1953-03-04 20 1 6 REPS 501 0 House of Representatives. 1953-03-04 Mr. Speaker (Hon. Archie Cameron) took the chair at 2.30 p.m., and read prayers. 501 Questions 501 501 KNM ALP 0 0 HARRISON, Eli Mr E JAMES HARRISON - The question that I direct to the Minister for Air is supplementary to a question that I asked him last week. It refers to mail services to Manns Island. I have found that there is a great deal of resentment against the reply that I received from the honorable gentleman last week. The men who are stationed at Manus Island are emphatic, according to communications received in Australia by their wives and families, that there is only one mail delivery at Manus Island each week. I understand that the mails leave Australia on Monday and Wednesday each week, but that there is only one delivery at the island. Can the Minister tell me, so that I may transmit the information to the persons concerned, on which days mails arrive at and leave Manus Island? 501 009MA LP 0 0 MCMAHON, William Mr McMAHON - I take exception to the' statement by the honorable member for Blaxland that u great deal of resentment is felt by members of the Royal Australian Air Force at Manus Island. I speak from personal knowledge because 1 went to Manus Island and asked the men in person, in every mess and at every parade, whether they had any objections to or any valid grounds for criticism of their mail service. I found that there were few complaints. Therefore, I say to the honorable member that it would be wise for him to check his facts. I assure him positively that there are two mail services each week to Manus Island. I shall find out the days on which mails leave. 502 KNM ALP 0 0 HARRISON, Eli Mr E JAMES HARRISON - They leave on. Mondays and "Wednesdays and go by different routes. 502 009MA LP 0 0 MCMAHON, William Mr McMAHON - I shall ascertain also when they arrive at Manus Island. It is wrong of the honorable member to come to this House and create the impression that there is discontent when, in fact, I do not think that a great deal of discontent exists. There is a little discontent, but that cannot be avoided. 502 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! The rules that govern the asking of questions without notice provide, that they shall not introduce debatable matter. That provision applies both to questions and to replies. Obviously, in this instance, the question contained a debatable statement. In these circumstances, it naturally provoked debate in the reply. 502 502 K7J 0 0 CRAMER, John Mr CRAMER - Is the Minister for Health aware of any move to relax the quarantine regulations in order to permit horses from foreign countries to be brought to Australia for the Olympic Games? If such a move is contemplated, will the Minister make sure that our regulations shall be rigidly enforced in order to prevent any possibility of the introduction of live-stock diseases ? 502 C7E CP 0 0 PAGE, Earle Sir EARLE PAGE - The honorable gentleman can rest assured that the Government is very concerned that nothing shall be done that will affect adversely the future welfare of the live-stock industry of Australia. The president of the equestrian committee associated with the Olympic Games will visit Canberra to-morrow to discuss this problem with me, and to make suggestions about what should be done to meet the situation. Until I have heard those suggestions, I cannot give - an expression of opinion upon the matter. 502 502 K9G 0 0 JOHNSON, Herbert Mr JOHNSON - With a view to encouraging the early development of many known deposits of valuable strategic base metals that exist in Western Australia, will the Treasurer give consideration to alleviating the incidence of taxation on tantalite, scheelite and other minerals of a like nature? Such action would relieve the burden of taxation upon prospectors and companies who are willing todevelop deposits of those minerals and, by so doing, create a valuable national asset. 502 F4T CP 0 0 FADDEN, Arthur William Sir ARTHUR FADDEN - The honorable member has brought this matter to my notice previously. It involves a question of policy that is receiving the attention of the Government. 502 502 KCK 0 0 DOWNER, Alexander Mr DOWNER - My question is addressed to the Minister for Immigration. By way of explanation, I refer to the fact that many immigrants who arrive in this country from Europe are unable to speak or to understand English. Such a disability detracts from their capacity as citizens and hinders their chances of obtaining employment. Will the Minister consider making arrangements for immigrants, when they have received permission to enter this country, to undergo compulsory instruction in English, either before embarkation or during the voyage to Australia? 502 009MC LP 1 0 HOLT, Harold Mr HOLT - A great deal of work has been done upon this problem, which we realize to be one of great importance to the success of the immigration programme generally. It was rather easier to cope with the problem when we were taking large numbers of immigrants from refugee camps established in Europe, because tuition in English could be given much more readily when prospective immigrants were assembled together in large numbers. Despite the difficulties that have developed, we are taking advantage of such opportunities as present themselves to arrange for some tuition to be given during the voyage to Australia. In addition, there is an extensive system of voluntary education in this country. Tuition in English is given in classes held in schools after normal hours, and by correspondence courses. We have enlisted the aid of the Australian Broadcasting Commission, which broadcasts lesson programmes. There has been an encouraging growth of interest by immigrants in these activities, largely, I believe, as a result of the Good Neighbour activities that we are carrying on. During the last twelve months, there has been a very substantial increase of the proportion of immigrants who take advantage of the tuition classes and the correspondence course. 503 JVM 0 0 MULLENS, John Mr MULLENS - Is the Minister for Immigration aware that many thousands of young Italian immigrants have suffered great distress through unemployment and intermittent employment? Is he aware that this story of human suffering has been highlighted by the suicide of two young Italian immigrants in Victoria and that our reputation in Europe is suffering as a consequence? Was not a moral obligation implied in the agreement with the Italian Government that, having enticed these people to Australia, adequate provision would be made by the Australian Government to provide them with continuity of employment? 503 009MC 0 0 HOLT, Harold Mr HOLT - If the young Italian immigrants to whom the honorable member has referred have suffered in Australia, much of their suffering has been caused by the efforts of well-meaning but misguided publicists from one section of the community or another. I do not know of any country in the world that provides better opportunities for European immigrants to start a new life than does Australia. At present I do not know of any unemployed Italians who were seeking work and have availed themselves of the opportunities presented by this Government who are not in well-paid employment. If the honorable member can find some Italians who are unemployed, I should be happy to do what I can to assist them. An interesting pointer to the success that Italian immigrants have had in establishing themselves in Australia is to be found in the volume of remittances that are now going from Australia to Italy. Last year they reached the substantial total of £4,000,000. This year they are being forwarded at the rate of £6,500,000 a year. As a Government, we have done what we could, not only to establish economic circumstances favorable to employment, but to ensure that Italian immigrants who come to Australia under government schemes are placed in suitable employment. That policy is being continued. 503 503 JWX ALP 0 0 FRASER, Jim Mr J R FRASER - Will the Minister acting for the Minister for the Interior consider the contention that serving members of the Permanent Forces whose family ties, either by reason of long residence or by marriage, are genuinely established in Canberra should be entitled to allocation of government owned houses on terms of complete equality with public servants and other citizens ? 503 KOL LP 1 0 MCBRIDE, Philip Sir PHILIP McBRIDE - This question has been considered previously. It has always been assumed that the Services are responsible for the housing of Service personnel. However, I am prepared to consider the matter again, and to advise the honorable member of the decision that is reached. 503 KEP 0 0 FALKINDER, Charles Mr FALKINDER - As official figures show that houses constructed by the War Service Homes Division itself have increased by approximately 2,000 over the figures for the previous year, and assistance for fully constructed dwellings that have been taken over by the division has decreased by 500 houses, is it the intention of the Minister for Social Services to place the accent further on government construction or is it to be placed upon private home construction ? 503 KWH LP 1 0 TOWNLEY, Athol Mr TOWNLEY - The honorable member's question indicates that he is not fully conversant with the activities of the War Service Homes Division. The division builds no houses. All houses for the division are built by private contract. 503 503 KZE 0 0 ROBERTON, Hugh Mr ROBERTON - My question is addressed to the Leader of the Opposition. Some days ago, I addressed a question to the Minister for External Affairs about the final report of the Congressional Select Committee established by the Government of the United States of America to investigate the Katyn Forest massacre. Subsequently, the Minister for External Affairs asked leave of the House to make a short statement. The Leader of the Opposition gave his assent. The honorable member for East Sydney- 503 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! What is the question? 504 KZE 0 0 ROBERTON, Hugh Mr ROBERTON - Leave was not granted. Since the Katyn Forest massacre was a crime against humanity committed by Soviet Russia and since the matter- 504 10000 0 0 SPEAKER, Mr Mr SPEAKER -Order! What is the question? The honorable gentleman, is making a statement. 504 KZE 0 0 ROBERTON, Hugh Mr ROBERTON - Will the Leader of the Opposition exercise his authority to ensure that information of international importance is not suppressed by the honorable member for East Sydney or any other member of the Opposition? 504 10000 0 0 SPEAKER, Mr Mr SPEAKER -Order! Before the Leader of the Opposition speaks may I point out that under the Standing Orders it is competent for any honorable member to object to leave being granted to make a statement and it is not necessary to secure the consent of the Leader of the Opposition, the Prime Minister, or anybody else. The right to object to leave being granted is the prerogative of every member of the House. 504 DTN 0 0 EVATT, Herbert Vere Dr EVATT - In answer to the honorable member for Riverina I point out, first of all, that no further application has been made to make a statement on this subject. I am certain that if it was made it would be agreed to on this side of the House. Leave was refused only because, immediately before, a very ordinary courtesy had been refused an honorable member on this side of the House. I would favour, and I am sure that every member of the Opposition would favour, an inquiry into the subject-matter on which the Minister for External Affairs sought leave to make a statement. 504 504 KXB 0 0 WATKINS, David Oliver Mr WATKINS - Can the Minister for Health inform the House whether he intends to introduce his proposed medical benefits bill during this session? If not, when will he introduce it ? 504 C7E CP 0 0 PAGE, Earle Sir EARLE PAGE - The legislation to which the honorable member has1 referred will be introduced in due time. 504 504 KCU 0 0 DRURY, Edward Mr DRURY - As the distribution of free milk to school children was begun in Brisbane only yesterday I ask the Minister for Health approximately how long ago the federal grant for this purpose wasfirst offered to the Queensland Government ? When did that Government accept the offer? Did the Australian Government sign uniform agreements on free milk and hospital benefits with all the States? 504 C7E CP 0 0 PAGE, Earle Sir EARLE PAGE - It will be remembered that early in December, 1950, the legislation providing for free milk for school children was passed by this Parliament. The Prime Minister at once wrote to every Premier in Australia offering the free milk on certain conditions, which were to be uniform throughout Australia. Every State except Queensland accepted that offer early in 1951. I am glad to say that on the 13th February last the Queensland Premier wrote to the Australian Government suggesting that he was prepared to consider the offer and an agreement has now been signed with the Queensland Government and the milk is being supplied to Queensland children. The Commonwealth has signed identical milk agreements and hospital benefit agreements with every State. Although it has been alleged that the Queensland Government signed a different agreement from that signed by the other States it will be found when the agreement is tabled that it is exactly the same as the others. The Queensland Government could have received the advantage of this agreement two years ago. 504 KHY 0 0 HOWSE, John Mr HOWSE - I preface a question to the Minister for Health by referring to previous representations requesting that, in areas where there is not an adequate supply of milk for free distribution to school children, such as in the Woodstock district, ice-cream be used as a substitute. I now ask the Minister will he consider introducing legislation to' substitute ice-cream for milk where necessary ? 504 C7E 0 0 PAGE, Earle Sir EARLE PAGE - The various State Education Departments, which are administering the whole programme for the distribution of free milk, are attempting, by means of experimental work, to establish whether ordinary dried milk may be made into a suitable equivalent of fresh milk. If that is possible, I think that it will be a better substitute for milk than, ice-cream would be in areas where there are inadequate supplies of fresh milk. 505 JVU 0 0 NELSON, John Mr NELSON - Can the Minister inform the House when the Government intends to supply free milk to school children in the Northern Territory? In view of the reply by the Minister to the question asked by the honorable member for Ryan, to the effect that the delay in introducing the scheme in Queensland was caused by the Queensland Government, to whom does he attribute the delay in introducing the scheme into the Northern Territory, which is a territory administered by the Australian Government? 505 C7E 0 0 PAGE, Earle Sir EARLE PAGE - The scheme was implemented in the Australian Capital Territory immediately a decision was reached by this House. So far as the Northern Territory is concerned, the honorable member knows how difficult it is to help the peripatetic aborigines in that area. Since November, 1951, everything has been done to implement the scheme so that it can operate at the earliest possible time for those who are settled. 505 505 JUP 0 0 CLAREY, Percy Mr CLAREY - Can the Minister for Supply state whether the Government intends to reduce the activities of Commonwealth munitions and armament factories, occasioning consequent dismissal of staff? 505 JOI LP 1 0 BEALE, Oliver Mr BEALE - That question should have been directed to the Minister for Defence Production. I shall direct his attention to it and obtain an answer for the honorable gentleman. 505 505 KWE 0 0 TIMSON, Thomas Mr TIMSON - I ask the Prime Minister whether, in view of the Victorian Government's professed intention to revise, in the near future, electoral boundaries in that State on the basis of two State seats to each Federal seat, he can indicate to the House whether a revision of Federal electoral boundaries in Victoria in the immediate future is contemplated? By way of explanation I state that if a revision of Federal elec torate boundaries in Victoria is contemplated, then it is obvious that the proposed State revision will be attendant upon such a Federal revision. 505 BV8 0 0 CALWELL, Arthur Mr Calwell - That will not save the Government ! 505 N76 LP 1 0 MENZIES, Robert Mr MENZIES - It is odd, is it not, that the honorable member for Melbourne always thinks of electoral redistribution in terms of saving himself or some of his friends? The problem raised by the honorable member for Higinbotham is, of course, very important. It is clear to everybody in the House that there have been movements of population, and that the distribution of seats at the moment is defective. That may not apply only to Victoria. I think it applies to more than one State. 505 DTN 0 0 EVATT, Herbert Vere Dr Evatt - It applies to all States. 505 N76 0 0 MENZIES, Robert Mr MENZIES - I think that the Leader of the Opposition is correct. It applies probably to all States and, therefore, we are obviously rapidly approaching the time when some redistribution should be put in hand. I had some discussion about the Victorian position with the Premier of Victoria when he was in Canberra recently. There is, of course, a particular reason for the Victorian Government's announcement of its intention to redistribute State electoral seats on the basis of two for each Federal seat. 505 BV8 0 0 CALWELL, Arthur Mr Calwell - It is bringing down the bill to-day. 505 N76 0 0 MENZIES, Robert Mr MENZIES - I understand that that is so, but, quite obviously, if it is possible to avoid taking two bites at the cherry, and avoid re-drawing electoral boundaries this year, and then having to re-draw them again next year, it should be avoided. 505 KX7 0 0 WARD, Edward Mr Ward - The Government could wait until after the South Australian election. 505 N76 0 0 MENZIES, Robert Mr MENZIES - I think that the honorable member for East Sydney is quite right. We are prepared to wait until after the South Australian election, and not to be wearied by the waiting. Indeed, we are prepared to wait here on these benches, if that is the right word, for the next ten years. 505 BV8 0 0 CALWELL, Arthur Mr Calwell - The electors will not permit that. 506 N76 0 0 MENZIES, Robert Mr MENZIES - The honorable member for Melbourne must surely remember how he used to say to us, when his party was in office, " You will never get us out ". Anyhow, time and change happen to us all. All I wish to say to the honorable member for Higinbotham is that I agree that the matter he has raised is a real problem. We are studying it, and as soon as we are in a position to make an announcement - because it is an Australiawide problem, as the Leader of the Opposition has said - we shall do so. 506 BV8 0 0 CALWELL, Arthur Mr CALWELL - Can the Prime Minister inform me whether it is a fact that there has never been a redistribution of seats in the Federal Parliament unless a census has been taken beforehand? Is it also a fact that the seats in one State have never been distributed separately from the seats in the other States of the Commonwealth '? 506 009MB CP 0 0 MCEWEN, John Mr McEWEN - That is not true. 506 BV8 0 0 CALWELL, Arthur Mr CALWELL - Yes, it is true. 506 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! If the honorable gentleman knows the answer, he has no right to ask the question. 506 BV8 0 0 CALWELL, Arthur Mr CALWELL - I was merely answering an observation which was completely incorrect. 506 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! I can answer the observation from my personal knowledge and assure the honorable gentleman that it is correct. 506 BV8 0 0 CALWELL, Arthur Mr CALWELL - It is a long time since you have been a Minister, Mr. Speaker, and I do not know that you will ever be one again. I was addressing a question to the Prime Minister. I now ask the third part of the question. Has the Government decided to undertake a census, and, if so, when is it to be conducted ? 506 N76 0 0 MENZIES, Robert Mr MENZIES - If I might first deal with the earlier portion of the question or assertion of the honorable member, I should say that, following the well-known truth in this House, what he has said is wrong, is right, and what he has said is right, is wrong. As to the census, I shall find out. 506 506 K7O 0 0 CREMEAN, John Mr CREMEAN - I ask the Minister for External Affairs what the position is in relation to Christian missions that were formerly located in the interior of China, but are now domiciled on a refugee basis in Hong Kong? How are those missions being maintained? Does the Government make any grant towards the temporary maintenance of Australian missionaries so affected? Will he give consideration to making such a grant. 506 JWE LP Minister for External Affairs 1 0 CASEY, Richard Mr CASEY - I regret that I was not adequately seised of the honorable gentleman's question, but if he will place it on the notice-paper I shall have the matter thoroughly investigated and let him have a reply. 506 506 K6Q 0 0 CORSER, Bernard Mr BERNARD CORSER - I address a question to the Minister for Social Services concerning delays affecting amenities available to war widows. Under the present regulations, a war widow who requires eye treatment, or whose children need dental attention, must first apply to the head office of the Repatriation Department in a capital city. If the application is approved, the applicant is told to obtain a medical certificate from the local doctor or dental officer, as the case may be, as to the necessity for glasses or dental attention. The tooth continues to ache while this certificate is sent to head office, which may later advise the applicant to consult a dentist- 506 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! Is the honorable gentleman asking for information? So far, he seems to have been giving it. 506 K6Q 0 0 CORSER, Bernard Mr BERNARD CORSER - I was merely giving an illustration, which I have practically completed. The local dentist may then send a report back to the head office in the capital city, together with a quotation of the cost involved. If the case is approved, instructions are sent back to the local dentist to proceed with the work. Will the Minister consider the possibility of expediting the present procedure so that the local repatriation doctor or dentist may deal with cases on the spot and, if necessary, issue the required orders for spectacles or dental attention, and thereby save patients from, perhaps, another two months' discomfort? 507 KWH LP 1 0 TOWNLEY, Athol Mr TOWNLEY - The question asked by the honorable member is really not one for my department to determine. The benefits to which he has referred come within the province of the Repatriation Department. I shall, therefore, bring to the notice of the Minister for Repatriation the matters raised by him. 507 507 KEJ 0 0 KEON, Standish Mr KEON - Is the Postmaster-General aware that the reputation of Australian artists and composers is suffering from the very poor quality of the records that are processed for the Australian Broadcasting Commission by private interests ? The records are processed from first-class quality master discs or tape recordings, made by the Australian Broadcasting Commission, of performances by Australian players of works of Australian composers. Will the Minister have a searching inquiry made to ascertain the reason why private interests should be allowed to unload such poor quality work on the Australian Broadcasting Commission when the commission itself is capable of turning out first-class recordings at lower cost? 507 JLZ CP 0 0 ANTHONY, Hubert Mr ANTHONY - I do not know how much of what the honorable member has said may be factual, but I shall have his complaint investigated. 507 507 KX7 0 0 WARD, Edward Mr WARD - Some months have now lapsed since the Minister for External Affairs made an announcement that he had discovered a nest of traitors in the higher ranks of the Public Service, was having inquiries made and that he proposed to take a certain course of action. Can the Minister now make a statement about the present position of this matter, and announce when he believes that his inquiries will have been completed? 507 JWE LP 1 0 CASEY, Richard Mr CASEY - I can ease the honorable member's fears, and assure him that his friends are being adequately looked after. 507 507 JUQ 0 0 CLARK, Joseph Mr CLARK - Will the Minister for Social Services make representations to the Government to have all pensions in creased because of the increase of the cost of living? 507 KWH LP 1 0 TOWNLEY, Athol Mr TOWNLEY - The honorable member's question involves a matter of policy which will be considered at the appropriate time. 507 JSW 0 0 BRYSON, William Mr BRYSON - In view of the fact that the honorable member for Sturt, while speaking in this House last September as a Government supporter, informed honorable members that it was the intention of the Government to abolish the means test on pensions before it went out of office, will the Minister advise the House when it is proposed to take some action to abolish the means test? 507 10000 0 0 SPEAKER, Mr Mr SPEAKER -The honorable member's question involves a matter of policy and therefore it need not be answered. 507 KWH 0 0 TOWNLEY, Athol Mr TOWNLEY - I was about to say that it is not usual to answer questions of policy in answer to questions. 507 KFG 0 0 GRIFFITHS, Charles Mr GRIFFITHS - Will the Minister for Social Services state whether it is a fact that males over the age of 65 years and females over 60 years who are still in employment are not entitled to receive sickness benefits when they become ill and are off work ? If so, does the Government intend that all persons over the retiring age should be compelled to retire, or will the Minister examine the possibility of allowing all persons to receive social services benefits irrespective of age while they continue to be employed? 507 KWH 0 0 TOWNLEY, Athol Mr TOWNLEY - The provisions with regard to benefits that are available to women over 60 years and men over 65 years have never been altered. Up to the present, those provisions have worked quite well under successive governments. However, there is merit in the honorable member's suggestion and I shall consider it. 507 507 JF7 0 0 BEAZLEY, Kim Mr BEAZLEY - My question, which is directed to the Minister for Territories, has reference to criticism M'ot has emanated from planting circles in the Territory of Papua and New Guinea as the result of a decision of a New Guinea court concerning a labour ordinance of 1950, under which the labour contract of natives who did not fulfil their contract to work a 44-hour week was treated as an agreement rather than a binding indenture. The court's decision laid down a rule that no stronger action could be taken against natives than against Europeans. Does the Government intend to stand by the 1950 ordinance or does it intend to make the law more stringent? 508 ZL6 LP 1 0 HASLUCK, Paul Mr HASLUCK - I find difficulty in following the trend of the honorable member's thought. The present Government replaced the system of indenture of native labour in the Territory of Papua and New Guinea by a system of engagement under contract. That system is in operation, and there has been no change in the Government's policy. As a result of many successive amendments of native labour legislation over the past years, the whole of that legislation is in a state of what might be termed internal contradiction. Because of that, the whole matter of native labour legislation in the territory is being reviewed by one of the senior officers of the territory in order that we may consider the total question of the regulation of native labour. 508 508 L19 0 0 LESLIE, Hugh Mr LESLIE - Is the Minister for Commerce and Agriculture in a position to give the House any further information about the progress being made in the discussions that are taking place relative to the International Wheat Agreement? In view of the tremendous importance to wheat-growers of the agreement and the negotiations that are taking place in regard to it, is the Minister prepared to make periodic public announcements relating to the progress being made, rather than leave the wheatgrowers to' rely upon the only bits of information they get at present through the press, which may not correctly interpret the situation? The Minister should be able to make authoritative statements on the subject. 508 10000 0 0 SPEAKER, Mr Mr SPEAKER -Order ! The honorable member may not discuss the matter. 508 009MB CP 0 0 MCEWEN, John Mr McEWEN - There is at present a hiatus in the active negotiations between the delegates to the Council of the International Wheat Conference. The gap between the price thinking of the exporting countries and the price desires of the importing countries, which was originally very wide indeed, has been substantially narrowed by negotiation, but I am not yet able to say that it has become so narrow that one can confidently predict that an agreement will follow. In my judgment, it would be quite contrary to the interests of the Australian wheatgrowers if I were to make periodical statements regarding wheat movements by Australia and, say, France, or Canada, and disclose the nature of the whole of the negotiations that are taking place. Negotiations are not best conducted in such an atmosphere. I inform the House and the wheat industry that the Government, for the first time, has sent the general secretary of the Australian Wheat Growers Federation - the growers' own nominee - to Washington where he is privy to all the negotiations that are taking place. Through the channel of the government cable service, he is in constant communication with the federation and I am in frequent communication with him. All the leaders of the wheatgrowers of Australia are given, confidential up-to-date information regarding the progress of the negotiations. 508 bill Bill presented by Mr. McEwen, and read a first time. SECOND READING 508 009MB Murray CP Minister for Commerce and Agriculture 0 0 MCEWEN, John Mr McEWEN . - by leave - I move - That the bill be now read a second time. The main purposes of this bill are to amend the procedure for determining the terms and conditions of employment of the staff of the Australian Meat Board and to delete that section of the act which enables the Minister to veto or alter decisions of the board if the chairman dissents from any decision of the board. The Meat Export Control Act provides that the salaries and conditions of employment of persons engaged by the board shall be as prescribed by regulation.' That provision makes it necessary to go through the procedure of promulgating regulations to cover all variations of- salaries and allowances. Any proposed variations, such as cost-of-living adjustments, cannot operate, nor can superannuation adjustments be effected until the necessary regulations have been promulgated. It is the policy of this Government, as it was of previous governments also, that salaries and other remuneration payable to employees of Commonwealth statutory authorities should carry the approval of the Public Service Board. Some authorities which have been constituted under acts passed since 1945, have, in fact, been operating under such arrangements. These authorities determine the terms and conditions of employment of their staffs, subject only to approval by the Public Service Board. No regulations are required, and variations of salaries or other conditions of employment may be made effective without delay. It is proposed that this should be standard procedure for all Commonwealth marketing authorities, and the amendment proposed under this bill will apply it to the Australian Meat Board. The bill also provides that the Minister's power to veto or alter decisions of the board under section 10 (5a.) of the act be deleted. The meat industry considers that this provision, which was inserted in the act in 1946, constitutes an unwarranted intrusion into the affairs of the board. Sub-section (5a.) of section 10, which it is now proposed to delete, reads - If the person presiding at a meeting of the Board dissents from any decision of the Board, signifies at the meeting to the other members present in person his intention to bring his dissent to the notice of the Minister and, within twenty-four hours after the close of the meeting, transmits to the Minister notice of his dissent together with full particulars of the decision, effect shall- not be given to the decision unless the Minister approves of the decision (whether with or without variation) and, if the Minister approves of the decision subject to a variation, the decision so approved shall be deemed to be the decision of the Board. That provision has always been regarded as being objectionable not only by the board, the majority of members of whom have been elected by the producers, but also by Government supporters who when they were in opposition strongly opposed its insertion in the act. The Government is in agreement with the industry on this point and considers that there is ample protection of Government and industry interests in the remaining sections of the act in that the major powers of the board are still subject to the direction of the Minister. The principal act provides that salaries, fees and expenses payable to members of the Australian Meat Board and any variations of such payments, shall be prescribed by regulation. An opportunity is being taken in the bill to dispense with the necessity for promulgating regulations for those purposes. All the proposed amendments in the bill are designed to bring the principal act up to date and to make it conform to the Government's policy that the provisions of Commonwealth marketing legislation shall, to the greatest degree possible, be uniform. These amendments are procedural only and do not affect the substance of any provisions of the principal act. Debate (on motion by Mr. Calwell) adjourned. 509 bill Bill presented by Mr. McEwen, and read a first time. SECOND READING 509 009MB Murray CP Minister for Commerce and Agriculture 0 0 MCEWEN, John Mr McEWEN . - by leave - I move - That the bill be now read a second time. The main purposes of this bill are to provide an additional dairy-farmer representative on the Australian Dairy Produce Board, to delete that section of the act which enables the Minister to veto or alter decisions of the board if the chairman dissents from any decision of the board, and to amend the procedure for determining the terms and conditions of employment of staff of the board. At present, direct dairy-farmer representation ou the board is confined to two members and the Government considers that this representation should be increased. Dairy-farmers are also represented indirectly but most effectively by representatives of co-operative' dairy companies which, of course, are composed entirely of dairy-farmers. The strength of the dairy farmers' voice on the board was weakened by the unfortunate death last year of the ex-chairman of the board, Mr. G. C. Howey, who, as president of the Victorian Dairy Farmers Association during the whole period of his chairmanship, wa3 directly associated with a most important section of the dairying industry of Australia and a stro'ng advocate of primaryproducer interests. The bill provides for the appointment to the board of a third representative of the dairy farmers of Australia. The bill is also designed to amend the provision in the act relating to the procedure of appointment of the dairy farmer representatives. The Government considers that the act, as at present worded, is unduly restrictive in that the source of nominations is strictly and permanently limited to a single organization, and in the possible absence of nominations from that organization, no appointments of dairy-farmer representatives could be made. The bill also provides that the Minister's power to veto or alter decisions of the board, as contained in section 10 (5a.) of the act, be deleted. The dairying industry considers that this provision, which was inserted in the act in 1947, constitutes an unwarranted intrusion into the affairs of the board. The Government is in agreement with the industry on this point, and considers that there is ample protection of government and industry interests in the remaining sections of the act, in that the major powers of the board are still subject to the direction of the Minister. The Dairy Produce Export Control Act provides that the salaries and conditions of employment of persons engaged by the board shall be as prescribed by regulation. This provision makes it necessary to go through the procedure of promulgating regulations to cover all variations of salaries and allowances. Any proposed variations, such as cost-of-living adjustments cannot operate, nor can superannuation adjustments be effected under the existing procedure until the necessary regulations have been promulgated. It is the policy of this Government, as it was of previous governments, that salaries and other remuneration payable to em- ployees of Commonwealth statutory authorities should carry the approval of the Public Service Board. Some authorities which have been constituted under acts passed since 1945, have, in fact, been operating under such arrangements. These authorities determine the terms and conditions of employment of their staffs subject only to approval by the Public Service Board. No regulations are required, and variations of salaries or other conditions of employment may be made effective without delay. It is proposed that this should apply as standard procedure for all Commonwealth marketing authorities, and the amendment to th-j act, as proposed in the bill, will make it operative in respect of the Australian Dairy Produce Board. I make it clear that this amendment merely provides that the conditions of employment attaching to a particular post shall be standard in relation to other boards. The standardization will be watched by the Public Service Board itself. That applies to the conditions attaching to the post and not to the employee. Within those limits the right to engage employees or to dispense with their services will be entirely within the discretion of the board. The principal act provides that salaries, fees and expenses payable to members of the Australian Dairy Produce Board and any variations of such payments shall be prescribed by regulation. An opportunity has been taken in the present bill to dispense with the necessity for promulgating regulations for those purposes. All other proposed amendments contained in this bill are designed to bring the principal act up to date in line with the Government's policy to have the provisions of Commonwealth marketing legislation as uniform a3 possible. These amendments are procedural only and do not affect the substance of any provisions of the principal act. I commend the bill to the consideration of honorable members. Debate (on motion by Mr. Calwell) adjourned. 