2nd Parliament · 3rd Session
The President took the chair at 10.30 a.m., and read prayers.
How many officers in each of the existing staffs in the central offices of the Commonwealth Departments came from each State?
– The Public Service Commissioner has supplied the fol lowing information: -
asked the Minister representing the Minister of External Affairs, upon notice -
Did the Minister for External Affairs or his Secretary (Mr. Atlee Hunt) at any time issue instructions that the s.s. Merrie England was not to receive public mails for British New Guinea?
– The answer to the honorable senator’s question is as follows : -
No. A reply has now been received to inquiries which were made on this subject. The Postmaster, Cooktown, reports that it is not true that public mails were refused to be carried by the Merrie England. He adds that the officers of that vessel are always most willing to take any mails tendered, and that two public mails were despatched by the Merrie England on the last three occasions she visited Cooktown.
Motion (by Senator Col. Neild) agreed to -
That there be laid upon the table of this Senate copies of all papers connected with the applications of Messrs. S. Conry, W. A. Green, and J. Hunt, lockers in the Commonwealth Customs Department, Sydney, for restoration of seniority, of which they have been deprived through Departmental mistakes.
The order of the day having been read,
– What I suggest is that we should make a call of the Senate now - in accordance with the standing order; but we must recognise that the trains from Adelaide and Sydney do not arrive until later in the day; and I think that the best plan would be to call over again at half-past 2 o’clock the names of those honorable senators who do not answer to the first call.
Honorable Senators. - Hear, hear.
The following senators were absent : -
Senators Findley, Fraser, Gould, Gray, Higgs, Macfarlane, Matheson, McGregor, Millen, O’Keefe, Pulsford, Story, Symon, Turley, and Walker.
At a later stage -
The names of the senators who did not answer when the Senate was called were called again, when the following senators were absent: - Senators Gould, Gray, Matheson, Pulsford, and Symon.
– I have received from Senator Gould a letter in which he says -
I very much regret that important business engagements here prevent my attendance at the call of the Senate to-morrow.
There is a telegram from Senator Gray that he is ill and cannot attend. Senator Matheson is absent in Europe. Senator Pulsford has both written and telegraphed that he is ill, and cannot possibly travel. Senator Symon has telegraphed that he is unable to be present.
Motion (by Senator Keating) proposed -
That the report be now adopted.
– It was decided last night that the consideration of the reported Bill should be deferred until honorable senators had had an opportunity to consider whether certain amendments should be made. If it is proposed to proceed with the consideration of the report at once, the promise made by the Minister will have been redeemed in the letter, but, so far as I am concerned, violated in the spirit. I do not consider that there is any particular urgency for this machinery Bill, which differs entirely from those measures which provide for referring to the people certain proposed amendments of the Constitution. We should have a fair opportunity to consider alterations in the direction I indicated last night, especially in the form of the ballotpaper to be placed in the hands of the electors. The interval between the time at which we adjourned last night and our meeting this morning has been of no use to me for considering the form of amend ments; but, if opportunities were given for consideration, amendments might be suggested which would enable the electors to more clearly understand the questions upon which they are called upon to vote. I admit that at this stage I cannot suggest an amendment, because I have not had an opportunity to look into the matter. There is no reason why we should place it beyond the power of the Senate to make alterations which may be considered desirable.
– We have made some amendments in the measure, which will have to be considered by the other Chamber.
– But those amendments are not of any great importance, and the Minister surely does not suggest that they will not be accepted. As this is only Tuesday, one or two days might well be spared for the further consideration of the provisions of the Bill. Inasmuch as there is nothing to be gained by rushing the Bill through, it would certainly be safer and better for us to wait. I do not intend to press the matter to a division, because I do not think that any obligation rests upon me to do more than protest against the Bill being hurried through, when there is no urgency in the matter.
– The stage that we have reached in the life of this Parliament warrants us in clearing the notice-paper as speedily as we reasonably can. Senator Clemons has in his mind the possibility of some amendment that might perhaps be of advantage, but I submit that, after all, the ballot-paper is a comparatively insignificant consideration in the taking of a referendum.
– Ballot-papers which have been used in the States have contained much more information than is proposed to be given in this case.
– Then such information has been, if I may so term it, wastefully given. Any information appearing on the face of the ballot-paper cannot be of any practical use to the elector. If he has not been sufficiently informed before the ballot-paper is placed in his hands, he will have very little time for the acquisition of knowledge afterwards. Senator Clemons complained that we had not had this Bill before us for a sufficient length of time to enable us to intelligently consider it. It has been before us for some weeks, and if honorable senators have not been able to intelligently consider it in that time, how can we expect the electors to understand it when its object is explained to them upon a ballot-paper?
– We want to make the electors’ path as easy as possible.
– I submit that any information that could be conveyed by the ballot-paper would not make the understanding of the elector more clear. We must rely upon administration rather than legislation, as far as that is concerned. Provision is made for a statement with regard to the proposed alteration of the law, which is to be made as lucid as possible. Such a statement could not be printed on the ballot-paper. Senator Clemons urges that the ballot-paper should indicate clearly the question upon which the elector is asked to vote. I take it that that object can be accomplished by adopting distinguishing colours for the ballot-papers in respect to different questions submitted to the electors. We can make it clear that a ballot-paper of a certain colour relates to one particular question, and a paper of another colour to another question, and so on, and the elector will not require to read any explanation in order to enable him to understand.
– There may be five different ballot-pa;pers, each with a distinctive colour - could the elector be expected to identify each colour with a particular subject ?
– Yes, I think so. I have in my mind two colours which are so deeply impressed upon the minds of the people that no special directions would be required to identify them with the questions to which they are related.
– It would be very unfair to choose for ballot-papers certain colours, which might unduly influence votes.
– I think that we ought to clear the notice-paper of some of the measures that we have been discussing for days and weeks.
– We have not had this Bill before us for weeks.
– The consideration of a Bill practically begins when the second reading is moved bv the Minister.
– I do not think so. The honorable senator has afforded us conclusive proof that the consideration of certain Bills has, in his case, begun long before the second-reading stage has been reached.
– That has not been the case with most of the measures that have been before us during the last three weeks.
– Perhaps not. The honorable senator pointed out that there was no special urgency in connexion with this measure. But at this stage in the life of a Parliament, every measure is more or less urgent - that is to say, there is always the danger that something mayhappen to cause a Bill to be included among the slaughtered innocents. It would be disastrous if that were to happen in this case.
– That cannot possibly happen, if we want to have a referendum at all.
– If the other Bills are of such importance that thev ought to be carried, this Bill becomes as important .as any of them, for the reason that they cannot be put into operation without it. We are now within a few hours of the end of the session. At all events, I hope so: and while I have never urged that we should slum our work, but, on the contrary, have always insisted that we should do everything possible to perfect legislation, still, if the honorable senator can suggest no need for an amendment, there would appear to be no reason for delaying the Bill.
– There is no harm in allowing the Bill to remain upon the notice-paper if Senator Clemons is not satisfied with its present form.
– I think that the referendum will be a failure under this Bill.
– An opportunity should be given to the honorable senator to formulate an amendment if he desires to move one. I do not share the apprehension that the Bill may be amongst the “ slaughtered innocents “ at the end of the session. We have already passed one Bill to amend the Constitution, and though there was a difference of opinion regarding it, still, as it has been passed bv both Houses, we all recognise that the necessary machinery to give effect to it should be enacted. If Senator Clemons, after further consideration, is satisfied with the schedule, it will be merely a formal matter to pass the Bill through its remaining stages. Last night, however, the honorable senator was battling with the schedule till the adjournment hour, in the absence of a quorum, and took no advantage of that fact. If there was an implied promise that he should have an opportunity to reconsider the schedule later on, effect should be given to it. Clearly, he has had no such opportunity between 11 o’clock last night and the present hour.
– I trust that the Government will proceed with the Bill, so as to remove it from the notice-paper. It was read a first time on the 20th September, and was distributed among honorable senators immediately afterwards.I have had some experience of referenda, and think that Senator Clemons will agree with me that it is far better to state definitely the question upon which the electors have to vote than to leave it to be formulated by the Government, which would then have ah opportunity to give a party colouring to it. What can be plainer than the form set forth in this Bill? No honorable senator knows what may take place between now and the end of the session. For all we know, if the Bill is postponed, it may become one of the “slaughtered innocents.” If Senator Clemons can suggest a better way to state the question on the ballotpaper than that formulated in the Bill, I shall be prepared to help him. But there is a grave danger in allowing the Executive to state the question in its own way. Unless a definite amendment is suggested. I trust that the Government will proceed with the Bill.
Senator Col. NEILD (New South Wales)[10.58]. - I hope that the Government will agree to a postponement of the measure. It is a small matter ; and in view of the fact that we already have on the paper a Bill for the purpose of correcting the ridiculous phraseology of an Act passed last session, the inadvisableness of rushing through the Bill without proper consideration, is apparent, I suggest that the Minister should allow a reasonable postponement, not with a view to delay, but in order to perfect the Bill.
– Last evening, when we were discussing the schedule of the Bill, I promised Senator Clemons that if on the report stage he was prepared to suggest an alternative ballot-paper, and with that object in view desiredto move for a recommittal, I should offer no objection. I recognise - as he does - the difficulty of preparing an alternativeto the ballot-paper submitted in the brief interval that has elapsed since the adjournment of the Senate last evening. I ought to recognise it, because I was kept here threequarters of an hour after the Senate had risen, and I had to be present for some time before it re-assembled this morning. But I would point out that I am now moving “that the report be adopted.” If that motion be carried, the Bill will not be removed from the business-paper.
– But the Minister has a contingent notice of motion.
– I do not intend to move it.
– Then it is not proposed to proceed immediately with the third reading of the Bill?
– I did not know that.
– Honorable senators will recognise that there is some urgency in this matter, inasmuch as the Bill provides the machinery for taking a referendum, which must be taken very soon. It is necessary that that machinery should be properly understood throughout the Commonwealth by the assistant returning officers and other officials connected with the Electoral Department. It is also necessary that the Department should, as soon as possible, have the requisite forms prepared and instructions issued, so that those who will be associated with the working of the measure may become thoroughly acquainted with its provisions. I will ask honorable senators to recollect that fact when we are considering the Bill at a later stage.
Question resolved in the affirmative.
– In moving -
That the Bill be now read a secondtime.
I desire to say that it is a very short measure which is designed to remove doubts as to the validity of certain action that has been taken in connexion with the electoral divisions of New South Wales. The preamble recites that doubts have arisen as to the validity of a proclamation having reference to the electoral divisions in that State, and that it is desirable that Parliament should set such doubts at rest. Accordingly clause 2, which is practically the only operative part of the Bill, declares -
The proclamation published in the Gazette on the seventeenth day of July, One thousand nine hundred and six, declaring the names and boundaries of the electoral divisions for the State of New South Wales shall be deemed to have been lawfully made, and the electoral divisions as therein set out shall, from the date of the publication of the said proclamation and until altered, be the electoral divisions for the State of New South Wales.
The circumstances which have occasioned the introduction of this Bill would, at first, seem to be of a very insignificant character. Honorable senators are aware that in the Electoral Act we have made provision for the distribution of the different States into electoral divisions for the purpose of returning members to the House of Representatives. Perhaps it would be well if I read the sections of the Act dealing with the subject, namely, sections 17, 18, and 19. Section 17 reads -
Before reporting on the distribution of ‘any State into divisions, the Commissioner shall cause a map of each proposed division to be exhibited at post-offices in theproposed division, and shall invite public attention thereto by advertisement in the Gazette.
Section 18 reads -
Objections or suggestions in writing may be lodged with the Commissioner not later than thirty days after the first publication of the proposed distribution, and the Commissioner shall consider all objections and suggestions so lodged before making his report.
Section 19 provides -
The Commissioner shall forthwith, after the expiration of the thirty days above mentioned, forward to the Minister his report upon the distribution of the State into divisions and the number of electors residing in each proposed division, together with a map signed by him showing the names and boundaries of each proposed division.
It will be seen, therefore, that the foregoing sections provide that before reporting on the distribution of any State into divisions, the Commissioner shall exhibit a map of each proposed division in conspicuous places, that he may then receive objections or suggestions in writing, and that any objections or suggestions so lodged may be considered by him. They further set out that after the expiration of the thirty davs within which such objections or suggestions may be lodged, the Commissioner may forward to the Minister his report and the map signed by him showing the boundaries of each proposed division. For the purpose of distributing New South Wales into electoral divisions, Judge Murray was appointed the Commissioner under the Act. His report upon these divisions was received some time ago - it is dated 2nd May, 1906 . In paragraph 56, the learned Commissioner says -
The only suggestions in writing which have been made for an alteration in the scheme since the exhibition of the maps are the following : -
He then enumerates the suggestions. In the following paragraph of his report, he adds -
So much for the objections and suggestions which were made in writing within thirty days. In addition to these, your Commissioner, anxious to acquire any information which in matters of detail - even though they might lead to considerable amendments, in the nature of corrections of errors or imperfections - were likely to improve the scheme, substantially, but not conclusively, set out in the published maps and descriptions, entertained, and, so far as he thought proper, acted upon, certain other suggestions and discoveries.
He then proceeds to set out a suggestion by Mr. Watkins, a member of the House of Representatives, concerning which he says -
Mr. Watkins, M.P. for Newcastle, offered your Commissioner some suggestions, founded upon his own intimate topical and general knowledge of the division, for which, given as they were entirely in the public interest, and for the purpose of improving the scheme of distribution in relation not only to the present but to the early future, your Commissioner was much indebted. The first, and less important, but very useful, proposal relates to the western end of the southern boundary of the proposed division of Newcastle, and provides on the north-west for a more complete excision of West Wallsend from the proposed Newcastle and the inclusion of its whole population in the proposed Hunter division ; and, on the south-east, for an exactly similar converse treatment of Young Wallsend. This suggestion, though not formally put into writing by Mr. Watkins, has been adopted, being an obvious improvement ; as has also been, with the assistance of the officer in charge of police at West Wallsend, another suggestion by Mr. Watkins, that it would be well to avoid the severance by the main northern railway line, used as a boundary, of the Cardiff community, some distance farther to the eastward.
Honorable senators will see, if they peruse paragraph 57, which is somewhat lengthy, that the learned Commissioner, in addition to considering proposed alterations that were submitted in writing, acted on suggestions which were submitted to him verbally. Under these circumstances, the question arose whether or not such action, though obviously intended by all parties in the public interest, would or would not affect the validity of the proposed distribution. The matter was referred for legal advice, and it has been thought desirable, in order to avoid doubt which might at any time be cast on the distribution, to introduce a validating Bill. If the Bill be passed no question can arise hereafter as to the validity and legality of the distribution effected by the Commissioner in the case of New South Wales.
Question resolved in the affirmative.
Bill read a second time, and reported without amendment; report adopted.
– I move -
That the Bill be now read a second tin;e.
Honorable senators have had before them the progress reports, Nos. 2, 3, and 4, of the Tariff Commission, and the recommendations therein contained have been dealt with in measures relating to the distillation of spirits, Excise, and so forth. The first progress reports and recommendations of the Tariff Commission were unanimous. As honorable senators are aware, the Commission was composed of four protectionists and four free-traders; and there have now been placed before us progress reports Nos. 5 and 6, which deal with stripperharvesters and agricultural implements generally. On this subject the members of the Tariff Commission are, as it were, divided into two hostile camps - one composed of protectionists, who make certain recommendations, on which this Bill is based, and the other composed of free-traders, who object to the whole of those recommendations. The present Government, as honorable senators are aware, is a protectionist Government.
– Sometimes !
– And being protectionists, the members of the Government naturally lean towards the recommendations of Sir John Quick, the Chairman of the Commission, and the other protectionist members. It will be remembered that by some means these reports were prematurely and. improperly made public, and that, therefore, it became necessary for the Government to submit the proposals to Parliament at once. That was done, the Government adopting the recommendation of the protectionist section of the Tariff Commission. However, considerable alterations were made in another place, and the Bill assumed the ‘form in which it is now submitted for the approval of honorable senators. I have plenty of material here for a very long speech. I could quote from two reports of the Tariff Commission, largely and with considerable pleasure, but at this late period of the session I refrain from doing so, feeling sure that honorable senators have, read every word of these interesting documents. I should like, however, to give a few figures relating to the importation of agricultural implements into the Commonwealth in 1905. Agricultural implements, n.e.i., which are subject to a duty of 12^ per cent., were in that year imported to the value of £198,040. Stripper-harvesters, which are subject to a similar duty, were imported to the number of 1,730, representing a value of ,£112,395. Reapers and binders, which are free, were imported to the value of £14,000, and the importation of other agricultural implements represented .£343,000. The manufacture of harvesters in Australia averages 2,700 machines, and there is an export trade - to the Argentine, principally - which in 1905 amounted to 418 machines, valued at £30,000. I now turn to the progress report No. 6 of the Tariff Commission, and direct honorable senators’ attention to page 33, where the conclusions of the Commission are set forth. This progress report refers to stripper-harvesters, which are the most important implements dealt with under the Bill. The- history of stripperharvesters is briefly traced from what I may call almost prehistoric times. The first conclusion of the Tariff Commission is -
That the stripper-harvester, as a composite machine performing four operations - stripping, threshing, winnowing, and bagging the grain - is an Australian invention, the first practical beginning of which dates back to John Ridley’s (South Australia) stripper of 1847, improved by the addition of a winnowing device by Joseph Mellor (South Australia) in 1857.
This brief history shows unmistakably that the stripper-harvester is purely an Australian invention, in the development of which, practically, no other country has taken a hand. How the machine came to be manufactured in America, and exported to Australia, is set forth in conclusion No. 7, as follows: -
That no stripper-harvester was imported into Australia prior to the year 1900: that in the year 1900 the Massey-Harris Co., of Canada, obtained one of Nicholson and Morrow’s harvesters from a certain farmer in Victoria, which they sent to their works in Canada, and about a year after that company commenced to send stripper-harvesters into Australia ; that shortly afterwards the International Harvester Company of America (or some of its predecessors in title) obtained samples of the Australian-made machine, which, they sent to their workshops in the United States, shortly after which that company also commenced to send stripper-harvesters to Australia.
They go on to prove unmistakably that the harvester is an Australian invention, and in paragraph 9 they state -
That whilst there is nothing legally or morally wrong in the manufacturers of one country copying and imitating the unpatented inventions, improvements, and devices used and published by those of another country, the manufacturers, inventors and workmen of the country in which those inventions and improvements originated have undoubtedly the right to ask that a tollin the shape of Customs duties should be levied on such foreign imitations and adaptations before they are allowed to enter the markets of the originating country. That it is within the right, as well as the province, of the Legislature of the originating country to impose a higher toll and a more discriminating duty against imitated and copied articles than against articles of common types and patterns.
After detailing much useful information upon the question, they proceed to make their recommendations. In these we find the kernel of the proposal, so far as stripperharvesters are concerned -
We recommend -
That in trade between the States and with other countries combines and agreements between importers, manufacturers, and dealers in machinery and implements in restraint of trade, and fixing or regulating selling prices, be declared illegal, and made a criminal offence ; (b) that the duty on stripper-harvesters be as” follows : - Stripper-harvester, existing duty to remain unaltered, ad valorem, 12½ per cent. ; additional duty per machine, subject to conditions hereinafter pro vided, ad valorem, 12½ per cent.
Provided that if, within two years after the passing of the Act, the retail price of stripperharvesters made in Australia has been raised above £81 ; or if, after the expiration of two years from the passing of the Act, the retail price of stripper-harvesters made in Australia has not been reduced to £70; or if, after the expiration of one year from the passing of the Act, the manufacturers of stripper-harvesters in Australia are not paying their workmen a fair and reasonable rate of wages, the GovernorGeneral may, upon the receipt of a joint Address from the Senate and the House of Representatives, certifying to the foregoing effect, by proclamation, suspend the collection of such additional duty of 12½ per cent., for such period as may be deemed advisable.
This report is signed by Sir John Quick, Chairman of the Commission, Mr. Frank
Clarke, Senator Higgs, and Senator McGregor.
– The Minister is reading from a report which is not in the hands of honorable senators. It is a pity that it has not been circulated.
– I think that every honorable senator has received a copy.
– It is a parliamentary paper, and probably honorable senators received copies of it so long ago that they have forgotten all about it. Itis said that we must proceed with due deliberation, but it seems that we have given some honorable senators too full an opportunity to study this report.
– If we wish to obtain a copy we must go outside the Chamber.
– The free-trade members of the Commission, consisting of Senator Clemons, Representative Fowler, Representative Fuller, and Mr. G. W. Wamsley, object to this recommendation. Honorable senators will observethat the recommendations I have read are divided into two paragraphs - a and b. In paragraph a, it is proposed that combines and agreements in restraint of trade be declared illegal, and in paragraph a of the report of the free-trade section of the Commission it is urged that that proposal is beyond the limits of the Commission ; then, in paragraph b, it is contended that the recommendation contained in paragraph b of the report of the protectionist section of the Commission that the duty be increased to 25 per cent. is not justified by the evidence.
– The honorable senator is misreading the report of the freetrade section. Paragraphs a, b, and c of that report do not refer to the corresponding paragraphs in the recommendations of the protectionist section. Paragraphs a, b, and c of ourreport embody our reasons for rejecting certain conclusions derived from the evidence by the protectionist section of the Commission.
– The two series of paragraphs appear to fit in very well. I was lead astray by the fact that, read in the light I have indicated, these paragraphs appeared to set forth a correct statement of the views of the free-trade section, who urge that the industry is flourishing, and does not require the assistance of an additional duty. The position is that the protectionist mem- bers of the Commission have made recommendations upon which we base this Bill. There are two interesting points that I desire to bring especially under the notice of honorable senators. In the first place, the Bill provides for a fixed, and not for an ad valorem duty on harvesters.
– Is the Minister going to justify the assessment made by the Minister of Trade and Customs?
– I do not propose to be drawn aside to a consideration of any act by the Minister of Trade and Customs. I merely intend to point out why, in certain cases, a fixed duty is preferable to an ad valorem one. If possible, it would be better to have nothing but fixed duties, but owing to the different values of articles, ad valorem duties are necessary in certain cases. We might have one article valued at £10, and another of the same trade description worth only £5, and it is clear that in such a case a fixed duty would not work fairly. But where we have to deal with a wellknown article of one type, like that under consideration, a fixed duty may be imposed with great advantage. It saves trouble and annoyance in the valuation of the article for Customs purposes. Honorable senators are aware of the trouble we have already had in connexion with harvesters in this respect. When they were first imported, they were valued at something like £26 for each machine. The importers declared that they were not worth more than that sum, and on that valuation the dutv of 12J per cent, was levied. The ReidMcLean Government raised the valuation to some .£38, and, so far as I know, the importers agreed to that, . and paid duty on the increased valuation without a word of complaint. They were either getting, their goods in unfairly at a valuation of £26, and in that way robbing the Commonwealth, or they were asked to pay an excessive amount of duty on the valuation of £38. As they did not grumble at the increased valuation, it may be assumed that they considered it fair.
– Thev did not grumble?
– Not at the valuation of £38.
– No; they accepted that.
– Although they had previously declared that the machines were worth only ,£26.
– And they proved it by sworn evidence.
– Then why did they accept the valuation of ,£38 ? Subsequently, Sir William Lyne raised the valuation for Customs purposes to about £60.
– No; to £65.
– They complained of that, and, I understand, there is a case before the Court in connexion with the matter at the present time. Some of the reasons why a fixed duty is better than an ad valorem duty may be stated in this way : It is a simple, cheap, and convenient method of raising the duty, whilst it prevents fraud in the manipulation of invoices.
– That applies to all articles subject to an ad valorem duty.
– That is so. ‘ There is no doubt that the ad valorem duty is vicious in that respect. The fixed duty facilitates) quick delivery and ‘passage through the Customs, and its tendency is to encourage the import of the best description of articles, as compared with others. On the other hand, it may be admitted that an ad valorem duty is equitable in its incidence. Where there is a fair valuation of imports, and no manipulation of invoices, the more valuable goods pay the higher duty under the ad valorem system, and it is therefore more equitable in its incidence. It has been found to be most suitable in the majority of cases in all countries where Customs duties are levied for protective purposes, and it has been recommended by the Tariff Commission in preference to any other scheme; but its principal disadvantages are that it offers temptation to fraud by the manipulation of invoices, and tends to encourage the importation of cheaper, and at times inferior, goods, to the exclusion of better and more expensive articles. I have been advised that if honorable senators care to learn the extent to which invoices are manipulated they have only to go to the Customs Department to obtain a considerable amount of information on that exceedingly interesting subject. In my own State, unfortunately, it has recently been discovered that under the Commonwealth, and under the State Government before the Commonwealth took over the Customs Department, trickery of this description was carried on with the result of a loss to the Customs Department of some £26,000. On harvesters, therefore, we prefer a fixed duty to an. ad valorem duty. I turn now to the
Tariff Commission’s progress report No. 5, which deals generally with the whole subject of agricultural machinery and implements. I shall direct the attention of honorable senators to the recommendations therein contained, and I propose to make a few quotations from the report. I refer, of course, to the report of the protectionist members of the Commission, so far as the recommendations are concerned, but so far as regards other matters I believe that the free-trade members of the Commission do not disagree with the summing up of the case.
– How is the honorable senator connecting this with the question of stripper-harvesters?
– I have finished with the stripper-harvesters for the present. I intend now to refer to the Commission’s progress report No. 5 on agricultural machinery and implements. I have finished my quotations from the report dealing with harvesters- I refer honorable senators to the Commission’s progress report No. 5. The protectionist members of the Commission, in paragraph 41 of their report, state -
That in submitting this scheme, whilst we have taken into consideration the views and interests of manufacturers who have launched into great and important industrial enterprises, we have not been unmindful of the right of the workers and employes generally, without whose skill, regularity, and reliable labour, these undertakings cannot be carried on, or of the convenience and interests of the farmers and other users of these implements and machines. If we were apprehensive that local manufacturers would gain any advantage or additional security by reason of increased duties, or that the workers would not share in that advantage or security, we would not be parties to any alteration in the Tariff in the proposed direction. In like manner if we believed that this increase would be granted at the expense and to the prejudice of farmers and settlers, we would be equally adverse to any change. We are of opinion that the result will be to reduce importations and increase local production and output, and that the greater the local production and output the less will be the prime factory cost. This is the opinion of the great trusts and combinations against- which Australian industry is now engaged in deadly contest. Such being so, the selling price of these machines and implements will, in our opinion, not necessarily be raised by- reason of the increased duties pronosed. The manufacturers say that they do not “hope or desire to use the increased duties to enable them to raise the price to the consumers. We believe them, and take them at their word.
That is a summing up of the whole position. They believe that the duties should be increased, and that that will not neces sarily mean an increased price to the farmers who use these machines. They believe also that the worker should be safeguarded, and should be insured fair wages for the work he performs for the manufacturer. They say that they believe what the manufacturers told them, and they finish up by saying that they take them at their word. Their recommendations are set forth on page 43, and have been embodied in the Bill, with the exception that fixed rates instead of an ad valorem duty of 25 per cent, have been imposed on stripperharvesters and strippers. On page 43 certain provisos are set out. Of these the first is -
Providing that if the retail or selling price of any implement or machine made in Australia similar to that upon which the additional duty is hereby imposed be raised above such prices ruling in Australia during 1905, the GovernorGeneral may, in pursuance of a joint Address by the Senate and the House of Representatives, suspend the collection of such additional duty upon any machine or implement for such time as may be deemed advisable.
Effect is given to that in clause 4, which enacts that -
If the Governor-General is satisfied that the cash prices at which stripper-harvesters and drills manufactured in Australia are sold exceed the prices hereunder set out, he may, by proclamation, reduce the rate of duty specified in the schedule in respect of stripper-harvesters, but so that the reduction shall not reduce the rate of duty below one-half the rate of duty imposed by this Act.
Then follows a schedule of prices, which, after certain dates, are not to be exceeded. The second proviso reads -
That if the majority of manufacturers of the machines and the implements made in Australia similar to those upon which additional duties are hereby levied do not, after the expiration of one year from the passing of this Act, pay their workmen engaged in making such machines and implements a fair and reasonable rate of wages, the Governor-General may, in pursuance of a joint Address by the Senate and the House of Representatives, affirming that such fair and reasonable wages are not being paid, suspend the collection of such additional duty - upon any machine or implement for such time as may be deemed advisable.
Effect has been given to that by the Excise Bill, which enacts that if any manufacturer is paying unfair rates of wages, the rates of Excise set out in the schedule shall be chargeable on his productions, which will have the effect of lowering the protection which he enjoys bv one-half.
– Is not that unconstitutional ?
– I do not think so, though I am not a constitutional lawyer. The honorable and learned gentleman has made a study of the Constitution - a fact of which we have had a great deal of evidence of late - so that his opinion may be anticipated with interest. The Excise Bill provides a method of determining what are fair rates of wages, the question ultimately going before a Justice of the High Court if necessary. These two Bills are practically one, and, therefore, I shall have very little to say in moving the second reading of the Excise Bill.
– Unless the honorable senator agrees to keep this Bill in Committee until the Excise Bill has been dealt with, he will not get it through.
– I have no objection to treating the two measures as one.
– One is the complement of the other.
– All I ask is that there may not be too great delay. The third proviso of the Tariff Commission is -
Provided that if within two years after the passing of the Act the retail price of stripperharvesters made in Australia has been raised above £81, or if after the expiration of two years from the passing of the Act the retail price of stripper-harvesters made in Australia has not been reduced to £70, the GovernorGeneral may, upon the receipt of a joint Address from the Senate and the House of Representatives certifying to the foregoing effect, by proclamation, suspend the collection of such additional duty of 12½ per cent. for such period as may be deemed advisable.
Effect is given to that proviso by clause 4. The free-trade members of the Commission apparently consider that there should be no alteration of the Tariff, and express their opinion in a report in which they do not say whether they agree or disagree with the provisos which I have read. The last paragraph of their report says -
That the requests, where made, for increased duties are not sustained or justified by weight of evidence, and that any such increase, if made, would be prejudicial to the best interests of the agricultural industry, the continued development of which is necessary to the industry referred to in this report.
We recommend that the present duties be not increased.
They add that certain anomalies will be dealt with in a later report. That report I have not seen. The Bill is the outcome of the report of the protectionist members of the Tariff Commission.
– We know that; but it is a nice admission to make to declare that the report of half the members of the Commission has been entirely ignored.
– As the report of one section of the Commission is quite contrary to that of the other section, it was impossible to accept one without ignoring the other.
– What is the good of a Commission if the report of half of its members is to be ignored?
– The Government had to accept or reject the report of one section.
– They might have paid attention to the reports of both sections.
– I do not think that that was possible, seeing that the reports are as opposed as are light and darkness. One section recommends an alteration, and the other says that no alteration is necessary.
