12th Parliament · 1st Session
Mr. Deputy Speaker (Mr. McGrath) took the chair at 3 p.m., and read prayers.
– I have to announce that it is the intention of Mr. Speaker to issue a writ on Thursday, the 29th October, for the election of a member to serve for the electoral division of Wimmera, in the State of Victoria, in the place of the Hon. Percy Gerald Stewart, deceased. The dates in connexion with the election will be - Issue of writ, Thursday, 29th October; nomination, Monday, 9th November; polling, Saturday, 28th November; return of writ, on or before Tuesday, 15th December, 1931.
– Is the Prime Minister in a position to make any statement to the House regarding the hold-up of shipping?
– A compulsory conference under the presidency of the Conciliation Commissioner is still sitting. At this stage any statement on the subject by the Government might prejudice negotiations.
– Has the Prime Minis ter seen the report in the Melbourne Herald that the president of the Victorian branch of the Labour party blames communist influence for the troubles amongst meatworkers and seamen, which are causing great loss to the Commonwealth. As I have been unable to learn from the Attorney-General, in answer to previous questions, whether the Government contemplates action to declare the communist organization an illegal association, to check the entry into Aus tralia of further foreign agitators, and to take steps towards the deportation of those already here, will the Prime Minister tell the House whether, having regard to the serious situations in the meat export and shipping industries, the Go vernment now proposes to take any action along the lines I have suggested ?
– I have not read the newspaper report referred to by the honorable member. I have already informed the Deputy Leader of the Opposition that one of the disputes referred to is the subject of a compulsory conference, and for that reason I do not propose to make any statement on the subject at this stage.
– Set in the front of this Parliament House are two foundation stones which, so far, hear no inscription. In view of the fact that the late member for Wimmera, Mr. P. G. Stewart, turned the first sod in connexion with the laying of the foundations of this building, will the Prime Minister consider the desirability of inscribing his name on one of the stones?
– The honorable member was good enough to intimate to me that he intended to ask this question. On each side of the entrance to Parliament House is a stone left for inscription with the names of those closely associated with its opening. I understand that the proposal of the last Government was that the names of the Duke of York. the then Governor-General, and the then Prime Minister should be inscribed on the stones. No money, however, has been provided on the Estimates for this purpose by either the last or the present Administration. The Government has considered the matter, and has decided that when the stonesare inscribed the name of the late Mr. Stewart will be put on one of them, as he turned the first sod for the foundation of Parliament House.
– Inreply to an inquiry addressed to him by me, the PostmasterGeneral wrote, on the 13th October -
Since the present Government took office, the department has placed orders overseas to the value of approximately £40,000for material which it would have been practicable to manufacture in Australia.
Has the Postmaster-General any explanation to offer in relation to this strange admission regarding expenditure overseas on equipment which could have been manufactured in Australia? Is such expenditure in keeping with the policy of the Government for the protection of Australian industries?
– It is quite in accordance with the protectionist policy of the Government to import material which cannot be manufactured in Australia. I shall supply to the honorable member further details to prove that, since the « present Government assumed office, the ratio of imports to local manufactures in the purchases of the Postal Department has decreased considerably.
– Has the Minister yet received a report from the committee which he appointed to inquire about the accommodation at Canberra hotels, and, if so, will he lay it upon the table of the House ?
– The report is to hand, and receiving my consideration. As this waa a departmental inquiry, I shall have to give consideration to the honorable member’s request to lay the report upon the table of the House.
Prjsfbbknoe to Unionists
– Is it the policy of this Government, when letting contracts, to stipulate the employment of union labour?
– The conditions of contract are set out upon the form which has already been submitted to this Parliament. I do not remember its exact wording, but the policy of the Government is to give preference to unionist.? and also to returned soldiers.
– Can the Minister indicate when the Wheat Bill is likely to be brought down to the House?
– Has the PostmasterGeneral arrived at a decision regarding the projected dismissal of cleaners employed at Melbourne and Sydney? Their case was recently investigated, and I believe that they were given an extension of time until the 30th October?
– I am doing everything possible to retain their services,
– Is the Prime Minister in a position to say when this House is likely to adjourn?
– That is in the hands of honorable members.
– I have received the following telegram from the Fruitgrowers Co-operative Society, Orange, New South Wales : -
Local fruit-growers strongly oppose any relaxation embargo on imported apples which may arise in reported despatch 0,000 cases from Vancouver. Serious danger introducing fire blight disease. Request you protect our interests.
Is it a fact that apples are being imported from Vancouver, and, if so, what 3teps are being taken to prevent the introduction of fire blight disease into Australia ?
– Those iu Canada who are engaged in the apple trade are fully informed of our objection to the importation of apples. They know that apples that may be infected with fire blight cannot be landed here. Every precaution is being taken to prevent the introduction of this disease into Australia.
– When was the embargo on fruit lifted to allow Canadian apples to enter Australia? I understand that under the Canadian trade agreement apples are not on the free list, and that the embargo applies to Canadian fruit as well as to the fruits of other countries,
– Apples were not included in the trade agreement with Canada.
– Because of the danger of introducing disease?
– Yes. There was a lengthy discussion on the subject, and because of the danger of introducing disease with apples, they were omitted from the trade agreement altogether. I shall ascertain for the honorable member the exact position with regard to the embargo.
– Have any steps been taken to give effect to the recommendations of the secretariat inquiring into the relief of unemployment by assisting the gold-mining and other industries?
– I have made several statements in this House to the effect that a request has been made on behalf of the Premiers Conference to the banks for an advance of £5,000,000 for unemployment relief. To date some moneys have been advanced to local governing bodies for that purpose. When I obtain from the banks an assurance that additional money is available, I shall ask the secretariat inquiring into unemployment to consider in detail how it shall be expended.
– When the Prime Minister was negotiating with the banks for an advance of £5,000,000, was there any suggestion by them that the schemes should be submitted by both the local governing bodies and the Government before any advance would be made?
– The request of the Premiers Conference was that £5,000,000 be made available by the banks to be distributed by the Government either in giving direct employment or through local governing bodies. The reply that I received from the banks was that they were unable to make that amount available, but they added that they were prepared to consider propositions submitted to them by local governing bodies. They later indicated that three such applications had been considered by them and accepted. I then made a statement to the House to the effect that the banks were prepared to consider any reproductive and sound proposition submitted to them by local governing bodies. In all cases the propositions must be submitted to the banks. It has been suggested by the Chairman of the Commonwealth Bank Board that any such schemes should be submitted first to the bankers of the local governing bodies, and then either through them or direct to the Commonwealth Bank.
– Will the Prime Minister give the House full information with regard to the expenditure of £93,000 supposed to have been advanced for the repatriation of coal-miners? What other authority is contributing to the work now proceeding at Newnes, and do the whole of the operations come within the purview of the Auditor-General’s Department?
– A week or so ago I made a statement to the House on this subject. If there are any further details, as the honorable member’s question suggests, I shall obtain them for him.
– Honorable members have been given to understand that a subcommittee of Cabinet has been appointed to go into proposals for reducing the principal and interest on war service homes in order to give relief to the occupiers. Will the Minister in. charge of war service homes state whether that committee has yet presented a report, and whether a statement will be made on the matter before the House rises this
– A request has been made to the Treasury to examine certain figures in order to discover the effect of proposals which have been submitted. I have not yet received the Treasury report, but when it comes to hand a statement will be made.
– This week?
– I do not think so.
Importatio n - Manufacture.
– The honorable member for Bendigo (Mr. Keane) has asked a number of questions regarding the importation and cost of explosives. The information is being obtained.
asked the Minister of Works, upon notice-
Willhe institute an early inquiry into the practicability of the manufacture of mining explosives in the Department of Works?
– The Department of Works has not the equipment necessary for the manufacture of explosives. The question asto whether the manufacture of mining explosives could be undertaken by the Department of Defence has been referred to that department for advice.
asked the Minister for Trade and Customs, upon notice -
Willhe lay onthe table of the Houseall correspondence and papers dealing- with the appointment of a representative of the growers of jam fruits on the Fruit Industry Sugar Concession Committee?
Mr.FORDE.- The papers referred to will be laid upon the table of the Library.
asked the Minister for Trade and Customs, uponnotice -
– The answers tothe honorable member’s questions are as f ollow : -
– On the1 6th October, the honorable member for Hunter (Mr. James) asked the following question, upon notice : -
What amount of imported coal wascon- sumedduring the year ended the 30th June last inAustralian waters by vessels visiting Australia, and what was the amount of primage duty collected thereon?
I am now able to furnish the honorable member with the following information: -
Thequantity of imported coal consumed in Australian waters is not separately recorded, nor is the amount of primage collected on coal kept separate from other primage duties. The particular information sought is, therefore, not available.
Conditions of Employment
– On the 8th October, the honorable member forCorangamite (Mr. Crouch) asked the following questious, upon notice: -
Iam now able, to furnish the honorable member with the following informa tion : - 1.On the24th June, 1927. His Honour JudgeLukin made an award by consent which isset out in full in the printed determination in thiscase (No. 82 of 1926). This award doesnotcover workers.
– On the14th October, the honorable member for Balaclava (Mr. White) asked the following question, without notice: -
Wasa payment recently made by the Government to West Australian Airwaysas compensation; if so, what was the amount and what was it for?
I am now in a position to inform the honorable member as follows: -
No payment has been made to WestAustralian Airways by way ofcompensation. I may say. however, for the honorable member’s information, that the sum of£657 11s.9d. was paid to West Australian Airways Limited, in full and final settlement of a. claim for reimbursement of expenditure incurred by the company in connexion with a special air mail publicity campaign for the East-West service. This campaign was originally approved by Cabinet as a joint effort by the Commonwealth and the company to attract a greater volume of air mail traffic to this service, and consequent benefit to Commonwealth in surcharge air mail postage, expenditure to he incurred by Commonwealth and company on a £1 for £1 basis. Subsequently, however, and before the Commonwealth had incurred any expenditure, the matter was reviewed in the light of the adverse financial situation, and the arrangements cancelled by the Commonwealth. The suspension of the campaign in its early stages deprived the company of any financial benefit from it, and after considering various factors, Cabinet approved of the refund to the company of all expenditure incurred which was deemed to be a reasonable charge against the publicity scheme.
– On the 16th October, the honorable member for Brisbane (Mr. D. Cameron) asked me a question without notice regarding the proposal for international control of the whaling industry. As promised, I have looked into the matter. The present position is as follows : -
As a result of a decision of the Hay session of the Council of the League of Nations, the question of the Convention for the Regulation of Whaling was placed on the agenda of the Twelfth Assembly. The draft convention and the observations of the various governments regarding it were referred to a special committee of jurists and experts which met at Geneva on the9th September, and on which the Commonwealth was represented by Mr. Borley of the Colonial Office. This committee agreed on a final text of the convention, generally on the lines already communicated to the House, and it was opened for signature during the assembly and signed on behalf of the Commonwealth by Mr. J. R. Collins. As soon as copies are available I will make the text available to the House.
Contr act With Gardiner Construction Company.
– On the 14th October, the honorable member for Corangamite (Mr. Crouch) asked me the following questions, upon notice : -
I am now in a position to furnish the following replies: - 1 to 3. I am advised that the Gardiner Constructions Proprietary Limited have no contract with the Commonwealth Oil Refineries Limited, but act on occasions as consulting engineers to the company. Where work of a special nature is required such as welding tanks and pipe lines, also the construction of country bulk installations, the work is carried out on a “cost plus 10 per cent.” basis. The Gardiner Constructions Proprietary Limited supply designs and all plant, accept all risk and guarantee the work. Where the work is put out to tender as is usually the ease the fees paid are 3 per cent. for design and/or 3 per cent. for supervision in accordance with the scale of charges laid down by the Institution of Engineers of Australia. The Commonwealth Oil Refineries Limited advises that it is impossible to statu exactly the cost of the different work done or supervised without making exhaustive analysis of the accounts since 1927, but that the total cost of all classes of work carried out or supervised in the fiveyears ending 30th June, 1931, by Mr. Baldwin,B.E., A.M.I.E. (Aust). of the Gardiner Constructions Proprietary Limited, on which they have drawn fees, cannot have exceeded in the aggregate the sum of £180,000.
The following papers were presented : -
Customs Act and Commerce (Trade Descriptions) Act - Regulations amended - Statutory Rules 1931, No. 125.
Judiciary Act - Rule of Court - Dated 1st October, 1931.
Motion (by Mr. Forde) agreed to -
That he have leave to bring in a bill for an act to amend the Customs Act 1901-1930.
Bill brought up, and read a first time.
In Committee of Ways and Means:
Consideration resumed from the 16th
October (vide page 822) on motion by Mr. Forde -
That the schedule to the Excise Tariff1921l928 be amended -
Item 2 -
By omitting the whole of sub-item (d) and inserting in its stead the following sub-item: - “ (d) Whisky, distilled wholly from barley malt by a pot-still or similar process at a strength not exceeding 45 per cent. over proof, matured by storage in wood for a period of not less than two years, and certified by an officer to be pure malt whisky - ( 1 )If bottled under customs or excise supervision subject to such conditions as to the bottling and as to the strength of the spirits as are prescribed by departmental by-laws, per proof gallon, 28s. (2)If not bottled under customs or excise supervision, per proof gallon, 33s.”
.- This item provides that whisky bottled under customs or excise supervision shall be subject to an excise duty of 28s. a gallon; but if not bottled under customs or excise supervision, the duty shall be 33s. a gallon. I move -
That the sub-item be further amended by adding the following: - “And on and after the 21st October, 1931-
Whisky, distilled wholly from barley mult by a pot-still or similar process at a. strength not exceeding45 per cent. over proof, matured by storage in wood for a period of not less than three years, and certified by an officer to be pure malt whisky - per proof gallon, 28s.”
This committee has already struck out the extra duty of5s. in respect of brandy, and it would be at least consistent if we adopted the same course in respect to whisky and other spirits effected.
– That course was adopted in respect to brandy in order to put Australian brandy on the same footing as the imported article.
– When the committee was discussing brandy some time ago the proposal to remove this extra duty of 5s. was carried with the help of eight members from the Government side of the House. Brandy was the first item to be discussed, but after that, the party whip seems to have been cracked, with the result that, when the next item came up, only three of those eight members who supported the reduction of the duty on brandy were found to support the same reduction as it applied to whisky. Mixed up with these matters are the interests of rival trade concerns, but this should not influence the committee. We should consider only whether the duty is justified or not. The amalgamated whisky companies have their own bond stores, and market their own well-known proprietary lines, so that it is to their interest to maintain the extra duty of5s. Besides them, however, there are many smaller importers who bring in whisky not so well known, but nevertheless of excellent quality, and sell it for less than the proprietary lines. They have not their own bond stores, with the result that they have to pay this extra 5s., a duty which serves no useful purpose at all. The only substantial defence offered for it by the Minister when this matter was last before the committee was that the customs supervision of bottling operations in bond provided some guarantee of the quality of the liquor, but this claim, when examined, cannot be justified. It was asserted that this provision was a check on illicit, distilleries, but a man who risks a penalty in conducting an illicit still will not hesitate to put up his product in the bottles used by the well-known whisky distributors. As a matter of fact, the certificate of the Customs Department is no guarantee whatever of the contents of a bottle. Makers of illicit spirit must be dealt with, if at all, by the excise staff. Many hotelkeepers do a service to the public by importing their own whisky, bottling, and retailing it. All imported whisky may be relied upon as good, because no one would he foolish enough to import bad whisky on which a duty of 28s. a gallon has to be paid. The duty represents by far the greater part of the price of whisky. In my opinion, there is no ground whatever for retaining this discriminatory duty of 5s.
.- This discriminatory duty affects locallymade whisky, and was “ wangled “ originally to the benefit of Federal Dis- tilleries Limited, whose product was the only Australian whisky that was manufactured in large quantities at that time, and was mature enough to he put on the market in bulk.
– Who opposed the duty previously? The Scottish distilleries?
– No. First of all, it was put on clearly in the interest of Federal Distilleries Limited.
– Has that company now amalgamated?
– Its share list was made known to us at the time the duty was introduced, and I do not propose now to go into the matter, beyond saying that Mr. John Wren was a large shareholder. The fact that discrimination was shown between one Australian distillery and a number of others led to some resentment on the part of a local distillery that was being established by the Scottish combine.
– No.I can assure the honorable member that the Corio distillery was strongly in favour of the duty.
– I propose to show what made it strongly in favour of it. Within a few weeks of the introduction of the schedule containing this discriminatory duty, a second schedule was brought down giving the Scottish combine the same advantage over its small competitors in regard to imported whisky as was enjoyed by Federal Distilleries Limited, and what the former gained over its small competitors made up for any disadvantage suffered with regard to locallydistilled whisky. Failing that, it enabled Federal Distilleries Limited, as the honorable member for Martin (Mr. Eldridge) has implied by interjection, to make an advantageous amalgamation with the big combine which now has the smaller importers as well as the smaller Australian distilleries in a position of great disadvantage. A large quantity of Australian-made whisky is being consumed to-day, and, incidentally, the industry provides a market for a considerable quantity of Australian-grown barley. A good deal of this whisky is blended with imported lines. In May, members on this side, as well as members supporting the Government, including the honorable member for South Sydney (Mr. E. Riley), pointed out that the new discriminatory duty deprived publicans of the privilege they had previously enjoyed of doing their own bottling, and many publicans all over Australia were having a bad time.
– Therefore, the retailers are not in favour of this duty.
– The publicans were not in favour of it, because it deprived them of the opportunity of doing their own bottling, if they were so inclined.
