1953-03-03 20 1 6 REPS 436 0 House of Representatives. 1953-03-03 Ms. Speaker (Hon. Archie Cameron) took the chair at 2.30 p.m., and read prayers. 436 Questions 436 436 10000 0 0 SPEAKER, Mr Mr SPEAKER - Are there any ques tions about important matters that need immediate attention? 436 436 JSW 0 0 BRYSON, William Mr BRYSON - I refer the Prime Minister to an anomaly in the furlough rights of temporary employees of the Public Service. In explanation, may I say that my attention has been directed to five temporary employees of the Public Service who are under notice of dismissal. Three of them are more than 60 years of age and two are less than that age. All have had approximately the same period of service. The three who arc more than 60 years of age will receive pro rata furlough payment, and the two under that age will not receive any such payment. Will the Prime Minister give consideration to the introduction of an amendment of the Public Service Act so that' this anomaly may be remedied? 436 N76 LP 1 0 MENZIES, Robert Mr MENZIES - I shall inquire into the facts of the matter raised by the honorable member. 436 436 KBH 0 0 WILSON, Keith Cameron Mr WILSON - Is the Minister for Labour and National Service aware that there is an acute shortage of grape-pickers at Renmark in South Australia, and that unless such labour can be secured there will be a grave danger of losing a sub stantial part of the sultana crop in that district ? . As there are no unemployed persons in the Liberal-governed State of South Australia, will the Minister endeavour to secure grape-pickers from Victoria orone of the other Labour-governed States whose governments have failed to provide full employment for their people? 436 009MC LP 1 0 HOLT, Harold Mr HOLT - I understand that there is ashortage of labour to harvest the sultana crop at Renmark. Although we have heard stories from time to time in recent months about the great amount of unemployment in this country, we have experienced a degree of difficulty in finding adequate labour for harvesting in that part of Australia, and also at Mildura.I do not know that much labour would be available from Victoria at present. Perhaps the Victorian Labour Government has not been in office long enough for the employment position to become slack in Victoria. I shall ascertain what can be done from the State of New South Wales, where, unfortunately, half the total unemployment of the Commonwealth appears to be concentrated in the city of Sydney. 436 KCD LP 1 0 DAVIS, Francis Mr DAVIS Reports are current in Victoria that under-employment in certain canneries is delaying production. Will the Minister for Labour and National Service say whether those reports are correct? If they are correct, are there any steps that his department can take to meet the situation? 436 009MC 0 0 HOLT, Harold Mr HOLT - A paragraph was published this morning, in, I think, the Melbourne Age, about a shortage of female operatives at the Shepparton canneries. I have made inquiries of my department to ascertain the position. I understand that, although we have done a good deal to supply female labour to those canneries, there is still' a shortage of such labour there. We are trying to alleviate the shortage. 436 436 K58 0 0 O'CONNOR, William Mr O'CONNOR - Will the Minister for Health inform the House whether the legislation that relates to the obtaining of life-saving drugs provides 'that patients shall have a free choice of dispensing chemist? If that is so, is the Minister aware that the freedom of choice is being nullified by a method known as " channelling ", which appears to be an arrangement between medical practitioners and some chemists? Is it a fact that, as a result of this channelling system, 60 per cent, of the total quantity of life-saving drugs now being dispensed is being handled by 10 per cent, of the chemists? Is the Minister aware that this method is causing grave concern to chemists, particularly those who are the owners of comparatively small businesses? 437 10000 0 0 SPEAKER, Mr Mr SPEAKER Order ! The honorable member has already asked four questions. 437 K58 0 0 O'CONNOR, William Mr O'CONNOR - In view of the fact that channelling is distinctly unethical and corrupt, will the Minister take all measures necessary to stamp it out, and at the same time preserve the freedom of choice of patients? 437 C7E CP 0 0 PAGE, Earle Sir EARLE PAGE - Every patient in Australia has complete freedom of choice of the chemist to whom he may go to have a prescription dispensed. The honorable member's statement that 60 per cent, of the life-saving drugs now being dispensed is handled by 10 per cent, of the chemists is grossly inaccurate and untrue. The dispensing of free medicine is fairly evenly distributed over the greater number of chemists throughout Australia. A small amount of channelling may be going on. If the honorable member knows of a case of chanelline. and brings it to my notice, I shall see what can be done to prevent it. 437 LLW 0 0 DEAN, Roger Mr DEAN - I ask the Minister for Health whether an arrangement has been made with the Department of Health whereby one month's notice is to be given to pharmacists before any alteration is made of prices or of the conditions of supply of drugs that are on the free list. I understand that on the 3rd February, certain drugs were transferred to category 14a, which is a very limited category, and that no notice of such transfer was given to pharmacists until the 13 th February, that is, after a lapse of ten days. This delay caused considerable confusion among the pharmacists. 437 C7E 0 0 PAGE, Earle Sir EARLE PAGE - Every effort is made to ensure that any change that is made shall at once be brought to the notice of both doctors and chemists. How ever, first notification of such changes must be made in the Gazette before they can be published in any other form, and that process involves a certain delay. I shall see if it is possible to avoid delay in notifying chemists of such changes. 437 437 KHY 0 0 HOWSE, John Mr HOWSE - -I direct a question to . the Prime Minister in his capacity as Minister in charge of Commonwealth education. Is it a fact that students in the Australian Capital Territory sit for the New South "Wales Intermediate and Leaving Certificate examinations and use New South "Wales Department of Education text-books? If that is so, will the right honorable gentleman ensure that schools under the control of the Commonwealth use unbiased text-books, instead of such New South "Wales text-books as that entitled Social Studies for Sixth Grade, by G. T. Spaull, which is heavy political propaganda for the Labour party ? 437 N76 LP 1 0 MENZIES, Robert Mr MENZIES - I appreciate what the honorable member has in mind. I shall ascertain the extent to which New South Wales text-books are used here. I am not unaware of the fact that there are text-books used in Canberra on such special subjects as political science - I have read one or two of them - that are hardly impartial ; but then, political science never was. 437 437 JUX 0 0 MINOGUE, Daniel Mr MINOGUE - Has the attention of the Minister for Social .Services been directed to the fact that, yesterday, 300 nien and women queued up at the social services office at Hexham House, Goulburn-street, Sydney, to make inquiries about the payment of cheques for the unemployment benefit that should have been received by them on Friday last? Has the Minister taken steps to rectify the appalling conditions at the Sydney office of his department, which I brought under his notice by way of an earlier question regarding overcrowding? Will the honorable gentleman adopt a system of making payments to the unemployed other than that at present used ? Will the Minister consider making an increase of the clerical sta- 438 10000 0 0 SPEAKER, Mr Mr SPEAKER -Order ! The honorable gentleman- has now asked four questions. 438 JUX 0 0 MINOGUE, Daniel Mr MINOGUE - But they are all deserving ones. If you had seen the men that I saw yesterday at 10 o'clock - - 438 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order! The honorable member may not make a statement. He must ask his question. 438 JUX 0 0 MINOGUE, Daniel Mr MINOGUE - Will the Minister approach the authorities which control the Sydney Town Hall with a view to securing the basement of the Town Hall for use for this purpose in lieu of the existing social services office which is a disgrace to this country? 438 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order! The honorable member may not comment on matters raised in a question. 438 KWH LP 1 0 TOWNLEY, Athol Mr TOWNLEY - The honorable member has brought to the notice of the House an incident that happened in Sydney last night. Cheques for unemployment relief benefit were posted to recipients on Wednesday last in the usual way, but somehow or other one bag of mail went astray at 'the Sydney General Post Office. My department posts about 250,000 letters at the Sydney General Post Office every month, and this is the first occasion on which our letters have gone astray. The missing mail bag was discovered in the mail room in the basement of the General Post Office yesterday morning. The Postal Department is making a special delivery of the mail so Hint it will, reach the addressees concerned as soon as possible. I have discussed the matter with the Postmaster-General who is inquiring into the reasons why the mail bag was mislaid. Apart from that, [ do not know that there is anything more that I can do. 438 K6T 0 0 COSTA, Dominic Mr COSTA - Recently I asked the Minister for Social Services whether, under the proposed agreement between the Australian Government and the United Kingdom Government for' the provision of social services on a reciprocal basis, United Kingdom pensioners, like Australian pensioners, would be entitled to free treatment by doctors and to other free medical benefits. The Minister said that he thought such benefits would be extended to United Kingdom pensioners, but that he would confirm his reply after he had discussed the subject with the Minister for Health. Has he discussed the matter with the Minister for Health, and, if so, is he now in a position to announce a decision? 438 KWH 0 0 TOWNLEY, Athol Mr TOWNLEY - Yes, I have discussed this matter with the Minister for Health, but I am not in a position yet to make an announcement on it. These matters must be discussed, not only with the Minister for Health, but also with the British Medical Association and members of the medical profession generally in order to determine whether doctors are willing to co-operate. Up to the present, doctors have co-operated in all the Government's medical schemes, as the honorable member is aware, and I see no reason to doubt that they will do so on this occasion. 438 438 KIH 0 0 LUCOCK, Philip Mr LUCOCK - In view of the importance of the Suez Canal from both a strategic and political viewpoint can the Minister for External Affairs assure the House that Australia will be represented in any discussions that may take place concerning this area and that no action with regard to the withdrawal of troops from the canal zone, or in regard to any other factor, will be taken, without the Australian Government being fully informed and its views being considered ? 438 JWE LP Minister for External Affairs 1 0 CASEY, Richard Mr CASEY - I assure the honorable member that Australia's interests in the important matter that he has raised will be fully looked after. 438 438 JVA 0 0 MORGAN, Charles Mr MORGAN - Can the Prime Minister say what progress is being made in the formation of the Commonwealth Development Corporation? Will he indicate the nature of its functions? Will the Parliament be given any say with respect to the set-up of that body? 438 N76 LP 1 0 MENZIES, Robert Mr MENZIES - The honorable member, no doubt, is referring to the corporation, the formation of which was announced in London when the Prime Ministers' conference was being held there recently. That was not to be a corporation in which the Australian Government, or any other government, would have a share. It was to be a group of people in the United Kingdom representing various large investment areas. I have heard no details recently. I know that the formative work has been going on. I have no further information about what the corporation will do. We, of course, will not be in a position to tell it what it shall do; but we hope that when it is established and commences operations something good may come out of it so far as Australia is concerned. 439 439 KXB 0 0 WATKINS, David Oliver Mr WATKINS - Will the Minister for Supply inform the House of the progress that has been made with the establishment of an atomic energy commission in Australia, and when such a body is likely to be actually set up? 439 JOI LP 1 0 BEALE, Oliver Mr BEALE - An announcement was made towards the end of last year that an. atomic energy commission was to be appointed. Three members have been functioning in anticipation of formal appointment which will be effected under a measure which I hope will be introduced in the near future. 439 439 JU8 LP 0 0 CAMERON, Donald Alastair Dr DONALD CAMERON - Can the Minister for External Affairs give to the House any information about the present disturbances in Persia and their possible effect upon the general situation in the Middle East? 439 JWE LP 1 0 CASEY, Richard Mr CASEY - Australia is not represented at Teheran. We have been kept fully informed by the United Kingdom Government of all negotiations with respect to the oil dispute which is still current. We have not yet received any information about the disturbances that occurred at Teheran yesterday, but I should expect to receive such information in Canberra this evening. If it contains anything of consequence about which I should inform the House, I shall do so. 439 439 JZB 0 0 FITZGERALD, Joseph Mr FITZGERALD - Is the Minister for Civil Aviation able to advise the House whether the Government intends to honour the agreement that it made with the local government authorities concerned to vacate the Rose Bay flying base by September of this year ? I raised this matter about six months ago on behalf of constituents in the BondiWoollahra section of my electorate. They are disturbed by the noise of aircraft and are worried about the danger of lowflying aircraft. What is the exact position at present regarding the transfer of that base? 439 JLZ CP 0 0 ANTHONY, Hubert Mr ANTHONY - It is intended to transfer the flying boat base from Rose Bay to Botany Bay when circumstances permit ; but circumstances will not permit of such action in the immediate future. Somebody has to put up with the noise made by these low-flying aircraft, and I suppose the residents of Botany Bay will ultimately have to put up with it. I happen to reside in Rose Bay when I am in Sydney, and, consequently, I fully appreciate what it means to have these aircraft flying overhead at low altitudes. At the same time, the impossible cannot be done. It is not possible to transfer the base in the immediate present. 439 KFG 0 0 GRIFFITHS, Charles Mr GRIFFITHS - In view of the statement by the Minister for Civil Aviation last week that the Government was unable to proceed with the construction of a civil airport for Newcastle this financial year, will he now say whether any consideration has been given to a request by commercial interests in Newcastle for permission to build an aerodrome at Redhead which would be suitable for aircraft up to the standard of the DC3? If this matter has not received any consideration, will the Minister ascertain from officials of his department whether Redhead would be a suitable site for an airport and, if so, whether an aerodrome could be built for £20,000 as has been reported? If the Minister is advised that an aerodrome could be built at Redhead, will he give approval for those interested in the project to proceed with that work. 439 JLZ 0 0 ANTHONY, Hubert Mr ANTHONY - I shall have all aspects of the honorable member's question fully examined. 439 JF7 0 0 BEAZLEY, Kim Mr BEAZLEY - My question, which is directed to the Minister for Civil Aviation, arises from statements to the effect that Australian National Airways Proprietary Limited, a private company, has put before the Government proposals for the rationalization of air transport in this country, which the company says are in line with the request of the Government that it and Trans-Australia Airlines should prepare a plan for such rationalization which would eliminate competition on certain routes. Will the Minister say whether the action of Australian National Airways Proprietary Limited in making that statement public implies that the Government has approved, or is likely to approve, of it? 440 JLZ 0 0 ANTHONY, Hubert Mr ANTHONY - The honorable member should be aware that the Civil Aviation Agreement Act, which was passed recently by the Parliament, provides that this matter shall be determined by the two companies themselves in negotiation, or, failing agreement, by an arbitrator mutually agreed upon by the companies. ' Therefore, the matter does not come within the province of the Government at all at this point. 440 JF7 0 0 BEAZLEY, Kim Mr Beazley - The Minister has no influence with Trans- Australia Airlines? 440 JLZ 0 0 ANTHONY, Hubert Mr ANTHONY - I think everybody will agree that it is very desirable .that both airline companies should be able to pay their way and that overlapping services should be eliminated. As I have said, the Civil Aviation Agreement Act provides for matters of that kind to be determined either by .the two companies, acting in agreement, or, failing agreement, by an arbitrator. 440 KDA 0 0 DUTHIE, Gilbert Mr DUTHIE - I direct to the Minister for Civil Aviation a question that is supplementary to that asked by the honorable member for Fremantle. Since the fate of Trans-Australia Airlines seems to reside in the hands of an arbitrator, and several months have elapsed since the Civil Aviation Agreement Bill was passed, can the Minister give any indication when the arbitrator will be appointed and whether he, as Minister, will make the appointment? 440 JLZ 0 0 ANTHONY, Hubert Mr ANTHONY - The fate of TransAustralia Airlines or Australian National Airways Proprietary Limited does not rest in the hands of an arbitrator. Whatever rationalization proposals may be put into effect will be on the basis of reason. The matter of the appointment of the arbitrator is one for mutual agreement between both airlines. Australian National Airways Proprietary Limited1 and Trans-Australia Airlines have' reached a measure of mutual agreement in regard to the identity of a possible arbitrator, but it has not yet been possible to complete the arrangements with the individual who is acceptable to both. In the event of disagreement between the airlines in that respect the Minister for Civil Aviation has power to make an appointment, but I do not think that that occasion is likely to arise. 440 440 KIF 0 0 HULME, Alan Mr HULME - Last week, the Minister for Supply announced that more than £2,000,000 worth of orders for military clothing for the Services had been placed by his department with firms throughout Australia. Can the honorable gentleman inform me whether a fair proportion of these contracts went to firms in Queensland, whether such orders represented the granting to that State of a fair proportion of the total allocation, and whether most Queensland manufacturers were included in the allocation? 440 JOI LP 1 0 BEALE, Oliver Mr BEALE - I recall that the honorable member for Petrie has pressed, on previous occasions, the claims of textile manufacturers in Queensland for orders for the Services. In the allocation of. contracts recently, as in the past, we have endeavoured to spread the orders as widely as possible not only among the maximum number of tenderers but also among the States. I am glad to say that Queensland fared pretty well in the recent allocation of orders. The normal capacity of Queensland firms to make clothing of this type is about 10 per cent, of the total Australian capacity. Queensland, if my memory serves me aright, got contracts for approximately 15 per cent, or 16 per cent, of the total orders. Speaking again from memory, I think that a large number of manufacturers in that State participated. In Queensland there are many small manufacturers who tendered promptly and gave us good delivery dates. 440 440 KDA 0 0 DUTHIE, Gilbert Mr DUTHIE - I point out to the Minister for Supply that many Australian people are concerned at the possibility of the disposal to American interests of valuable uranium from our widespread deposits. Can the Minister assure the country that Australia's interests in this matter, which are actually owned by the people, will be fully safeguarded, and that overseas interests will not obtain a controlling power in any way over this new Australian industry? 441 JOI LP 1 0 BEALE, Oliver Mr BEALE - I give that assurance to the honorable member for Wilmot. There is no intention at all to dispose of Australia's interests unfairly or improperly. The uranium is primarily for the benefit of Australia, and the interests of this nation will certainly be protected. 441 441 DB6 0 0 WENTWORTH, William Charles Mr WENTWORTH - My question to the Postmaster-General relates to public telephones, the installation of which has been approved but which have not yet been installed. Is the honorable gentleman aware that, in many instances, the Postmaster-General's Department is advising that, although line plant and exchange plant are reserved, the installation cannot be made immediately because of the shortages of equipment? Can he give the House some information about which items of equipment are in short supply? In view of the fact that the supply position in general is now easier than hitherto, cannot special efforts be made to overcome those shortages and ensure, as a matter of principle, that when line plant and exchange plant are available, public telephones which have been approved for installation will be installed not later than three months after the date of approval for the work? 441 JLZ CP 0 0 ANTHONY, Hubert Mr ANTHONY - I am unable to tell the honorable member the particular items that are in short supply, but the position is that, in the last three years, we have installed more public telephones than had been installed in any other three-year period in the history of the Postal Department. We have installed 3,000 public telephones during the three years we have been in office, and that number represents a considerable percentage of the 16,000 public telephones installed in .Australia. I regard that performance as pretty good. We realize the necessity to provide public telephones for the use of people who do not have their own instruments, and public telephones are being provided as rapidly as the department can undertake the work. 441 KCS 0 0 DRUMMOND, David Mr DRUMMOND - Will the Postmaster-General say whether it is a fact that a very generous policy of assistance in telephone service extensions in rural areas has been initiated by him since he took office and that the policy has been of material assistance to country people? Has his attention been directed to recent heavy falls of rain on the tablelands, which have endangered certain coastal towns? Will he instruct his officers that priority be given to telephone line extensions which, if completed, would enable warnings to be sent from the tablelands to the appropriate authorities, so that they could take steps to protect the lives of people on the coast? 441 JLZ 0 0 ANTHONY, Hubert Mr ANTHONY - I shall direct the attention of my departmental officers to the honorable member's suggestion. My department has liberalized considerably the conditions attaching to the provision of country telephone lines to people on the land and, as a result, many country people have been able to install telephone lines necessitating miles of construction although they would not have had a hope of obtaining such lines before. 441 441 KMD 0 0 OSBORNE, Frederick Mr OSBORNE - Has the Minister for External Affairs any information about the offer that is said to have been made by President Eisenhower that, subject to certain conditions, he would meet the head of the Soviet Union? Does the -Minister know whether such an offer was communicated to Russia and, if so, what were the conditions? 441 JWE LP 1 0 CASEY, Richard Mr CASEY - We have no information other than that published in the press. I understand that, at a press conference a few days ago, President Eisenhower was asked whether he would meet the head of the Soviet Union. He replied, I believe, that he was quite willing to do so under certain reasonable conditions that he set out. I understand that later, Mr. Churchill was asked the same question and gave the same answer. The matter has not been specifically considered by the Australian Government but I believe that the Commonwealth's view would be in general agreement with the replies that have been given by the . president of the United States of America and the Prime Minister of the United Kingdom. 442 KCS 0 0 DRUMMOND, David Mr DRUMMOND - Will the Minister for External Affairs inform honorable members whether it is a fact that quite recently he delivered' an address to the Institute of International Affairs in Sydney, upon the principles of Australia's foreign policy? Is it also a fact that that address has been printed in the form of a booklet? If these are facts, in view of the terse, concise and clear statement of principles of which the right honorable gentleman is capable, will he consider issuing the booklet to every honorable member of this House, and to all senators? 442 JWE 0 0 CASEY, Richard Mr CASEY - The address to which the honorable member has referred was given in Brisbane, not Sydney. However, I shall certainly ascertain whether the suggestion of the honorable member can be complied with. 442 442 BV8 0 0 CALWELL, Arthur Mr CALWELL -As the Treasurer is a native of Queensland and represents a Queensland electorate in this Parliament, will he make a statement in the next few days setting out the reasons why he refused to help to finance the Burdekin Valley Development Scheme, the Tully Falls Scheme and the Dimbulah-Mareeba Scheme, and why he refuses to pay half the cost of the proposed railway from Callide to Gladstone? 442 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order! The honorable member is touching now upon policy matters. 442 BV8 0 0 CALWELL, Arthur Mr CALWELL - No, Mr. Speaker; the Treasurer has already announced his policy. He has said that he will not do these things, and I should like to know his reasons. 442 N76 0 0 MENZIES, Robert Mr Menzies - The honorable member for Melbourne is apologizing for his past. 442 BV8 0 0 CALWELL, Arthur Mr CALWELL - If you permit interruptions,Mr. .Speaker, it is difficult for me to prove .to you that my question is in order- 442 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! That is a matter to which I should like the honorable member himself to pay some attention. 442 BV8 0 0 CALWELL, Arthur Mr CALWELL - I should like to know why the Treasurer will not carry out the promises of the Chifley Government to undertake those works which are of great importance to the development of Queensland and to the defence of the north of Australia. 442 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! There is much debatable matter in the honorable member's question and the Treasurer need not reply to it unless he wishes to do so. 442 BV8 0 0 CALWELL, Arthur Mr CALWELL - He cannot. 442 F4T CP 0 0 FADDEN, Arthur William Sir ARTHUR FADDEN - In reply to the blatant propaganda of the honorable member for Melbourne, I challenge him to produce any promises that were made officially by Mr. Chifley to the Queensland Government in connexion with the Burdekin Valley Development Scheme or any other works project in that State. 442 BV8 0 0 CALWELL, Arthur Mr Calwell -Mr. Chifley repeated his promises on the floor of this House, and in the presence of the Treasurer. 442 10000 0 0 SPEAKER, Mr Mr SPEAKER - .Order ! The honorable member for Melbourne himself was asking a few moments ago that there be no interruptions. 442 F4T 0 0 FADDEN, Arthur William Sir ARTHUR FADDEN - As I have said so often in reply to such propaganda questions, when the Queensland Government presents its projects in a sound economic way, they will receive the sensible consideration of this Government. 442 K6Q 0 0 CORSER, Bernard Mr BERNARD CORSER - In view of the fact that the Burdekin Valley Development Scheme is estimated to cost £70,000,000 and that the Chifley Government's promised " special assistance " permitted expenditure at the rate of only £100,000 a year on this work, is it not fair to assume that at that rate of expenditure, the project would take 700 years to complete? 443 F4T 0 0 FADDEN, Arthur William Sir ARTHUR FADDEN - The honorable member's mathematical calculations are correct. 443 443 KE8 0 0 KEKWICK, Bruce Mr KEKWICK - Has the Minister for External Affairs seen or heard a report to the effect that certain prominent Japanese politicians who had a hand in framing the new constitution of Japan consider that that document needs only slight revision in order to permit Japan to rearm? What is the view of the Australian Government on recent suggestions of rearmament in Japan? 443 JWE LP 1 0 CASEY, Richard Mr CASEY - I do not know what " slight amendments " are meant. As I understand the position, the constitution of Japan, not the treaty of peace, forbids rearmament. 443 DTN 0 0 EVATT, Herbert Vere Dr Evatt - That is the internal constitution. 443 JWE 0 0 CASEY, Richard Mr CASEY - Yes. 443 DTN 0 0 EVATT, Herbert Vere Dr Evatt - Not the treaty of peace. 443 JWE 0 0 CASEY, Richard Mr CASEY - That is what I have said. The treaty of peace is silent on the subject of rearmament. 443 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! Debate across the table is out of order. 443 JWE 0 0 CASEY, Richard Mr CASEY - As I understand the situation, an amendment of the Japanese constitution would require a motion in one of the two Houses of the Diet, and such a motion would have to be carried, first, by a two-thirds majority, and subsequently by a majority of the Japanese people at a referendum. That does not seem to me to be a very slight process. The Australian attitude towards the treaty of peace with Japan and rearmament was very fully stated by me on behalf of the Government in this House about twelve months ago. There has been no alteration of that attitude of which I am aware since then. 443 443 KJQ 0 0 JAMES, Rowland Mr JAMES - Will the Minister for Immigration consider making use of army huts at disused military camps in order to provide educational facilities for young children at the British . immigrant centre at West Cessnock?. Children of very tender years at this establishment are exposed to grave risk when they cross a main road in order to go to school. Military huts could be used to provide a kindergarten at the camp. Also, the centre could be made a little more congenial than it is if military huts were used for the purposes of providing a library and an entertainment hall. Two military huts could be joined together to provide a suitable hall. 443 009MC LP 1 0 HOLT, Harold Mr HOLT - I appreciate the interest of the honorable member in these matters. I shall examine the practicability of the suggestions that he has made. 443 443 JRB 0 0 BOSTOCK, William Mr BOSTOCK - My question is addressed to the Treasurer. When h student wins a Commonwealth scholarship, the value of the scholarship is offset against the deductible allowance that the parent of the student can claim for income tax purposes. Consequently, the value of the scholarship is reduced considerably in many instances. In one case that has been brought to my attention, the remaining value of the scholarship is insufficient to pay for the books that the student will require. Will the Treasurer consider whether it would be possible to make the value of Commonwealth scholarships free from income tax implications? 443 F4T CP 0 0 FADDEN, Arthur William Sir ARTHUR FADDEN - The question raises a matter of policy that wil! be considered in due course. 443 JWX ALP 0 0 FRASER, Jim Mr J R FRASER - As the Treasurer has recently caused to be published and widely distributed a 70-page booklet entitled Income Tax for Farmers and Graziers, which sets out in detail the ramifications and benefactions of Commonwealth taxation, will he say whether the Government was really serious in its proposals to hand taxing powers back to the States this year? 443 F4T 0 0 FADDEN, Arthur William Sir ARTHUR FADDEN - I fail to discern any association between the latter part of the honorable gentleman's question and the booklet to which he has referred. The Government has never been more serious in its life than it is in relation to handing back taxing powers to the States, which have requested a return of those powers. 444 444 JLW 0 0 ANDREWS, Thomas Mr ANDREWS - The Minister for Defence may recall that it was stated last week that the studies of engineers had been impaired because national service training broke into three and a half, weeks of their school period at the beginning of the year. Since then I have ascertained that national service training, in certain instances, also affects medical students by preventing their attending lectures during from one to three weeks of camp training. Could the camp training period for these students at the beginning of the year be reduced in order to permit them to take full advantage of all lectures and could arrangements be made for them to do a corresponding additional period of national service training at the end of the year? 444 009MC LP 1 0 HOLT, Harold Mr HOLT - The arrangements for the training of those who are undertaking educational courses have been worked out as carefully as could be contrived with the various authorities concerned. My department has tried to arrange the training period of university students, for example, so as to cause them the least possible inconvenience. I shall examine the point which the honorable member has raised with a view to giving him a more detailed reply to his question. I think that he will find that every care has been taken in order to ensure the least possible interruption in the study of the young men concerned. 444 444 KEJ 0 0 KEON, Standish Mr KEON - Will the Prime Minister inform the House whether it is the intention of the Government to seek a redistribution of seats in Victoria? Is the prime factor actuating the Government in seeking a redistribution its desire to save a number of its members- particularly the M!inister for External Affairs - from the wrath of the electors? Since the La Trobe electorate can only be made safe- 444 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! The honorable gentleman is now introducing comment of a debatable nature. 444 KEJ 0 0 KEON, Standish Mr KEON - It is the end of the question, Mr. Speaker. Since the La Trobe electorate can only be made safe for liberalism at the expense- 444 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! The honorable gentleman is proceeding further on the matter.- 444 KEJ 0 0 KEON, Standish Mr KEON - Can the Prime Minister say who the sacrificial victims will be ? 