
  3. Are any steps being taken to provide relay stations for country districts where owners of receiving sets are obliged to pay the same licence-fees as those paid in Melbourne?
  4. If any action is contemplated, how long will it be before some relief from the present conditions is afforded?
  5. Is it a fact that applications for licences for relay stations for country districts have been made by Station 3LO, Melbourne, and that such applications have been refused by the Postal department?
  6. If such applications have been refused, what was the reason for the refusal?
  7. If the Government proposes to take no action to give people residing in country centres a satisfactory wireless service, in order to enable those engaged in agricultural pursuits to keep in touch with market operations and to obtain vitally important weather reports and forecasts, will the applications that have been made for licences for relay stations be immediately considered and the necessary permission granted to enable the work to be proceeded with by the company or companies concerned with a view to avoiding unnecessary hardship?
Senator CRAWFORD:
Honorary Minister · QUEENSLAND · NAT

– The whole position with regard to wireless is now under consideration by the Government, and it is hoped that an announcement will shortly be made.

page 913

QUESTION

NEW GUINEA

Campaign Against Venereal Disease

Senator PAYNE:
TASMANIA

asked the Minister representing the Minister for Home and Territories, upon notice -

  1. Is it a fact that, after incurring expenditure in a campaign devoted to combating the ravages of venereal disease among the natives of the Territory of New Guinea, the campaign was unable to be pushed to a satisfactory conclusion owing to lack of funds?
  2. Were representations made to the Minister of Health, for advice and/or to the Government for special assistance for this object; and if so, with what result?
  3. Has the matter been considered by the Government with a view to this work being again taken up and carried to a successful conclusion ?

Senator Sir WILLIAM GLASGOW.The answers to the honorable senator’s question are as follow: -

  1. Inquiries are being made and the information will be supplied as soon as possible.
  2. When the annual grant for the welfare of the natives was initiated, it was specifically laid down by the responsible Minister that a substantial portion of the grant should be allocated to the medical services of the Territory so far as they related to the natives. It was understood that portion of this allocation would be expended on the campaign against venereal disease.
  3. See answer to 1.

page 913

QUESTION

CANCER RESEARCH

Senator PAYNE:

asked the Minister representing the Minister for Health. upon notice -

  1. Is the Government aware whether Canada proposes establishing a special laboratory for the exclusive study of the scourge of cancer and the devising of means to combat the same?
  2. Will the Government consider the appropriation of a sum of money for a similar purpose in Australia?

Senator Sir WILLIAM GLASGOW.The Minister is making inquiries and will reply to the honorable senator’s question as soon as possible.

page 913

QUESTION

CANBERRA

Unprotected Electric Wires

Senator FINDLEY:
VICTORIA

asked the Minister representing the Minister for Home and Territories, upon notice -

  1. Is it a fact that there are houses in the Federal Capital Territory where unprotected electric wires are only nine feet from the ground ?
  2. If so, will, the Minister take immediate steps to have this state of affairs altered, so as to prevent the possibility of an accident occurring from such a cause?
Senator Sir WILLIAM GLASGOW:

– 1 have asked my colleague, the Minister for Home and Territories, to obtain the information desired by the honorable senator, and when it is to hand I shall make it available.

page 914

QUESTION

TARIFF BOARD

Reports on Timber and Potatoes.

Senator J B HAYES:
TASMANIA · NAT; UAP from 1931; LP from 1944

asked the Minister representing the Minister for Trade and Customs, upon notice -

  1. Is it a fact that the Tariff Board’s reports on timber and potatoes have been in the hands of the Government since March?
  2. If so, will he make them available for honorable senators at an early date?
Senator CRAWFORD:
NAT

– The answers to the honorable senator’s questions are as follow : -

  1. The report on potatoes was received by the Minister about March last, the report on timber towards the end of September last. The reports have not yet been fully considered by the Government.
  2. When the reports have been fully considered by the Government they will be laid on the Table of the House.

page 914

QUESTION

TIMBER IMPORTS

Senator HERBERT HAYS:
TASMANIA

asked the

Minister representing the Minister for Trade and Customs, upon notice -

What is the quantity of timber imported into the Commonwealth as from 30th June, 1926, to the 31st August, 1927?

Senator CRAWFORD:
NAT

– The information is being obtained.

page 914

PAPERS

The following papers were presented: -

Industrial Delegation to United States of America - Report of the Industrial Delegation appointed by the Commonwealth Government to investigate the method employed in, and the working conditions associated with, the manufacturing industries of the United States.

Northern Australia Act -

Central Australia - Ordinances of 1927-

No. 9 - Encouragement of Primary Production.

No. 10 - Stock Diseases.

North Australia - Ordinances of 1927 -

No. 9 - Encouragement of Primary Production.

No. 10 - Stock Diseases.

Migration and Development, Commission -

Statement showing persons employed, including experts and advisers, and cost of Commission to end of August, 1927.

page 914

LEAVE OF ABSENCE

Motion (by Senator Foll) agreed to -

That Senator Guthrie be granted two weeks’ leave of absence on account of urgent private business.

page 914

CRIMES BILL.

Second Reading

Senator McLACHLAN:
Honorary Minster · South Australia · NAT

– I move -

That the bill be now read a second time.

The main object of this measure is toprevent persons discharging firearms over certain Commonwealth lands, such asdefence lands, and more particularly over areas of land uponwhich explosives are manufactured or stored. Recently, two men were observed shooting cormorants from the bank of the Maribyrnong river opposite to the explosives factory, and some of the bullets passed close to certain buildings in which high explosives were stored. In November of last year a similar occurrence took place at the Liverpool manoeuvre area, New South Wales. The bill also proposes to make it an offence to dischargefirearms over any prohibited area, namely over any area belonging to, or occupied by, the Commonwealth, upon which there is a notice prohibiting shooting purporting to be given by, or by the authority of, a Minister. The section will not apply, however, to persons authorized to discharge firearms by the Commonwealth officer in whose control the land is placed. It is also proposed to amend section, 89 of the Crimes Act. This section deals with trespass on naval or military lands, and provides for the arrest of trespassers by any member of the Defence Force. It sometimes happens, however, that a member of the Defence Force is not available when the offence is committed. It is therefore proposed to extend this power so that arrests may be made by any person employed in the Department of Defence, any peace officer of the Commonwealth, or any member of the police force of the Commonwealth or of a State or Territory.

Debate (on motion by Senator Needham) adjourned.

page 914

FORESTRY BUREAU BILL

Second Reading

That the bill be now read a second time.

Honorable senators will, I feel sure, agree that a measure which has for its object the launching of a national forestry policy is long overdue. I shall not weary the Senate by quoting statistics; but may say that in 1926 our imports of timber totalled 495,500,000 feet, valued at £5,000,000. Australia, which is little more than a century old, and has but a handful of people buys the bulk of her timber from America, a country three centuries older and with a population of over 110,000,000. This is not because that country has set her house in order so as to supply her own requirements, but because this older off-shoot of the British race has not yet exhausted her virgin forests on the Pacific slope, so that she can still meet her requirements and at the same time sell a surplus overseas. Australia, on the other hand, is dependent on imported lumber.

Our consumption of imported timber is approximately 84 feet per head of population. It may be said that possibly we are exporting largely to other lands. The timber we import is soft-wood, whilst our own forests consist for the most part of hard-wood timbers. An exchange of one for the other would be economically sound; but how does our hard-wood industry stand? The export figures are: -

