Senate
10 July 1930

12th Parliament · 1st Session

  1. Senate
  2. 12th Parliament
  3. 1930

The President (Senator the Hon. W. Kingsmill) took the chair at 3 p.m., and read prayers.

page 3932

ESTIMATES AND BUDGET PAPERS

Senator DALY:
Vice-President of the Executive Council · SOUTH AUSTRALIA · ALP

– When the papers to which the honorable senator has referred were handed to me, I was informed by the Treasury officials that the annual Estimates were not quite ready. As soon as they are ready theywill be laid on the table of the Senate, and I shall move the usual motion “ That the papers be printed.”

page 3932

QUESTION

RATIONING OF WORK

Senator DUNN:
NEW SOUTH WALES

– I ask the Leader of the Government in the Senate, without notice -

  1. Has the attention of the Minister been drawn to a statement appearing in the Sydney

Morning Herald of the 9th instant regarding the action of Nettleton, Son & Co., furniture warehousemen, Sydney, when advising their employees they would have to stand down at their own expense one week in ten, as stated in the following memorandum: -

Although we do not expect any one to work during the week they are tabled to be off, still it will be allowable for them to be at their post if they desire it. This is entirely at the staff’s option, but should any one realize the keen sense of duty by giving their services free, for the weeks set down for retrenchment, it will give us some solid idea of those who are really eager to see the struggle through in a conscientious and self-denying manner?

  1. As this appears to be tantamount toa threat to employees of thisfirm that they must work one week in ten without wages, can the Government in any way prevent the firm from taking the action contemplated?
Senator DALY:
ALP

– The Commonwealth Government has no power to prevent the system to which the honorable senator has called attention, being brought into operation. It is a matter that is controlled exclusively by the State.

Senator Sir GEORGE PEARCE.Is it not exactly what has been done by the Minister for Defence in regardto the defence forces?

Senator DALY:

– As I have not inquired into the steps taken by the Minister for Defence, I am not in a position to answer the honorable senator’s question.

page 3932

QUESTION

AUSTRALIAN STOCKS

Senator DUNN:

– I ask the Leader of the Government in the Senate whether he will undertake to give the widest publicity to the overseas cables as published in the Canberra Times this morning, in relation to the rapid rise on the London money markets of Australian Commonwealth stocks?

Senator DALY:
ALP

– The honorable senator may rest assured that anything the Government can do to inspire confidence among its own people and people overseas will be done.

page 3932

STANDING COMMITTEE SYSTEM

Second Report of Select Committee

Senator Sir HAL COLEBATCH brought up the second report of the Select Committee on the Standing Committee System.

Ordered tobeprinted.

page 3933

QUESTION

MAKINE SURVEYS

Senator H E ELLIOTT:
VICTORIA · NAT

asked the Minister representing the Minister for Defence, upon notice -

  1. Has his attention been directed to the extreme inadequacy of the surveys of the Australian coasts, and to the fact that there are still numerous uncharted shoals on the Queensland coast in the path of shipping, that islands are wrongly charted, and that other inaccuracies prevail? If not, will he inquire as to the facts from the Naval Department?
  2. I.7i view of thu danger of loss of life arising from erroneous charts, why have the marine surveys conducted by the Naval Forces been discontinued?
  3. When is it to be expected that they will be resumed?
Senator BARNES:
Assistant Minister assisting the Minister for Works and Railways · VICTORIA · ALP

– Inquiries are being made and a reply will be furnished to the honorable senator as soon as possible.

page 3933

QUESTION

ALLEGED CEMENT COMBINE

Senator H E ELLIOTT:
VICTORIA · NAT

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

  1. Has the Minister noticed a report published in the Age of the 8th instant, of a statement made by Councillor Bell, of Richmond, Victoria, at a council meeting, to the effect that the great combine that exists in the cement industry was exploiting the public, that the companies concerned were making 100 per cent, profit, and that one-third of the relief money being subscribed for certain works was being absorbed by these companies? [f not. will he have an inquiry made as to the statement reported?
  2. What measures are proposed by the Government to protect the public and the unemployed from such exploitation?
  3. Will the names nf the companies concerned be published?
Senator DALY:
ALP

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

  1. The matter has just come under notice. 2 and 3. The fullest inquiry will be made to ascertain the facts of the case. Until this has been done it cannot be said what action may be taken.

page 3933

QUESTION

MILITIA AND CADET FORCES

Senator H E ELLIOTT:
VICTORIA · NAT

asked the Minister representing the Minister for Defence, upon notice -

  1. Will he state what was the strength of the Militia and Cadet Forces of the Commonwealth on the 30th .Tune last, showing strength by divisions?
  2. What was their respective strength on the 31st May previously?
  3. What was the net gain or loss of each division in strength during the period between 31st May and 30th June, 1930?
Senator BARNES:
ALP

– The information is being obtained, and a reply will be furnished to the honorable senator as soon as possible.

page 3933

QUESTION

IMMIGRATION RESTRICTION

Senator E B JOHNSTON:
WESTERN AUSTRALIA

asked the Minister representing the Minister for Home Affairs, upon notice -

  1. Under what conditions are European immigrants permitted to enter Australia for the purpose of settling here?
  2. ls it a fact that a Polish national, who is engaged to be married to a girl resident in Australia, and who has a guarantee of employment and support for three years, and would have the sum of £30 in cash on arrival, is not permitted to enter the Commonwealth?
Senator BARNES:
ALP

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

  1. In the case of certain European nationalities, including Poles, it has been found necessary, in view of the existing economic conditions in the Commonwealth, to impose a numerical limitation, and in accordance with that limitation, the entry of nationals of such countries is, as a general rule, now confined to very close relatives, such as the wives and minor children, te., of persons already domiciled here, but not including adult males desirous of coming to this country to marry. The applications received for the admission of Poles eligible for admission under the arrangement for limitation already tax the quota to its full capacity.
  2. Yes, in view of the circumstances mentioned in reply to question No. 1.

page 3933

QUESTION

IMPORTATION OF ELEPHANTS

Senator E B JOHNSTON:

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

  1. Has an application been received for permission to import elephants into Western Australia for the purpose of demonstrating their suitability for work in connexion with the clearing and cultivation of land?
  2. Has the application been refused?
  3. If so, on what grounds?
  4. Has the importation of elephants been permitted for the circus ring?
  5. Are these elephants continuously travelling throughout the Commonwealth and New Zealand, without causing complaint or risk of disease to stock?.
Senator BARNES:
ALP

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

  1. Yes.
  2. Yes.
  3. The importation of such animals, except under the controlled conditions of supervision existing in connexion with circuses and zoological gardens, is considered to be dangerous, and is prohibited under the Quarantine Act.
  4. Yes.
  5. Yes; but such animals are under strict supervision continuously.

page 3934

QUESTION

FINE WOOL FABRICS

Senator COOPER:
QUEENSLAND

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

  1. Is it a fact that, owing to the incidence of the present high rate of tariff, fine wool dress fabrics have risen in price to the extent of between18s. and 20s. per dress length?
  2. If so, will not such an increase in price have the effect of creating a greater demand for artificial fabrics, which would be, to a certain extent, to the detriment of the wool industry in Australia?
  3. To what extent are fine wool fabrics of a weight of 3 oz. and 4 oz. per square yard manufactured in Australia?
Senator DALY:
ALP

– The information will be obtained.

page 3934

WESTERN AUSTRALIAN AGREEMENT (WILUNA GOLD MINES) BILL

Third Reading

Motion (by Senator Daly) proposed -

That the bill be now read a third time.

Senator LAWSON:
Victoria

I do not desire to speak at length on this motion, nor do I wish to justify or explain the vote which I recorded lastnight or the statement I made that the repudiation of this agreement by the Senate would, in my judgment, mean a breach of faith with the Government of Western Australia. I understand that certain honorable senators took exception to what I said, and contended that the argument was plausible, but upon examination appeared to have nothing in it. I ask if any honorable senator is able to quote a precedent where any Parliament has failed to ratify a bona fide agreement made in good faith between two governments. The Government of Western Australia was induced to give this guarantee of financial assistance as set out in the agreement which has beensigned and which forms the schedule to the bill. The agreement has not been impugned on the ground of impropriety, and I cannot recollect an instance where an agreement entered into in this way has failed to obtainthe endorsement of Parliament. The practice of the Parliament is to endorse the actions of its ambassador. There is one startling case - the conditions are not at all comparable; - in which the Senate of the United States of America refused to support its ambassador by ratifying the Treaty of Versailles. I cannot, however, recall any case in which the Prime Minister or the Government of Great Britain has in good faith entered into an agreement with another government, and the British Parliament has not duly ratified that agreement. There may be criticisms and objections and some honorable senators may take a view different from my own; butI personally refuse to take the responsibility of breaking faith with the State of Western Australia in regard to this agreement. At the same time, I should like to say to the Leader of the Government in the Senate (Senator Daly) that I do not think that such agreements should be entered into and Parliament morally committed before Parliament has had a real opportunity to consider them. The Government of Western Australia should have been informed’ that a bill would be submitted asking the Federal Parliament to ratify this agreement, but that the Commonwealth would not be committed until the bill had been passed. If this course is to be followed without reference to Parliament, the Government, whatever government it may be, must not, because of precedent, rely upon the endorsement of Parliament. Greater care should be exercised in entering into agreements of this kind. I do not propose to debate the merits of the matter. Governments should buttress themselves against political pressure and attempts to obtain grants, and should make it impossible for Ministers to be tempted by political pressure to give bribes. I know the way in which such things may develop. I am not suggesting impropriety in this case, but the Government should protect itself against such a position arising and against undue political pressure. That was the aim of my observations last night. They were objected to in certain quarters, and I have taken this opportunity to indicate the grounds on which I based my decision.

Senator McLACHLAN:
South Australia

– It appears to me that the distinction which Senator Lawson desires to draw between the position under this bill and that which should be taken up is as the difference between Tweedledum and Tweedledee. In this bill, the second reading of which was carried last night, there is a distinct provision that the agreement is to be subject to ratification by this Parliament, and I cannot see how there could be any breach of faith if this Parliament failed to ratify it. The Governments which entered into the agreement had their eyes open, and there is no foundation for the suggestion of Senator Lawson that by failing to ratify the agreement we should be breaking faith with the Government of Western Australia. The Prime Minister said that he would sign the agreement subject to its ratification by Parliament, and there is a specific provision to the same effect in the agreement itself.

Senator DALY (South Australia - [3.18]. - I should like honorable senators to understand that no attempt was made by the Government to enter into a contract with the Western Australian Government and really force Parliament to ratify it. I submit, however, that there would be a distinct breach of faith as between governments if this Parliament was to arbitrarily refuse to ratify the agreement. The Government conferred with representatives of the Western Australian Government and of the company, and the fullest investigation was made into the possibilities of this particular mine. The Government then entered into an agreement with the Western Australian Government on the distinct understanding that the agreement would be submitted to this Parliament for ratification. The Western Australian Government was entitled to believe that as the Government had entered into the agreement Parliament would ratify it unless there was some good reason for not doing so. I submit that there is a distinction between the position as put by Senator Lawson and Senator McLachlan. Senator Lawson need have no fears so far as this Government is concerned. It was not intended in this instance, nor will it be contended in connexion with any other transaction, that the Government has the right to enter into contracts with other Governments or individuals and then to throw the responsibility upon Parliament of carrying out what may be regarded as a moral obligation.

Question resolved in the affirmative.

Bill read a third time.

page 3935

BANKRUPTCY BILL

Report adopted.

Senator DALY:
Vice-President of the Executive Council · South Australia · ALP

– I move-

That so much of the Standing and Sessional Orders be suspended as would prevent the bill being passed through its remaining stages without delay.

I am aware, Mr. President, that it is your wish that the power sought by this motion should not be exercised except in urgent circumstances. I am instructed by the Clerk of the Senate that the amendments have all been printed, and until this bill becomes law it is impossible for the judge appointed by the Government to proceed with insolvency work. It is the desire of the Government to have the bill passed into law without delay, so that instructions may be given to the judge to proceed with his work, and that the congestion of insolvency business obtaining in Melbourne and Sydney at the present time may be removed.

Question resolved in the affirmative.

Bill (on the motion by Senator Daly) read a third time.

page 3935

CENTRAL RESERVE BANK BILL

Second Reading

Debate resumed from 27th June (vide page 3443), on motion by Senator Daly -

That thebill be now read a second time.

Senator Sir GEORGE PEARCE (Western Australia) [3.23] . - The Leader of the Government, in introducing this bill, seemed to anticipate opposition to it. Let me assure him that that is not the frame of mind in which we on this side approach the measure. We are sympathetic towards the idea of establishing a central reserve bank. The Minister said that the Opposition would suggest that the bill was an attempt to realize the Labour party’s objective of socialization. Would it not be quite logical for us to assume that? It is surely not uncomplimentary to members of the Government, and to their supporters, that we should expect that they will endeavour to realize the ideals of the platform of their party.

Senator Sir GEORGE PEARCE.Yes, I often explained the Labour platform when I was a member of that party, but I do not think that I ever gave such au extraordinary explanation of it as was made in Melbourne a few days ago by a member of the Government, the honorable member for Bourke (Mr. Anstey). Are we to assume that his statement indicated what is meant by the Government’s policy on banking?

The Leader of the Government said that there was no need for fear, because the Commonwealth Bank already carried out 75 per cent, of the functions of a central bank. I congratulate him upon the history that he gave of the development of the Commonwealth Bank. It was an unbiased and straight story of the way that bank has developed. Not only the Senate, but also the country, is under an obligation to him, because a good deal of misrepresentation of the position of that bank has occurred. Attempts have been made to show that it has not been properly developed, and that by the measures passed by a previous Government it has been stunted and prevented from expanding. Therefore, I am sure that we were all very glad to hear the statement of the Leader of the Government concerning the bank’s gradual development and evolution in the direc tion of acquiring the functions of a central reserve bank until it has assumed 75 per cent, of those powers. Then the Minister went on to point out that what is now sought for the bank is the other 25 per cent, of the functions which a central reserve bank should, and which the Commonwealth Bank does not, exercise. I assume from his subsequent remarks that he was dealing with the functions of a central reserve bank in connexion with overseas exchange, and that, apparently, is the only function that the Commonwealth Bank is not performing that would be carried out by a central reserve bank. Such a bank may fix the rate for overseas exchange, if it can control the supply of gold at home and abroad; but the supply of exchange is not within the bank’s control. It may fix the rate, but it cannot fix the supply.

Senator Sir GEORGE PEARCE No; that is determined by the ratio between exports and imports. The Minister quoted the position of South Africa. Why has that country a lower exchange rate than Australia? We have an excess of imports of over £37,000,000, whereas South Africa has an excess of exports amounting to £58,000,000; but that is not .because South Africa has a Central Reserve Bank. I appeal to the Minister not to confuse cause and effect, and not to attribute the position of South Africa to the possession of a Central Reserve Bank when it is due to an excess of exports.

Senator Sir GEORGE PEARCE.It may fix the rate of exchange, but not the supply.

Senator Sir GEORGE PEARCE.Yes. The Leader of the Government” said that the private trading banks had not disclosed to the Commonwealth Bank their position with respect to overseas balances. That may be so, because, as he says, the Commonwealth Bank is a trading bank, and they might be dis-‘ closing information to a competitor. We are told that adversity makes us acquainted with strange bed-fellows. I noticed in to-day’s press that the banks have agreed to co-operate in the matter of exchange. A conference has been held in Melbourne for this purpose, so that the last remaining shred of argument that the Leader of the Government had has gone. The banks have agreed to co-operate without the establishment of a reserve bank! These banking institutions, at the request of the Government, which I suggest was, in the circumstances, quite properly made, have agreed to pool their credit resources in Great Britain and give priority to the demand liabilities of the Commonwealth. A central bank could not do more than that which is being done under our existing banking system. What Senator Daly says should be done by a central bank, is being done to-day by the Commonwealth Bank as regards 75 per cent. of the functions of a central bank, and as regards the other 25 per cent., the work is being done by the Commonwealth Bank and the private trading banks in co-operation. The Leader of the Senate (Senator Daly) said also that because the Commonwealth Bank is a trading bank the Government does not feel that the remaining 25 per cent. of the functions of the central bank should be placed in its hands. When we remember that the Government, through the Treasurer, will control the central bank and the Commonwealth trading bank as well, I suggest that the Minister was drawing largely upon his imagination when he made that statement. Then he went on to say -

It is quite impossible for a bank to carry out the functions of a central reserve bank while continuing as a trading bank.

On that point I need only remind honorable senators that the Bank of England, which is essentially a central bank, also discharges the functions of an ordinary trading bank.

SenatorRae. - Not for the general public.

Senator Sir GEORGE PEARCE.It is true that the Bank of England does not, in every aspect of banking, compete actively with the private trading banks in Great Britain, but it receives deposits on current account, and carries out many of the functions of a trading bank. There is, I think, some ground for suspicion con cerning the motives actuating the Government in bringing forward the bill at this juncture. We are told that, in order to break up the monopoly now existing in regard to the availability of credit, the Commonwealth Bank should become a more active competitor with the trading banks, the underlying purpose, no doubt, being to drive the private banks out of business. As a matter of fact, this statement was made only a few weeks ago and it certainly gives ground for the suspicion that the intention is to permit the Commonwealth Bank to compete more aggressively against private institutions and, if necessary, to use its strength to drive them out of the business. I wish again to emphasize that honorable senators on this side are not opposed to the establishment of a central bank. We arc prepared to consider a proposal to that end on its merits; but we cannot lose sight of the fact that after this bill is disposed of we shall be called upon to discuss another relating to the functions of the Commonwealth Bank as a trading bank. These two measures, I submit, should be considered together.

