10th Parliament · 1st Session
Mr. Speaker (Hon. Sir . Littleton Groom) took the chair at 2.30 p.m., and read prayers.
– (By leave). - I move -
That theElectoral Act Select Committee have leave to report the minutes of evidence from time to time.
I understand that unless Parliament authorizes the committee to publish its evidence it will have no power to do so. The committee met this morning, and unanimously desired to have this power granted to it, and for that reason the motion is submitted.
Question resolved in the affirmative.
Mr. MACKAY, as Chairman, brought up the report of the Standing Committee on Public Works, together with minutes of evidence, relating to the proposed transfer of the Postal Department’s telegraph lines between Perth and Adelaide to the transcontinental railway route.
Ordered to be printed.
– In view of the long-deferred hopes of the returned soldiers and their dependants, will the Prime Minister kindly say if he will give time, before the session finally ends, for the order of the day for “ Disabilities of exsoldiers from pre-war causes” to be finalized ?
– I do not think that any difficulty is likely to arise in connexion with the matter. I cannot undertake to give, prior to Easter, time for the further consideration of the order of the day referred to, but before the session closes there should be no difficulty about dealing with it finally.
– I wish to ask a question of the Minister for Works and Railways. By way of explanation, I should like to say that I placed a question on the notice-paper for last Friday referring to the Kyogle to South Brisbane railway. The Minister asked that it should be postponed, and yesterday in his absence the Prime Minister supplied an answer to the question. I complain that the answer which was given -
– Order ! Does the honorable member intend to put a question?
– Yes ; but I complain of the answer that was given to my question.
– Order ! The honorable member may state such facts as are necessary to make his question plain, but will not be in order in arguing the matter or discussing the answer given to a previous question.
– I shall ask the question. If my question is placed on the notice-paper again will the Minister give an intelligible answer to it?
– Order! It is not parliamentary for the honorable member to put a question in that form.
– Will the Minister give an answer which is not evasive.
– It is out of order to suggest in a question that a Minister has not given a straightforward answer.
– It is now nearly two years and two months since the Government announced its policy to build a sea- plane carrier. Will the Minister for Defence inform the House what is now the actual position in connexion with the building of the carrier?
SirNEVILLE HOWSE.- The building of the seaplane carrier is proceeding, and the work is up to contract time. It will be completed, I hope, in 1928-9.
Food Supplied to Trainees
– Has the attention of the Minister for Defence been called to an occurrence which took place at the Liverpool camp, when certain trainees marched out of camp as a protest against the food supplied to them?
SirNEVILLE HOWSE. - The matter has not been brought under my notice. I shall immediately make inquiries concerning it.
– Is the Minister for Works and Railways aware that Messrs. Clarke, Padley, and Company, of West Melbourne, have the agency of a German invention which uses crude oil, with the result that they can run a car carrying 100 passengers at a cost of less than½d. per car mile? If not, will the honorable gentleman request the CommonwealthRailways Department to make inquiries with the view of utilizing this invention by arrangement with the manufacturers, and so reduce the railway cost?
– The invention referred to has not been brought under my notice. I shall get the Commissioner for Railways to make inquiries concerning it.
Sale of “ Bay “ Liners
asked the Prime Minister, upon notice -
Has any offer been made for the purchase of the Bay Line of steamers since the Commonwealth offered them for sale. If so, what amount was offered, and by whom?
– No offer has been made for the purchase of the “Bay” line of steamers.
Wire and Wire-netting.
asked the Minister for Trade and Customs, upon notice -
In view of the evidence given by Lysaghts before the Tariff Board in support of further protection to the wire and wire-netting manufacturers, will the Minister inform the House -
What was the actual subscribed capital of this company when it started operations in New South Wales, and with what number of shares was it registered?
What actual capital has sincebeen obtainedby the Company for the carrying on of the firm’s operations?
Whathas been the company’s expenditure of capital, not including profits in the building up of the firm’s business?
What does the last balance-sheet producedbythe company show as regards -
Number and paid-up value of shares.
Value of all assets,
Dividends, if any, declared during past three years..
Amount paid by way of bonus by the Government to this company ?
– This matter is the subject of investigation by an accountant attached to this department. The information asked for cannot at present be given, as the report has not yet been received.
asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follows : -
asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Minister for Defence, upon notice -
– I regret that the information asked for is not yet available.
– I should like to make a personal explanation. In the Argus of Monday, 15th March, under the heading, “ Federal Politics,” the following statement is published as information concerning the proceedings in this Parliament: -
Not having been consulted the Opposition felt aggrieved, the result being that Mr. Makin, of South Australia, vigorously “ stonewalled “ the Power Alcohol Bill, and made progress impossible.
I did not speak at all on Friday on the Power Alcohol Bill, and, therefore, the impression likely to be created in the public mind by the Argus report is quite erroneous. I am sure that the House would not for a moment entertain the suggestion that I would be guilty of such public misconduct as to “ stone- wall “ any measure.
Importations - Use of Commonwealth Steamers
– On the 12th February the honorable member for Yarra (Mr. Scullin) asked the following questions : -
I am now in a position to inform the honorable member that during the twelve months ended the 31st December, 1925, 2,731¼ tons (measurement) of defence material were shipped to Australia, and the proportion of such material shipped by the Commonwealth Line was 1,595¾ tons. It is the practice in the High Commissioner’s office to ship goods for Australia in the Commonwealth Line steamers wherever possible. Explosives, which form a large portion of the tonnage shipped from England to the Defence Department, cannot, on account of the special conditions governing such shipment, be always taken by vessels of the Commonwealth Line. Further, stores are sometimes purchased for direct delivery at ports in the United Kingdom other than those from which Commonwealth Line steamers usually depart for which freight has to be arranged by other vessels.
Payments to Public Servants, Members of Boards, Commissions, Etc
– On the 10th February, the honorable member for Cook (Mr. C. Riley) asked the following question: -
Whether the Prime Minister will make available a list of officers of the Commonwealth Public Service, members of boards, commissions, &c, who are receiving salaries of, or exceeding, £900 per annum; showing the names, officers, and amounts of salary received ?
I told the honorable gentleman that I would obtain the information for him. I have obtained it, but it is so lengthy that it would occupy a great space in Hansard, and as much of it has already been published, I have had a return placed on the table of the Library.
– On a point of order, I should like to know whether it is competent for the Prime Minister, in replying to a question, to say that because the reply is somewhat lengthy it will be laid on the table of the Library instead of being published in Hansard ? The time may arrive when honorable members may wish to turn up Hansard to obtain that information. I ask what authority the Prime Minister has to determine that information asked for by honorable members shall be tabled in the Library, and not printed in Hansard?
– It is open to the Prime Minister to make what answer to a question he may deem necessary. He stated that the information which had been prepared was so lengthy that it would be placed as a return on the table of the Library. All such papers may be seen at any time by honorable members. Before an answer can be printed inHansard, it must be read in the House by the Minister making it, or handed in for inclusion in the Hansard report.
– I lay on the table of the House the Eleventh General Report of the Parliamentary Standing Committee on Public Works, and move -
That the reportbe printed.
Under the Public Works Committee Act, the reports of the committee must be laid on the table fourteen days after the date appearing on them. This report is dated the 29th January, but it was presented to His Excellency the GovernorGeneral only last week, and was not received in my department until yesterday.
.- The delay in presenting the report was caused by tie general elections, and the need for the appointment of a new committee after the assembling of Parliament. When the new committee met, the annual report was immediately prepared, and submitted to the Governor-General, as required by the act.
Question resolved in the affirmative.
Admission of Germany
– In reply to several questions asked yesterday regarding the position that had arisen at Geneva, I indicated that if possible I would make a statement on the subject to-day. I ask leave to make that statement now. (Leave granted.) I regret that the information contained in the columns of the Australian press yesterday, that Brazil, one of the non-permanent members of the Council of the League of Nations, had definitely refused to allow unanimity to be reached regarding the admission of Germany as a permanent member of the Council, has now been officially confirmed. As a result of that action it has been impossible to admit Germany as a permanent member of the Council, and the whole matter of Germany’s admission to the League has been postponed until the September meeting of the Assembly. I very much regret that this position has arisen, and in the circumstances I think it desirable to inform the House of the whole of the facts regarding the genesis of the recent proceedings at Geneva, and the course which the Government pursued during the recent sitting of the Assembly there. That meeting arose out of negotiations which took place at Locarno, which culminated in the Treaty of Mutual Guarantee to which Great Britain, Germany, France, Belgium, and Italy are parties. One of the conditions of that treaty was that it should not come into operation until Germany had been admitted to the League. Germany undertook to apply for membership, and this she did. She had to apply for admission in the same way as any other power which might desire to become a member would have to apply. A special meeting of the Assembly was called to consider Germany’s application. If such a special meeting had not been held, the matter could not have been dealt with until the ordinary meeting of the Assembly in September next. To delay the matter until then would have delayed the operation of the Treaty of Locarno. Accordingly a special meeting of the Assembly was summoned, and invitations to attend it were sent to the 55 nations which are members of the League. A second question to be considered was the appointment of Germany as a permanent member of the Council of the League. Three of the parties to the Locarno Treaty are permanent members of the Council of the League, and those powers, and the other signatories of the treaty, had agreed that Germany should become a permanent member. Consequently there .had to be a meeting of the Council at the same time as the meeting of the Assembly. Every one will agree that the provision that Germany should be given a permanent seat upon the Council of the League was wise and proper and in accordance with the spirit of co-operation in which the League is trying to promote world peace. It was the spirit that permeated the Locarno negotiations and “led to the signing of the Treaty of Mutual Guarantee. The permanent members of the Council of the League are Great Britain, France, Italy, and Japan. At the time of. the framing of the Covenant of the League it was contemplated that the great powers should become permanent members of the Council, and that there should also be four - increased later to six - elected non-permanent members, to be chosen from time to time from the other nations who were members of the League. Provision was made under the Covenant for increasing either the permanent or the non-permanent members of the Council; but any recommendation made by the Council for such an increase must be unanimous. This unanimous recommendation of the Council goes before the Assembly, because any new member of the Council must be approved by the Assembly. The Assembly can act on a majority vote. At Geneva it was found that the necessity for securing a unanimous recommendation from the Council would be a serious obstacle to the admission of Germany to the League, and the failure to obtain unanimity has led to the present unfortunate situation. It has come about through the ambition of certain nations to obtain permanent seats upon the Council of the League. It is possibly not unnatural that countries should aspire to permanent seats on the Council, and two countries in particular - Brazil and Spain - have long held this ambition, and have been working very hard for its realization. The application of Germany also led to a new claim by Poland, based upon the many complicated and difficult questions that are outstanding between that country and Germany. Poland bases its application for a permanent seat on the Council upon the argument that it is not fair or just that, in these circumstances, it should not be in an equal position with Germany. This caused a troublesome situation; but Poland’s case could have been met by her appointment as a nonpermanent member of the Council, and I think that the good sense of the Assembly could have been relied upon to keep Poland on the Council so long as there were difficult and complicated questions outstanding between that country and Germany… There were thus at Geneva grave elements of disunion on matters on which it was absolutely vital that there should be a spirit of good, sense and cooperation. This is to be regretted. We should, however, recognize the efforts that were made to overcome the difficulties which arose. While we are forced to the conclusion that one nation showed a spirit that was hardly in accord with the ideals of the League, there were other nations which showed that they were prepared to act in a spirit which would assist to establish the position of the League and to assure its influence in the world. Unfortunately, the difficulties could not be overcome. Sweden and Czecho-Slovakia, both of which are. non-permanent members of the Council, tried to ease the situation, and- to bring about the admission of Germany into the Council of the League by voluntarily offering to resign to make way for Poland. Notwithstanding that offer, Brazil was adamant, and refused to give way. She took up the attitude that unless a permanent seat was given to her upon the Council, she . was not prepared to allow unanimity to be reached by the Council, which, of course, prevented Germany from being given a permanent seat upon the Council. I do not want to comment on or to criticize the action of any other country ; but I certainly think that it is deplorable that one nation should have been able to do so much to destroy the spirit which enabled the Locarno treaty to be entered into, a treaty which every one will admit is the most important step taken towards securing the peace of Europe since the signing of the Armistice. It is regrettable that a country which is so far away from the storm centre of Europe should be able to take action the consequences of which, if they cannot be avoided, may again throw the world into a devastating war.
I shall now put before the House the attitude of- the Government regarding the. questions that arose at Geneva. I would remind honorable members that it was a special meeting of the Assembly, and the outstanding question to be determined was the admission of Germany to the League, with a permanent seat on the Council. The Government’s view was that nothing should be done to imperil Germany’s admission to the. League, and the honouring of the undertaking that she would be given a permanent seat on the Council. A second question of equal, if not greater, importance arose, namely, the further enlargement of the Council beyond the admission of Germany to a permanent seat, and in regard to this the Government considered it imperative that it should express its opinions promptly and definitely. It accordingly represented to the British Government, and instructed its delegate at Geneva, that it considered it most undesirable that there should be any increase of the permanent members of the Council beyond the admission of Germany. The framers of the Covenant of the League of Nations contemplated that permanent seats on the Council would be given only to great powers having worldwide interests, whose influence and sense of responsibility arising out of such interests would enable them to play au important part in the affairs of the world. At that time it was anticipated that America would enter the League and have one of the permanent seats on the Council. But in order that the Council should not be composed of great powers only, the Covenant provided for the election by the Assembly of six non-permanent members. If the League is to succeed it must be guided by considerations of practicability. However much we may desire that the nations of the world shall be on a footing of absolute equality and have permanent seats on the Council, we cannot ignore the fact that the League will be destroyed if the Council be so constituted that the smaller, but more numerous, powers can dictate to the great powers. If that state of affairs is allowed to develop inevitably the League will collapse. To-day it has the goodwill, co-operation, and assistance of all the great powers, and its strength is steadily growing, but if by an increase of the permanent members the great powers are placed under the control of a council dominated by the small powers, who have no world-wide interests - powers, for instance, that have no interests outside South America - a fatal blow will be struck at the League. Where, then, ara we to draw the line? A line of demarcation is fixed at the present time in such a way that no unrest or discord is created in the League. It distinguishes between the acknowledged great powers which have permanent seats on the Council, and the lesser powers which are entitled to a definite number of non-permanent seats. If the demand of Brazil for a permanent seat had been acceded to, many other nations would assert that they had an equal claim to similar representation.
– All the powers would demand a seat.
– Exactly, and the rivalry between the nations that were seeking permanent seats on the Council would create a deplorable position. Because of these considerations the Government stated quite frankly its opposition to any proposal to progressively enlarge the Council.
– Did the views of tb(? Commonwealth Government coincide with the views of other dominions?
– I am not in the position to say how strongly the governments of other dominions have expressed themselves. I have explained that on the immediate issue before the special meeting of the Assembly, the Government’s attitude was that nothing should be done to imperil Germany’s claim to take a permanent seat on the Council immediately, and that every effort should be made’ to obtain her full co-operation and assistance in the spirit of the Locarno Pact.
– Were any conditions imposed ?
– Does the Prime Minister feel at liberty to explain the attitude of the British Government towards the enlargement of the membership of the Council ?
– I do not. That is a matter to be dealt with by the British Prime Minister in the House of Commons ; but, so far as Germany’s admission to the League is concerned, the British Foreign Secretary, Sir- Austen Chamberlain, went to Geneva with instructions from his Government that Germany’s admission to the League and a permanent seat on the Council should be facilitated. The second issue did not arise directly out of the recent special meeting of the
Assembly, but it has been so much discussed that the Government felt it imperative to express emphatically the view that it is most undesirable to break down the present constitution of the Council, by which the permanent seats are reserved for the recognized great powers, and the lesser powers, in rotation, are given nonpermanent seats. The Government was also of opinion that, should any country of purely local interest, be found to be especially concerned in matters to be dealt with by the Council, it should be left to the good sense of the Assembly to take that fact into consideration when electing the non-permanent members of the Council.
– Are the other dominions in accord with that?
– Generally, I think; but I cannot say whether they have expressed their views quite so definitely as has the Commonwealth Government.
– They have not opposed the Common’ wealth Government’s view?
– No. As to the future, it is impossible to say what is likely to occur between now and the next meeting of the Assembly in September, or at the Assembly itself. It is inconceivable that the work so happily terminated at Locarno should be stultified by the action of any one member of the Council of the League. It is unthinkable that any one country, particularly one which is far removed from the region which is directly and immediately the object of the Locarno Treaty, should persist in its attitude of thwarting the consummation of the Locarno settlement, and the active cooperation of Germany with the League. The recent proceedings demonstrate how necessary it is that all the nations which are members of the League, and which, above all, have received the great honour and responsibility of sitting on the’ Council, should use their position and influence, not to satisfy purely selfish ambitions, but to collaborate with the rest of the world in a spirit of goodwill. That is the only possible basis of international co-operation. Without such an attitude no association of states or League of Nations can hold together. I would greatly deprecate any exaggeration of what has happened at Geneva. I do not think that the League has suffered any real injury or that, its foundations have been in any way damaged. If a spirit of selfishness has been displayed in one quarter, good sense, compromise, toleration, and even self-sacrifice have been displayed in other quarters. The Government, however much it may regret and deplore that the present situation has arisen, does not regard it with alarm. It believes that a satisfactory solution will be found at the next meeting of the Assembly in September, ‘when a real spirit of conciliation will animate all the members and Germany will at length enter the League and take her seat on the Council in circumstances befitting the dignity of a great power. I might have made this statement om the motion that a paper be printed, and thus have afforded honorable members an opportunity to debate it. But I suggest that the present time is not opportune for such a debate. Before Australia’s delegates leave for the next meeting- of the Assembly of the League, an opportunity will be afforded the House to express its view upon the important and vital matters which will arise at Geneva, and which unquestionably will require to be considered at the Imperial Conference to be held subsequently.
– Does that promise cover the Locarno agreement also?
– Yes. When that time comes members will be better qualified to gauge the situation and estimate the trend of events at the Assembly. If the matter were discussed now, we might be apt to express our condemnation of recent developments in language which subsequent events might prove to have been unfortunate.
– Will the Government accord the House an opportunity to decide whether the Locarno agreement should be ratified ?
– The House will have the opportunity to discuss the agreement, but I do not say that a decision can be arrived at before the matter has been discussed by the Imperial Conference. Recent unfortunate events may remove the need for ratifying the agreement, but I trust that that will not happen.
.- (By leave.) - Having regard to the concluding remarks of the Prime Minister, I do not propose to say much regarding the situation that has developed at Geneva. The right honorable gentleman said that the provision of the constitution of the League, requiring that any decision of the Council shall be unanimous, interferes considerably with the operation of the League. That is the kernel of the trouble, and I suggest that the time is opportune for the Prime Minister to take action for the purpose of bringing about an alteration of the procedure. It was apparent to me when I was at Geneva, as it appears to have been to the Prime Minister, that some such change is essential if the League is to function satisfactorily.
– Is the honorable gentleman dealing with the point that unanimity is essential in regard to many subjects?
– Then I shall have to define my views very much more clearly than I have already done. I do not desire that the honorable gentleman should have the impression that I said that unanimity was undesirable.
– The time has arrived for an alteration of the constitution of the League. Honorable members must realize that if one vote is sufficient to prevent action from being taken, whether it be in relation to the admittance of a new member or on any other matter, intrigue and compromise are bound to ensue. The League cannot be expected to prove a success if there is room for dissatisfaction regarding its procedure. I believe that the League will not continue to exist for very many years unless an alteration is made to its constitution. I, therefore, stress the necessity of this Government making representations to the Imperial Government to take steps to that end. Where it is necessary to secure absolute unanimity it is an easy matter for a comparatively strong nation to influence a smaller nation in the direction of taking action which will effectually prevent the League from functioning satisfactorily.
– Unanimity is very necessary for the protection of Australia’s interests.
– I go so far as to say that there must be a state approaching unanimity.
– What chance would Australia have if unanimity were not essential? As it is, Great Britain’s vote must go against us before anything can happen to us.
– If it were provided that a number of nations must disapprove of certain proposed action to prevent it from being taken, the League would occupy a far stronger position. Absolute unanimity is quite a different matter. I would not object to a proposal that two-thirds, or even three-fourths, of the members of the League must consent to any proposed action. Had I, as the representative of Australia at the Fifth Assembly of the League, had the right to vote upon the matter, the Institute of Intellectual Co-operation would not be in Paris to-day.
– That principle is embodied in our own Constitution - the principle of equal representation.
– That is quite a different matter. Unanimity implies that every nation must agree to every proposal. The right honorable gentleman is well aware of that. I wish to see the League function properly, and do some good in the world. That is not possible with its existing constitution. I shall reserve for afuture occasion any further remarks that I have to make.