444 N76 LP 1 0 MENZIES, Robert Mr MENZIES - I take it that the honorable member's question is intended te be facetious and in that sense I enjoy it. The honorable member appears to have some murky -ideas about the purposes of redistribution. Perhaps he has derived his inspiration from New South Wales and Queensland. 444 444 BV8 0 0 CALWELL, Arthur Mr CALWELL - In view of the fact that it has been estimated that the accounts of the Postal Department will show a deficit of £3,000,000 this year will the Postmaster-General state what action the Government intends to take to meet that situation? If there are to be increases in telephone, telegram and postal rates- 444 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order! The honorable gentleman is getting on to policy. 444 BV8 0 0 CALWELL, Arthur Mr CALWELL - I am finding it increasingly difficult to put a simple question. 444 10000 0 0 SPEAKER, Mr Mr SPEAKER - The honorable gentleman's trouble in that regard is of his own creation. 444 BV8 0 0 CALWELL, Arthur Mr CALWELL - I do not think so. I wish to know whether the methods it is proposed to adopt to meet the situation that I have outlined will be announced before or after the coming Senate election? 444 JLZ CP 0 0 ANTHONY, Hubert Mr ANTHONY - The accounts of the Postal Department have recently beentabled in this House. They showed that the department made a profit of £600,000' in the last financial year. 444 BV8 0 0 CALWELL, Arthur Mr Calwell - What about this financial year? 444 JLZ 0 0 ANTHONY, Hubert Mr ANTHONY - The profit made in the last financial year was the first profit made for very many years, including years in which the Chifley Government was in office. Under that Government the department lost between £3,000,000 and £4,000,000 a year. 444 BV8 0 0 CALWELL, Arthur Mr Calwell - That is not true, 445 10000 0 0 SPEAKER, Mr Mr SPEAKER -Order ! The honorable member for Melbourne must cease interjecting. 445 JLZ 0 0 ANTHONY, Hubert Mr ANTHONY - The current financial year will not end until the 30th June next, and as there are many things that can happen between now and that time I am unable to say what the profits or losses of the department may prove to be for the full year. As soon as that information is available the Government will take whatever action it thinks proper. The record of the department under this Government is much better than it was under the previous Government. 445 K8B 0 0 CURTIN, Daniel Mr CURTIN In view of the assurance just given to the House by the Postmaster-General that his department is showing a surplus, will he give the House an assurance that public telephone charges will not be increased to 4d. a call in the forthcoming year? 445 JLZ 0 0 ANTHONY, Hubert Mr ANTHONY - I give no assurance of any kind in reply to questions of that character asked in the House. 445 445 KEJ 0 0 KEON, Standish Mr KEON - Will the Postmaster-General say whether it is a fact that his department is still expending money on the operation of frequency modulation radio stations in two of the capital cities and, if it is a fact, will he indicate the reason for the continuance of that expenditure, seeing that it does not appear to be likely that either frequency modulation stations or frequency modulation transmission will come into general use in this country ? 445 JLZ CP 0 0 ANTHONY, Hubert Mr ANTHONY - Whatever frequency modulation transmissions there may be at present are only of an inconsequential and experimental nature. 445 BV8 0 0 CALWELL, Arthur Mr CALWELL - My question is directed to the Postmaster-General. In view of the fact that only people who live in the capital cities and in Newcastle and Launceston can hear parliamentary broadcasts, because only in those cities are there two national broadcasting stations operating, will he consider implementing the plans of the Chifley Government for the establishment of second national broadcasting stations at Townsvillo in Queensland, Port Augusta in South Australia, Broken Hill in New South Wales and Geraldton in Western Australia? If that should be done a greater number of people would have the opportunity of listening to debates that may 'take place in this chamber and in the Senate. I ask the question because all the people of Australia pay the same listening fees and are therefore entitled to the same facilities of the department over which for the time being, and I emphasize for the time being, the Postmaster-General presides. 445 JLZ 0 0 ANTHONY, Hubert Mr ANTHONY - As the Postmaster-General for the time being, I shall answer the honorable member's question. When the present Government assumed office there were any number of plans in existence, made by the preceding Chifley Government, but there were no means of carrying them out. Everybody in the country had been promised something, but to honour all the promises of that Government about £50,000,000 more than was available to the Postal Department would have had to be expended. This Government has erected quite a number of regional stations to carry the parliamentary broadcasts and the Australian Broadcasting Commission's second programme. Indeed, the Government has erected more regional stations of this nature in the last three years than the Chifley Government erected in its eight years of office. 445 Mr. Duthie proceeding to ash a question, 445 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! The honorable gentleman is not seeking information. The question is therefore out of order. Mr. Costa proceeding to ask a question, 445 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! The honorable gentleman has. asked a question about government policy. The question is therefore out of order. 445 miscellaneous 445 JLZ Richmond CP Postmaster-General and Minister for Civil Aviation 0 0 ANTHONY, Hubert Mr ANTHONY . -by leave- The Government has received very incomplete information about an accident that occurred to the Comet jet airliner that was proceeding to Australia. Full details of the matter are not yet available, but we have reason to fear that the Comet aircraft which was en route to Australia has crashed at Karachi, and that all on board Have lost their live3. I understand that the aircraft crashed about 3,700 yards from the runway at Karachi. It was travelling to Australia to inaugurate a service between Sydney and Honolulu for Canadian Pacific Airlines. The aircraft was the product of the De Havilland works in England, and in my opinion, and in the opinion of aeronautical experts throughout the world, it was the finest jet aircraft that has been produced. I cannot indicate the cause of the accident at the moment, but I understand that the crew of six and also the five passengers were killed. I desire tq extend the sympathy of the Government to all those who have been bereaved by the tragedy. I also extend our sympathy to the management of Canadian Pacific Airlines, which owned the aircraft and was bringing it to Australia via Karachi, Singapore and Darwin, to begin the new air service. The accident is a matter of great regret, and I feel sure that the company and every one concerned with the matter will have the sympathy of the whole of the Australian people. 446 DTN Barton Leader of the Opposition 0 0 EVATT, Herbert Vere Dr EVATT .- -by leave - May I ask the Prime Minister (Mr. Menzies), to indicate in any message that he may send that it is on behalf of .the Parliament. I agree with the Postmaster-General (Mr. Anthony) that whatever the circumstances of this tragedy, the great pioneer flight of the crew of the Comet, and the efforts of all other leaders in civil aviation throughout the British Commonwealth, will never be forgotten by the people of this country. 446 bill SECOND READING Debate resumed from 19th February {vide page 127), on motion by Mr. Menzies - That the bil] be now read a second time. Dr. EVATT (Barton- Leader of the important piece of legislation, and I shall endeavour this afternoon to give reasons why it should not be accepted by the House. The bill will bring about a very drastic and fundamental change in the structure of the Commonwealth Bank of Australia and will permanently weaken the central bank as well as the general and other divisions of the Commonwealth Bank of Australia which is the most valuable asset of the people of Australia. The bill is extremely important because, as I shall show, the Commonwealth Bank of Australia, from its commencement in 1912, was designed to carry on general banking business by that very name, and that function is now to be altered. The name " Commonwealth Bank of Australia ", which is such an integral part of the bank's goodwill, is to go. The substance of the measure before us may be summarized in this way: The whole of Part IV. of the Commonwealth Bank Act 1945 is to be repealed. As a result, the Commonwealth Bank of Australia will no longer be able to carry on general banking business, that is, the functions of a trading bank, for which it was first commenced. In effect, the Commonwealth Bank in its general banking activities is to be wound up by the force of the bill which we aru asked to pass, and an entirely new corporation, to be called " The Commonwealth Trading Bank of Australia ", is to be established in its place. True enough a link with the Commonwealth Bank of Australia is to be retained in regard to overall supervision and policy; but the point that must be remembered all through this debate is that the day by day control of the new, so-called trading bank is to be vested in a general manager who may be appointed only with the joint consent of the government of the day and the Commonwealth Bank Board. If the board recommends the appointment of A as manager and the Government does not want A, A cannot be appointed. That in itself is an extraordinary provision which gives the government of the day a veto over what is essentially a function of the Governor of the bank or of the board. The Government may delay the appointment of a general manager of the new bank until it receives from the Governor and the board a nomination which is satisfactory to it but not necessarily to those skilled in banking or to those who have some knowledge of the business and history of the Commonwealth Bank. The person selected for appointment as manager must be a person whose nomination is acceptable to the government of the day. Such a provision does not apply to any other branch of the activities of the Commonwealth Bank and is entirely wrong. I emphasize the point that in clause IS the Government proposes to transfer the business of the Commonwealth Bank and its general banking division to the new trading bank. Such a fundamental change will not make it possible for the Parliament merely by an enactment to transfer customers and their accounts, and particularly their liabilities under advances, without obtaining in every single instance written consent. Imagine how long it would take to obtain the written consent of every single customer of the bank! This proposal must inevitably cause serious delay and utter confusion to the customers of the general banking division of the Commonwealth Bank and to the members of the business community with whom the customers of the bank deal. I understand that the general banking division of the Commonwealth Bank of Australia has considerably more than 300,000 customers who will be inconvenienced and prejudiced in the way I have mentioned. Those customers, in turn, deal with millions of citizens, all of whom will be confused and whose business activities will be delayed by this new machinery. At first glance it is almost impossible to see the reason for this arbitrary change in the business dealings of the trading division of the Commonwealth Bank. Let us consider the reasons advanced by the Prime Minister (Mr. Menzies) for the submission of this legislation. In his second-reading speech the right honorable gentleman said that the purpose of the legislation was - . . to obviate the possibility that the Commonwealth Bank could place its own trading activities in a privileged position by unfair use of the central banking functions. Is it seriously suggested that the trading activities of the Commonwealth Bank should be cut off from the other functions of the bank because it is feared that the bank may by unfair use of its central banking functions place its own trading activities in a privileged position? One would have thought that an attempt would be made to prove the correctness of such a statement by the submission of facts, but no facts were submitted to substantiate it. It is merely a general statement which, I think, can be shown to be incorrect. As a matter of fact the same argument, though the Prime Minister put it in a slightly different way, could be used to show that the primary responsibility of the Commonwealth Bank is its function as a central bank. One could argue round and about that point. The first function of the Commonwealth Bank is the trading function which it has carried out successfully since 1912. Both of these arguments are completely destroyed if one has regard to the practical business situation that has existed for more than a quarter of a century. Looking at the matter from a practical business viewpoint we must remember that the Commonwealth Bank of Australia in its general business - its trading business if honorable members prefer so to describe it, although that is not a better name - has existed for 40 years and for more than a generation since the Commonwealth Bank has functioned as a central bank as well as a trading bank. I refer honorable members to the report of the Royal Commission on Monetary and Banking Systems, because I believe it provides the key to the solution of the problem if we want to examine the facts accurately and impartially. Honorable members will recall that the commission was presided over by the Chief Justice of South Australia, Mr. Justice Napier, and included in its membership Professor R. C. Mills and Mr. E. V. Nixon, Mr. J. B. Chifley, Mr. H. A. Pitt and Mr. J. P. Abbott. Everybody has recognized the work that was done by that commission, the labour that it put into its investigations and the fact that it carried them out after the depression and before the outbreak of World War II. Some differences of opinion arose among the commissioners, but on the essential matters that are dealt with in this measure, the opinion of the commissioners was unanimous. Their report is one of the most comprehensive that has ever teen presented to any parliament, and it was based upon a lengthy inquiry,, the sworn evidence of experts and the most careful and elaborate research. The commission recommended that the central bank should be the Commonwealth Bank. That was the existing position at that time and the commission affirmed it clearly and emphatically. The commission recommended that the bank should be organized mainly in its existing form. It also recommended - we forget these obvious facts when so much prejudice is injected into debate - that as the central bank's sole concern was the general public interest, it should be publicly owned and controlled. Then the commission, in paragraph 521 of its report, made this crucial recommendation - The present structure of the Commonwealth Bank, consisting as it does of a. central bank with trading bank powers and a savings bank, is. in our opinion, essential to the efficient exercise of its functions as a central bank. That is to say, the trading bank functions incidental to such a bank are part and parcel of what the Prime Minister said was the primary function of a central bank. The royal commission elaborated that point in its report. The trading bank is not a mere excrescence upon the Commonwealth Bank. Long before central banking was developed in either Australia or any other country, the Commonwealth Bank started its trading activities; and it received the endorsement of the royal commission not only as a trading bank but also as a central bank. But the function which the commission declared was an essential function of a central bank is now to be torn from the central bank. However, the Prime Minister has produced no arguments in support of that decision. Perhaps, if we looked sufficiently closely into the matter we should find a reason for the Government's decision, but it would not be a reason that would commend itself to the House. The royal commission dealt fully with the trading bank powers of the Commonwealth Bank and pointed to the fact, about which members of the Labour movement had complained for many years, that th,e Commonwealth Bank had, in effect, placed limitations upon its own trading activities and that since 1930, at least, it had not been a serious competitor for business with the trading banks. I heard Mr. Scullin, Mr. Curtin and Mr. Chifley, when each was Prime Minister, make that complaint. 448 C7E 0 0 PAGE, Earle Sir Earle Page - Nevertheless, it was not true. 448 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! The Minister for Health will have an opportunity to participate in the debate. 448 DTN 0 0 EVATT, Herbert Vere Dr EVATT - The royal commission, which consisted of the gentlemen whose names I have mentioned, stated clearly in its report that what the Australian Labour party complained about at that time was true. I have checked the relevant reference in the report most carefully. The words " since 1930, at least ", are not my words ; they were used by the commission which fixed that year in that context. I repeat that since 1930, at least, the Commonwealth Bank Board had placed limitations upon the bank's trading activities and that since that year it had not been a serious competitor for business with the private trading banks. In substance, the royal commission made that statement in paragraph 157 of its report. If the Minister for Health (Sir Earle Page) checks the reference, he will find that that year was put forward unanimously by those experts after they had investigated the facts. I repeat that Mr. Scullin, Mr. Curtin and Mr. Chifley each complained that the Commonwealth Bank Board had held up the trading activities of the bank. In fact, the- board had not appreciated the vital importance of the bank's trading activities in relation to its functions as a central bank. If its central bank functions were predominant, it is wrong to infer that its trading functions were of less importance. The royal commission pointed out that the Commonwealth Bank had not made much use of its trading activities for the purpose of expanding, or contracting, credit. It is well known that the old Commonwealth Bank Board did not seek business in any really competitive spirit. It was for that very reason that in the 1945 act the Chifley Government made it a statutory duty of the Commonwealth Bank to compete actively with the private trading banks. That amendment was made on the basis of the facts that were reported by the royal commission and to which I have just directed attention. The royal commission made a recommendation in relation to the structure of the Commonwealth Bank and I appeal to honorable members, whatever their preconceptions might be, to consider every word of it. It is contained in paragraph 511 of the report and reads as follows : - Although it is unusual for a central bank to carry on trading bank activities and to control a savings bank, we consider it desirable that the Commonwealth Bank should do both. Through its trading bank activities it possesses powers of competing with the trading banks which can be exercised as and when required.. Similarly, its savings bank activities add to its ability to regulate the volume of credit and enable it to compete, if necessary, with the State savings banks. The royal commission concluded - We are of opinion that the use of its trading bank activities as an adjunct to central banking policy is in keeping with its' central bank functions and is to be approved. So, we find in two parts of the report of the commission recommendations whereby it pinned itself to the doctrine that the trading bank functions, apart from their contribution towards competition, are to be regarded as a vital function of a central bank. If due regard is paid to the great force of these careful recommendations, the case put by the Prime Minister completely breaks down. What the Prime Minister has done has been to commit the very blunder- that the royal commission deliberately condemned. The trading business of the Commonwealth Bank, in fact, assists, and is necessary to, its great central bank functions. If the Prime Minister was right in regarding the primary responsibility of the Commonwealth Bank as being that of a central bank, then the royal commission asserts that the trading, bank activities, like the savings bank activities of the institution,, assist the central bank activities of the Commonwealth Bank.. Why are those activities to be changed.? If central banking is so important and if the royal commission's recommendation is. right in its implications on the vital part of trading bank functions in connexion with central banking functions, why is the Government altering the position? Of course, the report of the royal commission does not necessarily bind the Parliament, but I point out that nobody has ever challenged it on this point. Why has the Prime Minister not even referred to the report of the royal commission, or attempted to answer those cogent findings which I have summarized? He simply made a series of assertions. But the people of Australia, who own th<? Commonwealth Bank, desire to know the reason for the change. The Commonwealth Bank of Australia has many branches and departments - general trading, industrial finance, the mortgage bank, rural credits, and savings - and they are vital and integral operations of the bank. Therefore, the people will ask, " What is the real purpose of the Government in introducing this legislation? What does it really want to do? It cannot be the professed reason. Consequently, the reason must be sought elsewhere ". The effect of the proposed change is clear. Is not the real purpose of the Government to weaken the Commonwealth Bank on its trading side compared with the private banks ? That will be the inevitable effect of the bill, and, therefore, that must be the intention of the Government. The bill could- have no other purpose. I believe that the private banks are entitled to compete to the best of their ability with the trading branch of the Commonwealth Bank of Australia, but I submit that this bill goes much further than that. It subverts and destroys the structure of the Commonwealth Bank ;. it gives to- the private banks an unfair advantage; and it helps to destroy the goodwill of the rival business, which has been built up over a period of 40 years and conducted solely as a public utility in the interests of its owners, the people of Australia. If you want to destroy a business, destroy its goodwill. If you want to destroy its goodwill,, destroy its name. That is an old aphorism in connexion with trade and business, and that is what is happening in the present instance. The new institution is to be called the Commonwealth Trading Bank of Australia. This change of name is one of the worst features of the bill. Tha Commonwealth Bank of Australia is a name that is honoured and respected not only in Australia but throughout the world. The bank, according to its annual report,has hundreds of branches throughout Australia, and in parts of the Pacific. What do they do? They do not engage in central banking activities. They do the work, primarily, of a trading bank. What is to happen to them? Is the Government telling millions of people throughout the world that there is a new bank, the Commonwealth Bank of Australia, which is not to engage in trading bank activities, and that there is to be a Commonwealth Trading Bank of Australia. This name is ambiguous, uncertain and puzzling. Everybody who has a knowledge of business affairs will agree that this change is a vital one. The Commonwealth Bank of Australia, as a name, indicates ownership and control by the people of Australia. The new name has not that significance. There will be confusion, which will be worse confounded because of the enormous number of customers involved, and the people with whom they deal. Cheque forms will need to be issued for the new bank. Business will be disturbed and anxiety aroused amongst the staff. When those happenings are the inevitable result of legislation, it is reasonable to infer that they are contemplated and intended. The name of a great and successful business like the Commonwealth Bank of Australia is an integral and valuable portion of its goodwill. A glance at the last annual report of the institution enables us to see how successful its operations have been. The goodwill is a portion of the assets; and the name is an integral part of the goodwill. The goodwill of a business really means, and includes, the tendency of people to resort' to the institution in order to do business, and the name is everything. I shall cite a parallel case so that it may be tested. Let us suppose that the Bank of New South Wales, which is a very old and famous bank, was compelled by statute to change its name to the Trading Bank of New South Wales. Here, I pause for a moment to point out that the Commonwealth Bank of Australia is not changing its name voluntarily. The alteration is the result of action by this Government. There is no evidence that the Commonwealth Bank Board is in favour of this change. I challenge the Government to say whether the board wants the alteration. 450 BV8 0 0 CALWELL, Arthur Mr Calwell - The people do not want it. 450 DTN 0 0 EVATT, Herbert Vere Dr EVATT - I shall deal first with the attitude of the Board to the change. The Government won the issue before the people on the re-appointment of the bank board. I should like to know whether the board wants the change of name. I believe that action to compel the Bank of New South Wales to change its name, thereby interfering with its goodwill, which is an asset, would be regarded as an outrage. I take exactly the same view of the Government's proposal to change the name of the Commonwealth Bank. 450 KFQ 0 0 GULLETT, Henry Mr Gullett - A few years ago the right honorable gentleman voted for legislation to nationalize banking. 450 DTN 0 0 EVATT, Herbert Vere Dr EVATT - The nationalization proposal involved the fullest compensation for the assets, but the Government, in this legislation, is subverting and destroying the goodwill of a business without compensation. 450 C7E 0 0 PAGE, Earle Sir Earle Page - Nonsense ! 450 DTN 0 0 EVATT, Herbert Vere Dr EVATT - The name "Commonwealth Bank of Australia " is known to the people who own the institution and who deal with it. I mention, in passing, that the Banking Bill 1953, which the House will debate later, will attempt to subject the new bank to the same rules relating to special deposits as are applied to the private trading banks. That is a different point, and I realize that it is not under consideration at the present time, but that is the intention of the Government.But let us assume, for a moment, that the provision is defensible, and that the point of view is understandable. That would be no reason for taking away from the Commonwealth Bank of Australia its general business, its present name, and the status and prestige that go with the name. The Commonwealth Bank, according to its latest report, is obeying the general directions relating to special deposits. However, , I have no doubt that the whole matter will be discussed when the Banking Bill 1953 is before the House. Injury to the goodwill of the business must follow from the introduction of this bill. Therefore, my inference is that it is the intention of this Government, not to establish fair competition as between the Commonwealth Bank in its general business, and the private banks, but simply to prejudice, injure and weaken the general banking business of the Commonwealth Bank of Australia and convert it into a weak bank. That, clearly, is the purpose of the Government. I now ask whether the Government has the slightest authority from the people to make this change. I claim that it has no such authority whatever. This matter was not mentioned in the general election campaign that followed the double dissolution in 1951. The only issue at that time was whether the Commonwealth Bank Board should be reconstituted and govern the Commonwealth Bank in all its activities or whether that authority should repose in the Governor of the Bank. I also invite honorable members to study the famous document in which is reprinted the policy speech delivered by the present Prime Minister on behalf of the Liberal party and the Australian Country party during the general election campaign in 1949. The only matter relating to banking in that speech was whether control should be exercised by the Governor of the Bank, or by the Governor with the co-operation of a board. The Prime Minister completed his reference to banking with the following words : - We will continue the trading bank activities of the Commonwealth Bank in fair competition with the other banks. He did not suggest that the name or the structure of the Commonwealth Bank would be changed, or that his Government would repudiate the recommendations of the Royal Commission on Monetary and Banking Systems. He also did not suggest that the appointment of the general manager of the bank would be subject to the veto of the Government. Indeed, the reverse is promised and implied in that statement. Therefore, the Government, far from having authority to make these changes, put the very opposite view to the people. If this measure is passed the people will have been completely deceived, and the promises that were made to them repudiated. There i3 one other matter that I should mention in view of the Prime Minister's misleading references. This legislation does not raise any question of the nationalization of the private banks. It is well known that the nationalization of the private banks would be impossible in this country without a drastic amendment of the Constitution. The people gave their verdict against nationalization and, at the 1949 and 1951 election campaigns, Mr. Chifley stated the position quite clearly and quite frankly as he had done when the nationalization legislation of 1947 was being repealed. All this talk of indirect nationalization of the banks is a smoke screen deliberately used by the Government to disguise its real purpose which is, of course, to sabotage the people's bank by weakening its structure, reducing its functions, and preventing it from competing actively with the private banks in the manner approved by the people of Australia when they supported the 1945 legislation. Beyond doubt, just as . it would be contrary to the Commonwealth Constitution for any Government to nationalize the private banks, . it ' would be equally unconstitutional for any Parliament or any Government to pass legislation, or do any executive act, designed to achieve the same end by indirect means. That is elementary and courts of law have frequently acted on that principle. The reality of this measure cannot be concealed from the minds of the people by catch-cries or- by smoke-screens. The Government knows perfectly well that, politically, legally and practically, the nationalization of the private banks is a dead issue. "What it wants to do is to obstruct the people's bank, or at least to obstruct its trading bank activities, and so prevent it from competing fairly and openly with the private trading banks. Not only has the Government no mandate for such actions but it also assured the people that nothing like that would be done. It is no mere coincidence that this action is being taken on the eve of an important election. If the Government had sincerely wanted to pass measures of this kind, it could have done so at any time during the last two years. Clearly the bills have been introduced for some other purpose, which no doubt, will be revealed when the Senate elections are held. The Government has never sought a mandate for these proposals which, as I have said, can only weaken a great public utility merely for the sake of preferring a few private trading banks. This policy of favouring private monopoly is not new with this Governmer.t. It has been applied in a most open and unashamed manner since honorable members opposite .were elected to office in 1951. I remind the House that, during the 1951 election campaign, the Government promised to introduce legislation which would seek an alteration of the Constitution to prevent socialization without a prior referendum of the people. Here may I interpolate that if such a plan were adopted, surely it would be equally necessary to adopt a constitutional safeguard to prevent a government such as the present administration from continuing its insensate policy of selling out assets belonging to the people and weakening public utilities without the express authority of the people. Honorable members opposite want it only one way: They do not want the people's verdict on legislation such as this about which there is great public concern and indignation. There is widespread public resentment against these bitter, almost wanton attacks on public utilities including some eminently successful undertakings during the last eighteen months. Vital enterprises, which have not been monopolies in any shape or form, have been either sacrificed or weakened by the Government, not to end public monopoly but to strengthen, confirm and enrich private monopoly. That is the great issue that is becoming clear in this country. I need only give the House two or three illustrations. This Government has sold the Commonwealth's interest in Amalgamated Wireless (Australasia) Limited and the Glen Davis shale oil project has been sold out. Trans- Australia Airlines has not been sold, but a special act has been passed to help Australian National Airways Proprietary Limited and to hurt Trans-Australia Airlines. The Commonwealth's majority shareholding in Commonwealth Oil Refineries Limited has been sold at a price far less than its true worth, and Australia to-day has no real interest in any of the major oil companies. Commonwealth handling equipment at New South Wales, Victoria and Queensland ports is to be sold. The Minister for Supply is trying to sell it now, and may already have sold some of it. Coalwinning plant for the open-cut mines is also being sold. Much of that plant was purchased from the United States of America by the Chifley Government in accordance with the then Prime Minister's policy of buying only the best equipment in the world. Coal had to be obtained quickly, and valuable machinery was imported for that purpose. Now the equipment is to be sold through the Joint Coal Board. And that does not complete the list. The Commonwealth shipping line, which provides a vital service to States such as Queensland and Tasmania, is to be sold. 452 KE8 0 0 KEKWICK, Bruce Mr Kekwick - I rise to order. I ask, Mr. Deputy Speaker, what the matters to which the right honorable gentleman is now referring have to do with the measure under consideration ? 