This proposal should be considered from three points of view. Firstly, is this the time to make such a drastic change in our banking system ? Secondly, are the framework and functions of the proposed central bank, as outlined in the bill, satisfactory? Thirdly, is the proposed method of control satisfactory? As to the first point, I direct attention to the present state of the financial position of the Commonwealth. Credit, as we all know, is most difficult to obtain, not because of any desire on the part of the private banks to restrict credit, as alleged by certain supporters of the Labour party, but because Australia is suffering from widespread commercial depression. How stupid it would be for the private banks to restrict credit in view of the fact that they make their profits out of the credits they give their customers. If they restrict credit they limit their opportunities to earn profits. The drop in our national income is due not to the action of the banks in restricting credit. It is due to the world-wide depression as a result of which all governments are finding it hard to meet their obligations. Surely then, at a time like this, it is extremely unwise to contemplate altering the financial structure of the Commonwealth in such a way as to cause, possibly, a still greater disturbance in the commercial life of this country. In other words, is it wise to swap horses when crossing the stream? Every honorable senator and every person in the community who reads the budget statement presented in the House of Representatives yesterday by the Treasurer must realize that, in a financial sense, Australia to-day is crossing the stream, and that this is not the time to make the change contemplated.

I suggest that the three points which I have put to the Senate justify the proposal that there should be a full inquiry. The functions of the proposed central bank are most important. Why should we assume that all the wisdom in the community resides in the Treasury or in some sections of the Commonwealth Bank? Surely there are in this country people of wide banking and commercial experience associated with private banks and great financial institutions whose opinion on this important matter is entitled to respect. Why should not we give them an opportunity to voice their views on the proposed changes in our banking system which may be vital to the safety of the institutions which they control?

On the question of control, I would point out that the method proposed to be adopted is, so far as I am aware, unknown in respect of any other central bank in the world. Surely the contemplated departure is so drastic as to warrant a thorough investigation. The control of the central bank is of the greatest importance to the people. . In no other country is the central bank under political control.

We have, in Australia, a board of directors of the Commonwealth Bank. Those gentlemen were selected because of their standing, ability and wide knowledge of banking, and they have now acted for some years as directors of the bank. Is it not rather peculiar that they were never asked to express an. opinion either as to the desirability of establishing this bank, or as to the form in which it should be moulded ? If they were asked for such an opinion, it has not been disclosed to us. Why should they not have been asked their views on the matter? If their opinion was hostile to the Government’s proposal, surely that is no reason why the advice of such capable and experienced men should be spurned. Something might be said against seeking the advice of directors of private banks, as it might be claimed that their interests were riot those of the general public. But here is a board of directors controlling the people’s bank. I have not yet seen the opinion of any commercial organization that has investigated this project that does not incorporate a resolution against it. There must be some reason for that attitude. It cannot in all cases be mere political prejudice. Why should we not give those people an opportunity to present themselves before a committee, give their reasons and substantiate them under cross-examination ? Because there is no other central bank in the world controlled in the way that it is proposed to control this bank, I cannot support the second reading at this stage. I desire further information on the subject. I am not against the establishment of a central reserve bank if I can be satisfied on the points that I have indicated, but I am not satisfied about them at this juncture.

Senator Sir WILLIAM GLASGOW (Queensland) [3.33]. - Like the right honorable the Leader of the Opposition (Senator Pearce) I congratulate the Leader of the Government in the Senate (Senator Daly) on the capable and impartial way in which he outlined the history of the Commonwealth Bank and the project now before the Senate. I think we are all proud of the- progress made by the Commonwealth Bank. Particularly has it grown since the war. In 1924, by act of Parliament, the management of the bank was vested in a board of directors, and it has since developed along the lines of a central reserve bank. The funds and the business of the bank have grown considerably and, as the Leader of the Government in the Senate said, it is now exercising 75 per cent! of the functions of a central reserve bank. The remaining 25 per cent, relate to the regulation of exchange.

Central reserve banks have been established in other parts of the world and, before committing ourselves, to this measure, which would have a tremendous influence on the finances of Australia, particularly at the present time, we should consider what has happened elsewhere. The ex-Treasurer of the Commonwealth, speaking in another place, said -

To-day practically every important country in the world has a central reserve bank, the three outstanding exceptions being Australia, Canada, and the Argentine. It is a rather remarkable commentary upon -what can’ happen in the absence of central reserve banks that in these three countries there have been serious financial disturbances in the last couple of years, and at the present time they are probably the worst sufferers from financial stress.

A commentary on that definite statement has just been received by cable from Canada from an authoritative source, fully representative of settled opinion held there. It is as follows : -

Astonished at statements made regarding Canada. Views expressed Times Trade Supplement, 19th June, 1920, applicable in their entirety to situation to-day. Canada has had no serious financial disturbances, and during great war was only country in world where banks did not raise rates to commercial customers above (J per cent., and we had no financial failures or serious commercial difficulties during financial crash in United States of America last fall. Our Finance Act passed by our Parliament in 1914 and still in operation enables banks obtain when necessary all advances they may require for carrying on business of country. Operation of this act also does not cost Canadian Government one penny, whereas federal reserve bank system United States of America is carried on at cost of many million dollars per year to that country. ,

The reference in the Times Trade Supplement of the 19th June, 1926,. reads -

In view of the fact that Great Britain and the leading countries of Europe have as the keystones of their financial systems a central bank and that the United States has found if necessary to co-ordinate and strengthen the multifarious weak units of its .financial system by creation of the federal reserve banks, the opinion prevails in some quarters that Canada is behind the times in not creating » central bank. This opinion is strengthened by the example set by Australia, and even more plainly by South Africa. It is the writer’s desire to show how Canada has worked out her problems in the light of her own experience, and lias evolved simple and inexpensive machinery for performing the functions of a central bank so far as the country hae experienced any need of one, and, further, that she has accomplished this without burdening her financial system by the overhead of a costly institution such as has been found necessary in other countries.

In any broad survey of the financial system of Canada the Dominion Notes Act and the Finance Act must undoubtedly form part of the picture. In most countries where a central bank exists the exigencies of government finance have either played a large part in its establishment or have profoundly modified its constitution. The problem of Government finance was fought out and solved by Canada some years- before confederation, partly as an outgrowth of the proposal for “ free banking to which reference has already been made. Under the Dominion Notes Act as it exists to-day the Dominion Government furnishes all the small change-making notes used in the country, _ and, in addition, has a very large issue, chiefly of special notes, for use by banks as cash reserves and for clearing house settlement purposes.

Thu other main functions of a central bank are usually co-ordination of the banking system and the practice of rediscounting. The need for co-ordination has not been felt in Canada. There are at present only eleven banks, all of them of considerable size and strength as compared with the average banking unit in the United States of America. There is also the Canadian Bankers’ Association, an incorporated body clothed with certain statutory though strictly limited powers, which provides a co-ordinating organization. The right honorable Sir Thomas White, Minister of Finance for Canada, throughout the great war, bore public testimony to the efficiency with which the existing system responded to the calls of the Dominion Government.

Finally, there is the question of rediscounting. Before the war, when the fluctuations in sterling exchange were strictly limited by the gold points, the Canadian banks had access to the London discount market and all their requirements were easily provided for there. On the outbreak of war this source of funds was cut off, and by a proclamation issued early in August, 1914, and subsequently embodied in the Dominion statutes, and finally in what is known as the Finance Act 1925, arrangements were made to enable the Canadian Minister of Finance to make advances to the banks by the issue of dominion notes against the pledge of certain securities defined in the act. These advances bear interest at a rate fixed from time to time by the Treasury Board of Canada,, and are constituted by the statute a second charge (second only to the notes of the bank in circulation, which are a first charge) on the assets of -the borrowing bank. Under the provisions of this legislation all the requirements of the Canadian banks have been met since the outbreak of the war in a simple, practical, and efficient manner without the heavy overhead of an institution such us one of the United States federal reserve banks, which would prove a crushing burden in Canada.

In recent year of slackened business activity the advances to the hanks under the Finance Act have been steadily growing less. They have seldom during the last three or four years reached as large a sum as $30,000,000, and at the end of February, 102fi, the latest date for which figures are available, they amounted to only $2,000,000. On a business of this volume no central bank could be expected to live.

In the Times Trade Supplement of 29th June, 1929, the following reference to “No Central Banking Institution in Canada” appears: -

There is no central banking organization in Canada comparable to the Bank of England or to the Federal Reserve Banks of the United Sta.tes of America. An important function of such institutions is supplied by the Government itself, which assists the commercial banks in times of pressure by making short-term advances against certain first-class securities, promissory notes, and bills of exchange secured by documentary title to wheat, oats, corn, &c, and also those issued or drawn for agricultural, industrial, or commercial purposes. In addition to the security the Government obtains a second charge on the assets of the borrowing bank, the first charge being in favour of the note-holders. At present, 4i per cent, per annum is charged by the Government on such advances which are granted for periods not exceeding one year. As will be readily seen, this facility is of great importance in a country where there is a heavy seasonal demand for money for growing, moving, and marketing the crops, and the banks regularly avail themselves of it.

In 1900, the Dominion Parliament incorporated the Canadian Bankers Association, of which all banks are members. Certain duties in connexion with the establishment of clearing houses and the supervision of note circulation and of suspended banks have been given to it, but one of its main functions has been to facilitate and encourage the co-operation of the individual banks and, when necessary, the co-ordination of their policies. The association, which is under the authority of the Dominion Treasury Board, thus performs one of the most essential functions of a central bank. The system works very smoothly and efficiently, and there does not appear to be any need for a central bank of the orthodox type.*

The bill appears to be modelled on the South African act, and the ex-Treasurer (Mr. Theodore) quotes that bank and also the United States of America Federal Reserve Banks as functioning successfully, and, therefore, presumably applicable to Australia. Before the United States Governments adopted their plan for a central reserve bank, which was forced on them because their system of local banks was working badly and embarassing their whole credit system, they spent much time and employed the services of experts by commission abroad and at home in exploring till systems of central reserve banks.

In South Africa, member banks number four with total deposits involving only between £5,000,000 and £6,000,000, and the main . activities of the bank are the management of note issues and government business. The latter, . according to the latest report available, was on a creditor basis. Their’ gold holdings totalled 50 per cent, of their total liability on notes issued, and deposits consisted chiefly of foreign and British Treasury bills. In South Africa, as in Australia, a local bill market is of negligible dimensions, the investments under the heading “ Domestic Bills “ being in the March, 1928. hal n nee-sheet less than £800,000.

If we ave to infer from the exTreasurer’s speech that the South African model of a reserve bank is being adapted to Australia, or that its successful functioning in South Africa is a precedent for. Australia, such inferences are misleading for the reason that the South African Reserve Bank does not compete with the member banks for ordinary banking business.

Senator Sir WILLIAM GLASGOW But a bank closely associated with it will do so. The Governor of the South African Central Reserve Bank, Mr. William Hervey Clegg, in his annual address to stock-holders on the 15th May, 1928, gave expression to a fundamental axiom in regard to any system of central reserve banking as follows: -

We do not at our branches, nor indeed at head office, transact much business with the general public. In fact, as I have often pointed out before, our constitution under the act renders this impossible. Nor should we, as far as I can see, even if our powers were enlarged, ever want to do a general banking business in competition with the other banks. Lot me say once more, what I have said before at least a score of times, that a central bank, like the Bank of England, Or the federal Reserve Bank of the United- States of of America or the South African Reserve Bank, holding the reserve balances of the other banks, whether voluntarily or compulsorily, ought never to do a general banking business in Competition with the other banks. There are central banks in Europe which do a good deal of ordinary commercial business, but I think you will find that those banks do not hold the reserve balances on the other banks to any large extent, and their “ centralness “ consists rather in possession of the power of note issue and in close connexion with the State, than in that intimate interlinking of each bank with the Central Bank, and through the Central Bank with each other, which takes place in countries where the banks keep their main reserves with the Central Bank and the Central Bank takes upon itself the general regulation of credit and the maintenance of the gold reserve of the country.

The bill before this House must be considered in conjunction with an amending Commonwealth Bank bill providing that the present Commonwealth Bank shall be divorced from its present constitution as a central bank and freed to actively engage in widespread competition with trading and State savings banks throughout Australia, a transgression of the chief essential of any approved and prudent system of central reserve banking. The proposed Australian central reserve bank places the most important function of the proposed bank, namely, the investment of the £17,500,000 taken from the trading banks and any other moneys ii will receive on the banks’ settling accounts and other depositors’ money, in an unfettered and uncontrolled power of management. Clause 8, sub-clause i, gives the bank power -

To make advances to the Government of the Commonwealth or of a State or to any authority constituted under thu law of the Commonwealth or of any State.

The South African act quoted by the Government contains no such provision. On the contrary, it limits the right of the central reserve bank to buy government and local authorities’ securities not having more than six months’ duration. The bill now under consideration gives power to the management to buy and advance against government or local authorities’ securities without limitation as to amount or duration of time. On the subject of the need for clearly defining the powers of a central reserve bank and fixing definite limitations on its operations, Mr. Clegg, whom I have already quoted, in a report on the South African Reserve Bank, dated May 15th, 192S, stated : -

There are several lines of business in which the hank could operate without any serious interference with the general business of the other banks, and it is the board’s opinion that the bank ought to have a free hand, subject to certain definite restrictions so that it could’ do such business. Professor Plant, in a recent article, entitled “The Future of Central Banking in South Africa,” has expressed so succinctly the views I hold on this matter that I should like to quote his word - He says: - “ There is much to be said for legislation on either the positive, but ultra-cautious policy of defining simply what the bank may do, or the negative, but more courageous, plan of prohibiting such operations as are inconsistent with the responsibilities of a central bank, and then leaving to the Governor and his hoard freedom to act as circumstances demand. A middle course is hardly defensible even as a temporary expedient”.

The bill provides that the central reserve bank shall manage the note issue of the Commonwealth and take over the gold reserve, and handle all gold shipments. At present the gold reserve against notes is 25 per cent., the total usually held being in excess of that percentage. If the bill under discussion is passed the gold reserves can be reduced to 12½ per cent., since it is provided that, while the reserve shall be 25 per cent. against notes and total deposits, up to half of the reserve can be held abroad in Government paper or prime bills and the remaining half at home in gold. The reserve banks of all other countries are required to keep reserves in gold ranging in percentage from 25 per cent. to 50 per cent., the majority being 30 per cent. to 45 per cent.

A reduction of the gold reserves does not appear to be a wise move at the present time, and a perusal of the reports of the debates on this bill in another place does not disclose what expert authority, if any, recommended or approved such a radical change in this respect.

The bill does not appear to measure up to the accepted standard of a true central reserve bank. It seems unusual and dangerous to suddenly take away from trading banks a large proportion of their cash reserves at the present time - when banks, wool-broking firms, and other financial institutions are straining their reserves to carry on the business of the country - and hand them over to the management of the central reserve bank to use practically at their sole discretion. Safeguards and limitations appear necessary and wise. A weak or inefficient management, confronted with pressing demands from necessitous State or Commonwealth Treasurers, or both, might permit reserves, designed and marshalled as safeguards and real fighting reserves to fight panic and runs, to become frozen and unavailable for advances to governments in time of need.

The constitutions of most central reserve banks appear to be framed with safeguards against the very contingency which this bill seems to be framed with the express intention of making possible.

It seems reasonable to ask at least that, while not disagreeing in any way with the principles of true central reserve banking, expert opinion should be sought and the whole field of our financial system explored before we hastily commit ourselves to any new system of reserve banking. It seems necessary to consider first if we need such a bank in Australia, seeing that trading bankers, wool houses, and other such people are not in accord with the proposals now submitted, and in view of their responsibilities in safeguarding more than £300,000,000 of public deposits they should be permitted to express their views and recommendations. These should not be lightly considered. Further, it is evident that the feelings of small depositors in savings and trading banks, as well as those of borrowers from those institutions, must receive consideration. There appears to be a feeling of uneasiness amongst a growing section of these people regarding tampering with banks’ reserves by the Government, and a survey of this aspect of the problem is advisable.

Senator Sir George Pearce has dealt with the question of the regulation of exchange raised by the Leader of the Government in the Senate. I notice, however, from a statement by SirRobert Gibson, Chairman of the Directors of the Commonwealth Bank, published in this morning’s Sydney Morning Herald, that at a conference between the trading banks and the Commonwealth Bank, an agreement has been reached in regard to this matter. I quote the following from one of last week’s issues of the Brisbane Courier : -

Banks’ Duty to Nation.

Viscount Novar, better known to Australians as Sir Ronald Munro-Ferguson, GovernorGeneral from 1914 to 1920, when he was raised to the peerage, delivered a thoughtful address at the centenary celebration of the Union Bank of Scotland at Glasgow recently. “ Thinking more of experience of the world in general than of banking in particular,” Lord Novar said that at no time since 1785, when the fortunes of the country were at their lowest ebb, had there been such cause for anxiety to all connected with finance. To judge superficially from accounts and reports of banks and insurance companies one might think that Great Britain was prosperous. Yet every bank manager knew too well the ebb of capital from staple industries, a process which had been stimulated by lavish public expenditure. Probably the banks alone could effectively curb the extravagances of Governments by dealing with them as drastically as with the borrowing individual spendthrift. Commerce and industry, together with the unemployed, were being equally demoralized by credits and doles administered nationally or internationally by many agencies. If doles to the unproductive individual destroyed his energy and initiative, doles to the uneconomic industry would as surely produce the same evil results upon a larger scale. The records of the British hanks were proof of the public confidence reposed in them. In a few cases at home and overseas there were indications of a desire on the part of Governments to establish an official or unofficial connexion with the banks, and such efforts had to be closely watched, while the tendency of all Governments to induce banks to shoulder responsibility for Government schemes and financial adventure should be stiffly discouraged.

In view of the financial position of the Commonwealth a thorough investigation should be made before any attempt is made to establish a central reserve bank. There is a strong feeling among members of the various chambers of commerce in Australia, wool-broking associations in the different States, and those closely interested in the finances of this country that the time is not opportune to introduce a banking system of this kind. As I consider that a thorough investigation should be made, I move -

That all the words after “ That “ be left out with a view to insert in lieu thereof the words “the bill be referred for consideration and report by a select committee consisting of Senators Dooley, Dunn, Sir Hal Colebatch, Lawson, Carroll, O’Halloran, Sampson, and the mover. That such committee have leave to send for persons, papers, and records, and to move from place to place, and that the committee report to the Senate on this day four weeks.”