– I do not wish the honorable gentleman to remain under a misapprehension. I dealt with an unfortunate result of the requirement of unanimity, but I did not desire honorable members to think that it was my view that unanimity was not necessary. That is a matter which would necessitate very full discussion, and it could appropriately be debated in this House. I have no intention of arguing against the principle of unanimity that at present operates in regard to many of the decisions to which the League may come.
The following paper was presented : -
Pacific Island Shipping and Mail Services - Statement regarding.
In committee (Consideration resumed from 12th March, vide page 1619) :
Clause 3 (Validation of refunds).
.- This is the principal clause of the bill. It proposes to validate the refund of certain moneys which were collected in respect of bonus shares that had been distributed from accumulated profits. During the second -reading debate, three or four speeches relating to this particular matter were delivered. Whilst I admitted that the re-collection of this money would cause great difficulty, and might impose certain hardships, I said then, and I now repeat, that it is the duty of the Treasurer (Dr. Earle Page) to tell honorable members precisely what those difficulties are, so that they may judge as to whether the action which the Government took should be validated. He has not done that. I complain of the honorable gentleman that he has -not treated honorable members fairly. If they are able to satisfy themselves that the bill is necessary, well and good; I cannot. A large sum of money which had been legally collected was illegally refunded because of the misinterpretation of a’ judgment of the High Court. “Sufficient care was not exercised in the making of that interpretation. Admittedly, illegal action has been taken, and a large sum has been refunded to persons from whom it was legally and justly collected. After the lapse of three years, we are now asked to validate, those refunds. If the Government can prove to us that the blunder which it committed, serious though it was, cannot be rectified, that it is impossible for it to retrace its steps, we shall have to accept the position.
– The Treasurer said that that was the position.
– I gave a long explanation, and mentioned about seven different reasons why the money cannot be re-collected.
– It was longer than it was clear.
– It was neither long nor clear. If honorable members will read the Treasurer’s second-reading speech, they will find that he made a few general statements dealing (with the difficulties that might be apprehended, but did not furnish the House with any information. He is the only person who possesses inside information. What is the use of his saying that the existence of trust funds and the probable death of certain shareholders who had refunds made to’ them render it impossible for the money to be re-collected? He has not stated the exact position. There cannot be a large number of shareholders affected. We should be given a general statement, secting out the number of assessments affected, the amount of money involved, the particular instances of hardship that could arise, and their number. The whole of that information is in the possession of the honorable gentleman.
– It is not.
– If it is not, there must be something radically wrong with the administration. Surely the department has a record of the refunds, and a receipt for each amount?
– That record is not separated from every other taxation receipt or refund.
– It would appear on the file of each individual affected.
– There would be 400,000 or 500,000 of them.
– There would, not be that number of refunds.
– I refer to the total number of cases. They are all mixed up, and it would be necessary to search through the lot.
– Then it is about time a change was made in the bookkeeping methods of the department. We have two parliamentary committees - the Public Works Committee and the Public Accounts Committee - that inquire into certain aspects of the expenditure of public money. There is greater necessity in this than in any other phase of administration for an investigation by a committee of honorable members. Very few honorable members are informed regarding the administration and the activities of the Taxation Department, which I regard as the most important of our departments. We have to wade through large numbers of documents to obtain even a surface knowledge.
– We have had a very extensive survey by a royal commission.
-That is so. It was a very useful survey, and a most valuable report was presented. But that is now out of date. Judgments of the court which have been delivered from time to time have altered the whole aspect of our legislation; and very few members are in a position to discuss them with authority. Even in the last five years great changes have occurred. Yet we continue to amend legislation without having definite information as to the full effect of our actions. Only yesterday it was reported in the daily press that a claim for £40,000 had been withdrawn. I was not able to gather from the abbreviated report of the proceedings why the case was withdrawn. If it was wrongly withdrawn the Government has lost £40,000 which it should have ; if it was correctly withdrawn £40,000 was wrongly claimed.
– The claim was not for income tax.
– No; it was for wartime profits tax. A special appropriation was made by Parliament to enable refunds of taxation thought to have been wrongly paid, to be made to applicants who applied within six months of the date of the announcement in Parliament. It has since been found that that taxation was legally imposed, but the refunds were made. Now the Government desires to validate them; but apparently we have no record of the amounts or receipts in respect to them. If the money was not refunded in the loose way which I suggest, and a proper record was kept, it will be easy for the Treasurer to supply the information that we require. I shall not hammer this matter any more. The simple fact is that extraordinary action was taken by the Government without a due regard for the facts. Parliament was led to believe that the High Court held certain things which, in fact, it did not hold; and that certain moneys were collected illegally. It was subsequently proved that the money was collected quite legally. In the circumstances the Treasurer should supply us with the number of persons to whom refunds were made, the amount of the refund in each case, and a return showing whether the personsconcerned arenow dead or alive. Having that information before us, we should be in a position to judge whether or not we should validate the repayments that were improperly made. In view of the paucity of information supplied to us, honorable members on this side of the chamber will not take the responsibility of voting for the bill.
– I do not know whether the Treasurer proposes to afford the committee any statement of the difficulties of the Taxation Department in supplying the information which the honorable member for Yarra has requested. It is perfectly clear, as the honorable member has said, that if more books were kept in the Taxation Department, statistical information such as he desires could be easily supplied to us; but, to my knowledge, as one of the administrators who presided at the Treasury for a time, the Taxation Department kept as few books as it thought necessary, and I believe still does so. The provision of statistical information by a department which collects revenue from, perhaps, 500,000 taxpayers, is most expensive; and if we desire it, we shall require to add largely to the vote for its administration. Refunds of taxation are made under headings whose number is legion. I do not think the bill is as important as either the Treasurer or the honorable member for Yarra thinks it to be, nor that it will matter a great deal whether we pass it or not; in fact, in my opinion, it might just as well be thrown under the table as be passed.
– The right honorable member means that the three-years’ limit is nearly up;
– Yes. There is a statute of limitation - of lamentation for some people - and the bill has been introduced almost at the expiration of the period prescribed. The Treasurer should have brought the measure down as soon as the law made it manifest that it was necessary.
– It was introduced last year.
– But it was not passed. The Treasurer introduced it as diffidently as he might introduce a blushing bride, giving us no chance to look at it.
– It was introduced as an earnest of the Government’s intention.
– The best earnest of intention in a matter of this kind is action. If the Treasurer had given us last year the information that he has given us this year, I believe that honorable members would have passed the bill without delay; but it does not matter now whether we pass it or not. The bill affects to deal, in its three major clauses, with profits that have already been taxed. That fact was overlooked in some of the arguments of the honorable member for Yarra.
– Ob., no ; it was not !
– May I say that I consider that the. honorable member’s speech on the second reading of the bill was one of the most industrious, clear, far-sighted and excellent efforts that I have ever heard on a subject of this kind since I have been a member of this Parliament. The honorable member had evidently studied the matter with very great care, and under some difficulty, for he did not pretend to be personally associated with any enterprise that distributes bonus shares. He had had to read up the subject, and for that reason -his educative * speech on the principles of taxation affecting this measure was the more praiseworthy. I disagree with him on one vital point. I think that we should argue, not as to the merits of taxation refunds, the difficulty of making them, the necessity for indemnifying the Government, and the wisdom of passing retrospective legislation, but as to whether we should ever have attempted to tax bonus shares in the way that we did. The honorable member for Yarra knows that, in all eases, this taxation has been paid on money represented by bonus shares distributed from accumulated profits, on which a double tax has been paid. If a company made a profit of £50,000, distributed only half of it, and reserved £25,000, which in subsequent years was issued in the form of bonus shares, a double tax wa3 paid on the amount so reserved. The flat rate was levied year after year on accretions of capital before they expressed themselves in the shape of bonus shares, and when later the Taxation Department determined to follow to their destination bonus shares, and to tax the recipient shareholders on them, a double rate was paid. The money which all these shares represent has therefore been taxed at more than double the average rate.
– I said that they had not been taxed at the full rate.
– The honorable member said that the flat rate was not the fair rate in all cases. I do not say that it was ; but the fact remains that the shares were taxed at a higher than the flat rate.
– The amount of tax was based on the flat rate, I think.
– The department erred in its own favour, and the rate of tax that, was levied on these shares was a higher average rate than the recipients should have paid. My experience in regard to the levying of taxation is that you cannot get absolute justice; you can only get as near to the fair thing as practicable. Our effort was to fix a rate which would approximate to the average. Unfortunately, the general opinion of honorable members who would tax bonus shares seems to be that 99 per cent, of shares of this class are received by the wealthy taxpayer, or the “fat man/’ as he is commonly designated. I venture to say that if we had time in our busy lives to examine carefully the share registers of the joint stock companies, from the banks, the wool firms, and the shipping firms, right down to the smallest corporations of the kind that are operating in Australia, we should be astounded at the width of distribution of their shares. I recently examined the share register of one of the largest companies in the country, which has a capital of £2,500,000. It is a successful concern, and was originally promoted by courageous, wealthy people. It would not be fair for me to mention the name of the company. I only wish to say that I was astounded, as I wandered through the register, to find that of the many thousands of shareholders, there were very few who held 1,000 shares. The corporation was composed, very largely, of shareholders who held from 100 to 500 shares, and they belonged to all classes of the community. I should be glad if, at some convenient time, a few of the more thoughtful members of the Opposition, who speak upon these subjects, and are interested in them, would join me in making an examination of the share registers of some other big companies. In the last ten or fifteen years, joint stock enterprises have covered well nigh the whole of our productive and industrial field, and while, originally, the shares in them are taken up by a few wealthy persons, they soon become parcelled out, and pass into the possession of the general community. Trustees, widows, and minors, in very many instances, hold shares in these companies. I should like the honorable member for Yarra to bear this fact in mind in his consideration of the bill. Many of the people who pay the flat rate on shares of this kind have incomes lower than the amount of the exemption.
– That is unjust.
– No refund of taxation would be possible in those cases. I think it would be almost impossible to recollect the amounts that have been refunded; and instead of spending time on arguing as to the practicability of doing so, we should be well advised to devote our consideration to the merits of subjecting to further taxation money, represented in bonus shares, which has already been taxed. In my opinion, such taxation is inequitable and unjust. The bill does the best it can in a tardy way to rectify matters, and for what it is worth, deserves support. But prompter action should be taken should it be necessary in the future to give effect to the decisions of the courts altering the interpretation of the law accepted by the commercial community or the department. The taxpayers have been misled, the big trading corporations have been misled, and the Government- has been misled, and I think the judges have faltered and varied in their views of the intentions of Parliament as expressed in the laws relating to taxation. I am sure that the honorable member for Yarra would find worth while an examination of the width and extent of the distribution of the joint - stock shareholding in Australia. The examination of the register of only a few companies would, I am certain, surprise him and other honorable members. Take a corporation like the Bank of New South Wales, the shares of which are sold singly in the share markets of Australia. They were originally held in large parcels. The fact that they have been split up so much indicates to me that the people believe this to be the era of joint operation. Enterprises have been started in Australia, since the war, by joint-stock methods, which could never have been established had the ordinary private firms of a few years ago been left to inaugurate them. The corporations that have been responsible for their establishment have had to invite the people generally to invest their savings in them, and the joint-stock corporations that have been established are beneficial to the community, and tend to stabilize the national credit. Such huge accretions of capital cannot help doing so. There is one other theory in relation to bonus shares that I desire to mention. When we gave the Commissioner of Taxation power to say that companies should distribute a certain amount of their income, it was with the object of preventing them from evading taxation by being subject to a flat rate lower than the average rate. That, in my opinion, was not altogether a good thing. I believe that companies such as I have in mind should be encouraged to reserve a good deal of their profits for the expansion of the industry in which they are engaged. I noted, for example, in this morning’s newspapers that, perhaps, the richest proposition that Australia has ever known in the State represented by the honorable member for Fremantle (Mr. Watson), the Golden Horseshoe mine, is now asking for Government assistance. If I remember aright, no less than £13,000,000 was taken out of one or two shafts in the Golden Mile at Kalgoorlie and distributed amongst the shareholders after working expenses and plant had been paid for. But a period of relative poverty arrived; poorer ore had to be treated, and the company cannot now carry on without assistance. Something of the same kind occurred in connexion with one of the richest mines ever known in Victoria - the Long Tunnel mine, in Gippsland. That mine was torn open and dividends paid to its shareholders as fast as they could be dug out until a smaller lode was reached, and the mine was shut up. What takes place in connexion with mining may take place in connexion also with big productive enterprises of other kinds. We should encourage people engaged in these enterprises to pay reasonable dividends only, and put surplus profits back into their business for expansion and the equalization of dividends.
– If that had been done in Kalgoorlie that town would not be in the position it is in to-day.
– Quite so; and Western Australia would not be getting a grant of £450,000. I hope that honorable members generally will recognize that it is impossible to argue the question concerning joint stock companies and corporations from one side only. The better we understand these organizations, the more we realize the benefits they are distributing throughout the community, the manner in which they are extending the power of this nation to carry its war debt, and providing for the payment of satisfactory wages and the giving of continuous employment. In other words, this is an era when, without the operations of joint stock companies, we could not have tackled many of the biggest things we have successfully achieved in this country.
– Would it not be advisable to adopt the principle of exempting from taxation profits used for the expansion of an industry.
– That is not done, and there might be a germ of justice and benefit to industry in such a proposal. We adopt a reverse course. We say that secrecy is the badge of crime. It is assumed that a company that does not distribute all its income must be trying to defeat the tax collector, and that the saving and storing of profits is a bad thing. In recent years the last Government and the present Government have seen the necessity and wisdom of refraining from unduly penalizing companies which, although doing things for their own benefit, are at the same time expanding the industries in which they are engaged. I hope that the Treasurer will take a lesson from what has occurred, and if he has retrospective legislation to propose, will not delay it until it becomes bluemouldy. This legislation is late in making its appearance, so late that it scarcely matters now whether it is passed or not. But on the ground that it intends to relieve bonus shares of double taxation, I support the clause and also the clause that follows.
– I do not intend to follow the right honorable member for Balaclava (Mr. Watt) in a general discussion of the wisdom or otherwise of the taxation of bonus shares. That, in my opinion, could be more effectively discussed on the question of raising revenue for the year’s services.
– I discussed it because the honorable member for Yarra (Mr. Scullin) devoted some time to it.
– In reply to the honorable member for Yarra, I said that I would not follow him in such a general discussion either.
– Such a discussion would be quite relevant to this bill.
– I point out that whatever may be the merits or demerits of the taxation of bonus shares, the attitude adopted by honorable members opposite is that they are quite prepared to let this bill pass if given a definite assurance that in future bonus shares will be taxed. That would not be fair, because it is not right that Paul should have to pay because Peter has managed to avoid paying. The question of taxing bonus shares is one which should be settled on its merits, and not because of its connexion with the subjectmatter of this bill. This, in my opinion, is a proposal to deal out evenhanded justice in a simple and straightforward manner. I should like to point out that if the judgment of the High Court in the James case had been given in 1924, there would have been no occasion for the introduction of a measure such as this, because the whole matter would have been covered by the bill introduced in 1925, which enacted that after the passage of three years it would be impossible for the Commissioner of Taxation to re-open assessments. As soon as it was possible for the judgment of the High Court to be thoroughly studied by the Crown Solicitor, which was at the beginning of 1925, and as soon as the Government made up its mind as to its policy, it made an announcement of its intention to introduce this bill. The fact that the policy of the Government was as stated, was an indication to the Commissioner of Taxation not to proceed with the re-collection of moneys which had been refunded, as he might otherwise have felt himself compelled to do.
– Could he have done so?
– He regarded it as impracticable for the reasons I have given; which, whatever view the honorable member for Yarra (Mr. Scullin) may take of them, are considered by the Commissioner of Taxation to be cogent reasons. I should like to emphasize what was said by the honorable member for
Balaclava (Mr.Watt) on the subject of keeping a separate account for each taxpayer and a record of refunds made to him from various sources.
– This was a special appropriation.
– During the greater part of the period during which this series of acts have operated, from 1915 to 1921, between 700,000 and 800,000 taxpayers were sending in returns to the Taxation Department. If honorable members carefully consult the annual budget statements, they will find that sums varying from £500,000 to £1,200,000, to meet refunds of revenue, have been voted every year. Considerable alterations take place in the revenue anticipated from assessments because of new information supplied by taxpayers. Taxpayers are required to pay the amounts at which they are assessed within a certain time, and adjustments are only made subsequently. These adjustments were made in the ordinary way. There was no special appropriation for the purpose. On the statement made in this House regarding the policy to be pursued, taxpayers concerned had to make their applications for refund within six months. Those applications were dealt with in the same way as all other applications for refunds. It would involve a tremendous amount of clerical work, and the examination of hundreds of thousands of assessments, to discover the total amount involved. It is clearly impossible to supply the information in this connexion which some honorable members desire. We have arrived at a stage when practically the whole of the assessments cannot be re-opened. There are only certain assessments, and these are very few, remaining to be dealt with. The proper course to pursue is to pass this measure so that the exact position of the Government and the taxpayers shall be understood.
.- I intend to vote against this clause, and probably against a number of other clauses of the bill. I understand that most of the people holding bonus shares are in receipt of incomes up to £5,000 per annum.
– Or perhaps £50 per annum.
– There are very few in receipt of small incomes.
– How does the honorable member know?
– They would not be liable to this taxation unless their rate was over the company rate.
– I want to say in reply to the contention of the right honorable member for Balaclava (Mr. Watt), that one might go through lists of the shareholders of various companies, and I guarantee that amongst them will be found quite a number of people who hold shares in several giltedged propositions like the Broken Hill Company, big joint stock companies, pastoral companies, and banks. Their aggregate income from their shares in various companies amounts to a very considerable sum. They cannot be regarded as poor people at all. A comparatively poor man may be advised by a stock broker that, instead of putting £200 or £300 into the Savings Bank for a return of 4 per cent., he should invest it in a joint stock concern. Such persons may be the small shareholders to whom the right honorable member for Balaclava refers, but if shareholders’ lists for a number of big companies are examined, I guarantee that the same names will be found in many of them.
– The shareholders in receipt of small incomes will not be affected by the bill.
– Why not?
– Because the only persons liable to this taxation are those whose rate on personal income exceeds that of the company rate.
– I have not gone into the intricacies of the subject as the honorable members for Balaclava and Yarra have done, but it appears to me that in this bill it is proposed to permit a number of very well-to-do people in this community to get off very lightly.
– If that is correct, it is the justices of the High Court who are responsible.
– No; because they put the matter right in their decision in the James case. The honorable member for Balaclava is thinking of the High Court decision in the Webb case. This is a bill to validate action contrary to the High Court decision most recently given.
– It is to validate the action of the Government in making these refunds.
– I remind the right honorable member that the decision of the High Court in the Webb case was confined to only one aspect of the matter. In the James case the same justices decided that all bonus shares are taxable.
– No ‘man in this House can follow the variations in those decisions.
– I think we are fairly safe in arriving at the conclusion that in the Webb case only one aspect of the matter was dealt with. In that case it was decided that the bonus shares were to be regarded as capital of a reconstructed company. In the James case the representative of the Crown, as well as of the appellant, asked the court for a general decision. . That decision was given, and it was that bonus shares are taxable.
– Reconstruction may mean capital extended or added to.
– The court did not desire that capital should be taxed,’ and quite right too. Upon the reconstruction of a company bonus shares were regarded as capital, and it was decided in the Webb case that they were not taxable. But I repeat that in the James case the High Court gave a general decision that bonus shares are taxable.
– It is impossible to reconcile the two judgments.
– The court regarded the bonus shares in tha Webb case as capital.
– The Treasurer has said that taxpayers were required to make application for refunds within a certain time.
– That is so.
– I suppose that means that those who did not make application within the stipulated time will not be entitled to a refund.
– They bad their opportunity.
– From what I know of the matter, and particularly from the information supplied by the honorable member for Yarra, this bill has nothing at all to do with the course which is to be pursued in the future.
– No, but it is inferentially an announcement of a definite policy by the Government not to touch profits again.
– I believe that it is. Under this validating bill a number of wealthy taxpayers escape considerable taxation on money that is the most easily earned in the community. I agree with the right honorable member for Balaclava (Mr. Watt) that the companies take risks in their investments and do a certain amount of good in the community, but I contend that the country has been very good to them. Taxation should rest equitably upon every section of the community. I am against class legislation, and shall therefore oppose the bill.
