12th Parliament · 1st Session
The President (Senator the Hon. W. Kingsmill) took the chair at 3 p.m., and read prayers.
Fine Woollen Fabrics
– Is it a fact that, owing to the present high rates of tariff; fine wool fabrics have risen in price to the extent of 19s. or 20s. a dress length? If so, will not such an increase have the effect of creating a greater demand for artificial. materials, which will react to the detriment of the Australian . wool, industry? Can the Minister, also. say. to what extent fine wool materials, woven three ounces to the square yard, are manufactured in Australia ?
– I do not think’ that there is any doubt . ‘that the.’ tariff schedules have not had the results’ suggested by the honorable senator; but, in order -that I may obtain the information sought, ‘I ask thathe place his. question on the . notice-paper.
Senator Sir GEORGE PEARCE.Has the attention . of the Vice-President ofthe Executive Council been directed to a statement in ‘ to-day’s Sydney Morning Herald that Mr. P. Coleman, M.H.R., is’ investigating the administration of Australia House and . will spend at least one month investigating the various departments ? In view of the fact that the Minister for Trade and Customs has just returned from London, and that the right honorable the Prime Minister and two other Ministers will shortly be in London, does the Government think . that the expense involved in this investigation is justified?
SenatorDALY. - I suggest that the right honorable the Leader of the Opposition. (Senator Sir George Pearce) knows that the Minister. for Trade and Customs visited England in order -to attend the Naval Disarmament Conference; that he also knows- that the Minister -did excellent work there in the interests of.
Australia, and that his time was fully occupied with matters connected with tha conference. The right honorable gentleman also knows that the Prime Minister will pay the closest attention to the duties devolving upon him in connexion with the Imperial Conference, and will have no time to investigate the administration of Australia House. The time of the Minister for Markets and Transport (Mr. Parker Moloney) will be fully occupied in dealing with matters associated with the Economic Conference connected with the Imperial Conference. The Leader of the Opposition must be aware that after the Attorney-General (Mr. Brennan) has completed his work at Genova, his time also will be fully occupied at the Imperial Conference in London. From information that has been supplied to the Government, it is of the opinion that Mr. Coleman’s time can be profitably employed, even at some cost ro the nation,in attempting to effect economies which the Government suggests can be, and ought to be, effected in the administration of Australia House.
– As I intimated on Friday, I have received from Senator Colebatch a letter informing me that it is his intention to move the adjournment of tho Senate for the purpose of discussing a matter of urgent public importance, namely, “ The consequence to Australia of retaliatory action by other countries that are penalized by recent tariff schedules, and more particularly the statement made recently by the Consul-General for Belgium, in its application to the frozen meat industry of Western Australia and the position of the pastoralists in the Kimberley districts of that State.”
Four honorable senators having risen in their places in support of tha motion.
Senator Sir HAL COLEBATCH (Western Australia) [3.5]. - In accordance with the letter which I have forwarded to the President, I move -
That the Senate at its rising adjourn till 10 a.m. to -morrow.
My purpose in doing so is to direct the attention of honorable senators to a matter of great urgency, namely, the consequences to Australia of retaliatory action by other countries which are penalized by recent tariff schedules, and more particularly the statement made last week by the Consul-Gcncral for Belgium in its application to the frozen meat industry of Western Australia and the -position of the pastoralists in the Kimberley district of that’ State.
I take it that my first duty is to establish the urgency of this’ matter. Last week’s newspapers contained a statement from the Consul-General for Belgium, which I shall not read, although 1 propose to direct attention to one or two paragraphs in it. The Consul-General for Belgium pointed out that the purchases by Belgium from Australia last year amounted to over £9,000,000, while sales by Belgium to Australia during the same period represented a value of £910,000, leaving a trade balance of over £8,000,000 in our favour. He went on to enumerate the classes of goods purchased by Belgium from Australia, but the only one to which I intend to refer, as being pertinent to this motion, is frozen beef, valued at £438,000. The Consul-General also pointed out that all the commodities which Belgium purchased from Australia, with the single exception of butter, were imported into Belgium duty free. On the other hand, he stated that the new tariff schedules recently introduced ‘ into this Parliament’ practically meant that imports from Belgium are now almost barred. He said that very few of the articles affected can be listed as luxuries; that practically all of them are primary products for some secondary local industry, such as plate and window glass, glassware, velvet, piece goods, cotton linen and ticking, parchment paper, precious stones unset, chemicals, and machinery. The Consul-General went on to say that the public and the Government of Belgium are aware of the difficulties with which the Commonwealth is confronted, and wish Australia a prompt and complete recovery. He added that for the time being Belgium would not enforce any measure which would . hamper in any way the speedy reestablishment of complete prosperity; but that if tho prohibitory measures, and the elimination of fair competitive conditions of commercial intercourse, were given a permanent character, Belgium would feel fully justified in taking appropriate measures for directing the patronage of Belgian buyers to those countries where goods manufactured in Belgium are not excluded from the market by drastic customs dispositions. That is an extremely courteous statement. But it is so strong that we cannot afford to ignore it.
Shortly after that statement appeared in the press I received an urgent telegram from the Premier of Western Australia drawing ray attention to the fact that the imposition of a duty on frozen beef entering Belgium would mean the closing down of the Wyndham Freezing Works, with disastrous results to the whole of the cattle-raisers in the East Kimberley district. The measure of those results F shall indicate a little later.
– There is no danger of that now. The Consul-General for Belgium is quite satisfied.
Senator Sir HAL COLEBATCH.L’ do not think that any one is quite satisfied. I want first to refer to the position of our trade with five countries - four European countries and Japan - with which we have had trade connexions, none of which is at all satisfied with the present state of affairs. “ The following table reveals the exchange of business between Australia and the countries men,tioned taking the average for’ the past five or six years : -
We have purchased approximately £15,000,000 worth of goods per annum from those five countries, and . in return they have bought from us goods to the value of” £55,000,000, a trade balance iri our favour of approximately £40,000,000. We are told that this is all emergency legislation. No matter how acute our difficulties may be, what good are we going to effect for Australia by disturbing trade relations that are so tremendously to our advantage? Personally, I do not hesitate to say that this form of legislation cannot possibly be of any good in any emergency. I direct the attention of honorable senators opposite to a statement that was recently made by the British Chancellor of the Exchequer, Mr. Phillip Snowden, who uttered a warning against a rush to quack remedies which, he stated, only aggravated bad conditions. He was afraid that there was a good deal of that to-day. Those are very wise words. Mr. Snowden went on to say that he was sure that high tariffs, being such a hindrance to trade, were in some degree responsible for the depression of world trade. He added that the Government must bc as reasonably assured as possible that the schemes it sanctioned were sound, and would conform to the conditions that it had laid down as to the efficiency of industry and the low cost of production. Those are the two things that we are putting right out of our minds. We are adopting instead what Mr. Snowden describes as quack remedies. How is it to be supposed that those countries can continue making their purchases from us if we refuse to buy from them ? France has already imposed retaliatory duties on our wheat and butter. Germany has imposed duties on our products, but they cannot be termed retaliatory because they have also been extended to the products of other countries. Whereas in 1926-27, Germany, France and Italy purchased from us 33,000,000 bushels of wheat, representing 52 per cent, of our total export, last year Germany and France purchased none of our wheat and Italy only about 3 per cent, of our total export. That indicates that we are cramping our market. The Italian trade with Australia is of comparatively recent origin. It began in a comprehensive way in 1919, when Italy established a line of steamers to trade from Europe to this, country. . Since then Italy’s purchases from Australia have reached as high a figure as £10,000,000 in one year and haveaveraged £5,250,00.0 per annum. On the other hand her sales to us have been between £1,000,000 and £2,000,000 per annum, a great balance in our favour.. During the eight years from 1921-22 to- 1928-29, we have bought from Italy £10,500,000 worth of goods as against Italy’s purchases from Australia in that period of £49,000,000, a trade balance is* our favour of approximately £38,500,000. An Italian steamer calls at our ports about once a month, and during the last two years 22 have visited Australia and have payed in harbour and wharfage, other dues and wages, an average of £12,500 each, or a total of about £140,000 a year. Italy now contemplates putting on bigger steamers for our trade. They will be motor ships, and while they will need less coal, they will call for greater service in other directions. Similar remarks apply to the trading activities of France and Germany with Australia. Their ships come to our ports, give employment on our wharfs, in our coalmines and in many other directions. The biggest item that Italy takes from Australia, and this applies very much to Germany and France, is wool, of which Italy bought 120,00.0 bales last year. Of that total that country was under an obligation to buy only two-thirds of her requirements from Australia. Because of the quality of our wool, Italy could not, without injury to itself, refrain from buying less than 80,000 bales of wool from Australia, but it could- purchase the remaining 40,000 to. 50,000 bales from any other country as well- as it could from us. The same remarks apply to France and Germany.
Tallow is another’ commodity that Italy purchases largely from Australia. It also buys a good deal of our wheat, as well as copra from the islands, through Sydney. All of those products could be purchased just as well from other countries, and in all of those matters Italy could have retaliated without any injury to herself.
We want the very opposite set of conditions to apply. We want to see those countries buying more of our products. There is no reason why we should not build up a trade with them in our butter and meat. Only recently tenders were called for a contract to supply tinned meat to cover the army and navy requirements of. Italy. I have very good reason to believe that had we been on sound friendly trading relations with Italy, a part, at least, of that very considerable contract would have ‘ come our way. Two tenders were received from Australia, one from the Wyndham meat works and the other froma meat works in one of the eastern States.