Senator LAWSON:
Victoria

– I second the amendment. In doing so I should like to say-

The PRESIDENT (Senator the Hon W Kingsmill:
WESTERN AUSTRALIA

– Order! Before the honorable senator proceeds, I should perhaps explain the course to be followed in the circumstances which have now arisen. To the motion “ That the bill be now read a second time” an amendment has been moved and seconded that the bill be referred to a select committee and the advisability or otherwise of appointing a select committee is the only subject which can . be discussed at this juncture. The Leader of the Government in the Senate, who moved the second reading of the bill, .may speak to the amendment without prejudicing his right to reply to the debate on the motion for the second reading of the bill, but the honorable senator who moved the amendment will not be permitted to take any further part in the debate because he has already spoken to the motion for the second reading and to the amendment.

Our Standing Orders in regard to the appointment of select committees are very unsatisfactory, and should be amended at an early date. Standing Order 194. which relates to the second reading of bills, reads -

Amendments may be moved to such question by leaving out “ now “ and adding “ this day six months “ which, if carried, shall finally dispose of the bill; or by referring the bill to a select committee; or the previous question may be moved.

The provision for the reference of a bill to a select committee is clear, but it is necessary to provide for the debate on the motion for the second reading being proceeded with after the select committee has reported to the Senate. That is covered by Standing Order 196 which reads -

When a bill has been reported on by a select committee, a future day may be fixed for the second reading.

That is the procedure that will be followed. In order that there may be no misunderstanding I wish to impress upon honorable senators, that in speaking to the amendment it will be permissible for them only to discuss the advisability or otherwise of appointing a select committee. They may not refer for the time being to the merits or demerits of the bill itself.

Senator LAWSON:

– I have already seconded the amendment moved by Senator Glasgow which provides that this bill be referred to a select committee, and I propose in the observations I am about to make to abide with absolute fidelity by the ruling which you, Mr. President, have just given. The select committee which was appointed by the Senate this session to consider and report on the standing committee system dealt with a subject such as this in the report which it presented, and it recommended that the Standing Orders should be amended to facilitate the appointment of standing committees. lt investigated the standing committee system in operation in the great Mother of Parliaments, as well as those operating in the United States of America, New Zealand, and other countries. Honorable senators who have read the report will remember that the select committee informed the Senate that the invariable practice of the Mother of Parliaments is to refer technical and intricate bills to a select committee so that experts may express their opinions upon them. The Senate was assured that under such a system it would have the fullest possible information before it in dealing with legislation. I submit that this measure is peculiarly one for reference to a select committee. The amendment has not been conceived in a spirit of antagonism to the Government or of hostility to the measure, and I trust the Government will be willing to accept the proposal for an impartial investigation.

Senator Daly:

– We are to have a minority representation on the proposed committee.

Senator Sir George Pearce:

– The majority of representation is always determined by the numerical strength of the parties.

Senator Daly:

– But we have a big majority in another place.

Senator LAWSON:

– It seems to me that this chamber is peculiarly adapted to review a measure of this kind, and that it should be its special province to afford those who can place expert knowledge and advice at its disposal an opportunity to furnish that information. I am not concerned with the personnel of the committee; but I think the proposal with respect to the relative representation of parties is fair. I understand that the committee is to consist of three supporters of the Government and five members of the Opposition, and having regard to the numerical strength of parties in this House the representation of the Opposition does not appear to me to be excessive. What will be the functions of this committee?It will be a judicial body charged with the conduct of an investigation. Those who accept the responsibility of service on it will be bound to dismiss from their minds preconceived notions; to consider impartially and on its merits the subject submitted to them, and to afford to those qualified to advise the fullest opportunity to give information on the question for the benefit of Parliament. By referring the bill to a select committee we shall not be taking out of the hands of this chamber the right to give the ultimate decision. Unfortunately, as the select committee on the standing committee system pointed out, it would appear from the wording of the Standing Order under which this action may be taken that the reference of a bill to a select committee is done with the object of defeating it just as is the case when an amendment is moved that a bill be read this day six months. I agree with you, sir, that our Standing Order relating to the reference of bills to a select committee needs revision. The committee charged with the responsibility of investigating the standing committee system recommended an amendment of the Standing Orders to facilitate the appointment of committees to deal with measures of this kind. The Mother of Parliaments from which we draw our precedents would not dream of passing a measure such as this without first submitting it to a select committee for investigation and report. By adopting such a course we should be safeguarding the interests of everyone concerned, and giving them an opportunity to express their views, not only in the interests of the Senate, but for the benefit of the nation. Such a committee wouldnot consider the subject from the standpoint of pre-conceived party motives, but would deal with it on its merits. All the Senate is asked to do is to say that this difficult and delicate problem - in view of existing circumstances it could not be more delicate - should be referred to a select committee for a thorough investigation. I do not pretend to be an expert in banking practice or to be qualified either by my training or business experience to pronounce judgment on the details of the bill. Therefore I welcome the opportunity . of informing my mind on the subject through the agency of a select committee. I trust that the Government will take the suggestion in the spirit in which it is made, and will regard it, not as a hostile move to sidestepthe bill, but as a means of utilizing the machinery which is extensively used in other Parliamentary institutions, and which, I venture to say, should be more freely availed of by this Parliament to give those interested an opportunity to express their views on the measure. The Senate will then be able to proceed with the consideration of this legislation in the light of the best advice and evidence that is available on such an intricate and technical subject. I am sure that every member of the proposed committee, no matter to what party he may belong, will, as was the case in connexion with the select committee on the standing committee system, look at this matter free from party considerations, and from the viewpoint of a parliamentary institution. I know of no bill which could be more appropriately referred to a committee for impartial consideration. I. therefore, urge the Senate to carry the amendment, and I ask the Government to accept it in the spirit in which it is offered, so that we may arrive at some unanimity in our consideration of this important measure.

Senator DALY:
V ice-President of the Executive Council · South Australia · ALP

– The Government is not prepared to accept the amendment, and I hope that it will not be treated lightly by honorable senators. This bill has been before Parliament for practically three months. It has been discussed in almost every chamber of commerce and chamber of manufactures throughout Australasia.

Senator Sir George Pearce:

– It has not been before the Senate.

Senator DALY:

– But it has been before Parliament, and it has been dismissed in the columns of the public press for about three months. Many articles have been written upon it; many comments, some even by honorable senators, have been published. Therefore, it seems to me that this amendment is an attempt to shelve the measure. This is not the first time that the subject of national banking has been before this chamber, and I invite the mover of the amendment, or any other honorable senator, to name any occasion on which the subject of Commonwealth banking was under consideration by the Senate and was referred to a select committee. Did this chamber refer the question of the establishment of the Commonwealth Bank to a select committee? Did it deal in that way with the proposals for a note issue, and for the other activities to which I referred in my second-reading speech? Then why, at this stage, should this bill be referred to such a committee? That course should not be followed unless necessity for it can be shown.

Let me discuss with honorable senators opposite exactly the class of information that they hope to obtain by the appointment of a select committee, and having elicited the class of information required, I shall ask them whether they are not able to obtain it without the assistance of such a committee. The information that such a committee might be expected to obtain relates to the question of whether it would be advisable for the activities of the national bank to be extended to include the control of foreign exchange. No honorable senators would suggest that any information on that point could be secured. And yet while I can show that already the nation possesses 75 per cent. of the functions of a central bank, this Senate is now asked to appoint a select committee to inquire whether the bank of the nation should take control of foreign exchange which represents the remaining 25 per cent.

Senator Sir George Pearce:

– To consider the method of control as well.

Senator DALY:

– The Leader of the Opposition classified the desired information under three headings; but is this a time to appoint a select committee on this matter?We know the position of our overseas exchange, and we have the experience of the other countries in dealing with their post-war problems, and the financial crises that they have had to face.

At the committee stage I shall be able to furnish honorable senators with the experience of 27 central banking institutions. Provided that every honorable senator is prepared to do what is expected of him by the nation, he can obtain as much information as any select committee that might be chosen. The amendment would hold the measure up for a month. It would be a case of Nero fiddling while Borne was burning. Yesterday, the financial position of the nation was placed before this chamber. The Government is at its wits’ end in attempting to obtain complete control of finance so that it can place the ship of State on an even keel, as soon as possible. It is now proposed to delay this action by the appointment of a select committee, which, for the next month, would inquire into matters on which honorable senators can obtain’ all the information required. I am not concerned whether or not this debate is adjourned this afternoon. Honorable senators are at liberty to address as many questions as they wish to the Government on this subject. I have the DeputyGovernor of the Commonwealth Bank here with me, and I am prepared to arrange with him to place his services at the disposal of honorable senators so that they may obtain any information desired.

Senator Chapman:

– He is not the only person who can give information.

Senator DALY:

– Will the honorable senator tell me what he. desires to know? The Senate would then be able to decide whether the appointment of a select committee would be the best way to obtain it. I think that I am entitled to demand to know what information honorable senators require.

Senator Reid:

– The evidence that a select committee would obtain might assist the Governmnt

Senator DALY:

– Could such a body tell us any more than we know already about our financial position in Australia and in London ? If any honorable senator says that he believes in the principles of central banking, and believes that there should be a central reserve bank in Australia, and then hesitates to consider whether it is proper to pass this measure-

Senator Chapman:

– We, on this side, are more concerned about the right method of bringing the new system into operation.

Senator DALY:

– I am pleased that I have convinced the honorable senator that there is no necessity to appoint a select committee for the purpose of ascertaining whether this reform should be brought about. I remind honorable senators that in times of depression there is a graver necessity for a tight grip on the finances than in periods of prosperity. The Leader of the Opposition (Senator Pearce) has asked “ Why swap horses while crossing a stream?”, but I suggest that it would be wise to build a bridge for the purpose of crossing it.

Senator Guthrie:

– Are not the private banks giving all possible assistance to the Government?

Senator DALY:

– They are according very generous assistance, and I have no desire to detract from the merit of that service; but, if the progress of Australia is te be permanent, we should place this assistance on such a basis that it will not be withdrawn. The banks have met, and have decided, in the interests of the Commonwealth, to make a certain move in relation to exchange. The banks themselves admit the necessity for it.

Senator Sir William Glasgow:

– That amounts to pooling the exchange in the interests of the nation.

Senator DALY:

– Of course, it is only one step towards the objective, and it is making the position of the Government easier than it otherwise would be; but we desire the consolidation of our financial forces under the control of the nation. In the opinion of the Government that is essential.

Senator Sir William Glasgow:

– The Government is getting that.

Senator DALY:

– No. Nobody can give an authoritative statement to the Commonwealth Government to-day regarding our supplies of exchange overseas. Of course, the banks cannot disclose that information one to another, because they are in competition.

I am attempting to show that all the facts of the position are already known to honorable senators, or are available to them. The suggestion is not that it would be as well for us to pack our heads in ice for a month, and then bring cool judgment to bear on this measure. The suggestion is that certain, information would be of advantage to the Senate and could be obtained only by the appointment of a select committee. Senator Chapman referred to the method of control of the proposed bank. I would remind him that the Governor-General in Council appoints members of the judiciary. Would the honorable senator suggest that the judges appointed on the recommendation of the Government are politically controlled? We have had experience of the method of appointing the board of directors of the Commonwealth Bank, and nobody can suggest that that board is politically controlled. I wish to convince honorable senators that at the committee stage of the bill all the information desired can be advanced. The amendment would have the effect of postponing the measure until next session. Whatever the motive behind the amendment may be, I suggest that it would be dangerous to adopt it, in view of the fact that the necessity for a central reserve bank is admitted. In committee, honorable senators can bo quite candid with one another and ask for any information required by them, so that a measure that will assist the Government in its present financial straits may be passed. I do not believe in simulating an ostrich. It is of no use to pretend that honorable senators have not been approached in connexion with the vote on this bill. We all know that lobbying goes on in respect of various measures. Let us be candid about this matter. The postponement of the hill to enable an inquiry to be made by a select committee will make it impossible for the Government to go ahead with its proposals to right the ship of state. A postponement will mean that the present unsatisfactory position of Australia overseas will develop still further and make the task of the Government much more difficult. I remind honorable senators that they have the advantage of the experience in central banking in 27 other countries. The legislation dealing with the central banks in other countries is available to thom here. Excellent text books on this subject are to be found on the parliamentary library shelves. One contains a special report concerning the establishment of the Central Bank in South Africa in 1925. There is also much other information for the guidance of honorable senators. I am prepared to discuss, in committee, the whole question of the framework and structure of the proposed central bank, If the principle itself is established, I feel confident that we shall be able to compromise in respect of the various other points that have been raised. I, therefore, urge honorable senators to vote against the amendment and to carry the second reading of the bill.

Senator Sir HAL COLEBATCH (Western Australia) [4.34]. - I am very much surprised that the Leader of the Senate (Senator Daly), should resist the amendment moved by Senator Glasgow, and I am still more surprised at the nature of the reasons advanced by the honorable gentleman. He has told us that this proposal has been before the country for the last three months, and that it has been discussed by practically every chamber of commerce in Australia. My information is that not one single chamber of commerce has given its approval to this bill. Surely such bodies are entitled to be heard when a proposal such as this is before Parliament for discussion, and surely the information which they could give is of value.

I propose to deal briefly with the various points raised by the Vice-President of the Executive Council (Senator Daly). He has told us that the Commonwealth Bank Bill was not referred to a select committee. Australia has very great reason to regret that that course was not adopted before the bill, under which the Commonwealth Bank was established, was passed by Parliament. Had that been done, I feel sure that one tremendous disadvantage, which the whole of the Commonwealth has been suffering for many years might have been avoided. We should probably not have had Commonwealth Savings Banks competing in every State with similar institutions established by State Governments. No one with knowledge of finance can deny that this competition between the Commonwealth and State Savings Banks is a calamity of considerable magnitude. There are a number of other directions in which banking authorities and chambers of commerce might express views of importance if this bill were referred to a select committee of this chamber. We are told that the Government wishes this measure to be passed in order that it can take complete control over all finance. Possibly this bill as a means to that end is, in the view of the Government, the best way to solve our difficulties, but I venture to say that there is a very considerable volume of public opinion that does not believe that complete governmental control over public and private finance is the best method to adopt to right the ship of state and restore confidence among the people of Australia. We are told, further, that any honorable senator may consult the Deputy Governor of the Commonwealth Bank on any point that may he raised in connexion with this proposal. If we accept the Minister’s suggestion can he give us an assurance that in giving such information, the Deputy Governor of the Commonwealth Bank will be speaking the minds of the directors and of the Governor of that institution?

Senator Daly:

– Of course he would not.

Senator Sir HAL COLEBATCH.Quite so. The Minister’s answer, to my mind, suggests that it would be of some importance if Ave had before us documentary or other evidence that the bill, in its present form, meets the approval of the Board of Directors, or of the Governor, of the Commonwealth Bank. We are told also that central banks have been established in 27 other countries, and that the literature relating to central banking is available to all honorable senators. I have read every one of the constitutions of these banks. Without exception, they all disclose important differences in the various central banking systems adopted as compared with the proposal contained in this bill. I do not propose to discuss those differences at ill is stage.

Senator Daly:

– Such differences may be cleared up in committee.

Senator Sir HAL COLEBATCH:

– I am afraid not, because they are differences, not of detail, but of principle. I do not accept the view of the Leader of the Senate (Senator Daly) that the present situation indicates the need for the establishment of a central bank.

Senator Sir George Pearce:

– That point may be cleared up if the bill is referred to a select committee.

Senator Sir HAL COLEBATCH.If it is so referred, the select committee will have an opportunity to take evidence from competent authorities, including the responsible heads of the Commonwealth Bank as well as of banking authorities associated with private institutions, and we shall be in a better position to judge the merits of this proposal.

The bill has been before the chambers of commerce and financial institutions, for three months, and it has not received the approval of any one of them. Many are in sympathy with the idea of the establishment of a central reserve bank; but this bill has not, so far, received the endorsement of any financial or commercial institution in Australia. That fact, in itself, to my mind, is ample justification for the, request that there shall be a more complete investigation than we have had up to the present. The Government, if it carries the bill in its present form, will be taking a very great risk. The Senate should not make itself a party to that risk. We should not agree to the establishment, without full inquiry, of an institution that will drastically alter the financial structure of Australia - an institution which, to use the words of the Leader of the Senate (Senator Daly), is to be set up so that the Government may have complete control over all forms of finance in Australia.

It will be within the recollection of honorable senators that, when this proposal was first mooted., the opinion expressed in London financial newspapers was very favorable to the general idea. Since then, however, I have read most hostile criticism of many of the more important principles contained in it. T have seen the fear expressed that the bill, as it stands, may lead to an undue measure of political control being exercised, involving reckless advances to governments, Common wealth and State, and to municipal and other bodies. I have also seen the doubt expressed that the central bank, as constituted under this bill, may not preserve the currency of the country against inflation. This, as honorable senators will concede, is a most important point. I venture to say that the passage of the measure in its present form will be more likely to injure than to help the credit of Australia. As regards the existing financial situation of the Commonwealth, I need only say that a statement by Sir Robert Gibson, chairman of the Commonwealth Bank Board, published in this morning’s newspapers, clearly shows that the whole of the private banks are co-operating with the Commonwealth Bank and with the Government, in order that the obligations of Australia abroad may be met. If honorable senators read the statement made by Sir Robert Gibson, they will find that he refers over and over again to the “ unanimous “ decision of the banks which are co-operating in this movement, and the unity that exists between them and the Commonwealth Bank. Consequently no harm can possibly come from a sufficient adjournment of the consideration of this bill to allow its provisions to be fully investigated. I do not hesitate to say that, so far as I am concerned, if the amendment is not carried, E shall, at a later stage, give reasons why t intend -to vote against the second reading.