– I was not present when -the bill was discussed, but having carefully studied and examined the various speeches made on the subject, I have formed the conclusion that carelessness was undoubtedly exhibited by the Government when in 1922 it introduced the original measure based upon the Webb case. As a member of the Opposition, I do not feel justified in accepting any responsibility for validating an act of carelessness on the part of the Government, whether this Government or its predecessors
Mi. Watt. - All governments are careless.
– In this case the carelessness was of a particularly gross character. The Government should exercise the nicest possible degree of care in the administration and interpretation of taxation laws. * There should be a permanent standing committee of this Parliament to consider all taxation measures.
– Does the honorable member favour the adoption of the American system of committees?
– To a large extent, particularly in respect of taxation. The responsibility would then be shared by all parties. At present the Treasurer exercises a tremendous power in administering the taxation laws, and in . the public interest that responsibility should be partially shouldered by a parliamentary standing committee. It is regrettable that our method of taxation should be so involved and complex. We have two parallel systems of taxation, one the graduated system of taxation for income and- land assessment, and the other a flat rate for companies.
– We cannot help that. We have only two choices in income taxation - simple and rough, or delicate and complicated.
– That is so. It would be wrong for the Opposition to accept any responsibility for this measure. I feel sure that honorable members generally agree that a standing committee should be appointed to consider all taxation measures. Most honorable members are not well informed on the complexities of taxation, and I think with the honorable member for Balaclava that we can all afford to pay a tribute tothe honorable member for Yarra (Mr. Scullin) for the trouble that he took in preparing his second-reading speech on the bill.
Mr.RODGERS (Wannon) [4.6]. -I propose to assist the Government to make good its promise, because any other action would have a negative effect. The deed is done, and the bill is to rectify it. The principle involved in this matter is strictly not in test. If it were, I should have a good deal to say, and my vote would be cast against the principle unless it applied equitably to all taxpayers. For instance, what rights have companies over private individuals that they should be earmarked for remission of taxation on portion of their earnings, either placed in reserve or issued in the form of bonus shares? Take the primary producer. He knows that in a country like Australia lean years occur periodically. He builds up reserves of fodder to carry him through droughts. He does not take those reserves into account in his earnings, but he has to pay income tax on them. If the principle of taxation were now at stake, I should vote for its allround application, and for the insertion in our taxation legislation of a proviso that every taxpayer shall have the privilege of setting aside a certain portion of income and calling it reserve or capital. This would place all taxpayers on the same footing. Discrimination in favour of those who form themselves into companies to avoid taxation should not be encouraged. The privilege should apply all round.
– That principle is recognized to the extent of 15 per cent, in the case of pastoralists and ordinary traders.
– It is 15 per cent, in the case of private traders, and 33 per cent, in the case of companies.
Mr.RODGERS- There is in this bill a discrimination that should not be found in equitable legislation. The Government should be assisted to carry out its promise, and to validate something that has already been done, whether rightly or wrongly. I reserve my right, when the general principle of taxation is discussed, to deal anew with the subject of bonus shares.
– I am tempted to say a few words in reply to the general discussion on the bill. I appreciate the informative speech made by the right honorable member for Balaclava (Mr. Watt). I agree with a large number of his statements, especially regarding the large number of persons who hold a few shares in companies. I shall accept his invitation to examine any. company registers that he may put before me, because I am always ready to gather information; but I would inform him that I have examined scores of company registers, and although there are a large number of small shareholders on those registers, yet I find that many persons hold small parcels of shares in a large number of companies.
Mr.Rodgers. - They have spread their blessings.
– They have spread their investments. The right honorable member for Balaclava supports this measure on its merits respecting exemption of bonus shares from taxation. The Treasurer chided him for raising that matter, and said that it had nothing to do with the bill. The honorable member for Balaclava truly reminded him that I had dealt with that subject at some length. I remind the committee that it has a lot to do with this bill, because we have to consider, not only its legality, but its equity. Is not equity the main thing? I should not hesitate one moment to support the validation of an illegality if I were satisfied that it was equitable; but, in this case, it is not. The exemption of bonus shares is most inequitable. Their taxation is embodied in the legislation of this country, and this bill constitutes one of the worst forms of discrimination that has ever been exercised in regard to taxation. The exemption from taxation of bonus sharesisnot only inequitable, but also illegal. Surely we have strong grounds for opposing the bill.
– What would be the effect if the bill were defeated?
– The department would then be called upon to re-collect the moneys refunded.
– It could not do so.
– I have received no information that would bear out the honorable member’s contention. We have asked for information from the Government. We allowed the bill to pass its second-reading stage to give the Government an opportunity to obtain further information, but it has answered all our queries by simply saying that it cannot be obtained. This is not the first time that such a thing has happened. Storrie years ago I asked for information respecting amounts of money due on the leaseholds of this country. The Treasurer informed me that the information could not be obtained. I set about to obtain that information myself, and my efforts at that time led to the appointment of a royal commission. Notwithstanding the boast of the Treasurer about the finding of the commission, the facts that were placed before it bore out every statement that I made in this chamber. All the information that was refused me in this chamber was subsequently produced and printed in documents. I have a complete set of those documents, which may be perused by honorable members. When I am now told the same old stereotyped story, I refuse to accept it. As a member of. the Opposition, I cannot share the responsibility of passing this validating measure. It does not validate the decision of the court, as was suggested. It simply proposes to validate the action of the Government, which the last decision of the court declared was illegal. It is true that that action was taken because of the interpretation of the previous decision of the court, but it was a gross misinterpretation of that decision. A layman, after examining the High Court judgment, would not conclude that the decision in the Webb case was that bonus shares were not taxable. The honorable member for Balaclava says that the Government’s action in introducing the bill is merely a rough way of doing, justice, and is therefore equitable. He said that these shares had already been taxed, and that refunds had been made to remove the inequitable double taxation. That statement does not convey to -this com mittee the exact position. Under the original law there was a flat rate of 2s. 8d., and subsequently 2s. 5d. in the £1 on all companies’ accumulated profits. When those profits were distributed there was a rebate of the amount of the tax. Let me give a simple illustration. Consider the case of a man who paid taxation at the rate of 4s. in the £1 on an income derived from salary and dividends. The £400 received as dividends was added to his other income, and he had to pay in respect of it the difference between the 2s. 8d. which the company had already paid and the individual rate of 4s. That was the only taxation imposed on bonus shares, and it was not in any sense double taxation. The present company rate is ls. in the £1, and when dividends or profits are again taxed in the hands of the shareholders, less a rebate of the amount paid by the company, the shareholders are not doubly taxed. When the flat rate was 2s. 8d., the only people who had to pay taxation in respect of bonus shares were those whose individual rate of tax exceeded the company rate. Therefore the honorable member for Maribyrnong (Mr. Fenton) was quite right in saying that the refunds were confined to. people who enjoyed large incomes. The talk about the small shareholders in a company is irrelevant, because the moneys, refunded, by the Government wore received only by persons whose average incomes exceed £4,000 per annum. They are the only persons affected by this bill. That fact does not make this legislation right or wrong, but it emphasizes my contention that the people who will be benefited by it are few in number; they are what the right honorable member for Balaclava (Mr. Watt) termed “ the fat men.” That .fact adds strength to my contention that this proposal is not equitable. There are thousands of small shareholders in companies whose income, if received from some other source, would not be taxable, and they are inequitably taxed under the present flat rate. When the rate was 2s. 8d. in the £1, those recipients of dividends on bonus shares whose individual rate of tax exceeded 2s. 8d. in the £1 were allowed a rebate; those whose individual rate was less than 2s. 8d. received no allowance. To-day companies pay a flat rate of ls. in the £1 on all profits, and a widow whose only income is £50 from a small parcel of shares left to her by her husband, has to pay income tax amounting to £2 10s. . That is most inequitable. The royal commission on taxation, composed mainly of men prominent in the financial and commercial world, did splendid work, and made a simple and just recommendation, namely, that a flat rate should be levied on undistributed profits; the distributed profits should be taxed in the hands of the shareholders; the tax on reserves should be struck at what would have been the average rate of tax if the profits, had been distributed, say 2s. 5d. or 2s. 6d. ; when the reserves were distributed, they should be added to the income of the recipient shareholder, and taxed at the individual rate, the company rate previously paid being rebated to the company. The existing law was passed in the small hours of the morning, and this committee has been afforded no information regarding the effect of the tax. The Commonwealth is being cheated by clever people, who are able to dodge taxation by the formation of companies. The right honorable member for Balaclava said that companies should be encouraged to put more of their profits into reserve. I agree with, the right honorable member. Instead of businesses being improverished to pay dividends, more of the profits should be set aside to provide a fund which would be an insurance against hard times. I have mentioned many instances - and the honorable member for Ballarat (Mr. McGrath) could add many more - of mining companies concentrating on the rich lodes in order to pay high dividends, and not setting aside any reserve for the development of the lowergrade ore. A similar policy is followed in other industries. I agree that companies should be encouraged to make reserves ; but should not the same encouragement be given to the private trader ? The honorable member for “Wannon (Mr. Rodgers) rightly asked why our legislation should distinguish between a private concern and one controlled by a company. In one town there may be two large drapery establishments, one owned by John Brown, and the other by Thomas Smith and Company. Each makes a profit of £100,000. Both should be treated alike in regard to taxation. But the law allows John Brown to carry only 15 per cent, of his profits to reserves, whilst Thomas Smith and Company may put 33 per cent, into reserve, and pay only company rate of tax thereon. Is that equitable ? The truth is that many small proprietary businesses are ‘being floated into companies for the purpose of avoiding taxation. The- royal commission suggested that reserves should be taxed at a flat rate, and the company should get a refund when the profits were distributed and taxed at their destination. Another suggestion is that the company should be treated in exactly the same way as the individual, and that may be an easier way out of the difficulty. But there is no suggestion of double taxation. The commissioner merely follows the dividends or bonus shares into the hands of the shareholders, adds them to his income, assesses him at the individual rate, less the flat rate already paid by the company. Every dividend issued by any company is taxed as part of the shareholder’s income when he receives it ; yet it has come from profits which have already paid the company rate. Nevertheless, there is no double taxation. The only inequitable feature of the present companies tax is that the rebate is enjoyed only by those whose individual rate of tax exceeds the company rate. It should be rebated to all shareholders, and that can be done only by the rebate going to the company. I dp not believe in taxing the profits of a company. I believe in taxing the income of the individuals who receive the dividends. Taxing at the source is neither sound nor equitable. An income tax should be a tax on income alt its destination. A shareholder enjoying an income of £500 should be taxed on £500, neither more nor less. The exemption of bonus shares will allow an inequitable state of affairs to continue. It will encourage the evasion of taxation amounting to hundreds of thousands of pounds per annum. Day after day companies are formed for no other purpose than to evade taxation. They call themselves investment companies or holding companies. The honorable member for Balaclava criticized that section of the act which requires a company to distribute two-thirds of its profits, or in default provides for an assessment based on the assumption that two-thirds has been distributed. That provision was designed to discourage the evasion of taxation, but it actually discourages the carrying of profits to reserves. If the taxation were made equitable, companies would be encouraged to build up their reserve funds. The right honorable member for Balaclava interprets this bill as a declaration, by inference, that bonus shares should not be taxed. If that is so, every honorable member who is opposed to granting such exemption should vote against the bill.
– Voting for the bill does not commit one to the exemption of bonus shares.
– I do not think it does, but the right honorable member for Balaclava said that that was the only justification for the measure that he could discover. I do not think that it is. Honorable members can vote for the bill if they are satisfied that there is no remedy other than that which the Government proposes; but they must bear in mind that, in so doing, they will be lending their support to an illegality. I should support the Government if I were satisfied that no other course was open to it. There is special provision in our legislation to meet cases of hardship, so that we need not concern ourselves with that aspect of the matter. I refuse to believe that it is impossible to re-collect this money, and I decline to share in the responsibility of validating the action which was taken by the Government.
.- The speech which the honorable member for Yarra (Mr. Scullin) has just delivered laid bare the fallacy and the misapprehension that underlie the whole of the opposition to the bill. It has been repeatedly said that the measure applied only to those whose incomes exceeded £4,000 a year; but, as that contention was not seriously argued, I assumed that honorable members believed that it had not a substantial basis. The honorable member for Yarra has just argued that only those who were assessed at a rate above the company rate received a refund in accordance with the promise that was made by the Hughes Government in 1922. That is quite erroneous. Every taxpayer who participated in the distribution of bonus shares received a refund, whether the tax was small or large. I ask the committee to visualize a ssupposititious case. Let us assume that when the statutory exemption was £200, a taxpayer with an income of £198 in one year received from some source bonus shares whose face value was £500. That taxpayer would be taxed on the basis of an income of £698.
– Would there be no rebate?
– There would be a rebate of the amount paid on the 500 shares; but the other income would still be within the taxable range.
-Would not the rebate wipe out the whole of the tax?
– No. If it were decided to compile a list of those who received refunds, it would be necessary to analyse every return which was made between 1915 and 1922.
– The Minister is wrong. The rebate of1s. in the £1 would wipe out the tax in a case such as he has mentioned.
– Of course it would. I point out, also, that at that time the rate would be 2s. 5d., or 2s. 8d. The ordinary rate on an income of £698 would be about 6d. in the £1. The whole of the company rate on the £500 would be refunded, and it would not be necessary to pay any tax at all.
– I have not worked out the exact details; but when the shares and other income together exceeded the general exemption, the other income was always taxable at the rate applicable to the combined income. The shares are added to the income at their face value to ascertain the graduated scale. Refunds were necessary when the shareholder’s individual rate on his combined income from the shares and other sources exceeded the company rate, and also to the extent that the shareholder had paid tax or additional tax on his other income by reason of the aggregation of that income with the shares. I do not believe that any honorable member desires that all assessments covering a period of six years should be examined. That is the reason for the Government’s holding that it is impracticable to deal with the matter in the manner suggested. The real basis of its objection, however, is that three years ago the Commonwealth Parliament acquiesced in the action which the Government, on the definite statement of the Treasurer, proposed to take. The policy was changed in the present taxation legislation, so that what was done in the past should he done in the future. As taxpayers have for three years been under that very definite impression, we should validate the action which was then taken. It would be unjust to compel these persons to make an accounting of that money and return it to the Treasury. This is not the proper time to argue the merits or the demerits of the taxation of bonus shares. I think that I have shown conclusively that, unless the whole of the assessments were examined, it would not be possible to compile an accurate return. I therefore ask the committee to agree to the clause.
Question - That the clause be agreed to - put. The committee divided.
Majority . . . . 19
Question so resolved in the affirmative.
Clause agreed to.
Clause 4 agreed to.
Clause 5 (Cases where judgment -given) .
– I wish to explain the circumstances that have led to the inclusion of this clause in the bill. The Government and the Commissioner were so sure of their position when the claim was drawn up in the James case that they decided to re-assess James’s taxation and include in the amount the tax on bonus shares from both accumulated and current profits, so that an authoritative test of the question might be made. James was told that, in view of the Government having stated, in Parliament, that a tax would not be imposed upon bonus shares distributed from accumulated profits, the tax would not be collected on his shares which issued out of accumulated profits, irrespective of what the decision of the court might be. We did not desire the case to be upset on a mere technicality, and, on the other hand, we wished to have a definite declaration from the court that all bonus shares were taxable.
.- When the motion for the second reading of the bill was before us, I said that the Government could have had a test case stated in 1922 to determine the legal position; but the Treasurer interjected that that would have been improper. I replied that it was always possible to make an arrangement with a taxpayer to have a question tested in the court; and the Treasurer said that that would be immoral. But that is precisely what was done in the James case. The Government asked James to agree to have added to his original assessment the amount of tax on the bonus shares which he had received from accumulated profits, but on which he had not been assessed, and James agreed with the proposal, on being given a promise that whether the Government won or lost the case, no tax would be collected from him on his bonus shares from accumulated profits.
– That is not so; James was not asked to agree to our altering his assessment; he was merely told that we had altered it .
– If my statement is wrong, the Treasurer is to blame, for he has refused to give us information which we should have had. But my remarks are based upon a letter by James’s taxation expert, published in the daily press, which stated that James was assessed for taxation on bonus shares distributed from accumulated profits, and appealed against the assessment on the logical ground that as bonus shares distributed from accumulated profits were not taxable, those distributed from current profits should not be. Before the case came on for hearing, the letter went on, James was asked to agree to have added to his assessment the amount of tax on his shares from current profits, and he agreed to the request on the Government giving him- a promise that, even if it won the day, his shares would not be taxed. Counsel for the Commissioner for Taxation, Mr. Owen Dixon, advised that a complete assessment of taxation on all James’s bonus shares should be submitted in the claims to the Court. If the Government could make an arrangement with James, in 1925, to have a test case stated on this point, it could have done so in 1922; and had it done so, then we should not be required now to validate an illegality three years old. Before the present AttorneyGeneral (Mr. Latham) was a member of the Government he argued, when a measure was before this chamber with the object of validating the appointment of taxation appeal boards, the appointment of which the High Court said was invalid, that it was entirely wrong for the Government to ask Parliament to go behind a judgment of the court; but that is precisely what the Government of which he is a member is now asking us’ to do.
– The honorable member’s remarks on several of the points at issue are not quite correct. In the first place, Sir Edward Mitchell was counsel for the Commissioner of Taxation in the James case, and not Mr. Owen Dixon. In the second place, the reason for including James’s full assessment in the claim was to avoid the possibility of the proceedings being upset on a mere technicality. James was told that no matter what the decision of the court might be in regard to taxing bonus shares distributed out of accumulated profits on which company tax had been paid prior to 1922, he would not be asked to pay tax on those shares. No arrangement was made with him on the matter; he was merely told what the Government intended to do.
– Then what is an arrangement ?
– There was a specific statement, but no arrangement made. The honorable member said in the third place that, because the Government had the question of taxing bonus shares distributed from accumulated profits tested in the court in the James case, it could have had it determined in 1922, by arrangement with a taxpayer. The honorable member seems to forget that no question as to the right of the Commissioner to tax these shares was raised prior to the James case.
– I find that I was in error in saying that Mr. Owen Dixon was counsel for the Commissioner in the James case, but I was speaking from memory. My error in that connexion does not prove that the remainder of my remarks was inaccurate. An arrangement was made with James that, even if the court decided that he must pay tax on shares distributed from accumulated profits - and the Government believed that he should do so, or it would not have included them in the claim - he would not be requested to pay it. I do not know how the Treasurer can possibly reconcile the facts in any satisfactory way.
Clause agreed to.
.- I had intended to move that the following new sub-clause be added: -
Section fourteen of the Income Tax Assessment Act 1922-1925 is amended by inserting after paragraph (m) of sub-section (1.) thereof the following paragraph : - “ (n) Cash or shares received by a prospector or leaseholder as consideration for the assignment or transfer of any claim lease licence or other title held under the mining laws of a State.”
I am advised that it will not be in order for me to do so, but I feel that if I were to press the matter you would decide in my favour, Mr. Chairman, for we are undoubtedly considering an amendment of the Income Tax Assessment Bill. I should like the Treasurer to give me an assurance that honorable members will have an opportunity to consider this amendment- when the Income Tax Assessment Bill is before them later in the year.
-I give the honorable member an assurance that the Government will bring down an Income Tax Assessment Bill later in the year. He will then be able to test the House on his proposed amendment.
– The proposed amendment is entirely irrelevant to this bill.
Bill reported without amendment; report adopted.
Bill, by leave, read a third time.
Message received from the Senate intimating that Senator Thompson has been discharged from the Electoral Committee, and that Senator Hoare had been appointed in his place.
In committee (Consideration resumed from 4th February, 1926, vide page 721).
Clause 3 -
After section 10 of the principal act, the following sections are inserted : - 10a. (1) For the purpose of this act there shall be a board, consisting of three members, who shall be appointed by the Minister and shall hold office during his pleasure.
The Minister shall appoint one member of the board to be the chairman and another member to be the deputy chairman.
Two members of the board shall form a quorum.
The chairman shall preside at meetings of the board.
In the absence of the chairman from any meeting the deputy chairman shall preside. 10J. A grower who has not received from the proceeds of the sale of his dried fruits produced in the year One thousand nine hundred and twenty-five an amount sufficient to repay any advance made to him under this act, and provide for the maintenance of himself and his family, may apply to the board, on or before the first day of September, One thousand nine hundred and twenty-six, for release, either wholly or in part, from his indebtedness in respect of the advance.
– In connexion with the appointment of the proposed board, I want to say that I have seen the Minister for Markets and Migration (Senator Wilson), and he will be very glad if the growers will submit to him the names of two or three persons from whom he can select their representative. The other members of the board will be representative of the department. From what I have already said on this bill, it will be gathered that it is a liberal measure. The Government desires that it shall be administered in a sympathetic manner. Every case will be treated on its merits.