– The Bill is a compromise ; it does not embody in their entirety therecommendations of either section.
– It certainly does not give effect to the desire of the manufacturers, which was the imposition of a duty of 25 per cent. on each machine. The Government proposed a duty of £16 each on stripper-harvesters, but that was reduced, on the motion of the honorable member for Barker, to£12 each, which represents something like 25 per cent. on the value of the machines.
– That would be £16
– That is on the value fixed by the Minister of Trade and Customs, which I am not going to say is too high, but which, at all events, is recognised by a good many persons as having that tendency. Therefore, we have reduced the value to a little over£45 or £50.
– Will not the Minister express his own opinion as to that value ?
– No; I do not think it is right that I should.
– But the honorable senator is moving the second reading of this Bill.
– I am not in a position to say whether my honorable colleague is right or wrong. A case is now before the Court to ascertain whether he is right or not.
– The matter is before the Senate at the present time.
– In their report the Tariff Commission say that they believe that the price which was fixed by the Minister of Trade and Customs is too high.
– Who said that - protectionists and free-traders alike?
– Yes. The duty which is imposed by the Bill amounts practically to that which the protectionist members of the Tariff Commission recommended, because, so far as I can make out, £12 per machine represents 25 per cent. of the fair invoice value.
– On the Minister’s own showing, it does not, unless he says that the fair invoice value of the machine is£48.
– I should imagine that it would be about£48. Although I have not gone into the question so completely as has the honorable senator, still I believe it will found that my statement is correct.
Debate (on motion by Senator Clemons) adjourned.
– I move -
That the Bill be now read a second time.
It will be remembered that in the course of my remarks on the Customs Tariff (Agricultural Machinery) Bill, I alluded to the following proviso to the recommendations of the Tariff Commission : -
That if the majority of manufacturers of the machines and the implements made in Australia similar to those upon which additional duties are hereby levied do not, after the expiration of one year from the passing of this Act, pay their workmen engaged in making such machines and implements a fair and reasonable rate of wages, the Governor-General, in pursuance of a joint Address by the Senate and the House of Representatives, affirming that such fair and reasonable wages are not being paid, suspend the collection of such additional duty upon any machine or implement for such time as may be deemed advisable.
If that suggestion were adopted the practical effect would be that when one manufacturer was not paying a fair rate of wages, the whole trade would have to suffer in consequence of his act. A way out of the difficulty was found by inserting in this Bill the following clause: -
Duties of Excise shall, on and from the first day of January, One thousand nine hundred and seven, be imposed on the dutiable goods specified in the schedule at the rates specified in the said schedule.
The duties of Excise correspond with the duties of Customs which are specified in the other Bill -
Provided that this Act shall not apply to goods manufactured by any person in any part of the Commonwealth under conditions as to the remuneration of labour which -
are declared by resolution of both Houses of the Parliament to be fair and reasonable; or
are in accordance with an industrial award under the Commonwealth Conciliation and Arbitration Act 1904; or
are in accordance with the terms of an industrial agreement filed under the Commonwealth Conciliation and Arbitration Act 1904) or
are in accordance with terms which, in the opinion of the Minister, are fair and reasonable ; or
are, on an application made for the purpose to the President of the Commonwealth Court of Conciliation and Arbitration, declared to be fair and reasonable by him or by a Judge of the Supreme Court of a State or any person or persons who compose a State Industrial Authority to whom he may refer the matter; or
in the case of goods manufactured before the thirty-first day of March, One thousand nine hundred and seven, are either as advantageous to the workers as the standard conditions at the place of manufacture, or are declared by the President of the Commonwealth Court of Conciliation and Arbitration, or by a Judge of the SupremeCourt of the State in which the goods are manufactured, or by the Minister, to be fair and reasonable.
I think that in that proviso the recommendation of the Commissioners relative to wages has been given effect to. In these matters, of course, the difficulty is to fix what is a fair and reasonable rate of wages; but I believe that under clause 2, if enacted, no injustice would be done either to the manufacturers, on the one hand, or to the workers on the other. If it were found that a manufacturer was not paying a fair rate of wages to his men, then the Excise duties which are specified in the schedule would be levied upon all the machines which he made. I have given a full explanation of the scope of the Bill. It has been very carefully considered, and will, I believe, meet almost every conceivable case.
Debate (on motion by Senator Clemons) adjourned.
Debate resumed (vide page 5788) :
– It is to be regretted that honorable senators have not had their attention more specially directed to both of the reports of the Tariff Commission upon the question of stripper-harvesters. It is quite true, as the Minister has stated, that the papers relating to the case have been circulated ; but, owing to the multiplicity of documents that have been distributed during the last few weeks, it is difficult for one to readily place his hand upon those relating to any particular question.
– Seeing that the honorable senator is a member of the Commission, he ought to be the last to complain.
– I am not complaining of having been placed at any disadvantage, but I am pointing out that other honorable senators, who are not members of t he Tariff Commission, but who are quite as much interested as I am, have not been able to place their hands readily upon the reports, and to follow the Minister when he was dealing with this very important question. I shall find it necessary to refer at greater length than the Minister has done to the reports which I have indicated, because I feel it incumbent upon me to direct attention to the conclusions of the Commission which are based upon the very voluminous and exhaustive evidence taken by them. I might summarize the demand made in respect of stripper-harvesters as being one for increased protection upon the ground that under existing conditions the local manufacturers were unable to compete successfully with their rivals beyond the seas. It was urged by more than one witness that unless increased duties were granted, the local industry would be seriously imperilled, if not stamped out. We first directed our attention to the cost of manufacture, and the prices which the manufacturers and importers had been able to obtain from the public during the last three or four years. I shall have to refer to this matter in detail at a later stage, but by way of summary I may point out that the unanimous conclusion of the eight members of the Tariff Commission was that the cost of manufacture of stripper-harvesters within the Commonwealth did not exceed £41.
– Were the members of the Commission unanimous upon that point ?
– Yes, decidedly.
– The Minister stated that there was a faction fight.
– In the cases where the members of the Commission were divided as to their conclusion, the Minister took shelter under that arrived at by the protectionist members, but with regard to those points upon which the Commission were unanimous, the Minister was practically silent. He said nothing except what was extorted from him, by interjection, upon the very important point with which I am now dealing. As we all know, the first trouble that arose - if I may so describe it - was due to the action of the Minister of Trade and Customs in fixing upon an arbitrary sum as the value of imported harvesters at the port of shipment. The Commission had to investigate that point, and necessarily felt it incumbent upon them to inquire as to the price of manufacture, not merely in Canada and the United States of America, but also in (Australia. If there were any question as to the value of the evidence obtainable with regard to the cost of manufacture in Canada or the United States of America, information with reference to the cost of production in Australia would naturally be very useful as a guide. It has never been contended by Mr. McKay, or any other Australian manufacturer, that stripper-harvesters could be made here at a less cost than in the United States or Canada. Therefore, having ascertained that the cost of production in Australia was£41 per machine, we were safe in assuming that that outlay was not exceeded by the manufacturers in Canada or the United States of America. I may say, in passing, that no witness who came before the Commission was more consistently reluctant than was Mr. McKay to disclose many material facts connected with his business.
– Very naturally.
– It may, or may not be, that such reticence was natural. Mr. McKay was told that it was highly desirable that he should make a full and free declaration with regard to his affairs, but at the same time it was intimated that if he declined the Commission could not take any steps to force him to do so. The Chairman told him that if he refused to disclose certain material facts he would do so at his own risk. In spite of that emphatic warning, however, the Commission were unable to obtain any evidence from him as to the cost of production. It, therefore, had to go to other sources. It had to endeavour to obtain this evidence as it best could.
– It was hardly fair to ask a man to disclose his cost of manufacture. It might, disclose the whole process.
– Precisely. The comparison between what it costs to make and the price at which the machines were sold to the farmer would disclose what his profits were. But let me contrast Mr. McKay’s attitude in this matter with that of the importers - both the Massey-Harris Company and the International Harvester Company. We had this satisfactory statement from both of them - that they would be only too glad to furnish every single item of the cost relating to the manufacture of their harvesters, provided Mr. McKay would do likewise. That challenge was open for above a week. The Commission gave Mr. McKay ample opportunity - urged him more than once, in fact - to meet them on fair terms, and to go into the figures with as much readiness as the importers had shown. But that challenge was never accepted, and to this day Mr. McKay refuses to make any statement as to his profits.
– Have the importers made their statements?
– They have. The Massey-Harris Company has given the fullest and freest statement of every expenditure in connexion with its business. It has given sworn evidence as to every single detail and every small item. There is nothing omitted in the complete statement made by the Massey-Harris Company. That contrasts most favorably with the attitude of Mr. McKay, the basis of whose complaint was that the Australian manufacturer could not sell at a profit against the competition of the importers. The Massey-Harris Company and the International Harvester Company did not come before the Commission and say, “ In consequence of the decision of Sir William Lyne,’ Minister of Trade and Customs, which decision we hold to be unfair, we are unable to carry on business in the Com monwealth.” There was no complaint of that kind by them. The complainants in the case were Mr. McKay and other Australian manufacturers. Under ordinary circumstances, when a complaint is made, the procedure is to ask the complainant to prove his case, or, at any rate, to make out a -prima facie case ; and it is just because the onus of proof was on Mr. McKay that the Commission had to come to the conclusion, which it did unanimously, that there was nothing - absolutely nothing - to warrant Mr. McKay’s demand for such an increased duty, in! order that he might make a profit based on the cost of manufacture and the sale price. I have here an interesting document, which I propose to read, because it deals with the question of profits made by selling, at unfair prices, and also with the method adopted to obtain high prices. It is within the common knowledge of every one that two or three years back .an agreement was entered into in Australia, not only by the importers of stripper-harvesters, but by the manufacturers, with regard to the selling price. It originated with the manufacturers. The chief man in bringing about the agreement, I have not the slightest hesitation in saying, was Mr. H. V. McKay. Much has been heard of this agreement, but I do not know that it has been published. I think it worth, while to read the document in order that we may see what happened a little prior to the agitation for increased duties.
– What is the date of the agreement?
– 1905. I will read it. It is as follows: -
Articles of agreement entered into this fourteenth day of March, Nineteen hundred and five, between the several persons, firms, companies, and corporations, who shall severally sign and execute these presents whereby the said persons, firms, companies, and corporations do hereby mutually covenant and agree with each other as follows : -
This agreement shall govern all transactions in connexion with the sale or hiring of stripper-harvesters and attachments therefor entered into in this State of South Australia during the period beginning from the date hereof and “ending on the 31st day of January, 1906, unless superseded by an agreement of prior date, and everything will be done to carefully and faithfully follow its various provisos and terms, not only in the strict letter, but also tothe full intent, meaning, and purpose.
Each party binds itself, its employes, agents, and representatives, to sell or hire -or offer for sale or hire all stripper-harvesters and” attachments therefor during the period abovementioned in strict accord with the prices and terms in the following schedule, and also to make all settlements in strict accord therewith, excepting only that any party may, if it so desires, Ax its prices higher than the prices shown in the schedule.
There was an opportunity, not for reduction, but for increase. Any one could put up the price beyond the schedule, but the agreement strictly bound all the parties not to put down prices.
– If long credit was given, that was necessary.
– That may be so, but such a comment does not apply to the sentence that I have just read. The agreement goes on -
“A” terms are one payment due 1st February, 1906. “ B “ terms are two payments, one-half due 1st February, 1906, and one-half due 1st February, 1907. “ C “ terms are four payments, one-fourth cash on delivery, one-fourth 1st February, 1906, one-fourth 1st February, 1907, and one-fourth due1st February, 1908. “D” terms are three payments, one-third due 1st February,1906, one-third due 1st February, 1907, and one-third due 1st February, 1908.
That answers Senator Fraser’s interjection, and shows that the schedule is provided with cash prices, as well as with prices extendingovervariousterms
– The agreement proceeds -
For all machines supplied in the Bordertown district, or in districts east or south of Bordertown, settlements may be made as for 1st March in lieu of 1st February.
A discount off “ A “ terms of £4. may be allowed to the purchaser if the full value of the machine is paid in cash within seven days of its starting.
The above prices are for a standard machine measuring not more than 4 ft. 9 in. between drum cheeks. An extra charge of £1 per tooth to be made for wider machines.
Each stripper-harvester is to be equipped with pole and 2-horse trees, or 4-horse swings and no pole, without extra charge, but no allowance to be made if pole and trees are not taken.
Attachments are to be charged extra for at not less than the followingprices : -
Delivery of all machines and the attachments therefor to the using purchaser in South Australia shall be f.o.b. at Adelaide or Port Adelaide, but the Gawler and Kapunda manufacturers have the right to deliver their machines at their own railway stations without extra charge to the users. All machines shall be “set-up” at the places where delivery is given. Any inland freights which may be advanced shall be charged to and collected from such using purchaser, and shall not be rebated.
Cash discounts and interest. - In all cases where payments are not made within 14 days of the day on which they are due, interest at the rate of not less than10 per cent. per annum must be charged for the additional time allowed after the due date.
In cases where the debtor desires to anticipate a part, or all, of payments to come due, a discount at the rate of not to exceed 10 per cent. per annum for the period for which the payment is anticipated, may be allowed on the amount paid in anticipation of the due date.
– That is pretty hot.
– Senator Fraser will notice that the word which is applicable to the payment of interest is’ “ may.” The document continues -
Invoicing. - No machines referred to herein are to be booked or invoiced at less than “A” terms of this agreement.
The object of that provision is to safeguard the agreement that whilst they might charge more for these machines, they bound themselves not to charge less than the “A” price - that is the cash price - of £85.
Starting. - No allowance to be made to customers for starting machines.
When all these people - I shall presently read the names of the signatories to the agreement - joined together for the purpose of exacting from the consumer as much as they possibly could for their machines, there was no obstacle placed in the way of each having access to the books of the others. That happy arrangement is no longer observed, as is evidenced by the fact that Mr. McKay declined to afford the Tariff Commission any opportunity to investigate his books, or to tender sworn evidence as to the actual cost incurred in the manufacture of his harvesters.
That is a very comprehensive order which bound all the parties to the agreement not to lose a single penny of the profit.
– There were to be 110 secret commissions.
– The provision goes a good deal further than that.
With the exception noted, the sum of the said special commission, and the regular commission to local agents is not to exceed 10 per cent, as above provided.
I think there is a good deal of matter for consideration in that clause, but I will not comment upon it at present.
No party either personally or through its employes or agent shall directly or indirectly influence or seek to influence any customer to cancel a bond fide order given to any other party, and will in all cases decline to supply goods on any order not taken in accord herewith.
– Tt was a very farreaching combine.
– Yes. The agreement continues - -
– A very wise and proper provision.
– There may be different opinions as to that.
Parties having depots in show towns may keep them open on show days, and the depot keeper may remain in the depot on show days, and the days preceding and following shows, but such depot keeper must not attend shows.
– Could he go out to lunch ?
– The agreement proceeds -
As regards the September show at Adelaide, it is expressly agreed that if the authorities of the Royal Agricultural Society refuse to allow any of the parties to this agreement to occupy their usual allotments at that show, all the parties to this agreement will decline to make any exhibit.
– They do not exhibit at shows.
– The agreement goes on -
While this agreement binds the Australasian Implement Company to make no donationor contributionto shows in its name, it is dis- tinctly understood that nothing contained herein shall prevent the G. P. Harris Scarf e and Co. Ltd. from making such donations.
Eachparty hereto agrees that it will collect, in addition to the full list price of all repairs used, a minimum charge of 10s. per machine for each stripper-harvester repaired by it, and that in the event of the owner of any stripper-harvester neglecting to give it notice before the 1st June, 1905, of his wish to have his machine repaired, then the minimum charge shall be 20s. per machine. From this is ex- cepted all repairing done strictly in performance of its usual printed warranty. It is further agreed that the parties hereto shall issue not later than 30th April, 1905, a circular setting forth the above charges, and each party to mail a copy to each owner of its stripperharvesters in South Australia, whose address is known to it.
In witness whereof we hereunto attach our official signatures : -
Robinson & Co. Pty. Ltd., per Jas. Moore.
Massey-Harris Co. Ltd., by its Attorney, A. S. Patterson.
Nicholson & Morrow, per A. Picken.
International Harvester Co., per A. L. Smith.
The Australasian Implement Co., R. H. White, manager.
The S.A. Farmers’ Co-operatiye Union Limited. E. Graham, manager.
James Martin & Co. Ltd. J. F. Martin, chairman.
-I have read the whole of the agreement, which. I think, is a very interesting document. It was the chief operative means of keeping up the price of stripper-harvesters for a certain period in Australia to a minimum of £85. That agreement was broken, but not by Mr. H. V. McKay. It may interest honorable senators to know that the people who were the one cause of the agreement coming to an end were not Australian manufacturers, but were the two chief importing companies - the Massey-Harris Company and the International Harvester Company. Those two companies signed the agreement, but they have the redeeming grace of having broken it.
– They repudiated the agreement they signed.
– As a matter of fact, that is not quite correct.
– I think it is.
– If there is any virtue in breaking the agreement, it was first broken by Australian manufacturers on a promise of the Minister of Trade and Customs.
– An underhand promise ?
– An open promise, made in the light of day ; and, in consequence of that promise, the International
Harvester Company and the MasseyHarris Company withdrew.
– This is very interesting to me.
– The honorable senator knows that that is so.
– I should like to know more details about the promise - how it came to be made.
– It was made in public, and was reported in the press.
– I should like to know whether it was a promise with an implied consideration.
– It was a contingent promise, and the Massey-Harris Company and the International Harvester Company took it as a breach of the agreement, and withdrew.
– And well they might. I can understand from Senator Trenwith’s interjection what took place.. We are told that some Australian manufacturers went to the Minister of Trade and Customs - we can supply what is left out - and said - “ If you give us £25 as a specific duty, or some other protection, to enable us to keep up the price, as we do now by the agreement, we will let the agreement go by the board.” It is easy to understand that arrangement. No doubt Mr. McKay thought that if he could secure from the Minister a protective duty of £25, he would make more profit than even under the agreement - he would shut out the importers as well.
– Doesthe honorable senator not mean a duty of 25 per cent.?
– I mean a specific duty of £25. Senator Fraser cannot expect me to be in the confidence of the Minister of Trade and Customs or Mr. McKay.
– Was there any mention of £25 per machine as a Customs duty ?
– I refer Senator Fraser to the evidence. The complaint in regard to stripper-harvesters was based on the ground that a specific duty of £25 per machine was requisite in order to place the Australian manufacturers in a position to make a fair profit.
– That was when Customs duties were being paid on a value of £26.
– It was when the
Reid-McLeanGovernment took action.
– It was at a time when stripper-harvesters were being introduced at an invoiced price, not of £26 or£28, but of £38.
– Before the honorable senator leaves the matter of the agreement will he tell us the reasons given by the importing companies for breaking the agreement ?
– I should like to refer Senator de Largie to the evidence, and I hope to be able to do so later on if he will remind me. I cannot place my hand on the evidence just now, because, as honorable senators know, the testimony is most voluminous.
– That which has been read by the honorable senator is said to be an authentic document ; how did the honorable senator become possessed of it? Was it produced in evidence?
– Does Senator Trenwith think that I am reading a document that is not authentic?
– No ; I merely wish to know.
– I do not think that at present I can completely answer the question. It is perfectly open to Senator Trenwith to verify the document - no doubt he could get at a source of information quite as original as my own.
– I do not hint or suggest that the document is not authentic, but I think the Senate has a right to know how the honorable senator became possessed of it.
– I cannot answer completely, but will begin a series of exclusions by at once saying that I did not get the document from Mr. McKay.
– The document is not in the evidence given before the Commission?
– I do not think the document will be found in the evidence. Before I ask honorable senators to follow me in any details, I should like to refer to some of the main factors which ought to govern us in dealing with this matter. It is hardly necessary for me to repeat that the members of the Tariff Commission, free-traders and protectionists alike, had no trouble or difficulty - and, certainly, without any concession on the part of the protectionist members - in coming to the conclusion that the total cost of the manufacture of a stripper-harvester in Australia may with complete safety be put down at £41.
The evidence on this point is very voluminous, but I think the mere statement that the eight members of the Tariff Commission were of opinion that £41 was a liberal allowance ought to be sufficient for honorable senators. The proof is to be found in the evidence. There is ample corroboration in the evidence of half-a-dozen witnesses.
– The evidence of manufacturers.
– Did any manufacturer state that the cost was £41 ?
– No, we could not get Mr. McKay to say that it was.
– Why specially select Mr. McKay ? Did any manufacturer say that the cost was only£41 ?
– I do not think that we could induce any manufacturer to say specifically that that was the cost. I shall be very glad, if necessary, to point out the grounds on which the Commission arrived at this conclusion as to the cost. In paragraph 10 of the report, signed by the four protectionist members of the Commission, it is stated -
That the evidence shows that the factory cost of stripper-harvesters, plus wholesale profit, in the principal markets of Canada and the United States of America, is about£38, and that upon invoices so framed the duty collected amounted to £5 4s. 7d.
– That is to say, all the evidence the Commission had before them was to that effect.
– What does the honorable senator mean by that interjection ?
– The Commission had exactly the same evidence from the American manufacturers as it had from the other side. No books were presented.
– But an offer was made by the Massey-Harris Company and the International Harvester Company to allow the fullest scrutiny of their books if Mr. McKay would do the same.
– Why did not the Commission accept that offer? They would have accepted a similar offer on the part of the other side.
– We made every effort to induce Mr. McKay to make a similar offer, so that his books, as well as those of the Massey-Harris Company and the International Harvester Company, could be subjected to an examination by a skilled accountant appointed by the Commission.
– If Mr. McKay would not produce his books, why did not the Commission ask the other companies to hand in their books ?
– Because it would have been unfair to them.
SenatorPlayford. - The Commission proceed to point out that -
It is necessary to draw particular attention to the fact that the above-named factory cost of the Australian-made stripper-harvester is merely, an estimate, based upon a deduction from facts.
– I intend to read the paragraph which the honorable senator is quoting. Paragraph 10 continues -
That the Minister of Customs, being dissatisfied with such invoice valuation, in July, 1905, re-assessed the invoice value of stripperharvesters under the Customs Act 1901, section 160, and fixed such value at£65 ; with the result that the duty was raised from £5 4s. 7d. to £8 2s. 6d., being an increase of £2 17s.11d. That the question of the legality of the Minister’s decision being at present the subject of a suit in the law courts, we feel precluded from expressing any opinion on the question of such invoices valuations.
– Has that legal contest eventuated?
– No. An attempt was made, eitherby the Minister of Trade and Customs or the Attorney- General, to stop it, but proceedings are still going on. This attempt to burke inquiry reflects very little credit on the Commonwealth.
– Is there any evidence that such an attempt was made ?
– The honorable senator can inform his mind by looking up the reports. Paragraphs on the subject have also appeared in the press. Paragraph 11 of the Commission’s report reads -
That the manufacturers of stripper-harvesters in Australia declined to give the Commission information respecting the factory cost of making stripper-harvesters in this country, but from data submitted to the Commission by such manufacturers, viz., that the. cost of the material of a stripper-harvester amounts to about £26, and that the wages paid in its manufacture amounts to 30 per cent. of the cost of the finished article, the inference has been drawn that the total cost of a locally-made stripper-harvester is about£37 3s.
We had abundantly clear evidence, which justified the Commission in arriving at the conclusion that the cost of the material in a stripper-harvester is £26.
– What about the cost of labour?
– Our conclusion in that regard is based upon evidence, as to the total cost, that we had to piece together. We took the evidence of, I dare say, half-a-dozen witnesses as to the cost of labour employed in producing the finished article, and made the very generous estimate that it was equal to 30 per cent, of the cost of the finished article. Personally, I do not think that it is more than 25 per cent. ; but we all decided to err largely on the safe side, in order that no one should be able to cavil at our finding.
– What were the factors which led to that deduction?
– We ascertained, first of all, to our complete satisfaction, that the total cost of the material in an Australian stripper-harvester amounts to about £,26.
– Then you required another factor as to the cost of the finished article.
– The evidence as to wages ought to be sufficient.
– I cannot, without referring to the evidence, point out how we arrived at that estimate of 30 per cent., but I can assure Senator Trenwith that it is a generous one, based on reliable evidence.
– Was any opportunity offered to McKay Brothers to question the Commission’s estimate?
– We repeatedly questioned Mr. McKay on this point. We not only urged him to give us full evidence on this point, but on more than one occasion these facts were submitted to him, and he was asked whether he could deny them. Mr. McKay sent a witness to controvert certain other evidence that had been given before us, but that witness carefully, and almost with emphasis, refused to touch the question of cost. Whilst they were prepared to contradict other witnesses as to conditions of labour, they scrupulously avoided any repudiation of the evidence given by this particular witness and others as to the cost of these machines.
– All the other manufacturers did the same.
– That does not make McKay’s position any better.
– Why not mention James Martin, May Brothers, or Nicholson and Morrow ?
– Because we know, if Senators Playford and Trenwith do not, that the whole complaint originated with Mr. McKay.
– That is a matter of common notoriety.
– It is not true.
– The notoriety is well justified. The report goes on to say -
Assuming this statement and the inference therefrom as being correct, and adding to the cost of machinery and the cost of wages another 10 per cent, to represent general expenses of manufacturing, management, lighting, insurance, &c, the cost of a complete machine in Australia should work out at about £41.
That is the conclusion arrived at, not by the free-trade members of the Commission, but by the whole of the members of the Commission. It was arrived at by the four protectionist members without any concurrence of the free-trade members. In other words, they originated this expression of opinion, and they not only believed it firmly, but believed it first. We were all of opinion that that conclusion was justified by the evidence which came before us. I desire to emphasize the fact that this conclusion does not represent any compromise on the question between the protectionist and free-trade members of the Commission. In paragraph 12 of their report, the protectionist members of the Commission say -
That the American and Canadian manufacturers say that they can produce stripperharvesters much cheaper in North America than they can be produced in Australia, and that the invoice price of ^38 represents not only factory cost, but manufacturing profits for the head establishment in Canada, and in the United States before the machines are transmitted to Australia for sale.
The evidence on that point was fairly broadcast ; but I think no one will say that a manufacturer’s profit in America or Canada represents more than £5 per machine. I omit paragraphs 13, 14, and 15, and come to paragraph 16, which again is a part of the conclusion arrived at by the protectionist members of the Commission, and includes, a tabulated statement concerning the question of cost of manufacture and profit made. These are the figures given -
Landed cost, including duty, Massey-Harris, £60 is. 4d. ; International harvester, ^55 18s. nd.
I stop for a moment to point out how these figures compare with the valuation imposed upon these articles bv the Minister of Trade and Customs. The protectionist members of the Commission found that these figures represented the landed cost, including duty, of the machines referred to - that is to say, all the cost of manufacture and shipment from the United States until the machines were landed in the Commonwealth, duty paid. The landed cost, including duty, of the Australian-made harvester, is given at £41 -
Selling expenses, Massey-Harris, £17 16s. 11d., International harvester, £12, Australianmade, £21 17s.5d.
It will be seen that a considerable difference in cost of distribution has been allowed for by the protectionist members of the Commission. They have, I think, dealt with the matter generously in agreeing that the Australian manufacturers are at a cost of distribution largely exceeding that entailed upon the competing foreign firms.
SenatorCol. Neild. - £21 in one case, and , £12 in another.
– Precisely. It is alleged that Mr. McKay, with all his organization and capital, had to spend . £21 on the distribution-cost of an Australianmade harvester, as against £12 spent by the International Harvester Company, and £17 by the Massev-Harris Company. I have only to repeat that this is a liberal and generous estimate for the Australian manufacturer. If it is accurate, there is no doubt that the distribution-cost of the local article is too high, and should be lowered. I might mention here that the Tariff Commission found that, in connexion with many other items, the cost of distribution in Australia is a great deal too high. That was the opinion formed by every member of the Commission. We were asked to increase duties in order to allow of a fair profit to the manufacturer, andwe felt that, in many cases, a large amount of the profit was leaking ; that the distribution-cost was a great deal too high, andseriously affected both manufacturer and consumer.
– The report makes an allowance of over 50 per cent. for distributioncost - £21 on a machine valued at £41. That seems to me to be preposterous.
– I say that it is an extremely generous and liberal allowance; and, if it is not, it only proves that there is something radically wrong with the distribution of Australian-made goods.
– It is not an allowance at all. It is merely a statement of evidence presented.
– I take the interjection, and ask Senator Trenwith whether he thinks that the allowance is too high or too low.
– I do not say anything about it, except thatit is a mere statement of evidence presented.
– It is a part of a serious conclusion, and I am willing to allow Senator Trenwith to say whether he thinks£21 17s. 5d. is toohigh or too low a figure at which to set the distributioncost of the Australian-made machine?
– I express no opinion about it.
– If the honorable senator regards it as too high, then the profit made by Mr. H. V. McKay is even more than the tabulated statement shows. If he says that the figure is too low, then I say that, instead of asking for protection not only for stripper-harvesters, but for a hundred-and-one other articles, the honorable senator and every one who is concerned for the welfare of Australian industries should bend their energies to the reduction of the enormous cost of distribution of Australianmade goods. If the honorable senator will do that, I shall be with him, because I feel that, not only in the case of stripper-harvesters, but in the case of many other articles, the cost of distribution is unjustified, and does great injury to manufacturer and consumer alike.
– The high cost of distribution of the Australian-made machine is the result of keen competition, which makes it necessary for the manufacturers to have so many travellers employed.
– The objection applies equally to a hundred-and-one other articles, and I point out that the members of the Commission have no doubt whatever as to the cost of distribution of the International Harvester Company’s and the Massey-Harris Company’s machines, and that it is much lower than the distributioncost alleged to be incurred by the Australian manufacturer.
– Are not the. MasseyHarris costs alleged in the same way as the costs to the local manufacturers ?
– I do not think they are, because we had the fullest information on the subject, and I believe the figures stated cover the cost down to a penny.
– Why should not the honorable senator believe the statements of the local manufacturers in the same way ?
– Because we did not get evidence from them in the same way. I point out that the landed cost and selling expenses affect the merchandising profit, which is at the root of the matter. The merchandising profit in each case agreed to by the four protectionist members of the Commission - it is still with their report I am dealing - was, per machine : Massey-Harris, ,£3 is. od. ; International Harvester, ;£i3 is. id. ; and - under existing circumstances, without any alteration of the Tariff - Australian-made machine, 2s. 7d. The latter figure is given in spite of the fact that the selling expenses of this machine are put down at £21 17s. sd., or £9 more than for the International Harvester Company’s machine, and £5 more than for the MasseyHarris Company’s machine.
