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Tuesday, 26 March 1957

Mr WHEELER (Mitchell) .- In supporting the motion for the adoption of the Address-in-Reply to the GovernorGeneral's Speech, I wish to address my remarks to the amendment, which attacks the Government's housing policy. Housing is a subject on which a considerable proportion of the members of the Parliament can speak with some feeling, as I am able to do from my own experience. When I was discharged from the services, after having married, I had no home, and I had first-hand experience of housing problems in 1946. 1 fully realize the tremendous urgency and importance of the housing problem in 1957. However, it is sheer nonsense to say, as the Opposition does, that the problem can be solved simply by the provision of more funds for housing. There are two inseparable problems in the present housing situation. One is finance, and the other is the excessive cost of homebuilding. Any government that really sets out to overcome our housing difficulties must solve both those problems. I consider that high costs have now become the more urgent of the two. Prices have been soaring ever since the end of World War II. Indeed, they have increased so much that a man who bought a house in 1946, and now wishes to add a garage to it, as likely as not finds that the garage will cost him more than the house cost him ten years ago. It now costs so much to build homes that many people cannot afford the necessary repayments, even if finance is available to them. Even though the homes built by the much-vaunted New South Wales Housing Commission are heavily subsidized by the taxpayers, the rents are frequently more than people can afford.

It is becoming obvious that the discussion on this amendment has back-fired on the Australian Labour party, and those whose faces are red now are Mr. Cahill, the New South Wales Premier, and Mr. Landa, the New South Wales Minister for Housing. I think this debate has shown conclusively that, in housing, New South Wales is a delinquent State. Its population has increased in smaller proportion than that of any other State has done, but it is still in a worse housing situation than any other State is. Figures published by a Sydney newspaper after wide investigation show that the population of New South Wales has increased in the last few years by only 19 per cent., or one-third less than the increase in South Australia, and not much more than half the increase in Western Australia. Yet South Australia and Western Australia have solved their housing problems, and the position in New South Wales seems to be getting steadily worse!

For the whole of the period in question, South Australia has had a Liberal and Country League government, and for part of the time Western Australia has had a liberal government. New South Wales complains that it has received from the Commonwealth insufficient funds for housing. It is a much bigger State than South Australia is, but the indications are that the South Australian Housing Trust will complete more houses this year than the New South Wales Housing Commission will complete. I am grateful to the Opposition for submitting this amendment, not only because the debate has exposed the complete inability of Labour to handle the housing situation in the States in which it holds office, but also because 1 believe that we needed a full-scale debate on housing.

Naturally, finance has tightened up as costs have skyrocketed, because many prudent people are afraid of the high cost level. In effect, this fear is a natural regulator which, in time, will force costs down, In fact, it is doing this at the present time. But the restriction of finance has gone too far at this stage, in my opinion. Money must be provided for housing, and the amount available at the present time should be increased. However, it is just not enough, lt is one thing to make large advances, but the money should be increased in a manner that will keep industry working at its proper level but not revive those over-demand conditions which have caused the present inflation. To provide sufficient money requires skilful control, ft is a job that can be done only by a central bank, and we have not a proper central banking system. That, I believe, is the immediate cause of the present trouble in home finance.

I have been warning this House for years of the dangers which are likely to arise from this serious defect in our banking structure. If I wanted an instance to prove this point conclusively, I could not have had a better one than this housing situation, although I am sorry indeed that it is one which is so disastrous for so many people.

There has been, of course, an attempt to regulate the amount of money available for housing so as to restrain cost inflation. I am not in the confidence of those in control, but that situation is obvious to anybody. It is obvious, also, that unfortunately this control has been clumsy. The regulation intended only to diet the patient as a precaution against financial obesity has in some localities reduced him to starvation. The natural question is: How did this happen? I have been making some investigations along this line and it seems a sorry tale of misunderstanding, lack of confidence, and lack of co-ordination between the trading banks and the man who, in effect, controls the trading banks, Dr. H. C. Coombs, the Governor of the Commonwealth Bank. Also, I regret to say that there are some indications that the Commonwealth Savings Bank, the so-called people's bank, cut its allocation for homes just at the time when it could and should have increased it. Dr. Coombs made a statement to the Labour party in which, by implication, he threw the blame for lack of housing finance on to his competitors, the trading banks. His control of the private banks, I should hasten to state, is exercised through a branch of the Commonwealth Bank, which calls itself the central banks. If ever there was a case in the commercial world of misdescription this is it, because our so-called central bank is, in fact, a wholey owned subsidiary of the Commonwealth Bank - a subsidiary though which it is able to harass and control the other trading banks with which it competes. It was, in fact, given its present powers by the Labour party, mainly as a means of putting the private trading banks out of business. I think it is self-evident that a true central bank must be above and completely unconnected with any trading bank. It must control the trading banks, therefore there is a complete need for impartiality. In addition it must be able to get their co-operation, because it cannot supervise directly all the myriads of transactions which these banks conduct; but our so-called central bank has none of these qualities. Unfortunately, however, Parliament has given it the authority of a central bank.

