House of Representatives
6 June 1924
9th Parliament · 2nd Session
Mr. Speaker (Rt. Hon. W. A. Watt) took the chair at 11 a.m., and read prayers.
page 1097
PAPERS
The f ollowing papers were presented : -
Arbitration (Public Service) Act - Determinations by the Arbitrator, &c.
No. 18 of 1924 - Professional Officers’ Association.
No. 20 of 1924 - Commonwealth Public Service Clerical Association; Australian Telegraphists’ Union; Commonwealth Postmasters’ Association; Federated Public Service Assistants’ Association; Australian Postal Assistants’ Union; General Division Officers’ Union of the Trade and Customs Department; Australian Postal Linemen’s Union; and Australian Letter Carriers’ Association.
Northern Territory Acceptance Act and Northern Territory (Administration) Act-
Ordinances of 1924 -
No. 11 - Aboriginals (No. 2).
No. 12 - Deceased Brothers’ Widow’s Marriage.
War Service Homes Act - Land acquired at Waverley, New South Wales.
page 1097
QUESTION
DISTRIBUTION OP WOOL PROFITS
Motion of Censure
Mr SCULLIN:
Yarra
.- I move -
That this House strongly condemns the Government for its action in -
Agreeing to pay out of public revenue the sum of £275,393 10s. for distribution between the British Government and B.A.W.B.A. on a claim that had neither legal nor moral support.
Entering into the agreement without consulting Parliament; and
Making a part payment of £137,696 15s. without Parliamentary appropriation.
In moving this motion, of which I gave notice yesterday, I am fully seised of the seriousness of challenging the Government in respect of its handling of the public finances. I am not unmindful, either, of the responsibility imposed upon me in submitting this motion, in view of the fact that I do so with the approval and endorsement of my respected and trusted leader and colleague (Mr. Charlton) and of my colleagues in the Labour party. Although I believe that the case I am going to submit to the House is a strong one, I realize my own limitations and the difficulty of clearly presenting so intricate a matter to honorable members. In the third annual report of the British Australian Wool Realization Association Limited, commonly known as Bawra, covering the whole of its transactions for the year ending 31st December, 1923, there appears the following statement : -
The claim of the Central Wool Committee against the Commonwealth Government, arising out of the contract dated 12th March, 1920, entered into by the Prime Minister, Mr. Hughes, with the Colonial Combing and Spinning Company, was discussed at several conferences between Mr. Bruce and your chairman.
The report then indicates that the settlement arrived at involved the payment of £275,393 10s. In a later paragraph of the report there is the statement -
On 14th November, 1923, a cheque for £137,696 15s. was received by the Central Wool Committee from the Commonwealth Government, and in conformity with the terms of the agreement entered into between the British Government and the Commonwealth Government, this amount was apportioned fifty-fifty between the British Government and Bawra.
Having read that report, I looked to see if any statement on the subject had been made by the Auditor-General. I did find a statement published in the report of the Auditor-General issued this year substantially supporting the assertion that this claim had been agreed to and the money paid. At first glance it was not evident that there was anything wrong, but when I had read the report carefully I was concerned to know why the settlement of the claim had been so long delayed, because the payment was made in respect of the purchase of wool in March, 1920, over four years ago. If the claim was a legitimate one, why was not the money paid before? Then 1 began to investigate. In the course of my investigations I have examined many documents. I examined first of all the wool contract between the Australian and British Governments. I have read the agreement entered into between the Australian Government and the Colonial Combing and Spinning Company. I have carefully read the promise made by Mr. Hughes in this House when he was Prime Minister. I have read all the reports of the Central Wool Committee which have been presented to the House and included in its records. I have read also the whole of the speeches made by the chairman of Bawra to its directors, and in none of these documents can I find a valid reason why this large sum of £275,393 10s. should be paid. I make the definite statement that the British Government has no claim, either legal or moral, to one penny of the money. I make the further definite statement that Bawra has no legal or moral claim to one penny of it. To those definite statements I ask the Prime Minister (Mr. Bruce), when he replies, to give specific and definite answers, and not to set the question aside or hide it by camouflage. I have been forced to the conclusion that this transaction indicates the absence of any sincere attempt on the part of the Prime Minister, his Treasurer, and his other colleagues, to safeguard the public funds. The Government having failed in that regard, the duty devolves upon this House as the custodian of the public funds to see that they shall not be wasted, squandered, or wrongly paid away. This is a serious matter, involving as it does over £275,000, and because it is a serious matter, I do not ask honorable members to accept any ex parte statement by either the Prime Minister and his colleagues or myself. What I do ask them to accept is the indisputable proofs that will be submitted, and the documentary evidence I shall place before them. I would not insult the intelligence of representative men by making merely a general statement of this character, and I shall submit proof for every important statement I make. The first document to which I shall refer is the contract between the Australian. Government and the British Government. I have a copy of the contract here, and it is included in the records of this House. It consists of a series of cablegrams that passed between the Australian and British Governments.
Mr Maxwell:
– Was this in 1920?
Mr SCULLIN:
– In 1916.
Mr Maxwell:
– That is the original contract.
Mr SCULLIN:
– The negotiations commenced then and were continued over the period from 1916-17 to 1919-20, covering a contract which ended on the 30th June, 1920. I do not propose to read all the cablegrams, but I shall make extracts from them, but I shall not intentionally utter one word which I do not believe to be true and supported by the documents. Under the agreement the wool grown in Australia was to be acquired by the Commonwealth Government and sold to the British Government at a flat rate of 15 1/2d. per lb., and after the requirements of the British and Allied armies had . been satisfied, the surplus was to be sold, and the profits divided equally between the British Government and the Australian. Pool. An important condition of the contract was that all wool needed for local manufacturing purposes was to be excluded from the sale. That contract ended on the 30th June, 1920. On the 12th March, 1920, an agreement was entered into between the then Prime Minister (Mr. Hughes) and the Colonial Combing, Spinning, and Weaving Company Limited, the terms of which were arrived at after negotiations between the Central Wool Committee and that company had broken down. To keep the industry going, to keep men employed, and to manufacture as much as possible of our own wool in our own country, Mr. Hughes entered into an agreement, a copy of which I now present for the information of honorable members. Under that agreement the Colonial Combing, Spinning and Weaving Company Limited was permitted to select from the Pool at the appraised price up to 10,600 bales of wool, which quantity was agreed upon as being the full capacity of the -company’s works. The quantity actually taken by the company was 9,047 bales, showing that it could notuse the full quantity to which it was entitled. Under the agreement the Australian Government was to receive 80 per cent, of the net profits arising from the transaction, and the company was to retain 20 per cent. At that time the ruling prices for wool in London were exceptionally high, in fact they may be termed peak prices. Protests were entered against the Government making this agreement with the company. The arguments raised at the time are familiar to most honorable members who were then in the House and to many who were not. The protests were made mostly on behalf of the Australian wool growers, but objections were also raised by the Chairman of the Central “Wool Committee (Sir John Higgins) who said that it would not be fair to the Imperial Government if wool was taken when the prices ruling abroad were so high. To these protests the Prime Minister of the day (Mr. Hughes) replied in Parliament on the 20th March, as reported on page 562 of Hansard. He said -
Wool for Australian industries wag expressly excluded from the sale to the British Government.
He added that the growers’ case would be considered on its merits. That is a. brief review of the position.
What I now desire to do, in order to make the position quite clear, is to divide the first part of my motion into two distinct sections. The sum of £275,393 is being equally divided between the British Government and Bawra, and I now wish to ask, apart from any other consideration, what right has the British Government to receive that money or any portion of it? I wish for the moment to confine my remarks to that phase of the subject. The first proof I put forward of the fact that the British Government has not any claim to one penny of the money, is to be found in the contract between the Australian Government and the British Government. On the 14th November, 1916, the first cablegram was sent from the Secretary of State for the Colonies to the Australian Government in which the following statement appears : -
The question of ensuring adequate supplies of wool for military needs of British and Allied armies has been engaging the serious consideration of His Majesty’s Government.
They offered to purchase the Australian wool clip.
On the 21st November, 1916, a cablegram was despatched from the Prime Minister’s Department in Australia to the British Government agreeing to sellthe Australian wool clip at a flat rate of 151/2d. per lb., andour Government imposed this condition -
All wool required for local manufacturing purposes will of course not be included.
Following that a cablegram dated 30th November, 1916, was received by the Australian Government from the Secre tary of State for the Colonies, part of which reads -
We agree to the condition that the wool for local manufacturing purposes should not be included in the sale to the British Government.
In further confirmation of that a portion of a cablegram dated 4th December, 1916, from the Prime Minister’s Department’ to the British Government read - .
All wool for local requirements will be drawn from your purchases at official appraised prices.
That is clear and definite, and I wish to again emphasize that the series of messages from which I have quoted constitute the only agreement between the two Governments. The copy of the agreement which I have received from official records I submit in substantiation of my contention, and it provides further proof of its correctness. I have also before me a paper which was laid on the table of the Senate by the late Senator E. D. Millen on the 17th March, 1920, in which it is stated: -
The contract with the Imperial Government which ends on the 30th June covers the surplus of wool clips over local requirements. Local requirements nave throughout been held to include manufacture of wool tops for export as well as manufacture of woollens for local consumption.
I wish honorable members to note the significance of the explanation given by the Government of the day in the paper laid on the table of the Senate from which I have quoted, and to particularly notice the words -
Local requirements have throughout-
That is, throughout the whole purchase scheme - been held to include manufacture of wool tops for export as well as manufacture of woollens for local consumption.
I have also before me the speech of the Prime Minister of the day,, who was more responsible than any other person for drawing up the contract and entering into the agreement, and I quote from that gentleman’s speech on March 18th, 1920, as reported in Hansard on page 562, in which he said -
All wool for Australian industries including wool necessary for wool tops was expressly excluded from the sale to the British Government.
The Prime Minister speaking again on 26th March - see Hansard, page 921 - said -
At the Conference–
That is the Conference which he called together at which the whole of the wool interests of Australia were represented. the principle of only selling to the Imperial Government the surplus left after supplying local manufacturers with sufficient raw material to enable not only the present plant to be kept fully occupied but to also encourage the extension of manufacture during the war and provide employment for the people, was specifically recognized.
I direct the attention of honorable members to Parliamentary Paper No. 55, presented during the 1920-21 session. It contains a report by the chairman of the Central Wool Committee (Sir John Higgins) in which he protested against the contract made between the Commonwealth Government and the Colonial Combing, Spinning and Weaving Company Limited. He stated that the supply of an abnormal quantity of wool at the appraised price to that company adversely affected the interests of the Australian growers and the British Government. He admitted, however, that the Imperial Government only purchased wool “ over and above Australian requirements,” and also that local requirements included the output of wooltops for export. But he interpreted that condition to mean “ normal requirements.” On page 17 of that paper, there is a copy of a letter from the then Prime Minister (Mr. W. M. Hughes) to Sir John Higgins) in which he says : -
The Central (Wool Committee make an assumption - which underlies their whole argument - that Australian requirements must be interpreted as meaning “ normal “ requirements.
There is no mention of “ normal “ requirements in the contract, and it would be a monstrous thing if there were. In such an abnormal time, when our industries were expanding, and when, as a matter of fact, two new wooltops companies had been formed, consequent upon the exigencies of war, it would have been a monstrous thing to say, “ You shall not expand your industries with your own raw material, grown in your own country.” It would have been the height of audacity to suggest it, particularly with respect to a quantity of wool which was sold eighteen months after the war had ended. In his letter to Sir John Higgins, to which I have just referred, the then Prime Minister (Mr. W. M.
Hughes) stated that there was nothing abnormal in the quantity of wool supplied to the Colonial Combing, Spinning, and Weaving Company, and that, as a matter of fact, it represented only one-sixth of one per cent, of the whole of the wool put into the Pool. I add to that that it represented only $ per cent, of one year’s clip. There was nothing abnormal about it at all. Mr. Hughes also said in that letter -
But, even if the amount were very much larger, the British Government would have no cause of complaint. The British Government has only purchased the surplus over Australian requirements, and whatever those requirements are, the wool allotted to them is something to which the British Government can have no claim. . . . The contract with the British Government was limited to wool “ over and above Australian requirements,” which included requirements for Australian woollen mills and Australian wooltops combers.
That is a definite and emphatic statement by the then Prime Minister, who had drawn up the contract, and who, more than any other man, was responsible for it. He indicated, in definite and express terms, the conditions of the contract. I shall now submit something that will appeal to the legal mind of the legal men in this Chamber. It deals with precedent. Let us examine for a moment what was the practice adopted during the four years of the Pool. In that period, 168,000 bales of wool were supplied to the Australian woollen mills for local requirements at’ the appraised price, and not one penny of interest or profit went to the British Government in respect of it. There was no reason why it should have gone to it. In the same period, 80,000 bales of wool were supplied to the wooltops companies under varying arrangements and different conditions, and in respect of none of that did the British Government make a claim.
Mr MAXWELL:
– What period did those transactions cover?
Mr SCULLIN:
– The whole four years of the Wool Pool, from 1916 to 1920. Not one penny of any profit or alleged profits was- claimed by the British Government under the profit-sharing agreement in respect of any wool sold to local industries. The profit-sharing agreement with the British Government was carried out in its entirety by the Australian Government and the Australian growers.
