15th Parliament · 1st Session
Mr. Speaker (Hon. G. J. Bell) took the chair at 2.30 p.m., and read prayers.
– Has the Prime Minister received from the Federal President of the Returned Sailors and Soldiers Imperial League of Australia a letter in connexionwith the appointment of a select committee to inquire into repatriation matters? If so, will he make it available to honorable members?
– I have received such a letter, and will lay it on the table of the House.
– Will the right honorable gentleman, if I forward them to him, also make available to honorable members letters from branches of the Returned Sailors and Soldiers Imperial League of Australia on the same subject but evincing a different interest?
– I can see no reason why I should lay on the table of . the House letters received by other persons. A letter addressed to me as Prime Minister, and expressing the official view of an organization with respect to a public matter, is one which I am prepared to lay on the table of the House. That is why I replied as I did to the honorable member for Wannon.
– Will the right honorable gentleman inform the House as to whether, prior to receiving from Sir Gilbert Dyett a letter informing him that, in the opinion of the Returned Sailors and Soldiers Imperial League of Australia, a select committee was not necessary to deal with anomalies under the Repatriation Act, he as Prime Minister sought an opinion from any of the State branches of the Returned Sailors and Soldiers Imperial League of Australia?
– I did not.
– With reference to the letter which the Prime Minister has received from the Federal President of the Returned Sailors and Soldiers Imperial League of Australia expressing the opinion that an inquiry into anomalies in the Repatriation Act is quite unnecessary, has the right honorable gentleman received letters expressing a contrary opinion from branches of the Returned Sailors and Soldiers Imperial League of Australia, including the Wentworth Falls, Katoomba, Blue Mountains and Cresswell State Sanatorium branches?
– I have no recollection of seeing any letters from those branches; If I have received them I shall lay them on the table.
– I can give all of them to the right honorable gentleman.
– I should sooner receive them myself.
-I ask the Minister representing the Minister for Commerce whether the Government has reached a decision on the request for a bounty on canned pineapples, following the investigation of the pineapple industry early in the year?
– In pursuance of the promise that I made to the honorable member last week, I have secured from the Minister for Commerce a statement which reads as follows -
A report on the investigation has been submitted, and indicates that, until the results of the present year’s operations are known, it is not possible to reach a final decision. The officer who investigated the industry was unable to obtain any useful information regarding cannery costs for earlier years, but it is anticipated that after the 30th June next, some information on this matter will be available. The Queensland Canneries Proprietary Limited, which was formed last year and In which the growers, through the Committee of Direction of Fruit Marketing, holds slightly less than one-half of the shares, will complete its first year’s operations on the 80th June next. Some information regarding cannery costs and results should then be available, and we should be able to come to a final decision.
Investigation of Affairs by Taxation Department.
– Yesterday the honorable member for Ballarat (Mr. Pollard) asked mc a question concerning a report that the Taxation Department had been inquiring into the operations of a large Melbourne business organization, and I promised to make inquiries into the matter. I have received, as the result of those inquiries, the following report from the Commissioner of Taxation :; -
Under the secrecy provisions of the Income Tax Assessment Act I am not free to divulge the affairs of any taxpayer except in the course of the administration of the act. The Commissioner, however, is required to furnish an annual report to Parliament, and it has been the practice of the Commissioner hitherto to inform Parliament, in a statement contained therein, of the names of the taxpayers and the particulars of the penalties involved in those types of cases which have been treated by the department as coming under the clauses covering fraud ot evasion. No case, however, is published in the Commissioner’s report, irrespective of the year of investigation, until any objection or appeal has been disposed of and the case brought to finality.
Honorable members will, of course, appreciate that there is very good and sound reason for that. The report concludes -
I have no information in my possession which enables me to identify the case to which the press report quoted by Mr. Pollard refers, but to the extent to which any such case, or the cases of any of the parties connected therewith, have already been brought to conclusion, the particulars will be or will have already been published in the Commissioner’s annual reports.
– Can the Prime Minister assure honorable members that the welcome statement published in to-day’s press, that cordial exchanges had taken place between Mr. Haciro Anta, a representative of the Japanese Government, and the Prime Minister of Australia, is founded on fact?
– It is true that I have had an exchange of correspondence with the Japanese Minister in question. The substance of that correspondence has been accurately reported. I may add that I received to-day a courtesy call from the new Japanese Consul-General, Mr. Akiyama.
– In view of the report that the building of the new military hospital at Randwick, which was the subject of a report by the Public Works Committee, has been- delayed owing to the fact that the State of New South Wales owns the freehold of the land on which the building is to be. constructed, can the Minister for Repatriation say what arrangements or proposals have been made between the two governments to facilitate the construction of this building!’
– Certain delay has occurred in finalizing the negotiations, purely because the Federal and State Ministers concerned have not been able to ‘arrive at a mutual decision in regard to the values of the hospital property and the property to he exchanged for it. A conference is now taking place between officers of the Commonwealth SurveyorGeneral’s Department land the State officers concerned, and it is hoped that in the very near future a mutual understanding will be arrived at. The work will then be proceeded with.
Applications for Positions - Letters from Membersof Parliament .
– In view of the large number of applications for employment received at the various factories of the munitions establishments, will the Minister for Defence have arrangements made at each of the factories for an official to interview on the premises all applicants for employment, and will he give instructions that, when work becomes available, it shall be allotted to applicants with the required qualifications in order of priority of registration?
– Yes, I undertake to adopt both suggestions. In fact, steps have already been taken to do what the honorable member suggests. Furthermore, in order to save the time of members of Parliament, I think it might be advisable to issue instructions that it is quite unnecessary for applications to be accompanied by letters from members of Parliament. It is realized that much of the time of honorable members is taken up in providing such letters, the purpose of which is to influence those who. have the making of appointments, whereas, of course, the letters of themselves do not carry any weight whatever.
– Seeing that all the government-owned munitions factories are situated in Victoria or New South Wales, I ask the Minister for Defence whether he will grant free travelling facilities to persons living in the other States who apply for jobs at those factories and wish to arrange interviews in connexion with their applications?
– I regret that I cannot accede to the honorable gentleman’s request.
– In view of the fact that on the 28th July next it will be 100 years since the arrival in Australia of Sir Henry Parkes, the Father of Federation, will the Prime Minister consider recognizing the great deeds of that statesman by erecting a memorial to him in Canberra?
– The honorable member’s proposal will receive consideration.
– Will the Minister for Supply and Development state whether the Government is contemplating the abandonment of the Supply and Development Bill, as has been reported in that reputable journal, the Melbourne Argus?
– I have no knowledge of any such intention.
– Is the Minister for External Affairs yet in a position to say whether any arrangements have been made for a trade agreement between Australia and Japan?
- Mr. Akyama, the new Consul-General for Japan, called on me this morning and informed, me that he hoped, at an early date, to have instructions for entering into negotiations for a trade treaty.I should think he will be prepared to go on within a fortnight. My colleagues, the Minister for Trade and Customs and the Minister for Commerce, areready to proceed at any time.
– Is the Minister for External Affairs able to inform me whether under our trade agreement with Japan that country has exceeded its export quota to this country, and has not taken its full quota of imports from us?
– Japan’s quota of exports to Australia has not been exceeded nor has its wool quota from Australia been reached.
– I desire to make a personal explanation.In the course of the speech which I made on the Supply and Development Bill on the 23rd May, I said that Commonwealth Revenue was about £90,000,000, and that the expenditure on defence was £23,300,000, nearly one-quarter of our revenue. The Minister for Supply interjected that the revenue was about £100,000,000, and that interjection appears in the proof of my speech. I have obtained the budget -figures for 1937-38, the last available, prepared when the Minister for Supply (Mr.
Casey)was Treasurer. At that time the revenue was £89,458,000, and even his estimate for this year is only £93,000,000. Therefore, I maintain that I was right.
Mr. SPEAKER (Hon. G. J. Bell).That is hardly a personal explanation.
– Has the Assistant Treasurer yet ceased to act as counsel for the Australasian Performing Right Association? If so, when did he cease to act, and has he, since joining the Government, conferred with, or tendered advice to, the PostmasterGeneral on the intriguing subject of performing rights.
– I ceased to act for the Performing Right Association when I joined the Cabinet, since when I have not in any way attempted to influence the judgment of the Postmaster-General.
– I direct the attention of the Postmaster-General to a paragraph which appears on page 44 of the last annual report of the Australian Broadcasting Commission to the effect that extensive inquiries by the commission had revealed that it was paying much higher rates for performing rights to the Performing Right Association than the rates paid for similar facilities by broadcasting organizations in other parts of the world. The next paragraph suggests that the Commonwealth Government should pass legislation to deal with the matter. Will the Postmaster-General include some remarks on this subject when he is making his promised statement early next week?
– The statement I hope to make next Tuesday will deal with the proposed broadcasting journal. The matter of performing-right fees is under consideration. Opinions are being obtained concerning it, and a statement on the subject will be issued as soon as possible.
Shelter for Waterside Workers
– Has anything yet been done to provide a shelter shed for waterside workers at the pick-up place at PortKembla?
– I asked Senator Allan MacDonald to go down to Port Kembla and make a personal investigation. He did so, and has made a report which was discussed in part with a deputation which waited on me on Monday. I have since seen the Prime Minister, and explained the position to him. As soon as possible, I shall go to Port Kembla, investigate the position myself, and make a recommendation to the Government.
– Is it a fact that the Defence Department proposes to close the present rifle range at Adamstown? Is the Minister aware that protests have been lodged against such a proposal? Will he inform the House where it is proposed to put the range?
– No protests have been brought under my notice. I am not familiar with the position, but I shall make inquiries and inform the honorable member.
– I ask the Minister representing the Minister for Commerce whether the Minister has seen a memorandum from the Australian Dried Fruits Association, which was forwarded to his department last year, setting out the need for a bounty on currants. If not, will he examine this matter with a view to providing this very necessary assistance to a fine Australian industry?
– I have not seen that report, but I shall bring the honorable member’s question under the notice of the Minister.
– I ask the Postmaster-General whether the following statement made by him when the Broadcasting Bill was before this House on the 3rd May, 1932, still represents his views -
We should regard broadcasting as a national undertaking, and should not, at this stage, consider the setting up of an authority which would compete with private enterprise ….
Its duty is to do certain things for the development of broadcasting. There is no reason why it should engage in certain activities which would bring it into competition with private enterprise.
It is our duty to pass constructive legislation; but we should not leave the way open for a governmental authority unnecessarily to undertake enterprises which should properly be left to private individuals.
– It appears that all this is quite unnecessary in framing a question.
– If these are still the Postmaster-General’s views, does he consider an arbitrary incursion by the Broadcasting Commission into the publishing field is consistent with them?
– With regard to the first part of the honorable member’s question, my reply is : “ Yes, those are still my views “. With regard to the second part, I hope to be in a position to make a statement concerning the whole matter on Tuesday next.
– Yesterday I asked whether estimates of the cost, revenue and profits in connexion with the journal proposed to be issued by the Australian Broadcasting Commission had been made, and, if not, whether such information was being prepared? Is the Postmaster-General yet able to answer that question?
– I remind the honorable member that, as I pointed out in answering a previous question, I hope to be in a position to make a statement with regard to the whole of this matter on Tuesday next.
– Is it the intention of the Postmaster-General, or the Government, to interfere with, or veto, in any way, the powers conferred by this Parliament upon the Broadcasting Commission to conduct its own affairs? Can the Postmaster-General give any assurance to this House that no combine in any newspaper field will be allowed to override the decisions of this Parliament in regard to this matter?
– 1 have already stated that I hope to be in a position to make a statement on this matter next Tuesday. With regard to the second part of the honorable member’s question I say, definitely, “No”; the interests of the listeners of Australia will be the Government’s first consideration.
– When the PostmasterGeneral is dealing with the matters already raised in connexion with the activities of the Australian BroadcastingCommission, will he consider the advisability of reducing the listeners’ licencefee?
Land Mortgage Branch
– I ask the Prime Minister whether it is the intention of the Government to invite the House, before the close of the present sesssion, to pass legislation to establish a lands mortgage branch of the Commonwealth Bank?
– I thought I had said the other day that it was the Government’s intention to do that, if possible; and that intention still remains in my mind.
– I ask the Minister for Defence whether it is a fact, as attributed in a report in the Melbourne press to Lieutenant-Colonel McArthur, that in the event of war it would take half the militia to round up the spies in Australia, who could paralyse the country in no time by blowing up bridges, factories and petrol dumps? Has the Minister anything to say to such comment by a responsible military officer?
– No; it is not a fact, and I have nothing to say regarding that statement.
– Some time ago the Premier of South Australia stated that considerable work was to be undertaken at the Islington works in the assembling of aeroplanes and in other directions in connexion with the Commonwealth’s defence programme and, as the result, the people of South Australia were looking forward to considerable activity in those works. I now understand that some delay has occurred. Can the Minister for Defence say whether such delay is due to the establishment of the new Department of Supply and Development, or to a decision that this work will not be undertaken in any factory in South Australia ?
– The answer to each part of the honorable member’s question is no.
– Has the Minister for Defence investigated the quotes of tenderers for the supply of boots to the Defence Department with a view to discovering whether the prices submitted by the successful tenderers were due to sweating in those particular factories, and whether the prices submitted by the unsuccessful tenderers were due to an attempt at profiteering?
– I shall investigate the matter raised by the honorable gentleman. I, personally, have not carried out any investigation regarding the possibility of sweating in establishments conducted by any of the successful tenderers. The Contracts Board, which investigated these particular tenders, was perfectly satisfied with the bona fides of the tenderers. However, if the honorable gentleman has any particular case in mind I shall be only too glad to investigate it.
– Will the Minister for Defence inform me whether the Contracts Board which recently accepted tenders for military boots is the same board which, some time ago, accepted tenders for certain shells upon which, after manufacture, the company concerned rebated 7s. a shell to the Government?
– Ultimately, yes.
– As the licence to import a certain quantity of potatoes from New Zealand expires at the end of the month, I ask the Prime Minister whether the Government has yet made any decision respecting the conditions that will obtain subsequently?
– At the request of the Potato Advisory Board, a conference between the board and the Minister for Commerce was - called for this morning. It is still sitting. -
– Will the Treasurer state the reasons why the Loan Council refused permission to the Sydney City Council to raise a loan in Australia to meet a maturing London loan of £1,000,000? Is the right honorable gentleman aware that the Sydney City Council was consequently obliged to renew the loan in London for a further period of five years at 5 per cent., which is equivalent to 6^ per cent, in Australia?
– The honorable member’s question relates to a matter that arose before I became Treasurer. I have no information on the subject at the moment, but I shall make inquiries into it.
– Is the Minister representing the Minister for Commerce able to give me any information concerning the negotiations between Australia and the United States of America for a trade treaty ?
– The Government is not yet in a position to make a statement on that matter.
– I ask the Prime Minister whether any action has been taken, or whether’ action is contemplated, to standardize our railway gauges. If this subject has not yet been considered by the Government, will the right honorable gentleman, in view of the promise made by the late Prime Minister to have the subject listed for consideration at a conference of Ministers of Transport early this year, give an undertaking that such a meeting will be called at an early date to deal with it?
– That subject has not yet been considered by this Government, but it will come under notice in due course.
– Is the Minister for Defence yet able to make a statement concerning the re-establishment of welfare committees for the ratings of the Royal Australian Navy?
Mr.STREET. - That matter is at present before the Naval Board.
– Will the Minister for Defence consider the advisableness of increasing the quota of new rifle clubs that may be formed in New South Wales? Applications for the formation of about 50 clubs have been made, but the annual quota is only six.
– No doubt that subject will be taken into consideration when the budget is being prepared.
– Has the Postmaster-
General noticed a report in to-day’s press to the effect that at an inquiry into the claim by certain postal officials for an increase of wages a witness said that members of the House of Representatives were given precedence over public subscribers in connexion with telephone calls? If this is so, are such members given some secret sign or password to entitle them to this privilege? Cannot all honorable members be given this sign ?
– I have seen the report referred to by the honorable member. The statement of the officer concerned was rather extravagant. So far as I know, members of the House of Representatives are not given preference in telephone calls. If the honorable member will place his question on the noticepaper, I shall have further inquiries made.
– I want the secret sign.
– Obviously, as all honorable members know, preference is not given to members of Parliament.
– Will the Minister for Supply and Development inform me whether any action is being taken by the Government to acquire a property in the south-east of South Australia for the purpose of establishing a station of the Council for Scientific and Industrial Research there ? If not, will the Government take steps to establish a branch of the Council for Scientific and Industrial Research there ?
– I am not aware of any immediate negotiations concerning property in that locality, but I shall inquire into the matter.
– Is the Minister for Social Services still of the opinion he expressed some time ago to the effect that the solution of the housing problem requires immediate action by the State Government in co-operation with the Commonwealth Government? If so, when does he propose to bring the matter before Cabinet?
– I remind honorable members that it is not in order to ask Ministers for an expression of their opinion.
– The subject referred to by the honorable member involves government policy which will be discussed at the appropriate time.
– Will the Minister for Social Services inform me what steps are being taken to encourage the training and employment of youths? Does the honorable gentleman propose to request the Treasurer to make available a larger sum than formerly for this work?
Sir FREDERICK STEWART.Again, the question refers to a matter of Government policy. Action has been taken by previous governments in connexion with the subject referred to by the honorable member, and no doubt further consideration willbe given to it by the present Administration.
– In preparing Estimates for his department for the forthcoming budget, can the PostmasterGeneral say how far he has been able to influence government policy in the direction of providing surf clubs with telephone services free?
– This matter has been given some consideration owing to representations made by many members on both sides of the House. It is still under consideration.
– Will the Minister for Social Services have prepared a return setting out the social services now provided by the various State Governments?
– The information sought by the honorable member is already being compiled at my request. I shall be pleased to make it available to him when it comes to hand.
– Will the Minister representing the Minister for the Interior arrange for a list of the works to be undertaken, together with the names of the contractors and the location of the works to be placed in a prominent position at the Customs House, Sydney, for the convenience of men who seek employment with the Works Department?
– I shall see that consideration is given to the honorable member’s request.
Motion (by Mr. Menzies) proposed -
That order of the day No. 1 be postponed until after order of the day No. 2, Government business.
.- I hope that the Prime Minister (Mr. Menzies) will not press his motion, because, if it be agreed to, honorable members will be deprived of the opportunity to bring before Ministers urgent matters requiring attention. It is particularly necessary that honorable members should be given that opportunity since Parliament is soon to go into recess for two months, and possibly longer. I take this stand because I know that some members of my own party desire to bring forward urgent matters of public importance. Doubtless, some supporters of the Government are in the same position, and I should be amazed if some members of the Country party do not raise questions of vital importance to the primary producers of Australia. Yesterday, I gave reasons why, in my opinion, it would be unwise to deprive honorable members of the opportunity to discuss three motions on the notice-paper. I realize that I cannot discuss those subjects now, but I stress the wisdom of providing opportunities to acquaint Ministers with matters that have been brought under the notice of honorable members by the electorates. I ask the Prime Minister not to adopt this autocratic attitude so early in his career, but to give opportunities for the fullest discussion of matters of vital importance to the people of Australia. The motion of the right honorable gentleman savours of that inner group dictatorship which we heard condemned by the honorable member for Balaclava (Mr. White) last year. I hope that the present Government will not attempt to adopt dictatorial methods, notwithstanding the evidence of a desire on the part of the Prime Minister to have in his own hands the supreme control of the business of Parliament. He should remember that his Government and party do not represent a majority in this Parliament. I protest against this motion, and I hope that other honorable members also will voice their abjection.
– My objection to the motion is based on happenings in this House to-day. Ministers are adopting the habit of making statements on important subjects of public importance without providing opportunities for the House to discuss those subjects. That practice places private members at a disadvantage. By means of statements made by leave of the House the Government is able to place its views before the public, but honorable members generally are denied a similar opportunity. This afternoon, in answer to a question, the Postmaster-General (Mr. Harrison) said that he hoped to make a statement on the subject referred to next Tuesday. If the business paper were allowed to remain as printed, honorable members would be able to express their views on the subject to-day, and the Minister would then know the mind of Parliament on the subject. It would appear that the only course open to me will be to object to any statement being made on Tuesday next, or, indeed, on any other day, by any Minister, unless opportunity be also given for a discussion of such statement. Should the Prime Minister (Mr. Menzies) persist with his motion, I hope that members of my party will agree not to grant leaveto Ministers to make statements in the future.
.- The action of the Prime Minister (Mr. Menzies) in attempting to deprive honorable members of their rights hardly squares with the splendid statement of the right honorable gentleman, made a few weeks ago, that he hoped to restore to Parliament its deliberative character, and provide every honorable member with opportunities to express his views. His promise to restore the democratic nature of the Parliament was given wide publicity, but his actions yesterday and to-day in moving to deprive private members of their rights, are in direct contrast to his promise. It would appear that no change from the practice of the past is likely during the term of office of the present Prime Minister. In order to rush away to his dugout by the 9th June, the right honorable gentleman, like his predecessors, seeks to close the mouths of private members.
– The motion will suit the honorable member, who, doubtless, has made some appointments for the following week.
– I have not made any appointments for that week. Much as I dislike Canberra in the winter, I am prepared to remain here as long as is necessary to deal with the business that should be brought forward. I hope that honorable members generally will vote against the attempt to deprive them of their privileges so early in these sittings of the House. Although Parliament has sat for only three weeks, the Government is prepared, even at this early date, to take this action to close the mouths of the elected representatives of the people. It ismost reprehensible.
.- I should be quite inconsistent if I did not protest against this action of the Government. I think the Government is following a most provoking course and asking for trouble. Honorable members of this House have their rights, and the Government under the lead of the Prime Minister (Mr. Menzies), thinks that it can take this dictatorial course and get away with it. I have never been a party hack nor do I intend to become one. On the notice-paper yesterday was a most importantnotice of motion relating to anomalies under the Repatriation Act. That matter cannot be discussed to-day because of action taken by the Government yesterday, yet I find in the press to-day in relation to this very matter which could not be discussed to-day a letter that the Prime Minister received from the Returned Sailors and Soldiers Imperial League of Australia.
Mr. SPEAKER (Hon. G. J. Bell).Order! The honorable member is not discussing the motion.
– It seems that some “ hand-out “ had been made to the press that I had intended to obstruct the business of the Government-
– Order ! The honorable member may not discuss that matter now.
– I presume that, in expressing my views on the motion now before the House, I shall again be accused of obstructing the Government. In the letter that the Prime Minister apparently handed to the press yesterday-
– I shall not allow the honorable member to continue to discuss that matter.
– I shall not refer to it in detail.
– The honorable member must not refer to it at all.
– Had not the Government brought forward this motion I would have been given an opportunity to discuss this all-important subject to-day.
– As the honorable member has a notice of motion on the notice-paper regarding that matter, it could not be discussed to-day on the grievance motion.
– The Government is evidently hastening into recess. I conclude by saying that if private members’ rights are to be trampled upon, and importantsubjects, such as that to which I referred, are denied a hearing in the Parliament, the only alternative open to me is to adopt another procedure which the Government cannot stop, that is, to move the adjournment of the House. If the Government persists in denying honorable members their rights in this way, I shall ha ve to consider taking that action.
– Motions of the kind now before the House were carried dozens of times when the honorable member was a Minister.