452 10000 0 0 ADERMANN, Charles Mr DEPUTY SPEAKER (Mr Adermann - I ask the right honorable gentleman to come back to the bill. 452 DTN 0 0 EVATT, Herbert Vere Dr EVATT - I was merely giving some illustrations to show that the proposal contained in this measure is in line with the policy of the Government. The Commonwealth shipping line is to be sold. As a Tasmanian representative, the honorable member for Bass (Mr. Kekwick) will object to that. The whaling industry, too, is to pass to private enterprise. Clearly, this attack upon the Commonwealth Bank is a part of this Government's over-all plan. It is not an attack upon a monopoly. Indeed, the passage of this measure will help combines and monopolies conducted for private profit, and ' will hurt a great public utility. The Government's excuse for actions such as this is always that there must be fair competition, and now its attack has been turned to the greatest asset of the Australian people. Without the Commonwealth Bank as a financial and economic instrument, a great leader in the field of banking such as the late Sir Denison Miller, could not have done what he did during World War I. During World War II. also, the Commonwealth Bank financed marketing pools and assisted the development of secondary industry for defence purposes. I emphasize the importance of the general banking division of the bank in our direct war effort. Other parts of this legislation are open to strong criticism, but I am confining my attention now to the essence of the measures which is the attempt to subvert and undermine the Commonwealth Bank. Just imagine the gratuitous injury that is to be inflicted by altering the name to the " Commonwealth Trading Bank of Australia ". If the Government wants to distinguish between the trading bank and the central bank, why does it not change the name of the central bank to the Central Reserve Bank of Australia ? That would be less injurious. Alternatively, why not retain the title " Commonwealth Bank of Australia " and merely add " General Banking Division " on cheques or other instruments ? Why confuse the 300,000 customers of the people's bank and the other individuals with whom they deal? Why interfere with the goodwill of the business? The proposals now before us are completely in the teeth of the recommendations of the 1936 royal commission which consisted of individuals with most divergent views on politics. At least they were unanimous on that point. The people have not approved of this attack on their asset, and I believe that they will express their disapproval at the first opportunity. The Prime Minister has repudiated his promise to submit to them a proposal for the alteration of the Constitution in order to resolve the issue, and I believe that they will be roost condemnatory of the Government's action in introducing these measures. The Commonwealth Bank of Australia bears an historic name. Men like Andrew Fisher and King O'Malley were responsible for the early venture, and it became extremely suc cessful. The Commonwealth Bank Board in the 'thirties tried to stop the bank from exercising its trading functions in competition with the private banks. I repeat .that assertion in the presence of the Minister for Health (Sir Earle Page) and ask him to check it against the report of the Royal Commission on Monetary and Banking Systems. If the Government wants to have fair competition, it needs only to let competition continue on the present basis. Interference with fair competition, by altering the name of a bank or by other means, can lead only to unfair competition. The Labour party vigorously and consistently opposes interference of any kind with the Commonwealth Bank. In .that respect it carries on the historic tradition that the people's bank must not be interfered with. The Government proposes to wage a war of aggression against the Commonwealth Bank of Australia. Its intention is, not to establish conditions of fair competition, but to place at a disadvantage the bank which is owned and controlled by the people. For that reason the Opposition uncompromisingly opposes these bills. 453 C7E Cowper CP Minister for Health 0 0 PAGE, Earle Sir EARLE PAGE . - One of the greatest entertainments that I have enjoyed during my long term as a member of this Parliament has been the continuing spectacle of the political gyrations of the Labour party in relation to the banking issue. I have heard its members advocate nationalization of banking, and I have heard them shout stories about the imminent destruction of the Commonwealth Bank at a time when the bank has been growing rapidly and establishing branches in almost every country town and populous suburb. While they cried about the decline of the bank, its assets continued to grow at an astonishing rate. For example, the number of branches of the Commonwealth Bank increased from 62 in 1922, just before 3 transformed it into a central bank, to 275 in 1942. That was an increase of approximately 400 per cent. Over the same period, its assets increased from £134,000,000 to £481,000,000, an increase of morn than 300 per cent. The staff expanded from 1,800 to 6,300, an increase of 400 per cent. All this happened when, according to the Labour party, the Commonwealth Bank was dying! Its profits increased from £400,000 a year to almost £1,000,000 a year over the same period. Since this Government came to office in 1949, the number of accounts with the bank has increased from 252,000 to 372,000. Over a period of ten years, during eight of which the Labour party was in power and when, according to honorable members opposite, there were all sorts of reasons why the bank should flourish, the number of accounts increased from 142,000 to only 250,000, a rate of increase which is not comparable with the rate that has been maintained during the past three years. Although I watched the Labour party for many years as it wandered about in a maze of doubt, trying to make up its mind whether to nationalize banking to-day or to do something else to-morrow, I did not expect to witness the Leader of the Opposition (Dr. Evatt) performing all the antics in which he has indulged in this House to-day. First of all, he told a lot of tarradiddles about the bank declining and losing prestige. The truth is that the Commonwealth Bank has continued to develop and expand its activities ever since it was established. O'Malley and others who helped to erect this structure realize that both the Treasurer (Sir Arthur Fadden) and I have been amongst the greatest protagonists of the bank. Independent observers have paid tribute to our efforts on its behalf. Even the late Mr. Chifley in 1945 spoke with approval of this declaration which I made in 1924 : - The important functions of banking can properly be performed only with the guidance and control of a central bank. Decision and settled policy are essential. Divided counsel and clashing interests of individual bankers must in the end be fatal to good credit management, and banking can be raised to its greatest perfection only by the action of a central bank working always for the good of all. I cannot understand why the Leader of the Opposition should repeat his wild story that the Commonwealth Bank is being destroyed. It has been disproved a thousand times and is not believed by the people of Australia, who have rejected it at election after election. That is demonstrated by the fact that, since 1924, when the Commonwealth Bank was made a central bank, the Labour party has won only a few elections whereas the antiLabour parties have won about ten When the Labour party fights an election campaign on the issue of banking, as it did in 1949, it is simply blown to the winds. The next stage in the speech of the Leader of the Opposition was reached when he adopted the garb of a penitent and virtually kneeled beside the Speaker's chair and begged us not to think that he would dream of nationalizing the banks. He said that the Constitution would not allow him to do so. The fact is that the Labour party tried to nationalize banking when it was last in office. The right honorable gentleman himself sponsored the Banking Act 1947, which included amongst its objectives - the taking over by the Commonwealth Bank of the banking business in Australia of private banks and the acquisition on just terms of property used in that business; the prohibition of the carrying on of banking business in Australia by private banks. That act also made provision for the Governor of the Commonwealth Bank to acquire the assets of any bank without any preliminaries and to appoint directors who, behind the backs of the shareholders and depositors, could make a deal with the Government that would destroy the bank. It is no fault of the Labour party that banking in Australia has not been nationalized. That party did everything within its power to bring about nationalization and even fought its case before the High Court of Australia. It engaged the best legal advisers in the nation but, despite their erudition, they were unable to defeat the provisions of the Constitution. "Why honorable members opposite should moan about the bills now before the House passes my comprehension. The bills provide that Australia shall have exactly the same sort of bank as the Commonwealth Bank was until 1924. I refer the House to section 7 of the 1911 act, which was passed during the regime of a Labour government. That section provided - The Bank shall, in addition to any other powers conferred by this Act, have power- to carry on the general business of banking; to acquire and hold land on any tenure; to receive money on deposit, either for a fixed term or on current account; to make advances by way of loan, overdraft, or otherwise; to discount bills and drafts; to issue bills and drafts, and grant letters of credit; to deal in exchanges, specie, bullion, gold-dust, assayed gold, and precious metals ; ( h ) to borrow money ; and to do anything incidental to any of its powers. All those functions are provided for in the present hills. What is the difference between the Commonwealth Bank as it was in 1945 and is to-day, and the Commonwealth Bank as it was prior to 1924? The difference is that the anti-Labour parties in 1924 gave to the bank the right to issue notes and control the currency of Australia. This power has been the principal cause of the enormous development of the bank since that time. It has invested the bank with great influence, which enabled it during World War II. and the recent economic recession to hold the fort for Australia in a way that would have been im possible otherwise. Acceptance of this idea has gradually permeated the minds of Labour men. Mr.Calwell. - What nonsense ! 455 C7E 0 0 PAGE, Earle Sir EARLE PAGE - I shall quote the words of Mr. Theodore and Mr. Chifley upon the matter. I suggest to the honorable member for Melbourne (Mr. Calwell) that it would be a good idea if he were to brush up his knowledge of the history of the Labour party in regard to the matter before he entered the Parliament. What really made the Commonwealth Bank was its power to control the note issue. When the Labour party was in office in this Parliament between 1910 and 1913, Mr. King O'Malley begged the Labour caucus, day in and day out, to agree with him that control of the note issue should be handed by the Treasury to the Commonwealth Bank. He tried to persuade members of his party to support him, but his efforts were defeated. The Labour Government of that time maintained the position as it was. Mr. Chifley, speaking on the Commonwealth Bank Bill 1945, said- The Commonwealth Bank was created by the Fisher Government in 1911 . . . For the first twelve years, its chief activities were assistance to governments and industry during the 1914-18 war, the establishment on a growing basis of the Commonwealth Savings Bank, and the development of general banking business. That is exactly what this measure is designed to achieve for the proposed Commonwealth Trading Bank. Its functions will be those which were entrusted to the Commonwealth Bank by the Labour party. Foryears, Labour supporters followed me round the country, saying that I created a monster by making the Commonwealth Bank a central bank, but the Commonwealth Bank grew rapidly in its trading activities as well as in its central banking activities. When Mr. Theodore became Treasurer in 1930, he presented to the Parliament a measure very similar to this one. It was supposed to represent the views of the whole of the Labour party at that time. Mr. Theodore suggested that there should be a Commonwealth trading bank, for which certain capital should be made available, and that that bank should do exactly what we are suggesting that the proposed Commonwealth Trading Bank shall do. He introduced also a measure to establish a board to control the central bank. The provision in that respect was in almost exactly similar terms to the provision that was incorporated in the 1924 legislation. The board existed from 1924 to 1945. By the wisdom, knowledge and experience that it had gained it was able to finance this country during World War II. When the war ended, an ungrateful Labour government sacked the board without a word of thanks, although it had served thecountry very faithfully, and many of its members had been reappointed by that Government. By 1949, the temper of the people had changed and they decided that the board should be reestablished. After the 1949 general election, the honorable member for Melbourne went round the country, saying, " The present Government will not dare to face a double dissolution on this issue". Finally, by strategy, we induced the Labour Opposition in the Senate to give us an opportunity to ask for a double dissolution, and our request was granted. What happened then? Throughout Australia, there was a move against the Labour party, and the present Government parties were able to secure a working majority in the Senate, despite the suppositions of those who had introduced the proportional representation system, which they thought had made that impossible. The Labour party has been hypocritical in its handling of this matter. I must deal with the Government's banking legislation as a whole, because it is almost impossible to deal with one of the measures by itself. In the Commonwealth Bank Bill, the problem of special accounts is raised, because it is proposed that the Commonwealth Trading. Bank shall contribute its quota to the special accounts fund. The two bills must be discussed together, because they are like Siamese twins. Blood flows from one twin to the other, through the nexus between them, and if they are separated, both are liable to bleed to death. I am certain that the last thing that the Labour party desires is that either of the measures shall, so to speak, bleed to death, because honorable members opposite, in their hearts, agree with what I am saying and they know that what is proposed will represent a great improvement of the present position. The objective of the Government is to provide definite safeguards against bank nationalization by the Commonwealth Parliament. At the? present time, the Constitution affords us some measure of protection, but we know that bank nationalization could be achieved by administrative action that would strangle the private banks. The objective of the Government is to establish a condition of affairs in which that cannot be done covertly, and will have to be done, if at all, by action taken by the Parliament in the sight of all the people of this country. Such action, if it were attempted by the Labour party again, would, I am certain, evoke the revenge of the people. The first thing that the Government did to provide safeguards against bank nationalization was to establish a Commonwealth Bank Board that was representative of industry generally. The members of the board are appointed in such a manner as to ensure continuity of policy on the board. There is no need for me to discuss the wisdom of that action, because it received the endorsement of the people at the 1949 and 1951 general elections. The Labour party made the re-establishment of the Commonwealth Bank Board an issue in those elections, and the people said that they wanted a system under which control of the Commonwealth Bank would lie, not in the hands of one man, but in the hands of a number of wise and experienced men, who could -examine problems and decide general principles. That is what happens in a cabinet. We do not expect one man to run the country, so we have adopted the cabinet system. It has been adopted, not only by the Government parties, but also by the Labour party, because we believe in the truth of the saying in tha Old Book that in the multitude of counsellors there is safety. There may not always be wisdom. During the time that the Commonwealth Bank Board was in existence the Commonwealth Bank grew. The achievements of the bank are visible for everyone to see. Its building; aic there. The volume of its business, the number of its departments, tha number of its officers and the size of its profits grew. The business done by the bank since the establishment of the board gives the lie to any suggestion that the present Government parties had ever, done anything to interfere either with the growth of the Commonwealth Bank or with its proper functions, which are, first, to a.:t as a central bank, and secondly, to compete with the private banks in respect of certain activities for the benefit of the community as a whole. It has been suggested that people will be confused if the name of the bank is changed. During the last twenty years, there have been many amalgamations of banks and many changes of name, but apparently nobody has forgotten the way to his bank. Recently, the Bank of Australasia and the Union Bank of Australia Limited amalgamated, under the title of the Australia and New Zealand Bank Limited. There is no indication of any decline of the business of those banks as a result of the change of name. People who know the Commonwealth Bank will not be deceived into thinking that it is another bank because it has an extra word in its name. That word, incidentally, was suggested as a part of the name of the bank by Mr. Theodore as Labour Treasurer in 1930. It is not a new suggestion. Under the Government's proposals, the Commonwealth Trading Bank will be a facsimile of the Commonwealth Bank as it existed from 1911 to 1924. The only difference in functions will be in the activities which will be taken over by the central bank which will have control of the currency. As Mr. Chifley said in 1945, there is no doubt that the activities of the bank from 1911 to 1924 were of extraordinary beneficence to the whole of Australia. 457 BV8 0 0 CALWELL, Arthur Mr Calwell - "Would the Minister mind quoting -Mr. Chifley's words? 457 C7E 0 0 PAGE, Earle Sir EARLE PAGE - His words were as follows : - The Commonwealth Bank was created by the Fisher Government in 1011 and placed under the sole control of a. Governor, Sir Denison Miller. For the first twelve years, its chief activities were assistance to governments and industry during the 1914-18 war, the establishment on a growing basis of the Commonwealth Savings Bank, and the development of general banking business. 457 BV8 0 0 CALWELL, Arthur Mr Calwell - 1 thought that the Minister had something new. 457 C7E 0 0 PAGE, Earle Sir EARLE PAGE - I do not bring anything new when the old is so valuable. I would sooner depend on what Mr. Chifley said as a financial guide than on what the honorable member for Melbourne cooks up. 457 BV8 0 0 CALWELL, Arthur Mr Calwell - The Minister misquoted Mr. Chifley. 457 C7E 0 0 PAGE, Earle Sir EARLE PAGE - I quoted the actual words of his speech of which he was good enough to give me a copy. Under the bill before the House the central bank will be made strong in all its essential features. I shall quote Mr. Chifley again. He said - The important functions of banking can properly be performed only with the guidance and control of a central bank. Decision and settled policy are essential. Divided counsel and clashing interests of individual bankers must in the end be fatal to good credit management . That principle has been a guiding star of the Government parties since 1924. It was mentioned in their policy speeches in 1922 and incorporated in legislation during their subsequent term of office. The principle was abandoned for three years but the people of Australia vehemently decided to restore -it. Under this bill the central bank will be put in a better position to help other banking institutions. After reading history I believe that one of the reasons why the world progressed to the degree that it did progress during the last 150 years has been the great wisdom and experience of the British banking system which resulted in international confidence in sterling. This bill provides for the establishment of an organization such as the Bank of England which has been the keystone of the arch of the British financial structure. It will be as important to us as the Bank of England has been important to the sterling area and the economy of the United Kingdom. Under this bill the central bank .will be protected insofar as its special accounts are concerned. When the banking legislation of 1924 was before the House I stated that in my view the banks would voluntarily put their reserves into the central bank. Within the first year of the operation of that legislation each of several banks deposited over £1,000,000 voluntarily with' the Commonwealth Bank. When the special accounts system was originally instituted all banks in Australia voluntarily agreed to put their excess deposits into these accounts in order to prevent inflation. 457 BV8 0 0 CALWELL, Arthur Mr Calwell - The Labour party placed such a provision on the statute-book. 457 C7E 0 0 PAGE, Earle Sir EARLE PAGE - That fact illustrates the difference between the Labour party and the Government parties. We acted in co-operation with the banks; the Labour party resorted to compulsion. As I have said, the private banks voluntarily deposited millions of pounds with the Commonwealth Bank, but were compelled, later, to make deposits under National Security Regulations. During the last ten years we have had an example of how that system works. Mr. Charlton, Leader of the Opposition in. 1924, suggested that the trading banks should put 10 per cent, of demand deposits and 5 pei* cent, of time deposits into the special deposits accounts of the Commonwealth Bank and Mr. Theodore inserted such a requirement in his 1930 bill. He said that he would insist that the Commonwealth Bank should also deposit the same proportion of its funds as every other banking organization. We have had a heavy time since then. Since the war we have gone to the top of the billow and into the trough of the wave and we have found how much we need in special deposits accounts. The last recession which shook the world was handled in Australia by the special accounts system. 458 BV8 0 0 CALWELL, Arthur Mr Calwell - 13 the Minister referring to last year's depression? 458 C7E 0 0 PAGE, Earle Sir EARLE PAGE - That is something which exists only in the mind of the honorable member for Melbourne. I referred to the recession throughout the world in 1930, when the Labour Government was in office and our export values fell by 30 per cent. In some unions 80 per cent, of workers were then out of work. Last year 2 or 3 per cent, may have been out of work. It has been found by experience that it is not necessary for 100 per cent, of the increased deposits of trading banks to be placed in the special deposits accounts. As a result of discussions it has been decided that the uncalled liability which existed under the 1945 legislation should be eliminated. It has been decided to make a fresh start under new conditions and a certain day last year will be fixed as a basis for the new position. A maximum of three-quarters of the total increase in the deposits of the private banks will be required to be deposited with the central bank. The representatives of the central bank have agreed to that proposal and have expressed the opinion that the Commonwealth Trading Bank should contribute its share of special deposits. This share will vary according to requirements but the maximum amount will be about £15.000,000 to start with. I think that that amount will be ample because it is not likely that we shall have a worse smash, in local finance than that which resulted last year from our huge overseas commitments and the tremendous drop in the price of wool. Therefore,. I contend that this bill, which will protect the special accounts system, is a wise measure. I consider the bill to be necessary. It also has the flexibility that is a requisite for the proper handling of problems like this. I know from my experience in the surgical profession the necessity and the wisdom of doing the thing that is needed to produce the best result. If a surgeon came to an operation with his mind already made up about what he would do, irrespective of the conditions he might find in the patient's body, he would only make a mess of the operation. It is not necessary to demand that the trading banks lodge a 100 per cent, deposit under the special accounts system when only 50 per cent, is necessary. 458 JLW 0 0 ANDREWS, Thomas Mr Andrews - It is still compulsory by statute. 458 C7E 0 0 PAGE, Earle Sir EARLE PAGE - There is a maximum, but there is also plenty of flexibility. I ask the House to support the bill, because I am sure that it will strengthen the whole financial structure of the nation. The Commonwealth Bank has grown from its small beginnings in accordance with the tradition and instinct of Australia. I do not speak disparagingly of anybody who has done anything to help its growth. I say that it is a good thing to-day that the bank did grow. It will also be a good thing if we, in this Parliament, should all agree to support the measure. 458 BV8 0 0 CALWELL, Arthur Mr Calwell Mr. Calwell interjecting, 458 C7E 0 0 PAGE, Earle Sir EARLE PAGE - Does the honorable member for Melbourne intend to oppose the bill? 458 BV8 0 0 CALWELL, Arthur Mr Calwell - Yes. 458 C7E 0 0 PAGE, Earle Sir EARLE PAGE - I cannot understand that. I thought intelligent people would support it. 458 KDX Ballaarat 0 0 JOSHUA, Robert Mr JOSHUA . - I do not wish to deal with the past as extensively as the Minister for Health (Sir Earle Page) has dealt with it, but I point out that the statement by Mr. Chifley regarding the development of general banking business during the first twelve years of the Commonwealth Bank's existence, which the Minister for Health quoted, referred to the development of business which was at that time based mainly on conducting Australian Government accounts. Everybody knows that from 1924, which was about the time of which the Minister for Health was speaking, the conduct of the bank was anything but satisfactory to the people. I had personal experience of that fact. In 1924 I. went with my brother to a branch of the Commonwealth Bank, from which ho sought a small advance that he required for an important purpose. We had decided to approach the people's bank for the accommodation. I had plenty of first-class security to offer, but the manager of the branch said that he could not help us, and that we should have to go to a trading bank for the accommodation. He said that if a trading bank could not help us we could come back and see him, and his bank might assist us. The result was that we did our business with another bank. That is the way the bank was operated at the time to which the right honorable gentleman has referred. Everybody knows that in the report of the Royal Commission on Monetary and Banking Reform the Commonwealth Bank was not referred to as a strong banking instrument. The reason was that, at the time the commission was held, the bank was a weak instrument dominated by the trading banks. The commission recommended many steps that should be taken to make the Commonwealth Bank useful and able to fulfil its important functions. In our examination of this bill we should get right down to the question of what was in the minds of those who framed the measure. I agree with the Leader of the Opposition (Dr. Evatt) who said - It was obviously promoted by the knowledge that, given the proper opportunity, the Commonwealth Bank would increase its business and make huge inroads in the business of the other trading banks. That was the thought uppermost in their minds, and they framed the bill to prevent the Commonwealth Bank from working in active competition with the trading banks, and becoming of real value to the people. .Since 1945 considerable expansion has occurred in the Commonwealth Bank's business, and we must remember that we have had in power for the last three years a government that has not shown itself to be completely sympathetic to the expansion of the bank, as I can show by reference to the bank's report. The report shows that since 1945 the bank's deposits have increased by 100 per cent., its advances have increased by 300 per cent. ' and its cash reserves by 400 per cent. That shows the good progress by the bank. The Industrial Finance Department, which started from, scratch in 1945, now has a total of £23,000,000 on advance. The report states that the department could have made further advances for this important work had it been able to do so. If the Government had been sympathetic to the expansion of the bank, and had tried to assist it to carry out its proper functions, it would have made more money available to the Industrial Finance Department, because it is recognized by all businessmen and economists that .small businessmen are necessary to maintain the economic structure of the community. The Industrial Finance Department was inaugurated specially to assist small businessmen. It could have made use of more money in that direction had the Government been prepared to make it available. 459 BV8 0 0 CALWELL, Arthur Mr Calwell - A Labour government inaugurated that department. 459 KDX 0 0 JOSHUA, Robert Mr JOSHUA - Yes, under the 1945 legislation. It is obvious that the trading bank directors are afraid of the people's bank. They fear that, given the opportunity, it would make inroads into their business, so they decided that they must do something to hamstring it. Many people are confused by the statement that the functions of the trading bank section of the Commonwealth Bank should be separated from the remainder of the bank's functions. They get the idea that all the accounts held in the bank are jumbled up in some way, and that it is impossible to tell how the activities of the trading section are progressing. The trading bank section is organizationally combined with the central bank, but there is no doubt about its progress, profits and value to the community. Its profits are set out clearly in the 1952 report of the back at page 32. The profit of the general banking division is there shown as having been £351,904 and its assets and liabilities are clearly set out separately on pages 38 and 39. There will be absolutely no advantage in the separation of the trading bank section. The position is known to the Government and to the Commonwealth Bank Board and to everybody concerned. The separation will achieve nothing from the organizational point of view. Every control imposed .on the banking system as a whole is observed also by the Commonwealth Bank. The Treasurer (Sir Arthur Fadden) has admitted that the bank observed the advances control policy just as much as did any of the trading banks. The 1945 legislation provides no machinery for the Commonwealth Bank to pay money into special accounts, but the bank, nevertheless, observed the system and set money aside. This is made clear in the Monthly Review of Business Statistics, at page 48 of the November. 