19th Parliament · 1st Session
The President (Senator the Hon. Gordon Brown) took the chair at 3.15 p.m., and read prayers.
page 2022
– Is the Minister representing the Minister for Health able to indicate the extent to which the regulations under what is known as the McKenna free medicine scheme remain in force now that the present Government’s health scheme has become operative?
– I shall he pleased to bring the honorable senator’s question to the notice of the Minister for Health and to obtain from him a considered reply which will be furnished to the honorable senator as soon as practicable.
– On the 17th October, Senator Wright asked the following question : -
Iask the Minister representing the Minister for Health whether, consequent upon the very welcome arrangement that was made re cently by his colleague for the provision, free of charge, of life-saving drugs in co-operation with the chemists and the doctors, the McKenna regulations providing for general free medicine are still in operation or have been modified or repealed?
The Minister for Health has supplied the following reply : -
The scheme to provide life-saving drugs has been introduced by this Government by a new set of regulations which completely supersede the regulations promulgated by the previous Government.
page 2022
– I preface a question to the Minister for Trade and Customs by stating that in its 17 th report the former Parliamentary Standing Committee on Broadcasting unanimously recommended the establishment of a music composers’ fund on lines similar to the Australian LiteraryFund. I do not know whether or not difficulties have arisen in giving effect to the committee’s recommendations, but the fund has not yet been established. Will the Minister confer with the Prime Minister with a view to giving effect to the recommendation that such a fund be established to assist music composers in Australia? Such a fund would be of great assistance to those who have the ability to compose music but have not sufficient money to publish their works?
– I have not had an opportunity to peruse the report to which the honorable senator has referred, but I agree with him that any encouragement that can be given to the cultural development of our people is to be highly commended. I shall discuss the matter with the Prime Minister and ascertain his views on the recommendation and shall convey the desired information to the honorable senator.
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– Will the Minister representing the Prime Minister state whether it is a fact that a Current Affairs bulletin issued by the Commonwealth Office of Education, Sydney, on the 25th September, contained statements which are contrary to the Federal Government’s policy on the gold output of Australia? If so, will the Prime Minister see that propaganda against gold, such as appears in the article to which I have referred, and which is injurious tothe interests ofWestern Australia, is not repeated ?
– I have not seenthe report to which the honorable senator has referred, but I agree with her that the maintenance of gold production is important, not only to the great State of Western Australia, but also to the economy of Australia as a whole.If propaganda is being directed towards reducing the output of gold, that is a matter of great concern, and I shall certainly have it looked into.
page 2023
– I wish to ask the
Minister representing the PostmasterGeneral a question which I preface by stating that I understand that a board was established a considerable time ago for the purpose of controlling radio programmes that are broadcast throughout Australia, in order to ensure that broadcasts of sporting events did not represent too great a proportion of the entertainment provided. “Will the Minister ascertain whether that board is functioning, and if it is, will he take steps to see that those people who desire to hear programmes other than sporting programmes are provided with suitable entertainment on Saturday afternoons and Monday evenings ?
– I shall be pleased to bring the honorable senator’s request to the notice of the Postmaster-General, and I hope to be able to furnish him with a reply at an early date.
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– I direct the follow ing questions to the Minister representing the Prime Minister: - (1) Is the Minister aware that the Victorian Government recently proclaimed a Shoddy Footwear Act for the purpose of preventing shoddy footwear manufactured in Victoria from being foisted on the people of other States? (2) As the use of good footwear by the youth of Australia may be regarded as a defence precaution, will the Minister endeavour to enlist the cooperation of all footwear manufacturers in the Commonwealth, and that of the Australian Standards Association, in order that certain standards for footwear materials and their manufacture may be prescribed? (3) As the good health of all Australians is dependent, to a large degree, upon the wearing of suitable footwear, will the Minister cause a thorough examination to be made by the Commonwealth Scientific and Industrial Research Organization of the footwear classed as “ shoddy “ in Victoria, and! will he also furnish to each honorable senator a report setting out the results of such examination?
– I should say that the manufacture and sale of shoddy goods in the State of Victoria is a matter within the province of the Government of Victoria rather than of the Australian Government. However, if the honorable senator will place his questions on the notice-paper, I shall endeavour to have answers obtained for him.
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– Can the Minister representing the Minister for Health inform the Senate what drugs are now available free to the public under the Pharmaceutical Benefits Act? There is much confusion on the subject of the free supply of drugs, mainly because most chemists inform customers that in order that a drug may be obtained free of charge it must be a life-saving drug.
– I understand that all chemists have been supplied with a list of the life-saving drugs that may be supplied free of charge. Regulations under the act have been issued and are available to honorable senators. I have a copy in my office which I shall be pleased to make available to the honorable senator in order that he may see the full list of drugs supplied free.
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– Is the Minis ter for Repatriation aware that the advance of £2,000 granted to exservicemen for the purpose of building homes is now inadequate, owing to the rapid increase of building costs, and that consequently ex-servicemen are being driven into the hands of private financiers, who make larger advances but charge higher rates of interest? Will the Minister consider recommending toCabinet that the advance be increased and that the rate of interest charged upon it be decreased ?
– I assume that the honorable senator has referred to the advances made by the War Service Homes Department to ex-servicemen for the purpose of building houses. It is true that the maximum advance that can be made by the department for that purpose is £2,000. That decision was made approximately eighteen months ago. The War Service Homes Department charges a lower rate of interest upon money advanced than do the banks, although there is not much difference between the rates. Provision is made in the budget for £25,000,000 to be made available to the War Service Homes Department to finance the building of homes for exservicemen. I shall bring to the notice of the Minister concerned the honorable senator’s suggestion that the size of the advance be increased.
page 2024
– I understand that to-night the Prime Minister will make a statement in the House of Representatives upon the situation in Korea. I ask the Minister for Trade and Customs whether it will be possible for a similar statement to be made in this chamber simultaneously with the Prime Minister’s statement? Having regard to the fact that the Korean question seems likely to overshadow all other questions, could arrangements be made for the Senate to discuss it before the Parliament rises at the end of this year?
– The Leader of the Opposition in this chamber and members of my own party have already spoken to me about this matter. I hope, with the leave of the Senate, to make a statement upon Korea in this chamber after the Prime Minister has made his statement in the House of Representatives.
asked the Minister representing the Prime Minister the following question, upon notice -
Was the Prime Minister refused permission to enter Korea for the purpose’ of inspecting Australian personnel in action in that country?
– The Prime
Minister has supplied the following answer to the honorable senator’s question : -
At the time of the Prime Minister’s visit to Japan the only Australian servicemen in action in Korea were the members of the Royal Australian Navy and the Royal Australian Air Force, who were based on Japan. The Prime Minister inspected both the Royal Australian Air Force operational base at Iwakuni andH.M.A.S. Bataan, and talked with members of these services who had just returned from operations against the enemy. In addition the Prime Minister spent some time with the Australian Army troops at Kure. When the question of a visit to Korea by the Prime Minister was raised, General MacArthur, . Supreme Commander of the Allied Powers, expressed the view that the position in Korea was too fluid to permit of a visit by the Prime Minister to the operational area.
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– In view of the fact that the number of members of the Parliament was recently increased and that accommodation in this building is inadequate, will the Minister for Trade and Customs consider the advisability of holding, during the forthcoming Jubilee Celebrations, a competition for a design of the new and permanent Parliament House ?
– The honorable senator’s suggestion is worthy of full consideration, but I suggest that, instead of raising the matter in this chamber, he should raise it with the Prime Minister or the authority that will have control of the erection of the new Parliament House when it is decided to proceed with it. Perhaps it would be useful if he forwarded his suggestion to the chairman of the Public Works Committee for appropriate action.
page 2024
asked the Minister representing the Minister for Immigration -
– The Minister for Immigration has supplied the following answers : -
Representations should be made to the State governments, registration boards, and other competent authorities that migrants holding professional qualifications of repute should be admitted to registration for their respective callings, after passing the appropriate examinations and following a reasonable period of training or readjustment sufficient to assure their competence in accordance with Australian standards. The States should be asked to make this period in each case the minimum possible to secure this result and also that the period be uniform throughout Australia.
Subsequently, the Immigration Planning Council, which is composed of leading representatives of industry, the trade unions, and others with special knowledge of industrial and economic problems, reviewed the matter and suggested that before any approach is made to the States along the lines recommended by the Citizenship Convention, the question be raised with the professional organization concerned. The Minister for Immigration wrote in July to the associations concerned with a number of the professions, raising the question of whether some easing of legislative restrictions on entry is justified in the light of present and expected population increase. It was suggested that Commonwealth officers and representatives of professional associations should have some preliminary discussions which might form the basis of definite proposals to be conveyed by the Prime Minister to the Premiers of the various States. In September these matters were submitted at the recent Premiers’ Conference in a generalized and preliminary way. It was agreed at the conference that the individual States should examine their respective legislations with a view to establishing ways in which some relief could be arranged. Already there are indications that some State Parliaments may deal with certain professions. It is pointed out that some very difficult problems are raised in connexion with the matter, as a number of professions and a variety of registration and professional requirements are involved. In these circumstances no early and spectacular results may be expected, nor is it likely to be possible to achieve conditions of uniform legislation as between the different States or the different professions. It should not be inferred from the foregoing that the professional skills of migrants are not being utilized in Australia. Already some hundreds of migrants qualified as doctors, surveyors, engineers and architects are employed by Commonwealth and State departments and agencies, in hospitals, pharmacies, in industry and the public utilities. While, because of the State legislation provisions referred to, they cannot actually practise their professions, many are employed as medical orderlies, radiologists, surveyors’ assistants, engineering and architectural draftsmen and the like. The qualifications of all displaced persons are examined and where they cannot be placed initially in work related to their professions, they are subsequently transferred as openings are found for them.
asked the Minister representing the Minister for Immigration, upon notice -
Senator SPICER (through Senator O’Sullivan). - The Minister for Immigration has supplied the following answers to the honorable senator’s questions : -
page 2026
asked the Minister representing the Prime Minister the following questions, upon notice -
– The Prime Minister has supplied the following answers to the honorable senator’s questions : -
page 2026
asked the Minister representing the Prime Minister, upon notice -
– The Prime Minister has supplied the following answers to the honorable senator’s questions : -
COMMONWEALTH BANK BILL 1950 1 Nu. 2.
Second Reading.
Debate resumed from the 7th November (vide page 1261), on motion by Senator Spooner -
That the bill be now read a second time.
.- When the debate on this measure was adjourned last night, I was dealing with events in China during the banking crisis in that country. My authority was a despatch from the correspondent of the Melbourne Age in China, dated the Sth April, 1949. Here is a paragraph from that report -
News soon got around that the plane had brought a consignment of bank notes. The following morning clerks of the Central Bank began distributing the newly arrived notes through the silver market. This was followed by a rumour that the notes were forgeries. Merchants refused to accept them.
That action by the controllers of the Chinese banking system lit a torch that led the way to revolution and murder. The despatch continued -
Late in the afternoon, General Lu Han, Governor of Yunan, appeared and sat at the head of the table in the bank. He set himself up as a judge. Prisoners were brought before him one by one, guarded by police.
The Chinese people were suffering as the result of the machinations of those who controlled the financial affairs of China. I venture the opinion that that incident in itself helped to fan into flame the hatreds that resulted in the Chinese civil war, the repercussions of which now threaten to envelop the world.
The Labour party has proposed the appointment of a select committee consisting of honorable senators from, both sides of the chamber, to examine the whole subject matter of banking and to devise a plan under which this Parliament will be able effectively to control the credit of the nation. The eyes of the Australian people are on this Parliament at the present time. This bill does not deal only with the control and administration of the Commonwealth Bank; its implications go farther than that, because the Commonwealth Bank can and must be the controller of the credit of Australia. Recently, the Prime Minister (Mr. Menzies) made arrangements for the borrowing of 100,000,000 dollars from the United States of America. Before the proceeds of that loan could be made available to our economy, 15,000,000 dollars of the loan had already been lost because of the reduced purchasing value of the money when the loan was made, and it has been estimated that since then its purchasing value has fallen by an additional 4 or 5 per cent. In effect, instead of receiving 100,000,000 dollars we shall receive a little more than 80,000,000 dollars.
An examination of the history of Australian private banks shows that since 1910 there has been a general linking-up of large trading combines and the trading banks of Australia. Included in the combines linked with the private banks are the Colonial Sugar Refining Company Limited, and the powerful insurance group. The financial columns of yesterday’s Sydney Morning Herald reveal the fact that those who invest money in influential organizations such as Dunlop Rubber Australia Limited enter into competition with the trading banks. For instance, the Australian Mutual Provident Society has recently advanced £1,250,000 to Dunlop Rubber Australia Limited at 4$ per cent, interest. One of the reasons why we are so insistent on the attitude we have adopted to this bill that we realize that in the event of financial crisis there will be an immediate tightening of credit, and gigantic companies such as Dunlop Rubber Australia Limited may become engulfed in the resultant upheaval. Let us consider the history of the financial and economic crisis of 1931. Until then other rubber companies such as Barnett Glass Limited and the Perdriau Rubber Company, had carried on successfully but they were unable to survive the effects of the crisis and they were subsequently absorbed by Dunlop Rubber Australia Limited. We are eager toprevent similar occurrences in the future. Our sole desire is to ensure that the Commonwealth Parliament shall be ableto exercise effective control of ‘the credit of the nation in an emergency. Thepublished figures relating to the activities of the Commonwealth Bank during 1948- 49 and 1949-50 reveal that the’ profits of the bank have declined. In> 1950 the total profit of the bank from the Central Banking Department, the Note Issue Department, the General Banking Department, the Rural Credits Department, the Mortgage Bank Department and the Industrial Finance Department, amounted to £6,126,000. In the previous year the total profit derived from those sources amounted to £6,244,000. In other words the profit of the bank for 1949- 50 was £118,000 less than the profit of the preceding year. These figures are significant because all other banking institutions and practically all large financial undertakings made increased profits in the year ended the 30th June, 1950. The profits of the Commonwealth Bank declined as the result of the curtailment of its activities. The Labour party in its proposals for banking reform is looking ahead. We contend that banking is a subject on which there should be a united front in this Parliament. Labour’s policy on banking is dictated solely by the need to safeguard the interests of the people.
What are the objectives of the Government in this bill? It has been said by those who support the measure that it will in no way affect the Banking Act 1945. Honorable senators will recall that the provisions of the Banking Act 1945 give the Commonwealth Bank general jurisdiction over the advances policy of the private banks, enable it to determine whether in the public interest the lending policy of the private banks should be restricted or encouraged, and what rate of interest they should pay and receive. It also provides that the surplus investible funds of the private banks shall be deposited with the Commonwealth Bank at a low rate of interest. In periods of financial crisis all governments take measures to control banking. In the latter part of the eighteenth century, in the nineteenth- century, and again in the thirties of this century, governments throughout the world took control of the banks in order to avert financial crises and to safeguard the interests of the people.- Every one knows that in periods of financial crisis the credit of the nation must be controlled by the responsible government.