510 bill Bill presented by Mr. McEwen, and read a first time. SECOND READING 511 009MB Murray CP Minister for Commerce and Agriculture 0 0 MCEWEN, John Mr McEWEN . - by leave - I move - That the bill be now read a second time. The main purposes of this hill are to amend the procedure for determining the terms and conditions of employment of the staff of the Australian Egg Board, and to delete that section of the act which enables the Minister to veto or alter decisions of the board if the chairman dissents from any decision of the board. The Egg Export Control Act provides that the salaries and conditions of employment of persons engaged by the board shall be as prescribed by regulation. This provision makes it necessary to promulgate regulations to cover all variations of salaries and allowances. Any proposed variations, such as cost-of-living adjustments, cannot operate, nor can superannuation adjustments be effected under the existing procedure until the necessary regulations have been promulgated. It is the policy of this Government, as it was of previous governments, that salaries and other remuneration payable to employees of Commonwealth statutory authorities should carry the approval of the Public Service Board, and some authorities which have been constituted under acts passed since 1945 have, in fact, been operating under such arrangements. These authorities determine the terms and conditions of employment of their staffs, subject only to approval by the Public Service Board. No regulations are required, and variations of salaries or other conditions of employment may be made effective without delay. It is proposed that this should apply as standard procedure for all Commonwealth marketing authorities, and the amendment to the act as proposed in the bill will make it operative so far as the Australian Egg Board is concerned. The bill also provides that the Minister's power to veto or alter decisions of the board, as contained in section 9 (8.) of the 1947 act, shall be deleted. The egg industry considers that this provision constitutes an unwarranted intrusion into the affairs of the board. The Government is in agreement with the industry on this point and considers that there is ample protection of Government and industry interests in the remaining sections of the act in that the major powers of the board are still subject to the direction of the Minister. The principal act provides that salaries, fees and expenses payable to members of the Australian Egg Board and any variations of such shall be prescribed by regulation. An opportunity has been' taken in this bill to dispense with the necessity for promulgating regulations for those purposes. All other proposed amendments contained in this bill are designed to bring the principal act up to date and make it conform to the Government's policy to have the provisions of Commonwealth marketing legislation uniform to the fullest extent possible. These amendments are procedural only and do not affect the substance of any provisions of the principal act. I commend the bill to the con,sideration of honorable members. Debate (on motion by Mr. Cax well) adjourned. 511 miscellaneous PRECEDENCE Motion (by Mr. Eric j. Harrison) agreed to - That Government business shall take precedence over general business to-morrow. 511 bill SECOND READING Debate resumed from the 3rd March (vide page 495), on motion by Mr. Menzies - That the bill be now read a second time. 511 KMD Evans 0 0 OSBORNE, Frederick Mr OSBORNE .- There is strictly only one measure before the House, a bill to amend the Commonwealth Bank Act 1945, but as it is interlocked with another bill on the notice paper - the Banking Bill 1953 - I shall address my remarks generally to both bills. They contain provisions for very important reforms of the banking system, and I welcome them warmly as far as they go. At the same time I regret that they do not go a great deal further. The importance of these bills should be considered in relation to the long history of the development of central banking in Australia. Our banking system is not static. It is a living and developing system, which is always undergoing change, and any criticism of these measures on the basis that our banking system is fixed and static will undoubtedly miss the point. Originally private banking in this country was unrestricted by any form of control or interference. Then central banking functions had to be developed. They were attached as a matter of convenience to the Commonwealth Bank, which, as has been rightly pointed out in this debate, began as a trading bank only. It is also true that its importance as a trading bank has since been greatly exceeded by its importance in our national life as a central bank, which function is a relatively modern one. Had the importance of the functions of a central bank been appreciated in the thirties, and had its development been anticipated then, I have no doubt that the claim for an independent central bank would have been much more strongly stressed during the sittings of the Royal Commission on Monetary and Banking systems in 1936 and 1937. It is entirely coincidental that in Australia the central banking functions have been performed by the Commonwealth Bank in Association with its trading functions. There is no special virtue in that fact, as members of the Opposition appear, for some extraordinary reason, to claim. Under the 1945 banking legislation we have reached a position in this country where the central bank - the Commonwealth Bank - has excessive powers and is able completely to strangle the whole private banking system at any moment. Attached to it is a trading bank, which has very great advantages by reason of its direct association with the central bank. The result, as one might have expected, is fear and distrust of the central bank by the whole banking system. When I refer to the banking system, I do not mean only institutions which are known strictly as trading banks. The ramifications of the banking system go far beyond that. They involve also insurance companies, hire purchase companies, and many other organizations of that kind. That situation in which the entire banking system could be destroyed overnight demands reform; and reform has been introduced very rightly by this Government in the shape of these two bills. There is a vital principle involved in them for every liberal, including not only members of the Liberal party, but all subscribers to our point of view. That principle is that a free enterprise banking and monetary system should be continued in Australia. That is the issue that lies at the back of this debate. Of course the socialists do not like these reforming measures. The Leader of the Opposition (Dr. Evatt) does not like them. The honorable member for Melbourne (Mr. Calwell) does not like them. No true member of the Opposition likes them, because the Labour party is pledged to the destruction of the private enterprise banking system in Australia. 512 KDX 0 0 JOSHUA, Robert Mr Joshua - That is quite wrong. 512 KMD 0 0 OSBORNE, Frederick Mr OSBORNE - The honorable gentleman who had the temerity to say that will be hauled before the executive of his party, if he is not careful, in order to explain his deviation from its policy. We have been treated to a determined attempt by the Leader of the Opposition during this debate to mislead the people into the belief that he no longer subscribes to the plan for the nationalization of banking and that it is not now a matter of importance. I shall have more to say about that at a later stage. A great issue is involved in the Government's proposals. It is nothing less than that of the preservation or destruction of the private enterprise banking system of Australia. In one comer we have private enterprise banking; in the other corner we have socialist banking with its consequent bureaucratic muddling. Any present consideration of the banking system must revolve around the relations of the trading banks with the central bank. It is admitted generally to-day by most people who think about these problems, including men associated with the trading banks, that there is a compelling need for a strong central bank and that this central bank, in the ultimate analysis, must be under, the control of the government of the day. This is not a matter of argument in Australia any longer. Within that framework, the question of banking reform is concerned wholly with relationships of the trading banks and the central bank, and the powers of the central bank over the whole banking system. The Leader of the Opposition, unfortunately, avoided this issue completely and sought to represent the Government's proposals merely as an attack on the Commonwealth Bank. 513 BV8 0 0 CALWELL, Arthur Mr Calwell - Hear, hear! 513 KMD 0 0 OSBORNE, Frederick Mr OSBORNE - I gather from the loud applause of the honorable member for Melbourne that he proposes to follow the same line of argument. I had hoped for a better approach to the subject by him. The Leader of the Opposition used catch phrases and parrot cries, like " Hands off the people's assets ". He completely ignored the real issue. He tried to convince the House, and presumably the people, that this Government intends to attack the Commonwealth Bank in the interests of the trading banks. That suggestion is base and misleading, and his statements can be disproved by a simple test. If, in fact, the Government intended to attack the Commonwealth Bank for the benefit of the trading banks, it would be natural to expect private banking interests to receive the Government's proposals with applause and approval. What is the fact? The measures have been roundly condemned by the leaders of the private banks in Australia on the ground that they are not complete enough and do not go far enough. That fact, I should think, in the view of any rational human being, would dispose of the ridiculous argument that the Government is attacking the Commonwealth Bank in the interests of the private banks. I repeat that the real issue at stake is that of nationalized banking as opposed to private banking. Why did the Leader of the Opposition avoid the issue? Perhaps he did so because he does not understand it. That is by no means an improbable explanation. Perhaps he did so because he wants the people of Australia to forget that he is an avowed exponent of the doctrine of nationalized banking. I should have had more respect for him had he said straight out that the Government's proposals make little difference to the Labour party but that Labour does not like them because they cm will make the task of nationalizing the banking system a little more difficult. I am not in complete agreement with all details of the measures that we are considering, but I defend the principle that lies behind them. Are we to have a free enterprise banking system controlled to the degree which is necessary in the public interest through a central bank responsible ultimately to the Government of the day, or are we to have a single nationalized bank with the consequent bureaucratic muddling that would go with it? That is one of the great issues of our time in Australia. It was well known to Marx and Lenin, and it is well known to Stalin, that he who controls the banks controls the whole system. 513 KDA 0 0 DUTHIE, Gilbert Mr Duthie - Marx never said anything of the sort. 513 KMD 0 0 OSBORNE, Frederick Mr OSBORNE - He did not say so in those words, but that is the effect of what he said. I could quote his statement if I had sufficient time at my disposal. It is an acknowledged fact that one of the first steps in the -socialist method, and the Com,munist method, is control of the banking system. The Labour party, of course, wants to take hold of the banking system so that it may have the whole nation within its grasp. That is why it resents any attempt to make the process of gaining power over the banking system more difficult. I should respect honorable members opposite more if they would acknowledge their intentions and state their position plainly. The honorable member for Melbourne is not unknown for his frank avowal of the principles that he espouses, and I hope that he will clear the air a little more than his leader did. I turn now to the bills that are before the House. It refers, first, to the Commonwealth Bank Board which was reestablished by earlier legislation enacted by this Government. The board controls the Commonwealth Bank. The Governor of the bank is the chairman of the board. For my part, I consider that to be an unfortunate arrangement, because I do not believe that the chief executive of any institution should be also the chief member of the board of directors of that body. However, this arrangement was promised in the policy speech delivered on behalf of the present Government parties in 1949. The promise has been carried out. I hope the policy of our parties may be varied in future so as to provide that the Commonwealth Bank Board shall not be. under the control of the chief executive of the bank. The next point in the plan of reform for which the bills provide is the establishment of a separate general banking division within the Commonwealth Bank to be known as the Commonwealth Trading Bank. The Leader of the Opposition raised the extraordinary objection that this represented an attack on the goodwill of the Commonwealth Bank. He suggested that the alteration of the name of the general banking organization with which customers of the Commonwealth Bank now deal would impair the efficiency of that organization. That argument can be characterized at once as nonsense. We saw an example recently of the amalgamation of two large trading banks in Australia into a single unit which is, I believe, the second largest trading bank in Australia. The new bank has adopted a completely new title. Are the men who controlled those two banks, and who now control the amalgamated bank, fools? Did they deliberately destroy the goodwill of their two banks ? Of course not ! The idea is nonsensical. It is essential, if there is to be any fair competition between the trading banks of Australia and -the Commonwealth Bank, that the central banking powers of the Commonwealth Bank should be separated from the powers, obligations, duties and advantages of its trading bank organization. The function of a central bank is to stand in judgment over the whole banking system and to control its activities in accordance with the ebb and flow of the general economy of the country. How can those functions be exercised with fairness and justice if the central bank itself, through its trading bank organization, is in competition with the private banks? That is the position, stated simply. If honorable gentlemen opposite believe this to be an academic matter, they should discuss it with some of the people in the trading banks. Prom the top to the bottom of the trading banks there has been a very real fear and distrust of the central bank in Australia, because that bank, through its trading bank activities, has been in direct and unfair competition with them. To establish confidence in the central bank among trading banks, it is necessary that the trading functions of the Commonwealth Bank should be separated entirely from its functions as a central bank. The independence of the central bank is a prime essential for trust and confidence. But socialists do not accept that viewpoint. They do not see any necessity to differentiate between the central bank and the trading bank section of the Commonwealth Bank. They would merge all banks with the central bank and have a magnificent bureaucratic muddle. I regret that the Government has not gone one step further and separated entirely the trading bank section of the Commonwealth Bank from the central bank. 514 KJQ 0 0 JAMES, Rowland Mr James - Why does not the honorable member propose the abolition of the Commonwealth Bank? He is trying to cripple it. 514 KMD 0 0 OSBORNE, Frederick Mr OSBORNE - It is obvious that the honorable member for Hunter (Mr. James) has not followed the trend of my remarks. If he had done so, he would be able to answer that question himself. I regret that .the Government has not seen fit to establish two entirely separate bodies, a central bank and a trading bank, but I welcome the measure as far as it goes. As I have said, we cannot expect confidence to exist under the conditions established by the 1945 legislation. We cannot expect the trading banks and the other financial institutions of Australia to have confidence in a central bank while that bank is in competition with them. In saying that, I make no charge against the Governor of the Commonwealth Bank or his officers. But they are human beings, and it is a natural human characteristic to work for and exalt those things that one controls oneself. While people remain human, that characteristic will always be present. I do not believe it to be possible for a person, so to speak, to draw a line down the centre of his thinking and to say, "In my left-hand capacity, I am the Governor of the central bank in Australia ; and in my right-hand capacity, I am the chief executive of a large trading bank. In my one capacity, I shall control myself in my other capacity". That would be asking too much of any human being. 515 KID 0 0 LUCHETTI, Anthony Mr Luchetti - Does the honorable member reflect upon the honesty of the Governor of the Commonwealth Bank? 515 KMD 0 0 OSBORNE, Frederick Mr OSBORNE - Not in the slightest. I thought I had made that clear. I was saying that the independence of the central bank is a prime essential for confidence in the economic system of Australia. That confidence will be engendered to . some degree by the separation of the trading bank functions and the central banking functions of the Commonwealth Bank under this measure, but I wish that the separation were more complete and that two separate institutions were created. Under this bill, the Commonwealth Trading Bank will be managed by a general manager, who will be under the control of the Governor of the Commonwealth Bank, which, for the purposes of my remarks upon this bill, I shall refer to as the central bank. I think that is a mistake, because, as I have said, a man cannot be expected to divide his capacities and in one capacity, control his activities in another capacity. The next feature of the bill to which I shall refer is that the special agencies of the Commonwealth Bank as it now exists, the Rural Credits Department, the Mortgage Bank Department and the Industrial Finance Department, are to be left under the control of the central bank. I would much prefer them to be under the control of the trading bank. I know that that argument does not appeal to the Opposition, because honorable members opposite prefer the whole thing to be in one large structure. The argument of the Government is that to place those three agencies under the control of the Commonwealth Trading Bank would be unduly to fetter and embarrass that bank, because they have no deposits and no separate assets of their own. But if they were made part of the Commonwealth Trading Bank, I believe that finance for those agencies could be made available to the Commonwealth Trading Bank from the central bank at any time. That would have certain advantages. Suppose the central bank decided that there should be an expansion of rural credit and industrial finance. It could make money available to the Commonwealth Trading Bank, which, if I had my way, would control those three agencies, but, although the finance would come from the central bank, the responsibility for the administration of the finance would rest upon people who were completely independent of the governor and the board of the central bank. Let me turn to the second section of the proposed reforms, which is contained in the bill that will come before the House next. The principal reform contemplated by the amendment of the Banking Act is a reform of the special accounts system established under the Banking Act 1945. That can be welcomed almost without reservation. Under the Banking Act 1945, the Commonwealth Bank can call up at any time the whole of the uncalled liability of the trading banks, which at this date amounts to over £540,000,000. That means that the Commonwealth Bank, in hostile hands - by " in hostile hands " I mean under the direction of a Labour Treasurer pledged to the nationalization of banking - could cripple the private banking system of this country at any moment. Under the proposed amendment, that uncalled liability will be removed. As the Prime Minister (Mr. Menzies) has told us, three great benefits to the private banks are envisaged by the legislation. It will cancel the uncalled liability that hangs over the heads of the private banks at the present time, put a ceiling on their future liability, and apply to the Commonwealth Trading Bank the same special account provisions as will be applied to independent trading banks. I have two minor criticisms to make. First, if there were a return of the state of inflation from which this country is now emerging, the limit might prove still to be too high for the safety and security of- any trading bank if the central bank came under the control of a hostile, or socialist, Treasurer. Secondly, I believe it is a mistake that the legislation does not provide that all banks should be treated equally in relation to the calling up of special accounts. I know that the liquid assets of banks vary from time to time, and that sometimes it is necessary to show consideration for a bank which, due to the nature of its business may be subject to special seasonal fluctuations and has demands made upon it which are not made upon other banks. It is inevitable that the assets of -some banks will be at times less liquid than those of others. But to give to the governor of the central bank power to differentiate between banks and to call up larger proportions of the deposits of some than of others is to place in his hands a power which, if it fell in hostile hands, could be used to pick off the private banks one by one. 516 JPE 0 0 BIRD, Alan Mr Bird - Labour governments have not done that in the past. 516 KMD 0 0 OSBORNE, Frederick Mr OSBORNE - The last Labour Government was so deeply involved in trying to nationalize the banks of this country by direct means that it did not give much attention to the indirect method. But if the Labour party were to come into office again, it would know that, Tinder the Constitution, it could not bring about bank nationalization by direct methods and would set about doing so by indirect methods. If the protections and reform"! envisaged by this legislation are to bc really effective, they must be water-tight against a future government that might seek to exploit every loophole in them. The second criticism I have to offer is that if the central bank differentiates between banks with respect to the proportion of their funds that it calls up by way of special deposits, it could be subsidizing a bank which has acted unsoundly. Banking is a highly competitive business and each bank is faced with two competing inclinations. One inclination is to make as large advances as possible in order to attract and keep customers, and the other is to ensure that their position is fundamentally sound at all times so that they cannot get into difficulties. My criticisms of this measure are of a minor nature in view of the great things that the bill will accomplish. If the Opposition should seek to take any comfort from the fact that I am not able to give complete and unqualified approval to the Government's proposals, I remind them that, as a Liberal member, I am exercising a privilege which is denied to them. If a Labour government were taking, this action, a caucus decision would have been made concerning it, and Heaven help him who dared to buck it! I accept whole-heartedly the purpose behind these bills, and I welcome the reforms which they introduce. I regret that they do not go further and establish a completely independent central bank in Australia. Banking . is a complex matter and the only clear fact concerning it in this country is that the Opposition is determined completely to nationalize banking. The Government parties are determined to preserve an independent, free-enterprise banking system, with a strong central bank. It is a pity that the Opposition cannot appreciate that whilst the present Government is in office it will protect the banking system. Then this discussion might be directed to a consideration of the bills on their merits instead of being limited, on the Opposition side of the House, to a nonsensical diatribe such as that of the Leader of the Opposition, who referred to attacks on the people's assets. The honorable member for Darebin (Mr. Andrews) made some attempt to deal with the measure on its merits. He appreciated some of the difficulties which I and some of my colleagues experience in connexion with this measure. He referred to the dependence of all governments on their technical advisers and said that' the present officials of the Commonwealth Bank, being the men who advised the last Labour Government, had apparently converted this Government to socialist views. This facetious remark emphasized a real problem which faces Liberal governments in dealing with matters of policy, concerning which there are two widely opposed political conceptions. This problem does not exist for Labour members because caucus tells them how to vote. On this side of the House, where there is freedom of thought and discussion and conscience, the position is more difficult. We face a very real problem in our inevitable dependence on bank and Treasury officials in matters of this sort. Can it be expected that they will naturally and easily tend to give advice which will lead to a restriction of their own authority and a reduction of their own power? Being human beings, that would be very difficult for them to do. In matters of this sort I believe that we must make up our minds firmly on the broad course that we wish to take and follow it without regard to the backward glances of our technical advisers. Banking in Australia is a living system. Arguments about central banking will continue for many years. For that reason I have stated my views on this matter in some detail. I hope to be in this House long enough to see the establishment of a true and independent central bank. 517 10000 0 0 SPEAKER, Mr Mr SPEAKER - 'Order ! The honorable member's time has expired. 517 KDA Wilmot 0 0 DUTHIE, Gilbert Mr DUTHIE .- In my opinion no government has ever so ruthlessly or so cold-bloodedly gone about the destruction of the peoples' assets in Australia as has this Government. It has either sold those assets directly- to private enterprise or it has carefully whittled down the people's control of their assets. The Government has sought to justify its action by saying that it has a mandate. It will soon tell us that it has a mandate for murder. The Government has disposed of the people's shale oil project at Glen Davis in New South Wales. Did it have a mandate for that action? It did not. It has disposed of the Commonwealth Oil Refineries Limited. Did it have a mandate for that action? Certainly not. It abolished the Stevedoring Industry Board. Did it have a mandate for that action ? It did not. It disposed of the peoples' interest in Amalgamated Wireless (Australasia) Limited- 517 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! The honorable member is discussing matters that have been debated in this session. 517 KDA 0 0 DUTHIE, Gilbert Mr DUTHIE - I am leading up to the bill before the House. This is purely a passing reference. The Commonwealth Handling Equipment Pool has gone. The Government had no mandate to dispose of that. The Trans-Australia Airlines business- 517 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! I have told the honorable gentleman that he is dis cussing matters which have been debated in the present session and which are clearly and, I think, to his knowledge, outside the Standing Orders. 517 KDA 0 0 DUTHIE, Gilbert Mr DUTHIE - I have not heard that ruling given against anybody else who has mentioned those matters in this debate and they were mentioned by the Leader of the Opposition (Dr. Evatt) in his speech. I come now to this bill, which is another instance of the Government's attempt to destroy the peoples' interest in the Commonwealth Bank, by dividing and conquering. The Government proposes to divide the bank's functions into two distinct activities. Has the Government a mandate for that action? No doubt it would claim to have a mandate for anything whether it was mentioned in its policy speech or not. Prior to the last general election the Prime Minister (Mr. Menzies) said in the course of his policy speech that the Government parties would continue the trading bank activities of the Commonwealth Bank in fair competition with the other banks. He has now said that the purpose of this bill is to obviate the possibility that the Commonwealth Bank might place itself in a privileged position as a trading bank by the unfair use of its central banking functions. Apparently his opinion has changed since 1951. What has caused that change? It is the result of outside pressure. So we have the spectacle of his attempting to divide and conquer and weaken the Commonwealth Bank which has had a remarkable influence on Australian financial and economic affairs since 1911. The Commonwealth Bank was established by the Fisher Labour Government in 1911. It began operations in 1912 with Denison Miller, later Sir Denison Miller, as Governor. From 1912 to 1924 its main activity was helping the Government and industry during the 1914-18 war. The bank raised £350,000,000 for the financing of the wheat, barley, and meat pools and other pools that were established during the war. It saved the primary producer millions of pounds in interest charges in those years. It also cushioned the effect of the depression of 1920-21 by channelling into the economic bloodstream of the nation, a sum of £20,000,000. It established the Commonwealth Savings Bank in those years, and also developed its general banking business. Then in 1924 came a very important change in the structure of the bank, when the reactionary Bruce-Page Government established a board consisting of two ex officio and six other members who were actively engaged in agriculture, commerce, banking and industry. Thus, the people's bank became what the Sydney Sun .called at the time "a bank for bankers " instead of the people's bank, and operated under the hidden domination of the private banks. Between 1924 and 1929 no acute problems faced the bank, but in 1929 it assumed the control of gold in this country, and in 1931 it took over the management of the exchange rate, and so its central banking activities were born. But in the great economic blizzard, which lasted from 1929 to 1933 with world-wide effect, the Commonwealth .Bank Board failed the people dismally, even though it discounted treasury-bills to the value of about £55,000,000 in that period. At that time, Sir Robert Gibson was the Governor of the bank, and Mr. J. H. Scullin was Prime Minister of Australia. Unemployment soared to 750,000 and 20,000 were forced off their farms in five years. The debts of the . wheatgrowers and wool-growers amounted to £288,000,000. Insurance companies- received a rake-off of £128,000,000 as a result of the forfeiture of 195,793 insurance policies and 1,113,156 industrial policies. Mr. Scullin pleaded with the Commonwealth Bank Board to let him have £18,000,000 with which to pay the wheat-growers 4s. a bushel for their wheat, and to alleviate the disastrous unemployment. The board refused him point-blank. -The Royal Commission on Monetary and Banking Systems had something to say on that matter in its findings, at paragraph 543. It said - Two of the most important monetary measures taken during the depression were the expansion of central hank credit by means of treasury-bills in 1931 and 1932, and the movement of the exchange rate in January, 1931. In each case, in our opinion, the depression would have been lightened and some of its worst effects avoided if these measures had been taken earlier. . ifr. Duthie. So the Labour party claims rightly that the Commonwealth Bank did not assist the people in the greatest disaster that had ever come on this nation, because it was shackled by a board that was really running the country, instead of the Labour government of the day having the real power. World War II. imposed a great strain .on our finances. War-time controls were established, and the Commonwealth Bank Board was forced into line to assist the Australian Government during the difficult years of the war. Just before the war ended the next important Commonwealth Bank Bill was brought down in this House. This was early in 1945. Among other things that legislation sacked the reactionary bank board that had been established in 1924 by the Bruce-Page Government, after it had had a run of 21 years during which it had had a restrictive influence on the development of the bank. Proof of that fact is the small number of branches of the bank established in those years. That restrictive board was deliberately designed to curtail the development of the bank. The 1945 legislation placed the bank under the control pf a governor and an advisory council subject to the Treasurer of the day. That legislation firmly established the bank as a central bank, an indispensable part of which is -its General Banking Division. The royal commission in its report, at paragraph 135, dealing with that matter, said - A Central Bank's job is the regulation of the volume of credit, including currency. That is fundamental. I claim that any action which weakens this function is fifth-column action within our economy. This bill proposes such action by dividing the Commonwealth Bank's functions into two distinct compartments, and so weakening its central bank functions. When the Minister for Health ('Sir Earle Page) was Treasurer 26 years ago, he said, in introducing an amendment to the Commonwealth Bank Bill - The important functions of hanking can properly he 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. That was the best bit of common sense that the right honorable gentleman ever uttered. The 1945 legislation established and extended the general banking activity of the Commonwealth Bank, thereby bringing it into active competition with the then nine trading banks. The Government has talked a lot to the effect that the nationalization of banking would bring all banks under one control. I remind honorable members opposite that some private banks are already engaged in the attainment of that goal, and have been so engaged for the last 70 years. 