House of Representatives
16 November 1965

25th Parliament · 1st Session

Mr. SPEAKER (Hon. Sir John McLeay) took the chair at 2.30 p.m., and read prayers.

page 2733




– When does the Prime Minister expect to be in a position to make a statement about the situation in Rhodesia?

Prime Minister · KOOYONG, VICTORIA · LP

– I am very anxious to make a statement on this matter to the House. In fact, with - and sometimes without - my colleagues I have devoted a great deal of time over the weekend to setting out the framework of such a statement. In the absence of any unforeseen circumstances - and one never knows what is happening internationally - I would hope to ask the indulgence of the House at 8 o’clock tonight to make a statement. In the meantime I want, if I can, to follow my usual practice of letting the Leader of the Opposition have a copy of the statement for his own information by, say, 5.30 this afternoon. If this is to be done - and I am still doing some work on the statement - then I think I will have to ask all honorable members to be good enough to defer any questions they may want to put to me until tomorrow, because I do want to adhere to this timetable if it is at all possible.

page 2733



Mr Malcolm Fraser:

– I ask the Minister for Labour and National Service a question. Can he advise the House what action he has taken or can take to help solve the wool stores dispute? Has the strike been caused by some elements in the Federated Storemen and Packers Union who pay no attention to the authority of the union and who show little concern for the processes of arbitration? What part has been played in this dispute by the wool exporters and the brokers to protect the growers and the wool trade? I point out that this is serious not only from the point of view of-


– Order! The honorable member is not in order in making any comment. ‘ I. suggest he direct his question.

Mr Malcolm Fraser:

– Is the Minister fully aware of the seriousness of this matter because of the delays of sales and the effect this will have on wool exports, and also because of the delays it will cause in returns to many persons who can ill afford to have their returns from wool sales delayed?

Minister for Labour and National Service · LOWE, NEW SOUTH WALES · LP

– I am sure that the Government and, in fact, every member of the House, is well aware of the seriousness to Australia’s international trade of this unfortunate strike that has taken place in the Melbourne and other Victorian wool stores. If I may answer the honorable member’s second question first, I think you may take it, Mr. Speaker, that this strike represents a breach of faith by the Victorian secretary of the Federated Storemen and Packers Union. He freely entered into an agreement with the woolbrokers for a period of three years which provided for substantial increases in pay. He has committed a breach of faith by breaking that agreement and calling this strike which is holding up the shipment of Australian wool. Secondly, the strike shows flagrant defiance by the Victorian secretary of the federal leadership of his own union, because the executive of that union is opposed to the strike and is anxious to get the men back to work. Finally, it ignores the arbitration system. If it is thought that there are grounds on which the decision should be changed he had every right to go to the Conciliation and Arbitration Commission to see whether the Commission would contemplate a change in the agreement or in the award itself. This .action indicates a very serious state of affairs, as the honorable gentleman has well said, for this country.

As to the first part of the question, concerning what action I personally can take, naturally I have discussed this problem not only with my Department but with representatives of the wool selling brokers. Action lies with them under sections 109 and 1 1 1 of the Conciliation and Arbitration Act, and as I understand it they will shortly - if they have not already taken action - be taking action in order to have the matter placed before the Industrial Court to have orders made against the secretary or penalties imposed upon sections of the Storemen and Packers Union in Victoria. As this action either has been, or is likely to be, taken, I think it is better at the moment not to make any further comment about it. However, the action taken does affect to a very great extent the shipment of wool from Victoria, and consequently I will keep this matter under continuous review.

page 2734



Mr Allan Fraser:

– I ask the PostmasterGeneral: Will he consider the fact, as given by Mr. John Howard, that the Australian television series “ Homicide “ has to be produced on one-twentieth of the budget allocated for the production of a similar series’ in America, yet the American series can be bought here for half the cost of “ Homicide “? In view of the success of “ Homicide “ despite this handicap, will the Minister revise his pronouncement that Australia is without producers and directors of high quality? When will he act to give the Australian television industry an even break so that Australian producers and directors will no longer be confronted with the dilemma that they must either starve in Australia or go abroad, to the further detriment of the Australian industry?

Postmaster-General · PETRIE, QUEENSLAND · LP

– I refer the honorable member and others who are interested to the statements that are recorded in “ Hansard “ as my comments regarding directors, actors and so forth in the industry. I most certainly did not say what the honorable member has suggested I said. As to the final part of his question, this matter is under review by me and I hope soon to place a recommendation before the Government. I would hope that not much later there would be a statement of policy concerning it.

page 2734




– I address a question to the Postmaster-General. I refer to an application for something rarer than pearls in New South Wales - I refer, of course, to a new telephone service - made by the Kuring-gai Club of Business and Professional Men. The club has 230 members, including doctors - general practitioners and specialists - ships’ captains and an airline pilot. It is situated about eight miles from the Sydney G.P.O. in a fully built up area on the Pacific Highway. It is approximately 100 yards from the Pymble telephone exchange. The Club has just been advised that -

This work has been scheduled for inclusion in the programme intended for completion in early 1967.

Would the Minister be prepared to advocate that an Estimates committee should be set up in this Parliament to investigate whether in this particular field, for example, Government policy is being efficiently carried out - that is, assuming that it is Government policy to supply telephones to people before the Angel of Death removes the necessity?


– I have made a number of statements in this House about the telephone situation in Australia, particularly the situation in New South Wales. Not very long ago I indicated that there had been a substantial increase in the capital available to the Post Office for this year. I also indicated in the Estimates debate the proportion of- money on the telecommunications side which is available to New South Wales. If I remember correctly, 38 per cent, of Australia’s population is resident in New South Wales and this year about 44 per cent, of the money available for telecommunications will be spent in that State. I have already said that this is not just a matter of money. There is not much virtue in having the money if there are no people to be employed. I refer to technical people trained by the Post Office itself. They are not people who come from outside industry. So there is more than one factor to be concerned with in this particular matter. We have within the Post Office a basis of priorities and these priorities are strictly enforced. If the honorable member is suggesting that one group of people should be raised in the priority list when such action is not justified, having regard to other people, then I do not accept his suggestion. We will observe the priority system which, over the years, has proved to be a most satisfactory basis on which installations have been made by the Post Office. I would mention that there is to be a special effort. As I have indicated previously, we hope this year that there will be a reduction of some 6,000 or 7,000 applications for telephones on the deferred list in New South Wales.

page 2735




– Is the Treasurer aware that the Reserve Bank of New Zealand makes finance available to primary producers’ marketing organisations in that country at an interest rate of 1 per cent, per annum? Is the right honorable gentleman also aware that the New Zealand Government secures finance from the same source at the same rate of interest? Does the Treasurer agree that this low interest rate gives New Zealand exporters of primary products an advantage on outside markets in that it constitutes a secret form of subsidy? Will the right honorable gentleman give consideration to making similar arrangements in Australia, and to including Government borrowings?


– I think that one has to take into account the differences which obtain as between one country and another before trying to draw too direct a comparison. For many years Australia has had a very efficient system of financing rural exports under the Rural Credits Section of the Reserve Bank of Australia. Also there are in the various States financial institutions, some of them conducted by the State Governments, which give special consideration to the situation of rural producers. I will look into the facts as alleged by the honorable member to see whether there is anything that could be gained from the adoption in Australia of practices current in New Zealand, but I think that the general conclusion of those who study the Australian banking situation is that it serves very effectively the needs of the nation.

page 2735




– My question ls addressed to the Treasurer. In some sections of the community there is confusion of opinion as to whether special bonds and inscribed stock series L still attract the Commonwealth taxation rebate of 2s. in respect of each £1 of interest included in the taxable income. This has occurred owing to the reference made to treasury notes for which the 2s. tax deduction is no longer available. Will the Treasurer clarify this situation?


– Dealing with the first part of the question, I can say very emphatically that the tax rebate does apply in respect of inscribed bonds and the special bonds to which the honorable member has referred. Indeed, this is a feature which adds very significantly to the attraction of an investment either in Government bonds or in the special bonds to which the honorable member has referred. Indeed, one would need to secure a considerably higher percentage return from an equity investment or similar investment in order to get the equivalent of the investment gain that results from the application of the rebate. If there is any confusion arising from the decision of the Government not to continue the practice of allowing this rebate on the return from treasury notes, I would remind the honorable gentleman that this matter was covered by me in some detail in the second reading speech delivered earlier in this session on the Income Tax Assessment Bill.

Mr J R Fraser:

– Read it from memory.


– I think I can give the substance of it from memory. The substance is that treasury notes differ from the other securities I mentioned in that they are regarded by the Government as an instrument of economic management and were designed to absorb some of the liquidity that developed at particular periods of the year. Subsequently, their use was extended and they were issued throughout the year. Because they are in a field in which precise and quick calculations must sometimes be made to effect comparison with other short term securities, the Government felt, following representations made to it, that lt would be advantageous to remove the rebate. This may mean that we will find it necessary to make some adjustment in the rates, but I think the advantage will be evident in a field of investment in which the speedy comparison between the returns from short term securities is a highly desirable element.

page 2735




– I address a question to the Postmaster-General. What complaints, if any, have been received by the Minister or the Australian Broadcasting Control Board about the television production entitled “ Living on the Fringe “? Will the Minister state whether he has seen the programme, which is considered by many to show only one side of the story, completely disregarding important improvements in the social, recreational and economic conditions of the residents of the district shown? Will the Minister also state whether he considers the programme to be fair, unbiassed and suitable for distribution abroad?


– This programme, as far as I know, has been shown by the Australian Broadcasting Commission in Sydney only. I have not seen it. The references to it that I have read have been in the Sydney Press and I understand that members of the Australian Labour Party on the Sydney City Council are not very happy about it. This has caused a second showing of the film by the Commission.

page 2736




– My question is addressed to the Acting Minister for Primary Industry and refers to the “ No “ case in the wool reserve prices plan referendum, which was recently sent to growers. Is the Minister aware that there is a seriously inaccurate mathematical calculation on page 4 of this case, which is apparently designed to mislead the growers into thinking that they will show an annual loss under the conditions contained in this calculation, whereas in fact they will show a profit? Will the Minister do all he can within the Government’s authority to publicise this inaccuracy?

Minister for the Interior · RICHMOND, NEW SOUTH WALES · CP

– The first I saw of this was a report today in the “ Sydney Morning Herald “ of a statement by a certain gentleman refuting some of the claims made in the “ No “ case. The Government’s attitude on the referendum all along has been that it should take a neutral position and leave growers to decide for themselves whether they will support the “ Yes “ or the “ No “ case. The people responsible for drawing up either the “ Yes “ or the “ No “ case must stand or fall according to the facts that they have presented to the growers.

page 2736




– I wish to ask the Minister representing the Minister for Civil Aviation a question. In view of unfortunate accidents which have occurred recently overseas in the operation of Boeing 727 aircraft and which have resulted in serious loss of life, and seeing that this type of plane is widely used in Australia, will the Minister confer with his colleague about making a statement concerning the airworthiness of the 727 aircraft?

Minister for National Development · FARRER, NEW SOUTH WALES · LP

– I shall confer with my colleague and see what can be done. I have only read newspaper reports of the accidents. I remind the honorable member that a considerable number of these aircraft are flying. From all accounts appearing in the reports that I have read, the accidents seem to have been caused by pilot error.

page 2736




– My question is directed to the Minister for the Army. Will he consider appointing a panel of psychiatrists to examine Army psychologists who are advising young soldiers to quit the Army because of lack of leadership qualities? Will he, after the panel of psychiatrists has completed its report, then establish a panel of psychologists to examine the psychiatrists?

Minister Assisting the Treasurer · BARKER, SOUTH AUSTRALIA · LP

– I shall be glad to give careful consideration to the point made by the honorable gentleman in his question. Insofar as he obviously has a particular case in mind, if he will let me know the details of it I shall be happy to examine it. I must say that my experience is that psychologists play in the Army, as in every form of selection in industry and elsewhere today, a very valuable and useful role provided their opinions and recommendations are kept in the correct perspective.

page 2736




– My question, which is addressed to the Minister for Labour and National Service, concerns the significant rise in unemployment figures. The statistics released yesterday by the Department of Labour and National Service showed a substantial increase in the overall numbers registered for employment, with the rise affecting at least three States. I ask: Is it not usual for employment to fall at this time of the year owing to the decline in seasonal employment and other factors? Can the Minister explain the reason or reasons for the increase in unemployment and will he say whether it is expected that this unhealthy trend will continue?


– It is wrong to say that there was a significant rise in unemployment - that is, in registrants for employment - during October. The increase can be measured in hundreds. It should not be regarded as a significant rise as suggested by the honorable gentleman. If one looks at the figures and takes an objective view, you will see that the number of job vacancies increased by something like 7,000, not by hundreds. There has been an easing of demand and we have, of course, been looking very carefully at the problem of registrants for employment. At present there are many more vacancies than there are persons registered. Nonetheless the current trend is unusual for October and consequently it gives the Government concern as to the strength of the trend. I recently said - this repeats what the Prime Minister has already said - that we have been looking in detail at the motor vehicle industry, where reductions in demand and in employment have taken place. We are making a clinical and microscopic examination of the field of housing, which comes more within the jurisdiction of the Minister for Housing than of myself. He and other Ministers are carefully examining this problem. If it is thought that action has to be taken quickly in the housing field it will be taken. The effect of drought is, of course, impossible to estimate The question asked by the honorable member raises very difficult matters of economic policy. Various issues of the “Treasury Information Bulletin “ have pointed out that some flexibility had to be achieved to permit transfers of labour to defence projects and Western Australian iron ore works. It was the Government’s intention early in the year to secure a degree of flexibility. This flexibility is in fact being achieved. Nonetheless I repeat that the trend does require careful watching.

page 2737




– My question is directed to the Minister for External Affairs. Has he noticed two Press statements which appeared today and yesterday, one announcing an agreement signed by the Japanese Government with Indonesia concerning activities proposed to be carried out by the Japanese in West New Guinea and including fishing rights, and the other concerning a proposal by the Japanese to enter into an agreement with a French company to carry out an oil search programme in the Territory of Papua and New Guinea near Wewak? Has the Minister any information about these matters? If not, will he make inquiries and let me know the full details of the proposed activities?

Minister for External Affairs · CURTIN, WESTERN AUSTRALIA · LP

– One of the matters mentioned by the honorable member would come within the province of my colleague, the Minister for Territories, and the other would come under External Affairs. I certainly will undertake, in consultation with my colleague, to obtain the information and provide the honorable member with such information as is available to us.

page 2737




– I preface my question to the Treasurer by saying that the request that I am about to make may be rejected because of lack of precedent, or even administrative problems, but I ask that it be considered in the light of the great need and in the true spirit of Christmas which honorable members on both sides of the chamber would approve. My question simply is: Will the Treasurer consider making an extra payment of £1 to pensioners as a Christmas gesture to the aged, infirm and underprivileged of the nation?


– The honorable gentleman has referred to the question as being without precedent. I think that action along these lines would be without precedent, but the request is one which is made quite regularly about this time of the year. The source of the query is the variation on this occasion. It is usually, I think, the honorable member for West Sydney who gets in first with this one. However, despite this invasion of copyright, I assure the honorable member that I shall be glad to take up with my colleague the question which has been raised. The Government did express its general policy on these matters in the course of the Budget and I cannot, therefore, express any optimistic view of a review at this time.

page 2737




– I ask the Minister for Labour and National Service a question supplementary to that which I asked last week about recent developments regarding the recruitment of waterside labour in terms of the Stevedoring Industry Act 1965 and as agreed to at the recent conference of the parties concerned. I now ask: What were the results of the first ballots for waterside workers under the new registration system which were held yesterday at Sydney and Port Kembla? Is the Minister satisfied with the qualifications of the men coming forward and is he satisfied so far with the operation of the new recruiting system?


– As the honorable gentleman has said, the Australian Stevedoring Industry Authority did call for nominations for recruitment into the stevedoring industry in at least 10 ports throughout Australia. Yesterday nominations were completed for the Sydney and Port Kembla branches. At Port Kembla, 20 general cargo waterside workers were required, and Sydney required about 39 mechanical waterside workers. All told, at the two ports about 700 people nominated for recruitment into the industry to fill the 38 or 59 vacancies. At Port Kembla a ballot is already taking place to get the 20 men and when this has been completed the names will be passed on to the Waterside Workers Federation.

At Sydney - this answers part of the honorable gentleman’s question about qualifications and quality - it was found that few of those who nominated for the mechanical branch bad the two certificates which were required to permit them to be recruited immediately. Some had the two certificates and those nominations will be processed immediately and the names passed on to the Federation. In other cases where applicants had one certificate the Stevedoring Industry Authority will take the responsibility of training them, if it is thought that they can be trained, so the second certificate can be awarded and, consequently, (recruitment can take place. As to the last two parts of the honorable gentleman’s question, the first of which related to my opinion as to satisfactory standards, under the Act it is the responsibility of the Stevedoring Industry Authority and not my responsibility to establish standards. I have been informed that the Authority is satisfied with the quality of men who alt nominating. I hope that that answers the last part of the honorable member’s question.

page 2738




– I ask the Minister for the Navy whether he is aware that at the present time the Victorian Government is holding an inquiry into the building up of Western Port as a deep sea port. Has the1 Royal Australian Navy any plans for a naval base for seagoing ships in this area? Is it the intention of the Department of the Navy to give evidence at the Victorian Government’s inquiry?

Minister for the Navy · PERTH, WESTERN AUSTRALIA · LP

– I am aware that the Victorian Government is conducting an inquiry into the future of Western Port. Only yesterday, following quite protracted correspondence between the Victorian Government and my Department, a conference was held at Flinders to discuss this question. 1 have not received the report of that conference yet, but I understand that agreement was reached all round, mainly with respect to the Navy’s future role in that area. As the honorable member is aware, the Western Head gunnery range takes in some of the western approaches which will be used now by tankers going to the new refinery.

As to whether it is the intention to establish a base for naval vessels in the future, I can only comment on the coming three year programme. It is not envisaged in that programme that anything along those lines will be done. The Navy has a fairly heavy capital investment in this area and will therefore continue to operate from there. As the honorable member is aware, there is a gunnery range in the United Kingdom at Portland where the volume of shipping is about 20 times the volume of shipping at Western Port. Therefore, we can continue to use the gunnery range at Western Head without any difficulty at all.

page 2738




– I ask the Treasurer whether there is any substance in the statement contained in a recent Press editorial that, due to the restrictive financial measures of the Reserve Bank of Australia, trading banks are unable to make finance available to primary producers to enable them to carry on.


– I thought that this matter had been made plainly known by the statements made in this place from time to time. I think honorable members will be aware that it has been stated In , categorical terms that, with respect to finance for those affected by drought, the position has been made clear to the trading banks by the Reserve Bank. In addition, the latest consultations between the trading banks and the Reserve Bank have revealed that the trading banks are giving practical effect to the arrangement which had been entered into.

I think the best practical suggestion I can make is that if honorable members experience any instances where the policy is not working out as we have been given to understand it is, I shall arrange for the matter to be considered promptly by the bank concerned. The matter is kept regularly under review by this Government, in consultation with the Reserve Bank which, in its turn, is keeping in regular communication with the trading banks.

Many problems arise in this field, but to the best of my knowledge - it is certainly my own belief - the banks are doing what they can to assist in the matter, con- sistent with the recommendations put to them by the Reserve Bank.

page 2739




– I address a question to the Minister for Shipping and Transport. In view of the holocaust and loss of life on the “ Yarmouth Castle “, when does the Minister expect to introduce legislation to implement the Convention for the Safety of Life at Sea which was drawn up, with Australia’s support, in June 1960, which came into force as regards the shipping of participating countries last May, and which has already been ratified by at least three dozen maritime countries, including the United States, Canada, Japan and every country on the European Atlantic coast, except, I think, Portugal?

Minister for Shipping and Transport · FORREST, WESTERN AUSTRALIA · LP

– The accident to the “Yarmouth Castle”, to which the honorable gentleman refers, occurred to a ship under the Panamanian register, and I am not sure of the circumstances. So far as the Convention for the Safety of Life at Sea is concerned, I shall look up the progress that is being made and give the honorable gentleman an answer.

page 2739



Mr Malcolm Fraser:

– My question is directed to the Acting Minister for Primary Industry. Has a certain misunderstanding been brought to the Minister’s notice concerning application forms for ballot papers in the wool industry ballot? Is it correct that 25 per cent, of such applications in Victoria have been filled in incorrectly? If so, what action is being taken to see that all growers entitled to a vote are properly enrolled? Can all the action that is needed to be taken be completed by the 9th December time limit?


– I am afraid I cannot answer the honorable member as to whether 25 per cent, of application forms have been inaccurately filled in, but it is true that some forms have been inaccurately filled in. With every enrolment application form a brochure - the enrolment entitlement pamphlet - is sent out explaining who is qualified to vote in the forthcoming referendum. Those entitled include individuals, corporate companies, trusts, estates and partnerships. I think that anybody who studies this brochure should get an indication of whether or not he is entitled to vote. I am afraid I do not know what can be done about-those who have incorrectly filled in the form, but I should like to assure the honorable member that the Commonwealth Electoral Office is doing everything possible to ensure that every vote is valid. I take it that the Electoral Office will not eliminate a vote because of a minor irregularity.

page 2739



Mr J R Fraser:

– I ask the PostmasterGeneral, with great respect, whether he will reconsider his decision that a .person in Zone 1 who owns a broadcasting receiver and a television set must take out a combined receiving licence. Does this interpretation given by the Minister in his second reading speech, and in letters written to me since, conflict with the provision of section 126aa of the Act which states that such a licence “may” be granted? Would the Minister have a look at this matter, and if possible reserve to people who wish to take out separate licences the right to do so?


– 1 do not intend to try to give a legal interpretation in answer to a question, but I remind honorable members that the combined licence was brought into operation for the convenience both of the public and the administration. The honorable member will remember that to obtain two separate licences requires a payment of £8 15s. 6d. whereas £8 10s. is the payment for a combined licence. But when it comes to actual administration in the Post Office, having regard to the millions of licences which are current at the present time there is a tremendous advantage to be gained by having a combined licence rather than the separate licences, and Parliament decided that a separate licence should be available only where a person has a television set and does not own a radio set, or where he has a radio and does not have a television set. I see no reason at the moment, unless a strong case can be presented to me by the honorable member, why any alteration should be made in the present arrangements.

page 2740




– I ask the Treasurer a question which is supplementary to a question asked by the honorable member for Riverina. Does not the policy enunciated in the answer given by the Treasurer, namely that the Reserve Bank has given instructions to the trading banks with respect to finance for those affected by drought, apply only to credit worthy farmers who can be dealt with by the trading bank system? What provision is made for the many farmers, otherwise in the category mentioned by the Minister, who will no longer be credit worthy because of their drought losses? They have extended their credit to the limit in buying fertiliser, seed and other things. Will this category be dealt with by the State banking agencies? If so, what discussions are proceeding to ensure that the pipeline is clear so that urgent help may be got to this group?


– The banking system includes the Commonwealth Development Bank, which does not normally operate on the same basis as the trading banks. In addition, the rural banks of the States most affected - New South Wales and Queensland - are expected to give some assistance in this field. The honorable gentleman may be aware that the Prime Minister, on behalf of the Government, has already conveyed to the Premiers of New South Wales and Queensland an offer by the Commonwealth to give some financial assistance. He has pointed out that if interim financial assistance is necessary to enable the States to carry out schemes of relief that they may decide upon, the matter would be viewed favorably by the Commonwealth Government. I think that at present the matter may be said to be in the hands of the State Governments to consider the practical offer which the Commonwealth Government has made. We would hope to receive some information from the States on this matter as soon as they can come to a decision in relation to it.

page 2740




– I ask the PostmasterGeneral a question. Have negotiations between the Amalgamated Postal Workers Union of Australia and the PostmasterGeneral’s Department regarding the staffing of the new electronic coding machines broken down? Are the machines to be staffed by female labour, working a seven day shift work roster? Will many of the girls on shift work be only 15 or 16 years of age? Will they be paid £358 per annum less than a male operator? Will the installation of the machines mean a substantial saving to the Department? If so, why is the Department pursuing its penny pinching policy of employing cheap labour? Is it true that in every other country where these machines are used male labour is employed or, if female labour is employed, male rates are paid?


– It is not my responsibility to determine the conditions and rates of pay of those who work in the Post Office. Rates of pay and conditions of employment are determined by arbitration tribunals and are observed by me as they are by every other person in the Post Office organisation.

Mr Jones:

– But why-


– Order! The honorable member has already asked his question.


– If the honorable member wishes to go ahead and answer his own question, that is all right with me, but if he wants me to answer the question I suggest that he keep quiet. It is intended to employ females on these machines. I indicated the other day that these machines were in the nature of modified typewriters and therefore I believe that this work is suitable for females. The rate of pay for female operators will be less than would be paid to a male but I think it is fair to say that no males are trained and qualified to operate these machines. They represent a complete departure from normal male work. I do not know at what age the girls will be employed on these machines, but they will be employed under conditions to which I referred earlier. As to whether the employment of females on these machines will mean a great saving to the Post Office, I remind the honorable member that the installation of these machines for the first time in Australia necessitates a tremendous capital outlay. Therefore the cost of operation and depreciation will be higher than is normal with the type of equipment used for the sorting of mail. The suggestion that this equipment or this type of equipment is not used in other parts of the world is quite incorrect. There is a movement throughout the world towards installing this type of equipment.

Mr Jones:

– I raise a point of order, Mr. Speaker. The Minister misunderstood my question.


– There is no substance in the point of order.

page 2741



– I ask leave to make a personal explanation, Mr. Speaker. I was misrepresented by the Minister.


– Leave is granted.


– The Minister said that in my question I had stated that these machines were not used in other parts of the world. I did not say that. What T said was: Is it true that in every country in the world where these machines are in use either male labour is employed or male rates are paid when female labour is employed?

page 2741


Ministerial Statement

Minister for National Development · Farrer · LP

– by leave - The Governments of the Commonwealth and of the Australian States have reached agreement on a system of legislation to control and safeguard the exploration for, and exploitation of, the petroleum resources in Australian off-shore areas both within and beyond territorial limits.

Interest in exploring the petroleum resources of the sea bed has quickened considerably in recent times. However, apart from Territory ordinances the Commonwealth has at present no legislation governing this sort of activity. All States, as well as the Northern Territory and the Territory of Papua and New Guinea, have granted exploration permits under their existing legislation and the Commonwealth has granted subsidies for exploration of some of these areas. The discovery of natural gas in the area of Bass Strait is encouraging both to the companies, concerned and to the country as a whole. It is hoped that further exploration will bring fresh discoveries of both oil and natural gas.

A series of conferences extending over a period of more than two years has taken place between the Commonwealth Minister for National Development and the State Mines Ministers, and the Commonwealth and State Attorneys-General. The Minister for Territories (Mr. Barnes) has also been associated with the discussions. The discussions have been limited to resources of petroleum whether in gaseous, liquid or solid form. The objectives in the extensive CommonwealthState discussions that have been taking place have been to work out a scheme that would give certainty of legal title to operators in off-shore areas who undertake the substantial expenditures involved in offshore exploration and exploitation, and, at the same time, would enable constitutional issues to be put on one side, thus avoiding constitutional litigation of the kind that has been going on in the United States for many years. The several Governments have mutually agreed that without abating any of their constitutional claims - that without abandoning those claims - they should try to arrive at a concerted policy with common administration and with complete agreement between them as to what is to happen. This has been achieved. That it has been possible to reach this agreement is a unique tribute to the strength of our federal institutions and I think that we may take satisfaction in the thought that statements similar in content are being, or will be, made in the State

Parliaments - thus demonstrating the unanimity of purpose of the several Governments.

