1927-11-04 10 1 3 SENATE 959 0 Senate. 1927-11-04 The President (Senator the Hon. SirJohn Newlands) took the chair at 11 a.m., and read prayers. 959 Questions 959 959 JXJ 0 0 NEEDHAM, Edward Senator NEEDHAM - I desire to ask the acting Leader of the Government in the Senate (Senator Glasgow) if he is aware that a statement, whichwill be given wide publicity, . appears in this morning's press to the effect that the Federal Government has decided to sell the Australian Commonwealth Line of Steamers, and that its decision was endorsed at a joint meeting of the parties supporting the Government. Will the Minister say if the statement is correct? If it is, will he give the Senate an early opportunity to discuss the motion now on the notice-paper that the report by the Public Accounts Committee on the Commonwealth Government shipping activities be printed ? 959 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - The honorable senator is aware that it is not customary to deal with matters of policy in answer to questions. If the Leader of the Opposition (Senator Needham), will be patient, he will be advised of the position in due course. 959 JXJ 0 0 NEEDHAM, Edward Senator NEEDHAM - In view of the far reaching importance of this matter, the uncertainty as to the real position, and the undoubted effect of such a pronouncement upon the revenue of the Line- 961 10000 0 0 PRESIDENT, The The PRESIDENT Order! The honorable senator is not entitled to make a statement when asking a question. 959 JXJ 0 0 NEEDHAM, Edward Senator NEEDHAM - Will the Minister arrange the business on the notice paper so that the motion for the printing of the report of the joint committee of Public Accounts on the Commonwealth Government shipping activities will be brought forward 'next week, as early as possible ? 959 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW >The motion to which the honorable senator refers will be discussed in the ordinary course. 959 JYX 0 0 FINDLEY, Edward Senator FINDLEY - Is the statement correct that at joint meeting of Nationalists and Country party members yesterday a desire was expressed by all the members of both parties present, with one exception, that the Australian Commonwealth Line of Steamers should be sold ? 959 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW >It is not the practice for the members of any of the parties represented in this Parliament to disclose what transpires at party meetings. The Leader of the Opposition (Senator Needham) would not be willing to say what happened in caucus, and I do not propose to disclose the nature of the business transacted at the party meeting to which he refers. 959 959 KNF NAT 0 0 MASSY-GREENE, Walter Mr GREENE - Can the Minister for Defence (Senator Glasgow) indicate when the discussion on the motion that the estimates and budget papers,1927-28 be printed, will be resumed and when it is likely to conclude. I think honorable senators should be supplied with this information so that they can make their arrangements. 959 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW >I regret that at present I am unable to inform the honorable senator when the discussion on the motion to which he refers is likely to be completed. I shall be absent next week; but the Leader of the Government in the Senate (Senator Sir George Pearce), will be here, and possibly he will be able to give the honorable senator definite information. 959 JXZ 0 0 DUNCAN, Walter Senator Duncan - Is it intended to dispose of the CommonwealthBank (Savings Bank) Bill and the Commonwealth Housing Bill before the debate on the budget is resumed? 959 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW Yes. 959 KNF NAT 0 0 MASSY-GREENE, Walter Mr GREENE - Will the discussion on the budget be resumed after those measures have been disposed of? 959 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW Yes. 960 Income Taxation On Gold 960 JZW 0 0 ANDREW, David Senator ANDREW - .Has the Minister (Senator Glasgow), noticed a statement to the effect that the Federal Income Tax Commissioner is levying full income taxation on the gross price of the gold which is being won in New Guinea and forwarded to Australia, and that if the present policy is continued, further consignments will possibly be sent to New Zealand? 960 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - The matter is being considered. 960 960 K3X CP 0 0 CARROLL, William Senator CARROLL asked the Minister representing the Minister for Trade and Customs, upon notice - Hu s his attention been directed to published statements to the effect that fully 90 per cent, of the uren producing bananas in Australia has gone out of production owing to the ravages of the disease known as "' Hunchy Top "! If the facts arc as stated, and there is no industry to protect, will steps be taken to remove the duty on bananas in the interests of the consuming- public? 960 JRW NAT 1 0 CRAWFORD, Thomas Senator CRAWFORD - The answers are as follow ; - No. Such statements would be inconsistent with the information at hand. In 1925-2G, the latest year for which complete statistics an; available, the area, planted was 10,515 acres, .with -a production of 2,089,780 bushels valued at £819,594. See reply to 1. 960 bill S boomi Reading. Debate resumed from Srd November (vide page 932) on motion by Senator Sir William Glasgow - That the bill be now read a second time. 960 KMP New South Wales 0 0 GRANT, John Senator GRANT ; but instead of getting a fair deal it has been obstructed at every possible point. I say most emphatically that its operations have been hampered and the amount of deposits limited owing to the action of the directors, no doubt with the approval of the Government, in continuing to pay depositors in the- savings bank the nominal rate of 34% per annum, whilst the State savings banks pay at least one half per cent. more. There is no reason why that should be so when the security in each case is the same. So far as I have been able to judge, the objective is flic ultimate destruction of the trading section of the bank. If we examine the bill very closely and consider the action of the Government in endeavouring to destroy the trading section of the bank, we can only conclude that it is anxious that this class of business should revert to the private banks. 1 mentioned yesterday the bank crisis of the early, nineties ; if the Government is determined to destroy the trading facilities now possessed by the Commonwealth Bank, it will incur the risk of a crash similar to that which then occurred. I do not know whether honorable senators are fully aware of the extent of the calamity, concerning which a most informative and carefully prepared speech was delivered in the Legislative Council of New South Wales, on the 10th February of this "year by the Hon. James Ryan. He stated the position fully, frankly and fearlessly. Honorable senators will doubtless remember the outbreak of industrial unrest that occurred in 1S90 and culminated in the maritime strike and the birth of the Australian Labour Party. Up till that time the organized unions of Australia believed, quite erroneously, that industrial action would secure for them whatever they desired; but when they pitted their strength against that of the organized employers of the Commonwealth' they learned that they were incapable of giving effect to their idi-n?. Acting upon the advice of certain sections of the daily press they adopted the practice of having representation in Parliament. They returned, first to the State. Parliaments- and subsequently to the Commonwealth Parliament, men who were pledged to a definite platform. It will be remembered that at that time, there was a land boom in Melbourne, Sydney and other large cities. The cessation of employment and consequent withdrawal of the wages of the workers brought about the collapse of building societies, and thirteen of the 25 trading banks in the Commonwealth were forced to suspend payment and hang out the sign " Closed, pending re-construction." As a result thousands of people were ruined. Every State Savings Bank, however, was able to weather the storm. Is it now the intention of the Government to render ineffective the savings bank branch of the Commonwealth Bank and destroy the trading facilities of that bank so as to bring about a crisis similar to that which overtook the Commonwealth in the early nineties? Whether or not that is the intention, there is a very serious danger of a repetition of those occurrences. Sir George Dibbs, the then Premier of New South Wales, was regarded as a shrewd financier. The banks found it necessary to have several acts passed by the Government of New South Wales before they were able to re-open their doors. They held deposits totalling £90,000,000 and a sum of £13,000,000 belonging to their shareholders. But for the State Savings Bank the calamity might have been very much worse. Pour of the banks that suspended payment went into liquidation and only- six met all their obligations. I shall refer particularly to the action of three - the A.J.S., " the E.S., and A.C., and the Queensland National. I am pleased to be able to say that in March last the- A.J.S. Bank resolved to pay to its depositors the money which it owed to them. The PRESIDENT (Senator the Hon. Sir John Newlands). - The honorable senator will> not be in order in discussing in detail the business of private banks. 961 KMP 0 0 GRANT, John Senator GRANT - An effort is being made to minimize the importance of the Commonwealth Bank by separating from it the savings bank branch. In those days of which I speak the private banks were unable to carry on without support from the State Savings Bank of New South Wales. The Barrack-street bran- h of the Savings Bank encountered difficulties, and I doubt whether it would have survived if it had not been tided over its troubles by the Post Office Savings Bank. The point I wish to make is that the Common wealth Bank receives substantial support from the Savings Bank branch, which collects and holds a large volume of deposits that in case of emergency are at the disposal of the general bank. Therefore any attempt to minimize the importance of the Savings Bank branch should be strenuously resisted. The effect of this legislation " will be to destroy the trading facilities of the Commonwealth Bank and place the whole of the business in the hands of the private banks. At the time of the crisis to which I have referred, the E.S. and A.C. Bank held deposits totalling £4,000,000. It has repaid only £1,000,000. Ever since, however, it lias continued to pay dividends to its shareholders. I believe that the last dividend amounted to 124- per cent. 961 10000 0 0 PRESIDENT, The The PRESIDENT - 1 again ask the honorable senator not to discuss the business of the private banks. For the last five minutes he has been referring to those institutions. The senate is at present considering a bill dealing with the Commonwealth Bank. 961 KMP 0 0 GRANT, John Senator GRANT - The bill proposes to detach the savings bank branch from the general bank. In 1S93 it was the State Savings Banks which saved the private banks. 