The statement which Dr. Coombs gave to the Labour party a fortnight ago shows how impossible our present banking structure is, because the Governor of the Commonwealth Bank played party politics in a very big way and was quite unfair to the private trading banks. Dr. Coombs is in a unique position. He has been given so much control in his dual position that he is a big factor in the Government of this country. As he is not elected to his position it may be thought that he should be exempt from criticism. but any claims he may have had to immunity in this direction I submit have certainly been removed by this statement. He has, of his own volition, precipitated himself into the political sphere. The statement was made to the committee set up by the Labour party preparatory to this present censure amendment. This committee was called a fact-finding committee, but everybody knew that its real purpose was to obtain political material with which it could embarrass the present Government.

Mr Ward - That is sheer rubbish.

Mr WHEELER - Well, I have heard it said that the committee could have had a more benign chairman, but that is a matter of opinion. The committee heard what it called " evidence " from State Labour politicians and from fellow travellers, including members of the Communist controlled Building Workers Industrial Union. It added as a scalp to its belt this statement from Dr. Coombs. He was, of course, within his rights in making it, but one might challenge his wisdom in making the statement to this committee. His actual words, as reported, leave him very much open to criticism. One of his statements is grossly unfair to his private competitors and another is highly questionable. As related by the Labour party to the capitalistic press, this statement reads -

The Commonwealth Savings Bank will advance less money in 1956-57 than each of the two previous years. This is because the growth of private savings banks has meant a considerable reduction in the rate of increase in the deposits of the Commonwealth Savings Bank. Private savings banks, however, are now making loans for housing and aggregate advances by all savings banks seem likely to be higher in 1956-1957 than in 1955-1956.

That statement shows one of the causes of the shortage of housing finance; but why is the Commonwealth Savings Bank cutting back its finance at this critical time? Dr. Coombs's excuse is that there has been a reduction in the rate of increase of deposits. But take note that he has not claimed a reduction in deposits. Indeed he could not do so, because on the bank's own figures, from the beginning of June, 1956, to the end of January, 1957, its deposits increased by £15,500,000. the figures since January have not been published. Surely, even if the deposits only remained steady, without any increase at all, the bank should have been able to maintain its rate of advances for housing. It has been making these advances for housing for many years, and the figures have been steady at around £1,000,000 per month over the last ten years. Repayments should finance the new advances, which is the whole idea of the Credit Foncier system. Mark you, the deposits actually increased! There was a very good reason why this cut in housing advances was undesirable. We can show that the private savings bank will contribute much to housing, but there is a lag in arranging these things. It was therefore incumbent on the Commonwealth Bank to take up as much as possible of the slack' during the runningin period. Dr. Coombs was well aware of this situation, because he said in his annual report of August, 1956 -

A sudden contraction in this lending before now savings banks were ready to take up their share of the responsibility could have produced some economic disturbance.

His own savings bank's contribution to housing was then at the rate of £1,000,000 a month, but that is not a very large amount when one considers that the Commonwealth Savings Bank's assets total £740,000,000. That bank has very large liquid assets. Surely it would have been able to find a little extra for housing during this critical period. What happened to the drop in advances? It is a baffling problem and, unfortunately, except for Dr. Coombs's vague statement that the banks will advance less during the year, we have no information. The private savings banks have given very specific and very encouraging figures on how much they will advance for housing, but since June no figures have been given by the Commonwealth Bank.