519 KWP 0 0 TURNBULL, Winton Mr TURNBULL - They are taking a long time about it. 519 KDA 0 0 DUTHIE, Gilbert Mr DUTHIE - Never mind, they work quietly, slowly, effectively and surely towards their goal. There were 56 private banks in this country in 1877, but there were only nine in 1945 and only seven are operating to-day. The process of monopolization of private banking goes on ruthlessly, yet honorable members opposite have the nerve to talk about the monopoly effects of the nationalization of banking. Nationalization of banking is as dead as the dodo as an issue because, according to the High Court and the Privy Council, the Constitution makes it impossible of fulfilment. Yet this other kind of monopolization is in process, and some private banks are monopolizing the whole of the private banking field in Australia. Section 17 of the Commonwealth Bank Act provides as follows: - (3.) The Bank shall carry on its general banking business in a separate division of the Bank to be known as the General Banking Division. (4.) The Bank shall keep the accounts and transactions of the General Banking Division separate and distinct from the other accounts and transactions of the Bank. Section 18 provides - (1.) It shall be the duty of the Bank, through the General Banking Division, to develop and expand its general banking business. (2.) The Bank, through the General Banking Division, shall not refuse to conduct any banking business for any person, by reason only that to conduct that business would have the effect of taking away business from another bank. In his second-reading speech on the Banking Bill 1945 the then Prime Minister and Treasurer, Mr. Chifley, said that the Government had framed the bill to secure the following objects : - To provide a legal framework, uniform throughout Australia, for regulating the banking system. To safeguard depositors of the banks from loss. To provide for the co-ordination of banking policy under the direction of the Commonwealth Bank. To control the volume of credit in circulation and bank interest rates. To mobilize, and to provide machinery for the control of, the foreign exchange and gold resources of the Australian economy. Briefly summed up, that is the purpose of the 1945 legislation,which also created the Industrial Finance Department of the bank. In 1947 the Chifley Government attempted to nationalize the banks, basing its action on the section of the Constitution which provides that the government of the day has a right to control banking" other than State banking ". That has been proved null and void.I do not know what that section of the Constitution now means, since the banking legislation of 1947 has been declared invalid by the High Court of Australia and also by the Privy Council. 519 KWP 0 0 TURNBULL, Winton Mr Turnbull - It saved the country. 519 KDA 0 0 DUTHIE, Gilbert Mr DUTHIE - I do not think that it, did. The next change in the administration of the bank came in 1950, with the re-appointment by this Government of the Commonwealth Bank Board. Reaction was again in the saddle, after five years without a board.Following on the appointment of the board came restriction of credit, the calling up of mortgages, and the refusal to grant loans to persons who wanted to expand both primary and secondary production. Pressure was put on borrowers. The bill now before the House represents another stage in the campaign to interfere with the structure of the Commonwealth Bank by dividing it into two distinct banks. This policy of dividing and conquering is to be ruthlessly pursued. Any action which will weaken the central banking functions of the bank is opposed to its best interests as well as being detrimental to our financial and economic strength. The 1952 report of the Commonwealth Bank, which is the latest available, after listing the four component parts of the bank, states at page 26 - This concentration of activities under the control of the central bank is unique in central banking but affords strength to the central bank. The Commonwealth Bank thus acknowledges the fact that the way in which it is constituted at the moment lends strength to its central banking functions. Yet the Government is now attempting to weaken those central banking functions by lopping off the general banking section. That action will disrupt and disorganize the bank. In addition, it will affect the staffing at a time when solidarity and stability are urgent and vital. Of course, the present Government parties were helped into office by the banks of the country. If honorable members cast their minds back to 1949, they will remember that the private trading banks had their staffs running all over the country fighting the Chifley Government. They fought for all they were worth. It is obvious that there must be some reward for their efforts. Is this completely unnecessary legislation designed to strengthen the Commonwealth Bank against private banking interests and influence? Is that likely in view of the fact that this Government is supported by the big financial interests in the country? When the matter is regarded from that angle, the answer is that the measure is not designed to strengthen the bank. On the contrary, it will cost the institution a certain amount of goodwill and, perhaps, some of its customers. I wish now to illustrate briefly the growth of the Commonwealth Bank. In April, 1939, there were 142,808 depositors with the General Banking Division. In 1949, there were 257,982, or an increase of 115,174 in ten years. The 1952 figures, which are the latest available, indicate that there were 372,870 depositors, or an increase of 114,888 in only three years. In other words, the number of depositors with the General Banking Division increased by 115,174 in the ten years to 1949 and by 114,888 during the three years from 1949 to 1952. I suggest that those figures are indicative of the growth and progress of the trading bank section. 520 ZL6 0 0 HASLUCK, Paul Mr Hasluck - Under a Liberal government. 520 KDA 0 0 DUTHIE, Gilbert Mr DUTHIE - Very well, but that does not mean anything. This Government has not interfered with banking policy - at least, I hope it has not. Why is it necessary to interfere with the Commonwealth Bank set-up if its business has increased so greatly in only three years? Is it that the private banks are afraid of the increasing competition between them and the General Banking Division of the Commonwealth Bank? Have the private banks said to the Government, in effect, " Split the Commonwealth Bank into two parts. That will be the most effective method of subduing its competitive nature ". In 1939 there were 320 branches of the Commonwealth Bank throughout Australia, whilst in 1949 there were 420, and in 1952, 439. I shall not weary honorable members with statistics relating to savings bank accounts. I shall content myself with saying that such accounts have increased from 2,348,975 in 1939 to 4,359,087 in 1952. It is, therefore, obvious that the bank is in a healthy condition. The Royal Commission on Banking in 1935 stated, in paragraph 577 of its report, that - We are of opinion that the use of ite trading bank activities as an adjunct to central bank policy is in keeping with its central bank functions and is to be approved. The men who made that pronouncement were leaders in banking matters. 520 KCQ 0 0 GRAHAM, Bruce Mr Graham - Who were they ? 520 KDA 0 0 DUTHIE, Gilbert Mr DUTHIE - Sir John Napier, Professor Mills, Mr. Edwin Nixon, and the late Mr. Chifley were members of the commission. Surely their opinion is worth something ! Yet , the Government proposes to destroy the banking set-up which was approved by such men. The trading bank and central bank functions of the Commonwealth Bank have been happily and constructively married since 1912. After 41 years of matrimony, which have produced healthy economic children, this Government proposes to destroy this financial partnership by enacting legislation in a parliament which is pledged to strengthen, not weaken, the economic state of the Australian people. This separation of the functions of the bank will not be a divorce, for which one party at least is always responsible, but an annulment of the marriage. Such action must ultimately weaken and inhibit the functions of the bank as an indispensable instrument for good in the unfinished war against recessions, depressions, unemployment, insecurity, monopolies and exploitations. That is why I strongly oppose the bill. 521 KE8 Bass 0 0 KEKWICK, Bruce Mr KEKWICK .- The honorable member for Wilmot (Mr. Duthie) has made no worthwhile contribution to the debate, so I will proceed straight away to deal with the bill. The banking measure now before the House merely seeks to put into effect the undertaking given in the joint policy-speech of the present Government parties in 1949, which was as follows : - We will continue the trading bank activities of the Commonwealth Bank in fair competition with the other banks. This debate has made apparent two distinct schools of thought. We, on this side of the House, believe in fair and unfettered competition. Socialists on the other side want a completely socialized banking monopoly. The majority of the people have shown a very real fear of a government controlled monopoly bank, and for that reason the Leader of the Opposition (Dr. Evatt) went to great pains to try to convince his listeners that bank nationalization was, to use his own words, a dead issue politically, legally and practically. The right honorable gentleman was almost gleeful when claiming this to be the case. What a remarkable volte' face that appears to be, when we recall the tenacity, and near fanaticism with which he tried to attain the objective clearly stated in the Labour party's platform that the banks must be nationalized. But does the leopard change his spots? There has been no amendment of the Labour party platform, so that it can be assumed that as soon as Labour once again assumes office in this country, if the people are ever hoodwinked sufficiently to put them there, it will immediately set about destroying the private trading banks. [Quorum formed.] Although thwarted by the High Court and subsequently by the Privy Council on purely legal grounds, the Labour party would obtain its monopoly bank by forcing the private banks out of business. It is - amazing to read of Labour's rank political expediency, which is designed solely to deceive the people about its real intentions on banking. One reads headlines such as the following which appeared in the Launceston Examiner of the 26th February, 1953- Labour will halt its banking policy. The great Labour party will halt its banking policy! I suggest that it will merely temporarily change from direct bank nationalization to a policy of expediency to gain a majority at the forthcoming Senate elections. But the Labour party will certainly not change its platform. In view of those facts we realize how fickle is the attitude of Labour to great financial matters such as this. The honorable member for East Sydney (Mr. Ward) once again has let the cat out of the bag, this time in regard to banking. In a bitter party room debate, according to the Adelaide News of the 25th February, 1953, he was soundly rebuked by the Leader of the Opposition for insisting that Labour's policy was still to nationalize the banks. The honorable member for East Sydney is reported in that newspaper to have said that - It was the confirmed' policy of the Labour party that banking should be nationalized and therefore the duty of the party to advocate and carry out this policy. The report continued to the effect that the Leader of the Opposition warmly berated the honorable member for East Sydney for choosing such an unfortunate time for letting the cat out of the bag, particularly in view of the approaching Senate elections. That indicates quite clearly where the Labour party stands on the matter of bank nationalization. Such political opportunism must surely sicken Labour's own supporters and the slogan of the Leader of the Opposition must surely now be " popularity before principle ", because there is no doubt that during the last few months item after item of the Labour programme has been temporarily put aside to be revived at the appropriate time. In his attempt to win the prime ministership no holds will be barred by the Leader of the Opposition. Honorable members on this side of the House, and the people at large, want to know where Labour stands on this matter. Does it stand for the policy of bank nationalization? It is clear that, undercover, it certainly does, because otherwise it would not oppose the present measures which are intended to provide safeguards to prevent central banking policy from putting the private banks out of business. If such an event occurred the Labour party would have a ready-made nationalized bank. In order to illustrate that point, I point out that under existing legislation the powers which can be exercised by the Commonwealth Bank are capable of being used arbitrarily to close any or all of the private trading banks. To mention an extreme example, an attempt to call funds into special accounts to a total approaching the legal maximum, would precipitate such a crisis. In this regard the Commonwealth Bank has a dangerous direct power to take over a bank. If a bank is unable or is likely to become unable to meet its obligations, the Commonwealth Bank has power to take it over. However, the worst feature of the whole matter is that the Commonwealth Bank is the sole judge of a situation such as this. In effect, the powers of the bank make possible the direct nationalization of the private banks. The Government's banking proposals seek to put the Commonwealth Trading Bank on the same footing in regard to central banking restrictions as the other banks. What could bc fairer than that ! Why should the Commonwealth Trading Bank enjoy an unfair advantage over its competitors, or for that matter why should the private trading banks have an unfair advantage ? The bill sets out primarily to achieve two very important objectives. First, proper and adequate power for the central bank, and, secondly, a proper measure of protection for the private trading banks. Under the latter objective, the responsibility of the private trading banks to meet enormous uncalled liabilities in the special accounts has been abolished. Incidentally, if the total uncalled liability of the trading banks as at October, 1952, which I understand was £545,000,000, had been called up, the trading bank system would have been smashed and, indeed, I venture to suggest that if a Labour Treasurer had been in power then, that is what would have happened. That was the method which the Labour party, having been defeated in a legal process of nationalizing the banks, had determined to use for their destruction. When one considers the Opposition aspirants for the treasurership of this country, one can only shudder at the possibility that the honorable member for East Sydney may hold the financial reins of Australia. For that matter, it may be the Deputy Leader of the Opposition, who rather fancies himself as a financier and banker. An even more horrifying thought is to contemplate the Leader of the Opposition being let loose on the finances of this country, because his irresponsible financial policy is so well known that most people shudder at the very thought of it. I now intend to answer some of the arguments that were raised by the Leader of the Opposition in his speech yesterday. He claimed that the Government was waging an open attack on the Commonwealth Bank, and was aiming to weaken it and give an unfair advantage to the private trading banks. I refer honorable members to the previous remarks that T made about this matter, which set out quite fully that proper and adequate power will be reserved to the central bank. Docs that sound like an attempt to sabotage the Commonwealth Bank? A proper measure of protection is to be provided for the private trading banks. As there has been a suggestion that some insecurity of feeling exists among the staff of the Commonwealth Bank, I shall quote a small relevant passage from the joint policy speech of the Government parties that was delivered in 1949. The Prime Minister (Mr. Menzies) said then In view of certain rumours, let me add that the present staff of the Commonwealth Bank has nothing to fear. That completely refutes the argument that has been advanced by the Leader of the Opposition that this Government is out to attack the Commonwealth Bank. Nothing could be further from the truth. The Leader of the Opposition claimed that the bill would destroy the goodwill of the Commonwealth Bank merely by the addition of the word " trading ". The effect of the addition will be that the relevant section of the Commonwealth Bank will be known as the Commonwealth Trading Bank. The Leader of the Opposition claimed that the title was ambiguous, uncertain and puzzling. Apparently the only person who could not understand the word was the right honorable gentleman himself, because it simplifies the whole matter. To the ordinary citizen it is a specific term. It indicates to him that this is the trading section of the Commonwealth Bank, and distinguishes it from the other branches of the organization such as the Mortgage Bank Department, the Industrial Finance Department and the central bank itself. The Leader of the Opposition claimed that the old Commonwealth Bank Board did not seek competitive business, and that that was one reason why it was displaced by the Labour party when it was in office. The Prime Minister himself refuted that statement when he said that the duty of the Commonwealth Trading Bank would be to develop and expand its business. Does that sound like any curtailment of the Commonwealth Bank's activities or a desire to undermine or decrease its business ramifications? This Government has not stultified the Commonwealth Bank. On the contrary since this Government has been in office the Commonwealth Bank has made great progress in its development. Between the years 1949 and 1952, the number of branches of the Bank increased from 420 to 439. It is not the practice to go around, the country setting up branches of the bank willy-nilly, but the increase in the number of branches shows that there has been considerable advance in the development of the Commonwealth Bank's business. In 1949, the number of accounts in the bank totalled 257,982. In 1952, three years later, the number of accounts had increased to 372,870, an increase of almost 115,000. Obviously the Leader of the Opposition cannot substantiate his claim that the- bank's business has been sabotaged deliberately by the Government. Such a charge is too absurd for further discussion. The right honorable gentleman also claimed that the Commonwealth Bank would be robbed of its significance as a peoples' bank by the addition of the word "trading" to its title. What a meaningless catch-cry is the expression "the peoples' bank ". Just what is the phrase intended to convey ? What is its meaning ? Is it intended to imply that the people own or control the Commonwealth Bank ? If they do not, it is not the people's bank. If any private citizen believes that the Commonwealth Bank is the people's bank let him try as a customer to deviate the slightest bit from the bank's policy and see how far it will get him. John Citizen can enjoy only specified rights as a customer. He cannot claim any privileges or favours so the term " the people's bank " is meaningless and valueless. It is even worse than that, for when it is fully analysed, it is revealed as a cheap political hoax. So bereft of genuine arguments on banking was the Leader of the Opposition that he then spoke at some length about the people's assets. Like the honorable member for Wilmot (Mr. Duthie) he introduced such irrelevant matters as Amalgamated Wireless (Australasia) Limited, the Glen Davis shale oil plant, Australian National Airways Proprietary Limited and Trans-Australia Airlines. They were only side issues, introduced in an endeavour to distract attention from the real purpose of the right honorable gentleman's argument. Again a meaningless catch-cry was introduced with the intention of deceiving the electors into the belief that this Government had attacked the assets of the people. The Government is not selling out the people's assets.. It is selling out socialism which the people fear and have every justification for fearing. And then with tedious repetition as if to convince himself the Leader of the Opposition frequently punctuated his speech with the statement that bank nationalization was a dead issue. Honorable members have heard the same statement from his supporters. We can understand their fear of the nationalization argument. Although their attempts to nationalize the banks were defeated on legal grounds when their ease went before the Privy Council, everybody in Australia knows that if the Labour party again gets control of the treasury bench, it will endeavour to abolish the trading banks and establish a banking monopoly in Australia. I was amazed to hear the Leader of the Opposition so glibly claim that the bank nationalization issue was dead. Methinks he protested too much. In 'actual fact, the measures that are before the House will give ample protection to the banking system. The separation of the trading operations of the Commonwealth Bank from its other activities will give the public a fairer and more competitive, and therefore more efficient banking service. Under this Government's financial policy, the Australian banking system will be safe. Would it be safe under the direction of any of the three Labour aspirants for the position of Treasurer whom I have previously mentioned? They are the Leader of the Opposition himself, the honorable member for Melbourne (Mr. Calwell), and the honorable member for East Sydney (Mr. Ward). Would it be safe with them ? I think not. 524 K8B 0 0 CURTIN, Daniel Mr Curtin - What about the present Treasurer (Sir Arthur Fadden) ? 524 KE8 0 0 KEKWICK, Bruce Mr KEKWICK - I believe the honorable member for Watson (Mr. Curtin) would be as efficient a Treasurer as any of the three that I have mentioned, and all honorable members know how efficient he is. Would anybody outside the Opposition feel safe with any of those honorable members running the nation's finances ? Heaven forbid that that should happen or that any socialist should control the banking institutions of Australia. All of them naively believe, with the executive of the Australian Labour party which determines Labour policy and action, that the primary function of the Commonwealth Bank should be the printing of money as and when it is required. Everybody knows that a Labour government in office means the maximum use of unsecured credit. That would lead to greater use of the printing press and less security, for the people. That type of finance was freely used by the Labour Government when it was in office and it did much to destroy the real value of Australian money. To sum up - the opposition to the bill resolves itself into a contrast between schools of thought. There is the Australian Labour party which, if it traded under its true colours, would call itself the Australian socialist party because it believes in the complete socialization of banking, finance, industry, production, distribution and exchange. It cannot get away from it. Socialization is a plank of its platform and as soon as the Australian Labour party gets the opportunity, it will put its platform into execution. We, on this side of the House, espouse a system of free, fair and unfettered enterprise. While this Government remains in office Australia will be safe from the controls that were foisted upon it by members of the Opposition when they were in power. 524 JRF Fawkner 0 0 BOURKE, William Mr W M BOURKE .- The Commonwealth Bank Bill has nothing to do with the protection of the trading banks from all the dire happenings that the honorable member for Bass (Mr. Kekwick) suggested might befall them. The matters to which the honorable member referred in the greater part of his speech are covered, not by the bill before the House, but by the Banking Bill which will be considered later this week. The bill before us deals with aspects of the organization of the Commonwealth Bank. The main change which the measure is designed to effect in the organization of the Commonwealth Bank is to make its General Banking Division, which has previously operated as a department of the bank in active competition with the trading banks, a separate legal entity, to be known as the Commonwealth Trading Bank of Australia. The bill provides that the new legal entity, the Commonwealth Trading Bank, shall have its own general manager, who shall be appointed by the Governor-General upon the recommendation of the Commonwealth Bank Board. The government of the day will thereby have power of veto over the appointment. The bill also provides that the general manager shall manage the Commonwealth Trading Bank under the Governor of the bank, and that the Governor shall, in relation to the management of the Commonwealth Trading Bank, act in accordance with the policy of the Trading Bank and with any directions of the board. The Opposition is very concerned about this legislation. The separation proposed to be effected between the Commonwealth Trading Bank and the rest of the bank is, admittedly, only partial because the Governor of the bank will retain an overriding power in respect of the new bank. Although only a partial separation is proposed the Opposition is concerned about the possible results of such partial separation and also the fact that this partial separation of the trading activities from the other activities of the bank may very well be a step towards their complete and' absolute separation. Opposition members have been interested to listen to the speeches made by successive Government supporters who have openly expressed their criticism of die measure on the ground that it does not go far enough. The honorable member for Bass was the only exception to the rule, but he did not deal with the subject-matter of the bill nor did he make any reference to the separation of the trading activities of the bank from the rest of the bank. Other Government supporters, one after another, have said that the bill does not go far enough and that they want complete separation of the trading activities from the other activities of the bank. Because of that demand by Government supporters, Opposition members feel very concerned about the possible effect of this legislation upon a great national institution. Australians have every reason to be proud of the Commonwealth Bank, which is a unique institution that has no counterpart in any other country. It is imperative that we should jealously guard the bank and its rights and functions and see that it is not weakened in any way. Looking back over the history of the bank it is interesting to recall that when it was first established by the Fisher Government in 1911, it operated purely as a trading bank and had no central bank activities or functions whatsoever. In the course of time, because the Commonwealth used the facilities of the bank, it had the use of considerable deposits of money which enabled it to develop its trading activities very rapidly. It also developed an extensive savings bank business. According to the report- of the Royal Commission on Monetary and Banking Systems it was not until 1929 that the bank assumed the functions of a central bank. As the result of the depression the bank was forced to assume some of the functions of a central bank. It controlled the note issue, which at one time had been under the control of the Treasury; it became a clearing house for the trading banks which utilized it to clear balances as between themselves; it controlled the exchange rate ; and it discounted treasury bills for the Government. All in all, it rendered services and performed functions which were useful to the trading banks. It was, in reality, a banker's bank, lt existed largely for the benefit of the trading banks because, under the board that then controlled its destinies, it was not allowed to engage in active competition with them. Evidence given before the royal commission makes it quite clear that it was the deliberate and express policy of the board that the bank in its trading activities should not take customers away from the other banks. These functions of a central bank were exercised by the bank, but the vital central bank function of controlling the trading banks and regulating the amount of credit that they could release was not exercised by the bank at that stage. It had no control over the activities or functions of the trading banks, nor did it have power to regulate or restrict the flow of credit from the trading banks to the general community. During the depression it was realized that the then existing system was wrong and that it was necessary to establish a central bank to exercise control over the trading banks. It is interesting to recall that, in 1930, Mr. E. G. Theodore, who was then Treasurer in the Scullin Government, introduced a bill to establish a central reserve bank, independent of the rest of the Commonwealth Bank, under which the trading banks were required to lodge with the central reserve bank a proportion of their deposits. It is a matter of history that nothing came of the legislation. The bill was passed by the House of Representatives but it was killed by a hostile Senate. It has been estimated by competent observers' that if an enlightened and proper banking policy had been applied during the depression years with the knowledge and experience that we have since gained, up to 90 per cent, of the misery, suffering and hardship of the depression days would have been avoided. Contrary to the wishes of the government of the day, nothing was done to alleviate the dreadful effects of the depression. The public conscience was aroused by those experiences and the great uneasiness among the people about the operations of the banking system resulted in the appointment of the Royal Commission on Monetary and Banking Systems. The commission presented an interesting report to the Parliament in 1937. Nothing was done about the report until 1945 when the Parliament passed the Commonwealth Bank Act and the Banking Act which were introduced by the Chifley Government. When the history of that period is written, those two measures will constitute the greatest memorial to the memory of Mr. Chifley as one of the great treasurers who have served this country. There can be no doubt that they are among the most important measures that have been passed by this Parliament in recent years. Under them the Commonwealth Bank was set up in the form in which it exists to-day, that is, as a great central bank of a type that does not exist in any other country. For instance, the Bank of England and the Federal Reserve Bank in the United States of America, as central banks differ entirely from the Commonwealth Bank which, in addition to its central banking functions, controls the note issue and operates a General Banking Division, a Rural Credits Department, a Mortgage Bank Department and an Industrial Finance Department, as well as a large savings bank section. Members of the Opposition believe that the existence of all these departments add strength to the central bank activities; and .it is for that reason that we oppose this measure. The Commonwealth Bank is not only a central bank but it also has its own trading bank section which conducts Mr. W. M. Bourke. a substantial proportion of the general banking business of the community. At the 31st December last, the deposits of the private trading banks totalled £1,195,400,000 and deposits in the general banking division of the Commonwealth Bank amounted to £120,700,000. The Commonwealth Bank in its general banking division controlled approximately 10 per cent, of the general banking business of the community. That substantial proportion of the general banking business represents aditional resources of a type which the bank has at its disposal but which are not available to central banks in other countries; and to that degree the Commonwealth Bank is enabled to implement its policy more effectively as a central bank. It is enabled not only to issue directives relating to the amount of credit that should flow into the community and the direction in which that credit should flow but also, through its Trading Bank Division, to influence banking policy directly in relation to 10 per cent, of the banking business of the community. The bank's trading activities give it direct contact with the public and enable it to keep its finger on the public pulse. The Opposition believes that the continued existence of a central bank, quite untrammelled, is of vital importance to the future welfare of Australia. If the trading bank activities and the centra] bank activities are separated, the operations of the Commonwealth Bank as a central bank must be definitely weakened. Although this measure makes provision for only a partial separation, the fact that a considerable number of Government supporters have expressed disapproval of the bill in that respect and have urged that it should go further shows that the fears of the Opposition are well based and that we have every reason to fear that the trading bank activities shall not be completely separated from the other sections of the bank. Such a division would be a severe blow ,to the effectiveness and prestige of this unique and powerful central bank. I am a great admirer of the Commonwealth Bank. I shall strongly oppose any action that would tend to weaken it and shall support any proposal that would strengthen it. But there is one aspect of the operations of the Commonwealth Bank that causes me concern. The Parliament, which is composed of the elected representatives of the people, should be enabled to express its views more effectively in relation to the operations of the bank. Those operations should be placed more directly under the control of the Parliament. When one examines the ramifications of the Commonwealth Bank, one realizes that it controls enormous assets in its own right. The report of the bank for the financial year ended the 30th June last shows that the assets of all its departments amounted to £1,046,323,018 and that the assets of the savings bank amounted to £595,212,775, or a total of £1,641,535,793. The magnitude of those assets will be appreciated when it is remembered that in 1929 when the bank first began to function as a central bank, with a general banking division and a savings bank and also having control of the note issue, its total assets amounted to only £148,000,000. In addition to controlling those tremendous assets to-day, the Commonwealth Bank as a central bank exercises control over the operations of the private trading banks. It controls not only the volume but also the direction of credit that the trading banks are permitted to release. As a result of that quantitative and qualitative control of credit in addition to its vast activities in all its departments, any action that the Commonwealth Bank may take must have a. decisive effect upon the general standard of living and prosperity of our community. Employment levels, price levels, housing activities and all those other vital matters which concern each and every one of us so greatly are fundamentally affected by the manner in which the Commonwealth Bank uses its vast powers. Indeed, the bank possesses such powers that its influence could be of great benefit, or, on the other hand, if the control of the institution fell into the hands of incompetent or unwise people, those great powers could give rise to great evil. If the bank exercised its powers unwisely the whole economy of Australia could be brought to its knees within a short time. During the economic depression, the Commonwealth Bank, perhaps through a lack of knowledge, but certainly through an improper exercise of its powers, wrought great harm to the people of this country. Sir Robert Gibson, who was the chairman of the bank board at that time, opposed a proposal for a fiduciary issue, of a mere £18,000,000 required by the Government of the day in order to set in motion a public works programme to provide work for the tens of thousands of people who were unemployed. The Commonwealth Bank was a much less influential institution then than it is to-day. It controlled considerably less assets than to-day, yet it was able effectively to thwart the policy of the government. The board was able to dictate the policy of the Australian governments at that time. I refer particularly to the historic letter written by Sir Robert Gibson to the then Treasurer, Mr. E. G. Theodore on the 12th February, 1931, in which he stated very bluntly. - Subject to adequate and equitable reductions in all wages, salaries and allowances, pensions, social benefits of all kinds, interest and other factors which affect the cost of living, the Commonwealth Bank Board will actively co-operate with the trading banks and the Governments of Australia in sustaining industry and restoring employment. The chairman of the Commonwealth Bank Board was not responsible in any way to the people, yet he laid down conditions under which the bank would be prepared to assist the Australian governments to sustain industry and restore employment. He imposed those conditions upon this Parliament, which consisted of the elected representatives of the people. I am not directing those remarks in any critical sense against the Commonwealth Bank as it exists to-day. I am merely pointing out that the Commonwealth Bank controls such enormous assets, and exercises such tremendous power over every vital aspect of our financial and economic life, including the flow of credit and. currency in the community, that its powers, if they were improperly exercised, could produce serious effects. Bad decisions by the bank board could have alarming and even disastrous effects. Therefore, I believe that this Parliament should exercise a more direct control over the Commonwealth Bank than it does at the present time, not in the sense of laying down the policy to which the bank should give effect, but so that decisions of the board on such matters as the rate of the flow of credit, and on changes in advances policy, will be placed before the Parliament, together with the reasons for them. If that procedure were followed, the Parliament would have an opportunity to debate those matters and express its views upon them. The Parliament, which consists of the elected representatives of the people should be able to express its views about the vital operations of the Commonwealth Bank, and keep them under its scrutiny. The provisions of the Commonwealth Bank Act seem to be completely inadequate in this respect. Section 10 of the act provides that the Commonwealth Bank Board shall, from time' to time, inform the Government of the monetary and banking policy of the bank, and the banking policy of the Commonwealth Trading Bank. The board is under a statutory obligation to advise the Government from time to time of its policy, but the Parliament has no automatic right to debate such matters at regular intervals. The remainder of section 10 of the Commonwealth Bank Act provides a whole series of tedious and complicated steps to be followed in the event of a difference of opinion between the government of the day and the board. At the conclusion of that procedure, all the papers in connexion with the dispute are to be laid before the Parliament. At that stage, the Parliament has the opportunity to debate the matter, and express its views on it. However, such a matter would come before the Parliament only after a dispute had occurred between the government of the day and the bank board. I do not know of any occasion when that section of the act has been put into effect. If a government or the board desired to keep a matter from the Parliament, it would be easy to ensure that the difference of opinion did not go so far as to become an open dispute that would require all the facts to be placed before the Parliament. I believe that, in order that this position may be remedied and in order that the Parliament, as the custodian of the rights of the people, may be able to have under its direct scrutiny the operations of the Commonwealth Bank, this great institution should make a statement every six months setting out the policy which it has been pursuing, and giving the reasons for it. That statement should then be placed before the Parliament, so that we may express our views on the way in which the bank has been exercising its vast responsibilities. The two single factors which exercise most influence over the general economic welfare of the people of Australia are, first, the operations of our central bank in the manner I have described, and, secondly, the budget which .the Treasurer of the day presents to the Parliament each year. Under the budget proposals, taxation is imposed, revenue is raised, and provision is made for the expenditure of the proceeds. The budget, which is now an enormous affair, is debated very fully in this chamber. The Treasurer of the day expounds his financial policy, submits detailed Estimates, and proceeds to justify his policy. His proposals are fully discussed, and the Opposition is given every opportunity to criticize them . All the implications of the budget proposals are' examined. The Parliament has reappointed the Public Accounts Committee to scrutinize items of expenditure, so that honorable members may keep their eyes, on the ways in which the Government is expending its revenues. In my opinion, a similar procedure should be followed with the Commonwealth Bank, which possesses vast "powers which affect the economic and financial welfare of the people so greatly. If such a suggestion were given effect to, and if the operation of the bank were placed under the scrutiny of the Parliament in the manner I have advocated, the operations or influence of the bank would not be weakened or reduced in any way. I do not make that suggestion in any sense critical of the bank. The only feature of the Commonwealth Bank which is open to criticism is the way in which the board was able to dictate " to the responsible governments of Australia during the financial depression. That State of affairs has changed, since the bank board is now responsible to the government of the day, but I contend that responsibility to the government of the day is not enough. Automatic machinery should be established to give the Parliament itself the right and the opportunity to debate these matters, irrespective of the desires of the Government regarding them. In the brief period remaining at my disposal, I should like to suggest one direction in which the Commonwealth Bank could actually give further facilities to the people of Australia. 