961 10000 0 0 PRESIDENT, The The PRESIDENT - The honorable senator has already made that statement twice. I ask him not repeat it. 961 KMP 0 0 GRANT, John Senator GRANT - If you, sir, rule that .1 am not entitled to make any reference to the private banks - 961 10000 0 0 PRESIDENT, The The PRESIDENT - The honorable senator has been allowed to make very extensive references to those banks. I now nsk him to confine his remarks to the bill, and not to repeat himself. 961 KMP 0 0 GRANT, John Senator GRANT - All I wish to saT is that neither the English. Scottish and Australian Chartered Bank nor the Queensland National Bank has repaid to its depositors the amount which it owes to them. If the savings bank branch is detached from the Commonwealth Bank and the latter is destroyed as a trading bank, I cannot see what is to prevent a recurrence of the disastrous events of the early nineties. I, in common with every honorable senator, wish the Commonwealth Bank to bo in a position at all times and in all places to satisfy the demands of its creditors. Most of the private banks were not able to do that, and the result was disastrous to tens of thousands of people. If this or any other government attempts to destroy the Commonwealth Bank it will not receive any. support from me. Let us take another view of the situation. The Commonwealth Bank was controlled originally, to a very large extent, .by Sir Denison Miller. The public rallied round him because it knew that he and the bank had behind them the credit of the community and that their money would be safe. It was under his control that the savings bank branch was established. The bank has a number of branches throughout the Commonwealth. According to the latest figures obtainable, its assets, including accrued interest, amount to about £46,479,000. It is now proposed to transfer those assets to a commission, which is to have the power to carry on the general business of a savings bank; to acquire and to hold land on any tenure ; to receive money on deposit either for a fixed terra or on current account ; to make advances by way of loan or otherwise; and to do anything incidental to any of its powers. I take strong exception to the bank being given the power to acquire and to hold land on any tenure. That is not the business of any banking institution. One reason for the financial crisis of 1893 was that building societies and trading banks held large areas of land. Their assets were not in a liquid condition, and when called upon to find money they could not do so. In spite of that experience, it is now proposed that the Commonwealth Savings Bank shall have power to acquire and to hold land. It will not plough one acre of any land which it may acquire. If I had my way no banking institution would be permitted to hold land for more than a few months, after which it would have to be sold. Clause S, which enables the bank to engage in land speculation, is sufficient to condemn the bill. I have been unable to ascertain how much land in the various States is held by private banking institutions ; but, some time ago, I saw a map of a portion of New South Wales which showed the owner of each block of land. It astounded me to see so many blocks marked with the names of private banking institutions. The bill should provide that the Commonwealth Savings Bank shall not hold land for more than a certain limited period, after which it must be offered for sale. I should go further, and provide that similar restrictions should apply to all banks. The bill also provides that of the half-yearly net profits of the savings bank, one-half shall be placed to the credit of a fund to be called the savings bank reserve fund, and that one-half shall be paid into the national debt sinkingfund as soon as practicable after the preparation of each balance-sheet. The only reason for providing that one-half of the profits shall be devoted to the national debt sinking fund is to ensure that the bank shall be crippled. No State savings bank is required to set aside one-half of its profits in the manner indicated in this bill. The Government has deliberately introduced- this provision in order to destroy the usefulness of the bank. The profits of the bank should be utilized to pay increased interest to depositors, to reduce the interest on overdraft, and to extend the operations of the bank. The Government is not prepared to do this. When the Common- wealth Bank was established, it wa3 expected that it would soon have branches in almost every important town in the Commonwealth. But what do we find ? In a large State like New South Wales, it has only eighteen branches. Yet in almost every township one can find a branch of the Bank of New South Wales, the Commercial Bank, the English, Scottish and Australian Bank, the Union Bank, or some other private bank. In not establishing more branches the Directors of the Commonwealth Bank have neglected their duty. In the whole of Australia and New Guinea there are only 75 branches of the Commonwealth Bank doing general business. In addition, there are two branches in Great Britain, making a total of 77 branches in all countries. 963 K8P 0 0 THOMPSON, William Senator Thompson - Does the honorable senator know of any other bank which in the same period, has established more branches? 963 KMP 0 0 GRANT, John Senator GRANT - If the number of branches of the various private banking institutions in Australia could be ascertained, the 77 branches of the Commonwealth Bank would, by comparison, sink into insignificance. 963 K8P 0 0 THOMPSON, William Senator Thompson - But they have not established so many in the same period. 963 KMP 0 0 GRANT, John Senator GRANT - I am unable to say that; but it is not improbable that since the Commonwealth Bank was established in 1910, the private banks have established 700 branches in Australia, as against the 77 branches established by the Commonwealth Bank. Honorable senators opposite appear to be determined to aggrandize the private banking institutions, and to detract from 'the Commonwealth Bank. Except to approve of the profits made by the Commonwealth Bank, and of the purposes to which they are devoted, honorable senators supporting the Government have not one word to say in support of the Commonwealth Bank. It is contended that the separation of the Savings Bank branch from the other operations of the Commonwealth Bank is necessary, because of the housing scheme proposed by the Government. 963 10000 0 0 PRESIDENT, The The PRESIDENT - The honorable senator will not be in order in discussing the Commonwealth Housing Bill in connexion with this measure. 963 KMP 0 0 GRANT, John Senator GRANT - I shall reserve my remarks on the Government's housing scheme until the bill dealing with it is before us. At this juncture, I shall content myself by saying that the Government does not intend to buy one brick or one tile - not even a tile mad,: in Melbourne. I intend to submit an amendment to the bill. Again I protest against the proposal of the Government to separate the savings bank branch from the general business of the bank, and also against the appointment of a new board of commissioners. No sound reason has been advanced for this course. There has been no indication of the salary to be paid to the Chief Commissioner, but the other two Commissioners will each receive a salary of £500 a year. It is provided that they must meet at least once a month. I do not like the idea of paying men £40 and a few odd shillings for one meeting a month. 963 JXZ 0 0 DUNCAN, Walter Senator Duncan - Does the honorable senator suggest that they will meet only once a month? 963 KMP 0 0 GRANT, John Senator GRANT - Yes. 963 JXZ 0 0 DUNCAN, Walter Senator Duncan - The provision in the bill states that they must meet at least once a month. 963 KMP 0 0 GRANT, John Senator GRANT - And that will mean one meeting a month. 963 K8P 0 0 THOMPSON, William Senator Thompson - In actual practice the bank directors often meet several times in a week. 963 KMP 0 0 GRANT, John Senator GRANT - Not at all. I should be in favour of increasing the salaries of the commissioners to at least £600, so that they would get the round sum of £50 for each sitting. It is proposed to appoint them for a period of seven years. The proposal from start to finish is objectionable. When the per capita payments were under discussion some time ago, strong objection was taken by members of the party opposite to a departure from the principle that the authority which raised the revenue should also spend it. I do not know whether honorable senators opposite believe in that principle now, because of recent events ; but they/ have nothing to say against it. The bill will serve no useful purpose. On the contrary it will do much to destroy the efficiency of the Commonwealth Bank. For this reason I move the following amendment: - That all the words after " now " be left out with ii view to insert in lieu thereof the words - '"' referred to u. select committee for the purpose nf ascertaining the views of the authorities of the Commonwealth Bank on the proposals contained in the bill." The Minister in charge of the measure has not stated whether the managers of the Commonwealth Bank in the several capital cities are, in favour of the scheme. We are entitled to this information, because the proposal vitally affects their administration. There is no justification whatever for the proposed separation of the savings bank branch from the general banking business of the Commonwealth Bank. Before any action is taken the fullest inquiry should he made by a committee of members of both Houses, and a report presented to Parliament. Sound reasons should be advanced before the Senate agrees to the partial destruction of the Commonwealth Bank. 964 KLU Queensland NAT Minister for Defence 1 0 GLASGOW, William Senator Sir WILLIAM GLASGOW [11.55]. - I sincerely hope that the Senate will not agree to the amendment. Obviously it is intended to destroy the bill. On only one occasion in the history of the Federal Parliament has a bill been referred to a select committee. When the original Commonwealth Bank Bill was introduced by the Fisher Government, Mr. Deakin, the then Leader of the Opposition, moved an amendment to have it referred to a select committee, but Mr. Fisher strongly opposed it and it was. defeated. No good purpose can be served by referring this measure to a select committee of both Houses. Senator Grant has not advanced any reasons why the Senate should- agree to his amendment. We know, of course, that honorable senators opposite believe it to be their duty to find fault with, and object to, every proposal submitted by the Government. The separation of the Savings Bank business from the general banking business of the Commonwealth Bank will facilitate the financing of the Government's housing proposals, and I can assure honorable ' senators opposite that there is no ground whatever for doubting the sincerity of the Government in this matter. 