Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Full Day's HansardDownload Full Day's Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Thursday, 10 July 1930

Senator DALY (South Australia) (V ice-President of the Executive Council) . - The Government is not prepared to accept the amendment, and I hope that it will not be treated lightly by honorable senators. This bill has been before Parliament for practically three months. It has been discussed in almost every chamber of commerce and chamber of manufactures throughout Australasia.

Senator Sir George Pearce - It has not been before the Senate.

Senator DALY - But it has been before Parliament, and it has been dismissed in the columns of the public press for about three months. Many articles have been written upon it; many comments, some even by honorable senators, have been published. Therefore, it seems to me that this amendment is an attempt to shelve the measure. This is not the first time that the subject of national banking has been before this chamber, and I invite the mover of the amendment, or any other honorable senator, to name any occasion on which the subject of Commonwealth banking was under consideration by the Senate and was referred to a select committee. Did this chamber refer the question of the establishment of the Commonwealth Bank to a select committee? Did it deal in that way with the proposals for a note issue, and for the other activities to which I referred in my second-reading speech? Then why, at this stage, should this bill be referred to such a committee? That course should not be followed unless necessity for it can be shown.

Let me discuss with honorable senators opposite exactly the class of information that they hope to obtain by the appointment of a select committee, and having elicited the class of information required, I shall ask them whether they are not able to obtain it without the assistance of such a committee. The information that such a committee might be expected to obtain relates to the question of whether it would be advisable for the activities of the national bank to be extended to include the control of foreign exchange. No honorable senators would suggest that any information on that point could be secured. And yet while I can show that already the nation possesses 75 per cent. of the functions of a central bank, this Senate is now asked to appoint a select committee to inquire whether the bank of the nation should take control of foreign exchange which represents the remaining 25 per cent.

Senator Sir George Pearce - To consider the method of control as well.

Senator DALY - The Leader of the Opposition classified the desired information under three headings; but is this a time to appoint a select committee on this matter?We know the position of our overseas exchange, and we have the experience of the other countries in dealing with their post-war problems, and the financial crises that they have had to face.

At the committee stage I shall be able to furnish honorable senators with the experience of 27 central banking institutions. Provided that every honorable senator is prepared to do what is expected of him by the nation, he can obtain as much information as any select committee that might be chosen. The amendment would hold the measure up for a month. It would be a case of Nero fiddling while Borne was burning. Yesterday, the financial position of the nation was placed before this chamber. The Government is at its wits' end in attempting to obtain complete control of finance so that it can place the ship of State on an even keel, as soon as possible. It is now proposed to delay this action by the appointment of a select committee, which, for the next month, would inquire into matters on which honorable senators can obtain' all the information required. I am not concerned whether or not this debate is adjourned this afternoon. Honorable senators are at liberty to address as many questions as they wish to the Government on this subject. I have the DeputyGovernor of the Commonwealth Bank here with me, and I am prepared to arrange with him to place his services at the disposal of honorable senators so that they may obtain any information desired.

Senator Chapman - He is not the only person who can give information.

Senator DALY - Will the honorable senator tell me what he. desires to know? The Senate would then be able to decide whether the appointment of a select committee would be the best way to obtain it. I think that I am entitled to demand to know what information honorable senators require.

Senator Reid - The evidence that a select committee would obtain might assist the Governmnt

Senator DALY - Could such a body tell us any more than we know already about our financial position in Australia and in London ? If any honorable senator says that he believes in the principles of central banking, and believes that there should be a central reserve bank in Australia, and then hesitates to consider whether it is proper to pass this measure-

Senator Chapman - We, on this side, are more concerned about the right method of bringing the new system into operation.

Senator DALY - I am pleased that I have convinced the honorable senator that there is no necessity to appoint a select committee for the purpose of ascertaining whether this reform should be brought about. I remind honorable senators that in times of depression there is a graver necessity for a tight grip on the finances than in periods of prosperity. The Leader of the Opposition (Senator Pearce) has asked " Why swap horses while crossing a stream?", but I suggest that it would be wise to build a bridge for the purpose of crossing it.

