House of Representatives
28 April 1971

27th Parliament · 2nd Session

  1. House of Representatives
  2. 27th Parliament
  3. 1971

Mr SPEAKER (Hon. Sir William Aston) took the chair at 2.30 p.m., andread prayers.

page 2123

PETITIONS

Education

Dr CASS:
MARIBYRNONG, VICTORIA

– 1 present the following petition:

To the Honourable The Speaker and Members of the House of Representatives in Parliament Assembled. The humble Petition of Residents of the Division of the Australian Capital Territory respectfully showeth:

That there is a likelihood that education in the Australian Capital Territory will in the foreseeable future be made independent of the New South Wales education system:

That the decentralisation of education systems throughout Australia is educationally and administratively desirable and is now being studied by several State Government Departments:

That the Australian Capital Territory is a homogeneous and coherent unit especially favourable for such studies.

Your Petitioners therefore humbly pray that a Committee of Enquiry, on which are represented the Department of Education and Science, institutions of tertiary education, practising educators, and the Canberra community, be instituted to enquire into the form that an Australian Capital Territory Education Authority should take, the educational principles and philosophy that should underlie it, and its mode of operation and administration.

And your Petitioners, as in duty bound, will ever pray.

Petition received and read.

Censorship

Mr GRAHAM:
NORTH SYDNEY, NEW SOUTH WALES

– I present the following petition:

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The Humble Petition of the undersigned citizens of North Sydney respectfully showeth:

That they are not gravely concerned that moral standards in the Australian community may be changing, particularly in regard to the community’s willingness to treat adults within it as reasonable and responsible people who are capable of making up their own minds as to what may be perfectly acceptable or unacceptable material in books, magazines, plays, films and television and radio programmes, and particularly when this material depicts life in human society, including language habits and sex habits and gives warning of the dangers of the use of violence and narcotic drugs;

That they in fact welcome this change, having regard for the fact that it demon strates an increasing tolerance of and re- spect for the rights of individuals to think their own way through their own lives, free from information-withholding restrictions which people of one religion or one standard of morals may seek to impose on either the majority or minority who do not hold the same views;

That they question the simplistic view that nations ‘perish’ because of a so-called ‘internal moral decay’ unless such ‘decay’ is taken to include an increasing unwillingness to face the facts of life in open discussion and freedom of thought;

That they welcome the statement by the Honourable the Minister for Customs and Excise, Mr Chipp, that the concept of censorship is abhorrent to all men and women who believe in the basic freedoms and that, as a philosophy, it is evil and ought to be condemned-

Your petitioners therefore humbly pray that Honourable Members of the House of Representatives in Parliament assembled will seek to ensure that Commonwealth legislation bearing on films, literature and radio and television programmes is so framed and so administered as to give the maximum freedom to adults to choose what they will watch, read and listen to, even in the fact of pressure from those who seek to impose their ideas and morals on others who do not share them.

And your petitioners, as in duty bound, will ever pray.

Petition received.

Kangaroos

Mr IRWIN:
MITCHELL, NEW SOUTH WALES

– I present the following petition:

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of residents of the State of Victoria respectfully showeth:

That because of uncontrolled shooting for commercial purposes, the population of kangaroos, particularly the big red species, is now so low that they may become extinct.

There are insufficient wardensin any State of the Commonwealth to detect or apprehend those who break the inadequate laws which exist.

As a tourist attraction, the kangaroo is a permanent source of revenue to this country.

It is an indisputable fact that no species can withstand hunting on such a scale, when there is no provision being made for its future.

We, your petitioners, therefore humbly pray that:

The export of kangaroo products be banned immediately, and the Commonwealth Government take the necessary steps to have all wildlifein Australia brought under its control.

Only a complete cessation of killing for commercial purposes can save surviving kangaroos. And your petitioners, therefore, asin duty bound will ever pray.

Petition received.

page 2124

QUESTION

EDUCATION

Mr KENNEDY:
BENDIGO, VICTORIA

– I ask the Minister for Education and Science a question arising from his revelation of the appallingly high drop out rate in State and Catholic secondary schools. He will recall figures last week which showed that of all secondary students who commenced secondary education 5 or 6 years ago only 24.9 per cent of all State secondary students throughout Australia last year enrolled for their final year while the figure for Catholic schools was 31.8 per cent and for other private schools 79.1 per cent. Does the Minister know how far this discrepancy is produced by financial obstacles which prevent State and Catholic school students from completing their education? Is the Government concerned to know what other reasons account for this drop out rate? Does it believe that there is a loss to Australian society, and has it any plans to remedy this situation? : Mr FAIRBAIRN - It is true that the number of people who commence secondary education in either government or Catholic schools and do not reach the matriculation standard appears to be extremely high. Nevertheless there are many reasons for this, one being that the numbers do not include persons who engage in diploma courses, technical training or other forms of training to fit them for jobs that they intend taking. I think it is only natural that the independent schools should have a higher percentage of students who commence secondary training and continue until they matriculate because very often those students come from parents who are anxious to see that the students complete their training and who can afford to let them do so. Frequently these students go on to higher training at university.

There has been a considerable improvement in the situation in recent years. In fact I am informed that over the last 6 years the number of students in government secondary schools completing matriculation has increased by 64 per cent; those in Catholic schools by 32 per cent; and those in independent schools by 27 per cent. Naturally the Government is extremely interested in every avenue by which it can help to improve the standard of education. The honourable member will know that the Commonwealth Government is interested in many fields of education. It is increasing the number of teachers who are being trained through its scheme of unmatched grants. Eventually these grants will make available something like 14,000 places for additional teachers throughout Australia. This is of considerable assistance. In addition the Commonwealth has instituted programmes for science laboratories and for libraries. The Commonwealth has seen that additional funds are available to the States because, after all, basically it is the States which are responsible constitutionally for education.

page 2124

QUESTION

QANTAS AIRWAYS LTD

Mr GRAHAM:

– Having regard to the Prime Minister’s personal concern and interest in the settlement of the Qantas Airways air crew industrial dispute, is it possible for the right honourable gentleman to advise the House of the present position in this dispute and the results of his negotiations and mediations?

Mr MCMAHON:
Prime Minister · LOWE, NEW SOUTH WALES · LP

– It is true, as the honourable member has said, that on Sunday I had discussions with the Minister for Civil Aviation, Senator Cotton, and also the Director-General of Civil Aviation. We had to consider 6 different problems including problems associated with superannuation, the introduction of the jumbo jets and general problems relating to Qantas. I say immediately that on the reviewed estimates that were made within Qantas there was the prospect of a substantial surplus in its next year’s accounts being converted into a very substantial deficit, so it became obvious that action had to be taken to bring expenditures into line with receipts. Matters that were discussed with me on Sunday were the subject of discussions with representatives of the pilots.

First, it was agreed that Qantas itself had to be treated as a commercial and viable operation. In other words it was not to be considered as though it were a welfare service. It had to be able to compete in international company. Second, the problem of superannuation arose because with the introduction of jumbo jets and with very substantial increases in salaries the amount involved in maintaining the present formulas would have been excessive. It has been decided that Qantas will appoint actuaries and other people who will be able to draw up a viable scheme and one that will subsequently be presented to the pilots. Incidentally, the pilots will be making their own examination and we hope, therefore, to be able to get some reconciliation. The third point is in regard to the surplus of pilots and other members of air crews. The Department is looking into the problem of surplus pilots and is1 trying to find out whether it will be able to place surplus pilots in the civil aviation industry. As far as other elements of flight crews are concerned, the Minister for Civil Aviation and the Director-General of Civil Aviation hope to be able to have discussions upon these in the not too distant future.

The fourth point 1 wish to raise is in regard to industrial disputes. It has been agreed already by the pilots that they will adhere to the formula that has been adopted and that Mr Coldham, a Queen’s Counsel, will participate in the discussions. They hope that by these means they will be able to reduce the area .of ‘dispute on the industrial front and be able to reach solutions by way. of negotiation. There is also the problem of strikes. I must say that I have taken a strong view on this because it is strikes and the resultant standdowns that are destroying the reputation of this very great corporation. Negotiations will proceed in an endeavour to find out whether we can obtain a mechanism or a system by which we. will be able to prevent strikes stopping Qantas . aircraft from flying and to overcome the difficulty of aircraft not being able to keep up with Qantas schedules. Lastly, the representative of the pilots gave, an assurance to us that, so far as the flying of 747s was concerned, they would agree to ‘bid’ for training on 747 aircraft and that training of pilots for those aircraft would proceed so that Qantas 747s would be flying according to Qantas schedules. I say no more on this because I think that the negotiations have reached a delicate stage, and while I believe that what I have said already to the House ought to have been said I feel it would be imprudent to proceed any further at the moment.

page 2125

QUESTION

ABORIGINAL LAND RIGHTS

Mr WHITLAM:
WERRIWA, NEW SOUTH WALES

– I ask the AttorneyGeneral a question concerning the case in which the Yirrkala Aboriginals sued

Nabalco to establish their traditional land rights at Gove and in which the Commonwealth helped with their costs. I ask whether the Commonwealth will meet the costs of any appeal they make to the High Court of Australia and whether, on such an appeal, the Commonwealth will contend as strenuously as it did before the Supreme Court of the Northern Territory to uphold the unsatisfactory common law and ordinances which have frustrated the Aboriginals’ land claims?

Mr N H Bowen:
PARRAMATTA, NEW SOUTH WALES · LP

– It is true that judgment has been delivered against the plaintiff Aboriginals in the Gove case. It is true also that the Commonwealth Government up to the present has been paying the legal costs of the plaintiff Aboriginals, including counsel’s fees, solicitors’ costs and witnesses’ expenses. We believe it was the proper thing to do as it was an issue of considerable national importance affecting not only the Aboriginals in the Territory but possibly in other areas around Australia as well, and of course, the Australian people. Relating to advancing arguments on behalf of the Commonwealth, I point out that the plaintiffs had a leading Queen’s Counsel representing them. I do not know what the honourable gentleman means by ‘strenuous argument’. I do not appreciate adjectives applied to legal argument. I think the Commonwealth was perfectly in order in briefing at least senior counsel, to represent it and the people of Australia in putting the legal matters properly before the judge. This is what was done.

The judge has given his judgment. I have a copy of it and I have to consider it. It is 262 pages in length. No doubt the counsel and advisers for the Aboriginal plaintiffs also will be considering the judgment and whether they would wish to appeal to the High Court from it, as the Leader of the Opposition has suggested. I think that until some indication is given that they would wish to lodge an appeal, it would be premature for the Government to announce any decision on the question of costs. I simply refer to the whole attitude of the Government in the past in relation to that issue.

page 2125

QUESTION

TAXATION

Mr DRURY:
RYAN, QUEENSLAND

– I ask the Treasurer whether the Government has considered making an overall review of our whole taxation structure for the purpose of simplifying present taxation law, removing anomalies, improving methods of assessment and streamlining administration, particularly as many years have elapsed since the last complete review took place.

Mr SNEDDEN:
Treasurer · BRUCE, VICTORIA · LP

– The Government has asked the Commissioner of Taxation and his officers to undertake an examination of the taxation Act and its structure, and the honourable gentleman will remember that in the last Budget one of the products of that examination was the relief granted to the middle and lower income tax groups. My recollection is that at the time of the Budget Speech last year my predecessor said that the examination would continue. In fact, it is continuing. It can take account of all the matters which the honourable gentleman mentioned in his question. I will bring to the attention of the Commissioner of Taxation the honourable member’s question concerning the machinery and administrative facility although I know that the Commissioner has been very concerned about achieving just that very result.

page 2126

QUESTION

OVERSEAS INVESTMENT IN AUSTRALIA

Mr GRASSBY:
RIVERINA, NEW SOUTH WALES

– Is the Treasurer aware that 30 per cent of all Australia’s company income is currently going overseas to service Australia’s foreign debts? Is he further aware that it has. been estimated that by 1974 the outflow of money to service foreign investment in Australia will exceed the inflow by foreign investors? If he is aware of these developments, is he concerned? If he is concerned, will he tell the House what steps he has in view to rectify a situation in which we as a country are putting ourselves in pawn for the rest of the century?

Mr SNEDDEN:
LP

– I did not expect to hear a little Australian attitude coming from the honourable gentleman. I do not accept as fact the figures upon which he relies. I do not know where the prognostication which he quotes comes from. I will have my officers search all the published documents to see whether I can identify who has said this. Perhaps the honourable gentleman will help me by saying who said it so that the matter can be argued sensibly, not on the basis on which he puts it.

It is necessary to make this point very clearly and, I hope, adequately: Australia presents to the world enormous opportunities for development It presents to Australians the promise of increased living standards, as we develop our country. Our country has been able to mobilise an immense amount of capital for development in Australia, but at this stage it is not able to mobilise the totality of the capital needed. It is the attitude of the Government mat we welcome the inflow of capital into Australia so that our country can be developed. We have benefited very greatly by the attraction that Australia represents to overseas countries wishing to find in Australia a partnership in development.

page 2126

QUESTION

BROILER GROWERS

Mr LUCOCK:
LYNE, NEW SOUTH WALES

– My question is directed to the Treasurer. I refer to the answer provided by the Treasurer to a question on notice asked by the honourable member for Riverina. In the concluding .stages of that answer, the Treasurer states that the case in question which relates to primary industry taxation concessions to broiler growers has been referred to a board of review. As I understand that the decision of that board of review has been given and the appeal has been lost, I now ask the Treasurer: Will he have discussions with the Minister for Primary Industry with a view to amending the present legislation to allow those engaged in this important and viable primary industry to maintain this recognition?

Mr SNEDDEN:
LP

– My colleagues, the Deputy Prime Minister and the Minister for Primary Industry, have written to me already about this matter. I replied to them in terms that were contained in the answer to the question on notice which appears in Hansard dated 27th April 1971. I was not aware that the board of review had reached a decision. As the honourable gentleman has informed me of that fact, I will ask that an examination be made of the matter and I will have discussions with my colleagues.

page 2126

QUESTION

BOMBING OF EMBASSY

Mr JAMES:
HUNTER, NEW SOUTH WALES

– I ask the AttorneyGeneral: Under the provisions of the Public Order (Protection of Persons and Property) Bill which was passed by this House last week, would it be possible for a sentence heavier than the term of 18 months hard labour passed on the 2 persons convicted of bombing one of the foreign posts in Canberra - and one of the most attacked foreign posts in Australia - to have been imposed? Can the Minister say what was the maximum penalty provided for the offence of which these 2 persons were charged?

Mr N H Bowen:
PARRAMATTA, NEW SOUTH WALES · LP

– The Public Order (Protection of Persons and Property) Bill has not yet become law, although it has been passed by this House. If it were law, the 2 most serious offences prescribed - the offence mentioned by the honourable member would fall into one of those classes - are grievous bodily damage to individuals or damage of a serious character to property. The maximum penalty for the latter under which a bombing of an embassy would fall would be 3 years imprisonment. I regret to say that I am not able to inform the honourable gentleman what the maximum penalty is under the general law under which the 2 defendants were prosecuted.

Mr James:

– It is 14 years, I think.

Mr N H Bowen:
PARRAMATTA, NEW SOUTH WALES · LP

– It could possibly be a very substantial sentence such as the honourable member mentions. I think I should comment that by and large the Public Order (Protection of Persons and Property) Bill not only modernises and simplifies an old law but also mitigates broadly the sentences with which it deals some of which, under the old laws, provided for life imprisonment. The ordinary law of the land still can be invoked so that the appropriate, penalties that exist under the ordinary law in respect of charges for arson or damage, such as the honourable member referred to, and under the provisions of Public Order (Protection of Persons and Property) Bill still will exist together.

page 2127

QUESTION

CLOTHING INDUSTRY

Mr IRWIN:

– My question is directed to the Minister for Trade and Industry. This garment, which I now show to the House, can be purchased in Australia for 49c after it has attracted a 50 per cent retail markup and a duty of 32 per cent-

Mr Cohen:

– Put it on.

Mr IRWIN:

– No. It has a bunny on it, something like you.

Mr SPEAKER:

-Order! The honourable gentleman cannot be heard because of the interjections.

Mr IRWIN:

– This garment can be sold at 49c after attracting a 50 per cent retail mark-up and a duty of 32 per cent has been paid on it. It would cost Australian manufacturers $1.12 to make this garment and, allowing for a 17 per cent mark-up, it would sell at $1.30. As the clothing industry is now passing through a difficult period, does the Minister agree that a bleak future awaits it? This industry employs many women. Is there any way in which the industry can be protected?

Mr ANTHONY:
Deputy Prime Minister · RICHMOND, NEW SOUTH WALES · CP

– If an industry is being grievously harmed by imports of certain articles it has a right to come along to my Department and put forward a case for emergency protection. The Government examines the evidence. If the industry has a bona fide case then it is referred to the Special Advisory Authority which can give temporary protection. Once having been given temporary protection, of course, the industry is then referred to the Tariff Board for a full and complete investigation and recommendations are made to the Government. I would suggest that if this industry is going through the predicament which the honourable member suggests it might consider going through the normal procedures.

page 2127

QUESTION

IMMIGRATION

Mr McIVOR:
GELLIBRAND, VICTORIA

– Will the Prime Minister answer this parochial question from an undistinguished back bencher with 50 years honorary service in the Australian Labor Party: Is it the intention of the Government to relax the immigration laws of this country to allow Japanese workers to be employed in the motor car industry in Australia? Would not action of this kind be the forerunner of demands for entry of Japanese workers into ether industry in which Japanese capital is involved? Further, if this intrusion is to be allowed has consideration been given to the effect that it will have on the prospects of rural workers, already displaced and about to be displaced due to the rural crisis, obtaining employment in industry and commerce in this country?

Mr MCMAHON:
LP

– The Government’s policy, that is, the policy of the Liberal and Country Parties, on immigration has not been changed in substance since March 1966 when the then Minister for Immigration announced what our policy was - not static, because we are constantly looking at the problem of migration to see whether there should be any liberalisation. But there has been no liberalisation since March 1966. Now, the 3 bases on which we adjudge whether migrants of non-European descent should be permitted to come in are, first of all, that they should be assimilable because we want one Australian community and we do not want little enclaves that can cause us the kind of trouble that has been caused in other parts of the world; secondly, we want them to have the kind of qualification that is necessary to permit them to fit readily into the work structure of this country; and finally, we want to be sure that they will make a contribution to our development as well.

As to the first part of the honourable member’s question relating to Japanese, 1 can assure him that, there has. been no change in our policy relating to the migration of Japanese workers. If there is an occasion when special skills are required or if there are occasions when we feel that due to the demand that is made upon the work force when we have over full employment then special consideration will be given to nonEuropeans being introduced into Australia. But when this happens we usually consult the Australian Council of Trade Unions or, as I recollect was the case in Western Australia, the local Trades and Labour Council. These are our policies and we have no intention at the moment of changing them.

As to the introduction by the honourable gentleman, far from his being regarded as an undistinguished back bencher we on this side of the House regard him as a distinguished member of the Opposition. We listen to his point of view more, I can assure him, than perhaps we listen to others, including those on the front bench.

page 2128

QUESTION

EDUCATION ALLOWANCES

Dr SOLOMON:
DENISON, TASMANIA

– I ask the Minister for Education and Science whether he is aware that despite means-tested Commonwealth scholarships, students from rural areas attending universities are at a financial dis advantage compared with their urban counterparts. Is the Minister aware that the proportion so affected is probably higher in Tasmania than elsewhere? Will he examine the possibility of either eliminating or reducing the relative disadvantage involved?

Mr FAIRBAIRN:
Minister for Education and Science · FARRER, NEW SOUTH WALES · LP

– The Commonwealth Government is aware of the extreme problems facing people from rural areas who have to go away from home in order to complete their tertiary education. Because of this the Government has assisted them. The scholarships, of course, are awarded on merit but once a person obtains a scholarship he gets a living allowance. The allowance for a student living at home is $700 per annum whereas the living away from home allowance has recently been increased to $1,100 per annum. Although a means test applies in both cases, the living away from home allowance cuts out on an adjusted income of the parents of $7,360 whereas the allowance to a person living at home cuts out on an adjusted income of the parents of $6,026. I will check those figures but I think they are correct. Thus there is an advantage both in the means test and in the actual amount a scholar gets when he is living away from home. Nevertheless I certainly take to heart what the honourable member has said and I will get my Department to look into this matter. The Commonwealth is constantly reviewing its policies in this field and I will have a further look at this matter for him.

page 2128

QUESTION

WOOL

Dr GUN:
KINGSTON, SOUTH AUSTRALIA

– My question is directed to the Minister for Primary Industry and refers to the Bill introduced yesterday to provide a loan of $33.5m to the Australian Wool Commission. How much has the Government already lent to the Australian Wool Commission to cover its operations? What is the full loan estimate for 1970-71? What are the terms of the loan? ls the Minister concerned that the Australian Wool Commission will have difficulty servicing the loan due to the fact that it has sold little wool from, its stockpile and is not, therefore, accumulating any revenue?

Mr SINCLAIR:
Minister for Primary Industry · NEW ENGLAND, NEW SOUTH WALES · CP

– The honourable gentleman might be delighted to know - then, again, he might not be - that there has been a very marked improvement in wool markets around Australia. If he cares to look at this morning’s newspapers he will see that the general percentage of the wool clip being acquired by the Australian Wool Commission has declined, as was instanced in several sales this week, to as low as 5 per cent. In terms of the amount of money that has been borrowed by the Australian Wool Commission, the Bill introduced by my colleague yesterday provided for additional borrowings to encompass what was then seen to be the possible requirement of the Commission in relation to the prevailing buy-in figure in many sales of up to 25 per cent of the wool offered. In addition, prior to that, legislation was introduced in this House which allowed for $ 11.5m or $12rr to be advanced to the Australian Wool Commission. All other funds used by the Commission have been borrowed from the private trading banks and those funds have been used in the normal operations of the Commission. Also an amount of money was advanced by the Government for the price averaging plan system which was the subject of legislation introduced in this House in the middle of last year. That legislation was designed to facilitate the operation of the price averaging plan. Since the Australian Wool Commission was constituted the amount of money advanced for price averaging plan purposes has also been used by the Commission but for the purposes originally envisaged. I can give the honourable gentleman in writing the details of the amounts about which he has asked and perhaps that might be the more satisfactory course.

page 2129

QUESTION

TASMANIAN SHIPPING SERVICES

Mr WHITTORN:
BALACLAVA, VICTORIA

– I ask the Minister for Shipping and Transport whether stewards are necessary on Australian National Line ships. Why are these striking stewards able to hold Tasmania to ransom and cause unemployment there and hardship to Tasmanian families? How many weeks each year do stewards have off or, more particularly, how many weeks do they work each year?

Mr NIXON:
Minister for Shipping and Transport · GIPPSLAND, VICTORIA · CP

– To take the last part of the honourable gentleman’s question first, the stewards work under an award which was last considered by the Commonwealth Conciliation and Arbitration Commission in December last year. At that time they were granted a wage rate which, now including the 6 per cent increase, is $7,685 for chief stewards and $6,095 for assistant stewards.

Mr McLeay:

– How many weeks leave?

Mr NIXON:

– They work a 32-week year with 20 weeks annual leave.

Mr Cope:

– Like the Senate.

Mr NIXON:

– The only difference between the stewards and the senators is that the senators have to answer to the people of Australia for their actions and for the time they work. It seems to me that the stewards do not have to answer to anybody. I do not want to be provocative at this stage. Honourable members will know that the stewards are considering their position in talks with Mr Justice Franki. Let me reassure the House that this is a matter of some particular difficulty to many industries, not only in Tasmania but now reaching right down the Australian seaboard. Many great industries are in the position of having to consider standing down their employees. It is an incredible situation in which a small number of stewards - about 800, I think - are threatening a great deal of Australia’s industry. All I can hope is that common sense will be brought to bear on the problem.

page 2129

QUESTION

AUSTRALIAN ARMY: BASE IN WESTERN AUSTRALIA

Mr BERINSON:
PERTH, WESTERN AUSTRALIA

– I ask the Minister for the Army: What stage has been reached in the joint Army-Defence examination announced last year of the feasibility of establishing an Army base in Western Australia? Has the Minister’s attention been drawn to speculation in recent months that the project has been abandoned or deferred indefinitely? What is the present factual position of this matter?

Mr PEACOCK:
Minister for the Army · KOOYONG, VICTORIA · LP

– This matter was the subject of a joint departmental discussion between the Department of Defence and the Department of the Army. A report was completed last year and has been under discussion, together with the very detailed costing which has been required by officers of both Departments. This has not yet been concluded. It is one of a number of matters which I will be taking up for discussion when the Minister for Defence returns from overseas. There is nothing else I can add at this juncture.

page 2129

QUESTION

PESTICIDES

Mr JACOBI:
HAWKER, SOUTH AUSTRALIA

– Has the attention of the Minister representing the Minister for Health been drawn to the banning by the

Japanese Government of DDT and pesticides containing cancer-causing kinds of hydrocarbons, on the ground that they have effects of long lasting contamination of vegetables and dairy milk and are gravely injurious to human health? Has the Minister been informed that the ban on DDT as a farm pesticide is to be reinforced by a $7,500 fine for its use in agriculture after 1st May 1971? Is any legislation contemplated by the Government to ban these health hazards along similar lines to the Japanese Government’s action in view of the conclusive results of Japanese research?

Dr FORBES:
Minister for Immigration · BARKER, SOUTH AUSTRALIA · LP

– I am not aware of the latest position of this matter. I will refer the question to my colleague, the Minister for Health, and ask him to let the honourable member have a detailed reply. 1 could perhaps make these points: The first is that we have committees of the National Health and Medical Research Council, which is an expert body set up to advise both the Commonwealth and the States on these matters. The question of the toxicity of pesticides is kept under constant review by one of the committees. I know that very regularly it has under review the question of DDT, but I know also that it has not been prepared up to now to take the same view about DDT as some similar bodies have taken overseas. With due respect to the honourable gentleman, I think we have enough expertise in this country to make our own judgments about matters of this sort without being unduly swayed by what happens in other countries. By all means we should be aware of what happens in other countries, and these committees of the National Health and Medical Research Council are aware of and are in constant touch with equivalent bodies overseas. But I think that finally the decision should be made in Australia by our own people. I need hardly add that any final decision to do something about this by legislation would be a matter for the State governments and not the Commonwealth Government.

page 2130

QUESTION

MAKINE STEWARDS’ STRIKE

Dr SOLOMON:

– My question to the Minister for Labour and National Service is supplementary to that asked earlier by the honourable member for Balaclava. Is the Minister aware that in addition to the enormous and regrettable cost of the ship stewards’ strike and its disruption of the Tasmanian economy it is estimated to have cost the ship owners $14m so far? Does he find this situation and its origins compatible with the consistent complaint of honourable members opposite that our industrial firms make excessive profits and that the Government spends too little on various community services such as education?

Mr LYNCH:
Minister for Labour and National Service · FLINDERS, VICTORIA · LP

– Certainly my colleague, the Minister for Shipping and Transport and myself, and indeed the whole of this Government, are well aware of the tremendous cost of the present marine stewards strike, not only to Tasmania, as the honourable gentleman suggests, but also to ship owners. The honourable member suggested that it has cost the ship owners about $14m, and according to my understanding that figure would be correct. Of course, as the Minister for Shipping and Transport has also emphasised today, the House must reflect on the tremendous economic havoc which this unnecessary and irresponsible strike has caused to the Australian community. As the honourable gentleman suggested in his question, what has happened is inconsistent with claims made by the Opposition. Indeed, members of the Opposition should reflect upon the great difficulties with which so many entrepreneurs and industrialists in Australia are faced at the present time because of the great degree of industrial disputation.

If I recall the facts correctly, I might generally summarise the matter which the honourable gentleman has brought before the House by stating that last year there were approximately 2,700 strikes involving the loss of 2.4 million man days and involving also a loss of $30m to Australian wage earners. I believe that this will be seen not only as a comment on the strike to which the honourable gentleman refers but also as a general observation on the degree of growing disputation on the industrial scene. I comment no further on the particular matter because it is the subject of proceedings currently before the court. As I mentioned yesterday, there will be a meeting of the marine stewards tomorrow.

page 2130

QUESTION

QANTAS AIRWAYS LTD

Mr WHITLAM:

– I ask the Treasurer: How much has Qantas Airways Ltd lost this financial year and how much is it expected to lose in a complete fianancial year as a consequence of the Act passed 6 months ago to cancel its exemption from sales tax? I ask the honourable gentleman this question because when the Bill was before the Senate last October the Deputy Leader of my Party there, Senator Willesee, asked the Minister in charge whether the cost to Qantas that year would be $900,000 and the Minister said that he would need the help of the Treasury on this involved calculation. I ask: Has the Government considered restoring the sales tax exemption to Qantas to help its international position and to obviate its atrocious retrenchments?

Mr SNEDDEN:
LP

– I do not know the figures. I do not carry them in my mind. I will inquire about them and let the honourable member know.

Mr McMahon:

– He is again wrong. Qantas is making a profit this year.

Mr Whitlam:

– I am quoting from Hansard.

Mr McMahon:

– You are quoting it wrongly.

Mr Whitlam:

– I have it here.

Mr SPEAKER:

-Order! T have called the Deputy Leader of the Opposition to ask a question. I think he is entitled to be heard.

page 2131

QUESTION

TASMAN1AN SHIPPING SERVICES

Mr BARNARD:
BASS, TASMANIA

– I ask the Minister for Labour and National Service a question supplementary to those asked by the honourable member for Denison and others in connection with the serious situation in shipping services to Tasmania. Does the Minister appreciate that Tasmania is completely dependent upon shipping for transport and for the flow of goods between that State and the mainland? Will the Minister seriously consider making at some future date - an early . date, I would hope - a statement in the House that would indicate what the Government proposes to do in order to prevent a recurrence of this problem in Tasmania and that an opportunity will be afforded to honourable members to debate this matter?

Mr LYNCH:
LP

– Of course I am well aware that Tasmania is completely dependent upon shipping for the economic life of that important State of Australia. How ever, it will be clear to the honourable member that the unions apparently do not share that conviction. One ought to dwell on that as a first point. Secondly the honourable member asked me whether I will consider making a statement to provide the House with information on whether or not it is possible to prevent a recurrence of this situation in Tasmania. As the honourable gentleman will recall, the Prime Minister indicated during the last 24 to 48 hours that he and other Ministers - myself, the Minister for Shipping and Transport and my colleague in another place, Senator Wright - will be meeting a deputation from Tasmania. As I recall, this meeting will be held next Monday morning. Certainly this opportunity will be taken for a very full and wide-ranging discussion on any avenues available to the Commonwealth to seek to prevent a recurrence of this situation. What follows from that point will be a matter for my consideration.

page 2131

PERSONAL EXPLANATION

Mr WHITLAM (Werriwa - Leader ot the Opposition)- I seek to make a personal explanation because the Prime Minister misrepresented me in an interjection. The Prime Minister said while the Treasurer was answering a question asked by me just a moment ago that I had the facts wrong or something to that effect. I was relying on the Senate Hansard of 15th October 1970. Page 1193 shows that Senator Willesee said:

I asked the Minister for Civil Aviation (Senator Cotton) a question on it the ‘ other day.

I asked the Minister whether that was true and whether it was a fact that this alteration would cost Qantas in the vicinity of Sim a year. He said that it was true that this was happening, but -it that stage he was unable to confirm or deny the figure I .suggested. I am wondering whether he has any more information now. As I understand the position, the estimate is that this alteration will cost Qantas about 1900,000 a year, pirn the cost of extra staff that will have to be employed.

In reply, Senator Cotton said:

In response to Senator Willesee’s question, I directed this matter to Qantas Airways Ltd within about 6 hours. He and I are in 2 different positions. He has information from Qantas that I am unable to obtain. Officers from Qantas tell me that it was impossible for them to arrive at an accurate figure for me to give to Senator Willesee. They did not know what it was. 1 said, to them: ‘Can you give us some indication, such’ as between something and something or something plus or minus?’’ They said: ‘No, we cannot. It will take an involved calculation over some period of time to work it out. We will need the help of thi Treasury and the Taxation Branch on this matter. Therefore, Mr Minister, we cannot help you’.

How much did it cost Qantas this year and how much would it cost Qantas in a full- year?

Those were »y words - ‘how much would it cost’.

page 2132

MARGINAL DAIRY FARMS RECONSTRUCTION SCHEME

Mr SINCLAIR:
Minister for Primary Industry · New England · CP

– - Pursuant to section 12 of the Marginal Dairy Farms Agreements Act 1970, J present a copy of an agreement made between the Commonwealth and the State of South Australia in relation to the marginal dairy farms reconstruction scheme.

page 2132

HMAS ‘LEEUWIN

Ministerial Statement

Dr MACKAY:
Minister for the Navy · Evans · LP

– by leave - I thank the House and the Deputy Leader of the Opposition (Mr Barnard) for their courtesy in allowing me to make a statement at this juncture. In recent days there have been several reports of incidents involving junior recruits in HMAS ‘Leeuwin’ where it has been suggested that initiation or similar practices have given rise to physical violence or other forms of bullying behaviour. The Navy is most concerned al the implications of these reports as it is proud of its training establishments and regards itself as in loco parentis to junior recruits in HMAS Leeuwin’.

Consequently, I have today requested His Honour Judge Rapke of the Victorian County Court to proceed to Western Australia to investigate these allegations. His Honour has wide experience of Service matters, having acted in an honorary capacity as Judge Advocate-General of the Navy since 1963. He will consider and report to me, if at all possible before the House rises in deference to requests last night from the Opposition’s front bench that this might be so, firstly, on whether there is any evidence of the existence of any form of initiation or similar practices in HMAS ‘Leeuwin’ which involve organised physical violence, degrading or bullying behaviour and, secondly, whether there is evidence over recent years of any pattern of undue physical violence or bullying among the junior recruits.

Mr BARNARD:
Bass

– by leave- This is the third statement made by the Minister for the Navy (Dr Mackay) on two rather brutal incidents at HMAS ‘Leeuwin’. The first made yesterday afternoon was on injuries suffered by Junior Recruit Connolly. The second made, late last night dealt with injuries received by Leading Junior Recruit .1. D. Russell. In each case the Minister substantially confirmed allegations which had appeared in the Press. The main point of difference was on whether these were isolated incidents or parts of a consistent pattern of bastardisation or initiation rituals. -The Minister was rather more confident on this issue last night than he is today. He said last night:

It would appear that neither could be described as associated with initiation or so-called bastardisation activities. Both would seem to be the result of fights between the boys concerned which came about for different reasons.

Today he has taken the serious step of appointing a judge to investigate the allegation that he took some pains to quash in the House last night. It does not seem to have been resolved to the satisfaction of the Minister that these incidents had no link with bastardisation or initiation practices. The first point that needs to be made is that both these incidents involved rather more brutality than did those revealed in the investigations of bastardisation at Duntroon. The Duntroon practices were mainly of a pin-pricking nature such as the performance of absurd or tedious tasks. There were other practices which involved a degree of physical discomfort such as performance of an excessive number of push-ups. But certainly no practices were disclosed which would have had the end result of putting a youth into hospital for 1 1 days.

Both incidents at ‘Leeuwin’ involved physical conflict sufficient to cause injury and mental distress. Another serious element of these incidents is that recruits entering ‘Leeuwin’ are rather younger than are cadets enrolling at Duntroon for the first time. This emphasises the extreme seriousness of the incidents at ‘Leeuwin’, particularly if there is any evidence to associate them with a persistent pattern of bastardisation. The degree of injury inthe first incident was not great but its impact was augmented by considerable mental distress.

The degree of injury in the second incident was extremely grave. Again there was mental distress culminating in a nervous disorder which needed treatment in a repatriation hospital. These incidents reveal the need for a very close look at practices of control and supervision at ‘Leeuwin’.

The Minister has appointed Judge Rapke to investigate these allegations. I feel it unfortunate that a person who has had close association with the Navy should have been selected for this task. I say this without any intention of disparaging the Judge who I am sure is a competent person, both in civil and naval jurisdictions. A full scale committee of inquiry was appointed under an independent supreme court judge to investigate the Duntroon incidents. Its terms of reference were much more extensive than those given to Judge Rapke, although the incidents were not as serious. It would have been a wiser course for the Minister to have appointed a committee of inquiry on these lines, or at least to have appointed an independent tribunal. Any suggestion of a hasty inquiry with implications of a white-wash will not be acceptable to the Opposition. The circumstances have changed since yesterday The Minister made a statement yesterday about only one incident. Last night he made a further statement, and the whole circumstances have changed. It is clear that the implications are much more serious than they were believed to be yesterday when the Minister made his first statement. It is obvious from the Minister’s demeanour and his anxiety to keep the Parliament informed on these investigations that he treats them with the utmost seriousness. I urge him to widen the investigation on the lines I have indicated and eliminate from it even the slightest hnt of Service partisan ship. In conclusion I want to quote irons the Fox report into the Duntroon Military College which states at page 9:

We are emphatic that conduct which has come to be called ‘bastardisation’ must be banned. It is senseless and degrading; it is not countenanced elsewhere in the Army and there is no place for it in the Royal Military College.