A strong protest was received by the Government from the Licensed Victuallers Associations all over Australia. The Minister for Markets and Transport (Mr. Parker Moloney) quoted a resolution of the executive of the Victorian Licensed Victuallers Association, approving of the new principle, and that action was one of the most audacious pieces of effronter y that any member could have been guilty of, because the chairman of that executive wasa nominee of the same Mr. Wren who had such a large interest in the Federal Distilleries Limited, the original beneficiaries under this discriminatory duty. No sooner had that executive carried that resolution which the Minister for Markets and Transport communicated to this committee as the considered opinion of the Licensed Victuallers Association of Victoria, than a special meeting of the association was called, and the members of the executive were forced to resign, so that there might be sufficient members who had no connexion with outside vested interests and were not prepared to “ whitewash “ the Minister, against the interests of the hotelkeepers throughout Australia.
– But the Australian body carried a resolution contrary to that of the Victorian association.
– The resolution approving this duty was “ wangled “ by their president, who wasa licensee of a hotel in which some of the shareholders of Federal’ Distilleries Limited were the principal owners. Obviously the resolution was not the considered opinion of the hotelkeepers in Victoria, but of the persons who had obtained the ear of the Government. I strongly support the amendment submitted by the honorable member for Perth (Mr. Nairn). This duty has caused a. good deal of extra expense to a large section of business people, and it has been imposed in the interests of a very small and wealthy section, which was making good profits beforehand, and which, by this discrimination, has been able to gain a more secure monopoly than it has had in the past.. Duties of this sort give the whole system of protection a bad name. They endanger other duties which might be of assistance to useful Australian industries, and help to provide increased employment.
– I think that the case advanced by honorable members opposite is sound. First of all, they say that the amendment should be supported in order that we may be consistent in our action. As we have removed the extra duty on brandy bottled out of bond, I am at a loss to know why we should not apply the same principle to whisky.
– The committee previously rejected the extra duty of 5s. per gallon on brandy bottled out of bond, but approved of an extra duty of 5s. per gallon on imported whisky. To be consistent, the Government proposed to remove the os. extra duty on Australian brandy. If the committee had previously rejected the 5s. extra duty on imported whisky, similar action would have been taken in regard to Australian whisky.
– The next point that I take is that the retailers hold the view that this duty should not be permitted to stand. I have discussed this matter with an official of the Retailers’ Association, who has informed me that his association feels strongly that this imposition should not be allowed to continue any longer. The Minister said that the Government’s object was to safeguard the purity of the spirit by having it bottled in bond under customs supervision. As has been pointed out, ample safeguards already exist by reason of the powers possessed by the States.
By accepting the amendment we shall, with the aid of other duties, create greater opportunities for employment among retailers than if we continue the policy
Bt present pursued by the Government.
Unless the Minister can give us more information than he has already supplied, I feel disposed to support the amendment of the honorable member for Perth (Mr. Nairn).
[3.42J. - This matter was fully debated when the import duties on whisky were before the committee. The committee then decided to place an extra 5s. duty on imported whisky bottled out of bond; but it was not in favour of a similar duty on imported brandy bottled out of bond. In order to place Australian brandy on the same footing as imported brandy, the committee on my suggestion agreed to the removal of the extra 5s. a gallon duty on Australian brandy bottled out of bond. To be consistent the committee should now place Australian whisky in the same position as imported whisky, by applying the 5s. extra for bottling out of bond on both.
The 5s. per gallon extra duty on whisky bottled out of bond was imposed for three reasons. First, it gave a measure of protection to the public, since the extra duty would be an inducement to have whisky bottled in bond, under customs supervision, thus ensuring that the contents of the bottle would be true to label, at least up to the time it reached the hotel bar or the consumer. The second reason was to increase the revenue, although that is not an important consideration. The third reason for the extra duty was that additional avenues for employment should be provided in the manufacture of bottles, cases, and straw envelopes, and in bottling and packing the spirits in the bond stores. The 5s. extra import duty on spirits bottled out of bond applies to whisky, brandy and gin under the customs tariff, and to whisky, brandy, gin and liqueurs under the excise tariff. No objection has h?en raised to the 5s. a gallon extra duty on brandy, gin and liqueurs bottled out of bond, because those lines are practically all bottled under customs supervision in bond. Brandy has since been eliminated by the committee.
In May, 1927. a health conference, presided over by Senator A. J. McLachlan, representing the then Minister for Health, was held in. Melbourne. The Commonwealth was represented by Dr. D. G. Robertson, Director of the Division of Industrial Hygiene, and an adviser of the Commonwealth in relation to the Commerce Act, who attended in the absence of Dr. Cumpston, the Commonwealth Director-General of Health; Mr. W. Percy Wilkinson, Commonwealth Analyst and an adviser of the Commonwealth in relation to the Commerce Act; and Mr. H. Thomson, representing the Department of Markets and Migration. The representatives of New South Wales were Dr. R. Dick, president of the Board of Health and chairman of the Pure Poods Advisory Committee created by the Pure Food Act; Dr. T. Cooksey, Government Analyst; and the Hon. J. G. Farleigh, M.L.C., a member of the Pure Foods Advisory Committee, who attended as a commercial representative. Queensland’s representatives were: - Dr. J. I. Moore, Commissioner of Public Health ; Mr. J. Brownlie Henderson, Government Analyst; and Mr. F. Harper, of Messrs. Robert Harper and Company Limited, who attended as a commercial representative. South Australia was represented by Dr. W. Ramsay Smith, permanent head of the Department of Public Health, chairman of the Central Board of Health and chairman of the Advisory Committee created by the Food and Drugs Act; Dr. W. A. Hargreaves, Director of Chemistry and Government Analyst, with Mr. J. W. Grasby, a commercial member of the Advisory Committee, as commercial representative. On behalf of Tasmania, Mr. E. J. Tudor, acting permanent head and Secretary of the Department of Public Health, and Mr. A. J. Miller, of Messrs. A. J. Miller and Maund Proprietary Limited, attended. Victoria’s representatives were Dr. E. Robertson, permanent head of the Department of Public Health, chairman of the Commission of Public Health, and chairman of the Foods Standard Committee created by the Health Act; Dr. Heber Green, ^Lecturer in Chemistry at the Melbourne University and a member of the Foods Standards Committee; and Mr. A. D. Price, president of the Federal Wholesale Grocers Association of Australia, commercial representative. The representatives of Western Australia were Dr. J. Dale, who attended in the absence of the Commissioner of Public Health, Principal Medical Officer, and chairman of the Pure Foods Advisory Committee; Mr. C. E. Stacy, Deputy Government Analyst; and the Hon. J. M. MacFarlane, M.L.C., a member of the Advisory Board.
Senator McLachlan opened the conference on behalf of the Commonwealth Minister for Health. Having cordially welcomed the members, he expressed the hope that, the deliberations of the conference would result in the adoption, by the States and the Commonwealth, of an improved code of uniform standards for foods and drugs, not only from the standpoint of health, but also from that of facilitating interstate trade and commerce. Among the resolutions agreed to at the conference was the following: -
The Commonwealth re-affirms the resolution of the conference of 1013, which was re-affirmed by the conference of 1922, that “All spirits imported in bulk to be sold in bottles under the label or name of any distiller, manufacturer, or agent, outside the Commonwealth, should be bottled in bond under customs supervision, and should be labelled ‘ bottled in bond by’ (here adding the name of the manufacturer or of the agent within the Commonwealth).”
The Government’s present proposals are in accordance with the resolutions of that health conference.
The regulations under the Spirits Act provide for certain stamps and markings on spirits bottled under customs supervision. Regulations 7 and S read -
Upon the written application of the owner and satisfactory proof as to the identity of any spirits under customs control, an officer may mark or cause to be marked the description of such spirits in the following manner: -
The stamp to be used for descriptive purposes shall be adhesive, not less than two inches in diameter, or such smaller size a« may be authorized by the Comptroller in special cases, printed in black letters on white ground, and in the following design, but the descriptive terms varied to suit the requirements, provided that a reduced facsimile of the stamp may be used ‘for miniature bottles.
The proscribed stamp is circular in shape, with the worlds “ Commonwealth Customs “ enclosing a crown set between the letters “G” and “ B “, underneath which is printed “ Pure Australian Standard Brandy.” In the case of whisky, the word “ whisky “ would be substituted for the word “ brandy.”
This impost will tend to insure that customers will receive spirits that are true to label. T realize that a number of licensed victuallers prefer to bottle their spirits out of bond, on their own premises. By describing the spirit as a house whisky, and charging a price similar to that asked for standard whiskies of the best quality they obtain an advantage which would disappear if the extra 5s. duty were imposed. If a hotelkeeper bottles and sells a spirit as a house whisky, he has merely to comply with the stipulation as to alcoholic content. Although it may be a cheap imported whisky, he oan sell it at the same price as is charged for a reputable brand, and be safe from interference by a liquor inspector. The recognized proprietary brands of whisky are bottled in bond, under customs supervision, and are subject to test by the health authorities. If they are not up to standard the liquor inspectors can Institute a prosecution against the person who dispenses them. I admit that it is possible for persons who are intent upon adulterating whisky to evade the authorities. At the same time I point out that it was the opinion of the very representative health conference to which I have referred that if spirits are bottled in bond under customs supervision the customer may be sure that his whisky is true to label, at least up to the time that it is placed on the hotel bar.
My experience in connexion with the Department of Trade and Customs is that when a section of the community cannot obtain what it wants by fair means, it endeavours to do so by a campaign of intimidation and innuendo. I say unhesitatingly that, in the administration of the department, no individuals or companies are known to me, or to any member of the Government; nor were they known to my predecessor. Every case is considered on its merits, and to say that this duty was put on to suit any special interests is absolutely untrue.
To-day certain members of the committee are intensely solicitous on behalf of the interests of the small trader. When, on Friday last, I pointed out that to extend the period insisted on for maturity of spirits from two to three years would be playing into the hands of the big vested interests, which include the Federal and Corio distilleries, now controlled by the overseas whisky combine, my warning was disregarded. I pointed out that for 25 years the term of maturity had been two years. Practically without warning an amendment was tabled, to extend that period to three years. I stated that I had inquired whether the proposal would adversely effect any small distillers in business in Australia. I was informed that there were two such distilleries in South Australia. I asked the Comptroller-General of Customs to despatch a telegram to the Collector of Customs in Adelaide to ascertain the opinion of those traders. He received a reply intimating that they were distinctly against an extension of the period of maturity, on the ground that it would mean a serious set-back to their business. The Government thereupon urged that the matter should be referred to the Tariff Board, so that all sections of the community would have an opportunity to give evidence. By an overwhelming majority the Government’s advice was rejected, and the amendment was carried. As a result the firm of Milne’s, Adelaide, will not be able to sell any whisky for twelve months, until its spirits have a maturity of three years. The Opposition and certain other honorable members, who to-day object to the imposition of this additional 5s., last week played into the hands of the whisky combine, and acted against the interests of the small distillers. Their attitude is inconsistent, and prevents the Government from preserving the interests of the smaller men.
– How much labour and capital is involved in the firm of Milne?
– That firm is well known in South Australia, and a very reputable one. The action of Opposition members, who are loud in their agitation for the small man, has put it temporarily out of business as a seller of Australian-made whisky.
– I desire to support the amendment. When the honorable member for Perth (Mr. Nairn) moved a similar amendment for a reduction of the duty on brandy I supported him, and, with all due regard to the Minister, I think that honorable members who carried that amendment, were under the impression that it would also apply to whisky.
This additional tax of 5s. on whisky bottled out of bond is unjust, and unfair to the retailers of Australia. I am
Unaware that similar taxation is imposed iu any other country. The Minister claimed as one reason for its imposition that it would provide additional employment. I understand that it has brought about further unemployment. Another reason was that it would bring in additional revenue. There, again, the hopes of the Government are obviously futile.
I know that the Minister has received strong representations from the Queensland Licensed Victuallers Association, and from the Merchants Association, of Brisbane, who have for years bottled whisky in their own stores, out of bond, without any ill effect to the public, and under the constant supervision of the officers of the Health Department. I know of no instance in which they have taken advantage of that privilege. J urge the .Minister to reconsider the matter, and. if possible, accept the amendment.
.- Although the Minister has stated that no influence has been brought to bear upon him in regard to these duties, I have never seen so many blunders committed as in connexion with the customs and excise schedules which have been before this chamber recently. Concession after con- cession has been granted, and I would be interested to learn the reason for them. If the Minister is anxious to be guided by the Tariff Board, he should allow the old conditions of free bottling to continue. Up to “1.929 no restriction such as is now proposed was in operation; now the Minister has decided to give an unjust concession to the whisky combine. Why? I n any case the supervision of alcoholic liquors is a. State concern, and all the St it,. Governments have inspectors en gaged in safeguarding the public health in this regard. The Commonwealth Parliament seems to be always endeavouring to exceed its constitutional powers in order to encroach upon the domain of the States. The logical corollary of the proposal now before the committee is that the Commonwealth shall appoint inspectors, in addition to those in the service of the States, to ensure that the liquor supplied to the public is up to standard. For many years reputable publicans have been accustomed to buy spirits by the hogshead or half-hogshead, and bottle and label it. on their own. premises. I have read a published statement that even now certain licensed houses are bottling in bond, then emptying the bottles into hogsheads and returning the bottles to bond. If that is so, the restriction imposed by the Minister is not effective. By giving a concession to the combine the Minister has taken from another section of the community the right to import or purchase spirits in bulk. The Commonwealth should not attempt to interfere with the licensing laws, which are the responsibility of die States. At the commencement of the debate on the tariff the committee signified its emphatic opposition to the compulsory bottling of brandy in bond. If the amendment now before the committee is agreed to, it will be an instruction to the Minister to withdraw the unreasonable restriction he has imposed on publicans who want to buy whisky in bulk.
– The Minister’s statement that my amendment on Friday last to increase the period of maturity from two to three years was made in the interests of the big distillers was- unfair. I might with equal propriety charge the Minister with having imposed the restrictions in regard to bottling in bond in order to advance the interests of the whisky combine. Equally unjust was his further assertion that the amendment was sprung on the committee. ‘ I gave him at least a week’s notice of it,, and he had even earlier knowledge that such an amendment would be moved. It was proposed, not in. the interests of any section, but solely to safeguard the public health. Every part of the British Empire except Canada requires a. three-year period of maturity.
Question - That the amendment (Mr. Nairn’s)be agreedto - put. The commit tee divided. ( Chairman - Mr. McG r ath. )
Ayes . . . . . . 18
Noes . . . . . . 29
Majority . . . . 11
Question so resolved in the negative.
By omitting the whole of sub-item (e)and inserting in its stead the following sub-item: - “ (e) Blended whisky, distilled partly from barley malt and partly from other grain, containing not less than 25 per cent. of pure barley malt spirit (which has been separately distilled by a pot-still or similar processes at a strength not exceeding 45 per cent. over proof), the whole being matured by storage in wood for a period of not less than two years, and certified by an officer to be whisky so blended and matured -
– The committee on Friday last decided to increase the period of maturity for barley malt whisky from two years to three years. The same extension should apply to blended whisky. I, therefore, move -
That sub-item (e) be amended by adding the following: - “And on and after the 21st October, 1931 -
Blended whisky distilled partly from barley malt and partly from other grain, containing not less than 25 per cent, of pure barley malt spirit (which has beenseparately distilled by a pot-still or similar process at a strength not exceeding 45 per cent. over proof) the whole being matured by storage in wood for a period of not less than three years, and certified by an officer to be whisky so blended and matured - ( 1 )I f bottled under customs or excise supervision subject to such conditions as to the bottling and as to the strength of the spirits as are prescribed by departmental by-laws, per proof gallon, 30s.
– Despitethe Government’s proposal that the matter should be referred to the Tariff Board, the committee on Friday last decided that the period of maturity for barley malt whisky should be increased from two to three years. It would be inconsistent to have a three-year period for malt whiskies and a two-year period for blended whiskies. I agree that the period of maturity should be the same in both instances, but, to be consistent in the Government’s attitude that the matter should be referred to the Tariff Board, I shall oppose the amendment.
Amendment agreed to
.- I move-
That the sub-item be further amended by adding the following: - “And on and after 21st October, 1931- (e) Blended whisky, distilled partly from barley malt and partly from other grain, containing not less than 25 per cent. of pure barley malt spirit (which has been separately distilled by a pot-still or similar process at a strength not exceeding 45 per cent. over proof), the whole being matured by storage in wood for aperiod of not less than three years, and certified by an officer to be whisky so blended and matured -
If bottled under customs or excise supervision subject to such conditions as to the bottling and as to the strength of the spirits as are prescribed by departmental by-laws, per proof gallon, 28s.
If not bottled under customs or excise supervision, per proof gallon, 33s.”.
I move this amendment to rectify an excise anomaly which has been in existence for a number of years. No doubt the Minister is conversant with the facts. At present the higher duty on blended whisky as against pure malt whisky prevents the blending of our potstill and patent-still whisky with other whiskies, a process which is essential if we are to produce a palatable whisky in Australia. Pot-still whisky is not consumed to any great extent, either in Australia or in any other part of the world. The differentiation in the excise of 23. a gallon as between pure malt whisky and blended whisky, has materially interfered with the sale of whisky produced in Australia from our own grain. The same rate of excise should apply to both pure malt whisky and blended whisky. If the amendment is carried, a great impetus will be given to the local industry.