– Before suspending the sitting for the luncheon hour, I should like to M.v that I am not quite sure when this debate can be resumed. It was adjourned until after consideration of the Excise _Tariff Bill, No. 37, and then the debate on the Excise Tariff Bill was ordered to be taken on motion.
– According to your ruling given the other day, sir, it will come on automatically after the Bills proposing alterations of the Constitution have been dealt with.
– Very well; I shall assume that that is the intention of the Senate.
Sitting suspended from / to 2.30 p.m.
Motion, (by Senator Playford) proposed -
That the Bill be now read a third time. .
– I desire briefly to recapitulate one or two of the chief objections which will again cause me to vote against the Bill. I ask honorable senators not to be led away by the fact that it has been announced that this is the first step towards the introduction of a system of old-age pensions. When I sought to insert a provision to limit the applica’tion of the’ revenue to be derived from special duties to that purpose, the Government voted against it. I really asked from them by the amendment a reasonable guarantee that the object which they, had put forward as the motive of the Bill would be adhered to, but, by voting against it as they did, I affirm that they have shown clearly that what they want issimply power to collect - special duties, which they may or may not use for the purpose of introducing a scheme of oldage pensions. Seeing that they declined to give that assurance to which, I think, we were all entitled, .we can only regard1 the Bill as it stands, not as one which paves the way towards the establishment of a system of old-age pensions, but merely as one to enable the Government to collect additional revenue, and to have the freedom to spend it as thev like. As the Minister of Defence said, he might use the money for defence purposes. I appeal to the Senate whether, in the absence of a provision to ear-mark the special revenue for the purpose of paying old-age pensions, there is anything in the financial position of the Commonwealth, or that of the States, which would justify us in taking the first step towards giving the Government power to impose special duties, and to devote the proceeds to general purposes. For that reason, I propose to vote against the motion.
Senator Col. NEILD (New South Wales) [2.35]. - When I seconded the motion for its second reading, I announced that unless the Bill was so altered as to distinctly allocate the revenue to be derived thereunder to the payment of old-age pensions, it would be my duty to vote against its third reading. I do not propose to elaborate what I then said, but in view of the fact that I voted for the second reading, and propose to vote against the third reading, “ I think it desirable to emphasize my attitude by uttering these few words.
– The proposed amendment of the Constitution, if adopted, would enable the Government to impose special duties of Customs and Excise for the general purposes of government. My great objection to the proposal is that the Government could devote no part of that revenue to the payment of the interest on the States debtsWe have on the notice-paper two Constitution Alteration Bills, and they are so closely inter-related that I can hardly speak of one Bill without having in my mind the provisions of the other. From my point of view, the Constitution is a compact, which was made between the Commonwealth then com- ing into existence and the States, and by which the latter could relinquish to the former the revenue from Customs and Excise duties, and at the same time the former could undertake to relieve the latter of the burden of their interest charges. Senator Symon quoted the other day some extracts from the debates in the Federal Convention, and we can have no doubt that the underlying idea was that when the States agreed to relinquish that most important source of taxation they looked to the Commonwealth to relieve them of the payment of their interest charges.
– The honorable senator is referring to the provision for the return of three-fourths of the net Customs and Excise revenue?
– The Braddon section was inserted in the Constitution in order to insure to the States for a period of ten years that three-fourths of that revenue should be handed over to the States Treasurers, or be applied to the payment of the interest on States debts. So far nothing has been done to relieve the States of that burden. On the contrary, we find that steps are being taken continually to encroach upon that principal source of taxation. We have had several instances of proposed expenditure which appeared to be hardly justifiable, because they would have tended to reduce that revenue, and it is now proposed to enable the Government to raise additional revenue from Customs and Excise duties, and at the same time not to carry out the compact which was made with the States.
– The Commonwealth have handed back to the States considerably more than they were entitled to.
– The compact was not that the Commonwealth should spend one-fourth, but that the charge of carrying on the government - the legitimate charge, I take that to mean - should be debited to the States, and the balance, whatever it might be. handed over to them. The limit of three-fourths was simply put in section 87 to insure that at least that amount should 50 towards the payment of the interest on the States debts. It is not stated anywhere, nor is it implied, that the amount which the States were to receive should be limited to three-fourths of the net receipts. It was clearly intended that the pre-Federal debts should be taken over by the Commonwealth, and that the interest thereon should be paid out of the Customs and Excise revenue. Of course, there was no absolute undertaking that sufficient money would be raised from that source to meet the obligation, but the States had a right to expect that it would have been assumed by the Commonwealth at quite an early stage of its existence, and at all events that a very considerable portion of the interest charge would be defrayed from that source.
– But would the States consent to hand over their debts to the Commonwealth ?
– “Undoubtedly they would, but they are not asked to do so. The question whether the consent of the States should be required was discussed in the Convention, and was decided inthe negative. There is nothing, however, to prevent the Commonwealth Parliament from taking over all the preFederal debts without asking the consent of the States. The honorable senator is, perhaps, also aware that an amendment was moved to make the taking over of the States debts compulsory, and that for reasons which we need not go into here it was not carried. Undoubtedly it was part of the compact that the Commonwealth should assume the liability of the States in respect of pre-Federal debts. I think it was also understood that the States could very reasonably ask that a very large portion of that liability should be discharged by the Commonwealth from the Customs and Excise revenue.
– That is going to take place.
– At the present time the revenue from that source is falling off. By one Bill which was submitted this session, it was intended for certain purposes to reduce very considerable the revenue derivable from the duties on spirits. We have had before us measures, and we have also heard of measures, under which it is proposed to spend more and more of that revenue. If the proposed alteration of the Constitution were adopted, and special duties of Customs and Excise imposed, no part of that revenue would be applicable to the payment of the interest on the States debts. Although that can be legally done under the Constitution, still it is a moral breach of the Federal compact, and on that ground I shall vote against it.
– So much has been said by Senators Millen and Drake, . with which I agree, that it is hardly necessary for me to repeat it. This is a Bill on which I cannot give a silent vote. On a former occasion I alluded to the fact that it is a departure from what I call pound principles of finance on the part of a strong Government to have to hypothecate any portion of its income to a specific purpose. It is a system of finance that has been adopted by financially weak countries like Turkey, China, and some of the South American Republics.” I hope that if the Minister cannot give us an assurance that the powers conferred by this Bill will not be used except for old-age pensions, the Senate will reject it on the motion for the third reading.
– I did not speak on the motion for the second reading of the Bill, and that is my excuse for offering a few remarks now. It occasionally happens that a public man finds himself forced to oppose measures in the principles underlying which he believes. I am a strong believer in old-age pensions, and should like to see them paid throughout Australia.
– That is not before us now.
– The excuse given for this Bill is that it is necessary to provide a fund for the payment of old-age pensions. But I have to consider the financial position of Tasmania. I may be wrong, but it seems to me that itis the duty of every senator representing that State to guard againstany diversion of public money until our financial affairs are placed upon a sound and solid basis.
– How long will that be?
– So long as the honorable senator votes to prevent right being done, and the true ends of Federation being accomplished, the financial affairs of Tasmania are not likely to be improved. If we are to hypothecate revenue for a particular purpose I hope that the time will come when we shall hypothecate for purposes of old-age pensions revenue derived from those who can best afford to pay it.
– Before Federation Tasmania imposed a duty of 6d. a gallon on kerosene and 3d. a lb. on tea.
– That was done for revenue purposes. I should like to see it done again, if it were accompanied by a tax that would make people who can afford to pay contribute to the revenue.
– A large number of revenue tariffists would like to see that in order to escape direct taxation.
– I do not think that any one will accuse me of being anxious to escape direct taxation, but the Federal Parliament up to the present time has done nothing in that direction.
– How are we to have old-age pensions if means of providing the money are not devised ?
– That is not for me, but for the Government, to determine. It appears to me that we are . going to permit Ministers to expend money in directions which must necessarily affect the finances of the weaker States’. Until their finances are properly considered - and they have never been properly considered in the history of Federation - we ought not to legislate in this direction. Therefore, I shall vote against this measure, as I voted against a Bill last night for the purpose of providing bonuses, though I agree with the underlying principle of both Bills.
– The honorable senator is a very weak supporter of the Government.
– I do not think that I should be regarded as a supporter of the Government. I am neither a supporter of the Government norof the Opposition. I am a supporter of what I believe to be good legislation.
– I do not think that any one can deny that the debate on this Bill has been productive of some good: If it has attained no other useful purpose, it has, at any rate, elicited a clear and unmistakable declaration from the Government that the object of this Bill is notstrictly and alone to furnish means for the payment of old-age pensions.
– It is practically limited to that.
– The debate has brought out this fact : that while honorable senators opposite profess to be supporters of old-age pensions, they are opposed to all methods of raising funds to pay them.
– When an amendment was proposed which had the clear and definite object of ear-marking the revenue to be raised under this Bill for a special purpose, the Government opposed it, because they refused to allow the Senate so te limit the future operations of special duties. The Government, therefore, intimated to us quite openly that, in their opinion, it was desirable that a free opportunity should be given to them - or some other Government, at some future time - to apply to purposes not mentioned, but merely hinted at, the funds that would be derived from special duties.
– It is not a question of the Government, but of the Parliament which must provide the funds.
– I am perfectly willing to substitute “Government’’’ for “ Parliament.” I am dealing with the avowed object of this Bill as introduced by the Government.
– The object of the Bill is to provide a fund for old-age pensions, but we are not to be bound and prevented from using it for other purposes.
– I hope that every word Senator Playford has used will serve as a declaration on behalf of the Government regarding the Bill. He now says - “ Our primary object is to provide an old-age pensions fund.”
– And there is no other purpose that we know of at present.
– But. as the Minister also interjects, the time may come, when the Government will want the Bill for some other purpose, and, therefore, he says in just as clear and unmistakable language, that it is for other purposes as well as to provide for old-age pensions. I think it well that the debate has cleared up that point, at any rates. Whether honorable senators like it or not, let us be quite clear as to what we are doing. Under this Bill we are abrogating, to some extent, the Braddon section of the Constitution. I do not hesitate for a moment to say that I object to any abrogation of it. I recognise that some honorable senators think it desirable that the Braddon section should not be continued ; but it would be far better for us to wait until the time arrives when, under the Constitution, we shall have to deal with the question. Rightly or wrongly - I think very rightly - the framers of the Constitution imposed a fixed limit of ten years within which the Braddon section must end. At the expiration of that term they left, it open .for Parliament to make other provisions affecting the financial relations of the Commonwealth and the States. Any attempt to go behind, or to upset such a clear intention of the Constitution is an attempt that we should all deprecate and resent. That remark applies as much to those honorable senators who think that the Braddon section is what it was once called - “a blot” - as to those who approve of it, and think that the term “ blot “ was a misnomer. At any rate, the Constitution is very clear on the point, and has imposed a time limit of ten years. We should respect it. Let me turn for an analogy to that other important provision known as the bookkeeping section. The framers of the Constitution provided that,’ for five years., the distribution of revenue should be on a bookkeeping principle. I venture to say that no man in this Parliament will attempt, until those five years have expired, to alter that section. It is well known that many of us have the strongest objection to it. Many of us think that we shall never accomplish a true Federal spirit until the bookkeeping section is done away with. But no one, whether in favour of it or against it, would make any attempt, before the expiration of the five years, to modify it in any respect. But that is not the kind of treatment we are 0 01 na to apply to the Braddon section. We are now saying that, though the ten years have not expired, we will pass such legislation as will alter it in important particulars. It should require an extremely strong case - circumstances of an extraordinary character - to induce this Parliament to think of altering that section until the ten years’ period has expired. But we find in the present case, that although nothing has happened in the nature of a crisis, the Government deliberately wishes to break through the Braddon section, in order to establish an old-age pensions fund. I have said already that the amount of money that we can derive will be entirely inadequate for the purpose. I do not think that there is the slightest doubt about that. No one in the Senate has ventured to say that, if we pass this Bill, we shall secure what we want. Indeed, it has been admitted that if we ear-mark the special duties contemplated for the special purpose in view, we shall not have achieved our object. We can only achieve it by imposing duties so enormous as to make them far more protective than revenue producing in their character. We have heard the argument that, so far as kerosene is concerned, if we attempt to raise money by a high duty, we -shall -fail, because people will not consume kerosene, and the consequence will be that there will be no fund.
– We have heard all this four or five time’s.
– I do not wish to elaborate the point in detail, but I am showing what the effect of this Bill will be. I cannot imagine that any one will gainsay the statement that we shall provide an inadequate amount for old-age pensions from duties on tea and kerosene. How are we going to provide the balance? We shall have to get it in some other way. But that is a very poor way of legislating. Are we to trust to chance - to” a sort of casual financial accident - to supply at least one-half of the total fund we require? The most confident supporter of the Bill1 in the Senate has not ventured to assert that we shall derive from the duties contemplated more than -^”7^0,000. It is asserted that we shall require £1,500,000. From what source is the balance to be derived? Some honorable senators say that we are going to get it from a direct tax on land. That may be so ; but, as I have said before, if we are going to derive revenue from a tax on land, we shall simply be imposing what the Labour Party want to impose - a tax which at least one of them in the Senate lias asserted to be a revenue producing tax, whilst others have asserted that it will’ be penal in its object. I have heard at least one member of the Labour Party say that he would make up the deficit by such a tax as forms part of the platform of the Labour Party. That would produce £750,000, which is the balance required. The only other alternative suggested is that we should take the money out of the extra one-fourth which the Commonwealth at present retains of the Customs and Excise revenue. Any senator who has followed the course of financial expenditure and revenue during the last few years must recognise that the amount and value of the surplus of one-fourth is rapidly and continuously decreasing. It is quite impossible for any business man to attach any value whatever to the expectation that we shall be able to provide the ,£7 50,000 out of the one-fourth of the revenue. I was going to add another reason, but. seeing _ that the first is’ so conclusive. I shall not occupy further time on the point. We are faced with the fact that this Bill will not do what we desire. There are a great many honorable senators in the Senate who do not believe that the revenue ought to be devoted to such a purpose - that this is not a proper source of income out of which to pay old-age pensions. When I put it mildly in that way, I am stating something with which every honorable senator, irrespective of his views, thoroughly agrees. I do not care to elaborate the subject further. The question has been well debated, but we have the consolation that the debate has been productive of some good. The question has been given the consideration which it thoroughly deserves, but which it wholly failed to get elsewhere. One of my chief objections, apart from the futility of the whole scheme, is that it simply represents a make-shift or temporary expedient - that it shirks the whole question ‘of the financial relations of the Commonwealth and the States. If we pass the Bill it will simply operate as a means of checking or stopping the solution of our financial difficulties, which it has been the paramount duty of the Commonwealth to effect ever since 1901.
– I am surprised not to have heard, in the course of the discussion on this Bill, what appears to me a most serious objection. The proposal is one which will cause friction between the Commonwealth and the States at the very time when we ought to endeavour to bring about the opposite result. Not one of the States has asked us to pass an old-age pension measure. The larger States of Victoria and New South Wales themselves provide oldage pensions with more or less satisfactory results. Why should we now, by a side wind, endeavour to do what we have not been asked to do? Apart from the objection to altering the Constitution, if we have a purpose in the Bill, why should we not set forth that purpose? If .my constituents ask me what is the object of this Bill, I can simply reply that it is to enable the Government to raise money, but for what purposes I cannot say. That is not a proper position to be placed in in relation to one’s constituents. I shall advise my constituents to vote against the proposed alteration of the Constitution.
.- If there is one fundamental principle in the Constitution it is the Braddon section. Not only the statesmen of ‘ the various States, but also the mere men in the street, have seized on this section as being for the protection of States rights. Those, who have thought about the matter regard the present proposed legislation as a moral breach of faith- on the part of the Government. I have always been opposed to this Bill, and I have now more reason that ever for objecting to it. I understand that the Premier of Tasmania, and his colleagues are aghast at the spirit of reckless1 extravagance in which the Deakin Government are asking the Parliament to vote away the people’s money. We have to look, not only at the schemes in the air, but at the schemes on the notice-paper of this Parliament, to see that an end to the extravagance must come very quickly - that we cannot afford the reckless expenditure which the Labour Party and the Deakinites combined are endeavouring to force upon us. Senator Macfarlane has made an excellent point. More than one-half of the citizens of the Commonwealth enjoy exceedingly liberal, almost lavish, systems of old-age pensions; and the poorer States, which have been deprived of a considerable amount of revenue tinder Federation, do not ask for any scheme. I do not think that these smaller States should be dragged into this enterprise in an indirect way - a way which is lacking in courage and statesmanship - when they are providing by methods of their . own for their aged poor. It may be said that Tasmania is a conservative State; but, at any rate, Tasmania, above all things, desires to be sound in finance, and to maintain its credit in the world. There is no desire in Tasmania for reckless expenditure, which it is felt we cannot afford. I venture to say that in Tasmania there -are very few people suffering hardship on account of poverty. The charitable and other provision made for the assistance of the poor in old age is most excellent and generous of its kind, and fulfils its purpose. It appears to me to be absolute madness to rush this old-age pensions scheme through before the Deakin Government have made a single attempt to deal with the Braddon section or the bookkeeping section, or to show that there is amongst them any financial ability whatever. Senator Mulcahy was warned that he must not allude to the Bounties Bill in the discussion; but I suppose that, by way of illustration, we may compare the different modes in which the Deakin Government are advising us to spend money. Do honorable senators consider a scheme of old-age pensions more important than the building of a Federal Capital in the bush. To hear some honorable senators talk one would think that we cannot make laws in a Federal spirit unless we start to pile up bricks and mortar. Do honorable, senators consider old-age pensions more important than defence? Everybody is nagging at the Minister of Defence and making all sorts of suggestions, and now, I understand, we are to have an Australian Navy, at what expense I know not. Which is the most important - to have our defences as we have been advised by naval officers both here and in England, or to have old-age pensions? If we are a Christian, a civilized, and a democratic community, there ought to be very few people in Australia wanting the necessaries and comforts of life. It is the duty of the States to see that the poor do not want the comforts of life.
– Sufficient wages are not given in Tasmania to enable the people to live.
– The honorable senator might just as well tell me that the moon is not made of green cheese. We are not talking of wages or labour, but of the grand. Christian, democratic duty of providing for those who cannot help themselves. That duty has been performed in Tasmania in a Christian” and civilized way, and the people of that State cannot afford a system of old-age pensions of 10s. per week given to all, whether deserving or undeserving - pensions which are proposed with no other motive than to enable the Labour Party to curry favour with the electors. The whole proposal is a sham and a disgrace. If the Deakin. Government are in favour of old-age pensions, why do they not bring forward a scheme and suggest the means? The Government has absolutely departed from the admirable report of the Royal Commission, which advised that the money ought to be provided out of the Consolidated Revenue. That recommendation was made after examining scores of ‘ witnesses, and after considering the matter for months. The course advised was the sound financial course; but the Deakin Government, for reasons best known to themselves - because thev think more of place and power than of the public welfare - brought clown the scheme now before us.
– Is the honorable senator not confusing the Deakin Government with the Labour Party, the latter never having proposed to tax tea and kerosene ?
– I know perfectly well that the Labour Party do not want to tax tea and kerosene; but Senator Pearce has swallowed the dose, and very properly says, “ I want old-age pensions, and if I cannot get them in the way the Labour Party desire, I shall take them in the way in which the Deakin Government will give them.” I do not regard the scheme of paying £1,500,000 in old-age pensions as an honest scheme, but, as I say, one introduced for the purpose of currying favour with the electors - of setting the people who have nothing, against the people who have something. If the Government had proposed a. modest scheme, providing for contributions from employers and employed, I could have understood the position. If Tasmania cannot afford to pay her share of £1,500,000, she might be able to pay her share of £500,000; and I have shown that: if a young man contributed £1 4s. o,d. per annum from the age of twentyone to the age of sixty-five, he could provide for himself a pension of 10s. per week. I further showed that, under the scheme I suggested, a man need only pay 8s. 2d. a year in order to provide for himself in his old age. Some honorable senators contend that a man cannot afford to pay 8s. 2d. a year out of the wage of £2, £2 10s., or £3 a week 1 but that argument only shows that there is no common sense or financial ability behind this business. The Government are afraid to set forth the purpose of the Bill. The Minister of Defence tells us plainly that he will not limit himself to the purpose suggested, but desires to raise revenue on special duties for any purpose the Government please.
– Nothing can be done without the sanction of Parliament.
– The question of special duties bears some similarity to the question of the income tax at Home. British statesmen do not’ like an income tax of is. or is. 3d. in the £1, but that is the only tax which can be resorted to in times of emergency for raising large additional revenue. The States retained the land, and nearly every State has a. land tax, with some sort of income, dividend, or ability tax; and it is idle for us to talk of raising £1,500,000 bv direct taxation.
– The Bill does not propose to raise money bv direct taxation.
– I know; but the debate has been conducted on the as sumption that that is what is meant by the Government. Are the Government ashamed to state plainly what they mean ? I should be telling the electors of Tasmania an absolute lie if I were to say to them that I do not know the meaning of the Bill. I shall have to tell them that it is intended to provide for a scheme of old-age pensions, but I shall have to tell them also that it will not provide for more than half the money required, and while I do not’ know where the other half is to come from, the members of the Labour Party desire to get it out of the land bv imposing a Federal land tax on top of the land taxation of the States. The power proposed under the Bill .is one which should be kept in reserve for some distinctly national purpose which must be attended to at once. It might be that we shall be called upon to defend ourselves before many years are over our heads, and in the case of a national emergency like that Ave shall have nothing to fall back upon. This is the maddest idea I ever heard of. and it does not emanate from sincere statesmen, but from a Cabinet of opportunists.
.- I .am very sorry to hear that the Government have not made up their minds to allocate the fund which may be collected under this measure to the payment of oldage pensions.
– We fought that out in Committee. We had a division on an amendment to provide for that, and the
Government voted against it.
– That only emphasizes my objection. If the Government will even, at this stage, pledge themselves to apply the revenue to be raised under this measure to the pm:ment of old-age pensions, they will relieve me of a great deal of anxiety. In Victoria and New South Wales, old-age pensions schemes are already in operation, and those States comprise two-thirds of the population of the Commonwealth. I have been for many years in favour of old-age pensions, though I think I could improve upon the system at present in vogue. I should favour a Commonwealth scheme of oldage pensions if it could be reasonably carried out, but I am afraid that if the Minister does not give me an assurance whilst I am speaking, or after I sit down-, that this fund will be allocated to the payment of old-age pensions-
– It is the Bill, not the Minister.
– The Minister could bring in another Bill providing that the money derived from these special duties shall be devoted to the payment of old-age pensions.
– That is what is intended.
– The Government opposed an amendment to that effect. It is not in the Bill, and we cannot get it there.
– The Ministry could introduce another Bill of a few lines allocating the money to be raised under this measure to the payment of old-age pensions. If they will do so, I shall vote for the third reading of this Bill, or, if they will make a promise to do so next session, I think I can see my way to vote for the measure.
– This Bill cannot become law until it is indorsed by a majority of the people in a majority of the States.
– I know that that is so, but I cannot break the compact that was honestly and fairly made at the Federal Convention, especially when I consider the extravagance that is taking place, though I admit that if the Commonwealth were in danger, I should be prepared to break any of the provisions of the Constitution. Why should we be called upon to break the compact made with the States when, with a few months’ delay, the difficulty might be overcome. If the Government had conferred with the Premiers of the States that have not already established old-age pensions schemes, they might have induced them to do so.
– Conferences have been held, and the States Premiers have said that they would not object to special duties.
– There might have been another Conference.
– The States Governments are asking for one at the present time.
– They are going to hold a Conference next week, or the week after, which will probably open the eyes of the people of this country. I say that it is the duty of the Commonwealth Government to confer with the States Governments on every occasion where there is a clashing of interests. The Common wealth Parliament was not created merely for the purpose of riding rough shod over the States Parliaments. It was created to deal with defence and other matters which cannot be so well dealt with by the States Governments, but its powers and duties are circumscribed by the Constitution. I am sorry that, as the matter stands, I cannot see my way to vote for the third reading of the Bill, because the Government will give no pledge that they will apply the funds raised by means of these special duties to the payment of oldage pensions.
– A pledge was given in another branch of the Legislature that the money would be devoted to the payment of old-age pensions.
– No pledge has been given. The Minister of Defence said that it might be used for the purpose of defence.
– What is a Ministerial promise?
– I am glad to have had - that statement from the Ministerof
Defence. I am sincere in my speech. If that be so, and the Government in another place have given a pledge to apply the money raised under this measure to the payment of old-age pensions, I must vote for the third reading of the Bill.
– Why do not the Government put it in the Bill ? Ministers here voted against it.
– Ministers in the Senate may have voted against it, but I do not look upon the action of the two Ministers representing the Government in the Senate as equal to a pledge given by the Government in another place.
– Will not the honorable senatorlook at the Bill? Of what use is such a promise when it is notin the Bill?
– I do look at the Bill, and I am sorry that another has not been introduced allocating the money for the purpose intended.
– If the honorable senator votes for the Bill the money can be applied to any purpose in the world.
– I admit that it could in certain extraordinary emergencies or contingencies, which I hope and believe will not arise.
– Did not the Government vote to exclude the express provision from the Bill?
– Yes. We moved an amendment to earmark the. fund for old-age pensions, and the Government voted against it.
– Am I not right in believing that the Minister of Defence has said that the Government have given a pledge in another place?
– Yes, absolutely.
– Then why did the Government vote against it?
– Because we did not consider it constitutional to put it in the Bill.
– What is the value of a pledge?
– The pledge having been given, I shall vote for the third reading of the Bill.
– I wish to say a few words on the Bill before the third reading is passed. There seems to be a good deal of misapprehension not only with regard to the Bill, but with respect’ to the objects for which the Government are seeking special powers under the Bill. I should like honorable senators to seriously consider these powers before casting a vote’. What are the provisions of the measure? They are that the Government shall submit to the people the question whether the Federal Parliament shall have the power to impose special Customs duties on articles which at present are not taxed for a special purpose. To my labour friends who propose to vote for the Bill, I put this question: Are they in favour of adding to the burden of indirect taxation now being borne by the working community of this country? Are they not aware that three-fourths of our present taxation is levied through the Customs, and that the burden of indirect taxation is so severe that the working man is actually bent double under it? Can they for any imaginable reason add to the weight of that burden? They know perfectly well that they are bound by their platform not to vote for the imposition of any further Customs taxation until the resources of direct taxation have been exhausted. I am not sure that even that qualification is contained in the platform.
– What platform is the honorable senator speaking of?
– I am referring to the platform which Senator Henderson agreed to and signed and upon which he was returned as a member of the Senate.
– I am sure the honorable senator is not.
– I call upon the honorable senator, and every other labour member of the Senate, taking the Bill as it stands, to vote against it. I say advisedly that no labour senator can vote for this Bill without violating the platform upon which he was returned to the Senate, and which he signed before entering it. I ask Senator Pearce what this Bill proposes? It proposes to ask the people whether this Parliament shall be permitted to impose further additional indirect taxation.
– It does not propose that they should be asked anything of the kind.
– Apparently Senator McGregor does not understand the Bill, and therefore I am not surprised that he should be going to vote for it. I think that the debate should be adjourned, so that honorable senators may get a real understanding of what it means. It proposes to submit this question to the people : “Are you in favour of such an alteration of the Constitution as will permit the Federal Parliament to impose special Customs duties for a particular purpose?” Is not that right?
– No, it is not right. The honorable senator should have learnt his lesson better.
– My honorable friends are sheltering themselves behind the “particular purpose.” That is the umbrella under which they come in out of the wet. When a man buys an umbrella he usually takes care that it will be of some service to him. What is the umbrella under which my honorable friends seek to shelter themselves? It is a vague and definite promise on the part of the Government that special duties will be levied on tea and kerosene,and that the proceeds thereof may be used for the payment of old-age pensions, and any other purpose which the Government may desire. When Senator Millen wished to pin the Government down, Senator Playford refused to be pinned down. He said, “ No, we may use this money for any other purpose.”
– For defence purposes.
– Only under exceptional circumstances.
– The Minister used those very words - “ for defence purposes” - to myself.
– The Minister said that the Government might use the money for defence purposes. Of course we have no mention of tea or kerosene in the Bill. There is only an indirect reference to the items. I wish to remind some of my honorable friends of what they said on a previous occasion, when a proposal to tax tea was submitted. Senator Pearce expressed his view very tersely. He said -
I shall not consent to its reimposition.
Senator Higgs, who proposes to vote for this Bill, said -
Ido not regard tea as a legitimate source of revenue.
If it was not a legitimate source of revenue then, how can it from his point of view be so now? Further, he said -
A scientific protectionist will admit tea free.
So far as I know Senator Higgs, he is still a protectionist. He claims to be a scientific protectionist, and therefore he ought to be opposed to taxing tea now, as he was then. Again, he said -
I take itto heart, as a protectionist, that Senator Classey, who is also a protectionist, should propose a tax on lea.
He felt hurt that a protectionist should so far diverge from the straight line of a protectionist policy as to advocate a tax on tea. Senator O’Keefe said -
In voting against this motion to impose a duty on tea, I sincerely believe that I shall be voting in accordance with the wishes of 75 per cent. of the people of Tasmania.
Apparently, either the people of Tasmania have changed their mind or Senator O’Keefe has changed his; I do not know which. Further on - and I would commend this part of his speech to him - he said -
There is room for a very great deal of improvement in our system of direct taxation.
Senator McGregor was equally emphatic on the point. He said -
For the last ten or twelve years I have been advocating a platform which included the abolition of the duty on tea. If we put a duty on tea the merchants will sell an inferior article at the same price. I hope that honorable senators are not going to be gulled into the belief that the public will not benefit by the remission of these duties. I hope that this motion will be defeated, and that the people of Australia will enjoy the benefit of cheap tea.
Evidently my honorable friend believes now that it is a right and proper thing to tax tea.
– In any case, the honorable senator is going to vote for the Bill.
– This Bill does not propose to put a duty on tea.
SenatorSTEWART.- The honorable senator intends to vote for the Bill knowing that the Government intends to put a duty on tea and kerosene. I do not know what he has in his mind, but I ask him whether he thinks that he will be acting in accordance with the platform of the Labour Party by consenting, even in an indirect fashion, to any addition to our Customs taxation. If I did so, for any reason - I do not care what it might be - I would not believe that I was keeping the pledge I signed, and the promise I made to my constituents. I find that on that occasion the following honorable senators voted against the re-imposition of the duty on tea: - Senators Best, de Largie, Higgs, Smith, McGregor, O’Keefe, Pearce, and Styles. That is a “ yes-no “ with a vengeance. Fiveyears ago it was “ no,” and to-day it is “yes.”
– Who voted for the imposition of a duty on tea ?
– Some of my honorable friends on the right did, I suppose.
– The honorable senator will not find my name on the list.
– He will find my name there.