We remind honorable senators opposite that we have passed some of the legislation introduced by the Government in a matter of a few minutes, but that the implications of this legislation are of such great importance to the people that we must hasten slowly. For that reason alone the debate on this bill has been much more protracted than would otherwise be the case. The Labour party has always advocated the nationalization of banking. When the Chifley Government sought to give effect to that policy its legislation was held to be invalid by the High Court. We are content to abide by that decision. Last year the note issue department of the Commonwealth Bank made a profit of £4,332,000. The notes issued by that department are guaranteed by the nation. When private banking institutions in Australia enjoyed the privilege of printing their own bank notes the people were never sure of what would happen to the value of a £1 note if they were fortunate enough to possess one. Following the bank crisis of 1891, several Victorian banks failed and the bank notes issued by them were absolutely valueless. It was a similar state of affairs to that which existed in Germany after World War I, when ten 1,000,000-mark notes would not buy even a packet of cigarettes in any part of Europe. The Australian Labour party, in its opposition to this measure, is attempting not only to safeguard its own interests, but also to protect tEe people of Australia. In order that that may be done, it is necessary to ensure that this country’s financial organizations are above reproach. The Opposition is not attempting to force its views upon the Government ; indeed, I suggest that it has shown the Government a way out of its difficulties. If the Government claims that it is genuinely concerned for the protection of the interests of Australia, why does it not acquiesce in the proposals put forward by the Australian Labour party that there be an investigation of the whole of the proposed legislation and that a committee be appointed to conduct that investigation? If it did that, it would be following a course adopted in many of the grave industrial disputes that have occurred in this country. The Australian Labour party has often been attacked by members of the Government in relation to industrial disputes. They say to the Opposition, in effect, “ If you believe in conciliation, why do you not practise it ? “ I suggest to the Government that here is a splendid opportunity to demonstrate to the people of Australia that it is prepared to examine the whole question of banking in an endeavour to make the Commonwealth Bank organization the best that can be devised. I believe that honorable senators on the Government side would agree that the Commonwealth Bank should not be subservient to the trading banks. The time has long since passed when the private trading banks had a right to dictate to the Commonwealth Bank what its policy should be. The policy of that bank should be determined by the Parliament, regardless of what political party occupies the treasury bench.
Honorable senators will no doubt remember the general election which resulted in the defeat of the Scullin Government. That Government’s downfall was due to the withdrawal of the financial resources of this country by the supporters of other political parties. I can remember huge hoardings, 20 ft. or 30 ft. wide, which were erected throughout Victoria to warn the people of what would happen if the Scullin Government were re-elected. One of those hoardings depicted a woman at a washtub being advised that she should not vote for the Scullin Government because it would confiscate her life’s savings. When the Scullin Government was victorious at the elections unemployment was rife. According to the census figures, there were 485,000 men and women out of employment. It may well be understood that the electors at that time required jobs and money. There was no question then of shortage of labour. A shortage of work was the great problem. Neither was there a shortage of housing, such as there is to-day. Australia is fortunate in being a primary-producing country, and in having the markets of the world at its disposal. Europe has been devastated by war, and even in the eastern countries to-day the people are not able to obtain the thimbleful of rice which was their lot prior to World War II. Australia has been shipping to the eastern countries rice grown in this country. It is sending overseas as much wool as any other country in the world, and the same may bo said of ite wheat exports. This is a wonderful country, and something should be done in an effort to safeguard ite financial interests.
The people of this country have a right to the basic requirements of food, clothing and shelter. The homes being built to-day are altogether different from those that were built when 1 was going to school. To-day decent homes are being erected in the suburbs of Melbourne and slums are being demolished. Schools are being, built. There are technical schools and universities which have been opened to a large number of people who at one time would not have been able to afford to pay 3d. or 6d. a week for their children to attend the State schools. As a member of I lie reconstruction and rehabilitation training scheme in Victoria, I came iu contact with young men who had been the victims of the depression and had been denied the right to learn a trade and, in some cases, to elementary education. That scheme opened universities to some of those young men, who otherwise would never have had an opportunity to attend such institutions. It i3 worthy of mention that in Melbourne the highest percentage of passes was obtained by those students who studied under the rehabilitation scheme. The members of the Australian Labour party desire to see that future generations of Australians shall be provided with better opportunities than were available in past years. [Extension of time granted.] I believe that all political parties in this country agree that there is a need to improve our social services system and that the differences of opinion between them relates only to questions of degree. The Labour party believes that certain things should be done, and the anti-Labour parties, while agreeing that those things should be done, say that they should be done later or by means other than those suggested by the Labour party. Throughout the whole of the civilized world, a general improvement of economic conditions is in progress. We in Australia are faced with a problem greater than that which confronts any other white race in the world, and it is useless to shut our eyes to that fact. We must do everything possible to protect our civilization. Unless the financial policy of this country, and consequently our entire economic system, is based upon a safe and permanent foundation, we shall be unable to improve the social services that our people enjoy at the present time.
I believe that honorable senators opposite agree with the propositions that have been put forward by the Labour party, but, like us, they must accept the decision of the majority in their parties. The members of the Senate represent millions of voters in the six States of the Commonwealth, and I believe that we should be able to rise above petty party intrigues and, by using the brains with which we have been endowed, evolve a scheme that will safeguard not only the Commonwealth Bank but also the whole of the economic resources of this country, of which we are justly proud.
– Senator Katz is one of the elder members of the Senate, and honorable senators on this side of the Senate chamber know that when he speaks, he does so with sincerity. I was impressed by his concluding remarks. He suggested that honorable senators on this side of the chamber should co-operate with members of the Opposition on the select committee that it is proposed should be established to consider this bill. I do not deny that we could make some contribution to the solution of any problem connected with banking in this country, but I view with suspicion the suggestion that a select committee be appointed. The Opposition’s objective is to avoid giving a 1 decision on this measure, which is anathema to it. The suggestion that a select committee be appointed is a face-saving device. Therefore, members of the Opposition cannot expect honorable senators on this side of the chamber to co-operate with them on the committee.
This bill is concerned with two acts of Parliament - the Commonwealth Bank Act 1945 and the Banking Act 1947. Although a great deal of attention has been focused upon the Commonwealth Bank Act 1945, the crucial clause of the bill is clause 3, which reads as follows : -
The Banking Act 1947 is repealed.
I remember that when a bill similar to the one that we are now discussing was before this chamber, the AttorneyGeneral (Senator Spicer) referred to the Banking Act 1947 as a shocking piece of legislation. I entirely agree with that remark.
– It is dead now.
– The Labour party would have us believe that the Banking Act 1947 is dead, but that argument is being used only as a smokescreen. While the objective of the Labour party is the nationalization of the means of production, distribution and exchange, honorable senators opposite cannot get away with their story that, as far as they are concerned, the nationalization of banking is dead. It is the very keystone of the policy of the Labour party. It is useless for the Opposition to say that the nationalization of banking, as a political issue is past and forgotten, because it is not. The history of the Banking Act 1947 is interesting. In 1945 a measure relating to banking was placed upon the statute-book.
– Was there anything wrong with it?
– I do not propose to discuss whether there was anything wrong or right with it. It was placed upon the statute-book. Subsequently, certain provisions of the legislation relating to local government authorities being compelled to bank with the Commonwealth Bank were challenged in the High Court and were declared to be invalid. After the announcement of the High Court’s decision, Mr. Chifley, notwithstanding that the Labour party did not have a mandate from the people of Australia to nationalize banking in this country, introduced the Banking Bill 1947 into the Parliament. It is probable that that measure aroused more public interest than any other measure. The process of the law eventually proved that certain provisions of the 1947 legislation did not comply with the Constitution, and, therefore, that legislation has remained in suspension. But it is still on the statutebook, and we know that should a Labour government be returned to power at a future date, it would have no hesitation in re-introducing this issue.
– Only by a referendum.
– Bank nationalization has never been departed from by Labour. Undoubtedly, it is the most important part of Labour’s policy of socialization. It is freely acknowledged by leading socialists in all parts of the world that the first step towards socialization is the nationalization of banks.
– Is that why the Bank of England was nationalized?
– I shall quote a familiar story in relation to Lenin, an undoubted socialist. When addressing a congress in 1917, he said -
We are all agreed that the fundamental first step in this direction must Ire such measures as the nationalization of the banks. We cannot at first nationalize the small consumers’ concerns - that is, those with one or two employees - nor can we at once place them under a real workers’ control. But the role of these small men can be made small to vanishing point, and through nationalization of banks, they can be tied hand and foot.
– Where did the honorable senator read that?
– It is sufficient for me to .say that I have read it. The Government parties know where they stand in relation to the present banking system. We fully subscribe to the principle of a central bank. It has been suggested from time to time that we are out to undermine the authority of the Commonwealth Bank.
– Why does the Government seek to change the present method of control of the Commonwealth Bank?
– We recognize that the Commonwealth Bank is a great institution, and one that we should preserve with all of the strength at our command. We believe that the operation of the Commonwealth Bank as a central bank in competition with the private trading banks, is an ideal system of banking in this country. I point out that I have had some experience of the banking facilities in Australia. In the course of my business I have had dealings with both the Commonwealth Bank and the private banks. It appears to me to be the height of folly for a government to abolish a banking system that has proved satisfactory for so long.
– That is out of the picture now.
– I am entitled to speak about that aspect of the matter, because we are making provision for the repeal of the 1947 banking legislation. At the last general election, the people of Australia endorsed the present system of banking in this country. I cannot understand why the Australian Labour party should consider it an advantage to eliminate private banking institutions, which have rendered great service to this community.
– They have made huge profits, too.
– I shall not deal further with that aspect of the matter at present. During the debate, honorable senators opposite have referred continually to the depression of the thirties. I recognize perfectly well that there was a depression. In fact, as a primary producer, I was one of many people who suffered severely at that time. All primary producers went through the mill, and received only very low prices for their products. We know, of course, that every member of the community was suffering in some degree.
– Was the honorable senator in the hands of the banks?
– At that time, the banks showed me great consideration.
– The honorable senator was very fortunate.
– Every person who placed his cards fairly and squarely on the table received just treatment by the private banks at that time.
– The honorable senator does not appear to know much about the subject.
– I know sufficient about it to enable me to prove my .words. Some honorable senators opposite have stated that the depression was wholly attributable to the heinous conduct of the private banking system. I am quite prepared to acknowledge that mistakes may have been made at that time, but our knowledge of banking has since improved immeasurably.
– We learned in a hard school.
– I agree with Senator Large, but point out that knowledge gained in the hard school of experience is the most valuable. I am not prepared to say that at times the measures that were taken were not wrong. It must be remembered that the whole world was affected by the depression.
– Because of international capitalism.
– I am not prepared to follow Senator Nash into the realms of international capitalism, because he invariably becomes confused about his theories. Many things have been ascribed to the depression. The fact is that we all passed through the depression, and we sincerely hope that nothing of the kind will ever occur again. Whether or not the proper remedies were applied at the time, Australia was one of the first countries in the world to emerge from the depression. One of the factors that contributed to the depression was the extremely low prices, received for our exports, a fact which resulted in the drying up of Australia’s London funds.
A good deal has been 3aid during this debate about the proposal of the Labour Government during the depression to make a fiduciary issue of currency to the value of £18,000,000. It has been claimed that, had the issue been made, it would have lifted Australia out of the depression.
– It would have, too.
– It might have helped. I agree with Senator Willesee that our national finances are at present being conducted on much the same principle as that upon which a fiduciary note issue would have been based. My father, who was a Liberal member of Parliament in South Australia, was a very keen supporter of the fiduciary notes proposal. However, there was an acute fear in the minds of the people that inflation would result from the issue of fiduciary currency. There was fear of the unknown, and the Commonwealth Bank Board of the day could not see its way to agree to the proposal.
In any case, nothing is to be gained by trying to lay the blame upon any one section or group. We know that we all suffered during the depression, and we know that it was attributable to many causes. While we have the Commonwealth Bank acting as a central bank, and working in close collaboration with the private banks, we should be able to avoid another depression. I sincerely hope that we shall.
I take exception to the remarks of some honorable senators opposite in support of their theory that this bill represents a’ pay-off to the private banks. That is a gross misrepresentation. I have met many bank, officers, and found them to be reputable gentlemen. They certainly do not deserve to be slandered in the way that some honorable senators have slandered them.
– They were fed with propaganda by the Liberal party machine.
– Nothing of the kind happened. The employees of the private banks are able to think for themselves. They are intelligent people, and they recognized the menace of the Labour Government’s proposals for the nationalization of banking. We do not deny that they assisted us during the last election campaign. They did so because they were opposed to tha nationalization of banking. They were within their rights in making known to the people the dangers inherent in the Labour Government’s proposal. What right have honorable senators opposite to challenge the sincerity of the bank officers-, and to refer to them in defamatory terms?
During the election campaign, the leaders of the anti-Labour parties made it clear that, if they were returned to power, the Banking Act of 1945 would be reviewed. That legislation was the outcome of an agreement entered into between the Commonwealth Bank and the private banks while the Fadden Government of 1941 was in office. The act worked well during the war, and has been of benefit to the community. Under it, the Commonwealth Bank functioned as a central bank. It controlled the credit policy of the country, and the advances policy of the trading banks, and it still does so. That was not the point at issue when we said that we would review the Banking Act of 1945. By that statement it was meant that the Commonwealth Bank would be placed under the control of a board, instead of being under the control of a governor, or of the Government. The present bill proposes to reconstitute the Commonwealth Bank Board, which will be a panel of men of proved knowledge and experience whose duty it will be to control the policy of the bank. Under the Banking Act of 1945, the political head of the Treasury might conceivably disagree with the Governor of the bank and override his decision, but no Treasurer would lightly sweep aside a policy laid down by a board of tried and experienced men.
– So that is the reason for the change. Now the secret is out.
– That was made clear in the policy speech of the leaders of the anti-Labour parties. If a serious dispute over policy should occur between the Treasurer and the board, the matter will, under this legislation, be referred to the Parliament, but there is no such requirement in the 1945 legislation.
– Any decision by the Treasurer can be challenged in the Parliament at any time.
– Yes, if the Parliament finds out about it. In simple terms, the choice lies between board control and one-man control of the Commonwealth Bank. It is a straightforward problem. My own common sense demands that I should support board control in preference to one-man control. At present, the bank is under the sole control of Dr. Coombs, whose past political leanings are well known.
Opposition senators interjecting,
– There is no need for camouflage.
– The Government intends to sack Dr. Coombs.
– I have not made any such declaration. All I have said is that, at present, the bank is under the control of one man, who, admittedly, is subservient to the Treasurer.
– Then why bring his political opinions into the discussion?