-There is much truth in what the honorable member for Wide Bay (Mr. Corser) says, because one of the drawbacks in regard to the quality of Australian whisky has been the feeling among the whisky-drinking public that blended whisky is more palatable than malt whisky. At present a tariff preference is given to pure malt whisky as against blended whisky. I do not think that it is advisable to have any deterrent to the blending of malt whisky with grain whisky. The amendment is reasonable, and I am prepared to accept it.
Amendment agreed to.
Item, as amended, agreed to.
Item6 (Tobacco) -
.- Some time ago I raised in this chamber the question of the relation of the duty of 2s. 4d. on manufactured tobacco, as provided in this item, to the duty on cigarettes. Sub-item a, with which we are now dealing, relates to hand-made strand tobacco. Sub-item b relates to manufactured tobacco. I presume that it is desired that there shall be a relationship between the two sub-items, and that is why I am speaking on the duty of 2s.1d. on hand-made tobacco, but with particular reference to the duty of 2s. 4d. on manufactured tobacco. I understand that the position is this: with manufactured tobacco subject to an excise duty of only 2s. 4d., it pays a large number of cigarette smokers to roll their own cigarettes of fine cut tobacco rather than buy cigarettes which are dutiable at 7s. 6d. per lb. under item8. I suggest that this duty should be examined from a revenue point of view. A mere increase in the duty on manufactured tobacco would probably still further decrease the smoking of tobacco in its various forms; but I suggest for the consideration of the Minister that the duty on cigarettes might produce more revenue if it were reduced. If it were reduced to, say, 3s. 9d., I am informed that cigarettes made of Australian tobacco could be sold at nine for 3d., instead of at ten for 6d., the present price of the common cigarette.
– Why say “ common cigarette “ ?
– I mean the most commonly used cigarette, which is important from a revenue point of view. Expensive cigarettes are unimportant from that viewpoint. It seems to me that we might quite well regard these items substantially from the point of view of revenue without disregarding their effect on Australian employment. There must now be a big loss of revenue, because of the increasing habit of people rolling their own cigarettes out of fine cut tobacco. Then, the manufacture of cigarettes gives more employment than the manufacture of the tobacco in cigarettes. For that reason it would be desirable to reduce the duty on cigarettes. I do not profess to be an expert on this subject, and I admit that I have heard only the views of those who advocate this change. If there are contrary opinions, I shall be glad to hear of them from the Minister. There at least appears to be a prima facie case for the reconsideration of this duty or the rearrangement of the relation between the duty on manufactured tobacco and that on cigarettes, in the interests alike of revenue and the provision of employment for our own people. More employment is obviously given in the manufacture of cigarettes than in the manufacture of tobacco, and the smoker, whatever he smokes, is a fair subject for revenue taxation, as I think, every honorable member will admit. I, therefore, ask the Minister whether he is prepared to reconsider these duties. One way of dealing with the matter would be to increase the excise duty on tobacco, but. tobacco is already so expensive generally, that I suggest that such an action would defeat its own object, and would probably be unwise. The excise officers, however, have special knowledge of the subject, and may be able to make a better suggestion than mine. If, by adjusting these duties, we can obtain cigarettes made out of Australian tobacco for practically half the price at which cigarettes are now sold, and at the same time diminish the use of fine cut tobacco for rolling cigarettes, so that excise duty will be paid at 3s. 9d. a lb. instead of 7s. 6d., we increase the revenue, and provide more employment in the tobacco industry. I am interested to know what the Minister has to say on this matter.
.- f also ask the Minister to give some thought to the disparity between the excise duty on cut tobacco and that on cigarettes. I am not at present raising any objection to the difference between the excise and customs duties upon tobacco, nor suggesting that the protection afforded to locally-grown or manufactured tobacco is too high. The disparity between the excise duty on Australian tobacco, in its cut form, and when made up in cigarettes, is so great that it i? practically preventing the Australian manufactured cigarette from getting on to the market at all. The gap between the two duties must be narrowed very considerably if Australian manufactured cigarettes are to win a place for themselves in popular favour. In these hard times the public is taking to rolling its own cigarettes, and is thus getting a cheaper smoke; but it, is at the expense of the revenue, and of the cigarette manufacturing industry. It is also limiting the use of Australian tobacco. If the present disparity continues, there will be no place for locally-manufactured cigarettes on the market. Every one will either smoke cigarettes they roll themselves, or if they are able to afford it, they will smoke cigarettes made from imported tobacco. That, of course, is in the interest, neither of the Australian tobacco-growing industry, nor of the manufacturing industry. The Australian article should be enabled to get into every part of the market at as low a rate as the country can afford. We know that revenue must be raised, but the present duties are decreasing the amount of possible revenue, while also handicapping the Australian industry. 1 am not blaming the Minister for this, because I believe that, in the great rush of preparing the tariff schedule, he must have overlooked this matter. I do noi suppose that he can give an answer offhand, but I suggest that if he is not able to accept an amendment now, he should defer the item. Perhaps, after further consideration, he will find that he can accept an amendment which would have the effect of assisting both the Australian tobacco-growers and the Australian cigarette manufacturers. Quorwm formed.]
.- The Deputy Leader of the Opposition (Mr. Latham) has drawn attention to the difference between the excise duty on cigarettes and that on cut tobacco, and he said that this disparity was resulting in loss of revenue. He suggested that the excise duty on cigarettes should be reduced from 7s. 6d. to 3s. 9d., but, in my opinion, if this were done the revenue would suffer considerably. In these hard times I believe that we should noi do anything which would result in sacrificing revenue. One of the leading firms of cigarette manufacturers, Carreras, has recently circularized honorable members of this House making curtain suggestions regarding excise duty. T have here an extract from the Melbourne Herald, dated the 15th October, dealing with the operations of this firm. It states -
During the past year, when most share investments have been undergoing severe depreciation of values, the £48,000 preference issue in Carreras Ltd. has been gaining strength, both for dividends and for capital security.
Some years ago, £40,000 of this capital formed portion of the funds of Snider and Abrahams Ltd., a most disappointing, ambitious venture which made losses instead of profits. T.t was reconstructed under tlie title of 0. G. Goode Ltd., the preference dividend was increased from 8 to JO per cent, cumulative, as compensation for unpaid arrears, and 124,902 ordinary shares of£l each had 19s. struck off.
The smaller undertaking was making satisfactory progress, and was earning preference dividends when the opportunity arose, in July last year, to link with the hi,7 English tobacco company, Can-eras Ltd., whose Australian connexion for several popular tobacco lines (including “Craven A” cigarettes) had become seriously handicapped by emergency and general tariffs, unions manufacturing could bc undertaken in Australia.
So G. G. Goode became Carreras, ami the English company supplied large amounts of new funds for its manufacturing and trade expansion.
The big change in operating results is so far visible only in gross profits, and not in net earnings: - £37,241, in part reflecting the difficulties of business, but also representing the expense of vigorous expansion of markets and of developing goodwill for future trade, and meeting interest on large loan funds introduced into the company.
I have not time to read the whole of ihe article, and J. ask leave to have it incorporated iu Hansard.
– I object to the incorporation, without reading, of matter dealing with the finances of a particular company. If honorable members wish to get such matter into Hansard, they ought to read it.
– I have been quoting From an article dealing with the affairs of the company which prepared the brief for the Deputy Leader of the Opposition.
– I have no brief; 1 received a circular, as did the honorable member for Indi.
– If that company has come out here with the idea of making the same phenomenal profits as it has made in the Old Country, it will find that it has made a mistake.
– Will the honorable member deal with the merits of the suggestion which has been put forward, as distinct from its origin ?
– I propose to deal with, its merits. A week ago I went to the trouble of buying several packets of cigarettes, and having them weighed. As honorable members know, cigarettes are sold, not by weight, but by the numberin a packet. I went to the trouble of working out how much per lb. smokers, were paying for some of the standard brands of cigarettes, and the result is set forth in Mie following table: -
– What bearing has this statement upon the duty under consideration ?
– If the excise duty were reduced from 7s. 6d. to 3s. £)d. per lb., as suggested by the honorable member for Kooyong (Mr. Latham), increased profit would be made on cigarettes manufactured from imported leaf.
– I understand that the big organization now has to meet competition.
– The import duty is 5s. 2d. per lb., and the excise is 7s. 6d. per lb., making a total of 12s. Sd. per lb. Since the manufactured cigarettes return £1 10s. -1-d. per lb., the manufacturers should be satisfied.
– I have raised not the subject of the profits of any of the companies, of which I know nothing, but the matter of increased revenue and employment.
– I hope that the honorable member will accept the assurance of the Customs Department, which declares that the suggested reduction would result in decreased revenue. If the present duties are retained, the Australian tobacco industry will be safeguarded, and will continue to prosper. Last November, the excise duty on tobacco manufactured in this country, whether from Australian leaf or from imported leaf, was increased from 2s. 4d. to 4s. 4d. per lb., and this action caused complaints from my electorate, which produces the bulk of the tobacco grown in Australia. When the Select Committee on the Tobacco Industry was making its inquiry, evidence was given by a director of the BritishAustralasian Tobacco Company to the effect that when the import duty was 3s. per lb., the Australian grower was not effectively protected, because it paid the manufacturers to buy American leaf. The present Government increased the import duty to 3s. 6d., and the extra 6d. represented the first effective protection given to the local industry. As a result, the industry prospered, but if the additional excise duty of 2s. per lb. had been retained, it would have sounded the death knell of the Australian industry. At a deputation, which I arranged, to the Minister for Trade and Customs, it was pointed out that the excise duty should remain at 2s. 4d., and any additional revenue required should be obtained by increasing the duty oil the imported leaf. The excise on both the imported and the local leaf was then fixed at 2s.- 4d. per lb., and an additional duty of ls. 8d. per lb. was placed on the imported article. Since then the Australian industry has bounded ahead.
The figures show that in 192S Australia was producing approximately 5 per cent, of its total requirements of tobacco, and, given a favorable season this year, there is every prospect of one-third or, perhaps, even one-half, of the total quantity of tobacco consumed being manufactured from locally-produced leaf. That is one of the beneficial effects of the tariff policy brought down by the present Government, and we should take care r.ot to interfere with the existing duties. In one year we have sent as much as £3,000,000 to the United States of America for tobacco, and £4,500.000 hatbeen transmitted to that country by us for timber, while for motor cars no less than £12,000,000 has gone out of Australia in one year. We have been sending too much money away that should have been used here in providing employment for the thousands of our own men who are out of work. In 1929, Australia had 372 registered tobacco-growers, and in August of this year the number had increased to almost 1,800. If the present total were ascertained it would probably be found to be much in excess of 1,800. We should bear in mind the fact that the local tobacco industry gives a considerable amount of employment indirectly, because the growers need barns, the erection of which provides work for builders and carriers. The makers of implements of various kinds, too, arc experiencing increased trade on account of the prosperity of the tobacco industry. The following table indicates the extent to which the industry has increased under the policy of protection : -
– 1 submit that the information now being given by the honorable member is irrelevant. It has nothing to do with the duties of excise on cigarettes and cut tobacco.
– The whole item is before the committee, so that the honorable member’s remarks are in order.
– If the excise duty were reduced, as desired by the honorable member for Kooyong, the acreage which I have indicated would be decreased. The honorable member drew attention to the difference between the excise duties on cigarettes and on pipe tobacco. I point, out that in the United Kingdom there is a duty of 8s. lOd. on pipe tobacco, and a duty of 13s. 7d. per lb. on cigarettes.
– That is a revenue duty.
– But the honorable member for Kooyong; submitted his amendment with a view to increasing the revenue. I will willingly support a reduction in the excise duty on cigarettes made wholly of Australian leaf, but the suggestion made is that the excise on all cigarettes should be reduced, to 3s. 9d. per lb. I would favour any action that would have the effect of placing a cheap, 100 per cent. Australian cigarette on the market.
There is a large over-production of tobacco in the United States of America.
Rhodesia, and Greece, and if the present excise duty were interfered with, the Australian manufacturers would probably import sufficient leaf from those countries to last them for five or ten years. By the time that Australian tobacco-growers had produced sufficient leaf to meet our requirements, the manufacturers would be able to snap their fingers at them. According to information which I have received recently, bright mahogany leaf sells for from 3¼d. to 9½d. per lb. in the United States of America; the average is about 3d. per lb. There is no need to import American leaf, seeing that we can grow in Australia tobacco which should satisfy the most fastidious smoker. An Australian grower of tobacco, who recently retired from business after 60 years’ experience, said that, in his opinion, Australia would, before long, become another America as a producer of tobacco. I agree with him; already the industry is thriving in many parts of Australia. I am not greatly concerned with the effect of these duties on the manufacturers of tobacco and cigarettes who, judging by their huge profits from year to year, seem well able to look after themselves, but I am concerned with the effect on our growers and smokers of tobacco. I suggest, therefore, that we should leave well alone, and that the existing duties should not. be altered for the present. [Quorum formed.]
.- I do not profess to know much about the tobacco-growing industry, nor do I, being a non-smoker, claim to be an authority on the different kinds of tobacco and cigarettes which are offered for sale. Some time ago representations were made to me by members of the Tobacco Workers Union that a shortage of supplies of the cheaper kinds of cigarettes had led to unemployment or rationing among them. These Australian workers believe in developing the Australian tobacco industry, but they state that Australian leaf is not yet, grown in. sufficient quantities to meet the demand for the cheaper kinds of cigarettes, and that a quantity of the Australian leaf already in stock is affected with blue mould. They ask that the shortage of Australian-grown leaf be met by allowing cheap leaf to be imported from the United States of America for a time, subject to customs regulations, in order that their members may be kept employed. During my recent visit to South Australia, I found that retail tobacconists were forced to ration the sale of the cheaper lines of cigarettes because of a shortage of supplies.
– I think that the rationing applies to pipe and plug tobacco, rather than to cigarettes.
– When I raised this matter on a previous occasion, some honorable members referred to the danger of dumping. The Minister then said that he would ascertain whether the case I had presented to the committee was borne out by facts, and, if so, whether any regulations could be framed to meet the situation. I should be glad to know the result of the inquiry which be promised to set on foot.
– The Tobacco Workers Union is opposed to the suggestion of the Deputy Leader of the Opposition (Mr. Latham).
-I am not supporting the Deputy Leader of the Opposition.
.- The Deputy Leader of the Opposition (Mr. Latham) made out a logical case when he asked whether a re-adjustment of the excise duties would increase the revenue. Despite the representations which have been made by interested parties, my examination of the position convinces me that the revenue will suffer if the duties are altered. There should be a more scientific basis for the excise duty on tobacco, so that the smokers of cigarettes may be placed in a more favorable position than at present, in comparison with the smokers of plug tobacco. I am fairly certain that there are no cigarettes made in Australia from 100 percent. Australian leaf.
– There are.
– I have been supplied with cigarettes said to be made entirely of Australian leaf.
– They have probably been samples. No Australian-made cigarettes, containing only Australian leaf, can be purchased from tobacconists. Even the Australian makers of cigarettes admit that at least another year must elapse before a sufficient quantity of Australian leaf suitable for manufacture into cigarettes will be available. As an Australian native, I hope that before long we shall make, in this country, all the cigarettes and plug tobacco we require; but however great our desire to establish ibis industry in Australia, we should not lose our sense of proportion. If I am correct in saying that no cigarettes made entirely of Australian leaf are manufactured in Australia, it would appear that, any re-adjustment of the excise duties would mean that smokers of plug tobacco would have to pay more than they do now for their tobacco, and that more leaf for cigarettes would be imported. Plug tobacco is already so dear that those who use it most - the workmen on a reduced basic wages - are forced to use less of it than they would if it were cheaper. If the price of pipe tobacco is further increased, there will be a falling off in consumption, with a corresponding loss of revenue.
The excise duty is based on the weight of the finished article. Plug tobacco is loaded with eight or nine other ingredients, including glycerine, liquorice, and honey, which are used to give it a better flavour. Ninety per cent, of that loading cannot be mixed with the tobacco which is manufactured into cigarettes, because it would make the machinery unworkable. Although Australia is in need of revenue, it would, in my opinion, be unwise to tamper with, the excise duty on tobacco so long as Ave do not grow in Australia sufficient leaf for our own requirements. An alteration of the duty would encourage the importation of tobacco leaf, and act detrimentally to the interests of the Australian tobaccogrowers. While much of the leaf which is manufactured into cigarettes in Australia is imported from other countries, Australian leaf is being increasingly used in the manufacture of pipe tobacco.
In considering these duties, we must not lose sight of the labour involved in the manufacture of tobacco and cigarettes. The labour required to manufacture cigarettes is small compared with that necessary to manufacture pipe tobacco or cut-up tobacco for cigarettes. Moreover, in the manufacture of cigarettes, most of the work which is not done by machinery is performed by females, whereas men arc engaged in the manufacture of pipe tobacco. To the use of machinery and the employment of females I do not object; I mention the matter merely to show that, from the point of view of providing work for our people, cigarette manufacture does not compare favorably with the making of plug tobacco. If we encourage the smoking of cigarettes rather than plug tobacco, we shall displace well-paid male labour with cigarette-making machines and female labour. At this stage, we cannot afford to tamper with the excise duties on tobacco, for, by so doing,, we shall reduce employment, and incur a loss of revenue.
