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Wednesday, 21 April 1915

Mr JOSEPH COOK (Parramatta) . - I do not know that I would have troubled the Committee with any remarks except for some statements made by the Treasurer before dinner. I accept to the full his statement as to the help which he expressed himself as glad to receive from any member of the House who is able to contribute in any way to a solution of the financial problem with which he is grappling, and which has arisen mainly out of the war. It would be a reprehensible thing if anything of a party character should be imported into the consideration of our national finances in these crucial days, and, so far as I am aware, the Treasurer will receive from the whole of the members who act with me on this side of the chamber the most cordial assistance and the best help they can give him in solving this problem which he has set himself in financing the war.

The first remark which I feel I ought to make is to offer a little advice to the Treasurer in regard to the language which he uses upon occasions. I saw two statements made by the right honorable gentleman during the adjournment. The first was made at a public meeting, and the other formed portion of a telegram sent by him to the Labour Conference, which was sitting in New South Wales, and had reference to the Norton-Griffiths agreement, which was then being debated somewhat fiercely in the conference. But for the fact that this was the second occasion on which the Treasurer had used almost the same language I should not have referred to it. This is the expression to which I referWhen we came into office it was discovered that the financial proposals agreed to at the Conference convened by the Cook Government during the war had broken down.

The Treasurer has not told the House, nor the Parliament, nor the country, why or how these proposals had broken down. I do not know why they broke down. I know nothing about their having broken down. The Treasurer has never ' told the country the way they did break down, and so we are in the dark in that respect; but to any outsider reading that telegram the inference conveyed would be that to the Conference so convened, and which the right honorable gentleman, together with the present AttorneyGeneral, attended, the Cook Government had submitted a financial proposal which, after acceptance, had broken down. The right honorable gentleman has chided me on more than one occasion for having referred to a single detail connected with that Conference. All I have to say is that, if the Treasurer does not wish to have the details of that Conference divulged - and I do not wish to divulge them - he should word his statements concerning it rather differently. He knows as well as I do what occurred at that Conference in connexion with the financial scheme. He was as much concerned in its terms and in their acceptance as I was, and a great deal more.

Mr Fisher - I shall put the whole of the papers on the table.

Mr JOSEPH COOK - The right honorable gentleman knows what occurred; he knows how it finished up; he knows my attitude towards the whole scheme, and he knows his own attitude and that of the Attorney-General, and he does not put the matter fairly when he conveys tha impression that the Conference accepted a scheme which my Government submitted to it, and which has since broken down.

Mr Fisher - It did not break down, but it failed in its object.

Mr JOSEPH COOK - But whose scheme was it, and what broke down, entitling the right honorable gentleman to use the words in this telegram ? It was not the scheme originally submitted to that Conference. I feel I ought to put this matter before the public. The scheme which broke down was not a scheme submitted by the Cook Government.

Sir John Forrest - Did the scheme break down?

Mr JOSEPH COOK - That is precisely what I am quite unable to say. I do not know that the scheme broke down.

Mr Riley - Was the scheme acted upon ?

Mr JOSEPH COOK - That, also, I do not know. I am not able to give the honorable member any details. I do not know them. All I know is that a scheme was agreed upon at the Conference, but it was not a scheme submitted by the Cook Government; and when the- Treasurer words his telegram to the Labour Conference in such a way as to leave a clear and unmistakable inference to be drawn that some proposal of the Cook Government had broken down, it means misrepresentation.

Mr Fisher - I did not say that in words.

Mr JOSEPH COOK - What other inference' could be drawn from the words, " When we came into office, it was discovered that the financial proposals agreed to at the Conference convened by the Cook Government during the war had broken down " ? That is all I wish to say "in order to correct the inference which one would draw from reading the statement of the Treasurer, namely, that some scheme submitted to the Conference by the Cook Government had broken down; as the right honorable gentleman i.« well aware, no such thing occurred.