The total exports approximate 122,000,000 feet valued at a little under £1,500,000. Our export timber trade to-day represents but 24 per cent, of our imports of timber and’ i3 practically confined to Western Australia. The larger mills in that State are gradually closing’ down, and it will not be very long1 before the last of the virgin jarrah country will be cut out and the export of this timber will cease. We shall then have to pay entirely in other goods or gold’ for the timber we require. The value of timber is increasing every year and with the cutting- out of the supplies on the American Pacific coast prices may be expected to rise to great heights before 1950, which is the date estimated by forest authorities when the export of Oregon, western yellow pine and redwood will cease. Why is Australia dependent on foreign countries for her supplies ? If Australia- must have soft-woods, why do not our exports pay for our imports? The answer is that as far as reliance upon our timber reserves is concerned, the area of forest lands in Australia »vas small when the first pioneers set out to till the land. It was under 25,000,000 acres in a continent of 1,900,000,000 acres. Since then the virgin forests have in all commercially accessible parts been cut over to supply an export trade or to make farming lands. Local population was insufficient to absorb the smaller sizes al,d scantlings, so that a very small proportion of the original forest wealth of Australia was converted into sawn timber. Only the best trees were cut down ; the second-class logs were left to rot, and periodical fires burnt up the new growth which should have replaced the older trees that had been removed or had died. To-day the forests of Australia present for the most part a sorry spectacle or “cemeteries of trees,” as Sir Frank Heath called them. For our present population the area of forest land should be ample. The Interstate Forestry Conference set this area down at 24,500,000 acres, or over 4 acres per head of population. Et is now generally recognized in older lands that it takes 0.86 acres per head of fully developed and scientifically managed forest to supply the needs of a modern civilized community. It is clear that for our present needs we should require only some 5,000,000 acres of forest; and had our predecessors only developed a forestry policy, the remaining 20,000,000 acres would have been still yielding us a precious export trade. If every acre of our forest heritage were brought into its maximum condition of yield, there would be enough timber to supply the needs of a population of 28,000,000 people. This- population, at our present rate of increase in Australia, may be expected to be reached in 70 years. This, then, is the time to bring our forests into a condition of maximum productivity. I. yield to no one in my admiration of Australian timbers - the jarrah in Western Australia; the redgum, mountain ash, messmate, blackwood-,, bluegum and red ironbark in the south ; the grey and narrowleafed ironbark, tallow wood, spotted gum,, and turpentine in the eastern States, as well as those splendid cabinet woods, cedar, maple, white beech, crowsfoot elm and black bean, to name but a few, in North Queensland. Australia is indeed fortunate to possess such magnificent woods. “With them we can build the finest of houses, and can decorate the interiors with the most beautiful woodwork, and finally we can furnish our homes with cabinet woods which can only be rivalled by mahogany. Unfortunately our supply of soft-wood timber is limited. Our forests of hoop pine, bunya, kauri, celery top and huon from Queensland, New South Wales and Tasmania are so ne”arly exhausted that the cut of Australian soft-woods represents but a tiny percentage of the import figures.

Forestry is a cold, hard business. It is a form of agriculture where the crops are spaced at long intervals instead of being annual; it is farming on long rotation. We can do nothing without wood. All the substitutes invented only demonstrate that wood is still as necessary as ever. The more civilized a country - the more it is developed, and the higher its standard of living - the greater is its .consumption of wood, and nearly 80 per cent, of this is soft-wood of the pine, spruce, or fir families. A properly managed forest will give a sustained yield of timber equal to the growth of the forest annually. If we cut out our forests faster than they will grow, it is clear that we shall quickly exhaust them. Lack of appreciation of this fundamental fact has brought Australia to her present unenviable forestry position. It is not only in regard to soft-woods that the shortage is felt. The shortage of sound hard-wood for such purposes as railway sleepers is becoming very serious, and is hampering development. Another aspect of forestry which has been overlooked -is the influence of woodlands on the conditions of environment. Inland, in the less well watered regions, vast areas have been denuded of their scattered forest formation to improve the_ grazing and to make way for wheat. The lessons of history have been disregarded, and already the evil effects are being - felt in Australia. The general j-elative humidity is lowered, desiccating winds make husbandry difficult; or at their worst, cause soil erosion to such an extent as to make any form of agriculture impossible. In the words of a famous French forester : “ Democracy finds forests and leaves deserts.” In the mountain country, too, the result 01 de-forestation is exceedingly serious. The springs and rivulets that feed the greater rivers are converted from perennial streams to rushing torrents. Whole mountain sides are washed away once the forest is destroyed, and its spongy soil laid bare to the winter rains. The silt carried down ruins the lowlands and the people suffer. Sudden, violent floods are the rule in such country. Protection forests at tlie heads of the rivers are as important as in the great wheat belt. It is of little use our making provision for a timber supply for 28,000,000 people if the land which must yield the main agricultural produce of the population is, in the meantime, rendered sterile.

The Commonwealth Government, alive to the national importance of the forestry 1 question, has taken certain steps .to inquire in what direction the responsibilities lie. Reports by a qualified forester have been obtained as to the forest resources and potentialities of Papua, New Guinea, the Federal Capital Territory, Jervis Bay and Norfolk Island. The Northern Territory remains to be investigated. Following on recommendations made in the report, the Administration of Papua has formulated a policy and the financing of it is now under consideration. In the Territory of New Guinea we have the same obligation, and it is expected that a policy will be laid down soon on lines similar to that adopted by Papua. In this way a reserve of timber will be built up in the tropics. Norfolk Island is too small to do much more than supply its own requirements. The island boasts a valuable timber tree in the pine that bears its name, and in this respect the island will prove a valuable source of seed supply for the mainland. The Federal Capital Commission has appointed a technically trained forester to take charge of the work at Canberra; pine planting is now being extended and the hard-wood forests are being assessed. The next obligation which the Central Government shouldered was the Australian Forestry School. Ever since 1917 the interstate forestry conference has urged the establishment of one school to train all the foresters of Australia. For various reasons effect was not given- to the unanimous recommendations of the state foresters. As finality seemed as far away as ever, the Federal Government offered to establish the institution itself in the Federal Capital Territory. To this proposal the States agreed. Pending the erection of the buildings at Canberra, the generous offer of the University of Adelaide to house the school there in the meantime, was accepted. The buildings at Canberra are now completed. The first students entered the permanent institution on 11th April last. The provision of an Australian Forestry School involves a substantial expenditure, not only on buildings and equipment but also in respect of salaries paid to the principal and his staff of lecturers. It is felt that by this means alone can the future forest administrators and field staffs of Australia be trained in their work. It is only in this way that a school of Australian forestry thought can be built up. Apart from its own Territories, this is the first step taken by the Commonwealth Government to assist forestry throughout Australia. Another direction in which the Commonwealth can help is in organizing and coordinating research work into the various problems of sylviculture and forest management. We have at present no accurate data as to the yield of our forests in timber. We cannot say that such and such a timber should be grown in a pure stand, or whether it requires a mixture of species to attain - its best development. Finally, we cannot say how many years it takes for a tree to mature. The rotation of our crop is unknown. To remedy all this it is proposed to establish a research branch to investigate all the problems of forestry. To provide the necessary machinery to carry out the duties and obligations I have outlined, it has been necessary to create a forestry bureau. In the Prime Minister’s policy speech at Dandenong, the establishment of such an organization was announced. This bill has been introduced to pro vide for a continuity of that policy. The current year’s appropriation for the Commonwealth’s forestry activities is £5,708. As the school develops and the research branch is established, the cost will increase. It will take some years to train the research men, and until they are ready, little progress can be made. It is for this reason that the clause regarding scholarships has been inserted in the bill. We must subsidize research students if we are to get results. Although the functions detailed in the bill could be carried out without legislative action and despite the fact that the bureau and the. school have already been established, it is felt that the founding of a national policy by the Commonwealth Government is a step of such importance that it should receive the assent of Parliament, so that the policy once laid down may be pursued by successive governments on such lines as will promote the development of forestry throughout Australia.

Motion (by Senator Needham) proposed

That thu debate be now adjourned.

The PRESIDENT (Senator the Hon. Sir John Newlands). - Since the transfer to Canberra there has been a fairly general request that rough proofs of speches of honorable members of both Houses should be made available every morning. Efforts are being made to have such proofs made available much earlier than is the case at present. In the course of a day or so we shall be in a position to know exactly whether that can be done.

The PRESIDENT:

– I point out that this discussion is quite irregular. I understood perfectly the question that -was asked by Senator Ogden, and I was under the impression that I had answered it in a way which honorable senators could understand. The question of whether a rough proof of the speech that has been delivered by the Minister can be made available comes within the scope of the attempt that is being made to furnish honorable senators and honorable members of another place with rough proofs of all the speeches that are delivered in both Houses from day to day.

Senator Grant:

– That is not the point .

The PRESIDENT:

– The one is covered by the other. I, and, I think, honorable senators generally, understood the question to refer to the furnishing of a rough proof of all speeches at the earliest possible moment.

Motion agreed to; debate adjourned.

page 918

COMMONWEALTH BANK (SAVINGS BANK) BILL

Second Reading

Debate resumed from 2nd November, (vide page 849), on motion by Senator Sir William Glasgow -

That the bill be now read a second time.

Senator NEEDHAM (Western ‘Australia) [3.33 J. - Since the Minister (Senator Glasgow) moved the motion for the second reading of this bill I have had an opportunity to study its provisions, and have come to the conclusion that this is but another attempt on the part of the Government to minimize, if not destroy, the usefulness of the Commonwealth Bank. The present is not the first occasion on which the Government has been guilty of amending the provisions of the Commonwealth Bank Act in the direction of destroying the bank’s effectiveness and utility and preventing it from functioning in the way that its founders intended that it should function. The Treasurer (Dr. Earle Page), when introducing this measure in another place, said that during the tenure of office of the present Government, it had done everything possible to improve the machinery of -the Commonwealth Bank so as to enable it to function to the fullest possible extent in supplying the evident needs of the people. If the honorable gentleman had said that the Government had used every endeavour to make the machinery of the bank function in the interests of the private banks of Australia he would have been much nearer to the truth. It is not functioning in the interests of the people.