I submit that the same comments apply in equal measure to recruit training in the Royal Australian Navy. We on this side of the House acknowledge that the Minister, as I said yesterday when I replied to his first statement on this matter, did act properly in this matter but I believe that the matter is now of a nature that is serious enough to warrant not merely an inquiry by a single judge but an inquiry by a full and representative committee of inquiry.

Mr Kirwan:

– Mr Speaker, I ask for leave to make a short statement on the same subject.

Mr SPEAKER:

– Is leave granted?

Mr Swartz:

– No.

Mr SPEAKER:

– Leave is not granted

page 2133

QUESTION

TARIFF POLICY

Ministerial Statement

Mr ANTHONY:
Minister for Trade and Industry · Richmond · CP

– by leave -in recent months the Government has given close consideration to its policies as they affect manufacturing industry, and particularly to questions of tariff policy. Government policy on tariffs cannot be properly evaluated, or even understood, in isolation. It needs to be seen in relation to the potential, and the problems, of the whole range of industries affected by protection and the place of those industries in the Australian economy. The sector of the economy which benefits most from tariff protection is undoubtedly manufacturing. However, it should not be overlooked that a very wide range of primary industries also receive some measure of tariff protection.

It is to manufacturing industry in particular, and the role of manufacturing in the Australian economy, that consideration must be given in any appraisal of tariff policy. Manufacturing provides some 28 per cent of our gross national product and 28 per cent oftotal employment. If we add to those directly employed in manufacturing industry those employed in providing services for the manufacturing industries a substantial proportion of all Australian employees are dependent on manufacturing for a livelihood.

The value of factory output has been doubling every 9 or 10 years. The growth in exports of manufactures has been even more dramatic. Twenty years ago exports of manufactures amounted to only $50m or 4 per cent of our total exports. Indications are that in the current year they will exceed $S00m and provide a fifth of our total exports. Major contributions are being made by chemicals, motor vehicles and parts, and iron and steel. Processed foodstuffs will provide another fifth.

Aggregate figures, however, do not reveal the whole story. Australian industry has not simply grown bigger over the last 10 or 20 years; it has greatly diversified and has acquired great new technical capacity and strength. This increasing sophistication of Australian industry has enabled it to compete more and more for sales in international markets as the figures I have quoted show. The truth is that Australia is now an industrial nation. What we become and how well we succeed in developing this country and raising the economic and social living standards of our people will depend to a large extent on how well we succeed in realising the potential, and overcoming the problems, of the industrial sector.

All these are matters that must be borne in mind when we consider questions of tariff policy. At the same time we have to consider the facts of the Australian environment. We are a young country with a small population occupying a continent of 3 million square miles. This provides us with a potential based on abundant natural resources. At the same time it involves some important disadvantages. Compared with their counterparts in many industrial countries overseas our industries have a small domestic market scattered over a vast continent. Australia is moreover far from the main world markets.

Because Australia is a young country with a relatively small economy not many Australian companies have massive resources available for investment in major projects, or for the development of technology, on a scale comparable with resources available to their overseas competitors. To sustain a fast rate of growth Australia must attract the investment of both domestic and overseas capital in its manufacturing industry. The business community must have confidence in the future of Australian industry if it is to invest its money. For this reason it is essential for industry to know where it stands in relation to Government policy.

Many Australian industries face costs higher than those of their overseas competitors for reasons beyond their control arising from the Australian natural and social environment. I have in mind such things as wage costs arising from our policies of full employment and our high living standards, high transport and power costs, and increased costs arising because the scale of production is often unavoidably small. No government can ignore the existence of these basic economic facts of life. It is because of them that we must have an effective system of protection for the manufacturing sector if it is to make its necessary contribution to our national growth. This does not mean that we should have protection at any price. We must be selective. Protection of industries involves a cost to the community. It is the responsibility of government to seek to ensure that protection is afforded only where the benefits to the community exceed the cost involved, and even then, that the protection given is no higher than is necessary.

But let us make no mistake about it. The dramatic growth of manufacturing industry in the post-war period, and the contribution made by that growth to our national development has been made possible in large measure because there has been an effective policy of protection. It has for many years been the firm policy of all Australian governments that reasonable and adequate protection should be afforded to economic and efficient Australian industries. This basic policy has not been seriously challenged. The present interest in tariff matters is not directed at this basic proposition but is concerned with a reappraisal of the practical application of that policy. Such a reappraisal I believe is timely, given the increasing importance, maturity and sophistication of Australian manufacturing industry.

Governments have long recognised that deciding what industries should be protected, by how much and by what means, is a very difficult as well as a very important task which can only be carried out satisfactorily on the basis of an adequate knowledge and analysis of all the relevant facts. Accordingly, successive governments since 1921 have sought the advice of the Tariff Board before reaching decisions on these matters.

The Tariff Board system has proved of great value. With the aid of its substantial and experienced staff the Board has developed procedures to enable it to conduct public and detailed inquiries into the circumstances of industries before arriving at its recommendations. The Tariff Board was established as an independent advisory body and governments have scrupulously maintained its independence since its foundation. The good sense of having the Tariff Board undertake its work objectively, and with a minimum of direction, has commended itself to all governments.

In special circumstances successive gov ernments have from time to time given the Board directions in relation to a particular industry being reviewed - for example, ship-building and machine tools for defence reasons. Any such directions have invariably been included in the terms of reference to the Tariff Board and so have been public information. The Government will continue to do this where it is considered necessary.

For nearly 40 years the Tariff Board, in recommending protection, has had only two specific guidelines, both contained in commitments given in the 1932 and 1957 trade agreements with the United Kingdom. These were that protection would be afforded only to those industries reasonably assured of sound opportunities for success; and that protection would not exceed a level which would give United Kingdom industry full opportunity for reasonable competition on the basis of the relative costs of ‘economic and efficient’ production. In addition to this traditional guidance, it has been indicated that the Board should have in its mind the national economic objectives as a whole.

Governments have considered at times whether further guidance was needed to meet new circumstances as they have arisen over the years but they have not felt this necessary. It has been felt that the basic policy of giving reasonable protection to industries judged to be economic and efficient should remain, and that specific Tariff Board recommendations should continue to be based on a judgment arising from a thorough examination of all the factors relevant to the particular case before it. In recent years the Tariff Board has, quite properly, been examining whether it can continue to fulfil effectively its role of advising the Government in today’s circumstances onthe basis of principles derived from the circumstances of the 1930s. It has concluded, and has reported its conclusions in its recent annual reports, that changes in circumstances have made the traditional tariff making principles and practices inadequate to deal with the current requirements of the economy. Accordingly, the Tariff Board has developed a. new approach to its work which involves a systematic review of the tariff, and the establishment’ and use of points of reference’ based on the concept of effective rates of protection.

Points of reference represent levels of effective protection reflecting in the Board’s view, ‘high’, ‘medium’, and ‘low’ cost production. The Board considers that ‘high’ cost production is that where effective rates of protection exceed 50 per cent; ‘medium’ cost production is where effective rates exceed 25 per cent but do not exceed 50 per cent; and ‘low’ cost production is where effective rates are 25 per cent or less.

In the area it defines as high cost the Board has said that, subject to any noneconomic considerations which the Government may wish to have taken into account, its recommendations will aim at least to contain industries, other than those demonstrating clearly compensating external benefits and those which can show beyond reasonable doubt prospects of operating with substantially lower levels of protection within a reasonable time. In dealing with industries in the medium protection range the Board has said that it will adopt a watchful attitude. It will, for example, have particular regard for their future prospects and likely influence on the prospects of other industries. In dealing with industries it defines as ‘low cost’, the Board has said it will adopt a liberal attitude, aimed at encouraging the maximum expansion in this area. After considering the views expressed by the Tariff Board the Government decided in January that there should be a progressive review of the tariff and that the principles to be followed by the Tariff Board in the review - or in the case of applications for new tariff levels - should be the subject of further examination by the Government.

Before this further examination I considered that it would be desirable for me tq hold discussions with various groups interested in this question. I have talked with representatives of the Manufacturing Industries Advisory Council, the Conference of National Manufacturing Industries Associations, the Associated. Chambers of Commerce of Australia, arid, the Australian Farmers’ Federation which included on this occasion a representative of the Australian Woolgrowers’ , and Graziers’ Council I have talked also with the Chairman of the Tariff Board. These discussions showed that there is general acceptance of the proposed systematic review pf the tariff. There was also general acceptance of the Board’s suggestion that the review should begin with industries in the Board’s high’ cost category which have not recently been reviewed. ‘Machinery’ and Manufactures . of Metal’ have been nominated by. the Board as the first 2 areas to be reviewed. References covering the remainder of Chapter 84 of the Tariff which deals with ‘Machinery’ will be forwarded to the Board in the near future to be followed in due course by references in the area of ‘Manufactures of Metal’. This will get the review under way.

During the Government’s examination of this question, including the consultations with interested groups, it became clear that, whilst there is no objection to the use of the Tariff Board’s points of reference in determining the sequence of the tariff review, there is considerable anxiety amongst manufacturers that these points of reference will become the main determinant in setting levels of protection. In these circumstances the Government has considered that it should make its attitude to tariff policy quite clear. The 2 basic principles of the tariff policy of successive Australian governments have been, first, that the Government itself is responsible for all decisions and, second, that before reaching its decisions, the Government seeks the advice of an independent Tariff Board. The Government reaffirms support for both of these basic principles. The independence of the Tariff Board will be preserved.

The first principle of Government responsibility for decisions is just as important. The Tariff Board is an advisory body and has never been anything else. The decisions and the responsibility rest with the Government. For this- reason there is value in restating the kinds of considerations which the Government must necessarily take into account in reaching its decisions. The Government sees no reason to change its basic approach. It believes that reasonable and adequate protection should be given to worthwhile industries, taking into account all relevant considerations. From the Government’s point of view, the economic worth of an industry to the nation requires a judgment on whether the benefits derived by the community from the existence of that industry outweigh or otherwise the costs to the community of providing adequate protection to it. More generally, the maintenance of a competitive industrial structure is of central importance to the Government both for promoting sound economic growth and for the most efficient use of the nation’s resources.

Clearly, the higher the protection needed the more important it becomes to take the costs to the community fully into account and the more critically must the case for such protection be assessed. However, no Government can decide its tariff polity on considerations of cost alone. The task which the Government faces is to make the right decision in each case in the national interest, taking into account the costs involved and the benefits. This is a very difficult task. Generally speaking the benefits are more diverse and harder to measure than the costs. Perhaps this is why there appears to have been, in recent public discussion on tariffs, preoccupation with cost aspects with less consideration for the benefits. Benefits to the community from the existence of an industry which a government must consider in making its judgments on the level of protection provided include, but go wider than, the direct relationships which one industry may have with another in providing inputs or using outputs. For example, an industry may make a significant contribution to the employment of special classes of labour;it may contribute to the development of special skills of significant value to other industries; it may contribute to technological development; it may make a particular contribution to export earnings; it may provide domestic competition for imports and bring the price of imports down.

Similarly, there can be highly significant non-economic implications which a government must take into account in considering the protection to be afforded an industry. Examples are where factories in decentralised locations provide major employment opportunities, or where an industryhas defence significance. The Government’s responsibility, moreover, is not limited to reaching a judgment as to the relative costs and benefits of providing adequate protection for an industry at a particular point in time. A judgment must be made of the likely balance ofcosts andbenefits in the years ahead. Governments cannot make basic decisions affecting important industries without giving most careful thought to the likely results of those decisions.

The assessment of the worth of an industry and the establishment of appropriate rates of protection is and always will be a matter calling for the exercise of judgment. The Tariff Board has explained that its points of reference are not in themselves definitive or independent criteria for assessing the economics of local activities; that the existence of high levels of protection does not necessarily mean that an industry is uneconomic; and that an element of judgment will always be involved in the assessment of external effects. This is certainly the Government’s view.

The worth of an industry cannot be adequately assessed if undue reliance is placed on the points of reference without adequate consideration of other relevant factors like those I have mentioned. It is clear that the more comprehensively’ the Tariff Board is able to take into account the significant economic and non-economic factors which the Government itself must take into account, the more valuable its reports will be to the Government. Similarly, the more comprehensively the Board is able to support its recommendations with a full exposition of the factual basis and its analysis of the facts, the more informed the Government will be when exercising its judgment and arriving at its decision. It is also evident that the Government needs as clear advice as the Tariff Board can give in its reports to enable the Government to reach judgments on the likely consequences of implementing the Board’s recommendations.

There is one other aspect I want to mention. The Government has considered a suggestion by a number of leading industry associations that there would be advantage in having the simpler types of tariff cases dealt with by one member of the Board so that decisions could be reached more quickly. The cases concerned are those which do not involve consideration of the ‘economic and efficient’ criteria. Consultations have been held with the Chairman of the Tariff Board on this matter.

The Government has decided that matters such as Customs by-laws, both admissions under by-law and simpler cases of cancellation of by-laws, tariff classification, dumping, the addition of goods to the New Zealand/ Australia Free Trade Area and questions relating to the granting of concessional entry of products from lesserdeveloped countries could be handled in this way. It is proposed to introduce amendments to the Tariff Board Act to allow for the addition of a ninth member to the Board and to authorise the Chairman of the Board to appoint single member Boards to inquire into the types of cases I have mentioned. Details of the amendments proposed will be announced as soon as possible. This action should also be of assistance to the Tariff Board in the handling of its other work including the progressive review now to be undertaken. I present the following paper:

Tariff Policy - Ministerial Statement, 28 April 1971.

Motion (by Mr Swartz) proposed:

That the House take note of the paper.

Dr J F Cairns:
LALOR, VICTORIA · ALP

– The House and industry and many other people have waited many, many months for a statement by the Minister for Trade and

Industry (Mr Anthony) and by his predecessor which would give them some guidance on the making of tariffs, a subject on which guidance has been very much needed. I am not sure that this statement can be said to have filled the gap in any way. It seems to me to be fairly abstract and ambiguous. In many ways ‘ it really says nothing about Government policy on tariffs and I do not think any manufacturer in the country could see in the statement anything which would guide him in being able to judge what would occur in given circumstances. In a sense this statement means anything, it means everything and it means nothing. The Minister recognises the importance of manufacturing industry directly in employing. 28 per cent of the workforce and in accounting for 28 per cent of the gross national product and indirectly because a very substantial proportion of all Australian employees and their dependants depend directly upon protected manufacturing industry; I should think the figure would be well over half. He could have mentioned the substantial proportion of primary products consumed in Australia. In all primary industries except perhaps wheat and wool the percentage would be more than half.

The Minister could have explained to the House the importance of preventing some wedge from being driven between one section of the community and another in respect of protection. He could have appealed to his own supporters to appreciate the significance of protected Australian industry to the Australian farmer as a market and not be concerned with one side of the question alone as some of his supporters have been as recently as last evening. The Minister then turned to costs and placed wage costs first in his statement of costs. So do his supporters; so do all the critics. Australian industry has costs in excess of industries overseas, in many cases, and the implication is that the main reason for this is high wage costs. The Minister has said nothing in this statement on this question except to give wage costs again pride of place. But the Customs Tariff Bill that is before the House is based upon a number of reports which show clearly - if the Minister and his supporters want to read them - that wage costs are a very small proportion of the total costs of the industries which are reported on. I refer to factice, vulcanised rubber, weighing machines, pencils, crayons, chalks, alloy steel, vinyl acetate, screws for wood, copper. gauze, nitrogenous fertilisers and acetone derivatives. In all these cases and some others - they were the only ones that I found quickly - these are industries in . which the Tariff Board reports that wage costs are a very small proportion of the total costs, and if we are concerned with costs it is time that we got this question of costs into proportion.

I am sorry that the Minister’s statement still holds the old prejudices in respect of that. The Minister said that many Australian industries face costs higher than those of their overseas competitors, but that protection is essential. He continued:

This does not mean that we. should have protection at any price. We must be selective. Protection of industries involves a cost to the community. It is the responsibility of government to seek to ensure that protection is afforded only where the benefits to the community exceed the cost involved, and even then, that the protection given is no higher than is necessary.

That statement is completely unexceptionable. How could it be otherwise? But how do we know when benefits will exceed the costs? How are we to find out? I do not think the Minister’s statement has added anything to the lack of information that has persisted on- this’ question for several years now, about how we are going to find out whether benefits exceed the cost and about what sort of machinery we need for this purpose. Are’ we satisfied with things as they are? Obviously this statement is satisfied with things as. they are.

The Minister then went on to deal with guidelines and it seems tq me that the Government is thinking’ of the answer to this question of how we find out simply in terms of guidelines. There are 2 traditional guidelines to which the Minister correctly directed our attention in his speech. He spoke of only 2 specific guidelines, both contained in commitments first given in 1932: He said:

These were that protection would be afforded only to those industries reasonably assured of sound opportunities for success; and that protection would not exceed a level which would give United Kingdom industry full opportunity for reasonable competition on the basis of the relative costs of ‘economic and efficient’ production.

These are inadequate guidelines. They were laid down at a time when Australian industry and the Australian economy had their backs to the wall. They were laid down for the advantage of industry in the United Kingdom, not Australian industry. These were guidelines which expressed a balance of economic power at the” time which was very much in the United Kingdom but not in Australia. We had at the time about one third of our work force out of employment, we owed England more than we could pay, we had a visit from Sir Otto Niemeyer and we were on the receiving end. These guidelines were laid down in those circumstances. They are obviously not good enough; new ones are needed. The Government has recognised this but it has been neglectful. In the face of its neglect the Tariff Board has taken a new approach. It has gone out on its own in the absence of guidelines. The Minister is not responsible for this because he has not been the Minister for too long. In his speech the Minister said that the Tariff Board’s new approach is a systematic review of the tariff, the establishment of points of reference based on the concept of effective rates of protection. The Tariff Board, first of all, cannot carry this into effect; it has not got the means. I refer to the 1969-70 report, the fourth report in which this matter was brought to the attention of the Government. The report said:

The resources available to the Board have been fully occupied on normal tariff revision inquiries (including inquiries on some sections of chapter 84 of the Tariff) and dumping and NZAFTA inquiries. Additional staff was therefore sought to enable the Board to begin the systematic review referred to in the previous section.

That is the same systematic review to which the Minister referred. The report continued:

The Public Service Board recommended the creation of the additional staff positions at the beginning of June 1970. It is understood that this recommendation has not yet-

It was 8 months later when the Board wrote this: . . been submitted to the Executive Council by the Minister. In reply to a letter from the Chairman of the Board, the Acting Minister has said that the matter raised important policy questions which he would discuss with the Minister for Trade and Industry at the first opportunity. The Minister has recently informed the Board that he expects a significant increase in the number of by-law, dumping and NZAFTA matters referred to the Board.

The Board has never been equipped even to begin its systematic review.

Mr Anthony:

– That is a bit out of date now.

Dr J F Cairns:
LALOR, VICTORIA · ALP

– Well, what has been the increase in staff? You might have told us today because this is much more important than a few abstract guidelines. I had a question on .the notice paper for some time and I do not think the information which the Minister gave me in reply adds much to what we had before. I think the Government has been deliberately concealing this and delaying the appointment of extra staff to the Tariff Board. In my opinion the Tariff Board is even now under-equipped for ite job. What is the good of talking about guidelines if you have a recommendatory board without the staff to do its job? I submit that the Tariff Board does not have the staff.

I next want to refer to the classification of the Tariff Board in relation to high, medium and low cost industries and what the Tariff Board proposes to do. Presumably the Tariff Board proposes in the case of 50 per cent or over to contain these industries; it says so. What we want to know and what the nation wants to know is what the Government intends to do in such circumstances. But the Minister has given no indication about this. If the Tariff Board recommends reductions in tariffs in this 50 per cent area, as it did recently with agricultural machinery, in circumstances which indicate that that industry is going out of existence in Australia, what is the attitude of the Government towards this? I think in this case the companies concerned - the 2 main companies at any rate - do not seem to be much worried that the industry is going out of existence in Australia because they will by supplying to Australia from their overseas plants the same things they were manufacturing here, and this suits them better. But does it suit us better? There is no indication in what the Minister has said on any standard of reference at all as to how we could answer that question.

The Minister speaks of his consultations, but there have been no consultations with any unions, none with any workers, none with any people who might be disemployed as a result of any of these changes. There have been consultations only with a select section of the economic community, such as manufacturers, Chambers of Commerce, farmers federations, graziers councils. They are 3 to 1 in favour of tariff reductions, I suppose, or, if we weighted them according to the influence they might have, we might have to double that ratio to 6 to 1. There have been no consultations with any unions and if the unions come up later with action the Government . will say that they should be quiet for they have nothing to do with it; that is not their role. If Mr Hawke says anything about it, that will not be his job. But Mr Hawke was never called into consultation by the Minister. The Minister in. his speech recognised the anxiety among manufacturers that these points of reference will become the main determinant iri setting levels of protection. The Minister or whoever wrote this speech skated very carefully around ‘ this. He will not face this question of. what is. to be done for the anxious manufacturers, if the Tariff Board goes ahead with its points of reference. The speech’ provided no answer except to say that there has been a preoccupation with costs and less consideration to benefits.

Mr Giles:

– Oh, no. .

Dr J F Cairns:
LALOR, VICTORIA · ALP

– I am sorry that the honourable member chooses interjections rather than speeches to explain what he means. The Minister set out the other factors that he thinks should be taken into account. I will not read what he said. I submit they are meaningless. I submit that what he said can. mean anything or everything, or it could mean nothing. It gives no guidance to any anxious manufacturer about what is going to happen, what standards or factors additional to the ones the Tariff Board has stated the Government will take into account when weighing whether it will accept the report of the Board in this high cost field. There is no indication at all. The Government is leaving its options deliberately open. It does not want to displease its freer trade supporters - the pastoralists, the graziers, the Chambers of Commerce. Neither does it want to displease the manufacturers. It is keeping its options completely open but this is not the role of a government. Finally, the Government does not face the facts of life, the inevitability of change. It does not face the fact that industries will have to close, that workers will have to lose their jobs as a result of all these things. It does not face the job of equipping the Tariff Board to ascertain the facts. It has not done so and the Tariff Board is not so equipped. The Government does not face the responsibility of having to get reports into this House which tell the facts of industry. It does not tell Parliament the facts.

Mr DEPUTY SPEAKER (Mr Lucock:
LYNE, NEW SOUTH WALES

-Order! The honourable member’s time has expired.

Debate (on motion by Mr Kelly) adjourned.

page 2140

ASSENT TO BILLS -

Assent to the following Bills reported:

Dried Fruits Levy Bill 1971

Dried Fruits Levy Collection Bill 1971

Dried Fruits Research Bill 1971

page 2140

TARIFF PROPOSALS

Mr CHIPP:
^Minister for Customs and Excise · Hotham · LP

– I move:

Customs Tariff Proposals No. 7 (1971) Customs Tariff Proposals No. 8 (1971)

The Customs Tariff Proposals which I have just tabled relate to proposed amendments to the Customs Tariff 1966-1970. As usual I have arranged. ..for a copy of this speech to be distributed to honourable members so they may read it. with me. A detailed summary of the tariff changes involved is also being circulated. These Proposals implement the.. Government’s acceptance of the Tariff . Board’s recommendations on pins, hairpins and curling grips; refractory products; and diamond drilling machines. In its report on pins, hairpins and curling grips the Tariff Board recommended duties of 30 per cent, ad valorem, general tariff, and 20 per cent, ad valorem, preferential, tariff on ordinary pins with solid metal heads, bobby pins <- and curling grips. This means no change in duty on bobby pins or ordinary pins with solid metal heads but a reduction in duty on curling grips from existing rates of 45 per cent, ad valorem, general tariff and 27i per cent, ad valorem, preferential tariff.

On the remaining goods under reference, including such products as hairpins, safety pins and berry pins the Board recommended non-protective rates of 7£ per cent, ad valorem, general tariff and free preferential tariff. This represents in the main a reduction in the level of duties previously applying to these goods. In respect to refractory products the Board recommended that duties of 20 per cent, ad valorem, general tariff and 10 per cent, ad valorem, preferential’ tariff apply to most of the goods covered by the report. For refractory bricks of magnesite this means an increase in duty of 2k per cent, ad valorem, general tariff and 10 per cent, ad valorem, preferential tariff. On refractory bricks of other materials there is ‘ a decrease in duty of 12i per cent, ad valorem, general tariff but an increase in duty of 5 per cent, ad valorem, preferential tariff. There is a reduction in the level of protection on heat insulating bricks of 20 per cent, ad valorem, general tariff and 7i per cent, ad valorem, preferential tariff. In regard to other refractory goods the change in duties varies according to each product and I invite the attention of the honourable members to the summary provided.

Also included is a change in the rate of duty on Fijian fish soups which is being reduced from 5c per lb to 1.9c per lb. This reduction brings the duty to the level of the preferential tariff rate for these goods and restores ,be margin of preference which existed for Fijian exports to Australia prior to 1965 when primage duty of 10 per cent, ad valorem, was removed from imports from general tariff countries. On diamond drilling machines the Tariff Board in its report on mining and metallurgical machinery has recommended that protective duties of 30 per cent, ad valorem, general tariff and 20 per cent, ad valorem, preferential tariff apply to diamond drilling machines. The duties were previously Ti per cent, ad valorem, general tariff and free preferential tariff. Honourable members will have noted that the tariff change in relation to mining and metallurgical machinery is restricted to diamond drilling machines. It has been established that production of diamond drilling machines in Australia is now being seriously affected by import competition. The Government has decided, therefore, to implement the protective duties recommended by the Tariff Board on these goods without delay while detailed consideration is being. given to the much wider recommendations by the Tariff Board on mining and metallurgical machinery generally. At this stage the report is not being released. With the concurrence of honourable members I incorporate in Hansard an excerpt from the report wherein the Board summarises its conclusions on these drilling machines.

page 2141

EXCERPT FROM TARIFF BOARD REPORT OF 8 FEBRUARY 1971 ON MINING, METALLURGICAL ETC., MACHINERY CONCLUSIONS

Mindrill, the only specialist manufacturer of diamond drilling machines in Australia, has successfully produced these machines for over 20 years. The company manufactures a wide range of drills from small hand-held machines to the largest in the world capable, of drilling to depths of 10,000 feet. Production and sales by the company have increased over the 6 year period to 1969-70 but profitability has declined since 1967-68.

Fox and George Moss Pty Ltd manufacture multi-purpose machines which incorporate the facility for diamond drilling. Since its entry into this field in 196S, sales by Fox have expanded significantly.

Imports of diamond drilling machines have gained a considerable share of the expanding market. Imports increased from $202,000 in 1965- 66 to $1,016,000 in 1968-69. Sales by the local industry also increased during this period but the local manufacturers’ share of the market could not be determined because of the multi-purpose nature of some machines.

Over the years, Mindrill appears to have provided ah important service to the local mineral exploration industry and has developed along with the industry’s requirements. The company now produces an extensive range of machines to meet the widely varying needs of users. This range appears to be wider than that offered by importers and if the company finds that this contributes to its disabilities, some rationalisation of its production may be necessary. Because it operates a large subsidiary drilling company, Mindrill has first hand knowledge of the requirements of diamond drilling machines in Australia and is able effectively to test any new equipment. Mindrill has also supplied parts and equipment for competitive drills.

Mindrill’s manufacturing operations appear to be technically efficient, with a high percentage of plant utilisation. The company operates most of its plant on a single shift and overtime basis and works two full shifts on some machines.

Despite high disabilities revealed by several price comparisons, Mindrill’s overall level of disadvantage appears to be moderate when importers’ mark-ups and certain local advantages are taken into account. These advantages are the existence of its drilling subsidiary, the company’s ability to produce machines to meet users’ specific requirements and State Governments’ preference over and above that provided by the Tariff for locally manufactured equipment. Mindrill’s drilling subsidiary not only provides Mindrill with a sizeable captive market but also permits the ready Sow of information from operators and enables the company to field-test its equipment.

Importers claimed that a duty on diamond drilling machines would limit exploration and impose an unnecessary burden on the export potential of the mining industry. However, the Board believes that the duty it will recommend will have only a slight effect on users’ costs, among other things, because of the long life of the machines and the footage which can be drilled in that time.

Importers also claimed that, should a protective duty be applied, Mindrill would command a monopoly position and be unable to ‘ Satisfy the local market’s requirements. Mindrill submitted evidence that it had the capacity with greater recourse to sub-contractors, to supply the total demand of local users, estimated at about seventy machines per year. .However, the Board believes that the levels of duty recommended will permit sufficient import competition to minimise any danger of Mindrill becoming the’ sole ‘supplier of the Australian market. Furthermore, machines manufactured by Fox and George Moss Pty Ltd are to some extent .competitive with. Mindrill equipment.

The Board considers that the local industry is efficient and that the manufacture of diamond drilling machines is a worthwhile industry for Australia. Users benefit from the existence of a local industry to the extent that machines can be readily adapted or designed to meet their specific requirements and service and, possibly, spare parts are more readily available. The industry has made significant exports and, though initially assisted by import licensing, has subsequently developed without the assistance of protective duties.

The main source of import competition is Canada with the United States of America, South Africa and Sweden also important. These are all relatively high labour cost countries but appear in some instances to be able to produce diamond drills on a much larger scale than Mindrill has found possible. The Board will recommend rates of 30 per cent General, 20 per cent Preferential for diamond drilling machines. The resulting increase in the’ local industry’s share of the market should enable manufacturers to achieve significant economies in factory overhead with some savings also possible in labour and materials costs.

Effective rates will differ little from the nominal rates but may in some instances be slightly lower.

It is only in the extremely unusual circumstances of this present case that the Government has decided to implement part only of a Tariff Board’s report while it has yet to consider the report as a whole. I wish to make it clear to honourable members that this action is not regarded by the Government as creating any precedent for part implementation of future Tariff Board reports.

In its report on mining and metallurgical machinery the Tariff Board stated that information submitted by witnesses and invoices examined by the Board indicated that diamond drilling machines have been imported at prices below stated current domestic values. Of the imports of complete machines of which it had knowledge the Board stated that approximately 30 per cent were invoiced at free on board prices which were in many instances about 10 per cent below current domestic values. The Board expressed the belief that a continuation of trade on this basis would constitute a serious threat to Australian industry. Having received a report from the Board as required by statute, I have taken action to have a notice published in the Gazette in consequence of which diamond drilling machines may be liable to dumping duty. I commend the Proposals.

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

page 2142

TARIFF BOARD

Reports on Items Mr CHIPP (Hotham- Minister for Customs and Excise) - I present the reports by the Tariff Board on the following subjects:

Pins, Hairpins and Curling Grips. Refractory Products

Ordered that the reports be printed.

page 2142

WOOL INDUSTRY BILL 1971

Bill presented by Mr Sinclair, and read a first time.

Second Reading

Mr SINCLAIR:
Minister for Primary Industry · New England · CP

– I move:

That the Bill be now read a second time.

The purpose of this Bill is to enable the Commonwealth Government to guarantee the repayment of loans and the payment of interest on amounts that may be borrowed by the Australian Wool Board for the construction and equipping of integrated wool selling complexes. The motion to introduce such a Bill was initiated by the former Treasurer in his Budget Speech last year. In view of the fairly short time available for the passage of legislation and the fact that no call was made on the Wool Board to finance integrated wool selling complexes at that time legislation was not passed in that session nor introduced. This Bill is, in other words, a measure which was foreshadowed some 9 months ago. An amendment to the Wool Industry Act last year authorised the Wool Board to establish or encourage the establishment, where appropriate, of integrated wool selling complexes, and empowered the Board to borrow for these purposes, subject to the approval of the Treasurer and myself.

The principal aim of establishing wool selling complexes is to have a well laid out building which incorporates the most modern mechanised wool handling and recording equipment for the common use by wool selling brokers to enable the most efficient and speedy movement of wool into store, within store and out of store to the ship. The amendment made to the Act last year allows the Board either to finance the construction and equipping of complexes by industry interests or to construct and equip the complexes itself. The Board will only adopt the latter course if the wool trade, including wool selling brokers, wishes it to do so. In financing the construction of complexes, the Board will ensure that woolgrowers receive a fair share of the savings arising from the construction of the complexes. If the Wool Board undertakes the construction of complexes itself, it will act solely as a landlord and rent the complexes to wool selling brokers and others concerned in the presale handling of wool, its sale and preparation for shipment. The rentals charged by the Board would be sufficient only to cover costs, payment of interest and repayment of loans.

The Wool Board is anxious to keep the cost of erecting complexes as low as possible and in this regard an important component of cost is the interest which would have to be paid on borrowings. It follows that if the Board can obtain lower interest rates by having a Government guarantee, the cost of constructing complexes would be lower and hence a greater benefit would flow to woolgrowers. At the present time 3 Sydney brokers are building wool selling facilities at Yennora in the western suburbs of Sydney. It is understood that the other Sydney brokers are now also willing to move to Yennora. To date development there has been wholly financed by the 3 brokers themselves, but the Wool Board has been collaborating closely in the planning. The facilities at present under construction at Yennora are so designed as to be capable of being developed into a fully integrated complex. The Yennora project will be breaking new ground in the field of wool handling. In the circumstances, the benefits which will flow from it to the various sections of the industry will be watched with considerable interest and will, no doubt, influence decisions on the establishment of integrated wool selling complexes in other centres.

Studies undertaken by the Wool Board as well as by wool selling brokers demonstrate that an integrated wool selling complex at Yennora offers good prospects of important cost savings in wool handling in Sydney. The possible introduction of presale objective measurement of wool and sale by sample carries important implications for future wool handling procedures. The application of pre-sale objective measurement and sale by sample is at present being subjected to a series of trials. This has been made possible by a grant of $1.5m by the Commonwealth Government. It seems fairly certain, however, that presale objective measurement and sale by sample will play an important role in the future in the disposal of the Australian wool clip. Any proposal for borrowing by the Australian Wool Board in connection with wool selling complexes must be approved by the Minister for Primary Industry and the Treasurer. We will, of course, ensure that any problems which might affect the viability of such a proposal have been fully resolved before approval is given for the Wool Board to proceed. The Wool Board is anxious to be in a position to facilitate the development of integrated wool selling complexes where they can be justified on the grounds of increased efficiency and cost savings. The amendments which are the subject of the Bill will help the Board to achieve this objective. I commend the bill to the House.

Debate (on motion by Dr Patterson) adjourned.

page 2143

INCOME TAX ASSESSMENT BILL (No. 2) 1971

Bill presented by Mr Snedden, and read a first time.

Second Reading

Mr SNEDDEN:
Treasurer · Bruce · LP

– I move:

That the Bill be now read a second time.

The purpose of this Bill is to amend the provisions of the income tax law relating to interest withholding tax so as to give effect to decisions announced by the former Prime Minister on 13th December last. Two other taxation Bills to be introduced immediately - the Income Tax (Bearer Debentures) Bill 1971 and the Income Tax (Withholding Tax Recoupment) Bill 1971 - are complementary.

The interest withholding tax is a tax levied at the rate of 10 per cent, on interest received by overseas lenders from Australian borrowers. The borrower is obliged to withhold 10 per cent of the interest and pay it to the Commissioner of Taxation. It is a form of tax commonly used by many countries to tax certain classes of income having a source within their* territory. When the interest withholding tax in its current form was introduced as from the beginning of 1968, it was expected that in most cases, particularly where there were arrangements between Australia and the other country concerned for relief of double taxation, the overseas lender would be able to obtain a taxation credit in his own country for interest withholding tax deducted in Australia. If so, k was to be expected that the burden of the Australian interest withholding tax would not generally fall on the Australian borrower - in other words, that the rate of interest payable by the Australian borrower would not include the cost of interest withholding tax.

However, a review of the effect of the interest withholding tax on Australian borrowers has caused the Government to believe that’ the rax frequently falls not on the overseas lender’ but on the Australian borrower. This is because the lender adds to the rate of interest he charges a compensation for the interest tax withheld. The Government has made clear the importance it attaches to flows of capital from abroad for the development of our resources and of the economy generally. It has also made clear that it wishes to see as much Australian equity and managerial participation as possible in developmental and industrial enterprises in this country. In so far as the burden of the interest withholding tax on overseas borrowings is passed on, in whole or in part, to the borrower in Australia, it is thought that its effect could be detrimental to the achievement of these objectives. As a result of the review to which I have referred, it is proposed under this bill to exempt interest on two broad categories of overseas borrowings from interest withholding tax. The first broad category is bearer securities issued overseas to the public or on an otherwise widely spread basis. The second broad category relates to what might be termed overseas borrowings to support whole or partial Australian ownership of ventures in this country.