– No government with which I have ever been associated would trample on the rights of honorable members to bring to the notice of the Parliament the undoubted anomalies that exist in relation to returned soldiers under the Repatriation Act.
– Order ! The honorable member will resume his seat.
.- Whilst I attach a good deal of importance to the retention of private members’ day, I do not intend to oppose the motion before the Chair, for the simple reason that I appreciate the importance of the matters on the business-paper, and I realize that it is the desire of the Government to endeavour to conclude the present sittings within a reasonable time, possibly by the 9th June. I am prepared to support the motion on that understanding, fully realizing at the same time, that no other opportunity will be provided for the discussion of private members’ business before the termination of this sessional period.
Question put -
The House divided. (Mr. Speaker - Hon. G. J. Bell.)
Majority …… 6
Question so resolved in the affirmative.
In committee: (Consideration resumed from the 24th May (vide page 722).
Clause 5 - (1.) Subject to the directions of the GovernorGeneral and to the nest succeeding subsection, the matters to be administered by the department shall be matters relating to -
the manufacture or assembly of aircraft or parts thereof by the Commonwealth or any authority of the Commonwealth ;
arrangements for the establishment or extension of industries for purposes of defence ;
the acquisition, maintenance and disposal of stocks of goods in connexion with defence;
arrangements for ascertaining costs and for the control and limitation of profits in relation to the production of munitions; and
surveys of Australian industrial capacity and the preparation of plans to ensure the effective operation of Australian industry in time of war; and
the investigation and development of Australian sources of supply of goods, which in the opinion of the Governor-General are necessary for the economic security of the Commonwealth in time of war. (2.) The Governor-General may from time to time determine the extent to which or the conditions upon which any of the matters specified in this section may be administered by the department.
Upon which Mr. McCall had moved, by way of amendment -
That the word “profits”, paragraph e, be omitted with a view to insert in lieu thereof the words “ net profit to six per centum on the value of the actual assets employed in the earnings of such profit”.
.- The object of my amendment is to prevent those who will be engaged in the future in the manufacture of munitions and armaments from making excessive profits. Wo who have considered this matter do not believe that the Government has included sufficient safeguards in the bill to prevent the exploitation which the Government claims to be desirous of eliminating. The Government has set a net in which there are holes big enough to allow the sharks to escape. No doubt, in accordance with its declared policy, the Government considers that the mesh is sufficiently small, and, therefore, the whole point at issue is the method to be adopted to achieve the desired end. Speaking at the Sydney Town Hall recently, the Prime Minister (Mr. Menzies) directed the attention of his audience to the exorbitant profits made during the Great War by those engaged in the manufacture of arms and other equipment for defence purposes. He referred to the public outcry which the operations of profiteers caused at that time, and he pointed to the steps taken to get something back into the Treasury from these exploiters, as they were then termed. He said that the opportunity had now arrived for the Government to take action which, in effect, would lock the stable door before the steed was stolen. Some of us believe that it is very hard to find in this measure the lock on the door, and, in fact, some of us have difficulty in seeing even the door. I have submitted my amendment for the purpose of limiting the profits of private manufacturers to a maximum of 6 per cent. The amendment is designed specifically to make sure that there will be a lock on the door. I submit the proposal to the committee in the hope that it will be accepted.
It is generally agreed, I think, that the advisory panel of accountants is competent to arrive at what it considers to be fair profit for this work in the circumstances that would obtain in a period of national emergency.
– There is no such thing as a fair profit.
– I find myself very much in sympathy with the honorable gentleman in that view, particularly when considering the profits of Government annexes and other establishments of a semi-governmental character that will be engaged in the manufacture of armaments. The Government’s plan to prevent excessive profits is to set up a body of experts in costing and accountancy, and to leave to them the problem of deciding what will be a fair profit at any given time for individual establishments; but this bill contains no direction as to what the Government considers to be- fair profit. If we pass the bill in its present form, no direction in that matter will have been given by this Parliament. What authority have the members of this panel to decide what is a fair profit? They are supposed to be men at the top of their professions, and I do not say that they are not competent to determine what they regard as a fair profit, but their opinion in that matter may be entirely different from that of the representatives of the people in this Parliament.
We have had some advice on the practicability of this scheme from the honorable member for Darling Downs (Mr. Fadden), whois an expert accountant, and as fully qualified as anybody in this chamber to judge whether the scheme can be put into effect and provide the check desired. That honorable gentleman has a business which is probably second to none in Australia, and his decision is worthy of the consideration of this committee, particularly in view of the fact that not one member of the Cabinet possesses similar accountancy qualifications. Statements have been made by the Minister (Mr.
Casey) insinuating that the sponsors of this amendment are directing their attack against private business concerns, and he deplores the fact that we are not prepared to trust them. He makes an appeal to us to consider the patriotism of these people, and the fair deal that they are likely to give to the Government, or, as he declares, that they will give to the Government in a time of national emergency. I join with him in saying that I believe that the majority of the private establishments engaged in this work are of the character indicated, but there are always the exploiters, and it is they whom we definitely desire to check, if we limit the profit to 6 per cent, we shall declare to these firms before they accept contracts the maximum profit that they will be allowed to make. The charge laid by the Minister is, I think, unjust, because our leader, the Prime Minister, has announced that the profiteer must be checked. As I pointed out earlier in my remarks, the only disagreement in the committee in this regard is as to the means to be adopted to apply the remedy.
We could cite some good examples, even in this period of peace, of individuals supposed to be of unimpeachable character, and highly regarded in business circles, who are not only taking action contrary to all business ethics, but also doing something designed to rob the Treasury of legitimate revenue. I refer particularly to the wealthy financial group in Melbourne which is involved in a dispute with the Taxation Department, and whose liability to that department will, I am led to believe, be colossal. When legal proceedings are instituted, the members of this Parliament will be staggered to know the amount involved. I should be perfectly justified in naming these individuals, but, in view of the fact that income tax matters are confidential, I do not propose to do so. There are many bottles which, if uncorked, would release an unhealthy stench. Many disclosures could be made. What is the object of this urgent desire to limit exploitation by armaments and munitions manufacturers in a time of national crisis? Surely the motive is because the whole nation and its resources should be consolidated for the common purpose of defeating the foe.
On the one hand, the young men of this country, including myself and some of the younger members of this House, will be placed in the firing line where we may lose our lives. On the other, hand there will be others who will be sitting back and, supported by evidence supplied to those compiling the national register, will say that they are employed in the production of munitions. Some engaged in such work may make extortionate profits unless definite action is taken to control them. I shall mention some of the steps taken by the Government to assure a continuous and efficient supply of munitions, and show to what degree private concerns conducting governmental or semigovernmental institutions may make tremendous profits. Three avenues will be utilized in producing commodities required for defence purposes - first, the eighteen government annexes, secondly, government factories; and, thirdly, the Contracts Board, which peruses all tenders for the supply of war materials. The Government has set up eighteen annexes sixteen of which have been erected at the cost of the Government. The Government has paid for the buildings.
– For the entire cost of the buildings?
– Yes, it has also provided the capital to equip them with machinery for the manufacture of munitions. We have been informed that some, . if not all, of these factory-owners have made available a portion of ‘ the land adjoining their factories on which annexes are to be built. Those conducting such undertakings will be able to make tremendous profits unless action is taken to prevent them from doing so. That is a point which many have overlooked. I shall cite a practical example in order to throw some light on the matter. The Government has arranged to provide these organizations with orders, and agreements have , been reached whereby they will be paid a profit of 4 per cent, on their turnover. Supposing that a firm controlling one of these annexes receives an order for, say, £100,000 worth of gas masks, on which a profit of 4 per cent, would be paid. A private firm conducting the business in a’ governmental annex would receive a profit of £4,000. Contrast the position of that manufacturer with that of a private contractor who would have to provide his own capital, machinery and equipment. Such a manufacturer would be asked to produce £100,000 worth of gas masks, and in order to do so he would have to provide £20,000 or £30,000 worth of machinery and equipment. tinder the amendment, such a manufacturer would be allowed only up to 6 per cent. It does not mean that he would be paid 6 per cent.
– It does.
– On the assets employed.
– What assets has he?
– He must have assets in the form of machinery and equipment to produce £100,000 worth of gas masks otherwise he cannot accept the order. A profit of 6 per cent. on a capital of £30,000 would be only £1,800 as against the £4,000 made by the manufacturer using capital, machinery and equipment provided by the Government.
The CHAIRMAN (Mr. Prowse).Order! The honorable member has exhausted his time. The honorable member for Bourke-
– If the honorable member for Martin wishes to conclude his speech, I shall withdraw, temporarily, my right to address the committee at this stage.
– I thank the honorable member for Bourke. The honorable member for Batman (Mr. Brennan) asked by interjection what justification there is for manufacturers making profits from the production of arms and munitions in times of crisis, particularly when the equipment they are usinghas been provided by the Government. I have no hesitation in saying that they are not entitled to anyprofit at all. What profit accrues to the young men who joined the militia to be trained for defence purposes? What do they receive? Only 8s. a day when in camp, which, if they are receiving only the basic wage is only about one-half of what they would be earning in civil life. What sacrifices are manufacturers to make? There is no evidence of any sacrifice at all. There is no concrete provision in the bill which can operate when exorbitant profits are being made. I regret that the Government should have stated that if my amendment be carried it will have to consider withdrawing the bill. The responsibility is on it. Does it wish to protect the profiteers? I intend to press my amendment, and I challenge the Government to show where any definite provision is made to prevent profiteering.
– The amendment of the honorable member is not worth a snap of the fingers.
– That remark can also be applied to the amendment moved by the Deputy Leader of the Opposition (Mr. Forde). It is extraordinary that only a few of those honorable members in opposition who on many occasions have expressed themselves so strongly on the subject of profiteering have spoken on this clause. My amendment provides the power to control profits and if it should be found that it is an unjustifiable impediment to the production of munitions, the Government can refrain from enforcing it or bring some other proposal before Parliament for its consideration. This is a practical attempt to ensure definite control of profits.
.- The honorable member for Martin (Mr. McCall) destroyed the whole of the case for his amendment by his closing sentences. This clause is a permissive clause. It does not compel the Ministry to do any of the things listed in it. Subclause 1 reads -
Subject to the directions of the GovernorGeneral and to the next succeeding sub-section, matters to be administered by the department shall be matters relating to-
There is no need for me to cite those matters. Sub-clause 2 reads -
The Governor-General may from time to time determine the extent to which or the conditions upon which any of the matters specified in this section may be administered by the department.
Sub-clause 2 sabotages the whole of the provisions of sub-clause 1 by providing that the Governor-General may in each case prescribe the extent to which and the conditions upon which these matters may be administered. It means that although the Governor-General has power to direct that prices shall be controlled and limited,, he need not exercise it. He may withdraw that matter from the con* trol of the Minister or impose such restrictions upon it as to make it unworkable and favorable to the manufacturers..
– We can deal with that later.
– The Acting Leader of the Opposition (Mr. Forde) has circulated an amendment which makes it imperative that in no case shall the Governor-General, that is to say the government of the day, withdraw from the scope of this legislation the power to limit and control profits. That means that, although the Governor-General may give a direction fixing the extent to which, or the conditions upon which, any other power may be exercised, he shall not be able to deny full exercise of the power to limit or control profits. The honorable member for Martin justified his amendment by saying that the Government need not put it into force unless it desired it. I do not see what advantage an amendment like that would be to the bill. Like every body else, I want to curb the profits made by the producers of munitions, but realize that we are largely in their hands. If this measure is at all necessary, the production of munitions is an urgent consideration for this country. The Commonwealth has not sufficient establishments to produce all of the munitions that the Government contemplates ; and it would be useless for the Government to establish a number of factories knowing that, if their need disappeared through war being over, it would be unable to apply them to the production of goods in time of peace. That was well settled in. the High Court’s decision in the case The Commonwealth versus The Australian Commonwealth Shipping Board, which was decided in 1926. I shall read the relative passage from the majority judgment of four justices, on page 9 of volume 39 of the Commonwealth Law Reports. The justices said -
Despite the practical difficulties facing the Commonwealth in the maintenance of its dockyard and works, the power of naval and military defence docs not warrant these activities in the ordinary conditions of peace, whatever be the position in time of war or in conditions arising out of or connected with war.
The activity in which the Australian Commonwealth Shipping Board had tried to engage was the supply, erection and maintenance of turbo-alternator sets for the power house of the municipal council of Sydney at Botany Bay. The doing of that was challenged by the Attorney-General of the Commonwealth on behalf of private manufacturers ; that is to say, the validity of a Commonwealth administrative act was challenged by the chief law officer of the Commonwealth. The High Court held that, although, in time of war, the defence power was enlarged for the successful prosecution of the war, in time of peace the defence power shrunk to its former dimensions and forbade the Government to apply, for the production of peaceful commodities, a factory which had been erected in the exercise of the defence power. That, of course, makes it uneconomical to have a large number of Commonwealth-owned factories. We are thrown back, therefore, on the use of private agencies, and we are largely in their hands. If the- first consideration is the production of munitions, the limitation of profits can only be a secondary consideration. I do not think that even the honorable member for Darling Downs (Mr. Fadden) could state what should be the proper rate of profit. I cannot understand the basis of calculation suggested by the honorable member for Martin. I cannot understand why 6 per cent, should be based on the assets of the manufacturing company, and why it should not be based on the costs of production.
– That would give a far greater measure of profit.
– I do not suggest that that should be the basis. But that does not make me understand why the rate should be based on assets. I cannot understand why it should not be based on costs. .What I understand by an attempt to regulate the price of a commodity, is a f formula which allows for costs of production and all other things, and then fixes the rate of profit. I have no capacity to say what should be a proper rate of profit, but my incapacity I share with every honorable member, with the possible exception of the honorable member for Darling Downs. I want to understand why it is proposed that the cost of any particular commodity produced by munitions factories, the cost of a gun for instance, should be based on a certain percentage of the assets of the company. It would appear that the cost would vary according to the resources of the factories.
– It is profit, not cost.
– That means that the rate of profit would vary with the company. In each case the Government would have to ascertain what were the assets of the company before it could say what price the company could ask for its commodities.
– I take it that the only assets concerned, would be such assets as were employed in tho manufacture.
– How is that going to be ascertained? It seems to me that the Minister is being asked to embark on an impossible inquiry. It seems comparatively easy to ascertain labour costs, material costs, overhead costs, allowances for depreciation and so on, and that, I understand, is the basis always used by costing accountants. But this business of determining the rate of profit on assets seems to impose on the Ministry a problem that varies with every particular contract and every particular piece of product.
Leaving the amendment for the moment, the position taken up by the Ministry, seems to be this : “ There is no reason to suspect that the producer of munitions will seek to make a high rate of profit “. Experience indicates that such producers, in fact any persons who contract to supply the necessities of the Government in a time of need, take full advantage of the position. They will act up to that principle by getting as much profit as they possibly can. Full advantage of the necessities of this country will be taken by the people who produce commodities for the use of the Government. Then it is said that all that is necessary is a voluntary advisory panel of unpaid, patriotic person’s. When I say that they are patriotic, I do not imply that they are unpatriotic. I think that it is a fine thing that they have offered their services, but it would be better to have a permanent staff whose only interests are the interests of the Government to supervise and check this matter. 1 believe that that will have to be done. If profits are to be restricted effectively there must be appointed persons whose sole duty it will be to examine all contracts made in order to ascertain the amount and rate of profit made in respect of every contract. That would be a tremendously difficult task. If the Government is determined to apply the principle of controlling and limiting profits made out of the manufacture of armaments and munitions, it will be necessary to have a permanent staff of officials whose duty it will be to concentrate on this work. It could not be done properly by persons working in an honorary capacity, or part time. I doubt that this Committee is competent to say what should be the maximum rate of profit, and to lay down once and for all an inflexible, Procrustean rule. It is not competent to determine the basis upon which profits should be computed, whether on costs of production or on the value of assets.
– Could not the position be met by inserting a provision instructing the Government with regard to the matter ?
– The Acting Leader of the Opposition (Mr. Forde) has notified his intention to move an amendment to provide that in no case shall the Governor-General withdraw from the purview of the Minister, power to control or limit profits. That is the way I approach the issue. I may not agree with m: ny honorable members, but the view taken by the Opposition is that, but for the constitutional objections and the difficulties caused by the lack of sufficient time, the production of munitions should be a government monopoly: We realize that the shortness of time in the first place makes that difficult, and also that if a large number of Commonwealth defence factories were to be established, the Government would be imposing upon this country a dead weight of capital costs in respect of establishments which could not be employed economically at the conclusion of any war. Consequently, large staffs of executives and skilled workmen would have to be dispersed. Private manufacturers, on the other hand, have in existence the necessary establishments and labour staffs which are now engaged in the manufacture of peace time requirements. In time of war these could quickly be converted to the production of munitions and other defence supplies, and when the time of emergeney had passed, they could again be employed on peace time needs. Therefore, whether we like it or not, we are forced to enlist the co-operation of private manufacturers in order to ensure adequate supplies of defence equipment in a national emergency. But if we are forced into that position we say that profits must be controlled, and that the mechanism for the control of profits must be as flexible as possible. I repeat that the committee is not in a position to lay down an inflexible and unalterable basis for the computation of profits.
– I listened with great interest to the honorable member for Martin (Mr. McCall) and I do not question his sincerity in submitting his amendment for the limitation of profits; butI think he should have informed the committee of the basis to be adopted for determining the amount of capital assets to be used in the manufacture of government orders.
– The advisory panel of accountants provided for in this measure would do that.
– That is so, hut I think that the committee is entitled to some explanation. The limitation of profits is not so easy as some honorable members apparently believe it to he. It would be quite simple to assess profits in a factory which was engaged solely in the manufacture of commodities for the Government, hut not easy in the case of an industrial organization which was employed for only part of its time on the manufacture of Government requirements’. For example, it would be very difficult to assess accurately what assets were being employed by a private manufacturer and for what period in connexion with a government order. That is the difficulty which arises according to my interpretation of the amendment moved by the honorable member for Martin. If I am wrong I hope he will tell the committee so. Take for instance, the case of a manufacturer who receives an order from the Government for the supply of goods to the value of £5,000. If the value of his assets engaged in the fulfilment of that contract were £10,000, then under the scheme proposed by the honorable member for Martin, the manufacturer, would be entitled to a profit of £600.
– Up to £600.
– I am afraid that under the amendment proposed the maximum would become the minimum.
Mr.Fadden. - A check will he provided by the Contracts Board.
– That may be so. But that is the proposal of the honorable member for Martin in a nutshell.
– The manufacturer might get as much as 60 per cent. under certain conditions.
– That is the point I am coming to. Therein lies the great weakness of the amendment. A factory having assets to the value of £10,000 may be utilised for the manufacture of. Government supplies worth £5,000. Under the amendment that manufacturer would be entitled to a profit of £600. There is, however, the possibility that that same plant would be used under similar conditions, several times in one year. It seems inequitable that one manufacturer fulfilling an order for, say £20,000 worth of supplies and using a plant valued at £10,000 would receive only £600 profit, whereas another manufacturer, having assets to the same value but fulfilling an order for only £5,000 worth of supplies would be entitled also to £600 profit. I know it has been suggested that the Contracts Board, or whatever body is to assume control of these contracts, would take into consideration turnover in fixing the amount of profit; but if a manufacturer received an order in the month of January for £10,000 worth of supplies, how could the board assess the amount of profit which should be made on that order? To do this it would have to know how many more orders that firm would be asked to fulfill in the same year.
If an arbitrary figure of 6 per cent. is to be imposed as the maximum profit it should be 6 per cent. per annum. Unless that is specified in the amendment it will he impracticable, because it would be possible for a manufacturer to receive numerous orders during one year. Even if the Contracts Boardwere to fix 2 per cent. on the assets employed as the maximum profit on a government order, that in itself would not be an adequate restriction. If a manufacturer received an order for £20,000 worth of supplies in January, and if he employed assets valued at £10,000 to carry out the order, at 2 per cent, his profit would be £200.
– He would be entitled to 4 per cent on his turnover.
– Yes. But that manufacturer would be eligible to undertake other orders during the year, and if he made 2 per cent. on all of them his profit might be 20 per cent. per annum or more. I do not know whether or not the honorable member for Martin realizes that such a position could arise if his proposal were adopted.
– I do not follow the honorable member’s argument.
– I submit that it is not possible to come to any other conclusion. I am heartily in favour of the principle embodied in the amendment moved by the honorable gentleman, because, as I said in my second-reading speech, there must be some control over profits made by private manufacturers in fulfilling government orders for munitions and equipment.
In the final analysis a complete and effective check on profits depends upon the sincerity, diligence, and determination, of a government in its efforts to enforce the principle of profit limitation. No amount of legislative precaution would ensure an efficient and adequate check of profits unless there was a determination to see such provisions enforced. I wish to carry the argument a little further. I submit that the proposal of the honorable member for Martin might, and very likely would, operate harshly against small manufacturers. Before the amendment is put, I want the committee to be seised of the fact that the basic idea of the honorable member for Martin is that the profit of 6 per cent. shall be fixed on the assets actually involved. That could be turned over several times in the year. If the board fixed the rate at only 1 per cent., the contractor would earn 10 per cent., 12 per cent., 15 per cent. or 20 per cent., according to the number of orders he received. Whatever check may be provided, this proposal is impracticable and unworkable, and in the end it would react against the Government. It is but fair to say that the honorable member probably believed that, in fixing the amount of net profit, consideration would be given to the number of orders that a contractor’ would receive in any one year. If a man received an order for goods to the value of £10,000 in January, by what method could the board determine that before the end of the year he would have received orders to the value of £100,000? I want the honorable member to assure the committee that the Government will be safeguarded against the contingency that I have suggested. I cannot see any escape from it.
– Can the honorable member point to any safeguard in the bill?
– As the bill stands, it will be the function of the Government to sec that undue profits are not made.
– That is not the case under the bill.
– It will have the power to do so.
– If it wishes to exercise that power.
– The bill is permissive. My amendment would make it imperative.
– The honorable member for Martin feels that the Government will treat every case on its merits. Would not that be the case under his amendment ? If the rate of profit were fixed at 6 per cent., every case would have to be treated on its merits, and the Government would have to decide what amount of net profit the contractor should be allowed to earn. Quite apart from that, what is the idea of the honorable member on the vital matter of arriving at the prime cost of the article concerned?
– The experts would do that.
– If that be so, we might as well rely on the experts in regard to the net profit. I am just as anxious as is any other honorable member to set that contractors are not permitted to take advantage of these contracts. In the final analysis, the sincerity and determination of the Government will be the deciding factor. I suggest to the honorable member that even under his proposal the responsible authority would have to use discretion in fixing the profit to be earned. I am emphatically of the opinion that, before the committee accepts the amendment, it should have, first, some definite indication as to how the capital involved in each contract is to’ be arrived at, and secondly, an explanation as to what is proposed with a view to seeing that there is equitable distribution of the 6 per cent, in relation to a contractor who receives several orders during the year. I say, without fear of contradiction, that the proposal of the honorable member is impracticable and unworkable.