Senator THOMPSON:
Queensland

– Those of us who have received the voluminous literature on this subject, and have studied the views of banking authorities, must agree that the provisions of this bill are extremely intricate, and that the whole subject requires very close investigation of a character which is not easily given in committee, as suggested by the Vice-President of the Executive Council (Senator Daly). While I agree with the idea that a select committee should examine the provisions of the bill and report to the Senate, I can see certain objections to that course. If there is one subject more than another in respect to which confidential, disclosures must be- made, it is on this question of banking. Therefore, much information which will be required will probably not be forthcoming through the ordinary channels open to a select committee. It may be urged that this information could be obtained in camera. That course is not quite satisfactory. It seems to me there is a way which ought to be acceptable to the Government, as well as to honorable senators. I suggest that the Government enlist the services of Sir Otto Niemeyer, a representative of the Bank of England, who is on his way to Australia to confer with the Government and the Commonwealth Bank with regard to the present situation in this country. It has occurred to me that, if he were requested by the Government to make a full and complete investigation of this proposal to establish a central reserve bank, we should have information of value concerning not only the scheme itself, but also as to the time when it should be brought into operation. It may be urged that Sir Otto Niemeyer is coming to Australia for another purpose, and that he would not be available to undertake this inquiry.

Senator McLachlan:

– Sir Otto is accompanied by at least one very competent financial expert..

Senator THOMPSON:

– -He is, and that should make the position all the stronger. Austria and Czecho-Slovakia in their time of financial trouble, which was much more acute than that at present experienced by Australia, were afforded the assistance of one of Great Britain’s most prominent financiers. That gentleman went across to those countries, investigated their affairs, and made recommendations that were carried out by the respective governments. To-day the finances of those two countries are in a fairly satisfactory state. I should prefer such a course to the appointment of a select committee. If the Government will give me an assurance that the bill will be deferred and the advice of Sir Otto Niemeyer sought, I shall support its action as, I think, would the remainder of honorable senators on this side.

Senator CHAPMAN:
South Australia

– I cannot allow this important motion to pass without making a short reference to the central banking project of the Government. The establishment of a central reserve banking system would have a most important effect on the banking system of Australia. It may almost be said that it would revolutionize our banking practice. What I am concerned about is whether a central reserve bank is to be established in a proper manner, or whether, improperly constituted, its inauguration would be something for which we should later be sorry. Functioning properly, such an institution should aid the development of Australian trade and commerce; Lt would conserve our credit and stabilize prices. If it were improperly constituted and functioned other than as such a bank should it would have the contrary effect on our trade and commerce. The matter is so important and far-reaching that it deserves our most serious consideration.

It has been suggested by Senator Daly that honorable senators can obtain all thu information that they desire on the subject from the Deputy-Governor of the Commonwealth Bank. I think that neither the Government nor honorable senators in opposition, nor, indeed, any royal commission or other body appointed to investigate the matter, would be satisfied by consulting only one authority. It is apparent that different experts would ventilate different’ opinions, very probably of a contrary nature. I desire Parliament to obtain the very best advice in the matter, and I believe that that can be done by the appointment of a select committee. It has been said that we may read the acts relating to the establishment of central banking in 27 different countries. One honorable senator has intimated that he has read those acts. He is indeed fortunate. Bills are literally pouring into the Senate, and there are numerous different subjects upon which we are expected to concentrate. I, personally, find it impossible to attend satisfactorily to everything. If the subject of central reserve banking were summarized in the report of a royal commission or a select committee, the condensed information would greatly assist our deliberations. I point out that in no other country has a central reserve bank been established similar to that proposed in this measure. The Commonwealth Bank is absolutely a governmental institution, belonging to the people of Australia. In that respect it differs entirely from the banking systems of other countries. The project to establish a central reserve bank in this country therefore needs the most exhaustive investigation before it is consummated, otherwise we may commit a blunder that will have far-reaching and adverse effects on the finances of Australia.

Senator O’HALLORAN:
South Australia

– I regret that honorable senators opposite have given a measure of support to the motion now before the Senate. It may mean the deferment of the passage of the bill and its consequent indefinite postponement, at a time when such an adjunct to our financial stability is sadly needed. Senator Glasgow, when submitting his motion, suggested that the committee should report to the Senate this day month. If there is such a fund of information to be gathered, if the matter is of such vital importance, and if we are to take cognizance of the desire of the Government to terminate the session as early as practicable, which will necessitate Parliament sitting a greater number of days a week than at present, what reasonable prospect would a select committee have of completing its investigations and submitting a report in time to enable Parliament to finalize the measure this session?

Senator Reid:

– The Standing Orders permit the granting of leave to enable a select committee to sit during sittings of the House.

Senator O’HALLORAN:

– That is so, but it may not be convenient. We have been told that a select committee might elicit evidence to the effect that the time is not opportune to establish a central reserve bank in Australia. From my association with the politics of Australia, and from my reading of the political history of this country, I believe that such an argument is always presented against any departure from existing practice. I suggest that evidence to the contrary would also be submitted to the committee. Honorable senators have referred to the necessity to consult chambers of commerce and leading financial authorities on the subject. I ask what information could those gentlemen submit to the committee that would further help Parliament in considering the establishment of such a bank. I have read a number of resolutions in the press condemning the bill, but I have seen no argument adduced as to why it should not be agreed to and the bank established. It will be necessary for the committee to inquire and report as to the advisability of establishing a central reserve bank in Australia. We already have before us the experience of 27 nations which have established such banks. Once having established the system not one of those countries has repealed its legislation on the subject or discarded the idea. Senator Colebatch asked that public opinion should be consulted. Public opinion is certainly entitled to consideration, hut what public opinion would be consulted by a select committee ? It would approach interested persons whose views would, naturally, be colored by their preconceived opinions on the subject, and there is no guarantee that those opinions would be based upon any knowledge of the provisions of a central banking system.

Senator Chapman:

– Surely the banks would be able to state how the innovation would affect them.

Senator O’HALLORAN:

– I am not permitted to deal with that phase at this juncture. If I were permitted to do so I could demonstrate effectively that the point of view of the bankers might not necessarily be the view that should be considered and given effect to by Parliament in the present crisis. In saying that, I am not endeavouring to infer anything of a disrespectful character against the associated banks. I think that we may safely assume that, in drafting this measure the advisers of the Government resorted to the opinions of world authorities on the subject, and that the bill is the result of mature consideration. If a committee were appointed it would have to rely in the main for its expert opinion on central banking practice, on the views of the authorities already consulted by the Government. If the party spirit were absent from the committee - and I hope it will be if it is established - it could come to no other conclusion than that arrived at by the responsible advisers of the Government. If, on the other hand, partisanship prevailed, we should have Government supporters recording their opinions one way, and those in opposition the other, And when we come to this chamber the position will not be clarified, and weeks, perhaps months, of valuable time will have been wasted.

Senatorreid. - But we shall have the information.

Senator O’HALLORAN:

– What further information can honorable senators have than that which is accessible to them in the library at the present time ?

Senator Daly:

– Or could be procured for them.

Senator O’HALLORAN:

– Two months ago, I received from the librarian, an intimation that the parliamentary library contained a certain number of books and reports dealing with the functions of central reserve banks, and suggesting that in view of the fact that legislation on the subject was to be submitted, I might he anxious to secure some of these volumes. I was supplied with a list of about 30 or 40 standard publications dealing with the subject.

Senator Sir George Pearce:

– Did the honorable senator read any of them?

Senator O’HALLORAN:

– I read one or two.

SenatorReid. - Is the honorable senator now a financier?

Senator O’HALLORAN:

– No. What views I put forward on this subject are those of the common sense man in the street, whose opinion is very often worth more than that of an expert. In addition to the information already available to honorable senators, we have the assurance of the Leader of the Government in the Senate (Senator Daly) that the technical and expert advice of the Deputy Governor of the Commonwealth Bank is available to all honorable senators. In the circumstances, there is no valid reason why the bill should be referred to a select committee. In view of the need to carry the nation through the financial maelstrom which lies between it and a return to prosperity, it should be the duty of this chamber to get on with this task at the earliest possible moment.

SenatorRAE (New South Wales) [5.8]. - I cannot see the need for the amendment. It would have been more politically honest if those who desire to kill the bill had moved the adjournment of the second reading for six months, which actually will be the effect of carrying the amendment. It is nothing new in politics to find persons professing to believe in a principle, yet, for party reasons, killing that principle by paying too close an attention to the details of a measure in which it is contained; it is a very old expedient. In view of the early termination of the present session, it is possible that the fixing of the date for the submission of the report of the proposed select committee at four weeks from now is a deliberate attempt to cover the full period of the session, so that the whole matter may be postponed until next year. It would be more commendable to take steps openly to kill the measure. It has been stressed by honorable senators opposite that by consulting financial experts, and people whose opinion may be worth having, a select committee can get information that is not otherwise obtainable. It appears to me, however, that the opinions of those who have not had any experience of the working of federal reserve banks can be of very little value. Even if, from study and from their connexion with banking business, the head officials of the private trading banks have some knowledge of the theory andpractice of central reserve banking, can a select committee get from them the inner information on which it may form a sound judgment? I venture to say that notwithstanding the powers it will possess it will have no means of forcing these people to reveal matters which they believe to be of such a private character that a revelation of them might, in some way or another, injure their businesses as between one bank and another. Consequently, a select committee, if appointed, could get very little information indeed beyond what is available from the sources already mentioned. Mere opinions are of no value unless they are founded on special knowledge, and there is no special knowledge available which a select committee could hope to obtain. Of course, it is practically impossible for those who value what they believe to be secret knowledge to keep it absolutely secret. It leaks out. Interested parties obtain scraps here and there and by a process of elimination arrive at the facts. A select committee might certainly, by argument, arrive at some little compromise over details, but the fact remains that honorable senators opposite are out to kill government legislation, and honorable senators on this side are out to see it through. The Leader of the Opposition has asked whether it is advisable at the present juncture to establish this bank.

Senator Carroll:

– The evidence may show that it is advisable to do so.

SenatorRAE. - The point is that for those who want to kill a measure of this kind, there are two excuses available. One is that a period of depression, unrest, and business dislocation, like the present, is not a suitable time for the establishment of a central reserve bank. The other is that in a period of phenomenal prosperity there is no function a central reserve bank can adequately fulfil, and, consequently, we might as well let well alone. As a matter of fact, such flimsy excuses can always be raised in opposition to any legislation. Nearly all honor able senators opposite have at one time or another expressed the opinion that there should be a central reserve bank, and that the Commonwealth Bank should fulfil the functions of such an institution. Without trespassing on. the President’s ruling, I should like to point out that the Government’s proposal is not so complex or elaborate as honorable senators would try to make out. There is no mystery about the setting up of a new bank in order to separate the central reserve bank functions from the trading bank functions of the Commonwealth Bank. The issue is quite a simple one. It needs no select committee to unravel any mystery. Such a body could not hope to have any real financial secrets disclosed to it which would have some meaning over and above anything known to us at present. The representatives of insurance companies and chambers of commerce know no more about central banking than I do. I have read their comments. At any rate, all that I have come across contain nothing but what is founded on prejudice. There is not one argument in them; they are 3.imply statements without any proper foundation. I suppose that if the majority of honorable senators have made up their minds to remit the bill to a select committee, they will do so, but I remind them that -

  1. . it is excellent

To have a giant’s strength; but it is tyrannous

To use it like a giant.

In my opinion, this select committee has simply been proposed in order to worry the Government. Honorable senators opposite seek to kill the bill by a pretence of getting information for which there is no need whatever.

Senator McLACHLAN (South Australia [5.15]. - It would indeed be unfortunate for a bill such as the Central Reserve Bank Bill to engender party political feeling, and when Senator Daly referred to ice-packs, I thought that they should be applied all round. I think that the great majority of honorable senators are committed to the principle of a central reserve bank, but there are certain features in connexion with the establishment of such a bank at the present juncture, which, because of the position of Australia’s affairs, should give us ca use to pause. Perhaps, I shall not be trespassing on the President’s ruling if I refer to the excellent brochure written by Sir Ernest Harvey on central reserve banking, which, I undertsand, largely gnided the Government in drafting this measure. One thing that clearly emerges from it is that he desires the bill system to be substituted in lieu of the present Australian practice of overdrafts. That such a result will follow the establishment of a central reserve bank is certain.

The PRESIDENT (Senator the Hon W Kingsmill:

– The honorable senator cannot debate that point now.

Senator McLACHLAN:

– It is a matter that would have to be considered by a select committee, because it is of supreme importance to the commercial community of Australia to know whether they are to be compelled to pay interest on the whole of the money they require, instead of only on the portion which they are actually using at the moment. That is one aspect of the matter. Another relates to the reserves which are being removed from the private trading banks, or mobilized, as the Minister put it so, well on the second reading, for the purpose of buttressing the position of an individual institution.

Senator Rae:

– I submit that the honorable senator is now trespassing the ruling given by the Chair.

The PRESIDENT:

– The honorable senator is certainly getting pretty close to the edge.

Senator McLACHLAN:

– I trust that I shall not fall over the edge. I am endeavouring to show what it would be necessary for a select committee to solve. Senator Rae has said that the proposal contained in the bill is quite a simple one, whereas it is deserving of the most critical examination by every one who has the interests of Australia at heart. It involves matters of tremendous moment to those who are dependent on getting financial assistance from banks. Therefore, without infringing on the ruling of the Chair, I put it, broadly that it should be the duty of a select committee to ascertain three things. Are we to jettison the old banking overdraft principles of Australia for the bill principles; are we to weaken the capacity of the trading banks to make further advances to the people of Australia, and are we not weakening our national institution in the movement we are taking? I think it would be illadvised and out of place for me to discuss in detail or give my opinion upon these matters.

Senator Daly:

– Could not the work to be undertaken by a select committee be carried out as effectively by the Senate?

Senator McLACHLAN:

– No. There are many matters of detail on which information can be obtained only from the directors of the Commonwealth Bank, the general managers of the various private banking institutions, and from the gentleman to whom Senator Thompson referred. I am not totally opposed to the bill as Senator Rae seems to think. I welcome its introduction, but I contend that before it is placed upon the statute-book information should be obtained from those competent to advise us on the intricacies of banking. I quote the following statement, the origin of which I donot know : -

Finance is thus enabled to function with the largest possible degree of elasticity. Maintenance by the trading banks of rigid reserve ratios with a central bank would lessen that elasticity and reduce the amount which the banks could lend to assist industry generally. The power of the banks to provide additional funds-

Senator Rae:

– I rise to order. The honorable senator is again discussing the merits of the measure.

The PRESIDENT (Senator the Hon W Kingsmill:

– I think he is. The honorable senator must confine his remarks to the amendment.

Senator McLACHLAN:

– I am not opposed to the principle embodied in this measure. I believe that there is a general desire on the part of honorable senators on this side of the chamber to assist the Government to perfect the bill, and to prevent a drastic step being taken at a most inopportune time. The Minister (Senator Daly) pointed out that a central reserve bank is necessary as we are passing through an extremely dangerous period ; but up to the present the private banking institutions have stood the strain remarkably well. According to the statement of the Minister and to paragraphs which appeared in the press this morning there is the greatest harmony between the

Commonwealth Bank and the private banking institutions.

SenatorRae. - That is because this measure is before Parliament.

Senator McLACHLAN:

– According to press reports the private banks are giving the Government preference in the matter of exchange. The position in America and in South Africa, referred to by Senator Colebatch, is entirely different from that in Australia. In the Irish Free State a royal commission was appointed to inquire into a central reserve banking system; but the finding of that commission was that such a bank was unnecessary and inadvisable. I deprecate the suggestion that an attempt is being made to kill the bill. I have no murderous intentions towards it; but I should like to see legislation of this kind passed in such a form that it will be a credit to this Parliament, of assistance to trade and commerce, and a means of stabilizing our financial position.

Senator Daly:

– The honorable senator wishes to displace our child and to put in one of his own.

Senator McLACHLAN:

– This child of the Government, if it may be so termed, needs a good deal of medical attention before it can develop.

The PRESIDENT:

– The honorable senator is again referring to the bill.

Senator McLACHLAN:

– I was suggesting that this child of the Government should receive the attention of a physician in the form of a select committee, in order to ascertain the nature of its complaint. If a select committee were appointed a tremendous amount of information could be obtained from those closely associated with banking, who would have an opportunity to place all their cards on the table and to discuss the whole subject dispassionately in the interests of the people.

Senator DUNN:
New South Wales

.- “Be brief or be butchered” is an old saying familiar to all journalists. Although I intend to be brief, I feel somewhat like a fish thrown up by a charge of dynamite - I have a still mind and glassy eyes. The Leader of the Opposition (Senator Sir George Pearce) supported the bill with certain reservations. He was followed later by the Deputy Leader of the Opposition (Senator Sir William Glasgow), who moved an amendment which, if adopted, will have the effect of wrecking the bill. This measure was under consideration in another place for several weeks, and was eventually passed by a substantial majority; but when it reaches this chamber honorable senators opposite think it should not be debated until an investigation has been made by a select committee. I appreciate the courtesy of the mover of the amendment in including my name in the personnel of the proposed select committee; but if such a committee is appointed its members will be “ parking their frames “ for weeks in the capital cities in collecting evidence which will not be of any benefit to the Senate. The Minister and Senator O’Halloran have already pointed out that there are numerous standard works in the Parliamentary Library on the banking systems of various countries, from which all the information required could be obtained. The committee, if appointed, would cost from £3,000 to £4,000 in conducting an investigation, when all the information required is at our disposal. Such a committee would not submit a unanimous report. Let honorable senators opposite be candid and place their cards on the table. Are they prepared to wreck this bill because they have a majority in this chamber ? The effect of the appointment of a select committee would be to put the measure into cold storage. Many thousands of pounds have been spent by parliamentary committees, both Federal and State, in making investigations, and in most cases their recommendations have been ignored. If the proposed committee spent a month in making the inquiry that is nowsuggested, the business of the country would be held up unnecessarily. I appeal to the Opposition to withdraw the amendment.