The reason given why Australia was not favoured with the contract was that there was no shipping available. I venture to suggest that that is not altogether a sufficient reason, and that had Italy been treated as a good customer ought to be treated, a very good fight would have been put up for that tender, with a reason able hope of success.
Our next step was to prohibit the importation of lemons from Italy. Australia has not imported lemons from that country except when the product was not available in Australia.
SenatorRae. - That is not correct. I have seen thousands of cases coming in when we had plenty of our own in the
Senator Sir HAL COLEBATCH.Usually we purchase Italian lemons only when our own are not available. I have a letter from the -New South Wales Wholesale Distributors Association setting out that point very clearly.. It states that there have been no importations of Italian lemons in recent years,- except in the summer months, when they are badly wanted and our own are practically unobtainable. I suggest that Australian consumers will discover between December and February next, when it will be difficult to purchase lemons, that an injury has been done- to them by excluding the Italian product.
One of the best known imports into Australia from Italy is the Borsalino hat. I wonder whether honorable senators realize what happens in regard to that hat, which sells in Sydney, Melbourne and other centres at 37s. 6d. The first stage is that the Italian manufacturer buys in London Australian rabbit skins for each hat, at a cost of 3s. to 4s. I understand that he manufactures the skins into a Borsalino hat and sells the finished article at11s. f.o.b. Genoa. From that l1s. it is necessary to deduct approximately 3s. 6d., the price of the skin, leaving 7s. 6d. as the total amount remaining for the Italian manufacturer.
– What is wrong with the Australian-made hat?
Senator Sir HAL COLEBATCHNothing, so far as I know. The Borsalino hat is delivered at Sydney at 15s. 6d. c.i.f., to which must be added. 8s. 6d. for duty, making a . total of 24s. It costs to distribute the article almost double as much as the manufacturer receives for making it. That is the condition of affairs that must always arise from excessive tariffs. They invariably lend themselves to monopolies of that description, involving the consumer in a much greater charge than is justified.
Japan sells to us approximately £4,000,000 to £5,000,000 worth of goods per annum and purchases in return commodities to the value of £12,500,000, an advantage in our favour of about £8,000,000. Among the’ articles sold to Australia is a comparatively small quantity of Japanese oak which pur furniture makers say is essential to enable them to carry on their business satisfactorily. Our importations of that item amount to about £150,000 per annum. Japanese oak has now been shut out, to our detriment, and to the great annoyance of the people who are our very good customers. I understand that already Japan’s purchases of our wool have fallen off in recent years.
– The -honorable senator is in error. The purchases of our wool by Japan have increased.
Senator Sir HAL COLEBATCH.That being so, the figures relating to our trade with Japan are even more striking. The fact that Japan is increasing its purchases from Australia, entitles that country to more consideration at the hands of this Government.
I come now to the case of Belgium. Our exports to that country last year totalled’ over £9,000,000 and the total value of our imports from Belgium was only £910,000. Under the provisions of the Belgian Tariff, it is competent for the Government of Belgium to impose certain import duties without reference to Parliament. There is a marked difference, apparently, between the practice in Belgium and the practice here. In some countries, including the United States of America, no tariff duties can be collected by the Government until Parliament has approved of the schedule; but in Great Britain a tariff becomes operative directly it is tabled in the House of Commons, although it is regarded as a strict obligation on the part of the Government that it shall give Parliament the earliest opportunity to consider the matter. In Belgium, and apparently also in some other countries, the Government has discretionary power, within certain closely defined limits, to impose tariffs; but in Australia, which is supposed to be the most democratic country in the world, we are living under a very complete despotism in this matter. It is competent for the Commonwealth Government to impose a tariff by simply laying a new schedule on the table. In this way a tariff may be imposed and duties collected under it for many months before Parliament has an opportunity to consider the Government’s proposals. This Government has done that. Eight months have elapsed since its first tariff schedule was laid on the table in another place, and I venture to say that a period of twelve months will elapse before the representatives of the people in this Parliament will have an opportunity to discuss it. This condition of affairs does not obtain in any other country. If the Government of Belgium exercised its power to impose a tariff on Australian frozen meat, as it threatened, it could, without consulting Parliament, levy a duty of between id. and i of Id. per lb., which would be sufficient to exclude the whole of our Wyndham frozen beef from the Belgium market.
– Will the honorable senator give me the reference to the legislation which he has mentioned? I understood’ the Government of Belgium proposed to levy 2-llth of Id. duty on Australian beef.
Senator Sir HAL COLEBATCH.The tariff on frozen beef is 30 francs per 100 kilograms, which the Belgian Government, without the consent of Parliament, could impose.
– That is about l-5th of Id. per lb. duty.
Senator Sir HAL COLEBATCH.With reference to our Wyndham frozen beef, I ask honorable senators to believe that I speak on this matter with a fairly exact knowledge, because for seven years I was a member of the Government in Western Australia. For the greater part of that time I was Minister controlling the Wyndham meat works, and, later, as Agent-General in London, I supervised the selling of its products. In connexion with this matter, I should like- to read to honorable senators the following tele* gram which I received from the Premier of Western Australia a few days ago: -
Exports Belgium last season £150,000 equals 07 per cent, total output. During last six years output to Belgium represents 83 pur cent. Loss of this market will inevitably close works as Germany already prohibited imports of frozen beef since 30th June. Result on pastoral industry Kimberleys disastrous as Wyndham only outlet, and in Northern Territory result serious. Wyndham lias been carried on for many years at heavy loss to maintain pastoral industry which will inevitably close down if Belgium prohibits imports. Contract for tinned beef for Royal Navy docs not improve position as could be carried out without interference Belgian trade.
The market for that class of beef is very limited, because the beef is regarded as second grade. By this I do not mean that it is inferior in quality, but it is lean meat from small cattle, and it is almost impossible to sell it satisfactorily on the Loudon market. If it -were placed there, the exporters would certainly have to take much lower prices, and it would be impossible for them to carry on the industry. Consequently, they are obliged to look to the continental market for their outlet. They have been, selling their meat in Belgium and other European countries, practically ever since the Wyndham meat works started. The construction of those works was begun in 1914, prior to the war. When war broke out the Government then in power, a Labour Government, found itself in serious . difficulties, and wisely or unwisely - I do not propose to debate that point now - it decided to complete the contract itself. As a result the works cost £880,000. Since then there has had to be added loss of interest amounting to £692,000, bringing the capital value of the works up to £1,572,000. Since 1919 up to the present time, with the exception of one1 year, the meat works have been carried on by the State. During the first three years, the losses were very heavy, but since then the loss has been equivalent to the charge for interest and amount to be set aside for the sinking fund. The Government realized that even if the works were closed, it would be losing just as much money, because interest and sinking fund charges would still have to be met, so in the interests of the cattle-growers of East Kimberley, who depend upon the works as an outlet for their stock, it determined to keep the works open. The industry provides employment for a considerable number of men, who receive good wages. I do not suggest that the men do not earn them. I have visited the works on many occasions and I can say without fear of contradiction that no mull work better than do the employees of the Wyndham meat works. As I have said, the establishment is of advantage to the community generally, and particularly to the cattle-raisers, who, if the works were closed, would have no outlet for their stock, and consequently could not carry on. There has been a small loss in addition to the interest and sinking fund charges in the operation, of the works during the last seven years. If now the Belgian meat market is closed to us the loss to the exporters will not be less than id., per. lb., and it will amount to £25,000 a year; If the works are closed the effect upon settlement in that part of Australia- will be disastrous. It is true that Vestys and Bovril Estates Limited have large interests in the Northern Territory. One of the firms mentioned has important interests in the Argentine, and the other in the United States of America, so I have no doubt that they will be able tq carry on. But what will become of the hundreds of small growers of cattle who depend, upon the Wyndham meat, works for the sale of their stock.
– Vesty’s works at Darwin have been closed for years.
– 1 was referring particularly to Vesty Brothers’ interests in cattle stations. 1 understand they have about sixteen properties, and, if I remember right, nine are in the Northern Territory, and seven in Western Australia. A fair number of cattle from those stations is sent to the Wyndham -works. Bovril Estates Limited also have’ large properties in North Australia, and they, too, send some of their cattle to Wyndham. These two big firms have huge interests in other parts of the world,’ and they could carry on even if the Wyndham meat works were closed down. In fact, I think it likely that, between them, they would absorb the bulk of tlie small cattle-owners who would be forced to go out of business. There is no more stirring epic in the colonizing history of Australia than the’ wonderful achievement of the Duracks, who, in 1S83, sot out from Queensland with 8,000 head of cattle, on a trek lasting two years and eight months. They lost five members of their party and one-half of their stock before they established the cattle-raising industry in the East Kimberleys. These people and their descendants have stuck to the job ever since, and it is deplorable to think that they are now in danger of being driven from their holdings if the Wyndham meat works are forced to close. The cattle industry of the Kimberleys has decreased considerably during the last niue or ten years. There has been a falling off of from 640,000 head in 1916 to 564,000 head in 1927. The East Kimberley portion of 1 lie north-west is served by the Wyndham Moat Works; but most of the West Kimberley cattle go down to the Perth market, which cannot be reached by those in .the East Kimberley. Notwithstanding the general decrease in the Kimberleys as a whole, the number of cattle in the East Kimberley district has increased in the period named by 56,000.
– How many beasts are slaughtered at Wyndham?
Senator Sir HAL COLEBATCH,From 25,000 to 30,000 a year.
– Practically all of the meat is exported.