The scheme agreed to by the Governments will be effected by Commonwealth and State legislation in similar terms which will be presented to the several Parliaments pursuant to a formal agreement between the Commonwealth and the States setting out details of the agreed arrangements and the basis of, and understandings behind, such arrangements and evidencing the intention of all parties.

The legislation proposed by both the Commonwealth and the States will include provision for the application in off-shore areas of the general body of law in force in the adjacent State or Territory. This will include both State and Commonwealth laws and will apply in off-shore areas in relation to the exploration for, and exploitation of, petroleum.

Mr Whitlam:

– What will happen in the Gulf of Carpentaria?


– If the honorable member will wait until I get to a later part of the statement I think he will learn what will happen there. The legislation will also include a mining code devised by the Commonwealth and the States in co-operation, and providing for a common set of principles to apply to all offshore petroleum operations anywhere around the Australian coast, but allowing sufficient flexibility to enable the peculiar circumstances and problems off-shore from any individual State or Territory to be met. The administration of this legislation will be in the hands of the States and Territories, save only that the States have agreed that the Commonwealth will be consulted on all aspects which may affect the Commonwealth’s own special responsibilities under the Constitution in matters such as defence, external affairs, health, immigration, customs, navigation, and so on, and that in these matters the States will give effect to Commonwealth decisions.

Because of the very natural interest in the principles of the off-shore mining code on the part of companies currently holding offshore tenements or contemplating off-shore exploration, I propose now to give a brief outline of the basic principles which will be included in the legislation to be introduced by the Commonwealth Government and also the several State Governments. These principles have been agreed between the respective governments and will be submitted to the Parliaments.

The general run of existing State petroleum legislation provides for a three-stage system, that is, a permit to cover basic exploration, a licence over a much smaller area which gives permission to carry out drilling operations, and a lease to cover the production stage. The new off-shore legislation will be a two-stage system. A permit will cover all stages of exploration including drilling, and a licence - equivalent to a lease on land - will cover production. Under the scheme a permit may be issued initially for a period up to 10 years, or having been issued initially for a lesser period, may be extended to a total life of 10 years. If its duration exceeds two years either as an initial grant or because of extension, such duration shall be divided into successive specified periods and there will be provision for reduction of the areas of the permit at the ends of such periods. This is to encourage companies to concentrate their efforts on the most prospective areas which they discover but not at the,-, same time hold lange off-shore areas which are not being effectively explored.

Companies holding permits will be required to carry out exploration work in accordance with programmes approved by the State Mines Ministers or by the appropriate authorities in Commonwealth territories. There will be provisions requiring operations to be carried out in such manner as will not interfere unjustifiably with navigation or fishing, or with the conservation of the living resources of the sea and the sea bed, with underwater cables or pipelines, or with mining operations for minerals other than petroleum.

Rental will be payable to the States or Territories at an annual rate of 2s. per square mile but not exceeding the sum of £1,000 for any permit area. This is a comparatively modest rate but it is the view of the several Governments that companies should be encouraged to spend as much as possible in actual exploration. Rentals Will be kept by the States.

There will be many other details customarily found in petroleum legislation, such as a requirement that operations be carried out in accordance with good oil field practices, that proper safety procedures be observed, that reports be submitted at specified intervals, together with provisions for the voluntary relinquishment of a permit, and also for cancellation if the permittee fails to comply with the terms and conditions laid down in his permit.

I deal now with the granting of production licences. In the event of a permittee discovering payable petroleum he will have a preferential right to a licence for production. Licences will issue for periods of 21 years, with the licensee having the right of extension, providing he has satisfactorily carried out the conditions and covenants of his licence, for a further period of 21 years. During the first 21 years royalty will be payable at the rate of 10 per cent, of value of production at the well head. The second 21 years will be divided into three sevenyear periods, during each of which the royalty may be varied by agreement between the several Governments. Further extensions of the licence may be granted. The effect of this is that an operator is assured, providing he carries out his side of the bargain, of holding his licence area for at least 42 years and that during the first half of this the royalty rate will be fixed at 10 per cent, of value at well head. Royalties will be divided on a 50-50 basis between the Commonwealth and the adjacent State. The disposition of royalties in the case of the Territories will depend on the general financial relationships between the Commonwealth and the particular Territory concerned.

The method by which areas of a licence for production will be determined is of interest. The Commonwealth and the States have agreed that there shall be established over off-shore areas a graticule system of block areas, the size of each graticular block to be 5 minutes of arc of latitude by 5 minutes of arc of longtitude. In the areas of Northern Australia this results in graticular blocks of a little over 30 square miles in size, reducing as one moves south until in Bass Strait the blocks are approximately 25 square miles. Reduction in size is of course brought about by the fact that minutes of latitude decrease in length between the Equator and the South Pole.

Following a discovery of petroleum within a permit area the permittee will be asked to nominate a graticular block which will then become the centre of a group of nine graticular blocks which for purposes of simplicity will be known as a location. Each side of the location will be three blocks in length. From within this location of nine graticular blocks a permittee will be entitled to select any four blocks and to be granted a production licence covering such blocks. The permittee will have at least two years in which to make his selection and this period may be extended to four years if the State Minister - or the appropriate authority in Commonwealth Territories - considers further time is needed for adequate exploration and assessment of the area of the location. Those graticular blocks which are not selected by the permittee will be excised from the permit area and may be disposed of by the States or Territories by tender. The original permittee will have the right of first option over any such graticular blocks at the top price offered by any other tenderer provided that if the top price offered is not considered satisfactory, allocation may be deferred and the blocks re-advertised. The proceeds from the sale of these blocks will be retained by the adjacent States.

It will be noted that this arrangement will enable the permittee who discovers petroleum to secure as of right a licence for production over an area of 100 square miles or more, according to latitude. This is the normal maximum size of a lease currently provided for in State legislation. The permittee has the right to nominate the central block of the location so that he can have the location established over the area which he thinks will most suitably cover the geological structure in which he is interested. The permittee has a second choice in that he can take his pick of four blocks out of the nine constituting the location. There will be no limit to the number of licences that may be granted to any one company. This arrangement we believe is fair to the permittee, while at the same time taking into account the national sentiment that the Australian people as a whole should benefit appropriately from the development of our natural resources.

If the block nominated as the centre of a location is so positioned that to make it the centre of a location of nine graticular blocks would encroach on areas already included within other locations or would encroach on other permit or licence areas, the location pertaining to the discovery and its nominated block shall be limited to that number of graticular blocks which are not already encumbered, and the permittee will be allowed as of right to choose blocks over which he will be granted production licences according to a laid down scale. For instance, if the location is limited to seven blocks, the permittee may be granted licences over four. If the location is limited to four blocks, the permittee may be granted a licence over two, and so on. A permittee who discovers payable petroleum will also have a preferential right to a pipeline licence for the purpose of bringing his product ashore by a reasonably direct route.

I should like now to deal with the position of companies holding tenements issued by the States or Territories. Throughout the discussions between the Commonwealth and the States, the Commonwealth has made clear its intention, wherever possible, to honour tenements which have been issued by States or Territories and accepted by companies in good faith prior to the passage of Commonwealth legislation. There will be provisions in the legislation relating to the confirmation of existing tenements for the unexpired period of their life and to this end confirmatory permits may be issued temporarily with boundaries that do not conform to the graticular system to which I referred above.

Existing tenements are of comparatively short duration. Many will expire in 1966, a few in 1967 and 1968, while four run until 1969. As mentioned earlier, the new legislation will provide for permits of up to 10 years’ duration. Some companies may therefore prefer to be issued with a new permit under the new legislation. Others, whose permits have only a comparatively short time to run, may find it more convenient to have their old permit confirmed for the unexpired period of life. This will be a matter for negotiation between the companies and the State Mines Departments. The Commonwealth and the States have agreed together on the general principles under which confirmation should be handled.

This then is a summary of the intention of the Commonwealth and the States with regard to off-shore petroleum legislation. I emphasise that the proposed system has been designed to ensure security of title and tenure to off-shore operators, to avoid costly and time-consuming litigation, and to establish an effective and legally sound administrative regime supported co-operatively by the Commonwealth and the States. Legislation will be brought down during the next Session of Parliament.

I present the following paper -

Off-shore Petroleum Legislation - Ministerial Statement, 16th November 1965 - and move -

That the House take note of the paper.

Mr Whitlam:

– In view of the fact that legislation will be coming before the Parliament could the Minister let us know beforehand what portions of the Gulf of Carpentaria, the Gulf of St. Vincent, Spencer Gulf and Bass Strait are regarded as being within, and which portions are regarded as being outside, territorial limits?

Mr Fairbairn:

– I am sorry that at present I cannot let the honorable member know the position. We are working on the boundaries between the various States and between Australia and Papua and New Guinea. There are some complicated decisions to be made on boundaries as well as some very complicated legislation - international legislation - on who owns certain portions of off-shore areas. Until this has been agreed to and a map produced I am afraid I can do nothing more than assure the honorable member that the information will be made available to the Parliament when the legislation is brought in or, if possible, beforehand.

Debate (on motion by Mr. Whitlam) adjourned.

page 2744



Minister for the Interior · Richmond · CP

– by leave - At question time, in answer to a question asked by the honorable member for Wannon (Mr. Malcolm Fraser), I did not quite explain myself fully when he asked whether or not it was true that a certain number of enrolment application forms for the wool referendum, arriving at electoral offices, were invalid. In reply to him I used the word “vote” when I meant to use the words “ voting application form “. It is true that some of the voting application forms have not been filled in correctly. As I said in my reply, the Electoral Office is being as lenient as possible and is not declaring them invalid for any minor irregularities.

page 2745


Assent to the following Bills reported -

Appropriation Bill (No. 1) 1965-66.

Appropriation Bill (No. 2) 1965-66.

page 2745


Second Reading

Debate resumed from 28th October (vide page 2330), on motion by Mr. Bury -

That the Bill be now read a second time.

Melbourne Ports

.- The Opposition intends to oppose this Bill because it is designed to give legal sanction to the increases in duty on petrol, tobacco, cigarettes, beer and spirits. We oppose the measure not because, in some circumstances, we do not think items such as these should be taxed, but because in the circumstances and terms of the Budget we regard them as regressive in their application and because we believe they will result in an inequitable distribution of the increased tax burden that the Government felt was necessary as a result of the Budget.

In terms of an increase of about £70 million in taxation and a total Budget commitment of £2,600 million, at least it is arguable whether the economy is better off for this extent of increased taxation. But if that were the contention - and that was the contention of the Government - then there is a case in favour of the proposition that the increase ought to have been more in the field of direct taxes and less in the field of indirect taxes. Actually, the pattern chosen by the Government was the reverse because, of total increases in this Budget of the order of £72 million for the next financial year to end in June 1966, some three quarters, £54 million, is comprised in the items that come within this schedule. Just to refresh the minds of honorable members on this matter I want to quote from the Budget Speech of the Treasurer (Mr. Harold Holt) in this House on 17th August. He said -

The proposed increases have been varied slightly from 3d. in the case of petrol (3.01d.), aviation gasolene (2.984d.) and aviation turbine fuel (2.98d.) to ensure that the new rates on conversion to dollars and cents will not produce more than two places of decimals of cents. The increases, which will come into effect immediately–

They took place on 17th August last -

Are expected to yield an additional £25,060,000 in a full year and £21,890,000 in 65-66.

Regarding beer the Treasurer said -

The rate of excise and customs duty on beer will be increased by1s. 61/2d. per gallon, which is broadly equivalent to an increase in duty of something over1d. for a 10 oz. glass . . . The increase is expected to produce an estimated £20,900,000 in a full year and £16,560,000 in 1965-66.

The increase on spirits, whisky, gin, brandy and the like is estimated to bring in £6,420,000 in a full year and £5,390,000 in 1965-66. So far as tobacco is concerned the increases, again, are to have immediate effect. The Treasurer said -

The increases, which will have immediate effect, are approximately -

I ask honorable members to bear in mind the significance of that word approximately -

Equivalent to an additional 3d. duty on a packet of 20 larger cigarettes or on a 2 oz. packet of tobacco. The increase in duty is, of course, less than 3d. on a packet of 20 smaller cigarettes. The resultant rates of duty will convert conveniently to dollars and cents. The additional revenue from these proposals is estimated to amount to £13,300,000 in a full year and £10,700,000 in 1965-66.

He added that, in a full year, the increases would total £65,680,000 and £54,540,000 in 1965-66. The purport of the increases in this measure is to add a sum of £54,540,000 to the collections of taxes on petrol, beer, spirits and tobacco.

Again, just to see the perspective of these items, I draw the attention of honorable members to the bulletin, “ Commonwealth Finance 1963-64”. On page 4, in relation to the Consolidated Revenue Fund it shows that for 1963-64 - the last completed financial year - excise on beer yielded £123.5 million to revenue. Of course, some revenue was collected by way of customs duty on imported liqueurs, but this Bill deals with excise. The figure for spirits was £9 million; for tobacco £9 million; cigars and cigarettes, £73 million; and petrol £68 million. Those items aggregated about £270 million and now, on top of this, there are to be further increases amounting to £54.5 million.

The Opposition has pointed out that unfortunately the impact of these taxes does not seem to fall directly where it is imposed. It is true that they result in an increase in the price of beer. The price of beer has risen by Id. for a glass of 10 oz. - for those who like it that way. Petrol has risen by 3d. a gallon and the price of an average packet of 20 cigarettes has risen by 3d. The cynical assumption behind the imposition of these increases is that the consumption of these items will not fall significantly, so that the more that is spent in this direction - and it will be £54.5 million this financial year - the less will be available for consumption of other items in the community. I have made my own test with respect to these matters. I have said to people: “As a result of the increase in the price of a packet of cigarettes have you reduced your consumption? “ I have been told: “ No “. A certain member of this House whom I approached recently told me that, his consumption of cigarettes cost about 10s. a day. His consumption of about 50 cigarettes a day has not altered to any degree because of the fact that he now has to pay 9d. more for about three packets. This also applies to the consumption of petrol. People are not using motor vehicles any less frequently merely because the price of petrol -is now 3d. a gallon dearer. Of course, we had the rather ironical circumstance that during an election campaign two years ago the Government came to the polls with a proposition that would make the price of petrol to country consumers almost equal to the price to city consumers. A difference of about 3d. a gallon was fixed by legislation introduced, I think, in May of this year. All the benefit of this is new taken away by increasing the price of petrol again by 3d. In a sense, I fail to see the consistency in this approach, but at least the House ought to note that, the presumption is that the consumption of these articles will continue at the same physical level but at a higher financial cost. The additional amount involved is £54,500,000, so that the consumers as a whole have about £1 million a week less to spend on other goods and services in the community. At a time when, in some respects, the economy can scarcely be called buoyant, it seems hard to justify this action.

I make those points to explain why we are opposing the measure. I repeat our proposition simply. We believe that, to begin with, lt was arguable whether taxation increases were necessary at all In this year, I think the way that the economy ls going at the moment, in another month or two there may well be a moye to reduce some of the taxes that have been increased. But assuming, as the Government did, that tax increases were necessary, we regarded it as inequitable that £3 out of every £4 raised by the increases should come from indirect taxation and only £1 from income tax - the tax that is supposedly levelled according to capacity to pay. The final point is that, because consumption of these items has not fallen and because the ordinary family in the community still buys as much tobacco, petrol and beer, the other items in the family budget are suffering.

I want now to go into some detail on some of the individual items. I want to draw attention to the excise on tobacco, particularly on cigarettes. It seems that bigger profits will be made by certain people. Those who are responsible for setting^ the price of cigarettes are making a profit, as it were, out of the increase in the amount of duty and in a moment I will show the extent of this. The increased duty on tobacco -and cigarettes will be £10,700,000 for 1965-66. I want to show that, as a result of the increases, two channels of distribution in the trade - the tobacco manufacturers and the retailers of cigarettes - will between them make an additional profit of the order of £1 million. Clearly in a matter such as this I would not normally quote individual Instances, but I have in mind that every cigarette manufacturer wants the name of his product to become a household word. In these circumstances, I feel no reluctance to give individual examples in this House. On the occasions when I have time to watch television and on the very rare occasions when I watch a commercial channel rather than the national channel, I seem to be afflicted for half the time with people trying to persuade me that one cigarette is somehow much better than another.

Mr Uren:

– And gives better lung cancer.


– I will come to that point. It seems to me that some cigarette manufacturers are, in a very subtle way, giving consumers less tobacco than they think they are getting. I do not know whether the manufacturers do this because they are frightened they may be causing lung cancer. One point that is mentioned in the fancy advertisements on television is the number of cigarettes in a packet. No mention is made of the quantity of tobacco in a packet. After all, a gallon of petrol is a gallon of petrol wherever it is purchased. The pumps are checked regularly and I do not dispute their accuracy. But 20 cigarettes apparently are not 20 cigarettes however and wherever they are bought. They vary, and fancy terms such as “ king size “ are used. Some are plain and some are filter. But we are not told that some are significantly shorter in weight than consumers are led to believe they are.

I want to substantiate my comment by referring to a publication that was, I think, sent to every honorable member, lt is called “ Contact “. It says that it has the largest net sales in the food and grocery trade in Australia. It circulates in New South Wales. The copy I have is dated 1st October 1965 and is headed “ When cigarettes are not all smoke”. It contains a table that gives a comparison per 1,000 cigarettes. It will ask honorable members in a few minutes to do a little bit of arithmetic. After all, we ought to know what we are being asked to approve. The Statistician has published figures in the bulletin Manufacturing Industries 1963-64, No. 26, “ Tobacco, Cigars and Cigarettes “. A footnote to page 4 of the bulletin shows that in 1962-63 19,692 million cigars and cigarettes were sold. Cigars are, of course, relatively insignificant in the aggregate. In 1963-64, the total production of cigars and cigarettes in Australia had reached the astronomical figure of 20,041 million.

Mr Turnbull:

– Is that packets or cigarettes?


– This is individual cigarettes.

Mr Bury:

– Are these king size?


– No, it does not say that they are king size any more than the people who try to sell their cigarettes state the quality or quantity of tobacco in them. I am suggesting that, if there is to be honesty in these discussions, the tobacco content of the cigarettes should be stated somewhere on the packet. People are free not to smoke if they do not want to, but at least if they choose to smoke there ought to be honesty in public dealings. There is a measure of dishonesty at the moment, and this is brought out quite clearly in the table given in the publication “Contact”. In terms of comparative honesty it seems that the only tobacco firm in Australia that can claim honesty in its dealings with the public in respect of content is Rothmans of Pall Mall (Aust.) Ltd. Other firms will be mentioned by implication because I propose to cite particular examples. As I have said, I have no reluctance to do this, because cigarette manufacturers by medium of television and radio enter every household nightly and tell people how good their product is. We are entitled to say, where we can tell, just what is the quality of the product and just what some of the manufacturers have been doing.

This article in “ Contact “ is based on a survey undertaken recently by Mr. W. H. Black, who is a registered food analyst and chemist. So far as I can find out nobody questions his bona fides and his competence or the honesty of the factual survey that emerges in this article.

Mr Reynolds:

– Is it quite independent?


– It is at least independent of the tobacco interests, and that is surely what is required. The survey showed that as a result of the recent increase in the excise on tobacco, which we are asked to sanction by means of this Bill, the prices of all cigarettes went up by 3d. a packet even though, as I pointed out before, the Treasurer, in his Budget speech, said that the increase in duty was approximately equivalent to an additional 3d. on a packet of 20 cigarettes and was less than 3d. on a packet of 20 smaller cigarettes. Some of these cigarettes apparently are very much smaller than the advertising indicates but nevertheless all manufacturers increased prices by 3d. a packet. It is worth noting here that at present not one of the prices quoted for any of these items has an exact decimal equivalent. So what will happen when C Day arrives and these prices have to be converted into decimal currency? If the tobacco interests do with the decimal changeover as they did with the duty changeover the public will be mulcted even further by dishonest pricing.

The manufacturers of Peter Stuyvesant cigarettes have the most honest performance. As a result of the increase in excise they actually took a slight loss. Apparently the tobacco in a packet of Peter Stuyvesant cigarettes warranted an increase in duty of more than 3d. This firm was the best performer. The makers of Country Life cigarettes gained 7d. per 1,000 cigarettes. I just want it to be noted here exactly what is meant by references to 1,000 cigarettes. Somebody might ask: “ How could you distribute the increase in any way other than over 1,000 cigarettes? “ There may be some point there but I want to show that in terms of a total consumption of 20,000 million cigarettes all these small sums of 2d., Sd. and 7d. per 1,000 cigarettes add up to a substantial sum in the aggregate. Similar substantial sums will be involved when price increases take place as a result of the change to decimal currency.

There was an honest performance also in respect of Rothmans king size plain cigarettes. The gain was only Id. per 1,000 as a result of the increase in duty. Rothmans king size filter did better for the manufacturers. As a result of passing on more than the increase in excise an additional 5d. per 1,000 profit was gained on these. Craven “A” filter, however, gained ls. 2d. per 1,000. Perhaps it would not have been difficult for the Craven “ A “ firm to have reduced its price for these cigarettes by id. a packet. I am simply suggesting that we could get somewhere near a divisible sum if we divided 50 into ls. 2s. Craven “A” cork tip cigarettes gained ls. 3d. per 1,000, Viscount ls. 2d., Alpine ls. 4d., Escort ls. lid. and Capstan cork tip 2s. 5d. Turf filter were the best performers for the makers, gaining more than any others, at 2s. 9d. per 1,000. Those who smoke these brands of cigarettes should note these things.

One of the points made in this article is that apparently the public is not quite so silly as the cigarette manufacturers imagine. People in the long run sift out the information and determine which cigarette gives the most smoke in terms of the price paid. Certainly the worst performer for the public was Turf filter. The manufacturers of Riggio cigarettes were comparatively honest. These gained only 2d. per 1,000. Consulate gained 7d. per 1,000 and Marlboro 8d. I have worked out a small sum to indicate something that I ask honorable members to note. Every Id. per 1,000 by which the prices of cigarettes are increased means an increase of £4 per one million. In terms of a consumption of 20,000 million cigarettes, an increase of Id. per 1,000 means a total increase of £80,000. As I pointed out, the price of Peter Stuyvesant cigarettes fell by 2d. per 1,000 and that the prices of Rothmans king size plain and Riggio cigarettes rose by Id. and 2d. per 1,000 respectively. Of the remaining increases the minimum was 5d. per 1,000. If we take this figure and apply it to the total consumption of cigarettes we see that cigarette smokers are being asked to pay, over and above what they ought to have been asked to pay as a result of the increase in excise, a minimum of £400,000 a year.

There is a further item that must be taken into account - the retailer’s profit margin. That margin apparently is computed not on how much it costs to sell a packet of cigarettes but on the total price of the packet. So if the price asked by the manufacturer is increased because thi excise is raised the retailer’s margin also goes up. The minimum increase in the margin in this instance could be said to be 5d. per 1,000 cigarettes. If we make the same sort of calculation that I have already made, we see that the smoker pays yet another £400,000 in increased profit margins to retailers. So the manufacturers and retailers together are getting something like £1 million a year more than they would have got if they had not passed on to the consumers costs aggregating more than the equivalent of the increase in duty. Surely a situation like this merits notice. I am not quite sure whether there ought to be imposed a separate tax of some kind simply to take from those who are making this sort of additional profit what they are not entitled to get. That is one point that is mentioned in this article in “Contact”.

The second point that I want to bring to the notice of the House is that quite apart from the consequences of the increase in excise the public has for a very long time been robbed because there is apparently less tobacco in some of these cigarettes than smokers are led to believe. This survey that I have mentioned made an interesting comparison. Presumably it assumes what I am sure the cigarette manufacturers would not like to be assumed - that there is not very much difference between one cigarette and another in terms of the quality of the tobacco. That may be argued, of course. Some people may have a favorite brand of tobacco and really believe that they can tell the difference between it and another brand. I suppose that if certain additives having nothing at all to do with the tobacco are added a cigarette may be given a taste that it would not otherwise have. Presumably the suggestion is that tobacco, as retailed under all these brands, is a fairly homogenised sort of product and that, therefore, it is the quantity of tobacco that should be significant. This document states that for every packet of 20 of Craven “ A “ filter cigarettes the smoker loses about 1+ cigarettes but pays the same price. 1 have never heard of that information being revealed in advertisements for Craven “ A “ cigarettes. All we are told is that it is a certain type of pack containing a certain number of cigarettes. I am not precisely sure what its advertising gimmick is, but there is nothing to show that in terms of tobacco there are li cigarettes fewer in the pack than there is in some other pack.

The article states that although the price of Viscount cigarettes is 7 per cent, less, the cigarettes are lt per cent, lighter in weight. However, the firm of Rothmans, which pays the highest price for tobacco leaf on the auction floor - we have had a little bit of argument in the House recently about this - has more quality to offer. Presumably there is some difference in quality in that instance. The article then states that on the factors of weight and price the public is paying more for the tobacco that it smokes in the cheap brands of cigarettes. These cigarettes are not really cheap at all when one thinks of what they ought to be related to - the quantity of tobacco that they contain. Quite a war has been going on with regard to cheap tobacco prices. Apparently some cigarettes are not as cheap as people think when some significance is attached to the quantity of tobacco they contain or the value that one gets for the money he spends. The article continues -

For instance the smokers of brands selling below 3s. 4d. a packet of 20. (Capstan and Turf) are losing the equivalent of more than 4i cigarettes in every pack.

In other words, the public gets not 20 cigarettes from each pack but the equivalent of only 151 cigarettes. Again, that has not been stated in the advertisements, so far as I am aware. The article then states -

Independent weight tables give Capstan Filter at 1.621 lb. of tobacco weight per 1,000 cigarettes as against Rothmans tobacco weight of 1.971 lb. per 1,000.

That discloses that there is a difference of 35 of a lb. in terms of a base of 1.621 - nearly a quarter difference in the quantity. In fact that difference comes down to the equivalent of more than four cigarettes in favour of Rothmans. In 24 Capstan filter cigarettes there would be the same quantity of tobacco as there would be in 20 Rothmans cigarettes. However, I rather think that it should be expressed the other way by saying that instead of getting 20 cigarettes one is getting only 16. The article continues -

The same applies to Turf filter.

Rothmans is about 23 per cent, heavier than Turf and Capstan and only 18 per cent, dearer.

The extra weight of tobacco in a Rothmans King Size filter pack of 20 means that, to get similar value, the Turf and Capstan smoker would pay about 9d. more.

So the consumer is not really getting cheap cigarettes; he is getting a dishonest weight in the pack of cigarettes that he buys. The article continues -

There is one exception to the Rothmans transcendency. Peter Stuyvesant gives more value both in weight and price than any cigarette on the Australian market.

