Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Thursday, 3 November 1927

Senator NEEDHAM (WESTERN AUSTRALIA) - No, that is not so. I should not be far wrong if I said that it functions exclusively in the interests of the associated banks. That contention is supported by a statement which is credited to members of the Country party to the effect that the Bruce-Page Government took the bold step of converting the Commonwealth Bank into a bank for bankers. I cordially agree with that statestatement. With each succeeding amendment the Government has tended more and more in that direction. If it were sincere in claiming that it is endeavouring to improve the machinery of the bank and extend its operations it would have ensured the establishment of a greater number of branches throughout Australia than exist to-day. Let me quote Victoria as an example. In that State the Commercial Bank has 37 branches, the English, Scottish and Australian Bank 6S branches, and the National Bank 42 branches; whilst the Commonwealth Bank has only seven branches.

Senator Andrew - How long have those private banking institutions been in existence?

Senator NEEDHAM - The Commonwealth Bank has been in existence for a sufficiently long, period to have established a far greater number of branches than exist in the comparatively thickly populated State of Victoria. There is the same paucity of branches also in the other States, and particularly in the country districts, in which many people who desire to become clients of the bank are not given the opportunity to do so. The founders of the institution - the Australian Labour Party - intended that it should function in the interests of the people. The bank should be conducted in the interests of the people. That is notbeing done to-day. If this bill becomes law, an institution of which we should be proud, and which should be performing more useful work than it is now doing, will be weakened still further. The bank is now merely an institution to assist the private banks. Time will not permit me to give the whole of the circumstances connected with the " stand and deliver " attitude adopted by the associated banks of Australia about three years ago; but it is within the knowledge of honorable senators that they forced the Commonwealth Government to make available to them Australian notes to the value of many millions of pounds. For a time the Government resisted their demands, but eventually capitulated. The newspapers, in their commentary, said the terms on which the bank strike was settled provided that the associated banks should have the " right to draw " Commonwealth notes up to £15,000,000, including the £5,000,000 already borrowed, and that the rate of interest on the £5,000,000 should be reduced from 6 per cent. to4 per cent. Honorable senators opposite never fail to criticize workers when they take strong action to better their conditions or improve their wages; but they are silent concerning this " hold-up " by the associated banks in order to obtain a reduction of 2 per cent. interest on the amounts advanced to them.

Mr GREENE (NEW SOUTH WALES) - What caused the trouble with the hanks?

Senator NEEDHAM - I have not time to refer to that aspect of the matter now. The settlement arrived at also provided that interest was to be paid only on the amount actually drawn. Instead of yielding to the demand of the associated banks, the Government should have created credits for the Commonwealth Bank, and extended its operations. In that case the profits which were made by the private banks would have been made by the Commonwealth Bank. The action of the banks at that time held up industry and increased unemployment. The money madeavailable to them by the Commonwealth enabled the private banks to issue credits to at least four times the sum advanced to them. They charged high rates of interest, and made huge profits at the expense of the people. I have mentioned this incident in order to rebut the Treasurer's statement that the operations of the bank have been extended with advantage to the people. The decision of the Labour party, led by Mr. Andrew Fisher, to establish a Commonwealth Bank, was derided both within this parliament and outside of it; but, despite all the opposition offered the bank made good. It was established without security. It is true that the Commonwealth Bank Act provided for a capital of £1,000,000 ; but the Governor of the Bank decided to do without it. The one small loan which the bank obtained from the Treasury was soon repaid. In its early years the bank was controlled by one Governor. It had not been in existence many years before Australia was plunged into the cataclysm of war. It was then that the true value of the Commonwealth Bank to the people of Australia was revealed. Had it not been in existence at that critical time, we should have faced a worse financial disaster than that through which this country passed in 1893.

Mr GREENE (NEW SOUTH WALES) - On what does the honorable senator base that opinion?

Senator NEEDHAM - I shall deal with that presently. Soon after the commencement of the war some of the private banks decided to close their doors; but the Commonwealth Bank remained open during the whole period of the conflict.

Senator SirWilliam Glasgow - Which private banks closed?