Senator Sir HAL COLEBATCH.Yes; at times a small quantity has been despatched to the local market. I think honorable senators will realize that it is practically impossible to sell frozen beef in competition with, fresh beef, and that only in exceptional circumstances will it be possible to sell frozen beef if our present market is closed to us. According to the statement of the Premier of Western Australia, which I have quoted, and that made to me by the general manager of the Wyndham Meat Works, who has been in his present position since the works were established, if the Belgian market, which has been taking practically SO per cent, of the works’ output, is closed, the works will have to be- shut down, and the people in that district will be left without any possible outlet for their cattle. The time allotted for the discussion of this motion does not permit me to touch upon many of the phases of this question that I should like to discuss. We cannot, however, ignore the possibility that France, Germany, Belgium, and Italy may, under present circumstances, combine to totally shut out Australian products. It will then be found that our difficulties are more serious than they are to-day. It has been said in another place that France has no right to discriminate against Australia, because in imposing u general tariff we are not discriminating against France. People give their own interpretation ‘to words. It is all very well for us to say that the Commonwealth does not discriminate between States in the payment of bounties to those producing a certain commodity iri a particular State, but it is doing so. Foreign countries will naturally say that in imposing a tax on particular goods which they produce we are discriminating against them. If it is considered by other countries that we are discriminating against them they will naturally discriminate against us. . If they choose to place a certain interpretation on our action we cannot contest their opinion. In submitting this motion to the Senate, I will mention one point which I have not time to discuss at length : We all hope the League of Nations is going to make for peace. The Government appears to have almost childlike faith in the League; but there will never be anything approaching enduring peace and real prosperity amongst the peoples of the world unless we mete out to each other international justice, cultivate international friendship, and encourage international trade relations. Without these things there can be no world peace or world prosperity.
– I entirely agree with the sentiments expressed in the concluding words of the mover of the motion. It has been the policy of this Government ever since it has been in power to encourage the. very best relations between Australia and the British dominions, and also between Australia and other nations. In view of the recent conference between the Prime
Minister (Mr. Scullin) and the Belgian Consul, the urgency for this motion disappears. There is no danger that the Wyndham Meat Works will be closed down in consequence of any action taken by the Government. I have been instructed to say that the conference between the Belgian Consul and the Prime Minister was of a most friendly character, and that, before the conference ended, there was a complete appreciation of the fact that the Government has been forced into its present position, and is prepared to modify its tariff when circumstances enable it to do so. We have had many discussions in the Senate concerning our adverse trade balance, which is largely the cause of the present depression, and I hope at some period during to-day’s sitting to submit for the consideration of honorable senators the Estimates and budget-papers for the financial year 1930-31, which will enable honorable senators to realize the very difficult position in which the Government is placed. There seems to be some doubt in the mind of Senator Colebatch as to the course which the Government is pursuing. Some honorable members suggest that we have adopted some foolhardy policy regardless of our economic position; but that impression would, I submit, be removed if honorable senators read the last annual report and balancesheet of the Commonwealth Bank, a paragraph of which reads -
Arising out of what has already been said in this report, there emerges a position which must be faced at once and met without any evasion - this refers to overseas importations into Australia. As it stands to-day as indicated, the position is already one of embarrassment in regard to meeting external payments, and there are no justifiable expedients which can be adopted to meet the situation, excepting the determination to drastically reduce the importations of things non-essential until such time as we are again in a position to pay for these from oversea surpluses the result of production. If, therefore, the adoption of this course has the effect which it must have, of drastically reducing our custom to peoples overseas, it must not be interpreted as any policy against international trading, but should be accepted by those concerned as an indication of our determination to meet the position in the only way that can be approved by those who believe in sound financial and commercial principles.
I submit that that clearly sets out the reasons why the Government has acted in. this way. Our position has been appreciated by other nations, and in the spirit which animated that particular passage’ in the report which I have just read. The report continues -
Whilst the import and export figures for the current financial year cannot be ascertained until after 30th June, those so far available indicate a serious position of drift in the direction of adverse balance.
As this motion was submitted with the intention of directing attention to the effect of the tariff on the trade of Belgium with Australia, and not with Italy and France - because there is no urgency as far as those nations are concerned - I direct the attention of the Senate to the fact that our tariff does not discriminate against Belgium or any other country.
– It does against Belgian goods.
– It does not. The honorable senator must realize that our relationship with Belgium is closely associated with matters of foreign policy. When reference is made to the figures relating to our trade with any foreign country we have to bear in mind that Australia is part of the British Commonwealth of Nations. For instance, we buy steel rails from Great Britain, which in turn imports from Belgium the ores from which those rails are made. Has it never occurred to Senator Colebatch that a good deal of our trade with the United Kingdom is trade which has percolated from other countries through Great Britain to Australia?
– It is quite the other way about.
– It is not. I am not suggesting that in the aggregate the goods that Britain imports from foreign countries and the goods we buy from Britain would, in that indirect way, equalize Australia’s trade balance with those countries, but it is a fact that an adverse trade balance between one country and Great Britain might actually work out as a favorable trade balance between that country and Australia. We are, however, linked up with the British Commonwealth of Nations. We buy from Great Britain and, from the standpoint of trade balances, we are regarded asbeing part and parcel of Great Britain. In regard to reprisals, honorable senatorsmay remember the difficult situation that was once created when Canada was threatened with reprisals. What would be our position if we were to adopt a system of rationing our particular requirements between Great Britain and other countries? In framing a tariff we are obliged to show a preference to the United Kingdom. As to Belgium, if Senator Colebatch had studied the particular facts, he would have discovered that Belgium has raised no objection to any embargo that Australia has placed upon Belgian goods. The representations made by the Belgian consul to the Prime Minister had no relation whatever to the emergency tariff adopted by the Commonwealth. They related only to recent increases in certain tariff items to which I invite the attention of honorable senators. . We import from Belgium fur and other skins to the value of £40,098 per annum. The only tariff alteration made in regard to fur and other skins applies to rabbit skins. No alteration has been made in regard to gloves, of which Australia imports from Belgium £44,512 worth per annum. Likewise, there has been no alteration, except in regard to woollen piece goods, to the tariff, on piece goods of which we import from Belgium £175,000 worth a year. I could go right through the list down to the item of glassware, to which exception has mainly been taken by Belgium. On plate glass, of which we import from Belgium £131,247 worth a year, no alteration has been made. There has been an alteration in regard to precious stones. These figures were available in the Customs Department for Senator Colebatch to see. What the Belgian consul drew attention to was the fact that the Commonwealth was nearing the border line, but Ministers already appreciated that fact. After the financial statement is delivered, the Senate will have ample opportunity to discuss the Government’s foreign policy, and it would be anticipating debate for me now to go into matters relating to Italy, France and the other countries mentioned by Senator Colebatch.
– Through the French Commissioner, the French Chamber of Commerce last week made a complaint about discriminating duties.
– I quite agree that France has taken certain action, but we cannot remedy it by discussing motions for the adjournment of the Senate.
– In the list of goods which these European countries are sending to Australia, are there not piece goods upon which very high duties have recently been imposed?
– There has been no increase in the tariff on piece goods other than woollen piece goods. Negotiations which are now proceeding between various countries will form the subject of discussion at the forthcoming Imperial Conference. Nobody appreciates more than this Government does the necessity for building up overseas traded But nobody appreciates more than this Government does the- fact that Australia cannot continue living in a state of false prosperity; that its financial position is such that stern realities must be faced; that Australia’s present policy is dictated by the financial’ interests in whose hands the fate of the country rests, and will rest for some time to come. Senator Colebatch knows that the overseas trade position was sufficiently precarious to justify the Government in taking the action it did. The Wyndham meat works are not in any danger.
– The meat industry is in a serious position.
– I was going to sav that we need not anticipate trouble with Belgium. The Prime Minister, as a result of his interview with the Belgian consul, is fully alive to the situation. The whole question of Empire trade will be considered at the Imperial Conference, which Mr. Scullin is leaving Australia in a few weeks to attend. The people of Great Britain must realize that if Australia is to buy goods from them and at the same time hold this continent as a white settlement, the Empire must treat the matter of inter-dominion trade on a more serious basis than it has apparently been treated in recent years. Our exports of beef to Belgium represent about 15 per cent, of our total exports in beef. The total exportation last year was valued at £2,888,000, of which £1,599,000 worth went to the United Kingdom. The value exported from Queensland was £2,605,909, and that from Western Australia was £112,000.
– That figure is utterly wrong.
– It is the figure that has been supplied tome. Honorable senators will realize that I can supply only such figures as are furnished by the department. Those I have given the Senate are vouched for by the Customs Department. They show that the exports from the various States were . valued as under : -
– I think there is some mistake.
– I have just had handed to me Overseas Trade Bulletin No. 26 for the year 1928-29. The figures [ have quoted appear on page 17. The Bulletin gives £112,765 as the total value of the beef exported from Western Australia. If those figures are wrong, then both the Customs Department and the Statistician’s Department are wrong. Those figures are pounds sterling, not pounds weight.
– I understand that.
– In view of the early discussion on the budget, to discuss this matter fully now would simply be to duplicate that discussion. I have given Senator Colebatch an assurance that the Government is alive to the situation, so far as Belgium is concerned. I have also informed him that a conference between the Consul-General for Belgium and the Prime Minister ended satisfactorily. In view of these facts, and the additional fact that at the Imperial Conference, which is to be held within a few weeks, the whole matter of our export trade will be discussed, I suggest that Senator Colebatch should withdraw his motion.