.- I do not believe that the Government sincerely desires to eliminate profits. Possibly the provision for the limitation of profits is included in the bill in an attempt to make the general community believe that such is the intention of the Government, so that industrial conscription, which it proposes to apply, may be the more readily accepted. I shall not be over-critical of the amendment of the honorable member for Martin (Mr. McCall) on the ground of its impracticability, because I believe that the whole of the proposals submitted are impracticable, and I am perfectly satisfied that profit will never be eliminated until the profit system itself is abolished. It would be very difficult for any government or board of inquiry to ascertain exactly where the profits were made or obtained. In the case of defence requirements, althought it might appear on the surface that a number of undertakings are engaged in the manufacture of these commodities from the raw state to the finished product, actually, with the monopolistic control that exists to-day, they merely pass through the hands of a number of companies which are subsidiary to the monopolistic concern.
Let us examine the sincerity of the Government in this matter. The Minister for Supply and Development ,(M.t. Casey), in his remarks last evening, said that there are several ways in which the Government to-day obtains its supplies. According to the right honorable gentleman, a certain, proportion is obtained from government factories, in respect of which the Question of undue profit could not arise ; a further proportion is obtained through the annexes, the profits of which are to be limited by the Government to 4 per cent.; and tenders are called for the balance. The right honorable gentleman pointed out that contracts first come under ,the review of the Contract Board, and having been carefully checked are submitted to a further check by a departmental sub-committee. Evidently the right honorable gentleman’s argument is that there is already existing departmental machinery which makes it impossible for undue profits to be earned by any undertaking that accepts contracts from the Government. I put it to honorable members, that if the Government already makes reasonable provision against undue profits being earned there is no necessity to continue with the farce of appointing a panel of accountants to make a further examination of the contracts. When the Minister was asked whether every one of the contracts would receive the same check - that is, that they would be completely inquired into - he ridiculed the suggestion on the ground that it would be impossible for the advisory panel of accountants to inquire into every one of the 10,000 contracts let in one year. I recognize that such would be the case. As a matter of fact, the limited time which the advisory panel will have to devote to this particular work in an honorary capacity proves conclusively that it is farcical to suggest that there will be an adequate check of 10,000 contracts per annum.
– No one has ever suggested that.
– If the policy of the Government were carried to its logical conclusion, if it were anxious to have an adequate check of contracts, it should provide for the work to be undertaken by men who would be fully occupied and paid accordingly, and not depend upon men acting in an honorary and advisory capacity.
In reply to a question asked by the honorable member for West Sydney (Mr. Beasley) the other evening, the Prime Minister (Mr. Menzies) said that he was unaware that the Australian Iron and Steel Company and the Broken Hill Proprietary Company Limited are one . concern. I am not prepared to .believe that the Prime Minister is so illinformed as to be of the opinion that these two undertakings are separate and distinct. I have perused the latest financial digest issued hy Jobson, which discloses that on the directorate of the Broken Hill Proprietary Company Limited are Mr. H. G-. Darling, Mi:. Essington Lewis, Mr. R. 0. Blackwood, the Honorable W. 6. Duncan, M.L.C., Mr. R.’ C. Mears, and Mr. H. R. Lysaght. That is not the complete list. In addition to being directors of the Broken Hill Proprietary Company Limited, these gentlemen are also directors of the Australian Iron and Steel Company. Yet the Prime Minister had the audacity to tell us that he was unaware that there is any connexion between the two concerns, or that they actually constitute a monopoly in this particular business in the Commonwealth! Everybody knows that that is the position. We expect the Prime Minister, when asked a direct question, to state facts.
Zinc is a very important requirement of defence establishments. On the directorate of Amalgamated Zinc Limited are the Honorable Harold E. Cohen, C.M.G., C.B.E., D.S.O., V.D., M.L.A.- an antiLabour member of Parliament and, I understand, a close personal friend of many members on the government benches - and the Honorable Sir Walter Massy-Greene, K.C.M.G. Ministerial members will not disguise the fact that this latter gentleman was at one time very closely associated with them in the political world. Sitting on the directorate of Electrolytic Zinc Company of Australasia Limited we again find the Honorable Harold E. Cohen,. C.M.G., C.B.E., D.S.O., Y.D., M.L.A., the Honorable Sir Walter Massy-Greene, K.C.M.G., Sir Colin Fraser, and Mr. M. L. Baillieu. In the list of the directors of Zinc Investments Proprietary Limited, another concern which is interested in this particular branch of industry, we again come upon the name of the Honorable Harold E. Cohen, C.M.G., C.B.E., D.S.O., V.D., M.L.A. Also associated with him on the board of directors is Sir Walter Massy-Greene, K.C.M.G. Yet, if the Labour party suggests that there is any connexion between these various concerns honorable members opposite ridicule the idea. Every one knows, of course, that they are so interlocked that, when tenders are called for the supply of goods in the manufacture of which they are interested, there is no real competition at all. For all practical purposes, they form one big ring. Included among the directors of Broken Hill. South are Sir Colin Fraser, Sir Alexander Stewart and Sir Sydney Snow, K.B.E. On the directorate of North Broken Hill are Sir Colin Fraser, Mr. H. Baillieu and Mr. L. Baillieu, . whilst on the board of Hume Steel, as we all know, is Senator A. J. McLachlan. There are other directors on these various companies, of course, but I have mentioned those who have been more prominent in anti-Labour political organizations.
I do not share with the honorable member for Bourke (Mr. Blackburn) and other honorable members who have expressed a similar view the belief that the men acting upon the various advisory committees are all to be commended for their so-called patriotic offer to render voluntary service. When we realize that Sir Colin Fraser, one of the members of the Industrial Advisory Committee, is a director of Electrolytic Zinc, Broken Hill South and North Broken Hill; that Mr. Essington Lewis is a director of Broken Hill Proprietary Limited and of the Australian Iron and Steel Company; and that Sir Alexander Stewart is also a member of the directorate of Broken Hill South, we realize how interlocked are their interests. These gentlemen, in their capacity as advisers to the Government in the expending of millions of pounds, will be in a position to give direct service to the’ industrial concerns in which they are interested. Surely honorable members do not imagine that this condition of affairs will not arouse the suspicions of the public.
Clause 5 imposes, no obligation on the Government to take any steps whatever to limit profits, and there is a very good reason for that. The Government never intended to limit profits. Paragraph d empowers the Government to make arrangements for the acquisition, maintenance and disposal of stocks of goods in connexion with defence. I take it that,, under that paragraph the Government desires to create the impression that action would be taken to ensure adequate supplies of oil at a reasonable price. The Government, in order to ascertain the position regarding oil supplies, will have to make inquiries of the major oil companies, and in order to ensure that undue profits are not being made, it will have to ask questions about costs and profits. Every one will remember . just what happened some years ago, when the Commonwealth Government appointed a royal commission to obtain just that information from the oil companies. At that time, the Prime Minister (Mr. Menzies) was the legal advisor of the Shell Oil Company, one of the major oil companies involved in the inquiry. When the royal commission attempted to obtain information regarding costs of production, marketing costs, profits, &c, the Prime Minister, in his capacity of legal representative of the company advised it not to give any information whatever. How can he now, as” Prime Minister, insist upon the companies supplying the very information that, as their legal representative a few years ago, he advised them to withhold?
The CHAIRMAN (Mr. Prowse).The honorable member’s time has expired.
– The Government cannot accept the amendment of the honorable member for Martin (Mr. McCall). It appreciates the motive which prompted him to move the amendment, and it is entirely in sympathy with his desire to restrict the taking of exorbitant profits by any supplier of defence equipment to the Government. However, not only would the amendment not achieve that result, but also it is entirely impracticable of application. In the first place, it raises the question of the value of the assets employed in any business supplying goods to the Government. The making of such a valuation would be an extremely costly matter. It would require a great deal of time, and it is doubtful whether anything of real value would be achieved.
– Then has the Government no intention to limit profits?
– The inquiry proposed by the honorable member who moved the amendment would involve the separation of the assets used in the production of any particular product. It is probable that only a part of a great number and variety of assets would be used in the production of a great number and variety of products. To determine the time and extent to which each asset would be used in the production of a particular product would require a computation that would be entirely impracticable.
Honorable members have questioned the Government’s sincerity regarding the limitation of profits. They have asked why does not the Government put in the bill a provision which would have the effect of placing an effective check on undue profit taking. The Government says in reply that it is taking plenary power in this bill to impose what checks are necessary. The responsibility will then devolve upon the Government to exercise that power, or if it does not do so in an effective and efficient manner, to take the consequences for its failure at the hands of Parliament. The Government will give ample evidence of its sincerity. If it was not sincere, there was no need for it to bring this bill before the House at all; there was no need to make any reference to the limitation of profits, and there was no need to appoint honorary advisers to an accountancy panel. The fact that it did those things is evidence of its sincerity. The honorable member for East Sydney (Mr. Ward) has suggested that, because the honorary panel will not be able to make a personal investigation of the many thousands of contracts that have already been let by the Department of Defence, it will not be able to serve any good purpose at all. It has been explained, however, that the functions of the panel are not to conduct minute investigations of every contract, but to investigate the present methods followed by the Government in controlling and limiting profits. If it is found by this qualified body, the majority of whose members are experts in cost accounting, that our methods are unsatisfactory - and we do not assert categorically that they are -not - the Government will then be in a position to consider the recommendations of the panel. I suggest that we can take no more practical step than to say that, although we are satisfiedthat the machinery now in existence has worked well for a number of years, we appreciate that the strain placed on it by the enormous expansion in the number of defence orders may have revealed some weaknesses. Therefore, we are asking this expertbody to make an investigation, and to recommend improvements. I think that honorable members are satisfied, in view of the detailed explanation by the Minister for Supply and Development (Mr. Casey), that, in respect of the overwhelming majority of defence contracts, an effective control has been exercised, and no possibility of excess profit-making exists. It seems clear that, so far as the annexe system is concerned, there is little likelihood of profiteering. Most of the criticism has been in respect of the supply of raw materials to manufacturers. In that regard, the Government does exercise a check, inasmuch as it has the cooperation of officers of the Defence Department, the Contracts Board, and the Trade and Customs Department. A very close check can thus be kept on prices of raw materials sold to manufacturers, and, in the past, this has proved very effective. Copper was mentioned by the honorable member for Balaclava (Mr. White) as providing what he considered a glaring example of fleecing the Government.
– I said that the Government had to explain the fictitious price at which copper was quoted.
– I remind the honorable member that, when he was Minister for Customs, he tabled a report covering the investigation by the Tariff Board of the copper industry in Australia.
– And last night I read excerpts from it to the committee.
– One of the disclosures made in that report was that the producers of copper in Australia were at a disadvantage in that, while they were paying award wages and observing Australian conditions of labour, they had to meet in open competition the product of the Belgian Congo and Northern Rhodesia, where coloured labour was employed. Despite that fact, however, and despite the fact that freight costs were worked out on the basis of the shorter journey from Africa to Europe, because the quantity of Australian copper was not sufficient to be taken into consideration, the Defence Department in Australiawas able to obtain copper at world parity prices. In fact, the honorable member for Balaclava recommended that a duty of £4 a ton should be imposed in order to protect the Australian industry.
– Yes, that is why the Australian producers are able to compete.
– I suggest that if the suppliers of any commodity, such as copper, are charging unreasonable prices, the Government has a remedy in its power to remove the tariff protection which that industry enjoys. The honorable member specifically excluded the producers of steel from the charges he made. There is one other check : if it be found on analysis that any supplier of raw material is making an exorbitant charge, there is power under section 67 of the Defence Act compulsorily to acquire the commodity at a price fixed by an independent arbitrator. There again we have a definite check should we find any flagrant abuse in this regard. The Government is taking -full powers under this measure. As I mentioned earlier, there was no necessity for it to introduce a bill of this kind, or to include these particular powers.
– Well then, the passage of this bill is not vital to the Government ?
– I do not say that at all. The Government’s policy is to improve the existing administrative machinery in connexion with the supply of defence requirements, and it regards, as a very necessary part of that programme of improvement, the passage of a bill of this kind.
– But the honorable gentleman just said that there was no necessity for the Government to introduce this measure.
– I said that if the Government’s sincerity in the matter was questioned, the answer was that there was no necessity upon it in the first place to introduce this bill. I pointed out that, if the Government did not genuinely desire to improve the present practice, or to secure more effective control, there would be no necessity for this measure. The very fact that it is introducing the bill and taking these powers, is evidence of its good faith in this regard. I can only repeat that, in asking for full powers under this measure, the Government accepts full responsibility for the proper exercise of those powers, and will be prepared to stand up to any charge which may be levelled against it in the future that it has fallen down on that responsibility. The Government having accepted that responsibility, the committee should not weaken the very full powers which it seeks under this measure by imposing any arbitrary limitation, which might very well have an effect entirely opposite to that desired by those supporting the amendment. The wisest course for the committee is to leave the full powers in the hands of the Government, and charge the Government with full responsibility for the exercise of them.
.- Whilst I am not opposed to the principle of the amendment moved by the honorable member for Martin (Mr. McCall), I am opposed to it for the simple reason that it will not accomplish what the honorable member seeks to accomplish. ‘ In the first place, I” am opposed to the allowance of a profit of 6 per cent.
– Six per cent, is the maximum.
– That is all hocuspocus. As an accountant, the honorable member knows that, even if the amendment were adopted, a firm would be able to make a profit of 60 per cent. He also knows that, as the bill is drawn, the Government need not impose the limit provided in the amendment, for sub-clause 2 affords a let-out. For this reason, the Deputy Leader of the Opposition (Mr. Forde) proposes to move an amendment which will make it mandatory on the Government to impose a limitation on profits. I propose to support that amendment.
– And I shall support it.
– The amendment to be moved by the Deputy Leader of the Opposition will make it mandatory upon the Government to live up to its statutory obligation in this regard. We, on this side, will be the watch dogs, to see that it keeps a check on profits. I agree with the honorable member for Lilley (Mr. Jolly) that, if a limitation of 6 per cent. were placed on profits, a contractor could, as the remainder of the measure is now drawn, make 60 per cent, profit if he secured ten contracts.
– Not on a -basis of turnover.
– Yes. We, on this side, wish to force the Government to check profits. If the amendment to be moved by the Deputy Leader of the Opposition be agreed to, we can then say to the Government, “It will be your responsibility under this mandatory clause to check profits, and if you do not” do so, you will hear all about it from the Opposition “.
I propose now to deal with the remarks made by the Minister for Supply and Development .(Mr. Casey) .last night. I often wonder why honorable gentlemen opposite can talk, both inside and outside of this chamber, about the patriotism of these contractors in peace or war, particularly when we have a wealth of evidence concerning the methods by which they fleeced ,and bled this country at a time when it was fighting for its life. When the honorable gentleman suggests that these interests have undergone a change of heart, or have changed their methods, and will not go for as much profit now as they did in the Great War, he would have us believe that he is one of the “ innocents abroad “. But he is too well connected with big .business not to know that no such change has taken place. I propose to give specific instances of profiteering at the present time; and the Minister knows as much about them as I do. He talks about “ honorable “ accountants who will advise the Government. He describes them as “honorable “, because they hold prominent positions in the business world. For the most of their time, they are engaged in dishonorable undertakings, such as the cloaking of profits of their clients in order to evade taxes.
– That is libellous.
– It is true. We have been told by men like Portus, and the rest, that many young men leave accountancy firms because they are obliged to keep two sets of books, one to be locked up in the safe, and the other to be kept for taxation1 purposes. A lot of these firms engage men who were previously employed in the Taxation Department, because they are fully conversant with the methods of the Commissioner of Taxation. They are induced to join private accountancy firms in order to help in the evasion of taxes. I know of certain firms in Sydney which have their own: methods of making out income tax returns, but in order to reduce the tax payable by their clients, engage officers of this kind to water down the return, and, for this service, the latter are paid fees ranging from £10 to £30. In many cases they succeed in halving the amount of tax. This practice is going on all over Australia. Expert crooks are being employed to fake books in order to enable big businesses to evade taxes. Sometimes they are caught. For instance, a man was fined £300,000 in Sydney recently for an offence of this kind. We all remember the case of the Abrahams brothers, in which a previous government took a hand in the unmasking of roguery. I have no confidence in these accountants; nine times out of ten they prove the truth of the saying, “ Figures don’t lie, but liars can figure “. The Minister also spoke of manufacturers who will not seek to make profits out of the Government’s defence contracts, but will be actuated solely by the desire to help their country. During the Great War we saw how the Sydney Morning Herald, one of the newspapers which sooled on our young men to the front, and which, incidentally, holds a big parcel of shares in the Broken Hill Proprietary Company Limited, raised its price for in memoriam advertisements by 400 per cent., and thus exploited the mothers and widows of our dead soldiers. I was in business during the Great War, and I know firms which had thousands of yards of black Sicilian in stock ; the price had been ls. Sd. a yard but, because it was old fashioned, it had been written down at the rate of 3d. a year until it represented to them about ls. a yard. But this material was pulled out of their cellars and sold at 10s. a yard to the widows and mothers of soldiers who had been murdered on the battlefield. Similar instances of profiteering might be given in connexion with the woollen industry. Let us examine the patriotism of a manufacturer like Henry Jones of Tasmania. After recovering all of his investment and allowing for taxes imposed under the war-time profits legislation, that gentleman made £400,000 out of contracts to supply jam to the Government during the Great War. However, I do not ask the Minister to take my word on thesematters. When the honorable member for Bourke (Mr. Blackburn) was a member of the Victorian Parliament, he was supplied by the State ‘Treasurer (SirAlexander Peacock), in answer to a question, with a table of figures showing that various firms, identified by symbols, had; made profits ranging from 115 per cent.. to 4,000 per cent, in one year during theGreat War. Those figures can be found, in Commonwealth Hansard, for the 10th August, 1917, Vol. LXXXII.. page 998. I ask the Minister to study those figures. After doing so, I hardly think he will suggest, for one moment, that these robbers will not do the same thing to-morrow, if they get the opportunity, as they did during the Great War. I, personally, should like tosee thoroughly investigated the contracts already let for the supply of boots or any other article to the Defence Department. When the Minister speaks of the patriotism of these people, he will not pull the wool over the eyes of honorable memberson this side, because this country has had bitter experience of the profiteers. The Government now suggests that opportunities, for profiteering will be considerably limited because of the safeguards which have been provided for the checking of profits on raw materials. I ask the Minister what check did the Government put on the contract let to the Broken Hill Proprietary Company Limited when that company itself, case hardened as it is, felt too ashamed to take the Government’s £1 10s. for shell cases and handed back 7s.?
– I shall answer the honorable member in detail on that point.
– I shall await the honorable gentleman’s reply. The Government proposes to go around the country seeking out these profiteers and begging them to collaborate with it in the supervision of contracts for supplies of defence material?.-
The history of every country, including Australia, Great Britain, Germany, France, Italy and the United States of America shows that big business takes every opportunity to make excessive profits on munitions as on everything else. Very little competition exists in big business. Possibly a certain degree of competition may still occur in the supply of boots, clothing and some other similar articles, but even in connexion with these it is well known that firms arrange what are known as a “gentleman’s agreement”. Sometimes it will be agreed that one firm shall obtain one contract on condition that another obtains the next. By this means contracts are distributed, and to a large extent, prices regulated ; but whatever competition may occur in retail business, practically none exists in the wholesale trade. To-day wholesalers and manufacturers generally not only arrange prices amongst themselves, but they also fix retail prices. If a retailer dares to sell certain goods at less than the fixed price he is refused further supplies. This procedure affects hosiery, underwear and clothing of various’ kinds. We cannot anticipate that any different procedure will be applied to the furnishing of goods to the Defence Department.
Nevertheless, I shall be interested to see what steps the Government intends to take to check profits. We shall be willing to consent to a mandatory clause authorizing the making of a check on profits, but we shall consent to nothing that will enable manufacturers to put a loading on their overhead costs. The only effective way to deal with this business, in my. opinion, is for the Government to be its own manufacturer. I ask the Minister to declare specifically, when he replies to these remarks, whether profits are to be allowed on watered capital and bonus shares. If a company has watered its stock until it has a nominal capital of £1,000,000, but an actual paid-up capital of only £100,000 or so, and the Government allows profits on the basis of £1,000,000, the company will be in a very happy position. If profits are allowed on inflated stock a declared profit of 5 per cent. may actually become a profit of 25 per cent., 30 per cent. or 40 per cent. In the case of the Broken Hill Proprietary Company Limited, the profit will be very much higher than that, for the honorable member for Kalgoorlie (Mr. Green) indicated very clearly last night the degree to which the company’s stock was watered. We also know that the capital of many coal-mining enterprises has been watered to an extraordinary degree. In one case an original capital of £60,000 or £70,000 has been inflated so greatly that the company now has capitalized reserves totalling £3,000,000.
– The honorable member’s time has expired.
– I propose to show honorable members that the Government’s efforts to restrict profits to a reasonable figure are soundly based. The Government does not believe that it is possible to evolve a magic formula in three or four lines of an act of parliament which will automatically regulate profits. This view is supported by information collected by our officers over a long period of time, from many other countries of the world. I shall read some statements on this subject from British and Canadian official documents. In both Great Britain and Canada a policy and method similar to that of this Government is being applied. The outlook of the peoples of those countries is similar to that of our own people. . The Prime Minister of Great Britain said a year or two ago -
His Majesty’s Government are determined that the needs of the nation shall not serve to pile up extravagant profits for those who are called upon to meet them … On the other hand, it is important to retain the goodwill of industry, for in peace time firms cannot be compelled to undertake contracts on terms which they consider unreasonable . . . It will be necessary also to co-ordinate the demands of the three Services so that proper priority shall be observed and competition between them, which might lead to higher prices, avoided. His Majesty’s Government believe that all these difficulties can be overcome through the organization they have in mind.
– The fact remains that the difficulties were not overcome.
– Presumably, the British’ Government is overcoming them through the Supply Department. The British Prime Minister also said-
Control to prevent excessive profits will be effectively exercised by inspection of books, adequate technical costings, audits on behalf of the State and arbitration in cases of dispute. The Government are satisfied that this cun he done without impairing the confidence unci enterprise of contractors undertaking novel and difficult tusks.
I new direct attention to the following statement in. the Report on the Estimates of Great Britain, which was issued a year or eighteen months ago: -
My Lords .concur in the committee’s view that great difficulties are inherent in a system of non-competitive contracts and, in particular, that it is necessary that the question of oncost should receive the closest attention. They agree that the whole position calls for the utmost vigilance, and they assure the committee that the matter will be kept under close and continuous review.
My Lords are in general agreement with the view expressed by the committee that in appropriate cases where a firm price cannot be fixed without undue risk to the Exchequer, contracts . should be placed at a provisional or target price on the basis that if the contractor in practice reduces the cost of manufacture below the cost allowed for in the target price, the benefit of such reduction should be shared in prescribed proportions between the contractor and the contracting department.
The first Report on the Estimates of Great Britain issued a year ago states -
Your committee are glad to learn that the established methods of placing orders by competitive tender continue to be adhered to as far as possible by the defence departments, and that the type of contract known as time and line, in particular, is only admitted in isolated and exceptional cases.
Those extracts show the general trend of thought on this subject in Great Britain, where the contracts involve an expenditure of hundreds of millions of pounds as against a relatively few millions of pounds in Australia.