.- I desire to thank the Minister and the Government for their assurances to me and to the growers, and their offer to consider the appointment of one of the growers as a member of the proposed board. That is something which I urged very strongly when this bill was previously under consideration. The board will have to deal with the question of repayments under this measure. I stated before, and now repeat, that the Government should not insist on the repayment of these advances. In support of that statement I propose to quote from the original act, under which the advances were made, and I ask honorable members to note the points I make. Section 10 of the act of 1924 provides that -
First of all the advance was upon the 1925 crop, and no other. It was to be repaid only after the costs of production andmarketing, as determined by the Minister, had been received by the grower. The growers did not receive sufficient to provide for the costs of production and marketing. The Government admits that; but instead of wiping off the advances on the ground that the growers did not receive the costs of production and marketing, it now insists that the advances shall be repaid out of the 1926 and 1927 crops. That is fundamentally wrong. It is a violationof the provisions of the original act.
– Is the honorable member speaking on behalf of the growers? Do they want to repudiate their obligation to pay these advances?
– They do not want the Government to repudiate its obligations under the act.
– Do the growers claim that they should be released from their obligations to repay the advances because they did not make sufficient in the particular year?
– If they do, the growers of Victoria are different from those of other States.
– In answer to the honorable member for Fawkner (Mr. Maxwell), let me say that the growers made application for the advances because of the terms under which they were to be made. It was a condition of repayment that growerswere to receive the costs of production and marketing, and the repayment should be from the 1925 crop.
– That is scarcely an answer to my question. Do the growers now claim that because they did not receive sufficient to pay costs of production and marketing they are released from the repayment of the advances made to them ?
– They do.
– But for the advances made, the growers would have been right in the mud.
– That may be so, but the growers made application for the advances because of the conditions under which they were to be made. Very strict conditions were laid down, as honorable members will see from section9 of the act of 1924. It provides that -
An advance shall not be paid to a grower unless he makes an application in the prescribed form furnishing the prescribed information, and undertakes -
to expend the advance entirely on material and labour (including the maintenance of the grower and his family) in connexion with cultural operations on the orchard of the grower ;
to repay the advance, with interest, in accordance with the. provisions of this act;
to deliver the dried fruits produced by him in the year One thousand nine hundred and twenty-five to a packing organization or to an export merchant approved by the Minister;
to permit any person, firm, or company (authorized in writing by the Minister) to supervise the cultural operations on his orchard, and to examine all books and documents in connexion therewith; end
to comply with such other conditions as the Ministers determine.
Those conditions were complied with by the growers.
– Does the honorable member think that if they repudiate the repayment of their advances Parliament will assist them in the future?
– The growers are asking that the provisions of the act shall be carried out.
– Does the honorable member say that the Government took the risk that the advances would not be repaid ?
– Yes. I have already quoted the section of the original act dealing with the repayment of advances. Almost every grower made application for an advance on the understanding that he would be guaranteed his costs of production and marketing. As they did not receive those costs, the growers naturally conclude that they are not expected to repay the advances.
– It is the Minister who determines whether the growers have received the costs of production and marketing.
– That is so. It seems to me that before proceeding to demand repayment of the advances, the Government should make inquiries to discover whether the growers had received the costs of production and marketing.
– Is the honorable member speaking for the growers?
– In reply to the continual and persistent interjections of the honorable member for Moreton (Mr. J. Francis), I would say that I am placing before honorable members the views of the growers, as it is my duty to do. If those views are obnoxious to the honorable member he can stand up and say so. The Government has the numbers, and I am powerless in this matter. It assures me that the proposed board will deal fairly with the growers, and where they are clearly not in a position to repay advances made to them, there is a provision in this bill to enable the advances to be wiped off.
– The honorable member appears to desire that the growers should be relieved of repayment, whether they can meet the advances or not.
– In the circumstances, I can do no more than accept the assurances of the Government. Everything will depend on the manner in which the proposed board will deal with the growers. If it deals with them in a callous or arbitrary way, this bill will be worthless. There are- many returned soldiers engaged in the dried-fruits industry, and if they have to meet repatriation advances by the State Government with interest thereon, and also the advances made under the Dried Fruits Advances Act of 1924, they will be placed in a very difficult position. I have no alternative but to accept the assurance of the Minister that the board will deal liberally with the men engaged in the dried fruits industry. No industry in this country has had worse treatment. If any honorable member doubts that, let him talk with those engaged in the industry, and he will soon be convinced that what I am saying is correct.
has said that because these moneys were not collected from the growers out of the proceeds of the 1925 crop, as provided for under the original act, the Government should not collect them at all. That is a novel argument to me. It was only after the Government had ascertained that the collection of moneys on the 1925 crop would place the growers in financial difficulties, that it agreed to defer payments until the disposal of the 1926 and 1927 crops. The board will deal sympathetically with all cases. Growers who prove to the board’s satisfaction that they cannot meet their obligations will receive total release. Others will receive partial release. The Government is acting liberally, and I am surprised that the honorable member for Wimmera has put forward such an extraordinary claim on behalf of the growers. I have a small amendment to insert in the proposed new section 10j. I move -
That after the word “ board,” the words “in the form prescribed,” be inserted.
The growers will send in their applications and make their statements on that prescribed form.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 4 agreed to.
Title agreed to.
Bill reported with an amendment; report adopted.
Bill, by leave, read a third time.
Customs and’ Excise Duties.
In Committee of Ways and Means: Consideration resumed from 11th March (vide page 1614), on motion by “Mr. Pratten -
That the schedule to the Customs Tariff 1921-4 be amended as hereunder set out, and that on and after the fourth day of Mardi, One thousand nine hundred and twenty-six, at nine o’clock in the forenoon, Victorian time, duties of Customs be collected in pursuance of the Customs Tariff as so amended.
That, excepting by mutual agreement, or until after six months’ notice lias been given to the Government of the Dominion of New Zealand, nothing in this resolution shall affect any goods entering the Commonwealth of Australia from the Dominion of New Zealand [vide page 1228). . . .
.- When speaking on this matter on Friday last, I dealt with several points to which I shall now briefly refer to connect up my remarks. I spoke of the muchvaunted settled policy of Australia and asked for a definition of it. I asked if the adoption of the policy of protection would mean excessive protection or prohibition. I referred to my election pledges, which were against excessive duties. I showed that, despite the prediction of the previous Minister for Trade and Customs, when introducing the 1920 Tariff, that it would result in a reduction of imports, there had actually been a steady and continuous increase of imports, with a corresponding decrease in the export of both primary products and manufactures. It was hinted by interjection that I was choosing my figures to suit my case, but I would remind honorable members that I was then dealing with the effect of the tariff, not on local production or consumption, but on the export trade. I said emphatically that the slight increase in primary production was due largely to the enormous sums of money that had been spent under the repatriation scheme in the various States during the last four or five years. When progress was reported I was dealing with agricultural implements, and I propose now to touch further upon that subject. Last Friday week, when the honorable member for Gippsland (Mr. Paterson) moved the adjournment of the House to discuss agricultural implements, the Minister in his reply lauded the report of the Tariff Board. He said that it was an excellent report, and th?.t we should give the board credit for its industry and its aptitude in marshalling its facts. I say emphatically that the report of the Tariff Board on agricultural implements is biased, and is the most one-eyed report that has ever been presented by any board to this Parliament. These are strong statements, which I shall support by quoting the report itself. One point strongly stressed by the board was the debt that the primary producers owed to the Australian manufacturers and engineers. The report reads -
The Australian-invented implements have made it possible to produce wheat in the Commonwealth at a lower cost than in any other country in the world, and 30 per cent, cheaper than in the United States of America.
In another place it reads -
The agricultural implement manufacturers have directly benefited the primary producer to a quite remarkable extent, through the invention and development of the types of implements needed for the conditions peculiar to Australia, and which have enabled the farmers here to produce wheat at a cost which is probably less than that in any other country in the world. The Australian implement makers have brought into use machines of inestimable value to the farmer, and of particular value in subduing the Mallee country and bringing it under cultivation. It is sufficient, therefore, to say here that the primary producer is the direct gainer through the existence of the industry, and it would not be unfair if the primary producer had to contribute something through the medium of the Customs tariff in order to maintain that industry.
I contend that instead of the Australian manufacturers and engineers conferring benefits upon the producers as indicated in the report, nearly all the inventions and improvements in Australian agricultural implements have been due to the genius, not of Australian engineers but of the Australian farmers themselves. I go further and say that many of the improvements in Australian agricultural machinery - I refer particularly to stump jump machinery - have been adopted by the Australian manufacturers and engi- neers only after the most persistent agitation by the farmers. Changing the types of implements always involves expense, and many of the Australian manufacturers are conservative and will not adopt a change until they are convinced that it is beneficial and likely to be a success. To illustrate that contention, I instance the Robinson Big E harvester, a three-wheel’ machine. In the opinion of some farmers at Woomelang, the machine had a tendency in the stripping of sandy country to side-drag. This made it heavy to pull, threw a great deal of chaff and wheat on to the riddles, and spoiled the sample. Some of the farmers thought that the machine would do its work better if the front wheel were extended. In the midst of harvesting wet weather set in, and, suspending operations, they decided to experiment with one of the machines. Taking it into a blacksmith’s shop they extended the front wheel 18 inches. The result was a remarkable improvement in the stripping of sandy paddocks. The experiment was reported to Robinson’s agent, and the manufacturer was urged to make the alteration part of the standard equipment. Some years elapsed before the company adopted the proposal, and then it imposed an additional tax on the farmer by regarding this alteration as special equipment, for which the purchaser had to pay a higher price. However, so many applications came from farmers in the Mallee for the improved machine that the firm had to standardize it, although the wheels were’ not extended so far as some farmers considered necessary.
– That was a mere structural alteration to one of the greatest inventions in Australia. Would it not be better to deal with the origin of the stripper-harvester, which made the farmer independent of the Trades Hall?
– As a practical agriculturist, the honorable member should know what he is talking about. No individual, whether engineer or farmer, can claim credit for having perfected the Australian stripper-harvester. It has evolved over a long period of years from the genius of men in different sections of the community. So far from singing hymns of praise to the Australian engineers, the working farmers them- selves are responsible for many of the inventions and the improvements of agricultural implements.
– The manufacturers do not deny that.
– As a practical agriculturist, the honorable member should know the position. Earlier in my speech I quoted a statement from the Tariff Board report that the Australian agricultural implement-makers have brought into use machines of inestimable value to the farmer, particularly in subduing the mallee country, and that implements suitable for Australian conditions have been invented and developed by Australian manufacturers. The whole tenor of the report is to give to engineers and manufacturers all the credit, whereas some of it rightly belongs to the farmers.
– I agree with the honorable member; but the manufacturers have been quick to snap up the suggestions made by farmers.
– We are told that it is of advantage to the primary producers to have in Australia an industry for the manufacture of agricultural implements. The advantage is not all on one side. One of the biggest advantages enjoyed by Australian manufacturers over their competitors, in Canada, for instance, is that, being on the spot, they are able_more quickly to make changes to meet Australian conditions. I am not opposed to the Australian manufacturers, nor would I, by any action in this Parliament, deliberately seek to make their position more difficult, or destroy their industry. Every implement on my Mallee farm is of Australian origin, and was bought for that reason. The question in regard to which we join issue with the high protectionists is not as to the advantage of the local manufacture of agricultural implements, but the conditions under which the factories have been established, and shall continue to operate. Consider the profits that are made by some of the manufacturers. The report of tho Tariff Board includes one clear illustration of profiteering. In summarizing the history of T. Robinson and Company Proprietary Limited, the report says -
In 1924 this company, in addition, distributed £60,000 in bonus shares, raising their capital issue from 40,000 to 1100,000 out of the reserves that had been accumulated over a period of seven years.
During the seven years in which the company was paying dividends of 10 and 15 per cent., it was not disbursing all its profits. When, in 1924, it did endeavour to do so by increasing the dividend to 20 per cent., it had such an accumulation of reserves that it decided to distribute £60,000 in bonus shares. The Board’s report continues -
Firms such as this one that ‘have succeeded in mass production should not be discouraged. They are entitled to good profits, and the community that encourages such is likely to progress. The Tariff Board has impressed upon this firm the necessity for further reductions in prices, and will, in future, keep in touch with them, and with all other such firms simi-‘ larly circumstanced, and press for the limit of price concession.
Here is an apology by the Tariff Board for the makers of agricultural implements -
The Tariff Board is impressed with the necessity, when considering the case of firms engaged in the agricultural implement industry, such as this one, and the question of profits earned by them, to have in mind the very large capital engaged in the undertaking as represented by internal reserves and .bank overdrafts, in addition to the amount of subscribed capital. Such firms perform the services of banking institutions by extending long credits on hire and purchase agreements, which are of stupendous importance to the primary producers, and, furthermore, are involved in heavy annual expenditure in the maintenance of expert staffs, who educate the primary producer in the use and care of modern agricultural implements.
Further on, the board again stretched its sheltering wings over the Australian implement manufacturers -
In concluding this report, the Tariff Board would mention that, for some considerable time now, the agricultural implement makers in Australia seem to have been made the chief target of attack by those who are critical of the Protectionist system, which has been adopted by the people of Australia. The Tariff Board considers, in view of its exhaustive investigation and report, this industry might be permitted to perform its useful functions to the community without being made themain objective of such attack.
– I read every word of that report, and the farmers’ representative says that it is absolutely unanswerable.
– I am answering it. Here is another instance of bias in this so-called unanswerable report, and it is so subtle that unless it were read carefully it would not be perceived -
In order that price reduction on implements may continue and be assured to the primary producer, the Tariff Board is of opinion that a reduction of duty would be decidedly inadvisable in the interests of both the primary and secondary producer of Australia.
The inference is that it is necessary to maintain the duties, and for the primary producers to pay the cost of keeping the manufacturing industries in operation in order that price reduction may continue, and that those who oppose the duties do not wish such reduction to continue. The report proceeds -
The Tariff Board is, on the other hand, disposed to recommend that when the ultimate price reduction has been reached under the present tariff, and it be still found that there is a considerable percentage of implements coming in from overseas, that consideration should be given to further tariff assistance, so as to assure this additional percentage to the local producer, on condition that further considerable price reductions are assured, and also with the hope of inducing overseas firms to establish works in the Commonwealth’.
The honorable member for Wakefield (Mr. Foster) has stated that the representative of the primary producers upon the Tariff Board endorsed that report. I shall not mention the opinion that is held by many farmers outside this chamber regarding a representative who would sign such a report. The only effect of having such a representative on the board is to give a false appearance of justice to the report. Many arguments have been advanced to account for the difference between the prices of imported and locally-manufactured machines, but the question that the average farmer desires to have answered is - how can the Canadian manufacturer sell to the Canadian farmer a binder for £42 whereas the
Australian manufacturer, who pays lower rates of wages, charges the Australian farmer £68.
– It is a new industry in Australia.
– The whole of the debate has been concentrated upon the recommendations of the Tariff Board, which has been vested with exceedingly wide powers. Section 15 of the Tariff Board Act 1921, provides -
The Minister shall refer to the board for inquiry and report the following matters: -
British preferential tariff or the intermediate tariff, to any part of the British Dominions, or any foreign country, together with any requests received from Australian producers or exporters in relation to the export of their goods to any such part or country;
any complaint that a manufacturer is taking undue advantage of the protection afforded him by the tariff, and in particular in regard to his -
– Its power in relation to any of those matters is limited to investigation, report and recommendation.
– The powers of the board are so wide, and its operations affect so vitally the whole of the industrial and economic life of this country, that its composition should receive the careful consideration of honorable members. Independence of outlook, and freedom from bias, are as necessary in its members as they are in the judiciary, but apparently they have been chosen, not because of their freedom from bias, but in order that they may represent certain sections of the community. That is indicated by the appointment of a fourth member as a direct representative of the primary producers.
– The Country party imagined that the board represented certain interests, and it clamoured for a representative. Its request was acceded to, but still it is not satisfied.
– In the light of subsequent events, I certainly am not satisfied. Many producers believe that’ the board is merely a, party tool, which carries out the policy of the government of the day.
– That is a most improper statement to make.
– The chairman of the board is a departmental officer. My brief experience of departmental officers has convinced me that they are intensely loyal to the government of the day, no matter what the opinions or the policy of that government may be. When a change of government occurs it is, with them, a case of “ The king is dead. Long live the king!” It hag been truly said that in all of us there is a good deal of human nature. That applies with considerable force to those very excellent servants of the departments to whose loyalty I have paid such a tribute. When a board is presided over by a departmental officer there is the tendency to make recommendations that will please the Minister. The Tariff Board appears to consider that it is its duty to interpret and enforce the settled policy of Australia.
– There is, upon moral grounds, an argument in favour of that stand. The Minister for the time being represents the nation.
– It should not be a function of the Tariff Board to interpret our tariff policy.
– It suggests the best means for giving effect to that policy.
– This Parliament should not delegate to any board the right to fix duties without its sanction and approval. Under the act the board may make a recommendation to the Minister, and he may, without the authority of Parliament, impose duties upon specific items.
– Parliament has given the Minister certain discretionary power.
– It is quite true that Parliament has given the Minister the power to take such action. I shall cite a specific instance. Parliament laid it down that wire netting should be imported free of duty; but when certain English manufacturers were selling lines of wire netting at a price that the Tariff Board and the Minister considered was lower than the price of a similar article of Australian manufacture, a duty was imposed under the provisions of the Customs Tariff Industries Preservation Act.
– ‘That was a dumping duty.
– The honorable member may call it by whatever name he chooses, but the fact remains that the intention of Parliament was departed from, and a duty was imposed.
– The Minister merely carried out the law.
– I do not say that the Minister acted outside the scope of his powers; but I say, quite clearly, that although Parliament decided that imported wire-netting should be duty free it has been subjected to a dumping duty.
– Thereshould have been a provision in the Industries Preservation Act that no dumping duty should be payable on any article that was duty free under the tariff.
– I do not agree with that at, all.
– It is not often that I agree with the honorable member for Maribyrnong (Mr. Fenton), but I do so in this case. It would not be fair to Australian manufacturers if their competitors oversea were allowed to dump their manufactures here under any conditions with the deliberate object of destroying a necessary Australian industry. Provision should be made to prevent practices of that kind in the wire-netting industry by an increase in the bounty. My point is that duty should be imposed only with the authority of Parliament. The Tariff Board should not be a departmental board. It should be entirely independent.
– It is so now; two of its members are quite independent.
– The board would be far more effective if its powers -were limited to making inquiries into the necessity for duties and the incidence of the existing tariff, and if it reported to Parliament instead of to the Minister. It would be advisable, in my opinion, to appoint a tariff committee composed of honorable members of this House, and charge it with the duty of considering the reports of the Tariff Board and recommending the amount of duty to be imposed. The present procedure is wrong. Apart from my disagreement with the extremely protectionist policy of the Tariff Board, I have a great admiration for . its enthusiasm. I consider that it has done a tremendous amount of good hard work, and I make no reflection whatever upon it.
– The honorable member made a serious reflection upon it earlier in his speech.
– What did I say?
– The honorable member had better read his speech when it appears in Hansard, and- he will see.
– It is not my practice to make a gibe at any person or body, and then endeavour to escape its consequences by withdrawing it. I think the honorable member for Wannon (Mr. Rodgers) took me up earlier in my speech when I said that, on account of the operations of the Tariff Board many producers in various parts of the country were saying that the board was merely an instrument to carry out the excessive and extreme protectionist policy of the Government of the day.
– Does not the honorable member think that he reflected on the board when he said that it was the tool of the Minister?
– I said that many of the producers considered it to be so. I consider it my duty to the primary producers, whom I represent, to interpret their views in -discussing a matter of this nature; and I believe that I am speaking their mind.
– It is also the honorable member’s duty to correct the erroneous views of his constituents, and not to support them.
– How does the honorable member suggest that the tariff committee that he has proposed should be constituted ?
– So far as possible, such a committee should fairly reflect the fiscal, opinions of the House. Generally speaking, I think that when honorable members criticize an existing arrangement they should propose another as a substitute for it. I am trying) to do that. If my suggestion for the appointment of a tariff committee is not considered to be workable, all I can say is that it is the best that I can make.
– I am prepared to take the responsibility of saying that it is not practicable.
– Under the present system the Tariff Board has an almost impossible task, and it is inevitable that its conclusions must displease more people than they please. Even if the members of the board were supermen, they would still incur adverse criticism. In my opinion, it would immeasurably help the board and add to the value of its findings if it were relieved of the responsibility of recommending definite tariff duties. If its reports were submitted to a tariff committee, such as I have suggested, the committee could make recommendations to Parliament.
– Parliament imposes the duty, and authorizes every alteration of it.
