14th Parliament · 1st Session
The Senate met at 11 a.m.
The Clerk. - I have to inform the Senate that, owing to illness, the President will be absent from the sitting to-day. In accordance with the Standing Order, the Chairman ofCommittees will take the chair as Deputy President.
The Deputy President (Senator Sampson) took the chair and read prayers.
Motion (by Senator Sir George Pearce) agreed to -
That, during the absence of the President on account of ill-health, Senator Burford Sampson, Chairman of Committees, shall take the chair of the Senate as Deputy President, and may perform the duties and exercise the powers of the President during such absence.
The following papers were presented -
Supplementary Estimates of Expenditure, and Supplementary Estimates of Expenditure for Additions, New Works, Buildings, &c., for theyear ended 30th June, 1935.
Defence Act - Regulations amended - Statutory Rules 1936, No. 62.
Norfolk. Island Act - Public Works Ordinance - Regulations.
Northern Territory Acceptance Act and Northern Territory (Administrations Act-
Ordinances of 1936 -
No. 4 - Aboriginals.
No. 5 - McMillan Mortgage Discharge.
Aboriginals Ordinance - Regulations amended.
Buildings Ordinance - Regulations.
Crown Lands Ordinance - Regulations.
Electric Light and Power Ordinance - Regulations amended.
Papua Act - Ordinances of 1936 -
No. 3 - Gold Buyers.
No. 4 - Petroleum (Mining).
Seat of Government Acceptance Act and Seat of Government (Administration) Act-
Ordinances of 1 936 -
No. 15 - Real Property.
No. 16 - Housing.
Money Lenders Ordinance - Regulations.
Canned Fruits Export Control Act - Regula tions amended - Statutory Rules 1936, No. 52 - No. 54.
Meat Export Control Act - Regulations - Statutory Rules 1936. No. 39.
Wine Overseas Marketing Act - Regulatiunamended - Statutory Rules 1930, No. 51.
Seat of Government Acceptance Act and Seat of Government (Administration) Act - Public Baths Ordinance - Regulations amended.
Beer Excise Act - Regulations amended - Statutory Rules 1930”, No.61.
Customs Act - Regulations amended - Statutory Rules 1936, No. 59.
Spirits Act - Regulations amended - Statutory Rules 1936. No. 60.
-Has the Minister for External Affairs seen the following statement of Mr. C. V. T. Wells, of Adelaide, chairman of Guinea Airways Limited, published recently in thepress? -
Aeroplanes of the latest types, and of a total value of more than £40,000, have been ordered for service in New Guinea by Guinea Airways Limited, within the past two months … He also commented on the Commonwealth proposals for the merging of air transport companies in New Guinea and Papua under strict Government supervision.
Has the attention of the right honorable senator also been directed to the protest made by Mr. J. A. Carpenter, of the firm of W. R. Carpenter Limited, a company that is engaged in air transport in New Guinea, against the proposals of the Commonwealth, and his statement that this and other companies do not wish to be merged, but desire to be allowed to conduct their business in their own way? Is there any truth in the statement that it is proposed to merge these independent companies into one company ?
– I have not seen the statements referred to. It is, however, a fact that the Government has had under consideration the whole matter of an air policy for New Guinea and, subject to further investigation, had agreed in principle with the idea of a merger of air companies. That further investigation has been made, and in the light of representations by interested bodies in New Guinea - air companies, mining companies, and others - the matter is again to come before the Government for its consideration.
– Will the Leader of the Government advise the Senate whether Mr. Bruce, Dr. Earle Page, and Mr. Menzies have approached the British Government in regard to the lifting of the sanctions imposed against Italy? If so, onwhat grounds was such action taken? If not, has the Government taken, or does it intend to take, any action in this matter?
– The Government intends to inform Parliament at a suitable moment of its policy in regard to sanctions.
– With great diffidence, because of the colossal ignorance displayed by the Government in matters of the kind, I ask the Leader of the Government if he has noticed the criticism of Australian publicity methods in London which appeared in the Sydney Labor Daily of the 12th instant?
– Is that a reliable newspaper ?
– It is not only reliable, but also intelligently edited. It could bo read with profit by the honorable senator. The paragraph to which I have referred contains a statement by Mr. Gordon Donkin, a well-known world traveller, to members of the Millions Club, on the day previous to its publication. It reads -
Mr. Donkin said Australia House was costing a lot of money and needed great assistance. Its influence was lessened by the fact that several States had moved from the building to offices nearer the heart of London. The displays were unsatisfactory, the window dressing being bad, and the photos being rarely changed. A good scheme was to show films of Australia in the6,000 schools in England, he suggested.
Will the Government make an inquiry into this matter, which is of considerable public interest?
– My attention has been drawn to the matter by the honorable senator this morning. I suggest that a supply bill which is to come before the Senate shortly will provide him with a suitable opportunity to refer to it.
– Can the Leader of the Government give to the Senate any indication of the plans which have been made for the closing of the session, and the bills to which we may be asked to give our attention? I raise the matter now in preference to registering disapproval of the adoption of rush methods at the end of the session. I am particularly anxious to avoid those, and every effort to prevent the usual indecent haste will be made by the Opposition.
– If the honorable senator will examine the notice paper of the Senate and of the House of Representatives, he will see what bills have been listed for consideration. Whether all of them will be carried to finality, 1” am not at the moment able to say. The Government does not intend to rush matters. The Senate agreed, without opposition, to meet in the morning during this week in order to facilitate the disposal of business. I should imagine that the legislation awaiting consideration will probably be concluded towards the end of next week.
– In the matter of cement duties, is the Government agreeable to lay on the table the letter which it has received from Sir Geoffrey Whiskard, so that honorable senators may be fully seised of the facts? Did Sir Geoffrey Whiskard indite the letter entirely of his own volition, or was he advised to do so by the British Government? Was the British Government first approached by the Commonwealth Government?
– It is not the practice to make public communications that pass between the British and the Commonwealth Governments upon matters of policy that affect both Governments. But the Prime Minister has given the effect of this message to the House of Representatives, and I understand that the Postmaster-General (Senator A. J. McLachlan) took similar action at an earlier stage of the debate on the tariff in the Senate.
– As the matter has not been discussed by the Senate and may, therefore, be regarded as sub judice, and as the Senate has not had, and according to the reply just made by the Leader of the Government, is not likely to have, the full facts placed before it, does the right honorable gentleman consider that Sir GeoffreyWhiskard acted fairly when, in a speech in Melbourne, he made definite statements in regard to the breaking of the Ottawa agreement before the Senate had had an opportunity to decide whether or not the terms of that agreement had in fact been broken?
– The Government takes no exception to the statements made in Melbourne by Sir Geoffrey Whiskard.
asked the Minister representing the Minister for Trade and Customs, upon notice -
– A consignment of 5,000 tons of cement was ordered by the Western Australian Government and the initial supplies commenced to arrive in March last. The reasons given by the Western Australian Government for placing cement contracts overseas were that owing to the shipping strike and the fact that the Western Australian cement manufacturer was unable to supply the full Government demand, supplies had to be imported from the United Kingdom. Failure on the part of the Western Australian Government to obtain supplies would have resulted in holding up certain works construction programmes and this would have necessitated the dismissal of a large number of employees engaged on these works.
An importer’s transactions with the department are kept confidential and the detailed information requested cannot be furnished. It can be said, however, that no shipment of cement imported up to the present could have been landed on a duty-free basis but with 5 per cent. primage chargeable at a lower figure than that which the Tariff Board states would permit of profitable sale by efficiently conducted factories in Australia.
Bill received from the House of Representatives.
In committee: (Consideration resumed from the 7th May, vide page 1357).
Division 6. - Metals and Machinery
Item 177 (Locomotives, tractors and tractor parts).
.- I do not understand why the tariff should discriminate between engines and engine parts. Tractors from Britain are admitted free whilst similar machines imported from other countries are subject to a duty of 12½ per cent. under the intermediate and general tariffs. Replacement parts, such as cylinder sleeves, are, however, subject to duties of 20 per cent. British, 37½ per cent. intermediate, and 51¼ per cent. general. Previously, these parts were British free, and general 15 per cent. In my opinion, cylinder sleeves for replacements should not be subject to higher duties than are imposed on complete tractors.
– The same argument could be applied to parts for motor cars.
– The manufacture of cylinder sleeves for tractors is not an established industry in this country, but is only a sideline with a number of manufactures. I shall not move for a reduction of the duties, but I ask the Minister to refer this matter back to the Tariff Board for further consideration.
– The findings of the Tariff Board in relation to cylinder sleeves for tractors are given in its report of the 18th February, 1935. On page 7 the board stated -
The request was based on the ground that these parts were now commercially manufactured in Australia, and were no longer entitled to by-law admission.
Representatives of the “ Caterpillar “ and “ Twin City “ tractor interests strongly protested against granting the request, on the ground that sleeves for the tractors handled by them could not be commercially manufactured in Australia.
After discussion, a compromise was effected between the parties, whereby a diameter of 5 inches was accepted as a dividing line, the importers consenting to the imposition of duty on sleeves of an internal diameter up to f> inches, mid the local manufacturers conceding by-law admission of sleeves exceeding that measurement.
The local manufacturers have developed the production of tractor sleeves under by-law rates of duty and are producing a satisfactory article for the smaller-sized oil and petrol engines, but .they still have to prove their capacity to manufacture the larger-sized sleeves suitable for the Diesel engine.
The board is satisfied that an internal diameter of 5 inches, as suggested by the parties concerned, represents a fair division between the two classes of engines, and the limit of satisfactory manufacture reached in this line in Australia at the date of the inquiry.
As I indicated earlier, 1 shall, on the conclusion of the examination of the tariff by the committee, send a memorandum to the Minister for Trade and Customs (Mr. White) in connexion with a number of items. I shall include this item in my memorandum.
Item agreed to.
Items 178 and 179 agreed to.
Item ISO (Gas meters, wireless receivers, sparking plugs, &c).
Senator LECKIE (Victoria.) 1 11.23 1 . - There has been considerable reduction of the duties on sparking plugs. Previously these articles were subject to duties of British ls. 6d. or ad valorem 33J per cent., and general ls. 9d. or ad valorem. 65 per cent. ; the rates are now ls. or 30 per cent., and ls. 4d. or 57i per cent, respectively. Importations of sparking plugs which, in 1931-1932, represented a value of about £15,000 have increased to £44,000 per annum. The proposed reduction of the duty will strike Australian manufacturers of sparking plugs a blow from which I doubt whether they will recover. As locally-made sparking plugs have proved entirely satisfactory, the great increase of the use of internal combustion engines opens up a wide field for Australian manufacturers. I am afraid that in this instance the Tariff Board has not taken into consideration all the facts such as the returning prosperity in Australia and the reduced wages in other countries.
– The Tariff Board was divided in its opinion as to the specific duties which should be applied to sparking plugs. Two members favoured an immediate reduction of the rates, with a further reduction on and from the 1st July, 1936, in order to afford local manufacturers ample time to consolidate their position, whereas the remaining two members favoured an immediate reduction, but recommended lower specific duties. The only difference between the recommendations of the two sections of the board as to the duties which under the present exchange conditions should operate after the 1st July, 1936, is that one section favours a reduction of the specific rate under the British preferential tariff by 3d. more on each plug than does the other section. TheGovernment decided to accept the recommendation of that section which favoured, the higher specific rates, as it considered, that too great a reduction might have the effect of increasing importations considerably, with a consequent severe loss of trade to local manufacturers. The general tariff rates recommended were, however, re-adjusted to permit of a margin being available for treaty negotiations.
The sparking plug industry operates under conditions different from those which obtain in most other industries. Sales are divided into two distinct sections, namely, plugs used as original equipment for motor cars, and sales for replacement purposes. It is common practice in the trade for plugs used as original equipment to be send at prices much lower than those for plugs for replacement purposes. That practice is followed in overseas countries, and the board reports that in both the United Kingdom and Canada equipment plugs can be purchased at one-sixth of the lowest price paid by large distributors for plugs for replacement purposes. The board is of opinion that sales on that basis cannot return a profit, and that overseas manufacturers, therefore, place great value on the equipment business as an advertising medium. Generally, sales of plugs for equipment purposes are made at cost or even below cost, whilst replacement plugs are sold at prices which represent a profit which is considered to be above normal, so that the total sales yield a reasonable return to the manufacturer. The board considers that rates of duty which would be more tb.an adequate for the replacement trade would be inadequate for the equipment business. It is also of opinion that the retention of a large share of the equipment business now held by local manufacturers is necessary if the industry is to ‘progress in this country. Rates of duty which did not take into account the equipment business would, therefore, leave local manufacturers distinctly vulnerable. Under the old rates of duty, importations of sparking plugs increased from about £14,700 in 1930-31 to over £44,450 last year. As the imports for the first six months’ of the current financial year are practically on the same basis, I do not think that wo need fear any great injury to the local industry. I assure the honorable senator that the Minister -for Trade and Customs (Mr. White) is watching the position carefully.
– Sub-item . (i) deals with dry batteries and dry cells. Since the duty on these goods has been reduced, importations have increased from 69,000 to 194,000 per annum. This seems to suggest danger to the local industry. The local manufacturers of dry batteries, like the local makers of sparking plugs, have established a new industry which is struggling to get on its feet. The Ottawa agreement specifically empowers the Government, in the interests of a new industry, to fix the duties higher than they would otherwise be, and I suggest that, until the industry is firmly established, the Government would be justified in proposi”<r slightly higher rates than those o.___ :tinea in the schedule. I understand that the manufacturers, when they secure a commanding position in the local market, will be content to carry on their business with lower duties. The sparking plug and dry battery industries are valuable to Australia, and provide a fair amount of employment. It would be batter, I suggest, for the Government to keep a fatherly eye on them, rather than seek to punish them.
– Although the importations mentioned by Senator Leckie may seem large in number their value is not great. The following table shows the value of the importations of dry cells since 1930-31 : -
In 1928-29;, the value of the imports was £180,000, and in 1934-35, when the value of the imports was only £3,114, the value of the Australian production was £250,000. It will he seen from the above figures that the importations for the last six months amounted in value to about £3,000, of which sum about £2,000 represents importations from the United Kingdom. There is another aspect of the industry that was closely investigated by the Tariff Board. The impression which the board’s report left on my mind was that this is ah industry that has to be watched from the punishment point of view, as well as with a fatherly eye. It has been the subject of three reports by the board in recent years. Following on the imposition of the fixed duties by the Scullin Government, the matter was forwarded to the board for inquiry. as to the necessity for these duties. The board stated that the fixed duties were unnecessary, and recommended a reversion to the previous rates. The recommendation was not accepted by the government of the day.
Shortly after the Lyons Government assumed office in 1932, the board was requested to go into the matter again.
It again stated that the fixed duties were not required, and recommended the rates of 35 per cent., British preferential, and 55 per cent., general. On examining this report, it was found, on the figures used by the board in the report, that batteries could be imported at prices considerably below the local price, and, as the establishment of this industry in Australia had caused a considerable reduction of prices to users, and also as work was being given to about 500 employees, the Government decided that it would be most unsafe to adopt the board’s recommendation. This aspect was pointed out to the board, which was requested to go further into the matter. The board then recommended the duties upon which the present proposals are based. In each of its reports, the board has made reference to what it states is excessive profit. The profit, particularly in the case of one company, appears large in comparison with paid-up capital, but the profit on each battery is small, the total profit being obtained because of a comparatively large output. The fact remains that, apart from the large amount of employment that has been given, the local industry has forced down prices from the very high level of prices which were being charged for imported batteries. It was on account of the increased employment provided in Australia, and the lowering of costs to the buyers, that the Government would not. risk the annihilation of the industry by adopting the previous recommendations of the Tariff Board. The proposed duties are. by no means too high, but should be sufficient for the protection of the local industry, and, at the same time, should help to keep prices at a reasonable level. This sub-item falls within the same category as that relating to sparking plugs, to which Senator Leckie has also referred, and two or three others which are under constant review by the department.
.- I am glad to have heard the Minister’s statement on this matter. When these goods were all imported, the prices were high. Immediately the Australian industry was established, the prices were reduced, and have been gradually falling ever since. It seems to me that, if the local industry is crushed, the importers will have the prices in their own hands again. I urge honorable senators to realize the value of the local industry.
– The matter will be carefully watched. The trade itself is satisfied with the position.
Item agreed to.
Item 181 agreed to.
Item 182 (Bolts, nuts, rivets, and metal washers, n.e.i.).
– Will the Minister furnish the committee with information on this item? There seems to be no reason why we should encourage the importation of such articles as bolts and nuts. Surely the local manufacturers can fully meet the demand. Following up the Minister’s remark a few moments ago - that the local manufacturers had made no protest against the reduction of the duties on dry batteries - I should say that they know too well the policy of this Government, and that they realize what a fetish the Ottawa agreement has become. Like members of the Opposition in this chamber, they probably consider that it is practically useless to make protests to the Government, which always uses its majority to achieve its ends.
– Can the honorable senator cite one instance in which a manufacturer has not put his case before the Tariff Board?
– I have personal knowledge of numbers of manufacturers definitely refusing to play a losing game any longer, because they are convinced as to what would be the result of further protests to the Government. Will the Minister explain why it is considered necessary to give importers any opportunity at all in regard to such articles as bolts and nuts?
– The importations of bolts, nuts, and metal washers show a tremendous falling off. In 1928-29 the total importations from all countries amounted in value to £188,719, and, in the following year, to £131,403. During the depression period, the importations fell off greatly, and the highest point reached since was £38,842 in 1934-35. I am glad to say that, of that sum, imports from the United Kingdom amounted in value to £30,547. The total value of rivets imported ‘from all countries in 1928-29 was £16,863, whilst, in 1934-35, the value had dropped to £4,189. The total value of imports of screws with nuts, or for us© with nuts, was £38,114 in 1928^29. There was a rapid falling off in the following years, and the figure for 1934-35 was £19,421.
In view of the opinion expressed by the Tariff Board that, at the rates of duty now proposed, manufacturers of black bolts and nuts would need to reduce prices for certain sizes of their products in order to compete with importations, inquiries have been made with a view to ascertaining the effect of the proposed duties upon this industry. It has been ascertained that, from the 1st November, 1935, the principal manufacturer of black bolts and nuts effected a general reduction of prices by giving an increased discount, the extra discount amounting to 1.7 per cent, of the list price, which is equivalent to an all-round reduction by 3 per cent, of the wholesale selling price. Inquiries reveal that this manufacturer is progressing satisfactorily under the new duties. Output in the year 1935, during which year the proposed duties operated, increased by 1,000 tons, thus resulting in a decrease of production costs and allowing for the reduction made in selling prices. The number of hands employed increased from 378 in the year 1934 to 450 in 1935. It is, therefore, evident that the proposed duties have not adversely affected the local black bolt and nut industry. On the other hand the progress of this industry under the new duties cannot be considered as other than satisfactory.
– I do not propose to make a long speech on this item, but it is an instructive item, inasmuch as the Leader of the Opposition (Senator Collings) has disclosed the demand there is in some quarters for protection on things, which from their very nature, leed a minimum of protection. It should be perfectly obvious to every hon.rable senator that bolts, nuts, rivets, metal washers, screws with nuts or for ;se with nuts, and engineers’ set screws, are weighty things to import. The freight on them, therefore, quite apart from any other cost, is bound to be extremely high, and the local industry derives a tremendous initial advantage in this _ respect over the imported article. The duties set out in the schedule are exceedingly complicated, but in order to illustrate my contention I shall deal first with the British preferential tariff. This is an ad valorem duty of 35 per cent, less 3s. 6d. per cwt., or, as an alternative, an ad valorem duty of 10 per cent., whichever rate returns the higher duty. That higher mathematician whom the Postmaster-General (Senator A. J. McLachlan) was invoking the other day would have his work cut out if he were to apply his brains to this item.
– Another “ administrative difficulty “ would arise too.
– Is the protective duty of 10 per cent, also subject to the full exchange rate under the new schedule?
– The minimum protection afforded to. the Australian article against any British imports is therefore 35 per cent.
– Apparently it is, for in addition to the 10 per cent, ad valorem duty, the exchange rate of 25 per cent, must be taken into consideration. The two make the protection afforded to the Australian manufacturer 35 per cent. The importer is also required to pay freight and other charges. Bolts, nuts, rivets and metal washers are articles which, from their very nature, are of the simplest type to manufacture; the raw material is obtainable in Australia, the manufacturers are established here, and the market is at their very door. In view of all these circumstances, how the Leader of the Opposition can claim that this- schedule launches a drastic attack upon the local manufacturers of these articles and that it is necessary to retain the duties at a high level in order to ensure that they are adequately protected is beyond my comprehension, just as it is beyond my comprehension that Senator Leckie can seriously suggest that the market will be thrown open to the importer by these rates of duty, which, in my opinion, aTe high. On the articles manufactured in foreign parts and imported into Australia a duty of 55 per cent, is imposed, plus at least 25 per cent, exchange. If that protection is not more than adequate, I do not know what would satisfy the local industry here. The duties, as they stand, are prohibitive. I fail to see that any increase of duty, short of an absolute prohibition, could be added to the rates set out in the schedule.
– I cannot allow the statement of Senator Duncan-Hughes to pass, that, in addition to the duty of 10 per cent, upon British goods, the exchange rate adds a further 25 per cent. There is nothing of the kind, and I doubt very much whether the exchange rate affords the manufacturers an additional 3 per cent, protection. The raw material in bolts and nuts accounts for about 70 per cent, of the finished article, and on that raw material the Australian manufacturer pays the English price plus 25 per cent.
– Is the raw material imported or derived locally?
– It is derived locally, but the costs are based on London prices.
– But that does not affect the landed price of the goods.
– No, but it affects, the cost of local manufacture. The coat of the raw material is 25 per cent, mow than an English maker of nuts and bolts pays for his raw material.
– But the Australian manufacturer obtains his raw material from within the Commonwealth.
– That makes no difference, because the manufacturer pays for his requirements in Australian currency, and is therefore on the same basis as the manufacturer of the British goods which enter Australia. Furthermore, the exchange rate of 25 per cent, has increased the price of foodstuffs and primary products generally, so that the cost of living figures have risen causing a consequential increase of wages. Apart from the 10 per cent, protection the manufacturer receives no protection other than about 3 per cent, from the exchange rate. If my figures are submitted to an accountant I am confident that he will confirm them.
Senator HARDY (New South Wales j [11.55]. - I do not entirely agree with the view expressed by Senator Leckie, because, although I admit that his argument is particularly ingenious in the matter of raw material, I point out that bolts and nuts are a finished product; and that is what is imported into Australia. If Senator Leckie were to obtain a bill of lading and invoices for bolts and nuts imported from America or any other country with a currency not far removed from the gold standard he would find that the 25 per cent., which he airily dismisses as not affording any protection, is actually giving very real protection indeed.
– If I interpreted the remarks of Senator Duncan-Hughes correctly, he stated that the manufacture of bolts, nuts and screws is not a very important indus try.
– I did noi say that.
– Did not the honorable senator convey the impression that the industry was not deserving of much consideration?
– It is a most efficient industry.
– I am gratified that Senator Duncan-Hughes did not desire to convey that impression, because this industry is one of the most efficient in Australia.
Duly and Hansford, a Marrickville firm, has arrived at a stage to-day when it has made its factory the equal of, if not superior to, possibly any other in the world.
– Is the honorable senator referring to McPhersons Proprietary Limited, of Melbourne?
– Perhaps Duly and Hansford does not manufacture the same type of bolts and nuts as McPhersons Proprietary Limited, but the quality of the bolt it turns out, which is of the type known as the bright bolt and nut. and is utilized by the great majority of motor manufacturers throughout Australia, has been frequently commended by engineers. This firm has made wonderful progress. It has installed automatic machinery, and the quality of its output is most excellent.
– What is the proportion of labour to the actual poundage of product ?
– I do not know, but. the growth of this enterprise has been remarkable. Whereas a few years ago only a few persons were employed, to-day there are some hundreds of men engaged. Unless a. high rate of duty on this class of product were maintained, it is very likely that imported nuts and bolts would be dumped on the local market to the disadvantage of the Australian industry. I understand that Malleable Castings Limited also manufactures goods of this class, but Duly and Hansford has shown that it can manufacture a remarkably fine article which is the equal of any produced overseas, and is in demand by the manufacturers of motor cars of all types. The firm has definitely established that, by making a high class product efficiently in Australia, it has reduced the cost to the local consumer. This is acknowledged, not only by those who have been informed of their achievements, but also by competent engineers. Therefore the industry deserves the protection that has been given it.
– Honorable senators may desire to be informed of the conclusions of the Tariff Board in regard to this industry. The board has accepted the position that the local manufacturers obtain their steel in Australia as cheaply as do the manufacturers in the United Kingdom, and therefore the tariff - whatever it may be - is imposed purely on the costs of Australian manufacturers in order to equalize the position and protect the Australian industry. The Tariff Board met with some difficulty in making its inquiries because, as honorable senators will see on page 7 of the report, when it endeavoured to obtain from the manufacturers themselves the local cost of production, the only figures available were those that obtained in the depression period. When production was increased, the overhead charges were also reduced,but not in the same ratio. The Tariff Board was obliged to make several investigations into this matter.
– Did the manufacturers refuse to disclose certain figures?
– No, they supplied them. The report states -
The costs of production submitted in evidence by W.E. Macpherson, on behalf of Macphersons Proprietary Limited, the principal Australian manufacturer of black bolts and nuts, were not in sufficient detail for the requirements of the board, and a special investigation conducted at the instigation of the board revealed that
the costs submitted were based on operations during 1931-32 when output was very low. In the following year output had increased by more than 50 per cent. with an appreciable reduction in costs.
The company sells its productsis manufacturers, as wholesalers, and as retailers, and segregation of selling costs was impracticable,
For the same reason, exact allocation of profits derived from the manufacture of bolts and nutswas impracticable, but the available data pointed to the conclusion that, despite comparatively low output, freedom from overseas competition had enabled the company to earn a. high margin of profit per ton of product sold.
During the last twelve months the board has held several inquiries into various branches of the metal industry, and in accordance with article 10 of the United KingdomAustrulia Trade Agreement has paid particular attention to the relationship between costs in the United Kingdom and in Australia. The general conclusion arrived at by the board is that the ratio of all costs is about l.6 in Australia to . 1 in the United Kingdom when the Australian costs are expressed in Australian currency and the United Kingdom costs in sterling. Special circumstances in individual cases sometimes lead to a small variation from this ratio, but after a close examination of the particulars obtained at the special investigation into the cost of manufacturing bolts and nuts in Australia and the available evidence regarding costs in the United Kingdom, the board is of the opinion that the adoption of a 1.6 to 1 ratio as applying to the “ costs above steel “ would be slightly to the advantage of the local manufacturer.
In this connexion it should be pointed out that the local manufacturer’s estimates tendered in evidence were that labour costs are 56 per cent. higher in Australia than in the United Kingdom and that “expenses” other than labour and raw materials are 50 per cent. higher in Australia - the weighted average for “ costs above steel “ being53 per cent.
The board is of the opinion that a duty of 35 per cent. applied to the “costs above steel “, if practicable, would provide adequate protection to the local industry. This duty - with the statutory 10 per cent. added to the value for duty - would amount to 38½ per cent. of the “ costs above steel “ and supplemented by the exchange rate of 25½ per cent. would penult the local manufacturers to gain the whole market if the “ coats above steel “ were kept within the ratio of 1.04 to 1.
Added to this protection the local manufacturer would have, as already explained, a further ls. Bid. per cwt. represented by the advantageous difference in freight, less the disadvantageous difference in steel costs.
– Have the manufacturers asked for a higher duty?
– I do not think so. There was some controversy regarding washers, but very little regarding nuts and bolts.
– ‘They are satisfied with the fortunes they are making.
– I do not know whether they are making fortunes, but we may rest assured that they are doing reasonably well, and if they would pay more attention to standardization their customers would benefit still further.
– I am grateful to- the Minister for having read those extracts from the report of the Tariff Board, because I think that they substantiate my argument, rather than the remarks of Senator Leckie.
– Could the honorable senator follow the arguments of Senator Leckie ?
– I do not agree with them, and I am not sure that I followed them in their entirety. I try to consider tariff matters regardless of individuals or firms, and I am not here to push the barrow of any section or interest. Senator Arkins suggested that I had made an attack on one particular firm, the name of which he mentioned, and I am ashamed to say that I am so ignorant that I did not know that such a firm even existed. I have no animus against that firm, or against the industry. I say, however, that, in my opinion, the amount of assistance which the industry is receiving seems to me excessive rather than, as the Leader of the Opposition (Senator Collings) said, inadequate. In addition to the advantage derived from the tariff, the local manufacturers enjoy the goodwill of the business. It is obvious that the average Australian, other things being equal, is likely to buy from an Australian firm rather than from overseas firms; and if it is a fact, as Senator
Arkins says, that the quality of the Australian product is superior to that of the imported article, that would be an added incentive to consumers to use the local product.
– There is apparently some confusion about the firm of McPherson Proprietary Limited. They are the people who produce bright nuts and bolts.