I now direct attention to the following comments made in a report received from an officer in out Trade Commissioners’ office in Ottawa concerning the Canadian practice : -
It is the Government’s declared intention that Canada’s defences be materially strengthened and to this end the programme of modernization undertaken two years ago is to be further augmented, particularly in regard’ to the air services. ‘ Together with the plans already under way for the production of bomber planes upon an extensive scale for the British Government, the enlarged Canadian defence programme should stimulate manufacturing and increase employment in a number of industrial fields. At the same time the Government has made known its intention to establish a defence purchasing board through which necessary equipment will be bought,, and, where private manufacture is necessary,, it will be the duty of this board to see that profits ure fair and reasonable. The Government does not propose that private manufacture of defence materials is to be undertaken without profit, but, as the Prime Minister stated to the House on Monday, the 16th January, the production of munitions is to beso safeguarded that profiteering will be impossible. The purchasing board, he added, will be one that will command public respect and confidence.
It will thus be seen that neither in Great Britain nor in Canada has any magicformula been evolved which automatically excludes the possibility of profiteering. The fixing of an arbitrary percentage could not possibly be effective.
The aim of the amendment moved by the honorable member for Martin (Mr. McCall) is to limit the net profit to 6 percent, on the value of the actual assets employed in the earning of such profit.. I presume that the honorable member envisages *he retention of the contract system. His idea is that tenders will be called and presumably the lowest tender tentatively accepted. Subsequently an investigation is to be made of costs, and if it finds a profit exceeding 6 percent, of the value of the actual assets employed in the earning of” it, the tender will be rejected and fresh tenders called. But the Government has no power whatever to compel any firm to sell its goods at a certain price. It cannot direct firms in “this matter. It cannot even say that the tender price shall be such as will permit of not more than 6 per cent. being earned.
– The Commonwealth Government has power to buy raw materials.
– The honorable member for Balaclava probably has in mind section 67 of the Defence Act which gives the Government power, undercertain circumstances, to requisition goode and pay for them at a fair price - to be determined by arbitration. That power will, of course, still exist when this bill is passed, and, as the Assistant Minister remarked in his speech, occasion may arise to use it; but the power- does not enable the fixing of an arbitrary rate of profit. If this amendment were agreed to it would undoubtedly involve a long and exhaustive investigation of every contract and so cause considerable delay in the supply of materials. “When it is- remembered that about 10,000 contracts are let each year, and that the number of them is likely to be greatly increased in the next year or two, it will surely be appreciated that any procedure which causes delay will be serious. Reasonable expedition is essential in the supply of the materials which the Defence Department requires. If undue delay were to occur through the establishment of this new department, it were better that it had never been established, and that the existing practice had been continued. One of the main purposes of the creation of this new department is expedition.
– The Assistant Minister said, not 20 minutes ago, that there was no need for this department.
– With great respect I suggest to the honorable member for Barker that he did not say quite that. He said that some of the powers to be exercised by this new department already existed.
– He said” that all of them existed and that this bill was not necessary.
– I cannot accept that as a true interpretation of the Assistant Minister’s speech. I did not hear all his remarks, but, for myself, I would say that some of the so-called powers set out in this bill arc not powers, but rather functions.
– This bill merely expands the powers contained in section 63 of the Defence Act.
– I mentioned that on another occasion.
– But additional matters are also included.
– A great many additional, matters are covered. If a department of supply and development is to be established, surely it is appropriate that Parliament should approve of it by legislative action. The functions of the new department are stated in clause 5 of the bill. I call them functions rather than powers, for possibly all the things set out in the bill could be done to-day under the provisions of a large number of existing acts. The honorable gentleman will agree that that would not be appropriate. There would be interminable delay in discovering the amount of capital and assets employed in the earning of profits on any particular government order as, fox example, an order for 50,000 tooth brushes or 200 pairs of hoots. As was mentioned by the honorable member for Darling Downs (Mr. Fadden), the information could he obtained in respect of a public utility company, such as one which supplies electricity or gas to the public, or performs some service week in and week out throughout each year. In such cases, it would be possible to know the amount of capital and assets involved, and to determine the price which should be charged for gas or electricity, in order to yield a predetermined rate of profit.
– Could it not be arranged that A statutory declaration be submitted with the tender, and for checks to be made subsequently?
– That would not be appropriate. The honorable member for Werriwa spoke of watered capital. It is impossible to go back over the history of any company, and ascertain the actual capital involved, particularly, when large numbers of small contracts, each for a relatively few hundred pounds, are involved. The cost would be a great deal more than any saving which might be effected.
– It is done in the Customs Department. The inspectors of that department do not check the whole of each consignment.
– When I spoke earlier during the committee stage, I said that, as the result of my short experience in this new department, I was convinced that the Government was getting extremely good value from the contract system, under which public tenders for supplies are invited in widely circulated advertisements. I still adhere to that view. I have from the department - although I do not propose to use the information in this discussion - a list of practically all the major items or materials that are purchased by it in a normal year, and, in particular, the purchases so far during this financial year. The statement contains two columns, in the first of which is set out the lowest tender price, and in the other, the price of the same article charged to wholesale houses. In every instance - and there are many scores of items - the contract price obtained by the Government under the tender system is appreciably below that charged to wholesale houses. If I were at liberty to give to honorable members the details - but, for obvious reasons I cannot do so-
– The committee should have them.
– I think that it would be unwise to supply the information, because, by so doing, I mightprejudice prices inthe future. Honorable gentlemen may take my word that there is a very appreciable difference between the ordinary wholesale prices and the prices charged to theGovernment.
– That is only with respect to manufactured goods; we want a check on the prices of raw materials.
– What about manufacturers’ prices?
– I havereferred to manufacturers’ prices; I am speaking of the prices of goods sold in bulk to wholesale houses, and comparing them with the prices at which the Government buys similar goods under the contract system. The latter are very much lower. That being so, I do not think that it is possible to say rightly that there is any profiteering in respect of goods purchased by the Contract Board.
– That may be so, but the public does not believe it.
– I have a number of facts to prove it, but I believe that it would be against the public interest for me to give to the committee the details which I have in my possession.
– Does the Contract Board get the benefit of discounts?
– No question of discount arises.
– In some instances, there are definite discounts.
– I am sorry that I must disagree with the honorable gentleman; in respect of goods obtained by public tender, the prices are net. The honorable member for Werriwa mentioned a contract let to Broken Hill Proprietary Company Limited for shell cases, and said that that company had returned to the Government 7s. in respect of each shell case made by it. In his opinion, that action proved that the contract price in the first instance was too high, and he accused the Contract Board of not having been sufficiently vigilant in the policing of prices. The facts are that the Broken Hill Proprietary Company Limited obtained a contract at a price which, when compared with the price of manufacture in government factories doing the same job, was quite reasonable. However, when the job had been completed, the company said that it would accept no profit, and would charge no overhead or depreciation, but only the cost of materials and labour. That patriotic gesture on the part of the company led to its returning 7s. in respect of each shell case. I do not think that that action supports the case presented by the honorable member for Werriwa.
– Will the company do that in every instance?
– The Broken Hill Proprietary Company Limited can be relied on to do the patriotic and decent thing in relation to the supply of munitions for government requirements.
– It was ashamed to charge prices equal to the cost of manufacture in government factories.
– Could the Minister give to the committee a few examples from the list in his possession?
– By doing so I could strengthen my case, but it would be against the public interest.
– If public interest is involved in the manufacture of munitions, why would it be against the public interest to give the information?
– As I have said, it might prejudice prices in the future.
Mr.Fadden. - Evidently the Minister anticipates that manufacturers will attempt to profiteer.
– It would be useless to give figures unless I also gave the names of the contractors and the materials to which they relate.
I come now to the subject of annexes. Recently an air mission from the Old
Country visited Australia in order to advise the Commonwealth Government with respect to the manufacture of aircraft on a large scale in this country. At least two of the gentlemen comprising that mission had had considerable experience in the manufacture of munitions, because during the Great War they controlled their manufacture in Great Britain. The policy of the Government in relation to annexes was discussed with them, and their advice was sought. When they had been told the conditions under which annexes were to operate, they expressed the opinion that the contracts that the Commonwealth Government had entered into with respect to annexes, under which the amount of overhead was reduced by the exclusion of about ten items, and, at the same time, the possible profits were reduced to a maximum of 4 per cent., were the stiffest they had ever seen.
– Are those gentlemen connected with any industries for the manufacture of munitions?
– No; they were advisers to the British Government during the last war. The Government has given a good deal of consideration to this subject, and it believes that it would be impossible to fix any arbitrary percentage of profit which would stop profiteering. The Government believes that no general rule can be laid down; each case must be dealt with on its merits. It believes that the checks and safeguards that already exist are adequate but it is not certain, and therefore it proposes to set up an accountancy panel, before which all the facts of each case, as well as the procedure followed in purchasing requirements, will be laid. It will be open to its members to advise the Government in any direction that they think fit, and to say what additional safeguards, if any, should be instituted. In this way, ‘the Government believes that it will be able to carry out its policy of ensuring that no exorbitant profits shall be made out of the supply of materials for defence purposes.
– What does the Minister mean by reasonable profit?
– What is a reasonable profit will vary in each case. A profit of 4 per cent, may be exorbitant in some cases; in others it may be quite insufficient.
– Will the Minister cite a typical instance?
– I shall hp happy to do so. Materials involving a considerable outlay on the part of the supplier for a relatively few articles come within a different category from materials supplied in large quantities and requiring no considerable expense in providing jigs, dies, and fittings. Unless the Government is to allow the writing off of those costs, no manufacturer supplying a small order could carry on at a low percentage of profit. ‘ In respect of standard lines as, for instance, toothbrushes or boots, the position would be different. There are many instances of goods in the manufacture of which a considerable outlay has to be made, even though only a few articles are sold. It would be impossible for a manufacturer to recoup his outgoing in respect of jigs, dies, fittings and tools from a comparatively small order. Either he must be allowed to write off a considerable percentage of the capital cost of those jigs, dies, fittings or tools, or he must be allowed a profit considerably more than 4 per cent. The circumstances of each case will be different, and they will have to be met differently.
– The Minister has sustained his point in respect of certain aspects of manufacture, but will manufacturers have first to provide themselves with jigs, dies, patterns and tools?
– Manufacture to-day is different from what it was only a few years ago; instead of making isolated articles, manufacturers now engage in mass production. I refer to manufacturers who have carried on largely with jigs, dies, fittings- and tools in various establishments largely built especially for one job.
– I appreciate that; but military equipment, shells and the like, do not come within that category.
– I am speaking of all defence supplies, amongst which shells and actual munitions are in a minority this year.
– Can the right honorable gentleman give to the committee some instances in which heavy costs will be incurred in connexion with jigs, dies, fittings, &e. ?
– Instances occur in connexion with everything that is not absolutely standard with civilian requirements. We know, not only from our own experience, but also from the experience of other countries that have faced and are facing this same problem, that we would be fooling the Australian public if we were to set an arbitrary percentage, i.md rely largely on that for the control of profits.
– Would the Minister regard a profit of 4 per cent, as fair and reasonable ?
– In the circumstances in which the annexes are to be run, 4 per cent, would represent a very low profit.
– Four per cent, on turnover ?
– Considering the conditions which the businesses to which the annexes are attached have to abide by, including the provision of fully-trained personnel at very short notice to man these works, I believe that 4 per cent, would be a very -low profit.
– I am sure that every honorable member who has been associated with this debate is desirous of using every means possible to prevent profiteering in connexion with defence requirements. History’ shows that in respect of their supplies of war materials, governments have been the victims of profiteers right throughout the ages. Anybody who has taken a very close interest in this debate must have been struck by the fact that whilst the Government has brought forward nO concrete proposal to give practical effect to the general desire for the prevention of profiteering, it has raised every obstacle in the way of honorable members who are desirous of incorporating some safeguard in this bill. I was amazed at the statements of both the Minister and the Assistant Minister that no formula could be set down for establishing a profit-finding basis and that, as a consequence, they were unable to give any idea as to what would be a fair and reasonable margin of profit for ‘those supplying government requirements. We all know very well that everything can bc costed. The Minister has stated that in the United Kingdom all means possible were used to control costs of production, by inspections of factories and the laying down of formulas established on a definite technical basis for cost finding. The Defence Purchases Board in Canada had the same methods. If the Government has in mind as a fair and reasonable margin of profit what it proposes to allow to he firms conducting the annexes, namely, 4 per cent, on turnover, God help this country in the event of it having to meet heavy expenditure during a time of war. As an experienced accountant I say that I know of very few businesses which obtain or are able to maintain a net profit of 4 per cent, on turnover. Yet, that margin is to he allowed to those concerns which are controlling the annexes for which the Government has to find the whole of the equipment, the works and the buildings, and, in most cases, the land. These annexes are to be fully equipped by the Government and private enterprise is to be asked to find only the skilled labour, out of the employment of which it is to be allowed to make a profit of 4 per cent, on total output or turnover. We have been told that it is impossible to lay down a formula. ‘ Whilst I do not contend that the formula suggested by the honorable member for Martin (Mr. McCall) is perfect or complete, I regard it as an honest attempt to prescribe a reasonable limitation of profit. The Government itself can work out the details of its application. I have before me a cost-finding questionnaire sent out to members of the Printing and Allied Trades Association in New South Wales by Messrs. Sorenson Purves and Company, a well-known firm of chartered accountants established in Sydney and Melbourne. This questionnaire, which was sent out in order to arrive at a costing basis for the printing trade in New South Wales,, asks for particulars concerning various factors that operate in that industry. I shall not weary the committee by referring to the details. The point I wish to make is that if the printing trade of New South Wales can evolve a basis for the determination of costs in that industry, is it beyond the capacity of the national government of this country to formulate a basis for ascertaining the costs of those engaged in the manufacture of munitions in order to prevent profiteering in the event of war? The suggestion made by the honorable members for Martin (Mr. McCall) and Balaclava (Mr. White), has been wrongly interpreted by the honorable members for Werriwa (Mr. Lazzarini) and Bourke (Mr. Blackburn). It was not suggested that profits be limited to 6 per cent, on turnover, but that it be limited to 6 per cent, of the ascertained true value of the assets used in the earning of the profits. The Minister, in stating that the policing of any arbitrary margin of profit would be too cumbersome, drew attention to the fact that there are thousands of contracts to be dealt with, and asked if it was suggested that every one of them should be scrutinized in order to determine the profit made by the contractor. There is no necessity to do that. The system of contract by public tender must be continued, but the system should be carefully policed. Every contractor should be licensed. He should be required to put his licence number on his tender and embody in it an affidavit that the price at which he has tendered does not permit him to earn a profit in excess of that prescribed. Competition between tenderers will determine whether there is evidence of profiteering. Oau we not depend on the integrity of manufacturers, and, if there is any suspicion of profiteering, inquire into it? We do that in connexion with taxation returns. Taxation officials do not scrutinize every return. They do not look upon every taxpayer as a rogue and a thief. But if in an individual case the department has its suspicions aroused, it investigates the return and takes appropriate action. If that is found satisfactory in connexion with taxation returns, could it not also be done in connexion with our huge defence expenditure of over £70,000,000? If the Government is sincere in this matter, could it not ask the new Department of Supply and Development, the ‘Works Department, the Tariff Board and the Contracts Board jointly to police a provision for the limitation of profits ? Instead of placing every obstacle in the way of honorable members who desire to protect the interests of the people against profiteers, it should be ready to give sympathetic consideration to their suggestions.
– The Government is creating suspicion by its actions in this regard.
– That is so. The amendment proposed by the honorable member for Martin (Mr. McCall) will be of no use unless the amendment forecast by the Deputy Leader of the Opposition (Mr. Forde) be carried. Subclause 2 must be amended in order to make it mandatory on the GovernorGeneral to give effect to the provisions of sub-clause 1. The amendment of the honorable member for Martin is an honest attempt to impose a check on profiteering. I repeat that the 6 per cent, profit margin will find its own economic level because every tenderer will take into consideration the possible tender of his competitor. Competition will be keen. Unless some definite margin of profit be laid” down a contractor who bases his tender on a maximum profit of 6 per cent, will be at a disadvantage as compared with another with perhaps a larger turnover, who bases his tender on a profit of 4 per cent. I suggest that the Government could utilize the amendment moved by the honorable member for Martin as the basis for the fixing of an equitable margin of profit.
In Queensland price-fixing legislation has been in operation for years. We are told that the Department of Supply and Development will deal with all kinds of commodities - munitions, raw materials, finished articles, motor tyres, toothbrushes, &c. Every commodity in Queensland is subject to price-fixation, and to the scrutiny that it demands, and, if profiteering has not been eliminated, it has at least been reduced. The prices of commodities throughout the State are revised in accordance with the conditions obtaining from time to time. It is all humbug to say that the Commonwealth Government could not lay down a formula for the control of profits. We could stipulate that profits should be limited to a maximum of 6 per cent, on the capital value of the assets utilized, and prescribe certain charges allowed for overhead expenses, depreciation, &c. We should take the actual experience of the Contracts Board, and ascertain whether a 6 per cent. residue represented a fair and reasonable return. In the schedule to the Electric Light and Power Act of Queensland are set out certain classes of expenditure to be allowed for in calculating the cost of production, so that the fair selling price of the commodity may be determined. The act requires certain information to be supplied by the company, and, if the department is not satisfied about it, an investigation is held. If the company has not observed the provisions of the act, it is liable to a fine and certain other penalties. The total revenue is taken into consideration, and from that is deducted the cost of production as set out in the schedule. [Leave to continue given.] The Gas Act of Queensland is drawn on similar lines. Under the electric light act, the cost of production within certain prescribed limits and with regard to certain items is ascertained. The amount of profit allowable is arrived at in this way: A sum not exceeding 7 per cent. of the amount actually invested in the undertaking at a certain date is ascertained in accordance withthe for- mula set out in paragraph 2 of the schedule, which states the kinds of assets on which that 7 per cent. is allowed. That is all that is asked for by the honorable member for Martin under his amendment. I repeat that the limit of profit under the amendment would be 6 per cent. of the value of the assets actually used.
– Suppose a firm obtained only three contracts in a year.
– If it had 33 contracts, the principle would be the same, because it would have to sign a declaration as towhether it had complied with the provisions of thelaw. If it desired the full 6 per cent. profit, and one of its competitors wanted a profit of a lesser percentage, surely the safeguard is obvious. The firm that wanted a profit of 6 per cent. could not compete successfully with the establishment which required only 5 per cent., all other things being equal.
I cannot see why the honorary advisory panel is necessary, having regard to what the Minister and the Assistant Minister have told us. The Assistant Minister said that this panel would look into everything done by the Contract Board. This oversight would relate only to the purchase of materials, not to the cost of production or to the question whether the margin of profit was fair and reasonable. It is necessary to have a basis on which to work. That basis should be the cost of production, which must be calculated on prescribed lines. We are told that theadvisory panel will overlook the work of the board to see if the buying is right, and if all the necessary safeguards are applied. There is some consolation in the statement by the Minister that, as the result of the activities of this board, the prices paid compare more than favorably with the prices charged to wholesale houses for similar lines ; but that does not prove that the profits obtained are fair and reasonable. It is necessary to get down to the root of the matter in order to safeguard the public purse, and to do that there must be a proper, uniform and technically-ascertained basis of cost of production, if we are to have what is considered by this Parliament - not by an honorary advisory panel - to be a fair and reasonable rate of profit. That is all that we desire. Each of us represents about 60,000 electors, and Ave should not have so little regard for our trusteeship as to hand over to fivehonorary public accountants the task of deciding what is a fair and reasonable rate of profit. That is a matter for this Parliament to determine, and the first and most definite attempt towards that end is to be found in the amendment submitted by the honorable member for Martin, which I hope every honorable member who desires to put a limit on the amount of profit to be permitted will support up to the hilt.
– I give notice of my intention to move the insertion of the following new paragraph after paragraph e: -
Any profits made by any annexe created at the direction of the Department of Defence and/or the Department of Supply and Development, or any profits made by any private company engaged in the manufacture of munitions, shall not be in excess of 4 per cent. per annum calculated on the capital invested. “ Munitions “, for the purpose of this section, means armaments, arms and ammunition, or parts relating thereto, as supplied to the Navy, Army and Air Force.
I remind the committee that paragraph e states -
Arrangements for ascertaining costs and for the control- and limitation of profits in relation to the production of munitions.
The definition of “munitions” in clause 4 is-
Armaments, turns anil ammunition, and includes such equipment, machines, commodities, materials, supplies or stores of any kind, as arc. “in the opinion of the GovernorGeneral, necessary for the purposes of defence.
I direct particular attention to -the words “ in the opinion of the GovernorGenera] “. This is a very wide provision. It enables the Government to bring under the act everything grown upon ‘ or derived from the earth, and everything manufactured. If we are to limit profits in accordance with that definition, it will be necessary to control profits generally in all industries. I should say that “profits”, as contemplated in paragraph
.- I was impressed by the remark of the honorable member for Bourke (Mr. Blackburn) that this measure has been placed before Parliament because of the need to be prepared for any. emergency. In ensuring that excessive profits shall not be made we must not load the bill unduly, and thus seriously interfere with the efforts of the Government to provide for the effective defence of Australia. In studying this subject we have to consider first the matter of urgency, and secondly the means that may be employed to ensure that no one shall make undue profits out of the manufacture of armaments and munitions. The bulk of the money expended on defence will go not to, say, 10,000 manufacturers, but to those producing raw materials. They are the syndicates and the combines which control the metals - the zinc; the lead, the nickel with which bullets are plated, and the steel for machine guns - and the thousand and one other things that the manufacturer must obtain before he can produce those articles on which the ‘ honorable member for Martin (Mr. McCall) wishes to work out his 6 per cent. Under the amendment, the whole of the concentration is on the manufacturer to see that Jio does not bilk the Government of anything, but there is no means to ensure that the men who supply the manufacturers with raw materials and their other needs and possibly are profiteering thereon shall be brought within its scope. They will completely escape the net. I was impressed by the .statement made during the second reading by the former Minister for Defence (Mr.
Thorby) that the major portion of Australia’s defence requirements came from about five different sources. The honorable member did not name them, but they include the suppliers of metal, rubber, oil and cement. The rubber suppliers form one huge combine in which the Dunlop-Perdriau, Barnet Glass and Goodyear enterprises are represented. A huge ring controls the fuel oils and lubricants needed for our navy, air force and mechanized army. Huge amounts are to be spent on the storage of oil. The suppliers of cement control the manufacture of fibro-cement and Hume pipes. None of them would be brought within the net by this amendment.
– Of course they would. What would prevent it?
– There is nothing in the amendment to embrace sources of supply. In the early days of a state of emergency public spiritedness may be fervent and general but it will soon dissolve and the efforts of combines will be directed to improving their own position. In New South Wales, as soon as the brick combine got things its own way, it skyrocketed prices without consideration of public welfare. There is nothing in this amendment that, would strike at the root of the trouble. The only effective protection is, as was stated by the honorable member for Lilley (Mr. Jolly) and the honorable member for Bourke (Mr. Blackburn), the sincerity of the Government in enforcing some control of profits. Any words can be put into the bill, but I guarantee that the persons against whom the words are directed will get some smart lawyer to make gaps in the legislation wide enough for a horse and dray to be driven through them. That has always been the case when the interests of big business have been threatened by legislation. The Government should consider two or three things. It should look to the source of raw materials and ensure that the manufacturer of the finished product is not charged exorbitant prices for his materials. The Commonwealth Government of itself has no power to fix prices of raw materials, but it could do so in collaboration with the State governments, which have the necessary powers. A precedent for such action exists in the collaboration that has taken place between the Commonwealth and State governments in respect of agricultural products. The amendment no doubt has good propaganda value. It suggests that something is being done. But I suggest that the honorable member for Lilley was right when he said that the 6per cent. of profit which the amendment aimed at as the maximum would become the minimum and that there would be an accumulation of six-per-cents in the cost of the finished product, whereas, had the profit fixing been left to the discretion of the Government, it might have been kept at a level lower even than that which the honorable member for Martin seeks.
