|
| |
Debate resumed from 7th April (vide page 594), on motion by Senator
Paltridge -
That the bill be now read a
second time.
Senator WRIGHT:
Tasmania
.- At the adjournment last night I was referring with a great deal of gratitude
and pleasure to the fact that, although the bank nationalization legislation of
1947 was formally repealed in 1953, by the present legislation the threat of
such nationalization is finally destroyed and there is being erected, to take
the place of a government monopoly bank, a group of banking institutions subject
to the control of the dominant Reserve Bank, with the legal requirement that
that bank shall deal uniformally, and without discrimination, with each unit of
the banking system, whether it is a private banking institution or a government
banking institution.
In order to appreciate the background to the new structure, I suggest that we
could well spend a moment in reflecting upon the type of legislation which
recommended itself to the Opposition. That type of legislation, which sought to
achieve bank nationalization, might well form a precedent for other trade
nationalization processes if Labour were called upon again to occupy the
government benches. Let us remind ourselves that at the time when the bank
nationalization legislation was presented, there were six or seven private banks
in Australia, some of them wholly owned by Australian shareholders, and some of
them having foreign - mainly English - shareholders. The legislation took the
form of enabling the Commonwealth Bank of that day, still occupying the double
position of a central bank and a trading bank, to acquire the whole of the
shareholding of each of the trading banks and to displace the directors of the
trading banks by directors who were nominees of the government of the day. As a
device to escape the constitutional guarantee that anybody in this country
dispossessed of property by the Commonwealth shall be entitled to compensation
on just terms, the bill stated that the Commonwealth Bank, in effectuating the
compulsory acquisition, was not representing the Commonwealth and, therefore,
was not subject to the requirement to give compensation on just terms. Then, to
facilitate that nefarious objective-
Senator O’Byrne:
– Driving the money lenders out of the temple.
Senator WRIGHT:
– Money lenders have their purpose, and many of us are grateful to them from
time to time. What I was saying before Senator
O’Byrne, no doubt for the benefit of the listeners, tried to disconnect
my line of thought, was that it occurred to a so-called Australian Government in
1947, having acquired the shares of the private banks and having placed its
nominees as directors in control of those banks, to say, “ You will not receive
compensation assessed by the ordinary judicial courts of the country “. The
Government intended to create a special court called, not the star chamber, but
the court of claims. That court was to be beyond appeal, and its constitution
remained unindicated. That represented such an ambitious, arbitrary,
unrestrained and undemocratic course of action that I think most people of a
liberal frame of mind were apprehensive.
I mention these facts again to-day because we heard last night Senator
McKenna and those who sit behind him say that they are still devoted to
the principle of the nationalization of banks. They take refuge in the excuse
that their devotion can be of no avail because the Constitution prevents them
from doing such a thing. That excuse is well answered by any thoughtful person,
as it was answered by one of my colleagues last night, by saying that what the
High Court said was that that particular act was invalid under the Constitution.
The ingenuity of Senator
McKenna and those whom he employed on that occasion might be equal, on
another occasion, to producing a bill for indirect nationalization that would
escape invalidation.
It is of considerable satisfaction to me that as time has rolled on the
processes of purposeful politics have taken the place of such measures. After
parliamentary vicissitudes that took an extraordinary turn last year we now have
the satisfaction of seeing the old spirit expressed in a number of bills which I
believe will become acts.
Under these measures there will be constituted a group of banking institutions
that, given goodwill and left free from the meddlesome and prejudicial
interference of politicians will, I think, render great service to the economy
of this country and those who trade within it. What is its structure? It takes
the form of four main bills. If we discard the fourth, which is of a
transitional nature, it takes the form of three. The first is the Reserve Bank
Bill, under which the Reserve Bank is constituted. It is a bank which the bill
specifically declares shall confine itself to the acknowledged functions of a
central bank. It shall not carry on the ordinary day-to-day trading transactions
in which the Commonwealth Trading Bank or the private trading banks engage. That
will enable it to develop a skill and an efficiency in its special functions. By
reason of having no vested interest in day-to-day trading bank transactions,
it will develop an impartiality that
should inspire the confidence of every banking institution subject to its
jurisdiction.
I should think that that will be recognized by any fair-minded student of
politics as a great contribution to the strength of the central bank in this
country. It will give to Australia a guarantee that there will not be a partial
central bank - a central bank which, by reason of its interest in trade, would
be inhibited from exerting the whole of its authority on the proper occasion to
restrain a policy which it thought was not for the good of Australia.
Now, being free from any trading
interests, the central bank can be expected to be completely impartial and,
therefore, fearless in the exertion, with such strength as is required, of the
authority that the act gives to it. That authority is very wide.
We who stand for the support of a free enterprise system, not for the purpose of
securing vested interests but in recognition of the fact that anybody who has a
business, a farm or a few shares has, by virtue of his right to control that
asset, his little share of independence, come here and say that the central bank
system is required in the banking business.
The banking business is so potent that
it is necessary for the regulation of the economy to have under the supervision
of the Treasurer, under the direction of the Parliament, a central bank which
has vast authority over the transactions of the trading banks. That authority,
so far from being restricted by the Reserve Bank Bill, is to be greatly
expanded. I challenge any honorable senator opposite to point to a word in the
measure which could indicate that the authority of the central bank is to be
restricted to a degree less than that required for the proper functions of a
central bank.
The second measure we are considering is the Commonwealth Banks Bill. I should
think that the comprehensiveness of thought which conceived the idea of
constituting, under the one measure, a tripartite institution can claim
considerable credit. First, we have the Commonwealth Trading Bank, which we
constituted in 1952 or 1953. That is to be continued. So far from there being
any implication that the Trading Bank’s activities are to be restrained, the
bank is specifically enjoined by the language of the measure itself to go
forward, in the form of statutory duty, and expand and promote its business
irrespective of the inroads it will make, by fair trading practices, upon its
competitors.
Then there is the Commonwealth Savings Bank. At the committee stage, I hope I
shall be able to engage the Minister for Shipping and Transport in some
discussion in order to clarify my mind upon the outlook of savings banks. The
Commonwealth Savings Bank enjoys a degree of confidence which gives it very
great power. The latest figures that I carry in my recollection show that its
deposits are of the order of between £700,000,000 and £800,000,000. A bank with
deposits of that order, if left to its own judgment for the unrestrained
advantage of its depositors, would be a very powerful banking institution. The
measure before us departs in no way from the functions of the Savings Bank as
anticipated by our predecessors. As I understand the measure, it requires the
Commonwealth Savings Bank to use its funds for investment, first, in government
securities and, secondly, in housing activity. I wonder whether that field of
investment is dictated because it is thought that those investments return the
best security and the best profit to the depositors, or whether in some way the
Government feels that it is entitled to use Savings Bank moneys to implement
Government policy? But the Savings Bank is preserved, with all its potency, as
an integral part of the Commonwealth Bank structure.
The third part of the Commonwealth Bank structure emerges as a combination of
two branches of the bank - first, to assist industry, and then to assist in
farming securities - in the form of the Development Bank. Ever since that name
was given to the combination of those two branches of the Commonwealth Bank, a
good deal of disquiet has been expressed in various items of publicity as to
whether an opportunity or a loophole is created for the Commonwealth Bank
structure to evade the provisions whereby all banking institutions in Australia
are to be made uniformly subject to the control of the central bank. The
Development Bank is to be given the function of financing businesses whose
potential rather than their assets recommend themselves to accommodation, and of
financing farms and other forms of agricultural development which need finance
in order to carry on. But in all its activities, the Development Bank is not to
be subject to the reserve deposit or special accounts control that is in the
hands of the central bank, and which is the central bank’s chief instrument for
controlling the other banking institutions.
Needless to say, those who represent the purpose of true Liberal thought on this
side of the chamber have intensified their study of the proposed Development
Bank, because of the references that have been made repeatedly to this possible
use of it. Particularly do I refer to a recent public statement by our colleague
in another place, the honorable member for Mitchell (Mr.
Wheeler). No doubt that statement led not only myself but also others
to reexamine the problem to see whether or not the Development Bank was really
open to the criticism that I have mentioned. For myself, Mr.
Deputy President, I must register the conclusion that I cannot accept
that criticism. 1 believe that the Development Bank, because of its true nature,
requires immunity from the special accounts control that is in the hands of the
central bank in relation to the ordinary trading banks.
I express myself with some enthusiasm about the whole conception of the
Development Bank. I regard it as being a vast improvement upon the two
departments that it will supersede. Those two departments are midget in their
conception. As an economic contribution to the expansion and development of
small industry, and to agricultural expansion, they are insignificant.
The Development Bank has been endowed with a small amount of capital, relatively
speaking, but I have no doubt that, as the increase of that capital is under the
control of the Parliament, it will be governed entirely by the progress of the
bank from year to year. I feel that the Development Bank will serve a vital
purpose in our economy, because Australia has been plagued with the existence of
a twolevel economy ever since we felt it necessary to impose, and to continue to
impose, a very considerable tariff behind which our nascent secondary industries
could establish themselves. Our primary industries, depending upon overseas
markets, obviously have had to pay the cost that that tariff has injected into
our local production, since primary producers must accept prices on the basis of
world parity.
Since then, we have had an added rigid, governmental control that does not
respond readily to the economic forces that, more flexibly, govern international
trade. In the last decade there has been forced upon us by circumstances an
import licensing system that is building up a very strong wall behind which
secondary industry is being developed. The costs of secondary production in
Australia are being increased, and year after year that is being done at the
expense of the farmer. Agricultural income does not, therefore, represent a
reasonable return on agricultural capital, nor does agricultural income show a
reasonable return for the labour of the people employed.
This two-level economy is being intensified. It is one of the alarming growths
in the Australian economy. The thing that amazes us is that, with the reduction
of the agricultural economy, the other section of the economy should have been
able to sustain the level of economic prosperity that the country has enjoyed
during the last two years. Except for the fact that, in the last day or two, the
price of wool has increased by 7i per
cent., there is no reason to hope for a significant improvement of prices in our
primary or exporting industries. All of this, I think, Mr.
Deputy President, indicates that the real expansion and development
that must take place if this country is to be made strong, must occur outside
the cities. It shows, too, that you must have finance to follow the farmer on to
his land, finance that is not recallable merely because there is a drought, a
bushfire or a flood, and the security becomes a bit mildewed, as it were. The
finance must be provided upon the basis that it will be left with the borrowers
for the economic cycle, provided, of course, that you have men of character and
determination to work. The money lent must be left with a man for a cycle of
seven or ten years so that he can develop his property and so that you will be
assured of a reasonable chance to get your money back with a fair rate of
interest. I hope that it is the purpose of those who constitute the Development
Bank to assist agricultural development in that way. So, Mr.
Deputy President, I feel that those two measures should give
satisfaction, not only to the Parliament but also to the country.
The third measure relates to the central bank, the subject of the first measure;
to the Commonwealth banks, the subject of the second measure; and to the private
trading banks, which owe their existence to the enterprise of those people who
established them and have maintained them. I note with great satisfaction that
henceforth any private bank which has occasion to consult the central bank will
not run the risk that from such contact may come the migration of some of its
business, not to the central bank but to the central bank’s left hand ally, the
Commonwealth Trading Bank. Let the Commonwealth Trading Bank expand by virtue of
its own merits, not by virtue of a confidential alliance with the central bank.
Let it increase its business as much as it can upon the merits of its own
competition. But how greatly confidence will be increased when this legislation
begins to operate! When you approach the central bank you will know that, on the
other side of the keyhole, in the next room, there does not stand your trading
competitor who, if not listening in fact, may be told within the next hour just
what your problem is in relation to such-and-such a customer. The present
situation leads to the natural suspicion on the part of the trading banks that
by giving their full confidence to the central bank they may. by indirect means,
lose some of the business that their customers have entrusted to them.
This legislation will ensure that, in the application of the statutory reserve
deposits provisions, the central bank shall function without discrimination in
respect of the Commonwealth Trading Bank and the private trading banks alike.
Therefore, it will not be possible for the central bank, at the future behest of
a government which might adopt the ruthless, arbitrary tactics in manipulating
the special accounts system which were given expression in the attempt to
nationalize the banks, without notice to demand an unlimited percentage of the
deposits of the trading banks and, by starving them of their depositors’ money,
so strangle them. This measure provides that the central bank shall not require
more than 25 per cent, of the deposits of the trading banks, whether they be
private trading banks or the Commonwealth Trading Bank, except on 45 days’
notice, that provision to continue without restriction as to percentage for a
period of six months and to be renewable by positive act for periods of three
months. This proposal provides very significant means whereby the arbitrary
possibilities of the statutory reserve deposit system may be properly controlled
and affords some degree of equity and fairness in what could be an otherwise
unrestricted control.
Having said those things in support of the views that have led me, with a great
deal of enthusiasm, to welcome this legislation, I want to say a word or two
about the comments that have been made by honorable senators opposite in
relation to hire purchase. I am one of those who believe that, given a degree of
resolution on the subject of hire purchase, the State governments and also the
Federal Government, by simple devices, could have ensured a greater measure of
equity in that line of business than has been displayed in the last five or six
years. I believe that some of the conditions and interest rates of hire-purchase
business in some quarters are too high and that they are unfair. On the other
hand, some are quite fair. They recognize a proper expense ratio and they do
give the commodity to the man of small finance on a credit instalment system so
as to advance the standard of living of the ordinary home in this country to a
remarkable degree.
But the lesson we should learn from hire purchase in relation to banking is
this: If you exploit a power and use it arbitrarily, those who have any
resources will use their ingenuity to escape the dictator; and the whole
development of the banking system in relation to hire purchase represents an
endeavour to avoid the arbitrariness of the partial system that has prevailed.
It represents a want of complete confidence in the system whereby the central
bank was allied to the Commonwealth Trading Bank which was a competitor of the
other banks. Knowing that there are limitations to the federal power expressed
in the banking placitum, they say “ We will add to our security by placing a
part of our capital in a hire-purchase department “. Nothing that we can do,
without amending the Constitution, can prevent the banks from employing their
capital for the creation of hire purchase companies which are not subject to the
banking power. But, Mr.
Deputy President, it needs to be understood that if we use the power
fairly there is a very much greater guarantee that that development will be
arrested and we will have no need to fear unfairness in the hirepurchase field.
I support the bill.
Senator BENN:
Queensland
– There never has been a clear reason submitted to this Senate for the
introduction of these measures known as the banking bills; and after listening
to the diatribe which has been inflicted on this Senate by the professional tub
thumper to whom we have just listened, the issue is more confused than ever it
was. The Government itself does not feel responsible for these bills, and when
we make a complete examination of all that has happened since it was suggested
that they should be brought down, we find that the Government has not played the
major part in their framing and drafting or, indeed, in their introduction. It
is futile for the Government to say that it is wholly responsible for the
legislation now before us when every one in the Commonwealth knows that it is
not. Last night, we listened to one honorable senator on the Government side
outline the history of this legislation. He read to us a motion that was
submitted to a branch of the Liberal Party at Heidelberg. When one examines that
motion he finds that it has served as a preamble to this legislation. The motion
really outlined the principles upon which these bills have been framed.
It is undoubtedly true that the customers of the Commonwealth Bank have not
sought this legislation. It is also true that the customers of the private banks
throughout the Commonwealth have not sought it; but those banks requested the
Government to introduce the bills. We know that public companies control the
banks and, of course, have an alliance with the Government that is very strong.
It has been suggested that on one occasion the private banks financed the
Government parties’ election campaign. That suggestion has not yet been
adequately refuted by any honorable senator on the Government side. As a matter
of fact, the evidence that is available supports the submission that the private
banks have a strong alliance with the Government parties and support them
financially to win elections, particularly against the Australian Labour Party.
If we look at the record of the Commonwealth Bank over recent years, we find
that the Government, if it really were the custodian of the Commonwealth banking
structure, certainly had no cause to introduce these bills. Last financial year,
the Commonwealth Bank did quite well. Its profit from central banking business
was £10,102,000. In the Note Issue Department, a profit exceeding £12,000,000
was made, whilst in the Rural Credits Department a profit of £184,000 was made.
In the Mortgage Bank Department, the profit was £110,000, whilst in the
Industrial Finance Department the profit was £405,000 - a total profit in those
departments of £2,339,521. Turning to the record of the Commonwealth Trading
Bank we find that last year it made a profit of £520,000, whilst the Savings
Bank made a profit of £874,000. The total profit made by the departments I have
mentioned amounted to £24,790,401. Could that be a reason for the Government
introducing this legislation? If it were solicitous for the welfare of the
Commonwealth banking structure, surely it must be satisfied with the profits
that were made last year.
When we examine briefly what has been done with the profits of the Commonwealth
Bank, we find that they have been used to good purpose as far as the citizens of
the Commonwealth are concerned. One-half of the profit of £10,102,000 made by
the central bank went to the Commonwealth Bank Reserve Fund, whilst the other
half went to the National Debt Sinking Fund. Thus, as far as the citizens of the
Commonwealth are concerned, a great benefit was derived. The profit of
£12,592,626 made by the Note Issue Department was paid into the Consolidated
Revenue Fund. If that amount had not been paid into that fund, to that extent
additional taxation would have had to be levied on the people. One-half of the
profit made by the Rural Credits Department was paid into the Rural Credits
Department Reserve Fund, whilst the other half was paid into the Rural Credits
Development Fund. Anybody who knows anything about the rural life of the
community realizes that it was in the best interests of the people as a whole
that the Rural Credits Department of the Commonwealth Bank was built up. It is
impossible for those engaged in rural pursuits to carry on their business
without at times obtaining credit.
The profit of the Commonwealth Trading Bank, which had been £520,262, was
halved. A sum of £260,131 went to the bank’s reserve fund and the balance to the
National Debt Sinking Fund - once again conferring a benefit upon the community
at large. So it is not in the operations of the Commonwealth Bank that the
Government has found cause to introduce the legislation now before us. If that
is so, what is the reason? The Minister for Civil Aviation (Senator
Paltridge) in moving the second reading, said that there was one main
reason why the Government had decided that the central bank should be separated
from the remainder of the Commonwealth Bank group. It was entirely, he said, a
practical reason. I would say - and I think that many of my audience would also
say - that it was a political reason because the promptings were of a political
rather than a practical nature. The Minister went on to say that there could not
be full harmony within the Commonwealth banking structure while there was a
central bank closely associated with the Commonwealth Trading Bank. However, he
did not really explain why there could not be complete harmony. If there was
lack of harmony, who were the malcontents? I suggest that they were the private
or public companies engaged in banking business. Such people would, of course,
receive first consideration at the hands of the Government - not the welfare of
the people of Australia.