Senator NEEDHAM:
WESTERN AUSTRALIA

– No, that is not so. I should not be far wrong if I said that it functions exclusively in the interests of the associated banks. That contention is supported by a statement which is credited to members of the Country party to the effect that the Bruce-Page Government took the bold step of converting the Commonwealth Bank into a bank for bankers. I cordially agree with that statestatement. With each succeeding amendment the Government has tended more and more in that direction. If it were sincere in claiming that it is endeavouring to improve the machinery of the bank and extend its operations it would have ensured the establishment of a greater number of branches throughout Australia than exist to-day. Let me quote Victoria as an example. In that State the Commercial Bank has 37 branches, the English, Scottish and Australian Bank 6S branches, and the National Bank 42 branches; whilst the Commonwealth Bank has only seven branches.

Senator Andrew:

– How long have those private banking institutions been in existence?

Senator NEEDHAM:

– The Commonwealth Bank has been in existence for a sufficiently long, period to have established a far greater number of branches than exist in the comparatively thickly populated State of Victoria. There is the same paucity of branches also in the other States, and particularly in the country districts, in which many people who desire to become clients of the bank are not given the opportunity to do so. The founders of the institution - the Australian Labour Party - intended that it should function in the interests of the people. The bank should be conducted in the interests of the people. That is notbeing done to-day. If this bill becomes law, an institution of which we should be proud, and which should be performing more useful work than it is now doing, will be weakened still further. The bank is now merely an institution to assist the private banks. Time will not permit me to give the whole of the circumstances connected with the “ stand and deliver “ attitude adopted by the associated banks of Australia about three years ago; but it is within the knowledge of honorable senators that they forced the Commonwealth Government to make available to them Australian notes to the value of many millions of pounds. For a time the Government resisted their demands, but eventually capitulated. The newspapers, in their commentary, said the terms on which the bank strike was settled provided that the associated banks should have the “ right to draw “ Commonwealth notes up to £15,000,000, including the £5,000,000 already borrowed, and that the rate of interest on the £5,000,000 should be reduced from 6 per cent. to4 per cent. Honorable senators opposite never fail to criticize workers when they take strong action to better their conditions or improve their wages; but they are silent concerning this “ hold-up “ by the associated banks in order to obtain a reduction of 2 per cent. interest on the amounts advanced to them.

Mr GREENE:
NEW SOUTH WALES · NAT

– What caused the trouble with the hanks?

Senator NEEDHAM:

– I have not time to refer to that aspect of the matter now. The settlement arrived at also provided that interest was to be paid only on the amount actually drawn. Instead of yielding to the demand of the associated banks, the Government should have created credits for the Commonwealth Bank, and extended its operations. In that case the profits which were made by the private banks would have been made by the Commonwealth Bank. The action of the banks at that time held up industry and increased unemployment. The money madeavailable to them by the Commonwealth enabled the private banks to issue credits to at least four times the sum advanced to them. They charged high rates of interest, and made huge profits at the expense of the people. I have mentioned this incident in order to rebut the Treasurer’s statement that the operations of the bank have been extended with advantage to the people. The decision of the Labour party, led by Mr. Andrew Fisher, to establish a Commonwealth Bank, was derided both within this parliament and outside of it; but, despite all the opposition offered the bank made good. It was established without security. It is true that the Commonwealth Bank Act provided for a capital of £1,000,000 ; but the Governor of the Bank decided to do without it. The one small loan which the bank obtained from the Treasury was soon repaid. In its early years the bank was controlled by one Governor. It had not been in existence many years before Australia was plunged into the cataclysm of war. It was then that the true value of the Commonwealth Bank to the people of Australia was revealed. Had it not been in existence at that critical time, we should have faced a worse financial disaster than that through which this country passed in 1893.

Mr GREENE:
NEW SOUTH WALES · NAT

– On what does the honorable senator base that opinion?

Senator NEEDHAM:

– I shall deal with that presently. Soon after the commencement of the war some of the private banks decided to close their doors; but the Commonwealth Bank remained open during the whole period of the conflict.

Senator SirWilliam Glasgow:

– Which private banks closed?

Senator NEEDHAM:

– Some of them were about to close, and they would have done so, but for the assistance rendered to them by the Commonwealth Bank. Even the Bank of England closed its door for 24 hours; yet the London branch of the Commonwealth Bank conducted its business as usual. The Commonwealth Bank assisted in theflotation of loans to prosecute the war. Ten war loans, amounting to approximately £210,000,000, were floated during the period of the war.

Mr GREENE:
NEW SOUTH WALES · NAT

– Does the honorable senator suggest that those loans were floated by the Commonwealth Bank?

Senator NEEDHAM:

– The Commonwealth Bank assisted in their flotation. The total flotation expenses of those loans amounted to only £705,747, or5s. 7d. per cent.

Senator Sir William Glasgow:

– Private banks also assisted.

Senator NEEDHAM:

– I have not said otherwise. Had the various issues been raised in London in the ordinary way flotation expenses would probably have exceeded £5,000,000. In addition to assisting in the flotation of loans, the bank undertook to remit money to our soldiers overseas. Fifteen thousand payments were made monthly in respect of military allotments and pensions. Telegraphic remittances from Australia averaged 2.000 a week. Then we had the financing of the war time pools and several other schemes that could be mentioned. With a smaller staff than it has to-day all this work was done by the bank, yet this bill proposes an increase in staff. The first attempt made by this Government to alter the machinery of the Commonwealth Bank was the appointment of a board of directors. In addition to the board we have a Governor of the bank and a Deputy Governor. In all, we have nine men to do the work which was handled so ably during the abnormal period I have mentoined by two men - the Governor and his deputy. The Government now is not content with that. It proposes to add to the number of controllers by appointing three commissioners to administer the savings bank business of the Commonwealth Bank. Under the provisions of the bill before us, it is proposed to separate the savings bank department from the general trading department of the Commonwealth Bank, and appoint three commissioners to administer the savings bank business. The chief commissioner is to devote the whole of his time to the work of the savings bank and he will have the assistance of two part-time commissioners, each paid £500 a year. One of these parttime commissioners is to be a director of the Commonwealth Bank. Thus, in addition to a Governor and Deputy Governor of the Commonwealth Bank, we are now to have seven directors and three commissioners. It is, to my mind, an unnecessary piling up of expense. When he was a private member, the Treasurer (Dr. Earle Page) was known as the apostle of economy, and he condemned the folly of having a number of taxation departments collecting revenue from the same source; but he is not following his own advice when he asks Parliament to pass this bill for the separation of the savings bank business from the general trading business of the Commonwealth Bank. We are informed that this separation is necessary so that the savings bank deposits may be utilized for the Commonwealth Government’s housing scheme. The details of this scheme are given in the Housing Bill, which will be before the Senate at a later stage. But even if the Commonwealth Government was about to embark on a house building scheme, that would not be a valid excuse for divorcing these two important branches of the Commonwealth Bank.

Senator Sir Henry Barwell:

– The Commonwealth only proposes to lend money to the States.

Senator NEEDHAM:

– The Commonwealth will lend the money to certain “ authorities “ who will be responsible for carrying out the housing scheme and for the repayment of the money advanced to them, with interest thereon. It cannot be claimed that the Commonwealth Government really intends to embark on a house building scheme of its own; yet because it is alleged that the scheme would entail additional work on the directors of the Commonwealth Bank, and the Governor and the Deputy Governor of the bank it is proposed to divorce the savings bank business from the general trading business of the bank. Some of the directors of the Commonwealth Bank seem to have a very high opinion of their abilities. Apparently their desire is to deal only with high finance. Possibly they have come to this decision because of the conference they have had with a recent British visitor who has a reputation for high finance. At any rate, they seem to be determined to wash their hands of what they call the small business of the bank, and to confine their efforts to what they should regard as high finance. lt is not the intention of the Commonwealth Government to embark upon a house-building scheme. It will simply lend .money to specified “authorities,” who will do all the work and assume full responsibility for the repayment of loans with interest. The proposal to appoint new commissioners is quite in keeping with the practice of the present Government. Since it has occupied the Treasury bench, it has been shirking Ministerial responsibilities and handing over to commissions and boards work that should be done by Ministers themselves. During the years 1924-25 and 1925-26, it appointed boards, commissions, &c, at a cost of approximately £500,000. A day or two ago I asked the Leader of the Senate if it was intended to assist the commission, industry which apparently was languishing, because, for fully a month, no commission had been appointed. My question has now been answered. Another commission has been appointed. Let me illustrate the point I am endeavoring to make. Although we have a Commonwealth Department of Markets and Migration, and a Minister for Markets and. Migration, the Government has also appointed a Development and Migration Commission with a huge staff. No one knows what it does. Perhaps no one will ever know what it does.