After all, Rothmans make Peter Stuyvesant, so the transcendency is there in another form. This may account for the reason why Rothmans have been doing so well. Perhaps the public is not quite so silly as the advertisers for other brands of cigarettes make out. At least that is a point that advertising people should sometimes take into account. I have often said to advertisers, and I have not been very popular for saying it, that I have never bought anything as a result of seeing it advertised on television. In fact, an advertisement on television tends to set up an opposite reaction in me. I tend to be against a product that I see advertised, because of the blandishments that are put to me. It seems that that is true also of many users of tobacco.

Despite the various advertisements for Viscount, Marlboro, Riggio or some other brand which states that those cigarettes axe so good, apparently people still pay attention to how much tobacco they get in the packet of cigarettes that they buy. All this seems to me to be of some significance and I suppose it has a bearing on restrictive trade practices, to some extent. Probably the same could be said of other channels of trade. I am not suggesting that the tobacco interests are any less dishonest than other interests. It is a pity that one cannot say that they are more honest, but that would be a reversal of the circumstances. The activities of the tobacco interests are probably no less dishonest than are some of the other wiles of the advertiser. I do not think it is often realised just how much advertising costs Australia. I think I have seen the figure put at about 2 per cent, of the gross national product, which would mean that advertising costs Australia in the region of £160 million to £200 million a year. Occasionally when we are told that it pays to advertise we should ask whom it pays. Apparently it does not really pay the consumer as he has to pay for the advertising.

All I am suggesting here on the question of advertising as it applies in the tobacco world is that it is loading increased prices on to the consumers of the article. In turn, with the Government knowing just how easy it is to collect duty on items such as cigarettes, beer and petrol, when increases take place as a result of an increased duty more is added to the price than needs to be added. We are supposed to leave these things to what is called good old private enterprise for the prices to be regulated. I suppose it would not be too bad if it were left to private enterprise to regulate the price if people knew just how the regulation was taking place. I hope that wider coverage can be given to the circulation of this interesting table of comparison per 1,000 cigarettes. As I have tried to show in terms of the measure we are debating, over and above the £10 million that the Government chooses to charge the users of tobacco, the trade has charged perhaps another £1 million that it need not charge. None of the tobacco interests seems to have gone out of business because of the small profits that it earned before.

As a result of this increased duty the retailers will receive, between them, almost and additional £i million and the manu facturers will receive nearly a further £i million. I suppose it could be said that among the retailers this extra charge is a bit more thinly spread than it is among the manufacturers because there are thousands of channels of distribution in the retail field. Probably this is just one of the facts of life that because prices are fixed in terms of turnover, when the price increases have been as a result of an increased tax the margin over and above that is simply added on automatically. But there does not seem to be any need for the manufacturers of tobacco to do the same sort of thing. I suppose if they were really honest they should repay to the Treasury the amount they have received over and above the amount that they have paid out. Perhaps that amount should go into some sort of fund to assist the tobacco industry or back into general revenue where it would be to the advantage of the whole community rather than to the advantage of those who happen for the time being to be manufacturing cigarettes.

I suppose that if I had the details I could go into similar arguments about what happens to the penny increase in the price of a glass of beer. There may be some argument as to whether some of that increase represents profit to the brewery or whether some of it represents profit to the publican. Perhaps it would be asking too much to ask the House to go through all that as well, but all these things do show the significance in the total Australian economy of what we might call the unholy trinity - beer, petrol and tobacco. These three things are some of the necessaries of life. As I have said, 20,000 million cigarettes are consumed in a year and goodness knows how many millions of gallons of beer are consumed and how many millions of gallons of petrol are used. But they do represent a good source of tax revenue for the Government. This year more than £300 million will be collected by way of excise duty alone. On top of this will be the revenue collected by way of customs duty, and I think that it pays the House to look occasionally in detail at some aspects of these problems. I trust I have not wearied the House unduly by giving the story about cigarettes which is not really a very pleasant one.


.- As is well known in this House, but perhaps not as well known outside, the Government has decided that, due to increased defence expenditure and other committments, it is necessary to levy certain additional revenue imposts this year. The Bill under consideration seeks to give legislative authority to the collection of certain revenue by way of increased indirect taxation.

I listened very attentively to the honorable member for Melbourne Ports (Mr. Crean). I have decided to speak not merely because I support the measure but because I would like to refer to certain points mentioned by him. First the honorable member gave us a great lesson on cigarettes and tobacco, the like of which I have never heard in my experience of almost 20 years in this Parliament. It was the best advertisement for Rothmans cigarettes that I have ever heard. If Rothmans had to pay for such an advertisement on television, on the radio and in the Press, I venture the opinion that the cost would be such that the sum of £1 million that the honorable member mentioned would pale into insignificance. It was a marvellous advertisement. But was it genuine? ^’/:”

Let us examine the case he put forward. The honorable member based his case on some pamphlet that he had. He went into minute details concerning the weight of different brands of cigarettes. Were those cigarettes weighed correctly?

Mr Crean:

– Yes.


– The honorable member says that they were. But what proof have we that they were? On what real authority is that statement based? I should like to know all these things. Is the honorable member himself a smoker? Is his opinion as to what is the best brand of cigarettes based on practical experience? If there is more tobacco in the Rothman’s cigarettes than in Craven “A” - I do not know whether there is or not - it may be that the tobacco in the Craven “A” cigarettes is of better quality. It is the quality, not quantity, that counts with the smoker. If the Craven “A” has a taste that “ comes through “ to the smoker - as is said in another advertisement - probably he will prefer that brand to another that has a fraction of an ounce more tobacco in each cigarette. The honorable member did not refer to quality; he referred only to tha quantity of tobacco. Every smoker knows that quality, not quantity, counts with tobacco.

I have watched the honorable member for Melbourne Ports very closely ever since he came into this House. I have always regarded faim as a good friend. We have always got on well together. But I must say now that I have never seen him smoke a cigarette.

Mr Crean:

– No, and the honorable member never will.


-So when lt comes to judging the quality of a cigarette, the honorable member is less than a novice - he has no knowledge whatever. For this great advertisement that he has given Rothmans he depends on what is written to a certain statement by certain people. I do not agree with what he said in connection with cigarettes. He also said many other things that I am not quite happy about. He referred to a colleague in this House who was smoking about 50 cigarettes a day and who is continuing to smoke that number in spite of the increased price. The honorable member nods in agreement with that. I could take him to four, five, or perhaps six honorable members of this House who, since the Budget was introduced, have given up smoking cigarettes altogether. We must judge these things on averages.

Mr Reynolds:

– Where are they?


-They are in this House. If the honorable member for Melbourne Ports will come with me, I shall be very pleased to introduce him to them. And they are saying how much better they are feeling, too.

Mr Reynolds:

– Hear, hear!


– I am glad to hear one honorable, member opposite saying “ Hear, hear “. The honorable member for Melbourne Ports said that the excise on cigarettes had gone up by the equivalent of about 3d. a packet. I do not deny that but I do point out that I live in a town named Boort in the Mallee electorate where the, tobacconist has to charge 6d. a packet more for some brands of ordinary cigarettes than one would have to pay for them in certain Melbourne shops. These are the things that need to be investigated. Because of this price differential, men in the country areas are beginning to buy their cigarettes in cartons from the cities with the result that the local tobacconists are just about going out of the trade. Of course, some people will still stand by them, but others are buying cigarettes for up to 6d. a packet less in the cities. Boards may be seen outside shops in the metropolitan area of Melbourne - no doubt the honorable member for Melbourne Ports has seen them - offering certain brands of cigarettes for up to 6d. a packet cheaper than the price for which the man in the country can buy them. That this should be possible is completely wrong. I hope that the proposed restrictive practices legislation will put this matter right. But we cannot very well relate that to the legislation before us, although the honorable member for Melbourne Ports made a very good attempt to do so because at least three-quarters of his speech was about cigarettes.

I wish now to refer to some other matters mentioned by the honorable member. He said that the consumption of cigarettes, beer and spirits will continue at the same physical level. He made a point of that. That may be so, but it must be remembered that this is purely a matter for the individual. The individual decides for himself whether he is satisfied to pay the extra price. Tremendous quantities of beer and cigarettes are involved. It would seem to me that the member of this Parliament who smokes 50 cigarettes a day would not be much worse off if he smoked only 45 a day. In fact he would be much better off physically and would be offsetting the increased taxation.

The honorable member for Melbourne Ports said that he believes in direct taxation, not indirect taxation. I remind him that the Government has increased direct taxation by 2i per cent, in order to obtain the revenue needed to meet the increased expenditure on defence. Has it not, therefore, in effect increased both direct taxation and indirect taxation by an approximately equal percentage? I should think that that is a fair method of raising the money necessary to conduct the affairs of the Commonwealth. But the honorable member for Melbourne Ports said nothing about the Go vernment’s action in increasing direct taxation. There is no escape from direct taxation but the smoker, for example, can escape the payment of indirect taxation by not smoking so many cigarettes. The honorable member for Melbourne Ports said that cigarettes are necessaries of life. He argued that if the price of cigarettes is increased by 3d. a packet people will not be able to buy certain other goods because they will not have the same amount of money as they had before. The real necessaries of life are the other goods to which he referred.

Cigarettes and beer are things which the individual can decide to cut down for himself. The amount by which he would need to reduce his consumption to avoid paying extra tax would not be very great. The honorable member then said that the price of petrol in country areas cannot be more than 3d. a gallon above the price paid in the metropolitan areas. I think the correct figure is 4d. The legislation to which he referred was brought in to give the consumers in rural areas an advantage over the city consumers. Although petrol has gone up 3d. a gallon in the city and the country the country still has the same advantage that it had before. The principle of the legislation still stands. It is not as though the price of petrol went up by 3d. and the country now had an advantage of only Id. over the city. If petrol is being sold anywhere in Australia at more than 4d. above the appropriate metropolitan price, then the people who are paying that higher price should complain to their Federal member and ask the reason why. It does not matter whether petrol goes up by ls. a gallon, the country areas will still pay only 4d. above the city price; the principle remains. The Australian Country Party strongly supports the principle that rural areas a certain distance from the metropolitan area should have this price advantage.

The honorable member for Melbourne Ports spoke of cigarette advertising. I have to get back on to the subject of cigarettes because most of the speech of the honorable member was devoted to that subject. He referred to petrol but then came back to the subject of cigarettes. The honorable member spoke of television advertising. I should like to know why television advertisements make out that cigarettes are so essential for young people who take part in sporting events. If a young person is engaging in tennis, cricket or football he must rush off, according to the television advertisements, and smoke a cigarette.

Mr Coutts:

– Is the honorable member on their side?


– I am certainly not on their side. I am only referring to what the honorable member for Melbourne Ports said. It is suggested that young people must rush off and smoke these cigarettes if they are engaging in sporting’ events. It must be known that a lot of people do not consume all the tobacco in the cigarettes they smoke. There are what are known as society smokers. Some ladies in society take only a few draws and then they throw the cigarette away. Some of them could not smoke any more of the cigarette or they would be sick. They take only a few draws and then they butt the cigarette - I think that is the term - and throw it away. Were honorable members to visit some of the cocktail parties at Parliament House or at some of embassies where cocktail parties are held and were to look at the receptacles into which cigarette butts are put they would see that some cigarettes are only partly smoked, some are half smoked and, of course, some are smoked altogether. We have to remember too that the filter on cigarettes has changed things quite a lot. In the giant, or king size, cigarette the filter takes up a lot of space. It has apparently become necessary to have a filter. I saw a rather amusing comic strip recently. It depicted a man going about the city picking up what are known as bumpers - that is, cigarettes that have not been fully smoked before they are thrown away. The strip implied that the man had to go out of business because since filters have been introduced most of the tobacco in a discarded cigarette has been smoked.

As far as the general debate is concerned I believe that the honorable member for Melbourne Ports did not have any vital points to put forward as to why the Opposition was opposing the measure. There is only one reason why Labour is opposing this legislation. Every Labour man knows, and I do not think anyone will deny it-

Mr Duthie:

– The honorable member can tell us.


– I will cerainly tell the House. Cigarettes are very popular. Many people smoke them. Beer is tremendously popular. These items are used by large numbers of voters. Petrol, of course, is used by a large section of the community also. A tax placed on these three items hits people personally and a number of members of the Labour Party realised that here was their opportunity. The honorable member for Melbourne Ports knows that what I am saying is right. He is smiling. He is generally pleasant, as he is quite a good fellow. He thinks that if the Labour Party opposes any rise in the price of beer, cigarettes or petrol then surely that will mean a few extra votes at the next general election.

Mr Duthie:

– The honorable member was not at the caucus meeting or he would not talk like that.


– I was not present at the caucus meeting. Sometimes I think I would like to be to hear what is said, although I am not of an inquisitive nature.

Mr Duthie:

– Has the honorable member ever heard of indirect taxation?


– I have heard of indirect taxation.

Mr Duthie:

– That is what we are against.


– J have already said that the Government has imposed an equal measure of direct and indirect taxation in order to raise sufficient money for defence. Have honorable members opposite ever heard of defence? Have they ever wondered why it is important that the Government should get this money? When direct taxation is imposed people have no chance of getting out of paying it. I know I have stirred up a hornet’s nest by touching on a sore point as far as the Opposition is concerned. A tax on tobacco, cigarettes, beer, petrol and spirits touches a lot of people personally. The late leader of the Labour Party, Mr. Chifley, said on one occasion in this House when I was present that what hurts people is something that touches what he called the hip pocket nerve. A tax on the things I have mentioned touches the hip pocket nerve of a large number of people in the community. Does anybody think that a man who has not a motor car, does not drink beer and does not smoke cigarettes would be interested in this matter? Of course not. A lot of other people will be interested because they consume beer and smoke cigarettes. I am not saying that they should not do so, but I do say that it would not hurt them if they were to cut down a bit on the consumption of these things. It would help the Government. Even though the Government would not derive as much from excise duty the people would be more healthy and in a better condition to do their work. Individually people have the right to decide what they will do. The honorable member for Melbourne Ports referred to a colleague of his whom he did not name. I am glad that he did not name him because otherwise I could not speak about him. If a person like that man smokes 50 cigarettes a day and will not cut his quota down by even 5 he will have to pay the extra tax. However, there are some people who have given up smoking altogether. The additional tax will not affect them. I support the Bill.


.- This is a machinery Bill to implement the actions taken by this Government when the Treasurer (Mr. Harold Holt) made his Budget speech on 17th August last. We know that this tax revenue had to be raised to pay for the huge increase iri defence expenditure from £304 million last financial year to £385 million this year. The only objection the Labour Party has stated is that the additional revenue is being raised by means of indirect taxation. It is being paid by the great mass of the people and not by the section of the community which really controls the wealth of this nation. The Labour Party believes - and it has said this over and over - that a more equitable tax is that which is levied directly. As far back as November of last year, when there was talk about increasing the defence expenditure of this country, I challenged the Government on this point. Let me remind honorable members of what I said. I quote from “ Hansard “ of 17th November 1964 at page 3130. 1 said-

We have not been told how we are to pay for this increased expenditure. Is it to be by way of increased taxation? If so, what section of the community is to bear the burden? Will it be the wealthy section - the section which the Government represents? If taxation is to be increased, will the Government continue with its policy of raising revenue by way of hidden taxes, indirect taxes which are inflationary and which impose a burden on the workers, the real wage earners - those 82 per cent, of the taxpayers who earn £29 a week and less? Neither the Prime Minister nor the Treasurer (Mr. Harold Holt) has yet given us any details of how this lopsided scheme will be financed.

There was silence. There was no suggestion of how this increased defence effort would be paid for until the Budget was brought down last August. We do not claim to be prophets, but we knew the policies of this’ Government. We know how this Government has acted in the last 15 years. We knew that the Government would hit at the workers by increasing indirect taxation. It would not further tax the minority section of the community which it really represents. This Government truly is a minority government. It represents the wealthy section of the community, which has become wealthier and wealthier under this Administration while the poor have become poorer and poorer.

Let us examine the means by which the Government proposes to increase revenue. An increase of 3d. a gallon in petrol tax will yield £25 million to the Government in a year. I do not pretend to be a prophet, but I assure the electors that this is just the beginning. The Treasurer will find ways to raise more revenue from petrol tax. In his Budget speech he reminded us that, petrol is much dearer in Britain than it is in Australia. Was this a message to the Australian motor car user? Was it a warning that petrol tax will be further increased? This is a good way of taxing the great mass of people and those companies which use motor vehicles but, of course, we know that the increase in tax is passed on by most companies to the consumers by increased charges for their products - to the 82 per cent, of people who earn less than £29 a week. They are the people who are really carrying the burden of this increase in defence expenditure.

Revenue from excise on beer will increase by £20 million. In the case of spirits, the increase will be £6.4 million and in the case of tobacco products, £13.3 million. The total increase in customs and excise revenue will amount to £65.68 million. These are indirect taxes. This Government claims that it believes in equality and in an equitable distribution of wealth but what does it do in the field of income tax? It increased income tax by a flat 2i per cent., yielding an extra £18.9 million to revenue in a full year. I remind the honorable member for Mallee (Mr. Turnbull) that the Government’s policy is to increase indirect taxation rather than direct taxation. In 1951-52, revenue raised by excise duty amounted to £100 million, representing 10.7 per cent, of taxation revenue. Last financial year the amount so raised was £315 million, representing 16.7 per cent, of taxation revenue. So in that period taxation revenue raised by indirect means increased by 6 per cent. I have referred to only one indirect tax - excise duty. I could refer to increases in others, such as sales tax and payroll tax. In 1951-52, £386 million was raised by means in income tax, representing 42.2 per cent, of taxation revenue. In the last financial year, the amount so raised was £785 million, representing only 41 per cent, of taxation revenue. So revenue raised by equitable means fell by 1 per cent., but revenue raised by excise duty increased by 6 per cent.

I believe that the wealthy companies should pay more tax. The amount of tax paid by people in the high income bracket and perhaps even in the middle income bracket should be ^increased because we must face up to ouT great responsibilities. We must face up to our defence commitments and the need to develop this nation. We have tremendous responsibilities in education, public works, housing and other fields. We all know that the Budget was a budget of stagnation. We all know that there is a crisis- in local government through lack of finance. Look at the position in education - particularly university education.


– Order! I remind the honorable member that we are dealing with an excise tariff measure.


– I will relate my remarks to the Bill. The Bill is a machinery measure to implement the pledges which the Treasurer made on 17th August. The Treasurer had to find a way to pay for our increased defence commitments. He did this mainly by increasing indirect taxation rather than direct taxation. The Labour Party has stated where it stands on the matter of taxation. We have always said that wherever possible taxes should be levied in the form of direct taxation. We have conceded that indirect taxation is appropriate in some spheres - possibly when too much money is being spent on beer, tobacco and cigarettes. In this case, it is appropriate to impose a tax so as to divert revenue to social services and to the caring for our ill and infirm. This has always been Labour’s policy. But there is a limit to indirect taxation. I have never smoked, nor have I ever been a drinker. I recall that in my Army days, when I was younger and more fixed in my views, I said that if people were silly enough to smoke and to drink, let them pay for their pleasures. But a wise old Socialist said: “ The workers have very few privileges. Smoking and drinking are two of them. If you increase taxes on tobacco and drink the workers will simply cut down expenditure on other things.”

I was in Britain in 1948 when Sir Stafford Cripps brought down an austerity budget in which he increased excise duties on tobacco and cigarettes. I was living at the time in a poor section of London with the parents of an Army mate. I saw these old people and many workers, most of whom were on low incomes, doing without some of the necessities of life so that they could still’ have their beer and cigarettes. I recall seeing, as a prisoner of war, the craving of enlightened and intelligent people for a smoke. On one occasion I saw a doctor ‘ selling his food for a cigarette. It is very difficult for a person to knock off smoking. As a non-smoker, I have never tried to tell people that they should give up the habit. They have a right to smoke. The only objection I have ever expressed has taken the form of criticism of some advertising executives in the tobacco companies who try to induce our young people to take up smoking. But I believe every person has the right to take up smoking, or drinking for that matter, if he desires to do so. If people do take up smoking I do not think we should over-tax them. I do not think we should take from the workers the few pleasures or privileges that they have. However, it will probably be only at the hands of a future Labour government that the masses of this country will get a fair go. This Government, which is a minority government representing the very small wealthy section of the community, soaks the masses and looks after the wealthy.

It is for these reasons that I have much pleasure in supporting the honorable member for Melbourne Ports (Mr. Crean) In his opposition to this legislation.

Question put -

That the Bill be read a second time.

The House divided. (Mr. Speaker - Hon. Sir John McLeay.)

AYES: 58

NOES: 42

Majority . . . . 16



Question so resolved in the affirmative.

Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Mr. Bury) read a third time.

page 2756


(No. 3) 1965.

Second Reading

Debate resumed from 28th October (vide page 2330), on motion by Mr. Bury -

That the Bill be now read a second time.

Dr J F Cairns:

.- This Bill has been introduced for the purpose of giving legislative effect to a number of Customs Tariff Proposals that have been presented to the House over a period of time. They areTariff Proposals Nos. 1, 2, 3, 4, 5, 6 and 7. They cover a very wide range of products coming from many sectors of industry. The Bill makes a great many changes in tariff rates, in some cases minor changes. In a large number of cases there are reductions and there are also some increases. At this stage I do not propose to discuss the amendments in detail. This would undoubtedly weary the House considerably and it would not add anything, I believe, to our understanding of the legislation. The Opposition does not oppose any of the amendments that are being made. The legislation allows us at this stage to consider the question of tariffs generally. We consider it is appropriate to point to the wide range of amendments as an illustration of the development of tariff policy.

It is worth while pointing out that recently we had made available to us the very extensive report of the Vernon Committee. Although a number of people in the House would presumably prefer to forget this report, we now have it available to us. It is a very bulky document and it has much to say that is relevant to the Bill before the House. I think it is desirable to show the relevance to this Bill of a number of things that appear in the report. The proposals we are considering relate to a wide range of products. In a number of cases we have reductions and in many we have increases in tariffs. I think it is appropriate at this stage to point out what we are doing as a Parliament in respect of tariffs. These proposals, of course, tend to centre on the 30 per cent, or 40 per cent, rate of tariff. It is interesting to note that there is a wide range of products in Australia that are not taxed at all. The Vernon Committee tells us that of the 3,410 items it considered there are 1,390 that are subject to free entry, on which there is no tariff at all, and 230 on which there is a tariff of less than 121 per cent. On the remainder the tariff ranges from 121 per cent., which is not normally considered a protective amount, up to 721 per cent. There are seven items subject to 721 per cent.

It appears therefore that the average rate of protection, according to the survey the Committee made, is nearer to 30 per cent., with a large range of items - larger than we sometimes think - not taxed at all. We ought to ask and answer the question: What has been happening to the tariff over a period of years? Here the Vernon Report gives us valuable information. It tells us that before the war dutiable imports as a percentage of all imports were 54.4 per cent. Dutiable imports now as a percentage of all imports have fallen to 43.8 per cent. Imports bearing protective rates as a percentage of all imports were 39.8 per cent, before the war and are 18.6 per cent, today. The average duty on imports bearing protective rates was 32.1 per cent, in 1938-39 and is 31.9 per cent, today. This indicates - and it ought to please the honorable member for Wakefield (Mr. Kelly) - that dutiable imports and imports bearing protective rates have fallen considerably as a percentage of the total since before the war, although the average duty on imports bearing a protective rate is much the same, in the vicinity of 30 per cent.

The report also indicates, and it is of value to know this at this stage, that estimates made by Dr. Corden and confirmed by the Vernon Committee’s own calculations suggest that 60 or 70 per cent, of Australian manufacturing industry, measured both by employment and by value of production, is dependent in some degree on the protective tariff. Of course, whenever we are considering legislation of this kind we are asked, and properly asked, to consider the cost of the tariff, or the burden of the tariff, to Australian industry. I know that those who have been critical from time to time of legislation that has come forward have always been concerned to look at the economics of the situation. They want to know the economics of the industry on which the tariff is being imposed. This is a matter for detailed examination, and this is what the Tariff Board is for. All of the proposals before us in this Bill have been examined by the Tariff Board from time to time and the Board has borne in mind the economics of the production concerned.

First, in respect of this position as a whole I have taken the stand on behalf of the Opposition in this House that it is not much good being critical of the tariff system unless we can see some workable alternative. I am pleased to say that the Vernon Committee has taken a similar view. It points out that had Commonwealth Parliaments over the years not used the tariff system to protect Australian industry then some other system would have had to be devised. It is not just a case of considering the Australian economy protected by tariff as one alternative and the Australian economy not protected at all as another alternative, because the Vernon Committee, as did the so-called Brigden Committee - the Australian tariff inquiry of 1927 - agreed that it would be quite impossible for Australia to have maintained and built her population in a system that had not developed industrially and had not been diversified. The Vernon Committee stated -

Today, the national objectives are clear - Full employment, economic growth supporting a rapid increase in population, and improving living standards, all to be consistent with internal economic stability and external balance. Once it is conceded that tariffs have been a factor, even if not the only factor, in stimulating investment and direct employment in protected industries, it must be asked whether the alleged cost of protection can be discussed as though no alternative positive policies for achieving these objectives would have been needed in the absence of protection. This is close to the Brigden Committee’s hypothetical question.

The Vernon Committee goes on to point out that the kind of alternative system that would have been present in a non-tariff system, in a free trade system, would have been exchange depreciation. If we had not used the tariff system the suggestion is that the rate of exchange would have had to depreciate over the years by at least 30 per cent. If the tariff has given us about 30 per cent, protection on the average, in the absence of a tariff and with a free trade system we would have needed an exchange depreciation of 30 per cent, to get the same kind of protection. The Vernon Committee said -

To speak of free trade with no substitute for tariff protection is unreal.

I should like to hear what the honorable member for Wakefield has to say about this alternative, because in the absence of a system of tariff protection, which has certain virtues that are shown particularly in this Bill, we have to compare the alternatives. I think it is well to make this comparison in a few words. The tariff system has been discriminating; it has been selective. The Tariff Board from time to time has been able to look at a particular industry with a good deal of information in its possession and has been able to say: “We will impose a tariff of 12 per cent., 20 per cent., 30 per cent, or 40 per cent, on this particular industry”. It has been able to give protection on some kind of economic valuation. The alternative of an exchange depreciation would give the same amount of protection to every industry. It would give the same protection to a high profit industry as to a low profit industry and would therefore give high rates of profit and high rates of return in profitable places.

The Vernon Committee at page 13.15 of its report shows a very useful diagram indicating how unsatisfactory this kind of distribution would, in fact, be. We can say, therefore, that any conceivable alternative to a general system of tariff protection would be unsatisfactory. The next point I want to make before 1 leave the general situation in respect to this Bill is that there have been proposals for a uniform tariff. There have been proposals that, if the average protective tariff rate is about 30 per cent., we should never deviate very far from that 30 per cent. We should not go much below it and we should never go much above it. It seems to me that this uniform tariff rate would have the same general defect as the alternative of exchange depreciation. Here you would have an average rate of tariff, being the representative rate, giving the same kind of protection to a high profit industry as to low profit industry. You would miss the value of the tariff method which is able to protect in proportion to the need and is able to protect where the need is found.

