Senate
29 April 1936
14th Parliament · 1st Session
The President (Senator the Hon. P. J. lynch) took the chair at 3 p.m., and read prayers.
page 902
PAPERS
The following papers were pre sented : -
Immigration Act - Return for 1935.
Meat Export Control Act - Regulations - Statutory Rules 1936, No. 41.
Navigation Act - Regulations amended - Statutory Rules 1936, No. 42- No. 47.
Transport Workers Act - Regulations amended - Statutory Rules 1930,No.53.
Wheat Growers Relief Act - Regulations - Statutory Rules 1936, No. 46.
page 902
QUESTION
COMMONWEALTH MILITARY FORCES
What was the strength of the Commonwealth Military Forces (Militia) by arms, on the following dutes, namely: - 30th June, 1932; 30th June, 1933; 30th June, 1934; and 30th June, 1935?
What were the enlistments in those years, and the resignations?
What is the present strength by arms of the Commonwealth Military Forces (Militia) in - (a) Officers, (b) non-commissioned officers, and (c) other ranks?
What is the percentage of strength to establishment?
What is the percentage of efficiency to strength ?
What is the strength, by arms, other than Staff Corps, of the Permanent Military Forces?
How many staff sergeants-major are there in the Australian Instructional Corps?
What is the personnel of the Royal Australian Air Force - (a) Permanent, and (b) Citizen ?
I am now in a position to inform the honorable senator as follows: - 1, 2 and 3 -
The latest available figures (viz., 31st December, 1935) are as follows: -
The strength of the Militia Forces as at the 3lst March, 1936, was 20,764, but details in regard to ranks and arms are not yet available.
- Eighty-seven per cent.
- Eighty per cent. as at the 30th June, 1935. (Efficiency is determined at the end of each financial year.)
- Australian Instructional Corps, 488; Royal Australian Artillery Regiment, 592; Royal Australian Engineers, 151; Australian Survey Corps, 25; Australian Army Service Corps -Supply and Transport 69, Remounts 100; Australian Army Medical Corps, 22; Australian Army Ordnance Corps, 80; Australian Army Veterinary Corps, 5; Provost Staff, 12; total, 1,544.
- Four hundred and thirty-eight. 8. (a) Permanent - Officers, 138; air cadets, 62; airmen, 1,086; total, 1,286. (6) Citizen - Officers, 45; airmen, 218; total, 263.
page 903
QUESTION
AUSTRALIAN WOOLLEN COMPANIES
Senator McLEAY:
SOUTH AUSTRALIA
asked the Minister representing the Minister for Commerce, upon notice -
What profits were made by the Australian woollen companies during the last financial year ?
Senator BRENNAN:
Minister without portfolio assisting the Minister for Commerce · VICTORIA · UAP
– The department is not in a position to furnish the information sought by the honorable senator.
page 903
QUESTION
PETERSHAM TELEPHONE EXCHANGE
Senator DEIN:
NEW SOUTH WALES
asked the PostmasterGeneral, upon notice -
Is it a fast that a very definite undertaking was given by his predecessor that the con version of the Petersham telephone exchange from the manual to the automatic system would be commenced last financial year, and completed this year; if so, will the PostmasterGeneral indicate when the conversion of this very important exchange will be completed?
Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT
– I am not aware of any such promise having been given by my predecessor. The honorable senator will be interested to know that the department expects that approximately 1,500 of the subscribers on Petersham exchange will be connected to automatic equipment during next month. It is not possible to say at this stage when the remainder of the subscribers will receive automatic exchange service.
page 903
CUSTOMS TARIFF 1936
Second Reading
Debate resumed from the 24th April (vide page 899), on motion by Senator A.. J. McLachlan -
That the bill be now read a second time.
Senator LECKIE:
Victoria
.- Although in the ordinary course the debate on this motion would cover a wide range, it appears to have developed into a discussion concerning the duties on cement. I shall reserve my remarks under this heading until the committee is dealing with the relevant item, but it will be necessary to make passing reference to the subject owing to. the fact that the Government has announced the receipt from the British Government of a protest against the restoration by the House of Representatives of the duty on British cement, claiming that it contravenes the Ottawa agreement. It seems to me extraordinary that, when the Senate is about to discuss the tariff schedule, the British Government should, contrary to its traditions for courtesy to a self-governing dominion, make this protest for the obvious purpose of influencing votes in the Senate and stifling the private opinions of honorable senators.
Senator Brown:
– Perhaps the protest was inspired?
Senator LECKIE:
– The honorable senator may be right, and without knowing the circumstances and the exact terms of the protest, all we can say is that the action of the British Government is not in accordance with the traditions of
British diplomacy. I think the Government would be well supported if, on behalf of this Parliament, it resented any attempted interference hy an outside government during the discussion of tariff measures.
It is acknowledged that Parliament should have the earliest opportunity to consider the effect of duties imposed by the tariff. It is claimed by the Government that as the removal of the duty on British cement recommended by the Tariff Board became operative many months ago, when the schedule was laid on the table of the House of Representatives, any restoration of the former duty is an infringement of the terms of the Ottawa agreement. That argument is so infantile that I am unable to follow it. Perhaps the explanation is that the bridge between my mind and the collective mind of the Government has broken down. Whether it has broken down at my end or the Government’s end is immaterial. I repeat that the argument does not appeal to me, and I feel sure also that it does not appeal to many hundreds of thousands of citizens in Australia. It is important to note that earlier legislation enacts that a reduction of a duty becomes operative immediately a new schedule is laid upon the table of the House of Representatives. That is a distinct departure from the procedure in any other Parliament, so far as I am aware. A period of eighteen months or more has elapsed between the introduction of a new tariff schedule a.nd the discussion of its incidence by Parliament. This procedure has on occasions worked a grave injustice to certain industries: Recently the Labour party re-announced its “ new protection “ policy.
Senator Hardy:
– The same old policy in a new dress.
Senator LECKIE:
– That party will grant protection to an industry only when it gives to its employees proper wages and conditions. Let us visualize what might, happen -in the event of an industrial dispute occurring with the Labour party in power in the Commonwealth. Were an industry not to give to its employees wages and conditions which that government thought proper., it could immediately table a tariff schedule removing altogether the import duties on competitive articles from overseas.
Senator COLLINGS:
QUEENSLAND
– The honorable senator should read what I said on that subject.
Senator LECKIE:
– A Labour government could follow the same procedure as the present Government has adopted, and keep the reduced duties in force for six or twelve months, or even longer before they were dealt with by the Parliament, with the result that the industry would be ruined. An unscrupulous Minister, or government with such power, could easily ruin an industry. It could say to those concerned in a dispute, “ See what happened in such and such an industry. The Government took the risk of men being thrown out of employment, because it wanted to teach certain fellows a lesson. If you are not careful, it will do the same to you “. The sooner the provision that lower duties become operative immediately a tariff schedule i3 tabled in Parliament is repealed, the better for Australia and industry generally.
This subject is complicated by reason of the fact that the Tariff Board has been vested with powers greater almost than those of the Parliament itself. So long as the Government adopts the policy that no duty shall be either increased or decreased except on the advice of the Tariff Board, so long will the power of this Parliament be nullified. It is absurd that Parliament should throw away its powers by vesting them in an outside body, arbitrarily chosen. The Tariff Board was appointed, in the first place.’ to advise on the scientific encouragement of Australian industries; but it has developed into a “ funk hole “ for the Minister for Trade and Customs, the Government, and oven Parliament itself.
The PRESIDENT:
– The honorable senator has used a rather ugly term.
Senator LECKIE:
– I withdraw the words “ funk hole “ and substitute “ wellcovered dug-out “, which means the same thing. I am amazed that the Tariff Board, which is supposed to be guided by scientific principles, is so ignorant of the actual working conditions in many factories. In saying that, I do not accuse it of intentional bias. The board has condemned industry generally for having too much plant, but any Australian manufacturer who had only sufficient plant to deal with a regular volume of business would soon be forced to the wall. He must make provision to meet rush periods and fluctuations of demand from day to day. A regular flow of business over a long period is unusual. On this subject I speak with some authority, for I am a manufacturer. I could do with about one-third of my present plant if the demand on the factory were regular, day after’ day. The demand, however, is not regular, and there must be sufficient machines of various kinds to supply rush orders from customers who themselves are subject to a time limit. If I had not sufficient plant to deal with such orders, I should lose many customers.
Senator Arkins:
– The honorable senator must deal in perishable goods.
Senator LECKIE:
– What goods are not perishable? Cement, for instance, is a perishable commodity. If it were desired to store large quantities of cement, immense space would be needed. That storage would have to be dry, and to provide it many hundreds of thousands of pounds would have to be expended. The Tariff Board also seems to ignore the fact that in every factory there is an economic unit. That factor is not so generally recognized as it ought to be. Many years ago I was chairman of directors of a co-operative butter company. In the early stages of the company’s development it found that a production of ten tons of butter a week was an economic unit. When the production reached thirteen or fourteen tons a week, the company found that it could not produce butter as cheaply as when the plant dealt with only ten tons a week, but when the output grew to 20 or 21 tons a week, another economic unit was reached, and the company found that production costs were les3 than when the factory produced ten ton» a. week. Larter, when the quantity of butter produced increased slightly, the company found that it could not produce it as cheaply as when the plant dealt with twenty tons a week. The reason is that when a factory is called upon to produce more than a certain quantity of goods, extra plant, accommodation, and supervision are needed, and extra shifts may have to be worked.
Those factors the Tariff Board appear to have overlooked. Let me for a moment again refer to cement. In the manufacture of that commodity it has been found that the economic unit is 60,000 tons. Were Tasmanian cement works confined to the 8,000 or 10,000 tons of cement required in that State they would have to close their doors. A market on the mainland for the balance of the 60,000 tons is essential to the continuance of those factories. I am afraid that if the recommendation of the Tariff Board in regard to cement be carried out, it will destroy the cement making factories in the smaller S’tates of the Commonwealth, leaving, possibly, only those in Victoria and New South Wales. Those factories would, in that event, be called upon to supply the whole of the Australian demand, with the result that the freight on cement from Victoria and New South Wales to other parts of the Commonwealth would be greater than the freight on cement from Great Britain. Generally, manufacturers in Victoria and New South Wales are delighted to see factories established in the other States, notwithstanding that in some respects such factories increase the competition. The reason ‘ for this is not altogether altruistic. They recognize that so soon as fair-sized industries are established in the smaller states, creating much employment, the people of those states begin to realize the value of such .industries in maintaining their prosperity and will support protection sufficient to safeguard their newly-established enterprises against the cheap labour products of other countries. The aim of this Parliament, as it is the aim of the manufacturers of Australia, should be to establish factories as widely as possible throughout Australia. Particularly should factories be established in the smaller or less populous states, as they are now established in Victoria and New South Wales.
The Tariff Board has assumed a number of functions which I do not think this Parliament or the people of Australia expected that it would assume. It has taken upon itself the responsibility of saying how much profit any industry should be allowed to make and also how much plant any industry should have. In adopting this course the board is playing directly, and surely, into the hands of big business, as such a policy results in the concentration of particular industries in a few factories. I remind honorable senators that the important industries of Australia grew practically out of nothing; for instance, such concerns as the McKay Harvester works, MacRoberston’s confectionery factory, and some of the big factories now established in Sydney developed from very small beginnings. The tendency of the Tariff Board’s recommendations is to concentrate industry in the hands of hig business, that is, in the hands of companies with capital amounting to hundreds of thousands of pounds. Consequently, such industries will be confined to a few factories, and these, I claim, will be much harder to control than, a large number of smaller factories spread over Australia. The board prescribes 10 per cent, as a reasonable maximum profit. That seems a very fair rate of profit, particularly on a capital of some hundreds of thousands of pounds but, if a man is starting in industry with a capital of from £1,000 to £5,000 will such a rate of profit be sufficient to enable his business to grow? Under this policy a small business must remain small; the only hope for any business to become and remain big is for it to commence on a big scale. This is harmful to Australia, as the tendency to-day is for the directorates of most of the big business concerns to be dominated by accountants or representatives of financial institutions. Thus, big business becomes soulless and gives scanty consideration to the old employees in any industry which it controls. To such directorates profits are the only consideration; they say that results are the only things that count ; they have no sympathy or consideration for the rights of old employees. I repeat that it is to the advantage of Australia to have manufacturing activities distributed as much as possible.
We have been told that the rejection of the recommendation of the Tariff Board to reduce certain duties will amount to an infringement of the Ottawa agreement. It is claimed that this Parliament is morally bound under the Ottawa agreement to carry out in toto the recommendations of the Tariff Board.
To my mind the benefits which have accrued to Australia as the result of that agreement appear to have been rather exaggerated. Such benefits have never been stated definitely in figures. We have heard vague statements as to the benefits that have accrued under the agreement, to the producers of Australia, but some of those benefits are imaginary. I cannot see that the producers of Australia have gained very great benefits as the result of the agreement. In support of that view I quote figures which 1 have taken from the London Times Trade and Engineering Review of March, 1935, contrasting the trade of Australia, Canada and New Zealand with the United Kingdom before and after the Ottawa agreement. The values quoted are all in English currency ; I shall not resort to the old trick of quoting imports in English currency and exports in Australian currency. The value of imports from Australia to the United Kingdom rose from £45,679,000 in 1931, to £50,061,000 in 1934, whilst the exports from Great Britain to Australia rose from £141,528,000 in 1931 to £26,251,000 in 1934.
Senator Sir George Pearce:
– The year 1931 was in the middle of the depression.
Senator LECKIE:
– That was about’ the time when the Ottawa agreement was made.
Senator Guthrie:
– Does the honorable senator suggest that the Ottawa agreement has not been of enormous importance to Australia?
Senator LECKIE:
– That is exactly what I am suggesting. I wish to know in definite figures what advantage the agreement has conferred upon Australia. Canada, as well as Australia, suffered a depression and I direct attention to the figures relating to its trade with the United Kingdom. Great Britain’s imports from Canada for the years I previously mentioned rose from £32,841,000 to £50,413,000, whilst the exports from Great Britain to Canada fell from £20,551,000 to £19,725,000. Similarly, Great Britain’s imports from New Zealand rose from £37,775,000 to £40,445,000, whilst the exports from Great Britain remained practically the same. I point out that whilst Great Britain’s imports from Australia increased by only 9^ per cent., its exports to
Australia increased by 801/2 per cent., whereas Great Britain’s imports from Canada increased by 531/2 per cent., whilst its exports to Canada actually decreased. Yet some people have the cheek to pick out Australia as a country which has not implemented the Ottawa agreement. Those critics say not a word against Canada, South Africa or New Zealand in this respect. Particularly are they silent with respect to Canada, which has a population of 10,500,000, whose imports from Great Britain, so far from increasing have actually decreased. Taking all these factors into consideration it must be obvious that Australia has implemented the Ottawa agreement more loyally than any other dominion.
Senator McLeay:
– All the more credit to it.
Senator LECKIE:
– I am giving Australia that credit, but I emphasize that Australia is repeatedly singled out as the one dominion which has not implemented the Ottawa agreement. This allegation is groundless.
Senator Badman:
-What about the exports from Australia to other dominions as the result of the Ottawa agreement ?
Senator LECKIE:
– The total production in Australia in 1933-34 in the dairying, poultry and bee-farming industries was valued at £40,000,000, whilst the total exports of these products for the same year were valued at only £10,000,000. Therefore 74.6 per cent. of these products was consumed in Australia, showing that the home market for these products is three times more valuable than the export market. The only commodity in respect of which the value of exports has been greater than the value of produce consumed locally is wool. In 1933-34 production in Australia, exclusive of bullion and specie, was valued at £357,932,000, of which £112,000,000 -worth was exported, while the value of goods consumed locally was £241,000,000. Wool is the only exception.
Senator Sir George Pearce:
– What of wheat?
Senator Badman:
– About four-fifths is exported.
Senator LECKIE:
– These figures show that barley, bran, flour and rice valued at £24,000,000 were exported, but the value of wheat exports is not given. The advantages of the Ottawa agreement are somewhat problematical. Mr. Malcolm MacDonald, M.P., Secretary of State for Dominion Affairs, said: -
Great Britain had undergone a revolution, and had adopted protection as a National Policy. The first objective of the Ottawa Conference was to increase the prosperities of the countries of the Empire to establish two way traffic in goods within the Empire. The Ottawa Agreement did not establish Empire freetrade. That creed was associated with ideas which belonged to the ancient past.