The Government has also suggested that the banking bills have been made
necessary by the existence of a certain amount of dissatisfaction. We had not
previously heard that any great dissatisfaction existed.
Apparently, the private banks have been unable to do the things that they wished
to do, and have not been happy with the set-up. The heads have been counted, and
the bodies checked, and the Government believes that it has a very good chance
of getting its legislation passed on this occasion. Apparently it believes in
the old saying, “ If at first you don’t succeed, try, try, try again”.
Will some one on the other side of the chamber please tell me how the economy of
the Commonwealth will be improved by the passage of this legislation? How will
it affect the welfare of the people? Will credit releases by the private trading
banks be more worthwhile than they have been in the past? Will there be a great
upsurge of employment? I prophesy that we shall notice no difference at all,
that the Government is hedging in this matter because it is afraid that the
Australian Labour Party will regain office - as it deserves to do - any day now,
and will establish a Commonwealth banking system which will function in the
interests of the people.
No reasonable person would deny for a moment that credit should be nationalized,
that it should be controlled by the Commonwealth Bank, and that the Commonwealth
Bank’s policy should in turn be dictated by the Commonwealth Government. Even in
the legislation before us there is a connecting link between the Treasurer and
the new organization. The Treasurer who departed from this Parliament but a few
months ago was too shrewd an individual to allow to be drafted any legislation
that would take away from him the right to veto the whims and wishes of bank
boards and bank executives. For that reason the Treasurer is still to have a
hold upon the operation of the banking legislation.
The proposed banking structure is to be made up of several main departments -
central banking, note issue, rural credits, mortgage bank and industrial
finance. We shall have also a Commonwealth Trading Bank, a Commonwealth Savings
Bank and a Commonwealth Development Bank. One of the proposed changes will take
the central bank away from other banking operations. The Government will create
a Reserve Bank, and this bank will take over rural credit and the note issue.
Any one who is conversant with Commonwealth finance knows the importance of
those two departments - wherever they may be located.
Senator Hannaford:
– It sounds very much as if the honorable senator intends to support the bill.
Senator BENN:
– For certain reasons I will not support one iota of it. This legislation forms
a kind of boundary between the Liberal-Country Party and the Australian Labour
Party. Labour is always solicitous for the welfare of the people, but Government
supporters are forever thinking of the welfare of companies, both private and
public, and of the profits that they should make, irrespective of the expense
that this inflicts upon the public at large.
The functions of mortgage banking and industrial finance are to go to the
Development Bank. There will be a Commonwealth Trading Bank, associated, of
course, with the Savings Bank. Over the years great confidence has been reposed
in the Commonwealth Bank by the citizens of this country. It has shown a profit,
and people have been inclined to place their business with it because of the
confidence that it has won down the years. There will be, we have been told, a
Reserve Bank Board - another case of a bank board coming into operation. It is
interesting to note the constitution of the proposed board. There is to be a
managing director, and a number of officials.
The board will control the Reserve Bank
and will dictate its policy, lt will have many powers, but behind it will be the
Treasurer, who will have the last say. If the board’s policy does not accord
with his own, he has the means to change it. That is one good feature of the
banking legislation.
I cannot help wondering whether the private banking institutions of Australia
will be satisfied with even this legislation. The Government has amended the
banking legislation more than once, and I have a feeling that even now the
private banks will not be satisfied. I admit that they have been clamouring for
this kind of legislation for years. The board which will control the reserve
bank will have ten members. As I said earlier, there will be a governor, a
deputy governor, the Secretary to the Treasury and seven other members. Of
these, five shall not be public servants. Obviously the appointees are well in
the mind of the Government at the present time. They will be placed on the board
for certain reasons - reasons which are known to the Government. It is also
proposed that we shall have the Commonwealth Banking Corporation which will have
charge of the banks to which I referred a short while ago. It will have charge
of the Mortgage Bank Department, the Industrial Finance Department, the
Commonwealth Trading Bank, the Commonwealth Savings Bank and the Development
Bank. The proposed legislation sets out
as plainly as possible that the officers of the Reserve Bank are not to play
golf or bowls, or go fishing with officers of the Commonwealth Banking
Corporation, that even their wives are not to go out to afternoon tea together.
The staffs of the two organizations are to be completely segregated, and I have
no doubt that there will be a prohibition against the daughters of officers of
the Reserve Bank marrying officers of the Commonwealth Banking Corporation. That
is carrying things much too far. These officers are not even to belong to the
same fishing clubs; in fact, they are not to have any communication at all or
discuss banking business in any form whatsoever.
The Commonwealth Banking Corporation is to be controlled by a board on which
there is to be a managing director, a deputy managing director, the Secretary to
the Treasury and eight other members to be appointed by the Government. The only
good feature about it is that the Treasurer is to have the final say, so that
the members of this board will not be able to wreck Australia by pursuing
irresponsible policies in the future.
Senator Toohey:
– But say they have an irresponsible Treasurer?
Senator BENN:
– I am pleased that Senator
Toohey made that interjection. It does happen that a person who may
have been an irresponsible member of the House of Representatives immediately
becomes a very responsible citizen when he is appointed Treasurer of the
Commonwealth. He must become responsible because he cannot carry out the
important functions and duties of Treasurer in an irresponsible way.
Senator Paltridge:
– Whom have you in mind?
Senator BENN:
-I have several in mind. As a matter of fact, the Opposition has more men
capable of filling the office ot Treasurer than the Government has, and I can
name them if necessary. Indeed, honorable senators on the Government side are
not completely happy with their present Treasurer. I understand they are making
moves now to change the Treasurer.
The Government also proposes to create executive committees of the Commonwealth
Banking Corporation Board for each of the three constituent banks. It will be
the duty of the officers of those committees to go round the various departments
probing into their business to ensure that they are following the policy laid
down by the Commonwealth Banking Corporation. I should say that all this is
unnecessary circumlocution when it comes to financial matters; and it could have
been avoided if the Government had used a little common sense and had not paid
so much heed to the wails of the private banks.
One thing that concerns me greatly is the staffing of the proposed new banks,
especially the proposed Reserve Bank. Honorable senators will understand my
concern when I compare the provisions of the Reserve Bank Bill in this respect
with those of the Commonwealth Banks Bill. The bill which seeks to create the
Commonwealth Banking Corporation contains the usual provision we see in
legislation relating to the staffing of a Commonwealth undertaking. There is
nothing in that bill at which I can cavil for it sets out that no person shall
be appointed unless he has, in open competition, passed the prescribed entrance
examination. That is quite satisfactory, but when we turn to the Reserve Bank
Bill, we find that no reference whatever is made to the passing of a prescribed
entrance examination.
Why has that requirement been omitted from the Reserve Bank Bill? Is it not
because the Government has friends whom it wishes to appoint to the service of
this bank? Or is it because it has many friends who have sons who will be
seeking careers in the Reserve Bank? I object strongly to the wording of the
Reserve Bank Bill. This Government is amending the legislation to establish a
Reserve Bank but makes no provision for the staff to be appointed on a fair
basis. The people of the Commonwealth ask only for fairness in these things. If
the Government had included provisions similar to those contained in the Public
Service Act, one could have no objection whatsoever, but, because no such
provisions are included, and because the door is being left open for members of
the Government to appoint their friends to positions of importance in the
proposed Reserve Bank, I object strongly to it. I shall certainly have much more
to say about that matter when the bill is being discussed in committee. Of
course, the only conclusion one can arrive at is that these bills, so far from
improving the business of the Commonwealth Bank or the Reserve Bank and the
departments associated with them, will tend to suppress their business
activities.
Reference has been made to hire purchase, and one reason given for the private
banks engaging in hire-purchase business is that they were prevented from
engaging wholeheartedly in banking business. I have never heard such nonsense in
all my life. If we trace the history of banking, we find that only a few years
ago - I think it was in 1953 - this Government amended the hanking legislation
to allow private banks to invest their profits in hire-purchase companies. Prior
to 1953, such investment was prohibited under the Banking Act of 1945. Under
that act, the central bank could prevent the private banks from investing their
funds where they wished. That prohibition was repealed in 1953 and the gate was
opened for the private banks to invest in hire-purchase companies. And what a
whale of a time they have had ever since! What profits they have made, and what
dividends have been paid by the companies in which these banks have been
directly interested!
Perhaps I should give honorable senators an idea of how the private banks have
fared over recent years, and I shall take the year 1956 as an example. The Bank
of New South Wales has operated in the field of hire purchase on quite a large
scale in association with the Australian Guarantee Corporation Limited. At the
end of one year’s activities the corporation paid a dividend of £373,000 into
the funds of the Bank of N.S.W. The Australia and
New Zealand Bank Limited made a net profit of £1,000,000 for the year in
question and its subsidiary, the Industrial Acceptance Corporation Limited, paid
the bank £186,000. The National Bank of Australasia Limited made a net profit of
£951,000, and received from its subsidiary, the Custom Credit Corporation
Limited, a dividend of £300,000. The English Scottish and Australian Bank
Limited made a profit of £386,000, and received a dividend of £100,000 from its
own hire-purchase company, Esanda Limited. We cannot deny that the evil of hire
purchase exists in Australia, but it was a revelation to me to hear honorable
senators opposite say that the banks were driven into hire-purchase business. In
fact, the banks entered the field of hire purchase of their own volition because
of the great profits to be made. I know of cases in Queensland in which in
previous years farmers, particularly cane farmers, have approached a bank to
obtain a loan to enable them to purchase tractors and other farm equipment. When
the private banks entered the field of hire purchase they immediately referred
applicants for loans to their subsidiary hire-purchase companies. Of course, the
rate of interest charged by those companies was much higher than the interest
charged on a bank loan.
Time permits me to state only a few of the facts associated with the activity of
the Commonwealth Bank during the war years. If one were to study the subject of
banking, one would come to the conclusion that banking should be a unit of our
defence departments. During the Second World War, the Commonwealth Bank played a
major part in maintaining our stability. The bank provided finance to assist our
primary production. That is a matter which Australian Country Party senators
conveniently forget. For the life of me, I cannot understand any member of the
Australian Country Party supporting this proposed legislation, especially in
view of the part that the Commonwealth Bank played in assisting primary
production. The bank supported the wheat industry to the extent of £164,000,000,
and the meat industry to the extent of £124,000,000. Incidentally, those amounts
were advanced during 1940 and 1941 when the £1 was worth three times its present
value. In all, the Commonwealth Bank advanced £408,000,000 to primary producers.
However, the Australian Country Party, to suit its own ends, conveniently
forgets the great service that the Commonwealth Bank rendered to Australia
during our period of trial, and is prepared to allow the private banks to run
riot once again in the field of hire purchase that returns such enormous
profits.
Senator Hannaford:
– Does the honorable senator suggest that the private banks played no part in
Australia’s war effort?
Senator BENN:
– I am informing honorable senators of the part the Commonwealth Bank played in
financing our primary products. The private banks did not advance any money to
assist the primary producers nor did they raise any loans to assist the war
effort. Unfortunately, I do not have the time at my disposal to make a complete
answer to my friend’s statement. I hope that at some time in the future I shall
have the opportunity to do so. Notwithstanding the number on the Government side
of the chamber and the smaller number on this side, I earnestly hope that the
legislation now before us will be defeated again.
Senator McCALLUM:
New South Wales
– Few bills have come before this chamber which I have supported with more
enthusiasm than this one, or of which I have had a fuller knowledge. Listening
to some of the speeches of honorable senators opposite, including the speech of
the Leader of the Opposition (Senator
McKenna), I have doubted whether the bills have been as thoroughly
examined as they warrant. I have certainly given them a thorough examination. I
have read all of the bills, including the subsidiary bills; I have consulted
with members of my party and with members of the Australian Country Party; I
have consulted with officials of banks and with many bank officers in both
private and public banks. I have gained most knowledge from officers of the
Commonwealth Bank. I could not mention the names of those officers with
propriety, because I disagree entirely with the suggestion of the Leader of the
Opposition that, before passing this legislation, we should call for a statement
from Dr. Coombs, and
from other bank officials. Those officers have a duty to advise the Government
and to administer their departments. When legislation is introduced, Cabinet and
members of the Government parties must accept full responsibility for its
passage.
I wish to comment very briefly on the value of the bills now before us and,
because the bills contain various common principles, I shall not deal with them
separately. The proposed legislation will give Australia a truly central bank,
serene and aloof, not only from the private banking system, but also from the
public banking system. That plan was inherent in the proposal almost at
the time when it was first decided upon; in fact, it was in the minds of some of
the men who were responsible for the foundation of the Commonwealth Bank
although it was not developed at that stage. This proposed legislation will
bring that plan into operation. The bank will not be entangled in any way with
private or public banks. That is very desirable, and is in keeping with central
banking practice in all countries of the world except in one or two rather
backward countries.
I join issue with Senator
Benn and with his colleagues who have said that they can see no reason
for departing from a system that was working reasonably well. Institutions
develop, and when the rudimentary form vanishes the institutions must be
reconstructed on a different basis. That is the Government’s proposal in regard
to our banking structure. I agree with some honorable senators opposite in that
one must have a good deal of knowledge to know whether the very elaborate system
envisaged is absolutely necessary, but the whole matter develops from this one
fact: The central bank functions had to be divorced from the trading bank and
other banking activities. When that decision had been reached, other action had
to be taken to give the Government control over the new system that was to be
instituted. I might use the example of a suit of clothes which, although still
quite serviceable, has become too small to wear comfortably. As a new suit must
be purchased, one naturally purchases a tailored suit. Every step taken by the
Government can be justified.
The next point to be borne in mind is that, as far as can be done by
legislation, we will have a trading bank capable of operating on the same terms
as the private banks operate. The new bank will not be weakened in any way. That
is the opinion of the banking officers who know. The new legislation will
strengthen it, because it will become a full trading bank in its own right. The
statute, as other honorable senators on this side have told us, orders the bank
to do that. It will and indeed has become a full trading bank. In Sydney - I
presume it is the same in the other capitals and country towns - you will notice
what has been done. If you walk around the streets you can see new Commonwealth
Trading Bank buildings going up. Only a fool would attempt to insinuate that the
Commonwealth Bank was being weakened.
The Commonwealth Bank from the very beginning - I am using that title in the
general sense - was destined to be a real bank. That is the one great service
that the famous King O’Malley gave it. He wrote in his memoirs - and I have
heard him say it with his own voice - “ I was determined that this should not be
a Treasury side-show. I was determined that the Public Service should not run
this bank as other public servants ran other public institutions.” It was to be
a bank owned by the people - or by the government - but controlled and directed
by men with banking experience. Whom did he get? It was one of the best private
banking officers in New South Wales, the famous Denison Miller, who was chosen
to be its founder. It was largely due to the banking experience of that
gentleman and the officers he gathered around him that the bank succeeded as
well as it did. Had it become a mere sideshow of the Treasury, as it might
easily have done under the sort of legislation that often slips through, that
would not have happened.
I know that She officers of the Commonwealth Bank always take the view that they
are not simply public servants and are no different from the people in the
private banks. They take the attitude that they are bankers, who understand the
business of banking. I think it was Senator
Benn who said that no customer of the Commonwealth Bank desires this
legislation. I am a customer of the Commonwealth Bank. I have never had a cheque
account with any other bank. I am very satisfied with the Commonwealth Bank, but
not merely because it is the Commonwealth Bank. It is conveniently placed for me
because it happens to be in the same building which I occupy. I know more
Commonwealth Bank officers than I know private bank officers. I like them, and I
trust them. They succeed because they are bankers and understand the nature of
banking. When I go to see the manager of a Commonwealth Bank branch, he talks to
me as a private banker would talk to his client. On the only occasion when a
very junior officer took a different attitude 1 said, “ If that is going to be
the attitude of the Commonwealth Bank, 1 will leave it. I have only to walk
across the road.” But, fortunately, the general tone of the Commonwealth Bank is
exactly the same as that of the private banks.
Senator Hannaford:
– Did they threaten to take your overdraft away?
Senator McCALLUM:
– I will not reveal any secrets. Lastly, we have this great Development Bank,
for which I have the greatest enthusiasm. I may say that I am one of those who
had a number of conferences - perhaps private talks would be a better
description - with other gentlemen of our party who were disquieted about this
Development Bank and who thought that possibly it could be a device to defeat
the purpose of the act by engaging in ordinary trade in an illegitimate way. Senator
Wright has completely answered that, and I will simply say that I agree
with him. I believe that the type of development work that has been done in the
past by the two small institutions has has been excellent. I believe that under
this renewed and enlarged Commonwealth Bank it will be greater still. The bank
will help private entrepreneurs of a modest type.
If private enterprise is to survive - and I hope it will - it can only be by the
constant renewal of small individual enterprises. There was a time when I feared
- it was the sort of argument that made me a momentary convert to socialism -
that the growth of great trusts and combines might destroy the small individual
enterprises. But it will not. The evidence everywhere is the same. Although you
get these great enterprises, some of which last and some of which perish, small
private enterprise begins again. To have a body with skilled officers who can
give assistance to the small enterprises is going to be one of the greatest
factors in the development of this nation. Let me give one illustration. I refer
to a man who made a very great success of business in Australia. He is Mr.
Coles, who is well known in the retail trade. When he left the Army, he
applied for a little financial assistance from a Government official under the
very generous terms that were then provided to repatriate returned men. On his
card was written, “ Has not the requisite business ability “. Apparently the
official could not find that ability, but it was there and was proved in the
issue. To help such men will be the purpose of the Development Bank.