Senator Sampson:

– Yes. Some one knows what it does. I shall tell the honorable member by and by.

Senator NEEDHAM:

– We have been waiting to hear what the commission has done.

Senator Sampson:

– Evidently the honorable senator has not been in Western Australia or Tasmania recently.

Senator NEEDHAM:

– I was in Western Australia a few weeks ago, but evidently Senator Sampson is in possession of information that the Government cannot give in reply to questions from this side of the chamber. I was proceeding to illustrate my point. The Development and Migration Commission had referred to it by the Government a matter affecting the gold mining industry. One would have thought that this expert body would be in a position to handle the matter itself, but it did not do so. It appointed another committee to advise it, so that it in turn could advise the Government. Thus, we have a vicious circle. We appoint commissioners to do certain work that Ministers should do, and they in turu appoint others to do the work that they should do. Although there may be no justification from the people’s point of view for the separation of the savings bank branch from, the general trading branch of the Commonwealth Bank, and although in the interests of economy the step proposed to be taken is quite unnecessary, I must admit justification for it from the point of view of the Government itself; because it is the policy of the Government to stand by the associated banks instead of the Commonwealth Bank.

Mr GREENE:
NEW SOUTH WALES · NAT

– - -Does the honorable senator suggest that the Commonwealth Bank is being made a central bank?

Senator NEEDHAM:

– I have no hesitation in saying that I should like to see the Commonwealth Bank the only bank in Australia controlling the credit and the financial administration of the Commonwealth. That was really the position it was intended the bank should occupy when it was first established.

Mr GREENE:
NEW SOUTH WALES · NAT

– I am pleased to hear that open confession.

Senator NEEDHAM:

– I have not the slightest reluctance in making it. The Commonwealth Bank is really becoming a- puppet of the associated banks. The Treasurer has said that it is necessary to separate the savings bank business from the general business and rural credits business of the Commonwealth Bank, and he has made much of the fact that the rural credits department of the bank has been of great asistance to the farmers. When the Commonwealth Bank rural credits branch was established, it may have been intended to afford assistance to the farmers, but I have yet to learn to what exent it has done so. No advance can be made by this branch of the bank for a period longer than twelve months or for any other purpose than that of financing crops. If that can be regarded as assisting the men on the land the assistance is very limited. I remind honorable senators, and particularly Ministers, that when the last amending

Commonwealth Bank Bill was before another place the honorable member for Bourke (Mr. Anstey) moved the following amendment: -

That the following words be added to the motion : -

That the bill should contain provisions for an extension of the functions of the Bank to provide rural credits for the following purposes:

1 ) To advance upon broad acres.

To assist co-operative finance in primary and secondary production.

To assist land settlement and development.

To establish a grain and fodder reserve against periods of drought.

If that comprehensive amendment had been adopted by the Government and incorporated in the bill, the result of its operation would have been of much greater assistance to the primary producers than the flimsy scheme to finance them for twelve months, as is now proposed. When the amendment was moved the Treasurer (Dr. Earle Page) intimated by interjection that it had been taken from the platform of the Country party. If it had been - I do not think that it was because the Labour party has not to go to the Country party or any other party for ideas - the Treasurer, as Leader of the Country party, and his followers, if they were sincere and consistent, should have supported it. The amendment embodied something that would have been of practical assistance to farmers who have not been helped in any real sense by the rural credits branch of the Commonwealth Bank. In traversing briefly the main features of the bill, I have pointed out the departure from the original intention, and have emphasized the point that if it becomes law itwill be the means of further preventing the Commonwealth Bank from functioning in the way intended when it was established. As the measure can be more effectively debated in committee, I shall have more to say concerning its main provisions when that stage is reached. I maintain that the measure is not necessary, and that it will have the effect of weakening instead of strengthening the Commonwealth Bank, which was established in the interests of the Commonwealth and the Australian people.

Senator FINDLEY:
Victoria

– I had hoped that such an important measure as this would receive the serious attention of honorable senators or. both sides of the chamber ; but apparently the supporters of the Government do not intend to debate it on the motion for the second reading.

Senator Sir Henry Barwell:

– There is ample- time to do that.

Senator FINDLEY:

– Had I not risen the second reading would have been agreed to without further debate. The Leader of the Opposition (Senator Needham) dealt very fully with the operations of the Commonwealth Bank since its inception, and referred to the magnificent work which this great institution, a monument to the untiring energy and . capacity of the Labour party, has done. The bank proved a veritable Bock of Gibraltar to the Commonwealth and the Australian people during a period of national emergency: It was established in spite of the vigorous and bitter opposition of the supporters of honorable senators opposite, and when its establishment was first suggested many financial authorities said things concerning it which could hardly be believed.

If there is one section of the community more than another that should be grateful to the Labour party for establishing the Commonwealth Bank it is the primary producers, many of whom are in a sound position to-day only because of the assistance they received from it when help was not forthcoming from, other financial institutions. The Australian Commonwealth Line of Steamers was materially helped by the Commonwealth Bank, and without the assistance of Commonwealth ships our primary producers during the war would have been at the mercy of mice and rats. All the primary produce pools in operation during the war and after were financed by the Commonwealth Bank, and, asthe Leader of the Opposition has said, while that institution was under the control of a Governor, a Deputy Governor, and a capable staff. The Government now proposes to separate the savingsbank business from the general banking business. For what purpose? The Prime Minister in his policy speech said thatthe

Government intended to undertake a mammoth housing scheme, on -which £20,000,000 was to be expended. Many persons could hardly believe that an anti-Labour Government would introduce such a scheme. It has been said that the Government intends to assist in the erection and purchasing of homes on better terms than are being offered under any other scheme. The Government does not propose to do anything of the kind. It merely proposes to appoint three commissioners - yet another board - to do certain work. There is always one course - boards - on the Government’s menu, which is served at any hour of the day. This Government is reducing parliamentary government to a farce.

Senator Payne:

– Does the honorable senator think that a savings bank can be effectively controlled without the assistance of a board of directors ?

Senator FINDLEY:

– The Commonwealth Bank was efficiently controlled for some years by one man and his staff. The Government now proposes to separate the activities of the Commonwealth Bank and to appoint three commissioners to control the savings bank branch ostensibly to enable it to give effect to its so-called housing scheme. The capital upon which the commission will operate for this purpose will consist of one-half of all increases in deposits over -the total amount of deposits existing at the commencement of the Housing Act, as well as one-fourth of all repayments of loans, together with other moneys which will subsequently be borrowed. These will be handed over to the commission, and in turn, I presume, passed on to other authorities. Those authorities, which are not specifically named, will have the power under this bill to grant financial assistance to State authorities if all the States agree to amend their existing legislation. It would not be in order for me, in the debate on this bill, to discuss the Government’s housing scheme, although one proposal is Jinked up with the other. I shall therefore endeavour to confine my remarks to the- measure under discussion. Some -time ago we had a visit from Sir Ernest Harvey, the comptroller of the Bank of England. I do not know whether he came to Australia at the invitation of the Commonwealth Government, but ii iis reported that his expenses were paid by the bank of England. During his stay in Australia he made a number of speeches, in one of which he stated that the Bank of England viewed a proposition not from the position of whether it would earn a profit, or benefit shareholders, and he was glad to know that the directors of the Commonwealth Bank were taking a view of their duties very similar to that taken by the directors of the Bank of England. On the other hand, the private banks, as we know, are out to secure the biggest return for their shareholders. Who are the shareholders of the Commonwealth Bank? The people of Australia. And are not the people of Australia directly interested in its success and progress? We hoped when the bank was established that it would be essentially a trading institution, competing with existing banks, and making profits for its shareholders - the people of Australia. Certain honorable senators and members of another place, however, do not wish the Commonwealth Bank to compete with existing financial institutions. It is well known that during the last few years private trading banks in Australia have made immense profits, though in some instances an endeavour has been made to cover up the real position by watering the stock. Notwithstanding the financial stringency, the trading banks in Australia have never been more prosperous than they are today. What they are doing for their shareholders, the Commonwealth . Bank should be doing for its shareholders, the people of Australia. The bill now before us is a sham and a delusion.