Where borrowings are made overseas by means of widely spread bearer securities, the Government is satisfied that the cost of interest withholding tax must be met by the Australian borrower irrespective of whether or not the borrowing company is predominantly overseas owned or Australian owned. This is so because, for technical reasons, it is not practicable for overseas tax credits to apply at all under the instituitonal arrangements that have in practice to be adopted for payment of the interest. These arrangements provide for interest on the securities to be paid over the counter by banks in overseas financial centres when the holder of the security presents his interest coupon, and the bank is reimbursed by the borrower or his agent. It has been found impossible for our withholding tax to be collected from the real lenders in these circumstances. I mention in this connection that, as a general measure against tax evasion, the present law - by section 126 of the Income Tax Assessment Act - imposes a special rate of tax of approximately 42 per cent on interest paid on bearer securities where the borrower does not supply to the Commissioner of Taxation the names and addresses of holders to whom the interest is paid.

The provisions of section 126 apply to overseas issues of bearer securities. Despite these provisions, however, borrowers resident in Australia which wish, and are able, to have access to overseas capital markets through the issue of bearer securities can still make such borrowings by setting up an overseas borrowing subsidiary in a country which does not impose tax on interest on bearer securities. Australian interest withholding tax at the rate of 10 per cent is then paid on interest on the borrowing by the Australian company from its overseas subsidiary. That is a technical solution which enables the Australian borrower to meet both our requirements and those of the overseas capital market. But there can be no crediting of our withholding tax against tax levied by the real lender’s country of residence, and so the tax would usually operate to increase the effective rate of interest payable by the Australian borrower. It is accordingly proposed that interest on bearer debentures that satisfy tests set out in the Bill will be exempt from withholding tax and section 126 tax. Broadly speaking, the exemption will be available for interest paid by Australian-resident companies on overseas borrowings made by them through widely spread bearer debentures for use in, or in connection with, a business carried on in Australia by a resident of Australia. It will be immaterial for this purpose whether or not the borrower or user is Australian owned. The intention is to eliminate scope for companies which are resident overseas to channel their overseas borrowings via Australian based companies in such a way as to use Australia as a tax haven.

A requirement for exemption is that the debentures be issued outside Australia for the purposes of raising a loan outside Australia in a foreign currency, the interest on which is paid outside Australia in a foreign currency. One objective in defining overseas borrowing in this way is to minimise the risk of evasion of tax by residents of Australia. Precautions of this kind have to be stronger with bearer securities than with registered securities. It will also be a prerequisite for exemption that the Commissioner give a certificate that, having regard to the circumstances surrounding the issue - statutory guidelines for the Commissioner are provided in the Bill for this purpose - it is reasonable to regard the debentures as having been issued with a view to public subscription or purchase, or other wide distribution among investors. The purpose of this, of course, is to prevent borrowings from simply being dressed up as exempt bearer debenture issues so as to take advantage of the exemption. Earlier I referred tq the issue of bearer securities or debentures via an overseas subsidiary of the Australian borrower. It has been represented to us that some Australian borrowers will find it expedient to continue to borrow in this way because of the preferences of overseas lenders. We see no reason to prevent them from doing so, and accordingly the exemption in respect of bearer debentures will apply, not only where debentures are issued directly by the Australian borrower, but also where debentures are issued through an overseas sub sidiary which is wholly owned and controlled by an Australian-resident parent and its only business is to borrow for onlending, at cost to the parent company for use in, or in connection ‘ with, an Australian business.

Unless there is exemption under the plan for borrowings to support- Australian ownership, .which I describe- shortly, bearer debenture- interest that does not qualify for the exemption will, as previously, be subject tq section 126 tax if the identity of the holders is not disclosed. . However, the rate of tax under section 126 will bs reduced to 10 per cent for non-exempt interest on completely foreign issues by residents of Australia, that is, issues in a foreign currency, on which interest is payable in a foreign currency by a resident qf Australia. In other cases,, the rate of tax will be the same .as that, now imposed. A separate Bill, the. Income Tax (Bearer Debentures) Bill 1971,., will- declare the rates of tax under section 126. 1 come now to the second, and in many respects ‘ the more important, broad cafegory of overseas borrowings on which under the Bill interest will be exempt from interest withholding tax- - namely, borrowings to support whole or partial Australian ownership of ventures . in this country. Except in the case of widely-spread bearer securities, there is no absolute barrier to prevent the overseas lender from obtaining in his country the benefit -of tax credits in respect: of interest withholding tax deducted in Australia. However, we have been advised that difficulties frequently arise and that the cost of our interest withholding tax may have to be met by the Australian borrower in the form of an increase in the rate of interest on the loan. Sometimes all that is involved is that the borrower is asked to put the lender in funds temporarily until the latter’s tax credit is received, in which event there is no permanent cost to the borrower. We have been advised that in other cases there could be a permanent cost to him because the lender cannot obtain a full credit, or perhaps for other reasons. Where this is so, the Government, believes that these problems and costs must affect Australianowned companies to an extent that need not, and generally does not, apply to overseas companies which can have access to loan funds from abroad through overseas parent or associated companies. Accordingly, the Bill provides for exemption from interest withholding tax, in defined circumstances, of interest on overseas borrowings by Australian-owned borrowers! The purpose is to ensure that the law does no! operate to discriminate against Australian owned enterprises, relative to overseasowned enterprises, in the matter of the effective cost of interest on overseas borrowings.

For this exemption to be available, test; as to the extent of Australian ownership and control ‘ must be satisfied both by the borrower and the enterprise in which the borrowed moneys are used. In the terms used in the ‘ Bill, the exemption will bc available only if the borrower is an ‘Australian entity’ and the borrowed funds are used in an enterprise owned by an ‘Australian entity’ or an enterprise in which there is ‘substantial Australian participation’. The Bill specifies that individuals ordinarily resident in Australia, the Commonwealth, a State and authorities of the Commonwealth or a State are Australian entities for the purpose. In the case of companies, in broad terms a company will be treated as an Australian entity if, in addition to its being a resident of Australia, at least 60 per cent of the ownership and control . is vested in Australian entities (including shareholder companies that are themselves Australian entities) and no one person who is not an Australian entity has rights to more than 20 per cent of the ownership or control. Other types of business organisation, such as partnerships and joint ventures, may qualify as Australian entities on satisfying tests as to Australian ownership and control adapted from those applicable to companies.

An enterprise will be deemed to be one in which there is substantial Australian participation if the extent and concentration of participation by Australian entities are such as to represent an effective Australian influence in the carrying on of the enterprise. An enterprise owned by a company will be a enterprise with substantial Australian participation if rights to at least 20 per cent of the ownership and control of the company are held by one Australian entity. Alternatively an enterprise may qualify if at least 30 per cent of the ownership and control of the company is held by not more than 5 Australian enti ties, or at least 40 per cent is held by any number of Australian entities. Enterprises owned by bodies other than companies may qualify on satisfying tests as to the extent of Australian ownership and control adapted from those applying for companies. Interest on loans raised abroad by such enterprises will be exempted from tax if, on an application to him by the borrower, the Commissioner of Taxation certifies that he is satisfied that the borrower is an Australian entity and the loan moneys are for use in an enterprise owned by an Australian entity or an enterprise in which there is substantial Australian participation. If, in the latter case, the money is provided as a loan to the enterprise, the loan must not be excessive in amount when related to the extent of the Australian participation in the enterprise.

Other ancillary tests, dealing with matters such as rights over the appointment of directors, redeemable shares and options to acquire shares and artificial arrangements designed to obtain exemption that otherwise would not have been available, are also proposed as safeguards against devices to circumvent the main tests I have described. Where circumstances so change during the currency of a loan that the tests for exemption are not met, the interest will remain exempt from withholding tax but the borrower will be liable to pay a special tax - in effect, a substituted withholding tax - on the interest attributable to the period during which the tests are not met This tax will be imposed at the rate of 10 per cent by the Income Tax (Withholding Tax Recoupment) Bill 1971. That Bill also provides for the imposition of additional tax, at the rate of 10 per cent per annum on the amount of the special tax, equivalent to the additional tax for late payment of withholding tax that would have been payable if the interest had not been exempted from that tax.

I turn now to administrative procedures governing the operation of the exemption in its application to both of the broad categories of overseas borrowings I have described. If a particular borrowing meets the precise tests set out in the Bill and the Commissioner of Taxation is satisfied that the case falls within the terms and spirit of other provisions of the Bill including the extensive guidelines contained in it, he will give to the borrower a certificate that he is so satisfied. On the giving of this certificate interest on that borrowing will, while it continues to satisfy the precise tests, be exempt from withholding tax and, in the case of interest on bearer debentures, from tax under section 126 of the Income Tax Assessment Act. Interest exempted from withholding tax will also be exempted from ordinary income tax levied by assessment. A certificate of exemption will be given by the Commissioner upon the borrower demonstrating how the money borrowed will, in the end, be used. Such certificates will be given only after the overseas loan has been raised and all the relevant facts have been made known to the Commissioner. However, the Commissioner will follow his usual administrative practice in cases of this kind of indicating beforehand to prospective borrowers who place all the facts before him whether, on those facts, he can be expected to give a certificate once the loan is raised.

Should the Commissioner conclude that a certificate of exemption should not be given he will be obliged to notify the borrower accordingly. The law will treat this notice as if it were a notice of an income tax assessment, with the consequence that the borrower will have usual rights of objection and appeal against the Commissioner’s refusal to give a certificate. A taxation board of review will accordingly have the power to grant a certificate of exemption should it conclude that the particular loan falls within the policy evinced by the legislation. The new exemptions from interest withholding tax provided for in the Bill will be effective in relation to loans the contracts for which are entered into on or after the date of Royal Assent. It will be immaterial that negotiations for a loan concluded on or after the date were begun before then, or that the loan is in substitution for an earlier loan. In the statement made by the former Prime Minister on 13th December it was foreshadowed that the amendments would be effective as from 1st July 1971. It has been found, however, that no purpose would be served by deferring operation of the new provisions beyond the date of Royal Assent.

Before concluding I should explain the significance of clause 9 of the Bill, which has a different purpose from those I have described. On the face of things it may appear that the clause will operate to withdraw an exemption from withholding tax that is provided by the existing law in respect of interest credited by overseas branches of Australian banks to accounts kept with the branches by foreign customers. However, this is not the case. I should explain that this category of interest - broadly interest on savings bank or fixed deposit accounts kept by non-residents with overseas branches of Australian banks in the ordinary course of their business - has been and will continue to be exempt from withholding tax under a general provision in section 128b (2.). The latter provision frees from the tax interest paid to a nonresident where it is incurred by a resident in carrying on business through an overseas branch. The specific exempting provision that is to be omitted by clause 9 is, in fact, redundant. While its inclusion in the original interest withholding tax legislation was considered desirable to make it doubly clear that the interest concerned would not bear withholding tax, its’ withdrawal is now considered necessary since a view has been expressed that it could operate to provide a general exemption for ordinary borrowings by Australian banks on behalf of companies in Australia. Such borrowings which meet the tests for the exemptions proposed in the Bill will, of course, be free of withholding tax but it isnot, and never has been, intended that all such borrowings should automatically qualify for exemption under the provision now proposed to be omitted. The amendment to be made by clause 9 will be effective as from tomorrow.

I have arranged for a memorandum giving comprehensive explanations of the technical provisions of the 3 Bills to be circulated to honourable members before they are debated. The Government believes that the legislation will assist generally in the attraction of overseas investment to Australia, and on a basis under which Australian entities will not be at a disadvantage relative to overseas-owned enterprises in regard to the effective cost of overseas loan capital. I commend the Bill to the House.

Debate (on motion by Mr Crean) adjourned.

page 2148

INCOME TAX (WITHHOLDING TAX RECOUPMENT) BILL 1971

Bill presented by Mr Snedden, and read a first time. -.» -

Second Reading

Mr SNEDDEN:
Treasurer · Bruce · LP

– I move: - That the Bill be now read a second time.

This Bill should be read in conjunction with the Income Tax Assessment Bill (No. 2) 1971. Speaking broadly, its purpose is to impose a special tax of 10 per cent in cases where a borrowing initially meets the tests for exemption under the earlier Bill for borrowings to support Australian ownership or participation, but which subse: quently fails to satisfy those tests. The effect is to impose a tax in substitution for the withholding tax that, but for the exemptions proposed in the main Bill, would have been payable.

Since the special tax will be paid somewhat later than the withholding tax which it replaces, the BiB also provides for the imposition of further tax, by way’ of additional tax for late payment, at the rate of 10 per cent per annum based on the amount of special tax. This additional tax is to be calculated from the date on which the withholding tax would have been payable to the date on which the special tax is notified and, as i? usual with late payment penalties statutorily imposed, may be remitted wholly or in part if the circumstances so warrant. I commend the Bill to the House.

Debate (on motion by Mr Crean) adjourned. . , ..

page 2148

INCOME TAX (BEARER DEBENTURES) BILL 1971

Bill presented by Mr Snedden, and read a first time.

Second Reading

Mr SNEDDEN:
Treasurer · Bruce · LP

– I move:

This Bill is also complementary to the Income Tax Assessment Bill (No. 2) 1971 which I have just introduced. In broad terms, it imposes tax on interest paid by a company on bearer debentures where the names and addresses of the holders of the debentures are not provided to the Com missioner of Taxation by the company concerned. Under the present law, such interest is liable to tax at a rate of approximately 42 per cent. This rate will be continued - if the bearer debenture interest does not qualify for complete exemption - except where the interest is paid on wholly foreign issues made by residents of Australia. In these cases the rate of tax will be the same as the withholding tax rate, that is, 10 per cent. I commend the Bill to the House.

Debate (on motion by Mr Crean) adjourned.

page 2148

INTERNATIONAL TIN AGREEMENT BILL 1971

Second Reading

Debate resumed from 1 April (vide page 1332), on motion by Mr Anthony:

That the Bill be now read a second time.

Mr DAVIES:
Braddon

– The tin agreement which the Parliament is asked to ratify, is the fourth negotiated by international interests since 1956 and is the most important one to date for Australia because we have changed from a consuming-importing member of the agreement to a producing-exporting member. The other major tin exporting countries arc Malaysia, Bolivia, Thailand, Indonesia, Nigeria and the Democratic Republic of Congo. The objectives of the agreement are set out in Article I and I shall refer to them briefly. They are to provide for adjustment between world production and consumption of tin, to alleviate serious difficulties arising from a surplus or shortage of the metal, and to prevent excessive fluctuations in the price of tin and in export earnings from tin. This refers to the operation of the buffer stocks to which I will refer later. Another objective is to prevent widespread unemployment or underemployment and other serious difficulties which may result from maladjustments between the supply of and demand for tin. It is pleasing indeed to see this objective regarding employment and the well being of the work force employed in the industry included in the agreement.

Other objectives refer to the taking of steps, in the event of shortages of supplies of tin occurring or being expected to occur and in the event of a surplus of supplies of tin occurring or being expected to occur, to mitigate serious difficulties which producing countries might encounter. These are implemented by export controls to which I will also refer in a few moments. Another objective of the agreement is to review disposals of non-commercial stocks of tin by governments and to take any steps which may be necessary.

In Australia tin is found mainly at Greenbush in Western Australia, on several dredging sites along the tablelands of Queensland, at Ardlethan in New South Wales, and at Rossarden, Renison Bell

The table clearly indicates that up to and including 1965 Australia was a net importer of tin. In that year we imported 1,582 tons and exported less than half of that quantity, 682 tons. In the following year, however, we imported only 203 tons and “exported more than six times that quantity, 1,360 tons. Due to the development of hard rock mining on a large scale at Renison Bell and Mount Cleveland we have seen the gap between imports and exports widen considerably. It is to the great credit of those two outstanding mining concerns that last year, 1970, we had to import only 100 tons whereas we were able to export 4,600 tons. Not only has this been of great benefit to this country in assisting our balance of payments overseas, it has led also to the construction of a new town at Luina, in one case, and to the rehabilitation of another, Zeehan, with millions of dollars being spent on the provision of new homes, schools, roads, shopping centres, television translator services, water and sewerage and, in recent years, Mount Cleveland in Tasmania. As I indicated earlier, Australia is now participating in the agreement as an exporting member. This change from a net importer to a net exporter occurred between 1965 and 1966 with the dramatic developments which took place at Renison Bell and Mount Cleveland on the west coast of Tasmania. The changed picture is best illustrated in a table of tin production, trade and consumption; for which I am indebted to the Australian Mining Industry Council. I have referred . this table to the Minister for Trade and Industry (Mr Anthony) and with the concurrence of honourable members I incorporate it in Hansard. schemes, and all the other associated services and amenities that have been of tremendous benefit to the people in this otherwise rather isolated area.

As a net exporter, for the first time under the present International Tin Agreement, we are called upon to meet our obligations to contribute to the buffer stocks. I am very pleased that our negotiators in Geneva were able to have our contribution based on a percentage of our exports only and not calculated on our overall production. Under the present Agreement to come into force from 1st July this year for a period of 5 years, the buffer stock will amount to 20,000 metric tons and our contribution will amount to $1.6m. The floor price has been set at £Stgl,350, an increase of £Stg90 over the corresponding figure in the last Agreement while the ceiling price is set at £Stgl,650 It is the duty of the manager of the International Tin Council to endeavour to keep the world price between the floor price and

the ceiling price. He is authorised to buy or sell, in an endeavour to iron out any wide variations in world prices. If the market price falls and approaches the floor price set under this Agreement, then the manager buys in stocks. If, on the other hand, the market price rises and approaches the ceiling price, the the manager sells from the buffer stock in an attempt to stabilise prices.

I would like to point out that Australia’s contribution to the buffer stock is not another Government handout. When the Agreement terminates in June 1976 there will be, as under the previous 3 agreements, a winding up of the buffer stock and the Government can expect to receive its advance repaid in full, together with an interest rate of about 6 per cent because this has been the trend over the past 3 agreements. The manager of the Tin Council is an Indonesian, who is extremely competent and has had wide experience in the industry. I believe credit is due to him for the success of previous tin agreements. Apart from operating on the buffer stock to control fluctuations, the manager can also call on member countries to impose export controls if the world price of tin falls below the floor price set under the present Agreement. Quotas are determined, based on overall production of member countries, and, I understand from discussions with the Executive Director of the Australian Mining Industry Council, Mr G. P. Phillips, that the quota set in the case of Australia should be enough to prevent any disruption to the industry in the event of export controls being introduced.

Export controls have been imposed only once since the agreements commenced in 1956 and in that case the Australian Government imposed restrictions on Australian exports of tin even though we were not officially in the producer category. Tin producers are fully aware of the effects of any controls, especially now that we are a net tin exporter, and the chairman of directors drew attention to this in his report to the shareholders of Renison in September 1969. He said:

The International Tin Council has imposed restrictions on the exports of tin by its producer country members, and although Australia is not officially a producer country, the Australian Government has voluntarily imposed some restrictions on Australian exports. The tonnage of permissible exports from Australia under this arrangement has been such to date, that Australian production and exports have not been affected. Nevertheless, in considering any expansion programme full regard would need to be taken of the possibility thatinternational restrictions could limit Australian tin exports from time to time. . . .

I refer now to the voting strength on the

International Tin Council. The Council is centred in London and each participating country is represented by one delegate exercising a certain number of votes. The producer countries- we are included in that group - hold 1,000 votes and these are allocated to producer members in accordance with their volume of exports. In his second reading speech the Minister for National Development (Mr Swartz) referred to the fact that Australian exports are small, accounting for only about 3 per cent of world trade. Consequently, Australia holds under annexe A of the Agreement the 5 initialvotes plus 27 according to exports, making 32 out of a total of 1,000 or 2.82 per cent of the total votes allocated to producer countries. Malaysia has447 votes or 45.83 per cent of the total as the largest exporter of tin in the World. However, there is every indication that Australia’s place as a tin exporter will improve in world standards. I have already paid tribute to Renison Tin and Cleveland Tin NL for their great developments in recent years which, have taken us from a net importer to a net exporter, and this trend will continue to develop as further expansion takes place at Renison Bell and Luina.

Tin mining has been carried on at Renison Bell since its discovery by Ringrose Nicholson in 1890 and an intensive diamond drilling programme from 1955 to 1957 revealed extensive deposits, hitherto unknown.

The Mount Lyell Mining and Railway Co. gained a controlling interest from Electrolytic Zinc Co. of Australasia Ltd in 1958 and gave considerable impetus to the mining operations and exploration programme. There was considerable speculation in 1964 that Consolidated Gold Fields took over Mount Lyell Mining and Railway Co. simply to gain control of Renison Tin. Whether or not this be true, it is correct to say that the company certainly did commence an era of development, unprecedented in the region, which led to Australia’s passing from a net importer to a net exporter. This involved an expenditure of over $10m and meant the driving of a declined adit which is now almost 8,000 feet from the portal to gain access to .the Federal and Bassett lodes. A concentrating plant, capable of treating 1,000 tons of ore a day was constructed on an area near the portal of the adit. Land was acquired in the nearby township of Zeehan, and the construction of housing and single men’s and staff quarters, of a very high standard, was commenced. Street construction, kerbing and guttering, water and sewerage services in Zeehan were undertaken by the company and when completed these essential services were handed over to the local governing body for operation. It has certainly provided a new look for Zeehan.

There has been a spectacular increase in the treatment rate over the past 10 years at Renison, rising from about 100 tons per day, 10 years ago, to 1,200 tons per day now-an increase of 1,100 per cent. The tin content of the concentrates produced was 1,134 tons in 1968 and this increased by just over 100 per cent to 2,277 tons in 1969 and by a further 40 per cent to 2,812 tons last year. Production will increase still further with developments and the expansion programme currently in hand. The General Superintendent, Mr R. R. McGhie, and his staff can take great pride in what they have accomplished, both in the mine and for the township of Zeehan, and especially in the fact that their mine is now producing one-third of Australia’s output of tin, and is the largest of its kind in the world. The other mine which has contributed also to our transfer from a net importer to a net exporter is Cleveland Tin NL. It issued its prospectus in 1966 and commenced to build the township of Luina in the rain forest at a cost of over $2m. Further houses are planned for a work force which averages 230 to 250 men. A sum of $8&m was spent on mine development, and further development is being undertaken to step up the rate of treatment and recovery of the tin concentrates.

It is anticipated that both treatment and recovery rates will stabilise in June of this year, when Cleveland NL will be producing 140 tons of tin per monthly period of 28 days. Unlike Renison, this mine also produces copper and this runs at about 50 per cent of the amount of tin, giving 65 to 75 tons of copper per monthly period of 28 days. Here again the standard of housing, amenities, roads and streets, accommodation for. single men. provided by the company, and, above .all,’ the very fine community spirit in this new town - in the treatment of new arrivals and the assistance given to those in need, as only two examples - stand out worthy of the highest commendation.

The Minister referred- in his second reading speech to the significant expansion of production, resulting ‘from the development of large scale hard rock mining in Tasmania, and as the member for the area I am especially proud of. the contribution being made to the nation’s economy by Renison and Cleveland,- the two mines concerned. By their activities, they have lifted this country from a net- importer to a net exporter and have guaranteed, by their further developmental projects, that our export earnings from tin, valued- at $12m, will increase even further in the future. ‘

The International Tin Agreement, the ratification of which is provided for in this Bill, will assist these companies because the objectives as set out in the draft Agreement cover a wide fieldi, and ‘will ensure price benefits and a fair degree of stabilisation for the . industry. This, as I have indicated, is very important for Tasmania, two-thirds of which is had for the exploration of minerals. Several companies hold tin exploration licences. They are: Ludbrooks in the south west, between Cox’s Bight and Bathurst Harbour, ah area covering 170 square mile’s; Texins in the north east; the New Mount Bischoff company, which has taken up 2 leases along the Waratah River; Anglo American, which is operating under the name of Comstaff Pty Ltd, and which is engaged in. an extensive programme around the old Mount Bischoff mine; and Australian Consolidated Industries, which, in conjunction with Renison, holds licences extending up the west coast from Granville Harbour to the Arthur River and is looking for tin and other minerals.

Mr W. E. Tucker of St Helens is currently undertaking to issue shares to the public in Briseis tin mine at Derby in the north east of Tasmania, and has stated that his group has spent $200,000 on equipment to date. Blue Metal Industries of New South Wales recently took over the old Endurance mine at South Mount Cameron in the north east, and is about to reopen the old mine. This company, BMI, is already producing tin from the nearby Monarch mine. ; ‘ Over the past 10 years, our production of tin has risen 450 per cent - from 884 tons in 1960 to 4,939 tons last year - and its corresponding value has risen 1,600 per cent, from being worth just under $lm 10 years ago to $17m last year. I repeat the figures because they show the spectacular increase in the mining industry in the island State of Tasmania. The value of tin produced 10 years ago was just under Sim, and last year it reached $17m. I have a table, supplied by the Mines Department of Tasmania, which shows the production and value of tin produced in Tasmania over the last 10 years. I have already referred it to the Minister for Trade and Industry (Mr Anthony) and have received his concurrence in having it incorporated in Hansard. So With the concurrence of honourable members I incorporate it in Hansard. . .

We, as a State, are now the largest tin producing State in the Commonwealth, and Renison on the west coast of Tasmania, as I have already said, would rank as the largest tin mine of its kind in the world. Two-thirds of the State is held for exploration for minerals, and international agreements such as the one which this measure will ratify must inject additional confidence into the mining industry, as well as providing adequate safeguards for producers and consumers alike, and for the stability of employment of those engaged in the industry.

In conclusion, I am very pleased to note that Australia has changed from being a net importer to a net exporter of this very important and valuable mineral. I strongly support the International Tin Agreement of which Australia is now a member. It will give us an umbrella of protection on the lines that I indicated when I commenced my speech, particularly as regards the sale of tin and the protection of the work force engaged in the industry. I strongly support the measure before the House.

Mr SWARTZ:
Minister for National Development · Darling Downs · LP

– There are many reasons why I wish to speak in this debate on the measure to ratify the Fourth International Tin Agreement, which was negotiated in Geneva, in AprilMay of last year. The important fact is that the Agreement has been signed by all major producing countries and sufficient consuming countries to ensure it will come into force from 1st July 1971. The reason for this measure is that’ the third of the 3 previous agreements on tin will terminate on 30th June this year. But the important difference is that whereas Australia, hitherto, has participated in all 3 as a consuming member country, that is, one which usually produces less tin than it consumes, this time our participation will be that of a producing member. The. encouraging fact is that we are now a net. exporter of tin, and expect to remain so for the term, of the Fourth Agreement at least.

The broad objective of this Bill is to ensure such condition’s will continue to obtain as will help to’ achieve a rising rate of production of tin on the basis of a remunerative return to producers. Clearly, this would help to secure an adequate supply at prices fair to consumers, and to provide a long term equilibrium between consumption and production To achieve its objectives, the International Tin Council has as one of its mechanisms a buffer stock financed by compulsory contributions from producing members. One of the important provisions, of the Fourth Agreement is for voluntary contributions from any consuming member. The buffer stock is intended to facilitate control of short term fluctuations in the price of tin on world markets. In addition, the Council may implement, as needed, export and stock controls on producer members. This additional and basic mechanism is used to correct more deeply seated imbalance of the world market, which the buffer stocks are unable to overcome.

Although the Fourth Agreement is substantially the same as the previous 3, it will have rather more direct effects on Australia. Obviously, the. most significant change is the raising of our status from a consuming to a producing one. However, this in itself brings certain obligations. These are, first, to contribute to buffer stock financing and, secondly, to impose limits on tin exports and stocks when considered necessary by the International Tin Council. As distinct from the other 6 producing nations who export almost all of their production and whose obligations are based on the level of their production, Australia will be assessed only on the level of our exports rather than on production, in respect of our compulsory contribution to the buffer stock and our permissible exports when export controls are found to be necessary. I should like to stress that this was secured to recognition of Australia’s unique position among producing members of consuming a large part of domestic production.

Honourable members may wonder about how this buffer stock to which I referred, is controlled, and what are the safeguards. For their information, I might point out, that the buffer stock is managed by an officer of the International Tin Council, who operates within rules, laid down in the Agreement, with respect to prices determined by the Council. He is known as Buffer Stock Manager, or, colloquially ‘BSM’ I mention this because his title, or office, features frequently when clarifying the Fourth Agreement. I feel it would be best if 1 spoke first about price ranges and then on the action that will be automatically taken. Let us take first a ceiling price of £Stg 1,650 a ton. I speak in Sterling because even though Britain has changed to dollars the old terminology applies for the time being. The action is: If the market price is at or above this price of £Stg1,650, the BSM must sell at market price. Under the Third Agreement, he had to sell at the ceiling price. If the market price is between £Stg1,540 a ton and £Stg 1,650 a ton, the BSM may buy or sell, provided he is a net seller. Previously, he might only sell. If the market price is between £Stg1,460 and £Stg1,540 a ton, the BSM may neither sell nor buy, unless directed by Council. Similar action was required under the Third Agreement. If the market price is between £St:1.350 and £Stg1,460 a ton, the BSM may buy or sell tin, provided he is a net- buyer. Previously he might only buy. If the market price is at or below £Stg 1,350 a ton, the BSM must buy at the floor price. He was similarly required under the Third Agreement.

The producing countries’ contribution to the buffer stock amount is aggregate to the equivalent in can or tin of 20,000 tons of tin metal. As Australia’s contribution will be assessed on exports, our contribution to the buffer stock will total about $1.6m, or only about half what it would have been, if our obligations were based on production. The first instalment will be about $600,000 and is payable next July. The Commonwealth Government has agreed to bear the burden of financing Australia’s contribution to the buffer stock account because of problems in ensuring that any funds collected are returned to the persons who carried the weight of the tax in the first instance.

The fact that there are several hundreds of tin producers in Australia, the vast majority of whom produce only small quantities, and many of whom operate only intermittently, also introduced difficult problems. In providing the finance, the Commonwealth simplifies matters in several ways: First, administrative difficulties will be avoided, and no administrative cost will be incurred; secondly, the Commonwealth will retain the money on the liquidation of the buffer stock 5 years later, and, thirdly, the Commonwealth can expect to earn a return approximating the long term bond rate, currently 7 per cent. As part of objectives to stop extreme price fluctuations, the International Tin Council may require ‘producing’ members, such as Australia, to exercise some form of control over exports and stocks. Although we were a ‘consuming’ member, Australia, at the request of the Tin Council, maintained export controls between December 1968 and December 1969 because our production had increased significantly over the previous 3 years. Our action was quite voluntary, and was undertaken in a spirit of reasonable membership. Under the new - Fourth - Agreement, such actions, if required, will be obligatory and our quotas will be related to past export performance.

At the first review, our export performance will be taken as a minimum of 4,572 metric tons.

The Australian tin producing industry is an important one for Australia, especially in particular areas. For instance, the total value of mine production in the calendar year 1969 was $21.3m and on the same pricing basis our likely production would be worth about 25 per cent more, in 5 years from now. The value of tin exported as metal, and as tin-in-concentrates in 1969- 70 totalled $ 12.2m, and in 10 years is forecast on a realistic basis at $25m. Moreover, the tin industry provides a necessary economic base for a number of communities, in Queensland, New South Wales, Tasmania, and West Australia. While many producing units are small and spread over many communities, they rate significantly, in the list of producers of major economic importance in their districts. I. could quote instances, such as Tableland Tin Dredging and Ravenshoe Tin Dredging, on the Atherton Tablelands of Queensland; Ardlethan Tin, Gibsonvale Alluvials and Tullabong Tin in New South Wales; Renison Limited, Cleveland Tin, Aberfoyle Tin and Storeys Creek Tin Mining in Tasmania; and Pilbara Tin and Greenbushes Tin in Western Australia. All these firms provide solid economic support for the communities, in which they operate. In addition, there are over 300 smaller producers, who contribute to a total Australian production of 7,947 tons of tin. The end result of all this industry, enterprise and endeavour, is that, since 1960, Australia’s position has changed, from being a net importer of 1,708 tons of tin, valued at $3.4m, to a net exporter in 1970, of 4,673 tons, valued at $14m. I commend the Bill to the House.

Dr J F Cairns:
LALOR, VICTORIA · ALP

– I am glad to have heard the speech delivered by the Minister for National Development (Mr Swartz). He has said a great deal more that what he said when the Bill was introduced originally. He certainly has answered quite a number of questionsseveral questions, at any rate - that I felt I would otherwise like to raise. This means that my speech on this Bill will be cut very short indeed. The Minister left me in some doubt as to whether or not the contribution that is made by the producing country is a compulsory one. What are the limiting factors in agreement or practice which determine that Australia was able to have a contribution based on exports rather than production? Is this a. normal arrangement made in the International Tin Agreement or is there something unusual about this arrangement?

Mr Swartz:

– It is a special arrangement with Australia because of our high domestic consumption.

Dr J F Cairns:
LALOR, VICTORIA · ALP

–I thank the Minister.

The International Tin Agreement has operated since 1956.., This is the fifth phase of it and it will last for 5 years. It is a rational, humane, and. civilised way of conducting world trade. I think that it is important for a moment to ask the question: Why is it that arrangements of this sort can be reachedwith respect to tin but cannot be reached with respect to other commodities?

The Agreement has developed in this present phase. The Union of Soviet Socialist Republics, a net importer of tin, has signed for the first time and the Federal Republic of Germany has also signed the Agreement for the first time. But the United States of America, still, it would seem, very much an independent free trader in commodities as far as it concerns other nations, has still not signed the Agreement.

In some senses this Agreement is a collusive and restrictive one but it is one in which the consumers as well as the producers have an effective say as distinct from most collusive and restrictive agreements, and this must have a significant influence on the” prices and conditions’ “f fiat operate in the international trading of tin. But this kind of agreement depends upon effective participation by the members and from the Australian point of view it depends upon effective participation by Australia both to achieve Australia’s interests and to achieve - I would hope- international interests, lt is in the interests of producers of every commodity that there should be a rational, sensible way of controlling the way in which it is sold. There is nothing to be said for the methods of the jungle in international trade, nothing to be said for violent fluctuations - or any fluctuations at all, for that matter - and this is an example of the way in which world trade in any commodity may be rationally controlled in a civilised way. It is the way in which one would expect all commodities of significance eventually to be traded.

I want to emphasise that point particularly because it has not been emphasised so -far in the debate. This is a rational and civilised way of trading .md there is no reason why it should not apply to every commodity. There is no reason why we should not have a similar international arrangement for wool and one for wheat. There is no reason why such an arrangement should not be able to give greater stability and greater certainty in predicting the future and for better prospects of determining conditions of production and deciding upon future outlay. It would seem to me that this is the kind of advocacy that ought to be coming from all producers and particularly, I suggest, from Australian Country Party supporters who “are not in the habit of making it. Why can we not have a similar international agreement about wheat and wool? Why do we have to go through these terrible traumas of great fluctuations? Why do we worship uncontrolled nature so much? Once upon a time that was what happened in public health. Every now and again we would have a world epidemic which swept hundreds of thousands of millions of people out of existence but we do not worship that sort of thing any longer.

We have now established various measures of public health control which have eliminated most of these epidemics that used once to sweep the world but we still believe in epidemics in trade. We still accept these things as though they were beyond our control. But the establishment and operation of an agreement like the International Tin Agreement shows that these things are not beyond our control and they raise objectives that everyone concerned with international wellbeing, as well as the wellbeing of the national producer, ought to be willing to support strongly. So I commend this Agreement. The Opposition supports the Bill giving effect to it. I direct the attention of the House, and the Government in particular, to this Agreement as an example of the way in which international trade in every commodity of significance could eventually be organised and the way in which I hope, in particular, commodities like wheat and wool that are important to Australia will be organised. The Opposition supports the Bill.

Mr GILES:
Angas

– I am glad that the honourable member for Lalor (Dr J. F. Cairns) touched on the overall problem of commodity agreements because I think this is terribly important and I intend to do roughly the same sort of thing later on in my remarks. Unless I misheard the honourable member, he suggested that my colleagues in the Australian Country Party should look into the possibility of commodity agreements in wheat and wool. I would just reply to that suggestion by saying that there has been a very effective International Wheat Agreement which was superseded by The International Grains Arrangement. I do not know whether I misheard the honourable member or misunderstood him-

Dr J F Cairns:
LALOR, VICTORIA · ALP

– It does not have the same substance.

Mr GILES:

– No, one is a trifle broader than the other. The honourable member said that it was time they had a look at it with a. view to introducing one. I am just replying to that. I thought one had been introduced.

Dr J F Cairns:
LALOR, VICTORIA · ALP

– I suggested introducing one like this.

