House of Representatives
17 May 1932

13th Parliament · 1st Session

Mr. Speaker (Hon. G. H.Mackay) took the chair at 3 p.m., and read prayers.

page 813



Prime Minister · WILMOT, TASMANIA · UAP

– It is not the intention of Ministers to reply to questions without notice to-day, for the reason that there is urgent and important business which must be disposed of, and the Government is anxious to clear the way for the debate on the tariff.

page 813




asked the Minister for the Interior, upon notice -

In view of the need for greater co-ordina tion of the seven separately-administered government railway services in Australia and the failure of these systems to secure voluntarily an adequate measure of co-operation in regard to interstate matters, will he inform the House whether the Commonwealth has power under the Constitution to require the States:-

To cease the wasteful competition be tween one State railway system and another for traffic adjacent to State borders? 2. (a) To fix the rates to be charged by

State railway systems for passengers, goods and livestock travelling from a station in one State to a station in another State? (b) To fix the conditions pertaining to the carriage of such traffic?

To conform to standards in regard to railway equipment such as -

Locomotives, carriages and wagons, commonly used for interstate traffic and which travel from one State to another;

Locomotives, carriages and wagons commonly used for interstate traffic but which do not travel from one State to another;

Stations, station yards, signalling and other structures and equipment commonly used for interstate traffic?


– The honorable member’s questions involve matters of law. It is not the practice to express, in reply to questions in Parliament, opinions upon matters of law.

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Motion (by Mr. Lyons) - by leave - agreed to-

That he have leave to bring in a bill for an act relating to the temporary suspension of the Financial Agreements Enforcement Acts 1932 and the Financial Emergency (State Legislation) Act 1932, and for other purposes.

Bill brought up, and read a first time.

Second Reading

Prime Minister and Treasurer · Wilmot · UAP

by leave - I move -

That the bill be now read a second time.

The object of this measure is to suspend the emergency legislation embodied in the “Financial Agreements Enforcement Acts and the Financial Emergency (State Legislation) Act recently passed by the Parliament. Honorable members are so well acquainted with the happenings of the last week that it is not necessary for me to traverse at length the circumstances leading to, and the justification for, the introduction of this bill, which, I trust, will have a speedy passage through the Parliament. The refusal of the late Government of New South Wales to meet the obligations of that State under the financial agreements, threw on the Commonwealth the burden of doing so, and necessitated action by the Commonwealth Parliament to enforce them. The object of the emergency legislation, which we are now asking to suspend, was to compel the Government of New South Wales to repay to the Commonwealth Government amounts which the latter had paid on behalf of New South Wales, and the deliberate refusal of the Lang Government to obey that legislation, led to Mr. Lang’s dismissal by the Governor of the State, who has appointed other advisers. The new Premier (Mr. Stevens) has declared that he fully subscribes to the resolution passed at the last conference of Premiers, that -

This conference affirms its adherence to the Premiers plan, undertakes to meet interest obligations, and to continue progressively to reduce budget deficits.

That undertaking was given by all the governments represented at the conference, except those of New South Wales and Victoria. The representative of the Victorian Government refused to re-affirm its adherence to the Premiers plan.

Mr Scullin:

– What has this to do with the bill ?


– I am showing that the new Premier of New South Wales intends to come into line with the Premiers of all the other States, except Victoria.

Mr Scullin:

– The Enforcement Acts were designed to recover moneys; they had nothing to do with the Premiers plan.


– I am making it known that the new Premier of New South Wales has undertaken to give effect to the provisions of the Premiers plan with respect to the balancing of budgets.

Mr Watkins:

– Why stonewall the bill?


– I am not stone-walling the bill, and I am not seeking to make political capital out of this business; I am greatly pleased that better conditions have returned. No one could be more glad than I am at being able to introduce legislation for the suspension of the emergency measures which the Government regarded as necessary to meet the conditions that recently prevailed.

Mr Scullin:

– The Prime Minister should make it clear that the Victorian Government has never suspended the payment of interest.


– I have done is on a number of occasions. The Victorian Government adhered to the Premiers plan religiously, until the Acting Premier (Mr. Tunnecliffe) notified the last Premiers Conference that that Government did not intend to reaffirm its adherenee to the plan.

Mr Scullin:

– This legislation does not affect the Premiers plan; it has to do with the payment of interest by New South Wales. Why invite a debate on a bill which could be passed in two or three minutes ?


– I am not doing anything of the kind. Adherence to the Premiers plan is essential if the interest commitments of Australia are to be met.

The conflict between the Commonwealth Government and the New South Wales Government has caused great inconvenience to the public of New South Wales.

Mr James:

– The Prime Minister did not appear to recognize that fact last week.


– I have always recognized it, and have deeply regretted the necessity for the legislation which we are now suspending. The Government has had no desire to cause the people of New South Wales inconvenience, and this bill has been introduced for the purpose of terminating at the earliest possible moment any inconvenience that may have been unavoidably caused. Therefore, we ask that the bill be treated as an urgent measure. We seek not to repeal, but to suspend, the emergency legislation.

Mr.Rosevear. - In case Mr. Lang comes back again!


– I suggest to the honorable member that he would greatly help the country if he did what he could to see that Mr. Lang is not returned to power.

Power is given to the GovernorGeneral to restore, by proclamation, the provisions of the enforcement legislation, and the effect of proclamations, directions, notices, &c, issued under it; but now that the new Government of New South Wales has given the assurance that it will meet its interest obligations, this legislation should certainly be suspended so long as a real effort is being made to observe the conditions of the plan that has been adopted by the other State Governments.

Mr Gander:

– Who will be the judge of that?


– There is no necessity for a judge.

Mr Blakeley:

– But there are certain qualifications.


– The main qualification is that the suspension will not affect the rights and liabilities created by the emergency acts. Any person who has committed an offence, or incurred liability while they have been in operation, will not be relieved of liability by the legislation we are now considering.

In conclusion, I remind honorable members of the actual financial obligations of New South Wales to the Commonwealth to-day. The gross default of the State in regard to interest obligations which had to be met by the Commonwealth was £4,301,827. Deducting Commonwealth contributions to interest which were withheld - £729,354 - the net default of the State was £3,572,473.

Mr Cameron:

– Which the restof Australia has had to pay.


– Yes, except for £612,414, which has been recovered by the Commonwealth from the State. Therefore the net amountnow owing to the Commonwealth by New South Wales is £2,960,059. I say to the people of New South Wales, and particularly to the taxpayers of that State-

Mr James:

– Vote for Stevens!


– I may say that at the proper time, but that is not what I am saying now. When this bill has been passed, the taxpayers of New South Wales will be again in the position which they occupied before the recent Commonwealth emergency legislation was introduced. Every tax, and every payment due by individuals or companies to the Treasurer of New South Wales, should be paid by them in the same way as before default was made by the recent State Government. Such payments should again be made to the State authority, and not to the Commonwealth. I am as pleased in being able to introduce this bill as I was sorry to have to bring in the measures which it suspends.


.- I desire to express my gratification at the suspension of hostilities between the State of New South Wales and the Commonwealth, and to express also my pleasure, which I am sure is shared by almost everybody in Australia, and all well-wishers of this country outside the Commonwealth, that New South Wales hasagain acknowledged and adopted the Australian and British tradition of honesty. As a citizen of New South Wales I am glad that the conflict has ended, and that the anarchy that was rampant there has ceased. The people of New South Wales heaved a sigh of relief, which I suppose was heard even in the other States. It was possibly heard in Victoria on Saturday last, when it was known that Mr. Lang was no longer in office, carrying out his policy of hostility to the Commonwealth Government and to the rest of Australia. Everybody agreed that it was scandalous that such a position could have arisen, and now that the circumstances have changed, I trust that the Commonwealth Government, in these very difficult times for taxpayers, will see to it that, although Mr. Lang has placed New South Wales in arrears with its interest payments, a certain period of time will be allowed to that State to put itself right financially. It would be unfortunate if an attempt were made to collect immediately all the money in arrears, because the charges have been running on for several months, and the revenue of the State has been spent in other directions, with the results that the amounts due can be obtained only by increased taxation extending over several years without general hardship. That is quite a reasonable request, because New South Wales is suffering, not merely from the outburst on the part of Mr. Lang, but from other actions that have tended to strangle production and progress in that State. I hope that New South Wales will never again, have a similar experience, and that at the election to be held shortly in that State, at which the people will have an opportunity of expressing their opinion on this matter, the electors will make it known clearly where that State stands, for the next three years at any rate.

I hope that the Federal Government will take an early opportunity of making the position safe for the future. There ha3 been no reason in the past to expect that any State in Australia would definitely break any agreement such as that which was abrogated by the Lang Government. Consequently no provision was made in that agreement to cope with such a position as that in which New South Wales was placed by that Government. That was why it was necessary for the Commonwealth Parliament to pass the emergency legislation. It was reasonable to anticipate that the conduct of one government in its dealings with another government representing the same people and the same class of people throughout Australia would be such that there would be no need for a penalty clause in any agreement between those governments; but unfortunately after the experience we have had we cannot trust certain governments in this regard, and the Federal Government would not be justified in failing to take steps to prevent a repetition of the recent trouble. I hope that action will be taken by this Parliament during the next few months to put the people of any State in the position of being able to bring to book at the earliest possible moment any parliament or government of that State which deliberately transgresses against our accepted standards of tradition and honour. I understand that the leaders of the two parties represented in the new Government in New South Wales have definitely pledged themselves on the subject of the subdivision of New South Wales. There may be difficulties in obtaining the assent of the Parliament of that State, because the Legislative Council is not an elective body. I trust that the Commonwealth Government will take steps to ensure that the will of the people of that or any other State which desires to express itself in such a matter can be carried into effect without any delay.


.- While I am not opposing this measure, I think that the emergency legislation should be obliterated from the statute-book, and not merely suspended. I cannot allow this opportunity to pass without expressing my opinion as to the change of front that has been brought about through the action of the Governor of New South Wales, the legality of which is questionable. It makes one wonder whether we are living in a true democracy when one man can dismiss a Ministry that was elected by the people with a greater majority than that recorded in any other State. That change of front has been brought about simply because the present Government has been put into office in New South Wales by autocratic means. This new government has decided that it will carry out the Premiers plan to the letter, and that entails the enslavement of the people of this country in order that the overseas bondholder may be paid his interest. It is designed to inflict a reduction of wages on the whole of the workers, and effects reductions in the amounts provided for social services such iu child endowment, widows’ pensions and compensation. The Premier who has been dismissed in New South Wales opposed a reduction of the workers’ standard of living at every Premiers conference at which such a proposal has been made. Mr. Lang is to be commended for the stand he took on behalf of those who could not afford to have their standard of living further reduced. He declared that the debts of New South Wales should be paid by those who could afford to pay, and he advocated a reduction of the rates of interest on the public debt. That would have placed the burden of main taining the State on the wealthy section, who, unlike the workers, hav.e not been compelled to go without the necessaries of life. Even those men who get intermittent employment are not earning sufficient to provide the bare needs of themselves and their families. Because Mr. Lang would not reduce his people to the coo’lie standard of living, the legislation which this Government now proposes to suspend, was enacted to deprive him of financial supplies. When that proved ineffective, the Commonwealth stole the revenues of the State by putting the bailiff into State departments. These extreme measures not yielding the results that were anticipated, somebody else, whom the Nationalists first ridiculed in the press, but to-day laud as a hero, because he has taken up the cudgels in behalf of the Nationalists and the foreign bondholders, was drawn into the dispute. To the Stevens Ministry, appointed by the Governor, the Commonwealth Government immediately offered assistance that it had refused to the Lang Ministry that held office by the declared will of the people. The legislation attaching the State revenues is to be suspended, and banking facilities are to be restored to State departments to enable the payment of child endowment and widows’ pensions to be resumed. Furthermore, because the Commonwealth Government has probably heard, through its own secret service, of sworn declarations regarding the activities of the New Guard, it does not propose to proceed with the royal commission to inquire into the proceedings of that organization.

Mr Lyons:

– I rise to a point of order. The honorable member is discussing a matter that is not relevant to the bill.


– I ask the honorable member to confine his remarks to the proposals contained in the bill.


– The newspapers have stated that the Government does not now propose to proceed with the inquiry by a royal commission into the operations of the New Guard, and I mention the matter because I have seen sworn declarations that implicate several Government supporters.


– Order I The honorable member must obey the decision of the Chair.


– The enforcement legislation of this Parliament has affected the State administration in all its ramifications, and it is unfortunate that on a bill to suspend that legislation one is debarred from discussing its effects in detail. The matter I was mentioning is of serious importance to one section of the State Service, the New South Wales Police Force, which has been accused of having arranged a “ frame-up “ in regard to the attack on Alderman J. S. Garden by members of the New Guard. The members of the police force desire that the royal commission should proceed. To impose his slave standards of living on the workers, Mr. Stevens has announced that he proposes to appoint a new judge to the Arbitration Court in order to reduce wages in conformity with the Premiers plan. I am gratified that this bill will free the people of New South Wales for a time from the hardships recently imposed upon them by the enforcement legislation enacted by this Parliament, but unfortunately this relief is only to be temporary. The enforcement legislation may at any time be put. into operation again by the issue of regulations.

This is entirely election propaganda; it is a warning bo the - electors of New South Wales that if they support the Ministry that has been put in office by the Governor, they will get relief from the Commonwealth, but that if they dare to re-elect Mr. Lang to office the enforcement legislation will be put into operation again.

Hon on able MEMBERS Hear, hear !


– The interjections of honorable members reveal what is behind this legislation. The people of New South Wales are being told that they must not vote for Mr. Lang. I hope they will realize that this Parliament is dictating to them as to whom they shall elect to the State Parliament. The attitude of the Commonwealth Government is entirely wrong. This enforcement legislation should not be held suspended above the heads of the people of New South Wales. The Commonwealth Government should declare its willingness to accept the verdict of the electors if they decide in favour of Mr. Lang.

But the Prime Minister and his supporters are not prepared to do that. They are prepared only to laud the action of some person, who has no interest in Australia, in dismissing the Government of New South Wales. They are prepared to laud that action, but not to stand by the people.


– Order ! The honorable member must not reflect, even in the most remote manner, on uie GovernorGeneral or the King’s representative in any of the States.


– I am not permitted to do that; although all the vilification possible can be hurled from this chamber at a representative of the people of New South Wales. Yet we claim to be a democracy! It is entirely wrong that a Premier of a State should be subject to the insults that were recently directed in this House at Mr. Lang. Nothing has been bad enough to say about him, yet I claim that he is a truer representative of the poorer section of the community than those who have vilified him. He has at least endeavoured to help the poor and needy rather than those who have wealth and plenty. Mr. Lang adopted a Christ-like attitude, and now the Prime Minister and his followers are prepared to crucify him as Christ Himself was crucified by people of the same type.


– I and my associates in this House are pleased that at least for the time being the futile financial legislation, recently introduced by this Government, is to be suspended. We have been assured from time to time that the many amendments to the original act were introduced without political bias, and that the only desire of the Prime Minister (Mr. Lyons) in introducing them was that the State of New South Wales should honour its solemn obligations to the bondholders. Yet the second clause of this measure gives the clearest indication that the original legislation was designed as a threat to be held over the heads of the people of New South Wales. When that legislation was introduced in this House, the default of New South Wales amounted to a little more than £900,000. To-day we are assured by the Prime Minister that the default of that State totals over £3,000,000. That indicates how utterly futile this legisla tion has been in remedying the difficulties that confronted this Government in collecting its dues from New South Wales. The provisions of this bill clearly indicate that the act is being manipulated for purely party purposes. No other inference can be drawn from it than that if the Labour party is returned to power - which I feel sure will be the case - the financial emergency legislation will again come into force. It seems that is the event of the so-called Stevens Government being returned to power, the Commonwealth Government will not only suspend the financial emergency legislation, but will also provide additional assistance for New South Wales. We are assured by the Prime Minister that if a “real effort “ is made by the new Government of New South Wales, the enforcement legislation will not again become operative. What is this “ real effort “ referred to by the Prime Minister? We have heard him eulogizing the Premier of South Australia, holding him up as a pattern to the Premier of New South Wales, because he has faithfully carried out the Premiers plan. At the Premiers Conference, the Premier of South Australia, a so-called Labour man, openly boasted that in that State wages were lower and taxes higher than in any other part of the Commonwealth.

Mr Stacey:

– He made no such boast.

Mr Blacklow:

– At least the Premier of South Australia is honest.


– It may be that he is. The net result of the action of the Premier of that State in making a “ real effort “ to carry out the Premiers plan is his contemplated visit to Canberra with a request for a special subsidy from the Commonwealth of £2,000,000, which the people of New South Wales will have to assist to pay. Is that what we have to anticipate in respect of the new Government of New South Wales? If it makes a similar effort to carry out the Premiers plan, and then approaches the Commonwealth for a special subsidy of £2,000,000, will it receive the consideration which the Premier of South Australia is expecting? The whole thing reeks of political bias. Who is to be the judge of what constitutes a “ real effort “ ? Statements have been made by supporters of, not only this Government, but also the Country party, that the reason -why New South Wales cannot meet its commitments is that the people are living too well, and the unemployed are getting too much. The honorable member for Calare (Mr. Thorby), when the subject’ of unemployment was being discussed in this House, openly advocated the suspension of widows’ pensions, mother endowment, workmen’s compensation, and every other social benefit in New South Wales.