Senator HERBERT HAYS:
Tasmania

– It is clear that it is urgently necessary to refer the bill to a select committee. If the measure has the merits claimed for it, why does the Government object to a complete investigation of this far-reaching proposal? The Leader of the Government said that Ministers had given it the fullest consideration, and that the Deputy-Governor of the Commonwealth Bank was here to give all information that might be required with regard to it. . When asked whether the Deputy-

Governor could speak on behalf of the Governor and the Board of Directors of the Bank, he replied in the negative, and that is ample justification for agreeing to the amendment. Less than two years ago a bill submitted by the late Government, for the amendment of the Commonwealth Bank Act, was passed in the other branch of the legislature, and when the measure reached this chamber, and objections were raised to it, the Government brought down important amendments which made a fundamental alteration in the bill as originally drafted. Does the Leader of the Government say that the last word has been said on the present bill ? Senator Bae has mentioned that the party opposite would not stand for any fundamental alteration of this bill. No honorable senator on this side has expressed opposition to it, either directly or indirectly ; but we say that its effects will be so far-reaching that it is desirable that the fullest investigation should be made. Let the Governor and the DeputyGovernor of the Commonwealth Bank, and also the Board of Directors, be called by the committee, so that it may ascertain how far their views are consistent with those expressed by the Leader of the Senate. The attitude adopted by him clearly shows that the Government is not prepared to consider amendments submitted by the Opposition regarding the fundamental principles of the bill. The proposal should be examined from every angle.

If it is essential that the bill be passed to assist the country out of its financial straits, let the light of day be thrown upon it, and let us consult all interests with which the measure may conflict. It is not fair to suggest that the Opposition intends to take advantage of its majority. We have never adopted that unreasonable attitude to the Government. We have endeavoured to be fair at all times, and there is no justification for saying that our object is to defeat the bill. It is declared that the appointment of the proposed committee would delay the passage of the measure; but I venture to suggest that such a course would assist in facilitating its passage. I think that, in the end, the Leader of the Senate will thank the Opposition for moving for this inquiry. Why assume that the committee would be hostile to the Government? It is not fair to suppose that, because the Government will not have a majority on the committee, majority and minority reports are inevitable. Throughout this session the Opposition has shown a genuine desire to co-operate with the Ministry in every way. We are led to believe, from press reports, that eminent financial authorities from Great Britain will shortly visit Australia at the invitation of the present Government. Is not the subject-matter of this bill the one question above all others about which those authorities should be consulted ? We should await their arrival with pleasure and welcome any advice from them that would enable the fullest inquiry to be made. In the best interests of Australia, the Government should take full advantage of their visit, so that when the bill is passed it will have the endorsement of those best* qualified to express opinions upon it.

Senator OGDEN:
Tasmania

.- I have to confess that I know nothing about the intricate business of banking, so I do not intend to discuss this measure at great length. My present inclination is to support the second reading.

Senator Rae:

– But the honorable senator will delay the second-reading stage as long as possible.

Senator OGDEN:

– There is always suspicion in the mind of the honorable senator. I shall support the amendment because I desire the bill to be referred to some competent authority for examination. We do not know what authorities advised the Government in framing it. Certainly no member of the Ministry is an authority on central banking. I accept the general principle of the bill, but T am not satisfied that it ought to be passed in its present form. I do not altogether approve of the proposal to refer it to a select committee, because, as a rule, select committees occupy much time in an inquiry and in the end its members reach a partisan decision. I should prefer the bill to be referred to a competent authority on banking. It is an expert question, so I doubt that an inquiry by a select committee, comprising members of this chamber, will get all the information desired. Senator Thompson made what I regard as a good suggestion, namely, that the banking authorities who are on their way to Australia to confer with the Commonwealth Bank and the Government with regard to the present situation, be requested to study the bill and report upon it. If the Vice-President of the Executive Council (Senator Daly) will give me an assurance that this course will be taken, I shall vote, against the amendment. Failing that, I shall be compelled to vote for the appointment of a select committee in the hope that that body will examine acknowledged authorities and that we shall have the benefit of their opinion. The Government should not take up a stand-and-deliver attitude. The bill is, as I have said, a most intricate one. I should prefer the inquiry to be conducted by a royal commission; but, failing that, and if the Minister will not assure honorable senators, that Sir Otto Niemeyer will be asked to examine the proposal, I shall vote for the amendment.

Senator BARNES:
Assistant Minister · Victoria · ALP

– I do not profess to have any banking knowledge, but 1 can assure honorable senators that the measure now under discussion has received careful consideration, and that the Government’s purpose is to do all that is possible to improve the financial position of Australia. We believe that this bill is an instrument by means of which it will be possible for the Government to bring Australia safely through its troubles. We received the advice of high banking authorities with respect to the provisions of this measure.

The PRESIDENT (Senator the Hon W Kingsmill:

– Order! The honorable senator must confine his remarks to the terms of the amendment which seeks the appointment of a select committee to consider the bill.

Senator BARNES:

– The fear has been expressed that the proposed centralbank will be under political control. On this point, I remind honorable senators that the complexion of parliaments change from time to time and since the central bank will be conducted in the interests of the people it will, to that extent, be under some form of control by the Government of the day. Honorable senators opposite who are supporting the amendment desire that the bill be referred to a select committee which will take evidence from recognized authorities in banking and commerce. In that way they hope to get information which, they think, may guide them in the further consideration of the proposal. I am at a loss to understand how it will be possible to obtain expert advice which has not already been given to the Government. The sooner the bill is passed, the sooner will the Government be able to put in hand its proposals to right the present financial situation, and thus win the fight for Australia.

Senator HOARE:
South Australia

– I am surprised at the attitude of honorable senators opposite who appear anxious to delay the passage of the bill. Senator Herbert Hays declared that if we delayed now to obtain information through a select committee, the bill would probably have a quicker passage through this chamber. Senator McLachlan”, who also is a strong supporter of the amendment, would have us believe that he knows nothing of banking systems, and that therefore, he would be glad to have the views of competent authorities who might be asked to give evidence before the select committee. If the amendment is carried, only three honorable senators on this side will be appointed to the committee, so the Government will be in a hopeless minority. I have a clear recollection of the passage, some years ago, of the bank bill which may be regarded as full brother, to the present measure. No one then suggested that it be referred to a select committee for inquiry, although it was just as intricate as is the bill now under discussion. The majority of honorable senators opposite say that they are in favour of a central bank, but are not. satisfied with the provisions in this bill. Senator Ogden frankly admitted that hi’ understands very little about banking. Very few laymen do. It is a science that has to be studied assiduously to be understood.

Senator Ogden:

– Does the honorable senator understand it?

Senator HOARE:

– I suppose that I know as much about it as does Senator Ogden. I know that if you do not govern your finance it will govern you. What would the personnel of the proposed committee know about banking?

Senator Ogden:

– They would call evidence.

Senator HOARE:

– Do honorable senators opposite believe that bankers would disclose to a select committee the knowledge that it has taken them a life-time to acquire? As the bill is against the interests of the associated banks their representatives would, in almost every case, be opposed to it.

Senator Reid:

– Their opinions would be of some value.

Senator HOARE:

– I do not think that the opinion of any biased person is of value. If we needed a select committee it should be one whose personnel knew something about the subject. I believe, too, that the committee, if appointed, should be comprised of members of both Houses of Parliament. It is usual for committees to be composed of a majority of Governmentsupporters, and I think that that should be done in this instance. I appreciate the difficulty in which Senator Glasgow found himself, but if such a majority were not obtainable in the Senate it could have been got elsewhere.

Senator Ogden:

– The other House would not agree to the committee.

Senator HOARE:

– Then why not give the task to the Public Accounts or the Public Works Committee? They would know just as much about the subject as any other committee that was appointed, and the Government would have a majority on either of them, as is its right. Personally, I cannot see why the measure should not be deliberated upon forthwith without any resort to a select committee.

Senator Ogden:

– We need expert advice.

Senator HOARE:

– If anybody came along and told Senator McLachlan, or any other honorable senator opposite that, because he wantedfurther information on the subject, lacked brains, he would very probably regard himself as insulted. Surely honorable senators have sufficient knowledge and intelligence to know whether the bill is the right thing for Australia or not. If they think that it is not, let them have the courage and honesty of their convictions and vote it out of existence.

Senator Daly:

– Honorable senators opposite say they want to pass the measure this session.

Senator HOARE:

– They are not going about it very expeditiously by appointing a select committee. I fail to see how such a body could investigate the matter exhaustively and submit a report that would enable the Senate to arrive at a decision before Parliament adjourns. Do honorable senators opposite believe that they will gain additional knowledge from the deliberations of the committee?

Senator Reid:

– Yes.

Senator HOARE:

– I admire the faith of the honorable senator. It must be patent to all that we should be setting the committee an impossible task. If a committee is insisted upon, why not follow the suggestion that we should adjourn the Senate to-night after appointing the committee, and give that body a week in which to deliberate and submit a report. That should satisfy honorable senators opposite, although I am confident that we would then know no more about banking than we do now. Senator McLachlan would still come along in his innocence claiming that he did not understand the bill, and that he would like its discussion postponed until Parliament re-assembles in February or March next. I should not be surprised if the select committee appointed submitted such a recommendation. Honorable senators would then go to their respective States, smugly complacent in the belief that they had effectively carried on the business of the country.

Senator Thompson:

– Why not consult the expert, as I suggested.

Senator HOARE:

– There is something to be said for that. If anybody desires to air his knowledge on the subject he should be brought right here to assist us on the job.

Sitting suspended from 6.15 to 8 p.m.

Private business taking precedence after 8 p.m.,

page 3957

QUESTION

EXPORT OF MANUFACTURED GOODS

Senator Sir GEORGE PEARCE (Western Australia) [8.0]. - I move -

That, in order to assist Australia to redress the overseas trade balance, the Senate is of opinion that the Government should give con sideration to the formulation of proposals, by which the manufacturing industries of the Commonwealth could be encouraged to export manufactured goods to overseas markets.

In the ministerial statement made at the commencement of the session, the Government invited Parliament to constitute itself into an economic committee. I do not know that we have done’ very much in that direction so far, hut I ask honorable senators to spare half an hour for the consideration of one phase of our economic problem. Various people have appealed to the farmers to grow more wheat; in fact, there has been a general appeal to the primary industries to produce more in order to assist Australia to overcome its overseas trade balance; but, so far, no one has appealed to our manufacturing industries to take part in the endeavour to put the ship of State on an even keel. . Our manufacturers have had 30 years of protection for their industries under the Commonwealth) and, in the case of those established in Victoria, another 30 years prior to federation. That is to say, some of them have had 60 years in which to reach maturity. Surely they ought now to be in a position to stand the cold blast of the competition under which Australia’s primary industries have to stagger in the markets of the world. It cannot be said that there are no markets available within easy reach of our shores. The East Indies, the Pacific Islands, New Zealand, South Africa, Egypt, China, and Malaya are some of the countries one calls to mind in which we ought to be able to place our manufactured goods. At any rate, our sister dominion, Canada, is selling her manufactured goods in those countries. Although Canada has had a protectionist policy for quite a number of years, its tariff is by no means as extreme as that of Australia. I understand that its highest duty is 35 per cent., and that the bulk of the duties are lower than that. Of course, it may be said that there is a great home market alongside Canada; but, in order to reach that market, Canadian goods have to cross a tariff wall very much higher than that which goods produced in the United States of America have to cross in order to get into Canada. It is a protectionist doctrine that a country should he prepared to sell its surplus output on the world’s markets at less than cost. At any rate, that practice is adopted by both the United States of America and Canada. Manufacturing industries in Australia are doing little or nothing towards assisting in Australia’s endeavour to restore its overseas trade balance. Why should all the responsibility to do so be placed on the primary industries? They have had no particular assistance from governmental policy, either Federal or State, and at no time have had any protection. Surely the favoured industries which have had the blessing of protection showered upon them, and all the advantages of a sheltered home market, should be able to do something at a time like this to assist Australia. It is a matter well worthy of the Government’s consideration, and it is, I think, within the region of practical politics. If Canada, employing white labour, paying wages, and giving conditions of labour very similar to our own, and like Australia, peopled by a British race, can export manufactured goods, we ought to be able to do so. If we cannot, there must be some reason for it. It is the responsibility of the Government to ascertain what that reason is and see if it cannot find some means of overcoming the difficulties, if there are any, that stand in the way of our exporting manufactured goods. If monetary assistance is required to enable our manufacturers to get their goods on to the markets of the world, surely these people, who have had the advantage of a sheltered home market for so many years, should be able to raise the money themselves. I do not see why something in the nature of an excise duty or levy should not be imposed upon them for the purpose of raising a fund which could be used to assist those who would be willing to come out from behind the shelter of the tariff and go on the markets of the world in competition with other countries.

The Commonwealth Year-Booh for 1929, classifies Australia’s exports. The term “manufactured goods” needs some explanation, and I shall quote the classification in the Tear-Booh to show what I mean by it. They are of two classes. For instance, we produce primary products such as wheat and milk, and the former is made into flour and the cream from the latter into butter. But for the purposes of classification neither flour nor butter comes under the heading of manufactured goods. The classification is set out on page 230 of the Year-Booh as follows : -

The following table gives an analysis of the exports of Australian produce according to the main classes of industry, in which the goods were produced. In certain cases in which the produce has been subjected to some initial process of manufacture, opinions may differ in regard to its classification, but in preparing the tabulation the method adopted generally has been to credit to the primary industry those products in which the value of the primary element is appreciably the greater. Thus, such commodities as flour, jams and preserved fruits, chaff and prepared fodders, &c, have been treated as the produce of agriculture; butter, cheese, preserved milk, and bacon and hams have been credited to the dairying industry; canned meats, tallow and fell.mongered skins have been credited to the pastoral industry, but leather has been classed as a product of manufacturing; minerals and metals, which have been smelted or otherwise refined, but not further manufactured, have been included as the produce of mining; and sawn timber as the produce of forestry.

It is my purpose to make a comparison between Canada and Australia in the matter of manufactured goods. It is interesting to note what a small proportion of manufactured goods is comprised in Australia’s export trade. In 1913, the value of primary produce exported from Australia was £72,833,454 whereas the total value of manufactured exported goods was only £2,304,693. In 1927-28, the latest figures given in the Year-Booh, the respective figures were £134,158,348 and £4,789,099. The value of primary produce exported in 1927-28, exceeded the va’lue of that exported in 1913 by £61,324,894. Even if we allow for the increased price levels the increase over 1913 price levels was over £9,000,000. In the same period the increased value of manufactured goods exported was only £2,484,406. The percentages are striking indeed. Primary products represent 95.71 per cent, of our export trade and manufactured goods only 4.29 per cent. I have compiled a list of certain manufactured goods, Canadian and Australian, showing the value of the Canadian exports of those lines in 1906 and 1928, compared with Australia’s exports in 1928-29. I have taken the year 1906, because the population of Canada was then about the same as that of Australia today. Australia’s population in 1928 was 6,336,786, and Canada’s in the same year, was 9,650,000. The list I have compiled is of manufactured goods, which have been heavily protected under the Commonwealth, and in some cases for 30 years prior to the establishment of federation. The table is as follows: -

Of these highly-protected and in many cases bounty-fed goods, Australia exported, in 1928-29, £1,406,280 worth, while Canada, in 1906, with a similar population and with lower duties, exported £2,742,000 worth in 1906. In 1928, her exports of these manufactured items had increased to £31,400,413. The population of Canada is one and a half times greater than that of Australia, but in these items alone Canadian exports in 1928 were 22 times more than those of Australia in the same year, while in 1906, when Canada had the same population as we have at present, she exported a little over twice the quantity that Australia exported. There must be some reason, and surely it should be determined. Should we not be able to follow the Canadian example ? If we did so we would not have to adjust our adverse trade balance. Why should not the manufacturing industries of the Commonwealth play their part in solving this important problem? In 1928 the Canadian exports of raw material were 47.2 per cent., that of partly manufactured goods 15.4 per cent., and of fully manufactured goods 37.4 per cent. Those figures are to bc found on page 48S of the Canadian Year-Booh for 1929. It is interesting to note that while Canada exported 37.4 per cent, of manufactured goods, Australia exported only 4.29 per cent. The Hon. Charles Dunning, Minister for Finance in the Canadian House of Commons, in delivering his budget-speech on the 1st May, 1930, said-

While nature, in no small way, influences the volume of produce grown, the same does not apply to the output of our factories. A short time ago a distinguished former Minister of Finance, Sir Thomas White, in addressing the shareholders of a corporation of which he is an officer, made the interesting comment that Canada now ranks seventh in the world’s manufacture, and that the value of industrial production during ]!»20 was around 4,000 millions of dollars, an increase of about 200 million dollars since the close of 1028.

That is the way in which to overcome an adverse trade balance. He further stated that -

The statistics of value added by manufacture per worker show that the industrial efficiency of Canada-

Here is where the secret lies - is close to the level established in the United States of America, which is regarded as the highest in the world. Industrialists recognize that scientific research, coupled with ingenious mechanical inventions, has played an important part in bringing about this increase in per capita production, and it is evident from the figures just quoted that Canadian industry is more than keeping abreast of world developments in that respect.

Further on he says -

The outlet for our manufactured goods increases as their reputation grows, finds favour both at home and abroad.

Canada has no favoured position in this respect. As I have already pointed out, whatever advantages Canada, has in the matter of markets, the United States of America has similar advantages. Canada has to meet the competition of the United States of America, and in doing so has, by the figures I have quoted, produced a wonderful record. Further on, in dealing with primary production, the Minister of Finance in Canada states -

On the export side three groups show a peculiar depreciation. Grains were down $243,000,000; flour exports decreased by 120,000,000, and dairy products by $8,000,000.

On the other hand, among the increases in exports are: Farm implement exports, which increased by $2,300,000; exports of paper and its products were up $3,000,000; aluminium and its products, $0,800,000; copper and its products increased by $11,000,000 and precious metals by nearly $22,000,000.

If Canadian manufacturers had been content to shelter behind a tariff wall, and not to export their goods, Canada would be, and for the same reason, in exactly the same position that we are in to-day in respect to trade balance. Canada has, however, extended her secondary industries and they have taken a fair share of the responsibility of meeting the overseas trade balance.