Mr GILES:

– Well, now if we want to introduce one like the International Tin Agreement all sorts of different things apply. The first is that we must have cooperation from producing countries and, of course, the nigger in the wood pile - if nigger’ is the right colour description in this case- was the Union of Soviet Socialist Republics. Evidently the honourable member for Lalor does not appreciate that the non-co-operation of the USSR was one reason why we could not get an agreement on wheat equivalent to the International Tin Agreement. However, I wish to develop that argument a little more fully later on. - 1 welcome the chance- purely as a personal matter- to talk briefly today on the International Tin Agreement. I have had a very great interest in this Agreement for a good many years,- ever since I had the opportunity to do economic geography, part time, at the Adelaide University. The International Tin Agreement is really fascinating. It copes, probably because of the type of commodity it deals with and certainly because of ,the type . qf- agreement itself, with circumstances, with, which no other agreement has been able to cope. One could say that the International Sugar Agreement and, indeed the Commonwealth Sugar Agreement, have functioned well. One could say that the International Grains Arrangement, until it was broken by the world surplus of wheat, functioned well. But the International Tin Agreement has held its head high for many, many years and has functioned over the operation of 4 full agreements. . Its success can be queried only twice. The first time was when Russia tried to flood the tin market and the second was when the buffer stock ran dry. This happened because there was a run on tin with consequent rising prices. In other words, the very principle of the agreement, whereby when prices rise stocks are released from the buffer zone and put onto the free market on the instructions of the (Council, broke down on one second occasion not many years ago.

The International Tin Agreement has become, with the advent of Australian participation for the first time as an exporter, an even more important philosophical part of our trade policy than previously. Our interest previously was primarily as a pro ducer and consumer but not as an exporter. Mr A. C. B. Maiden has defined trade policy - I quote this in order to set a base for my argument - as ‘the broad strategy behind a country’s, total, export or import trade’, and within that definition, commodity policy as being ‘the extension into the international sphere of national agriculturalincluding mineral - policy’.

So it is the relationship between the International Tin Agreement and our commodity policies that I wish to explore for a few minutes this afternoon. I think it is fair to say that it has become fashionable throughout the mass media of Australia and . in this Parliament to refer to many of the trade and internal policies of the Government as having fallen on bad times or as having fallen into disarray. It is very easy to join in these remarks. It is- very easy to say that if the Australian tobacco industry had not been protected, the. use of Australian raw. and unscoured wool in the United States of. America during the last year might not have fallen by 22 per cent or that if some other policy had been adopted the demand for Australian unscoured wool on world : markets last year would not have fallen by 8 per cent. It is. very easy to be critical when times are different. . One of the- worrying features of our trade policy in our, rationalisation, of it internally and externally,! is that changes are occurring so quickly; it must be a great source of worry to those administering this policy. It is - not unimportant that industry representatives and backbenchers from both sides crf the House should rethink some of these policies and, if necessary, kindly criticise them and produce new ideas about so many of these matters. I do not pretend for one minute that I have not been critical or that I do not like being critical but I would point out that it is very easy to be critical and not make constructive suggestions. I will be critical here and now. I believe it is quite insufferable that the Australian people have not been given a white paper dealing with Government attitudes on commodity agreements. If one spreads this argument to something wider - than commodity agreements I think our whole aim should be spelt out.

Is our policy anything more than trying to act through the General Agreement on

Tariffs and Trade to get a freer method of trade as a trading nation? Is this our policy in trade? Have we a policy which says that although we support and work’ for international agreements on coffee, mea’t and all sorts of things we should not do much to promote commodity agreements in other areas? The honourable member for Lalor (Dr J. F. Cairns) mentioned ‘ wool. I intend to touch briefly on that subject later. There are all sorts of other commodities. Do we, as a Parliament and as a government, attempt to’ compromise between the Labor Party’s attitude on the tariff of instructing the Board as to the guidelines the Labor Party requires or do we divorce ourselves from this and say to producers: ‘If you want a stabilisation scheme and if you want us to work in the realm of an international commodity agreement you have to tell us because unless you guarantee us some support we do not intend to .do anything about it’? The answer lies somewhere between this interference and a doctrinaire insistence that all good boys do as the government wants on the one hand and what I regard as too little leadership on the other. 1 have no doubt that in. the future when planning national budgeting at primary producer level - at all sorts of levels - and when budgeting becomes a matter of greater exactitude, there will be more merit for commodity agreements. Because I see no paper or policy statement of significance on these matters I do not know what the Government’s thinking is. I think the time has certainly come when we need to consider these matters. It has become fashionable lately, for instance, to say that we do not agree with supply management, to use a catch phrase. I think there is a fashionable trend back to the market place economy. I do not know that this is a valid exercise or whether we are not all getting a trifle hysterical and picking up the easy catch phrase ‘market place economy’ because I am quite sure that great merit exists in trying to equate supply with a consumer demand situation. After all, this is a business principle that is adopted widely by all sorts of businesses.

How is this for an example of supply management? Last year, due to Sir Henry Bolte trying to keep thin and other peculiar matters, there was a sudden demand for unsweetened grapefruit juice concentrate.

The facts are that over the last year, if my arithmetic is correct, 2 million bushels equivalent of unsweetened grapefruit juice has been consumed by Australians. Only a quarter “of this, 0.5 million bushels, has been supplied by the Australian producer measured as an equivalent’ in weighted grapefruit. Here in by-law entry is an interesting case of supply management applying internally in Australia and keeping on the shop shelves a commodity that shows no signs of losing its attraction to consumers in this country. In due course, Australian production, which is a very long range matter involving investment and the planting of fruit trees, will deal with this situation. The point I am trying to make is that this is a classic example of supply management by feeding to people who want it approximately the quantity they require of a raw material. This is precisely what we are trying to do with world commodity agreements. I do not know clearly what, the Government’s attitude is in relation to this and, with great respect, I ask the Minister for the Interior (Mr Hunt), who is at the table, to pass on to. his colleague, the Minister for Trade and Industry, the suggestion that some of these things should be explored and spelt out more deeply for Australian people, industry groups and Parliament in general.

As a trading nation do we or do we not want commodity agreements similar to the International Tin Agreement affecting iron ore, bauxite, steel, alumina, copper, zinc, lead? I do not know whether producers of these commodities want it. On the other hand, I do not know whether in the national interest we should listen too carefully oh occasions to the producers of those commodities. The Minister in his second reading speech pointed out that great price benefits have existed over the years as a result of these tin agreements. He said:

The Australian Tin Industry . . . has derived considerable price benefits from the operation of successive agreements.

If that is a valid remark then is this case not valid in respect of other commodities? I am thinking not altogether from the point of view of the interests of producers who may or may not want this action but in the interests of the national economy, without intruding into the producer’s private business to any inconvenient degree. We . must re-appraise these matters from time to time. Where do our national interests lie? Will price fluctuations in these commodities in future be so violent as to cause disruption to our national income. Will these alter, perhaps undesirably, the direction of investment, the direction of research or the direction of resource exploration? The Government must explore these matters and report back to the Parliament at some time in the future in the form of a White Paper.

If we look at all the commodity agreements that affect this country and the people in it directly or indirectly - I will not enumerate them now - we find all sorts of definitions that effect the type of thinking on each commodity. We should ask: Is a commodity durable? Is it non-durable, in which case an international .commodity agreement such as the International Tin Agreement may not be appropriate. Is the commodity semi-durable, as dried fruit is, in which case there exists- the International Sultana Agreement? Is there one line of the commodity, as in the case of tin? I do not imagine that there are different qualities of tin of any consequence. Perhaps I am wrong. I imagine that there is one line called ‘tin’. Or does it have 480 commercial equivalents, as does wool? If it does, obviously the International Tin Agreement will not be able, without a great deal of pruning and a great difference in thinking, to cope with a commodity such as that.

Is it a low volume commodity? Does it store easily, as tin does, or is it like loosely pressed wool which, is an expensive commodity to store as’ it has great volume? What percentage of the production is exportable and what nations are exporting it? Russia has rendered ineffective 2 agreements that we have considered. What is the relationship with other consuming nations? Is it, to use the phrase of the honourable member for Lalor, mildly collusive and restrictive in effect? Under these circumstances will the consumer nations agree to the commodity agreements? These are some of the factors that have to be looked at extremely carefully before we can develop a base for any commodity agreement. If we look at wool we find that there are several things-

Mr Foster:

– Is the honourable member talking about tin?

Mr GILES:

– The honourable member has always been tinny. He will not be for much longer. I hope that the honourable member has finished jabbering. If we look it wool, for instance, we find some things that are helpful and of consequence in considering this matter. Mr Deputy Speaker, can you do something with this perfect idiot down there who is interjecting? He has got the manners of a louse.

Mr DEPUTY SPEAKER (Mr Luchetti:
MACQUARIE, NEW SOUTH WALES

– Order! I ask the honourable member for Angas to withdraw that remark.

Mr GILES:

– Very well. He has not got the manners of a louse.

Mr DEPUTY SPEAKER:

-Order! I ask the honourable member to withdraw that reflection on the honourable member for Sturt.

Mr GILES:

– I withdraw it in unqualified fashion. May I continue? .

Mr DEPUTY SPEAKER:

-Order! I. ask the honourable member for Sturt to restraint himself and cease his conversation.

Mr GILES:

– I was about to say, when I was so rudely interrupted, that in Australia we have a reserve supply of wool purchased by the Australian Wool Commission. We do not know why we have it, we do not know the guidelines for its purchase, but we presume that it is doing the wool producers a lot of good. I accept this as an argument of some merit. But must we stick to a star ‘lot’ mentality as a result of which on diminishing markets in terms of price, the cost proportional to that commodity is going up every time we have to store wool? Do we need the number of lines of wool that we have been led to believe is necessary over the years? Only this week I received evidence to suggest that many of the users of wool in the international field do not mind whether it is 68, 72, or what it is as long as the length is right. Should we be re-thinking our entire position on wool, remembering the existing surplus which could be called buffer stock’? As far as I know, the Government is not thinking of it in this way but this need exists, not only in Australia but also in New Zealand and South Africa which have very nearly all of the world wool exports. Under those circumstances it is not right that we should try, not to prop up the price of wool so that it encourages artificial textiles, but to produce some situation which could have some meaning in the world of tomorrow.

Mr DEPUTY SPEAKER:

– Order! , The honourable member’s time has expired.

Mr HUNT:
Minister for the Interior · Gwydir · CP

-To summarise and answer gome of the comments that have been made by the honourable member for Lalor (Dr J. F. Cairns) and the honourable member for Angas (Mr Giles), I would like to make the point that whilst many of the international agreements for commodities do not necessarily have facilities for buffer stocks we do have an International Grains Agreement - the Minister for Trade and Industry (Mr Anthony) introduced the International Wheat Agreement Bill in this House last week- an international sugar agreement and an international coffee agreement as well as one for tin. Each of these agreements is tailored to the needs of the particular industry. I agree that we should move towards these objectives.

The citicism was levelled that perhaps the Australian Country Party should be doing more in this field. I draw the attention of the House to the fact that the former Leader of the Country Party, the Bight Honourable John McEwen, probably did more than any other man to try to bring about . an international trading approach to many of our commodities. There is nothing doctrinaire about the Government’s approach to these matters. It has been a basically pragmatic policy, taking each commodity in turn after consultation with the interested countries. The Government endeavours to devise an appropriate agreement which will stabilise prices for the commodity concerned at reasonable levels equitable to consumers and exporters alike. It cannot and does not ignore the wishes of the industry concerned.

The Government has endeavoured in all cases to confer with and ascertain the wishes of the various industries producing these commodities. Hence it looks to their advice on an industry basis before undertaking the initiative for a commodity agreement. I remind the House that Australia is a party to the International Sugar Agreement, the International Grains Arrangement, the International Tin Agreement and an agreement for the coffee industry. They are all international agreements. Since the International Sugar Agreement was brought into effect prices have trebled. Today sugar is selling on the international market at about $Stg46 a ton. The honourable member for Angas raised several points, one of which related to a proposed White Paper on trade and international trade agreements. He suggested that I might bring to the notice of the Minister for Trade and Industry the comments that he had made in this respect. I shall certainly do that. Beyond that I have nothing further to add.

Question 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 Hunt) read a third time.

page 2159

CUSTOMS TARIFF BILL 1971

Second Reading

Debate resumed from 7th April (vide page 1597), on motion by Mr Chipp:

That the Bill be now read a second time.

Dr J F Cairns:
LALOR, VICTORIA · ALP

- Mr Deputy Speaker, I suggest that this might’ be a convenient time to suspend the sitting.

Sitting suspended from 5.50 to 8 p.m.

Dr J F Cairns:
LALOR, VICTORIA · ALP

– (Quorum formed) Tariffs are a means of using the powers of government to protect or assist members of the community. Such a principle is realistic and sensible and no-one can afford to claim to stand against it, least of all representatives of farmers. Our purpose should not be to attempt to justify the principle or contend against the principle but to be concerned to work out ways of using it intelligently and effectively. It can be said that one of the main differences between those on this side of the House and those on the Government side, and between the Labor movement as a whole and all those business interests - and by no means all of them - who are or have been most opposed to the Labor movement is that those business interests and their political representatives in Parliament want to leave it to the market to decide what economic activity shall be carried on and what wages and prices shall be. But the Labor movement has no great affection for the market and wants to see built up various public institutions to protect people against the impact of the market and to provide for them the things that the market does not provide.

The market is not a process which arranges for capital and labour to be employed where it is most efficient and economic, nor is it a process that ensures that people will be rewarded fairly or even proportionately to their efficiency or productivity. Insofar as the market departs from the conditions of perfect competition, it departs from the conditions assumed to be necessary tor these results. The market in fact contains nothing like the conditions of perfect competition. It is increasingly dominated by a few vast organisations more and mon controlled from foreign countries. People still talk and argue as though the myths drawn from perfect competition are a good description of the way the economy works. They are not. The most significant economic decisions that have been made in Australian history, have been those made to protect Australia from the full effects of economic power exercised by vast organisations in other countries, largely in western Europe and the United States of America. To develop the means to secure this protection has always been the most urgent need for every small. country. Australia, still being a small country, requires not less of these means but more. The debate about tariffs fits into this context.

There are those who say that tariffs should be simplified and reduced, and that then Australia should rely mainly upon the market for what is to happen. They argue that if this occurs resources will be employed in the most efficient and economic places, and .they argue that full employment, not being dependent upon tariffs, will remain secure. I believe there could be tariff reductions without endangering full employment, but I do not accept the other assumptions that appear in the freer trade case. We do not know whether resources, after tariff reductions, would be employed in most or even in more efficient places or that the Australian economy would benefit from the change. This is, first, because the economy is not competitive. We may eliminate an industry only to find that we may have to pay much more to a foreign monopoly for what the Australian industry produced, even though the foreign “monopoly produces at a lower cost than did the eliminated Australian industry. No-one can disprove that proposition. In international trade economic power is used even more ruthlessly than it is in domestic trade, and the Australian Labor Party will never consent to any change which hands over to the foreign corporations more and more power over the Australian people.

There are others who take part in the debate about tariffs who say no more than that the tariffs should never be reduced. In fact, they take a position similar to that of the freer trade school. They too rely mainly upon the market. They want to keep the tariff wall a bit higher but they are content to allow the market to do whatever it can do over that wail. Neither school has much that is useful to offer for the economic progress of Australia. It is not the policy of the Australian Labor Party to rely more and more upon the market economy to maintain full employment, efficient and economic operation of the economy or a fairer distribution of the national income. It is the policy of the Australian Labor Party to develop more fully the means we need so that we may know more about the actual operation of the economy and know more about what may be done to get the best results in the future.

An Australian Labor Party government will be concerned to ensure that Australian resources are economically and efficiently used and that no excess prices are charged or unfair profits or other returns are made. An Australian Labor Party government will not permit an Australian industry to exploit protection to make excess profits by charging high prices. But equally an Australian Labor Party government will not permit under any circumstances an Australian industry which is operating economically and efficiently, and which is not charging high prices and making excessive profits, to be swept aside merely because some overseas competitor for a time may be able or willing to land goods at a lower price. With an Australian Labor Party government in office the Australian people can be assured that all those who work economically and efficiently will be protected, but no-one will be allowed to make excessive profits.

Government supporters often say that the Commonwealth Government cannot do this because it does not have sufficient constitutional power. But the Commonwealth Government can achieve this result by the way it makes and applies tariff protection. The Tariff Board can make sure not only that those in Australia who work economically and efficiently shall be protected but equally that people do not make excess profits. But it has never been the purpose of any Liberal-Country Party coalition to ensure protection on the one hand and to ensure that excess profits are not made on the other hand. Its purpose has been confined only to protection. To take any action about excess profits would completely contradict everything that . the Liberal-Country Party coalition stands for. It would make nonsense out of every word of its ideology, its political jargon and its policy. Protection, yes; but to. prevent excess profits, no, never.

This is why the case made by such freer trade advocates as the honourable members for Wakefield (Mr Kelly), Corangamite (Mr Street) and Angas (Mr Giles) is so oldfashioned and rudimentary. They do not want to prevent favoured people from using their economic power to make excess profits. This is not what they mean when they say they want more competition to ensure that resources are used more efficiently and economically. They do not really apply tests that relate to the economy as a whole or to the national interest. They merely stand for one economic interest against another. They believe that farmers would be better off if they could buy machinery, fertiliser, clothes or 100 other things at lower cost. They believe that importers, the chambers of commerce and international financiers would be better off if there were fewer restrictions in international trade and they could do just what they liked. The Press that speaks for these interests - the financial interests, mainly, and the farmers - like the ‘Sydney Morning Herald’ brood of newspapers, the ‘Australian Financial Review’ and so on do not support freer trade because it might result in greater efficiency. They support freer trade mainly because it would benefit certain economic interests that own or. support them.

The Australian Labor Party stands for certain interests too. It stands primarily for’ the Australian worker and his family. Tariff protection more than anything else determines whether the worker will keep his job or whether he will be thrown out to search for one elsewhere. Human welfare and real people are involved iri this. This is not just a matter of theory and jargon. The Australian Labor Party will never adopt a policy that may cause an upheaval in the lives of ordinary people simply because of some abstract economic theory preached by academics some of whom do live mainly in ivory towers, by writers in financial newspapers, or by ever so humble members of this Parliament. A Labor government will not permit any Australian industry to be deprived of ‘protection unless it is reasonably sure of the consequences. But a Labor government will not permit a protected industry to exploit- :the’ public by charging excess prices. Those are 2 cardinal principles of the Labor approach. But theold methods of protection- are totally inadequate.

Protection has often been decided on without adequate knowledge of the industry concerned or of its prospects. There are many industries which receive ‘. protection that have never been examined for years.. Protection has often been, granted although the Tariff Board is well aware there are monopolies at work and that collusive and restrictive practices prevail. Even in tariffs proposed in this very Bill there are several examples of that. Tariff protection has been exploited in this way for years under governments that have been continuously supported by honourable members such as the honourable members for Wakefield, Corangamite, McMillan and Angas and by the financial newspapers which pretend now to be concerned so much about efficiency and exploitation. No, it is not’ excess profits and feather bedding that worries them; it is that certain people and not others should have the excess profits and the feather beds.

Changes must take place ; in industry. They must take place in any . economy. An economy must be geared ; so that it can make necessary changes quickly and with the least resistance. From time to time some industries must contract; others must expand. Some have to close down. Some workers may., if they choose, remain in one factory all their working lives. Others may have to lose one job and move to another when they do not want to dp ‘so/ It will be the purpose of an Australian Labor Party government to face these facts. Briefly, it will be the purpose of an Australian Labor Party government to do the following: Firstly, to equip the Tariff Board, or some similar body, to be able quickly to ascertain all the relevant facts about any industry, under inquiry, which the Tariff Board now cannot do; secondly, to require the Tariff Board, or some similar body, fully to report all those facts to the government and to the Parliament so that those who have to make in the public interest decisions about tariffs, or no tariffs, will be sufficiently informed to be able to do so. We are not now sufficiently informed. We have a miserable standard of information upon which to base our decisions. Thirdly, a Labor government would plan changes in industry, or in simple words, it would be able to indicate to, or warn industry or those involved, that they can rely upon protection without conditions, or under specified conditions, for at least a period, or to a certain date. No industry should be cut down without reasonable warning and every industry should know that as long as it remains efficient and economic’ it will not be allowed to be cut down. Fourthly, it would ensure that every worker who loses his job because it has been judged to be in the public interest to reduce or eliminate a tariff that has protected him will be guaranteed a living wage until he gets another job, and he will have guaranteed to him, if he should want it, a retraining course calculated even to raise his skill and income in a new position. A worker does not have that at the moment. What we pretend to have in this field is just humbug. This is not because of the faults of anyone in particular who administers this field but because governments have never seriously tackled the job of transferring resources and retraining people.

The Jeremiahs, the old men of the Parliament - those who know nothing of what modern methods can do - will say that this cannot be done. I will leave such as the honourable members for Wakefield, Corangamite, Angas and McMillan to advance the argument that it cannot be done and that we cannot afford it. I will leave the Jeremiahs and the old men of the Parliament to do that. But there has never been an advance in social welfare, or in public economic management that such members have ever received in any other way. They have always said that it could not be afforded or that it cannot be done. This is not because they really believe that it cannot be afforded or done, but because they want to leave the power to do these things to what they call the market, and by leaving them to the market all it means is that they leave theses decisions to their own friends - the owners and managers of banks and other businesses. That is what it is all about. They stand for particular economic and social groups and interests. We stand for different economic groups and social interests. It is not just a matter of wisdom, intelligence, brilliance or being foolish. This side of the House represents 2 different sections of this nation. Those sections have to be represented here.

The honourable members to whom I referred cannot openly say that decisions about the future of workers and their families should be left alone to bank managers and managers of businesses. They have to say that something different, that it cannot be done or cannot be afforded. If enough people believe them then the bank managers, business managers and financial newspaper proprietors will be left with all the power to say what is to happen to workers and their families. This is what tariff policy is really all about. It is not just a matter of greater or less efficiency, greater or less ability or greater or less humility. It is also a matter of economic power and who shall exercise it. It is a matter of social prestige and who shall have it. It is a matter of the old against the new. It is a matter of the public interest against the private. Private interest has its role to play but Australia must be equipped with public bodies capable of getting the facts and giving the best possible and most informed advice about the future. The Tariff Board is not able to do this.

I want to make my position clear about the Tariff Board. I have no reason to believe that anyone associated with the Tariff Board is not efficient, capable and a person of integrity. I make no criticism that anyone is inefficient. I do not imply that anyone associated with the Board is not a fully competent and honest public servant. But I do say that the Board is not, and never has been, equipped to do its job. For several years now the Board,. has reported that it wants to make more systematic inquiries, that it wants to examine the relations of one section of industry to others, that it wants to examine tariffs that have not been examined for years. The Board has been reporting in this way for at least 4 years. In its last report the Board stated - I read to the House today an extract from this report - that it has been seeking an increase in its staff since way back in 1968 or 1969 and that this increase was held up by the Minister for Customs and Excise or the Minister for Trade and Industry; the increase was held up by someone as a matter of policy and was not submitted to the Executive Council for 8 long months.

Mr Chipp:

– Who said that?

Dr J F Cairns:
LALOR, VICTORIA · ALP

– This is on page 9, in paragraph 55 of the 1969-70 report.

Mr Chipp:

– Did you say that the Minister for Customs and Excise held it. up? .

Dr J F Cairns:
LALOR, VICTORIA · ALP

– No. I said the Minister for Customs and Excise or the Minister for Trade and Industry. I am not sure who it was, but somebody did.

Mr Chipp:

– You are not sure?

Dr J F Cairns:
LALOR, VICTORIA · ALP

– No, I cannot be sure of that, but the extract of the Tariff Board report points to the Minister for Trade and Industry. I cannot be absolutely sure who was responsible for holding it up. The Minister for Trade and Industry has told us nothing. In addition to this, the Minister was obliged to answer question on notice No. 2865 by admitting that the number of references then held by the Board on which no report had been made was 54 and. that 18 had been with the Board for 1 year, 9 for 2 years, 3 for 3 years, 2 for 4 years and 1 for more than 4 years.

With the Board reporting that ‘the resources available to it have been fully occupied on normal tariff revision inquiries’, with the Minister telling the Board that he expects a significant increase in at least some normal inquiries and with 54 normal revisions in hand, 18 for a year, 9 for 2 years, 3 for 3 years, 2 for 4 years and 1 for more than 4 years, why is it a matter ‘of policy’ whether the Tariff Board should get the staff it has requested; and why had 8 months to expire and yet the request of the Board for more , staff had not even been submitted to Executive Council? Even if the Board. gets the staff it has asked for my point still’ remains. The Board will be far from equipped with the necessary staff to do its job. “How can it be denied that in these circumstances the Tariff Board is not equipped’ to make its inquiries fully enough?’ With the Tariff Board so badly equipped ‘ it is obvious that it cannot inform the Parliament whether tariffs should be retained or removed.

I believe that it is contrary to the policy and intention of the Government to equip the Tariff Board so that. it. may ascertain and report a full range of facts.-‘ The Government wants tariffs to be retained or removed but it does not want industry to be scrutinised. How is it that /the advocates of freer trade have said so little about the delays in inquiries and about’ the lack of staff at the Board? Why is it that they praise Tariff Board reports for t their adequacy . and completeness , of information when it is obvious that they i>re very poor in the information they ! provide? One hardly ever finds one Tariff Board report that is set but similarly to another. One hardly ever finds any information about costs or any explanation why costs here might happen to be higher than elsewhere. In that very important sector of Board reports relating to costs much is padding and much is not of any value at ali. It is obviously put there as a substitute for real information. Members opposite cannot expect the Board to. be ,in It position other than that which it is in. It has not the means to find out,’ nor has it the approach which is necessary for it to find out, information.

These advocates of freer trade differ from the rest of the Government only because the Government wants the status quo to rumble on without examination and change whereas they want tariffs to be cut or removed, but equally as much without scrutiny. They know very well that an adequate examination may show that a tariff should not be cut or removed, and that is not what they want. There can be no possible dispute for the conclusion that the Tariff Board is not equipped to make the inquiries it is sure should be made, even at the level it makes inquiries now. But is that level or extent of inquiry sufficient? It is not, for the reasons that I have given. Even a quick reading of almost any Tariff Board report .will show that it is not It is only in recent times that we have been finding in Tariff Board reports summaries of information which is available from the Commonwealth Statistician and which could have been obtained from that source in the past. Hardly ever do we get a systematic presentation in a report. Who are the producers of the products? How many of them are there? Where are they located? What are the expected levels of future imports? Where do they come from? Why are costs higher here, or if they are lower here, why is there a difference? Hardly ever is this important question of comparative costs .properly handled.

A report Should begin with -a statement of the reference made by the Minister. It should then show in the clearest possible way what the old rates were and what the new rates will be. Sometimes one has to search through a report to find this simple information. A brief history of the industry and the tariffs in question should be included. That information appears sometimes, but frequently it does not. Then in the report should come a statement on the industry - the number of firms, their location, the size of the industry, the number of people employed and the amount of funds employed. .In most cases when this is referred to at all we are told that the information is not available because it has been given confidentially. If this Parliament is to grant tariffs, which means millions of dollars in the allocation of resources, members must not be satisfied to leave so much under the secrecy of what is confidential. No Parliament can decide upon a tariff without that kind of information. At best there are rarely any more than hints that the Board has been given some information confidentially about these important things. In their reports, in all cases there should be a clear statement of imports and import prices and how each has changed over the relevant period.

Careful attention must be given to ascertaining and stating actual costs of production in Australia and comparative overseas costs. In every case there must be information, in a systematic way, showing why Australian costs may be different from overseas costs. At best there is rarely any satis factory information about costs, and the sections of the reports dealing with them are invariably general and abstract. It is cost and comparative cost situations, and the reasons for differences, that represents the core of a report, but often there is no core at all, and when there is it is frequently incomplete and vague. The Board also should set out in any report recommending any reduction in tariff whether it considers that the industry should be given any notice of the change - this is never, even considered - and what it considers will happen if the tariff is reduced. We must have some picture of what will happen if we slash a tariff. We should have some information about what will happen to the people involved, but never is any attention given to this aspect. Never is any attention given by the Board, the Government or anyone else to the alternative possibilities of employment and to the necessity for retraining employees in situations like this. The Board should be able to take into account the number of people who may be disemployed or drawn into employment by a tariff change, and it should be able to say what alternative employment there is or where workers will come from if more are needed. This subject is never dealt with. The Board should be able to say whether any disemployed workers will be suitable for retraining, or what might otherwise happen to them.

We have, in this Bill, one case - the manufacture of wood screws - in which profitability does not appear to have been satisfactory, but on top of that 2 new firms joined the 3 already in the industry. They must have added to the over-capacity that appears to have been there already, but despite this situation the Board recommended a higher tariff. Is the Board never concerned with the number of firms in an industry and is it prepared to fix a tariff to protect an industry and then leave the firms to fight out the result, wasting resources because they have been protected? There may well be a vast waste of resources. The Australian industry might be very efficient and economic in one form, but not in the form that it has taken - often because of the kind of decision that has been made by the Board and by the Government. The Board, using its present methods, may, in fact, cause inefficiency and lack of economy in an Australian industry which, except for the Board’s decision, may have taken on an economic and efficient form of structure. All of these things are possibilities yet we have had from the Minister this afternoon a statement full of abstract nonsense and in no way coming to grips with that situation. This has gone on for long enough. For 5 or 6 long years we have been debating tariffs in this House without ever having come to grips with the subject, merely talking of tariffs of protection and of free trade of theories which may have meaning or none at all. That is what it has amounted to. It has been wasted time. We must come to the realities. We must have the necessary knowledge to develop industry through tariffs and other means. On this side of the House we must realise that we are a planning Party and that we intend, if we can, to find out where we should be going. We intend to lead this nation, as well as we can, along that way.

The Opposition will vote against the second reading of this Bill and will continue to vote against Customs Tariffs Bills in this House until at least 4 conditions ‘ are satisfied. Firstly, that the Tariff Board or a similar body is fully equipped quickly to ascertain all the relevant facts about any industry under inquiry or any industry that should be under inquiry. Secondly, that reports from this body are adequate enough to allow the Government and the Parliament to decide what should be done about tariffs or other related matters. Thirdly, that sufficient notice of changes is given to allow all those affected to plan to meet the changes. Fourthly, that every worker who loses bis job because of any changes will be guaranteed a living wage and should have available to him a retraining course calculated even to raise his skill and income in a new position.

Mr Chipp:

– Did you get that through your Executive?

Dr J F Cairns:
LALOR, VICTORIA · ALP

– This is the policy of the Australian Labor Party and until these conditions at least are present we will not be voting for any tariff legislation.

Mr Chipp:

– That is not in your platform.

Dr J F Cairns:
LALOR, VICTORIA · ALP

– Our platform is that we accept protection as long as we are satisfied that prices are properly controlled.

Mr Chipp:

– Who determines your policy?

Dr J F Cairns:
LALOR, VICTORIA · ALP

– That is for the parliamentary Party to determine and we have determined it. I challenge you, Mr Minister, and anyone on your side, to say what your policy is and to stop giving us the meaningless nonsense which was served up this afternoon by the Minister, in the guise of guidelines for the Tariff Board. We have told you what our policy is, clearly and unequivocally. I have told you the conditions under which we will continue to vote against these Bills. I throw the ball over to you. Now you tell us what your attitude to tariff making in this nation is.

Mr Chipp:

– This has been approved by the Federal Executive, has it?

Dr J F Cairns:
LALOR, VICTORIA · ALP

– For too long you have been living on ambiguities and abstract nonsense. The time has come to an end when you can’ do that. The challenge is thrown over to you’ and I am waiting for you to answer it.

Mr DEPUTY SPEAKER:

– (Mr Lucock) - Order! The honourable member’s time has expired. , (The Clerk’ having announced the receipt of notices of motion)

Mr Buchanan:

– I am not sure whether this is a point of order but I seek your guidance, Mr Deputy . Speaker. Surely when we are in the middle pf a debate on tariff, which concerns things ‘of very great moment, and when an honourable member on this side is about to reply to something completely nonsensical which has been said by the honourable member for Lalor- ; i:

Mr DEPUTY SPEAKER:

-Order! The honourable member is debating the issue. There is no point of order. The’ honourable member will resume his seat.

Mr STREET:
Corangamite

– The honourable member for Lalor (Dr J. F. Cairns) has challenged anybody on this side of the House to make known their policy on tariffs. I have the greatest possible pleasure in putting forward tonight my’ policy on tariffs. The honourable member has ascribed to me and to other honourable members on this side policies which I have never espoused and which, as far as I know, have not been espoused by other honourable members, and this should become apparent during the course of my speech tonight. The honourable member for Lalor also referred to the necessity for retraining those people who may be displaced by a reduction of tariff or those people who may be eliminated from an industry which is no longer judged to be economic and efficient, if I understood him correctly. All I can say to that is that the Australian Labor Party has shown that it is lamentably ignorant of the recent legislation introduced into this House which relates to a scheme for job retraining for those displaced by technical change and which incorporates realistic measures precisely on the lines advocated by the honourable member for Lalor. The interesting part of the honourable member’s speech was that he seemed to assume, for unspecified reasons, that planning everything would solve all of our problems. What he has forgotten is that any plan will be wrong. No forward plan will bc exactly right. All planning will be wrong in some degree. The degree of consequent disaster will be directly related to how wrong a plan is. But it must be remembered that it will be wrong.

Today has been an historic day in an Australian tariff debate because the Minister for Trade and Industry (Mr Anthony) made his long awaited statement on tariff policy. It may be argued whether a major statement was necessary. I think that the answer to that is yes, because all forms of production in the world today are subject to a rate of technical change which has never before been experienced. Australia is one of the main trading nations of the world. If our place is to be retained we cannot remain aloof from these changing circumstances. Australia must keep up with the world because if there is one thing which is certain in this uncertain world it is that the world will not slaw down for us. How successful have we been in the past? We hear a great deal said about the much vaunted rate of increase in our gross national product. I would like to refer to the fifth edition of the World Bank Atlas which indicates that Australia’s growth rate over the period from 1961 to 1968 was 2.4 per cent. In that period there were 23 countries with a per capita gross national product of over $1,000 a head. Of those 23 countries Australia ranked twenty-first in rate of growth. We were above only New Zealand and the United Kingdom. I would not pretend that this performance is due solely to our tariff policy, but certainly it will be very difficult to improve our relative position on this table if resources continue to be diverted to the high cost areas of production.

In the present very difficult inflationary situation Australian consumers would benefit greatly from the stimulus provided by some outside competition, and certainly sections of our own industry probably need the same stimulus. The statement made by the Minister is relevant npt only to the reports we have before us today but is even more important to the future tariff policy of Australia which, in turn, will exert a very strong influence on the form and direction of the Australian economy. I congratulate the Minister and the Government on the statement, and in particular on the emphasis given to maintaining the complete independence of the Tariff Board. This was essential for the Board’s proposed review of tariff protected, industries. We can now be reassured that this review will take place with the freedom of the Board unimpaired by any restrictions placed upon it by the Government.

In recent years there has been a great deal more informed discussion on the tariff and a greatly increased awareness of the effects of tariff, not only the direct effects of the cost involved in the higher prices which have to be paid for tariff protected goods compared with those imported duty free, but far more importantly the indirect effect, that is, the effect on the arbitration system and of the pervasive influence of tariff protection extending from the higher cost of the tariff protected product itself to the users of the products, who in turn pass on their costs to the consumers. A matter of particular concern to those who have to operate without protection is the distribution effect of tariff protection because income is distributed away from those without protection to those benefiting from protection. The hardest hit in this first group are the primary producers, many of whom have no protection and face declining prices for their products.

A further and more recent stimulus to interest is the present inflationary situation, to which I referred a moment ago, because tariffs impose a cost penalty on the economy and the higher the protection the higher the penalty. This very important factor was specifically referred to by the Minister and was taken into account by the Government in agreeing with the Tariff Board’s proposal that the tariff review should begin with those industries in the high cost category which have not been reviewed before or in recent years. The Minister, quite rightly, referred to the fact that while the Tariff Board should be called upon to report only on the economic and efficiency aspects of an industry, the Government retained the right to take into account other criteria, such as the employment of specialised classes of labour, the development of special skills or technical development, export earnings and domestic competition for imports.

However, there are 3 particular argu ments which are sometimes used in support of tariffs to which I should like to refer. The first is that tariffs are needed for employment. In commenting on this argumentI again emphasise that it is not tariffs as such that I am criticising;I am criticising unwise or unduly high protection. In the present Australian situation of full employment and shortage of capital, it is demonstrably ridiculous to claim that high tariffs are required to provide employment. When there are more investment opportunities than capital can fulfil, the only result of excessively high protection will be to divert scarce resources of capital and labour into high cost industries, when the same resources would show the nation a better return in low cost industries.