Of course this raises the question of what shoud be the maximum rate of pro tection. I am sure that the honorable member for Wakefield is interested in this question. When one looks at the amount of pro.tection given in this Bill, or at the summary table to which I referred at the beginning! and considers the suggestion made available in the Vernon Committee’s report, which has come from the Australian Woolgrowers and Graziers Council, concerning a maximum rate of protection for each category of industry beyond which additional protection will be refused - the top strata should not go beyond 60 per cent, ad valorem, says the Graziers Council - it seems to me that some kind of maximum figure is not unreasonable. I would think that if protection were to go beyond 60 per cent, there ought to be some strong reason for it. It does not often go beyond 60 per cent. There are seven items with protection of 724 per cent, under the British preferential tariff. There are only 14 items with over 60 per cent, protection today.

Mr Kelly:

– Is that British preferential tariff?

Dr J F Cairns:

– There are seven of each. Another point, which is not directly relevant to this Bill - I mention it only in passing - is the other argument that is frequently raised in defence of a tariff that is too high; that is that a tariff should always be provided to* maintain in existence an existing industry. I do not think that this is a proposition that can be generally accepted. I think that where the industry concerned is a regional or local one, and you have a fairly large number of people dependent on it, then there is a case for the maintenance of a tariff sufficient to keep that industry in operation but only for a limited period. I do not think that this should be understood to be a permanent factor. I think h those cases that the Tariff Board should recommend that the protection be for three years, or for an understood period; but if the industry is going to remain permanently uneconomic it should be given notice that it has to move or close down so that all those who may have to move and find other jobs and accommodation - and that is often difficult - will have some warning that this is likely to happen. I think the argument that we should use a tariff simply to maintain an industry in existence is one we should not accept. There should be special cases where this should be done but for a limited period only.

I think honorable members should have had opportunity by this time to have a closer look at the Vernon Committee’s report. 1 have been going through this document selectively and endeavouring to discover things in it that have relevance to the kind of proposals we are considering this afternoon and the kind of proposals that are relevant to the position taken over the years by the Opposition.

The next point that I raise 1 regard as one of very great importance. The Vernon Committee detailed a number of types of protection. At paragraph 14.40 on page 14.14 of volume 1 the Committee said -

The case where the output of even one plant of the minimum technical size for efficient operation may be beyond the capacity of the Australian market is more difficult.

This case includes one or two of the items that are present in the Bill before us this afternoon - the ethylene polymer and copolymer products, continuous filament acetate yarn and probably one or two others. In this case there are one, two, or three firms, at the outside, in the industry. The Vernon Committee recognised that these large monopolies or oligopolies, not only must exist, but must grow. The kind of tariff protection we are considering this afternoon reflects this consideration. We know that the Tariff Board is considering the chemical industry as a whole. A classic example was considered by the Vernon Committee. In respect of the type of industry to which I have referred, three propositions were put forward by the Vernon Committee. The Committee in its report said -

It would seem imperative to consider export possibilities, where the minimum capacity operable is too large for the Australian market.

We have seen a number of cases in the last 12 months of tariffs put before the House where precisely this is the case. The Committee continued -

The Board could probably consider this in deciding whether it should aid the establishment of the industry.

Undoubtedly the Board does consider this. The Committee went on -

This point is recognised explicitly in the reference to the Board on the chemical industry.

That is the case I have just mentioned. The Committee also stated -

A request for an undertaking about price policy, if high protection is given, would not be unreasonable, especially where the product concerned is an essential raw material.

I am pleased to find this in the Vernon Committee’s report because this is the position I have taken on behalf of the Opposition in this House for two or three years. We simply cannot go on giving tariff protection to the monopolistic and oligopolistic industries without being also concerned about the price they charge for their product. I repeat that the Vernon Committee, appointed by the Government but ignored by it pretty substantially since then, operating at a cost of £150,000 but hardly ever mentioned by honorable members on the other side of the chamber, said -

A request for en undertaking about price policy, if high protection is given, would not be unreasonable, especially where the product concerned is an essential raw material.

Most of the recommendations of the Vernon Committee were quite moderate and all were conservatively stated. Realising what kind of government it was dealing with and hoping that it had not gone an inch too far - but of course it has gone a mile too far because in many respects the Government is in the 18th century and not in the 20th - it went on -

We realise that the approach to the second matter mentioned in paragraph 14.40 has its dangers.

That was the paragraph I have just mentioned. The Committee continued -

It involves government oversight of a price agreement, even if the latter is informal.

Of course, Government oversight of a price agreement involves some Government intervention, and the Vernon Committee knew just how antipathetic the Government would be to such a suggestion. The Government wants to have oversight by industry of the Government and not oversight by the Government of industry. The Vernon Committee knew it was walking on very tender ground here.

But the Government has an oversight of wages. It has a commission and a set of commissioners and conciliators who fix wages. The Government intervenes very strongly before this commission and if trade unionists and workers misbehave by stopping work, the Government, through its courts, invokes penal powers and imposes very strong penalties on the workers. On the other hand, the Government interferes on behalf of manufacturers and others by using tariffs, and it is doing this in the Bill that is now before the House. There is interference of all sorts now, but the Vernon Committee considers that there should be interference to obtain a price agreement in the oligopolistic and monopolistic sectors so that when a tariff is granted the enterprise concerned is not allowed to do as it likes about price. The Vernon Committee thinks that this ought to be undertaken but it knows that the Government will be very unsympathetic.

I think it is interesting to note that in this respect, as in many others, the recommendations of this very significant committee tended to support the position taken by the Australian Labour Party in respect of the economy rather than that taken by the Government that appointed the Committee and paid £150,000 for it to do its work. The Committee said -

But, despite all difficulties-

The difficulties it foresees in obtaining agreement about price policies from industry - we believe that there is scope, in cases approved by the Board, for relatively high protection, backed by price undertakings, for, say, a three- or five-year period, to enable large enterprises of this kind to become consolidated. This general argument is, we believe, even more relevant to the use of quantitative restrictions, which are discussed in the next section.

L think this is of very great importance. I do not know whether those honorable members on the other side of the House who will follow me will agree with this proposition, but it seems to me that this is the most important proposition submitted by the Vernon Committee in respect of tariffs of the kind that are before the House now. In this sector of industry, the Vernon Committee does not want to see a continued policy of handing out tariff protection without seeking price agreements. Some leading economists in the world today believe that monopolistic price fixing which occurs in the modern economy is the fundamental cause of inflation. These economists range from Dr. Coombs of the Reserve Bank of Australia to Gardner Ackerly. who is now chairman of the President’s Committee of Economic Advisers in the United States. The Vernon

Committee recommended that tariff protection of the kind we are discussing now should not be given to large scale industry without some undertaking about price policy. I think this is most important.

To show in passing how significant these firms are, I mention that there were 1,813 factories in Australia in 1961. Only 3.14 per cent, of all factories employed 591,808 persons or 51.31 per cent, of the persons employed in all factories. Australia has reached such a degree of industrial concentration that 3.14 per cent, of the factories in Australia employ 51.31 per cent, of all persons employed in factories. In this very small sector of 3 per cent., with a relatively few firms iti each industry, almost every one of the firms has tariff protection of 30 per cent, or more. They have power within very wide limits to fix their own prices and nothing is done by the Government to influence the fixing of these prices. The Government’s own committee, the Vernon Committee, which was selected by the Prime Minister (Sir Robert Menzies), which included leading representatives from the important sectors of industries and which operated at a cost of £150,000, reported that tariff protection should not be extended to industries of this kind, as we are doing in this Bill, without some undertaking from the industries as to price policy. I think this is one of the most significant developments to have taken place in this sphere for some time. To show again the significance of these firms, let me quote in passing a number of other figures. In 1957- 58, 1.7 per cent, of all tax paying companies received 61.7 per cent, of all company income. Less than 2 per cent, of the companies paying taxation had nearly 62 per cent, of the income of all companies. I think this ought to concern members of the Australian Country Party even more than members of the Liberal Party. The Australian Country Party is supposed to represent farmers who are relatively large in number and who must face the large city monopolies for the purchase of their machinery and material. When they operate in this sense as a large number of buyers facing a few sellers, as the statistics I have quoted show, they must lose in the deal.

I would like to refer to one or two other matters in respect of the legislation now before the House. I deal with this again as a general proposal; I do not intend to discuss the Bill in detail at this stage.’ The suggestion is sometimes made in these debates that instead of using tariff protection we should use the alternative of a bounty. We will later discuss a bill in which a bounty is given for copper. The views of a good many influential people in respect of the bounty as an alternative method of protection are revealed by the remarks of the Vernon Committee. The Committee, generally speaking, dismisses the bounty as an alternative method, but it does so for reasons that are to my mind quite substantially invalid.

Mr Buchanan:

– I thought the Committee was infallible in the honorable member’s view.

Dr J F Cairns:

– If the honorable member wants to think in this strange sort of contradiction, a good deal of what he says in the House become explicable immediately. The Vernon Committee said -

However, it should not be thought that there are not direct costs associated with bounties. They are paid from tax revenue and taxes are a cost to the payers. Thus, the export industries contribute to the cost of bounties on materials and equipment which they use, but this contribution, through taxation, would be less than the additional costs that they would incur from an equivalent tariff. The increase in taxation to cover bounties will have some indirect effects on prices, but it seems reasonable to suppose that the combined direct and indirect effects of bounties on exporters’ costs and incomes are less than those flowing from equivalent tariffs.

I believe that this proposition is true in respect of different sections of industry. They may suffer or benefit relatively in respect of a bounty. But I think it is wrong to consider that a bounty, if it gives the same measure of protection as a tariff, would not impose almost the same cost in the economy as a whole. Taxation, as with any other cost, is eventually transferred into prices. I believe that the assumption that as a cost factor taxation behaves somewhat differently from other cost factors underlines a good deal of what the Vernon Committee had to say. This is one point on which I disagree strongly with the Committee. I believe that in the modern economy, with its oligopolistic forces and its general system of accountancy which tends to put into costs the same kind of thing, in every firm even when the firms are small, taxes tend to be transferred as rapidly into prices as are wage increases or tariffs. Therefore, I think that this examination made by the Vernon Committee is not valid in that respect.

I want to conclude by a final reference to what the Committee had to say. It concerns this vexed question on which the honorable member for Wakefield (Mr. Kelly) has from time to time differed from the Minister for Trade and Industry (Mr. McEwen) and his Department. The Vernon Committee stated -

We have tried to picture the role of the Tariff in Australian economic growth, in which it is a powerful instrument, although not the sole determinant. The more effectively the Board clarifies and applies its) own principles, the more economic benefit is likely to result. We see no possible objection to, or difficulty arising from, a statement by the Government of national objectives, an affirmation of the Tariff as an instrument appropriate to them and a clear acceptance of the Board as an independent adviser in these matters.

The Committee said that it had no objection to the Government’s making a statement of national objectives and telling the Board what it wanted it to do. I did not see any objection and the Opposition does not see any. The Committee saw the Tariff Board as an instrument of government policy like any other. It ended its reference with a phrase which, I believe, the honorable member for Wakefield is probably delighted to find - a clear acceptance of the Board as an independent adviser in these matters.

The Government and the honorable member for Wakefield have a job on their hands, just as the Vernon Committee had, in reconciling with what is described as the independence of the Tariff Board the accepted necessity - I believe it is accepted by most people - for the Government to lay down certain national tariff objectives that must influence the Board.

Mr. Deputy Speaker, I have endeavoured to relate to this Bill several propositions that have been culled from the Vernon report. I believe that these propositions among others in the report - there are many others that should be considered - need to be considered by the House at this stage. I think it is appropriate that we have an opportunity to debate them when considering a bill of this kind. The Opposition does not oppose this measure.


.- Mr. Deputy Speaker, I appreciate the way in which the honorable member for Yarra (Dr. J. F. Cairns) has discussed this measure. It is obvious that under the recently amended Standing Orders the proper stage at which to debate the nature of this measure is the second reading stage when we are permitted to discuss its general principles. At the Committee stage we discuss the particular tariff items referred to. It was interesting to hear the honorable member relate the general principles that lie behind so many duties in the big list embodied in this Bill. He has related this measure to the recommendations in the ‘report of the Committee of Economic Inquiry, which is known shortly as the Vernon Committee. I believe this was an excellent thing to do. With a report of the quality of the Vernon report in our hands it would be almost futile to attempt to discuss the general principles of this measure without reference to the general principles relating to tariffs as laid down in its report.

I suppose that I awaited the presentation of this report with more anxiety than did most members of the Parliament. Surely it will be no surprise to honorable members that I turned first to the two chapters on tariffs. After all I have been conducting a lonely campaign in this House for some years and I would be less than human if I did not look anxiously for the general verdict of a committee such as the Vernon Committee. I may say that it was with a feeling of utter relief that I found my arguments in the main verified by the Committee’s findings in relation to the main matter on which I have been slogging away in this House for so long, and on which, perhaps, some honorable members have considered that I indulged in tedious repetition.

I agree with the honorable member for Yarra that the Committee set out to consider whether, as in times past, we should now have a free trade system. The members of the Committee came down quite definitely, as did the Brigden Committee, as the honorable member for Yarra said, in favour of a protective system. The Committee stated that Australia has progressed as much - I think this was the way in which it was put - under protection as it would have done under a free trade policy. Indeed, it is difficult to imagine the Australian economy under free trade. I have never been a free trader. I have had to deny this in the House before. All I have been trying to do is to get the House and the Government to look at the problem clear eyed and to realise that there are costs in a protective system unless it is used well. The Vernon Committee went on to discuss the additional burden. It found that measurement of the additional burden of tariffs was impossible by statistical methods, it tried to measure this in a rough kind of way. It calculated, for instance, that the additional cost borne by the wool growers because of tariffs represented an increase in costs of about 10 per cent.

The Committee then got down to looking at the tariff system in detail. I must admit that its general line of reasoning delighted me. The earlier chapters of the report point unerringly to the fact that the Achilles heel in our economy is the problem of producing the exports that we need to pay for the increasing imports that the developing economy demands. The Committee stated - we all agree with this - that we can no longer expect the great primary industries to carry the responsibility for providing most of the necessary exports and that secondary industry will have to shoulder an increasing share of the burden of supplying the exports that we need. If secondary industry is to do this and to increase its exports the costs imposed by heavily protecting secondary industry will have to be carefully watched. The Committee also pointed out that care in fixing tariff levels was even more important now than it used to be. It stated ‘ the opinion of some writers, as follows - . . once the country is already highly industrialised, … the scope for external economies becomes smaller and external diseconomies become an increasing danger.

In other words, as we become more industrialised, we shall have to be more instead of less careful about how we use the tariff weapon.

The Vernon Committee went on to discuss more specifically what principles should guide the Tariff Board in making its recommendations. The Committee declared -

Although, on the whole, we believe that the Tariff has not unduly impaired the ability of primary industries and, more recently, secondary industries to expand their export activities, we are satisfied that there is no case for the indiscriminate application of tariff protection. . . . The Board should also consider whether particular tariffs are likely to hamper the economic operation of other industries to such an extent that disadvantages outweigh any gain resulting from them.

The Committee then went on to consider the difficulty of defining the terms “ economic” and “efficient”. I believe that honorable members on both sides of the House subscribe to the use of these terms. The Committee pointed out the difficulties and concluded with a significant statement in these terms - . . an industry would be regarded as economic if it could earn, or within a reasonable period expect to earn, normal profits and pay normal wages behind a Tariff barrier of this height.

That is, slightly less than 30 per cent, most favoured nation -

As a useful practical approximation to the concept, we believe that the Board . . . should maintain a constant- examination of its decisions to determine what elements make up its “ going “ rate or general cost-disability rate. If an industry seems to call for less than this rate, this will indicate that it has special advantages. These may greatly improve its export prospects. In such cases, the modest protection required could be granted without much difficulty. If industries call for more, there is need for added care in the examination to determine whether they have prospects of becoming economic and efficient or of significantly contributing to the efficiency of others. We do not anywhere argue that an industry should not be protected if it calls for duties higher than the going rate, but we suggest that the Board should give special reasons for recommending rates significantly higher than this. The greater the excess, the greater the justification required.

Some of the items that we are now debating need this special justification. I shall discuss later one item which has a duty of 60 per cent. Then the report goes on to explode some of the general misconceptions that have shrouded our thinking about tariffs, particularly in this chamber. I ask honorable members to listen to this quotation, which I am glad the honorable member for Yarra mentioned -

A strong, although in our view unwarranted, presumption is gaining ground, that an industry, once in existence, should be protected and that, once protected, should continue to receive the protection it needs, even if its cost disabilities rise to high levels.

Just imagine what would happen in this House if I had said that as, indeed, I often have. How often has there been a squeal from both sides of the House when I have said exactly that. I have said that an industry has not an automatic right to protection just because it is in existence. Then there is a lovely quotation from paragraph 14.33 which I cannot help reading. I must admit that I have been rolling it around my tongue ever since I first saw it. It states -

So much is said about the role of manufacturing in sustaining population increase that, as it was put to us, we may become mesmerised by. the thought of bigger and better factories as the only source of future employment. Manufacturing is not the only source of employment; indeed, it employs at present over 271 per cent, of the work force, and it may become less important relative to tertiary industries . . . Moreover, protected industry acounts directly for only about 15 per cent, of the work force and we should not therefore, exaggerate its significance . . .

That paragraph has a familiar ring to me. I think that generally speaking I have used the figure 27 instead of 271, but this is the kind of thing that I have been trying to get the House to recognise - that heavily protected secondary industry does not loom so very large in the employment field. Then the Committee goes on to discuss another question at which I have been slogging away for so long. I refer to the desirability of using ad valorem rates and percentage rates instead of specific rates which have so often been used. The Committee gives as a reason the advantage of simplicity and then refers to the ill feeling caused in other countries if we use these complex specific rates.

Further - I agree with this most wholeheartedly - the Committee suggested that when the Board recommends other than the simple ad valorem rate it should indicate, so far as possible, the ad valorem equivalent of the duty. This is something for which I have been arguing. I hope t hai the added weight of the Vernon Committee’s report will bring that about. It is interesting when one realises that in the recent reports on cotton textiles and man made fibre piece goods the Board recommended the very high rate of 55 per cent, which was nevertheless expected to bring a complaint from the industry but was received with comparative mildness. This was probably because when it becomes public knowledge that a duty of 55 per cent, has been applied to the products of an industry, that industry is likely to expose itself to public ridicule if it goes to the community, the Tariff Board or the Government and says that that rate is not high enough. A rate of 55 per cent, is a lot at any time. There is a great advantage in using ad valorem rates and I commend to the Tariff Board the principle that if it uses specific rates it put in a table showing the ad valorem equivalent, as indeed it did in the report on man made fibres which was recently published.

The Vernon Committee then went on to examine the emergency protection procedures and pointed out the importance of keeping in mind the fact that the Special Advisory Authority is awarding emergency protection and the Tariff Board permanent protection. It points out that these are two separate judgments made on different grounds. Then I come to the words which I have been hugging to my bosom ever since I saw them. They read -

One advantage of explicit treatment by the Board of the emergency situation which gave rise both to the Special Advisory Authority’s report and its own is that the Government will properly hesitate before referring the case back to either the S.A.A. or the Tariff Board. Inquiries by the S.A.A. and, subsequently, by the Tariff Board ought to be sufficient.

Shades of the old shuttle service. We will discuss later when we come to stationary engines how that reference was shuttled backwards and forwards from the Board to the Special Advisory Authority. Perhaps we have seen the last of that animal. We have all known that this kind or procedure has threatened directly the independence of the thinking of the Tariff Board.

In the final chapter of the report the recommendations are drawn together in some paragraphs which we should never forget. I cannot quote them all, but I shall cite one which I think the House should take to its heart -

We would also stress that, if policies of protection are such as to divert skilled labour away from industries with sound opportunities for expansion to less economic uses, they will damage national productivity. The Tariff must not be regarded as an instrument for creating employment of this kind. As we have said, the problem will be a scarcity, not an over-supply, of skilled labour.

That needed saying, particularly in this chamber. How often have we been slapping protection around just to create employment, forgetting all the while that we were harming employment and development in other industries and, in particular, damaging their export potential. This thinking that high tariffs have been necessary to create and safeguard employment has been, I presume, the historic reason for Labour’s traditional policy of protection. It seems not only to have been the policy of the Labour Party but also to have motivated the Government’s policy, but in a more hazy and, perhaps, more ill defined manner. For instance, on 6th September, before the report of the Vernon Committee was made public, Mr. Boyer, a member of the Tariff Board, while speaking in a private capacity said in a public lecture that we should rethink our old ideas that tariffs were necessary to create employment, which was almost exactly what the Vernon committee said. But Mr. Boyer was severely castigated by Mr. Anderson, the Chairman of the Associated Chambers of Manufactures of Australia, and also by the Minister for Trade and Industry (Mr. McEwen) for making that statement. I cannot help wondering whether the Minister, on his return to Australia, will castigate the Vernon Committee for having said almost exactly the same as Mr. Boyer said.

While on the subject of tariffs in relation to employment there is something that really needs to be said. I am sorry to have to inject a personal note into this discussion, but I think this is important. As some honorable members may know, my father was a member of the Tariff Board during the 1930’s when unemployment was stalking the land. I have often heard him tell of the feeling of the very real responsibility in those days of deciding whether a particular industry should get help through higher tariffs. In these days it is comparatively easy to say that for the well being of the community in general a certain industry should not receive protection because so many other avenues of employment are open, but in those days in the 1930’s it was much more difficult. I think recognition of the difficulties of those days is proper. In paragraph 17/89 of its report, the Committee outlines the core of its thinking on this question, and I shall quote that paragraph in full. It reads -

If the concept of the general cost disability experienced by import competing industries, as we have discussed in chapters 13 and 14, is accepted, the aim of tariff making should be to encourage those industries which either have a proven disability less than, or not generally in excess of this general disability, or which have prospects of reducing their disability to this level. Others should not be encouraged. The concept itself does not require translation into precise arithmetical terms even if this were possible. However, if interpreted as a certain range of duties, say, around 20% B.P.T. and something under 30% M.F.N., it does give a needed bench mark for the concept in traditional use, namely, that industry should be, or give promise of becoming, economic and efficient. This, in our view, should form a central concept in the Tariff Board’s assessment of economic and efficient

So there, at last, we have what we have all been groping for - a clear and authoritative statement, a bench mark for the Government, the Parliament and the Tariff Board to use. It is to be hoped that we all have the sense and courage to use that bench mark, knowing that it will often be unpopular with certain sections, but knowing also that any government that hopes to be loved by all is not a good government and that any member who seeks immediate electoral popularity by urging high duties for industries in his own electorate is not necessarily a good member.

Perhaps from now on, with these principles spelt out so clearly for us to follow, tariff debates in this chamber will be on a higher plane than they have been recently. Let us hope, too, that there will be no more of the personal abuse that has wounded those who have tried to say, haltingly and lamely perhaps, what the Vernon Committee has said so authoritatively. Let us hope that the chambers of manufactures and other similar groups will realise at last that they have a more important duty than pressing for the immediate advantage of particular groups; that the true welfare of their members depends chiefly on having a developing, thrusting and export competing economy, both in primary and secondary industry, and that we will never attain that goal while we seek to protect all industries, however uneconomic and inefficient they may be - in other words while we persist in our present policy of trying to be loved by all.

The chief responsibility for implementing the Committee’s recommendations will fall on the Tariff Board itself. No one has a greater appreciation of the Board’s past performances than I have. It is an appreciation that is personal, political and economic. I am well aware of the pressures with which the Board has had to contend on the poli- deal and economic front. It has not been easy to give, with courage and conviction, the guidance that we need in this difficult and complex problem. Now that the Vernon Committee has spelt out so clearly the general principles that should guide the Tariff Board; now that the Committee has made it so clear that the independence of the Board is essential to its giving clear economic answers to economic questions, I confidently expect that the Tariff Board will shoulder its important and increasing responsibility.

We in this House can help in this by being more aware of the true nature of the problems that the Board has to face. The Government, too, would help in this if it were to let it be known that the general principles spelt out in the Vernon Committee’s report had its general approval. The Vernon Committee’s recommendations are based on tariff assistance being available for economic and efficient industries. This has always been the Government’s policy, in theory, but in practice it has been much looser than that, and certainly much more generous to uneconomic and inefficient industries, to the damage of the export industries. So I think the time has come for the Government to reaffirm its policy of protection and, in particular, to say whether it accepts or rejects the recommendations of the Vernon Committee. The export industries in particular are surely entitled to know this. So is secondary industry. So are the Government parties, and so is this Parliament. I strongly urge the Government to state whether it accepts or rejects the Vernon Committee’s recommendations.

I cannot help but pay tribute to Sir James Vernon, the chairman of the Vernon Committee, for the breadth of vision and the courage which it must have taken for him to put his mark of approval on the tariff recommendations. In business, he is the representative of one of the largest Australian companies which has often asked for protection of very high levels. It is a measure of the quality of the man that, when making a national report, he could put national considerations first. Certainly the recommendations of the Committee will carry more weight because he has signed them as Chairman. To him and the other members of the Committee Australia owes a great debt of gratitude for saying so clearly what so desperately needed saying so clearly.

I notice that Mr. Burgess, director of the Textile Council of Australia, received the news of the Vernon Committee’s recommendation on protection with what we are coming to regard as characteristic petulance. He is reported in the “ Financial Review “ of 30th September 1965 as saying that the Vernon Committee’s report was egg-headed and that its tariff recommendations were nonsense. I think Sir James Vernon would be surprised to find himself regarded as an egg-head. It is true that Sir John Crawford is a professor of distinction; and so is Peter Karmel. But after all, Sir John Crawford headed the Department of Trade and Industry for a great many years, with great distinction to himself and great benefit to Australia, and this at a time when Australia was making what the Chinese would call a great leap forward. Surely he would know the practical problems as well as the theoretical answers on tariff matters. I am sure that the other two members of the Committee, Mr. Ken Myer, who is an executive of The Myer Emporium Ltd., and Mr. G. K. Molesworth, an executive of a meat processing firm, would also be surprised to find themselves branded as egg-heads. Personal abuse of this kind, which is indulged in by Mr. Burgess all too frequently, is a lot easier than logical argument, as I know to my sorrow.

In conclusion I cannot help but draw a parallel as the honorable member for Yarra did, between the report of the Vernon Committee of 1965 and the report of the Giblin-Copland Committee in 1929. It seems that every now and again we need to have a close look at ourselves and, particularly, at our protective system. We have been fortunate that on both occasions we have been able to call on the services of clear thinking and courageous people. I just cannot help wondering rather wryly whether the people of the required quality will be available next time.


.- I wish to make only a few remarks. The honorable member for Wakefield (Mr. Kelly) has paid a tribute to the Tariff Board. Therefore, he must have been fully satisfied with its findings over the years. I cannot see how the Vernon Committee’s report can make much difference to the fundamental principles of what is required with relation to tariffs. I rise mainly because of something which was said by the honorable member for Yarra (Dr. J. F. Cairns). I appreciate what he said. In fact, I appreciate very much both the speech of the honorable member for Wakefield and the speech of the honorable member for Yarra. I do not always seek to find fault with what has been said in this House.