-HUGHES. - The other day I noticed that the Minister for Trade and Customs (Mr. White) said that even Adam Smith agreed that it was necessary to give protection to infant industries until they became established. That was the original idea when our tariff policy was formulated by Mr. Kingston, but our experience has been that, in the case of some industries, paradoxical though it may seem, the older they grow, the more infantile they become, in the sense of asking for more and more protection.
– If they become successful the Tariff Board has a crack at them.
– I should say that there is no likelihood whatever that the Tariff Board desires to destroy or injure any efficient industry in Australia. The probabilities are all against it.
– The board can make iii 1 stakes
– Then those mistakes can be rectified.
– According to the Ottawa agreement, as interpreted by the Government, it is not competent for Parliament to rectify a mistake made by the Tariff Board.
– If a really serious mistake were made by the board, resulting in the injury of an important industry, honorable senators may rest assured that Parliament would not allow the situation to continue without taking remedial action. The Minister for Trade and Customs already possesses, and frequently exercises, power to prevent dumping. I cannot believe that a small reduction of duty on this item or that will have the effect of destroying an important industry. Every day we hear in this Parliament protests against trivial reductions of duty on iron and steel articles, accompanied by the suggestion that, if the reduction be persisted in, the BrokenHill Proprietary Company Limited will be ruined. Of course, no one really believes that.
.- I regret that Senator Duncan-Hughes was not able to understand my argument, but I still believe that the argument was sound. I was merely trying to show that it is an error to suppose that Australian manufacturers enjoy an advantage of 25 per cent. over British competitors because of the exchange rate. According to the report of the Tariff Board, which the Minister has just read, the “ costs above steel “ are at a ratio of 1.64 to 1. I placed the ratio at 1.25 to 1, so that the report of the board really supports my contention. There is always apt to be confusion of the use of exchange to regulate trade and the depreciation of the currency. The Australian £1 has been deliberately depreciated by the manipulation of the exchange rate, which no longer acts as a regulator of trade. Steel is the raw material for the manufacture of bolts and nuts, and the fact remains that the Australian manufacturer pays 1.6 for steel as compared with 1 paid by his English competitors. I believe that the present duty will adequately protect the Australian industry, which is every year becoming more efficient, and is obtaining a larger share of the Australian market.
. - Senator Leckie has suggested that the exchange rate is not worth much as a protection to the Australian manufacturer. I believe that that contention is not correct, but, assuming that it is correct, we may with justification ask why the Government proposesto increase tariff duties by 1 per cent. for every £1 by which the exchange rate falls. So far that provision has not been questioned, but we have a right to question it if what Senator Leckie says is true. In that case, if the formula is allowed to operate, the Australian manufacturers will receive more protection, than they are entitled to.
– I have no wish to be dragged into this interesting controversy regarding the effect of the exchange rate. The report of the Tariff Board speaks for itself. The Australian manufacturers are obtaining their steel at the. same rate as are the manufacturers in the United Kingdom, so that the British manufacturer enjoys no advantage in that respect. The Tariff Board took pains to examine the cost of steel to the manufacturers in each country. The other headings under which costs were tabulated were the cost of manufacture and packing, manufacturers’ profit, and cost of delivery c.i.f. and e. at main Australian ports. Senator Leckie regards the figure 1.6 as the ratio applying to the raw material used in this industry. The fact is that, as far as steel is concerned, it applies not at all. The report of the board states -
After a close examination of the particulars, obtained at the special investigation into the cost of manufacturing bolts and nuts in Australia and the available evidence regarding costs in the United Kingdom, the board is of the opinion that the adoption ofa l.6 to 1 ratio as applying to the “‘costs above steel” would be slightly to the advantage of the local manufacturer. In this connexion itshouldbe pointed out that the local manufacturer’s estimates tendered in evidence were that labour costs are 50 per cent. higher in Australia than in the United Kingdom, and that “ expenses “ other than labour and raw materials are 50 per cent. higher in Australia, -the weighted average for “ costs above steel “ being 53 per cent. The beard is of the opinion that a. duty of 35 per cent. applied to the “’ coats above steel “. if practicable, would provide adequate protection to the local industry. This duty - with the statutory 10 per cent. added to the value for duty - would amount to 38½ per cent. of the “costs above steel “ and supplemented by the exchange rate of 25½ per cent. would permit the local manufacturers to gain the whole market if the “ costs above steel “ were kept within the ratio of 1.64. to1.
Local manufacturers and overseas producers purchase steel on the same basis, and as the 25 per cent. exchange advantage benefits the local manufacturer this formulahas been applied by the Tariff Board. Should exchange fall by 10 per cent. or 20 per cent., the degree of protection afforded would be increased.
– Senator Johnston raised an important point, which I had previously mentioned to the Leader of the Opposition (Senator Collings), concerning the action to be taken by the Tariff Board in the event of the exchange rate decreasing. Senator Leckie has shown quite clearly that, in some instances, Australian manufacturers do not derive a 25 per cent, advantage from exchange.
– There are instances in which they do not, but under this item they derive the full benefit.
– Senator Leckie, who is a manufacturer, mentioned wages and other costs upon which a 25 per cent, exchange advantage cannot operate. If the rate of exchange is reduced, the Customs Department automatically imposes a higher duty. The Minister, who is supported by the board, stated that local manufacturers receive an exchange advantage of 25 per cent., but the manufacturers say that they are not getting the full benefit mentioned. Because the schedule provides that for each £1 by which tlie equivalent in Australian currency of £100 sterling is less than £12<5 at the date of exportation, the duties will be increased by certain specified percentages, it does not follow that manufacturers are now getting the full advantage of tho exchange rate.
– The contention of Senator Leckie in respect of raw materials purchased in Australia to be manufactured here, appears to be correct. Australian manufacturers using raw materials produced locally have to pay for such materials iti Australian currency, and therefore cannot benefit by the exchange.
– This item does not. relate to raw materials.
– I am. referring to the raw material used in the manufacture of bolts and nuts. I do not suggest that the duty is insufficient, because I believe that the firms engaged in the manufacture of these articles are doing exceedingly well, and have not asked for higher protection. We are not right in assuming that local manufacturers are always protected to the extent of 25 per cent, in addition to the customs duties and natural protection in the form of freight, insurance, and such other charges.
Item agreed to.
Items 186, 187, 190, 192, and 193, agreed to.
Item 197 (Spoons, forks, platedware n.e.i.).
.- Sub-item a of this item covers electroplated spoons, forks, butter, fish and fruit knives, and sub-item c platedware n.e.i. The duties imposed under each sub-item have been reduced. The principal material involved is nickel silver, for which the Australian manufacturer pays ls. 7d. per lb. and the British manufacturer only ll£d. per lb. Will the Minister explain why platedware n.e.i., covered by sub-item c, has been separated from electroplated spoons and forks in sub-item a? The nickel plating industry has been established in Australia for many years, but the manufacture of plated spoons and forks has been undertaken in Australia only in recent years.
– The Tariff Board stated that it was difficult to deal with the articles mentioned in sub-items a and o under one item, because the local manufacturing charges in respect- of articles in one subitem are higher than in the other. Platedware n.e.i., has, therefore, been separated from the articles mentioned in sub-item a. On page 7 of its report the Tariff Board stated -
In the platedware industry relative labour costs are unusually high. The latest published production bulletin indicates that for the year 1081-32 tho proportion of labour to production in the electroplating industry was 00.70 per cent., whilst the general average over factory production as a whole for that year was 50.4 per cent.
On page 8 the board stated -
The manufacture of spoons and forks has only existed in Australia to any considerable extent during the past three years. Spoons and forks, both plated E.P.N.S. and of unplated mixed metal, are manufactured from blanks imported duty-free from the United Kingdom. The proportion of locallymanufactured spoons and forks to tho total Australian requirements appears from the latest information available, to be approximately SO per cent.
The present local prices for the better quality .E.P.N.S. spoons and forks in some cases exceed the duty-paid landed prices of imported spoons and forks of equivalent silver deposit. This would suggest the need for a duty at least as high as on plated hollowware. An examination of the nature of the industry shows, however, that a large proportion of the total factory cost is either dutyfree material(e.g., imported blanks) or exportable metal, and that the labour involved is relatively small.
The itemhas been divided for the reason given by the board.
Item agreed to.
Items 206, 208, and 215, agreed to.
By adding a new sub-item (e) as follows: - “(e) Picks, mattocks, hooks and slashers, ad valorem : British, 25 per cent. : intermediate, 42½ per cent. ; general, 53¾ per cent.
– What is the object of grouping hooks and slashers with picks and mattocks, which are largely Australianmade? A comparatively large number of the hooks and slashers which are extensively used in this country, is imported. Can the Minister give figures showing the respective importations of picks and mattocks and hooks and slashers ?
– Unfortunately, the importations of all these tools have not been separately recorded. Mattockshave been included in the figures for picks from 1933-34 onwards, but importations have been very meagre. Importations of these tools since 1929-30 were valued as follows:- 1929-30, £2.897; 1930-31, £1,932; 1931-32, £567; 1932-33, £1,557; 1933-34, £3,992; and 1934-35, £5,085. Practically the whole of these importations came from the United Kingdom; the only year in which importations from foreign sources exceeded the value of £50 was in 1929, when their value rose to £204. This industry was reviewed by the Tariff Board in 1931 and again in 1934. The large disparity between the Australian price and the landed costs of British tools caused the board in 1931 to recommend that the duties on picks and mallee slashers be lifted. Since 1931, however, local prices have been reduced considerably, as follows : - Picks, 34 per cent.; mattocks, 30 per cent.; hooks, from 9½ per cent. to 21 per cent. ; mallee slashers, 12 per cent. The landed cost of British tools has also fallen appreciably on account of lower f.o.b. costs, the fall in exchange from 30 to 25½ per cent., the reduction of primage duty from 10” per cent. to 5 per. cent.,’ and the reduction ofduty from 55 per cent. to 26¼ per cent. Local manufacturers supply approximately 50 per cent. of local requirements of picks and mattocks, but only 15 per cent. of hooks and slashers. The Australian manufacturers owe a fair proportion of their trade to the preference extended to them by government and municipal bodies. Although there is a big difference between the Australian price and the landed duty-free costs of imported tools, the Tariff Board is satisfied that there is room for improved efficiency in the industry. Improvements have been made over the last few years, and further improvement is expected. If the whole of the local market were to be given to the local manufacturer, the duty would need to be excessive, but owing to the fact that the articles are tools of trade for workmen and settlers, who can ill afford to pay increased prices, and that the local production costs are relatively much higher than costs in the United Kingdom, the imposition of high duties would not be justified. The Tariff Board stated that it seriously considered recommending the total removal of the duties on the British tools, but in view of the fact that such a course would cause severe loss to manufacturers who were encouraged to engage in the industry by reason of high duties, it was unwilling so to recommend. The duties proposed are moderate, and approximate those provided in the 1933 tariff. They should be sufficient to give protection to efficient manufacturers, and at the same time should not place an undue burden on the users.
– The information supplied by the Minister in respect of prices and importations must satisfy every honorable senator that these tools should not be grouped. I suggest that mattocks and picks should be shown apart from hooks and slashers. The Minister stated that only about 15 per cent. of the hooks and slashers are made in Australia. I also point out that the reduction of prices of these tools ranges only from9½ per cent, to 21 per cent., as compared with reductions up to 34 per cent. on picks and mattocks. In view of this fact, the proposed duty on hooks and slashers inflicts a most unfair tax on a very deserving class of people - the pioneers of this country - who are forced to use these tools extensively. Every honorable senator who has had occasion to purchase them for clearing work on farms knows that the prices to-day are in some cases 100 per cent, higher than they were twenty years, or even fifteen years, ago. The ordinary slasher, which is known as the Gippsland hook, costs to-day from 9s. 6d. to 10s., as compared with 4s. 6d. a few years ago. [ suggest that the proposed duty on these tools constitutes a heavy tax on a class of people who should receive every encouragement from the Government through the tariff. I repeat that the grouping of all of these tools is most unfair. I do not desire to move a request, but 1 urge the Government to take notice of the facts I have pointed out, and to reduce substantially the duty on books and slashers.
– I am glad that Senator Herbert Hays raised this matter. It is the policy of this Government to eliminate as speedily and effectively as possible the pests which confront the primary producers. The implements referred to by the honorable senator are the only tools that, can be used by the nian on the land to keep his areas in decent condition. The greatest pest of the farmer in Tasmania is bracken fern. Hundreds of thousands nf acres of good land in that State is not productive to-day because of the enormous cost of clearing it. The most effective way to do this is by the use of hooks and slashers. Although this Parliament has taken steps to make productive every acre possible, it is now proposed to retard this work by imposing high duties on articles which are most needed for this work. The prices of fern hooks and slashers are at least from 75 to 80 per cent, higher than they were a few years ago. I suggest that the imposition of high duties on those tools miniraizes the efforts already taken by this Parliament to make as much land as possible productive.
– Does the honorable senator suggest that the clearing of land will go ahead by leaps and bounds if this duty is reduced?
– If the honorable senator is prepared to visit the north-west of Tasmania, I shall show him any amount of land which can be made very productive if the occupants are given reasonable facilities to do this work cheaply. I support the remarks made by Senator Herbert Hays, and I hope the Government will carry out his suggestion.
– T presume that it is unnecessary to say that the Opposition would not support Senator Hays’s suggestion if the honorable senator were to put it in concrete form. To members of an intelligent Opposition, however, it is interesting to note suggestions that Tasmania, with all its wonderful potentialities, is awaiting only cheaper slashers to improve hundreds of thousands of acres of land. When I visit Tasmania, shortly, I shall accept Senator Payne’s invitation to show me round the northwest portion of that State, which, but for the fact that slashers cost from 2s. to 3s. more than they did a few years ago,, could be immediately turned into smiling plains, and made to produce more of those articles for which Tasmania is now justly noted. Does Senator Herbert Hays really visualize the full effect of his suggestion when he emphasizes that, in days gone by, slashers cost only 4s. ? In passing, I mention that, in my younger days, 1 used these tools in the scrubs of Queensland. Therefore, I know something about them. I remember also the rate of wages which I then received, and can readily compare them with the wages paid for similar work to-day. Does Senator Herbert Hays, and do other honorable senators who support his remarks, want to restore all the conditions that prevailed in the days when slashers could be bought for 4s.? Iri those days workers in the scrubs possessed only one pair of dungarees, and on Sundays had to lie on their bunks while these were washed and’ dried, so that they could wear them the next morning. Do these honorable senators desire to see a restoration of all the conditions which existed in those days, when low standards of human comfort and low wages prevailed?
– The honorable senator knows better than that.
– I do not doubt the honorable senator’s motives, but I doubt his capacity to realize the implica- tions of many of the proposals which he makes in this chamber. He and honorable senators who support him are tariff slashers who do not understand the implications of their statements when they speak of the wonderful days when slashers could be bought for 4s. ; their remarks suggest that they desire to upset the policy, which has been continued by all good Australians from those days up to the present time, to improve our general standards and uplift the community. For these reasons the Opposition opposes the sinister attempts of such honorable senators to reduce customs duties. Despite the fact that the Government brings forward tariff proposals which are modest enough, some honorable senators propose further reductions. However, Senator Herbert Hays has stated that he is not prepared to move a request; if he did so we would oppose his proposal.
Sitting suspended from 12.45 to 2.15 p.m.
– I should not have taken part in this discussion if the Leader of the Opposition (Senator Collings) had not indulged in extravagant criticism of the remarks of Senator Herbert Hays, whose one desire, I take it, is to ensure that farm tools covered by this sub-item are made available to primary producers at a cheaper rate than, is now possible. I fail to see how the expression of that wish can be construed as a desire to revert to the industrial conditions that obtained a couple of decades ago. I deprecate very strongly this attempt, by the Leader of the Opposition, to discredit Senator Herbert Hays, because I am quite sure that no honorable senator would wish to return to conditions that existed 25 years ago. There was the same unfair suggestion in the honorable gentleman’s statement that Australian manufacturers would not submit evidence to the Tariff Board, for the implied reason that the board was “ stacked.”
– I rise to a point of order ! I do not know whether Senator Hardy intended to do so or not, but he certainly conveyed the impression that, in the course of my remarks, I expressed the view that the Tariff Board was “stacked.” That remark is personally offensive to me, and I think it should be withdrawn. I did not say that, nor was it in my thoughts. Furthermore, I did not say anything that could be twisted to convey that meaning.
– I said that the implication of the honorable senator’s remarks was that the Tariff Board was “ stacked.” Undoubtedly, the honorable gentleman did say that Australian manufacturers would not submit evidence to the board because of their belief that, despite any recommendation made by the board, this Government would continue’ with its policy of extinguishing Australian industries.
– Is that a reflection on the Tariff Board?
– I regard it as such, because the board conducts an impartial inquiry, and presents to the Government an impartial recommendation based on the evidence submitted to it.
– Is the Tariff Board infallible?
– I do not suggest that it is; but I think every honorable senator will admit that it is impartial, and is guided solely by evidence placed before it.
– Have we not the right to criticize it?
– Most decidedly we have; but criticism should be reasonable and fair. If the honorable senator considers that the remarks of his leader relating to Senator Herbert Hays were fair, I am a bad judge of what is reasonable and fair. I agree with Senator Herbert Hays that primary producers should be able to purchase hooks and slashers at a low price, because they are standard farm tools, and are very largely used. In the last four year prices have been reduced, on one occasion by 12 per cent., and on another by 21 per cent. I do not know if it is the intention of Senator Herbert Hays to request the House of Representatives to make the rates lower than those recommended by the Tariff Board. If it is, I shall not support him. because the Tariff Board made a careful inquiry- into this matter, and expressed the view that lower rates would threaten an Australian industry. The board stated -
Taking into consideration the importance of keeping tho prices of such important tools of trade as low as possible, and also the fact that the duty that would be required to secure a big proportion of the market to local manufacturers would need to be excessive, the board is forced to the conclusion that increased duties would not be justified.
Another course which the board has considered is to recommend ‘the removal of the duty on British goods altogether. While this would possi’bly result in a net benefit to the community, the board realizes that it would cause severe loss to manufacturers who have gone to considerable expense in establishing plants for tool manufacture. In view of the fact that manufacturers were encouraged to engage in the industry by reason of the fact that high duties were .provided in the customs tariff, the board is unwilling to recommend that the duties be removed.
The board then suggested a middle course -
There remains the medium course of imposing moderate rates of duty. At present, the protection through the Customs Tariff is 26i per cent. This is augmented by the protective effect of exchange, which is equal to more than 20 per cent, ad valorem. The board sees no sound justification at the present time for a duty higher than 25 per cent, ad valorem, which, with exchange, but excluding primage, provides a total protection (over and above freight and charges) of over 45 per cent. The board, therefore, finds that reasonable rates of duty under the British preferential tariff would be 25 per cent, under existing conditions of exchange, and 45 per cent, with exchange at par.
As I agree entirely with the board’s conclusions I shall support the rates recommended by that body. I believe, with the board, that whilst lower duties would probably be of benefit to the community, they would threaten the extinction of an industry which was established under high protective duties. Therefore, it is reasonable to take the middle course recommended by the board.
– I share the view expressed by Senator Herbert Hays. The Minister told us this morning that the local manufacturers supplied 50 per cent, of the demand for picks and mattocks, and 15 per cent, of the demand for hooks and slashers. This suggests that they are not particularly anxious to secure the market for hooks and slashers, preferring to cater for the demand for picks and mattocks. This being the case, it is only reasonable that the duties on hooks and slashers should be lowered in order that the users of these articles may obtain them at a reasonable price.
.- I move-
That the House of Representatives be requested to make the duties -
Hooks and Slashers, ad valorem, British, free; intermediate, 42½ per cent.; general, 03$ per cent.
I, like Senator Hardy, deprecate the extravagance of the language used by Senator Collings. But we all know that the honorable gentleman does not mean what he says. When I hear him abusing the Government or any of its supporters I am reminded of the story of the boy who went to sea and made entries in his diary to the effect that he said his prayers every night when, as a matter of fact, he did not. Upon being questioned by a friend as to the reason, he said, “ I know I don’t say them, but it will read well at home “. The same may be said of much of the abuse which Senator Collings hurls across the chamber - it reads well to his constituents, but we do not always take him seriously. No one desires to revert to the earlier industrial conditions which the honorable gentleman painted so strongly this morning ; to the time when, as he said, he worked with a slasher for about twelve hours a day for a few pence. The discussion has shown, and the Minister has admitted, that the item should be further divided. The Minister told us that 50 per cent, of the picks and mattocks used by primary producers are made in Australia, but only about 15 per cent, of hooks and slashers are manufactured locally. He also informed us that there had been a reduction by over 30 per cent, of the price of picks and mattocks, but a reduction by only 13 per cent, in the case of hooks and slashers, which are largely used. Every man on the land, and, indeed, every occupant of a small homestead block, uses a slasher. Statistics show clearly that Australia’s requirements of these tools are not being supplied by local manufacturers.
– The group contains only edged tools.
– By making the change which I suggest we should render a great service to the primary producers of this country, while not injuring any industry which makes a substantial part of our requirements of these goods.
– For what purpose are the hooks used ?
– They are used for cutting scrub and undergrowth, and also for trimming hedges. Prices of ordinary hooks range from 5s. 6d. to 10s. 6d.; heavy hooks may cost about 10s. I ask the committee to give favorable consideration to my request.
.- Before 1929 there was no duty on these tools, but in that year a duty of 55 per cent., British preferential tariff, was imposed. As a result of the duty the price of these articles was lower in 1934 than in 1929 when there was no duty at all, showing that the establishment of the Australian industry had reduced the prices of both locally produced and imported tools.
– The importers were profiteering in 1929.
– Senator Herbert Hays must have gone back to a period before 1929 to find ground for his argument. The duty of 55 per cent. was reduced to 35 per cent. in February, 1932, and in October, 1935. the rate was further reduced to 26¼ per cent. ; now it is 25 per cent. Senator Herbert Hays should be satisfied with the Minister’s assurance that the prices of picks have been reduced by 34 per cent., and of slashers by 13 per cent. As the local industry has developed, prices have fallen. The honorable senator probably knows that hooks and slashers vary considerably in respect of both size and weight. Any of these tools which are not made in Australia may be imported free under by-law.
– That is being done.
– No substantial part of Australia’s requirements of hooks and slashers is made locally.
– The honorable Senator is wrong in saying that every farmer uses slashers. Senator Guthrie, who owns several thousands of acres of land, has never seen one. I myself have never used one on the hundreds of acres of land which I have held. Nor have I heard of a slasher being used to trim a hedge, although the appearance of some hedges suggests that slashers have been used for that purpose.
– Has the honorable senator ever seen a hedge of box-thorn ?
– In some districts box-thorn hedges are regarded as cover for rabbits and other vermin, and must be destroyed. In any case, a box-thorn hedge is an ugly thing which damages the wool on the sheep. I trust that the request will not he accepted. Although picks and mattocks were made in Australia before there was a duty on them, the making of hooks and slashers is a new industry to Australia, resulting from the imposition of duties on these tools. I have been through one of the Melbourne factories, which makes large quantities of these implements, and in the large hardware stores of Melbourne and Sydney Australianmade slashers, equal to the best slashers imported, are on sale.
– They could be made under a bounty.
– The point which I stress is that since the imposition of the duty, prices of these implements have fallen - by 34 per cent, in respect of picks, and by 13 per cent, in respect of hooks and slashers. The committee would be ill advised to agree to the request, which is not justified. The probable additional cost to the primary producers of this country has been exaggerated, forI understand that good slashers are handed down from generation to generation almost as an heirloom. Unless there is a vast amount of box- thorn to be destroyed, a slasher should last for many years, and, therefore, an addition of1s. or1s. 6d. to the purchase price does not representa great deal to those who use them”.
– I hope that the committeewill not agree to the request. I can at least lay the flattering unction to my soul that my innocent remarks have stirred Senator Herbert Hays, and also his selfappointed protector, the Leader of the Country party (Senator Hardy). Both honorable senators, quite inaccurately, referred to my remarks as “ the extravagant language of the Leader of the Opposition “. As to extravagance of language, the Senate would do well to recall the statement of Senator Herbert Hays that every primary producer, every man on the land. indeed, every holder of a small suburban block, uses a slasher, and longs for a return to the good old days when such articles cost less than they do to-day. 1 cannot recall having heard more extravagant language. At times I have been tempted to believe that I am gifted in that respect. But I now frankly admit my inferiority to Senator Herbert Hays, and express my willingness to sit at the feet of the master and receive tuition. Australian firms are making these tools.
– Only 19 per cent, of Australia’s requirements.
– The honorable senator previously said that Australian manufacturers made 13 per cent, of Australia’s requirements of these tools. Being uncertain of the exact percentage, lie endeavoured to cover himself by saying that the proportion of locallyproduced slashers to the total in use in Australia was certainly not more than 20 per cent. The fact remains that these tools are being made satisfactorily by Australian manufacturers. Whenever a local industry is able to cope with the Australian demand, we are told that it no longer needs protection, because it has the home market, and should be able to stand on its feet. But when another Australian industry is struggling to get on its feet the freetraders in our midst do their utmost to prevent it from gaining control of the home market. The rules of logic suggest that they should not try to have it both ways. If Australian industries are to be encouraged to develop until they can supply the requirements of the home market, freetraders must not be allowed io lay unholy hands on the tariff.
– Australian manufacturers should be assisted by means of a bounty.
– The honorable senator rarely addresses the committee, but when he does, he is always amusing.The honorable senator suggests a bounty. 1 recall other occasions on which he has advocated the granting of assistance to fruit-growers and other primary producers. I do not complain of that, for they deserve more than they get; but the honorable senator who pleads their cause should not attempt to break down the fiscal policy of this country.
– We are only endeavouring to prevent the Opposition from building up that duty.
– The honorable senator has stated that the Country partyhas adopted this illogical attitude, because it is afraid that the Opposition will go to the other extreme and endeavour to boost up the duty. He knows full well that the Opposition has no intention of asking for the imposition of a higher duty on hooks and slashers.
– The honorable senator would have that duty increased if he were able to get sufficient support.
– The honorable senator should not anticipate what the Labour party would do if given the opportunity. Some day we shall have the opportunity, and when we occupy the Government ‘ benches, we shall listen to the gnashing of teeth and wailing that will come from the Opposition. Senator Hardy’s attitude is quite illogical, and I hope that the good sense of honorable senators will prevail to ensure that the request be rejected.
– I support the request submitted by Senator Herbert Hays, not because I am desirous of injuring a worth-while Australian industry, but because, as I stated a little while ago, figures show that local manufacturers do not value the local market for hooks and slashers. The Tariff Board has, reluctantly, recommended the imposition of this duty covering four types of implements, and while I .am anxious to give a fair measure of protection to the manufacturers of picks and mattocks, I feel that if this grouping system is permitted to remain when the Tariff Board again gives consideration to the item, a reduction of the duty will be recommended. If that happens, the manufacturers of picks and mattocks will lose the benefits of the protective tariff.
– What would happen if the entire group were co-ordinated?
– The figures quoted by the Minister show that, with the duty that obtains at the present time, the local manufacturers of hooks and slashers are satisfied to supply only 15 per cent, of Australian requirements. It is clear to me, therefore, that without inflicting an injury on the manufacturers, the duty could he reduced. But the committee would be well advised, when the subject of picks and mattocks is being discussed, to ensure that the duty is sufficient to enable the local manufacturer to remain in business.
– The Tariff Board’s report, issued in June, 1934, was made after evidence had been taken from a number of manufacturers in Australia. One of the witnesses was Mr. L. F. Chandler, director and general manager of “W. H. Plumb (Australia) Limited, Alexandria, New South Wales. This gentleman is an American manufacturer who has seen fit to establish a factory in Australia to engage in the manufacture of these implements. Apparently, he was well advised how to look after his own interests in this respect, because honorable senators will see on page 4 of the report the rates of duty which he suggested should be applied to this industry. Although I believe that Senator Herbert Hays is correct in stating that only 15 per cent, of the requirements of hooks and slashers are being manufactured locally, it is anticipated that the output will be considerably increased shortly. Certain types of hooks are at present included in the list of tools admissible under by-law. These are -
Honks, viz., grass, hop, potato, reap, sail, spud, vims, weed.
