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Wednesday, 27 May 1914
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Senator DE LARGIE - As the articles were to appear in the Perth Morning Herald, I suppose the editor, Mr. Drayton, would be responsible for them.


Senator Oakes - Were they sent to Mr. Chinn first?


Senator DE LARGIE - Yes ; and he takes the responsibility of giving them to me. Here is the powder for an article as supplied by Mr. Smith -

For forty years American citizens have been trying to burst up the Oil Trust, but all efforts failed. . . . What has taken place there is now at work in Western Australia. The Timber Combine for years now have been manipulating the outside sources of supply (like the Standard Oil), buying up all the timber that can be got from the little man, and getting other companies to come in with them, with the result that practically all the marketable timber supply is. controlled by the combine.

I quite agree with what Mr. Smith says there. No man knows the facts of the case better than he does. No one in Australia knows the timber trade better, and he is dealing with a subject with which he is familiar in every sense of the word -

The public must now pay any rate the combine demands, and timber that cost £3 12s. per load will go up 50 or .100 per cent. This happened repeatedly with oil. Is it not time the people realized, before it is too late, that any more combines is not for their benefit ?

I hope the Government, who are now considering the appointment of a Royal Commission to go into the matter of trusts and combines, will make Mr. Smith one of the Commissioners, because no man in this country knows more about combines and their tactics than he does. As this statement shows, he is well up in their tactics, and knows exactly what they do. He would make a splendid commissioner, and would give an interesting report on these matters.


Senator McGregor - Does the honorable senator think that he could not be bought off?


Senator DE LARGIE - Not him !


Senator Millen - I should like to know what was paid to Chinn for this work.


Senator DE LARGIE - Later on, if an inquiry is held, Mr. Teesdale Smith will be able to tell us. The statement continues -

The State is fortunate to have still a small area of timber land available. This will prove a great boon to the Government, and put it beyond the power of the Timber Combine. The Government should be careful not to allow the combine to get hold of this area. The combine has refused to ratify the co-operative agreement entered into between the workers and the combine. They (the men): could follow out the line of work that has been agitating the mind of the community so long-

One would not think that Mr. Teesdale Smith was a Socialist. viz., the working of the timber of the State on co-operative lines. But the combine is making a strenuous effort to block the men going on with the agreement. The combine ib paying away gratuitously higher wages than the Court awarded, to try and create dissension and discontent amongst the workers, to dislocate the efforts put forth on behalf of the men by those that worked for their efforts daring the strike. If the Court had to be persuaded at inordinate length that the combine should not pay higher wages, and that it was necessary in the interests of the industry that lower wages should be paid, and that the combine could not pay higher wages and live, now, in face of this, the combine is paying higher wages to some of its employes, surely it is a fair thing to ask why? If they can placate some of the men in the hope to defeat the co-operative scheme.

Honorable senators will see that in this statement Mr. Teesdale Smith is backing up the men whom he was fighting against only a few months before. Here he justifies the men who struck in order to better their conditions; but when the case came before the Arbitration Court the men had no more bitter opponent than Mr. Teesdale Smith. He was the head and front of the defence of the combine at every turn. He tried all he knew to defeat the men who had gone on strike; but it is evident from this statement that in his heart he knew he was doing wrong. He knew that in asking' that the railway freights should be reduced on timber bought from the combine, a concession which was granted by the Government, he was asking for- something to which he was not entitled, and which the combine did not require. Here in this statement he is ' 1 turning dog ' ' on the very people who paid him at that time. He is exposing their tactics by supplying information of this kind for publication in the press. This is the kind of man whom the present Government have preferred to let in by the side door, in order that they might give him a contract without calling tenders,, so that other contractors would have an opportunity of competing with him for the work.


Senator Millen - Does the honorable senator not think, in view of these letters from Chinn, that the less he says about "turning dog " the better?


Senator DE LARGIE - When a man like Mr. Teesdale Smith is let into the public employ in the way he has' been, after injuring another man as far as he possibly could, I consider that that man is quite justified in getting level with him in any way that he can. I hope that Mr. Chinn will get level with a few more of his enemies, some of whom are in the present Government, and many of them


Senator Millen - Members of the present Government?


Senator DE LARGIE - Many of the enemies of Mr. Chinn are mixed up in this contract in some way or another.


Senator Millen - The honorable senator means to say that there are some decent men connected with the contract.


Senator DE LARGIE - They are very decent men.


Senator Oakes - The honorable senator has done Chinn more damage this afternoon than was done him by anything that came before the Select Committee.


Senator DE LARGIE - If that be so, the honorable senator will be glad, but, certainly, he does not look pleased. I am doing the members of the present Government no good, anyhow. I am showing the manner of man they are prepared to do- business with.


Senator Oakes - The honorable senator has shown that the Commonwealth was justified in getting rid of Chinn.


Senator DE LARGIE - By exposing the tactics of the present Government, Mr. Chinn is getting level with those who persecuted him. The information I am giving is; something that the public are entitled to know. If Mr. Chinn, has done wrong, I am not here to defend him ; and I certainly do not intend to defend the present Government or Mr. Teesdale Smith. What I say here is that the statement I am reading exposes the character of the man to whom: the Government have given a contract at double the rates usually paid for the work, and to whom they have practically made a present of £20,000.


Senator Guthrie - Why should Mr. Teesdale Smith be given a present of £20,000?


Senator DE LARGIE - I do not know how much Teesdale Smith supplied in the shape of election expenses. If we knew exactly how much Teesdale Smith is worth to the Government at election time, I could tell Senator Guthrie whether he is getting a sufficient return through this contract.


Senator Millen - If the honorable senator is trying to insinuate that the Government gave the contract to Mr. Teesdale Smith because of any contribution or assistance at election time to the party funds, let him say so.


Senator DE LARGIE - I am not itf possession of any more proof than the indirect proof which is before us. I say that Mr. Teesdale Smith is getting exactly £20,000 more than he should get for the work he is to carry out under the contract. Why is he getting this money?