– I am not concerned about my honorable friends 011 the right. I do not pay very much attention to their platform ; in fact, I do not know whether they have a platform or a purpose in public life. My understanding of the Labour Party’s policy has always been, and still is, that one of our purposes is to reduce indirect taxation and to increase direct taxation. I am here pledged to reduce on every occasion which offers, the burden of indirect taxation now bearing so heavily upon the great mass of the people.
– And the honorable senator is pledged in a measure to the principle of the referendum.
– I am pledged not only to reduce the burden of indirect taxation, but also to add to our direct taxation. If the Government will come forward with a scheme of direct taxation sufficient to provide funds for the establishment of an old-age pensions scheme, no one will support it here more heartily than I shall.
– Will the honorable senator bring his supporters with him ?
– I have no supporter here ; I do not lean against any one, and trust that no man leans against me. I stand erect on the platform which I signed when I entered the Chamber, because I believed in it, and to it I intend to adhere. When I cease to believe in the platform, I shall say so, and step off it. My object here is, if possible, to reduce the indirect taxation, to increase the direct taxation, and to get a scheme Of old-age pensions, but not by such means as those now suggested. There is a most excellent maxim which tells us not to “ do evil that good may come.” I intend to obey that maxim for once. Probably some honorable senators may say. that it suits me to do so. It does suit me. I shall stick by every pledge which I signed when I became a member of the Senate, and I trust that the’ good sense of the majority will accomplish the defeat of this proposal.
Question - That the Bill be now read a third time - put. The Senate divided.
Majority … … 5
Motion (by Senator Playford) proposed -
That the Bill be now read a third time.
– I had not an opportunity to speak on the motion for the second reading of this Bill, and therefore propose now to give my reasons for voting for the third reading. It is, of course, not a party question. The measure is perfectly free from all such consideration. Some of my honorable friends object to theBill being passed, because the present Parliament is practically moribund, and, therefore, intend to vote against it on that account. Personally, however, I think that it is a very useful measure. If one of the present provisions of the Constitution were carried out, it would mean that we could only take over debts for each State to a certain amount (per head of population. That would imply that we could only take over debts for each State to the amount of the debt of the State having the smallest indebtedness. As a matter of fact, the total indebtedness of Australia at present represents£236,680,739. The average rate of debtper capita in each State is as follows: - New South Wales,£55 13s. 9d. ; Victoria,£42 13s. 4d. ; South Australia, £74 3s.9d.; Queensland,£77 17s. 8d. ;
Western Australia, £680s. 7d. Tasmania, £51 6s. 4d. The average indebtedness of Australia, therefore, is £58 6s. per head, taking the population at 4,052,570. But as Victoria has an indebtedness of only £42 13s. 4d. per head, we could, under the provision referred to, take over debts only to the amount of£171, 000,000. Under this measure, we could take over the whole of the indebtedness of the States if we cared to do so. If we took over only £171, 000,000 we should still leave the States with£65,000,000 of debt in addition to future loans, over which the Commonwealth would have no control. Up to the present, the Commonwealth is going throughits infantile troubles. I suppose that young countries have complaints which are natural to their youth just as have the younger members of the human race. We all know that children are addicted to measles, whooping cough, and similar ailments. One of the infantile complaints of this Commonwealth has been the passing of too much legislation, interfering unduly, I consider, with the liberty of the subject. But I believe that in time that fault will be rectified. There is an impression in Great Britain that if we had a system of Australian Consols they would command relatively a better price than do the stocks of individual States. It is quite true that the state of the moneymarket at present is not favorable to a general Conversion Scheme, but if we do not in the present Parliament pass this Bill, we may have to wait three years longer before being able to do so. I therefore put it to honorable senators whether it is not a wise thing to give the Government power to formulate a suitable Conversion Scheme when the appropriate time arrives. Mr. Coghlan, in his able paper dealing with this subject, has stated that there is an impression that such a large scheme as is contemplated should not be put into operation until the money market in Great Britain has been favorable for something like two years. Supposing that assumption to be correct, how do we know that the two years would not elapse between the present time and the expiry of the next Parliament? Are we to wait three years before we pass a Bill enabling the Government to convert States’ debts, and then possibly have to wait an indefinite time until the money market again gets into a favorable condition ? The Commonwealth, as we all know, has control over Customs and Excise duties. We are also aware that if it chooses to exercise its power, it is at liberty to impose direct taxation. Though I. for one, should be no party to the Commonwealth Parliament under ordinary circumstances exercising that power, still it is one which constitutionally can undoubtedly be exercised. The States at present are entitled to three-fourths of the net Customs and Excise duties raised and many States desire that the Braddon section shall be continued beyond 31st December, 1910. If the Commonwealth were to take over a substantial amount of the debts of the States, even though the States did not receive back three-fourths of the Customs and Excise revenue, they would surely have a sufficient guarantee against the Federal Government becoming unduly extravagant. I do not believe that there is any State in Australia that would repudiate its liabilities. I would not for a moment suggest such a thing. But the money market is very sensitive, and if investors see that one Government in this country, in addition to having control of Customs and Excise, has also power to impose direct taxation, the public liabilities of such a Government would appear to be a safer security than would the stock of any individual State. Because, after all, the first mortgage on the income of the country is in the hands of the Commonwealth Government, and investors would consider that there might be a danger in looking to the States for what is practically a second mortgage security. I do not suppose that any Ministry would think of putting forward a Scheme of Conversion without working in co-operation with the States. I support this Bill to give the’ Federal Government power to institute a Conversion Scheme when the proper time, comes, not with the idea, however, of acting in opposition to the wishes of the States. But if the Federal Government can prove to the States that they would derive an advantage from a Conversion Scheme, doubtless the States would give their adherence to it. When I addressed the Federal Convention in Sydney, in 1897. the Imperial authorities had not accepted State obligations as trustees’ securities. That has since been done. Therefore, the great advantage that I at one time thought the Federal ‘Government securities would have over States Government securities has been greatly minimized. As a matter of fact, at the present time both State and Commonwealth indebtedness is in Great Britain a proper object of investment for trustees’ securities. I am. disposed to think that Sir John Forrest’s estimate of a saving of¼ per cent. per annum from the Commonwealth Conversion Scheme is not excessive. In fact, Mr. Coghlan evidently considers the estimate very low. He says that the average rate of interest on the debts of Australia at the present time is£3 14s. per cent.If Sir John Forrest’s idea were carried out, and we were able to borrow at 3 per cent., we should realize a saving of 14s. per cent. But I believe that many of the States could themselves at the present time convert their debts at less than £3 14s. per cent. I consider, all things regarded, that Sir John Forrest, in taking credit for a saving of¼ per cent., was not putting forward more than a moderate estimate. Even with that saving.¼ per cent. on a total indebtedness of£236,000,000 would give a saving in interest of£590,000 a year.
– We are going to save more than per cent, on our new loan in Victoria.
– But the money market is at present in an extraordinary position.
– Does the honorable senator think that has anything to do with the Bill?
– Yes, I do. I think it is a very important matter. I am perfectly justified in mentioning the advantages that would be likely to be secured under the measure. In days gone by, I quoted a very interesting letter from’ Mr. David George, the present manager of the Bank of New South, Wales in London, who has been connected with that institution since the year 1862. He has risen from a junior position in the bank to that of manager in London, and, during his forty-four years of service, has probably been connected with more Australian loans than any other banking official in London. Mr. George wrote this letter after consulting with various members of the Stock Exchange, and it expresses their opinions as well as his: -
We think the idea is a very good one, and if it could be carried out, we believe the result would be a considerable saving. But it is difficult to see how the debts of the various Colonies could be consolidated until Federation, on satisfactory lines, has been accomplished. It seems to us that until the Colonies’ have obtained Federation, and the Federal Government has full power over the railways and Customs to enable it to provide for the service of the debt, it will not be possible to secure consolidation.
There, of course, we cannot altogether agree with him -
But if you are successful in federating the Colonies, we think consolidation of the debts will follow as a necessary corollary. Federation will bc incomplete without consolidation of the debts.
– He was assuming’ that the interest-earning works would also be federalized.
– But we know that the States object to even a portion of the railway income being hypothecated.
– Does not the argument, therefore, fall to the ground?
– Not necessarily. The quotation proceeds -
Thirdly, as to bringing about a consolidation into Australasian consols at once of all the various debts of the Colonies. This we believe to be the best plan ; but in order to carry it out a large Conversion Scheme would have to be introduced. The whole question depends upon terms, that is to say, the Quid fro quo that would be offered to the holders of the different stocks to induce them to exchange their present securities into stock of the consolidated funds. This, of course, will be a difficult and delicate matter to arrange, and it will require to be placed in the hands of actuarial experts of great experience and skill to ascertain the relative values of the different loans of the separate Colonies to a single interminable consolidated inscribed stock, and the most influential medium will have to be employed to launch the scheme, and to find an opportune time for that purpose.
– He contemplated conversion before maturity, which everybody knows to be extremely difficult.
– And expensive.
– The letter proceeds -
The varying dates of maturity, and rates of interest, and the feeling existing here as to the position which the different Colonies afford as security for their loans, would all have to be taken into account. Present holders cannot be compelled to- exchange their securities, and, therefore, sufficiently liberal terms will have to be offered to induce the great bulk of them to fall in with a conversion scheme. The different merits and values of the loans of the various Colonies will make it difficult to ascertain .an all round satisfactory basis of exchange. Holders, for instance, of New South Wales securities, owing to their superior credit, will require a greater inducement to exchange their present holdings, while it may suit holders of Victorian, South Australian, and ‘ Tasmanian stocks to accept a security of a federated Australia much more readily.
I shall show, in a moment, that that is Mr. Coghlan’s idea.
– How is it proposed to accomplish all this?
– It is not proposed to accomplish it at the present time, but merely to give the Government power to take advantage of the market.
Fourthly, as to the rate of interest upon which such a conversion should be based. We certainly think that the best rate would be 3 per cent. This, we believe, would be the most practical basis upon which the debt could be consolidated. A lower rate, we fear, would simply cause any scheme to result in failure, therefore we would certainly recommend a 3 per cent, inscribed stock, and we believe that in course of time it would go to a premium. If the whole of the debts were consolidated into one stock, it would make a very bis» market on our Stock Exchange, and would cause larger dealings, and attract more public attention, and become a more favorite investment.
The writer goes on to express his preference for inscribed stock over debentures. It may be asked how it is that so far Australian stock has not been a success at Home with trustees. The reason, apparently, is that many of the Australian stocks of 3I and 4 per cent, are, or have been, at a pre- mium, and trustees, as a rule, do not like to buy stock at a premium, because, frequently, if a premium be given, it cannot be charged to the life tenants, and the corpus may ultimately be reduced. It is desirable that stock for trustees’ purposes should rather be at a small discount.
SenatorFraser. - But there is no loss unless they sell at a loss.
– I draw the attention of Senator Fraser to the fact that someyears ago,. 3 per cent. Consols went as high as £115, and trustees were authorized to invest in them, and, although the interest was reduced from 3 per cent. to 2½ per cent., the fall was much greater in proportion. I propose to quote from Mr. Coghlan, and from the Insurance and Banking Record to show that there is a great deal to be said in favour of increasing the power of the Commonwealth Government in this connexion.
– Is the honorable senator not making a speech showing the advisability of a conversion of the loans?
– I am speaking in favour of increasing the powers of the Government.
– I do not wish to stop the honorable senator, but his remarks do not appear to have much to do with the Bill.
– I shall not detain honorable senators much longer. Mr. Coghlan remarks -
The conditions surrounding the redemption of Australian loans are chaotic….. It has obviously been the policy of those responsible for fixing these dates to let the future take care of itself.
Then Mr. Coghlan gives a table which he thus summarizes -
A glance at the foregoing table shows how the absence of combined action amongst the States has greatly complicated a situation which, in any circumstances, would have been difficult. Each Government has acted according to its immediate exigencies, regardless of the financial needs of its neighbours; but in fixing the date for repayment of their loans Australian Treasurers may plead that they were guided by the opinions of the banks in London, to whom their State’s business was intrusted, and the banks on their part have considered chiefly the needs of the Stock Exchange, which prefers to deal with as few denominations of stock as possible…..
Most Treasurers find the care of the present taxes their resources to the full, and they do not, therefore, look beyond to the day of reckoning when the task of redemption has to be faced.
These objections to the want of method hitherto prevailing in fixing dates for redemption, are, of course, so many arguments in favour of uniformity, and amply demonstrate the need of Federal action, by which alone they can be entirely avoided.
The placing of a loan in London by any one State of the Australian group, especially if it be of a large amount, usually results in an allround weakness in the price of Australian securities, and subsequent issues of other States are placed at a disadvantage if the market is approached before it has recovered its tone. The States have in this respect all the evils of disunion and all the liabilities of Federation, with out one of the advantages which Federation would give.
I shall now quote from The Insurance and Banking Record of the 20th September, this year. When I once before quoted from this publication, I was paid the compliment of being asked whether I was the author of the article, but neither of that nor the present article can I claim to be the author.
At present it(i.e., the Commonwealth) possesses the power to take over only the debts which existed at its establishment on 1st January, 1901. The proposal is a very proper one, for without the additional power sought, no satisfactory arrangement for the transference of the State debts to the Commonwealth, with the ultimate view of consolidating them, is possible. The amendment is one that should not meet with any opposition.
Returning to Mr. Coghlan’s paper, I quote the following: -
The last proposal (to utilize the savings as a redemption fund) is perhaps the one that has most to commend it, but it is hardly one that is likely to be popular in many quarters, as it does not admit of the States interest bill being immediately reduced, although it provides for an ultimate reduction of a most substantial character by paying off, absolutely, all their existing loan obligations. Assuming, for the sake of illustration, that the Commonwealth could float 3 per cent. stock at par, then as during the next five years debentures to the value of£22,423,588, and Treasury bills of £11,707,410, bearing interest at an average rate of over 4 per cent., fall for redemption, the Commonwealth being in a position to take up these loans on a 3 per cent. basis, there would be a saving of £273,000ayear, no part of which sum would be passed on to the States, the whole being used as a sinking fund to pay of] the new stock, which it would do in forty-six years, to the great advantage of the States which would then be relieved of their debtsto the extent above-named, viz.,£34,140,998.
In connexion with this question of the sensi tiveness of Australian stocks to comparatively small sales, it is disappointing to find that the advantage which it was thought would arise when Australian and other colonial stocks were brought under the operation of the Acts govern- ing investments by trustees, has not been realized. It was confidently expected that Australian stocks would be in a much better relative position than they were formerly, and that they would approach in value to the very best class of investment stocks. It must be confessed, however, that their relative position compared with Consols has not improved, but, as three buyers out of four are trustees, this fact alone must influence price, and competent judges place the advantage of being a trustee stock at 2 per cent., or even higher; however that may be, it is very evident that, having acquired the position of trustee stock, if Australia should now lose that privilege, it would be most prejudicial to its interests.
In any circumstance an amendment of the Constitution of some kind is advisable, as it would be unwise for the Commonwealth to approach the question of the transfer to it of State loan obligations, unless it were free to deal with all those obligations as occasion arises, and were also in the position of monopolizing the London market for its own loans, which is not the case as the law now stands.
The success or otherwise of the initial essay of the Commonwealth in the field of high finance will undoubtedly have far-reaching effects, and even influence the price of future issues.
At one time I w,as under the impression that, when necessary, the States would hypothecate a portion of their railway income to supplement the amount raised by the Customs duties ; but it seems extremely doubtful whether this is practicable at present. According to section 105 of the Constitution, the States have to give an indemnity for any deficiency ; and Senator Drake asks what means there is of enforcing that provision. There is the power of direct taxation, and I think the States would rather give an. indemnity than allow that power to be exercised.
– I said that was thi difficulty that stood in the way of the first Treasurer.
– I submit that it would be an admirable consummation of our efforts if the Commonwealth were to take over the States debts some day not far distant. I think, with such guarantees from the States as I hope will be given to the Federal Government, the scheme now .suggested would result in very great advantage to the Commonwealth. A similar view was expressed in days gone by in a number of very able financial articles which appeared in the Sydney Daily Telegraph. Sir John Forrest believes that any saving in interest ought to be given to the respective States on whose loans the saving is made. No doubt nothing will be attempted in that’ matter without the introduction of a
Bill providing what shall be done with any savings made. Mr. Coghlan seems, to favour the idea that any savings made should be used to form a sinking fund to retire the loans. The Treasurer, however, holds this, view7 -
That all net profits arising from any conversion or redemption of existing loans should be credited by the Commonwealth to the State concerned, and the annual payment by that State reduced accordingly from time to time.
I am afraid that I have detained the Senate for some time, but I did not care to give a silent vote on a question in which I have taken a great interest for many years. I believe that if we do not pass this Bill now it will not be many years before a similar measure will be passed, because the Stages will go on issuing new loans. Some loans already floated will not mature until 1952. The sooner we deal with the question the better it will be for the future of- the Commonwealth. I shall have much pleasure on this occasion in voting with the Government. I do not look upon this as a party Bill, and I hope honorable senators generally agree with me in that respect.
.- I have only a few words to say. It is possible that the Bill would do no harm if it became law, but I think it would be almost useless. I am glad to be able to say that I have heard that Victoria will be able to pay off nearly the whole of her .£4,000,000 loan when it matures. I was guarded iri my statement on the subject the other day. but since I spoke then I have posted mvself up in the matter, and I learn that Victoria will be prepared to pay off almost the whole of the ,£4,000,000 shortly falling due. We might pass thousands of statutes, and yet the only way in which our securities can be improved is by the. States facing the situation, and paying off their loans when thev mature. I am glad to say on the best authority, that of the Premier of this State, that already arrangements have been made for the* payment by Victoria of ,£3,000,000 out of the £4,000,000 loan shortly falling due.
– How much of that will be taken out of the savings-bank deposits ?
– Probably about £2,500,000, but that will not matter since they represent the savings of the people.
– It will be a local loan, all the same.
– It will be a local loan, and I am only too delighted to learn that we shall be able to get the money from our own people. That is the proper system to encourage. I am able to make another statement in connexion with the matter, and that is that the interest on the money which is to be obtained to meet the loan shortly falling due will be only 3^ per cent., and there will be no commission charged. Honorable senators are aware that we have had to pay very heavy commissions in the past. I say that when the fact I have stated becomes known in London next July, and I suppose it has already been referred to in the financial press, investors will at once rush our stock. The fact that Victoria is able to do this will enormously’ enhance the credit of the other States. We need not be at all alarmed about our financial position. It is as sound as it can possibly be, and I am only too happy to be able to say so.
– I have listened, as I always do, with the greatest respect to what Senator Walker has said, and also to the opinions of the experts to whom the honorable senator has referred. I must say, however, that many of his statements were quite beside the question, and do not constitute an argument in favour of the Bill. With respect to the opinion given by Mr. David George, who I understand is a great London expert, it clearly has no bearing whatever on the subject before us. Mr. George, writing before Federation, advocated that the Constitution should be so framed as to provide for a great conversion scheme by which l’oans might be converted before they matured. What is the use of telling us that now? When, on the second reading, I mentioned that if the debts were transferred the Commonwealth Government might take advantage of favorable conditions of the market to float some portions of loans that had not fallen due, the Minister in charge of the measure was scornful. He scouted the idea, and declared that sb far as the Government are concerned, they do not think of taking over any ‘loans except as thev mature.
– What about underwriting and banking charges ?
– The honorable senator told us, as the Senate and the other House have been told before, that it would be a good thing to take power to convert all the debts up to date, but be fore I would take the advice given in the great financial publication to which he has referred, I should like to know whether the writer knew the position he was talking about. The chances are that he did not, and that it was simply put vaguely to him that it would be a good thing to include State debts contracted since Federation, and then to go in for a big scheme. Looking at the Constitution, and taking into account what is there provided, it would entail certain consequences which I think were not in the mind of the writer of the article referred to at the time he wrote it. I wish to s,tate what those consequences are. I hope that the best possible interpretation will be put upon anything I have to say, and that no one will carryaway the impression that I desire to speak disrespectfully of any State. I am sorry to say that, judging by a press report, the Premier of Victoria seemed to think that I had said something derogatory of this great State. I not only never intended anything of the kind, but I remember that I said that I expressly wished to pronounce no provincial views, and that I regretted having to name any particular State, and did so only because the first loans to mature are Victorian loans. Seeing that Senator Fraser followed me in the debate, I feel sure that I did not say anything very wrong about Victoria., or the honorable senator would have corrected me.
– No, the honorable senator did not. He never intended to do so.
– I am sure that if the Premier of Victoria had read the whole of my remarks he would not have formed any such conclusion. If he had read the debate that followed he would have seen that supporters of the Bill” were advocating the omission of the provision requiring a proportionate part of the debts of each State to be taken over on the ground that if that provision were retained the Government would be embarrassed - “ encumbered was the word used by one of the Victorian senators - because thev would not be able to convert the Victorian loans of £4,000,000 and ^2,000,000 shortly falling due without being encumbered with the obligation of having to deal at the same time with some of the debts of the other States. I may be pardoned for incidentally referring ‘ to two Victorian loans about to fall due which other honorable senators evidently had then in their minds as constituting the immediate reason for which the Bill had been introduced. That incident might be considered closed, but I think I may fairly make use of the argument that, if the Premier of Victoria says that Victoria will not require any help from the Commonwealth in meeting the loans of £4,000,000 and ,£2,000,000 which will fall due next year and the year afterwards, the proposed amendment of the Constitution is not necessary in the interests of the other States.
– Who cares whether he is independent or not; we have to consider what is for the good of the Commonwealth.
– - Quite so, and if Victoria does not require this amendment of the Constitution, what other State does?
– We have nor to consider the opinion of Mr. Bent, bac what is best in the interests of the Commonwealth .
– We have here a proposed amendment of the Constitution, which, we are told, is urgent, in order that loans falling due may be dealt with at maturity. Now, it turns out that Victoria does not desire the proposed amendment. New South Wales has a small loan of ^2,750,000 falling due in 1908. Does that State require the proposed amendment ?
– Certainly not.
– South Australia does not require it, Queensland and Western Australia have no loans falling due in the near future. There is therefore really no urgency for the Bill, and it is not being asked for. What is, being asked for is this : Ministers and honorable senators sometimes will persist in confusing two things. What has given rise to all the talk about taking over the debts of the States is that the States Governments are particularly anxious to retain or to strengthen their grip upon the revenue from Customs and Excise, which thev feel slipping awa,v from them. Thev have been told that here is a means of doing that, and they say, “Take over the debts at once.” They are asking that the debts shall be taken over in order that the Commonwealth may assume the liability for the heavy interest charge which is at present pressing upon them, and meet it out of the Customs and Excise revenue.
– That is a strong argument in favour of the Bill.
– I think I shall be able to show the honorable senator that it is not. The loans may be divided into two classes. I put in one class those which existed at the time the Commonwealth was established. They were loans contracted by the Colonies before Federation, in a great many cases upon the strength of the Customs and Excise revenue of the States. It was to that source of revenue that the States - Governments looked for the payment of the interest. When Federation took place the bond that was, agreed to was clearly shown by the sections of the Constitution if honorable senators will read them in their order. There is, first of all, the very important section 86, which provides that -
On the establishment of the Commonwealth the collection and control of duties of Customs and of Excise, and the control of the payment of bounties, shall pass to the Executive Government of the Commonwealth.
And the next section provides that, after paying the expenses of the Commonwealth - the balance shall, in accordance with this Constitution, be paid to the several States, or applied towards the payment of interest on debts of the several States taken over by the Commonwealth.
That refers to the class of debts that were contracted bv the Colonies before Federation, and which the Commonwealth agreed to take off the hands of the Colonies.
– They are in exactly the same class as the other debts, although they were, contracted at a different period.
– No, they are quite distinct. The second class of debts comprises those contracted by the States, as States of the Commonwealth. Lest I should be charged with any partiality, I have refrained from finding out the States which have contracted “these debts, or their amounts. I take into account only the fact that they reach a total of
– They are clearly outside the compact represented in the Constitution.
– They are not only outside that compact, but thev are debts of a different class. They are loans that were raised by the States as States of the Commonwealth, after thev had parted entirely with the power to raise revenue by Customs and Excise for the payment of interest. They went into the market and borrowed the money, knowing that their status had changed, and the money was lent to them with the knowledge that, as States of the Commonwealth, they had not the power to raise revenue from Customs and Excise for the payment of interest. Does not that constitute a difference in those two classes of debts ? In spite of the word “ may “ being in the section, the compact requires the Commonwealth to take over the pre-Federal debts. But there is no obligation upon the Commonwealth to take over subsequent debts, which, of course, the States have contracted with their eyes open.
– In the case of those debts they had a guarantee of a return of three-fourths of the net Customs and Excise revenue for a period of ten years.
– Yes. What has stood in the way of the Commonwealth taking over the States debts? The first Treasurer, Sir George Turner, was willing, as he stated at the Conference of Treasurers to. take over all the pre-Federal debts, but he thought that, in the circumstances, they should hypothecate a part of their revenue for the payment of the interest charge. They were not able to come to an arrangement for that purpose, and that is the reason why no transfer has been effected. By agreeing to the proposed amendment of the Constitution, we shall not only not assist in that direction, but we shall create an obstacle. Under section 105 the Commonwealth may take over all the preFederal debts, or it may take over a part of those debts ; but if it takes over a part only it must take over a proportional part from each State, and that has been found somewhat inconvenient. Under that section, therefore, the Government, if it is in earnest, could commence to take over States debts to the amount of ^202,000,000, and they need have no regard to the provision as to taking a proportional part from each State. But if the section were amended as proposed, they would be obliged to take over States debts to the amount of ^235,000,000, and would not be able to take over only ^202,000,000 worth. Is it easier, I ask honorable senators, for the Commonwealth to take over ^202,000,000 worth’ of debts, to arrange for the payment of interest thereon, and to make the necessary adjustments with the States, or to take over ^235,000,000 worth?
– The larger the stock the more popular it would be with trustees at Home.
– No doubt trustees like a large operation. In the past the States have been too much under the advice of financial experts, who all want big conversion schemes. Did the Colonies ever get an advantage from taking the advice of financial experts in regard to the inscription of stocks? South Australia was, I think, the first State to inscribe its own stock. Did it take that step on the advice of financial experts?
– No; on the advice of myself and the manager of the Bank of Adelaide, and Mr. Millicent, the head of the syndicate in London which deals with loans, and others. But I had the opposition of the banks.
– That is what I have generally found, in connexion with loan operations. We are, to a certain extent, in the hands of .financial experts, but we shall make a great mistake if we surrender our own judgment. Let us get all the good advice we can from that source, and then judge the question for ourselves.
– My fellow AgentsGeneral - from Sir Saul Samuel downwards - recommended me not to touch the inscription of stock.
– Those gentlemen had been in London for some years, and absorbed that idea from what they call the big financiers. There is an idea abroad that high finance is a subject which ordinary mortals cannot touch.
– In 1893 that idea was exploded very largely.
– I am very glad that it was. My opinion is that a man who earns 10s. a day and has to keep a wife and six children would, if placed in a position of responsibility, soon know as much about finance as some of the great financiers who always want to plunge us into big schemes. I believe that at the bottom of this proposal to take over the additional debts, and so increase the sum total, is advice which has been given bv persons who want to do a “big thing.”
– Why did not Sir George Turner take over the pre-Federal debts amounting to ^202,000,000?
– I have already told the Senate.
– He said, “ I want to take over the whole of the debts, and not a part of them.”
– I beg the Minister’s pardon, because Sir George Turner took the subject in hand immediately after the Commonwealth was established, and, of course, the additional debts had not then been contracted.
– It was the whole of the debts that Sir George Turner wanted to take over.
– No. Sir George Turner said that if the Commonwealth took over all the States debts, without regard to the provision as to taking over a proportional part from each State, some States would be so heavily indebted to the Commonwealth that it would be a question of how they could arrange to meet their obligations.
– It would have been very trifling as regards the debts of £-02, 000,000. It was because Sir George Turner wanted to take over other debts that the difference, with the States arose.
– I beg the senator’s pardon.
– I was present at the Treasurers’ Conference.
– A reference to the report of its proceedings will show that Sir George Turner said that if he had the power he was not prepared to act immediately. It was all subject to an arrangement with the States, which, however, has never been effected.
– The argument is that it could be done without any arrangement with the States.
– In Queensland, which I take as an example, the interest bill is so vast that the Customs and Excise revenue does not represent one-half of it, and that sum, together with the net railway revenue, is not equal to the whole. What do the Government intend to do if the proposed alteration of the Constitution be adopted ? Would it not so considerably increase the difficulty as regards the payment of interest that they would be compelled to take over debts to the amount of ^”235,000,000 ?
– No, we are not bound to take over even £202,000,000 worth. We only want power to do it.
– There is nothing in the Constitution now to prevent the Parliament, if it chooses, taking over States debts to the amount of ,£202,000,000 - that would give all the relief which the States are asking for - and if, at the same time, it were provided that, up to a certain point, the interest shall be defrayed out of Customs and Excise revenue, I feel sure that the States would be quite satisfied. By making the proposed alteration, we should not only not help forward the transfer of the States debts one iota, but would place an additional obstacle in the way of its accomplishment, because in future, if we wanted to go in for a large operation with the view to the conversion of the debts we should not be able to take over £202,000,000 as we can now. We should have to take over either a proportional part from each State or £235,000,000 worth. I, as a representative of a State which is most heavily indebted in proportion to its population, would strongly object to a piece-meal taking over of the debts ; that is, to not taking over any of the debts until an individual loan matured. I do not object, however, to the Commonwealth taking over a considerable proportion of the debt of each State, so that it could convert each loan as it fell in. Under the Constitution, as it stands, it could transfer every loan as it became due. The proper course for the Commonwealth Government to adopt, in the first instance, was to have assumed the liability of all the States debts, and if the Customs and Excise revenue was not sufficient to meet the interest in any case, the deficiency would have been a charge on the State, and every State, I feel sure, would have honoured its obligation. There would have been nothing then to prevent the Commonwealth Government from converting each loan as it matured, or, by floating a small loan for its own purposes, taking advantage of favorable terms on the London market to gradually convert the transferred debts, which, of course, it would have had the power to deal with by way of renewal, conversion, or consolidation. From the first year of the Commonwealth’s existence a satisfactory scheme might have been brought into gradual operation, and the States would have been satisfied, because they would have recognised that the Commonwealth had assumed the responsibility in connexion with the debts, and to that extent the States Treasurers would have been relieved.