The condition governing the profitsharing was that any wool which the British Government had on hand, after it had supplied its own military needs and those of the Allied armies, should be sold at public auction, and the profits divided. That condition covered wool which was sent abroad, and which the British Government handled. On the sale of such wool, it was entitled to half profits. No contract, condition, or promise was made that the British Government should have any profit on wool sold to the Colonial Combing, Spinning and Weaving Company, or any other company in Australia. The Colonial Combing, Spinning, and Weaving Company was engaged in the same class of industry as that in which Messrs. Whiddon Brothers Limited, The Yarra Falls Spinning Company Proprietary Limited, and other similar companies were interested. Those companies had obtained wool for four years under varying agreements and different conditions, and in no instance was it contended that the British Government was entitled to share in the profits of the sale of wool to them. Why, then, should the British Government participate in the profits from the sale of 9,047 bales to the Colonial Combing, Spinning and Weaving Company Limited? That was wool sold to an Australian company for an Australian industry. The British Government did not buy, sell, or handle it. I ask the Prime Minister, therefore, what claim, under any promise made in this House with respect to the sale of wool for our local industries, had the British Government to participate in the profits of that sale? Wool sold for local industries was expressly excluded from the sale to the British Government, and it was expressly excluded also from the Prime Minister’s promise, made to the growers of Australia. I shall summarize my contentions on this point. I think the facts are too clear and definite to require lengthy repetition. That the British Government was excluded from any interest in wool that was sold for Australian industries, is proved by the conditions of the contract between the Australian Government and the British Government. It is also proved by statements submitted to this Parliament, and also by the admission of the Chairman of the Central Wool Committee, and by the practice that was followed with respect to wool supplied to woollen companies and wooltops companies in the four years of the Pool operations. Those facts show definitely and clearly that the sum of £137,696, which was said to be due to the British Government, and half of which has already been paid out of the public revenues of Australia, is purely and simply a gift to that Government. I notice that an attempt has been made to suggest that we are attacking the British Government, when we ought to be grateful to it for having purchased Australia’s wool. I notice, also, that opinion is divided as to whether the contract with the British Government was beneficial or not to the Australian growers. I assure honorable members that, so far as I am concerned, those considerations do not enter into the matter. Whether the contract was good or bad, beneficial or not, is not the question at issue. A business contract was made between two Governments. Not only were the terms of the contract honoured, but without any justification this Government has gone beyond them. If honorable members feel inclined to be generous, out of a sense of gratitude to the British Government for having purchased our wool - and I have heard that sentiment expressed so often that I believe some persons may be inclined to act in that way - I point out to them that the British Government made the overtures for the acquirement of our wool clip, and repeated them again and again prior to every renewal of the agreement. I have here a document that was sent from the British War Office, setting forth the offer to purchase the second wool clip, in which the following statement was made -
Continuance of wool purchase is now necessary. British and Allied military demands art steadily increasing.
Then in one paragraph of this memorandum, which sets out the advantages of the purchase by the British Government, they say -
It has enabled the British Government to obtain the supplies necessary for clothing the British and Allied Armies, at a reasonable cost, by limiting speculation in raw material.
I submit those facts as a counter to those people who will say that even though this Government has paid to the British Government a sum to which it was not entitled, this Government was merely dis- charging a portion of the debt of gratitude that we owe to the British Government. I point out that, on the latter’s own statement, it received wool for the needs of its own army and the armies of its allies, at a reasonable cost. I do not quarrel with that. But, in addition, the British Government was enabled to sell the surplus of our wool that it did not require for its own military needs, and to retain half the profits of the sale. On the lowest computation, it cleared £30,000,000 as its share of them. I ask, have we any right to bleed the Australian taxpayers for the purpose of making an additional gift to the Imperial Government? There I leave the question of the payment to the British Government. There I can afford to leave it. The Prime Minister (Mr. Bruce), to justify the action of the Government, has to impugn the conditions of the contract entered into between the two Governments; he has to impugn the statements made by the previous Government in this House and in the Senate; he has to impugn the practice that obtained during four years in respect to the wool supplied to every local industry in Australia.
I now come to the reason upon which the Prime Minister and the Government have based this payment, namely, a promise made in this House by the then Prime Minister (Mr. Hughes). As with the contract made with the British Government, whether that promise were wise or unwise, does not affect the matter. The Government rests its case upon that promise, and makes it the basis of the payment, as it was the basis of the claim. Very well. Let us take that promise, and examine the case that is based upon it, to see if this payment can be justified. Mr. Hughes’s promise was that he would deal with the growers’ case on its merits. In a letter which was published in this official paper No. 55, he made the following statement in regard to the growers’ interests -
Any claim on their behalf could also be disposed of by pointing out that the wool required for local requirements is outside the Pool.
Mr. Rodgers, then member for Wannon, speaking on behalf of the growers, said to Mr. Hughes -
We ask that you put us in as good a position as we would have been in had you not taken that wool.
To that Mr. Hughes replied on 26th March, 1920 (Mansard, page 923) -
I am prepared to consider whether the grower shall have as much profit as he would have had if the wool had gone into the Pool, and been sold to the British Government in the ordinary way.
Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917
– Hear, heart That is reasonable.
At this stage might I interpolate that in that promise there was nothing to justify any payment to the British Government. Mr. Hughes had expressly excluded that, stating also that the growers, too, could be excluded, but that he would consider their case on its merits, and further consider whether they should not share to the same extent in the profits as if this wool had been sold to the Imperial Government. Having received that promise, Mr. Rodgers followed up the matter, and on 16th April, 1920 (Hansard, page 1295), he asked Mr. Hughes the following question -
Whether the Government is prepared to allow to the Australian wool-growers in respect of the wool supplied to the Colonial Combing, Spinning, and Weaving Company, under contract for the manufacturing of wool tops, the same share of profits in such wool as if it formed part of the wool sold to the Imperial Government?
Mr. Hughes replied, “Yes.” I draw attention again to the fact that the question asked related only to the wool-growers of Australia, and not to the British. Government. We have reached the point at which we must consider what that promise means. As I have said, it does not mean that the British Government should participate in any of the profits. What, may I ask, is the argument put forward on behalf of the British Government ? If this wool had gone into the Pool, they say, if it had been shipped abroad, and sold for civilian purposes by the British Government, at a profit, they would have been entitled to receive half the profits. That would be true of every pound of wool sold to every other industry in Australia, but that it was expressly excluded - and rightly so - from the sale. It would be a monstrous thing if wool grown in Australia could not be manufactured in Australia unless the profits were shared with a Government in another country that had nothing to do with the production of that wool. I challenge any honorable member opposite to dispute that contention. Not one of them will dare to do so. Let us, then, return to this claim of the growers. Mr. Hughes promised that the growers should get 50 per cent, of any profits that would have been derived from the re-sale of that wool if it had been sold to the British Government in the ordinary way. Accept that as a basis, and examine what the Government has done. On that promise a claim was made. Before the submission of the claim, Sir Robert Garran was asked to interpret Mr. Hughes’s meaning. It is most extraordinary that they should go to Sir Robert Garran for an interpretation of a statement like that.
Mr Maxwell:
– “With whose claim is the honorable member dealing now?
Mr SCULLIN:
– I am now dealing with the claim made by the Central Wool Committee, on the promise of the then Prime Minister (Mr. Hughes) in this House. They asked Sir Robert Garran for an interpretation of that promise, and it was given on 6th August, 1920. The method he suggested for ascertaining the amount to be paid to the growers was as follows : -
- 1 ) Ascertain the flat rate value of the wool, plus all charges that would have been payable if it had been sold in London.
- Ascertain the amount that wool of a similar type should have realized if sold by auction in London on the date that each payment was made by the Colonial Combing, Spinning, and Weaving Company for the wool.
The amount to be paid would then be one-half the difference between (1) and (2).
Let me make that opinion simpler. Sir Robert Garran did not mention any one but the wool-growers, whom he said should be paid one-half of the estimated profit. What does his interpretation mean? He says : - “ Ascertain the price that was paid for that wool, and add to it what it would cost to send it to London; then ascertain the price ruling in London at that time, and deduct one from the other to arrive at the estimated price,” which is, in simple words, plain to all of us, London parity. Why did Mr. Hughes make other promises if he meant “London parity,” and why, I ask, was a legal opinion required to interpret plain English like the Prime Minister’s promise? Why did not the Central Wool Committee ask Mr. Hughes what he meant? They did not ask, but submitted to him their claim on a “ London parity “ basis. In a letter dated 30th
August, 1920, the then Prime Minister of this country referred to his own promise. If it is acknowledged that Shakespeare could best interpret his own characters, surely Mr. Hughes was the best man to say whether he meant London parity. Not only did he say, in his letter of 30th August- to the Central Wool Committee, that he would deal with the case of the growers only on its merits, but he reiterated that statement on several occasions, and backed up his own interpretation of his own promise by refusing to recognize the basis upon which the claim was made. In a report of Bawra, distributed to honorable members this morning, it is stated that -
Mr. Hughes, while admitting the Government’s willingness to fulfil the obligations incurred by his promise, would not accept the basis on which the Central Wool Committee construed its claim.
That construction placed by Bawra upon Mr. Hughes’s words is quite true. Why would not Mr. Hughes admit the basis upon which the Central Wool Committee construed their claim? It was because their construction was that the wool should be paid for at London parity, and at that time the price of wool was at its peak. Mr. Hughes’s promise was that the growers should not suffer as a result of the wool being taken out of the Pool, and that they would receive the same share of profits as if the wool had formed part of that sold to the Imperial Government in the ordinary way. That meant that the wool would be treated as if it had been included in the Pool, and sold in Britain in the ordinary way; and, after cleaning up the whole of the year’s clip, the profit, if any, ascertained and divided. The only way to give effect to Mr. Hughes’s promise was to ascertain the average price that the whole of the wool in the Pool had realized. Let us examine what that average price would have been, and see if there should be any payment arising out of that promise. The wool in question was extracted from, the Pool between March and June, 1920. At the end of June, 1920, the selling agreement with the British Government lapsed, and all wool left in the Pool became the property of the British Government. At that time, there was 1,16.1,823 bales of wool in Australia, and about 1,000,000 bales in England and on the water ; so that over 2,000,000 bales of Australian carry-over wool was in existence on the 30th June, 1920. Of the wool lying in Australia, approximately 500,000 bales comprised merino wool, which was the class of wool sold to the Colonial Combing, Spinning and Weaving Company. That I wish to emphasize, and to refer to later. In March, 1920, when the agreement was made, the price of wool was at its height. It remained so until the 23rd April, when the market began to weaken. A cablegram received from London stated that the fourth series of sales opened with a market of a weaker tone, and a reduction of 10 per cent. On the 23rd April, 1920, the market showed a weaker tone; but, of course, exceptionally high prices were still ruling. Then there was a gradual descent, until, with a sudden slump, the wool market collapsed. I submit these facts to honorable members, not for their information - because I know that many of them know far better than I do the course of the fluctuations on the wool market - but as a reminder. In a report dated 30th August, 1920, Sir John Higgins, the Chairman of the Central Wool Committee, said -
A considerable portion of Australian carryover wool is not at present saleable.
Speaking to the shareholders of Bawra on the 17th March, 1921, he said-
From the opening of the Australian sales, in October, 1920, there have been serious reductions in values….. American and
Japanese buyers secured superior merino wool at constantly declining prices.
At that time, Mr. Hughes, in a speech in this House, referred to the Australian carry-over wool as a “ mountain of wool,” and said that some had even suggested burning it. Dr. Earle Page, in this House, in May, 1921 - page 8047 of Hansard - said that when the Bawra clip was thrown on the market last year - 1920 - at the first sale prices sagged 10 to 20 per cent., and at the next open sale a further 20 per cent. He added that if the Bawra wool were thrown on the market, prices would fade away ; and I agree with him that they would have done so. So bad had the position become, that an endeavour was made by the wool interests to fix a reserve price for wool. They could not agree, and eventually the Australian Government fixed a reserve price of 8d. per lb. for all wool. A proclamation to that effect was issued on the 9th May, 1921. During all this time, the 9,000 bales of wool, if they had not been sold to the company in Australia, would have been portion of the “mountain of wool.” Bawra was organized at the end of 1920, and was registered as a private company in January, 1921. Bawra, when it was formed, took over as its assets half of the Australian carry-over wool, and acted as agent for the sale of the British Government’s wool, comprising the other half of the Australian carryover, and wool purchased from other countries. After taking over the wool in January, 1921, the first thing they did was to write it down 40 per cent., showing that its value was low. If the 9,000 bales of wool sold to the Colonial Combing, Spinning and Weaving Company had been included in the Pool, it would have been written down to that extent. At that time there were 1,836,000 bales of Australian wool in the carry-over, and the 9,000 bales, if they had not been sold here, would have been added to them. Bawra took over 918,000 bales, and has since disposed of them. I submit to honorable members that the profits which should have come to the Australian growers as a result of Mr. Hughes’s promise must be calculated on what the wool realized under the control of Bawra. What did it realize? We have their report up to the end of last year, in which they show that they disposed of 90 per cent, of the Australian carry-over. They have sold 836,706 bales for a total of £18,167,084, or an average price of £21 14s. 3d. per bale, from which must be deducted shipping, insurance, and handling charges. As the average appraised value of that wool was approximately £22 10s. per bale, it is manifest that it did not realize on the average the appraised price, and- I wish to know where the profits came from on which this Government paid away the Australian people’s money.
Sir Granville RYRIE:
– How is it that the growers of wool have obtained dividends out of Bawra ?
Mr SCULLIN:
– I thank the honorable member -for that interjection. I shall answer it. The dividends that have come to the shareholders of Bawra are due to this fact, and to this fact only, that two-thirds of its assets were wool. About £14,000,000, in round figures, represented wool, after it had been written down 40 per cent., and the other £8,000,000 consisted of cash. Two- thirds of the assets were written down to 60 per cent, of the appraised value, and sold at, approximately, appraised price, the profits coming from valuing the wool at 60 per cent., and selling it at 100 per cent. I have quoted the average price obtained for 90 per cent’, of the wool up to the end of last year. I have not before me the official report of th(> final sales, but I have seen the press report of a speech by the Chairman of Bawra, and from this I have made some deductions. Although a much higher price has ruled in the last few months - the last bale was sold, I believe, on the 2nd May - I have calculated that the average price received for the whole of the Australian carry-over wool sold by Bawra would not exceed £22 lis. per bale, from which must be deducted shipping, insurance, and handling charges. I repeat that as the appraised price of that wool was £22 10s. per bale, no profit resulted from the transaction. I have a table of figures which I desire to place on record, and in order to save time I propose to pass it to Hansard -
Mr SPEAKER (Bt Hon W A Watt:
BALACLAVA, VICTORIA
– Is the statement official ?