These significant remarks were commented upon by the Minister for Trade and Customs (Mr. White) in the following words: -
For twenty-five years we have had a preferential tariff which had meant a great advantage to Great Britain. In the eleven years, 1922 to 1932 inclusive, the United Kingdom imported from Australia merchandise valued at £472,796,182. In the same period she exported to Australia goods produced in the United Kingdom to the value of £537,507,742, leaving a merchandise balance in favour of the United Kingdom of £64,711,560. In the same period Australia paid to the United Kingdom in the service of her overseas public debt £280,000,000.
During those eleven years we were at a disadvantage to the amount of £340,000,000, which was met by borrowing overseas. Exchange on the interest payableoverseas now amounts to about £5,000,000 annually. In view of the fact that for those eleven years there was a balance against Australia of £340,000,000 to £350,000,000, surely it is time we started to correct our trade balance. When there seems to be a slight balance in our favour it is not the time to make a fuss.Honorable senators are well aware that we have not reached the stage when our overseas trade balance is satisfactory. Even during a prosperous year the balance is unsatisfactory, and last year we had an adverse trade balance of about £10,000,000.
Senator Sir George Pearce:
– We have a satisfactory balance. Interest is not trade.
Senator LECKIE:
– How are these amounts paid?
Senator Sir George Pearce:
– By our favourable balance.
Senator LECKIE:
– We can buy only what we can pay for, and we can sell only those goods which we have to sell. I am unaware of a substantial surplus of Australian produce accumulating in this country. If weimport goods we have to pay for them in cash or with other goods, otherwise we shall be in an unsatisfactory position. If the balance of trade turns seriously against us, we must raise the exchange, ration credit in Australia, or ration imports. There may be one or two other methods, but the position has to be checked in some way. If we decide to pay for the excessive imports with money borrowed overseas, what becomes of Australia’s credit, and how long will it be before the exchange rate reaches an uneconomic level? I have always been opposed to arranging the exchange rate at a fixed level. Exchange was intended to be a regulator of trade between countries, but when it is pegged, instead of regulating the trade it merely depreciates the value of the Australian currency. The only other way is by raising tariff barriers or by restricting imports. If we are to allow the exchange to rise to a higher rate, it may reach 150 per cent. instead of 125 per cent. as it is at present, and instead of paying £5,500,000 annually in exchange on interest commitments overseas, we shall have to pay £11,000,000. It is better to protect Australian industries and to provide employment for Australian workmen, than to make work for the operatives in Great Britain, Japan or other countries. We should not tax our own people to pay a further £5,500,000 for exchange on overseas interest. To show what the manufacturers in Great Britain think of the Ottawa agreement, I may say that the Executive Committee of the Federation of British Industries has sent a significant memorandum to His Majesty’s Government in the United Kingdom. I quote a. passage from the British Export Gazette, of 1936, in whicha plea is made for a modification of the Ottawa agreement, of course, altogether in favour of British manufacturers. Strange to say, the extract concluded by advocating that duties be imposed against manufactured articles imported from the dominions. It stated -
The federation, therefore, urges that in order to avoid undue competition arising in the home market from these or other causes from any part of the Empire, whether dominions or Crown colonies, the Government should adopt the policy of affording effective protection to United Kingdom manufacturers, either by duties, quantitative regulation, or in any other way which may prove feasible.
Senator Guthrie:
– But Australia does not export manufactured goods.
Senator LECKIE:
– The British manufacturers object to the effective protection of Australian industries, but ask the British Government for effective protection of the manufactures of the United Kingdom.
At the last general election, the Commonwealth Government made certain professions of faith, ‘and laid down a definite policy for the adequate protection of Australian industries. That credo was accepted in good faith, both by the people of Australia and the classes directly interested - the manufacturers and the workers - as being the considered policy of the Government. Now those sections of the community could very well be excused for thinking, in view of the reduction of duties on nearly 2,000 items, that that declaration contained more of a profession than of faith. I warn the Government of the growing trend of feeling against it throughout the Commonwealth.
Senator Sir George Pearce:
– Can the honorable senator name any one Australian industry which is showing signs of not receiving adequate protection?
Senator LECKIE:
– Certainly I could quote examples; the interjection of the Leader of the Senate is an old gag.
Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT
– It is easy to generalize.
Senator LECKIE:
– That is exactly what the Government is doing; it is always taking the easiest path. There is always atime lag in the effect of duties.
Senator Brennan:
– This policy has been in operation for four years.
Senator LECKIE:
– Yes ; but only within the last eighteen months has the Government been reducing duties, except for the abolition of the Scullin Government’s surcharges and prohibitions, which nobody wanted. Three members of the Government have made the astounding statement that the number of employees in Australian factories is greater than ever, and that the factories of Australia are prosperous, largely due to the tariff policy of the Government. Such an assertion is so ludicrous that one almost doubts the political sanity of the honorable gentlemen responsible for it. The declaration that the reduction of duties has brought prosperity to Australian manufacturers is so puerile that it cannot be regarded seriously. I agree that the general policy of the Administration - not its tariff policy - contributed to this prosperity. The Government restored confidence, which had been destroyed by the action of a previous administration and managed the finances of the Commonwealth in a highly creditable manner; the return of confidence, coupled with the increased prices for primary products, was responsible for the improved position of the manufacturers. But the statement that this prosperity is attributable to the tariff policy of the Government is so puerile that it will not be accepted by anybody with a knowledge of the facts. If the Government contents itself with claiming that the improved position of manufacturers is due to its general policy, I shall agree with it. I think that the Government has done excellently in that connexion. Owing to undue influence, it is adopting a wrong tariff policy at present, but I have no doubt that it will speedily discover its mistake. The most that the Government can claim for its tariff policy is that it has done no harm.
Senator Collings:
– But there are 15,000 fewer employees than there would have been if the duties had not been reduced.
Senator LECKIE:
– At one time Australian manufacturers were told “Make a success of your business or perish “. Now they are told “ Make a success and die.”
Senator Guthrie:
– But they are not dying?
Senator LECKIE:
– So soon as an industry becomes prosperous and gives extensive employment, it becomes a target for attack. If it be failing, no notice is taken of it. The Government claims that it has a moral obligation to implement in toto the Ottawa agreement. Doe? that moral obligation mean putting thousands of our people out of employment?
Senator Sir George Pearce:
– No.
Senator Collings:
– The Government has failed to give employment to thousands of men.
Senator LECKIE:
– Let me draw again upon the cement industry to illustrate my contention. There is on the water at the present time a shipment of “ Tunnel “ brand cement, consigned to “Western Australia by the Danish steamer s.s. Stanford. The consignor is AlfredField of London and the consignees are Brown & Bureau Limited, of Perth, who chartered the boat on behalf of certain “Western Australian interests. The original shipment of cement was 4,750 tons, the remainder of the cargo consisting of sulphur. But when it became known that the duty was likely to be lifted, the consignment of cement was increased to 6,000 tons.
Senator Guthrie:
– Are not Brown & Bureau Limited, the representatives of Australian manufacturers of cement?
Senator LECKIE:
– I am not aware of that, but the firm is agent for the “ Tunnel “ brand of cement manufactured in Great Britain. A week later a second boat with a cargo of 5,000 tons of cement is following. Therefore within the next three weeks 11,000 tons of British cement will arrive inWestern Australia. Honorable senators may be aware that it requires eight men working all the year round to produce 1,000 tons of cement; four men are engaged in the actual manufacture of cement, and another four men are required to produce coal and other necessary materials. The arrival of 11,000 tons of cement in “Western Australia in three weeks means that 88 men will be deprived of employment for twelve months and they will not get work that they otherwise would have obtained. Is that the moral obligation that the Government has undertaken in resolving to implement the Ottawa agreement? Never in my life have I heard anything so iniquitous. The Government has a moral obligation to put Australians into employment, not to give work to Englishmen. Does its mora! obligation in respect of the Ottawa agreement imply further that employment shall be withheld from Australians, so that the workers of Japan shall be given jobs? I have never heard of a moral obligation of this kind before. The factsI have cited are a concrete instance of what occurs when duties are lowered.
Senator Sir George Pearce:
– Those threats were uttered in connexion with the glass industry; but the fears were never realized.
Senator LECKIE:
– They were not realized because the demand for glass in Australia became greater and greater with the return of prosperity.
Senator Badman:
– What about the demand for cement?
Senator LECKIE:
– The demand for cement has not been so great.
Senator Guthrie:
– Perhaps that is due to the higher prices charged.
Senator LECKIE:
– No ; it is the result of the decline of building operations in the depression years. I have given the Senate a concrete example of the effect of the Tariff Board’s recommendation with regard to cement and have shown that Western Australia will suffer heavily.
Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT
– If the Government of Western Australia had not obtained that cement, work on the Canning Weir would not have been carried out, and a large number of Western Australian workmen would have been without work.
Senator LECKIE:
– The difficulty of securing cement was attributed to the shipping strike; but that was not correct, because there are cement manufacturers in Western Australia.
Senator Hardy:
– Does the honorable senator think that the cement companies have made only reasonable profitsin recent years?
Senator LECKIE:
– I do not wish to be drawn into a discussion of the profits of the various cement companies, but I know that the Goliath Cement Company, in Tasmania, for fourteen years made no profit at all, and at the end of that time had to write off one-third of its capital. During the last seven years it has paid on its reduced capital three dividends of 21/2 per cent., 10 per cent. and 15 per cent., respectively, or a total during the last seven years of 271/2 per cent., representing 4 per cent. on its reduced capital of 13s. 4d. in the pound. Over the whole period its shareholders have lost in capital 6s. 8d. in the pound, and have been paid in dividends 3s. 10d.
Senator Badman:
– May that be regarded as typical of other cement companies ?
Senator LECKIE:
– It may be taken as typical of many such companies. I am afraid that some honorable senators have a misconception of the dividends paid by cement manufacturers in recent years. They have failed to note that if dividends have been paid they have been paid not out of profits, but out of accumulated surpluses. During the depression many business firms had to write down their capital and draw on their reserves in order to give a return to shareholders. They were in a better position than primary producers, because they were able to place the position before their shareholders and obtain approval for proposals to write down capital in order to carry on, and have a chance to recover.
I was somewhat amused at the remarks of Senator Payne and other honorable senators concerning the effects of the tariff on the cost of living. Having been associated with industrial concerns for many years I know that following the imposition of the Scullin tariff, the costof living in Australia fell by 25 per cent. And what perhaps is more remarkable, since this Government reduced the duties on 2,000 tariff items the cost of living has gone up. This fact effectively disposes of the argument that the tariff affects the cost of living. In June, 1929, the cost-of-living index figure was 1,797. In1933 it had dropped to 1,332, and in March of this year it had increased to 1,427. In view of these figures it is absurd to claim that higher tariffs increase the cost of living. The explanation for the present higher index figure is to be found in the better prices being obtained in Australia by our primary producers for their products. We do not begrudge them this relief although it will affect costs in secondary industries.
I have endeavoured to place before the Senate, as clearly as possible my views on tariff matters generally, and shall reserve further remarks till we reach the committee stage of the bill. Australian manufacturers are not high tariffists, but they feel that they are entitled to ask for adequate protection against competition from other countries where wages costs are lower and working conditions not so favorable as in Australia. They do not believe in prohibition or surcharges. They all would be pleased if they could double their present volume of employment. I claim for them that during and since the depression they have stood up to their job. Factory employment has absorbed a very large number of skilled operatives. The present need is to find more work for unskilled labourers, who suffered most during the depression, largely because of the cessation of government works. Without casting any slur upon cement workers, coal-miners and the like, I say that a man does not require to be skilled in order to give satisfaction in such occupations, and it is to the interest of Australia to give tariff protection to all those industries which employ unskilled workers. I trust that, in anything that I have said this afternoon, I have not been unfair to the Government. I do not quarrel with its tariff policy so much as the attempt, which has been made to influence the debate in this chamber on the cement duties. That item should be discussed entirely on its merits. “ There is no moral obligation resting on this Parliament to heed representations from outside and, by an alteration of the duty imposed on cement by the House of Representatives, cause thousands of Australian workmen to lose their employment. There is no reason at all why we should set back the economic clock in Australia in order that a greater measure of prosperity may be given to workers in another country.
Senator FOLL:
Queensland
.- 1 agree with the remarks of Senator Leckie about the need of adequate protection of Australian industries, and I feel sure that our kinsmen overseas recognize that, in order to keep our people employed, it is necessary to establish in Australia large secondary industries. But I disagree with the honorable senator’s observations with reference to the effect of the Ottawa agreement on Australian industries. Those of us who have watched closely world events since 1931 will recall that the Imperial Conference, which was attended by the then Prime Minister (Mr. Scullin), Mr. Parker Moloney and Mr. Brennan, dispersed without having marie any plans for the orderly marketing of Empire products in Great Britain. At that time there was an alarming glut of primary products on the London market, and prices declined to such an extent as gravely to endanger the position of primary producers in the Mother Country. As a way out of the trouble, the then Premier of Canada (Mr. Bennett), convened the Ottawa Conference for the discussion of marketing problems common to the Mother Country and all the dominions, and I claim, contrary to the views expressed by Senator Leckie, that but for the Ottawa agreement the primary producers of Australia would to-day be in a very serious position. Senator Leckie emphasized the recent increase of importations from Great Britain as compared with importations in -1931. The improved trade is due entirely to internal recovery in Australia, and it should be noted that the increased importations include machinery and other classes of goods required for expanding secondary industries in this country. Were it not for the preference given to Australia by Britain, this country could not dispose of its exportable surplus of sugar, except at greater loss than is now incurred. That preference makes it possible for 97 per cent, of Australia’s surplus sugar production to be disposed of in the United Kingdom. With the exception of wheat and wool our primary products have practically only one overseas market; and until additional markets are secured, we shall have to nurse that market very carefully.
Senator Collings:
– Every country is seeking additional markets.
Senator FOLL:
– That is so. The high quality of Australian primary products is appreciated by the people of Britain, and that fact ensures for them a share of the British market.
I do not agree that the rejection pf an item in this tariff schedule is likely to cause other parts of the British Empire to cease to buy Australian primary products. Such a suggestion is ridiculous, if only for the reason that Australia owes Britain a considerable debt, which can be paid only by Britain accepting large quantities of our primary products. On the 5th July last, the British Minister for Agriculture, Major Elliott, addressing a conference in Westminster Hall,
London, said that it was necessary for Great Britain to trade with those countries which were in its debt. As a member of that conference, I asked -
I would like to ask whether, when the beef agreement was entered into between Great Britain and the Argentine, such considerations as the payment of interest due on money that had been lent by Britain to the Argentine were taken into account as part and parcel of the agreement between Britain and the Argentine, whereas when the restriction was placed on our own Dominion of Australia the British Government knew that Australia would never default and none of those interest payments or things of that sort were taken into consideration at all?
The Minister for Agriculture replied -
No, that is not accurate. We were simply governed by the old maxim, which has several times been reiterated here in ovir discussion, that unless wc accepted the beef we could not expect payment, and that unless we accepted it we should force default upon our debtor. It was exactly the same in the case of Australia and in the case of the Argentine.
Public men in Great Britain realize that that country must accept large quantities of dominion products if the dominions are to meet their obligations to the old country. In our desire to dispose of our exportable surplus, however, we should be careful not to do anything to injure our chances of securing a larger share of the British market. When in England a few months ago, I found that the people there recognized that Australia could not confine itself to primary production, but must make a proportion of its requirements of manufactured goods. The suggestion that by rejecting one item in this schedule we endanger our export trade with Britain is ridiculous.
During , the last few weeks statements by the Prime Minister (Mr. Lyons) and other members of the Cabinet, that it may be necessary to place restrictions on imports from the United States of America, have been given prominence in the press. Art. the. present time it is” essential that the closest and most friendly relations should exist between the English-speaking nations of the world, and, therefore, I should be sorry to see any action taken which might cause ill feeling between this country and the United States of America. I am aware of the serious nature of our trade relations with that country, and admit that for twelve or fifteen years Aus- tralia’s trade balance with the United States of America has become increasingly alarming; but, after all, not many of the goods which are imported from there enter into competition with Australian manufactures. Moreover, most of the things of which Australia has an exportable surplus are grown, or manufactured in the United States of America.
Senator Hardy:
– ‘What about Australian wines?
Senator FOLL:
– I have always favoured the establishment of trade agencies in other countries. Foi- many years Australia has had a trade agency in the United States of’ America ; but I have been greatly disappointed that more success has not attended its activities. An analysis of Australia’s imports from the United States of America shows that the greater part of them consists of motor cars, oils, petrol and motion picture films. The people of Australia have the remedy in their own hands. They could, for instance, buy more motor cars made in Britain and fewer of those made in the United States of America. Unfortunately, however, the percentage of motor cars imported from Great Britain is decreasing rather than increasing. British petrol and oils are available to the Australian public so that in regard to those items also, there is no need to purchase American products. Nevertheless, 1. repeat that, at this juncture, we should encourage the closest possible relations with other English-speaking countries, and not indulge in threats of tariff action against them.