The second argument is: ‘But where are the low cost industries?’ The honourable member for Lalor will not agree with this but honourable members on this side of the House sincerely hope that this Government never reaches the stage where it directs firms or industries where to invest their money. But again I come back to the point that everyone agrees that Australia is short of capital. In fact, we rely heavily on overseas capital to maintain our growth rate. Because a great deal of local capital is tied up in high cost industries we have had to forgo hundreds of millions of dollars worth of equity in many of this country’s largest and potentially most profitable projects, particularly mining.

The fact that we have got into this position through unwise tariff protection in the past is no argument to continue it in the future.

A third argument sometimes put forward is that we should take into account the wage level of overseas suppliers. If goods can be sold cheaply in Australia because the wage levels in the countryof origin are lower than ours, then, so the argument goes, our products are entitled to special consideration in order to protect them against this allegedly unfair competition. There are 2 points worth mentioning here. The first is that imports of this kind generally come from the less developed countries, and everyone seems to applaud the principle that it should be a prime object of Australian policy to encourage and assist those countries to raise their living standards. But how can they do this if we refuse to buy goods from them or deny them the opportunity to compete on their merits in fields where they have a comparative advantage?

It is interesting to note that the same people who advocate protection against low wage sources are very liable to argue that protection is also justified to protect our industries against goods produced by countries who are able to take full advantage of the economies of scale in their production. Very often these goods come from the largest and most technically advanced countries, with wage rates higher than ours. So if we are going to protect all our industries against low cost suppliers on the ground that their wage rates give them an unfair advantage, and against high cost suppliers, on the ground that their scale of production gives them an unfair advantage, who is left to provide fair competition for our industries? It appears that the only production left to use as a yardstick by which to measure our performance will be that of countries with relatively high wage rates but who are unable to achieve economies of scale in their operations. If we base our tariff policy on these foundations, it does not seem likely that we will enhance our ability to compete on world markets abroad or to contain costs to the consumers at home.

A recent Tariff Board report has disclosed that the average effective rate of protection in Australia is no less than 46 per cent and that the total protection available to manufacturing industry - not necessarily used, although we hope that the Tariff Board will be able to tell us how much of the amount is actually used - is $2,700m. I should like to interpolate here and say that the widely criticised $200m assistance to primary industry seems pretty small to me in comparison with that figure. Primary producers are constantly being exhorted to produce at a cost that meets the market price, and I have no doubt that this is the correct policy from the national point of view and, in the long term, for primary industries themselves. But what is sauce for the goose is sauce for the gander, and it would be un thinkable to apply standards to the generally profitable and indeed, in some cases, relatively affluent manufacturing industries less severe than those that are applied to the struggling, embattled primary industries.

It is clear that in the past our tariff policies have resulted in a degree of misallocation of resources which we can ill afford, and it is to be hoped that the Minister’s statement will prevent such misallocation in the future. I should like to give a few examples of this. I think that it was my friend the honourable member for Wakefield (Mr Kelly) who first pointed out that in Australia we have 4 motor car manufacturers and several assemblers, for a population of between 12 million and 13 million, receiving protection at an effective rate of 67 per cent. In the United States there are also 4 motor car manufacturers but there are no assemblers for a population of more than 200 million. Their tariff protection is at the rate of 3 per cent or 4 per cent.

If we look at the small air-cooled engine industry we find that successive increases in tariff protection, now standing at 65 per cent have resulted in gross overcapacity. I hasten to reassure my colleague the honourable member for Ballaarat (Mr Erwin), who naturally takes a keen, proprietary interest in this industry, that it is not the industry itself that I am criticising; it is the result of unwise tariff protection. But the piece de resistance must be the example quoted by the honourable member for Wakefield recently concerning the humble household plastic bucket. I could not believe this story when I first heard it, but subsequent investigation has shown it to be substantially true; it has been confirmed. Imagine yourself a manufacturer of plastic buckets in Australia. You have the choice of buying your raw materials from the local chemical industry, operating under a degree of tariff protection, or getting them from overseas and paying the import duty. In most cases I think it is true to say that you would buy the materials locally because it is easier, and you would pass on the high cost of your raw materials to the housewives who buy the buckets.

But there may be another course of action open to you. Suppose you bought a plastic bucket manufactured in Hong Kong from raw materials supplied by the same Australian chemical industry from which you bought your raw materials but supplied under what is euphemistically termed a policy of marginal pricing for export. Having got the plastic bucket back to Australia you could then grind it up and manufacture your plastic bucket from the granules produced. It is technically possible but surely so ridiculously expensive that it would be of only academic interest. But I am assurred that a manufacturer who adopted this practice could make and sell a plastic bucket cheaper than one manufactured from raw materials bought in the normal course of business in Australia. It needs no further elaboration from me to emphasise the ultimate economic absurdity of the situation or the fact that the implications go a lot further than plastic buckets.

That brings me to my next point, which is the increasing importance of manufacturing industries in earning export income. Primary industries are certainly still the most important single source of export income, but the principal growth in the future will come from the mining and manufacturing sectors. Mining obviously will depend very largely on export markets. This industry has long term contracts and profitability will, to a great extent, be determined by the level of local costs. Many capital items of equipment required by the mining industry come from the metal manufacturing industry which, as the Minister said in his statement today, would be one of the first industries referred to the Tariff Board for review. This industry enjoys protection at an effective rate of 80 per cent. But manufacturing industries themselves will become increasingly interested in keeping tariff protection at reasonable levels. Exports of manufactures have been rising at a tremendous rate in the last few years. The annual rate of increase has been approximately IS per cent. This has not happened just by chance. More and more Australian industries are finding that, to achieve economies of scale in production they must produce in quantities which cannot be absorbed by the domestic market.

What I have said leads, I think, to one conclusion. It is this: As Australia becomes a great industrial nation, the primary industries, the mining industries and the manufacturing industries will find themselves increasingly not in competition for government aid and assistance but with a great common objective, that is, to remain competitive in world markets. Many manufactured products must pay the costs of high protection on their inputs. This obviously severely affects their ability to remain competitive. If we price ourselves out of world markets, Australia will become a nation whose people are reduced to taking in each other’s washing for a living, lt is not merely the role of the Tariff Board which we are talking about, important though that may be. It is nothing less than the future form and direction of the Australian economy.

This Government is in a position where it will be responsible for making the decisions which will shape the economic future of the nation. If we make the right decisions and assuming there is no world catastrophe the prospects for this country seem almost unlimited. If we make the wrong decisions, we could endanger all that we have and all that Australia could be. These are very great responsibilities, probably second only to the defence and the security of the country. The actions of this Government during the last few months have proved that we on this side of the House are prepared to take a responsible attitude to the problems that Australia is facing. What we need to do now is to continue to prove that we are worthy of this country and of the people who have elected us. One test of our worth will be our tariff policy, (t has taken many years of dedication and hard work, particularly by my colleague the honourable member for

Wakefield, to get such a statement made in this Parliament. It is my belief that this statement signals the start of a new era in Australian tariff protection. Let us give the Tariff Board the facilities that it requires, and let it get on with the job.

Mr DEPUTY SPEAKER (Mr Cope:
SYDNEY, NEW SOUTH WALES

– I call the honourable member for Chifley.

Mr Buchanan:

– Before you do that, Mr

Deputy Speaker, may I make a-

Mr Armitage:

– No.

Mr Buchanan:

– 1 take a point of order.

Mr DEPUTY SPEAKER:

-Order! What is the honourable member’s point of order?

Mr Buchanan:

– 1 refer to what happened at the conclusion of the speech of the honourable member for Lalor (Dr J. F. Cairns). We were right in the middle of a debate on tariffs when the clerk at the table came in ana*-

Dr J F Cairns:
LALOR, VICTORIA · ALP

– No point of order arises.

Mr Chipp:

– Let the Chair hear it.

Mr Buchanan:

– The clerk came in with a matter that was absolutely extraneous, lt had nothing to do with the business before the House. Please, could not these matters be introduced at a more suitable time when the flow of debate would not be upset?

Mr DEPUTY SPEAKER:

-Order! The point of order is without substance. I suggest that that is a matter for the Leader of the House and the Whips.

Mr Buchanan:

– I could not agree more.

Mr ARMITAGE:
Chifley

- Mr Deputy Speaker, I intend to deal with the matters set out in the Bill. The previous speaker, the honourable member for Corangamite (Mr Street), dealt mainly with the theories of protection versus free trade. This seems to be a particular ability of the Government forces at the moment. Government members are having the first class argument on this matter. They are saying: The day of Jack McEwen is finished. We are going to go our own way now. Jack McEwen no longer runs us. We will have our policies implemented’. 1 gathered from the honourable member that his policy in terms of the attitude of the Government on this issue of protection versus free trade is one of free trade.

I only hope that the honourable member has not too many industries in his electorate because he may find that, if the ultimate policy that he advocates is implemented, considerable unemployment will occur within those industries in his electorate. For that reason, I feel that the honourable member may be taking a dangerous course. If the ultimate policy that he proposes is introduced it could bring about considerable unemployment in many electorates. This might happen even in his electorate, in which case he may need to revise some of the policies that he has advocated. I will watch this matter with interest in the future. However, I wish to deal with the Bill itself.

The Bill increases tariffs in many cases and decreases them in other cases. Broadly speaking, the Bill increases tariffs in respect of the chemical industry. The effect of the Bill in relation to vulcanised rubber sheet actually is a plus and a minus - a little bit of both. In the case of footwear - and considerable competition to the Australian industry comes from Japan, among other countries - the Bill very decisively decreases the tariff; in other words, it will allow competition from Japan in the future.

I turn now to the steel industry. Here the Tariff Board has carried out a sitting on the fence job - a 50-50 approach - with some increases and some decreases. Next, I mention screws. Here we get into the metal trades industry. Summarising the document which explains the purposes of this Bill, we can say that, broadly speaking, the tariff is reduced with respect to the metal trades industry; in other words, protection of the industry is reduced decisively.

The decision in relation to pencils, crayons and chalks again is a fence sitting job with a few pluses and a few minuses. In some instances protection is increased but mainly it is reduced. Again, in the fertiliser industry, the tariff protection has been largely reduced. The same can not be said with regard to artificial Christmas trees. We are going to protect artificial Christmas trees. The Tariff Board is not worried about the metal trades industry but it thinks that we should protect artificial Christmas trees. Protection with respect to agricultural industries will be reduced. The honourable . member for Riverina (Mr Grassby) will be glad to hear that! With the exception of a few items such as cherries and orange juice, protection to Australian industries definitely has been reduced.

Mr Grassby:

– Irresponsibly.

Mr ARMITAGE:

– Quite irresponsibly. I agree. I will give an example of this. I can see, Mr Deputy Speaker, that you are chuckling. I can recollect once receiving many, many telegrams from the Australian citrus industry opposing an increase in imports of citrus juice. I can recollect seeing you, Mr Deputy Speaker, as the member representing the Redfern district, reading out those telegrams. I can recollect saying at that time that you, Sir, represented the most unique constituency in Australia; you had citrus orchards in Redfern. 1 wish to deal with, some of the increases that have occurred in imports of. cherries and citrus juices. This will interest the honourable member for Riverina just as it interests people in areas close to my own electorate, for example, in the area of Mitchell. In 1967-68, 17,137 gallons of orange juice was imported into Australia. Today, orange juice imports stand at 48,328 gallons. These figures show an appreciable increase. Despite the fact that the citrus industry in Australia is an area which deserves protection and assistance, as is the case with cherries, the protection necessary by way of tariffs to help the industry is not provided. Looking at the overall picture of tariffs I gather from the way Government supporters are acting tonight that the discussion of tariff policy is the in thing. It is the old story of the protectionist versus the free trader. As I said before, the honourable member for Corangamite is obviously a free trader. Of course, this argument is not new. It happened 30 or 40 years ago. The question of protection versus free trade has been discussed in the universities for many years. For many years people were discussing whether Australian industry was efficient enough to compete against imports and I cannot help but feel that I am living in days gone by. This has all happened before.

It is a very good thing that the free traders did not have their way 40 or 50 years ago because if they had we would still have a rural economy. We would not have an industrial-cum-rural economy as we have today. We would not have been able to overcome the problems of the postwar years when we had to employ hundreds of thousands of returned servicemen. We would have had to settle them in the wool and wheat industries and in the rural industries generally.

Mr Grassby:

– It would have been impossible.

Mr ARMITAGE:

– As the honourable member for Riverina says, it would have been impossible. But fortunately we had in those days a few people who looked a little ahead and they said: ‘An industrial economy for this country is more likely to provide employment, earn the necessary overseas currency, give us a healthy balance of payments and enable us to produce our own motor cars and things like that*. I can remember as a child that a box of matches similar to the one I hold in my hand was imported. We did not make matches.

Mr DEPUTY SPEAKER (Mr Cope:

– Are they my matches?

Mr ARMITAGE:

– I did not know you were a smoker, Mr Deputy Speaker. After this 1 will know where to borrow a cigarette. But the facts are that a box of matches had to be imported only a matter of 40 years ago. We had no motor car industry, no chemical industry - we had very little secondary industry - but fortunately some people felt that we should give Australian industry a go in the belief that this country could make anything if it was given the opportunity.

Mr Buchanan:

– Such as what?

Mr ARMITAGE:

– The honourable member says: ‘Such as what?’ That is how much confidence he has in his own country.

Mr Buchanan:

– That is not what I said.

Mr ARMITAGE:

– That it what he said. I still say that the important issue is whether or not we give industry in this country a go. As I said earlier the main section of industry being attacked here is the metal trades industry. Honourable members must remember that the metal trades industry is the section of industry which determines our conditions, wages and terms of employment. There is a great deal to be said for the points made by our shadow Minister for Trade and Industry. He said that the trade union movement had not been consulted in regard to these tariff policies. Earlier today while dealing with that innocuous statement made by the Minister for Trade and Industry (Mr Anthony) the shadow Minister said that the Minister had sat on the fence and had not said anything new. He had made no commitment as to what he intended to do in the future. He had said, in effect: ‘Yes, the old man has gone. I would like to knock his policies. I have a lot of pressure groups working on me bu I do not know whether I should do it, so I will sit on the fence’. Our shadow Minister said that surely he should consult the trade union movement on these issues because there are various pressure groups today, including some elements of the Press gallery and some lobbyists - I do noi think I need to mention names - which are very strongly advocating a reduction of tariffs to allow cheap imports, apparently because they have some interest in this. The former Minister for Trade and Industry, Jack McEwen, was quite explicit both outside this House and inside it as to who these people were. He was also quite explicit as to who the lobbyists for these overseas interests were. In fact, I can recollect a time when he barred the Prime Minister (Mr McMahon) and prevented his becoming Prime Minister because he considered that the Prime Minister was advocating the cause of one of the major lobbyists.

Our shadow Minister for Trade and Industry said today that we should properly equip the Tariff Board to enable it to make these inquiries because it is obvious from the inadequate information contained in this report and in the reports that have preceded it that no member of this House could possibly honestly decide whether or not this Bill should be passed. We have inadequate information. The information has not been given to us. We have not the basic information from which these reports were compiled and that is the reason why the Opposition has decided to oppose every item contained in this Bill. How can we possibly pass this legislation when we have not been given the necessary information upon which to determine whether or not it should be passed. There is a great deal of logic in this and it is a pity that Government supporters were not as honest because they are accepting the decision of their Minister without adequate information being placed before them.

In his statement earlier today the Minister made the point that if there is a general review of tariffs the first section of industry to be looked at will be the metal trades industry. We know that if that section of the industry is attacked there will be a reduction in wage standards because it is used as a yardstick for the whole of industry. Of course, we know how the former Prime Minister made that point. The headline in the Sydney Morning Herald’ of 3rd March this year stated:

Gorton pledges tariff check on inflation.

In other words, he was going to use the instrument of a reduction in tariffs, particularly in the metal trades sector, as a way of cutting down the power of the trade union movement. He was going to do this by reducing the bargaining power of the trade union movement and so reduce wages and employment in that sector of industry.

Mr Giles:

– That was a damned good thing.

Mr ARMITAGE:

– A member of the Government forces has just said it would be a damned good thing. He said it would be a damned good thing to reduce wages; he said it would be a damned good thing to reduce employment in the metal trades section of industry.

Mr Giles:

– I rise to order. It was I who interjected but I certainly did not say the things that the honourable member is alleging I said.

Mr ARMITAGE:

– May I continue, Mr Deputy Speaker? I have been very truthful. The honourable member said it would be a damned good thing to use tariffs to reduce employment.

Mr Buchanan:

– That is not what the honourable member said.

Mr ARMITAGE:

– I said there are moves in the Government ranks, initiated by the former Prime Minister, adopted by the present Prime Minister, and adopted by the present Minister for Trade and Industry to reduce employment in the metal trades sector of industry and to reduce wages in that sector. The honourable member said it would be a damned good thing. That indicates the motives behind this Government’s policy. So far as this Bill is concerned-

Mr Giles:

– I rise to order. It is not my wish to be impolite and butt into the honourable member’s speech. I did interject but with reference only to his earlier statement about the powers of unions.

Mr DEPUTY SPEAKER (Mr Cope)Interjections are completely out of order in any case.

Mr ARMITAGE:

– I think the honourable member is getting worried. The Australian Labor Party commits itself to full employment in this country. It is disturbed by reports that the Federal Government proposes to use a reduction of tariffs in key sectors of industry as an instrument to weaken some Australian industries, particularly those in the metal trades sector, thereby bringing about substantial unemployment in those industries with a consequent reduction in the bargaining power of salary and wage earners. That is the matter in relation to which the honourable member interjected. At the same time the Opposition is not opposed to any measure designed to reallocate capital, manpower and materials to improve national prosperity. It believes it is against the interests of workers in industry and consumers to maintain excess prices and profits behind a barrier of monopolies and other restrictive trade practices, as well as excessive tariffs. The Opposition will not support a reduction in tariffs unless such a reduction is supported by adequate guarantees that the reduction will not weaken the bargaining power of salary and wage earners and will not reduce their living standards.

Mr DEPUTY SPEAKER:

– Order! The honourable member’s time has expired.

Mr BUCHANAN:
McMillan

– Tonight we are discussing the philosophy of tariffs. If we were to take the philosophy to its logical conclusion we would say that those people who are trying to reduce the incidence of tariffs would create a situation where anybody could buy a Japanese motor car for about $1,000 less than they are paying for it now if we did not have a motor industry in Australia. General Motors-Holden’s Pty Ltd employs perhaps 100,000 men; I do not know exactly how many people work for that company. There is a suburb of the city of Dandenong called Doveton, the growth of which was made possible by the fact that General Motors-Holden has established an industry in that area and is paying out hundreds of thousands of dollars to people who are now able to buy motor cars, boats and caravans, go away for holidays and really enjoy the very high standard of living we have in Australia. A lot of people at the present time are trying to destroy that picture. 1 do not believe in high tariffs. I make that quite clear. My position in this regard has been criticised a few times and it has been said that I am on the side of every manufacturer who wants an increase in tariffs. I am not. But I am completely opposed to the present method adopted by the Tariff Board in trying to arrive at what it has called the equivalent rates of duty. It has gone right away from the concept for which we have worked over the last SO years in order to introduce something entirely new. I will continue to oppose this as long as I can. I will probably be beaten in the finish but I will continue to oppose it. It is absolutely impossible for Australia to become the great industrial nation which it has the destiny to become unless we can develop the manufacturing industries that can turn our raw materials into something we can sell to the world as secondary products. Some of these will be partly finished, some will be totally finished. Australia has increased its exports of manufactured products from a miserable $50m a year to about $800m last year and this will continue. We have a Tariff Board which has been established for the last 50 years - it was started about the 1920s - and in the last couple of years we have seen it trying to do some absolutely dreadful things to Australian industry. I say this very deliberately because I believe that what it is trying to do will do a lot of damage to Australia if it is allowed to continue this way.

Today was a watershed in the whole tariff controversy. The Minister for Trade and Industry clearly stated what the Government intends to do in its tariff policy in future. This intention does not tally with what the Tariff Board has been trying to do. I spoke to the Minister for Trade and Industry today about this and suggested that he was providing guidelines on which the Tariff Board would conduct its future inquiries. He said that this was not so, that he was not providing any guidelines which would bind the Board to any action. For many years now we have had only 2 matters which had to be taken into consideration by the Board - whether an industry was efficient and whether it was economic. In the short time I have available to debate a question like this I can only come down to the very hard fundamental facts. The Tariff Board has been providing the Government with information on which it has to make decisions as to whether it agrees with the assessments the Board has made of the protection that is required by an industry.

When it comes to umbrellas or guitars or the nonsensical things into which the Tariff Board inquires, I would agree that these things are immaterial. It does not matter whether we make umbrellas here or import them from Hong Kong. But it does matter that we have chemicals. It does matter to Australia that it has the industries it is required to have if it is to be of any importance in the world and if it is to have metal manufacturers, car manufacturers and the capacity to supply itself with tanks and heavy commercial vehicles and the needs of war. If we are to be able to produce the things that are necessary to make this country important, we have to have those industries. Up to date the Tariff Board has taken no notice of this. In the last 4 reports it has brought out it has set up a standard and has said: ‘The Board will judge whether an industry is of some benefit to Australia purely and simply by the fact that it might need 50 per cent duty, 25 per cent duty or under 25 per cent duty*.

From my long experience of Australian manufacture - I have been concerned in it - I am quite sure that certain industries which are enjoying a duty of 20 per cent or 25 per cent are just as over-protected as those with a duty of 50 per cent. I can remember back in 1930 or 1931 when industries such as Simpson’s - now it is Simpson-Pope - started off on a backyard basis. At that time Vickers was only a small organisation. Then we had a war. In those days a lot of these industries and the Government found that it was absolutely essential for us to rely on our own powers of production. Why should we be dependent on a lot of overseas countries to supply us with goods? Some people would like to obtain all their weedicides and insecticides at what they think would be a lower price from overseas countries which would leave us for dead if the need arose to manufacture these things ourselves.

If the Government is going to work along those lines and judge an industry purely and simply on whether it is mathematically a high rate industry or a low rate industry, it will be in a lot of trouble. We have to take into consideration the fact that the Tariff Board consists of a group of men - usually it is only 2 men - who examine an industry and who are required to come up with some sort of a recommendation. I do not want to bring the cherries argument into the debate tonight because that argument has been well and truly settled, but it is obvious that the Board’s endeavours in this case have been misdirected. The members have not done their homework properly. The research people have not investigated the industry. The Board has not understood the problem confronting it and it has brought out a report which is completely contrary to the best interests of those engaged in that industry.

As long as this situation remains I shall criticise the Tariff Board for its inability to understand what the problems are. It does not take into consideration the things that have been recognised by the leaders of this country. The members of the Tariff Board are mediocre fellows, as Sir John McEwen said. I want to remind honourable members of what Sir Robert Menzies said in his John Story memorial lecture. He said that the Tariff Board is purely a statutory body subject to the control of this Parliament. The Minister for Trade and Industry (Mr Anthony) said today that the Parliament is the supreme body and is the one that is going to make the decisions. But the Parliament did not make the decisions in this case. The Minister for Customs and Excise (Mr Chipp) came in here, put the Tariff Board’s report down on the table and said that this will apply from 4 p.m. today. Tomorrow everybody will pay the new rate.

Honourable members have no say about the merits of the case that has been presented to the Parliament. When we get the report we are not told the facts that are behind it. The principal function of the Tariff Board is to consider, by reference from the Government, applications for protection. In doing this in the past the Board has been guided by two points of reference: that the industry be economic and efficient. Unfortunately I do not have time to develop my whole argument, as I would like to do. A couple of weeks ago I put to the Government members trade committee the purpose of protection. I am not concerned with the miserable little products of any individual, whether he is an harmonica manufacturer or whatever he is. The purpose of protection is to attain sustained industrial growth in this country. Australia is destined to become one of the very great countries in the world. Unless we have a history of sustained industrial growth we will not become a great industrial country. We want to achieve this at the fastest possible rate compatible with economic stability.

These are vague generalities but I. think all honourable members know what I mean when I refer to the fastest possible rate compatible with economic stability. We have to take into consideration the economic objectives of the Opposition if it becomes the Government. I am saying that they would be the same. We would want the people of Australia to have rising standards of living. That is the whole reason why everybody is trying to get increased wages now. Everybody wants more refrigerators, motor cars, boats and caravans. We have to have rising standards of living and we cannot have them unless we have full employment. We cannot have full employment unless we have industries that are capable of employing people, and we cannot have them if we sit back and say: Well, 20 per cent should be enough. That will enable the people of Taiwan to manufacture their products and to bring them into this country. They can have two-thirds of the market and we will have the other third.’ I want it to be the other way around - for us to have the market and for them to come in and perhaps provide some of the luxuries.

We want our people to be fully and usefully employed. Beyond that, if our grandchildren are going to be of any importance in this world, as we would like them to be, they will have to supply other people. Australia is in a unique position, right on the fringe of Asia. We have a market of hundreds of millions of people whom we can supply with the products that they want. For various reasons we are not able to compete in these world markets now in primary production. We will have to compete with them with our secondary industries. It is a strange thing that we find it extremely difficult to sell condensed milk or something like that to these countries but we can sell them fishing rods, golf clubs, louvred windows and other manufactured products.

There are people, unfortunately, on both sides of this House - I wish they were on only one side - who would handicap our manufacturing industries and make them susceptible to competition from the cheap labour countries. We want in Australia a stability of costs and prices that will enable us to welcome into Australia people who wish to manufacture here carpets, motor cars or anything else. People have been clamouring to come to Australia and to develop industries here, and yet we handicap them immediately by saying that they have to be able to compete with any cheap labour country that likes to make its products available at prices which the Tariff Boad cannot investigate. I defy the Tariff Board to find out the cost of production of a pair of shoes in the People’s Republic of China, because it just is not on. Everybody in this House knows that our leather goods industry, one of our traditional great industries, is being decimated because it has to face competition from countries which have entirely different standards of living to ours.

I suggest that in his speech this afternoon the Minister for Trade and Industry made one small mistake. I welcomed his speech. I think it was marvellous. It was a terrific improvement on anything we have heard for years and years in this place. But he said that the Tariff Board would examine some industries and make some recommendation on the basis of an industry being economic and efficient. He said some guidelines would have to be set and that this would be a matter for the Government. Those guidelines should have been laid down for the Tariff Board so that the Board could take them into account when examining an industry and deciding what protection that industry should have. Unfortunately I do not have time to mention all the things that I think the Tariff Board should consider. A couple of weeks ago I put about 20 points to our Government Members Trade Committee. I suggested that the Tariff Board should take into account such things as employment in an area and the necessity for encouraging industry in an area. The Minister did acknowledge these considerations. Other considerations include an industry’s potential, its effect on other industries and how the inputs and outputs of that industry would affect associated industries. In summing up very briefly I would like to say that I think it is essential that our Tariff Board should get away from its mathematical approach.

Mr DEPUTY SPEAKER (Mr Lucock:

Order! The honourable member’s time has expired.

Mr DAVIES:
Braddon

– I strongly commend and support the Australian Labor Party proposition for a fuller and more detailed analysis of the costs and other factors that determine the cost of production of an industry, which is a relevant factor to be considered in deciding the extent of protection for our industries. This evening 1 want to deal specifically with the first Tariff Board report on the list contained in the second reading speech of the Minister for Customs and Excise (Mr Chipp). I refer to the report relating to calcium carbide and the Board’s recommendations on protection for that industry. The Tariff Board has recommended a duty of 40 per cent preferential, an increase of 10 per cent, and a general rate in accordance with international commitments. I understand that the margin of preference is twenty-three and one-third dollars a ton, so that the general rate will now be 40 per cent plus twenty-three and one-third dollars a ton.

I state categorically that the Labor Party supports this increase, and I commend my colleague and friend, the honourable member for Franklin (Mr Sherry), for his great advocacy and support for this industry in his own electorate. I know that several public meetings have been held in his electorate. As recently as Monday evening a very big public meeting was held which was attended by Labor members of the State Parliament in Tasmania. The honourable member for Franklin was represented by his very charming wife. We strongly support the continuance of and the increase in the protection that has been granted to the industry that manufactures calcium carbide at Electrona in southern Tasmania. The Board has recommended also that any shortfalls in Australian production of calcium carbide be admitted at minimum rates of duty. The current demand in Australia for calcium carbide is about 20,000 tons annually. In Tasmania we produce 14,000 tons a year, so the shortfall of 6,000 tons is admitted practically free of duty except for a duty of 71 per cent on non-preferential sources of supply. 1 believe that this by-law arrangement comes into effect only if Australian users of calcium carbide agree to take the full output of the carbide works at Electrona in Tasmania.

It was announced in the Tasmanian Parliament on 16th March this year that the smallest of the 3 furnaces at Electrona would close down at the end of June and that about 30 members of the work force of approximately 230 would lose their jobs. My inquiries lead me to understand that this will reduce production to 10,000 tons of carbide annually and that this production will be mixed with a similar amount of imported product for a twofold purpose: Firstly, to attempt to satisfy criticisms contained in the Tariff Board report on the operations of the carbide works at Electrona; and secondly, to attempt to reduce the overall cost of carbide to the 3 main buyers in Australia. This, as I indicated, would be brought about by mixing the cheaper imported product with the higher priced locally produced commodity.

I agree with the sentiments and comments of my colleague, the honourable member for Lalor CDr J. F. Cairns). Thirty people are to be retrenched due to the efforts of a company to reduce costs and to satisfy the criticisms of the Tariff Board. I think we should know what steps are being taken to retrain these people for alternative employment or what steps are being taken to obtain alternative employ ment for them. They have been retrenched through no fault of their own. I voice the sentiments of my colleague and friend, the honourable member for Franklin, and others in Tasmania in the hope that further retrenchments will not be made in this industry.

This Government and the Tariff Board must do all in their power to safeguard the industry at Electrona in southern Tasmania for 2 reasons. Firstly, Electrona is the only place in Australasia, and that includes New Zealand, where calcium carbide is produced. The industry must be protected and kept operating, because Australian industry would be in a serious position if it were entirely dependent on overseas suppliers. If any major international -upheaval occurred to halt the supplies we would be cut off. During the last week or two in Tasmania we have seen what can happen in the case of any upheaval. The industrial life of that State was slowly but surely coming to a halt because the shipping strike had cut us ofl from the mainland supplies. Secondly, the carbide works at Electrona represent the only secondary industry of any note in the Channel district in southern Tasmania. Electrona is the centre of the apple growing districts of Tasmania and it provides employment and stability to an area which is going through economic difficulties due to our inability to get rid of our apple crop at any reasonable price. I believe that the Minister for Trade and Industry was alluding to benefits such as these when in a recent speech on tariffs he said that no government can decide its tariff policy on considerations of costs alone. He went on to say:

The benefits of an industry to this country must also be taken into account and generally speaking the benefits are more diverse and even harder to measure than the costs.

This is perfectly true in the case of carbides. The cost of protection is easy to calculate and as I have indicated the company is proposing measures to assist in lowering these costs. But the benefits far outweigh the costs in this case. Therefore protection is justified and the Government must ensure that the plant at Electrona is kept operating.

I shall refer again to the Minister’s statement later in my speech. The chief users of carbide in Australia are Commonwealth Industrial Gases Ltd, Australian Liquid

Air Ltd, both of which manufacture gas cylinders for oxy welding, and Imperial Chemical Industries of Australia and New Zealand Limited which uses this product in the preparation of a substance used in dry cleaning. Norway is the chief overseas supplier to CIG. The price of carbide from Norway is approximately $90 f.o.b. plus about $30 a ton for freight and delivery into store in Sydney. This brings the price to around $120 a ton. CIG has an agreement, recognised and approved by the Department of Trade and Industry, to take its proportionate share of production from Electrona so that the imports from Norway can come in under by-law and attract a margin of preference of only 7i per cent, giving a delivery into store price of about $130 a ton. The price for the Tasmanian product free into store in Sydney is about $165 a ton. The fact that is is possible to buy imported carbide at a very much lower price than that produced at Electrona was pointed out by the Tasmanian Premier in the statement in the Tasmanian Parliament to which I referred earlier.

However, I want to point out - and this is very important - that if the Norwegian product was not admitted under by-law and attracted the full general rate of 40 per cent plus the margin of preference of twenty-three and one-third dollars per ton, the imported price would be higher than the cost of the carbide produced in Tasmania. So, I believe in order to satisfy criticisms from the Tariff Board and others as to the cost structure of this industry, and in order to stay alive - this is the very, very important point that the honourable member for Franklin and I want to emphasise - the company has taken the decision to reduce production as from July to meet about 50 per cent of Australia’s requirements. Although the industry is not in my electorate I personally put in a strong plea for continued assistance to the industry. I have been associated with it in one way or another for some 30 years and I have great respect for the pioneering family of Hay Brothers who owned, managed and operated the limestone quarries at Ida Bay for many years before selling them to Australian Commonwealth Carbide Co. Ltd.

The old scow, ‘Cathkit’, which was brought from New Zealand to carry to Electrona the limestone to be mixed with anthracite from South Africa to produce carbide, is still in commission and has been joined since by the ‘Alma Doepel’. Here again I would refer to the decentralising benefit of this industry because, without doubt, the small township of Lune River would go out of existence but for the 10 houses there owned by the company for its quarry employees. The company owns a further 50 homes at Electrona and Snug. The town of Snug made world headlines in 1967 when it was completely wiped out in the disasterous bushfires which swept through southern Tasmania. The company plant also was severely damaged and although it was forced to close down for one month all the workforce was kept on the payroll and apart from rehabilitating its own plant and building the company and its employees played a major part in rehabilitating the surrounding districts.

The Commonwealth Government has a financial interest in the well being of Electrona. There is not only an interest in whatever benefits Electrona can bring to Australia - and I refer again to the Minister’s recent speech - but also an interest because the Government loaned the State Government $218,000 so that the carbide company could get back into production after the bush fires. To my knowledge this loan has not yet been repaid. On pages 5 and 6 of its report the Tariff Board goes into some detail to compare the costs of production at Electrona with the costs in 2 overseas countries. Here again I want to point out how much I agree with what has been said by my friend and colleague, the honourable member for Lalor. I fail to see how we can make any comparison because of the tremendous disparity in volume of production compared with the 2 overseas companies chosen by the Board. The Rand plant in South Africa produces 40,000 tons a year in one furnace. The Odda plant in Norway produces 108,000 tons a year using 2 furnaces. The plant in Tasmania is small by world standards and produces only 14,000 tons - not 40,000 or 100,000- yet the Tariff Board uses these volumes for comparison purposes. We are producing only 14,000 tons in 3 furnaces. I cannot see how we can make any comparison, in regard to costs, with the Rand and Odda plants when we compare our low level of production with theirs. As the honourable member for Lalor said, how can we compare costs? How can we do this when insufficient information is given or when the information that we are given is entirely unsatisfactory?

The Tariff Board on page 5 of its report on calcium carbide stated:

The Board received in confidence -

Why can it not make this information available to us even if it is of a confidential nature? I repeat:

The Board received in confidence details of costs of production from 2 overseas producers of calcium carbide represented at the inquiry, Rand and Odda. These enabled the Board to assess the extent of disabilities in ACC’s cost of production.

How gullible was the Board if it wanted to make this comparison? I am not casting any reflection on the members of the Tariff Board. But here we have 2 overseas companies which have come forward to supply their costs of production and these details have not been made available to us. These are the only companies which have wished to do this. Surely there could be collusion or some ganging up or some effort to mislead the Board. I am not casting any reflection at all on the Tariff Board. However, because these 2 organisations which have high levels of production Were able to supply information of a confidential nature, the Board has turned around and estimated the cost disabilities. How can anyone forecast this? The Board has said that the cost disability of the plant at Electrona is as follows: Direct labour SOO per cent, raw materials 80 per cent and electricity 150 per cent. What does this mean? Why did not the Board spell it out? Why did not the Board come out into the open and give us more detailed information on the costs of the Australian industry as compared with the detailed costs from overseas so that we could see just how those plants are operating and where is the disability.

The Labor Party requires some detailed assessment so that we can see whether the level of protection that we are seeking for our industries is justified. The carbide company at Electrona suffered in the bush fires of 1967. There was another fire in the plant in 1968 and along with all other Australian industries this industry has had to meet the ever increasing cost of raw materials, wages and transport. Let us forget about what the Tariff Board says. The figures of the company are conclusive. In the year of the bushfires - 1966-67 - the company did not pay a dividend. In the 4 years prior to that the annual profit dropped from $33,750 to $20,356. In 1967-68 there was a loss of $125,000. The company lost a further $124,424 with the plant fire of June 1968 and its report for 1968-69 showed a loss of $14,351. So for the last 3 years for which figures are available, there have been no dividends.