Mr Thorby:

– What authority is the honorable member quoting?


– I am quoting Hansard.

Mr Thorby:

– I have no recollection of making such statements.


– That is the action advocated by the representatives of the United Australia party and the Country party, as a solution of the employment problem throughout the Commonwealth. Is that to be the “ real effort “ which the Government of New South Wales must make in order to receive the assistance of this Government? If so, the Prime Minister and his supporters will be sadly disappointed when the Lang Government is returned to office, because, irrespective of whether this emergency legislation is again put into operation, those social benefits will never be taken away from the people of New South Wales by a Labour government. The position is obvious. Every facility has been made available to the Stevens Government, though it is in a minority in the State House. In New South Wales we have the peculiar spectacle of a self-governing State being under the control of a government which receives the support of less than one-third of the elected representatives of the people. That Government does not dare to meet the Parliament of the State.

Mr Stewart:

– It is going to meet the people.


– Yes, and in order to help it, the Commonwealth Government is restoring to it all the facilities which it took from the last Government. The enforcement legislation is to be suspended, so that the new Government may have funds with which to pay for social benefits until after the State elections, though

I feel fairly confident that, should the present Government be subsequently returned in New South Wales, those social benefits will cease. I go so far as to say that the “ real effort “ expected of the Government of New South Wales is the abolition of those benefits, so that the Government may be in a position to honour its solemn obligations to the bondholders. Let me assure honorable members opposite, however, that they are likely to be disappointed. Mr. Lang will be returned by an overwhelming majority, and social benefits will not, as this Government anticipates, be abolished. We welcome this bill, because it provides an opportunity of pointing out how utterly futile the enforcement legislation has been, so far as its original intention was concerned. When the firstenforcement act was passed, the amount in default was something over £900,000. That sum has now grown to over £3,000,000. No matter what government is elected in New South Wales, it will be faced with the same difficulties that confronted the Lang Government. Apparently, the Commonwealth Government proposes to use the enforcement legislation as a threat against the people of New South Wales, lest they should be tempted to return Mr. Lang as Premier. It is becoming increasingly evident that the’ enforcement legislation was never intended to be anything more than a political instrument for the purpose of helping the Commonwealth Government’s political friends in New South Wales. The trick is too transparent, however, and must be seen through by even the most dunderheaded elector. I predict that, no matter what government may be returned after the elections in New South Wales, the Commonwealth Government will not have the courage to administer another dose of enforcement legislation.


.- I congratulate the Government on its prompt action to remove the restrictions which were necessary while the Lang Government was in office, but are unnecessary now that a group of honest men form the Government of New South Wales. Those men have undertaken to honour the obligations of their State, and thus the Commonwealth enforcement legislation is no longer needed.

My chief object in rising was to reply to a statement of the honorable member for Dalley (Mr. Rosevear), who deliberately endeavoured to misconstrue a speech I made in this House on the unemployment relief bill. He said that I suggested that widows’ pensions and child endowment payments, together with workers’ compensation, should he abolished. That was a wilful attempt to misrepresent what I said. Actually, I said that those who were willing to provide employment under an unemployment relief scheme should themselves be granted relief from child endowment taxation.

Mr James:

– I rise to a point of order. Has this anything to do with the bill before the House?


– The honorable member for Calare (Mr. Thorby) began, by discussing the bill, and now seeks an opportunity to contradict something said by the honorable member for Dalley (Mr. Rosevear) - something which was itself outside the scope of the bill. The honorable member for Calare must realize that, if he proposes to continue the present line of discussion, it will be necessary for him to ask leave to make a personal explanation.


– I have said all that I wish to say on that point. I am glad that the Government has seized the first opportunity that presented itself to relieve the people of New South Wales of the disabilities which were necessarily imposed upon them while the Government of that State refused to honour its obligations. The Commonwealth Government, now that it has to deal with an honest government in New South Wales, is prepared to grant that State all the assistance which it has granted to the other States. No matter what developments may take place in the future, the Commonwealth Government will retain power to require the State of New South Wales to pay its just debts. I have no doubt that the present Government of New South Wales will honour its obligations, and thereby lift a great load of anxiety off the people’s minds. I regard the bill now before us as the first step towards the rehabilitation of New South Wales.


.- I compliment the Prime Minister (Mr. Lyons) on the introduction of this bill. When the enforcement legislation was first introduced, it was vigorously opposed by the group to which 1 belong. We fought it clause by clause, and in some of the divisions only three, or perhaps five, voted against the Government. We opposed it on principle, because we knew that it was wrong. When the enforcement legislation first came before the House, the Prime Minister (Mr. Lyons) and the Assistant Treasurer (Mr. Bruce) declared that it was designed specifically to recover from New South Wales the moneys that that State owed to the Commonwealth. It is well known that it failed to achieve that purpose. Realizing that the legislation was a failure, the Government has come round to our way of thinking, and is withdrawing it.

I regret that, in his second-reading speech, the Prime Minister indulged in political propaganda to further the cause of his friends in New South Wales. I assure the honorable gentleman that the result of the election is not in doubt.

Opposition MEMBERS - Hear, hear!


– The honorable member for Lang (Mr. Dein) says “Hear, hear “ ! I should like to know whether he and the honorable member for Barton (Mr. Lane) are prepared to resign if Lang candidates are returned* for their areas in the State Parliament. The people “of New South Wales will rally round the banner of Labour; Mr. Lang will bc returned triumphant, and will continue to legislate for the masses, and not for the classes.

Prime Minister and Treasurer · Wilmot · UAP

– I purposely refrained from political propaganda when malting my second-reading speech, merely stating inescapable facts, and although honorable members of the corner group have done their best to make political capital out of the bill, to further the cause of Mr. Lang and those associated with him, I do not intend to reply to their remarks, although I could well claim credit for what this Government has done.

Two honorable members have declared that the emergency legislation proved futile, because under it we have not col- lected the full amount that the Commonwealth Government has had to advance on behalf of the Government of New South Wales. But it has not proved futile. If it had proved so, honorable members in the corner group would be happy indeed ! But it will bring about the recovery by the Commonwealth of the moneys that it has paid for that State. Already it has brought into power a government which has given a definite undertaking on behalf of the people of that State to honour the obligations of the State.

The speakers to whom I refer claim that the emergency legislation was designed to defeat Mr. Lang. The Commonwealth Government is not concerned with Mr. Lang. The axe fell, and the measure lifts it again. It is not suspended in order that it may fall again on the neck of Mr. Lang; it would fall, should that be necessary, on the neck of any government that should adopt the policy which was pursued by that gentleman.

I regret that His Excellency the Governor of New South Wales has been drawn into this discussion.

Mr Gander:

– Why did the honorable gentleman not protest last week when the right honorable the Leader of the Opposition (Mr. Scullin) referred to the Government of New South Wales?


– I agree with what the Leader of the Opposition said. I have never criticized the action of a Governor, as I consider that the decisions come to by the occupants of that office are arrived at in all honesty. It was not His Excellency the Governor of New South Wales who brought about the present state of affairs; it was Mr. Lang himself. Mr. Lang broke a law passed by the Commonwealth Parliament, and upheld by the highest court in the land, and he also instructed others to break it. Because of that he was dismissed from office. That is the whole story.

It has been stated that the Commonwealth Government is now providing facilities for the Stevens Government to pay widows’ pensions which it withheld from the Lang Government. The facilities for paying those pensions were never taken away. It was Mr. Lang who re fused to avail himself of those facilities, and would not pay those pensions. Again, when difficulties occurred in regard to the Public Service SuperannuationFund of New South Wales the Secretary ofthe Australian Teachers Federation came to Canberra, and conferred with this Government about the matter, and I have received a letter from that gentleman thanking this Government for the attitude it took, and for the assistance that it gave to those associated with the fund.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clause 1 agreed to.

Clause 2 - (1.) The operation of -

  1. the provisions of the Financial Agreements Enforcement Acts 1932; (b)all proclamations, regulations, notices and directions, in force immediately prior to the commencement of this Act, which have been issued, made or given under the Financial Agreements Enforcement Act 1932, or under that Act as amended by any subsequent Act; and
  2. the provisions of the Financial Emergency (State Legislation) Act 1932, is by force of this Act suspended. (2.) The suspension effected by the last preceding sub-section shall take effect as from the commencement of this act, and shall continue until the issue of a proclamation under the next succeeding sub-section.

Amendment (by Mr. Scullin) proposed -

That the word “suspended”, sub-clause 1, be omitted with a view to insert in lieu thereof the word “ repealed “.

Prime Minister and Treasurer · Wilmot · UAP

– I am not prepared to accept the amendment. I have already made the position clear to honorable members. I can quite understand the desire of those who have opposed every effort of my Government in connexion with the financial agreements enforcement legislation, to get rid of it. This Government is prepared to insist always that what it pays on behalf of the Government of New South Wales it shall collect. Delay might ensue if this legislation were repealed; therefore, the Government is not prepared to accept the amendment.


.- I support the amendment, as I believe that the repeal of the enforcement legislation would promote a better spirit among the people of New South Wales, and would demonstrate that they are not to be coerced when recording their votes at the coming election. I regret that the Prime Minister refuses to accept the amendment.

Question - That the word proposed to be omitted (Mr. Scullin’s amendment) stand part of the clause - put. The committee divided. (Chairman - Mr. Bell.)

AYES: 45

NOES: 15

Majority . . . . 30



Question so resolved in the affirmative.

Amendment negatived.


– I move -

That the words “ until the issue of a Proclamation under the next succeeding sub-sec tion “, sub-clause 2, be omitted with a view to insert in lieu thereof the words “ for the period of two years “.

I realize that if this amendment is agreed to it will have the same effect as the previous amendment, for the life of the original act is only two years; but I suggest that even though the Prime Minister (Mr. Lyons) would not accept the amendment of the Leader of the Opposition (Mr. Scullin), he might accept this one.

Prime Minister and Treasurer · Wilmot · UAP

– I cannot understand the reasoning of the honorable member. Acceptance of this amendment would virtually mean the repeal of this legislation, and, as I have declined to accept an amendment with that object, I cannot accept this proposal.

Mr.ROSEVEAR (Dalley) [4.8].- I am willing to assist the Prime Minister (Mr. Lyons) to elevate this question above the level of political party bias. I have come to the conclusion that we should let the people realize that we are animated by the most honorable motives, and not by considerations of political gain, and therefore I am prepared to assist-

Mr Prowse:

– I rise to a point of order. I submit that as the amendment now before the Chair will have exactly the same effect, if carried, as the amendment which has just been defeated, it is not in order.


– I do not know that it can be said that this amendment is identical with the previous one-

Mr Lyons:

– It would have the same effect.


– The first proposal was to repeal an act, and this amendment is to limit its operation for two years. It is difficult to decide whether the amendment should be ruled out of order, and I shall not do so at the moment.

Mr.ROSEVEAR.- We are endeavouring to assist the Prime Minister in his difficult task of inducing the people to believe that this legislation is not actuated by political bias. In his calmer moments, the Prime Minister will realize that he would be wise had he accepted our proposal as the best way out of a difficult situation.

Question - That the words proposed to be omitted (Mr. James’s amendment) stand part of the clause - put. The committee divided. (Chairman - Mr. Bell.)

AYES: 42

NOES: 16

Majority.. 26



Question so resolved in the affirmative.

Amendment negatived.

Clause agreed to.

Clause 3 agreed to.

Title agreed to.

Bill reported without amendment; report adopted.

Bill -by leave - read a third time.

page 823


Assent to the following bills re ported : -

Financial Emergency (State Legislation) Bill.

Spirits Bill.

page 823


Motion (by Mr. Archdale Parkhill.) agreed to -

Th at the papers presented on the 27th April - statistical returns in relation to the last federal election - be printed.

page 823


Customs Duties

In Committee of Ways and Means (Consideration resumed from the 3rd May, vide page 258) on motion by Mr. gullett -

That the schedule to the Customs Tariff 1921-1930 be amended as hereunder set out (vide page 199).


.- Colonel Bell-

The CHAIRMAN (Mr Bell:

– As it is not the practice of the Commonwealth Parliament to record the military rank of honorable members in the Votes and Proceedings, I prefer that honorable members should address me, when in the Chair as “ Mr. Chairman “ or as “ Mr. Bell “.


– I am pleased to have this opportunity of discussing the Government’s tariff proposals. In my opinion, such a subject should be considered from a non-party point of view, although I regret that when I was Minister for Trade and Customs, some critics of the tariff who then sat on the Opposition side departed from that high standard. It was interesting to hear the recent speech of the present Minister for Trade and Customs (Mr. Gullett) regarding these proposals, and to note that the responsibility of ministerial office has considerably sobered him in his attitude to tariff matters. When I was Minister for Trade and Customs I had to submit to a good deal of unfair criticism from the present Minister and others, but I now realize that the Minister, now that he is charged with some responsibility, will feel some pangs of remorse for the unreasonable attitude that he previously adopted. The subject of galvanized iron is one in which the honorable member for Swan (Mr. Gregory) is deeply concerned. The present Minister, when in opposition, was unfair enough to say that the granting by the Scullin Government of an increased duty on galvanized iron was the “ biggest ramp ever put over.” Of course, as an ex-pressman, the Minister knew how to obtain publicity. The morning after that statement was made, his photograph appeared in the press under big headlines, one of which was - “ Serious charge against Minister.” I was subjected to unfair tactics of that description in regard to the galvanized iron duty.

The Minister for the Interior (Mr. Parkhill) stated, when a member of the Opposition, that the increased duty had been granted to Lysaght Limited by way of compensation, and he alleged that a certain member of the last Ministry, who is not now in this Parliament, was a shareholder of a company in Brisbane that distributed Lysaght’s products. He wished it to be inferred that the duty had been increased because a certain member of the last Ministry was a shareholder in Brett and Company, which was only one of a number of companies distributing Lysaght’s ‘ products in Queensland. Yet, the present Minister for Trade and Customs has not reduced the galvanized iron duties, which he said were a disgrace to Australia. The honorable member for Warringah (Mr. Parkhill) is also a member of the Government that has approved of the duty that it strongly condemned when I introduced it. The arguments which I used as Minister in support of the duty were employed by the present Minister on the 25th February last. Some of the extravagant statements which the Minister made are reported in Hansard of the 16th September, 1931, as follow : -

It would be a much easier matter to-day to make out a sound ease for a reduction of the existing duties, because of the falling costs associated with the industry. … It is quite unfair - in fact it is an outrage at this period of Australia’s affairs - to ask Parliament to put Lysaght Limited on to a normal dividend-earning basis. The tariff was never intended to be used in that way. … I recommend all honorable members to examine the Tariff Board’s report on this matter, and I challenge any of them to read it with an impartial mind, and still support the duty proposed by the Minister. The board’s report is one nf the strongest, most convincing and most logical documents of its kind which has ever been submitted to this Parliament. . . The Tariff Board recommended a specific protective duty of £4 10s. a ton, but only on the condition that the wholesale price should not exceed £25 a ton. I cannot understand why the Minister departed from a specific recommendation of that kind.

By inference and innuendo the Minister tried to create the suspicion that there was something wrong in my action. The press took the matter up, and published a report of his statement under black headlines. The Minister did not then know that within six months he would succeed me as Minister for Trade and Customs, and would have to assume responsibility for making a decision in this matter which would be of far-reaching importance.

I invite honorable members to hear what the Minister said in his speech in this House on the 25th February last, in justification of my rate of duty which he condemned last year -

As everybody knows these companies have been suffering the full effects of the depression, and are enjoying anything but full prosperity at the present time. Some of the companies were actually carrying on at a loss when prices were reduced. One company lias not paid a dividend for two years. . . It may be added that Lysaght Limited have placed returns before the department showing that the selling price which will operate after the 1st March will not return any profit or margin for depreciation. The company has offered the fullest accountancy investigation into its affairs . . . The board’s recommendation, which I was reluctant to pass by, was based upon an anticipated annual output at the Newcastle works of liO.000 tons per annum. The output for last year was approximately 33,000 tons, and the present rate of output is slightly in advance of that figure. I found that the factors upon which the Tariff Board based its findings had changed to such an extent during the previous twelve months that I did not feel on safe ground in adopting the report. I feared that the adoption of the report might lead to heavy imports, with considerable unemployment, not only at Lysaght’s . . .; but also1 at the Broken Hill Proprietary Company’s works.

The responsibility associated with ministerial office has caused the present Minister to adopt my line of argument so far as galvanized iron is concerned. Now let us see what Lysaght Limited have done in order to retain the £5 10s. duty which is necessary to the life of the industry, and which the Minister is now convinced is justified.

Mr Gullett:

– I am not.


– He evidently thought so, and got his Cabinet to agree to the duty when he left it in the schedule. He stated that he had had the accounts of the company carefully examined, and, before taking action in the matter, I, too, instructed accountants to examine the company’s books. I also got an officer of the Treasury, Mr.