Moreover, as Senator Leckie pointed out. if certain of these implements are not being manufactured in Australia they may be admitted free of duty, upon the authority of the Minister, under by-law. If honorable senators closely study the Tariff Board’s report, they will see that the board, when it reported previously on this industry, was very much inclined to do what Senator Herbert Hays desires the committee to approve to-day. On page 5 of the report, the board refers to its earlier suggestion that mallee slashers be added to the list of tools for admission free of duty under by-law. That recommendation was nor adopted by the department, because the local price of the article was reduced. In the meantime, however, overseas manufacturers of mallee slashers also reduced the f.o.b. price of their article, in some instances by as much as 37 per cent. “While there has been a general reduction of the prices of tools from overseas, the greatest reductions have been in respect of types which are being manufactured in Australia. If this industry is to expand, and to give the primary producers the benefit of a reduced price, the Australian manufacturers must have an opportunity to increase their sales on the local market. In regard to mattocks, the following opinion is given on page 5 of the Tariff Board’s report: -
The c.i.f. prices of 4i-lb. mattocks imported from the United Kingdom were 33s. 3d. per dozen for one grade, and 24s. 3d. per dozen for a. cheaper grade. The local manufacturers’ selling price was 43s. lid. per dozen. At that time, the rate, of exchange was 30 per cent, and primage duty 10 per cent. In addition to these charges a duty of 34 per cent, would have been required as protection against the higher grade of British mattock,, and a duty of (10 per cent, in the case of the lower-grade article.
The Tariff Board proceeded to make the following comparison of the prices of these tools in 1931 and June, 1934, when it was making its inquiries: -
During the same period oversea prices have shown a downward trend, and the landed costsof imported tools have been further reduced on account of the fall in the exchange rate, Australia on London, to 25* per cent, by thereduction in primage from 10 per cent, to 5 per cent., and by the exchange adjustment, on United Kingdom preferential duties.
No definite information is available as to. the yearly Australian requirements of the various tools, but witnesses representing local manufacturers estimated that the valueswould be approximately as follows: -
Ficks and mattocks - between £10,000 and £18,000.
Hooks and slashers - between £20.000 and. £25,000.
On the basis of these estimates the local output of picks and mattocks represents about one-half of the total demand for these tools. However, much of the business obtained would appear to be due to a preference extended by government and municipal bodies, which at present are heavy purchasers of tools for unemployment relief work. Australian production of hooks and slashers represents a very small proportion, approximately 15 per cent., of the stated requirements. An obvious difficulty in the manufacture of hooks is the wide variety of types and sizes required for the various uses. This renders more costly the production of a particular type, and places local manufacturers at a disadvantage with overseas competitors who have access to many markets, and are thus able to produce in larger quantities. Moreover, users of hooks and slashers are mostly men on the land, whose individual requirements are small, and who apparently prefer to buy well-tried brands.
The only way in which a reduction of imported implements can take place is by closely watching this industry and admitting hooks and slashers, under by-law, free of duty where the manufacture of them would be entirely uneconomic. I urge honorable senators to retain the present duty. The Tariff Board itself saw fit to review an earlier recommendation, because it considered that an increase of turnover would ultimately cause a reduction of prices.
– Every honorable senator knows full well that keen-edged tools are not, and have never been, satisfactorily manufactured in Australia.
– That is not correct.
– Very few axes are manufactured in this country; the keenest andbest ones are imported. Scythes, carpenters’ tools, and hooks, of which the hooks referred to in this item form part, are not manufactured in the Commonwealth, and the Minister’s figures show definitely and conclusively that they are not being satisfactorily made in Australia, and will not be for many years. Only 15 per cent. of the Australian requirements of hooks and slashers is supplied by local manufacturers; but I venture to state that the majority of skilful workmen who use axes or hooks would prefer to pay substantially more for a better class of imported tool. The art of the manufacture of keen-edged tools has been handed down from generation to generation in England and America. An axe handle made from hickory in America costs 3s. 6d. or 4s., and I consider that no Australian axeman, however patriotic he may be, would purchase a locally-made handle, because it would ‘be unsuitable for his requirements.
– I desire to refute the statement by Senator Herbert Hays that, in Australia, no satisfactory keen-edged tools have been made. I happen to be associated with an industry which uses a large number of edged tools, and I say quite frankly that 90 per cent. of them, including axes, which are used exclusively in the forests, are Australian made.
– Oh !
SenatorHARDY. - Perhaps a different set of conditions applies in Tasmania, but the honorable senator stated that he considered that few Australian axemen would use keen-edged tools made in Australia. From my practical experience, I know that such is not the case in New South Wales.
SenatorUPPILL (South Australia) [3.0]. - The Leader of the Opposition (Senator Collings) and Senator Leckie were incorrect when they gave the impression that slashers are not used on wheat farms, because practically every wheat-grower in the Mallee districts uses these tools for removing the second growth of shoots after land has first been cleared of heavy timber. It may be said that the amount saved in using imported tools would be small, but as clearing is usually carried out by piecework, the price paid for these tools is an important factor to the men engaged on the work. I support the request.
.- I did not mean to convey the impression that wheat-farmers do not. use slashers, because some of them may possess quite a number ; but on the large wheat-growing areas in New South Wales, Victoria and South Australia slashers are not used extensively, because the land has been cleared for many years. This industry, which was established on the duties imposed in 1929, has been in existence for only five years, and as it is producing a fair per centage of Australia’s requirements it should be afforded adequate protection. The slashers made in Australia are of good quality, and since they have been manufactured locally the price of the imported article has been reduced by 33 per cent, to 50 per cent.
.- Surely Senator Leckie does not suggest that the committee should be guided by the duties imposed under the 1929 tariff?
– I did not suggest that.
– I refuse to be influenced in the slightest by the duties imposed by resolution in that year, because they were not submitted to the Tariff Board for investigation and report, and were never ratified by Parliament. The duties in force prior to the increases made in 1929 should be the basis upon which to consider the rates in the schedule.
– I am surprised that Senator Herbert Hays should say that sharpedged tools cannot be manufactured satisfactorily in Australia. The “Kelly” axe, an American product, is used extensively in Australia, as also is the “ Collins “ axe. The “ Plumb “ axe, made in Sydney, is superior in quality to some of the best American axes. Hooks and slashers, which must have keen edges, are of such good quality that they are handed down from one generation to another. ‘The slight saving that might be made is negligible.
– In advocating a lower duty on picks, mattocks, hooks and slashers, Senator Herbert Hays contended that keen-edged tools cannot be manufactured satisfactorily in Australia. When a tariff schedule was before this chamber nearly three years ago, there was a lengthy debate on axe handles, and some honorable senator suggested that Australian axe handles were inferior to those manufactured in America.
– The honorable senator must confine his remarks to the item before the committee.
– I am showing that Australian axe handles are equal, if not superior, to imported hickory handles. The statement that hooks and slashers cannot be manufactured satisfactorily in Australia is unwarranted, and Australian wood is as good as any that is imported.
Question - That the request (Senator Herbert Hays) be agreed to - put. The committee divided. (The Temporary Chairman - Senator Badman.)
Majority . . . . 6
Question so resolved in the negative.
Item agreed to.
Item 221 (Mouse traps, rat traps, vermin traps).
– I ask the Minister for information on this item. Surely it will not be suggested that Australia is in such poor shape that its manufacturers cannot provide all the mouse, rat, and vermin traps required in this country?
– The importations of vermin traps for the last five years have been as follows : -
The proposed duty on mouse traps will effect increases, at the present rate of exchange, equivalent to 10 per cent., British preferential tariff, and 20 per cent, or1s. 10½d. per gross, general tariff, and that on rat traps is equivalent to 10 per cent., British preferential tariff, and 20 per cent, or 10s. per gross, general tariff. The rates on vermin traps, n.e.i., are unchanged.
– Why are vermin traps admitted free?
– They are essential for the destruction of such pests as wild dogs, foxes and rabbits. Mouse andrat traps are now manufactured in Australia, and native timber and locally-made wire are used. The industry is not a large one, but 25 workers, mainly juniors, are employed. The Tariff Board has reported that competition from Sweden has reduced the turnover of the local manufacturer, although the quality of the traps is admitted to be equal to that of any imported line. The board considers that the progressive reduction of the prices of Swedish traps makes it necessary to provide specific rates as alternative to the ad valorem duties in the general tariff. Marginal increases over the general tariff rates recommended by the board have been retained for treaty purposes. Locally-made traps are available at reasonable prices, and the proposed duties should ensure a reasonable and adequate protection.
Item agreed to.
Division 7. - Oils, Paints and Varnishes
Items 229 and 231 agreed to.
Item 232 (Varnishes, &c)
.- This industry, which has been established in Australia for many years, is one in which, as the result of our protection policy, overseas manufacturers, particularly British manufacturers, have been induced to establish factories in Australia. Some of our biggest paint and varnish works have been established by British firms who found that in order to capture a profitable share of the Australian market it would pay them to manufacture here and use Australian raw material and Australian workmen. I take it that this is one of the objects of our protection policy, which is not designed solely to enable local manufacturing to he built up from nothing, but also to induce manufacturers from Great Britain, who have had many years’ experience in particular trades, to establish works here with their own capital. As an indication of the importance of this industry, I point out that capital of over £2,000,000 is invested in it; it distributes in wages alone over £120,000 annually, and produces approximately 2,000,000 gallons of paints and varnishes, and 3,000 tons of white lead annually. The proposed reduction of the duty on this item is not very great, but it is sufficient to keep the industry wondering what is going to happen next. Although I shall not urge that the proposed duty be increased, or that the old duty be retained, I remind the Minister that duties can be reduced to a point at which local industries will find it unprofitable to carry on. It is essential that our tariff should always allow for the difference between wages and conditions operating in industries here and overseas.
– Is the honorable senator more concerned about . the manufacture of white lead or the manufacture of varnishes?
– I have in mind principally varnishes. I point out that the varnishes covered by this item are not the varnishes usually used on furniture or walls, but are used principally in other industries such as tin-plate printing and allied trades. The development of this industry in Australia has been very marked during the last five or six years. Previously . all our tin-plate varnishes were imported from America or Great Britain, but to-day two or three firms are established in Melbourne, and one, of which I am aware, in Sydney, and these are turning out products equal, and, in some cases, superior to any previously imported from overseas.
– Do those firms use Australian products?
– Over 70 per cent, of the raw materials used in this industry and the bases for white lead are of Australian origin.
– Do they not import certain classes of gums?
– Only a small proportion, most of them come from India and Africa. I emphasize that the varnishes made in Australia to-day are quite satisfactory, in fact local manufacturers have developed varnishes more suitable for Australian conditions than are produced overseas. I again warn the Minister that the protection of an industry can be reduced to a dangerous level. This is one of the biggest and most rapidlyexpanding industries in Australia; it is efficient in every possible way, and every honorable senator who has visited such works as those of Major Brothers, Berger, and Taubman, realize its importance.
Item agreed to.
Item 233 agreed to.
Division 8 - Earthenware, Cement, China, Glass, and Stone.
By omitting the whole of sub-item (a) and inserting in its stead the following sub-item: - “(a) Portland Cement, per cwt., British, free: intermediate,1s.; general. 1s. 4½d.;
And inrespect of sub-item (a) -
For each £1 by which the equivalent in Australian cur rency of £100 sterling is less than £125 at the date of exportation -
An additional duty of, per cwt., British, . 36d. ; intermediate, . 36d. ; general,. 36d.;
And on and after 2nd. April, 1936 -
.. - I move -
That the House of Representatives be requested to make the duties - “per cwt., British, free; intermediate,1s.; general,1s. 4½d.
And in respect of sub-item (a) -
For each £1 by which the equivalent in. Australian currency of £100 sterling is less than £125 at the date of exportation -
An additional duty of per cwt., British, . 36d.; intermediate, . 36d.; general, . 36d.”
Honorable senators will observe from the explanatory memorandum that; - (1.) The duties under the Customs Tariffs 1933, were1s. per cwt., less exchange adjustment (British preferential tariff), 1s. 6d. per cwt. (general tariff). (2.) The Government introduced proposals in another place for reduction in duties to free (British preferential tariff),1s. per cwt. (intermediate tariff) and1s. 4½d. per cwt. (general tariff), based on the recommendation of the Tariff Board. (3.) The Government’s proposals were rejected and compromise rates of 6d. per cwt., less exchange adjustment (British preferential tariff),1s. 3d. per cwt. (intermediate tariff), and1s. 6d. per cwt. (general tariff) were forced upon the Government in another place.
I shall proceed to offer sound reasons in support of the request I have just moved, the substance of which is that the Government’s proposals introduced in November last be reverted to. It is granted that the cement industry is a large employer of labour and pays large sums in wages. The Tariff Board stated that, on the basis of the productionof 400,000 tons of cement, employment is given to 2,000 hands in the quarrying and transport of raw materials, and in the manufacture of cement, involving a wage cost of £350,000 per annum. In addition, indirect employment is given in the mining and transporting of coal and in the manufacture of paper hags.
Local manufacturers have supplied more than 95 per cent, of Australian requirements during the last ten years. Imports have been relatively small, and in the last few years have included coloured, white and quick-setting cements of types not made in Australia. The stimulus given to cement production and the protection given to the local industry have led to the installation of plant far beyond the needs of Australia. The rated capacity of the plants is over 1,300,000 tons per annum, whereas in the peak year of production the total output was approximately 750,000 tons. The output for 1933-34 was 410,000 tons.
The board found that duties at the rates operating under the Customs Tariffs 1933 prevented external competition, and were being used to cover excess profit-taking in an industry which is over-capitalized, in which free internal competition does not exist, and in which high costs of production are an inevitable result of the distribution of output between too many plants. Costs submitted to the board showed conclusively that, if free competition had existed between the different manufacturers, some of them could have shipped to other States and sold at prices below the level of prices in those States, and still haTe made a profit.
The value of the cement industry cannot be calculated solely in the terms of raw materials used and employment created. Price is an important factor. Other important activities, such as the building industry, use large quantities of cement. An unduly high price not only retards progress in these industries, but also restricts demand and tends to limit the amount of employment in the cement industry.
At the time of the board’s first inquiry, local manufacturers were selling cement at the following prices: - Queensland, £4 17s. 5d. a ton; New South “Wales, £4 10s. lid. a ton; Victoria, ‘£4 6s. 8d. a ton; South Australia, £4 19s. 7d. a ton; Tasmania,, £4 15s. 6d. a ton.
These prices have since been reduced, and in March of this year were as follows: - Queensland, £4 12s. 9d. a ton; New South Wales, £4 5s. lid. .a ton; Victoria, £4 ls. 9d. a ton; South Australia, £4 2s. 4d. a ton ; Tasmania, £4 8s. a ton.
After an exhaustive investigation of costs, which were liberally dealt with, the Tariff ‘Board came to the conclusion that the maximum reasonable selling prices, free on rail metropolitan area,, should be - Queensland, £3 3s. lOd. a ton ; New South Wales, £3 16s. 5d. a ton;. Victoria, £3 8s. 7d. a ton; South Australia, £3 8s. 2d. a ton; Tasmania, £3 10s. lOd. a ton. The prices now obtaining for locally-made cement are higher than what the board considered to be maximum reasonable selling prices by - Queensland, £1 8s. lid. a ton; New South Wales, 9s. 6d. a ton; Victoria, 13s. 2d. a ton; South Australia, 14s. 2d. a ton; and Tasmania, £1 2s. lOd. a ton. On the information submitted by the Tariff Board, there appears to be ample room for a reduction of selling prices.
At this point it is opportune to compare the local prices of cement with those ruling in other countries. On the first page of the Tariff Board’s supplementary report, the prices in Canada, the United Kingdom, and the United States of America are shown. The lowest Australian price at factory is 65 per cent, higher than the Canadian domestic price expressed in Australian currency, 40 per cent, higher than the United Kingdom domestic price on a similar basis, and 32 per cent, higher than the American domestic price. Taking the highest Australian price at factory, the percentage margins, by which the local prices are higher, are : As compared with Canada, 117 per cent.: United Kingdom, 83 per cent.; and the United States of America, 74 per cent. The disparity was much greater under the . prices ruling a year ago. This serves to emphasize the price disability under which Australian users of cement are labouring in comparison with users in other countries.
The manner in which the board assessed maximum reasonable prices is set out in the table appearing at the foot of page 8 of the original report, and I invite the attention of honorable senators to the comments appearing at the commencement of page 9 of the report relative to the various items of cost. The board appears to have been very liberal in its assessment of reasonable maximum costs. A case in point is the cost of limestone and clay, for which the figure of 7s. 6d. a ton has been adopted. In its independent inquiries as to costs of comparable quarry materials, the board ascertained that one municipal authority in Victoria obtains blue metal spalls from a quarry, situated about 5 miles from the point of delivery, at a delivered cost of 5s. 3d. for 1½ tons, roughly the quantity of material required to make a ton of cement. Moreover, blue metal is much harder to quarry than limestone, the sizes are smaller than the sizes of limestone ordinarily sent to crushers at cement works, and the material is hauled 5 miles by motor truck; yet the price of the spalls, including contractor’s profit, is only 5s. 3d. for 1½ tons. A further instance cited was hard screened ballast for the Victorian railways, which is delivered into tracks in the country at a price, including profit, of 5s. for 1½ tons.
The reasonable maximum cost of production at factory has been assessed by the Tariff Board at £2 6s. 5d. a ton in New South Wales and Tasmania, and £2 10s. 2d. in Victoria and South Australia. The liberality of the board’s assessment can be judged from figures which are given on page 8 of the original report with regard to the net cost of producing and marketing refined copper. The cost a ton of refined copper was £45. The grade of ore being treated necessitated the use of approximataely 30 tons of material, and the total cost a ton of ore was only 30s. The ore is mined, principally in underground workings, is subjected to two or three crushings, passed through classifiers, and then treated by the. flotation process. The cost of 30s. a ton of ore also includes the cost of treating the metallic content recovered by the flotation process, which involves filtering, smelting, casting the metal into anodes, and refinement. Costs of fuel, maintenance of a large plant, and transport system, as well as depreciation, are included in the total cost of 30s. a ton. Honorable senators will surely agree that the board’s figures of £2 6s. 5d. to £2 10s. 2d., as representing the maximum cost of manufacture of cement, are not unreasonable, having regard to the figure of 30s. a ton for copper ore.
Further support is lent to the board’s cost figures by the fact that in the last trading year the actual production costs of six factories, operating in three States, were below the board’s figures by from 6d. to 7s. a ton. As four of these factories were operating on an. output of less than half of their capacity, there could be no better proof that the board’s estimates did not set an impossible standard.
The Tariff Board has allowed 10s. a ton as a reasonable margin for profit. Subsequent to the publication of the original report, the industry arrived at the assumption that the margin of profit allowed by the board was gross profit, and included selling and administrative expenses and taxation. The board has made it clear, in the supplementary report, that the term “ profit “ includes taxation, but not selling and administrative expenses which are included under the heading, “ manufacturing “, for which an amount of 20s. a ton was allowed.
In its original report, the board pointed out that only one company made a disclosed profit of less than 10s. a ton, and stated that the need for a reduction of profit was evidenced by the high earnings in a period of restricted output when the rates of profit ranged from 6 per cent. to 32 per cent, per annum. In the year prior to the original inquiry the excess profit, that is the profit over the reasonable figure of 10s. a ton allowed by the board on the output of eight plants, amounted to approximately 12s. 6d. a ton, which, when applied to the output of all factories, represented approximately 200,000 in one year.
The excess profit figures brought out in the supplementary report are still more alarming. A summary of the results of ten factories during the last trading year shows that the excess profit earned, after allowing the reasonable profit of 10s. a ton, including income tax, and 6s. a ton for depreciation, was 14s.11d. a ton. This summary is all the more striking by reason of the fact that the excess profit of 14s.11d. a ton is very close to the effective British preferential tariff rate of 15s. 6d. a ton imposed during the year in which the profits were earned. Furthermore, the excess profit was earned by plants working, in the aggregate, at less than half of their capacity.
In its latest “report, the Tariff Board has accepted the lowest quotation for British cement of 51s. 6d. a ton, c.i.f., for the purpose of showing the competitive position, and estimates that the landed duty free cost on that basis will be - Queensland, £3 Ils. Sd. a ton ; New South Wales, £3 10s. 3d. a ton ; Victoria, £3 lis. a ton; South Australia, £3 lis. lOd. a ton, and Tasmania, £3 lis. 2d. a ton.
The Customs Department has examined invoices for importations of British cement during the last two or three months, and has found that the lowest actual landed costs on wharf - duty free except for primage - were considerably higher than the board’s estimate. The actual landed costs of these shipments were - Queensland, £3 16s. 3d. a ton; New South Wales, £3 14s. 7d. a ton; Victoria, £3 16s. lOd. a ton; South Australia, £3 16s. 4d. a ton; Tasmania, £3 14s. 5d. a ton. These figures compare Wi tb the board’s reasonable maximum selling prices as follows: - Queensland, 12s. 5d. a ton higher; New South Wales, ls. 8d. a ton lower; Victoria, 8s. 3d. a ton higher; South Australia, 8s. 2d. a ton higher; Tasmania, 3s. 7d. a ton higher. Thus it will be seen that, except in the case of New South Wales, imported cement could not be landed in competition with Australian cement if the local product were sold at reasonable prices.
– The honorable senator has exhausted his time.
[3.43]. - We have listened to a very interesting disquisition from my colleague on the cement duties. As it is essential that all the facts should be given to the committee at the outset of this discussion, and as I have complied with the Standing Orders by intervening at this stage, I suggest that the PostmasterGeneral (Senator A. J. Mclachlan) be permitted to continue his speech.
– I am obliged to my leader for giving me the opportunity to continue.
As regards New South Wales, the board stated, in its supplementary report, that it is satisfied that efficiently conducted factories could meet the competition of free importations landed at fi cost as low as £3 10s. 3d. a ton, free on wharf, Sydney - 4s. 4d. a ton lower than the lowest actual landed cost to dateand still make a higher margin of profit than the 10s. a ton, which the board considers reasonable. The evidence tendered by the industry in connexion with last year’s trading confirms this view. Fourfactories that sold 260,000 tons in New South Wales during the trading year, would, after providing 6s. a ton for depreciation, have made an average profit of 9s. a ton if all their product had been sold at Sydney at £3 10s. 3d. a ton free on rail. This could have been achieved by the four companies operating in the aggregate to less than 40 per cent, of their capacity. Figures of individual manufacturers, which, for obvious reasons cannot be disclosed, give much stronger support to the board’s contention.
In its supplementary report the board pointed out that two new companies are being formed to manufacture cement in this country - one in New South Wales, and the other in Western Australia. Whilst the Government views with some apprehension the construction of further works for the manufacture of a commodity, the demand for which can more than fully be catered for with existing plant, the fact remains that these new companies are entering the field in the full knowledge that the duties on cement have been reduced. Inquiries instituted in Western Australia, in February last, indicated that the formation of the new company in that State was proceeded with in the full knowledge of the abolition of the duty on British cement, as it was definitely held that the company would be able to produce cement at less cost than other companies now operating in Australia.
In its two reports, the Tariff Board has proved that the cement industry, in charging the excessive prices which the previous protection permitted, has not only traded profitably, but has also caused unnecessarily high costs to users, particularly the building industry which is a far greater employer of labour than is the cement industry. It can reasonably be claimed that these higher prices have retarded natural progress in the building industry and others. In retarding this progress the cement-makers must stand charged with having prevented employment in dependent industry. Moreover, the capital cost of homes, factories, farm requirements and Government and municipal works, has been increased by the amount by which the actual price exceeds a reasonable price. During the life of those buildings or works, the community has to pay that extra cost.
This industry, which is monopolistic in character, has earned high profits with cement plants working at less than half capacity. If production increased in relation to capacity, and the protection provided by the Customs Tariff 1933 were allowed to continue, the excessive profits which would be earned by the cement industry can well be imagined.
I have proved, by the figures I have cited, that the free admission of cement from the United Kingdom, while not preventing local manufacturers from making reasonable profits, will ensure fair prices to consumers, and accordingly, I ask the committee to support the request. It appears to me - and I say it more in sorrow than in criticism - that this industry has drifted into an impossible position economically. The addition of another uneconomic unit will increase the already great difficulties. The industry will be menaced, not so much by competition from overseas as by internal competition. In the interests of Australia, it is wrong to maintain an industry with a capacity too great for local requirements.
– And, therefore, the Minister suggests reducing the capacity?
– The only corrective that can be applied economically is an increased output of the local factories. During my second-reading speech, Senator Arkins asked why a certain cement-making factory in Tasmania was built. The explanation is that the British firm which had the contract for the construction of the Sydney
Harbour bridge decided to make its own cement rather than pay the prices asked by Australian manufacturers.
– The Minister is giving his case away.
– The Goliath company was in existence before Dorman Long and Company came to Australia.
– That company created another unit, thereby adding to the already existing difficulties. Had prices been reduced, there would have been uses for cement other than those which exist in Australia to-day.
– Local competition is a good corrective of excessive prices.
Senator A. J. McLACHLAN.The corrective will be the local competition. It will not result from anything done under this tariff proposal. The Tariff Board has shown the extent to which prices can be reduced, and it is a pity that this natural industry has not been organized on a more satisfactory footing.
– The committee is indebted to the Postmaster-General (Senator A. J. McLachlan) for the figures which he has placed before it, but, in my opinion, the Minister gave away the Government’s case. His speech contained two statements of particular interest to the Opposition. First, he said that there are too many cement-making plants in Australia, and that they are over-capitalized, and secondly, he referred to the huge profits made by Australian makers. The difficulties mentioned by the Minister are inseparable from the form of government of which he is a part, and the social order of which he is a champion. Duplication of plant, and over-capitalization of industry, represent a considerable waste of energy ; but they are inevitable under the capitalistic order which exists in the world to-day. .
– Why does the honorable senator continue to support the evil?
– The honorable senator will have an opportunity later to tell the Senate all that he knows of this subject. It is idle for a champion of the present social order to claim that in the cement industry alone there is overcapitalization and duplication of plant. In the street in which I live, in the capital city of Queensland, about 24 bakers’ carts deliver bread to 24 houses. In my opinion, that is a criminal waste of energy. Yet we are asked to believe that the cement industry is an outstanding example of how not to do things. It is cited as an instance of an industry possessing more plant than it requires. At the peak period of production, Australian factories produced 750,000 tons of cement a year. The rated capacity of the plants is over 1,300,000 tons of cement annually. The Government has invested the cement industry with an importance to which I do not believe it is entitled. Instead of honorable senators being able to discuss the duties on cement calmly and dispassionately, the turmoil of the last two or three weeks has elevated this subject to one of major national, even international, importance. Indeed, so important has it become that the Government of the United Kingdom has been moved to protest to the Commonwealth Government against the proposal to reduce duties on cement. The British Government has deemed it necessary to enter a protest against the action of the elected representatives of the people in the other chamber of this Parliament! I am somewhat sceptical regarding the protest. I do not doubt that a protest has been received ; but I wonder whether it might not have been inspired from this end, in order to run the rule over this Parliament. I shall express my view regarding that protest by registering’ an emphatic vote against any lowering of the duties on cement.
I am not in a position to present to the committee the financial aspect of this question as it affects any cement-making industry outside Queensland. I remember well when the Queensland factory was established. My remarks cannot be suspect as special pleading by one who owns shares in the company. In this respect, as in others, the Opposition has clean hands, and a clear mind, for its members do not own shares in any cement-making concern.
– A member may be a. shareholder, and yet have clean hands.
– I know numbers ofpeople who invested money in the Queensland company. For years they did not receive any dividend; indeed, only lately has the company been able to make any return to its shareholders.
– Is that why its shares are at a premium?
– I anticipate that Senator Hardy will tell us again that, in opposing lower duties on cement, the Labour party is supporting an overfed monopoly, the bloated capitalist, the rich profiteer, and the dastardly exploiter. I retaliate by saying that the Government is insincere when it complains of the profits made by Australian manufacturers of cement. If they are making excessive profits, the Government has an effective remedy in its own hands. The Government does not need to tinker with the tariff policy of the Commonwealth in order to prevent any company from making excessive profits. The course which lies open to it is to compel the companies by taxation to disgorge those extravagant profits into the Commonwealth exchequer.
– The Government will not do that, because it is afraid of hurting its supporters.
– These bloated capitalists, exploiters, and predatory vested interests supply the Government’s election funds and enable it to broadcast its propaganda throughout the Commonwealth. According to the speech of the Minister in charge of the bill (Senator A. J. McLachlan) the remedy for excessive profits, which, in this case, means unduly high prices for cement in Australia, is to permit the admission free of duty of cement manufactured in Great Britain.
– Does the honorable senator believe that there should be excessive profits
– I assure Senator Hardy that the Opposition is familiar with the passage about Satan reproving sin. I have a newspaper article headed “Huge Cement Profits; British Prosperity “, in which I find that the cement manufacturers of the United Kingdom, whom the benevolent Tariff Board, and still more benevolent Government which patronizes it, recommends should be allowed to send cement to Australia free of duty, make enormous profits. The Government;, having established the Tariff Board, is now obliged to patronize it because the creature has become greater than its creator. The figures which I shall cite will show that the British cement manufacturers, on whose behalf the Government has gone on its knees to request Parliament to remove the duty from imported cement in order to prevent Australian manufacturers from making extortionate profits, are far from being impoverished. The Alpha Cement Company, in 1933, earned a profit of 10.1 per cent, and paid a dividend of 4 per cent.; in 1934, the respective figures were 6.3 per- cent, and 5 per cent.; and in 1935, 13.8 per cent, and 10 per cent. The Associated Portland Company, in 1933, earned a profit of 7.1 per cent, and paid a dividend of 7 per cent. ; in 1934, the respective figures were 6.3 per cent, and 5 per cent. ; and in 1935, 13.8 per cent, and 10 per cent. Those profits are not so bad, but the British Portland Company has set Australian manufacturers such an example that they will have to put on their running shoes in order to catch up with it. This company made the following profits
– Surely these are not the skinny fellows that the Government desires to assist !