– There is no harm in that. I have not hurt Dr. Coombs in any way. I cannot understand Labour’s opposition to the substitution of board control for control by the Governor. The Government has made known the names of five men whom it intends to appoint to the board. There will be five others, chosen because of their peculiar knowledge of banking. Obviously, with the Commonwealth Bank under the control of a board, the knowledge of banking that will be available to the Treasurer will be far greater than that which can be provided by only one man. For that reason I cannot understand the Opposition’s attitude to this measure. Government enterprises of all kinds are controlled by boards, some of which were appointed by Labour administrations. In various countries where banks are under governmental control, the board system is in operation. The Bank of England, for instance, is controlled by a board. It is futile for the Labour party to claim that the Government’s purpose in restoring board control of the Commonwealth Bank is to undermine the authority and the strength of that institution.
SenatorWard. - That was done by the previous board.
– Nothing could be further from the truth. That is merely a figment of the honorable senator’s imagination.So, the object of this bill is to re-institute board control. The measure provides that, in the event of a difference of opinion between the board and the Treasurer, the Parliament shall be informed. No such provision is made in the 1945 act. Under this bill, Parliament will have the final say.
– What will the Parliament be able to do ?
– It will be able to debate the issue on which a difference of opinion between the Treasurer and the board has arisen. The influence of the Parliament can be brought to bear.
– What guarantee is there that a dispute will ever reach the Parliament ?
– The honorable senator’s common sense should be sufficient guarantee of that. Apart from the clauses relating to the re-institution of board control, this measure is free of controversial provisions. However, the Labour party has set its face against the re-appointment of a board, and I do not think that it is likely to change its attitude, but instead of throwing the bill out, the Opposition proposes to resort to the subterfuge of referring the measure to a select committee, thus shelving it for the time being. We do not know what the terms of reference of the select committee will be but we are suspicious of Labour’s motives and for that reason we condemn the Opposition’s proposed action.
I do not propose to enter into a discussion of the other provisions of the bill. It is sufficient for me to say that the powers of the bank are to be extended rather than curtailed. Various branches of the bank, including the Rural Credits Department, the Mortgage Bank Department, the Industrial Finance Department, and the General Banking Division are to be given increased capital. This Government is quite prepared to extend the powers of the bank so long as it operates in competition with the trading banks. We have no intention to undermine the bank, and the restoration of board control would not do that. On the contrary, it would further the interests of the Commonwealth Bank. I take exception to any suggestion that I should be a party to undermining this great national institution.
– Perhaps the honorable senator would not do it consciously.
– I deny it with all my strength. I believe that the
Commonwealth Bank is a wonderful institution. The Government aims to preserve the integrity of the bank, as is clearly shown in the simple terms of this measure. The Opposition has no chance of convincing the people of this country that the Labour party has forgotten all about bank nationalization. The nationalization of our banking system is still a live issue and the people of Australia are not likely to forget it should a double dissolution arise out of this bill or any other measure. I strongly refute any suggestion that this measure is a pay-off to the private banks. Throughout our history we have sought to strengthen the Commonwealth Bank. Honorable senators opposite have only to read the history of the bank to see for themselves the truth of my words.
I support the bill because I believe that it will strengthen the bank and enable it to play a more prominent part in promoting the welfare of the Australian community. I sincerely believe that a board will be able more effectively to control the affairs of the bank than is possible under the existing system of control by one man in collaboration with the Treasurer of the Commonwealth.
– It is realized by everybody that banking is the most highly organized business in the country. Because the business of banking is so highly organized there is far more misrepresentation in relation to banking than in any other business. For example there is a banking institution called the National Bank of Australasia Limited. It is not a national bank, as its title seems to indicate, but a private bank. Such a trade name is grossly misleading. Similarly the Bank of England is not really a bank of England but a private banking institution.
– The trade name, Australian National Airways Proprietary Limited is another instance of misrepresentation.
– That is so. Bankers capitalize on national names for the purpose of conveying a false impression about the status of the institutions which they control. Many years ago when the proposal to establish a Com monwealth bank was the subject of great controversy, it was said that bankers spoke in a language of their own which wa3 not intended to be understood by the ordinary working man. To-day, the ordinary working man is beginning to know a great deal more about banking than is appreciated by those who control the banks. Private banking institutions ure established not for the purpose of giving service but for the purpose of making profits for their share-holders. If no ‘profit were to be gained from the business of banking, private banks would not be in existence. Profit is the dominant motive for their establishment. It is n mis-statement of the truth to say that the private banks exist for the convenience of the people. They exist solely to prosper the interests of their share-holders.
The theory of banking has been developed on -the assumption that all moneys deposited in a bank will not be withdrawn at any one time. Thus, banks trade in credit. National or governmental banking came into being solely as the result of the failure of the private banks to provide the services which the people required. State banks were established originally because the private banks were not interested in small deposits. Banks sponsored by various State governments were established to meet the needs of the small depositor, and because they do so they are still in existence. Similarly, the Commonwealth Bank came into being because of the disastrous failure of the private banks in 1893. I am old enough to remember what happened then, although I was only a very young boy at the time. I remember that on a Saturday rumours were current that something was about to happen, and that on the following Monday practically all the banks closed their doors and, as a result, thousands of business people were ruined and businesses were disorganized throughout the country. The private banks failed as the result of either bad speculations or incompetent management. From that time onwards representatives of the Labour movement, and other persons who were in no way connected with it, stressed the necessity for the government more and more to control the business of banking. That was one of the reasons why the words “ control of banking “ were written into the constitutional provision setting out the powers of the Commonwealth Parliament and one of the main reason why the Commonwealth Bank was established in 1911. I and many other people recall the carping criticism and misrepresentations that were indulged in by those who opposed Labour’s proposal for the establishment of the bank. The conspicuous success which has been achieved by the Commonwealth Bank is a most eloquent and convincing answer to those who opposed its establishment. To-day, honorable senators opposite and Government supporters in another place voice practically the same criticism of the Commonwealth Bank as did those who opposed its establishment nearly 40 years ago. The Commonwealth and the States entered the field of banking as the result of what I describe, for want of a better term, as the economic necessity of the people. The people demanded greater security and better services than the private banks were willing to provide and State banks came into existence to meet that demand. The same remarks apply to other State instrumentalities, such as the Postal Department, the railways, tramways and other governmental or semi-governmental undertakings, which were all established because of the obvious failure of private enterprise to meet the requirements of the people. .
The two world wars forced into being a more effective co-ordination of banking than had existed in earlier years in both Australia and England. Senator Katz said only a little while ago that immediately after the outbreak of World War I. the English banks practically, closed their doors and the government of the day had to step into the breach and control them so that the war effort would be financed in the interests, not of the private shareholders of the banks, but of the nation. All wars have been capitalized by bankers and monopolists in their own interests.. Even our national debt itself is a form of capitalization of war and of the sacrifices and sufferings of the men who fought, as well as the men who worked, during war-time. The exigencies of the two world wars were such that the governments of the United
Kingdom and Australia were compelled to take control of banking. The Banking Act 1945 was passed by the Commonwealth Parliament to prevent World War II. from being capitalized by the private banks as they had capitalized World War I. when they were allowed a great deal of latitude to make profits for their shareholders. The Curtin Government decided that during World War II. the private banks would not again be given that latitude. Nothing fosters coordination of effort so much as does danger faced in common. Danger faced in common is the strongest bond ,of unity between man and man. When a nation is threatened by an enemy its resources are swiftly co-ordinated in order to meet that danger. Co-ordination of banking has been highly successful not only in Australia but also in England.
World War II. forced into being another bank which was the first of its kind in the history of the world - the International Bank for Reconstruction and Development - from which the Prime Minister (Mr. Menzies) has recently borrowed 100,000,000 dollars on behalf of this country. That world bank, was established at Washington five year,? ago in order to enable its subscriber countries to meet their war-time financial commitments. The establishment of such an institution, and the fact that already 48 countries are shareholders in it, will eventually force the nationalization of banking whether Senator Hannaford likes it or not. If the war in Korea develops into another world war, there will be no alternative for the government of the day, whether it be this Government or another government, to taking full control of banking, in order that it may ensure the no-ordination of services, and the elimination of competition. There can be no competition in time of war. There must be scientific and effective co-ordination of all resources: man-power, materiel, and finance. When it is stated that the 1947 legislation is a shocking measure, I ask the honorable senator to study the background of that legislation in order to see why it was necessary. The Cabinet of that time gave the most serious consideration to the banking position in this country, and it came to the conclusion that nationalization of banking was as necessary in the post-war period as it had been during the war period. If this country is to establish and maintain a better and more equitable working economy than it has possessed in the past, if it wishes to avoid crises, and to control its capital expenditure ‘ as it should be controlled, so that millions of pounds will not be spent on non-essential production and services while essential production and services are starved, there can be no alternative, under existing conditions, to the Government’s assuming full and complete control over banking. There cannot be several boards of directors of private banks formulating banking policy and defying the Government, as they have done in the past. “When they did not defy the Government, they laid down terms upon which the Government should borrow money in order to finance the prosecution of a war, or the payment of social services benefits. Those boards of directors, like so-called Liberal governments, are interested not so much in rendering services to the public as in making profits. On the other hand, a Labour Government is interested in rendering services that are required by the people, rather than in making profits for shareholders, most of whom do not render any useful service in return for the dividends they receive.
– A Labour government must adopt the same banking practices over the years, though.
– The private banks are influenced by the profit motive, rather than by any motive to provide service.
– Is not the Commonwealth Bank also influenced by the profit motive?
– “With the present Government in control, yes.
– The difference is that the profits made by the Commonwealth Bank are used in the interests of the people. The transcontinental railway line was financed entirely by the Commonwealth Bank, and the people of this country are not under any obligation to pay one penny in interest or principal.
To-day, we are passing through extremely difficult and dangerous times.
We are in the midst of what is known as an inflationary period, which is generally followed by a deflationary period. If that happens, the results will be disastrous. At the moment, the United States of America is passing through a highly inflationary period, similar to that which obtains in this country. According to the American correspondent of the Melbourne Sun, the following prices are being charged in the United States of America to-day for essential commodities: - Butter that cost 4s. lOd. per lb. in 1946 is now 6s. 9d. ; coffee which was then 3s. per lb. is now 8s. 3d. ; milk, then lid. a quart, is now ls. 6d. ; pork, then 3s. 3d. per lb., is now 5s. 8d. ; and sirloin steak, once 4s. 3d. per lb., is now 9s. 9d. Those high prices are due to inflation.
– The honorable senator therefore admits that there are worse inflationary conditions than those being experienced in Australia ?
– That is exactly the point I wish to stress. I do not desire to score political points, but I urge the Government to take a much more serious view of the economic state of affairs in this country to-day. Unless it does so, the members of the Government will find that the Australian people will be compelled to pay the same prices as those I have just referred to. The United States of America is the wealthiest and the most highly industrialized country in the world, and it should be in a position to produce commodities at a much cheaper rate than is possible in Australia. The impact of the last war forced the United States of America to mechanize its industries on a far greater scale than in pre-war days. In order that honorable senators may learn how the Government of that country has been penalized because of manipulation of the currency by the private banks, I quote the following passage from the Melbourne Sun: -
Inflation is hurting not only the family. Six months ago a bill was sent to Congress for allocation of funds to buy 4,500 fighter planes. By the time Congress got around to passing the legislation, inflation had taken 750 of the planes. The money that a few months before would have bought 4,500 fighters now bought only 3,750.
That article gives some idea of the extent to which control of private banking may be directed against a powerful government such as that of the United States of America. That government’s control over banking is negligible compared with the control the Australian Government exercised under the 1945 legislation. If the Korean war continues, the United States of America Government will be -compelled to take most drastic action against the banks in order that the nation may survive and succeed in that war. The driving forces of war will compel the Government to take that course.
To quote further from the newspaper report to which I have already referred, I instance the case of a postman of New York, with a wife and two children, earning a salary of £25 a week. It is stated that he cannot live as well now as he did when he received only £19 a week. A bachelor of science, who receives £21 a week, pays £6 a week for a one-bedroom “flat, which is the cheapest he is able to obtain. Those are the conditions which obtain in a country possessing practically unlimited natural resources, It is, perhaps, the most self-contained country in the world. Further evidence of the inflationary state of affairs in the United “States of America is found in the statement .that shoes for a ten months old baby cost £3 a pair; that a baby’s suit -costs £8; and a piece of steak in a restaurant costs 30s. The article proceeds -
The banks are reporting a heavy cash-in of -savings bonds. None of this speaks of true prosperity.
Apparently the technique is to increase prices to such a high level that the workers ;are forced to liquidate their savings and sell their bonds, so that the banks may tuy them back at lower rates. There is nothing new in that technique. The f nal paragraph of the article states -
Meanwhile, the families of America, high and low, are remembering those days in 1946 when -they said, “No, sir, things can’t go on like this. Prices will have to stop rising. It just can’t go on “. They were right. Things -were certainly bad back in 1940, but they are worse to-day. Fifty per cent, worse.
What can be said of the United States of America can also be said of Australia at the present time.
– And also of Denmark and England, or, for that matter, of the world.
– Not of the world. Everything in this world depends on management. Where there is incompetence and fraudulent management, there are results similar to those I have indicated. In Australia to-day, there is incompetent and fraudulent management, which accounts for prices increasing in an entirely unwarranted manner. Those high prices represent fraudulent charges on the incomes of the lower wage groups and of the pensioners. As Senator McKenna has stated, it is the same as having a thief in each house. It is an invisible thief, which works through the medium of the press and the broadcasting stations. It creates false ideas concerning the necessity for increasing prices. Economists, accountants and business men are all in the conspiracy to increase prices to the very limit. This Government does not propose to do anything in order to apprehend that thief, although it has been warned by men of high educational qualifications of the necessity for doing so.
The Government has sought the advice of many competent men, but it has done nothing. Unless something is done, the position that has developed in the United States of America will also develop here in Australia.” Much, of course, will depend upon the resistance of the workers to the economic conditions that obtain at the present moment. They are resisting at the moment, and the women are resisting also by boycotting the shops. But that kind of thing should not be necessary. A government that has been elected to control the affairs of the nation should make at least an attempt to do something. It is far better to attempt to do something and fail than to make no attempt at all.
We are passing through a very dangerous and difficult period. The cause of the troubles from which we are suffering is, in broad and general terms, the issue of notes or credit far in excess of the value of goods produced. Inflation is an expedient that is generally adopted in war-time, when man-power and materials are in short supply. It is on all fours with the action of the forger who utters notes that are accepted as genuine notes. For those notes, he receives goods. The notes create a demand for goods, and that demand is responsible for high prices. Ultimately he can, at those high prices, sell the goods that he bought at low prices and recover practically all of the notes that he issued, and make a profit of from 25 to 50 per cent, in the form, not of paper but of intrinsic wealth. That is the modus operandi of .the banks at the moment.