Mr SCULLIN:
– No.
Mr SPEAKER:
– Then it must be read.
Mr SCULLIN:
– The table is as follows : -
I am aware of the astute argument that may be put forward against my case. It will probably be said that the wool about which the dispute turned was merino wool, and that I have quoted the average price of merino and cross-bred wools. Having anticipated that contention I am ready to answer it, and I shall not knowingly refrain from dealing with any aspect of the case. I draw the attention of honorable members to the fact that in the first and second years of the Pool, 1921 and 1922, it was largely merino wool that was sold. In those two years 90 per cent, of the merino wool was disposed of, whereas most of the cross-bred wool remained to be sold. From none of the reports of Bawra can one find out what the different grades of wool realized. So far as I can ascertain not one of these reports - indicates what merino wool fetched and what cross-bred wool brought, even on an average. For information on this matter I have gone to the Investor’s Digest, controlled by Mr. Jobson, who is, I think, regarded by most honorable members as a very reliable authority. He has made a calcula-tion of what the merino wool brought in ‘the years 1921 and 1922, when it comprised 90 per cent, of the wool sold. He considers that in 1921 the average price received for merino was £22 per bale, and that in 1922 the average was £26 per bale. If honorable members doubt these figures I ask them to apply a test. Take the year 1921 when 242,016 bales of merino wool and only 88,099 bales of cross-bred wool were sold. The total gum realized in that year was £6,394,821, or an average price of £19 7s. 5d. per bale. Honorable members opposite may say, “ But cross-bred wool was not saleable.” “Very well, letus assume that the cross-bred wool was given away in that year, and let us divide the total receipts for both merino and cross-bred wool by 242,016, the number of bales of merino wool sold. The price thus obtained does not work out at more than £26 per bale, even on the assumption that 88,099 bales” of cross-bred wool were given away, which, of course, was not the case. Honorable members opposite may ask, “ Would not that wool show a profit at £26 .per bale?” My answer is, “ No, because the appraised price of merino wool averaged £30.” For 90 per cent, they received £22 in one year and £26 in another. Let me make the position clearer to those honorable members who have not followed the details of the case. There is a distinction between the average appraised price and the individual appraised price, for the average price, with a slight adjustment, becomes the flat rate price, but in the appraising of the various grades of wool, of which there are about 800, I believe, they worked to a table of limits, so that after appraising the various grades of wool, the flat rate approximated ls. 3$d. per lb. Some growers may have received 4d., 6d., or ls., and some over 2s., but the flat rate was ls. 3$d per lb. The average appraised price of merino wool was about £30 per bale, and that was the class of wool sold to the Colonial Combing, Spinning and Weaving Company. Yet when Bawra began to realize on its wool, the calculation was that in the first year the merino brought £22 and in the second year £26. That accounted for 90 per cent, of the merino wool it had to sell. Even on that argument I can see no reason why this claim of £275,393 should be met, particularly when honorable members remember that it represents £30 per bale on 9,047 bales, it being alleged that this wool would have returned to the Pool £30 per bale more than the appraised price. So far as I can show and see it did not realize more than the appraised price; at any rate, if it did, it realized very little more, and, in any event, the calculation could not be finalized to the shilling until the last bale of merino out of the Australian carry-over wool had been disposed of. I have noticed in the press that the Prime Minister (Mr. Bruce) proposes to show that he compromised with the Wool Committee and had the claim considerably reduced. I advise the right honorable gentleman not to try those tactics on the House. The original claim was for £398,000, and the amount was based on 13,887 bales of wool. Mr. W. M. Hughes’s promise was with respect to the 9.047 bales of wool sold under the agreement of the 12th March, 1920, and to that quantity only, as can be seen from the Bawra reports. However, these people have the audacity to add to the claim 4,840 bales sold prior to the agreement of the 12th March, 1920, some of it, I believe, as far back as the 5th January, 1920. I suppose it was expected that “good old Father
Mr. Scullin
Government” would pay, but when Mr. Hughes called attention to the overclaim it was withdrawn. There was also a claim for interest, which also was eventually withdrawn. The present Prime Minister will throw out his chest and declare, “ I reduced their claim.” All I can say about this claim is that it was even more audacious and more impudent than the whole transaction has proved to be. The conclusion might be formed from certain paragraphs in the press that the Government are paying this money, not out of the people’s pockets, but out of the 80 per cent, profits that they were to get under the agreement of the 12th March, 1920. In fact, this point was emphasized in a letter written to the Government by the Chairman of the Central Wool Committee, who estimated that the profits out of this wool would be £44 per bale, of which the Commonwealth Government’s share would be about £320,000 on 9,047 bales. It was, however, estimated that on 13,887 bales the Commonwealth Government would get about £500,000, and a sturdy fight was put up in this House on behalf of the Australian growers that they should get the whole of that £500,000. The then Prime Minister stoutly resisted the claim, and said that it was a monstrous proposal. I did not see those sturdy gentlemen on the other side of the Chamber putting up a claim that the British Government should get a share of that £500,000. That claim was based on the sale of 13,887 bales. The reduced claim was based on the sale of 9,000 bales, and the Chairman of the Central Wool Committee estimated that the Government’s share of the profits on that quantity would be £320,000. Under the agreement of the 12th March, 1920, the Government were to get 80 per cent, of the net profits, and the company were to take 20 per cent. On the 8th May last I asked the Prime Minister what amount had been paid to the Treasurer as a result of the agreement with the Colonial Combing, Spinning and Weaving Company, and his answer was “nil.” This company, he said, had reported that instead of making a profit it had suffered a loss. I understand that owing to the collapse of the market it lost £40,000, and so the poor old Go- vernment get no profits, and yet are asked to pay out dividends. I come again to the promise which is the basis of the claim of the Central Wool Committee and of the payment made by the Government. The promise made by Mr. W. M. Hughes was in simple, plain language, and was that the growers were to get a share of any profits that might arise from the sale of the wool in Great Britain if sold by the British Government in the ordinary way. The “ ordinary way” in which all these profits were calculated right through the period was to cover the whole of the clip, and to take the average sales of all grades of wool, and not of specific grades. That was what was meant by the promise given by Mr. Hughes, but was certainly not the basis of the claim submitted. However, I leave that aspect of the question, and come now to the other recipient of the Government’s generosity, the British Australian Wool Realization Association, which at the end of 1920 stepped into the shoes of the Centra] Wool Committee. I want honorable members to mark the difference between the two bodies. Although they both have the same chairman, they are not the same. The Central Wool Committee was set up by the Commonwealth Government to represent the wool interests of Australia and the Government in administering the Pool, whereas the British Australian Wool Realization Association is a private company with shareholders. The claim against the Government was originally made by the Central Wool Committee, and half of the amount was paid by the Government to that body, whereupon the Central Wool Committee paid away half of the amount it received to the British Australian Wool Realization Association, and credited the other half, £68,000, to the British Government. It cannot be claimed by the Commonwealth Government that they are not responsible for what was done with that money. The obligation rested upon them to see that the Central Wool Committee disbursed it in the right way, and to ascertain why Australian money was sent overseas to a Government that had no more claim to a penny of it than I had. The British Australian Wool Realization Association was formed into a company to take over the whole of the assets of the Central
Wool Committee. When originally formed it consisted entirely of the people whose interests were in the Pool, the wool suppliers of Australia; but it is a very’ different body to-day. The Central Wool Committee could have been continued to realize the wool without the formation of a private company or the issuing of shares or trading in shares. But that course was not followed. The British Australian Wool Realization Association was formed. The claim for the growers’ profits, based on the Hughes promise, was lodged in November, 1920, and was not met until November, 1923, but during the period a big change came in the holding interests in the British Australian Wool Realization Association. ‘ The promise made by Mr. Hughes in this House was to Australian growers of wool in respect of whatever profits should arise of the re-sale of wool, and also in respect of their individual shares, in the Pool. But since then the big fish have swallowed the little fish to a large extent, big woolgrowers have bought out small growers, and speculators who have never grown a pound of wool are to receive a large share of the benefits lavishly distributed by an Australian Government. If the claim was a just one, why was it not paid immediately it was submitted? If it had been based on the right calculation of London parity, surely there was no need to wait for the realizations. The money could have been paid at once. I do not admit that the claim was rightly based, but, even if it were, the Government did not meet it. It was resisted by the Hughes Government for two years as an unjust claim. For one-half of that period the present Prime Minister (Mr. Bruce) was the Treasurer in the Hughes Government, and should have known whether the claim should be met. During the whole of that period also, the present Attorney-General (Sir Littleton Groom) was the legal adviser of the Government, and Senator Pearce, the present Minister for Home and Territories, was also a member of the Government. Surely they could not have consented to this Government paying if the claim was not a just one.
Mr SCULLIN:
– That is true. If the claim was just - a fact which I dispute - the delay in paying it has seriously injured a large number of people. The present arrangement benefits the big men and speculators, who have succeeded in cutting out the small men. Although the wool sold was outside the Pool,, and the growers had no legal claim, the former Prime Minister promised to consider their case on its merits. When Bawra was formed the directors took steps immediately to push out 53,000 small woolgrowers, whose claim to consideration was unquestioned. This was done without plebiscite or vote of any kind. They were simply informed that because their interest in the Pool for four years had been £100 or under they would be paid off in cash. I admit that their interests were small. Nevertheless they were entitled to the same consideration as the big wool-growers. They were pushed out of Bawra on a valuation of 60 per cent, of the appraised value of their wool interest. Yet we are told that this money was paid to honour a promise made by the then Prime Minister to the wool-growers of Australia! I have here a copy of a circular letter sent to one of these small men - a returned soldier settler - informing him that, no doubt, he would be glad to receive the cash - on the depreciated valuation. Those who held on to their wool interests in Bawra realized the full appraised price. In their “generosity” the directors of Bawra, besides calculating the wool interest of £he small men at only 60 per cent, of its appraised value, discounted a portion of it at 7 per cent, per annum for three years and the bulk of it at 7 per cent, for five years. But the shareholders of Bawra did not have to wait five years to get their full pound of flesh. To show how quickly the tendency to change the personnel of Bawra set in, I shall quote again on the authority of the Chairman-
Mr. Maxwell. Was that change made after the claim had been refused ?
Mr SCULLIN:
– I would not say that. The former Prime Minister never refused to honour his own promise, but he did dispute the basis of calculation. After that, small holders were pushed out and others bought out. Sir John Higgins, speaking on the 7th September, 1921, about nine months after Bawra had been formed, made flr” significant statement -
In time many shareholders may not be woolgrowers. . The ‘ number of share certificates awaiting transfer indicates that the change in ownership will be material and rapid.
It was. In the share list issued by Joseph Palmer, Sydney, on the 10th April, 1924, it is stated -
Bawra’s shares always change hands by the hundred thousand each week.
This is how the profits had been made. Many of these shareholders bought on a wool interest of 60 per cent, of the appraised value, and sold for approximately the appraised price.
Mr LISTER:
CORIO, VICTORIA
– Was that done without, protest ?
Mr SCULLIN:
– I do not think there was any protest, because at the time these small growers did not know what the position was, so they accepted the terms.
Mr Hill:
– Nor did anybody else know.
Sir Granville RYRIE:
– But they got more than the shares we’re worth at the time. Some of the shares were sold at 10s.
Mr SCULLIN:
– Th.e shares were issued at £1 and, I think, were sold as low as 12s., but this depreciation was due to the fact that the Chairman and directors of the Wool Committee were issuing gloomy reports, with the result that while they were bearing down values, other , people in the “ know “ were buying shares which will return 30s. One of the trusted members of the Wool Committee, Mr. Edmund Jowett, formerly a member of this House, doubled his interests in Bawra by purchases when the share market was down. I advise the honorable member for Warringah to keep off that track. At the time nobody could get information as to the real position except the people who were in the “know.”
Mr Cunningham:
– And they were buying into Bawra.
Mr SCULLIN:
– I shall give the names of some of ‘them before I finish. At that time the claim on the Government was a doubtful proposition. I do not say that none of the original holders have benefited or that there are not still some small holders in Bawra. There may be. Good luck to them. The only people who remained in were those who could afford to wait. This payment by the Government is a windfall to the big wool interests. Holders of 100,000 shares will benefit to the extent of over £1,100 in bonuses. A group of individuals and companies, totalling about twenty, hold- ing approximately 1,000,000 shares in Bawra, will receive over £11,000 from the Government. Some will receive about £2,000. In the main these are the people who, last year, were to get £1,300,000 remission in land taxation. The same names crop up here, there, and everywhere - the Australian Pastoral Company,the Australian Estates and Mortgage Company, the Australian Mercantile, Land and Finance Company, the Melbourne Trust Company Limited, Dalgety and Company, the New Zealand Loan and Mercantile Company, Messrs. Jowett and Creswick, the Fairbairns, the Austins, and theRussells. When 1 asked in this House for the file of the transactions to be placed on the table for the information of honorable members the Prime Minister advised me that the matter was under consideration, and that he would see whether the information could be supplied withoutprejudice to any interests.
Mr Bruce:
– The honorable member ought to tell the House what the papers were.