1952, issue, which says - At the beginning of July the General Banking Division opened in the books of ' the Central Bank a deposit account with a balance approximating the amount that would be required if it were subject to Special Account provisions of the Banking Act 1945. This represents a change in the form of liquid assets which were previously held, predominantly, in Treasury Bills. The people's bank held these special deposits of treasury bills for a very good purpose,, because Mr. Chifley believed that the Commonwealth Bank would be a better bank by doing it that ' way. The real reason for the separation of functions is that the Government wants to hamstring the Commonwealth Bank and prevent it from carrying out its proper duties. Let us consider what are the proper functions of the Commonwealth Bank. They are to promote the welfare and prosperity of the people of Australia, to prevent unemployment and to maintain the stability of the currency. Nowhere will one find among the objects of the bank any reference to making profits. The making of profits is not an object of the Commonwealth Bank. Its objects, as the people's bank, are wider, broader, and deeper than the mere making of profits. The Commonwealth Bank should be, as every honorable member of this House really believes, a positive instrument by which the Australian Government can carry out its financial policy, which, of course, must be related to its economic policy. By stultifying the bank's activities in the way pro- posed in the measure, the Government will destroy the ability of the bank to carry out its proper functions and to be a positive instrument for the carrying out of the economic policy of the Australian Government. Now let us consider what will be the capital of the Commonwealth Trading Bank, according to the bill before the House. It is proposed that the Commonwealth Trading Bank shall start operations with its present capital, which is in the neighbourhood of £4,250,000, and that it will have reserves of about £1,300,000. Therefore, a little more than £5,500,000 will be available as capital and reserves for the Commonwealth Trading Bank. Now let us turn to the capital structure of the private trading banks. Their combined capital amounts to almost £40,000,000, and their reserves total more than £32,000,000. Consequently, the Commonwealth Trading Bank will have a combined capital and reserves of £5,500,000 to £6,000,000, whereas the private trading banks will have about £73,000,000. The Commonwealth Trading Bank will haveabout 7 per cent, of the capital available to the other trading banks. Is it conceivable that a trading bank with 7 per cent, of the reserves of the other trading banks will be able to exercise a real influence over the policy of the trading banks in general? The Commonwealth Trading Bank will be a small, weak bank, and will be quite incapable of carrying out the great objectives for which the Commonwealth Bank was formed. Honorable members should also take notice of the capital and the reserves of the Commonwealth Trading Bank, because the economic policy of the Australian Government will have to be altered very soon. There will be a great expansion in banking business before long. One has only to consider the present signs - the unemployment, the un-used resources and the un-used capacity of our factories - to realize that there will have to be an expansion of banking business soon. Moreover, general elections are facing the Government, and the proposed Royal visit is also a factor. All those signs indicate that the Government will shortly throw more money into the community, and no doubt the trading banks hope to get most of it. If they have a national bank competing against them then it is certain that they will not get most of the new business, because the Commonwealth Bank, properly directed and with our full resources behind it, can offer a better proposition to the people than .can the private banks. The Labour party will always foster the institution that can offer the best proposition to the people. The Commonwealth Trading Bank, properly controlled, could offer lower rates of interest and better services than the private banks, and the proposed hamstringing of the bank by reducing capital, as outlined in the bill, will deny the people many of the advantages that they should have. Another most important matter must be considered by honorable members. Can any one imagine- the Commonwealth Trading Bank being a whole-hearted member of the community of private trading banks? Of course, the Commonwealth Trading Bank will not be taken into the fold of the private banks - it will be merely tolerated. It is a peculiarity of our banking system that one bank cannot increase its advances unless it has the co-operation of the other banks. For instance, if the Commonwealth Trading Bank decided to make housing loans available to the people at reasonable rates of interest,' and that policy did not suit the private banks, the Commonwealth Trading Bank would be obliged to act solely on its own. Consequently, the money that it might advance would flow out to contractors and then back to the private banks, and the Commonwealth Trading Bank would thus be deprived of its liquid resources. The Commonwealth Trading Bank, under those circumstances, could be driven into bankruptcy; and no doubt the private trading banks would drive it there. It is very wicked to place the Commonwealth Trading Bank in a position where it will be dominated by the private banks. It will have no policy of its own, and its general manager will have to watch very intently the policy of the private banks and try to follow it. It is- important that the trading section of the Commonwealth Bank should be supported by the whole resources of the. bank, which . are more than twice as great as the assets of the Trading Bank Division of the Commonwealth Bank. The Commonwealth Trading Bank should not have to pay money into special accounts, because it needs the utmost liquidity. Such money should be detained in treasury bills, as was done in the time of Mr. Chifley. I now desire to refer to section 116 of the Commonwealth Bank Act 1945-1951. The Government, if it is sincere in its expressed desire to help the people, could have used this measure to good purpose. Section 116 refers to advances- for home building, and provides that in no case shall an advance exceeding £1,750 be granted. The cost of building houses has increased so greatly that a loan of £1,750 is of very little use to any one who wants to own a home. The Government should have amended that section if it is sincere in its desire to help the people. The Government apparently wants to assist private banks by giving them- the business of the Commonwealth Bank. I have spoken to many officers of the Commonwealth Bank, and they have expressed concern to me about the provision in the measure which is designed to bring university graduates into the bank. Of course the bank must have properly trained officers, but the present officers are concerned because they believe that there are just as good men inside the bank as there are outside, and that if the Commonwealth Bank wishes to employ universitytrained men, it should select some of its present officers to undergo such training. The officers of the Commonwealth Bank believe that their interests are not being protected under this legislation because of the proposed method of introducing university students. It should be provided that Commonwealth Bank officers shall receive cadetships, with university instruction included' in the terms of their cadetships, and that only in the absence of suitable officers inside the Commonwealth Bank shall university graduates from outside be admitted. Alternatively, Commonwealth Bank officers could bf given leave to enable them to attend university lectures. All officers of the Commonwealth Bank will be affected by- this provision, because they are all looking for progress and promotion in the same way as are all other bank officers. If the Commonwealth Bank recruitment system is to be hamstrung' by this measure, the officers will be very hostile to the Government which introduced it. Moreover, as the conditions in the Commonwealth Bank have some effect on the conditions of the officers of the private trading banks, the latter employees are also concerned about this matter. This bill will destroy the Commonwealth Bank as an instrument which can carry out government policy, and that is why it should be rejected by every honorable member. The measure will weaken the capital structure of the Commonwealth Bank, and it will prevent it from taking business which it would normally accept. The bank will not be able to expand ; it will have to turn business away because its capital structure is insufficient to enable it to cope with the extra business. It would not be of much use for the bank to reduce advances by, say, a quarter or one-half of 1 per cent. below the rate charged by the private banks, and then, when its customers sought to take advantage of the reduced rates, to say, " The bank has not sufficient money to make an advance to you at the reduced rate ". The weakening of the capital structure of the bank will prevent it from taking all the business that would normally flow to it. I have pointed out that this legislation will have an adverse effect on the conditions of employment of about 6,000 officers of the bank, and that it leaves unaltered certain provisions in the 1945 act which should be amended for the benefit of the people. The bill was introduced by the Government not for the purpose of amending undesirable provisions in the 1945 act, which is an excellent piece of legislation and requires very little amendment, but to give effect to a part of its policy before it goes out of office. No impartial inquiry has been held into the subject of banking since the Royal Commission on Monetary and Banking Reform in 1935 conducted an exhaustive inquiry and presented one of the most valuable reports on this subject that has ever been presented to the Parliament. The Prime Minister told us in his second- reading speech that the Government had made inquiries and conducted discussions in relation to proposals contained in the bill. That merely means that he and members of the Government had discussions with the bankers. With whom else has the right honorable gentleman discussed this matter ? Who but the bankers has had a say about the functions and future of the Commonwealth Bank ? No information has been given to us about these so-called discussions, nor has an impartial inquiry investigated this subject which so vitally affects every member of the community. This legislation will not be approved by the people, and a Labour government of the not distant future will have to alter it and restore to the people the security given to them by the provisions of the 1945 legislation. The Government may force the bill through the Parliament, but it will not be approved by the people of South Australia or Queensland when they record their votes at the forthcoming State and Senate elections. 462 KIF Petrie 0 0 HULME, Alan Mr HULME .- One or two statements made by the honorable member for Ballarat (Mr. Joshua) call for an obvious reply. The first was that control policy in relation to the Commonwealth Bank had been observed. It has been observed by the bank in a voluntary way only since this Government came into office. If the honorable member has any knowledge of the banking set-up at the time of the 1949 general elections, he will know perfectly well that the Commonwealth Bank did not submit to the controls that were applied to the other trading banks of Australia. The second point made by the honorable member was that the Commonwealth Bank should be retained as an instrument for the carrying out of the economic policy of the Government. He did not attempt to prove that in the provisions of the legislation which is now under consideration by the House there is an indication that the Commonwealth Bank would be used for any other purpose. It is obvious that the provisions of the legislation which give the Government some control over matters of policy relating to either the central bank or the trading bank section of the Commonwealth Bank enable the Government to use the Commonwealth Bank as an instrument for carrying out its economic policy. The third point made by the honorable member was that the Commonwealth Bank is placed in an unfortunate position because its trading capital is limited to £5,000,000. For a banker- we believe that the honorable member was a banker before he came into this Parliament - to suggest that the business of a bank is limited by its capital is plainly ridiculous. It is well understood by all sections of the community that the deposits received by a bank become more or less its stock in trade and that its lending and general banking business is in direct relationship to the deposits which it receives. At the 30th June last year deposits in the trading section of the Commonwealth Bank amounted to £142,000,000. That amount of money, together with the capital of the bank, which is invested in fixed assets, represented its so-called trading stock. It is ridiculous for the honorable member to attempt to foster the belief that the lending capacity of the bank is limited to its capital of £5,000,000. The honorable member also suggested that the action proposed to be taken by the Government under this legislation would weaken the Commonwealth Bank. The citation of two sets of figures should be sufficient to convince Opposition members that, during the three years in which this Government has been in office, it has not weakened the trading structure of the Commonwealth Bank. Between 1949 arid 1952 the number of branches of the bank increased from 420 to 439. The number of accounts, which, I believe, is the best indication of whether or not the structure of the bank has been weakened, increased from 257,982 in 1949 to 372,870 in 1952. I have not worked ou t -the percentage increase but I estimate it to be very close to 50 per cent. In view of these figures I cannot understand how the honorable member for Ballarat can seriously contend that the Government has endeavoured to weaken the structure of the bank. Discussion of the bill before the House and the Banking Bill will highlight the points of difference on a most important matter between liberal of free enterprise philosophy on the one hand and Labour's socialist philosophy on the other. In this matter the principles of the Government and the Opposition are poles apart. If Opposition members are really honest in their criticism or condemnation of the measure in accordance with the platform of the Australian Labour party some enlightening revelations will be made during- this debate. One expects some hedging to be indulged in by Opposition members because they remember the reaction of the Australian people to their proposal to nationalize the trading banks of Australia in 1948-49. Opposition members will no, be prepared to state in the House views that accord with the policy of the Australian Labour party. I make one exception to that statement, for there is a member of the Opposition who on other occasions recently showed himself to be a very strong supporter of the platform of the Australian Labour party notwithstanding the fact that his leader and those who sit behind him endeavoured to hedge on it. The honorable member to whom I refer is, of course, the honorable member for Melbourne (Mr. Calwell) who is deputy leader of the Opposition. We, on this side of the House, like the writer of a newspaper article that was published within the last couple of days, wonder who really leads the Labour party in this Parliament. The Leader of the Opposition (Dr. Evatt) is a less forthright critic of the fundamental principles of the legislation before us than his deputy, the honorable member for Melbourne, is likely to be. The right honorable gentleman said to-day - it was expected by all honorable members on this side of the House that he would do so - that since the High Court had decreed against nationalization of banking we were only trotting out a bogy when we suggested that, if Labour were given a chance to do so it might give effect to that plank' of its policy. As every honorable member knows, there is more than one way of killing a cat than by wringing its neck; likewise, there is more than one way of nationalizing the trading banks than by enacting a law to do so. Under nationalization, as the Leader of the Opposition (Dr. Evatt) has mentioned, compensation would be payable to the private banks, but in the only other way in which the same result could be achieved, that is by forcing the private banks out of business, no compensation would be payable and, consequently, shareholders and others with interests in them would lose all. There are, perhaps, simple souls among members of the Opposition who do not realize that a government could force the trading banks out of business. Let us assume, for purposes of illustration, that the set-up which existed in 1949 when the present Government assumed office were allowed to remain. The private banks would be obliged to pay all increases of their deposits into the special account, and the Commonwealth Bank, through its trading section, could lend such moneys. The trading banks would have no additional money with which to trade. If the Commonwealth trading bank were to say, " .Wow we have the money, we will lend it out at a very low rate of interest ", it would obviously bring about a situation in which the private banks, even if no lending restrictions were placed upon them, would be unable to lend money at a profit in competition with the low rate a.t which it was being lent by the Commonwealth Bank. Ultimately, in such a situation, the private trading banks would be forced out of existence and their shareholders would lose everything. Nationalization is the objective of the Australian Labour party and if that party is returned to office in the future the reptile of socialism will show its poisonous fangs very soon afterwards. Consequently, the return of a Labour government must be a frightening prospect for the Australian people. I say deliberately that this legislation has, as its basis, an attempt to forestall the Australian Labour party. It is, in fact, an attempt to protect the public against that party in the event that it should ever be re- turned to office. Banking is one of the most important issues that have been before the people since the latter years of the regime of the last Labour Government. At the general election in 1949 at which that party was defeated the present Government parties stated a definite policy in relation to banking. One proposal which was included in the Prime Minister's policy speech at that time was that the Liberal party if it were returned to office would introduce a bill to amend the Constitution to make it impossible for socialist legislation to be passed in future without the approval of the people at a referendum. It is a pity that whilst the Government has introduced legislation in an attempt to give a degree of protection to the people in this respect it has not gone to the limit that the Prime Minister proposed in his policy speech during the general election campaign in 1949. I am not a lawyer, and I do not know whether a measure in relation to a referendum for that purpose could be introduced in this House. But many lawyers in the community believe that that could be done. Having regard to the definite promise that the Prime Minister gave in his policy speech in 1949, he should inform the House of the reason why it is impossible for a referendum to be held for that purpose. That is the first inadequacy of this legislation. I place on record my regret in that respect, and I sincerely trust that the people of Australia will not have cause in the future to regret that effect has not been given to that proposal. I turn now to two other matters which I regard as being of particular importance. The first of them relates to the separation of the trading section of the Commonwealth Bank from the other section of its activities which, in future, will be known as the central bank. There will be in the central bank activities, the savings bank, the rural bank section, the mortgage section and the industrial finance section. It is proposed that the trading bank will be separately incorporated, that it will have a general manager and that it will observe certain formalities which other trading banks are obliged to observe. In addition, it is provided that the general manager of the trading bank shall, under the Governor, manage the bank and that the policy of both the central bank and the trading bank shall be determined by the same hoard. Having regard to those provisions, I am unable to see that there will, in fact, be any alteration basically of the present set-up that could not have been achieved without the separate incorporation of the trading bank and the appointment of a general manager. The same result could have been achieved by a. process of departmentalizing, and all the formalities required under the bill could have been retained on that basis. I use the term " formalities " in respect of capital structure, special deposits requirements and the requirements included in the schedule in relation to the submission of details of assets, liabilities atnd profits. The appointment of a general manager is, in fact, valueless so long as he is to be under the control of those who control the central bank, namely, the board and the Governor. I say deliberately that the central bank and the trading bank should each function under a separate board and a separate manager, that the policy of each section should be determined by its board and that each board should be independent of the other. Proposed new sections 43 (3.) and 53a of the Banking Act provide that certain information which the board may receive must not be used " other than in exercise of its powers as a central bank ". That provision will make it impossible for the board to discharge its obligations to both sections of the bank on all occasions. How can any person, who is in possession of certain information, be expected not' to use it when it is pertinent to the solution of a problem which comes under his consideration? I cannot believe that over the years there will be no conflict of interest when the board is dealing, on the one hand, with central bank activities and, on the other hand, with trading bank activities. This seems to me to be a case of a person being unable to serve two masters. The very elements of central bank and trading bank activities can be totally different and, that being so, obviously, there should be a separate board to control each section independently of the -other. In relation to the central bank the board must be concerned with the over-all -national interest, but in relation to trading bank activities it would be concerned primarily with the establishment and expansion of a sound, profitable business. It cannot bc suggested that these two functions must at all times be a common interest. Prom time to time there will be clashes between, them. One would require of a member of a central bank board qualifications different from those that would be required of a person who was to serve on a trading bank board. Many persons in the community are quite capable of conducting profitable business enterprises, but fewer people are capable of taking into account all the considerations that are necessary to a sound central banking . system. I consider that the Government received bad advice when it was con- sidering whether one board or two boards should be appointed. In my opinion, the usual business acumen which might have been applied to this problem is not shown in the bill. I hope the day will come when we shall have an opportunity to rectify that omission. Members of the Liberal party and the Australian Country party have an obligation to safeguard the banking system to the utmost degree, and to establish it in such a way -that a socialist government in the future, if it endeavoured to undo what we have done, would encounter great difficulties, and the full effect of its policy would not pass unnoticed by the greatest number of people who believe in a free backing system. I recognize that what is done by an act of parliament can be undone by an act of parliament, but I point out that the more difficult we make the prospect of undoing our work, the greater will be the consequences of it and the greater will be the reaction of the community. For many years, the reaction of the community has been democracy's greatest safeguard. It may prove so in the future with respect to this legislation if a Labour Government is returned to office. I turn now to proposed section 18 (1.) of the Banking Bill 1953., which provides that the Commonwealth Bank may direct a bank to lodge an amount in its special account. When I discuss this matter, I make it clear that I am not in any circumstances criticizing the system of special deposits. However, I propose to offer some criticism of the word "may". In my opinion, the granting of this discretion to all Treasurers in the future may produce considerable difficulties. While the present Government remains in office, each bank will be treated justly and equitably. But does any one suggest that the private banks will receive the same impartial treatment from the Leader of the Opposition, the honorable member for Melbourne (Mr. Calwell) or the honorable member for East Sydney (Mr. Ward), should any one of those gentlemen become the Treasurer? Indeed, few members of the -Labour party other than those I have named have any prospect of becoming the Treasurer in a Labour administration. I should not be prepared to leave in the hands of any one . of the gentlemen whom I have named the administration of this section which means, in point of fact, that the Commonwealth Bank may call up all or part of any increases in the deposits of a bank, or not take any action in the matter at all. I shall give an example in relation to the broad principle. Let us assume that one of the trading banks other than the Commonwealth Trading Bank of Australia had an increase of deposits amounting to £100,000,000. Under this section, the liability to be called up could be £75,000,000, leaving £25,000,000 with the bank. If the Commonwealth Bank had an increase of deposits amounting to £50,000,000, the amount liable to be called up would be £37,500,000, leaving a balance of £.12,500,000. A socialist treasurer probably would not make any call on the trading section of the Commonwealth Bank, but would demand from the private bank the full amount of its liability. The Commonwealth Trading Bank of Australia would retain the £50,000,000 of increased deposits for its use, whilst the trading bank although its deposits had increased by £100,000,000 would have only £25,000,000 for its use. If such a policy were applied, fair competition as between the Commonwealth Bank and the trading banks would disappear. It may be necessary to leave with the board some discretion in this matter, but I believe that the discretionary power in proposed section 18 (1.) of the Banking Bill 1953 is too wide, and should be reduced. The next matter to which I shall refer also relates to the special deposits. In the list of banks set out in the First Schedule to the Commonwealth Bank Bill 1953 there is one bank, in particular, which I may describe as a "special business bank". The greater part of its lending is for home building and home ownership. The community urgently requires housing, and home ownership is to be encouraged. This bank is helping to finance those objectives. In the circumstances, greater latitude should be shown to an institution of that type. The existing provision covers all trading banks, regardless of the fact that one of them may be engaged in special activities. Part VI. of the Banking Bill 1953 requires some examination. Each bank is required, for statistical purposes and in order to make available to the community its actual financial situation, to furnish from time to time to the Commonwealth Statistician and the central bank a statement of its assets, liabilities and profits, and a good deal of other data. But proposed section 47a provides that the Treasurer may exempt a bank from this obligation. I cannot see why the Treasurer should have such discretion. If one bank is to supply this information, all the banks should be placed under a similar obligation. If the Treasurer is to exercise his discretion in favour of one bank, all the banks should be exempt from the obligation, and the information should be withheld from the public. Perhaps my speech has been somewhat critical of this legislation. I believe that it is not necessary always to tell the House the merits of a bill. When the circumstances arise, it is desirable to tell the Government that a part of its policy falls short of one's ideals. But the fact that an honorable member does so, does not mean that he does not recognize some good element in the legislation under consideration at that time. The extinction of the liability of £540,000,000 in respect of special deposits will be the cause of immense gratification to most people. It is of inestimable value to the economy, and a great relief to those who have the enormous responsibility of conducting the banking affairs of Australia. 466 JLW 0 0 ANDREWS, Thomas Mr Andrews - That is the worst feature of the bill. 466 KIF 0 0 HULME, Alan Mr HULME - I said in at there would be a serious difference of opinion between the philosophy of the Opposition members, and our own, if they spoke the truth from' the stand-point of the Australian Labour party policy. That fact that an honorable member opposite says that this is the worst feature of the legislation whereas I regard it as a good feature, merely illustrates the comment I made earlier. I believe .that the new basis of special deposits is a considerable improvement. I am not sufficiently well versed in banking matters to determine whether that provision will be adequate for all time, but I believe it to be adequate for the present at least. Possibly some adjustment may be required in the future, but certainly it is an improvement on the position that was left by the Chifley Government when it relinquished office in 1949. I say in conclusion that whilst there are some provisions of this legislation on which the Government is to be commended, I believe that in relation to the matters upon which I have offered some criticisms, improvements could be effected and I commend my criticisms for consideration by the Government. 467 JAG Melbourne Ports ALP 0 0 CREAN, Frank Mr CREAN . - The bill to amend the Commonwealth Bank Act 1945-1951 is viewed by honorable members on this side of the chamber with considerable suspicion. Apparently the Liberal party believes that it has an open card to do what it likes with our banking system and to clutter it up with mumbo-jumbo. The moment anybody raises his voice in criticism of the Government's proposals, honorable members opposite hold up the old bogy of socialization or something of that kind. The measures now before us have nothing to do with the nationalization of banking, but we on this side of the chamber see in them a subtle attempt to denature the Commonwealth Bank which is already Stateowned and is performing a very satisfactory function for the people of Australia.' I direct the attention of honorable members to certain words that were enshrined in the banking legislation of 1945, and which, since then, have been published on the cover of the annual reports of the Commonwealth Bank. Those words, I believe, bear repetition, and perhaps warrant some amplification during the time at my disposal in this debate. They are - It shall be the duty of the Commonwealth Bank . . within the limits of its powers- and the limits are considerable - to pursue a monetary and banking .policy directed to the greatest advantage of the people of Australia . . . and to exercise its powers under this Act . . . and the Banking Act 1045 in such a manner as in the opinion of the Bank will best contribute to the stability of the currency of Australia. . . The maintenance of full employment in Australia . . . and the economic prosperity and welfare of the people of Australia- In answer to the argument that has obtruded from the Government side of the chamber that any government interference is socialization, I propose to draw the attention of honorable members to very deliberate words of a man whom I do not think anybody in his wildest imagination could accuse of having been a socialist when he wrote them. They appear in the late Professor Giblin's book, The Growth of a Central Bank. Professor Giblin sets out in considerable detail the steps that led up virtually to the 1945 banking legislation. In chapter 10, which is entitled The War Period: The First Phase, Professor Giblin says - The war also killed at long last the old myth that it was possible to have a monetary policy independent of government policy; " free from the fact and the fear of political interference ", in the traditional phrase. War experience brought home to the general understanding that government financial policy was of necessity an integral part of monetary policy, and that no monetary policy could be effective without full collaboration between Treasuries and the banking authority. Those words should be carefully considered by the Government. Then, Professor Giblin adds these rather pregnant words - How that collaboration can best be brought about - particularly in a Federal system of government - has yet to be determined. The need for unified financial and banking policy is no longer in question. I suggest that under our federal system and because of our economic framework generally it is necessary to have trading bank functions carried out by the Commonwealth Bank as part of its central banking technique. That is borne out by the report of the Royal Commission on Monetary and Banking Systems. This legislation will weaken that link which is necessary if the Australian economy is to function properly. 