– The amendment is most dangerous.
– Yes. If challenged, manufacturers would have just reason to say “We are only producing at the price Parliament has fixed in its own statute “. The amendment moved by the Deputy Leader of the Opposition (Mr. Forde) finds more favour with me than an amendment which specifics a set profit of 6 per cent., 5½ per cent., or some other rate, the method of arriving at which is a mystery to everybody.Six per cent. might be too high or too low. If it be too low it will curb enterprise and prevent the Government from receiving tenders for what it requires. The right honorable member quoted the submission of the Prime Minister of Great Britain that industry must be permitted to carry on at a profit. It sounds well to say that there must be no profit, but nothing can be done without profit. Profit taking is part of human nature. Without it industry could not. employ hands. Profit, therefore, is essential to industry. What we have to ensure is that there shall not be excessive profit. It is the responsibility of the Government of the day, whatever be its political creed, to. check profits and, to that end, the scope of the legislation under which it acts must be as wide as possible. I am satisfied that the present Ministry is sincere.
Sitting suspended from 6.15 to8 p.m.
– Summarizing my remarks,I would say that I am satisfied about the sincerity ofthe Government to limit profits, but I am not quite convinced about the sincerity of ‘those people who stand behind the Ministry - those large financial and commercial organizations to whom Ministers sometimes bow. For the reasons given, I consider that the provisions of this clause relating to the limitation of profits should be a little more iron-clad than they are,though I have to admit that I do not see what action canbe taken to this end without sabotaging the bill itself. If the amendment movedby the honorable member for Martin limiting profitsto 6 per cent. be carried, manufacturers with a turnover six times a year could show a profit of 36 per cent. per annum, or any multiple of 6 per cent. according to their turnover.
– The principle of the amendment is to limit profits to6 per cent. per annum.
– That may be one interpretation of it. But when a few legal men get together there may be another interpretation of theprovision. The Commonwealth Government should be in a position to apply all necessary safeguards. If it cannot administer this legislation to the satisfaction of the people of Australia, Ministers and their supporters willhave something to answer for when next they go before the electors. The provisions relating to profiteering should be more definite. Therefore, I propose to support the amendment indicated by the Deputy Leader of the Opposition.
.- It was expected that this hill would arouse a great deal of interest and lead to a keen debate in this Parliament, because in all countries which, to-day, are engaged in the production of armaments, legislation of a similar form is receiving attention.
Clause 5 contains the most vital provisions. It deals with the functions of the new Department of Supply and Development and specifies the various matters to be administered by it in time of war or in a time of emergency such as we are now passing through. The new department will undertake the supply of all essential defence requirements. In order that profits made by private manufacturers of munitions may be adequately controlled, .the bill makes provision for the setting up of an accountancy panel to advise tie Government on the control of prices and profits. It is to this particular aspect of the measure that I wish to direct attention. When this legislation was being drafted, the Government sought the advice of many industrial leaders and men prominent in scientific :and commercial spheres. No doubt it was the sound advice given by thos© people which prompted the Prime Minister (Mr. Menzies) to say, in the Course of a speech delivered in Sydney recently, that if he could only have at his command half a dozen of the ‘best business brains available in Australia, he would feel quite happy in carrying on as leader of the Commonwealth Government.
The Government has brought down this important legislation to ensure the safety of the nation. Its provisions, as I say, include a proposal for the setting up of an accountancy panel to advise the Government in regard to the making of profits by private manufacturers of munitions and other war supplies in a time of emergency. I emphasize the word “ advise “ because that was the word used by the Minister for Supply and Development (Mr. Casey) in his second-reading speech, and because the accountancy panel will not itself undertake the actual work of checking. At least I presume that that is so because of the remarks made by the honorable member for Lilley (Mr. Jolly) and the honorable member for Darling Downs (Mr. Fadden), both of whom have reputations as public accountants.
Members of the Opposition have referred to several gentlemen who will be members, of the advisory bodies, such as the accountancy panel, as being representatives of big business interests. I suppose that that in a sense is true. Even the ‘ honorable member for Indi (Mr. McEwen), in his speech on the second reading, referred to certain powerful interests which were not too remote from the Government, as if he feared that some unholy influence might be exercised on the Government in connexion with the letting of contracts for the manufacture of munitions. I do not subscribe
to these fears, but I believe it to be in the public interest that we should do our utmost to prove them groundless. I go further and say that, in view of the existence of those business interests, we should take every possible step to prevent any undue influence from being brought to bear, any undue prices from being charged, and any undue profits from being made.
The Government is wise, in my opinion, in not desiring to expand its munitions factories more than is absolutely necessary. We all know that once a government associates itself with anything actively, it is very difficult to break that association. Of what use would be the expansion of government munitions and military clothing factories entailing the engagement of a large number of additional employees if all our fears about war should prove to be groundless? Obviously we should have incurred the expense of installing new plant and producing new equipment for nothing. I therefore suggest that it is far better to make arrangements with private industrial undertakings for the establishment of annexes in order to contribute to the country’s requirements in case of need. The demand for some of these requirements - for instance, aeroplanes and, probably, motor cars - will,” no doubt, continue to increase with the years, but we all fervently hope that the necessity to manufacture large quantities of munitions of war will not continue. However, certain experimental orders have been given to private manufacturers, and we cannot yet say how many more order will follow, or whether they be for complete articles or for parts.
In several States there are large engineering industries engaged in the manufacture of parts, for assembly in Sydney and Melbourne. Also associated with this work are vast industrial organizations and subsidiary undertakings engaged in the production of raw materials and in turning out manufactured goods. How is it suggested that work in these workshops in all parts of the Commonwealth would be policed? Obviously this work could not be done solely by an advisory panel. How are we to arrive a’t a fair profit basis? Referring to this matter last night, the
Minister for Supply and Development spoke of the work of the Contracts Board.: I believe that the system of inviting tenders for all government requirements is satisfactory to the departments, and fully protects the taxpayers. The Minister told us that, according to a departmental estimate, 60 per cent, of the amount paid for items bought by tender is paid away in wages, and 20 per’ cent, is expended on the purchase of materials, leaving a balance of approximately 20 per cent, to cover taxation, insurance, interest, charges for premises, depreciation and profit. That seems to me to be a very fair estimate. I agree with the honorable member for Darling Downs that the procedure in connexion with the letting of contracts by the Government is sound for the taxpayer. Costs are brought to such a low level that many firms are unwilling to quote, and in some instances will not offer a price at all.
Dealing with the question of annexes, the Minister said that in the assessing of profits, the following items were not to be taken into consideration as overhead charges: Interest on capital, selling expenses, advertising, bad debts, income taxes, debenture interest, reserves, commissions and insurance premiums on life policies.
The right honorable gentleman said that profit was to be based on the cost of production, which in turn would be computed only on direct wages, direct materials and direct expenses. He also suggested that profits should be on the basis of <£ per cent., which was equal to the interest payable on Commonwealth bonds. This seems to me to be a very fair basis on which to work, and I am prepared to accept it.
Now in regard to the question of checking costs as the honorable member for Lilley pointed out, there are many accountants who specialize in work of this kind - public accountants who are familiar with the ramifications of big business enterprises and their subsidiary organizations. If the Government desires a proper check to be made, thus ensuring that no profiteering is carried on, specialists of this kind . should be employed. It is possible that some of these men would be prepared to act in an honorary capacity, but in my opinion nobody should be asked or expected to undertake this work without payment. Like any one else, these men have to make a living and, moreover, I think the’ taxpayers would prefer that they bo paid. Then it could not be suggested that undue influence was being- exercised. _ If government officials could act in conjunction with these specialist accountants so much the better. I make the suggestion, not because I doubt, for one moment, the bona fides or the patriotism of those who control Australian industry to-day, but because its adoption would allay any possible suspicion on the part of members of the Opposition and would, I believe, give general satisfaction to the taxpayers’ of the Commonwealth.
.- Having listened with much interest to the debate on this measure, I note that some honorable members believe that they have a solution for the evil of profiteering. This problem dates back nearly 2,000 years to the time when the Holy Nazarene overthrew the tables of the money changers and drove the profiteers out of the temple at Jerusalem.
From that time until to-day, efforts have been made to check the amassing of great wealth from undue profits, but I have yet to learn of any government that has succeeded in defeating the profiteers. I sympathize with the Minister for Supply and Development (Mr. Casey) in his endeavour to cope with these avaricious individuals. As I said in my second-reading speech, I am afraid, that there is no possible chance of curtailing the profits made by those people, who to-day wax fat on the money which they derive from the sale of war supplies. I am disappointed with members of the “corner party”, who claim to be sympathetic with the working people of Australia. I consider that profiteering in foodstuffs is the worst crime it is possible to commit. I hope, therefore, that we shall be able to deal with those unscrupulous indi;viduals who, in a time of national crisis, corner foodstuffs. The first duty of the Minister should be to take complete control of all .measures necessary for our defence. I have heard the right honorable gentleman refer to Great Britain and European countries. Data collated by English and German authorities show that the most drastic steps have had to be taken in Great Britain and Germany to deal with profiteers. So sympathetic, loyal and patriotic were
Certain of the farmers of England that when restrictions were imposed on profiteering in milk supplies, they dried off the cows, fattened them, and sold them as fat beef. The farmers of England stooped to the meanest action they could possibly take, in order to exploit women and children. I have heard it said that Germans are the most patriotic people in the world. I take leave to doubt that. In 1914, Germany had to pass drastic legislation to nationalize industries, fix prices, and supervise the .distribution of foodstuffs.
– Coffee was destroyed in Brazil in order to cause a shortage of that commodity.
– As the honorable member for Reid (Mr. Gander) has pointed out, coffee was destroyed in Brazil in order to prevent the people from purchasing it at a reasonable price. Wheat was dumped in America for the same purpose. How does this Government intend to deal with its own masters and supporters ? It has been sent here by the profiteers to make it easy for them to exploit the masses. If there is one person whom I would punish severely, it is the profiteer who exploits the nation when it is at war. I support the practical amendment of the Acting Leader of the Opposition (Mr. Forde), who has demonstrated how profiteers could be dealt with in a time of crisis. If a Labour government has the opportunity to exercise this power, it will deal with the profiteer commensurate with his deserts. The Minister has explained what the Government proposes to do in connexion with the factories in which munitions are produced. There is to be a panel of experts for costing purposes, but before these gentlemen will be able to come to a decision they will need accurate information on which to base their calculations. The technical experts in industry will be under the control, not of the Government, but of the big industrialists throughout Australia, and these are the only people who know the real cost of the production of munitions. How can they be expected to supply secret information concerning their businesses? I agree with the honorable member for Werriwa (Mr. Lazzarini) that this is all hocus-pocus. I am well satisfied that it is merely propaganda, designed to induce the supporters of the Government to believe that it is pulling the wool over the eyes of the Opposition and the electors. Some people object to the imposition of a fine, and others to imprisonment. Were I a magistrate when the first profiteer was arraigned in a time of crisis, I should have no hesitation in sending him to gaol. The committee is unanimous in professing preparedness to deal with profiteers. That being, the case, the only logical course is to support the amendment of the Acting Leader of the Opposition. The Government must be given a mandate in this matter. Then, if it did not deal with profiteering the responsibility for failure to do so would rest on its shoulders. I have no doubt that the Minister sincerely desires to protect from exploitation the women and children of this country. In all countries it is they who are the most ruthlessly exploited in a time of crisis. I do not agree with the attitude adopted by the Country party, whose members are afraid that a Labour government might use this legislation to prevent the primary producers from cornering foodstuffs in a national crisis. At such a time the foodstuffs they produce should be placed in a pool for the benefit of the whole of the nation. I am satisfied that this clause is an attempt to deal with profiteers. The honorable member for Boothby (Mr. Price) is smiling. He is afraid to deal with the big profiteers in South Australia, who this year made a profit of 60 per cent., and who are exploiting the Commonwealth Government in the supply of materials for the defence o: this country. Certain profiteers who had contracts from the Defence Department became ashamed, and handed back to the Government a portion of their excess profits. That is absolute proof of the degree to which profiteering can be practised. If any member of the panel of accountants were put into industry he would be unable to work out the cost of production. Big companies which have technical experts will supply to the Government only such information as they want it to have.
– The honorable member’s time has expired.
– I have listened with a good deal of attention to the arguments that have been adduced on this clause. The honorable member who has just resumed his seat (Mr. Mahoney) touched on many subjects.Although I admit that the clause gives one considerable latitude, I do not propose to ramble as he has done but shall confine my remarks to paragraph e. Every honorable member is very greatly concerned in regard to profiteering. Although cheap gibes have been thrown across the chamber, let me say to those who have made them that I am just as much concerned about the limitation of profits as they are.
– The honorable member has never stood up to an obligation in his life.
– That is wrong. I have always been opposed to profiteering, and have spoken against it whenever the opportunity presented itself.
The CHAIRMAN (Mr. Prowse.)I remind the honorable member for Denison (Mr. Mahoney) that he is out of order in interjecting in the way he does. I am warning him.
– I was interested in the statement of the Minister for Supply and Development (Mr. Casey) that, even under existing arrangements profiteering was practically impossible. I do not entirely agree with him in that, but I believe that every effort should be made to exclude the possibility of profiteering. He also stated that under section 67 of the Defence Act, the Government possessed powers to control profit-taking. I am very pleased that it has such powers, because that constitutes an additional safeguard. However, whether or not the powers conferred in this bill are necessary for the purpose of controlling profits, its introduction has furnished an opportunity to discuss the subject of profits generally. I have studied the proposed amendments, particularly those of the honorable member for Martin (Mr. McCall) and the honorable member for Balaclava (Mr.
White). In effect, those honorable members have stated that a profit of 6 per cent. is sufficient in all cases. In my opinion, 6 per cent. might be too much in some instances, and not enough in others. For that reason I do not propose to support the amendment of the honorable member for Martin.
– I said that profits should be up to 6 per cent. They might be only one per cent.
– I do not like the wording of the amendment, and I do not like the principle involved in it. Therefore, I shall not support it, but I am prepared to support the amendment of the Acting Leader of the Opposition (Mr.Forde), which takes the form of a proviso that nothing shall exclude provision for the ascertainment of costs, and the control or limitation of profits in relation to the production of munitions.
We have heard much about the services of accountants. I believe that there are many admirable accountants, and they should be capable of doing much good work as members of an advisory committee. I point out to the Minister, however, that he should not place too much responsibility on them. It is necessary, in addition to accountants, to have qualified technical men to advise them. An accountant is a man who deals with figures only, and, in a matter of this kind, he would need the advice of a qualified technician.
Mr.Frost.-So that he might be deceived.
– It all depends on whether one has a suspicious mind. The rest of the bill has my support, and I hope that it will have a speedy passage.
.- The Government is prepared to accept the amendment foreshadowed by the Acting Leader of the Opposition (Mr.Forde), which takes the form of a proviso to clause 5 to the effect that nothing shall exclude provision for the ascertainment of costs, and the control or limitation of profits in relation to the production of munitions. The present proviso to clause 5 has merely a general reference to the functions of the department. It was never intended that it should in any way limit paragraph e of sub-clause 1.
.- The clause under consideration is clause 5 of the Supply and Development Bill, but the debate has become so localized that one would suppose that the clause related to nothing more than the profits of big business. I propose to take for the moment a wider view of the clause, congratulating the Minister (Mr. Casey), in passing, upon his rapid subsidence after an intelligent count of heads.
This clause sets up a new department of State, and it enumerates the matters which will be administered in that department, or which may be administered in it. It may very well be that none of the matters mentioned in the clause and its various sub-clauses will, in fact, be administered in this department. It may be that some of them will be administered for a certain time, and that the administration will then be discontinued, and they will pass out of the control of the department. It may be, as I indicated in my second-reading speech, that they will be administered for certain classes of persons for some of the time. In this respect, a new principle of government has been introduced, a principle of which I most heartily disapprove. I point out, however, that an act of parliament is not required for the creation of a new department of State. As a matter of fact, since the establishment of federation, new departments have, from time to time, been created, and old departments have been given new names. Changes more numerous than the changes in the personnel of ministries have taken place in the definition of their departments as circumstances were thought to require it. At the beginning of federation there were eight full-time Ministers of State, and two honorary Ministers. This Government has established a record. It has reached the peak. A majority of the members of the United Australia party are members of theGovernment. There are twelve fully-fledged Ministers and four partly-fledged, aspiring Ministers.
– Is this a second-reading speech, or is it a speech on the clause before the committee?
– It is a speech on the clause, which provides for the setting up of a new department, a fact that the profiteers have entirely overlooked in their pursuit of profits. I am discussing the creation of a new department of State, with a large variety of matters under its jurisdiction. I am not discussing, I remind the honorable member for Swan (Mr. Gregory), merely how much can be made out of the trade of blood. That is a subsidiary matter, though, no doubt, a very important one from the point of view of the Government to which he gives equivocal support.
The real motives for the creation of this department, with its new Minister who had to be accommodated after he was disrated, and who insists on his precedence, are, first, electioneering purposes, and, secondly, the pursuit of imperialism at the behest of the money masters in and out of Australia. Both as to the electioneering and as to the pursuit of imperialism at the dictation of others, the action of the Government has been directed by high finance. There is really no need for this bill at all. As the Assistant Minister (Mr. Holt) has himself admitted, the objects of this clause could quite well be achieved under existing legislation. He suggested that the introduction of the bill was a matter of courtesy, a concession to the prejudices’ of the Country party.
– That is a distortion of what I said.
– It was a most amazing statement for the Assistant Minister to make.
– As I have said, there was no need for this bill.We have provision here for inquiries under penalties, but these inquiries are already provided for under another bill, which I am not free to discuss, but which is about to be introduced. If I may say so, to make my point, it is suggested that arrangements may be made with the States; but arrangements maybe made with the States without reference to the powers contained in this bill. “ Arrangements “ mean anything or nothing. This measure is not necessary for that purpose. There is provision here also for running f actories.We are already running factories, munitions and clothing factories, and we had excellent factories which the Government and its friends closed up and of whichthey could be making good use if they had not sabotaged them. The principal provision of this clause is the creation of an unnecessary department, and, purely for political purposes, it contains a passing reference to profits which to me is, I admit, interesting. The honorable member for Richmond (Mr. Anthony) says that you must envisage profits, that you cannot carry on business, or pay wages, without profits. I am just as well acquainted as is -the honorable gentleman with the ordinary operations of the capitalist system. I have laboured under it for a good many years; most of us have, and we have suffered under it, more or less contentedly ; but I point out that this is quite a different matter. What we aTe envisaging is a state of war, and a state of grave emergency, in which there is a challenge and a threat to the lives of the people of Australia, in fact, to the country itself. At any rate the Government says so. We of the Labour party are not concerned with wars in foreign parts in respect of which we propose to take no part, but I point out that the only purpose for which munitions are to be made is for the physical resistance of a fictitious enemy whom we are to destroy with those instruments of death. I point out that, when this invasion takes place, if it does, with these munitions are to be employed the men of this country, and especially the working class, who will be conscripted for the defence of this country. Then, I ask the honorable member for Richmond, will these gentlemen be entitled to consider their profits with their backs against the wall fighting in defence of the lives, homes and hearths of the people of this country? There will be no question of 6 per cent, or 5^ per cent, for the workers whose lives are to be immolated, and rightly in those circumstances, for the defence of their own country within their own shores. It is for that reason, among others, that I am not interested in your bartering as to whether we are to get 6 per cent, for defending our country, or 5£ per cent, or 3 per cent. I am concerned with the defence of this country, ‘ and the defence of the lives of the people whom the Government proposes to conscript in the service of capitalism, wealth, and. profit. Under, the policy of this Government, sol- diers will be enlisted for service in foreign countries, possibly under conscription in foreign countries. I do not accept the declaration of the Government that there will be no conscription for overseas service. I have no reason to accept it. The present Government contains a Minister who himself declared that he would never be a party to conscripting Australians for service overseas, but who, when the occasion arose, determined to break his plighted troth, took his Government to Government House, formally handed in the resignation of that Government and asked for a fresh commission in order that he might pursue the policy of conscription for overseas service. He thus broke his bond with the people in spirit while keeping it in the word. Are these soldiers who serve in foreign parts to be assured of a 6 per cent, profit, or a 5 per cent, profit? Or are they to be put under martial law to do duty for somebody at something less than a living wage? Is that to be the position? I want to know what profits you are going to assure’ to the mother of the Australian son, who, driven out of this country by your base betrayal in regard to the social system of this country, loses his life on a foreign battlefield - the mother who finds the blackcoated messenger of death coming into her home, perhaps in my electorate, to be told that her son has died gloriously for King and Empire on a foreign battlefield, when I know he has given his life uselessly to serve your capitalists. What profit is this Australian mother to get for the loss of her Australian son in buttressing your capitalist system in foreign countries?
– The honorable member has exhausted his time.
– I should not have risen to speak on this measure in committee but for one or two statements made from the ministerial bench, and one from an honorable member opposite. I, personally, am strongly of the opinion that no amendment which can be put into this bill, whether it happens to come from the Opposition or from the Government side, from one lawyer or from another, will satisfactorily deal with what the committee is trying to deal with, namely, the limitation of profits. We might just as well be frank about these things, and, at least, not attempt to deceive ourselves. A good deal of misapprehension appeared to exist this afternoon and last night in regard to one or two -simple business transactions in Australia in regard to market quotations. Seldom has a more confusing statement been made as to what constitutes a market level, in this instance, for copper, than that made by the Minister (Mr. Casey) last night. Then, this afternoon, we heard a statement by the honorable member for Bourke (Mr. Blackburn), who seemed to be completely confused as to the difference between a profit being calculated on the capital involved in the conduct of a business and a percentage profit on the turnover. They are two entirely different propositions. This matter was raised by the honorable member for Martin (Mr. McCall) in regard to the supply of gas masks. If, for instance, you have a company engaged in the manufacture of that, perhaps, necessary, but uncomfortable, article, with a capital of £10,000 and you limit its profit to 5 per cent., it would be entitled, under the amendment now being discussed, to an annual profit of £500. But if this company were to make 100,000 gas masks a year at £1 apiece, and you were to limit its profit on that work to 5 per cent, on production, it would be entitled to a profit of 100,000 shillings, which is a very different figure. In order to arrive at a proper appreciation of what is involved in this amendment, we must go into questions of that kind, and I suggest that this committee is not exactly the best body to go into such questions.
– That is what the honorable member for Bourke said.