.- It is quite true that the objectionable fea- ture of this Bill, as originally introduced, has been taken out of it. But still I am nol prepared to vote for its third reading. My first reason is that which was admirably stated just now by Senator Drake, and, secondly, I shall vote against it because the Bill is, to my mind, another sign of the slipshod and piecemeal way in, which Ministers deal with financial questions. Instead of coming to Parliament with a scheme for dealing with the whole of our finances, thev come forward with a proposal to enable them to .do something which, as Senator Drake has pointed out, instead of being a help to the country, will be a hindrance. The Senate should feel indebted to Senator Drake far the clear thought that he has expressed upon a subject about which many honorable senators appear to imagine that there is no room for thought at all. Whatever may have been our opinion of the Bill before hearing Senator Drake’s speech, after hearing it we must see that there is a grave difference between the debts incurred by the States before Federation and1 those incurred subsequently. As Senator Drake has pointed out, there is an obligation upon the Federal Parliament under the Constitution to take over the pre-Federal debts to the extent of ^202,000,000. As they have surrendered their Customs and Excise revenue, to do so much is to give the States that consideration which they have always looked for. But we have 110 obligation whatever with regard to the ^35,000,000 of debt incurred since Federation, and I do not think that we need trouble ourselves about it. The States themselves are not troubling about it. It is a small burden to them. Some of the States, gaining wisdom by past experience, have been proceeding economically, and have not borrowed considerably since Federation. But the mother State has “ plunged “ to the tune of -£19,000,000. A rich State like New South Wales, with her vast possibilities and her huge assets, mav do that sort of thing, but if Tasmania had done the same I should have thought that she had taken a most dangerous and foolish course. It appears to me that what we ought to do is to relieve the States of the obligation for the debts incurred before Federation, which they have a right to expect us to do. and to leave them with the obligation for the ^35,000,000 incurred since. But the present Government has given us no solution of the problem which we have to face. We” shall make a great mistake in going in for piecemeal legislation which cannot be claimed to solve the financial problem. Suppose every State were for the next few years to follow the example of New South Wales, and to borrow largely for the construction of public works, to find employment for the working classes, and were to pay them 7 s. a day week after week, and month after month, even after it was shown that many of the men so paid would not work,’ could not work, and were by no means worth the wages they received. We know perfectly well that in New South Wales those wages were paid to men who were not earning them,- and who were not capable of earning them.
– What has that to do with this Bill?
– It has to do with it in this way - that the Commonwealth has an obligation with regard to the £202,000,000 of debts, but has no obligation with regard to debt incurred since Federation.
– I do not think that the wages paid in one State have anything to do with the question.
– I am pointing out that if a State in the future were to have a boom, it might incur new loan obligations to an enormous extent, and that there is no obligation on our part to take over such debts. But my principal argument against the Bill is that when we take over the debts, we are entitled to know what position the States are to be in with regard to their future borrowing. It is an exceedingly complex problem, but I notice that the Premiers at the Hobart Conference came to an agreement about it.
– Of .course they did. They came to the agreement that we should continue the Braddon section for a good many years.
– Will this Parliament agree to its continuation? Will the present Administration ask Parliament to continue it?
– This ‘Bill is the Treasurer’s scheme.
– That remark convinces me that the financial problem has not yet been solved, and that Ministers are not prepared to say how it will be dealt with. I am not prepared to vote for taking over any portion of the debts of the States until we know how the financial problem is to be settled, especially with regard to future borrowing. The question of converting the debts is an exceedingly difficult one, and, to my mind, sufficient importance has not been given to it. When is the right time to convert ? It can only be done when the market is favorable.
– These are all petty details.
– In regard to financial problems, every detail is not petty, but important.
– But it has all been said half-a-dozen times. I am getting, tired of it.
– Another reason why I should like to see the Bill postponed is because I believe the States are really waking up to the dangers in front of them arising out of the reckless expenditure of the present Government. The Premiers and Treasurers have agreed to hold a meeting to consider the question. That, in itself, offers a good reason for postponing the Bill. It would be much better for us to go before the electors with only one constitutional amendment, instead of four, as my honorable friend desires.
– I never desired that four amendments should be submitted to the people.
– My honorable friend has submitted three proposed amendments on behalf of the Government, and he also gave special facilities to Senator Pearce to propose another.
– I said I would vote against that. How grossly unfair the honorable senator is !
– If the debate that we have had throws more light upon the subject, the time will not have been lost, there are so many ways of looking at a problem so complex as that which faces us with regard to finance, and there are so many dangers to be guarded against. We are justified in insisting upon the difference, pointed out by Senator Drake, between the £35,000,000 and the .£202, 000,000.
– We have heard all that before.
– I never heard it so well and clearly put, and I desire to thank Senator Drake for his speech.
‘I wonder that the Government should proceed with this Bill after having the most valuable clause ex cised from it. What can the Government see in the measure in its present mutilated form ?
– Let us take a division, and the thing will be settled.
– Of course, we could deal with a fresh Bill every three minutes, if we were to act upon the Minister’s suggestion ; but then the Senate would become a mere voting machine, instead of a deliberative Chamber. I might draw attention to an ingenious mechanical appliance which has been set up in the vicinity of this Chamber. If the Minister wants merely to register votes, without consideration of the questions brought before us, a machine would serve his purpose equally as well as the Senate, and would be far less expensive.
– We might have a praying wheel.
– Yes, there are certain countries in which people perform their devotions by turning a handle. Why should not the Minister propose to legislate in that way ? But I again ask : Why is the Government proceeding with this Bill in its present form? What is the urgency? Why should it be pushed forward in preference to other Bills upon the noticepaper at this period of the session ? What is the use of passing the Bill if the Government has not got a scheme with regard to the debts to give effect to? All that can be suggested is that we ‘should pass this Bill with a view to a later readjustment, the terms of which have not yet been arrived at, nor are likely to be within the next few months. No Treasurer, or any one else who has dealt with the question’ of the transfer of the States debts, has ever proposed that the Commonwealth should take over those debts, except as the result of an arrangement with the States - an arrangement covering, not merely the debts, but the whole financial relationship, in which, of course, there is, in a prominent place, a provision known as the Braddon section. Until the whole of the financial relationshiphas been re-adjusted, neither this nor any other Government would propose to give effect to this Bill if it became law.
– The trouble before was that we could not take over the whole of the debts, and the States desired that we should take over the whole. If that difficulty be removed, we can go on with the negotiations.
– If that is the only difficulty why did the Minister introduce a Bill to accomplish some other purpose? Why did he introduce the Bill in its present form?
– It was certainly in a form in which it provided for the taking over of the whole of the debts.
– Yes; but there was something else, and the honorable senator attached great importance to that something else, which, however, he helped to strike out.
– It was one of the marked features of the Bill’.
– That was so, and it was introduced for a specific purpose. That proposal, however, has been abandoned,, and now I ask where is the urgency for the Bill. Seeing that the immediate purpose which the Government had in view - and which was obvious to everybody - has been deleted from the Bill, I should have thought they would put the Bill on one side. There are four years to elapse before we shall have to re-adjust the basis of our financial arrangements with the States, and during that time, we may consider what is to take the place of the Braddon section. But the Government press on with the Bill ; and I want to know why. Assuming that we pass this Bill, do the Government propose immediately, if they survive the elections, to take over ‘ the States debts ? Certainly not. I say that neither this nor any other Government would dream for a moment of taking over the States debts until an arrangement had been arrived at with the States; and, so far as I can see, no arrangement is likely to be arrived at until some one suggests a scheme more acceptable to the States than any which has yet been put forward. No Federal Government has shown a willingness to take over (he Stares debts unless the States are prepared to surrender some portion of their liberty to appear on the London market as borrowers. The position seems to me almost irreconcilable. I do not think that the Commonwealth ought to take over the States debts unless they have an assurance that the States will not venture on the London market ; and, on the other hand, I do not think that the States will give that assurance, nor do I, as an elector of New South Wales, think that they ought to. I cannot conceive that the best interests of New South Wales, with its enormous undeveloped territory, and the great demands of its land and railway policies, are to be conserved by tieing its hands as to borrowing. Are the Federal authorities prepared to take over the existing debts, leaving New South Wales with a free hand to pile up another national debt? That is the crux of the whole position. Until we can adjust and reconcile those differences, which appear to me at present to be irreconcilable, it is idle to go on with this Bill or any Bill of a similar nature. Senator Walker, and also Sir John Forrest, have pointed out possibilities of savings ; but I see no such possibilities. If there were a prospect of immediate saving, I have no doubt there would be greater chance of an agreement being arrived at between the Commonwealth and the States. On what does Senator Walker rely in his assumption’ that the Commonwealth would be able to effect savings?
– We must wait for the psychological moment, and does the honorable senator think that it may not arrive within the next three years?
– If it be the psychological moment for the Commonwealth, it will be equally the psychological moment for the State which requires to borrow. We have it now in the case of Victoria.
– Victoria can borrow at 3 J per cent.
– Does Senator Walker think that the Commonwealth will be able to borrow at 3 per cent. ?
– I think that the Commonwealth will be able to borrow at 3 per cent, within the next three years.
– Then Victoria would also be able to borrow at the same rate within the next three years. The question is what can we do to-day; and I say that Victoria could float her loan just as advantageously as could the Commonwealth.
– The honorable senator does not know ; the Commonwealth has never had a loan.
– It is equally a matter of statement or assumption on the part of Senator Walker and Sir John Forrest that a Commonwealth loan would be floated more advantageously than are State loans. Whenever this subject is under discussion, we are told that, because the Commonwealth has the revenue-yielding branches of taxation in the Customs and Excise, therefore the English money-lender will naturally look with more favour on the Commonwealth as a borrower.But I ask Senator Walker whether the English moneylender will ignore the revenue-yielding assets of the States? If the money- lender pays any attention at all to the revenue, and sources of revenue, will he ignore the fact that in New South Wales the railway and other assets yield a revenue not quite equal, but almost equal, to the amount of the interest ?
– There is the guarantee by the States.
– Have the States agreed to give an indemnity?
– Under the Constitution, the States are bound to give an indemnity.
– That is, if we take over the whole of the debts, and I am discussing whether it is advisable to take over the debts. If the States did give an indemnity, they would retain the assets. What would the indemnity of a State be worth any more than the assurance of the State to the English money lender that it would pay its debts when they became due? Suppose the State failed in its indemnity, what would the Commonwealth do?
– Impose direct taxation.
– On the individual State which failed?
– The whole of these interjections bring me to my objective. In every proposal made here or elsewhere, the one object I have is to bring about an absolute divorce between the Commonwealth Government and the States Governments in matters of finance. All the proposals yet submitted depend on one of two things - either we are to take over a liability of the States greater than the amount of money which at present is returned to them, looking to them to make the Commonwealth an annual payment, or, on the other hand, the Commonwealth must make an annual payment to the States. Of all the proposals put forward, the simplest seems to be for the Commonwealth to undertake to pay the States a lump sum every year, and let the States do exactly what they like with their loans or the money they receive. I admit the difficulties of that plan, but it does bring about the one objective I have - it leaves the States absolute masters of their own business, and quite independent of the fluctuations of the Commonwealth balance-sheet. The plan leaves the States without any necessity or inducement to approach the Commonwealth Government in any way, and it leaves the Commonwealth Government entirely free to levy whatever taxation is required in the knowledge of our obligations. Every financial scheme submitted by the present Treasurer or other gentlemen - and even the suggestions of Senator Walker - involve frequent contact between Federal and State finances; and it is that which induces me to regard the present proposal as entirely useless. Let me remind honorable senators that this is a Bill to amend the Constitution. If there were an immediate purpose to put a scheme into effect, and this proposal were adopted by the electors, I should say by all means “go ahead.” But what is the position? We are asked to place before the electors a proposal to amend the Constitution, with no assurance or guarantee that, if we obtain the authority, we shall use it, We have no guarantee that after we have obtained the authority it will not be necessary to again ask for power to alter the Constitution in some other particular. And we cannot know anything definitely on this point until we have thoroughly threshed out the matter with the States. The proper course would be to determine with the States what we are prepared to do, and what they want us to do, for the mutual advantage of both Commonwealth and States. Having matured a scheme, and worked it out to the last detail, we should know exactly what amendments of the Constitution were required, and could go to the electors with a clear statement of what Parliament proposed to do in the way of financial readjustments, and ask their sanction thereto.
Senator Col. NEILD (New South Wales) [5.10]. - We seem to have arrived at a roost extraordinary position. A Bill has been sent from another place, and we have struck out all that Bill with the exception of the short title, and have inserted an entirely new clause. I do not propose to take a point of order, but certainly it will be a very debatable question in another place whether this is the Bill that was originally introduced. A more complete cancellation of a measure was never seen in any Parliament in the world. The Government proposal has disappeared and there is now a proposal of the Senate under consideration. This is not a Government Bill unless the Governmentpin their faith merely to a short title. It is a
Bill which has been prepared practically by a Committee of this Chamber. I do not know whether the circumstances under which the Bill was introduced in another place were such as to enable the Bill now before this Chamber to be properly before another place, if it be sent there. At any rate, the original Bill was one to alter section 105 of the Constitution. That proposal has gone by the board, and now we have a proposal, emanating from a Committee of this Chamber, to add a new clause to the Constitution. The outcome of all this certainly is that in another place the statutory majority which enabled the passage of the Bill there will not sullies to pass the Bill which will be returned, because it is not the same proposal. If the Bill now before the Senate is sent to another place, there will have to be found a statutory majority, or the whole measure will come to an end. If in view of the fact that there has been a large exodus of honorable members, the Government cannot be sure of securing a statutory majoritv in another place, why do the Government waste time by going on with this Bill day after dav? There are matters of much more urgent consequence to be engineered - harvester manipulation, and things of that sort. The position must be of interest to any one who watches the development of the Constitution with the keenness which I know you do, sir, and which I venture to do at a great distance behind. What will be the fate of this measure if it should pass here, it is impossible to tell, and the Government are undoubtedly wasting time in going on with it. I believe that their anxiety to go to a division this afternoon is based on certain intelligence that the Minister of Defence has obtained whilst acting as his own whip, a novel position whichI regret to see a Minister of the Crown and leader of the Senate obliged to assume, and which does more credit to the honorable senator’s enthusiasm, and the whole-heartedness of his desire to get his measures through, than it does to the circumstances which have placed him in so invidious a position. Some time ago I referred fully to the question whether the Commonwealth with 5 s. in the £ can borrow more satisfactorily than can the States with their large interest earning assets. I make only a reference to the matter now,because whether the measure passes into law or not, it must be the subject of a great deal of friction in discussion, if not in fact, between the States and the Commonwealth. It must tend to bring the Federation into conflict with the free powers of the various States. If there is a power overhanging the States to take over their debts in whole or in part at any moment, it must interfere with the freedom of their operations in the money markets of the world. It may be said that this is merely an extension of a provision of the Constitution. So it is, but there has been so little regard paid to that provision of the Constitution since Federation was inaugurated that no Government has attempted to take action under it, and all that has been done has been to set up various schemes with the object apparently of marking time, and of keeping a verr ugly and difficult problem carefully out of harm’s way. In the circumstances this movement at this time of the session, and introduced as it has been, is very little more than an electioneering placard which it is expected will be useful to some persons in the course of the next month or two. If I were in the happy, or the unhappy, position of having to regard electioneering possibilities, it might be thought that I would take a different view, but I am expressing views now that I have entertained for a great length of time. I do not think that the Commonwealth will be able to borrow on better terms than the States, and that is a view which I enunciated when I delivered an address at the Imperial Institute, London, quite ten years’ ago in connexion with the subject of Australian Federation. I hope that the measure will be defeated, as I think it would be very advantageous to have this complex question postponed to a time when, according to parliamentary usage and responsible Government, it might be properly debated without honorable senators being under the strain of speaking with the crack of the whip of time in their ears. The Government are so indifferent to their own measure that they have abandoned their poor little bantling, and have accepted in its place something so entirely unlike what they proposed that their present action does not seem to me to indicate a desire for real legislation, but rather a feeling on their part that they will have something to put before the electors. If this Bill be passed into law, it will not be the Bill of the Deakin Government, but the Bill of the Senate.
Question - That the Bill be now read a third time - put. The Senate divided.
Majority … … 17
Bill read a third time.
Debate resumed (vide page 5798).
-25l- - When the debate on this measure was interrupted, I was dealing with the report of the protectionist members of the Tariff Commission on stripper-harvesters, and had referred to paragraph 16 of that report. I quote this further paragraph from the same report -
It is necessary to draw particular attention to the fact that the above-named factory cost of the Australian-made stripper-harvester is merely an estimate, based upon a deduction from facts stated by Australian manufacturing witnesses, who refused to give details or particulars of their factory costs and profits. Whilst strenuously contending that the invoice price of the imported machine should be fixed at not less than £60, they declined to disclose their trade secrets by stating their own factory costs and profits. It is necessary also to draw attention to the fact that the above tables, as far as they relate to the Massey-Harris and International Harvester Companies, are based upon the “Customs duty of £5 4s. 7d., according to the invoice price of ^38 odd ; by the re-assessment of invoice valuation the invoice price for the purpose of duty has been increased to £65, involving an increased duty of /a 17s. 1 id. If that increased duty be deducted from the profit of the Massey-Harris Company they would then only show a profit of 3s. iod., and if the same increased duty be deducted from the profit of the International Harvester Company they would only show a profit of £10 3s. 2d. It appears, however, from the evidence that the International Harvester Company has reduced its selling price to ^70 cash, and at that reduced price it would appear that, after paying the increased duty of £2 7s. nd., they would be selling at a loss of 16s. lod. ; at the same time, the representative of that company denies that they have ever sold machines at a loss. The increased duty, he said, was paid under protest, and his company is in hopes of getting it refunded.
With which hope I cordially agree -
When asked to explain on what particular items he could reduce his costs to enable him to sell at a profit at the reduced price of £70, Mr. L. H. Cowles said a reduction could be made in respect of the invoice cost of £38 10s. iod., and in the cost of sale.
This is an important statement, because it really means that the representative of the International Harvester Company said that their cost of manufacture could be reduced below the price originally quoted and used by the Tariff Commission as the basis of their calculations. I do not think that, at present, I need deal any further with that part of the report, which was signed and framed by the protectionist, members of the Commission. I now propose to quote material statements made by witnesses in answer to questions, because I think it is only fair for me to bring their evidence under the notice of the Senate. I have spoken about the mode in which the Commission ascertained the cost of manufacturing harvesters. I shall be ready to refer any honorable senator to the questions and answers which supplied the Commission with the facts. I shall take first of all the evidence given by Mr. Moore, who represented the firm of T. Robinson and Company, agricultural implement manufacturers, of Melbourne. In answer to questions 15825 and 15833, .he said that the cost of their raw material for each harvester was about the same as was claimed to be the original invoice price of the International Harvester Company’s machine, that is £26. He added that wages involved 30 per cent, of the cost of the machine, that cost being the selling price. From these statements, Mr. Patterson deduced - and he made a fair deduction - that as £26 was 70 per cent, of the cost of the locally-made harvester, the whole cost would be £$7 3s-‘j and, adding thereto 10 per cent, for overhead charges, the factory cost would still work out at under £41.
– Who is Mr. Patterson ?
– Mr. Patterson is the representative of the Massey-Harris Company. I believe that even the protectionist members of the Commission will readily admit that nothing could have been more straightforward than the manner in which he gave his evidence on oath. He shirked no question, he evaded no detail, however small. He was perfectly willing to meet every question, and to give a complete and exhaustive answer. I do not believe that a member of the Commission had the slightest doubt as to the< truth of his evidence. If he did not disclose the ‘whole truth, that was the fault of the Commission, because we had no witness at any time, or on any subject, who was more ready, with one reservation, to disclose all the facts bearing On the cost than he was, and that reservation was the submission of his books to a chartered accountant, or to the Commission, if Mr. McKay and other “Victorian manufacturers would do the same. Mr. Patterson said, in his evidence, that the extra, charges in the factory, of Massey-Harris were only 4 per cent. I m’erely quote that detail in order to show that when he allowed a margin of 10 per cent, to Australian manufacturers, he acted in a generous spirit. He proved to us conclusively that his own firm’s expenses for the incidental items come to only 4 Der cent, but, he said, “I readily grant 10 per cent, to Australian manufacturers.” I now come to the evidence given by a witness of whom, I frankly admit, much might be said. I have, I suppose, only to mention Mr. Weickhardt, when every honorable senator will at once recognise that I have named a witness about whose evidence there can be differences of opinion. He was an ex-employ6 of Mr. McKay. I suppose that mv experience in this matter is not unusual, but I have to say, with great regret, that, during “the course of our work, we more than once were forced, reluctantly or otherwise, to come to the conclusion that nothing could be more difficult than to get evidence from an employ^ of a firm - that it could only be got when, to use an Irishism, he was no longer an employe
– The only opportunity which a man has to speak is when he gets his quietus.
– I agree largely with the honorable senator, and it is a great pity that any one has to make such an admission with regard to the workmen of Australia. It was brought home to us more than once in the case of not only this industry, but many others, that working men were either so tied clown to the necessity of working in that particular employment, or so harassed by fear, that if they left they would not get other employment, that it was an almost impossible task for us to extract the whole truth, and certainly these men were amongst the principal class who could have given evidence.
– It may be taken for granted that if they could have given evidence favorable to their employers the road would have been made easy for them to give it.
– We had, unfortunately, instances of the kind suggested. I remember an instance of an employe, who, I am sorry to say, was evidently giving his evidence because he recognised that it was to his advantage to do so. No doubt an attempt will be made to disparage, perhaps to discount entirely, the whole of Weickhardt’^ evidence. But, so far as I could judge, his attitude was quite fearless. He challenged contradiction in every, possible way. He went into the most minute details, giving names and dates. He gave a lot of evidence with regard to employes of McKay, but I venture to say that, in no instance, did he refrain from communicating the names of men whose wages were low, or doing all he could to put us in touch with a man. He said : “That is .the name of a man who was employed by McKay on wages sometimes as low as 10s. a week, and that is his address as I last knew it. If the Commission want to hear from the man they can call him to substantiate or to deny my evidence.” No man could have attempted more fully to show his bona fides than did Weickhardt.
– Did the Commis-. sion call those men?
– We did not, but the ‘challenge was made public to McKay, in fact, to every one connected with the industry, to refute anything which Weickhardt had said. I shall deal presently with the way in which the challenge was accepted : but at present I prefer merely to quote from his evidence. He had been a foreman for two years in McKay’s employment. He certainly had had the best of opportunities to ascertain what the cost of manufacturing a harvester was. He gave his evidence in a most direct and unswerving way, with regard to not only the cost of manufacture, but also every cost incidental to the inquiry. Summarizing his evidence, he said that the highest estimate which could be placed on the cost of the material was .£23, the cost of wages was £9 17s. 2d., and the overhead charges were 5 per cent., or £1 2s. iod., making a total of £34. That sworn evidence was given by a man who for two years had been employed by McKay as a foreman, and who certainly must know, if a man employed by McKay at any time ever could know, what the cost of manufacturing a harvester was. I propose to refer to a portion of his answer to question 64825, because I think it bears out what I have said. I cannot read the whole of the reply, because it happens to be part of Weickhardt’s original statement, but it is well worthy of the consideration of any one who wishes to ascertain as far as he can from the evidence what the facts are -
It is obvious that, in summarizing and adding the incidental charges, and bringing the total cost up to ^34, Weickhardt was acting as Mr. Patterson did, in a generous spirit towards McKay.
– Would the honorable senator mind reading the passage again?
– I shall read from the beginning of the previous paragraph -
Now let us look at the cost of material. ‘Castings cost, finished, 14s. ner cwt. ; sheet metal, 16s. 6d. per cwt. ; timber, about ros. cwt.
T desire to show that Weickhardt gave his evidence in the most direct and specific manner possible. Not merely to a general summary, but as to all the items.
– What department did he supervise?
– I cannot recollect.
– I think I can help the honorable senator. He was a tinsmith.
– I only know that he was a foreman. On page 191 4 (question 73770) there is the following piece of evidence from the same witness -
Do you say that the cost of each of these harvester machines in labour is £y 10s. ? - I am allowing £10 to give them the benefit of the odd shillings and pence. I have worked it out in different ways, and I cannot make it come to more than that. I can give particulars, if necessary, as well as the names of the men, together with the .wages they receive.
I could of course quote more, but I do ‘not wish to elaborate this point more than is necessary. I desire to draw attention 10 the salient features regarding the implement itself. I will refer to a question” put to a witness named McGregor, and to his answer. It is to be found on page 1874 (ques.tion 66195) -
Your computation of £§ is approximately 30 per cent, of the whole. I understand you put the cost of wages at ^’9, and material ^20? - Yes, making ^’29 in all.
This witness was a farmer, but he had had some practical experience in the construction of these machines’. He had used them also, and knew more about them than perhaps the ordinary farmer would do. He must have had particular knowledge, or he would not have made that statement. It largely corroborates Weickhardt’s evidence, and I think it is especially material to the case. Before I leave the witness McGregor I would say that amongst other statements he made was one to the effect that Mr. H. V. McKay told him that the factory cost of the machine was £30. We had no reason for supposing that this man would have made such a statement if it had not been perfectly true. It was quite in harmony with the evidence of other witnesses as. to cost. I come now to the evidence of Mr. Rees, an engineer connected with Hawke and Company, of Kapunda. His evidence is to be found on page 1687 (question 47863) -
The complete machine costs 3d. a lb. right through ? - Something like that.
I do not attach particular importance to an answer so vague, but draw attention to it, because it is another way of estimating the cost. ‘ On the ascertained weight of the machine 3d. per lb. would work out at something under £30. We ako had some evidence from another farmer named Nowotna, whose testimony was, very sEN. ficant. It is to be found on page 1882 (questions 66409-10). It is to the effect that the witness was a shareholder in the McKay Company some years ago, and that a local manufacturer of machinery at Horsham constructed 50 machines for the company at ^50 each. If a small firm in an up-country place could make these machines for £50 at a profit, the witness argued that it should be quite possible for a firm with modern up-to-date equipment to make them at a much lower cost. From that argument I do not suppose any one would differ. I wish now to refer especially to the evidence given by Mr. Geo. Bult, who was an employ^ of McKay’s, and was sent by McKay to refute the evidence of the witness Weickhardt. I think I said in an earlier part of my speech that while the witness was sent by McKay to reply to Weickhardt’s evidence, and while his evidence does purport to be a refutation of many of Weickhardt’s statements, Tie was absolutely silent with reference to the cost of manufacturing the machines. Further than that, he absolutely refused to give any evidence on this most important point of our inquiries. The following are some of the questions and answers forming part of Bult’s evidence (question 66517, page 1886) : -
Did you read Weickhardt’s evidence wilh regard to the manufacturer’s cost of producing the harvester ; did you see where he estimated the cost at ^30? - Yes, I saw that.
What have you got to say about that, or do you wish to say anything? - I am not in a position to criticise that part of the business, and I don’t think Weickhardt is.
– From what source did the Commission receive the information that this witness was particularly commissioned bv McKay to give evidence?
– I do not think there is the slightest doubt about it. The evidence shows it. He came to refute the evidence of Weickhardt, and was an employe of the company.
– That does not prove that he was sent by McKay.
– It does not prove it; but I do not think that any one can have any doubt about it.
– As a matter of fact, the employes themselves passed a resolution to the effect that Weickhardt was utterly unreliable.
– If the honorable senator will look up the evidence, I do not think he will have any doubt that
Bult came before the Commission for that special purpose.
– I did look it up, and that is why I asked the question.
– I can assure the honorable senator that the Commission asked him, and that he made the clear statement that he had come for that specific purpose. He came with a long written statement. There is no question about that at all.
– Is there not more evidence that he was sent by the employes than that he was sent by McKay?
– If the assertion is made that the employes induced Bult to give evidence, I have to say again that the men were called together bv McKay and asked to appoint some one to attend and refute the statements of Weickhardt. There is no doubt about that.
– I think it is a subject well worthy of ventilation.
– I quite agree. Bult’s evidence goes on -
You are not prepared to deal with that at all? -No.
Either with that or the cost of the labour in producing the machine ? - No.
You do not wish to enter into that? - No.
While much that is significant may be obtained by positive evidence, there are times when a negation like that seems to have more weight and value than a direct and positive statement. Consider the circumstances. Every one knew that one of the main objects of our inquiry was to ascertain the cost of these machines. It was known that McKay himself, on more than one occasion, had refused to give any information on the subject. Attention’ was specially drawn to the fact that Weickhardt had given evidence as to the cost of production. This man Bult came to refute Weickhardt’s evidence. He knew that no part of Weickhardt’s evidence was considered more important, and that nothing that he stated was of more tangible and definite than the cost of producing the machines. He knew that they had been sold at a minimum of £85, and that it had been asserted that the cost of production was only £30. Naturally, it was expected that when Bult came before the Commission he would be ready to go into that. For those reasons, I say that, while we attached considerable importance to the positive evidence, this negative evidence was extremely eloquent.
– Did Bult deny the statement of Weickhardt that the wages were as low as he said?
– Bult made, various denials, but I can say quite honestly that his contradictions were not highly satisfactory. There were many gaps not filled up, even by his evidence, and when he was pressed as to certain individuals, times, and places, he failed to answer the questions. I admit that he gave a denial to many of the statements made by Weickhardt.
– That is what he went there for.
– He went there for the purpose, and he would have been a poor witness if he could not have made out some sort of a case. I say without hesitation that the balance of credibility was with Weickhardt’s evidence, taking the word of one man as against another.
– But Bult had no written statement as to the wages ruling at the Sunshine Harvester Works.
– Bult said in his evidence, “ I was asked on Saturday afternoon to give evidence on behalf of the men.”
– Senator Clemons said that- Bult was sent by McKay to give evidence, whereas Bult says that he was asked bv the men to do so.
– No doubt if I chose to spend the time I could convince even Senator Trenwith that a great deal of Weickhardt’s evidence could be absolutely relied on. The question arose as to the cost of iron, which is the chief raw material used in this industry. It has been asserted, without the slightest foundation in fact, so far as I- know, that the cost of iron is greater in Australia than it is in America. I am bound to say, however, that these assertions made from time to time by witnesses were merely’ expressions of opinion based on no official record, and, as a matter of fact, that opinion, while honestly given, was sometimes really wrong. There is also evidence which some persons may be inclined to say is no good, because it comes from Mr. Patterson. I hope, however, that we shall not hear that said, because I believe that Mr. Patterson was honest in his statements. That witness quoted facts and figures from official documents relating to the cost and. so forth of iron in various places. He said that the price of pig iron in England was £2 8s. ; in Toronto, £4 2s. 2d. ; in Pittsburg, £3 is. 6d. ; and in Sydney or Melbourne, £2 17s. 6d. The table he quoted clearly shows that the cost both in Canada and the United States was higher than in Australia at the same time. Mr. Patterson also quoted figures relating to bar iron or mild steel, the price of which in England was £6 10s. ; in Toronto, £8 6s. iod. ; in Pittsburg, £1 10s. ; and in Melbourne or Sydney, for Belgian iron, £fi 4s. gd. ; and for English iron, £1 10s. I do not think there is a member of the Commission, who is not convinced that iron is cheaper in Australia than in America or Canada. Now I come to the question of wages, and the payment for overtime. It has been asserted that Mr. McKay has to pay higher wages than he ought to, or that he is handicapped by what he has to pay for overtime; and I shall quote Bult’s evidence on the point. Bult, in answer to questions 66533-8, said practically that the employes are required to work overtime if necessary, and that for such overtime they are paid at no higher rate than for ordinary time - that the men do not even get an allowance for tea - and that it is not the practice to pay overtime in the agricultural implement trade. That was the evidence of the man who was sent by Mr. McKay, or, if Senator Trenwith objects to that, the man who was sent by his fellow employes, to give evidence.