Senator Millen - He is getting the same rates as were current and paid by the .Government of South Australia.


Senator McGregor - The honorable senator knows that is not correct.


Senator Millen - It is correct.


Senator DE LARGIE - It is ridiculous to say that he is getting the same rates as were paid by the Government of South Australia. Such rates were never before paid for inland railway construction in Australia.


Senator Millen - It is a scoundrelly thing for the honorable senator to say that the Government gave the contract because of any party advantage they derived from Mr. Teesdale Smith.


Senator DE LARGIE - Let the Government institute an inquiry, and we shall then see what they did it for.


Senator Millen - Institute an inquiry for any scoundrelly accusation the honorable senator may make?


Senator Findley - It is common rumour that Teesdale Smith contributed largely to the Fusion party's funds.


Senator Millen - It is a common lie spread by you and others.


Senator Needham - I rise to a point of order.

The DEPUTY PRESIDENT.- Order I Before the honorable senator rose, ' I had risen to ask "Senator Millen to withdraw his statement that Senator Findley was guilty of "a common lie."

Sentor Millen. - I did not say that Senator Findley was guilty of it. I say that it is a common lie - and I repeat the statement now - that is spread around the country that the Government gave the contract because of some pecuniary advantage which their party organization received from Mr. Teesdale Smith.


Senator Needham - Then the honorable senator said to Senator de Largie, "It is a common lie spread by you and others."


Senator de Largie - No; the honorable senator did not say that to me.


Senator Needham - I say that the Minister of Defence ought to be called upon to withdraw his statement, " It is a common lie spread by you and others," if he indicated any honorable senator in this chamber.

The DEPUTY PRESIDENT.- Senator Millen has stated that what he said was that Senator Findley said something which was a common lie spread by some one outside this chamber.


Senator Needham - No; the honorable senator's words were " by you and others."


Senator Findley - I rise to a point of order. As the members of the Government are so touchy on points of order, I wish to say what I believe was the remark made by the Leader of the Government in the Senate. I said that it was a common rumour that Teesdale Smith contributed largely to the Fusion "party's funds, and Senator Millen said, " It is a common lie spread by you and others." I ask whether that statement is in order.


Senator Millen - The honorable senator is giving currency to it now.

The DEPUTY PRESIDENT. -I stated that that statement was not in order, and I asked Senator Millen to withdraw it. Senator Millen denied that he had made the statement attributed to him. If Senator Findley objects to the statement made by Senator Millen I shall ask the honorable senator to withdraw it.


Senator Findley - I object to the statement that I spread any lie.

The DEPUTY PRESIDENT.- Then I ask Senator Millen to withdraw the statement.


Senator Millen - If Senator Findley takes that as a reflection upon his own veracity, I willingly withdraw it. I ask your protection, sir, and the protection of the Chamber. Am I, as a Minister, to sit here and be told, even though it should be only by the repetition of statements made outside, that I am a member of a Government who have given a contract for the purpose of obtaining a big advantage for its party funds? I am entitled, sir, to your protection, as one of the Ministry, from insulting insinuations of that kind.


Senator Findley - I object to that withdrawal. I do not consider it a withdrawal at all when it is introduced with the words, " If Senator Findley takes that as a reflection upon his own veracity." I did not ask for a withdrawal upon that condition.

The DEPUTY PRESIDENT.- Senator Millen has withdrawn the statement as applied to Senator Findley.


Senator Needham - He got off very lightly. He should be asked for an unqualified withdrawal. I was suspended for less.


Senator DE LARGIE - I do not know why Senator Millen was so touchy when I referred to those who are mixed up in this contract.


Senator Millen - Let the honorable senator leave out his insinuations against the Government, and I do not mind what he says.


Senator DE LARGIE - Why, then, is the honorable senator so angry? We know that the Government have hidden themselves behind certain names. Mr. Deane has been more than once dragged into this matter. All I have said is that we want an inquiry. I say that a number of men who were the persecutors of Mr. Chinn are mixed up with this Teesdale Smith contract. We want to know exactly how far the Government, Mr. Teesdale Smith, and the late Engineer-in-Chief are in it. Senator Millen himself has not been too guarded in expressing himself in this chamber in regard to some of these people. At this stage it will be interesting to honorable senators to hear Senator Millen's opinion of Mr. Deane, the late Engineer-iii-Chief, so that they may have some idea of the character of tho men we are dealing with. When there was a debate on the transcontinental railway in the Senate, and Senator Millen was referring to Mr. Deane's principal report, known as the 1911 report, he was hostile to the construction of the railway, as all his colleagues were. The party opposite tried to prevent the railway being constructed, and I may say that from the way in which they are carrying on in Western Australia to-day they are succeeding very well in preventing the construction of the line. What did Senator Millen say at the time referred to ?


Senator Millen - That was the time when the honorable senator was declaring that Mr. Deane was everything he could wish him to be.


Senator DE LARGIE - I did not know Mr. Deane's private or professional character at that time, and therefore could not express an opinion.


Senator Millen - But the honorable senator did express an opinion.


Senator DE LARGIE - All I knew was that he had occupied for some time the position of Consulting Engineer on the transcontinental railway. So far as I knew he was fit for the position. I did not say much for or against him for the simple reason that I did not know him. But Senator Millen came from the State in which Mr. Deane had been employed for many years as a professional engineer. It was no doubt from that experience of him that the honorable senator formed his opinion of him. He said during the debate Jo which I have referred -

I want to get back to the paragraph again, and to say that nobody, not even a cowboy cn the smallest farm in the country, would have permitted himself to sign it.


Senator Millen - Do you not think that you ought to read the paragraph? It has a very important bearing on that.


Senator DE LARGIE - This was a Paragraph in Mr. Deane's report regarding the transcontinental railway and the lands it was to run through.


Senator Millen - The report referred to had reference to the number of sheep available to be trucked every year, a matter on which Mr. Deane, as EngineerinChief, evidently did not know anything.