Hamilton, who is stationed in Sydney, and an officer of the Auditor-General’s Department as well, I believe, to make sure that any increase made in the price of galvanized iron was justified, after allowing for depreciation. These accountants stated that every increase was justified.

Mr Gullett:

– Yet I had the price reduced by £2 per ton immediately I took office.


– Under duress, the company agreed to a reduction of £2 ; but let us consider what that means. The Minister for Trade and Customs, and presumably also the Minister for the Interior, now agree that a duty of £5 10s. per ton is necessary even on full production, and the company has sacrificed the whole of its profits, in order to retain the protection which I gave. The practicability of a reduction in price by £2 a ton depended on increased production as the result of the continuance of the present duty. The company is working without profit and without provision for depreciation to-day, and the subscribers of their capital are receiving no return. The Minister said on the 25th February last -

Lysaght Limited have placed before the department returns showing that the selling price which will operate after the 1st of March will not return any profits or leave any margin for depreciation. The company has offered the fullest accountancy investigation into its affairs.

That was the Minister’s justification of his failure to reduce duties below those imposed by me. If all the duties I imposed emerge as successfully from the test, and are similarly defended in this Parliament by the Minister for Trade and Customs, and the Minister for the Interior, it will be obvious that many of the alleged serious mistakes of which I was accused in September last were mythical, and that my schedule was attacked merely for party political purposes. The honorable member for Swan interjected regarding the importations of galvanized iron before the prohibition was imposed. I remember ascertaining by inquiry at the time that no unusual importation had taken place, and I have more recently made extensive inquiry into this allegation.

Mr Gregory:

– Sworn evidence was submitted to the Tariff Board.


– What notice can be taken of an ex parte statement before the Tariff Board by an interested competitor ?

Mr Gullett:

– But it was a sworn statement.


– Can every statement by an interested person be believed? Would the Minister accept every ex parte statement made in a court of law ?

Mr Maxwell:

– Every statement before the Tariff Board is ex parte.


– I asked Lysaght Limited whether they had imported large quantities of galvanized iron before I prohibited further imports, and I have a reply dated the 14th May, which I invite the Minister to check -

We have to state that the importations of English galvanized iron, brought by us into Australia for the whole of the year 1930, were the smallest made by us in any previous year since 1.919, and there is absolutely no truth whatever in the statement that, prior to the embargo, we had imported large ‘quantities of galvanized iron, and had benefited ourselves in any way by such importations.

Mr Gibson:

– Which sworn statement are we to believe?


– I believe that which I am reading now, because I had investigated this matter at the time of the prohibition, and because I have a list showing the importations by Lysaght Limited for each month of 1929 and 1930. The letter continues -

Up to 1929 when the works were only organized upon an eight mill basis, it was ncessary to import from 50,000 to 00,000 tons of English galvanized sheets each year to supply the balance of our sales requirements, but towards the end of 1929, in view of the pending increase in the Newcastle productive capacity, which was arranged for and took place in 1930, these importations were gradually reduced, and would have been still further restricted had it been possible to forecast the extent of the general trade depression which took place early in 1930.

When the new extensions at our Newcastle works were completed in August, 1930, we found that the demand had fallen off to such n marked extent that instead of our being able to provide for two-thirds of the total requirements of the Commonwealth, as had been anticipated when the extensions were arranged for at Newcastle, we were in a position with our increased productive capacity of 80,000 tons per annum, to provide nearly twice the quantity that was being sold in the Commonwealth, and there was no longer any necessity for any outside importations.

The statement quoted in a Melbourne paper, and said to be given in evidence before the Tariff Board is absolutely incorrect. So far from importing large quantities of galvanized iron just prior to the embargo, we had, for several months prior to this, reduced importations and cancelled numerous orders given earlier in the year, in our endeavour to restrict shipments as much as possible. Our importations for 1929-1930 compare as follows, viz. : -

Out of the total importations made in 1930, 6,627 tons were for Queensland and Western Australian consumption, which markets it was not, in our earlier calculations, expected to supply at present from Newcastle, and which it was found only possible to provide by reason of the general falling off in the demand for the whole Commonwealth. Of the 13,865 tons imported in 1930, 11,050 tons were received between January and June, and only 2,815 tone after the 1st July. The embargo was proclaimed on the 3rd October, 1930. We enclose herewith statement showing our total importations of galvanized iron for the years 1929 and 1930, and think that the information given is an effective answer to the statements made. In conclusion we would like to add that we received no financial benefit whatever from the embargo, and that the realization of our stocks of English galvanized iron has certainly not been a profitable matter, as we have not been able at any stage, to cover the full eost of exchange upon such importations.

Years ago, this company imported from their works in England, 75 per cent, of the galvanized iron used in Australia. But in 1922, Mr. Hughes, then Prime Minister, met representatives of the company, and assured them that if they commenced the production of galvanized iron in Australia they would be given adequate protection. The company came to Australia, and while developing their local industry, continued to import galvanized iron from their Bristol works, but in steadily decreasing quantities. In 1929, the monthly importations were -


– Was not that the year that the honorable member increased the bounty ?


– The ScullinGovernment did not assume office until after these importations had been made. In any case, the honorable member always professes to favour bounties rather than duties. In 1930, the importations were -

Those figures reveal a steady falling off in importations. As soon as the company had installed eight additional mills at Newcastle, it was prepared to supply the whole of the requirements of Australia. In normal times, that would have been difficult, but owing to the depression and the decline of the building trade, the company was able to supply more than the local market required.

Mr Gibson:

– What was the company’s output in 1930?


– Its capacity is now 80,000 tons per annum, but I cannot state from memory the output in that year. I think it was between 30,000 and 40,000 tons. I direct the attention of honorable members to the fact that whereas the importations in 1929 averaged nearly 4,000 tons a month, in 1930 the importations averaged approximately 1,000 tons a month, and by October had decreased almost to vanishing point. These facts dispose of the allegation that prior to the prohibition of further imports, Lysaght’s had brought into Australia, huge quantities of galvanized iron from abroad, and had profited thereby.

This schedule should be approached in a non-party spirit, but, unfortunately, when I was Minister for Trade and Customs, the Opposition sought to make political capital out’ of the tariff; therefore, I feel justified in drawing attention to-day to the inconsistency of some hon- orable members who now occupy responsible positions in this Government. Two of the most important issues which confronted the Scullin Government on its assumption of office, were: (1) the application of a protectionist policy to the industries of Australia; and (2) the rectification of the adverse trade balance. It was obvious that the application of a policy of effective protection to our industries would go a long way towards the solution of the second major problem. The Labour party’s platform provided for the adequate and effective protection of both primary and secondary industries, and, in 1929, we had received from the people an unmistakable mandate to put that policy into operation.

Mr Gullett:

– The mandate did not last long.


– It lasted longer than that given to the Bruce-Page Ministry in 1928; that Government lasted only eleven months. The fact that a change of government has taken place in recent months does not mean that the people of Australia have gone back on the policy of protection.

Mr Maxwell:

– Does the Labour party believe in the protection of all industries ?


– The Labour party believes in the adequate and effective protection of all industries. I do not advocate conditions which will enable the importer to maintain a fight with the manufacturer, thus increasing overhead and selling costs, which would be eliminated if the whole market were enjoyed by one or the other. Those who say that public opinion in regard to the tariff has changed must not forget the momentous meeting between the representatives of the United Australia party and the manufacturers on the eve of the 1931 elections, when the anti-Labour forces feared that the manufacturers’ votes and influence would go against them. Definite assurances were then given by the present Prime Minister (Mr. Lyons) and the Attorney-General (Mr. Latham) that there would be no drastic writing down of the tariff if a Nationalist Government were placed in power. Experience has shown that the protectionist policy has been a success. Australian manufacturers have responded to the call made upon them, and have produced goods of a quality exceeding the most sanguine expectations of even many ardent protectionists. New factories have sprung up. Overseas firms, in order to continue to exploit this market, were obliged to get within the Australian tariff wall, and, as a result, the prices of their commodities fell from 20 per cent, to 50 per cent. As a protectionist, I am fearful, not so much of the tariff alterations that have already been, but of those that may be made in the future. I am particularly sorry, however, to note that the alterations made by the Minister, affecting two great primary industries, have caused consternation among the tobacco and the cottongrowers of Australia, although the cottongrowers have been somewhat appeased by his subsequent tariff alterations. He already has had three bites at the cotton duties - one on the 25th February, and two others later. Yet, when I, as Minister for Trade and Customs, brought down alterations to the tariff, I was subjected to severe criticism. The Minister now realizes that it is impossible to bring down a tariff schedule affecting many items without some anomaly creeping in which later has to be rectified. The following statement by the Minister when introducing his tariff proposals on the 25th February caused me much apprehension: -

What has been done in this schedule can be taken as an indication of the trend of the Government’s future policy.

I should like the Minister to elaborate that statement, because I am concerned, not so much with what he has done, as with what he may do, although he has already dealt a severe blow to the tobacco, pearl buttons, woollen hoods, cotton, corkboard, and other industries with which I shall deal at length when we are discussing items. “When I was Minister, I found, on going to the Trade and Customs Department, that previous administrations, in giving effect to what they called a policy of protection, but, what I term pseudo-protection, invariably carried the duties to a point at which the local industry was subjected to intense competition by overseas manufacturers. The result was to establish an incessant struggle between importer and local manufacturer. Each retained a portion of the trade, and neither could make any headway against the other. The result from the consumer’s point of view was to increase the cost of its purchases, as overhead, advertising, and distribution ex’penses generally were at their highest point. Had the whole market been given to either the importer or the local manufacturer, reduced selling prices would have resulted. This obvious fact was never realized by previous administrations. They simply toyed with the protection policy. The bold and courageous policy of the Scullin Government, which has been the subject of favorable comment by all sections of the community having the interests of Australia at heart, has aroused the ire and spleen of freetraders, little Australians, and geographical protectionists; hut since that Government put its policy into operation, the elections of Great Britain have given an overwhelming vote in favour of a similar policy for that country. Some people have an inferiority complex in respect of Australia’s future. In this connexion, Mr. Charles Hardy, senator elect and freetrade evangelist, of the Country party, recently stated that Australia would never become a manufacturing country. As Australia is already a manufacturing country, Mr. Charles Hardy stands disclosed as a false prophet. In any country, and particularly in Australia, the interests of primary and secondary industries are the same. Farmers, wool men, graziers, foundry men, weavers, food makers, clothes makers, amusement makers, are fundamentally one class - they are manufacturers, and their interest should be to develop Australia. We hear a great deal from certain honorable gentlemen opposite about Australia having to depend on its exports. The following statement was made by Sir Otto Niemeyer after he had investigated the conditions of Brazil : -

It is impossible to consider the economic position of Brazil without being struck by the entirely disproportionate role played by coffee, which alone accounts for (>0 per cent, in value of Brazilian export. So one-sided a development causes thu very greatest difficulties.

I am glad that in Australia to-day there is taking place a comprehensive development of both primary and secondary industries. Many of our secondary indus-. tries, as a result of the tariff protection afforded by the Scullin Administration, are manufacturing, not for only Australian requirements, but also for export. I want our manufactures to develop to a greater extent. Our men on the land are producing superfluous quantities of primary products, and many of these have to be sold at a loss. I know that honorable members who are freetraders advocate the lowering of the costs of production. What has been the experience of Cuba? That country,- which under black labour grows sugar and other articles for export, is to-day practically ruined. The European nations were taught a bitter lesson by the war, and many of them are now growing their own grain. The wool market is glutted. South Africa, twenty years ago, was a negligible competitor of ours; now it is a serious rival. France is developing her wool industry in Algeria, and in ten years’ time will be self-contained in respect of that commodity. Australian farmers are being forced to depend more and more on the custom of Australian industrialists. In the last twenty years the number of persons on the land has fallen from 473,000 to 419,000- a decrease of 54,000 - yet production has increased enormously in wool and butter, and the acreage cultivated is now nearly double that of 1911. In view of the necessity to develop Australia, there is no justification for resorting to huge imports of goods. Professor Giblin has rightly said -

Our future development must be chief!)’ by secondary industry. To attempt at the present any great extension of primary industry will be to knock our heads against a brick wall.

There is no gainsaying the statement of Professor Giblin, who is not an avowed protectionist. In support of the tariff policy of the Scullin Government, let me quote a statement of the President of the British Board of Trade, who was reported in the Age of the 7th May as follows : -

LONDON, 5th May.

The President of the Board of Trade (Mr. Runciman) warmly championed the Government’s new fiscal policy in the course of a reply to a debate in the House of Commons to-day on the latest import duties order.

Mr. Runciman emphasized that since the beginning of the Government’s new tariff policy in February there had been no rise in prices. On the contrary, the cost of living had actually fallen. Moreover the British export trade had shrunk less than that of any other manufacturing country. The inference was that Great

Britain’s trade held its own better than that of her competitors in regard to the balance of trade. It was a remarkable fact that we were able to .keep out of the country by the present policy £10,000,000 worth of goods. In a few months we will know how difficult it will be to obtain a reduction of tariffs anywhere in the world, but the Government believes it is going in the right way, and that for the first time in three generations it is in a position to drive bargains abroad, which are not only an advantage to Great Britain, but to universal trade.

Another member of the House of Commons, speaking during the same debate, said that employment in the Bradford trade had been halved as a result of the abnormal import duties on textiles.

The first problem which the Scullin Government, on its assumption to office, had to consider was Australia’s financial position, and interwoven with that was, of course, our overseas trade. As the state of the finances of this country was disclosed, it became evident that it was worse than we expected to find it. The overseas position had developed into a crisis of the first magnitude. Our national income had fallen by £200,000,000 per annum. In 192S-29 “it was £640,000,000, and in 1929- 30 £440,000,000. Out of this national income credits had to be established to meet, not only commitments at home, but also commitments abroad. Previously those payments had been met out of exports and borrowings. As £40,000,000 a year had been borrowed abroad during the regime of the Bruce-Page Government, the London money market was closed against Australia, and we could no longer look to that source for payment of imports. The importation of goods of a luxury class which were being manufactured in Australia was not only adding greater difficulties to our already precarious financial position overseas, but was also jeopardizing the existence of many of our secondary industries, and forcing thousands of employees out of work, and on to the dole. Had the trade balance in any one year been adverse, stringent measures might not have been necessary to rectify it; but the history of Australia’s external trading during the seven years’ period prior to 1929 showed that the growth had become malignant, because the value of imports had exceeded the value of exports by £78,000,000. That was only part of the financial picture. During the period of seven years our loan indebtedness abroad required an annual interest payment of approximately £26,000,000, or a total of £182,000,000 during the Bruce-Page Government’s period of office. In respect of our adverse trade balance and interest commitments, the Commonwealth, during that period, became indebted to the extent of £260,000,000. The Labour Government, therefore, had to decide upon a course of action which would rectify our adverse balance of trade and enable the country to live within its means. It had to decide which of the following policies would be of the greater benefit to Australia in the rectification of the adverse trade balance: - (a) Dependence upon the exchange rate solely; (b) combination “of restriction of imports and exchange rate. In considering the first alternative, due regard had to be paid to its likely effect on government finances. Our overseas interest payments at that time approximated £29,000,000 per annum. Every increase of 1 per cent, in the exchange rate meant an increase of £295,000 annually to the burden which Australian governments have to bear. An exchange rate of 50 per cent. - which was the least that would have stemmed the tide of imports - would have cost the Australian governments an extra £14,500,000 a year. Even without exchange, our annual overseas interest payments amount to almost £4 10s. per head of population. The superhuman task involved in meeting this payment may be appreciated when we compare our interest obligations with the obligations of Germany under the Dawes plan, which fixed, according to her estimated capacity, the indemnity which Germany was to pay at £125,000,000 a year, or approximately £2 per head of population. It was found that Germany could not carry the load, so another plan was adopted, called the Young plan, under which Germany was to pay £85,000,000 a year, or less than 35s. a head. Seeing that our interest burden, without any increased exchange rate, amounted to £4 10s. a head, it was obvious that we could not depend on an increased exchange rate alone to check imports. It was recognized that, by a reasonable increase in the exchange rate, a bonus would be given to the primary producers on their exportable produce, and that bonus is now worth to them from £28,000,000 to £30,000,000 a year. The extra cost involved to Australian governments by the increased exchange rate is between £7,000,000 and £8,000,000 a year, but no one who is familiar with the plight of the primary producers will begrudge them the assistance they are receiving. Dependence upon the exchange rate solely to rectify the adverse trade balance would have allowed importers of luxury goods, and goods which can be, and are being, made in Australia, to compete for funds in the overseas market against Australian purchasers of raw material, and other essential commodities.