Mr SCULLIN:
– I shall do that. I asked for the balance-sheet and financial statement of the agreement between the Government and the Colonial Combing, Spinning and Weaving Company. The right honorable gentleman refused my request on the ground that the matter was under consideration by the Govern ment. That might have been the position. I did not ask, nor do I expect, to be made available papers in relation to important matters that are still under consideration. But I asked a second question regarding the specific file relating to this claim and its settlement, and surely that matter was not still “ under consideration,” because the agreement to settle the claim was made last year, and half of the money has been paid. This is the question I asked in the House on the 14th May, and the Prime Minister’s reply thereto -
Last week I asked the Prime Minister to place upon the table of the House the file of papers relating to the claim made by the Central Wool Committee and Bawra, against the Commonwealth Government, under the contract made in March, 1920, with the Colonial Combing,Spinning and Weaving Company Limited. Seeing that the dispute was settled six months ago, will he place the correspondence on the table of the House for the information of honorable members?
Mr BRUCE:
NAT
– The relations between the Colonial Combing, Spinning and Weaving Company, the Commonwealth Government, and the Central Wool Committee are such, as I pointed out last week, that I am not prepared to lay the papers on the table until I have had an opportunity of fully considering whether the publication of the facts will injure the in terests of any one. As soon as I have had an opportunity of considering that aspect of the matter, I shall, if possible, make the papers available.
That question did not involve the Colonial Combing, Spinning and Weaving Company and its relations with the Government. It referred to a claim upon the Commonwealth made by the Central Wool Committee, acting for Bawra, and now, I understand, for the British Government also. The information I sought should have been at the disposal of honorable members, otherwise, how are we to know by what means the Government arrived at this settlement, and upon what basis they paid out the money? This amount of £275,393 is treated very lightly by the Government, but when the Treasurer wrote the cheque, on the 14th November last, within a few weeks after the House adjourned, he was pleading with the people to lend him money for the payment of war gratuities. That sum represents the income tax which the Government collects from 150,000 workers receiving the basic wage, or less. If the Government wish to be generous, let them remit the taxation of those people instead of making gifts to squatters and speculators. The same amount of money would have built 500 homes for the workers. And surely it would have been better to build homes for the poor than to adorn the mansions of the rich, as the Government have done.
Let me sum up the facts I have placed before honorable members : There were no profits over the appraised price, therefore, the ex-Prime Minister’s promise placed no liability upon the Government. But even if there were any profits, the British Government were not entitled to one penny of them, and they should have been given, not to Bawra, but to the original shareholders in the Wool Pool to whom the promise was made by Mr. Hughes. The Government, by entering into this agreement without consulting Parliament, has flouted this Parliament and treated honorable members as mere cyphers. It has violated a principle of responsible government, for which some honorable members in the Country party have clamoured so loudly. We are told by the chairman of Bawra that he was in constant conference with the Prime Minister (Mr. Bruce) in regard to the settlement; but the right honorable gentleman did not drop a hint in the House that he was conferring with Sir John Higgins, or had arrived at a settlement of the claim. If he defends himself by saying that Parliament was not in session, his position becomes worse, because only a week elapsed between the adjourning of Parliament and his departure for Britain, and are we to assume that, while preoccupied with packing his luggage, he parcelled out £275,000 of the people’s money? Not only did he flout Parliament by making this agreement, but he failed to take the earliest opportunity, after the re-assembling of Parliament, to explain what he had done. It has been suggested that we are belated in challenging this settlement. That is not true. I deliberately waited to give the Government an opportunity, after the reassembling of Parliament, to state what had been done; but the Government maintained silence. Then, when I asked for the file to be placed on the table, the Prime Minister evaded my request. Apparently, we, the representatives of the people and the custodians of the public funds, have no right to information regarding expenditure which is being incurred without parliamentary approval. I warn honorable members on both sides of the House that if they will not assert the right of Parliament to control the finances, they must cease to talk of democratic government, and must surrender their claim to be the custodians of the public purse. The claim by Bawra was based on a promise made in Parliament, and the negotiation and finalization of the settlement was a proper matter to be submitted to Parliament before any money was paid out. Parliament is the authority to interpret the undertaking given by a previous Prime Minister, and surely he knew best what he meant by that promise. The claim was made in 1920, and was not settled till 1923. Evidently it was not an urgent matter, but the Government made it urgent, and paid out half of the money without waiting to get a parliamentary appropriation. With all due deference to the legal minds, I suggest that the contract which the Government have entered into is not legal. The Government should have been warned by the decision of the High Court, in regard to a claim by the Commonwealth for a share of the profits of the Colonial Combing, Spinning and Weaving Company, arising out of a previous agreement, that the facts were on the side of the Government, but the executive had no power to bind the Commonwealth by an agreement which was not validated by Parliament. The settlement of Bawra’s claim has not been validated by Parliament, and I suggest to honorable members that in respect of the unpaid moiety they can still save the people of the Commonwealth £137,000 by refusing to validate an agreement that has no sound basis. It is an agreement in opposition to the terms of the contract. It is contrary to previous practice covering a period of four years. It is against the promise made by Mr. Hughes in Parliament, it is against the intention of Parliament at that time, and it is against justice and common sense. It is, at the same time, a very serious blow at the Australian people. I thank honorable members for the patient and attentive hearing they have given me. I leave the facts to their consideration,, and ask them to weigh carefully the three issues raised in my motion : (1) That there was no legal or moral claim for the payment of one penny to the British Government or to Bawra; (2) that the Government had no right to enter into an agreement without consulting this House; and (3) that the Government had no authority to pay out money in pursuance of that agreement without obtaining a parliamentary appropriation.
Mr BRUCE:
Prime Minister and Minister for External Affairs · Flinders · NAT
– I congratulate the honorable member for Yarra (Mr. Scullin) upon the manner in which he has stated his case. Very many of the statements he made reminded me of what I have been saying for some months past. The matter in respect of which an agreement has been made has been the subject of discussion for something like three years, and the attitude I have adopted in behalf of the Government has been not at all unlike that adopted by the honorable member for Yarra to-day. I propose to state exactly how this claim originated, and how the settlement was arrived at; but there are a few preliminary points which I desire to clear up first. The third paragraph of the motion which declares that the Government have paid out £137,695 15s. without parliamentary appropriation, may be dismissed at once. No payment has been made without parliamentary appropriation. The money paid in pursuance of the agreement made by the Government came from the Treasurer’s Advance, which is an appropriation by Parliament.
Mr Scullin:
– That is a quibble. It is not an appropriation.
Mr BRUCE:
– The amount is voted by Parliament to enable the Treasurer to make advances to meet expenditure, to cover which the Ministry must afterwards bring down Supplementary Estimates, and in these Estimates the expenditure is particularized. There is nothing improper in what the Government has done in this respect. The honorable member for Yarra (Mr. Scullin) quoted from the Auditor-General’s report. Surely that officer is the person who should draw attention to any improper action of the Government in the expending of the public funds. In the past, Auditors-General have drawn attention to many cases in which they have considered that irregularities have occurred. In the State of Victoria there was one very definite instance of such action, but I do not propose to refer to the matter now in detail. The Auditor-General, in dealing with this case, mentioned the fact that the claim of the Central Wool Committee was for £39S,000, and added, “Settlement has now been effected by compromise.’’ He then gave the number of bales involved in the claim, and stated the amount to be paid as £275,393. His report continued -
The particulars supporting this claim have been examined and found correct by the Audit Inspector engaged in the examination of the Central Wool Committee’s accounts.
He said further that one-half of that amount, or £137,696 15s. 5d., had been paid. I want to make it clear to the House that there has been nothing improper in the action of the Government, and I also desire to remove the suspicion that there has been any secrecy in regard to it, or any attempt to cover it up. Nothing of the kind has occurred. The whole transaction has been made perfectly clear, not only by the statements that have been published from time to time, but also by what appears in the Auditor-General’s report itself. The Ministry is accused of having entered into an agreement without having first consulted Parliament. Yet all we have done has been to honour a promise which was given. The honorable member for Yarra, after referring to that promise, said that action in regard to it had been too long delayed. In that, I agree with him, and after careful consideration of the whole of the circumstances, the Government decided on a basis for giving effect to it which Ministers considered fair and equitable. An arrangement was thereupon come to for which parliamentary sanction will be asked when the Supplementary Estimates are under consideration. The honorable member this morning mentioned three claims as having been put forward by the Central Wool Committee, and spoke also of a claim that the British Government was entitled to payment in respect of these transactions. Dealing with this claim, the honorable member occupied thirty-five minutes in trying to show that the British Government was not entitled to any payment. That is exactly the view that I have taken all along. It was expressly laid down that the British Government was not entitled to any of the money involved in the case. I regret that the honorable gentleman, towards the end of his speech, seemed to suggest that certain individuals had acted in an improper manner in buying Bawra shares. He suggested that there had been something in the nature of a conspiracy on the part of the big men to try to benefit themselves by an arrangement which they knew beforehand would be profitable. There is not the slightest ground for that suggestion.
Mr Scullin:
– I did not make such a suggestion. I suggested that the payment was a windfall for those who bought into Bawra.
Mr BRUCE:
– I am glad to have that assurance from the honorable member, because his remarks certainly left on my mind the impression that he considered that certain persons had acted improperly.
Coming now to the case itself, the first point to be considered is the interpreta- tion to be placed on tlie promise that was made by Mr. Hughes. There is nothing else in the case. There have been long and protracted discussions to ascertain exactly what that promise meant, and the basis which should be adopted in giving effect to it. Two conflicting views were put forward; first, that the basis should be the price of the wool fourteen days after selection - that is the price in London - and that from such price the costs and expenses of getting the wool to London should be deducted. That would give a figure equivalent to London, or, as it was at that time, world’s parity. The other view was that the wool should be paid for as if it had been shipped to Britain and sold in the ordinary way. The honorable gentleman has suggested another basis of valuation. He seemed to think that we should take into consideration the profits made by the Wool Pool during the whole period of its operations, and thus determine what would have been received for the particular quantity with which we are dealing. The honorable member appears to have overlooked the fact that all wool taken out of the Pool for specific purposes was sold in an entirely different manner from the wool remaining in the Pool. The wool under discussion was taken out of the Pool to be sold to supply the Colonial Combing, Spinning and Weaving Company Limited for manufacture into tops, just as other wool was taken out of the Pool to be sold to other local manufacturers. It was wool taken out of the Pool for specific purposes. But before dealing with that matter further. I wish to remind the House of the circumstances in which the agreement of 1920 was made. For about fifteen months the works, of the Colonial Combing, Spinning and Weaving Company had been closed down, and it was felt imperative that some action should be taken to re-establish them. Eventually - in March, 1920 - an agreement was arrived at, by which wool was to be provided to meet the full requirements of the company, namely, 10,500 bales, and its works were to be immediately restarted. That wool was to be paid for at the appraised price adjusted to the flat rate. But it was recognized that the company, when provided with wool at that price, would be in an extraordinarily for- tunate position, and the further agreement was made that if it made the wool into tops, and exported them, the Government should receive 80 per cent, of its profits, and the company should retain the remaining 20 per cent. That arrangement gives a very fair indication of the profits that were expected to accrue from the operations of the company. At the present moment I do not propose to say very much regarding the financial results, actually obtained by the company, but it is extraordinary that, having received wool at this very favorable price, and having sold its exported tops in markets where good prices were ruling - it was later when the tremendous slump in wool occurred - it made no profits. Other wooltop manufacturers who were receiving wool on less advantageous terms were making very large profits. The further fact should be noted that wool was sold to other wooltop manufacturers at the world’s parity price after the termination of control in June, 1920, and they appeared to be able to sell tops manufactured from it without coming to financial disaster.
Mr Charlton:
– Will the Prime Minister give the names of the companies to which he refers?
Mr BRUCE:
– I can assure the Leader of the Opposition that I am stating facts, but I do not wish to say very much about this part of the subject at the present moment. The papers which the honorable member for Yarra asked me to lay upon the table, regarding which he appeared to consider that I had not treated the House properly by refusing at this juncture to table them, are the papers referring to this matter. I felt at the time that it was inadvisable, in the interests of the general public, to make them available to honorable members. I have explained the inception of this arrangement in order to show that it was anticipated that very large profits would be made by the Colonial Combing, Spinning and Weaving Company, and that that was the reason why the Government of the day was influenced to say, “ The growers are entitled to some consideration for the wool supplied to this company for the manufacture of wool tops.” I stress the fact that when wool was made available for specific purposes, such as the manufacture of wooltops, a particular procedure was followed, and I wish to make clear the basis upon which such wool was made available. Under the arrangement with the British Government, of which the honorable member for Yarra has spoken, wool required for local purposes was made available to manufacturers in this country. It was supplied, for instance, to woollen manufacturers for making cloth for Australia’s use. Such wool was sold at the appraised price. But with wool sold to local manufacturers to be made into wooltops, a different arrangement was made. There was first an arrangement which lasted, I think, for six or eight months, under which, in such circumstances, all the profits arising out of the transaction were divided between the companies concerned and the Government, the companies taking one-third and the Government two-thirds, the Government’s share being regarded as a licensing fee. The second arrangement provided that the wool should be supplied at appraised prices adjusted to the flat rate, and that the companies should receive’ a poundage rate for the wooltops produced, any profits that were made going to the Commonwealth Government. It will be seen, therefore, that special conditions were laid down regarding the profits that might be made from wool used for specific purposes. These companies were under a further obligation to pay for the wool an additional amount, equivalent to the share of the profits that the Australian Government might be entitled to under the 50 per cent, arrangement which was come to. The general practice was that in all cases where wool was taken for a specific manufacturing purpose, where large profits were anticipated, the profits were not to be retained entirely by the people who made them, but were to flow back, to a great extent, to the Commonwealth Government. To the Colonial Combing, Spinning and “Weaving Company, special terms and conditions were given, and, instead of the profits coming back in the form of a poundage rate, or otherwise, the Commonwealth Government was to take 80 per cent, of them, and the company 20 per cent. Immediately that arrangement had been made, the question was asked what was to be the position of the wool-growers. The ex-member for Wannon (Mr. Rodgers) was very active in this matter. On the 26th March, 1920, in the course of a speech on a motion for the adjournment which he had moved, he raised the question whether the profits of the Commonwealth Government under the agreement should be paid into the Pool for distribution to the wool-growers, or the wool-growers should be placed in the same position, in respect of wool taken by the Colonial Combing, Spinning and Weaving Company under the agreement, as if it had been subject to the contract with the British Government. In his reply the then Prime Minister (Mr. Hughes) rejected the first suggestion, and said with regard to the second -
While I contend that under the agreement the wool used for local manufacture is wholly outside the Pool, I am ready to consider the proposal fairly on its merits. … I am prepared to say now, on behalf of the Government, that I will give favorable consideration to the proposal. I want to make my intention perfectly clear. I mean to say that 1 am prepared to consider whether the grower shall have as much profit as he would have had if the wool had gone into the Pool, and been sold to the British Government in the ordinary way.