Senator DE LARGIE - I am quite prepared to accept the Minister's opinion of Mr. Deane; but I want this matter to be again put before the public. Senator Millen continued -

I direct attention to the fact that a public officer, who ought to have been impartial, has put into his report stuff which would disgrace the mining prospectus of a " wild-cat show."

I asked whether this man had been dismissed by the Government, or had been allowed to resign, and they, I understand, have allowed him to resign in spite of the opinion held of him by Senator Millen, and in spite of the smellful jobs with which, I think, he can be charged - a charge which', I think, can be brought home if an opportunity is afforded. I do not care about making charges against any man who is not a member of Parliament, because those who are charged are not in a position to speak here. I recognise that one assumes a great deal of responsibility in standing here and making charges. But for the fact that these men are carrying out a public work, and are getting paid by the Government for performing the work, I would be the last man to make any statement- about them here. We all have an obligation to fulfil. We know that public money is being squandered. We know, too, that these men are at the bottom of the squandering, and consequently it is my duty to expose their tactics if I possibly can. It is of no use for any one .to say that Mr. Deane is no longer Consulting Engineer-in-Chief . He is drawing from New South Wales a pension of £462 per annum. A man who has a character such as Senator Millen said Mr. Deane has, and who has a connexion with Mr. Teesdale Smith in the way -.that I suspect he* has, is not entitled to a pension from the taxpayers of Australia. We want to get at the bottom of this business and to see that justice is done. I do not desire to make charges against Mr. Teesdale Smith or Mr. Deane, but I want them to get an opportunity to answer the charges. If an inquiry is authorized, these men will be put on a level with myself and will be entitled to defend their character if anything is said here to-day which should not have been said. I will now resume the reading of Mr. Teesdale Smith's epistle to Mr. Henry Chinn. Continuing, he says -

The combine is not sawmillers in the sense that is provided in the Land Act.

These, I may mention, are all wellknown arguments against the combine in Western Australia. We have argued that the combine broke the conditions of the Land Act under which they took up the land. We have pointed out that the concessions' should have been resumed long ago, because the persons were not entitled to them, and were preventing selection, because they were acting in a doginthemanger fashion by locking up a lot of land which, so far as timber was con- cerned, was practically cut out. This information, coming from Mr. Teesdale Smith, who knows the inside workingsof the combine, ought, I think, tostrengthen the arguments used by the Labour party time and again in Western Australia. Mr. Smith goes on teadvise the writer of the articles to instance all the little towns where the combine now have their business, and to point out that small retailers have been driven out of the business. This is what he said -

At Broome Hill the combine are not only retailers of timber, but employ carpenters to do jobs in the town, cutting out the small tradesmen.

No more competition with the combine in timber, and when they start out in opposition to the small tradesman, how long is the opposition going to last?

The Canning Concession and the Jarrahdale Concession should be rated under the Land Act at 10s. an acre. As the combine will not. allow selectors on these concessions, these concessions should be abolished, and a land tax put on by Parliament. This land is not held for timber purposes, as it has all been practically cut out of timber, but to prevent opposition to the combine stores; for if these lands were thrown open, and stores started within reasonable distances, the profits from combine's stores would materially decrease.

The whole of the 350,000 acres of land in these concessions would be taken up within a very short time if get-at-able, as it is some of the best land in Western Australia.

This communication will be printed in Hansard, and the public will thus learn something about the tactics of the combine ahead of the Royal Commission who are inquiring into this matter. At the same time, the public will learn something about the men whom the Government prefer to employ rather than have their construction work done by day labour. The public will gain some knowledge of the man who was able to interview the Minister and obtain from him a contract without tenders being called, or without any publicity being given to their intention. We shall then learn whether the public think that this is an honest and fair way of doing their business, when the day-labour principle does not permit of corruption in any shape. We shall then be in a position to go to the country on the question of day labour versus the contract system, with all its corrupt practices, such as this case undoubtedly exposes. If this debate has done nothing else, it has exposed the very smellful jobs of Mr. Teesdale Smith, and by-and-by the public will be in a position to decide which political party proposes to conduct their business in the most sensible and honest way. There are, I think, other reasons why an inquiry should be held. So far there has been an enormous expenditure on the transcontinental railway, far above the estimates furnished by Mr. Deane when we were asked to pass the Railway Construction Bill. When we find that his estimates are being enormously exceeded, we have a right to know as soon as possible the reasons for the excess. Now that the contractors have got their nose into the business, the cost of construction will go up and up. If, during the next two years - and I suppose it will take at least that time to build the line - the expenditure continues to exceed the estimates, it will be the most expensive railway which has ever been built in Australia, instead of being, as it should be, one of the most cheaply-built lines. Through similar country, the Government of Western Australia have had railways built at a cost of £500, £600, and £700 per mile. The transcontinental railway, I think, ought to have been built for about £1,000 a mile; at any rate, so far as earthworks are concerned, at about onehalf the amount which Mr. Teesdale Smith is getting. I have taken out the estimates of Mr. Deane, as furnished in his report of 1911 to the Commonwealth Government, and the actual cost of construction, as shown in the schedules issued from time to time by the Department. I find that on the four principal items his estimates have been exceeded by £1,348,255. His estimate of the cost for rails and fastenings was £1,012,0.00. Up to the present time rails and fastenings have cost £1,431,523, and only 700 miles of rails have been purchased. His estimate of £1,012,000 was for the whole length of the railway, namely, 1,063 miles. The cost of sleepers and ballast was estimated at £1,038,000. So far, £1,466,321 has been spent for about 700 miles of sleepers and ballast; that is £426,321 more than the estimate, and all the sleepers have not been purchased yet. Mr. Deane's estimate for plate-laying for 1,063 miles was £153,000, and already £526,989 has been spent .under this head. There is only one explanation of this excess, and that is that Mr. Deane did not estimate the cost of haulage in connexion with the platelaying. As regards rolling-stock, the