964 JXZ New South Wales 0 0 DUNCAN, Walter Senator DUNCAN . - Every true friend of the Commonwealth Bank will deplore the tone of the speeches delivered by honorable senators opposite. Banks, like all great financial institutions, can only operate effectively whilst they retain the confidence of the general public. The speeches and arguments of honorable senators opposite, if one can regard their objections as arguments, have been advanced not so much for the purpose of delaying the passage of the measure, as to destroy the confidence of the people of Australia in the Commonwealth Bank, which was established by the Labour party. They suggest that there is some sinister motive behind the introduction of the bill, and that the Government wishes to destroy the bank. Do they realize what would be the effect on the people in regard to the bank, if their arguments carried any weight outside? Public confidence in the Commonwealth Bank would immediately be destroyed. There might be a feeling of security as to deposits, but there would be no feeling of security in regard to continuity, and it is more than likely that a great many people who run accounts with the bank would feel inclined to transfer them to existing banks that were not likely to go out of existence in the near future. The greatest damage would be done in another direction. The receipt of deposits is only portion of a bank's business, whether it be a savings bank or a general trading bank; the more profitable section of a. banking business is the use of deposits for the purpose of making advances. 964 JZR 0 0 OGDEN, James Senator Ogden - That is wherein lies the risk. 964 JXZ 0 0 DUNCAN, Walter Senator DUNCAN - Yes. If our honorable friends opposite succeed in creating in the minds of the public outside the belief that the Commonwealth Bank is not likely to continue its operations for any reasonable length of time, people who want accommodation in the shape pf loans to enable them to carry on business will hesitate before going to that bank. Like the other class of people to whom I have just referred, they will prefer to go to another bank where they can be reasonably assured of some continuity of business. When honorable senators opposite realize the effect of the arguments they have been using and the insinuations they have made, that the Government is out to destroy the Commonwealth Bank and that this legislation will have that effect, I feel sure that they will regret what they have done. Senator Grant devoted practically the whole of his speech to an attempt to create in the minds of the public the belief that because the Government was proposing to take a certain action there would be in Australia a crisis similar to that of years gone by. He presented a most awful picture of what would happen in that event, the only purpose of which was to indicate that what had happened in the past must inevitably recur as the result of the action taken by this Government. A man with a sense of the responsibility attaching to his position as a member of this Senate should hesitate to create want of confidence on the part of the public in such a great institution as the Commonwealth Bank. Every credit must be given to the Labour party for the establishment of the bank, but there are also other honorable senators who keenly desire that the bank shall prosper and become a great financial institution. 965 KMP 0 0 GRANT, John Senator Grant - L rise to a point of of order. Senator Duncan is incorrect in saying that honorable senators of the Opposition are out to destroy public confidence in the Commonwealth Bank. What I said was that I objected to the action of the Government in seeking to destroy the trading section of the bank. Senator Duncan stands for the destruction of that section of the bank ; whereas I do not. The PRESIDENT (Senator the Hon.Sir John Newlands). - No point of order is involved. The honorable senator devoted nearly the whole of his speech to a criticism of what he described as the Government's intention to destroy the Commonwealth Bank, and so far as I can judge Senator Duncan is merely crediting the honorable senator with the charge he made against the Government. 965 KMP 0 0 GRANT, John Senator Grant - I made my position clear. It was that I objected to the destruction of the trading section of the bank. 965 10000 0 0 PRESIDENT, The The PRESIDENT - That is not a point of order. 965 JXZ 0 0 DUNCAN, Walter Senator DUNCAN - Further evidence of the charge I am making against Senator Grant and others of his party, is to be found iu t-he amendment submitted by Senator Grant, the sole object of which is to create an impression in the minds of the people that the Government is acting contrary to the wishes of the board of directors of the Commonwealth Bank. If the public outside can be made to believe that the directors of the bank are not in favour of the action contemplated by the Government, the impression is immediately created that they see grave danger in the action, and weight is lent to the argument put forward by Senator Grant and others that the only effect of this legislation can be the destruction of the Commonwealth Bank. It is not fair to move an amendment dragging in, as it were, the directors of the Commonwealth Bank and implying that if they had 'been given a chance to say what they thought, they would have declared against the bill. 965 KLU 0 0 GLASGOW, William Senator Sir William Glasgow - They passed a resolution in favour of it. 965 JXZ 0 0 DUNCAN, Walter Senator DUNCAN - I am aware of that, but they cannot come out and declare it publicly. Looking at the matter in a purely impartial way there are, I must admit, certain considerations to which one must give weight in favour of making no change in the allocation of the functions of the Commonwealth Bank, but there are many good reasons why the trading business of the Commonwealth Bank should be separated from the purely savings bank business. Ir must be remembered that to-day our Commonwealth Bank is a great and growing financial institution. It is even contemplated that the day will come when it will be the great controlling agency so far as Commonwealth finance is concerned, both public and private, lt will have to deal with big business in a very big way. We must admit that the enormous financial transactions to which the directors of the bank have to give their attention, even to-day are a sufficient task for them, without saddling them with the responsibility of paying attention Ho many minor matters of an entirely different class. I am confident that the whole of the attention of the board of directors of the Commonwealth Bank must be devoted to bigger business or more national business, speaking from a financial standpoint, .than would be handled by commissioners of a savings bank. 965 K8P 0 0 THOMPSON, William Senator Thompson - Surely a manager under a board of directors could handle the savings bank business. 965 JXZ 0 0 DUNCAN, Walter Senator DUNCAN - I do not know. Savings bank business carries with it certain responsibilities, and as we contemplate an extension of the scope of the savings bank in a direction not hitherto proposed, I do not think it would be wise to saddle the directors of the Commonwealth Bank with the added responsibility of giving attention to these minor matters. 966 K8P 0 0 THOMPSON, William Senator Thompson - The honorable senator should not forget that the details will be the responsibility of the States. 966 JXZ 0 0 DUNCAN, Walter Senator DUNCAN - I know that, but I feel that the board of directors of the Commonwealth Bank will have quite enough to do in directing the affairs of the Commonwealth Bank itself. The savings bank will not be an entirely separate institution. It will not have a separate board of commissioners with full power to do as they please quite irrespective of the Commonwealth Bank itself. One director of the Commonwealth Bank will also be a commissioner of the savings bank. This liaison is evidently to be created so that the savings bank will not be an entirely separate institution able to go along in its own sweet way and at its own sweet will without any consideration for the Commonwealth Bank as a whole. 966 KMP 0 0 GRANT, John Senator Grant - In what way will the two institutions be connected? 966 JXZ 0 0 DUNCAN, Walter Senator DUNCAN - Under this bill they will both be Commonwealth Banks. One will be the Commonwealth Bank in name and the other will be the Commonwealth Savings Bank. It is not proposed to hand over the savings bank business of the Commonwealth Bank to private enterprise or some outside agency. The bill merely sets up a separate organization for the purpose of dealing more effectively with the savings bank end' of the business of the Commonwealth Bank. The savings bank commissioners will have to make provision for all sorts of things that do not ordinarily come within the scope of a general bank. To my mind it is extremely wise to have a separate board of commissioners, seeing that there will always be the safeguard that one commissioner will also be a member of the board of directors of the Commonwealth Bank. It is questionable whether the Commonwealth is justified in going into the savings bank end of the business to any considerable extent. Of course honorable senators opposite are prepared to make any raids whatsoever upon the State savings banks. Honorable senators opposite want an institution that will offer such inducements to depositors that the State Savings Bank will have to close its doors. The Government or the party of which I am a member do not wish to do anything of that nature. "We recognize the enormous value of the work that is being done today by the State Savings Bank, and that it is wise that the savings of the people deposited in a State shall be applied to the development of that State. The assets of the Commonwealth Savings Bank, however, may be transferred from one State to another, and used in the general development of the resources of the Commonwealth. I have heard the argument adduced very effectively that the money deposited in State Savings Banks - savings- are quite different from returns from investments - should be used exclusively for improving the conditions and facilities in the State in which they are deposited. 