.-1 am not agreeable to the suggestion that was made by the Deputy Leader of the Opposition (Mr. Latham), as I do not think that it would have the desired effect. As a member of the committee which inquired into the tobacco-growing industry in Australia, I can speak with some authority of the opinions held by a number of experts regarding the quality of Australian tobacco. Mr. Goode, who was at the head of the firm that has now amalgamated with Carreras, told me that it would be impossible to obtain a satisfactory Australian tobacco for the manufacture of cigarettes. Later, I gave him a cigarette that was made of North Queensland tobacco. I also gave similar cigarettes to Dr. Cameron and others that I obtained from Mr. Temple Smith and Mr. Slagg, the American field expert, and others, and in every case the gentlemen concerned expressed their appreciation of the excellent smoking qualities of that tobacco. Unfortunately, we have not sufficient Australian tobacco to supply the market. At the same time, a considerable quantity of it is now being processed. The local industry has been retarded principally by the adverse propaganda of a number of people who are hostile to it. Although they pretend to favour developing the Australian industry, they work strenuously, by underhand methods, to bring about the opposite result. I went among the tobacco-growers a good deal, and repeatedly I came across evidence of the spread of this insidious propaganda, which is designed to prevent the local product from securing the Australian market. However, I believe that this country will eventually provide the tobacco that is necessary to supply its own requirements. Perhaps the time will be longer than many people hope.
The honorable member for West Sydney (Mr. Beasley) referred to blue mould. That is a disease with which our scientists are grappling, but for which no solution has yet been discovered. It simply wipes out whole fields of tobacco plants.
On the 21st August last, Mr. Richard Bayliss made application for a licence to manufacture tobacco, cigars and cigarettes, on a farm situated about four and a half miles from the Home Hill Post Office, which is my electorate. He received a reply from Mr. H. F. Mahony, sub-collector of customs, Townsville, dated the 2nd September, and reading -
Referring to your letter of the 21st August, 1931, and our conversation on the 28th August, 1931, I have to inform you that the Collector of Customs has advised that he will issue a licence to Mr. Bayliss on completion of documentary security for £300 as per form herewith.
Mr. Bayliss complied with the necessary formalities, and went ahead and expended nearly £2,000 on a factory designed to manufacture hand-made cigarettes and other tobacco products. Then, much to his surprise, he received a wire from his solicitor on the 7th October, which reads -
Advice received Comptroller-General Customs directs country licences manufacturers tobacco not to be issued.
I might explain that I have had samples of the fine cut and plug tobacco manufactured by Mr. Bayliss tested by a number of gentlemen, including the Minister for Health (Mr. McNeill), the Treasurer (Mr. Theodore), the honorable member for Darling Downs (Mr. Morgan), the secretary to the honorable member for Brisbane, and several journalists. In every case the opinion passed upon it was favorable. One journalist told me that its smoking qualities were admirable, and that he was prepared to give the tobacco an excellent write-up. Why then, is Mr. Bayliss prevented from manufacturing tobacco? He has undertaken to assist the department in every way when complying with the prescribed formalities. He will house the excise officer when that official visits the district to make his inspection, and will pay all expenses incurred by the department in transporting the officer to and from the factory. While I do not wish to complain about the action of the department, I contend that when a man has shown enterprise, and has expended nearly £2,000 in the development of an industry which would be the means of providing employment, his endeavours should be encouraged. I ask the Minister to investigate the matter; also that he shall not make any alteration in the existing duties.
– I assure the honorable member for Herbert (Mr. Martens) that Mr. Bayliss has not definitely been refused a licence to manufacture tobacco. The matter is being reconsidered. I shall bear the honorable member’s representation in mind. Evidently, Mr. Bayliss has done very good work in pioneering the manufacture of tobacco in Northern Queensland. The Comptroller-General of Customs has telegraphed to the sub-collector at Townsville for further information, and I hope to let the honorable member have a definite reply on the subject within a day or so.
I remind the Deputy Leader of the Opposition (Mr. Latham) that the differing rates of duty imposed on tobacco and cigarettes existed before this Government assumed office. It was 2s.1d. per lb. on pipe tobacco, and 7s. 3d. per lb. on cigarettes, and was then increased to 2s. 4d. and 7s. 6d. per lb. respectively. The Government cannot accept any proposal to reduce those rates, as it would involve a loss in revenue. The official Year-Book of the Commonwealth of Australia discloses that the quantity of tobacco on which excise duty was paid during the years 1920-21 to 1929-30 was as follows : -
The quantity ofmachine-made cigarettes on which excise duty was paid during the same period was -
I have not the figures for 1930-31, butI presume that they would disclose a falling off in that year, due not so much to the duties as to the prevailing depression. If the Government accepted the suggestion of the Deputy Leader of the Opposition and altered the rate on cigarettes from 7s. 6d. to 3s. 9d. per lb. it would mean a loss in revenue amounting to £937,000 per annum. That is on the assumption that there would be no increase in the consumption of cigarettes. The increased consumption of cigarettes necessary to balance that loss would be over 2,000,000 lb. In view of the state of its finances the Government cannot accept any amendment which would bring about a loss in revenue. I realize that the whole matter of duties on tobacco will have to be reconsidered as our own industries develop ; that as we change over tothe Australian leaf our import duties will decrease. That is realized by the tobacco-growers themselves. For the last financial year there was an increase in the revenue derived from duties on tobacco of approximately , £1,000,000. The time has not arrived when any of that could be sacrificed.
It has been stated that a reduction in duty would result in increased employment. It is always easy to advance specious arguments when decreased duties are sought by different sections of the community. I fail to see that there would be an increase in employment if the duties were lowered. In the cigarette section of the Australian tobacco trade, 90 per cent. of the employees are females and juveniles, which results in a corresponding decrease in the cost of manufacture. The adult female weekly worker receives £2 17s. 6d., and the juvenile £1 2s. 6d. a week. These two classes mainly compose the labour involved, owing to the standardization of modern machinery, which enables a female operator on a cigarette machine to manufacture 30,000 cigarettes per hour. These machines have reached a remarkable degree of efficiency. The raw material enters atone end, and the finished product is delivered at, the other, the machine having teased the tobacco, separated the dust and inferior leaf, printed the tubes and tipped them with cork or gold leaf, and rejected the damaged or soiled cigarettes. Hundreds of hand workers have been displaced. Recently I read that by the introduction of these new machines in one factory, three female attendants were able to maintain an output equal to that of 700 hand workers. Any alteration of the duries with a view to encouraging the smoking of hand-made cigarettes would be injurious to employment. I have already discussed this matter with the representatives of the workers in the industry, andI assure the honorable member forWest Sydney (Mr. Beasley) that they are opposed to any policy that would cause a switch over from pipe tobacco to cigarettes. Only One cigarette manufacturer in Australia, Carreras Limited, has asked for the alteration of duties. That firm has made enormous profits in England. I have no hostility to it; on the contrary, I welcome its establishment of a branch business in Australia, where it is at least giving employment, to a large number of girls. Nevertheless, it is well to remember that the manufacture of cigarettes is a highly profitable business, the return per lb. being much greater than per lb. of pipe tobacco. Within the next twelve months the import, and excise duties on tobacco will have to be reviewed. Any alteration would be inopportune now, first, because of the loss of revenue that would be involved, and, secondly, because it would disturb the rapidly developing tobaccogrowing industry.
Item agreed to.
Item 7 -
By omitting the whole item and inserting in its stead the following item: -
.- In the whole tariff schedule there is no item for which there is less justification than the reduction of the excise duty on handmade cigars from 2s. 8d. to 3d. per lb. The Government declares that it is short of funds, and wants money to revive industry and provide employment; yet in respect of a luxury which almost every section of the community agrees should bc taxed, the Government is making a present to the cigar manufacturers of ?37,987 a year. The Minister stated on a previous occasion that this loss of excise revenue is more or less mythical. The tobacco “ industry is one of the most profitable in Australia ; it is able to pay the highest wages, and the manufacturers have been drawing substantial dividends for many years past. Yet the Minister stated that the industry had represented to him that “ its condition was desperate, and that relief was necessary to save it from extinction.” The honorable gentleman also said that not many cigars are imported; but, notwithstanding the heavily increased duties, the importations in 1928-29 amounted to 138,000 lb., and in 1929-30 to 108,000 lb. lt is a strange fact that as the duty, on imported cigars increases, the local manufacture declines. In 1920, this Parliament imposed a very heavy import duty on cigars, and it has been calculated that if importation had continued at the old rate, and no cigars were made locally, the Commonwealth could, have paid a pension of ?200 a year to every person engaged in the industry, and still be ?S 6,000 to the good.
– Notwithstanding the extraordinary reduction of excise duty to encourage the production of Australian cigars, large quantities are still being imported.
– In 1925-26, Australian manufacture amounted to 455,548 lb.; in 1926-27 to 409,623 lb.; and in 1927-28 to 390,336 lb. Those were prosperous years. In 1928-29, the local production’ was 338.S73 lb., and in 1929-30. 306,740 lb.
– Is the honorable member aware that the imports of cigars have dropped from 87,443 lb. to 18,087 lb.?
– Because the Minister placed an embargo on cigars.
– I rationed the imports; but, although 40,000 lb. could have been imported, only 18, 087 lb. was brought in.
– The Minister should mention also that he increased the import duty to 20s. per lb., and rationed the imports to 50 per cent, of the total for the year ended the 31st March, 1930. How many people can afford to buy imported cigars which are subject to a duty of 20s. a lb.? But cigars, whether manufactured locally or abroad, are a luxury, and there is no justification for reducing the excise duty on them at the present time. What influence has actuated the Minister? Does he wish to maintain ‘ in privileged positions the small number of workers engaged in the industry, or to ensure larger profits to the manufacturers? Or is the explanation that the Government can afford to forgo ?37,000 of revenue?
– The influence comes from the Cigar Makers Union.
– Not wholly; no doubt the manufacturers also asked for this reduction of excise.
Mr. Peterson The duty and the excise amount to 2s. 9d. per lb., as against a duty of 20s. per lb. on imported cigars.
– I intend to test the feeling of the committee, but, as a private member, cannot move to increase a rate of duty. I shall propose merely that the present rate of 3d. be struck out. If that is carried, the Minister can move the substitution of any other rate. I. want the public to realize that, at a time when the Government has reduced pensions, is dismissing its employees, and has no money with which to carry out developmental works, it sees fit to make this gift to the cigar industry. There should be some solid justification for this alteration of duty. The Minister has said that the condition of the industry was desperate, and relief was necessary to save it from extinction. He has also stated that the Australian cigar, which was formerly sold for 7d., will now be purchasable at 6d., because of the consideration extended to the industry. If one wants ti cigar, what does it matter whether it costs 6d. or 7d. ? There is no doubt that this article is a. luxury. I move -
That the item be amended by omitting the figure and letter “ 3d.”
.- It appears from what the Minister has said on other occasions that the industry of manufacturing tobacco products is in a difficult position, and, accordingly, steps have to be taken to remove the obstacles in the way of its success. Some of those steps are being taken through the excise duty. It would be interesting to know why it is necessary to increase the excise on cigarettes and to decrease it on cigars.
– In one case it is 7s. 6d. and in the other1s. 3d.
– The excise on machine-made cigarettes is 7s. 6d. per lb., which is very high.
– Why did not the honorable member have it reduced when the Bruce-Page Government was in power?
– It is only during the last year or two that this tremendous increase in the rolling of cigarettes by smokers themselves has taken place. That factoris a new element, but it does not arise on this item.
– The habit was cultivated during the war.
– With new conditions, new methods must be considered, and changes in conditions in industry and commerce will justify tariff variations. A pound of cigarettes is not nearly so valuable as a pound of cigars, but the excise on hand-made cigarettes is 7s. 3d. per lb, and on hand-made cigars, 3d. per lb. The excise on cigars has been reduced from 2s. 8d. to 3d. The excise on machine-made cigarettes is 7s. 6d., and that on machine-made cigars,1s. 3d. I ask the Minister for an explanation of these duties.
.- I wish to make one point with respect to this item. The duty on the imported cigar is 20s. per lb. The Minister says that this excise concession has been given to the Australian cigar-making industry to induce smokers to use Australian cigars and to give a fillip to the industry. I would point out that even if the excise were to revert to the old rate of 2s. 8d. per lb., the total taxation on the Australian hand-made cigar, including a duty of 2s. 6d. on the imported leaf, would be 5s. 2d. - 2s. 6d. duty and 2s. 8d. excise. If the Australian industry cannot compete with overseas cigar-makers who have to pay a duty of 20s. as against 5s. 2d. per lb. in Australia, there is something very wrong with the industry. It is utterly ridiculous to have a disparity still greater than this between the duty on the imported cigar and the total duty and excise on the Australian cigar. I support the amendment of the honorable member for Swan (Mr. Gregory).
– I cannot accept the amendment of the honorable member for Swan (Mr. Gregory), which is to wipe out altogether the excise on cigars. The Tariff Board carefully inquired into the industry, and recommended a reduction in excise on condition that the manufacturers reduced the price of the cigar, and did not benefit as a result of the reduction. Representations were made to the honorable member for Maribyrnong (Mr. Fenton) when he was Minister for Trade and Customs, and in November, 1929, he gave effect to the recommendation of the Tariff Board. The reduction in the price was made operative forthwith, and the reduction in excise was made operative from about the middle of 1930. The Tariff Board, in its report, stated -
Furthermore, in connexion with the possibility of the employees’ union setting up fresh demands for increased wages and piece rates, the Tariff Board was assured that the workers were conscious of the fact that the future of their industry, and its expansion (for which the request for reduction in excise was being submitted), depended solely on the possibility of supplying the consumer with the 7d. Australian-made cigar at 6d., and the 3d. cigar with a fuller weight of leaf. And to do this it was essential that all four contributors to the final disposition of the product - the manufacturer, the worker, the retailer, and the Government - must co-operate to the one end, and that if one or other fail in their part the desired end cannot be achieved and the sacrifices by the Government (if made) of £60,000 of revenue would be absorbed by one or other of the factors other than the consumer. Under the circumstances, the Tariff Board is now satisfied that all factors are prepared to make a sacrifice in order that the consuming public may have the opportunity of obtaining a cigar at a convenient figure, and is prepared to recommend that the request be granted for the reduction in the excise duty from 2s. 8d. to 3d. per lb. on hand-made cigars.
– What is the date of that report?
– It is the last report of the Tariff Board and was made about the middle of 1925.
– There was no depression then.
– As a matter of fact the depression has adversely affected the cigar industry, because there has of late years been a continual falling off in the consumption of cigars and in the number of men employed in their manufacture here. Their numbers have fallen from 1,400 to about COO. The cost of the Australianmade cigar has increased from 4d. to 7d.
– The evidence before the Tariff Board was to the effect that the cigar consumption throughout the world had fallen off.
– That is so. The excise has been reduced in an. effort to rehabilitate this dying industry, which at one time was employing 1,400 hands. I was surprised when I visited a factory in Melbourne to find that 300 men were still making hand-made cigars. There is another factory at Perth.
– What is the average Wage paid in the industry?
– The wage is decent and reasonable.
– The men are not now on full time.
– Unfortunately, that is so. No government has hit the tobacco monopoly more than this Government has by increasing duties. We have made substantial increases in duties, and I resent the suggestion that this reduction in excise is a gift to a huge monopoly. No man knows more than the honorable member for Maribyrnong the condition of this industry. When he was Minister for Trade and Customs he made a careful investigation before reducing the excise.
– It was reduced to give the industry a chance to live, and to bring about more employment.
– This reduction is in accordance with the recommendation of the Tariff Board, which inquired into the conditions of the industry.
.- I have listened with much interest to the explanation of the Minister. He has quoted a Tariff Board report of 1925. The board reported, according to what the Minister read, that the industry was declining, that the price of the article was the obstacle to its recovery, and that a reduction in the price would have to be brought about in the interests of the industry as a whole, by sacrifices being made by the manufacturers and their employees, and in the revenue. We know of lie sacrifice of revenue which has been made. The Tariff Board in 1925 estimated that the loss would then be £69,000, but, according to a reply given in the House, the amount actually lost has been £39,000. Has the Minister anything to say regarding reduced profits and reduced wages which have come, about as part of this plan?
– The manufacturers have reduced the price of cigars, and the workers have accepted reduced wages.
– After the duty had been varied?
– If that is so, it appears that the arrangement has worked out satisfactorily, and there is nothing else to say.
.- This was one of the matters inquired into by the Tobacco Investigation Committee. Mr. Bentley, who was then chairman of the Melbourne section of the BritishAustralasian Tobacco Company, stated in evidence before the committee that it was perhaps possible, by very generous treatment on the part of the Government, to revive the cigar-making industry. He went on to say that the world consumption of cigars was becoming less every year, due, he thought, to the public going in for cigarettes rather than cigars. If the reduction of the excise duty will have the effect of increasing the popularity of cigar making then it is to be commended. We should aim at making cigars cheaper. Mr. Neville, who was tobacco expert in Queensland many years ago, said that the cigar leaf grown in the Don Valley, Bowen district, was equal to that produced in any part of the world; the difficulty was that certain vested interests in this country were determined at all costs to kill the Australian industry. In a previous speech I quoted from Mr. Neville’s report, in which he said that, although growers received 2s. per lb. for the first leaf harvested, the same quality leaf fetched only 4d. per lb. later in the season. The growers say that if they cannot get 2s. per lb. all round for their leaf it does not pay them to grow it, and at 4d. per lb. the proposition is hopeless. The result was that they went out of tobacco-growing, and are now growing sugar cane. If the growers receive sufficient encouragement - and the present proposal is a step in the right direction - they will be induced to go in again for growing cigar leaf. Professor Perkins, Director of Agriculture in South Australia, has stated that Australiangrown cigar leaf is entirely suitable for making cigars, except that it has not yet been possible to produce a satisfactory wrapper. Members of the investigation committee smoked 6d. cigars made from Australian leaf, and found them quite satisfactory. Cigar smoking is indulged in by a great many people who cannot be described as wealthy, and still more cigars would be consumed if they could be put on the market at reduced prices.