All inflationary periods similar to the one through which Australia and America are now passing are followed by deflationary periods, when markets become glutted and prices fall. When prices fall, factories and workshops close, and thousands of small business men who are unable to pay their debts become insolvent. In a deflationary period, creditor interests reap a veritable harvest as a result of the crisis caused first by inflation and then by deflation. The inflationary period in this country after the 1914-18 war was followed by the deflationary period that culminated in the crisis of the 1930’s, when workshops closed, and when wool was sold overseas for Sd. per lb. and wheat for 2s. 4d. a bushel. There was a complete collapse. Deflation is a technique adopted by creditors to enable them to reap a harvest in the form of profits at the expense of the ruin of thousands of - small business men and primary producers and of the millions of unemployed workers. That is the state of affairs with which we are confronted to-day, and it should receive more intelligent consideration than it is receiving from this Government. Periods of deflation are followed - by periods of re-inflation. In this country, the deflationary period of the 1930’s was followed by the re-inflationary period from 1939 until now. A study of the way in which the currency of a nation is managed reveals that there is more in currency manipulation than appears on the surface, and a great deal more than the bankers would have us believe. That problem has been studied by the Labour movement for years and that it why we are insistent that a Commonwealth Bank Board shall not be re-established.
Before I deal with the Commonwealth Bank Board, I wish to say a little more about the deflationary period of the 1930’s. It began in America on the 18th May, 1920, when the Federal Reserve Board of the Federal Advisory Council and the directors of the class “ A “ banks decided, at a secret meeting held in Washington, to deflate the American currency. According to reports, the reasons given for that action were that wages were too high and primary producers too prosperous. America was then, as it is now, the leading creditor nation of the world. As a result of the deflation of the American currency in 1920, ultimately there were approximately 13,000,000 persons unemployed in the United States of America and nearly 8,000,000 in Britain. The deflation that began in America in 1920 extended to England in approximately 1924 and to Australia in approximately 1829. Ultimately it caused what was termed a world-wide crisis.
– And then it led to war.
– Then it led to war, as it always does. As I explained a few days ago, the meaning of Hitler’s slogan “ Expand or Explode “ was that Germany had to engage in war to capture markets in which to sell its surplus goods or be faced with a revolution. The war in Korea has had a very beneficial effect in America. Last night’s Melbourne Herald contained the headline “Dollar shortage waning”. The dollar shortage is waning because America, owing to it3 war-time commitments, must buy from abroad more than it would need to buy if there were no war. That state of affairs has been referred to as an “ Allied blessing “. Britain, Australia and other countries will earn more dollars because they will be able to sell materials to America to be used for war purposes. If there were no war, there’ would be a scarcity of dollars. War makes it possible for big business to work at full capacity, which it cannot do in times of peace. Big business will never work at full capacity in times of peace unless the people of a country insist upon a reorganization of the internal economy of their country to ensure that in time of peace there will not be unemployment, shortages of dollars, mountains of consumable goods rotting in Kansas, Texas and other places, and millions of unemployed roaming the streets looking for work. The fundamental contradiction of the capitalist economy under which we live is increasing poverty in the midst of plenty in times of peace. In the 1930’s nearly 500,000 workers were unemployed in this country, while mountains of wheat were being eaten by weevils, factories were idle and the governments of the day were either grossly incompetent or callously indifferent to the suffering of the people. The conditions of those days have, so to speak, burned themselves into the very soul of the Labour movement. We shall never forget them.
– Is that the record of the Seullin Government?
– If the Opposition had given the Scullin Government the co-operation that it could easily have given when a modest request was made in relation to a fiduciary note issue, the position in Australia would not have been as bad as it was. In those days men like Senator Wright sat in this chamber. They were quite complacent, and it did not matter to them who starved as long as they were well fed. I remember that in 1939 Senator Keane and myself appealed to the present Minister for Fuel, Shipping and Transport (Senator McLeay) to give the unemployed something extra for Christmas, but we might just .as well have appealed to a wooden god, because, although the money and food needed to help the unemployed were in Australia, the government of that day did not attempt to do anything for them. But when war broke out and the men who were dispensable and could bc ignored became, almost overnight, indispensable and could not be ignored, money was found to feed, clothe and bouse them and their children far better than they had been fed, clothed or housed previously. That proves that the exigencies of war or developing economic conditions arp powerful factors in causing intelligent ideas to penetrate thick heads.
The question that is being asked to-dar is : Are we to allow history to repeat itself 5 I direct that question to the Government, which, with its background of experience, cannot plead ignorance as an excuse for inaction. Are we to allow something similar to or worse than what happened in the 1930’s to happen in the near future? That is a question that the people of this country, who are paying unwarranted high prices for goods, expect the Government to answer. Is the Government going to leave it to the people themselves to try to find some way out of the difficulty? Is it going to say to the people, “You will have to put up with present conditions as best you can ; they are inevitable “ ? Or is the Government going to make, as we suggest it should, a far more intelligent approach to the problem than a proposal to establish a Commonwealth Bank Board?
I emphasize again that there are three periods - inflation, deflation and reinflation. If inflation is profitable for the bankers, we have inflation. If deflation is profitable for them, we have deflation. If re-inflation is profitable for them, we have re-inflation. That happens because we allow, not the Government but private bankers to control the finances of this country. I submit that if the proposed Commonwealth Bank Board is established the Government will do even worse in the handling of the financial affairs of this country than it has done since its election to office. The proposed board will comprise ten members, seven of whom have not yet been named., Although honorable senators on this side of the chamber have inquired a number of times about the proposed appointees, their questions have not been answered. I have before me Thi Crisis in Australian Finance 1929-31. by Professor Shann “ and Professor Copland, which contains full information about the financial depression, including a letter that was addressed by the late Sir Robert Gibson, then chairman of the Commonwealth Bank Board, to the late Mr. E. G. Theodore, the then Federal Treasurer, on the 13th February, 1931. The pertinent part of the letter reads -
I am requested by my board to convey to you a resolution of the board as set forth hereunder: -
Subject to adequate and equitable reductions in all wages, salaries, and allowances, pensions, social benefits of all kinds, interest and other factors which affect the cost of living, the Commonwealth Bank Board will actively co-operate with the trading banks and the Governments of Australia in sustaining industry and restoring employment.
There we have an example of a subordinate body dictating to the government of the country. In effect, the bank board told the Government that it would not help in the slightest degree unless certain reductions were effected. Of course, a reduction of interest is not a reduction at all, because when interest rates are reduced, the purchasing power of money is increased correspondingly. The specific requirement to reduce interest rates was a deliberate attempt to misrepresent the position to the people of this country. Reductions of wages and salaries are real reductions. In days gone by, when the purchasing value of the £1 was 20s., 2 per cent, interest was equivalent to 6 per cent, interest now, when the purchasing value of the £1 is only about 6s. 8d. That is another contradiction that should be watched in connexion with the subject of banking.
The Prime Minister stated in his policy speech that a bank board comprising experienced and independent men would be established. I point out that to date experienced men have not been able to do anything constructive for the present Government, as prices are still increasing. It does not necessarily follow that an independent man knows what he is doing. Possibly an independent man would be ignorant of banking procedure. If I were asked to compare bank managers with average businessmen from the point of banking knowledge, I should probably place them in the classification of glorified bookkeepers, because many bank managers know little about economics, and draw no distinction between economics and finance. Furthermore, they are almost devoid of ethics. During the depression, although the members of the then Commonwealth Bank Board knew that thousands of their own kith and kin were living in a state of semi-starvation they did nothing to ameliorate the position. Even the worst of the aborigines would not leave unfortunate members of their tribes to starve. Senator Hannaford has referred to Dr. Coombs’s politics.
– The honorable senator said that the Government knew what Dr, Coombs’s politics were, or used to be.
– I did not cast aspersions on Dr. Coombs.
– The honorable” senator made a certain implication. I contend that we should confine ourselves to facts. Quite independently of his political beliefs or disbeliefs, the case that a man submits should be examined on its merits. He should not be condemned because of his suspected politics. I consider that it is unbecoming of a member of this chamber to approach this matter in the manner that Senator Hannaford has done. A representative of the people should not be influenced by prejudice. On many occasions during the last 40 years different people have stated that I was this, that, or the other thing merely because I did not conform to the views of the majority. When I accused honorable senators opposite of sufferingfrom “ commo-phobia “ I was not exaggerating the position, because they are influenced more by their fears than by their understanding of the position. In view of the mandate that the present Government accepted, it should display a more intelligent approach to this subject. I contend that the affairs of the Commonwealth Bank are satisfactory. Dr. Coombs depends on an Advisory Council,, which, is comprised of men highly qualified and experienced in banking to advise him about policy. Prom my knowledge of Dr. Coombs, I am convinced that he would confer with that council on all matters of major importance, and, as far as possible, observe the principle of conference and agreement rather than, arbitrary action. I should imagine that Dr. Coombs would confer with his Advisory Council and then send a memorandum to the Treasurer indicating what he was prepared to recommend. Hewould not dictate to the government as did Sir Robert Gibson. It would then, be the responsibility of the Treasurerto bring the matter before the Parliament. I remind honorable senators that during;the ‘thirties Sir Robert Gibson, from? the Bar of this chamber, told honorable senators what he was going to do. He evinced not the slightest concern about what the Government intended to do. I suggest that Dr. Coombs’s position isquite different. For all practical purposes he is adviser to the Treasurer, whois responsible to Cabinet, which in turn, is responsible to the Government, and the Government is responsible to thepeople. I suggest to Senator Hannaford that whenever he is expressing an opinions about a very prominent public servant, it. man who has given valuable service to this country both before and during the war, he should judge him on facts. He must not be influenced by what he believes to be the man’s political or religious beliefs. The Opposition has proposed that this matter should be referred to a select committee. As I have already stated, the 1945 legislation is operating satisfactorily. In view of the dangerous position with which we are faced, the necessity to prevent happening here what has happened in the United States of America, and to prepare the way in case we should become involved in another world war, the Government should seriously consider the suggestions that I have advanced.
– Order ! The honorable senator’s time has expired.
Motion (by Senator Ryan) put -
That Senator Cameron be granted an extension of time for 30 minutes.
The Senate divided. (The President - Senator the Hon. Gordon Brown.)
AYES: 27
NOES: 21
Majority 6
AYES
NOES
Question so resolved in the affirmative.
Sitting suspended from 6 to 8 p.m.
Leave granted ; debate adjourned.
page 2042
– by leave - As honorable senators are aware, the Prime Minister (Mr. Menzies) had intended sometime to-day, to make a statement in the House of Representatives about Korea. However, as the Security Council of the United Nations is now meeting to consider the Korean situation it would be unwise for the Prime Minister of this country, which is a member of the United Nations, to make such a statement at this juncture. Therefore, the Prime Minister will make his statement when the decision of the Security Council has been announced, and I shall immediately make a similar statement in this chamber.
– When?
– That will depend on how long the meeting of the Security Council lasts. The Leader of the Opposition (Senator Ashley) has interviewed me about this matter, and I have given him an assurance that as soon as the Prime Minister makes his statement in the House of Representatives I shall make an identical statement in the Senate.
page 2042
Debate resumed.
– Before the suspension of the sitting, I was about to refer to the 100,000,000 dollar loan obtained by the Prime Minister (Mr. Menzies) on the 22nd August from the International Bank for Reconstruction and Development. The equivalent of that loan in Australian currency is approximately £44,653,000. Therefore we shall be paying the bank more than 10s. for each dollar. In America, the dollar has a purchasing power of approximately 2s., whereas in this country it has a purchasing power of more than 10s. That illustrates the degree to which the loan is loaded against Australia in terms of goods. That is the sort of thing that a select committee could investigate. According to the Sydney Daily Telegraph of the 12th
October, since the Prime Minister obtained the dollar loan, its value has been cut down by 15 per cent, by rising prices in the United States of America. A report published in the Daily Telegraph states -
page 2043
New York, Wed. - An alarming inflationary spiral has cut the purchasing power of the United States dollar by nearly half since 1939.
Compared with 1939 the dollar is worth only 57 cents.
One effect of this inflationary spiral is to reduce the value of Australia’s dollar loan from 100,000,000 dollars ( £A.44,652,857 ) by about 15 per cent.
Therefore, the £44,653,000 has already been reduced by 15 per cent. Prices are still rising, and if they continue to rise, the 100,000,000 dollar loan will eventually be worth very little indeed. Therefore, there is an outstanding need for a select committee to inquire into financial matters. Great Britain had a similar experience shortly after that country obtained a loan of 3,750,000,000 dollars or £937,500,000 sterling from the Export and Import Bank of America, a private institution. Shortly after the loan was granted, its value, in terms of commodities required urgently in Great Britain, was reduced by at least 25 per cent, as the result of the increase of prices in the United States of America. That is the sort of thing that is going on. Every dollar loan is loaded against Australia. The Prime Minister and his colleagues are supposed to be business men, yet they tolerate such injustices without protest. So far as I am aware, there is no escape clause in the terms of the 100,000,000 dollar loan to this country. We shall finish up by being hopelessly in debt to the United States of America, and to private financial institutions at that, because most of the capital of the International Bank for Reconstruction and Development has been privately subscribed. The position to-day is desperate. Inflation in this country has reached serious proportions, but the Government is not doing anything about it, and the need for a select committee to do the job that the Government has failed to do is beyond all question. It is the duty of the Opposition to draw attention to these matters and to insist, to the best of its ability, that a more intelligent approach be made to the administration of our finances in the interests of the people of this country. I believe that all loans should be based on the principle of value for value. That is the only sound principle of finance. Neglect of that principle virtually amounts to fraud. It is time the Government did something about this matter.
I propose now to summarize the points that I have made. First, I emphasize that the private banks are operated for the benefit of private shareholders, whereas government banks are operated for the benefit of the people. The profits of the private banks go to the private shareholders, but the profits of the Commonwealth Bank and of State banks are used for the benefit of the people generally. Therefore, there is a good case for the nationalization of banking.
– I say that it is. absolutely necessary. Just as it was necessary to establish the Commonwealth Bank in 1911 to do a job that the private banks had failed to do, so it will be necessary to nationalize banking in this country, particularly if we become involved in another world war. We could not and should not allow the directors of private banks to dictate financial policy to the Australian Government. The duty of the Government is to govern. If it is not prepared to govern and to honour its obligations and meet its responsibilities, the duty of the Opposition is to challenge the Government. We are not here merely to draw our parliamentary allowances and to permit things to drift from bad to worse. If the Government were attempting to do something constructive, it would be a different matter; but, so far it has spent all its time thinking out alibis and excuses for its inactivity in spite of its promise, made both before and after the elections, to put value back into the £1. Nothing can be done that will be of any real use unless the National Government has control of the nation’s banking system to a far greater degree than is provided for even in the 1945 legislation. Banking must be. controlled to ensure that capital expenditure will be used to expand production and extend essential services, rather than to produce luxury goods, and provide non-essential services. That is part of the duty of a government bank. Private banks are concerned only with making profits, and if more profits can be made out of the production of luxury goods and the perpetuation of slums, then that will be the policy of the private banks. That has been going on over the years. The profit motive has always dominated the private banks. Should the war situation become worse, much more attention will have to be given to the service motive.