– It is on behalf of these British manufacturers that the Government desires to emasculate the Australian industry. The profits of the Tunnel Portland Cement Company are equally illuminating -
The article continued -
In addition to these improvements in annual profits Eastwoods Lewes Cement recently raised its interim from 2 per cent, to 4 per cent, and Ketton from 24 per cent, to 3 per cent. Perhaps the most significant declaration, however, is the doubling of the Associated Portland Cement dividend.
These figures demonstrate how unworthy are the crocodile tears shed by the Go vernment about the profits made by Australian manufacturers of cement.
– Is any duty placed on cement admitted to Great Britain?
– Of course there is. Is not the honorable senator aware that Great Britain has become a protectionist country? I believe that I am correct in saying that the cement makers of the United Kingdom offered no evi-dance before the Tariff Board; but in spite of this omission, the British Government has been moved, because of the action taken, in the House of Representatives in restoring the duty on imported cement to 6d. per cwt., to send a diplomatic protest to the Commonwealth Government. We have been told that the action of the House of Representatives in imposing a duty of 6d. per hundredweight constitutes a breach of the Ottawa agreement. Previously the . duty on British cement was ls. per hundredweight, and we are now requested to admit it free of duty. The ‘ House of Representatives adopted a compromise of 6d. per hundredweight, which seems to me to be eminently fair, but we are told that this action is dishonorable because it violates the Ottawa agreement. I do not propose to elaborate this matter; I shall content myself with making one or two definite pronouncements :. First, when the Ottawa agreement was being ratified by this Parliament, the Opposition definitely declared its attitude towards it. In the House of Representatives, the then Leader of the Opposition (Mr. Scullin), stated unequivocally to the public and to those who would participate in the benefits or disadvantages of the Ottawa agreement, that if the Labour party were returned to power, the treaty would be reviewed for the purpose of terminating those features of it which inflicted hardship upon Australian industry.
– The Labour party did not receive much support for that pronouncement
– That is only the story of yesterday; to-morrow has to come. The Opposition believes that this continual hacking into Australian industry by the Government will provide one of the most effective levers for its removal from the Treasury benches.
I could quote at length from the opinions of eminent counsel, who have been asked to express their views upon the sanctity of the Ottawa agreement, and whether the action of the House of Representatives is a violation of it. Honorable senators are familiar with the statements of those legal gentlemen. But the Opposition recognizes no question of morality or immorality, honour or dishonour in respect of any agreement of which we do not approve.
– The honorable senator’s time has expired.
Senator HARDY (New South Wales) 1 4.9]. - It is indeed refreshing to hear the Leader of the Opposition (Senator Collings)’ extolling two great evils, in regard to which he has repeatedly condemned the parties that support the Government. I refer to combines and excessive profits. On many occasions we have listened most attentively to his descriptions of the two greatest evils in our economic system. It will be generally agreed that he has put his case in the past most forcibly in saying that the two things against which the Labour party set its face are first, excessive profits and the exploitation by manufacturers of the poor unfortunate worker–
– I never mentioned that.
– And, secondly, those great opuses, the combines, which deprive the worker of his rightful due. Perhaps I have not used the honorable senator’s exact phraseology, but he has conveyed that impression in at least a dozen speeches reported in Mansard. In the report of the Tariff Board three main issues are considered. Two of them deal with those evils, excessive profits and combines, which ure so vigorously condemned by the Leader of the Opposition. Three broad issues are involved in this item and the Tariff Board has placed on record, after, not one, but two investigations, at which it had the fullest opportunity of sifting evidence, that the profits made by the manufacturers as a whole were unreasonably high. In spite of that finding, the Leader of the Opposition, who is disposed to combat excessive profits at every opportunity, now endeavours to maintain the duties which have enabled them to make the excessive profits condemned by the Tariff Board.
– The duty has been reduced from ls. to 6d. per hundredweight.
– When dealing broadly with the matter of profits we find that the Australian cement companies during the most unfavorable five years, economically, that Australia has ever experienced, made a total profit of £2,250,000. If that profit has been made during a “ boom “ period perhaps I could agree in part with the views of the Leader of the Opposition; but I emphasize that it was made when the average industry in Australia was struggling for its very existence. Because these companies were members of a combine they were able to extract from the public a succession of high prices in order to make a profit of £2,250,000. Is it not the policy of the Leader of the Opposition to protect the worker from excessive profits? When referring to cement in my second-reading speech, I asked why the Labour party had included this principle in its policy of “ New Protection “ ; the Leader of the Opposition did not hesitate to reply that the intention was to ensure that the worker should secure a reasonable share of the benefit which the manufacturer enjoyed through the incidence of the high tariff.
– The “ New Protection “ was to provide also for reasonable prices to the consumer.
– That is so. The investigations of the Tariff Board and, I believe, of the Leader of the Opposition, have demonstrated that 2,000 men are employed in the manufacture of cement in Australia. If honorable senators divide that number into the total profits of £2,250,000 which were returned during a period of five years, they will find that the cement manufacturers made out of each worker employed in the industry £225 per annum.
– What did the wool kings make out of their employees?
– The Leader of the Opposition advocated that the manufac- *turers of cement should be allowed to proceed as formerly. Does he consider that the figures I have quoted reflect a fair distribution of profits to organized labour? Over and above the cost of production, the cement manufacturers made a profit of £225 a man for each of those years.
– Those figures are childish.
– I suggest that if the Leader of the Opposition takes a pencil and paper and works out the figures for himself he will reach the same conclusion as I have. If there was one aspect which I expected the Leader of the Opposition to bring up for consideration on this item, it was the matter of the excessive profits made by the cement companies in the United Kingdom. The figures quoted by him are perfectly correct; I have before me the same extract as he quoted. Although the Tunnel Portland Cement Company made a profit last year of 20 per cent., I ask honorable senators to consider at what price that cement was sold in Great Britain. Was it £4 10s. a ton, the price charged to Australian consumers by local manufacturers? No; the domestic price in Great Britain was only £1 10s. Yet on the domestic price of 30s. a ton - it is only reasonable to assume that the export price would be lower - they have had no difficulty in making profits ranging from 20 per cent, to 30 per cent. Honorable senators should not overlook the tremendous discrepancy which exists between the price of British cement and that of the Australian product. I know that the Leader of the Opposition will refer to the increased labour costs in Australia, and the smaller production of Australian plants; but, if these factors are considered separately, as they have been by the Tariff Board, the onus is upon the Opposition to show why there should be such a tremendous discrepancy between the British and Australian prices. The average prices of cement in the Australian capital cities are as follows: - Brisbane, £4 lis. 9d.; Sydney, £4 10s. lid.; Melbourne, £4 6s. 8d. ; Adelaide, £4 14s. 7d.; Perth, £4 7s. 9d.; and Hobart, £4 15s. 6d. a ton. If British cement companies can make the enormous profits mentioned on a selling price 0 of 30s. a ton, why do the Australian cement manufacturers require 90s. a ton?
– Where did the honorable senator obtain the selling price of 30s. a ton ?
– Prom the Economist. If honorable senators in opposition expect to receive support from impartial honorable senators, they will have to explain the reasons for this discrepancy.
If we review the situation impartially, we must conclude that the industry i3 heavily over-capitalized. We have then to determine whether we should support such an over-capitalization with the consequent penalty which it inflicts upon the users of cement. The cement companies form one of the greatest combines operating in Australia; otherwise there would be greater competition in prices. I find that from 1925 to 1934 the price of cement has been steadily maintained. The chairman of directors of the Kandos Cement Company, in presenting his annual report to the shareholders, is reported to have said -
The cement industry is in a worse position in New South Wales than in any other State. There are far too many companies operating in that State, and any one of the five large companies in New South Wales could supply all current requirements.
That admission was made by the chairman of directors of the leading company in the Commonwealth. He continued -
Since 1921 the capital invested in cement companies has been increased by over 500 per cent., while productive capacity ha* increased from 150,000 tons in 1921 to 579,000 tons in 1930. To make matters worse it i? understood that it is proposed to float a new company; a step which would make the industry very much overdeveloped.
The paid-up capital of these companies on the 30th November, 1934, was estimated at £4,341,799, and the disclosed reserves £761,565, so that the aggregate capital employed was approximately £5,000,000. Did this capital produce £5,000,000 worth of cement? It did not. The production was valued at about only one-third of the total capital employed in the industry, but the profits of the companies operating as a combine amounted in five years to £2,250,000. These profits should be considered in conjunction with the fact that British manufacturers are selling their product at 30s. a ton, and making large profits. In these circumstances, it is impossible to substantiate the claim that a reduction ofdutywill have a serious effect upon the Australian cement-making industry.
– Some honorable senators seem to be under the impression that members of the Opposition support monopolies which are making large profits at the expense of the workers and the community generally. I remind Senator Hardy that profit-making, which is due to the economic system under which we are living, is not confined to cement manufacturers.
– Not excessive profits.
– Doubtless, honorable senators opposite have shares in companies, some of which are making excessive profits. At present there is antagonism between certain sections of the industry. Manufacturers of concrete pipes are competing with those producing earthenware pipes, and have even asked the cement manufacturers for rebates to enable them to compete more successfully. The Leader of the Opposition (Senator Collings) has mentioned that the members of his party are not financially interested in these companies. That is somewhat unfortunate; I should not be ashamed to admit that I had a few thousand shares in the Hume Pipe Company, an Australian cement company, or even in an English organization engaged in the production of cement. I would not condemn an honorable senator who fought for the retention of the duty, even if he were the sole owner of a cement-making concern; I would applaud him for the fight he was putting up in his own interests. Unlike honorable senators opposite, who are interested in timber, glass and other products, the members of the Opposition can study this subject in an unbiased way.I remind Senator Hardy, who seems to be somewhat perturbed because excessive profits have been made by certain Australian companies, that only a. few days ago Senator Sampson mentioned the losses made by one of these companies. It would be better if honorable senators, such as Senator Hardy, who speak of the excessive profits made by the cement companies, mentioned also the losses incurred.
– Can the honorable senator do so?
– Senater Sampson mentioned the losses incurred by one company, and the Leader of the Opposition gave the amount which has been expended on the industry. If these companies are making excessive profits, the Government should have exercised its power under the Tariff Board Act of 1921, section 15 of which reads - (1.) The Minister shall refer to the board for inquiry and report the following matters: -
any complaint that a manufacturer is taking undue advantage of the protection offorded him by the tariff, and in particular in regard to his -
Has there been a full inquiry in regard to this matter? Has the Government received such a report from the board? We believe that the board should furnish a. full report. We are not here merely to uphold the interests of companies. If a report has been made - and I am open to correction on this point - then, of course, action could be taken. Subsection 3 reads -
If the board finds on inquiry that any complaint referred to it under paragraph (ft) of sub-section (1) of this section is justified, it may recommend -
that the amount of duty payable on the goods the subject of the complaint be reduced or abolished; or
that such other action as the board thinks desirable be taken, but shall, before it makes any such recommendation, consider carefully the conditions obtaining in the industry as a whole.
If the charges of profiteering against cement companies constitute prima facie evidence that they are making undue profits, then it. is the duty of this Government to see that a thorough inquiry is made into the industry under the provisions which I have just quoted.
– Does the honorable senator think that those companies have made high profits, or not?
– I am not pronouncing judgment at the moment. I emphasize that members of the Opposition do not uphold exploitation of the workers in any form. As a matter of fact, we represent a party which hopes, through the efficient organization of industry, that there will be no exploitation, but that industry will be carried on for the welfare of the community generally. “We do not support profiteering by companies, whether in respect of timber, cement, or any other commodity. The Minister has told us of excessive exploitation on the part of cement companies and said that they are overcapitalized. My leader replied that overcapitalization is general in industry. If we were a wise people, we would ensure that the factories built up by the workers would be used- for the benefit of the community as a whole. There is no doubt that, if the community were run economically - -that is, if the best were got out of industry - every cement works in Australia to-day would be operating at full capacity. “We know that we are using an article in the construction of roads which is not the best for this purpose. A few years ago I listened to a speech by the president of the Automobile Association of America at New Farm, Brisbane, in which he pointed out that, in building bitumen roads, and building these too narrow, we are repeating America’s mistake. Suppose, for instance, that we commenced to build roads of cement.
– That should be done.
– How could we manage to do so with cement costing £4 a ton ?
Sen ato r BROWN. - If all our cement works were producing at their full capacity, prices naturally could be reduced. Members of the Opposition always advocate that industry should be utilized to the fullest. Over and over again I have said that no good will be accomplished by dividing our markets for base commodities; in this instance, we are dividing our market between British and Australian cement, which can be produced here in abundance. Honorable senators who support such a policy are following a false track. When we are wise in our generation we will not be arguing about dividing our market, which is limited because of our stupid economic system, but will be utilizing to the full our machinery for the production of the greatest quantity of the articles we need. I have laboured this point repeatedly; we shall not solve the problem of over-capitalization and excessive charges by admitting cement free from the Old Country, thus enabling British manufacturers to compete successfully with factories already established in this country. That is a foolish and stupid idea.
– Do I understand the honorable senator to say that we should not build bitumen surfaced roads?
– I was quoting from a speech by the President of the Automobile Association of America.
– Many authorities disagree with that view.
– A great many authorities agree that experience over a long period has shown cement roads to be cheaper and more satisfactory.
– The honorable senator has exhausted his time.
– At this juncture, I desire to clear away certain misunderstandings which exist in the minds of members of the Opposition. Senator Collings said that excessive profitmaking by cement companies should be dealt with by means of taxation, and Senator Brown has suggested that if the facts are as found by the Tariff Board, ah inquiry of a punitive character should be embarked upon by the board under section 15 of the act. The latter suggestion constitutes an attempt by the Labour party to throw up a smoke screen in order to enable its supporters to extricate themselves from the predicament in which they find themselves. The Tariff Board act expresses clearly the duties of the Minister. Honorable senators will recall that, in the course of my second-reading speech, I approved of the policy laid down by Mr. Scullin in 1931, in which he indicated that the Tariff Board was the proper authority to employ to inquire into these matters. To-day, honorable senators opposite, suggest - and this is a subtlety of their opposition to the Government - that because a Tariff Board inquiry has been held under one section of the act, and has found certain things in regard to this industry which we are not attempting to remedy by still allowing them the benefit of the exchange equivalent of 9d. per cwt. on cement, we should technically refer the matter to the board under section 15 1 h, for a punitive inquiry which can be made only after the Minister has received complaints of the nature specified in the act. An inquiry has been made under the provisions of paragraph d which reads -
The board heard evidence on two occasions, and on this arrived at its findings. Yet the honorable senator seeks to escape those findings on the empty technicality that the inquiry should have been held under the provisions of paragraph h. In such circumstances I should imagine that those interested in the cement industry would say: “Save us from our friends.” Paragraph h reads -
Any complaint that a manufacturer is taking undue advantage of the protection afforded him by the tariff, and in particular in regard to his -
The Minister has received such a report together with the recommendations of the Tariff Board. Does Senator Brown suggest that because no complaint had previously been made, the Minister could not refer this matter to the board and that the complaint having now been made the Minister should ask the board to conduct an inquiry under paragraph h? I ask the honorable senator what distinction can be drawn between the findings arrived at by the board on the inquiry already held and any inquiry which it might make. Under paragraph h, I emphasize that Mr. Scullin, in 1930, held the view that the Tariff Board, irrespective of how it had come into existence, was the proper authority to employ for inquiries of this nature. I admit that Mr. Scullin, on that occasion, made specific reference to section8 of the act; but what does that matter? We have the facts and findings of the board based on inquiries which it has already held into this industry. The provisions under which those inquiries were held do not inflict punishment on any one.
– That is a lawyer’s view.
– This reasoning rests on a solid foundation of fact. Honorable senators opposite endeavour to escape from the findings of the board by saying that they were arrived at in pursuance of paragraph d, whereas they should have been arrived at in pursuance of paragraph h. What does it matter under which section of the act these findings were arrived at ? A full inquiry was held, all interested were heard, and the board’s findings are available for every honorable senator to read.
. -I listened; carefully to all that the Postmaster-General (Senator A. J. McLachlan) had to say and also to the remarks of other honorable senators who preceded me, and I am amazed at the statement that cement companies of Australia have made inordinate profits - so great as to be altogether outside the ordinary range of profit. Statements of that nature are, of course, ridiculous. In some years, nearly all businesses make enhanced profits, but one cannot say that their average profits are excessive. All ‘that Senator Hardy said about the cement industry could have been applied to almost any business, and particularly the textile and agricultural implement industries. Of nearly every industry, it is possible to say that there are too many individual competitors. No one can doubt that there are too many individual competitors engaged in the manufacture of bread in Australia. I am not contending that the existing conditions in the cement industry are ideal. It is difficult to obtain ideal conditions in any business. No doubt it would be ideal for the time being if the number of cement companies could be limited to the number required to supply all our present needs; but as Australia progresses and its population grows, thus requiring an expansion of the building and other industries, the manufacture of cement should increase pari passu with the increase of cement users. Senator Hardy also compared British and Australian prices. I have not an explanation of the discrepancy. I am glad to know that Great Britain can produce quality cement at the price mentioned by Senator Hardy, and it is significant that in government and municipal contracts let in the United States of America, an allowance is made for an increase of from 20 to 50 per cent, on local prices, in order to meet competition from British manufacturers. That is something which should not be overlooked in any comparison of Australian and British cement prices. Tasmania is vitally interested in this business. The Goliath Portland Cement Company atRailton, Tasmania, in a letter to me under date the 4th March, 1936, stated -
British manufacturers are favouredwith very easily worked raw materials, available immediately alongside their factories, and the exporting companies deliver direct from factory to overseas steamer and enjoy freight rates which are lower than certain of our interstate trade charges.
It is significant that British cement manufacturers can send cement from British ports to Brisbane or other Australian ports at freight rates lower than are charged from Tasmanian ports to Brisbane.
– What is the freight from Great Britain?
– I understand that it is 26s. a ton.
– During the coal strike, British ships charged only 13s. 3d. a ton for carrying British coal.
– The higher freights charged between Australian ports make it difficult for the local content companies to meet overseas competition. I repeat that I am pleased to know that British manufacturers are producing cement at the prices cited by Senator Hardy, but I remind the honorable gentleman that the day will come when Australian manufacturers also will be able to sell cement at a much lower price than that which is now charged. Senator Hardy also mentioned that 2,000 persons are employed in- the cement industry. It was absurd for the honorable senator to divide the alleged profit of the industry for a period of five years by the number of employees, and say that the companies made a profit of £225 per annum for each, person employed in the industry. I challenge the honorable senator to point to any industry in the world which earns such staggering profits. Whatare the facts? Nearly all of the cement companies have been obliged to write down their capital, limit their operations, and cut down expenses in every possible direction in order to carry on. For many years the Tasmanian company gave no return to its shareholders. On the contrary, they were required to pay calls, and eventually the company had to go into liquidation. I say definitely, that the profits of Australian cement companies are not, in ratio, greater than the profits earned by manufacturers in any other Australian industry. The declared dividend of a company is not always a true index of its trading position. In the cement industry, special provision has to be made for obsolescent machinery.
– The Tariff Board has allowed 6s. a ton for depreciation.
– I know that. But is the honorable gentleman aware that the’ members of the board did not visit any of the cement works? Nor have they expert knowledge of the business. I have some knowledge of engineering methods, but I could not go through the works of the Goliath Cement Company and say definitely that the whole of its machinery was up to date or that its methods represented the last word in efficiency. Although the board allowed 6s. a ton for depreciation of plant, it knows nothing whatever about the business.
– Has the ‘honorable senator any idea of the protection which should be given to the industry ? Does he believe in prohibition?
– No; but I say emphatically that a duty of 10s. a ton is not prohibition.
– Would the honorable senator agree that protection of 100 per cent, “was sufficient?
– I cannot say if any given rate of protection is or is not adequate, but I have read the report of the Tariff Board, and also the replies of cement manufacturers.
– Which would the honorable senator believe?
– I prefer to take the view of a man who gives all his attention to his business. The Tariff Board has presented certain figures. Are we to understand that the board also discharges the functions of a prices commissioner? If so, may we expect that the board, in future reports, will recommend what charges are to be made for various commodities? If this is to be the responsibility of the board, it will have a man-size job to perform. I deprecate the statements made by other honorable senators that the Australian cement companies are making inordinate profits. The same might be said of manufacturers of agricultural implements and textiles.
– The cement companies arc not making inordinate profits.
– I am glad to know that Senator Guthrie is on the side of the cement manufacturers. The Tariff Board has made a calculation of the prices which should be charged to Australian users of cement. As the board does not comprise experts in the cement industry, it was not in a position to make such a definite recommendation. I, therefore, hope that the Government’s proposal will be rejected.
– Several statements made this afternoon call for a reply. The first is the contention of Labour senators that the use of the taxation weapon by the Government would have prevented the cement companies from making excessive profits. I would, however, point out that taxation of profits would not necessarily have meant control of profits or a reduction of the prices charged to users of cement. The recommendation of the board in relation to this item has been framed with a view to ensuring a lower price. In a country like Australia, in which development is likely to take place on a large scale, it is essential that cement should be made available at a reasonable price. I do not, for a moment, deny the right of the cement companies to charge a reasonable price for their product or to make a reasonable profit. My contention is that present prices, besides being un- reasonable, are preventing the economic development of the Commonwealth. Senator Millen has challenged the right of the Tariff Board to be the judge of prices. He complains that ‘members of the board did not visit any of the cement works in the various States. But was that necessary? The inquiry, I take it, was into the economics of the industry, and the information obtained was intended for the guidance of the Government and Parliament in implementing national policy. That members of the board did not inspect cement works, and do not possess technical knowledge of the business of cement production, is not a reason why we should ignore their recommendations. Senator Millen told us that he does not believe in prohibition, but the honorable senator did not say what, in his opinion, would be reasonable protection for the industry.
– I consider that 6d. per cwt. in the British tariff is reasonable.
– Very well. Let us consider how the industry would stand without that measure of protection. If the Government’s proposal be carried, the protective incidence, of exchange and other charges will give the Australian cement companies protection amounting to 164 per cent.
– Nothing of the sort.
– The cost of transporting cement from Britain to Australia is 27s. lOd. a ton, expressed in sterling.
– It is only 26s. 10d.
– There is no fixed rate.
– If the honorable senator were to approach the shipping companies, he would find that the rate is 27s. lOd. n ton.
– -For large quantities the rate is probably not much more than half that amount.
– On the basis of 27s. lOd. a ton, freight charges from Britain represent 92 per cent, of the price charged by the British manufacturer in his home market, namely, 30s. a ton. It is possible that the export price of British cement may be a little lower than the domestic price. But to the export price must be added the following charges : -
Assuming that the Government’s proposals are not carried, and that the duty is £1 a ton, less exchange adjustment, we arrive at a figure of 15s. a ton net. That represents an additional 50 per cent., making the total protection, not 164 per cent., but 214 per cent., in the event of the Government’s proposals being defeated. That is too great a measure of protection to an industry which is of such importance in the economic life of the nation.
– I am strongly of the opinion that, owing to its bearing on international trade, this item has been given a significance above its importance in the commercial life of our country. Every honorable senator must decide whether he will base his decision on a commercial, or on an international, basis. If he chooses the former, he must be guided to a great extent by the findings of the Tariff Board ; but should he adopt an international basis, he must decide whether the agreement is subject to a legal interpretation, or is to be regarded almost entirely as an honorable understanding among members of a world-wide Empire in the component parts of which conditions are entirely different. We must review this subject in the lightof those factors if the British Empire is to maintain its prestige in war and in peace. As I have said, we must, to a great extent, be guided by the findings of the Tariff Board, if we regard this as a commercial proposition. It is almost unnecessary to say that the Tariff Board consists of honorable and independent gentlemen, who consider the matters that come before them from a national standpoint, and, in submitting their reports, have no ulterior motive. The board has every opportunity to gain reliable knowledge, because those who appear before it as witnesses give their evidence on oath. Moreover, the constitution of the Tariff Board allows anymember to record his disagreement with the views of the majority. I am not altogether enamoured of boards and commissions, but I submit that, if Parliament constitutes such bodies, it should be guided by their findings. Perhaps no greater argument in favour of accepting the recommendations of the Tariff Board on this subject could be advanced than is afforded by a study of what took place in the House of Representatives during the debate on cement duties. There was considerable conflict of opinion as to the conclusions which should be drawn from the figures submitted. Entirely different deductions were made from the same premises. It was stated there that the wages paid to employees in the Australian cement industry amounted to £2,000,000 a year.
– That amount includes wages paid to men, both directly and indirectly associated with the industry.
Senator JAMES McLACHLAN.The wages paid to workers in the industry amount to only £350,000 a year. One member of the other chamber said that wages in England were 50 per cent. below Australian rates; another put them as 100 per cent, lower. Further, the selling price of cement in England, according to various speakers, ranges from 30s. to £2 15s. 6d. a ton. The Leader of the Opposition in the House of Representatives (Mr. Cur tin) drew attention to the Labour party’s new protection policy.
– It was so new that it lasted only one day.
– It was stated that the freight on cement from eastern Australian ports to Western Australian ports was greater than the freight from England. That may be true; but the remedy lies, not in the tariff, but in an amendment of the Navigation Act. Some honorable senators have described Australian manufacturers of cement as profiteers, and “gogetters.” I prefer to describe them as astute business men. It has been said that shares in cement companies, which were listed at £1, have been quoted at 34s., and even as high as 40s. Those figures certainly indicate that the industry has made profits, but they also show public confidence in the management. I do not know how many, if any, members of this Parliament hold shares in cement companies; but those who are shareholders need not blush on that account. I do not hold shares in any such company, but I should like to be a shareholder. All that the cement companies have done has been done within the law. They have paid the income tax demanded of them, and have worked under Arbitration Court awards. Moreover, they have contributed to the revenue of our railways, and assisted other industries. If they are such “ go-getters “ as some honorable senators would have us believe, what has Parliament been doing since 1.914 that it has not curbed their activities? Those who advocate lower duties on cement do not desire to destroy this Australian industry. I do not think that any government would be so insane as to attempt to destroy an industry of this description. Speaking in Adelaide recently on the new protection, the Leader of the Opposition in the House of Representatives said that the Labour party would not protect any industry which employed,, say, 200 or 300 men, if by such protection 1,000 men were kept out of employment. If cement could be landed in South Australia at £2 a ton, that State could employ, in the construction of roads, twenty times as many men as are now engaged in the manufacture of cement. Those who advocate lower duties want to assist the industry, not to destroy it. In my opinion, the local industry has nothing to fear from the admission, free, of cement from Britain, because, as has already been pointed out, Australian manufacturers would still be protected by exchange and primage duty, as well as by the anti-dumping legislation enacted by this Parliament. The penalties prescribed by that legislation are so drastic that no overseas manufacturer would take the risk of dumping cement in this country.
– They are getting close to that now.
– I do not think so. The two consignments of cement which have been imported intoWestern Australia from the United Kingdom would not have been brought in had it not been for the Australian shipping strike. As to cement being brought here as ballast, it appears to me that the anti-duinping legislation to which I have referred provides an ample remedy.
– Has that legislation ever been applied to British products ?
– Not so far as I know, but there is no reason why it should not be applied to them. Some time ago this Parliament was told that certain action which was then proposed would ruin the match-making industry. Action was taken, but the industry was not ruined. Indeed, so affluent has the firm of Bryant and May become that it has instituted a 40-hour week in its factory. Probably the cement manufacturers will be able to do likewise. As has been previously mentioned by honorable senators, the Ottawa agreement must be regarded as being either legally binding or an honorable understanding. I place the latter interpretation upon it. In my opinion it is not open to any question of legality; it is simply an agreement between two parties. Apparently, one of them, in this case, is in danger of breaking it. Although the legality of the agreement is not involved, when the time arrives for negotiating its renewal, the aggrieved party which considers that it has suffered an injury will simply decline to extend its operation. Senator Collings mentioned that the protest of the British Government against the restoration of the duty to 6d. per hundredweight was an inspired action, and the press has, for some time, published similar innuendoes. But I have every confidence that the protest was not inspired; and I believe that if the general public were made conversant with the facts, they would not believe the allegations that are being made by supporters of the cement companies. In Canberra are two representatives of the British Government; the Governor-General has a watching brief at all times, and the High Commissioner for the United Kingdom is an active gentleman whose duty is to guide and direct us and act as a connecting link between the two Parliaments.
– Did the honorable senator say “guide and direct us?” His function is to watch the interests of Great Britain.
Senator JAMES McLACHLAN.His function is to help Australia in regard to matters which concern the Commonwealth and the United Kingdom.
– The utterances of the High Commissioner in Melbourne do not look like helping us.
– His remarks may have been a little untimely.