In conclusion, I wish again to refer to the Minister’s statement on tariffs. Prior to this afternoon I had only a newspaper extract of the speech, as reported in the Financial Review’ of 16th April, when the Minister was speaking about the Government’s point of view and talking about what the Government looks for. He said:

From the Government’s point of view, the economic worth of an industry to the nation requires a judgment on whether the benefits derived by the community from the existence of that industry outweigh or otherwise the costs to the community.

So, he is speaking of either the benefits or the cost. Later in his speech the Minister referred to the fact that:

No Government can decide its tariff policy on considerations of cost alone.

The Opposition has endeavoured to point out to him tonight the costs of the Carbide Company. The Minister went on:

The task which the Government faces is to make the right decision in each case in the national interest, taking into account both the casts involved and the benefits.

He continued:

Benefits to the community from the existence of an industry which a Government must consider in making its judgments on the level of protection provided include-

Then - and this is the important thing as far as the Opposition is concerned - he said:

Similarly, there can be highly significant noneconomic implications which a Government must take into account in considering the protection to be afforded an industry. Examples are where factories in decentralised locations provide major employment opportunities.

I agree with my colleague, the honourable member for Kalgoorlie (Mr Collard), who last night advocated protection in the form of a subsidy of some $2m to keep alive in

Western Australia a town of 25,000 people. Tonight, my friend the honourable member for Franklin (Mr Sherry) and 1 have simply advocated the extension of tariff protection for the Carbide Company of Tasmania in order to keep alive an industry at Electrona in southern Tasmania. Of course, my friend has always been a strong advocate of the decentralisation of industry in his own area. I also have been associated with a policy of decentralisation for over 30 years. I know the benefits that can flow from the continued support by the Government of the calcium carbide works at Electrona and the benefits that accrue in this apple growing area where producers today are facing depressed incomes. Every support for this industry in such an area where the industry gives some economic support to the area-

Mr DEPUTY SPEAKER (Mr Luchetti:

– Order! The honourable member’s time has expired.

Mr KELLY:
Wakefield

– Tonight I shall speak with brevity but with sincerity. It would be easy for me, after the statement by the Minister for Customs and Excise (Mr Chipp), to behave as one sometimes behaves in a dressing room after one’s team has had a victory. I do not know whether the Minister can remember when Carlton last had a victory but probably on such an occasion he goes to the dressing room and shares the happiness of everyone. However, this is not of much help when players come in to salve their wounds on the Sunday or when the team starts to train again on Tuesday. Then it is time to do something useful. It will not be achieving anything useful if tonight I just get up to cheer. I am grateful that the Minister has made the clear statement that those of us who are interested in the economic future of Australia have been waiting for with anxiety, and later, with confidence. But we have been challenged today to lay down the kind of protection policy we believe in. I shall spell out briefly what I believe in. I speak for no-one else. I believe in the protection of economic and efficient industries. Here we should pause to differentiate between the two.

An efficient industry, as I understand it and as it is generally accepted, is an industry whose industrial processes are efficiently carried out. There are many such industries in Australia. An economic industry is one whose situation suits the Australian economy. An industry can be efficient and its industrial processes exemplary, yet it still may be uneconomic in the Australian situation. I am indebted to the honourable member for Hindmarsh (Mr Clyde Cameron) for what I regard as a perfect illustration of this. An industry at the South Pole could be growing bananas. It could be the most efficient industry imaginable. All of its processes could be perfect. The only thing wrong with it would be that it would be in the wrong economic situation.

So the Government believes, and it has always believed, in the protection of economic and efficient industries. The question then facing the Government is how does it decide which industries are economic and efficient. For a long time now the Government has posed this problem to the Tariff Board. In the past, the Board has been charged with the responsibility of giving economic answers - not giving any political decisions, but giving advice as to whether an industry is economic and efficient in the Australian situation. I have watched the development of the change in the quality of its advice with much interest in the past. Some honourable members may know that my father was, for many years, a member of the Tariff Board. Since I have been a member of this House I have taken a great deal of interest in the way in which the Tariff Board has set about answering this question: Is the industry economic and efficient?

What pleases me most about today’s statement is that it indicates that there is to be no change in he Tariff Board’s responsibility. The Tariff Board has not received any riding instructions. It is being charged with its old responsibility of saying whether an industry is economic and efficient and of giving an economic answer. The Tariff Board reports to the Government and the Government makes a political decision on the economic advice that it has received. What was disturbing me, and others who feel like me, was that the Government might have thought: ‘Let us give the Tariff Board other riding instructions. Let us ask it to put some politics in its reports.’ This would have been popular in many quarters. The Government may have gained some votes from it. The only thing wrong would have been that the Government would have got the wrong economic answers. It is to the everlasting credit of the Government that it has again come to the clear realisation that what it needs is economic advice on which to take political decisions. It is easy to criticise the quality of the advice that the Government has received and to criticise the quality of the reports. Many people have dined out on this and said slickly that the Tariff Board reports are not good enough. I guarantee that I have read more closely more Tariff Board reports than any other member on the back benches in this House. There are some reports of which I would be critical to a degree but I would defy anybody to show that there has been any general lack of quality in the Board’s reports over recent years. Some reports are better than others, I have heard it said, but because these reports are compiled by human beings they contain human weaknesses. I would not like to see anybody get away with a slick criticism that Tariff Board reports are lacking in quality. I have read almost every one of them very carefully. With all the experience that I can bring to bear on this I claim that the reports in recent years have improved vastly.

The other matter in which we on this side believe and which ought to be made clear is that the higher duty the greater the cost to the community and, therefore, greater justification is required in granting protection. Any industry which asks for a high rate of duty is asking for resources to be diverted to it at the expense of other sectors of the community. The Tariff Board has never said that. People have put those words into the Board’s mouth. The Board has never said that industries which require a higher rate of protection will not be protected. Some of them have been protected and some of them will be protected in the future, but to do so without measuring the cost of diverting the resources is just plain silly. That is all that the Tariff Board has ever set itself to do - lo measure the cost. We know that the higher the cost the greater the burden to be borne by export industries. It is true that in past years the rural sector was able to carry the additional cost burden of $2,700m which is the equivalent of the subsidies payable. The export sector has had to carry increased costs of about $2,000m. The rural sector used to be able to carry a large proportion of this burden but it will not be able to do so in the future.

One of the things which has interested me as I have carried the banner around the country for a reasonable tariff protection policy is that the support I receive most now is from the secondary industry sector that exports, or knows that its only chance to expand in the future is to export, in order to get the economies of scale. The people in this sector say: ‘Why does not someone tell us that there is a cost in high protection and there is a cost in employment?’ There is no such thing in the economic world as a free ride; someone always pays. One of the facts of life is that employment in industry can be jeopardised by high protection in the same way as it can be increased. Someone always pays. If a duty is placed on a synthetic product such as the raw material from which plastic buckets are made - PVC granules - the employment potential in the user industry is jeopardised. The interesting thing to me is that when I started along this lonely tariff road in the past I used to speak for the rural sector and that sector used to support me as best it could, but the people who support me now and the people who think as I do are those in the secondary industry sector which hopes to and knows that it can export. Indeed that sector has demonstrated its ability to export. Let us be clear about the employment situation. In the past people justified protection because it created employment, yet high protection jeopardises employment in the user or the export industries.

Another matter which I ought briefly to mention is the fact that there has been some discussion recently on what policy we should have in regard to protection against imports from low wage countries. If you say the words properly with a curl on your lip you can talk about imports from cheap labour countries, but we all know that we are watching with breathless anxiety the ability of Korea, Hong Kong and India to live by the expansion of their secondary industry exports. Let me give the House an example of what I mean. I was in Bombay recently and I visited a factory which was processing Australian skim milk powder into urgently needed cow milk mixed with buffalo milk. That factory was using milk processing equipment imported from Australia under the Colombo Plan. After I had watched with gratification the quality of their processing methods I asked an official ‘Have you any problems?’ I was told ‘Well, Mr Kelly, only one and that is that we cannot buy your skim milk powder*. I said ‘Why? We are desperately anxious to sell you skim milk powder’ and the reply was ‘Yes, but we cannot get the foreign exchange’. During the afternoon I visited a cotton textile factory in Bombay and saw what 1 in my ignorance thought to be a first class technical process of making cotton sheets. I said to someone at the factory ‘How are you going?’ He said ‘We have troubles with Australia. There is a 55 per cent duty wall over which we cannot get our cotton sheets’. This is what overseas trade responsibility to underdeveloped countries is all about. It is not a question of making speeches in this Parliament. It is the recognition that you have to trade with people if you really want to help them. It is of no use for us to beat our breasts in public and say that trade is more important than aid. We all know that this is basically true. But when it comes to dealing with these countries, for example, buying their sheets so that they can buy our skim milk powder, we say: ‘Oh, we did not mean that’. It is the kind of thinking that we must have, not only for our economy but also to ensure that we can bridge the widening gap between the haves and have nots. We do these things for our own benefit as well as for the benefit of other countries.

I promised the House that I would speak with sincerity and brevity. I will not continue my remarks much longer. I congratulate with all sincerity the Minister for Trade and Industry (Mr Anthony) for the statement he has made today. I congratulate, too, the Minister for Customs and Excise for the way in which he has handled customs matters in this House. It has been of great benefit to honourable members in understanding tariff matters. For far too long tariff matters have been thought to be something that no-one could understand. We all have had difficulties in the past in understanding these matters. The understanding which we had during the last Parliament has been immeasurably improved by the care which the Minister has taken to make it possible for ordinary people to follow the intricacies of a very complicated subject. While 1 am in this congratulatory mood, which does not overcome me often in this place, I would like to congratulate the honourable member for Corangamite (Mr Street). When I became a Minister I wondered what would happen to tariff debates, and I left the tariff torch lie. I wondered who would pick it up. It was picked up with remarkable ability and dedication by the honourable member for Corangamite. He has carried it on faster and farther than 1 would have been able to do. I would like to add my thanks to him.

This day is the end of a long bitter battle for me. Some honourable members who have been here for some time will recall the boredom of my speeches to the House on this subject. If I did not bore them I certainly bored myself. It became almost an endurance test. This is something of which the House might take note, lt is often thought: ‘What do back benchers do? What do they ever achieve?’ In looking at them today and in listening to today’s debate I took some comfort from the fact that I, as a back bencher, with an inordinate amount of difficulty, have had some influence on the Government’s policy. I think that there is a place for the back bencher who is prepared to do the kind of back breaking work which I found it necessary to do in order to understand this difficult subject of tariffs. So today, with a feeling of immeasurable relief, I stand here and congratulate the Minister for his statement which to me appears to signal the end of the old policy of protecting many things too generously. From now on we will have a much more clear-eyed and responsible tariff policy.

Debate (on motion by Mr Connor) adjourned.

page 2181

TAXATION CASE

Ministerial Statement

Mr SNEDDEN:
Treasurer · Bruce · LP

– by leave - I rise to inform honourable members that the Government is examining the implications of the recent decision of the High Court in the income tax case Commissioner of Taxation v. Casuarina Pty Ltd, which has received wide publicity. The decision has disclosed a gap in the income tax legislation enacted in 1964, following recommendations of the Commonwealth Committee on Taxation 1959-1961- the Ligertwood Committee - to provide a statutory definition of a public company. The effectiveness of the income tax law as it applies to companies and their shareholders substantially depends on this definition.

The High Court decision shows that companies which are in every real sense private companies, and were intended by the amendments made in 1964 to be taxed as such, are able to acquire the status of subsidiaries of public companies, and to be treated, in respect of dividends paid to them by other private companies, as public companies. Reference to the facts of the decided case as found by the Court will show that this result is brought about by highly artificial arrangements which do nothing to change the essentially private character of the companies receiving the dividends.

The gap disclosed by the decision substantially negates the intentions of the Parliament in 1964 in giving effect to recommendations of the Ligertwood Committee designed to counter legal tax avoidance by private companies and their shareholders. The tax revenue at stake is substantial but also at stake is the principle of equitable application of the income tax law.

The Government takes a serious view of the situation and is considering the amendments to the income tax law it should propose to the Parliament in order to close up the particular loophole. The objective will be to prevent companies which are really private in nature being able, by means of artificial arrangements intended to have effect only for taxation purposes, to take on the guise of public companies. It is proposed that the appropriate amendments should apply for the 1971-72 income year and subsequent income years. They will also apply in respect of the 1970-71 income year except where the artificial arrangements had been fully constituted on or before 28th April 1971. I present the following paper:

Taxation case- Ministerial Statement, 28th April 1971.

Motion (by Mr Swartz) proposed:

That the House take note of the paper.

Mr CREAN:
Melbourne Ports

– 1 am pleased to note that the Government is examining what it calls the implications of the recent decision of the High Court. I should like to refer to the observations of the Ligertwood Committee on Taxation. On page xiii of the preface the report states:

Such schemes, although not illegal, are nevertheless inequitable. The provisions of the Assessment Act and the rates of tax levied from time to time are designed to secure to the Treasury a predetermined quantum of Revenue for carrying on the government of the country; and if, by the ingenious use of the provisions of the Act-

I suggest here that there has been some ingenious use of the provisions of the Act - and of the general law, a significant number of taxpayers are able to diminish their tax liability or avoid it altogether, it follows that the consequential loss of Revenue must be made good by the remaining body of taxpayers who either have not the same knowledge or opportunity of avoiding tax or are unwilling to lend themselves to schemes to thwart the apparent intention of the legislature.

Following upon the recommendations of the Ligertwood Committee certain amendments were made to the Act in 1964, with the intention of closing certain loopholes in the Act. Again we see what can be done by skilful lawyers. I submit that this is one of the matters with which one has to contend in the public field. The Treasurer (Mr Snedden) yesterday, in answer to a question concerning interest rates, referred to technical matters. Once a layman is unable to follow the logic of certain kinds of events, I think there are great difficulties inherent in the situation.

The majority of people who have to pay tax in this country are wage earners, and they have no capacity whatsoever to escape their proper liability for taxation. I for one - I am sure this is the view of all honourable members on this side of the House - resent the clever lawyer who tries to lessen the capacity of taxation and does so only at the expense of the rest of the community. I do not know whether in the long run the solution is that there should be no private companies at all. I think that this is the area to which clever lawyers are tending to turn their attention. But in the long run there might be only one kind of company.

At the moment skilful lawyers determine whether a person is taxed as an individual or as a partnership or as a private company or as a public company. Very often the very subtle device is used whereby a person can form a public company and then turn it into a private company within a few days. The whole purport of the exercise is to reduce one’s total liability for taxation. As a very famous lawyer - I think it was Lord Mansfield - said on one occasion, it is the right of everybody in the community to pay as little tax as he can, but it is also the right of the government, by legislation, to ensure that loopholes through which clever lawyers try to drive carts and horses are closed.

All 1 suggest is that we will support the Government in any attempt to close the devices which clever lawyers use. If I may say so, it appears, from the evidence given before the Senate Select Committee on Securities and Exchange, that the line between a person becoming a millionaire and finishing up in gaol is a very fine one. But the majority of people have no such intention. They tread the honest road of economic endeavour. They pay such taxation as is imposed upon them, and in some respects the taxation is heavier in the indirect field than is sometimes acknowledged. There Ls no possibility of either evasion or avoidance in the direct field of taxation on income earned by nearly 90 per cent of the Australian population. A clever lawyer tries to draw a fine line between evasion and avoidance. He tries to suggest that one is libellous. All I suggest is that both are very tenuous lines as far as equity in taxation is concerned.

We believe that the whole structure of taxation in Australia should be reexamined. One Government member today asked a question of the Treasurer along these lines. The Treasurer gave in reply what 1 thought was a serious answer. The Government of which the Treasurer is a member has been in office in this country now for in excess of 20 years and as far as the major tax that operates in this country is concerned - 1 refer to income tax on individuals - no alteration has occurred for approximately 16 years. The incidence of this tax has been eroded by inflation. The sorts of deductions that are available give added advatage to those in receipts of higher incomes. The majority of concessions that are available to low income earners have not kept pace with inflation. These people do not have available to them the sorts of devices that are available with respect to company taxation. Australia collects by-way of company tax approximately half of what is collected through individual income tax.

I have no regrets whatever at the closing of the door very heavily on any prospect of evasion of taxation at the company level. I refer to the sort of device that suggests that it can be said that a company is a private company. This afternoon we heard one of the most complicated speeches ever made in this House - I am sure that the Treasurer agrees - with respect to an attempt to avoid certain kinds of clever evasion that have been practised. Most people in the community do not try to be clever; they try to be honest. In this case, I take no view with regard to Casuarina Pty Ltd - under the Casuarina tree - or Fortuna, as the other company is called. Nevertheless, this case apparently has opened up what the Treasurer has described as highly artificial arrangements. My side of the House supports any attempt to bring down to earth these highly artificial arrangements.

While I know that it is no easy matter, 1 simply throw up the suggestion that the Treasurer and his Government may need to decide whether there should be one class of company only. A number of hatch doors may be needed out of that sort of law. But when by clever legal contrivances - I do not think they are anything else but clever contrivances - an amount of taxation that is properly payable is evaded, my side of the House will assist the Treasurer to the hilt to close the doors on such action. I will not say any more because 1 respect the view that the case has been decided only recently and the details have still to be examined. I am not even sure, from this sort of case, what the totality of evasion may be. The Treasurer has not indicated that; he may not know what it is. I do not think that is quite as great as is sometimes imagined. Nevertheless, if anybody can avoid payment of $1 of taxation that is legitimately payable, I for one will support any move to see that the door to this opening is closed very heavily against that person.

Mr MARTIN:
Banks

- Mr Deputy Speaker, I am pleased to see that, at long last, the Government has decided to introduce this piece of legislation which will close a gap in the income tax legislation which, as disclosed by the statement delivered by the Treasurer (Mr Snedden), has existed since this legislation was enacted in 1964. It is true that the gap has existed since that time. My criticism is that the Government has waited so long to close the gap.

The Treasurer has stated in his speech that the taxation revenue at stake is substantial. This is no secret. It is well known to the highly qualified legal practitioners who are paid to advise on means of tax avoidance. It is well known to the highly skilled senior officers of the Taxation Office whose duty it is to advise the Government on these schemes of avoidance. My criticism is directed at the Government because it has waited so long to close this gap which has existed since 1964. On the admission of the Treasurer himself, in his statement, the tax revenue at stake, even at this stage, is substantial. How much revenue has been lost in the period since 1964 to the present time because the gap was not closed when it was known to exist?

In a speech that I made in this Parliament last night, I said:

Since entering this Parliament I have raised my voice consistently in the cause of amendments to the Income Tax Assessment Act to close up these loopholes.

I intend to restrict my speech to a short time because I have given an undertaking to the Government Whip that I shall do so. This matter can be debated at a later stage at much greater length. On 18h March 1970, in my maiden speech, I said:

I would like to draw a contrast between the attitude of the Government in these matters with its attitude towards legalised tax evasion. It is a fundamental principle of equitable taxation that the contribution of each individual to the State should be equated to his ability to pay. This principle was first enunciated by Adam Smith centuries ago. Few would deny that the real burden of taxation now falls much more severely on the person who can least afford to pay it. This Government has shown a complete inertia against changes in the taxation laws.

I wish to refer now to a speech that I made in this House on 2nd September 1970. In that speech I said:

There was not one word in the Treasurer’s Budget speech about any scheme by the Government to prevent plans by taxpayers for legalised tax avoidance. I am certain that there would be recommendations in existence for alteration of income tax laws to prevent these legalised methods of tax evasion. I am fortified in these thoughts by a statement made by a Second Commissioner of Taxation as far back as May 1969. He publicly stated that these tax avoidance schemes were a social evil.

I interpose that this Second Commissioner of Taxation is a highly skilled and highly competent person. He is a man of complete integrity. My speech continued:

If a Second Commissioner of Taxation went so far as. to make this statement publicly I have no doubt that these thoughts would have been put on paper to the Government in the form of recommended changes in the legislation.

In addition to those speeches, I have asked some questions in the House on this subject. On 8th May 1970 I directed a question to the then Treasurer, the present Minister for Foreign Affairs (Mr Bury) regarding certain schemes of taxation avoidance. I did not restrict my question to the scheme of taxation avoidance under discussion now. I did not receive an answer which satisfied me. The answer given by the then Treasurer, Mr Bury, was this:

It is open under the law for any citizen to operate the laws as he can best to his advantage.

The honourable member for Riverina (Mr Grassby) then interjected: ‘Oh?’. The then Treasurer continued:

Within the law. I would say that this is not confined just to companies or the particular people to whom the honourable member has referred. A great number of individuals, some of whom may be in this House, use every device they can to lower their tax bill.

I do not know where he got that information from. He continued:

The Commissioner of Taxation and the taxation machine generally are constantly on the alert to prevent loss to the revenue by various tax dodging devices.

I agree 100 per cent with his statement. He continued:

Naturally these are* being invented all the time by very ingenious gentlemen and it is not possible to keep up with their pace. The taxation law inevitably moves a little behind events.

Now we come to the part of the answer to which I take exception. It is this:

However, if the honourable member has any good practical suggestions and examples which we could bring in quickly I should certainly be very delighted for the information that he can provide. The general position is understood by all. But chatter about the general position does not help the job of collecting necessary taxation.

On 6th April 1971 I asked a question along similar lines of the Treasurer (Mr Snedden) about general schemes of tax avoidance and not just the one under discussion. I received a similar answer to that which 1 had received from the former Treasurer. 1 should like to place on record a part of the answer to which I took exception and also the manner in which that answer was given. He said:

Knowing that the honourable gentleman has a history as a tax investigator- 1

I am proud of the fact that I served for 34 years in the Taxation Office -

I ask that if he has any information that is still residual in his head, will he please tell me and I will do all that I can to follow it through. 1 will conclude by saying that it is not my function to advise the Government. The Government has a highly skilled, highly trained and very competent body of men in the Taxation Office whose duty it is to advise the Government. I believe that they do this. It is not for me as a member of the Opposition to suggest these procedures to the Government. They are well known in the Taxation Office. If the Treasurer and the Government are sincere in these matters they have only to ask these skilled officers in the Taxation Office. I am certain that they get the right advice. I hope that as this particular taxation avoidance device is now being closed, although 7 years too late, the Government will not restrict itself to that. There are many other taxation avoidance devices which are well known to the skilled officers in the Taxation Office. They were well known to me before 1 left the Taxation Office and I suggest that action be taken at a very early date to close the gaps now. Let us not have a repetition of the present situation where the loss of 7 years revenue is a cost which has to be borne by people who can least afford to pay it.

Debate (on motion by Mr Giles) adjourned.

page 2185

CUSTOMS TARIFF BILL 1971

Second Reading

Debate resumed (vide page 2181).

Mr CONNOR:
Cunningham

– The honourable member for Lalor (Dr J. F. Cairns) has correctly stated the attitude of our Party to the general question of tariffs. I support him to the hilt. The honourable member for Wakefield (Mr Kelly) has been for many years an arch priest of free trade. Tonight he felt entitled to rhapsodise on the advent of the mi.lenium in relation to the future functioning of the Tariff Board. Perhaps in the light of certain other developments which will follow quite naturally from the visit of the Japanese Minister for International Trade and Industry we might be approaching the day of economic judgment instead. As I see the picture, the Government has no reason to congratulate itself on its handling of the tariff issue and the fate of its tariffs. Its approach to tariffs will largely depend on our future trading relations with Japan in particular. Debates on tariffs are endemic. They are like malaria. They are difficult to live with but one cannot shake them off.

There are quite a few facts that ought to be noted. Firstly, despite all the wailing and the wringing of withers on the part of certain sections of the financial Press the hard truth is that a matter of 71 per cent of our imports are either free of tariffs or within the 12i per cent limit which is considered nominal and acceptable. That information is contained in the latest report of the Tariff Board. As for the remaining 29 per cent of imports, it would appear that the average usage of the tariffs as a whole is of the order of 28 per cent. If we are looking at points of reference we see that the Tariff Board said that anything at or below a tariff of 25 per cent is acceptable and this is a reasonable measure of tariff protection. That being so, if we look at things in the round there is not a lot to criticise. There are some individual cases capable of correction. There are undoubtedly some abuses, but nevertheless we as a Party are by instinct, by tradition, by policy and by persuasion a Party of protection, as is every other worthwhile trading nation in the world, particularly every nation which has industrial developmental aspirations. Australian industry can be said to have really commenced with the men who were attracted to Victoria in the days of the gold rush. They did not find gold and they went to Melbourne and formed an urban proletariat. They provided the labour force for the first real Australian industry. The tariff issue has been one of constant controversy ever since.

I am a hard liner on tariffs but I am not a fool. I know where correction is necessary - but, let it be said, limited correction - and where there is a need to modify the tariff let us have a look at the other side of the picture because in all cases trade is reciprocal, or it will be for Australia in the future. From now on we will not be dealing with hard currency countries such as the United Kingdom where in certain cases we could sell our goods and receive currency. It will be a matter of reciprocity because today we live in a new, changing and very unaccustomed world of trade. Tariffs, of course, bulk very largely in our Constitution. If honourable members choose to examine the Australian Constitution they will find that no fewer than 10 of some 130 sections relate specifically to questions of tariffs.

The Government has its proponents both of tariff maintenance and tariff reduction. But this should be said: If we want really to know where we are to go in the future as a nation we have to consider much broader issues than merely the functioning of the Tariff Board with all its limitations. I say, particularly to members of the Liberal Party, that the Tariff Board will never cease to work until we can remove from its windpipe the arm bar which the Country Party has always placed on it. As a reflex action, the Country Party demands the right to the Trade and Industry portfolio. The constant friction between that Ministry and the Treasury is a matter of notoriety and of scandal because up to date the Tariff Board has been in many instances given its riding instructions by the agrarian pressure group known to Australia as the Country Party.

Where do we stand in Australia today? We need to look at this question in a very broad perspective. We are in a world where the major countries, particularly the United States of America and the United Kingdom, are in a phase commonly called stagnation - stagnation in terms of an increase in productivity but with inflation continuing Australia is still heavily dependent upon an inflow of some $ 1,000m to $1,1 00m per annum of investment to balance our trade on current account. I am not speaking of the trading balance; I am speaking of the balance of payments on current account. Although we have recently had quite an influx of hot money attracted by the marginal difference between our current interest rates and those of other countries, that hot money will go out again as quickly as it came in. So we are not in a position to dispense largesse to other countries stronger than we are in terms of international trade. Quite the reverse. As a matter of fact, we are due for the squeeze and it is coming with the visit of the Japanese trade delegation which was really the trail breaker, followed, of course, by the Japanese Minister for International Trade, Mr Miyazawa.

We are drifting gradually from our old relations with Britain but I will not burden the House with the general lessening percentage of our trade with the United Kingdom. Australia forms part of a Pacific triangle of trade and in that triangle we have a very substantial favourable balance with Japan. Japan deals with us not because it likes the colour of our eyes but because it cannot get better and cheaper raw materials, particularly iron ore with a high iron content, first class coking coal, first class bauxite and copper. Every mineral that is part of a modern industrial economy we have. Japan is getting our raw materials and, because of the economic ineptitude of the Australian Government, getting them at bargain prices.

I happen to speak for a city of steel. The Australian steel industry is an efficient, industry, so efficient that we are able to sell certain types of steel on the west coast of the United States in open competition with the major American steel producers. But by the same token, whilst we can do that in relation to ingots, billets and slabs, and right down to skelp, when we get to black sheet, even the Australian industry, efficient as it is, is subject to very fierce competition from Japan. That being so I am very strongly opposed to any modification of the minute protection which we have and which we need and which is a matter that vitally concerns the employment of some 3,000 men in my city.

I now return to the general economicclimate in which we function. We are to a certain extent getting the best of both worlds because since the end of World War II we have been one of the major primary producing nations. It is a matter of common knowledge that the terms of trade have been progressively worsening year by year for the primary producing nations in their transactions with the industrialised nations. With the exception of steel and one or two major industries, we cannot say that we really started to enter into the world of heavy industry until we were forced to do so with the fall of Singapore. From then on it has been by our own strong arm that we have been able to develop and will continue to do so. Therefore, I suggest to the Government that it should strongly temper its enthusiasm for general tariff revision until it has really considered the impact on Australian heavy industry in relation to its defence and developmental potential.

Of course, we are in a period of transition not merely in terms of employment. Everyone knows that rural employment is on the decline. Fewer and fewer primary producers are producing more and more and getting less and less for it. On the economic treadmill they are just about holding their position. We have to enter into strong competition with a major industrial giant - Japan. In the case of the United States there is a very strong protective bloc. The so-called western capitalist democracies are breaking up into protective blocs and we do not belong to any of them. We lack the sophistication and, in the case of the Government, the will to do what needs to be done to see that we keep our place in the sun. We will be subjected to very great and specious pressure from Japan to take more and more of its manufactured goods in return for more and more of our raw materials, particularly our mineral wealth. While we are here to do business with Japan we have to realise that it respects strength, it respects skill and it respects commercial competence and this is definitely lacking in this Government. As for skill, it makes me shudder to think of the incompetence of this Government and its failure really to come to grips with our future relations with Japan. Japan will respect strength but we will be the subject of their economic ju-jitsu Japan will use our strength, and we have strength in raw materials, to work our undoing unless we are capable of matching and equalling the Japanese in wits. But for the Japanese Minister for International Trade to rebuke Australia and suggest that our tariff structure is too high is a case of Satan rebuking sin because no country in the world today has higher tariff barriers than Japan, and those barriers will continue. No person or firms seeking to invest in Japan can get any guarantee that he or it can take out dividends, much less repatriate capital. The efforts of the American automobile industry to enter that closed market have been a matter of constant friction between the United States and Japan. It is in - just in - and the Japanese are pretty smart operators. We have to match them in every way. The first thing, as I see it, is to ensure that Japan does not get its feet inside the door of the Australian economy. As good customers and respected customers, yes. We have taught them to respect us on the field of battle. Let us teach them to respect us on the field of economic bargaining. It is time that we did. Thanks to the shortcomings of the Government, we are even worse prepared today to meet them and to match them than we were in 1941 when we were under the threat of their aggression.

If honourable members want to know the strength and the ability of the Japanese people they have only to look at how they have lifted themselves up by their economic boot straps. The first thing they did after MacArthur went in was to devalue their currency. I think that they reduced it from about 350 yen to the £1 sterling to 1,050 yen. They gave themselves a flying start. Japanese industry, when it sought to import, had to have its own internal private balance of trade with what was called the ‘link method’. If a Japanese firm wanted to import it had to export an equal amount to offset it. It could sell any surplus of raw materials brought in that it did not want to use, and so make a great profit out of it. A common example of this was sugar which was coming in at that time at about 4d per lb and being sold for about lOd. The profit from that was pumped back into external trade.

The Japanese operate as one through the Ministry of International Trade and Industry and also through the Bank of Japan. They have played our coal industry on a brake for many years. When they first came here they pitted one off against the other. In my own district there were 4 different firms cutting one anothers throats. It was common knowledge afterwards that they could have signed up for $3 per ton more than they actually got. As a matter of fact, today Japan is getting our coal landed in Japan at $5.50 per ton less than they are paying on an average for coal from other parts of the world. That is the measure of the incompetence of this so called businessman’s Government. We have to study the Japanese people. We will be trading with them all along the line. They have ventured into what will be known as resources diplomacy’. They lack raw materials. They need to get them. They can get them from no better place - in regard to either quantity or stability - than Australia. We must be ready to meet these people and to play them at their own game. If we do, they will be our stable and permament trading partners. If we do not, we will be their wood and water joeys.

Mr HURFORD:
Adelaide

– 1 rise to participate briefly in this debate to add my views to those of honourable members on this side of the House who are protesting against this Liberal-Country Party Government’s method of tariff making. With my colleagues I am totally dissatisfied with a number of aspects which have manifested themselves in the Customs Tariff Bill 1971. The Opposition has decided that the best method of highlighting its dissatisfaction is to vote against all stages of the Bill. This is not to say that we do not agree with some of the changes that have been introduced into this Parliament since 22nd May last and which are validated in the Bill. The honourable member for Braddon (Mr Davies) mentioned one particular case on behalf of his colleague, the honourable member for Franklin (Mr Sherry) earlier tonight. I know that the honourable member for Franklin will be participating in the debate during the committee stage even if there is no time for him to do so at this stage.

There are other examples which we could, if we got down to the details of the Bill, bring before the House of areas where we approve of particular recommendations in the Bill. At the same time, we are very conscious of the fact that where tariffs have been reduced - I was referring to an increase in tariff when I mentioned the case which affects the honourable member for Franklin - time has shown that there nas not been great unemployment. But this is not why we are opposing the Bill. We want to highlight the whole method of tariff making. This brings me to the 4 principles which we consider must be fulfilled before we are content to support a Bill such as this one. The principles have been stated before. They have been stated again tonight by the honourable member for Lalor (Dr J. F. Cairns). I believe that they are worth repeating in my own way.

Firstly there is the question of the adequacy of the Tariff Board. Is it not a fact that the Board has thrown out requests and hints - I think one could almost say that if it were able to do so it would throw out demands - for more staff, more facilities with which to do the vital work it is given to do. To illustrate my point let me read from a question and answer which appears in Hansard of 6th April 1971. It is question No. 2865 of the questions on notice. The honourable member for Lalor asked:

  1. How many references for inquiry, upon which no report had been made, were held by the Tariff Board at 30th June 1970 and how many are still held at the present time.

The answer is as follows:

  1. The number of references held by the Tariff Board upon which no report had been made at 30th June 1970, was 54. Of these 1 reference was subsequently withdrawn and 1 was superseded by a later reference. Of the remaining 52 references, 39 were still held by the Tariff Board as at 31st March 1971.

The second part of the question reads as follows:

  1. How many of these references have been with the Board for longer than (a) 1 year, (b) 2 years, (c) 3 years, (d) 4 years and (e) more than 4 years.

The answer reads:

  1. As at 31st March 1971, the number of these 39 references which had been with the Tariff Board for longer than (a) 1 year- 18, (b) 2 years - 9, (c) 3 years- 3, (d) 4 years - 2, (e) more than 4 years- 1 dated 12th October 1965.

The third part of the question reads:

  1. When is it expected that reports will be made on these references.

The answer is as follows:

  1. As at 31st March 1971, the stage of processing of these outstanding references was -

Public hearings completed - 36

Public hearings commenced - 2

Public hearings pending - 1

It is not possible to state when reports will be made on these references.

This is an illustration of the fact that the Board has not the staff and facilities to be an adequate Board for the purposes for which it has been set up. It does not have the support of the Government to make us believe that it will have the staff and the facilities in the near future. Belatedly we learned in the much heralded statement given to the Parliament today that we are to get an extra - 9th - member for the Board. In addition to that, the Chairman will be authorised to appoint single member Boards to inquire into the simpler types of tariff cases.

But this is not enough. It is the expertise in the backroom that is also required. The honourable member for Lalor has, i believe, already indicated some of the extra information which should always be given - not just sometimes, but always - with each one of these reports. This brings me to the second principle upon which the Australian Labor Party is prepared to fight in this matter of sensible tariff policy - namely the proper disclosure of information, to this Parliament and to the people of this country. There is not enough information being gathered by the Tariff Board let alone being given properly to the Parliament and thus to the people. Let me give examples of the sort of information which should be included in each one of the reports, not just an odd one here and there. Where costs are shown to be higher than they ought to be, let us have the details of why those costs are higher. This will necessitate more investigation and more research, but this information should be available to the Parliament and to the people of this country if such great decisions as to whether an industry is to survive, to contract or to expand, are to be made.

Another principle concerns the level of imports at the present time of a particular commodity under discussion. We have a right to know these facts. Certainly we want to be assured that this sort of information has been taken into consideration by the Board when it makes its recommendations to the Government. Costs of production represent another area about which information should be given. We should receive information also about comparisons with other countries and, as the honourable member for Lalor mentioned in the course of his speech, about the number of firms in an industry.

This brings me to the third principle which we uphold, that is, that plenty of notice should be given before the Government decides to contract an industry or to phase it out altogether. We are first and foremost a Party which believes in full employment. We are here to represent the lesser privileged people of this community. They are the ones who are hurt first by decisions such as this. The more privileged people, privileged perhaps in the sphere of education and in many other ways, can adapt themselves, can adopt new jobs and can move easily between places of employment on opposite sides of Australia. But the people who are hurt by so many of these decisions do not have these resources, this capital in the background, with which to adapt to change. The industries in which they work must be given time to contract and, indeed, the workers must be given time to move away to other sources of employment.

The fourth principle is very closely linked with the matter I have just mentioned. It concerns the retraining of the workers who may be displaced by such changes. We tire the first to admit that such changes do not come about only by changes in tariffs. Indeed, we uphold the principle that there ought to be far more study of and far more teeth in restrictive trade practices legislation and far more ability to see that excess profits are not being made from such restrictive practices. These policies of ours may themselves be responsible for contraction or reduction in employment in certain industries, but together with changes in tariffs we want to see first and foremost a structure set up in Australia so that people will be protected when they have to move from one job to another. This does not just mean retraining; it means also the payment of a subsidy to those who are obliged to move their homes. It means also some payment for loss of income incurred between jobs and not the miserable unemployment benefit with which people who are out of employment have to endure at the present time.