I now come to another factor which influenced the Scullin Government in taking immediate steps to prevent the importation of goods which could be manufactured in the Commonwealth. The cumulative effects of a policy of deflation adopted by certain nations were making themselves manifest when our Government came into power. The general fall in price levels abroad gave some indication of what was to follow. Manufacturers overseas were being forced by the banks to diminish their overdrafts, and it became necessary for them to turn their stocks into liquid assets. This meant that sales had to be effected quite regardless of the cost of production, and the greatest problem facing overseas manufacturers was the finding of foreign markets. In order to prevent the introduction of an era of dumping, the Scullin Government introduced its tariff resolutions of November and December, 1929, followed by special duties and prohibitions in April, 1930, and the consolidated tariff schedule of June, 1930. The introduction of these schedules raised a tariff barrier which prevented the dumping of overseas goods on the Australian market.

Those who are loudest in their condemnation of the tariff are they who claim to speak on behalf of the primary producers. They are for ever condemning the policy of protection when it applies to something made in Australian factories, but they are satisfied enough with protection when it applies to the product’s of their own farms. Let us have a little consistency in this matter. I propose to show that primary producers have definitely bene- fited from protection, and that they receive assistance in other ways which compensate them for any burden indirectly imposed upon them by the tariff.

The Bruce-Page Government appointed a* economic committee, which estimated that the total cost of protection to the Commonwealth was £36,000,000 annually. Of this sum, £10,000,000 was the estimated cost of protection to primary industries, and was made up as follows : -

Other forms of assistance to primary producers were estimated by the economists to cost another £12,000,000, making a total of £22,000,000 paid by the community for assistance to primary pro1ducers. The calculations of the economists did not include the cost to the community of the bounties on gold, cotton, wheat, flax and linseed; nor the export control votes for dried fruits, canned fruits, dairy produce, wine and other primary produce, overseas marketing vote*, and cattle tick control. Some of the £26,000,000 which protection of secondary industries is estimated to cost should properly be debited against primary production, because many classes of goods classified as secondary are mainly comprised of primary products, such as sugar, butter, asc.

If the primary producer desires protection for what he produces, he must realize the country’s obligation to protect secondary industries, which provide him with a local market. If our secondary industries suffer from the blight of insufficient protection, unemployment will become rife, and there will occur a marked falling off in the demand for primary produce. On the other hand, the healthy development and extension of our secondary industries will create an increased ‘demand in Australia for primary products at prices that . will be at least payable to the farmers. Let us examine the effect of protection on the butter industry, in which the honorable member for Gippsland (Mr. Paterson) is particularly interested. Australian butter producers are, in effect, receiving a bounty of £3,000,000 from the people of Australia. Consumers in this country hare #o pay 4d. per lb. more for their butter than would be charged if the bounty on exported butter were not paid.

Mr Paterson:

– That is quite wrong.


– Here are some of the primary products which receive protection. They include milk, butter, cheese, bacon, hams, pork, lard, wax, poultry, eggs, live-stock, and pigs. Of these foodstuffs, Australia produced, in 1929-30. £49,389,000 worth. The value of such goods consumed in Australia was £40,819,000, while exports were valued at £8,579,000. Thus Australians consumed 82½ per cent. of the food products mentioned in this group, and only17½ per cent. was exported. In 1929-30, we exported 107,000,000 lb. of butter, valued at £7,000,000. During the same year we consumed in Australia 191,000,000 lb. of butter, valued at £15,000,000. Our total production of butter for that year was 299,000,000 lb., valued at £22,000,000. The average wholesale price of butter overseas was1s. 3½d. per lb., whereas in Australia it was1s. 7½d. per lb. Thus the margin for the farmer in favour of the local market, compared with the overseas market, was 4d. per lb., to which extent the primary producers benefited. Does it not, then, pay the primary producers to build up a local market in which they can sell their products to contented artisans employed in Australian factories? In the year to which I have referred, the Australians consumed butter per capita to the value of £2 9s. In the United Kingdom butter to the value of only £1 3s. 3d. per capita was consumed. It is evident, therefore, that one Australian consumer is worth to the Australian farmers more than two consumers in the United Kingdom. Primary producers should remember this when they feel disposed to disparage the local market, and to say that we should place our confidence only in the export market. Where would the butter producers be to-day if they were depending wholly on the export market?

Let us examine the effects of the last Government’s tariff proposals. By far the most important is their effect on our external trade. As a direct result of the measures adopted by the Scullin Government, an adverse trade balance of £32,000,000 for 1929-30 was converted into a favorable trade balance of £28,000,000 for 1930-31, despite the collapse in prices of our principal exportable product. Australia is now living within her means. Real prosperity should not be defined as “ an inordinate sense of pride in the satisfaction of wearing foreign hats, eating English biscuits, and clothing oneself in imported suits and Paris frocks “, but as “ buying what we can afford of Australian products.” Australia can never develop if we accept the doctrine that it is easier to buy than to produce.

Mr Gullett:

– The honorable member will probably admit that the depression may have had a little to do with rectifying the trade balance.


– It has had something to do with it, no doubt ; but we must remember that the depression affected the volume and value of our exports as well as of our imports. The Scullin Government brought about a scientific restriction on the importation of luxury lines. As a result of its negotiations with the banks, credits were made available only for necessary imports. Australia may now be said to be on an even keel again, due to the tariff policy of the Scullin Administration, a policy which Great Britain herself two years later has seen fit to adopt.

I was pleased to read in a recent leading article in the Melbourne Herald the following statement : -

Australia’s trade figures lend themselves to varying deductions, but in the main they tell a story of satisfactory achievement. Two years ago, or less, a favorable trade balance of £28,500,000 sterling - the amount of credit anticipated for the financial year which ends with June - was too remote to enter into calculations.

My only regret is that the Melbourne Herald did not see fit to give any of the credit for this achievement to the Scullin Government, to which it belonged.

It has always been contended by those opposed to protection that increased duties invariably result in increased prices. The results of investigations which I was able to make when I was Minister for Trade and Customs, proved conclusively that prices have been considerably reduced since the Scullin duties were imposed. A study of the prices charged for agricultural implements in various freetrade countries, which have no agricultural manufacturing industries of their own, is most illuminating when we compare them with the prices charged for Australian-made implements. Take, for instance, the prices of foreign agricultural implements in South Africa,

British East Africa, and New Zealand, and compare them with the prices of Australian agricultural implements manufactured in Australia -

Those figures speak for themselves. It is not necessary for me to devote further time to that aspect of the subject.

Some honorable members may doubt my statement in regard to the price reductions that have occurred. The following table, comparing present prices with prices ruling before the Scullin Government imposed the tariff, substantiates my remarks, and indicates that price reductions are almost general : -

the tariff has also been the means of introducing a large amount of overseas capital into the Commonwealth, which has been invested in our secondary industries, and has opened up new avenues of employment. In all, 34 new branch firms of important overseas companies have engaged in manufacturing operations in the Commonwealth since the tariff was introduced. Having been granted adequate protection, 75 notable new companies with Australian capital have become established, and have engaged themselves in the manufacture of goods. I am prepared to give honorable members the names of those concerns.

A most pressing burden imposed on the man on the land is that of interest. Yet we hear comparatively little on that subject from representatives of the Country party in this chamber. Hundreds of thousands of primary producers have purchased land at inflated values, on which they have to pay high rates of interest. The lifting of the whole tariff would not affect those payments, and primary production for the most part can return little profit to those engaged in it while those high interest levels remain. In this regard, it is interesting to review an estimate of the wheatproduction costs for the 1930 season, compiled at the request of the wheat committee of the Producers and Consumers Conference that was held at Bathurst, New South Wales, on the 12th May, 1931. The figures, which deal with the 1930 season, were compiled by four farmers, of whom Mr. H. K. Nock, of Nelungaloo, now the honorable member for Riverina, was one. Those gentleman showed the cost of 400 acres of wheat cropped, including 250 acres of fallow. The net cost of production was £873, the cost of interest being £386, or 45 per cent, of the cost’ of production. After working for nothing, the farmer concerned would lose £182 for the year; every 1 per cent, in interest rate meant a difference of 3d. per bushel. I should like to know why we do not hear more about high rates of interest. The effective tariff protection granted by the Scullin Government is of inestimable value to those who produce our milk, butter, cheese, rice, bacon and hams, pork, lard, fruit, honey and waxes, poultry, eggs, and live-stock.

I remind the Minister that the duties on corkboard, pearl buttons, chains, almonds, glass, and wool hoods need to be reconsidered, otherwise many persons will be thrown out of employment. I also urge the Minister to give heed to my representations with regard to certain items that have been dropped out of the schedule, and placed on the 192S-29 basis.


.- I listened with interest to the carefullyprepared apology of the honorable gentleman who was Minister for Customs in- the Scullin Government.

Mr Scullin:

– It was a good speech, as the right honorable gentleman knows.


– I am not reflecting on its quality; but it was somewhat belated.” It should have been delivered to the people of Australia prior to the last general election, for the electors were then asked to judge as to the merits of the Scullin tariff. They did so, and definitely rejected the party which had produced it.

It is worth while, for a few minutes, to examine certain of the points that were raised by the honorable member for Capricornia (Mr. Forde). He said that for many years prior to the advent of the Scullin Government there had been a huge adverse trade balance. The Commonwealth Year-Book discloses that in the year 1928-29, the last, year of the administration of the BrucePage Government, our exports were £144.,8.r>0,000, and our imports £143,647,000, which proves that there was a favorable balance of trade in the year immediately preceding the election of the Scullin Government. It was claimed by that Government that Australia’s difficulties would be surmounted, unemployment would vanish, and our progress be unchecked if we could only secure a favorable trade balance. We have established a favorable trade balance of £28,000,000, yet unemployment has grown to even greater proportions. A favorable trade balance is not the only remedy for unemployment, which will continue to grow until we do something to the tariff entirely contrary to what was done by the Scullin Government. Statistics demonstrate that, in the years when we have an excess of imports, unemployment is at its lowest ebb, also that our trade is balanced every ten or fifteen years. In the depression of the ‘nineties, there was none of these astounding tariff increases. At that time Mr. George Reid was Premier, and, despite the freetrade policy of his Government, there was a favorable balance of trade, due very much to causes which still exist - the poverty of the people, and their inability to buy overseas.

The Labour party has frequently told the fable that they are the only friends of the farmer. We know how successful that statement was at the last general election. Everybody in Australia is looking for some means to bring our unemployment to an end. The world generally is becoming agreed as to the way in which that can be achieved. It can be done only by the restoration of the equilibrium between the prices paid for goods produced on the farm and of those produced in the factories. That has been made clear in every report that has been presented on the financial position of Australia. In his report in 1930, Sir Otto Niemeyer pointed out that the cost of goods needed by our exporters must come into harmony with the prices received for our products on the overseas market, otherwise our people would have no purchasing power. The experts who were appointed by the Government to make a survey of our economic problem stated that there must be certain reductions made in rents, interest, and governmental expenditure, and especially must there be a revision of the tariff, so that people might be able to buy, despite their reduced incomes. The committee stated in its latest report -

Menare unemployed because prices for the products of industry over a large field are less than the cost of producing them. The fall of export prices has cut down generally the incomes of producers for export. Many are making losses. This falling off in rural purchasing power has spread unemployment throughout the community. The restoration of employment, as opposed to temporary stimulants, is to be found in bringing into harmony the costs andprices of export industry. This adjustment must involve, for the time, a general lowering of standards in agreement with our loss of real income.

The first of its recommendations reads -

  1. That equilibrium between costs and prices be sought as a basis for the restoration of employment.

While recommendation No. 8 states -

That the Commonwealth Parliament systematically revise the tariff with the objective of promoting the greatest employment throughout industry, and not only in the industry directly concerned in each item.

The partial failure of the Premiers plan to produce last year the satisfactory results that were anticipated is mainly due to the fact that there has not been a reduction in the tariff to bring the price of finished goods simultaneously into line with the reduction of income sustained by the community generally. That must be corrected.

I was astonished to find no reference in the Prime Minister’s speech at the Premiers Conference to the revision of the tariff as suggested by the Experts’ Report. Before the last general election a discussion took place between the Leaders of the then Nationalist party, the All for Australia party, and the Country party, in regard to giving effect to a policy such as that approved by the experts. As a result of deliberations, in which the Prime Minister (Mr. Lyons) was represented by Mr. Latham and others, it was agreed, among other things, that these parties should go to the country on a common policy in respect to the tariff and arbitration.

In certain States there was a definite allocation of seats on this basis, the Country party abstaining from contesting certain seats, and the United Australia party responding similarly in respect of certain other seats. The agreement on this point read as follows : -

page 834



To create employment and lower the cost of living, it is agreed that there must be a reduction in the cost ofproduction and distribution in both primary and secondary industries. This can largely be achieved by a revision of the industrial situation and a revision of the tariff, which must be carried out equitably.

  1. Tariff. - The scientific revision of the tariff for the economic rehabilitation of Australia with a view to - (a.) The encouragement and protection of efficient primary and secondary industries ;

    1. The expansion of the export of primary and secondary products;
    2. Encouragement of empire trade;
    3. Negotiation of reciprocal trade treaties with other nations.

Mr.Forde. - That was sufficiently ambiguous to enable the Government to do what has been done.


– It was not ambiguous in any sense, because both parties quite definitely understood what was intended. It was intended, in short, that there should be a downward revision of the tariff. That subject was definitely discussed for several days, and no element of doubt was left in the minds of those who participated in the discussion that if the United Australia party were returned to power the tariff would be revised in a downward direction. That this is so is proved conclusively also by the published platform of the Emergency Committee of South Australia. It will be remembered that in that State an agreement was made among the. various organizations which desired political representation in this Parliament, under which they undertook to fight for one candidate in each seat, and for one Senate team. Under this arrangement the Country party abstained from contesting certain seats in South Australia. The arrangement on this subject is referred to in the published platform of the South Australian Emergency Committee in these words -

The policy of the Emergency Committee is -

Economically sound tariff policy with effective preference to Great Britain and interdominion reciprocity.

Lowering of costs of production in the primary industries by the revision of tariff and bounties.

It is on these grounds that I contend that the real issue at the last election was tariff reform and reduction of customs duties. I had no element of doubt in my mind on that point. I was amazed, therefore, that after the assumption of office by this Government it should introduce a tariff schedule which contained some most fantastic increases in relation to such items as hot water bottles, clothes wringers, and the like. Can any one imagine that with the old tariff duty and a 25 per cent. advantage in exchange against Great Britain and nearly 55 per cent. against countries like the United States of America, France, and Germany, any new increases are necessary? Is there any prospect of us establishing a big industry in Australia in respect of these items? No one in the world can think that for a moment. It is almost incredible that at a time like this a government which was returned to power on its pledged undertaking to revise the tariff in a downward direction, with the possible exception of only a few big national industries, should introduce a tariff schedule providing for increases in duties in respect of eleven insignificant industries which can never become a big factor in the manufacturing life of Australia.

In this connexion, the Country party said prior to the last election -

The Country party proposes to make immediate reductions on all commodities which are not being manufactured in Australia, or which are not being manufactured to any serious extent, particularly machinery and tools of trade. All prohibitive duties will be immediately revised in the light of this policy. It is not our intention to smash well established and properly run Australian secondary industries, but we will see that sufficient protection is afforded those industries to ensure their continuance upon lines of efficiency. Where it is proved that manufacturing industries are being conducted on inefficient and uneconomical lines, or profiteering at the expense of the public, we shall not support protection to them.

In the light of this statement, the United Australia party agreed not to contest certain seats against the Country party, because it said that the policies of the two parties in respect of tariff matters were practically identical.

The election has been fought and won. There is no question but that the extraordinary tariff policy of the Scullin Government contributed greatly to its defeat, nor is there any question but that the people throughout Australia believed that the new Government would very early in its career take action to reduce tariff duties’. After the election, when it was suggested that the Country party should be represented in the Ministry, I pointed out to the Prime Minister that we could only accept office if we had adequate safeguards that tariff revision would be undertaken. The Prime Minister was not prepared at that time to give the safeguards which the Country party considered necessary, and so on behalf of the Country party I stated that although we were prepared to support the Government in its general policy we could not accept representation in the Cabinet. Immediately following upon my announcement to that effect the daily press in numerous leading articles asserted that the whole of Australia, as well as the Coun try party, would expect tariff revision to be undertaken.

Mr Stacey:

– In Adelaide the United Australia party said that it would accept the recommendations of the Tariff Board in regard to tariff revision.


– I shall deal with that subject in a few moments, and also inquire why the attitude of the honorable member for Adelaide (Mr. Stacey) is not the same now as it was on the hustings before his election.

I was very surprised to learn that at a deputation a day or so ago, which I now learn was a private deputation, it was stated on behalf of the Government that it is not intended to carry out the policy on which the Government, in agreement with the Country party, went to the country.

Mr Gullett:

– That is not so.


– If the Minister for Customs (Mr. Gullett) will assure me that the Government is prepared to carry out its agreed policy in that regard I shall accept his assurance.

Mr Gullett:

– We shall stand by the policy declared by the Prime Minister in his policy speech.


– There can be no question whatever as to the agreement on tariff matters, which the Country party and the United Australia party made prior to the election. That agreement to all intents and purposes could be said to have been signed, sealed and delivered by the leaders of the parties at that time. If the Prime Minister says now that he will only carry out some nebulous policy that comes from somewhere else, and not the policy which he adopted, and to which 1 was a party, I ask him whether he thinks it proper that one party should alter the terms of an agreement, without the consent of the other party ? To do so in this connexion would be repudiation comparable with the repudiation of Mr. Lang in another connexion.