529 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! The honorable member's time has expired. 529 JWE La Trobe LP Minister for External Affairs 1 0 CASEY, Richard Mr CASEY '.- This is a moderate bill. It is a middle of the road measure which, I think, reflects the general temper and tone of the present Australian Government. The Government does not favour extremes, either of the left or the right, and I believe that, in most instances, moderate, long-sighted measures turn out to be more in the interests of the bulk of the Australian community than do measures that smack of extremism. I wish to direct my attention largely to some of the matters upon which the Leader of the Opposition (Dr. Evatt) relied in opposing this measure. First, quite early in his remarks, he referred to the Royal Commission on Monetary and Banking Systems of 1936. I may say that, as Commonwealth Treasurer at that time, I had some association with that commission. The right honorable gentleman made some play on the fact that Mr. Chifley, aa a member of the commission, had concurred in the unanimous decision that the continuance of the close association between the Commonwealth Bank and its General Banking Division should continue. That is quite true, but the Leader of the Opposition failed to mention the fact that Mr. Chifley subscribed also to the commission's unanimous recommendation that the Commonwealth Bank should be controlled by a board of directors - an opinion which he apparently changed some time later. I believe, therefore, that no great gain is to be made by pointing to one view held by Mr. Chifley unless one is to point also to another view which he held in 1936 but subsequently changed. The Leader of the Opposition said that a very close, intimate, organic association between the central bank and trading bank functions of the Commonwealth Bank was necessary in order to provide an additional piece of machinery or another weapon to enforce control of the volume of credit in the community. That, of course, is arguable. In the days of the royal commission, of which Mr. Chifley was a member, the device of obliging the private trading banks to maintain hundreds of millions of pounds in special deposits with the General Banking Division of the Commonwealth Bank had not emerged. That device, of course, is the most powerful means that any one could conceive of controlling the volume of credit in the community. The special account system has been in use, in varying degree, but always in very high degree, for the last six or seven years. However necessary it may have been 10 or 15 years ago for the central bank to have at its disposal the resources of the trading section of the Commonwealth Bank, .that necessity has long since passed. In other words, the small weapon of 10 or 15 years ago has yielded place to the very much more powerful weapon of compelling the private banks to establish special deposits with the Commonwealth ' Bank as a means of controlling the credit in the Australian community. Some play was also made by the Leader of the Opposition of the fact that the Commonwealth Bank had always conducted trading bank activities, and he sought to have us believe that, for some reason which he did not disclose, it was necessary in Australia, of all countries, to have trading bank activities associated with the central bank to enable the central bank properly to perform its functions. This claim seems to me to be rather curious and I submit that a survey of the. world position provides ample justification for raising one's eyebrows at such a proposition. There are many central banks throughout the world, but in only one of the free countries is a trading bank function intimately connected with the central bank. Great Britain, the United States of America, Canada, New Zealand, South Africa, Prance, Belgium and Denmark all have central banks, but those central banks have no trading bank functions. In only one country does the central bank engage also in trading bank activities, and that one country is Egypt. I wonder which is more likely to be right - the one single country which, although a respected nation, has never been to the forefront in the commercial, industrial or financial activities of the world, or the remainder of the great free countries which have central banks? I should like some one on either side of the chamber to explain to me any peculiar conditions in Australia that made it desirable for us to have an organic connexion between central bank and trading bank functions. I do not believe there is any convincing answer to that question. Another matter that the Leader of the Opposition pursued in some detail was_ his claim that the customers of the Commonwealth Bank - I think he estimated their number at about 300,000 - would, upon the establishment of the proposed Commonwealth Trading Bank, be prejudiced in their minds, and in their dealings with the Commonwealth Bank. The right honorable gentleman did not venture to say what disabilities would exist, and I must admit that I cannot think of any. Customers of the Commonwealth Bank will be able to use their present cheque books without altering the cheque forms in any way. They will not be obliged to write in the name " Commonwealth Trading Bank ". When the cheque books at present on issue are exhausted, customers will receive new books with the name " Commonwealth Trading Bank " inscribed in them. Clients of the Commonwealth Trading Bank will have to put up just as much security - no more and no less - for their advances as they are required to put up now. Cheques drawn on the Commonwealth Bank will be accepted by the Commonwealth Trading Bank. That is specifically provided for in proposed new section 22 (b) for which provision is made in clause 6 of the bill. Therefore, I cannot imagine any disabilities that customers of the Commonwealth Bank will suffer under the new regime. The argument advanced by the Leader of the Opposition in this connexion will not hold water. An assertion upon which the Leader of the Opposition laid some emphasis was that the Commonwealth Bank itself would suffer by the change. He said that the prestige and goodwill of " the trading bank would suffer because it was to be divorced in name from the Commonwealth Bank, and called the Commonwealth Trading Bank. We have had many instances in this country of banks changing their names and incorporating or absorbing other banks. I can cite several such examples from our recent history. I have taken some trouble to ascertain whether, when those changes were made, there was any noticeable . decline in business, or whether customers suffered any disabilities or the banks lost any deposits. In' no case could I find any evidence to show that disabilities have been suffered through a bank changing its name or being absorbed. The most recent example, of course, is the amalgamation of the Union Bank of Australia Limited and the Bank of Australasia, which, I understand, is still in progress. The bank that emerged as a result of that amalgamation, the Australian and New Zealand Bank Limited, has now been in existence for about a year and, in that time its business has grown and prospered. The bank has not lost customers or deposits. Indeed, the volume of business has expanded. The name of the new bank is quite different from those of its two component organizations, yet it has not suffered any disabilities. Indeed, it has grown in stature. Not very long ago the Commercial Banking Company of Sydney Proprietary Limited, absorbed the Bank of Victoria, and the National Bank absorbed the Queensland National Bank. I have yet to hear that any customers of the institutions that were absorbed had any complaints to make in spite of the fact that the component banks lost their identity. In neither instance is there any evidence that the customers have suffered from any disability. I believe that the contentions of the Leader of the Opposition in this respect do not hold water. Honorable members on this side of the House who had expected to hear a speech of some consequence delivered by the right honorable gentleman on this matter of national importance were disappointed. He did not advance any arguments to cause us to tremble. The Leader of the Opposition stated, that the nationalization of banking is a completely dead issue politically, legally and practically. In view of the right honorable gentleman's intimate association with the attempts that have been made by the Labour party in recent years to nationalise banking in ' this country, combined with his legal experience and knowledge, I am prepared to accept his dogmatic statement, as far as it goes. But, like many statements that have been made in this House, it did not cover the whole of the matter at issue. It was a half truth. It may well be, for all that any man can say, that the nationalization of banking is a dead issue from the legal and constitutional point of view - the unspoken qualification was " by constitutional means " ; it may well be that, by legal and constitutional means, banking in Australia to-day could not be nationalized; but the nationalization of banking by other than constitutional means is far from dead. I refer to the means that were adopted by the gentlemen of the Opposition when they were in office a few years ago. Their hostility to this measure is due to the fact that its provisions will make a little more difficult in the future the nationalization of banking by other than constitutional means. Section 48 of the Banking Act 1945 provides - (1.) Except with the consent in writing of the Treasurer, a bank shall not conduct any banking business for a State or for any authority of a State, including a local governing authority. That provision applied to trading banks. The Leader of the Opposition will remember very well that the validity of that section was challenged before the High Court of Australia by the Melbourne City Council, and the council won. The Commonwealth then appealed to the Privy Council. Although the right honorable gentleman spent many hundreds of hours arguing before the High Court, and subsequently before the Privy Council, the provision was declared invalid. The section of the 1945 legislation that I have cited gives us a clue to a great deal, because it was one of the numerous attempts that were made by the former Labour Government to nationalize banking, not by constitutional means, but - to use a homely term - by squeeze. In other words, it was something that was done behind the backs of the Australian public, who are notoriously antagonistic to the nationalization of banking. As that Government could not nationalize banking by constitutional means, it went behind the backs of the Australian public and tried to squeeze the trading banks out of existence by administrative means. The first of those means was the provision of section 48 of the 1945 act, which was declared unconstitutional. It was probably on that basis that the Leader of the Opposition stated that there could not be nationalization of the banks by constitutional methods. When Mr. Chifley was denied that weapon, he went for straight-out nationalization of banking, but failed. At that time the Commonwealth Treasury issued a list of 126 local governing bodies which were forbidden to transact business with the trading banks. I shall cite another illustration of the lengths to which Labour was prepared to go. The New South Wales Labour caucus resolved that all State instrumentalities should bank with the Rural Bank which, of course, is a government bank. That resolution was not implemented completely, due to the resistance of some State instrumentalities which had traditionally banked with the trading banks and wanted to continue to do so. Then Mr. Olive Evatt, who, I believe, is a blood relative of the Leader of the Opposition, ordered the Housing Commission of New South Wales, when he was Chief Secretary of New South Wales, to transfer its banking business_ from the Bank of New South Wales, a leading trading bank, to the Rural Bank. That was done. Then, with the appetite growing within him, he proposed to transfer the banking accounts of the 'Chief Secretary's Department and of every other government body with which he was connected, to the Rural Bank. It is common knowledge that, at that stage, the then Premier of New South Wales, Mr. McGirr, had a majority of only one in the Labour caucus, to kill the proposal although, he knew how unpopular it would be with the general public. Let us assume the dreadful prospect, at some time in the future, of a Labour government again gaining office in the federal sphere. Such a government, working in cahoots with the State Labour governments, could transfer the banking accounts of all government instrumentalities to a government bank. One could legitimately imagine that those governments would not let any contracts for public works unless the contractor undertook to do all his banking business with one or other of the government-owned banks. These are not fantasies, but are well within the bounds of possibility, should that black day come in Australia. Therefore, we can legitimately discount the statement of the Leader of the Opposition that the nationalization of banking is a dead letter legally, politically, and practically. Maybe it is, but nationalization by squeeze is a possibility that the Australian public should be warned to keep in the forefront of their minds. I believe that a good deal of the opposition to this bill has been caused by the fact that its provisions will make centralized government control of banking more difficult in the future. It is not an extreme measure. Many people believe that it does not go far enough, and that the Government should have gone a good deal further in this respect. But we are a middle-of-the-road "government, and this is a middle-of-the-road measure. I remind honorable members on this side of the House, though it should not be necessary to do so for the benefit of honorable gentlemen on the left of Mr. Speaker, that nationalization is still a plank in the platform of .the Australian Labour party. There has been a little slurring over of this fact recently, notably at the Adelaide conference of the Labour party, but nationalization is undoubtedly the most important single plank in that platform. The South Australian branch of the Australian Labour party submitted the following motion at the Adelaide conference in January: - That the Australian Labour party should warn private enterprise that it will on return to office pursue ite socialist .policy and resume control of those means of production, distribution and exchange sabotaged by the Menzies Government. That motion was not debated because the conference agenda committee ruled that it was already covered by the party's socialist objective. Honorable members opposite should realize that they cannot conceal a fact on the one hand whilst exposing it to view on the other hand. No serious individual will deny that the platform of the Labour party still contains the socialization plank, which is just as much to the forefront and just as important as it ever was. The honorable member for Melbourne recently boasted that - The Menzies Government can make al] the agreements it likes, but we shall tear every one of them up when we assume office. The people of Australia should note these facts because, in these days, the habit of honorable members on the south side of the House is to damp down their socialization objectives. They wrap up their policy in a peculiar form of words which tends to lull the people into an unsuspicious state of mind, but the truth is that their socialization objective is still as important in their programme as it was when they were in office a few years ago. The public should be warned. Labour's history when in power does not engender confidence that any Labour government in the future will fail .to use its power to further its published objective. Nationalization by squeezing the trading banks out of existence is one of the ways in which the Labour party, having already had a great deal of practice at that sort of manoeuvre, will endeavour to go behind the backs of the people, if it ever regains power, notwithstanding the frequently expressed dislike of the people for nationalization in any important form, particularly in relation to banking. As my time is necessarily limited, I shall not detain the House-- 532 6V4 0 0 DALY, Fred Mr Daly - Hear, hear! 532 JWE 0 0 CASEY, Richard Mr CASEY - I sympathize with the honorable member. No doubt he is anxious to prevent these facts from being broadcast to the people. This is a simple bill. It has not evoked any passionate debate, but I believe that it is generally acclaimed as a good measure. It will not take away from the central banking functions of the Commonwealth Bank any power that is of particular importance to the bank in its main task of controlling the economy of the country. However, it will put the trading hank functions of the Commonwealth Bank on a parity with those of the private banks in respect of special deposits, interest rates and all other matters of consequence. Now we shall have fair competition between the Commonwealth Trading Bank of Australia and the old established trading banks. None of us can ask for anything better than fair competition. Therefore, I join with my colleagues in commending the measure to the House. 533 JTF Perth 0 0 BURKE, Thomas Mr TOM BURKE .- The Minister for External Affairs (Mr. Casey) has laboriously endeavoured to justify the bill. The most that he has been able to say on behalf of the Government, however, is that this is a middleoftheroad government and that the bill is a middle-of-the-road piece of legislation. In fact, the whole purpose of the Government is obscure to the Parliament, is suspect by the Opposition, and certainly is suspect by the people of Australia. This is a bill for which the Government has no mandate and for which there is no warrant. Any consequences that may flow from it can be only detrimental to the economy of Australia and damaging ,to the power of the nation's great central bank. The Minister said that a number of new features in the banking legislation of this country had removed the need for a trading bank section in the Commonwealth Bank of Australia. That bald statement is far removed from the truth. Modern developments in banking practice, which involve the increasing use of bank credit in times of great inflationary crises, have rendered more important than ever before the operations of a trading bank section of the Commonwealth Bank. The right honorable gentleman said that no other country in the Western world, with the exception of Egypt, had a trading bank section in its central bank. I shall discuss the history and development of central banking systems later. For the moment, I shall content myself by pointing out- to the Minister and to the House that, in highly industrialized countries in which the central banks do not include a. trading bank section, it has been found necessary invariably in times of crisis to establish such organizations. Such action was necessary in Great Britain where, during the great economic depression, two giant corporations financed by the Bank of England had to be established in order to help to rationalize British industry, reduce unemployment, and strengthen the economy of the nation. Similarly, a vast corporation had to be established in the United States of America during the depression. That country has since developed its Federal Deposit Insurance Corporation. During the depression, it was forced by circumstances to establish the giant Reconstruction Finance Corporation. This organization had to be brought into being because the United States of America had no counterpart of the trading bank section of the Commonwealth Bank of Australia in its federal reserve system. The Reconstruction Finance Corporation bolstered up American banking systems throughout the trying years of the depression, held together the basis of the American economy in that time of stress, and emerged from the depression as the largest holder of banking stock in the whole of the industrial world. That happened in the true home of private enterprise - the very citadel of the competitive banking, if such a thing as competitive banking is to be found anywhere in the world. Thus, the facts of recent history demonstrate clearly that, where a central banking system does not include a trading bank section, some such organization must be provided in crises in order to meet the needs that arise at such times. The need for a trading bank section in a central bank has not been diminished by the special deposit system, which I shall discuss later. In fact, the need has been increased considerably by recent developments. The Minister for External Affairs also discussed the subject of nationalization by unconstitutional means. He uttered the same old gibes and paltry sneers thai we have become accustomed to hear from the erudite Minister and his colleagues. The right honorable gentleman referred in particular to section 48 of the Banking Act 1945, which 'required all State governments and local government authorities to conduct their banking business with the Commonwealth Bank of Australia. Let us consider the origin of that section. During the course of this and other debates upon banking, mention has been made of the Royal Commission on Monetary and Banking Systems, and also of the very great progress that is said to have been made by the Commonwealth . Bank under a system of- management by a board. The royal commission submitted to individuals and organizations throughout Australia connected with banking a list of questions that were required to be answered and which, in fact, were answered. One of the questions was, " Should State governments and local governing authorities bank with the Commonwealth Bank of Australia ? " That question was submitted to the Commonwealth Bank Board of that day, which had been established by a government in which some of the members of the present Government held prominent positions. The board's reply was, " Yes, it is vital for our central banking functions that we should hold the accounts of State governments, of local governing authorities, and of statutory bodies as well". That was the reply given by men who, we have been told, were representative of all sections of the Australian people and were competent to control the bank during the period of its greatest development. Similar men have been appointed by this Government to control the Commonwealth Bank to-day. The Commonwealth Bank Board of that day, appointed by a nonLabour government, said, " It is vital for our central banking functions that we should hold the accounts of State governments and local governing authorities". That was the answer to the question which the board was required to answer, but it added gratuitously that it should hold the accounts of statutory bodies as well. The honorable member for Warringah (Mr. Bland) knows that the holding of those accounts would give a much broader basis for control by the central bank and, in addition, that periodic payments by such authorities permit of an expansion and make possible' a contraction that could disrupt the whole of the Australian economy. A Commonwealth Bank Board, appointed by a non-Labour government and similar to the board which has been established by this Government, stated that it was vital for the central banking functions of the Commonwealth Bank that the bank should hold the accounts of public authorities. Then Sir Leslie McConnan, the general manager of the National Bank of Australia, said that if legislation to that effect were passed, it would be challenged in the High Court. The Minister for External Affairs (Mr. Casey) said to-day that section 48 of the Banking Act 1945 was a squeeze, and a means by which non-constitutional measures were sought to be used to force the private trading banks out of business, but I point out that the action taken under section 48 was in line with a recommendation by a board established by a non-Labour government, and that a similar board has been established by the Government of which he is a member. The right honorable gentleman said also that this legislation would make it more difficult to nationalize the banking system of Australia. It will not do so. If this scheme be pushed on actively, it will be easier to nationalize the banks. A new corporation is to be established, under the control of a general manager. It will be free from all the liabilities and responsibilities of a central banking organization. A government could, if it so desired, push the new trading bank organization strongly and support it with all the forces at its command. That would make easier the nationalization of the private trading banks. In the circumstances, we were mystified as to why the Government introduced this measure until we realized that heavy and continuous pressure had been exerted upon it by its supporters inside and outside the Parliament. The Government had to make concessions to the great powers to which it owes its existence, and to placate the loud voices of the Government back-benchers in the Parliament. So it introduced this legislation, which will do no good to the Australian banking system, will not safeguard the Australian economy, and will weaken the present central banking structure. 1 turn from that matter to a consideration of the banking system in Australia. If time permits, I shall also discuss banking systems throughout the world. Let me deal for a few minutes with the history of the Commonwealth Bank. That organization began as a trading bank, and during the early years of its existence it grew tremendously. It carried a great financial burden that other banks were unable to carry, and it played a tremendous part in the life of this country in war and peace. The present Minister for Health claims that he, as Treasurer of a non-Labour government, established the Commonwealth Bank as a central bank, but that is not correct. He circumscribed this operation. It is true in fact and in theory that, from the time the Bruce-Page Government amended the Commonwealth Bank Act, the operations of the Commonwealth Bank were circumscribed. Its power to develop was not used, and its ability to compete with private banks was not taken advantage of. Consequently, the bank did not develop to the degree to which it could have done during those years. Then came the depression, when the Commonwealth Bank ought to have been the backstop of Australia and a guarantee of the stability of our economy, but it was not. The men who were in control of the bank at that time were not trained in banking, were not versed in economics, and were not directly responsible to the Australian people. The Commonwealth Bank Board, instead of permitting the bank to provide machinery to enable the man-power and materials of Australia to be utilized to the best advantage, " stood over " governments of the day elected by the people, deepened the depth of the depression, made more rigorous the sufferings of the people, and made more difficult the economic recovery that was achieved slowly and laboriously. To support my contention, I have only to quote the words of. Mr. J. M. Keynes, the great liberal economist. I do' not use the word " liberal " in the sense to which it is applied to the reactionary Liberal party in this country. In a letter to the Prime Minister of the United Kingdom, he said that the nation's problems could only be overcome by expanding bank credit as much as prudence and wisdom would allow. He gave the same advice to the President of the United States of America. He told the President that although he had primed the pump generously he had not primed it sufficiently. He said that bank credit should be expanded to the limit of man-power and materials required to get the economy working once more. It was only after that advice had been given that a central bank was established in the United States of America. Central banking is a comparatively recent development in financial affairs. After "World War I., under the leadership of Montagu Norman, central banks were established in most of the modern industrial countries of the world. They were completely removed from government control. It was a basic requirement of Montagu Norman that Governments should have no influence over central banking systems. As a result we sank into the depths of the depression and suffered the effects of the stupid financial and economic policies which were pursued in those difficult years in this country and throughout the world. Those policies have now been completely reversed. It is now accepted throughout the world that central banks should be owned or controlled by governments. The International Bank for Reconstruction and Development was established consequent upon the reversal of the policy that was followed after World War I. After World War I. the Bank for International Settlement would not deal with reserve banks or government banks. After World War II. began the International Monetary Fund refused to deal with banks unless they were government agencies or operated by governments. There was a complete reversal of policy in relation to the ownership and control of the central banks. The main purpose of the central bank is to manage the ordinary currency of a country. Its real test occurs in times of inflation or recession. Provided that government policy is wise there is little difficulty in handling a period of inflation. It is in times of depression that the real test is applied to the central banking system. What are the weapons with which the central bank can achieve real results in a depression? Professor Cairncross, in his Introduction to Economics, analyses the position on the basis of the British financial system. The Bank of England has been established far longer and is more powerful than the Commonwealth Bank. Its advice is accepted far more readily than the advice of the central bank is accepted in this country. In addition, open market operations in Britain are a real source of power to the central bank. But even after allowing for all the powers in the hands of a long-established central bank, Professor Cairncross concluded that it is important to realize how narrow is the basis of the power of the Bank of England to direct economic policy. In this country the central bank has no such long tradition as the Bank of England and has not such great power. Australia has no history of ready compliance by trading banks with central bank directives. In the United Kingdom to-day banks readily accept the direction of the central bank and the British Treasury. In this country they do not readily accept advice from comparable authorities. In Australia the money market is not as responsive to openmarket operations as it is in the United Kingdom. Consequently there is only one way in which the Commonwealth Bank, as a central bank, can operate satisfactorily in a time of recession or depression. It can operate only through a branch of the bank itself. In a time of depression it could not direct private banks to lend. It would be impossible to enforce such a direction. Having regard to that undeniable fact what is our remedy if depression should come once again? It is clear that action must be taken by a trading bank division of the Commonwealth Bank, which, using its accumulated reserves and combined funds, could make credit available if the private banks refused it. If the trading banks again panic, a powerful organization, supported by the Commonwealth of- Australia, responsible to the National Parliament, must step into the breach. What has the Government done? Has it extended the means by which the Commonwealth Bank could take the action that I have mentioned? Has it given more power to the trading section of the Commonwealth Bank? Has it made the reserves of the bank more mobile for the purpose of dealing with a depression? It has not done any of those things. It has removed the trading bank section from its proper place as part of the complete banking mechanism of