The honorable member for Yarra said that the Country Party should be the party most interested in findings of the Tariff Board. He said that the Country Party claims to represent the primary producers who are the people who could be hardest hit if the Tariff Board grants to a rich company protection that it really does not need and so permits that company to increase the prices of its products, whether they be tractors or anything else, to the primary producers.

The honorable member for Yarra will admit that if the costs of a secondary industry increase, all that it needs to do is change the price tag on the product it has to sell, whereas the primary producer who engages in specialised production, generally has a surplus of products which must compete on the open market. As that surplus has to be exported the primary producer has to take the best price he can secure on the world market. I would say that the Tariff Board’s function is chiefly to maintain an even balance in the economy and by doing that it will best serve Australia.


– I do not intend to delay the House for any length of time. We are supposed to be discussing a bill in relation to customs duties. The debate has been conducted on a pretty wide basis. The honorable member for Yarra (Dr. J. F. Cairns) and the honorable member for Wakefield (Mr. Kelly) have given us lectures on what the Vernon Committee has said. I do not disagree with everything that was said by the Vernon Committee, but I do disagree with the practical application of some of the recommendations of the Committee. I will not go into that matter because there is not time. I wish to deal with this matter on a proper basis.

We are asked in this House to approve of certain recommendations made by the

Board. When I say this I am not trying to disparage or discredit anything that the Tariff Board has done. It is doing its duty in accordance with the policy and the Act under which it works. The Tariff Board makes certain recommendations to this House and we, as members of Parliament, have either to approve or reject thoserecommendations. In certain instances we are not given in the reports of the Board the full information on which to arrive at a considered decision regarding the matters to be decided. Although the report of the Board definitely states that evidence is to be given in public we find that quite a bit of the evidence is given in secret behind closed doors. Being given in private, it is not made available to us as members of Parliament; nor is it made available to the general public. It is therefore difficult for us to find out whether or not an increase or a decrease in a duty is warranted. In certain respects I agree that certain evidence must be given in private. There are business procedures which it would not be right to disclose, but nevertheless I believe that this House should not have to arrive at a decision when it is- not given all the evidence relating to a particular matter. We should have all the information at our fingertips, as it were, in order to arrive at a considered opinion, as we have either to approve or reject the Tariff Board’s report. 1 do not know, Mr. Deputy Speaker, whether it is intended to finish the debate on this Bill before the suspension of the sitting, but I should like to refer to what the honorable member for Yarra said about bounties. He said that it is doubtful whether it would be wiser to grant a bounty to an industry instead of imposing a tariff to protect it. I want to recall to the memory of honorable members a certain proposal that was made to this House some years ago when a bounty system was introduced for the encouragement of the production of Australian industries. I instance a certain industry in Western Australia that was manufacturing tractors. The recommendation of the Tariff Board at that time was that we should cut out the bounty paid to the industry and increase the tariff on imported tractors. At that time we were paying about £300,000 in bounties and bad we cut out the bounties and increased the tariff the users of these products would have had to pay about another £1 million. That is the amount the Treasury would have received and the manufacturer of this particular tractor would have received an increased price for its product. A proposal before the Board at the present time could mean, if it were adopted, a terrific increase in the price of raw materials that are brought into this country to be used by secondary industry.

I ask for leave to continue my remarks at a later stage.

Leave granted; debate adjourned.

Sitting suspended from 6 to 8 p.m.

page 2767


Ministerial Statement


Prime Minister). - by leave - Mr. Speaker, I propose to make a statement to the House. When I have finished it, I will table some relevant documents on Rhodesia. Those documents contain a verbatim account of the communications between Mr. Ian Smith and the Prime Minister of Great Britain. I am happy to say that there will be enough copies of the documents for every honorable member to have a copy for his own consideration. At the conclusion of my statement, which will not be very long, I will move that the House take note, not only of the paper, but also of the papers that I will table so that all will be available for discussion in due course.

Recent events in Rhodesia, and the reactions to those events in other countries, have presented to all of us acutely difficult problems. It is therefore desirable that I should, on behalf of the Government, set out for the benefit of honorable members what we believe to be the facts and what views we take on the various suggested remedies. First I should point out that as Great Britain is for this purpose the colonial power, only the Parliament of Great Britain could grant independence to Rhodesia. The Unilateral Declaration of Independence by the Rhodesian Government was therefore illegal. The Declaration having been made, and the Governor having dismissed Mr. Smith and his government, a position arose in which the only lawful government in Rhodesia is now the Government of the United Kingdom.

The executive authority is at present in the hands of the Governor, subject to any legislative or administrative steps taken by Great Britain. We accept the view that it now becomes necessary for the Governor of Rhodesia to call, if he can, a new government into existence. If he cannot do so, the responsibility for the government of Rhodesia will rest with Great Britain. It is important, I think, to remember these basic facts. Rhodesia is not now without a government at all. That is, it is not in a state of anarchy, but is subject to the direct authority and control of Great Britain. Let me emphasise this. The objective of any action now to be taken must surely be !o assist the United Kingdom to bring into being a constitutional government, and to end the illegal situation in Rhodesia. The sooner this can be done, the better. If it cannot be done, or if it is not done with reasonable promptness, the risks of violence, bloodshed, and extreme action, to which I will refer later, will grow, bringing grief and suffering to millions of human beings.

The Rhodesian problem has twice been discussed at Prime Ministers’ Conferences. On each occasion, it was unanimously - I repeat, unanimously - accepted that the authority and responsibility for leading Rhodesia to independence must continue to rest with Britain. Though this seems at present to be under some challenge in the United Nations Assembly, it still remains the central truth in the controversy. In the discharge of its responsibilities, the Government of the United Kingdom went to great pains to conduct discussions with the then Prime Minister and Government of Rhodesia. I will narrate, as objectively as possible, what the British Government did. It indicated very plainly that it was not contemplating force; that it wished to establish a basis for ultimate independence which would be fair to all the people of Rhodesia. It did not take the extreme view, now being advocated by some, that the Constitution of Rhodesia should immediately be altered so as to provide for an immediate African majority. It realised that the people were not yet ready for this, and that to act precipitately might conceivably create what might be called a “ Congo situation “, of unhappy memory.

The Government of the United Kingdom indicated five principles as providing the basis upon which independence could be granted. These principles were -

  1. The principle and intention of unim peded progress to majority rule, already enshrined in the 1961 Constitution of Rhodesia, would have to be maintained and guaranteed.
  2. There would also have to be guaran tees against retrogressive amendment of the Constitution.
  3. There would have to be immediate improvement in the political status of the African population.
  4. There would have to be progress to wards ending racial discrimination.
  5. The British Government would need to be satisfied that any basis proposed for independence was acceptable to the people of Rhodesia as a whole.

As principles, these appear, as Mr. Harold Wilson has said in the House of Commons, to have been accepted by Mr. Smith. The real difficulties arose as to their application. The five principles, as I took an opportunity of telling Mr. Wilson, were and are completely in line with our own thinking. Having regard to what has happened, I think I should now tell the House that I sent a message to Mr. Smith just as he was entering upon his discussions in London. I said I had a natural understanding of the problems confronting the European settlers in Rhodesia, a country which has enjoyed its own substantially but technically incomplete form of self-government for many years, and in which the contribution of the European settlers to the economic vigour of the country has been most substantial. I repeated my own view, which I have on several occasions expressed, sometimes quite forcibly, I hope, in Prime Ministers’ Conferences, that two extreme views that had been put forward were not practicable.

The first extreme view was that either immediately or within a few months there should be adult suffrage with, in consequence, an African majority. If this view were to prevail then, as I said to my friend, Mr. Smith, I could see all the elements of bad, because inexperienced, government, and possible economic disaster. The other extreme view was that the achievement of an African majority should be indefinitely resisted. This view, as I have repeatedly said, and, as I said to Mr. Smith, was, in the prevailing international political climate, quite impracticable.

I pointed out to Mr. Smith, as I have done in Prime Ministers’ Conferences, that in my opinion the matter was one of timetable, a matter of phasing in more and more African voters until after some reasonable period of time they found themselves in a majority. By “ phasing in “ I mean such measures as adjustments to the B roll and perhaps the creation of a blocking third in the local Parliament. After all, the 1961 Rhodesian Constitution and the discussions attending it seemed to me, as I pointed out to Mr. Smith and as I have pointed out in Prime Ministers’ Conferences, to contemplate that ultimately the African voters would prevail. I told Mr. Smith that the working out of such a timetable should provide a good basis for agreement. I told him that should agreement fail to emerge and should there then be a unilateral declaration of independence, the results, not all of which were foreseeable, could be painful and difficult’. I told him, as I have since told this House, that Commonwealth countries would not recognise an independent nationhood so achieved.

It should be clearly understood that a similar line was followed with much patience and reasonableness by the British Government. Mr. Wilson himself, in his speech to the House of Commons, put it in this way -

Although successive British Governments-

I emphasise “ successive British Governments”; the Home Government and the Wilson Government have followed identical policies in this respect - are deeply and irrevocably committed to guaranteed and unimpeded progress to majority rule, the British Government, who alone through the British Parliament have the legal power to grant independence, do not believe that in the present and tragic and divided conditions of Rhodesia, a majority can or should come today, or tomorrow. A period of time is needed, time to remove the fears and suspicions between race and race, time to show that the Constitution of Rhodesia with whatever amendments may later be made can be worked and is going to be worked and that the rule of law equally with the maintenance of essential human rights will be paramount and the time required-

This, I think, is a very wise statement - cannot be measured by clock or calendar but only by achievement.

In spite of all these efforts, this illegal declaration of independence has now been made with the constitutional consequences to which I have referred. What has happened since? The British Government has done two things. First it has, through the Governor, dismissed the Smith Government. It has prohibited exports of arms to Rhodesia. It has imposed certain exchange restrictions. It has denied Rhodesia access to the London capital market and has terminated Commonwealth preferences.

Some of these clearly have more relevance to the particular position of the United Kingdom than they would have to the position of Australia. But the British Government has also imposed a ban on the import of tobacco and sugar into the United Kingdom, these two items constituting more than one-third of the total Rhodesian exports. It will be observed that the imposition of these sanctions by Great Britain has been made with what I would call constructive moderation. As I understand it, it is not aimed at ruining the total economy of Rhodesia, for that would be to punish indiscriminately, but to provide a means of persuading the European minority and its leaders to realise the gravity of the situation, to have second thoughts, and to approach the lawful Government with an expression of willingness to negotiate to finality on the basis of the five principles.

The second action taken by the British Government was to bring the matter before the notice of the Security Council. Now this may at first sight seem to be inconsistent with the sound basic proposition that this is a matter between Great Britain and Rhodesia. But I have no doubt that the British Government felt that it was better for it to take the matter to the Security Council, to outline the steps taken by it, and endeavour to secure international support for its actions, than for the matter to go to the United Nations under the auspices of other people who might demand courses of action which did not recognise either the particular authority and responsibility pf Great Britain in this matter or the present constitutional position of Rhodesia. Recent events seem to have justified this view on the part of the British Government, though they have at the same time presented us all with problems of the utmost gravity.

I turn now to considering our own attitude. We have, as I have previously pointed out, refused to recognise what is now an illegal administration. We have also in this House rejected any notion of the use of armed force which would be repugnant to the people of Australia, but would also inevitably produce more ruin and disaster than any of us would be prepared to contemplate. We will not either physically or financially contribute to the use of force. Measures of enforcement - if I may use that phrase - need a good deal of thought. Are they to punish, or to persuade, or even to compel? We reject the idea of punishment, for it would be undiscriminating and therefore unjust. The machinery of persuasion deserves more thought. This great problem is essentially a matter to be solved by negotiation, in the light of the principles that have been stated, and with the object of securing a peaceful and ultimately a democratic future for Rhodesia.

The demands currently being made at the United Nations for violent repression require critical examination. Suppose the United Nations directs or proposes military sanctions. What will be the object of this exercise? If it is to defeat the European Rhodesians in the field and kill a number of them, what problem will be solved? If adopted it would represent a violent course in which the innocent would suffer with the guilty, and would embitter racial relationships in the whole African continent for generations to come. If the object is not to be punishment but persuasion, what is it that the Rhodesians will need to concede in the face of force? What new Constitution or form of Government will be demanded? It is, alas, quite clear that if the United Nations authorised armed force, the clamour would be for an immediate adult suffrage, the immediate application of which would quite plainly have at the best hazardous, and at the worst disastrous results. What is needed in Rhodesia is a reasonable timetable, accompanied by a special educational campaign, to which all of us might well contribute something, to fit the African voters for their ultimate authority.

What I have said emphasises the nature of the deep differences which the debates in the United Nations have already disclosed, differences which are fraught with great danger and on which we are bound to express our own views with some frankness.

The first difference, and I here repeat myself, concerns the position of Great Britain as the colonial power whose legislative authority has been illegally defied by the Smith administration. That problem is one primarily for Great Britain and Rhodesia. What Great Britain is seeking at the United Nations, as we understand it, is general international support for her own measures of an economic kind. This does not satisfy what may be called the direct action or armed force views of many nations, particularly of some in the AfroAsian group. They demand armed force, and are attacking Great Britain for not employing it. If these nations had their way, the United Nations would no doubt be called upon to establish what might be somewhat ironically called “ a peacekeeping” force. I say ironically, because the peace to be restored or kept would have been broken by the action of these nations themselves.

I have already put. and answered the question as to the objective of armed force which, it would appear, would be not only to punish but to create a new Constitution and system of government on a basis which we would not want to see established overnight, or prematurely. My colleagues and I have had very great reservations about even economic sanctions.


– I am delighted to hear that the honorable member has been thinking. I will repeat the statement, having regard to this brilliant interjection. My colleagues and I have had very great reservations about even economic sanctions. If we accept for ourselves some economic measure or measures, it will not be because we think them intrinsically equitable. They may bear most heavily upon the Africans themselves - which is something worth thinking about - and if strongly resisted by the Rhodesians themselves imposing sanctions against, for example, Zambia, formerly Northern Rhodesia, that great copper producing country might well be ruined. But making allowances for these views, we have come to the conclusion, particularly having regard to the way in which Great

Britain is being attacked for employing peaceful means, that we would regard economic measures as the lesser of two evils. The greater evil would be the use of force with all its bloodshed and misery. This would be aggravated if the forces were directed by racial hatreds or gave rise to political consequences of which advantage could be taken by other and more hostile nations. It might well be, and this would appear to be the judgment of the British Government, that the losses arising from the kind of economic measures they have announced will be sufficiently serious, while not involving utter disaster, to induce most Rhodesians to have second thoughts, and to come back through constitutional means to the negotiating table. We’ hope that this will occur, and will occur before too much damage has been inflicted on people who have, as I have pointed out, been the greatest contributors to the prosperity of Rhodesia.

We will not export arms or military equipment to Rhodesia. We do not import sugar from Rhodesia, with which we have a fairly modest trade. But we do import tobacco. On this we. will follow what has been done by Britain, and put a ban on the import of Rhodesian tobacco; this, of course, will not apply to tobacco in transit. Tariff preferences to Rhodesia will be suspended. We will co operate with the Government of Britain in two other financial respects: First, we will amend the definition of the sterling area in the Banking (Foreign Exchange) Regulation’s, so as to exclude Rhodesia, or make such other amendment as is appropriate to exclude Rhodesia from the treatment accorded to sterling area countries, and, secondly, we will take, such action as is open to us to prevent evasion of the British exchange control measures.

We do not have any diplomatic mission in Rhodesia. We have a trade representative, whose appointment in Rhodesia will terminate. Above all things, we hope that none of these measures will be of long duration. It would be a sad commentary on the unwisdom of mankind, if through the obstinate pursuit of an illegal course, this prosperous country should be reduced economically to ruin, to the lasting unhappiness of all of its people, voters or non-voters, white or black. I present the following papers -

Rhodesia- Ministerial Statement, 16th November 1965

Documents on Rhodesia, 27th October 1964- 11th November 1965- and move -

That the House take note of the papers.

Debate (on motion by Mr. Calwell) adjourned.

page 2771


Customs Tariff Proposals (No. 9*)

Minister for Housing · Wentworth · LP

– I move- [Customs Tariff Proposals (No. 9).]

  1. . That the Customs Tariff 1965, as proposed to beamended by Customs Tariff Proposals, and as proposed to be amended by Customs Tariff (No. 2) Bill 1965 introduced into the House of Representatives on the twenty-fourth day of August, One thousand nine hundred and sixty-five, be further amended as set out in the Schedule to these Proposals and that the amendments operate on and after the seventeenth day of November, One thousand nine hundred and sixty-five. “2. That in these Proposals, “ Customs Tariff Proposals “ mean the Customs Tariff Proposals introduced into the House of Representatives on the following dates: - 17th August, 1965; 18th August, 1965; 16th September, 1965; 30th September, 1965; 12th October, 1965; and 28th October, 1965.

page 2771


page 2771


Proposals No. 9 which I have just introduced remove from goods of Rhodesian origin the special preferences previously accorded. With the exception of provisions relating to tobacco leaf in transit to or in bond in Australia today all goods of Rhodesian origin are subject to duties at the general tariff rate.

In addition, my colleague the Minister for Customs and Excise (Senator Anderson) has this day signed an instrument placing an embargo on the importation of Rhodesian tobacco. This tariff change and the tobacco prohibition implement the changes forecast by the Prime Minister this evening. I commend the proposals to honorable members.

Debate (on motion by Dr. J. F. Cairns) adjourned.

page 2774


Second Reading

Debate resumed (vide page 2767).


– Prior to the suspension of the sitting I mentioned that quite a lot of the evidence given to the Tariff Board on proposals submitted to it for variation of tariffs was not available to the public or to honor able members to enable them to decide whether to reject or approve the recommendations of the Tariff Board. In the Annual Report of the Tariff Board for 1964-65 which is the last one available mention is made of this fact in relation to evidence given to the Board, particularly in public. At paragraph 139 of its report the Board stated-

The Tariff Board Act - provides that evidence at the Board’s inquiries shall be given in public and on oath, and the intention clearly is that the facts related to any question of affording tariff or other assistance against imports should be publicly known. However, where it would be unreasonable to expect a witness to make public evidence which could detrimentally affect his position vis-a-vis his competitors, for example cost and financial information, the Act provides that the Board may accept such evidence in confidence.

The Board continued -

The Board finds it necessary to stress that evidence must be given in public, unless the Board considers that it is desirable in the public interest to treat it as confidential. Too much of the evidence recently tendered as confidential has been of a public nature and was thus unacceptable to the Board on a confidential basis.

I want to make the point that this House is asked to decide, on only partial evidence, whether it will agree that there should be a variation of the tariff one way or the other. I do not agree with this but I must be fair and say that I think there is some merit in the suggestion that some evidence must be taken in private. I agree that these people have the right to protect their business procedure or business management. But I cannot get it clear in my own mind at times whether it is just for this House to make a decision on only partial evidence. We have to accept blindly the recommendations of the Tariff Board. In saying that I am not suggesting that the Board does not give what it believes to be an honest and true report and that it does not believe in the recommendations that it makes to Parliament on the various proposals.

I mentioned before - and I repeat - that I cannot suggest an alteration to the present procedure whereby the information which we do not now receive could be made available in such a form that we could give tariff proposals fuller consideration and vote accordingly in this House. If the Minister for Housing (Mr. Bury) thinks this matter is worthy of some comment I would like to hear the views of the Government and of the Minister in particular. Perhaps he might deal with the matter more fully so that our minds will be clearer on the subject.

The honorable member for Yarra (Dr. J. F. Cairns) mentioned bounties paid to various industries. To a certain extent I agree that bounties should be paid to an industry until such time as it is on a sound economic basis or until it has proved that it can produce efficiently. I agree with the honorable member for Yarra that some limitation should be put on the period of the bounty. I agree that these bounties have been an advantage to the economy of Australia and to the industries concerned. But, by and large, the bounties come out of general revenue. The taxpayer has to pay for them but, in various cases this does mean that the amount paid, does not go anywhere near the amount that would go into the Treasury - apart from the increase in price of the home produced article. I gave one example before the suspension of the sitting for dinner. I referred to one occasion when this House rejected a Tariff Board recommendation that a bounty should be abolished and a tariff placed on the importation of all tractors. At that time we were paying about £300,000 or £400,000 in bounties to the Australian companies on the Australian made content of these tractors. Had we adopted the report of the Tariff Board it would have meant that about £1 million extra would have been required and that would have been added to the cost of imported tractors.

The Tariff Board has had a look at this question and has made very pertinent comments regarding bounty payments and bounty assistance. I will not read all of them but I will read the concluding paragraphs. The Board said -

The Board considers that bounty assistance should generally be provided to industry on the same basis as tariff assistance, that is without attaching any profit limitations. The need for a safeguard, in the public interest, against unreasonably high profits being earned by producers in receipt of bounty must be considered in relation to the period of the bounty and the fact that the rates of bounty recommended by the Board are subject to periodical review by the Board. It is no doubt necessary, for budgeting or other reasons, to assess the total annual amount likely to be paid in bounty to particular industry. This can usually be done with a reasonable degree of accuracy. Where some limitation is desirable, the Board suggests it should be set as an annual monetary limit to total bounty payments rather than a limit to the rate of return on funds.

I think those remarks should be taken into consideration in any future inquiries by the Tariff Board when dealing with bounty payments. I said that I would not delay the House for long on this matter. I rose particularly to mention that I am in a bit of a quandry sometimes - and 1 think other members are also - regarding the decisions we have to make as to whether to accept or reject the recommendations of the Board when we do not have all the evidence placed before us to enable us to make a decision. That was the main point I wanted to make.

Minister for Housing · Wentworth · LP

.- in reply- First of all, I would like to assure honorable members that all remarks made in the course of this debate will be given due consideration by the Government, particularly remarks concerning bounties. In particular, the honorable member for Maranoa (Mr. Brimblecombe) raised the question of the secrecy of information given to the Tariff Board. I can assure the honorable member that secrecy is observed in the minimum number of cases. The Board exercises its pressure towards publicity. However, particularly where there are a small number of firms in an industry, the firms concerned naturally regard as confidential and secret certain of their costs. These are things such as over-award payments. If full publicity were insisted upon in these cases the information sought would not be forthcoming. I can assure the honorable member that the Board considers all the information provided on a confidential basis with a view to seeing how much of it can be publicised, lt probes the particular witnesses of the firm concerned to ensure that only what is very strictly and completely private business information is finally kept secret. All the pressure that can reasonably be exercised by the Board in the direction of full publicity of all the relevant facts is already exercised. It is intended that the Board should continue that pressure. I am sure the honorable member will appreciate that some information is given by firms which, by its very nature, they consider it quite vital to their own interests to keep secret.

Question resolved in the affirmative.

Bill read a second time.

In Committee.

First Schedule.

Amendments 1 to 10 - by leave - taken together.

Dr J F Cairns:

.- I want to raise two matters, both of which have been mentioned before. The honorable member for Wakefield (Mr. Kelly) earlier today referred to that part of the report of the Vernon Committee which deals with the way in which it can be decided whether an industry is economic. The Committee reported -

As we see it, an industry would be regarded as economic if it could earn, or within a reasonable period expect to earn, normal profits and pay normal wages behind a Tariff barrier of this height.

That is to say, a tariff of 20 to 30 per cent. The Committee continued -

As a useful practical approximation to the concept, we believe that the Board, as suggested in paragraph 14.15, should maintain a constant examination of its decisions to determine what elements make up its “going” rate or general cost-disability rate. If an industry seems to call for less than this rate, this will indicate that it has special advantages. These may greatly improve its export prospects. In such cases, the modest protection required could be granted with-‘ out much difficulty. If industries call for more, there is need for added care in the examination to determine whether they have prospects of becoming economic and efficient or of significantly contributing to the efficiency of others. We do not anywhere argue that an industry should not bo protected if it calls for duties higher than the going rate, but we suggest that the Board should give special reasons for recommending rates significantly higher than this. The greater the excess, the greater the justification required.

In the provisions before us immediately, there are no proposed tariffs that would significantly exceed this as an ad valorem rate. But I raise the proposition that has already been mentioned by the honorable member for Wakefield in respect of this matter and in respect of the rest of the matters that we will be dealing with later in the Committee stage. It seems to me that even the test that the Vernon Committee recommends is not the kind of test that resolves the matter. What are normal wages and normal profits? Economists have found great difficulty in defining normal wages and normal profits in the past. The Committee means, I think, that the Tariff Board has to pay very close attention to the profits and the wages that in fact are paid in the industries that it protects. Having established that principle at this stage, I will try to apply it later to several other items in the proposals.

Amendments agreed to.

Amendments 11 to 37 - by leave - taken together.


.- I want to discuss particularly the obscure subsubstance vinyl acetate monomer, which is discussed in the Tariff Board’s report on acetyl products. The duty we are proposing tonight was recommended by the Tariff Board in its recent report on acetyl products, which was signed on 30th November 1964 and tabled in March of this year. In this same report, the Tariff Board recommended a reduction of the bounty on cellulose acetate flake. When we discussed this reduction of the bounty in the last session of the Parliament, I complimented the company on being able to manage on a very small amount of protection - under 10 per cent. - but at the same time expressed surprise about some of the other recommendations in the report. The recommendation to which I referred particularly was this recommendation on vinyl acetate monomer.

Vinyl acetate monomer is the raw material for paints, for textile finishing, for making gramophone records, for surface coating, for making vinyl floor tiles and polyvinyl alcohol fibres, lt is obviously an important product in many industrial processes. It is made by only one company and that is C.S.R. Chemicals Pty. Ltd. It is made, as are all the products discussed in this report, in the one factory at Rhodes in Sydney, which I have had the opportunity, through the courtesy of the company, to visit. The history of the reports on vinyl acetate monomer is interesting. In June 1961, the Tariff Board recommended a duty of £45 a ton. In October 1962, the Special Advisory Authority increased this by £17 to £62 a ton. In August 1963, the Tariff Board awarded a duty of £57 a ton. This works out at about 38 per cent, ad valorem if the price is £150 a ton f.o.b. and 48 per cent, if it is £120 a ton f.o.b. The price seems to vary between these limits. Now we have this last report in which the Tariff Board recommends a duty of 60 per cent. This works out at about £80 a ton if the price is £134 and £72 a ton if the price is £120 a ton. A year later in 1963-64 the average price for the 1,110 tons imported was £134 a ton. A year later in 1963-64 the average price was £120 on the 475 tons imported in that year.

This material is one of the products under reference in the current inquiry into industrial chemicals. So, in the next few months there will be yet another recommendation. No-one can say that the industry is being neglected. It has a grim history of rapidly rising protection - rising in this report to 60 per cent. Surely a halt must be called soon. Let us have a look at the picture as it now appears. The estimated demand for vinyl acetate monomer in Australia is 4,500 tons a year. The Tariff Board in its earlier report mentioned that C.S.R. Chemicals Pty. Ltd. employs more people than the Canadian producer who produces 10 times as much. This is evidently because the Canadian plant is bigger and can carry the overheads of labour saving equipment. But all the same it casts a certain amount of doubt on the efficiency of the Australian plant. In its 1963 report, the Tariff Board said that 17 men were directly employed in making vinyl acetate monomer, but it recognised that - I quote from the report -

The number of persons associated with the production of V.A.M. would be greater if account is taken of persons engaged in the production of the intermediate materials.

