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Wednesday, 27 October 1971
Page: 2603

Mr PEACOCK (Kooyong) (Minister for the Army and Minister Assisting the Treasurer) - In returning to the provisions of this Bill I wish very briefly to discuss 3 particular points. Firstly, there is the matter raised by the honourable member for Melbourne Ports (Mr Crean) regarding the constitutional situation which flows from the decision of the High Court of Australia in the Rocla pipes case. I point out that it is, of course, still not certain to what extent this case has clarified the Commonwealth's constitutional powers to control financial corporations. This aspect of the High Court judgment is under examination.

Mr Hughes - I am quite prepared to give you some advice on this.

Mr PEACOCK - Your fees are too exorbitant. This aspect of the High Court judgment is under examination by the Government's legal advisers and the scope of the Commonwealth's powers should not be assessed at this stage as being allembracing.

Secondly, in regard to matters raised by the honourable member for KingsfordSmith (Mr Lionel Bowen), it is fair to point out that the introduction of this Bill does not signify any change at all in the long-standing policy not to grant overseas interests authority to carry on banking business in Australia or to allow them to acquire interests in existing Australian banks. That policy has been maintained since 1945 without the assistance of the present Bill. Among the methods used in the past in maintaining the policy, moral persuasion has proved quite successful because overseas interests would naturally be very reluctant to disregard the Government's wishes in matters of this kind. The Act will provide the Government with an additional measure for use in some circumstances but other methods will remain available as before. With regard to the detailed application of the policy, a distinction can be made between overseas investment in Australian bank shares of a portfolio nature and overseas investment with a view to exercising an influence over an Australian bank. The Government has not previously found normal portfolio investment by overseas interests in Australian bank shares a threat to the policy and there is no reason to believe that this situation will necessarily change in the future.

However, if purchases of bank shares - and this was referred to by the honourable member - within the 10 per cent limitation by overseas interests were for purposes going beyond portfolio investment, such as to give overseas interests a voice in the affairs of an Australian bank, the Government's opposition to such purchases will be the same after the Bill is enacted as it has been in the past. Finally, in regard to a matter raised by the honourable member for Riverina (Mr Grassby) prior to the dinner adjournment concerning the Australia and New Zealand Banking Group Limited, the only major bank to which the Bill will not apply is that bank, which is incorporated in the United Kingdom. However, that bank remains subject to section 63 of the Banking Act which provides that except with the Treasurer's consent the bank shall not enter into an arrangement for the sale or disposal of its business by amalgamation or otherwise or effect a reconstruction of the bank. The Australia and New Zealand Banking Group Limited savings bank subsidiary will be subject to the Bill, since the savings bank is deemed to be incorporated in Australia by recent United Kingdom and Victorian legislation.

Question resolved in the affirmative.

Bill read a second time.

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