I draw the attention of the ‘Senate to a circular recently issued by the Joint Committee for Tariff Revision, situated in Sydney, because I believe it to be the filthiest piece of political propaganda it has been my lot to see.
Senator Gibson:
– Why mention it?
Senator FOLL:
– I mention it because people who stoop to this kind of propaganda and attempt to intimidate members of Parliament should be exposed in the Parliaments of this country. When the duties on cement were under discussion in the House of Representatives, certain Ministers - I think unwisely - accused some members of the United Australia party of having been influenced by lebbyists. I say nothing against lobbying if properly conducted, because, in my opinion, every section of the community has a right to interview members of Parliament, in Parliament House or elsewhere, and present its case. We are here, as representatives of all sections of tho community, and if the electors so desire they should be free to present their case to members without being accused of a criminal action.
Senator Duncan-Hughes:
– Would it not be better for them to make their representations by letter?
Senator FOLL:
– I do not think that the method of approach matters much, so long as the representations are made properly. Until the circular to which I have referred came under my notice, I had regarded the Joint Committee for Tariff Revision as a body of men desirous of bringing about tariff reform in the proper way. I pass over the first portion of the circular, which deals with the Tariff Board’s report on portland cement, to draw attention to the following paragraph, to which I take the strongest possible exception -
The decision of the Government to give effect to the recommendation of the Tariff Board was defeated, tho following United Australia party members, amongst others, voting or pairing with the Labour party in favor of the motion for the postponement of the item as an instruction to the Government to increase the tariff: -
At that time the possible infringement of the Ottawa agreement had not been mentioned. The circular continued -
Messrs. J. T. Jennings, (Watson); John N. Lawson, (Macquarie); A. Lane, (Barton); Honorable J. A. Perkins, (Eden-Monaro) ; W. V. McCall, (Martin) ; Honorable Sir Charles Marr, (Parkes).
Honorable senators will observe that reference is made to certain government supporters “voting or pairing” with the Labour party. The inference is that they acted in collusion with another political body. I remind the Senate that time after time the Prime Minister has said that the tariff is not a party matter, and that members of the United Australia party may vote on any item as they think fit.
Senator Collings:
– The whip has been cracked since then.
Senator Arkins:
– How could they pair with members of the Labour party if they were voting together against the Government ?
Senator FOLL:
– That, of course, was impossible. The circular stated further -
Each one of these members not only took up the attitude that they knew more about the position than the Tariff Board after its exhaustive inquiry, but they also had no hesitation in recording a vote which, in the opinion of the Government, forced a violation of the terms of the Ottawa agreement.
We suggest to you that it is a matter for your consideration whether the interests of a very small minority are to be placed before the welfare of the rest of the community. If you feel that your member has taken a course of action which is not in the best interests of the major industries concerned (such as building and road-making) and of Australia as a whole, wo feel sure you will know how to voice your disapproval1 in a way that, your federal representative will understand.
So far as my committee is concerned, it has no “ axe to grind “, and in dealing with tariff’ matters is seeking only what is fair and reasonable to all sections interested, and before any reduction in duty is advocated by us, it must, in our opinion, be in the best interests of Australia as a whole.
This circular was printed by the thousand by the Joint Committee for Tariff Revision, in order to do as much harm as possible politically to those members of the United Australia party who on this item voted with the Opposition in the House of Representatives. It was sent to every member of local government bodies in each electorate represented by these members. Obviously this action was an attempt to intimidate them. As the circular has not been distributed in my State, I am not affected by it, but I deprecate such tactics ; they are not likely to help the activities of this body, which, apparently, expects to earn the support of the decent section of the community. I have given publicity to this circular in order to reveal the despicable nature of the propaganda which is being used against my colleagues in the House of Representatives, because of the attitude they adopted on this matter.
As to my own attitude, I shall not vote in favour of increasing duties on cement or any other article if such action is likely to clash with the provisions of the Ottawa agreement. It is imperative that Australia to-day should hold its share of the British market, and, if possible, extend it, because it is due to the preference which we enjoy on that market that we are able to sell so much of our primary products at a favorable price, as we are doing to-day. I believe that if propaganda of this type had not been indulged in, following a vote against the Government in the other chamber on what was comparatively a small item, no more would have been heard about the matter. Like Senator Leckie, I know sufficient of the duties of British Cabinet Ministers to realize that they would not have bothered themselves about an item so insignificant unless representations had been made to them by the producers of cement in Great Britain itself. .Furthermore, it is probable that but for the propaganda to which interested parties have resorted the decision of the House of Representatives would have been accepted as a matter of course, and nothing further would have been heard about it. This is too trivial a matter to be allowed to affect the Ottawa agreement. However, having regard to the negotiations now being conducted in Great Britain by the Minister for Commerce (Dr. Earle Page) and the Attorney-General (Mr. Menzies), and in view of the visit of the Prime Minister (Mr. Lyons) and other Ministers to England next year to undertake further negotiations for long-term agreements in respect of meat and butter, it would be very dangerous to bandy about the Ottawa agreement in this chamber, as has been done during the last few weeks. Therefore, I shall record my vote in support of the Government on the cement item.
Senator Collings:
– Wait till von return home !
Senator FOLL:
– I am quite prepared when T return to Queensland to justify any vote I cast in this chamber, or elsewhere, which will prevent injury from being done to the great primary industries of this country. I say frankly that I am firmly of the opinion that had propaganda of the nature which I have mentioned not been disseminated, the protest against the cement duty as a breach of the Ottawa agreement would not have been raised. However, it has been raised, and consequently the matter has now become serious. I shall not cast my vote in favour of any proposal which would, because of its bearing on that agreement, threaten injury to the primary producers of Australia.
Senator DEIN (New South Wales) [4.26 j.- But for the claim that the acceptance of certain duties in this schedule would infringe the Ottawa agreement, I would not have spoken on the second reading of this bill. It has been contended that if Parliament accepts the rate of duty on cement specified in the schedule, a principle of the Ottawa agreement will be violated. There is a difference of opinion on this matter, but the majority of eminent counsel who have been consulted hold the view that no principle of the Ottawa agreement will be infringed if Parliament refuses to accept the recommendation of the Tariff Board in relation to the duty on cement. I did not read the opinions of counsel, because after studying the relevant articles in the agreement, I formed the opinion that any honorable senator could come to a commonsense decision on this matter for himself. The Minister for Trade and Customs stated definitely that the increase of the duty on cement could constitute a violation of article 12 of the agreement. The Canberra Times does not rely on article 12 to support a similar view, but bases its arguments on articles 10 and 11. Evidently those who contend! that a provision of the Ottawa agreement will be infringed if Parliament does not agree to the Tariff Board’s recommendation on this matter, do not agree among themselves. If article 12 applies, as the Minister contends it does, Parliament has no alternative but to accept every recommendation of the Tariff Board, but when the Ottawa agreement was before the House of Representatives, of which I was at that time a member, we were distinctly told that that would not be its effect. Article 12, upon which the Government relies, deals specifically with the increasing of existing duties; it says nothing whatever about reducing existing duties. It reads -
His Majesty’s Government in the Commonwealth of Australia undertakes that no new protective duty shall be imposed and no existing duty shall be increased on United Kingdom goods to an amount in excess of the recommendation of the Tariff Board.
Had the amendment carried in the other chamber effected an increase of the exist- ing duty on cement, say to 21s. a ton, such a decision certainly would have violated the Ottawa agreement, hut as an existing duty was decreased, article 12 does not apply. If the Government’s contention is correct, is it not logical to assume that at least one article of the agreement would have read something like this: “His Majesty’s Government in the Commonwealth of Australia undertakes not to impose any duties beyond those recommended to the Tariff Board “?
Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT
– Such a provision would have conflicted with the Government’s policy.
Senator DEIN:
– There is no article of that nature in the agreement, and this fact was noted during the debate on the Ottawa Agreement, when we were assured that the powers of the parliament in relation to tariff making were not, by this instrument, being surrendered to the Tariff Board. I cannot accept the view that article 12 has any bearing whatever on the proposed new duty, which is lower than the previously existing duty. Under article 10 the Tariff Board was directed to compare the costs of manufacture in other countries with the cost of production in Australia; but no evidence whatever was tendered by British manufacturers. In the absence of such evidence how could the Tariff Board determine whether article 10 which deals with competitive costs was being implemented? Under article 11 the Government definitely undertook to review existing duties in accordance with article 10, and if necessary, to vary the duties. How can it be said that articles 10 or 11 have been infringed when no such evidence was tendered ? Further, it has been contended by some that articles 10, 11 or 12 have not been violated but that the spirit of the Ottawa agreement has been. What is the spirit of that agreement? I participated in the debate in the House of Representatives on the adoption of the agreement, and to me it appeared that the spirit of the agreement was the downward trend of our protective duties in order to allow competition from other countries of the Empire. Therefore, the action taken is not a violation of the spirit of the agreement, but is strictly in compliance with it. I supported the passage of the agreement in the House of Representatives, but I feel certain that when the cement duties are before this chamber I can vote either with the Government or against it, believing that whatever I do I shall not be supporting a breach of the agreement.
There are two factors which stand out prominently in connexion with the manufacture of cement or other goods. First, we must retain possession of the Australian market for the Australian manufacturer, and, secondly, the local manufacturer is entitled to the Australian market, but only if he is prepared to do the proper thing. According to the report of the Tariff Board and other information at my disposal, the cement companies have not played the game in the past. The Australian manufacturers should have a monopoly of the local market only if they are worthy of it. The cement manufacturing companies have not played the game, and have done exactly what a Labour Government encouraged them to do. This Government is doing the right thing, and in consequence of its fiscal policy generally, Australia is in a much better position to-day than it was when the Scullin Government was in office. I am not particularly interested in the cement duties and I propose to deal with them on their merits.
Senator Collings:
– Then we know which way the honorable senator proposes to vote.
Senator DEIN:
– I have an open mind on the subject. Reference has been made to the extent to which lobbying has been carried on in connexion with the duties on cement and other commodities. I have been approached by the representatives of importers and manufacturers. I realize that the representatives of all interests have the right to be heard. It was probably intended that the circular mentioned by Senator Foll, which is mere intimidation, should come into my hands, and I know that every alderman and councillor in local governing bodies in New South Wales has been urged to watch how the votes were cast. Some persons wish me to do a certain thing, but I hope to do what is right. That circular is a clear instance of intimidation, of which
I entirely disapprove. I shall follow the debate on the cement duties very closely, and the case which appears to have the greater merit will receive my support.
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– Honorable senators on this side of the chamber are in the fortunate position that they need not become wildly excited over the tariff debate. Honorable senators opposite appear to be somewhat perturbed, particularly in respect of the duties on some items, and there seems to be a possibility of a split in the ranks.
Senator Dein:
– We have not all to vote in the same way.
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– No ; I believe that there will be honest differences of opinion. Like Senator Dein, I have not yet made up my mind how I shall vote on certain items; but although I am not a high protectionist, I urn a keen advocate of the reasonable protection of Australian manufacturers, because we should not import goods which can be manufactured economically in this country. Even under a protective policy there can be two-way trade. It seems unreasonable to suggest that, while cement is being manufactured successfully and economically in Australia, supplies should be imported free of duty from Great Britain and allowed to enter into competition with the local product. Those who believe in the free admission of British cement may even go so far as to suggest that concrete blocks should also be imported from that country. It is an admission of weakness even to debate the question of the free importation of British cement into a country with plants capable of producing all that it requires. The duties on cement will be determined by the votes of honorable senators opposite. When the last tariff schedule was before the Senate the Government had the support of two members of the New South Wales Labour party, who, on more than one occasion, saved it from defeat. I intend to follow the debate on the cement duties very closely and to support the case which has the greater merit. According to information supplied by the Industries Protection League of New South Wales it appears that between 1932-33 and 1934-35 imports increased by 273/4 per cent. and exports decreased by63/4 per cent. - a total disadvantage to the Australian trade of 341/2 per cent.
Senator Guthrie:
– Those are not the latest figures.
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– They have been supplied by the friends of honorable senators opposite. When approached by a representative of manufacturers I informed him that some manufacturers interview Labour representatives in the hope of securing their support for high duties, but when they received protection they did not care what happened to the workers whom they employed. These figures show that we are asked to give a further advantage to Great Britain to the detriment of an Australian industry. The general result of the Ottawa agreement has been to place Australia at a considerable disadvantage. The statement has been made that the landing of 11,000 tons of British cement in Western Australia during the next few weeks will have the effect of depriving 88 men of employment.
Senator Hardy:
Senator Hardy interjecting.
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– I draw the attention of honorable senators to a passage in Hansard which is a splendid example of the vivid descriptive powers of Senator Hardy. In 1933, during the debate on the customs tariff, he said -
I am astounded tofind the Leader of the Senate and the Minister in charge of the bill playing political leap-frog or riding on a merry-go-round the tunc of which changes nightly.
Senator Hardy:
– That demonstrates how well the Minister has done since, because he has come to the revision of the tariff.
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– The honorable senator continued -
If we are to have such political somersaults, such fiscal acrobatics, what hope is there of sound government? The same somersaulting has been indulged in by the Minister in charge of the bill. He also has been able to change his fiscal ideas overnight, to shed his opinions as easily as a snake sheds its skin in the spring.
Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT
– The honorable senator does not know my fiscal opinions.
Senator HARDY:
– The opinions of the Minister in charge of the bill are as multicoloured as was Joseph’s coat.
Senator Collings:
– The marriage of convenience had not taken place then.
Senator Hardy:
– It is a marriage of common-sense.
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– In view of those utterances, which are of course somewhat hackneyed, hut none the less true in regard to the position occupied by Senator Hardy to-day, I expect him to vote with the Opposition against the proposal to remove the duty on British cement.
Senator Hardy:
– The honorable senator would be well advised not to be over optimistic.
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
-! am endeavouring to show that the principal opponents of the duty on cement have somersaulted on other tariff matters. In this connexion, apparently, any change of opinion may be pardoned, whether it is made overnight or in ten seconds.
The PRESIDENT:
– I fail to see how the remarks of the honorable senator can be connected with the bill.
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– Considerable debate has taken place in regard to the manner in which honorable senators have in the past changed their views. Such great changes of opinion have occurred that apparently anything is pardonable.
The PRESIDENT:
– But there is no duty upon changes of opinion.
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– Figures have been quoted in this chamber to prove that, since the operation of the Ottawa agreement, Australia has suffered serious disadvantages. I consider that the proposal to permit the free entry of British cement into Australia is indefensible. Information supplied to honorable senators demonstrates that the original duty of ls. per cwt. on cement dated back to . the nineties; it was imposed by the State of Victoria, which led the other States of Australia in tariff matters.
Senator McLeay:
– What was the exchange rate then?
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– The honorable senator might just as well ask me what was the value of money then. I was working in the nineties, and I am aware that the present purchasing power of money is not so great as it was in those times; the sum of 10s. would then go as far as £1 to-day. At the beginning of the present century a working man could raise a family decently on 50s. a week.
Senator McLeay:
– How far would it go with the 30-hour week?
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– The 30-hour week has not yet been introduced in Australia; but, unless it be adopted, we shall witness a revolution. Information supplied by the Australian Industries League leads me to ask what excuse the opponents of the duty on cement have to offer for a return to the Government’s proposal. They state that, the Ottawa agreement has been violated. I do not propose to quote the agreement chapter and verse, hut eminent counsel have given their opinion that the restoration of the duties on cement by the House of Representatives does not constitute a violation of the agreement.
Senator Arkins:
– Legal opinions on that matter differ.
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– They differ on most matters. Honorable senators, who oppose the restoration of the duty on cement say that the Tariff Board reported in favor of the free entry into Australia of cement manufactured in Great Britain, and that the recommendation should be accepted as final. From my interpretation of the Constitution of the Commonwealth, this Parliament is responsible to the electors for the imposition of duties of customs and excise, and I fail to see how the Tariff Board can be made superior to Parliament. The contention of the Government in this regard is untenable. From the silence among the supporters of the Government I assume that they admit that this Parliament is the supreme authority on tariff matters.