– Yes, and I entirely agree with him in that respect. I can only say, therefore, that I am surprised at the Government’s action in accepting the amendment of the Acting Leader of the Opposition (Mr. Forde). It seems to me as if the Government itself is not quite sure exactly where it stands in this measure. In the second-reading stage, I gave the bill the unstinted support to which I thought itwas entitled. To-day, however, I see the Government accepting an amendment which, in its own heart, it must know to be futile, and I hear the Assistant’ Minister (Mr. Holt) this afternoon declaring that the Government has every power to’ do what this bill attempts to confer upon it.
– That is not correct. -I said that this bill was evidence of our good faith, inasmuch as if we did not desire to control profits and to speed up defence preparations it would not’ have been necessary for us to introduce it.
– I should be very interested to see the transcript of the shorthand notes of what the honorable gentleman said this afternoon.
– The honorable member will have an opportunity to do so.
– I should very much like to have that opportunity. The Assistant Minister said that it was a matter of courtesy that this bill was introduced - that all of these powers were already in the hands of the Government. If that is the attitude of the Government then we are being held here to-night discussing matters which there is no necessity for us to discuss at all.
– That is not the attitude either of the Government or of myself.
– We might as well argue on that point as on some of the matters raised in this measure. I stand now where I stood last week. The provision of a proper system of munitions supply and development for warfare in this country is very necessary, but the manner iri which this bill is being put through, and the fact that a sheaf pf amendments is coming from the Minister himself - I think that no less than ten new clauses have come into the bill, to say nothing of a host of amendments to clauses already drafted - leads one to suspect either that the bill was drafted in a hurry, or that the Government is very doubtful as to the course it is taking, and the rate at which it is proceeding al >ng that course. In regard to all of these amendments I say that we might as well get down to tin tacks and recognize that, if it is the declared policy of the Government, by introducing this measure, to give the country” the impression that profits are to be controlled by some sleight of hand method, we should debunk the thing now and be done witE it. We might as well admit that these things are to be carried outon the basis laid down during the second-reading debate, namely, the Government will proceed by trial and error and nothing else. Judging by the debate so far the error is becoming very evident.
.- I am pleased that the Minister has agreed to accept the amendment forecasted by the Acting Leader of the Opposition (Mr. Forde). I agree with the honorable member for Barker (Mr. Archie Cameron,) that the Government has no real intention to put an endto profiteering. At any rate, if it is attempting to accomplish that purpose, it has succeeded so far only in deceiving itself. A few months ago, in company with other honorable members, I inspected the munitions works at Maribyrnong, in Victoria. At that time the factory was producing shells of various sizes, and we understood that the work was to be continued to cope with the requirements of Australia. Wehave heard that many countries, particularly Great Britain, are fully occupied in providing their own defence requirements, and that orders have been placed in Australia for materials for the manufacture of munitions. When a bill was passed by this Parliament last year to authorize the expenditure of £63,000,000 on defence, the Opposition did not oppose the Government in any way. In fact, it gave what amounted almost to an open cheque. If, at that time, the Government had asked for more money the Opposition would have agreed to provide more. The Leader of the Opposition (Mr. Curtin) stated that it was the business of the Government to know what was needed for defence purposes, and that it ought to know better than the Opposition what was needed. We gave the Government a free hand to carry out its defence plans. So far I am greatly disappointed at the way in which it has set to work. We heard from the Assistant Minister (Mr. Holt) last night that the Government had purchased 800 tons of copper and 300 tons of zinc. I do not know what price was paid for the zinc, but the price paid for the copper was £48,000, or £60 a ton. I understand thatthe price of copper for the last two or three years has been about £40 a ton. According to the Commonwealth. Year-Book, the price of copper in 1936 was £38.44 a ton. The price now is £41 a ton.
– The honorable member is quoting the London price.
– That is so, but the honorable gentleman denied the statement of the honorable member for Balaclava (Mr. White) that the price the Government had paidtook into account freight to Great Britan and back, plus 25 per cent. exchange. As a matter of fact, the honorable member for Balaclava was right. The price of copper in Great Britain at present is £41. If we add to that price 25 per cent. for exchange, a liberal amount is still left to cover the equivalent of freight charges to and from Great Britain.
– The honorable member’s contention is not soundly based. The London price for copper in 1937, plus exchange, was £56 in Australian currency.
– But how does the copper get to London?
– I explained that this afternoon.
– The Minister has not answered the honorable member’s question. I wish to know how the Government arrived at a price of £60. If the 1937 price for copper in London was £56 in Australian currency, it must have been the highest price ruling in that’ year. The present London price is £41, which is equivalent to £51 5s. in Australia. The difference between that amount and the £60 paid by the Government provides an ample margin for freight to and from Great Britain.
– It would also allow for insurance and handling charges.
– That is true. Therefore the honorable member for Balaclava is right. If the Government took into account imaginary transport costs, imaginary wharf fees, and imaginary labour costs in this purchase, the whole transaction was a farce. This matter should be investigated by the advisory accountancy panel. If that panel actually advised the Government in this transaction, its appointment should be terminated.
I take exception to the purchase of only 800 tons of copper and 300 tons of zinc. Of what use would that quantity be for .the. manufacturers of munitions to supply the whole of Australia’s requirements ? When I visited the Maribyrnong factory I was given to understand that it had very limited supplies of metals in stock When we voted £63,000,000 for defence purposes I believed that the Government would lay in a stock of defence materials, but it has not done so. Yet each month large consignments of zinc and copper are being loaded for overseas ports at Risdon in Tasmania. A Japanese line of steamers is taking away, not hundreds, but thousands, of tons of zinc every month. Tasmania possesses one of the world’s finest copper mines from which copper is exported to many countries. If the Government were sincere in its defence policy, it would be retaining large quantities of copper for its own purposes. Copper and zinc are essential to the manufacture, of munitions. There could be no fear of financial loss because the prices of these metals will never fall. They are now as low as they ever will be. The Government’s chief concern is not the protection of Australia, but the constituting of advisory panels, to provide jobs for a few men in Victoria and New South Wales. The honorable member for Moreton (Mr. Francis) said last night that three or four Victorians had been appointed to one of these panels and- three or four residents of New South Wales and Victoria to the other. The Government has considered only the powerful interests in these two States from which its policy is dictated. I have said -on other occasions that, if Australia became involved in a war, the first act of an enemy would be to destroy the zinc works in Tasmania, with the result that Australia . would have neither munitions nor materials with which to manufacture them. The 300 tons of zinc recently purchased is scarcely worth considering. The Tasmanian smelting works are the only ones of the kind in the southern hemisphere.
– Are they situated on the coastline?
– No. They are on the Derwent River, about 40 or 50 miles inland. The waterway is sheltered and could bc easily defended. If the Government .were sincere in its defence programme, it would establish munitions factories in Tasmania. Even if. supplies of raw materials could not be transported regularly across Bass Strait, the finished munitions could be shipped as opportunity offered. At present, if Tasmania, were. isolated by danger from submarines, or from some other cause, the factories on the mainland would soon exhaust their stock of raw materials. No harm would be done if the Government purchased raw materials for its own use instead of permitting them to be sent overseas. The Government has announced that it . intends to decentralize defence works, and the Loan Council has intimated that to compensate , the States for the smaller amounts of money granted to them, greater sums would be made available for munitions work’s. I ask honorable members to consider the value of the works allocated to Tasmania in the last four years. In 1935-36, £616,000 was spent on defence works in Australia, and’ of that amount Tasmania received £14,528.; Comparative figures for subsequent years are: 1936-37, total expenditure, £643,000, Tasmania’s share, £13,390 ; 1937-38, total expenditure, £695,000, Tasmania’s share, £7,000; 1938-39, total expenditure, £1,342,000, Tasmania’s share, £12,000. It can be seen that Tasmania’s share is growing smaller every year.
– What amounts did the smaller States receive in those years in the Federal Aid Roads grants and grantsinaid ?
– Order! The discussion must not proceed on these lines.
– I reply to the Minister’s question by asking him one in return. What amount did Tasmania pay in petrol tax in those years?
The TEMPORARY CHAIRMAN.The honorable member must not pursue that question further.
– This bill is far-reaching and of importance to all the State’s. I trust that the Government will accept the various amendments foreshadowed by the Acting Leader of the Opposition. It’ is strange that it should have dispensed with private members’ day in order to debate an amendment, only to agree to that amendment to-night.
– The honorable member’s time has expired. “ ‘
.- In my . second-reading speech I announced that I supported the principle contained, in- this clause. I do so because I believe that it may reduce the lag in defence supplies. Later, in committee, I moved that profits be limited to 6 per cent. I chose that figure somewhat at random,-, in the hope that the Government would propose something better. That amendment was withdrawn in favour of one designed to make the 6 per cent, apply only to the value of the actual assets employed in the earning of any profit. That would prevent any business man from placing money in reserve and claiming that his profit was only*6 per cent. That rate is a maximum. Minister’ after Minister has -spoken, only to reveal how palpably unprepared the Government was to do anything specific to limit profiteering. It was claimed that various proposals to that effect were unworkable. I do not say that profiteering is indulged in to any extent, although there may be profiteering. I am glad to have the support of the honorable member for Franklin (Mr. Frost) of what I said in regard to copper, as he is in a position to know. Yet the Minister floundered when attempting to deal with the matter, but no explanation has been given; we do not know whether or not excessive profits are being made. In my opinion, the standard of commercial integrity is as high in Australia as in any other country.
– It must be bad in some places.
– My statement applies to both manufacturers and importers who tender for supplies to the Defence Department and other departments. The reason that there are no excessive profits in connexion with government contracts is that there is definite competition between tenderers. Monopolies are in an entirely different category. So faT, there has been no adequate explanation of the way in which their figures will be checked. There will be no competition for certain metals and other materials, even if tenders ‘be called. Private members have no access to the figures of these concerns as has the Government. For that reason, the Government should be frank, and say de finitely that this or that, company is making only, say, 1 per cent, or 2 per cent, profit. If that were done, the air would be cleared, and honorable members generally would have more faith in the sincerity of the Government. After all, this debate was initiated by the Government. The Prime Minister (Mr. Menzies) said, and other members of bis Cabinet have repeated, that there is to be no profiteering in relation to defence supplies. This half-baked bill is brought forward to give effect to that declaration and we are asked to accept it. Because we have criticized the Government’s lack of clarity we are told that we are attacking Australian manufacturers. The Government has issued a challenge to manufacturers and importers. We ask it to say how it intends to deal with the matter, but it has failed to show how profits are to be checked. The amendment of the Acting Leader of the Opposition (Mr. Forde) does not make the position any better than it was before. Instead of “ arrangements for ascertaining costs and for the control and limitation of profits “, the amendment proposes to add the following proviso: -
Provided that no such determination shall exclude provision foi; the ascertainment of costs and for the control and limitation of profits in relation to the production of munitions.
What is the limitation, and how is it to be enforced? ‘Some honorable members condemned the panel of accountants, but such a panel is nothing new for it was mentioned last year. I agree with the honorable member for Barker (Mr. Archie Cameron) that the Assistant Minister (Mr. Holt) admitted that there is nothing new in this bill, and that all that it seeks to do could be done under the defence powers that already exist. I remand the Government that the wartime profits tax brought £7,000,000 to the Commonwealth Treasury, because certain people exploited the public in connexion with the supply of foodstuffs and munitions. Some honorable members who were in different theatres of war know that things there were not always right. I know that valuable lives were lost through second-hand aeroplanes having been used in Mesopotamia, although that was the fault of neither Australia nor Great Britain, but of another portion of. the Empire. I thought that the Government was going to tackle this thing, but the bill contains no evidence of how it will be done. A panel of eminent accountants will give their services in an honorary capacity. No doubt they will do their work well , but it must be remembered that they will have their own businesses to attend to. I should like to know whether they will be called in to check the prices charged by monopolies?
– They are to check existing methods.
– So far, no government, irrespective of its political faith, has dared to touch the monopolies in our midst. When I was Minister for Trade and Customs I at least made them appear before the Tariff Board. The Assistant Minister said that I approved of certain duties on copper. I did so, but only on the recommendation of the Tariff Board. When administering the Trade and Customs Department, I endeavoured to get as many men into employment as possible and I remind the House that during the six years I was in control of the department, 4,000 new factories were established and work was found for over 200,000 additional men. Those figures are a source of great satisfaction to me. It has been said that Australia’s policy of protection tends to create millionaires in our midst. I reply that, if there are to be millionaires, it is better that they should be in this country than in other countries; because as residents of Australia they are taxpayers, and the Government can tax them. I do not care from what industry excess profits are made; those profits should be taxed, so that the burden of taxation on people with smaller incomes may be made lighter. Last night I read some criticism by the board that “ corner “ prices in Australia are too high, though there were reasons given. This is the time to check profits, not to throw men out of work. Honorable members will recollect that when I reduced the duties on cement there was an outcry; although this was to force down prices several members of the present Cabinet voted against the reduction and temporarily defeated the Government. I repeat that I regarded it as my duty to do what I could to place men in employment and develop Australia, rather than make it possible for a few persons to make excessive profits.
– The copper company to which reference has been made has averaged less than 6 per cent. profit for the last six years.
– The Melbourne Herald has shown the profits made by that company. I do not say that there has been profiteering; it is for the Government to say that there has been no profiteering.
– Is the honorable member referring to the Mount Lyell Company?
– No, I refer to Austral Bronze and the associated company which took it over. The Mount Lyell Company supplies raw copper. We do not know what profit it makes on that commodity, nor do we know that the panel of accountants will be able to obtain that information. As I have said, the proposed amendment of the Acting Leader of the Opposition is useless. I adhere to the proposal for a limit of 6 per cent., which the honorable member for Darling Downs (Mr. Fadden), who is an accountant said was a good amendment, although he hoped to improve on it. I disagree with those who say that it is impossible to know what profit is being made. Profits are ascertainable. No business can succeed unless its owner knows what profit he is making; otherwise he would soon become bankrupt. A constant check must be kept on stocks and costs.
– The amount of sales is not known.
– A business without a proper system of accountancy will soon find itself on the financial rocks. I admit that some firms cannot give their dividend rate for a year, but they should be able to state the cost of any item. I recommend that a statutory declaration should accompany every tender. The Government has power to provide for it by regulation. Tenderers should be required to submit a declaration, in which they swear that the profit made by them is, say, 2 per cent. or 3 per cent., or any rate below 6 per cent. Above that rate they can be rejected, or, if there are special reasons for a higher profit, special legislation can be brought down. Business is competitive, and the facts can be ascertained by qualified accountants.
The Trade and Customs Department has effective means of obtaining the information that it desires. Boarding officers cannot examine every item in the statement supplied to them by ships’ passengers, but they pay particular attention to persons whom they have reason to suspect. In these cases the Government can do the same ; it has the power to check profiteering, and to save millions of pounds to the taxpayers of Australia who are now taxed heavily to pay for the defence of their country yet it will not bring forward a formula, after all its propaganda. The Government should say to the captains of industry, “Are you willing to supply defence materials at a profit of one per cent”. I regret that both the Opposition and the Government imagine that something of use will result from an amendment which cannot be said to ensure that profiteering will be checked.
.- This is an important clause with a very wide scope. It vests in the Minister powers which may be used in any direction desired by the government of the time. There are some provisions which I fear are definitely not in the interests of the workers and others applied to vested interests which are not likely to be effective in their operation. Much of the debate has related to the method of preventing profiteering in connexion with the supply of arms and munitions. The amendment of the honorable member for Martin (Mr. McCall) is nebulous. The honorable member asks for a limitation up to 6 per cent. on the value of the actual assets employed in the earning of profit. If we were dealing with a firm whose whole activities were directed towards the production of the same sort of commodity or commodities for the Government, it would be possible to show whether or not its profits exceeded 6 per cent. on the capital invested; but as many of these contracts will represent only a small percentage of the business of the companies to which they are let, it would be unfair to allow them to charge prices which would enable them to pay 6 per cent. on the whole of their capital investment. It is a most ineffective proposal in that, although the profit on the whole of a company’s transactions may not exceed 6 per cent., the profit on that portion of the business represented by Government contracts may be as high as 60 per cent., with a much lower percentage, or even loss on other undertakings. Calculations shouldbe made of the profit derived on each unit supplied. I have no faith, either, in the efficacy of the clause as it stands at present. In my opinion it will not achieve the desirable objectives of limiting profits and protecting the people against exploitation. I believe that it has been inserted in the bill merely as a gesture to the public that the Government is doing something to prevent profiteering while initiating new enterprises for the private manufacture of armaments. The history of the manufacture of arms and armaments has been one of exploitation of the peoples of the world. It is realized by every one that the armaments firms throughout the world have been the cause of many wars. This bill is of outstanding importance in that it sets up a new department and brings about a departure from existing practice of government manufacture of munitions. I remember very well the honorable member for West Sydney (Mr. Beasley), in moving the adjournment of the House some time ago, protesting very strongly against the policy which it was stated the then Government was proposing to adopt, of handing over to private enterprise the manufacture of armaments. It was contended by honorable members on this side of the House that the manufacture of armaments should be restricted to government factories, and that this country should at all costs discourage the operations of the armaments ring, which have proved such a curse in other countries. On that occasion, the then Minister for Defence (Sir Archdale Parkhill) said that the Government did not propose to depart from the policy of government manufacture of armaments. We find now, however, that this measure has been brought down for the specific purpose of stabilizing the policy for the private manufacture of armaments. To delude the public, the Government has inserted in the bill the clause now under discussion which it says gives sufficient power to the Minister to prevent profiteering. The policy of the party on this side of the chamber is thatthe manufacture of firmaments should be strictly a function of the Government and that no avenue should be left open for private exploitation of the misfortunes of the nation in time of emergency. This bill presents an opportunity for private enterprise to exploit the people of this country in a direction never open to it before. As a matter of fact, many of our captains of industry are transferring from civil enterprises to various branches of the armaments racket, in anticipation of making excessive profits. One very important manufacturer has given up his ordinary civil enterprise in order to engage in the manufacture of aeroplanes (because he believes that it will be a profitable venture. There should be no profit in the manufacture of war material. A defensive war would be fought in the interests of the capitalists of this country, and it is up to them to make their contribution to the defence of their country by not seeking to gain unfair profits out of the manufacture of war material. As a matter of fact I would go as far as to say that they should be prepared to manufacture war material at a loss, because it would be used for the protection of their property. As I pointed out in the earlier part of my remarks, it is impossible to eliminate profit from the private manufacture of armaments, because there are so many means by which profits can be hidden, even from the most competent accountants. As was pointed out this afternoon, although the dividends of semi-government undertakings, such as the Electricity Commission, and of private corporations engaged in the supply of gas, are limited to a certain percentage, it is found from time to time that the profits earned are higher than they should be, so that it becomes necessary to place the surplus into special reserves or sinking funds, or to write down the value of assets. Thus profits may be hidden in such a way that they cannot be ascertained even by the closest investigation of accounts. Endeavours have been made from time to time to prevent the continuance of that practice, but it is almost impossible to do so. While the Minister was speaking of the supply of raw materials to manufacturers engaged in munitions making, I interjected and asked whether it was proposed to limit the profits of those engaged in the supply of raw materials. The right honorable gentleman said that he would deal with that matter at a later stage. He completed his speech, however, without outlining to honorable members the methods proposed to be adopted to limit the profits of those engaged in the supply of raw materials. For instance, we have the Broken Hill Proprietary Company Limited supplying steel and some of the most important basic commodities to the armaments ring. Apparently that company will be able to fix its own price for those raw materials. The Minister has not. told us in what way it is proposed to investigate the prices of those commodities, nor was he prepared to say that steps would be taken to ensure that the producers of raw materials would charge a reasonable price to the manufacturers who turn out the finished articles. The price of metals was also discussed, particularly that of copper. It was pointed out by some honorable members that the Government proposes to pay the London price, plus the Australian exchange rate, for its copper purchases. If it be desired that London parity price should be paid, we should pay the London price less the cost of freight to London. The metal is not to be sent to London. If, for instance, metal is sold for £40 a ton in London, and the freight is £10 a ton, it should be sold in this country for £30 a ton, whereas, if we had to pay the actual London price we should be paying a price which included freight from this country.
The scope of clause 5 is indeed’ pen wide. A later clause in the ‘bill gives power to the Governor-General to make regulations in respect of all matters specified in clause 5. ‘ It is in respect of those regulations that I .see the greatest danger of abuses. Paragraph d which deals with the acquisition, maintenance and disposal of goods is a very important one for this Parliament to consider. We have only to remember what happened during the Great War as the result of regulations promulgated under the War Precautions Act. Regulations were issued under that act over which the Parliament had absolutely no control. As a matter of fact, many of the things done then by regulations were even kept secret from the Parliament. My authority for that statement .is the official booklet Rules for the Censorship of the Press, copies of which were issued confidentially to selected executives of newspaper companies during the war. Each copy was numbered and a signature was obtained for its issue. The recipient was made personally ‘responsible for the pamphlet and the secrecy of the information it contained. At first the rules were taken Lightly; the press endeavoured to get round them. We found, however, after one prominent journalist in Melbourne, and another in Sydney, had been threatened with internment for contravention of the rules, that the resistance of the press was broken down and the newspapers came into line and adhered to the rules. These regulations, issued under the War Precautions Act, which were designed to prevent the disclosure to the enemy of naval or military information, were most drastic in character. The dual effects of the censorship were to remove impediments to the economic conscription of Australian youths - legal conscription being twice rejected - and to suppress facts that would reveal the profiteering in respect of war materials and services .that had gone on. Regulation 28 (ae) gave power to the military authorities to enter hy force, and, if necessary, to seize and destroy copies of newspapers containing “injurious matter.” The dragnet definition of “ injurious matter “ covered “ any matter likely to be injurious to the public safety or. welfare.” The military authorities decided what was injurious matter and there was no appeal against their decision. The object of the regulation was to put the military authorities absolutely above criticism of any kind. I mention the regulations promulgated under the Wai* Precautions Act to draw attention to the possible abuses .that may follow the utilization of powers to make regulations in respect of this clause. There has been much discussion in this chamber lately about the powers of the Parliament being usurped by the Executive. This clause will enable the powers of the Parliament to be still further encroached upon by the Government. During the war we had experience of the rationing of sugar, butter toad other commodities produced in this country. That rationing was carried out for the purpose of profiteering on the overseas war markets. The wool-growers of this country alone lost approximately £500,000,000 on the war transactions. Section 3, sub-section 21 of the War Precautions Act provided that the publication of oversea quotations for wool and of prices obtained for wool shipped overseas should be prohibited.
– The honorable member’s time has expired.
.- I’ express my keen disappointment that the Government has not seen fit to introduce into the bill a definite provision with regard to the control and limitation of profits, and that the Ministers who have spoken on behalf of the Government have equally failed to convey to the committee how the clause now under discussion will be administered. As a matter of fact, I think that every explanation attempted by the Minister has left the committee with less confidence in the eventual mode of administration. The arrangement which the Government apparently proposes to make in connexion with the price of copper, which was dealt with by the committee in detail proves on examination to be entirely unsatisfactory. If the general authority to be given to the Government for the control of profits is to be administered in the same way as the price of copper has been determined, I should say that the purpose which the Parliament has in mind in thus helping the Government will be wasted. The products of the greatest industries of Australia are constantly realized on by the producers - I am referring particularly to the primary producers - on the ‘basis of export parity; that is, the price prevailing in the great market centres of the world, less all costs incidental to the transportation and sale of the products there. For instance, the wool-growers sell their’ products in Australia at London parity, which means the London price, less tall costs incidental to the transportation of the goods to London and the sale of them there.