On the 16th April, 1920, Mr. Rodgers asked the then Prime Minister the following question : -
Whether the Government is prepared to allow to the Australian wool-growers in respect of the wool supplied to the Colonial Combing, Spinning and Weaving Company, under contract for the manufacturing of wooltops, the same share of profits in such wool as if it formed part of the wool sold to the Imperial Government.
Mr. Hughes’s reply to that question was “ Yes.” Soon after, contention arose as to what Mr. Hughes’s statement actually meant, and it was then that discussion of the two alternative methods of assessment cropped up. One alternative was that, following the ordinary custom of the trade, payment should be made fourteen days after selection, the price to be arrived at on the only basis then possible, namely, the London parity. The other alternative was to assume that the wool had been sold to Great Britain, to discover the price at which it would have been so sold, and give credit on that basis. I have been through all the papers, and those are the two alternatives that have been under discussion all the time. It was a question whether this wool should be treated in the way in which wool had always been treated when it was required for a specific purpose and specific profits were made upon it, or whether it should be deemed to have gone into the general Pool and an adjustment made after the whole period had expired and accounts were balanced. These are the alternatives upon which the argument on the subject has been continued for something over three years. When I came into the matter no finality had been reached. I have already said, that with regard to the claim on behalf of the British Government, I have followed exactly the same line of reasoning as the honorable member for Yarra. I have resisted that claim, and the Government has not recognized it. But we have to remember that the position is not quite so simple, or so certain, as the honorable member for Yarra has described it. He quoted what the late Senator E. D. Millen said in the Senate, and what Mr. Hughes said in this House; but in this dispute what Mr. Hughes and what Senator Millen said has never been accepted as a correct interpretation of the true position.
Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP
– By whom has it never been accepted ?
Mr BRUCE:
– By those who are contending for the rights of the woolgrowers. I fought for the view that, the British Government is not entitled to anything. Having made it perfectly clear that there was a dispute on that point which had to be settled, I want to explain what the contentions of the two sides to the dispute are. The honorable member for Yarra, in speaking to his» motion, has made it perfectly clear that the agreement contained in the cablegrams which have been referred to shows that wool taken for Australian requirements was to be exempted from the conditions applying to the wool sold to the British Government. The contention of the Commonwealth Government, and the interpretation which Mr. Hughes and Senator Millen supported, was that Australian requirements covered all wool which Australia needed for such purposes as the stimulation of our manufactures, including the making of wooltops for export, and any new industry in which we could employ wool. The contention of the other side has been that we were only entitled to exempt from the agreement what was required for our own internal consumption - as,. for instance, that” made into woollens for local use. Another contention has been that wool kept out of the Pool and used here in the manufacture of, for example, blankets for export to New Zealand, should be subject to the original arrangement, and valued at 15Jd. per lb., and that a guarantee should be given to the Customs Department, at the time of the exportation, that if there were profits arising out of the transaction, an additional amount would be paid.
I ask leave to continue my remarks at a later stage.
Leave granted; debate adjourned.
Motion (by Mr. Bruce), by leave, agreed to -
That all other business be postponed until after the motion of want of confidence, now before the House, is disposed of.
Sitting suspended from 1 to 2.15 p.m.
Mr BRUCE:
– I have said that we have resisted and have refused to admit the claim made on behalf of the British Government, but at the same time I have endeavoured to show that there are arguments which can be advanced in its favour, and that it is not a frivolous or foolish claim.’ “We fought it, and in this settlement we have defeated it. But it is only fair to show why the British Government should be entitled to some participation in these profits. Wool used for particular manufacturing purposes, and out of which special profits were expected to be made, was treated differently from both wool used in Australia for the manufacture of cloth for our own requirements and wool which went directly into the British Government’s purchase.
I come now to the 4,840 bales which went to the Colonial Combing, Spinning and Weaving Company Limited before this agreement was entered into, and in regard to which a claim was made on behalf of the growers. The honorable member for Yarra (Mr. Scullin) said that that claim was absolutely ridiculous, that it was. impudent, and that nothing could be said in its favour. The claim that the 4,840 bales should be included was also resisted and they were excluded ; but I want to show that it was not, as the honorable member suggests, a frivolous and ridiculous claim. The wool went to the Colonial Combing, Spinning and Weaving Company prior to the agreement of the 12th March being entered into, on the understanding that it was to be used for the manufacture of wooltops. At that time no wool was going to the Australian wooltop makers at the appraised prices. Under the first arrangement one-third of the profits of the wooltop manufacturing companies were to go to them, and twothirds of the profits to the Government. There was a subsequent arrangement under which the wool was sold at the appraised price, brought to the flat rate, and a poundage rate paid, and the whole of the other profits were to go to the Government. But this particular company had obtained 4,840 bales of wool at the appraised price taken to the flat rate, and was not under any obligation to pay Jd. of any profits that might be made to any one. That was claimed by the growers to be an invidious distinction in favour of a company which, it was said, was thus given an advantageous position. Consequently, when the agreement was made, in March, 1920, for a further 10,000 bales to be supplied to the company, and permission was given to the company under that agreement to export - which, but for this agreement, it would not have been able to do in regard to the 4,84.0 bales it had already obtained - the growers said, “ These people have this wool at the appraised price, brought down to the flat rate. They will be able, by reason of the agreement with the Colonial Combing Company, to export it, and make great profits out of it, and the growers ought to get their share.” They asked why these people should be the only ones who were not compelled to pay more when the wool was being used for the manufacture of wooltops. We have, however, also resisted and defeated that claim under the actual terms of the agreement. The agreement entered into in March provided for the supply of 10,000 bales, and gave permission for the export of wooltops. It made no express reference to the 4.840 bales, but it bound the Government to permit the export of all wooltops which might then be on hand, or which might subsequently be manufactured. Basing its position on the ground that Mr. Hughes’ promise only applied to wool selected under the agreement itself, the Governhas refused to make any payment in respect of the 4.840 bales. That is what we have done, and that is why the 4,840 bales were excluded. I am dealing with this point, as I did with the claim made on behalf of the British Government in order to show that there was some sub stance in the contentions put forward, and, in the opinion of the Government, at least a basis for argument. It seemed to us that a compromise was the best way to settle the whole matter.
I now come to the third point, concerning the 9,047 bales, in regard to which we have admitted the claim, and have made a settlement. These 9,047 bales were actually selected under the contract of March, 1920, and were obviously subject to the contract entered into on that date. The ex-Prime Minister (Mr. Hughes) said, in this House, that the growers were to derive some advantage from the arrangement that had been made with this company, under which the Government was to receive 80 per cent, of the profits. The difficulty was to arrive at a basis on which to determine the price of the wool. It was contended that payment should be on the basis of “ fourteen days after selection.” The practice in the trade is, in normal circumstances, that when wool is sold by auction, settlement shall be made fourteen days after the auction has actually taken place. This, however, was a case not of auction but of selection, and there was no price determined at the time of selection. The growers have contended throughout that the price should be the world’s parity at the time when the selection took place, or in other words, the London price at that time, less costs, charges, and expenses involved in transporting the wool to London. The other basis we have contended for is that the price should be that which would have been realized if the wool had been included in the British Government’s purchase, shipped in due course to Britain and sold at a certain date. The honorable member for Yarra has suggested that if that had been done there would have been no profits. He quoted exhaustive figures to show that the average price received for the whole of the wools in Bawra in 1921 was £22 per bale. Then he said that he would go a step further; that he would exclude from his calculation cross-bred wool, since some might say that its inclusion depreciated the average price, and that, taking only merino wools, the average price in 1921 was only £26. I wish to make it very clear, however, that we have to determine to what extent the assets belonging to the growers would have been increased if the 9,047 bales of wool bad been taken to Britain, and bad realized a certain amount over the 15 1/2d. per lb. There are 377 types of merino wool, and the Colonial Combing, Spinning and Weaving Company selected its 9,047 bales from the better types. I have the details of i ts selections before me, and honorable members may take it that practically the whole of its wool was selected from the first 50 types. The 377 types of merino wool varied in appraised price from 48d. to lOd. per lb., and since the company selected its 9,047 bales from the higher types, I think it must be obvious that a substantial amount would have been added to the assets of the growers had these wools been sold in the ordinary way in Great Britain. It is practically impossible, however, to ascertain by how much the growers’ assets would have been increased by such a sale. It is impossible to determine when those bales would have been shipped, when they would have been sold, and what prices would have been realized. Nobody could say what would be a fair time to accept as the time of sale, in order to assess those wools at their proper value. Although the Government contended all along that that was what should have been done, and I emphasized that view, it eventually came to the conclusion that the thing was impracticable, and that a settlement could not be made on that basis. Consequently, we adopted the basis of settlement within fourteen days of selection, insofar as we admitted the claim. It has been suggested that this meant the selection of a peak point in wool prices, and that, thereafter, a serious slump occurred, from which the wool market has never recovered.
Mr Scullin:
– I did not say that.
Mr BRUCE:
– If that had been the case, and this wool had been sold, after the slump, it is quite obvious that a low price would have been realized. An examination of the chart of the prices paid for finer types of wool will show that while it is true that there was a depreciation, it is also true that there was a subsequent appreciation. The actual figures show that if we take 100 as the basis in 1921, the figure for 1923 would be 243. In view of all the circumstances, the Government considered that it was impossible to arrive at the actual price this wool would have fetched if it had been sent in as part of the British Government’s purchase. Consequently, it concluded that the best thing that could be done was to effect a compromise, and so settle the claim, which had- been a continuous trouble for the last three and a half years. The question of the claim for interest was also raised by the honorable member for Yarra. It became a substantial factor in the situation. Interest was claimed, not from the date of the agreement, March, 1920, but from November, 1920, and the amount of the claim for interest increased until it reached about £50,000. The longer we delayed settlement, the more this item would be increased. The mover of the motion, however, brushed aside the claim for interest, and said that it also was perfectly frivolous, and totally untenable. Again, I agree with him. That was the third part of the claim that the Government refused to accept. I venture to suggest, however, that such a claim cannot be treated so airily and lightly as the honorable member would have us believe. The whole basis of his contention was that the wool-growers should be put in as good a position respecting this wool as they would have been had it gone abroad in the ordinary course. How is he or any one else to determine what would be a fair price for this verymuchsoughtafter and fine type of merino wool ? If the Combing Company had not secured it, it might have been shipped almost immediately, and the money realized for its sale have been invested and have been interest-bearing ever since. There is nothing to show that that would not have been done, and in that case no honorable member could deny that there was some justification for the point of view of those who urged that interest should be paid. Of course, the wool might not have been shipped until a short time before the Pool was wound up, but whether the time was short or long, some claim for interest would undoubtedly have been made. However, the interest claim was rejected by the Government. In three cases out of the four our compromise took the form of a point-blank refusal to acknowledge the claim. I suggest to the House that the settlement that has been made is reasonable and fair. Great difficulty had to be faced at all points. We absolutely refused to accept any liability in respect of the claim made on behalf of the British Government.
Mr Maxwell:
– Is that claim still being pressed ?
Mr BRUCE:
– No.
Mr Scullin:
– But the Government has paid the money.
Mr BRUCE:
– The Government paid the money to the Australian growers. The honorable member for Yarra was incorrect in saying that we had paid this money to the British Government, We have not paid the British Government a penny. We absolutely rejected the claim made on their behalf, and said we would not pay it. We paid the money to the Australian woolgrowers, and they, rightly or wrongly, in the exercise of their own generous spirit, paid half of it to the British Government. But the Commonwealth Government has nothing to do with that.
Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP
– Did not the Government make any arrangement with the growers regarding what they were going to do with it?