the Commonwealth Bank. In time the Government could push this bank on to greater heights so that in ten or twenty years it would be the most powerful trading bank in Australia. But in the last two or three years the Government has weakened our capacity to counter depression because it has reduced the power of the Commonwealth Bank to handle a recession or mitigate the affects of a depression. This Government has failed in every respect. It has abrogated its promises to the people. It has made concessions to persons whom it represents. That fact should damn it entirely in the eyes of the Australian people. Now, in a time of tightening employment, when people look apprehensively to the future, the Government is continuing its policy of halting public works. This discredited Government has now introduced a measure which will make our job more difficult in the- event of a depression because the powers of the Commonwealth Bank will have been reduced. Sitting suspended from 6 to 8 p.m. 536 F4T McPherson CP 0 0 FADDEN, Arthur William Sir ARTHUR FADDEN . - As far as I can gather from the debate up to this point, the Opposition's case against the measure rests on three points. They are: (1) that the proposals contained in the bill are contrary to the recommendations of the Royal Commission on Monetary and Banking Systems, and will weaken the central bank; (2) that the separate incorporation of the General Banking Division of the Commonwealth Bank as the Commonwealth Trading Bank of Australia will destroy the bank's goodwill, with .consequent injury to its general trading activities, and will benefit the private trading banks; and (3) that the Government has no mandate from the people for the separate incorporation of the Commonwealth Trading Bank. It is hard to believe that those arguments are advanced with any degree of conviction or sincerity. At the best, they reveal a confused state of thinking. Significantly, the Opposition has failed to address itself to the central issue, namely, whether it is right that weaknesses in the present law - a law enacted under a Labour administration - which leave room for an unfair attack on our competitive banking system, should be remedied. That basic central issue has been totally ignored by honorable members opposite. The arguments that the Leader of the Opposition (Dr. Evatt) has tried to erect on the findings of the Royal Commission on Monetary and Banking Systems are curious in the extreme. The proposals in the bill do not conflict with the commission's recommendations, as I shall prove conclusively. What the royal commission said was, that under Australian conditions it was proper for the central bank to have control over ordinary trading functions as well as savings bank functions. That comment was made because in other parts of the world it is unusual for the central bank to engage in such activities. The actual words of the r ya commission that were quoted by the Leader of the Opposition were - 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. The Government fully agrees with that view, and the proposals contained in the bill are specifically designed to preserve the relationship between the central bank and the Commonwealth Bank's present trading activities in matters of policy. The bill is specially designed to face the necessity for that purpose. As the Prime Minister (Mr. Menzies) said in his second-reading speech, we believe that the central bank should have a trading bank instrument (a) so that it can have direct contact with modern trends in finance and business and be able to keep abreast of changing economic conditions; (fc) so that it can give a lead, by its own example, to the banking system; and (c) so that, if necessary, it can direct resources into investments that are relatively unattractive from a purely commercial banking viewpoint, but which must be made in the national interest. Accordingly, the bill provides that the Commonwealth Trading Bank will be managed by a general manager who will be under the governor of the bank, and will be subject to policy directions by the Commonwealth Bank Board. By this means the central bank will continue to control the policy of the Commonwealth Trading Bank. Where, then, are the proposals in conflict with the findings of the Royal Commission on Monetary and Banking Systems? The weakness of the Opposition's case is thus revealed. It is not astonishing that, in a desperate attempt to justify its position, the Opposition has put an entirely wrong construction on the views of the royal commission. It is also significant that the Opposition has tried, but with little effect, to develop an argument by reference to the situation as it existed as far back as 1936. Much water has flowed under the bridge since then, and, in particular, I direct attention to the fact that the bank nationalization issue had not reared its ugly head. The Opposition claims that the proposed changes in relation to the general banking business of the Commonwealth Bank will destroy the bank's goodwill and will lead to a weakening of its general banking activities. The main basis of this argument apparently centres on a mere change of name from the " General Banking Division " to the " Commonwealth Trading Bank of Australia " which, by some mysterious process, we are asked to believe, and the people are asked to believe, will, in itself, result in a loss of confidence. Does anybody claim that the separate incorporation of the Commonwealth Savings Bank on the 9th June, 1928, produced the gloomy results that the Opposition claims' would follow the proposed change? The actual figures in this respect tell their own story. On the 30th June, 1927, the savings bank section of the Commonwealth Bank had deposits totalling £45,900,000. On the 30th June, 1928, which was after the separate incorporation of the Commonwealth Savings Bank, the deposits had risen to £47,600,000. The deposits of the savings bank had further risen to £50,100,000 by the 30th June, 1929. Therefore, over the three years from 1927 to 1929, which covered a period before and after the incorporation of the Commonwealth Savings Bank as a separate entity, deposits not only rose to the extent that I have indicated, but, in proportion to the total savings bank deposits in Australia also they showed an improvement. It is obvious from those figures that the savings bank business was not adversely affected by its separate incorporation, and time will show that the trading section of the Commonwealth Bank will not be detrimentally affected as the result of having been made a separate entity as provided by this measure. We shall take a more recent -example of a change in the name of a bank, and its results. In September, 1951, the Bank of Australasia and the Union Bank of Australia amalgamated, the name of the new institution being the Australia and New Zealand Bank. In September, 1951, the combined deposits of the Bank of Australasia and the Union Bank of Australia totalled £208,000,000. In October, 1951, the deposits of the new bank, the Australia, and New Zealand Bank, totalled £212,000,000, and in the following month they rose to £213,000,000' whilst by December, 1951, they had risen to no less than & total of £225,000,000. The incorporation of the new bank obviously did not lead to any loss of business, nor did it affect the goodwill of the banks concerned. The Leader of the Opposition has referred to a " smoke-screen ". It seems that he is the person who is guilty of throwing up a smoke-screen by his insidious suggestion that the public should not have confidence in the new Commonwealth Trading Bank. Apparently the Leader of the Opposition has become partial to such smoke-screen tactics in conducting his political campaigns. The line he is taking on this present occasion is typical of his recent efforts. Having failed to keep his finger on the pulse of the true economic life of Australia, he now fills the air with wailings to the effect that the economy of the country is falling to pieces, despite all the obvious indicators of the Government's mastery of the former inflationary condition. He attempts to set up a smoke-screen and to play upon the fears of the public. I suggest that if he is not careful he will be known henceforth as " the arch destroyer of public confidence ". His colleague, the honorable member for Melbourne (Mr. Calwell), used his best endeavours to undermine the savings of the people of Australia when he recommended that they should spend instead of save at a time when the Government was making strenuous efforts to deal with the inflationary position which it had inherited from a government of which he was a member. The bill before the House contains a simple provision which will test the sincerity of the .Opposition. I refer to proposed new section 22b., which provides that " the Commonwealth shall be responsible for the payment of all moneys due by the Trading Bank ... ". In other words, the Commonwealth Trading Bank is to be guaranteed by the resources of the Commonwealth of Australia. What greater measure of security could be given? The bill also provides that it shall be the duty of the trading bank to develop and expand its business. -That provision is scarcely consistent with the contention of honorable members opposite that the purpose of the legislation is to sabotage the trading activities of the Commonwealth Bank. On the contrary, the bank will be under a statutory obligation to expand and develop. It has been suggested that the resources of the Commonwealth Trading Bank will be weakened by the enactment of this legislation. That is outright misrepresentation. The bill specifically provides that all the resources of the present General Banking Division, including its capital and reserves, are to be taken over by the Commonwealth Trading Bank. How, then, will the ordinary trading functions of the bank be weakened? During this debate the Opposition has produced nothing more than vague generalities which do not stand up to examination. The truth is that the Government has been unequivocal in its policy of expanding and developing the trading functions of the bank. In the 1951 legislation we specifically provided for substantial increases of the capital of the various trading departments of the bank. Moreover, since we assumed office in 1949, there has been an increase of no less than 50 per cent, in the deposits of the General Banking Division, whilst the number of customers of the division has increased in very much the same proportion. So much for the contention that the Government is bent on weakening the activities of the Commonwealth Trading Bank. The truth is the exact reverse, as the figures which I have cited clearly demonstrate. I come now to the question whether this Government has received a mandate from the people of Australia. To assert that it has not a mandate in connexion with banking is absurd. The subject of banking was before the people at both the last and the previous general election. In 1949 it was a definite issue which put the then government into the cold shade of opposition. In 1951, the Australian Labour party received the shock of its life when a double dissolution was granted and it was obliged to face the .people again on the issue of banking. The people of Australia have cause to remember that, in 1946, the Chifley Government was silent about its intentions in regard to banking and banking policy. At that time it requested, and unfortunately received, a blank cheque which it proceeded to fill in with socialistic red ink. A few months after its return to office it set out to nationalize the banking system of Australia, which has always been a plank in its platform. The people of Australia look to the present Government to safeguard their banking system and to provide them with a competitive system. The legislation now before the House is designed for that purpose. If the Government parties are able to prevent it, never again will the people be subjected to an attempt to socialize their banking system. It is all very well for the Leader of the Opposition to try to camouflage the position. During this debate he was at pains to pretend that his party has no intention to nationalize the banks. The right honorable gentleman said that the law is against such a course and that, consequently, the banks could not be nationalized, even if the Australian Labour party desired to do so. That was the effect of the assurance he endeavoured to convey to the people on this very important matter. ' But let us look at a little history. We know very well that there are other ways of killing a cat than by choking it. Let us examine the policy of the Australian Labour party. Honorable members opposite have been discreetly quiet in connexion with this matter, but the basic policy of their party is the same to-day as it was in 1922, when Jock Garden enjoyed sufficient support to enable him to write into the constitution of the party the policy of socialization of the means of production, distribution and exchange. Every candidate for election to the Australian Labour Parliamentary party has, perforce, to sign a pledge, in the course of which he vows, " I also pledge myself to actively support and advocate at all times the party's objective - the socialization of industry, production, distribution and "exchange ". The platform of the party, as amended by resolution, of a federal conference held at "Canberra in 1948, provides for the nationalization of banking, credit, insurance and monopolies. Members of the party either honour that pledge as honest men, or they do not do so. If they do not, they do not remain in the party for very long. The people of Australia should not be misled by the apparent repentance of the Leader of the Opposition. This very important bill has been introduced for the specific purpose of saving and protecting the competitive banking system of the country from the onslaught of socialization. There has been a good deal of twisting and turning with regard to the plank of the Australian Labour party platform to which I have just referred. Honorable members will recollect that the party endeavoured to find a solution of the banking problems in what they were happy to call the " Blackburn declaration ". 539 JSW 0 0 BRYSON, William Mr Bryson - I rise to a point of order. Has the platform of the Australian Labour party anything to do with the bill before the House, Mr. Speaker? We are debating a bill dealing with the Commonwealth Bank, not the platform of a political party. 539 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! I have listened to most of the debate since it began, and at the very beginning a case was put up to show that nationalization could not take place. If the right honorable gentleman has any comment which he wishes to advance to prove that it can take place, then I believe he is in order. 540 F4T 0 0 FADDEN, Arthur William Sir ARTHUR FADDEN - I contend that I have adduced the most convincing evidence to prove my case. I have shown that every member of the Labour party has pledged his word to endeavour to bring about a condition of socialization in Australia, and I have linked that pledge with the attempt to nationalize our banking system. The Leader of the Opposition, in his speech on this measure, tried to hide the basic principles of the Labour party. He would have us believe that there had been a change of front in the party, and that the banks and industries of Australia have nothing to fear from the Labour party by way of nationalization. However, we are all well aware that socialization can be brought about by strangulation. The trading banks have a liability to contribute to the special accounts held in the Commonwealth Bank, and if all those liabilities had to be honoured at once, a socialist government could destroy or put any of the trading banks out of business. No trading bank in Australia could continue to exist if the Government of the day decided to force it to discbarge its liabilities. If this Government has done nothing else it has certainly removed that instrument of socialization, to the great advantage of our competitive banking system. "We know that the Labour party is endeavouring to avoid a public declaration of its policy on socialization. Despite the Blackburn declaration, the Labour party endeavoured to nationalize banking, and it was only by a verdict of the highest court in the British Empire that the Labour Government was prevented from nationalizing the banks. If the previous Labour Government had got control, by way of nationalization, of the banking system, it would have had control of everything that the people of Australia owned. Surely no discerning Australian will be deceived about that. In his time the Leader of the Opposition has advanced certain naked and unashamed socialistic doctrines; but recently the Labour party has covered the nakedness of its principles with a fig leaf, and further camouflaged them by a certain preamble to its platform written by the honorable member for Fremantle (Mr. Beazley). The Labour party has no more chance of running away from its socialistic principles than a dog has of running away from a tin can tied to its tail. If socialization of everything is not the objective of" the Labour party, let some member of the party stand up here and make an unequivocal declaration to that effect. In conclusion may I say that, stripped of all their unconvincing generalities and vague innuendoes, the Opposition's arguments have now been shown in their true light. They will fool no one. The Opposition has remained strangely silent on the basic question at issue. Are honorable members opposite prepared to say that a way should be left open to subject the private trading banks to unfair and underhand attacks without the sanction of this Parliament? Are they prepared to say that .the ordinary trading activities of the Commonwealth Bank should be exempted from the central banking control which has to be observed by all other trading banks as a part of our competitive banking system? Unless honorable members opposite are prepared to answer those questions in the affirmative - and we all know that at least in public they are not - then their objections to the bill now before the House must fall to the ground and dissipate like ice cream in the sun. If our banking system is to be preserved on the basis of fair competition - and there is no doubt where the Australian people stand on this subject - then no logical objection can be raised to the setting up of a new legal entity which will carry on the ordinary trading functions of the Commonwealth Bank and which will, by the force of law, be required to observe the controls im- " posed by the central bank on the other trading banks. To argue otherwise is tantamount to saying that we should not have a competitive banking system. Is the Labour party in favour of a competitive banking system? To all fair thinking people the answer is perfectly clear. Despite what the Opposition may say about its interpretation of public opinion, the people are very concerned about our banking system. Whenever a banking issue has been brought before the people of Australia, the Labour party has suffered defeat in no uncertain way. Until the Opposition has the courage to declare one way or another whether it is in favour of socialization, the people of Australia cannot afford to trust the party. This Government is determined to preserve the competitive trading bank and free enterprise system in Australia. 541 BV8 Melbourne 0 0 CALWELL, Arthur Mr CALWELL .- The House and the people have jut listened to a speech by the most unpopular man in Australia. I did not apply that description to the Treasurer (Sir Arthur Fadden) ; he describes himself in that way. The only complaint that I have about his description is that it i3 a gross understatement. The Treasurer was not allowed to introduce this bill. Since federation every other bill that has dealt with banking has been introduced into this Parliament by the Treasurer of the day. The present Treasurer is, in cricket parlance, the tenth man in. He is a tail-ender who has just made the team. Even so, he could not last his time out. He could not occupy the half -hour allotted to him in this debate because he could not find sufficient arguments in favour of what the Government has done. The Prime Minister (Mr. Menzies) had to introduce this bill, but not because he is any more popular than the Treasurer. In a recent man-to-man talk, he said that he knew that he and his Government were about as popular as a wet day during a cricket match. This measure is another attempt on the part of the tories of our time to rivet more shackles on the Commonwealth Bank - the people's bank. The Government says that it believes in fair competition. I did the Prime Minister the honour of reading every word of his second-reading speech, and I found that he spoke about the Government being deeply committed to the principle of fair competition in the banking system, and that he composed a symphony around that expression. He tried to convince himself, and to mesmerize his followers into believing, that the tories of to-day are like the tories of yesterday. They have always wanted the Commonwealth Bank to be in active competition with the private trading banks. They cannot falsify history. In 1911, the Fisher bill was opposed by Sir Joseph Cook and Dr. Carty Salmon. If the supporters of the Government want to find a criticism of those tories, let them read the speeches of William Morris Hughes made while he was still a supporter of the Labour party, and was in opposition to those who did not want a Commonwealth Bank of any sort introduced into this country. Nobody will be fooled by the protestations of the Government that this measure is really a bill to strengthen the .Commonwealth Bank and to ensure fair competition between the private trading banks and the Commonwealth Bank. From the time of the formation of the Commonwealth Bank in 1911 until 1945, by agreement with the heads of the private trading banks, the Commonwealth Bank was never allowed to compete actively against the private trading banks in Australia. Sir Denison Miller did not permit the Commonwealth Bank to compete actively with them. But the Labour party in 1945 wrote into the Commonwealth Bank Act three provisions. The first was that the Treasurer of the day, in the final analysis, must be the authority to determine financial policy. The second was that the Commonwealth Bank must pursue a financial policy aimed at full employment in Australia. The third was that the Commonwealth Bank must actively compete with the private trading banks. Honorable members now on the Government side did not like those provisions then any more than they like them now. Already they have mauled the first provision regarding the authority of the Treasurer. They would like to" strike out the provision for full employment. The Premier of South Australia, who is a Liberal, said recently that he stood for a high level of employment, which is not full employment, and that is the policy of the Liberal party. On the eve of the Senate election, which the Government is going to lose anyhow, it would not dare to try to strike that provision from the law. Neither would it dare to state that the private trading banks must not meet competition from the Commonwealth Bank. The Minister for Health (Sir Earle Page), who was described by a former colleague of his as "the tragic Treasurer " in a previous government, tried to lead the House into believing that there had always been active competition. He said that the number of branches of the Commonwealth Bank had increased from 92 in 1922 to 275 in 1942, but in- an answer that was given by the Treasurer to the honorable member for Wilmot (Mr. Duthie) yesterday, it was disclosed that the number of branches of the Commonwealth Bank was 420 in 1949. when the Labour Government went out of office, and that they now number only 439. In three years this Government has allowed the Commonwealth Bank to open only nineteen more branches. It is doing everything it can to destroy the Commonwealth Bank. The Minister for the Navy (Mr. McMahon) said last night that this Government had given close consideration to the question of banking. He denied, as did the Minister for Health, that this Government is taking orders from the private banking institutions. I have the report of the last annual meeting of the Bank of New South Wales, the biggest of the Australian banks. The late Mr. Martin Mcllwraith stated at that meeting - We have voiced our criticisms on many occasions of the provisions of the 1945 hanking legislation which subject the trading banks to the domination of the central bank, the Commonwealth Bank of Australia, which is also their privileged competitor . . . Our hank, in association with the other trading banks, has expressed its views on the banking system, to the Government on several occasions in the past twelve months, and it is to be hoped that our objections to the ambiguous structure of the central bank in Australia . . will be carefully considered in legislation which is pending. Yet honorable members opposite protest that they do not do what they are ordered to do. Mr. Mcllwraith also said - The Government's proposals would afford some relief, hut it was to bc regretted that they did not fully rectify the shortcomings oE the present system. The private banking interests saw the Commonwealth Bank Act as being disadvantageous to themselves. They have told this Government what it is to do and the Government has gone a part of the way with them. The honorable member for Macarthur (Mr. Jeff Bate) has circulated several amendments which propose that the Government should go the whole way with the banks. What he has said in his amendments has been said in press articles and speeches by the honorable member for Mitchell (Mr. Wheeler), the honorable member for St. George (Mr. Graham), the honorable member for Mackellar (Mr. Wentworth) and the honorable member for Evans (Mr. Osborne), but they will not vote with him. When a division is taken, most of them will stand by the Government and make their excuses to the banks. The Government will have difficulty in raising its usual quota of election campaign funds from the private trading banks after the way that it has treated them in recent times. 542 KNX UAP; LP from 1944 0 0 HARRISON, Eric Mr ERIC J HARRISON - The honorable member for Melbourne (Mr. Calwell) said that the Government was doing what the banks told it to do. 542 BV8 0 0 CALWELL, Arthur Mr CALWELL - That is true, but the Government has to consider public opinion. Elections are to be held in Queensland and South Australia on Saturday. The Labour party is likely to win those elections and .the Government will not want to damage further its reputation before then. This bill proposes to amend the Commonwealth Bank Act 1945- 1951. The correct title of the measure should be: "A bill for an act to destroy the Commonwealth Bank in order to benefit the shareholders of the private banking interests ". Unlike the Commonwealth Bank, the private banking institutions are conducted not for public service but for private gain. From the days of the first settlement on the shores of Australia until 1911, a period of nearly 130 years, the private banking institutions managed the banking affairs of the nation, issued the currency of the nation and made enormous profits that really belonged to the people by the issue of bank notes. Had there been no Commonwealth Bank or Commonwealth control of the bank note issue, all that has been derived from them would have gone to the profit of the private trading banks and their shareholders, many of whom are living outside Australia and are interested in it only to the degree to which they can exploit it. The Note Issue Department of the Commonwealth Bank made a profit of £55,000,000 from the 15th December, 1920, the date of the transfer of the Note Issue Department to the bank, to the 30th June, 1951. The total profits made by the bank in all its departments from 1911 to the 30th June, 1951, was well over £100,000,000. That would have been taken by the private banks had there never been any Commonwealth Bank. The Opposition stands for the Commonwealth Bank because it is the buttress of our economy and it is essential to our nation. It is the only political party which believes in the Commonwealth Bank. It is hypocritical nonsense for one honorable member after another on the Government side to say that he believes in the Commonwealth Bank and wants to maintain it as an essential feature of our banking structure. They claim that the primary function of the Commonwealth Bank is to act as a central reserve bank. The Fisher Government established the Commonwealth Bank not to act as a central reserve bank but to compete with the private trading banks, and it had good reason for doing so. The bank crashes of the 1890's showed how dangerous it was to leave the banking of the country in the hands of people who were interested only in making a profit. The establishment of the reserve bank came in 1924, and the Labour party has never accepted the idea that the Commonwealth Bank is a reserve bank - a bank, in other words, to buttress the private trading banks and save them from disaster. The Commonwealth Bank is the people's bank. It has various departments and all of them are important and must be separate. 543 JOE 0 0 BATE, Henry Mr Jeff Bate - "What about the Labour Government's legislation of 1930 ? 543 BV8 0 0 CALWELL, Arthur Mr CALWELL - That has been dealt with, and I do not intend to say more about it, but I suggest that honorable members cogitate' upon the role that has been played by the privately controlled monetary system in the life of Australia. We were told by the Minister for Health that it was one of the blessings of the last century. It was nothing of the sort! If honorable members opposite will recall the ruin and misery caused by the various depressions in this country that were brought about as the result of the opera tions of international financiers and their Australian agents ; the number of suicides and bankruptcies that were scattered over the country the number of businesses ruined and the manner in which our economy was destroyed ; and the fact that from 1893 to 1906 not one building was constructed in the City of Melbourne because of the fear engendered- by the bank smash of the 'nineties; they will admit that the privately controlled monetary system is the greatest monopoly of the age. Small businesses are allowed to exist for a time, but ultimately they are swallowed up by the big combines and trusts, and then, by what has been described as the inevitability of gradualness, these combines become the possession of, or at least subject to the domination and control of the money monopoly. Why does not the Government leave the 1945 banking legislation alone ? Why is the Government continually trying to erode it? There would have been no nationalization legislation in 1947 if there had been no challenge of the validity of all sections of the 1945 act. The nationalization legislation was the answer to the attempt made by the mortgagemongering banks to destroy a great national institution. Monopoly capitalism owns and controls the private banks as it does the trusts and combines that operate in Australia to the detriment of all its citizens. These interests, as the late Mr. Frank Anstey once said, are interlocked, interwoven and interlaced. The Government talks hypocritically about its desire to protect the Commonwealth Bank. In 1924, the Bruce-Page Government removed the bank completely from the control of the Parliament and placed it in the hands of a collection of hopeless tories who were constituted as the Commonwealth Bank Board. One of them, a man named Gibson, who subsequently became chairman of the board, was a successful bedstead manufacturer; another, named Ashton, was a polo player; and a third, named McComas, was a squatter. The Board included insurance directors and directors of private banks who nominally severed their connexion with those institutions when they were appointed to the board. The only ones who knew anything about banking were the Governor of the bank and his deputy and the Secretary of the Treasury. Until the Fisher Government established the Commonwealth Bank in 1911, private financiers determined the monetary and credit policy of the nation. They robbed while they ruled and, on several occasions, they nearly ruined the nation. Several attempts have been made to maul the Commonwealth Bank. It was mauled in 1924 when the Bruce-Page Government established the Commonwealth Bank Board as a buttress for the private banking institutions. Another attempt to maul it was made in 1938, when the present Minister for External Affairs (Mr. Casey) as Treasurer had the audacity to introduce a proposal to issue debentures on the security of the assets of the bank. He proposed to let his friends come in on the deal. There was then no need to issue debentures or to increase the capital of the bank because the assets of the bank exceeded its liabilities by more than £19,000,000 and the bank was making an annual profit of more than £1,500,000. The attempt was so audacious that the Lyons Government withdrew the measure. Last year another attempt was made to maul the bank by the re-establishment of the Commonwealth Bank Board." It has been sucessful for the time being. 'Now, another attempt is being made to maul the bank. It, too, will be successful for a few days or a few months, but not for more than a year. By re-establishing the Commonwealth Bank Board last year the Government in fact handed over control of the nation's finances to the representatives of big business. The Royal Commission on Monetary and Banking Systems has been mentioned on several occasions during this debate, and its report has been misquoted and distorted by honorable members opposite. For the benefit of honorable members I shall read the crucial recommendation in the report which appears in paragraph 521. It reads - 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 effective exercise of its functions as a central bank. That was said in 1936. Now the structure of the bank is to be altered because the Government thinks that, in the light of current information, the commission's report was not right. The commission included only two democrats in its membership, a Labour man, the late Mr. J. B. Chifley, and the late Professor Mills. - All the others were reactionaries, including the former honorable- member for New England, Mr. J. P. Abbott. .Yet that body was so appalled at the depredations of the depression years that it said that the trading bank had to be maintained as an essential part of the Commonwealth Bank structure. The royal commission criticized the part played by the private banks during the depression in terms which also constitute a reflection on the Bruce-Page Government, on every tory of the day and on every tory who "has spoken from a public platform since, then. The commission said - They must bear some responsibility for the extent of the depression. That was strong language having regard to the persons who used it. Those words mean that the depression would have been lightened and some of its worst effects avoided had the expansion of banking credit come earlier. In 1930-31, these banks paid dividends ranging from S per cent, to 10 per cent, while farmers and small shopkeepers were facing ruin. Over a lengthy period the private banks of Australia had paid dividends which averaged 10 per cent, of their paid-up capital. That means that, in twenty years, they received in dividends twice the amount of their subscribed capital, and they still had in reserve an amount nearly equal to the capital invested in them. Is it any wonder that these parasitic institutions have always spent and always will spend lavishly to defeat the Labour party and support the forces of reaction? The depression was a real one; let no honorable member imagine otherwise. It was so appalling that the present Postmaster-General (Mr. Anthony), in a speech which he made in this House on the 26th May, 1938, said- Out of 12,275 dairy-farmers in Queensland only 99 had taxable incomes last year in excess of £250. Thus, in 1936-37, less than 1 per cent, of the dairy-farmers in Queensland earned more than £5 a week. Honorable members opposite know the effects of the depression, but they try to delude themselves into believing that it was caused by some authority other than .the international financiers, the manipulators of the nation's money, with the acquiescence of the private trading banks of Australia. The condemnation of the private banks by the royal commission expressed in the terms I have quoted is sufficient evidence of that. I wonder whether honorable members opposite have forgotten that the depression, which .threw 30 per cent, of our working people out of employment, the same depression which similarly affected every country in the Western world, was the work of the international financiers, aided and abetted by incompetent governments, and that one of the most incompetent of them was the Bruce-Page Government which did untold harm to the people of Australia. In the depression years in South Australia - and I say this for the benefit of listeners in that State who will be voting in the State elections on Saturday next, and to Queenslanders who will be doing likewise - the private banks made 3,000 primary producers insolvent. The same position obtained in every other State. It is because of the protection and assistance that was given to them by the 1945 legislation and as a result of the financial policy that Labour pursued during the war and afterwards until it was defeated that the majority of farmers throughout Australia are more prosperous to-day than they ever were before. However, last year, because of the credit restriction policy of this Government, thousands of farmers, regardless of the value of their assets, were unable to obtain financial accommodation that they required. I could produce ample evidence from every capital city of the truth of that statement. Members of the Opposition have been endeavouring in vain to prise out of this Government information about the present financial position of Australia. Yesterday, the Leader of the Opposition asked the Treasurer to inform the House of the present amount of the treasury-bills that have been discounted by this Government with the Commonwealth Bank. So far we have been unable to obtain that information; but we have a shrewd idea that an amount of bank credit of approximately £200,000,000 has been pumped into the financial channels of this country. That money must be having an inflationary effect upon the economy of this nation. I have said that when the House was in recess some Government supporters roared like lions about the iniquity of this legislation from the point of view of the private banks. When the vote on this measure is taken, 1 shall be interested to see how many of those honorable gentlemen will be prepared to stand up to what they said in that connexion. I have never changed my views about banking, or bankers. I believe in the Commonwealth Bank and in the 1945 act. The bank should compete actively with the private banks. 