– Especially when the case is sub judice.
– I desire to emphasize that the GovernorGeneral and the High Commissioner for the United Kingdom are watching AngloAustralian relations, and an impartial observer will conclude that the protest of the British Government was not inspired. The benefits of the Ottawa agreement to Australia have been considerable. In my opinion it is futile to attempt to deprecate the value of that agreement to the Commonwealth. I do not propose to reiterate the figures that have been quoted a number of times in this chamber, showing additional exports of meat, eggs, butter and cheese to the Old Country as a result of that agreement. I. am confident that it gave the Commonwealth an opportunity to market that extra produce.
– The honorable senator’s time has expired.
– Senator James McLachlan seems to be too sensitive about the Ottawa agreement. I remind him that the duty on imported British cement, when that agreement was entered into, was1s. per h undredweight.
– Hear, hear!
– The Opposition appears to have outraged every principle that is holy by supporting an amendment to make that duty 3d. per hundredweight. While I am just is British as is Senator James McLachlan, if I were asked to choose between taking my lead from Great Britain or New Zealand on a matter which affects both dominions, I would unhesitatingly declare my preference for the sister dominion. I find that the duty on British cement in the patriotic dominion of New Zealand is 8d. per hundredweight.
– That has been imposed since the Ottawa agreement was signed.
– I am grateful to have that information from the honorable senator because it strengthens my case. New Zealand, as well as Australia, cannot be accused of violating the Ottawa agreement, which I am satisfied has not been broken in this country. The Commonwealth is keeping the pact it entered into with Great Britain.
– It is a good agreement unbroken.
– In my opinion it has not been broken by the imposition of a duty on British cement. Honorable senators have raised the matter of freight. Having some knowledge of the conditions on the shipping fronts in Australia and New Zealand, I know that captains of ships which are arriving or leaving in ballast prefer to use wet sand because it coheres well and does not shift as gravel does. A common occurrence, when a ship is not loading out or in, is to give it ballast, which is ‘ obtained for nothing. Ballasting is carried out to ensure the security of the vessel, and a number of steamers which come to Australia and New Zealand bring ballast in their holds. Inquiries which I have made have elicited that a considerable quantity of cement from Great Britain is introduced at freight charges practically equal to the cost of ballast ; I made a note of that fact long ‘before I read in the Melbourne Age an article which I propose to quote to honorable senators.
– Are not the remarks of the honorable senator a reflection on the Labour Government of Western Australia ?
– Not at all.
– The Western Australian Government was endeavduring to break a strike.
– No ; the Government was unable to obtain sufficient cement from local manufacturers and was, therefore, obliged to import a shipment in order to enable an important public work to be carried on; otherwise the men who were employed on it would have lost their positions. If a strike occurs, a Labour Government is bound to take steps to control it. Although it has more sympathy for the ordinary worker engaged in private industry, it must take steps to control any strike which extends to public utilities.
– i Would the Labour Government in Queensland take such action ? *
– Yes, and for that matter a Labour Government in any State of Australia. The following editorial statement was published in the Melbourne Age -
Much was made by importing interests of an extravagant and unbalanced charge of profiteering. Those who make such charges conveniently ignore the initial losses incurred in launching new enterprises and the long periods that frequently elapse before the profit-making stage is readied: Neither Parliament nor public would tolerate excessive profit-making under Protection, but those who wish to be Fair realize that current dividends do not tell the full story of many Australian industries which owe their existence to the commercial pluck and patience of shareholders. More over, there is reason to suspect that as part of the campaign against Australian manufacturers, British cement has been dumped in various States during tho past few months.
– The Government knows that the cement cannot be dumped.
– This article was published on the 28th April last. It continued - lt was stated in the House of Representatives - and not refuted - that importers were selling cement in Australia at little more than one-half the prevailing price in England.
Those are serious charges which have been made by a responsible newspaper and I have no doubt that these things do happen with our British cousins, as they have happened in the past with foreign countries. Tor some time rumours concerning the alleged profits made by Australian cement manufacturers have been subtly circulated through the lobbies. So subtle indeed were they, that they might have been almost convincing if I had not taken the pains to verify the facts concerning the profits of the various companies. One gentleman said to me: “ Senator MacDonald you will be shocked to learn that the cement industry is making a profit of 32 per cent.” I said in reply that I had heard of profits of 100 per cent, and as much as 500 per cent, being made in other countries; but I could not believe that the cement industry generally was making a profit of 32 per cent. Upon referring to the Tariff Board report of 1935, I discovered the following illuminating facts : -
Although the highest profit was 32 per cent., that cannot be. taken as a criterion for all the cement manufacturers; the profits of the various companies must be averaged. If the present duty is lifted the factory which manufactures cement in Queensland will, undoubtedly, be wrecked.
– Does the honorable senator consider, that 32 per cent, is an undue profit?
– Yes ; but many companies in Australia are malting up to that profit. The 1935 report of this precious Tariff Board which has not visited the cement works, stated further -
The percentage net profit on the capital employed - as adjusted by the board - by individual manufacturers in the last trading year for which returns were submitted to the board, is shown in the following table . . excluding the taxation on capital employed in the industry.
I have already submitted that table to honorable senators for their consideration; apparently taxation and perhaps other charges had still to be deducted from what is shown as the profits of the cement manufacturers. Even the Tariff Board can be loose in the manner in which it deals with the economics of an industry. The profits of six, seven and eight per cent, are common enough, but one is inclined to blink an eye when they become as high as 24 per cent.
– How do the profits compare with those made by the breweries ?
– I have not made that comparison; but probably every honorable senator holds some shares in one enterprise or. another. I, myself have held a parcel of 40 shared in a business enterprise for twenty years and have never received a dividend from them. Compared with the figures in reference to the cement companies mentioned in the report of the Tariff Board, other enterprises are making far more substantial profits.
– One of the cement companies has made a profit of 32 per cent.
– But we have to consider the average profit, which in this case is 11.4 per cent. According to the statement of one honorable senator who supports the Government, some shareholders in the. cement, companies lost money. Whilst dealing with this matterI consider that some of the shareholders in gold-mining companies should be protected against the sale of shares. In one big venture the promoters made profits totalling hundreds of thousands of pounds, but the market price of shares is now one-quarter or one-fifth of their former value. The Minister, who said that excessive profits’ were being made by the cement companies, also stated that two new companies have been formed, and I remarked that, if that is so, the alleged combine cannot prevent, the formation of other companies which act as a corrective. It would, therefore, appear that the industry can be regulated and that with greater competition prices will be reduced.
– The honorable senator has exhausted his time.
. -Honorable senators were staggered by the figures quoted by Senator Hardy in relation to the protection afforded to the Australian cement-making industry, and particularly his statement that freight from the United Kingdom is 27s.10d. a ton. Every honorable senator knows that a single consignment of coal has been carried to Australia at 13s. 3d. a ton, and that on larger consignments a much lower rate could be obtained. That being so, the honorable senator’s figures are ridiculous, and his deductions absurd.
– The impertinent proposal of the Government appears to have some force behind it, probably from outside Australia. That also may have been the case when a just compromise was reached in the House of Representatives. Since I delivered my second-reading speech, I have been corresponding with certain interests in Tasmania and collecting all the information I could get on this subject. I have also studied further the two reports of the Tariff Board, which are excellent productions, but, as I stated previously, they are only theoretical. As suggested by Senator Millen, when inquiries of this nature are being conducted, the members of the board should make a reconnaissance to become conversant with the conditions under which the cementmaking industry is conducted. As a soldier I know the value of a personal reconnaissance, particularly during war time. I never took anything for granted, and if it were humanly possible, I always made a reconnaissance myself. Until I visited the magnificent works at Port Pirie, I had not the faintest idea what the port itself was like or the nature of the work undertaken in the extensive plants operating there. The members of the Tariff Board should have visited, two or three of the limestone deposits and cement works, and in that way obtained a good idea of the work on which the companies are engaged. Senator Hardy spoke of freight rates as if they were static, but if the honorable senator were conversant with shipping he would know that they are not. Unfortunately, freights are controlled by monopolies, agreements and honorable understandings between shipping companies, and in this regard Australia is particularly vulnerable. In many instances, the rates to Australia are reduced to a minimum in order to obtain back loading of wheat, wool or other primary products. Many vessels proceeding from Australia to British or continental ports carry consignments inbulk. whereas those coining to Australia carry principally manufactured goods. It is childish to suggest that a freight of 27s. lOd. will prevent British manufacturers from dumping, cement in Australia. Senator Millen stated that “Welsh coal has been shipped to Australia at a freight of 13s. 3d. a ton, and it is reasonable to assume that when shipments of British cement are regular the present rate will be reduced considerably. A cable from England dated the 11th May stated that definite inquiries have been made in London concerning freight on a parcel of 5,000 tons, which was quoted at 20s., with a lower rate for large consignments. That is the point which we have to consider in endeavouring to protect adequately an efficient industry such as cement-making. In arriving at a reasonable selling price for the Now South “Wales companies, the Tariff Board estimated freight and insurance at 27s. 6d. a ton. The board also stated that as British cement could be landed in New South “Wales at 70s. 3d. a ton, the selling price was fixed at 76s. 5d. a ton ; this would leave a profit of 10s. a ton, but out of it provision has to be made for taxation and other items of expenditure. Obviously, the New South “Wales companies would have to sell their product at 75s. 3d. a ton to enable them to compete with imported cement. The profit on tho board’s figures would be only 8s. lOd. a ton. The board’s estimate of freight has already been reduced by at least 13s. or 14s. a ton, and it is apparent on the board’s figures that if British cement is admitted duty free the New South “Wales companies will lose at least 10s. a ton. The Australian companies contend that an effective duty of at least 7s. 6d. a ton is necessary to enable them to compete with the British manufacturers, and, as I stated previously, it is now certain that a substantial duty is necessary if the Australian cement is to be kept on the local market. The natural advantages enjoyed by British manufacturers have already been stressed by some honorable senators, and after full consideration of all. the facts I am satisfied that British cement can, and will, be brought from England to Australia at a price lower than that at which an Australian com pany can transport its product from the works to the principal market. I know that that is so in the case of Tasmania, where the freight is an outstanding factor. If British cement is admitted free of duty, the Australian manufacturers will be faced with a grave danger, and thousands of their employees and others indirectly dependant upon the industry will suffer. It is always foolish to prophesy, but I know that the day will come when we shall benefit if large quantities of cement are manufactured in Australia. If we ever have to defend this land we shall find, as many discovered sometime ago. that cement is of great value in prosecuting a war. If we have to depend upon outside sources for supplies. God help Australia. I am amazed at the decision of the Government, and can only conclude that it is acting in response to outside pressure. It must be in a difficult position when it trots out the recommendations of the Tariff Board to support its action. The Government would have lis believe that the board’s reports are sacrosanct, and that its recommendations must always be accepted. But I notice that the Government adopts the recommendations of the board when they support its views, and ignores them when they do not. A Tariff Board is necessary because it would be utterly impossible for member? of this Parliament to devote proper attention to customs duties. I am confident that the board’s reports are impartial, but I shall never be prepared to swallow - hook, line and sinker - everything put up by the board. I suggest to the Government that the compromise adopted by the House of Representatives is fair and reasonable, and I shall not support th»> Government under ‘ any consideration in what I consider to be a very risky and hazardous experiment. I am confident that, if the Senate accedes to the Government’s request, its action will have sue!, repercussions as will necessitate the bringing down of legislation to right the wrong - that will have been done.
.- I am glad that the Government has seen fit to divest its arguments to-day of the sanctity of the Ottawa agreement ; its position, in this respect was untenable. I regret very much that, in a speech which he made in Melbourne last week, the High Commissioner for the United Kingdom went so far as to say, in effect, that the British Government should be the judge as to whether either Britain or Australia was breaking the agreement.
– He said nothing of the sort. He claimed, on behalf of the British Government, the right to protest, and, I think, every honorable senator will concede him that right.
– But Australia has not violated the Ottawa agreement in any respect. I dealt with this matter fully in my second-reading speech, but my views on it have been accentuated by the speech of Sir Geoffrey Whiskard, in which he claimed for the British Government the right to interpret the Ottawa agreement on both its own and Australia’s behalf. I am glad that the Government has now dropped its contentions regarding the Ottawa agreement, and is now prepared to rest its case solely upon the recommendation of the Tariff Board. If the board, on its own figures, can be shown to be wrong, will the Government change its mind on this matter? That is a fair challenge.
– Can the honorable senator show in what respect the Tariff Board is wrong?
– Yes. I am not altogether blaming the board in this matter, because its inquiry was made twelve months ago. In its report, however, it gave the price of British cement at 23s.8d. a ton f.o.b., whereas it is well known to every one. in the trade that British cement can be bought to-day for 19s. a ton.
– In London.
– From what firm?
– The Tunnel Company is one. If the Government makes an unbiased inquiry into this matter, it will be convinced of the facts which I have stated. The Tariff Board also reported that the freight rate on cement from England to Australia was 27s. 6d. a ton, and based its calculations on that figure. Will the Government find out what freight is being paid on the cargo of cement which will arrive at Fremantle this week on the SS. Stanford? The freight on that cargo is 13s. a ton, and for continuous and very large shipments, the freight rate is even less. Thus, the Tariff Board’s figures are 14s. 6d. and 4s. 6d. a ton less on freights and price respectively, or a total of 19s. 2d. a ton below prevailing charges. I point out that, within the next few weeks, 11,000 tons of cement will arrive in Western Australia at a. cost of 13s. a ton, and not 27s. 6d. The board’s calculation may have been correct at the time at which it was made, but the fact remains that its figures do not apply to-day.
– Mr. Kneeshaw, in his evidence before the board, said the price was 27s. 6d. a ton.
– But that was twelve months ago; the price is not static.
– The board made its last review in March, 1936.
– What did it say then ?
– The same as it said before.
– The Government says that the Industries Preservation Act offers additional protection to Australian companies.
– Therehas been no necessity to invoke that act.
– So far as the manufacturers of Australia are concerned, that act is a dead letter. The Department of Trade and Customs will not take notice of any evidence put before it by Australian manufacturers; invariably the reply given by the department is that the evidence is not sufficient to place before the Tariff Board. Even in cases in which complaints are placed by the department before the board, six months elapses before a manufacturer can gain relief.
– The price of 13s. a ton was not put before the board by the cement, manufacturers? Mr. Symonds submitted c.i.f. and e. costs.
– His price was f.o.b. £1 3s. 8d. sterling; and that is the estimate which the board accepted. Much has been said in this debate in regard to over-capitalization and overextension of plant in this industry. From such remarks one would judge that the industry was a single entity which suddenly stretched out and established extra plants and over-capitalized itself. What arc the facts? Each of these companies operates independently. If an honorable senator were engaged in business, how could he stop another manufacturer from setting up a plant in the same trade. How could cement manufacturers in New South Wales and Victoria stop the Goliath Company in Tasmania from being established? How could they stop similar companies from being formed in Queensland or in other parts of New South Wales and Victoria? Are the original Australian cement companies to be held responsible for the fact that other companies thought that the cement manufacturing business was a good one to enter? How could they stop other people from putting their money into the industry? The only way in which this industry can be controlled as a single unit, operating at a uniform price, is for the Government to take control of it; in that way only will it be possible to stop other cement factories works from being established.
– That is what will happen if the Government persists in its present policy in respect of the duty on cement.
– Possibly that will be one result. The chairman of the Kandos Cement Company has been quoted as having said that undoubtedly there are too many cement works operating, and that the industry is overcapitalized. I ask honorable senators to bear in mind the fact that he made the statement at a time when another company had just sent out its prospectus prior to engaging in this industry. Do any honorable senators know anything about bluffing in business?
– Was not the statement true?
– I know” what the object of it was; it was to bluff those who were proposing to form other companies - but in this discussion the statement has recoiled somewhat to the detriment of the man who made it. When I was starting in business a prominent manufacturer in the trade approached me and poured a fearful tale into my ear about the troubles which would confront me. He said that every one in the trade was insolvent, that the trade was over-capitalized, and could not get half enough work, and that if I went into the business I would be insolvent within six months. Nevertheless, I went into it and my business increased ; 1. am not “ broke “ yet. The statement attributed to the chairman of the Kandos Cement Company is akin to that made to me; he wanted to bluff those who were contemplating the formation of other companies. Now that the Government has come to the aid of the Kandos Cement Company, I cannot say whether it will succeed in bluffing other companies. It is well known that competitors will arise not only in this industry, but in all other industries which promise success.
– Hear, hear !
– For the information of the Minister I point out that under the circumstances which have arisen in the cement industry, works in the smaller States will be forced to close. Possibly the companies in New South Wales and Victoria will be able to operate, despite the abolition of the duty on British cement, in the restricted markets in their particular States ; they have capital reserves upon what they can draw. The companies in the other States, however, especially in Tasmania and South Australia, will go to the wall.
– Will the honorable senator stake his reputation on that statement?
– Yes. Furthermore I point out that in the event of the proposed duties being accepted, the Victorian and New South Wales companies will not be able to send their cement to the other States, because the freight rates will be a good deal higher than those from Great Britain. I believe that I have made a fair examination of this matter. The Government is depending upon the recommendations of the Tariff Board. The board’s calculations have been proved to be wrong; consequently the Government should be prepared to revise its proposal. It was stated to-day that reductions of the cost of cement which will be effected through the new duties, will make it possible to construct concrete roads at approximately the present cost or bitumen roads, and that the cost of cement buildings will be greatly decreased. In one mile of concrete road18 feet wide and 6 inches deep there are 445 tons of cement. The cost, including. the 7s. 6d. which the Government now wishes to take off, would be £7,392. Without the British duty the cost would be £7,224, a difference of slightly over 2 per cent., or £168 a mile. Will any honorable senator contend that that small amount would justify any public authority in constructing a bituminous, instead of a concrete road? The cost of the cement used in the largest building in Melbourne or Sydney, costing up to £500,000, would not be more than 6 per cent. of the total, yet it is held by some honorable senators that the retention of the British duty would retard building operations. The statement is ridiculous.
– The honorable senator has exhausted his time.
. -This afternoon we have heard a variety of opinions expressed, but very few honorahle senators have emphasized the extreme importance of this industry to Australia, although it is true’ that Senator Sampson mentioned cement in relation to defence. It might be just as well to examine the subject a little more closely in order to ascertain what is in the minds of those honorable senators who arc urging the Government to press its requestfor the removal of the British duty. The industry employs, directly and indirectly, a large number of Australian workers - figures which have been furnished to me put the number at about 12.000 - -and the wages bill amounts to about £2,000,000 annually. But there is another phase which should receive consideration. Those honorable senators who know New South Wales and Victoria will understand what I mean. If the British duty is removed, and if Britishcement competes so fiercely with the local product as to threaten the extinction of the Australian industry, whole townships that have been built up around cement works in the various States will be destroyed. In that event, what will happen to the little communities at Kandos, Portland, and Berrima, in New South Wales, and the workers attached to the factory at Geelong, in Victoria?
– We could not allow anything to happen to them.
– I hope that the majority of- this committee will emphatically refuse to he a party to any action that would make such a disasterpossible. The party which I lead in this chamber does not intend to take any risks where Australian primary or secondary industries are involved. We believe it to be the duty of this Parliament, at all times, to protect Australian industries up to the hilt against competition from any country, including the United Kingdom. Labour’s policy is, first, preference to Australian industries ; second, preference to the United . Kingdom; and third, favorable treatment for any countries with which we can make good bargains. Every other country is doing this. Even in the United States of America, so we are told, special precautions are taken to protect the American cement manufacturers from British competition.
Senator Hardy had something to say this afternoon about the “ new protection “, and the Postmaster-General (Senator A. J. McLachlan) interjected that “ new protection “ had lasted only for a day. In the general debate on the tariff, I made an official pronouncement of the policy of the Australian Labour party, because I wished to have it on record in Hansard, as protection against the irresponsible ramblings of gentlemen like Senator Hardy, who this afternoon repeated some of his misstatements about Labour’s policy. Let me briefly tell the committee again that Labour stands for the effective protection of Australian industries- with measures to prevent profiteering and to assure protection to workers; it stands also for import embargoes to secure the home market for Australian industries capable of fully supplying the demand, subject to the control of prices, and industrial conditions and the maintenance of Australian standards.
– Does the honorable senator believe in protection for the consumers ?
– We believe that all sections of the community should enjoy a worth-while standard of living, Th is cannot be said of the workers in some other countries, including the United Kingdom. We stand for the maintenance of Australian living standards against allcomers.
Reference was made this afternoon to the price at which British cement can be sold in Australia ; but not one word was uttered about the living standards of British cement workers which is one factor that enables United Kingdom manufacturers to undersell Australian competitors. Varying statements have also been made about shipping freights. The freight on cement from British ports in British ships has been as low as 13s. a ton, and it is well known that, if shippers can guarantee a large shipment in one vessel, a rebate is obtained on even 13s. a ton, so the report of the Tariff Board, in that particular at least, is not reliable. We should always consider the entirely different conditions prevailing in the industry in Great Britain and Australia. This continent is so vast that Great Britain could almost be dropped in some waterhole and one would hardly notice the splash. With a population of 6,500,000 of people spread over this great continent, it necessarily follows that transport charges on primary and secondary products are heavy in comparison with charges in Great Britain with its enormous population settled in a comparatively small area. In the Mother Country cement works are established alongside the raw material.
-Some of the Australian companies also have that advantage.
– Every Australian cement manufacturer is required to pay heavy freight charges on either the raw material or the finished product. This expenditure is incidental to Australia’s industry. If the majority of honorable senators adopt the attitude of good internationalists and favour international freetrade, we shall continue to import cement and other manufactured goods and to produce pineapples, sugarcane, and other such commodities. But the Opposition will have ‘ none of this tariff-hacking policy, which threatens the extinction of Australian industries. We know, however, that we are powerless, except in association with other honorable senators, to affect the final result of this discussion, but I ask those honorable senators who have given serious thought to this item to consider where this destructive tariff policy is going to end. To-day the attack is on the cement manufacturers; to-morrow it may be directed against another equally important Australian industry. It is significant that, in every tariff discussion, it is the Australian manufacturer, not his overseas competitor, who is impeached and put in the dock for trial. Those honorable senators who have not yet made up their minds on this item should ask themselves why the cement manufacturers of the United Kingdom did not, either indirectly or through their representatives, appear ‘before the Tariff Board when it was inquiring into the industry.
– They knew that they did not have a chance.
– They did not appear before the board because they knew that their interests were quite safe in the hands of this tariff-hacking Government; that the nefarious job of injuring Australian industry would be done more efficiently by the Ministry. It seems that, in this game of tariff-making, the dice are always loaded against our own people. The Tariff Board, we have been told, did not visit any cement works to obtain first-hand information of the manufacturing process, nor did it invite manufacturers of the United Kingdom to send representatives to give evidence, yet it reached certain conclusions which we are expected to endorse. I am not impugning the honour of the Tariff Board, I believe that the members of that body did their best according to their lights, but in my opinion the board’s outlook is an ti- Australian. Therefore it should not be placed on a pedestal, and all its recommendations should not be above criticism.
Sitting suspended from 6.16 to 8 p.m.
– The duties on cement should be considered intheir proper perspective. I have a strong suspicion that behind the agitation for cheap cement is the sinister shadow of the Hume Pipe Manufacturing Company, which is meeting with severe competition from the makers of earthenware pipes in Australia. If the Government’s proposal is accepted by Parliament, and the decision of the House of Representatives is upset, the road will be clear for that company to wipe out its only competitor - the manufacturer of earthenware pipes.
– Does the honorable senator think that the company persuaded the Tariff Board to bring in its recommendation?
– This “note of interrogation “ who leads the Country party, is like a mosquito; his objectionable feature is not so much his bite as his continual buzzing. This afternoon Senator Hardy said that the price of cement in England was about 30s. a cwt. He then attempted to compare that price with the price of cement in Australia. It is not possible to deal with this subject in that way. The Tariff Board is supposed to have taken certain factors into consideration. It said that steamer freight, insurance, and other charges on cement imported from Britain, totalled about 27s. 6d. a ton, whereas the fact is that 13s. a ton is the prevailing rate, with a possibility of rebates for larger quantities. Australian standards are different from those of England, and therefore, a fair comparison is not possible. Honorable senators must decide whether they will champion the Australian standards, or agree to the continual whittling away of them. The United Kingdom manufacturer not only has his raw material close at hand, but he has also shorter haulage from his works to the place at which his product is used. Reference has been made to the action of the Opposition in supporting cement companies which, it is alleged, have made, and are making, extravagant profits. I am reminded of the story of the housewife who borrowed a kettle from the lady next door. Her neighbour took action against her on the ground that the kettle was damaged when returned. The defence was that if the kettle were damaged, which was denied, it was damaged before it was borrowed; in any case it was returned in as good condition as when it was obtained. That seems to be the “line adopted by some honorable senators in connexion with these duties. They say that the cement companies are making exorbitant profits; but the companies deny the charge. Even the Tarin* 150arc admits that some of these cement-making companies are sailing dangerously close to the wind, lt imagines that a profit of lOs. a ton allows a sufficient margin; but it appears to have overlooked the fact that out of that profit taxation has to be paid, amortization funds created, and unexpected expenses met. The Opposition holds no brief for’ the exploiter or the profiteer, but that is no reason why it should remain silent should either the Tariff Board or the Government attack Australian manufacturers unjustifiably. If the cement companies in this country are exploiting the users of cement, the Government should have sufficient courage to prevent that exploitation. It has the power to do so. I have a closer acquaintance with the manufacture of cement in Queensland than in the other States. I know that, not only has the Queensland company not made extravagant profits, but also that for years, ic could not pay any dividend at all. Indeed, only during recent years have its shareholders received any return on their capital. iSo far from being callous and indif’ferent to the welfare of its employees, the company takes more interest in them than is customary among companies. The Queensland Cement and Lime Company has established an employees’ sick benefit and welfare club, the objects of which are the raising of funds by donations, voluntary contributions, and endowments, such funds to be applied to the assistance of members when absent from work through illness or accident, or to be paid to their dependants in case of death; the provision of medical attendance and medicine, and overhead expenses of the committee of management, or otherwise as the committee directs. Although the committee is composed entirely of employees, the company subsidizes fi for £1 all amounts raised by it. The fund is in credit about £1,200. The employees of the company enjoy benefits which they would not receive in most manufacturing establishments. I know that it will bc said that it is strange to see a Labour Opposition taking up the cudgels on behalf of these companies. We on thi 3
Bide believe that the cement-making in dustry in this country is efficiently conducted. Indeed, the Tariff Board does not assert otherwise. We believe also that, if given a fair chance, the local industry will continue to improve its output until it is able to supply the whole of the Australian requirements. In considering this item we must, not overlook the fact that the duty was ls. a cwt. until the present, schedule was tabled in the House of Rep- _resentatives. The Government now proposes to remove entirely the duty on cement from Britain, thereby leaving the local industry at the mercy of manufacturers in the United Kingdom. As a compromise between ls. per cwt. and free importations, the House of Representatives decided on a duty of 6d. per cwt. on British cement. In my opinion, that was a fair and reasonable compromise. We are now asked to reverse that decision, and to inform the other chamber that the Senate refuses to ratify the extremely reasonable compromise which was submitted to it. I hope that the committee will reject the request.
.- I question if there ever was a time when more thought should be given to the tariff schedule than to-day. Our primary and secondary industries are so inter-related that we must be careful not to destroy either of them. Experience has taught us that a well organized home market is the best market. In order to create a home market for our primary products, we must encourage our secondary industries. The Government would he well advised to accept the proposal of the other chamber in regard to cement, for it would give to the industry an opportunity to adjust itself to the new conditions. The Government says that acceptance of the decision of the House of Representatives would be equivalent to an infringement of the Ottawa agreement, but I strongly dissent from that view. The opinions of learned counsel support my view. The discussion that has taken place has been based, not on the recommendation of the Tariff “Board, but on the sanctity of the Ottawa agreement. I cannot understand the attitude of the Government in continuing to extoll the “‘spirit of Ottawa “. Either its nerves are shaken, or it is wandering in its sleep. I visualize members of the Imperial Government, which we all admire, sitting around a board, not only dictating the policy of the British Empire, but also guiding the destinies of other nations of the world. They have assembled for the purpose of reviewing the Ottawa agreement as it affects both the British and the Australian governments. After carefully reading the record of the operation of the agreement, they look at each other and say, “ It is a wonderful performance, The Australian Parliament has crossed every ‘ t ‘ and dotted every . ‘ i ‘ of the agreement. We must give the Commonwealth credit for having done that “. By that time, however, the spirit of Ottawa, to which extensive allusion has been made, has been wafted over the troubled ocean, and has affected those men. Looking again at each other, they say, “ It must be the spirit that is wrong “. They analyse it and come to the conclusion that it has been badly diluted ; therefore, they instruct their representatives in Australia to convey a message to the Commonwealth Government as rapidly as possible for consideration. The distinguished officer who delivered that message did so in a tactful and friendly manner. Nevertheless, I decline to accept the statement of the Minister that, in supporting the action taken by the House of Representatives I shall become a dishonorable citizen and member of Parliament by endorsing a breach of the Ottawa agreement. No one has a greater love for the British Empire and a greater admiration for the politics of Great Britain than T have, but I refuse to be told by the British Government or the Commonwealth Government what course of action I should take in regard to an agreement submitted to this chamber for its consideration. I shall comply with every condition of the agreement, but I shall not be influenced by the alleged spirit which has been summoned to the aid of the Government, but which exists only in the minds of its creators, who contend that they are the only persons who are right, and that those who vote in opposition to them are dishonorable. The endorsement of such a policy would have far-reaching effects on our politics; it would cause confusion in the minds of our manufacturers, and create an undesirable feeling between the two countries. Whatever action we take as parliamentarians, we should be loyal to an agreement made; but I protest against the action of the Government which, in order to win a fight which is immaterial to the great majority of people, has camouflaged the issue so as to create fear in the minds of honorable senators. Because of the intemperate atmosphere which surrounds the discussion of this item, I shall cast my vote against the request submitted by the Minister in charge of the bill.