Senator Reid:

– Why?

Senator FINDLEY:

– Because the Government does not intend to build houses. The passage of the measure will probably create a fictitious land boom. Recently there appeared in one of the Melbourne newspapers a half-page advertisement of a land sale. In the corner of that welldisplayed advertisement was a note to the effect that the Commonwealth Government’s £20,000,000 housing scheme had passed through all its stages in the House of Representatives. Here was a definite instance of a firm of land and estate agents making capital out of the Government’s proposal. Undoubtedly the intention was to induce people to attend the sale and to buy land, in the belief that the Commonwealth Government would, by means of financial assistance help them to erect houses on the land.

Senator THOMAS:
NEW SOUTH WALES · NAT

– Is that the fault of the Government?

Senator FINDLEY:

– It is, because the Government led the people to believe that it intended to embark on amammoth housing scheme, different from any carried out by the State authorities. Actually what it proposes to do is to appoint three commissioners to arrange for advances to existing State authorities. The total deposits in the Commonwealth Savings Bank are, roughly, £47,000,000. The State Savings Bank of Victoria has deposits amounting to £60,000,000. yet that institution has not deemed it necesary to appoint commissioners to carry out its housing schemes.

Senator Payne:

– Is not that bank managed by commissioners?

Senator FINDLEY:

– It is controlled by part-time commissioners. The chairman is paid a salary of £600 a year, and the other commissioners £500 a year each. The principal work of the bank is undertaken by the general manager and his staff.

Senator Payne:

– -What is the honorable senator complaining about in regard to this measure ?

Senator FINDLEY:

– I wish the honorable senator would follow my argument. The commissioners to be appointed under this bill will not erect a single house.

Senator Andrew:

– They will find the money.

Senator FINDLEY:

– They will not do even that. The main portion of the money will be raised by loans. The excess deposits in the savings bank will be an infinitesimal sum compared with the amount that will have to be borrowed to give effect to the Government’s scheme.

Senator Andrew:

– That is questionable.

Senator FINDLEY:

– If the honorable senator will read the speeches delivered in another place on this bill, he will see that I am right. There is no justification whatever for the separation of the savings bank activities from the general banking business of the Commonwealth Bank. There is equally no justification for the appointment of commissioners. Assuming that this bill and its complementary measure go through all stages without vital amendment, and that the necessary money will be available, the amount of work to be done by the commissioners will be so unimportant that it could very well be done by the present management.

Senator Duncan:

– The present arrangement has not been satisfactory, from the point of view of the savings bank.

Senator FINDLEY:

– That is because full advantage has not been taken of the opportunities. The Commonwealth Savings Bank is paying a lower rate of interest on deposits than that paid by the State Savings Banks. In both Sydney and Melbourne the State Savings Banks are housed in monumental buildings. I understand that the State Savings Bank in Sydney has been in course of erection for three years, and that it is not completed yet.

Senator Duncan:

– Why interfere with State Savings Bank business?

Senator FINDLEY:

– When it is finished it will be a splendid advertisement for New South Wales. The same may be said of the magnificent State Savings Bank building in Elizabethstreet, Melbourne. The volume of work done there is immense. Senator Duncan has just asked why the Commonwealth is competing with the State Savings Banks. My reply is that the Commonwealth Government went into the banking business in the interests of the people of Australia. When it undertook the savings bank business the hope was expressed that suitable premises would be erected in all the important centres throughout Australia. Many of the post office buildings are so unsatisfactory as not to conduce to an increase in business. It should be the policy of the Commonwealth Bank to develop its activities in all branches on up-to-date lines. It has not hesitated to provide modern premises for its general banking business, but it has shown some reluctance to do the same for the savings bank branch.

Senator Duncan:

– Does the honorable senator say that the States are not already doing all the savings bank business effectively?

Senator FINDLEY:

– No. The State Savings Bank in Victoria is doing a splendid work. The same kind of work should be done by the Commonwealth Bank. The bill proposes that the Government shall engage in a roundabout way in a housing scheme. Why does not the Government put forward its best efforts to further the interests of that branch of the bank, which in future is to be managed by a commission? From time to time it is made apparent that a very large section of the community has every confidence in the Commonwealth Savings Bank, and is anxious to do business with it notwithstanding that the interest rate which it offers islower than that of the State institutions. Deposits are made by people, who, if they were sordid, selfish, and keenly anxious to obtain the highest possible return, would do their business with the State Savings Banks.

Mr GREENE:
NEW SOUTH WALES · NAT

– The limitation that is placed upon the amount which may be deposited has a good deal to do with that.

Senator FINDLEY:

– Perhaps that may have some effect. I regret that the Government has seen fit to introduce legislation, the ultimate effect of which will be to weaken what the Labour party hoped would be one of the strongest financial institutions of its kind in the world. Since the present administration assumed office it has not shown itself fully cognizant of the efforts that have been made by the bank to extend its operations, and the work which it has done. Time and again it has declared its opposition to any form of collective ownership of financial and other institutions. I regard this as a further evidence of its intention to weaken, not to strengthen, the Commonwealth Bank and of its desire to assist the private banks, the shareholders of which are always anxious to secure the highest dividends.

Mr GREENE:
NEW SOUTH WALES · NAT

– I have listened with a good deal of interest to the two speeches that have been delivered this afternoon. I was somewhat pleased to hear the open confession which was made by Senator Need- ham that the real objective of the Labour party when it founded the Commonwealth Bank was the nationalization of credit, as they call it, in Australia.

Senator Hoare:

– The honorable senator has struck the nail on the head.

Mr GREENE:
NEW SOUTH WALES · NAT

– I hope that before I sit down I shall have convinced the honorable senator of the fundamental fallacy which underlies the nationalization of credit. I believe I shall be able to show him that the right method to adopt to reduce Australia to the depths of penury is to bring about the nationalization of credit. If he understood the system of credit and the foundation upon which it is built, he would once and for all abandon those views, realizing that they are the greatest folly. I did not attempt to prepare a set speech on this measure, because I found myself in some doubt as to the real intention of the Government in bringing it forward. I tell the Government quite frankly that I, at all events, do not believe it has stated its ultimate objective to either Parliament or the country. To some extent I share the view which is held by honorable senators who sit on the left of the Chair, that the reasons which have been advanced are not sufficiently profound to indicate a necessity for the introduction of the measure, and the change that is contemplated in the control of the savings bank thatat present is attached to the Commonwealth Bank. I hold the view that the ultimate objective of the Government is to clear the decks somewhat by divorcing the activities of the savings bank from those of the Commonwealth Bank, so that in the course of time the latter may realize its true function as a central bank in a way by which it is capable of conferring inestimable benefits upon every man, woman, and child in Australia. If that is the objective, it has my hearty support. It is well within the realm of possibility for the Commonwealth Bank to become such an institution. One of the great dangers that I have always foreseen has been exemplified in this chamber to-day. I dare say that one of the reasons why the Government has not frankly advised the country of its real objective, is that it fears that if, by some turn of fortune’s wheel, our friends opposite should again be returned to the

Treasury bench, they would undo the good work that had already been done, and endeavour to realize their objective of making the Commonwealth Bank the grave of all other banking institutions.

Senator Thompson:

– That is not a near possibility, I hope.

Mr GREENE:
NEW SOUTH WALES · NAT

– I also hope that it is not. I believe that the Commonwealth Bank could and should become the centre of banking organization in Australia. If we make it that, we shall have gone further towards establishing the business credit of this country on a sound basis for the future than is possible by any other means. If the Commonwealth Bank is to be the central banking institution of Australia; if it is to be the foundation upon which the whole structure of Australia’s banking finance rests, it cannot and must never employ its funds to any extent in the ordinary banking business of the other banks. The moment it did so, it would become involved in the ordinary business of banking, and could not function as a central bank or be the foundation of our banking system. I believe I shall be able to prove that it is utterly impossible to nationalize credit.

Senator Findley:

– The honorable senator ought not to forget his prediction when the Commonwealth Bank was first proposed.

Mr GREENE:
NEW SOUTH WALES · NAT

– I have not forgotten what I then said.

Senator Findley:

– The honorable senator was incorrect.

Mr GREENE:
NEW SOUTH WALES · NAT

– I was not. I said then, and I repeat now, that it would have been infinitely better if the Labour party had had a thorough inquiry into the banking system of Australia, and had ascertained the proper kind of bank to establish. Had it done so, the Commonwealth Bank would have been of infinitely more value to Australia.

Senator Findley:

– The honorable senator predicted that it would be a failure.