Commonwealth has already purchased £441,436 worth. Mr. Deane estimated that £315,000 would be sufficient to buy all the rolling-stock required for the line. On these four items the actual expenditure has been £3,866,266, as against Mr. Deane's estimate of £2,516,000, showing an excess of £1,348,255. If this rate of expenditure continues, there is no knowing what the actual responsibility for this line is going to be. Therefore, I think that in connexion with Mr. Teesdale Smith's contract the inquiry, if the Government intend to let us have an inquiry, ought to be given a sufficiently broad scope, to take in the present expenditure on day labour, the past expenditure in this regard also, and the purchase of stock. Where a suspicion exists that there is something wrong with a contract - and such a suspicion undoubtedly exists in the case of the Teesdale Smith contract - it would be well to inquire into the purchase of all this material with a view to ascertaining whether the Commonwealth has been charged fair prices for it or not. I hope' that the Government will recognise that it is their duty to set the public mind at rest by granting an exhaustive inquiry into the whole matter of the construction of this transcontinental railway. I hope, too, that they will no longer delay a settlement with the men who are on strike at the Kalgoorlie end of that line. Those men are merely asking for the rate of wages which is being paid by a private contractor, and their claim, therefore, ought to be conceded, as it is fair and beyond all cavil.

Senator Lt.-ColonelO'LOGHLIN (South Australia) [4.57]. - It is with some degree of reluctance that I intervene in this debate, which -has now been prolonged over several weeks. But, in dealing with the matters upon which I propose to touch, I shall endeavour, as far as possible, to avoid repeating arguments which have been previously advanced; and where I do dwell upon questions which have been dealt with by other speakers, I shall strive to introduce new matter. I want, as the lawyers say, to take a preliminary objection to the way in which the position is put in paragraph 2 of the GovernorGeneral's Speech. That paragraph reads -

My stay in Australia has been a most pleasant and useful one to me, and I would fain hope it may have been' of some slight service to

Australia. My relations with both Governments and people have been of the happiest kind, and Lady Denman and I shall leave Australia with feelings of the deepest regret.

In that paragraph it will be noted that, whereas the word " Governments " is printed with a capital " G," the word " people" is printed with a small *' p." I suppose that this is indicative of the view entertained by the Government of the relative importance of themselves and of the people. But I venture to say that when an appeal is made to the electors the position will be entirely reversed. We have been told that the reason Parliament has been called together at this unusual time of the year is to transact urgent public business. With that end in view, the Ministry have introduced two so-called test Bills which can "have no effect whatever upon the existing condition of things, and which they knew would have a tendency to delay, instead of to expedite, the transaction of public business. I am not going to dogmatize upon those two measures. I recognise that we are sailing on an uncharted sea in regard to the dead-lock provision of our Constitution. ' There is no similar provision in any other Constitution with which I am acquainted. But I do say that the dead-lock which it is proposed to create by these two Bills is an entirely artificial one. That can be conclusively proved by a reference to the history of those measures. Last year the Government in their statement of policy declared their intention to introduce Bills dealing with an amendment of the electoral law and with the Arbitration Court. The Bill dealing with the electoral law proposed, among other points, to restore the postal vote. The other measure was intended to exclude from the operation of the Arbitration Act the rural workers of the Commonwealth and preference to unionists. These Bills were submitted in another place. But on the 31st October, before the Senate had committed any overt or covert act, the Government suddenly dropped those Bills, and substituted two others for them, with the avowed object of provoking a conflict with the Senate. Those measures were forced through the other branch of the Legislature with malice aforethought. The Government applied the " gag " on every possible occasion. I repeat that the history of those Bills conclusively shows that if a dead-lock is created, it will be an artificial dead-lock. Coming to the Premiers' Conference, I wish to say that, in my judgment, such gatherings serve a very useful purpose, so long as they are confined to their legitimate sphere - so long as they deal with matters in which, the States are jointly interested, and with which they cannot deal independently. The fact of the Prime Minister and the Premiers of the States meeting in consultation has also a tendency to bring about harmonius relations between the Commonwealth and State authorities. But the Premiers should confine themselves to matters which come within their jurisdiction, and ought not to attempt in any way to usurp Federal functions. For example, when they come to deal with industrial laws, it appears to me that they are trenching upon a matter which should be reserved to the Commonwealth, and which can be more effectively dealt with by the Federal authority. Amongst the matters which properly come within the jurisdiction of the Premiers' Conference is that of the State debts. Although the Commonwealth possesses the power to take over the debts without consulting the States, it would be very unwise to take arbitrary action of that character. Then there is the question of a uniform railway gauge. That is a matter in respect to which there must be joint action. The Murray waters is another subject upon which united action can very appropriately be taken by the States and the Commonwealth. But if the States are to attempt to enact legislation upon matters which can be better dealt with by the Commonwealth, I ask where was the necessity for federating? If that sort of action be insisted upon, we shall get back to the old days when a Federal Council was in existence. Some honorable senators will doubtless recollect the pre-Federation period, when there was a Federal Council consisting of representatives of the various States. South Australia was represented upon that body, and I remember the late Sir Richard Baker describing it as a body that had nothing to do and no power to do it. It is a pleasure for me to be able to commend the Government for something. Whether they have blundered into it or not I cannot say, but there are some measures in respect of which they have adopted a proper and statesman-like attitude. Amongst these is the agreement arrived at with the States in regard to the utilization of the Murray waters.

There is plenty of water in that great river to supply all the States for both irrigation and navigation if properly utilized, and the key to its utilization lies in a proper system of locking. Only three of the States will directly participate in the benefit, and there is no reason why they should not share in the cost. Queensland will also benefit to a certain extent, because some of her waterways drain into the Murray, and the locking of the Murray for navigation purposes will benefit her, although perhaps not to the same extent as New South Wales, South Australia and Victoria. As those three or four States will participate iu the benefit, they cannot possibly have any objection to the Commonwealth paying the comparatively small sum of £1,000,000, considering the benefits that will be received, towards the better utilization of the Murray waters. Western Australia and Tasmania will not directly benefit by the expenditure, but I would point out to their representatives here that Western Australia has received special consideration under .the Constitution, and Tasmania has been provided for by more recent legislation. By those means the whole body of the taxpayers in the other States have contributed towards certain privileges to which those two States were fairly entitled.