.- When speaking on the second reading of this bill, I stated definitely that, in view of the absolute necessity for honouring the Ottawa agreement in every particular, I intended to cast my vote with the Government. I regret, as other honorable senators have done, that the Ottawa agreement has intruded itself into this discussion.
– It was pushed in.
– Both the Commonwealth Government and the British Government have declared that they regard the action taken by the House of Representatives as a breach of the Ottawa agreement. For that reason alone I shall record my vote on this occasion in support of the proposal of the Government.
– The honorable senator did not say that until the Minister in the House of Representatives invited honorable senators to state that it was a breach of the Ottawa agreement.
– Responsible Ministers of the Parliament of the Commonwealth, as well as the British Government, through its representative in Australia, have declared that they regard the imposition of a duty of 6d. per cwt. on cement, after the Tariff Board had recommended admission free of duty, as constituting a breach of the Ottawa agreement. Whatever our personal views may be, the fact remains that the two parties to the agreement consider that it has been violated. I am of the opinion that the contract is so vital to the primary producers of Australia that nothing should be done to endanger its existence. Later, I shall suggest to the Government what I think is a way out of the difficulty that has arisen in connexion with this item. One of the greatest dangers that I foresee from the placing of imported British cement upon the free list is that British manufacturers, whose production costs are less than those in Australia, could flood the market before local manufacturers have had an opportunity to re-organize their industry and reduce costs, in order better to compete with imports. It is almost unprecedented for a substantial tariff on imported goods to be completely withdrawn at one fell swoop. The Tariff Board would have been better advised if, after it had received the statistics relating to operations of the various companies in Australia, it had suggested that, in order to allow them the opportunity to reorganize their business and delivery arrangements, and reduce their costs, there should be a gradual paring down of the duty instead of its immediate abolition. I do not propose to refer at great length to the Tariff Board’s report, but I endorse the remarks of the Leader of the Opposition (Senator Collings) with regard to the Queensland Lime and Cement Company. Only in comparatively recent years has that company made any profits; and hundreds of citizens of Queensland are small shareholders in this concern. When the company was formed, to make Ace Brand cement, the large majority of the shareholders took an interest in the enterprise, but not in anticipation of receiving high dividends immediately on their investment. They were actuatedby the fact that Queensland, unlike Victoria and New South Wales, is not in the fortunate position of having a large number of secondary industries in proportion to its population. Figures show that the State is now making satisfactory progress in secondary production. But honorable senators who are familiar with the personnel of the shareholders in this cement enterprise will realize that many of them invested their money in order to give the industry a start. For many years they waited, but no dividends were declared ; only during recent years have they been able to obtain some small return on their investment. I do not think that it is fair merely to cite, as an example of a company’s prosperity, the rate at which its shares are quoted on the stock exchange. A surplus of money is awaiting investment and people are prepared io accept a much lower rate of interest now than probably at any other time in the last 40 years. Some shares are standing at a high premium on the stock exchange and people are willing to take 3£- per cent, and 4 per cent, on industrial stocks, a return which would not have attracted any investor a few years ago. That has been the reason why the prices of many such shares have risen as they have done. If honorable senators compare the stocks of the cement company with, for instance, those of the Australian Glass Company, whose £1 shares are quoted at £4 10s., or with those of the Swan Brewery, in Western Australia, whose shares are quoted at a high premium, they would realize that the price of the cement shares are not on an abnormally high level. The company in Queensland has been handicapped up to the present time by reason of the fact that it has been obliged to cart its limestone from Gore, which is over 200 miles from the factory itself. It has also been handicapped by the freight charges on the cement it sends to various parts of the State. Certain statements were made this afternoon in connexion with freight rates on cargoes from Great Britain. In my opinion, the assertion that cement is likely to bo brought from the Old Country to Australia at a figure as low as 13s. a ton is extravagant; but the freights between coastal towns in Australia are to-day very considerably in excess of the cost of bringing goods of this description from the United Kingdom to Australian ports. like the Leader of the Opposition, I am particularly interested in the welfare of the cement company in Queensland; I leave honorable senators from other States to defend similar enterprises in their constituencies. But I emphasize that the Queensland company , is handicapped because it is required to transport its limestone supplies over 200 miles to Brisbane. I am gratified, however, that it has now taken steps to secure supplies of coral from Moreton Bay, which stands in close proximity to its works. Thus, it will be able very considerably to reduce the cost when it puts its new plant into operation. The company is also building a concrete road to the wharf on the Brisbane River, from which the coral supplies will be taken to the works ; con sequently, the considerable freight charges incurred in bringing limestone from western Queensland will be avoided. In view of the fact that the Government considers that the action of the House of Representatives in restoring the duty to 6d. per cwt. is a breach of the Ottawa, agreement, I suggest, as a fair compromise, that the duty of 7s. 6d. be continued for twelve months, in order to enable the companies to adjust their costs. On numerous occasions when new tariff items have been placed on the schedule, the operation of the duty has been deferred. Therefore, we shall not create any precedent if my proposal be adopted. During the twelve months the companies will have the protection of 4£d. a bag, and they will be well aware that at the expiration of that term that advantage will cease. In the interim, therefore, they can re-organize, reduce their costs and re-adjust ‘their prices, and the Government will be able to ascertain whether dumping of overseas cement occurs. I have not discussed my proposal with the Government, but I -suggest that it offers a way out of the existing difficulty. The Queensland company, which has been battling along under adverse conditions for so long, would have its new plant in operation before the expiration of the twelve months, and would thus be able to make an effort to reduce costs. If this compromise arrangement were adopted by the Government, it would not constitute a breach of the Ottawa agreement.
– The Government must regard the proposal of Senator Foll as being just as much a violation of the Ottawa agreement as was the rejection by the House of Representatives of the original proposal. From a logical viewpoint, it is obviously impossible for the Government to accept the suggestion of the honorable senator. I do not know how long the Queensland Lime and Cement Company mentioned by the Leader of the Opposition (Senator Collings) has been incorporated, but an analysis of its financial position as disclosed in Jobson’s Investors’ Digest shows that its operations have been fairly successful. That publication contains the following particulars concerning the company’s financial position : -
Capital issued and paid up, first preference, £44,878; second preference, £182,183; and ordinary, £18,000. Assets consist of freehold laud, leases, &c, valued at £28,624; plant, machinery, buildings, railways, &c, £316,422; debtors and deposits on contracts, £29,179; Australian consolidated stock, £22,829; Queensland National Bank, £6,153; fixed deposits, £61,000; cash on hand, £75; and prepayments, £1,219. Depreciation reserve, £155,532 or 45 per cent, of the fixed assets.
It will be seen that the company is in a very strong position.
– It proposes to use some of its capital in erecting a new plant.
– Obviously, it should do so, but in the interests of consumers and the community generally, it should supply its product at more reasonable rates. Moreover, the company has been operating on an uneconomic basis in that it has been transporting limestone over an unnecessarily long distance. The profitable nature of cement production in Queensland is shown by the net profits earned on paid capital, namely: 1930, 12.3 per cent.; 1931, 7.7 per cent. ; 1932, 6.5 per cent. ; 1933, 6.4 per cent. ; 1934,8.6 per cent. ; 1935, 10.5 per cent.
During the depths of the depression, while other industries were struggling to avoid big losses, the Queensland Cement and Lime Company was able to earn a net profit which did not fall below 6.4 per cent, on the paid capital. That public opinion in Queensland is agreed on the excessive nature of cement prices is apparent from an article in the Brisbane Courier-Mail of the 1st April, 1936, which reported the findings and recommendations of a special committee of the Brisbane City Council. Sections of the committee’s report as it appeared in that newspaper, read -
The opinion that the delivered prices paid by the council for cement are too high has been expressed in a report by the chief city engineer (Mr. Gilchrist), the acting tramways manager (Mr. Quinn), the manager of the water supply and sewerage department (Mr. Nelson), and the superintendent of stores (Mr. Roe). Heavy transport costs and the excessive price at the works are given as the reason for the high costs. The delivered price at the works is £4 10s., plus railage and cartage, making a total of £4 19s. 6d. to £5 a ton at the point of consumption. Byan arrangement between the railways and the cement company delivery cannot (except in exceptional cases) be obtained at the works. This practice involved considerably high transport charges, due to double handling, increased mileage of transport, and overhead costs, and a duplicationof transport charges.
The opinion is expressed that apart from the transport question the price charged at the works is too high, taking into consideration the magnitude of the council’s activities and the reliability of the council as one of the company’s most consistent customers. The landed cost of imported cement in Brisbane, the report states, is £3 16s. 8d. duty free, compared with a local price of £411s. 9d., and it is obvious that if the Commonwealth Government restored the duty of £1 per ton the prospect of a reduction in price in Brisbane would be remote.
It would appear that the council’s loyalty to the principle of supporting local industries is being exploited, especially as it is understood that certain government works providing more or less temporary demand have secured better prices than the City Council, which will require very large quantities for itssewerage, tramways, and works operations for many years.
The committee expresses the opinion that there is room for reductions of price in transport costs, as well as the cost of the cement at Darra, and it recommends -
1 ) That urgent representations be made to the Minister for Trade and Customs supporting the recommendations of the Tariff Board that the existing tariff provisions remain.
That tenders be invited for either one or two years’ supply of cement (approximately 10,000 tons annually) for delivery at (I) Darra; (2) on rail Roma-street: (3) on wharf Brisbane; and that suppliers and carriers be invited to tender for delivery from any one of these three points on a route mileage basis of a half-mile scale.
– Is that a Labour council?
– The Minister is misleading the committee.
– That remark is offensive, and I ask that it he withdrawn.
– In deference to orderly procedure I withdraw it; I shall comment on the Minister’s statement later
– I object to the Leader of the Opposition withdrawing the remark in deference to orderly procedure. The statement is offensive, and should be withdrawn without any qualifications.
– I withdraw it.
Senator A. J. McLACHLAN.Naturally, the council, which is governed by the Labour Caucus, hastened to state that the recommendations of thecommittee did not accord with the views of the majority of the aldermen, but the following remarks of the Lord Mayor, reported in the Courier-Mail of the 2nd April, are of interest: -
The Lord Mayor agreed that the council was paying too high a price for cement, but said that no action on the lines suggested by the departmental representatives would receive the endorsement of himself or the Labour aldermen. Tenders, probably, wouldbe invited for the supply of cement for a period.
The newspaper report goes on to say -
Aldermen are agreed that the council should obtain some reduction in the price of cement, and also a big cut in transport costs, and it is likely that both these aspects will be reviewed shortly. The council feels that it has the remedy in its own hands when it receives tenders for fresh supplies.
There is definite evidence that’ competition from other companies is being stifled in Brisbane, possibly with the connivance of southern manufacturers. One large merchant in Brisbane has attempted to obtain cement at the lower prices available to members of the Cement Association at that centre. He has been quoted a delivery price of £5 7s. per ton for Queensland cement. His attempts to obtain at lower prices cement made in the other States have been unsuccessful, the distributors for southern manufacturers quoting the same price as for the Queensland product.
Just recently the same merchant telegraphed an order to a southern manufacturer for the supply of 50 tons of cement, but he was advised that that maker was not supplying the Queensland market. This savours of monopoly under the cover of protection.
– How is it that Tasmania can send 150 tons weekly to Queensland?
– That is the quota allotted to that State; additional shipments are not admitted.
The Queensland company’s price to merchants must be regarded as highly profitable, if the price quoted for the supply of cement for a large government undertaking in Brisbane can be accepted as a guide. In this instance, a works price of £4 4s. per ton has been quoted, equivalent to about £4 10s. f.o.r. Brisbane, as against £5 7s. per ton to the merchant to whom I have referred.
We have been told that the board’s estimate of a maximum cost of 7s. 6d. a ton of cement is too low, having regard to the fact the Queensland company incurs a freight cost on limestone of 19s. a ton of cement. In this connexion the Tariff Board stated -
The board took note of the company’s intention to work a coral deposit at Moreton Bay when estimating the Queensland cost of limestone and clay at 7s.6d. per ton. The board cannot subscribe to the view that cement is being economically and efficiently produced in Queensland under conditions that involve a freight rate of 19s. per ton on one of the raw, materials. Much less can it subscribe to the view that because one company’s costs are so far out of step with the others, it should recommend a duty which would protect such costs. The adoption of such a duty would give all manufacturers the opportunity of keeping prices at the level of importing costs, and on an estimated consumption of 500,000 tons per annum in Australia, the margin for exploitation would be considerable, and the board must recognizethat it has not been the policy of the cement manufacturers to pass on to the public the advantage obtained from a secure market.
The board then dealt with competition in northern Queensland. I think that I have said sufficient to convince honorable senators that the free admission of British cement will not interfere with the operations of the Queensland company, which has a depreciation reserve of £155,000, and had in October last a credit on its profit and loss account of £51,000, bank deposits . amounting to £61,000, and Commonwealth inscribed stock valued at £22,000.
– Will the Minister now analyse the financial position of that company’s English competitors?
– The English companies are doing remarkably well; they have big outputs and big reserves, and pay big dividends, yet they are still able to sell cement at an astonishingly low price.
– The honorable senator has exhausted his time.
– I intend to deal with this matter principally from the point of view of the industry in Western Australia. I am not able to speak with first-hand knowledge of the manufacture of cement as an Australian-wide industry. But the industry has assumed, in the press at any rate. political significance which is not justified, and ha3 also attained a prominence which its real importance does not warrant. All of us are aware that intensive propaganda has been indulged in by every party interested in this matter. In that propaganda, however, there has not been a strict adherence to facts. For instance, it was stated in a Western Australian publication that the abolition of the duty on British cement would cause, through the closing down of the Swan Portland Cement Company, the unemployment of 700 hands. Actually that company claims to employ at the most 250 men and youths. In view’ of these circumstances, I have been impelled to examine this matter calmly for myself.
First of all we must give credit to the Tariff Board for its comprehensive investigation of the industry, and for the care with which it prepared its report and findings. On page 3 of its supplementary report, the board said -
Much less can it (the board) subscribe to the view that because one company’s costs are so far out of stop with the others, it should recommend a duty which would protect such costs.
In Western Australia I have identified myself with the movement for preference to local products; consequently, in this instance, I remind myself that I stand in this chamber as a representative of a State. With many other honorable senators, I desire to sec a supply of cement available to industry at a reasonable price. I am aware of the importance of this product in building construction and to local governing bodies for the construction of better roads. In many ways also, it is of great value to the man on the land. Therefore, I do not desire to see the local cement industry unduly hampered in it3 operations through the total abolition of the duty of 20s. a ton, before such time as it will be enabled to adjust itself to the new conditions. Nor can I accept without protesting vigorously, any proposal, that may jeopardize the means of livelihood of 250 people. The Tariff Board stated clearly that at the present time the excess cost of local cement over that of dutyfree imported cement is lower in Western Australia than in any other mainland State; at Perth, the difference is only 3d. a ton. .Disregarding for the time being, the issues of over-capitalization, excessive reserves, and under-production, I point out that, although the board may have been compelled to pass judgment upon the average cost of output, there are nevertheless several factors with which the Western Australian company has to contend, which are not common to the other companies.
It may not be generally known that approximately 1§ tons of raw material have to be processed to produce one ton of cement. In this connexion the percentage of lime content of the stone available in the vicinity of the Swan Portland Cement company’s factories is too low and variable for the company’s purposes; decayed shell which is dredged from the adjacent river is used as a substitute. The cost of recovering and washing this shell is much greater than the usual limequarrying process, and varies according to the amount of over-burden to be removed, and the length of haulage from the shell bed to the factory. Over a certain period of last year the average consumption of this basic material was 1.75 tons to a ton of cement. The actual average cost, together with the necessary mixture of clay being 12.07s. a ton of cement, or 4s. 6d. a ton above the figure accepted by the Tariff Board. Furthermore, this company uses Collie coal, which has to be hauled over 120 miles to Perth, the railage alone averaging 12s. a ton. Together with this cost the invoice price, shunting and handling charges, bring the total cost to 23s. a ton landed at the company’s factory. The calorific value of this slock - and this is an important point - is very low and consequently a larger consumption for burning is essential; .65 tons is used in the kilns alone to produce one ton of cement clinker, the average cost of which is 14.97s. a ton of cement, as compared with the board’s estimate of 8s. Id. a ton. Furthermore this company does not generate its own power, but draws its electric current from the public supply. The average cost of this item, over the period which I have already mentioned was 9.9s. a ton of cement. The Tariff Board’s report is not clear upon the point as to whether or not its estimated cost of coal covers the cost of power. If it does, then this cost to the Swan company roust be added to the 14.97s. already mentioned for this item. lt will be seen, therefore, that the cost of raw material, coal and power, to this company totals over 21s. in excess of the actual average cost set down by the board. Furthermore, as the supply of coal and power is outside the control of the company, the costs of such items are virtually fixed. I do not desire to convey the impression that this company is in a bad way; on the contrary, it appears to have been well managed. It has a nominal capital of £150,000 of which £148,737 has been called up. In its last financial year it made a net profit, of £19,492, out of which it paid dividends at the rate of 10 per cent. It reserved £3,000 for taxation and placed £4,000 in its general reserve fund, and carried, forward £728. That, I suggest, is quite a modest performance. Among its assets, fixed deposits and bonds amount to £22,697; it has also £10,032 in current account. On an output of approximately 45,000 tons for the year it was content with a profit of less than 8s. a ton, and during the last five years it has made voluntary reductions on accepted Government tenders aggregating 27s. a ton.
Personally, I believe that the position of the industry in Australia as a whole, fully warrants a reduction of the duty of 20s. a ton; but I am loath to see that protection disappear altogether at present. These companies need time to adjust themselves to new conditions. It is well known that railway freights in Western Australia are unduly high, and that the price of Collie coal could well bo reduced, with a not inconsiderable advantage to the local cement company. Until adjustments can be arranged the industry should be protected. Western Australia, needs this industry, and the local company, as the Minister has indicated, so long as it does the fair thing in meeting local demand, is entitled to continue in existence. The Tariff Board made it clear that the object of its recommendations is not to permit importations of cement but to bring about a reduction of local prices. Such a method of adjustment, I suggest, must be applied with the greatest caution. Last week I received a telegram which led me to put question upon the notice-paper. Doubtless, all honorable senators have heard Mie answer to that question. I believe that, the actual position of the cement manufacturing industry is not yet fully understood; nor is the answer to my question fully appreciated. In the circumstances, therefore, a further inquiry should be made. I shall vote on this item in accordance with the facts which I have just described to the committee.
– AH honorable senators must agree that cement manufacturing is an industry natural to Australia. It should be economically sound and able to produce all of the local requirements of cement. Splendid deposits of lime, clay and coal are at its disposal, and I feel sure that no one would desire to do anything which would jeopardize its future. In considering the competition of British cement we must pay due regard to the cheapness of mining the chalk cliffs of Dover and converting the material into cement ; also, we must recognize the cheapness of coal in Great Britain. For these reasons cement can be manufactured there at a very low cost. We must recognize the efficiency of the British industry when we learn that the companies are selling cement at 30s. a ton in the United Kingdom and showing a huge profit. Before going into the “ pros and cons “ of the industry in Australia, I wish to make it clear why I intend to vote in support of the Government on this item. One reason - and I suggest that this cannot be lightly brushed aside - is our position as a full partner in the British Empire and a party to the Ottawa agreement. It is all very well for some honorable senators to say that the Ottawa agreement has nothing to do with this matter. The British Government, through its representative in Australia, has very definitely stated its opinion that if we put a duty on cement higher than that recommended by the Tariff Board, we shall be committing a breach of the agreement.
– Does the honorable senator believe that the reduction of duty agreed to by the House of Representatives, constitutes a breach of that agreement ?
– -I do not pretend to be nearly so good an authority on the Ottawa agreement as is the British Government, whose representative in this country has conveyed to the Government the opinion of his Government, that a duty on cement above that recommended by the Tariff Board will constitute a breach of the agreement. That view is endorsed by every member of the Commonwealth Ministry, which I was elected to support.
– What is the honorable senator’s opinion ?
– I think that the retention of the British duty, would be a breach of the Ottawa agreement. Some people, I notice, are inclined to regard the Ottawa agreement as a document of little moment to Australia, whereas it has been of incalculable benefit to this country.
– ‘And to Great Britain.
– I admit the honesty and sincerity of those who take the opposite view, and I wish to have the opportunity to-night to state, quite dispassionately, my own opinion on this important subject. Honorable senators would do well to remember that the value of our exports to Great Britain has increased from £44,500,000 in 1932, to £51,500,000 in 1935. This increase, I suggest, is definite evidence of the advantage to Australia of the Ottawa agreement. I know, of course, that four eminent King’s Counsel have expressed the opinion that the imposition of the British duty of 6d. per cwt. is not a breach of the Ottawa agreement; but I take the view that if it is not a legal breach, it is at all events a moral breach of that arrangement. We all know that members of the legal fraternity thrive on differences of opinion on legal matters, and I assume that the Ottawa agreement is no exception. That contract imposes on the Government of this country a moral, if not a legal, obligation to do certain things, and it should not be necessary to remind those who intend to vote against the Government on this item, that the Government of the Mother Country has at all times scrupulously honoured its moral and legal obligations.
In regard to the cement duties, we should be guided by the Tariff Board, which is an unbiased and experienced tribunal, composed of Australians who thoroughly endorse the pro tective policy of this country. The board has submitted two reports. The second was issued in March of this year, and contains findings which, to my mind, are conclusive. The board stated that users of cement in this country have been charged unnecessarily high prices, which react unfavorably on government departments, local governing bodies, roads boards, builders, and contractors, whose costs are increased, and also penalize the general public through higher costs for dwellings. I should like to see a much larger proportion of Australian roads constructed of cement, instead of imported bitumen. In the United States of America, where wages are higher than in Australia, cement roads can be constructed for one-third of the cost in Australia. If cement were readily available to contractors and builders at a reasonable price, say £3 10s. a ton, as against 30s. a ton in England, and £2 a ton in Canada and the United States of America, much larger quantities of this valuable building material would be used, and there would be a great deal more employment in Australia. The industry is a good one. I have nothing whatever to say against it. I should be exceedingly sorry if, as the result of my vote on this item, any cement factory in Australia had to discontinue operations. If I conscientiously believed that a vote for the Government on this item would damage one cement company, I should seriously reconsider my attitude.
– If the honorable senator were satisfied that the British duty of 6d. per cwt. was not a breach of the Ottawa agreement, would he vote against it?
– I should not do anything that would be a contravention of any provision of the Ottawa agreement. It is. true that the cement industry gives employment to 2,000 Australian workers, but the important point to bear in mind is that cheaper cement would mean increased building activity and additional employment in the building trade, which alone provides work for 20,000 Australians. I am advised that the price of cement in Australia is two and a quarter times higher than in any other country.
– On whose authority does the honorable senator make that statement?
SenatorGUTHRIE.- On what I believe to be very good authority - one of the largest users of cement in Australia. The Australian manufacturers have an unlimited supply of the raw material. Some of the companies have the limestone and coal on the same property. If cement were available at a cheaper rate larger quantities would be used, and there would be a reduction of construction costs generally, to the benefit of the entire community. Some honorable senators appear to be under the impression that if the Tariff Board’s recommendation is accepted, British cement will be admitted free of all charges. That is not the case. The Tariff Board stated that exchange is equivalent to a duty of 14s. a ton, to which must be added freight and handling charges, which, in the opinion of the board, would provide an ample margin for Australian manufacturers. The board added that some companies, working in combination, have been charging excessive prices for cement. Another objection urged by the board is that the industry is over-capitalized, and although the companies have not been working at anything like capacity, profits have been high, and, in some cases, excessive. The board states further that five companies during the depression years showed a profit of £2,250,000. There also appears the statement that since last September, when the duty was taken off British cement, two new companies have been formed, and are now erecting buildings and plant with a view to catering for Australian requirements. Their action suggests that Australian manufacturers have nothing to fear.
– Shares of cement companies on the stock exchange have greatly appreciated in value.
– Yes ; the prices of many shares are now almost sky-high. The board stated that the profits of the various companies have ranged from 6 per cent. to 32 per cent. The average primary producer would be delighted if he could get a return of 6 per cent, on his capital investment. It should be remembered also that this very satisfactory range of profit has been made by companies with an output ranging from 16 per cent, to 34 per cent, of capacity, the average being only 32½ per cent; this shows that the companies concerned were working to practically only one-third of their capacity. The profit of only one company, according to the board’s report, has been less than 10 per cent., and the profits of several companies have ranged from 9s.10d. a ton to £2 0s. 6d. a ton, whilst the weighted average profit was £1 2s. 6d. a ton. These profits, I suggest, are excessive. The industry should be content with the profit of 10s. a ton as suggested by the board. The board went on to state that if cement could be made available at a reasonable price, the output of the companies would be vastly increased, because of the wider demand for the product. Finally, the board advised that the only way in which the manufacturers can be forced to reduce their prices to reasonable levels is by reducing the duty on importations. The high prices which have prevailed for cement in recent years hamper unduly the building, steel, timber, hardware and many other industries. If cement were available at a reasonable price the industries affected by it would be in a position to give employment to a much larger number of men.
– The honorable senator has exhausted his time.
– I have to confess my inability to understand the attitude of some Government supporters on this item. Senator Guthrie and Senator Foll appear in the role of “ Yes-No “ men. Not long ago Senator Foll expressed the hope, that the Government would take action to protect the cement industry in Queensland from overseas competition, which, he said, would if allowed to continue at the present rate smash the industry. To-night Senator Foll adopts a different attitude. He is willing ‘to allow the Government to smash the Queensland cement industry by permitting the free importation of British cement. I cannot follow the honorable senator’s reasoning. I have received a letter from the Queensland Cement and Lime Company - one of the concerns that is threatened by the removal of the
British duty - informing me that the importation of British cement into Queensland in January of this year was only 125 tons ; in February it rose to 368 tons, and in March to 451 tons, making a total for the first three months of thi3 year of 944 tons. Honorable senators opposite say that they are desirous of encouraging Australian industries. Senator Guthrie expressed that desire, and then went on to mention the huge profits made by Australian cement companies. As a supporter of the existing social system the honorable senator should be delighted that his friends are making these profits. There has been an increasing inflow of cheap cement from England. What guarantee have we that the increase will not continue?
Comparison has been made of the wages paid in Australia and in England to cement workers. The comparison is most interesting to members of the Labour party. Ordinary labourers in the cement works of England are paid lOd. an hour ; the rates in Queensland range from ls. 9d. to 2s. Id. an hour. Tradesmen in England receive ls. 3d. an hour, whereas their fellow tradesmen in Queensland are paid from 2s. 2d. to 2s lOd. an hour. The rate in Queensland is 100 per cent, greater than in England. Moreover, general stores, including engineering parts, are from 50 per cent, to 100 per cent, higher in Australia than in England. We on this side do not ask for protection for this industry in order that it may exploit the people. But we realize the necessity to. safeguard the basic industries of this country. This afternoon, when I said that if the Government had acted properly it would have arraigned i these companies under section 15 of the Tariff Board Act for making excessive profits, the Minister in charge of the bill called me a bush lawyer. I do not mind that, for I have known many bush lawyers to possess great intellectual powers, whilst, on the other hand, I have known many members of the legal profession to be congenial idiots. I have in mind -a barrister who could pass almost any examination after twelve months’ study, but in the ordinary affairs of life is a. complete misfit. As a bush lawyer with some experience of life, I claim that the Minister in charge of the bill grossly misinterpreted my remarks. There is a proper way to deal with any company which exploits the public. A man who is charged in a court of law with petty larceny is not likely to be found guilty of arson. The cement companies appeared before the Tariff Board in connexion with an investigation which had nothing to do with excessive prices or restraint of trade. Had they been dealt with under a different reference they would have been able to submit evidence on their own behalf, and everything would have been fair and aboveboard. First, there was one inquiry and, later, another. I ask the lawyers on the other side, who are acquainted’.with every legal point, whether the second inquiry was held in public, or in camera. Were the cement companies told that they were to be punished for making excessive profits? They were not told that because they had been making excessive profits and paying huge dividends, cement from England would be admitted free instead of being subject to a duty of ls. a cwt. The position is similar to that which would exist if a man who was charged with petty larceny, and then given ten ears for arson, were told that he could have defended himself under the first charge.