The ordinary economic cycle has three distinct phases. First, there is a period of inflation, such as that with which we are now faced. This will be followed by a deflationary period, the effects of which may be even worse than those of the depression of the early 1930’s. Ultimately, after the damage has been done and workshops have been closed and hundreds of thousands of working people have been reduced to the border-line of necessity, we shall have a re-inflationary period. That is the process that has gone on in the past, and economic crises have occurred approximately every ten years. The time has come for a re-organization of our economy.
– The honorable senator is rather gloomy to-night!
– I feel keenly on this matter, particularly when I find that honorable senators opposite are completely indifferent and even callous. Apparently, they have never tried to see the other fellow’s point of view. I ask Government supporters to put themselves in the places of pensioners or basic wage workers, and to consider how much they would then be able to buy with their greatly reduced purchasing power.
– Does the honorable senator’s conscience not trouble him when he recalls that the financial drift started during the regime of the Chifley Government?
– The Labour party has been resisting the wrongs of our present economic and financial system for many decades. I am here as a result of that resistance. In every State of the Commonwealth, my colleagues and I have spoken to the people of this country from public platforms and have told them exactly what to expect. We ask honorable senators opposite to agree to the appointment of a select committee so that the subject of banking can be thoroughly inquired into as quickly as possible. If such a select committee iB appointed and makes a recommendation the Government will have to accept responsibility for accepting or rejecting it. The Opposition, in the performance of its duty to the electors insists on the appointment of a select committee to’ consider how banking can best be managed and how the credit of the country can best be controlled. After all banking is merely trading in credit. The banks accept deposits at the lowest rate of interest and issue loans at the highest rate of interest.
– The honorable senator should read the report of the Royal Commission on Monetary and Banking Systems.
– I have done bo: I do not think that the honorable senator himself has read it.
– I have read it.
– This afternoon I urged honorable senators to read the findings of the Royal Commission on Monetary and Banking Systems which inquired into the subject in Australia in 1926 and the royal commission established in Great Britain in 1931 known as the Macmillan Commission. If Senator Maher had read the findings of those two commissions he would not have made the sort of silly interjections he has been making to-night.
Senator Maher interjecting,
– Order ! Senator Maher will have an opportunity to take part in the debate later.
– Intellectually, most of the supporters of the Government are simply living from day to day. They have not delved as deeply into this subject as they should have done. There are many excellent books on banking in the library which they would do well to read. I refer, in particular, to Economic Tribulations, written by a former Governor of the Bank of England, which contains an exposure of the whole system of banking in England. What the author has said in relation to banking in England is equally true of banking in Australia. A whole field of information on this subject is available to honorable senators opposite. They should be prepared to avail themselves of it and endeavour to improve their knowledge. The slogan “ All things yield to pressure “ keeps running through my mind, for where there is no pressure there is no result. The Opposition will exert on the Government all the pressure of which it is capable in an attempt to improve this measure.
– It is noteworthy that several weeks ago when we were discussing a bill which was exactly similar to the measure now before us, Senator McKenna said -
We can dispose of this bill in a few moments.
Within a few momenta the Opposition used its brave majority to dispose of that measure and have it returned to the House of Representatives. No mention was then made of the appointment of a select committee to study the ramifications of banking. The Opposition has chosen to adopt a different attitude to this identical bill. Instead of endeavouring to pass it with expedition, honorable senators opposite have used every device to stone-wall it. We have listened ad nauseam to specious arguments and longwinded speeches. Extensions of time have been granted. For what purpose were they granted?
– In order to educate the honorable senator.
– I am afraid that the pearls of wisdom which honorable senators opposite have cast before us have done nothing to educate us. Opposition senators have frequently asked me how I, a farmer, could know anything about banking. When I look at some of them I think that, as a farmer, I would not breed beasts like them. I would not object to the time that has been spent in the discussion of this measure if honorable senators opposite would only make up their minds about it. Unfortunately, their inability to make up their minds about important legislation is becoming a habit. Only a little while ago we had a classic example of their shillyshallying in relation to another measure until the twelve real masters of the Australian Labour party had made up their minds for them.
– The uncrowned kings of Australia!
– Notwithstanding that honorable senators opposite had opposed the measure for months they meekly did the bidding of their masters. They are in a similar position in respect of the measure now before us. The 34 Opposition senators, blessed with brains and ability-
Opposition Senators. - Hear, hear I
– They refuse to utilize their talents and cravenly wait for their masters to make up their minds for them. They remind me of a team of horses walking up and down a fence looking over into an adjoining paddock unable to make up their minds whether to jump the fence or stay where they are. Honorable senators opposite are waiting until their masters yoke them up and tell them what to do.
This bill is designed inter aiia to repeal the Banking Act 1947. On the broad principles of banking and banking practice there is a great difference of opinion between the Opposition and the Government. Indeed the general election of last December was fought largely on that issue. The electors knew the respective banking policies of the Labour and antiLabour parties and they made their choice and indicated it in no uncertain way, but the so-called democrats who sit in Opposition in this Parliament are not prepared to abide by their decision and yet are fearful of testing public feeling on the subject. On the 10th December last every elector in the Commonwealth knew it was the objective of the Australian Labour party to nationalize the private banks. Honorable senators opposite have been perfectly frank about their advocacy of that plank in the platform of their party. I do not quarrel with them on that account. If they believe that the banks should be nationalized they are perfectly entitled to do so. Indeed if they were men of substance they would uphold their view in the face of opposition of any kind. It has been stated repeatedly by Senator Cameron, Senator Grant and other Opposition senators that the nationalization of banking is not a dead issue, and that if the Labour party were given another opportunity to give effect to that policy it would do so.
– I did not say anything of the kind.
– Statements of that kind were cheered to the echo by the Scottish clan among the Opposition, but let the twelve strong and trusted masters of the Australian Labour party merely whisper the words “ bank nationalization “ again and Senator Cameron and Senator Grant and their colleagues would fall over one another in a race to see who could take the first step in the implementation of that policy. Yesterday, I would not have thought more than 26 of them would have been in such a race; to-day I am convinced that all of them would engage in the scramble.
In his policy speech the Leader of the Liberal party, the present Prime Minister (Mr. Menzies), stated that if he were elected to office he would repeal the Banking Act 1947. Clause 3 of this bill, which is one of the most important clauses in the measure, consists only of these six words which read -
The Banking Act 1947 is repealed.
As we all know, it was the objective of the Labour party in that act to nationalize the banks and take control of the banking institutions thus virtually enabling it to become the financial dictator of Australia. Why was the ordinary man in the street so hostile to Labour’s bank nationalization proposals? I do not know of any proposal against which so much hostility was expressed by the ordinary citizen.
– Does not the honorable senator know that the banks could not be nationalized without an alteration to the Constitution? Why does he not stick to the truth?
– Order !
– The man in the street said to the politicians, “ Hands off our savings. We want no member of Parliament, whether he is a Liberal or a Labour member, to tell us what we are to do with our savings “. He knows that his savings represent the reward of his labour and he has said, “ If you touch my money, you touch my labour and in the final analysis you nationalize employment “. People throughout the country who have deposited their savings in the banks, whether those savings be large or small, have said decisively, “We will not have nationalization of banking “. In spite of that, the Opposition is prepared at the first opportunity to proceed with its policy of bank nationalization. Banking is not a function of government. The practice of governments trading and engaging in commercial enterprises is quite foreign to constitutional government and is entirely wrong. The function of the government, as far as banking is concerned, is to ensure that banking institutions render service to their customers. During this debate a great deal has been said about trial and error, and honorable senators opposite have harked back to the bright days and the dark days of the past. I am quite willing to admit that mistakes were made in the past, but no useful purpose can be served by raking over all the dead ashes unless we are prepared to profit from those mistakes. Because of those past errors, I believe that the banking institutions throughout the world have improved. Australia’s banking institutions to-day compare more than favorably with those of any other country. By trial and error, our banking system has been improved by affording protection to the borrower and also to the depositor. The members of the Opposition appear to think that the only person to be considered in any banking system is the borrower.
– That is nonsense!
– I know it is nonsense for members of the Opposition to hold that view. Now that it has been acknowledged to be nonsense, perhaps there will be a change of heart. Irrespective of the bank concerned, the depositor is the person who must receive the greatest consideration, and the protection of his money is the keystone of sound banking, but a bank that wishes to be successful in its operations balances the scales evenly between the depositor and the borrower. That is what the banking institutions have done and are continuing to do for the people of Australia.
Several honorable senators opposite have referred to the depression years. I remind them that during that depression, the banks lent more money than they had ever lent before. Although banks are merely the custodians of the funds deposited with them, during the depression some banks went so far as to lend money beyond the limits of safety. Had prices fallen even 5 per cent, further at that time it would have meant ruin not only for borrowers but also for depositors. The financial disaster that befell this country would have been greatly increased. At that time wheat was being sold at ls. 7d. a bushel. Honorable senators opposite have stated that the banks should have guaranteed 5s. a bushel, but let us compare that statement with their more recent attitude. When the Australian Labour party was in office it was so magnanimous towards the farmers and was so concerned with banking principles, that it offered farmers 6s. a bushel for their wheat when the market price was 18s. I mention that as an instance of contradictory attitudes on the part of members of the Opposition.
– Perhaps the honorable senator might tell us something about the proposed bank board?
– Order! The honorable senator is doing his best and does not require any assistance.
– I do not propose to be led from my line of argument by the red herring that the Opposition has been attempting to drag across the path. The important point of this bill, and the point with which the members of the public are concerned, is that it will enable the Government to repeal the 1947 banking legislation. Honorable senators should not confuse banking principles with credit. Under the existing system, the central bank is charged with responsibility for the distribution and use of credit.
I wish to answer one or two of the criticisms that have been made by honorable senators opposite. We have heard a great deal from Senator Cameron con cerning profits, and one would think, after listening to the honorable senator, that to make a profit is a sin or a crime. A person must make a profit for whatever work he does if he wishes to make progress. It has been stated that employers utilize their employees in order to make profits. That is true. They do so in order to improve the lot of the workers of . the world. If it were not for the making of profits, how could employers improve amenities, install machinery, and effect all the labour-saving devices that are so necessary?
– Does the honorable senator believe that there should not be production for use?
– Never in the history of Australia was there as much need for production as there is to-day. Never did the ordinary man and woman have so great a need of the necessaries of life. Yet the Australian Labour party was so concerned about providing for their needs that it reduced the working hours from 44 to 40 weekly.
– I rise to a point of order. I take exception to the honorable senator’s remark that the Australian Labour party introduced the 40-hour week. I point out that the 40-hour week was introduced after very lengthy consideration by an arbitration tribunal of this country. It was adopted after due and deliberate consideration-
– . Order ! The honorable senator must not make a speech. There is no point of order. I point out to honorable senators that there may hp thousands of people listening to this debate to-night, and I have no doubt that those people are as interested as I am. I wish to hear. Senator Mattner, and I deplore the constant interruptions. The honorable senator may make whatever statements he thinks fit. I have no doubt that he believes that he is speaking the truth. It is the duty of each honorable senator, when his time comes, to rise to his feet and present his point of view. It is not for me to say whether Senator Mattner is right or wrong. I take it he is expressing his point , of view, which he has a perfect right to do, and he has a right to be heard in silence. If an honorable senator takes objection to what Senator Mattner says, he will have an opportunity to say so during his own speech of one hour’s duration, which may be extended by half an hour if the Senate approves. Honorable senators should endeavour to restrain themselves and to listen to what Senator Mattner has to say.
– No employer desires to see unemployment, because it would reduce his profits. I have no doubt that all decent employers are interested in their employees and their welfare, and the sooner honorable senators opposite appreciate that fact, the better it will be for this country. I am heartily tired of constantly hearing the doctrine enunciated that the employee and the employer cannot live amicably together. That is a rotten doctrine, and is one that is doing more harm in this country than anything else. An effort should be made to stimulate better relationships between employers and employees. I support the provisions of this measure, which relate to the establishment of a Commonwealth Bank Board. I believe that control of the Commonwealth Bank by one man is, so to speak, backdoor nationalization. The establishment of a Commonwealth Bank Board is one way of preventing the indirect nationalization of banking in this country. I hope that the men appointed to the board will be men of vision. I have sufficient faith in my fellow Australians to believe that there are men in this country who, if they were appointed to the board, would work in the best interests of the Australian people.
– They did not do so last time.
– That interjection is too stupid for words. The honorable senator knows that what he has said is incorrect. Many persons would be happy to receive from a bank the consideration that he received in connexion with the property that he owned. I do not think the honorable senator can complain about his transactions with banks. I hope that one of the men appointed to the board will have experience of agriculture. We have never yet had to worry about our food supplies in this country, but it is probable, having regard to the natural increase of our population by 106,000 persons a year and the arrival of 250,000 migrants each year, that within five to seven years we shall not be producing enough meat to supply our requirements unless meat production be increased before then. One of the functions of the Commonwealth Bank Board will be to take action to increase food production in this country. There has been much glib talk about how production in the outback areas can be increased, but I do not believe that production in those areas can be increased greatly. It will be the responsibility of the Commonwealth Bank Board to ensure that areas served by good rail and road transport systems will be developed to the greatest possible degree. I believe that the establishment of the board will be in the best interests of the banking system of this country and also of the Commonwealth Bank.
The provisions relating to the establishment of the board are not the vital provisions of the bill. The vital provision is clause 3, which states -
The Banking Act 1947 is repealed.
That clause is of vital importance to the Australian banking system, and I heartily support it. I ask honorable senators to pass this measure speedily in its present form.
SenatorO’FLAHERTY (South Australia) [8.50]. - There is no doubt that Senator Mattner gave much thought to the statements that he made, but they were not, except in minor details, very accurate. Apparently, the honorable senator is optimistic enough to hope that his remarks will influence the public. He said that the Labour party could not make up its mind in relation to another measure. Let us accept, for the purpose of argument, that, as the honorable senator suggested, the mind of the Labour party upon that bill was made up for it by another body. When we announced our decision, there was consternation in the camp of the Government. It did not know what to do. One honorable senator said that the mind of the Labour party was made up for it by what he referred to as the twelve apostles. I point out that the gospel preached by the Twelve Apostles so many years ago has spread throughout the world.
– I referred to the twittering birds - the twelve apostles who do not know their own minds.
– Senator Maher has said that the twelve apostles of to-day do not know their own minds. The man that the twelve Apostles of bygone days followed was crucified. The honorable senator, metaphorically speaking, would crucify those who follow the twelve apostles to whom he referred..
Senator Mattner said that nationalization as a political issue is not dead and there is no doubt that that is true, as far as the Labour party is concerned. There is no doubt also that it is alive throughout the world. But the fact is that the Australian Parliament, owing to the limitations imposed upon it by the Constitution, has no authority to nationalize any institution in this country. Before the Labour party, if it were in power, could nationalize any institution or industry in this country, it would have to ask the people, by way of referendum, to alter the Constitution to permit that to be done.
– Or do it indirectly.