Finally, there is the great Savings Bank, one of the greatest of our
institutions. The Savings Bank is valuable for encouraging thrift, for keeping
the savings of people from their childhood until perhaps they no longer need to
keep them there, although I have found it always convenient to have a Savings
Bank account. I began in the Savings Bank at school by putting in Id. a week, I
think - and sometimes ls. when some one was generous to me. From that I acquired
the habit of going to the Savings Bank. When I was a young man I had no cheque
account. I did not have enough money to warrant one. The Savings Bank was my
bank for all purposes.
It is necessary, I think, for us to answer fully the assertion that is made
repeatedly - but without one scintilla of evidence - that the Liberal party
wishes to destroy the Commonwealth Bank. That has been sufficiently refuted by
the acts themselves. Honorable senators have only to read the acts to see that
that assertion is not true. They have only to look at the development of the
Commonwealth Bank since this Government came into power to know that that is not
so. The Commonwealth Bank is going from strength to strength as a result of this
Government’s policy. The policy of the Liberal party, which I think is also the
policy of the Australian people, has always been that there should be both a
public and a private banking system.
Honorable senators will remember that in 1935 Mr.
Lyons, the then Prime Minister, set up a commission to inquire into
banking. It was a very good commission. I happen to know a great deal about it. Mr.
Chifley was a member of that commission appointed by Mr.
Lyons, and he said to me, “ 1 do not know much about banking, but I
will learn a bit “. He did learn a bit, as we all know. He used to send me the
reports of every meeting, so that I was able to follow exactly what was being
done.
It is true that Mr.
Chifley put in a dissenting report, saying he wanted only a public
banking system, but every other member of that commission - and one of them, the
chairman and senior man on it, was a personal friend of Mr.
Chifley and became his closest friend - was emphatic that the one way
to have a properly developed banking system was to have both private and public
banks.
This, I think, is the final answer to much of the tawdry and tattered assertion
that has come from the benches opposite about the iniquity of the private banks.
Why do people tolerate them if they are merely rackrenting, atrocious,
cannibalistic institutions preying on their clients? If you do not like your
private bank, all you have to do is to go across the road to the Commonwealth
Bank. A Commonwealth Bank branch is available almost everywhere. If ever there
was any disadvantage imposed on the Commonwealth Bank, that has gone as the
result of the legislation of this Government. We enjoined the Commonwealth Bank
to go ahead. It is growing and growing. Honorable senators interject, but anger
is not a proof of knowledge; it is merely a proof of inability to answer an
argument. I am not a bit deterred by the fact that the Opposition Whip continues
to make a few assertions to the effect that I am wrong. I say that the
Commonwealth Bank to-day can get anybody’s custom if it is as good and as
satisfactory as are the private banks. The private banks exist because a great
number of clients wish to retain them. A man can go to any of the banks. A most
interesting point is that among the clients of the private banks is the
Government of New South Wales.
Senator Wade:
– A Labour government?
Senator MCCALLUM:
– Yes, a Labour government. Every Labour government that has existed in New
South Wales has flatly refused to take all its banking business to the
Commonwealth Bank or the Rural Bank. There was a time when a Labour government
refused to give any of its business to those public banks. The person in
particular who refused to do so was the great John Thomas Lang, who in his time
was regarded as the most virile and progressive Labour man in the Commonwealth.
He refused point blank to take any of his business away from, I think, the Bank
of New South Wales.
Senator Wade:
– You will get an overdraft.
Senator MCCALLUM:
– I hope I am satisfactory to both the private and the public banks. I am not
attempting to insinuate that there is anything wrong with any of them. But it is
a fact that pressure was put on Labour Premiers in New South Wales, including
the present one, to take all government business away from the private banking
system. I cannot prove it, but I have been told that to-day the New South Wales
Government does some banking business with the Rural Bank and some with the
Commonwealth Bank. But with many of the great public departments, including the
greatest of all - the Education Department, to which I belonged - the cheque was
always paid to one bank, namely, the Bank of New South Wales. That, Sir,
I think sufficiently answers the charge, in support of which no
evidence has been produced, that the Government intends to destroy the
Commonwealth Bank.
A lot is made by Opposition senators of the setting up of a board and the fact
that it will include people from private industry. The Scullin-Theodore
Government introduced legislation to establish a central reserve bank, with
which all banks were to keep reserves. That bank was to be placed under the
control of a board of not more than nine members. The set-up was almost exactly
like that of the present board. The governor was to be the chairman of the
board, which was to include the Secretary to the Department of the Treasury and
five persons who were not public servants but who had been actively engaged in
agriculture, commerce, finance, industry, and labour. The only difference was
the inclusion of the word “ labour “. Exactly what that meant, I do not know.
But I imagine it simply meant that they had to have experience in ordinary life.
I think I have answered most of the arguments that have been put forward. I not
only support this measure but give my heart and hand to it. I hope we will not
pay any attention to the obsessions and phobias of doctrinaire socialists who
have had an election cry which they think will serve them again - people who are
afraid to re-think the problems that we thought were solved 50 years ago but
which were not.
These measures seek to give us a banking system which will have the great merit
of preserving the choice of the client and which will cut away from ordinary
banking practice in order to give special help - help that could come only from
a special bank - to the energetic and the adventurous, who will build this
country. That is the truth about this legislation. I think most honorable
senators opposite know in their hearts that is the truth and that that is why
this debate has been so tedious and tawdry, with not one solid argument for the
rejection of the bills having been advanced.
I believe there are a few clauses which we may have to look at at the committee
stage, not because there is anything fundamentally wrong with them but because
they are badly drafted. Let me tell the story about one of these clauses. I was
very puzzled about it and went to two of the draftsmen and to several officials.
Finally, I did a bit of research myself and discovered what was wrong with it. I
discovered that it had been lifted bodily from the Chifley legislation! I do not
think it will do much harm or much good. I think it was included originally
mainly for propaganda purposes, but it was a badly drafted clause. When we reach
the committee stage, do not let us be foolish enough to fight over every word of
the bill as though we were asserting a principle. The accurate drafting of a
bill is something in itself and, if we do not listen to reasoned argument as to
why a clause should be redrafted, we may find ourselves in the ridiculous
position of Government senators fighting desperately to retain something which Mr.
Chifley put in and of honorable senators opposite taking the opposite
view.
I support the bill. I am sure it will be agreed to substantially in its present
form.
Senator MCMANUS:
Victoria
.- Mr. Acting Deputy
President, this legislation is unsatisfactory, because it fails to
grapple with what is the real banking problem in this country to-day - that of
ensuring that credit is readily available and is diverted to the avenues where
it will do most good.
Before I deal with the reasons for the decision of the Australian Democratic
Labour party to oppose the legislation, I wish to refer to a minor matter which
was brought forward yesterday by Senator
McKenna, on behalf of the Opposition, at the commencement of his
speech. To sum up the honorable senator’s words, he said that it will be
possible for this legislation to be passed because this Government is in power
after having received the preferences of the Democratic Labour party at the last
election. Senator
McKenna proceeded to rebuke the Democratic Labour party for, as he
said, having given its preferences to the Liberal party. I listened to that
statement with surprise.
The seat behind me is usually occupied by Senator
Condon Byrne, of the Queensland Labour party. I pointed out to Senator
McKenna that in the election held only a month or two ago the filling
of the final Senate vacancy depended upon the preferences of the party to which
he belongs. In Queensland, the Australian Labour party decided to give its
preferences to a Liberal candidate in preference to Senator
Condon Byrne. So it would seem that the Australian Labour party has
been guilty of that for which he has attempted to rebuke the Democratic Labour
party during this debate. I do not propose to spend any great time on this
matter, which is a minor one. I only add that the reasons for the present
political situation in Australia, and for the situation on the Opposition side
of this chamber, run far deeper than the mere question of preferences. When all
is said and done, any party can only recommend to the people how they should
cast their preferences; the people themselves make the decision. The decision at
the last election was a decision of the people and not of any particular party
or group. Therefore, we should accept the decision and look to the future.
The Minister for Customs and Excise (Senator
Henty), who opened the debate for the Government, declared yesterday
that the introduction of this legislation was a great occasion for the
Government. He said it was the culmination of a ten-year campaign by the
Government to give effect to something which it promised in 1949 when it assumed
office. I suggest that that is a remarkable statement and that the Minister must
have made it with his tongue in his cheek. From the middle of 1951 to June,
1956, the Government had a majority in both Houses and there was nothing to
prevent it from introducing this legislation if it thought it was necessary. No
attempt was made to introduce this legislation which we are now told is so vital
that the Government regards it as one of its greatest achievements in having
brought it before the Parliament on this occasion. There was an obvious reason
why no action was taken in that period. The Commonwealth Bank was functioning in
a way which gave satisfaction to the people of this country, and the Government
itself believed that the action that is contemplated by this legislation was
entirely unnecessary.
When I was elected to the Senate, the Government had six months before I took my
seat in which to bring in, and have passed, such legislation if it felt that it
was necessary. In the press and in many other places it was stated that if the
Government did not take action before that period of six months elapsed it would
lose its majority and could not make any changes in the banking system. The
Government took no action during that period of six months, and therefore I
suggest that it must have had very good reason for failing to do so. It must
have believed, as its Treasurer and other Ministers told the Parliament on
frequent occasions, that the Commonwealth Bank was functioning in the best
interests of the people. We are therefore entitled to ask: From where did the
drive come that led to this legislation being brought before the Parliament? It
could not have come from the Australian Country party, because it is notorious
that the Australian Country party leaders resisted very strongly for a
considerable period any moves for this legislation. The Australian Country party
was founded as the result of a belief by many primary producers that they were
not being fairly dealt with so far as the availability of credit was concerned.
The supporters of the Australian Country party have always insisted that there
shall be no interference with the ability of the Commonwealth Bank to supervise
the issue of credit in the best interests of the people. I believe it is true
that one of the main reasons that this legislation was not brought forward
before was that the leaders of the Australian Country party» particularly the
former Treasurer, did not think that it was desirable.
Senator Scott:
– The honorable senator is only guessing, of course.
Senator McMANUS:
– I am making one of those guesses which, on examination, will be found to be
very well based indeed. The position is, therefore, that the Government’s
collective arm was twisted by an outside group, the private banks, in order to
force it to introduce legislation which the leaders of the Government and the
people generally did not believe to be either necessary or desirable.
We have been told by some that there was a public demand for this cutting up of
the Commonwealth Bank. I move about the community and I have not heard of any
public demand. I did not hear, amongst the people generally, any attacks on the
Commonwealth Bank, or criticism of the work that it was doing in the community,
but I did hear strong criticism of the private banks on the ground that they
were not playing their part in making money available for housing - co-operative
housing in particular - and also for development generally. I regret that, in
those circumstances, we should have a healthy organization being tampered with
while the organizations which, in the view of the people, are not doing their
proper job, are left scot free and are having their demands to hamper the
Commonwealth Bank, in their own interests, acceded to.
If I am asked to produce authority for my statement that the legislation is
unnecessary, I shall produce no other authority than the words of the present
Prime Minister (Mr.
Menzies). In 1953, Mr.
Menzies supported in this Parliament legislation to make certain minor
alterations of the Commonwealth Bank structure. This is what he said -
It will place beyond doubt
the continued operation of the Australian banking system in fair and open
competition within the framework of central bank policy.
Senator McCallum:
– But this is 1959.
Senator McMANUS:
– There we have the Prime Minister saying, in 1953, that he was introducing
legislation to place beyond doubt the very factor which he now says makes
necessary the legislation that we have before us.
Senator Wade:
– He moves with the times.
Senator McMANUS:
– I do not think he moves as fast as that. My friend, Senator
Wade, knows that banking does not change as rapidly as all that. I
appreciate that honorable senators opposite are rather hurt by the revelation
that the Prime Minister in 1953 did the job that they are claiming he is going
to do now; but they have heard the Prime Minister’s own words, to the effect
that the legislation that was then being introduced would settle the whole
question of whether there should be unfair competition between the Commonwealth
Bank and the private banks. Therefore, in 1953, he took away the very excuse
that is now being put forward for the introduction of this legislation.
At that time, the then Treasurer, Sir
Arthur Fadden, stated -
The sole purpose of this bill
is to remove the central bank’s excess powers-
Sir Arthur Fadden
removed the central bank’s excess powers in 1953. How, then, can this
legislation remove powers which do not exist? Sir
Arthur said -
The sole purpose of this bill
is to remove the central bank’s excess powers which clearly go far beyond
those it needs in order to exercise proper bank control.
My friends opposite, I realize, are somewhat staggered by those statements. I am
sorry that I have had to place the statements before them, after they have had
rather a difficult morning, but I have my duty to perform. I simply say once
again that the job that this legislation is supposed to carry out was, on the
word of the Prime Minister and the Treasurer, performed in 1953. Therefore,
there must be some sinister motive behind this present legislation.
In my estimation - and I am fortified in my belief by reading the glowing
tributes that have been paid to the CommonWealth Bank in the last eight or nine
years by members of the Opposition, by Treasurers and by Prime Ministers - the
Commonwealth Bank has done an excel lent job for the people of Australia. There
is no necessity for this interference with the work that it is doing. The
Commonwealth Bank has not let Australia down in housing or in development. It is
the private banks which have let Australia down. They are the ones for whom
medicine is required. There is no need for the kind of medicine that is provided
in this legislation for the Commonwealth Bank. I regret that a healthy
organization is being operated on by the Government, while organizations which
need treatment are being allowed to go scot free.
Of course, we are told that one of the good features of this legislation is the
proposal to establish a development bank. We have been told that this is a great
occasion because, after a magnificent campaign and a terrific struggle, the
Government has been able to establish a development bank. Such a bank would
already be in operation if the Government had been prepared to do that which it
could have done economically more than twelve months ago but which, for
political reasons, it was not prepared to do. When I spoke on the banking
legislation twelve months ago, I said that as far as the Democratic Labour party
was concerned there was no objection to the Development Bank and that we were
prepared to vote to bring it into existence.
Senator Scott:
– Has the honorable senator authority to speak for the party?
Senator McMANUS:
– Definitely. I was followed, at a later stage, by Senator
Toohey. I think he will agree that he said that, as far as the
Australian Labour party was concerned, its supporters also were prepared to vote
for the Development Bank legislation if it were severed from the other
legislation.
Senator O’Byrne:
– Your party holds its party meetings in a telephone booth.
Senator McMANUS:
– The Australian Labour party’s federal representatives from Western Australia,
in the lower House, would not need a telephone booth.
The Government is in the position of having delayed for more than twelve months
the operation of this Development Bank which, it is claimed, will be the
salvation of the primary producer and the small business man. When the
Government was told more than twelve months ago that there would be no
opposition at all to the introduction of the Development Bank, either by new
legislation or by a simple amendment of one of the provisions of the existing
legislation, the Government refused to act in the matter. It suggested that the
Development Bank was inextricably bound up with the other legislation, but that
was not so. For political reasons, the Government wanted to use the proposal to
establish a development bank as an inducement or bribe to win support for its
other banking measures. There is no reason why the Development Bank could not be
already functioning if the Government, for political reasons, had not held up
that proposal. I say, therefore, that the Government is not entitled to take any
credit to itself for the Development Bank on this occasion, because it was a
matter on which the whole of the Senate was unanimous; and that bank could have
been brought into existence more than twelve months ago by a unanimous vote.
Now, of course, there is another argument that is presented on behalf of this
legislation. We are told that it is going to prevent the nationalization of
banking. That argument falls down at once when it is realized that the
Parliament is a sovereign body; whatever Parliament does it can undo. I have
heard it suggested that the Commonwealth Bank is being cut up so effectively by
this legislation that it will never be possible to unscramble the egg; but my
examination of the legislation does not lead me to believe that that is so. As
far as this legislation is concerned, it can be undone by Parliament, and
therefore the argument that it is going to prevent beyond all doubt the
nationalization of banking must fall to the ground. But I want to say this: Even
Government senators are uncertain whether this legislation will do that job,
even for the time that this Government is in power. Some of them have told me
that they believe this legislation will prevent the nationalization of banking,
whilst other Government senators have told me that they believe this legislation
will make the nationalization of banking easier of achievement. I am aghast that
all Government senators, some of whom subscribe to one view and others to the
opposite view, will allow themselves to be regimented into voting for these
bills although they are not sure of the effect that they will have.
A year or so ago I read an opinion that was expressed by the financial editor of
the “ Sydney Morning Herald “, who certainly would not be a supporter of the
parties represented on this side of the chamber. He stated -
The net result is that if
Parliament passes this legislation a hostile board on the central bank could
not wipe out trading banks in 24 hours. It would have to give 45 days’
notice. The banks wanted 90 days, but it was agreed to split the difference.
Then he went on to say -
It seems like shadow sparring
because after the 1949 debacle no government would dare another attempt to
nationalize the banks unless it had the people behind it.
There is the crux of the situation. The safety of the private banks to-day does
not depend on any legislation or legislative safeguards; ultimately, it depends
on whether the people are satisfied that the private banks are doing a good job.
If the people feel that there are advantages to be gained from having a number
of banks, the people themselves will prevent the nationalization of banking. The
fate of the private banks is in their own hands, and they ought to realize that
fact instead of running to the Government and asking for the provision of
safeguards which cannot be finally effective. As I have said, if the private
banks do a satisfactory job, the people themselves will prevent the
nationalization of banking. The people ultimately will decide whether there
shall be nationalization of banking or not, and they will decide that question
according to whether the private banks do the job they are established to do.
Another point made by the financial editor of the “ Sydney Morning Herald “ was
that this legislation will actually make it easier for a government, which is so
inclined, to nationalize the private banks. He went on to say that whereas under
the existing legislation the central bank can call up 25 per cent, of the
trading banks’ deposits on one day’s notice and the remainder after 45 days
elapse, under the legislation now before the chamber the Government can call up
the lot.
Senator Vincent:
– That is not quite true.
Senator McMANUS:
– I made that assertion twelve months ago and it was not denied. I have since
taken steps to heck it.
Senator Vincent:
– Does the honorable senator believe that it is true?
Senator McMANUS:
– After I made the statement, I listened to the speeches of a large number of
Government supporters but I did not hear any of them contradict it. The
statement was also made in a very well-known public organ, and it is amazing to
me that if it were untrue no one made any attempt to deny it.