Now, speaking broadly and generally, I wish to say that - and this is the only criticism I wish to make about the recent financial statement of the Treasurer - a very large portion of it deals with the part of the Commonwealth Bank in financing the States and the Commonwealth during this war time. I am . unable to see why this matter . has been introduced at such great length, and with so much labour and anxiety, because the figures give the clearest of all indications as to the part played by the Commonwealth Bank during this crisis. The facts, boiled down, are that the Commonwealth Bank has been of no assistance whatever to the Treasurer in solving any of his own financial problems. He has not borrowed a shilling from the Bank, so far as we know; and, in all these large transactions, evidently the Bank has had no money to give him. The Bank has assisted the States only to the extent of £2,000,000. If I were championing the cause of this institution, as he is doing, I would be content to express the pious hope that, at some future time, in connexion with some other Australian crisis, it might have grown to such proportions as to prove a valuable standby to the Commonwealth. That would be a correct statement of the attitude of this Bank through all these crucial days, and in connexion with the serious financial problems which have confronted us.

Let us take the figures as they are set out in the Ministerial statement. The Prime Minister tells us that he has already borrowed, or arranged to borrow, from the Imperial authorities, £28,000,000. lie borrowed £18,000,000 from them in the first instance, which sum is to be transferred by monthly instalments to the States, and he has arranged to borrow another £10,000,000 from the same source. He has also arranged for a loan of £2,000,000 towards the construction of the transcontinental railway, and his Estimates provide for loans which this Parliament has authorized amounting to £7,805,086. These amounts, together with 10,000,000 sovereigns, which he is getting from the private banks, make up a total of £46,986,000. It will be seen, therefore, that whilst he is getting £28,000,000 from overseas, he is borrowing the rest from the Notes Fund and the private banks, with which the Common wealth Bank has nothing whatever to do. Out of a total of approximately £47,000,000 - the total loan authorizations - the Commonwealth Bank has not contributed one cent.

Mr Fisher - The right honorable gentleman should cut out the £7,000,000 that will not be used.

Mr JOSEPH COOK - I am speaking of commitments - of what this House has authorized.

Mr Fisher - But that £7,000,000 is intended to cover contingencies. It does not represent a debt.

Mr JOSEPH COOK - And the £10,000,000 is intended to cover contingencies. Part of Mr. Lloyd George's obligations represent contingent borrowing. He assumes that the war will last a year, but if, by some miracle, it were to end to-morrow, the whole of the money would not be spent.

Mr Fisher - But that £7,000,000 is not in existence.

Mr JOSEPH COOK - And I am pointing out that the expenditure contemplated by Mr. Lloyd George is not in existence. It represents contingent borrowing - contingent in the sense that he anticipates that the war will last till the end of the year. I am speaking of authorizations by this House, and I say that of the £47,000,000 to which I have referred, the Commonwealth Bank has hypothecated not one penny. The whole statement is out of proportion. In the Ministerial statement there were only two small paragraphs, occupying about 4 inches, devoted to financial authorities which have supplied the Prime Minister with 10,000,000 sovereigns, whilst about 30 inches were devoted to a bank which has not given him a penny. Just why this elaborate reference to the Commonwealth Bank finds a place in a document which relates to the right honorable gentleman's own financial obligations, T do not pretend to know.

Mr Fisher - The right honorable gentleman was calling for a statement. I asked the Governor of the Bank for one, and he supplied it.

Mr JOSEPH COOK - There is no doubt that the Prime Minister has permitted .a fine statement by the Governor of the institution to be placed alongside the other financial statements embodied in the document. That seems only to emphasize one thing, namely, the very poor part which the Commonwealth Bank has been able to play in the tremendous crisis which has come upon us. What has the Bank done? It has lent to the State Governments £2,000,000. I suppose that we may fairly eliminate from our calculations any reference to municipalities, tramways, and harbor trusts. I do not suppose that expenditure under these headings necessarily arises from the war. Therefore, the plain fact is that while the Treasurer's authorizations in connexion with the war have risen to the tremendous total of £47,000,000, the Commonwealth Bank has been enabled during this time of unprecedented stress to lend the States - not the Treasurer, U0 the author of the Bank, and not the man who has needed these rolling millions - the sum of £2,000,000. Whilst the Treasurer has had to go to the private banks for 1.0,000,000 sovereigns, the Commonwealth Bank has not had a sovereign to give him.