Mr BRUCE:
– None at all. I conducted the whole of the negotiations, and absolutely refused to acknowledge any claim by the British Government. I said that the only liability recognized by this Government was that incurred by it under the promise made by Mr. Hughes in this House, and that that applied only to the Australian grower. There was no mis. take as to the position which this Government took up. We refused to acknowledge any liability respecting interest, and that claim was dropped completely. We disclaimed any responsibility in respect of the 4,840 bales, and stated that the subsequent agreement was the only instrument upon, which we would base any settlement. We limited the matter to the 9,047 bales. I have endeavoured to explain to the House the reasons which led to our agreeing to a settlement in respect of the 9,047 bales, on the basis of the prices ruling fourteen days after the selection of the wool. That basis was agreed upon, not because we felt that settlement should be made in that way, but because it was found absolutely impracticable to ascertain the price that would have been received had the wool gone forward in the usual manner. We were also influenced by the fact that that was the custom of the trade, and it was the basis upon which ordinary sales were effected immediately after June, 1920, to top-makers and other persons affected. Those are, broadly, the grounds on which the Government contends that this is a fair and reasonable compromise. The actual amount claimed was £398,010, together with interest at the rate of 6 per cent, per annum from the 4th November, 1920. In addition, we should have had to add interest from the 1st January, 1923, and to double the amount of the claim, if there were anything in the contention that the British Government also should participate, the result being that the total would have reached nearly £900,000. The Government settled the matter for £275,393 10s. lOd. That, as I have said, is based on the piece prevailing fourteen days after selection by the Colonial Combing, Spinning and Weaving Company, and, of course, is in respect of only one-half of the profits. We have absolutely refused to have anything to do with the claim for the other half which would have gone to the British Government. There is one other point. Under the arrangement with the British Government, 15 1/2d. was to be paid for every pound of wool right over the whole clip. Obviously, the grower of wool of low grade could not be given the same amount as the grower of wool of high grade. Therefore, a basis of appraisement was laid down. There were some 848 types of wool appraised, at prices which, it was calculated, would return lo-Jd. per lb. over the whole Australian clip. The British Government accepted that appraisement, and every year an appraisement was made in relation to the flat rate. The number’ of lbs. of wool in each of the 847 classes was ascertained, and their values fixed, and the prices were then adjusted so that the whole clip averaged 15-Jd. per lb. The British Government accepted the appraisements, and every year an adjustment was made with the British Government on account of the wool purchased by the Australian woollen and wooltop manufacturers. In the year 1916-17, £21,192 had to be credited to Britain, because the wool supplied to Australian manufacturers was above the average quality of the clip, and the wool delivered to Britain was to that extent lower than the qualities that should have been supplied to justify the flat rate of 15£d. per lb. In 1917-18, on the other hand, the quality of the wool supplied to Australian manufacturers was below the average, and, in consequence, a credit of £61,815 became due to the growers. In 1918 there was again a credit of £44,513 to Britain, while in the year 1919-20 the credit amounted to £373,050. That very big falling off in the quality of the wool going forward is attributed, in a large measure, to the fact that much of the finer types of wool was being used in this country, and of it, the 13,000 bales taken by the Colonial Combing, Spinning and Weaving Company formed a large part. If honorable members look at the report issued by the Central Wool Committee they will see that the withdrawal of these 13,000 bales from the Pool was held to be responsible for some £200,000 of the discount of £373,050. If that is correct, it means that, because that wool went to the Colonial Combing, Spinning and Weaving Company, the Australian woolgrower had to refund to the British. Government an amount not less than £200,000, which the British Government would have paid if it had received wool of certain types and qualities to make up a value equal to an average price of 15id. per lb.
Mr Scullin:
– The Prime Minister has missed the point. The Colonial Combing, Spinning and Weaving Company paid over 2s. per lb. for that wool. It paid the highest appraised price for the merino wool.
Mr BRUCE:
– It has been estimated that because those 13,000 bales went to the Colonial Combing, . Spinning and Weaving Company, the amount paid to the Australian growers was some £200,000 less than it would have been had that wool gone forward in the ordinary way. There is only one other point with which I wish to deal, namely, the introduction of a certain amount of prejudice into the consideration of this matter. It has been suggested that the small men were put out of the Pool, and that the money in question is a gift to the big men, many of whom are not wool-growers, and none of whom are in need of assistance; that really nothing should be given to the shareholders in Bawra because they are deserving of nothing. But any arrange ment entered into by the Government to make payments must be honorably met, and the necessary money provided, without consideration of the financial affairs of the recipients. The facts, however, are not as they were stated to be. When Bawra was formed, small holders, who had not, over the four years, put into the Pool wool exceeding £100 in value, were paid in cash. These men were bought out, because the amounts involved were so small that there was really no other practical course to pursue. There were individuals among the number so paid who received for their share an amount as low as Id. or 2d. The small growers were paid in full, and the arrangement, I think, was very welcome to them. No complaint has been made by them. After these very small growers had been paid, there were still left in the Pool about 50,000 wool-growers. The honorable member for Yarra suggested that the Bawra shares had fallen into the hands of individual speculators, combines, and groups. The fact is that 90 per cent, of the Bawra shares are to-day held by those to whom they were originally issued. That effectively disposes of the honorable member’s contention.
In conclusion, I would say that the honorable gentleman, with the support of the Leader of the Opposition and the whole of his party, having moved a direct motion of censure against the Government, it is being treated as such by Ministers. Yesterday, we followed the constitutional course of adjourning the House. But my ‘ examination of the honorable member’s statements points to the conclusion that he has moved his motion on very frivolous grounds. He made a very long and admirably constructed speech, and presented his case in a manner which no one could have bettered. But, unfortunately, the greater part of it was composed of the very arguments that the Government itself has been using for months past in endeavouring to get a settlement of the matter in dispute. Over half an hour was devoted to the claim made on behalf of the British Government. We have refused to entertain that claim, contending that it is not a valid one. Further, hours have been spent in trying to arrive at a fair basis of payment in respect of the 9,047 bales, as to which there is no pos- sible doubt that something should be paid. In view of the claims already struck out, we consider that the basis determined upon is a very fair and equitable adjustment of the whole position. A great part of the speech was devoted to the claim respecting the 4,840 bales, which was stated to be ridiculous and frivolous. We do not say that it was frivolous or ridiculous, but we have refused to admit it. So far as the claim of the British Government, the claim affecting the 4,840 bales of wool and the claim for the interest upon it, are concerned, the honorable member and the Government see eye to eye. No case has been made out to justify the moving of a motion of censure. It is a long-outstanding dispute that has been settled. There is no question but that the growers had been promised that they would be given further consideration regarding wool that came under the agreement with the Colonial Combing, Spinning and Weaving Company. We have viewed the question from all sides, and have tried to be absolutely fair to all concerned. We think that the arrangement that has been made will commend itself generally to every fair-minded person. I very much regret that this money has had to be paid out of the Consolidated Revenue. The arrangement to supply these 9,047 bales of wool to the Colonial Combing, Spinning and Weaving Company was made at a time when prices were high, and they were supplied at a price which was very favorable for a profitable trade. Very few people could have had any doubt that profits would be made, and at the time most persons would have been sure that the promise made to the growers would be very easily met out of these profits. Unfortunately, the result has been very different f from what was expected . We are told that no profits have been made. But we have to honour our pledge, and to comply with the undertaking that was given we must provide the money out of the Consolidated Revenue. I am confident that the House will not agree to this motion of censure, notwithstanding that it is backed by the whole of the Opposition.
Mr CHARLTON:
Hunter
– I desire to congratulate the honorable member for Yarra (Mr. Scullin) on the very able manner in which he has presented his case to the House. His speech gives evidence of diligent search, and constitutes an indictment of the Government as strong, perhaps, as any I have heard in my parliamentary career. With all due respect to the right honorable the Prime Minister (Mr. Bruce), may I say that his reply begs the question altogether ? He does not touch the essence of the charge. It is idle for him to try to cover up the real gravamen of this charge by talking of negotiations concerning the cost of wool here and abroad, and the claims that were made. The fact which the honorable member for Yarra put before the House and the country, and which he stressed, was that the Government had expended public money without the sanction of this Parliament. I shall take that point first, although it is the third in the indictment, because the Prime Minister brushed it airily aside, declaring that Parliament had appropriated money for this particular purpose. He said that it was appropriated under the Treasurer’s Advance. Every honorable member must know that the Treasurer’s Advance is not an appropriation of money for any specific purpose The Government must bring a matter specifically before Parliament before money can be appropriated for it, and in this case the matter was not brought specifically before Parliament. There was no specific vote in respect of it. It is true that £1,500,000 was voted to Treasurer’s Advance account, and such a vote is necessary for administration purposes. Probably it is agreed to by every Parliament, but it is laid down that it must be used only for matters of urgency or national importance.
Mr Mahony:
– Otherwise it would be dangerous.
Mr CHARLTON:
– Otherwise it would be dangerous, and Parliament would no longer be the custodian of the public purse. The whole history of parliamentary government in England proves that that is so. Since the days of Pitt, British Governments have been condemned, even in connexion with matters arising out of war, for advancing large sums of money without parliamentary approval. It is perfectly clear that if there were exceptional circumstances which demanded this payment, the first duty of the Prime Minister was to bring the matter under the notice of the House immediately it met. But will any one say that this was a matter of special urgency? The dispute had continued for nearly four years, and Bawra is not yet in liquidation. Will it be argued that it was imperative that the money should be paid last year? No honorable member can claim that it was an urgent matter at that time, although I admit that the dispute was an intricate one, and that the position was extremely delicate. In support of my opening contention, I propose to quote Todd on Parliamentary Government in England.
Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936
– I direct your atten tion, Mr. Speaker, to the fact that all the members of the Country party have left the chamber.
Mr Cook:
– Not all.
Mr SPEAKER:
– That is not a point of order.
Mr CHARLTON:
– Todd points out that there is a fund on which the Government may draw in cases of emergency, and he says -
Nevertheless, the system of Exchequer control, while it effectually prevents the unauthorized issue of public money, is powerless of itself to prevent irregular expenditure. The control of the Exchequer over the issues of public money is based upon an admitted principle of our constitutional system, that no money is legally available for public purposes but that which has been placed at the disposal of Government by Parliament. The Government, in fact, are unable, under the laws now in force, to obtain from the Exchequer any money but what is drawn against some specific parliamentary grant.
Was any of this money drawn against a specific parliamentary grant? -
The issue of money by the Comptroller of the Exchequer is, moreover, accompanied by what is substantially an authoritative direction to the proper officers to apply suchmoney to the particular service for which it was granted by Parliament, and the annual Appropriation Acts have always strictly forbidden any misapplication of the funds granted therein.
That clearly shows what the British practice is. Todd further states -
And here, it may be appropriate to notice, some remarkable instances wherein the Government have assumed the responsibility of incurring expenditure without the previous sanction of Parliament, and to point out the proceedings taken by the House of Commons in such cases.
At the commencement of the French revolutionary war, Mr. Pitt advanced enormous sums, amounting to upwards of £1,200,000, to the Emperor of Germany, to aid in the defence of the “ general interests of Europe,” without the previous sanction of Parliament. Upon the attention of the House of Commons being directed to this affair, it was proposed to pass a vote of censure on the Minister, but his friends interposed, and induced the House to agree to an amendment, declaring that the proceeding in question, “’ though not to be drawn into precedent, but upon occasion of special necessity, was, under thepeculiar circumstances of the case, a justifiable and proper exercise of the discretion vested in His Majesty’s Ministers “ by a former vote of credit. Observe also the proceedings of the House of Commons, in 1805, in regard to Mr. Pitt’s conduct in loaning public money to Boyd, Benfield. and Company, public contractors, to enable them to fulfil their engagements with Government. But when, in 1840, after the prorogation of Parliament, the Government ordered an increase to be made to the navy, beyond that authorized by the Legislature - although the circumstance’s which induced the Government to assume this responsibility were exceptional and peculiar - great objection was taken in the House of Commons to the act, and it was declared by Sir Robert Peel, and other leading members, that, either a, supplementary vote of credit, in anticipation of the emergency, should have been asked for, or else the special attention of the House should have been directed thereto by the Crown, at the re-assembling of Parliament, in order to obtain indemnification for the transaction, either by a, special Act of Indemnity, or in some other way. so as to prevent its being hereafter drawn into precedent. It was finally agreed to introduce a clause into the Appropriation Bill for the purpose of recording the sense of the House on this proceeding.
A special clause was inserted in the Appropriation Bill drawing the attention of the House to the matter : yet here in the Commonwealth we are invited to sanction the action of the Government in expending money without Parliamentary authority, not in a case of urgency such as in time of war, but in ordinary circumstances, when the matter could have been brought before Parliament. Although there has been no specific vote, the Prime Minister has the audacity to tell the country that Parliament has already agreed to the expenditure. That argument will not bear investigation. The Treasurer’s Advance account should not be drawn upon in circumstances such as these. That fund is necessary for departmental purposes, but it was never intended for meeting claims such as this one, which was contrary to all the agreements into which the Government had entered. Seeing that the dispute began a considerable time before the present Government came into office, one wonders why there was such haste to settle it immediately after the adjournment of the House. Parliament had been sitting almost until October, when it adjourned to enable the Prime Minister to leave for the Imperial Conference. But
Parliament was never consulted in the matter. Honorable members knew nothing about it. The Estimates had been passed, and immediately after the House rose the Government decided to pay the money. The Prime Minister explained that the settlement of the dispute had been noted by the Auditor-General in his annual report. That officer certainly made a casual reference to the fact that there was a claim, and that it was disputed ; but one would assume from the statement of the Prime Minister that the AuditorGeneral had particularly drawn the attention of Parliament to the payment of the money. We may as well face the actual position. The Prime Minister cannot hide his tracks in this ingenious . way for the purpose, perhaps, of misleading the House. I have before me a copy of the Commonwealth of Australia Gazette containing the Treasurer’s Statement of Receipts and Expenditure for the year ended the 30th of June, 1923. Accompanying this is the annual report of the AuditorGeneral, who states -
As a result of negotiations between the Govern mont anil the Chairman of the Central Wool Committee and B.A.W.R.A., (Sir John Higgins), that portion of the claim relating to the 4,840 bales has been waived, as also has the claim for interest, <ind the Government has agreed to refund to the Wool Pool from wool tops licence-fees the sum of £275,303 10s. 10d., in full and complete settlement, which settlement has been accepted on behalf of the Central Wool Committee, B. A. W.R. A., and the British Government. . . . Of this amount, £275,393 10s. 10d., one-half, or £137,690 15s. 5d., will be credited to the British Government. . . .