Senator Wright:
– It was only a statement
Senator McMANUS:
– I shall leave it to the experts on my left who are interjecting to check the
legislation to find out whether or not it will do the job that the Government
says it will do. It cannot effectively protect the private banks against
nationalization. They can do that only by their own actions, by the service they
give to the community.
This legislation is not necessary, because the Prime Minister (Mr.
Menzies) and Sir
Arthur Fadden, who was Treasurer in 1953, told the Parliament at that
time that the Commonwealth Bank was doing the job the country needed. This
Government, which for four or five years had a majority in both Houses, made no
attempt during that period to bring down this legislation, because the
Government’s leaders felt that it was unnecessary. It now appears that they have
been unable to continue to stand up to the pressure from the private banking
organizations, and so this legislation has been introduced. For the reasons that
I have stated, the Democratic Labour party will oppose it.
I should point out that the only serious criticism which I have heard the Prime
Minister make of banking organizations in recent years was directed not against
the Commonwealth Bank but against the private banks. A couple of years ago Mr.
Menzies stated that if only the traditional lenders, the banks and the
insurance companies, would put their resources into housing, the housing
situation would be solved. That was a direct statement by the Prime Minister
that the private banks had let the country down in relation to housing. If one
examines the actual lending activity of the
Commonwealth Bank over the same period one finds that it threw all its resources
into doing a good job of financing housing - though the private banks were at
the same time reducing the assistance that they were giving in this direction.
In 1955, the private banks made £105,000,000 available for housing. The 1957
figure was down to £86,000,000. There was one reason for that - the impact of
hire purchase.
As soon as hire purchase came on the scene the eyes of the banks turned away
from housing and legitimate development. I contest the assertion of one
Government speaker that they turned away because they lacked confidence; that
they were uncertain as a result of the control of the central bank, and the
activities of the Commonwealth Bank. Let us be frank. They turned in the
direction of hire purchase because it offered greater profit. I am sorry that I
have not the time to deal adequately with the question of hire purchase. It is a
very serious thing when 28 per cent, of the credit of this country can be
extended in a form over which the Government has no real control. The situation
is steadily growing more and more serious.
The Government’s decision to extend television to States other than New South
Wales and Victoria will lend a tremendous impetus to hire purchase. The
provision of finance for the purchase of television sets will make it even more
difficult for people to obtain credit for other purposes. One can look in any
newspaper and see hire purchase firms offering 9 per cent., 10 per cent, and
even 12 per cent, interest on investments. Unless something is done about hire
purchase the position will become increasingly serious. I appreciate the fact
that the States will shortly be having a meeting on the subject. They realize
the desperate position that is developing. I am sorry that the Commonwealth has
not done more to exercise the control which, in a previous debate, Senator
Wright said that it could exercise. I have been told frequently by
Government supporters that the Government can do nothing about hire purchase,
but I attach importance to Senator
Wright’s statement - made during the banking debate twelve months ago -
that the Government, through its banking power, could issue a banking policy
directive which would control the supply of finance from the banking system to
the hirepurchase companies. I respect Senator
Wright’s opinion, and I should like to see the Government act upon it -
not leave it to the States to deal with the present desperate position arising
from hire purchase.
I do not altogether agree with the suggestion of Senator
McKenna that Dr.
Coombs’s opinion should be given great weight in this matter. I do not
mean that I do not respect his opinion. I realize that he has an international
reputation in this field, but I was one who, in 1930, objected violently to the
opinion of Sir Robert Gibson
being given overriding significance. Having done that, 1 am not prepared to
concede that similar weight should be given to the opinion of Dr.
Coombs. Any government is entitled to expect that its officers will
advise it, but, in the long run, the decision on policy must be its own.
I am sorry that this legislation has been brought down. I have tried unceasingly
to see the reason for it. I believe that the Government generally was well
satisfied with the way in which the Commonwealth Bank had worked over the last
ten years. I do not believe that the present proposals were greeted with
enthusiasm by many leading members of the Government. We could have had the
Development Bank - an excellent proposal which will do much good if the bank is
properly handled by an adequate board - without all the proposals which have
accompanied it. Indeed, the proposed Development Bank could have been put into
operation without opposition from this side of the House, had the Government so
wished. The legislation before us is unnecessary, undesirable and not in the
best interests of the people of Australia.
There has been some talk about the views of different parties on the question of
bank nationalization. I am opposed to the nationalization of banking. In 1947,
the people made a certain decision. In 1949, they re-affirmed that decision, and
I am prepared to accept the will of the people who have shown that they want a
dual banking system. If they ever decide that they want only one bank they can
easily bring that about by putting all their accounts in the Commonwealth Bank.
I am opposed to monopoly, whether it is private monopoly or State monopoly,
while realising that in some circumstances it is necessary for the Government to
control big undertakings. Because I am opposed to monopoly, I am opposed to the
nationalization of banking. I am equally opposed to this legislation because it
will weaken a bank that has done an excellent job - a bank which acts
essentially in the interests of the people.
I am not influenced by any suggestion that the bank might be sold. No government
would have the courage to attempt to sell the Commonwealth Bank. Any government
that attempted to do so would automatically ensure its defeat. Therefore, my
attitude on the bill is that the onus is on the Government to show that the
legislation is necessary. The Government has failed completely to show any
deficiency, weakness or danger in the present banking set-up. The legislation
cannot have any great effect for good. 1 believe that it is likely to have
serious effects for ill.
Senator SPOONER:
New South WalesVicePresident of the Executive Council and Minister for National
Development · LP
– When Senator McManus says
that he is opposed to the nationalization of banking, he should follow his
argument through logically and say that he believes in ensuring that we have in
Australia the best possible banking system. It is because the Government
believes that the alterations in contemplation will strengthen the banking
system that it brings this legislation forward.
Senator McManus, in
the part of his speech that I heard, dealt at some length with the subject of
hire purchase. I am sorry that I was not here during the whole of his speech.
The great thing in this legislation is the position of the Reserve Bank that is
to be set up. No comment, no criticism and no discussion upon the legislation is
directed to the main point unless it examines the powers, the functions and the
re-arrangement of the Reserve Bank, because to the Reserve Bank of Australia are
to be entrusted the great responsibilities of ensuring that we have an orderly,
efficient and generally good banking system. If the honorable senator spoke on
the Reserve Bank in my absence I stand corrected, but I heard no comment or
criticism from him of the proposal to set up that bank. I repeat, no criticism
or comment about this legislation is complete without an emphatic and analytical
examination of the change that is being made in Reserve Bank functions.
Sitting suspended from 5.45 to 8 p.m.
Senator SPOONER:
– The Senate is now debating the four major bills and the ten smaller,
consequential bills which, in total, comprise the banking legislation. As a
result of the recent elections, the Government now has a majority in the Senate
and, because of that, we are hopeful that the legislation will pass through the
Senate following upon the present deliberations.
Before looking at the terms of the legislation, I should like to take a little
time off to review past history, as distinct from the content of the proposed
legislation; to review what has happened in the past and to examine the lesson
that I believe can be learned from looking at that history. I remind the Senate
that the passage of this legislation could be, in truth, the end of what is a
colourful episode in the history of the Senate. The history of the episode goes
back to 1950. I think it is factually true to say that the then Labour
government was defeated because of its banking legislation, and the Menzies
Government came into power in 1949 pledged, as part of its policy, to the
introduction of most important reforms in banking legislation. In terms of that
policy speech, we introduced legislation within a few months after we had
assumed office, only to have it rejected in the Senate, where the Labour party
carried over a majority in numbers even though it had been so soundly defeated
in the House of Representatives.
We brought the legislation into the Senate, and a hostile majority in the Labour
party defeated it. We re-introduced the legislation, and it was defeated on the
second occasion. Then, as a government, we took the constitutional step of
securing a double dissolution, something that has happened only twice in the
history of the Commonwealth Parliament, when both Houses were sent to the
country. As a result, we came back with a majority in not only the House of
Representatives, but also the Senate. Following that change in the situation, we
re-introduced legislation in 1951 and had it carried.
We then come on to 1953. In that year, we re-cast the structural arrangements of
the Commonwealth Bank. We set up the Commonwealth Trading Bank as a separate
legal entity. We made that trading bank subject to the same controls as all
other trading banks. We made alterations in the special accounts provisions
which we found were necessary in the light of the experience we had had in the
three years in which we had been in office. We took from the Commonwealth Bank
excessive powers over central banking. Those powers were clearly in excess of
central banking requirements and were clearly disturbing to not only banking but
the general commercial community. We still held a majority in the Senate and,
therefore, that legislation was duly enacted.
Following the next elections, we brought down additional legislation in
December, 1957, and again in January. 1958. I am sure those occasions are fresh
in the recollection of all honorable senators. Following the election, and, as a
result of proportional representation, there were even numbers in the Senate,
and the Senate rejected that legislation. The legislation now before the Senate
is, for all practical purposes, in exactly the same terms as that which was
defeated in December, 1957, and in March, 1958. There has been some criticism of
the Government for not bringing down the legislation which was rejected in 1957
and 1958 at a time when we held a majority in the Senate. To that criticism, I
give the reply that this banking legislation is of profound significance and of
profound importance. I think it is fair that I should say that, as a government,
we have at all times proceeded carefully and slowly, that we have not at any
time refrained from taking proper heed of responsibilities that we had when we
made changes of such far-reaching consequence.
I have repeated the history of the banking legislation in order to illustrate a
fact of profound political significance and importance in that I claim that on
three occasions the Labour party has not hesitated to use its numbers in this
chamber to defeat banking legislation for which, I submit, the Government had a
clear mandate from the electors of Australia. I pause to make the point that it
is not the usual conception of the functions of an upper house or a house of
review to act at cross purposes to a government dealing with legislation of
profound national and economic importance for which it had the support of the
people. I propose to come back to that point later; but I ask that it be noted
now that despite the fact that we were introducing legislation which we had
placed before the people, and for which we had obtained the approval of the
people, that legislation was rejected by the Labour party, and rejected in
circumstances in which the numbers in the Senate, under proportional
representation, were even, and because, owing to the constitution of the Senate,
the vote goes in the negative when the numbers are even.
I venture to make the statement that the reason for this situation lies in the
fact that the clash of views between the socialists and Liberals on banking is
probably the greatest single issue between the opposing political forces in
Australia. The importance of the point is that there is now no doubt at all that
central banking, with all its policies and all its techniques, is an essential
part of the equipment of any democracy. It must not only be maintained and
retained, but maintained and retained at the highest degree of efficiency in
order to guarantee the stability of the economy. There is no doubt at all that
all central banks, in the light of modern experience and in the light of the
development of banking techniques, have to be fortified with controls for use as
the occasion warrants.
The clash between the socialists and the Liberals is that despite whatever
national protestations to the contrary there may be, the policy of the
socialists is the nationalization of banking. The policy of the Liberals is a
central bank, a reserve bank, superimposed upon a decentralized free enterprise
banking system. That is the great conflict between banking under a system of
free enterprise, with competition between bankers so that individuals have a
choice of banks and competition between rival banking concerns on the one hand,
and a monopoly banking system, which would follow the implementation of the
socialist policy, on the other hand.
Against that background I say this - I hope with a sense of responsibility -
that, in truth, every change that we have made and every change that we have
contemplated throughout the various stages of this legislationin 1950, 1951,
1953, 1957 and to-night - has been aimed at benefiting the economy of Australia
and at increasing the confidence of the people of Australia in the economic
arrangements which govern conditions in this country. I make the claim that
everything we have done in that direction has been successful. I do not claim
that this alone is responsible for the great prosperity that Australia has
enjoyed over the last decade, but I do say that the changes we have made have
improved very materially the relations between the Commonwealth Bank and the
trading banks, between the Commonwealth Bank and the commercial community
generally, and between the Commonwealth Bank, the trading banks and the people
of Australia. Those changes have contributed greatly to the level of prosperity
which undoubtedly we have enjoyed during that period. So I emphasize the point
that the great clash here is between monopoly nationalized banking and free
enterprise banking subject to the control of a reserve bank.
True it is that in 1953 Dr.
Evatt, in criticism of the Government, said -
The Government knows
perfectly well that politically, legally and practically the nationalization
of the private banks is a dead issue.
By that statement Dr.
Evatt denies what I have stated to be one of the principal objectives
of the Australian Labour party. The Leader of the Opposition in the Senate (Senator
McKenna), in his contribution to this debate, described the retention
of the nationalization of banking in the platform of the Labour party as
something like an idealistic objective and he said that, for practical purposes,
no one need worry about its retention. However, the nationalization of banking
remains part of the Labour party’s platform. Even during the debate upon this
measure members of the Labour party have expressed their adherence to that
objective.
Senator Kennelly:
– I agree with that.
Senator SPOONER:
– The Deputy Leader of the Opposition nods his head and says, “ I agree with
that “. I give him credit for saying what he believes. I have no time for
anybody who has an objective and walks away from it. Congratulations to you, Senator,
for standing up for what you believe, but do not blame me for attacking
you upon what I believe to be a grave matter that could do grave harm to the
Australian economy.
Although Dr. Evatt has
said that the nationalization of banking is a dead issue and has created the
impression that it is something in which the Labour party is no longer
interested, we know in our political day-to-day life that a substantial
proportion of the members of that party freely express the view that
nationalization of banking is not a dead issue, that fait that has happened to
date is that the High Court has declared certain legislation unconstitutional
and that that is a challenge to the wit and ingenuity of the Labour party to
bring down other legislation which will come within the four corners of the
Constitution and be declared constitutional by the High Court.
I have recited occasions on which, in my opinion, the Australian Labour party
has most improperly used its weight of numbers in this chamber to defeat
legislation for which the Government had a mandate. That is a matter of great
discredit, not only to the Labour party but also, I believe, to the Senate. I
believe that I have made out an unanswerable case to support the view that those
who are opposed to monopoly banking, as I am, had better beware of the Labour
party. As I have said, this is a great issue between the two parties, but even
that fact does not justify the smudge campaign which always seems inherent in
Labour party attacks on any great issue. The point to which I am leading is
this: The usual statement made on our side of politics is that as Parliament can
unmake any legislation that a previous Parliament has made, the only way to
maintain a competitive system of free enterprise banking is to continue to
return a Liberal-Country party government to power. I add this refinement: Up to
this stage in the history of banking legislation the Senate has played a most
important role. Events in the future could well show that the Senate will play
an even more important role than it has in the past. I cannot imagine the
Australian Labour party winning an election upon its policy of banking because
political history shows that the people have no confidence whatever in banking
proposals that emanate from the Labour party. When the day comes, as come
perhaps it will, when the Labour party attains power in Australia, it will do so
by concealing carefully its plans for monopoly nationalized banking. When it
gains power it will have no more compunction in introducing banking legislation
for which it has no mandate than it had in rejecting the legislation for which
the Government had a mandate. If the people of Australia are well advised and
maintain a Liberal party-Country party majority in the Senate, the time will
come when the Liberal party and the Country party in the Senate will have the
responsibility of protecting the interests and rights of the people of Australia
by rejecting banking legislation which the Labour party concealed and was not
prepared to disclose at the time it fought an election and for which it has no
mandate. The Liberal party and the Country party in the Senate at that stage
will do a great national service by rejecting that legislation, if the Labour
party has no mandate for it, and ensuring that the principles of government
remain unsullied in that the great political parties only introduce legislation
for which they have obtained a mandate from the people.
I summarize what I have to say by saying that what has happened is that the
Labour party acted most improperly in rejecting legislation for which the
Government had a clear mandate. I make the accusation that in election campaigns
the Labour party will not have the courage to advance the banking views which it
holds. I make the further accusation that if the Labour party does come into
power in Australia it will have no compunction whatever in attempting to destroy
the private trading banks by bringing down legislation which it had not the
courage to fight for on the election platforms. I make the forecast that if the
people of Australia have sufficient acumen and sufficient political sense to
give the Liberal and Country parties a majority in the Senate, they will have
the best instrument that they could have for the maintenance of a competitive
free enterprise system of banking in Australia.
It has taken me longer than I thought it would take to say what I have just
said. I want to run quickly over the provisions of this legislation. I make the
point that I made just before the suspension of the sitting. I believe that too
much emphasis has been placed on the Development Bank, the functions of the
Commonwealth Banking Corporation and the separation of the various functions of
the Commonwealth Bank. More thought and more emphasis should be given to the
creation of the Reserve Bank, separate from all other banking functions. That is
the important part of the legislation. I believe that in central banking we are
developing in knowledge and techniques. It is becoming increasingly a part of
the foundation of our economic affairs. It is of profound significance to ensure
that the Reserve Bank is established under, as I believe it is in this
legislation, a fair and just formula so that it can do the national task that it
is obliged to do.
I agree with what Senator
McManus said earlier. Whilst a great measure of independence is to be
given to this Reserve Bank, and whilst no government would lightly interfere
with what it will do, in the final analysis the Government must reserve to
itself the right to disagree with what the bank does. The Government should do
that only in circumstances in which the disagreement is brought out before the
Parliament so that all may see the effect of it. I remind honorable senators
that it is in the charter of the Reserve Bank, not in the charter of the
Commonwealth Banking Corporation, that we have carried forward that great
obligation which I think is expressed so well.
We charge it with the responsibility for
the stability of the currency of Australia, the maintenance of full employment
in Australia, and the economic prosperity and welfare of the people of
Australia. By creating this organization, the Government, acting with
a great sense of responsibility, has done what it thinks is right, but we should
never overlook the fact that if the Reserve Bank is to be successful, as we all
want to see it, there must be a co-operative effort by the banking system, the
commercial community and the people of Australia. There is, in my opinion, an
increasing appreciation, not only throughout the commercial and the banking
communities, but also amongst the people of Australia, of the part that the
Reserve Bank plays in its control of the volume of credit that is available to
the people. People are taking more and more interest in the Reserve Bank, in
what it means and in what it has to do. The Reserve Bank is not the only factor
in this matter by any means. The influence of governments and of their fiscal
policies, as evidenced by their Budgets, also play a part. But, as I tried to
say earlier, although the co-operative effect, the working together of all
sections of the Australian community, is needed, in so many ways it is to the
central bank or the Reserve Bank that we look for a lead.