Question - That the figure and letter proposed to be omitted (Mr. Gregory’s amendment) stand part of the item - put. The committee divided. (The Chairman - Mr. McGrath.)
Majority . . . . 18
Question so resolved in the affirmative.
Item agreed to.
Item 8 agreed to.
Motion (by Mr. Forde) agreed to.
That the excise tariff resolution introduced into the House of Representatives on the 29th July, 1931 (vide page 4584, volume 131) be incorporated in the present proposals in lieu of Item 11 of the excise tariff resolution introduced into the House of Representatives on the 26thMarch, 1931.
By adding a new item as follows: - “11. (a) Petroleum or shale products, viz. - Petrol, benzine, benzol, benzoline, gasoline, naphtha, pen- tane and any other petroleum or shale spirit, having a flash point of under 73 degrees fahrenheit when tested in an Abel Pensky closed test apparatus -
As prescribed by Departmental by-laws, free.
N.E.I., per gallon, 4d.
Coal tar and coke oven distillates suitable for use as petrol substitutes having a flash point of under 73 degrees fahrenheit when tested in an Abel Pensky closed test apparatus -
1 ) As prescribed by Departmental by-laws, free (2)N.E.I, per gallon, 4d.
And on and after the 30th July, 1931 - 11. (a) Petroleum or shale products, viz. - Petrol, benzine, benzol, benzoline, gasoline, naphtha, pentane and any other petroleum or shale spirit, having a flash point of under 73 degrees fahrenheit when tested in an Abel Pensky closed test apparatus -
1 ) As prescribed by Departmental by-laws, free.
N.E.I., per gallon, 4d.
Petroleum or shale distillates, viz. -
Turpentine Substitutes -
1 ) As prescribed by Departmental by-laws, f ree.
N.E.I., per gallon, 4d.
Coal tar and coke oven distillates suitable for use as petrol substitutes having a flash point of under 73 degrees fahrenheit when tested in an Abel Pensky closed test apparatus -
1 ) As prescribed by Departmental by-laws, free.
N.E.I., per gallon, 4d.”
.- The proposal is that petrol, benzine, and the like, as prescribed by departmental by-laws, shall come in free, and n.e.i., at -Id. a. gallon. Accordingly, it is left to be determined by departmental by-laws whether the petrol and other similar products are to be admitted free, or are to be dutiable at the rate of 4d. a gallon. The Minister may have given an explanation which I have not heard, but if he has not, I should like to know why it is proposed to reserve this power to the department without any indication in the excise item itself of the ground upon which the discrimination may be exercised. Why is it proposed to reserve to the department the right, to discriminate in the case of the same article to thi3 enormous extent?
.- Provision is made for exemption under bylaw of such petroleum or shale products, and coal, tar, and coke oven distillates as may be prescribed. The by-law provision has been added because is was felt that small tar plants belonging to shire councils, &c, which produce by-products coming. within the scope of the item, should be exempt.
Sitting suspended from 6. IS to 8 p.m.
– I recognize the desirability of having a large quantity of petrol produced in Australia, but it would not be wise to allow the Government, merely by means of departmental regulations, to prescribe what kind of petrol shall be free of excise duty, and on what a duty of 4d. per gallon shall be paid. The term, “ prescribed by departmental by-laws “, might well be altered to “ as provided by regulation “, and then Parliament would have an opportunity of disallowing any regulation with which it disagreed. The Minister might inform the committee what is meant by the provision of an excise duty of 4d. per gallon on petrol “ not otherwise included “.
– I support the request of the honorable member for Swan (Mr. Gregory) that more definite words than “ as prescribed by departmental by-laws “ shall be employed. Such vague statements enable the department to do almost as it likes with the trade and commerce of the country, irrespective of the wishes of Parliament. Strictures were made by the Tariff Board on this matter in its last annual report, and the Government should take cognizance of its observations. The Minister, apparently, had no intention of replying to the remarks of the honorable member for Swan.
– I shall do so immediately the honorable member for Warringah resumes his seat.
– I believe that the Minister intended to let the item slip through without comment from him.
– These duties were imposed for revenue purposes only. Provision is made for admission under by-law, and I understand that objection has been taken to this practice; but it was adopted largely as the result of representations made by honorable members themselves. The honorable member for Darling Downs (Mr. Morgan) and the honorable member for Herbert (Mr. Martens) pointed out that certain shire councils produced byproducts on which excise duty was charged. Provision is made for exemption under by-law of such petrol, or shale products and coal tar distillates as may be prescribed. The object of the inclusion of the by-law provision was to exempt the products of the small power plants of shire councils, such as those at Toowoomba and Cairns. We have also exempted petrol extracted from shale. The Tariff Board recommended that, but also said that if any large quantity of petrol should be extracted from shale in the future, the matter would have to be reviewed. I quite concur in that opinion, hut the extraction of petrol from shale in Australia is still in the experimental stage. Small quantities of petrol are being extracted from petroliferous gas at Roma, and no excise duty is charged on that; but the time may come when petrol will be produced in large quantities from petroliferous gas, or oil may be struck in large quantities, and then the whole matter should be reviewed. The practice of exempting goods under by-law was not instituted by the present Government. It has been in operation for years. Whenever such action is to be taken, an announcement to that effect is published in the Commonwealth Gazette.
Tin* difference between the excise and the import duty is 3d. per gallon. The whole matter is now being considered by the Deputy Comptroller General of Customs (Mr. Abbott), and an accountant of the Customs Department in Sydney. They are investigating the refining costs of the Commonwealth Oil Refineries Limited, because that company claims that if the difference of 3d. a gallon were not maintained, it would immediately have to close its works. The Government hopes in the near future to have a report from those officers.
.- This item has an important relation to the operations of the oil refining companies in Australia. The duty on petrol imported from abroad is 7d. a gallon, and the excise on petrol produced in Australia from imported crude petroleum is 4d. a gallon, leaving a margin of protection in favour of the Australian product of 3d. a gallon. The two companies engaged in refining operations in Australia are the Commonwealth Oil Refineries Limited and the Shell Oil Company. The Vacuum Oil Company lately made a proposal to the Government that if it would make certain alterations in the regulations, the company would spend about £800,000 in plant in Australia; but, according to the Tariff Board, if the company carried out its proposals, the loss to the revenue of the Commonwealth would be about £700,000 a year. I hope that the Government is not prepared to accede to the proposals.
– The margin of protection necessary is being investigated by the officers of whom I have spoken.
– But the matter seems to have been investigated already by the Tariff Board, which estimates that the present margin of 3d. a gallon is unnecessarily high. The board made a definite recommendation that the excise should be increased from 4d. to 5-id. a gallon, decreasing the margin of preference in favour of the Australian article from 3d. to lid. per gallon.
– The Government has maintained, except for a brief period of three months, the differential rate that has always operated. The department was not satisfied with the Tariff Board’s report, and a careful investigation into refining costs is being made by officers of the department.
– When the Commonwealth Oil Refineries Limited was established, the margin of preference was only Id. per gallon, and it was increased to 3d. per gallon when the Shell Oil Company commenced operations in Sydney. The Tariff Board has made an exhaustive report, and has given a definite decision. Here, apparently, we have another instance of the Minister, not being satisfied with the board’s report, appointing two officers of his department to make a further recommendation.
– Because the Commonwealth Oil Refineries Limited said that if the Board’s recommendations were adopted it would cease operations immediately.
– That may be so; but I disapprove of the action of the Government in asking some of its officers to furnish another report because the report of the Tariff Board does not suit it. The Minister constitutes some of his officers a court of appeal when a recommendation of the Tariff Board does not suit him. The Tariff Board, on page 12 of its report, stated -
After examining the position, the board is convinced that the sum of Id. per gallon would greatly exceed the cost of labour expended in the production of a gallon of petrol in Australia from imported crude petroleum. The board does not suggest that a margin of Id. per gallon would bring about refining in Australia, but it considers that such margin is u& much as the industry is worth to the Commonwealth from h.ii economic stand-point.
The board feels, however, that the fact that local refineries have, already been established, and that one of them started under a more generous margin of protection than that siu: crested, should be taken into consideration in making a recommendation. (At the time the Commonwealth Oil Refineries Limited commenced operations the protection available was Id. per gallon. When the Shell Company of Australia Limited started, however, the margin was M. per gallon.)
Even considering this fact, however, the board does not consider that the margin should exceed lid. per gallon. On figures ava liable to the board, this sum would exceed the whole amount expended on refining in Australia by an efficient “skimming” plant, and is four times greater than the amount that would be spent in wages. . . .
In all the circumstances, the board is of opinion that the margin between the excise duty on locally-refined petrol and the. duty on imported petrol should not exceed lid. per gallon.
The board considered the question of costs and the value of this industry to Australia from an economic point of view. An examination of its report shows that the witnesses it examined were representative, and that the whole question was carefully considered. In the opinion of the board, the industry is not worth what we are paying for it. On every gallon of petrol produced in this country from crude oil, Australia loses 2d. The board points out, moreover, that that loss of revenue is not compensated for by any advantage to the consumers of petrol. It would be better for Australia if the company were to close down entirely, for then the gain to the revenue would more than compensate for the loss of any benefits. According to the Tariff Board, the wages paid in the industry represent only one-eighth of the present margin of preference. At the existing rate of 3d. a gallon we are losing eight times a3 much as is paid in wages to those engaged in the industry. The right honorable member for North Sydney (Mr. Hughes), who was responsible for forming the Commonwealth Oil Refineries Limited, told us recently that the company had completely failed to accomplish the purpose for which it was established. He made it clear that he would not hesitate to wipe it out of existence, if given the opportunity. As it is not competent for a private member to move for an increase of taxation, I move -
That the figure and letter “4d.” (wherever occurring) be omitted.
I do so in order that another figure may be inserted in lieu thereof, and to give the Government an opportunity to show that it is prepared to take cognizance of the recommendations of the Tariff Board.
.- The price of petrol is a matter of serious concern to the people of this country, as is also any question affecting a loss of revenue. The Tariff Board’s report shows that that body went exhaustively into the question of the refining of oil in Australia, and that Australia is making a big annual loss through having oil refined here. It is clear from a perusal of the board’s report that we were living in a fool’s paradise when we decided to refine oil in Australia. On page 13 of its last annual report the Tariff Board gives the following table showing the loss which it considers would result to Australia, assuming that various quantities of petrol were refined in this country -
In the face of that table we should give careful consideration to the loss of revenue which results from the refining of oil in Australia. We cannot afford to lose money in this way. We hear a great deal of the need for reducing the costs of production; yet we are unnecessarily keeping up the price of petrol, which is essential to our progress. When the Bruce-Page Government introduced its proposal to refine oil in Australia 1 predicted that it would result in a loss. My anticipations have been realized. It would be better if this company were to close down, for with open competition we should be able to buy petrol more cheaply than we can obtain it to-day. If we then put a duty on imported petrol, our revenue would increase.
– I protest against the paucity of information which has been supplied to the committee regarding this important item. On every hand we hear complaints of the excessive cost of production, and the effect on our primary and transport industries of the high price of petrol, yet all that we have got from the Minister is an explanation regarding certain by-products obtained by certain municipal councils. The Minister told us that inquiries are being made by officers of his department, and that when their report is to hand the Government wil] take some action, hut he entirely ignored the major question. As has been pointed out by the honorable member for Perth (Mr. Nairn), the Tariff Board has already submitted a report on this matter, and made definite recommendations. That report the Minister has seen fit to ignore1; he will not even discuss it. I have here a report on petrol prices by an officer of the Auditor-General’s office, and an officer of the Trade and Customs Department, which contains the following important statement : -
The cost of petrol has, to a degree, been enhanced by the extensive distributing facilities that have been installed by both the Shell and the Vacuum Oil Companies. Representatives of both companies admitted that their own existing facilities were practically sufficient to cope with the whole of Australia’s requirements. Including the operations of the other major companies, and the independent importers of petrol, it is clear that the selling facilities have increased beyond requirements.
The consumer of petrol in Australia has to pay for these things. The honorable member for Perth quoted from a report of the Tariff Board on petroleum in its various forms. The board also referred to the matter in its annual report, in which the following paragraph appears : -
The Tariff Board, taking into consideration the position of refiners already established in Australia, recommends that the existing margin of 3d. per gallon between the customs and excise duties should be reduced to1½d. per gallon, which figure the board considered a reasonable margin of protection, and represented the maximum value of the industry to the Commonwealth. The danger of an excessive margin will be realized when it is pointed out that close investigation by the board shows that an efficient refiner on the margin of 3d. would have more than lid. per gallon advantage over imported petrol, and past experience indicates that the Australian consumer has not derived any advantage from this excessive margin.
Notwithstanding that these reports cry aloud to heaven against the burdens which are imposed on the Australian consumers of petrol by the major oil companies in this country, the Minister contents himself with some fatuous reference to municipal councils which have conducted experiments which have resulted in certain by-products having been extracted from coal tar. All the information that has been vouchsafed to this committee by the Minister has been in connexion with irrelevant and unimportant matters; he has ignored the interests of the consumers of petrol. The major oil companies in Australia have no greater friends in any other part of the world than the Minister and this Government. If that were not so, why did the Government not have regard to the reports of the Tariff Board and its officers as to the excessive cost of petrol in Australia? Allegedly, this is a Labour government. Does it stand for the monopolists, or for the public? Let it proclaim itself. The Government claims that it has no sympathy with these predatory American companies. Every member in this chamber should actively resist the tactics of the American oil magnates. Unfortunately, honorable members opposite are bound by the shackles of party; by the influences that are brought to bear on them from divers places. They, therefore, sit quietly, and acquiesce in anything that the Government or the Minister does. When they face their masters outside, a happening which is inevitable, they will be asked why they supported the powerful American oil combines in their raid upon the pockets of the people ; why they did not instead induce their own Minister, whom they can control from caucus, to reduce the costs of petrol to the people of Australia. The result will be interesting.
– One would gather, from the remarks of the honorable member for Warringah (Mr. Parkhill), that this Government had not increased the duties upon petrol. Actually it has increased them from 3d. to7d. per gallon since it assumed office. The difference between the excise and import duties has been 3d. a gallon since 1926, except during three months of 1929.
If this Government rushed in prematurely and reduced that differential rate the Commonwealth Oil Refineries Limited, of which the Commonwealth Government holds half the shares, and not the American companies, would suffer. Rightly or wrongly, the Hughes administration committed the Commonwealth Government to an investment of £351,000 in the Commonwealth Oil Refineries Limited. This country has had no monetary return from its investment in that enterprise. Whatever profits may be made by that company go to the expansion of its organization.
– What is the Government doing about it ?
– It has appointed Mr. McFarlane, of the Treasury Department, to act as liaison officer between it and the Commonwealth Oil Refineries Limited. It will be that officer’s duty to make periodical reports to the Government on the management of the company, its costs of production, and its charges. When the Tariff Board issued its reports on crude petroleum, and the difference between excise and customs duties, the general manager of the Commonwealth Oil Refineries Limited despatched an urgent telegram to the Government declaring that if the recommendation were put into effect the company’s refinery would have to close down. ‘Do honorable members want to see the Commonwealth Oil Refineries Limited close down in such a peremptory fashion? That report was based upon the Shell Company’s refining costs from crudes of high petrol content. The Commonwealth Government immediately appointed the Deputy Comptroller of Customs and an accountant to investigate the whole matter of the cost of the Commonwealth Oil Refineries Limited. Within a few weeks the Government will receive a report from those two responsible officers, and it will then be able to come to a determination in the matter.
Amendment negativeil .
Item agreed to.
Items 12 and 13, and preliminary matter agreed to.
Standing Orders suspended ; resolution adopted.
That Mr. Forde and Mr. McNeill do prepare and bring in a bill to carry out the foregoing resolution.
Bill brought up by Mr. Forde, arid read a first time.
.- I move -
That the bill be now read a second time.
This is the customary tariff measure that confirms the duties already agreed to by the committee. It also contains the usual validating clauses covering the duties that have been collected under the various resolutions that have been tabled from time to time.
.- I congratulate the Minister for Trade and Customs (Mr. Forde) and the Minister for Health (Mr. McNeill) upon the celerity with which they were able to produce a bill founded upon a series of resolutions which two minutes ago were supposed to be open to amendment by this chamber. The rapidity of the procedure demonstrates the unreality of much of the debate in which we were recently engaged.
Question resolved in the affirmative.
Bill read a second time, and passed through its remaining stages without amendment or debate.
Bill returned from the Senate without amendment.
Debate resumed from the 16th October (vide page 827). on motion by Mr. Theodore -
That the bill be now read a second time.