I come now to the Ottawa agreement. Senator Guthrie is desirous that that agreement shall not be broken, yet Sir Geoffrey Whiskard - a fine type of English gentleman - says definitely that Australia has broken that agreementSenator Foll says that, although he desires to help Australia, he must support, the Government in connexion with these duties, because Australia has broken the agreement. The Acting AttorneyGeneral (Senator Brennan) attempted to cloud the issue by saying that, there is a great deal of misunderstanding in regard to the agreement. Article 10 of that agreement, which was signed by Mr. Bruce and Sir Henry Gullett on behalf of Australia, provides -
His Majesty’s Government of the Commonwealth of Australia undertake that during the currency of this agreement the tariff shall be based on the principle that protective duties shall not exceed, such a level as will give United Kingdom producers full opportunity of reasonable competition on the basis of the relative cost of economical and efficient production, provided that in the application of such principle special consideration may be given to the case of industries not fully established.
Article 11 contains the words “existing protective duties “, of which Senator Brennan made a strong point. That article provides -
His Majesty’s Government in the Commonwealth, of Australia undertake that a review shall bc made as soon as practicable by the Australian Tariff Board of existing protective duties. . . .
A few days ago the Acting . AttorneyGeneral informed us that the “ existing duties “ were not those in force when the Ottawa agreement was signed, but those which were in operation after the Tariff Board made its inquiry, and when the schedule was laid on the table of the House of Representatives. Did any one ever hear such an utterly foolish argument from an eminent legal gentleman? Any man of intelligence who read3 the Ottawa agreement will conclude that those who signed it - both Englishmen and Australians - believed that by “ existing duties “ was meant the duties operating at the time the agreement was signed.
– Evidently one party to the agreement does not agree with the honorable senator.
– I admit that there is a great divergence of opinion.
We on this side resent the charge that our opposition to the Government’s proposal in regard to the duties on cement is merely factious. We oppose the free entry of cement from England because we know that the decision of the House of Representatives is not a breach of the Ottawa agreement. This committee has the right to say whether it considers any report of the tariff is fair or unfair.
– The honorable senator’s time has expired.
– If argument is to be judged by the force with which it is delivered, I must admit that Senator Brown’s argument must prevail over mine. Several honorable senators have expressed regret that the Ottawa agreement has been drawn into this controversy. One reason why nothing was said about it by the Minister in charge of the bill is that the Government felt that, in regard to ques tions of fact, there was no need to have recourse to something which should be kept in the background and which, in fact, the Government did keep in the background as long as possible.
I shall deal briefly with the reasons which actuated the Government to rely on the inquiry by the Tariff Board. More than three years have passed since this matter was referred to the board. That body made an exhaustive inquiry, and at page 10 of its report, dated March, 1935, stated -
The board is satisfied that local manufacturers should be able to sell cement at prices below the duty-free cost of imported cement and obtain a reasonable profit per ton. This means that their selling prices to distributors or most favoured customers would be well below importing costs. The existing duty is being used to cover excess profit-taking in an industry which is over-capitalized, and in which high costs of production are an inevitable result of the distribution of output between too many plants.
If any honorable senator desires to pursue that, paragraph to its conclusion, he will find that it is not without value in the present discussion. That report in due time came before the House, and the industry, well organized as it is, having a great deal at stake, and being willing to pay what was necessary to have its case tried once more, made an appeal. Its representatives interviewed the Prime Minister and submitted such a case that the right honorable gentleman consented to refer the matter to the Minister for Trade and Customs (Mr. White), who saw fit to order a second inquiry by the Tariff Board. The industry then was in the position of knowing the case that had been made out against it in the first report of the board. I quote a passage from the second report, which is also instructive - ‘
The high costs in all the factories and the extremely high costs in some of them are duc. no doubt, to very low output in relation to capacity, but the board considers that the industry provides a useful example of a drift to comparative inefficiency caused by the absence of free, local competition . . . The plain facts aro that the present plant has a capacity of l,313’,0O0 tons per annum. and it proceeded to give the figures to show how much over the necessities of the case that is. The board proceeded -
It was made abundantly clear in the board’s report that the object of its recommendations was not to permit the importation of overseas cement, but to force a reduction of local prices.
Again, on page 7 -
While there is room for a re-organization of the industry to permit of economics in costs, the board is convinced that the main immediate barrier to the necessary reductions in prices is the desire of the manufacturers to retain the high level of profits to which they have been accustomed.
The board then set out what, those profits are, and, on the next page, it stated -
Mho industry has undoubtedly been overprotected in the past. The high protection permitted high prices and excess profit-taking. The high profits provided an inducement to install plant in excess of requirements, with the result that costs increased. The depression caused a serious curtailment of demand, and the depreciation of Australian currency so increased costs of. importations, that the local manufacturers had nothing to fear from overseas competition.
If time permitted, I would have finished that paragraph, but I commend it to any of my honorable friends opposite if they desire any further opinion upon that point. Having reports of that description, the Government, being pledged to tariff making on the basis of the reports of the Tariff Board, did not consider it necessary to appeal to anything, except the plain facts set out by men specially skilled for the work, in & report which had been .duplicated entirely in the interests of the industry. True to the instinct of quarrelling with the umpire, it is now objected in this committee that two things have happened: First, the board did not hear the British manufacturers. That is revelant to the observation frequently made by the Leader of the Opposition that Australian industries are always put in the dock, and that the onus is placed upon them of showing why a duty should be retained. I venture to submit that is quite in accordance with the appropriate order of Things.
– The Government should put the other fellow in the dock and ask him to explain why the duty should be reduced.
– The natural order of things is freedom of trade between the component parts of the British Empire. If certain interests in those parts desire to restrict, that freedom, the onus rests with them to show, in the interests of the Australian people, why they should be granted that concession. That is the natural onus of proof. The Tariff Board itself stated on that very point -
With the experience gained in the assessment of English costs-
Of course, the hoard could not compel the attendance of witnesses from other parts of the world. It regarded the onus as resting upon the Australian manufacturer. . There are other references in this connexion which, if time permitted, I would quote for the information of honorable senators.
The second point in disputing the umpire’s decision has been raised by Senator Millen and Senator Sampson, namely, that the Tariff Board did not visit one factory. The Tariff Board, I venture to submit, is composed of intelligent persons, and we are asked to believe that their failure to visit a factory prevented them from making a complete and valuable inquiry.’
– Quite so.
– I merely assure the honorable senators who put forward that view that the Tariff Board is not the only tribunal which, in the social order of Australia, has to investigate facts. Courts have to investigate very important facts; but the judge and jury do not go down to the cross that marks the spot where the crime took place.
– If any doubt exists, they very often do so.
– In only one set of circumstances. If a view of the scene can assist them in arriving at the facts, they may visit it.
– That argument, applies to the Tariff Board in this case.
– Is the Tariff Board, by visiting the workmen in some particular cement factory, to learn particulars about wages which they might not learn from those who are in a position to give the information? Can the board find out any better b; being on the spot, what capital is invested, the total consumption of cement in Australia, or the dividends of the companies?
– By visiting the factory the board could find out first-hand the efficiency of the industry.
– Such information is not to be obtained from the navvies at work, but from the executive officers who have this material in their possession. The board obtained the information, and made excellent use of it; but, because this use is against what certain conductors of industry consider to be contrary to their interests, the recommendation is subjected to severe criticism. We have been told by some honorable senators that interests behind the Government have induced it to adopt its attitude on this item. If such a statement, can be made against the Government, it may also be said against other sections in this chamber. For my own part, I have never seen or heard from, directly or indirectly, any person connected with this controversy. But I know that numbers of persons interested in this matter have been frequenting this building. Senator Brown, having apparently mistaken his vocation, has discovered that there was something about the mode of reference to the Tariff Board which precluded it from giving the report which it did. One of the subjects which can be referred to it is the necessity for a reduction or an increase of a duty. How can that fundamental fact be found out unless the wages, profits and general condition of the industry are investigated ? That was done by the board, and, speaking with due deference to a bush lawyer of the standing of Senator Brown, I humbly submit that it was done quite properly.
I desire now to make brief reference to the Ottawa agreement, and the general methods employed” in the conduct of a tariff discussion. On this item, the spectacle of an industry being crushed out of existence, and of starving children, has not been staged as much as usual. I am glad that no honorable senator has said that the proposal of the Government arises from mere malice to crush Australian industry. Sometimes faint references were made to such a desire, but nothing more. The old story about the greed of the importers seems to have been played out; but the reason may be that honorable senators conceived that a better string to play upon would be the protest of the British Government against the action of the House of Repre- sentatives. As my time is now practically exhausted I may make further allusion to this aspect at a later stage.
– I do not propose to cast a silent vote upon this much-discussed matter of cement duties. Unfortunately, in addition to the merits and demerits of the case itself, the matter of whether or not the duties, as proposed in the schedule, constitute a transgression of the Ottawa agreement has been raised, in my opinion quite wrongly. The position is, briefly, that the agreement having been drawn up and agreed to by this Parliament, the Tariff Board held an inquiry into the then prevailing duty on cement, viz., £1 a ton. The board, in its wisdom, decided that that duty was too high, and recommended that it be decreased. Members of the House of Representatives, while agreeing with the board as to the necessity for some reduction, were not prepared to accept the board’s finding in its entirety. The British Government protested against a partial reduction of the duty amounting to 6d. per cwt., as it was quite privileged to do. This Government agreed with its view; hence the request which has been proposed in this chamber is in conformity with the views expressed by the British Government. I find myself in the position that, if I accept the Government’s contention that, as a supporter of the Ottawa agreement, I am in duty bound to support it in this matter, it will mean that every time the Tariff Board recommends an increase or reduction of duty, I shall be similarly bound. I am not prepared to so bind myself. When a member of the House of Representatives, I supported the adoption of the agreement, because I understood that in matters of this kind I should have a free hand. I do not deny that the Commonwealth has received great advantages under the Ottawa agreement, and I believe that wo should support it because its repudiation would bring disaster to a large number of our primary producers.
As I believe that the agreement does not enter into this discission, I feel at liberty to vote on the merits of the case. The Tariff Board has conducted two inquiries within the last two years into the cement-making industry, and its reports, which have been carefully and impartially prepared, contain -remarkable disclosures, some of which have already been mentioned during the debate. For instance the .board has stated that one factory is producing only 16 per cent, of its total capacity, and another only 18 per cent. One naturally asks why a factory producing only 16 per cent, of its capacity should continue to operate, and why it should have installed expensive plant which it did not intend to utilize. I presume that after it commenced operations it was absorbed by the cement combine, and was satisfied to make a low or a reasonable profit. The board also stated that the net profits of the cement companies range from 6 per cent, to 32 per cent. The company producing only 16 per cent, of its capacity may be that which is making a profit of only 6 per cent. A remarkable feature of the industry is that the ring has apparently fixed its prices at a figure which would enable the company producing only 16 per cent, of its capacity to make a reasonable profit. If a company can make a reasonable profit on that basis, what must be the profit made by the company producing up to 74 per cent, of its capacity? Probably that is the company which made a profit of r)2 per cent. Senator J. V. MacDonald -did not object to one company making a profit of 32 per cent., because others were making only 6 per cent. A net profit of 32 per cent, is outrageous. Mr. J. Symonds, the general manager of the Commonwealth Portland Cement Company, was examined by the Tariff Board and the report of a portion of his evidence reads -
Question. - “ That naturally raises the question as to whether or not some works ought to bo continued as operating concerns ; ‘ does it not? - Yos. I contend that half the works ought to be shut down. Still, how can you do that?- I cannot be a law to other’ people.”.
Question. - “ I have heard of other means of shutting them down than by law? - Yes, there are. Still, they ought never to have come into existence, but there you are, they have machinery agents running around telling the people what they ought to go in for, and 1 suppose this is duc to the commission they get.” “ What I am putting to you is not original, and my colleague raised it earlier in the day - they came into existence because the flowers were blooming too prolifically, so to speak. The thing appeared to be too attractive? - Yes, and some of my friends came into the thing quite blindly without any consideration of the costs at all.”
Why should the consumers have to pay excessive prices merely because some persons invest their capital in these companies without a thorough preliminary investigation. Before the cement ring was formed New South Wales Water and. Sewerage Board invited tenders for cement. One company, which was not then in the ring, tendered at a certain price, but on the 31st March the contract expired and fresh supplies had to be obtained. Tenders were not called because it was known that every tenderer would submit a similar price, and the board had to pay an increase of about 12s. 6d. a ton for its supplies. I understand that the Public Works Department of New South Wales obtains its supplies of cement from the .Kandos. Company at £3 4s. a ton, but those engaged in road construction and other similar work have to pay £4 lis. a ton. I venture to suggest that as soon as the contract expires the department will be forced to pay the price fixed by the cement ring. That is an aspect of the industry which makes it impossible for me to support its claims. I was glad to hear the Postmaster-General (Senator A. J. McLachlan) refer to the excessive profits made in this industry. Excessive profits are made in other industries, and some effective check will have to be placed upon those who are not satisfied with reasonable returns.
In matters of this kind the Government should move carefully, otherwise there may be serious repercussions. Prior to the depression, the imports over a period of six years averaged 21,176 tons per annum, with exchange at par and a duty of 20s. a ton. During the depth of the depression in 1931-32, when the exchange moved to about 13s. a ton, which, together with a duty of 20s., afforded protection equivalent to 33s. a ton, only 245 tons were imported. In ‘1932-33, under similar duties, but with a gradual improvement of conditions, imports increased by 220 per cent. In 1933-34 they increased by 178 per cent, over the previous year, and in 1934-35 by 115 per cent., showing quite conclusively that considerable supplies of British cement were finding their way into Australia. It is easy to visualize that, with the acceptance of the board’s recommendations, large quantities of British cement are likely to be imported into the Commonwealth, which will affect employment in Australia and our overseas trade balance. The matter does not rest there. The companies should reduce prices to the consumer, for they have the protection of 13s. a ton afforded by exchange, which should be nearly sufficient to prevent overseas manufacturers from obtaining an unfair advantage. I cannot support the duty of 10s. a ton, representing an effective duty of 7s. 6d. a ton, because the latter amount together with the 13s. a ton mentioned, would mean a protection of 20s. 6d. a ton, which the Tariff Board stated quite clearly is too high. I am not prepared to support the 6d. a ton now embodied in the schedule, because that would enable the ring to continue to exploit consumers. On the other hand I feel very reluctant to support the Government’s proposal that British cement should be admitted free of duty, because that would leave a protection of only 13s. a ton. The Tariff Board, in its supplementary report, stated that if exchange were at par it would recommend a duty of 15s. a ton as reasonable and adequate. The hoard is somewhat inconsistent when it recommends free admission when exchange is equivalent to a protection of 13s., and they say with exchange at par, 15s. a ton would be reasonable and adequate. I feel that a duty somewhere between 13s. and 20s. 6d. a ton would be fair, but the Government would not . accept such a suggestion, because it would besaid to be an infringement of the Ottawa agreement.
Senator Sir GEORGE PEARCE (Wes- tern Australia -Minister for External Affairs) [9.58].- I should like to remind honorable senators of what the Ottawa agreement actually provides. To understand the spirit of the agreement, we have to remember what transpired at the Ottawa Conference, and interpret the intention underlying articles 10, 11 and 12. At that gathering the representatives of the British Government submitted thespecific and definite proposals contained in articles 1 to 7. Those articles refer to schedules, including schedule b, which sets out the specific duties which the British Government is imposing on foreign wheat, butter, cheese, apples, canned and dried fruits, condensed milk and other commodities entering Great Britain. The representatives of the British Government having stated the concessions they were willing to make to the Commonwealth, naturally asked what the Commonwealth was prepared to do. An agreement is an arrangement into which two parties enter, and when one party offers concessions it is only reasonable to assume that the other party will reciprocate. Articles 8 to 15 provide what the Commonwealth is to do. When the agreement was considered the duties imposed were higher than they had been at any previous period. They were soaring to Himalayan heights. It is unthinkable that the British Government offered the specific advantages to Australia, which are set out in detail in the agreement, and, in return, accepted something which might have meant that the. Scullin tariff would remain in force; those were the duties existing at that time. Obviously, the British Government did not view the matter in that light; it did not contemplate for one moment that those duties were to remain; and the Australian Government never intended that they should. Consequently, in articles 9, 10 and 11 of the agreement principles were laid down under which the Australian Government should proceed. Why did not the Australian Government do as the British Government did?
– It could not.
– That is true; it was bound by its election pledge. The Labour party had raised tariff duties without reference to the Tariff Board ; the two parties opposed to the Labour party pledged themselves that they would not bring in a tariff without a prior reference to the Tariff Board. Consequently, the Australian Government said, in effect, to the British Government, “ We cannot undertake to do what you undertake to do. but we recognize that you would not accept our present tariff as a fair bar- gain; therefore, we undertake that there shall be a review of all our duties “. That is the essence of the undertakings given by the Australian Government under the Ottawa agreement. It was the primary step necessary to the carrying out of the agreement. Then, in other articles the principles which should govern such a review were set out. One of these was that the duties to be imposed against British goods should be such as would allow of reasonable competition. The Australian Government then gave another undertaking that it would not impose any duty against Great Britain higher than that recommended by the Tariff Board.
– After the board had reviewed the duty.
– Yes, obviously, after review by the board ; otherwise the undertaking would be meaningless. If the review does not operate on that principle, what is the good of it? It would be saying to the British Government, “ We leave ourselves free to maintain the 1929 tariff”. That was the Scullin tariff. Do honorable senators believe that the British Government would have undertaken to give those specific advantages to our trade over foreign trade, if Australia were to remain free to maintain the 1929 tariff after the Tariff Board had recommended reductions following a review of those duties? If honorable senators review the history of this agreement they must realize that the British Government intended, that the Tariff Board review should be a real thing and not a sham. If this were not so, its representatives would not have been so foolish as to enter into the agreement. That reviewwas meant to be a live thing; it was intended that the conclusions of the Tariff Board, after it had made its inquiries, should be acted upon. I suggest to honorable senators that they cannot console themselves by splitting straws over the meaning of the words “ existing duty “ ; they cannot shelter themselves in that way from the charge of departing from the spirit of the agreement. Although I could say much more on this matter I do not propose to continue my remarks at any great length. In conclusion, I urge honorable senators to study our position as an exporting country, and to remember the importance of the exporting industries to the economic life of this country, and also their importance to the welfare of the secondary industries, including the cement industry. What would be the effect on our economic life if our exporting industries could not maintain their present volume of production and exports and could not expand? I urge honorable senators to study actual facts in regard to world trade to-day, remembering, as we are obliged to do, that, excepting for wool and wheat the United Kingdom is our only market for primary products. I ask honorable senators to look at the schedules of the Ottawa agreement and to study the advantages we enjoy thereunder in respect of our primary products generally. The existence and growth of our primary industries since Ottawa have been due entirely to these specific duties which were imposed by the British Government entirely as the result of the Ottawa agreement. Australia is a young country, and if we are to hold it we must have a greater population; how can we expand our industries if we disregard the United Kingdom market? To-day, two Ministers of this Government are in the United Kingdom seeking an expandingshare of the British market for our primary products. Australia is not the only country which has representatives in Britain at the present time with the same object in view; agreements with other countries are now being considered by Britain. In these circumstances would it be wise at this juncture to start quarrelling with the best friend we have as to whether or not we have observed the Ottawa agreement?
– And we must, consider world conditions as they are.
Senator Sir GEORGE PEARCE.Yes. I suggest that in the light of the facts which I have described, and which cannot be disputed, we would be unwise to enter into a discussion as to whether or not, according to the legal phraseology of the agreement, we shall be breaking that contract by imposing certain duties on cement. Whatever may be the fact in that respect, the British Government regards the imposition of a duty on cement higher than that recommended by the
Tariff Board as a breach of the agreement; that is the essential point to be considered. In the light of the Tariff Board’s report, and the facts elucidated in this debate should we enter into such an argument with Great Britain at this juncture ?
– I refrained from speaking previously on this very important matter, as I was anxious to hear as much as possible of the arguments for and against the Government’s proposal. I have come to a decision only after weighing very carefully the “ pros “ and “ cons “ of the whole matter. My decision has been influenced by the fact that I have watched the progress of the cement industry in Tasmania, which State I represent in this chamber. I shall go back a good many years to the time when a venture was set on foot, having at its head men of the highest repute in Australia, men such as Sir John Monash and Mr. Bowes Kelly, who were esteemed for their business acumen and their general attitude towards commercial matters, to establish a large cement works on Maria Island. A capital of nearly £500,000 was invested in this venture. The shareholders’ list represented very broad interests, because it was generally felt that the venture should succeed in the interests, not only of Tasmania, but also of Australia. The history of that concern provides very painful reading. After a few years of strenuous work, during which as fine a plant as could be procured was operated, the undertaking collapsed, the shareholders losing practically the whole of the money they had invested. However, some years later it was generally felt that an opportunity still existed to establish a cement works to exploit the limestone deposits at, Railton. Consequently a new company set to work; it employed some of the best men available, but it soon met with difficulties. For twelve years it has been operating, and in 1933, after nine years’ work, it paid its first dividend of 2i per cent. Then its capital had to be written down by one-third, and in 1934 it paid a dividend of 10 per cent., which was equal to 6$ per cent, on the original capital. The main reason for the company’s success at that time was the gradual revival of trade then taking place in Australia; we were getting out of the depression. Last year this company paid a dividend equal to 10 per cent, on its original capital. These are the only dividends it has paid during twelve years of its operation. Thus honorable senators will realize how small has been the return to these shareholders on their capital. On reading the Tariff Board’s report, which is an excellent document from one point of view, the average reader would be given the impression that the ordinary shareholders of the company had been receiving unduly large dividends; whereas in fact they had not received 2 per cent, return on the capital over the period in which it had been invested. I have followed the development of this company for many years. Its fortnightly expenditure totals £2,000, half of which is paid in wages and salaries, and the other half for coal; these payments are equal to £52,000 per annum. The district in -which the works are established relies almost entirely upon this industry. In addition, the company distributes money as payment . for power, railage and wharfage, and this expenditure benefits Tasmania ‘ as a whole. Consequently, as a representative of that State, I am vitally interested in the proposal now before the committee, because whatever decision is arrived at it will have a profound effect upon Tasmania’s economic welfare. Last year the Goliath Company shipped from Devonport alone 48,000 tons. I have to consider whether I should be justified in supporting the Government in its desire to eliminate altogether the duty which hitherto has enabled the industry to become established in Tasmania. The item imposes a duty equivalent to onehalf of the rate previously obtaining. The Government asks this committee to request the House of Representatives’ to adhere to the recommendation of the Tariff Board, which is that importations of British cement should be free of duty.
Several honorable senators have referred to cement as a key industry. No one will challenge that statement and, notwithstanding all that has been said about unnecessary plant, I can visualize the time when, if the present prosperity continues, there will be two or three times the existing demand for cement, and the whole of the plant that has been installed by the various companies will be working to capacity. Any company which is so short-sighted as not to make provision for future needs will be at a disadvantage when the increased demand is made.
We have heard a good deal to-day about the Ottawa agreement. I regret that that issue has been raised. The amount involved in this item is so small that I think its effect on. any provision of the Ottawa agreement is hardly worth discussing, unless it can be shown that the retention of the reduced British duty would be a distinct breach, not only of the spirit, but also of the letter of the agreement. I have studied the agreement very carefully, and have come to the conclusion that the proposed duty in this item is not a contravention of any article of that arrangement. If the contention of the Leader of the Senate is correct, Parliament must, in future, be guided solely by the Tariff Board and accept every recommendation which that body makes, irrespective of whether the duties recommended are appreciably lower than existing rates. It will not then be competent for Parliament to ignore any recommendation of the Tariff Board and impose higher duties. I could make out a strong case, and show that the Government has ignored the spirit of the Ottowa agreement in connexion with the duties on another item; but I do not wish to discuss it at this stage. I repeat that I have come to the conclusion that the British duty of 6d. per cwt. is not a breach of the Ottawa agreement, and I believe that if this committee passes the item as it stands, the British Government will not regard the matter very seriously, or question the good faith of the Commonwealth Parliament.
– The honorable senator does not think that we should lose our overseas markets?
-Certainly not. The following statement, which I have received from an authoritative source, should interest honorable senators: -
Attempt to limit plant capacity: Critics of the industry suggest that its maximum plant capacity should be limited to 900,000 tons, yet before the depression Australia’s actual requirements in one year, 1927-28, had grown to 776,180 tons. On the basis of anticipating only a 20 per cent. expansion (for which any “key” industry must look ahead), an annual supply of 031,432 tons wouldbe needed. To produce this and allow for strikes and emergencies, a margin of 25 per cent. below plant capacity would have to be provided for. Anything more than an estimated production of 75 per cent, would be unsafe, which means that the total plant capacity, at full run on a three-shift day throughout the year, would be 1,241,897 tons.
In addition to imposing limits on the industry’s capacity, it is suggested that gross returns from the industry should be limited to 10s. a ton. On last year’s production, 481,148 tons, this figure would yield: -
This equals 3.8 per cent, on a capital of £5,000,000, which is the present valuation of the industry’s assets, after making an adequate allowance for depreciation. Even on the board’s valuation . of £3,600,000, the return is only 5.34 per cent.
If the trade recovered to predepression peak year at 776,180 tons, the return at 10s. a ton (deducting income tax) would yield: - 6.21 per cent, on a £5,000,000 valuation. 8.62 per cent, on a £3,600,000 valuation.
This is before providing for selling and administrative costs, and contingent reserves.
The Australian manufacturers have expenses to meet for administration head offices, share department, research and advertising, the aggregate cost of which averages 5s. a ton, and the suggested limit of 10s. a ton gross profit has been declared after a careful accountancy analysis, to be “ commercially impossible “.
Senator Hardy this afternoon cited figures showing the amount of capital invested in the industry, and the range of profits made. I took a careful note of his remarks, and, from my calculations, I estimate that the average profit earned by the companies mentioned was 8 per cent., which is not an unreasonable return. It must be remembered also that the figures covered the period since the return of prosperity.
I am not taking this attitude to the item because of any personal interest in the Tasmanian concern, I am not financially interested in any cement company in Australia, but I feel that if I supported the Government on this item I should not be acting in the best interests of the State which I assist to represent in this chamber, or in the best interests of the people of Australia. I admit that there are, in connexion with the cement-manufacturing business, many things of which I do not approve; but this is not the time or place to deal with them. The Australian cement manufacturers have been told ‘by Parliament that a portion of the protection which they have hitherto enjoyed is to be taken from them, a*nd we can reasonably expect that with the adoption of more efficient methods this necessary commodity will be made available to users at a lower -price than they have hitherto paid.
– The honorable senator has exhausted his time.
– I shall not take up a great deal of the time of the committee, because I said what I wished to say, and, at some length, in the general debate. My purpose to-night is to summarize my views on this subject. The first point to consider is the relation of this item to the Ottawa agreement, and as the Leader of the Senate (Senator Pearce) has dealt admirably and in detail with that aspect of the matter - very much better than I could have done - it is not necessary that I should attempt to add anything to what he has said. It does, however, seem to me that we should be giving a very poor return for the benefits which we have enjoyed for many years if now we sought to re-open the Ottawa agreement with a view to deciding whether or not we should honour our part of the compact.
– The benefits under the Ottawa agreement are mutual.
– That is. true, but that does not affect the question now before the committee. The benefits which we have enjoyed have exceeded those accruing to Great Britain, partly because the concessions given by the Mother Country were immediate, whereas ours, from the very nature of the agreement, have been delayed.
– Figures relating to British imports have shown a substantial increase.
– Perhaps so, but I repeat that that does not affect the question which we have now to decide, namely, whether we shall carry out our part of the agreement.
– We have done so.
– In the general debate, I questioned whether we had properly honoured our part of the contract, particularly in relation to primage, and I took the view that we had not done so. This, of course, is a matter of opinion, but any honorable senator who cares to study the articles of the Ottawa agreement, particularly article 14, which deals with primage, will, I am sure, have very grave doubts on the point.