966 JZR 0 0 OGDEN, James Senator Ogden - And invested only in safe avenues. 966 JXZ 0 0 DUNCAN, Walter Senator DUNCAN - Exactly. The attack upon the State Savings Banks, which is contemplated by honorable senators opposite, cannot be justified in any circumstances whatever. It is true that the Commonwealth Bank has not attempted to enlarge the scope of its savings bank activities to any considerable extent'; but as honorable senators are aware war occurred shortly after the Commonwealth Bank was established, and into the financial responsibilities associated with this great international conflict the bank threw the whole of its organization and energies in an endeavour to conserve national interests. The bank had not the time or opportunity to establish Commonwealth Savings Banks all over Australia. 966 JXJ 0 0 NEEDHAM, Edward Senator Needham - But it is nine years since the armistice was signed. 966 JXZ 0 0 DUNCAN, Walter Senator DUNCAN - Moreover, the State Governments through their savings banks have been providing the necessary facilities in this direction. The Leader of the Opposition (Senator Needham) who says that it is nine years since the armistice was signed infers that branches of the bank should be established everywhere in Australia; but before such establishments can be opened the bank authorities must be sure that the business offering will be sufficient to warrant the expenditure to be incurred. It would be easy for the Commonwealth Bank through its savings bank department to erect costly buildings all over Australia, and to appoint a staff of clerks who would be waiting for business. Such an undertaking would be costly, exceedingly difficult to justify, and could succeed only to the extent to which business was withdrawn from the State Savings Bank. There was no indication to the Governor of the bank when it was under the efficient control of the late Sir Denison Miller, or subsequently to the board of directors, that depositors generally desired to transfer their accounts from the State Savings Bank to the Commonwealth Savings Bank. 967 KMP 0 0 GRANT, John Senator Grant - Agencies are established at every post office. 967 JXZ 0 0 DUNCAN, Walter Senator DUNCAN - Tes, and they are handling all the business that is offering. Whenever the business transacted at an agency reaches a certain figure a newbranch is established. Generally speaking, only small sums are deposited in post office agencies, and it would not pay the bank to establish branches to do the business which is now being very effectively handled through those agencies. It would be an easy matter for the Common - wealth Savings Bank to pay a higher rate of interest to depositors as suggested bv. Senator Grant. 967 KOZ 0 0 HOARE, Albert Senator Hoare - The Commonwealth Savings Bank should at least pay the same rate of interest as is paid by the State Savings Bank. 967 JXZ 0 0 DUNCAN, Walter Senator DUNCAN - If the same rate or even a higher rate were paid, deposits might be withdrawn from the State Savings Bank. These deposits are not lying idle in the vaults as some appear to think, but are loaned to farmers, producers, and workers. If there was a sudden rush upon the State Savings Bank funds caused by a general transferring of accounts, advances would be called in, and possibly a financial crisis would result. That is something which th'e directors wish to avoid. I submit that they have acted wisely in adopting a cautious policy, instead of going out with carpet bags, so to speak, looking for business. The directors now find that if the activities of the bank are separated as proposed, they will be untrammelled and that a new organization will be able to handle new business in a proper way, and give effect to certain Government proposals including a housing scheme. When the Commonwealth Bank was first established it commenced operation with many advantages, one of which was that it handled all Government business and had control of the important financial transactions arising out of the war. Possibly the bank would not be in the sound position it is to-day if the war had not eventuated. The new savings bank organization which is to be established under the control of the Commonwealth Bank, will also commence with a big advantage, because of the fact that the housing scheme and other good undertakings will be handled by the bank and its branches and agencies throughout the Commonwealth, which may result in its immediate success. If this scheme had not been brought forward I do not think that the Commonwealth Savings Bank would have made greater progress during the next few years than it has made in recent years. Under this proposal it will become a large financial institution controlling more particularly the savings of the people, as against returns from investments, and will be carrying out a useful service to the community. It is difficult to understand the attitude of honorable senators opposite, and I can only suggest that they are anxious to cause trouble, financial or otherwise, in order to injure the Government. 967 JXJ Western Australia 0 0 NEEDHAM, Edward Senator NEEDHAM .- The Minister (Senator Glasgow) has said that the object of the amendment is to destroy the bill; but that is not the intention of "its mover or of those supporting it. It has been submitted with the intention of obtaining information which so far has not been supplied by the Minister or any one else. Senator Duncan contends that those opposed to this measure wish to destroy the confidence of the people in the Commonwealth Bank. 968 JXZ 0 0 DUNCAN, Walter Senator Duncan - I said their action would have that effect. 968 JXJ 0 0 NEEDHAM, Edward Senator NEEDHAM - Our object is to prevent the Government from destroying the status of the bank. We are anxious to ascertain if the proposals submitted to the board of directors are similar to those embodied in the bill and whether the reasons given at a meeting of the board at which a certain resolution was carried, were those which actuated the Government in proposing to separate the two departments of the bank. After reading the resolution to which I have referred I believe there is prima facie evidence that the board had before it an entirely different proposal from that embodied in the bill when the resolution was carried. It is not the desire of honorable senators on this side to attack the hoard of directors, as suggested by some honorable senators, but merely to ascertain what was the actual position when the meeting was held. I do not think that the hoard of directors would have suggested a separation of the bank's activities if they had known that the Government's proposals merely involved loaning money to the state authorities who would have to do the whole of the work. In these circumstances the board would not have said that it would be overworked. If it had the responsibility of controlling a housing scheme involving the employment of skilled and unskilled tradesmen, lands officers, surveyors, conveyancers, draftsmen and others, it might have objected to such a proposal; but whenwe examine the scheme we find that the commission has only to pass the money on to certain State authorities. 968 JXZ 0 0 DUNCAN, Walter Senator Duncan - If the honorable senator will refer to clause8 he will find that the commission has more than that to do. 968 JXJ 0 0 NEEDHAM, Edward Senator NEEDHAM - In discussing the amendment I am not entitled to refer in detail to that provision. The board of directors must have had before them some other proposal which caused them to pass the resolution to which reference has been made. It is because of the doubt which exists in my mind that I consider the bill should be referred to a select committee. The committee would need to invite the authorities of the bank to appear before it and supply it with the information which has been sought in vain from the Government. I hope that honorable senators will give the amendment serious consideration and agree to refer the bill to a select committee. 968 JZR Tasmania 0 0 OGDEN, James Senator OGDEN . - I am not a banking authority, and therefore do not intend to discuss the intricate subject of banking; but I. wish to give reasons for my intention to oppose the second reading of the bill. Ido not charge the Government with having any ulterior motive. Unlike some honorable senators, I do not say that there is a desire to destroy the confidence of the public in the Commonwealth Bank. I am rather inclined to believe that the object of honorable senators of the Opposition is to destroy public confidence in the Government. It is a pity that we cannot discuss these questions on their merits. I hold the view that the introduction of this measure was prompted by the directors of the Commonwealth Bank. Unquestionably the institution has beenestedcarefullyandcapablymanaged. Ithasinv its funds judiciously, and has built up an organization which possesses the confidence of the public and also other financial institutions. The bill proposes to separate the business of the savings bank from that of the general bank. Such action will not weaken, but on the contrary will strengthen, the general bank. My objection to the measure is that, as the savings bank is the people's bank, we ought not to do anything which will lessen the confidence of the public in it. The reason for this separation is to be found, I think, in the fact that the Government at the last election foolishly and inadvisedlycommitted itself to a housing scheme. That is not a proper function of the Commonwealth Government; it should not attempt to interfere with what is essentially a prerogative of the States. I believe that the directors of the Commonwealth Bank hold this view : "If the Government intends to utilize the funds of the savings bank for the construction ofhomes for the people, and erecting warehouses and storage facilities it had better separate the business of the savings bank from that of the general bank, because we do not wish to have any connexion with such doubtful investments." The proposed now section 33w, provides: The savings bank may invest any moneys held by it - in any Government