That is very definite, yet the Prime Minister has assured honorable members today that the Government resisted the claim made on behalf of the British Government. The fact is that the Government paid the amount, and it sheltered itself behind the fact that the money was paid to the Central Wool Committee, although the chairman of that Committee is also the chairman of Bawra. In the AuditorGeneral’s report we are told distinctly that half the money is for the British Government. Is it not playing with the facts for the Prime Minister to assert that the Government resisted that claim ? The full settlement was for £275,393 10s. 10d., and the Prime Minister has paid half of that amount to the Central Wool Committee, which, in turn, has paid half of what it received to the British Government in compliance, according to Sir
John Higgins, with the agreement which had been in existence from the commencement of the wool transactions. If the Government should stand up to anything they should stand up to this arrangement. If they recognize only the Central Wool Committee in the matter, why do they not say so ? And why have they decided, according to Sir John Higgins, to pay the full amount in two instalments to that Committee? If the British Government was not entitled to receive anything, why was the full amount paid over to the Central Wool Committee, which, according to Sir John Higgins, was entitled to only half the amount, and no more ? I can quite understand the Prime Minister saying, “ We have right through resisted the claim of the British Government,” but I have gone through the papers carefully, and have not found one document showing that the British Government have ever submitted a claim for any part of this money. As a matter of fact, the British Government has said throughout that wool for local manufacture in Australia does not come under the wool agreement. In the face of such a statement, and in the face of the wool agreement itself, would they ask the Commonwealth Government for money which was not owing to them ? It is a slur on them to insinuate that they would make such a request. There is not a scintilla of evidence to prove that they have done sp. The only people concerned in this matter were the Central Wool Committee and Bawra. But it is useless for the Prime Minister to argue that no part of this money has been paid by the Ministry to the British Government. Bawra’s report tells us that half of the money paid has been sent to that Government in accordance with the wool agreement, which stipulated that all moneys received should be divided equally between the Committee and the British Government. We are told that there is a reference to this matter in the report of the Auditor-General. As a matter of fact, the business was not settled until the end of the year, whereas the report of the Auditor-General is dated the 30th June.
Mr Scullin:
– And the cheque was not paid until February in the year following.
Mr CHARLTON:
– These things, which are in black and white, show the weakness of the reply of the Prime Minister to the very clear charges made by the honorable member for Yarra. Nor do the documents support the attitude taken up by the right honorable gentleman that he was acting on a promise given by his predecessor. Every one knows that Mr. Hughes very strenuously resisted, for a certain period, at any rate, any claim for a share in the profits on the wooltops transactions; and that he pointed out that the wool used for the manufacture of wooltops came under the category of wool to be manufactured in Australia, . which was definitely excluded under the agreement with the British Government. In this House he made a speech which showed that it was clearly understood by the Government, Sir John Higgins, and Mr. Jowett, who were present when the wooltops agreement was drawn up - and these are the men who are asking for this money - that this wool was specially excluded from the wool handled by the Central “Wool Committee in agreement with the British Government.
A lot has been said about the position of Mr. Hughes in this matter. The honorable member for Yarra admits that Mr. Hughes said that he would give consideration to the claims of the growers, and the Prime Minister has reiterated this; but on the 17th March, 1920, Mr. Hughes said-
The contract with the Imperial Government, which ends on the 30th June next, covers the surplus of the wool clips over local requirements.
He made it quite clear that all wool to be manufactured, completely or partly, in Australia, was to be deemed to be wool for local requirements. Even the Prime Minister of to-day does not deny that. Mr. Hughes went on to say -
I desire to emphasize that point, since on the first day of the Conference which was held, and as the result of the deliberations of which the agreement with the British Government was made, there was specifically excluded from the sale all the wool necessary to keep the local manufacturers fully employed.
Local requirements have throughout been held to include the manufacture of wool tops for export,as well as manufacture of woollens for Australian consumption
So that Mr. Hughes, who drew up the agreement, distinctly laid it down that this wool was not to be included in the clip administered by the Central Wool Committee, and that position was accepted by the British Government, because they have made no claim to a share in the profits derived from the sale of this wool. Mr. Hughes was very emphatic on this point, as I could show by reading further from his speech. The honorable member for Yarra has placed before honorable members a very clear resume of the negotiations between the British Government and our own. In view of the war, the British Government saw the necessity for getting control of wool, and to achieve that end, got’ into communication with the Australian Government. An agreement was arrived at by cablegram. There is nothing but these cablegrams to indicate that such an agreement was reached between the two Governments. Among the cables which passed between the two Governments was the following, dated the 21st November, 1916, from the Prime Minister to the Secretary of State for the Colonies : -
Further, the wool required for local manufacturing purposes will, of course, not be included.
On the 30th November, 1916, the Commonwealth Government received a communication from the Imperial Government, in which it was stated -
We agree that wool required for local manufacturing purposes need not be purchased on behalf of Imperial Government.
There is no mistaking the meaning of that message. Further cablegrams passed between the two Governments. I need not read them all, but on the 21st June, 1917, the following message was despatched to the Secretary of State for the Colonies : -
Commonwealth willing to extend present contract for last season’s clip to cover coming season’s clip.
A cablegram from the Secretary of State for the Colonies, dated the 13th July, 1917, confirmed the proposal regarding the 1917-1918 clip. That was an extension of the agreement to cover the next year’s clip, on the terms of the original agreement which excluded wool used within Australia. On the 7th June, 1918, the Secretary of State for the Colonies cabled -
His Majesty’s Government are anxious to enter into negotiations to extend arrangements ona basis suitable to both Governments. His Majesty’s Government are willing to purchase the Australian clip for the period of the war, and for one full wool year commencing 30th June after the termination of hostilities. We propose that appraisement prices averaging Is. 3l/2d. shall be continued on present system. -As regards wool sold for other purposes, Australia shall receive half of any excess which may bc obtained over basic prices.
On the 12th June, 1918, the following cable was sent to the Secretary of State for the Colonies : -
Commonwealth Government, on behalf of Australian wool-growers, accepts offer His Majesty’s Government to extend the purchase of Commonwealth wool clips for period during the curency of war and one full wool year commencing on 1st July after the termination of hostilities and ending on 30th June following.
That is further evidence that the agreement was extended until twelve months after the conclusion of the war upon the old terms and conditions. The Central Wool Committee was constituted in November, 1916, to administer the woolmarketing scheme, and Bawra was formed at the end of 1920. These organizations proceeded to operate the agreement that had been made between the Imperial and Commonwealth Governments. In the light of those facts, is there any justification for paying one penny of this money to anybody? It is idle for the Prime Minister to say that he denies the right of the British Government to any share in the money, and that he has stoutly resisted the claim. “Why did he pay money to anybody under the agreement I have quoted? There are no exceptional circumstances surrounding this matter. It is as clear as day that there was no justification for paying out this money to Bawra or anybody else. Even Sir John Higgins, writing to the Secretary to the Prime Minister’s Department, on the 10th March, 1920, said -
Although the cablegrams arc numerous and lengthy, the main stipulations are few and simple. The British Government purchased the entire exportable surplus of the Australian wool clip at 15Jd. per lb., greasy weight, placed on shore in Australia, it being stipulator! in the earlier contracts that a charge of fd., and in the last extension of the contract a charge of fd., shall be added to cover holding and handling charges till the wool is placed f.o.b. steamer.
Sir John Higgins practically admits in that letter that the new arrangement was in accordance with the agreement which had been entered into earlier between the two Governments. At that time he made no claim to a share in this money, and, during the debate from which I have’ already quoted, the then Prime Minister (Mr. Hughes) said that Sir John Higgins and Mr. Jowett were present when the wooltops agreement was made, and approved of it. A paper laid on the table of the Senate on the 17th March, 1920, stated plainly-
Local requirements have throughout been held to include manufacture of wool tops for export, as well as the manufacture of woollens for Australian consumption.
Throughout the currency of this agreement, every Minister who has answered questions on the subject, irrespective of what Government was in power, has stated clearly that that was the meaning of the agreement. Indeed, it is so clear and definite that there is no just claim on the part of any outside interest to even one penny of that money. Nothing is to be gained by discussing the details of the fluctuating selling prices of wool. We have to face the facts that are before us, and the gravamen of the charge against the Government is that it paid out public money which had not been appropriated by this Parliament. The facts are incontrovertible. I have never heard a weaker defence than the statement by the Prime Minister that the payment was made out of the Treasurer’s Advance. A payment from that fund is not an appropriation; it must come before the House for approval; and if, on the grounds of urgency, the Government has to draw to a large extent upon the Treasurer’s Advance, it is its duty to bring the matter before the House at the earliest possible date. The claim for this payment ex- ‘ tended over a long period. The former Prime Minister (Mr. Hughes) resisted it up to a certain point, but, notwithstanding the strong opposition to the claim, which he expressed in his speech in this House, he eventually, succumbed to some influence, and agreed that some consideration should be given to the growers. His difficulty was to decide what that consideration should be; and he found it hard to determine, owing to the fluctuations in the price of wool. But the present Government conceded the claim. Why? Was it because of the nature of the Government, representing, as it does, two parties holding opposing views, but having equal power in the Cabinet ? Probably the representatives of the Country party thought that they were gaining a benefit for the wool interests. Judging from the Prime Minister’s early remarks, he opposed the payment and doubted the validity of the claim, which, however, was eventually acknowledged. I assume that the Government’s decision was arrived at before the Prime Minister left for England.
Mr Bruce:
– Certainly.
Mr CHARLTON:
– Whether the right honorable gentleman agreed to it, or was overruled by the majority in the Cabinet I do not know, but I am convinced that it is not in the interests of the country that the present Government should continue. It represents two parties, whose views on many questions are diametrically opposed. One party was, prior to the last general elections, constantly clamoring for economy, and condemning the Government, of which the present Prime’ Minister was Treasurer. But, in connexion with these payments, honorable members of the Country party no longer mouth economy; they apparently believe that the claim is well founded, and probably they will assert that the money will be paid to the small growers. The honorable member for Yarra (Mr. Scullin) has disclosed the trick that was played upon the small men, 53,000 of whom were bought out of Bawra at a valuation 40 per cent, less than the appraised price. That is a startling statement, but nobody has contradicted it. There is some powerful influence in this country which, in its own interests, is moulding the actions of the Ministry. The facts of the case admit of no other deduction. In all these matters involving sums of money the same persons appear to be interested. It is a regrettable state of affairs when people occupying wealthy positions in the country are able to exert the greatest influence on its affairs. ‘ We hear nothing of the masses. They have received no concession from this Parliament.
Mr Stewart:
– Has the honorable member forgotten the additional sum of over £ 1,000,000 provided for old-age pensions?
Mr CHARLTON:
– I shall qualify my statement by saying that the poorer people have received no concession of an industrial nature. We find that many of the men who are receiving this public money are among those who owe the country large amounts in respect of the taxation of leaseholds. It would have been wise if the Government had set one claim against the other. Had it not been for some members on the other side who objected to the remission of the tax being made retrospective, and who supported the Labour party, those men would have escaped paying their just dues. I believe these people still owe the tax; but they have escaped taxation for the future. What is the influence at work which enables these people, who are well off, and who in many instances obtained their wealth during the war period, to obtain exemptions when the rest of the people have to bear the burden of the war debt? There is no justification for such a state of affairs. Yet in face of that, it is proposed to pay them this money. It has been urged that this action is in the interests of the woolgrowers. But we have been told that 53,000 of them are already exempt, and that Bawra is a limited liability company, with its shares on the market. It is a speculative concern, and, like many mining ventures, allows the market to drop from time to time.
Mr Yates:
– They bear it down.
Mr CHARLTON:
– Of course they do. They so manipulate things that the bulk of the shares are held by a few people. The honorable member for Yarra (Mr. Scullin) has gone through the list of shareholders, which contains names like that of Mr. Edmund Jowett, an exmember of this House. I entertain no animus against Mr. Jowett, but he is indeed very fortunate in his business dealings. He has doubled his interest in Bawra, and is able to escape further land tax on his very large holdings in this country. Where are we drifting ? Can the country afford this kind of thing ? Can we claim that this Parliament is legislating in the interests of the whole of the people of Australia when such things are permitted ? Actions of this nature are in the interests of a privileged few. This Government has not done much, but what it has done has been all in the interests of the well-to-do people of the community. The case before us is additional evidence to that effect. I should like to know whether the right honorable the Prime Minister (Mr. Bruce) was himself agreeable to this payment being made, or whether he had to submit to the views of the majority of the members of Cabinet. It is possible that the Country party decided to withdraw their support from the Government unless the payment was made; and that the Ministry, because of its composite nature, was in jeopardy. I do not intend to deal with the various phases of the Wool Fool. I am not concerned about the details of its working, but I am concerned about the action of the Government in spending this money without having first obtained the approval of Parliament. If the payment were absolutely necessary the Ministry should have seized the first opportunity to bring the matter before Parliament. I ask those honorable members who may be opposed to my views, whether they consider that responsible government is possible when huge sums of money are expended before being specifically appropriated by Parliament, or, where special circumstances exist which render such payments necessary, without the matter being reported to Parliament at the earliest possible opportunity? That is all we are asked to decide in this instance. We do not ask where the money is going, but whether there is justification for the expenditure. I maintain that there is no justification for the action of the Government. The Prime Minister himself uttered not one word in justification. I have heard a good many censure motions submitted, but never a more severe one than that of the honorable member for Yarra (Mr. Scullin). Nor have I heard a weaker reply than that of the Prime Minister. He treated the whole question in a light and airy way.
Mr Mathews:
– He had no other answer.
Mr CHARLTON:
– The motion submitted reads. -
That this House strongly condemns the Government for its action in -
Agreeing to pay out of public revenue thesum of £275,393 10s. for distribution between the British Government and B.A.W.R.A. on a claim that had neither legal nor moral support.
Entering into the agreement without consulting Parliament; and
Making a part payment of £137,696 15s. without Parliamentary appro priation.
Had I been Prime Minister, in similar circumstances, I would have endeavoured to show that the action of the Government had some legal and moral support. It is indeed a strong indictment to say that the action of the Government in this case lacks both legal and moral foundation.