– I do not know whether the Minister for Social Services (Senator Spooner), by his interjection, is suggesting that the Commonwealth Bank Act 1945 and the Banking Act 1945 are measures designed to achieve the nationalization of banking in this country. If that be his suggestion, why does the Government propose that only the Banking Act 1947 shall be repealed? Why does it not propose also that the Commonwealth Bank Act 1945 and the Banking Act 1945 shall be repealed? If the Minister believes that the Labour party, by sponsoring those two measures in 1945, was attempting to nationalize banking in this country, he must believe also that the Government is speaking with its tongue in its cheek when it says that it desires that only the Banking Act 1947 shall be repealed. That is the measure by which it was intended to nationalize the banks of this country. I do not want it to be assumed that in this debate we are dealing only with the Commonwealth Bank Act 1945, because we must have regard also to ths provisions of the Banking Act 1945. which the Commonwealth Bank is administering.
Senator Mattner also said that the last Labour Government wanted to obtain control of the financial institutions of this country in order that it could become a financial dictator. Senator Maher said, by way of interjection, that that Government wanted to get its hands on the people’s money. That is not so. It was that Labour Government which protected the people’s money and, on behalf of the ‘Commonwealth, gave a guarantee that depositors’ money would be paid in full if any bank failed. Senator Mattner claimed that this Government was trying to protect depositors and borrowers, but it was a Labour Government which, by securing the passage through the Parliament of the Banking Act 1945, protected the money of depositors and borrowers, not only in the Commonwealth Bank and the Commonwealth Savings Bank, but also in every other bank. The Government does not propose to alter that act. It recognizes that the principles enunciated in it are good. Senator Mattner said also that the people of Australia are saying, in effect, “ You politicians must keep your hands off our money. We do not want to interfere with it “. If that be the opinion of the people, why does not the Government propose that the Banking Act 1945 shall be repealed? If that measure were repealed, the control of the financial policy of this country would revert entirely to private banking institutions. By introducing this measure, the Government has declared itself to be in favour of the socialistic principle that the financial policy of this country should be determined by the Australian Government. The only difference of opinion between honorable senators on this side of the chamber and those on the other of it relates to the method that should be adopted to give effect to that principle. We say that the financial policy of the nation should be determined by the Australian Parliament, acting through a Commonwealth Bank controlled by a governor. Government supporters say that the financial policy of the nation should be determined by the Australian Government, acting through a Commonwealth Bank Board, one of the members of which should be the Governor of the Commonwealth Bank. That is the only difference between us.
– There were differences wider than that last year, when the Labour Government was defeated at the general election.
– I am not talking about last year; I am talking about this bill.
– The honorable senator is making a virtue of a necessity.
– I am not making a virtue of a necessity. I have stated a fact that cannot be disputed. For many years the present Government parties have urged that there should not be political control of banking in this country, but notwithstanding that, this Government has introduced a bill under which this Parliament will retain the control of the financial and economic policy of Australia. It is true that honorable senators on this side of the chamber are somewhat suspicious of the provisions relating to the establishment of a board, because we believe that it would be impossible to find independent persons to act as members of it. The honorable senator also stated that the people are demanding that politicians should keep their hands off the people’s savings. I point out that since 1945 not a penny piece has been taken from any bank depositor in Australia. Furthermore, the Commonwealth Bank was under the control of a Labour government until last December. It is evident that honorable senators opposite are trying to stampede the people into the belief that, by controlling the economic policy of the country through the Parliament, Labour wanted the people’s savings. I point out that there is a State Savings Bank in most of the Australian States-
SenatorSpooner. - Except in New South Wales.
– There was a Government Savings Bank of New South Wales, which was taken over by the Commonwealth Bank when it got into difficulties. There were certain agreements at the time that I shall not mention now. The fact is that the business formerly handled by that bank is still being handled by the Commonwealth Bank. Of course, I realize that New South Wales is the stamping ground of the Minister for Social Services (Senator Spooner). In addition to State savings banks, there are rural credit banks in some States. The State governments control those institutions, and guarantee the depositors’ money. In other words, those banks are socialistic institutions, which are politically controlled.
– There are at least three States without them.
– Al though supporters of the Government have criticized socialized institutions and bank nationalization, the Commonwealth Bank has been continued by the present Government. If the Government was sincere it would repeal the 1945 banking legislation so that all banking business in this country would be handled by private enterprise.
– The honorable senator is misrepresenting the position. Our objection is to monopoly by nationalization.
– The honorable senator who has just interjected claims that Labour desired to establish a monopoly. I remind honorable senators that higher authorities than Senator Wright have stated that it is necessary for the Government to remove control of the economic policy of the country from the banking institutions.
– I presume that the honorable senator is referring to Lenin and Stalin?
– Oh, no. Abraham Lincoln wrote -
Money is a creature of law, and the creation of the original issue of money should be maintained as an exclusive monopoly of National Government. Government possessing the power to create and issue currency and credit as money and enjoying the right to withdraw both currency and credit from circulation by taxation and otherwise, need not and should not borrow capital at interest as a means of financing governmental work and public enterprise. The Government should create, issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers. The privilege of creating and issuing money is not only the supreme prerogative of government but it is the government’s great opportunity. By the adoption of these principles, the long-felt want for a uniform medium will be satisfied.
The taxpayers will bo saved immense sums in interest, discounts and exchanges. The financing of all public enterprise, the maintenance of stable government and ordered progress and the conduct of the Treasury will become matters of practical administration. The. people can and will be furnished with a currency as their own government. Money will cease to master, and become the servant of humanity. Democracy will rise superior to the money power.
That is as true to-day as when it was written. The Labour party’s policy in this connexion is in line with the views of Abraham Lincoln. Furthermore the present Government i3 still using the machinery that was established by Labour, for the purpose of carrying on some of the developmental work in this country. In this connexion the Government has repudiated its promise to the people of this country to restore value to the £1. Senator Mattner has claimed that banking is not the function of the Government. I emphasize that State governments have operated banking institutions for a considerable period. If banking is not the function of government, it would appear that the honorable senator has “let the cat out of the bag “. Is it because banking is not the function of government that the present Government desires to establish a bank board, and thereby hand over control of the Commonwealth Bank to the private banking institutions? He has “given the whole show away “. Apparently the reason why the Government does not repeal the existing banking legislation is that there would be a major upset in the economy of this country. Therefore, the Government proposes to establish a board of ten members, seven of whom will be independent persons. The honorable senator expressed the wish that an agriculturist would be included on the proposed board. Why should not an industrialist or a seafaring man be included? In fact, there are from 100 to 200 different avocations in this country, each of which could claim a right to representation. The honorable senator claims, in effect, that because banking is not the function of government a bank board should be established in order to accept the responsibility for directing the economic policy of this country, and ulti mately handing control back to where it was before. It cannot be gainsaid that during the regime of the former bank board the controlling factor was not the government of this country. I remind honorable senators that international finance groups influenced the financial control of Australia at the time. It will be remembered that Sir Otto Niemeyer was invited by the then Prime Minister (Mr. Scullin) to visit Australia. The fact was that the right honorable gentleman had to obey the dictates of the financiers. If what Senator Mattner said is correct, there must be a hidden reason why the Government wishes to reestablish the Commonwealth Bank Board.
– No reason has been advanced yet.
– Senator Mattner also claimed that in 1931 the private banks lent more money than they ever lent previously. I remind the Senate that they did not lend that money for nothing. The return that they received was the production that was made possible because the producers were granted the facility of obtaining credit. The banks saw the opportunity to gain an additional return on their money, and as a result they became stronger during the depression years than they had been before. They even increased their capital at that time. Senator Mattner referred to wheat production in 1931. I remind honorable senators that when Labour had the opportunity to do so, it increased the guaranteed price for wheat from 5s. a bushel to 6s. a bushel. Prior to the Curtin Administration taking office an antiLabour Government had guaranteed prices ranging from 2s. lOd. a bushel to 4s. lOd. a bushel. The comparison in favour of Labour is obvious.
– But, not in comparison with world values.
– On the contrary, although anti-Labour governments offered up to 4s. lOd. a bushel on world values, Labour guaranteed 6s. a bushel. Furthermore, Labour adopted a stabilization policy, whereby certain imdemnities were provided for the wheat-growers, and subsidies were paid in order to enable the growers to produce wheat at a payable price.
– And organized the marketing of the wheat, too.
– That is so. In. 1939, there were in Australia millions of bushels of wheat which nobody wanted, and which nobody could sell. It remained for a Labour Government to dispose of it. Honorable senators opposite should, be fair, and tell the whole story, instead of picking on one phase of a subject, and trying to make political capital out of it.
The purpose of this bill is to amend the Commonwealth Bank Act 1945, which was passed while the Labour Government was in office. In addition to the Commonwealth Bank Act, there is the Banking Act 1945, under which certain controls were established over the operations of the private banks. It provides for the issue by the Treasurer of licences to private financiers to carry on the business of banking. Other provisions, which deal with the control of international exchange through the central bank, are administered by the Governor of the Commonwealth Bank, assisted by an advisory council, consisting of Treasury officials and officials of the bank itself. It is now proposed to hand over those administrative powers to the Commonwealth Bank Board that is to be appointed. The board will also control the note issue, central banking activities, and the relations of the Commonwealth Bank with the private banks.
On these points the Labour party differs radically from the: Government. The Labour party, after having studied the question very closely, and after having considered the reports of various royal commissions on banking, came to the conclusion that the Commonwealth Bank should be placed under the control of a governor instead of a board. The board was abolished by the Commonwealth Bank Act 1945, and a close liaison was established between the Governor and the Treasurer. In that way, it was possible for the Government to keep its finger on the economic pulse of the world, and,, through the central bank, to. control national and international credit for the benefit of the people of Australia. Now, the Government wishes to, alter that system, and to reconstitute the Common wealth Bank Board. Once the board is appointed, it will be possible for the Government to divest itself of responsibility. For instance, the board could appreciate the Australian £1 in relation to the currency of other countries, and the Government could then get out from under by claiming that the responsibility for what was done rested with the board and not with the Government. The Labour party believes that the Government, and finally the Parliament, should accept responsibility for variations of the exchange rate with other countries. At present, the Government is advised on such matters by a council of experts, who understand international exchange dealings.
We have been told that the Government intends to appoint to the Commonwealth Bank Board a number of independent men. Senator Mattner told us that they would be experienced in banking. Where are such men to be obtained outside the Commonwealth Bank itself, unless they are drawn from the private banks? We maintain that no one associated with the private banks should have any say in the control of the Commonwealth Bank, which is the people’s bank. If such men are appointed to the board they could do what was done before by men with a similar background. They could jam the machinery of the Commonwealth Bank so that the private banks would have all the say in the control of credit.
– That is the intention of the Government.
– -I should not like to impute that intention to the Government,, but I believe it to be the intention of some of the Government’s supporters. Senator Mattner must have had some such, idea in his mind when he said that there should be no government interference with the control of banking.
Some of the provisions of the bill will have the effect of varying the methods of administration of the Commonwealth Bank. A case might be made out for placing the Commonwealth Savings Bank under the control of a board. Indeed, the Liberal party, in a manifesto issued in 1948, actually advocated that. I quote from the manifesto as follows: -
Liberal Party Platform. - The complete detachment of “the Commonwealth Savings IBank, both in control and operations, from all other banks, government or private.
Our political opponents used to say that the Labour party wanted to get its hands on the people’s savings. It would appear that the supporters of the present Government want the private hanks to be able to put their hands on the savings of the people.
– Of course, that is what the Government wants.
– Apparently not, because the Government has now repudiated its election manifesto in that regard. However, there appears to be ample reason for the appointment of a select committee to inquire into these matter.
At the end of the bill, there is a clause which deals with the payment of pensions to certain judges. It is as follows : -
Section four of the Judges’ Pensions Act 1948 is amended by omitting the words “, the Judge of the Supreme Court of the Australian Capital Territory and to Judges of the Federal Court of Claims “ and inserting in their stead the words “ and the Judge of the Supreme Court of the Australian Capital Territory “.
I do not know what is the purpose of that clause, and it has not been explained by any Minister or any Government supporter. It probably relates to a superannuation or pensions scheme of some kind. That is another matter which could be inquired into by a select committee. Various parts of the bill provide for the repeal of certain sections of the Banking Act 1945, and the substitution for them of certain other provisions. It would be the duty of a select committee to discover just what would be the effect of such alterations. I do not think that many honorable senators know a great deal about the details of banking. I do not know much about them myself. Some of us have learned a little about the general economics of banking, but the actual mechanics of banking is a job for professionals. We should obtain some expert information on the subject. In particular, we should try to find out whether it would be possible, because of the proposed amendments that are to be effected by this bill, to evade certain of the provisions of the Commonwealth Bank Act 1945. Some one suggested that the subject should be examined by a royal commission, but I do not think that we can extend the inquiry beyond the scope of the bill. There is no occasion for examining every phase of banking, and I think that the inquiry could be best conducted by a select committee.
Some rude remarks were made to-day by one honorable senator about the Governor of the Commonwealth Bank. He might not have intended his words as an attack on the Governor, but that is what they were. I point out that, even under this bill, the Governor i3 to continue in his position and, what is more, is to be chairman of the board that it is proposed to appoint. I have no quarrel with that, but if the present Governor of the bank i3 to be the chairman of the proposed board, and the Deputy Governor is to be the vicechairman, it is clear that the Government has every confidence in the ability of those gentlemen.
– Dr. Coombs went to Professor Laski’s school of economics in London.