With that rather indecisive kind of statement in mind I have assumed that the production of vinyl acetate monomer in Australia employs 25 not 17 people. Let us assume that there is no duty and that the overseas price is £120 a ton. This was indeed the 1963-64 average f.o.b. price of imports. What is the industry costing the consumers in Australia? The demand is 4,500 tons’ a year and the duty is £72 a ton. So the extra cost each year is £324,000 and the additional cost for every person employed is £12,960. However, if the average price was £134 a ton, as it was in 1962-63, the additional cost to the consumer would be £360,000. That is assuming, of course, that C.S.R. Chemicals Pty. Ltd. raised its price to the duty paid price. This would work out at a subsidy of £14,472 a person a year. Probably C.S.R. Chemicals would not raise its price to the full duty paid price. So we should content ourselves with the first figure of £324,000 as the annual subsidy paid by the consumers. This represents an annual payment per person employed of almost £13,000.

The recommendations of the Tariff Board in its report on acetyl products are in my view a puzzling mixture of fact and wishful thinking. For instance, the effective protection of the bounty on cellulose acetate flake was under 10 per cent., acetic acid receives 25 per cent, and cellulose acetate moulding compounds receive 25 per cent. Yet vinyl acetate monomer receives 60 per cent. And they all are made in the same factory. In the report there is no examination of the reasons why there is this difference, except that the Board states that some of the products have a natural protection. This is not measured. So we have little idea of how much it is really worth. There is no examination at all of the impact of the increased V.A.M. prices on the users of this product. One of the things that puzzles me is how the paint manufacturers can continually carry increases in the duties on most of the products that they use in their paint.

Finally - and this is the most important point, Sir- the Tariff Board’s report is surely an example of the recommendations in the report of the Vernon Committee of Economic Inquiry to the effect that when duties of, say, above 25 per cent, are awarded the Tariff Board should give clear reasons why this higher than average protection is justified. Loading the costs of the users of V.A.M. in this way without any kind of examination of the impact of the increased costs seems to me to be wrong. This is even more apparent when one puts this recommendation alongside the recommendations for very much lower protection on similar products made in the same factory. Obviously there must be some reason -for the Tariff Board’s decision to differentiate in’ this way. But I cannot see it written into the Board’s report, and that is where I think it ought to be. Let us hope that as a result of the Vernon Committee’s report each recommendation for duty higher than the going rate Of somewhat less than 30 per cent, most favoured nation will be looked at with care and will be justified with clear reasoning as to why the higher rate is warranted and with due weight being given to the impact on the User industries, particularly export, industries or- those that can hope to enter the export field later.

Dr J F Cairns:

.- Mr. Temporary Chairman, this is one example of the application of the principles that the honorable member for Wakefield (Mr. Kelly) and I have culled out of the report Of the Vernon Committee of Economic Inquiry. I do not want to delay the Committee by adding anything to what the honorable member has already said on this matter.

Minister for Housing · Wentworth · LP

Mr. Temporary Chairman, this matter is clearly tied up with all the acetyl products. They all stem from the same source, as the honorable member for Wakefield (Mr. Kelly) mentioned. Vinyl acetate monomer is only one in a whole complex of acetyl joint products. They all are being reviewed in the wider context of the tariff Board’s inquiry into the chemical industry as a whole. That inquiry has a very much wider basis than the inquiry into vinyl acetate monomer. All these separate products listed as acetyl products are associated compounds and it is simple for any other country that has a heavy demand in one sector of this type of production to dump the associated products on the Australian market.

The Board, in the conclusions noted in its report on acetyl products, stated that the local industry’s natural advantage appeared to be largely offset by the ability of overseas competitors to negotiate particularly low freight rates and to offer extended credit terms, and that it appeared also that overseas suppliers of some goods under reference were able to hold stocks in Australia and provide technical services if required, for example in the case of moulding compounds. The Board also noted that it had received some evidence of unfair trading practices in competition from Japanese vinyl acetate monomer and that the nature of these practices suggested that a sliding scale duty would not necessarily be an effective form of protection against them. The Board stated further that it had. noted the effects of administrative action taken by the Department of Customs and Excise iri this direction.

The fact is, Sir, that vinyl acetate monomer cannot be considered except in relation to other products of the acetyl group. Clearly, the Tariff Board’s recommendation on this substance is tied up with the other products. It may be as well to remind the honorable member for Wakefield that there have been some reductions in relation to other acetyl products. For instance, a reduction of bounty from 7d. to 6d. per lb. for cellulose acetate flake has been recommended, with a limitation of bounty to a total of £112,000 per annum, and this limit has been imposed. Reduced duty on acetic acid has been recommended and adopted. There is no change in respect of a number of other products.

In conclusion, I again stress a fact that the honorable member for Wakefield mentioned: This is an interim report and it has to await the final report of the Tariff Board in the wider context of the whole chemical industry because so many of these products are essentially tied to one another. In the circumstances the Government considers it prefectly reasonable to accept the Board’s recommendation.

Dr J F Cairns:

– Can the Minister give any indication when the general report on the chemical industry will be available? We have been waiting for it for a long time now.


– I can give no indication at the moment. The task is very complex, but it is being pushed ahead as fast as the available resources will allow.

Amendments agreed to.

Amendments 38 to 71 - by leave - taken together, and agreed to.

Amendment 72.


.- The point I want to raise is quite a small one. It relates to continuous polypropylene mono.fil yarn for use in the weaving and rope industries. The matter I want to stress relates particularly to the weaving industry. When the Tariff Board in its report of 26th January 1965 dealt with this reference it said - I do not quarrel with these words -

The Board believes that the production of monofil and strip by-

The particular manufacturer whose activities were being considered - should be regarded as a whole, and that it would not be desirable to differentiate in the Tariff between the three types of monofil and strip covered by the reference. -

One of the three types was continuous polypropylene monofil. The only question I want to raise, and the matter to which I ask the Minister in another place to give his consideration, is whether in the present circumstances it is entirely appropriate that the proposed increased tariff should apply to polypropylene monofil for use in the weaving industry. The history of the matter, if I may summarise it, is that long before this reference, which was heard by the Tariff Board in May and June of 1964, there had been complaints about the quality of the polypropylene monofil put out by the sole local manufacturer. The complaints emanated particularly from one of the firms engaged in textile weaving. When the matter came before the Tariff Board the question of quality control was raised by the opponent to the proposed increase and, so far as I can gather from scanning the evidence, the manufacturer who was applying for an increase in the rate - I do not think it would be proper to name the company - put the view in sworn evidence that the criticisms by users of this product were generally due to production problems en countered in the early stages of development of the industry. The report of the Tariff Board stated -

It was claimed that these problems had now been overcome and that in range and quality, monofil produced in Australia is equivalent to those imported.

The Board accepted that view, because if one reads on to page 7 of the report one will see in the second column of that page that the Board says -

The industry has had some problems concerning quality of production, but it appears to the Board that these have now been largely overcome, and that <he quality of locally made monofil is generally satisfactory.

The Board was there referring to the polypropylene product. I am in a position to say that since then the user of this product, who is particularly concerned about its alleged lack of quality, had occasion to write to the manufacturer, who was the applicant for the increased tariff, on 12th March 1965, which was slightly less than two months after the report of the Tariff Board. The letter, which was a letter of complaint, stated -

We have just had some tests run on 10 mil polypropylene yarn manufactured by your company and these tests have been compared with results from identical yarns of overseas manufacture.

I am most concerned-

This is the user of the product speaking through its managing director - at the comparison shown by the tests tha* I have referred to and these indicate from tests relating to thickness, tensile strength and elongation that your yarn is below the standard of identical yarns imported from overseas.

The tests disclose that your yarns and imported materials are identical as to diameter, but the breaking strain of the imported material was 5.2 lb. by comparison with 2.9 lb. for the yarn manufactured by your company. In regard to elongation the tests report indicates that your yarn showed approximately 25 per cent lower elongation than the yarns’ imported from overseas and I think you will agree that this bears some investigation.

There followed a request that the matter be investigated. That letter produced a reply of 24th March this year from the manufacturer concerned. I think it is proper to quote from the reply, but again without indicating the identity of the person making the reply. The letter stated -

We thank you for your letter dated March 12 referring to tensile strength of our polypropylene monofilament.

We have been aware for some time that polypropylene monofilament manufactured by us is slightly lower in tensile strength than some of the imported polypropylene monofilament. Appropriate steps have been taken to improve this aspect and it is estimated that within 4/5 weeks we shall be able to supply monofilament approximately equal in strength to any overseas.

I go on from there to say simply that my information, which I can only describe as information at this stage because it comes from one source and I am not in a position to vouch for its absolute accuracy, although I believe the source of the information to be reliable, is that the quality, which I have indicated from reading the letter of 24th March from the manufacturer was admittedly below standard, has not improved in the meantime. Inquiries that I have made as recently as today indicate that the absence of improvement persists. 1 understand that the weaver who is concerned about the lack of quality in this product covered by the proposed amendment has applied for a standing by-law to be introduced to cover the situation until the anticipated improvement in the quality of the product takes place. I understand that the application for a standing by-law was made at the beginning of September. Presumably, it is now under consideration. All that I suggest for the consideration of the Minister in another place is that this does seem to be a case in which the optimism expressed by the manufacturer at the Tariff Board hearing may have been ill founded. I put it no higher than that. I suggest that this may be a case where prompt action is required to bring in some sort of alleviating by-law to cover the position of weavers, who, after all, must compete intensely against imported products, so that the position can be looked after until the rosy state of affairs which was forecast by the manufacturer to the Tariff Board comes about.

Minister for Housing · Wentworth · LP

– I should like to say to the honorable member for Parkes (Mr. Hughes) on this question that there has been a long standing argument between the manufacturer on one side and the weaver on the other as to the quality of this product. No doubt the Tariff Board considered this situation. This is not a new question, but it is one on which I could not possibly pronounce a personal opinion. The duties proposed are only 10 per cent, ad valorem British pre ferential tariff and 20 per cent, most favoured nation tariff. These are not particularly high rates of duty. The Government has accepted the Tariff Board’s recommendation that this protection should be given. But the question is always open. No doubt if conclusive evidence could be adduced of the qualitative deficiency of the product, the Minister for Customs and Excise (Senator Anderson) will certainly weigh that factor. But I should like to emphasise that this is not a heavy level of protection and that the question is one on which there may be counter arguments. Although the duty is low, the user no doubt would like to be able to get the product cheaper. But that is the natural wish of any manufacturer.

Amendment agreed to.

Amendments 73 to 84 - by leave - taken together.


.- I do not propose to detain the Committee for long because the item that I shall be discussing is not an important one. I refer to the recently reduced duty on umbrellas and sunshades. I do not suppose anyone here would pretend to claim that the umbrella is a tremendously important part of our economy, but I want to use it as an example of the way in which protection can operate unless it is looked at very carefully.

The old duty on personal umbrellas, which make up most of the market - 1 do not carry one because it never rains in South Australia - was 47i per cent, plus 3s. on each umbrella. As there are 366 people employed in the whole industry, making both beach umbrellas and personal umbrellas, I shall assume that there are 300 people employed in making personal umbrellas. It appears that the local industry is supplying 90 per cent, of the market.

Most of the umbrellas are made from imported materials. The Tariff Board, in its report, says -

Certain small parts of rain umbrellas are produced locally from tools and dies supplied by the local industry.

Later on it says -

Information given to the Board shows that in many cases the landed duty-free cost of imported umbrellas is not much more than the duty-free cost of the imported materials used in tha equivalent local products.

This is an interesting exercise. It appears that the industry is little more than an assembly industry and that there is little saving in foreign exchange as almost all the materials are imported. I cannot help remarking that on our own farm we can make axes, the only difficulty being that we have to buy the heads and the handles. As the Australian umbrella industry imports the cloth and the frames and, in some cases, the handles, there cannot really be much of the umbrella left. As I said before, made up umbrellas can be imported for very little more than the cost of importing the components separately and then assembling them.

The Tariff Board, after examining this industry carefully, and after pointing out all these awkward little facts, reduced the duty somewhat. It is now 40 per cent, ad valorem plus 3s. on each umbrella. Last year, the average f.o.b. cost of each umbrella was about 7s. With the 3s. on each umbrella, the total duty works out at 40 per cent, plus 43 per cent., or 83 per cent, protection.

Now let us see the rather ridiculous position that arises. In 1962-63, we imported about 81,000 umbrellas. These cost an average of about 6s. lOd. each. We also made in Australia 815,247 umbrellas, making a total Australian demand of 896,247 personal umbrellas. The 40 per cent, duty on all these umbrellas would work out at £125,440 while the 3s. duty would work out at £134,400, making a total increased cost of £259,840. Assuming that there are 300 people employed making umbrellas. Therefore, for every person employed in the industry, the users of umbrellas are being asked to pay about £870 extra each year. As 75 per cent, of the employees are women, that is a pretty fair subsidy to pay for the sake of employment.

The position becomes even sillier when we realise that these employees are really adding no value at all. As I said before, we can import the umbrellas for just about the same price as we are paying for the imported components. So it appears that the £870 that we pay for every person employed in making umbrellas simply goes down the drain without any value to the economy at all. When we discuss these things in Parliament, and when I bring out these awkward little facts, people ask: “ What about defence? “ Well in this case, what about defence? I do not think even Neville Chamberlain would claim that umbrellas are absolutely necessary for defence.

I am not a free trader. I believe in a sound protective system, but no one can tell me hat it is worth paying £800 extra for every person employed in an industry that has to import most of its components, anyhow. The whole thing is a clear case of protection gone a bit queer. This is a pity when protection, if wisely applied, can be of great benefit to our economy. To persist in this kind of thing is futile.

Minister for Housing · Wentworth · LP

– I should like to say one or two words in response to what has been said by the honorable member for Wakefield (Mr. Kelly). The honorable member for Wakefield should notice that in this case there is in fact a reduction in the duty on umbrellas. I freely recognise that the honorable member for Wakefield has no vested interest in this industry al’ all. He invariably wears a good worsted suit that stands up to the rain very well. Sometimes, when he gets wet he is not in any way bashful about wearing the suit for the whole week. Nor does the honorable member display his figure on the beach and one of the greatest markets for this industry is the demand for beach umbrellas. When the honorable member goes to sleep in the shade I know he sleeps in the shade of a hay stack, not under one of these bright umbrellas. This is an industry of a certain size. It is important and one of its main markets is for beach umbrellas and camping outfits rather than umbrellas for keeping off the rain. If the industry is to survive at all, it needs this measure of protection and the Government accepts the Tariff Board’s recommendation.

It is true that the industry employs only about 330 people, but I would hope that the honorable member for Wakefield pays some heed to the Vernon Committee’s report on tariff matters. The general tone of that report is that on the whole it is probably the capital intensive industries which it is in the interests of the Australian economy to protect rather than those which employ a large amount of labour for small capital outlay. Irrespective of this particular example, we should bear in mind that it is the capital intensive industries and not the mere employers of labour which are important. The Government certainly takes the view that although the Tariff Board has recommended reduced duties, this is an industry which we should keep going.

Amendments agreed to.

Amendments 85 to 1 1 1 - by leave - taken together.

Dr J F Cairns:

.- I wish to refer to amendment 92 which relates to laboratory hygenic and pharmaceutical glassware. It results from a report made by the Tariff Board in December 1964. The Board recommended no change in duties on this glassware. Previously the general rate was 30 per cent, and the preferential rate 20 per cent., and this legislation proposes that those rates be maintained. The odd thing is that this is a capital intensive industry, the type of industry in respect of which the Minister indicates he agrees with the Vernon report. I am informed that there has been a considerable cutback in production in this industry, and that one fairly large firm in Sydney has eliminated altogether production of laboratory and pharmaceutical glassware, and apparently is not making much protest. The 30 per cent, rate seams to indicate that the industry might have been reasonably efficient. It has been functioning for quite some time. However, as I have said, my information is that there has been a considerable cut back in production and that one large firm is going out of production altogether. This seems to be odd when there is to be a continuation of existing rates. Apparently production is being cut back and there is not a great deal of protest about it. It might suggest that the producer or producers which are going out of production in Australia might also be interested in the import of this glassware into Australia from some parent or subsidiary body overseas. I do not know whether the Minister has any information on this matter or whether my own information, particularly in regard to the Sydney firm, is correct. I should like to know more about the matter.

Minister for Housing · Wentworth · LP

– I understand that the firm to which the honorable member for Yarra (Dr. J. F. Cairns) has referred has produced large stocks, and in view of those accumulated stocks it has cut back its production. This was a circumstance that was not foreseen at the time the Tariff Board was considering this matter. It is an economic situation which has arisen since then and no doubt will have to be dealt with, as time goes on, as a practical matter in accordance with the change in situation.

Amendments agreed to.

Amendment 112.

Dr J F Cairns:

.- This is one of the rates of duty which seems to me to be rather high. The proposed general duty is 42* per cent, or £6 10s. on each of the internal combustion engines concerned, with the addition of a previous temporary duty of 171 per cent, the preferential duty is apparently the same. So 171 per cent, is added with one hand and taken away with the other. As I have said, this duty seems to be fairly high, to say the least. I shall not refer to the Tariff Board report in detail other than to say that the Board does not seem to have been very enthusiastic about this. It has had a couple of looks at the . situation apparently as a result of references back to it, and this seems to me to be a case where, if we applied the Vernon Committee’s test of an economic industry, we would need some further information. My understanding of the Board’s report is that the Board does not give us that satisfaction, and in some senses it seems to me the Government is going further than the Board wanted to go in respect of these duties.


.- It is pleasing to hear the honorable member for Yarra (Dr. J. F. Cairns) adopt the attitude which he did. It is not often that the Labour Party adopts such an attitude. It is a pity, in a way, that he has the facts wrong; I do not like to discourage him. This duty was not imposed as a result of a Tariff Board report; it was the result of a Special Advisory Authority report which followed a Tariff Board report which had followed another Special Advisory Authority report. This is the grim kind of shuttle service about which I have spoken before in this Parliament. Going back over very recent history, there was a Tariff Board report in 1961 which recommended a duty of £6 10s. or 421 per cent., whichever was the higher.

Then there was an emergency hearing in 1961 which resulted in increased duty. There was another emergency hearing in 1962 which again led to an increased duty. Then in December 1962 the full Tariff Board reported on the matter and recommended returning the duties to the old rate, namely £6 10s. or 42i per cent. Now the Special Advisory Authority has, in another report, recommended increasing the duty by 17i per cent. The full Tariff Board is looking at the matter again. One wonders how the Board could ever look an engine in the face again. Probably the duty will be reduced again and probably the whole process will start all over again.

This is a most depressing Special Advisory Authority report. It makes no effort to examine the efficiency of the industry. It just says that some Australian manufacturers are selling at a loss and that some imports are coming in. It does not state the proportion of imports coming in and it says nothing about over-capacity in the industry or Which manufacturers are losing money. The Authority was obviously not at all concerned about the fact that users of the engines would be dented access to cheaper and better quality engines. I think the whole Special Advisory Authority report was a lamentable document in every way, particularly for what it did not tell us.

Let us have a look at the industry. There are three main Australian manufacturers. Villiers Australia Pty. Ltd. is the largest producer of the small two and three horsepower engines. It would be more correct to call Villiers Australia Pty. Ltd. assemblers than manufacturers. In three engines at least imported materials make up from 70 per cent, to 80 per cent, of the material cost. This factory is situated at Ballarat and is watched over by the anxious and angry eye of the honorable member for that district (Mr. Erwin). The main manufacturer of the six horsepower engine is James N. Kirby Pty. Ltd., which came into the business later than Villiers, encouraged, no doubt, by the lavish protection granted in the past. These two sections of the industry together - Kirbys and Villiers - have the capacity to make twice as many engines as the Australian market demands, even if no imports come in at all.

The third big manufacturer, Ronaldson Brothers and Tippett . Ltd., also of Ballarat, and also watched over by the member for the district, concentrates on engines of over six horsepower. This firm has the capacity to produce 8,000 engines a year whereas the total demand, imports included, is only 4,000 engines. So obviously the industry is gravely over-capacitated, even without imports. As I have said, the industry has the capacity to produce twice as many engines as the Australian market can take, quite apart from imports. It is largely because of the costs arising from this unused capacity that some sectors of the industry are losing money and this is the reason that the duties were raised by 171 per cent, as a result of the Special Advisory Authority’s report. Is not this a direct invitation to erect more unused capacity in the sure and certain belief that duties will again be raised to -guarantee profits? Is it not straight out economic foolishness to reward unused capacity in this way? One of the reasons given by the Special Advisory Authority for the increased duty was that the price of imported engines has declined since the Tariff Board’s report in 1962. The price has declined in some cases. I can give the Committee the figures. The price of the 2 h.p. Briggs and Stratton, engine has declined by 3s. 8d. but the duty, has increased by £1 13s. 6d. The price of the 4 h.p. engine has declined by 5s. 5d. but the duty has increased by £2 8s. The price of the 6 h.p. engine has declined by 9s. 6d. but the duty has increased by £3 7s. 6d. The price of the 9 h.p. engine has declined by 6d. but the duty has gone up by £5 18s. 5d. If the Special Advisory Authority expects his report to be treated with respect he should not base his judgments on flimsy evidence, such as the assertion that one of the problems confronting the industry is that the price of imported engines has fallen. The price has fallen - in the case of the 9 h.p. engine by only 6d., but the duty has gone up by £5 18s. 5d. The Vernon Committee made some caustic comments about the report of the Special Advisory Authority. It said that his reports should be as full as possible, particularly as no public evidence is given. The reports should go into detail and tell us what facts were available, instead of dishing up stuff such as this to which I have referred.

Do the increased duties matter very much? The engines are used mainly on concrete mixers, fire and spray units, grain augers, water pumps, 32 volt electricity plants and so on. They are used mainly on farms and are essential tools of trade for farmers who have no chance of increasing their prices to make up for the excess costs they pay. A Briggs and Stratton 2 h.p. engine has a value for duty of £9 lis. 9d. in America. The old rate of duty in Australia worked out at £6 10s. per engine. The increase of 17i per cent, in the temporary duty works out at £1 13s. 6d., giving a total duty of £8 3s. 6d. or a total protection of 85 per cent. On a 4 h.p. Briggs and Stratton engine the total duty is £8 18s. or protection of 65 per cent. On a 6 h.p. engine the duty is £1 1 10s. 6d. or protection of 60 per cent. On a 9 h.p. engine the duty is £20 5s. lid. or protection of 60 per cent.

The total demand for the engines under reference appears to be about 60,000 a year. If the average increased cost due to all duties is £11 per engine - it will probably be more - the extra cost to the Australian user will be more than £600,000 a year. All this will come out of the pockets of the farmers. This is a subsidy paid by the users - mainly farmers - and its main justification is to make unused capacity profitable. As I have said, this extra price has to be paid by the farmers. No one worries much about this. It is true that when important people open agricultural shows and such events they like to make stirring speeches exhorting us to adopt modern methods to keep our costs down so as to compete on world markets and to provide the exports that Australia needs to pay for essential imports. I am pleased that the Minister for Territories (Mr. Barnes) is in the chamber, because he does these things with distinction. It is pleasant to listen to these speeches. We all file on to the oval, our bowler hats usually held reverently across the stomach. We hear a beautiful speech, but often it is spoiled by the fact that no one outside the oval can hear it. We often wonder whether people would be impressed if they could hear it. I know that when the Ministers have gone away I have had the awkward job of explaining to my farmer constituents who have been urged to keep costs down in order to compete on the export market, why they should be expected to pay an extra £600,000 a year for essential tools of trade. They ask what is to be done about engines. They ask why the price of their tools of trade is increased if they are expected to keep their costs down.

I know that we are not politically powerful. I know that we have some responsibility to keep up exports and that the economy depends on us at this time. So let us look at the problem from the point of view of the manufacturers. Howard Rotavator Ltd. is a good Australian firm which employs good Australians in the making of good rotary hoes. They make good engines also. At the last public inquiry the firm’s representative said -

We also manufacture small rotary hoes and twowheeled tractors, requiring an engine of around 145 c.c. capacity, and until recently these machines were fitted with Australian built engines. At this time the cost of the engine represented approximately 55 per cent, of the factory cost, and .t was found that when this company took over Howard Industries the small rotary hoes and tractors were completely unprofitable and it was decided to discontinue their production. Since the introduction to the Australian market of a cheaper imported engine it became profitable to once again manufacture small rotary hoes and we are currently making three machines fitted with an American 143 c.c. horizontal engine. The recent increase of 10 per cent, temporary tariff on these engines has again raised the question whether it will remain profitable to continue manufacturing these small units.

Now the duty has gone up yet again by a further 17i per cent., making the position in respect of rotary hoes yet more difficult. For a 6 h.p. Briggs and Stratton engine for a rotary hoe the American or Canadian manufacturer pays £19 4s., while the Australian manufacturer will have to pay £30 14s. 6d. for the same engine. The new duties on engines are paid for by others besides farmers, who realise, as I have said, that they do not matter much these days. We should not be deluded by the hope that engine prices will not rise as a result of this latest impost. They may not, although I have heard that story before. But they will not fall; that much is certain. It is poor consolation for the Australian farmer who is using a 2” h.p. engine to spray his wild turnips - I hope the honorable member for Mallee (Mr. Turnbull) is listening - to know that the list price to a manufacturer of agricultural plant with a Briggs and Stratton 2 h.p. engine is now £17 15s. 3d. in Australia while his American or Canadian competitor is paying £9 lis. 9d. for exactly the same engine - a difference of 85 per cent.

The Government’s decision is made now and there is little we can do at this stage except to point to the damage done. Let us hope that the Vernon Committee report will put an end to this kind of sloppy protection. That Committee, of course, made the point that a duty of above the going rate of about 30 per cent, should be granted only if there are particular reasons for this, as higher duties than this increase the cost to user industries, primary and secondary, and damage their export chances. The Committee also pointed out that the authority of the Tariff Board and the effectiveness of the whole protective system are weakened if the Government shuttles references backwards and forwards between the Special Advisory Authority and the Tariff Board. I regard this case of emergency protection of stationary engines as a glaring example of bad protection. Not only is the rate too high but there is no reasoning to support it and now it must go back for the third Tariff Board hearing within a few years. As I have often said, protection is of value if well used. This is a glaring example of its being abused.

Dr J F Cairns:

.- I propose to take up only a few minutes of the Committee’s time to look at this matter in its complete context. We have listened with much satisfaction to the honorable member for Wakefield (Mr. Kelly). Tonight and on other occasions he has analysed carefully and pretty accurately what happens when we are making tariffs and increasing the cost of manufactured products, such as engines which are used by his constituents in Wakefield. The honorable member has painted a very vivid picture of what he does when he goes into his electorate. He told us how a Minister somewhere or other opens a factory. He will be closing it too, of course. The honorable member told us how he and his constituents stand with their bowler hats held in a prominent position. The Minister then opens the factory which is going to turn out engines that will cost the constituents of the honorable member for Wakefield 85 per cent, more than they would pay for imported engines. The honorable member for Wakefield then goes to work on his constituents and continues his efforts to persuade them to vote Liberal. No doubt they come to the meetings which the honorable member addresses, and to other places where he meets them, in their Mercedes Benz and Dodge motor cars. No doubt there would be a Bentley or two not far away. The honorable member says to them: “Although this Government, of which I am a very active supporter, is making you pay 85 per cent, more for your internal combustion engines and your rotary hoes than you would have to pay for imported ones, whatever you do you must go on voting for me, the Liberal Party member for Wakefield, one of those really responsible for your increased costs “. The honorable member will no doubt be able to explain to us how he reconciles his conduct as an incisive analyst of high tariff charges in this House with his technique of political persuasion of his constituents to accept what this Government does.