Senator Pearce - You are more likely to get opposition from some States that are going to benefit directly than from the States that will not benefit.


Senator O'LOGHLIN (SOUTH AUSTRALIA) -Colonel O'LOGHLIN. - Some opposition has already been indicated by one of the organs of public opinion in Victoria, but we in South Australia have become quite used to having our negotiations with Victoria banned by the Ago, and are not surprised to find that paper taking up the same attitude in regard to the present proposals for the utilization of the Murray waters. I unstintingly compliment the Government on the action that they have taken in this regard, and hope that the arrangement will be duly ratified by the State Parliaments. I know there are difficulties ahead, but I believe that even in Victoria the arrangement made by their Premier and other Ministers at the Conference will be honoured and the scheme carried out.


Senator Pearce - Is this the third or fourth agreement?


Senator O'LOGHLIN (SOUTH AUSTRALIA) -Colonel O'LOGHLIN.Ithink the fourth. The previous ones have been tentative. Both Mr. Price and Mr. Verran, Labour Premiers, entered into arrangements, and Mr. Verran, I am glad .to say, finding that he could not get much satisfaction out of Victoria, took the matter in hand himself, sent to the United Sta>tes for an expert, Captain Johnson, and proceeded with the locking of the Murray within South Australian territory, independently of the other States - a position which has been indorsed by the present Government. He also entered into an arrangement with New South Wales for the establishment of a large storage basin in Lake Victoria. The proposal put forward at the Premiers' Conference to transfer the Commonwealth Savings Bank business to tho States is unthinkable, and should receive the strenuous opposition of every member of both Houses. Having established a National Bank, a bank in which all the people are shareholders, we should not for a moment entertain the proposition to eliminate from it the particular part which deals with the savings of the common people, to use rather an objectionable expression. We should not be asked to cut out the man whose monetary position is not sufficient to enable him to have an account with the ordinary commercial banks.


Senator Oakes - He still has the States Savings Banks. What difference does it make to him ?

Senator Lt.-ColonelO'LOGHLIN.I take a fatherly interest in the States Savings Banks, having been for twelve years a trustee of the South Australian institution, and an excellent institution it is in every way, but we have established a national scheme dealing with ^banking as a whole, and there is no reason why we should divide it bv eliminating the savings bank part from the general scheme.


Senator Oakes - You are coming in as a competitor with already established Savings Banks.


Senator Lt Colonel O'LOGHLIN - Our warrant for doing so is contained in the Constitution, which places banking and currency in the hands of the Central Government. This was a mandate indorsed by the people. When exercising our right to take over certain activities from the States under the

Constitution is there any precedent or warrant for our doing so in a partial manner only? We might just as well say that when taking over defence we should take over the naval part only and leave the military part with the States.


Senator Lt Colonel Sir Albert Gould - That could not be done under the Constitution.


Senator Lt Colonel O'LOGHLIN .- I do not think that, under the Constitution, we could divide the Savings Bank part from the general banking part, and that is the position suggested by the governor of the bank himself.


Senator Oakes - Mr. Miller does not take that view. He says that he cannot alter the present methods until an Act of Parliament is passed.


Senator Lt Colonel O'LOGHLIN - He also suggests that it will probably require an alteration of the constitution before it can be done.


Senator Lt Colonel Sir Albert Gould - He means the constitution of the bank, not of the Commonwealth.

Senator Lt.-ColonelO'LOGHLIN.It might as well be suggested that, in taking over trade and Customs, the Commonwealth should take over the Customs and leave Excise with the States.


Senator Lt Colonel Sir Albert Gould - That, again, is expressly provided for by the Constitution.


Senator Lt Colonel O'LOGHLIN - We get back to the same position, that where the power to deal with banking is given to the Central Government, it means the whole power, which should not be divided. Can honorable senators give me any instance where, under section 51 of the Constitution, the Commonwealth has only partially exercised a power?


Senator Lt Colonel Sir Albert Gould - I cannot give an instance of the kind in Australia, but if we like we can exercise part of a power and leave the rest of it to the States as a matter of fair play.

Senator Lt.-ColonelO'LOGHLIN.Can the honorable senator give me any instance where any Federal Government have taken a power over in a partial manner ?


Senator Lt Colonel Sir Albert Gould - Is it fair to interfere with State activities which you cannot abolish altogether ?


Senator Lt Colonel O'LOGHLIN - Surely the honorable senator does not attempt to say that the Act under which the Commonwealth established the Savings Bank is ultra vires?


Senator Lt Colonel Sir Albert Gould -No.


Senator Lt Colonel O'LOGHLIN - The Commonwealth had the right to do it under the Constitution, and the honorable senator can give me no instance of any power which a Federal Government have a right to exercise being dealt with, either here or anywhere else, in a partial manner. I strongly object to our National Bank dealing only with the commercial man, the man who has a chequehook and a banking account, and leaving out the much larger proportion of the people who want to invest their small savings. Our opponents do not want this bank to be even a commercial bank, because they know that it competes with their particular friends, the private banking institutions, who are the mainstay of their party.


Senator Lt Colonel Sir Albert Gould - The governor says he wants it to be the bankers' bank, so as to assist the private banks.

Senator Lt.-ColonelO'LOGHLIN.I do not object to that. It should be the bankers' bank, and the bank of the Commonwealth Government, and all the State Governments; but it should be the poor man's bank also. This is the reference to the subject in the Speech -

My Advisers have, in conference with the State Premiers, undertaken to bring before Parliament at an early date certain measures to give effect to agreements there arrived at, and accordingly a Bill will be presented for abolishing the dual control of the savings of the people existing at present, and making such arrangements with the State Governments as will greatly strengthen the Commonwealth Bank, increasing its resources and enabling it to be of immense service to the people of the Commonwealth in connexion with the management of their debts, and, it is hoped, new loan negotiations.