– I challenge that statement, and quote wire netting as an article which is being dealt with by the Customs Department altogether differently from the manner in which Parliament has determined. It is well known that one of the main objects in appointing the Tariff Board was to make the tariff as flexible as possible. As to the wisdom of attempting to make a tariff flexible, I quote from Making the
Tariff in the United States, by T. W. Page, who is the president of the United States Tariff Commission. Mr. Page says -
Flexibility would be an undesirable feature of the tariff in any event. It is true that when any tariff goes into operation, experience shows that some of the duties in it have been wrongly calculated for carrying out the policy intended. It is also true that, as time passes, conditions in industry and commerce undergo changes which throw other duties out of adjustment with the intent of the law. The necessity of correcting such maladjustments explains in part the frequent recurrence of tariff revisions in recent American history. But it sometimes happens that the change of conditions is not so widespread as to justify a general revision, and yet that it seriously affects some particular branches of industry. In that event it might well be desirable to modify the duties on the products of the’ industries affected.
Such instances, however, are not so frequent that Congress cannot deal with them as they arise. When the tariff is framed, substantial allowance should be, and in fact is, made for the ordinary, the seasonal, and other recurrent vicissitudes of industry and commerce. It is necessary to do this for the reason that stability of rates is far more essential to the public welfare than is the maintenance of an exact adjustment of duties to tariff policy. When the operation of the law clearly discloses that, owing to exceptional and unexpected developments, ‘ some of the rates are gravely injurious, there is no valid reason why Congress should not give them individual consideration. Such a procedure, however, is quite different from what is implied by the term “ flexible tariff.”
Undoubtedly there is something alluring in the motion of a benignly flexible tariff. It is as plausible as the maxim : Be good and you will be happy. Unfortunately, it rests on a mistaken supposition, namely, that it is possible to alter duties punctually and smoothly in such a manner as to offset with substantial preciseness changes in economic conditions, and thus to maintain equilibrium between importation and domestic production. But even if this supposition were correct, which it is not, a flexible tariff would still be an expedient of harmful possibilities. For it should toe remembered that the tariff, whatever the purposes of it may be, is in fact a tax assessed on the import branch of international trade. And it is an essential quality of a just and unoppressive tax that it should be certain in order that suitable provision may he made for its payment without destructive consequences. There can he no safety in business plans when the payments which the Government will exact from business arc unknown. This is especially true of an indirect tax, such as the tariff is, where ultimate payment is expected to be postponed, and all the intricacies and uncertainties of shifting are encountered. Under a system of flexible .rates the paralyzing sense of insecurity that attends a general revision would be made continuous. It is hard to conceive of any more damaging effect of a tariff on conservative business than would result from a substantial and irregular fluctuation of duties. It would instil into the import trade a powerful spirit of speculation, and this in turn would undermine the security ot all domestic producers with whose produces imported goods compete. Flexible duties, therefore, instead of promoting stability, would add another to the many uncertainties to which commerce and industry are exposed.
I shall make one other quotation from this work in answer to the statement made during the debate that the tariff of the United States of America has been made flexible because the President, upon the recommendation of the Tariff Commission’, has power to make alterations in it.
– Does he ever exercise that power?
– He has exercised it . in a very few instances, as the following quotation will show : -
Modification of the tariff >by proclamation of the President has been negligible. In June, 1924, the Tariff Commission sent to the Senate a report on the progress of its work. The time lacked by three months of completing the twoyear period for which the committee on finance had first proposed that- the “ flexible “ provision of the tariff should remain in force.’ At that date, the President had ordered no change of duty, except on wheat and wheat products, barium dioxide, and sodium nitrite. The commission, meanwhile, had received requests for investigation from 172 industries. Thirtyseven investigations had been instituted; but of these eight had been suspended, only three had ‘been completed and their results laid before the President, and the rest were in various stages of progress. To regard the present tariff, therefore, as “ flexible,” one must view it from a geological stand-point.
A statement was made by the honorable member for Perth (Mr. Mann), which was referred to later by the honorable member for Boothby (Mr. DuncanHughes), to the effect that no man can be a moderate protectionist. According to the honorable member for Perth, every man must be a whole-hogger ; he must be either an out-and-out freetrader or a prohibitionist. I do not accept that view. I am not a freetrader. If a proposal were submitted to this House to wipe out all Customs duties I should fight and vote against it. I believe in moderation in all things. I believe that the imposition of Customs duties is permissible and desirable as a source of revenue. Duties are desirable and necessary also for the fostering of new industries, but I qualify this statement by saying that I do not include tinpot industries for the manufacture of dolls’ eyes, mouse traps, artificial flowers, or many other finicking little businesses that could be mentioned.
– The honorable member would not protect such industries?
– I am not to be induced to commit myself in respect of specific industries. I am dealing with general principles, and I say, speaking generally, that the benefits, conferred by protection on the secondary industries of Australia are very often far outweighed by the burdens it imposes on our primary industries.
– The honorable member believes in duties on dried fruits.
– The duties on dried fruits were imposed before (federation, and have never been altered.
– Is it right that they should be imposed?
– The dried fruits industry has for a quarter of a century had the benefit of the protection afforded by those duties.1 My objection is to the continual increase of duties on specific items. Before I agree to further increases I want to know where they are going to stop. If Mr. H. V. McKay having had for 25 years the protection of a duty of, -say, £10 on reapers and binders, and having had the opportunity to adjust his business accordingly, did not come to this House asking for more and more protection, I should be prepared to continue to give him the advantage of the protection he had previously enjoyed. The difficulty is that industries that have been protected are continually clamouring for higher protection. I believe that excessive protection is harmful. When we take such a huge sum as £37,000,000 per annum out of the pockets of 6,000,000 of people, that must have a material influence on the cost of living, and of production.
– It is because our protective duties are not sufficiently high that a revenue of £37,000,000 is received through the Customs.
– I note the honorable member’s interjection, and let me say that when proposing, in 1920, the imposition of what were described as very excessive duties the then Minister for Trade and Customs expressed the opinion that the effect of their imposition would be to reduce the revenue derived from Customs taxation. The effect has been to increase it. Wow, the successor of tho then Minister for Trade and Customs comes along with the old story, the old dope from the same old bottle, and asks us to believe him when he says thatincreases in duties will result in the reduction of Customs revenue, although all the predictions of his predecessor in that regard have been falsified by experience. I do not admit that in all cases the home market is the best market, but assuming that it is, it has to be remembered that, the taxation of the implements and tools of trade used by the primary producer in production for export is unjust and inequitable. Whatever may be the opinion of members of the Labour party with regard to the building up of industries in this country, I ask them whether they consider it equitable to compel the primary producers of Australia to pay Customs taxation on their implements and tools of trade used, not for production for home consumption, but for production which must be sold in the markets of the world. That is what the Australian primary producers object to. There might be some justification in asking them to pay the Australian price for their implements and tools of trade used in production for local consumption; but to compel them to pay through the Customs duties levied on implements and tools of trade used to grow produce which must be sold in the markets of the world, is wrong, unjust, and indefensible. ‘ The real remedy does not lie in acceding to continual applications to this House for higher and still higher duties. The Minister referred to Australian secondary industries as suffering from growing pains. That was a very frank’ and significant admission, for which I thank the honorable gentleman. He made it clear that the idea that it is necessary to impose a duty to enable local industries to be established, and when they have commenced mass production, as the American makers of agricultural machinery have done, the duties may be, removed, must be abandoned because he quite frankly admitted that after an industry is established it is necessary to continue to feed it with fiscal dope in order to keep it going, and to relieve it of growing pains.
– “Was that said by the present Minister for Trade and Customs ?
– Yes ; the honorable gentleman made quite a number of very useful admissions.
– I am afraid that the Country party is suffering from growing pains just now!
– I am glad that interjection was made, because it enables me to say that some representatives of the primary producers in this corner, whilst protesting against the tariff burdens that are piled upon the primary producers, feel that, as they are being crucified by this policy, they are compelled in self-defence to hop in with the rest and get a cut out of the tariff. I do not agree with those who think in that way. If we get the Australian price for butter, wheat, and the other primary products of Australia based, not on export, but on import parity, and continue increasing the protective duties year after year, as is done for the benefit of the secondary industries, the result must be that the cost of living in Australia will be considerably increased. Wages will necessarily have to be increased to meet it. Costs of production will be increased, and the last position of the country will be worse than the first. The attitude adopted by some honorable members opposite surprises me. Do they not realize that the object of nearly every increase in the tariff - I admit there are some exceptions - is to enable local manufacturers to increase their prices.
– That is an incorrect statement.
– It has in many cases led to reductions in prices.
– I carefully qualified my statement by admitting that there are exceptions, but ‘I repeat that in a great many cases the object of imposing a duty is to enable the local manufacturer of the article to raise his price. If that is not the object, why impose the duty? I may be told that the manufacturer may temporarily raise his price, but that it will ultimately come down. That is mere prophecy, and I have said that the object of the imposition of a duty is to increase the price of the article upon which it is imposed.
– When we started the manufacture of reapers and binders in Australia the price of those implements was reduced.
– I have no wish to be one-eyed in this matter. I have said there are exceptions to what I regard as the rule. Higher duties result in higher wages, which increase the cost of production. Manufacturers and organized workers are fighting one another, and the poor devil who handles the pick and shovel is always a lap behind in the race. When prices go up the worker has to apply to the Arbitration Court to increase his wages, and may have to wait a very long time before his application can be heard. The workers are always a lap behind in the race. The real remedy is not the continual increasing of tariff duties or the granting of bounties, but a campaign throughout the country to secure national efficiency in workmen, primary producers, and manufacturers. It ia to that our energies should be directed. The continual increasing of tariff duties is no remedy for our difficulties, and when the Minister replies to this debate it will be for him to tell us where all this is going to end.
Sitting suspended from 6.30 to 8 p.m.
.- I should not have arisen tu address myself again to the tariff during the general debate had it not been for the astounding statement made by the honorable member for Wimmera (Mr. Stewart) that an agreement had been entered into between the Nationalist party and the Country party in Western Australia in order that they might present a united front in that State at the recent elections. He pointed out that ‘but for that agreement, Senator Pearce, a member of the Cabinet, would not have been returned to Parliament. Many peculiar things take place in connexion with election campaigns, but I venture to say that, if one took the trouble to look up political history, it would be difficult to find a parallel case to this, in which a Minister of the Crown, who had agreed in Cabinet to certain tariff proposals, introduced in the form of a schedule two or three months prior to the elections, had entered into a compact to do his utmost, if returned to Parliament, to reduce the duties imposed by that schedule. The action of the Minister for Home and Territories clearly proves that responsible government, as it existed in the past, does not exist to-day. This anomalous position has been brought about because of the endeavour to govern this country by two parties which do not see eye to eye on many questions, particularly the tariff. What was this agreement? It is only right that the position should be clearly put before honorable members. The honorable member for Wimmera, in this chamber last Friday, said -
The agreement between the National party and the Country party in Western Australia for the conduct of the last election has been quoted, but I shall quote it again -
That asthe presenthigh tariff is inimical to the best interests of Western Australia,the full strength of the two associations shall be devoted to securing a substantial reduction in the existing tariff.
The object of that agreement was to secure a substantial reduction in the existing tariff. No Minister of the Crown is justified in agreeing in Cabinet to a certain tariff schedule, and then for political purposes entering into an agreement to endeavour to reduce substantially the duties imposed under it.
– Perhaps Cabinet allowed him to do that.
– The Government should at once investigate this matter. The present position is misleading to the public. The agreement continues -
That as a reduction can only be secured through our parliamentary representatives, neither party shall give its endorsement to any candidate not in agreement with this policy.
That, subject to the above-mentioned conditions of policy being accepted as the basis of an appeal to the electors, the Primary Producers’ Association is willing to co-operate with the United party of Western Australia in running a joint team, consisting of two representatives of the United party and one representative of the Country party, for the forthcoming Senate elections. The team so selected shall receive the endorsement and support of both associations, and no other candidate shall be nominated, endorsed, or supported by either association.
The right honorable member for Balaclava (Mr. Watt) then interjected, “ That was an immoral compact”; and the honorable member for Wimmera replied -
Whether it was moral or immoral, it was assented to by both political parties. One member of the Cabinet, the Minister for Home and Territories (Senator Pearce), accepted those conditions, nominated under them, and won his seat under them. He would not have been returned had he not accepted them.
Many things in connexion with political campaigns may be overlooked, but it is difficult to overlook an action of this kind on the part of a Minister of the Crown. It indicates that politics in this country are deteriorating. While this agreement was being entered into in Western Australia, the Prime Minister made the following statement: -
The Government recently found it necessary to submit proposals for an amendment of the tariff in respect of certain of our industries. These alterations were only submitted after the most exhaustive examination by the Tariff Board and the Government, and are based upon the principle of sane and reasonable protection to efficient Australian industries.
In other words, the Prime Minister told the public of Australia that the tariff which we are now discussing was in the interests of efficient Australian industries ; that the Government had considered it, and had come to that decision. Every Minister is loyally bound to stand by a decision of the Cabinet, otherwise responsible government would not be possible. Yet, despite the Prime Minister’s statement, Senator Pearce deliberately entered into an agreement with a section of the Country party in Western Australia. Evidently he had some qualms of conscience respecting his action, because, when opening his campaign at Perth he was reported as follows: -
He was not a high-tariffist, but he recognized that we could not have freetrade. The Federal Parliament was very strongly protectionist, and from every appearance would continue to be so. His influence had been used to moderate tariff proposals, and his position in this regard was the same as that of Ministers representing the Country party who were members of the Composite Ministry. When the tariff, after being considered by the Cabinet, was finally approved, he must accept that decision or resign.
Yet, prior to making that speech, he deliberately signed an agreement designed to break down the tariff.
– Who said so?
– The honorable member for Wimmera (Mr. Stewart).
– I did not say so.
– It is marvellous how honorable members quibble when circumstances are against them. I remember that a somewhat similar position arose when the Country party, before the elections, made representations to their Leader respecting new States, and also the tariff as it affected agricultural implements. At that time honorable members quibbled, and they are still quibbling.
– I did not say that Senator Pearce signed that agreemnt.
– What does it matter? He accepted the conditions under the agreement.
– That is so, but I did not say that he put his signature to the agreement. In any case, his word is as good as his signature.
– Senator Pearce’s position was defined in his speech read by the honorable member.
– The report of Senator Pearce’s speech continues -
If he resigned on account of the protectionist nature of the tariff, no other Western Australian Nationalist or Country party member could take his place.
That is how the Minister for Home and Territories defined his position.
– There was no secret about the agreement. The facts were published in all the newspapers before Parliament was dissolved.
– The facts were published in Western Australia,, and I am entitled to place them before the general public. The Composite Government went to the country on a policy of protection, and as a result obtained the votes of the manufacturers and many of the men employed in factories. I am now endeavouring to show that an agreement was entered’ into in Western Australia whereby one Minister of the Crown promised to do his best to reduce the duties imposed by the tariff. There is no escape from that position.
– What would be the position of the honorable member if he were a member of Cabinet together with Senator Gardiner?
– We should get on very well. Senator Pearce continued -
If members from the State remained out of the Cabinet, it would not affect the tariff one iota. The probability was that, failing a1 high tariff member from Western Australia, a high tariffist from the east would take the position, and Western Australian representatives would still be in a minority in both Houses on the tariff issue.
That shows the motive that actuated Senator Pearce.
– It is all right.
– If I were a member of a government that had decided on a certain policy, I should stand true to its decisions. If Senator Pearce had not done that, he would not have been re-elected. After agreeing to a tariff schedule approved by the Cabinet of which he was a member, he pledged himself to do all that he could to reduce it. That was. a very serious thing for the Leader of the Government in another place to do. A majority of members in this House believes in protection. The Government also professes to believe in it. Yet one of its Ministers - and the one who will be in charge of the tariff when it reaches another place - has stated publicly that he will do his best to wipe out, or reduce, the tariff which the Government has introduced. Recently, a bill providing for a grant of £450,000 to Western Australia was agreed to because of the disabilities which the tariff imposes on that State. That grant will be made from money collected as Customs revenue. Western Australia cannot have it both ways. She cannot obtain a grant of £450,000 from the Commonwealth Treasury, and at the same time cut off the source from which that money is obtained. A doublebarrelled gun is being levelled at the Government. Not only do Western Australian members desire the tariff to be reduced, or wiped out, but they also want to get from. the Treasury a grant out of money received by virtue of the tariff to assist them to meet disabilities caused by the tariff.
– It is possible to get revenue without protection.
– I. wish that there was no revenue from that source. I should like the tariff to be sufficiently high to enable Australia to be self-contained. If revenue is not obtained from Customs, it must be obtained from some other source. The next source is the income tax. But, for two or three years, the Treasurer has been endeavouring to get the Commonwealth to vacate the field of income taxation. In Sydney, yesterday, a big meeting of interested persons made representations to the Government to abolish the Federal income tax. Should revenue from Customs and from income taxation be no longer available, how would the Government obtain revenue ? We must not lose sight of the fact that Australia incurred a debt of . £400,000,000 in connexion with the recent war. That money has to be repaid; from that there can be no escape. While that war debt remains it is useless for honorable members to complain that our income taxation is too high. If each person paid only that taxation which he thought necessary, how should we pay our debts?
– How shall we pay our debts if we manufacture all our requirements here?
– If Australia were in a position to manufacture all her requirements, her population would be sufficient to enable a substantial reduction in taxation to be made. The establishment of factories gives employment to greater numbers of people. They constitute the home market for our primary products, and enable taxation to be reduced. The Government went to the country declaring that it was in favour of the tariff schedule - a protectionist tariff. Because of that policy it gained the support of numbers of people who previously were wavering. Before the recent election, numbers of men otherwise opposed to the Labour party told me that they were not satisfied with the attitude of the Composite Government on fiscal matters. But when the tariff schedule was introduced, they were satisfied.
– Was it the same schedule as that which we are now discussing?
– Yes. Senator Pearce said that the present high tariff was inimical to the best interests of Western Australia. The tariff to which he referred is the tariff with which the committee is now dealing.
– He referred to the whole tariff.
– That makes the matter worse. The tariff schedule was introduced by the Government of which Senator Pearce was, and still is, a member. Yet, according to the honorable member forFawkner (Mr. Maxwell), Senator Pearce is now prepared to reduce the whole of that tariff schedule. Western Australian legislators are freetraders when in Western Australia and protectionists when in the eastern States.
– My objection was to the Minister’s claim that the election result was a victory for protection.
– In view of this agreement, that was not the case. I did not know of the existence of the agreement until the honorable member for Wimmera (Mr. Stewart) referred to it last week.
– The honorable member for Swan (Mr. Gregory) read it.
– The more light that is thrown upon this subject the more clearly is it revealed that there was a deliberate attempt on the part of Western Australian members to bring about a reduction, not only of the present schedule, but also of the whole tariff. I say nothing as to the attitude of the honorable members for Swan (Mr. Gregory) and Perth (Mr. Mann) ; they have been consistent. But no Minister is justified in entering into an agreement for political purposes when that agreement is opposed to the policy of the Cabinet of which he is a member. I cannot imagine that Senator Pearce accepted this agreement without first consulting Cabinet. What is to be said of a Cabinet which, after having submitted a tariff schedule, based on the recommendations ofthe Tariff Board, permits one of its members to enter into an agreement to do all that he can to reduce that tariff ?
– The people of Western Australia accepted Senator Pearce on his public statements?
– They accepted him on this agreement. Because it was thought wise to get rid of him, Senator DrakeBrockman was got out of the way before the agreement was entered into. As things were, Government supporters in Western Australiasaw little chance of reelection. This arrangement was therefore entered into. It is no wonder that people speak contemptuously of parliamentary institutions. Men like Sir Henry Parkes and W. B. Dalley would not have stood for this kind of thing. If, during their regime, a member of the Cabinet agreed to something which was not in keeping with the settled policy of the government, he would have been called upon forthwith for an explanation. The position now is that the Country party claims Senator Pearce as a supporter of its fiscal policy. Hitherto it has been contended that, in the Composite Government, the Nationalist party held a majority of portfolios.
But with Senator Pearce supporting the Country party members of the Cabinet - and he said that. Ministers belonging to the Country party held the same views that he did - a different position has arisen. There is now the same number of Ministers on each side. What, will happen if Senator Pearce, in another place, uses his influence to interfere . with the tariff ? No Government can control the affairs of the Commonwealth in such circumstances. Until the Minister denies it - if he does deny it - I shall assume not only that before entering into the agreement he consulted Cabinet, but that Cabinet consented to the action which he subsequently took. What will the manufacturers of Australia say when they know that they have been tricked? The Prime. Minister went to the country declaring that his Government stood for protection, that it would do its best to pass this tariff schedule. But at the same time he permitted one of his colleagues - the Leader of the Government in the Senate - to go to Western Australia and to agree to do what he could to reduce the tariff. What is responsible government coming to when such things are possible?