.- This, and the Commonwealth Debt Conversion Bill, which the House has been invited to consider together, deal with the problem raised by dissentients to the recent conversion loan. The conversion to a substantially lower rate of interest of the whole of Australia’s internal indebtedness, totalling nearly £558,000,000, without actual legislative compulsion, was a task the result of which was open to a good deal of uncertainty. Bondholder* generally had come to realize that the fall in the national income was so tremendous that the Commonwealth Government simply could not continue to pay on its internal debt a burden of interest which averaged well over 5 per cent.; that, to save their capital from destruction, and in their own interests, they must be prepared to accept a lower return. Yet, although this philosophical view was generally accepted by bondholders, I do not think that anybody anticipated that 97 per cent, of the huge total of our internal indebtedness would be converted without resort to compulsion. The result was truly remarkable, and whilst no one is so blind as to suppose that altruism rather than recognition of the national inability to pa’y was the dominant motive which actuated bondholders, the Australian bondholders cannot be deprived of the credit of having by an overwhelming majority consented to sacrifice from 20 to 30 per cent, of their interest income without the whip of compulsion being applied. Even more remarkable was the extremely high percentage of conversion on the direct initiative of the bondholder. Of the £541,000,000 converted, £510,000,000 was converted on the active initiative of the holder, and only £31,000,000 by passive acquiescence. Most people expected that a far larger proportion of the amount would be converted simply through inaction on the part of the bondholder, and a much smaller proportion by active consent. I was relieved when the National Appeal [Executive, consisting of the Prime Minister (Mr. Scullin), the Leader of the Opposition (Mr. Lyons), and Sir Robert Gibson, acting on my suggestion, altered the wording of the prospectus and Advertisements relating to the conversion loan ; in my opinion, the original wording was extremely dangerous, and might have invited trouble in the future.
The two bills now before the House deal with the £16,650,000 worth of unconverted stock, representing rather less than 3 per cent of the total. In normal circumstances, even if the whole amount matured in one year, it would present no difficulties. A redemption loan would be floated, and new capital would be subscribed to repay the principal, less such amount as had been already redeemed by the sinking fund. But I agree with the Treasurer that it would be almost impossible to float a redemption loan now, because nobody could be expected to invest in 4 per cent, stock at or near par when he could purchase similar stock at from £80 to £S4. The Treasurer is, therefore, faced with the necessity of finding money to meet these maturing obli- gations without recourse to a new loan, s it possible to meet the obligations presented by the unconverted loans about to mature without recourse to further borrowing or inflation ? If that is possible, it is the only honest course to take; if it is not possible, we must choose between inflation on the one hand and breach of contract on the other. We have already varied our contract with bondholders representing £541,000,000 worth of stock, of 97 per cent, of the total internal debt, but with their consent. The measures with which we are now dealing propose to vary the contract in relation to the balance without the consent of the bondholders, and nothing but sheer inability -to carry out our contract could justify such a course. So far our hands are clean, because the variation of the contract in regard to the £541,000,000 has been made with the consent of the bondholders. If we arc indisputably unable to meet the obligations represented by the unconverted loans we can pass these measures, and still keep our hands clean; but if we can meet these obligations and do not, we soil our hands, and become repudiators.
What resources have we? A further loan may be regarded as* impracticable at the present juncture, although there are some who think that it has possibilities of success. Further inflation would be dishonest. There is one other hope - the sinking fund, the very purpose of which is to redeem loans. When the Treasurer stated that £9,600,000 of the unconverted loans would fall due within the next sixteen months, my first impression was that there was no escape from this legislation. Since then, however, I have investigated the possibilities of the full utilization of the sinking fund, and I do not believe that it is impossible to meet the obligations arising out of the unconverted loans, if we are determined to do so. I realize that in addition to our legal obligations to the dissenting bondholders, we have a moral obligation to those who converted under conditions which involved them in serious difficulties and hardship. If the result of the conversion had been a 90 per cent, assent and a 10 per cent, dissent, the course which the Government proposes would have been inevitable, but with a 97 per cent, assent, and less than 3 per cent, dissent, I believe that if the obligation in respect of the unconverted balance were the only problem, and Ave had not to consider the needy converting bondholder, we could meet our obligations. Again, if Ave were free to amend the act which enables probate duties to be paid in bonds, by withdrawing that concession for two or three years, wholly or in part, the sinking fund would be more than adequate to do what needs to be done. But we are not free to do that, because the prospectus issued in connexion with the conversion loan stated definitely that 4 per cent, and 3£ per cent, converted bonds would be accepted at face value in payment of probate duties. Even with that handicap, I believe the sinking fund would be adequate to meet our liability in connexion with the unconverted stock if allied with that were not the problem presented by the needy person who converted under extraordinary conditions; for although the conversion loan has been regarded as voluntary, it nevertheless was not a normal voluntary loan. The only time when any strain would be felt in regard to meeting our actual legal obligations, as distinct from the moral obligations to the converting bondholders, would bo during the current and following financial years, when £9,600,000 of maturing bonds will have to be redeemed. During those two years there will be a total sinking fund provided in respect of the internal and external debt of £14,000,000- £7,000,000 per annum, representing £3,500,000 against the internal debt and a similar amount against the external debt. But not all of the £7,000,000 per annum is available for the purpose of redeeming unconverted maturity loans. Of the internal sinking fund of £3,500,000 available each year, £1,700,000 is received in bonds in payment of probate duty. Indeed, I understand that practically the whole of the probate duties are now paid in bonds, and for the obvious reason that if a trustee can pay £1,000 worth of probate duty with bonds which cost only £S00 in the market, he will choose that method rather than, pay cash. The cancellation of bonds received in payment of probate duty is a statutory obligation. The Treasury receives credit for the full face value of the bonds, and then the National Debt Sinking Fund Commission has to accept them at face value, and loses any profit it might have made had it received cash, and been able to go upon the market to buy bonds at depreciated rates. Of the £3,500,000 of sinking fund in con- nexion with the internal debt, £1,700,000 is, therefore, not available for the cancellation of other securities. There is left a balance of £1,800,000.
– There are certain other fairly considerable commitments.
– I have mentioned the principal one. The external debt sinking fund also is £3,500,000, and there are contractual obligations in connexion with it. On certain loans raised by New South Wales and Queensland the sinking fund payments have to be made direct overseas. They amount to less than £500,000 yearly. Assuming those obligations to be in round figures £500,000, there is left £3,000,000, which, added to the balance of £1,800,000 from the internal debt sinking fund, makes a total of £4,800,000 per annum available for use at the discretion of the Commissioners for the redemption of stock.
– I assure the honorable member that he has not taken into account all the commitments of the sinking fund.
– There may be other minor commitments. On the basis, of my figures it is a singular coincidence that in two years we shall have available £9,600,000; exactly the amount required to meet the unconverted bonds falling due in that period. After the first two years the position will be very much easier, because the amounts falling due will be smaller. It is true that in the first two years the unconverted loans fall due some months before the sinking fund would be fully available - on the 30th of June of each year - and some temporary accommodation from the Commonwealth Bank would be necessary, for which the sinking fund would be security. The’ Commonwealth Bank could, no doubt, hold the bonds which have ‘been paid off as security until, at the end of the financial year, they could be redeemed at face value out of the sinking fund. I believe that the account would be pretty nearly square with the bank at the end of this and next financial year by making use of the sinking . fund, although the sinking fund commitments which the Treasurer, by interjection, has mentioned, are apparently somewhat larger than I believed them to be.
– The honorable member has missed the trade money investments.
– I have not missed that at all. It is clear that there would be £4,800,000 per annum, or £9,600,000 of converted commitments in two years, and surely that would include trade investments. I understand it includes maturities, trade and other investments. The Treasurer, by his silence, admits that.
– What is the honorable member’s point?
– I say that the £9,600,000 which falls due within the next two years includes all maturities, trade investments or otherwise.
– It does not.
– That is how I read the Treasurer’s speech.
– The sum of £9,600,000 is part of the unconverted loans. Trade money is not included.
– I am dealing with unconverted trade moneys, concerning which the Treasurer has made special provision for pushing them back for a year. He proposes, in respect of unconverted trade moneys, to provide £250,000 this year, and a shade over £1,000,000 for each of the next two years.
– The trade moneys form part of the converted stock.
– The Treasurer has based his case for this hill upon two arguments. One is the great difficulty that would be experienced in the next three years in redeeming maturing bonds. I contend that the sinking fund is capable of doing a great deal more in that respect than the Treasurer has led us to believe, and that the amount which the Treasurer has set out- £1,250,000- for the relief of necessitous bondholders-
– It is £2,000,000.
– The Treasurer stated in reply to a question which I asked in the House, that he was going to bring down an amendment to this bill for the purpose of authorizing the National Debt Sinking Fund Commission to pay off £2,000,000 worth of bonds at face value. I understand from that, that while the National Debt Sinking Fund Commission would have authority to pay off that amount, nevertheless the Treas urer’s proposal for the payment of £1,250,000 still stood.
– Perhaps I did not make the position sufficiently clear. The National Debt Sinking Fund Commission has allocated £2,000,000 for that purpose.
– Another argument used by the Treasurer was to the effect that dissenters in many instances were selfish, and must not be left better off than the converters. That is an argument which certainly appeals to human nature. Many of those who have converted might be expected to say “ Why should the dissenter be treated better than we have been ; make him do what we have had public spirit enough to do.” I admit that that is a human sort of argument, but standing alone it would be no justification for breaking a contract. There is only one justification for this legislation, if it can be justified, and that is the proof of absolute incapacity to pay. It is said that the dissenters were actuated by selfishness. We know definitely that many thousands of them at any rate were not. The Treasurer gave us figures showing that some £6,500,000 of unconverted stock comprised amounts up to £1,000. I should say that it would be safe to assume that the average would be well under £500, because there would be an enormous number of small investments of, perhaps, £20, £50, £75 and £100. Probably the average of the particular investments amounting to £6,500,000 would be £300 or less .
– The number of investors would probably be 12,000.
– If the average investment up to £1,000, is £300, the number of such small investors would be 22,000.
– Is not the number known ?
– It may be known, but I do not think that it was made known in the Treasurer’s speech. Let us suppose that some of these dissenters were selfish, and no doubt some were actuated by selfish motives. I have no sympathy whatever with the man who could have converted, but, for selfish reasons would not do so ; yet I repeat that that, in itself, is no justification for breaking a contract. If a man owes his grocer £10, and discovers that selfishness is a marked trait in the grocer’s character, surely that would not justify refusal of payment on the due date. Whether a bondholder is selfish or unselfish, it is his money that we hold.
I have already stated that I believe that we could meet these contractual obligations, without recourse to borrowing, other than by temporary accommodation which the sinking fund would repay. But I admitted earlier in my remarks that we have a moral obligation to the person who converted, believing that it was his duty to convert, who will suffer considerable hardship thereby. The Government has to some extent recognized that obligation by making arrangements under which certain amounts will be redeemed for necessitous bondholders before the due date. A certain proportion of their bonds will be redeemed regardless of whether they come into the class of dissenters or of those who have already converted. Let me say that if by paying the last penny on the due date to all dissenters regardless of their need, we make it impossible to relieve the needy converting bondholder, then I would regard that as a much more valid reason for breaking the contract than some of the arguments used in this debate. It would, at least, mean that we are compulsorily converting because we are unable to meet both legal and moral obligations. The legal obligation is to the dissenting bondholder, and the moral obligation is to a certain proportion of those who tinder stress have converted, perhaps to their own disadvantage. It is impossible for me to gauge what the legitimate requirements of thu needy, converting bondholder may be. I do not think that any one of us can attempt to gauge that. When we have approached, so near the 100 per centgoal by voluntary sacrifice, when we have so nearly achieved success with the consent of the bondholders, it is a thousand pities that there should be the necessity for such legislation as this, to spoil what has been done up to now by giving in, as it were, at the last ditch. The test of true statesmanship is ability to take the long view. We have to look forward to 1938, or to a much shorter period than that with respect to loans maturing overseas. In 1932, there will mature overseas, State loans of £24,250,000; iu 1933, nearly £13,000,000; ‘ in 1934, £13,600,000; in 1935, £15,500,000; in 1936, £14,000,000; and so on. In 1938 we shall have to redeem in this country at least one-tenth of the £558,000,000 which has been converted.
– A considerably greater amount than that.
– What would it mean to the investors overseas and in this country if, when their loans fell due in 1938, or before, the Commonwealth Government could say, “ We have varied no contract except by consent of the bondholder “. That is what makes it so regrettable that this step should be necessary, if indeed it is necessary. We must inspire bondholders with the confidence that we are prepared to go to the last possible inch to carry out our obligations to thom. Whatever the Treasurer may say, even if he can show that the figures which I have stated with respect to the sinking fund can be somewhat discounted by other commitments of which I have no knowledge, it must be admitted that the Government is not going the whole distance to which it could go in making use of the sinking fund so as to carry out its obligations to the fullest extent.
– It is the National Debt Sinking Fund, and not the Government which makes use of the sinking fund.
– I admit that, but the Government is in a position to give authority to the National Debt Sinking Fund Commission to take over at face value not £2,000,000. worth of bonds, but as many bonds as it can buy with the money at its disposal.
– The National Debt Sinking Fund has not allocated sufficient money to enable us to meet all those commitments.
– I accept the Treasurer’s statement, but I still adhere to my contention that the Government can go further than it is now going in relieving necessitous bondholders. The Government’s proposal is to make available this year £1,250,000 for necessitous bondholders, and £250,000 for trade purposes, and next year not less than £1,000,000 for necessitous bondholders, and just over £1,000,000 for trade purposes.
– It is £2,000,000 for necessitous cases thisyear.
– The Treasurer has already corrected me on that point. The Government could go beyond that. I believe that the capacity of the sinking fund is much greater than the Treasurer has said. I urge him to go further than to introduce the amendment which has been foreshadowed to give authority to the National Debt Sinking Fund Commission to use £2,000,000 out of the fund for purchases at face value. I urge him to go to the extent of asking this House to give authority to that commission to make use of the whole of its available funds for the relief of necessitous bondholders, whether they have converted or have not converted their bonds. This should be done with no niggardly hand. Viewed in the light of sinking fund possibilities the Government’s proposals are niggardly. If the National Debt Sinking Fund Commission had the authority which I suggest it should have, that would show that we are willing to do all within our power to meet our obligations. There would be no objection to the National Debt Sinking Fund Commission using some of the funds to buy stock at the market value, if it could do so without inflicting injustice on any one ; but the bondholders, and especially necessitous cases among them, should receive first consideration. I appeal to the Treasurer to give the additional authority asked for. If the Treasurer will enlarge the scope of his proposed amendment for this purpose, I shall be glad to support it.
– Is that authority necessary ?
– I understand that it is, or the commission would not have asked the Treasurer for it.
– There would be no restriction as to the amount.
– I understood that it would be restricted to £2,000,000.
– No. The National Debt Sinking Fund Commission has itself allocated £2,000,000 for this purpose, but in the provision granting it authority no amount will be mentioned. The commission may exceed the sum of £2,000,000 if it likes.
Mr.PATERSON.-I hope that the authority will be exercised to the fullest extent and that both the Government and the National Debt Sinking Fund Commission will go as far as possible to meet the requirements of necessitous bondholders. In that way we may hope to retain the confidence of the investing public. The Government should, by its action, demonstrate that it has done everything that it can to meet the just claims of bondholders.
.- There is a danger that Parliament, in its present mood, may be disposed to accept anything agreed to by the Premiers Conference, instead of examining all proposals, and dealing with them according to their merits. [Quorum formed.] The Leader of the Opposition (Mr. Lyons) said that he approached the discussion of these bills with feelings of regret. I may say that I approach the matter with feelings, not only of regret, but of shame as well. I feel ashamed that the affairs of this country were allowed to drift to such an extent in years gone by that we are now unable to find the sum of £9,000,000 falling due in the next fifteen or sixteen months, which must be paid if we are to keep our contract with our bondholders. It is only eleven years ago since this Parliament - I shall not say as an act of bribery, but in an attempt to catch votes, allocated between £20,000,000 and £30,000,000 for the payment of gratuities to returned soldiers. That measure was passed with little debate, and in a light and airy manner. We, who were so prodigal then, cannot now even keep our word as a government to those who lent us money to make the payment.
Clause 4 of the Commonwealth Debt Conversion Bill is as follows: -
Notwithstanding anything in the Debt Conversion Agreement or in the Commonwealth Debt Conversion Act 1921 contained, every holder of existing securities which have not been converted into new securities in accordance with the provisions of that act shall, notwithstanding that any holder of those existing securities may have signified or may signify dissent, be deemed to have made an application in accordance with section 9 of the net for their conversion into new securities, and they shall be deemed to be so converted accordingly.
– If that can bc done, why does any government ever enter into any contract?
– If it can be done, the Government can break any and every agreement it ever enters into. It’ is no wonder that I feel ashamed that such a proposal should come before this Parliament, and that it seems likely to be accepted, if not light heartedly, at least without any apparent qualms of conscience. This clause of the bill tells the dissentient, in effect, that his “ no “ means “ yes “. It tells him that, no matter what the agreement entered into by the Government; no matter what the date upon which his bonds fall due for repayment ; no matter what he thinks or wants, or needs, the Government will not keep the terms of its contract.
– It is all part of the plan for which the honorable member himself voted.
– I object to that statement. Compulsory conversion was not in the plan, and the honorable member knows it. The Leader of the Opposition (Mr. Lyons) said that he wished that the very plain statement in clause 4 had been worded in a manner not quite so plain. The Treasurer suggested that the Leader of the Opposition would like to have it camouflaged. I am pleased that the statement has been set forth as plainly and frankly as possible. The credit for that, I am sure, is not to be given to any politicians, but to the draftsman. Had politicians drawn up the clause, they would have endeavoured to soften the harsh frankness of the statement; they would have sought’ to hide the fact that repudiation was about to take place. The effect of this provision will be that the Government has obtained the money under false pretences, or at any rate, that it is retaining money under false pretences. A private citizen who attempted to do the same thing would very quickly find himself in “ Queer Street “.