The British Government has every right to seek trade agreements with Australia; but, unless it, can demonstrate that the action of the House of Representatives in restoring the duty on cement violates the Ottawa agreement, honorable senators are perfectly entitled to support that duty. The Minister in charge of the bill (Senator A. J. McLachlan) stated that the Government had received a protest from the British Government against the restoration of the duty. In my opinion the British Government has gone out of its way to protest. My experience of Australian politics goes back 45- years, and I have read extensively on political matters. I do not recall one instance of the British Government protesting over what Senator Foll rightly characterized “ a trivial matter,” such as this one. In conversation with some of the lobbyists - who, by the way, have every right to represent their claims to honorable senators - I said that I did not suppose that if the administration encountered another reverse in regard to this duty, a double dissolution would follow. I added that the matter was not so important as to warrant an appeal to the country. He replied, “ No, hardly that.” This item can be regarded as of minor importance in comparison with many of the matters that concern this Parliament, and the grave international factors which are claiming the attention of the British Government at the present .time. In my opinion, the protest from the British Government must have been instigated by some interest in Australia, or by some fervid low tariffist who desired to use the British Government and its unique protest to browbeat this Parliament into adopting a course of action favorable to the British manufacturers.
Senator Leckie referred to the Labour party’s policy of “ new protection “ as an old policy in a new dress. In point of time the ideas are old, but they are still held in the Labour movement and are embodied in the mind of the Australian masses. The Labour party has not altered its opinion in this regard. The new protection has not been put into practice before because of the opposition of influential interests in the Commonwealth. I believe that the High Court once gave a decision which, in effect, invalidated this policy. This Parliament cannot consider a tariff enactment which will protect the wages and conditions of the workers; nor can it by means of the tariff prevent exploitation. If by any statute an industrial monopoly is created, this legislature cannot pass a law to fix the price of the article to the consumer. But it can take action in another direction and I draw attention to the remarks of the Leader of the Opposition (Senator Collings) on the second reading of this measure. He explained clearly how the Labour party proposes to meet those evils which have been apparent for very many years. The Government fears that exploitation might take place in regard to cement. Senator Collings pointed out that the Government could take the necessary power to overcome these evils and prevent monopolies from exploiting the public and making excessive profits. The Government can by a special act fix the retail prices of their commodities and set a limit upon their net profits. Through the industrial courts, wages, hours of labour and working conditions of employees engaged in industries can be determined. He also reminded the Senate that the Government has power to levy taxation and that if any adequately protected industry should exploit the public, taxation upon its profits could be increased without raising any constitutional difficulties. The Labour party is well aware that much can be done by taxation. Some of our thinkers regard the taxation weapon as all-sufficient to check monopolies, prevent the exploitation of the public, and assist towards a fairer distribution of wealth. Its effectiveness in. this respect is well illustrated in Great Britain where, on certain incomes the tax burden is 15s. in the £1.
Senator Brennan:
– In Great Britain taxation is levied for the purposes of government, not for the purposes suggested by the honorable senator.
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– Nevertheless, it shows what the public will stand, and I repeat that this Government has in its hands a weapon to prevent the exploitation of the consumer by any monopolistic concerns in this country as well as to meet the expenditure on administration.
The people who have furnished us with this propaganda with reference to cement duties refer to the dumping evil. On this point I remind the Senate that Australia, which is largely an agricultural and pastoral country, also dumps many of its surplus products in overseas markets.
Senator Dein:
– How would you define “ dumping “ ?
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– As to the definition of dumping, there seems to be some difference of opinion. My interpretation of the term is the marketing of a product overseas at a price lower than that at which it is sold in the home market, and at a price which threatens the extinction of an industry in the importing country. It has been suggested that this may happen to the Australian cement industry if the recommendations of the Tariff Board are accepted. Quite naturally we seek to protect our own industries after which we are prepared to give first preference to British products. It is contended that British cement is being dumped in Australia. The figures supplied to us show that the price in Great Britain is 38s. a ton, and it isstated that large quantities have been sold in foreign countries at as low as 20s. a ton. That price suggests dumping.
Senator Arkins:
– What is the definition of dumping in the act?
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– I have given my definition of the term. The price on wharf, Sydney, of British cement is £3 10s. 3d. a ton, compared with 23s. f.o.b. English ports. The freight is 27s. a ton, the balance being represented by exchange, wharfage and other charges. The Australian price for British cement, compared with 20s. a tonin foreign countries, would suggest that there is some opportunity for the Australian industry to compete with it; but the people who have been responsible for the propaganda material supplied to honorable senators describe this price as dumping, and they contend, further, that unless protection is given to the Australian industry it will be seriously endangered. Queensland is not so well provided with secondary industries as to regard with’ equanimity any tariff legislation which may injure the Darra Cement Company which carries on operations about twenty miles from Brisbane. I understand that Tasmanian senators are equally concerned about the position of cement companies in that State, although Tasmania, in proportion to population, has a larger number of manufacturing industries than has Queensland. Figures relating to factory employment in Queensland show that there has been practically no improvement since federation. If, on a population basis, we had our fair proportion of existing Australian manufacturing industries, there would to-day be 30,000 more factory employees in our State. Queensland cannot afford to lose any of its few secondary industries.
Senator Foll spoke of the need for retaining the British market for Australian primary industries. I agree that for many years, we have enjoyed a very substantial share of the British market ; but most of us believe that for reasons of sentiment, we should have better treatment. An Australian citizen of Danish heritage reminded me a few days ago that although Denmark has its own king and sovereign Parliament, it is economically a dependency of Great Britain. The same may be said of some other foreign countries. In effect they are British colonies, although they do not fly the British flag, and their people do not speak the English language. This is a fact we should bear in mind when dealing with tariff matters.
Senator Guthrie:
– We do not know what views the honorable senator himself holds.
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– I have still an open mind. The Governmenthas been frightened by a protest from the British Government; but the British Manufacturers Association has not said anything. Either it knows that it has a bad case, or it relies on the British Navy being sent out to protect its interests. On the other hand, the actions of the Australian manufacturers of cement have been open and above board. When the Ottawa agreement was entered into, the duty was1s. per cwt. A compromise at 6d. per cwt. is more than could reasonably be expected by the British manufacturers.
Senator Arkins:
– What is the British domestic price?
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– The British home-consumption price is about 38s. per cwt. Both sides have had an equal opportunity to present their cases, but the British manufacturers have failed to do so effectively. I shall not be influenced by the protest received from the British Government In my opinion, it should be told to mind its own business. What would that Government think if we in Australia protested against some action taken by the House of Commons to protect the interest? of British manufacturers? When Australia has a case to present to Britain, it sends to the Old Country some of its foremost Ministers. At present, the Minister for Commerce (Dr. Earle Page) and the Premier of Queensland, Mr. Forgan Smith, are in England endeavouring, by personal interviews with British Ministers, to enter into some businesslike arrangements to the benefit of both countries. Cannot we, in this country, settle our own tariff matters without the British Government entering a protest? Were the Commonwealth vo attempt to interfere with the sovereign rights of any State, that State would not take it lying down, as we are supposed to take the protest of the British Government.
Senator Brennan:
– The British Government merely drew attention to certain articles of the Ottawa agreement.
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– The British Government is entitled to make representations to the Australian Government; but it goes too far when it enters a protest, as it has done.
Senator McLACHLAN:
SOUTH AUSTRALIA · NAT
– What would the honorable senator do if the British Government reduced the preference given to Australian sugar in the British market?
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– The Postmaster-General (Senator A. J. McLachlan) suggests by his interjection that Queensland is the only portion of the Commonwealth to benefit from the British preference on sugar. He forgets that the money received for the Queensland sugar sold in Britain helps Australia to pay its way in London.
Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT
– I merely asked whether the honorable senator would not consider himself entitled to protest if the British Government reduced the preference on sugar.
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– Much depends on the tone and manner, in which negotiations are conducted. The protest of the British Government suggests that, in its opinion, Australia is a colony of Britain; but, as I have said, Britain has many other colonies, although they do not fly the Union Jack, for other countries have been given preference over Australia in the British market.
Senator Arkins:
– The Ottawa agreement did not give Australia any preference.
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– The net result to Australia from the Ottawa agreement has been poor indeed. In say ing that, I am speaking not merely as a member of the Labour party, because in tariff matters members of all parties are more or less untrammelled. I remind the Senate that the three members of the Opposition in this chamber have not at all times been unanimous in regard to tariff items. I should not consider my position as a Labour man compromised were I to vote in favour of British manufacturers in respect of some tariff item.
Senator Dein:
– It is only a matter of a reasonable rate.
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– In my opinion, the House of Representatives agreed to a reasonable compromise. Englishmen are noted for their willingness to compromise and to adopt a reasonable attitude in all matters. They should accept this half measure - 6d. per cwt. instead of ls. - as a fair thing. On the figures which have been presented to us, the industry will receive a severe setback should the decision of a majority of the House of Representatives be reversed in this chamber.
Senator E B JOHNSTON:
Western Australia
– I welcome this bill because it gives to our primary producers a small measure of relief from the excessive burden of the Australian tariff. My only complaint is that the steps taken by the Government towards tariff reduction are altogether too short, slow, and faltering. However, so far as the measure has a downward trend, it has my whole-hearted support.
A good deal has been said about the protest of the British Government in regard to the implementing of the Ottawa agreement. I am amazed that that protest was confined to cement, because it appears to me that, in regard to primage duties, that Government has cause for complaint. Under article 14 His Majesty’s Government in the Commonwealth of Australia undertakes, in so far as goods the product or manufacture of the United Kingdom are concerned, to reduce or remove primage duty as soon as the finances of Australia will allow. I congratulate the Government on having substantially reduced the primage duties. Nevertheless it is estimated that from that source the revenue will benefit this year by £1,000,000. In view of the fact that the Government received £4,500,000 over its estimated revenue for the first eight months of this year, and expects the year to end with a surplus of over £5,000,000, the time is opportune to remove the primage duty altogether from imports from Great Britain. If that were done, it would give much greater relief to the producers and consumers of Australia than would a removal of the duty on British cement. This action should he taken at once if we are to keep faith with Great Britain under the Ottawa agreement.
As I listened to the protests of my highprotectionist friends, including those of the Labour party, I wondered what they would permit to enter this country. They object not only to cement, but also to other items being imported. “Western Australia has no local market for its main products, hut must sell practically all of them abroad. In normal seasons 85 per cent, of the wheat grown in that State, and practically all of its wool, is sold overseas. Yet on item after item the Labour party has shown a desire to keep out of this country goods made in other countries. The farmers and producers of Australia who receive low prices for their exported products are unable to pay for empty ships to come here to take away their wheat and wool. The people of Western Australia, at all events, want two-ways trade with other countries.
Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932
– They want cement brought in as ballast.
Senator E B JOHNSTON:
– The only chance of obtaining reasonable freights on the things which we have to export, because there is no market here for them, is to allow the ships which are to carry them to come here laden with other goods. So far as this bill will reduce the incidence of the tariff, it will have my full support. I shall support every tariff reduction contained in the Schedule; I say that after careful consideration of the items. There are, however, some items of the greatest importance, of which agricultural machinery is a notable example, on which this Government has not made the reductions in the general tariff recommended by the Tariff Board. In fact, in regard to agricultural machinery and many other items, it has made no reduction of duty at all in the general tariff.
At one time we used to import much agricultural machinery from Canada. This was an important item in interdominion trade, but, unfortunately, Canadian machinery does not come, under the British .preferential tariff. In dealing with items of this kind I think the Government should carry out to the full the recommendations of the Tariff Board. Already in this debate we have heard a good deal about the need for strict adherence to the impartial recommendations of the Tariff Board. Assertions have been made to the effect that as the board is the body that has the right and the requisite knowledge to deal with such matters, its recommendations should in most instances be accepted as a guide. That is the attitude of supporters of the Government in regard to the Tariff Board’s recommendations dealing with duties on cement; it is my attitude, not only with regard to cement, but also many other matters, particularly the important items of agricultural machinery. I wonder if any farmer in Australia, when he hears from the Government the cry, “Hurrah for the Tariff Board”, when the Parliament is considering duties on cement, would be pleased to find its supporters, when dealing with duties on agricultural machinery, which are of much more importance to our producers, completely ignoring the recommendations of the board? I admit that the board’s recommendations have been carried into effect in regard to agricultural machinery imported from the United Kingdom, but I point out thai Great Britain does not use, or manufacture, agricultural machinery of the types used by Australian producers; that class of machinery is produced extensively in Canada and the United States of America. Thus, when the Government says in relation to cement: “Hurrah for the Tariff Board,” it must, to be consistent, give similar weight to the recommendations of the board in regard to duties on agricultural machinery. I propose to ask the Senate to carry out fully the recommendations of the Tariff Board in respect of these duties, and also in respect of the duties on motor bodies and panels. To date these recommendations have been ignored by the Government.
As Western Australia depends mainly on primary production, the existing tariff oppresses every section of its people because such duties tend to increase the cost of production. This has been proved by tribunal .after tribunal appointed by different Federal Governments, and by the Committee of Economists appointed by the Bruce-Page Government to report on the economic effect of the tariff. That committee, which consisted of Professors Brigden, Copland and Giblin and Messrs. E. 0. Dyason and C. H. Wickens, reported that the subsidies paid to protected Australian production through the operation of the tariff amounted in 1926-27 to £36,000,000, or, approximately £6 a head of the population of that date. This amount distributed among the States in proportion to the volume of protective production represented a cost of £2 4s. per capita in Western Australia more than the people of that State received as the result of all tariff protection. This committee also reported that the burden of the tariff feil much more heavily upon Western Australia than upon any other State. This is due to the enormous size of Western Australia, to the fact that the people of that State are almost entirely dependent upon primary production and, further, to the fact that they are scattered over a very wide area. In addition the cost of the tariff to Western Australia is increased through the operation of the Navigation Act as Western Australia is situated a great distance from the centres of the big industries established in the Eastern States. In this connexion I refer particularly to the prices of agricultural machinery. Giving evidence before the Royal Commission which inquired into the operations of the Navigation Act, Mr. McKay, of the McKay harvester manufacturing firm, said that he was very sorry that the average price of agricultural machinery in Western Australia was from 10 per cent, to 12-J per cent, more than in Victoria, but that this could not be avoided, because of the very heavy freights and the distance over which the machinery had to be transported. On the mean population in 1926-27, the net burden of the tariff on Western Australia, according to the expert committee to which I referred, was no less than £926,000. This figure has never been seriously challenged and, of course, coming from such a capable and unbiased source, it could not be challenged. Yet Western Australia has had very little relief. Even the State Grants Commission has said that it cannot take the tariff into consideration as it is not one of the disabilities suffered by Western Australia under federation which it is permitted to assess under the terms of the commission’s appointment. Despite this fact, the best commission which has yet been appointed to inquire into the disabilities of the States under federation - that headed by Mr. W! G. Higgs, an ex-Treasurer of the Commonwealth - said that Western Australia’s main disability under federation was the burden and incidence of the tariff. This burden has increased out of all proportion to what it was at the time the Higgs commission made its report in 1925. The difficulty of apportioning the burden of the tariff in respect of the other States of the Commonwealth is very great, although it is clear that the tariff confers great benefits on Melbourne and Sydney at the expense of the rural industries of the Commonwealth. Only two States, Western Australia and Tasmania, keep complete and accurate records of their trade with other States. Owing to their isolation, it is easier for these two States to keep such records than it would be for Victoria, for instance, to keep records of its trade with, say, New South Wales and Queensland. The Western Australian disabilities committee in preparing the case for Western Australia for submission to the States Grants Commission this year, made a special inquiry into the cost to Western Australia of tariff protection and the incidence of exchange during the year 1933-34. I shall refer to some of its conclusions. It had been suggested that in spite of the higher tariff rates operating the actual amount of protection used by Australian manufacturers to-day is less than in 1927, the year covered by the Bruce-Page Government’s economic inquiry. In reply to this statement I point out that the South Australian disabilities committee found that in 1932-33 the cost of protection of Australian production was £29,900,000, irrespective of the protective incidence of exchange, a factor which did not operate in 1926-27, when the cost was assessed by the committee of economists at £36,000,000. Furthermore, the South Australian commission assessed the net burden of protection to Western Australia for that year at £1,298,252 or £2.97 a head of the population, as against £2.4 a head in 1926-27. Thus as late as last year we find a South Australian committee pointing out that Western Australia to-day is paying much more towards protection than it did in 1926-27, when the Bruce-Page Government appointed its committee of economists.