545 009MC 0 0 HOLT, Harold Mr Holt - What about the 1947 act? 545 BV8 0 0 CALWELL, Arthur Mr CALWELL - I believed in that act; but it was declared to be unconstitutional and, therefore, nothing more can be done about it. I desire to protect the 1945 legislation. Members of the Australian Labour party will be satisfied if they can maintain that legislation; and if we can do so we shall see whether the behaviour of the private banks with regard to the Commonwealth Bank will differ from the way certain other interests behaved in respect to Australian National Airways Proprietary Limited in relation to Trans-Australia Airlines. The private banks talk about competition, but they want monopoly. They want to grasp the nation by the throat and make it meet every demand that they make upon it. I repeat that I have never changed my views about the Commonwealth Bank. When the 1947 legislation was before this House, I said something which I shall now repeat because I believe that it is still true. This is what I said - The hanks have blighted more lives than the most disastrous droughts; they Iia ve blasted more hopes than the most destructive bush fires; they have broken more spirits than the most devasting floods. Anybody who knows anything of the history of Australia knows that that statement is true. I challenge Government supporters to cite any Australian authority from a non-banking source that. would support the contentions that they have advanced during this debate. Let them, if they can, quote the opinion of any church leaders that would support their views. 546 KWE 0 0 TIMSON, Thomas Mr Timson - We have the views of the electors in 1949. 546 BV8 0 0 CALWELL, Arthur Mr CALWELL - The honorable member for Higinbotham (Mr. Timson) had the support of the electors in 1949, but he has their support no longer. At least, polling in the recent Victorian State elections in electorates that are included in his own electorate show that he is about to make a farewell appearance in this chamber. I challenge Government supporters to quote any church leader in this country that would support the views that they have advanced in the course of this debate. However, the late Most Reverend Dr. Le Fanu, speaking in 1945 as the Anglican Primate of Australia, said - The fundamental Christian objection to the existing capitalistic system and the banker's control of money, from which it seems inseparable, is that it holds persons in serfdom to the exigencies of financial policy - but money was made for man. The present Pope, in a statement dealing with despotic economic domination, declared - This domination is most powerfully exercised by those who, because they hold the control of money, also govern the credit and determine its allotment, for that reason supplying, so to speak, the life-blood to the entire economic body, and grasping in their hands, as it were, the very soul of production, so that no one can breathe against their will. Members of the Australian Labour party agree with the sentiments expressed in both those statements. I shall now quote from a statement that was made on banking by the late Mr. Mackenzie King, when he was Prime Minister of Canada. Mr. Mackenzie King was a Liberal. Unlike supporters of this Government, he was not a disguised tory or a hopeless conservative masquerading as a Liberal. Speaking during the general election campaign in Canada in 1935, he said - Canada is faced with a great battle between the money power and the power of the people, a battle which will be waged in the next Parliament. 1 plead for a sweeping LIberal majority in order to carry out my policy of public control of currency and credit. Until the control of currency and credit is restored to the Government, and recognized as its most precious and most sacred responsibility, all talk of the sovereignty of Parliament and democracy is idle and futile. Mr. Mackenzie King, I repeat, was a Liberal. The. supporters of this Government, who mouth the word " Liberal ", are, if anything, even worse reactionaries than the people who, in 1911, had the courage to oppose the establishment of the Commonwealth Bank. Honorable gentlemen opposite are the spiritual heirs of the tories of yesterday, but they have not the courage of their spiritual ancestors because they will not say where they really stand on this issue. They are trying to lead the Australian people to believe that they really love the Commonwealth Bank and that they are only changing the name of that institution in order to facilitate its trading bank activities. 546 10000 0 0 SPEAKER, Mr Mr SPEAKER -Order ! The honorable member's time has expired. 546 BV8 0 0 CALWELL, Arthur Mr CALWELL - I have done very well, I think. 546 10000 0 0 SPEAKER, Mr Mr SPEAKER -Order ! I must ask honorable members to contain themselves. To-night, many of them on both sides of the House have shown a tendency to interject. I also remind honorable gentlemen who speak that they cannot add a postscript after their time expires. 546 009MC Higgins LP Minister for Labour and National Service and Minister for Immigration 1 0 HOLT, Harold Mr HOLT . - The honorable member for Melbourne (Mr. Calwell) concluded his speech by saying that he had done very well. The judgment of honorable members on that statement will vary according to what we know to be the very mixed complexion of those who sit behind the Labour leaders in this chamber. I have no doubt that those honorable members opposite, who, like the honorable member for Melbourne, are frank, open and avowed socialists and are prepared to live up to the pledge that they signed upon their entry into this Parliament, will think that he has given a clear exposition of where they stand in this matter. On the other hand, those who prefer the more obscure and misleading tactics to which the present Leader of the Opposition (Dr. Evatt) resorts, will by no means be pleased with the honorable member's effort. Although it is not quite relevant to the bill before the Chair, I shall deal first with a matter which took up a considerable portion of the honorable gentleman's concluding remarks. He referred to the depression and the role that the private banks played during that period. In a manner that is becoming characteristic of members of the Opposition, he represented the depression as some sinister, Machiavellian conspiracy on the part of international financiers, [f that is the view that is held by the Australian Labour party to-day, it certainly was not the view that was held by Labour leaders during the period of the depression or for a considerable time after the depression. I find that as late as November, 1929, when those difficulties were becoming apparent, Mr. Scullin said in a speech presented through the Governor-General, to this Parliament - The existing difficulties are seasonal in character. There is no reason to believe that si continuation of those conditions is likely, And there should be a return to normal prosperity in the coming year. Prom that hopeless misconception of the position at that time, and from the blunders of judgment which followed from that failure accurately to assess the situation of those days flowed the disasters that wrecked the economy of this country for years, and built up a community bitterness which has not yet been eradicated from our system. The Labour party, conscious of the way in which it blundered into disaster in those days, has had ever since a sort of psychological complex about the depression. The Labour party can never get away from the depression story of wretched unemployment - a condition to which it contributed so greatly. The honorable member for Melbourne asks us whether we have forgotten that 30 per cent, of the working population were unemployed in those days. Of course, we have not forgotten that situation, and many people who were adults during the depression have not forgotten the miserable part which Labour played in those disastrous and wretched days. The people of Australia were so conscious of the way in which Labour had blundered through those difficulties that they threw the Scullin Government out of office in a vote that attained record landslide pro portions, and kept the Labour party out of office for twelve years thereafter. We have been attacked for the manner in which we have handled a comparable crisis in recent times. I remind the House that a comparable drop in export income led to the disaster in the early thirties. This Government will take lasting pride in the manner in which it has met the crisis. I am sure that the people of Australia, as they see the story in perspective, will give the Government their commendation. Paced with a situation comparable to that which confronted the Scullin Government in 1929, this Government has led the country so skilfully through the serious crisis that people have hardly been aware of what was happening. We can now see ahead of us a stable and prosperous period in which we may develop our country. My colleagues and I have no wish, either in this legislation or in what we say, to criticize the conduct of the Commonwealth Bank. On the contrary, we would not have been able to get so successfully through the crisis with which we have been dealing had it not been for the close, active and capable co-operation which we have had from the Governor and officers of the Commonwealth Bank, and members of the Commonwealth Bank Board. Had they not, in co-operation with the Treasurer, worked in conformity with the policies laid down by the Government and released literally hundreds of millions of pounds from the special accounts lodged with them by the private banks in order to cushion the shock of the economic crisis, we would never have got through it. I, for one, am happy to pay a public tribute to the Commonwealth Bank for the way in which it has worked so skilfully, in conjunction with government policy, to ensure that we should negotiate the hazards which confronted us over the last twelve months. It is utter nonsense for any member of the Opposition to say that this Government is attempting to weaken the structure of the Commonwealth Bank or its capacity to help us through our economic problems and with the development of our own Australia. The Leader of the Opposition declares that we have no mandate from the people to introduce this kind of legislation. He is lucky to Lave such a short memory, because it must have been painful for him to see the great majority, which the people gave the Labour Government in 1946, swept away by the tide of public indignation that followed the attempt by the Labour Government to nationalize the banking system in 1947. He tells us that we have no mandate to introduce this legislation. Why, we would never have gained a majority against the overwhelming Labour majority of 1946, and been in a position to take office, had the people of Australia not become so worked up and indignant at the attempt to filch away their rights and opportunities. The principal mandate given, to us in 1949 was to put the opportunity to nationalize our banking system beyond the reach of any socialist Labour government in future. The Leader of the Opposition tells us that the Labour party has respected the verdict of the people in that matter, and recognizes in the results of the general elections in 1949 and 1951 a vote against the nationalization of banking. The right honorable gentleman says that some constitutional change will be necessary in order to bring about the policy which Labour espoused, and that nobody need have any fear of what a Labour government might do in this connexion. Does he mean that the Labour party has abandoned its clearly expressed objective - the complete socialization objective- to which every honorable member opposite is pledged? Has the Labour party abandoned that objective because it cannot see any prospect of nationalizing the banks in the future? Is there still, apart from this general objective in the Labour platform, quite clear and distinct from that, a specific reference to the nationalization of the banking system ? I say that there is. I invite any honorable member opposite to deny that there stands, as a specific plank in the platform of the Labour party to-day, the nationalization of the banking system. Why do they try to cheat and defraud the people by telling them that there is no means of carrying out the policy to which they are pledged ? The Leader of the Opposition has given an assurance on that matter. Do I hear the same kind of assurance given by the honorable member for Melbourne, who is the Deputy Leader of the Opposition, and those who are of the same opinion as he on these matters? We are told that the Royal Commission on Monetary and Banking Systems recommended something substantially different from what is proposed in this bill. Such a statement, of course, is completely untrue, as an examination of the recommendations of the royal commission will confirm. I have in my hand an appropriate quotation from the report of the royal commission, which reads as follows: - The view of the Commission ... is that the most desirable hanking system in the present circumstances of Australia is one which includes privately-owned trading banks. The system which we contemplate is one in which a strong central bank regulates the volume of credit- - No honorable member on this side of the House counters that proposition. We are entirely in favour of it - and pays some attention to its distribution. We are entirely in favour of that policy! The report of the commission proceeds - We are of opinion that the adoption of our recommendations will place the Commonwealth Bank in that position. We are satisfied to leave the distribution of credit to privately-owned trading banks, working for profit, but regulated in the manner indicated in our recommendations. A strong central bank, publicly owned, and not dominated by the desire to make profit, will exercise the necessary control over the activities of the trading banks, and the organization of these banks on a profit-making basis will conduce to efficiency, while the area of choice- Which honorable members- opposite sought to deny us in 1947 - afforded to borrowers will be greater than if all banking were nationalized and brought under one control. We think that in this way the national interest will be best served. The only member of the royal commission who dissented from that recommendation, which is precisely in line with what we are doing in this legislation, was the former Labour Prime Minister, the late Mr. J. B. Chifley, who introduced the legislation to nationalize banking in 1947. I doubt whether the views of the Labour party have changed one iota since Mr. Chifley introduced that legislation. The honorable member for Melbourne has said that he still believes in the banking legislation of 1947. He has not changed Iris spots, and at least he has the honesty and decency to admit where he stands on this matter. If he could get to the position which the 1947 legislation sought to create, namely a government monopoly of all banking, he would get to it tomorrow. He would be the first to admit that fact if it were put frankly to him. But of course we have now become rather accustomed to the performance that is going on inside the Labour party. Is it being given consciously ? Is it deliberate ? Is it by a subtle design, or is it by just one of those unhappy chances that we find the Labour party, in this day and age, with a seriously marked split personality. We are all familiar with that classic of English literature, the splendid and interesting story of Dr. Jekyll and Mr. Hyde. Dr. Jekyll was a benign, good living, decent citizen, who went about his professional work doing good wherever lie could; the friend of all men and the enemy of none. But he had a split personality. There was also Mr. Hyde, the beast in him, who was revealed on unhappy occasions and who created such wretchedness and havoc. It is quite clear if one examines the public statements of the leader of the Labour party and of his deputy in this chamber in recent months, that here we have another clearly marked ease of Dr. Jekyll and Mr. Hyde. There is the learned doctor who is able to go around the country trying to catch the swing votes; the little friend of all the world, who always says the apt and kindly tiling - "You want more pensions? You shall have more pensions. You want reduced taxes? You shall have reduced taxes. You want more imports? You shall have more imports. You want to restrict imports because they interfere with local manufacture? We shall encourage local manufacture. You want a private system of television? We shall give you a private system of television." But while the learned doctor is saying these nice things, out stalks Mr. Hyde and says, "You want private television? Net on your life. There will be a government monopoly. You want an election some time next year? Not on your life. If we can deadlock the Senate there will be an immediate election." 549 K8B 0 0 CURTIN, Daniel Mr CURTIN -I rise to order. I should like you to rule, Mr. Speaker, whether the Minister's statements are relevant to the bill now under discussion. 549 10000 0 0 SPEAKER, Mr Mr SPEAKER -The Minister is in order. 549 009MC 0 0 HOLT, Harold Mr HOLT - I am sure you realize, Mr. Speaker, that it is of tremendous importance to the people of Australia that they should understand the motives behind the Labour party's opposition to this measure, and that there should be a clear statement of where the Labour party stands on this vital issue. If I had time, I could trace the interesting peregrinations of this split personality around policy item after policy item. As we all know, Labour's bank nationalization legislation was rejected by the High Court. The Labour party's platform states that Labour does not believe in appeals to the Privy Council, and I have no doubt that the honorable member for Melbourne, as a good orthodox member of the Labour party supported that plank of the platform when the High Court ruled against' the nationalization bill. But his leader, who was then Attorney-General, saw an opportunity to fight again on that issue on another front, and on he went. We are all familiar with the result. One could cite instance after instance of this hopeless cleavage of view which leaves the country completely confused about where the Labour party stands. In spite of the soothing syrup that is administered to the community by the Leader of the Opposition, so long as the Labour party's sworn objective is to nationalize various undertakings in turn, the people of this country can have no doubt about Labour's intentions. Labour's view on the nationalization of banking has never changed. If we on this side of the chamber believed in our hearts that the Labour party, if returned to office, would insist on fair competition between the Commonwealth Bank and the private trading banks; that it would seek to preserve, the neatly balanced system under which there is a strong government central bank and soundly based private banks, able to take the various shocks that occur in our economy from time to time and to provide a choice pf banks to the community, there would be no need for this bill. This measure is the witness of our conviction that the Labour party stands to-day where it stood in 1947 - determined to enforce a government monopoly of banking just as soon as the opportunity to' do so presents itself. Now, of course, we are being told a very different story. Dr. Jekyll says that there are some very misleading references in the Prime Minister's speech. This legislation, he argues, does not raise any question of the nationalization of any private bank. Indeed, he assures us, it is well known that nationalization of the private banks would not be possible in this country without a drastic amendment of the Constitution. The right honorable gentleman added - The people gave their verdict against nationalization and, at the 1049 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 smokescreen deliberately used by the Government to disguise its real purpose, which is, of course, to sabotage the people's bank- I invite honorable members opposite to listen particularly to these words because they came from the mouth of the Leader of the Labour party. Later, I shall direct their attention to what their Deputy Leader said, and I shall invite them to choose which they are to follow. The Leader of the Opposition continued - 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 government or any parliament to pass legislation, or do any executive act, designed to Achieve the same ends 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 catchcries or by smoke-screens. The Government knows perfectly well that, politically, legally and practically, the nationalization of the private banks is a dead issue. That was the Leader of the Opposition stating the policy of the Labour party on this very important question. But, unfortunately for the right honorable gentleman, along came Mr. Hyde, galloping into the scene again. In 1950, long after Mr. Chifley had announced that he had given the nationalization of banking away and that it would not be possible without an alteration of the Constitution, and after the 1949 election, at which the public will on this issue had been clearly shown, the honorable member for Mel- Mr. Holt. bourne made a most enlightening statement in this Parliament. 1 ask the House to listen very carefully to this passage, because here again we find that classic cleavage of view. Is it accidental? Is it deliberate? Is it designed to mislead the Australian people or merely to reveal that the Labour party is hopelessly divided on this major question of policy? Speaking on the Commonwealth Bank Bill on the 11th October, 1950, the honorable member for Melbourne said - In the course of time, the Commonwealth Bank will be the only hank in Australia. That was in 1950 ! By competition it will force the private banks out of existence and thus the private banking system will be nationalized without the necessity to pay compensation to the private banks. And here is a neat little additional touch - The Government has chosen to have it in that way, and it will get it in that way. That sounded rather ominous, and the honorable member for Isaacs (Mr. Haworth) was so disturbed that he interjected - in a disorderly fashion I am afraid, but understandably - That is a threat? The honorable member for Melbourne replied - It is a promise. I have stated the facts. Nobody, surely, will object to fair competition. Supporters of the Government are always talking about the necessity for free enterprise and plenty of healthy competition. Therefore, they will not be entitled to complain when the private banking institutions are confronted wilh plenty of competition from the Commonwealth Bank in the future. In the Banking Act 1945. Labour specifically provided that the governor of the Commonwealth Bank should be directed to compete actively with the private banks. As the present Government has allowed that provision to remain it is committed to a policy of expropriation at the expense of the private banks without the payment of compensation to those institutions. That is what it will mean. In other words, that is what it would mean under a Labour Government. He continued - For that fact I am thankful ; and I am pleased to have lived to see the day when the ranks of the Philistines have been convinced of the truth of what we say. 550 JF7 0 0 BEAZLEY, Kim Mr Beazley - The honorable member for Melbourne stated that the policy of the anti-Labour parties would lead to that. 551 009MC 0 0 HOLT, Harold Mr HOLT - The honorable member for Melbourne implied that the private trading banks would meet with plenty of active competition. Of course, I realize that . the honorable member for Fremantle (Mr. Beazley) is thoroughly embarrassed by the indiscretions of the honorable member for Melbourne. It would be well for honorable members opposite to make up their minds where they stand. The honorable member for Melbourne has made no bones about his view of the private banks of this country. He is the man who has been freely spoken of as the next Treasurer of this country should Labour win the Treasury bench at the forthcoming general election. The hon- orable member for Melbourne, who is second in seniority in the ranks of Labour, has every right, therefore, to ask for the treasureship, and I have little doubt that if he pressed his claim he would obtain it. As he is the man who would have supreme say over banking and financial policy in this country, it is vital for the people of Australia, who have to vote on these issues, to know where he stands and what he feels in his heart about these matters. When the honorable member for Melbourne was concluding his speech on the motion for the second reading of the Banking Bill in 1947, as reported- in Hansard, volume 194, at page 1475, he stated - I say in conclusion that the history of banking in Australia is one long story of corruption, fraud, and failure . . . The banks have blighted more lives than the most disastrous droughts; they have blasted more hopes than the most destructive bush fires; and they have broken more spirits than the most devastating floods. 551 K8B 0 0 CURTIN, Daniel Mr Curtin - Hear, hear ! 551 009MC 0 0 HOLT, Harold Mr HOLT - I am glad to have the " Hear, hear ! " of the honorable member for Watson (Mr. Curtin), because I am certain that the honorable member for Melbourne said those things with the concurrence and approval of the Labour party. I am not denying that most honorable members opposite are prepared to live up to the pledges that they have given. Our only complaint is that the public are entitled to be told frankly by honorable members opposite where they stand, but Labour is not telling them that. The honorable member for Melbourne continued - While they continued to exercise a power that properly belongs to the nation they enjoyed an extraordinary prosperity, but their days are numbered. 551 K8B 0 0 CURTIN, Daniel Mr Curtin - What does that mean? 551 009MC 0 0 HOLT, Harold Mr HOLT - I have a fair idea what it means. He went on - Their time is up. The profits they arrogated to themselves will, like the profit made by the Commonwealth Bank, be utilized in the public interest, and the power they have so misused will, in future, be exercised by the instrumentalities set up under the authority of Parliament, answerable to the elected representatives of the people, and to no one else. That is clear enough. I am not quarreling with the clarity of the statement of the honorable member for Melbourne. I have never been under any illusion where lie stands on the socialist programme, nor where the honorable member for East Sydney (Mr. Ward), the honorable member for Watson, and some other honorable gentlemen opposite stand in regard to that programme. They have expressed their thoughts quite clearly and forcibly in this House from time to time. But before the critical election for the Senate, and the general election of the House of Representatives, honorable members opposite should, if there is any honesty in their hearts, tell the people of Australia frankly and fairly where they stand. At the general election of 1946 Labour secured an overwhelming majority. There was not a mention during the election campaign of their intention to nationalize the banking system of this country. The people of Australia voted for them without a thought in their minds that this would happen. As the people go to the election of 1954 or perhaps, if Mr. Hyde has his way, of 1953, they will still have no real inkling of what Labour proposes to do regarding the pledged programme that has been adopted by every honorable member opposite. It is about time that there should be .placed before the public who are asked to vote in a democracy, by -those who claim the privilege of leadership, the facts of issues on which they are required to vote. 551 JF7 Fremantle 0 0 BEAZLEY, Kim Mr BEAZLEY .- The speech of the Minister for Labour and National Service (Mr. Holt) was extremely interesting to members of the Opposition. It marks the decline of the Minister as a debater in this House, where he has always been distinguished as one of the most critical analysists. He did not, at any stage of his speech, analyse the measure before us. His speech was as political as any electioneering speech that he has ever made. He has said that because we are a divided and hopeless Opposition, the Australian public do not know where we stand and do not support us. I hope. that the Minister -will press the Prime Minister (Mr. Menzies) very strongly not to separate the dissolution of this chamber from the Senate election in May, so that the honorable gentleman may then test whether the public opinion of Australia is so emphatically opposed to Labour as he stated. We have been told by the Minister that we are unacceptable, to the public. The Premier of South Australia has told all federal Liberals to keep out of the election in that State. That is an interesting commentary on Liberal opinion of federal Liberal policy. The Minister's reference to the report of the Royal Commission on Monetary and Banking Systems was a flat untruth. The essential characteristic of the legislation before us is that it takes from the central bank its trading bank powers, and divides the Commonwealth Bank into two parts. Paragraph 521 of the report of the Royal Commission on Monetary and Banking Systems reads - 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. In other words, the central bank must have trading bank powers. The same royal commission, which the Minister suggests believed in some sort of equality of competition between the Commonwealth Bank and the trading banks reported, at paragraph 538, as follows: - The Commonwealth Bank should be in a position to give a lead which the trading banks mid other financial institutions will follow, and if necessary to give assistance in its capacity as the lender of last resort. To do this successfully, it must possess ample resources which it can use at its discretion, its prestige must stand high, its capacity for leadership be proved and recognized, its policy be understood and accepted, and its powers be such that in the last resort it can enforce its policy. On their part, the trading banks and other financial institutions must co-operate with the Commonwealth Bank. It should be open to them to discuss freely with the Commonwealth Bank any matter of common interest, and to make representations or criticisms on the facts disclosed to them, but in the end the responsibility must rest on the Commonwealth Bank to enforce its policy, and on the trading banks and other institutions to conform to the policy , and to assist in carrying it out. For a Minister of the Crown to rise in this House and suggest that the Royal Commission on Monetary and Banking Systems talked about " equality between the banks ", " fair' competition ", and " separation of the trading bank functions of the Commonwealth Bank from its central bank functions ", to use the Liberal jargon, is utterly untrue and contrary to the plain words used in the paragraphs that I have quoted from the commission's report. The bill is welcomed by the Labour party in one respect, because it mark< another step in the career of an Australian Country party Treasurer (Sir Arthur Fadden) as the destroyer of a predominantly Liberal party government. The right . honorable gentleman has destroyed three State Liberal governments already, and before long he will oblige us by destroying this. Government. The reason why the bill marks another stage in the downward progress of the Treasurer is simple. It adds to the public impression of the subservience of Ministers and their supporters to private interests and swells the accumulating evidence of their desire to get rid of any government institution which is successful, or at any rate to weaken any such institution which is so successful that they dare not touch it. They began with the so-called civil aviation agreement, which struck a blow at Trans-Australia Airlines. Now this bill provides another example of their subservience to private interests. It is not designed to achieve anything positive. This Government, of course, has positively directed th-3 Commonwealth Bank at times. For example, it positively directed the bank to lend £4,000,000 to a bankrupt airline company. 553 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! The honorable member must not debate questions that have been decided by this House. 553 JF7 0 0 BEAZLEY, Kim Mr BEAZLEY - No,' Mr. Speaker. I shall endeavour to make my remarks as relevant to the bill as were those of the Minister for Labour and National Service. As I have said, the Government gave a positive direction to the Commonwealth Bank in that instance.' But this bill contains no positive direction to the Commonwealth Bank to do anything. Instead, it will belittle the Commonwealth Bank by giving to its General Banking Division the ignominous title of Commonwealth Trading Bank. The private banks try to dignify themselves by avoiding the words " trade " and " trading " in their titles at all costs. Thus, we have the Bank of New South Wales, the Australia and New Zealand Bank, and the National Bank of Australasia. If those banks were to be compelled to describe themselves as trading banks, it might be humiliating to them, but at least it would not be misleading because they are in for trade and the profits of their shareholders. That is their function. The Commonwealth Bank, however, is not in for trade, and its profits go, not to private shareholders, but to the Treasury. Yet it is to be forced to accept the misnomer " Commonwealth Trading Bank" ! What would happen if the Government introduced legislation to compel private banks which dignify themselves by State, and even national, titles to call themselves trading banks? What would Government supporters say to legislation which provided that the Bank of New South Wales should be known henceforth as the " Trading Bank of New South Wales" and that the Australia and New Zealand Bank should adopt the title " Australia and New Zealand Trading Bank " ? 