– Unfortunately, the schedule does not show that influence.
– We do not know what will happen. Many items which should be in the tariff schedule are not there. We do not know what influence can be exerted by those five members of the Cabinet.
– The schedule was presented before the compact was made.
– That does not detract from what I have said.
– The statement of the honorable member for Wimmera (Mr. Stewart) is not correct.
– That really does not matter, because the same influences would have been present in the Cabinet. Senator Pearce stated distinctly that he was working in conjunction with the Country party members of the Cabinet in this matter. His action demands the attention of the Government and of Parliament. Whatever our political views, we all admire a party which, when in office, shoulders its responsibilities and is true to the best traditions of Parliament. The action of the Minister would not be tolerated in the House of Commons, or, indeed, in many of our State Parliaments. Yet, in the Australian National Parliament we are asked to stand for this kind of thing in order that the Composite Government may remain in office. Rather than that the Composite Government should continue, it would be better for the Nationalists themselves to form a government. There would then be no division, and we should have responsible government. We should not then have one section of the Cabinet standing for something, and another section, while not approving of it, agreeing to it. When one party controls the administration we shall get back to responsible government. The sooner that can be achieved the better it will be for the country. The state of affairs that has existed for months past is most unsatisfactory. In making this complaint I am seeking no party advantage; I am actuated only by the desire to uphold the traditions of British parliamentary institutions. The signing of an agreement by a member in opposition to the policy of his Cabinet is wrong, and I would be recreant to my duty as a member of this House if I did not draw public attention to it. It is clear that honorable members opposite have placed party advantage before political rectitude. The Government is not right in leading people to believe that it stands for the fostering of local industries by means of tariff protection, when, apparently, half the members of the Cabinet are endeavouring to destroy that policy. The disclosure of this agreement will at least have the effect of opening the eyes of those people who voted for Ministerial candidates in the belief that the tariff schedule now before the committee indicated the accepted policy of the Government. I believe that threefourths of the people of Australia are in favour of the protection of local industries. The Government played on the fiscal sentiments of the people in order to get returned to office, notwithstanding that half the members were doing their utmost to destroy the tariff. I do not criticize those honorable members who are conscientious believers in free trade, and appear in their true colours; it is to their credit that they fight for their political faith. But it is not in the interests of olean government that a Ministry which claims to have a protectionist policy should allow one of its members to enter into an agreement for the removal of tariff duties. I invite the Government to declare whether or not it had knowledge of this agreement.’ If it had such knowledge, the Prime Minister had no right to make a policy speech in which he pledged his Cabinet and his party to a policy of fostering secondary industries by means of tariff duties. If the Government had no knowledge of the agreement, the Prime Minister should say so. If it acquiesced in Senator Pearce’s action, it should be frank with the people, so that they may know that their votes were obtained by false pretences. At election time many things are done which would not be done at other times, but when the probity of the Cabinet- is undermined and certain members enter into an agreement for the purpose of nullifying the publicly declared policy of the Government, a serious wrong is done to- the country. We cannot have stable government while this condition of affairs obtains. A return to one-party government will be in the interests of the Commonwealth, for we shall get away from the present system of intrigue and compromise, and the advocacy of sectional interests without regard to the welfare of the great majority .of the people. All sections of the House are prepared to help the primary producer to any reasonable extent, but the members of the Country party are always trying to wring some advantage out of other sections of the community. That state of affairs cannot endure. It is the duty of all honorable members to place the welfare of the country as a whole before the interests of a class or section. By the establishment of secondary industries a market will be provided for the primary industries, more employment will be created, and the country will be made capable of absorbing more population, thus reducing the taxation per head and helping to develop Australia into one of the finest countries on God’s earth.
– Repeating the tactics to which his party has frequently resorted during the last three years, the Leader of the Opposition has sought to create division in the ranks of Government supporters by raising false issues. His great anxiety to secure, at one time for .-the Nationalists and at another time for the Country party, better consideration and representation, is almost pathetic. The honorable gentleman has declared that Senator Pearce, a member of the Ministry, went about the country saying that he was opposed to the fiscal policy of thu Government. That is an absolute misstatement. The agreement between the Nationalist and Country parties in Western Australia was not a secret.
– It was not known to me.
– Months before the election was held the terms of the agreement had been published in the Western Australian newspapers.
– Those newspapers are not read in Melbourne.
– They should be read by any honorable member who presumes to make charges such as the Leader of the Opposition has made to-night. The two organizations in Western Australia accepted the nomination of three candidates for the Senate, knowing full well their views and responsibilities. When they accepted Senator Pearce, they knew that as a Minister he was bound by the declared policy of the Government. That policy was no secret. Last year the Government tabled in this House a tariff schedule almost identical with that now before us, and would have given legislative effect to it had not the Leader of the Opposition challenged us to go to the country on the communistic issue. Senator Pearce did not mislead the people as to his position; he knew, and they knew, that if he were returned to Parliament it would be his duty as the Leader of the Government in another place to pilot the tariff through that chamber and fight loyally for the policy it represented.
– He made that quite clear in his opening speech in the Queen’s Hall, Perth.
– There was never any doubt as to his attitude, and he was accepted by the two organizations that were a party to the agreement and by the people of Western Australia with a full knowledge of the facts. I am surprised, therefore, that the Leader of the Opposition should pretend that the honorable member for Wimmera (Mr. Stewart), when he read the agreement, disclosed something which hitherto had been hidden. The agreement was known to the public months before the election inNovember last was thought of.
– Even if that be so, the wrong remains.
– I can see nothing wrong in the arrangement that was made. A Minister may personally hold certain views, but in Cabinet he has to abide by the decision of the majority and fight for whatever policy is put before the country by Cabinet as a corporate body.
– Does that apply to the Treasurer’s policy in regard to new States?
– My policy in regard to new States will commend itself to the people. It will certainly be much more acceptable to the electors of Capricornia than is the policy of the honorable member.
– What is the Treasurer’s policy in regard to the tariff?
– I have expressed it in this chamber on many occasions. At present my duty as a Minister is to stand solidly behind the schedule which the Government has submitted to the House, and to fight continuously for it. That is precisely the position of Senator Pearce.
. - The Leader of the Opposition (Mr. Charlton) is deserving of the thanks of all fair-minded honorable members for having drawn attention to the moist immoral contract made by Senator Pearce, the Leader of the Senate, in order to ensure his re-election. During the election campaign the Government, by facing both ways on the fiscal issue, hoodwinked the people in Western Australia . and the electors in the eastern States. Ministers apparently considered that the end justified the means. The Treasurer said that there was nothing wrong in the compact to which Senator Pearce subscribed. Yet when the right honorable member for Balaclava (Mr. Watt) heard the terms of the agreement read by the honorable member for. Wimmera, he interjected that it was a’ most immoral arrangement. He was expressing an impartial opinion. The Treasurer knows that the arrangement was immoral, corrupt, and politically dishonest, and that a party guilty of such conduct deserves to be swept out of public life. The Treasurer says that all this has been known for the last eight months, that it has appeared in the Western Australian newspapers, and that honorable members should have known of the agreement. But the Western Australian newspapers have a limited circulation in the eastern States, and I doubt whether the Treasurer himself ever reads a Western Australian newspaper. The honorable member for Swan (Mr. Gregory), earlier in the debate, also brought this matter before the committee. He said that so far as Western Australia was concerned the Country party and the Nationalist party, prior to the elections, came to the following agreement : -
That, as the present high tariff is inimical to the best interests of Western Australia, the full strength of the two associations-
The honorable member was here referring to the Nationalist and Country party organizations - shall be devoted to securing a substantial reduction in the existing tariff.
asked’ if that was a mandate, and the honorable member for Swan replied that it was an agreement entered into in Western Australia. Is it likely that any honorable member would enter into an agreement without knowing all about its terms ? And is it suggested that Senator Pearce was not a party to it? The agreement continues -
That as a reduction can only be secured through our parliamentary representatives, neither party shall give its endorsement to any candidate not in agreement with this policy.
That, subject to the above-mentioned conditions of policy being accepted as the basis of an appeal to the electors, the Primary Producers’ Association is willing to co-operate with the United party of Western Australia in running a joint team, consisting of two representatives of the United party and one representative of the Country party, forthe forthcoming Senate elections. The team so selected shall receive the endorsement and support of both associations, and no other candidate shall be dominated, endorsed, or supported by either association.
The honorable member for Yarra (Mr. Scullin) asked -
Was that the agreement accepted by the Government’s representatives?
To which the honorable member fopSwan replied -
I am giving facts from which the honorable member can form his own deductions.
We know from that statement of the position that Senator Pearce was a party to the agreement, and that the Government candidates in Western Australia were out to deceive the people of that State in order to ensure their return with a majority. If this is not political dishonesty and immorality, I do not know what is. Is it .any wonder that the right honorable member for Balaclava (Mr. Watt) declared it to be a most immoral compact in view of the fact that the Government of which Senator Pearce was a member was committed to a protectionist policy. It was quite in keeping with the action of the Treasurer (Dr. Earle Page) in visiting Capricornia with a Country party candidate with the object of deceiving the people concerning the New States movement. He told the people there that a considerable amount of interest was being taken, in the New States movement in Melbourne, and that meetings of the Parliamentary New States Committee were held weekly.
The ACTING CHAIRMAN (Sir Granville Ryrie). - The honorable member must confine his remarks to the tariff.
– I intend to do so, Mr. Chairman. The Treasurer endeavoured to show that the suggested new States could be brought about if the Federal Labour party had not, as he termed it, “ fallen down on the job.” He deliberately set out to deceive the people in Capricornia, New England, and other places. He also said it was regrettable that the honorable member for Capricornia, meaning myself, did not attend the meetings of the Parliamentary New States Committee. Are honorable members aware that the Treasurer himself is not a member of that committee, and that the committee meets about once in every six weeks or so ? I remind them also that only yesterday the Prime Minister (Mr. Bruce) took action to ensure Government business taking precedence over private members’ business, which includes a notice of motion relating to the formation of new States. That action prevented this chamber from discussing the question. Is it .any wonder that the right honorable member for North Sydney (Mr. Hughes), in his book The Case for Labour, published many years ago, declared that coalition governments were immoral combinations unlikely to be of any benefit to the country ? It is evident, from the disclosures made by the honorable member for Wimmera (Mr. Stewart), and eloquently emphasized this evening by my leader (Mr. Charlton), that the Government has descended to unheard of depths of political immorality and dishonesty. The Leader of the Government in another place associated as he was with Country party members of the Cabinet, and Country party candidates went before the electors of Western Australia pledged to bring about a substantial reduction in the tariff. This, mark you, is the gentleman whom the Government has to rely upon to pilot the tariff through another place. I should like to know what the 450,000 workers employed in our secondary industries think of this. I should like to know, also, what the manufacturers of Australia and those primary producers who have to depend upon the home market for the disposal of their surplus products think of it? I intend to confine my remarks to certain phases of the’ tariff proposals and emphasize where I stand in relation to the schedule. I believe in the granting of bonuses to assist primary and secondary industries in their initial stages; I believe in adejquate tariff protection for both primary and secondary industries; 1 believe, also, that we should, at the earliest possible date, give effect to the Labour party’s new protection policy. This will guarantee to the manufacturers adequate protection, and they in their turn .will be obliged to observe Australian standards in their factories and sell their ‘ goods at reasonable prices. This policy will result in a substantial increase in our population, and provide a splendid home market for our primary producers. All honorable members have received numerous communications from interested parties in regard to various items in the schedule, particularly those items dealing with cotton tweeds, cotton piece goods, and woollen piece goods. I do not propose to deal with those subjects in the general debate on the schedule. The honorable member for Wimmera (Mr. Stewart) stated, in the course of his remarks, that the recent Farmers’ Conference at Ballarat carried resolutions protesting against the present high tariff policy of the Government. That conference also passed, a resolution endorsing the policy of the Composite Ministry. If the farmers at the Ballarat conference had been sincere and consistent they would have supported the stand taken by the honorable member for Wimmera, and passed a motion of censure on those Country party members who sold their political principles for office. Evidently they were more anxious for the continuance of conservative government in Australia than that their principles should be given legislative effect, so they deserted the honorable member for Wimmera. It is apparent, from speeches made by Country party members during this debate, that they are ardent freetraders, and are out of step with Australia’s national policy of protection. If they had their way, they would flood this country with imported goods from, cheaplabour countries.
– ‘Who said that?
– I heard the honorable member for Forrest (Mr. Prowse) express that sentiment. The honorable member for Gippsland is what is called a “shandygaff” protectionist; that is to say, he wants protection for everything that the farmer produces and freetrade in farming implements. He has also been referred to as a “ leaky-roof” protectionist. So far as our secondary industries are concerned I fail to see any difference between the honorable member for Gippsland and the honorable member for Perth (Mr. Mann), who, at all events, was bold enough to say that if he had his way he would wipe out all tariff protection. The policy of Country party members, if adopted, would result in the destruction of all our big manufacturing industries and the unemployment of 500,000 people.
– The honorable member is talking sheer nonsense.
– On the fiscal issue the honorable member for Gippsland speaks with two voices.
– We remember his motion for the adjournment of the House to discuss the duty on agricultural implements.
– That astute move was taken on the eve of the Country party conference at Ballarat. The honorable member moved the adjournment of the House to protest against duties being imposed on agricultural implements so that farmers could buy in the cheapest market, but he failed utterly to prove that the foreign market was the cheapest. It is evident that, on the fiscal issue, the honorable member for Gippsland is not as sincere as is the honorable member for Perth. One wishes to wipe out the duty altogether, and the other declares himself to be in favour of a moderate tariff, which will slowly strangle our secondary industries. Members of the Country party, if they had their way, would gradually strangle some of the primary industries in certain parts of Australia, especially the Queensland sugar industry, so that sugar could be imported from Java and other cheap labour countries.
– I have never said anything of the kind.
– But the honorable member for Forrest did, and he was Government whip until he was, passed out not long ago. It is well known that the honorable member for Gippsland. and other members of the Country party are opposed to any effective protection being afforded to our secondary industries.
– We are not.
– The honorable member believes in what he callsa. reasonable amount of protection, but he thinks that the duties in this schedule are too high. He tries to face two ways politically. I prefer a man like the honorable member for Perth (Mr. Mann), who is politically honest enough to say definitely where he stands. The Treasurer, I believe, is of the same opinion as the right honorable member for Balaclava concerning the Western Australian agreement, but he is. not courageous enough to say so. The honorable member for Gippsland is not prepared to give adequate protection to our secondary industries, but on the other hand he is anxious that protection should be granted in respect of maize, millet, potatoes, hops, jams, dried fruits, and onions. As a matter of fact he was a member of a deputation that waited upon the Minister for Trade and Customs (Mr. Pratten) recently. He then said, “ I want the duty on potatoes increased from £1 to £4 a ton.” Those presentat the deputation were Messrs. Rodgers, Bell, Hurry, Cook, M. Cameron and Paterson, members of the House of Representatives. They desired to have the duty on potatoes increased by 300 per cent. ; but they objected to . 45 per cent. protection on farming implements. They, therefore, speak with their tongue in their cheek when they say that the raising of the duties on items produced in the secondary , industries has the effect of increasing the cost of living to the workers. Will not the raising of the duty on potatoes increase the cost of living to men and women, not only in the cities, but also in the country districts ?
– They were making that plea to the Minister whilst some of their friends were advocating a reduction in the duties on other items.
– One of their friends was most eloquently appealing for the reduction of the duties on items relating to secondary industries. That is arrant hypocrisy which will not carry any weight with the people. What are the views of the honorable member for Indi (Mr.. Cook) ? He delivered a speech on the tariff, in this chamber, on the 5th March last. He threw out his chest, and grew red in the face. The Age, on the following day, reported him as having said -
As a farmer, I do not want any more protection than a good road to my farm, a little duty on broom millet and meat.
That is typical of the breadth of vision which is displayed by some honorable members who sit in the corner opposite. They cannot take the broad Australian view. They stand on their back verandahs at their farms, look down their fields, and decide that protection on millet and meat, and a decent road, are all that they require. Yet the party to which they belong has a half-share in the Composite Cabinet ! Some Nationalist honorable members from Western Australia advocate reasonable protection until they visit their State; when they assure, those who desire freetrade, “We will co-operate with Country party members to reduce the tariff.” In the eastern States they preach the doctrine of protection for our secondary industries. Honorable members opposite say that that is political honesty ! I should like to hear their definition of political dishonesty. I had to fight a good deal of misrepresentation in Queensland during the recent election campaign. All the newspapers were opposed to the Labour candidates. The Country party candidate for Capricornia said that Federal Labour members would ruin the Queensland sugar industry if they had an opportunity to form a Government.
– Is the honorable member now trying to give us a little of what he then received ?
– I am endeavouring to show the inconsistency of certain Country party candidates, who took their lead from Dr. Earle Page. I was told that certain honorable members on this side favoured’ the wiping out of the tariff protection in relation to the sugar industry, aud the introduction of black-grown sugar. Yet nothing was said of the freetrade speeches in this chamber of the Country party. The Minister for Works and Railways (Mr. Hill), in a speech which he delivered on the 2nd April, 1924, according to Hansard, page 245, said -
I would remove the sugar embargo, and do away with Arbitration Courts and high tariffs.
– He was a strong protectionist in regard to prunes.
– He favoured the protection of prunes, potatoes, and millet and maize, because they were grown in his electorate; but he was not prepared to adopt the Australian view, and admit that if the sugar industry were wiped out, the greatest bulwark of our White Australia policy would be destroyed. Without that industry, the north could not be developed. Despite the views that they have previously expressed,- certain honorable members opposite now claim’ to stand for a reasonable measure of protection for the secondary industries of Australia. ‘ That word “ roasonable “ is most ambiguous. If it means the lifting of the embargo which protects the sugar industry, and the introduction of black-grown sugar, how can they say they truly represent the interests of the primary producers? They may represent those who are engaged in primary production in a few square miles of Victoria, but they lack the vision which should be possessed by honorable members of a chamber of this character. It is difficult for me to understand why these alleged Country party members should hold such views, in view of the wonderful progress that has been made in Australia under protection during the last 20 years. A more rapid advance has been made during that period than in any other similar period in the previous history of Australia. Australian industries, primary and secondary, increased in value from £117,000,000 in 1903 to £392,000,000 in 1923-4; whilst our manufacturing industries .increased from £28,000,000 to £132,000,000. A perusal of the statistics discloses a substantial increase every year. For example: -
Surely those figures prove that our protectionist policy has been a great success. The establishment of new industries should be encouraged in the interest of Australia’s development. We should all welcome the establishment of such new industries as the. Ford Motor Works. The Australian tariff convinced Henry Ford that it was better to establish manufacturing plants in Australia than to pay the duty that was imposed upon the imported article.
– Others are likely to follow suit.
– That is so. The Labour party’s policy of protection is not onesided, nor is it confined to the back portion of some farm. It is a well-balanced Australian scheme. We, as a party, support effective protection for agricultural machinery and implements; but we also say that those implements and machinery should be sold at a reasonable price, and that in their manufacture the Australian standard of living should be observed in the factories. Our policy also embraces adequate protection for the primary industries.
– And for the consumers.