Mr Watkins:

– I rise to a point of order. Is the right honorable member entitled to discuss agreements that may have been made between two parties prior to the election?


– It has always been the practice to allow a general debate on the motion for the adoption of the first item of a tariff schedule, but I think the right honorable member could discuss the tariff without dealing with the motives of different parties prior to the election.


– I am dealing with this subject only because I regard it as vital to the welfare of Australia. I do not think it will be necessary to. introduce into this Parliament a measure to provide for the enforcement of the agreement to which I have referred, because the march of events in the next eighteen months will force any government which may be in office in reducing the tariff generally to do exactly what the Country party and the’ United Australia party agreed to do in October or November of last year. I shall be quite satisfied to leave the fulfilment of that agreement to the future for I know f-bat economic forces will make it inevitable that we must adopt the principles which were then agreed upon. That is one reason why, although I did not get an assurance from the Prime Minister that his Government would give effect to the agreement, I felt easy in my mind as to the future course of events in regard to the tariff policy. I knew that it would be impossible to make any real improvement in the condition of Australia until something had been done in the way of tariff revision.

The tariff is only one cog in our machinery of government that can bring down costs, but it must be put into the right place. You cannot make even a Ford car go unless you put all its mechanism in the right place. We shall not be able to advance the interests of Australia unless we put our different legislative enactments to reduce costs of living and production in proper relation to each other. There can be no doubt whatever’ that the people of Australia understood that if the United Australia party were returned to power it would adjust our tariff definitely in the direction of lowering it, and I consider that so long as nothing is done in this direction the recovery of Australia will be impeded. The prices of farm goods and finished goods must be brought into conformity with each other. What Britain is doing at present in regard to the tariff is quite clear. It has been openly stated by leading articles in the Loudon Times, that the present protectionist policy of Great Britain /is intended as a bargaining instrument to force the general tariffs of the world down to a lower basis. We all realize that up to the present Great Britain, with her freetrade policy, has provided a dumping ground and a safety valve for protectionist countries. She is now no longer willing to allow herself to be used in that way, and has adopted a tariff policy of her own. But the principles of the British tariff have been made abundantly clear. We have been told by members of this . Government within the last few weeks that we should tune in with Great Britain, and’ I take it that the Prime Minister will set us an example by causing the Customs Department and the Minister for Customs to tune in with the tariff policy of Great Britain.

Wc have been given some advice in this connexion by our own Tariff Board and by the experts appointed by the Government. Recommendation No. 8 in the series to which I have already referred reads as follows: -

That the Commonwealth Parliament systematically revise the tariff with the objective of promoting the greatest employment throughout industry, and not only in the industry directly concerned in each item.

It is pointed out later in this report thai the prices of farm and manufactured goods must be made to harmonize before the evil of unemployment can be effectively corrected. Later the report states -

The opportunities are unlikely to be vigorously exploited except under the pressure of a downward revision of the tariff.

The report then goes on to give specific illustrations of how certain industries have been adversely affected by the tariff. Let me mention, for the information of honorable members, the index figures relating to the prices of farm products, as compared with those relating to manufactured products. The honorable member for Denison (Mr. Hutchin) represents a constituency which benefits by low duties, because its development is dependent on the success of primary exporting industries. In 1911, the index figure of 100 was used by the Commonwealth Statistician to represent the wholesale prices of farm products and manufactured products in Australia. In 1928, immediately prior to the general slump in world prices, the index figures with respect to those commodities rose to 175 and 179 respectively ; but in January, 1931, after practically every schedule of the Scullin tariff had been imposed, the figures had fallen to 119 for farm products, and to 193 for manufactured products. In December, 1931, while farm products were represented by 118, or almost the 1911 price, manufactured products had an index figure of 200, the latter prices having exactly doubled since 1911. That statement shows the result of the present tariff policy. We must get the prices of manufactured goods back, by some means or other, to the old level ; but it cannot be done if the tariff on secondary goods is exploited as at the present time. Six months ago the price of galvanized iron was £24 10s. per ton, and to-day it is £29 10s.; in fact I recently asked for a quotation at Grafton for eight-feet sheets, and the price demanded for’a fair number of tons was £32 per ton. Cement, which was selling at £4 10s. per ton some years ago, is now quoted at about £7 10s. per ton. Take fencing wire, or even hats, and compare the present prices with those ruling three years ago, when the prices obtained for primary products were almost double what they are to-day. These high prices are being extracted from the public under cover of the tariff.

When the Leader of the Opposition was in power he was an ultra-protectionist. He declared that he would give practically 100 per cent, protection to Australian industries. The right honorable member imposed a tariff which he regarded as prohibitive, and he probably said to himself “Nothing from overseas can get inside the protective wall which I have built round Australia “. In December, 1930, when the last but one of the tariff schedules of his Government was brought down, the exchange rate was 6 per cent. The right honorable member then thought that the high-water mark of protection had been reached. The present Minister for Trade and Customs attacked that tariff most vigorously, and said that it was too high ; but, when he came into office, the additional protection against Great Britain, by reason of the rise in the exchange rate, amounted to 25 per cent. Against Germany, France, and the United States of America, which are all great manufacturing countries, there was practically a further 30 per cent, protection because of the depreciation of sterling. So our manufacturers enjoy an increased protection amounting to 55 per cent, against the principal manufacturing countries of the world over and above what the right honorable member who leads the Opposition thought to be necessary. Yet the present Minister, who said that this Scullin tariff was too high, has increased the duties on eleven tiddly-winking items, and has asked the committee to believe in the sincerity of his protestation that he desires to bring duties down. There are 79 reductions of duties in the present schedule, varying from 5 per cent, to 25 per cent.; but there is an increased protection of 55 per cent, against foreign countries. Yet the Minister would now take credit for having reduced that 55 per cent, to 50 per cent.

Mr White:

– What about the tobacco duties ?


– I shall deal with them. The Minister said that it would be scandalous for an industry like the tobacco industry to have a duty of 300 per cent.; but in this schedule he has brought down a fixed duty which, I think, he said was abhorrent to him, of 7s. 6d. on smoothing irons.

To-day the wholesale cost of an electric smoothing iron in America is 2s. 6d. ; therefore we have a fixed duty on this article of 300 per cent. The reason, I think, why the Minister put on this fixed duty is that smoothing irons have depreciated so much in value in the United States of America that an ad valorem duty of. 70 per cent, was not considered sufficient, and so he imposed the fixed duty which, according to his own words, would be a scandalous impost to apply to tobacco.

I understand that the Government’s defence of this extraordinary attitude is that it is following a recommendation of the Tariff Board; but will the ‘Minister tell the committee why the Government did not act on the Tariff Board’s recommendation regarding the duty on galvanized iron? Why is it necessary, when the board’s report does not suit the Government, to decide to have another investigation, when at other times the board’s report is acted upon? Is it the policy of the Government repeatedly to ask for reports from the Tariff Board until it obtains such reports as meet with its approval? The board, in the past, has been known to issue annual reports containing pearls of wisdom, giving a comprehensive view of the whole industrial outlook, and pointing out how Australia is being seriously handicapped by the high costs of production, which are attributable to our fiscal policy; but when various items are sent along for examination and report, in many cases the board recommends increased duties, which greatly add to the cost of production on the plea that the national policy of Australia is high protection. During the regime of the Bruce-Page Government, at least 50 per cent, of the reports submitted by the board were no: acted upon by the Government, it thought, in its wisdom, that the duties recommended were too high in the circumstances. Surely the Tariff Board is a government instrumentality, the purpose of which is not to lay down tariff policy - that is surely the function of this Parliament - but to present facts in a non-partisan way. If one looked up the debate on the occasion of the appointment of the board, one would find that it was not regarded as the duty of the board finally to determine these matters. In Great Britain an advisory committee is to be constituted, and it will observe certain fundamental principles determined by the Parliament in coming to its decisions. In many cases, the Tariff Board points out that it has examined certain matters impartially, but that as the settled policy of Australia is one of national protection, certain duties are recommended, such as a £28 10s. per cent, impost on kerbside petrol pumps. All the arguments used by the board suggest that it is against the imposition of high duties, but it recommends heavy duties on account of the recognized fiscal policy of this country. This Parliament should determine the basis for decisions whether certain industries should or should not receive encouragement under the tariff.

Mr White:

– It is impossible to generalize.


– Three general guiding principles have been laid down by the London Times, the leading protectionist journal, on numerous occasions since the present Government came into power in Great Britain. This journal pointed out that if an industry is to be regarded as deserving tariff assistance, it should be prepared to sell its products without increasing its prices, and should be able to supply goods of the same quality as those obtainable in other countries at the same price. The second fundamental requirement is that it should be able to meet the whole of the demands a of the nation, and the third is that it should be ready to bear its share in the fight for overseas trade by exporting. If there are industries in Australia which can fulfil those three fundamental conditions, and can guarantee that if they are given protection they will not exploit the public, I am prepared to give them such duties, as will ensure to them the home market. I am not so much concerned about the height of the tariff wall as I am about what goes on behind it.

Mr Hutchin:

– Would the right honorable member wipe out those industries which do not measure up to those standards ?


– I would give each case consideration on its merits ; but if. an industry is to receive protection, it should, at least, have prospects of an export trade unless it is regarded as essential on defence or other national grounds.

Mr Scullin:

– Does the right honorable gentleman suggest that the conditions laid down in Great Britain should apply to Australia?


– Not entirely. India, like Australia, is a primary producing, rather than a manufacturing, country, and there Sir David Chadwick, I think, laid down similar fundamental principles to those to be observed in Great Britain. It seems to me that we have got into difficulties with our tariff policy because we have coddled many industries which employ, on an average, probably less than 40 or 50 persons. To permit these industries which supply 25 per cent, or 30 per cent., or even less than that, of Australia’s requirements of the articles produced by them to be heavily protected a heavy impost has been placed on the back of the exporting industries, and on every consumer and wage-earner in Australia.

Mr Maxwell:

– “When the Prime Minister delivered his policy speech, did the right honorable member take exception to his statement on the tariff on the ground that it was not in consonance with the agreement which had been made?


– I took it for granted that the Prime Minister would announce a tariff policy in conformity with that arrangement. I had started my election campaign a day or two earlier, and my. statement of policy does not admit of any doubt as to what I meant.

Mr Holman:

– Was the arrangement published ?


– It was published in the Sydney Morning Herald in November on the day after the agreement was made.

Mr Nairn:

– The complaint is not so much of the tariff itself as of what the Prime Minister said immediately before the election to a deputation of manufacturers.


– I do not wish to deal with what may have been said at a private deputation.

Mr Gullett:

– Anything I said to a deputation I shall say in the House.


– I am glad to hear that. I draw the attention of the committee to the method adopted by the British Government in connexion with the formulation of its customs tariff. The first condition was that if. possible the fiscal policy of Great Britain should be more or less stable, and not subject to violent fluctuations periodically. One of the most serious complaints against the tariff policy of the Scullin Government was that it was continually changing, as many as six schedules being introduced in one year. During that Government’s period of office no less than ten tariff schedules were submitted to this House, and these constant variations were almost as vexatious and oppressive to the trading community as were the actual duties. In Great Britain, in order to obviate uncertainty, an attempt has been made to secure agreement on tariff policy between those parties which are in unison on certain fundamental political principles. Mr. Walter Runciman, a freetrade Liberal, was appointed president of the Board of Trade, and he and a conservative Chancellor of the Exchequer are serving under a Labour Prime Minister. A tariff correlating or. reconciling the views of the three principal parties in the United Kingdom is not likely to be attacked with any successes, and the customs policy of the country is more or less fixed for a period. Certain Liberal Ministers in the Cabinet objected to even what Mr. Runciman had accepted, and this difference was fought out in the House. But the general outlines of tariff policy were fixed by this inter-party arrangement. No such agreement has been reached in Australia, and many tariff proposals are likely to be introduced during the life of this Government, which later will inevitably be changed. One of the main conditions of the protective policy of Great Britain is that protected industries shall increase their output per employee, thus cheapening the cost of production and enabling a reduction of the selling price. That should be one of the fundamental objects of tariff protection. The London Times, in a leading article on the tariff on the 5th December last, said that the new tariff must be combined with safeguards so as to minimize any immediate increase in prices, and to guarantee that within a short period British goods should be comparable, quality for quality, and price for price, with those of their competitors. It insisted that if that requirement were not met the duties would have to be reviewed, and if necessary removed. I suggest as a means of determining what industries should first be investigated that we should compare the prices being charged in Australia by local manufacturers with the prices charged for similar goods in the United Kingdom or other country_ of supply. If there is a huge disparity - as there is in connexion with galvanized iron, the Australian price of which is only a few shillings below that of the imported article, after exchange, duty, freight and insurance have been paid - the duties should be reviewed.

Mr James:

– What about the price of butter?


– The price of Australian butter in London, of a quality comparable with the best Danish, is almost identical with the price charged in Australia. [Leave to continue given.] In South Africa 16-gauge galvanized baling wire is 18s. 2d. a mile, as against 31s. 3d. in Australia; 16-gauge black wire is 15s. 2d., as against 24s. 4d. in Australia, and 14-gauge barbed wire is 14s. 3d., as against 23s. 6d. in Australia. The South African producer of wheat and wool is able to buy wire and other requirements much more cheaply than the Australian farmer, who has- to compete with him in the markets of the world.

Another point emphasized in England is that no industry should be entitled to protection which is not prepared to render itself efficient. The London Times says -

II the basic assumption is that any industry can claim a tariff as a right to safeguard it from foreign competition, then the experience of Australia may be repeated in this country, the incentive to reduce costs may be impaired, and the tariff may shelter serious inefficiency.

Those principles should guide us in the revision of our tariff policy. I have been informed by makers of iron and steel that if general costs can be reduced they will be able to export to the markets of the world. The Canadian exports of iron and steel products are valued at £22,500,000 annually, yet Australia can only export primary products. Years ago, before the high tariff duties were imposed, Hoskins and Company, of Lith gow, were able to tender successfully for cast iron pipes for the goldfields water scheme in Western Australia in competition with manufacturers in other parts of the world. A representative of a great machinery firm told me recently that if materials were as cheap now as they were when the firm built up its big business at the time of the Reid Administration in New South Wales, it would not ask for a duty higher than from 10 to 15 per cent., and with that protection would export competitively across the Pacific, as well as supply the Australian market.

Great Britain has appointed an advisory commission practically the same as our Tariff Board, not only to determine what protection shall be given to individual industries but also to report bienially on the comparative efficienoy of each protected industry, in comparison with its principal foreign competitors, the progress in the output per employee, the volume of production, the prices charged for the home market and for export, and the development of the industry during the two years, especially in regard to.the export trade, as a means of assessing the competitive efficiency of the industry. The basis of the retention of duties would be evidence of a high output per man employed, reasonable prices,, and success in the home, Empire, and foreign markets. All protection, it is declared, should be conditional upon the efficiency of the protected industry. I challenge honorable members to go through the reports of the Tariff Board upon the Australian industries to which increased protection has been given, and declare that they contain satisfactory evidence of the efficiency of those industries, or of the need for increased duties. I recollect that in a report made four or five years ago on the iron and steel industry, those tests were not applied at all. The London Times, of the 27th February, laid down two guiding principles for the formulation of a tariff policy - first, that the danger of inefficiency should be met by a determination that the tariff should not be adopted for any individual industry unless that were clearly in the general interests, and, secondly, that it should be realized that the height of the tariff is of little importance in comparison with what happens behind the tariff wall. That principle is applicable to our tobacco industry. High duties on tobacco will do no harm if no undue advantage is being taken of such protection, and that the industry is not attempting to exploit the public is shown. by the fact that its product is selling at 4s. per lb. below the price of the imported article.

I am not a freetrader; I desire to see big industries established and expanded, and an export trade built up in secondary, as well as in primary products. But we 3hall not be able to export either primary or secondary products unless the cost of living is reduced by the removal of protection from insignificant industries, the bolstering of which forces up the costs of commodities, necessitating higher wages, and bringing about stagnation and unemployment. The community is prevented by this burden of uneconomic costs from encouraging many of its natural industries, such as the manufacture of boots and shoes from Australian hides, and biscuits and cakes from locally-grown maize, rice and flour. These industries, of which the raw material is available in Australia in abundance, should play a part in the export trade, and they could do so if we were to adopt a policy which would enable industrial equipment to be imported at reasonable prices so that industries could be made efficient and. up to date. Such a policy would bring about a return of prosperity in Australia more quickly than in any other country. I commend to the Government party, first a careful study of the policy to which its leaders agreed on the eve of the general election, and, secondly, immediate action to give effect to this policy, because until that action is taken Australia will remain in the doldrums, and unemployment will continue, if it does not increase.

Sitting suspended from 6.15 to 8 p.m.

Minister for Trade and Customs · Henty · UAP

– It was with much regret, Mr. Chairman, that I heard you state your wish that your military title should not be used by honorable members in the debates, in this chamber. “When I reflect upon the distinction with which you have, during the course of two campaigns in the service of this country and of the

Empire, earned that title, I deplore that it should not be commonly used in this chamber, nor appear in the official records of this Parliament.