467 K7J 0 0 CRAMER, John Mr Cramer - How? 467 JAG ALP 0 0 CREAN, Frank Mr CREAN - My task in the next few minutes will be to attempt to show the honorable member that. We on this side of the chamber are entitled to he suspicious just as honorable members opposite apparently consider themselves entitled to be suspicious, of the bona fides and origin of this legislation. It seems to have been drawn up in great haste, not in consultation with government banking officials, but at the behest of the trading banks. After all, there have been examples in the past, and there probably will be- some in the .future, of the profitmaking side of banking conflicting with the public interest side. To indicate the apparent hasty preparation of the measure I draw the attention of all honorable members to the report of the Commonwealth Bank for the year ended the 30th June, 1952, which reached honorable members about October of last year. On page 26, under the heading " Trading Activities ", a description is given of the functions of the various sections of the Commonwealth Bank. The report states - There are four trading departments of the Bank, the General Banking Division, the Mortgage Bank Department, the Industrial Finance Department and the Rural Credits Department. Each of these trading departments has its own capital, reserves and borrowing powers, and each keeps its accounts and transactions separate and distinct from those of the other departments. Then it goes on to say - and these words I emphasize, were written only six or seven months ago - This concentration of activities under the control- of the Central Bank is unique in central hanking but affords strength to the Central Bank. Through the trading departments the Central Bank baa been able to maintain contact with business and the market and to give its staff a wide and diversified banking training. Honorable members opposite are always prone, to point to the alleged shortsighted view taken by so-called bureaucrats because of their lack of direct contact with worldly affairs. According to the report, the diverse functions of the Commonwealth Bank enable its officials through their association with the trading department, to understand the normal day-to-day workings of banking undertakings. . It states - Further, through the direct lending operations of these departments, and through the Commonwealth Savings Bank, the Central Bank is able to exercise a positive influence on the economic situation. Those words were penned not long ago and it seems strange, therefore, that we are called upon to-day to consider legislation such as is now before the House. The Government has not demonstrated the need for the proposed changes. It has made no attempt to prove that the trading section of the bank competes unfairly in any way with the private banks, or is inefficiently managed. It is under an obligation to justify these measures, but it has not tried to do so. "We are entitled to assume that its advisers would supply it with arguments to support the proposals if changes were genuinely justified. In the absence of satisfactory explanations, we are obliged to refer to the authorities whose opinions are available to us. The Leader of the Opposition has referred to the findings of the Royal Commission on Monetary and Banking Systems. Surely nobody will suggest that it was a socialist organization. Paragraph 582 of the lengthy and valuable report of the commission states - By the use of its trading bank powers the Commonwealth Bank can decrease the cash reserves of the trading banks ... On the other hand, it can increase their cash reserves, far example, by expanding its own advances. In other words, the Commonwealth Bank, through its direct access to trading facilities, is able to influence the economic policy of Australia for the good of the Australian people generally, ' not merely for the purposes of profit making. Government supporters have suggested that compulsion is not necessary in our dealings with the private banks. They argue that the private banks are always willing to co-operate when required to do so by the Government. The Opposition considers, however, that' there have been times in Australia's history -when the trading banks have refused to co-operate with governments for the welfare of the Australian people. Even the present Treasurer, when he was Treasurer in 1941, had great difficulty in obtaining the voluntary co-operation that was necessary at that time. It would have been reasonable then to expect to obtain the support of the private banks on patriotic grounds, even though at other times they might act as scoundrels. Patriotism could be regarded as the best defence of the private banks in time of war. "We must accept the fact that about seven, out of eight people use the facilities of the private trading banks instead of those of the Commonwealth Bank. The Opposition considers that banking is- a function not greatly different from other business functions and that its prime purpose should- be to ensure the maximum welfare of the people as a whole. Nevertheless, the Treasurer found in- 1941 that he had to invoke certain powers of regulation in order to mobilize the banks most effectively for the war effort. I shall refer honorable members to the opinions of Professor Giblin on this subject, because tie was engaged as an. economic consultant at that time. As the- Leader of the Opposion has said, the Labour Government's banking- legislation of 1945 was merely the culmination of war-time experience and arose from that Government's recognition 'of the impossibility of carrying over into peace-time the system that had been employed during the war. It was impossible then to rely on voluntary organization or the use of indirect regulatory powers because such methods were open to challenge. A voluntary arrangement had been employed in the early period of the war, but it did not operate as satisfactorily as the Treasurer of the day hoped. The right honorable gentleman, therefore, drafted certain economic security regulations. The private banks raised a howl of objection that their bona fides should be queried in any way. After the Treasurer had negotiated with representatives of the banks, an agreement of some kind was reached, but the banks made a reservation to which Professor Giblin referred on page 284 of his book, The Growth of a Central Bank, in the following terms: - The trading banks, after they had thus tightened up their offer of voluntary cooperation, made a statement of principle which is not without interest : The importance of being as specific as possible, in their statement of effort is fully appreciated and in this direction they have gone as far, in their judgment, as their responsibilities to their depositors and the public generally will allow. They view these responsibilities with the utmost gravity and are firmly of opinion that any steps, either voluntary or compulsory, in the way of control by fixed formulae or by arbitration means, are not only doomed to failure, but the result thereof will inevitably cause unrest in the minds of depositors and the community as a whole possibly with disastrous results. " The reality and seriousness of this danger is stressed with all the forces at their command. Professor Giblin added this cryptic remark - This statement, besides disclosing a natural longing for binding agreements which will not in, fact bind, illustrates in view of after events the dangers of impassioned prophecy. As I have shown, even at the height of the war, the private bankers were not in any way prone to allow themselves to be regulated for the public good but rather were motivated by their short-sighted desire for profits. While that state of affairs continues, there will always be difficulty and contention in relation to the regulation of the important functions that banks perform. As circumstances change, of course, it will be necessary to change our legislation in relation to banking. Let us consider the activities of the General Banking Division of the Commonwealth Bank. I join issue with the honorable member for Petrie (Mr. Hulme), who referred to special deposits with the General Banking Division. It seems to be a curiosity that the General Banking Division, which in any case holds all its surplus funds with the central bank, should be asked to earmark some of those funds and put them in a special drawer with the central bank marked " Special Deposits ". The position of the private trading banks is different from that of the General Banking Division of the Commonwealth Bank, because virtually that division and the central bank are one entity. Nevertheless, as was stated by the honorable member for Ballarat (Mr. Joshua), in the course of an excellent speech, even -when there was no statutory obligation upon the. General Banking Division to lodge moneys with the special accounts fund of the central bank, the accounts of the division revealed that it held a certain number of treasury bills, which represented loans to the Government by the division. Probably this will be regarded as heresy by honorable members opposite, but, for the life of me, I see no reason why any private banking institution in this country should hold £1 worth of treasury-bills. Such bills represent temporary loans made by the central bank to the .Government to tide it over periods when its commitments are greater than its revenue. In my opinion, one of the greatest rackets through the years has been that the trading banks have been able to take up treasury-bills for two or three months and to earn 1 per cent, interest up them. Recently, this Government raised the rate of interest. At the moment, private trading banks in this country hold about £130,000,000 of a total treasury-bill issue of £156,000,000. That fact shows that, under the present Commonwealth Bank Board, established by this Government, our banking structure has been allowed to deteriorate, and that already liquid assets are in the hands of private trading banks that ought properly to be held either by the central bank itself or in the special accounts fund. As I have said, even in the days when there was no obligation upon the General Banking Division of the Commonwealth Bank to hold special funds, it held them by reason of its holdings of treasury bills. All that has happened is that this Government, by regulation, has made applicable to the General Banking Division the conditions that apply to private trading banks. If we look at the balance-sheet of the division, we find that, instead of holding approximately £20,000,000 worth of treasury-bills. that holding has been replaced by an item of £20,000,000 in the special accounts fund. That is the kind of mumbo-j umbo that goes on under the present system. If any attempt is made to rectify that system, members of the Government parties raise their hands in holy horror and say that the banks are faced with a threat of socialization. Treasury-bills represent short term debts owed by the Government to that part of the Commonwealth Bank which acts as the central bank, because when treasury bills have been issued they are taken up by the central bank, which sometimes then distributes them among the trading banks. During the last war, that was done as a part of the deliberate policy of the government of the day, in order to maintain the profits of the private banks. Not much is said about that beneficent action by a Labour treasurer. He did a great deal to keep the profits of the trading banks at a level that was regarded as normal prior to the war. That story is very well told in the book written by Professor Giblin from which I have quoted. The question has been asked : What are the functions which, from time to time, the central bank can ask the General Banking Division of. the Commonwealth Bank to undertake ? Without attempting to deal with the other measure that will come before us shortly, I want to refer to certain changes that have already taken place in the structure of the Australian banking system, which, taken in conjunction with the amendments proposed by the Government, will do a great deal to weaken the control that the central bank should properly exercise in this country. Owing to the nature of the economic framework of Australia, it is difficult to apply to this country the same kind of traditional techniques, as it were, that apply to central banking in some other countries. Most of the books about central banking deal primarily with the federal reserve system in America, or with the operation of the money market in England by the Bank of England. They are the two greatest central banking systems in existence. A great change of the techniques of central bank operations occurred during the last war. Now, writers are saying, particularly writers in countries such as Australia, Argentina, South Africa and India, that countries of that kind must develop their own techniques. What applies to conditions in America and the United Kingdom does not apply necessarily to what, for want of a better term, are described as undeveloped money markets. I direct the attention of honorable members to a very valuable book upon the subject. It is entitled Central Banking in Undeveloped Money Markets, and is written by Mr. S. N. Sen, an Indian. India, in some respects a very primitive country, is taking its place as a member of the family of nations, and it has to adapt its banking techniques to meet that situation. Mr. Sen deals with the banking systems, not only of his own country but also of other countries, and he has written quite an interesting chapter upon the operation of banking techniques in Australia. We must bear in mind that our situation is very much different from that of many other countries. By and large, we are dependant for what we can buy upon what we are able to sell overseas and, more importantly, upon the prices that we receive for the goods that we send overseas. One of the techniques that we must develop is the technique of mobilizing properly our foreign balances. It appears that during the last six or eight months the operation in this country of the relationship of the central bank with private trading banks has not been very happy in that connexion. Australian overseas balances have been allowed to dwindle. It appears that some kind of indiscriminate policy has been adopted in relation to imports. The situation that we face at the present time in Australia lias been created largely by the policy that the Government has adopted in relation to that very important matter. In the Monthly Review of Business Satistics for November, 1952, it is stated that the total deposits of the Australian banks between September, 1951, and September, 1952, fell from £1,177,000,000 to £1,054,000,000, and that during the same period the advances made by those banks rose from £568,000,000 to £682,000,000. It has now been suggested that the volume of credit should be regulated, not by the advance policy of the banks, but by their deposits. It is difficult to understand why that suggestion should have been made. In one period there was a heavy fall of bank deposits accompanied by a rapid rise in advances but this is a state of affairs which does not always exist. It is often very difficult to prevent private trading banks from carrying out a policy of their own. At times it may be necessary to attempt to neutralize the policy of the trading banks which are more concerned with the condition of their balance-sheets than with the general economic welfare. The two do not always conflict but there are times when they do. Because of the possibility of conflict it may be necessary from time to time for the central bank to enforce a policy through its own agency. It seems to me that in weakening the link between the trading section and the central banking section of the Commonwealth Bank, as it will do by means of this legislation, the Government will weaken the opera tion of central banking in Australia. I do not think that anybody would seriously challenge the statement of Professor Giblin that a government must intrude a great deal into the determination of monetary policy. 471 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! The honorable member's time has expired. Sitting suspended from 5.58 to 8 p.m. 471 KCS New England 0 0 DRUMMOND, David Mr DRUMMOND . - Insofar as the measure proposes to separate the trading bank functions of the Commonwealth Bank from its central banking functions, incorporating the trading bank section as a. separate institution under its own general manager, it represents fi further step for ward" in the growth of the Australian conception of banking and its control. It may be asked whether the legislation is necessary and meets the requirements of the situation. The Leader of the Opposition (Dr. Evatt) to-day traversed the reasons why there should be no interference with the existing banking machinery and cast doubts on the motives of the Government. Other members of the Opposition supported his views, thereby fulfilling the purpose for which a Parliamentary Opposition exists - that is to say, the Opposition exists to express its point of view on all matters that deeply affect the body politic, when it is at variance with that of the Government. The first question to which I shall address myself is whether the measure is necessary for the proper conduct of finance in Australia. I should say unhesitatingly that anybody who regarded the measure with an unbiased eye would have to admit that the whole development of the theory and practice of banking in the twentieth century, more particularly since the outbreak of World War I., has made it increasingly important that every country which wishes to safeguard its own finances, the solvency of its world position, and its prosperity, should have a central bank. There are reasons why such a central bank should not be involved in the ordinary trading activities of the country. I shall refer to them later. I have in my hand a book by a man who is a recognized authority on this subject. He points out that under the stress of the huge cost of World War I. and the enormous loan requirements that placed a heavy burden on the credit structure of every country involved in it, central banking traditions had to be set aside, and the central banks in all the belligerent countries had to assist the State in the process of adaptation to war economy. He also points out that what was commenced in that intense and accentuated form - a form which modified all the previous conceptions of central banking - was speeded up by the world depression of the early 'thirties, and that with the outbreak of World War II. . central banks were once more required to come to the aid of their respective governments in connexion with the provision of war finance and the maintenance of cheap money. Any unbiased observer would admit that the proposed modification of the existing legislation is in accordance with world experience. Any suggestions that this bill constitutes an attempt to attack the people's bank, to rob the people of some right to which they are entitled and similar catch-cries, are not only outside the point, but may be entirely dishonest. If they arise from ignorance it is a great pity that people who engage in loose discussion of these issues suffer from such ignorance. It is a much greater pity that other people who might reasonably guide the nation indulge in such catch-cries for the purpose of temporary political gain. The fact remains that the changing world economy, brought about not only by two world wars, but also by the whole trend of modern civilization and development, has made it necessary for each nation .to have a bank that can control, in a proper and effective fashion, the whole of the financial operations within its borders. Modern invention has destroyed some of the old protections that nations relied on for the preservation of .their financial position. There was a day, not so far distant, when communications were much slower than they are now, when the modern fast aircraft was almost in the region of the mythical. To-day people can be transported rapidly from place to place and communication of information can take place almost instantaneously by means "of radio in a way that entirely alters the whole structure of the protection that nations establish against any infiltration of their financial position. So it became necessary in the course of events that central banks should be called into existence, and should have entrusted to them control of the inflow and outflow of credit, the note issue, and the movement of finance within the national frontiers, and should also be able to mobilize the credit of the nation in time of war or in time of threatened economic dislocation. All those are reasons for the existence of a central bank. We in Australia have had machinery which, on the whole, has served us well up to the present time. Nevertheless, to suggest that the Commonwealth Bank, which was launched for certain specific purposes, should continue to operate without modification, is just as unreasonable as to suggest that because the parties that support the Government propose to support an amendment of the existing legislation they have some sinister and ulterior motive. The measure that is before the House undoubtedly is intended to provide much more effective banking machinery. Having considered the reasons why this legislation should be submitted, I ask myself whether the machinery that is proposed is the best to achieve its objective. I think I cannot do better than quote again the publication Central Banking by M. H. de Kock, who stated - Central banking has become an entirely separate branch of banking, as distinct from the functions and operations of commercial banks, industrial banks, agricultural hanks, savings banks, investment banks, etc. Central banks have developed their own code of rules and practices, which can be described as " the art of central banking" but which, in a changing world, is still in the process of evolution. That sets out my own firm belief in the way that the structure of a central bank should develop. The author continues - A further requisite of a real central bank is that ft should not to any great extent, perform such banking transactions as accepting deposits from the general public and accommodating regular commercial customers with discounts or advances. It is now almost generally accepted that a central bank should conduct direct dealings with the public only in such forms and to such extent as, in the circumstances of the particular country, it considers absolutely necessary for the purpose of carrying out its monetary and banking; policy. If a central bank has a large commercial banking business, such operations might come into direct conflict With its functions as the bankers' bank, the lender of last resort and the controller of credit.' This legislation is brought before the Parliament as a step towards preventing such developments. It is intended to separate the functions of the Commonwealth Bank that immediately compete with the rest of the banking community and to place them in a separate institution I should like to have seen the Government go further than it has done. The measure proposes that - The net profits of the Trading Bank in each year shall be dealt with as follows: - one-half shall be placed to the credit of the Commonwealth Trading Bank of Australia Reserve Fund; and one-half shall be paid into the National Debt Sinking Fund. In the long run, it would have been sounder finance to place the newly incorporated bank on exactly the same footing as the other banks so that it would have to meet every charge that they have to meet arid build adequate reserves to meet those charges. I do not doubt that it is the intention of the Government that something of that kind shall be done within the framework that it has provided, but I should like to have seen it made more clear. I should have preferred also a more complete severance of the trading bank from the central bank. I know that in the United States of America, where a federal reserve bank system has been developed, there are twelve reserve banks. Upon each of the boards of those banks, which are co-ordinated one with another, three practical bankers are appointed from the private banks. They would comprise about one-quarter of the total membership. I think that ultimately that development might take place in Australia but the action that has been taken by the Government to-day is along the lines of modern banking. A country that has not a completely integrated central bank is at the mercy of forces outside the country much more than from those inside it. Those that are inside the country can be controlled relatively easily, but the control of those outside implies control of the flow of credit and finance inwards as well as its outflow. Having that in mind, I believe that when we talk about handing to the bank the control of credit or the machinery for the control of credit, we should recognize clearly exactly what is meant by the issue of credit. That should be in the minds of the people also. Undoubtedly the issue of credit can be of very great value to a country in certain circumstances, but if it is not used in the proper fashion, it can also destroy. Already it has largely destroyed the savings of the thrifty in Australia. Those who had contributed to superannuation funds upon a certain basis before the war now find that their return is insufficient because of the fluctuation of values. I am greatly perturbed when I hear some person ask, "If credit could be found to run a war, why cannot it be found now for other needs of the community? " Opposition Members. - Hear, hear ! 473 KCS 0 0 DRUMMOND, David Mr DRUMMOND - Honorable members on the Opposition side say " Hear, hear ! " to that proposition, but I warn them that if the well is baled out until it is almost bone-dry, one cannot expect to pour as much water on the garden as one did previously. All the credit that we so generously expended during the war was the price that we had to pay to hold this country, and I believe that we will have to pay more before we are finished. But surely some common sense should be directed towards the matter. The credit that was poured out in time of war came from savings that were accumulated by the people in times of peace, and further savings must be gathered together before we can offer credit, in the form of banknotes, that is anything better than shin plaster. I direct the attention of honorable members to one major difference between the parties who support the Government and the Opposition. We know that it was the policy of the Labour party when it was in office to bring the banking institutions, of the nation under the control of the Government so that it would have complete and sweeping direction of the nation's financial institutions. That is entirely in line with the policy to which Opposition members are pledged, which is nationalization of the means of production, distribution and exchanges. The honorable member for Fremantle (Mr. Beazley) has produced a most charming preamble to that policy in an attempt to sugar the pill, but so long as that objective remains in the policy of the Australian Labour party, so long will there be a deep-rooted and, I think, fully justified suspicion that the Opposition still adheres to the theories of Lenin and Marx that the way to control a country and bring it to socialism or communism is by complete and sweeping control of all finance. That policy is still embedded in the platform of the Australian Labour party. I have no doubt that the Leader of the Opposition (Dr. Evatt), with a Senate election coming on, is most eager to soft-pedal that part of the platform. I have not the slightest doubt that the Australian Labour party rather regrets that portion of its policy and regards it as something to keep in the background. However, as long as it is there it is the governing part of its policy. I raise this matter with considerable regret, but it is necessary that the people should understand the position. When the Opposition attacks the proposed separation of the central banking functions of banking from those of the trading banks - a step which is designed to ensure fairness and the acceptance of sound banking principles - I suggest that its objection is not a bona fide one, but arises from aversion to anything which attempts to ensure freedom and independence, within reasonable limits, for the trading bank facilities of the community. Honorable members of the Government parties may contend that the separation will not go far enough. They may say that the Government' should subscribe more fully to the contention that central banking should be completely severed from the trading bank operations and should not be involved in competition, directly or indirectly, with those institutions. However, if they were to say that, they would come up against the position which the Government has had to face - that the development of banking has brought into existence a great trading institution which has rendered valuable service to the community. Nobody would attempt to deny that that is so, nor would anybody deny that the officers of the Commonwealth Bank are very highly trained, competent people who have helped to build up that institution and are entitled to security in their positions. Nobody, least of all myself, would attempt to deny that the officers of the bank are loyal to it. However, those are different matters altogether from saying that the bank should not be put in a position of unfair competition with other banks. Whilst I regard this measure as a most effective and longsighted step forward in the association that has grown up between the central banking functions, which develop somewhat like Topsy, and the other functions of the Commonwealth Bank, I think that the day is not far distant when members of all political parties will attempt to bring about a further separation of the functions of the bank. I hope that it will be found possible to bring about a constitutional reform to make it exceedingly difficult for any political party which is in power to effect the nationalization of banking. In my opinion it is not practicable, by alteration of the Constitution, to achieve that result. I believe that a- political party which is in power in this Parliament and determined to bring about nationalization of banking, could do so irrespective of the constitutional provisions, simply by the use of the administrative weapon and indirect legislation. I believe that many of the ills from which the Commonwealth suffers, and a certain amount of the difficulties which affect the proper working of Commonwealth and -State relations, in regard not only to banking but also to other matters, can be brought effectively under control, to the benefit of the people of Australia, by ultimately bringing under proper safeguard the right of initiative and referendum to repeal indirect as well as direct legislation which attacks their liberties. Direct legislation may be controlled by constitutional provisions, but indirect legislation cannot be so controlled, because human ingenuity is able to get round the Constitution. It is not possible to control administration unless the people of Australia elect to this Parliament 'governments which are determined to protect their liberties. One of the most effective ways of protecting those liberties is to ensure reasonable financial independence throughout the Commonwealth. The day that we permit the reasonable financial independence of the private hanking institutions of this country to pass under the exclusive control of a government, we shall turn down the page of the history of the freedom of the Australian people. I support the bill because I believe that it is a long step in the right direction and will eventually prove the means of bringing about further reforms. 475 10000 0 0 SPEAKER, Mr Mr SPEAKER - I must call the attention of the House to the loud conversations which I was able to hear in several parts of the chamber during the last 27 minutes. If such conversations do not cease, I shall have to act. There are, also, too many interjections. There has been recent public disputation concerning the broadcasting of parliamentary proceedings. The remedies are in the hands of honorable members, who may make or break the reputation of the House. 475 JLW Darebin 0 0 ANDREWS, Thomas Mr ANDREWS .- Apparently the honorable member for New England (Mr. Drummond) experienced a degree of difficulty in relation to this bill. In that connexion he is in the same position as the honorable member for Petrie. (Mr. Hulme), who addressed the House this afternoon. The first difficulty that seemed to confront the honorable member for New England was that he apparently does not believe that the bill presented to the House will actually bring about a real division between the trading section and the central bank division of the Commonwealth Bank. During the course of his remarks he indicated that he desires a more complete separation. Exactly what he meant by that, I do not know, but I intend to have something to say about that matter during the course of my remarks. The honorable member also said that he would like to see the introduction of legislation to prevent bank nationalization in Australia. If the Commonwealth Bank is not at present a nationalized institution, I should like to know what is. The honorable member seemed to me. to be simply playing with words in an attempt to fool the people outside this Parliament. This bill certainly bears witness that the Government is once again surrounded by a cloud of peculiarities. In 1949 the Government committed itself to the abandonment of the philosophy that underlay the Commonwealth Bank Act 1945. At that time a good deal was said about the nationalization of banking. Indeed, everything but the real fact about banking in Australia was put before the people by the Government parties when they were in opposition in 1949. The term " nationalization " was . interchanged very freely with the word " socialization " in order to create a feeling of apprehension in the minds of the people. After this Government assumed office, however, it produced a bill to amend the Commonwealth Bank Act 1945. In substance, the amendment displaced the Governor of the bank and the Advisory Board, and replaced them with a Commonwealth Bank Board. However, the substance of the 1945 act remained. That was the principle that the will of the Treasurer of the Commonwealth should prevail if a difference of opinion arose between the Commonwealth Bank Board and the Treasurer. It seems to me that this Government substantially endorsed the Commonwealth Bank Act 1945 by not altering that particularly important provision. The Commonwealth Bank is not independent of this Parliament. In fact, it is very much limited by the Parliament. The bank is as nationalized as any institution in this country. Every time I hear remarks passed about the nationalization of the banks I wonder whether the people who speak so glibly of nationalization are being deliberately dishonest in order to fool the people, or whether they have not yet realized that the Commonwealth Bank is a truly nationalized institution. Honorable members interjecting. 475 10000 0 0 SPEAKER, Mr Mr SPEAKER -Order ! Interjections must cease. 