– That argument was effectively answered this afternoon by Senator Cameron in reply to an interjection. It does not matter whether Dr. Coombs went to Professor Laski’s school of economics or to Bernard Shaw’s school of economics. His work should be judged by the activities and balance-sheets that have been issued since he became Governor of the bank. Those balance-sheets, certified by the Auditor-General, show that whatever political opinions Dr. Coombs may hold, his knowledge of banking and economics is sound. The efficiency of his administration of the bank is beyond question. I have not heard one honorable senator opposite suggest that Dr. Coombs should not continue to be Governor of the bank even if the board is reconstituted. Let us look at the record of the Commonwealth Bank. It was founded in 1912 with a capital of £10,000, which was rapidly repaid. To-day the capital of the bank is £17,533,000. That is an extraordinary achievement. In the last, twelve months the capital has increased by approximately £400,000. Apparently there is efficient administration of the bank’s affairs. The Reserve Fund of the Commonwealth Bank rose from approximately £2,880,000” last year to approximately £3,600,000 this year. That increase too seems to indicate efficiency in the administration of the bank. In the last financial year, the bank’s assets increased from approximately £24,000,000 to approximately £25,000,000. As Senator Katz pointed out this afternoon, the trading activities of the bank have yielded a profit of approximately £6,000,000. In addition, when profits made by the Commonwealth Savings Bank are added, the total profit amounted to about £7,61S,000. Those figures hardly suggest that an alteration of the administration of the bank is necessary. Clearly the present Governor has done remarkable work on behalf of the people of this country. Since the passage of the 1945 legislation, the Commonwealth Bank, under the direction of Dr. Coombs, has worked in close liaison with the Treasury. No one can deny that, in those years, the Commonwealth Bank has been an efficient institution and has rendered splendid service to successive governments. As I said earlier in my remarks, no one has lost as much as a penny by depositing his money in the Commonwealth Bank. So why is there any need for this bill? “Why does the Government wish to alter the present system of control? The Commonwealth Bank is expanding rapidly. It is opening new branches all over the Commonwealth. It is entering into brisk competition with the private trading banks, and, admittedly, it is taking some customers from those banks. As Governor of the Commonwealth Bank, Dr. Coombs controls its central banking activities which, of course, are carried out in close cooperation with the Treasury. Can any one find fault with the Commonwealth Bank as a central bank? No one can do so except, of course, the private banks, which are required by law to lodge special deposits witu the Commonwealth Bank. They claim that they receive less than 1 per cent, interest on such deposits, whereas, when they require money, they have to borrow it at a considerably higher rate of interest. “What is the difference between the private banks lodging special deposits with the Commonwealth Bank and an ordinary investor lodging his money with any bank on fixed deposit? The only difference is the element of compulsion that is applied to the private banks. The ordinary depositor who invests his money on fixed deposit for, say, two years, cannot withdraw his funds before that period has expired. He may, however, use his fixed deposit as security on which to borrow money. His fixed deposit may be carrying an interest rate of only l-J or 2 per cent., but he will have to pay more than that on the money that he borrows. That is ordinary banking practice, and, as I have said, the only difference between that and the investing of the excess funds of the private banks in the Commonwealth Bank, is the element of compulsion associated with the latter transaction. That compulsion is necessary in the interests of the economy of this country. If the private banks were permitted to withdraw their funds from the Commonwealth Bank and allow them to be circulated through the community, we would experience a. state of secondary inflation which would be far worse than our present position. A crisis would arise immediately. That is why the private banks are required by law to deposit their surplus investible funds with the Commonwealth Bank. The private banks have no quarrel with that. There is no complaint about that practice in any of the annual reports of the private banks. Their only complaint is that their special deposits carry a lower rate of interest than that which they have to pay when they themselves borrow money.
– They have to pay six times as much interest.
– That does not matter. Interjections such as that just made by Senator George Rankin show why, in the eyes of the Government, the re-introduction of the Commonwealth Bank Board is necessary. Interest payments on money borrowed by the private banks will be reduced, and the Government will disclaim all responsibility because the decision will have been made by the board. Funds may even be made available to the private banks without interest at all. Honorable senators will recall that some years ago, the private banks secured the right to draw several million pounds from the Commonwealth Bank. They did not actually draw that money, but, solely on their right to do so, they were able to issue credits bearing a substantial rate of interest. There was no mention then about the interest rate charged by the private banks being six times as great as that which they were required to pay.
Senator Mattner has said that we are always quarrelling about profits. In the existing state of society profit is a potent motivating force. We should so re-organize society that whilst the profit motive is still permitted to exist goods can be produced cheaply and sold in this country or exchanged for other goods from overseas. Exorbitant profits should be eliminated. What constitutes exorbitant profits constitutes a major point of difference between honorable senators opposite and ourselves. We are continually objecting to the exploitation of the people for profit.
I trust that the Government will see the wisdom of appointing representatives to sit on the proposed select committee so that experts in banking may be induced to state their opinions freely on the mechanics of this bill and its relation not only to the Commonwealth Bank Act 1945 but also to the Banking Act 1945. If the select committee can obtain expert evidence on those matters it may be able to resolve the differences that exist between the Opposition and the Government on this important subject. If the Government refuses to appoint representatives to the committee I suppose we shall have to ask the twelve prophets, about whom we have heard sp much recently, to decide what we should do.
When an identically similar measure was before the Senate on an earlier occasion I stated my views on it at length. I do not propose to go over the ground again, other than to say that I am opposed to the establishment of a Commonwealth Bank Board because I believe that it would be almost impossible, if not entirely impossible, to obtain the services of independent persons from outside the government service or the service of the Commonwealth Bank to carry out the functions which the Government has assigned to the board. If, as has been stated, the Government intends to appoint to the board representatives of industries it must be prepared to go the whole hog and give representation to all industries, and as it would be impracticable to obtain representatives from all industries who are experienced in banking practice and procedure, the Government’s proposal is foolish and in no way constitutes a better system of control than that which obtains at present under which the bank is administered by the Governor acting on the advice of an advisory council and with proper liaison with the Treasurer of the Commonwealth.
– As this bill is exactly similar to an earlier measure which has already been disposed of by this chamber there is no need for me to repeat what I have already said about this subject. The purpose of the bill seems to be threefold. Its first and principal purpose to repeal the Banking Act 1947 is stated in clause 3 in these simple words -
The Banking Act 1947 is repealed.
Opposition senators have said that we can forget all about the nationalization of banking because the High Court has ruled that the Commonwealth Parliament has no constitutional authority to nationalize the banks. As issues of that kind have a habit of recurring, the Government has sought to make certain that the sections of the Banking Act 1947 which the High Court has held to be invalid cannot be revived. At the general election on the 10th December last, the people expressed in no uncertain terms their determination to reject Labour’s banking proposals. Those who have studied this subject do not need to be told that banking was one of the most important issues on which the election was fought.
– And lost by the Labour party because of bankers’ lies.
– I did not hear any bankers’ lies, nor have I accused the Opposition of having told lies during that campaign. The subject of banking was discussed freely on every election platform throughout the Commonwealth ; the issues were clearly placed before the people and the people recorded their verdict on them in no uncertain terms. In order to place the bank nationalization issue beyond doubt the Government has inserted a clause in this bill which provides that the Banking Act 1947 shall be repealed.
The second purpose of the bill is to replace the present system of control of the bank by a governor and an advisory council by board control. Can any honorable senator opposite name any bank in Australia, or in the world, which has not a board of directors? A board of directors is the equivalent of an executive committee. All large industrial, financial and trading concerns are administered either by a board of directors or by an executive. Surely the Commonwealth Bank which has 430 branches spread throughout the Commonwealth, and which engages in a great diversity of banking business, should be similarly controlled. Surely honorable senators opposite will agree that the position of the Governor of the bank would be greatly strengthened if, as is suggested in this bill, a board of experts were appointed to assist him. Mention of executive committees reminds me that I read in the press that the members of a very important body recently had a long discussion concerning a proposal that the numerical strength of its executive be reduced from 14 to 7. If the newspaper report was correct the majority of the members decided that an executive of fourteen members could do a better job than could a smaller executive.
SenatorWright. - Which body was that?
– It was the Australian Labour party. Notwithstanding that decision members of the anti-Labour party now contend that the direction and control of the Commonwealth Bank should be left in the hands of one man. To say the least, they are inconsistent. I have always believed that two heads and two sets of brains are better than one. The direction and control of the Commonwealth Bank, which has wide ramifications throughout the length and breadth of Australia, is not an easy task and the Government has wisely decided to entrust it to a board.
Since the Commonwealth Bank was first established in 1911 it has operated under three different forms of manage ment, two of them being somewhat similar.From 1911 to 1924 the bank was managed by a governor; from 1925 to 1945 it was managed by a board; and since 1945 it has been managed by a governor who in respect of policy decisions acts on the advice of an advisory council. At present the bank is administered by a governor, a deputy governor and an advisory council consisting of five persons, or an executive of seven in all. The board proposed in this bill will not be much larger. Honorable senators opposite are very worried because five members of the board have as yet been unnamed. I have no more idea than they have who will be selected.
– As a member of the Government, the honorable senator should know that.
– I am not a member of the Cabinet, but one of its supporters. I have no more idea than has the honorable senator who will be selected. I believe that as far as it is practicable to do so all interests throughout the Commonwealth should be represented. I trust that Western Australia will be represented because although that State may not be numerically strong it is one of the most important areas of the Commonwealth and one in which the Commonwealth Bank has very great interests. The people of Western Australia need the Commonwealth Bank just as much as they need the private banks. I have no fear of the ability of the Government to select five suitable persons for appointment to the board.
– The honorable senator is an optimist.
– In these days one needs to be an optimist. Honorable senators opposite have said to-day that there is a good case for the nationalization of banking. Senator Cameron told us tonight that in time of war the nationalization of banking is absolutely necessary. Some Opposition senators are still as keen on the nationalization of banking as they were before the general election and we are just as keen as we were then to preserve the freedom of the private banks to conduct their business in their own way and we shall continue to fight for that principle. I have always regarded banks as institutions established for the convenience not of bankers but of their customers. All of us want to bank our money where it is convenient for us to do so. When the Commonwealth Bank was first established it was intended not to replace the private banks but to compete on equal terms with them for the banking business of the community. There is room for the Commonwealth Bank and also for the banks which some people refer to as private banks, but which are really public banks because they are public companies. While those banks are competing with each other, the members of the public will receivethe attention they deserve.
– What competition is there between the private banks?
– I assure the honorable senator that there is competition. If he goes to any country town or to any city of Australia, he will find that the banks will compete for his business. There is competition as far as service is concerned, and one may choose the bank that provides the best service.
– What, about cooperation ?
– There is also cooperation. As I have already stated, I have nothing against the Commonwealth Bank, and, in common with many other people, I use it and will continue to use it. I consider that it is the people’s bank. It is only necessary to consider the progress that it has made to appreciate that it must be permitted to continue.
– Then why interfere with it now?
– Only for the purpose of improving it. That is the sole reason. I consider that a board would be of assistance to the Governor, and that a board of ten members would make his job easier. If the control of the bank is in the hands of one man and anything happens to him, difficulties may arise, but if a member of a board was not able tocarry on, the functions of the bank would not be affected to the same extent. I do not say that anything will happen to the Governor of the Bank. I knew him in 1923 and 1924 and I have seen him again recently, and I am sure that he will be able to carry on for a long while yet. I have no doubt that, as chairman of the bank board, he would efficiently perform his duties. I ask for leave to continue my remarks.
Leave granted; debate adjourned.
page 2057
Bill received from the House of Representatives.
Standing Orders suspended.
Bill (on motion by Senator Spooner) read a first time.
– I move -
That thebillbe now read a second time.
The purpose of this bill is to provide for the payment during the current financial year of special grants aggregating £12,175,000 to the States of South Australia, Western Australia and Tasmania. The payment of these grants has been recommended by the Commonwealth Grants Commission in its seventeenth report which was tabled in the Senate on the18th October. As in previous years, the Commission has adopted the principle of financial needs in arriving at the grants recommended. In interpreting this general principle, it has compared the financial positions and practices of the claimant and the non-claimant or standard States.
The audited results of the States’ budgets on which the Commission bases its detailed calculations are not available until some time after the close of each financial year. There is, therefore, a time-lag of two years between the year on which the grants are assessed and the year in which the grants are paid. To meet this time-lag difficulty, the grants recommended by the Commission in its last two reports have consisted of two parts. The Commission’s first step is to calculate the “ assessed grants “ for the latest year in respect of which audited figures are available - in the present case, 1948-49. In arriving at the “ assessed grants “ for 1948-49 the Commission calculated the amounts which would have been required to give the claimant States balanced budgets in that year and then adjusted these amounts to take account of differences between the claimant and non-claimant States in standards of social services expenditure and in the rates of taxation and the charges of State business undertakings.
The first part of the grants now recommended by the commission is the difference between the grants so assessed for 1948-49 and the grants actually paid in that year. This part is an adjustment to correct overpayment or underpayment in the grants recommended and paid in 1948-49. The second part of the grants represents the commission’s estimate, calculated on a conservative basis, of what the assessed grants for 1950-51 may prove to be when the audited results for this year become available. It is treated by the commission as an advance payment which will be adjusted two years hence when the assessed grants are calculated.
As I have mentioned, the special grants recommended for payment this year total £12,175,000. Of this amount the first part of the grants totals £1,755,000 whilst the advance payments to meet the indispensable financial needs of the States in 1950-51 total £10,420,000. The first part of the grants recommended for payment to South Australia and Western Australia amount to £762,000 and £1,089,000 respectively representing the amounts by which the grants now assessed for 1948-49 exceed the grants actually paid in that year. The grant actually paid to Tasmania in 1948-49 exceeded the grant now assessed for 1948-49 by £96,000 and the grant for 1950-51 has therefore been adjusted accordingly by the commission. The second part of the grant, which is designed to meet the indispensable financial needs of the States in 1950-51 is in each case higher than the grants assessed for 19-18-49. This reflects the deterioration which would occur in the finances of each State in the absence of increased special grants. The reasons for this deterioration are set out fully in the commission’s report. The main single item accounting for the deterioration is the increase in social services expenditure.
In arriving at the grants, the commission has taken account of the shares of the claimant States - amounting to £2,539,000 - in the prospective increase in the tax reimbursement grants this year. As the special grants now proposed involve an increase this year of £1,121,000, the total increase in payments to the claimant States on account of both the tax grants and the special grants will amount to approximately £3,660,000. Of this amount, South Australia will receive an additional £2,254.000, Western Australia an additional £1,226,000 and Tasmania an additional £180,000. The special grants recommended each year by the commission, since its establishment in 1933, have always been adopted by successive Australian governments and the present Government can see no reason why the recommendations contained in the commission’s seventeenth report should not be adopted this year. I commend the bill to honorable senators.
Debate (on motion by Senator Ashley) adjourned.
page 2058
Secondreading.
Debate resumed.
– Before the debate on this measure was adjourned, I had already stated that the bill contained three main features : first, the repeal of the 1947 Banking Act, secondly, the replacement of the Governor of the bank by a bank board, and, thirdly, legislation to strengthen the financial structure of the bank by increasing the capital of its trading sections. 1 suggest that no honorable senator will find fault with those objectives.
Honorable senators opposite have referred to the making of profits by banks other than the Commonwealth Bank, but it is obvious that unless they are permitted to do so there will be no banks. The same principle applies to all forms of business. While dealing with the matter of profit-making, I wish to refer to the practice of profit-sharing, which is being adopted more and more in Australia. That is one of the ways in which difficulties between employer and employee may be overcome. There is, undoubtedly, great need for co-operation between them. In to-night’s newspapers there is a report in which one of the big companies gives details of the amounts that it has handed back to its employees. If that profit-sharing is extended, it must lead to greater satisfaction among the workers of Australia.
This bill has now been before the Senate for a considerable time and I can see no merit in the proposal to refer it to a select committee. The Government desires that it be passed. Its passage has been delayed and will be further delayed if it is referred to a select committee. I trust that honorable senators opposite will again consider the matter and will vote in favour of the bill so that it may become law.
– I shall approach this bill from the human viewpoint. I do not propose to quote a lot of figures. I was struck by a remark of Senator Piesse to the effect that if there were no profits, there would be no banks and no businesses. Obviously, the honorable senator is obsessed by the importance of profits. Anything that, accrues to an individual who conducts an enterprise after working expenses and overhead charges have been paid is profit. I am stating an economic truism when I say that profits are unpaid wages. Profits and interesta re basically immoral.