security approved by the Treasurer; That is all right - in advancing money, in accordance with the Commonwealth Housing Act 1927, for the purchase or erection of dwelling-houses, and for the discharge of mortgages on dwelling-houses; in advancing money for the erection of warehouses or storage facilities intended for the warehousing or storage of primary products, including the erection of plant for treatment to ensure their preservation and preparation for marketing. Those avenues of investment were doubtless distasteful to the directors of the Commonwealth 'Bank, and rather than accept the responsibility of conducting that form of business, which is considered by financial institutions to be neither safe nor sound, they invited the Government to separate the business of the savings bank from that of the general bank. Other directions in which the new bank may invest any moneys that are held by it are - in debentures issued by the Commonwealth Bank ofAustralia for the purpose of its rural credits department; on fixed deposit with the Commonwealth Bank of Australia; in any other prescribed manner. I fear that, by placing the management of the savings bank in the bands of a separate set of commissioners, we may leave it to some extent at the mercy of an idealistic treasurer or government, and the confidence of the public in it may be destroyed. That is why I oppose the measure. If the Government considers that it is necessary to give effect to its pledge in regard to housing, it can do so without separating the business of the savings bank from that of the general bank. 969 KMP 0 0 GRANT, John Senator Grant - Is not the Government destroying the trading section of the Commonwealth Bank? 969 JZR 0 0 OGDEN, James Senator OGDEN - No, it is strengthening it by leaving it free from the necessity to undertake doubtful investments. 969 KLU NAT 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - Does the honorable senator suggest that, the investments provided for by the bill are risky or doubtful ? 969 JZR 0 0 OGDEN, James Senator OGDEN - I do; especially if the savings bank attempts to do the work itself. It certainly is better to make advances to authorities; but we do not know who their authorities are to be. This move will have the effect of strengthening the general business of the Commonwealth Bank at the expense of the savings bank, which is the bank of the people. 969 JYX Victoria 0 0 FINDLEY, Edward Senator FINDLEY . -I am very glad that the amendment has been moved, because it will give honorable senators opposite time for reflection and further consideration. As an observer of events and the dispositions of human beings, it appears to me that on the other side of the chamber there are some honorable senators who are not altogether in favour of the measure. Senator Ogden has expressed an opinion, which to a degree is shared by other honorable senators opposite. Senator Thompson, by his interjections, has convinced me that he is not a whole-hearted supporter of the bill. 969 K8P 0 0 THOMPSON, William Senator Thompson - I support the principle whole-heartedly, but I. am opposed to the methods that are proposed. 969 JYX 0 0 FINDLEY, Edward Senator FINDLEY - When the proposals that are embodied in the billwere placed before the Government party for a full-dress rehearsal, there was not absolute unanimity among its members. Whenever a measure has the unequivocal support of honorable senators opposite, they lose no time in expressing themselves fully and enthusiastically upon it. Not one has so far displayed any enthusiasm for this measure. The discussion upon the motion for the second reading would not have been continued yesterday had I not risen and prevented it from going through. It has been said that the authorities of the Commonwealth Bank are not wholly in favour of these proposals, and that they believe such functions ought not to be undertaken by them. If that be correct, what objection can honorable senators opposite have to the appointment of a select committee which would ascertain the opinions of those gentlemen? Possibly the Government has been obliged to propose the appointment of three commissioners, because the directors of the Commonwealth Bank are not disposed to do this work. A select committee would be able to make an exhaustive inquiry, not only into the proposals embodied in this bill, but also as to the duties which the new commissioners will be called upon to perform. Senator Duncan said that there was no necessity for the establishment of the Commonwealth Savings Bank seeing that in all the States there were then in existence State savings banks in which the people's savings, could be placed. He also said that the money deposited in those banks was utilized for the development of the States. Iri the face of those remarks, I cannot understand his concluding statement that the commission will be able to establish new branches of the savings bank, and thus further increase .the usefulness of the institution. 970 10000 0 0 PRESIDENT, The The PRESIDENT - Order ! The honorable senator will not be in order in following that line of reasoning any further. He must confine himself to the amendment before the chair. 970 JYX 0 0 FINDLEY, Edward Senator FINDLEY - A select committee would be able to remove any doubt which now exists in the minds of honorable senators opposite whether the resources of the Commonwealth Savings Bank should be applied to the whole Commonwealth, or whether the savings of the people in each State should be utilized in that State. There is nothing in the bill to indicate the intention of the Government in that connexion. A select committee would be able to enlighten us. The object of thu amendment is to ensure that only the best legislation shall be placed upon the statute-book. We on this side are not opposed to a genuine housing scheme; on the contrary, it would receive our wholehearted support. But we are in doubt whether the Government's pro posals are the best that could be brought forward. In1 what better way could that doubt be removed than by the appointment of a select committee to inquire into the whole matter? The Government has not hesitated to appoint select committees to inquire into matters of lessimportance than the future of the Commonwealth Bank. Senator Duncan is a member of a royal commission - it was at first' a select committee - which has travelled throughout Australia, and now desires to pursue overseas its investigations into the film industry a matter not nearly- so important asthat now before the Senate. Theappointment of a select committee does not necessarily mean the expenditure of large sums of money. In any case, the cost of a select committee, as is proposed in the amendment,, would be infinitesimal compared with that of the royal commission to which I have referred. If thought, necessary the committee could be restricted to a certain period in which to make its investigations and present its report. After full inquiry by a committee it should be possible to introduce a scheme worthy of the Commonwealth, and concerning which there could be little or no difference of opinion. Nothing could be worse, from the point of view of the future of the Commonwealth Bank, than that there should be division among its directors, or that the new commissioners should not work in co-operation with the directors to whom is entrusted the general administration of the bank. A select committee would be able to ascertain whether such co-operation was possible, or likely. 970 KTR 0 0 MCLACHLAN, Alexander Senator McLachlan - Is it not self-evident that there will be that cooperation, seeing that one of the commissioners will be a director of the Commonwealth Bank? 970 JYX 0 0 FINDLEY, Edward Senator FINDLEY - There is to. be one full-time commissioner and two part time commissioners. Even assuming that the chief commissioner will be in the closest co-operation with the directors of the Commonwealth Bank, we do not know how many commissioners will constitute a quorum. 970 10000 0 0 PRESIDENT, The The PRESIDENT - I ask the honorable senator to confine himself to the amendment before the Senate. 971 JYX 0 0 FINDLEY, Edward Senator FINDLEY - It has been said that the success of the savings bank will depend largely on whether there is the closest co-operation between the two boards of directors. I was contending that that is a matter of such importance that it warrants investigation by a select committee. 971 K8P 0 0 THOMPSON, William Senator Thompson - -Does the honorable senator not- think that the opinion of a manager working under a board of directors, would be of more value than that of themembers of a select committee? 971 10000 0 0 PRESIDENT, The The PRESIDENT - -Order ! Discussion along that line must not continue. Honorable senators must confine their remarks to the amendment now before the Senate. 971 JYX 0 0 FINDLEY, Edward Senator FINDLEY - I hope that honorable senators on the other side will not feel that in this matter they must necessarily follow the dictates of the Minister; but that they will give the amendment the consideration that it deserves. If they do that, I feel sure that they will support it. 971 JZD QUEENSLAND NAT; UAP from 1931 0 0 FOLL, Hattil Senator FOLL . - I have been interested in observing how honorable senators opposite have seized on this amendment to further their desire to destroy the bill. We have had before us many measures more important than this; yet honorable senators have not advocated the appointment of a select committee to inquire into the matters covered by them. They have been contend to debate the measures fully in the light of the information contained in them and of any further particulars given by the Ministers in charge. By agreeing to the amendment the Senate would be shirking its duty. The bill before us is one which should be dealt with by the representatives of the people. Sitting suspended from 1 to 2.30 p.m. Question - That the words proposed to be left out be left out (Senator Grant's amendment) - put. The Senate divided. 5 18 Majority . . 