475 JLW 0 0 ANDREWS, Thomas Mr ANDREWS - This proposed legislation will give legal authority to something that is unique in banking generally. Just as it could be said that the Commonwealth Bank Act 1945 gave legal form to certain national security regulations, so it may be said that this bill will provide a subtle division in the activities of the Commonwealth Bank. I used the word " subtle " because it could be argued, and indeed it has been argued by the Opposition, that the division is less real than the Prime Minister (Mr. Menzies) would have his supporters believe. Under this legislation it is proposed to make the General Banking Division of the Commonwealth Bank a separate legal entity with definite functions, as was done in the case of the Commonwealth Savings Bank. The Commonwealth Trading Bank is to have its own general manager, but it is to have a staff that is in common in many respects with the staffs in other divisions of the Commonwealth Bank. Moreover, the most important point is that the general manager of the Commonwealth Trading Bank will be under the authority of the Governor of the bank and the Commonwealth Bank Board. Therefore, it is very difficult to believe that this measure will provide for any real division between the functions of the Commonwealth Bank. Honorable members on the Government side have failed to convince the Opposition that there will be any real division of functions while the general manager is under the authority of the Governor and the Commonwealth Bank Board. Therefore, the important principle that the functions of the bank should be under the authority of the Governor, and ultimately under that of the Parliament, has not been changed by this measure. This affords a second example of how this Government has endorsed the Chifley Government's Commonwealth Bank Act of 1945. Apparently the Government has not been able to find any way to alter fundamentally the 1945 act, which is so sound that the Government cannot afford to make any real change in its provisions. Perhaps those who advised the previous Treasurer of the Commonwealth have converted the Prime Minister to the philosophy which underlies the Commonwealth Bank Act 1945. The nature of the general structure of the Commonwealth Bank Act 1945 has been recognized by the Government, and it is ironical that so many promises should have been made before the act was passed, and that none of those promises was put into effect after the sound features of the 1945 act had been examined. Almost every attempt that the Government has made to alter the banking structure has proved .the soundness of the provisions of the Commonwealth Bank Act 1945. There <can be no doubt now that the Prime Minister is a convert to the philosophy of the 1945 act, because he recently rebuked Mr. Gandon, the general manager of the Bank of New South Wales, for making misleading statements . about the functions of the Commonwealth Bank. He reminded Mr. Gandon that the Rural Credits Department of the bank had been established to provide short-term loans on concessional rates of interest to co-operative- societies and marketing boards, pending the sale of' primary products. He informed him that that had been done because such business was unattractive to private banks. Apparently the private banks did not want the Commonwealth Bank to conduct business of that sort, but did not suggest that they desired to take over the business themselves. He also informed Mr. Gandon that the Mortgage Bank Department of the Commonwealth Bank had been established to provide long-term loans, repayable by instalments, to primary producers in order to relieve them from pressure for repayment in difficult times. That displaced the old method of using an overdraft, through which pressure could be most effectively applied. The Commonwealth Bank is now providing services that the private banks will not give. The Prime Minister's conversion to the principles of the Commonwealth Bank Act is obviously not acceptable to his masters, so he has had to compromise. His compromise has taken the form of doing whatever he can to weaken the 'Commonwealth Bank, and he has tried to present arguments about the necessity for the independence of the Commonwealth Trading Bank. However, those arguments would not fool the merest economic tyro. It is quite true, as the Leader of the Opposition (Dr. Evatt) said, that this present subtle device is not in accordance with the report of the Royal Commission on Monetary and Banking Systems, which recommended that the trading activities of the Commonwealth Bank should be integrated with its general banking business. The Prime Minister is not entitled to claim that such a recommendation is being carried into effect by separating the trading activities of the bank from its general activities, but if its trading activities are not integrated with the general business of the bank, the staff activities certainly are. In other words, an officer of the bank would carry integration with his feet. I shall go a little further in order to explain precisely what I mean by that statement. The Prime Minister, in introducing tha bill, said - > Out purpose lias been to obviate the possibility that the Commonwealth Bank could place its own trading activities in a privileged position through unfair use of the central banking functions. The right honorable gentleman then went on to say - The conclusion that we have arrived at from that is that the General Banking Division of the Commonwealth Bank should be given a separate corporate existence and that, for the purposes of central banking control, it ought to be on exactly the same footing as are all the other trading banks in Australia. That such separation is not practicable is proven by the converse argument to that used by the Prime Minister. My claims seem to be obvious and follow from the words of the right honorable gentleman which implied that unfair use would be made of the central banking functions if trading bank activities continue to be associated with the central bank activities of the bank. Although the two divisions will be legally disintegrated, officers who have central bank knowledge will control trading bank policy and will have much to do with advances. Are we to assume that the Commonwealth Bank Board or the Governor of the bank, when dealing with trading bank activities, will in some mysterious way develop a vacuum in place of knowledge they have as controllers of the central bank? Is 'it to be assumed that the policy they recommend will have no relation to information acquired as controllers of the central bank? Furthermore, are we to assume that officers promoted by transfer from one division to another will forget the statistics they learned in the central bank, and that they will have learned nothing of the mind of private bank operators and their activities in relation to advances, investments or the times when movements take place in the various banking systems? These suggestions are fantastic. Everybody well knows that there is no real separation' when there is such an integration of staff throughout the whole of the Commonwealth Bank. For the Prime Minister to pretend to us that there is a disintegration of the two divisions when, in fact, there is complete integration of staff, is simply to ignore the fact that integration could walk with the feet of the officers. Let us hear the words of the Prime Minister on that subject. The right honorable gentleman said - The primary responsibility of the Commonwealth Bank is its function as a central bank acting in harmony with the economic and monetary policy of the government of the day. Referring to the Government, the right honorable gentleman continued - We believe that the Commonwealth Bank's general trading activities form a useful section of the commercial banking system and that these activities should be developed in fair competition. I interrupt my recitation of the Prime Minister's words by saying that it is here where the Prime Minister's ideas of integration present themselves as the converse of my argument on precisely the same point. The right honorable gentleman went on to say - We believe that they have great merit, because they act as a source of information to the central bank. They enable the central bank to have an instrument by which it may give leadership in banking policy. In other words the right honorable gentleman states that the trading division business will be checked against the trading activities of the trading banks to help to establish policy: These statements and opinions made and expressed by the Prime Minister in his second-reading speech will be checked by the over lords of the Commonwealth Trading Bank of Australia. "Whom does the Prime Minister think he is fooling when he emphasizes the existence of separate legal entity? I do not think that honorable members opposite were fooled by his statements. The separation of- which he spoke is about as real as the separation of a son from his father when the son sleeps in a sleep-out instead of in his father's bedroom. I could think of a better example of the unreality of the alleged separation. I't is about as fair as would be the act of a teacher who strives to set an independent examination paper for his own class. He knows precisely what his pupils know and what they do not know, and, therefore, he will do one of two things. He will set a paper which is within the limits of his pupils' known confined knowledge, or he will do a grossly unfair thing and set a paper which is outside the limits of their knowledge and thus ruin their chances of success. That will be precisely the position of the Commonwealth Trading Bank in association with the central bank. Let me illustrate the point still more precisely. Recently, on the advice of the Treasurer (Sir Arthur Fadden), I interviewed Dr. Coombs in an effort to 'complete arrangements for an overdraft which had been promised to a co-operative building society. Later I wrote to Dr. Coombs on the subject and he replied that the request could not be granted, but if the society cared to form a new society i! could secure an advance of £100,000 from the Commonwealth Savings Bank for precisely the same purpose. The new society was formed and the £100,000 was obtained. Yet the Commonwealth Savings Bank has* a legal separate entity from that of the Commonwealth Bank. This specific example shows the lack of integration between the activities of the divisions of the bank which are given separate legal entity. The Prime Minister has indicated that there is division in the ranks of the Government parties regarding this puerile legal separation. From the speeches to which I have listened this afternoon I am all the more certain that there is division in the ranks of the Government parties in connexion with this legislation. So much is. the Prime Minister a convert to the Banking Act 1945, which, in my estimation, is the very acme of nationalization, that he has determined that the Ministry shall have the final say as to who shall be appointed general manager of the Commonwealth Trading Bank. So, there is to be parliamentary control over the whole of the institution of the Commonwealth Bank, from the top to the bottom. In view of all this, the Prime Minister's statements about nationalization, always, of course, synonymous with socialization, add up to rank hypocrisy. He does not admit that the Commonwealth Bank is a nationalized institution, yet all the Government's legislation confirms it as such. The general election of 1949 was fought, not on nationalization, but on monopoly. It would be as well for Government supporters to face up to the situation. The general election in 1949 was fought, not on the issue of bank nationalization, but on that of monopolies. I invite Government supporters to exhibit a little more honesty in their, use of the term "nationalization". The fact i3 that the Prime Minister has perforce been converted to nationalization because, by the very force of circumstances, a central bank is essential in order to' ensure effective over-all control of our economy. Sufficient examples have been brought to our notice during the last few years to demonstrate the necessity for empowering a central bank to exercise such control. Government supporters must agree that there is no alternative to that position. However, the bill now before the chamber and the Banking Bill will do much, by compromise, to weaken the effectiveness of the central bank. These measures have, been introduced on the pretext that a future Labour government may do something to weaken the private trading banks. . Government supporters have raised that cry during the course of this debate. Apparently, they are much more concerned about possible gains to be made by the private trading banks than about the responsibility . of the Parliament to ensure effective over-all control of our economy through a central bank. A Labour government would be most \mlikely to engage in acts of the kind which Government supporters allege the Labour party is desirous of perpetrating. That fact becomes obvious when we consider the purposes for which the Commonwealth Bank was primarily established. Everybody knows that at present many semi-governmental institutions are operating on overdrafts with private banks. Consequently, if a Labour government in the future did any overt act to smash the private banks, such as directing them to call up overdrafts, chaos and unemployment would be caused immediately. The only way in which any government could ruin the private trading banks would involve the ruin of the very people whom the Commonwealth Bank was established to protect. Consequently, it is beyond my comprehension how any one could assume that a Labour government would do anything that would adversely affect the lives and interests of that section of the community which the Australian Labour party represents. If it did so, it would simply court annihilation. Therefore, the charges made by Government supporters in this debate have been made merely as party political propaganda. Apparently, the Government has little faith in the finding of the Privy Council that monopoly nationalization is ultra vires the Constitution. It is clear that many persons who thought that that judgment was sound in every respect have now become somewhat dubious about it. Otherwise, the Government would not be so concerned to ensure greater protection for the private banks. Everybody recognizes that the management of the Commonwealth Bank under the 1945 act has been singularly sound. Since the suggestion was first made that the Government would introduce amending legislation in respect of the Commonwealth Bank, every newspaper in Melbourne has declared that the bank has not exercised any of its great powers unfairly or tyrannically. In those circumstances one wonders why the Government has found it necessary to seek means of weakening the Commonwealth Bank by introducing measures of the kind now before the Parliament. The bank requires the great powers that it now possesses in order to meet the possible emergency that could arise if the private trading banks, actuated merely by the profit motive, made advances to a degree that would cause secondary inflation and thus unbalance our economy. It is right and proper that the central bank should be clothed with full powers to meet an emergency of that kind. I submit that in the last analysis full central banking powers are needed in order to protect the private banks against themselves. For instance, they could be tempted to make advances to a degree that would harm our economy. In doing so, they would ultimately ruin themselves. In view of the fact that the Commonwealth Bank has acted with restraint and to the complete satisfaction of those in the community who have our over-all economic welfare at heart, why does the Government desire to break down a morality that has been established through the activities of the bank merely to appease the selfish interests which have urged it to introduce this legislation? The proposal contained in the bill is a pretence at separation of t£e trading activities of the bank in a watertight compartment merely in order to give the impression that the trading division will not have the same backing as it possessed formerly. In order to intensify that psychology among those who previously did business with the bank, the Government has even gone to the extreme of changing the name of the bank. Under the Banking Bill, the power now vested in the Commonwealth Bank to call up uncalled liabilities of .the trading banks into special account is to be drastically reduced, and such action could render the central bank practically impotent should there arise an emergency of a kind that we have experienced in this country even during the life of this Parliament. Hypocritical provision is being made to enable the Commonwealth Trading Bank to effect amalgamations. 479 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! The honorable member's time has expired. 479 009MA Lowe LP Minister for the Navy and Minister for Air 1 0 MCMAHON, William Mr McMAHON . - The bill before the Chair relates to the Commonwealth Bank in respect of its organization, functions, powers and system of management, whilst the Banking Bill relates to banking generally and seeks to empower the Commonwealth Bank to control to a degree the activities of the private trading banks. The bill now being debated seeks, first, to establish a separate trading bank which will compete with the ordinary private trading banks; and, secondly, to ensure that the trading bank shall operate in free and fair competition with the private banks. Before I deal with the actual text of the Commonwealth Bank Bill 1953, I want to discuss three arguments put forward with some degree of consistency by Opposition members. The first is the somewhat bald statement that this bill will permanently weaken the central bank. The Leader of the Opposition (Dr. Evatt), who voiced that criticism, did not produce one argument or fact to support it. He merely put forward, as also did the honorable member for Darebin (Mr. Andrews), the extraordinary proposition that there would be a weakness in the central banking functions. Let me state immediately that one object, admittedly a secondary object in relation to this bill, although it will become clear when the Banking Bill 1953 is before the House that it is a primary object, is to strengthen the central banking system of Australia. None of the central banking functions as they exist at present under the legislation passed by the Chifley Government, is to be taken from the central bank. That institution will continue to control the note issue and the total amount of credit that may be created by the trading banks, and act as the banker for the Australian Government. The central bank may also discount treasury-bills issued by the- Government. Consequently, the House will see that' the first argument, on which the Labour party relies so strongly to support its case, proves .to be a fallacy. There are two other parts of the Leader of the Opposition's speech on which I shall touch briefly. First, under the existing act and under this amending bill, the Government retains the final responsibility for determining the policy to be pursued by the Commonwealth Bank, and the newly established Commonwealth Trading Bank of Australia. Therefore, I cannot see how it can be argued that this bill will in any sense weaken the Commonwealth Bank with respect to its trading activities. The Leader of the Opposition made another statement which must have been gathered somewhere outside the precincts of this House, though certainly not from the Commonwealth Bank Board itself, because he said that the customers cannot be transferred, without their written consent, from the General Banking, Division to the Commonwealth Trading Bank of Australia. That happens to- be a. complete misstatement of fact. I know a fair deal about this kind of -transaction, because I was the junior partner in a firm of solicitors that handled amalgamations of various banks. I was associated with the details of the amalgamation of the Bank of New South Wales with the Australian Bank of Commerce, and I have been able to apply the knowledge that I gained during that transaction to this particular case. I state with emphasis and conviction that the present legislation profits from the experience gained during- that amalgamation; and, by force of the act itself, the securities and the customers will be transferred from the General Banking Division of the Commonwealth Bank to the new Commonwealth Trading Bank of Australia.. It is true, as will be pointed out later; that special action may be taken in particular cases. It is true that the Commonwealth Bank may, as a matter of wisdom, decide to say, in Effect, to its customers, " The Government has enacted this- legislation. We should like you to know the facts, and consent to the transference of your account from the General Banking Division of the Commonwealth Trading Bank". But as a general rule it will not be necessary, in law,, to ask for the consent of the customers in that matter. The third point which should be emphasized is that the Leader of the Opposition and the honorable member for Darebin drew attention to the fact that this bill does not exactly comply with the recommendations of the Royal Commission on Monetary and Banking Systems in 1936. The Leader of the Opposition pointed out that the commission expressed the opinion that the structure of the central bank, the trading bank and the- savings bank, as it existed at that time, was essential to the efficient functioning of a central bank. I ask the House to mark the date> 1936. I also ask the House to remember the circumstances that occurred between that year and 1948. When regard is had 'to those circumstances,, honorable members will realize that the royal commission was not dealing with a set of conditions in which, a Labour government, by an arbitrary act, could wipe the trading banks out of existence, and establish one monopoly central bank in their place. In other words, the conditions have so changed since 1936 that it amounts to sheer nonsense to argue that because the royal commission made certain recommendations in that year, those recommendations apply to-day. There is no greater authority for the proposition that I have put that as conditions change so we must change our Commonwealth Bank and trading bank structure than the late Mr. J. B. Chifley, who, when he was introducing the Commonwealth Bank Bill in 1945, made the following statement : - A banking system must always be in process of evolution He did not accept the idea, that a recommendation made in 1936 would apply in 1945. He continued as follows : - Since . . . 1029-33 it has come to be recognized throughout the world that changes in the banking system should be the result of conscious decisions of policy. The Government is doing so in this bill. We have examined the changed circumstances and adjusted the structure and powers of the Commonwealth Bank in order to meet them. Therefore, it is rather foolish to argue that because the royal commission may have made some kind of positive recommendations in 1936 we should accept those recommendations to-day- 481 BV8 0 0 CALWELL, Arthur Mr Calwell - The Government is taking this action because the banks have asked it to do so. 481 009MA 0 0 MCMAHON, William Mr McMAHON - The banks have not asked the- Government to separate the trading bank functions in this way. This action is being taken on the Government's own initiative-. 481 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! Debate across the table between the Minister and the honorable member for Melbourne is out of order. 481 009MA 0 0 MCMAHON, William Mr McMAHON - I must refute the statement of the honorable member for Melbourne (Mr. Calwell), because it is totally incorrect. The- principal provision of the bill is designed to establish the Com- monwealth Trading Bank of Australia. Provision is also made that the Commonwealth Trading Bank shall carry on its business under terms of perfectly fair competition with the commercial trading banks. I do not think that any honorable member is prepared to argue that such a proposition is not just. We all believe in fair competition and in fairness generally. If we believe in fairness as a basic principle, surely we can carry our thought a stage further and argue that we believe in fair competition between a Commonwealth organization and commercial organizations. What does the Government propose to do? It will establish the Commonwealth Trading Bank of Australia out of the existing General Banking Division of the Commonwealth Bank, and provision is made for the new institution to have all the powers of a trading bank. The bill authorizes the Commonwealth Trading Bank of Australia to receive money on deposit and to lend money. After all, those are the main powers usually exercised by a trading bank. Authority is also given to the new institution to borrow money, buy and sell securities issued by the Commonwealth, and purchase other securities. Therefore, honorable members will see that the Government is establishing a Commonwealth trading bank, a national bank if the House likes to call it by that name, with all the powers that would normally be, given to a trading bank. The Commonwealth Trading Bank is to be capable of carrying on its business in a competitive fashion. The Government has gone further. Clause 18 provides that the Commonwealth Trading Bank shall expand its business. That appears to be a very wise provision because, in this growing country, it is necessary to have increasing banking facilities and we want both the Commonwealth Trading Bank and the ordinary trading banks to expand their operations. To enable the Commonwealth Trading Bank to do that, clause 19 provides that adequate finance shall be made available. The honorable member for Darebin said that, so far as he could see, no- substantial change was being made under this legislation. He advanced a somewhat complex argument which was fairly difficult to follow, aud he accused the Prime Minister of hypocrisy. He said that the Prime Minister had merely attempted to create an illusion of separation without making any separation in law or in fact. The honorable member based his argument on the fact that the trading bank and the central bank were still to be owned by the Australian Government. To my way of thinking, the honorable member's argument amounted almost to a perfect proposition that the Government should completely divorce the central bank functions from the other functions of the Commonwealth Bank, and give the Commonwealth Trading Bank its own power of management and a completely separate existence and board. If that is what the honorable member meant, he should have had the courage to come out into the open and say so, and then fight for his place in the Labour movement; but he did not have the courage to do that. He merely argued that because the two sections pf the bank would still be owned by the Commonwealth there would be no real division. There is no relevance in that argument. "We are not dealing with nationalization. "We are trying to establish a system under which the day-to-day management of the Commonwealth Trading Bank will be effective and efficient. Secondly, we are trying to provide adequate protection for the commercial banks against unfair discrimination by the central bank. I say, therefore, that the second argument advanced by the honorable member for Darebin can be dismissed because it has no relevance whatsoever to the bill now before the House. The second point made by the Prime Minister when introducing this legislation was that the critical and central purpose of the bill was to prevent discrimination by the central bank against the ordinary commercial banks. He pointed out that, at present, the General Banking Division of the Commonwealth Bank could be given such wide powers that, over a period of time, it could by administrative action drive the private trading banks out of existence. The Government had decided, therefore, he said, to establish an organization and a mechanism that would give adequate security to the private banks. His words on that subject are worth repeating. He said - Our purpose 1ms been to obviate the possibility that the Commonwealth Bank could place its own trading activities in a privileged position through an unfair use of the central banking functions, and the conclusion that we have arrived at from that is that the General Banking Division of the Commonwealth Bank ought to bc given a separate corporate existence. I am sure every member of this chamber who remembers the events of 1947 will agree that a government of the same political complexion and inclinations as the Chifley Administration would not hesitate, by indirect and unfair means, to nationalize Australian private banks. Obviously, a party that attempted to nationalize the private banks through confiscation by legislation, would not hesitate to achieve its objective by the other means at its disposal - the hidden means of administrative controls and administrative manipulation. I am sure all honorable members on this side of the chamber wholeheartedly agree with me that the principle of nondiscrimination should be firmly established and that the Commonwealth Bank should not be able, at the direction of an arbitrary government, to drive the trading banks out of existence or to discriminate unfairly against them. It is the intention of the Prime Minister and of the Government that this intention should be achieved in two ways. First, it is to be achieved by completely separating the trading bank functions from the central banking and' other functions of the Commonwealth Bank. A separate legal organization is to be established, with its own common seal, and its own identity. It will be compelled to keep its own accounts and manage its own business according to the policy laid down by the Commonwealth Bank Board. As an independent organization, its activities will be open to the scrutiny of any one who is interested. I believe that, by this legislation, we can prevent special privileges being given to the Commonwealth Trading Bank as perhaps they might have been given to the General Banking Division. It is provided that the policy of the Commonwealth Bank and of the Commonwealth Trading Bank shall be determined by the Commonwealth Bank Board; but the following qualification is provided - In determining the policy of the Trading Bank the Board shall do so in such a manner as not to conflict with the policy in relation to the Commonwealth Bank acting as a Central Bank. It is implicit in that provision that when the central bank decides on a line of policy, it shall be applied equally to its own subordinate organization and to the commercial trading banks such as the Bank of New South "Wales Limited and the Commercial Banking Company of Sydney Proprietary Limited. That will give reasonable and effective protection to the trading banks against unfair discrimination. The Government's arguments on this legislation may be stated in two propositions. The first is that we are establishing an effective government trading bank with adequate powers. Any one who cares to call it a people's bank can do so. The second is that it will have ample opportunity to flourish if its management is efficient and is capable of standing up to fair competition by the trading banks. Admittedly it will have some privileges such as freedom from income tax, but in general it is fair to say that the Commonwealth Trading Bank will have to meet .competition and will have to be efficient. There are two other matters to which I should like to refer. The first is the contentious problem of the management of the Commonwealth Trading Bank. In dealing with this matter, the Government considered many alternatives. It decided that the day to day control of the trading bank should be taken out of the hands of the Governor, who has to attend to other important matters such as central banking policy, and placed in the hands of a general manager. A similar situation exists in the Industrial Finance Department and the Savings Bank Department. Therefore, we are following a very good precedent established by a Labour government. The Government considers that it must have the right to decide finally, through the Executive Council, whether the nominee of the Commonwealth Bank Board is an efficient and proper person to carry on the day to day management of the trading bank. Therefore, it proposes that the board may make a recommendation but that, if the person nominated is not approved of by the Government, for good reasons, the appointment will not be made. I believe that this is the best arrangement that can be made in the circumstances, short of taking other action that has been recommended by certain individuals. It is a sensible provision which should commend itself to the House. Another provision I propose to discuss refers to final decisions on central bank policy and trading bank policy. The law at present provides that central bank policy shall be determined by the Commonwealth Bank Board and must be communicated to the Government so that, if the Government disagrees with the opinion of the board, it can communicate its views to the board, direct the board to pursue the policy that it favours, and accept responsibility for that policy. The Government proposes that a similar provision shall apply in relation to the policy of the Commonwealth Trading Bank. That means that, under the terms of this bill the Government will have final responsibility for determining the quantum of credit to be issued, the note issue policy, general interest rates, exchange rates and all other important central bank policy matters, and also will have an overriding power in relation to the trading bank policy. This will ensure that we shall have a strong Commonwealth Trading Bank. The provision will not prejudice the people's bank in any way. My final argument is directed specifically to the Opposition. Honorable members opposite seem to object to any alteration of the banking law and, in particular, to the proposal to divorce one of the activities of the Commonwealth Bank from its central hanking function I remind them that it has long been the policy of the Labour party to establish a. separate federal reserve or central bank. The honorable member for New England (Mr. Drummond) and various other honorable gentlemen no doubt recall that the late Mr. E. G. Theodore brought into this House a bill that was designed to establish a central reserve bank completely divorced from other banking functions and responsibilities. That was the policy of the Labour party under the leadership of the late Mr. Scullin. Therefore, it is unreasonable for honorable members opposite now to resist the much more moderate proposal by this Government to separate the general banking functions of the Commonwealth Bank from its central banking functions and to place them under the control of a manager who will be responsible to the Governor and the Commonwealth Bank Board. As I pointed out earlier in my speech, the late Mr. Chifley argued that in dealing with banking problems, we should ' observe the changes that affected our economy and, if they were sufficiently substantial and significant, we should examine the banking structure in order to ensure that it should remain an effective instrument to carry out the policy of the Government in the changed circumstances. The banking structure cannot remain static. Everything goes through a process of evolution, and there is no difference between the banking mechanism and the ordinary commercial activities of a trading organization which finds that the demand for its product has been exhausted so that, if it is to survive, it must produce some other commodity that is required by the public. I do not suggest for a moment that we should embark lightly upon changes. However, we should be prepared to make changes when they become necessary. This Government, in its wisdom, has decided to change our banking system in a way that has been made necessary by economic changes. I do not contend that this bill provides the answer to the perfectionist's dream. We cannot achieve perfection in this world. Nevertheless the measure provides for a worthwhile change that will achieve efficiency in Australia's banking system. The circumstances of our country are peculiar. They are not the same, for example, as those of the United Kingdom and the United States of America. Australia is a primary producing country and its export income is liable to violent fluctuations which affect its internal prosperity, whereas the United Kingdom is a manufacturing country and the United States of America is almost self-contained. Therefore, we have to devise a banking system that will satisfy the peculiar needs of Australia. We cannot adopt holus bolus the banking system of the United Kingdom or that of the United States of America. We must adapt our system to our special needs and to changing circumstances. 484 10000 0 0 SPEAKER, Mr Mr SPEAKER -Order ! The Minister's time has expired. 484 KXZ Burke 0 0 PETERS, Edward Mr PETERS .- The Treasurer (Sir Arthur Fadden) said in 1950- . . the administration of the Commonwealth Bank should not be subject to frequent and violent change . . . the Government is satisfied that the broad .purposes of monetary and banking' policy arc being achieved. For this reason, and because it would be undesirable to make frequent changes in legislative requirements affecting the banking system, the Government has decided to preserve the general pattern of control by the Commonwealth Bank over the banking system and the broad structure of the Commonwealth Bank. The right honorable gentleman also declared that the Government was convinced that the legislation which it then introduced would make the Commonwealth Bank an instrument that would serve industry and the people of Australia with complete satisfaction. Why has the Government changed its attitude and introduced legislation to alter the broad structure of the Commonwealth Bank and change the control that the bank exercises over monetary and credit policy in this country? That question has been answered by the Minister for the Navy (Mr. McMahon). Some one on the Government side of the House suddenly came to the conclusion that those changes were desirable. The Minister has said that the changes will be processes of evolution. The processes of evolution have received some assistance. There is not a private banker in this country who has said that the present banking legislation of this Government is sufficiently favorable to the private banks to satisfy them. Since 1950, private bankers have consistently stated publicly that the present banking legislation is not sufficiently favorable to them. Therefore, its master's voice having spoken, the Government has introduced legislation to divide the Commonwealth Bank into two sections and to place restrictions upon the deposits that the Commonwealth Bank may call upon private banking institutions to lodge with it. The Government does not believe in the Commonwealth Bank. It believes in private enterprise. Therefore, bit by bit, it is whittling the Commonwealth Bank away. It is either not willing or has not the necessary courage to introduce a measure for the dissolution of the whole of the Commonwealth Bank and the handing of its functions to private banking institutions. Bit by bit, it is giving added power to the private banks, to the detriment of the Commonwealth Bank. It wants to utilize the Commonwealth Bank, not as a bank in the interests of the people, but as a buttress and a weapon for use by private banking institutions in their own interests. 