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Wednesday, 6 May 1942

Mr SPOONER (Robertson) .- I move -

That the amendments of the National Security (Supplementary) Regulations made by Statutory Rules 1942, No.111, be disallowed.

The regulations made under Statutory Rule No.111 are closely related to the subject-matter dealt with in the following notice of motion which also appears in my name: -

That the regulation under the Commonwealth Bank Act, made by Statutory Rules 1942, No. 123, be disallowed.

Statutory Rule No.111 seeks to amend the Commonwealth Bank Act, whilst Statutory Rule No. 123, which also refers to the Commonwealth Bank Act, seeks to amend a former statutory rule drawn under this act. The two statutory rules make important changes in the procedure of dealing with the accounts of the Commonwealth Bank, more particularly in keeping this House advised from time to time of the position of the bank. Statutory Rule No.111 deals with a variety of other matters to which I take no exception. It deals with the treatment of the profits of the Commonwealth Bank and the Commonwealth Savings Bank, and that, I believe, is largely consequential upon the amending measures proposed in the early part of the rule in regard to the treatment of accounts. The rule also deals with the calculation of interest on savings bank deposits and with the supply of statistics to the Treasurer. Upon those matters I do not desire to comment, and my remarks will be directed only to the

Treatment of the hank accounts. Honorable members are aware that the forms of the House do not provide for the amendment of the statutory rules. Chough one is satisfied with the great body of the proposals contained in a statutory rule, one has no alternative to moving for the disallowance of the whole of the regulations because of a small section with which one may not agree. That position arises at present.

The Commonwealth Bank Act, in sections18, 19, 20 and 20a, deals with the accounts of the bank. Section 18 provides -

The board shall furnish to the Treasurer, in accordance with the prescribed forms, quarterly statements of the assets and liabili- ties of the bank and of the business of the bank, which statements shall be published in theGazette, and also such other periodical statements as are prescribed.

That is done at present. The quarterly abstracts until recently furnished by the Commonwealth Bank were published in the Gazette of the 11th September, 1941, and the 23rd December, 1941. I am not aware that any subsequent abstracts have been published. Section 19 refers to the inspection and audit of the bank's affairs. I ask honorable members to note that section 20 provides that the board shall, at least twice a year, prepare certain accounts. The wording of section 20 comes from the original Commonwealth Bank Act, and is as follows: -

The board, at least twice in each year, shall prepare a balance-sheet in accordance with the prescribed form and submit it to the Auditor-General for report as to its correctness or otherwise, and transmit it with the report of the Auditor-General to the Treasurer, and shall also transmit a true copy of the balance-sheet and report to the Presi dent of the Senate and to the Speaker of the House of Representatives to be laid before the Senate and the House of Representatives respectively.

Section 20a, which was an addition to the principal act made in 1927, sets out - (1.) The Treasurer shall, at least twice in each year, prepare a statement of the combined accounts of the bank and the savings bank in accordance with the prescribed form. (2.) The Treasurer shall submit the statement to the Auditor-General for the Commonwealth for certification as to its correctness. (3.) The statement shall, within fourteen days of its being so certified, be laid before both Houses of the Parliament if the Parliament is then sitting, and, if not, then within fourteen days after the next meeting of the Parliament.

That was the position before the new statutory rules became law, and I shall now show how the act is amended by the two statutory rules, the disallowance of which I now seek. Under these rules returns which the bank is now obliged to make quarterly, and the Treasurer is required to publish in the Gazette, will be discontinued, and the accounts which are at present required to be submitted under section 20a will also be discontinued. Henceforth, the Commonwealth Bank will be required to furnish to Parliament only its annual audited balance-sheet, and the annual audited balance-sheet of the Savings Bank Department.

The regulations under Statutory Rule No. 123 relate to the Note Issue Department of the bank. At present half-yearly statements must be furnished in relation r.o the note issue, but under the new regulations an annual statement to the 30th lune each year is all that will be necessary.