Senator Sir GEORGE PEARCE.To all parts of the world, including Australia. Canadian machinery manufactured by white labour is imported into Australia, notwithstanding the high tariff we impose.

It is interesting to notice in this speech that while, as I have pointed out, Canada has a tariff which in Australia would be regarded by protectionists as almost a revenue tariff - the highest duties being 35 per cent, and most of them in the neighbourhood of 20 to 25 per cent. - there is a whole list of goods on which decreased duties by way of British preference are imposed. These include: wire rope or cable, galvanized wire, covered wire, wire cloth, wire netting, springs for railway vehicles, wire fencing of certain gauges. Among the implements now free under the Canadian British preferential tariff are the following: milking machines, pasteurizers, ploughs, rollers, spraying and other horticultural equipment, hay loaders and tedders, grain and hay grinders and crushers, potato diggers and planters, incubators and brooders, hay presses, scythes, sickles, rakes and forks, separators, fanning mills, corn huskers, windmills, and electric power generators. Although the Canadia n Minister of Finance announces that Canada is decreasing duties on certain lines or making them free to GreatBritain, we are faced with the position that we are enormously increasing duties on almost every one of the items I have mentioned. Does not this suggest that we are on the wrong track, and that we should learn something from Canada? An economic committee such as the Prime Minister suggested should be formed to study these facts and to endeavour to put us on the right road. If we look through some of the items in our tariff we find such articles as confectionery, which to-day are on the prohibited list, and which have been protected by an extremely high duty. Notwithstanding this, we find in Bulletin No. 26 for 1928-29 that we exported only £90,000 worth of confectionery. Other exports were as follows : - Pickles, £8,735 ; ale and beer, £44,607 ; and manufactured tobacco, £495,629 ; I understand that the great bulk of this tobacco goes to New Guinea and the Pacific Islands. Other exports are apparel and attire, on which we have imposed duties up to 60 per cent., valued at £101,499. Although the boot and shoe industry in Australia has been a close monopoly, Australia was able, in that year, to export only £11,671 worth of leather boots and shoes.

Senator Sir GEORGE PEARCE.Many of them go to the Pacific Islands and to the Malay States. The fur from which felt hats’ are made is produced in Australia, but it is sent to England and then back to Australia. We have been able to export only £12,732 worth of hats and caps. Other items of export are blankets, £1,790; piece goods, silk, &c, £44,931; woollen piece goods, £12,355; cordage and twines, £16,064. Of agricultural implements of all kinds we have exported only about £4’0,000 worth. The item of electrical machinery is fairly large, as it amounts to £107,328. I could go on through the list and include such items as wire-netting, £4,347; pipes and tubes, £2,492 ; rails, fish bolts and plates, £2,932. Although we have substantial iron deposits, and an abundant supply of coal, we have only been able to export iron and steel goods of comparatively small value. The value of glassware, bottles, &c, exported in that year was £15,584, and rubber tyres, £44,542. We export tallow all over the world, but in that year we were able to export only £4,553 worth of candles. The wood match-making industry, which is held up as a model Australian industry, and which has enjoyed a prohibitive tariff ever since I have been a member of the Federal Parliament, has been able to export only £3,142 worth of wooden matches. I have selected only those items that are highly protected, and the total of the list from which I have selected only certain items amounts to £3,238,397. When we come to the secondary stage of primary production, which includes fertilizers, butter, dried fruits, flour, meats, milk and cream, sugar, tallow, wine, &c, we find that the value of these commodities exported in 1928-29 was £37,111,748. On most of these items there is little or no protection. Dried fruits are protected to some extent, but for the most part the protection is low. With goods manufactured from primary products and common to both countries, we more than hold our own with Canada. In 1906 Canada exported these commodities to the value of £10,469,555, and in 1928, £22,152,468, while during 1928 the value of Australia’s exports of the same commodities was £31,34S,S00. What is the lesson to be learnt from those figures? Australia is able to hold her own with Canada in the export of the articles on which we do not impose prohibitive duties. To enable those industries to live, the goods that they manufacture have to be exported and have to withstand the cold blast of world competition, but those industries that we coddle and shelter, and to which we have given prohibitive duties for the last 30 years, cannot show their noses outside the tariff wall. A paltry £3,238,397 is all they can contribute in the way of exports to assist this country in itS terrible depression. If Australia did what Canada is doing, our main problems would be solved.

It might be wise for us to consider whether we should not call a halt and see whether we have not taken the wrong track.

Senator Sir GEORGE PEARCE Yes. Canada has succeeded without prohibitive duties, and, to-day, it has no adverse trade balance. In all seriousness, I ask the Government to consider whether it would not be worth while setting some body of persons to work to formulate a plan by which manufacturers would be encouraged to produce for export. We have the remarkable instance of the McKay Harvester Company going to Canada to manufacture implements for the foreign market.

Debate (on motion by Senator Daly) adjourned.

page 3962

LIFE INSURANCE BILL

Motion (by Senator McLachlan) proposed -

That the reports be adopted.

Senator DALY:
Vice-President of the Executive Council · South Australia · ALP

.- I move-

That the bill be recommittedfor the purpose of the reconsideration of clause 4 and the consideration of a new clause to follow clause 56.

The effect of the proposed amendment is to provide for the registration of insurance collectors. The party that I represent has suggested certain amendments relating to policies under £100. The Senate, in its wisdom, saw fit to reject those amendments, and the Government now seeks to obtain the registration of insurance collectors.

Question - That the amendment be agreed to - put.The Senate divided. (President - Senator the Hon. W. Kingsmill. )

AYES: 8

NOES: 12

Majority . . 4

AYES

NOES

Question so resolved in the negative.

Amendment negatived.

Original question resolved in the affirmative.

Reports adopted.

Standing and sessional orders suspended.

Third Reading

Senator McLACHLAN:
South Australia

. - I move -

That the bill be now read a third time.

I wish to express to the Leader of the Senate (Senator Daly), and to honorable senators generally, my thanks for the courtesy which they have extended to me during the discussion on this bill. Although some people may think that the preparation and conduct of this measure through the Senate was a light labour, I can assure them that because of its technical details, with which, perhaps, I was not so familiar as I ought to have been, it involved a considerable amount of work. I feel sure that the bill is an improvement on all other life insurance legislation in this country. If amendments are found to be necessary in the future, they will have my hearty support. I trust that the measure will have a reasonably speedy passage in another place, and that it will be given legal effect as soon as possible.

Senator RAE:
New South Wales

– I am exceedingly sorry that the bill has been passed by the Senate in its present form because I consider it to be very defective in many respects, and I can only hope that the more democraticallyminded members of another place will insist upon amendments which failed to receive the acceptance of honorable senators in this chamber. I am surprised that a bill of this character should have been entrusted to a private member, and particularly one who is closely associated with insurance business. It seems to me that it has failed in almost every respect to be any advance on the reactionary legislation passed by the various State Parliaments. Senator McLachlan, in the course of the numberless speeches which he made during the debate in the committee stages, told us that it contains the best portions of existing State legislation, and that in its present form it is worthy of general acceptance. I absolutely dissent from that statement. In the first place the bill contains no provision guaranteeing that there will be an honest audit of the balancesheets of the various insurance companies. The industrial section is, in my opinion, scandalous, and there is no provision requiring companies to disclose what amount is absorbed by those who constitute the directorate of the various insurance companies. I consider the measure to be quite reactionary in its terms and believe it is not calculated to fit in with the spirit of the times. I am looking forward to the day when all forms of insurance will become a State monopoly. But until we reach that objective, we should at least pass legislation giving some guarantee to insured persons that they will receive a fair and honest deal at the hands of the various companies. In this respect this bill fails utterly. What reason is there for the omission of a provision relating to the surrender value of industrial policies? Then, again, why should not the fees paid to members of directorates as well as all allowances, travelling expenses, &c, be stated in a separate item in the balance-sheets ? Policy-holders would then know who are living on the game, as many are doing, at the expense of widows and orphans, for whom insurance protection is primarily intended. Widows and orphans are continually being misled by the fake methods adopted to secure business. Even one leading insurance company, which is supposed to be sacrosanct - I refer to the Australian Mutual Provident Society - adopts most unfair tactics. It inserted advertisements in the Sydney Morning Herald, and probably in other newspapers, not only in New South Wales, but also in the other States, inviting prospective insurers, towards the end of the society’s financial year, to take out insurance policies so as to enjoy the benefits of the current year’s bonus.

This, of course, is impossible, because the rules of the society distinctly provide that no bonus is payable on any policy less than two years old. Even if the insured person dies within that period, the bonus is not added to the policy. This society, as honorable senators well know, is regarded as a model institution, and yet it descends to such mean tactics to obtain new business. I am particularly interested in the industrial side of life insurance, and I know that in numberless instances the wife or daughter in a household is beguiled to take out policies by glib-tongued life insurance canvassers, who promise all sorts of fancy benefits, and often they discover, even before the policy is due, that owing to some technicality they :have thrown their money away. At the best, industrial insurance is necessarily a poor kind of provision, because the greater part of the premium payments is swallowed up in overhead expenses. Nevertheless, companies beguile innocent and ignorant people to take out policies which are not worth their face value. We have done nothing to prevent that state of affairs in the future. The honorable senator in charge of the bill has been so averse to accepting any amendments whatever in his pet bill, that it was only with the utmost difficulty that we secured a number of trivial alterations, which the common sense of other honorable senators forced him to accept most reluctantly. This bill is, in my opinion, a disgrace to the Senate. I trust, however, that when it is being discussed in another place amendments will be insisted upon by the more liberal minded members of that chamber, and that when it is returned to the Senate its sponsor in this chamber will not know it.

Senator DUNN:
New South Wales

– As one who took an active part in the discussion during the committee stages of this bill, I cannot allow it to go to another place without a few words. It does not go with my blessing. I should prefer to treat it in the manner most popular with suburban boarders who are annoyed by ‘ a neighbour’s nocturnal cat. I would like to give it “ the boot “ to another place. I hope I shall bo a member of this chamber when a government representing the party to which I belong will have a sufficient majority in both Houses to ensure the passage of a national insurance scheme for the people of Australia. I should have liked to see a number of important amendments inserted in the bill, but the numbers were against us. I trust, however, that when it comes from another place. Senator McLachlan, who has spent so much time on it in this chamber, will not be quite sure whether it is a life insurance bill or a wheat marketing bill.

Question resolved in the affirmative.

Bill read a third time.

page 3964

PRIVATE BUSINESS

Ordered -

That private business, “ intra-Empire trade,” and “ Gold, bounty on production “ be postponed.

page 3964

CENTRAL RESERVE BANK BILL

Second Reading

Debate resumed from page 3957.

Senator HOARE:
South Australia

– The Leader of the Opposition appears to think that this proposal has about it the taint of socialization. I can assure the right honorable gentleman that his fears are unfounded. I see no need for the appointment of a select committee. If, however, the majority of honorable senators decide that it shall be referred to a select committee, I suggest that the Senate adjourn over next week to enable the committee to visit Melbourne to take evidence there and present its report to the Senate on the Wednesday of the following week. We should then be able to proceed with the debate on the bill. The endeavour of the Opposition is to stultify the efforts of the Government by hanging up the bill until Parliament re-assembles next year. Had the Government made a vital issue of the matter there would have been no committee.

Senator E B Johnston:

– There is nothing to prevent the Government making it a vital issue even now.

Senator HOARE:

– I believe that there is, as the motion will no doubt be carried. It is but right that the Government should have a majority of members on the committee. I do not infer that honorable senators opposite would be unfair in their attitude, but I do believe that they would all be looking in the one direction. If appointed, the committee cannot possibly effect anY satisfactory results, and I again urge honorable senators opposite to consider my suggestion that the Senate should adjourn for a week to allow the select committee to conclude its investigations.

Senator CARROLL:
Western Australia

– As one whose name has been mentioned as a member of the suggested committee it was not my intention to speak on the motion. However, I cannot allow to pass unchallenged the insinuations of honorable senators on my left as to the probable attitude that will be adopted by members of the committee appointed from the Opposition. It has been declared that we seek the appointment of a committee merely to put the bill into cold storage. If the committee is appointed and I am a member of it I for one shall not countenance such a procedure, and I feel that I can answer similarly for my colleagues. The one desire of the Opposition is to expedite the inquiry, in order that a definite and informative report may be tabled. I am confident that those who claimed that our object is to kill the bill are not expressing their true feelings, and that it will not he very long before they will regret having made such baseless charges against honorable senators sitting in Opposition.

Senator DOOLEY:
New South Wales

– I should not have spoken on the motion had my name not been mentioned as one of the suggested committee. I am quite satisfied that the Government has considered the bill exhaustively. I am not of a suspicious turn of mind, and I should not. like to think that honorable senators opposite are not endeavouring to do their best in the interests of those who sent them here. Yet there appears to be an atmosphere of mystery surrounding their attitude towards the Central Reserve Bank Bill, livery one of them who has spoken has expressed himself in favour of the bill.

Senator Carroll:

– Not of the bill.

Senator DOOLEY:

– Each one has agreed as to the desirability of establishing a central reserve bank in Australia. Senator Pearce was the only one to advance specific reasons against the measure, the principal one being that the time is not ripe for the establishment of a central reserve bank in this country. I do not know that the time is ever ripe to those who are opposed to such a project. I remind honorable senators opposite that when the Labour party was in Opposition, and the Government brought down legislation its members never asked for the appointment of a select committee. The Government always appeared satisfied that it was on the right side, and that it had given mature consideration to the measures presented. No government has given greater consideration to any proposal that it has fostered than the present one, which has achieved a remarkable amount of work during the limited time that it has been in office. I am, therefore, wholeheartedly in support of the bill, and I feel that if the committee is appointed by the Senate it will merely prolong the agony by staving off this necessary legislation until some future date. If I could not support a measure I should be sufficiently courageous to say that I did not approve of it. Honorable senators opposite should adopt a similar attitude. I cannot see my way clear to support the appointment of a committee. It will merely shelve the bill, which is of vital importance to the nation.

Senator COOPER:
Queensland

– [ have been impressed’ with the fact that honorable senators supporting the Government seem to hold different opinions as to whether the bill should or should not be submitted to a select committee. Senator Dooley remarked that when the Labour party was in opposition it did not, at any time, urge the appointment of select committees to inquire into a measure brought down by the Government. That may be so, but I remind the honorable senator that when he a.nd his colleagues were in opposition they frequently suggested that bills should be amended or re-committed. The present Opposition asks for the same privilege, and, merely because it has a majority, it should not be imputed that its motives are not quite straight.

Senator Daly:

– The honorable senator must realize that it contemplates taking the business out of the hands of the Government.

Senator COOPER:

– Surely the Opposition has the right to protest against any measure which it does not approve. That is all that.honorable senators on this side are doing. Theirs is no idle desire to thwart the efforts of the Government. Rather they are endeavouring to perfect a bill the importance of which is generally admitted. It has been contended that the measure has been before Parliament for the last three months. I submit that it has had a mixed reception, and, as it has only recently come before the Senate, its progress has not been retarded in this chamber. The object of the Opposition in asking for a select committee is to evolve a better and more useful bill than that submitted by the Government. While honorable senators on this side agree as to the importance of a central reserve bank, they differ with supporters of the Government as to its conduct and personnel, and want those matters thoroughly investigated. I agree with Senator Thompson that we should take advantage of the arrival of the two eminent British financiers who are now nearing Australia to discuss with them the establishment of a central reserve bank.

Senator Sir GEORGE PEARCE (Western Australia) [9.12]. - The statement was made by the Leader of the Government in this chamber (Senator Daly) that the Central Reserve Bank Bill had been before Parliament for three months. On looking up the dates I find that leave was given to bring in the bill in the House of Representatives on the 7th April last, but that its second reading did not take place until the 3rd June, when the Minister in charge of it explained the nature of the measure and the policy of the Government in regard to it. It reached the Senate on the 18th June, and its second reading was not moved in this chamber until the 27th June.

Senator Daly:

– But it was fully discussed in the press prior to that date.

Senator Sir GEORGE PEARCE:

– It was merely commented upon. Senator Barnes and other supporters of the Government claim that the measure has received full consideration from the Government, and because of that it should be accepted. I remind honorable senators that the Government’s handling of bills is not of such a nature as to encourage us to accept every measure that it brings down. I direct attention to the constitutional bills, on which the Government evidently had two minds. It brought down two, changed its mind, and then brought down a third. A similar procedure occurred in regard to its amendment of the Arbitration Act, so that it cannot be wondered at if honorable senators on this side are rather sceptical as to whether all wisdom has been exhausted when the Government passes judgment on a bill. A large number of objections have been raised to this measure by people who have given a great deal of thought to the subject. When people come before the select committee they will not be able to get away with statements that they can so easily make in communications to newspapers. They can be cross-examined and their reasons sought for opposing the bill. The Government should not be afraid to submit their legislation to criticism outside, and therefore, should not fear the results of the submission of this bill to a select committee. In any case the amendment has not been moved for the purpose of delay.

Question. - That the amendment (Senator Sir William Glasgow’s) be agreed to - put. The Senate divided. (The President. - Senator the Hon. W. Kingsmill).

AYES: 14

NOES: 6

Majority . . 8

AYES

NOES

Question so resolved in the affirmative.

Amendment agreed to.

page 3966

PAPERS

The following papers were presented : -

Dairy Produce Export Charges Act - Regulations Amended - Statutory Rules 1930, No.65.

Export Guarantee Act - Return showing assistance granted to 30th June, 1930.

Air Force Act - Regulations Amended - Statutory Rules 1930, No. 77.

Defence Act - Regulations Amended - Statutory Rules 1930, No. 75 - No. 76.

page 3967

COMMERCE (TRADE DESCRIPTIONS) BILL

Second Reading. -

Senator DALY:
Vice-President of the Executive Council · South Australia · ALP

– I move-

That the bill be now read a second time.