It cannot be denied that there has been a great deal of concern, not only in the
banking system and the commercial community, but also in all walks of life, that
we in Australia have a Reserve Bank which is not completely independent of all
other banking activities. It is an oddity that we have a situation in which the
Reserve Bank has as a part of its set-up branches which are competing with the
banks which it seeks to control. There is an old saying that Caesar’s wife must
not only be above reproach, but also must appear to be above reproach. There is
no doubt at all that the disquiet over this situation goes very deep in the
community. As the techniques and rules of central banking have become better
understood and developed, not only by the central bankers themselves, but by
other people, the oddity of the situation in Australia has caused more and more
disquiet. What we have done is to remove the cause of that disquiet.
I have not the time to talk in terms of the distribution of the functions of the
banks. I conclude on the note that too much emphasis has been placed on the
functions of the various branches of the bank. In my opinion, the point is not
whether the Commonwealth Banking Corporation will succeed at the expense of the
private banks, although that is a matter of some consequence to some people, but
that the Reserve Bank should grow in experience, wisdom, knowledge and
techniques and be better able to carry out the great responsibilities with which
it is entrusted. When I say that, I am not to be held as decrying what the
central bank has done up to the present stage. Let me say to those who suggest
that we should not re-organize the central bank and put it on the best possible
basis to give leadership that will lead to co-operative effort, that they are
unknowing and do not realize the extent to which things can be improved and to
which they will be improved as we obtain greater knowledge and experience. They
do not understand the extent to which it is felt that even better can be done
than has been done.
A lot of time and thought has been given to the form of this legislation. We, as
a government, believe that the proposals contained in it will adequately protect
the interests of all those who are at present associated with the Commonwealth
Bank organization. We believe that those proposals will equip the Reserve Bank
in a much better way than it has been equipped up to the present time. We
believe, too, that the years ahead will prove that this legislation was another
step forward just as was the legislation of 1951 and 1953, and that it will make
another great contribution to what is in future to be known as the Reserve Bank
of Australia. Mind you, the responsibility to maintain the stability of the
currency, full employment, economic prosperity, and to care for the welfare
of the people of this country has shifted to the Reserve Bank.
Senator KENNELLY:
Victoria
. - Mr. President, at
the commencement of my speech I want to assure the Leader of the Government in
this place (Senator
Spooner) that this legislation will be repealed when Labour is returned
to office.
Senator Wade:
– If ever.
Senator KENNELLY:
– The political pendulum swings. You may not always be so happy about hanging
onto the backs of the Liberal party. I have known the time when the Australian
Country party has been delighted to shake them off. I also want to assure the
Leader of the Government that the policy of the Australian Labour party is
nationalization of the banks. Labour does not run away from that policy. I also
wish to say - the honorable senator would have said it if he had wanted to be
fair - that that cannot be done until the Constitution is altered. We will fight
for that alteration. We will not run away from it. If ever a piece of
legislation was introduced in the interests of monopoly private banking, it is
the legislation now before us. It demonstrates more clearly than does anything
else that this Government is subservient to the banking interests. When I
interjected a while ago, some one said, “ Oh, the smudge campaign!” I ask the
person who was the treasurer of the Liberal party in 1949 whether or not the
banks paid into the Liberal party funds. He should know. Of course, they put in!
I was then federal secretary of the Labour party, and I know they put in.
Senator Scott:
– But is not that better than taking chicken feed-
Senator KENNELLY:
– Now listen, one fool at a time. You can go later. It is just fantastic to say
that this legislation, which no doubt will be passed in 1959, was not bought and
paid for in 1949. In this House, as in most Houses of Parliament under our
system, it is not so much the logic that counts as it is the numbers, and at the
moment the Government has the numbers.
I say to my friends in the corner on my left that this legislation would not be
passed if they had opposed it at the time and place that mattered. It is nice to
come into this chamber and make speeches against important legislation such as
this, but I suggest that, if my friends had wanted to defeat it, they had the
opportunity to do so.
Senator Wright:
– At the price of putting Evatt in?
Senator KENNELLY:
– I am not saying anything about the price. I was saying that they had the
opportunity to defeat it.
Senator McManus:
– But that was the price, was it not? You were told how you could get the
preferences, but you did not want them.
Senator KENNELLY:
– When I see friends sitting on opposite sides of the chamber helping one
another, I can understand the common feeling.
Senator McManus:
– Well, you helped them in Queensland in the election. To whom did you give your
preferences in Queensland? You gave them to the Liberal party.
Senator KENNELLY:
– Now, listen. I know something about it. I am sorry if I have ruffled my
ex-colleague. I was delighted when my friends in the corner here helped to
defeat this legislation at the firstreading stage when it was last introduced.
But if the position was bad then, it will be made worse by the present
legislation, as I hope to prove. Now our friends here make speeches against the
legislation. I am only suggesting that, if they thought the legislation was that
bad, when they knew that if this Government was returned to office it would
fulfil its masters’ wish-
Senator Cole:
– We would much sooner give way to them than to the Communists.
Senator KENNELLY:
– Well, we understand that you would much sooner do that, but would it not be
better all round not to attempt to fool the people outside?
Senator Cole:
– But did not you try to fool the people by your advocacy of communism?
Senator KENNELLY__ I
do not mind having a discussion with your deputy leader, because at least there
would be something in any such discussion. So, if you do not mind, will you let
me continue from that angle? I said that this legislation demonstrates to those
who are prepared to think, to those who do not take their views from the press,
that the Government has introduced it on account of help given to defeat Labour
in 1949. I do not think that honorable senators opposite will deny that that is
so. Similarly, I do not think that Senator
Spooner will get up in this chamber and say that the private banks did
not put in money with the object of defeating the government of the day, because
if that government had been returned to office it would, so far as the
Constitution permitted, have attempted to go on with nationalization of the
banks. All that I say is that these bills are not in the public interest because
they will strangle certain industries to which the bank board will not desire to
lend money. I shall discuss this matter again later in my remarks, and I shall
indicate the kind of people who have already been appointed to the board.
This legislation has, of course, the sanction of the big newspaper interests of
Australia, because some of the people who control the newspapers are also
directors of some of the private banks. In order to refresh the minds of
honorable senators opposite, let me refer to some of those persons. Vincent C.
Fairfax is a director of the Bank of New South Wales. He is also a director of
John Fairfax Limited, which publishes the “ Sydney Morning Herald”, the Sydney
“Sun”, and the Sydney “ Daily Mirror “, and operates television stations in
Sydney and Brisbane. Is it any wonder that the views of those newspapers are
slanted in regard to this legislation? What chance have the people to receive
through the press in which Vincent C. Fairfax has a controlling say a fair
intimation of the pros and cons of this legislation as compared with the
existing legislation?
Let us consider the way in which the press and the banks are tied together in my
own State. We have, for instance, H. D. Giddy, who is chairman of the National
Bank of Australasia Limited. He is also chairman of Herald and Weekly Times
Limited, which controls the Melbourne “Herald” and “Sun-News Pictorial”, the
“Courier Mail” and the “Telegraph” in Brisbane, and the “ Advertiser “ in South
Australia, eight radio stations, and three television licences, one of which,
may I say with respect, Sir,
is controlled illegally. That shows the set-up and the link that exists
between the Melbourne press and the other press that I have mentioned. Again, is
it any wonder that the views that are presented to the people on this
legislation are slanted?
Let us look at the third person, Sir
Arthur Rymill, who is chairman of the Bank of Adelaide and a director
of Advertiser Newspapers Limited. Is it any wonder that the views that are
presented to the people in that State are slanted? Therefore, in at least three
States, including the two main States, the minds of the people must have been
more or less impressed by slanted views on this legislation because the people
who, in the main, have a very big say in the press also have a very big say in
the administration of some of the private banks.
We may well ask ourselves what the private banks are after. Of course, they want
to see the Commonwealth Bank weakened as a competitor. They want to see the
central bank controls over their activities also weakened. They want the lending
activities of the Commonwealth Bank to be controlled by a big-business board,
having a sympathetic outlook, no doubt, to big business. So far as the
Development Bank, about which I shall have something to say later, is concerned,
they want the Commonwealth to be confined to the more risky or less profitable
business of banking. This Government is submitting meekly to the desires of the
private banks.
Senator Spooner stated
a few moments ago that this legislation represents a great advance in banking
legislation. No one should know more about that than he does. It is truly a
great advance so far as the private banks are concerned, but, just as in the
case of other concerns that were owned by the nation, because the Government has
the numbers it now desires to weaken the Commonwealth Bank.
Senator Scott:
– Have we weakened it in the past?
Senator KENNELLY:
– Certainly, you have. By its amendments of the 1945 banking legislation, on
each occasion this Government has legislated in order to give to the private
banks better opportunities than it has given to the Commonwealth Bank.
Senator Scott:
– Why is the Commonwealth Bank-
Senator KENNELLY:
– I do not want to take all of the time to which I am entitled, because I think
that most other honorable senators wish to speak in this debate. Therefore, I
think we shall get on much better if Senator
Scott will desist from interjecting now and make his speech after I
have resumed my seat.
Before dealing with the legislation, I want to make some general observations on
banking and credit policy. Traditionally, credit control has been one of the
main weapons available to governments against unemployment, inflation and
depression. To-day, there is very disturbing evidence to indicate that the
Government can no longer exercise the influence that is necessary in those
fields. To an increasing degree, the controls built up and exercised by Labour
from 1941 to 1949 have been discarded. More and more decisions affecting the
welfare of the nation are being taken by private monopolies that are motivated
only by a desire to reap greater and greater profits. How has government control
over the credit structure been reduced? The private banks have ignored central
bank policy in relation to liquidity ratio. In 1954, the Commonwealth Bank
stressed the advisability of a 25 per cent, ratio of liquid assets to advances.
It is true that the position improved in 1958, but in 1954 only one bank
maintained the 25 per cent, ratio.
Senator Scott:
– I have read this elsewhere.
Senator KENNELLY:
– I do not think so. After looking at the figures for 1954, I can quite
understand why the central bank desired the maintenance of a 25 per cent, ratio,
because at that time one bank, the Australia and New Zealand Bank Limited, had a
ratio as low as 9.8 per cent. It is true that, by 1958, its ratio had risen to
21.6 per cent. What do we find? Looking at the growth of hire-purchase business,
it is ironical that whilst the private banks have not greatly increased their
advances to the public, they have, through the hirepurchase subsidiary concerns
they control, made big increases. In 1955-56, the total advances that had been
made by the major trading banks aggregated £908,300,000; in December, 1958, the
amount was £932,200,000, there having been an increase of £23,900,000 over the
period. But let us consider the position in relation to advances through
hire-purchase concerns. The amount outstanding on hire purchase at September,
1955, was £197,200,000; by September, 1958, the amount outstanding had risen to
£313,000,000, an increase of £115,800,000.
Senator Paltridge:
– Did I understand the honorable senator to say that that was the amount of the
advances outstanding?
Senator KENNELLY:
– I ask Government senators who are interjecting to be patient. I can quite
understand why the Australian Country party wants to rush to the defence of the
banks, bearing in mind what the banks have done for the members of that party
over a long period of years. I said that in the hire-purchase field the balance
outstanding at September, 1955, was £197,200,000. At September, 1958, the
balance outstanding was £313,000,000, being an increase of £115,800,000. The
figures that were quoted during the debate on this measure in the House of
Representatives show that hire-purchase companies in which the private banks are
major shareholders had lent two-thirds of the total amount advanced through hire
purchase. I should think that that would satisfy even my Australian Country
party friends opposite. One may ask why it is that the banks are more interested
in the hire-purchase field than they are in normal banking. The reason is, of
course, that much more profit may be made by making advances through hire
purchase than can be made by advances in the normal manner. Again, profit is the
guiding motive.
This Government has refused to take any action to restrict hire-purchase
activities. It states that it has not the constitutional power to do so. But it
could permit the Commonwealth Bank to operate in the hire-purchase field. As
every one knows, the Government has done the reverse; it has obliged the bank to
withdraw entirely from the hire-purchase field. Is it any wonder that the Labour
party is very sceptical about the Government’s banking legislation? If the
Government sincerely wants to help the people, all that it has to do is to
permit the Commonwealth Bank to operate in the hire-purchase field. I am
convinced that if the bank were permitted to enter that field there would be a
considerable decrease of the rates of interest at present being charged not only
by the private banks, but by all firms connected with hire purchase.
Having my eye on the clock, Mr.
President, 1 shall now deal briefly with the salient points of this
legislation. As I have said, the Government’s main purpose in introducing it is
to weaken the structure of the Commonwealth Bank. As my colleague, Senator
O’Byrne, has said, the Government even proposes to change the name of
the Commonwealth Bank. Of course, I can quite understand its attitude in the
matter of changing names, because as we know the Liberal party was formerly
known by several other names. It is quite easy for the Government to produce
reasons why the name of the Commonwealth Bank should be changed.
What criticisms are offered by Labour concerning this legislation? In the first
place, the Reserve Bank Bill separates the central bank from the Trading Bank
and the Savings Bank. The Commonwealth Bank Bill sets up a corporation of
private businessmen to run the Trading Bank, the Savings Bank, and the
Development Bank. The Banking Bill, which deals with the Commonwealth’s control
over private banks, abolishes the present system of control through special
accounts and introduces in its place a new system which could not, on account of
the time factor, be applied quickly in the event of a national crisis. Then
there is the separation of the central bank from the Trading Bank, Savings Bank,
and the Development Bank. That is a major change in the present organization.
When the Leader of the Government (Senator
Spooner) stated in his second-reading speech that the change is
desirable and that it would be beneficial, he overlooked what Sir
Arthur Fadden said when, as the then Treasurer, he introduced this
self-same legislation in another place prior to the general election of November
last. This is what the then Treasurer said -
All the experience has shown
there cannot be full harmony between the central reserve bank and the
private banks …. nor that close co-operation which ought to exist until this
separation is effected.
What sort of a reason is that? The right honorable gentleman went on to say -
This lack of confidence in
the present structure on the part of the private banks and their customers
is undoubtedly the crucial factor in the whole measure.
That portion of his speech was faithfully repeated in this chamber by Senator
Spooner, who is now the Leader of the Government. Sir
Arthur Fadden went on to say -
The private banks have made
it plain that they do not criticize the way in which the central bank has
used the powers and functions it has under the present legislation. On the
contrary, they have been at pains to commend the competence, integrity and
impartiality of the central bank.
If any one would know whether that was true or false it would be the Treasurer
of the day. As that is exactly what he said before the last election in
introducing, for the second time, the banking legislation which this chamber
rejected, one wonders why we find Senator
Spooner saying exactly the opposite to-day. I believe that what
I have read to honorable senators proves conclusively that there is no reason
for the re-introduction of the banking legislation except that the private banks
desire the change and, of course, that this Government desires to satisfy the
banks.
When this legislation was first before the Liberal party and the Country party,
it was known that both the Prime Minister (Mr.
Menzies) and the then Treasurer (Sir
Arthur Fadden) were opposed to it. Certain feelers were put out - even
in this place - to inquire whether, if the Country party broke with the
Government, the Australian Labour party would support it in forming another
government.
Senator Wade:
– Oh!
Senator KENNELLY:
– I would not expect our friend to know, but there are other members of the
Country party who would. It shows that then, at least, the whip had not been
cracked hard enough.
Senator Scott:
– Tell us the whole story.
Senator KENNELLY:
– You will learn it one day from the annals of years gone by.
Senator Scott:
– It is all imagination on your part.
Senator KENNELLY:
– It is true. I do not mind having one cockatoo in a gathering but I strongly
object to a number cackling at the same time. Let us look at what Mr.
Menzies said in 1953 -
We believe that the
Commonwealth Bank’s general trading activities have great merit because they
act as a source of information to the central bank. They enable the central
bank to have an instrument by which it may give leadership in banking
policy. It has a great number of advantages that I need not discuss at this
stage.
The Prime Minister said that in 1953, but even he, strong as he is in his own
party, could not stand up to the banks in 1958, and again in 1959. If a certain
condition was favorable in 1953, by what logic can it be said to be wrong in
1958 or 1959?
A further fault in the Reserve Bank Bill is that it perpetuates the bank board
which the Government set up in 1951. If one looks at the personnel of the board
one sees the undoubted link with huge private interests outside. I am reminded
of what happened in Britain not so long ago, when the bank rate rose. Two
directors of the Bank of England had private underwriting interests. Remarkably
enough, their firms were the only firms which sold prior to the rise in the bank
rate. When an inquiry was held they said, Mr.
Acting President, that they had not used the information that they had
gained as directors of the bank. They were exonerated, but theirs were the firms
that reaped the cash. That is why we are opposed, and always have been opposed,
to such interests.
Every one must admit that the Commonwealth Bank has been a monument to the
people whose foresight brought it into existence. Country party senators must
have forgotten the years when the Commonwealth Bank stood behind them and the
private banks would not.
The Commonwealth Banks Bill, the second measure, hands over the conduct of the
Trading Bank, the Savings Bank and the proposed Development Bank to a board, the
majority of whose members will be private business men. On a board of eleven
members there will be only three Commonwealth representatives, of whom one will
be the Secretary to the Treasury. Each of the three banks will have an executive
committee of five members, and on these committees the Commonwealth is to be
permitted only one representative in the case of the Trading Bank and the
Development Bank, and two representatives in the case of the Savings Bank. What
could one expect to happen in such circumstances? Will not the people whom the
Government appoints, having a majority on these boards, tend to help industries
in which either they or their friends are interested? We have seen what has
happened in other parts of the world, and I do not think that Australians are
different from anyone else.
While it may be said that so far the Government is not getting rid of the
Commonwealth Bank, it is nevertheless putting the friends of the private banks
in control. While it is true that there will still be a Commonwealth Trading
Bank, Government representatives will have extremely little say as to its
policies. On all the boards they will be in a minority. It is comparable with
leaving the shares in private banks in existing hands but controlling those
banks by boards made up largely of Commonwealth Bank officials. That is the
exact reverse of what the Government proposes in connexion with the control of
the various branches of the Commonwealth Bank. As
I do not like making statements unless I can back them up with facts, I propose
now to examine the positions of the present members of the Commonwealth Bank
Board. First, we have Mr.