The balance-sheets of the Commonwealth Bank and of its Savings Bank Branch were prepared for the year ended the 30th June, 1941, and were tabled in the House on the 1st October, 1941. Three months is not an unreasonable period to allow a large organization like the Commonwealth Bank for the preparation and auditing of its balance sheets and their presentation to Parliament. Under the new regulations it may be assumed that the next balance-sheet will be submitted to the Parliament about three months after the 30th June, 1942, which means that it should be available to honorable members early in October. About September the Treasurer will submit his budget statement to Parliament together with Estimates of Receipts and Expenditure for the financial year 1942-43. The balance-sheets and other data in relation to the Commonwealth Bank should also be available to Parliament about that time. But if these regulations remain in force without amendment such accounts will be available to us only once in each year for the future.

Honorable members will recall that two budgets were presented to the Parliament last year. The former Prime Minister and Treasurer, Mr. Fadden, presented his budget, and a few weeks later, the present Treasurer, Mr. Chifley, presented his budget. Those budgets were the best statements of the financial position that could be prepared at the times they were submitted, and I do not propose now to enter into a controversy concerning their merits. The present Treasurer informed the House that he anticipated that £220,000,000 would be required for war expenditure during this financial year. Yet in December, only two months later, he had to inform honorable members that it had been discovered that not less than £240,000,000 would be required. A great deal had happened in those two months. Japan had entered the war, and Australia's expenditure had increased enormouslyThe fact is that no government and no treasurer can forecast what is likely to happen, owing to war developments, from one week to another - I might almost say, from one day to another. The most recent authoritative statement made on behalf of the Government concerning war expenditure, is that not less than £270,000,000, or £280,000,000, will be required for war purposes in this financial year, and that our war expenditure in the next financial year may well exceed £300,000,000, and even rise to £350,000,000, or £360,000,000. No one can forecast with any accuracy what amount of money will be involved in the developments of the next two or three months. These facts are important, because the money needed by the Government must be obtained from taxation, loans, and the Commonwealth Bank. The Treasurer told us in his last financial statement that the gap between estimated revenue and expenditure would have to be bridged by funds made available through the Commonwealth Bank. The nation's bank would be obliged to bridge the gap between expenditure and revenue whatever government was in power. The position next September will be similar to that which we faced last September, except that the gap will be greater. I shall not try to forecast the position, and I do not think that even the Treasurer could make anything like an accurate forecast. In these circumstances it is vital that Parliament shall have available to it, from month to month if necessary, financial statements showing the effect of the nation's financial operations upon the Commonwealth Bank so that honorable members may keep themselves informed of the trend of finance.

The Commonwealth Bank issues a Statistical Bulletin, every month. I receive a copy of it through the post, and I find it an interesting and informative document. Statements of the assets and liabilities of the bank are not given in every Bulletin, but information of considerable importance is published. No obligation rests upon the bank to publish this Bulletin and the directors could discontinue the issue of it to-morrow if they so desired. Periodically, also, authorized statements appear in the financial columns of the public press concerning the operations and assets and liabilities of the bank, but no obligation rests upon the Bank Board to publish these reports. It is desirable in times like these that the board should be required, by statute or regulations, to make such information available at frequent periods. The obligation to publish the information once a year is not sufficient, and unless such information he fur.nished frequently the Parliament and the country may become hopelessly out of touch with the bank's position.

I do not wish to be misunderstood. I do not suggest that it is the intention of the Bank Board to discontinue publishing its monthly Statistical Bulletin or its regular statements in the press or that the Government desires the board so to do, but we must view the position as a Parliament and take proper steps to see that the interests of the public shall be safeguarded. No government would regard the situation carelessly, but it is desirable, in fact, imperative, that Parliament shall have the information furnished to it regularly and more frequently than once a year. If the regulations to which I am objecting be allowed to operate without amendment, particularly as to the frequency of reports, there could be ushered in a new era of censorship over the financial operations of the Commonwealth at a time when they should be subject to the closest scrutiny. Many people in Australia to-day are watching with great concern, and sympathy, the financial trends of the nation. It is known that the Commonwealth Bank is carrying a huge responsibility. Finance is, in fact, more closely allied with government than ever before. Upon the budget estimates the bank may be required to finance the nation by shortterm credit for very large amounts. To-day governments are required to give consideration to totals which were beyond the imagination of governments a few years ago. Matters of much greater importance than those directly related to the mathematics of the budget are presented to the Parliament from time to time. The Prime Minister, the Treasurer, and other Ministers are appealing to the public to save. They should make such appeals, and the public should save. The appeals are being made because the Government wishes to ensure that as much as possible of the money in circulation shall :be deposited in the Savings Bank, or conserved in other forms of savings, and he capable of being used by the bank and the Government for war needs and form a base upon which the bank may safely issue whatever credit is demanded by the Government to finance its operations. It is important that this Parliament shall be able to study the Savings Bank deposits month by month. It should he in a position to form an opinion as to whether the issues of notes and treasurybills on the one hand are safely related to the bank's resources on the other hand. That information can be available only if adequate statements are tabled in the Parliament from time to time. It is not sufficient that the Parliament should be dependent upon information received from other quarters.