Mr Gabb:
– It has no legal foundation.
Mr CHARLTON:
– The Prime Minister has endeavoured to evade the gravamen of the charge. He has given us mere words. I give the right honorable gentleman credit for the skilful manner in which he manoeuvred around the question without touching it. Perhaps the honorable the Attorney-General (Sir Littleton Groom), with his legal training, may be able to show that these people to whom payment has been made have a legal claim. My mind would be easier if he could show that such was the case. But, in my opinion, the whole of the evidence goes to show that there is neither legal nor moral justification for the action of the Government. I repeat that negotiations had been taking place for a considerable time, and were completed before the Prime Minister left for England, although he left only a week after Parliament rose. Can any one say that he was justified in agreeing to make this payment when no statement had been made to the House?
Mr Gabb:
– Did the Government reach a decision during the last week beforethe P rime Minister departed?
Mr.CHARLTON.- I am taking it for granted that they did. That makes the case worse. They were negotiating while Parliament was sitting, and no statement regarding those negotiations was made to the House, but as soon as Parliament rose, and there appeared to he no likelihood of its meeting again for five or six months, action was taken. The Government assumed, probably, that after that period of time its action would be overlooked, which probably would have been so but for the ferret I have on my right (Mr. Scullin). Every credit is due to him for sifting the matter. He has made the charge. Where is the answer? The charge is very definite and complete. Legal men on the Government side of the House will not say that the charge of spending the money irregularly has been legally answered. If we permit this sort of thing to continue, what will become of responsible government? We have to make advances to the Treasurer, but they are intended only for certain urgent contingencies, which must be submitted to
Parliament subsequently. This expenditure was not urgent. It could have remained in abeyance until the House met. Bawra will not go into liquidation for some time. It has troubles outside this affair. This does not trouble it, because it has been settled. The Prime Minister says that the Government has given nothing to the British Government. He will not deny that the British Government will receive the full amount referred to in Sir John Higgins’ statement as due to them. An amount of over £275,000 is payable, half to the British Government, and half to the Australian wool-growers. Half that amount has been paid by the Go- vernment, and the Prime Minister has not said that he will not pay any more money for this purpose. He is committed, according to the statement of Sir John Higgins and others, to pay the remainder of the money at some time or other. If the other half is paid it will go where the first half went - half of it to the British Government and half to Bawra. Is it not idle, in view of that fact, for anyone to . say that the Government resisted the claim of the British Government - a claim that was, in fact, never made? It is an injustice to the British Government to say that it made a claim- for money to which it was not entitled. I ask now f,or documentary evidence to be produced in this Chamber, that the British Government, either by cable or by letter, or verbally to the Prime Minister, when he was in England, asked that this money should be paid. I am prepared to stake my existence as a public man that the British Government would not make such a demand. The ex-Prime Minister of Great Britain (Mr. Bonar Law) was a man of rectitude, who understood agreements and arrangements, and he would never ask for money that did not belong to his Government. The British Government did exceedingly well out of this wool deal. It received £30,000,000, and was not expecting to get any more, but our Treasury, apparently, is so overflowing that we can afford to give away £200,000 or £300,000 while our own people are groaning under a heavy burden of taxation.
Mr Paterson:
– We did not give the British Government a penny.
Mr CHARLTON:
– To whom’ was it given ? It is easy to see that the honorable member is quibbling. The Prime
Minister has said that the Government resisted the claim of the British Government, and did not pay a penny.
Mr PATERSON:
– Hear, hear
Mr CHARLTON:
– The honorable member says “ Hear, hear,” but does he know whether the British Government made the claim? I suggest that he should not libel that Government - he should ascertain the facts. It is very easy to try to hoodwink the public of Australia by making statements of that character. The honorable member suggests, by his interjection, that n >ne of this money is going to the British Government.
Mr Paterson:
– I did not say that. I said that this Government did not pay it.
Mr CHARLTON:
-The- honorable member is one of fourteen- members of the Country party who work this Government as they like, and he says that the Government did not pay it. He makes this assertion, notwithstanding that he heard the Prime Minister to-day make the most of the fact that he had “ re- ‘sisted the claim of the British Govern: ment.” Those are not my words. They are the words of the honorable member’s loader, and yet the money has been paid. In spite of this, the honorable member and others go into the country and say that not a penny is being paid to the British Government. As a matter of fact, the full amount agreed upon by Sir John Higgins and others connected with the Wool Pool will be paid. The agreement that was arranged with the ex-Prime Minister (Mr. Hughes) included, according to Sir John Higgins, the right of the British Government to half the profits, and he states the fact in very emphatic language. He said, “ As far as Bawra is concerned, we arc in duty bound to give half the profits to the British Government, because that has been the procedure under the agreement.” There is no escape from that statement, and it is idle to try to dodge it. The issue is plain and clear. Honorable members who vote for the expenditure of public money in this way should be straightforward when they go before their constituents, and should not attempt to hide behind the subterfuge that the Government has not paid the money. I have never said that the Government did pay it to the British Government, but it paid it to the Wool Com- mittee. and that Committee, under the agreement, has to share it with the British Government. Evidently the members of the Wool Committee have some regard for equity, because they realize that, even though the Prime Minister or any one else says to them that they must not give the money .to the British Government, they are in duty bound to give it. Every member of this House also knows that. I complain that, in order to escape this ugly position, the Prime Minister has said that the Government resisted the claim of the British Government, but he gave no evidence that the British Government made any claim to participate in the profits. The British Government knows, as does every member of this House who consults his conscience, that it was never intended that this wool should go into the Pool. The agreement set out clearly that wool for local manufacturing purposes should have no connexion with the Wool Pool. Strange to say, those who negotiated for the purpose of getting this money, agreed, according to the ex-Prime Minister (Mr. Hughes), that this wool should not go into the Pool; but they now come forward, when they think there is money to be made out of the people of this country, with their claim. They do this notwithstanding that they have already done well. I make no complaint about them doing well, but we in this House have a duty to perform. We must protect the public funds ; we cannot allow them to be squandered without reference to Parliament. It is idle to say that the money was passed when we granted the advance to the Treasurer. I have already clearly shown, by references to Todd and the procedure adopted in every Parliament, that the Treasurer’s Advance is not a special appropriation for a particular or specific purpose, but is merely to enable the Government to meet unforeseen contingencies which may arise in connexion with the administration of the different Departments. It is true that, in connexion with a matter of national importance, of an urgent character, involving expenditure, the Treasurer’s Advance Account may be drawn upon; but, in order to safeguard the public funds, if that course is followed the first duty of the Prime Minister, when Parliament re-assembles, is to announce to this House, “ We have done so-and-so, and we ask you to indemnify our act.” I ask whether that has been done in this case. Has there been any mention of this matter by the Government in the House? Would there have been any mention of it before the Supplementary Estimates were being considered if it had not been for the action taken by the honorable member for Yarra? We know that there would not. It has been mentioned by the Prime Minister only because the honorable member for Yarra unearthed the case. He has driven his charge home to the hilt, and, so far, though there has been a lot of ‘ camouflage indulged in, there has been no adequate reply to the honorable member, and the gravamen of his charge remains unanswered. Honorable members owe to the people of the country the duty to protect the public purse. The usual practice of Parliament should be observed. It ill-becomes a Parliament in Australia to break down the traditions governing ‘ the control of the public finances which have been followed in Parliaments throughout the world, and especially in the Mother of Parliaments, the British House of Commons. We cannot afford to do that kind of thing. Honorable members opposite may be so divided that neither political party can hold the Treasury bench, and members of both must compromise with their conscience on many things in order that the Government may continue to hold its position, and honorable members on this side may be prevented from crossing the chamber. Let me say that, so far as honorable members on this side are concerned, we cannot get to the other side without an appeal to the people. But administrative acts of this kind will help us to get there. We shall be able to explain to the people of the country what has happened under the composite Government, in their neglect, to safeguard the finances of Australia, with the result that we will be given the opportunity to direct the affairs of this country. When we are given that opportunity, many things which have happened under the administration of the party opposite will have to receive early attention at the hands of the party now on this side.
Mr KILLEN:
Riverina
.- The honorable member for Yarra (Mr. Scullin) has unearthed a scandal. He has discovered that the Government has agreed to pay £275,393 10s. l0d. out of the public revenue to Bawra and the British Government, and has actually already paid over £137,696 15s. of that sum. Whilst we have to applaud the honorable member for the fine public spirit he has displayed in his effort to unearth this scandal, and’ we must all admit that he made out a very fine case from his point of view, I contend that the honorable member has not presented to the House the correct version of the matter with which he has dealt. If he had moved a vote of censure on the Government because it had agreed to pay only £275,393 10s. in connexion with profits made on wool, instead of an amount of £398,000, which it owes, the honorable member would have been on the right track, and would have received far more support from fair-minded members of this House than he is likely to receive for the motion he has submitted. As nearly as it can possibly be computed, the amount owing by the Government to the Central Wool Committee is £398,000, and the scandal in this matter is that the Government has agreed to pay only £275,393 10s. The discrepancy between the amount which the Government considers it owes and the sum which Bawra claims is accounted for by the 4,840 bales of wool used for a particular purpose, and on the sale of which Mr. Hughes promised in this House that the growers would not sutler. At that time 4,840 bales of wool had been used by the Colonial Combing, Spinning and Weaving Company. Is it not fair and reasonable to contend that that wool should have been included in the wool for which Mr. Hughes said the growers should be compensated? It was part of a parcel of the very finest merino wool that could be obtained in Australia, and the growers had a right to be compensated for the whole of it.
Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP
– It was not covered by the agreement.
Mr KILLEN:
– I have no doubt at all that it was in the mind of Mr. Hughes that the whole of that wool should be covered by the agreement. He evidently meant that that wool should be included with the rest, but, whether he meant that or not, the growers had the same right to profits on that wool as they had to profits on the balance of the wool in the Pool. The honorable member for Yarra and the Leader of the Opposition (Mr. Charlton) have made a good deal of capital out of the statement that this wool was wool required for local manufacturing purposes. That is not at all a correct statement. I suppose they assume that, because this wool was made into tops, it was used for local manufacturing purposes. As a matter of fact, it was not. It was made into tops, which were exported, and really was put to the same use abroad as the balance of the wool that in the ordinary way was shipped overseas. It is not correct to say that it was required for local manufacturing purposes.
Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP
– It was excluded from the agreement with the British Government.
Mr KILLEN:
– The honorable member is quite wrong. If it had been manufactured into cloth used by the people of this country, the statement would be correct, but as it was used in the manufacture of wooltops, which were exported, the statement is totally wrong, because that wool really is in the same category as that on which the growers were entitled to profits. It has been said that the Government received no money from the Colonial Combing, Spinning and Weaving Company, but I understand that it has received from the company something like £88,000, and under a claim which it has made the Government will very likely receive an additional sum which will more than cover the expenditure to which the honorable member for Yarra has taken exception.
Mr Cunningham:
– The Prime Minister (Mr. Bruce) has said that the Government has received nothing from the company.
Mr KILLEN:
– My information is that the Government has received £88,000 already from the company, and there is very little doubt that it will receive an additional sum amounting to more than isproposed to be paid to Bawra. In dealing with this matter, we should consider what happened in connexion with other companies in a position similar to that of the Colonial Combing, Spinning and Weaving Company. There were three other companies - Whiddon Brothers, the YarraFalls Spinning Company, and the Lincoln Knitting and Spinning Mills - in a similar position, except that their profits were to be estimated on a slightly different basis. All these companies paid Bawra a share of their profits, and why should not the Colonial Combing, Spinning and Weaving Company do the same T The only difference between them was that the Colonial Combing, Spinning and Weaving Company was allowed a bigger profit on capital than the other companies. It was allowed 20 per cent., whereas the others were . to get only 12$ per cent. The honorable, member for Yarra made capital out of the statement that the Colonial Combing, Spinning and Weaving Company made no profits, and therefore the Government could not get any. I can only say that during the same time Whiddon Brothers made £231,000, of which the Government received £52,000. Bawra received its share on practically the basis claimed in this particular instance. If Yarra Falls Company also made. £61,147 in that time, and other smaller companies made so much, how is it. that the Colonial Combing, Spinning and Weaving Company Limited has not been making any profit. Although the wool in question comprised the pick of the Whole of the merino wool in Australia, the honorable member for Yarra (Mr. Scullin) suggests that if it had been marketed in England it would have brought only about £26 per bale. Of course the honorable member assumes that it would have been marketed at a time when the market was unsatisfactory; but, as the Prime Minister (Mr. Bruce) pointed out, the probability was that a good quantity would have realized very high prices. It is not certain that even a portion would have been placed on the market when prices were unfavorable. ‘ Some would, possibly, still be on hand, and a quantity might have been sold last year at satisfactory rates. It is probable that it would have realized a good deal more than £26 per bale. “We have also to remember, as the Prime Minister stated, that if it had been shipped to Great Britain it would have made a considerable difference in the average quality of the Australian wool marketed during that particular season, and have caused it to bring probably £200,000 more than was obtained. These are points which the honorable member for Yarra and the Leader of the Opposition (Mr. Charlton) have overlooked. It has been stated that Parliament has not been consulted in this matter. I was not a member of the House when the arrangement was made j but I understand that when the ex-Prime Minister (Mr. Hughes) was asked what the Government were likely to do in regard to the claim, he said that they intended to treat the question on its merits, and would see that the wool-growers were placed in as good a position as if they had sold in the ordinary way. I ask leave to continue my speech at a later date. Leave granted; debate adjourned.
House adjourned at 4.1 p.m.
Cite as: Australia, House of Representatives, Debates, 6 June 1924, viewed 22 October 2017, <http://historichansard.net/hofreps/1924/19240606_reps_9_106/>.