13 AYES NOES Question so resolved in the negative. Amendment negatived. Senator Sir WILLIAM GLASGOW (Queensland - Minister for Defence) [2.35]. - Honorable senators opposite, in their criticism of the bill, suggested that there was something sinister behind the action of the Government in bringing forward a proposal to separate the savings bank branch from the general business of the bank. They also asserted that the Government appeared to be anxious to interfere with the status of the bank itself, and proposed to make it the puppet of the associated banks. As a matter of fact, quite the reverse is the case. On several occasions the Government has taken legislative action to increase the activities of the bank. In 1920 the note issue was transferred from the Treasury to the Commonwealth Bank. Subsequently the bank was placed under the control of a board of directors, and later a rural credits branch was established. The Government now proposes to separate the savings branch from the general bank to facilitate the financing of the housing scheme. In every instance the intention has been to strengthen the position of the bank. 971 KMP 0 0 GRANT, John Senator Grant - What proportion of the savings bank deposits will be used for the building of houses? 971 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - The proposal is to set aside 50 per cent, of the increase in deposits, and 25 per cent, of the repayments for that purpose. 971 JZR 0 0 OGDEN, James Senator Ogden - ~Not all for the building of houses. 972 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - The scheme includes also the building of warehouses, silos, and storage facilities for primary products. To indicate more clearly the progress made by the bank, I may state that in 1923-24, prior to the appointment of the board of directors, the total profit earned during the year was a little over £250,000. In 1924-25, following the appointment of the board, the profit was over £334,000; in .1.925-26 it amounted to £461,297, and iu 1926-1927 to £580,987. There has been a progressive increase in profits since the appointment of the board. These amounts include the profit earned by the savings bank branch. During the war period the bank made very Taree profits. In 191S-19 it earned £846,944. In that year it had available no less a sum than £18,S52,000 of Treasury money on current account, free of interest. Naturally in that year it earned big profits. Even if it had been under the control of financiers like Senator Gram or Senator Findley, it would still have shown a. substantial credit balance on its operations. In the following year, with a total of slightly over £20,000,000 of Treasury money on current account, the profit was £833,144. At the 30th June, 1920, the Treasury deposits had fallen to about £10,000,000, and the profits came down to £695,000 ; while in the following year, with Treasury deposits amounting to only £7,323,000, the profits still further declined to £550,000. During the" last two or three years the amount to the credit of the Treasury in the Commonwealth Bank has been small. I am sure that honorable senators will realize that the one purpose of the Government, in appointing the board of directors and subsequently in establishing the rural credits branch, has been to enable the bank to function in the interests of the people of Australia. Senator Needham stated that a few years ago the associated banks compelled the Commonwealth Bank to issue notes to the value of £15,000,000 at 4 per cent.., instead of 6 per cent. Honorable senators will recollect that in 1923 the Australian wool clip was very heavy, and prices were high; . but wool-growers, brokers and the banks were very much concerned owing to the stringency of credit. .The wool-growers approached the Government with a request to take action to relieve the situation. They pointed out that unless more credit was made available it would be extremely difficult to dispose of the wool clip. I was in Queensland at the time, so I have a personal knowledge of the difficulties. One well-known buyer attended the Brisbane sales to buy wool, and whilst in the auction room he received a telegram informing him that credit, which he thought was granted, had been withheld. Those sales had to be postponed for a week until more credit was1 made available to buyers. The Commonwealth Bank made available to the associated banks, through the note issue branch, the sum of £15,000,000 at Bank of England rates, on the understanding that the money was to be repaid within nine months, so as to prevent the banks from making permanent advances with the credit. It was not necessary, however, for the other banks to avail themselves of the offer of the Commonwealth Bank. The situation was met by the Commonwealth Bank making advances from its own funds up to a total of approximately £3,000,000.. As the honorable senator is apparently complaining about the action taken blythe Government in stabilizing the credit of the Commonwealth, I presume that if his friends had been in power at the time they would have done nothing to stabilize credit and enable the primary producers to market their produce. 972 JXJ 0 0 NEEDHAM, Edward Senator Needham - That could have been done by the Commonwealth Bank itself. 972 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - The Commonwealth Bank was used for the purpose. 972 JXJ 0 0 NEEDHAM, Edward Senator Needham - But the Government made the money available for private banks. 972 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - The Commonwealth Bank and the private banks also had to provide funds at a time when it was necessary to stabilize credits and make money available for marketing our primary produce, particularly the wool clip. The Commonwealth Bank also, in conjunction with the Bank of England, assisted in bringing about a return to the gold standard. Three or four years ago Australian primary producers had to pay an exchange rate of £3 10s. per cent, on the "whole of the produce exported from Australia. At the same time- Australian manufacturers had to compete with importers who had the advantage of an exchange rate of £3 10s. per cent. The return to the gold standard had the effect of reducing that rate to 5s. per centum. 1. do not think that honorable senators will claim that it was not a function of the Commonwealth Bank, or in the interests of the people of Australia, for the bank to assist in bringing about a return to the gold standard. 973 JXJ 0 0 NEEDHAM, Edward Senator Needham - What has the honorable senator to say concerning the profits made by the private banks, when the rate of interest was reduced? 973 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - The rate of interest paid by the private banks was that which they always pay when money is made available to them by the Note Issue Board. It was only a temporary loan to tide them over a time of stringency. Furthermore, the rate of interest on short-dated loans is always low. You cannot get for money lent for six or nine months the rate of interest you o*an get for money lent for longer periods. In London, for instance, money is often borrowed for 24 hours at a very low rate of interest and on very liquid securities some- Times. Those are the various functions the bank has been carrying out, and I think that honorable senators will agree that they have been carried out in the best interests of the people generally. Senator Needham drew attention to the fact that the bank has now seven directors in addition to a governor and a deputy governor. It is rather strange to hear honorable senators opposite suggesting that one man should be placed in control of anything. 973 JXZ 0 0 DUNCAN, Walter Senator Duncan - They want an autocracy. 973 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - Only when it suits them. As a rule they do not believe in placing the control of anything in the hands of one individual, and it is, therefore, interesting to note their departure from that principle on this occasion. If a person in charge of an institution such as the Commonwealth Bank happened to die or resign, his successor might adopt an entirely different policy which might not prove to be in the best interests of the bank. I regard a board of directors as necessary to secure some continuity of policy in the bank and to prevent any one who happens to be in immediate charge of it from acting autocratically. Senator Needham also objected to the creation of a rural credits branch. 973 JXJ 0 0 NEEDHAM, Edward Senator Needham - I did not object to that; but I said that it was not affording any assistance to the mau on the land. 973 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - Advances to the extent of £S,000,000 were made last year, and as that was only the second year of its operation I think that this section of the bank has made extraordinary progress. One of Australia's greatest problems is the marketing of its produce. Co-operative organizations have found i.t very difficult to finance the sale of their produce overseas to the best advantage. But the rural credits branch of the Commonwealth Bank is now rendering them great assistance in that respect. Prior to its establishment these organizations hari to ask the Government to guarantee their banking accounts; but now the rural credits branch of the Commonwealth Bank enables them to get the necessary financial credit to market their produce overseas to_ the best advantage. Senator Findley objects to the fact that the bank is not opening branches in country towns, and is making use of post offices for the transaction of its savings bank business. 973 JYX 0 0 FINDLEY, Edward Senator Findley - I do not object to the post offices being used ; but I claim that no progress is being made in the erection of adequate buildings for an expansion of business. 973 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - Post offices do the Commonwealth Bank's savings bank business. That is the way in which savings bank business is done in Great Britain. What would be the use of the Commonwealth Bank opening a branch in a place where the requirements of the people were already met by another bank? It would not be good business to open a branch of the Commonwealth Bank where a profit was unlikely simply for the sake of having a branch there. Such a policy would act adversely against the bank, and might possibly have the effect of increasing the rate of interest charged. 974 KMP 0 0 GRANT, John Senator Grant - How does it come about that there are 30 branches of the Commonwealth Bank in Queensland, and only eighteen in New South Wales? 974 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - There has been great development in country districts in Queensland, and the Commonwealth Bank has had the advantage of being able to open branches in those towns in their early stages of development. InNew South Wales, which is a much more highly-developed State, the requirements of most country towns have already been met by other banks. 974 JYX 0 0 FINDLEY, Edward Senator Findley - There is nothing in what the Minister says, because the Commonwealth Bank has established branches in Victoria where other banks are already established. 