I desire particularly to emphasize the last part of that statement. What is to prevent the Government from doing this " great service " to the people, without making any haggling conditions? Is there anything in any Act to stop them from joining with the States and offering all the facilities which the Commonwealth Bank can offer for doing all the business of the

States? Why should they make any haggling conditions about a proposition which, they say, is to be of such immense benefit to the States and the Commonwealth? If it is a good thing, why not do it ? If they choose, then, to go on with any negotiations, and can arrange any feasible scheme for the States to continue the Savings Bank business and the Commonwealth Bank to go out of it, that should be a separate matter altogether. I am entirely opposed to any such proposal; but there is no reason why they should place the two things in opposition, and say that if we do not agree to the proposal to hand the Savings Bank business over entirely to the States they will not bring in a Bill to achieve this great scheme which is to be of such immense benefit to the States and the Commonwealth. If it is a good thing for the Commonwealth National Bank to deal with the whole of the business of the State and Commonwealth Governments, the scheme ought to be proceeded with without hesitation or delay, and without any hampering conditions such as are suggested in the paragraph that I have just read.


Senator Long - As a matter of fact, the Commonwealth Bank is now doing the business of the Tasmanian Government.


Senator Lt Colonel O'LOGHLIN .- I have been pleased to see that the State of Tasmania has in this matter shown a splendid example to 'the larger States. I am reminded of the saying, " A little child shall lead them."


Senator Millen - The State of Tasmania got a solid cash consideration for doing it, too.

Senator Lt.-ColonelO'LOGHLIN.One result which has followed from the Commonwealth Bank entering into savings bank business is that in South Australia, and, I believe, in all the other States as well, there has been a considerable extension of the facilities offered to the public by the State Savings Banks, and a liberalizing of their regulations, which has been very much in the interests of the public. So far as general depositors are concerned, I do not think the proposal to ' abolish dual control of the Savings Bank business will " cut much ice." At present the general depositor has the choice of two banks, and the com* petition between them has already led to the liberalization of the methods of the State Savings Banks in his favour. In the circumstances, the abolition of the dual control of the business is not likely to arouse the enthusiasm of the general depositor. I am personally in favour of the savings bank business and the whole of our national banking being carried on by one bank. As I indicated when the Minister of Defence was speaking, if there is to be one control of national banking, as I believe there should be, it ought to be national rather than provincial. The Minister took some exception to the word " provincial," but I am not particular as to the phrase, and I say that national banking should be conducted by the Commonwealth rather than by the States. That should be self-evident, because the .Commonwealth has control of all the post-offices, and could impose a uniform system and regulations throughout the States. It must commend itself to the public generally that it is better that there should be a central control than that there should be six different systems in operation in the different States. If there are not to be six different systems operating in the States, the different State Parliaments must pass six similar Acts coordinating the system adopted.


Senator Oakes - Competition is the life of trade. If they put up the rate to 4 per cent, they will get the money.


Senator Long - The private banks charged the Tasmanian Government 6 per cent, on their overdraft, but the Commonwealth Bank charges them only 4^ per cent.


Senator Lt Colonel O'LOGHLIN .- I am not satisfied that the Commonwealth Bank has done as much as it should do for the benefit of the public during the time it has been in existence. I agree that we should make every allowance for Mr. Denison Miller in the difficulties he has had to meet in the starting of a new system in the teeth of the opposition of all the private financial institutions, aswell as of the State Governments. The Commonwealth Bank has turned the corner, and is making a profit much sooner than any one could reasonably have expected. I do not believe that even the most sanguine- expected that the bank would show a profit for the first three or four years at any rate. It is evidence of its sound and healthy condition" that it has already been able to show a profit which, I am sure, will be largely increased during every succeeding year. But I look forward to the time when the Commonwealth Bank will abolish the iniquitous banking charge of 10s. a year imposed upon the customers of banks. This practically amounts to a charge by the bank for using the moneys of their customers. I look forward to the time when the Commonwealth Bank will be prepared, as many London banks do, and as some private concerns in Australia do at the present time, to pay a small rate of interest - 2 or 3 per cent, on current accounts. If the Savings Banks are able to pay 3 or 3£ per cent., I do not see why the Commonwealth Bank, which has no dividends to pay to shareholders, and has many facilities for business which private financial institutions cannot command, should not be able to pay a small rate of interest on current accounts.


Senator Lt Colonel Sir Albert Gould - The honorable senator should bear in mind that the banks may make, losses, and must make provision against them.


Senator Lt Colonel O'LOGHLIN - Every bank is subject to losses. The Savings Banks make losses sometimes. The South Australian Savings Bank is one of the safest and best managed institutions of the kind in the Commonwealth, and yet, during the time I was a trustee, it occasionally became possessed of properties which had to be sold at a loss. Every bank must take a risk of that kind. I believe that the time will come when the Commonwealth Bank will abolish the iniquitous banking charge to which I have referred. I can remember the time when that charge was first made. For many years previously there was no such charge. It was only imposed when the managers of the different private banks laid their heads together and discovered that new means of exploiting the public. I believe also, that the Commonwealth Bank will be able to pay a small rate of interest, 2 or 3 per cent., on current accounts. That would make the commercial banks sit up, and would put an end to a system under which the public have been bled by the financial institutions for many years. There is one other matter connected with the Savings Bank branch of the Commonwealth Bank to which I wish to direct attention. I refer to a regulation which is used by opponents of the bank to very seriously damage it. It deals with a matter which has already been considered by the Senate. I was not in the Federal Parliament at the time, but I believe that it was owing to the action of the Senate that a provision in the Commonwealth Bank Bill, similar to the regulation to which I refer, was eliminated. It was a provision that the bank should not be responsible if a depositor's pass-book was obtained by some one else, and money fraudulently drawn from his account. I have here a Savings Bank pass-book of the Commonwealth Savings Bank, and quote from it Regulation No. 27-

The officers of the Savings Bank shall diligently endeavour to prevent fraud, and to identify every depositor transacting business with the Savings Bank; but in case any person presenting a depositor's pass-book, and producing a withdrawal form purporting to bear the signature of the depositor, or stating himself to be the depositor named therein, shall unlawfully obtain any deposit or sum of money from the Savings Bank during the hours of business, the Commonwealth Bank of Australia shall not be responsible for the loss so sustained by such depositor, nor be liable to make good the same.