– I think that would be the fairer way to describe the position.
– We had evidence as to the wages paid, and a comparison with those paid in Canada. I shall quote the Massey-Harris factory as compared with the factory of Mr. McKay in the matter of wages, and the comparison comes out in this way : Fitters in the Massey-Harris factory, £2 13s., as compared with £2 us. 6d. in McKay’s factory; joiners, £2 15s. 5d., as compared with £2 ns. 3d. ; painters, £2 16s. 8d., as compared with £2 15s. 6d. ; blacksmiths, £3 4s. sd., as compared with £2 9s. 6d. ; moulders, £2 16s. 8d., as compared with ,£2 10s. 6d. The evidence was clear and unmistakable that higher wages are paid in Canada than in similar factories in Australia. I think, perhaps, I might again refer, incidentally, to the enormous cost of distribution. I have already said that, in my opinion, those costs are far too high, and that they are largely at the root of the trouble, if there is any trouble, in this and other industries in the Commonwealth. Of all the witnesses who came before us, there was none who confessedly was so lavish - so wanton almost - in his expenditure on distribution as Mr. McKay. I think it will be found from the evidence, that he spends an enormous amount in advertising. It is within the knowledge of every honorable senator that no man connected with any Australian industry indulges more lavishly in advertising than does Mr. McKay.
– We have only to look at the back page of the Bulletin to see that.
– There is hardly a newspaper in the Commonwealth which does not show traces of enormous expenditure in this direction by Mr. McKay. That expenditure may or may not be justified ; but I do not think that the farmers and others who use these machines should be compelled by legislative enactment to make up to Mr. McKay the enormous amount he distributes in various forms - I accentuate “ various forms “ - of advertising. The figures as to the output of these machines are very illuminating, and, being official, they are not in the same category as ordinary evidence.
– I think there ought to be a quorum. [Quorum formed.]
– It was asserted by Mr. McKay that he could not carry on without additional protection, which, of course, meant additional profits for him.
– Is it absolutely necessary in the interests of the Commonwealth that Mr. McKay should carry on.
– First of all, Mr. McKay never made such a contention as that he could not carryon without an additional duty.
SenatorCLEMONS.- Then why did he ask for the additional duty ?
– Because he was threatened with extinction by one of the most powerful financial institutions in the world.
– I think that Mr. McKay invented that threat. There was no evidence that the threat ever materialized - we could find no source of origin for it except in Mr. McKay’s own imagination. I shall not deal with that sort of statement, but with facts and figures. In the year 1899 the output at Mr. McKay’s establishment was 301 machines, and in 1905 it had risen as he himself admitted to more than 1,500 under the Federal Tariff. It is generally understood that the output for last year was nearly 2,000. Mr. Bult, in his evidence, stated that in 1905 the output was 1,930 machines - a shade more than the output of 1904, which, I take it, means that the figures for the two years were pretty nearly the same. The total number of harvesters imported in 1905 was 1,730. We are confronted with the fact that one man made 1,930 machines in Australia, as compared with 1,730, which represents the total imports. When we remember that there are at least twenty-four other manufacturers in the Commonwealth, and that the total number sold from all sources was between 5,000 and 6,000, we can easily understand what a large and domineering position Mr. McKay occupies in connexion with this industry.
– Mr. McKay is the largest manufacturer; but what does the honorable senator mean by “ domineering ?’ ‘
– I am sure that Senator Trenwith need not quarrel with that term, which may most properly be applied to Mr. McKay. The term applies not only to all that Mr. McKay has said, but to all that he has done. It certainly applies to Mr. McKay’s attitude before the Tariff Commission, and it applies with extreme exactitude to his conferences with the Minister of Trade and Customs.
– What was the total number of machines imported in 1904?
– I have the number, and I know that a great many remain unsold at the present time. I now come to another statement which was not given in evidence before the Commission, but which appeared publicly in a Melbourne newspaper under the signature of Mr. McKay. It covers the years 1901 to 1905, and is very instructive as showing what Mr. McKay has himself said, and actually published in a Melbourne newspaper, in one of his rare moments of frankness -
In the year 1901 the number of machines locally made was 1,500. There were none imported, and the total sales were consequently 1,500. In 1902 - locally-made, 500; imported, 160; total sales, 660. 1903 - locally-made, 2,000; imported, 500; total, 2,500. In1904 - locally-made, 3,500; imported, 1,700; total, 5,200. In 1905, the last available year, the sales of locally-made harvesters were 4,000; imported, 1,400; total, 5,400.
On these figures I make only this comment - that of the 4,000 locally-made machines sold, probably 2,000 were sold by Mr. McKay. It seems fitting that at this stage I should refer to another aspect of the business, and that is the export trade. Mr. McKay had established so enormous a business under the Federal Tariff, the efficacy and value of which he disputes, that he was in a. position to turn out and sell half of the total of locally-made machines sold in the Commonwealth in 1905, and, in addition, in that year he exported a great number of harvesters, chiefly to the Argentine Republic. In 1905, the total exports of harvesters from Australia numbered 419. I will not say that they were all Mr. McKay’s machines, but it is admitted that nearly all were his; I think I may say that 99 per cent. of the machines exported were Mr. McKay’s. These machines were exported chiefly to the Argentine, and, according to the Customs valuation, represented a sum of £30,192. In the seven months of this year, 1906, Mr. McKay has exported 484 machines, of the total value of £32,318.
– That is very criminal.
– No, it is very satisfactory. I congratulate Mr. McKay and the Commonwealth upon it. Senator McGregor holds an entirely mistaken view if he believes that it is criminal for industries to flourish in Australia. Such a view is not held by honorable senators on this side, and no one can say from anything, I have said or done that I could ever hold such’ a view under any circumstances. Whether Mr. McKay has increased the price of his harvesters to the detriment of the consumer is another question. I. have shown that, under the Commonwealth Tariff, with the protection of a duty of 12½ per cent., he has been in a position to turn out 2,000 machines for local sale, and over 400 for export. It will, perhaps, be interesting to honorable senators to know at what price, according to his own sworn evidence, Mr. McKay sold his machines in the Argentine Republic. We know what he sells them for here. Australian farmers may be congratulated that, whilst, as consumers of harvesters, they have, in my opinion, and in the opinion of a great many other people, to pay far more than they ought for these machines, they are still very much better off than the farmers in the Argentine, because Mr. McKay sold his machines there, according to his own evidence, for the sum of . £140 each.
– No. They were retailed for £140 each in the Argentine, but Mr.. McKay did not sell them for that.
– Then what happened ?
– The importer in Argentine did what importers everywhere do. When he had the people in his grip he held them there.
– Mr. McKay, in his evidence, stated that he had, and probably has now, in the Argentine a person who is known as a purchasing agent. Senator Trenwith can define the functions of a purchasing agent as he pleases, but there is no doubt that Mr. McKay’s machines have been sold in the Argentine at £140 each.
– That is what we should have to pay for them here if we had no local manufacture.
– The honorable senator has referred to a sum of , £30,192 as the valuation of harvesters exported.
– I am glad that Senator Best has mentioned that. It is significant that the sum to which he has referred is a Customs valuation. The figures I have quoted were supplied by the Customs authorities, and, according to them, in 1905, 419 machines were valued by the Customs for the purpose of export at £30,192, which Senator Best will see runs out to a trifle over £70 for each machine. In 1906, 484 machines were exported, and the Customs officers valued them for purposes of export at £32,318, which works out at a little less than £70.
– A natural consequence of the increased trade and cheaper production.
– The export price given by Mr. McKay was under £70 for machines sent to the Argentine, where they were sold at just double that price, or £140 each. Mr. McKay might tell the Customs authorities that £70 is a fair price for his machine, but he cannot be accused of having ever sold, them to Australian farmers at that price.
– Wholesale dealing always carries with it lower prices than retail dealing. He never sold to an Australian farmer the number of machines he sent to the Argentine.
– I am assuming that Mr. McKay must have given the Customs authorities £70 as the fair export price of his machine, and that is much lower than he has ever allowed Australian farmers to get his machines for.
– He has to add distributing cost.
- Mr. McKay can never be accused, to the best of my knowledge, of ever having sold one of his machines even at his factory in Melbourne for under £70. Seeing that Senator Playford has admitted that he did not pay any attention to’ the report of the four free-trade members of the Commission, though they were numerically equal to those who framed the report to which the honorable senator did pay attention, I think I am justified in reading the conclusions to which they came, at least once, for the information of the Senate. They summarized them as follows : -
That paragraph is abundantly justified when we remember the agitation that was stirred up, especially in Melbourne, with respect to stripper-harvesters, and that whilst the Tariff Commission was sitting, and before they had completed their report on stripper-harvesters, Mr. McKay, who had given evidence before the Commission, was actually engaged in intriguing - I think I am absolutely justified in using such a term - with the Minister of Trade and Customs for the purpose of securing a higher rate of duty, and, if he did not succeed in inducing the Minister to do that, he at least succeeded in inducing him to put forward, what I say, is an absolutely false and unwarrantable estimate of the cost of the imported machines in the country of origin.
– It was based upon the importers’ invoices.
– It was not based upon anything of the sort. That was denied absolutely and conclusively as the result of an inquiry instituted by the Canadian Government. The Canadian Department of Trade and Customs, at the request of some one in the Commonwealth, made special inquiry into that matter, and the finding of the inquiry was absolutely contradictory of the statement made by the Minister of Trade and Customs that £65 was the fair value of these machines in the country of origin.
– The point I urge is that that was the valuation according to their own invoice in Italy.
– If Senator Trenwith is going to rely upon that–
– I do not rely upon it; I merely state a fact.
SenatorCLEMONS.- The less that Senator Trenwith or any one else says about the incident in Italy the better for the reputation of Mr. McKay.
– I am not saying that it was proved.
-All that was proved was that the whole thing was so ridiculous and contemptible that I venture to say that neither Mr. McKay nor any one else will attempt to defend it any longer. Senator Trenwith referred to a statement made in private correspondence from Italy, and pits it against the statement of the Canadian Government, made after inquiry.
– I do not. I do not say that it was correct, but I say that it was the basis of the estimate of value.
– I will leave it to the Senate to say to which statement the greater importance should be attached. I do not think that honorable senators will attach any importance to the Italian correspondence. The second conclusion of the free-trade members of the Tariff Commission reads -
That the introduction of stripper-harvesters during the last four years from Canada and America has had the effect of increasing the demand, stimulating the skill and enterprise of Australian manufacturers, and supplementing rather than supplanting local production.
Every word of that paragraph has been conclusively justified by the evidence. We have proved up to the hilt that the demand has increased ; the competition, such as it was, representing only one-third of the total output, certainly had the effect of stimulating the skill and enterprise of the Australian manufacturers; and I say further that, instead of supplanting local production, the figures I have given prove that the most the importations did was to supplement it.
Sitting suspended from 6.30 to 7.45p.m.
– The third finding of the four free-trade members of the Commission is -
That the manufacture within the Commonwealth is rapidly expanding, and that in addition to supplying the larger part of local requirements a considerable export trade to neutral markets is being profitably carried on.
With the absolute truth of that statement no honorable senator can quarrel. If is perfectly true, as the figures show, that the manufacture of stripper-harvesters within the Commonwealth has been, . and is, rapidly expanding. It is equally true that, in addition to supplying the larger part of the local requirements, a very considerable export trade to neutral markets is being profitably carried on. The fourth finding refers to the export trade, which I have dealt with. The fifth finding is -
That the conditions of competition in Australia do not necessitate any increased protection to local makers, who are at no disadvantage in regard to cost of manufacture except when their equipments and methods are inadequate.
I haw pointed out and given figures to show that the rate of wages in Australia is a little less than that which is paid in the competing countries, but in order that I may not be accused of not stating the case fairly or fully, I shall admit at once that to a large extent that statement is qualified, though, in my opinion, it is in no way materially altered by the fact that the method of production in Canada and the United States is not precisely the one which is adopted here. I refer, of course, to the number of hours worked, especially to the different system in vogue in those countries of adopting piece-work more than is done here. The subject of piece-work and payment by hours has come before the Commission in connexion with many industries, and, from the evidence given by many manufacturers in more than one industry, I am forced to the conclusion that they are inclined to think that they would get better results if piece-work were more largely adopted here. I am also forced to this inevitable conclusion, that employes have admitted freely and without pressure that it has one tendency, and that is to give higher wages to the better man. In the opinion of some persons it may, though I do not admit it does, press harshly upon men of inferior ability ; but, even if it does, it certainly has this, recommendation in the opinion of workmen who gave evidence, that it gives to a better man an opportunity’ of deriving an increased benefit from his additional skill.
– Piece-work is not applicable to all trades.
– I admit that in some cases it would be difficult to apply piece-work satisfactorily. I believe that in many industries it would result in increased profits and benefits to the manufacturers, and increased remuneration to many more able and efficient workmen. The sixth finding is as follows : -
That the evidence does not justify the fears expressed that the local industry will be seriously injured by outside competition unless the present Customs duty is increased. On the contrary, the evidence is clear that Australian manufacturers, by accepting reduced, but still ample, profits, could secure under the present Tariff a virtual monopoly of the whole trade, the price of the machine to users being much too great in relation to the manufacturing cost.
I should like to hear any honorable senator find fault with a single part of that conclusion. There is no evidence at present to justify any fear that the industry is likely to be seriously injured by outside competition. I admit that statements have been made to the effect that in the opinion of manufacturers, the industry is threatened, but so far there is absolutely no evidence which in the least degree justifies the expression of opinion that it is being crushed or injured in any way. I admit that a certain number of stripper-harvesters is imported, but I venture to say that no one in Australia will contend that mere importation to that limited extent constitutes a menace and danger to the Australian industry. I do not believe that the most ardent protectionist would say that. The Bill is nothing else but the clearest possible recognition on the part of the Ministry that hitherto the profits of the manufacturers have been too high, or in the words of the finding; -
Australian manufacturers by accepting reduced, but still ample, profits, could secure a virtual monopoly of the whole trade.
The reason for that finding is that if the manufacturers did accept reduced profits, which, of course, would mean a reduced price for the stripper-harvester so far as we could possibly ascertain by the evidence, importers, in order to compete, would have to effect some large economy, either in the United States or Canada, in the cost of production, or in Australia in the cost of distribution, which, as we all know, is decidedly less than that which is now borne by Australian manufacturers. The seventh finding of the four free-trade members of the Commission is -
That the request for an increased duty is not justified by the evidence, and that any increase, if made, would be prejudicial to agricultural interests, the continued development of which is necessary to the stripper-harvester industry.
There is only one answer to that conclusion, and that is that if we give to the local manufacturers the entire control of a commodity, the price will be reduced. That is an old protectionist argument, with which I do not intend to deal now. If there is any honorable senator who is so satisfied as to allow the Australian manufacturers to have an entire monopoly, feeling sure that, at the same time, the consumer would not be injured by the levying of increased prices, my answer is, “ Do away with, any pretence of allowing the imported article to come in. Do not fool with the question of levying a duty of £10, or £15, or £20, but. if you have other legislation which would bring about the desired effect, do away at once with any moderate protection, and boldly say that the article can be made here, and that it would be for the benefit of producers, consumers, and workmen in that industry, as well as associated industries, to prohibit importation by one short but effective clause.” There is no other answer to that position.
– The honorable senator would not support that proposal.
– I do not wish to be forced reluctantly to make a declaration about my future policv on fiscal questions ; but the time seems to me to be rapidly approaching when I and other men who sincerely believe in the policy of free-trade will be forced to accept, as the lesser of two evils, a policy of prohibition, trusting, to the experience of Australia to prove that it is a bad one.
– Let us speed the day.
– I wish the honorable senator would speed the day. I am rapidly becoming tired of the demand for increased protection, because I recognise, as I believe the honorable senator recognises, that, if an increased duty, whatever it may be, be imposed we shall not have reached finality on this question, and that the day will come sooner or later when we shall be told by Mr. McKay, or his legitimate successor, that the duty of or £12, as the case may be, is inadequate to protect the local manufacturers against an inroad of importations, and we shall then be asked to raise the duty to £20, or some other amount, per machine. I would sooner once, and for all, face the question of complete prohibition of importation, leaving the Commonwealth to make its financial arrangements to suit, and affording to the electors an opportunity to judge, and judge decisively and finally, whether that is or is not a good doctrine for Australia.
– That is a bold policy.
– I am not pretending that I approve of it, but I conceive it quite possible that, as the years roll by, many of us may ask for a definite policy of that sort, so that we shall not be called upon any longer to tamper with the question by fixing a duty in one Parliament, and raising it in the next. We have no guarantee that whatever protection is now given to stripper-harvesters, Parliament will not be asked to reconsider it. The final recommendation of the four freetrade members of the Commission reads as follows : -
We recommend that stripper-harvesters be classed and treated as other agricultural, horticultural, and viticultural implements and machinery, n.e.i., and no change be made in the existing form or rate of duty.
In concluding my references to stripperharvesters, I desire to remind honorable senators of a fact which, possibly, they have forgotten, and that is that the demand for increased duties in connexion with this industry, as well as others which came before the Commission, arose largely from the cry, especially in Victoria - it was scarcely heard anywhere else in the Commonwealth; no echo of it, I believe, reached other States - that a great many of our industries were languishing, being starved, dying. Is there any man in the full possession of his senses who can apply any one of those epithets with any accuracy to the stripper-harvester industry? Can it be said by the wildest protectionist enthusiast that- there is any languishing about that industry, that it is starving, that it is dying? The facts give the absolute lie to such a statement. The facts, which are incontrovertible, and based on official statistics, prove conclusively that since Federation it has made enormous strides. The demand for increased duties, therefore, cannot be defended on the ground that it is a strangled industry. I do not think that that cry could be raised with regard to another industry with which we have dealt this session. If we trace the effect to the cause which is represented by the Tariff, we find that the stripper-harvester industry has made vast progress ‘ during its operation. What is the cause of the demand for an increased dutv ?
It is not because the industry is dying or languishing. What is the reason? I do not know, unless it is the tremendous personal power of the chief man in the industry in Australia. What do we find from the figures? We find, taking the last year again, that the total number of machines imported was 1,730. The total number manufactured and sold by Mr. McKay’s firm was 1,930. All the rest of the manufacturers in the Commonwealth, at least twenty -three in number, produced 1,840. What is, then, the position as we find it? That one firm in Australia dominates - I am not saying “ domineers “ - the whole position. Are we, with our eyes open, to increase the facilities for that firm to dominate the position ?
– Who are the shareholders in the company ? That is what we want to know.
– I think it is owned by Mr. McKay’s family.
– I know nothing about the shareholders. I hope they are all Australians. I am glad to see any Australian industry flourishing. I am glad to see this industry flourishing. But there will be a danger, if Ave increase this duty, of producing not merely a flourishing industry, but an industry that may become a menace to the country. With regard to the Bill itself, the Government has recognised the desirableness of reducing prices to the consumers, and has therefore made an effort to make the operation of the duty conditional upon the price charged. I notice that Senator Trenwith who. at any rate, takes a keen interest in this matter of stripperharvesters - I hope I can say that without any kind of offence - has given notice of an amendment on this very question. His amendment suggests the danger to which I have alluded. On the one hand, Senator Trenwith has circulated an amendment which will operate as a safeguard to the manufacturer in enabling him to increase his price if an increase in the cost of his raw material takes place; but what safeguard has the consumer under this Bill ? The clause to which I refer is drafted on the assumption, first of all, that the cost price of these machines is going to remain fixed and permanent -for a definite number of years. It is also based on the assumption that the progress of the industry has reached its limit, and that the manufacturer’s cost is not going to be decreased.
What guarantee have Ave that in Canada, in America, or in the Commonwealth of Australia, the cost of manufacturing these machines will not Se materially reduced in the future?
– 1 think it will be.
– If it is, what guarantee have Ave that the consumer will get a corresponding reduction in price?
– None at all as to this Bill.
– I am glad that Senator Trenwith recognises that; but, at any rate, he is taking steps to secure that if the converse happens, for any of the various reasons that may operate upon the industry, the manufacturer shall be indemnified against any consequent loss. It is time some one spoke for the consumer ; and I say that clause 4, read in conjunction
Avith the schedule, offers no guarantee whatever to the consumer of what ought to be guaranteed to him, that if, through the advance of scientific methods of carrying on the industry, and consequent upon the activity and ability of the producers, a reduction in the cost of manufacture is brought about, the consumer will get that benefit which he has always been entitled to in every country in the world. This Bill denies that advantage to him.
– The Bill does not provide it for him, but it does not deny it.
– Competition amongst the various manufacturers will provide for that.
– Has not the consumer the benefit of that competition Avithout the Bill?
– This is a trust, if you like !
– I quite agree with Senator Neild, and thank him for the suggestion. I read to-day an agreement which represented the transaction of a most vicious trust or combine.
– The most complete one Ave have ever had in Australia !
– And which Ave have legislated against.
– We are legislating to do a thing which no Act passed by the Federal Parliament this session will affect, or impeach in any way whatever This Bill legislates to this effect - that no matter what the cost of manufacture maybe, the price of the article, so long as certain conditions as to wages are observed, shall remain at £70.
– That is the maximum price.
– It will not be more.
– How is it going to be made less? By’ the grace of the manufacturers ?
– By the same process by which it has been made less year by year since harvesters were made.
– That process has not been brought about owing to the action of the local manufacturers, but by competition from outside.
– I say yes. There has always been, even in protectionist Victoria, a certain amount of competition in this matter.
– Not from abroad.
– Certainly from abroad.
– How long?
– How long have stripper-harvesters been made? How long have they been produced in Victoria? The earliest date of which we can take notice is 1897. I admit that a few were made before that, but 1897 is the first year which we can recognise. In 1900 they were commenced to be made in Canada and the United States, and it is due to that competition that the price has been, as low as it has been.
– They have been made here for the last twenty-five years.
– I maintain that what I have urged is a fair objection to make ‘to this clause. With regard to the provisions of the Bill relating to Excise, which, to a certain extent, govern this Bill, I have to say that while I cordially indorse the spirit of them, and while I shall join heartily in trying to divert to the pocket of the consumer some of the immense profits that have been made out of the industry, I have grave doubts as to whether, even if we pass the Bill, we have the constitutional power to enact the provisions to which I refer. But in Committee I am not going to raise that point. The good intent of the provision is quite sufficient to insure silence on my part, so far as the constitutional question is concerned. The Bill deals not only with stripper-harvesters, but with a vast multiplicity of agricultural machines ; but I feel it to be quite impossible - and it would be wholly without justification at the present time - to deal with more than the harvester question. Therefore, I shall say nothing in regard to general agricultural implements as dealt with by the Bill. Without wishing to thrust my view upon any other member of. the Senate, it seems to me that those items are so diversified and numerous that they can be better treated in Committee. I do not propose, therefore, to allude to them in my second-reading speech, but when we get into Committee, I shall have something to say. I have to say in conclusion that the profits made in the stripper-harvester industry at the present time are enormous, and that the wages paid by the chief man in the trade, Hugh Victor McKay, are at any rate under grave suspicion.
– How can they be under suspicion ?
– The suspicion under which they rest is this : that they are unfair, and that they bear no justifiable proportion to the profits made in the industry. We had a considerable amount of evidence which is quite sufficient to show that Mr. McKay has, at any rate, been not less active in his desire to get wages as low as possible as in his desire to get increased profits.
– He is a good old protectionist !
– I should be very sorry if every protectionist had made as strong efforts as Mr. McKay has done to evade Wages Boards in Victoria, and to secure working men in Australia at an unfair rate of wage. I do not think that in making these comments upon this aspect of the question, which is very important, I shall be met with dissent from the protectionist members of the Commission. If they express their views, I am perfectly certain that they are bound to admit entertaining the same suspicion as to whether Mr. McKay’s treatment of his workmen has been such as to enable him with any fairness to ask for considerate treatment bv this Parliament.
– I have no intention at this stage to enter into a dissertation on the question of freetrade and protection -per se. The Commonwealth has adopted the policy of protection, and .there is no need at this period of the session to discuss the general principle. But I purpose dealing with an argument used by the honorable senator who has just resumed his seat. To start with,
I venture to say that he endeavoured to place an entirely wrong issue before the Senate, and, in order to do so, made a statement that is not borne out in any way by any evidence taken before the Tariff Commission. He stated that Hugh Victor McKay, who is one of twenty-three other manufacturers of harvesters in Australia, came before the Commission, and said : “ We cannot make these machines at a profit unless we get more protection.” That was never said bv any witness at any time during the inquiry.
– What did thev want it for then?
– What was said was that this industry, which, as it has been the custom to say, was developed by Mr. McKay, was threatened distinctly and definitely by the most powerful commercial trust in the world, which had declared that it already had 90 per cent, of the harvester machinery trade of the world, and was going to get the other tenth whatever it cost.
– Ninety per cent, of what ?
– Of the harvester machinery trade.
– What doe’s the honorable senator mean by the “ harvester machinery trade “ ? Stripper-harvesters are not used in any other part of the world.
– The stripperharvester is a harvester machine.
– The honorable senator should not quibble about a word. Stripper-harvesters are not used in America or Canada.
– I am aware of that; but these companies make reapers and binders, and the statement upon which Senator Clemons based the whole of his argument was that the local manufacturers declared that the business was unprofitable unless they got a higher dutv. As a matter, of fact, they have all admitted that the business is highly remunerative. They never disputed it. I have not read the whole of the voluminous evidence taken by the Tariff Commission : I have not had time to do so. But I have read the evidence on this question carefully, and “Gave, no hesitation in saying that no witness at any time said that the business was unprofitable, and that the manufacturers required more protection to get a better profit. But they said, and said with truth, that they were threatened by a “ combination which has, in America, practically subjugated producer and consumer to its purposes. That is a very serious menace. The American Harvester Trust has, within the last month or two, been mulct in damages to the extent of $20,000, and some $5,000 costs for contravention of the anti-trust law. It is a matter of notoriety that the International Harvester Trust, “the Beef Trust, the Standard Oil Trust, and the Steel Trust are all one; and it is declared - and there appears to be very little doubt - that the combination has at its control at least .£200,000,000. The process that is adopted in America is to crush out all those who try to resist the trust’s operations. The trust has been exceedingly liberal in purchasing interests in order to pool them, and thereby obtain, as it has obtained, the control of an enormous market. The result has been, notably in connexion with the Beef Trust, that the price of cattle has gone down, and the producer has had to take less and less return for his labour, while the price of meat has gone up to the consumer for a necessary article of daily diet. What is alleged is that this combination has introduced its operation into Australia, and has declared that it will have the control of the Australian market.
– Where was this declaration made?
– It was given in evidence before the Tariff. Commission by Mr. Moore, I think, who produced a statutory declaration made by Mr. Coxon.
– Are those people representatives of the International Harvester Company ?
– No, they are persons who declared on oath that the representative of the International Harvester Company had made the declaration. We could hardly expect representatives of the International Harvester Company to make those statements.
– We can hardly be expected to take the evidence of a. trade rival.
– Senator Clemons laid immense stress on the fact that the evidence was taken on oath when he quoted the statements of Mr. Weickhardt.
– I laid stress on many other things in Mr. Weickhardt’s evidence.
– But Senator Clemons, as is the custom, I may say, thought very little of the evidence of Mr.
McKay, for instance, although it was given on oath ; he seemed very doubtful about Mr. McKay’s evidence, but in the case of Mr. Weickhardt he took the oath as a presumption of truth.
– I did not question a single statement made by Mr. McKay.
– I venture to say that the whole of this evidence is worth as much credence as evidence of interested parties usually is - no more, and no less.
– All I say is that we cannot expect a trade rival to be a correct source from which to get a declaration of this kind; it is secondhand evidence.
– We could hardly have expected the man who would be prejudiced by such a statement to make it before the Commission. However, I give the declaration for what it is worth, and it is worth no more to me than it is to Senator Millen. The following is the declaration : -
I, Edward Coxon, of Numurkah, in the State of Victoria, blacksmith, machinery maker, and commission agent, do. solemnly and sincerely declare -
That about three months ago, in my office in Numurkah, I was interviewed by Mr. Beale, one of the travelling representatives of the International Harvester Company of America, and that the following conversation took place : - Mr. Beale said, “ The International Harvester Company is determined to get hold of the trade in harvesting machinery, and it’s only a matter of a little time till we knock out all the local men.”
– Does the honorable senator call that conversation evidence?
– It is evidence to the extent that Coxon declared it to be true
– Coxon declares that an accent’ said it.
– But there is a letter to the same effect.
– I shall come to the letter later. The declaration goes on -
I said, “You can’t beat McKay.” “Yes,” he replied, “We’ll beat McKay. We have unlimited money behind us, and even if we worked at a loss for three years, we are bound to beat him. Say that McKay’s agent at Numurkah is getting the trade, we shall put on two men to beat him. If they don’t succeed we shall put on three, or a dozen if need be. We don’t care what money it costs, we shall secure the trade. McKay had an offer from us to buy him out, and he will live to regret the day that he refused that offer. We are going to close him up.”
I was not at that time, and am not now, agent for H. V. McKay, who was the person alluded to.
And I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of an Act of the Parliament of Victoria, rendering persons making a false declaration liable to punishment for wilful and corrupt perjury.
Declared before me, at Numurkah, this 18th day of April, 1905.
Wm. C. Fitzwatek, j. P.
– It is the natural “ blow “ of an enterprising bagman.
- Senator Millen may say that that declaration is not evidence, but it is as near direct evidence as we can get. It is the evidence of a man who declares that these statements were made to him by representatives of the International Harvester Company, and, unless Coxon is guilty of perjury, the statement was made. That there is justification for assuming that such a statement might be made is shown by a letter written by Mr. Crawford, the manager or secretary of the International Harvester Company, of America. It will be remembered that in the agreement which Senator Clemons read so deliberately, and with so much emphasis, as showing there had been a combination in Australia of a very dangerous character, and that Mr. McKay was at the head of it, there was a stipulation that the parties would not take each other’s servants away. The letter, which shows how that agreement was kept, is as follows : -
International Harvester Co. of America, Febru- ary,1905, Mr.
Dear Sir, - We regret to note that you have the agency for the sale of the McKay Harvester competitive to ours.