Mr GREENE:
NEW SOUTH WALES · NAT

– I do not think that my honorable friend can point to any such prediction. The reason why a central bank should never engage in the ordinary business of banking is in reality a very simple one. The whole object of a central bank is to stand behind the banking business of the country, and in times of stress and difficulty, which are always occurring to some extent, to make available its resources in such a way that it will afford the relief which is essential. In the last few months we have experienced a very stringent money market. So stringent has it been that instances have come to my notice of men who have gone to their bankers with giltedged security, that showed a margin of 75 per cent. on the amount they wished to have advanced, and have received the reply, “ We are very sorry, but we cannot give you one penny.” That position has arisen from two causes apart from seasonal conditions. One is the extremely rigid system of banking that exists in Australia; and the other that, at the present time, there is no institution which, holding its funds in a fluid form, has at its command the means to make its resources available to the other banks to relieve the stringency. That is one of the great functions which a central bank should perform. But if that bank, in competition with others, advances its funds in exactly the same way as they, and those funds are utilized in a similar class of business, tied up in long dated or not easily realizable securities, it is subject to the like stringency.

Senator Thompson:

– The Bank of England does private banking in addition to acting as acentral bank.

Mr GREENE:
NEW SOUTH WALES · NAT

– To only a limited extent. A central bank which is engaged in the same class of business as that of the other banks will experience their difficulties in times of financial stringency; instead of being able to assist them, it also will be in straitened circumstances. No bank can advance more money than it has.

Senator Hoare:

– Money or credit ?

Mr GREENE:
NEW SOUTH WALES · NAT

– A bank can only advance the money that it has.

Senator Hoare:

– Will the honorable senator explain how the banks, with less than £57,000,000 in notes, gold, and bullion can lend approximately £300,000,000?

Mr GREENE:
NEW SOUTH WALES · NAT

– It is done on a system of credit. Has the honorable senator considered the basis of that system ?

Senator Hoare:

– I am waiting for the honorable senator to explain why credit cannot be nationalized.

Mr GREENE:
NEW SOUTH WALES · NAT

– Credit cannot be’ nationalized because it is founded on the individual. The credit of a nation is the accumulated credit of the individuals comprising it.

Senator Hoare:

– If it is the credit of the community or the nation why cannot it be nationalized?

Mr GREENE:
NEW SOUTH WALES · NAT

– It is impossible to nationalize anything which is based on the individual credit of the unit. The system of credit is built up, stone by stone, tier by tier, on the individual credit of the units in the community. That is why it is impossible to nationalize credit. Nationalization necessarily destroys the unit and leaves the nationalizer grasping at a shadow-

Senator Hoare:

– Has the honorable senator ever read Frank Lock’s Nationalization of Credits

Mr GREENE:
NEW SOUTH WALES · NAT

– No, and I do not want to read it if the author’s views are similar to those expressed by the honorable senator. I remind him that some time ago Russia attempted to nationalize credit. It was thought that, if all the capitalists were killed their wealth would become the wealth of the nation. The attempt resulted in the credit of Russia, both individual and national, being destroyed. The basis of the whole system of credit is that the law gives to every man the inviolable right to hold that which is his. Upon that basis the system of credit is built. The credit of any company or bank is the accumulated credit of its individual shareholders.

Senator Duncan:

– Credit cannot be nationalized without nationalizing security.

Mr GREENE:
NEW SOUTH WALES · NAT

– It is impossible to nationalize credit, because the nation’s credit is based upon and is the cumulative effect of that of the individuals who form it. While I doubt the necessity for separating the savings bank branch from the ordinary business of the Commonwealth Bank, in order to give effect to a housing scheme and to provide for rural credits, I feel that if the proposal of the Government will make it possible - as I believe it will - for the Commonwealth Bank to become a central bank, a rock of defence in times of financial stress, then it has done the right thing in introducing this bill. A bank which is engaged in financing rural industries and housing schemes, and in providing longdated credits, cannot keep its assets in a condition sufficiently fluid to enable “it to carry out the functions of a central bank. When Sir Ernest Harvey, the controller of the Bank of England, who was recently in Australia, said that the proposals1 of the directors of the Commonwealth Bank were along the lines adopted by the directors of his bank, carrying out the functions of a central bank, he meant that both banks were endeavouring to keep their assets in as fluid a condition as possible under existing banking conditions so that they could- render financial assistance to the country generally. In making money available for short periods only, and thus keeping its assets in a fluid condition, a bank must necessarily be prepared to earn lower rates of interest. But in doing so it renders a far greater service to the community than- if by doing otherwise its profits were £ per cent, greater. If I have rightly interpreted the Government’s intention, I hope that no amount of opposition will turn it aside from the course it proposes to follow. The Commonwealth Bank properly established as a central bank will render such assistance to this country that even honorable senators opposite will be convinced of the wisdom of the Government’s proposal; and, except from a few persons whose opinions are of little value, we shall hear no more of the nationalization of credit. Australia needs a central bank. While our people were, for the most part, engaged in primary industries the cash credit system of banking was admirably suited to our needs. The amount of business then done by bills was comparatively small; indeed, there is only a small bill market in Australia to-day. But if we had a central bank which was amongst other things, a bank of rediscount to which the other banks could turn in times of financial stress and obtain assistance, we should have a growing bill market, and a very much more fluid condition in banking circles, with the result that those periods of financial stress which we from time to time experience and which are so detrimental to our progress, would be less, and our financial position improved.

Senator Thompson:

– Are there not big bills of exchange now in respect of exports?

Mr GREENE:
NEW SOUTH WALES · NAT

– Those bills do not help us a great deal ; in fact, the difficulties connected with our exports some times cause internal financial stringency. The bills of exchange in respect of the wheat and wool which we export do not help us. We want a bill market for internal commerce.

SenatorThompson. - We do not want to get back to the old days when promissory notes were largely used.

Mr GREENE:
NEW SOUTH WALES · NAT

– A great deal can be done with bills of exchange if the business is established on a thoroughly sound basis. By means of bills our finances can be made more liquid than they now are. For that reasonI believe that the Commonwealth Bank, properly controlled, has a great future. Believing that the purpose of the Government in introducing this bill is to achieve what I have said, I shall support the measure.

Senator PAYNE:
Tasmania

.- Seeing that this bill is closely allied with the Commonwealth Housing Bill, I expected that it would have received some commendation from honorable members opposite; but, though I listened attentively” to their remarks, I did not hear them utter one word in support of the measure. It is my regret, and that of many other honorable senators, that for bills containing provisions which may be helpful to the people, the Government cannot get a word of commendation from those who sit in opposition. I can understand an Opposition being firm in its attitude towards the Government on matters that conflict with its own platform; but I cannot understand needless opposition to matters which cannot be in conflict with its platform. The bill before us provides for the separation of the savings bank business from the ordinary banking business of the Commonwealth Bank, and when one realizes the fundamental difference between the functions of these two branches of the bank, one can easily see that it is advisable to bring about this separation be cause of the contemplated provision of a large sum of money for the effective housing of the people of Australia. Senator Greene has pointed out clearly that an ordinary trading bank must of necessity have its assets in a liquid condition easily realizable at any time. More particularly is this necessary in the case of the Commonwealth Bank if it is to fulfil the functions of a central bank. On the other hand, a savings bank is entitled to lend out the funds of its depositors on very long terms. My experience in Australia during the last two years, especially since housing schemes have been put in operation to provide homes not only for soldiers but also for civilians, is that a very deserving portion of the community has had no consideration extended to it in this direction. It is probablya more important section of the community than any other. I refer to the middle classes who, under the provisions of the Housing Bill, will now have an opportunity to obtain homes of their own on very easy terms. In what way can we make Australia better than by having a contented people living in their own homes, secured on the easiest possible terms? If there was nothing else to be considered than that achievement, this legislation should have secured at least some sympathetic consideration from honorable senators opposite. Everyone must be gratified to learn that the operations of the Commonwealth Bank since its inception have been so useful to Australia, and one can easily imagine that many avenues will be opened up by the legislation we are now considering which will lead to the development of primary industries, as well as towards the development of a housing scheme for the people. I hope that honorable senators who have spoken in opposition to this bill will recognize that they can support the Housing Bill in view of the ultimate good it must do to the whole community. I shall reserve my further remarks until we are discussing the Housing Bill.