On inquiry from the bank, 1 have been advised that the current rate of advances to co-operative building societies and to individuals is at the rate of £10,000,000 per annum. That is, in effect £2,500,000 less than the amount advanced last year. All this points to the fact that advances in the first half of the year were low. That in itself contributed to the shortage of finance. If in the last quarter - April, May and June - after the favourite has bolted and the situation is as it is now. the Commonwealth Bank has a sudden desire to grant more and more advances, the very purpose of these t funds will be destroyed. Money should bc advanced in a steady flow throughout the whole of the year. We should have more information about housing advances made by the Commonwealth Savings Bank. I feel sure that there, is a need' for a. real factfinding committee, which will examine the Commonwealth Savings Bank housing advances and find out why it has reduced advances at this time. Maybe that will give us the key to the riddle of the, sudden contraction of housing loan moneys.

I said also that Dr. Coombs made a statement which was unfair to his competitors. The position is that private trading banks, as distinct from the new saving banks, have reduced their housing advances by £18,000,000 in the past eighteen months. Apparently Dr. Coombs was asked hy the fact-finding Labour committee whether the central bank has directed the private banks to do this. He replied1 -

The Central Bank has not issued any directive on advance policy for trading banks on loans or advances for home building purposes. The trading banks were free to make loans at their discretion, subject to broad principles which emphasized restraint in advances to finance large items of capital expenditure for import and to provide preference to projects which would significantly benefit the balance of payments.

That statement is correct as far as it goes, but it is very misleading. He should have added that the trading banks have been discouraged from making long-term advances, and housing advances are long-term. He should have said also that he had reduced the amount of money the trading banks had available for advances by the continual callup of the funds and that, by the very act of giving preference to primary and secondary industries which produced export goods or replaced imports, as directed by him, they were left without sufficient money to finance their additional responsibility of housing.

That the trading banks carried out his directive is shown in the very substantial improvement in the trade balance position. Yet for this very act of helping him and giving him co-operation, Dr. Coombs has, by implication, criticized them. Housing loans, in any case, have become a dangerous form of advance since the Chifley Government introduced the form of special deposit call-ups. They tie up money for long periods of years. If, during any part of such a long period, a socialist government should come into power - which Heaven forbid - it would call up this money and, because a bank was unable to obtain it from: the borrower, it would be at the mercy of the central bank and consequently might, be forced out of business. It might have been said that the trading banks could be granted exemption from the call-up into the special accounts of some of their money if they agreed to use that money for housing advances, but a prudent banker would probably have grave doubts about accepting such a proposition.

Dr. Coombsmight have said all of those things, but he said none of them. As it stands, his statement represents, by implication, a very unfair indictment of the private banks. I should say that, by this one act, he has shattered any hope of real cooperation in the future between his central bank and the private banks while he continues in control. Yet an efficient banking system is impossible without that cooperation. Assuming we get a proper central banking system, which I hope we shall get in due course, we shall be able to regulate efficiently the supply of money for housing, and the home finance problem will be solved.

The other problem is one of costs. This is a much more difficult question, because both sides in the building industry, the employers and workers, have been living for so long in an atmosphere where costs do not matter that it is difficult for them to get back to reality again. However, I am pleased that the idea I put forward in this House in 1953 for large-scale project building is receiving increased attention. That is the means by which America and Great Britain dealt with their housing problems, and I think it could help Australia. We have large-scale construction by State, housing authorities, but unfortunately the economies achieved by working in large quantities are mainly nullified by wastefulness in government administration. Some largescale construction is being carried out by private companies quite successfully. But the trouble is that they cannot be sure that their prospective purchasers will secure finance.

This is the time for an imaginative and experimental approach to the problem so that we shall be able to cut through the delays. We might invite organizations with proper equipment to submit their propositions to us, showing their designs, what they can construct and their prices. If any one quoted a figure which would shaw a really big saving to purchasers and everything else was satisfactory, the Commonwealth could give a guarantee that it would find the finance for eligible purchasers. One thing is certain, and that is that present methods, at least in New South Wales, are not good enough. I am all in favour of any new move which will break this deadlock, but it must be one which will give us homes, quickly and at a lower price. In New South Wales, labour and materials now available are not being used to the best advantage. It has been a hard job up to the present to get co-operation from the New South Wales Government, but I think the present controversy has taught every one a good deal, and that the climate is right, for corrective action to be taken.

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