I do not intend to vote for this bill. Some time ago, when a similar proposal was brought before the Labour caucus by the honorable member for Bourke (Mr. Anstey), I objected to it on the ground that it amounted to repudiation, and members of the Ministry at that time adopted the same attitude. The honorable member for Bourke proposed that payments should be deferred for twelve months only, and it would ill become me, who refused to accept that, to agree to the present proposal, according to which payments are to be deferred, in some cases, for 30 years. I cannot support this act of repudiation. The honorable member for Gippsland (Mr. Paterson) said that this measure could be justified only on the ground of inability to pay. In my opinion, it should be put even more strongly than that. The only justification for the bill, and particularly for clause 4, is, not stated inability, but proved inability to fulfil the contract. So far it has not been proved that we are not in a position to fulfil the contract entered into with the bondholders who have dissented regarding amounts falling due within the next three or four years. The honorable member for Gippsland said that it would be possible, if the National Debt Sinking Fund Commissioners were agreeable, for a sum of £4,800,000 to be made available annually from the fund to meet the claims of those who have dissented, and to relieve necessitous cases among those who have converted.
– I claimed only that- £4,800,000 would meet, for -the first two years, the claims of dissenting bondholders; the others I said should receive consideration.
– In order to meet the claims falling due over a period of three years, three times £4,800,000 would be available.
– Is the honorable member aware that seven governments agreed to this proposal?
– The honorable member for Reid (Mr. Coleman) appears to be taking the same stand as the Treasurer (Mr. Theodore) did. To them the fact that seven governments have agreed to a thing is sufficient justification, no matter what is done. They would, on that account, condone even the breaking of a contract. Who are the seven Australian Governments that they are sacrosanct? I regret that this Parliament should feel bound to agree to a certain course of action, merely because Mr. Lang, Mr. Hill, the Treasurer, and the Prime Minister came to a certain arrangement in a half secret conclave. If this is to be done as a matter of course, we may as well close this Parliament. Up to the present time the Commonwealth Government, particularly, has not tried to meet the claims of the dissenters. The amount falling due to dissenters in December next is £4,273,872. That means that about £2,250,000 is required, since the Treasurer states that £2,000,000 will be available from the amount that would ordinarily go into the national debt sinking fund. How does the Treasurer, or anybody else, know that the people of Australia are not prepared to find another £2,250,000 to save the honour of this country? In this far-flung continent, with a population of over 6,000,000, would it be impossible to provide an additional £2,250,000 to prevent the faith of the people in government contracts from being destroyed? No Treasurer is justified in giving the people of this country credit for so little honour, by December, 1932, it will be necessary to provide another £2,940,321. The Treasurer said that he would be able to find at least £1,000,000 out of sinking fund payments in order to meet that liability. That means that by December, 1932, it would be necessary to provide £1,900,000 to meet all claims for the redemption of bonds up to that time, and it is not impossible for that money to be obtained. By February, 1933, a further £2,386,211 would have to be found, and I admit that that would be somewhat difficult ; it might not be possible to raise the money until the sinking fund amounts became available after the following June.
Apart from the moral aspect of the matter - the importance of upholding our national honour - let us consider the bill from a purely business viewpoint. I agree with the Leader of the Opposition, who said the other day that the time when we should have to face up to the effect of destroying the faith of the Australian bondholder in the pledged word of the Government was the year 1938. I am confident that the various governments of Australia are taking a wrong stand in repudiating their contracts before they have exhausted every means of honouring their compacts. Since 97 per cent, of the bondholders have agreed to the conversion of their stock, it would be a bad business deal, in my opinion, to detract from the success of that effort by agreeing to the present bill before it had been proved that the claims df dissenters cannot be met.
– Should we allow the ultra-selfish bondholders te obtain their last pound of flesh?
– I intend to deal with that aspect of the matter. The Treasurer, moving the second reading of the bill, said that those who had converted had willingly made a sacrifice of income, and, perhaps, had incurred hardship through the deferment of the payment of the principal, and he added that it would be unfair to the overwhelming majority of the bondholders if those who dissented were placed in a more favorable position. I say to those who have converted their stock that the Government is much more unfair in depriving those whose bonds mature in 1938 and 1941 of an opportunity of obtaining their money. [Quorum formed’]. It seems to me that this talk about unfairness is hut a cloak for vindictiveness. I gather from the condensed report of the proceedings at the first financial conference in Melbourne that the majority of the Premiers and Treasurers, and even the Prime Minister, had there displayed a vindictive attitude to those bondholders who were expected to dissent.
– Is the honorable mem. her a dissenter?
– No. “What little government stock I hold has been converted, and even an amount of £9 12s. of surplus capital, which I could have drawn in cash, I have allowed to remain in the loan until 1.961. I was strongly tempted to dissent, because I felt indignant that, after entering into a covenant with the Government, it should have gone back on its agreement. The stand taken by the Government with regard to compulsory conversion has given me surprise. I thought that it might tax the interest of dissenting bondholders up to 25 per cent, or 30 per cent., and that would not have been a severe hardship, compared with the reduction of 22£ per cent, in interest, seeing that the dissenting bondholders would have had access to their capital at the agreed dates. We should realize that any display of vindictiveness towards these bondholders will have a boomerang-like effect ; I think that this will be proved in 1988. An analysis of the 491 cases mentioned by the Treasurer in his secondreading speech makes it clear that the persons who dissented did so because of need, rather than greed.
– What about the two cases of over £1,000,000 each?
– One of them, is the Government Savings Bank of New South Wales. I think that the Treasurer will admit that the dissentients in respect of bonds of over £50,000 were Organizations, not individuals. Of the 491 cases mentioned, 225 were elderly persons whose holdings represented their life savings. It can truthfully be said that 359 of those 491 dissentients were unwilling to convert only because they had need of their money.
– Those cases will be met under the hardship provisions of this measure.
– -I admit that some of them will be met, and I am glad that provision has been made for them.
– All needy cases will be met.
– It is not sufficient merely to say that all needy cases will be met. When seven governments are prepared to break their pledges, we are justified in refusing to accept the word of any government. The Treasurer described the action of bondholders in refusing to convert their holdings as the grossest form of selfishness. I admit that some bondholders dissented for selfish reasons; but most of them did so because they needed their money.
– The 491 cases mentioned were described by me as cases of hardship.
– That may be so ; but the honorable member’s speech indicated that he regarded dissent as the grossest form of selfishness.
I am concerned that preference should be given to overseas traders. In the course of the Treasurer’s speech, I interjected that, if we paid overseas traders in full, there would be less money available to meet necessitous cases in Australia. The Treasurer described my interjection as a cheap gibe; but, later, he explained that seven governments had agreed to treat the overseas traders in that way. I do not know that a contract made with an overseas trader is more sacred than one made with an Australian bondholder.
– Provision to meet the cases of overseas investors was included in the Debt Conversion Bill, No. 1, which has already passed this chamber.
– I take it that these moneys represented profits made in Australia, which were invested here because the exchange position made it unprofitable to send it out of Australia.
– It was overseas money invested in Australia on short terms. The Premiers Conference made special provision for such cases.
– I should like to know whether any of that money represented profits made by overseas companies who invested it in Australia because of the unfavorable exchange rate.
– Some of it might have come within that category; it was all trade money.
– The money was invested as a business transaction, and there, is, therefore, no justification for giving overseas traders special treatment. I should like to know whether the details of these investments by overseas traders were made out when the first bill was introduced.
– The matter was left to the Loan Council which, in turn, left it to mc, as chairman. Provision to meet these cases was made in the scheme accepted by the Premiers. Before the conversion scheme was, submitted to this House the banks ascertained the amount of money invested in that way. It was fully understood by the Premiers Conference, before the first bill was introduced, that these amounts should be met.
– Under the old arrangement there would have been payable to overseas traders before the end of 1936 the sum of £3,351,000; they will now receive £3,376,000 by 1935. That is to say, in a shorter period they will receive £25,000 more than they would have received in the ordinary way. I cannot understand the reason for giving them that preference. The figures supplied by the Treasurer are capable of no other in- terpretation than that overseas traders will receive more generous treatment under the new arrangement than they would have received in the ordinary course. Why should they receive £25,000 more than they otherwise would have received while needy persons domiciled in Australia will receiveonly about £6,000,000 of the £12,000,000 to which they are entitled? Parliament will be sadly lacking in a sense of duty if it allows this differential treatment of bondholders. I, for one, shall not remain quiet while such things are contemplated. One wonders whether these overseas traders include the big oil companies and the film combines. Thehonorable member for Warringah (Mr. Parkhill) has charged the present Government with favouring big monopolies. It certainly stands for the big manufacturing monopolies, and it would appear that in this legislation it is favouring certain overseas traders, particularly those from the United States of America, while penalizing Australian bondholders.
The honorable member for Gippsland (Mr. Paterson) seemed to be somewhat mixed-
– He often is.
– No. It would be well if other honorable members put as much into their speeches, and expressed themselves as clearly as does the honorable member for Gippsland. I am not surprised that even he was confused with regard to the amount to be taken from the sinking fund to meet the claims of overseas traders. The position is not yet clear to me, although I have read the Treasurer’s speech three times. I should like the Treasurer to say whether £2,000,000 will be taken out of the sinking fund before the 30th June next.
– Yes, for cases of hardship.
-Does that amount include about £250,000 for overseas traders?
– Am I to understand from the Treasurer that the £1,000,000 per annum to be provided to meet necessitous cases in Australia will be separate from any amount set apart for overseas traders ?
– I am glad to have that assurance, for it will save me from saying one or two hard things which otherwise I would have been compelled to say.
The Treasurer said that he did not know whether I thought that the Government should not make any attempt to meet the special requirements of overseas investors whose money was tied up in government securities. I did not make any such suggestion, and I object to such words being put into my mouth. I am concerned that an effort should be made to meet the amount due to every bondholder as it falls due. In my opinion, nothing can condone default unless an unsuccessful effort has actually been made to meet each case as it arises. It is not a case of my desiring to single out overseas traders for breaches of contract, but that I do not see that a bondholder domiciled in Australia should be placed at any disadvantage compared with a person from overseas who has invested his money in this country. Possibly the bill isno worse thanthe proposal that the honorable member for Bourke propounded to caucus. That scheme would have operated for one yearonly, but there is no doubt that it was renewable. I do not feel justified in voting for the measure until the Government has exhausted every avenue to effect, a settlement. That has not been done. An expression of opinion is not sufficient justification for the Government repudiating its contract. Until the Government proves its inability to meet the position, it is not justified in breaking its solemn contract.
-The honorable. member for Gippsland (Mr. Paterson) put up a very good case for paying off dissentient bondholders. In my opinion that is the only honorable thing that can be done. If the members of a firm were called together and asked to save their business by making a financial sacrifice, and some refused to do so, the aim of their colleagues would be to buy. put the dissentients. It wouldbe necessary to get, rid of the selfish dissentients, and to help those who were prevented by poverty from making the desired sacrifice. That is the procedure that the Government should follow. It has appealed to the people of Australia to convert the Commonwealth’s total internal indebtedness, and .there has been a splendid patriotic response, 97 per cent, of the bondholders having converted. 1 believe that had the matter been handled more swiftly, and with a better realization that a sacred contract was involved, the percentage of conversions would have been even higher. Some £16.500,000 remains unconverted. Australia has to find the money to convert that amount, even if it has to pay over an extended term. The honorable member for Gippsland pointed out that it may be done through the sinking fund, and he advanced figures to prove his contention. In the past, Australia has enhanced its prestige by its splendid efforts.- If this compulsory conversion is insisted on, its fair name will be besmirched. T regard’ clause 4 of the bill as a” statute of repudiation that we are asked to support. It reads -
Notwithstanding anything in the Debt Conversion Agreement or in the Commonwealth Debt Conversion Act 1931 contained, every holder of existing securities which have not been converted into new securities in accordance with the provisions of that act shall, notwithstanding that any holder of those existing securities may have signified or may signify dissent, be deemed to have made an application in accordance with section nine of that act for their conversion into new securities, and they shall he deemed to be so converted accordingly -.
Provided that nothing in this section sim!! apply to Commonwealth Treasury bills issued to a bank in. . Australia with the approval of the Australian Loan Council or to securitiesissued with the like approval to such a bank in exchange for such bills.
That is the most damnable clause that has ever been before an Australian Parliament. I cannot support that dishonorable proposal. If agreed to, it will stand against Australia in just the same way as would the action of a man who compounded with his creditors. For all time Australia would be regarded as the nation that had repudiated.
In his second-reading speech the Treasurer referred to many of those who had failed to convert as people who demanded their pound of flesh. He declared that they were actuated by selfish motives. I received a letter this morning from a small bondholder who lives in my e’le’ctorate, whose case must bc typical ‘of hundreds of other Australian bondholders. It reads -
When the loan was launched by Mr. Lyons last year my husband had £500 in the bank, which he knew he needed in two years to pay off a mortgage on which he is paying ti* per cent, interest. He could have paid off this mortgage and saved by it, but through me, I am sorry- to say, he put the £500 into the loan and since the Government appealed for conversion, we got into communication with the owner of this property, which we are paying off (which is empty, and in a bad state of repair) to see whether she would accept Government bonds, and she refuses to do so as she needs the money. We also need the money to help to do something to the property so that it could be let, and thus bring in some return. We notice what Mr. Theodore has to say about people standing for their “ pound of flesh “. My husband was away doing his bit in France along with many others who have sacrificed their health, while Mr. Theodore was standing for “his’’ pound of flesh.
I am glad that the Treasurer has inserted in the bill some provision to meet cases of hardship. That is an act, of fairness that should apply to those who have converted as well as to those who have not. It will be very difficult to decide which are hardship cases. A man may have held bonds to the value of thousands of pounds, and converted” all but a few. Yet it would be a hardship to him if he were compelled to convert those remaining few, as he might have to find money on a given date.
The dissentient bondholders must be paid off. It is incomprehensible to me that overseas traders should receive special consideration. Surely Australian citizens Should have preferential treatment, if there is to bc any. [Quorum formed.] Much’ of the money invested in bonds held by overseas traders is for goods imported into Australia, for which payment was not sent abroad because of the very high rate of exchange. The Government proposes to come to the rescue of persons holding those bonds, whose purchases of bonds were not made so much from patriotic motives as in the case of the Australian bondholders, but for convenience and speculative reasons. That will mean a further flight of capital from Australia, and place those people in the position of being preferred to those in Australia who have not converted their holdings, perhaps because of hardship. I want a better explanation from the Treasurer than that given by him as the reason why these people should receive over £1,000,000 as preferential bondholders.
The honorable member for Gippsland (Mr. Paterson) suggested one method whereby money might be raised to pay off these bondholders. There must be other alternatives, and I suggest one. The Government informed the Commonwealth and associated banks that it needs £3,000,000 to provide a bounty on wheat, and it was agreed that the money should be provided contingent on the price of wheat remaining below 3s. a bushel. As the price of wheat has risen to 3s. a bushel it is unnecessary to use that money for the purpose. I am alive, as every other honorable member must be, to the deplorable plight of the wheatgrowers. They must be kept on the land. Yet their position is incomparably better than that of the workless man in the city. They can at least grow their own food and have abundant fuel. It would be rare to find an instance of a primary producer starving. The unemployed town dweller is faced with nothing but black despair. He has no position to go to, and he cannot grow what he needs for his sustenance. Therefore, he and his family are forced to accept the government dole. In the circumstances I consider that the proposal to grant a bounty on wheat is merely vote buying, a device which will make many question the sincerity of the Government.
– The wheat-farmers have received no sops in the past.
– For many years they were paid 4s. a bushel for their wheat. Prices have fallen throughout the world. So have wages. The wheat-growers are faced with a situation such as confronts everybody else. I agree that they must be kept on the land, but I contend that this vote-catching proposal is unnecessary. That £3,000,000 could be used to a better purpose if paid to dissentient bondholders. Now that the price of wheat has risen to 3s. a bushel it is quite possible that the banks will not agree to make the money available for the purpose contemplated by the Government. At the same time, the Government proposes to introduce a wheat bounty bill at an early date, which indicates that it intends to apply pressure to the hanks.
– What .about the pledge that has been given to the wheat-growers?
– I am not responsible for that pledge. I regard the proposal from a business point of view. The Government cannot afford to pay this amount. I support the proposal of the honorable member for Gippsland, and ask the Treasurer and the Government to give earnest consideration to raising the necessary finance for paying off dissentients, irrespective of whether they were actuated by selfish motives, or their reason was poverty. I shall vote against the bill if a division is taken.
.- To a very large extent, I agree with the attitude of the honorable member for Gippsland (Mr. Paterson), and the honorable member for Angas (Mr. Gabb). However, governments in the past have not acted on the high principles enunciated by those honorable members. This is a democratic country. This Parliament was elected by a majority of votes in the various constituencies of the Commonwealth. I very much disagree with the decision, but I have to grin and bear it. A company or syndicate is governed by the will of the majority of the shareholders. A certain dividend may have been forecast by the directors, but if 97 per cent, of the shareholders agree that the financial circumstances of the company necessitate a smaller dividend, the 3 per cent, who dissent must bow to the will of the majority. Australia being a democracy, majority rule obtains. We have already broken faith with the returned soldiers. We promised to pay to them certain pensions, but the financial exigencies of the nation have necessitated a variation of the undertaking. Other interests which we hoped would not be adversely affected have been obliged to share in the general sacrifice, because, otherwise, the country could not meet its obligations. The honorable member for Balaclava (Mr. White) has proposed that the Government should withhold the £3,000,000 which it proposes to provide for necessitous wheat-growers. He fails to realize that a definite promise was made by the Prime Minister (Mr. Scullin), as head of a government elected by a majority of the electors, to pay to the’ wheat-farmers 4s. a bushel on last year’s crop. Not one farthing of that guarantee has been paid. Subsequently, this Parliament enacted that a bounty of 3s. a bushel should be paid; not a farthing of that has been paid. Now the honorable member for Balaclava (Mr. White), representing those people in exotic secondary industries who have been sponging on the farmers for many years, and are still dependent upon them, would deprive them of every penny of the promised bounty, notwithstanding that 3s. a bushel will not repay the cost of production. Such a suggestion shows the extent of the honorable member’s vision. It has been said, that Australian credit will suffer if we do not honour our obligations to the dissenting 3 per cent, of bondholders, but I recognize the great injustice that would be done to the 97 per cent, who converted, and to other citizens who made tremendous sacrifices, if a premium were to be placed on selfishness. I have no sympathy for the mean 3 per cent, who refuse to share in the general sacrifice.