It will be remembered that this agent represented Mr. McKay before he represented the American company- that he was Mr. McKay’s servant before he was the servant of the International Harvester Company -
Now that we have not only the most complete, but, no doubt, the best line of harvesting and seeding machinery in Australia, we would ask you to discontinue McKay’s harvesters -
– That is quite a regular thing in business.
– It is not a regular thing for honorable people to do when they have agreed to do otherwise.
– A man cannot serve two masters.
- Senator Mulcahy knows, as a business man, that some agents serve a dozen masters in a dozen different lines.
– But not in the same line.
– At any rate, they broke that portion of the agreement. as we are positive you could do much better if you handled our goods exclusively. The inducement we offer you in the way of commission and competent salesmen and experts should be an incentive to you to stand by the company, that is, not only in a, position to give you the largest line of goods, to which they are adding every year, but are ever ready and willing to treat fairly with you in assisting you in every way possible to make a success. You are no doubt aware that the International Harvester Company of America manufacture and sell 90 per cent. of the world’s output of the harvesting machinery -
That is not the declaration of a trade rival, but of the manager of the company, and it proves that those people had declared that they had 90 per cent. of the trade.
– But the honorable senator added to that statement.
– As proved by Coxon’s statement, these people declared their intention to get the other tenth of the trade, at whatever cost.
– Then the honorable senator relies on Coxon’s statement in proof of the second allegation.
– I rely on the two combined, and on the well-known methods in the trust. I rely on the facts as they are here presented. The letter bears out that part of Coxon’s declaration relating to the statement of the representatives of the company. and it goes without saying that this company will continue to grow, and under such circumstances we are sure you would prefer to be identified with a company that will be the most useful to you from a remunerative stand-point.
I need read no more of the letter than the concluding words -
We are placing this matter fairly before you in order that you may see it from our viewpoint, and we trust that this letter will be the means of securing to us an exclusive contract with you for the McCormick line.
For the International Harvester Coy.,
I have read these extracts to show that there is some justification for the fear expressed by the Australian manufacturers. Senator demons has quoted very largely, and with great confidence, the statements of Mr. Patterson, manager of the MasseyHarris Company, and various other witnesses on behalf of the importers. It was singular to note that whenever he quoted the statements of witnesses on behalf of the importers, he expressed the fullest possible confidence in them, but when he came to refer to the evidence of Mr. McKay or of any other local manufacturer he did so with a shrug of the shoulders, and an intimation that, of course, as they were interested parties, their statements must be discounted. Let us find out from the statement of the importers what reliability can be placed on their evidence. It is a matter of history that they sought to get their harvesters through the Customs for purposes of duty at £26 each.
– And did do so for a time.
– The Minister informs me that they were successful in doing so for a time. They could not have done that without a declaration on oath that that was the cost to them. I remember that when this Bill was called on Senator Neild interjected, “ The McKay harvester job,” and I have no doubt that he thought at the time! that it was a job.
– If I thought so then, I think so much more after having heard Senator Clemons’ speech.
-Having listened to Senator Clemons’ speech, I am sure that the honorable senator desiring to do what is right, will hearpatiently the little I have to say, because I do not intend to follow Senator Clemons through the enormous list of quotations he introduced that were not pertinent to the issue, and that were all based on the assumption and allegation that these people had asked for an increased duty because the industry was not paying.
– If the honorable senator wishes to convince me of anything he will address himself before he sits down to the question why it should be necessary for the Commonwealth to grant a large concession to firms that are doing so exceedingly well.
– I think that is a fair request, and I purpose complying with it. I am just now dealing with the credibility of the witnesses who spoke on behalf of the importers. The International Harvester Company declared on oath that the machines were invoiced to them at £26, and they got them through the Customs by paying duty on that invoice price. I am about to read from an advertisement circulated by the. company.
– Is that the advertisement in which they put forward a statement based on McKay’s figures?
– Yes, I am about to quote from their advertisement, in which they endeavoured to show how their costs are made up, and what profit they make, and I will ask honorable senators to bear in mind that they declared on oath that these machines were invoiced to them at£26. They say in their advertisement -
This, it is true, is not a statement on oath.
– Was not £38 10s. the valuation fixed by Mr. McLean?
– Yes,. The point I am directing the attention of honorable senators to now is that these statements are distinctly in conflict. Either one of them may be true, but both cannot be true. It may be said that we are dealing with people who are capable of telling untruths, and that it is reasonable to assume that if it suits them any statement they make will be an untruth. That is. not an unfair inference. If we are dealing with a proved prevaricator-
– Is their machine invoiced at£38 10s.10d. the same as that invoiced at£26?
– Yes. There is no allegation that it is a different machine.
– The£38 10s. was the valuation fixed by Mr. McLean as Minister of Trade and Customs.
– They say in their advertisement “ invoiced to us.” As a matter of fact, they published this advertisement when the price fixed by the Minister of Trade and Customs was£65.
– But that price was under reference to the Courts.
– Not at the time this advertisement was published.
– Does Senator Millen say that that is what their advertisement means?
– I shall say directly what I mean. I am trying just now to find out what Senator Trenwith means.
– I mean what these people say in their advertisement;I am not expressing any opinion of my own just now. I am endeavouring to find out from the statements made by these people whether they are reliable, and whether we are justified in believing them as against every one else who gave evidence to the Tariff Commission. I have shown that they have made contradictory statements. They have declared on oath that the invoice price of their machines was £26, and they state in this advertisement that the invoice price is£38 10s.10d.
– Does not the honorable senator see that the figures in one case represents the value of the article landed, and in the other the same value probably with duty and charges added?
– The honorable senator will see that that is. not so, because they mention the duty specially afterwards in the advertisement. They say here “ And are invoiced to us at , £38 10s.10d,” and they said at the Customs office on oath “ As invoiced to usat £26.” That is what I wish to nail them down to at this juncture. These people whom we are to believe in preference to people who have lived with us and have helped to make Australia, make two statements, both of which cannot be true, and one of which must be a de liberate untruth, and cannot be merely a mistake or an oversight. As I said before, when we are dealing with people who are proved to be capable of telling untruths in this way we have a right to assume that if it suits them all the statements they make will be untrue. I have still further proof out of their own mouths of their want of integrity, but before I refer to it I shall read the whole of the advertisement so that there may be no mistake -
It has been said that the last item is not theirs, but is a statement merely adopted as having been made by Mr. H. V. McKay, in evidence before the Tariff Commission.
– Is not that obvious, on the face of it?
– No. In this advertisement they are professing to show where the profits go, and they give this item of expenditure, and quote Mr. McKay in support of it.
– Is not the whole thing built up on. McKay’s figures?
– No; the other figures are their’s, without evidence to support them, and the last item is also their’s, but supported by Mr. McKay’s sworn evidence. This is their statement of where their profits go to. It says so at the head of the advertisement.
– Will the honorable senator lend me the document when he has finished ?
– With pleasure, but I have not done with it yet. They say further -
– Senator Trenwith does not believe everything he sees in print.
– No, I do not believe these people. I am endeavouring to show that they are not worthy of belief.
– What the honorable senator is reading now was printed by McKay. It is part of McKay’s advertisement.
– I beg the honorable senator’s pardon, it is not. It was cut out of a newspaper in which the International Harvester and Massey-Harris combine placed this advertisement, and it was not printed by McKay at all.
– Can the honorable senatorgive the name of the newspaper?
-I cannot, but a similar advertisement was published throughout the Australasian group. If they had said, “According to Mr. McKay, this is our profit,” it would be different, but they say -
They admit that it is that much, but complain that the Minister of Customs says that it is more.
– They do not admit it.
– Surely they do when they say, “ And fire invoiced to us at £38 10s.10d.” The advertisement continues -
Remember, that we can and will, on his request, verify to the commercial editor of the Argus (or to the Age) every figure of the first three items of our expenses as stated above. The fourth is stated on the authority stated.
Remember, that out of the above expenses of £3955. 6d. all, except the first item - that is £30 4s.1d. - is spent in Australia.
If there are any honorable senators who agree that there is merit in spending that much in Australia, I admit that the merit would be very much greater if the whole of the£38 10s.10d., the cost of production abroad, were also spent here.
Remember that the recent increase in the valuation for duty increases the duty paid by us from the above figures to 2s. 6d., or an increase of £2 17s.11d., and hence reduces our profit, as shown above, to 5s.9d.
– Is that per machine ?
– Yes, that is what they declare in the advertisement.
– That is a joke.
-That is, if you take the other people’s valuation.
– They say that they are charged too much through the Customs, and that that is one of the causes of their getting, only that profit.
-This appears to be a sort of supposititious case.
– That statement appears in their advertisement as a fact.
– We all know what advertisements are.
– The document which I am now about to read was circulated after a deputation of Australian manufacturers had waited upon the Minister of Trade and Customs and urged their fear of the combination, and asked for a largely increased duty. In order that there might be no fear that they would take advantage of an increased duty to increase the cost of the harvester to the consumer, they said :” We undertake, if this duty be imposed, to reduce the price of stripperharvesters by £5 at once, and we undertake at the end of twelve months to reduce it by another £5.”
– Was this undertaking given when they were members of the combine?
– Was it not a very loyal action?
-I have dealt with the loyalty of the others. I am not defending the combine. I think it was baneful, and I am glad to know that the Parliament felt it incumbent upon it to legislate against combines. If the combine was baneful, it was as baneful on the part of the importers as it was on the part of the local manufacturers.
– I should imagine from their undertaking that it paid them very well.
– Very likely ; but what becomes of the argument of Senator Clemons that the local manufacturers had declared that they could not make the machines at a profit? They never made that declaration. They merely declared that they were threatened, and there is every justification for assuming that they were in danger of subjugation by a combine, whose method is to subjugate all competitors - either to buy them out and bring them into the fold, or to crush them out.
– There was no more anxious seller a little while ago than Hugh V. McKay.
– I see no offence in a man wanting to sell out.
– Nor do I see any offence in buying out a man.
– There is evidence that Mr. McKay refused to sell to the International Harvester Company, and it was presented before the Tariff Commission on oath, and was not denied, either on oath or otherwise, that they did want to buy out his establishment and to incorporate him.
– Why did not the company buy him out? Because he wanted too much.
SenatorTRENWITH. - Becausehe would not consent to sell.
– He would have sold if he could have got his own price.
– As a rejoinder, the International Harvester Company circulated this document -
On October 7th, the harvester buyers of Australia got action instead of promises - they got something substantial now instead of vague illusory promises, to be realized on in the dim future, for on that date we made an open quotation of our harvesters as follows :
After giving a list of the quotations, they say -
This is a cut of £12 10s. per harvester, averaging cash and terms prices together. There will be about 4,000 harvesters sold in Australia this season, hence our action obviously saves the farmers approximately£ 50,000.
If they were getting a profit of only 5s. 9d. when they were selling the machine at £81. what profit must they be getting when they are selling it at £12 10s. less? Clearly they must be losing£12 4s. 3d.
– I am afraid that my honorable friend has not a proper sense of the humour of the modern advertisement.
– My honorable friend would make any one laugh, but just now we are dealing with too serious a subject to be entertained with a joke. Clearly the statement of the International Harvester Company is not to be relied upon. But if there is any doubt on that point, I shall take a letter, which, when it was refused publication in the Age, they fell back on the very proper proceeding of publishing and which, I presume, they sent to every member of this Parliament. It is only to show how unreliable they are that I make the following extract: -
We have no hesitation in admitting that the former price of £81 was artificial, but we most emphatically deny that£70 is a dumping price.
They had no hesitation in admitting that they had made to the public a statement that was not true.
– Surely that is a very strange interpretation to put on the statement !
– They admitted that when they declared that they were getting only a very small profit at£81 per machine-
– They did not declare that. They said that taking McKay’s figures into the calculation, they were.
– They said : “ These figures show where our profits go. and we quote Hugh V. McKay in proof thereof.” Senator Clemons, in reading the agreement which I deprecate as much as he can laid great stress upon the fact that the International Harvester Company had at any rate, the merit of breaking it. If there is any merit in breaking an agreement. I may say that it was entered into by the Australian manufacturers as a matter of self-defence.
– They did not keep good faith, and that is why it was broken.
– My honorable friend was very glad when he thought today that the importers had failed to keep good faith. That is another evidence of his extraordinary bias. When that thought passed through his mind he said : “ It was a bad agreement, but, at any rate, the merit of breaking it lies with the importers.” As it happens, such merit as it is does not lie with them. The first who sought to break away from the agreement under conditions which would give them security from the octopus of which they were afraid were the local manufacturers, who declared to the Minister of Trade and Customs, and, of course, to Australia, because it was a public deputation, at which representatives of the press were present - -
– Succeeding a private one !
-They declared that if an increased duty were given, and they were secured from the danger of unfair competition, by which they were beset, the consumer would not suffer, because they would undertake to make an agreement amongst themselves, and if need be, to have it inserted in legislationtoreduce the price by£10 within ayear. Honorable senators, if they have paid any attention to the question, know that the local producers had, without any pressure from outsiders, reduced the price of their machines. The first harvester of which I have any knowledge was sold for £120, and the price was steadily reduced until it reached £81, at which it stood when the importers came here. A great deal has been said about Mr. Hugh V. McKay, and it is admitted that there would have been no harvester of an effective character in Australia to-day but for him.
– Why not give the gentleman his full name - Hugh Victor McKay ?
– I think that the term”Victor” very aptly applies to Mr. McKay. He was victorious in perfecting and rendering available for the agriculturist a machine which, has proved to be of incalculable benefit to wheat-growers, and which competent agriculturists have declared is the reason whywheat growing in the mallee areas has remained profitable. The prices had come down so continuously, and to such a rate that, unless a machine of that character had been invented wheat growing in the mallee areas, where the yields are comparatively light, would have been quite impossible, because the cost of taking off the wheat would have been too great. Mr. McKay has been referred to, and Senator Clemons has referred to the enormous expansion of the stripperharvester industry during the operation of the Commonwealth Tariff. It happens that the development and adoption of the stripper-harvester was contemporaneous with the establishment of the Commonwealth, but for nearly thirty years previously Mr. McKay had been working under the greatest possible disadvantages - on several occasions he was in the direst financial difficulties, having to seek assistance right and left, to spend what money he had and what money the members of his family had - in order to develop this machine. Therefore it is not wonderful that now he is the largest manufacturer of it. It would have been very wonderful if, after all the struggles he had undergone, and difficulties he had faced through at least a score of years, he was anything but the leading manufacturer. As a matter of fact, the temper and character of the. man thoroughly justifies his name, Hugh Victor McKay. He is not a man to be depressed or put down by difficulties, and that he should be prominent in the agitation for protection against the danger by which he is beset is very characteristic of him. A man’ who, in spite of enormous difficulties, persisted in his efforts until he developed the machine, is not likely to take sitting down an inroad of that kind. Senator Clemons argued that there is no danger and no cause for fear in connexion with this matter, because, after all, this one man, Hugh Victor McKay, has made one-third of the whole of the machines that have been sold in Australia in the last year for which there are returns. The figures are significant. No machines were imported whatever in the first year of Federation. Indeed, one machine had to be exported in order that it might be copied in America. But the importers so rapidly began to absorb the trade that in the year mentioned by Senator Clemons they had already secured one-third of it. Surely that is evidence of a very great danger. I am quite certain that if any invader of Australia had already taken possession of one-third of the country, we should feel that there was a great deal of danger, and that it was extremely likely that, unless checked, the invader would soon get the other two-thirds. We should have to be up and doing very quickly to resist him. These are the facts proved by Senator Clemons himself. Of course, it was not possible to prove anything else.ButSenator
Clemons said that the local manufacturers have developed an export trade. True, they have done so. The honorable senator said that the price the unfortunate farmers of Argentina have had to pay for their machines is£140. I ask my free-trade friends to remember that figure. In protectionist Australia, the machines were sold for £81. But in free-trade Argentina, where there is no protective duty to enhance the cost, where there is unimpaired commerce, where every manufacturer in the world can land his goods as cheaply as possible, where there is no Anti-Trust Act, or any legislation of the sort, the Argentine farmer has to pay£140. The Australian farmer at the present time buys the same machine for£75, and will soon be able to obtain it for£70. Surely my honorable friends who declare that the increased duty will increase the cost to the consumer must be oblivious of the difficulties of the consumer in Argentina.
– Is that the cash price? Is it not paid in bank notes, which are heavily discounted?
-I do not know. If my honorable friend wishes to imply that Argentina is upon such a bad financial basis that a pound note is not worth £1, I am not sufficiently informed to combat his argument.
– Hear, hear.
– But my opinion is that there is no warrant for that assertion.
– Hear. hear.
– At any rate, what I have shown is that, so far as the duty affects the price at all, it appears that the machines are immensely dearer in free-trade Argentina than they are in protectionist Australia. Senator Clemons referred to an agreement. He laid stress upon it. and said that the importers had the merit of breaking it. They also had the merit of making it.
– McKay was so innocent that they compelled him to come in !
– He had to in his own defence. The agreement was constructed by Mr. Patterson - the same Mr. Patterson to whom Senator Clemons attaches himself. It was drawn up by him, and emanated from the Massey-Harris Company’s office. I am not defending it at all. It was an unwise agreement.
– I take it that the honorable senator has satisfied himself as to the facts that he is now relating?
– Yes, I have satisfied myself.
– The honorable senator believes what he is told.
– I believe what I see, and I have seen a letter signed by Mr. Patterson, declaring that he had forwarded the agreement for consideration.
– Was it not agreed to by theparties to it, and left to Mr. Patterson to draft the document?
– I think that is probable : but there is the fact. Of course, the combination was a bad thing; but it was not worse than the combination of the Associated Banks, which decides the amount of interest that is to be paid on overdrafts.
– I am waiting to see how the Anti-Trust Act will affect them?
– I hope we shall be able to cope with all these combines. If we do not it will only prove that we have not been able to achieve our desires. Now I want to read another letter from the International Harvester Trust dealing with the agreement. Senator Clemons alleged that the importers were the people who were so annoyed by the combination that they had to get out of it - that it became so irksome to them that they could not out up with it any longer, and that the merit of getting out of it rested with them. The letter says -
On behalf of this company, I desire to give you notice that we shall withdraw from the various trade agreements now existing in Australia ten days from this date.
The reason for this withdrawal is that on behalf of the company, the writer signed these trade agreements believing that they were to conserve the best interests of the various signers. For a long time past local manufacturers have been casting the most serious reflections on this company, thereby violating the said agreements. However, these matters were passed over lightly until reports in the Argus and Age, of issue 5th instant, in which report is given of the delegation of local manufacturers who on the previous day waited upon the Minister of Customs, and among other items that certainly could be classified as a direct attack against this company, they stated that in case a heavy duty was placed against American importation of stripper-harvesters they would bind themselves to reduce their price£5 the firstyear, and a further £5 the second year, after the same came into effect.
This is certainly a most flagrant violation of the trade agreement, and as it is within the power of the Customs Department to put a duty of this kind on within 30 days from this date, it may be classified absolutely as an offer to the people of Australia to cut their present price from£81 to £71.
The article, of course, is sent broadcast over Australia, and, undoubtedly, will be copied by papers in other States, therefore our decision to positively withdraw, and to say to you that the writer, as manager of this company, will decline to discuss the matter with any other signer of the trade agreement.
I recognise that there is a .clause in the trade agreement that 10 days’ notice shall be given. I know, however, that this is not necessary, and that no signer of the trade agreement under these circumstances will live up to it, consequently I shall feel that all said trade agreements are cancelled, and of no effect from date of this letter. I beg to suggest, in conclusion, that as a trade agreement will not be in effect any longer, that you tender your resignation to all signers, and state that you will no longer act as secretary.
International Harvester Company of America.
That is the reason why the American Harvester Trust and the Massey-Harris Company .drew out of the arrangement.
– Because the other people had black-legged.
– That letter is signed bv E. C. Drum, Australian general manager for the Massey-Harris Company. I said at the commencement of my speech that I did not propose to discuss the question from the ordinary point of view of free-trade and protection. I take it to be admitted that protection is the policy of the Commonwealth. What I set out to urge was that this protection was asked for, not for the reason stated bv Senator Clemons, incorrectly, mistakenly ; though I venture to say that he ought not to have made the statement, seeing that he was a. member of the Tariff Commission - but because the Australian manufacturers were threatened with invasion at any cost. Now I propose showing briefly how easily these importers might crush out our local industry without a single penny of loss to themselves. If they were only selling harvesters I “have shown that the price that thev declare that they are prepared to sell at now means, upon their own figures, a loss. But they are also selling other agricultural machines - amongst others, reapers and binders - upon which there is no duty. They were sold at ,£25 in Australia before the American combination was formed - that is to say, before McCormick and several other makers were scooped into the combine, and when there was competition from America in the manufacture of the machines. But directly the combine was formed the price was raised to £,3&~ 10s.
– In some instances the price was as high as £55.
– Of course, in the case of deferred terms there must be an increased price. Let us assume, for argument’s sake, that the International Harvester Company is giving to the farmers of Australia on every harvester that it .sells £12 ios..; in other words, that that is the amount of the company’s loss on every harvester sold. But suppose at the same time that the company .makes a profit of £13 l OS. upon every reaper and binder sold.
– That is only a margin of £,6 or £7 on each machine.
– That is true; but I want to show that the company can make a substantial profit - perhaps not as large a profit as it ought to have, but still a sufficient one for the purpose of crushing out a rival and securing a monopoly. We know the methods that the company has adopted in America.
– The honorable senator is assuming that the company could sell as many reapers and binders ai the higher price as at the lower one.
– I am assuming that they will sell the reapers and binders required whatever the cost. The man who wants a reaper and binder is confined to this one avenue ; and my free-trade friends-
– Surely this is not a question of free-trade and protection.
– I have no wish to argue the question from that point of view. But to those who argue that the absence of duties induces competition, I point out that there is no duty on reapers and binders, and yet, that these can be obtained only from the combine at the invoice price of ^38 1 os., and not £25, as formerly. I think I have shown that there is real danger of this industry being crushed out. It is an enormous industry, which has done two remarkably good things for Australia - it has given a profitable means of employment for capital, and a large amount of employment to workpeople.
– McKay has been no philanthropist.
– I do not think that any business nian sets out to be a philanthropist.
– Mr. McKay has been far from a philanthropist.
– I have been a working man for forty-five years, and I do not know any working men who have set out to be philanthropists in relation to their employers.
– I do not know any employer who did what Mr. McKay did - - shift his factory from a city to a shire in order to avoid factory legislation.
– As a matter of fact, there is a great deal to be said for Mr. McKay in that connexion; and no one would charge me with being callous to the interests of employes. I may say that I know personally a large number of the employes of Mr. McKay, and I have taken the trouble, at my own expense, to see and speak to them at their work, and away from it. I have had a great deal of experience in regard to the conditions under which working men pursue their trades, and I am confident, from what I saw in the two very large establishments of Mr. McKay, that the conditions of employment there cannot be bad.
– Did the honorable senator see all the boys?
– I saw a good many boys there, but I do not know that there were more in proportion to the men than in other factories.
– Was it in deference to the wishes of the men that Mr. McKay shifted his works away from the jurisdiction of the Wages Board ?
– I do not desire to discuss that matter on the present occasion.
– The honorable senator is discussing all round the matter.
– So far as my knowledge goes, there was only a dispute as to two machines which Mr. McKay introduced, and to which the men objected. Mr. McKay had paid a large sum for those machines, and said that he must have them worked, and that if the men would not . work them he would get others that would. When the machines were set to work with unskilled labour, a demand was made that that labour should be dispensed with, and skilled men - those who had previously refused to work the machines - should be employed. Mr. McKay, with some justification, I think, said, “ No, I did not put these men on at my desire, but, as they are there, I am not going to dismiss them.” At any rate, there is no doubt that the cost to Mr. McKay of moving the factory was enormous, and it could not have been as a matter of profit that he took that step. Of course, as I have said, that step is characteristic of the man, who has had to fight difficulties, and is no doubt masterful. I am not defending Mr. McKay, nor do I desire to discuss this matter; but there is ample evidence that the men employed in this factory are well treated. The father of this very man Bult was employed by Mr. McKay when a boy at 5s. a week, and he is now foreman over one of the departments. It is characteristic of these works that those employed have all been there for years. They came as unskilled men, and had to be taught the trade by Mr. McKay. My experience is that bad employers are continually changing their hands. I do not pretend to defend Mr. McKay for getting beyond the area of the Factories Act. But even in that-
– Is all this pertinent to the matter before the Senate ?
– No further than it is pertinent to the interjection. I tried to resist dealing with the matter.
– We do not wish Mr. McKay to have any protection unless the workpeople get a share of the benefit.
- Mr. McKay is no more a friend of mine than any other manufacturer in Australia. Every manufacturer here has my deepest sympathy, and may rest assured of my earnest efforts on his behalf, not because I know or like one more than another, but because the manufacturers are an embodiment of a principle which must be adopted if the country is to be as prosperous as it ought to be. I have only referred to Mr. McKay because he has been made the head and front of the offending by the opponents of this measure ; he has been spoken of as the perpetrator of a “job,” the “bulldozer” of the Government, and all that sort of thing.
-The hypnotizer of the Government.
– I have shown, at any rate, that the industry is an enormous one. There are two other large establishments in this city representing the Massey-Harris Company and the International Harvester Company, but, as large as these are, they could be placed in the enormous works of Mr. McKay, and could scarcely be found. That shows the magnitude of this industry, and the advantage it is to Australia. If something is not done to protect our Australian manufacturers, the effects will be disastrous to twenty or thirty other establishments, which, though large, are not as large as that of Mr. McKay.. I have visited one of these establishments at Gawler, in South Australia, where, in addition to general engineering work, harvesters are made, and from 600 to 1,000 men employed.
– But all these men are not employed making harvesters.
– That is so ; but what I desire to point out is that Mr. McKay’s works are much larger than those at Gawler. Then there are the works of Nicholson and Morrow, Mitchell, and others in which Australian capital is invested, and which are giving, and will continue to give, if protection is afforded from the threatened aggression, remunerative employment for a large amount of capital, and equitable and humane conditions of employment for an enormous number of Australian people. At the same time, Australian agriculturists will continue to get a machine which has added enormously to the productiveness of Australia within the last four or five years, and at a price not higher, but much lower, than that which previously ruled. Senator Clemons urged that there is no guarantee that that state of things will continue. There is a guarantee under the Bill that the price must continue to be much lower, and past experience shows that the natural tendency is to reduction. Clearly, when there are nearly thirty powerful competitors, each will try to get as much as possible of the trade, and in that effort will either make better machines at the same price, or machines of the same quality at a lower price. If the Australian manufacturers be given the large trade which the industry renders possible, their increased output will, of course, reduce the proportion of managing expenses, rent, and interest on- capital.. If the trade- be kept entirely to Australia it will reduce enormously the inordinate expense of distribution. There is no doubt that in connexion with agricultural machinery, the expense of distribution is higher than in ordinary avenues of trade. These machines and implements have to be sold to the agriculturalist on his farm. Unlike most other producers, the agriculturalist lives in places remote from manufacturing centres, and can only purchase by making a visit to the town - which he is usually most reluctant to do - or by having a visit paid to him from town ; and the innumerable agents which are necessary under the circumstances have to be paid. Then the agriculturalist is one who receives only one payment a year, and, like most of us. he is able to purchase only when he is paid.
– And the payment is never big enough.
– It is very often insufficient, and under the circumstances the agriculturalist lias to purchase on credit to a greater extent than has an ordinary citizen. For all these reasons there will always be a large charge for distribution as compared with other industries, but, as far as practicable, that expense ought to be reduced, and it can be reduced by keeping the trade entirely in Australia. Labour has never received in any part of the world that consideration which it deserves, and that is largely owing to the dependence of the labourer. He depends usually for each day’s bread on that day’s labour; that is largely the normal condition. Therefore, he is less powerful to resist improper conditions which are imposed. But the Bill proposes to give the worker the shield of Statute law.
– Not this Bill, the Excise Bill.
– The Excise Bill and this Bill are really one. The Bill protects the farmer who is, in many instances, but very slightly removed from the condition of a day labourer in the early stages of his venture as a producer. It protects him from aggression by any combination should it arise. The complement to this Bill, the Excise Tariff Bill, provides that in this industry there shall be an Excise law; not because it is intended to impose an Excise tax. but because we propose to have an effective means of compelling compliance with humane conditions. It provides that in the event of any manufacturer not giving the workmen in his employ such conditions as are considered necessary in the interests of humanity, the Customs dutv to be imposed under this Bill shall be removed, and he shall be charged with an equivalent Excise duty, and so be deprived of the benefit of the Customs dutv. We have in this Bill the embodiment of the protectionist principle which Australia has adopted. We have, in addition, the embodiment of the principle of Wages Boards and Arbitration provisions which portions of Australia have adopted.
– Which are not very palatable to McKay.
– I am not arguing this for McKay, but for Australia. It would not matter very much to me if McKay were run over by a tram to-night, and did not appear to-morrow. The industry is what I am arguing for. I am contending for the profitable employment of capital in Australia, whether McKay’s or anybody else’s; for the ready provision of necessary implements of agriculture for our agriculturists ; for the manufacture of those instruments of production under conditions fair and equitable to the work-people engaged in the industry ; and I am urging that all these provisions are contained within the two Bills we are now asked to pass. I go a step further, and say that, suppose for argument’s sake, this duty is not necessary - that Senator Clemons was right, and there is no real danger of the industry being crushed out - this measure can do no possible harm. If it is a fact that the industry can continue under the conditions existing to-day the measure can do no possible harm, because the manufacturers will be unable to raise their prices, and cannot refuse to give fair conditions to their work-people. Therefore, the worst that will happen is that possibly the Bill will do no very great good. I do not admit that that is so, and I have endeavoured to show that it can, and will do good, that it will prevent aggression by a force that has become an enormous power in the United States, and is extending its operations over the rest of the civilized world. It will establish here a harrier against that aggression which I think will work incalculable ‘good to all sections of the Australian Commonwealth. I would strongly urge honorable senators opposite to permit this Bill to pass. I remind them of the knowledge they have of the operations of this combination abroadWithin the last few weeks we carried a measure designed to prevent the encroachments of combinations of this character. Honorable senators opposite declared that that measure would be inoperative.
– And the honorable senator declared that it would be operative.
– I am afraid, very much like my honorable friends opposite, that some means will be found to circumvent it. I have always held that view, but it furnishes no argument against carrying the Bill. It suggests rather that if the measure proves ineffective, an endeavour should be made to make it effective. Here, however, is a measure which cannot be circumvented. These machines cannot be brought into the Commonwealth without being seen, and to bring them here entails upon the persons who import them the obligation of paying a duty which cannot be circumvented. That brings me to another point which is in dispute. It has been urged that the fixed duty provided for in the Bill is inequitable. I say that for protective purposes it is the very best form that could be adopted, for two reasons. One reason is that it provides an absolute safeguard against fraud at the Customs. If you have to take nobody’s word but simply to count the number of machines, in order to ascertain how much duty must be paid, you cannot be cheated. Then the fixed duty has this effect : It is heaviest upon the rudest and commonest kinds of goods and lightest upon the most highly developed and superior goods.