553 009MC 0 0 HOLT, Harold Mr Holt - What would be wrong with that? 553 JF7 0 0 BEAZLEY, Kim Mr BEAZLEY - The private banks consider that there would be something wrong with it, because they realize that such titles are belittling. That is why they prefer to adopt territorial and national titles. The Commonwealth Bank is both territorial and national, and it deserves to be known as the Common wealth Bank of Australia, not as the Commonwealth Trading Bank of Australia. Government supporters have said that this legislation will introduce fair competition. If such statements mean anything, they imply that the situation up to the present has involved unfair competition. The Prime Minister uttered not one word during his speech to explain how the present situation might be considered to be unfair. Does the Government mean that the private banks are not able to make adequate profits because of the policy of the Commonwealth Bank ? Not one honorable gentleman opposite has dared to say so. Does it mean that the private banks cannot charge sufficiently high interest rates because of the existence of the Commonwealth Bank? No honorable gentleman opposite has dared to say so. Thus, the expression "fair competition " remains undefined, not from the mouths of loose demagogues, but from the mouths of distinguished Queen's counsel who know very well what demagoguery is, how to use words with precision, and when they are using words with imprecision. They know very well that "fair competition ", in the context in which they have employed it, means nothing. Both the Treasurer and the Minister for Labour and National Service, apart from their impudence in distorting the report of the Royal Commission on Monetary and Banking Systems, have evaded any explanation of the meaning that their political parties have attached to the expression " fair competition " in the past. It is interesting, therefore, to examine the evidence on the subject of competition given before the commission by Sir Ernest Riddle, who was appointed Governor of the Commonwealth Bank by a government of the same character as the present Government. During the cross-examination of Sir Ernest Riddle, the following series of question and answers was recorded : - By Mr. Chifley. - Do I understand from your answer to Question 2 that your bank will not take a customer from a trading bank? - We take creditor accounts without any restriction. In regard to advance accounts, if the banks are giving what we consider satisfactory service at a satisfactory rate, we do not interfere with them. From what has been said here, I take it your rate for advances is lower than that of the trading banks. Supposing a customer of a trading bank wants to transfer his business to your bank, would you refuse him ? - Yes, we have given an undertaking to the banks that, if they maintain their reserves with the Commonwealth Bank, we shall not use those reserves in competition with them. We were informed by witnesses on behnlf of the trading banks that there was no understanding with the Commonwealth Bank that if they maintained their reserves you would not compete with them? - iWe have stated publicly from time to time that we will not use their funds in competition with them. We use our own bank funds, but not the banks' funds. Does that mean you have given them an undertaking that if they leave their reserves with you, you will not, in effect, take customers -from them? - We will not use their funds to take customers from them. The amount of money we have available does not permit us to compete largely with them. One of the effects of this bill, of course, will be to set up the Commonwealth Trading Bank, so-called, backed by limited capital instead of the prestige and power of the central bank. Thereby, the competitive ability of the bank will be restricted as the competitive ability of the Commonwealth Bank was restricted at the time to which that evidence refers. The cross-examination of Sir Ernest Biddle was continued by the chairman of the commission, because the witness had evaded an essential part of Mr. Chifley's questions. The report continues - By the Chairman. - Your answer does not quite meet the question. The question put to you was whether you had given that undertaking to the banks. Prom what you have said, I understand that you stated publicly that you would not use their funds to compete with them; you are being asked whether you ever gave that undertaking, as it were, directly to the banks? - Yes, it has been said to the banks when we have been speaking to them. There has been no written agreement, but we have told them verbally that we would not use their funds in competition with them, and we have maintained that attitude. By Mr. Pitt. - How do you differentiate between their funds and the other funds? - We know what the other bank funds are, and we know what funds are available for ordinary trading purposes, and we keep our trading advances well within our own funds. By Mr. Chifley. - Do I understand that, if you did have funds available you would not make an advance to a customer of another bank not- allow him to transfer his business to you? - There is no definite undertaking that we will not do it, but as a general rule we will not. Have you done it at any time? - Yes, in some cases we have. Mr. Beazley. Then a very pertinent question was asked by Mr. Chifley - Has it ever occurred that a trading bank, through its head office, has communicated with you regarding the activities of your country managers in seeking custom? - Yes, frequently. That is, a trading bank has got in touch and informed you that your country manager is seeking to take custom from it? - Yes. What action do you take when you find your managers doing that? - We tell the managers we do not wish them to do it, if the other banks are giving satisfactory service. Who would determine what 'constituted "Satisfactory service"? - That would be determined by us at head office in most cases. We would see. the representative of the bank in Sydney or Melbourne, as the case might be, and find out if they were willing to give the services which we consider were satisfactory. As the Commonwealth Bank is the bank of the public, what is the reason for not giving all the service it can at the cheapest possible rate to the community? - We have to bear in mind the fact that we are acting as a central bank, as well as a trading bank. Does that mean that, because you are a central bank, you cannot operate to your full capacity as a trading bank? - Yes. So that by becoming a central bank you have crippled your activities as a trading bank? - We have restricted our activities. That evidence made the situation in relation to competition perfectly clear. An equally enlightening reference is to be found in the report of evidence given by the same witness in answer to Professor Mills and Mr. J, P. Abbott, a former representative of the Country party in this House. Professor Mills asked - Supposing you segregated your trading bank activities-- That is what this legislation will do - and that that institution ' did pay taxation, could it then afford to lend at the rates you are lending at ? The reply was - There might be some difficulty, because we have never pressed the trading bank side. Mr. Abbott asked Do you say that your bank has never pressed its trading bank activities? Does that mean your managers do not try to take any accounts away from other banks? Sir Ernest replied ; As far as possible we do not interfere with the advance accounts unless we think the banks are not giving reasonable service at a reasonable rate. In other words, it was nothing but a bank of last resort. At that time, its trading bank activities were segregated from its central bank activities by practice, but not by law. This legislation is designed to make that condition permanent. We cannot discover what honorable gentlemen opposite mean by " fair competition ". What they are doing is to compel a section of the Commonwealth Bank to have a very limited capital. They are annoyed at the success of the Commonwealth Bank. It has 300,000 . customers. It has been allowed to penetrate this field of private business. It has been extremely successful. We must not refer to companies by name, but I can say that recently one of the largest companies in Western Australia transferred its custom from a private commercial bank to the Commonwealth Bank. We know what annoyance that has caused. This legislation is designed to prevent that kind of thing from happening again. Honorable gentlemen opposite have told us repeatedly that the combination in this country of a central bank and a trading bank is unique in the world. Is that supposed to be an argument? What does it matter if it is unique? What is required is an explanation of why that is a faulty arrangement, if it be faulty. The Minister for Labour and National Service did not dare to argue that the Commonwealth Bank had operated against the interests of the nation. There can be only one explanation of the decision to limit the competitive powers of the bank. It is that he believes that it is operating against the interests of the private trading banks. Honorable gentlemen opposite have made great play with the question of the central reserve bank. They have said that they believe that ultimately control of credit should be placed in the hands of the Commonwealth Bank, and that the volume of credit should be determined by it. But they have not faced the fact that if the Commonwealth Bank, at a time of impending financial crisis, is to be the instrument of a government policy designed to prevent that crisis from occurring, it cannot be only a central bank and must also have powerful trading bank activities that will enable it to direct credit to industries which the Government has determined shall be expanded in the national interest. In other words, when a government has to intervene to cure a sick economy, it has to determine certain channels of investment. The present Government determined that the Commonwealth Bank should make Australian. National Airways Proprietary Limited a*, channel of investment. In the same way,, any government in power in a depression, would have to determine certain channels . of investment that it regarded as desirable.to eliminate a depression. The Minister's fall from grace as an" analyst to a propagandist was most clearly demonstrated when he drew an analogy between the situation in 1949, when this Government took office, and that in 1929, when the Scullin Government took office. The honorable gentleman said that in recent days this Government prevented a depression from developing in the same way as the depression developed when the Scullin Government was in office. If Mr. Scullin was responsible for the depression in Australia, docs the Minister say that the English Conservatives, were responsible for the depression in England, when there were 2,500,000 unemployed in that country? The honorable gentleman knows that it was a world-wide depression. Although he is a lawyer, and a constitutional lawyer to boot, as well as a political historian of some quality, he has told us that the financial policy of the Scullin Government in regard to the depression was disastrous. The honorable gentleman knows that Mr. Scullin's financial policy in regard to the depression was never passed by the Senate. The Scullin Government was in office, but not in power. Honorable gentlemen opposite have told us that in 1930 Mr. Scullin introduced banking legislation that was conservative legislation. Anybody who knows anything about politics and has studied the history of Labour governments which have had to defer to a Liberal legislative council or to a Liberal Senate knows that such governments have had to frame their legislation upon the basis of what will get through the Legislative Council or the Senate. Unless a Labour government has 8 majority in both houses of a parliament it must govern in many respects upon Liberal premises. I do not stand by what Labour governments do in Western Australia or South Australia when they have only four out of twenty seats in a Legislative Council. They must do what they can to get progressive legislation through the State parliaments, modified by the opinions of an Opposition that dominates the second chamber. The Scullin Government evolved a definite policy in the depression. That policy was to compel the Commonwealth Bank to expand credit. The Minister for Labour and National Service knows that when the previous Chief Justice of the High Court, Sir John Latham, was Leader of the Opposition in this Parliament he opposed a bill for a fiduciary note issue of a bagatelle of £18,000,000, on the ground that it would be inflationary. If the honorable gentleman reads the report of that debate, he will find that Mr. Theodore finally asked Sir John Latham, "What is inflation?" Getting no answer, Mr. Theodore said, " Inflation is a condition of sharply rising prices. Prices are crashing all over the Commonwealth. Does the right honorable gentleman dare to say that we have an inflationary position ? " Sir John Latham, brilliant lawyer though he was, gave the masterly reply, " We have inflation and deflation, too, operating at the same time." That was the only answer that he could produce to the Scullin Government's economic policy, which was never accepted by the Parliament. If the Minister were to twit the Scullin Government about its lack of courage in not forcing a double dissolution of Parliament, he might have a case, but having regard to the political situation of that day, it is quite untrue to say that the legislation that was passed then was the legislation of the Scullin Government. The Minister is quite aware that it is untrue, because he is not ignorant of political science or political history, and he knows the relations between the two houses of the Parliament that existed at that time. What the Scullin Government could get through the Senate then we are prepared, not to defend, but to apologize for as all that could be done in the circumstances of the time. But it is quite untrue to say that it represented Labour's policy. The policy of the Labour party was to expand credit in the slump by means of a fiduciary note issue, and to use the Commonwealth Bank as an instrumentality to make that expansion. We still stand identified with that policy, and the Government parties have been converted to it. Honorable gentlemen opposite know very well that they have accepted our view that, in the last resort, the Treasurer should control the Commonwealth Bank. Is this legislation supposed to be a great bulwark? Does the Minister suggest that it could not be repealed ? Does he suggest that it would not. be possible to introduce a measure of one line to change the title Commonwealth Trading Bank back to the title Commonwealth Bank of Australia? The legislation has no reality, except that it belittles the Commonwealth Bank. It. is not positive legislation. It is entirely negative. It will make the Commonwealth Bank a weak trading bank instead of a strong one. But the Minister knows quite well that the position is not irreversible, and that the development of the Commonwealth Bank cannot bc stopped. He quoted the honorable member for Melbourne (Mr. Calwell), and asked whether we repudiated the view that he expressed. The honorable member for Melbourne was quite right in saying that the Philistines had been converted to our viewpoint. The Minister suggested that when the honorable member used the word " Philistines " he was referring to members of the Labour party, but the whole tenor of the honorable member's speech was that if we left the Banking Act of 1945 intact, by the weight of free competition the private banks would disappear. What have the private. banks said about the Commonwealth Bank as it exists to-day? Their attitude to it is similar to the attitude of Australian National Airways Proprietary Limited to TransAustralia Airlines. They say, " For Heaven's sake, call it off, or we shall be competed out of existence ". That was what the honorable member for Melbourne suggested. That is what this legislation is designed to stop. In the Government's parlance, unfair competition means any effective competition by a government instrumentality. The Liberals have a very distinct view of a role of governments in industry. A State railway is their idea of such a role. Private railways could not possibly make profits in a vast country with great distances and a small population. Private investors were not prepared to run private railways in Australia. Consequently, they were asked to invest in colonial bonds, guaranteed not out of railway profits that could not be made, but out of the revenues of the colonies. They are said to constitute State socialism. They represent, in fact, State guaranteed capitalism. When the Government owns an enterprise such as the whaling commission, which made a profit of £400,000, that is said to be unfair competition and it must be stopped. The activities of the Commonwealth Bank have been referred to as unfair competition and in order to restrict its functions the Government has decided to tear away its trading services. It has decided to permit the bank to have a very limited capital and to call it a trading bank, although it is a national bank, whilst the private trading banks are able to appropriate for themselves territorial titles. This bill is not worth very much. It is a childish piece of legislation. There was a glorious time in the history of the Liberal party from the middle of 1948 to 1949 when it had so much money that it was able to present such radio plays as the John Henry Austral series every night. It had full-page advertisements in the newspapers and two bank officers marching up and down every street, in order to assure housewives what a terrible man Mr. Chifley was. When I visited a polling booth in my electorate. I found twenty cars with " Vote Sneddon - One " on each. The Liberal party has decided that if it makes another gesture to the banks such as it made previously they might turn out their staffs again and provide cars and funds. The Minister for Labour and .National Service has taken as his theme - " The Leader of the Opposition versus the Deputy Leader of the Opposition", and he said that ipso facto, the honorable member for Melbourne (Mr. Calwell) will be Treasurer in the next Labour Government. The honorable member for Melbourne would make a good Treasurer, but it cannot be said that, ipso facto, he will be the Treasurer in the next Labour Government, because I cannot think of one Deputy Leader of the Opposition in the Labour party who became Treasurer. But this is the mountebank line that is to be presented on every broadcasting station if this bill procures for the Government parties the hundreds of thousands ' of pounds that they had in 1949. The Minister for Labour and National Service once said that nobody ever won two elections on the same issue. The desperation with which the Government is trying to win another election on the issue of the nationalization of "banking is interesting. The Minister claimed that the Government had a mandate from the people. He himself effected a brilliant analysis of the recent referendum on the Communist Party Dissolution Bill and announced that although the Government's case was defeated at that referendum by 50,000 votes, on the basis of that voting the Government would have a majority of eighteen seats at the next general election. The Government did not receive a majority of votes in 1951. It had a favorable distribution of votes from its point of view. So it should not boast too much about mandates. There is some sign that the Government's mandate has been withdrawn. This bill could be described as a bill to take away the trading bank activities of the Commonwealth Bank and to belittle the Commonwealth Bank by giving its industrial section ar> ignominious name. It might be described as a bill to win friends for the Government and provide it with the funds that it needs for the next election. The Minister for Labour and National Service has not explained why only the Senate is being pushed in to test the temperature of the water in May before other honorable members opposite take the plunge. Prom the by-elections in Flinders and Werriwa and from the results of other State elections, the Minister has an idea that the water is pretty cold. I have an idea that it is pretty cold, too, and this further gesture of subservience to private interests will make it even colder. 557 KWR Bradfield 0 0 TURNER, Henry Mr TURNER .- I am very conscious at this moment of the honour that the people of Bradfield have done me in sending me to represent them in this Parliament, particularly as I have represented them in another place. It is an embarrassment to follow on the heels of such a distinguished and illustrious predecessor as the late Right Honorable William Morris Hughes, who was a great man and who even in his latest days enlivened and illuminated the political scene with the shafts of his brilliant and coruscating wit. I have myself been his victim at times. I have listened with great interest to almost the whole of this debate. I was particularly interested in the speech of the honorable member for Fremantle (Mr. Beazley). Apparently there was some doubt in his mind and the minds of other honorable members opposite as to whether the Philistines were on this side of the House or on the other side. My recollection is that the Philistines were the people who were slain - as I, myself, have been bludgeoned to-night - by the jawbone of an ' ass. I was impressed with the hatred that the honorable member for Fremantle and other honorable gentlemen opposite expressed for private enterprise in all its forms. When I look across the face of this country and see how it has been developed by private enterprise, I am not ashamed to be a member of the party of which private enterprise is the foundation stone. I, too, have ideals. I believe that there can be no liberty in any country where there is no private enterprise and no private property. I believe that if we proceed to the end of the road upon which honorable gentlemen opposite have set their feet we shall end in slavery. " I do not make that statement in order to divert the attention of honorable members from the purpose of the measure, but because I could not help observing the hatred of the honorable member for Fremantle and other Opposition members for the institution upon which all our liberties depend. I want to be quite dispassionate in my examination of the bill before the House, and to cast a little more light on the situation and generate a little less heat. First of all, we must rid our minds of a certain amount of folklore that has gathered around this subject. For many years members of the socialist party have represented the private financial institutions as ogres who delight in throwing men out of work and causing starvation. That is the picture that has been painted here during the course of this debate and which has been painted on every street corner throughout the country wherever the subject of banking has been raised. On the other hand, Opposition members have painted a picture of the Commonwealth Bank as a sort of fairy godmother who is able to wave a wand and cause every grim ravine to become a garden, and every blazing desert to be tilled. This is an extraordinary picture. On the other hand, the private financial institutions or those responsible for their management have been too often represented by their friends as omniscient and infallible people who never made a mistake. If there were business depressions from time to time, then that was clue, so it was claimed, to some unkind and inexorable fate, but had nothing to do with those human failures of judgment to which we are all subject. Of course, both pictures are, to my mind, completely misleading. On the one hand, the folklore that emanates from the other side of the House does not carry conviction to the mind of. any sensible person; on the other hand, are there many of us who believe that there are human beings who are not subject to error? The plain fact is that the private banking institutions have been affected by all the motives that guide ordinary human beings. Those who control them have, no doubt, been unduly optimistic in time of boom, and perhaps have been unduly pessimistic when times were difficult. They have been influenced by the psychology of the business community, and all those factors have resulted in the recurrent booms and depressions that we have experienced over the years. The truth is that, particularly since 1930, and in a tentative way before that time, the minds of forward-looking people have been turning to the possibility of establishing central banks, with adequate powers, as a means of ironing out recurrent booms and depressions. The central bank movement began in a big way only after the 1930's. A lot of water has flowed under the bridge since those days. We have had great economists like Lord Keynes, who has had as much influence on his generation as Adam Smith had on an earlier generation, and men like Mr. Montagu Norman, the late Governor of the Bank of England, who spread the idea of establishing central banks. Then we had our experience in the last war, which necessarily involved control of our whole banking system to prevent unparalleled inflation and to ensure that our national resources were used to the best advantage to bring us victory. All these things have happened and, naturally, mankind has learned a lesson from them. There was no malevolence in the happenings of the past, but there was human failure as in relation to all things. With all that experience behind us there is now no real difference of opinion between the two sides of the House on the fact that to-day wc are committed and, indeed, embrace the idea of a strong central bank armed with sufficient powers to control the volume of credit and, to a considerable degree, the direction in which that credit shall be used. At the same time, we on this side of the House realize that the private banks have an essential part to play. The Royal Commission on Monetary and Banking Systems, from whose findings honorable gentlemen opposite have chosen quotations to suit their purpose, recommended clearly that the private banks should form an integral part of our financial system. I do not believe for one moment that we have now reached the sum of all human wisdom, and that, now that a strong central bank has been established, there will henceforth be no monetary difficulties. The point is not that we have embarked on something that will necessarily bring us to safety, but that we have embarked on something that, properly handled, may achieve better results than have been achieved in the past. I believe that the danger that will face us in the future - and this has impressed itself more and more on my mind as I have listened to honorable gentlemen opposite - will not hinge on whether we step on the accelerator by issuing credit in times of depression, but will lie in the question whether or not there will be sufficient wisdom to ensure that, in appropriate circumstances, the brake will be put on. As I listen to people who believe that anything can be done merely by the issue of credit, I fear that we may indeed learn the truth about these matters in a difficult way. If there are sufficient men of responsibility on the other side of the House who, when they are entrusted with the seals of office, are able to persuade their hot-headed followers that it is necessary to apply the brake at times, as well as to step on the accelerator at other times, in order to avoid recurrent booms and depressions, then all will be well. The danger in the future, now that we have a central bank controlled, in the last resort, by the Government, is that we may run into inflation. It was a wise man who said, not long ago, that just as unemployment had been the curse of the first half of the twentieth century, so would inflation be the curse of the second half. Let there be no mistake about that. Inflation brought Hitler to power in Germany. I am not suggesting that anything like that will happen here, but I suggest that inflation could bring about a cataclysm of one sort or another. I was in Germany when cigarettes were in use as currency because the German people had no confidence in government money. It is impossible to have an active economy under such conditions. The royal commission recognized, and we on this side of the House recognize, the need to have private banks as an integral part of the banking system, along with a strong central bank, not only because such a system gives a choice of banks to the customers, which is a most important matter, but also because monopoly power in banking could destroy liberties, such as the liberty of speech and of action, that our ancestors won for us and that we have sustained for centuries. If a bank under the control of a government could refuse a person credit, and call up his overdraft out of hand, then it would exercise over him, as it could also exercise over hundreds of thousands of citizens, the power of economic life or death. There can be no liberty in a community in which, in the last resort, the Government can exercise, such a power over the individual. It is only the continued existence of the private banks as a counterbalance to State monopoly which can assure liberty in this country. I have nothing but the utmost contempt for a political party that is unwilling to go before the people and say, "We propose to establish a banking monopoly and you must deal with the bank that we shall establish, which shall be able to refuse you credit and call up your overdraft when, it pleases ". Under such circumstances the people would be the helpless slaves of the Government. I repeat, I have nothing but contempt for a party that seeks to establish such a system by stealth. If it were to announce its intention plainly I should have respect for it. The Opposition, however, has spoken with two voices in connexion with that matter. I turn now to the profit motive of private banking, because this is a matter of some interest which has not been fully touched on during the debate. Is it wrong that private banks should be moved by the profit motive? Why is that such a dreadful thing? . When a customer approaches a private bank for an advance there is one test so far as the bank is concerned. That is, whether the enterprise upon which the customer wishes to embark is likely to be profitable; in other words, whether, for example, the article that he proposes to manufacture is something that the public wishes to buy. Is the service which it is proposed to render one for which the people are prepared to pay money? Will it be profitable? In other words, is it something which the community wants? Therefore, if the yardstick in making an advance is whether the thing for which the advance is required is profitable, surely it means that the advance will be made if the community needs the goods or the service which the borrower seeks to make available. Is there anything wrong with that? Is it right that a monopoly government bank should apply some other yardstick and say, " We do not care whether the public want it or not. We do not care whether it is profitable or not, because this is something which we think the public should not have ". I suggest that a person who is refused an advance in those circumstances will not be happy, but if he is refused because his proposal is one which the bank considers will not be profitable, he will feel that an. impartial test has been applied and will not then be resentful. I therefore seenothing wrong in a private banking; system operating at a profit, because that in itself ensures that money is being use( for the things that people want and not for something that the Government thinksthey should have. What is the attitude of the Australian Labour party towards nationalization of banking or the elimination of the privatebanks? There is hardly any need for meto labour this point because it has been admirably dealt with by other honorable members on this side of the House who have spoken during the debate. It is perfectly clear that the platform of the Australian Labour party requires that, private banks should be eliminated, liquidated or expropriated. That objective enters into the very warp and weft of Labour thinking. Nobody who has listened to this debate could have any doubt that the majority of those whosit on the other side of the House wish to establish their own monopoly bank - a " people's bank ", as they call it. I do not know who would own such a bank, but I am quite sure that if any one walked into that bank and asked for an advance, money would not be given to him unless he could provide proper security. He would not be treated differently from the way in which he would be treated by a private bank. In what sense, therefore, would such a bank belong to the people ? Ownership usually implies control. If . the Commonwealth Bank belongs to anybody, I suppose that, in the last resort, it belongs to the Government, or to the Treasurer, rather than to the ordinary man in the street. We must not bemuse ourselves with words and attach to the phrase, " the people's bank " a meaning tl] at it should not carry. It is clear, from all that has been said over the years and from the platform of the Australia Labour party that that party intends to try to eliminate the private banks. That could be done, no doubt, in various ways. The High Court of Australia, and later the Privy Council, declared that certain means which were attempted iri 1947 are not open to the Opposition should it regain office; but, as has already been said, there are various ways of achieving the same purpose. For instance, in the case of the airlines, if my memory serves me correctly, some of the methods used to eliminate competition included the refusing of import licences to a private airline to enable it to import aeroplanes without which it could not carry on its business; the refusal to give it mail contracts, and the denial of airport facilities. I do not intend to use my ingenuity or imagination in thinking up methods by which the private banks could be nationalized, but the Opposition has on its side many astute lawyers, and I have no doubt that ways could be found if the will were there to achieve the purpose. The object of the present legislation is to give some protection not only to the private banks, which are supposed to be the curly-headed boys of the Government, but also to all institutions which serve the whole of the people and are the guar antee of their liberties in the last resort. Let me say at once that I am more concerned with the liberties of the people than I am with the particular rights of private banks or any other institutions. With me, the liberties of the people come first. One should not be branded as standing for vested interests if one supports something on which the liberties of the whole of the people depend. The object of the legislation is to protect the private banks, and therefore the liberties of the people, from the expropriation that is threatened by the socialists, whilst at the same time leaving with the central bank sufficient power to control the volum? and direction of credit in such a way that it will ensure a high level of business activity, and the possibility of progress in this country. Of course, this lefisla-tion does not suit everybody. It has been attacked from both sides. For instance, on the one hand, it has been attacked by the bankers, who say that the proposals do not go far enough ; whilst, on the other hand, the socialists say that they go too far. it may be that, because the proposals have been attacked by the bankers on the one hand and" the socialists on the other, there is some indication to the public, as the Minister for Exter nal Affairs (Mr. Casey) said this afternoon, that this is a moderate, middleoftheroad measure, which should stand the test of time and which measures up to the requirements of real statesmanship. The legislation proposes to separate thu General Banking Division of the Commonwealth Bank from the central bank and to set it up as a separate entity. The socialists say that that will weaken the central bank, whereas the bankers say that the nature of the separation is not sufficient to give adequate protection by ensuring fair competition. The Commonwealth Bank Board will control the new entity that is to be set up. A general manager is to be appointed by the Government, on the recommendation of the Commonwealth Bank Board, to which he will be answerable. The staff of the two banks is to be freely interchangeable. The new entity will carry on its business with the same capital and on the same terms as in the past. Nevertheless, it is said by the socialist Opposition that the = arrangement will weaken the powers of the central bank to such an extent that it will not be able properly to carry out it' functions of controlling the volume of credit and, in large measure, the direction in which that credit is to be used. I wish now to quote from the last report of the Commonwealth Bank, which is that of the 30th June, 1952. Under the heading " Trading Activities ", the following statements appear: - 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. This concentration of activities under the control of the central bank is unique in central banking, but affords strength to the central bank. Through the trading departments the central bank has been able to maintain contact with business and the market and to give its staff a wide and diversified banking training. Further, through the direct lending operations of these departments, and through the Commonwealth Savings Bank, the central hank is able to exercise a positive influence on the economic situation. I ask how the separation of the trading bank division from the central bank can affect any of those requirements. What is the concentration of activities under the general control of the Commonwealth Bank? There is the Mortgage Bank Department, the Industrial Finance Department, the Rural Credits Department and so on, but none of those departments will be affected by this measure. The only part of the Commonwealth Bank's activities that will be affected by this bill is the .trading section. Surely it will be possible for the central bank to maintain contact with trading bank business through the Commonwealth Trading Bank, and to give its staff a wide and diverse banking training under the provisions of this measure. All the objectives as set out in the Commonwealth Bank legislation can be fully achieved under the new arrangement. The direct lending operations of other departments of the Commonwealth Bank will remain unaffected. Surely, because of the provision with regard to special deposit accounts, .the central bank will have power to do all that it is necessary for it to do ! It seems to me that the true position about the special accounts may be clearly summarized. Under the 1945 Banking Act it is possible for the central bank to call up from the trading banks all deposits in excess of those held by the trading banks at a base date in 1945. This measure will cancel this indebtedness of the trading banks, which amounts to more than £550,000,000 and which, under the Labour Government's act, could be called up to-morrow to the ruin of all the private banks. This measure substitutes for that provision, a provision under which 75 per cent, of the increase of deposits from time to time may be called up by the central bank. That seems to give a very fair opportunity to the central bank to exercise control over the volume of money or credit available to the private banks. Although it may be claimed on behalf of the private banks that the safeguards in this measure are not sufficient to protect them against the deprivations that have been threatened by the Opposition when it attains office, in the last resort all these matters depend upon the ballot box. Any legislation of this House can be changed by any future government that has control of both Houses of the Parliament - and of course such a day must come sooner or later. The ultimate safeguard of the proper use of the banking power to prevent deflation or inflation, which can be just as ruinous as deflation, is an informed public opinion exercised through the ballot box. It is to be hoped that the people of this country will take full heed of the speeches made by the honorable member for Melbourne (Mr. Calwell), and some of his colleagues during this debate, and will not entrust the Opposition with the seals of office until it entertains very different views from those that have been expressed by its spokesmen. If the people should entrust themselves to a ride on the tiger that has been plainly revealed by the Opposition, then they will surely learn through experience that will be just as bitter as the experience of the last depression, what irresponsible control of the monetary system can mean. It is to be sincerely hoped that the people of Australia will not have to learn the bitter lessons of irresponsible control of our banking systems that were learned by the people of Germany and some other European countries after "World War I. 562 JOE 0 0 BATE, Henry Mr Jeff Bate - I desire to ask your guidance, Mr. Speaker, on a matter of procedure. Am I permitted to move, during the committee stages of this measure, an amendment to clauses of this bill, on which I have not been able to address the House during the second-reading debate? I understand the procedure in the Legislative Assembly of New South Wales, but I desire to know the rule of the Commonwealth Parliament on this matter. Is my freedom to move an amendment to the measure in its committee stages affected by my not speaking on the second reading of the measure? If I vote for the second reading of the bill, which I endorse as far as it goes, will that action prevent me from moving an amendment at the committee stages? 