Senator Sir GEORGE PEARCE (Western Australia) [3.54]. - I do not propose to debate this motion at length; but I feel that the Senate is indebted to Senator Colebatch for having raised the question with which it deals. I am afraid that it is a matter which the Government has overlooked in its efforts to remedy the adverse trade balance. Every one sympathizes with the Government’s desire to rectify our adverse trade balance, which has been brought about, first, by Australia’s prosperity and the consequent tremendous purchasing power of her people, resulting in a very large flow of imports into this country; and, secondly, by the great drop in the value of our exportable produce. Several remedies might have been applied to the rectification of our adverse trade balance. The most natural of all remedies, and the one most in accord with economic facts, is an alteration of the rate of exchange. The second remedy is by increasing the tariff imposts. In my opinion, the Government rushed ahead in its use of the tariff without having fully examined all aspects of the question, of which the subject before us is one. If by shutting out imports, or by so raising the duties on imported goods as to effect a considerable reduction of imports, we lead other countries to take retaliatory action against our primary products, we shall be worse off than when we started, because we shall intensify our unemployment problem. In the past Germany has been an excellent customer for Australian fruit. The fruit industry in Western Australia has benefited considerably by reason of Germany’s purchases having prevented a glut on the English fresh fruit market. The prevention of that glut has enabled more satisfactory prices to be obtained than would otherwise have been the case. I understand that Germany is now about to impose retaliatory duties on goods imported from Australia. The same thing is true with regard to Australian butter imported into France. To show that the Government did not give full consideration to the economic effect of the imposition of these duties and prohibitions, alleged to have been designed to deal with the adverse trade balance, a former Minister for Trade and Customs (Mr. Gullett) checked the value of the imports represented by a number of the items in the list of prohibitions. He found that the value represented by twenty-two items now prohibited was only £300,000 last year. Obviously, our serious adverse trade balance could not be rectified by prohibiting those items, seeing that such a comparatively’ small sum is affected.
– The ocean is made up of numbers of drops of water.
Senator Sir GEORGE PEARCE.If we must seek the restoration of the trade balance by imposing prohibitory duties, we should do so in respect of items of considerable value. Three hundred thousand pounds spread over 22 items, when compared with the adverse trade balance, is like a mud puddle compared with the boundless ocean. Yet it is in connexion with such comparatively insignificant items that friction is frequently created.
Had this question been examined by the Tariff Board, that body might have shown the effect of the imposition of these duties. I suggest that an examination by the Tariff Board would probably have shown the danger of retaliatory action being taken by other countries. Senator Colebatch has shown that the Western Australian frozen beef industry cannot be considered exactly on all fours with the other meat exports of the Commonwealth, because the Western Australian product is peculiarly suited to the particular market in which it finds a sale. By singling out one country for special treatment of this kind, Ave really provoke the idea of retaliatory measures. This discussion will not have been in vain if it convinces the Government that in its desire to take immediate action to put the finances of the Commonwealth on a satisfactory footing, it imposed duties without fully considering their effect. I suggest that the Government would do well to review the tariff in the light of the question raised here to-day, and of other questions raised from time to time. Without waiting for a revision of the tariff by Parliament, the Government itself should revise it as soon as possible. At present the Government is master of the situation. Parliament is impotent, for it cannot even discuss the duties. If they remain in force for twelve months, much damage might result. I hope that the Government will not romain idle and allow the duties to remain in force, regardless of the consequences. This motion should show the Government that its action is already having ‘disastrous results. I hope that it will take immediate action to provide a remedy.
– The Senate is indebted to Senator Cole batch for having brought this matter forward. Seeing that the balance of trade with the five countries which have been mentioned during this debate amounts to £40,000,000 per annum in our favour it would indeed be serious if any action taken by Australia led to retaliatory .steps which would prejudice that favorable trade balance. I agree with much thai Senator Colebatch has said, but I was not impressed by his plea on behalf of the Wyndham meat works in Western Australia. Those meat works are overcapitalized. Iti reply to an interjection. Senator Colebatch said that between 25,000 and 30,000 beasts were slaughtered annually at the Wyndham mea; works. The export figures for Western Australia show that the total export of beef represents a value of only £112,000 per annum - an average of about £3 10s. a beast. I am aware that Vestys spent about £2.000,000 in establishing a meat works at Darwin, which has now closed down owing to the refusal of the men to work. I do not think that Senator Colebatch improved his case by his reference to Bovril Estate Limited and Vestys, because those two huge concerns, according to him, own too great an area of the land in North-western Australia.
– That is not so.
– They own ten or twelve enormous stations in that district. It is a pity that they do. If that country is suitable for the production of high class beef, as I believe it is, it would be better if it were divided into smaller though of course not small holdings.
I did not like the plea made by Senator Colebatch on behalf of foreign hats. 1 wear a good Australian hat, which costs me £1 retail and gives me satisfactory service. In my opinion every loyal Australian should wear Australian hats. 1 see no necessity to buy hats made in Italy when satisfactory hats made in Australia by Australians, can be purchased at a reasonable price. There is no reason why we should not impose a tariff on their hats, even if the Italians purchase our rabbit fur. At the same time, I wish to direct the attention of the Leader of the Government in the Senate to a serious anomaly that has arisen from the imposition of the new customs duties, one that I should like to see rectified immediately, as it will be a long time before we shall have an opportunity to discuss the subject in this chamber. I understand that the Government has imposed a very high tariff on ladies’ 3-oz. woollen dress goods. That material has never been manufactured in Australia, and I do not think that our manufacturers could make it.
– Why not ?
– They have not the machinery.
– Let them get it.
– The demand is not sufficiently great to justify their doing so.
– Is it essential that we should have 3-oz. woollen goods ?
– It is a fashion. I regard the item as more of a luxury than a necessity. But we must be careful in our actions. We desire to encourage everybody in this ana in every other country to wear more wool, rather than artificial silk. If the Government makes the cost of light woollen dress goods exorbitant the women of Australia will not buy them, but will purchase artificial silk articles instead. We certainly do not wish to bring about an increase in the use of so-called artificial silk. I think that the Government made a rather serious mistake in imposing this duty, and I urge a reconsideration of the matter. The woolgrower of Australia is at present in a pretty desperate position, and it must be remembered that Australia lives to a very great extent upon our wool industry. During the last season Australia’s wool clip averaged only l0¼d. per lb., as against l6¼d. forthe previous year.
– I call the attention of honorable senators to the fact that the motion under discussion deals with the consequences to Australia that would arise from retaliatory action being taken by other countries.
– I shall deal with that now.
– The only way that we can increase the purchase and wearing of woollen goods is by increasing wages.
– Woollen goods are very cheap. However, you, Mr. President, will not permit me to carry that point further. I draw the attention of the Government to our trade relations with Japan. The Japanese Consul and representatives of that nation in Australia have taken serious exception to the prohibition that the Government has placed on the importation of Japanese oak into this country. I believe that the prohibition clause has since been withdrawn, but that the duty on Japanese oak into this country has been increased enormously, making it practically a prohibited article. We purchase only about £174,000 worth of Japanese oak per annum, and that country, is one. of our best customers for wool. Last year Japan purchased wool to the value of £10,000,000, and wheat to the value of nearly £1,000,000. The balance of trade between the two countries is greatly in our favour. We also look to the East for an increased market for wool and other primary products. Japan has greatly increased its purchases of wool and wheat, and we should foster our trade relations with them. It has been computed that if the people of the wool-using world used an additional quarter pound per head there would be a shortage of the article and a consequent considerable increase in its value, which would do more to stabilize our financial position than any legislation that could be introduced. We are running a very serious chance of antagonizing Japan by imposing such a stiff duty on one of its products. If that country imposed a duty of1d. a lb. on Australian wool, and 3d. a bushel on Australian wheat, it would pay Japan to buy those commodities from South Africa, South America, Canada and the Argentine respectively. The shutting out of the comparatively small importation of Japanese oak could give employment only to about ten or twelve people in the Australian timber trade, and I cannot see that there is any advantage in closing the door to that product of Japan, one of our best customers in wool, and a growing customer in wheat and other of our primary products.
Senator Colebatch is to be thanked for drawing attention to- the fact that the imposition of heavy duties on goods that are purchased from some of our best customers is likely to lead to retaliatory measures on their part. Such action would make our position desperate. If the Government wishes to impose stiff duties, why does it not do so against the products of the United States of America ? The balance of trade in favour of America against Australia amounts to about £30,000,000 per annum. The United States of America has imposed a high tariff against our wool, wheat, meat, and fruit, and, in fact, everything that we produce. I remember when that country purchased from 200,000 to 300,000 bales of our wool every year and when Japan bought practically none. Now we sell very little of our wool to the United States of America, because that country has imposed a tariff against our wool of 38 cents per lb., practically prohibiting our product. On the other hand Japan is now purchasing from us 300,000 bales of wool per annum. I can foresee the time when Japan will be purchasing 25 per cent, of our total wool output, manufacturing it and supplying the resultant manufactured goods, not only for use in their own country, but to China, Manchuria, and the East generally.
We should foster the goodwill of such a valuable customer. I urge Senator Daly to endeavour to induce the Government, before it is too late, to revise these very high duties that are levelled against countries that are our best customers.