– There is a third argument in its favour - that it prevents any Ministerial or administrative eccentricities.
– That is another argument which I was not going to urge, and which I will not urge further now. but for which I thank Senator Millen. A fixedduty as a protectionist factor has the effect of encouraging the production of those articles which a new country is most likely to be able to produce, and it makes the dutv lighter proportionately on high class and superior goods, which a new country is less likely to be able to produce. As a protectionist factor, a fixed dutv should be imposed in every instance where practiable. The fact that a fixed duty is proposed is, therefore, no argument against the measure, though it might be an argument in favour of it. There will always be some articles upon which it will be difficult, if not impossible, to impose fixed duties, but I point out that we cannot send our goods to the United States, from which danger threatens us in this matter, without having to pav heavy duties upon .them. The United States have adopted a composite form of duty. In many cases, they have an ad valorem and a fixed duty on the same article.
– The honorable senator was not a member of the Senate when we amused ourselves with something of the same kind.
-As an illustration, the American people have on cloth a duty of 35 per cent. ad valorem, and a fixed duty as well.
– How does the honorable senator connect all this with the manufacture of harvesters?
– I connect it with the proposal that there should be a fixed duty. The Bill deals with more than harvesters, although Senator Clemons applied his argument almost exclusively to those articles. I have given harvesters a fair show, and I am now dealing with the proposal to impose a fixed duty. The United States impose, in some instances, fixed duties in addition to ad valorem duties on the same articles.
– Cock-a-lorum duties.
– I am not in the facetious frame of mind possessed by Senator Neild at the present moment. I am dealing with this question in dead earnest. It is a question upon which, to my mind, the continued prosperity and well being of this great Commonwealth ultimately depends. I hope that this small instalment of protective legislation, the most we can hope to pass this session, will be accomplished before Parliament prorogues.
– Senator Trenwith commenced his speech by denying a statement on which he said Senator Clemons based his argument, to the effect that the industry could not carry on without more protection. I shall not enter into the controversy raised by the conflict of opinion between the honorable senators referred to, and I propose, for the purposes ofmy argument, to accept Senator Trenwith’s declaration, whichI take to be an admission that the witnesses who gave evidence before the Tariff Commission admitted that the industry is highly remunerative, and that it is a threatened danger and not the existing position of the industry with which the honorable senator desires to deal. The honorable senator is dealing with a threatened danger.
– No, with a. present danger. We have lost one-third of our trade.
– This particular trade is growing all the time and is bigger now than it ever was. However, that is immaterial to the argument which I wish to develop. Senator Trenwith admitted that his object in supporting the Bill is to ward off a danger threatening or present, and I ask him to cast his mind back to his own remarks on the Anti-Trust Bill. In that Bill it was provided that, if any importers or outside combinations of manufacturers sought by importations to injure an Australian industry, there should be machinery by which that injury could be averted. After having spent some time in dealing with the Anti-Trust Bill, are we to be told that, after all is said and done, the warnings of honorable senators on this side were founded on substance, and that the whole measure will prove a nullity? That is what the admission of Senator Trenwith amounts to. Although the Government, in introducing that Bill, assured us that it was to be a measure held as a shield over threatened Australian industries, to ward off the darts and blows of hostile forces outside of Australia, it is now only so much waste-paper. If it is, I invite the attention of the electors of the country to the fact that we have been asked by the Government, supported by SenatorTrenwith and his associates to spend a great deal of time in discussing a useless measure.
– It might be as well, perhaps, on an occasion of this kind, to have a quorum. [Quorum formed.]
– When attention was called to the absence of a quorum, I was referring to the fact that some time ago we were asked topass a measure designed to protect Australian industries against the attacks of malign foreign forces.
– This is only our second arm of defence.
– Exactly ; but the whole of my argument is that the honorable senator’s last utterance in the Chamber is either an admission that the Australian Industries Preservation Act must prove an absolute failure, and is, therefore, a justification of the attitude taken up by honorable senators on this side, who affirmed that it would fail in its object, or he is now seeking to obtain for the industry something to which it is not entitled. The Government invited us, and he helped them to spend valuable time in discussing a Bill for the purpose of protecting local industries against foreign attacks. He now tells us that the object of the present Bill is to safeguard a particular industry against one of the threatened attacks which” it was the purpose of the other measure to ward off. If it is going to ward off that attack, if it is complete and effective for the purpose for which it was designed and enacted-
– I agree with ,my honorable friend that it is not complete.
– Unfortunately, the honorable senator’s agreement comes many weeks too late. He ought to have agreed with me before.
– I agreed with the honorable senator then, but it was the best measure that we could get.
– I admire the candour of my honorable friend when he admits that he helped to occupy time to force upon the statute-book a measure which he admits will be ineffective. If the Government cannot find more useful work with which to occupy the attention of the Senate than to pass Bills which are to be inoperative and useless, it appears to me that it should mark its sense of disapproval of such a gross waste of public time. I wish to go with some detail into a further argument advanced by Senator Trenwith. I was surprised that an honorable senator with such, an intimate acquaintance with men and affairs should have laid so much stress upon the statement of Mr. Coxon, and to emphasize the fact that it was made on oath. A statement may be made on oath a dozen times and not contain a vestige of truth, but still the author may not have been guilty of perjury. It is quite possible for a man to swear by a stack of bibles as high as the roof of the Chamber that a person told him something, and it may be quite true that that person did, but still the statement may not contain a word of truth.
– The other fellow might have been a liar ?
– Exactly. The fact that Mr. Coxon’s statement was made on oath” amounts to nothing. Had Mr. Beale made that statement on oath, there might have been something in it.
– I agree with the honorable senator.
– Where a man has repeated a tale told to him by an energetic commercial traveller, it is grossly exaggerating the true state of affairs to attach to that statement any importance, because it was given on oath when it was only secondhand evidence. What was the position? I find that it was Mr. McKay who produced this wondrous document for the consideration of the Commission. I am not objecting to its production by him-, but it is not unreasonable to suppose that he and Mr. Coxon ‘were on particularly good terms. Mr. McKay produced a declaration by Mr. Coxon, who swore that somebodyelse had told him something, and it was on such flimsy evidence that Senator Trenwith sought to build up an argument.
– My honorable friend should remember that I only quoted Mr. Coxon in answer to his doubt that the company had declared that it had 90 per cent, of the harvester trade of the worl’d, and I corroborated that from the manager’s own statement.
– I shall come to that point directly. What my honorable friend now says is that because a doubt was expressed by my interjection as to the accuracy of a statement, Mr.’ McKay produced a declaration bv Mr. Coxon that Mr. Beale had told him something. It certainly is a misuse of the word to call it evidence, but, from want of a better term, I submit that evidence of that kind would not be permitted in a Court anywhere, as the honorable senator knows perfectly well. The mere fact that a Royal Commission has much looser rules for eliciting information - and it is necessary that it should - does remove from a great deal of the evidence that value which is attachable to evidence when it is given in a Court.
– Of course, that applies to all the evidence.
– P admit that, and I only make the reference because my honorable friend emphasized the fact that the statement was made on oath. All the evidence that Mr. Coxon gave on oath was that he had been told something bv somebody else. My honorable friend can dismiss that evidence as entirely wanting in substance. When I look into the statement, what does it amount to? Mr. Beale appears to have been an agent of the International Harvester Company, and I take it that he was holding this conversation with Mr. Coxon with a view to advancing his own business interests, as well as those of his employer. I have heard, though Senator Trenwith may not have heard, that commercial travellers do develop the habit of drawing the long bow. They certainly do not possess an undue amount of modest, when thev go to press their wares upon the attention of possible buyers. One can assume that an agent, representing of all companies, an American one, would not be of much use to it unless he could indulge in” a little of that exercise which is known as “ blowing.” Having read the document, I can readily understand that the representative of an American company was indulging in a little bit oT bombast, with the object of impressing upon his hearers the great importance of his company, and the desirability of doing business with it. I dismiss it as not offering the slightest tangible evidence which in any way can be held to tell against the company. It would be ridiculous to suppose that an ordinary commercial traveller was entitled to speak with’ authority upon the affairs of a big combination whose head centre is on the other side of the world. It would be absurd to suppose that it had intrusted its secrets or its ambitions or its designs to a country traveller. The whole suggestion that it did is too preposterous for a moment’s sen- OtiS consideration.
– Yet Senator Clemons points out that Mr. Weickhardt should be a competent authority on the cost of production of harvesters.
– And why should he not, when he was in Mr. McKay’s employment for two years?
– There is a vast difference between the _position of Mr. Beale and that of Mr. Weickhardt, who had worked in the industry, and who being, I presume, a man of some intelligence, had had an opportunity of gauging the time required to do a particular portion of the work, and therefore to estimate its value, and also to ascertain the cost of the material. He coul’d reasonably arrive at an estimate, more or less reliable, as to what it would cost to manufacture a machine.
– That particular duty was imposed upon him by Mr. McKay.
– To look after the particulars.
– No; to go into the whole question of cost.
– That still further qualified Mr. Weickhardt to offer to the Commission an estimate for what it was worth ; but to liken his position to that of a commercial traveller in a country district, who possibly had never seen any of the real heads of the International Harvester Company, who might not have seen even the local head, and who might simply have been appointed as the result of a visit from a travelling representative of the company, is beside the question. I do not think, that Senator Trenwith would for one moment - at any rate, not seriously - put forward the contention, although he sought to do it by inference, that Mr. Beale was in any way entitled to speak authoritatively regarding the combine, or to speak as a man having knowledge of what it intended to do. It was the natural “blowing” of a keen commercial traveller, seeking to advance his own interests, with an eye to a commission, as well as those of his employers. Senator Trenwith went on to refer to a letter dealing with the agreement read by Senator Clemons, and told me that it was dated 1905. ^Apparently it is a letter by which one of the importing firms sought to draw, an employe from a local firm. Senator Clemons pointed out that that was in contravention of the terms of the then existing agreement. According to the date which Senator Trenwith gave me, and the date of the agreement, it was then at perfect liberty to do so.
– If mv honorable friend says “ No” I shall not contest the point. The agreement was to run from the 14th March. 1905, to the 1st January, 1906. When I asked Senator Trenwith the date of the letter he mentioned only the year.
– I think I said that it was written in February.
– If my honorable friend tells me that it was written during the period I have mentioned, and not in the earlier portion of 1905, I am quite satisfied. No doubt honorable senators noted the verv justifiable scorn with which he referred to this attempt on the part of Massey-Harris, in spite of a clause in the agreement, to try to draw to their own employ, an employe of one of the associated firms. But I did not hear Kim denounce the action of Mr. McKay and others, who were trying to undermine the spirit of the agreement. I did not hear him denounce their action in approaching the Minister, or in arranging for the deputation which subsequently waited upon him. I am left to understand that he has two codes of morals, namely, one for the unfortunate importer, who has to be kept to the strict line of ethics and morals, and’ the other for the local manufacturer, who is to be allowed to interpret ethics” and morals according as it may suit his business. I am not going to defend the action of Massey-
Harris, because, if the facts as stated by my honorable friend are correct - that they had entered into an agreement, one clause of which said that they were not to try to attract an employé from an associated employer - it was utterly wrong and indefensible. But equally disreputable was it for Mr. McKay and others, after having entered into an agreement to sell the harvesters at a certain price, to go round and destroy if not the letter, at least the spirit, of it, to try to get from the Minister of Trade and Customs - and they succeeded in doing so - an impost placed upon their co-signatories to the document, and then, later on by an open deputation to the Minister, to seek to get legislative restraints placed upon them. Nothing more disreputable on the part of business men could be imagined. That brings me to the real facts as to what took place at the Customs at that particular time. If we are not careful, there is a verv strong probability of Australian, politics taking on something of the colour and complexion which Ave are led to believe mark those in America. It seems to me that Ave are opening the door to very pernicious lobbying. Senator Trenwith has pointed with some pride to the fact that Mr. McKay is a masterful man. After the experience of the last few months, I did not require his assurance on that point. Every honorable senator, whatever his fiscal views may be. has recognised that Mr. McKay is a force to be dealt Avith. But I take it that he is merely a type of the successful and enterprising business man of modern times ; and what has happened in this matter seems to me to point a warning finger to what mav happen in the future if Parliament is not A’ery careful. It is pointing out to the manufacturers of Australia that the royal road to success is to importune the Minister, to work up an agitation through the press, and on the platform, and to use all the influences which a man in that position can bring to’ bear legitimately upon the Legislature itself. That is what is taking place in America, and what, I fear, unless Parliament is very careful, will take place here also. It unfortunately happens, if these influences are pernicious, as I believe them to be, that they have a ready means of operating here by reason of the strong views of some of the members of the Parliament itself. When a gentleman like Mr. McKay comes here, and makes out a . case with more or less success for increased protection, he naturally finds - and I” am making no complaint about it - ready and willing auditors amongst those who hold strong protectionist views ; and it seems to me that owing to the fact that some members have those strong views they are often ready to listen to such tales without a close examination of the alleged facts placed before them. It makes the way of the lobbyist easy to know that a large percentage of those to whom he appeals are, because of the principles which they hold, predisposed to give him a favorable audience.
– The honorable senator will admit that that applies both ways.
– Except that no large interest in Australia can apply to free-traders, because Ave can give them nothing.
– What about all the millionaire importers?
– If Ave have a few more samples of such legislation as Ave have had lately, not only will there be. no millionaire importers, but there will be no importers of any kind. Whilst, I say, there is a distinct incentive on the part of a number of people in the community to seek higher protection, there are very few opportunities for such appeals to be made to the free-trade members of Parliament. We can appeal, as we do appeal, to the large body of consumers, but not one of them is directly interested, as are the manufacturers and the workmen employed in the manufacturing industries.
– Is not the consumer directly interested ?
– Yes; but does he count as” an electioneering force?
– Unless he is a manufacturer.
– I do not share that view, nor do I think that my honorable friend himself would express the same view outside. It is one of the arguments frequently used by my protectionist friends that the reason why they prefer local manufacturing to importation is because local manufacturing is of such value in regard to the employment of labour. Consequently, there are large numbers of men engaged in the industries who are interested in protective duties. The influence which they can use must be obvious. -I do not say this by way of complaint, but there is no use in denying the facts. No one, Senator Trenwith least of all, would desire to see springing up in Australia anything like that system of lobbying which prevails in the United States; and I am sure that my protectionist friends would join with me in doing all that they could to prevent it. I am showing that by passing this legislation giving an undue protection to those interested in the harvester industry, when they have not made out a case for any more assistance, we are practically offering a premium to every industry in Australia which has already tasted the sweets of protection, and desires a higher measure of State assistance, to come and lobby around this Chamber, because we have told them that the reward for persistent, continuous, and masterful agitation is likely to be a still larger measure of protection. Had it been shown that this industry was threatened, and that it was impossible to carry it on without additional protection, it would have been an entirely different thing. But even Senator Trenwith, who, I venture to say, would strain a point to make out a case for a threatened industry, does not venture to say that any harm has been done to the harvester industry at present.
– Yes; I say. that one-third of the trade has gone in three years.
– One-third of what the local manufacturers never had !
– They had the whole of it before.
– Thev had the whole of nothing, and now, because they have something like two-thirds of something, mv friend says that they are threatened !
– They had- the whole of the trade when it had “attained to a considerable magnitude.
– Are not the proprietors of the Sunshine Harvester Works now making and selling more machines than thev ever did?
– Last year they did, but not this year.
– So far as we know they are.
– I do know, and say that they are not.
– Although Senator Trenwith says they are not making so many machines this year as they did last, I suppose he refers only to the nine months’ period.
– I speak of the same proportion of the year.
– I think that Senator Trenwith will not dispute the contention that the trade of the local manufacturers of these machines has been growing steadily.
– For five years, yes.
– It is only since that time that it took a spurt. The very severe drought that laid hold of Australia in 1902-3 had, of course, a serious effect upon the industry. But since the drought passed away there has been a rapid expansion of it. No one is better pleased than I am to see that a local industry is developing, and is able to supply local wants with local material and local labour. But I want to know what case has been made out for the additional State assistance proposed to be given by this Bill.
– Senator Guthrie mentioned that two large firms in Gawler were doing nothing.
– But surely we are not going to legislate for a Continent upon a. single instance of that kind. I say that the trade of Australia, as a whole, is rapidly expanding. That one or two firms may not have done well may be perfectly true, but at the same time the industry with which they are connected may be progressing. When any particular industry is mentioned there are always opened up questions as to the personality of the men who conduct them, and as to many other factors which explain success or failure in individual instances, but which have nothing to do with the simple fact that the industry in question is going ahead rapidly. Not only is that so, as far as the output in this particular industry is concerned, but there is nothing to justify the statement that the profits being made by those engaged in it are not, I will not say enormous, but certainly very liberal and generous.
– They are good.
– The honorable senator admits that they are good.
– I think that that is rather a cause for congratulation than otherwise.
– My only regret is that I have not been in one of these concerns during the last few years, so that I might have made such profits as have been made in the harvester industry.
– If the profit made is spread over the whole period Mr. McKay has been in the business it is very small.
– Is that an argument for increased protection for the industry? It seems to me that if there is any one who has been battling with want of success to develop an industry we ought to extend a kindly hand to him ‘rather than to the man who has reaped a handsome reward. I do not see that, under the circumstances, we are called upon in any way to penalize the rest of Australia in order still further to reward Mr. McKay. I will come directly to the point whether his profits, over and above what he would ordinarily get, have not been sufficiently provided for under a duty of 12^ per cent. Now it is proposed, however, to increase that duty to a considerable extent. I hesitate to say exactly how the fixed duty of £12 works out, because there is a considerable difference of opinion as to what the cost of the machines is. But it will not be disputed that the duty proposed to be levied is a very heavy one, compared with that which has hitherto prevailed. I ask my protectionist friends, what was the Royal Commission appointed to inquire into the Tariff expected to do ? The object was, if we are to judge from the public utterances of public men in the other branch of the Legislature and in the Senate, to inquire whether there were any industries that were languishing, or any anomalies to be corrected. It was never supposed that the Commission was to be made an instrument for securing a larger measure of protection for Australian industries. If that had been desired, no Commission was necessary. The Commission was appointed, if we can attach any value to the declarations of public men. to inquire whether anomalies existed in the first instance, and whether any industries were, as was alleged, languishing or being injured by having to carry on under existing conditions. That being so, I am bound to ask whether this Commission, upon the evidence taken by it - I do not pretend to have read it exhaustively - has made out a case in support of either of those contentions. Has it shown that any industry is languishing? Practically it is admitted that it has not. All that Senator Trenwith says is that he wishes to make the future of this particular industry more assured than it is under existing conditions. There is no evidence in the Commission’s report, or in
Senator Trenwith’s speech, that the industry is languishing, that the proprietors are obtaining insufficient profits, that there is any possibility, providing conditions remain as they are, of the industry being extinguished. Certainly it has not been shown that there is any anomaly in the Tariff affecting the industry. On the other hand, we have Senator Trenwith referring to the large number of men employed in the industry, many of whom would be thrown out of work if the efforts of the importers of harvesters were successful. We have the evidence of Mr. McKay, on page 1602, that there are “some thousands” employed in the industry. I suppose, if I were to try to bind Mr. McKay down to that statement, he would possibly say that he was speaking figuratively. Senator Trenwith would think that I judged Mr. McKay harshly if I said that he was lying, but I sa.y that Mr. McKay used that phrase in much the same way as the International Harvester Company used some phrases in the advertisement which Senator Trenwith quoted. It is not true that there are “ some thousands “ of persons employed in the industry, and Senator Trenwith knows that just as well as I do. The statement was, to characterize it in a complimentary fashion, a figurative way of putting the case. As a matter of literal accuracy, it was not correct.
– It is difficult to say how many are employed directly and indirectly.
– My friend, I think, will take my interpretation when I say that Mr. McKay’s reference ‘to the capital invested in “the business, the brains employed in its development’, and the thousands of members of the families of the operatives engaged in it, clear! v meant those immediately engaged, and it was just one of those rather loose figurative statements which, on examination, are found not to be quite accurate. I mention this because it shows that the industry is not, in any sense, in a parlous state. If I desired an industry as an illustration of the progress of Australian manufactures, I do not know one to which I could turn with” so much confidence as this harvester industry. And vet it is the particular industry singled” out for special favours at the hands of this Parliament.
– It is a new development.
– The industry is developing rapidly under a duty of 12½ per cent., and the onus is on the supporters of the Bill to show why a larger measure of protection is necessary.
– The importers are scooping up the business, and the local industry will be gone in three years.
– The local manufacturers are making more machines year by year; and if they are able to make something like two-thirds of the machines used, I see no reason why they should not only retain that proportion, but increase it. The point is whether the manufacturers are losing trade or not; and all that has been said up to the present is that they are not losing trade, but that they are not getting as much as they would like.
– They are not getting the whole of the trade.
SenatorMILLEN. - I say that one reason for that is furnished in the figures relating to the exports by Mr. McKay to South America. I can quite understand why Mr. McKay has not sold as many machines locally as he might have done. Instead of selling locally at a price in the neighbourhood of . £80 or£90, Mr. McKayhas exported and sold in the Argentine at£140. Senator Trenwith shakes his head, but those figures were read by himself.
– I think the machines are invoiced at£70, but that the retail purchaser in Argentina has to pay £140.
– Does the honorable senator mean that those exported machines are sold at . £70?
– According to the figures they are invoiced at £70.
– Will the honorable senator explain why, if the machines can be sold at £70, the higher price is charged locally ?
– I think the company might be able to afford to sell 1,000, or 400, or 200 machines at £70 in Melbourne.
– Then why do they not do so?
– Because they have not been asked to sell 200 machines in Melbourne.
– Do they sell 200 machines in one line for Argentina?
– I should say so.
– I should say they do not.
– My impression is that they are sent to a consignee.
– To fetch what they will? I think we may take it for granted that if there are 400 machines available for export, they are sent out there because they return a better price than if sold locally. I do not think that Mr.. McKay would take all the trade risks of exporting the machines if they could be sold locally at the same figure. If the inducements had not been sufficiently great to lead him to export, and he had devoted his time to selling them locally, there would be less room for the Canadian and American competitors. I was dealing with the reference to the action taken as the result of Mr. McKay’s efforts to get the Minister to interpose under the Customs Act on behalf of local manufacturers. I do not know anything more unfortunate than that reference. Senator Trenwith pointed out that the Massey-Harris people declared the goods to be worth £26, and the then Minister of Trade and Customs, Mr. McLean, raised the valuation to£38 10s. Senator Trenwith impugned the veracity and good faith of those importers, but it is a significant fact, to which Senator Trenwith made no reference, that when those importers asked the present Minister of Trade and Customs for facilities to prove the accuracy of their contention, the Minister refused to agree. When those importers asked for the appointment of a Commission to take evidence in the country or origin, in order to determine the true value of the goods, the Minister, who professed to want the truth, and nothing but the truth, declined to grant the request. Why was that done? Why did the Minister, who refused to accept their values, also refuse facilities to obtain evidence to determine once and for all what the goods were worth ? The whole affair has a sinister complexion, and I can only regard it as part and parcel of the pernicious influence, which, from beginning to end, Mr. McKay has exercised on the Ministerial deliberations, and on the administration of the Department. I have tried to point out that, first of all, no case has been made out for a large measure of protection for this industry. I have tried to point out that if the industry is threatened as alleged the Anti-Trust Bill furnishes ample protection against the dangers to which
Senator Trenwith alluded, namely, the importation by trusts or combines, or by means of dumping, with a view to injuring or destroying an Australian industry. The present position of the harvester industry is sufficiently satisfactory, and no additional protection is required. I desire to put in a word on behalf of the farmers, who undoubtedly will be taxed if, as a result of this or other legislation, there is caused an increase in the price of the article. Do what we may in the way of protection, we cannot by any possibility protect our farmers against the foreign producer. Our wheat-growers, who are particularly concerned, have unfortunately to compete against the cheapest labour in the world. Whatever we may do in the way of local legislation, the price of wheat is determined by the price in Mark-lane, where Australian wheat has to enter into competition with wheat grown by cheap Egyptian, Hindoo, and Russian labour.
– But that wheat is produced by most primitive appliances.
– The labour is the cheapest in the world, and it is the price of their wheat which rules the market ; and nothing we do here can shield our farmers from that competition.
– We can only benefit our farmers by bringing population here.
– No matter how rapidly the population increases, we are in hopes that the increase will mean more settlement, and, therefore, more wheat for export.
– The home consumption will be increased.
– At the same time, we hopethat the population, which may be attracted, will be a rural population, and that, in consequence, the production of wheat for export may be increased. The framers of the Bill, as shown in clause 4, regard it as something extremely undesirable -I should say suicidal - to do anything which would handicap our producers in the way of increasing the price of their tools of trade. My chief objection to the whole of this class of legislation is not merely that it means a higher measure of protection. I should not object to any duty if I thought that the sole effect would be to create local manufactures - to substitute local manufacture for importation. But there is always the possibility, and, in my opinion, the danger that, accompanying the develop ment of local industry, would be the imposition of an undue tax on the consumer.
– Assuming that to be so, it is guarded against in the Bill.
-I have my doubts about that. If I thought the whole effect of a protective duty would be to encourage local manufacture, I should vote every time for the protective duty. Free-traders do not vote against protective duties on the ground that these duties will develop local industries.
– I am afraid that some do.
– The honorable senator, I am sure, does not seriously mean that; the idea is too absurd. No doubt there may be found free-traders who are directly and personally interested in the import trade ; but I know of no one in this Chamber open to that suspicion. Free-traders object to protective duties, not because of any ill-will to local industries, but because they fear that while one local industry may be developed, an undue burden may be passed on to the consumer. I am not at all clear that the net result of the Bill will be other than a further impost on our farming population. If it became a question whether I should take some action here to benefit a manufacturingor a producing industry, I say at once that, as between the two, I should give my vote to the producing industry. But honorable senators opposite seem to think it possible to reconcile the two interests, and an attempt is being made to that end in this Bill. I welcome the Bill, not because I believe it will be effective, but because it is a recognition on behalf of my protectionist friends-
– Will the honorable senator give the Bill a trial ?
– I was asked to give the Anti-Trust Bill a trial, and, before the signature of the Governor-General is dry on that measure, Senator Trenwith tells me that it is only so much waste-paper. I am now asked to give this Bill a trial ; and I suppose that next session some one, after an appropriate interview with Mr. McKay, will tell us that the measure now before us is of no use, and ask me to give a trial to another measure. I am not prepared to indulge in legislation of that experimental kind. It does not behove us as serious business men to place on the statute-book all sorts of experimental laws. We ought to have a clear object before us ; and a reasonable measure of certainty that the particular Bill will effect the object sought; otherwise we ought not to be kept here considering it. I am not at all certain that the Bill will insure the immunity of the farming community from a burden of taxation which I, as a freetrader, “regard as most undesirable. Whilst I have no great faith in clause 4, 1 welcome it because it is a recognition by our protectionist friends of the well-known free-trade contention that it is the consumer who pays the protective- duty.
– Then what is clause 4 inserted for?
– Honorable senators opposite say that it is the consumer who - pays the protective duty, and we propose to give them a legislative guarantee that it will not be so.
– That is ingenious, as Senator Trenwith always is. Am I to be told that the schedule of prices which we will have to deal with later on is only put in to allay a groundless fear? Is it to become the law of the country, or is it not? Are stripper-harvesters to be sold at gradually reducing prices,, or is the provision inserted only as so much political padding ?
– We believe that what is provided for will follow, as it has done in a hundred instances.
– I could quote for the honorable senator 200 instances in which it has not followed. I look upon this clause as a recognition by our protectionist friends of a deeply-rooted fear that the effect of protectionist duties is to impose some additional burden on the consumer. It is an attempt, which I fear will not be successful, on the part of those responsible for the Bill, to try and reconcile the interests of producer and consumer which are so liable to clash, by saying that, while giving a measure of protection to the manufacturer, there is to be taken from him a guarantee that he will pass on some share of the benefits he will derive from this legislation to those who are compelled by force of law to purchase his goods. To this extent, I hail the measure, and the accompanying Excise Tariff Bill, as a recognition of two verv important principles grafted on two very bad Bills. If they are to become law, I shall, in con nexion with all future proposals to impose additional protective taxation, strive to the utmost of my power to see that these two guarantees are engrafted upon them, and that if we are to have established in this country a system which, by prohibiting imports, compels customers to purchase only locally-manufactured goods, our protectionist friends shall give some evidence of their bona fides when they say that protection leads to reduced prices. When they produce a single practical instance in which, as the result of the application of’ the protectionist principle, local manufacture has been developed, and at the same time prices have been reduced to consumers, then, and then only, will the fiscal question cease to trouble us.
Debate (on motion by Senator McGregor) adjourned.
– 1° moving -
That the Senate do now adjourn,
I hope that honorable senators will assist me in passing the Customs Tariff (Agricultural Machinery) Bill, and the Excise Tariff Bill connected with it, to-morrow, or be prepared to sit late until they are passed.
– Since- the Minister of Defence has gone so far in making an announcement as to the probable business to be taken tomorrow, I ask him to go a little further, and say what business he -will ask the Senate to deal with when we have finished with the Bills to which he has referred?
– The Customs Tariff (British Preference) Bill.
– Then I am sorry that it is necessary for me to introduce a topic on which I have already spoken more than once, and to remind Senator Playford that we have still to deal with, the Appropriation Bill.
– And the Government have introduced four fresh Bills in another place to-night.
– I regret that the danger should become greater5 every day that the Senate will be compelled by the Government to slur over, or to utterly neglect, the proper consideration of the most important measure that can come before any Legislature. I ask Senator Play- ford to show some regard for the Senate. I know that the honorable senator recognises the -difficulty, but if he postpones the consideration of that Bill for such a time as will compel the Senate to neglect’ its proper consideration, or else delay the closing of the session for some days, he will not be treating the Senate fairly. I say this, while fully realizing the difficult position in which Senator Playford is placed as a member of the Ministry in trying to get through the orders of the day as they appear on the notice-paper. I ask him to take into his serious consideration the possibility of giving honorable senators some definite statement as to when we shall be asked to deal with the Appropriation Bill.
– I shall try to do so to-morrow.
Question resolved in the affirmative.
Senate adjourned at 10.35 P-m-
Cite as: Australia, Senate, Debates, 2 October 1906, viewed 22 October 2017, <http://historichansard.net/senate/1906/19061002_senate_2_35/>.