974 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - Of course, the Commonwealth Bank is not likely to neglect the opportunity to establish a branch in a district whose development warrants the establishment of another bank; but, where there are already sufficient banks to provide for the requirements of the district, it is not good business to open another bank. Senator Thompson can rest assured that the existing agreements between the Commonwealth Bank and the Governments of Queensland and Tasmania by which Commonwealth Savings Bank funds are made available to the Governments of those States will not be affected in any way by this bill. Senator Ogden has some misgiving in reference to the proposed fields of investment for savings bank funds. He thinks that the security offered in paragraphsb and d of proposed section 35w are doubtful. 974 JZR 0 0 OGDEN, James Senator Ogden - They would not be accepted in general banking business. 974 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - Proposed section 35w provides - The Savings Bank may invest any moneys held by it - in advancing money, in accordance with the Commonwealth Housing Act 1927, for the purchase or erection of dwelling-houses, and for the discharge of mortgages on dwellinghouses. Under that provision money will be made available to the State Savings Banks and other authorities already engaged in building homes. Those institutions have not sufficient money now to comply with the demand for houses. 974 JZR 0 0 OGDEN, James Senator Ogden - They have sufficient money. 974 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - The census figures show that- 48 per cent, of the people of the Commonwealth are living in rented houses. Possibly the reason for this is that the people have not proper facilities for obtaining advances to build houses. Under the provision to which I have just referred the Federal Capital Commission could obtain money from the savings bank to enable it to build houses. Surely Senator Ogden does not suggest that it would not be safe for the Commonwealth Savings Bank to lend money to a borrower like a State Savings Bank, or the Federal Capital Commission ? 974 JZR 0 0 OGDEN, James Senator Ogden - My complaint is that it will lead to unnecessary duplication. 974 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - Duplication is just what we are endeavouring to prevent. If the Commonwealth proceeded to build houses in States where there were already authorities engaged in the task of building houses, it would lead to duplication. In this case that is not being done. The Commonwealth is merely advancing money to authorities already engaged in' building houses, to enable them to extend their operations. 974 JZR 0 0 OGDEN, James Senator Ogden - Some of the State housing schemes are not very profitable. 974 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - Housing schemes under the State Governments are not run for profit, but they are run in such a way that the losses incurred are exceedingly small. 974 JZR 0 0 OGDEN, James Senator Ogden - Are the State Governments to be responsible for the loans ? 974 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - The authorities who borrow the money will be responsible for the loans. 974 JZR 0 0 OGDEN, James Senator Ogden - Will the State authorities be guaranteed by the State Governments ? 974 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - Of course, the State Governments will guarantee their savings banks or agricul- tural banks. Paragraph d of proposed section 35w provides that - The savings bank may invest any money held by it- In advancing money for the erection of warehouses or storages facilities intended for the warehousing or storage of primary products, including the erection of plant for treatment to ensure their preservation and preparation for marketing. It will be quite safe to advance money against such assets; they are not likely to depreciate to any great extent. 975 JZR 0 0 OGDEN, James Senator Ogden - Will such moneys be advanced to local authorities? 975 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - They will be advanced direct to, say, cooperative concerns with due regard, of course, to the preservation of a safe margin of security. 975 KMP 0 0 GRANT, John Senator Grant - Does the 50 per cent, of the increase in deposits include accrued interest? Senator Sir WILLIAM GLASGOW.Yes, if the interest is credited to the accounts. Question - That the bill be now read a second time - put. The Senate divided. 20 6 Majority . . . . 14 AYES NOES Question so resolved in the affirmative. Bill read a second time. In committee : Clauses 1 to 5 agreed to. Clause 6 (Statement of combined account of bank and savings bank). 975 JXJ Western Australia 0 0 NEEDHAM, Edward Senator NEEDHAM . - This clause reads - After section twenty of the Principal Act the following section is inserted in Part III.: - "20a. - (1) The Treasurer shall, at least twice in each year, prepare a statement of the combined accounts of the bank and savings bank in accordance with the prescribed form. The Treasurer shall submit the state, ment to the Auditor-General for the Commonwealth for certification as to its correctness. The statement shall, within fourteen days of its being so certified, be laid before both Houses of the Parliament if the Parliament is then sitting, and, if not, then within fourteen days after the next meeting of the Parliament." Section 20 of the Principal Act reads - The Governor, at least twice in each year, shall prepare a balance-sheet in accordance with theprescribed form and submit it to the Auditor-General for report as to its correctness or otherwise, and transmit it with the report of the Auditor-General to the Treasurer, and shall also transmit a true copy of the balance-sheet and report to the President of the Senate and to the Speaker of the House of Representatives to be laid before the Senate and the House of Representatives respectively. Under this clause the Treasurer, instead of the Governor of the bank, will prepare and submit a statement for presentation to both Houses of Parliament. 975 KTR 0 0 MCLACHLAN, Alexander Senator McLachlan - The honorable senator will find that the point is covered by clause 9. 975 JXJ 0 0 NEEDHAM, Edward Senator NEEDHAM - That clause does not meet my objection. 975 KLU 0 0 GLASGOW, William Senator Sir William Glasgow - The Treasurer will prepare a statement of the combined accounts, because the Governor of the Commonwealth Bank will not have jurisdiction over the savings bank. 975 JXJ 0 0 NEEDHAM, Edward Senator NEEDHAM - The Governor should prepare a combined statement. Perhaps the Minister will explain the position ? Senator Sir WILLIAM GLASGOW (Queensland - Minister for Defence) [3.15]. - Section 20 of the principal act which the Leader of the Opposition has just quoted will still apply to the board of the general bank. The Treasurer will prepare a statement combining the two accounts, and present it to both Houses of Parliament. 975 JXJ 0 0 NEEDHAM, Edward Senator Needham - Does the Treasurer do that now? 976 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - No, because there is now only one account. This provision has been inserted because, in future, there will be two accounts, and it is thought wise to combine them. 976 JXJ 0 0 NEEDHAM, Edward Senator Needham - Could not the Governor of the bank do that work? 976 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - He will be responsible only for the general bank and not for the savings bank. Under the new arrangement there will be two authorities: The board of directors will prepare a financial statement in respect of the general bank, and the commissioners a statement in relation to the savings bank. Those statements will be combined by the Treasurer. 976 JYX Victoria 0 0 FINDLEY, Edward Senator FINDLEY . - If this bill becomes law the Chief Commissioner will be responsible for the preparation of the statement of accounts so far as the savings bank' is concerned, while the Governor will be responsible for the financial statement in relation to the general banking business. Both their statements will have to be sent to the Auditor-General for verification. That having been done, the two statements will be combined by the Treasurer, and again sent to the Auditor-General for examination. Seeing that the two separate statements will be examined by the Auditor-General, what necessity will there be for the combined statement to be submitted to him? Surely the Treasurer can be relied upon to total the figures in the two statements. It would appear that, merely as a matter of form, the combined statement will be forwarded to the Auditor-General 976 JXJ Western Australia 0 0 NEEDHAM, Edward Senator NEEDHAM . - The Minister's statement has thrown some light on this difficulty; nevertheless. I contend that a departure from the procedure now followed is being made. Under the new proposal the Governor of the bank will be responsible for the preparation of a statement only in respect of the general bank, while the Chief Commissioner will assume a similar responsibility in relation to the accounts of the savings bank. Later, those separate statements will be combined by the Treasurer. What is the necessity for auditing the combined statement, seeing that the two statements comprising it will already have been certified by the Auditor-General ? The clause will impose additional and unnecessary work on the Auditor-General. Senator Sir WILLIAM GLASGOW (Queensland - Minister for Defence) [3.24]. - This provision was included to meet the objection that by the division of the accounts the prestige of the bank would be affected. I remind honorable senators that it is notusual forany statements of accounts, which has not been certified by the Auditor-General to be presented to Parliament. I can imagine the indignation of honorable senators opposite if that were done. 976 JXJ 0 0 NEEDHAM, Edward Senator Needham - I want the statement to be verified by the Auditor-General. 976 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - That is what theclause provides. The combined statement of accounts will be prepared by the Treasurer and submitted to the Auditor-General for verification. Clause agreed to. Clause 7 agreed to. Clause8 - Section 35 of the principal act is repealed and the following sections are inserted in its stead : - A Commonwealth Savings Bank, to be calledthe Commonwealth Savings Bank of Australia, is hereby established. 