– I am very pleased indeed that Senator Colebatch has brought this matter prominently before the Senate and the Government. Only about three weeks ago I asked a series of questions relative to French duties. Those questions induced an honorable senator to bring the matter up on an adjournment motion and, when speaking at the time, I said definitely that the subject of high tariffs and embargoes would have to receive serious consideration, otherwise they would result- in retaliation from other countries. Wo can best understand the minds of other nations by referring to the reports of the League of Nations. Suppose that- our apples were sold in Germany at £1 a case and, because of our tariff impositions, that country retaliated with a duty of 2s. a case on Australian apples. That would mean that, whereas £1 a case would be received by the vendors of the apples of other countries, those selling our apples would receive only 18s. a case, representing a considerable loss to Australia. Already 20 to 30 nations have agreed to the desirability of lower tariffs.
– Who are they?
– I shall refer to them directly. If these nations, by reciprocal arrangements or otherwise, reduced their tariffs to each other, we should be at a disadvantage, and would receive less for our products than would the nations in the low ‘tariff circle.
I shall quote from the proceedings at the Economic Conference that was held at Geneva in May, 1927, under the auspices of the League of Nations. It indicates clearly what other nations think about this matter, and what is likely to happen if we antagonize them by imposing excessive tariffs and embargoes against their products. World- wide importance was attached to that gathering, no less than 50 countries being represented by 194 accredited delegates, and 157 experts and secretaries. The following is one of the resolutions agreed to: -
The main object of the work of the committee has naturally been the question of customs tariff levels which is closely bound up with that of commercial treaties.
The essential conclusion which emerges from the discussion in this field is that the Conference declares that “ the time has come to put an end to the increase in tariffs and to move in the opposite direction “. To achieve this result, it is recommended that action should be pursued along the three following lines: - Firstly, individual action by the various States with regard to their own tariffs; secondly, bilateral action through the conclusion of suitable commercial treaties; thirdly, collective action, by means of an inquiry undertaken by the economic organization of the League of Nations, with a view to encouraging the extension of international trade on an equitable basis by removing or lowering the barriers to international exchange set up by excessive customs tariffs.
I particularly direct the attention of honorable senators to the recommendation that bilateral action be taken through the conclusion of suitable commercial treaties.
SenatorRae. - Who elected that conference?
– It was a con- ference of delegates from practically all countries convened at the instigation of the League of Nations. The League of Nations took action following on the presentation of that report, and in April, 1928, the Economic Committee of the League in compliance with a particularly explicit recommendation of the conference, undertook to codify the most favoured nation treatment which it was pointed out should bc either the central principle or the normal outcome of every commercial negotiation. The report stated -
Within a few months the committee will be ready to furnish particulars which might serve as a basis for international engagements with regard to its mechanism, its scope, and iu bearing on multilateral conventions. The committee has also included in its programme the examination of those general, special, and geographical exceptions of which the introduction seemed desirable on account of established international practice or the peculiar circumstances of certain States.
The report of the Economic Committee on the work of its 25th session also continued the following statement by Dr. von Schubert : -
Guided by the resolution of the International Economic Conference, the committee concerned itself chiefly with the improvement of the treaty-making methods at present in use, which the conference recognized to be defective. Its main efforts were directed towards the unconditional application, on as liberal a scale as possible, of most favoured nation treatment which forms the best safeguard for the equitable treatment of commerce, and towards lbc lowering, by collective action, of customs duties regarded as excessive.
Not much was done by the League to induce collective action to bring about a lowering of customs duties, but much has been done by way of treaties. In July, 1927, the late Dr. Stresemann, speaking with reference to the. work of the International Economic Conference, said -
The conference declares that the time has come to put an end to the increase in tariffs a nd to move in the opposite direction.
These are momentous words, involving as t hey do, a whole programme of work which can only advance by progressive steps towards realization. The means to this end lie, first nf all, in the simplification and unification of the mechan ism of tariffs, in striving for greater stability in customs duties, in the introduction of improved methods of treatymaking, and, finally, in a gradual reduction of tariff burdens.
Three rouds lead, towards this goal: individual action by States with regard to tariffs; bilateral action through the conclusion of suitable commercial treaties, and, lastly, international concerted action. The importance of international co-operation in this field is strongly underlined by the conference and it is just this part of the work which falls within the province of the League of Nations and its economic organs.
The League found it difficult to secure united action. Accordingly, it directed its attention to the possibility of achieving the end desired by contractual methods. Dr. von Schubert; reporting on the work af the Economic Committee during its 24th session, stated -
The committee’s efforts are chiefly directed to placing contractual methods, including the most-favoured-nation clause, on a sound basis, and towards the possibility nf collective action with a view to the concerted lowering of customs barriers . . .
The council will remember the warm reception given to the recommendations of the Economic Conference both by the Assembly and by almost all the governments. The committee’s report states that various governments have taken practical steps to give effect to these recommendations, and further notes the influence the recommendations have had on the independent action of governments in their commercial policy, and instances the conclusion of numerous commercial treaties which have not merely lowered duties between the contracting parties, but, by the operation of the most-favcurcd-nation clause, have extended’ the benefit of the reductions to other countries also. To quote the report, “ It is no exaggeration to say that 1927 has been the year of commercial treaties.”
Other nations arc solving their difficulties by means of these bilateral treaties, and are obtaining the advantages of the mostfavourednation treatment in this way. Australia, because of its high tariff duties, is shut out, and, as a result, our primary producers will receive very much less for their, products than will the producers of those countries who are receiving the benefit of this lower tariff obtained by commercial treaties and the operation of the most-favoured-nation clause.
– I cannot congratulate Senator Colebatch for his action in moving the adjournment of the Senate to discuss the effect of Commonwealth policy on Belgian trade. I noticed, in the gallery this afternoon, a number of distinguished visitors, including the Consuls-General for the countries whoso interests are affected by this Government’s tariff policy. The speech of the honorable senator who submitted the motion would give the consular representatives and the people of Australia the impression that the recent tariff action of this Government was wrong in principle. . That is not so. When the ministerial statement was being debated in this chamber a few months ago, Senator Colebatch, referring to our export and import trade, said he had no doubt that, within the last six years, Australia had gone very much to the bad. The honorable senator added that he did not question the need for a decrease in the volume of Australia’s importations in order to correct our trade balance. How, at the eleventh hour, wo find, him making an appeal to this Government on behalf of certain European nations to reconsider its policy, which, T remind him, was endorsed by the people of Australia not many months ago. I have no doubt that Senator Colebatch either heard through the air or read in the newspapers, the policy speech delivered by the Prime Minister at Richmond, in Victoria, ten months ugo. On that occasion the right honorable gentleman definitely pledged, not only himself, but- also all the candidates representing the Australian Labour party that, if he were returned to power, lie would give effect to the policy of new protection, which is one of the planks in the platform of the party.
– I admitted, when we were discussing the ministerial statement, that there must be ti decrease in imports.
– I commend to honorable senators a stirring article which appears in Smith’s Weekly of the 5th July, 1930, dealing with the French trade in Australian butter. The principal ment works of Australia are established at Brisbane, Townsville, Bowen, and Rockhampton, in Queensland, from which large consignments of frozen mutton and beef are shipped to France and Belgium. Consignments from New South Wales arc shipped only from Sydney, and from Victoria from Melbourne. The principal consignments from Western Australia are despatched from Wyndham where the meat works are established and where the principal operations consist of boiling down and preserving meat for export.
– The honorable senator is entirely wrong.
– I am fairly conversant with the industry as I was for some time engaged in it in Queensland. I am also aware that every year from 50 to 60 members of the Meat Industry Employees Union of New South Wales are sent to Wyndham to undertake the work of boiling down and preserving meat for export. The principal ports from which Australian frozen meat is exported are in Queensland. Senator Colebatch accuses the Government of discouraging trade within’ the Empire, and contends that there has not been sufficient trade between Australia and the Motherland.
– I did nothing of the kind.
– The honorable senator’s political heart now appears to be bleeding for France, Belgium, Italy, an-1 Germany, with which. countries he said we should encourage the friendliest relations. What did the honorable senator mean by his reference to theLeague of Nations and world peace ? Did lie mean that in consequence of the Government’s policy in attempting to adjust Australia’s financial position we will so offend those countries that they are likely to declare Avar .against Australia? The honorable senator suggested that if in consequence of the Government’s fiscal policy it is necessary to temporarily close the Wyndham meat works the country will be ruined, and that there will be insufficient money in that State to establish a dominion, the flag of which I understand is to be a black swan flying backwards through the union jack. According to the Overseas Trade Bulletin, No. 5, issued by the Commonwealth Bureau of Census and Statistics, the value of the frozen beef trade between Australia and Belgium in 1927-28 was £415,591. The Belgian people are not purchasing our frozen meat merely because they wish to assist Australian trade, but because it pays them to do so. According to the bulletin to which I have referred, Australia’s trade with Belgium in glue pieces and sinews in 1927-28 was valued at £492,536. which also show? that the Belgian manufacturers of gelatine and other such commodities found it profitable to trade with Australia. In view of the time occupied in transit, and the price at which certain commodities can be obtained, Belgium finds it more profitable to trade with Australia than with other countries.
– The honorable senator has exhausted his time.
Senator Sir WILLIAM GLASGOW (Queensland) [4.44]. - With other honorable senators on this side of the chamber I congratulate Senator Colebatch upon bringing this subject under the notice of the Senate. One of the most important functions of government is . to see that the channels of trade are kept as free as possible. While we sympathize with the Government in its difficulties in attempting to adjust the trade balance, we realize that by placing embargoes and p’artial embargoes upon the products from other countries, our own export trade will be seriously affected. The Minister (Senator Daly) said that embargoes had been placed upon the importation of certain goods from other countries in order to reduce importations, and in that way to assist in adjusting the trade balance ; but if in doing so we should offend nations which are our customers and reduce the value and volume of our exports the last stage may be worse than the first.