Senator Lt Colonel Sir Albert Gould - Hear, hear!

Senator Lt.-ColonelO'LOGHLIN.Does the honorable senator approve of that?


Senator Lt Colonel Sir Albert Gould - No; I voted against it. I contended that the same provision should be made for the protection of the small depositor as for the big depositor. Senator Walker also tried very hard to defeat that provision.

Senator Lt.-ColonelO'LOGHLIN.I understand that the Senate did strike out that provision from the Commonwealth Bill, that the other House agreed to the amendment, and that, in defiance of the will of Parliament, the governor of the Commonwealth Bank has included the provision in the regulations of the Commonwealth Savings Bank.


Senator Oakes - The honorable senator should not forget that that could not have been made a regulation without the approval of the Fisher Government. It had to be done by Executive authority.

Senator Lt.-ColonelO'LOGHLIN.I doubt that statement. It may be correct if the honorable member means that the Fisher Government were responsible for the provisions of the Act placing the control of the bank entirely in the hands of the governor.


Senator Long - The regulations must receive Executive approval.


Senator Lt Colonel O'LOGHLIN - I think not. I understand that the Commonwealth Bank Act makes the governor of the Bank an absolute Czar, responsible to no one. Of course, he is not at liberty to contravene any of the provisions of the Act.


Senator Long - It is competent for Parliament to disallow the regulation.

Senator Lt.-ColonelO'LOGHLIN.I do not think it is possible for Parliament to disallow these regulations.


Senator Long - Yes; they have to be laid on the table, the same as other regulations.


Senator Buzacott - Does the honorable senator not think that this is an exceptional case because of the powers given to the Governor of the Commonwealth Bank?


Senator Lt Colonel O'LOGHLIN .- I do not think that these regulations have to be submitted to Parliament.


Senator Pearce - Yes, all regulations.


Senator Lt Colonel O'LOGHLIN .- If that be so, Parliament has been very remiss in this matter. Having expressed its views so strongly against this provision in the Bill, Parliament should not have allowed it to go through as a regulation.


Senator Turley - A number of honorable senators were in favour of the provision.


Senator Lt Colonel O'LOGHLIN .- I have special knowledge in connexion with this matter. I am able to say that, with an experience of sixty or seventy years, the South Australian Savings Bank did not find it necessary to have such a regulation.


Senator Pearce - They have it in Victoria and in some of the other States as well.


Senator Oakes - Not in New South Wales.

Senator Lt.-ColonelO'LOGHLIN.There were some slight losses in South Australia, but the experience of the bank showed that such a regulation was absolutely unnecessary. My point is that this regulation is being used by the opponents of the Commonwealth Bank to disparage it. When a man proposes to deposit his savings in the Commonwealth Bank, he is told, "You should not do that; you will have no security. Bead that regulation."


Senator Oakes - The Commonwealth Trading Bank protects the rich man's account against forgery of a cheque, but the Commonwealth Savings Bank does not protect the worker's account.


Senator Lt Colonel O'LOGHLIN .- In almost every bank, if any one forges the signature of a customer, the bank is held responsible.


Senator Long - The honorable senator forgets that no one can obtain money from the Commonwealth Savings Bank without producing the depositor's passbook and his signature to an order. Surely that is sufficient protection.


Senator Lt Colonel O'LOGHLIN .- It is not sufficient protection, because these Savings Bank pass-books pass through hundreds of hands. Country depositors send their pass-books through the post. They are handled by the Savings Bank officials, letter carriers, and other postal officials. If any of these are dishonest, they may appropriate a pass-book, and forge a signature.


Senator Long - A signature they have never seen?

Senator Lt.-ColonelO'LOGHLIN.They may have means of obtaining the depositor's signature. That may not be a difficult matter. The fact that the Savings Bank officials are not responsible in such cases renders them less careful in the examination of signatures than they would otherwise be.


Senator Pearce - Does the honorable senator not see the opportunity for collusion which would be left open without such a regulation?


Senator Lt Colonel O'LOGHLIN .- I do not, and I can speak of the experience of sixty or seventy years of the working of the State Savings Bank of South Australia. That experience shows that there is no necessity for such a regulation, and that is the experience also of the New South Wales Savings Bank. I am strongly against the regulation, which I know is used very largely to damage the bank. I trust that the governor will see fit, at the earliest opportunity, to abandon it, as it is quite unnecessary and very harmful. I quite sympathize with the desire of the State Governments that the money deposited in the Savings Banks should be made available for the development of the country. I think that that idea was amply carried out in the proposal which the ex-Prime Minister made to the State Governments, and that was that the States should be entitled to the whole of the old deposits and 75 per cent. of the new deposits, with an equal call on the remaining 25 per cent., and a share in the profits. There was hardly anything left to the Commonwealth Bank under that proposal, seeing that it would have to bear the responsibility of financing and managing the affair. Surely a partial call on 25 per cent, of the new business was not unreasonable? Some States asked that they should have a share in' the management of the Commonwealth Bank, but the Fisher Government would not consent to that request, because the Act provides that the management must be vested in the governor of the bank.


Senator Oakes - Mr. Holman decided that it would be better to hold on to the £30,000,000.