There are to-day two schools of thought in regard to the publication of financial information. There is one school which 'believes that as little information as possible upon finance should be available to the public. That is the old, conservative school; it comes down from the days when people believed that finance was too technical for the public to understand, and that matters were more safely and better controlled if detailed information was not made available to the public. The second school of thought, which I venture to think is growing, believes that safety lies in the fullest and most regular information being conveyed to the public for a thorough understanding of the financial position. I make no apology for declaring my allegiance to the second school of thought. Since the departure from the gold standard, finance has ceased to be a mechanical subject and is to-day a living, vital subject. What are its limits of safety is a matter of opinion. This House can have no worth-while opinion unless it is regularly supplied with information upon which a sound opinion may be based. This is a time when the Parliament should be encouraged more and more to take an interest in the movement of finance, and in matters that flow from financial problems. Finance is now inextricably bound up with politics and the management of the nation's affairs. There is no subject with which this House is concerned that does not in some way eventually tura back to the subject of finance. Whether it be the conduct of the war, the problems of post-war reconstruction, or social problems, none can be intelligently discussed without knowledge of the financial implications. I believe that these regulations are a retrograde step. This Parliament cannot hope properly to direct the policy of the country unless it is encouraged to take that close and intimate interest in finance which is expected of it. The new regulations should be amended so as to compel the Bank Board to recognize and act upon the necessity for publishing more regular statements of the position. If the people in these critical days, are to give of their best they should be encouraged to think upon financial matters, and. to work in with the Government in respect of all the needs of the country. One of the Government's greatest, difficulties is that the people do not understand its problems in regard to material and manpower. The Government will have difficulty in explaining these things to the people. Because the education, of the people has commenced late, the Government has a lot of leeway to make up. The more the people understand and appreciate the problems of finance, the better will they be able to follow the problems of government. It is vital that they should know them. I say of finance what General MacArthur recently said of the need for keeping the people advised upon military matters. Fie is reported as having said -

In democracies it was essential that the public should know the truth. The reason why the United States of America and the Commonwealth of Australia were trying to keep the public informed of what was going on was that imagination ran riot when the people did not know the truth, and as a result their confidence was reduced. The people must be instructed so that they could summon all their confidence, determination and purpose in support of the war effort.

What was there said in regard to the necessity for making the people acquainted with the military position is equally true of the financial position.