– That is not the position with respect to Belgium.
– It is in connexion with the product I am discussing, as I shall show the Minister. I was pleased to hear the Minister say that the embargoes which are at present imposed will either be removed or modified when our trade position justifies it. That . is the first ministerial statement we have had to that effect. Senator Colebatch has dealt with this subject from the view-point of Western Australia. It is also of vital importance to Queensland, which is the principal beef-exporting State, that the producers of frozen beef should be able to get a market for their surplus production, the export of which should be encouraged. . The beef produced in the northern part of Queensland is similar to that produced in the Wyndham dis trict. As the Darwin meat works are now closed, a large proportion of the cattle reared on the eastern side of the Barkly Tableland are marketed in Queensland, where they are slaughtered, frozen, and shipped. Certain circumstances have had a depressing effect upon the beef market since the beginning of the year and have resulted in stock dropping in price by over £2 a head. To-day the price of cattle at the Townsville meat works is 20s. per 100 lb., which is equivalent to a reduction of £2 a head on the price received at the end of last season. In 1921, 1922 and 1923 the price of cattle was below the cost of production; but since then the market has gradually improved, and during the last two years, in consequence of the reduced number of cattle in the country and of the improved condition of the market in Great Britain and on the continent, payable prices have been realized. The Belgian and German markets are important to Australian meat producers, because they absorb a large proportion of our second-grade beef, which, although of a lower standard, is good meat. This lean beef is suitable for continental markets.
– It is better than horse flesh.
– It is quite wholesome and excellent beef and I am rather surprised that the honorable senator should compare it with horse flesh. The continental markets take the lower-grade beef; they do not want fat beef; and the first-grade beef is absorbed by the English market. If the continental markets were not available for the lean beef, and it had to be marketed in Loudon, the only other place available, the effect would be to depreciate the market for our firstgrade beef. Senator Daly said that the Government’s action in connexion with these embargoes was not in the direction of discriminating against any European countries, but when a tariff is increased or an embargo is placed upon goods in the production of which certain countries specialize, it certainly has the appearance of discriminating against those countries. At any rate, that is the effect the embargo or the increased tariff is likely to have upon the people in those countries, just as we should regard it as discriminating agaiust Australia, if Belgium and Germany increased their tariffs on the second-grade beef we send to them. I hope that the Government when placing embargoes or increasing the duties upon commodities produced in foreign countries will have some regard for the effect its action is likely to have on some of our primary products. Beef gets no Government assistance in Australia, and every effort should be made to remove any hindrances there may be to getting’ it on to the best market. I hope that as soon as possible the Government will remove the embargoes or partial embargoes which have had the effect of offending certain of our excellent customers on the continent of Europe and elsewhere, and thus enable Australian products to get on the markets of those countries.
SenatorRAE (New South Wales) [4.55]. - I am not one of those who can on this occasion see their way to congratulate Senator Colebatch on bringing forward this motion, for the simple reason that it appears to me that it has brought about a position in which every honorable senator opposite, whetherhe approves of a high tariff, or admits one may be necessary in order to permit Australia to meet its adverse trade balance, wants something to be exempted. If all the wishes of honorable senators were fulfilled there would be no tariff at all. One wants Borsalino hats admitted free from Italy and another 3-oz. woollen goods from Belgium and so forth right down the list even to Japanese oak. Every honorable senator has some favourite commodity he wishes to be imported free of duty or nearly so. The whole tariff would be broken down if the Government acceded to all demands. I should be exceedingly glad if there were freetrade between every country. It would be an ideal condition of things, but retaliation is the very essence of tariffs. There is no fundamental principle involved in tariff legislation; excluding the use of customs duties for purely revenue purposes, it is almost entirely a matter of retaliation. Honorable senators opposite are apparently afraid that the result of the Commonwealth tariff will he that Japan will refuse to buy our wool and wheat, Germany will turn down our apples, France will not buy our butter and Belgium will not buy our meat. And it may be possible that Australians themselves, tens of thousands of whom are at present out of work and half-starved, will be compelled to eat the commodities they produce and wear woollen goods made by themselves from wool Australia produces. Such a calamitous state of affairs would break the hearts of our freetrade friends opposite! It is shocking that some honorable senators opposite seem to be filled with the idea that the only way in which a country can progress is to send away everything it produces of first-class quality and live itself on food of second-class quality. As I listened to Senator Chapman reciting the fact that certain nations in Europe are considering reciprocal tariffs and trade agreements it occurred to me that most of the European nations produce the same primary commodities.
– Some of the agreements have already been signed.
SenatorRAE. - I have not heard of anything more than pious aspirations in that direction, except . to a very limited extent. I am sure that honorable senators must have read, as I have read, that there has been a great tendency in recent years for nearly every country in the world to increase its tariff on many imports, and become as self-contained as possible, so that there is a practical danger of the world becoming a sort of series of watertight compartments.
– According to the last report of the League of Nations, many of these agreements have already been signed.
– My appreciation of the League of Nations is on a low level.
– Surely the honorable senator has seen that there is a European movement to reduce tariff walls ?
– I have seen all about that, and I have seen also that the Commonwealth of Nations, known as the British Empire, is seeking to try to bring about an economic unit of the whole of its far-flung dominions, so that there will be no tariff, or, at any rate,, very small tariff walls between the component parts of the Empire . and a big tariff against the world. It is impossible for the ideal of universal freetrade to be realized unless many other alterations are made in the relations between nations. Consequently, we must foresee the possibility of retaliation in the case of any tariff that is sufficiently high to be effective. We impose a protective tariff for the purpose of excluding foreign goods, and our eyes must be opened to the fact that if we adopt that policy we are always more or less in danger of meeting with retaliation. But are we the only people in the world with a high tariff? Do not other nations have high tariffs, in some cases higher than ours on many items? And are we so fearful of the results of our policy that we have to go on our bended knees to the people of other countries and say, “For goodness sake continue importing our products and we shall do our best to wipe out all our duties that affect you”? It is manifest in the case of a country like Australia, so far removed from other great centres of civilization, that, if the representatives of other countries come here to buy our goods they must derive some special advantage from doing so. They do not buy them from philanthropic motives. They do not make long journeys across the ocean, passing by countries nearer at hand, in order to deal with us unless our products are worth buying, or unless they are in some way advantageous to them in respect either of quality or price. They would not buy our goods if they could get goods of equal quality nearer to their home market. Consequently, as long as wo continue to produce either primary produce or manufactured goods of superior quality, or of quality suitable to the requirements of other nations, we shall get our share and do our share of the import trade of those countries.
– Not in manufactured goods.
– If our goods are superior in quality or quantity or in price, or if they suit the requirements of other countries, the representatives of those countries will come here to buy them. But we cannot possibly shut out goods by a protective tariff in order to increase local manufacture without running some risk of retaliation, just as every other nation that is trying to build up its internal economy by shutting out foreign goods meets the chance of retaliation. I cannot see how we are going to avoid it unless we entirely abandon our policy of protection. Are honorable senators prepared to have the courage of their convictions? Or have they any convictions on the matter? Do they say that we should adopt a straightout policy of freetrade, abolishing customs duties and raising revenue by other means, and letting Australians be “ wood and water joeys “ for the rest of the world? Or shall we stand by our protective policy? If we decide to stand by it, then manifestly every item will affect some other country. Otherwise, there would be no necessity for the imposition of duties. In every discussion of a tariff schedule, senator after senator rises to ask for an exemption in respect of some item in which he is particularly interested. If every such request wore acceded to what kind of a tariff schedule should we have? I appreciate that there are sound arguments for both protection and free-trade. But ‘we cannot have it both ways at the same time. If we arc < wedded to a policy of protection, we must bv prepared to accept the consequences of putting it into operation. If, as a result of that policy being put into operation, various commodities here and there are hit, we must still stand by the policy. And even if other countries affected by” our protection hit back, we must accept their retaliation as best we can. Why should we get into a state of panic merely because another nation objects to something it produces being kept out of this country?
– Why is ii that some of the embargoes recently imposed have since been removed?
– I do not suggest that, a government can take a blank sheet of paper and say that it will impose a fixed duty on every article imported. Various matters must be taken into account, such as the extent to which it pays to shut out certain commodities. That is a matter for a government to determine before putting its fixed policy into operation.
– The honorable senator is wobbling.
– I am not. It would be absurd if I were to say that a duty of, say, 25 per cent., 55 per cent, or 75 per cent, should be placed on everything indiscriminately.
– The honorable senator has not said why certain embargoes have since been removed.
– I suppose that the Government realized that in some instances errors of judgment had been made. It is possible that further information was placed at its disposal which justified the removal of the embargo in certain cases.
– Then the last word has not yet been said.
– The last word will never be said in connexion with any tariff schedule, because tariffs are only a lame expedient to bolster up a poor system. The whole capitalistic system is full of anomalies and contradictions which sooner or later will cause it to crumble. In the meantime, we are doing our best to bolster it up. We do so by all sorts of methods which inevitably result in further anomalies and contradictions.
– Is that the object of tariffs?
– The object is to make the system as harmless as possible in existing circumstances. When we cannot sec our way out of the maze in which we find ourselves, we must put up with our condition and do the best we can. I do not think that a final or a scientific tariff will ever be invented, because what we gain in one direction by the imposition of duties we lose in another direction. But, once we adopt a fiscal policy, we must accept it as a whole. I object to going down on our knees to ask other nations for favours. If in the markets of the world we are unable to hold outown, we deserve to suffer.