Senator NEEDHAM - Some of them were about to close, and they would have done so, but for the assistance rendered to them by the Commonwealth Bank. Even the Bank of England closed its door for 24 hours; yet the London branch of the Commonwealth Bank conducted its business as usual. The Commonwealth Bank assisted in theflotation of loans to prosecute the war. Ten war loans, amounting to approximately £210,000,000, were floated during the period of the war.

Mr GREENE (NEW SOUTH WALES) - Does the honorable senator suggest that those loans were floated by the Commonwealth Bank?

Senator NEEDHAM - The Commonwealth Bank assisted in their flotation. The total flotation expenses of those loans amounted to only £705,747, or5s. 7d. per cent.

Senator Sir William Glasgow - Private banks also assisted.

Senator NEEDHAM - I have not said otherwise. Had the various issues been raised in London in the ordinary way flotation expenses would probably have exceeded £5,000,000. In addition to assisting in the flotation of loans, the bank undertook to remit money to our soldiers overseas. Fifteen thousand payments were made monthly in respect of military allotments and pensions. Telegraphic remittances from Australia averaged 2.000 a week. Then we had the financing of the war time pools and several other schemes that could be mentioned. With a smaller staff than it has to-day all this work was done by the bank, yet this bill proposes an increase in staff. The first attempt made by this Government to alter the machinery of the Commonwealth Bank was the appointment of a board of directors. In addition to the board we have a Governor of the bank and a Deputy Governor. In all, we have nine men to do the work which was handled so ably during the abnormal period I have mentoined by two men - the Governor and his deputy. The Government now is not content with that. It proposes to add to the number of controllers by appointing three commissioners to administer the savings bank business of the Commonwealth Bank. Under the provisions of the bill before us, it is proposed to separate the savings bank department from the general trading department of the Commonwealth Bank, and appoint three commissioners to administer the savings bank business. The chief commissioner is to devote the whole of his time to the work of the savings bank and he will have the assistance of two part-time commissioners, each paid £500 a year. One of these parttime commissioners is to be a director of the Commonwealth Bank. Thus, in addition to a Governor and Deputy Governor of the Commonwealth Bank, we are now to have seven directors and three commissioners. It is, to my mind, an unnecessary piling up of expense. When he was a private member, the Treasurer (Dr. Earle Page) was known as the apostle of economy, and he condemned the folly of having a number of taxation departments collecting revenue from the same source; but he is not following his own advice when he asks Parliament to pass this bill for the separation of the savings bank business from the general trading business of the Commonwealth Bank. We are informed that this separation is necessary so that the savings bank deposits may be utilized for the Commonwealth Government's housing scheme. The details of this scheme are given in the Housing Bill, which will be before the Senate at a later stage. But even if the Commonwealth Government was about to embark on a house building scheme, that would not be a valid excuse for divorcing these two important branches of the Commonwealth Bank.

Senator Sir Henry Barwell - The Commonwealth only proposes to lend money to the States.

Senator NEEDHAM - The Commonwealth will lend the money to certain " authorities " who will be responsible for carrying out the housing scheme and for the repayment of the money advanced to them, with interest thereon. It cannot be claimed that the Commonwealth Government really intends to embark on a house building scheme of its own; yet because it is alleged that the scheme would entail additional work on the directors of the Commonwealth Bank, and the Governor and the Deputy Governor of the bank it is proposed to divorce the savings bank business from the general trading business of the bank. Some of the directors of the Commonwealth Bank seem to have a very high opinion of their abilities. Apparently their desire is to deal only with high finance. Possibly they have come to this decision because of the conference they have had with a recent British visitor who has a reputation for high finance. At any rate, they seem to be determined to wash their hands of what they call the small business of the bank, and to confine their efforts to what they should regard as high finance. lt is not the intention of the Commonwealth Government to embark upon a house-building scheme. It will simply lend .money to specified "authorities," who will do all the work and assume full responsibility for the repayment of loans with interest. The proposal to appoint new commissioners is quite in keeping with the practice of the present Government. Since it has occupied the Treasury bench, it has been shirking Ministerial responsibilities and handing over to commissions and boards work that should be done by Ministers themselves. During the years 1924-25 and 1925-26, it appointed boards, commissions, &c, at a cost of approximately £500,000. A day or two ago I asked the Leader of the Senate if it was intended to assist the commission, industry which apparently was languishing, because, for fully a month, no commission had been appointed. My question has now been answered. Another commission has been appointed. Let me illustrate the point I am endeavoring to make. Although we have a Commonwealth Department of Markets and Migration, and a Minister for Markets and. Migration, the Government has also appointed a Development and Migration Commission with a huge staff. No one knows what it does. Perhaps no one will ever know what it does.