– -Plus exchange.
– That, of course, goes without saying.
– That may be, but that is theonly itemas far as copper is concerned.
– That is not so. I should be disappointed if the Assistant Minister for Supply and Development (Mr. Holt) found difficulty in appreciating the fact that there is a very great difference. For comparison let us take a typical item such as wool. The wool-grower realizes as a net price for his product, the price ruling in London, less all costs incidental to transporting his goods there, insuring and selling them. Therefore, he receives something considerably less than the actual London price. Apparently, the Government intends to pay the Australian producer of the copper to be used in its munitions factories, not the London parity but the London price. If that producer were to sell his product in London, he would receive the London price less, of course, all the costs incidental to transportation and realization; but, if he were to sell the copper tothe Commonwealth Government, under the terms explained to this committee,he would receive more than the amount he would be paid if he exported his product to London, because he would get the London net price. Before the termination of this debate, the Government should indicate to honorable members that this state of affairs will not bo permitted to continue, not only in regard to copper,but also in regard to other products. I should like to receive an assurance that the price to he paid by the Government for any raw material produced in Australia will not be more than London parity, or the export parity. It seems to me absolutely unthinkable that the Commonwealth Government should be prepared to pay for copper or any other raw material used in the manufacture of munitions, actually more than the producer could secure by selling his product in the markets of the world. I do not want to labour this point, but if it may be taken as an example, then only very unsatisfactory administration may be expected from the new Department of Supply and Development.
In my second-reading speech I said that we would not expect a provision such as clause 5 to be embodied in an act. It is neither more nor less than a statement of policy, the proper place for which is the hustings. It is expected that when a policy is translated into a bill for submission to Parliament it will be reduced to concrete terms - something that honorable members may understand, criticize, and pass judgment upon. The very nature of this debate demonstrates that the expression of policy embodied in the bill is something that cannot be explained, even by the Government, to this committee. The intention of the bill, as at present drafted, is something that cannot be understood by honorable members. I submit that it should not be left to private members to endeavour, by means of amendments, to carry out the task of drafting legislation. That is the function of the Government.
– The honorable member will no doubt vote against the bill.
– I shall indicate my intentions in that regard later. It is for the Government itself, and not for private members, to translate policy into concrete terms which may be embodied in legislation. I appreciate the force of the arguments used against the amendments moved by the honorable member for Martin (Mr. McCall) and the honorable member for Balaclava (Mr. White), and that foreshadowed by the honorable member for Deakin (Mr. Hutchinson). It is not to be expected that a private member, left to his own resources, could submit an amendment making watertight a proposal in connexion with which the Government itself has been in default. I think that is very understandable. In preparing legislation a government has behind it vast resources, and the assistance of legal and technical advisers. Even at this late stage, the Government should face its reponsibility in the matter. Before the committee is called upon to vote on this clause, it should either introduce into the bill a provision more acceptable to honorable members, or, alternatively, it should give a clearer exposition, through the medium of a responsible Minister, as to how this policy is to be administered. By indicating its acceptance of the amendment foreshadowed by the Acting Leader of the Opposition (Mr. Forde) the Government has already gone so far as to meet, in part, the wishes of some honorable members. In my opinion that amendment is entirely valueless. Paragraphs a to f enumerate the total possible functions of the new department. I consider that the passing of this measure would not automatically authorize the department to administer all of these matters, but that it would be necessary for the Governor-General, under the terms of sub-clause 1, to direct that each or any of these matters should come within the scope of the department. Therefore it seems that, while the passing of this measure would authorize the new department to arrange, for instance, for the manufacture of aircraft, it would not be automatically authorized to proceed with the manufacture of aircraft. Before that could he done it would first be necessary for the Governor-General, according to the provisions of sub-clause 1, to give a direction that the manufacture of aircraft should be one of the matters with which the department concern itself. I draw attention to the fact that the opening words of clause 5 are- -
Subject to the directions of the GovernorGeneral, and to the next succeeding sub-section, the matters to be administered, by the department shall be matters relating to . . .
I therefore believe that if the GovernorGeneral were to refrain from proclaiming the manufacture of aircraft to be one of the matters to be administered by the Department of Supply and Development, that work could not be undertaken.
As to the amendment to be moved by the Acting Leader of the Opposition, subclause 2 merely provides a limiting authority. It indicates that, whilst the Governor-General may, in- the terms of sub-clause 1, determine that the control of .profits shall be one of the functions of the new department, he may also, according to the terms of sub-clause 2, negative the previous decision or impose some limit upon it. The purpose of the amendment is to ensure that the authority of sub-clause 2 will not be used to negative a prior decision. The point that concerns me is that the wishes of the Acting Leader of the Opposition are not really met by the amendment which he has circulated. I believe that even if that amendment were carried the GovernorGeneral could, if he so desired, refrain under the authority of sub-clause 1 from determining that any particular matter should be a. matter to be administered by the Department of Supply and Development. It seems to me therefore that .an explanation of this particular point is called for from the Minister in charge of the bill.
– The Minister has already given one explanation.
– That is so, but I submit that that explanation did not cover the point that I have taken. I think that I have raised this matter for the first time, and I ask the Acting Leader of the Opposition to direct his attention to it. I should like an assurance from the Minister for Supply and Developmentonly after he has had an opportunity to consult his legal advisers - that my fears in this regard are groundless. Alternatively, I suggest that the Minister himself might submit an amendment which would meet the point I have raised. Such an amendment should make it quite clear that it would not be possible for the Governor-General to circumvent a decision of Parliament, by refraining from proclaiming any particular matter” to be one of the functions to be administered by the department.
– With regard to the last point raised by the honorable member for Indi . (Mr, McEwen), I have already discussed it with the Acting Leader of the Opposition (Mr. Forde), and I have suggested to him that it might he possible to devise an amendment which would better suit his purpose than that which he has circulated, I understand that the honorable gentleman is now discussing with his colleagues means of providing a more suitable guarantee than that envisaged by the present amendment.
– I was interested to learn from the -Minister for Supply and Development (Mr. Casey) that the Acting Leader of the Opposition (Mr. Forde) is at the present time in conference, with the object of ! drawing up a new amendment, in order to achieve the object of honorable members on this side of the House. The first portion of this clause gives to the Government the power to exercise certain - authority, but in the second portion, ‘the
Governor-General has the power of veto. The honorable member for Balaclava (Mr. White) and the honorable member for Martin (Mr. McCall) have moved amendments in an endeavour to give to the Government power to limit profits, but these amendments if adopted will not have the desired effect.
We have only to study history to understand the extent to which an armament ring operates throughout the world, and to realize the tactics which it adopts to cause international unrest, to ‘bribe governments, and to secure orders. It also makes loans available to governments so that they will be within the grip of a world-wide monopoly. Representatives of the armaments ring, in anticipation of making huge profits on the orders they hope to receive, are actually advising governments as to the policy they should adept. The acceptance by the Government of the amendment foreshadowed by the Leader of the Opposition indicates that it also is concerned with the huge profits that have been made by manufacturers and is anxious to impose some restriction. How does the Government propose to limit profits? One big combine in this country controls many subsidiary companies, and when the parent company supplies raw material to its subsidiary companies the profits actually made can be ascertained only with great” difficulty. The amendment proposed by the Acting Leader of the Opposition should assist the Government in that direction. The oil companies operating in Australia are conducting a huge monopoly, and when their profits are low the petrol used in their own vehicles is charged at a low price, and when profits increase a higher price is charged. That is done in order to evade a portion of the income tax they should pay. In view of the information at the Government’s disposal concerning the tactics adopted by such companies, it should exercise the greatest care in dealing’ with companies engaged in the production of munitions for defence purposes. Some time , ago the waterside workers at Port Kembla refused to load iron ore for Japan because they knew that it was to be used in the manufacture of arms and munitions. The’ waterside workers at Townsville also objected to handling zinc concentrates for shipment overseas, but as their objection was overruled zinc concentrates needed urgently in Australia are still being shipped abroad. The honorable member for Indi (Mr. McEwen) said that those engaged in the production of copper are getting a “ rake-off “, but I hope he did not include those miners known as “gougers”. The Minister (Mr. Casey) admitted last night that the bulk of the copper used in the manufacture of munitions is purchased from the Mount Lyell Company, another monopolistic concern, and that the price paid by the Government is approximately £60 a ton. The honorable member for Franklin (Mr. Frost) gave the price for copper during the last two years, and his figures are correct. We were also told by the Minister that the price which the Government pays for copper produced in Australia is based on London parity to which exchange and freight have to be added. The “ gougers,” or those who mine copper on a small scale, do not derive any advantage from their arduous work, because they are compelled to accept the price offered by speculators who get all the benefit. In purchasing copper, at an excessive price the Government is exploiting the people. We have also been informed that the Broken Hill Proprietary Company Limited has made certain rebates” to” the Government. It is obvious, therefore, that the swindle has already started. We” have been discussing how we can restrict the profits of these combines for only two days and already we have had brought to our notice two instances of the Government’s having apparently to pay excessive prices. At that rate, if the discussion went on for weeks, the time would be well spent. The honorable member for Balaclava (Mr. White) declared that the Opposition’s amendment would not achieve what he said would be achieved by the amendment moved by the’ honorable member for Martin (Mr. McCall), but I point out to the honorable’ gentleman that the Opposition’s amendment’ makes it mandatory for the Government to ensure that it does not pay too dearly for the material supplied to it, whereas the amendment moved by the honorable member for Martin would not in any way alter the crucial sub-clause 2, which makes it optional for the Government to restrict profits.
The Minister for Supply and Development to-day read to the committee information as to how the authorities in England are controlling profits. I hope for the sake of the taxpayers, by whom I mean the workers, because the Government has raised indirect taxes to an abnormal height and thereby increased the cost of living, that this Government will never adopt the methods employed by the Chamberlain Government, for the simple reason that in January we learned that as the result of the re-armament programme in Great Britain 42 additional millionaires have been created. Again, during the September crisis there was a scandal in Britain over the supply of sandbags. Those two instances are sufficient to show the ineffectiveness of the methods adopted by the Chamberlain Government to restrict profits. The Assistant Minister for Supply and Development (Mr. Holt) said that there Avas no actual necessity for the Government to bring down this bill. Why was it brought down? It Avas brought down because the Government wanted to have four Ministers for Defence, and to find jobs for highly-paid public servants Who have lost their positions as the result of the throwing overboard of national insurance.
The CHAIRMAN (Mr. Prowse.)The honorable gentleman has exhausted his time. [Quorum formed.]
.- This is a most remarkable clause in a most remarkable bill. I have yet to learn that the bill is necessary.’ As a matter of fact the Minister for Supply and Development (Mr. Casey) admitted yesterday that it was merely a courtesy measure. That statement, if it means anything, would indicate that the bill has been introduced as an apology for a grave departure from general governmental policy. The Government, which has had a. complete monopoly of the manufacture of munitions, desires to depart very radically from that policy, and, in order to give some superficial importance to the event, has brought forward a measure the machinery clause of which is the one we are now discussing. This clause is the alpha and omega of the bill, yet a careful study of it discloses that, although the Government proposes to take’ unto itself powers which it already possesses, it contains the saving grace from the point of view of the Government that the whole of the powers that it proposes to take are subject to direction from the GovernorGeneral, which in effect is direction from itself to itself. I have not yet heard any honorable gentleman opposite claim for instance that paragraph a is necessary. Paragraph a reads: -
The provision or supply of munitions.
The Government is manufacturing munitions, and it could increase the supply of munitions to any extent that it desired. This bill is not necessary to give the Government that power. Paragraph b reads : - _
The manufacture or assembly of aircraft or parts thereof by the Commonwealth or any authority of the Commonwealth.
Does any honorable gentleman suggest that the Government has not already the power to manufacture or assemble aircraft ? Paragraph c reads : -
Arrangements for the establishment or extension of industries for purposes of defence.
Can anybody argue that the Government has not that power already? The establishment or extension of industries for the purposes of defence is a natural corollary to increased defence activities, and it could be achieved without this bill. Paragraph d reads -
The acquisition, maintenance and disposal of stocks of goods in connexion with defence.
Can anybody argue that the Government has not already the power to do that? Paragraph e contains the only power which I suspect that the Government lacks. It reads : -
Arrangements for ascertaining costs and for the control and limitation of profits in relation to the production of munitions.
I do not know that the Government has the power to do that at the moment, except through the customary system of tenders. If the Government invites tenders for’ the supply of any material connected with the defence requirements of this country, it can reject the tender of any manufacturer who, in its opinion, is making undue profits. Thus, whilst I have some doubt concerning the existence of legislative power to ascertain costs and to limit profits, I at least know that the Government may reject the tender of any firm suspected of profiteering. Consequently, I believe that it is not necessary to make the provision contained in paragraph e.
Paragraph / provides for -
The arrangement or co-ordination of -
surveys of Australian industrial, capacity and the preparation of plans to ensure the effective operation of Australian industry in time of war; and
the investigation and development of Australian sources of supply of goods, which, in the opinion of the GovernorGeneral, are necessary for the economic security of the Commonwealth in time of war.
The Commonwealth already possesses census powers, under which it undoubtedly has the right not only to inquire into the personal affairs of the people of the Commonwealth, but also closely to scrutinize any business which in its opinion may be necessary in wartime. Therefore, I consider that the provision in subparagraph (i) is unnecessary. I further believe that the Government already has the power to make whatever survey it desires of the Australian sources of supplies which, in the opinion of the Governor-General, are necessary for the economic security of the Commonwealth in time of war.
That disposes of all of the provisions in sub-clause 1, which sets out the powers that the Government desires to obtain under, this legislation. I consider, therefore, that the bill is not necessary, and that it has been introduced probably as a medium for the dissemination of the war propaganda in which the Government has been indulging for two or three years.
Let us assume, for the moment, that the Government has none of these powers. The bill will provide them, but why should the exercise of them be conditional upon a determination by the Governor-General - who, of course, acts on the advice of the Cabinet? Subclause 1 provides that the matters referred to in paragraphs a to / shall be administered “ subject to the directions of the Governor-General.” Consequently, the operation of these provisions is contingent upon such a direction being given.
The honorable member for Balaclava (Mr. White) yesterday submitted an amendment, which he subsequently withdrew ‘in favour of an amendment by the honorable member for Martin (Mr. McCall), which proposes to limit to 6 per cent, the rate of profit to be made on the manufacture of munitions. I do not know whether these honorable gentlemen seriously believe that the amendment would have any effect. I am inclined to think that they are indulging in the playful pastime of pulling their own legs ; because I do not think it is. possible for the Government or for any accountant to determine what is a fair rate of profit, or to decide whether any of. the firms which have Government contracts are making 2 per cent., 3 per cent., 4 per cent., 5 per cent., or 6 per cent. We have had placed before us illuminating information in regard to the marketing of copper, which, in itself, ought to be ah indication to honorable members of the impossibility of discovering what is a fair rate of profit in the manufacture of munitions. Copper is produced in Australia. The average person would think that the price charged to the Government for munitions purposes would be a figure represented by the cost of mining, smelting and purifying the . product, plus a reasonable percentage of profit to the employer. Yet we discover that the Australian price is entirely artificial, being based on the ruling price in London, which includes the cost of transport from Australia to England, plus the cost of exchange, which at the moment is 25 per cent.
– Orderly The honorable member’s time has expired.
– This afternoon the honorable member for Bourke (Mr. Blackburn) made a statement with respect to this clause with which I entirely agree. The honorable gentleman said, in effect, that he had grave doubts as to whether this committee was the best authority to judge what is a reasonable profit, and what is the best basis for assessing that profit. Some honorable members have proposed that profits should be limited to 6 per cent., others to 4 per cent., and. various suggestions have been made as to the basis upon which such percentage should be calculated. Two honorable members, both of them well-known accountants from the same State, have offered diametrically opposed opinions on the subject. All this goes to show the truth of what the honorable member for Bourke said. The Government has announced the appointment of an honorary panel of accountants to advise it as to the best method of dealing with the matter. Some honorable members have expressed their approval of the personnel of the panel, yet those same honorable members have proposed to make the matter absolutely rigid by fixing a definite percentage of profit. It seems to me that if we are to have an advisory panel we should, before taking action to fix a rigid formula, at least wait until we receive its advice. None of the amendments proposing to fix a definite percentage of profit can be regarded as satisfactory. The amendment of the Acting Leader of the Opposition (Mr. Forde) is in a different category, because it is general in its scope. Some doubt has been expressed as to whether it would be of any value. Sub-clause 2 permits the Governor-General - or in other words, the Government - to decide to what extent it shall administer paragraphs a tof. That would enable the Government to restrict or modify action under any of those paragraphs, but the amendment of the Acting Leader of the Opposition will ensure that no such modification can take place in respect of the matters covered by paragraph e. In other words, noprovision for the limiting of profits will be modified by what appears in subclause 2. This seems to be sound common sense, and for that reason I propose to support the amendment.
.- When I was interrupted I was discussing the price of copper, a metal indispensable for munitions. Though it is to a certain extent refined whenacquired by,the munitions factories, it is still essentially a raw material. I point out to honorable members that it will be very difficult to control profits on manufactured goods when such flagrant profiteering is actually taking placein regard to the supply of copper. The average Australian might assume that the cost of copper to the Australian Government, particularly for defence purposes, would be the cost of mining, smelting and refining it,plus a reasonable profit. We find, however, that even the Commonwealth Government has to pay the London ; price for the Australian copper which it buys in Australia. This includes freight on copper which never goes to London, plus exchange on the purchase price in sterling, in order to convert it to Australian currency. All those charges are added to what the Australian citizen would consider a fair price for a commodity produced in Australia. Therefore, when the Government is exploited in respect of this essentialraw material, I should like to know what method it proposes to adopt to prevent excessive profit-making by manufacturers. As a matter of fact, the Government has not yet stated what it considers to be a fair rate of profit. The only indication we have had is the statement of the Minister regarding goods manufactured in defence annexes. The Government, in order to encourage private manufacturers to interest themselves in the manufacture of munitions, has offered to provide them with the necessary machinery and buildings, to give them contracts, and to allow profits at the bond rate of interest. These annexe manufacturers will probably be on a good wicket. The work will be provided for them, and they will be allowed a fair rate of profit on all their undertakings. It is extremely difficult, however, to know How the Government proposes to control the profits of private manufacturers outside the annexe scheme. It has set up a panel of accountants to advise it . on the matter; but the members of that panel will have no responsibility to the Government. They will be giving their services voluntarily, and as they are all themselves in a large way of business, they willbe able to devote to government workonly such time as they are able to spare from their own business activities.
Defence requirements are not by any means confined to shells and guns; they include practically everything from a needle to an anchor. The Government will have to buy foodstuffs, boots, uniforms and other items of accoutrement. So far, honorable members seem to have concerned themselves only with controlling the profits of those engaged in the manufacture of actual munitions of war, but it will be just as necessary to control the profits of those supplying every other kind of defence requirement. Those who, during the war, made fortunes out of the manufacture of munitions, have been justifiably condemned, but not so much has been said about those who made fortunes out of supplying to the various belligerent governments putrifying foodstuffs. Little has been said of the fortunes made by those who provided clothing and other necessaries for the soldiers during the Great War. The point I emphasize is that the supplies of raw materials, in which there might be exploitation of the Government in a time of emergency, cover such a wide range that it will be practically impossible for the advisory panel of accountants, who are to give their time voluntarily and, therefore, will probably make a spare-time, instead of a full-time job of their work, to see that the Government gets a fair deal in the contracts it lets. In these circumstances the safeguards which the Government proposes to establish in order to prevent exploitation are totally insufficient. Furthermore, the Government has not satisfied honorable members as to what it considers to be a fair rate of profit in respect of contracts apart from those to belet to the annexes. After all is said and done, the issue to-day is simply whether or not the Government should leave all of this work to private enterprise. Up-to-date, we have, happily, been able to supply all of the requirements ofour Military Forces, and, as I believe the possibility of invasion to be remote, existing factories operating under government control should be able to supply pur probable defence requirements for many years to come. For this reason, I am totally opposed to this measure, particularly the provisions of this clause. Theyare unnecessary. Furthermore, the
Government is not sincere in its attempt to limit profits in connexion with these contracts. I repeat that it has not yet made a statement as to what it considers to be a fair rate of profit, whilst it has also failed to provide any definite machinery for the purpose of assessing costs and profits in the industries concerned. For these reasons, I shall support the amendments moved by the Acting Leader of the Opposition. Whether it be workable or not, it will, at least, make it mandatory on the Government to do something which it now only proposes in a nebulous way to do.
– I regret the necessity for the introduction of this measure. It has originated mainly in the Government’s desire to create a new department, but it is evidence of the war hysteria which is influencing the programme of the Government. The Government already possesses the powers which it is seeking under this measure, particularly in respect of the provision or supply of munitions and arrangements for. the establishment or extension of industries for purposes of defence. When it was announced in the Governor-General’s speech that the Government proposed to establish these annexes, I pointed out the danger of such a policy, particularly at a time when the trend in every country is for governments to control the manufacture of armaments. Notwithstanding this fact, the Government now proposes to permit the manufacture of armaments by private enterprise. Speaking in relation to these annexes in November last in the debate on the budget, I stated that as the establishment of these annexes would involve private enterprise in considerable expenditure, a general clamour would arise on the part of the firms concerned for a continuity of orders. By way of interjection, the then Minister for Defence denied that this would be so. I should now like to know what safeguards the Government proposes to provide in order to prevent these private firms from seeking orders in foreign countries for the supply of war materials. If they cannot be guaranteed a continuity of orders by this Government, what is to prevent them from endeavouring to get such orders in other countries at a rate of profit much higher than the Government would allow to them? The Government should watch this aspect, because, despite their alleged patriotism, armament manufacturers know no country; the only flag they recognize is the black emblem of the buccaneer. Local manufacturers of munitions will likewise be only too ready to accept any opportunity to secure orders overseas. To-day the British Government is making aircraft parts for Germany, despite the fact that the people in one country are being told that they may one day expect to be bombed out of existence by the air forces of the other. The Rolls Royce Kestrel engine, and the ArmstrongSiddeley Jaguar engines are being sold to the German air service, whilst British naval seaplanes are being built under licence in England on Heinkel patents. The Dutch Fokker factory sells the identical bomber to Germany that it had delivered to Czechoslovakia. These facts show that private enterprise in this field is concerned only with profits. Whenever a nation is faced with a grave emergency there will always be found a gathering of profiteering buccaneers loudly proclaiming their patriotism, while at the same time going their hardest in the dastardly game of plundering the people. For instance, when materials were needed in Britain during the recent international crisis for the protection of the people from threatened air raids, these despicable and unconscionable profiteers were willing to make supplies available only at profits ranging up to 500 per cent. Pickaxes and trench tools, which prior to the recent crisis were selling at ls., suddenly jumped to 10s., whilst the price of spades and shovels needed for digging trenches rose from 2s 6d. to 13s. 6., and that of galvanized iron required for air raid shelters rose by 500 per cent. There was no shortage of these materials before the crisis, but when the workers of Great Britain commenced to dig trenches and construct air raid shelters for the protection of the masses, supplies could be obtained only at prices dictated by the profiteers. A scandalous example of this ghoulish profiteering was provided- in. England in connexion with sandbags during the September crisis. Prior to the war scare, these were being sold at Id. apiece but the price suddenly jumped as high as lOd. Millions of them were needed for the protection of the civilian population and property, but they could he* obtained by government and local government authorities only at exorbitant prices. The manufacturers did not hesitate to sandbag the community and take the highest profits they could get. The honorable member for Wakefield (Mr. McHugh) informed the committee yesterday that Mr. Neville Chamberlain, the Prime Minister of Great Britain, held 11,000 shares in Imperial Chemical Industries Limited. These people are concerned mainly with profits, and they do not mind how the profits are obtained. Sir Basil Zaharo’ff became a multi-millionaire during the last war, and the firm of John Brown and Company Limited, of England, which is to-day concerned mainly with the manufacture of munitions, made a profit of £466,000 during the war hysteria of 1937. With these examples before it, the Government should make provision to manufacture all necessary munitions in government factories. It should not allow any private annexes to operate. The Labour party believes that Australia should be self-contained, but it does not believe that war-mongerers should be permitted to make immense profits. ” [Quorum formed.]