– I am concerned with the increase in costs of the users of these engines. I am not concerned with the criticism expressed by the honorable member for Yarra (Dr. J. F. Cairns) of the honorable member for Wakefield (Mr. Kelly). I am trying to look at the facts squarely. The tariff imposed on these engines is just another of the factors resulting in increasing costs to primary producers. The primary producer is being exhorted all the time to reduce costs and be more efficient, but we know that costs of production of the average farmer are rising all the time, and although it is not generally known, these increasing costs are affecting bank lending. It has been proved time and time again by economic surveys that very few primary producers are making more than from 2 to 5 per cent, per annum on the capital invested in their properties. It is no wonder that we of the Country Party as a rule continually argue that a halt must be made somewhere. We must in some way prevent further increases in costs of the end users of these articles, who cannot pass on increased costs.

I want to make my position clear. I will not support this proposal which will have the effect of increasing the cost of one of these items by £6 10s. I want a better explanation of why this is necessary. I take it that all these small engines are now made in Australia under licence. As the honorable member for Wakefield has said, these engines are over-produced in this country, and there is something wrong with the industry if it cannot produce them economically and sell them at a profit in equal competition with imported machines.

Furthermore, the receipts from this increased tariff go into the revenues of the Commonwealth, and there is a double payment, because the user has to pay the increased cost that is necessarily fixed on these articles in respect of which a tariff is granted. This is only one illustration of the way in which the costs of primary producers are continually increasing, and I object to this tariff.

Minister for Housing · Wentworth · LP

– The honorable member for Wakefield (Mr. Kelly) will realise that the current level of duty which was recommended by the Tariff Board has continued for two years, and that, following the recommendation of the Special Advisory Authority, the Government has imposed an increased duty of 1 7i per cent, ad valorem. Of course we live in a moving world in which things are constantly changing. As the honorable member for Wakefield pointed out, in this field there is a lot of capacity and because that capacity is underused the manufacturers concerned cannot operate profitably on the small market available. The extra duty is designed to protect their position and give them a somewhat greater share of the market until the Tariff Board, which is now inquiring into the industry, reports and makes recommendations to the Government. The Special Advisory Authority said in his report -

The Australian manufacturers do not intend to increase prices but hope the increased protection will enable them to obtain an increased volume of sales with consequent better use of capacity.

Without increased protection, which is largely designed to give a bigger market and more throughput, their position would greatly deteriorate. The recommendation of the Special Advisory Authority is designed simply to hold the fort until the Tariff Board can go into the long-term position.

Mr Kelly:

– The Minister said that last time.


– But I point out that that was some years ago and the world has moved on in the meantime. The industrial position changes very rapidly. The recommendation is simply that until the Tariff Board makes a report on this industry, which it has not done for a considerable time, the industry should be safeguarded. The idea is to provide a safeguard pending consideration of the long-term position.

Amendment agreed to.

Amendments 113 to 150 - by leave - taken together, and agreed to.

Remainder of Bill - by leave - taken as a whole, and agreed to. .

Bill reported without amendment; report adopted.

Third Reading

Bill (on motion by Mr. Bury) - by leave - read a third time.

page 2786


Second Reading

Debate resumed from 16th September (vide page 976), on motion by Mr. Bury -

That the Bill be now read a second time.

Dr J F Cairns:

.- This is a bill to extend the operation . of the copper bounty from 31st December 1965 to 31st December 1966, a year in which it is almost certain that not one penny of the bounty will be needed. In other words this is a bill to extend the period of operation of a bounty that will not be paid. The principle, however, is that a bounty is paid to what are known as higher cost producers to enable them to obtain, in present circumstances, a return of at least £340 a ton for the copper they produce and sell in Australia. Apparently it does not apply to exported copper. Higher cost producers are defined again in the Bill. They include those whose profits on refined copper would not exceed a rate of 10 per cent, per annum in the year in question and whose production of ore is less than 50 tons in the year, or a proportionate amount over a lesser period. This excludes the half dozen large producers of copper in Australia and the bounty is payable on considerably less than 10 per cent, of the total copper produced.

The floor price of copper is £340 a ton. It is worth the House paying attention to the actual price of copper in recent times. As a matter of fact the Australian price has been in excess of £340 a ton since September 1964. It was £340 a ton from September 1964 until April 1965. In May 1965 it became £375 a ton and remained at that price until September 1965. In October it became £381 a ton. At the end of October the Australian price was £395 a ton. The sterling price in London is considerably higher. Between September 1964 and April 1965 when the Australian price was £340 a ton the sterling price varied from £420 a ton in September 1964 to £488 at the end of April 1965. In May 1965 it rose to £498. In June it was £473, in July £410, in August £438, in September £481, in October £508 and at the end of October £519 a ton. One of the odd things about this situation is that one would think that with the Australian price at the end of October £395 and the sterling price in London £519 there would be no copper in Australia at all. This is one of the miracles of modern economics that is difficult to understand.

It seems that the behaviour of the Australian’ price was very much conditioned by the close down at Mount Isa as a result of a dispute forced on the miners by the company last year to suit its own purposes. This considerably interfered with the supply of copper in Australia. The output from Mount Isa has a significant influence on the price of copper in Australia. It has saved the Government money in that it has not been necessary to pay a copper bounty to the higher cost producers. It seems that this situation will continue for some considerable time. Copper is produced in all States of Australia except Victoria. It ranks with lead in importance after iron and coal in the mineral industries of Australia. Of course, Queensland is the most important producer. Mount Isa and Mount Morgan together produce about 80 per cent, of Australia’s total production. Other relatively large mining centres, some in Tasmania, would add about 10 per cent, to the total, indicating that the small producers - generally those operating towards the centre of Australia - are those to whom the bounty would be paid if the price were low enough to allow it to be paid. In his second reading speech the Minister said -

In coming to this decision, the Government has borne in mind the fact that Australian copper mines are located in remote country areas and communities centred in these districts are almost entirely dependent on the mines for their existence. Continuance of the bounty amounts to an assurance of assistance, in the event of a drastic fall in copper prices, to prevent the mines going out of production with grave social consequences to the dependent communities. For this reason alone it is considered that the bounty provision needs to be continued until a proper review can be conducted.

I have two comments on the Minister’s remarks. The Government says that this is not the time for a proper review and that some stability - some new situation - in the industry must exist before an inquiry can be properly conducted. It seems to me that, considering the present condition of- the copper industry in Australia, the appropriate time for an inquiry is now. I should like the Minister to give some reason for his view that now is not the time for an inquiry. With the price of copper as it is and the production of copper behaving as it is, we have never had a greater need for an inquiry. The Opposition believes that this is an urgent matter that should not be delayed.

Presently the honorable member for Braddon (Mr. Davies) will speak about, the Tasmanian producers. Although there will be no bounty payment now or in the foreseeable future because of the astonishingly high price copper is fetching here and abroad, there have been times when, to paraphrase what the honorable member for Wakefield has said about some industries, those copper producers in the 5- inch and below rainfall belt where it is always 90 degrees and over who produce fewer than 50 tons of copper and make less than 10 per cent, out of it could have been transferred to Surfers’s Paradise and settled there at the Government’s expense rather than be paid the bounty. It would have cost the Government less than the bounty. The honorable member for Wakefield generally applies this illustration to men working in secondary industry, but it quite clearly applies elsewhere.

The bounty will not be paid in the next 12 months, and it is uncertain when it will be paid, but the industry requires an inquiry urgently. An inquiry should not be deferred, as the Minister and the Government apparently believe. The very condition that makes the bounty not payable and not likely to be payable is what has happened at Mount Isa. It is necessary, therefore, for the Mouse to have some indication of the happenings at this mammoth concernMount Isa Mines Ltd. - that dominates the copper situation and which produces about 75 per cent, of the output. This is one of the largest companies in Australia and it has had a most fantastic expansion in recent years. In 1955 its capital was about £5.75 million. The last figures I have, which are not the most up to date, show that its subscribed capital in 1964 was £23.82 million. At the same time, in 1955 surplus profits, according to the balance sheet, amounted to £1,593,000, whereas in 1965 earnings employed in the business totalled £20.3 million. So in 10 years not only had the shareholders’ capital increased from £5.75 million to £23.82 million but the profits retained in the business had increased from £1,593,000 to £20.3 million. Any producer who can turn out profits of that kind ought to be in a position to pay adequate wages without causing a stoppage which dislocates the production of copper in the whole of Australia and creates a situation where copper prices have now reached the fantastic figure of £395 a ton in Australia. One cannot support the dominance of a concern like Mount Isa Mines Ltd. with an industrial policy in respect of the employment of its miners which is quite contrary to Australian traditions and with a policy of capital accumulation which allows the company to expand probably more rapidly than any other single company in Australia.

In conclusion, I think that if ever there was a time for a complete inquiry into the copper industry in Australia, not only for the purpose of a bounty of this sort but for the overall production of copper - because copper is a most important metal - it is now. Copper is necessary for many essential purposes. The Postmaster-General’s Department could not last five minutes without it. The suggestion by the Minister for Housing (Mr. Bury) that now is the time to put off an inquiry, until something happens in the next 12 months or two years, is one that the Opposition very strongly opposes. We think that now is the time when an inquiry of this kind is necessary so that we can see and understand more of the industry than we can from the information available to us at present.


.- The purpose of the Bill before the House, as outlined by the honorable member for Yarra (Dr. J. F. Cairns), is to extend the period of operation of the Copper Bounty Act for a further 12 months from the end of this year. The Tariff Board brought down its latest report into the copper industry in 1963 and recommended that the payment of a bounty then in existence should be continued for two years as from 1st January 1964. The enabling legislation was passed in this House on 30th October 1963. Without another reference to the Tariff Board, the Government now proposes to extend the payment of a bounty for a further 12 months until 31st December 1966, unless an earlier date of cessation is specified by proclamation.

The Opposition supports the measure because of the great economic importance of the industry to the country and because of the grave economic and social effects that would come about in towns dependent on the copper mines for their very existence if the mines were forced to close down or retrench due to any sudden fall in the price of copper. Under the Act, eligible companies are assured of a minimum price of £340 for copper sold for domestic consumption. For the period that the price was fixed by the Australian producers at £320 a ton, copper sold by companies on the Australian market attracted a bounty of £20 a ton. Just to give some indication of the value of the bounty to the industry, I point out that annual bounty payments varied between £405,000 and £699,000 for the three years to 30th June 1963. The Australian producers price rose to £340 a ton on 19th August 1964 and therefore, as indicated by my colleague the honorable member for Yarra, no bounty has been payable on sales since that date. Referring to prices of copper, the Minister, in his second reading speech, made mention of the unreal situation of the two world prices for copper. He said -

The prices have been high due to a worldwide shortage and this has led to an unreal situation of two unrelated world prices for copper. The position has been aggravated in Australia because the largest local producer, Mount Isa, lost production by an industrial dispute forcing our manufacturers to buy at the higher of the two world prices.

Because of this disturbed state of affairs in the copper industry, both at home and overseas, the Government considers that it would be preferable to defer the appropriate Tariff Board inquiry until conditions become more settled. At present the Board could have difficulty in assessing the long term protective needs of the industry.

The honorable member for Yarra pointed out that he and others would like to see the next inquiry into the copper industry in this country carried out at the earliest possible time. The two prices referred to by the Minister are the producers’ price, which at present is £A395 a ton and the London Metal Exchange price which is almost £A700 a ton. I point out that from 80 per cent, to 90 per cent, of the world’s copper is sold at the producers’ price and not at the more attractive London Metal Exchange price. As the chairman of Mount Isa Mines Ltd., Mr. G. R. Fisher, said yesterday at the annual meeting of the company, Australian companies look upon the producers’ price as a reasonable price and Australian mines supply copper at that figure.

I know from my experience of the west coast of Tasmania and from the copper industry officials in that area, as well as from what Mr. Fisher indicated, that mine officials and managements are anxious to keep the price of copper down because if it is not checked it could price itself out of the market and so open the way for inroads by substitutes. We know from our own experience that because of excess costs, and for other reasons, prices of various products have risen to such an extent that people have changed over to the use of alternatives. We have seen some industries so affected go out of existence.

We are all interested in the Rhodesian situation and there has been much speculation as to whether or not that country will take measures to prevent copper from Zambia being exported. If trade restrictions were placed on Rhodesia that country could retaliate and refuse to allow Zambian copper to pass through to the outside world. If that supply is lost to the world market then it is inevitable that the London Metal Exchange price must rise. But as Mr. Fisher pointed out at the annual meeting of Mount Isa Mines Limited - and it has been stated in certain journals - producers are conscious that further increases in the price could harm the metal and could lead to the substitution of other metals.

I am especially interested in the wellbeing of the Mount Lyell copper mine at Queenstown, Tasmania, which is now in its 70th year of production. Since 1896 the field at Mount Lyell has produced more than 300,000 tons of copper, 16 million ounces of silver and 600 ounces of gold. Its production of blister copper in the 12 months ended June this year was 13,709 tons. Although mined by the open cut method there has been a return to underground mining. This form of operation will continue in the present £6 million expansion programme which was outlined earlier this year by Consolidated Gold Fields (Aus.) Pty. Ltd. which now has a controlling interest in Mount Lyell. The company is spending huge sums of money on its own drilling programme in an effort to prove various ore beds and to extend the life of the mine. I pay a great tribute to these people. The drilling programme of some 36,000 feet last year was a record. This year, already, approval has been given by the directors to extend the drilling programme to more than double that of last year and a programme of some 84,000 feet has been approved. We know that the location of additional ore beds is becoming of very great importance because the life of the open cut mine at Queenstown is estimated to be no more than 10 to 12 years. We know now from the proving of various ore fields by extensive drilling that the life of the mine can be extended for another 25 years with the development of the underground mining process. However, we must be very careful. Because of the low grade of ore, the underground mining methods must be economical if we are to continue to operate and sell on the Australian and world markets. Because of the initiative shown by the company and because of its financial outlay, we welcome the Bill which in effect amounts to an assurance of assistance for copper in the event of any drastic fall in copper prices.

Coupled with the wellbeing of the mine is the economic prosperity of the town of Queenstown and the nearby towns of Gormanston and Strahan. The Minister in his second reading speech drew attention to the value of the bounty in preventing mines from going out of production with grave social consequences to the dependant communities. The industry in this area supports a population of about 7,000 people and has made a major contribution to the economy of the State of Tasmania. It is situated in the most sparsely populated and least developed area of the State. The mineral production in the west coast area was valued at more than £14 million for the 12 months ended June of this year. That is a sizable contribution to the economy of the State. The State Government has recently provided an excellent outlet road to the north west and the Murchison Highway and, with the existing roads to the north and south and the provision of landing strips at Queenstown, Strahan and Zeehan, this has meant a tremendous advance in the communication system in recent years and has helped to ease a great deal of the isolation of the area.

The advent of television too has been a boon. We find that two out of every three applicants for positions in this mining region asked first whether television is available. Thanks to the commercial television interests in Hobart, we can now enjoy this medium. The House will appreciate the mountainous nature of the country. Many members of the House have visited this part of Tasmania. . It is very beautiful and a lovely scenic spot. . The advance in the communication system will make it more accessible. However, because of the mountainous nature of the country, several pockets of population are unable to receive the television signal.. This is not directly associated with the Bill, but it affects the social life of the people and adds to their home and family life. Therefore, I again make a plea to the Government to install national television in the area as early as possible. With a stronger signal, we hope that this medium will be available to the residents along the whole of the coast. Educational sessions would be available to our schools and would be a boon in supplementing the other lessons taught in the schools.

One of the problems facing this mining area on the west coast could be a shortage of labour in the very near future. North of Mount Lyell a tremendous boom is taking place. At Renison Bell, at the tin mine, there is provision for an immediate increase ‘ in the treatment capacity to 200 tons a day and over the next two years this will be increased to 1,000 tons a day, with provision to go on to treat 3,000 tons a day, if this is required by market demands. A major contract has been let to build and equip a new mill and separation plant, administration building, change house, work shops, store and adit portal. The company’s housing estate programme, has commenced in the nearby town of

Zeehan. It is wonderful to see the revival of activity in this historic town. The contract has been let for the first 30 homes and for a water supply and sewerage reticulation and treatment plant for the town. The whole of the town will benefit, because the company is ensuring that these services will be available to other people in the town. The company is working in cooperation with the Zeehan Commission and these improvements will be available to ali the people of (he town, not only to those who reside in the company’s homes. I pay tribute to the company because its plans for the housing estate make provision for parks, gardens and recreation centres. Great credit is done to the company by its work, its designing and the way it is effecting a revival in this very historic place of Zeehan.

Further north, drilling and exploratory work has been completed at Mr Cleveland. This tin mine will come into full produc-: tion as soon as the present transmission line is completed and power connected to the - - mining operations. The old faithful E.Z. Mine at Rosebery, with additional ere drawn to it front Hercules and Farrell, is the life blood of Rosebery and the nearby towns of Tullah and Williams Ford. About 750 people are employed in the production of zinc, lead and copper concentrates. The green light has now been given to go ahead with the development of the huge deposits of iron ore in the Savage River area. This will provide employment for about 1,000 persons. Recruitment is under way in this field. The present announcement reveals that men who go there will be able to get work for 10 hours a day six days a week. One can imagine the very sizable pay packet that will be taken home. The provision of labour in the mining areas creates quite a problem. I do not know how the Department of Public Works in Tasmania, for example, will be able to attract labour when these other opportunities are available. The Department has to put in the access roads to the Savage River. These will cover some 26 miles and there will be a sealed highway of 70 miles all the way to Burnie. This creates a tremendous problem in the provision of labour. Long before the announcement of the Savage River project, we were experiencing a shortage, especially of skilled tradesmen, and this must be further aggravated now. I think, the Government can help with recruitment of skilled labour. I would urge it, in consultation with the company concerned, to embark on a policy that will ensure an adequate work force to cope with the tremendous boom that is “ taking place.

I revert now to Mount Lyell. 1 am very pleased that the bounty is to be continued. It will provide for any of the eventualities that I have mentioned. I hope that the Tariff Board in its next report will bear in mind the great value of this industry, not only to the west coast but also to the economy of Tasmania as a whole. I hope too that due credit will be given to the outstanding efficiency with which the mining operations at Queenstown are carried out. The mine operates on the lowest grade of copper ore worked anywhere in the world today. At Mount Lyell, the copper content of the ore is .7 per cent. Mount Morgan operates with ore containing about 1 per cent, and Mount Isa with ore containing about 3 per cent. The copper content of ore at Peko in the Northern Territory is about 6 per cent. This means that we have to treat about 2 million tons of ore each year to gain 13,000 to 14,000 tons of copper at Queenstown. If the comparable amount of ore is treated at Mount Isa, 55,000 tons of copper is recovered. This is four times the recovery rate that we have at Queenstown. The Mount Lyell mine is recognised in mining circles throughout the world as being possibly the most efficient mine operating in the world today. For this reason and because of the dependence of some 7,000 persons on the industry, I support the Bill and hope that favorable consideration will be given to the bounty when next it is mentioned in the House.

Minister for Housing · Wentworth · LP

– in reply- Mr. Speaker, I join with the honorable member for Braddon (Mr. Davies) in paying tribute to the efficiency of those who run the Mount Lyell mine and all those who are associated with it. I am sure that we all rejoice in the development that has taken place in the Mount Lyell area. Many of those concerned with the mine there have participated actively also in the development at Renison Bell. These and similar developments taking place elsewhere in the region bring new hope to this fascinating area which, whatever it lacks, certainly is not short of rain. The new road through to Rosebery will open up the area and afford more people the opportunity to go there. I am sure that many honorable members, like myself, have visited Mount Lyell and Renison Bell and viewed the operations of the mines there and of other mines in the area with the greatest of interest. As the honorable member for Braddon has pointed out, the developments in this area probably represent one of the main reasons for the introduction of this Bill. This is a standby measure designed to continue the underpinning of the industry should the worst befall.

I may say, Sir, that the constructive speech made by the honorable member for Braddon contrasted rather sharply in many respects with the remarks of the honorable member for Yarra (Dr. J. F. Cairns) who, in passing, brought into the discussion the Mount Isa dispute. This seemed to me a most unfortunate and hapless affair in which the interests of rival unions with their headquarters hundreds of miles away took precedence over the interests of those concerned with the wellbeing of the copper industry. Probably the only beneficiaries of the dispute were those who engaged in some kind of union warfare. A number of individuals with grossly inflated egos were enabled to inflict their attitudes on the Australian consciousness which would have been very much better engaged in thinking about other things. These individuals were the only beneficiaries of the entire dispute. Those who suffered most of all were the people who worked at Mount Isa, for they sustained irretrievable loss of wages, those who own and run the mine and, in the final analysis, Australia at large. This dispute was a most unfortunate affair that is best forgotten.

As I said in my speech at the beginning of this debate the Government has very good reasons for considering that this is a most inappropriate time to conduct an inquiry into the future needs of the copper industry. The time when the patient is in rude health is not really the time to call in the doctor. It is obvious that even the greatest experts in the world are quite uncertain about what the price of copper is likely to be in the immediate future. The whole object of this Bill is to maintain our copper mines, which are situated in out of the way areas and in which the livelihood of many Australians is involved. Whole communities would suffer severely if these mines were not protected. This is the whole purpose of the Bill at a time when, if anything, the price of copper is so high as to encourage all kinds of producers in other parts of the world to go into the industry, although at the same time the position is highly uncertain because of the current situation in Rhodesia and other developments. Prices on the London Metals Exchange are far above levels at which world producers would wisely want to keep them and at this stage it would be quite hopeless to engage in an inquiry for the purpose of trying to fix the kind of subsidy rate that would be needed if the worst befell. This Bill is essentially an insurance measure designed to continue support for the Australian mines until it is possible to assess the long-term situation.

Question resolved in the affirmative.

Bill read a second time.

Message from the Governor-General recommending an appropriation for the Copper Bounty Bill 1965 announced.

Message from the Governor-General recommending an appropriation for the purposes of an amendment to the Copper Bounty Bill 1965 announced.

In Committee.

The Bill.

Minister for Housing · Wentworth · LP

Mr. Chairman, I refer to clause 4, which reads -

Section 8 of the Principal Act is amended -

  1. by omitting sub-section (1.) and inserting in its stead the following sub-section: - “(1.) Where-
  2. a financial year or part of a financial year of a producer falls within a period to which this Act applies; and
  3. the net profit of the producer in that financial year or part of a financial year derived from the production and sale of refined copper after taking into account bounty payable in respect of that refined copper would exceed profit at the rate of ten per centum per annum on the capital used by the producer in that production and sale, the bounty otherwise payable in respect of that refined copper shall be reduced by the amount of the excess.”;

I move -

Omit paragraph (a), insert the following paragraph: - “(a) by omitting sub-sections (1.) and (2.) and inserting in their stead the following sub-sections: - (1.) Where-

a financial year or part of a financial year, of a producer, falls within the periods to which this Act applies; and

the net profit derived by the producer during that financial year or part of a financial year from the production and sale of refined copper, after taking into account bounty payable in respect of that refined copper, would exceed profit at the rate of ten per centum per annum on the capital used by the producer in that production and sale, the bounty otherwise payable in respect of that refined copper shall be reduced by the amount of the excess. (2.) For the purposes of the last preceding sub-section, where the Minister is satisfied that the net profit derived by the producer during an earlier financial year or part of a financial year that fell within the periods to which this Act applies from the production and sale of refined copper, after taking into account any bounty in respect of that refined copper, was less than profit at the rate of ten per centum per annum on the capital used in that production and sale, or that no such profit was derived, he may make such allowance by reason of that fact as he, in his discretion, thinks fit.’;”.

This clause was mentioned in my second reading speech in relation to the treatment of the profit limitation provision when the financial year of the claimant and the bounty year do not coincide. The paragraph proposed to be omitted provides for the amendment of sub-section (1.) of section 8 of the principal Act. The main purpose of the paragraph proposed to be inserted is to amend sub-section (2.) of that section, also to make provision in terms of the financial year accordingly. This is purely a drafting amendment.

Amendment agreed to.

Bill, as amended, agreed to.

Bill reported with an amendment; report - by leave - adopted.

Third Reading

Bill (on motion by Mr. Bury). - by leave - read a third time.

page 2793


The following Bills were returned from the Senate without amendment -

Northern Territory (Administration) Bill 1965.

Export Payments Insurance Corporation Bill 1965.

page 2793


Second Reading

Debate resumed from 15th September (vide page 923), on motion by Mr. Harold Holt-

That the Bill be now read a second time.

Mr SPEAKER (Hon Sir John McLeay:

– Is it the wish of the House that the suggestion made by the Minister be followed? There being no objection, that course will be adopted.

Melbourne Ports

Mr. Speaker, we have made a rather sudden jump in the business tonight, going from item No. 3 on the notice paper under Government business to the measures that are the subject of items Nos. 22, 23 and 24. It is rather late at night to get into a discussion on decimal currency. However the three Bills that are before us are part of the machinery necessary when the change to decimal currency takes place on 14th February next. This date, I believe, is rather colloquially known now as C Day. I am not quite sure what the “ C “ stands for in the minds of some people. I believe that it stands for different things in the minds of various persons. On that day, for good or ill, the new currency will come into operation, although apparently it will be a long time before the old currency goes out of use. I do not want to say a great deal about the technical details of the legislation, but I want to raise one or two matters which I think have significance in relation to the changeover to decimal currency. The cost to Australia of the changeover will be more than £30 million, which will be paid as compensation to people for changing the machines which are necessary these days for handling money.

I must confess that I have never been an enthusiast for the decimal system. I doubt whether all the advantages that are said to flow from it will in fact flow from it. Nevertheless, it is too late in the day to do anything about having second thoughts on the matter. I merely indicate that I doubt all the hifalutin argument about calculations being easier in decimals or arithmetic being simpler in decimals, particularly when we still have to do our other calculations of weights and measures in duo-decimal and other odd sorts of units. It seems that rather much has been claimed for the virtues of the decimal system. This is an example of one of the things that one finds in a community where, although it may be true that dissatisfaction can be expressed about things as they are, someone with a panacea can come along and suggest changing the old for the new. Nobody is really dedicated to supporting the duo-decimal system and so the decimal system, being in a vacuum, as it were, has been an easy sale for its proponents. But there are still one or two significant matters so far as the changeover is concerned. In my view we have not yet had very satisfactory answers about a considerable number of items which, in terms of prices in pounds, shillings and pence, will have no exact equivalent in a conversion to decimals.

I think it is about time that some providers of services of a kind that affect the public as a whole began to say what their new prices will be in the decimal currency when it is introduced. The Government has at least set a pattern. It has indicated what the postal charges will be from 14th February. In Victoria the Melbourne and Metropolitan Tramways Board has indicated what its prices willbe on 14th February, but it has said also that it will jack up the prices on 5th December. From that date the user of the tramway services in Victoria will have to pay Id. and 2d. more for a journey of from one to four sections. The Board has so rounded its fares that the increased prices which will operate on 5th December will have exact equivalents in decimals when the decimal currency is introduced on 14th February. Nevertheless, in Victoria we have a further example of an increased, price. Everybody who uses the trams will pay, ad infinitum, an increased, fare after 5 th December.