Senator THOMPSON:
Queensland

– I am deeply gratified that the Government has brought down this bill in association with a housing bill. It will enable us to tell our constituents that we have fulfilled the promise we made on the hustings that the Commonwealth would give the people facilities to

Guild their homes. I told the electors that nothing would save the community from bolshevik or communistic tendencies more than would the fact that they owned their own homes. I said that a man who owned his own house would not he inclined to turn it over to the Supreme Economic Council for the good of the whole community, which, as we know, is the objective of our friends opposite. It is not a new idea to build homes for the people. Many Labour Governments in Australia have their housing schemes, and it makes me wonder why there should be opposition by Labour members to the Commonwealth Government’s housing proposals. I hope that the federal scheme will not interfere with the existing State schemes. In Queensland, for instance, the system in operation has proved to be of the greatest advantage to the people. I am under the impression that it is now suspended owing to lack of funds. I should imagine that the State Governments would welome any opportunity that would enable them to provide homes for their people. The proposal to make the money available through the Commonwealth Bank ought to be acceptable to all, and I regard the proposal to. increase the maximum amount of the individual advance as a step in the right direction. It will extend the benefits of this class of legislation to a section of people who are usually overlooked. The man who has an income of from £400 to £700 a year has often to live in a more expensive way than many a man with higher remuneration.

SenatorVerran. - Could not the Commonwealth Bank do all this work without separating the savings bank branch from it?

Senator THOMPSON:

– Yes, but when we consider that the Government’s proposals in this respect are developmental - one might also call them philanthropic - we must realize that it is not a class of work that the Commonwealth Bank can very well undertake. I do not think any trading bank would make an advance on a housing proposition with a margin of only 10 per cent. A proposal of that kind requires a special government arrangement. The Commonwealth’s scheme proposes to give particularly long terms of repayment, with low rates of interest.

SenatorVerran. - South Australia built its thousand homes scheme through the State bank.

Senator THOMPSON:

– Any State bank with government backing could take up a proposition like that, and it is perfectly laudable for a government to advance up to 10 per cent of the value of a house; but an ordinary trading bank will not do so. I appreciate the Government’s housing proposals, and although I think the margin of 10 per cent. is rather small, I have to bear in mind the fact that repayments begin in the first week, and that as every week goes by, the position in this respect becomes sounder. I should like to know who will beresponsible for the losses that might be incurred.

Senator SirWilliam Glasgow:

– The authority that borrows the money.

Senator THOMPSON:

– The Commonwealth, I understand, is to make money available to the States, and under certain conditions which are to be laiddown, the States will make advances to home builders. The States, therefore, will carry out all the details of the Commonwealth housing scheme, and bear the remote possibility of incurring losses. It is a reasonable proposition that since the States will derive from this scheme the advantage of having their own people properly housed, any little disability that may arise from it should also be borne by them. It is quite right, I think, to separate the savings bank business from the general trading business of the Commonwealth Bank for this particular purpose, but I see no reason why the present board of directors of the Commonwealth Bank should not function over the whole of the transactions of the bank. A general manager could be appointed to manage the savings bank branch. There is too great a tendency nowadays to overload activities with controllers. I notice that when the board of directors of the Commonwealth Bank was asked if it would undertake the duties attaching to a housing scheme, it complained of being overloaded with work. Much larger concerns than the Common wealth Bank are managed by boards of directors who have under them many managers controlling different departments. It is idle, therefore, for the directors of the Commonwealth Bank to say that a housing scheme would overload them, especially when Ave know that all the details of the scheme are to be attended to by the States. I understand that the agreements with Queensland and Tasmania in respect to their savings banks are to be continued. It seems to me that there may be a grave risk of the amount available in the savings banks of Queensland, which I believe is larger than that in the Commonwealth savings banks in other States, being drawn upon to provide housing accommodation in other States. I should like an assurance from the Minister that such will not be the case, and that one State will not gain at the expense of another. I do not think there is anything in the contention of honorable senators opposite, that the separation of the savings bank from the general banking business of the Commonwealth is likely to be injurious to the institution; the same aggregate of assets will be available, and the financial strength of the bank will remain the same. There has been a good deal of criticism from honorable senators opposite concerning the general business of the Commonwealth Bank, which they say is deteriorating. Our experience in Queensland is that the Commonwealth Bank is now as well represented as some banks which have been functioning for 50 years and that its business is rapidly increasing. It is also said that the bank is not functioning as well under a board of directors as it did under the control of a Government. According to published figures, however, the net profits - which after all are the only test by which a bank’s progress can be gauged - in the first year of the board’s existence were £84,000; in the second year they were £210,000, and in the third year £330,000. These figures give the lie direct to honorable senators opposite who say that the bank is becoming decadent. It has also been said that the bank is not functioning as a reserve bank in the way it should. In this connexion, I should like to draw the attention of honorable senators to the position which arose two years ago in the wool business when the exchange rates on London ranged from between £4 and £5 per centum, and were tremendously against the wool-growers of Australia. With die powers which the Commonwealth Bank have been given of late, it was able to make available on the other side, the bank’s credits, which eased the position so tremendously that in a very short period the exchange rate was 5s. per centum. At that time 40,000 bales of wool in Queensland were catalogued for sale, but the sale had to be postponed because satisfactory finance could not be arranged. Certain proposals were considered, by the Commonwealth and trading banks, and as the result of reciprocity and harmonious working, the 40,000 bales of wool were sold at prices which I think have not since bee a equalled. That shows the benefit of a reserve bank when its powers are properly exercised. As suggested by Senator Greene, I should like to see the operations of the Commonwealth Bank still further extended. I believe that in time the private banks will realize the advantages of co-operating with the Commonwealth Bank, the reserve powers of which should be availed of to an even greater extent than they are to-day. At the same time, we should foster the splendid business which the bank possesses to-day. Advances should not be made made on such a conservative basis as at present. As I stated on a former occasion, I know of quite a number of instances in which good propositions have been rejected by the Commonwealth Bank. It is useless for it to endeavour to function as a trading bank, unless it handles this branch of its business on a reasonable basis. If the bank is not prepared to foster its present business and extend its operations, I would sooner it went out of ordinary banking and concentrated on reserve banking business; but I. sincerely trust that it will retain the magnificent business it now controls, and further increase its activities. Indeed, I hope that another amending Commonwealth Bank Bill will be introduced in which provision will be made for granting financial assistance to primary producers on the same liberal basis that is now proposed in the matter of housing. By so doing we should be assisting those upon whom the prosperity of the country largely depends. I trust that it will not be long before such a measure is introduced, and when it is it will have the same hearty .support that I now accord to this bill.

Senator GRANT:
New South Wales

– The Government has taken Parliament into its confidence to only a very limited extent in connexion with this bill and the Housing Bill, to which it is closely related. Those who have supported the measure have not attempted to show why the savings-bank business should be separated from the general banking business of the Commonwealth Bank in order to formulate a housing scheme. My impression has always been that the reasons which actuated those who favoured the establishment of the Commonwealth Bank were that it would soon become the sole banking authority in the Commonwealth. As honorable senators are aware, banking crises occur from time to time. In 1890 a considerable number .of building societies in Melbourne and Sydney which were unable to meet the demands made upon them closed their doors. A number of the chartered banks a little later on did the same. If my memory serves me aright, very few of the private banking institutions were able to keep their doors open and meet all the demand’s made upon them. I again express my emphatic condemnation of the action of a number of banks which retained the money of depositors which they were able to repay. It is scandalous to realize that privately controlled banks in New South Wales have been able to take advantage of legislation, and by paying the depositors the nominal sum of 3 per cent., retain deposits year after year, whilst refusing, except at the bank’s option, to terminate such an arrangement. It stands to the credit of the Commercial Banking Company of Sydney that it repaid its depositors immediately it was in the position to do so. Its example was followed by a number of other banks ; but some failed to do so, with the result that a certain number of banks now operating in Sydney, and, I believe, elsewhere in the Commonwealth, have been improperly holding on to deposits, which are now worth only about lis. instead of 20s. to the fi. It is generally believed that the people in New South Wales lost about £5,000,000, and the people of Victoria about £14,000,000, through the failure of private -banks in the early nineties. This is a phase of private banking practice that should not be overlooked. It is one reason why the Labour party, when it came into office, established the Commonwealth Bank. Unfortunately the bank has always been ‘ under the control of people distinctly anti-labour in their outlook. It is not a matter of surprise, therefore, that its development has been retarded. Indeed, there is a desire on the part of some people to destroy the bank so that Australia will get back to the position it occupied when private institutions had control of the people’s money. According to the last balance-sheet, the deposits in the Comonwealth Savings Bank, together with the accrued interest on 30th June, 1927, amounted to “£46,479,020 16s. 5d. The total would have been larger had the management of the bank been in the hands of authorities who had the interests of the people at heart. For some inscrutable reason no director of the bank and no supporter of the bill has explained why the Commonwealth Savings Bank pays only 3§ per cent, interest on deposits, as compared with 4 per cent, by the Savings Bank of New South Wales. Surely the credit of the Commonwealth is as good as the credit of any of the States. I am aware that, when the amount at deposit reaches a certain sum, the rate of interest is reduced; but it is a fact that on the minimum amount of deposit the rate paid by the Commonwealth Savings Bank is i per cent, less than is paid by State savings banks. The New South Wales Savings Bank has erected one of the finest banking chambers in the Commonwealth. The palatial structure in Castlereagh-street, Sydney, will cost, when completed, nearly £1,000,000.- Yet that bank can pay 4 per cent, interest to its depositors, and it can also deal liberally with all who desire to obtain advances for the erection of homes. The total amount to the credit of depositors in the Commonwealth general bank at 30th June, 1927. was £32,277,337 14s. lid. It is obvious, from these figures that, despite the efforts of the directors, backed up by this Government, to hamper the progress of the bank, the people are determined to give it very substantial support. They know perfectly well that their money is absolutely safe, and that they are never likely to see over the doors of the bank the sign - “ Closed pending reconstruction “, as was the case with many private banking institutions between1890 and 1893. I understand it is the intention of the Government to discontinue the trading activities of the Commonwealth Bank in order to establish it as a bank of reserve. The adoption of this policy will, in my opinion, destroy the ideal which was in the minds of those who were responsible for its establishment. Honorable senators may rest assured, however, that when the Labour party comes again into power it will immediately take steps to restore the bank to its proper position. A government that does not give effect to its proposals ought not to remain in office for one day. I do not blame this Government, because its objective is the destruction of the Commonwealth Bank as we know it. I ask leave to continue my remarks at a later date.