.- I have never had any enthusiasm for either the bill or the various amendments that have been foreshadowed; but the more I hear about the amendments the less I am attracted to them. Since the Government has agreed to accept the amendment foreshadowed by the Acting Leader of the Opposition (Mr. Forde), I feel certain that my suspicions are well founded. I do not think that the amendment can possibly achieve what is hoped of it. I have heard honorable gentlemen opposite criticize the profiteers, but if we judge them by their actions we must conclude that they regard these individuals as the most honoured section of the community. I well remember that Mr. Samuel Walder, a well known citizen of Sydney, became a wealthy man during the last war through supplying tents and other equipment to the Defence Department. An honorable gentleman interjects “ flags “, and I would remind honorable members that most of the flags supplied, by Mr. Walder came from Japan. That gentleman has taken a leading part in the activities of the United Australia party in New South Wales for many years, Yet, although he made exorbitant profits during the war, he was knighted on the recommendation of both the Commonwealth Government and the Government of New South Wales. How can honorable gentlemen opposite, who frown on the profiteers at one moment and bestow honours upon them at the next, expect to be regarded as sincere? They cannot, on the one hand, oppose the profiteers and, on the other, encourage them. The Minister for Supply and Development (Mr. Casey) has shown dearly by his actions over a period of years that he is not antagonistic to profiteering. In 1934, when he was Treasurer, he was instrumental in postponing the operation of a bill, and that action had the effect of exempt-, ing from income tax an amount of almost £6,000,000 of accumulated profits which the Colonial Sugar Refining Company distributed to its shareholders in that year. Not one penny of that huge amount was liable to income tax. The Colonial Sugar Refining Company will operate one of the annexes to be established for defence purposes. If we were to believe what some honorable gentlemen opposite say, Ave should regard the manufacturers of this country as being different from manufacturers of other countries. Actually, the main purpose of private manufacturers everywhere is to make the maximum profit possible. I have already challenged the sincerity of the Government’s professed desire to limit profits. Every time the Minister for Supply and Development rises to speak he confirms my opinion that the Government is not in earnest. Consequently, I am convinced that the Labour party should oppose this bill lock, stock and barrel, and should not attempt to amend it in any way. This evening the Minister for Supply and Development has said that the Government proposes to follow the British practice in respect of the limitation of profits. That course is entirely unsatisfactory to me. The honorable member for Cook (Mr. Sheehan), in the admirable speech which he has just delivered, made it clear that . in the war scare of last September, certain manufacturers of Great Britain increased the price of their products by as much as 500 per cent. British experts were brought to this country to advise the Government; hut as they have not been able to devise any means to prevent the exploitation of the general community in the United Kingdom, how can we expect them to succeed here? The honorable member for Batman (Mr. Brennan) pointed out in his excellent speech that we should be concerned, not Avith the percentage of profit that capitalist manufacturers might make on government contracts, . but with the steps which the Government should take to ensure the general well-being of the working-class community which we represent. Many honorable gentlemen in this chamber evidently believe that this country is already at war. I do not think so. According to statements made in this chamber from time to time by Ministers, and other information that is available to us, the situation is much easier than it was some months ago. In these circumstances, what is the need to rush this measure through Parliament? Are we always to be in a state of emergency? Is there to be no end of these critical times? Will the Minister, say when the crisis, or series of crises, is likely to end ?
– No man on earth, except perhaps one or two in Europe, can answer that.
– The Government has the latest information available, and it should be able to tell us something ; but when we ask for information Ave are told that disclosure of it would not be in the public interest. Why is it in the interest of the public to withhold information ? If the public good is the only thing which actuates the Government in withholding information, it is clear that the
Government has little faith in the people of this country. I am convinced that if the Australian people knew that their country was really in danger of attack, they would rally to its defence. So far, the Government has given no evidence that Australia is in imminent danger. We are asked to vest in the Government more extensive powers than have ever been given to a government in this country, and as an inducement to us to swallow the pill we are told that, although industry is to be organized in order that it may make its maximum effort for the defence of Australia, profits will be limited. I wish to know how that end is to be accomplished, if, indeed, there is any real intention behind this promise. The honorable member for Balaclava (Mr. White) referred to copper supplies. Neither the Assistant Minister (Mr. Holt) nor the Minister for Supply and Development (Mr. Casey) has yet satisfactorily answered his criticism. We have been told of the prices of copper in various years, but will any honorable member deny that, since the war scares commenced, the prices of all the metals used in the manufacture of munitions have risen? To-day’s London prices for such metals are much higher than they were a few years ago. Prices have been inflated by those who have taken advantage of the necessities of governments. Moreover, when copper is required in Australia - where it is produced - the Government is asked to . pay, not the cost of production plus 4 per cent, or even 6 per cent., but world parity prices, irrespective of whether they are inflated or not. Because prices on the London market have been sky-rocketed, the Australian community is to be fleeced. We are asked to pay London prices plus exchange and freight for copper which was produced in this country and never left it.. Yet we are told that there is to be np profiteering in connexion with munitions. I should like to know what the Government regards as profiteering. The Minister for Supply and Development expressed the opinion that the Government has no constitutional powers to exercise control of prices. If there is no constitutional power- to con.trol prices, what is the use of this committee trying to tighten up the machinery’ iri order to limit profits? I do not say that profit can be entirely eliminated from the manufacture of war equipment in’ existing circumstances. There is only one effective way to exercise control, and that is to manufacture the whole of the Commonwealth’s requirements in workshops owned and controlled by the Government. The argument against that is that, in the event of an emergency, the Government would have to construct extensive factories, and equip them with the latest machinery, only to find that the plant could not be used when hostilities had ceased, because the Government may not compete with private enterprise in manufacturing the requirements of’ the nation in times of peace. The present Government, which is the champion of private enterprise, says that such competition would be unconstitutional. That is so. The High Court in 1926 said so; but if the Government is sincerely desirous of limiting profits, there is an easy way by which it can remove that obstruction and allow government workshops to do other work than that ‘ connected with defence; it can ask the people so to amend the Constitution as to empower the Government to use its workshops for the manufacture, of the peace-time requirements of the community. There would he nothing . wrong with that. Are profits to be the. only things to be sacrosanct in this country? The honorable member for Batman (Mr. Brennan) made it clear who make the sacrifices in any conflict between nations. The attitude of the United Australia party towards profiteering is well-known. Its members are not opposed to profiteering, because the profiteers are members of the same clubs and rub shoulders with them every day. They converse together, and generally they are agreed about the things that they discuss. Those gentlemen who made their millions out of the last war contribute to-day to the funds of the Government party. How can we expect the friends of the profiteers to give effect to legislation to limit the profits of. their political supporters?
.- In contin.u’ation of what I have .already said’ in’ committee, conclusive evidence,” if further’- evidence- is required, ‘of the lack, of sincerity on the pant of the Government in submitting .this measure is found in sub-clause 2 . wherein it is provided : -
The Governor-General may from time to time determine the extent to which or the conditions upon which any of the matters specified in this section may be administered by the department.
The Acting Leader of the Opposition (Mr. Forde) has moved an amendment, placing paragraph e outside the scope of this sub-clause to the extent that, not subject to the direction of the Governor-General, but as an enactment of substantive law, one of the matters to be administered by this department; - the only one which must positively be so- is that paragraph e dealing with arrangements for ascertaining costs and the control and limitation of profits in relation to the production of munitions. That is the only part of this clause which may withstand the changing whims of the members of the Government as to whether it should be law or not. ‘ To that extent I congratulate the Deputy Leader of the Opposition, and I congratulate the Government on climbing down discreetly on a count of heads ; but I point out that the whole of the remaining part of the clause will not stand as positive law at all, because at any moment the Government may at its own whim remove any of these matters from’ the Department of Supply and Development. They may only be’ part of the law according to the taste and convenience of the Government. The Governor-General in Council may remove them, suspend them, or make any of them apply to certain classes of people for a limited length of time. I have never’ heard before in all my experience of statute law that the Governor-General - actually the Government - may repeal any section or sub-section at any time of his own sweet will without even the necessity for the passage of a regulation which at least would lie for a certain time on the table of. the House. With regard to this profiteering business, it has been stated that we rely implicitly on the honesty, the integrity, and above all the patriotism, of those gentlemen who, in annexes or out of annexes ‘are to supply munitions. All I can gay is that if we are to rely on them the calibre of the commercial gentlemen in big business in Australia must be .totally different from that of the members of a similar class in all other parts of the world. Why should they be so? Why should it be assumed that avaricious tendencies on the part of commercial men in Australia should be different from the grossly avaricious achievements of commercial men in other parts of the world who, once having tasted the blood of profit, have continued the blood-letting’ to the extent of countless millions of pounds, and have, by reason of their lust for profits, not only charged the maximum in pounds, shillings and pence or their equivalent in the currency of foreign countries, but have also actually and unashamedly promoted war and war scares so that demands may be created for the instruments which they manufacture ? The book Iron, Blood and Profits, by George Seldes, which was quoted ‘ the other night in an eloquent speech by the ‘honorable member for Kalgoorlie (Mr. Green), contains some very striking observations upon the distinction which is drawn between a soldier, who, in the heat of battle, offers some little comfort or kindness to the enemy, and the profiteering armaments -maker who supplies munitions . to the enemy to be used against the people of his own country. In the very first chapter of his book, the author says -
For giving aid or comfort to the enemy in time of war the penalty is death. Both civilians and soldiers share this punishment. If an American or a British or a French soldier in Ho Man’s Land had ever been caught giving a rifle or a grenade to a German, he would have been shot on the battle-field. But the allied armament makers who not only before the war, but during the war, gave rifles and grenades and the comfort of food to the enemy, received baronetcies and the ribbons of the Legion of Honour while making a profit of millions of dollars.
Does the Minister deny that that is a typical historical example of what ha6 gone on for years past on the Continent, and that it was a feature of the Great War of 1914-18, during which we in Australia, serving no useful purpose to ourselves, sacrificed 60,000 of our precious manhood? Does he not know that the Thyssens, who in 1916 sold cannon bucklers to the Allies, via a Dutch agent of course, were found guilty when accused of treason, and that to-day Fritz Thyssen, chief supporter of Adolf Hitler, is dictator of the iron, coal, steel, and armaments district of Germany? Does the right honorable gentleman deny that the profiteers and financiers of Great Britain are now entering into business arrangements with these very Thyssens who are dictators of Hitler, the dictator? Does he know that the French, before the World War, sold hand grenades to Bulgaria, which within a few months killed allied soldiers? Our soldiers - my own Australian brothers - were the men sacrificed to make profits for the armaments makers of Britain, France, Belgium and other countries. Does he know that the secret of the marvellous French gun, the Seventy-five, was taken to the Putiloff Works in Russia, where Krupp engineers worked by the side of British and French engineers? Does he know that the British firm of. Vickers helped arm the Turks, and that the Turks used British armaments almost exclusively in killing the Australian and New Zealand troops in the Dardanelles?
– That is not correct. The armaments used by the Turks were almost entirely German.
– I am not directing criticism against British manufacturers in particular - God forbid that I should. My attack is directed to financiers the world over. I am attempting to show that there is perfect camaraderie and loyalty in this financial ring.
In the same chapter we read -
The merchants of death, the Krupps, the Zaharoffs of our time, are for war. Numerous patriotic associations which they finance are for expansion, imperialism, colonization - by means of war.
Like Mussolini, they believe in war. The only other quotation that I am able to make from this book in the time at my disposal refers to a speech by Mr. Lloyd George -
On 18th August, 1919, speaking in the House of Commons, Lloyd George, without disclosing bow great a profit the armament-makers made during the world war, indicated the astronomical figure in his claim that he had been able to effect a saving of more than two billion dollars. He said, “ The eighteen pounder, when the ministry (of munitions), was started, cost 22s. 6d. a shell. A system of costing and investigation was introduced and national factories were set up which checked the prices, mid a shell for which the war office, at the time the ministry was formed, cost 22s. Cd., was reduced to 12s., and when you have 85,000,000 shells, that saved £35,000,000. There was a reduction in the price of all other shells, and there was a reduction in the Lewis guns. When we took them in hand they cost £165, and we reduced them to £35 each. There was a saving of £40,000,000, and ‘through the costing system and the checking of the national factories set up, before the end of the war there was a saving of £440,000,000.”
That is an example of the profiteering which the taxpayer of Britain has to bear. All these things have a beginning, and I point to this Government as being the one that earns the dishonour of introducing, in Australia, this system which in other countries has been an incentive to blood-letting. In Australia, too, it will prove an inspiration to war. What can we do with gentlemen who, in this country, which, unthreatened, unchallenged, and having no enemies, is at peace with all the world, propose to enter into an alliance in Europe that will make us the defenders of a large number, if not the majority, of the little States of Europe, in respect of which we have no knowledge or responsibility? This Government will have to take the blame for starting this evil thing with all its evil consequences.
.- I believe that thoughtful citizens throughout Australia are far from satisfied that our defence preparations are proceeding as rapidly as we have been led to believe in press statements and in speeches made from time to time by responsible Ministers and others. Considering the matter in the light of what has been done in other countries,’ I fear that our efforts up to the present time to provide effective defence in Australia must be regarded as rather futile, and if the so-called danger is real, our preparations should certainly be speeded up. If the bill before us will guarantee to the people that relief which they are seeking, then I hope that it will be appropriately amended and passed through its various stages with the utmost dispatch. Citizens generally have been greatly disillusioned with regard to the activities of the Defence Department in the provision of munitions and other necessary equipment. Having regard to the immense sums of money voted by this Parliament, and. the publicity given to our alleged preparations for defence, :it was expected that a great dual of work would be available in the munitionmaking branches of the department, but the details recently supplied, in reply to questions asked by honorable members in this chamber, show that, although there has been much talk, very little, comparatively speaking, has been achieved up to the present time.
It cannot be denied that we have no definite proof that Australia or the Empire is threatened by the potential enemies about which we read in the press or are warned by responsible spokesmen of the Government. I challenge Ministers to deny that these so-called potential enemies have shown great anxiety for friendly relations with this country, not merely in regard to trade, but also in many other respects. Australia should not be unduly exercised in mind about the forms of government adopted in other countries, nor with respect to the activities of those countries in other parts of the world. I fear that we are again being asked to make sacrifices for the purpose of maintaining what is known as the balance of power. This balance has disturbed the civilized world for centuries, and many wars have been fought in order to adjust it to our liking; but, up to the present time, we have not succeeeded in achieving that result.
Much has been said about the control of profits made by armaments manufacturers. I consider it almost impossible to control the profits made by them, and I believe that the people of Australia, who are fully conscious of this fact, are anxious that a change should be made. There is not the slightest doubt that a majority of the people desire the Government to provide for the complete nationalization of the manufacture of armaments and munitions, and in that way prevent private manufacturers from exploiting the people. The Minister and some of his supporters have said that it is impracticable to undertake the national manufacture of arms and equipment required for defence purposes, and that it is preferable to adopt the methods outlined by him and provided for in the bill. The Government, which believes that those now engaged in the production of ordinary commodities should in time of war produce defence requirements, should have the courage to face the position and give a lead to other nations by completely nationalizing the manufacture of arms. It is assumed that in an emergency those engaged in ordinary avocations in factories adjoining government annexes would be transferred to the production of munitions and equipment required for defence purposes, but. if they were transferred production in the industries they left would decrease, and prices would rise. It would be preferable to utilize the services of thousands of unemployed young men who could receive technical training, and also the unemployed of riper years capable of receiving tuition, and prepare them for the work of providing our defence requirements. In that way we would not only be preparing the way for effective defence, but also giving economic security to a greater number of our people than under the system proposed, and without the danger of dislocating ordinary industry. That there is a world-wide ring interested in the production of arms and munitions cannot be denied. That ring has its affiliations in Australia. The remarks of the honorable member for Balaclava (Mr. “White) concerning copper were illuminating, also the statement of the Minister (Mr. Casey) that the Government is purchasing copper produced in Australia” at London parity, to which freight and other charges have to be added. That principle is not applied to other primary products, particularly wheat and wool, in which I am more directly interested. These commodities when purchased in Australia are paid for at the Australian prices, and not at London parity. I prefer the amendment moved by the Acting Leader of the Opposition (Mr. Forde) to that moved by the honorable member for Martin (Mr. McCall) in which a proposal is made to limit profits to 6 per cent. Although the object is a worthy one, I believe that it is impracticable. I am pleased to learn that the Government has accepted the amendment of the Acting Leader of the Opposition, and, in effect, is making a virtue out of necessity. I trust that as the work of this Parliament proceeds we shall see similar gracious acts. In this way we are now coming nearer to democratic government. I trust that the Government will consider complete national control of the production of arms and munitions. Action should also be taken to control war hysteria, which is engendered by the press. Prominent persons should be asked to refrain from making inflammatory statements offensive to rulers in other countries. If that were done there would be a better feeling among the nations, and we might, to some degree, be able to set an example to the other nations of the world.
Amendment (Mr. McCall’s) negatived.
The following paper was presented : -
Lands’ Acquisition Act - Land acquired forPostal purposes atAttunga, New South Wales.
House adjourned at 11.40 p.m.
The following answers to questions were circulated: -
e asked the Minister representing the Minister for the Interior, upon notice -
– The Minister for the Interior has supplied the following answers: -
d asked the Minister for Repatriation, upon notice -
What are the ailments or diseases of returned soldiers which are recognizable by the department’s medical advisers as being attributable to the inhalation of poison gas or toother forms of exposure to poison gas?
– The inhalation of the various forms of gas gave rise to varying symptoms and clinical signs in different men. In many cases, the disability in respect of which an ex-soldier is now pensioned can be clearly traced to the effects of such gassing, whilst, in other cases, there is no possible association between the present incapacity and the gassing. It is impossible to say in general terms that any particular ailments are necessarily the result of gassing, and the question has to be determined on the facts in each individual case. Of importance in arriving at such a decision are (a) the records ofthe clinical condition of the ex-soldier following evacuation from his unit and treatment in hospital, and (b) the subsequent service, health and medical history in the years intervening between the date of the gassing and the date of the claim under consideration.
i asked the Minister for Social Services, upon notice -
What is the weekly amount being paid for salaries and administrative costs in respect of national health and pensions insurance?
– The information is being obtained, and will be furnished as soon as possible.
e asked the Minister in Charge of External Territories, upon notice -
Will the report of the committee appointed to consider and report as to the practicability of the amalgamation of the administrations of the Territories of Papua and New Guinea be submitted to the Executive and Legislative Councils of those territories for consideration and advice before any action is taken by the Government to amalgamate the territories or the public services of those territories?
– The desirability of submitting the report of the committee appointed to survey the possibility of establishing a combined administration of the territories of Papua and New Guinea for the consideration and advice of the Executive and Legislative Councils of those territories will be fully considered in the light of the report furnished by the committee.
Amalgamated Wireless (Australasia) Limited: Salary and Expenses of Chairman of Directors.
n asked the Prime Minister, upon notice - 1.When will the next board meeting of Amalgamated Wireless (Australasia) Limited be held?
– The answers to the honorable member’s questions are as follows: -
n asked the Minister representing the Minister for the Interior, upon notice -
When will the investigations into the volume of the iron ore deposits at(a) Yampi Sound, Western Australia; (b) Whyalla, South Australia; and in (c) Tasmania, be completed in each ease?
– The Minister for the Interior has supplied the following answer: -
y asked the Minister representing the Minister for the Interior, upon notice -
– The Minister for the Interior has supplied the following answers : -
y. - On the 23rd May, the honorable member for Hunter (Mr. James) asked whether it was a fact that Mr. L. J. Rogers, Commonwealth Fuel Adviser, had informed Phoenix Oil Extractors Proprietary Limited that before he would make an investigation of the company’s process for the extraction of oil from coal he desired to know what chemical catalyst the company was using. I have made inquiries into this matter, and I am now in a position to inform the honorable member that Mr. Rogers has not at any time sought information of this kind, nor would he need to obtain such information if he were able to witness a demonstration under strict test conditions.
International Labour Office: Maritime Conventions.
– On the 10th May, the honorable member for West Sydney (Mr. Beasley) asked to be advised as to what steps were being taken towards the ratification of certain maritime conventions adopted by the International Labour Conference in 1936. I now advise the honorable member as follows: -
Two very full statements on this subject were made in this House by the then Minister for External Affairs on the 29th June, 1938, and the 13th October, 1938. The Minister pointed out that only one ofthe six conventions referred to concerned the Commonwealth Government alone, namely, Hours of Work on Board Ship and Manning Convention (No. 57). Ratification of this convention in respect of the Commonwealth Government was registered with the League of Nations Secretariat on the 24th September, 1938.
The remaining five conventions deal with intra-state as well as interstate shipping. When the subject matter of an international convention affects the Australian States as well as the Commonwealth, the practice is to send copies of the conventions to the States with the request that the Commonwealth be informed as to the extent to which -
Upon receipt of the Maritime Conventions in question, letters alongthese lines, enclosing copies of the official text of those conventions, were addressed to the Australian States. I am now awaiting replies from two of the States from which replies have not yet been received. Until the desiredinformation is received, no further action with regard to the ratification of the conventions in question can be taken.
So far as the Commonwealth Government itself is concerned, Iassure the honorable member that every consideration is being given to the possibility of securing for seamen under Commonwealth control, conditions corresponding with those laid down in the conventions, insofar as these conditions are not already enjoyed by suchseamen. An exhaustive analysis of each convention has been made by Commonwealth officers, andspecial regard was paid to the interests of seamen when the Seamen’s Compensation Act 1938, and the National Health and Pensions Insurance Act 1938, were being drafted. The conditions of work prescribed by the maritime conventions are also being kept under consideration in the preparation of comrprehensive amendments to the Commonwealth Navigation Act.
A detailed statementhas been prepared, setting outin tabulated form, the present position under Commonwealth and State law in regard to matters covered by the maritime conventions. I am glad to be able to supply the honorable member with a copy of this statement,so that he may be in a position to form his own opinion regarding the extent of the inquiries already made on this subject. If, after perusal of this statement, he desires to put forward any further suggestions, I assure him that they will be welcomed, and given full consideration.
Cite as: Australia, House of Representatives, Debates, 25 May 1939, viewed 22 October 2017, <http://historichansard.net/hofreps/1939/19390525_reps_15_159/>.