I come now’ to the tariff proposals before the committee. During the debate the fact has been impressed upon me that it is quite useless for any one in the position, which I now occupy to endeavour to please all parties in this chamber, or all sections of the people of this country; and it is not my intention nor will it be my endeavour, in the administration of the Trade and Customs Department, to please all sections of the people. The aim of the Government, and my own personal aim in the administration of that department, is to frame the tariff in the interests of the Australian people as a whole, regardless of sectional interests in the community. I have little exception to take to the remarks of the Deputy Leader of the Opposition and ex-Minister for Trade and Customs (Mr. Forde). It is true that-the honorable gentleman condemned in a general way the tariff policy of the Government and its proposals for tariff revision, but I was gratified at the absence of any specific charge of harm to any section of the. community as a result of the present tariff policy.

Mr Forde:

– Specific charges will be made when the tariff items are under consideration.


– I anticipate, of course, that when particular items are under discussion, my honorable friend will have various complaints to make; but as we have made reductions in some .69 or 70 tariff items, the honorable member’s speech was, generally speaking, rather a commendation of our performance up to date.

Mr Forde:

– The Minister is flattering himself.


– The honorable gentleman has admitted that most of these reductions relate to items in respect of which he, as Minister, made substantial increases. We have, in respect of most of those items, returned to the level of 1921-28. The items now before the Chair comprise reductions, many of them of a substantial nature, but not to that level They, therefore, rank as amendments, and are open to debate. I also express my gratitude to the honorable gentleman for having unconsciously given me the opportunity to introduce these proposals, which are, in accordance with the policy of the Government, based upon the recommendations of the Tariff Board. We should not have had those recommendations to work upon had not the ex-Minister made the references to the board which led to the inquiry. The Deputy Leader of the Opposition, during his term as Minister, proceeded along arbitrary lines. He made arbitrary changes in the tariff. I have never yet been able to discover, nor do I expect to discover, the principles upon which he worked.

Mr Forde:

– I was not “ run “ by the Tariff Board.


– That is true, but I did suggest in this chamber on one occasion that it would appear as if the exMinister had been “ run “ by the office boy of the Customs Department, because the increases in duties which he made were, in practically every instance, a simple matter of multiplication- two times, three times and up to six times. That, so far as I have been able to ascertain, represented his deliberate tariff policy. Although on a number of occasions I urged him to abolish the Tariff Board and save the salaries of its members, inasmuch as he consistently ignored its recommendations, I am grateful to him that he did not accept that advice, and that he allowed this impartial, distinguished and disinterested board to continue its work, and to furnish me with a number of recommendations which, in strict accordance with the policy of the present Government, I was able to act upon.

The Deputy Leader of the Opposition praised the effect which the tariff policy of the Scullin Government had had in the correction of the balance of trade. I definitely challenge his statement. The correction of the balance of trade, or the great falling off of imports, was brought about, as we all know, chiefly by one great factor, and that was the depression, or the drying up of the purchasing capacity of the Australian people. Had there been no tariff changes at all, with the position representing exchange and primage duty as at present, the trade balance would have been much as it is to-day. I have little to quarrel with in the speech of the Leader of the Country party (Dr. Earle Page), except that I think he completely misstated and totally misunderstands the tariff policy of the present Government. I think that I shall be able to show that we have adhered meticulously to the tariff policy as disclosed and expressed by the Prime Minister (Mr. Lyons) in his policy speech, and endorsed by an overwhelming majority of the people. The Leader of the Country party spoke a good deal about an agreement which was reached in Sydney between the representatives of the United Australia party and the United Country party some little time before the election took place. I am astonished that the right honorable gentleman should quote the terms of that joint agreement in this chamber, and then have the audacity to suggest that this Government has in any way departed from it. Our policy to-day is in complete conformity with that joint policy. The agreement under the heading “ Tariff and Arbitration “ reads -

To create employment and to lower the cost of living, it is agreed that there must be a reduction in the cost of production and distribution in both primary and secondary industries. This can largely be achieved by a revision of the industrial situation and a revision of the tariff, which must be carried out equitably.

I challenge the honorable gentleman to show that there is anything in that so-called agreement which was ‘ not expressed by the Prime Minister in his policy speech, and which, so far, has not been given effect to by the Government. The agreement continues -

The scientific revision of the tariff for the economic rehabilitation of Australia with a view to -

the encouragement and protection of efficient primary and secondary industries ;

the expansion of the export of primary and secondary products;

Encouragement of Empire trade;

Negotiation of reciprocal trade treaties with other nations.

In order to show that the right honorable gentleman has little to quarrel about, I shall read fromhis policy speech as reported in the Melbourne Argus of the 1st December last. Dealing with the tariff, he said -

The Country party proposes to make immediate reductions in tariff on all commodities which are not being manufactured in Australia or which are not being manufactured to any serious extent, particularly machinery and tools of trade. All prohibitive duties will be revised immediately in the light of this policy, lt is not our intention to smash wellestablished and properly conducted Australian secondary industries, but we will see that sufficient protection is afforded those industries to ensure their continuance upon efficient lines. To ascertain which are the efficient and economic industries in relation to Australian customers we shall refer carefully to the Tariff Board to determine.

That brings home the facts that had the Country party been returned to power, before taking any steps towards tariff revision, it would have referred proposals for duties to the Tariff Board. Where then is the ground for the protest of the Leader of the Country party that we are not carrying out the policy laid down in the agreement reached by the two united parties’ prior to the election?

Sir Littleton GROOM:

– Was the agreement between the leaders of the parties, or between the parties themselves ?


– It was between the leaders and the deputy leaders of the two parties. I now come to the policy speech of the Prime Minister, when he was Leader of the Opposition, just before the last general election. I propose to read that section of the speech dealing with the tariff, because I wish to emphasize the manner in which it honours the agreement to which the right honorable member for Cowper was a party. It also enunciates the same tariff policy as that favoured by the right honorable member for Cowper in his own policy speech as Leader of the Country party. The then Leader of the Opposition (Mr. Lyons) spoke on the tariff as follows: -

Let me say at once that the majority of the members of the party which I lead have taken strong exception to the tariff schedules introduced into the last Parliament. This attitude has inspired propaganda by the extreme section of the protectionists, directed to prove that the Opposition is a party which stands for a policy of low protection that would not safeguard sound Australian manufacturing from excessive overseas competition or uphold Australian standards of living. Electors will bear in mind that on the Opposition side of the House there is no “ whipping “ on the tariff.

Dr Earle Page:

– What about tobacco ?


– The Government’s attitude was determined by the fact that it did not regard the duty on tobacco solely as a protective one. I am surprised that the right honorable member for Cowper who, for some years, was Treasurer of the Commonwealth, should pretend to be ignorant of the fact that our attitude towards tobacco was dictated by our concern for the revenues of the country. The speech continues -

Members vote as they please. One fact, however, shines out clearly. The Nationalist party, which is now included in the United Australia party in the Federal Parliament, has ever been, like its predecessor, the old Liberal party, staunchly protectionist. In fact, with very little exception indeed, the Nationalist and Liberal parties have been responsible for the protective tariff under which Australian manufacturing has grown up and flourished so impressively during the past 30 years. That policy is still maintained by the Opposition. The Nationalists and the Country parties stood firmly behind the Pratten tariffs. A substantial majority of the Opposition object to the tariff -making of the Scullin Government on two main grounds - the wholesale raising of duties by arbitrary ministerial action and without reference to the Tariff Board, and to the subsequent brushing aside of Tariff Board recommendations.

Further, they object to tariff-making of a prohibitive kind which they deem surely calculated to breed monopolies. They did nol object to the special emergency tariff prohibitions .and surcharge duties for the adjustment of the balance of trade, although they did ask that a time limit should be placed upon them. They believe, too, that such emergency measures should be subject to ratification by Parliament within a reasonable time.

As to the future, the United Australia party would not, even where it has any disagreement with particular tariff items, engage in sudden drastic change’s upon ministerial initiative, and without investigation by the Tariff Board. We believe that tariff changes of such a character may easily prove bad for industry and business generally, and consequently for employment. Where the tariff has been raised to what may be considered excessive levels without reference to the Tariff Board, we would submit cases for hearing as soon as practicable, and we- would in broad principle abide by the recommendation of the board. We do not believe it possible to remove tariffmaking from Parliament, but we strongly favour full investigation by a non-political tribunal before duties are altered. We fully recognize the great importance of local manufacturing and of the dependence of a great section of our farmers who do not produce for export, upon the consumption demand of the industrial workers.

That is the very same policy which was agreed upon by the party leaders. Ti received an extraordinary endorsement from the electors of the country, and we propose to follow it closely. In theory, the Government finds itself in agreement with the tariff policy of the Leader of the Country party, but in practice we break very definitely with him. We take all reports from the Tariff Board, and consider them impartially. We do not do as the right honorable gentleman obviously wishes to do; pick and choose between the reports and recommendations of the board according to whether they deal with primary or secondary industries. The right honorable member made merry this afternoon over the few increases we propose in the tariff, but he was not consistent. His practice is to oppose every increase in the protection afforded to secondary industry, but to oppose every decrease if it adversely affects primary producers. According to him no duty can be too low for a secondary industry, and none too high for the primary producers.

Dr Earle Page:

– That is a misstatement.


– The Government proposes to refer freely to the board, and to consider the board’s reports disinterestedly. It must happen that the great majority of tariff board reports will apply to secondary industries, but now and then reports will be submitted dealing with primary industries. If honorable members believe in the essential fairness of. the Tariff Board, they should be prepared to accept its recommendations, and not complain against increased protection for manufacturers or against alterations in the tariff which may adversely affect primary producers, even though the alteration, in general, be just.

Mr Gibson:

– Will the Minister inform honorable members of one proposed increase in the tariff which will benefit primary producers ?


– There is one, though it is not very important. I shall give this pledge, however: if the board makes a recommendation in favour of the primary producers, no member of this House will with greater pleasure press its acceptance than I shall.

Reference has been made to the Government’s policy regarding galvanized iron. I make no apology for what was done. It is true that last year I opposed increases in the duty on galvanized iron, and it is also true that, since I have been Minister for Customs, I have recommended to the Government, and the Government has accepted my recommendation, that the existing duty on galvanized iron should remain in force until the Tariff Board has conducted a further investigation into the subject. I have dealt with this matter . before, but, for the benefit of honorable members who have raised the issue,I shall again state the considerations upon which I have acted. Since the subject was debated eight months ago, very remarkable changes have occurred in the position relating to galvanized iron. The price of British iron, which was competing with the locally manufactured article, fell by £2 a ton. About the same time, there was an increase in the price of spelter, the effect of which was to increase the manufacturing cost of galvanized iron by 9s. 6d. a ton. Moreover, the Government permitted the duties to remain unaltered only after receiving an assurance from Lysaght Bros, that the price of galvanized iron would be reduced by £2 a ton. Having secured that reduction in price, and being uncertain as to the actual position, I decided to allow the duties to remain as they were until the board had had a further opportunity of reviewing the matter. Another important consideration was that the board’s recommendation was clearly based upon an annual production of 60,000 tons, but. at the time I acted, the annual production was just over 30,000 tons a year. The company represented to me that, with the price of galvanized iron reduced by £2 a ton, it was carrying on quite without profit, and was putting aside nothing for depreciation. The exMinister for Trade and Customs (Mr. Forde) saw fit to chide me for my merciless treatment of the company in this respect. The essential thing is that galvanized iron is £2 a ton cheaper than it was before.

Dr Earle Page:

– It is £35 a ton at Grafton, which is considerably dearer than it used to be.


– The right honorable member never seems to be able to get his mind beyond Grafton. There was this further consideration which affected our judgment: If Lysaght Bros. attain an annual production of 40,000 tons, they will receive a bounty of 10s. a ton, or the equivalent thereof, from their main supplier of raw material. Production is now increasing rapidly, and there is every prospect that before long the 40,000-ton mark will be passed. The arrangement entered into by the Government was, in the circumstances, the best that could be made. When the Tariff Board’s report on the subject comes to hand, it will receive very earnest consideration from the Government.

The right honorable member for Cowper also referred to the exchange rate, but he disclosed an extraordinary lack of knowledge of its bearing upon the tariff. He stated that this Government was apparently quite happy with present levels despite the fact that Australia had a 25 per cent, exchange against it so far as Great Britain was concerned, and a 55 per cent, exchange as compared with the United States of America. The right honorable gentleman would have the committee believe that Australian manufacturers enjoyed that difference in the way of protection. That may possibly be true,* but when the right honorable gentleman suggests that it will be very easy to overcome the difficulty this causes, he showed that he has given very little attention to the problem. He overlooked the fact that the exchange against Japan is only about 15 per cent. If, as suggested, the Government reduced the tariff by 55 per cent., the position of imports from the United States of America would be where it was when Australia was on par, but the tariff would be some 30 per cent, lower than if we were at par in respect of Britain, and very much lower in respect of Japan. The right honorable gentleman must remember that we are concerned with “British as well as foreign exchange. Had he reflected upon that he would be seised of the extraordinary difficulty associated with any attempts to adjust the tariff by allowing for exchange.

Mr Scullin:

– Exchange also operates upon the raw material.


– Yes. Quite a number of Australian industries would have to be taken into consideration. I recognize that if exchange remains where it is, plus 10 per cent, primage, it is impossible to get the tariff on to a sound basis. Moreover, exchange is of paramount importance in respect of the Ottawa conference.

If the right honorable member for Cowper has any idea that he considers would be helpful on the matter, I should be exceedingly glad to discuss it with him in the friendliest possible way, but it is not at all helpful to the Government merely to lay the charge that it has not effected a reduction of the tariff.

There are a few increases in the schedule based on sound Tariff Board reports, and I trust that the committee will accept them. The Government does not turn from Tariff Board recommendations even for an increase, because it recognizes that it would be remarkable, if, over the wide range of potential Australian manufacturing, there did not arise, from time to time, some sound and legitimate extension deserving of tariff assistance. I look forward to that extension confidently in the years to come. When an attractive item comes along soundly supported -by the Tariff Board, I shall recommend it with just as much goodwill as I would a reduction from the high rates imposed by the Scullin Government.

It may be thought that the Government is proceeding slowly and with excessive caution, but it is following its policy. I think that within a year from now, it will be found that the Tariff Board has covered the main features of the schedule, and will have made important recommendations as to the majority of our tariff items. Any delay in refusing excessive duties may prove of advantage to us economically and industrially. So long as we have an exchange and primage position against the importer of some 35. per cent, we have what is more or less a prohibitive tariff, even assuming that it is on the 1921-2S level. If this big task is carried through within some twelve or eighteen months of the election of the Government, this Administration will have conscientiously and effectively given effect to the policy upon which it went to the country. ‘The reductions that have been made deal perhaps harshly, if not finally, with a few minor manufacturing plants, but they have been adopted only because the Tariff Board reports on the subject were conclusive. The committee may be assured that in such instances the board has made it abundantly clear that those industries should never have been brought into existence by my predecessor in office, that they are in the fullest sense exotic, and a tax upon industry and the people rather than a benefit to them. When tariff making is carried to extremes, a crippling burden is placed upon the proper development of really worth-while industries.

If I were to express what I consider to be an ideal protectionist policy for a country such as this, it would be one giving an adequate measure of protection for carefully selected industries of magnitude for which there was opportunity here, having in mind raw material, climate, and particularly a sufficient market. Having selected those industries, I should service them with the cheapest supplies to be found anywhere in the world. In my deliberate opinion such a policy would quickly place quite a range of Australian manufacturing industries upon a limitless market. It would lead to the employment of a very much larger number of people than we have in the Commonwealth to-day and, with better industrial conditions, would make a stronger industrial Australia’.


.- At the outset I should like to say emphatically that the farmers of this country are not freetraders. It is utter nonsense to assert continually that they are. They are prepared to see our secondary industries established and prosperous, on sound, economic lines; and the burden on the community must not be out of proportion to the advantage derived from the protection that is given to manufactures.

Towards the end of September we obtained the 1931 report of the Tariff Board. It so strongly exposed the injustices and iniquities of the tariff schedule, and supported the Country party’s view regarding the stranglehold of the tariff upon living costs and the primary industries, that when it was suggested to come to terms on a common policy with the United Australia party, the Country party insisted that one of the main conditions should be an early revision and reform of the tariff, to cheapen living, and to give primary industries a chance. This condition was accepted by the party now in power. It was advocated by several of the Ministry, was submitted to the people, and the numbers of the United Australia party and the United Country party in the House demonstrate the people’s approval of it. But what do we find? The Governor-General’s address was far from reassuring, and now the mountain in travail has brought forth a mouse. When the people in the country assert that our party has been “ sold a pup “, we have no defence.