I am happy to support the Opposition’s contention in this debate that these 4 principles must be followed before we are prepared to support tariff changes. We are obliged to see that the people we represent are properly looked after when changes must take place. We are not against such changes in principle. The honourable member for Corangamite (Mr Street) outlined a few of the reasons why change should take place. I am, of course, referring to technological changes and to the fact that in order to get a better growth rate in our economy there has to be a reallocation of resources. There are changes in tastes and changes in imports to this country. There may be over-production, sometimes in primary industries and sometimes in secondary industries, as related to demand. Change will always be applied in many areas in our country, but we must have the structures to protect people who are hurt by these changes before we can support their being brought about by artificial means such as changes in tariffs. I believe that the old arguments of free trade versus protection are out of date. Of course we must have protection. All of us are protectionists. We are concerned only at the level of protection. We realise that these levels must change from time to time, but firstly we must have the structure in order to protect those who need protection when these changes take place.

Mr GRASSBY:
Riverina

– Mr Deputy Speaker -

Motion (by Mr Giles) agreed to:

That the question be now put.

Original question resolved in the affirmative.

Bill read a second time.

In Committee

The Bill.

Mr GRASSBY:
Riverina

– I was in somewhat of a dilemma, but I am glad that the Committee is dealing with the Bill as a whole because I wanted to make one or two points which would be difficult to tie to particular clauses of the Bill. I direct attention particularly to the fact that we, as the Opposition, have determined to oppose the action that the Government has taken in relation to the 23 items, for the one simple reason- and I make it plain that this is the reason as far as I am concerned - that inadequate information was supplied. This has been stated tonight, but I wanted to make it quite specific in relation to one of the reports, just taking it as an example. Earlier the honourable member for Lalor (Dr J. F. Cairns) and other honourable members on this side of the House who are concerned about rejecting the Government’s proposals referred to this inadequacy of information and also, if I might say, to the specious economic arguments and misinterpretations of fact.

For very obvious reasons, because of my rural interests one of the Tariff Board reports in which I was particularly interested was the one relating to cherries, lt contained statements relating to economics which would be questioned by anyone in the sphere of economics. Honourable members should look also at the actual facts of the situation in relation to this industry - in relation to what is being done at the moment and in relation to what the Tariff Board imagines would flow from its decisions.

I do not criticise the Tariff Board in a narrow or negative way. Our criticisms - and my own criticisms - are attached to the fact that the whole tariff making apparatus is just plainly inadequate. It is not fair to the Parliament and it is not just to the Committee to ask us to make determinations. The determinations that we are being asked to make at this stage of the Committee provide for increases in some items and for decreases in other items. These determinations in fact spell the death knell of one particular industry. This industry, of course, is the agricultural machinery industry. We are asked in the course of this Bill to put the final nail in the coffin. Perhaps it is true that the patient is not merely sick but has died. However, I would suggest that this marks a pretty important moment for an industry which was once our pride, which gave international leads and which was a significant industry at one time. All of us in the Parliament are asked to nail the lid on the coffin although we have had a totally inadequate presentation of data. This is the main bone of contention in relation to the items before us tonight.

Of course, there have been many references to free trade and protection. I suggest that these references are old echoes of the last century. Surely they have no place in a modern parliamentary debate on tariffs. We should be relating what we want to see developed to the needs of the nation as a whole. The honourable member for Wakefield (Mr Kelly) almost spoke his own panegyric this evening. He said: My long and lonely road has brought me victory and satisfaction’. The victory and satisfaction of the honourable member take the form of the statement which was made by the Minister for Trade and Industry (Mr Anthony) earlier today. The statement by the Minister is so hedged with qualifications that it means only one thing - that there is to be a review. But on what will this review be based? There has been great breast beating in some quarters about i the celebrated points of reference. But these points of reference, too, are so qualified and hedged that they can mean anything or nothing. So what we have had from the Minister today, except for a series of qualifications of what he has said before, is nothing. As a result we are still no wiser as to what is intended. The honourable member for Lalor made this point very clearly.

I want to draw attention to one factor that comes up very importantly in the matter of tariffs. This was referred to earlier today. Since 1932 there have been specific guide lines so far as the Tariff Board is concerned. The guide lines relating to trade agreements with the United Kingdom were endorsed again in 1957. Therefore, for 40 years, as a result of decisions which originated a generation ago, the Tariff Board has had specific guide lines. One specific guide line is that protection would bs afforded only to those Australian industries reasonably assured of sound opportunities for success. The second one is that protection would not exceed a level which would give United Kingdom industry full opportunity for reasonable competition on the basis of the relative costs of economic and efficient production.

No-one has attempted for a very long time to examine what that means in practice. I point out that as a result of that tariff making decision we have been importing inflation and inefficiency for a very long time to the tune, I submit, of 30 per cent on our added costs on this section alone. I invite the Minister to apply himself to how tariff racketeering can take place in relation to this section of Government policy. I shall cite 2 examples of this type of tariff racketeering which can relate all along the line. Two years ago a primary industry leader was awarded a Churchill scholarship. He went to California with a brief to see whether there were ways of improving primary production in the irrigation area. He saw a new type of machine which had never been seen in

Australia. There were only 3 areas in the whole country where it might be used. He arranged, in conjunction with a grower cooperative, to import the machine. The machine arrived. A 55 per cent duty was charged. There was an appeal on the ground that this was an experimental purchase - indeed, it was a prototype. Eventually only 7i per cent was retained. This decision was challenged and half a year later it was waived. The investigations over many long months had spanned not only Australian industry but also British industry. As this agreement operates at the moment, if the British Board of Trade had said that it could provide this machine in the United Kingdom, although the crop was not even grown there, our innovator would have had to pay up the 7i per cent. It is automatic. That is part of the 30 per cent cost impost brought about by the operation of a system based not on production, not on men employed, not on a real and valid industry, but simply on the say-so of the Board of Trade and a clerical officer.

The other example I want to give to the Committee concerns something that happened not so long ago when a printer and publisher in a capital city decided to install machinery for manufacturing stationery for digital computers. A company representative visited Europe, the United States and the United Kingdom. In England he found that most firms were using European machines but one man had evolved his own, built it and used it. In the United States the Australian found a machine which was three times faster and which operated at less than half the cost. Naturally he bought it. But the British Board of Trade said that despite the fact that their own people were using imported machines the United Kingdom could provide a machine. They said therefore: ‘You will pay the 7i per cent’. That was the decision conveyed through our own tariff making process.

Let us look now at this procedure which has been going on for 18 months or perhaps 2 years. When someone wants to import something from overseas without facing a crushing tariff burden he submits to the Department of Customs and Excise that it is not available in Australia. He must show what inquiries he has made. The Department refuses his application for by-law entry on the evidence presented and gives him a month to appeal. He does so and then the Department tells him that it will examine the matter in 4 months and that he must not bother the Department in the mean time. This delay of 4 months adds to costs. What you find very often is that the inquiries made by the Departmet amount in fact to a phone call to somebody in Australia. The person called is asked: ‘Can you provide this?’ Normally he will say: ‘Yes’. The Department asks whether he can provide it, not whether he has one on the floor. This is not adequate at all. I have known this to happen in industries with which I have close and continuing connection. It means that you open the door of tariff racketeering because of the machinery and the procedures that apply. The onus always is on the importer in this regard so time and again the 74 per cent is added when it should not be added. This means that there is an additional 7$ per cent on internal prices and the tendency generally is to come up to this price level. The result is anything from a 194 per cent to 22 per cent addition to cost attributable to this factor alone. This is an aspect of tariff procedure which has long been overdue for examination.

The CHAIRMAN:

– -Order! The honourable member’s time has expired.

Mr SHERRY:
Franklin

– I will not detain the Committee more than a few moments because most of what T want to say has already been stated cogently and eloquently earlier this evening. However, there are one or two points I want to contribute at this stage of the debate. The honourable member for Lalor (Dr J. F. Cairns explained with his customary clarity and precision the point of view of the Labor Party relating to tariffs. The honourable member for Braddon (Mr Davies) followed a similar pattern earlier this evening. One imagines always that a discussion on tariffs involves a fairly austere exercise in percentages and statistics. But this is not the only answer. Also involved in consideration of tariffs and industry generally is the question of human beings. I say that because people are closely concerned with decisions made in this Parliament.

Decentralisation is not only a theory advanced by the Government; it is also a desirable theory which meets with much support throughout Australia. However, let me turn to specifics in this issue. Earlier this evening discussion centred around an industry in southern Tasmania. It is the only industry of its type in Australasia and therefore must be regarded as making some contribution to the economic wellbeing of Australia. For that reason alone it deserves sympathetic consideration. One honourable member opposite - I will not argue with him on the point - questioned precisely what was meant by ‘economic efficiency’. Many interpretations could be placed on this expression but there are times when economic efficiency, profitable enterprises and profitability must take second place to the needs of the community.

The whole history of Australian Commonwealth Carbide Co. Ltd in Electrona in southern Tasmania is most interesting. It has experienced extraordinary difficulties in its fight to survive. It has suffered many unnatural disasters which have made its survival even more difficult. As the honourable member for Braddon said, the disastrous bushfires that swept most of southern Tasmania in 1967 had a great effect on the industry. In 1967, 1968, and 1969 the industry faced further operational problems. But it still is the largest producer of carbide in Australasia. The company employs about 200 people in a remote region. If one tried to calculate how many people would be affected if the industry failed it would be a reasonable assessment that the number would be anything from 600 to 800. The geographical location of the industry makes it vital that at this stage of Tasmania’s development it be sustained and maintained. It is in the centre of the fruit growing area of Tasmania. As all honourable members know, the Tasmanian rural industry is experiencing many difficulties and facing many problems. If anything is done to add to the difficulties of the only industrial enterprise in that part of the State it will not only create problems for the people in that area but also adversely affect the State’s economy as a whole. Parallel with the problems of the rural industry are certain difficulties with this industrial undertaking. I believe that this undertaking has a case for sympathetic consideration for assistance to enable it to be sustained and maintained to continue its economic contribution to Australia. One of the problems of an island State like Tasmania is that often the economic contribution it makes to Australia tends to be disregarded in the national’ Parliament. 1 feel, and I am certain that many honourable members from both sides feel, that this is an industry which is essential to the economy of Tasmania. It is essential also to the economy of the nation, and on that basis alone it deserves support at all times.

When the Parliament is debating tariffs and discussing industry generally it is important not only to think of the economic viabilty of an undertaking but also to have regard to the problems that are created for many people and their families if anything is done to disrupt that industry. If we do anything to exacerbate the economic difficulties which Tasmania is presently experiencing, the people of Tasmania certainly will not thank us. Not only for the economic reasons or for economic stability but also for the human interest involved and the great disruption that would take place, on these grounds alone I say that the proposals for the next 2 years on tariffs and protection for the carbide industry in southern Tasmania should be retained and maintained and should receive the sympathy of this Parliament.

Dr J F Cairns:
LALOR, VICTORIA · ALP

– The tariffs which are the subject of this Bill are covered in 23 or 24 reports of the Tariff Board and the Special Advisory Authority. All the tariffs are in the range of what the Tariff Board would call medium to low tariff rates. There are none in the 50 per cent or over category. Of the main commodities - something like 23 or 24 of them - there are 11 decreases in tariffs and 17 increases. It is difficult to weigh the net effect that this Bill will have. Many of the products concerned are of very minor significance. Some of the industries employ very few people and in some cases it appears rather strange that so much attention should be given to them when one considers the smallness of the resources involved. In some cases, such as the production of extrusion presses which are enormous items weighing from 2,000 tons to 5,000 tons, it is very difficult to imagine bow anybody can look into the future and say whether this industry will be efficient and economic. It is a matter very largely of the number of presses made and the experience gained. It is very apparent that we will never make many of these presses and therefore we will never have much experienced in this field. However, there is to be an increase of 20 per cent or 221 per cent in the tariff on this product. Perhaps 7 or 9 of them will be produced in the foreseeable future.

Honourable members should not get the impression that many of these items are significant because many of them are not. In view of the time and the work involved it may sometimes be doubtful whether increased tariffs on some of the items are desirable. The production of cinematograph projectors in Australia is a new venture. The Hanimex company is just beginning and it is very much a matter of speculation as to the company’s future. Once upon a time tariffs were not granted unless an industry was actually in operation. I do not say that the Opposition necessarily adopts that approach but this is a clear example of an industry which in terms of operation does not exist.

Both my colleagues from Tasmania have spoken about the increased tariff of 10 per cent on one production unit of calcium carbide in Australia. It seems to me that this is an increase that can be fully supported and the Opposition does fully support it. This item illustrates the position taken by honourable members on the other side of the House who are critics of tariffs. By Australian standards calcium carbide is produced efficiently in Tasmania. The plant in Tasmania produces about 14,000 tons. Plants in other parts of the world produce more than 100,000 tons. If the freer trade school is going to take the position that we should not produce anything in Australia unless we can reach a plant of comparable size, what will we have left? Reference was made to the production of motor cars by 4 companies in America and 4 companies in Australia. What hence do we do? Produce none? What steps do we take to have only 1 motor car company or 2 companies? If we have one or two companies, which are they to be? If we have Holdens and Fords manufactured here, do we bring in other makes without any tariff obstruction? When many of these theoretical submissions that come from the freer trade school are applied to what actually happens and the alternative is considered, one sees how completely abstract the approach is.

There are a couple of other points that 1 should like to mention in the Committee stage. I refer to vulcanised rubber sheets for which the Tariff Board recommends an increase of tariff, although not a significant increase, of 10 per cent in the general rate and 74 per cent in the preferential rate. In this case the Board reported at page 7 of its report that there is a registered trade agreement between local manufacturers. No doubt this is restrictive and collusive, but it is accepted as a matter of course by the Board. I wonder whether that is satisfactory and whether the Government has really faced the consequences of this situation. On the one hand the Government is supposed to take a position that it is against restrictive and collusive practices, yet on the other hand it grants an increase in tariffs to people who practise these things, lt seems to me that there is an unexplored area here for decision making in a situation which is not adequate as it is.

Another case involves footwear, where there is no change in the tariff rates really. In this case there are about a dozen producers in a situation which economically is not very sound. There has been much readjustment in the industry in the last 2 or 3 years and probably much more will have to take place. In this case the Board reports that it was hampered by the unwillingness of manufacturers to supply evidence. If I were in charge of this matter and the Board reported to me that it had been hampered by the unwillingness of manufacturers to supply evidence, despite what their trade associations wanted them to do, I think I would take the position that I would be hardly willing to grant them protection.

These are a number of the points that 1 think we should examine a bit more closely in the Committee stage, but there are dozens of other points also. In many ways I would like to have time to explore them. I have mentioned just a few examples. One matter that I mentioned earlier but which I shall mention again is the question of screws for wood. In this case there were 2 producers, Nettlefolds Pty Ltd and Sidney Cooke Fasteners Pty Ltd. The industry was not profitable. It appeared to have excess capacity. Then

Spurway’s Industries Pty Ltd and A. N. Cooke Manufacturing Co. Pty Ltd opened up in 1969 and probably increased capacity considerably. But despite this situation, there has been an increase of 71 per cent in the general tariff and about 174- per cent in the preferential rate. I recall the case a year or two ago involving the production of engines for lawnmowers, in which something like this occurred. Undoubtedly the protection granted secured the position of someone who deliberately and unwisely had gone into over-capacity. In the little time remaining to me I want to conclude by saying that tonight I have put forward the Labor Party’s policy on tariffs, but it appears to have gone unnoticed.

The CHAIRMAN (Mr Lucock:
LYNE, NEW SOUTH WALES

– Order! The honourable member’s time has expired.

Dr J F Cairns:
LALOR, VICTORIA · ALP

– If there is no objection, I will take my second period now. I have made it clear that industry does not have to rely upon some rather abstract sentences, such as those contained in the statement made by the Minister for Trade and Industry (Mr Anthony) today. I said quite clearly that a Labor government will not permit any Australian industry to be deprived of protection unless we are reasonably sure of the consequences. We will not permit any Australian industry which is efficient and economic on Australian standards to be deprived of protection. But a Labor government will not permit a protected industry to exploit the public by charging excess prices.

I made the point clearly that the difference between the Opposition and the Government on this point is a significant one. I believe that the Government has been prepared to support protection over the years irrespective of the prices charged and irrespective of whether the profits were excessive. Labor will not do this. If an industry requires tariff protection and cannot operate without it, we will give that industry, if it is economic and efficient, protection for its own needs, but we will not permit it to charge excess prices and to make excess profits. It seems to me that this is an area in which a considerable amount of debate about whether tariffs are proper will take place - not altogether a debate about whether this industry or (hat industry is economic or efficient, but a debate about whether an industry is in fact charging high prices and making excess profits. Very often that is the question involved.

I also pointed out that it would be completely inconsistent with the ideology or practice of the Government parties to tackle that problem. A Labor government will tackle that problem. I also said that I believe that changes must take place in industry. They must take place in any economy. An economy must be geared so that it can make the necessary changes quickly and with the least resistance. One of the results of tariff making - the way it has been done - is that changes cannot be made quickly and when they are made they meet resistance. A particular example of that is the matter of cherries. The Tariff Board, in a report which is open to criticism in certain ways - and this is the last point I want to mention this evening - has recommended in the case of brined and preserved cherries, which account probably for no more than one-third of the Australian production of cherries, if that much, the elimination of the tariffs or a reduction of approximately 35 per cent to 40 per cent in the tariffs.

This recommendation immediately provoked opposition from cherry growers, and the effectiveness of demonstration has been proved, as it so often is proved. It is ridiculous for people simply to say: ‘We will elect a government and then wait until the next election to do anything more’. The cherry growers were sensible enough to know that that was a very inadequate way of behaving. Apparently they have been effective in applying pressure upon the Government. In effect, the Government has decided to take no notice of the Tariff Board’s report. That shows what people can do if they stand up for their rights. I hope that a lot of other people will take notice of the result achieved by the cherry growers in standing up for their rights and will follow their example.

I think that only about 56 acres in Tasmania are used for cherry growing but I have 4 letters on the subject from Tasmania. That is not bad going and again illustrates what can be done when people stand up for their rights. I presume that the Government has also had letters from cherry growers. My point now is that if it were desirable to bring about the proposed change in tariffs, the resistance that it would generate would prevent the change from coming about.

I again submit that rather than talk about simple guidelines, points of reference and classification of industries as high cost, medium cost or low cost, we have to talk in this country, in the making of tariffs, about the machinery we should use to ascertain and report on facts, and the machinery we ought to have to bring about essential changes in industry. Unless we add much more adequate machinery than the Tariff Board now represents - machinery to collect the facts - we are not justified in coming to conclusions about changes in tariffs. Unless we can develop the machinery that will give industry adequate and proper notice to bring about changes we cannot reach proper conclusions. We do not want just a statement from the Minister that people ofNfl / by tariff changes will be assured of a living wage until they can get another job and that retraining will be available for them if they need it. A country which claims to be modern must make sure that those means are available to it. I have said tonight that until we in the Opposition are satisfied that such provisions exist we will continue to vote against proposals for tariff changes. When the Opposition becomes the Government we will introduce measures necessary for the proper discharge of the responsibility of Parliament in relation to tariff making.

Dr GUN:
Kingston

– With the indulgence of the Committee, [ wish to make some remarks of a fairly general nature that might perhaps have been delivered during the debate on the second reading of the Bill. I wish also to refer in passing to the statement made this afternoon by the Minister for Trade and Industry (Mr Anthony). I do not think any honourable member - certainly no honourable member on this side of the chamber - would ever dispute the importance of tariff protection to Australia in building up secondary industries. It has had the virtues of allowing us to build up and sustain an industrial base in Australia and in the years since World War II to sustain a large inflow of migrants. However, I think we accept that tariff measures, subsidies and such like have certain side effects. There are different types of side effects, the most

If one section of the community gains from a tariff, there may be another section - frequently there is - which loses because of that tariff. I take as an example a component manufacturer who benefits from a duty. The person who uses that component may be disadvantaged by that duty. The primary producer who sells on the open export market those of his products that are not subject to international commodity arrangements may be disadvantaged in respect of dutiable goods used on his farm. The housewife and the ordinary consumer may be disadvantaged to some extent by the imposition of a tariff. We must weigh these facts against the obvious advantages in the employment field, which arise from the tariff policy. In addition to the effect of tariffs on the redistribution of wealth in the economy, we must consider the effect of tariffs on the economy as a whole.

This afternoon, the Minister for Trade and Industry did not make any specific reference to the economy as a whole. But I think that we may take it as read that the Government concedes that it is about time something was done about the rather poor performance economically of Australia in recent years. I refer here to the development of our gross national product, not that the only thing that we should try to achieve is an increase in our gross national product. But it is something that is fundamentally important. Australia has done pretty badly in this respect. It is obvious that it is time something was done about our gross national product. In the last report from the Tariff Board, for the year 1969-70, we saw evidence that the amount of total protection to industry in Australia is approximately $2,7 00m. While not all of this available protection is being used no doubt exists that a large amount of excess profit is being made and that excessive prices are being charged behind this wall of protection.

I have no doubt that we accept that a need is present for certain changes in the direction of our tariff policy. For many years now many of the remnants of the Scullin tariff policy, which is very old indeed, have remained in force. In this policy are many items of anticipatory pro-

Australia has suffered also over several years in respect of tariffs from the effects of the ‘dead hand of McEwenism’. To judge from the speech made by the Minister for Trade and Industry this afternoon we now seem to have moved from the McEwen policy to no policy at all. Another important reason why we need to take another look at our tariff measures is the problem of inflation. No doubt exists in my mind that if we do not use our resources to the optimum we cannot possibly hope to control inflation.

I wonder whether honourable members may have seen the article which appeared in the Press last week in which Dr Sheehan of the Australian National University compared the situation in the United States of America and the United Kingdom with the position in Western Germany. He pointed out that deflationary policies had been introduced in the United States and the United Kingdom. Not very much growth in productivity has occurred in those countries and, as is well known, prices have skyrocketed there. Western Germany, which has gone all out for maximum growth in productivity, has not suffered the same problem. What has happened is that West Germany has been able to accommodate wage increases by greater productivity. As a result of this policy, price increases in Western Germany have been minimal. Here is another reason why it is necessary for us to have another look at our tariff policy.

I think that it is important to distinguish between the attitudes of the Opposition and of the Government, which would underlie any change that was to take place. It seems to me that the policy of the Government frequently is one of social Darwinism. The Government seems to be seeking some abstraction called ‘economic growth’, and that is all that matters. It is bad luck for those who are rejects from this system of improving our economic apparatus. Our policy is quite in contrast to this. We accept that nobody should be tection This policy imposed high protecdisadvantaged by any change which takes place in the economy in order to try to improve productivity and increase economic growth. Primarily we must accept that the purpose of altering any tariff policy is to help people. The people we are trying to help are the wage and salary earners in Australia. We take it as a sine qua non that nobody should be disadvantaged as a result of any Government measure which is taken. I note that last week the Government introduced a measure to provide payments of up to $46.20 for people who are subject to displacement due to technological change. I do not think the measure goes far enough. I do not think that any body who loses employment should suffer in any way. I believe that an employee should be compensated for any loss of wages. His weekly earnings should not drop at all. This could be covered mainly by his ex-employer who may be benefiting from some technological change which has resulted in somebody’s displacement. If that happens the difference between the $46.20 paid by the Government - or whatever the amount is going to be - and the man’s average normal weekly earnings should be made up by the employer.

I think that everybody should have his re-education or adult education completely covered by the Government if he is going to be employed in a different sphere. In spite of this there are certain times when we cannot regard this problem entirely as an economic one. I think that sometimes when we consider alterations in our use of resources we must have regard to the social question. Several years ago the honourable member for Wakefield (Mr Kelly) obtained considerable publicity when he was debating the question of Associated Pulp and Paper Mills Ltd. He said that it would be more profitable to pay the employees of that company so much a year to stay at home and watch television. That is just one case which sticks in my mind. I do think that one has to consider the other side of the coin. For example, Tasmania, being a small island State, has always had great difficulty in building up its industry and maintaining its population. The town of Burnie is completely dependent on APPM. If that company went out of business the town of Burnie would just fold up. If that happened not only APPM but also the shopkeepers and other employees in that town would be affected.

The CHAIRMAN (Mr Lucock:

– Order! The honourable member’s time has expired.

Mr BUCHANAN:
McMillan

– Mr Chairman, this series of Tariff Board reports covers a multitude of items. One happens to be agricultural machinery. People who support lack of any protection for Australian industries have said that this affects the primary industries. I make the point at this stage that not only the primary industries need protecting. The whole range of our manufacture and of our gross national product needs looking after. If we are to be concerned only with primary industry and come down to the fact that we should be able to obtain all the machinery that we want from overseas without any industry in Australia we have to face up to one or two factors. One of them is that some of our larger agricultural machinery manufacturers do provide a lot of employment. I am told that employment has nothing to do with tariff rates, but this is nonsense. After all, if we have no employment in this country we will have no country. If we are going to put immigration in reverse and send people to live somewhere else because we cannot get them jobs here in factories, which are the only places in which they can get jobs, we are going to be in a pretty sorry state. But in this report on agricultural machinery the Tariff Board has really made a fool of itself. It has given the lie to its own findings.

In its annual report the Board said that manufacturing industry in this country is subsidised to the extent of $2,700m a year. It puts this figure forward as having some validity. The Board is implying that the people of Australia are paying $2,700m more than they should. Of course, no subsidy is actually paid. We all understand that the Treasury does not pay a subsidy as it does in the case of primary industry which is given money in order to encourage production. So the inference is that the people of Australia are being forced to pay $2,700m more than they should. This comes out in the annual report of the Tariff Board and then there is an inquiry into agricultural machinery, which is fundamental in the whole Australian scene, and we find that the Board cannot support its own argument. If I had time I would like to go on for quite a while and show how in many other things it cannot support its own arguments. In fact, nobody can understand its arguments.

The tariff in fact is really not an important factor in determining the price for this type of machinery. The Board found in its report that internal competition between local manufacturers reduces prices to below what they would be if demand was met entirely by imports. In other words, the Board is saying that because we have an Australian industry prices are kept to a minimum. The Australian industry was originally started by H. V. MacKay in Sunshine with his stump jump plough and that sort of thing. The industry has been built up over the years to the stage where it has exported agricultural machinery for many years. This is something that we in this country understand better than most people in the world because we are a farming community. We have developed here a farm machinery industry which can defy competition from any other country.

The Tariff Board itself has said that because we have a competitive farm machinery industry prices are kept at a level which is below what they would be if we had to rely exclusively on imports. The competition between local manufacturers sets prices that do not exploit fully the duties available. In this regard I claim that the Tariff Board has refuted its own arguments, and it is no longer valid for the Board to say that the people of Australia are exploited by the duties imposed on manufactured goods. The report also suggests that the competition between imports was not such as to prevent very large mark-ups to end users. That simply means that those who bring overseas machinery into this country can profit from the belief of some people that because an item is manufactured in a foreign country it must be a little better than something manufactured here. There is not enough competition between those people to prevent very large mark-ups. In other words, the markup on imported machinery is so much higher than the mark-up on locally produced machinery that the farmers of Australia are being exploited by the people who import machinery for which they claim all sorts of fantastic things when our own machinery can do the job a lot better.

The Tariff Board has said that in some cases the mark-up on the imported goods is up to three times greater than that for locally produced goods. An argument which I have advanced for a long time is that there is more money in the business of importing goods and selling them to the Australian public at inflated prices than there is for the local manufacturers whom we should be looking after. I want to make it clear that I am not just making a plea for a local manufacturer simply because he is a local manufacturer. If the article which he produces is not good enough people will not buy it. However, it has been amply demonstrated that we in this country can make farm machinery which is far and away ahead of the typical machinery produced in other countries. Basically we are a primary producing country. We have the ability to do this, and it is complete nonsense for anyone to suggest that we should sacrifice these local manufacturing industries in order to obtain machinery at a slightly cheaper price because, as the Tariff Board found after a recent inquiry, if we rely on overseas manufactures we will pay a lot more for them than we would by supporting our own local producers.

Thursday, 29 April 1971

Mr COPE:
Sydney

-! take this opportunity to congratulate heartily the honourable member for Lalor (Dr J. F. Cairns) for the concise way in which he put forward Labor policy on this matter. As he said, over the years the Government has repeatedly given us ambiguous policies in regard to tariffs. Like other honourable members, including the Minister for Repatriation (Mr Holten) have done, I refer to the textile industry in relation to low wage countries and imports from these countries. It would be impossible for our textile industry to compete with the low wage countries, particularly Taiwan, Hong Kong and South Korea. We have many industrial amenities in Australia which it is our duty to protect. I refer to long service leave, compulsory annual leave, adequate sick leave and workers compensation. If we want to protect those benefits we have to protect jobs and we can only do this by tariff protection.

But I would like to point this out. We can have a situation where through the abolition of tariffs we can abolish an Australian industry and import similar products. Say, for example, we import a shirt from South Korea for $1 and sell it for $3, less than the price of an Australian shirt of similar quality. If we knocked the Australian shirt off the market completely let us not think for one moment that the imported shirt from South Korea would remain at the same price. The price would be increased. With the devaluation of sterling a few years ago, what benefit was passed on to Australian consumers by the importers? Does any honourable member know of any benefits that were passed on? Of course not. The benefits were kept by the importers. As far as we in Australia are concerned it is our duty at all times to protect the jobs of Australian workmen. Nobody on the Government side has explained to us yet how the Government intends to maintain our immigration intake if it abolishes the tariff system, which some honourable members opposite, particularly the honourable member for Wakefield (Mr Kelly) want. What the honourable member has not explained is where the migrants would find jobs.. They can find jobs only in secondary and. ancillary industries. They cannot find them in the primary industries. In fact, there are fewer people working on the land today than there were during the Second World War. The migrants depend absolutely on work in secondary industries for their survival. If there are no jobs for them it means there is no migrant intake in Australia. What we should press for at all times, in conformity with the very good policy of the Australian Labor Party, is tariff protection in order to protect the jobs of Australian workers.

Mr KELLY:
Wakefield

– I thought that we were to have a close debate in the Committee stages. Reading the financial Press, particularly the ‘Financial Review’ which I always regard with respect, particularly on Fridays, I understood that the Labor Party intended to test and argue each Tariff Board report. I spent the weekend wading through the reports and the House will be relieved to know that I will not inflict the whole lot of my homework on it tonight. The first report deals with alloy steel, particularly the 35 per cent duty on stainless steel. It is a remarkable situation that we have the 12669/71- -R-Wl

Japanese buying our iron ore, nickel and coal and shipping them to Japan, manufacturing from them stainless steel and having a 35 per cent duty imposed on the product to protect the Australian industry. I think this is a duty that should be examined and I am gratified to see that the Tariff Board has said it should be examined shortly.

However, there are particular features of the iron and steel industry which I should like to mention. The’ honourable member for Cunningham (Mr Connor) said today what an excellent industry the iron and steel industry is. No-one would contest how efficiently it has been able to organise itself. It can and is competing, as he said, with other countries in selling steel on the west coast of America. It is a credit to the country. But the justification for tariff protection has always been the infant industry argument. Here is an industry which really is growing beyond the infant stage. You, Mr Deputy Speaker, with your rural background have no doubt had experience with the foster mothering of beef calves. We once had a beef cattle stud and used to foster-mother beef calves by putting them on Jersey cows. -The calves did particularly well. We used to put a Jersey cow into a bail and a bull that was probably twice the size of a cow, would come charging up but he would not do to the cow what one would expect him to do; he would get down on his knees and start to suck from it. The steel industry is an infant industry which, like the beef bull, has really grown up. The beef bull would have been better for breeding purposes if it was not being fed on milk anyhow.

Mr King:

– If it had been paddock reared.

Mr KELLY:

– Yes, if it had been paddock reared. I think that the Broken Hill Proprietary Co. Ltd has come to the stage where it should no longer be regarded as an infant industry. There is one matter about this industry which I would like to draw to the attention of honourable members. This matter brings into focus the anxiety I have about the ways in which some industries can use their by-law advantage. I have had brought to my attention - and the Minister for Customs and Excise has with his characteristic courtesy and efficiency been good enough to take the matter up for me - something- which rankles me. John Lysaght (Aust.) Ltd, an organisation which is not unrelated to BHP, has had a reputation as a big company and, I always thought, an honest company. I now find it has applied for dumping duties to be imposed against certain products and is importing them under by-law and selling them in competition with its competitors, who have to pay the duty. I think that this kind of thing is inexcusable in a company of Lysaght’s standing. I think it is something which ought to be spelt out in a debate like this.

This legislation does bring into focus the importance of the by-law procedures which, I am glad to say, have been handled by the present Minister for Customs and Excise in a way in which they have not been handled for a long while by former Ministers. I have no criticism to offer about the report in respect to the extrusion, presses, but I would like to make one comment. This item falls within a part of the Chapter 84 group, which relates to the manufacturers of machinery, that it is hoped will be referred to the Tariff Board. The duty in this area is exceptionally high at around 55 per cent. It is a grievous burden for those industries in which the use of these tools of trade is essential. The Tariff Board recommended a duty of 30 per cent. I hope that this will be taken to be the bench mark. It should not be higher. I hope that it. will be lower. As these are essential tools of trade in secondary industry their price should not be increased unnecessarily.

I turn again to the vinyl acetate report. There is something about it that I want to mention in particular. I am not happy with the quality of the report, but I want to refer particularly to the reference. It was one of the loaded references which I hope we will never see again. It starts off by referring to the desirability to achieve the reasonably profitable development of soundly based chemical industry. I believe that the cost that achieving this end has imposed on primary and secondary industry must be taken into consideration. The Tariff Board should never receive references on these lines. It should always receive the usual reference, which is: ‘Is the industry economic and efficient? If so, what action should be taken?’ I was disappointed with the report on sorbital. A $350 support duty is recommended. Although I have been through the report with some care, I have not been able to find any reference to the significance of the $350 support duty to the f.o.b. prices. Officials of the Department have been good enough to go through it for me and they have, with some difficulty, worked out that there is some relationship. I admit that they are more skilled than I am, but I could not find it. I do not think that this is a good example of a Tariff Board report.

I turn now to the reports of the Special Advisory Authority. I never expect these reports to be of a high standard as they have never been of a high standard. These reports are typically poor examples. There is in the one on acetate derivatives a total absence of any reference to the effect of the duty. A duty of, I think, $70 a ton is imposed, but what does this mean? What is its ad valorem incidence? This is not good enough. The Special Advisory Authority ought to tell us as much as he can. I know that his time is short. However, he has a month to prepare his reports. It is not good enough just to present to the House a figure such as $70. There may be something in it, but I cannot find it. If I cannot find it, there will be others in the House, even as dense as I am, who cannot find it. It is not good enough .that it should appear in this form.

The last matter to which I want to refer is the duty on Christmas trees. It would be improper for such an important report to escape the attention of the Committee. It is said on page 5 of the report that employment in this industry is of some significance. I am not certain of the meaning of the words ‘of some significance’, but the Authority must have something in mind. This duty, to protect the employment of I do not know how many people, will cost the children of Australia, on my arithmetric $200,000 every year. There must be some kind of limit to the use of protection devices. This matter will now have to go to the Tariff Board for a full report, unless it is to become caught up as part of the plastics inquiry. The only thing we can hope for now is to have some kind of an artificial Father Christmas. The Minister for Customs and Excise (Mr Chipp) has all the necessary attributes and, if he let his whiskers grow a little, would make an ideal Father Christmas. I express my disappointment that the Labor Party has not done what it said it would do; that is, argue each report in detail.

Mr GRASSBY:
Riverina

– For the very first time I find myself in sympathy, or empathy, with the honourable member for Wakefield (Mr Kelly). I thought that be argued the Opposition’s case very well, in the dying moments of this debate, for a strengthening of the Tariff Board’s machinery to bring down more adequate reports. 1 accept that argument. The point I rose to make was in connection with the effect of tariffs in relation to foreign investment. This point has been totally overlooked. Tariff protection for manufacturing activities encourages and has encouraged much of the foreign capital inflow into manufacturing production. Some of these foreign funds have been attracted into highly protected industries and sometimes they have flowed into the least efficient sectors of manufacturing industry. There is no doubt that there is an argument here, in our examination of the overall policy, for us to see to it that the tariff is used as as instrument to guide foreign investment into those avenues which will be of best return to our nation and no-one else’s.