G. H. Grimwade, who has been a member of the board since 1949. He is an
appointee of the Liberal party and is a director of Commonwealth Industrial
Gases Limited, and of Courtaulds (Australia) Limited, which manufacture rayon
goods. He is also a director of Cumming Smith and Company as well as of Drug
Houses of Australia Proprietary Limited and Perpetual General Insurance and
Guarantee Company Limited. All I can say about him is that he would be most
impartial if some of the firms with which he is connected were anxious to obtain
credit. Another member of the present board is Mr.
W. A. Gunn. He is a director of Rothmans of Pall Mall (Australia)
Limited. Another member is Mr.
A. E. Symons, who is a director of Waters Holdings Limited. Then, I
remember very well, the appointment of Professor Hytten. He went to great pains
to explain away his statement that industry in this country needed a 7 per cent,
pool of unemployment.
Senator Hannan:
– You say he made it, but he did not in fact say that.
Senator KENNELLY:
– He did, and it just did not fit in.
Now. let us examine the proposal for the Development Bank. Is there any need for
this bank? The Government makes great claims about the measure to establish that
organization. The fact is that the functions of the proposed bank are already
being carried out to a very large extent by existing departments of the
Commonwealth Bank. If the Government wishes to make the Commonwealth Bank’s
activities any wider in this connexion, all that is needed is a simple amendment
of the existing act.
Further, in the bill which seeks to establish the Development Bank, the
Government proposes that the private banks may act as agents for the Development
Bank. Let us examine exactly what that means. Let us assume that the client of a
private bank asks that bank for accommodation and is refused. In such cases, the
general practice is for the refusing bank to suggest that the client approach
the bank’s hire-purchase organization. Under the measure before us, if such a
bank does not believe that the security offered by the client is good enough, if
it believes that it can earn more by lending out its money through hire purchase
- and it can - then it will act as agent for the Development Bank and in that
way keep the client’s custom. At the moment, if a client is unable to obtain
accommodation from his own bank he may approach another bank which will offer
him accommodation on condition that he transfer his account from the bank which
refused him to the bank which accedes to his request. Under the measure before
us, that will not happen.
The Bank of New South Wales has been quite frank about this matter. In a
quarterly review published in the Melbourne Age of 25th February, 1959, that
bank is quoted as saying -
The Development Bank should
be established as a separate lending institution for which all trading banks
would be appointed as agents. Such a move would not interfere at all with
the borrower’s existing banking arrangements.
A further statement credited to that bank was -
The submissions of the
trading bank appear to be met by the proposed legislation on all points
except this.
Is it any wonder, therefore, that Labour opposes this legislation, that Labour
suggests it is actually designed to meet the wishes of the private banks? The
Labour party believes that this legislation represents a surrender to the
powerful monopoly interests. It represents the surrender of that vital control
over credit which is necessary if the stability of the economy is to be
maintained. The legislation contains nothing calculated to help those
unfortunate people who are being fleeced by the hire purchase companies to-day;
and it certainly seeks to weaken the Commonwealth Bank.
When we are the Government - time changes all things-
Senator Cole:
– You will be a bit old.
Senator KENNELLY:
– It is remarkable how things do change; and I say without fear of contradiction
that a Labour government will amend this legislation.
The ACTING DEPUTY PRESIDENT. - Order!
Senator KENNELLY:
– Order?
Senator Marriott:
– You have gone a quarter of an hour over your time.
Senator KENNELLY:
– I have not gone over my time; I have argued that point already. If the
honorable senator would cease interjecting, I could finish much sooner.
The ACTING DEPUTY PRESIDENT. - Order! I called “ Order “ because of the
interjections.
Senator KENNELLY:
– Let me conclude by reiterating what I said at the beginning.
Senator Mattner:
– You have had 20 minutes longer than you should have had.
Senator KENNELLY:
– If the honorable senator can prove that I have had 20 minutes longer than I
should have had, I shall refrain from speaking further.
Senator Marriott:
– Your Whip dropped you a hint.
Senator KENNELLY:
– Would the honorable senator like to read what he said? We will remove this
legislation from the statute-book because we do not like legislation that is
submitted in repayment for money received by a political party.
Senator VINCENT:
Western Australia
– Senator Kennelly opened
his remarks some 40 minutes ago and closed them on the same theme - that the
Opposition believes in the policy of the nationalization of the private banks
and, if ever returned to power, will take steps to repeal the legislation now
before the chamber. I congratulate the honorable senator on his frankness in
stating the Australian Labour party’s policy. I wish he had been equally as
frank last November. It is something more than a coincidence that after an
election people like Senator
Kennelly usually become quite frank about their party’s policy dealing
with the socialization of industry, production, distribution and exchange,
whereas, when an election day is approaching, they become remarkably quiet about
this policy and even toss it overboard during their election campaign. If I have
the opportunity in three years’ time I shall remind Senator
Kennelly of his words to-night. I trust he will then be equally as
frank as he has been now. The honorable senator then developed the usual parrot
cry of the Labour party that the Government is the stooge of the private banks
and that we are subservient to them. If protecting the private banks from
extinction is being subservient to them, then of course we are subservient and
no one will deny it. However, I do not believe for one moment that protecting
any private institution from nationalized destruction is a sign of subservience.
If that were so, we would be subservient to many institutions. For instance, we
would be subservient to the gold-mining industry because we are protecting it;
we would be subservient to the dairying industry because we are protecting it,
we would be subservient to the wheatgrowers because we are protecting them, and
we would be subservient even to the great trade unions of this country because
we protect them also. That would be the position if Senator
Kennelly developed his argument logically. Let me assure the Opposition
that, no matter how much the Labour movement dislikes our policy, we intend to
continue to protect, not only the private trading banks but also all private
industry, from destruction by the socialist monster.
Senator Kennelly then
made some observations about hire purchase and quoted many figures to show that
the private trading banks are advancing millions of pounds to assist the
hire-purchase companies. I have the figures which show the true position. Since
1955 the central bank has controlled the investments of private trading banks in
hire-purchase companies, and whether the private banks like it or not, they will
not be allowed to increase their investments in those companies. The total
amount advanced by the seven private banks to hire-purchase companies is only
approximately £10,000,000 which, to put the matter in its proper perspective, is
the equivalent of only £12 out of overy £1,000 loaned by those private banks.
However, the Commonwealth Trading Bank at present has outstanding balances in
respect of hire purchase amounting to £16,400,000. There is the true picture
that Senator Kennelly was
trying to cover up in his rather remarkable speech. I shall deal later with the
honorable senator’s personal attack on certain members of the Commonwealth Bank
Board.
The Government has four major aims in the 14 bills with which we are now
dealing. The first is to separate the Reserve Bank from the other banking
activities of the Commonwealth Bank; the second is to modify the powers of the
Reserve Bank in its relationship with the trading banks; the third is to
establish the Commonwealth Development Bank, and the fourth is to establish the
Commonwealth Banking Corporation which will handle the remaining functions now
carried out by the Commonwealth Trading Bank and the Commonwealth Savings Bank.
I shall not elaborate on those four major aims because I think that all
honorable senators are well aware of the Government’s objectives, just as they
are well aware that the Australian Labour party is completely opposed to at
least two of those objectives.
I should like to develop now the effects or consequences of the proposed
legislation. Three main results will follow. I shall refer to them but not
necessarily in order of importance. The first important effect of this
legislation will be to make it more difficult, though not necessarily
impossible, for any future socialist government to nationalize the private
trading banks. The second important effect will be to strengthen greatly the
newly-constituted Reserve Bank and, at the same time, afford a greater measure
of protection to the trading banks in their relationship with the Reserve Bank.
The third important effect will be to leave untouched the Commonwealth Trading
Bank and the Commonwealth Savings Bank although placing them under separate
control and direction. They will be allowed to develop in the future as they
have in the past, in accordance with their statutory authority.
I shall now deal in detail with those three effects of this legislation. Taking
the lastmentioned effect first, I join issue with the Opposition as to the
probable consequences of this proposed legislation. The Opposition, through Senator
McKenna last night, and through Senator
Kennelly to-night, has insisted that this legislation will in some way
affect the future of the Commonwealth Trading Bank, and I think Senator
Kennelly even suggested that in some way the existing legislation had
already affected that bank and prevented its proper development. It is here we
get the real opposition by Labour to the whole of the fourteen bills. The only
real objection that Labour has to the measures can be summed up as follows: It
believes, or states it believes, that in some way this legislation is going to
affect adversely the future of the Commonwealth Trading Bank. There I join issue
with the Opposition most wholeheartedly.
In answer to the Opposition’s argument, I remind honorable senators opposite
first of all that the Commonwealth Bank still possesses its statutory charter to
expand and develop its business. It is still being ruled by the same statute. It
has a warrant and a statutory authority to expand its business and to continue
to expand it.
Senator Henty:
– And is to be given £2,000,000 more, too.
Senator VINCENT:
– It is to be given an increase in capital. In view of the Labour argument that
this bank is in jeopardy, it is important to consider that for some years now
the bank has been under the control and management of a board and that under
this legislation it will continue to be under the control and management of a
board, which will be called an executive committee. Senator
Kennelly to-night took violent exception to that method of management,
and last night Senator
McKenna likewise took exception to it. I think the expression that Senator
McKenna used was that it was a sinister policy.
Senator O’Byrne:
– So it is.
Senator VINCENT:
– We have now a statement by Senator
O’Byrne that it is sinister. Let me repeat that the bank is still
working under its existing statutory charter. That means that the members of the
executive committee of the Commonwealth Trading Bank are charged by law to carry
out that statutory franchise. If they do not do it, something is wrong with
them. If it is suggested that this Government is going to deliberately destroy
the bank, then I suggest that only one interpretation can be placed upon the
argument used by the Australian Labour Party, and that is that the members of
the executive committee, in collaboration with the Government, are entering into
a criminal conspiracy - because it would be a criminal offence - to destroy this
bank, whilst posing as the directors of the bank, acting under a statutory
obligation to expand it. That is the logical conclusion to the argument that
Labour postulates. If honorable senators opposite are prepared to accept the
argument that these well-known men in business, who have reputations of the very
highest calibre, are going to enter into a conspiracy which will have the effect
of destroying that bank, they are in effect charging them - along with members
of the Government, including the Prime Minister (Mr.
Menzies) - with being guilty of criminal conspiracy, an offence that is
punishable under the criminal law. Do the members of the Opposition seriously
believe that that is true? Do they really believe that the Treasurer and the
Prime Minister and other members of the Cabinet, including Senator
Paltridge, who is in charge of this bill here to-night, are all
criminally conspiring with members of the executive committee to destroy this
bank? The suggestion is absurd, lt is just as absurd as the accusation that the
Government is proposing to sell this bank. That is another of the allegations
which are completely unjusified.
If it were the Government’s policy to sell this bank, we could have done so
without the bitter necessity of bringing down fourteen pieces of legislation.
The Government could have sold the bank nine years ago, without introducing
legislation such as this. It could have sold it a dozen times very simply. Has
any evidence been adduced by the accusers - the people who are stating it to be
so - that the Government has any intention of disposing of the bank? Senator
McManus does not believe a word of it, and I do not think anybody else
does either. I suggest too that the electors of Australia on five consecutive
occasions, namely, five consecutive elections in the last nine years, have not
believed it either.
Finally, let me say something more about the future and the past activities of
the Trading Bank. Senator
McKenna last night, and Senator
Kennelly to-night, have both made serious accusations against the
integrity of the past board of directors of the bank and the gentlemen who will
be appointed to control this great institution. Let me quote from a speech made
by a very important parliamentarian in another place during the 1957 debate on
this bill.
At that time this important gentleman said that the Commonwealth Trading Bank
during the previous twelve years had increased its deposits from £50,000,000 to
£200,000,000, by far the largest percentage increase of deposits of any of the
trading banks in Australia. That was the increase in the deposits in the twelve
years prior to 1957. He said also that the loans to private individuals by the
Commonwealth Trading Bank had increased during that period eight times; that is
to say, for every £1 the Commonwealth Bank lent to its customers in 1945, it was
lending £8 in 1957. The same gentlemen, in the same speech, said that in 1957
the Commonwealth Trading Bank had no fewer than 500,000 customers and that those
customers were increasing at the rate of 40,000 per year.
Nobody can suggest that those figures indicate that this board has been guilty
of conspiracy or has not done its best to carry out the statutory obligation
imposed upon it to increase and develop this bank. I think we all agree with
those figures, which were given by no less a person than the Right Honorable Dr.
Evatt. We have the curious anomaly that in 1957, during the banking
debate, the Leader of the Opposition in another place tried his utmost to prove
that the Commonwealth Trading Bank was on the up and up, and was a highly
developed bank going forward by leaps and bounds, and that last night and
to-night we had Senator
McKenna and Senator
Kennelly both uttering gloomy remarks on the future and past
performances of this same bank. It is traditional for important members of the
A.L.P. to be marching out of step. This bill is no different from any others in
that regard. Members of the Labour movement are not unified in policy or thought
in regard to what has happened. We have no evidence whatever that any of the
objections offered by Senator
McKenna in regard to the future of this bank have any foundation. On
the other hand, we have plenty of evidence, supported even by Dr.
Evatt, that the bank has gone forward by leaps and bounds during the
years this Government has been in office, and there is no reason to suggest that
it will not continue so to do.
Having dealt with that aspect of the consequences of this legislation, I wish to
refer briefly to what I think is the second important sequel to it. I refer to
the establishment of the Reserve Bank. I agree with Senator
Spooner’s statement that in this respect the legislation is most
important. 1 think insufficient emphasis has been placed upon this aspect of the
matter during the debate. The Reserve Bank is to be created and is to be given
great strength, because it will be separated from the other portions of the
Commonwealth Bank structure. This separation has not been given verY much
prominence by the Labour party during the debate. Senator
McKenna is one of the few who have referred to it.
He complained that no proper opinion had been obtained as to the desirability of
separation. He suggested that perhaps the Government had erred in not obtaining
the opinion of Dr.
Coombs on the matter. With all respect to Senator
McKenna, 1 think lt would have been a terrible thing to have asked Dr.
Coombs to express an opinion. That opinion would have been used as a
political football in the Parliament. Whatever Dr.
Coombs’s views may be - I do not know what they are - it would have
been improper for any government to have asked him, as one of its servants, to
give an opinion which could have been kicked around this chamber.
There is plenty of other opinion to which I can refer and which is just as good
as that of Dr. Coombs. I
refer to Senator
McKenna to the expressed opinion of the well-known Professor R. S.
Sayers of the University of London on this question of the separation of the
Reserve Bank from the Trading Bank. At page 133 of his book “ Modern Banking “,
he says -
When the central bank does
ordinary banking business for customers in the same way as the other banks
do. it is entering into competitive relations with the commercial banks.
This is likely lo be derogatory to the central bank’s authority over the
commercial banks: they may well feel themselves not obliged to listen to the
requests of a competing bank. It was even suggested, when these
circumstances arose in earlier English banking history, that the commercial
banks themselves might cease to be customers of the Bank of England if the
latter continues its competitive attitude. Their deposits with the central
bank bring them no return: then why, say the commercial banks, should the
central bank make profits by lending funds to people who might have borrowed
from us? Antipathies of any kind between the central bank and the commercial
banks are most undesirable. In the interest of the smooth working of the
system there should be an atmosphere in which mutual help is possible at any
time. This is a serious argument
against the central bank’s participation in ordinary banking business.
I think everyone will agree that Professor Sayers is one of the world’s
outstanding authorities on this question. If that authority is disputed by the
Opposition, let me come closer to home. I shall read a very short extract from
an opinion by another well-known authority on banking, and will state the name
of that authority after 1 have read the relevant passage. This is what he said -
There is no doubt that this
situation-
He was speaking about the tie-up between the Trading Bank and the Reserve Bank -
has greatly aggravated the difficulties of the Commonwealth Bank in developing
central banking on a basis of mutual trust and voluntary co-operation by the
private banks.
He continued -
The Commonwealth Trading
Bank’s subordination to direct central bank control has been a continuous
restraining influence on its competition with the private banks. If the
partial separation of 1953 had any effect at all, it was to free the
Commonwealth Bank in some measure from this restraint. Complete separation
would increase, noi reduce the Trading Bank’s freedom to compete with the
private banks.
That very interesting observation was made by no other person than Professor
Arndt, who is one of the mouthpieces of socialist economic philosophy in
Australia. If my friends of the Opposition want to quarrel with Professor Arndt
or Professor Sayers, let them rise now and do something about it.
The answer to this question of the separation of the Reserve Bank from the
Trading Bank is not a matter of politics at all; it is a matter of economics. I
congratulate the Government upon doing something about it, because we have had
one of the very few reserve banks in the world - there is only one other - that
has tried to conduct private banking business together with reserve bank
business. The South African Bank still does it, but the authorities in South
Africa are very worried about it. We in Australia have had the courage and thi wisdom
to take steps to separate the two functions, and I think the country will be all
the better for it.
I refer, last, to the third consequence that will flow from this legislation,
and which is equally as important as the other two. I said earlier that I
believe - I think most of us do - that it will be difficult, although I agree
with Senator McKenna that
it will not be impossible, for a future socialist government to nationalize the
private banks. That, of course, is the great political issue that is being
debated in this chamber at the moment, although there has been very little
reference by the Opposition to it. I admired Senator
Kennedy’s frankness in stating that Labour, if ever it was elected to
office, would repeal this legislation; but nothing has been said about how a
socialist government could socialize the banks under the existing legislation.
The Opposition is very quiet about that aspect of the matter. I invite its
comment on it.
It is true, of course, that the central bank’s powers in relation to the private
banks have been somewhat curtailed. As against that, Senator
McKenna insisted that the Privy Council had permanently reduced the
possibility of the socialization of the private banks. I join issue with the
honorable senator there. I insist that a socialist government, even under the
existing or the proposed legislation, could make it most difficult, by the
misuse of the powers of the central reserve bank, for the private trading banks
to carry on. I think that, by executive action, a socialist government could
make it so difficult for the private banks that probably some of them would fail
or go out of existence. But, as Senator
Kennelly has threatened, this legislation could be repealed. The
Australian Labour Party is still pledged to destroy the banks. We should never
forget that. I think that at this moment all the members of the Labour Party in
this chamber are prepared to admit that that is their objective. I sincerely
hope that they will admit it in a couple of years’ time when we again face the
people.