Working on the recorded figures of interstate trade the Western Australian disabilities committee assessed the burden of the tariff on Western Australia at £1,187,899 or £2.7 per capita, a figure which approximates that arrived at independently by the South Australian committee. In its summary of this matter, the Western Australian disabilities committee said -
Summarized, the net subsidy paid by Western Australia to protected industry in the other States of the Commonwealth was as follows : -
To obtain these figures the committee conducted a most exhaustive inquiry, and in considering every commodity imported, assessed the extra cost on a conservative basis. It went on to state -
Our researches into the three phases of Commonwealth-State inter-relationship covered by this inquiry lead to the following conclusions : -
) During the year ended June, 1934, the net cost of tariff protection to Western Australia was £1,187,899.
The net benefit from the rate of exchange ruling was somewhere in the vicinity of £600,000.
The contribution to the Federal Treasury on account of customs and excise was £424,881 greater than the sum actually collected in, and credited to, Western Australia, and £219,407 greater than the average for all States calculated on a per capita basis.
The Disabilities Commission pointed out that in the Commonwealth figures quoted by it in respect of Western Australia’s position, no adequate allowance has been made for £424,000 contributed to the Federal Treasury on account of excise paid on goods in the eastern States which were afterwards shipped to Western Australia for consumption. On page 68 of the report the following summary appears : -
The following table shows the aggregate value of each of the groups into which the various items of interstate imports were divided for assessment, together with the excess cost and the exchange incidence calculated thereon: -
Before allowing for the extra cost of imports, the commission gave the Commonwealth the benefit of the exchange. The Senate should realize that these figures show conclusively the burden which the protectionist policy of the Commonwealth imposes upon the primary industries of Western Australia. These figures have been challenged by some accountants and economists in Western Australia, including Mr. H. K. Watson, a public accountant of high repute, who contends that the committee adopted a conservative basis in its calculations, and that the real burden imposed upon Western Australia is infinitely greater than is disclosed. I agree with that opinion. The figures show that that State suffers more from the protective policy of the Commonwealth and receives less benefit than any other State.
I now wish to deal briefly with the duties imposed upon agricultural machinery. These duties have remained stationary for many years, except in respect of the new British preferential duties. The only comparison needed is between the duties imposed in 1933 and i hose in the schedule now before the Senate. It is as follows: -
The Tariff Board recommended that the general tariff, which includes the new intermediate duties, should be reduced to 15 pei- cent, on the first seven of these items, namely, 161 to 167, and to 25 per cent, on those under item 171 a, h, c and d. The most important recommendation under the general tariff for the relief of the users of agricultural machinery has been entirely ignored by the Government. The board stated that its recommendations which are based in each case on the existing rate of exchange, but exclude primage duties, provide reasonable and adequate protection. The
Senator B. B. Johnston. existing duties were brought into operation on the 29th March, 1935, so that the Australian industry has received natural protection under the exchange rate ever since it was increased. It will be noted that the board’s recommendations in respect of the British preferential tariff’ have been accepted almost invariably, but its findings in respect of the general tariff have been ignored. From the point of view of the farming community, the reductions made in the British preferential tariff are of very little advantage, as the importations of implements from Great Britain have been small. The British. manufacturers did not even consider it necessary to take advantage of their rights under the Ottawa agreement by tendering evidence before the board. In this respect they have been given something for which they did not ask, and judging by importations the concession is of little value to them. It is a matter of whether the primary producers, who depend upon their ability to sell at a profit at world prices should be compelled to pay inflated prices for their tools of trade. I contend that they should not do so. Other items covering what might be termed tools of trade for secondary industries are admitted either free of duty or at a very low rate. Why should not the machinery required by the great agricultural industry be placed on a similar basis? We should accept the recommendation of the Tariff Board.
Senator Collings:
– Is there any scarcity of agricultural implements in Australia?
Senator E B JOHNSTON:
– No, but owing to the prices charged there is a scarcity of buyers. Many farmers require a great deal of new machinery as their plant has not been renewed during the depression, but they are quite unable to buy it at the present prices of machinery and wheat. I do not suggest that the Australian agricultural implement manufacturers are taking full advantage of the duties at present operating under the general tariff, but, considering the cost of manufacture in Australia and in the two particular competitive countries, Canada and the United States of America, the Australian selling prices are not so low as they should be. While I do not think that the Australian implement manufacturers take full advantage of the protection afforded, the fact that implements in Western Australia are 10 to 121/2 per cent. dearer than they are in the eastern States, places the farmers in Western Australia at a great disadvantage.
Senator Collings:
– Are the shipping freights too high?
Senator E B JOHNSTON:
WESTERN AUSTRALIA · CP
– Yes, this is an additional factor operating against Western Australian producers. Purchasers of, say, Sunshine harvesters in the eastern States can obtain them at a cheaper price than that at which they can be purchased in Western Australia.
Senator Sampson:
– What is the remedy ?
Senator E B JOHNSTON:
– One remedy would be the adoption of the recommendation of the Tariff Board for the reduction of duties on agricultural machinery under the general tariff. If the Government accepts the recommendation of the board in respect of plant required in secondary industries, why does it not do so in the case of agricultural machinery?
Senator Sampson:
– The honorable senator wishes us to be wood and water joeys.
Senator E B JOHNSTON:
– No. I want the agriculturalist to get his tools of trade at the lowest possible price, as he has to sell his products in the open markets of the world. The principal costs involved in the manufacture of agricultural machinery are wages and materials. The Tariff Board, in its most recent report, dated the 5th December, 1934, stated that the labour costs in the agricultural implement industry in Australia are lower than they are in Canada or the United Stated of America. In this most important factor - cost of labour - the Australian manufacturer enjoys an advantage over his competitors. In respect of material costs, the board stated that, at the time of the inquiry, the Australian industry suffered little or no disadvantage in the prices it was paying for its principal raw materials. In respect of steel, it gave the following information : -
These prices show that, in the nine years mentioned, there was an increase by 111/2 per cent. in Chicago and a decrease by 271/2 per cent. in Melbourne of the price of steel used for the same purposes. Of all the materials employed in the manufacture of agricultural machinery, steel sheets are the only one for which the price being paid by Australian manufacturers is out of line with the prices ruling in other countries. The matter of steel sheets was the subject of a Tariff Board inquiry in 1934, when the board recommended the introduction of lower duties ; this has led to price reductions. At this inquiry, the board found that the Broken Hill Proprietary Company Limited was charging Lysaght Limited a higher price for sheet bars for steel sheets than it waa charging for sheet bars for galvanized iron. As the costs of manufacture were identical in both cases, the board was at a loss to understand the reason for the difference in price - a difference which was passed on to the user of this agricultural machinery. Incidentally, this demonstrates that the protection on such material as sheet bars is not effective unless accompanied by protection for the industry which uses them as raw material ; further, it is one instance of how protective duties generally cannot be measured until they have accumulated as they pass through the hands of the various manufacturers. One of the main reasons why the cost of agricultural implements made in Australia is so disproportionate to that in the United States of America and Canada lies in the number of factories engaged in the manufacture of machinery of this type. According to the report of the Tariff Board, no fewer than 142 of them were in operation in the Commonwealth on the 30th June, 1933. It is quite clear that this large number for the comparatively small output, valued at £1,700,000, must have a very serious effect in increasing overhead » charges. Although it is not contended that the Australian industry is taking full advantage of the existing duties,’ that is by no means the end of the matter. In this respect, the Tariff Board states -
The community cannot afford to be satisfied that the present prices are not higher than the prices of duty-free imported goods, when it is considered that f freight, insurance, exchange and lauding charges on the latter amount to abour 05 per cent. The time is at hand when Australian manufacturers should bc exporting on a large scale instead of defending the need for protection on the home markets.
I wish that Australian manufacturers would heed that opinion, and realize that, on the comparative prices which they quoted, they have an excellent market for agricultural machinery in New Zealand and elsewhere. The opportunity to take advantage of it awaits them.
Senator W. B. Johnston
Considerable difficulty is experienced in making an actual comparison between the prices for agricultural machinery in various countries owing to the differences in the actual machines used; even when the machines are somewhat similar, differences in size, weight, &c, occur. I consider that a most reliable comparison can be made, in bushels of wheat, between a 6-ft. reaper and binder made in the United States of America, and a similar machine produced in Australia. On the 29th May, 1934, the world’s parity price for wheat at Chicago and Winnipeg was 73 cents, and the net prices which farmers received were 62 cents at Chicago and 5S cents at Winnipeg. On the same day the Australian farmer could not have received more than 2s. a bushel, taking into consideration the various costs in the several States. A farmer living within an average distance of Chicago would be required to produce 331 bushels of wheat in order to purchase a reaper and binder ; a Canadian farmer would be obliged to produce approximately the same quantity in order to procure the same implement in the dominion, because in Canada the prices quoted are on a basis slightly different from those in Chicago. The Australian farmer, however, would have to grow 682 bushels of wheat - more than double the amount required by the American and Canadian farmers - in order to purchase the same implement in the Commonwealth.
Senator E B JOHNSTON:
– Reaper binders are still extensively used. One is required on every wheat farm in order to secure the necessary hay for chaff. But the same relative figures would apply ^0 any other machine. To appreciate the full significance of the figures which I have quoted, the fact should he remembered that the Tariff Board made an exhaustive inquiry into the costs of agricultural machinery; it stated, in effect, that a general summing up of the comparisons between the costs of manufacture in Australia and abroad is that the home manufacturers are now in a position as favorable, if not more favorable, than those in the United States of America and Canada. But an Australian farmer is obliged to produce twice as much wheat in order to purchase a machine in Australia as an American or Canadian farmer has to produce to buy a similar implement. Yet the Australian producer has to compete in the open markets of the world with the producers of both of those countries. The same experience is to be found in connexion with every type of agricultural implement. No one would be more desirous than Senator Sampson to see Australian producers put in a position where they could purchase agricultural machinery at a price approximating the rates paid by their competitors in other countries. We can materially assist the Australian producer in that direction by accepting the report of the Tariff Board on this important matter.
The report of the Tariff Board dealt extensively with prices for agricultural machinery in New Zealand and Argentina; the board heard a good deal of evidence in this connexion. Even if the prices for agricultural implements in New Zealand were higher than those in Australia, these costs have not the same significance in the Dominion as in the Commonwealth. The former does not export wheat; consequently it does not have to meet the world’s competition in the sale of this commodity. Both New Zealand and South Africa import flour. In regard to these matters generally, it is difficult to obtain accurate price comparisons between the implements that will do the work. Any person who proposes to buy a harvester, or other agricultural machine, will endorse that. Numerous illustrations could be found of one Australian manufacturer charging higher prices for a certain implement than are charged by competing firms in the Commonwealth; yet the more expensive implement continues to be purchased by the farmer. flitting suspended from 6.15 to 8 p.m.
Senator E B JOHNSTON:
– I have said that it is difficult to obtain true price comparisons in Australia for implements which do the same work. It is much more difficult to get price comparisons with other countries where little reliable information is available as to local factors which affect costs of manufacture and distribution. In any case, I cannot . in what way price comparisons between different countries, which were made by the representatives of Australian machinery manufacturers in evidence before the Tariff Board, are relevant. It has been clearly shown in evidence, and the Tariff Board has reported to this effect, that Australian costs, with regard to agricultural machinery, are generally lower than those of the principal competing countries. This being so, what reason can there be for the Government, which attaches so much weight to some reports of the Tariff Board, refusing to give effect to its recommendations with reference to the general tariff on agricultural machinery? If, however, the prices of some kinds of agricultural machinery are higher in New Zealand and Argentina than in Australia, as alleged in evidence before the Tariff Board by representatives of the manufacturers, why do not those manufacturers take advantage of the position, which they say exists, by exporting their machinery to those countries?
Apparently one of the reasons why the Government completely ignored the Tariff Board’s report in respect of the general tariff on agricultural machinery was that American sales to Australia are much greater in volume and value than are the direct sales made by Australia to America. It is, however, impossible to balance trade between any two countries unless they are trading only with one another. Our present adverse trade balance with the United States of America is possible because we sell to Japan much more than we purchase from that country, and we have a favorable trade balance with other countries. It follows, therefore, that if we reduce our purchases from the United States of America, we must increase them from some other country. The real issue is whether the Government is prepared to reduce the duties on agricultural machinery, the bulk of which could be imported from the United States of America thus removing the barriers which prevent a reduction of the unnecessarily high price of agricultural implements to the Australian primary producers. If this were done, there would be opportunity for outside firms to compete with
Australian manufacturers who would still enjoy a protection of over 60 per cent, on a duty-free basis. Any efficiently conducted Australian industry with production costs below those of its competitors should be able satisfactorily to continue and even extend its operations.
The effect of the high tariff on agricultural machinery is especially important to the wheat-farmers of Western Australia. Owing to the operation of the Navigation Act and the distance from the large manufacturing centres in the eastern States, the farmers there have to pay from 10 per cent, to 12£ per cent, more for their agricultural machinery than is charged to farmers in the eastern States.
Senator Brown:
– How long will agricultural machinery last?
Senator E B JOHNSTON:
– Much depends upon the nature of the country worked. If agricultural machinery is used in some of the newly settled mallee districts, its life is short in comparison with its life when used on the well-tilled lands of older settled agricultural area3. Care in regard to storage when but of work is also an important factor in the life of agricultural machinery. I claim that an unanswerable case has been made out for the ‘acceptance, by the Government, of the whole of the ‘ Tariff Board’s recommendation for a reduction of the existing high duties on agricultural machinery in the general tariff. I also remind the Senate that the board which made this recommendation is the same board that recommended a reduction of the duty on cement which this Government is so anxious to see approved by the Senate. Cement i3, however, a comparatively small; item in the economy of the man on the land who, in measures of wheat, is compelled to pay more than twice as much for his agricultural machinery as his American competitors in the markets of the world have to pay.
The wheat industry is our greatest source of employment in Australia. The wheat-grower has to sell most of his product in the open market, yet this Government refuses to give effect to the recommendation of the Tariff Board for a substantial reduction of the general tariff on agricultural machinery which is so essential to every wheat farmer. It is no wonder that, in Western Australia alone, we have 2,500 abandoned wheat farms - a result of low world prices for primary products and high Federal tariff and taxes.
I hope that the Senate will make a stand on this matter, and give to the wheat-farmers of Australia the benefit of a reduction of the duties on agricultural’ machinery as recommended by the same Tariff Board, whose proposals in regard to cement are viewed so favorably by the Government. I hope also that the Government will take similar action to inclement the Tariff Board’s report on agricultural machinery as it is taking in regard to the comparatively minor item of cement.
I turn now to the duty in the general tariff on motor panels and bodies. Here again the recommendations of the Tariff Board have not been given effect, with most unfortunate results to distributors of British motor cars in Australia. These interests have submitted to the Minister for Trade and Customs (Mr. White) definite and reliable information as to the serious position in which they are placed through the inability of Australian motor body manufacturers to supply motor panels at reasonably competitive prices. I have had placed in my hands a sheaf of letters, from distributors of British motor cars in all States, complaining of the treatment meted out to them by Australian body builders some of whom _ are months in arrears with deliveries.. I am prepared to place all this information in the hands of the Minister in the hope that it will induce him to take the necessary action to give relief. The delay in the execution of orders is having a devastating effect upon sales of British cars in Australia. They have made out an unanswerable case for relief in the form of a temporary, if not a permanent abolition of the very heavy duty on British car bodies. The Government has from time to time given relief to the users of galvanized iron when they have been unable to obtain supplies in Australia, and it is contended that similar action should be taken to enable the distributors of Morris and other British cars to obtain bodies for them. The adverse trade balance between Australia and the
United States of America is greater than it should he, because distributors of British cars are unable to obtain an adequate supply of Australian .bodies to meet the demand. I therefore commend to the Government a suggestion, that in order to rectify the position, motor bodies from Great Britain should be imported duty free in sufficient numbers to meet current demands, at least until the Australian builders are in a position to fulfil their orders.
Senator Guthrie:
– Is the inability of British distributors to get Australian bodies due to any favoritism by Australian body builders for distributors of other cars?
Senator E B JOHNSTON:
– Some of the distributors complain that, Australian body builders give preference to distributors of American cars. We have beard a good deal about the spirit of the Ottawa agreement. The position of distributors of British cars in Australia is ample evidence of the contravention of the spirit of that agreement, and it is the duty of the Government to take the necessary action to give redress. This should be done by the removal of all duties on British motor bodies and panels. I am glad that the Government has given a small measure of relief, through the tariff, to the people of Australia, and I hope that the Senate will further improve the position by requesting the House of Representatives to further reduce the duties, particularly on those commodities which affect our pastoral, agricultural and mining industries.
Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP
– There is a great diversity of opinion regarding the fiscal policy of this country, and, therefore, it behoves all honorable senators to express their views in relation to it. Having listened with much interest to the speeches which have been made, especially by the leaders of the various parties in the Senate, I assure the Leader of the Opposition (Senator Collings) that I am in accord with him in that I am an Australian and a protectionist. I am a protectionist, to the extent that I should like to adhere strictly to article 9 of the Ottawa agreement, which provides that His Majesty’s Government in the Commonwealth of Australia undertakes that protection by tariffs shall be afforded only to those industries which are reasonably assured of sound opportunities of success.
Senator Collings:
– We all agree with that.
Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP
– I have always noticed a difference between the duties imposed in order to protect our industries and those levied for the purpose of increasing the revenue of the country.
Senator Collings:
– The Government penalizes successful industries.
Senator JAMES McLACHLAN.That may be so in some cases. I am glad that the Country party has changed its views somewhat and is now becoming reasonably protectionist. lu speaking to this measure honorable senators should voice their opinions, not only in regard to individual items and the country’s fiscal policy generally, but also in regard to the methods of applying that policy and its far-reaching effects on other aspects of government. I am safe in saying that probably 90 per cent, of the discontent of our people in regard to the tariff is due to the method of applying it. There is discontent regarding much of the legislation on the Statute Book which imposes taxation, but the fiscal policy is an outstanding illustration of the fact that the importer has little option but to pay up and look pleasant. The customs authorities reign supreme, in regard to the interpretation (to be placed on a tariff schedule.
During the last few weeks when I endeavoured to secure some information and advice from importers in South Australia, I was astounded to learn that they are almost entirely in the hands, and,, indeed at the mercy, of the customs house officials. I do not wish to be misunderstood, and do not insinuate that the officials apply undue pressure on importers, but the tariff schedules are so worded and are hedged about with so many provisos and conditions, and are divided into so many headings which are liable to different interpretations, that it is almost imperative that the officials be given, autocratic powers. During the regime of the Scullin Government thethen Minister for Trade and Customs (Mr. Forde) prepared a book entitled
The Official Tariff Guide for the convenience of importers. It dealt with practically the whole of the tariff schedules then in force, but the ink was scarcely dry before alterations became necessary. These alterations were printed on slips which could be pasted in the book. Had that method been kept up to date, every business house of any size would soon have required, not only an extra employee to keep record of the alterations, but also another youth with a wheelbarrow to hold the book. The result was that the majority of importers took the line of least resistance; they paid the dues and charged the extra cost to the consumers.
I may be as a voice crying in the wilderness, but I am confident that the time is not far distant when our laws will be simplified in language and consequently will be less bulky, and capable of being understood by the average citizen who has availed himself of our free education facilities.
Senator Hardy:
– Is the honorable senator of the opinion that our tariff laws are more complicated than our income tax laws?
Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP
– I am far from being alone in my desire for reform in draftsmanship. Recent decisions in various law courts are gradually convincing the general public that the phraseology of our laws and of amendments, additions, and deletions made to acts of Parliament and regulations, instead of making them legally watertight, simply open avenues for litigation; so that even members of the legal profession are becoming somewhat confused. In this connexion, I call attention to the Australian Legal Convention held in Melbourne last year. A perusal of a paper submitted to that gathering would convey, even to the lay mind, that there are really more antidotes than snake bites. During the conference, Mr. D. C. Ligertwood, K.C., of South Australia, in pleading for greater simplicity in statute law, said -
From day to day, and it almost seems from hour to hour, a steady stream of regulations, orders, and by-laws pours forth to overwhelm the citizen.
Like their British ancestors, Australians glory in their freedom. They resent undue control, and like to regard their home as their castle; they will not do things, or stop doing them, merely because an official says they must or must not. They want their laws so framed that it will be unnecessary to engage legal advice in order to interpret them. They resent being doubly taxed by having to pay taxation agents to assess the amount of their liability. Not only is difficulty experienced in ascertaining the amount of duty payable on the arrival of goods, but also the methods employed are complicated and obsolete, particularly in the event of there being a rise of duties while goods arc in transit, and in respect of goods damaged in transit. It is far more difficult to adjust trade arrangements with the customs officials than it is to adjust trade relations with exporters. As an illustration, I mention that, just prior to the last Christmas season, an importer in South Australia received from overseas a shipment of material for the making of Christmas stockings. He took delivery of the goods and paid the customs dues, but on opening the packages found that the material was almost useless. He got in touch with the suppliers, who acknowledged their liability, and agreed to forgo payment; but when he approached the customs officials, asking that the goods should be destroyed under their supervision and the duty refunded, he was informed that the only means whereby he could obtain a refund was by returning the material to the merchants from whom he obtained it. As the material was bulky, and freight was charged on bulk, not weight, he did not do so, with the result that, whereas the duty he paid represented a dead loss to him, the revenue of the country was enriched by a similar amount at his expense. In my investigations I have found that a similar position has sometimes arisen in regard to foodstuffs which have had to be destroyed. Surely these matters could be so arranged that this waste, which, in view of the needs of many in our midst, is almost criminal, could be avoided.
As honorable senators have no doubt received pamphlets from the secretary of the Tariff Reform League, they will be conversant with the instances cited, so that there is no necessity for me to quote them. While admitting that they are extreme cases, naturally seized upon by an organization whose objective is tariff relief, I point out that they at least demonstrate that our tariff schedules are so arranged as to be practically unintelligible to the ordinary individual and, in some instances, so extreme that even a Philadelphian lawyer might fail to unravel them.
Let us now consider Australia’s fiscal policy generally. As somewhat more than a casual student of this subject, I am convinced that it is necessary for a country to protect its people against the surplus production and, in some cases, the cheap labour of its neighbours. I am also of the opinion that the main objective of protection should be to foster local industries, rather than to provide revenue. That applies particularly to our island continent. Australia is young in comparison with many European countries, and yet it has set a standard of civilization which is higher than that of other nations. As we are anxious to maintain that standard we must admit that our chances of building up an export trade in manufactured articles are negligible. A century of experience has taught us that Australia’s wealth lies in its primary production, and, therefore; its fiscal policy must balance evenly the living standard of the people with their opportunities, irrespective of the source of their livelihood. I may be premature in referring in this connexion to the relation between this country’s fiscal policy and the proposal to establish a shorter working week.
Senator Arkins:
– A shorter working week would be all right if it were universal.
Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP
– In certain cases conditions may warrant the innovation, but the position is complicated in Australia, because of its high tariff wall. According to newspaper reports, Bryant and May, match makers, recently decided to adopt a shorter working week. Every time a match is lighted in this country, whether in a palatial suburban residence or to light a Capstan cigarette for a tired worker on the basic wage, doing his full eight hours with a pick and shovel, assistance is given to this firm to remain in business. I am strongly of the opinion that any industry in this country that can afford to adopt a working week of less than 48 hours is not entitled to protection, which is a form of subsidy from the people who use or consume the article it manufactures. Under present conditions, not only in Australia, but also in other countries, such treatment savours of that Utopian state which, to contemplate, is like a beautiful dream, but which may prove in practice a horrible nightmare.
Senator Collings:
-Would the honorable senator have machinery continually improved and working hours remain the same?
Senator JAMES McLACHLAN.”We are here to legislate, not for any particular section of the community, but for the people of Australia as a whole. Take, for instance, the case of railway employees. If this concession were granted, all would justly be entitled to a share in the privileges offered. Have we a railway of any magnitude which to-day is not losing money? If hours are reduced it necessarily follows that in order to maintain the existing service the number of employees must be increased. For instance no train runs to Adelaide from Melbourne on Saturday night, and no train runs from Adelaide to Melbourne on Sunday night. I approached the Railways Commissioner in South Australia and asked if it would not be possible to restore this service on trial. He replied that it would cost about £8,000 a year. If that would be the cost of running one train weekly for a year, honorable senators can easily understand what increases of fares and freights would be required to pay for the institution of a shorter working week in the railway service.
Senator Hardy:
– The honorable senator should not forget that we advocated an increase of the exchange rate, which increases our internal costs.
Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP
– Surely we would not want to shoulder both increases.
Senator Hardy:
– No; I mentioned the increase of exchange as a precedent.
Senator JAMES McLACHLAN.During the consideration of the cement duties in the House of Representatives a discussion took place on certain articles of the Ottawa agreement. Anything I may have to say in respect of cement duties will be reserved until the item is reached. Here, however, I voice my opinion of the Ottawa agreement in relation to this matter. I am convinced that the most ardent supporters of the agreement expected allegiance to it only in the spirit and not in the letter. Its very phrasing supports that view. One notes the recurring use of the words “ reasonable,” “ consideration,” and “ recommendation.” Without a doubt this phrasing gives the agreement a flexibility without which it would be unworkable. I am well aware that two wrongs do not make a right, but if it is suggested that the agreement is being violated in this instance, I ask - have we not been guilty of far greater violation in the past? Article 14 reads -
His Majesty’s Government in the Commonwealth of Australia undertake insofar as concerns goods the produce of manufacture in the United Kingdom -
to reduce or remove primage duty as soon as the finances of Australia will allow.
In 1935-36 the primage collected by the Commonwealth was estimated at approximately £4,000,000. The United Kingdom’s contribution to this was about £1,300,000, of which only £45,000, or less than 4 per cent., has been remitted. Was that concession to the United Kingdom reasonable, or in keeping with either the letter or the spirit of the Ottawa agreement? In comparison with primage, the duty on cement is insignificant. The duty collected on cement in 1934-35 totalled only £3,8S6 9s., of which amount the British contribution was £3,175 4s. This year the duty collected amounted to £2,269, Britain’s contribution being £1,623. These amounts are very small when compared with the receipts from primage duty. However, I do not think that the Government is dealing with the Ottawa agreement in this instance in tie light of the amount of money involved ; rather is it concerned with the principle at stake. I readily admit its wisdom in adopting that course. Like other honorable senators I have been supplied by eminent counsel with opinions regarding the effect in relation to the Ottawa agreement of the restoration of duty on British cement after the Tariff Board had recommended its removal. These learned gentlemen hold the view that there is nothing in the Ottawa agreement to suggest that the decision of the House of Representatives is a violation of that contract. I have already said that I am an Australian ; I am also a Britisher, and if the people in Britain believe that we are in this instance infringing any provision of the Ottawa agreement I shall have to consider the position very seriously. Meanwhile, I await with interest a statement by the Government regarding the official opinion in Britain in respect of this matter. Ministers of this Government are now negotiating trade agreements, and I do not think that any honorable senator would do anything which would seriously interfere with those negotiations, should the government of the United Kingdom hold the opinion that the action taken in the House of Representatives in respect of the duty on cement offends against the spirit of the Ottawa agreement. I shall defer further comment until we reach the item in committee.
Possibly some of the matters to which I have referred may appear irrelevant to a debate on a tariff schedule, but I submit that it should be the aim of every legislator to frame the fiscal laws in such language that the layman may have some chance of interpreting them without being doubly taxed through being forced to procure legal opinion.
Senator DUNCAN-HUGHES:
South Australia
– As apparently has been the case with other honorable senators, this bill does not arouse very much enthusiasm in me. I suppose that the relative lack of interest in the tariff which has been noticeable throughout it.s consideration in this chamber and in the House of Representatives, is inevitable, in view of the great delay that has occurred in affording Parliament an opportunity to express its opinion on the duties. The first instalment of this schedule was laid before the House of Representatives on the 6th December, 1934, and as those duties came into effect at that date, it is natural that some of the novelty should have worn off that portion of the schedule. Three years have elapsed since we had our last full-dress debate on the tariff. I do not propose to” go through all the details that I pre- sented to this chamber on that occasion, but I intend to say a few words to bring the position up to date. I do not in any way depart from the views I expressed on the tariff three years ago. In fact, I go further, and say that the views which various honorable senators, including myself, enunciated then with regard to the tariff as it affects Australia generally, are being proved to be sound. I shall adduce some reasons in support of that assertion. To begin with, .the very fact that so many reductions of duties have been made is in itself a proof that the rates of duties submitted to us three years ago were too high. I have said elsewhere, if I have not already made the statement in this chamber, that it does not really matter much what attitude we take towards the tariff, because the tariff issue has passed outside Australia. I and other honorable senators urged three years ago that, by moving to meet hostile action by other countries, we might to some extent avert the impending storm. That movement has not taken place, and the impending storm is now more imminent and more threatening than it was three years ago.
Senator Hardy:
– What is the impending storm?
Senator DUNCAN-HUGHES:
– -It is that countries overseas are becoming, as we also are becoming in relation to them, increasingly critical of others which do not make proper trade arrangements with them, or in default of such arrangements do not trade with them. The result is that we have reached a stage when we can hope to keep our trade with other countries in what constitutes a great portion of our products, only by making special treaties. I shall have something further .to say on that matter later.
I find myself in no more agreement to-day than I was three years ago with the Government’s attitude on the tariff. 1 agree with Senator Leckie that to this’ “Government and its predecessor we owe the restoration of confidence in the community, and the apparent rehabilitation of business generally in the Commonwealth. However, I do not agree that the Government’s tariff policy is correct. Senator Leckie, approaching the matter from a different angle, holds the same view. The Government started out,
I’32l partly with the object of restoring employment. We are all in agreement with that objective. The aim of all of us is to benefit our country, but we have different ideas as to how that end will best and most permanently be achieved. On this point, I join issue with some other honorable senators. The Government started out with the idea of increasing employment, and I admit that it has to a considerable extent succeeded. I do not think there can be any question about that. At the same time, I feel that its policy has leaned very definitely to the side of the manufacturers of Australia, with unfavorable results to the primary producers.
Senator Arkins:
– Senator Leckie disagrees with the honorable senator.
Senator DUNCAN-HUGHES:
– I shall answer the points raised by Senator Leckie.
Senator Hardy:
– Senator Leckie was beginning to think that the honorable senator was his ally.
Senator DUNCAN-HUGHES:
– Yes, and on certain points I am. For instance, I agree with what he said concerning the delay in affording the Parliament an opportunity to deal with this schedule, although we criticize this delay from different angles. But I do not agree with Senator Leckie’s view that a schedule should come into operation forthwith only when it effects an upward variation of duties. If this course were adopted, a great advantage would be given to the manufacturers in the event of an increase of duties, whilst a tariff effecting a downward revision of duties might lie on the table, as has happened in. this instance, for sixteen months, before coming into operation.
I dissent from what the honorable senator said concerning the Tariff Board. I do not wish anything that I say concerning the board to be regarded as criticism of its actions although I do not suggest that all of its decisions are the best imaginable. I have, however, no doubt’ in my mind that the board conducts its investigations with the greate ‘ of care and in a true public spirit. Senator Leckie suggested that Parliament has handed over its powers to the Tariff Board; that is not so. Parliament will continue to exercise its judgment, and will have the final determination. I remind the honorable senator that he accepted the function of the Tariff Board when he approved of the Ottawa agreement. I did not accept it. At the general elections, and when the measure embodying the agreement was under consideration, I said that I was not in favour of leaving these matters to the Tariff Board. I contend that it is the duty of the Government to propose what the customs duties shall be after having received recommendations from the Tariff Board.
Senator Leckie:
– I agree.
Senator DUNCAN-HUGHES:
– The honorable senator and others who think as he does have had the benefit of the delays caused by the fact that for three years the Lyons Government has chosen to refer to the Tariff Board certain matters for investigation, and it is unfair now, when duties begin to decrease slightly, for such interests to say that they are opposed to the Tariff Board system.
Senator Leckie pointed out that we have to pay exchange on the interest on overseas loans, and that the exchange rate is fixed by the Commonwealth Bank Board. Has it occurred to the honorable senator that we are not the only ones placed in some such position? Like the honorable senator, I am inclined to the view that it would be better to leave the exchange unpegged, so that it might find its own level. But I speak only as an amateur in financial matters; the men who decide these things know more about the subject than I do. Instead of cushioning the fall, to prevent any bones from being broken, they may have thought it best to state the limit to which the exchange should fall; I do not profess to be able to say with authority whether such a policy is right. In recent years, the currency of the majority of the great nations of the world has been devalued and stabilized. The honorable senator criticized the exchange rate because it depreciates Australian currency, but what of the devaluation and stabilization of the mark in Germany, the franc in France, and the lira in Italy?
Senator Leckie:
– I objected to the pegging of the exchange because it merely depreciates our currency and cannot be used for the regulation of overseas trade.
Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP
– HUGHES. - If the honorable senator objects to the fixing of the rate of exchange, surely it is more objectionable that European countries should stabilize the value of their currencies at a lower level.
Senator Leckie:
– It amounts to the same thing.
Senator DUNCAN-HUGHES:
– But the honorable senator did not say that.
Senator Hardy:
– On what basis would the honorable senator suggest that the exchange rate should fluctuate?
Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP
– HUGHES.According to natural causes.
Senator FOLL:
– That would be unsatisfactory to commerce.
Senator DUNCAN-HUGHES:
– That is so. Nevertheless, there is a considerable school of thought that a fluctuating exchange is preferable. I come now to the fourth point raised by Senator Leckie, to the effect that the tariff policy of the Government has not been of any benefit to Australia. He said that the Government’s general policy was doing good, but that its tariff policy had not yielded any beneficial results. Passing through Melbourne, I obtained a copy of the Sun Pictorial, of the 21st April, published in the State which the honorable senator represents in this chamber. In it I found the following : -
page 934
MORE FACTORIES THAN EVER
Employees a Record in 1934-35.
The manufacturing industries of Victoria have made steady progress in production from the low levels of 1930-32. More factories arcnow operating than ever before, and the number of persons employed (109,092), exceeds the previous record year (1920-27), by 8,053 says the Government Statist (Mr. Gawler), in a preliminary issue of figures for the year to the 30th June, 1935. Mr. Gawler states that the 1934-35 output value was £110,893,894- an increase of £8,397,584 on the previous year. Production value was £48,473,028, which exceeded the 1933-34 level by £4,27 1,983. There were 9,100 factories in operation, 204 more than in 1933-34, £2,423,005 more was’ paid in wages, £3,010,791 more was spent on materials, and 20,937 more persons were gin-“ ployed.
I quote that paragraph because Senator Leckie said that there- has been no improvement as a result of the tariff. The statistics show a marked improvement.
Senator DUNCAN-HUGHES:
– I am not going into the question of whether tariffs are, or are not, beneficial to a country. My contention is that, although Senator Leckie stated that no improvement had been shown as the result of the Government’s tariff policy, official figures reveal a palpable improvement in respect of the maximum number of persons employed and they constitute a record for Victoria. In view of these figures, how can the honorable senator say that the Government’s tariff policy has not been beneficial ?
Senator Leckie:
– According to the honorable senator’s argument, if no customs duties were imposed the position would be even better?
Senator DUNCAN-HUGHES:
– No. The honorable senator suggests by that interjection that I am a freetrader. I am not. I admit that the constant granting of excessive customs duties forces me more towards the doctrine of low tariffs than I used to be, but I am not a freetrader.
Senator Sampson:
– Are there any freetraders anywhere ?
Senator DUNCAN-HUGHES:
– I do not know. Universal freetrade would be the ideal system if it were practicable.
Senator ARKINS:
– Freetraders and protectionists are usually governed by geographical considerations.
Senator DUNCAN-HUGHES:
– The views of representatives of different States certainly vary according to whether the States which they represent are or are not engaged in manufacturing. I shall have something to say on that point before I conclude. I want to make it clear that I do not speak as an absolute freetrader. I may inform the honorable senator that I was a follower of the late Joseph Chamberlain 30 years ago. The honorable senator in those days was interested in farming pursuits, and probably was not a protectionist at all. So my support of protection extends at least as far back as his, but I stopped at a certain point. Senator Arkins mentioned the geographical factor in the tariff issue. On the 21st August, 1935, an article appeared in the Adelaide News containing figures supplied by the president of the South Australian Chamber of Manufactures which had become alarmed owing to the drift of manufacturing industries from the less populous to the larger States. I can quite understand that alarm. The president of the chamber, Mr. J. A. Binder, made the following, statement on behalf of the committee, and covering its investigations up to date: -
The increase in population for the Commonwealth as a whole between 1921 and 1933 was 21.97 per cent., whereas the gain in South Australia was only 17.33 per cent.
The State’s actual loss over seven years had been more than 17,000.
During the past six years the average annual increase in the number of persons employed in primary industries in South Australia was 370.
We cannot, therefore, look to the primary industries to absorb the 5,000 boys who leave school each year, or to provide work for the unemployed.
He went on to say that there is not likely to be any great increase of the market for Australian primary products in Europe. I believe that he is right. It is shown by Mr. Rinder that in South Australia, which is essentially a primary producing State, only 376 men per annum are going into primary industries, . and that the balance, if employed at ‘all, are going into secondary industries. He stated that this is due to the fall of the price of wheat and the difficulty of obtaining land suitable for primary production. He did not, however, say that this is due also to the fact that the secondary industries are more profitable than the primary industries and that they can afford to pay their employees better wages. While the primary producers could employ only an additional 376 annually over the last six years the secondary industries were able to take a much larger number. I am not saying anything against that, but am criticizing the fiscal system which makes that possible. The secondary industries desire to employ as many men as they can, and they are in a position to do so.
Senator Leckie:
– .What does the honorable senator suggest should be done with those men if they could not find employment in the secondary industries?
Senator DUNCAN-HUGHES:
– They would go to work in the country. I know that many farmers would be only too pleased to employ an extra man or two if they could only afford to pay the wages. They cannot do so, because they are not operating in a protected market. They have to sell their wool and their wheat in the world’s markets.
Senator Brown:
– How can -we overcome that? Does the honorable senator suggest that the manufacturer should be dragged down to the level of the farmers ?
Senator DUNCAN-HUGHES:
– That is not the proper way to put it. If the honorable senator speaks about dragging the manufacturers down, he should first say that they have been dragged up. By dragging them up too high, the honorable senator and persons sharing his beliefs have caused an unfavorable reaction against the class that supplies the real sinews of war. Due to the fact that it is heavily sheltered, the manufacturing section is able to make profits and give employment which the primary section - in my opinion, the more important section - is unable to do.
Look now at the converse side - the debit side. Increasing numbers of persons are finding employment in factories; but I submit that there are certain drawbacks which must be considered in this connexion. It is doubtful whether anybody, either primary producers or manufacturers, is satisfied. Manufacturers do not spend their time admiring one another; they enter into intensive competition amongst themselves. A great deal of jealously and distrust on the part of the smaller States is also created. I draw attention to two reports on the effects of protection which were published by South Australia for 1932-33, and hy Western Australia for 1934. The results of the investigations of the committees which compiled these reports are set out on page 7 of the latter report, which states, inter alia -
It may be well to summarize the conclusions reached by each of the three bodies hereto mentioned as to the per capita burden of protection on Western Australia. . . . That calculated by the South Australian committee for the year 1932-33 is £2.97. The Western Australian committee, as the result of the present inquiry covering the vear 1933-34, estimates the burden at £2.70.
That indicates that even the governments of the States are becoming vitally interested, and are having these matters expertly investigated. Restlessness is not confined even to the smaller States; persons resident in some of the larger States foresee the dangers which lie ahead. I was impressed by the fact that the United Australia party conference, held in Sydney about a week ago, passed the following motion: -
That the Australian tariff be adjusted to encourage international trade and to prevent reprisals from other countries.
When such a sentiment is expressed in Sydney, honorable senators may be sure that some persons there also can see the writing on the wall. Certain notable instances of this development have occurred in recent months. One of them arose out of the intimation of the Tariff Board that it cannot take into account uneconomic production. If a business man is capable of producing with the maximum of economy, facility and efficiency in Melbourne, the board will not give any special consideration through the tariff to another individual who wishes to engage in the same business in Brisbane, Hobart, or Adelaide. That policy seems inevitable under the high tariff system; but the result will be that factories must flow more and more, as they have been flowing in the past, from the capital cities of the smaller States to Melbourne and Sydney. It is perfectly obvious that if a business man is producing at a distant centre, far away from the main market, and is not to be granted any allowance in respect of his geographical disadvantage, he must in time be driven to the big centres of industry. If the manufacturers discover that they are obliged to sell in other States 93 per cent, of the motor bodies made in South Australia, they will sooner or later move to Melbourne or Sydney, where the demand is greatest. Nothing can arrest that tendency. The more competitive an industry becomes, the more inevitable is this change.
Senator Hardy:
– For that- reason, some of us advocate the formation of new States.
Senator DUNCAN-HUGHES:
– I am gratified that the honorable senator should be among that number; I have never heard him make a speech on that subject, but I am quite prepared to listen with great interest - although I do not promise that I shall support him - to any contentions which he may advance for the formation of new States. Ten years ago in the House of Representatives several honorable members used to deliver speeches on this subject ; but to my knowledge, no motion in this connexion has ever been moved in the Senate.
Senator Hardy:
– I submitted a motion, and the other speakers jumped on me.
Senator DUNCAN-HUGHES:
– I cannot recall having heard the honorable senator make that speech. The smaller States, I am sure, do not grudge,, and most of them have no objection, per se, to the production of a number of different commodities; but, when they realize that the inevitable result of the present policy must be that the wealth, men and factories will be congregated in the big capital cities, they, without any hostility to those cities, oppose that tendency.
Senator J B Hayes:
– How would the formation of new States prevent that?
Senator DUNCAN-HUGHES:
– I must allow Senator Hardy to explain that aspect. I note, also, a further development - the manufacturers themselves are beginning to become alarmed at the prospect. This afternoon, Senator Leckie mentioned that he favoured the distribution of factories over the various States. The manufacturers realize perfectly that, if other parts of Australia, apart from Sydney and Melbourne, are to be denuded of factories, political hostility to high tariffs will become more pronounced. For this reason they would prefer to see factories well distributed throughout the Commonwealth. Considerable discussion has, consequently, arisen regarding the advisability of establishing branch factories in the smaller States. Speaking in general terms, I consider that nobody in the smaller States will object to that; in fact, they will welcome the establishment of more factories within their boundaries, but for my part, I do not desire that a glass factory, for instance, should be founded in South Australia at the cost of the barley-growers of that State, whose services are of far more importance than are those of an artificial industry which may close down at any time.
Senator Leckie:
– Is not a branch of the glass industry being established in South Australia because the raw materials are located there?
Senator DUNCAN-HUGHES:
– Yes; but the barley-growers have been estab lished for years. Must their output be sacrificed in order that the glass industry may prosper? I prefer that the barley-growers should be permitted to carry on rather than that an artificial industry should be founded at their cost.
I notice also an increased hostility to the granting of bounties. ‘ Apparently Senator Leckie ignores the fact that the tariff schedule now under consideration contains protection for nearly every form of manufacture that can be devised ; yet on two occasions I have heard him state that he regards with great misgiving the increase of the number of bounties - the granting of, say, £9,000 to orangegrowers or £10,000 to some other form of primary production. I point out that the primary industries concerned in these bounties total, perhaps, 20 or 30; the manufacturing industries concerned in this schedule must number, if not thousands, at any rate, hundreds. Is. that consistent? The average primary producer, as I know and understand him, does not start out with the desire to obtainany assistance from any government; but he sees that his costs of living and production have been forced so high that he is bound, in self-protection, to ask for aid. The Government grants it in the form of a bounty, which is much easier to check than is protection given to an industry by the tariff. The Constitution provides for the granting of bounties, which I regard as a far more sound and scientific method of assisting an industry, whether primary or secondary, than is the tariff.
Senator Dein:
– Some primary industries receive both forms of assistance’.
Senator DUNCAN-HUGHES:
– I am aware that two different bounties were paid on cotton, which also enjoys tariff protection. The bounties and the tariff protection were passed in the one session.
Senator Arkins:
– Is any country in the world pursuing a policy of freetrade?
Senator DUNCAN-HUGHES:
– I do not think that that interjection answers my contention. Whether Ecuador or Czechoslovakia are freetrade or protectionist is not relevant to the argument; Australia has to meet its own problems and decide whether the imposition of high tariffs, not only now, but also in the future, will be beneficial to the Commonwealth as a whole.
Senator Dein:
– Does the honorable senator refer to protection in respect of both primary and secondary industries, or only in respect of secondary industries ?
Senator DUNCAN-HUGHES:
– I refer in this instance to both primary and secondary industries. The bounties payable to the primary industries have been rendered increasingly necessary by the high protection extended to secondary industries.
Senator Dein:
– Is the honorable senator aware that no country practises freetrade at present?
Senator DUNCAN-HUGHES:
– Great Britain prospered under a policy of freetrade, with certain exceptions, for a large number of years.
I propose now to consider what will be tlie effect on Great Britain of the adoption by Australia of a high tariff policy. The last annual report of the Tariff Board sets out in detail the preferences granted to Great Britain. I emphasize that statements which appear in the British newspapers and pronouncements by bodies such as the British Chamber of Commerce must be taken into account by honorable senators whether they like them or not; and the following report is significant : -
Tlie Association of British Chambers of Commerce has adopted the report of a special committee that was appointed to consider the Ottawa agreements. The report urges the Government to reserve the right in any revision to impose duties and quotas on dominion products if this is found to be necessary for safeguarding British industries. “ There is considerable dissatisfaction in many industries “ the report adds, “ with the way in which the articles of the Ottawa agreement have been carried out, and also with the methods of tariff boards, which are often complicated and too slow”. Some of the Tariff Board’s decisions have caused considerable anxiety, notably the Australian Tariff Board’s interpretation of article 10, -which does not conform to the interpretation generally placed on it in Great Britain. Moreover, the level of tariffs in some cases lias been insufficiently reduced to compensate for Australian currency depreciation. In view of these differences the British and Australian Governments should reach a new agreement, recorded in clearer language.
It will be within the memory of honorable senators that when the Ottawa agreement was made, Mr. Lyons, on behalf of the Commonwealth Government, informed. British Ministers that it would be impossible for the Australian Government to enter into any detailed agreement with Britain, because he had given an undertaking that all matters relating to tariff duties would first be submitted to the Tariff Board. The British Government replied, in effect, “Very well, we shall not expect you to make any detailed agreement. We shall give you certain specified benefits and ask you, in return, to observe the general conditions contained in articles 9 and 10 of the Ottawa agreement. We shall rely upon your carrying out the spirit of the agreement; we shall observe it in the letter.” That, in brief outline, was the arrangement made with Great Britain at that time. The question for our consideration now is : Have the terms of that agreement been fully observed? On this point I have just read a statement of the views of the British Chamber of Commerce. That body says that we have not observed the spirit of the agreement. I said three years ago in this chamber that unless we honoured that agreement in such a way that there could be no dispute about it, when we came to make a new agreement with Great Britain we should find that the British Government would not be satisfied with anything less than a detailed arrangement.
Senator Herbert Hays:
– The benefits? of the Ottawa agreement were mutual.
Senator DUNCAN-HUGHES:
– Of course, the benefits from the Ottawa agreement were expected to be mutual; but, as I have explained, the benefits given by Great Britain were specified, whereas in the case of Australia, they were in general terms with which we are expected to comply. The Minister for Trade and Customs (Mr. White) in the House of Representatives emphasized recently the effect of the tariff reductions, and pointed out that they related mainly to non-competitive items. His statement really requires to be contrasted with the language of article 10 of the Ottawa agreement, which provides that the Australian Government shall give to British manufacturers a reasonable opportunity to compete in the Australian market. If, as the Minister for Trade and Customs has declared nearly all tariff remissions made relate to non-competitive items, what becomes of our undertaking to give British competitors a reasonable chance of selling their products in the Australian market? The Minister went so far as to give actual figures relating to the reduced duties, and showed that from the 5th December, 1933, to the 30th June, 1934, the proportion of competitive to noncompetitive imports was 6 to 40.1, or 13 per cent., much the same percentage as for the last six months of last year. That does not indicate that we have given British manufacturers a reasonable opportunity to compete in our market. I mention this fact to show that before the present schedule was brought down the British Government had some ground for complaint.
Senator James McLachlan this afternoon referred to primage. I discussed this subject when dealing with the budget last year, and I recall that Senator Hardy and I crossed swords over it. I followed my speech with a question. If Senator Hardy will read the answer he will find that we have not carried out our undertaking, as regards the reduction of primage to anything like the extent that was expected of us.
Senator Hardy:
– Does not the honorable senator think that primage is linked with the protective incidence of exchange in respect of which we have made concessions in the tariff schedule?
Senator DUNCAN-HUGHES:
– I agree with the honorable senator. I do not wish to be unfair. That is one thing which we have done. We have made an adjustment on account of exchange, although we were not compelled to do so under the Ottawa agreement. I had made a note of the matter, and had intended to refer to it before resuming my seat if the honorable gentleman had not mentioned it by way of interjection.
Senator Dein:
– If we have not observed our obligations under the Ottawa agreement, how does the honorable senator account for the tremendous increase of imports from Great Britain?