– Should we not show the spirit of sweet reasonableness to good customers?
– Yes. I have no objection to any modification that may be found necessary.
– The honorable senator has exhausted his time.
Senator CARROLL (Western Aus moments when the spirit of piety possessed the soul of Scotland’s national poet, he prayed -
O wad some power the giftie gie us,
To see oursels as others sec us!
I do not know whether that prayer was answered in his case, and I doubt if any of us would be pleased if that gift sought by the poet were bestowed on us. Australia is beginning to wake up and to see herself as other nations see her. The revelation is not altogether pleasing. Indeed, the nation is very disquieted concerning the picture presented to her. For years Australia has been a sort of fiscal bully among the nations. That development is not recent, and, unfortunately, it is growing worse. But, at last, Australia is waking up to the fact that she is without a friend in the fiscal world, with the possible exception of the United States of America. For some extraordinary reason, this country has shown the greatest affection for the United States of America.
– It is not affection, but fear.
– It is strange that the country for which Australia has the greatest affection is that with which it has the greatest adverse trade balance. Australia trades with the United States of America as if that country were its father and mother and long-lost brother. All along the line Australia is losing her export trade because of her fiscal enactments. Senator Colebatch is deserving of our thanks for directing attention to the important matter he has raised this afternoon. Our fiscal policy has robbed us of an enormous trade with our sister dominion, New Zealand. Only the other day honorable senators received a communication from a Melbourne manufacturer of vermicelli, macaroni, or spaghetti, who claims to be a staunch unionist, in which he pointed out that in her last revision of the tariff, New Zealand had placed Australian manufacturers of the commodity referred to by him in a worse position than those of any other country. That was, he said, clear evidence of retaliation for the shabby way in which Australia has treated New Zealand in tariff matters.
– Our importations from New Zealand have increased.
– We have lost much of our trade with New Zealand just as we previously lost our trade with Fiji and the East Indies. It is not long since Australia practically prohibited the importation of bananas from other countries in order to benefit a section of her people. Western Australia’s flour trade with the East Indies has been lost because of tariff restrictions on goods from those countries. Western Australia receives all the kicks of the tariff but none of the ha-pence.
There is on foot a movement in favour of an import duty on Java kapok. If a duty is imposed on that commodity, Western Australia will again be hit, for it will mean the loss of . the balance of her export trade with Java. In consequence of duties imposed on tobacco and other goods from Egypt, that country recently retaliated by placing duties on Australian wheat. That again adversely affected Western Australia. Honorable senators will also remember that a year or two ago, as a measure of retaliation for our action in respect of South African maize, the Government of South Africa imposed a duty on Australian wheat. In one direction after another, we have gradually lost ground; one market after another has gone. Soon we shall be faced with the position of having to beg other countries to buy our goods. It may be that that will not happen in connexion with our wool ; but already the world can do without Australian wheat. Senator Rae said that buyers from other countries purchase our goods because they must do so.
– I said that the fact that they do indicates that they realize that it is to their advantage to do so.
– That may be so. But the Tesult of our policy is that our export trade is gradually being lost.
One remark made by Senator Dunn was, in my opinion, not justified. The honorable senator said that we had no right to discuss a motion of this nature because a Labour Government was recently returned to power because of its high protectionist policy. That may be so; but it does not mean that honorable senators not supporting the Government must remain dumb. Even minorities have their rights. The people of Western Australia are at present in a minority.
It is unfortunate for Australia that they are; for it will not be long before the people of the rest of Australia will realize that on the question of tariffs, as on many other questions, the views of the people of Western Australia are sound. Sooner or later, we shall be forced to realize that if we want other nations to buy our goods, we must buy something from them in return, instead of giving them a snub when they desire to trade with us.
– The primary producers of the Commonwealth are suffering most because of the reprisals directed against Australia by other nations for our repeated tariff increases. It is strange that the Government seems to direct its activities in the way of tariff increases and embargoes largely against our best customers among the nations of the world. It is significant that expensive luxuries from the United States of America seem to be the only items that do not receive attention at the hands of the Government when preparing tariff schedules. Recently Germany imposed higher duties on Australian apples than apply to apples from New Zealand. That is a serious handicap to the apple-growers of Australia generally, particularly to those of Western Australia who are nearest the German market. As a result of tariff increases imposed on French exports to Australia by this Government, France has recently adopted retaliatory measures against Australian butter. If the Government continues this policy of high protection and tariff embargoes, Australia will soon have no friends among the trading nations of the world. That will be particularly prejudicial to those States which engage chiefly in primary production. In this connexion, I wish to compliment Senator Colebatch on the clear way in which he set out the injury with which the Wyndham meat works are threatened through the action of the Government in increasing duties against goods imported from Belgium. The Wyndham meat works are the mainstay of a huge district in the empty north of Australia. The telegram received from the Premier of Western Australia and read by Senator Colebatch, clearly shows that without the
Belgium trade those meat works cannot keep going. If they are not kept going a few hundred pioneers in the north of Australia will he compelled to relinquish their holdings.
– Are the meat-works run by the State Government?
– Yes ; and at a loss. They just about pay working expenses, but cannot meet interest on capital, or depreciation. By keeping them open the Government makes possible the employment of a few hundred men during the busy season, and enables several hundred pastoralists to remain on their holdings in the empty north.
– That knocks out the statement that they receive no assistance ; that it is a purely private enterprise.
– The Government of Western Australia has kept the works going ; and during the past five years Belgium has purchased 80 per cent, of their output. It is a shortsighted policy for the Commonwealth Government to take this action. It seems to be unaware that the discontinuance of those works would mean throwing several hundred men into unemployment and ruining a number of small pioneer pastoralists. So long as Ministers see a few extra factory hands employed in the industrial suburbs of Melbourne and Sydney they have no regard for producers who are pioneering the cattle industry outback under great hardships. Western Australian representatives are certainly justified in protesting against an action that will prejudice the interests of that State and of the country generally. I was pleased to hear the statement made by the VicePresident of the Executive Council (Senator Daly). I consider that the Belgian Government acted generously when it gave the Federal Government an assurance that, in the circumstances, it would not exercise the power that it possesses to increase the duty on this Australian product, whose export to Belgium is so essential to Wyndham. By repeatedly raising the tariff, the Federal Government has done a good deal of harm to Australia. It has injured us in the eyes of our best customers; and has tended to depreciate the value of our primary products in the markets of the world.
Every day I read complaints emanating from nations that are good customers of ours, regarding our tariff increases, which are prejudicing their commercial relations with us. In the Melbourne Herald of the 2nd of this month there appears a statement on the matter, reading -
Following the Federal Government’s policy of .prohibiting the importation of luxuries, Mr. Forde, as Acting-Minister for Customs, refused permission for the importation of a consignment of French perfume valued at £3,000.
Members of the French Chamber of Commerce in Australia consider that, as regards customs duties, Australia has selected France for unfair discrimination.
A resolution passed by the chamber refers to “the absolute lack of consideration shown toward the country which, after Great Britain, is Australia’s best customer.” It is pointed out that for the last five statistical years the trade balance is in Australia’s favour to the extent of £66.000,000. Figures for 1928-29 show that imports amounted to £3,700,303 and exports to £15,141,155. The introduction of a prohibitive duty on Australian ‘butter is one stop that France has taken in an endeavour to remedy the position.
Another statement was made by M. Lestocquoy, the Assistant Trade Commissioner for France, who, speaking for the French Chamber of Commerce, said -
Although reluctant to criticize Australia’s internal policy members could not but resent the fact that in its classification of so-called luxuries, some of which were exclusively of French origin, the Federal Government had discriminated against the importation of certain classes of French goods.
The Federal Government, while totally prohibiting the importation of a few thousand pounds of French preserved fruits, soaps and furs, had omitted from the list of prohibition and even from any increase in duty unassembled motor-car chassis (imports value £7,712,723), petrol (£0,810,287), lubricating oils (£1,319,081) and cinema films (£1,500,000).
I think that the complaint with regard to petrol is likely to be removed to-day. M. Lestocquoy continues -
In view of the fact that France is one of the largest purchasers of Australian wool, the Chamber protests against such discrimination. It asks that preferential treatment be granted to certain goods that cannot be called necessities, and in so doing appeals to the sense of justice of the Federal Government. The French duty on butter is a retaliatory measure.
– Does the honorable senator know the quantity of butter that France purchases from Australia?
– I have not the figures at call, but it is unwise to offend in this way a customer that annually buys £15,000,000 worth of our products and sells us only about £3,700,000 in return. If the Government is foolish enough to persist in this obnoxious policy of increased tariffs, I hope that it will take care to apply them as lightly as possible against those nations that are our best customers.
– SenatorRae seems to visualize the millennium, when we shall not send anything out of the country, but consume all that we produce. Trade slogans are popular. We are urged to “ eat more apples “ and so on, but not even the greatest optimist could expect us to consume the whole of our wheat crop. Supposing that the policy of the Government is 100 per cent, successful, and that it excludes from Australia goods from every other nation, is it not apparent that we shall then have to pay double freights on our primary products when sending them to the world’s markets?
– It cannot be expected that ships will come here in ballast and charge the ordinary rates to carry our produce.
– On the honorable senator’s assumption we shall not buy anything, so that the country will not be prejudiced.
– I said that if the Government’s policy resulted in shutting out all imports, the primary products that we should have to send overseas would incur double the present freights. We could not expect ships to come out here in ballast and transport our output to the world’s markets at prevailing rates. So that the Government’s policy is likely to do grave injury to the farmers of Australia.