If to-day’s schedule were analysed, and allowance made for primage and the economic protection through exchange, it would be difficult to find an item in it on which Australian manufactures have not more protection than in 1930. Indeed, any member who has troubled to analyse the new schedule will have noticed that, with the exception of the material for gramophone records and the marble for our tombstones, about which few of us worry until it is too late, there are but two items where there seems any prospect of even a small reduction in the price of the. commodity. One is welded links over half an inch, and links for machinery. The other is tools of trade. If this is the Government’s conception of a revision of the tariff to reduce costs, its impotence is apparent. It is no wonder that Mr. John Heine, president of the Metal Trades Employers Association, chuckles when he mentions in his annual report that the assurance from the Honorary Minister for Customs that “ he will not disturb or alter the existing tariff schedules “ will be of great value to manufacturers. A perusal of the reports of the Tariff Board, in which instances are given of applications for increased tariff where balance-sheets show a profit of 12£, 37 and 100 per cent on capital, makes it evident that the profiteering of manufacturers needs checking.

Irrespective of the approaching conference at Ottawa, it is time for action to be taken in regard to the tariff. There is no justification for the Government’s delay in putting the pruning knife into the tariff as promised, so that production costs may be reduced. Today, primage, shipping costs and ex- change, which aggregate 50 per cent., should be ample protection for any efficient economic industry in Australia. Every one knows that even the most unnatural industries can be established in Australia - at a cost; but if protection is given to any industry to secure an advanced price, some other section of the people must contribute the cost of it. In not a few industries so fostered, the bounty or added prices have exceeded the actum wages paid, and if equity is to be restored in tariff matters, all interested in a tariff’s effect should be considered. Excepting the Government, with its revenue view-point, there are four parties interested in the tariff, namely, the manufacturer, their employees, other producers who need partly manufactured goods as their raw material, and the consuming public. But in the past the industrial manufacturer and his employees seem to have “ scooped the pool “. I say very definitely that I am not prepared to support the continuance of such a policy, or a government that permits one section co charge another section unreasonable prices for their tools of trade, machinery or goods, and disregards its responsibility to protect the consuming public from exploitation by over-protected monopolies. Our manufacturers harp on the influence of the wage rate on the price of goods, and we know that that is a big influence; but it is not the only one. Capital in industry demands its interest, and where this has been watered or inflated by the issuing of bonus shares, the higher overhead has as much effect on prices as the wage rate. What we need is cheaper services, cheaper interest, and cheaper goods; then, with cheaper living, we may ask for a lower wage and equalize the sacrifice.

One of the greatest causes for complaint to-day is the lag in the price-drop of retail goods, after wages have been cut. If the price of secondary products had been reduced like the price of primary products, there would be very little drop in the living standard, even at a lower wage. It is reasonable to ask the manufacturers to see that there is no delay in passing on the drop in wages, interest, rent, and material from which they have benefited. It seems to me that the only way to force them to face the music is by reducing the tariff. In my opinion, the test of the justification for a tariff should be the employment provided in relation to the price burden on the people. In 1928, there were 259 items of the tariff at 40 per cent, and over, and to-day there are 600 such items. In how many items has the employment versus burden test been applied? Because it has not been applied, the cost of living has mounted and many classes of goods have become too dear for people to buy. In spite of the jubilation of Mr. Bennett and the manufacturers when the last Government capped the tariff edifice, we find that, with the highest tariff on record, hundreds of factories have been closed, and unemployment was never worse.

I recognize that the generalities in my criticism of the present extreme policy, and the expression of my opinion that a change is necessary, need support in detail. I shall, therefore, refer to a few specific tariff items to show how they add to the cost of living, and directly menace the extension, and even the existence of our primary industries, and how the repercussions, and the higher costs, through dearer living, are like tentacles encircling and crushing the very industries it is desired to help. It has frequently been claimed, and many Tariff Board reports confirm the opinion, that many of our industries seek and need protection, because of the high Australian cost of the materials they use. Consequently, the first item with which I shall deal is the big basic industry of iron and steel. No one denies the value of a key industry. I recognize that in ore production, coal production, and the smelting and rolling processes, the iron and steel industry provides a great deal of employment. But any economic analysis of its value to the community must be assessed by a comparison of the labour with its cost. I claim that with the prices that the steel works charge for their products to-day, which are made possible by our high protection and monopoly control, the industry has become almost an incubus, instead of an asset to the country. It is adding to the cost of transport, and oppressing every other industry that needs its products for development, production, and construction or as raw material for other manufactures. Whether it be the metal for a railway engine, or the rails that the locomotive runs on, whether it be the metal in a concrete mixer, the girders * in a boot or clothing factory, the farmer’s plough, a roll of wire, or a pound of nails, each carries the burden, and the people affected are appealing for relief. I recognize that in dealing with these matters the most convincing argument is the price list, and for that reason I bring before honorable members a few prices which prove my assertions. I shall deal first with pig iron. I quote the following prices: - English, £3 5s. per ton, Continental £2 13s., and Australian, £6. I find that though there is a natural and economic protection of over 100 per cent., there is a further protection by the primage of 11 per cent., and by tariff of 20s. and 40s. per ton. In the case of rods and steel bars, the English f .o.b price is £6 5s., the Continental price £4 10s; and the Australian price £12 6s. 3d. I am not referring to the ordinary retail price quoted in the Sydney Morning Herald once a week. I believe that that figure is between £16 and £17 per ton. The figures I have quoted represent the lowest wholesale price. Shipping costs and exchange in relation to rods and steel bars amount to £4 12s. 6d. in respect of the English product, and £3 12s. 6d. in respect to Continental; and tariff and primage duties add £4 .8s. 9d. to the English, and £6 9s. lOd. to the Continental products. The total protection is, therefore, £9 ls. 3d. on the English product, which costs £6 5s., and £10 2s. 4d. on the foreign product, which costs £4 10s. This works out at a protection of over 140 per cent, on the English product and 220 per cent, on the Continental. I come now to channels and girders. The position in this case is very little better. The f.o.b. price of this product in England is £7 12s. 6d. per ton, on the Continent £4 15s. per ton, and in Australia £12 15s. per ton. Exchange and transport charges amount to £4 8s. Id. in respect of the. English product, and £3 3s. 9d. in respect to the Continental. Tariff and primage account for £4/ 6s. 9d. in respect of the English product, and £6 15s 6d. in respect of the Continental. The total protection in this case is, therefore, 115 per cent. English, and 209 per cent.

Continental. With galvanized hoop iron the position is just as bad. The price of this in England is £15 10s. per ton, and in Australia £26 16s. per ton. Tariff, primage, transport, and exchange account for £11 6s. 7d., and on this item, the local producer is using every penny of this protection. What chance have our factories to export their products or to compete with imports, when their machinery, their roofing, their shafting, every girder in their building, and even every pane of glass in their windows, costs so much more than in other countries? This compels them to charge higher prices, and to demand a high protection to carry on. That is what .makes living dear, and artificial wage rates necessary. It maintains high production costs, and makes it quite impossible for our secondary industries to share Australia’s burdens by producing goods for export. Surely the tragedy of the position is apparent. No one objects to supporting a healthy industry in its infancy, but surely it is time some of our industries got off the bottle. . The potentialities of Australia are unequalled; its mineral, coal, its primary products, are available at the lowest prices in the world ; with hides, wool and wheat it is the same; yet by the time any of them reach the secondary stage they are too dear to export. I believe that the Government knows that the extreme tariff is the cause of these- conditions. Certainly the- people recognize it, and they are impatiently looking to the Government, and expecting it to redeem its promise of a real tariff reform.

Let us take, by way of example, farm machinery. As I pointed out before, with these high costs of raw material, no machinery maker can compete with imports, without some tariff assistance. If a reform of the tariff brings cheaper living and wages, and cheaper material and transport, then not only machinery, but also the things produced by machinery could be turned out at prices that would pay, industry would extend, and men would get back to work. As a farmer, I pay tribute to the excellent quality of the Australian farm machinery, but we do object to the price, and many have no idea of the increased burden on farmers in this direction. It is not necessary to go back to 1902, when the price of the 6-foot binder was £32 ; in 1914, it was £38, and to-day it is £76. In 1914, a mower was £21 15s. ; to-day it is £36 15s. A 6-leaf set of harrows with swing in 1914 was £6 10s.; to-day it is £11 18s. 6d. The 8-foot reaper thresher in 1914 was £133; to-day it is £175. A horse rake in 1914 was £10 10s. ; to-day it is £21 10s.

When one reviews the extreme protection which the machinery industry enjoys, the reason is apparent. Let me give you a few more figures. If we add the duty and primage to the natural protection on a binder to-day they amount to 147 per cent. On a hay rake this protection totals 141 per cent; on a reaper thresher, 135 per cent; on a combine harvester, 124 per cent.; on duplicates, 100 per cent.; and on an oil engine, 159 per cent. If the tariff and the primage duty were removed, these machines could be sold to the farmers at practically the 1914 p”rices. Within the last few days, I obtained a quotation, and allowing for the tariff and the primage duty, the price was practically the same as that charged to the Australian farmers in 1914.

Mr Holloway:

– Were the machines of which the honorable member has quoted the 1914 price imported?


– Not all of them.

Mr Holman:

– How much difference to the average farmer would these price variations make in a year?


– In no case, is the difference less than 100 per cent., and it amounts, in some instances, to 159 per cent. On the average, the local prices are within a margin of 15 per cent, of the prices which the total protection would enable the manufacturers to charge. The prices demanded by the manufacturers of machinery are within from 15 per cent, to 18 per cent, of those which could be charged under the high protection that is enjoyed. Is the farmer of Australia to be expected to supply the world’s markets with his commodities, and compete with producers in other parts of the world, whose machinery is obtained on a freetrade basis? Our farmers have to grow their products in a protectionist country, and sell them on the world’s markets. It is the responsi bility of the Government to see that the industries which provide much of the - real wealth of the country are fairly treated.

Mr.- Hutchin. - Butter is not sold on a freetrade basis.


– I am dealing with .the tariff position generally as it effects the farmers.

Quite recently, when the new tariff came into force, certain prohibitions were removed from some of the machinery that the farmers had been accustomed to import, and last year the local manufacturers allowed a 5 per cent, discount off the prices of their machinery. On Friday last, I inquired whether that reduction still held good, but I was informed that it could not be given at the present time, and that it was not known whether it would be allowed this season. Despite the excessive protection enjoyed, the manufacturers have practically raised their charges by 5 per cent. The buying capacity of the farmers is not sufficient to enable them to pay the high prices now demanded for machinery. Railway returns at Albury show that last year less than 100 harvesting machines were transshipped across the Victorian border into New South Wales, compared with an average of over 500 a year for the previous three years.

Perhaps one of the most outstanding instances of the burdens imposed on the consumers by local industries is furnished by the price of galvanized iron. Neither the Newcastle Steel Works nor the machinery manufacturers can be accused of using in their prices the full protection available, but in the case of galvanized iron, no condsderation has been shown for the consumer. Indeed, the Tariff Board estimates that this industry has cost the community no less a sum than £300,000 a year. For some time the Australian company was getting a bounty of £4 10s. per ton, which exceeded the aggregate sum paid in wages to the employees in the industry. Thus we had the extraordinary anomaly of the. people providing a private company with the whole of the labour required by it, and the consumers paying a higher price for their iron than was charged in any other country in the world in which it is manufactured. Now Lysaght Limited are squealing about a small turnover, when the facts reveal that this -is absolutely because their prices are above the buying power of the people. If honorable members were to visit rural areas, they would find machinery being destroyed through exposure to the weather, hay and wheat stacks riddled with mice, and settlers asking their wives and young children to live through their pioneering days in kerosene-tin huts, because the rapacity of a manufacturing monopoly sheltered under the wing of an exorbitant protection makes it impossible for them to buy galvanized iron. I know that the rolled sheets used here cost somewhat more than those used in overseas works. I am also aware that £6 9s. Id. is a high wage rate that needs adjustment; but the wages paid do not justify the exorbitant price. To-day Australian quality, 26-gauge, galvanized iron costs £12 7s. 6d. cased f.o.b. England. The Australian factory charges . £26 10s. That is £14 2s. 6d. above the English price. The average citizen is sick of hearing excuses offered in an effort to explain away this huge margin of difference. It is of no use to tell the people that the Australian wage rate, and Lysaght Limited costs of material, together with the burden of overhead charges, justify a rate over 100 per cent, more than the price ruling elsewhere for a commodity that the farmers require. It is usual to judge by results, and if factories in Australia consider that incapacity, exploitation due to a monopoly, or excessive overhead costs justify an increase of 100 per cent, in price for an - ordinary commodity such as galvanized iron, the position should be reviewed. It appears to the people in rural communities that this high protection has afforded opportunities for exploitation, and advantage is being taken of them. Next in importance to the cost to the farmer of his machinery, and the roofing of his house, barns and sheds, the most serious item is the increased cost of his fencing materials owing to the tariff. When I draw the attention of honorable members to the big difference between the cost of fencing materials in Australia and their cost in other parts of the world, they will agree, I think, that too heavy a burden is placed on the farmer in this direction also. Taking the present price of wire-netting compared with that in 1913, we notice that the increase is’ about 40 per cent. Iron posts cost 7d. in 1914, and to-day the price is ls. 2£d. each. The pre-war price of No. 8 galvanized wire was £8 10s.; to-day it is £17 16s. 8d. Barbed wire was £13 10s.; it is now £23 10s. But perhaps the best indication of the extra cost to the Australian farmer would be shown by a comparison of today’s prices in Australia with those in other places. The following table shows the difference between the costs of material for a mile of ordinary farm fence, with one barb and five plain wires : -

The figures which I have given in regard to prices in South Africa include railage to Johannesburg, and the cost from the seaboard to Johannesburg is £2 3s. 3d. This makes the price of materials re- quired for a mile of fencing at the South African port £21 7s. 3d., while in England it is £20 5s.; on the Continent, £16 6s. 6d., and “ in Australia £41 13s. lOd. These figures show that an Australian farmer has to pay for the materials required for the ring fence of a 640-acres block £81 ls. 4d. more than a farmer in England, and £99 17s. 4d. more than a farmer on the Continent, and £79 14s. 4d. more than his competitor in South Africa. Naturally, the farmers want to know how this comes about, and a careful analysis shows that between 30 per cent, and 40 per cent, of the extra cost is directly due to the tariff. I submit , on behalf of the primary producers of Australia that it is an iniquitous injustice that these burdens should be heaped upon them by protection, to subsidize another section of the community, when they are compelled to sell their products in the freetrade markets of the world. Mr. Delprat declared at the opening of the Newcastle Steel “Works that their industry would be able to compete against overseas manufacturers without tariff protection, because of the natural protection available to it. As I have already indicated, the Australian iron and steel industries are no longer in the infant stage; they should be able to stand on their own feet.

I desire to go a little deeper into the causes of these high Australian prices. It is said that there has been collusion between the manufacturers and the employees to secure a high tariff, regardless of the effect on the consumers. The effect of such a policy is that the whole community suffers, by reason of the increased cost of living. During the time in which the wage rates have risen 100 per cent., the living standard has probably not been improved by more than 1 per cent. The increase of nominal wages has not been to the advantage of the workers, but has caused material hardship, and has increased the cost of production in the primary industries. Surely there is an obligation upon the Government to hold the balance fairly between the manufacturers and the industries which need their products. Let me delve a little further into the cause of the high prices in Australia. I have referred to collusion between the representatives of the , manufacturers and the industrialists for what appeared to be their mutual advantage, regardless of the effect on the consumer; but, when the tariff habit took possession of industry, prices of goods were found to jump more than the wage increase ; turnover decreased, the cost of living increased, and hands were reduced. The manufacturers now shelter behind the workmen, and blame the wage rates as the cause of the high prices of their goods. Some will say that the cost of production has increased of late years, but I submit that the application of science and improved machinery to industry has counteracted the advance in wages. In Pittsburg, in the United States of America, the price of steel is within three dollars per ton of the price 60 years ago; yet in Australia every bridge or factory that needs a steel girder, a machine, or a pane of glass, is handicapped equally with the farmer, while the worker is getting the blame. Even in the last tariff debate the then Minister for Trade and Customs (Mr. Forde) claimed that the higher tariff on these commodities was necessary to enable the Australian wage rates to be maintained. It is the tariffs that have raised living costs, and although we cannot continue to protect one industry so that it may pay five times the wage rate of Belgium, four times that of Germany, nearly three and a half times that of France, and almost double that of England, while those who supply the employees with foodstuffs are not receiving even £1 a week, I quite agree with the honorable member for Capricornia (Mr. Forde) that wages alone must not carry the blame. On this point the Tariff Board has already made a “ showdown “ in quite a number of the industries. The price of copper wire, made from local metal, with a 30 per cent, duty, plus natural protection, was 47 per cent, above the English maker’s price, although he had to pay freight on the raw copper from Australia. As the total wages were but 10 per cent, of the cost, the 47 per cent, margin certainly looks suspicious. Paper pulp is admitted free, and the direct labour costs of manufacturing 17,000 tons represented only £76,000. Yet the users were paying £212,000 more than if the finished product had been admitted free of duty. When the excess charge for the local article is 200 per cent, more than the total wages paid in the industry, we are entitled to ask whether the cause is inefficiency or exploitation. The manufacturers of superphosphate, giving evidence “before the Tariff Board, said that the labour cost was 7s. per ton. The margin between the lowest price charged and the cost of material was £1 ls. lid. a ton. -In this instance, there was a natural protection of 17s. 6d. per ton, even before the increase of the exchange rate, and tariff protection of 17s. 6d. to cover 7s. worth of wages. In connexion with galvanized iron, when the bounty payment covered the whole of the wage costs, there was still a difference of several pounds per ton between the prices charged by Lysaghts Limited and those quoted at the English factories. Although I admit that there must be an adjustment or levelling up in the distribution or the division of the national income to all parties, I submit that in many instances, after the whole of the wages paid had been deducted, the prices charged would still need a good deal of explanation. We read recently, that the Colonial Sugar Refining Company, with reserves of £6,380,000, representing over 100 per cent, of its capital, was paying a dividend of 12£ per cent., and yet was seeking a 10 per cent, cut in wages. The Broken Hill Proprietary Company, despite the fact that it has paid off a large number of debentures, has accumulated reserves to the amount of £3,710,000, although its capital is only £2,927,000. “We do not know whether these profits came from the Newcastle factory or from the mines, but we do know that, although the company has availed itself of the statutory reduction of interest on its debentures, although coal prices were reduced during the last two years, and although protection by exchange and primage amounts to 36 per cent., the tariff has remained high. It is quite clear from the facts I have mentioned that by many industries the tariff is being abused. I could mention many other items such as bolts, plough chains, split links, road machinery, and water pipe fittings, in respect of which the users have been sacrificed to the manufacturers. But we can deal with them when’ we are considering the schedule in detail. The people in the country are becoming impatient. . They were promised that the tariff would be reviewed and that duties would be reduced to give the primary industries a better chance. The sincerity of the Government’s promises will be judged by the extent and value of the tariff reductions it effects during the next twelve months. The country is looking for this relief now; I pray that it may be given soon.