562 10000 0 0 SPEAKER, Mr Mr SPEAKER - I do not understand the procedure in the Legislative Assembly of New South Wales. I have had some experience in a State parliament, because I entered the Commonwealth Parliament from the South Australian House of Assembly. However, I would not under any circumstances express an opinion about State procedure. The honorable member will not be prevented from moving amendments in committee simply because he did not speak during the second-reading debate on the bill. The fact that he did not speak during the second-reading debate does not mean that he is either for or against the bill. The purpose of a second-reading debate is to decide whether a measure is to be considered by a committee of the whole House. As soon as a bill is put before a committee of the whole House, it is open to any honorable member, the Speaker alone excepted, in my view, to attend and put before the committee any amendment that he wishes. The honorable member's rights and privileges in committee are fully safeguarded, notwithstanding the fact that he has not been called upon to speak during the second-reading debate. The honorable member is perfectly entitled to vote. The vital vote, in my opinion, is not the vote on whether the, bill shall be read a second time, but is the vote on whether the bill shall be read a third time. That is when the House expresses its views on the bill as it emerges from consideration in committee. Twentythree members of this House have spoken so far on this measure. There are 123 members of the House, so that 100 out of the total number of members have not yet had an opportunity to speak. In other words, 99 honorable members besides the honorable member for Macarthur (Mr. Jeff Bate) have not spoken. 563 6V4 Grayndler 0 0 DALY, Fred Mr DALY .- The honorable member for Bradfield (Mr. Turner) is a new member of this House, but he is not new to parliamentary practice for he was a member of the New South Wales Parliament for many years. Therefore, possibly the first speech that he has made in this Parliament would not bc a novel experience to him. Let me say, courteously, that I thought the presentation of his case was good, but I completely disagreed with everything that he said. The speech of the honorable member showed that the electors of Bradfield have elected as their representative one who will march -side by side with the honorable member for Warringah (Mr. Bland), whose state of social advancement stopped somewhere about the year 1901. The arguments that he espoused, and which were supported by the honorable member for Warringah, are the time-worn arguments always advanced by the most conservative of tories whenever they support the private banking institutions of this country. The speech of the honorable member for Bradfield no doubt brought joy to those thousands of his electors who exist on a meagre income of £20,000 a year after taxes have been taken from them. However, that small section of his electors who depend on employment for their daily bread and for the sustenance of their families, will have heard his speech with gloom. His policy, which is supported by the great majority of the honorable members on the Government side, is the policy that brought depression to this country in the grim thirties. With other members on this side of the House, I oppose the policy that has been enunciated by the Government's supporters. This measure is a pay-off to the private banking institutions of the country by a Government which is in office because of the financial support that was given to it by the banks in .1949. I hope that next Saturday judgment will be parsed on this legislation by the electors in two States and that due recognition will be given -to the views of honorable members opposite. The people will know then that the kind of policy that has been enunciated in this Parliament by honorable members on the Government side will rapidly add to the growing numbers of unemployed people. The honorable member for Bradfield said, in effect, that finance was the economic life or death of the people. He asked why a government should have power over finance. In reply I ask him why a bedstead manufacturer, a polo player and a dozen and one other people who are appointed to bank boards should control the destiny of the people ? Why should the private banking interests control the destiny of business people and all that goes to make a nation? Is it not more democratic and essential that power over the economic life or death of the nation should be vested in the elected representatives of the people and the people's bank? Therein lies the crux of the matter. The private banks realize that the greatest power that can be given to an institution is Mie power to provide the economic lifeblood of the community, which is money. By making excessive profits from the sufferings of the people, they have learnt that the loss of that power will take away from their shareholders and directors unlimited profits. That is why they fight to-day through the Vice-President of the Executive Council (Mr. Eric J. Harrison) and others to retain their profits and show no concern about the welfare of the people. Honorable members on the Government side have spoken as though they were united on this measure but we know that the bill is a sop to the private banks. Many honorable members opposite wish to go further and destroy completely the Commonwealth Bank. They have always fought against the Commonwealth Bank. They opposed its introduction. The same sorry story has been passed on to-day by honorable members opposite as was told by the predecessors, irrespective of the constant changes of names that they have adopted for their parties in an attempt to run away from the policies that they have espoused. It is inevitable that banking reform in Australia will be opposed by tory parties such as those on the treasury bench, and that parties which depend upon vested interests for finance will be called upon to dance to the tune of those who paid the election expenses of supporters of the Government in 1949. The honorable member for Fremantle (Mr. Beazley) has shown clearly how money was poured out by the banks in the 1949 election campaign in order that legislation of this type could be brought down as a pay-off to them for the finance that they subscribed to defeat the Chifley Labour Government. Among other things, I should like to know any reason for the introduction of this legislation other than the desire to pay off those who paid the Government's election expenses. Have any private banks failed since 1945? Have their profits fallen to any great degree? The profits that were announced a few days ago by the Bank of New South Wales were a record, according to my understanding of them. Have the banks lost any turnover? Have they been forced to the wall by legislation ? No adequate reason has been given by any honorable member on the Government side in a practical sense to show why the? legislation should be introduced. We can only assume that sinister and powerful influences have forced the Government to give way so that the profits of the private banks shall be maintained. We have had examples previously of the power that is wielded by the private banks over the Government. Honorable members have had the spectacle in this Parliament in days gone by of governments being bailed up at the point of a gun, so to speak, so that the private banking interests should be served. One should never fail to record in Hansard and to remind the people how the Commonwealth Bank, at the dictation of Sir Robert Gibson, decided to hold a gun at the head of the Scullin Labour Government and demand that certain things be done. That Government was threatened that if it did not do as it was told, it would not be allowed to carry on. I point that out so that honorable members will know that there is in this legislation a real threat and that figuratively it will place a gun in the hands of the private banking interests. On the 13th February, 1931, Sir Robert Gibson, who was then chairman of the Commonwealth Bank Board, wrote to the then Prime Minister, Mr. Scullin, in the following terms : - Subject to adequate and equitable reductions in all wages, salaries and allowances, pensions, social benefits of all kinds, interest and other factors which affect the cost of living, the Commonwealth Bank Board will actively co-operate with the trading banks and the Government of Australia in sustaining industry and restoring employment. In other words, the Commonwealth Bank Board decided that the people of Australia must pull in their belts in order that the banks could continue to make their profits. Ultimately the Scullin Government had to go to the people. The Treasurer of the day, Mr. Theodore, wrote to Sir Robert Gibson on the 15th April, 1931 as follows : - The attitude of the Board throughout the recent negotiations and as disclosed in the letter now referred to, can only be regarded by the Commonwealth Government as an attempt on the part of the bank to arrogate to itself a supremacy over the Government in the determination of the financial policy of the Commonwealth, a supremacy which, I am sure, was never contemplated by the framers of the Australian Constitution and has never been sanctioned by the Australian people. That was a deliberate hold up by the Commonwealth Bank which was controlled through the Commonwealth Bank Board by the vested banking interests of the country. .Subsequently because of the necessity to have the finance to provide work and because of the hold up of the people's money, Australia passed through one of the most bitter depressions of our time. During that period, when many Australians were unemployed and industries were closing down, the Commonwealth Bank provided no money and the Australian Government was unable to get finance to relieve the position. With the growing numbers of unemployed in Australia, a pool that has been formed deliberately by the Government, that should be remembered. At the worst period of the depression under the policy of the Commonwealth Bank as dictated by the private banks, there were 480,000 persons unemployed in Australia, and those in receipt of a miserable dole at the 30th June, 1932, totalled 783,000. There were many bankruptcies in which assets totalling £7,000,000 were involved. At that time a single man was granted 5s. 8$d. a week sustenance and a married man was supposed to maintain his family on 20s. a week. During those tragic years, when thousands of men walked the roads and streets fruitlessly seeking work, the banks were concerned only with maintaining profits. That position was brought home forcibly to the people in 1937 by the report of the Royal Commission on Monetary and Banking Systems, which stated in paragraph 565 - Along with other parts of the system, the trading tanks must bear some responsibility for the extent of the depression. In the mort, prosperous times preceding the depression, they went with the tide and expanded credit. There was then no central bank to guide their policy, but even in its absence, the banks might have taken concerted action which would have helped to check the boom, and thereby have lessened the extent of the depression. At the outset of the depression, the trading banks, in the interest of their depositors and of their own solvency, were forced by the general conditions and by the reduction of their London funds, due to the fall in export values and the cessation of overseas borrowing, to adopt a policy of contraction which intensified the depression. These are the interests to which the Government would hand back control of the Commonwealth Bank at a time when between 150,000 and 200,000 Australians are unemployed. The bitter pattern of the depression years is being written into the Australian economy by legislation such as this and by the economic policy applied by the Government. To-day, because of the policies applied by the Treasurer, there is money galore in the banks and goods are available for purchase, but thousands of Australians are unable to obtain work or to provide necessaries for their homes. That is the pattern of Liberalism all over the country. That is the pattern of policy which caused a notice to be posted up on the borders of Queensland on the 7th May, 1931 by the Minister for Labour, Mr. Seizer, in the infamous Queensland Moore Government, in the following terms : - WARNING! People, entering Queensland in search of work are hereby warned that at present there is a surplus of labour in every centre of the State and that they proceed into Queensland at their own risks. The Government can only hold itself responsible for feeding Queensland's own unemployed. The policies implemented in Queensland when the Moore Government was in office were foisted on the people of that State by the Commonwealth Bank, the controllers of which then represented the private banking interests. The people of Queensland might well take note of the fact that legislation of the kind now before the House may well mean the posting of similar notices from one end of the Commonwealth to the other. That is an indication of the dangers of this legislation. When the late Mr. Chifley introduced certain banking reforms he pointed out that the power and influence of the banks over the lives of the people were such that they brought to all sections of the community, particularly those in the lower income group, great sufferings unless they were wisely administered. This Government is following policies of a familiar pattern. On every occasion profit is its guiding motive. Referring to the depression years, when the people of Australia were "suffering untold miseries, the Royal Commission on Monetary and Banking Systems had this to say - Prior to that period, however, the trading banks as a whole have made large profits. In the period 1893-1930 - a period of 43 years, including two major depressions, one minor depression and the war - the published figures show that they made a total profit of £108,548,000, being an annual average of 10.27 per cent, on paid capital and 0.28 per cent, on shareholders funds. What have the private banks done but exploit the sufferings of the people, aided and abetted by tory governments that represent only the wealthy and influential sections of the community? The Government is concerned only with those who have most and not with those who have none at all. Government supporters speak of the need for competition in banking. I often wonder what method of competition the private banks prefer. Some years ago there were more than twenty private banks in Australia. As the result of amalgamations the number has now been reduced to six. Is that reduction an indication of the kind of competition that the private banks and honorable members opposite desire? If it, is not, what is the reason for the continual amalgamations that are going on? Mr. L. J. McConnan, chief manager of the National Bank of Australasia Limited, Melbourne, gave the following evidence before the royal commission on the subject of competition : - There is a general understanding among the associated banks that we shall not compete with one another on questions of rate. The charges for other services, such as keeping of accounts, internal and external exchange, &c, are also fixed by agreement among ug. Wo are free in the matter of quoting our overdraft rates, with the exception that there is an understanding. I personally have never seen any record of this understanding, but 1 believe the understanding is in existence that we will not compete against each other in the matter of rates. To illustrate that - If I am charging a man 5 per cent, the other hanker will not go to him and say, "We will give you that for 4 J per cent.". fs that the kind of competition the private banks prefer? I am amazed by the demands made, by those who prate about the need for competition. When an industry has been established in one area and a proposal is made that another industry be established alongside it, those who plead for competition invariably approach their federal member to enlist his aid in preventing the second industry from being established. They do not want real competition in industry or in anything else. The private banks want competition only on their own terms. If this legislation is passed the Commonwealth Bank will lose millions of pounds in turnover and profits. Much of the business of the bank will be placed in the 'hands of the wealthy few who control the private banking institutions and support the Government. What will the people think of a government which proposes to throw overboard the provisions in the Banking Act 1945 which established the charter of the Commonwealth Bank and made possible the achievement of full employment in Australia? This legislation represents another step forward towards the Government's goal of adding still further to the 150,000 people who are denied work. The Government merely gives lip service to the ideal of full employment. This legislation represents another step towards the destruction of the Government which faces annihilation and the fate that in recent weeks has befallen governments of similar complexion in the State sphere. The people will rebel against a government which seeks to impose upon them hardships, suffering and unemployment and at the same time allows its wealthy supporters to reap unlimited profits. The Commonwealth Bank is a bulwark against the depredations of the private banks, but this legislation will shackle it and restrict its activities. Control of the credit of this nation virtually means control of the Government. I have in my hand a well-known dodger, printed on nice pink paper, which reads - PARTY Leaders Receive Instructions. Air. J. G. B. McDonald, M.L.A., Leader of the Opposition, and Mr. T. T. Hollway, M.L.A., Leader of the Liberal party, receiving their instructions from Sir Frank Clarke, K.B.E., M.L.C., Vice-Chairman, National Bank. The dodger was printed when the 1947 banking legislation was under consideration. On the dodger is reproduced a photograph of Mr. J. G. B. McDonald and Mr. T. T. Hollway receiving their instructions from Sir Frank Clarke, K.B., M.L.C., the vice-chairman of the National Bank of Australasia Limited to defeat the then Labour government of Victoria. The legislation then under consideration in this House constituted a threat to the continued control of the finances of the nation by the private banking interests. There is another reason why the representatives of big business sit in this House to-night waiting to vote for this measure. They seek to hand the control of the business of government to their wealthy supporters who have complete control, not only of the private banks but also of this Government, and, through those channels, of the lives of the people. The resentment of the people against this measure will become apparent when the Government faces the electors. As Opposition members have said, the Senate election will cost approximately £240,000 and an independent election for the House of Representatives will cost another £240,000. 567 10000 0 0 SPEAKER, Mr Mr SPEAKER -Order ! The honorable member is not in order discussing electoral matters. 567 6V4 0 0 DALY, Fred Mr DALY - I was merely going to add, Mr. Speaker, that if a general election for the Senate and the House of Representatives was held the total cost would not exceed £250,000. The Government is not willing to have a general election because it fears the wrath of the people for this and other " sell outs " of which it has been guilty. It will be interesting to see how Government supporters vote on the amendment which one of them has indicated that he intends to move. 567 10000 0 0 SPEAKER, Mr Mr SPEAKER -Order ! No amendment is before the Chair. 567 6V4 0 0 DALY, Fred Mr DALY - The honorable member to whom I refer and the honorable member for Mitchell (Mr. Wheeler) speak through the press as though they were rebels in the Government ranks, but I have no doubt they will be obliged to support this measure. Indeed, I understand that those honorable members have been threatened with expulsion from the Liberal party if they fail to do so. I mention that fact in order to indicate the haste on the part of the Government to destroy the Commonwealth Bank. That is the object of this measure, and the criticism that has been advanced by members of the Opposition has convinced the people of that fact. The Government has advanced no reason for its attempt to destroy the 1945 legislation. Government supporters have not substantiated their claim that at present the Commonwealth Bank is competing unfairly with the private banks, and they have not produced any figures to substantiate their statements that the private banks have incurred substantial losses as a result of the 1945 legislation. On the contrary, that legislation empowered the Government of the day, regardless of its political colour, to exercise control over the banking system in the interests of the nation as a whole. I condemn this measure as a complete sellout on the part of the Government to the private banks. Under the bill, those institutions will be restored to the position which they enjoyed prior to the day's of the Bruce-Page Government. The bill is clear evidence of the fact that the Government's sole concern is to benefit vested interests regardless of the welfare of the nation. 567 KX7 East Sydney 0 0 WARD, Edward Mr WARD .- Mr. Speaker- Motion (by Mr. ERIC J. Harbison) put - That the question be now put. The House divided. (Mb. Speaker - Hon. Archie Cameron.) 49 35 Majority 14 AYES NOES Question so resolved in the affirmative. Question put - That the bill be now read a second time. The House divided. (Mr. Speaker - Hon. Archie Cameron.) 50 35 Majority . . . . 15 AYES NOES Question so resolved in the affirmative. Bill read a second time, and committed pro forma; progress reported. 568 adjournment 568 miscellaneous Motion (by Mr. Eric J. Harrison) proposed - That the House do now adjourn. 568 KDX Ballaarat 0 0 JOSHUA, Robert Mr JOSHUA .- I am compelled to raise a matter this evening. that I. should have preferred to raisetomorrow, but I find that I shall not. have an opportunity to do so. It concerns the sulphate of ammonia factoryowned by the Government at Ballarat. At present, this factory has in its storesome 3,500 tons of the product, which it is unable to dispose of, but production is continuing and the output is being placed in the store. The management has done what it can to restrict the output; but, as the factory is a chemical1 works, it must work at a certain pressure, or not work at all. Before last Christmasthe factory, which is conducted by Imperial Chemical Industries of Australia and New Zealand Limited, was obliged to lay off 40 men. Earlier, other employees had been laid off. The situation at the factory is serious indeed both for the management and the workers. I believe that the Government should make a statement about the position, because it is extremely mysterious. The output of the factory is controlled by a government instrumentality which distributes the production. So far, the output has been distributed to South Australia in anticipation of the require-- ments of that State' for next season. Consequently, the opportunities for selling further output are diminishing. One would have thought that in view of the difficulty of selling the whole of the Australian output, the Government would make sure that overseas competition was eliminated so far as possible; but that has not been done, because amongst the items on which import restrictions have been lifted we find sulphate of ammonia. Apparently this fertilizer is to be admitted quite freely into Australia whilst our own factories are having great difficulty in disposing of their product. There is another factory manufacturing sulphate of ammonia at Risdon, in Tasmania. It is operated by the Electrolytic Zinc Company of Australasia Limited. I understand that adequate supplies of sulphuric acid, which is used in the manufacture of sulphate of ammonia, have not been forthcoming for the Ballarat factory, and that the undertaking is likely to close in the near future. The time has come for the Government to make some statement about this matter. It should not keep the people of Ballarat guessing. They have a right to know what is to happen. They have a right to expect that this important government plant, which was installed as a war-time measure and has since been converted to peace-time production, will be maintained in operation. Perhaps the plant is getting old and should no longer be utilized. I do not know whether that is so; but the Government should make the position clear. If the plant is to be kept in operation it should be supplied with the raw materials that it needs. I have read pamphlets which state that the Risdon factory is to be extended. I do not know where the increased output of sulphate of ammonia will be sold, because, as I have said, a market cannot be found for- all the present output. The Ballarat undertaking should be informed of the state of the market, and. every possible step should be taken by the Government to provide an outlet for the sulphate of ammonia that is produced there. Possibly the demand could be stimulated by judicious advertising. The Government might also investigate the possibility of exporting this valuable fertilizer. The local product should be protected against imported fertilizer. It is the duty of the Government to state a clear-cut policy in connexion with this undertaking. 569 BV8 0 0 CALWELL, Arthur Mr Calwell - How many unemployed are at Ballarat ? 569 KDX 0 0 JOSHUA, Robert Mr JOSHUA - I think that the number is about 100 at present, but it has been as high as 240. If sulphate of ammonia is no longer required, the industry should be informed of that fact. The Ballarat employees want to know where they stand. As the Ballarat factory produces sulphate of ammonia in competition with private enterprise, the disclosure of some information on this subject might be beneficial. "We should like to know, for instance, to what degree the government factory trades in fair competition with private factories engaged on the same work. I hope that the Government will make the position clear for the benefit of those who have approached me on the matter. 569 KNX Wentworth UAP; LP from 1944 Vice-President of the Executive Council and Minister for Defence Production 0 0 HARRISON, Eric Mr ERIC J HARRISON . - in reply - I assure the honorable member for Ballarat (Mr. Joshua) that I am fully aware of the circumstances associated with the matter that he has raised to-night. The problem is receiving consideration at the moment with a view to ascertaining just what can be done. As soon as the Government is in a position to make a clear statement on the subject it will do so. We have no wish to deprive employees of the government factory of their jobs. We are doing our utmost to ensure that something shall be done to continue their employment because the industry in which they are engaged is essential to our defence. However, the honorable member for Ballarat knows full well that there is no suggestion at present that th, Ballarat employees will be thrown out of work. The circumstances of which lie has spoken may warrant the Government taking some action. As soon as a decision has been reached, I shall make a statement about it. Question resolved in the affirmative. 569 papers The following . papers were presented : - Lands Acquisition Act - Easement acquired for Defence purposes - Richmond, New South Wales. Nauru - Report to General Assembly of the United Nations on Administration of Nauru for year 1951-52. 569 23:15:00 House adjourned at 11.15 p.m. 569 ANSWERS TO QUESTIONS The following answers to questions were circulated: - 569 569 N76 0 0 MENZIES, Robert Mr MENZIES On the 18th February, the honorable member for East Sydney (Mr. Ward) asked the following question:— Is it a fact that a warning was issued by the New South Wales police to the effect that a man for whom they were until recently searching had in his possession a cheque drawn for £27,000 or £28,000 bearing the forged signature of the Secretary to the Commonwealth Treasury and also a number of genuine Commonwealth Bank cheque forms? Will he make an early and full statement to the House, including information on whether these particulars were furnished from a Commonwealth source to the New South Wales police and if so how it was known that the wanted man had in his possession a forged Commonwealth cheque and a number of genuine Commonwealth Bank forms and by what means they were obtained? Did the Prime Minister have any discussions with the Premier of New South Wales regarding the terms of reference of the royal commission recently appointed in tliat State, or did he seek to express any views upon the advisability of making the inquiries sufficiently expansive to include the aforementioned serious and important aspect of this matter? Jf the Prime Minister has not already done so, will, he take such a course of action? Further to my promise to make inquiries about the matter, I now advise the honorable member that on the 5th February, 1953, the Secretary to the Treasury received certain information through the Governor of the Commonwealth Bank from the New South Wales police. This information indicated a strong probability that a man then being sought by the police had in his possession a book of ordinary Commonwealth Bank cheque forms over-printed with the words " Consolidated Revenue No. 2 A/c ", with the word " Treasurer" printed in the position above- which the signature on a cheque would ordinarily be placed. The Secretary to the Treasury was also informed that evidence in the possession of the police suggested that two of these forms had been made out for sums of £27,000 and £28,000 respectively and signed with the Secretary's name (which incidentally is well known because it appears on Australian bank notes). Although on the evidence available, it would have been extremely difficult, if not impossible, to negotiate any such crudely forged cheques, the Secretary to the Treasury arranged immediately for the fullest possible investigation and for wide publicity to be given to the possible existence of forged cheques bearing his signature. I should like to make the following facts abundantly clear:—(1 ) To my knowledge there is no conclusive evidence that such cheques ever existed; (2) there is no Commonwealth account designated "Consolidated Revenue No. 2 A/c"; (3) no cheque forms are missing from the Treasury; (4) all possible action has been taken to protect members of the public from any attempt to negotiate such cheques. 570 570 JWU ALP 0 0 FRASER, Allan Mr ALLAN FRASER asked the Minister representing the Minister for National Development, upon notice - Concerning the establishment of an aerodrome at Coolringdon, near Cooma, has the collection of wind direction and velocity readings been completed? What stage has been reached in preparation of final designs and estimates? When will a firm proposal be ready for discussion between the Snowy Mountains Hydro-electric Authority and local government bodies in the area? When will construction of the aerodrome begin ? 570 JWE 0 0 CASEY, Richard Mr CASEY The Minister for National Development has supplied the following information:— The collection of wind data is a continuous process, and readings are still being taken. Readings commenced on the 17th December, 1951, and the information to date has allowed the Department of Civil Aviation to make a decision in favour of the site at Coolringdon in preference to that at Dairyman's Plains. The data, however, is not yet sufficiently comprehensive to give a final decision on the merits or advisability of augmenting a single runway with a cross runway. Probably a further minimum period of twelve months will be necessary for this purpose. Plans and specifications are being prepared by the Department of Works. Finalization of the plans is expected this week and specifications in two weeks. A preliminary estimate has been prepared by the authority, but is subject to revision upon receipt of finalized plans. Data for perusal by the local government bodies is in course of preparation and, subject to receipt of finalized plans, will beready by mid-March. This data will detail costs, advantages to be derived, relationship of aerodrome to shires, &c, and will request substantial support from the local government bodies. The authority is anxious to make an early start, and is in a position to do so, on the construction of the aerodrome, subject to an equitable distribution of cost between it and the local government bodies being arranged. 570 570 KVR 0 0 SWARTZ, Reginald Mr Swartz asked the Minister representing the Minister for Trade and Customs, upon notice - When will the Tariff Board's report dealing with duty on internal combustion engines be tabled in Parliament? Is it a fact that the information contained in this report ia urgently awaited by Australian manufacturers ? 571 KNX UAP; LP from 1944 0 0 HARRISON, Eric Mr ERIC J HARRISON The Minister for Trade and Customs has supplied the following information : - The Tarin* Board report on this subject has been before the Government and it ia anticipated that the report concerned will be tabled within the next tew days. I have no reason to doubt that the position is as stated, but see answer to 1.