976 JXJ 0 0 NEEDHAM, Edward Senator NEEDHAM . - The proposed section 35 involves a vital principle. It proposes to separate the savings bank branch from the Commonwealth Bank and to hand it over to a commission. Notwithstanding the Minister's statement when replying to the second-reading debate that this separation will not destroy the utility of the bank, I hold that it . will certainly lower its prestige. If honorable senators will bear in mind that the assets of the general bank are about £32,000,000, while those of the savings bank amount to approximately £46,000,000, and that the interest paid to savings bank depositors is only31/2 per cent., as compared with 5 per cent, paid by the general bank, on fixed deposits for two years they will see that the savings bank busi- ness is responsible for alarger proportion of the bank's profit than is the general banking business. We should be careful lest we do anything to endanger the standing of the Commonwealth Bank among the financial institutions of the world. SenatorChapman. - Have not the world's financial authorities said that the Government's proposals will strengthen the Commonwealth Bank? 977 JXJ 0 0 NEEDHAM, Edward Senator NEEDHAM - Some of them may have said so; but, as yet, we have not, had the views of the financial authorities controlling the Commonwealth Bank. Their request to be relieved of the savings bank business was based on entirely different ground from that which forms the foundation of another measure with which we shall shortly be called upon to deal. The Commonwealth Bank should be in active competition with the private banks instead of working in co-operation with thom. No valid reason has been advanced in the discussion on the hill, either here or in another place, for the separation of the savings bank branch from the general business of the bank. I was hoping that the Minister, in his reply to the second reading debate, would, indicate in what way the present directors would be handicapped if they were obliged to administer the proposed building scheme. We have had no assurance so far that the States will come into line and alter their existing legislation to enable them to take advantage of the assistance that will be available to them under this bill. Certain of the States may not be disposed to agree to it because their own building activities are working quite satisfactorily. 977 JZD 0 0 FOLL, Hattil Senator Foll - If some of the States do not accept the proposal, there will bo nothing to prevent the Government from going on with the scheme. 977 JXJ 0 0 NEEDHAM, Edward Senator NEEDHAM - Nevertheless, the committee is entitled to know if negotiations have been conducted' between the Government and the different States. It is reasonable to suppose that a measure such as this would not have been introduced unless the Ministry had been advised that the States were agreeable to it; but it would help honorable senators if they knew that Western Australia, for example, intended to come into the scheme, and that the Government of that State would appoint the necessary authority to take advantage of the provisions of this measure. I am afraid that the proposal will vitally affect the interests of primary producers, because if, as we fear, the prestige of the general bank suffers, it will not be in a position to render financial assistance to primary producers in the event of drought, or war. We should not forget the important part played by the Common wealth Bank in maintaining the stability of primary production in Australia during the war. Therefore we should not take any action which may weaken the bank's position. The adoption of the housing scheme is no justification for the Government's proposal to interfere with the present system of control. If money is required for the building of bornes, it can be made available through the Commonwealth Bank or through the Treasury. There is no need for this measure, no need to divorce the savings bank branch from the general business of the bank, and no need to appoint another board of commissioners, who will have little or nothing to do. I hope that the committee will reject the clause. 977 JYX Victoria 0 0 FINDLEY, Edward Senator FINDLEY . - . Before the committee agrees to the clause it should be furnished with the fullest information as to whether the Government has at any time been in communication with any or all of the State Governments with a view to ascertaining if they will amend their existing legislation to take advantage of it. It has been stated that unless they do this, the bill which we are now considering will be ineffective. Will the Minister inform honorable senators if a conference has been hold between the Commonwealthand State Governments to consider this matter? I have seen no reference to any such conference in the newspapers. It would be extraordinary, and certainly most unbusinesslike, for a government to pass legislation which, to be effective, depended upon, certain actions by the States without first having had an assurance of the co-operation of the States. The usual procedure is to convene a conference and agree as to the details. I do not propose, at this stage, to offer any opinion about the Government's housing scheme. I shall have another opportunity to say what I think of it. In the meantime, in fairness to the committee, we are entitled to more information. To a certain extent the bill is a camouflage. Possibly there would be some justification for it if the Ministry could show that ithad been introduced as the result of representations made by the different States of the Commonwealth. I have not heard of any State Government applying to the Commonwealth for financial assistance in respect to its housing proposals. In Victoria the State Savings Bank, which probably will be named as the housing authority for that State if this bill goes through is proceeding rapidly with the erection of houses in different parts of the metropolitan area, and I am not aware that it has requested the Commonwealth to come to its assistance. 978 JRT 0 0 COX, Charles Senator Cox - The Victorian authoritieswill rush it. 978 JYX 0 0 FINDLEY, Edward Senator FINDLEY - The Minister should tell this committee, and the people of Australia, the real reasons for the introduction of the bill, and state definitely whether any of the State governments have asked for it. As all the States have housing schemes in operation, the Minister should state definitelywhat are the intentions of the State authorities in regard to the Government's proposal. I shall awaitwith interest the reply of the Minister in charge of the bill. 978 JZW Victoria 0 0 ANDREW, David Senator ANDREW . - I am rather surprised at the strong opposition to the Government's proposals on the part of honorable senators opposite. It is a. laudable object to liberalize the Commonwealth Bank in order to evolve a housing scheme more generous than those already in existence in the various States. The State schemes are not liberal enough. A class of peoplewhom we are anxious to providewith homes are prevented from getting them. Under this bill the States will be enabled to advance money to that class of people, so that they may acquire homes. When the citizens of a country possess theirown homes they are, as a rule, more stable. They realize that they have an interest in their country, and they are anxious to see it progress and develop. After the war Great Britainwent in for a very extensive housing scheme. The CHAIRMAN (Senator Plain).The honorable senator cannot now deal with the Housing Bill. 978 JZW 0 0 ANDREW, David Senator ANDREW - In 1924 the Commonwealth Bankwas given charge of the note issue. The result of that changewas to reduce the discount and exchange rates and stabilize the financial condition of the Commonwealth. In 1925 a rural credit sectionwas added to the Commonwealth Bank. 978 10000 0 0 CHAIRMAN, The The CHAIRMAN - The proposed section does not dealwith the matter to which the honorable senator is referring. 978 JZW 0 0 ANDREW, David Senator ANDREW - I am surprised that such strenuous opposition should be raised to the Government's scheme to assist the masses and make them more contented. 978 KLU Queensland NAT Minister for Defence 1 0 GLASGOW, William Senator Sir WILLIAM GLASGOW [3.50]. - Senator Needham need have no fear that the adoption of the Commonwealth housing scheme will affect the amount of credit available for handling primary produce. 978 JXJ 0 0 NEEDHAM, Edward Senator Needham - I said that by the separation of the savings bank from the Commonwealth Bank the whole structurewould be weakened, and the prestige of the Commonwealth Bank lowered. 978 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - The honorable senator said that it would affect the financing of primary produce. 978 JXJ 0 0 NEEDHAM, Edward Senator Needham - Yes, in times of stress. 978 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - If the fundswere not available to it, the bank would not be of much assistance at such times. I remind the honorable senator that, at the present time, 85 per cent, of the deposits in the Commonwealth Savings Bank are invested in State and municipal securities, leaving only 15 per cent, to be held in cash. The Government's reason for adopting a housing scheme is the fact that the States have not at. the moment sufficient money to meet the demand for advances under their housing schemes. 979 JXJ 0 0 NEEDHAM, Edward Senator Needham - The States have had no difficulty in that respect, so far. 979 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - Another reason is that certain provisions limiting the maximum amount available to the individual under the State schemes should, in the opinion of the Commonwealth Government, be liberalized, and the Government believes that the money it proposes to make available will enable the State authorities to liberalize them. SenatorFindley. - Has any State government made representations to the Commonwealth Government to get this money ? 979 KLU 0 0 GLASGOW, William Senator Sir WILLIAM GLASGOW - As a result of conferences between the various housing authorities of the States and the Commonwealth Treasurer, there are indications that the States will take advantage of the money which will be made available if this bill is passed. On the second reading honorable senators had a full opportunity of discussing the principles of the measure, and all that they are doing now is to make further second-reading speeches, with the idea of delaying its passage. Question. - That clause 8, to the end of proposed section 35 stand as printed - put. The committee divided. 18 5 Majority . . 13 AYES NOES Question so resolved in the affirmative. Progress reported. Senate adjourned at 4.2 p.m.