In 1926 a bill to amend the Commerce Trade Descriptions Act was passed by the Senate, but owing to the pressure of other business was not dealt with in the other chamber beyond the first-reading stage. The present bill is practically the same with a few formal additions rendered necessary by the transfer of the administration of the export section of the act to the Department of Markets and Transport. Its objects are: first, to extend the power to require compulsory marking to any imported and exported goods in respect of which such marking is considered necessary, and secondly, to adapt the provisions of the act more exactly to the purposes they are intended to achieve.

In respect of the first object, at present marking of goods with a trade description is compulsory only in respect of the seven classes of goods specified in section 15, viz. : -

  1. Articles used for food and drink by man or used in the manufacture or preparation of articles used for food and drink by man.
  2. Medicines or medicinal preparations for internal or external use.
  3. Manures.
  4. Apparel (including boots and shoes), and the materials from which such apparel is manufactured.
  5. Jewellery.
  6. Seeds and plants.
  7. Brushware (which was added by an amendment of the act in 1926).

It is proposed to repeal this section, which action, combined with the omission of the word “specified” from sections 7 and 11 of the act, would remove the limitation and enable regulations to be issued to require compulsory marking in respect of any goods imported or exported. It will, of course, be understood that the granting of such power does not necessarily imply that it will be used to require the marking of all goods. This would not be practicable, for example, in the case of bulk goods ; neither is it necessary. All that is intended is that, when there are good and sufficient reasons for requiring the marking of a particular article or class of articles, the power to require it to be done should exist.

Cases have arisen in which such action has been found desirable. It arose in the case of brushware, and eventually the act was amended to include brushware, but obviously it is impracticable and cumbersome to amend the act to meet every individual case as it arises.

Other instances have arisen where compulsory marking is considered necessary. For example, representations have been made requesting that imported blankets should be required to bear an indication of origin. But, as they are not specified in section 15, nothing could be done. A similar position has arisen in the case of furniture from the East. One interest-, ing case was that of cricket balls made in India, which were imported unmarked. After importation marking was applied which would mislead purchasers into believing that they were buying Australian or English cricket balls. That sort of thing can only be prevented by having power to insist upon such goods being marked “ Made in India.”

When the Commerce Trade Descriptions Act was passed in 1905, the idea of the compulsory marking of goods was new in this country, and certain fears were entertained as to its effects. These, however, have not been justified by experience, and it may now fairly be claimed that the benefits of the act have been appreciated by the public and by manufacturers both in the Commonwealth and overseas. In this connexion it may be stated here that some time ago the Australian Association of British Manufacturers requested that all imported goodsshould, wherever practicable, be stamped, with the name of the country of origin.. In the tariff of the United States of America there is a provision that no articles shall be imported unless they bear a statement of the country of origin, where such can be applied without damage to the article. Articles imported without the required marking are delivered only after the marking has been applied, and in addition an extra duty of 10 per cent, ad valorem is collected on the offending goods. In Great Britain the British Merchandise MarksAct 1926 gives power to prohibit the sale,. or offering for sale, in the United Kingdom of articles not bearing an indication of origin. The goods are specified by the appropriate department after appointment of a committee to examine the matter and consideration of its report.

The report of the Imperial Economic Committee held in January, 1928, contains a reference to the conditions necessary to make voluntary preference to Empire goods effective, and one of these conditions is that the consumer should be able to recognize Empire goods. It seems obvious that efforts to encourage the consumption of Empire goods must be based on action that will enable the user to recognize them, that is, by compulsory indication of the origin of the goods. In view of what I have said, it will, I think, be admitted that the present limitation of the power to require’ marking results in anomalies, and prevents a proper application of the principles underlying the act, and also that it is out of date in comparison with the legislation of other countries on the subject of the marking of goods.

In regard to the second object of the bill, it may be explained that the act provides for two classes of marking (a) the compulsory application of a trade description, and (b) the prevention of the application of false trade descriptions. The terms “ Trade Description “ and “ False Trade Description “ are defined in the principal act. These are really separate and distinct objects requiring separate and distinct provisions, but in the present act the provisions relating to them are not distinct. Section 4 (1) defines when a trade description is deemed to be applied to goods. The terms of the section clearly indicate that it was designed to deal with the application of false trade descriptions. In such case it is necessary that the provision should be so drafted as to meet all the methods by which a false trade description may be used in relation to goods. But when it becomes a matter of denning the method by which a compulsory trade description, that is to say, a “ true trade description,” shall be applied the provision should be so drafted as to enable the trade description to be applied in a definite prescribed manner. Clause 3 of the bill deals with this point, and in it the definition is made clear as to when both a false trade description and a compulsory trade description shall be deemed to have been applied to goods. Clause 7 amends section 8 of the principal act. That section relates to goods which the act requires to bear a trade description.

It may be explained in regard to the compulsory application of a trade description that the trade description is required to bo applied directly to the article itself, where that is practicable, and, if that is not practicable, to the immediate container. At present section 8 ha3 effect where the goods are found without marking in the package or covering in which they were imported. For example: Boots must be marked and the marking must be applied directly to the boot. But when boots, without marking, are removed from the carton in which they were imported, the section is useless. The amendment proposed in clause 7 is intended to remove this defect. The effect of the amendment is that if a question arises as to the application of the section to particular goods, the first point for consideration will be: How do the regulations require the goods to be marked? If the marking must be applied directly to the article, and the article is found without the trade description so applied, it will come within the section. If the regulations require the marking to be applied to the immediate container, and the immediate container does not bear the required marking, the section will apply.

The new section which clause 8 of the bill proposes to insert in the act applies to goods found after importation to be bearing a false trade description. The principle is the same as is applied by section 8 to goods found after importation without a trade description which they are required by the act to bear. Both provisions give power to follow up goods which have been imported in con- travention of the act. It will be readily understood that it is impossible to inspect every article imported into the country, and it is, therefore, necessary to have the power to follow up goods in respect of which the provisions of the act may have been evaded.

The amendments proposed in respect of sections 3, 6, 11 (2) and (3), and 13 ave formal, and have been rendered necessary by the transfer of the administration of the exports sections of the act to the Department of Markets and Transport. The proposed amendment of section 5 merely extends the scope of inspection to cover inspections made at packingsheds, meat-works, and other places where goods are prepared for export. The proposed amendments of the act will generally ha.ve the effect of adapting its provisions more exactly to the purpose which the act was designed to serve, and will bring it into line with modern legislation on the subject.

I do not anticipate that the bill will be regarded as contentious. A similar measure was introduced by the previous Government and passed through this chamber, but, owing to circumstances over which that Government had no control, it did not get beyond the firstreading stage. I trust that honorable senators will dispose of the measure as expeditiously as possible as the Government is anxious to bring it into operation at the earliest possible date.

Senator Sir GEORGE PEARCE (Western Australia) [9.34.]. - As a member of the previous Government I had an opportunity to discuss many of the principles embodied in this bill, and am perhaps more conversant with its provisions than some other honorable senators. I am somewhat in doubt as to whether clause 8 was in the measure submitted by the previous Government. The clause reads -

After section nine of the principal act the following section is inserted: - “9a. All imported goods found in Australia which bear a false trade description shall, until the contrary is proved, be deemed to have been imported in contravention of this act.”.

Senator Daly:

– It was not in the bill as introduced; but I understand the Government moved to insert it.

Senator Sir GEORGE PEARCE:

– It is a rather drastic proposal. The success of this measure depends very largely upon wise and sympathetic administration. If it were administered by an arbitrary minister without exercising great judgment untold loss and injury could be inflicted upon a number of honest traders. It could be used in a most oppressive way, and considerable judgment and a good deal of sympathy will have to be exercised in its administration. I am not sure whether clause 8 is not in excess of -the constitutional powers of this Parliament. I am under the impression that when goods have been released by the customs the Commonwealth has no further control. Is it contended that cricket balls, for instance, to which the Minister referred, when once released from bond and placed in a retailer’s shop, can, if landed in contravention of the act, be seized and the person displaying them for sale be deemed to have imported them in contravention of the act?

Senator Daly:

– Only if they have been wrongfully passed through the customs.

Senator Sir GEORGE PEARCE:

– If they have been entered, the duty paid, and subsequently found to have been imported in contravention of the act will the retailer be responsible?

Senator Rae:

– Goods are sometimes imported under false invoices.

Senator Daly:

– The Commonwealth has power under the Constitution to intervene in such cases.

Senator Sir GEORGE PEARCE.This clause if severely administered, can be made very oppressive, because the person offering goods for sale may not be the importer. He might have purchased them through an- agent or a merchant.

Senator Daly:

– The responsibility will not then, be upon the retailer.

Senator Sir GEORGE PEARCE:

– I should like the Minister to consider whether this clause is not beyond our constitutional power. With the greater portion of the bill I am quite familiar, and with the exception of the constitutionality of clause 8 I do not think any objection can be taken to its provisions.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 to 7 agreed to.

Clause 8 (Imported goods found in Australia with false trade description).

Senator DALY:
Vice-President of the Executive Council · South Australia · ALP

– There is no doubt as to the constitutional power of the Commonwealth to enact this clause, as imports into Australia unquestionably come under the jurisdiction of the Commonwealth. The

Leader of the Opposition (Senator Sir George Pearce) is in doubt as to whether goods, when once cleared through the customs, are subject to Commonwealth jurisdiction. If they are cleared in accordance with the law we have no jurisdiction; but if an article cannot in law be cleared unless bearing a certain trade description, and by some subterfuge is cleared, the Commonwealth still has jurisdiction in respect of any condition precedent to its entry to Australia. The Leader of the Opposition also raised the point whether this provision would not inflict hardship on some retailers who had purchased goods in good faith. This clause does not impose upon such persons any liability for a criminal offence. Two facts have ultimately to be established. One is that a crime was committed, and the other is that the person charged actually committed the crime. Clause 8 relieves the Commonwealth of the necessity to establish the fact that a crime has been committed. It does not provide that the person on whose premises the goods are found shall be deemed to have contravened the act; but that they have been imported in contravention of the act. There may be an importation in contravention of the act, but the Crown has still to proceed and place the blame on the person responsible. This is an every-day provision usually inserted in legislation where there are difficulties in establishing certain facts in connexion with a prosecution. It is a form of legislation very common in continental countries, and which has been introduced, into not only the statutes of Great Britain, but those of the Commonwealth. The only effect which it has upon the common law is that it relieves the Government of the responsibility of establishing that a crime has actually been committed.

Clause agreed to.

Clauses 9 to 11 agreed to. s

Title agreed to.

Bill reported without amendment; report adopted.

page 3970

FORESTRY BUREAU BILL

Second READING

Debate resumed from 4th July (vide page 3700), on motion by Senator Barnes -

That the bill be now read a second time.

Senator BARNES:
Assistant Minister · Victoria · ALP

– In moving the second reading of this bill last week I had almost completed my remarks when an honorable senator asked to be supplied with particulars of the probable cost of this bureau. In order that I might have an opportunity to obtain the information sought, I asked leave to continue my speech at a later date. The establishment of this bureau will not involve new expenditure. The Forestry School has been in existence for about four years. Certain expenditure on it has been incurred by a previous government, and the present Government proposes to carry on the work, which is considered to be of great value to Australia. The amount voted on the Estimates for 1928-29 for this purpose was £7,738, and for 1929-30 £8,577. It is anticipated that the expenditure in the coming year will be about the same as last year. Honorable senators are conversant with the work of the school. The subject of afforestation claims our close attention. It is estimated that unless all countries adopt a vigorous policy of afforestation on scientific lines, there will be a shortage in the world’s supply of timber. .Other nations are devoting more attention than Australia to this matter, and, in view of its importance, I suggest that honorable senators should readily agree to this hill.

Senator Sir GEORGE PEARCE (Western Australia) [9.50]. - In supporting the measure, I point out to the Assistant Minister (Senator Barnes) that, in his second-reading speech, he remarked that my colleague, Senator Glasgow, was the Minister responsible for the establishment of the Forestry School; but that is not correct. I was the Minister when the school was established, and Senator Glasgow took the final step for its transfer from Adelaide to Canberra.

The charge has frequently been made that there is an overlapping of Commonwealth and State activities in regard to afforestation ; but the work of this school disproves that argument. The history of its establishment is interesting. The various States had recognized for some years the necessity for a central school of forestry, particularly for the teaching of the higher branches of that work. All the States were in difficulties in finding trained foresters to advise them, and at various conferences of Commonwealth and State Ministers motions were carried in favour of a central school; but agreement could not be reached regarding the location of the school; nor could the States agree upon the principles on which it should be conducted. We have a famous forester in Australia in Mr. LanePoole. When his appointment with the Western Australian Government terminated he was about to leave this country, because he had an offer elsewhere; but the Commonwealth Government induced him to remain in Australia by asking him to accept an appointment as Director of the Commonwealth Forestry Bureau. Eventually the States agreed to the establishment of this school, and decided that it should be located at Canberra. As a temporary expedient it was conducted in Adelaide for one year. The States undertook to send their foresters to be trained at this school, which was eventually established at Canberra, and is doing excellent work.

Let me give another illustration of the advantage that Australia has derived from the retention of the services of Mr. Lane-Poole. We are all familiar with the fact that the States of New South Wales, Victoria, and South Australia, in conjunction with the Commonwealth, have incurred large expenditure on irrigation works on the River Murray. For some years that river has been silting up, and salt water has been coming up from the sea further and further each year. Mr. Lane-Poole had been claiming for many years that that was due to the destruction of forests at the head waters of the Murray. He pointed to innumerable instances in the world’s history of prosperous country having been converted into desert by the denudation of forests and the consequent erosion. The matter came under the notice of an interstate conference held in Canberra and the late Prime Minister (Mr. Bruce) invited the State Premiers and the Ministers who accompanied them to hear an address by Mr. LanePoole on this subject. Victoria and New South Wales had been dealing with the problem to some extent, but they could never arrive at any agreement upon it.

Each of those States had been granting pastoral leases at the head waters of the Murray, and the .lessees had been burning off the forests in the hilly country. Owing to the denudation of the timber, when the rains came, the forests, instead of holding the water like a sponge, allowed it to rush down to the Murray and carry silt with it. The result was that there were floods in the winter, and a low river in the summer. Mr. LanePoole pointed out to the conference the grave danger of pursuing the course that had been followed in the past, and his remarks had such an effect upon those Ministers that they at once agreed to despatch their engineers to the head waters of the Murray for the purpose of investigating the position. The result was that an agreement was arrived at between those States for the termination of the pastoral leases, and a rigorous patrol was instituted to prevent further burning of the forests. Thanks to a vigorous policy of reafforestation, and the close supervision that is being exercised, the destruction of timber has been stopped. This is largely due to the retention of the services of Mr. Lane-Poole, and to the fact that the Commonwealth Government made them available to the States, and to the Murray Waters Commission. This shows that the Commonwealth can play a valuable part in cooperation with the States, without causing an over-lapping of Federal and State activities. The intention of the Commonwealth Government was not to carry out work that was already being done by the States, but to co-operate with them by supplying trained foresters. As this bill does not involve an extra penny of expenditure, but merely gives Mr. LanePoole a status as Director of the Commonwealth Bureau of Forestry, I have much pleasure in supporting it.

Question resolved in the affirmative.

Bill read a second time and reported from committee without amendment.

Report adopted.

page 3971

CENSUS AND STATISTICS BILL

Second Reading

Senator BARNES:
Assistant Minister · Victoria · ALP

– I move -

That the bill be now read a second time.

This is a short measure, introduced to overcome the difficulty which confronts the Government because of the expenditure involved in the taking of the next decennial census. As honorable senators are aware, provision is made for the taking of a census in the Commonwealth at decennial periods, but it is proposed to defer the census, due to be taken next year, until 1933. Thereafter it will be taken at ten-yearly intervals. The Government deems it desirable to postpone the census next year because it would involve an expenditure of £350,000. Honorable senators who have perused the budget statement, which was presented yesterday, will agree, I think, that this expenditure at the present juncture is not warranted, notwithstanding the value of the economic data and the other information which the taking of a census would disclose. The bill amends section 8 of the principal act by providing that instead of taking the census at the decennial period mentioned in the act, it shall be taken at such other times as may be prescribed. The Government prescribes 1933 for the taking of the next census. In view of the financial position of the Commonwealth I trust honorable senators will pass this measure.

Debate (on motion by Senator Sir George Pearce) adjourned.

page 3972

ADJOURNMENT

Wheat Marketing Bill

Motion (by Senator Barnes) proposed -

That the Senate do now adjourn.

Senator DUNN:
New SouthWales

– I should like to know from the Leader of the Senate (Senator Daly) if it is the intention of the Government to take any steps to assist rural production. I put this question to the Minister because the defeat of theWheat Marketing Bill in this chamber a few days ago affects large numbers of primary producers to whom the Prime Minister (Mr. Scullin) appealed a few months ago to increase the acreage under wheat in order to assist in correcting our adverse trade balance. The following telegrams have been received on this subject: -

Farmers this wheat belt bitterly disappointed Senate’s action rejecting wheat bill. Urge every effort be made submit again, even if guarantee for one year only.

Richard Job,

President Ashburnham District Council

Parkes Chamber Commerce disappointed rejection wheat bill and strongly urge quick submission short bill covering pool and guarantee one year only to meet present extraordinary situation instead waiting submit rejected measure.

Willis, President

Farmers greatly disappointed result wheat guarantee; see what can be done,

Kelly Co., Parkes

If arrange indignation meeting pool, Parkes, Saturday, could you come?

Hourigan, Parkes

View defeat of wheat guarantee catastrophe, given credit many farmers to increase area sown, very serious position now developed, advise any way out.

McGlynns Ltd., Parkes.

Farmers and business people concerned wheat pool. Is it possible for anything to be done?

Morgan, Parkes

Parkes Branch Farmers and Settlers strongly supports proposed new wheat pool bill.

Bassett

Many of these telegrams were sent to Mr. Gibbons, the honorable member for Calare.