1 Many of the Opposition have advanced good reasons why the proposed division should not take place. Through the years, there has been no loud demand for a separation of the trading bank operations from the other operations of the Commonwealth Bank. No demand of that kind has been made by the ordinary men in the street, by men interested in manufacturing or by men engaged in primary industry. The newspapers have not reported that indignation meetings have been held throughout the country because, through the years, the Commonwealth Bank has exercised its trading bank functions and its central bank functions as, so to speak, a combined operation. Nevertheless, the two parts of the bank are to be divided. I say that they will be divided because, by the division, those who are opposed to the Commonwealth Bank hope to weaken that institution and to strengthen private banking institutions. But there is something worse than that. The opinion of an eminent legal authority is as follows : - Under the Constitution, power is given to Federal Parliament to control banking. Does this power give the Commonwealth Government power to establish a bank? In the past, critics have been answered with the reply - " If the Commonwealth Government is to control banking, it must have an instrument to force the trading banks to conform to advance policy and other banking conditions considered desir able and safe for the country. In view of this aspect, it cannot exercise control without having an instrument to enforce authority ". Under the proposed new set-up, the central bank, with the departments as indicated, would be, no doubt, considered quite adequate to " control banking ". Then what about the Commonwealth trading bank, operating under a separate Act of the Commonwealth Parliament? On challenge by the private banks later on, it is more than likely that the High Court would say, " The central bank is the body which has the power to regulate and control banking. There is no need to also establish a separate institution to actually conduct active hanking business in competition with the private banks. In other words, the main body, the central bank, could look after the job." In these circumstances, the Commonwealth Bank, as we now know it, as established by the Fisher Labour Government and developed by Denison Miller, would go out of history. The- new legislation, therefore, is a dagger aimed at the very heart of the greatest institution now operating in Australia. With one great stroke, the private banks hope to rid themselves of competition in the conduct of commercial and trading banking business in Australia. That opinion may not be correct, because we know that there are great differences of opinion among legal authorities, but it is likely to be correct. 485 KBH 0 0 WILSON, Keith Cameron Mr Wilson -. - Who is the authority? 485 KXZ 0 0 PETERS, Edward Mr PETERS - It is an eminent legal authority. I am not one of those people who attach great credence to the dictums of legal gentlemen. But, having regard to that opinion, does it not appear likely that there is a danger that the trading bank established under a separate act of the Parliament could be challenged by a private banking institution and put out of operation altogether? I do not think that many tears would be shed by honorable members on the Government side of the House if it were put out of operation. There is another feature of the proposed division that constitutes a danger to the people of this country. One section of the Commonwealth Bank, the central bank, might make an advance to an individual, and the individual, having accepted the advance, might deposit the money with a private banking institution and not operate through the Commonwealth Bank. That would, weaken the Commonwealth Bank. Although there is always an endeavour to make the banking system of this country appear to be as abstruse and as complicated as possible, and although expressions and terms are used that the ordinary man may not understand, in reality the money changers or the manipulators of the finances of this community who call themselves bankers are, as the courts have said, traders in money. They are not only traders in money. Let me put this case to the House. I go to the Commonwealth Bank or to a private banking -institution and I seek a loan. The bank gives me £1,000. When I have secured that £1,000, I do not take it from the bank in notes. I open a cheque account. Then I have established a deposit in the bank. Orthodox bankers admit that every advance creates a deposit. For that reason banking institutions are able to lend, not merely the money that is actually deposited with them, but a vast amount more. As the honorable member for New England (Mr. Drummond) said, they create credit.' That credit upon which they levy toll in the form of interest is not based on money belonging to them nor to any particular depositor in the form of bullion or notes deposited. If was due to this fact that in 1941 the present Treasurer (Sir Arthur Fadden), who was also Treasurer at that time, decided that in order to finance the war effort it was essential that the power to issue credit over and above the real wealth of the community should be controlled by the Government. He introduced regulations which gave power to the Commonwealth Bank to immobilize a big proportion of bank deposits. The Treasurer said that in that way secondary inflation was mitigated. He was right. Probably the biggest factor in the creation of inflation is the power of banks to lend a lot more money than is, in reality, placed in their custody. As the Treasurer said, they become a medium of secondary inflation. They become the cause of too much money chasing too few goods. Orthodox bankers all agree that the quantity theory of money i? based on fact. That theory holds that the relationship between the amount of money in circulation and the quantity of goods available for purchase must be maintained, otherwise inflation or deflation will result. If the amount of money in circulation is increased with- out an almost simultaneous increase in the quantity of consumable goods the result is inflation. If, on the other hand, the amount of money in circulation is reduced without a corresponding reduction in the quantity of consumable goods the result is deflation. The disequilibrium known as inflation or deflation which occurs in the economy of the country is accentuated or diminished by the operation of private banking institutions. Because of that fact it is not merely desirable that a government should have full control over the monetary and credit creating policy of banking institutions but it is also absolutely essential in the national interest. After all, what do these people who call themselves bankers do? Do they add to the primary produce of this country? 486 JQ7 0 0 BLAND, Francis Mr Bland - Yes. 486 KXZ 0 0 PETERS, Edward Mr PETERS - The honorable member for Warringah (Mr. Bland) probably means that the service which bankers render may have some effect on the increase in primary or secondary production. But they are not the producers of goods. They do not grow wheat or farm products. They do not manufacture furniture or machinery. They only levy toll upon industry. They are entitled to a just payment for the service that they render. But the people who determine the charge for that service should not be the people who provide it. That is what is occurring. Banking institutions determine the value of the service that they render. They determine the amount that they shall charge the community. By restricting the amount of deposits that the Commonwealth Bank can demand from the private banking institutions the Government is endeavouring to assist those institutions to increase the price of their services - in other words, to increase the profits of their shareholders. This is an effort to give the banks a greater amount for the service that they render to the community. As a member of the Labour party I say that that is undesirable. As a member of the Labour party, I say that inflation not only exists but is getting worse. Inflation operates to the disadvantage of people on fixed incomes and of the community generally. Although some sections make a profit out of it. Whilst it exists the Government should be most reluctant to interfere with the power which enables it to control the secondary inflation that is caused by the operations of the banking institutions. I am not alone in declaring that inflation is caused by the banking institutions. In 1941, when this country was at war, the Treasurer said that in order to enable Australia to use its resources to the utmost it was necessary to control the power of banking institutions to create secondary inflation. 487 009MC 0 0 HOLT, Harold Mr Holt - I think that the Treasurer referred to the necessity to avoid creating secondary inflation. 487 KXZ 0 0 PETERS, Edward Mr PETERS - He said that it was necessary to reduce the power of the banks to create secondary inflation. 487 009MC 0 0 HOLT, Harold Mr Holt - The honorable member for Burke (Mr. Peters) approves of that. Mr. PETERS. I agree. But it was the Treasurer who indicated by his action in 1941 that he did not trust the private banking institutions to control the credit resources of this country in the interests of the war effort. That is what his action meant. If, in time of war, whenpatriotic fervour was at its height, and when wo could expect the best and noblest attributes of the people to come to life, the Treasurer considered it necessary to take action to prevent private banking institutions from utilizing their power in their own interests and against the interests of the community, then I say that in time of peace, when people in this country are suffering as a result of rising prices and shortages of commodities, most of the available supply of which is being snapped up by people who have more than their fair share of the money that is being too freely distributed, in some cases by private banks, those private banks cannot be trusted to exercise their functions and powers absolutely and unreservedly. 487 K58 0 0 O'CONNOR, William Mr O'Connor - They can never be trusted. 487 KXZ 0 0 PETERS, Edward Mr PETERS - The honorable member is merely repeating what the Treasurer himself declared, in effect, by his actions during the war. This legislation is definitely designed to further the practices of the private banks and to enable those institutions to increase their exploitations, not only of the ordinary worker but also of secondary and primary industry, if they so desire. Private bankers have not at heart the interests of the primary producers, whom the members of the Australian Country party are supposed to represent in this chamber. They have not the interests of the manufacturer or the ordinary citizen at heart. Because of that and because of the opportunities that bankers and banking institutions to-day have to do things that militate against progress and development in this country and against the welfare of its people, and because greater powers are proposed to be given to such banks, I oppose the measure. 487 KCU Ryan 0 0 DRURY, Edward Mr DRURY .- During this debate the socialists have been running true to form. The speech of the honorable member for Burke (Mr. Peters) is much along the lines that one would have expected. The Leader of the Opposition (Dr. Evatt) this afternoon set the standard of the debate for his followers, and so far the speakers on the other side of the chamber, who have taken part in the debate,, have merely peddled the old socialist doctrinaire idea of crippling the trading bank system and establishing in its place one big central monopoly bank. I do not propose in the time available to me to follow the honorable member for Burke into the labyrinth of his arguments on deflation, inflation, and secondary inflation, because I believe they are not strictly relevant to the debate. However, he made several statements that require immediate refutation because they are distinctly not in accordance with the facts. He stated that we on the Government side do not believe in the Commonwealth Bank. To produce evidence to refute that argument I merely have to refer to clause IS of the measure, which reads - It shall be the duty of the trading bank to develop and expand its business. If the Government were not desirous of maintaining the status quo in the activities of the Commonwealth Bank surely it would not have included such a provision in the measure. It is absurd to suggest that we are engaged in any process of whittling away the Commonwealth Bank. We desire, however, to take every possible step within our power to prevent any future socialist government from abolishing the private banking institutions which have served this country so well for many years, and from establishing in their place, as the socialists tried to do during their last term of office, a monopoly bank. We do not desire to transfer all or any of the functions of the Commonwealth Bank to the trading banks. We believe that the Commonwealth Bank and the trading banks have a definite and important parallel part to play in our community life. It is fantastic to suggest that the Government is in any way opposed to the Commonwealth Bank or to the carrying on of its functions. To say that the trading banks cannot be trusted is completely out of tune with the whole history of banking in this country. We can remember the notable part that the banks played during the depression years of 1929-32. The banks of Australia received a wonderful commendation from leading bankers overseas for the part that they played in extricating Australia from its economic difficulties at that time, and when, from time to time, this country has been faced with economic troubles, the banks have played their part nobly and well. So far from endeavouring to sabotage and weaken the Commonwealth Bank, as the socialists opposite have alleged, I believe that the Government is doing something, through this legislation, that will strengthen the overall banking structure of Australia. The bill seeks not only to separate, very properly, the central banking and the trading bank functions of the Commonwealth Bank. It seeks also to place the proposed Commonwealth Trading Bank, which, as the Minister for Health (Sir Earle Page) has pointed out, will be merely the present trading bank section of the Commonwealth Bank, under a new name, on exactly the same footing as arc the other trading banks. Moreover, it will ensure fair competition, which is something that the socialists do not wantto see. We believe in fair competition in the whole sphere of trading bank activities. That is the whole purpose of the measure. Our banking system has been adapted from traditional British banking practice. We believe in maintaining that traditional British banking practice, the outstanding characteristic of which is its flexibility. There is nothing in the bill that will in any way harm the flexibility necessary to our banking system. The report of the Royal Commission on Monetary and Banking Reform of 1936 emphasized the importance of maintaining our monetary and banking system on as flexible a basis as possible in order to enable it to meet the varying local conditions that might arise. The commission expressed the view that the best kind of banking system for Australia was one in which central banking has its own part to play whilst the trading banks and the other financial institutions are maintained as integral parts of that system, the central bank regulating the volume of credit and currency. We believe in maintaining the position of the central bank. We intend to encourage the development and expansion of the Commonwealth Trading Bank in fair competition with other trading banks. When this measure has been passed, the Commonwealth Bank will become primarily a central bank. It is true that it will still perform certain other limited functions, as the Prime Minister (Mr. Menzies) pointed out in his second-reading speech. It will still control the Industrial Finance Department, the Rural Credits Department, the Mortgage Bank Department, and so on, as a matter of convenience. The Commonwealth Trading Bank will become a separate legal entity under its own general manager, just as the Commonwealth Savings Bank is to-day. It is well for us to remind ourselves that the Commonwealth Bank was not originally founded as a central bank, but neither was the greatest central bank of all, the Bank of England. Both the Commonwealth Bank and the Bank of England were originally founded as trading banks. The idea of the central bank was not acquired until later. As the Minister for Health pointed out this afternoon, we are now reverting to the position that obtained between 1911 and 1924 in regard to the functions of the Commonwealth Bank as the central bank. One does not need to be a deep student of banking to know that the functions of a central bank are entirely distinct from the functions of an ordinary trading bank. It is a definite step forward that this should be recognized by this Parliament. Although the idea was evolved only slowly over a long period, most civilized countries acknowledge that there is a clear-cut distinction between a central bank and a trading or commercial bank. The Leader of the Opposition tried to show that the Government is acting against the recommendation of the Royal Commission on Monetary and Banking Systems when it proposes to separate the ptrading and central bank functions. I draw the attention of the House to paragraph 166 of the report of the Royal Commission on Monetary and Banking Systems dealing with the difference between trading and central bank functions. It stated - In a system of central banking, the central bank is responsible for regulating the volume of credit and the tradingbanks are responsible for distributing that credit amongst different industries. That indicates clearly that the members of the royal commission with one notable exception were agreed that there was a clear and definite distinction between the functions of a central bank and a trading or commercial bank. Honorable members on the Opposition side oppose this measure. Their attitude is easy to understand because they are dyedinthewool socialists. They believe in a monopoly bank and they did their best during their term of office as a government to set up one. As a member of the Royal Commission on Monetary and Banking Systems, the late Mr. Chifley was the sole dissentient from the general findings of the commission. The story of how the Chifley Government tried to put the private trading banks out of existence is history, but one which the people will not forget quickly. While the Labour Government was in office it did everything it could from 1945 onwards to squeeze the private trading banks out of existence with a view to setting up one bank as a first step towards the socialization of this country. Its vicious attempt in 1947 to strangle the trading banks, in clear and open defiance of the wishes of the people, forms one of the blackest chapters in the Labour Government's record of office. The 1945 legislation, which this Government amended in the first instance three years ago and which this bill now seeks to amend still further, was designed in the first place by the Labour Government to eliminate, by a gradual and insidious process, all competition from the private trading banks. It placed the Commonwealth Bank in a position of unfair advantage over the private trading banks in many respects. In 1947 the Labour Government grew tired of the process of slow strangulation, took its courage in its hands and decided upon an all-out attempt to kill the banks at one fell swoop. To-day the Leader of the Opposition claimed that bank nationalization was a dead issue. I submit that it is not dead. The Privy Council did not declare in its judgment that the banks of Australia could not be nationalized. It set out only that certain sections of the Chifley Government's Banking Act of 1947 were invalid, but honorable members know very well that a socialist government would look for and possibly find ways and means of circumventing the Privy Council judgment because the platform of the Australian Labour party clearly states that it stands for a monopoly in banking. I propose to quote from one or two sections of that platform because several honorable members on this side of the House were challenged by the Opposition to quote from the document. I have in my hand the platform and objectives of the Australian Labour party that is contained in the official report of the proceedings of the Nineteenth Commonwealth Triennial Conference opened at Canberra on the 1st March, 1951. I have not been able to get the latest amendments from the Adelaide conference, but I believe that no change has been made in the provisions of the platform related to banking. The stated objective of the Australian Labour party is - The Socialization of Industry, Production, Distribution and Exchange ... in accordance with the Principles of Action, Methods and Progressive Reforms set out in this Platform. The platform sets out the Principles of Action and the first three are - Socialization of industry by - The Constitutional utilization of Federal and State Parliaments, Municipal or other Governmentcreated authorities. (&) The National Planning of the Economic, Social and Cultural Development of the Commonwealth. The complete control of banking and credit by the nation. That means control by the Australian Government. Under the subsequent heading " Methods ", the platform continues - Nationalization of - Banking, Credit and Insurance. On the next page, under the heading " Progressive Reforms " and the subheading " Banking and Finance the Australian Labour party platform continues - The Commonwealth Bank to be developed on the following lines: - ,A nation-wide Trading Bank handling the ordinary business of the community. A Savings Bank performing the ordinary functions of such a bank. I do not hear any objection to those clauses from honorable members opposite and I believe that they are pledged to them. Time will not permit me to quote further from this socialist document, but honorable members opposite are avowed socialists and they stand for all that they stood for while in office - the nationalization of the private trading banks by any means, subtle or otherwise, and the setting up of banking in Australia on socialist lines. The measure that is before the House renders the new Commonwealth trading bank subject to exactly the same controls and directives as the other trading banks are subject to, and safeguards the interests of all. The Prime Minister (Mr. Menzies) has made it clear in his speech to the House that the Government, while desirous of providing for fair competition between the Commonwealth trading bank and the private trading banks, is. equally anxious to protect the interests of the customers and the staff of the Commonwealth Bank. In the joint policy speech that was delivered in 1949, the Prime Minister stated - In view of certain rumours, let me add that the present staff of the Commonwealth Bank has nothing to fear. We will continue the Trading Bank activities of the Commonwealth Bank in fair competition with the other banks. The Leader of the Opposition professes to see in those words something different from the proposals that are contained in the measure before the House. The whole purpose of the bill is tq ensure that there will be fair competition between the Commonwealth Bank and the trading banks ; nothing more and nothing less-- 490 BV8 0 0 CALWELL, Arthur Mr Calwell - By strangling the Commonwealth Bank. 490 KCU 0 0 DRURY, Edward Mr DRURY - 1 do not know whether the honorable member for Melbourne (Mr. Calwell) heard my previous reference to the section of the bill which states - It shall be the duty of the new Commonwealth Trading Bank to develop and extend its business. How the honorable member can infer from those words any desire to strangle the Commonwealth Bank is beyond my understanding. We believe that healthy competition on fair and equal terms will not only help to maintain that high degree of public confidence which is so necessary to the banking system, but will also play an important part in strengthening the system itself. After all, mutual trust and co-operation are fundamental in a banking system. They are fundamental as between the central bank on the one hand and the trading, or commercial, banks on the other. Trust and confidence are essential elements of our banking system. The separation of the Commonwealth trading bank from the other sections of the bank will add stature and strength to the central bank. I cannot agree with the socialists opposite who argue to the contrary, nor can I understand the force of the argument put forward to-day by the Leader of the Opposition that by changing the name of the bank we shall weaken its structure and damage its prestige. The right honorable gentleman also referred to the fact that the change would affect adversely the goodwill of the bank. I believe that those are merely words. Honorable members opposite have put up only a show of opposition to this bill. They have been hard put to it to find real arguments against the legislation, because they know that the people of Australia, in overwhelming numbers, believe in fair competition in banking. In 1949 the people gave to the present Government parties a mandate which was endorsed in 1951, to put into effect a banking system which, would ensure fair competition. A monopoly, either through a government instrumentality or by any other means, would be a thoroughly bad thing for Australia. The socialists believe in government monopoly of banking, and nothing will shake that belief. In case any one should doubt that that is one of their long-standing aims, I wish to read a few words that were used by the late leader of the Australian Labour party, Mr. Chifley, who was the sole dissentient on the Royal Commission on Monetary and Banking Systems in 1936. At page 264 of the report he said - I am of opinion that the trading section of thu Commonwealth Bank should be extended, with the ultimate aim of providing the whole of the services now rendered by the trading banks. Honorable members may see in those words the clear purpose behind the 1945 and 1947 legislation introduced by governments of which Mr. Chifley was the leader. 491 JWX ALP 0 0 FRASER, Jim Mr J R FRASER - Would the honorable member read that excerpt again, slowly? 491 KCU 0 0 DRURY, Edward Mr DRURY - If the honorable member for the Australian Capital Territory (Mr. J. R. Fraser) had a more intelligent understanding of banking he would not accept the socialist arguments that have been put forward. This Government believes in a middle course. The purpose of this legislation is to ensure not a monopoly but fair competition. That is the essence of the bill. We promised in 1949 that if we were elected to office we would legislate to provide for fair competition in banking, and that is precisely what we are now doing. Three years ago we honoured our promise in part by reconstituting the Commonwealth Bank Board, under the chairmanship of the governor of the bank. That step was whole-heartedly approved by the people when they returned us to power in April, 1951, with a majority in the Senate, which we did not previously enjoy. The Australian Labour party is trying to construe this bill as an attack on the people's bank. I remind the Opposition that many people in Australia deal with banks other than the Commonwealth Bank. Indeed, statistics show that something like 2,000,000 Australians bank with private trading banks. Thank goodness we have freedom of choice ! There is no restriction at all on our banking habits, although, of course, the Australian Labour party would like very much to see restrictions applied. This legislation will protect the interests of all concerned by separating the Commonwealth Trading Bank from the central bank system and by giving it exactly equal status with the private trading banks. Surely nothing could be fairer than that. Under the 1945 legislation a socialist treasurer could undoubtedly find ways and means to achieve his heart's desire to destroy the trading banks and set up a government monopoly bank in order to obtain control of the people's money, as the Labour party tried to do when it was in power. I can already see a glint in the eyes of budding socialist treasurers on the other side of the House. Under this legislation such a course would not be possible. Naturally the socialists are opposing the measure tooth and nail. 491 K8B 0 0 CURTIN, Daniel Mr Curtin - Stop laughing. 491 KCU 0 0 DRURY, Edward Mr DRURY - If the Opposition regards banking as a laughing matter, I suggest that it will be given another lesson next time it faces the electors, because the people will not be pushed about on this subject. They have demonstrated very clearly their desire to retain the present banking system, with freedom of choice for the individual customer. The Government parties believe that this subject should not be approached in a spirit of partisanship. They also believe that the general pattern of our banking system, which has served us so well in the past, should be preserved. That is a fundamental point which they have in mind in introducing this legislation. This bill will not only help to preserve the general pattern of our Australian banking system but will also strengthen it by removing the obvious dangers and weaknesses which are inherent in the 1945 legislation. Each' of the component parts of the Commonwealth Bank - that is, the central bank, the Commonwealth Trading Bank, which will be the trading section of the bank, and the savings bank - will be under entirely separate management under the proposed new set-up. Whilst I think that this is a very good move, I also consider it desirable that there should be some co-ordination of policy. The Government has recognized this need, after giving the matter a great deal of careful thought and consideration, and has endeavoured to ensure that the Commonwealth Bank Board will still co-ordinate broad matters of policy. In my opinion, the millions of bank customers in Australia are not so much concerned with the technical side of banking as they are with maintaining our present banking system on a truly competitive basis and in removing any threat, potential or otherwise, to its existence. The introduction of this bill represents the fulfilment of a promise which the parties on this side of the House made to the electors in 1949, to ensure fair competition between the Commonwealth Bank and the private trading banks. I believe that, like the 1950 amendment which was endorsed by the people in 1951, this bill will have the wholehearted support of a majority of Australians. 492 K6T Banks 0 0 COSTA, Dominic Mr COSTA .