So far as that institution is concerned, I hope it will continue to grow in resources, in soundness, and in stability. I wish to say as plainly as I may that this war and its consequences have only served to bring into greater relief the faulty basis upon which the Commonwealth Bank was established. We did not supply it with any resources. It has had to go round taking the people's pence wherever it could get them. Every thousand pounds that it has collected in the States has reduced the reserves of the States to a corresponding degree, and has thus forced them into its hands. The £2,000,000 which it has been able to lend them is only £2,000,000 out of the £6,000,000 that the Governor of the Bank has gathered from the States, and has therefore taken from their financial resources. Before a Commonwealth Bank can stand up to a crisis such as that with which we were suddenly confronted, it will have to make for itself a commanding position and status in Australia, so that in time of emergency it may be able to come to the rescue of the national Government. That is the teaching of the history of the Commonwealth Bank. The one outstanding feature is that while we have had to borrow money right and left that Bank has not had any money to lend us. I hope sincerely that we shall set up a Commonwealth Bank with such capital and resources behind it that we shall be able to draw upon it whenever a national crisis shall force us to do so. If ever anything emphasized the need for building this institution on a different basis the crucial time through which we have passed has done that. I hope that the Prime Minister, even now, will not turn down the idea of placing the Bank under the control of a directorate. It is the correct thing to do. I would suggest the wisdom of getting the States into this Commonwealth Bank, thus making it a national institution in essence as well as in name. There is another aspect of this matter. We find in nearly every great nation, the national bank coming to the help of the national Government. The Bank of England is the banker of the Imperial Government, the Bank of France of the French Government, the Bank of Russia of the Russian Government. The national Bank of Australia is not the banker of the Australian Government.

Mr Riley - The institution is not old enough yet.

Mr JOSEPH COOK - It has been in existence for three years.

Mr Fisher - Under three years.

Mr JOSEPH COOK - It is more than three years since the Bank was established, and I venture to say that if the right honorable gentleman had called the States to his assistance, and if all the financial resources of the States were behind him and concentrated in that Bank, he would have been able to do for Australia during this crisis, through the national Bank, relatively the same as the other national banks are doing for the countries oversea. That is the object we have to keep in view - make the national Bank in its relation to the national Government of Australia exactly what the national banks oversea are in relation to their Governments. I think I am entitled to say so much, Having in view the fact that fully one-third of this report is devoted to the assistance to the Commonwealth supposed to have been rendered by the national Bank. Honorable members must not mistake my attitude. I am not using this as an argument to decry the Commonwealth Bank, but only as an argument to induce the Prime Minister to make the institution a national bank, which it is not to-day. We cannot call a bank "national" when it cannot give us a sovereign in a national crisis. We must make the Bank into a national institution, and I am now pleading with the Prime Minister to take to heart the outstanding lessons of this war in relation to finance, and try to build up the Bank by appointing directors from the States, thus bringing the resources of the States into this national channel, and so fitting the Commonwealth to stand any strain that may come on it in the future.

Mr Fisher - I made a proposition to the States.

Mr JOSEPH COOK - I know the right honorable member did, but somehow the Premiers would not accept it. The Liberal Government made propositions to the States at the Premiers' Conference, and those proposals were agreed to. Had they been carried into effect they would have given the Commonwealth Bank £50,000,000 or £60,000,000 of current business.

Mr Fisher - "Where would it have come from?

Mr JOSEPH COOK - It would have represented the States' combined banking business. It would have given us £40,000,000 worth of current business at once.

Mr Fisher - It would not have added one penny to the wealth of Australia.

Mr JOSEPH COOK - No, but it would have added many millions to the resources of the Bank, and the Commonwealth Treasurer would have been able to borrow from the Bank during this crisis in a way he has not been able to do. I am not going to pursue the matter any further. My only wish is that we may soon create and erect this institution into a national Bank in deed and in fact, as it is now in name.

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