Although the Opposition’s policy is to destroy the banks, we believe that the
only way to economic and political freedom in Australia is to preserve them. I
believe that by destroying the private banks, the Opposition could make of every
citizen a menial, a man who had to look to the State not only for every meal but
also for every week’s work. It could make every professional man reliant on the
State for the payment of his fees, every tradesman reliant on the State for the
degree of profit involved in selling a tin of socialized jam, and every
wool-grower reliant on the State for the degree of profit involved in selling a
bale of socialized wool. So far as the socialists are concerned, many things
could be done if the banks were nationalized. There would be very little
necessity to carry the programme of socialization much further if the trading
banks were destroyed.
That, Sir, is why
I believe that this legislation is so important. It will, to some degree,
prevent the socialization of industry through the banking structure. It does not
provide complete insurance, but it is partial insurance. The only complete
insurance is to keep the socialists out of office. I suggest - and in this
respect I agree with Senator
Spooner - that if the socialists keep on insisting that they intend to
nationalize industry and banking, they will never come back into office. That is
a very sobering thought, because on five consecutive occasions the people of
Australia have, by election, overwhelmingly rejected this socialist philosophy
that is creeping into Australia and which will overcome us all unless we are
vigilant.
Senator O’FLAHERTY:
South Australia
– Senator Vincent, in
his concluding remarks, said that so long as we of the Labour Party stick to
nationalization we shall never come back to the government of this country. The
honorable senator does not understand that there is a form of economic control
which can be adverse to the people of the country and that the people can revolt
even against a Liberal government, irrespective of our advocacy of
nationalization. Having listened to the speeches that have been made during this
debate, particularly from the Government side of the chamber, I have come to the
conclusion that honorable senators opposite are poor, guileless innocents if
they think that they are doing good work for the country by attempting to put
over statements such as they have been making to-night. Evidently, they have not
the faintest idea of what really constitutes a banking system. They merely
repeat parrot cries that have been suggested to them from one source or another,
such as the controlling authorities of the private banking institutions.
Banking consists of a number of things other than merely depositing money with
banks. For instance, it consists of the control and issue of credit and of the
management of business undertakings. This leads, of course, to the question
whether the people who control the government of the country shall at the same
time control the banking institutions, financial institutions generally, and the
issuing of credit. When I listened to honorable senators opposite speaking about
the Commonwealth Bank and telling me and my colleagues what a grand institution
it is, my mind went back to the circumstances in which the Commonwealth Bank was
instituted. Political parties similar to the present Government parties, with
the private banks standing behind them, fought the establishment of the bank.
Right up till 1934 or 1935 they still fought against it. When the bank was
established, they restricted its activities to such an extent that it was not a
proper banking institution at all. Now, honorable senators opposite tell us what
a grand institution it is. They say that it has done marvellous work since the
present Government parties have been in control of it. I suggest that it has
done marvellous work despite the fact that this Government is in office.
The provisions of the 1945 Banking Act and the alteration of the control of the
bank that was made at that time, are the reasons that the bank has expanded so
greatly. Prior to that legislation, the bank was restricted in its operations.
For instance, if a person wanted to open an account with it, he could not do so
until he had tried to open an account with other banks. After they had refused
him accommodation, he could come back to the Commonwealth Bank. Worse than that,
because of the nature of the Commonwealth Bank Board that was in control at the
time, the hank was not allowed to help the Government in relation to its fiscal
policy. The 1945 legislation altered all that, with the result that people were
able to receive better service from the Commonwealth Bank than ever before.
During World War II., control of the banking system was effected by means of
regulations. That brings me to the point that, in 1939, the present Prime
Minister (Mr. Menzies) had
a quarrel with the private banks after he had proposed to do something to
prevent them from using the control that they had over the economy to hinder the
Government in doing the right thing while the country was at war. The Menzies
Government promulgated certain regulations, the scope of which was extended
somewhat in 1940. We have been told that that was done by agreement, but the
peculiar part about it is that that was the time when the Government parties
started to disintegrate. That happened because they had taken away from the
private banks something that the banks did not want to be taken away. The
Government parties disintegrated and went out of office, and a Labour government
came in. We did not have any voluntary agreement with the banks. We promulgated
regulations to control the banking institutions in order that we could control
the economy.
The Minister for National Development (Senator
Spooner) said to-night that we on this side forget that quite a number
of alterations of the Commonwealth Bank structure have been made by other
governments, but the honorable senator did not explain that when Labour did so
it was with the purpose of widening the scope of the bank to control the
economy, whereas this Government is altering the structure of the bank for the
purpose of restricting its operations. It has already restricted them and it is
now attempting to restrict them further. Of course, from the time that this
legislation begins to operate there will not be a Commonwealth Bank any longer.
There will be a Commonwealth Banking Corporation. The name “ Commonwealth Bank”,
which has existed for so many years, will go. That is a part of the destructive
purpose of this legislation which has been introduced at the behest of the
private banking institutions. Later, I shall indicate to honorable senators
something of the ramifications of those institutions.
When Labour introduced the banking legislation of 1945 the private banks spread
their tentacles for the purpose of gaining control of all possible means of
propaganda so that they might bring pressure to bear on the Government. They in
fact brought pressure to bear on the Labour Government from 1945 to 1949,
through the expenditure of enormous sums of money. They spent a great deal more
during and after the 1949 general election campaign. I think that I have already
stated in the Senate that, in 1952 or 1953, the Bank of Australasia made
provision for £500,000 to be paid into a special account for the purpose of
defeating a hostile government. That the bank succeeded is evident because it
gloated about that fact in its balance-sheet for 1949-50. That is when the
private banks started to spread their tentacles. They went into all sorts of
businesses so that they could bring pressure to bear upon the Government. They
used their influence to get men selected to run under the banners of the Liberal
and Country parties. There are men in the present Ministry who were picked up by
the banking institutions and utilized by them. They are now among the leaders of
the Government. They want to get control of the economy through the financial
credit system. To do this, it is essential to go all out to direct policy, first
of all through the propaganda network. Thus, we find the tie-up between the
press, radio and television interests. 1 have in my hand a graph which shows how
at least six of the private banking institutions are linked, through
shareholdings, nominees or directorates, with every newspaper having more than a
moderate circulation in all the capital cities of Australia. Through these
newspapers they control at least 73 per cent, of the radio network of Australia,
as well as the television stations that are now in operation and those that will
operate in Brisbane, Adelaide, Perth and, possibly, Tasmania. The object of the
graph is to show that private banking institutions have inaugurated a policy in
connexion with the scrambling of the Commonwealth Bank; and through their links
with practically the whole means of propaganda in radio, press and television,
the policy of this pressure group is forced on the Australian people per medium
of the Liberal party. This policy will profit the private banks in all their
ramifications to the detriment of the Australian public. I may say that the
graph has been compiled from official information set out in reports of the
Australian Broadcasting Commission and the Sydney Stock Exchange investment
service. It does not purport to show the complicated workings and interlocking
of the private banks with a colossal number of Australian companies in key
industries in Australia. It is just as well for me to mention that a bank, or
other investment house or nominee company of a bank may request - indeed, it is
a command - that a bank nominee, or nominees, shall be placed on the board of
management of the firm being financed as a condition of the supply of
much-needed funds. This assists the implementation of the bank’s policy.
I shall now explain the graph, which will be available to honorable senators for
their perusal. There are particulars in relation to six banks. The first is the
Midland Bank of England. This bank, which is registered in England, is jointly
owned by “Daily Mirror” Newspapers Limited, London, and “ Sunday Pictorial “
Newspapers Limited, London, who in turn are interested in M.P.A. Productions
Limited. I should mention that M.P.A. Productions is operative here in
Australia. Just recently there was some scrambling of shares and new companies
were formed. It has links with Broadcasting Associates Proprietary Limited,
which controls broadcasting stations 2GB, 2LF, 2LT and 2WL. They, in turn, are
associated with Associated Television Limited, London, and also Queensland
Television Limited, Brisbane.
Then there is a reference to the Australia and New Zealand Bank Limited, which
was formerly the Bank of Australasia Limited. That was the bank that utilized
£500,000 for the purpose of defeating a hostile Labour government in 1949. It is
affiliated with the Bank of New South Wales Limited. As a matter of fact, it
holds shares in that bank. It is also affiliated with Email Limited, a firm
which has dealings with broadcasting and television and so on. It is also
affiliated with the National Bank of Australasia Limited, which is registered in
Melbourne. There, again, there is a link with Brisbane T.V. Limited and David
Syme and Company Limited, Melbourne, who control a broadcasting station. Herald
and Weekly Times Limited, with which Senator
Kennelly dealt to-night, controls various newspapers throughout the
Commonwealth, and has links with other newspapers in the Commonwealth. It also
has links with, and controls in some cases, all the broadcasting stations and
television stations. The banks, linked one with the other, control the whole
propaganda machine in Australia. The Australia and New Zealand Bank Limited is
not an Australian bank as such. It is registered in England and its branches
operate in Australia. In turn, of course, it has all sorts of ramifications in
other industries as well. I shall deal fully with that phase of the matter
directly.
I want to deal now with the board that the Government proposes to appoint to
control this banking institution, so that the policy of the private banks will
be implemented. The next bank mentioned on the graph is the Commercial Banking
Company of Sydney Limited, which is registered in New South Wales. It is linked
with John Fairfax and Sons Limited, the proprietors of the “ Sydney Morning
Herald “, and with that company’s subsidiaries. As the “ Sydney Morning Herald “
is linked with Associated Newspapers Limited, this bank is linked with
practically all of the newspapers except the “ Daily Mirror “, which is printed
in New South Wales. The propaganda goes through the various channels provided by
links on the directorates, by direct shareholders, or through some method of
affiliation with other companies.
Last, but by no means least, the graph refers to the Bank of Adelaide, which is
linked with “ Advertiser “ Newspapers Limited, which will control the television
stations to be established in Adelaide. It also controls four radio stations in
South Australia. The position is that the private banks set out deliberately,
through their propaganda machine, to bring pressure to bear on this Government
for the purpose of establishing their policy in relation to banking institutions
generally. They did it effectively. Quite apart from any money that they might
have supplied direct to the Government parties, they established all kinds of
propaganda contact machines or parties so that they could use them for the
purpose of talking about the Australian Labour party. They did it deliberately
in an attempt to smash our party. They did it in all kinds of ways. With your
permismision, Mr.
President, for the information of honorable senators, I will place that
document on the table.
I should like to relate some of the numerous ways in which a policy such as I
have described can be propagated. To begin with, it can be done through the
press and the radio. News that is slanted against Labour is supplied -
syndicated articles that are always loaded against
Labour and in favour of the Government. So-called research media supply articles
of a semi-scientific nature, but slanted against Labour and stressing the
supposed necessity of having established a central bank, the Reserve Bank about
which the Minister was so concerned to-night. Another method is the use of
innuendo. One reads syndicated articles containing the most amazing lies and
suggestions against the Australian Labour party. They have emanated from
frustrated people who have been found out by Labour. They have been picked up by
the private banks and used for the purpose of slandering the great Australian
Labour party. All this is designed to get the Government to do their bidding.
Another effective method is adulation and flattery and the improvement of a
man’s social position so that the particular member becomes a good slave of the
private banks.
Men have been planted in the parties to carry out propaganda work. Government
members have admitted that the private banks have helped them to get into
Parliament and that they are grateful. These bills are the pay-off. I do not
challenge the sincerity of Government senators, but I do challenge the objective
they seek to achieve. They are absolute innocents so far as private bank
propaganda is concerned. They have fallen for it and are now putting it into
operation. The private banking institutions have made no secret in their reports
of what they are doing. They have always said, “ You have to separate the
sections of the Commonwealth Bank. You have to do this and that “. That is what
the Government is doing to-day - splitting up the Commonwealth Bank for the
purpose of carrying out the policy of the private banking institutions. That
policy is once more to gain control of this country’s economy.
The private banks also use scare propaganda which our friends in the corner, the
Democratic Labour party, fall for. They use scare headlines in the press. They
describe Labour’s activity as socialistic and say what awful fellows these
socialists are and what has happened in countries where socialism obtains. If
they cannot achieve their aim that way, they point to what has happened in
Communist-controlled countries and say that Labour is socialistic and is akin to
communism. Some stupid people have fallen for that. They have unwittingly gone
over to the side of the banks and now are more or less apologizing because they
did not take the proper action at the last election.
I turn now to the appointment of the men who are to control the various boards
which the legislation sets up. Any business man chosen will be found to have a
link with the private banking institutions. Earlier, Senator
Kennelly referred to Mr.
Grimwade, who is already with the bank and who is a director of Drug
Houses of Australia, in which the Australia and New Zealand Bank hold a fair
number of shares. Honorable senators will see that it will be virtually
impossible to obtain appointees who have not a connection with a private bank.
The Australia and New Zealand Bank is also mentioned in the graph to which I
referred earlier. It is registered in England. It is associated with the Bank of
Australasia, the Union Bank and a New Zealand bank. Either through direct
shareholding, or through nominees, it has substantial holdings in private
companies as follows: Australian Paper and Pulp Company Limited, 53,223 shares;
Commercial Bank of Australia, 59,711 shares; Bank of New South Wales -
shareholding not listed; Ampol Petroleum, 124,400 shares; Associated Paper and
Pulp Company Limited, 72,182 shares; Australian Consolidated Industries, 64,294
shares; Elder Smith and Company, 11,770 shares; Electrolytic Zinc Corporation of
Australia Limited, 50,880 shares; Email Limited, 100,860 shares. The Australia
and New Zealand Bank also has interests in fifteen other companies, among them
Drug Houses of Australia Limited and G. J. Coles Limited, the retail
distributors.
Another bank, which was not mentioned in the graph, also has links with
newspapers but unfortunately the bank is registered in Great Britain and its
share list is not available. After examining 104 Australian companies one finds
that Esanda, which is totally owned by the English, Scottish and Australian
Bank, has the following shareholdings: - 21,886 shares in Associated Pulp and
Paper Mills Limited; 20,000 shares in Australasian Paper and Pulp Company
Limited; 39,785 shares in Broken Hill Proprietary Company Limited; 17,250 shares
in Containers
Limited; 291,537 shares in Davies Coop Limited; 17,800 preference shares in Felt
Textiles; 160,083 shares in Metal Manufactures Limited, and 10,000 shares in
Robert Reid and Company Limited. Honorable senators will see that a business man
chosen from any of those organizations would have an undoubted link with a
private bank. Therefore, I say that it will be impossible to obtain men for the
boards who are not in some way linked with a company that is, in turn, linked
with a private bank. The Bank of New South Wales made a tremendous fuss about
the 1945 banking legislation. It put all the pressure in the world on the Labour
government of the day to persuade it to alter the legislation. It even went to
the court to prove just how far the Commonwealth could go. It was justified in
doing that, and it was a good thing from our point of view because we now know
just how far one can go within the Constitution. The Bank of New South Wales
does not file a record of its shareholders in New South Wales, but, on examining
the reports of 104 companies in the Sydney Stock Exchange investment service, I
find that four other banks hold shares in that bank and that, either directly,
or through nominees, it has substantial interests in many other companies. For
instance, it holds 16,189 shares in Tooth and Company Limited, 14,500 shares in
Associated Pulp and Paper Mills Limited - again connected with the newspapers -
72,182 shares in Australasian Paper and Pulp Company Limited, 20,141 shares in
Australian Consolidated Industries, 34,717 shares in British Tobacco (Australia)
Limited, 10,000 (B) ordinary shares in British Tobacco (Australia) Limited, and
103,421 shares in Broken Hill Proprietary Company Limited. I might mention that
Broken Hill Proprietary Limited is actually a British company. The Bank of New
South Wales also hold’s 21,950 shares in Courtaulds (Australia) Limited. It will
be remembered that one of the directors of Courtaulds has been mentioned here
already to-night as being also a director of Drug Houses of Australia Limited
and as being a member of the present Commonwealth Bank Board. That man is
associated with the Bank of New South Wales through the shares held by that bank
in the company with which he is connected. The Bank of New South
Wales also holds 14,200 shares in Containers Limited, 17,367 shares in Drug
Houses of Australia Limited, 39,701 shares in Dunlop Rubber Australia Limited,
33,513 shares in Felt and Textiles of Australia Limited, 41,400 shares in
Grocery and1 General Merchants Limited, 11,600 shares in Imperial Chemical
Industries of Australia and New Zealand Limited, 12,942 shares in McPhersons
Limited, 102,724 shares in Olympic Consolidated Industries Limited, and 72,879
shares in Woolworths Limited.
That gives honorable senators some idea of the ramifications of the bank and how
closely it is linked with the business community. This bank is using its
propaganda even in the business houses. When we remember the connexion the
private banks have with the business community, we must appreciate that it is
virtually impossible to find any businessman who is not influenced in some way
by the private banking institutions of Australia. I remind the Senate, too,
that, generally speaking, the private banks registered in Australia are more or
less dominated by banks registered in other parts of the world. And this
Government is carrying out the dictates of the private banking institutions by
scrambling the activities of the Commonwealth Bank and actually changing its
name. Is it any wonder that we oppose this legislation?
Finally, let me say that I believe in the social ownership of the means of
production, distribution and exchange. Exchange and credit issuance, of course,
are the real subject matters of the bills before us. I believe it is necessary
to organize society so that it may function for the benefit of every individual
member who shall share on a co-operative basis. I believe it “s necessary to
take control from those who now direct the means of production, distribution and
exchange, and who use that control to retain the major portion of production for
their own personal benefit whilst at the same time dictating whether the masses
of the people shall be allowed to work, or starve - when these controllers can
see no profit in employing them. That is why there are over 60,000 persons
officially registered as unemployed in Australia to-day. I believe that all
production should be for use and not for profit.
Because of this belief I oppose these banking bills. The controlling factor, or
means of finance, is in the hands of a few people, not all resident in
Australia, through their financial control of the private banking institutions.