.- I take advantage of this opportunity to make a few general remarks on the tariff. I have been struck by the predominance in all tariff discussions of those who take up the cudgels on behalf of the manufacturers and those who speak for the workers. Listening to these advocates, the impression is given that the community is divided into these two classes only. But, important as they are, they represent probably only from one-third to one-half of the total community, which is entirely composed of ..consumers, and it is the interests of the consumers I wish to stress this evening. Australia is almost unique in its remarkable indifference to the interests of the consumers. In most other countries political parties vie with each other in their enthusiasm to espouse the cause of the consuming masses, by endeavouring to keep down the cost of living. This indifference to the cost of living in Australia is largely due to the existence of our machinery for industrial arbitration which considers the question of the ability of those working under awards to meet upward variations in the cost of living. The Arbitration Court affects not to be concerned with the cost of living, in that as the level rises or falls the wages of the workers are adjusted accordingly. But there is a large body of people in the community for whom there is no wage-fixing machinery to adjust their income to their outgoings. I refer to pensioners, small shopkeepers, and people with limited fixed incomes, who have not the benefit of coming under any wagefixing tribunal. We know where the disregard of the cost of living has led us in the increasing upward spiral of higher tariff protection and higher nominal wages. The time has gone by when we can be indifferent to the cost of living. The relation of the cost of living to the cost of production is manifest, and the relation of the Australian standard of living to world conditions and prices has been brought home forcibly to us during the present depression. It seems evident that in the future the world will experience lower prices, wages, costs of production, and lower cost of hiring capital; whilst the levels may be higher than they are at present, they will be low compared with what they have been in the past. If we are to maintain the highest, possible standard of living in Australia, we must give closer attention to the cost of living than we have done hitherto. Tariff protection is a concession given by the community as a whole to relatively few manufacturers, and the mass of the people can legitimately demand the greatest possible efficiency in the conduct of industry. The consumer is justified in requiring the maximum value for his money, and unless protection goes hand in hand with the utmost efficiency, it becomes merely an additional tax upon the people and increases the cost of living.

The employees in the secondary industries are at the mercy of four factors - first, and possibly not the most important, the height of the tariff wall ; secondly, the rate of exchange ; thirdly, the purchasing power of the community - and this is one of the most important; and fourthly, the ability of the world to absorb our primary products at prices satisfactory to the producers.

I am leading up to the simple point, that if, at this moment, the Tariff .Board is under instructions to take into account the efficiency of industry, it should be definitely told to have more regard in future to that factor in determining the advice to be given to this Parliament regarding the level of the tariff. I am not sure whether the board is allowed to take into account the selling prices of goods in any industry under its observation, but if not, that is a point which the board might legitimately be asked to consider in the future, and include in its recommendations to Parliament.


.- I feel justified in offering a few words in reply to the complaints which have been made of the secondary industries, particularly in relation to the duties and embargoes imposed by the Scullin Government. Honorable members must not overlook the fact that the banks demanded that action should be taken to stop the inflow of imports with a view to correcting the adverse trade balance. That result has been produced by the operation of the tariff, and the present Government is enjoying the benefit of an improved trade balance. I have great sympathy with the man on the land, but many of his complaints of the undue protection of the secondary industries are not justified. Examining the tariff schedule, we find that on nearly every primary product the duties are higher than those on manufactured goods. On raisins the duty is 6d. per lb. Australian butter is 6d. per lb. dearer here than it is in London. A duty of from 4s. to 6s. per dozen half-pints is imposed on asparagus tips, and there is a duty of 2d. per lb. on peanuts, which grow as readily as wild oats. On all primary products Parliament has imposed duties of from 100 per cent, to 200 per cent. Suppose that we admit - and I do not admit it - that the tariff makes commodities dearer, then a 10 per cent, increase in the price of an article of consumption would be a bigger tax upon the people than an increase of 100 per cent, in the price of a commodity that would last for 40 or 50 years. If some honorable members had their way, we should all be hewers of wood and drawers of water. We can make, in Australia, every requirement of mankind. We have the best workmen in the world, and the rails manufactured here compare favorably with those manufactured elsewhere; in fact, they are submitted to a more severe test. During the war, the transcontinental railway was built. The Broken Hill Proprietary Company, whose works are in my electorate, supplied the rails for that project, and although the imported article was unobtainable, the company did not increase its price. When the price of imported galvanized iron was £80 a ton, there was no protest by the farmers. Because of the high prices ruling, Lysaght Limited was invited by a previous government to establish a branch of its works in Australia. When the works were established here, a bounty was paid on production, but the company, time and time again, asked for a protective duty in place of the bounty. Everything that is used in the manufacture of galvanized iron is produced in Australia. The company has reduced the price of its products, and when its works are capable of producing 80,000 tons, it is prepared to carry on under a lower duty as recommended by the Tariff Board. Why should we purchase abroad articles that can be made here, and thus take employment from our own people ? The iron and steel duties are not affected by the tariff proposals under discussion, and so long as some honorable members refer to them, they will get a Roland for their Oliver. The honorable member for Swan (Mr. Gregory) has complained that Lysaght Limited varies its prices. Let me inform him that the company will sell its products to any farmer in Australia.

Mr Gregory:

– I have already published its letter to the contrary.


– I understand that the agent to whom the honorable member refers, asked for a rebate on the purchase of a ton of material. Although the company will not allow rebates on quantities of less than two tons, it is prepared to sell its products to anybody, whether farmer or agent. The people of Western Australia are not prepared to manufacture for themselves. I know of one man who was refused permission to draw wire there. What is the transcontinental railway and air service costing this country? The air service, which is competing with the railway, is costing this Government £32,000, and the railway itself is costing £1,500,000. We do not complain about that, because we want this country to develop in order to keep our own workmen and artisans in employment. To-day the value of our imports, taken on an average, exceeds that of our exports by about £15,000,000 per annum. That is clear evidence that our doors are not locked against imports. One industry, which has recently been established, has interests in Western Australia, Queensland, and New South Wales, but unless it is given increased protection, it must go out of existence.


.- I am fully aware of the importance of these tariff proposals. Most economists and people who are studying the World depression agree that the three predominant causes of it are war debts, reparations and tariffs. Our tariff policy, as at present applied, is one of the definite causes behind the depression in Australia. If we are to rehabilitate Australia we must adopt some measure of tariff reform. We have definitely dealt with wages, rents, interest and other things, but the subject of tariff reform still remains to be dealt with by this Parliament, and, I hope, by this Government. Our policy of extreme protection to-day is the result of the action not of any one party or section of the community, but of all parties, and all sections of the people of Australia. I do not speak as a freetrader. I believe in protection, and protection wisely used can be, and has been, of great service to Australia. It is a developmental policy, tending to enlarge the scope of employment, and the market for primary products, at the same time giving a sense of financial stability to Australia. If we were to rely solely on exports we would have to depend for our revenue on the idiosyncracies of foreign buyers, but while we have protected industries we have a certain financial stability. Australia early in its history adopted the policy of protection, with the idea of developing its industries. The idea was also evolved that we should, to some extent, protect our workers against the workers of other countries, and to that end, a Customs and Excise Act which embodied that idea, was passed ‘in 1906. It was, however, declared unconstitutional in 1908. Later that idea was embodied in Arbitration Court awards, with the result that to-day the workers, or at least many of them, are in an enviable position compared with workers elsewhere. They are protected against the excessive tariff. During the war that was particularly noticeable, because the Arbitration Court increased wages in accordance with the increased cost of living. After the war, when the slump took place, and Australia was threatened with an inundation of cheap foreign goods, many tariff increases took place. In 1908 there were only 88 items of duty of over 40 per cent., whereas at the end of 1928 there were 259 such items. The growth of the protection policy in Australia, which was mainly to assist secondary production, led to a great deal of adverse criticism throughout country districts. Then the cry of country representatives was for tariff reform; but oi late years that cry, particularly in this Parliament, has practically ceased. They have definitely dropped their criticism of the protection policy, and have endeavoured to apply it to their own interests, with the result that to-day we have a huge protection of not only secondary industries, but also primary industries. The increased protection of secondary industries through the Arbitration Court awards, has had the effect of imposing burdens upon the primary industries, and the increased protection of primary industries has, through the Arbitration Court awards, had the effect of throwing back the increased costs upon secondary industries. The result has been that we have become involved in a cycle of rising tariffs and rising costs, which have placed Australia at a disadvantage compared with the rest of the world in the competition for markets. We have been too obsessed with our national policy of protection, and have failed to recognize the fact that this country, in common with all others, is in the grip of economic forces which cannot be permanently ignored.

The cost of protection for the year 1927-28 was estimated to be £26,000,000 for secondary industries, and £10,000,000 for direct protection to primary industries. In addition to the direct protection, primary industries received further assistance to the extent of £12,000,000 as a result of railway construction and other developmental work. Therefore, our protection for secondary and primary industries, direct and indirect, cost in that year £48,000,000. Not only were most of our secondary industries protected, but a good many of our primary industries were receiving protection. At that time a protective scheme for wheat was under discussion. Dealing with this subject at the time Mr. Giblin stated, in the course of a paper read before the economic section of the Australian Society -

It looks as if the day wore not far off when the whole hurden would fall on wool. The vision that comes is of Australia as one enormous sheep bestriding a bottomless pit, with statesman, lawyer, miner, landlord, farmer and factory hand all hanging on desperately to the locks of its abundant fleece.

While high prices ruled for Australia’s primary products, and while loan money was coming into the country at the rate of £40,000,000 .p. year, the burden of protection could be borne; but to-day we must face facts, and realize that prices for primary and manufactured goods must be brought more nearly into accord.

The Tariff Board is one of the brightest spots of our protective system. It has on more than one occasion drawn attention to the influence of tariffs and arbitration awards upon costs of production. In its report for 1925-26, the board stated that, if the cycle of increasing costs were maintained, it could see nothing but financial disaster ahead, and that at no very distant date. To-day we are actually facing financial disaster, and tariff reform is necessary. In 1928, a group of economists was appointed to investigate the working of the Australian tariff, and, in the course of their report, they state -

Our conclusions on effects indicate that the total burden of the tariff has probably reached the economic limits, and an increase in this burden might threaten the standard of living.

Despite this warning, the Scullin Government made increase after increase in the tariff, so that, in 1930, 418 items bore duties of 40 per cent, or over, and on 70 items the duty was over 75 per cent. At the present time over 600 items are in receipt of high protection. The effect of high protection is felt chiefly by our main exporting industries. Australia to-day needs to increase the volume of its exports. One of the main effects of the protective policy has been to divert production into the protected industries. The Deputy Leader of the Opposition (Mr. Forde) stressed the fact that, during the last’ decade, the number of employers in secondary industries exceeded those i» primary industries. Between 1920 and 1927 employment increased in secondary industries by 38.3 per cent., while that on farms decreased by 5.5 per cent. The main increase in employment in primary industries was in those which were in the enjoyment of protection. The pastoral industry, which has to depend upon world prices, showed an increase in employment of only 9.2 per cent., while in dairying, a protected industry, the increase was 26.3 per cent. The honorable member for Denison (Mr. Hutchin), when speaking on unemployment relief measures, stated that, during the earlier part of Australia’s history, the drift of population was from the coast into the interior.; but that, during the latter part, the drift has been from the interior back to the beaches. To a large extent, our protective policy has been responsible for this. We have overcapitalization in the cities, and before we can obtain real prosperity there must be a return of population to the country. This can be brought about only by decreasing the cost of producing goods for export.

In 1927-28, economists estimated that the burden of protection on the exporting industries was equal to 9 per cent. Today, with reduced prices for primary products, and increased tariffs, that burden must, at a conservative estimate, be 12 per cent, or 14 per cent., and this notwithstanding the fact that our main exporting industries are selling their products at less than the cost of production. If we are to settle those areas now on the fringe of civilization as we know it in this country, one of two things must be done, and in this regard I speak as one who knows something of the areas I refer to. We shall either have to find new lands of sufficient productivity to enable the settlers to bear the present heavy costs involved in our protective policy, or we must subsidize the industries carried on by those settlers. To subsidize primary industries to enable them to thrive on inferior lands would be impracticable, so that the only practicable alternative is to reduce costs of production. In other words, we must reduce the cost of protection to primary industry. To-day, we have extreme protection of secondary industries. When high duties are imposed there generally follows a rush to get into the protected industry, and this involves over-capitalization, duplication of managerial expenses and increased overhead costs. There are too many factories in Australia, and this leads to high production costs, making it impossible for us to export our secondary products.

High protection has provided a shelter for inefficiency and exploitation. “ The Tariff Board, in its last report, deals with this matter of exploitation carried on behind high tariff walls. The report states -

In several cases dealt with by the board in the period covered by this report there was evidence that the manufacturers who made requests for increased duties or supported proposals for such duties could, by reducing the selling prices of their products, have secured a considerably greater output in competition with imported goods. There was also evidence that the manufacturers concerned, although earning profits which justified such action, had made no attempt to reduce their prices. Instances came under notice where requests had been made for increased duty, or support had been given to increases embodied in tariff proposals, by manufacturers earning abnormal profits. One manufacturer in an industry supplying goods to the value of £100,000 per annum was making 100 per cent, per annum on the capital employed in his business. Another company with an output of £50.000 per annum had paid dividends ranging from 22-i per cent, to 12$ per cent, over the four years preceding the inquiry. In another industry a company having an annual turnover of over £1.000,000 made, over a period of seven years, profits ranging from 37 per cent, to 13£ per cent, per annum on the capital employed.

Those profits were not made during depression years, it is true, but the report shows that exploitation had taken place to the detriment of Australian consumers.

Before the Great War, when our duties were on a much lower scale, we had an average unemployment of about 6 per cent. During the years 1922 to 1929, when things were booming in Australia, when we were obtaining high prices for our primary products, and loan moneys were coming in plentifully, our average unemployment was 10 per cent., with a rising tendency, which has reached its present peak.- That shows conclusively that high tariffs did not create employment, despite the fact that conditions overseas had altered in favour of Australian manufacturers; that wages had been increased and hours shortened.

If we reach a state in Australia where employment cannot increase without subsidy through the tariff, we must either have a reduction of costs or accept a stationary population. We all realize that one of our principal needs is a greater population, and that to accept a stationary population would be to accept a policy of stagnation and despair. If we are to continue to go ahead, to increase population and increase employment, it is essential that there should be a reduction of ‘ costs, and it has been convincingly demonstrated that that can take place along the lines of tariff reform. An increase in national income can take place only along the lines of profitable production, and if profitable production is to be maintained a reduction of costs becomes imperative.

The tariff measures that hav*e been introduced by the Government are but a small step towards the desired end. I hope that the promises of the Minister for Trade and Customs (Mr. Gullett) will he carried into effect in their entirety. I confidently believe that tariff reform will he the means pf reducing the gap between primary and manufacturing prices, of putting our exportable industries on a more efficient basis, and of enabling the primary producer to become, as in the past, a greater purchaser of secondary articles. I believe that tariff reform will have a tendency to reduce unemployment, increase population, bring lands that- aro at present undeveloped into production, and help Australia in every way to fulfil its destiny.

Progress reported. .

page 857


Bill returned from Senate without amendment.

House adjourned at 10.6 p.m.

Cite as: Australia, House of Representatives, Debates, 17 May 1932, viewed 22 October 2017, <>.