– We agreed to remove the primage duty immediately the finances of the Commonwealth permitted that to be done. ^ Senator DUNCANHUGHES.Exactly. Paragraph c of article 11 places on the Commonwealth the obligation to “ remove primage duty as soon as the finances of Australia will allow.” We could, of course, delay action until we had repaid every internal and external borrower; but obviously, that would not be the observance of the spirit of the agreement. As to whether, from the legal point of view, the agreement has been broken by the amendment of the British preferential duty in the House of Representatives, I cannot say. I know that four eminent King’s counsel have expressed the opinion that the British duty of 6d. per cwt. is not a breach of the Ottawa agreement. Those gentlemen know much more of the law than I do. I move away from the word of the law very reluctantly to the spirit of the law, because laws were made in order that parties to an agreement might understand their legal position; it is dangerous to get away from the word of the law to the spirit of the law. In this matter we should do well to heed what the Leader of the Senate has just emphasized, namely, that whatever may be the legal position, we should carry out the general terms of the Ottawa agreement in a proper and honorable spirit. If we read the articles in conjunction with the statement of the Leader of the Senate this evening, we can, I think, come to no other conclusion than that, if we say that legally we are not bound to do certain things, we shall simply be taking advantage of a legal flaw in the agreement. If we adopt that course, is it likely, in the long run, to benefit Australia? I support the Government, because, on the merits of the Ottawa agreement, I think its attitude is right. But I can quite understand Senator Leckie’s opposition to the agreement. He considers that it is of no advantage to us. I gather that he is frankly hostile to it, and would like to see it abrogated.
– No ; but I should like to see it amended. I do not question the value to Australia of the British market.
-That is what the honorable senator did, if he will excuse my saying so, when he spoke on the second reading, and that is why Senator Brennan and I took him up. He stated, quite definitely, that the Ottawa agreement had been of no advantage to Australia. I say that it has been of great benefit to us. Whilst most agreements require alteration occasionally, it is a bad thing for the country and the Empire to say that, because there are provisions in the Ottawa agreement which might be improved, the agreement is an absolute failure.
I support the Government also because it proposes to reduce tariffs. Ever since I was elected to the Senate I have stood for a reduction of tariffs, and it would be most inconsistent on my part if, when the Government proposes a reduction, I failed to support it, irrespective of whether an industry in my own State was affected. Nevertheless, I agree with Senator Millen that the proposed reduction of theduties on cement is rather severe, although a general reduction of duties might be a good thing. Senator Millen also mentioned the duties on textiles as amongst those which might be reduced. There is also the duty on galvanized iron, which three years ago the Senate challenged; a1 though its decision was not confirmed by the other branch of the legislature. Glass, boots and shoes, and a number of other articles could also with advantage be subject to lower duties.
– What about motorcar bodies?
– We shall come to that item to-morrow. In passing, I may say that the duties on British motor-car panels are not excessively high.
Senator Sampson and Senator Collings referred to the value of cement in the defence of Australia. The former said that it was always desirable to make a personal reconnaissance. I agree with Senator Brennan that it was not necessary for those who were weighing the pros and cons of the cement duties to visit the works of the companies affected, and 1 remind Senator Sampson that General Ludendorff, who knows something about military matters, has stated that, even in the military sphere, it is most undesirable for a senior officer to visit the front line trenches because, if he does, he is almost certain to have his judgment affected by the difficulties which he sees there. Senator Plain said that the protest of the British Government suggested that the people and the politicians of this country are dishonest. I do not understand the British protest at all in that way. In my opinion, it means merely that a business agreement, which had existed for some time and in relation to which there have probably been many differences of opinion, is regarded by the Government of the United Kingdom as not, in the present instance, being kept as faithfully by Australia as it should be. I do not think that any one can cavil at the action of the British Government. Surely it is better to point out in advance the danger than to wait until a breach of the agreement has occurred. The duties on cement are of relatively small importance when the main issues are taken into account. To those immediately concerned they appear to be of vital importance, but we are here to consider, not only the interests of those engaged in the cement business, but, even more, the interests of the community as a whole. I do not fear that the Government’s proposal, if agreed to, will have the disastrous effect on the Australian cement-making industry that Senator Leckie and others profess to believe. In any case, it is our duty to consider this subject as representatives of the whole community. Similar problems will arise from time to time, and we must always remember that the concrete case under consideration has to be weighed against a host of intangibles which are of far more importance to the nation.
– The Minister in charge of the bill (Senator A. j. McLachlan) became somewhat annoyed at a remark of the Leader of the Opposition (Senator Collings), which he described as misleading. At an earlier stage he made a similar charge against me, but I was not in the chamber at the time. When I spoke of national security, I referred !o Australian security. I see danger in our imports growing more rapidly than our exports. If that state of affairs con tinues, we shall have not only to regulate imports by the imposition of duties, but also to prohibit certain importations, as the Scullin Government did. Had that Government not been courageous enough to impose embargoes Australia would have become bankrupt. In an earlier speech I referred to some figures which had been supplied to me by the Industries Protection League of New South Wales. I said that, according to information supplied by the league, it appeared that between 1932-33 and 1934-35 the value of imports had increased by 27if per cent., whereas exports had decreased by 6f per cent., making the total disadvantage to Australian trade 34£ per cent. I did not say that the figures were mine, for I distinctly attributed them to the Industries Protection League of New South Wales. But when he rose to reply the Minister in charge of the bill said -
Senator J. V. MacDonald endeavoured, by n process of reasoning which is common to honorable gentlemen opposite, to make a comparison between the exports and imports of the Commonwealth in particular periods. Thu honorable gentleman culled his material from bulletin No. 2, which has been in circulation for some time and, I have no doubt, has been placed in the hands of other honorable senators.
As I have already explained, I did not get it from that source. It would appear that the Minister, not I, was misleading the committee. The speech of the Minister continued -
I f they have studied it, they will see how misleading it is to make the comparison for thu years mentioned, because in tho base year, which Senator J. V. MacDonald selected, the exports of gold from this country amounted to £14.000,000.
The exports of gold did not amount to £14,000,000, because as in other years, when it was found necessary to export gold to save Australia, gold pounds were exported, and they have been included in the Statistician’s export figures. In order to get at the figure of £14,000,000, the value of gold pounds exported, £8,000,000, must be converted to its sterling valuation, £11,250,000, and then a further 25 per cent, is added for exchange. In other words, we are asked to pay another £2,750,000 on our own gold pounds. The Minister’s speech continued -
Therefore, results were the reverse of those indicated by the honorable gentleman.
That is a loose statement which suggests that my remarks were upside down. I shall show that they were not. The Minister, on that occasion, proceeded -
When making any computation regarding exports and imports, it is desirable to take into account what is really capital export. The honorable gentleman did not do that.
The Minister contended that the -gold pounds which were exported in order to save Australia should not be included in the export statistics. The bulletin No. 2 referred to explained, the situation in relation to the gold pounds, and said that what was done was for a special purpose. One might as well say that a comparison of two years was not fair because at one time the price of wool rose suddenly. The increased price of wool has meant many millions of pounds to Australia, but it was due very largely to threats of war, the exigencies of other countries, and the extraordinary demand for the commodity. If items are to be selected, and a tag put upon them, honorable senators will be able to discuss the figures until doomsday.
– What, has this to do with cement?
– It is most relevant, because I propose to develop my contentions along the lines of national security. Imports into Australia are growing much faster than exports, because, even if the £14,000,000 which 1 have referred to is allowed, the disadvantage to Australia, under the Ottawa agreement, owing to imports, is not compensated for by exports. Figures show that the disadvantages under that agreement are most substantial. I cannot understand the anxiety of the
Government to give an opportunity to English manufacturers to injure an Austraiian industry. Such action would naturally decrease some of the advantages we derive from our export trade, and make our national financial position insecure.
Honorable senators who support the Government’s proposal are concerned for the British manufacturers of cement. Thm, have asked us to draw back in horror from the alleged Australian combine. The Labour party has always been opposed to combines; but, if we are to have a combine supplying cement in the Commonwealth, for Heaven’s sake let it be an Australian combine.
– There is no Australian combine.
– I am “endeavouring to prove that point; therefore I welcome the interjection. The Leader of the Opposition (Senator Collings) quoted figures in relation to the huge cement profits made by British manufacturers of cement. This information was published in the Melbourne Herald, which stated -
While the Federal House at Canberra is bitterly debating the proposal to reduce duties on imported cement, and the British Government has hinted that failure to do so will be regarded as a broach of the Ottawa agreement, British cement companies are earning big profits in their own country.
Latest accounts show net profits ranging up to 40 per cent, on capital with dividends up to 20 per cent.
Rapid growth of earnings followed an agreement in 1034 between practically all the companies, aimed at abolishing price-cutting and stabilising prices slightly above the 1934 low level.
The agreement, together with cost reductions and the general revival of building in Britain, opened the door to substantial prosperitysays a recent issue of the Economist.
The Economist proceeded to quote particulars of the profits made by the principal British manufacturers of cement; they range from 6.3 per cent, to 41.4 per cent, in 1934-35. The dividends range from 4 per cent, to as much as 25’ per cent. These figures are not collected haphazardly by the Herald writer, because, like a good journalist, he quotes his authority for them. He stated that the figures were taken from a recent issue of the London Economist. As a newspaper editor, I subscribed to the
Economist for nearly ten years, .and that newspaper is regarded in Great Britain as being the leading authority on financial subjects. The cement combine in the United Kingdom is making enormous profits, and honorable senators are now asked to destroy the Australian industry in order to allow these British manufacturers to swell their sales. In one year, one of them made a gross profit of £1,186,000.
– That is the gross profit ?
– Yes ; I am aware that a gross profit can dwindle away when money is put into reserves, large sums are allotted for depreciation, and other amounts are tucked away by company accountants to gull the public. I emphasize that the dividends of the English manufacturers were as high as 25 per cent., while the earned percentage of profit of one company in 1933 was 43.9 per cent. The Government, therefore, cannot ask honorable senators to assist this poor, struggling industry in Great Britain.
The Leader of the Senate (Senator Pearce) endeavoured to persuade us that the intention of the Ottawa agreement was to increase both Australian and Empire trade. In my opinion the Ottawa agreement was inspired by the fact that Great Britain began to lose trade owing to the development of economic nationalism. Faced with dwindling markets abroad, it considered that the safest course to adopt was to negotiate an agreement for the greater encouragement of inter-Empire trade.
– To the mutual advantage of the participants.
– When one party suggests a bargain he generally does so with the object of obtaining considerable advantage from it.
– The honorable senator’s time has expired.
.- Two subjects dealt with during the discussion have reacted unfairly against the Australian cement companies. One was the statement of the Tariff Board that a gross profit of £2,250,000 has been made by nine of those companies during a period of five years. Honorable senators drawing attention ‘ to this position refrained from emphasizing the fact that the profit was “ gross “ ; it is just as well to remember that out of those gross profits provision has to be made for income tax and depreciation. The income tax on that amount would be at least £450,000, and the depreciation, taking the board’s own figures of 6s. per ton, would be £708,000. These two amounts would reduce the profit made to £1,100,000 for five years, or £220,000 a year, equivalent to a dividend of 4 per cent, on a capital of £5,000,000. Even if the capital were written down to the board’s figure of £3,600,000, the annual net profit of £220,000 would represent a dividend of only 5-J per cent. I do not desire that the statements of certain honorable senators in connexion with the gross profits of the Australian cementcompanies to create the erroneous impression in this chamber, and throughout Australia, that the manufacturers have made an enormous profit over a period of five years. Honorable senators in this debate have referred to overseas cement in the terms of British currency, and Australian cement in the terms of Australian currency. It would have been very much fairer on their part if they had referred to both products in terms of British currency. Had they done so the Australian price of £4 ls. for cement would have been expressed in British currency as £3 4s. 6d., which makes a wonderful difference.
Apparently I was a little premature when I complimented the Minister in charge of the bill (Senator A. J. McLachlan) on not dragging the Ottawa agreement into the debate at this juncture. I thought that the Government had decided that that contention had been found untenable and had abandoned it ; I therefore expected that the Government would fight the case on its merits. Nevertheless the Leader of the Senate (Senator Pearce) made a fighting speech on nothing but the Ottawa agreement.
– Various honorable senators referred to the Ottawa agreement, but the Minister in charge of the hill never mentioned it.
– Probably my attitude towards the Ottawa agreement has been misunderstood in this debate. Honorable senators should differentiate between the value of the British market and the value of the Ottawa agreement. They are entirely different. Before the Ottawa agreement was conceived, Great Britain took more primary products from Australia than it has purchased since the making of the agreement. In 1924- 25, which was a normal year, exports to the United Kingdom amounted to £69,000,000.
– That was due entirely to the boom in wool.
– Then I shall quote the statistics for another year. In 1925- 26 the United Kingdom purchases from Australia were valued at £61,000,000. This year there is another boom in wool but the purchases from. Australia total only £51,000,000. I quite agree that in the last three years Australia has been gradually selling more and more to the United Kingdom, bi.it honorable senators should realize that Great Britain has also made proportionately greater purchases from foreign countries than from the dominions. f. do not desire my view of the value .of the British market to be misunderstood ; I believe that it is the greatest trade advantage that Australia has; but at the same time the Australian market and allegiance to Great Britain are worth a great deal to the Old Country. Some honorable senators speak as though the British market we enjoy at present is due entirely to the Ottawa agreement. Great Britain took our surplus products long before the Ottawa agreement was conceived, and, even if it were abolished, would continue to purchase our primary commodities. What has appeared to me to be more remarkable than anything else in this discussion, is the great difference of opinion between the Commonwealth Government, and the British Government on the matter of the cement duties. The Commonwealth Government might state that it is entirely in accord with the Imperial authorities, but the contrary seems to me to be the case. I believe that the Commonwealth Government would not wilfully wreck any Australian industry and put people out of employment; but in this instance it has wrongly accepted a recommendation of the Tariff Board. which is not applicable to present-day circumstances. i think that this Government is perfectly sincere when it states that it does not think that its action will break the cement companies and cause unemployment ; it is perfectly sincere in stating that it does not consider that British cement will be imported into the Commonwealth. But why has the British Government made its protest? If the Imperial authorities do not consider that British cement will be sold to Australia, they would not deem it worth while to protest against the duty agreed to by the House of Representatives. I have no hesitation in saying that the Australian market for cement will bc valuable to British manufacturers. In those circumstances which Government is right ? If the contention of the British Government is correct heavy importations of British cement will enter Australia to the detriment of the local industry, and if the Commonwealth Government is right, and large quantities of British cement are not imported, the spirit of the Ottawa agreement can be regarded as so much flat soda water.
– I am sure that honorable senators followed the speech of the Leader of the Senate (Senator Pearce) with interest, and those who supported the adoption of the Ottawa agreement will concur in practically all the Minister said. It is generally admitted that that agreement has been of great benefit to the Commonwealth, and particularly to the primary producers; but I remind the right honorable gentleman that it was reached after the fullest consideration had been given to its possible effect upon both contracting parties. Although the agreement has been of distinct advantage to our exporting industries, it has been also a decided benefit to British manufacturers, because the overseas trade figures show that, as a result of its adoption, their exports to Australia have increased considerably. The remarks of the Leader of the Senate had very little bearing upon the subject now under consideration . The Minister, who, incidentally, mentioned the Scullin tariff, said that had it been understood at Ottawa that duties were not to be reviewed by the Tariff Board with the object of recommending reductions where necessary, the agreement would not have been entered into. An impost of 20s. a ton on cement had been in operation for many years, and I do not think that this impost or any possible variation of it was even mentioned at that conference. Those who disagree with the Government in this instance are as sincere and earnest in their attitude as are those who support it.
– “Who is to interpret the agreement?
– Surely we are sufficiently intelligent to understand what it provides. Are we to accept without question every recommendation made by the Tariff Board? The manufacture of cement is not difficult, and the companies now operating in Australia are producing a commodity of high quality. The works in Tasmania are producing about 50,000 tons annually, of which only 15 per cent, or 20 per cent, is used in that State, the balance being disposed of on the mainland. If the Tas1 manian company could not produce 50,000 tons annually, it would be compelled to go out of business. Cement cannot bear heavy transport charges, and if the industry is to be conducted on a sound economic basis, adequate protection must be afforded. If the cement-making industry is to be deprived of the assistance it has been receiving the position of other protected secondary industries should also be investigated.’ Were the duty on cement 50 per cent., it could, on the recommendation of the Tariff Board, be reduced without injuring the industry, but a substantial reduction of the comparatively low rate of duty it has enjoyed for some years cannot be justified. It has been said that as the industry is over-capitalized, and is making excessive profits, importations from Great Britain should be free ; but similar charges could be made against other secondary industries which are not affected.
– If the Government says that the amendment carried in the House of Representatives is a breach of the agreement, who is to decide ?
– In the first place, the Government did not at frs t regard the amendment carried in the House of Representatives as a breach of the agreement, but later the Minister for Trade and Customs (Mr. White) declared it to be so and said that the matter would be adjusted when the tariff was before the Senate. Surely we are not expected to vote blindly in matters of this kind. Cement-making is a natural Australian industry, which is being carried on efficiently in practically every State, and although the prices charged have been somewhat high, reductions have been made, and there is reason to believe that prices will he still further lowered. 1. agree with Senator Leckie, who contends that if the adoption of the Tariff Board’s recommendation will benefit Great Britain heavy importations of British cement will enter Australia. We have been told that if British cement is dumped in Australia action will be taken under the Industries Preservation Act, but I hesitate to believe that any effort will be made to restrict imports. I intend to oppose the free importation of British cement.
– -I have listened with amazement to some of the statements made during the debate. Senator Guthrie said that the price of Australian cement is two and a quarter times greater than that at which it is sold in any other country. In reply to a cablegram to the Australian Trade Commissioner in Canada, 1 have been informed that the price of cement in Toronto is £3 17s. 4d. a ton, which, when reduced to Australian currency, is £4 16s. a ton. The figures for Montreal are £3 9s. or £4 6s. a ton, and Vancouver, £4 or £5 a ton. If the price of Australian cement were two and a quarter times greater than that charged in Montreal, it would be over £12 a ton. The rates of wages in Canada vary from lOd. to ls. 3d. an hour, whereas the average Australian rate is 2s. Id. an hour. The Assistant Minister (Senator Brennan) said that when we appoint an umpire we should accept his decision. I was amused to hear such a statement. What did this Government do in relation to the umpire’s decision on agricultural implements ? In effect, it said “ we must abide by the umpire’s decision on cement, but his decision on agricultural implements does not count” and this is naturally interesting to the great mas.? of primary producers. I submit that the test of our attitude towards the Ottawa agreement is whether we are keeping to the spirit of it. It was never intended that British cement should be allowed free entry into this country.
– The duties on agricultural implements do not arise on this item.
– I am merely replying to Senator Brennan’s statement, about disputing the “ umpire’s decision “. It is generally understood that a party who dissents from the decision of the umpire acts in an unsportsmanlike manner. Nothing of an unsporting character has been done or proposed by the opponents of the Government’s request. In essence, the Ottawa agreement connotes a scaling down of duties. Under such an interpretation, the duty on cement can be reduced to any figure below ls. per cwt. It was never intended under the agreement to abolish completely the protection on this commodity. Such a course would mean freetrade between Great Britain and Australia.
– ‘The agreement speaks of fair trade.
– I contend that the reduction of this duty to 6d. per cwt. will permit of fair trade between the two countries. I have listened very carefully to all the arguments advanced in this discussion. and, as a result, I am confirmed in my opposition to the Government’s proposal.
.- I believe that the objection raised by the British Government to any action by this Parliament to impose a duty on British cement higher than that recommended by the Tariff Board was an honest objection, and that it was not inspired in any way. So advantageous has the Ottawa agreement proved to Australia that we cannot afford to break it. Senator Guthrie, when speaking on another subject, submitted figures of our exportations of meat, eggs, and butter to the United Kingdom, and pointed out what we had gained in that market under the agreement. I propose to deal with another phase of it. Although the Ottawa agreement was instrumental in assuring the prosperity of our primary industries, I. am not prepared to credit it with the whole of this development. In this connexion I make a plea on behalf of the primary producers themselves; by adopting a longer working week they did more than any other section of the community to help this country out of the depression. In 1925-26, when wheat prices were good, and business generally was booming, the primary producers confined their activities almost entirely to the growing of cereals; when the depression descended upon this country, and prices collapsed, they intensified cultivation, and engaged on a larger scale in i he production of sheep, pigs, and poultry. Mainly by working longer hours, they increased products for export, the revenue from which largely helped us out of the depression.
Looking at the Ottawa agreement from h purely commercial point of veiw, I feel inclined to accept a compromise in respect of the duty on cement. It is only reasonable that the people engaged in this industry should be given time, in order to enable them to put their house in order, and to become accustomed to the changed conditions. However, the Minister has pointed out that even a compromise would be only a qualified adherence to the agreement, and we have to concede all or nothing. If there is any likelihood of our violating the Ottawa agreement by accepting a duty higher than that recommended by the Tariff Board, I shall vote in support of the Government’s proposal. However, I am still hopeful that something may yet be done to obviate this difficulty. I am encouraged in that hope by the following remark, which was made in the House of Representatives on the 16th November, 1932, by Mr. Archdale Parkhill, who was then Postmaster-General, and is still a member of the present Ministry -
Article 12 does not mean that the Government must accept the recommendation of the Tariff Board.
In these circumstances I feel that I must support the Government; I repeat, however, that I am yet hopeful that a compromise may be reached.
– I have studied the reports of the Tariff Board and the discussions, as recorded in Hansard, on this item. Furthermore, I have obtained the views of several large users of cement in Melbourne and the country districts of Victoria. These people contend that the free entry of British cement may, for a time, throw a certain number of men out of employment, but that eventually the cheaper commodity will result in placing a far greater number in employment in other avenues. On the other hand, I have listened to the arguments put forward in the interests of the manufacturers of cement, who are apprehensive as to the effect Upon the industry of any action to abolish this duty. Viewing this matter with an open mind, from the points of view of both the manufacturers and the consumers, I favour the middle course presented by the imposition of the duty of 6d. per cwt. This course also would reduce the price of cement and so increase the demand for it, thus providing more employment inside and outside the industry. The suggestion that locally produced cement is essential for defence purposes is pure propaganda. Several thousands of tons are now being used in modernizing our coastal defences, but, when this work is completed, the requirements of cement for defence purposes will be negligible. In his advocacy of a lower duty, Senator Sampson stressed the defence requirements. I do not know whether he had in mind the construction of concrete dugouts and pillboxes, or the building of better and cheaper roads, which would serve for military purposes. As an Australian, I do not desire to see any injury done to any local industry. The ardent high protectionist is as big a nuisance to me as the dyed-in-the-wool freetrader; I prefer to steer a middle course. Had the vote on this item been taken before the implications of the Ottawa agreement were raised, I would certainly have voted against the Government. It is useless to debate whether or not the imposition of a duty above that recommended by the Tariff Board would constitute a breach of the agreement. I doubt whether the disposal of a few tons of cement would result in serious retaliation on the part of Great Britain. Nevertheless, there is a danger that such action on our part will adversely affect our export trade. In this matter, I have not been influenced by anyone; my conscience prompts me to record my vote in the interests of a big section of community rather than in the interests of a privileged few.
– But for Senator James McLachlan’s quotation of a sentence from a speech delivered in the House of Representatives on this subject by the Minister for Defence (Mr. Archdale Parkhill), I would not have participated in this debate. That quotation, I suggest, is like a number of other quotations often submitted to honorable senators; divorced from its text, it seems rather damaging. On this matter I am placed in a rather difficult position, because I recognize that the cement industry is of vital importance to Australia, and care should be exercised to see that no actual harm is done to it, whilst, on the other hand, I feel that we must, undoubtedly, honour the Ottawa agreement, which has proved of great value to Australia. In my difficulty I have studied the debates which took place in both chambers when tha Ottawa agreement was before this Parliament. The only conclusion I arrived at was that the then Opposition, led by Mr. Scullin, attacked the Government violently on the ground that the agreement denied to this Parliament the right to review or alter in this respect any finding of the Tariff Board. On that occasion, Mr. Beasley said - . . A good deal has already been said in this debate about article 12. and much more will be said about it before the debate concludes. It cannot be too frequently stressed that this article seriously affects the power of this Parliament to protect the industries of Australia. There cannot be a shadow of doubt that the article implies the scuttling of Australian secondary industries. It is proposed that the Tariff Board shall be equipped with greater power than this Parliament has. It is required of us, in my opinion, to jealously safeguard our power, and to rigorously resist any intrusion into our sphere of government. If the agrement is approved, unemployment would undoubtedly increase, and Parliament will be unable to do anything to safeguard or stimulate our secondary industries. Stripped of all humbug, this agreement means that for five years the Parliament of Australia will be powerless to do anything effectively for the protection of Australian industries.
This, of course, rather over-states the case, but in view of these remarks, I cannot understand the attitude adopted by the members of the present Opposition in this chamber. I emphasize that there were two parties to this agreement - Great Britain and Australia. They entered into a pact which was to operate over a period of years. The Australian delegates to the conference at Ottawa undertook that the Australian Government would place the agreement before Parliament and the British delegates undertook that their Government would do likewise. If one of two parties to an agreement claims that it has been broken, somebody must decide which party is in the right, and which is in the wrong. Speaking on the Ottawa agreement in the chamber, Sir Hal Colebatch pointed out that the time would arrive when someone would have to decide such a dispute. When asked by an honorable senator if the High Court should be the body to decide it, he replied that he. did not know, adding that perhaps time would decide the matter. The following report appeared in the Sydney Morning Herald, of yesterday.
The British High Commissioner (Sir Geoffrey Whiskard) warmly defended Great Britain’s intervention in the controversy over cement duties, in a speech to-day to the Melbourne Chamber of Commerce.
Sir Geoffrey Whiskard, who was the guest of the chamber at a luncheon, said that the freedom of both Australia and Great Britain had been curtailed by the Ottawa agreement, and he asked whether Australia would not have protested vigorously if Great Britain had broken her part of the agreement.
At Ottawa Australia made a definite bargain with Great Britain. Both parties to the agreement expect to get something from it and the Commonwealth, equally with Great Britain, is in honour bound to observe its part of the contract. Sir Geoffrey Whiskard went on to say -
In the last few years the members of the Empire, he said, had realized that the more each bought from the others, the more each could sell. They had learned that if trade was to be progressive, it had to be bilateral. At the Ottawa Conference there had been hard bargaining, not in the spirit of men determined to get the better of the other fellow, but in the spirit of men who realized that the more they bought, the more they could sell.
It hod been suggested, he continued, that certain representations about cement duties, which he had made on behalf of the British.
Government, were a gross interference by the United Kingdom with the freedom of Aus tralia to manage its own affairs. “ Is this true?” Sir Geoffrey asked. “Is it not a fact that in every bargain each buyer does in certain specific respects limit his own freedom of action for the time of the bargain V”
Under the Ottawa agreement we have limited our action for five years. Our undertaking is that British manufacturers shall have a reasonable opportunity to compete in the Australian market, in return for which Great Britain has given us valuable concessions in the British market.
– The Ottawa agreement does not bind us to eliminate all protection of our secondary industries.
– Under the Ottawa agreement questions relating to duties are to be referred to the Tariff Board. Sir Geoffrey Whiskard stated further -
Tho British Government entered into u certain bargain concerning imports from foreign countries which limited her freedom of action. Supposing the Parliament of Westminster decided to disregard those limits, would not the Commonwealth Government be entitled to protest very vigorously? The British Government and the other governments of the Empire undertook certain things at Ottawa, and they undertook those tilings in return for very definite and worthwhile advantages.
The British Government, Sir Geoffrey added, had undertaken obligations at Ottawa which were not easy to assume, notably the obligation of restricting meat imports from a country with which it had close economic relations, hut Great Britain now felt that it had been worth while to undertake those obligations. 1 have endeavoured, during this discussion, to find out where I stand with regard to the Ottawa agreement which I regard as vital. I was surprised to hear Senator Herbert Hays say that he, as one representative of the State of Tasmania, reserved to himself the right to interpret the agreement. If other honorable senators took the same view the position would be impossible. The Prime Minister (Mr. Lyons) has stated that the Tariff Board’s findings may be reviewed, but only by agreement between the two parties - the British and Commonwealth. Governments - which alone may determine in what particular it may be altered. I have no desire to injure any of our secondary industries; but I take the view that, under the Ottawa agreement, we are bound to do certain things. In many respects it is a wise agreement. The Leader of the Senate told us to-night that matters of very great importance to the Commonwealth and the Empire, even the Ottawa agreement itself, will be reviewed very shortly. Therefore, we should be especially careful. The British High Commissioner, with the full responsibility of his office, has intimated quite plainly that the British Government would regard the retention of the duty on British cement as an infringement of the Ottawa agreement. The Commonwealth Government takes the same view. There is disagreement among senators, some supporting the Government, and others being opposed to it on this item. In view of what has been said, and of the importance of this issue to the Commonwealth and the Empire, I believe that we should stand by the obligations which we entered into at Ottawa. This course, I am convinced, will be in the best interests of the Commonwealth and of the Empire.
Question - That the request be agreed to - put. The committee divided. (The Temporary Chairman - ‘Senator J. B. Hayes.)
Question so resolved in the affirmative.
Item agreed to, subject to a request, item 239 agreed to.
HOUR OF MEETING.
Motion (by Senator Sir George
Pearce) agreed to -
That the Senate, at its rising, adjourn till to-morrow at 11 a.m.
Senate adjourned at 11.45 p.m.
Cite as: Australia, Senate, Debates, 13 May 1936, viewed 22 October 2017, <http://historichansard.net/senate/1936/19360513_senate_14_150/>.