Any danger of inflation to this country lies in misunderstanding finance. We have to take steps to see that there shall at least be supplied to the people such basic information as will enable them to assist the Government and avoid difficulties in the future. The only limit beyond which information should not be made available, whether it be in regard to the military, the economic or the financial position, is when it may be of some value to the enemy. One may ask: What are the reasons for the discontinuance, at this critical stage, of the regular financial statements provided for in the Commonwealth Bank legislation? I am not prepared to believe that it was considered wise that the country should not know the financial position. I do not accept that for a moment. I do not suggest it, and ' hope that the Treasurer will not imagine that I have done so. I do not think that the matter was considered in that light. I believe that the proposal has been prompted by staff difficulties, and without proper thought on the part of those who framed these regulations, as to the implications that could flow from the change. I do not know whether the reason is, entirely, staff difficulties. It is so easy to-day to say "Let us make the change because we must economize in manpower". I have heard that some years ago, long before the war, and before the shortage of man-power had become evident, the Commonwealth Bank was pressing for these changes to be made. It may be claimed to-day that because of shortage of staff and the difficulty of getting trained officers it is desirable to reduce the amount of work required to be done, and that so much of this highly technical preparation of accounts might be dispensed with if these alterations were made. I am prepared to pay due regard to that, because it is a problem.' I have not any doubt that the Commonwealth Bank, like most other organizations, is suffering from staff difficulties. But it is vital that the bank should provide at least as much staff as is necessary in order to keep this Parliament and the nation properly supplied with information. I make bold to suggest a compromise in this matter. I commenced by saying that there are parts of these regulations with which I have no disagreement. I say to the Treasurer now, that the quarterly publication in the Gazette of the abstract of assets and liabilities does not serve any useful purpose, and helps the country very little; that the preparation of the half-yearly statements, and the tabling of them in Parliament, is equally vital to this country; that the preparation of the note issue accounts and their presentation to this Parliament, is vital. I do not suggest that the honorable gentleman should put the Commonwealth Bank to the trouble of having its accounts closed and audited twice a year. Let it perform that operation once a year if it so desires; but let it prepare, at not less than quarterly intervals, a complete statement of the assets and liabilities of the bank, including the Note Issue Department and the Savings Bank and let that statement be tabled in Parliament, and debated if necessary. That is the minimum of inf ormation that should be available to this Parliament. I believe that if the Treasurer would agree to that course, the bank would not be involved in any great amount of work, whilst this Parliament would be given the opportunity to review the position regularly, and would be kept in touch with what is happening, with the result that, when the annual accounts were presented in October, the reason for changes would be known, and Parliament would have the latest information connecting the existing position with the accounts for the previous October. The Treasurer may say that accounts which have been presented to this Parliament in the past have not been debated. I do not know whether that is so or not. But I do say that the Parliament should have the opportunity to debate them, and I hope that in the future it will debate them sometimes, if not on all occasions. I believe that, if this Parliament made a practice of studying the bank accounts, and of keeping itself informed of what was occurring, there would be at least short debates upon the financial position from time to time. I hope that such debates will be encouraged. More than the actual financial position of the bank is involved; there is the linking of that position with the policy of this Par liament, and the connexion of the movement of the note issue with the war policy of this country, together with the connexion of the short-term credit of the bank with all the policies that are approved by this Parliament from time to time. Parliament would be kept informed as to where the bank was moving, and where lay the point of safety or danger to which its attention must be directed. If these regulations remain in their present form, there may be a drift away from the proper control of the Commonwealth Bank. During the next two or three years, if not within a shorter period, it will .be very easy for this Parliament to forget its responsibility for the Commonwealth Bank. The Parliament and the Government of the day should, from time to time, infuse more of its policy into the operations of the bank. It is my opinion - it was an opinion that I held between 1932 and 1939- -that had there been more infusion of government policy into the policy of the bank, the difficulties of the depression would have been overcome more quickly than they were.

Mr Spender - How would it be infused ?

Mr SPOONER - By insisting from time to time that there must be recognition of government policy.

Mr Spender - How would the honorable member do that?

Mr SPOONER - If necessary, the Government might have to see that it had on the Bank Board from time to time, representation consistent with its policy. I would not accept the position that any financial institution in this country could say to the Government and the Australian Loan Council : " You have no right to support from us, and we refuse to give to you any more assistance than the maximum we lay down from time to time ". I do not want any position to arise that could in the slightest degree endanger Australia's financial position. I believe that, by encouraging greater interest in the control of finance, the risks associated with the over-reaching of finance in this country would be minimized. There are many "wild and woolly" thinkers on finance. Honorable members will have noticed that when. I said that I was looking carefully over the heads of every body. It is a duty of this Parliament to see that the people are not misguided. They will not be guided properly unless the fullest information is given to them, and Parliament takes the lead. Under war conditions things are being done in the realm of finance which were beyond the imagination of any one a few years ago. It may he that Australia is entering upon a new era in finance. I recognize the difficulties which have given rise to a suggestion for a change in the method of presenting Commonwealth Bank accounts, but I suggest that the Treasurer is going too far. If the regulation remains unaltered there will be a risk of the Commonwealth Bank becoming a completely autonomous institution owning no responsibility whatever to this Parliament. If he will amend the regulation as I have suggested he will provide means whereby Parliament will be able to take a proper interest in the affairs of the bank.

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