– We wish to prevent the consumers from being robbed by the exploiters, the speculative agents, and the market-riggers, who fleece the producers and consumers, and support the Nationalist party. The honorable member for Wimmera (Mr. Stewart) was very unfair in his criticism this afternoon of the agricultural implement industry. To answer his statement that the Canadian binder is cheaper than that manufactured in Australia, one has to consider the price which the Australian farmer had to pay for that binder prior to the 1921 tariff. It was then sold in Australia for £120. When the tariff was imposed the Australian manufacturer secured the trade. In order to recover the market the Canadian manufacturer reduced the price of his binder to £93. If, in spite of a substantially increased duty, he could make his business pay at that price, what sort of a profit was he making before the 1921 tariff when he was charging £120 for’ the same article. The honorable member for Gippsland, on the 26th February last, moved the adjournment of this House to discuss the duty on farming implements. I have never heard a weaker case than that which he put forward. It was just a political “ stunt “ to deceive the farmers who were about to attend a conference at Ballarat. The Minister for Trade and Customs effectively answered his arguments by stating that the agricultural “ implement industry in Australia gave employment directly to 5,000 men, and indirectly to between 3,000 and 4,000; that it turned out annually implements valued at £1,500,000; and that the cost of a 6-f t. binder in f freetrade New Zealand was £72, compared with £75 for the binder manufactured in Australia. Who would not be prepared to pay an additional £3 in order to support an Australian industry, especially as the farming implements manufactured in Australia are equal to any in the world? I have heard practical farmers say that they are superior to the imported article. All this talk about the high duties that are paid by the farmers on farming implements is so much moonshine in the light of the facts. Last year £135,000 was collected by way of duty on agricultural implements. That works out at only onethird of Id. on every bushel of wheat produced, leaving out of consideration all other agricultural products. That is on one crop. Take barley and potatoes and the cost is still more infinitesimal. The fallacy of the arguments used by honorable members opposite is thus exposed. They surely do not seriously claim that there is any truth in their statements. They make them merely in order to please a few misguided individuals, whom they should educate on these fiscal questions. They have secured their seats in this chamber by misleading the people with false statements. What - are- we experiencing in Queensland to-day? Owing to the inadequacy of the local market there is an over-production of sugar to the extent of 180,000 tons per annum, which has to be sent abroad to compete with sugar grown in Java and Fiji where labour costs ls. per day. This surplus sugar has to be sold .at £9 10s. per ton as against the Australian price, based on the cost of production, of £27 per ton, so that our sugar-growers lose heavily on it. The Queensland sugar-growers are strongly opposed to the freetrade policy of honorable members of the Country party. They do not desire to break down our tariff wall so that the products of cheap black-labour countries may compete unfairly with the products of Australia. The conditions here are incomparably better than those of most countries abroad.
– Why is it that the Queensland sugar-growers produce more sugar than is needed for Australian consumption ?
– For years the sugargrowers in Queensland and northern New South Wales were unable to produce sufficient sugar to supply our local requirements, but the sympathetic treatment meted out to them by various Governments has enabled them, to overtake and exceed the local demand. The tariff protection has made sugar growing a payable proposition. It is only in the last two years that we have had a surplus production here. If another 500,000 people were employed in the secondary industries of Australia there would be sufficient people here to consume all the sugar that we could produce. The tropical north is not suited for general agricultural operations, and adequate protection must lie gaven even the sugar-growers to make it possible for them to carry on their work. Our great national fiscal policy has been good for primary producers, not only in Queensland, but throughout Australia.
– Does the honorable member suggest that another 500,000 people would absorb the 40 per cent, surplus sugar at present being produced?
– If another 500,000 people were directly employed in our secondary industries, it would lead indirectly to the employment of another 1,500,000, and an increase of 2,000,000 in our population, and that would be sufficient to absorb all our surplus sugar, because the quantity consumed per head of population is gradually increasing. The sugar-growers of Queensland are very anxious to see a big increase in Australia’s population, provided that they can be given employment here.
– The honorable member has not yet answered my question. Why are we producing 200,000 tons more than is required for local consumption?
– I have already pointed out that, owing to the adequate protection given to the industry, people have been encouraged to engage in it. As a matter of fact, many persons acquired land and began to clear, and till it before there was a surplus production. It must be remembered that it is impossible to clear scrub country and get a crop off it in twelve months. Many of the people now engaged in the sugar industry entered into contracts for the purchase of their land two years before they got a crop off it. The sugar industry has developed in Queensland for the same reason that the number of factories has increased in Victoria, namely, that adequate protection has been provided to make development, possible. Men of initiative and enterprise will always be found ready to engage in primary and secondary industries when they are assured that adequate protection, will be afforded them against the competition of low-wage black-labour countries abroad. The honorable member for Wimmera (Mr. Stewart) quoted figures this afternoon with the object of showing that primary production had not expanded under our Protectionist policy; but he gave values instead of quantities. When he was asked by the right honorable member for Balaclava (Mr. Watt) to give quantities, as they would be more convincing, he side-stepped the question. I intend to quote figures, aud I shall give quantities and not values, to show how primary industry has developed in Australia under our Protectionist policy. In 1900-1, before we had a Commonwealth tariff, the total area under crop in Australia was 8,812,463 acres. In 1923-4, the area had increased to 16,531,186 acres. The production of wheat increased from 45,974,992 bushels in 1919- 20, to 164,544,701 bushels in 1924-5.
– The first year that the honorable member quoted was a drought year, and the next an abnormally prolific one. The year 1919-20 was one of the worst we have ever experienced.
– Well, I will take 1921-2.
– That was an extraordinarily good year.
– The wheat production in that year was 129,08S,806 bushels. The production of oats in 1919-20 was 12,556,111 bushels, and in 1923-24 it had increased to 17,303,325 bushels. A total of 6,764,005 bushels of maize was grown in 1919-20t and in 1923-24 the figures had increased to 8,114,733 bushels. The figures for barley are as. follows: - 1919- 20, 4,287,927; 1922-23, 6,548,935.
– The honorable member “is keeping to the drought year.’
– It makes very little difference which year I quote. All the figures show an increase. Will the Minister name an ordinary year t
– The year 1920-21 was a good year.
– In that year 373,056 tons of potatoes were produced, and in 1923-24 the quantity had increased to 447,570 tons. The production of hay totalled 2,986,411 tons in 1919-20, and 4,051,934 tons in 1923-24. The quantity of sugar cane produced in 1919-20 was 172,973 tons, while in 1923-24 it was 286,004 tons. Wonderful progress has been made also in our vineyards. The area under vine cultivation in 1919-20 was 73,326 acres, and in 1923-24 it had increased to 112,965 acres.’ The production of wine increased from 7,649,404 gallons to 14,663,881 gallons in the same period. The production of raisins and currants has also increased remarkably. In 1920-21, 136,551 cwt. of currants were produced, and in 1923-24 the figures had grown to 304,294 cwt. We produced 168,177 cwt. of raisins in 1920-21. and 590,406 cwt. in 1923-24. The honorable member for Wimmera (Mr. Stewart) should have quoted all these figures, but he failed to do so. The dairying industry has also developed substantially. The quantity of butter produced in Australia in 1919 was 165,648,791 lb., and in 1923 it was 226,665,853 lb.
– The honorable member is still using a drought year as the basis for his comparisons.
– I have quoted various years, and they all show an increase. The cheese production in 1920 was 24,160,524 lb., and in 1923 it was 25,380,525 lb. In the face of these figures it is ridiculous for honorable members of the Country party to say that our great national policy of protection is suicidal. Our primary industries are developing on every hand. It must be apparent to even the dullest intellect, that the welfare of the farmers of Australia is closely bound up with the development of our secondary industries. The best market that the farmers can have is the local market. Every expansion of our secondary industries means employment at good wages for more people^ and a development of the local market for the farmers’ produce. The Queensland producers, at any rate, realize that the larger the market at their door, the better for them. One customer in Australia is worth three or four on the other side of the world, because of the heavy transport charges involved in marketing our products abroad, and the competition there of low-wage countries. I cannot understand why honorable members opposite, particularly members of the Country party, should be continually railing against tariff protection and the secondary industries. The Treasurer (Dr. Earle Page) . went to the conference of farmers at Ballarat, and tried to face both ways. On Wednesday, the 10th March, he said -
At present the biggest exploiter of rural industries was political labour. . . . The spread between the producer and the consumer would have to be reduced to enable primary producers to prosper. . . . The consumer was as much interested in the attempts of the producers to secure orderly and regular marketing and the fair apportionment of the charges for distribution as was the producer himself.
Although the Treasurer undertook to introduce an improved system of marketing, he has done nothing in that direction. After four years of rule by the Composite Ministry, the primary producers now find themselves in as bad a position as that occupied by them when the Government came into power. In January last the Central Queensland District Council of Agriculture . convened a public meeting -of dairymen and their wives, and the following subjects were set down for discussion: -
Ways and means of bringing a maximum pressure to bear upon the Commonwealth to invest its producers with a Commonwealth orderly marketing system for the following reasons : -
Evidently the dairymen of Central Queensland do not enjoy the orderly system of marketing that was promised by the Treasurer, although - he tells us - his one object in entering public life was to provide it. “While they are no better off, the Treasurer has had four years of office at a very substantial salary. Another subject in which the people of my electorate are vitally interested is the cotton industry. I believe in the encouragement of both the primary and secondary branches of that industry, and there is great scope for expansion. According to figures supplied by the Minister for Trade and Customs (Mr. Pratten), I find that the value of raw cotton exported from Australia for the two years ended the 30th June, 1924, was approximately £500,000; while for the same period we imported manufactured cotton goods from other countries to the value of £33,000,000. I am pleased to notice that the Tariff Board, which has submitted a number of excellent reports upon articles manufactured in this country, makes a very wise comment regard; ing the manufacture of cotton goods. Referring to cotton yarn, it states -
The board investigated an application for payment of bounty at the rate of 6d. per lb. on cotton yarn spun in Australia. The application was based on the grounds that assistance is necessary to enable the applicants to establish on a sound basis the industry of spinning cotton yarn and of following with the related industry of weaving cotton piece goods, towels, &c.
In the course of the investigation the board visited the works of the applicant company where cotton yarn was being spun from the lint, and was subsequently being woven into piece goods and towels. The board was impressed with the undertaking, and with the prospective value of the industry in the development of cotton-growing in Australia, and also in the provision of a means for consuming large quantities of Papuan grown cotton.
The expansion of the secondary branches of the industry is of the utmost importance to Australia. It has been proved that we can grow cotton superior to the best American middling cotton, and it has brought more favorable prices than any other imported cotton on the Liverpool market. It would be an ideal state of affairs if Australia could grow sufficient raw cotton to supply spinning and weaving mills capable of manufacturing here the whole of the cotton goods required in Australia. Apart from the increase there would be in the number of cotton-growers, it is estimated that the industry would then provide employment for a further 285,000 persons.
– Who made that estimate?
– I understand that it was made in the Customs Department. Up to the present time, the primary and secondary branches of the industry have not had a fair chance to develop.The Queensland State Government gave the industry its first great impetus by offering guaranteed prices for raw cotton, as far back as 1919-20. The losses so far incurred by Queensland on that account are as follow : -
Altogether, the loss to the State Government amounted to £108,930 5s. 4d.
-Does the honorable member wish that loss to continue?
– I do not suggest that it should be continued indefinitely ; but for a period of five or six years the Government would be satisfied in guaranteeing the price in order to establish the in- dustry on a firm footing. In order to show the impetus that has been given to the industry by this method, let me quote the following figures as to the quantity of cotton produced in Queeusland : -
The total annual value of the product is now £300,000. At the inception of the period for which the price has been guaranteed the basis laid down was 5½d per lb. foi1 all cotton ; but, owing to the setting up of grade standards, after the first two years this basis was destroyed, thus causing intense disappointment to the growers, which is evidenced in the decreased area being put under crop this year. Since the departure from the spirit of the guarantee is responsible for the decrease in the acreage being planted this year, I am of the opinion “that the Federal Government should have reviewed the present guaranteed price with a view to resuscitating the industry. The losses on the guarantee are comparatively small when the services that the industry has rendered to the community are taken into account. The depreciated overseas market should not affect the guaranteed prices during the defined period, because the growers have accepted the conditions outlined at the outset, and have laid themselves out to produce cotton on a large scale. In many instances they have increased their liabilities by purchasing additional implements, and more especially have they responded to the appeal to grow cotton of a high quality. The prices now guaranteed by the Federal Government are inadequate, and it is felt that they are having a depreciating influence on the anticipated bounty, thus prejudicing the expansion of the industry in Australia. It will be remembered that the guaranteed prices fixed for the ‘ 1925-6 season were from 2$d. to 5d. per lb. I am glad to notice that the growers in Central Queensland are most active in their endeavour to secure an increase in the prices for the coming season. They have approached the State Premier (Mr. McCormack). According to a report in the Rockhampton Bulletin of the 16th March -
An increase of i&. per lb. in the guarantee for the present season’s cotton crop on the part of the State Government, provided that the Commonwealth Government would similarly give an increase of id., was promised by the Minister for Agriculture, Mr. Forgan Smith, to a deputation representing the Cotton Advisory Board to-day.
The present guarantee is 5d. per lb., so that if the Federal Government agrees to the proposal the guarantee will be increased to 6d.
The deputation comprised Messrs. L. R. McGregor (Director of the Agricultural Council), G. E. McDonald, D. C. Pryce, and E. J. Webster, members of the Cotton Advisory Board. Mr. McDonald said the conditions were seriously harassing the growers, who were getting a very light return.
I hope that the Prime Minister- (Mr. Bruce) and his colleagues will accede to the request from the growers for an increase of Id. per lb. in the guaranteed price. The Queensland Government has agreed to grant id. per lb. towards this increase if the Federal Government will grant the other £d.’ Surely, with the resources of the Commonwealth behind it, this Government will readily consent to the proposal, if it has the interests of the growers at heart. There has been a request put forward for a bounty of 2d. per lb. over a period of ten years to establish the cotton-growing industry- in Queensland on a sound basis. This request was made to the Federal Government before the last elections, and it said that it would refer it to the Tariff Board. I hope that the report of the board, when it is submitted, will recommend a favorable reply to the request. Unfortunately the cottongrowing industry in Queensland has not been as successful as was predicted.’ This bias been due largely to dry seasons. The last three seasons were unfavorable. The drought of 1922 was followed by a season in which pests did a great deal of damage to the crop. I am advancing these circumstances as reasons in support of the request for a bounty of 2d. per lb. on raw cotton. Cotton, is as sensitive to seasonal vicissitudes as are many other agricultural products. In the United States of America the cotton crop fluctuates between a feast and a famine. In one year there is a great surplus, and in the next, perhaps, a great scarcity. That is why transactions in cotton rank with the biggest gambles on the stock exchanges in America. In 1914, the crop in America was 15,000,000 bales. In 1921, it was 7,953,641 bales. For the three years * ending 1923, the average American crop was less than 10,000,000 bales. In 1924, it expanded to 13,627,936 bales, and in 1925 it was 13,588,000 bales. I mention these facts to show what a great opportunity there is for Australia in the cotton industry, if a bounty of 2d. per lb. is paid by the Commonwealth. In a reasonably good season next year, the Queensland crop might easily reach 35,000,000 lb. of seed cotton. That would be merely a drop in the ocean of the world’s market. Thirty-five million pound of cotton represents only 70,000 bales of 500 lb. each, and in one American State, Texas, last season there was a yield of over 4,000,000 bales. It will be a” long time before we can reach that, but we should first be able to supply our own spinning and weaving mills in Australia. The results from cotton-growing in Texas should be an example and an inspiration to the Australian cotton-grower. Cotton is grown and picked there chiefly by white labour, and under climatic conditions very similar to those of Queensland. There is in our favour the cheapness and virginal richness of our lands, and the absence of the dreaded boll weevil, which has been a frightful pest in America, and has caused a falling off of millions of bales in the American production of cotton. Let us hope that we shall have no experience of that pest in Australia. Europe draws three-fifths of all its requirements in cotton from the United States of America, where high wages are paid. Australia has nothing to fear on the ground that the Australian standard of wages . cannot be paid in the industry here. The Americans have no fear of over production of cotton, and we need not fear over production here, because Great Britain is to-day very much concerned about the sources from which she will obtain her cotton in the future. America . to-day is not producing as much cotton as she did eleven years ago. Therein lies. Australia’s chance. Last year England took 2,545,123 bales of American lint. Germany took 1,852,723 bales, and Japan took 701,575 bales. The cotton imported by Japan was worth £35,000,000, and was imported from the Gulf of Mexico. The importations of Japan are very significant for Australia, because they show the market which would be open to us for our surplus production of cot- ton. Japan requires raw cotton to the value of £35,000,000 a year, and Australia might very well aspire to capture that trade. That is one reason why I am pleading for the encouragement of the cotton-growing industry by the payment of a bounty of 2d. per lb. on raw cotton grown in Australia for a period of ten years.
– Egypt would be a competitor in the supply of raw cotton.
– Yes, England spends every year £200,000,000 in the purchase of raw cotton, and of that amount she spends about £30,000,000 a year in Egypt. If in Australia we could get even £10,000,000 a year for our production of raw cotton, what a wonderful thing it would be for this country. The sugar industry is worth £10,000,000 a year, but the cotton industry in Queensland in ten years’ time might be worth £15,000,000 a. year. That should be our aim. Although the prices of cotton lint have slumped, the passing1 of the severe depression in Europe will, I believe, tend to an increase in the prices offered for cotton. The. normal world demand for the raw product is not being met by present-world production. America, which previously supplied Europe with raw cotton, has now established her spinning industry to meet the wants of her ever-expanding population. Great Britain will have to look to the dominions to supply her with raw cotton in the future. In the United States of America cotton is spun within sight of the fields on which it is grown. That is what I hope to see in central Queensland, which is the greatest cotton-growing district in Australia. There are some thousands of cotton-growers there, and I hope that, in time, in central Queensland, we shall have Australian cotton spun within sight of the fields on which it is grown. If honorable members opposite take the desired interest in this matter they will support the request for a Commonwealth bounty of 2d. per lb. over a period of ten years. Last year American mills absorbed 6,191,349 bales of raw cotton, which was less than 2,000,000 bales short of her production in 1921. These figures show that America cannot be depended upon to continue to supply the requirements of Great Britain, or of Japan, especially in view of the destruction caused by the boll weevil in American crops. The big factor to make cotton a great success, as wool has been, in the development of Australia’s resources, will be quality as the first principle of production. In Queensland we have gone a long way on the road towards improvement of the quality of the cotton produced. The very best kind of’ cotton, the Durango cotton, is now being grown extensively. The Government planted experimental plots for the growth of cotton seed, and subsequently distributed the seed to Queensland growers, with the result that to-day practically 75 per cent, of the cotton grown in Queensland is of the Durango type. One finds on going into the figures that in America, for one purpose or another, the people use 26 lb. of cotton per head of population per annum. Taking the Australian average at 20 lb. per head per annum of our population. our annual consumption of raw cotton would be 120,000,000 lb., which is seven times the quantity of raw cotton which Australia produces to-day. It is estimated that if we grew all our raw cotton and manufactured all our requirements of cotton goods we could absorb 280,000 additional people in Australia. That would create a greater market for our sugar, butter, wheat, maize and potatoes, and it would not be necessary for members of the Country party to look for an increase of 300 per cent, in the duty on potatoes. . “We have to take into consideration the byproducts of the cotton industry which are all obtained from the seed. In America the seed is now being fully utilized. Forty years ago it was considered to be absolutely worthless. In 1914, a record year for the production of cotton in America, 6,000^000 tons of cotton seed were treated, which produced 230,000,000 gallons of oil, 2,750,000 lb. nf meal and 200,000 tons of linters. These manufactured, products were valued at £100,000,000. These figures show what a wonderful industry the cotton industry is. In the cotton industry in Queensland we have had some of the best cotton experts that could ‘ be obtained from America. Unfortunately, several of them were not conversant with Queensland conditions, and their advice was not so valuable as that of some of the ex perienced farmers. The cotton industry no longer belongs to any one State, and cotton-growers put that to the Federal Government as one of the reasons why cotton-growing should be treated as a great national industry, and why the claim for payment of a bounty of 2d. per lb. upon the cotton produced in Australia is justified. . Cotton-growers are quite within their rights in asking for this bounty for a period of ten years, or for five years at least. I know that the Minister for Trade and Customs will consider the request sympathetically. The granting of the bounty would guarantee the growers against loss. They have already spent a great deal on machinery and equipment. They have now gone into the industry, and cannot retrace their steps. With proper encouragement, they should be in a position in a few years to supply the whole of Australia’s requirements of raw cotton. An embargo should be imposed on the importation of raw cotton as soon as the cotton-growers of Australia can supply the requirements of cotton-spinning mills and weaving mills that will be established here in the next five years if effective tariff protection is given to both primary and secondary branches of the cotton industry. The Queensland primary producers’ organization scheme at present provides an arrangement with individual farmers in each industry to keep records showing the cost of production. Up to the present we have no very reliable figures to show what it costs to produce cotton. Under the scheme for the keeping of records, it will not be long before reliable figures can be obtained. The cost of production should be on a fair and generous scale, the basis of which should be decided upon by the Queensland Council of Agriculture, and approved by the Director of Agriculture. The growers of cotton should have some say as to the basis on which it is decided. In my opinion, there is a great future for the cotton industry of Queensland if the growers co-operatively control the cotton from the farm through the ginneries, and also look after the marketing of the product. With a view to the adoption of this course, the Queensland Government recently established the Queensland Cotton Pool Board, which has all the necessary powers to handle the cotton, purchase and sell it, and finance the crop. Now the cotton-growers are very wisely endeavouring to purchase plant and equipment from the British-Australian Cotton Growing Association at a fair valuation. They will pay for it over a term of years out of the returns from their crops, so that- they may control the whole industry. It is a very wise move on the part of the growers to control their industry from the farm to the market. If the Government will afford the desired impetus to the cotton industry in Queensland, and if it will give a bounty on the manufacture of cotton yarn in . Australia, and thus encourage the secondary industry to work in conjunction with the primary industry, I believe that cotton-growing will become one of the greatest industries in Australia, and will do much to absorb the additional 2,000,000 people who are necessary in order that we may consume all our surplus primary produce, such as sugar, 40 per cent, of which is sold abroad at a loss to the growers of Queensland.