Honorable senators opposite have confined their remarks mainly to the Banking Act 1947. Senator Piesse, having said that it was necessary to repeal that act to prevent the recurrence of an attempt to nationalize the banks of this country, went on to say, “ The banks should be as they are “. I believe that I have quoted him correctly. That statement was applauded by other honorable senators opposite. If Senator Piesse wants the banks to be as they are, why alter them? If he wants the Commonwealth Bank to remain as it is, why alter it by establishing a Commonwealth Bank Board ?
– Senator Piesse said that he wanted to improve the Commonwealth Bank.
– I believe that I have quoted the honorable senator correctly. Senator Mattner eulogized the Commonwealth Bank and said that our banking system was as good as any other in the world. He admitted that he knew very little about the matter, but he said that, in his opinion, there should be no government interference with banks. Having said that our banking system, which is controlled by the Governor of the Commonwealth Bank, who is answerable to the Treasurer, or, in other words, to the Australian Government, was as good as any other system in the world, he contradicted himself by saying that there should be no government interference with banks. I have listened to many men who could perhaps be described as the prototypes of Senator Mattner. All farmers have the idea that they should be left entirely alone and subjected to no interference. They believe that they should be a law unto themselves except when they are in trouble. When they are in trouble, they appeal to the Government for aid and invariably they receive it. Farmers who criticize socialism and urge that they should be a law unto themselves are advocating anarchy, which is the negation of all legally constituted authority.
Senator Hannaford stated quite clearly that the Opposition cannot expect the Government to co-operate with it on the proposed select committee. He said also that he did not believe in a fiduciary note issue.
– I did not say anything of the kind.
– The honorable senator said that we did not know anything of the operation of a fiduciary note issue. The statement that the Government would not co-operate with the Opposition on the proposed select committee was in conformity with the attitude that the Government has adopted since the last general election. When the Communist Party Dissolution Bill was presented to the Parliament, the Prime Minister (Mr. Menzies) said that no amendments would be accepted and that the measure would be passed in the form in which it was introduced. The Government caused 35 amendments of the bill to be made and the Opposition in this chamber was successful in persuading the Senate to make other amendments. In fact, the bill was not passed in the form in which it was introduced. The attitude of the Government is that it will not bend, and that its word is as immutable as the laws of the Medes and Persians.
I do not know why there has been so much talk about the repeal of the Banking Act 1947, because that measure is dead. It was killed by the High Court. The Labour party, if it were in power, could not nationalize the banks of this country unless, at a referendum, the people agreed to an alteration of the Constitution to enable that to be done.
Senatorguy. - The honorable senator is not as simple as that.
– I am not running away from the implications of what I have said. I believe in bank nationalization, and I hope that I shall live to see the day when all private banks are nationalized. I shall work towards that end. Honorable senators opposite know that, owing to the limitations imposed by the Constitution, this Parliament has no power to nationalize the banks of this country. Therefore, I cannot understand why so much fuss has been made about the proposal to repeal the Banking Act 1947. Honorable senators on this side of the chamber do not object to it. I do not concede that any individual or group of individuals has a right to make a profit from a service that is necessary to the public. I believe that banking, unless it is controlled by the Government, is only usury. In modern society, banking is a national utility and, as such, should be controlled by governments. The fact that in this country we have practically no Constitution was responsible for the decision of the High Court that the Banking Act 1947 was largely invalid. The Australian Government has to rely upon a few concessions from the States, but we pretend that these concessions amount to a constitution. I believethat all the Dominions - I am doubtful about South Africa - have constitutions that empower their governments to nationalize banks or any public utilities by acts of parliament. Banking institutions of this country have not been nationalized only because the Australian Government does not possess the power to do so. As I have said, I believe that the banking institutions of this country should be nationalized. When a war occurs and private enterprise, as usual, breaks down, it is necessary to resort to government control to guide the nation through perilous seas. On those occasions we adopt the much maligned principle of socialistic control. During the last war, private banks and other institutions were subject to directions by the Government. In times of crisis, we invariably adopt socialism. Honorable senators opposite should ask themselves what justification there is in peace-time for abandoning socialism, which has been proved repeatedly to be very effective and efficient, and reverting to the dog-eat-dog system of capitalism. Sooner or later, thepublic of this country will accept the principle of socialist control. In Britain, the Attlee Government has nationalized many industries. The Bank of England has been nationalized. The United Kingdom Government is introducing more socialist legislation each year, despite the most stupendous opposition that has ever been encountered by a British government. At the last general election in Britain, it was returned to power, after a turbulent campaign, with a small majority, but its majority is gradually being enlarged. It will be recalled that some time ago I prophesied that time would operate in favour of the Attlee Government, because it would win a larger proportion of the by-elections than its opponents.
– There are still private banks in England.
– I do not dispute that, but I say that any private banks that are operating in England to-day are subject to control by the Bank of England, or to governmental control. Even if Senator Hannaford is an Alice in Wonderland in relation to these matters, he should not put every other honorable senator into the same category. In my opinion, he would, as a banker, make an excellent farmer.
Senator Wright interjecting,
– I do not mind Senator Wright interjecting but, before he does so, I should like him to take the plum out of his mouth. I am satisfied that he is trying to roll his words round a plum or some other obstruction in his mouth.
The Commonwealth Bank Act 1945 placed the Commonwealth Bank under the control of a Governor instead of a board. Since 1945, the bank has flourished. The total sum deposited with the Commonwealth Savings Bank increased from approximately £146,880,000 to approximately £480,295,000 between June, 1939, and June, 1950. It is generally agreed that the Commonwealth Bank has done a wonderful joh, and its Governor, Dr. Coombs, has been widely eulogized. Although I have not heard any one suggest that Dr. Coombs’s appointment might be terminated, I think it would be wise for him to look for another job. I am suspicious of the Government’s intentions, because of incidents that have occurred since it took office. The hideous depression between 1929 and 1935 was caused by certain people who had fixed deposits in banks, and were living on the interest paid on those deposits.
– The honorable senator should not blame the trading banks again. That theory has been exploded.
– I did not mention trading banks. The banks used the money lodged on fixed deposit for the purpose of conducting their business. Following the termination of World War I., as wages and the prices of commodities rose steadily, the value of the £1 began to decline. I have wondered whether the Prime Minister (Mr. Menzies) had that in mind during the last election campaign when he undertook to restore value to the £1. When the £1 declined in value to about 12s. the persons who had lodged money with the banks on fixed deposit, to whom I have referred, made it known to the banks that they wanted their £1 to be worth 20s., and thereupon the various banks in this country set about achieving that objective. At the time big institutions were expanding very rapidly. The banks issued an edict requiring the reduction of overdrafts within periods of from 24 hours to 36 hours, with the result that expansion was halted and hundreds of thousands of employees were dismissed. That was true of large Sydney retail stores such as David Jones Limited and Farmer and Company Limited. As purchasing power was withdrawn from the community other workers became idle, and consequently the £1 became more valuable. In fact, many people were forced to work for next to nothing. At that time the Commonwealth Bank was controlled by a board, which intimated that it would provide assistance to the government of the day only if expenses, wages, social services, and interest rates were reduced. Although honorable senators opposite have referred to a body of twelve men outside the Parliament dictating what the attitude of die Opposition should be in relation to legislation that was recently before this chamber, I remind honorable senators that on that occasion the Commonwealth Bank Board dictated the financial policy of the Government. The then Treasurer, Mr. E. G. Theodore, introduced a bill to provide for a fiduciary issue of £18,000,000, £12,000,000 of which was allocated for the assistance of primary producers, and £6,000,000 for the relief of other industries. It was realized at the time that there would be a rapid turnover of money in the industrial sphere. Senator Hannaford has stated that when a fiduciary note issue was proposed during the depression, the people were fearful of the unknown. I point out that the printing of only 67,000 additional £1 notes enabled the construction of the transcontinental railway. Due to the rotation of that money, an enterprise that was then worth £6,250,000 was established. Its value is now much higher. Some honorable senators will remember the Guernsey experiment many years ago. Although the Prime Minister received a mandate for the repeal of the 1947 banking legislation he was not given a mandate to reconstitute the Commonwealth Bank Board, any more than he was given n mandate to insert the onus of proof clause in the recently enacted antiCommunist legislation.
– The Opposition ran away from that measure.
– Honorable senators opposite apparently think that the Opposition will run away from the measure now before the chamber. As I have said, the Government accepted 35 ‘amendments to the anti-Communist legislation, after the leaders of the Government parties had announced that the Government would not accept any amendments. Many of Labour’s suggestions were accepted, and I am convinced that the amendment that we suggested to the onus of proof provision would have been accepted if the Government had not had an ulterior motive. If the onus of proof provision was not required for the purpose of smashing the trade unions for what purpose was it wanted? I am sure that hundreds of thousands of people in this country consider that that was the real purpose for the inclusion of that provision in the anti-Communist measure. Ample evidence of the value of governmental control of finance is provided by the following paragraph in the report of the Commonwealth Bank recently issued -
When sterling was devalued in September, 1040, the sterling area’s gold and dollar reserves were at their lowest ebb of 1,340,000,000 dollars. Since then the position has so improved that at the cml of June, 19:50, the figure had reached 2,422,000,000 dollars.
That plainly shows that devaluation was carried out correctly. Had the former Prime Minister (Mr. Chifley) not taken extreme care to prevent a leakage, selfseekers and profit-mongers would have indulged in all sorts of trafficking in the various currencies. What greater object lesson could there be than that, to prove that management by a central head is desirable? No ill can come of the proposed select committee, even if it does not function as we hope that it will. I hope that Senator Hannaford’s statement that the Government would not co-operate was incorrect, and that there will be Government representation on the committee, if only to see what is going on and how the committee operates.
– There are several curious features about the attitude of the Opposition to the measure before the chamber. Although the Australian Labour party opposes the establishment of the Commonwealth Bank Board I remind honorable senators that when in office it was notoriously board-conscious. During its eight years in power the
Labour administration established more boards than had been appointed previously since federation. Although Labour is opposed to the establishment of a bank board, the Opposition has not sought to amend the measure in that connexion. I should be interested to hear from some honorable senator opposite why the Opposition has made no attempt to amend the bill, seeing that Opposition senators have so vehemently condemned it. They say that they do not want the bank to be controlled by a board, and yet they propose to refer the bill for examination by a select committee, which would itself be a kind of board. It is all very strange! When considering this bill, and the attitude of the Opposition, a number of questions come to the mind.
What is wrong with the proposal to appoint a Commonwealth Bank Board? The objections of the Opposition to the appointment of a board may be summed up by saying that, according to them, a Commonwealth Bank Board some years ago was responsible, directly or indirectly, for a world depression. I have listened to the debate very carefully, and our opponents have undoubtedly argued, in effect, that the Commonwealth Bank Board in 1930 caused the depression. Of course, on other occasions we have heard that the depression was caused by brutal capitalists. On still other occasions, we have been told that it was caused by the private banks. Now, it appears that it was caused by the Commonwealth Bank Board and, therefore, the bank should never again be placed under the control of a board. That is an argument almost as fantastic as it would be to say that the Commonwealth Bank Board caused World War II. What is wrong with placing the Commonwealth Bank under the control of a board ? Every great financial institution, from the Bank of England down, has a board of management. The Commonwealth Bank is the only institution of its kind that is trying to carry on without a board of directors. Every great industrial organization has a board of direction. The Amalgamated Engineering Union, a very large industrial organization, with assets valued at many thousands of pounds, has a board of directors.
– I have been a member of that union for many years, bat I never heard that it had a board of directors.
– It is controlled by an executive committee, and do honorable senators opposite suggest that the committee should be dispensed with? What is the difference in principle between the executive committee of a union and a bank board! The purpose of both bodies is to. decide policy. Even political organizations are controlled by boards. Recently, the executive of one of the great political organizations in Australia fortuitously put honorable senators opposite back on the rails regarding the Communist Party Dissolution Bill. Every great commercial organization including the Broken Hill Proprietary Company Limited -has a board of directors. All honorable senators opposite have heard of the Port of London Authority, which is managed and controlled by a board. There is a very good reason for placing big institutions under the control of a board. The responsibility for policy should not rest upon one person, however capable he may be.
Why are Labour senators opposed to the appointment of a Commonwealth Bank Board? Their argument, of course, is that the bank is doing very nicely without a board. It is accumulating assets, and even milking profits. Why, then, change the method of control ? In effect, they say that the bank was doing very nicely under the direction of the former Treasurer (Mr. Chifley). One of the main reasons why the Government proposes to appoint a board is that it wishes to prevent the Commonwealth Bank from getting on very nicely in the future under some other Mr. Chifley. It was getting on too well under Mr. Chifley’s nationalizing proposals. In future, the Commonwealth Bank, controlled by a board of directors, will be responsible to the people through the Parliament. It will not be directed by one man, who might become a financial dictator. That is why a board is to bc appointed, and that is why the Labour party resents the appointment of the board. The Labour party knows that the board will prevent future Chifleys from assuming the financial dictatorship of the country.
Why is the Labour party delaying the passage of this bill, which has now been debated for some weeks? When a former bill of the kind was before the Senate it was amended at the instance of the Opposition, but this time the Opposition is not proposing any amendments. Why will not the Opposition allow the bill to be disposed of in a reasonable time? A month ago, Senator McKenna said -
I repeat the assurance that 1 gave on Thursday that if the Commonwealth Bank Bill is called on it will be disposed of hy thi Opposition in a few moments.
I invite Senator McKenna to tell the Senate what he meant then, and to say why his colleagues in Opposition are now delaying’ the bill unduly. Members of the Opposition are using tactics that are against, the best interests of parliamentary government and are likely to bring the Parliament into disrepute. This is not a bona fide debate.- I have always believed that a government, charged with the responsibility of governing, should have authority commensurate with that responsibility. The Opposition is usurping the authority of the Government without accepting or being entitled to accept the responsibility that should go with authority. It is as if an army officer were told by head-quarters to take a body of men to the front-line and lead them into action without having any control over them, head-quarters insisting on retaining all control. The Opposition is depriving the Government of authority, but refuses to accept responsibility. I do not object to the Opposition using its majority in a bona fide manner either to amend the bill or to reject it. I invite members of the Opposition to pass the bill now, or to reject it now, or to amend it now. However, by simply delaying the passage of the bill, the Opposition is. making a laughing-stock of the Parliament. It is wasting the time of the Parliament, and wasting the people’s money. I earnestly ask the Senate to pass the bill to-night. The attitude of the Opposition is contrary to the traditions of democratic government.
Debate (on motion by Senator Amour) adjourned.
page 2064
The following papers were pre sented : -
Commonwealth Public Service Act - Appointment - Repatriation Department - B. J. Lawrence.
Lands Acquisition Act - Land acquired for-
Department of Trade and Customs purposes - Waikerie, South Australia.
Postal purposes - Lilydale, Victoria,
Senate adjourned at 10.58 p.m.
Cite as: Australia, Senate, Debates, 8 November 1950, viewed 22 October 2017, <http://historichansard.net/senate/1950/19501108_senate_19_210/>.