Senator Guthrie - Are not the private banks giving all possible assistance to the Government?

Senator DALY - They are according very generous assistance, and I have no desire to detract from the merit of that service; but, if the progress of Australia is te be permanent, we should place this assistance on such a basis that it will not be withdrawn. The banks have met, and have decided, in the interests of the Commonwealth, to make a certain move in relation to exchange. The banks themselves admit the necessity for it.

Senator Sir William Glasgow - That amounts to pooling the exchange in the interests of the nation.

Senator DALY - Of course, it is only one step towards the objective, and it is making the position of the Government easier than it otherwise would be; but we desire the consolidation of our financial forces under the control of the nation. In the opinion of the Government that is essential.

Senator Sir William Glasgow - The Government is getting that.

Senator DALY - No. Nobody can give an authoritative statement to the Commonwealth Government to-day regarding our supplies of exchange overseas. Of course, the banks cannot disclose that information one to another, because they are in competition.

I am attempting to show that all the facts of the position are already known to honorable senators, or are available to them. The suggestion is not that it would be as well for us to pack our heads in ice for a month, and then bring cool judgment to bear on this measure. The suggestion is that certain, information would be of advantage to the Senate and could be obtained only by the appointment of a select committee. Senator Chapman referred to the method of control of the proposed bank. I would remind him that the Governor-General in Council appoints members of the judiciary. Would the honorable senator suggest that the judges appointed on the recommendation of the Government are politically controlled? We have had experience of the method of appointing the board of directors of the Commonwealth Bank, and nobody can suggest that that board is politically controlled. I wish to convince honorable senators that at the committee stage of the bill all the information desired can be advanced. The amendment would have the effect of postponing the measure until next session. Whatever the motive behind the amendment may be, I suggest that it would be dangerous to adopt it, in view of the fact that the necessity for a central reserve bank is admitted. In committee, honorable senators can bo quite candid with one another and ask for any information required by them, so that a measure that will assist the Government in its present financial straits may be passed. I do not believe in simulating an ostrich. It is of no use to pretend that honorable senators have not been approached in connexion with the vote on this bill. We all know that lobbying goes on in respect of various measures. Let us be candid about this matter. The postponement of the hill to enable an inquiry to be made by a select committee will make it impossible for the Government to go ahead with its proposals to right the ship of state. A postponement will mean that the present unsatisfactory position of Australia overseas will develop still further and make the task of the Government much more difficult. I remind honorable senators that they have the advantage of the experience in central banking in 27 other countries. The legislation dealing with the central banks in other countries is available to thom here. Excellent text books on this subject are to be found on the parliamentary library shelves. One contains a special report concerning the establishment of the Central Bank in South Africa in 1925. There is also much other information for the guidance of honorable senators. I am prepared to discuss, in committee, the whole question of the framework and structure of the proposed central bank, If the principle itself is established, I feel confident that we shall be able to compromise in respect of the various other points that have been raised. I, therefore, urge honorable senators to vote against the amendment and to carry the second reading of the bill.

Senator SirHAL COLEBATCH (Western Australia) [4.34]. - I am very much surprised that the Leader of the Senate (Senator Daly), should resist the amendment moved by Senator Glasgow, and I am still more surprised at the nature of the reasons advanced by the honorable gentleman. He has told us that this proposal has been before the country for the last three months, and that it has been discussed by practically every chamber of commerce in Australia. My information is that not one single chamber of commerce has given its approval to this bill. Surely such bodies are entitled to be heard when a proposal such as this is before Parliament for discussion, and surely the information which they could give is of value.