– With many, it is a matter of need rather than greed.
– My sympathy goes out to those who are in need, and I am glad that the Treasurer (Mr. Theodore) has proposed a means of. assisting those bondholders upon whom compulsory conversion will impose hardship ! I refer particularly to the many people who invested £100 or £50 in government bonds in the belief that they were helping the country, and who will be embarrassed if they cannot cash their bonds on the due dates. We should make every effort to avoid injustice to necessitous bondholders, but those others who could have converted without hardship but did not do so are not entitled to sympathy. They showed a lack of public spirit when they refused to come into Hue with their fellow citizens, notwithstanding that the necessity of the- country was apparent to all. If not 1 per cent of the bondholders had converted, what would have been the value of the bonds? The very fact that 97 per cent, were patriotic enough to convert has given a definite value to the stock held by the selfish 3 per cent, who have dissented. If the conversion had been an absolute failure, the bonds would not be worth to-day 50 per cent, of their face value. I do not discount the honorable principle enunciated by the honorable member for Gippsland (Mr. Paterson), but we have to regard this matter in the light of Australia’s need.
– What does the good old book say?
– I have no doubt that it contains something appropriate to those who refuse to share in the general sacrifice.
– “ Righteousness alone exalteth a people “.
– The. 3- per cent, who expect the other fellows to make all the sacrifice cannot be very righteous. If Australia could meet its obligations to every one of .the bondholders, it would be in honour bound to do so. but with a national .debt of £1,200,000,000, .and a diminished income, it cannot meet its commitments. A general sacrifice by the whole of the people will enable the nation to carry on without imposing a crushing burden on anybody. In a democracy, .no wrong is done by demanding that the 3 per cent, of dissenting bondholders shall fall into line with. the 97 per cent, who converted, especially as the Government has undertaken that no avoidable hardship will be imposed upon any section of bondholders. The present Government is in office not with my approval, but by. the will of the majority of the electors.
– The electors never endorsed repudiation.
– Ninety-seven per cent, of the bondholding electors decided that conversion was the right policy for Australia in its present emergency. In accordance with the democratic principle of majority rule, the “3 per cent, who dissented should be ordered into line with those who consented.
.-This bill cannot be regarded other than as a measure of repudiation. I have always opposed repudiation, and I am sure that the proposal now before us is repugnant to every honorable member who holds that contracts should be sacred. When the Debt Conversion Bill (No. 1) was before the House, I supported an amendment moved by the Deputy Leader of the Opposition (Mr. Latham) to make provision for necessitous cases, particularly small bondholders who from patriotic motives invested their savings in early maturing securities. . I am pleased that the Treasurer has incorporated in this bill provision for such cases. Their needs should have received attention in the original act, but this measure of justice even at this late hour removes some of my objections to the bill. We are told that the cost of the conversion loan was £50,000. I assume that the cost of the action to be taken under this proposal will not be so great. I venture the opinion that had only 50 per cent. of the bondholders voluntarily converted, this proposal for compulsory conversion would still have been introduced.
– It would have been more necessary then.
– What was the need for incurring a cost of £50,000 when all the time the Government had the compulsion card up its sleeve? I said of the original bill that it implied compulsion, and that it said in effect to the bondholder, “ Come down or I shall shoot.” The bill now before us is a loaded gun, to shoot down those who would not voluntarily convert.
-inever thought any Australian government would adopt such a policy.
– The spirit of repudiation is repugnant to every honorable member; but desperate ills demand desperate remedies. Australia is in a serious plight, and no other practicable remedy has been suggested. I agree with what the honorable member for Angas (Mr. Gabb) said in regard to the preferential treatment of overseas traders. Why should they receive preference over necessitous bondholders within the country?
– Certain moneys belonging to overseas firms, which had accumulated owing to the rationing of exchange, were temporarily invested in Australian securities, and special provision for them was made in the conversion plan adopted by the Premiers Conference, and subsequently embodied in the legislation of this Parliament.
– Had not the Government power to deal with the holdings of overseas traders as it dealt with other stock?
– No, because special provision was made in the conversion loan for the money temporarily invested by overseas traders.
– I had £600 in early maturing bonds, and I intended to apply it to the purchase of a farm. Now I shall be unable to get the money for that purpose. My £600 was as im- portant to me as their millions of pounds are to the overseas traders.
– But the Premiers Conference made arrangements with the Loan Council for the investments of the. overseas traders to be dealt with in this way.
– Is there any reason why these traders should receive preferential treatment?
– Yes; because their holdings represented money that was needed for trade. The rationing of exchange, not the rate of exchange, caused the accumulation of the money in Australia, and it was temporarily invested in government securities.
– I recognize that the course which the Government has adopted is unavoidable. As the honorable member for Forrest (Mr. Prowse) said, had not a large percentage of the bonds been converted the securities would have been almost valueless. By converting voluntarily, bondholders were securing their own capital. It would be unfair to allow those who dissented to profit at the expense of those who voluntarily converted. It is a case of “ One in, all in.” It is not pleasant for me’ to have to vote for this bill, but the country was in such a desperate financial position that some reduction of the burden of public debt was essential. Our national income had decreased considerably and we had tremendous obligations to meet. If our income is 3d. and our expenditure 6d., we must obviously become bankrupt if we do not reduce expenditure. This nation was fast drifting into that position, and some drastic action had to be taken.
.- I do not agree that the step which we are now taking amounts really to repudiation. Repudiation implies not only refusal to pay, but also capacity to pay. Had this Government not adopted the rehabilitation plan we would have been unable to meet our obligations. There would have been a substantial shortage of money and, from the experience of New South Wales, we might fairly well assume that the section of the community to be first affected would be the bondholders. The first payment that we would refuse to make would, undoubtedly, be interest payments. Therefore, bondholders should realize that the adoption of this scheme is to their ultimate advantage. It was not possible to adhere to the conditions of their contract, and, under this arrangement, they are much better off than they would have been had they Jost not only their interest payments, but also a substantial portion of their capital. Those bondholders who have refused to convert have been referred to as persons demanding their pound of flesh. I do not agree with that at. all; they are merely asking for the fulfilment of the conditions of their contract, and because of that it is not fair to condemn them as Shylocks and the like. .But if we pay the dissenters in full they will be in a much better position than the majority who have voluntarily converted their bonds. Had it been believed by the majority of the bondholders that those who refused to convert would be paid in full, nothing like 97 per cent, of the bondholders ‘ would have taken part in the conversion. Most of them did not regard it as a voluntary conversion in the true sense. They treated it as part of a reconstruction scheme which the circumstances of the country demanded. There is absolutely no justification for penalizing those who were good enough to consent to conversion .by giving unfair preference to those who refused. The market value of the £100 bond is now something like £80. If we agreed to pay the 3 per cent, of dissenting bondholders in full, they would receive for each £100 bond £100 in cash, as against £80, the value of the bond held by the majority of bondholders. That would be placing the dissenters in an advantageous position.
– That would be better than putting the bonds maturing in 1938 in jeopardy.
– Let .the future look after itself. The fact remains that we were unable to find the cash with which to redeem bonds in 1931.
– That has not been proved.
– It has not been proved, but the honorable member must admit that there was no likelihood of obtaining money with which to meet our commitments. Because of that the conversion scheme was adopted. It may be that in 1938 we shall have to make further arrangements, but we must meet that position when the time arrives. This is a fair proposal, and it has its advantages. It places the bondholders in a more substantial position than they were in previously. Six months ago their position was exceedingly precarious. There was talk of inflation and repudiation, aud the bondholders were uneasy as to their holdings. That uneasiness has now settled, largely because of the. conversion loan and the manner in which it has been carried out. The legislation which provides for that scheme was devised in such a way as to make it practically impossible to tamper further with the holdings of the bondholders. It is rumoured that there is likely to be an attempt to make a. further cut in interest payments, but that can be done only, with the consent of the Commonwealth and the State parliaments. This scheme has been carried out by means of agreements between the Commonwealth and . the States.
– They were agreements to break agreements. .
– They were made pursuant to the Constitution, and before they can be: altered it will be . necessary to obtain the consent of the Commonwealth and the State parliaments. That places the bondholders in a satisfactory P081- tion. There seems to be good reason to believe that, as time goes on, we shall have a lower money standard in operation, and probably the 4 per cent, will represent a fair rate of interest. There is the prospect of bonds appreciating in value even to the extent of their face value. In the past an interest rate of 4 per cent, would have been regarded as extravagant, particularly in respect of government securities. A great number of government consols were issued at an interest rate as low at 2$ per cent., and it is only in recent years that an interest rate as high as 6 per cent, has been paid on government securities. That interest rate, in turu, set a high standard for the price of other moneys in use in industry. It is regrettable that the Government was unable to carry out its agreement with the bondholders; but this country at the sime could not honour the conditions of the contract, and it therefore made the best practical arrangement with its creditors.
Debate (on motion by Mr. Crouch) adjourned.
Freights to the Orient - Exchange - Importation of Machinery - Garden Island.
Motion (by Mr. Theodore) proposed -
That the House do now adjourn.
.- Since I spoke in the Hou3e on the subject of freights to Eastern countries, I have been in touch with the representatives of shipping owners engaged in trading to China and Japan, and I am informed that what I said as to exchange being favorable between Australia and those countries is inaccurate. They assure me that their exchange business has to be transacted through London, and that, therefore, they do not in fact obtain the advantages which I suggested. They point out that the increase in freight has been made to suit two sets of conditions; first, the exchange rate, and, secondly, the absence of loading from the East. I am informed by them that imports from the East are down to about 40 per cent, of what they were two years ago. If this be so, and if the exchange position be as stated, it is difficult to complain of at least a substantial increase in freight. These facts give the other side of the case, which, as I was careful to say, I had not heard when I spoke on the matter previously.
It has been suggested from time to time that an effort should be made in the interests of Australian trade to arrange direct exchange between Australia and the Eastern countries. I am well aware that the present time, with the uncertainty of finance, and of business conditions generally, is perhaps the least favorable in which to make such a suggestion, but the Treasurer might, perhaps, consult with the Commonwealth Bank authorities to see whether it is possible to initiate negotiations with the object of arranging direct exchange between Australia and the Eastern ports. If it could be done, there is little doubt that it would be of advantage to Australian trade. The trade between Australia and Eastern ports has been so adversely affected by certain Australian duties, which confer little, if any, benefit on Australian industries, that ships are coming here from the East, practically empty, and our exporters arc paying two-way freight on one-way cargoes. This aspect of the question should also be carefully examined.
Mr. PATERSON (Gippsland) [10.47 J. - On the 30th September last, I made representations to the Minister for Trade and Customs to allow certain machinery not manufactured in this country to come into Australia free, to enable a new industry to be set up. I cited the case of certain firms which desired to import plant for the purpose of manufacturing fishmeal. I said that plant which cost £3,150 f.o.b. in Great Britain would cost more than £7,600 to land in Australia, after paying 55 per cent. duty, primage duty, freight, exchange, sales tax, &c- This bad prevented the firm ‘ from going on with its project, because ‘the Customs Department would not remit the duty, even though it had been shown that, the machine could not be made here. The Minister, in reply, read a letter in which it was stated that a machine for manufacturing fishmeal had been ordered by the firm mentioned from a machinery manufacturing concern in Melbourne; that the Australian machine would cost only about half as much as the imported machine; and that the fishmeal manufacturing concern was quite satisfied. The Minister, in effect, endeavoured to discount my statement. I have here a letter, dated 1st October, the day after the Minister made his statement. The letter is as follows : -
I see from to-day’s Argun that Mr. Forde stated in Parliament yesterday that a fishmeal plant had already been ordered from a Melbourne manufacturer by the managing director of the firm which proposed to start a fishmeal industry. Upon inquiry I learn this statement is inaccurate. The firm referred to by Mr. Forde is Marine Industries Limited, whose managing director - Mr. E. O. Farley - has been endeavouring to obtain the necessary finance to purchase a fishmeal plant to produce fishmeal as a by-product from the main operations of the company which is catching sharks for their skins. Hitherto after the sharks have been skinned the carcases have been thrown back into the sea and Mr. Farley now proposes to utilize the carcases instead of wasting them,so that the fishmeal industry is only a secondary consideration with him. In a letter to me, written a short time ago, Mr. Farley stated that whilst he preferred the continuous type of plant-
That is the type I referred to on the 30th September. The letter goes on - he had been unable to obtain the necessary capital to purchase same, and that he would probably have to buy an Australian-made “ Batch “ type of plant from JohnW. Stamp Proprietary Limited, Melbourne, which could be used for about two years to produce fertilizer if it would not produce a meal when he hoped to have sufficient capital to purchase a proper fishmeal plant of the “ Continuous “ type. He also asked if I could make any suggestions, with a view to helping him to persuade his directors to purchase a Rose Downs and Thompson “ Continuous “ plant. I am given to understand that Mr. Farley wrote in a similar strain to the customs authorities, and it would appear to have been on this letter thatMr.Forde has based his statement that an orderhas been placed with a Melbourne firm. I can definitely state that up to this date John W. Stamp Proprietary Limitedhave not received an order for a fishmeal plant, nor has any Australian manufacturer yet made such a plant. The plants made by Stamp are abattoir or “ cooker “ plants for producing fertilizer only and they will not produce fishmeal which will be acceptable on the European market. With my letter of the 7th July, 1931, I forwarded to you copies of my correspondence with the Comptroller-General to the 6th July, 1931. In order that you may know the present position, I attach herewith the following subsequent correspondence : -
To Comptroller-General - 23rd September. Above letters show clearly that the “ Stamp “ plant is not suitable for producing fishmeal (I have definite advices to that effect from overseas) and that even if it was, there is no necessity for a duty, for plant of that type of Australian manufacture is only about half as costly as that of a British made “ Continuous “ plant. I have submitted many quotations for fishmeal plants to persons or firms who contemplate operating a fishmeal business as their main object - not as a byproduct - and especially to two large companies in the course of formation - one in Sydney and the other in Melbourne - who have made independent inquiries overseas, and have learned that the “ Continuous “ type of plant is essential for producing a satisfactory fishmeal.
That shows that my statement of the 30th September was absolutely correct, and that the Minister’s reply was, to some extent, misleading. The Minister suggested in his reply that the plant which he said had been ordered in Melbourne was of a similar type to that to which I had referred, whereas the two machines have nothing in common. One might as well try to compare a coster’s barrow with a motor car. Moreover, according to the letter I have read, even the machine referred to by the Minister has not yet been ordered.
– I was informed only a moment ago that the honorable member for Gippsland (Mr. Paterson) was discussing a subject with which I have been dealing, namely, fishmeal plant, and concerning which I had made a statement. I leave it to the fairminded members of this House to say whether the honorable member acted courteously in bringing up this matter on the adjournment, without first intimating to me that he intended to do so.
– I had to catch the Speaker’s eye. I brought the matter up at a moment’s notice, believing that some of the Minister’s colleagues would immediately acquaint him of the fact.
– If the honorable member had let me know earlier, I would have obtained the file dealing with the subject, and made myself conversant with it. If a member desires information about something which he brings on at the adjournment, he ought, to give the Minister notice. If, of course, he merely desires to make political capital,he usually does not desire an answer at all.I shall look into the matter raised by the honorable member, and furnish him with a reply later. My recollection of the reports in my office is that they support my statement that fishmeal plant can be made in Australia. The managing director of a company which proposed to embark upon the manufacture of fishmeal stated that he would have the plant made here because he could get a suitable type of machine at a lower price than he would have to pay for the imported article. Within the last three days, the representaTtive of a company called on me in Canberra, and pointed out that there was no justification whatever for allowing machinery of this kind to bc imported, because suitable plant could bc made in Australia.
– Is the Minister speaking of a continuous process plant?
– Yes. Another firm has informed me that it cannot obtain suitable plant in this country. The department has not yet turned down its application for a remission of duty, but I suggested that it should get into touch with Mr. Stamp to see whether it could not obtain locally a suitable machine. If it is unable to do so, it may apply to the department for permission to import a machine under by-law.
.- I desire to bring under the notice of the Minister for Defence certain matters relating to Garden Island. Last month a notice was posted on Garden Island referring to four matters: (1) Continuity of service; (2) annual leave privileges; (3) public holidays; and (4) furlough. The men concerned are of opinion that the new provisions will affect them prejudicially, because a written application
Attention called to the state of the House. There being no quorum,
Mr. Deputy Speaker adjourned the House at 11.1 p.m.
Cite as: Australia, House of Representatives, Debates, 20 October 1931, viewed 6 July 2017, <http://historichansard.net/hofreps/1931/19311020_reps_12_132/>.