There are still one or two significant groups in the community who provide services who have not given any indication of what they propose to do. One such group sells the daily newspaper. Iti most cases newspaper prices have no exact decimal equivalent. The price for a newspaper is still either 4<L or 5d. In some cases the prices of newspapers have already increased to 6d. and, after the conversion, they can be sold at 5 cents, which will be the equivalent of 6d. But what about the “:Herald “, the “Sun” and the “Age” in Victoria? What do they propose to do about the prices of their newspapers on 14th February? I think it is about time they came out with a definite announcement about what their prices will be in decimal terms as from 14th February. I take it that the same sort of argument applies to daily newspapers in each of the capital cities. I understand that one newspaper company somewhere has indicated what its price will be. It now charges 5d. for the newspaper and it has said that after the changeover the price will be 4 cents, which will be a reduction in price of .2 of -Id. I am afraid that I do not know which newspaper it is, but at least one has set the lead. I hope that some others will follow the fine example of that newspaper.

There are other examples, such as the price of milk. People purchase these items every day. People pay 9id. a pint for milk - I believe that that is the current price in Melbourne - but that amount has no decimal equivalent. I think it is about time that the milk interests indicated what the price of that commodity will be. There are a number of other items of a like kind where services or goods that are used by almost everybody in the community day by day and week by week have no exact decimal equivalent. I cited one example this afternoon in the debate on the Excise Tariff Bill when I referred to cigarettes. So far as I can make out no packet of 20 cigarettes at the moment has a price in shillings and pence which has an exact decimal equivalent. Again it would be interesting if some of those organisations would begin to announce what the new price of a packet of cigarettes will be on 14th February. I understand that it is part of the education programme already in a number of shops to show the two prices simultaneously. If the price of an item is 10s. at the moment a decimal currency price of 1 dollar is also shown. Perhaps the cigarette companies could publish the same sort of thing on their packets of cigarettes: At least we would know whether the tobacco companies intended to charge a little more for their product by adding so much per cent. of. Id. more than, the nearest exact conversion would make. That is one matter that I think is worthy of much more consideration than has so far been given.

There seem to have been some differences of opinion between honorable members on this side of the chamber and the Treasury advisers about likely increases in the cost of living as a result of the changeover. We believe, and I think our belief is borne out by an examination of likely circumstances, that there are many of these relatively small items which cost less than a couple of shillings where the tendency will be to take advantage of a small increase rather than to concede a small loss. There are still quite a number of items at the moment with prices of ls. 4d., ls. 8d., or ls. lid. where there is no exact decimal equivalent. We believe that the practice of those who have so far had the opportunity to get in first seems to show that they are setting a price a little higher rather than a little lower. I understand that one of the banks has suggested, after making a careful examination of certain types of goods, that it believes the increase in a weekly budget will be of the order of 3s. That may not seem very much, but it is significant to those who are already experiencing difficulty in maintaining their standards in the face of rising prices. I think the survey was made by the economics section of the Australia and New Zealand Bank Ltd., and it is only fair to point out that the basket chosen included only goods and excluded other items which I have mentioned, such as fares on public transport and daily newspapers. Already we know that each member of every family that uses the tramways services in Melbourne is to be faced with an increase of 2d. per journey, or 2s. a week in fares, and this is another item for which no automatic adjustment in the wage is given.

The Treasurer seeks to suggest that certain things did not happen to as great an extent in South Africa as we claim they did. We have produced evidence on previous occasions that the experience in South Africa was that the increase in weekly costs was borne more by the poorer sections of the community. It is easy to get lost in aggregate statistics which take all levels of income into account and which camouflage the fact that the burden is really borne by those who are least able to carry it.

We have suggested - I think even at this late stage it would be possible - that some of these increases could be mitigated if a half cent as well as a cent were inserted in the coinage. The. new coins in the higher values will be 50 cents, 20 cents and 10 cents. Those of smaller value will be 5 cents, 2 cents and 1 cent. There will be no half cent.. It seems to be suggested that a half cent would breach the decimal principle, but sometimes it is very easy to stand on high principles and forget common justice. South Africa is used as an example by the Government whenever it suits its purpose to do so and I point out that in that country the half cent did to some extent prevent increases that would otherwise have taken place. It seems also that the absence of a half cent coin will make the existing threepenny piece an almost useless coin. If there were a half cent coin, the threepenny piece could be of much more use than will be the case in the changeover arrangement.

There are one or two other matters that I think worthy of consideration. First I mention the reports that have been made by an indefatigible gentleman, Mr. Parry of Melbourne, who has made submissions in quite a number of places. I ask the House to take some note of what I am about to say because it seems to me that Mr. Parry has made a very substantial case on this point. He is of the opinion that there will be a real shortage of decimal coins almost as soon as the new coinage comes into operation. I understand he has written to quite a number of honorable members of this House. He seems to me to have made out a case that has not been effectively answered by the Government. It is easy enough for the Government to say that it believes that the position is covered, but I should like a much more adequate explanation than has been given so far. 1 quote now from the second annual report of the Decimal Currency Board which was tabled in this House a few days ago. Dealing with the number of coins produced as at 30th June 1965, the report contains this statement at page 17 -

Production of the new bronze coins at that date was about 45 million pieces per month, and some 550 million coins in all are expected to be available by C-day. This number includes 30 million each of the five-cent, ten-cent and twenty-cent cupro-nickel coins which have been ordered from the Royal Mint in London.

So, on C Day, there are to be available 550 million coins, probably of the one cent, two cent and five cent values. At first glance, that seems to be a quite significant number of coins but sometimes a little bit of arithmetic produces surprising results. This afternoon I stated that every year 20,000 million cigarettes are consumed in Australia. At first blush, that seems to be a very large figure, but when it is related to the smoking propensities of some millions of people, it comes more into perspective.

I wonder sometimes whether people know just how many coins are supposed to be circulating in the community at the moment. This information is contained in statistics published in “ Banking and Currency “ for 1963-64, Bulletin No. 2. The bulletin shows the aggregate net issues of the various coins in existence to the end of the year. Most people would be astonished to know, for example, that there are something like 1,100,000 crowns still circulating somewhere in the community. According to this bulletin, there is £275,000 worth of crowns or 5s. pieces still in circulation. As there are 4 crowns to the £1, this means that there are still 1,100,000 5s. pieces circulating or lost somewhere in the community. Certainly they have not been returned to the Treasury. There are also £23.6 million worth of florins still in circulation. This means that there are 236 million 2s. pieces in the community. There are also £10,770,000 worth of ls. pieces in circulation. If we multiply that by 20, we find that there are 215 million shillings still in circulation. There are £7i million worth of 6d. still in circulation. This represents 291 million sixpences. Mr. Parryhas suggested that, because there is no half cent, the threepenny piece will become a fairly useless coin under the new scheme. There is £7,300,000 worth of 3d. pieces still in circulation. This represents 590 million coins. The statistics also disclose that there are £58,000 worth of coins of unknown denomination still in circulation. I will not dwell on those at this juncture because, as their denomination is unknown the number is not known. I merely point out that £58,000 worth of these coins are circulating still. I pass to the record of the bronze coins - the pennies and the halfpennies. There are £3,206,000 worth of pennies in circulation. Again multiplying that figure by 240 we find that there are about 770 million pennies in circulation at the moment. There are £882,000 worth of halfpennies in circulation. Multiply that figure by 480 and we get 422 million halfpennies in circulation.

Mr Nixon:

– Has the honorable member been on a holiday with the Statistician?


– It does not do any harm sometimes to wander in these pastures. At least you get your perspective a little bit better denned. That makes a total of about 2,525 million coins circulating in the Australian community at present. It seems that the increase in coins over recent years has been somewhere of the magnitude of 100 million each year. The point being made by Mr. Parry - and it is worthy of consideration - is that he doubts whether the 550 million proposed new bronze coins will be sufficient. No doubt the Treasury believes the number will be sufficient, and it will have to bear the brunt of criticism if its calculation is wrong. There could be a great deal of confusion in the community if the calculation is wrong.

One suggestion is that for the first time in Australia’s history a person will be able to get a complete set of perfectly new coins. It has become quite a habit in recent times to collect coins. Whereas in my boyhood days we collected match brands, nobody seems to do that today. The children of today collect stamps and coins. Signifi cant sums are involved in collecting rare stamps or rare coins. Whilst I do not agree with the suggestion that thousands of people will queue up just to get a new set of coins, what will the banks do if people do decide to collect coins in this way? I do not know. Mr. Parry’s suggestion is that many of these new coins will go out of circulation immediately they are released and that therefore the old coinage will have to continue for a much longer period than seems to be imagined at the moment.

The banks will convert to decimal currency on C day and one of the terms of this legislation is to provide for bank closure days on 10th, 11th and 12th February. It is necessary under the terms of the Bills of Exchange Act to have this validating legislation and this is one of the things we are doing by this Bill. The banks will open for business on the basis of decimal currency on 14th February, but the community at large will be poised between the two currencies for quite a long time, and the suggestion is that the time will be longer than is expected. I do not profess to hold a brief for one opinion or the other, but at least the point has been made, and to my mind has been made fairly convincingly, that the time will be longer than is expected at present. I think that whoever is in charge of the Bill might indicate at the Committee stage whether the Treasury and its advisers really think that the projected number of coins will be adequate for the changeover. At first blush 550 million coins might seem to be a lot, but when it is taken into account that we have some 2,525 million coins circulating at present, it is not a large number. If we add the number of pennies and halfpennies we get a figure of about 1,200 million, which is twice as many as the new issue contemplates in terms of five, two and one cent pieces. It might be that there is some great mystery about the number of coins at present in circulation. It may be that this is simply a secret reserve that the Government has because half of the coins supposed to be in circulation have been lost. I do not know. If that is so, I think that it is time the Treasury told us the true position so that we might do something at least about wiping out in our statistics this great reserve. If 770 million pennies were distributed equally amongst the population of Australia every many, woman and child in

Australia would have 70 pennies. At Christmas time some of my children might have more than 70 pennies - they save them for their own reasons - but not only is each person in Australia supposed to have 70 pennies, he is also supposed to have 40 halfpennies. The honorable member for Wilmot (Mr. Duthie), his wife and a couple of his children ought to have among them 280 pennies and 160 halfpennies in the household at any point of time as well as a large number of florins and shillings, but I am sure that they have not this number of coins in the home. The Treasurer (Mr. Harold Holt) some time ago published an advertisement which asked where the pennies had gone. He might care to shed a little light on this rather mystifying circumstance. Does the Treasurer think that some of these pennies have been irretrievably lost or become worn out?

Mr Harold Holt:

– The honorable member probably has them tucked away in drawers and does not even know that they are there.


– I might have one or two, but I doubt whether I have anything like 40 or 50, which seems to be the suggested number if the statistics are correct.

I think that these aspects of the legislation are worth some consideration. I hope that the conversion to the new currency will be a smooth one but, as I have said, I still doubt whether it is worth all the trouble. The community will get a £30 million advantage over a very long time, if at all. However, we have chosen to take this action, and there is no point in retreating at this stage. Nevertheless the change over does present certain difficult problems. It seems to me that one of the problems will be a shortage of coins. I think that it would have been wiser to have leaned towards having too many coins rather than too few, as they would be used eventually in any case. I hope that during the Committee stage of this Bill the Treasurer will make a further statement to show that he has considered this matter. He may have some statistics up his sleeve, as it were, that will show that things will be all right.

I wish to refer to one other matter. It is about time that certain sections of the community stated what the prices of their products are going to be in decimals. I refer to the newspaper companies in particular. Is it yet too late to have a halfpenny equivalent which would mitigate some of the difficulties in conversion? I do not think that enough consideration has been given to the fact that the adjustment in prices will tend to be upward rather than downward. This afternoon I referred to cigarette manufacturers. They do not give us any grounds for hoping that they will lean towards the customer rather than in their own direction when the change takes place. I do not know whether any measures can be taken to trap people who propose to make profits that could be avoided in the conversion. I leave the matter there. The Opposition offers no objection to these measures because they are of a technical kind to facilitate the changeover. I do feel, however, that the problems that have been mentioned are at least worthy of consideration.

Debate (on motion by Mr. Hansen) adjourned.

House adjourned at 11.1 p.m.

page 2798


The following answers to questions upon notice were circulated -

Control of Ports in Australia. (Question No. 1343.)

Mr Freeth:

– The answer to the honorable member’s question is as follows -

The controlling bodies of the principal ports in Australia are as follows -

New South Wales -

The Maritime Services Board of New South Wales is responsible for the administration of all ports in New South Wales.


Geelong - Geelong Harbour Trust.

Melbourne - Melbourne Harbour Trust.

Portland - Portland Harbour Trust.

Queensland -

The Department of Harbours and Marine controls the ports of Brisbane, Burketown, Cooktown, Maryborough, Mourilyan, Normanton, Port Douglas, Thursday Island and Weipa.

Bowen - Bowen Harbour Board.

Bundaberg - Bundaberg Harbour Board.

Cairns - Cairns Harbour Board.

Gladstone - Gladstone Harbour Board.

Mackay - Mackay Harbour Board.

Rockhampton (including Port Alma) - Rockhampton Harbour Board.

Townsville (including Lucinda Point) - Townsville Harbour Board.

South Australia -

Ardrossan - Broken Hill Proprietary Co. Ltd.

Rapid Bay - Broken Hill Proprietary Co. Ltd.

Whyalla- Broken Hill Proprietary Co. Ltd.

Wardang - Broken Hill Associated Smelters Pty. Ltd.

Ballast Head - Colonial Sugar Refining Co. Ltd.

Port Augusta (wharf) - Commonwealth Railways.

Curlew Point (South Port Augusta) - Electricity Trust of South Australia.

Port Stanvac - Petroleum Refineries (Australia) Pty. Ltd.

The remaining ports are controlled by the South Australian Harbours Board.

Western Australia-

The State Government Harbour and Light Department controls the ports of Busselton, Broome, Carnarvon, Derby, Esperance, Fremantle Fishing Boat Harbour, Geraldton, Onslow, Point Samson, Port Hedland and Wyndham.

Fremantle - Fremantle Port Authority.

Kwinana - Fremantle Port Authority.

Yampi- Broken Hill Proprietary Co. Ltd.

Albany - Albany Harbour Board.

Bunbury - Bunbury Harbour Board.

Tasmania -

Burnie - Marine . Board of Burnie.

Currie - Marine Board of King Island.

Devonport - Marine Board of Devonport.

Hobart - Marine Board of Hobart.

Launceston (including Bell Bay and other Tamar ports) - Marine Board of Launceston.

Smithton - Smithton Harbour Trust.

Stanley - Marine Board of Circular Head.

Strahan - Marine Board of Strahan.

Ulverstone - Marine Board of Devonport.

Whitemark - Marine Board of Flinders.

Northern Territory -

Darwin - Northern Territory Port Authority.

Taxation. (Question No. 1313.)

Mr Bryant:

t asked the Treasurer, upon notice -

  1. Why is the ginning of cotton not included for investment allowance in section 62aa (4.) of the Income Tax and Social Services Contribution Assessment Act?
  2. Will consideration be given to its inclusion by amendment during this session?
Mr Harold Holt:

– The answers to the honorable member’s questions are as follows -

  1. When the investment allowance for plant and equipment for use in manufacturing production was introduced, it was not intended that it should apply to all processes which necessarily precede (or follow) manufacture. Nevertheless, when making a statement on 14th February 1962, on the Government’s decision to introduce the allowance, I said: “ Representatives of industry will no doubt raise other matters of detail between now and the time the legislation is introduced. The Government will take full account of these . . “. Subsequently, the Government received representations from a number of industries, but there is no record of any representations having been received from cotton ginners.
  2. The question of extending the investment allowance to plant and equipment used in the ginning of cotton will be considered when the investment allowance provisions of the income tax law are next under review.

Australian Military Forces. (Question No.1404.)

Mr Reynolds:

s asked the Minister for the

Army, upon notice -

  1. What period elapsed, in respect of servicemen of the 105th Field Battery, between their last pay day before embarkation and their first pay day in Vietnam?
  2. What provision is made, in respect of Australian troops in Vietnam, for (a) their visitation by organised entertainment units and (b) supply of current Australian news and general reading matter?
  3. With what average frequency does ship mad arrive in Vietnam from Australia??
Dr Forbes:

– The answers to the honorable member’s questions are as follows -

  1. Normal pay arrangements obtained for the pay day on 2nd September. The next pay day would normally have been on 16th September. However, to avoid difficulties involved in paying aboard H.M.A.S. “ Sydney “, members were paid on 10th September 1965. 105th Field Battery arrived at Bien Hoa on 28th September, and were paid on the normal pay day, 30th September. 2. (a) There are no entertainment units as such in the Army. However, the Government recently decided to sponsor tours by individuals and small groups of civilian entertainers to provide entertainment for the troops overseas and my Department is currently examining ways and means of implementing this decision,

    1. Up-to-date Australian news is broadcast by Radio Australia at times to suit the troops in Vietnam. This includes a request programme, Army news items and world news. In addition, tapes of Australian news are made and played from the Army Forces Radio Station in Saigon. Weekend newspapers from all States, including sporting newspapers and news sheets, are provided free of charge by the publishers to troops in Vietnam on an approximate ratio of one copy to each six members. The Army Education library in Vietnam contains a fair coverage of reference material and fiction. A well Known publisher of paperbacks has also provided supplies of these for the troops.
  2. Despatches of normal surface mail from Australia are received in Vietnam approximately once weekly. However, it has been possible to make special arrangements for the handling of mail to and from Australian servicemen in Vietnam. Subject to the availability of space on aircraft, all second class mail for members of the Australian forces in Vietnam, i.e. mail which would normally be carried by surface transport, is received in, and despatched from, Saigon four times weekly.

Decimal Currency.

Mr Harold Holt:

t.- On 29th October, the honorable member for Wide Bay (Mr. Hansen) asked me a number of questions relating to the introduction of a system of decimal currency.

As the honorable member has implied, there were no steep rises in prices in South Africa at the time of the changeover to decimal currency. In fact, the general price index in South Africa rose only 11/2 per cent, per annum (approximately) in the two years following the changeover date, or the same annual rate as the increase over the previous two-year period. It seems very doubt ful indeed that the use of a half-cent coin in South Africa could have been entirely responsible for this comparative price stability. All the evidence available so far in Australia appears to be that, while some small price increases will be unavoidable at C day, these will be in nearly every case either balanced, or exceeded, by price decreases in other lines.

As to the questions relating to the possible future price of newspapers, the only announcement I have seen so far is that one newspaper now charging 5d. will be reducing its price to 4 cents (4.8d.) from C day onwards.

Australian Economy. (Question No. 1317.)

Mr Beaton:

n asked the Prime Minister, upon notice -

  1. Is he able to state whether there has been recently a startling fall in motor vehicle sales, with consequent dismissals in the industry, and also a steep fall in approvals in the building industry?
  2. If so, will the strong combined downturn in these two key industries inevitably have a serious effect upon the economy?
  3. Is it a fact that, as the result of credit restrictions imposed by the Government, applicants for home savings loans have to wait up to six months for loans?
  4. Is the inadequacy of these loans leaving larger and larger and, in many cases, impossible deposit gaps for home seekers to meet?
  5. Will the Government take action to free this credit and enlarge home loans in order to revive the building industry before it becomes too late?
  6. Will he make a statement to the House indicating the Government’s plans for the motor industry and outlining what level of production the Government envisages for it?
Sir Robert Menzies:

– The answers to the honorable member’s questions are as follows -

  1. Registrations of new motor vehicles in September totalled 31,555, compared with 39,879 in August (an all-time record) and an average of 34,766 in the first seven months of 1965. Some workers have been dismissed from motor vehicle factories. The total value of building approved in September was £83.4 million compared with £80.3 million in August and an average of £75.2 million in the first seven months of 1965. The number of dwellings approved in September was 10,571, compared with 10,004 in August and an average of 9,677 in the first seven months of 1965.
  2. At present, no general weakening of demand seems to be indicated.
  3. Applicants for housing loans from certain institutions offering particularly favorable terms and conditions may have to wait some months before obtaining funds. But no credit restrictions have been applied by Commonwealth Authorities to housing funds, nor is it the current intention of the Government to apply such restrictions.
  4. No. In recent years there has been a substantial increase in the maximum individual housing loan granted by a number of lending institutions. The fact that those institutions are in general meeting the needs of borrowers is evidenced by the record level of house construction in recent years.
  5. I refer the honorable member to the statement by the Minister for Housing (Mr. Bury) on the Estimates for his Department reported in the “Hansard” of 26th October. From this he will see that the Minister is of opinion that the building industry as a whole is at present very active and in no need of stimulus. However, the Government will continue to keep a close watch on the level of activity in the housing sector.
  6. A statement will be made when the Government has considered the report of the Tariff Board on the motor vehicle industry.

New Guinea: Provision of Teachers. (Question No. 1420.)

Mr Whitlam:

m asked the Minister for Territories, upon notice -

  1. Did the Trusteeship Council this year reiterate the recommendation it made in 1962 and 1964 that Australia should invite assistance from the United Nations Educational, Scientific and Cultural Organisation in providing more teachers in New Guinea?
  2. Does the Government intend to heed the recommendation on this occasion?
Mr Barnes:
Minister for Territories · MCPHERSON, QUEENSLAND · CP

– The answers to the honorable member’s questions are as follows -

  1. Yes.
  2. The Government has always taken careful note of the recommendations of the Trusteeship Council as it will do in respect of the particular recommendation referred to in the honorable member’s question.

Aborigines : Commonwealth Employees. (Question No. 1168.)

Mr Whitlam:

m asked the Prime Minister, upon notice -

  1. How many Aborigines are employed by the Commonwealth?
  2. How many are paid full award wages?
  3. How soon will the Government pay full award wages to all Aboriginal employees in view of its submission to the Conciliation and Arbitration Commission on the hearing of the application to vary the Cattle Station Industry (Northern Territory) Award?
Sir Robert Menzies:

– The answers to the honorable member’s questions are as follows - 1 and 2. When engaging employees under the normal entry standards for the Commonwealth Public Service the Commonwealth is concerned only with qualifications and makes no distinction between Aborigines’ and other applicants. There are no statistics readily available which would show the total employment of Aborigines or part Aborigines by the Commonwealth. The total is estimated as being in excess of three hundred. The main area of employment for Aborigines is the Northern Territory and the majority of those employed there come under the terms of the Northern Territory Wards’ Employment Ordinance.

  1. It has already been announced that the Commonwealth Government’s general policy of nondiscrimination applies to the employment of Aborigines by the Northern Territory Administration and by Commonwealth Departments. This was made clear during hearings, before the Commonwealth Conciliation and Arbitration Commission, of the case concerning employment of Aborigines in the cattle industry in the Northern Territory. The Government is at present awaiting the decision of the Commonwealth Conciliation and Arbitration Commission in respect of this case.

Public Service: Married Women. (Question No. 1292.)

Mr Whitlam:

m asked the Prime Minister, upon notice -

In how many instances in each of the Inst five years have female public servants been released from bonds on the ground that they had married and were therefore deemed to have retired from the Commonwealth Service?

Sir Robert Menzies:

– The answer to the honorable member’s question is as follows -

The numbers of female public servants who have been released from bonds on ‘.he grounds that they married and were therefore deemed to have retired from the Commonwealth Service in each of the past five years have been -

The Third Division officers consisted of cadets and a post-graduate scholar. The Fourth Division officers were typists, accounting machinists and data processing operators.

Public Service. (Question No. 1337.)

Mr E James Harrison:

on asked the Prime Minister upon notice -

  1. How many appeals were dealt with by the Promotions Appeal Committees of the Commonwealth Public Service during the years 1962-63, 1963-64 and 1964-63?
  2. How many of these appeals were (a) successful and (b) unsuccessful?
Sir Robert Menzies:

– The answer to the honorable member’s question is as follows -

The information requested by the honorable member is available in the annual reports of the Public Service Board for the years 1962-63, 1963-64 and 1964-65. Appeals statistics are compiled on a calendar year basis. Appeals may be lodged against provisional promotions and temporary transfers. Information in relation to these two classes of appeals is shown in separate tables. The number of appeals, especially those against provisional promotions, include “ protective “ appeals lodged by officers who were themselves provisionally promoted but who appealed against other promotees as a safeguard against the possibility of their own promotion being disturbed by appeal.

Wool Research. (Question No. 1393.)

Mr Whitlam:

m asked the Prime Minister, upon notice -

How far have the changes in Commonwealth Scientific and Industrial Research Organisation wool research policy, which he described in his answer to me on 12th October 1965 (“Hansard”, page 1727), resulted in a modification of the ban on research into blends, which were discussed in the report of the Wool Marketing Committee of Enquiry in February 1962?

Sir Robert Menzies:

– The answer to the honorable member’s question is as follows -

There is no ban on research by C.S.I.R.O. into blends. The research programme agreed between C.S.I.R.O. and the Australian Wool Board is directed towards achieving maximum benefit to wool. Included in this programme are some inquiries on properties of blends.

Commonwealth Scholarships. (Question No. 1414.)

Mr Duthie:

e asked the Prime Minister, upon notice -

  1. Is it a fact that no provision exists which will permit students who miss the Commonwealth secondary scholarship examination because of sickness to be considered for these scholarships?
  2. If so, could this situation have disheartening and frustrating consequences?
  3. Could this examination be conducted at a more suitable time than in July when the weather conditions in Tasmania are severe and cause sickness and absenteeism?
  4. Could provision be made to enable candidates who are prevented by sickness from sitting at examinations to undertake the test at a later date?
Sir Robert Menzies:

– The answer to the honorable member’s questions is as follows -

It is normal practice in the conduct of public examinations to require all candidates to take the examination at the same time. For the award of Commonwealth secondary scholarships the Australian Government required selection to be made on the results of an external examination, externally marked and common to all competitors. The form of the examination was left to the State concerned. Tasmania and three other States chose to use a special examination prepared by the Australian Council for Educational Research. It was necessary, therefore, to hold this examination on a common date in each of the four States. The date in July appeared to be suitable to all number of the States concerned who were consulted beforehand and who all agreed to that date.

If a similar selection test is used next year, the question of the most suitable time for the examination will again be discussed with the States concerned. It will be a matter for negotiation to arrive at a suitable time convenient to all.

It would not be practicable to hold a second set of examinations at some time after the first for those who were prevented from taking the first set. Apart from the cost of preparing a second test, there would still remain the difficulty of comparing results under one test with results under another.

Nevertheless, my colleague, the Minister in Charge of Commonwealth Activities in Education and Research, has been concerned at the position of worthy candidates who were prevented from taking the selection examination by some unforeseen and readily verifiable circumstance, such as an emergency operation or an accident. He is considering whether a very small proportion of the available scholarships might be kept for students in this difficulty. Whether something can be done has in fact, not yet been decided.

Cite as: Australia, House of Representatives, Debates, 16 November 1965, viewed 22 October 2017, <>.