Senator Lt Colonel O'LOGHLIN .- Of course, that is the view of Mr. Holman. I saw a statement the other day that he would watch how honorable senators would deal with this matter, seeing that they had been elected as the guardians of State rights. I believe that honorable senators, whatever action they may take in this regard, will be better able to justify their position than Mr. Holman will be able to justify his flying in the face of the principles on which he "was elected. I must apologize for making a short reference to the Teesdale Smith contract, which has been hammered out in all its phases. I have a few figures which, I think, ought to be placed before the Senate. In the South Australian Register of 31st May the Prime Minister is reported to have said, I think at Melbourne, on the previous day -

Testimony still accumulates to show that the Ministry has made a reasonable and businesslike arrangement with Mr. Teesdale Smith upon this now celebrated contract. One would imagine that what had been done by the present Ministry had never been done by any previous Ministry in any place. It will be remembered that Mr. Verran sent along a testimonial for Mr. Timms as a good contractor, and the value of that testimonial is enhanced, as we learn that Mr. Verran himself had had experience, not only of Mr. Timms, but also of his one-time partner, Mr. Teesdale Smith.

I find from the last report of the Public Works Department of South Australia, which has just been issued, that Mr. Verran attempted to build a line on the coast of South Australia departmentally. Continued strikes and trouble with the men were of such a character that Mr. Verran's Ministry gave it up as a hopeless task, and accepted an offer from Mr. Teesdale Smith to do the same work.

This is the sentence to which I want to call particular attention -

Note that this was an offer, and not a tender. I am in a position to say that that statement is untrue. I think that I ought to know something about this matter, seeing that the railway referred to on Eyre's Peninsula was in the district I formerly represented, and that I was in the State Parliament when the incident occurred. One provision of our public works system in South Australia is that tenders for the construction of railways and other public works must be called. In the case of the Minnipa Hill railway, that provision had to be put in force; tenders were called, and Mr. Teesdale Smith was the lowest tenderer. Another provision of our public works system is that the EngineerinChief of the Department may tender for a public work. The Department did so in this case, and their tender was lower than that of Mr. Teesdale Smith, who, I may say, sent in the lowest tender from outside. I think the Department's tender was about £16,000 less than his tender. The Government accepted the tender of the Department, who carried on the work for some months, when, as mentioned by Mr. Cook in his statement, difficulties arose, and, finally, the Verran Government decided to ask Mr. Teesdale Smith if he was still prepared to undertake the work on the conditions in respect of which he had tendered, and he agreed. Tenders were, therefore, called for the work, and the statement of Mr. Cook, which he emphasized, that it was an offer, and not a tender, was not correct. It was really the acceptance of a tender after the Government had found great difficulties in carrying out the work departmentally. With regard to the prices which have been paid for work on the west coast, I have a statement taken from a report by Mr. J. C. B. Moncrieff, Engineer-in-Chief for Railways in South Australia. My colleague, Senator Senior, quoted various estimates for excavating and other work on the western railways, but those figures were taken from a Public Works report of two or three years ago. The report from which I am about to quote some figures is the report for the present year, and the one referred to by the Prime Minister -

The following statement of the cost of excavation in cutting and bank work, prepared by Mr. J. C. B. Moncrieff (Chief Engineer for Railways in this State), shows the cost of that class of work on all the lines we have been building in the last two years, and when it is seen that the price has varied from ls. 6d. to 5s. per yard, one realizes how difficult it is to make comparisons which would be of any value.

I am quoting from a statement made by Mr. Butler, Commissioner for Public Works, who was endeavouring to help a Fusion colleague out of the blunder and trouble he has got into over the Teesdale Smith contract.

Yeelanna to Minnipa Hill line, 87,555 cubic yards, cutting to bank, 4s. 6<1. per cubic yard; 89,071, do., 3s. 8d.; 83,776, do., 3s.

Darke's Peak, 52,800, do., 5s. ; 61,000, do., 4s.

Decres Bay, 22,460, cutting, 4s. 6d.; 19,970, filling, 2s. 6d.

Mount Hope, 28,450, cutting, 2s. 9d.; 34,000, filling, ls. 9d.

Brown's Well, 524,800, cutting to bank, 2s. 3d.

Paringa, 29,337, cutting, 2s.; 25,7C4, filling, 2s.

Loxton, 76,742, cutting, 2s. ; 44,888, filling, 2s. " Cutting to bank," I understand, means taking out of the cutting and placing in the embankment. Summed up, this quotation shows that the highest price paid was 5s. for a very small portion of the work, and that the lowest price paid was ls. 6d. Taking the good with the bad, the average price paid by the State for the work was 2s. lOd. - that is for work for which Mr. Teesdale Smith, under his Federal contract, was given 7s. I may mention, too, that more difficulty was experienced in providing water for some of the State lines than has been experienced in providing water for the eastern end of the transcontinental line. I hope that I have adhered to my promise not to traverse any matter dealt with by other speakers. The mover of this Address-in-Reply gave us a dissertation on the value of the Constitution and the almost superhuman virtues of its fifty framers. He practically told us that it was a sacred ark of the people's rights, which it would be sacrilege to touch. I do not know whether he was aware at the time that the Government had indicated that they intend to lay violent hands on this wonderful work of supererogation which the fifty statesmen framed, and which was supposed to last for all time. The Attorney-General has indicated very clearly that this Constitution wants amending, and he proposes, or his Government propose, at some time or other, to submit measures for that purpose. He has told us that the limitations imposed by the High Court, and extended by the Privy Council, have so altered the Constitution that, practically, its framers would hardly know it now, and that it is imperative that certain alterations should be made. This statement, I think, must have come rather as a shock to Senator

Oakes, after getting his cue and endeavouring to extol the Constitution as something so immaculate that it should not be touched in any way. I have noticed a rather significant thing. The Attorney-General, who is really the main force in the Ministry, has said that, so far as he can arrange, the proposed alterations of the Constitution will not be referred to the people at a general election. We know as a matter of fact that the voting on the referenda proposals when they were submitted apart from a general election was very small. On that occasion not more than 50 per cent, of the electors exercised the franchise, whereas when the same proposals were submitted at a general election the number who voted was quite 70 per cent. I trust that when amendments of the Constitution are contemplated they will always be submitted to the people at a general election, so as to insure the biggest possible vote on such important matters.







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