Senator DUNCAN-HUGHES:
– A senior official of the Customs Department would be able to furnish a more satisfactory answer than I can, but I remind the honorable senator that a considerable volume of the increased importations represents machinery for the expansion of our secondary industries. Attention was directed to this fact by the Minister for Trade and Customs in the House of Representatives. We must remember also that after the lifting of the depression many people in this country suddenly found themselves in a better position than they had been for some years. I suppose that some of the extra goods imported are intended for the improvement of their homes. There has also been an increase of importations of galvanized iron, due to the fact that the Australian industry was not in a position to supply the whole of the requirements of the local market. Without pretending to be an authority on this subject, I would not be very much perturbed by the rather heavy expenditure overseas this year. The large number of Australians who attended the late King’s jubilee last year would take out of this country a considerable sum of money. That would affect our trade balance, but I believe there is no reason to be unduly worried about the present state of our London funds.
As honorable senators are aware, I have given somewhat close attention to the effect of primage on British imports. In 1933-34, the total amount raised by this form of taxation was nearly £1,650,000, and in 1934-35 it wa3 still over £1,550,000. The reduction made in the budget for this year amounts to only £45,000. I am not sure if Senator Johnston mentioned this subject, but Senator J James McLachlan did, and, as I indicated about a year ago, I must support the view that as we ‘ undertook to remove the primage duty as soon as our finances permitted we are not carrying out our agreement. I feel sure that the majority of honorable senators will agree with me on this point.
Senator Leckie expressed a doubt that Great Britain was really doing very much for Australia under the Ottawa agreement by providing markets for our products. I should like to place on record what has been said elsewhere on this subject. This is what Great Britain does for Australia: It takes 90 per cent, of our export wines, 83^ per cent, of our currants, 64 per cent, of our sultanas, 93 per cent, of our butter and cheese, 99 per cent, of our eggs, 98.7 per cent, of our lambs, 95.8 per cent, of our mutton, 94.7 per cent of our pears, 83.5 per cent, of our’ apples,83.7 per cent. of our sugar, 96. 5 per cent. of our canned pears. Averaging the whole of our exportable primary products of these kinds, Great Britain takes 89 per cent. of all we send overseas. If that is not a substantial market, I do not know what is, and since we are losing our markets elsewhere 1 suggest that we should do our utmost to retain the British custom.
Senator Hardy:
– We should not do anything to weaken our preferences in that market.
Senator DUNCAN-HUGHES:
– I agree with the honorable senator. But unless we carry out, genuinely and fairly, the general provisions of the Ottawa agreement, can we reasonably expect to have similar treatment from Great Britain in the future? I never make a speech on the tariff without remembering that the protection given to us by the British Navy is the one thing that enables us to compete at all.
Senator Brown:
– Hear, hear !
Senator DUNCAN-HUGHES:
– I assure the honorable senator that this is not a subject for laughter; and I am sure he would not treat it with levity if he had passed through the Mediterranean inwar time, as I did, and noted that every port on the route was controlled silently and effectively by the British Navy.
I turn now to the foreign position. Sir Henry Gullett recently returned from an extended visit to European countries for the purpose of negotiating trade treaties. Upon his arrival at Fremantle he was, interviewed by a representative of the Melbourne Argus, and this is what he said-
Australia, in a trading sense, is extremely unpopular with all continental governments and industrialists.
One is not surprised that Australia is unpopular with industrialists in other countries, but that it is unpopular with European governments is a far more serious matter.
Any step that foreign wool-buyers can take individually or collectively to avoid the Australian market, to promote scientific research for substitutes, or to bear down wool prices, will continue to be taken in the absence of trade treaties.
He went on to say that he had conducted negotiations with France, Belgium, Germany, Czechoslovakia, Poland and Switzerland, and added -
Treaties could be made with most of the countries mentioned, but the question to be decided by the Cabinet was whether the benefits likely to be received by Australia represented a fair exchange for the concessions Australia would be called upon to give.
The fact that this is a time of almost unparalleled difficulty in international affairs, and that Britain buys over 90 per cent. of our total exportable surplus of primary products covering a wide range, should be taken into account. We are faced with the problem of our trade balance with various countries. Australia’s exports to Belgium for 1935 were valued at £5,689,965, whereas Australia imported from that country goods to the value of only £500,485. Can we expect the people of Belgium to be pleased with that state of affairs ? Australia had a favorable balance of trade with France in 1935, its exports to that country being valued at £6,186,419, whilst its imports were valued at only £758,605. France is not likely to be content with that position. Australia also had a favorable balance of trade with Japan amounting to £7,475,115, and with New Zealand amounting to £1,628,431. Senator Collings and Senator J. V. MacDonald, who have been in New Zealand, will be glad to know that Australia has a favorable trade balance with that dominion. I should be better pleased if the figures were closer. Like Australia, other countries are endeavouring to improve their financial position by entering into trade arrangements with the object of equalizing the balance of trade. With some countries Australia has an adverse balance of trade. For instance, its adverse trade balance with Canada is £3,557,169, with the Netherlands East Indies it is £3,624,325, with the United States of America, £7,748,305, and with Germany, £742,164. Some years ago, when this subject was being discussed in the Senate, we were told that it is not possible to have our trade with other countries absolutely balanced. No one really believes that that can be done, but the aim is to keep the figures as near to balance as possible. Senator Hardy dislikes bi-lateral agreements and advocates multi-lateral treaties. If it is impossible to enter into an agreement with one country, what chance is there of making an agreement with three countries? If we are not satisfied with our trade with the
United States of America, we can understand that France, Belgium, and other countries may not be satisfied with our trade with them. They insist on a certain correspondence between import and export figures - not an exact £1 for £1 arrangement. What has been the outcome of the efforts of the Minister directing negotiations for trade treaties (Sir Henry Gullett) ? The Minister returned to Australia some months ago, but, so far, I have not seen any full statement by him as to the result of his efforts. We have before us a schedule which contains the old three-deck tariff. There is to be an intermediate level for use when bargaining with other countries. With what countries are we bargaining and entering into agreements? It seems years since I first attended a deputation in regard to the export of barley to Belgium, but the most that has resulted is an agreement for a few months. The whole country is asking what agreements and trade treaties are being arranged with those countries which seem inclined to refuse to accept our products.
Senator Herbert Hays:
– Every country is endeavouring to supply its own requirements.
Senator DUNCAN-HUGHES:
– There is truth in that interjection. We must not be astonished if nations from which we will not buy prefer to trade with other countries. While we delay, markets are slipping from us. I am aware that, during recent years, Germany has bought a good deal of our wool, not directly but indirectly. But if we examine the position carefully we shall find that markets in those countries which have been the chief purchasers of our products are slipping from us. If that state of affairs continues, there will be increasing distress among our primary producers, because every customer we lose reduces competition, and in turn leads to reduced prices. There will be a further drift to the cities, and we shall have to rely on our secondary industries being able to sell their products overseas in sufficiently large quantities to pay our way. Although in some respects our export figures for secondary products show a slight improvement, for a long time we cannot expect that our high costs of production and heavy freight charges will fall sufficiently to enable us to sell large quantities of oursecondary products overseas. However good the quality, the high cost of production will prevent our competing successfully in the world’s markets. (Extension of time granted.)
We must not ignore the fact that high tariffs cause hostility and antagonism, and are likely to lead to war. During this debate it has been suggested that the present world position is due largely to the desire of each nation to be self-sufficient.
Senator Herbert Hays:
– That desire is very pronounced in Great Britain.
Senator DUNCAN-HUGHES:
– The very fact that Australia is a large and wealthy country with a relatively small population makes it more an object of hostility and antagonism than if it were a small and poor country, or had a large population. It may be said that I have overstated my case; 1 have tried not to do that. Sir William Beveridge, director of the London School of Economics and Political Science, in a lecture which he delivered in 1931, said -
Looked at internationally, as a way of escape from a world crisis, can anything be more patently insane than tariffs?
Every honorable senator will admit that the present is a time of crisis. I make a present of that quotation to any honorable senator who thinks that he is capable of refuting it. Sir William Beveridge may be wrong, but I remind the Senate that he is a world-famous economist.
Senator Collings:
– The United Kingdom did not take his advice.
Senator DUNCAN-HUGHES:
– Shakespeare lived long before the present age of economics, but looking through The Merchant of Venice recently,I found the following: -
The Duke cannot deny the course of law. For the commodity that strangers have With us in Venice; if it be denied, Twill much impeach the justice of the state : Since that the trade and profit of the city Consisteth of all nations.
At one time Venice was the centre of trade for the whole of the Mediterranean. I believe that passage to be just as true now as when it was penned.
SenatorMcLEAY (South Australia) [9.42]. - Having listened with a great deal of interest to this debate, I congratulate the Government on its position. The discussion has revealed great diversity of opinion among honorable senators, for Senator Leckie believes that existing tariffs are too low, whereas Senator Johnston is of opinion that they are too high. If we put our trust in the Tariff Board, which has gone into these questions thoroughly, and has expert knowledge–
Senator Collings:
– ‘Shelve our respon sibility !
Senator McLEAY:
-We are not bound to accept the recommendations of the Tariff Board; they should be taken as a guide. The Leader of the Senate (Senator Pearce) dealt effectively with Senator Leckie when he asked that honorable senator to name any efficient industry that had been adversely affected by a lowering of tariffs, and received no reply. I think that Senator Leckie was rather unfair to members of the Tariff Board, and I endorse what Senator DuncanHughes said regarding the work of that body which is rendering useful service to Australia. I am convinced that the Tariff Board desires to do the right thing, and to encourage efficient secondary industries in this country. In commenting on the method adopted by the board in dealing with complicated and difficult problems, Professor Copland said in 19341-
By the application of these tests and of its own searching examination of witnesses, the Australian tariff is being steadily overhauled by the board. Naturally, the board develops a technique of its own and its members become expert in handling the special problems before it. In these circumstances it is desirable that Governments should, as far as possible, put into operation the recommendations it receives from its own expert body, and that political parties should seek to establish a tradition that the tariff is not a matter that can be suitably handled by political controversy.
That is a very strong statement. I do not propose to go into details as to the merits of protection and the interests of the primary industries. The principal question raised by this bill iswhether we are to encourage industries that make excessive profits or have as their chief concern the making of profits-, regardless of the interests of the people? I was particularly interested to hear the Leader of the Opposition (Senator Collings) and the Leader of the Country party (Senator
Hardy) say that their parties favoured adequate protection. I hope that these duties will be considered from that point of view. Professors Brigden, Copland and Giblin further stated in their report -
Excessive protection has a demoralizing effect upon self-reliant efficiency throughout all forms of production.
That is very true. I hope that honorable senators will concentrate on this issue, and come to a decision as to whether or not some industries are receiving too much protection or are abusing the shelter which they enjoy. On this point, it is of interest to note that the chairman of an Australian company engaged in the manufacture of hosiery- one of the biggest industries in Australia - when speaking to his shareholders some time ago, dealt with this matter, and pointed out that his company was unable to carry on at a profit because its plant was too big for the trade that was offering. He said -
Strange to say, it was too much protection that killed us.
Under the hot-house stimulus of the tariff, many hosiery factories came into existence, with the result that their productive capacity was much in excess of the demand. Consequently, this big organization suffered heavy losses. In discussing the tariff, we should keep developments of this nature clearly before us. From facts presented in this debate, it is clear that, if we view the tariff problem in true perspective, we must realize that secondary industry and primary industry are interdependent. The prosperity of one is essential to the prosperity of the other. Both sections are important, and Parliament should, like the Tariff Board, endeavour to hold the scale of justice evenly between them, and take care not to injure either section, or to help one at the expense of the other.
As a protectionist, I submit that Australia to-day is confronted with four important problems, which we can do much to overcome by encouraging efficient, industries. The first is the need for increasing our population. This can largely be accomplished by establishing new efficient industries and : by maintaining industries which have been established on a sound basis. I notics with pleasure that this Government is considering the manufacture of aeroplanes in Australia. It would be a groat relief to me to know that we could make aeroplanes in Australia instead of having to send orders for planes to America which is one of our smallest customers. All nations to-day criticize the extreme policy of economic nationalism as practised by others. No country is more forward in such criticism than is America, but it continues to follow such a policy. I sincerely trust that this Government will act courageously in the negotiations which it is now conducting with the Government of the United States of America concerning the trade balance.
The second of the four problems to which I have referred is the improvement of the home market for our primary producers.It is clear from the lessons we have learned since the Great War, particularly in respect of wheat, that whether or not we adopted a protectionist policy other countries which impose a high tariff against Australian primary products to-day, would, in any event, have imposed such restrictions.
The third problem is that of unemployment. From statistics already cited in this debate, we know that this evil can be greatly minimized. Already a considerable improvement is evident. The fourth problem is that of the trade balance. This can be solved if we continue to encourage the establishment of efficient industries in this country. Senator Johnston referred to the manufacture of motor-car bodies. Most honorable senators, I think, received the letter to which he referred. The chairman of directors of Holden’s Ltd., which is the largest motor-body manufacturing firm in Australia, replying to that letter told me that his company could make bodies for British cars, and would be only too pleased to quote for such orders. He added that on the occasion referred to, his company looked forward to securing such orders, but was not given an opportunity to quote. Further, he assured me that it could and would give prompt delivery, although the firm which secured the orders was unable to do so.
In dealing with tariff schedules, we must jealously guard the rights of the consumer and ensure that manufacturers donot abuse the protection they enjoy. To any industry which abuses its protection by slackness of deliveries, or by making excessive profits, the Government should give a warning similar to that which it issued to the manufacturers of cement. If the motor-body manufacturing companies in this country were not able to maintain deliveries, I would be among the first to bring that fact under the notice of the Government, but at this stage, on the advice I have received, I say confidently that the present companies can supply all Australian requirements.
Much controversy has taken place as to the effect of the tariff on the economic life of this country. On this point I shall again quote from the remarks of Professor Copeland. We do not always agree with what the economists say, but when, as experts, they utter sound and independent opinions on such a complex problem as the tariff, we must give their views due weight. Professor Copland said -
In face of the growth of economic nationalism throughout the world and of industrial and agricultural development in . Australia I am unable to resist the view that our tariff policy has, on the whole, made a substantial contribution to our economic welfare.
I support that contention. Whether we like it or not we must face the economic position in the world to-day. We can talk about this intense economic nationalism as much as we like, but we should realize that we ourselves are pursuing just such a policy. While America and other countries continue their selfish nationalism, and persist in their refusals to negotiate with us on trade matters we have no alternative but to take steps to protect our own interests. We should concentrate on our market in the Mother Country, which to-day takes more than half of our exports of primary products.
The party represented by the Opposition was responsible for raising the tariff to an extreme height, and in doing so perpetrated a grave injustice against a primary industry in South Australia. Although the Leader of the Opposition was not a member of the chamber at that time, I dare say, judging from his remarks in this debate, that Labour’s fiscal’ policy had his full support. Instead of accomplishing the end which itssupportershoped it would, the Scullin tariff had just the opposite effect ; as the duties were raised unemployment increased.To-day a very great improve- ment has been effected in the economic lifeof this country through a review of those duties. I heard it stated this afternoonthat the revival which has taken placein commerce and industry has beeri dueto the policy of this Government. I congratulate it on that fact. Bankers, accountants and other independent economic authorities substantiate theclaimthatour economic recovery has been due mainly to Australia’s number one asset, the wool industry.When we read in the press that the wool cheque last season . was£10,000,000 over that received for the preceding year, we must admit that this industry helped considerably torestore confidence and prosperity in this country. Being interested in secondary industry I point out that,as improvements take place in our primary industries, and as the financial position of the man on the land becomes stronger, additional orders amounting in value to hundreds of thousands of pounds will begiven to our manufacturers, and the whole community will share in the benefits. I trust that, in considering this schedule we shall view our economic problems in their true perspective. As to the points raised in respect of the Ottawa agreement,’ let us remember that during the year 1935 our exports of lamb, mutton, beef and butter, which are the subjectof negotiations in London to-day - and perhaps at this very moment - were worth £15,000,000. Judging from the improvement which is now taking place in prices for these products, we can confidently say that during the year 1936 our income from sales of these products will be approximately £20,000,000. If our representatives in London are able to negotiate a long term agreement with Great Britain in respect of meat supplies arid so give security to our producers for five or ten years, additional lands can be opened up for the production of lamb, mutton and pig meat . If assured of a firm, market in Great Britain the value of our exports in this direction should increase from £20,000,000 to £30,000,000, and no one will receive greater benefit than will those engaged in secondary production. If our efforts in that respect are successful, and if, while using our own judgment we give due weight to the recommendations of the Tariff Board, we should be able to look forward to a period of greater prosperity and happiness.
Debate (on motion by Senator Guthrie) adjourned.
Senate adjourned at 10.1 p.m.
Cite as: Australia, Senate, Debates, 29 April 1936, viewed 22 October 2017, <http://historichansard.net/senate/1936/19360429_senate_14_150/>.