Leave granted; debate adjourned.

page 932

ADJOURNMENT

Federal Capital Territory - Saleof Land Leases - Petrol Station, Eastlake

Senator Sir WILLIAM GLASGOW:
Minister for Defence · Queensland · NAT

[5.42]. - I move -

That the Senate do now adjourn.

On the 6th October, Senators Elliott, Reid and Andrew, speaking to the Supply Bill, made certain representations regarding the sale of land leases in the Federal Capital Territory. They suggested that there was something in the nature of a land boom in the Territory at present, that the method of fixing upset prices was unsatisfactory, and that the business blocks offered for sale were not sufficient to meet the demand, thus causing prices to be unduly inflated. These matters have been discussed with the Federal Capital Commission, which repudiates any suggestion that it is forcing up land values, and expresses the definite conviction that there is no land boom in Canberra. The commission points out that the City of Canberra is being built on lines different from those of any other city, in that a pre-determined plan is being followed; zoning principles are being strictly observed, and land is being disposed of, by auction or sale, on a leasehold basis, in all of which respects the commission is being guided by either parliamentary enactments or governmental directions. The commission, in its capacity as owner of the land in the Territory, is obviously unable to leave to anybody else the provision of roads, footpaths, stormwater drainage, sewerage, water supply, and electric light and power. It has to incur the capital expenditure involved in connexion therewith, and the conditions which exist at Canberra require that these services shall be ready by the time buildings are to be completed. A very heavy financial obligation, enormously exceeding the corresponding obligation of a private land-owner, has accordingly to be considered by the commission whenever a subdivision is being opened up. It was suggested by one honorable senator that the Government should obtain the services of outside experts instead of relying upon the commission’s advice. In this connexion it is pointed out that, at the sales held prior to the commission’s appointment, a number of blocks were submitted, but less than half of them were sold, whilst the prices realized were in almost every instance the upset price. This upset price was arrived at by departmental valuers, who had absolutely no guide as to the real value of the blocks. Obviously the results of the first sale could not be taken as a clear indication of values. The next sale was held under the auspices of the commission, and, on that occasion, the upset prices were assessed by the commission’s valuers, and. were checked by a. member of the commission, the late Mr. C. H. Gorman, one of the most experienced land valuers in Australia. All the business blocks then offered were sold. The Chief Commissioner and the late Mr. Gorman were both present at this sale for the purpose of observation, and were satisfied that the demand for business blocks at the time had been amply met. Whilst the banks paid more than double the upset price, it is noteworthy that one block on a particularly favorable site realized only the upset price. The number of blocks submitted was fixed only after a very careful examination had been made of the requirements of the various types of businesses and shops in other centres. This examination was necessary to enable the commission to determine the minimum number of sites to be made available, and to avoid a repetition of the experience of “Washington, where provision has been made for three or four times the area of shopping and business space that the city actually requiresAs soon as substantial progress had been made with the buildings on the business sites which had already been sold, the commission made arrangements for the third sale of leases. The upset prices of the blocks offered at this sale were again assessed by the commission’s valuers, and submitted to an independent check by the late Mr. Gorman, after which they were fixed by the commission. Action did not, however, end here. In view of the large number of sites - business and residential - to be offered at this sale, it was deemed advisable to have the whole situation reviewed by an outside expert, and the services of the Valuer-General of New South Wales were secured for the purpose. That gentleman visited Canberra, and after the closest investigation reported that, in his opinion, all the values were lower than they really should have been. In some cases he considered that an increase of 80 per cent. in the values would have been justified. The commission did not, however, increase the values whichit had already fixed. In his report, the ValuerGeneral pointed out that the values of the best business sites in country towns, such as Tamworth, Bathurst, Orange, and Goulburn, were £100 per foot and over on a freehold basis. The commission holds the view that the capital value of what must inevitably be the two principal blocks in the business centre of the capital city of Australia must be greater, commercially, than that of business blocks in the country towns mentioned, having regard particularly to the fact that the present valuation remains for twenty years. It must also be borne in mind that the lessee is not required to pay cash, but has only to pay 5 per cent. down. Furthermore, in considering the capital value, it is necessary to take into account the fact that Canberra lessees are charged a rental of 5 per cent. per annum only on the capital value, whereas on a freehold basis the value of money could reasonably be placed at 71/2 per cent., which has the automatic effect of reducing the cost per foot of Canberra land by one-third. At the third sale the highest priced block of land brought £5,100. It has a projected frontage of nearly 75 feet, which makes the price per foot £68. When allowance is made for the rate of rental as compared with an ordinary interest rate, the cost becomes, in effect, £45 per foot. Other blocks sold realized prices ranging from £110 per foot up to £145 ; one block, however, reached as high as £175 per foot. Applying the factor already mentioned, the comparative cost per foot may be said to vary from £72 to £115. This sale was also closely watched. In the process, it became obvious that all the blocks sold, with one exception, were sold to investing individuals or companies which proposed to build shops for letting purposes, and also that there were practically no other bidders. This may be regarded as reasonably good evidence that there was no general public demand for these business sites, the whole of the purchasers being local people, with confidence in the future of the Territory, who had presumably satisfied themselves that they were paying not more than they believed the blocks to be worth. The commission is closely watching the position, and the best evidence that it has satisfactorily coped with the situation, and not unnecessarily restricted the number of blocks offered, is to be found in the fact that only a little more than one-half of the shops, and only a little over one-third of the offices, which have been built, have so far been let. As soon as a reasonable percentage of the present blocks is let the commission will make available further business sites. In the meantime, the free market conditions will ensure that no extortionate rents are charged.

Referring to the petrol filling station site, near Eastlake, Senator Elliott stated that-

Intending bidders were given to understand that no further sites for motor service stations would be made available, and thus to obtain the block the present lessees were compelled to pay a price far in excess of the upset.

This is not a fact. Quite the contrary is the case. The chief commissioner personally dictated a note which was read at the sale warning bidders for this site that the commission would definitely be making available further service station sites in the vicinity as soon as the circumstances warranted it. The selling price of petrol is controlled by the petrol distributors, and not by the service stations. At any appreciable sign of overcharge in any direction the commission will immediately make available additional service station sites. Five other garage sites have been sold, at all of which petrol can be sold to the general public. Two of these are already operating, and construction is about to be commenced on two others, so that the position in this regard is obviously satisfactorily protected.

With regard to the further suggestion made by an honorable senator that auctions should be dispensed with and sales effected by private purchase up to 10 per cent. in excess of the upset price, the commission points out that there would be very grave difficulties in dealing with choice sites attracting a number of applicants, and that, in such cases, it would be charged with the unenviable responsibility of deciding which of the numerous applicants should be allotted a particular site.

Question resolved in the affirmative.

Senate adjourned at 5.49 p.m.

Cite as: Australia, Senate, Debates, 3 November 1927, viewed 22 October 2017, <http://historichansard.net/senate/1927/19271103_senate_10_116/>.

View PDF View XML View in Voyant