-During the speech of the Prime Minister (Mr. Menzies) on the bill now before the House, the right honorable gentleman stated that the 1945 banking legislation was dangerous because it would permit a future government to use the Commonwealth Bank for its own political ends. That is very true. The Australian Labour party put the 1945 legislation on the statute-book so that it might use the bank, and the power of the bank, for political ends and carry out its policy of doing the greatest good for the greatest number. To coincide with the introduction of that 1945 act, the Australian Labour party also presented a white paper setting out a plan for full employment for the people of Australia. The attempt to control the money of the nation went along side by side with ,the attempt to attain full employment, and that is why the Labour party introduced the Commonwealth Bank Act of 1945. I remind the honorable member for Ryan (Mr. Drury) that in 1946 the people overwhelmingly endorsed that action of the Labour Government, by returning it to office with a large majority. The Labour party believes that the 1945 act was an excellent thing for Australia, because our policy is social security for all the people. We want to be in a position to build homes for all the families that require them and to give full employment to all those who wish to work. We want to be able to carry out national development, and to emancipate the people. Therefore, we make no apologies for the Commonwealth Bank Act 1945. We believe that it is a good act, and that it really implemented the report of the Royal Commission on Monetary and Banking Systems that was set up in 1936. The banking system of the nation should be controlled by a public authority which is responsible through the government, and the Parliament, to the people. In any discussion of banking, and its development in Australia, we must consider the history of the subject. There is no need to go further back in history than the year 1930. At that time Australia and the rest of the world were passing through one of the worst depressions in the history of mankind. The causes of the depression did not originate in Australia, they were external; but because of the failure of the Australian banking system to co-operate with the Labour government of the day, that government found itself in a hopeless position when it tried to relieve the enormous amount of distress which was being suffered by all classes in the community. Squatters, farmers, professional 'men, businessmen, managers, and employees all suffered alike. While it was recognized that the depression was world wide, the Australian Labour government of the day believed that the proper use of national credit could minimize the . effects of the depression in Australia. However, the banking system prevented the Government from making proper use of our national credit. Unfortunately, in 1930, political democracy failed to ensure that the persons chosen by popular vote were the real rulers of the people. The ultimate control rested with the non-representative. group of private 'bankers and financiers who directed the issue and restriction of credit. Eminent authorities have maintained that the power that controls the money is the power that governs the country. A former Chancellor of the British Exchequer, and Chairman of the Midland Bank, Mr. McKenna, stated - I am sure the ordinary citizen will not like to be told that the banks can and do create and destroy money, and that they who control the credit of the nation control the policy of the government and hold in the hollow of their hands the destiny of the people. Further quotations could be made of similar statements by eminent financiers. Those who remember the depression, and were affected by it, will fully understand what McKenna meant. If a person requires £1,000 he goes to a bank and, on providing suitable security, he is given the money by way of loan or overdraft. The bank manager does not hand out notes to him, but he does hand out a cheque book, and debits the £1,000 at the appropriate bank interest. When the cheque book has been taken £1,000 of new money has been created. By that simple method the banking system creates new money. It is a great privilege for persons who have not been elected by the people to hold power such as that. On the other hand, there is no law to compel bankers to lend money. If it suits the financial interests they can withhold credit. They withheld it in 1930, and just recently they gave us another example of what happens when they withhold credit. If the banks refuse to lend money to the level of their deposits they are deflating and destroying money. When the banking system fails to provide the necessary credit and money, our general economy is adversely affected. The credit restriction policy of banks, associated with government policy, has been acutely noticeable during the last twelve months. Because capital expenditure has been affected, and there has been a business recession, people have been put out of work. I believe that in such circumstances the Government, through its banking system, should create national credit and stimulate public spending so that when private enterprise fails employment will be maintained. The money system is merely a system of tickets which entitle the holder to goods and services and, above all, money is not a commodity. Money has no intrinsic value apart from the functions that it performs, and to regard money as a commodity is proof of a logical misunderstanding of its functions. The earliest economic system rested on the , barter of goods and services. These commodities were exchanged directly for other goods and services. There was no charge for interest then, but when banking was introduced in 1694, the Bank of England being the first English private bank, the system of using money as a commodity was introduced. While the barter system may have been cumbersome and awkward, it did not involve charges such as interest and exchange. We find from the beginning of the private banking system to the present time that financial institutions have been exploiting our money and credit system at a tremendous charge to the community. Money should not be sold. It should not be permissible for any one to sell money and credit, but by the bill now before the House the Government is perpetuating a banking system that has been doing that sort of thing for far too long. Does any honorable member consider that it is right and proper for the management of industrial organizations to have to go cap in hand to a private banker, or any financial institution, and pay £5 for each £100 that he wishes to use in order to carry on essentia] production? It is absurd that industry should be required to pay the overcharge that it has been required to pay in the form of interest. It is wrong that a legitimate credit user should be called upon to pay high interest rates. The credit of the nation belongs to all its people and should be organized through the people's bank, the Commonwealth Bank, and made available to them at a fractional rate of interest in order to develop the nation - to enable the farmer to farm his land and the home-builder to build a house for himself and his family. If a farmer requires an advance of £2,000 to develop his property and increase the production of food for the community, why should he be required to pay a private bank interest amounting to £100 per annum? For an advance of that, amount he would pay the bank in ten years no less than £1,000, and if he is unable to reduce the principal, as has so often happened in the past, and requires the advance for twenty years, in that time he would repay in interest an amount equal to the amount of the advance. Finally, if misfortune overtakes him he may be required, under the terms of the mortgage, to surrender his property and lose all equity in it plus the interest that he had paid during the twenty years' period of the advance. That illustration is typical of the fate that befell many farmers during the financial and economic depression of the 'thirties. Irrespective of the value of the borrower's equity in the property, the farmer, the station owner, the home-builder and the business man all fared alike. Thousands of instances occurred in which men lost everything they possessed because the governments of the day allowed national credit and money to be treated and sold as a commodity. I could give further illustrations to prove my point. For instance, when the recent £20,000,000 loan was floated at 4½ per cent. interest, State Premiers, Treasurers and leaders of all kinds of public utilities appealed to money lenders to invest their money in the loan so that schools, hospitals, roads and electric light and power and health facilities could be provided. A monetary and banking system that requires the people to pay4½ per cent. interest in order to use their own credit is completely ludicrous. This bill will perpetuate that kind of stupidity. Because of the existence of this farcical system our national debt is now no less than £3,060,486,761, an amount almost beyond human comprehension. It represents £363 a head of the population. Before we spend a penny for anything we must first find approximately £100,000,000 in interest on the national debt simply because wealthy investors are allowed to treat our money as a commodity. Earlier in my speech I said that it would be difficult to discuss Australian banking and credit policy, as it is affected by this bill, without referring to the economic and financial depression of the thirties, if we are to profit by the experience that we gained from that calamity. As honorable members will recall, the first effects of the depression were felt in 1929 when the prices for Australian exports began to fall and the overseas markets for our wool, wheat, meat and dairy products collapsed. The bankers who were then in charge of our monetary system opposed any action designed to stimulate local spending. They let things drift, depending on the efficacy of the old theory of supply and demand which went out of fashion with straw hats. In 1928, our export prices were at the average level of the preceding twelve years. In 1931, because of the collapse of the overseas markets, the prices of export commodities fell to 40 per cent. of the 1928 figure and unemployment immediately followed. By 1929, no less than 15 per cent. of the work force of the Commonwealth was unemployed. In 1930 the percentage increased to 24, in 1931 to 29 and in 1932 to 27. In 1933 the position eased somewhat and the percentage dropped to 19 per cent., at which figure it remained until 1939, when it dropped to 10 per cent., which has been the average percentage of unemployment throughout our industrial history. When the Chifley Government came into office unemployment disappeared completely because legislation, such as the Banking Act 1945, made it possible for that Government to institute and give effect to a policy of full employment. In order to ease the distress caused by the depression and to enable the Commonwealth to carry on its developmental schemes, the Scullin Labour Government advocated the use of national credit. The then Treasurer, the late Mr. Theodore, suggested that the Commonwealth Bank Board should authorize a fiduciary issue of £17,000,000, but the board, the members of which had been appointed by a Liberal government, refused point-blank to agree to the proposal on the ground that the proposed fiduciary issue would increase the note issue to an amount in excess of four times the value of the gold reserve. As honorable members will recall, we then subscribed to the fallacy of the gold standard. A gold-based money system is not a natural or a desirable one. The gold held by the community represents but a negligible portion of its real wealth. Our money system should be based on all our resources - on the land and all that comes from above and beneath it. Australia has a national income dividend of more than £3,000,000,000, and in times of unemployment we should not hesitate to use some of it. In 1930, the Scullin Government urged the Commonwealth Bank Board to forget the antiquated, moth-eaten bank idea of a gold standard. If its advice had been accepted and the proposed 'fiduciary issue had been authorized, men and women could have been put to work in essential industries. The Labour party knew, as any sensible political party should know, that employment creates employment and, conversely, that unemployment spreads unemployment. The fiduciary issue proposed by the Scullin Government represented only about one-quarter of the total Commonwealth budget of the day. Had Mr. Theodore's advice been accepted the effect of the depression could have been greatly minimized. The proposal was frustrated by the private banks in association with the Commonwealth Bank Board, the members of which had been appointed by a Liberal government. They combined to defeat a Labour government. Finally, that Government introduced a measure in this House under which it sought power to make a fiduciary issue to the amount of £17,000,000. That measure was defeated in the Senate, in which chamber the anti-Labour parties then had a majority of 29 to seven. I see an inherent danger in this bill. It will place control of monetary policy of the nation in the hands of a group which has no direct- responsibility to the people. It will re-establish the position that existed in 1930, and thus permit to recur the catastrophe which then caused unemployment and resulted in the establishment of communism in the wake of broken homes and broken hearts. This measure contains no safeguard against recurrence of a depression but will re-establish the set-up that existed in 1930 when a bankers' board was in control of the people's bank. Perusal of the annual reports of the Commonwealth Bank shows that its profits amounted to £7,618,000 in 1950, £7,306,000 in 1951 and £8,465,000 in 1952. Of its aggregate profits in 1951, the sum of £4,730,000 was paid into the Treasury, £3,394,000 being paid to Consolidated Revenue and the balance of £1,336,000 being transferred to the National Debt Sinking Fund. Out of the bank's profits for 1952, the sum of £3,380,762 was paid to Consolidated Revenue and the sum of £1,7 63,801 was transferred to the National Debt Sinking Fund. Whereas all profits made by the Commonwealth Bank are returned to the people, the profits of some of the private trading banks are paid to shareholders who do not live in Australia. Under this measure the Government seeks to protect the interests of such persons. It prefers to destroy the Commonwealth Bank which has made substantial profits for the people and to enable the private banks to make increased profits. In conclusion, I shall summarize the points that I have made. Banking and monetary policy of the nation should be the responsibility of the government of the day. The public interest should be our primary consideration and private profit should be completely eliminated from the banking system. Money should not be treated as a commodity to be sold. The structure of the Commonwealth Bank should be strengthened, first, as a central bank with complete control of the financing of internal and external trade; secondly, as a trading bank to compete with private trading banks in every phase of banking and enabled to control interest rates effectively; thirdly, as a national bank with power to make temporary or long term advances to governments and public utility corporations in order to enable such bodies to implement a long term social policy without being placed in subjection to private financial institutions; and, fourthly, as a mortgage bank charged with the duty of giving special attention to the requirements of agriculture and industry and, the provision of homes for every family. Debate (on motion by Mr. Osborne) adjourned. 495 adjournment HOUSING - GOVERNMENT WORKSHOPS, BOTANY - ROYAL AUSTRALIAN NAVY Motion (by Mr. Eric J. Harrison) proposed - That the House do now adjourn. 495 JWX ALP 0 0 FRASER, Jim Mr J R FRASER . - I desire to raise a case to which the Australian Capital Territory branch of the Returned Sailors, Soldiers and Airmen's Imperial League of Australia has directed my attention. It is the case of Sergeant R. C. Glover, who is a serving member of the Royal Australian Air Force. He registered for a house with the Department of the Interior at Canberra on the 27th February, 1951. In November last, that is one year and nine months later, he was advised by officers of the Housing and Accommodation Branch of the department that he would not be eligible to have a house allotted to him until he was discharged from the Royal Australian Air Force, six years hence. Officers of the Housing and Accommodation Branch, in advising him to that effect, were simply following instructions that had been laid down by the Minister for the Interior. The duty of those officers is not to make but to administer decisions, and I am completely satisfied that they invariably act with scrupulous fairness in administering the rules which they must observe. The case of Sergeant Glover is not the first of its kind to which my attention has been directed. I have been advised of the cases of several serving members of the forces who have found themselves in a similar situation; and I have taken up such cases, not only with the Minister for the Interior, but also with the service Ministers concerned. Generally, it must be recognized that the housing of men who are serving in a branch Of the armed forces is the responsibility, not of the civil authorities, but of the arm of the service concerned. However, I have always contended, and I now reiterate, that men who are serving this country in the armed forces are public servants in the best sense of the word and deserve to be assured that their wives and families shall be adequately and appropriately housed. A serviceman who is a native of the district or who, like Sergeant Glover, has married a local girl, should be entitled to the allotment of a house on the civil list. He should be as much entitled to select Canberra as his place of residence as are others who are eligible to be allocated a house by the department. Sergeant Glover, quite rightly, submitted his case to officers of the Returned Sailors, Soldiers and Airmen's Imperial League of Australia, and they made representations to the Minister for the Interior on his behalf. Those representations were rejected by the Minister who was acting for that Minister at that time on the ground that the housing of defence personnel is regarded as being the responsibility of thc military authorities. The league subsequently made further representations, but these also were rejected. I direct the attention of the House to the fact that Sergeant Glover served in "World "War II., that he has been on active service overseas on three occasions and that his last tour of duty was in Korea, where he was mentioned in despatches. Men like him must be regarded as being in a category completely different from that of men who simply serve a term of duty at Duntroon, Fairbairn or Harman or Belconnen. I submit that the Minister for Air (Mr. McMahon) has it in his power to ensure that Sergeant Glover shall be allocated a house in Canberra. I urge the Minister to examine this case carefully and to do his utmost to provide this serviceman with the security of a home for wife and family in the years to come. On the general subject of housing for servicemen, I refer to a letter written to rae by the present Minister for Air on the 10th September, 1951, as follows: - The Department of Air has, in the past, made unsuccessful representations to the Department of the Interior with a view to having its members placed on an equal standing with public servants in Canberra in the matter of allocation of homes in Canberra, and I shall again take the matter up with the Minister for the Interior. I have not had any further information from the Minister for Air on that point. The reluctance of the Department of the Interior to make houses available to the service departments, particularly the Department of Air and the Department of the Navy, may have been caused by the misuse of houses provided by the Department of the Interior for the Department of the Navy at Harman. I have mentioned this matter in the House previously, and I propose to refer to it briefly again. Some two years ago, the Department of the Interior, using the materials and the work force available in Canberra, constructed some 50 prefabricated cottages on an area outside the naval area at Harman. Those cottages were made available to the Department of the Navy, and ratings and petty officers, who had previously been housed in older cottages within the naval area, were transferred with their waves and families to the prefabricated cottages. Those personnel did not occupy all the cottages, and some eleven or twelve of the houses were occupied by single women who were serving as Wrans. Some eleven cottages were occupied by these young women, and two cottages were made available to them as recreation rooms. When I protested to the Minister about this use of houses which had. been built to accommodate family units, I was told that the Wrans would be moving into the older cottages at Harman and married personnel would move into the prefabricated cottages. However, that has not occurred. The serving Wrans at Harman have now been distributed more thinly in the houses. Some of them have been placed in older cottages, and others .are still occupying the prefabricated cottages outside the naval area. As recently as last week some three-bedroom prefabricated Riley-Newsum houses on the Harman station, each of which cost approximately £4,500 to build, were accommodating only three single women. Each of them had a room to herself in. a complete housing unit. As recently as last week,' two of the prefabricated houses which were built some two years ago had never been occupied. I believe that the use of houses in the manner I have described to accommodate single women, whether it be in the older cottages at Harman or the newer and more expensive prefabricated cottages is completely wrong when married people with families, and particularly naval, air force or army personnel, with families, are waiting for houses. I believe that those houses should be made available to accommodate married men with families, and I declare that the Minister has right at his hand the ability to provide a house for Sergeant Glover. 497 JOI Parramatta LP Minister for Supply 1 0 BEALE, Oliver Mr BEALE .: - Last Wednesday night, the honorable member for Watson (Mr. Curtin) referred to certain press statements concerning dismissals in the Stores and Transport section of my department at Botany, Sydney. He demanded a withdrawal of an alleged statement by me in the Sun newspaper a few days before that 30 men at the Commonwealth workshops at Hale-street, Botany, had been discharged for misconduct, ranging from theft to falsifying records, drunkenness, and insubordination. He also asked me to make a public statement as soon as possible giving the names of the 30 men who I claimed had been dismissed since I came into office and the reason for their dismissal. If the honorable gentleman had taken the trouble to warn me that he intended to raise this matter on the motion for the adjournment, I could have prevented him from falling into error, because the fact is that his statements in the House were based upon a misapprehension. I made no such statement in the press. The exact words that I used, and they had been reduced to writing, were as follows : - The activities of the Stores and Transport Section of my department, which includes the workshops at Hale-street, Botany, have been under close examination for some time. Early in 1950, when I became Minister for Supply, I appointed a committee of outside experts to report upon the operation of the whole section. After several months examination, they submitted a very critical report alleging extravagant and inefficient operations for some years previously. Some changes were immediately made, and, since then, more have been effected, including a reduction of several hundred in the staff and the introduction of more efficient methods. Some time ago, a special officer was also appointed to reorganize the whole section. He has substantially done his work in Melbourne; and is at this moment examining the Sydney division. As to the specific matters alleged in the article, some of these have been examined and not substantiated. Others have been, investigated, and drastic steps taken. For instance, one man, suspected of trafficking in spare parts, was prosecuted, convicted, and ignominiously dismissed. Another man has suffered a similar fate, and many others have been dealt with. Since I have been Minister, some 30 men in this section have been discharged for improper conduct, ranging, from theft to falsifying, records,, drunkenness,, insubordination and so forth. Honorable members will see- from this quotation that somebody has. attributed exclusively .to Hale-street, . misdemeanours which I made clear had occurred throughout the whole Sydney section. There were five cases at Hale-street, Botany. They were: reporting for duty under the influence, association with a convicted thief, conviction for pilfering, faking a medical certificate and unsatisfactory work. There were sixteen cases at Lordstreet, Botany, as distinct from those at Hale-street. They were: burning a truck and carrying an unauthorized passenger and unauthorized petrol, falsifying work-sheets, drinking in hotels on duty, leaving an area without authority, suspicion of .theft of materials, conviction for theft, drunkenness in charge of vehicles on duty and working in another position while claiming sick leave. There were also offences at Rozelle, "Woolloomooloo, Bunnerong and St. Mary's. 498 K8B 0 0 CURTIN, Daniel Mr Curtin - I am concerned only with the position at Hale-street. "Will the Minister clear the names of the men employed there? 498 JOI 0 0 BEALE, Oliver Mr BEALE - As to the honorable gentleman's request that I should publish the names of all the people concerned in these offences, it staggers me. Does he really mean that I should publicly reveal the names of every one of these men who had been convicted, or otherwise punished, and the misdemeanours for which they have been dealt with, with inevitable consequences to their wives and families as well as themselves? I will not do so. I think there is already too much bandying around in this House of the names of people under cover of parliamentary privilege. Most of the employees in this section are honest men, and nothing I have said should offend them. Indeed, they should be grateful for what we have been doing to get rid of the small minority of thieves, boozers, and no-hopers who have been spoiling the job for decent people. I hope the honorable gentleman will convey all this to the men at Hale-street who have spoken to him, and assure them that, under this Government, they will have, not only reasonable security and good wages, but also honorable employment among men they can respect and trust. 498 009MA Lowe LP Minister for the Navy and Minister for Air 1 0 MCMAHON, William Mr McMAHON . - The honorable member for the Australian Capital Territory (Mr. J. R. Fraser) has raised two matters which should be answered. The first one deals with the provision of accommodation for Sergeant Glover, and, in general, the provision of accommodation for members of the defence forces stationed in the Australian Capital Territory. The general policy of the Government on this matter is quite clear. I think that the House understands that it is not possible to provide accommodation for all the residents of the Australian Capital Territory, but when houses are built, they are made available in accordance with well-established orders of priority. On the 7th December, 1950, the Government approved a policy directive regarding the provision, from public funds, of houses for married personnel of the three defence services. The decision was as follows : - That as a general practice houses for married members of the defence forces should not be provided in capital cities and metropolitan areas, but provision should be made to meet reasonable requirements of housing for married personnel in other localities. This decision is in line with another finding relating to the housing of Commonwealth employees in country areas. The general policy in other than metropolitan districts is that provision shall be made to meet reasonable requirements. The Government does not provide complete accommodation for members of the fighting forces. It provides only for their reasonable requirements. I am sure that if the honorable member for the Australian Capital Territory gives this problem consideration, he will accept that decision as being sensible. He will realize that it would be quite impracticable to provide total accommodation for all married persons. Sergeant Glover arrived in Canberra about a year ago. He is a married man without children, and is accommodated with his family in Canberra. The principles upon which the Air Force acts when accommodation is available are these: Consideration is given first to the appointment that a member holds. Secondly, consideration is given to the length of time that his application has been in. Then regard is had to the circumstances in which he and his family are living and to the number of children. After examining all those matters and making a comparison with other applications, the unit commander at Fairbairn decided that other servicemen had a higher priority than Sergeant Glover. The honorable member for the Australian Capital Territory will appreciate that Sergeant Glover is living in comfortable circumstances, and that applicants who have greater claims to married quarters are being provided with accommodation by the station commander. I have dealt with the position at H.M.A.S. Harman fairly exhaustively in correspondence with the honorable member. There are 43 official residences, of which 40 are occupied. Of the three that are unoccupied, one will be occupied by the electrician in a few days' time, and two more will be occupied within about a month. There are also 41 service houses at H.M.A.S. Harman. Of those, eight are still unoccupied, but fourteen Wrans are due to arrive in about three weeks, and a further 24 will arrive soon afterwards. They will occupy the houses now empty at the naval station. The honorable member will appreciate that as the accommodation was built specifically to permit Wrans - the female members of the naval forces - to carry out their duties, it would be impractical to put some one else into the houses now, when we know full well that in, say, a month we should have to allot them to naval personnel. Briefly, therefore, I submit that, insofar as Sergeant Glover is concerned, others have a higher priority for married quarters than he has, and that in the light of the facts that have been presented to me, he is not badly off. Certainly he is not as badly off as some other members of the forces. So far as H..M.A.S. Harman is concerned, all the houses at present unoccupied will be occupied in about a month. For those reasons I suggest there is no real cause for complaint against either the Army or the Navy. Question resolved in the affirmative. 499 papers The following papers were presented : - Broadcasting Act - Fourth Annual Report of the Australian Broadcasting Control Board, tor year 1951-52. Lands Acquisition Act - Land acquired for - Defence purposes - Liverpool, New South Wales. Postal purposes - Bitliraniere, New South Wales. Public Service Act - Appointments - Department - Civil Aviation - D. M. Blackshaw. Defence - H. C. Fallu. Parliamentary Library - T. M. Exley. Repatriation- -C. M. Mortal. Supply- E. M. Phillips. Works- D. H. Beck, H. M. Beck. Seat of Government (Administration) Act - Statement of Receipts and Expenditure for the Australian Capital Territory for year 1951-52. House adjourned at 11.5 p.m. 499 ANSWERS TO QUESTIONS The following answers to questions were circulated: - KOREA. 499 499 KOL 0 0 MCBRIDE, PHILIP Sir Philip McBride On the 19th February, the honorable member for Darebin (Mr.Andrews) asked the following question:— Can the Minister for Defence inform me what percentage of the population of this country is represented by Australian troops fighting in Korea? What are the corresponding percentages represented by the troops of other countries fighting with the United Nations forces in that theatre? I now inform the honorable member as follows:— There are at present approximately 5,100 Australian servicemen serving in support of United Nations action in Korea and the percentage of these troops to the population of this country is .059, or 59 in every 100,000. In addition, of course, Australian forces are also serving in Malaya and the Middle East, and inclusion of those forces would raise the percentage of Australian servicemen overseas to .065. In regard to similar percentages for other countries fighting with the United Nations in Korea, the disclosure of such information is a matter for the governments concerned. Also the aggregate percentages would provide the enemy with useful information. 499 499 K7O ALP 0 0 CREMEAN, John Mr CREMEAN asked the Prime Minister, upon notice - How many candidates sat for examination No. 3930? How many candidates were successful at the examination? Of the unsuccessful candidates, what number failed in the English papers? Was the standard of the English papers equivalent to that for the Intermediate Certificate or the Leaving Certificate? Will he make available copies of the English papers set for the examination? 500 N76 LP 1 0 MENZIES, Robert Mr Menzies The answers to the honorable member's questions are as follows:— Six hundred and twenty candidates. One hundred and sixty candidates passed the complete examination. Of 400 who failed, 293 failed in English. The standard is similar to the Leaving Certificate since the examination in question is the annual internal Public Service examination and corresponds to the normal examination for outside entry to the Commonwealth Service, which is the Leaving Certificate examination. Yes. I am making three copies available to the honorable member. Other copies are available from the Public Service Board, Canberra, or from the Commonwealth Public Service Inspector, Victoria, and other States. 500 500 JAG ALP 0 0 CREAN, Frank Mr CREAN asked the Prime Minister, upon notice - Who were Australia's representatives (n.) on the group under the Under-Secretary of State for Commonwealth Relations to study Commonwealth Development and (6) on the group under the Minister of State for Economic Affairs to study the steps to be taken towards the convertibility of sterling? How often did these groups meet? Did the groups present reports; if so, to whom were they presented? Are these reports now generally available? 500 N76 LP 1 0 MENZIES, Robert Mr Menzies - The answers to the honorable member's questions are as follows : - Australia's official representatives on the Commonwealth Working Parties in question were: (a) Commonwealth Working Party on Development - The Commonwealth Treasury representative in London, Mr. J. F. Nimmo; (b) Commonwealth Working Party on Convertibility - Mr. L. G. Melville, Australian Executive Director on the International Monetary Fund. The Working Party on Development met on twelve occasions between the 29th January and the 19th February, 1952. The Working Party on Convertibility met on nine occasions between the 23rd January and the 9th February, 1952. Each working party submitted a report to the Commonwealth Government concerned. No. These reports are confidential. 500 500 JWU ALP 0 0 FRASER, Allan Mr ALLAN FRASER asked the Postmaster-General, upon notice - Is it a fact that subscribers requiring telephone instruments in colours other than black are .required to pay additional rental of £2 os. a year? What is the additional cost to the department of coloured instruments and why could not the added cost he fully paid by the sub-; scriber at the time the telephone is installed ? 500 JLZ CP 0 0 ANTHONY, Hubert Mr Anthony - The answers to the honorable member's questions are as follows : - Yes. The average additional cost to the department for maintenance and depreciation in respect of a coloured telephone is assessed at more than £2 per annum. As this extra cost is a recurring expense, it is necessary that the department be reimbursed' by means of an annual rental charge. 500 500 JAG ALP 0 0 CREAN, Frank Mr CREAN asked the Treasurer, upon notice - What were the amounts of treasury-bill 9 held by the private trading banks at the 30th June, 1950, the 31st December, 1950, the 30th June, 1951, the 31st December, 1951, the 30th June, 1952, and' the 31st December, 1952, respectively? What were the amounts of other Government securities held at these dates? 500 F4T CP 0 0 FADDEN, Arthur William Sir Arthur Fadden - The answers to the honorable member's questions are as follows : - The amounts of treasury-bills and other government securities held by the private trading banks are not available at the exact dates detailed in the question. However, the average holdings of these securities by the major private trading banks during the months specified were as follows: - 500 500 KDA 0 0 DUTHIE, Gilbert Mr Duthie asked the Treasurer, upon notice - How many branches of the Commonwealth Bank operated in Australia in 1939, 1949 and 1952. How many depositors were there with the Commonwealth Bank in (a) the Savings Bank and (b) the Trading Bank in 1939, 1949 and 1952? 501 F4T CP 0 0 FADDEN, Arthur William Sir ARTHUR FADDEN - The answers to the honorable member's questions are as follows: - The following information has been supplied by the Commonwealth Bank; - At the 30th June, 1939, 1949 and 1952, the total number of branches of the Commonwealth Bank was 320, 420 and 439 respectively. (a) The number of active accounts, excluding school Savings Bank accounts, maintained with the Commonwealth Savings Bank were- June, 1939,2,348,975; June, 1949, 3,907,535; June, 1952, 4,359,087. (b) The number of accounts, including deposits bearing interest, maintained with the General Banking Division of the Commonwealth Bank were- April, 1939, 142,808; April, 1949, 257,982; April, 1952, 372,870. 501 501 L08 LANG LAB; ALP from 1936; ALP (N-C) from 1940; ALP from 1941 0 0 ROSEVEAR, John Mr ROSEVEAR asked the Minister representing the Minister for Trade and Customs, upon notice - Are the contents of the files of the Customs Department considered to be confidential to the department and the Minister? If so, why was the file containing details of the importation of certain commodities by a person named Doyle made available to the honorable member for Mackellar? Was it for the purpose of providing the honorable member with political material for speeches made in the House? 501 KNX UAP; LP from 1944 0 0 HARRISON, Eric Mr ERIC J HARRISON - The Minister for Trade and Customs has supplied the following information: - It is not the practice of the Department of Trade and Customs to make available for perusal files dealing with the ordinary business transactions members of the public have with the department. On occasions, . files have been made available for perusal by members of Parliament who have made representations on behalf of the person or company to whom the particular file refers. Such action is taken solely in the interests of the party concerned and to ensure that no aspect favorable to his case has been overlooked by the department. There are other types of files in the department dealing not with ordinary business transactions, but with breaches of and frauds under the Customs Act andRegulations.In the pursuit of such inquiries and in the course of justice, the department welcomes the assistance and co-operation of reputable citizens, including members of Parliament. The department feels under no obligation to shield or protect law-breakers. No complaint has been received regarding any action token in the past in making files available forperusal toy members of Parliament and it is worthy of note that in this particular instance, no complaint has been received from the man with whose activities the file is primarily concerned. Members of the public may with utmost confidence rest assured that their normal business dealings with the Department of Trade andCustoms are guarded with the utmost secrecy.