For example, we could apply tariffs when we come to consider restrictive export franchise. The Department of Trade and Industry made an examination and found evidence of some 1,100 agreements on restrictive export franchise among 700 companies. In some cases higher production costs in Australia might curtail exports, but it is very much more likely that the companies could export considerably more if restrictions were not placed on them. In addition, some companies might be able to decrease unit costs if they could produce for a larger market and thus become more competitive. I think that we should be taking a regional view. This is where tariffs can be a useful instrument. I commend this thought to the Minister and to the Committee.

The mathematics of tariffs in relation to primary industry appear to point to one thing that needs to be done. It has been pointed out by the Tariff Board - I am grateful to the Board for having done so - that the value of tariffs to industry is $2,700m, of which primary industry receives perhaps $200m. Obviously, with primary industry contributing to half of the exports of the nation there is a need to consider some tariff compensation along the lines already applying in New Zealand. The New Zealand Government permits the entry of various materials duty free to keep costs down and to enable some of its primary producers at least to compete on export markets. This is something which should be considered and which should be done. Again, it comes back to our overall submission that the tariff making machinery is not adequate to take into account all these factors that have been raised tonight. I rest on that point.

Mr CHIPP:
Minister for Customs and Excise · Hotham · LP

– Firstly, I would like to say how pleased I am personally at the way in which this tariff debate has been conducted tonight. I would like to think that it is different from tariff debates in the past, when they were held on the last or second last night of sittings and when they were brought on at 2 a.m. and gagged time and time again. The fact that we have had an open run since 8 o’clock tonight and that many members have spoken, some more than once, vindicates my belief that members of Parliament wanted to talk in depth about Tariff Board reports and about specific items in them.

I would like to pay tribute to the honourable member for Lalor (Dr J. F. Cairns) and other speakers, but to him in particular in one sense. Tonight he stated unequivocally and categorically the policy of the Australian Labor Party on tariffs. I believe it is to be commended that in this House of Parliament a spokesman for the Labor Party on his particular responsibility should so state policy. What did he say? He made it crystal clear that the policy of the Labor Party on tariffs is nakedly socialistic, and his statement was supported unanimously by speakers for the Labor Party. Again I say it is to be commended that such an important issue in the economic policy of the country should be so clearly stated by the Opposition. But I think that this debate has highlighted one thing, namely, that no longer can any financial journalist suggest that there is a bi-partisan policy on tariffs in this Parliament. There is a dividing line as clear as crystal now, and the gap between the 2

Parties philosophically on tariffs is wide for everyone to see.

The Labor Party tonight has come out, surprisingly to me and my colleagues with whom I have discussed it, as an overprotectionist Party that seems to have gone back 20, 30 or 40 years to the bad old days, whereas on this side of the chamber there has been, I would have thought, a liberalisation of our philosophy. The honourable member for Lalor has supported protection virtually at all costs. But that is not enough. He does not only want the Tariff Board directed to protect but, after having made that step, and having in mind the profitability of industry and individual companies within that industry, he wants to control prices as well. He stated this unequivocably and I commend him for it. He did not stop there. He wants not only to direct the Tariff Board regarding profitability and not only to control prices but also to control and curb profits after those 2 steps. So he wants 3 bites at the cherry.

Dr Klugman:

– It is terrible.

Mr CHIPP:

– I am not saying that it is terrible or otherwise. I am simply saying what I understand the honourable member for Lalor to have said on behalf of the honourable member who has interjected and other members of the Labor Party. I think it would be safe to say that the statement by the Minister for Trade and Industry (Mr Anthony) today has generally been acclaimed by all or an overwhelming majority of members on this side r f the Parliament. That . philosophy which has been acclaimed here has been disowned unanimously by members of the Labor Party. Therefore I think today has been a watershed for tariff debates in this country, and that the Australian people, the manufacturers, the importers, the trade unions and everybody associated with our economy can now see quite clearly the dichotomy in policy on tariffs. Without being provocative or rude to the honourable member for Lalor, he said that the Labor Party is a planning party.

Mr Foster:

– That is correct. It is.

Mr CHIPP:

– Do not be ashamed of it. He said it in the context of a tariff debate. After having said that he spoke about the Tariff Board. Proceeding from the premise that the Labor Party is a planning party, clearly a Labor Party in power would direct the Tariff Board to carry out policies in accordance with its master plan. Therefore, under Labor, the Tariff Board, I suggest with respect, would become a tool of government and not the independent authority which this side insists that it should be.

I do not wish to prolong the debate, but I want to refer to one other statement that the honourable member for Lalor made. He referred to the position when Labor was in power. He criticised this, side of the House for not caring about the implementation of Tariff Board reports in relation to the work force. Without giving reasons, he criticised our philosophy of allowing the free forces in the ‘ market to determine various economic factors. I remind him that in the past 20 years our record of allowing the free market forces to govern has not been a bad one as far as the labour force is concerned. When Tariff Board reports, which may have caused some disruption in the labour force because of the economic performance of this Government and because of its free enterprise philosophy, have been implemented, those temporarily displaced workers have had ample oppor tunity to find alternative, employment. I conclude by thanking again all those honourable members who . participated in the debate.

Mr STREET:
Corangamite

– I would like to refer very briefly to the report of the Special Advisory Authority on artificial Christmas trees, which industry, the report tells us, is of some significance. I point out that an industry of some significance obviously employs some people and obviously has capital invested in it. I think we are entitled to know how many people are employed in the industry and how much capital is invested in it. We are told in the report - one of the few pieces of information that it does contain - that one manufacturer was in business prior to 1960 and one after 1960. The one who came into business after 1960 apparently believed that the product he was making was entitled to protection. Much to his surprise he subsequently learned that it was not entitled to protection. So we have the almost incredible situation of a report being presented to this Parliament which does not state how many people are employed, or how much money is invested, in an industry which did not go to the trouble of ascertain- ing whether it was entitled to protection. I think this Parliament is entitled to receive reports of a much higher standard.

Mr HURFORD:
Adelaide

– I do want to point out-

Motion (by Mr Giles) proposed:

That the question be now put.

Mr Foster:

– I want to take a point of order.

The CHAIRMAN (Mr Lucock:

– Order! The honourable member for Sturt will resume his seat.

Question resolved in the affirmative.

Bill agreed to.

Bill reported without amendment.

Adoption of Report

Motion (by Mr Chipp) proposed:

That the report be adopted.

Mr HURFORD:
Adelaide

– At the Committee stage of this Bill after the Minister for Customs and Excise (Mr Chipp) had spoken the honourable member for Corangamite (Mr Street) rose and made some remarks about a report. During the course of his remarks he pointed out the inadequacy of the information contained in that report in relation to the conclusions of the report. At this stage I merely want to say that this is precisely one of the main points that has been made by members of my Party during this debate.

Mr DEPUTY SPEAKER (Mr Dury)Order! There is no provision under Standing Orders for a debate at this stage. The honourable member may make comments at the third reading stage.

Mr Foster:

– Mt Deputy Speaker-

Mr DEPUTY SPEAKER:

– Order! There is no provision for debate at this stage.

Question resolved in the affirmative.

Third Reading

Motion (by Mr Chipp) - by leave - put:

That the Bill be now read a third time.

The House divided. (Mr Deputy Speaker - Mr E. N. Drury)

AYES: 45

NOES: 42

Majority . . . . 3

AYES

NOES

Question so resolved in the affirmative.

Bill read a third time.

page 2203

ADJOURNMENT

Law and Order - Political PartiesNewspaper Article

Motion (by Mr Swartz) proposed:

That the House do now adjourn.

Mr JAMES:
Hunter

– It is not my intention to use the full time available to me in this debate. I believe that what I am going to say to honourable members will meet with their approval. At this particular time in our history the Aus- tralian Government should be endeavouring to promote international relations on a higher plane with all countries, particularly those with whom we have very good trade relations. Last week in Canberra there appeared before the court 2 men who had journeyed across from Western Australia last January and had exploded 1 or 2 bombs at a foreign embassy in Canberra, causing extensive damage. It could well have been that-

Mr DEPUTY SPEAKER (Mr Lucock:

– . Order! I suggest to honourable members who are conducting a private debate in the corner that they are not assisting the Hansard reporter who is trying to take down the speech being made by the honourable member for Hunter. I suggest that they conduct their conversations outside the chamber.

Mr JAMES:

– Thank you, Mr Deputy Speaker. As I was saying, 2 young men, who migrated here I believe from Bulgaria, motored from Western Australia to Canberra for the express purpose of blasting a foreign embassy. Attacks on foreign embassies have caused so much concern to the Government that it saw fit last week to introduce legislation providing for greater protection to foreign embassies. I recall reading in the Press shortly after the 2 men were arrested by the police that the the police opposed bail in the court, one of the grounds for opposition being that the men had indicated that if they were released they would return to the embassy and bomb it again. After the trial the men were sentenced to imprisonment for 18 months with hard labour. All honourable members would be aware that persons who behave reasonably while in prison get a remission of approximately one-third of their sentence. A person who is sentenced to 12 months imprisonment invariably serves only 9 months, so it can be expected that these 2 evildoers will be released within 12 months.

Dr Everingham:

– What happens to conscientious objectors?

Mr JAMES:

– The honourable member reminds me that conscientious objectors are sentenced to 2 years imprisonment. I instance Zarb and other conscientious objectors who have made the headlines throughout Australia. I noticed in this morning’s Press that a person iri my electorate who stole $2 from a Cessnock church was sentenced to 12 months imprisonment with hard labour. Several days ago a Melbourne woman who forged a will was sentenced to 4 years hard labour. I have always believed that society looks upon crimes of violence far more seriously than it does thefts of a person’s property.

Mr Cope:

– It always should.

Mr JAMES:

– I agree entirely, and I think every honourable member would agree. The theft of a person’s property does not inflict a permanent scar but a violent attack on a building in which individuals may be domiciled could cause death or a permanent physical affliction. 1 believe that the 2 young fellows who blasted the front wall out of a foreign embassy in Canberra were treated mercifully by the judicial authorities in Canberra. I think the sentences were disgraceful and constituted an insult to a great world power, not that I think a more savage penalty should be imposed on an individual simply because the embassy to which I have been referring was involved. In view of the reckless ‘ indifference with which the 2 men perpetrated the crime of throwing a bomb into a foreign embassy, I believe the penalty should have been far more severe.

I understand that the maximum penalty for the offence with which these 2 evildoers were charged is prescribed as 14 years imprisonment. I understand also that in the Australian Capital Territory, unlike in other States, there is no provision whereby the Crown can appeal against the inadequacy of a sentence. I hope that the AttorneyGeneral (Mr N. H. Bowen) will give serious consideration to what I have imparted to the House tonight. I hope that it is the opinion of all honourable members that the sentence imposed is far too lenient. It is an insult to a country of great power and with which we conduct extensive trading operations. I would not like to think that the Soviet authorities would impose such a meagre penalty on evildoers in the Soviet Union convicted of a similar crime in relation to our embassy in Moscow. I hope that there will be no repetition of this frivolous type of treatment by the law enforcement authorities of such a very serious crime.

Dr PATTERSON:
Dawson

– Tonight I wanted to reply to attacks made on me yesterday afternoon by the honourable member for Kennedy (Mr Katter). Unfortunately the honourable member is away. I notified the Country Party through the Whip, which is more than the honourable member for Kennedy did to me yesterday, that I would be raising this matter tonight. Because the honourable member is absent from the House I will not say some of the things I had intended to say. I will reserve those until next week when he is here. However, I think it is necessary for me to at least put the record straight on this matter. As honourable members in this House know, we have from time to time some rough and tumble arguments in this place. - I can recall the first 12 months after my entry into this Parliament. I sat in the corner opposite the Country Party benches and I had a pretty rough time. I tried to give what was given to me. Although it was pretty rough I can say that I do not think there was ever anything personal in that time to the degree that any honourable members bore any malice outside this place. At least I did not and I have no indication that any member of the Country Party did either. I think that when personal attacks are made on an honourable member and when the attacks are . . .

Mr DEPUTY SPEAKER (Mr Lucock:

– Order! I think the honourable member for Dawson would be wise to restrain himself and to phrase his comments in a completely different manner. I suggest that the last words he used be taken out of the Hansard record.

Dr PATTERSON:

– When those attacks are not the truth then I believe that this is quite a different matter. I do not say this was an accident. It was deliberate. What the honourable member for Kennedy tried to do to me yesterday was to somehow or another say that I was a Dr Jekyll and a Mr Hyde and that I was now a disciple of foreign ideologies. In other words, he was linking me with Communism. That was his whole objective. If honourable members read his speech they will see that this .was his objective to show that I had suddenly changed all my views and I was now becoming a Communist. This is the smear ing approach but he could not say it in that language.

I am going to reply to his attack but I want to devote the rest of my time tonight simply to putting forward the facts. Let me say firstly that the honourable member distributed his speech to some Government members. One of those honourable members came to me and .aid - not to my face but in front of 3 other Labor members that he tore it up in disgust.

Mr Kevin Cairns:
LILLEY, QUEENSLAND · LP

– Say who it was.

Dr PATTERSON:

– I will say who it was when I want to. He tore up the speech in disgust. I should think that the honourable member for Kennedy would be one of the most vulnerable people in this Parliament and not one to be talking about inconsistencies in politics. The honourable member charged me with changing my ideologies, but I shall say more about that later. I do not know what hat he talks with sometimes. Before the Senate election I was in a railway camp in North Queensland when he and I were both in the Labor Party. They were voting for him because it was in Kennedy; but he was in the Labor Party! Never mind, I want to make this quite a serious matter. I speak with some difficulty tonight because I have had to change the complete tenor of what I wanted to say.

To put the record straight I want to say that when I read the newspapers on Sunday morning I was amazed to read in the ‘Sunday Mail’, which is the principal Sunday newspaper in Queensland, the following statement:

A Federal Country Party M.P., Mr R. C. Katter, yesterday referred to Britain, France, Holland and Sweden as ‘mongrel nations!’

They had refused to join Australia and the United States in the Vietnam conflict, he said.

Mr Katter was speaking at the Young Country Party conference in Yeppoon, central Queensland.

He said: ‘Great Britain, France, Holland and Sweden - they are the greatest lot of mongrel nations in the world.

They are the greatest culprits in the Vietnam question.’

I did not believe it. I say that quite frankly. I did not believe that any member of the Parliament would say that. I expected to see a statement in the next edition of the newspaper, or to hear one on the air during the day, to say that he had been completely misreported, but I did not see or hear one. I made contact on Monday to see whether the report was true. The reason why I am so upset is that this happened in my electorate. Honourable members opposite would be upset if someone came into their electorate and said these things, if they were said. I made a telephone call and found that this was in fact said. The Press had put this statement in inverted commas - they are not fools - because it was highly defamatory. On Monday the ‘Courier Mail’, which of course is a conservative paper, said in its editorial:

Mr Bury, on his return, ought to do some straight talking to his parliamentary colleague, Mr Katter, - one of the Queensland Country Party hopefuls for ministerial rank- at least until last Saturday.

It ill behoves a Country Party parliamentarian to presume to call Britain, France, Holland and Sweden ‘the greatest pack of mongrel nations’ just because their attitude of non-involvement in the Vietnam war differs from Mr- Katter’s, or in fact, from Australia’s.

That was quite intemperate language, and an affront to some of the leading nations of the world, whose policy, after all, is their own business.

This statement by the honourable member for Kennedy appeared in a number of newspapers. I repeat that the statement was made in the electorate of Dawson. I was beseiged with telephone requests from irate people in my electorate and others asking about this statement. I still thought that the honourable member would make some statement about it.

Mr Turnbull:

– He did.

Dr PATTERSON:

– When did he make a statement? I am talking about Monday. The honourable member has his dates mixed up.

Mr Giles:

– What about ‘Friday?’

Dr PATTERSON:

– This just goes to show the mentality of the honourable member for Angas. Look at him, perched up there like some great lairising galah.

Mr DEPUTY SPEAKER (Mr Lucock:

– Order! I suggest that interjections should cease. I remind the House that the honourable member for Dawson is making a statement. The honourable member for Kennedy is not present. The honourable member for Dawson has made a comment on that.

Dr PATTERSON:

– In conclusion, I say that I asked the honourable member for Kennedy to apologise for his statement, as he should have done. However, what he has done is to try to smear me in the most crude and amateurish way. I will deal with that matter next week when he is in the Parliament. Some of the things I intended to say tonight I most certainly will reserve for next week.

Mr TURNBULL:
Mallee

– First of all, I want to say that the honourable member for Dawson (Dr Patterson) told me that he intended to speak tonight in the adjournment debate and that he would refer to the honourable member for Kennedy (Mr Katter). I said te the honourable member for Dawson at the time that the honourable member for Kennedy had been given leave of absence from 5 p.m. today in order to attend a conference of the Australian Country Party in Queensland and that I thought if would be better if the honourable member for Dawson expressed his views when the honourable member for Kennedy was here in the Parliament. When the honourable member for Dawson commenced to speak tonight I interjected and said: ‘Leave it until he comes back’. That will be in Hansard. 1 think that would be the best thing to do because a few days would not make much difference. I have always been against personal attacks being made by honourable members from either side of the House. I have never made a personal attack during the time I have been in this Parliament.

Mr Foster:

– You have attacked rae.

Mr TURNBULL:

– Not personally. I want to say one or two definite things. I am not here to protect the honourable member for Kennedy; I am here to see that there is fair play. As Whip of the Parliamentary Country Party, I say that the honourable member for Kennedy made an explanation about the matter the honourable member for Dawson has raised during the debate on the Appropriation Bill and, to be quite fair to the honourable member for Dawson, the honourable member for Kennedy also made an attack on the honourable member for Dawson. The honourable member for Dawson, to some extent, has replied to that attack tonight. The whole point is that the honourable member for Kennedy said that what the newspaper said or what the honourable member for Dawson said was incorrect; that he had been misrepresented. Honourable members opposite should not get flustered about this. This happens all the time.

It seems strange to me that the newspaper said and the honourable member for Dawson also said that the honourable member for Kennedy made this statement at a meeting of the Young Country Party at a place called Yeppoon. I have been to many meetings of the Young Country Party and I have never seen the Press at any of those meetings. From where did the Press get this information? Did someone supply it to the Press? Of course, the statement may be true or it may be not. In any case, I think that when the honourable member for Kennedy returns to this Parliament he will speak and the honourable member for Dawson will speak, and they will carry on this feud. The honourable member for Dawon said that the honourable member for Kennedy had his speech typed out and it was handed to someone.

I did not see the speech, so I do not know anything about that. All I say is that the honourable member for Kennedy is absent at the present time, but that when he returns, if the honourable member for Dawson wants to continue the feud he may do so. But I suggest to both the honourable member for Dawson and the honourable member for Kennedy, with the very best intent, that they should drop the matter now because, after all, it will not do either of them any good.

Motion (by Mr Swartz) agreed to:

That the question be now put.

Original question resolved in the affirmative.

House adjourned at 12.59 sum. (Thursday).

page 2208

ANSWERS TO QUESTIONS UPON NOTICE

The following answers to questions upon notice were circulated:

Nuclear Power (Question No. 2837)

Mr Stewart:
LANG, NEW SOUTH WALES

asked the Minister for National Development, upon notice:

  1. Was the visit to New Zealand of the Chairman of the Australian Atomic Energy Commission for the purpose of discussing the supply of heavy water for the proposed nuclear reactor at Jervis Bay.
  2. Can he say whether New Zealand has been conducting experiments in . the manufacture of heavy water.
  3. If so, how long have these experiments been in operation.
  4. Is it anticipated that the cost of . heavy water from New Zealand will be lower than from other sources.-
  5. What would be the cost of heavy water for commencing the operation of the station at Jervis Bay if a heavy water reactor were selected.
Mr Swartz:
LP

– The answer to the honourable member’s question is as follows:

  1. No.
  2. and (3) 1 am not aware of any experiment which may have been conducted in New Zealand on the manufacture of heavy water
  3. Until there is a specific proposal for the manufacture of heavy water in New Zealand it will not be possible to comment realistically on the likely cost of production.
  4. The costs of the heavy water inventories for the reactors tendered for the proposed Jervis Bay station are of course still confidential information. However, an idea of the costs may be gained from the fact that a 500 MWe CANDU requires some 400 tons of heavy water, while a SGHWR of the same capacity requires in excess of 100 tons. The price recently paid for heavy water is around $30/lb.

Uranium (Question No. 2836)

Mr Stewart:

asked the Minister for National Development, upon notice:

What success has been achieved in producing enriched uranium in Australia.

Mr Swartz:
LP

– The answer to the honourable member’s question is as follows:

No attempt has been made to produce enriched uranium commercially in Australia. The Australian Atomic Energy Commission has been engaged in research and development relating to the centrifuge method for enrichment, with satisfactory results.

PHW Reactor (Question No. 2831)

Mr Stewart:

asked the Minister for National Development, upon notice:

Can he say why Argentina selected a PHW reactor; if not, will he endeavour to obtain the information.

Mr Swartz:
LP

– The answer to the honourable member’s question is as follows:

To the best of my knowledge, Argentina has not officially disclosed its reasons for selecting a PHW reactor for the Atucha Station nor would 1 propose to seek such information.

Cannabis (Question No. 3287)

Dr Klugman:

asked the Minister for Customs and Excise, upon notice:

Will he provide an answer in precise terms to part (3) of Question No. 2290 (Hansard, 7th April 1971, page 1638).

Mr Chipp:
LP

– The answer to the honourable member’s question is as follows:

See my answer to question No. 2289. If such evidence of the dangers of cannabis is still not sufficient to convince the honourable member that caution is necessary in dealing with this substance I invite his attention to the following:

A group of 4 scientists headed by Professor William Paton, Professor of Pharmacology at Oxford University have found that the main physically active constituent of cannabis, tetrahydrocannabinol, is liable to be absorbed by body fat and can be acrumulated progressively in the body in the same way as DDT. Professor Paton, who is also Chairman of the Home Office inquiry into the effects of cannabis said recently ‘If one were to view cannabis simply as a new drug which might be introduced into medi.ine, the evidence we already have of health hazards would rule it out’.

The British Medical Research Council has granted Professor Paton (21,000 for this research project to continue.

One major question he hoped to answer was whether cannabis had thalidomide-type action on pregnant women. Experiments on animals by several groups of scientists had resulted in deformed offspring.

The Council on Mental Health and the Committee on Alcoholism and Drug Dependence of the American Medical Association in a joint statement said recently:

When advocates of legalising marihuana claim that it is less harmful than alcohol, they are actually comparing the relatively insignificant effects of marihuana at the lower end of the dose-response curve with the effects of alcohol at the toxicity end ot the curve - i.e., the ‘spree’ use of marihuana versus acute or chronic ‘poisoning’ with alcohol. If they compared both drugs at the upper end of the curve, they would see that the effects on the individual and society are highly deleterious in both cases’.

If the honourable member is interested in learning more about recent genuine research into the effects of marihuana, I would be happy to supply him with further references.

Television (Question No. 2886)

Mr Collard:
KALGOORLIE, WESTERN AUSTRALIA

asked the PostmasterGeneral, upon notice: _ (1) What stage has been reached in the extension of a national television service to Esperance in Western Australia.

  1. Can he state the approximate date for the commencement of transmission; if not, could it be as late as 1973-74.
  2. Has finance been allocated for the necessary equipment and other costs of supplying television facilities to Esperance; if not, when is it expected that finance will be allocated.
Sir Alan Hulme:
Postmaster-General · PETRIE, QUEENSLAND · LP

– The answer to the honourable member’s question is as follows:

  1. The Esperance television station is one of 38 stations to be established throughout the Commonwealth as the seventh stage of television development. Field surveys have been carried out in all of the areas concerned but final planning based on the results of these surveys has not been completed in respect of “ a number of the areas including Esperance. The honourable member may be assured mat the work is proceeding as expeditiously as possible.
  2. I cannot indicate the likely commencement date at this stage but an announcement in this regard will be made as soon as possible.
  3. The Government has approved the expenditure necessary for the establishment of these stations.

Department of Defence: Defence Science Branch (Question No. 2900) Mr Barnard asked the Minister for Defence, upon notice:

  1. What is the approved establishment of the Defence Science Branch of his department.
  2. What is the present strength of the branch.
  3. What is the duty statement for each position in the branch.
Mr Gorton:
Minister for Defence · HIGGINS, VICTORIA · LP

– The answer to the honourable member’s question is:

  1. The approved establishment of, the Defence Science Division totals 33 positions.
  2. The present strength is 25 officers.
  3. Duty statements for all positions are available and are being supplied separately to the honourable member.

Telephones (Question No. 2887)

Mr Collard:

asked the Postmaster General, upon notice:

  1. How many applications for telephone installations have been received during the past 9 months in (a) Western Australia, (b) Victoria, (c) New South Wales, (d) Queensland and (e) South Australia from applicants residing within a radius of 15 miles of (i) an existing exchange and (ii) a proposed exchange. ‘ -
  2. How many of these applications have been satisfied in each State.
Sir Alan Hulme:
LP

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

  1. and (2) The following table relates to applications for telephone services made since 18th August 1970, which, prior to introduction of the new policy announced on that, date, would have involved the applicants in meeting part of the line construction costs. The table shows the position at the end of March 1971.

Telephones (Question No. 2885)

Mr Collard:

asked the Postmaster-Gen eral upon notice:

  1. How many applications for telephone installations in Western Australia remain outstanding where the applicant is within a 15-mile radius of (a) an existing exchange and (b) a proposed exchange.
  2. How many of these applicants have remained unsatisfied for (a) more than 12 months, (b) less than 12 but more than 6 months, and (c) less than 6 months,
  3. What are the main causes of delay in installation.
  4. Is shortage of equipment one of the causes; if so, what is the reason for the shortage and when is it expected to be overcome.
  5. Is shortage of manpower a major cause; if so, is there any reason why that cause should not be rectified.
Sir Alan Hulme:
LP

– The answer to the honourable member’s question is as follows:

  1. (a) 1,290. (b) 433.

Note- These figures refer to application received since 18th August 1970 (the date on which the new policy concerning the provision of lines for country subscribers was introduced) up to the end of March 1971.

  1. (a) Nil - See Note in answer to (a) above. (b) 174. (c) 1,551.
  2. In order to ensure best utilization of overall resources, the work involved in providing subscribers’ lines must be integrated with that required for upgrading existing subscribers’ lines, of which there are many thousands throughout the Commonwealth. It is necessary that the task be tackled in an orderly fashion, taking into account the rate of implementation of the automatic service programme, the development of different methods of circuit provision to meet special technical requirements in some cases, and the availability of staff for planning, designing, installing and maintaining the network. Delays will therefore be inevitable in some cases and in fact it will take some years before the full programme stemming from the new policy is put into effect.
  3. For all works included in annual construction programmes, the Post Office orders supplies of equipment in advance so that stocks are delivered according to planned installation arrangements. Currently, equipment availability is not a cause of delay in implementing the new policy.
  4. The demands arising from development of the telecommunications network as a whole are placing considerable strain on certain levels of technical staff resources. Shortages of resources at these levels do have a bearing on the Department’s ability to cope with demands directly related to the new country lines policy as they do on many other activities in which the Post Office is engaged. Steps are being taken to strengthen the areas concerned, but it will necessarily take considerable time to achieve.

Technical Training Grants (Question No. 2891)

Mr Reynolds:
BARTON, NEW SOUTH WALES

asked the Minister for Edu cation and Science, upon notice:

  1. What amount of the $30,000,000 made available under the States Grants (Technical Training) Act 1968 for the triennium ending 30th June 1971 has now been spent by each of the States.
  2. What amount was available to each State.
  3. On what projects has the money been spent, and what was the amount spent on each project.
Mr Fairbairn:
LP

– The answer to the honourable member’s question is as follows:

The information sought by the honourable member is set out in the tables below. The tables are self-explanatory. There are, however, oneor two points I should like to make by way of explanation:

Advances by the Commonwealth and expenditure by the States are not the same at any particular time. Advances are made by the Commonwealth against quarterly returns from the State. The quarterly return shows the amount spent to date on the project and estimated expenditure for the next quarter.

State expenditure is eventually certified by the State Auditor-General.

Large projects are not all completed in the triennium in which they were started. Projects carrying over into a second triennium are indicated in the tables. The amounts outstanding on such projects vary considerably.

  1. The projects on which money has been spent during the 1968-71 triennium are listed below. This includes the carry over of moneys on projects approved in the 1965-68 triennium. The figures shown are the estimated expenditure to 31st March 1971. Amounts of less than $5,000 are grouped under ‘Other*, which includes mainly adjustments and small carry over expenditure.

Convention on Consular Relations (Question No., 3005)

Mr Whitlam:

asked the Minister for Foreign Affairs, upon notice:

Why has Australia not yet ratified the Convention on Consular Relations - which was done at Vienna on 24th April 1963 and signed for Aus. tralia on 31st March 1964.

Mr Swartz:
LP

– As Acting Minister, I provide the following answer to the honourable member’s question:

The terms of both the Convention on Diplomatic Relations and the Convention on Consular Relations were such that Australia could give effect to them only after the enactment of legislation. Of the two, priority was given to Australia’s becoming a party to the former Convention. Legislation for this purpose was enacted in 1967 and Australia became a party in 1968. The scope of legislation needed to give effect to the Convention on Consular Relations is at present under examination.

Croatian Independence (Question No. 3219)

Mr Whitlam:

asked the Minister for Foreign Affairs, upon notice:

  1. What is the (a) date and (b) validity of Croatian independence which various organisations in Australia celebrate in April.
  2. Has Australia ever recognised the independence of Croatia.
Mr Swartz:
LP

– As. Acting Minister, I provide the following answer to the honourable member’s question:

  1. Various organisations in Australia celebrate 10th April 1941 asthe date of Croatian independence. On 6th April 1941, Hitler attacked Yugoslavia as a prelude to its subsequent occupation and dismemberment As part of this operation on 10th April 1941 the Germans created a puppet Croatian state, dominated by the Ustasha terrorist movement under Ante Pavelic, who had until then been an exile in Italy. The victory of the Yugoslav Resistance in the war against Germany put an end to the so-called Independent State of Croatia.
  2. No.

Pensions (Question No. 3038)

Mr Scholes:
CORIO, VICTORIA

asked the Minister for Social

Services, upon notice:

What would be the cost of adding 10 cents to each age and invalid pension.

Mr Wentworth:
Minister for Social Services · MACKELLAR, NEW SOUTH WALES · LP

– The answer to the honourable member’s question is as follows:

Based on statistics of pensions current at 1st

March 1971, the cost of inceasing age and invalid pensions by 10 cents a week would be $4.9m a year.

Social Services (Question No. 3176)

Mr Grassby:

asked the Minister for

Social Services, upon notice:

  1. Is he able to say how many countries pay social services to their citizens or former citizens now resident in Australia.
  2. Will the Government reconsider past refusals to enable Australian citizens to take their pensions with them wherever they may go and wherever they may settle.
Mr Wentworth:
LP

– The answer to the honourable member’s question is as follows:

  1. The number of countries paying social services to their citizens or former citizens now resident in Australia is not known. The following information in respect of the old-age or retirement pension payable by the countries indicated to persons permanently resident in Australia may however, be useful:

Canada -

The old-age security pension (but not the guaranteed income supplement) would be payable to persons residing in Australia who hadlived in Canada for 10 years immediately prior to being granted pension and had lived there for a total of 25 years after the age of 21. It would also be payable to persons in Australia who had lived in Canada for a total of 40 years after reaching age 18.

The Canada Pension Plan pension would be payable in Australia to persons who are qualified by virtue of contributions made in Canada.

France, Germany (Federal Republic), Greece, Holland, Italy, Malta, Turkey, United Kingdom, United States of America -

Pensions of these countries are payable under a social insurance system and would be available to qualified citizens living in Australia. In the case ofFrance and Germany, pensions are not payable in Australia to former citizens who have surrendered their citizenship.

Sweden -

The universal pension would be payable to Swedish citizens residing in Australia if registered in Sweden for census purposes in the year they reached 62 years of age and the 5 preceding years. The supplementary social insurance pension would be payable to Swedish citizens in Australia if they had pensionable income for at least 3 years in Sweden and to nonSwedish citizens with pensionable income in Sweden over at least 10 years.

Austria, Belgium, Finland, Ireland, Norway, Portugal, Spain -

Pensions of these countries are not payable topersons otherwise eligible if they reside in Australia.

  1. The question of paying Australian pensions to persons residing outside Australia is a matter of policy currently under review.

British Consul-General in Hong Kong (Question No. 3211)

Dr Klugman:

asked the Minister for

Foreign Affairs, upon notice:

  1. Is he able to say who is the British ConsulGeneral in Hong Kong.
  2. Can he also say how long Britain has maintained a Consulate-General in Hong Kong.
  3. Has he received any messages from the British Consul-General in Hong Kong for transmission to the Prime Minister (Hansard, 7th April 1971, pages 1549 and 1557).
Mr Swartz:
LP

– As Acting Minister I provide the following answer to the honourable member’s question:

  1. Hong Kong is a British Crown Colony. There is no British Consul-General in Hong Kong.
  2. and (3) do not therefore apply.

Slovakia (Question No. 3218)

Mr Whitlam:

asked the Minister for

Foreign Affairs, upon notice:

Has Australia ever recognised the independence of Slovakia (Hansard, 7th April 1971, page 1650).

Mr Swartz:
LP

– As Acting Minister I provide the following answer to the honourable member’s question:

page 2213

No

Australia-Japan Relations (Question No. 3223)

Mr Whitlam:

asked the Minister for Foreign Affairs, upon notice:

  1. Which departments are represented on the inter-departmental committee established to report on the whole gamut of the relationship between Australia and Japan. - (2) What are the committee’s terms of reference.
  2. What was the date of the establishment of the Committee.
Mr Swartz:
LP

– As Acting Minister I provide the following answer to the honourable member’s question:

  1. The Departments of Foreign Affairs, the Prime Minister and Cabinet, Defence, the Treasury and Trade and Industry are represented on the Inter-Departmental Committee on Japan. Other Departments are invited to participate in its discussions as appropriate.
  2. The terms of reference of the Committee are to make recommendations regarding Australian policies towards Japan and their coordination.
  3. The Committee held its first meeting on 8th June 1970.

Repatriation Pensions (Question No. 3057)

Mr Whitlam:

asked the Minister for Repatriation, upon notice:

  1. What would be the estimated cost of each proposal in the Returned Services League’s 1971 pension plan which was presented to the Government on 30th March 1971.
  2. What additional number of men who served in (a) the Boer War and (b) World War I would become eligible for benefits under the plan.
Mr Holten:
Minister for Repatriation · INDI, VICTORIA · CP

– The answer to the honourable member’s question is as follows:

  1. The estimated annual costs are - $m

    1. proposed increases in war and service pensions . . . . 100.09
    2. extension of hospital, medical and pharmaceutical benefits to all returned ex-servicemen of the Boer

War and World War I . . 7.04

  1. funeral grant increased from $50.00 to $200.00…… 1.13

    1. The additional number of men who would become eligible for the benefits specified in (1) (b) above is roughly estimated to be -
  2. 100- from the Boer War.
  3. 26,000- from World War I.

Repatriation Pensions (Question No. 3128)

Mr Whitlam:

asked the Minister for Repatriation, upon notice:

  1. What percentage of the average male weekly earnings for the December quarter of 1970 does (a) the special (T.P.I.) rate pension and (b) the general (100 per cent) pension represent at the rates payable from 1st April 1971.
  2. What were the corresponding figures a year earlier.
Mr Holten:
CP

– The answer to the honourable member’s question is as follows:

  1. Related to the December 1970 quarter average male weekly earnings the percentages are -

    1. 45.99 per cent.
    2. 14.15 per cent

  2. Related to the December 1969 quarter average male weekly earnings the percentages were-

    1. 46.15 per cent.
    2. 15.38 per cent.

Repatriation: Appeals (Question No. 2907)

Mr Charles Jones:
NEWCASTLE, VICTORIA

asked the Minister for Repatriation, upon notice:

How many appeals to (a) an Entitlement Appeal Tribunal and (b) an Assessment Appeal Tribunal were received from ex-servicemen and women residing within a 50-mile radius of Newcastle during 1969-70.

Mr Holten:
CP

– The answer to the honourable member’s question is as follows:

Records are not kept to enable an answer to be given to the specific question asked by the honourable member and to obtain the information sought would require - the examination of over 10,000 personal files. However, the following figures relating to appeals, from persons residing in the specified area, which were decided during the periods shown were more readily available and may meet his requirements:

Appeals to Entitlement Appeal Tribunals - 407 between 1st January 1970 and 31st December 1970.

Appeals to Assessment Appeal Tribunals - 431 between 1st January 1970 and 31st December 1970.

Cite as: Australia, House of Representatives, Debates, 28 April 1971, viewed 22 October 2017, <http://historichansard.net/hofreps/1971/19710428_reps_27_hor72/>.

View PDF View XML View in Voyant