They are able to have a finger in the
pie of every key industry, whether it be engaged in secondary or primary
production, and distribution. These private controllers of banks are associated
in various ways with shipping, coal, steel, chemicals, the press, and transport
industries. They are also associated with stock and station business and with
rural production.
The bills before us are evidence that, in essence, they also control this
Government. It is entirely wrong that a few controllers of the exchanges should
be able to dictate not only to the Government but also to the people of
Australia as a whole the policy to be applied so that they can retain that
control and so dictate just what the people should suffer, through their
economic and fiscal policy, which benefits only vicious dictators who give no
thought to the masses of the people.
In their machinations, they do give employment, but only if profit is to be made
from doing so. The whole system is wrong. Wherever it applies it brings
degradation and despair in its booms and bursts and leads all the time to the
slaughter of human beings in war because, although they are agreed on spheres of
influence, one set of controllers - the financiers - tries to wrest control from
those who are already in control in other spheres. They are now temporarily in
the saddle and each Government supporter simply has to obey their dictates. But
the tide will turn. The people themselves will turn in their suffering against
them, and, in .their despair, they will be just as vicious in retaliation as the
bank* ing institutions of Australia are in their treatment of the people at the
present time.
Senator BRANSON:
Western Australia
– To honorable senators and to people who may be listening to the broadcast of
this debate, I promise that I will not repeat one figure that has been mentioned
already. I think we have heard enough figures from Senator
O’Flaherty. In my contribution to this debate, I want to direct the
attention of the Senate to that section of the proposed legislation which deals
with the Development Bank. Before doing so, I should like to congratulate Senator
Paltridge upon his secondreading speeches. He devoted no less than five
pages of his speeches to an explanation of the bill which seeks to establish the
Development Bank. Although this proposed legislation has been before the
Parliament on three occasions, that is probably the greatest degree of attention
given by any Minister in explaining the proposal to establish the Development
Bank.
There is one very important avenue through which the Government can fulfil what
I suggest is its rightful function. I refer to assistance for the establishment
of new businesses in this country. The Government has taken advantage of that
avenue in the proposal it submits for the establishment of the Development Bank.
The proposal puts the Government in its right relation to the business structure
of the country. It puts the Government in the position of both initiator and
supporter without being a direct participant, and I suggest that the proposed
Development Bank will do much towards expanding opportunities for private
enterprise in this country. It will give a lift and boost to private enterprise.
I emphasize that the history of almost every worthwhile idea in this country is
that of an idea in the hands of a man who, as a general rule, has begun only
with that idea and an abiding faith in both himself and the future of this
country. With the development of technology, however, the time has passed when
any individual can start almost any kind of industry with very little capital.
The Government, through the Development Bank, will have the opportunity to give
impetus to worthwhile ideas. The Development Bank, by reason of its charter to
provide finance for the purpose of assisting primary production or for the
establishment or development of industrial undertakings, particularly small
undertakings, will play its part in the development of Australia. The
Development Bank will be empowered to provide finance in those cases where
finance otherwise would not be available on reasonable and suitable terms, with
a view to promoting the efficient organization and conduct of primary production
and/ or industrial undertakings.
In determining whether or not finance shall be provided the Development Bank
shall have regard primarily to the prospects of the applicant’s business
becoming, or continuing to be, successful, and shall not have regard to the
value of the security available. However, finance will not be provided to enable
a person to acquire goods to be used otherwise than in the course of his
business. That means that the man who has not sufficient capital to set himself
up in business will be able to obtain finance from the Development Bank. No
doubt, all honorable senators are aware that when one approaches a bank for a
loan some security is required. However, the Development Bank will be
established to assist those people who at present do not have sufficient
security to obtain accommodation elsewhere.
Senator Kennelly stated
that the existing banking structure could carry out the functions proposed for
the new Development Bank, but he did not mention that the Mortgage Bank
Department and the Industrial Finance Department, which will be absorbed in the
new Development Bank, had certain restrictions placed upon them. The Mortgage
Bank Department could advance to farmers up to 70 per cent, of the bank’s rather
conservative valuation of the security. In addition, the loan could be made for
a minimum period of five years or for a maximum period of 41 years, and for a
maximum amount of £10,000. Further, the Mortgage Bank Department was compelled
to obtain from the borrowers each half year, not only interest on the amount of
the loan but also instalments in repayment of the capital owing. In other words,
a fixed instalment had to be paid each half year. That requirement did not make
loans from the Mortgage Bank Department very attractive to prospective
customers. I am a farmer and I have had overdrafts from a bank. I know that the
average farmer prefers to work on an overdraft which rises and falls with his
income. As the Mortgage Bank Department was not in a position to work on the
same basis as other banks, the farmers were not anxious to do business with it.
For that reason, the two restrictions that I have mentioned have been
eliminated. The new Development Bank will be able to lend money to farmers in
the ordinary way of business. It will thus fill a very definite need in our
community.
We must begin to look towards the expansion of primary production in Australia.
Most of the recognized sound land areas already have been exploited. We must now
turn to those areas which require special treatment such as by the addition of
trace elements and greater amounts of superphosphate than we are using now in
the sound land areas. 1 have in mind the south-east of South Australia, the
Dongara-Gin Gin and the Esperance areas in Western Australia, and the Channel
country in Queensland, where millions of acres are awaiting development. Those
areas have three important ingredients - soil, sunshine and water - but the
fourth and most important item necessary for their development is capital. With
the assistance of the Development Bank I can visualize millions of acres, at
present unexploited, producing goods for the benefit of Australia. The
Development Bank can and will play a tremendously important part in our
development because it is designed to handle business which the trading banks
usually do not handle. The Development Bank will fill a gap in the banking
structure.
Senator Tangney:
– What about the Rural Bank?
Senator BRANSON:
– Yes, the Rural Bank has done a job in Western Australia, but that is only one
State in Australia. Further, the Rural Bank’s resources are limited. In his
second-reading speech the Minister set some of my fears at rest when he said
that the Government will walch the position closely in case the Development Bank
should require additional capital to handle the business that probably will
follow its establishment. I feel that many calls will be made on the bank very
soon after it commences operation. At present some of the £20,000,000 which it
proposes to take over is already advanced to customers. I have sufficient faith
in the Government to say that when the additional capital is required it will be
made available. We have the Minister’s assurance on that.
In recent years the rise in internal costs, coupled with the fall in external
prices, has placed the primary producer in a rather difficult position, to say
the least. The savings that previously he was able to set aside for the
development of his property have been reduced, and credit restrictions, brought
about largely by the fact that we are not receiving as much income from overseas
as we received previously, have prevented him from borrowing money for
development as freely as he has been able to do in the past. Consequently, the
primary producer is caught in a vicious cycle. Export earnings have not been
keeping pace with our development and, therefore, the finance available to carry
out the development works necessary to expand primary production on which we
depend to increase our exports has been restricted. The younger generation of
primary producers has been much harder hit than the older generation. That is
because young men have family commitments and heavy personal expenses and
usually have very little left out of their capital after establishing themselves
on their property. In addition, they are able to save very little out of their
income. Consequently, they are unable to develop their property as quickly as
they would wish to do. Again, I visualize the Development Bank playing its part
in assisting those people to develop their properties further and, as a result,
increase production. I support the legislation now before the Senate as I would
support any legislation that in my opinion would make it more difficult for a
Labour government to implement a policy of nationalization.
Honorable senators should have no doubt as to where the Australian Labour party
stands on the nationalization of banking. I respect the opinions of honorable
senators in this chamber and honorable members in another place who have stated
quite openly their intentions in regard to the future of the proposed banking
structure. I shall say a little more about that in a moment. I direct the
attention of the Senate to a statement made by the Deputy Leader of the
Australian Labour party in another place on 26th November, 1957. He said,
speaking of the Australian Labour party -
We have always believed that
the history of the private banks in Australia is a history of fraud, failure
and corruption. That is why we have always hated them. We hate them with a
holy hate.
Those are the words of the Deputy Leader of the Australian Labour party in
another place. This is his opinion, and he is entitled to it.
Senator Kennelly:
– He must have been in good fighting form that evening.
Senator BRANSON:
– I agree with Senator
Kennelly that he must have been. That is what he stated. There is no
doubt where the Deputy Leader of the Opposition in another place stands in
respect to banking. He made that statement, and I should like the people who do
not read “ Hansard “ to know what he said.
Senator Scott:
– What does Senator
Kennelly say?
Senator BRANSON:
– I will come to that in a few moments. I turn now to another very prominent
person in the Australian Labour party, one who was a recent contender for the
doubtful honour of the leadership of the party - Mr.
Ward. He had this to say -
Some honorable members
opposite seem to think that this legislation is doing something to protect
the private banks in the event of a Labour government regaining office in
this country.
We have heard submissions made here tonight on that. We are in no doubt as to
what the Labour party would do, because we have been assured what it would do. Mr.
Ward went on and elaborated a little further. He said that certain
members had stated that the banks could not be nationalized because of section
92 of the Constitution, but he disagreed with that contention to a certain
extent. He went on to say -
But what they failed to point
out was that the High Court only declared by a majority of four to two that
section 92 prevented the nationalization of the private banks. It is quite
true that each of the six judges of the court found some reason to declare
the legislation of the Labour government to be invalid, but only four of
them regarded section 92 as an obstruction in the way of nationalization.
Four of the judges declared banking to be trade, but two of them declared
that banking is not trade but an instrument thereof. Those two judges were
the then Chief Justice, Sir
John Latham, and Sir
Edward McTiernan, whom-
This is important -
I regard as the most learned
of the six judges who comprised the court.
In other words, they were in step and the other four were out of step, according
to Mr. Ward. He
continued -
So it is apparent that the
judges were not unanimous that section 92 was a complete obstruction.
This is what I think is rather important. Mr.
Ward continued -
Probably future judges,
possessing a more progressive approach and outlook to these matters, will
take an entirely different view to that taken by the majority on this
occasion.
He went on -
Let me turn to the question
of the nationalization of the private banks. I believe, as a member of the
Labour party, that if a Labour government of the future is to make real
progress in this country by implementing its policy of improving the living
standards, of the community, it must have a banking monopoly.
Those are the words of some one who was a contender for the leadership of the
Labour party in another place. We have a record of what was said by the very
well respected. Leader of the Australian Labour party in the Senate. I refer to Senator
McKenna, for whom I have a great admiration. He said that Labour will,
if ever in power, nationalize the banks if they can find a way to get around the
Constitution.
I have no reason to doubt that that is so. By way of a rather unruly
interjection - something I vowed I would not do in this House - I obtained some
information from Senator
Sandford. I was goaded into interjecting when Senator
Sandford said that the people should be given the opportunity to say,
by way of referendum, whether the banking system of the country should be
nationalized. I asked whether that was put to the electors by the Labour party
during the last election campaign. Senator
Sandford asked whether I had attended any Labour meetings. I replied
that I had, and he then implied that I must have been deaf because it was put to
the people at every political meeting that was held. By way of further
interjection I asked; “ That you would nationalize the banks? “ and he said, “
Yes “.
I am not a very distrustful sort of person, but from that I got the only
impression one could get, namely, that that issue had been put to the electors
of Australia at the last election at every Labour meeting that was held. Let us
have a look at the policy speech of the Leader of the Australian Labour party, Dr.
Evatt. He is the recognized leader of the party, the man who delivered
the policy speech for the Australian Labour party. In other words, he is the
official spokesman. If we look at his speech from the front to the back we will
find only one reference to banking nationalization, and that is a negative one.
He said -
On banking policy in general
the position of the Labour party is clear. The events of the past years have
shown first that the private trading banks cannot lawfully be nationalized.
That is not a statement that the Labour party would nationalize the banks, yet
Senator Sandford, by
way of a provoked answer to an interjection, stated that that was said at every
political meeting.
There is one other factor which I find it very hard to reconcile with statements
made by members of the Opposition. Senator
Sandford said also that the Menzies Government had done a dastardly
thing - a shocking thing - by selling the people’s assets. He gave a great
string of them. He mentioned Commonwealth Oil Refineries Limited and the whaling
station. I remind honorable senators that that was done over a period but,
strangely enough, the public that was going to revolt so violently against those
sales apparently endorsed the action of the Government. This Government, as Senator
Vincent stated, has been returned at the last five elections. If the
people were so crooked about these sales of their assets, do you not think they
would have registered some protest during the last five elections?
Senator Scott:
– Of course they would.
Senator BRANSON:
– I think so. What a number of Government supporters think is on record. What
the Labour party thinks is also on record. I want to place on record what I
think. I am completely and utterly opposed to the Labour party’s policy on
banking, and I support and congratulate the Government on the bills that are now
before the Senate.
Senator TANGNEY:
Western Australia
– I rise to oppose this banking legislation of the Government, just as I have
opposed every piece of banking legislation which this Government has brought
forth since it came into office in 1949. I am strengthened in my opposition this
evening by the papers which the Minister in charge of the bill has so kindly
made available to us, and for which I thank him. One of those papers contains a
summary of the Commonwealth banking legislation since the inauguration of the
Commonwealth Bank by a Labour government. It is quite an interesting document,
because it shows that every piece of constructive legislation, dealing not only
with the establishment but also with the continued existence and progress of the
Commonwealth Bank, has been introduced by a Labour government and that from the
very beginning every anti-Labour government has tried to whittle down the powers
and functions of the bank.
We,, as members of the Labour party, are very proud of the Commonwealth Bank and
of the part it has played in the development of Australia. It was established by
the Fisher Labour Government. It started with nothing and had to be developed
over the years. Its capital was to have been £1,000,000, to be raised by the
sale and issue of debentures, the Treasurer being authorized to make advances
out of Consolidated Revenue. It was found unnecessary to raise capital by the
issue of debentures, and initial requirements were met by a loan of £10,000 from
the Treasury, which was quickly repaid. It is important to note that from the
moment of its inception the Commonwealth Bank has always lived up to its
obligations and has never defaulted. It has never been a burden upon the
taxpayers, but has always had a very proud record in the development of this
country. That is why we very much regret that the Government has seen fit to
whittle down its powers and to separate its functions.
The Commonwealth Savings Bank Department began business on 15th July, 1912, and
general banking business was commenced on 20th January, 1913. We all know that
within twelve months Australia became involved in World War I. and that all the
money necessary for the waging of that war, for the creation of the Australian
Navy, and for the building of the Commonwealth railway, was found by the
Commonwealth Bank and by the governments of the day without recourse to overseas
borrowing. During World War II., the Commonwealth Bank was able to assist the
Commonwealth government of the day in raising the necessary money for the
successful prosecution of the war without going beyond the confines of Australia
to raise huge war loans. Throughout the intervening years, the bank has assisted
thousands of citizens with their plans for housing and rural development and has
had a very marked effect upon the economy.
We find that as Labour governments continued in office the Commonwealth Bank
continued its development work. When the Bruce-Page Government assumed office in
1924, it began the work that this Government is trying to continue by
establishing a board of directors to manage the bank. Six of the members of that
board had to be engaged in agriculture, com- merce, finance or industry. That,
of course, is quite important. We realize that the men who direct our financial
institutions must be men of great experience and of vision. Particularly do we
want men who are not bound to any particular group of business or industry and
who have no private interests which may affect the workings of those
institutions. We know it is humanly impossible for a man to divorce his private
interests from his public interests. We cannot expect the men who are members of
the Commonwealth Bank Board to be supermen. I am not attributing any improper
motives to them but am only taking into account the human factor. It is hardly
fair to them to expect them to have that exceedingly high ethical standard when
it comes to a conflict between their private and their public interests.
The Bruce-Page Government tried to go even further. It decided to appoint an
executive committee of three members to carry on the business of the bank
between board meetings, and to provide for a London board of advice. Apparently
the public outcry against interference with the Commonwealth Bank was so great
that the London board of advice was not developed. From time to time, even
though attempts by anti-Labour governments to effect alterations which might
have improved the bank had been approved by the Parliament, they were not given
effect to. Honorable senators need only to refer to the document furnished by Senator
Paltridge to see that what I am saying is true.
T do not approve of the move, but in 1927 the Bruce-Page Government decided to
transfer the Savings Bank Department’s business to a separate institution to be
managed by three commissioners to be appointed upon a resolution of both Houses.
But those commissioners were never appointed. In the meantime, management of the
department was to remain in the hands of the Commonwealth Bank Board. As we go
through the whole history of the Commonwealth Bank, we find that the anti-Labour
policy on banking has been one of vacillation and delay and that, although the
various governments have been forced at times into some kind of legislative
activity, upon more mature consideration or when pressure has been removed it
has been found unwise to give effect to the proposed change.
When the Scullin Government was in office, the Commonwealth Bank was called upon
to assist in the provision of employment and to help industry at a time of acute
world-wide depression. An approach was made for the issue of fiduciary currency
to the extent of £18,000,000. In these days when we budget for thousands of
millions of pounds, that sum does not seem very great; but in those days it
would have helped considerably in the provision of employment and the relief of
misery. But we know that that assistance was refused by the Senate. We know that
various economies had to be effected, even down to the humblest pensioner in the
land, because the Commonwealth Bank was hamstrung and was unable to provide the
necessary money to give relief. It was a tragedy that the Parliament was not in
control of the financial destiny of the nation but that our destiny was in the
hands of some one outside the Parliament.
During the term of office of the Lyons Government, the Commonwealth Bank was the
subject of an inquiry by a royal commission, but it took many years for any of
the findings of that commission to be implemented. One of the members of that
commission was later Prime Minister of Australia, and some of the advice that he
tendered to the commission in regard to the Commonwealth Bank was eventually
followed. In 1938, the Lyons Government proposed the institution of a mortgage
bank department along the lines recommended by the royal commission. The
relevant legislation was taken to the secondreading stage and then lapsed. I
mention these things to show that from the time a Labour government established
the Commonwealth Bank there has been much shilly-shallying by anti-Labour
governments.
Debate interrupted.
page 644
ADJOURNMENT
The PRESIDENT (Senator
the Hon. Sir Alister McMullin) - Order! In conformity with the
sessional order relating to the adjournment of the Senate, I formally put the
question -
That the Senate do now
adjourn.
Question resolved in the affirmative.
Senate adjourned at 11 p.m.
| |
|