Senator DUNN:

– I am not concerned with any promise which Mr. Gibbons may have made to the wheat-growers during the last election campaign. That gentleman is a practical wheat-farmer with a holding of about 3,000 acres in the Parkes district. I understand he. has under cultivation for wheat about 1,500 acres, and I need hardly add that he knows what he is talking about.

The Sydney Morning Herald of today’s date publishes the following from West Wyalong, an important wheatgrowing area in New South Wales: -

page 3972

WHEAT POOL BILL

Farmers’ Protest Against Rejection.

West Wyalong, Wednesday.

A meeting of farmers and business interests decided to telegraph the Prime Minister (Mr. Scullin) deploring the defeat by the Senate of the Wheat Marketing Bill, and asking for a suggestion how the proposed 4s. a bushel guarantee might be obtained. The meeting also decided to send a telegram to the president of the Senate (Senator Kingsmill) deploring the defeat of the bill, and advising that ameeting will he held here on Saturday to consider the position.

It also publishes the following: -

Forbes, Wednesday.

The defeat of the Wheat Marketing Bill has caused keen disappointment in the wheat belt. Farmers and business men declare that without a guarantee they will get less than production costs for their grain.

Mr. George Bassett, a prominent farmer, has stated, that country men have been “ had.”

Mr. A. J. Meagher, a large storekeeper, says that the fact that the measure has been defeated will temporarily further curtail credit for farmers.

Honorable senatorsmay be interested to know that many storekeepers in the western district of New South Wales have committed themselves to stand behind the farmers, in some cases, to the extent of £48,000 on the strength of the Prime Minister’s appeal, and the slogan”Grow more wheat.” With all respect to the senators representing Western Australia, I remind them that wheat is grown elsewhere in the Commonwealth, and in some of the States on a very extensive scale. I may add that the wheat-growers, in the aggregate, are not supporters of the Labour party, but they realized the seriousness of Australia’s position and when appealed to by the Prime Minister, took prompt measures to increase their acreage for wheat production. It is regrettable, therefore, that, owing to the action of the Senate, this Government’s scheme for a compulsory wheat pool and a guaranteed price willnot now be available to these growers. There is, I understand, a tendency now on the part of outside buyers to say to the farmers, “We cannot give you more than 2s. 6d. a bushel.” That will bring about a deplorable state of affairs in the Commonwealth.

Senator DUNN:

– What I mean is that it is now probable that wheat prices will be spoiled for Australian growers. The Sydney Daily Pictorial of to-day’s date publishes an article dealing with the wheat situation -

page 3973

DROPPED POOL BILL CAUSES FARMERS DISMAY

Wheat-growersmayDemandRighttoVote on Federal Wheat Scheme.

The statement of the Minister for Agriculture that no State wheat pool is possible this season has caused some dismay among rural organizations.

A strong feeling prevails that the Senate, in defeating the Federal Wheat Pool Bill, has dropped growers “ overboard,” and deprived them of the right to determine whether a pool should be formed or not. “ We feel very strongly that the dropping of the bill has been a victory for wheat agents and speculators,” said the president of a rural organization yesterday.

Indignation meetings, he said, were being organized in many centres of the State, at which prominent farmers would demand the right to speak for themselves in the matter.

Attention was also drawn to the fact that the Minister for Markets, Mr. Parker Moloney, had intimated that he would re-introduce the bill next year, in the hope that it would receive more favorable consideration.

It is recognized in this State that unless the bill is brought forward not later than February, and the necessary formalities completed before next season’s crop is sown, a similar position may occur. . . .

page 3973

DELAY CHARGED

Farmers and the officials of their organizations feel that the Federal Government unduly delayed the bringing on of the bill, and that the Senate, knowing the unprepared position of Victoria to handle a State pool, took advantage of the situation.

Whatever the result of next week’s interstate ministerial conference may be, it will be poor consolation to the men who have increased this year’s wheat area in the hope of obtaining the 4s. a bushel guaranteed by the Federal Government through the proposed pool.

It will mean, in many cases, that farmers who have toiled for three or four years without obtaining any profit from their wheat may again have to take world parity and suffer probable losses.

page 3973

RECORD AREA SOWN

With a record area, estimated at between 5,000,000 and 5,500,000 acres, under crop in this State, or an increase of about 25 per cent. over last year, growers expected, under the conditions set out in Mr. Scullin’s appeal, to recoup themselves for the losses sustained in recent years.

As it is, they feel that they have been “shanghaied” into growing more wheat without any guarantee that a satisfactory price will be paid for their produce.

They also feel that the bigger crop will prove an open field for speculators. . .

An examination of our daily newspapers indicates that other States are now realizing that they were unwise in advocating that the bill should be dropped. The following paragraph is taken from the Daily Guardian of the 7th July last. The writer, Mr. A. E. Perkins, is known to me personally, and I have no hesitation in saying that, as an authority on rural production, he takes second place to no man in Australia: -

page 3974

FARMERS AS PAWNS IN POLITICAL GAME

Wheat Let-down is Serious.

Huge Production - Now no Guarantee. banked on government assistance.

Uneasy Feeling

By A. E. Perkins

Not only does the rejection by the Senate of the Federal Government’s Wheat Pool Bill place Mr. Scullin and his Minister for Markets, Mr. Parker Moloney, in an awkward position, but it creates for tens of thousands of wheatgrowers throughout the Commonwealth a feeling of uneasiness, if not apprehension, in regard to the marketing of and price likely to be paid for the forthcoming harvest.

Australia, with an assured record harvest, estimated in some quarters at 200,000,000 bushels, with an exportable surplus of about 150,000,000 bushels, faces the position of an enormous world production.

The Commonwealth this year has an area under wheat which exceeds by millions of acres the record sowings of the biggest years, and is officially estimated at between 17,000,000 and 18,000,000 acres.

Early in its career the Scullin Government, with Mr. Parker Moloney as chief propagandist, put out its proposal for a federal compulsory wheat pool, under which the growers were to receive a guaranteed price of 4s. a bushel country stations, plus 8d. a bushel handling charges.

Whatever may be said of the merits or demerits of a compulsory pool, the Federal Government can be acquitted of the charge of “wanting to get hold of the farmers’ wheat,” because growers’ organizations throughout Australia, and more particularly the Farmers and Settlers’ Association of New South Wales, have for years stressed the desirability of an all-Australian pool in preference to State pools.

In all parts of Australia farmers responded to the Prime Minister’s appeal to grow more wheat.

page 3974

WIDE RESPONSE

There was unprecedented activity. Victoria increased its area by more than 1,000,000 acres.

In New South Wales there is an enormous increase, not yet officially stated, but estimated in the aggregate at well over 5,000,000 acres.

The inducement was, undoubtedly, the Federal Government’s guarantee of4s. a bushel, which, with a harvest of 200,000,000 bushels, would make a big hole in £40,000,000.

Despite the Government’s ability, with its overwhelming majority, to pass the Wheat Pool Bill, it was never calculated that the Senate had the box seat, and would reject the measure.

So the farmers went on sowing, the rain continued to soak the huge grain areas, and prospects were rosy for a bumper harvest and big cheques.

Unintentionally, the wheat-growers have been made pawns in the game.

page 3974

PRICES SPOILED

With a record yield practically certain, they have no guaranteed price for their grain.

Their market is uncertain, and they enter into competition with countries from which record harvests are expected.

page 3974

UNITED STATES OF AMERICA IS WELL UP

Reports from the United States of America indicate a yield well up to the average, although estimates are unconfirmed.

The American Government has given millions of pounds to assist its wheat industry.

Hope of the Australian farmer was that he would get a guaranteed price of 4s. a bushel in return for his work of putting millions of acres on to the Commonwealth’s grain area.

He has done his part, and, as far as a guaranteed price is concerned, an unsympatheticSenate has put him into the ditch.

By no stretch of the imagination can the Guardian he described as a Labour journal. The Labor Daily of the 9th July has this to say on the subject -

The Federal Senate has issued a declaration of war on the House of Representatives. The Prime Minister has taken up the challenge.

By 15 votes to 12 the Senate has thrown out the Wheat Marketing Bill, providing for the establishment of a pool, guaranteeing the farmers 4s. a bushel for their wheat.

It will be noted that out of a Senate membership of 30, only 15 Oppositionists were able to kill the bill.

With the seven Labour senators voted five of the Nationalists or Country party; fourteen senators did not record their votes.

Thus the Federal Government is faced with the extraordinary position of having its policy on this question dictated by fifteen senators, against the 47 Labour members and some Opposition supporters of the House of Representatives who recorded their votes in favour of the measure.

Those senators who rejected the bill, for the most part, were Bruce-Page supporters who did not face the electors last October.

They were, therefore, quite out of touch with the great change in public political thought, as shown by the return of the Federal Labour Government.

There is, of course, legitimate ground for difference of opinion regarding this important marketing of wheat question. It is, however, a vital national question, and having been sanctioned by the popular House had a right to be treated solely on its merits, and not on vindictive party lines.

Those areexpressions of opinion in the leading newspapers of New South Wales, and similar statements appear in the Victorian and South Australian press. The time is rapidly approaching when the representatives of Western Australia in this chamber will have to answer to the wheat-growers of that State for their action. Possibly Senator Colebatch was within his rights in arguing his case, but I prophesy that, within the next few months, when the wheat crops are harvested and the time comes to collect cheques, the farmers of that State will bitterly resent the position into which they have been forced. This Government is not pandering to the farmers for their votes. Both the State and Federal platforms of the Labour party embrace rural planks. This Government was elected by the people to do justice to alt sections of the community, but when it endeavoured to stabilize the position of the wheat-farmers its desire was thwarted, to the detriment of a great national industry.

The PRESIDENT (Senator the Hon W Kingsmill:

– I point out that no honorable senator is permitted to reflect on a previous vote of the Senate, unless he moves to rescind it, which is beyond the power of the honorable senator.

Senator DUNN:

– If I have transgressed the Standing Orders, Mr. President, I express regret.

Senator E B JOHNSTON:
Western Australia

– Senator Dunn should find it a simple matter to reply to the telegrams that he has received in regard to the Wheat Marketing Bill. It is true that honorable senators on this side did not approve of the compulsory wheat pool into which it was proposed to coerce the farmers, whether they desired it or not. It is also true that they did not approve of the gross discrimination between States that was contemplated by that measure by imposing upon the taxpayers of some States a burden out of all proportion to that imposed on taxpayers of other States. I agree that the Federal Government should assist the farmers of Australia, but that should be done along proper federal lines without discrimination between States, and in conformity with the action of this Parliament when assisting other industries. If the Government is honest in its desire to assist the wheat-farmers, it can still do so easily, simply, and fairly, by granting a bonus on the production of Australian wheat for the next year or, preferably, for the next five years. I notice that the Government has brought down four bills in another place granting bonuses on flax, linseed, shale oil and sewing machines. Surely it is but fair to ask that a measure of assistance should be granted to the wheat industry, which is infinitely more important to the nation than any one of those I have mentioned. The Prime Minister has asked the farmers to grow more wheat, and they have done so. That imposes an obligation upon the Government. The representatives of the farmers in this chamber have declared that they do not wish to have a compulsory pool or the imposition of a compulsory guarantee upon the States. They have also intimated that they desire to help the wheat-growers. That can be done by granting a bounty. I hope that Senator Dunn will make it clear to the people who have corresponded with him, and with the honorable member for Calare (Mr. Gibbons) in another place, that if the wheat-farmers are not assisted it is because the honorable senator and his colleague are unable to persuade the Government to provide the necessary bounty. I can understand that several of the telegrams read by Senator Dunn should have been addressed to the honorable member for Calare. It will be recollected that that gentleman was returned to Parliament because of his promise that the Government would guarantee 6s. 6d. a bushel on all wheat produced in Australia, without any obligation on the States. One can easily understand the disappointment and dismay of the farmers when the Government brought down a bill providing for only 4s. a bushel, any deficiency in world’s parity to be borne jointly by the State and Commonwealth Governments.

Senator Daly:

– That promise did not defeat the Wheat Marketing Bill.

Senator E B JOHNSTON:

– It caused a lot of disappointment to the people who are now corresponding with Senator Dunn on the subject. I suggest that the honorable senator and his friend in another place should make every endeavour to persuade the Government to give a bonus of at least 6d. a bushel on the production of wheat, as I have proposed, and that that should be done without imposing any obligation on the States.

Senator CARROLL (Western Aus this subject lias been ventilated, as it gives me an opportunity to clear up a little matter that was left in some doubt when the division was taken on the Wheat Marketing Bill last Friday. On that occasion, before the vote was taken, certain information came to my knowledge. It certainly placed a somewhat different complexion on the bill and caused me immediately to interview the Government whip in this chamber (Senator Dunn). I suggested that he should use his influence with his leader to secure a postponement of the division on the bill to permit of myself and others considering the additional information, and also to give us an opportunity to communicate with Senator Lynch, who had paired in regard to the second reading, and who might have desired to reconsider his decision in the light of later developments. Later, I mct the Minister for Markets (Mr. Parker Moloney) and repeated the proposal to him. Nothing was done. The division was forced, but I accept Senator Daly’s assurance, given to me informally across the chamber, that the request was not placed before him.

I notice that Senator Dunn has suggested to the Leader of the Government in the Senate (Senator- Daly) that the Government should bring down another bill to give a guaranteed price for wheat for an additional year.

Senator Dunn:

– I desire to make a personal explanation. I did not make any statement of the kind.

Senator CARROLL:

– I am sorry that T misunderstood the honorable senator, but that was the impression that his remarks conveyed to me. Honorable senators who took the same action as myself in regard to the Wheat Marketing Bill agree with me that the wheat-grower is urgently in need of assistance, largely because of the effect that federal legislation has had upon the cost of production and the cost of living. While costs remain high, the value of the farmers’ product keeps on going down, and the farmer now finds himself in the position of not being able to pay his way and live honestly before all men. Even now the Government has it in its hands to come to the assistance of the wheat-growing industry.

Surely it is not beyond its capacity to devise ways and means of doing so which would be acceptable, not only to the farmers, but also to every honorable senator. If it brings down the necessary legislation to give assistance to those engaged in the wheat-growing industry, it will have the support of all honorable senators. It is a wonderful tribute to the representation of Western Australia in this chamber, if it is a fact, as Senator Dunn has said, that one-sixth of the Senate can defeat any measure the Government brings down. If the Government has no stronger opposition than was offered by the six honorable senators representing Western Australia to the Wheat Marketing Bill it will be perfectly safe in bringing, forward all its legislation. I hope that Senator Daly will bring influence to bear on his colleagues to induce them to introduce a bill to give assistance to the wheat-growing industry which will prove acceptable to every one concerned.

Senator DALY:
Vice-President of the Executive Council · South Australia · ALP

– It was the desire of the Government to give assistance to the wheatgrowing industry and to guarantee to wheatfarmers a price of 4s. per bushel; but it felt that the only way it could do so, and at the same time protect the interests of the taxpayers, was to place the control of the marketing of the wheat in the hands of a board and to have a compulsory wheat pool. It was not prepared to bring down a bill to provide for a straight-out bounty on wheat, for the reason that its legislation was intended to assist the wheat-farmers, and not the wheat agents. If. however. Senator Carroll and Senator E. B. Johnston can give me the assurance that the Government can get the Wheat Marketing Bill through the Senate, I promise them that I shall take their request to the Government and see if there is any constitutional method of righting the wrong that has been done to the farmers.

Senator PLAIN:
Victoria

.- The rejection of the Wheat Marketing Bill has created consternation in the farming districts of Australia, more particularly among the business people. At the present time the farmers are passing through a critical stage. It is time to prepare fallow for the following year. The farmers of Australia, irrespective of the States to which they belong, realize the seriousness of their country’s external indebtedness, and when the Governments, Federal and State, appealed to the farmers to grow more wheat, they did so. When the Federal Government announced that it proposed to guarantee a payment of 4s. a bushel on delivery at railway sidings, credit was extended to the wheatgrowers by the storekeepers, thanwhom there are no greater benefactors to the wheat-growers. The country storekeeper stands to the wheatgrower through thick and thin; he rakes the risk of the wholesale merchant curtailing his supplies. Some merchants do not appreciate the plight of the farmer, and when they want their money they try to get it. The Victorian Government having withdrawn the assistance by which the farmers were previously able to purchase chaff for their teams, the only hope the farmer has to get assistance in that direction is to secure extended credit from his storekeeper, and this the latter felt he could give when the Commonwealth Government guaranteed the payment of 4s. a bushel for wheat. I want to warn the farmers. During the next month or two they will be worried by the downward trend of the price of wheat, and they will be subjected to pressure by the wheat merchants to sell the wheat they have in store to cover the difference between the amount advanced by the merchants and the drop in the price of wheat. It may even be necessary for the farmers to sell their next year’s crop on forward delivery to cover their liability on their stored wheat ; or they may feel that the price then available will be higher than what it will be in, say February next. I warn the farmers not to be too hasty in the matter. The darkest hour is always before the dawn. There is absolutely no reason why the price of wheat should drop as it has done. As a matter of fact, figures show conclusively that it should be, if not equal to what it was a few months ago, at least much steadier than it is. On 1st August of 1928 and 1929, the supply of wheat in the four principal wheat-exporting countries was as follows: -

The Australian figures include the estimate of the then growing crop. The net result of these figures is that during 1929 there was a reduction in the production of 419,000,000 bushels of wheat. Yet, in spite of this decreasing production, the price this year is lower than in the previous year, when there was a much bigger supply of wheat available throughout the world. These figures should offer some encouragement to the farmers who are smarting under blighted hopes. No parliament in Australia has assumed a greater responsibility than this Parliament did when it dishonoured a pledge given by the Government of the country to the yeomanry of the country. When the yeomanry begin to distrust their parliament we have the first sign of the crumbling of the nation. I appeal to the Government to endeavour, if possible, to carry out its promise, and there is, I think, hope that it will do so.

Question resolved in the affirmative.

Senateadjournedat 10.42 p.m.

Cite as: Australia, Senate, Debates, 10 July 1930, viewed 22 October 2017, <http://historichansard.net/senate/1930/19300710_senate_12_125/>.

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