.- I do not know whether the passage of the Power Alcohol Bounty Bill had any effect on the honorable member for Capricornia (Mr. Forde), but I am afraid that if our economics were based on his utterances, the condition of Australia would be bad indeed. If we placed an import embargo on all the things that Australia could produce, it would not be long before embargoes would be imposed on Australian produce in other countries. However, I did not rise to discuss the question raised by the honorable member for Capricornia, but to reply to the charge made by the Leader of the Opposition (Mr. Charlton) against a colleague of mine from Western Aus-, tralia: The Leader of the Opposition showed great heat, and professed to be astounded at what he denounced as the politically immoral practices of Senator Pearce. I wondered what was behind his tirade, and after some consideration, I began to appreciate the reasons that actuated him. I am satisfied that he did not think there was anything improper in what Senator Pearce did; but he realized that, having regard to the action taken in Western Australia, to the result of the elections there, to the fact that the people all over Australia are beginning to realize that high tariffs are not good for this country, and to the good work done by the Town and County Union in pointing out the dire effects of the high protection policy, he must find some way of making an attack. In Western Australia, we have a National party, a Country party, and a Labour party.
– Is.- there a National Union ?
– I believe there is. The parties were anxious to overcome the difficulty that existed in the previous Senate election, when a large number of. candidates went to the poll. The National party in Western Australia has no association with the National party here. The Country party in Western Australia is a low-tariff party, and it has a different policy from that of the Country party in Victoria. I believe that the Country party in Victoria is beginning to realize the need for more moderate duties. The people of Western Australia feel that high tariffs make production in that State almost impossible. The long distances that separate them from manufacturing centres may have something to do with that opinion. Representatives of the Country party and the National party met together. They were alike desirous of going before the country united. That was not because they feared the advent of a Government such as that extolled by the honorable member, not because they wished to see controlling this Commonwealth a Government like the Lang Government of New South Wales ; but because they wanted a Government that would act sternly and strongly against certain disturbers of the peace. They also sought a common policy, in regard to the tariff, and they decided upon a policy of moderate protection. The candidates accepted by the Nationalists were Senator Pearce and Senator Lynch, and the Country party was given the possibility of one member. Honorable members opposite have said that Senator Pearce signed an agreement. No request was made to him or to me, or to any other candidate, to sign- an agreement.
Mr.- Mahony. - They had the honorable member “ in the bag.”
– The honorable member knows how true that statement is in regard to the tariff. When on the election platform, Senator Pearce stated his policy in regard to the tariff clearly and distinctly, and also enunciated the general policy of the Government. Honorable members opposite may be pledged body and soul to the platform prepared for them, but I am not pledged to any platform, and I presume that Senator Pearce is not; but we are expected to give general support .to the party’s policy. He asked the electors to accept him on his public statements, and his speeches were fully reported in the public press. He said he was “not a high tariffist.” No one knows better than the . Leader of the Opposition whether that statement by him is true. When Mr. Tudor was Minister for Trade and Customs, Senator Pearce, at that time a Freetrader, was a member of the Cabinet. But was he not loyal in every way to the Government of which he was a member? He has been an advocate of low tariffs all his life. When the 1920 tariff passed through this House, and was sent up to another place, did not Senator Pearce do his duty there? Did he riot tell the people of Perth that he was not an advocate of high tariffs, but that he recognized that we could not have freetrade. in this country? He said the Federal Parliament was very strongly Protectionist, and, from all appearances, would remain so; and that his influence had been used to moderate tariff proposals. Was there anything wrong in ‘a Minister saying that his influence had been used to moderate tariff proposals? ‘ Are there any facts to justify the grave insinuations made by the Leader of the Opposition and the’ honorable member for Capricornia that ‘there was something immoral or improper in what he did? When a Minister goes before the electors he is bound only by his public . speeches.
– Do you say that he did not agree with the Cabinet?
The CHAIRMAN (Mr. Bayley).The honorable member for Melbourne. (Dr. Maloney) is out of order in personally addressing the honorable member for Swan (Mr. Gregory).. The honorable member must refer to him by the name of the constituency he represents.
– What would happen if the Leader of the Opposition (Mr. Charlton) and Senator Gardiner were members of one administration, and tariff proposals came up for consideration ? We all know that Senator Gardiner, during .the discussion in Cabinet, would urge a low tariff.
– If the Cabinet hadagreed to a certain tariff schedule, and had laid it on the table of the House, Senator Gardiner, as a member of the Cabinet, would not advocate on the public platform a reduction in the duties proposed under that schedule. .
– Senator Gardiner is an absolute freetrader. . “What would happen if he -and (the Leader of the Opposition were members of the same Cabinet ?
– We should be all right. Senator Gardiner would be loyal to the majority decision of Cabinet.
- Senator Gardiner is an honorable man, and having on the public platform advocated a low tariff he would naturally be loyal to his electors and to his principles when discussing tariff proposals in Cabinet. Naturally he would carry out the decision of Cabinet or otherwise resign from it.
– Senator Pearce denounced the Government’s own tariff proposals.
– He did not.
– At any rate the agreement denounced the Government’s proposals.
– There was no agreement so far as individual members were concerned. It merely concerned the policy of the two organizations. I venture to say that there is not one honorable member of this chamber who is prepared to accept every word in the platform of either the Country party or the National party. My opinions, on the tariff are strong, and the leader of my party knows perfectly well that I demand absolute freedom on tariff matters. Members of the Labour party are bound body and soul, but that would not suit me even if it suits the honorable member for Dalley. Senator Pearce, speaking to the people of Western Australia, said that when the tariff after being considered by the Cabinet was finally approved, he must accept that decision or resign. He accepted that decision, and nobody knows that better than the Leader of the Opposition. There was nothing wrong with Senator Pearce’s attitude in any shape or form. The people of Australia are realizing that a high tariff policy is not sound or economic, and is bound to cause injury to this country. It is time that we began to consider the future of Australia. We have borrowed no less than £150,000,000 during the last five years, and this has created a fictitious prosperity here. Our secondary industries have been spoon-fed : they have been encouraged by hot-house methods. Not one of them is ever likely to’ compete in the markets of the world. Are we going to follow a policy such as that enunciated by the honorable member for Capricornia (Mr. Forde), who favours an embargo against all foreign goods. Under such conditions what would be our relations with other countries? The future prosperity of this country depends upon our export trade. We must export, but we want millions more people here to open up the land and to develop our primary resources. I do not object to the imposition of moderate duties. The present high tariff is enabling the manufacturers to accumulate huge fortunes. I cannot understand how honorable members of the Opposition are prepared to support the imposition of high duties that enormously increase the cost of living. For instance, textiles are most grievously taxed under this schedule. The workers receive no benefit from the tariff, because only 8^ per cent, of the workers are engaged in the highly-protected industries of Australia. Boot manufacturing has been protected for the last 40 years, and yet the worker in that industry gets a lower wage than a bricklayer’s labourer. The workers are really being penalized by the present tariff. We must change our tariff policy, and live more within ourselves. We must borrow less money. We are continually making huge conversions of loan money at from 5
– The war is mainly responsible for that.
– On the contrary, that is a small item indeed ; it is the direct and indirect effect of the tariff which so increases the cost of living We should begin to .consider the economic position of Australia, and not float like a balloon in the air, thinking that we shall remain there. We should come down to bedrock. The manufacturers and their employees should come to a better understanding: I do ‘not mean through the Arbitration Court, but by agreement. The worker should be accepted as a partner in the manufacturing institutions, and accept piecework as is the practice in the United States of America and Canada.
– What the lion said to the lamb was, “ Come in and be my partner.” *
– If we adopted the methods in vogue in the United States of America, the honorable member would not be required in this Parliament. In that country, men employed in manufacturing are receiving from §45 to $60 a week. The skilled artisan there owns his own motor car and has a high position in society. He is paid for what he turns out. In nearly all the industries there the working hours are 44 and 48 a week. It would be far better to get the workers to agree to something in the nature of piecework, or to become shareholders in the businesses in which they are engaged, and receive a share of the profits. I have a great objection to duties which are not needed. I rose to refer to the remarks of the Leader of the Opposition (Mr. Charlton) regarding the Western Australian agreement. I thank him for giving me a copy of Senator Pearce’s speech, his action in doing so is further evidence of his unfailing courtesy. But the honorable member was in error regarding the action taken by Senator Pearce, who during the election campaign made his position abundantly clear to the people of Western Australia. I do not pretend to be an apologist for Senator Pearce. I have no time for the tariff proposals which the Government of which he is a member has introduced - if I could rely on the Opposition I would go further, because I realize what the tariff has done for Australia - but the person who tries to reflect on the action of Senator Pearce in connexion with the recent election makes a charge which is unfounded and unjust.
– The honorable member for Swan (Mr. Gregory) has given us no instance of a freetrade country. During my lifetime I have travelled a great deal; but only in Hong Kong have I come across a real freetrade community. Even there, I found on my last visit that a system of revenue tariffs had been adopted.
– There is one worse example than Hong Kong; Russia is a freetrade country.
– I have yet to learn that Russia is a freetrade country. One honorable member alluded to the yellow flag of protection. If he took the trouble to read Guy Mannering, by Sir Walter Scott, he would find that, in the period, covered by that work, the only freetraders were the smugglers - the thieves of the seas. From them it is but a short step to the pirates with their black flag. That flag the freetraders may claim.
– At one time wool could not be sent from Ireland to England.
– The honorable member has evidently forgotten his history lessons. England built up her manufactories by the closest protectionist policy which the world has ever seen. Of the 200 death penalties in England in the year 1S00, 75 were for breaches of the excise and customs duties. In those days children of six’ and . seven years of age were whipped in the mills, and made to work. Mr. Lloyd-George, before he was Prime Minister, unveiled a statue in Wales to the memory of three men who received sentences of seven, five, and three years respectively for advocating that the workers’ hours should be reduced to 70 per week, and their wages, increased from lis. to 13s. per week. In that way were the factories of England built up. Afterwards, there was an agitation in favour of freetrade. But England has never been a freetrade country; and she never will be. The position is much the same as it was when as schoolboys we played see-saw. At one end of the see-saw is the real freetrader, who does not want one penny from Customs duties. At the other end is the real protectionist, who is prepared to go to the extent of prohibition. He will not accept revenue rom the Customs House, but he will allow everything that cannot be made in his own country to enter free of duty. From a revenue point of view there is no difference between the true freetrader and the true protectionist; they both believe in obtaining the necessary revenue from direct taxation - principally land taxation. The revenue tariffist of England takes the place of the boy who in our boyhood days stood in the middle of a see-saw. Ry taking off some duties he causes the protectionist to go down and the freetrader to go up; by adding duties, in other instances he reverses the position of the see-saw. Since the days when England’s, fiscal policy was a policy of protection she has had a revenue tariff. The Channel Islands were supposed to have approached to -almost ideal freetrade conditions; but even there there was a revenue tariff. When I took the figures from *Mulhall’s Statistics, and compared the United Kingdom with other nations, I found that Great Britain drew more per head of population from her Customs House than any European nation, with the exception ‘ of Scandinavia. What but the Protectionist policy of Bismarck built up Germany’s might, which almost overwhelmed the world? What but its protectionist policy has made America the greatest manufacturing country the world has ever known? Australia’s policy of protection goes only about three-quarters of the way; but if the people were ‘ consulted by referendum, they would demand a truly protective tariff. In the Shipping World YearBook are published the tariffs of all countries. It shows that in the Argentine no duty is imposed upon agricultural machinery; yet no representative of the farmers has controverted the statement that such machinery is more costly in that country than in Australia. Only one country has a higher tariff than America, and that is the island Empire of Japan, which in half a century made a phenomenal rise from almost mediaeval conditions to a place amongst the most advanced nations. I hope that I may live to see Australia impose a tariff equally as high. Time was when two large stock companies in Australia joined forces to fight the American tobacco combine; they made the defeat of the combine their slogan; but the shareholders awoke one morning to find that the American combine had acquired a controlling interest in their business. The combine proceeded to fight the English tobacco companies, which, ‘ after losing £3,000,000 or £4,000,000, capitulated. The only country that has beaten the American combine is Japan. Knowing that a tobacco monopoly was a valuable asset upon which to raise loans, the Japanese Government made a generous offer to the American combine for its trading, interest in Japan. The combine, arrogant in its financial might, rejected the offer. A second appeal by the Japanese Government was likewise turned down, and the Government then said to the combine, “ We shall have to fight against you.” The combine said, “‘Good! Competitionsithelifeof trade.” At the time of my first visit to Japan the competition had just started. A duty of 20 per cent, upon tobacco had been imposed. Within a year that had been increased to 50 per cent. ; inless than another year to 100 per cent., and later to 250 per cent. The combine found that it could not compete against such a handicap. For instance, cigars costing £10 f.o.b Hamburg, would cost the combine £25 in duty, whereas the only cost to the Japanese Government was £10, plus freight and landing charges. Finding that it was being driven from the market the combine offered to negotiate with the Japanese Government with a view of abandoning the market, butthe Government wisely said, “ We made you two fair offers, which you would not accept. We prefer you to remain in the market, for competition is the life of trade.” Thus the combine’s own answer was turned against it. To-day the maximum duty on tobacco imported into Japan is 355 per cent. Australia gives only a comparatively small protection to the workers in the tobacco industry. For instance, the duty on tobacco for manufacturing purposes is only 2s. 6d. per lb, and the maximum duty is 5s. 4d. The duties on cigarettes are l1s. 6d. and 12s. per lb., and on cigars l1s. to 13s. per lb. In the United States of America the duty on cigars and cigarettes is $4.50, equal to about 19s. per lb., plus 90 per cent, of the value, which makes the total duty more than £1. The Japanese duty of 355 per cent. on cigars worth £5 would amount to £17 15s., as compared with about 15s. in Australia, for our tariff does not differentiate between the cheapest and most expensive brands of cigars. I have yet to learn of any honorable member who claims to be a true freetrader. Revenue tariffists there are, and we see many grades between the moderate protectionist and the prohibitionist. But can a man be a moderate thief or a woman moderately virtuous? Away with this moderation!
– One can be a moderate eater or drinker.
– That is so, but let us be whole-hearted in the protection of our industries. I recognize that the primary producer does not receive a fair deal. Iam informed that fruit sent by the producer to the Western Market is there manipulated and re-packed, the wholesaler taking so many pounds out of each case, so that when the fruit is sold again in the Victoria Market the purchaser gets 6 or 7 lb. less in weight. In that way the wholesaler adds to his profits, and so valuable have the auctioneers’ stalls become that a bribe of £1,000 was offered to a member of the Melbourne City Council - which, to his honour, he refused - to use his influence in favour of the granting of an application for one. There should be a means of bringing the prices received by the orchardists into more equitable proportion to those paid by the purchaser. The Labour party alone has attempted to deal with that problem. Consider the position of the grower of wheat. To-day wheat is worth about 5s. 8d. f.o.b. Approximately about 50 bushels, equal to about 3,000 lb., of wheat is required to make 1 ton of white flour. The cost amounts to £14 3s.4d. From 3,000 lb. of wheat, 2,000 lb. of flour can be made. That flour will absorb sufficient water to enable it to produce 2,600 lb. of bread. There are 1,000 lb. of offal- bran and pollard. Many scientists and dietists are coming to the conclusion that whole wheat-meal bread is much healthier than that which is made from white flour, which is too highly refined. I was astonished to find that some establishments charge id. more for a loaf of whole wheat-meal bread. I have been informed scientifically that 3,000 lb. of wheat will produce 3,000 lb. of whole wheat-meal flour. That flour will take up a greater quantity of water than white flour, and it will produce 3,900 lb. of bread. At 3d. a lb. the receipts from the 2,600 lb. of bread made from white flour will bring in £32 10s. The 1,000 lb. of bran and pollard at £9 a ton - which is a fair price - will produce £4 10s.,or a total of £37. Adopting the same prices in respect to the 3,900 lb. of bread made from whole wheatmeal flour, you find that the result is £48 15s. The cost of gristing would not exceed 30s. or £2. Will any honorable member who represents a country district say that the producer is getting a fair deal? I ask leave to continue my remarks to-morrow.
Bill returned from Senate without amendment.
Motion (By Dr. Earle Page) proposed -
That the House do now adjourn.
.- I desire once more to direct the attention of the Minister for Defence to the urgent necessity for extending the air service from Derby to “Wyndham. Wyndham. is the most remotely-placed settlement in Australia. It is 1,600 miles north of the capital city of Perth. The air service at present goes as far as Derby. Wyndham is so isolated that at present it has only one mail every two months. The position was accentuated by the fact that for 23 days in the month of January last the telegraphic service entirelyfailed.’ I have received from the chairman of the Wyndham Road Board a letter which I shall read, to acquaint honorable members with the difficult position of. the people, and the adverse conditions under which they labour. It is as follows : -
The residents of East Kimberley wish to bring underthe notice of the Senators and Government the following urgent reasons for the extension of the air service to Wyndham before the wet season: - 1st. We have only one mail every two months, and, owing to the breaks on the telegraph line extending for 1,000 miles, the Town of Wyndham was without telegraphic communication for 23 days in January, and was continuously down from the 18th of January to the 4th of February, and at time of writing is down again. During the period of line breaks, all telegrams have to be sent to Darwin by wire- - less ;thence through Adelaide to Perth, and vice versa. Days at a time, the wireless could not work owing to atmospheric disturbances, and messages were as much as a week late, and often not received in the order as when sent, causing confusion. After breaks had been repaired as far as Derby, wires were sent there; thence by aeroplane to beyond the break on the line; then transmitted to Perth.
The writer ofthis letter then proceeds to tell a most pathetic story - 2nd. Sir Alec. C. Campbell and Lady Campbell, with three children, eldest aged six, reside at Waterloo Station, . 164 miles from Wyndham. Lady Campbell was preparing to leave for Wyndham to be confined, when she was suddenly taken ill. A messenger was sent to Wyndham for the doctor, who set out at once on horseback, but arrived too late. The unfortunate lady died the following day. From the time the messenger left, and until the doctor arrived atthe bedside, eleven days had elapsed. Had we the aeroplane service, two lives would have been saved. We hope the lesson of thislady’s death will not go unheeded by the powers that be, asthe service would have saved many, lives in the past.
I do not lay at the door of the department over which the Minister for Defence presides the blame for the death of thispoor lady, but I stress the necessity for the extension of this air service, because such an extension would be the means, not only of providing a regular mail service, but also of saving human life. Government officers have been inspecting the ground between Wyndham and Derby. I trust that the Minister will- take into consideration the plight of this most remote centre in Australia, and in view of the great hardships that the people are suffering, arrange at once for the present air service to Derby to be extended to Wyndham.
Dr.MALONEY (Melbourne) [10.51]. - I am perturbed by the recent happenings at the meeting at the Council ofthe League of Nations at Geneva. It seems to me that an effort is being made to make patricians of the big nations, and plebeians of the small nations. Personally, I do not think that there will be peace on earth until there is a world congress at which every . nation will be represented and where the only question that will be asked is, “ Do you wish to join this congress for the purpose of making peaceand abolishing war for ever? Much as I should like to see Germany a member of the League, I cannot blame Brazil for opposing the proposal that Germany should be given membership in the Council of the League in’ preference to Poland and Brazil. I do not know whether the great money kings of the world are pulling the strings, but certainly theyrule the world in this age. Surely no group of nations has the right to say, “ We intend to form a small circle and you must stand outside.” Brazil represents 30,000,000 people, and is the only nation in South America that has membership in the League. If war should occur again, Poland will bethe first nation that will be in danger. Why should not both Brazil and Poland have membership on the Council ? Why should not every nation be admitted to it that desires admittance? I believe wholeheartedly that if a vote were taken in Australia to-morrow our people would say with an unmistakable voice that every nation that has a desire to abolish for ever the horrors of war should be permitted to join in one great conference with the object of achieving the glorious object of peace.
Question resolved in the affirmative.
House adjourned at 10.53 p.m.
Cite as: Australia, House of Representatives, Debates, 18 March 1926, viewed 22 October 2017, <http://historichansard.net/hofreps/1926/19260318_reps_10_112/>.