Senator Sampson - Yes. Some one knows what it does. I shall tell the honorable member by and by.

Senator NEEDHAM - We have been waiting to hear what the commission has done.

Senator Sampson - Evidently the honorable senator has not been in Western Australia or Tasmania recently.

Senator NEEDHAM - I was in Western Australia a few weeks ago, but evidently Senator Sampson is in possession of information that the Government cannot give in reply to questions from this side of the chamber. I was proceeding to illustrate my point. The Development and Migration Commission had referred to it by the Government a matter affecting the gold mining industry. One would have thought that this expert body would be in a position to handle the matter itself, but it did not do so. It appointed another committee to advise it, so that it in turn could advise the Government. Thus, we have a vicious circle. We appoint commissioners to do certain work that Ministers should do, and they in turu appoint others to do the work that they should do. Although there may be no justification from the people's point of view for the separation of the savings bank branch from, the general trading branch of the Commonwealth Bank, and although in the interests of economy the step proposed to be taken is quite unnecessary, I must admit justification for it from the point of view of the Government itself; because it is the policy of the Government to stand by the associated banks instead of the Commonwealth Bank.

Mr GREENE (NEW SOUTH WALES) - - -Does the honorable senator suggest that the Commonwealth Bank is being made a central bank?

Senator NEEDHAM - I have no hesitation in saying that I should like to see the Commonwealth Bank the only bank in Australia controlling the credit and the financial administration of the Commonwealth. That was really the position it was intended the bank should occupy when it was first established.

Mr GREENE (NEW SOUTH WALES) - I am pleased to hear that open confession.

Senator NEEDHAM - I have not the slightest reluctance in making it. The Commonwealth Bank is really becoming a- puppet of the associated banks. The Treasurer has said that it is necessary to separate the savings bank business from the general business and rural credits business of the Commonwealth Bank, and he has made much of the fact that the rural credits department of the bank has been of great asistance to the farmers. When the Commonwealth Bank rural credits branch was established, it may have been intended to afford assistance to the farmers, but I have yet to learn to what exent it has done so. No advance can be made by this branch of the bank for a period longer than twelve months or for any other purpose than that of financing crops. If that can be regarded as assisting the men on the land the assistance is very limited. I remind honorable senators, and particularly Ministers, that when the last amending

Commonwealth Bank Bill was before another place the honorable member for Bourke (Mr. Anstey) moved the following amendment: -

That the following words be added to the motion : -

That the bill should contain provisions for an extension of the functions of the Bank to provide rural credits for the following purposes:

(   1 ) To advance upon broad acres.

(2)   To assist co-operative finance in primary and secondary production.

(3)   To assist land settlement and development.

4.   To establish a grain and fodder reserve against periods of drought.

If that comprehensive amendment had been adopted by the Government and incorporated in the bill, the result of its operation would have been of much greater assistance to the primary producers than the flimsy scheme to finance them for twelve months, as is now proposed. When the amendment was moved the Treasurer (Dr. Earle Page) intimated by interjection that it had been taken from the platform of the Country party. If it had been - I do not think that it was because the Labour party has not to go to the Country party or any other party for ideas - the Treasurer, as Leader of the Country party, and his followers, if they were sincere and consistent, should have supported it. The amendment embodied something that would have been of practical assistance to farmers who have not been helped in any real sense by the rural credits branch of the Commonwealth Bank. In traversing briefly the main features of the bill, I have pointed out the departure from the original intention, and have emphasized the point that if it becomes law itwill be the means of further preventing the Commonwealth Bank from functioning in the way intended when it was established. As the measure can be more effectively debated in committee, I shall have more to say concerning its main provisions when that stage is reached. I maintain that the measure is not necessary, and that it will have the effect of weakening instead of strengthening the Commonwealth Bank, which was established in the interests of the Commonwealth and the Australian people.

Suggest corrections