I propose to deal briefly with the various points raised by the Vice-President of the Executive Council (Senator Daly). He has told us that the Commonwealth Bank Bill was not referred to a select committee. Australia has very great reason to regret that that course was not adopted before the bill, under which the Commonwealth Bank was established, was passed by Parliament. Had that been done, I feel sure that one tremendous disadvantage, which the whole of the Commonwealth has been suffering for many years might have been avoided. We should probably not have had Commonwealth Savings Banks competing in every State with similar institutions established by State Governments. No one with knowledge of finance can deny that this competition between the Commonwealth and State Savings Banks is a calamity of considerable magnitude. There are a number of other directions in which banking authorities and chambers of commerce might express views of importance if this bill were referred to a select committee of this chamber. We are told that the Government wishes this measure to be passed in order that it can take complete control over all finance. Possibly this bill as a means to that end is, in the view of the Government, the best way to solve our difficulties, but I venture to say that there is a very considerable volume of public opinion that does not believe that complete governmental control over public and private finance is the best method to adopt to right the ship of state and restore confidence among the people of Australia. We are told, further, that any honorable senator may consult the Deputy Governor of the Commonwealth Bank on any point that may he raised in connexion with this proposal. If we accept the Minister's suggestion can he give us an assurance that in giving such information, the Deputy Governor of the Commonwealth Bank will be speaking the minds of the directors and of the Governor of that institution?

Senator Daly - Of course he would not.

Senator Sir HALCOLEBATCH.Quite so. The Minister's answer, to my mind, suggests that it would be of some importance if Ave had before us documentary or other evidence that the bill, in its present form, meets the approval of the Board of Directors, or of the Governor, of the Commonwealth Bank. We are told also that central banks have been established in 27 other countries, and that the literature relating to central banking is available to all honorable senators. I have read every one of the constitutions of these banks. Without exception, they all disclose important differences in the various central banking systems adopted as compared with the proposal contained in this bill. I do not propose to discuss those differences at ill is stage.

Senator Daly - Such differences may be cleared up in committee.

Senator Sir HAL COLEBATCH - I am afraid not, because they are differences, not of detail, but of principle. I do not accept the view of the Leader of the Senate (Senator Daly) that the present situation indicates the need for the establishment of a central bank.

Senator Sir George Pearce - That point may be cleared up if the bill is referred to a select committee.

Senator Sir HALCOLEBATCH.If it is so referred, the select committee will have an opportunity to take evidence from competent authorities, including the responsible heads of the Commonwealth Bank as well as of banking authorities associated with private institutions, and we shall be in a better position to judge the merits of this proposal.

The bill has been before the chambers of commerce and financial institutions, for three months, and it has not received the approval of any one of them. Many are in sympathy with the idea of the establishment of a central reserve bank; but this bill has not, so far, received the endorsement of any financial or commercial institution in Australia. That fact, in itself, to my mind, is ample justification for the, request that there shall be a more complete investigation than we have had up to the present. The Government, if it carries the bill in its present form, will be taking a very great risk. The Senate should not make itself a party to that risk. We should not agree to the establishment, without full inquiry, of an institution that will drastically alter the financial structure of Australia - an institution which, to use the words of the Leader of the Senate (Senator Daly), is to be set up so that the Government may have complete control over all forms of finance in Australia.

It will be within the recollection of honorable senators that, when this proposal was first mooted., the opinion expressed in London financial newspapers was very favorable to the general idea. Since then, however, I have read most hostile criticism of many of the more important principles contained in it. T have seen the fear expressed that the bill, as it stands, may lead to an undue measure of political control being exercised, involving reckless advances to governments, Common wealth and State, and to municipal and other bodies. I have also seen the doubt expressed that the central bank, as constituted under this bill, may not preserve the currency of the country against inflation. This, as honorable senators will concede, is a most important point. I venture to say that the passage of the measure in its present form will be more likely to injure than to help the credit of Australia. As regards the existing financial situation of the Commonwealth, I need only say that a statement by Sir Robert Gibson, chairman of the Commonwealth Bank Board, published in this morning's newspapers, clearly shows that the whole of the private banks are co-operating with the Commonwealth Bank and with the Government, in order that the obligations of Australia abroad may be met. If honorable senators read the statement made by Sir Robert Gibson, they will find that he refers over and over again to the " unanimous " decision of the banks which are co-operating in this movement, and the unity that exists between them and the Commonwealth Bank. Consequently no harm can possibly come from a sufficient adjournment of the consideration of this bill to allow its provisions to be fully investigated. I do not hesitate to say that, so far as I am concerned, if the amendment is not carried, E shall, at a later stage, give reasons why t intend -to vote against the second reading.

Suggest corrections