SenatorRae asserted that he believed other nations traded with us because it was to their advantage. I am with the honorable senator in that, but he has to realize that the fact that those countries purchase a great deal of our produce makes back-shipment advantageous to them. The balance of trade gives them beneficial rates of exchange, and their goods come to Australia on very favorable terms.
SenatorRae. - The rate of exchange may vary at any time.
– It varies, of course, with the fluctuations in the balance of trade. At present in the case of the countries referred to in this debate there is a big balance in our favour, and other nations are encouraged to indulge in reciprocal trading with us. Our apple-growers have benefited to a considerable extent because of the existing rate of exchange with Great Britain. Senator Dunn asserted, contrary, I understand, to the pronouncement of the Leader of the Government in this chamber, that these measures were taken pursuant to the platform of the Labour party. You cannot have it both ways. I welcome the assurance that the Government is looking into the matter, and will endeavour to modify any action that may tend to injure rather than help us.
– The Labour party’s policy would not injure anybody.
- Senator Dunn asserted that these measures were taken pursuant to the policy of the Labour party. If Senator Daly does not agree with that, I have nothing more to say. Senator Dunn commented on an article that appeared in Smith’s Weekly, and even went to the extent of sending it across to me. I have read lit. It appears to me that the Belgian newspapers might have retorted in the same language. We all know that had Belgium chosen she might have bowed to superior force and permitted German hordes to pass through her territory as Germany desired, thereby saving Belgium from desolation and slaughter. But if honorable senators will look at that picture in the library they will realize that the spirit of the Belgian people, as exemplified in their King, refused to acquiesce in such a procedure. Belgium might well say to us now, “ The Belgian people stood side by side with you in defence of democracy and against militarism, and suffered the loss of many cities and of thousands of their best men. Now you promptly take the opportunity to discriminate against our country in this manner.” The argument advanced by Senator Dunn reacts against, rather than for us. I commend Senator Colebatch for his action in bringing this matter before the Senate.
– “When I was iu Queensland a few months ago I was met with information that the meat works were all more or less slowing down, and that, in consequence, quite a number of men were laid off, so adding to serious unemployment, which was already very high. Further, I was told that the price of a certain class of cattle was very adversely affected, and that a considerable decrease in value had taken place. Altogether there was rather a pessimistic note in cattle and meat circles, due to the fact that Germany had imposed prohibitory duties on imported Australian moat. Queensland had previously exported quite a considerable quantity to Germany. I am not sure whether or not the action is retaliatory, but I hope that when the Prime Minister visits England to attend the Imperial Conference, he will open tip negotiations with Germany with a view to having the duty removed. The impost makes a great deal of difference to our cattlemen and the meat works in Queensland, and in addition it is affecting the labour market, which requires bolstering up very much at the present moment. That is a point which I wished particularly to bring under the notice of the Leader of the Senate. With regard to the tariff generally, I think this motion would have been unnecessary if the Government had adopted my suggestion to Senator Rae when he was speaking and observed sweet reasonableness in its tariff measures against our good customers. If . that course had been followed by the Government, the present high rate of exchange would have been sufficient to rectify the economic situation in Australia within a reasonable time without recourse to the extreme measures which this Government hos adopted.
– I was astonished at the remarks of Senator Colebatch. The honorable senator adopted a very sympathetic attitude towards the Government of Belgium which has protested against the action of this Government in taking steps to correct Australia’s overseas trade balance. It seems to me that some honorable senators are protectionists when it suits them and when it does not suit them they declare for freetrade. Protection is the settled policy of Australia. I hope it will be endorsed by the people for all time. Since we stand for protection, surely it is unreasonable to expect the Government to alter its policy at the dictation of a government of another country which may be affected by increases in the Australian tariff. If we lower the tariff against Belgium, other countries which have trade relations with Australia will expect the same treatment. Senator H. E. Elliott reminded us that during the war Belgium was on the side of the Allies.
– What about the assistance which the Allies gave to Belgium?
– No one can deny that Belgium received great assistance from the Allies during and after the war. If we acquiesced in the request of the Governments of all those countries that fought on the side of the Allies, and lowered our tariff barriers Australia eventually would become a freetrade country, and it would be impossible to establish new or extend existing industries in the Commonwealth. If all countries adopted a uniform wage scale and observed our standard of living, we might then be able to surrender our protectionist policy ; but so long as we observe a higher standard of living and pay our operatives in industry higher rates of wages than obtain in other countries, we must protect Australian industries and Australian workmen by customs duties. It would be unreasonable to expect Australian industries to compete on even terms with industries in other countries where the wage-rate is, in some cases, as low as lOd. a day. I am surprised at the attitude of Senator Chapman, who is a free trader and a protectionist by turns. I assisted the honorable senator to have a duty imposed on New Zealand butter, because I am a wholehearted protectionist, and T considered that all industries should be equally safeguarded. Senator Glasgow also reverses his policy when it suits him. The . honorable senator comes from Queensland, which State is interested in the export of beef to Belgium or other countries. For this reason he supported Senator Colebatch in his protest against any action by this Government which might jeopardize or endanger that trade. Because he is interested in the exportation of beef he is inclined to adopt the role of the freetrader, and, I assume, would have no objection to the introduction of Belgian manufactured goods at lower rates of duty. Possibly, even he would not oppose the importation of cotton goods from Belgium, although a week or two ago he supported the Government’s proposal to pay a bounty to cotton-growers in Queensland. To say the least he is inconsistent in his fiscal faith. Let us be honest about this matter. I fail to see how we can support any movement to interfere with this Government’s policy. Recently we passed a measure under which bounties to the amount of £800,000 will be paid to encourage the establishment of cottongrowing and its allied secondary industries in Australia. We, therefore, cannot consistently lower duties against imports of cotton and other goods which would threaten the destruction of our new industries. I cannot follow the Une of reasoning adopted by those honorable senators who are supporting the motion. Because Japan, for example, imports Australian commodities to the value of £9,000,000 a year, that is no reason why we should allow Japanese manufactured goods to compete on unfair terms with the products of Austra-. lian secondary industries.
France, Belgium, Italy, Japan and other countries purchase Australian products because they are either cheaper or better than can be obtained elsewhere. There is no sentiment in commercial transactions. Senator H. E. Elliott stated that owing to the shrinkage in our import trade there will be fewer vessels coming to Australia to lift our surplus primary products. That is a difficulty which every protectionist country has to face. No one denies that we must find an outlet for our surplus production in other countries. I agree that in return Ave must expect to receive from those countries goods of equal value, but not a fraction more, if we are to build up secondary industries in Australia. I contend that we cannot differentiate in our tariff policy. This Government has decided that curtain duties shall be imposed in the interests of the nation and we must stand by its decision. I am in sympathy with the cattle-growers in Western Australia who depend upon the Wyndham meat works for their outlet, and I should be exceedingly sorry if anything happened to make the closing of those meat works necessary. I am not satisfied that our tariff policy has injured Belgian trade to the extent mentioned. If Belgium wants our meat, and if it is cheaper or better than that country can obtain in other countries, it will continue to take the Australian product. I hope it will at all events.
– I hope so, too.
– Quite so. We must, however, remember that the adoption of a protectionist policy must, to some extent, affect other nations. I hope that some way will be found to assist the meat export industry of Australia, If we were to meet the wishes of Belgium in this matter we should be confronted with requests by other nations. We must face the position as we find it to-day. If the wool producers, for instance, are in an unsatisfactory position, the services of scientists must be utilized to assist them to produce a finer wool that will favorably compete with artificial silk, which is at present seriously affecting the woollen industry of Australia.
Senator Sir HAL COLEBATCH (Western Australia) [5.53.]. - I do not feel that there is any necessity for me to apologize for having raised this question. It seems to me that it was high time that the Senate had an opportunity to discuss at least one feature of the Government’s fiscal policy. I do not disguise my own resentment of the fact that for eight months exorbitant customs duties have been imposed and collected without Parliament being in any way consulted. While I welcome the assurance of the Minister (Senator Daly) that these very high duties and prohibitions have been imposed only because of the present emergency, the satisfaction that I obtained from that statement was destroyed by the utterances of other honorable senators who supported the Minister. They assured us that these duties were in fulfilment of
Labour’s policy and that it is the desire of the Government nnder its protective policy to give the fullest possible protection to Australian industries, even to the point of prohibition. I am now wondering which is the correct statement. I accept that of the Minister because he speaks with a sense of responsibility. I believe that the Government has adopted this course only in this emergency, and therefore I must ignore the statements of other honorable senators opposite that this course has been followed- in pursuance of the policy of the Labour party.
SenatorRae. - We did not say that the emergency tariff was to remain in operation.
– The embargoes and prohibitions?
– I. am not prepared to admit that these prohibitions are necessary in the interests of Australia, and I assert without fear of truthful contradiction that the great volume of expert financial and economic opinion in Australia is entirely hostile to such a course. The Minister has directed attention to the last report of the Directors of the Commonwealth Bank. The words to which he directed particular attention were these - . . drastically reduce the importations of things non-essential, until such time us we are again in a position to pay for these from overseas surpluses the result of production.
But the importation of the chief nonessentials has not been drastically reduced. In fact, no serious attempt has been made to reduce importations in this respect. Senator E. B. Johnston referred to such articles as motor chassis, picture films, and things of that kind in connexion with which there has been no attempt to reduce importations, the prohibition of which would not have had such a serious effect upon Australia as the prohibition of a number of other essential commodities such as agricultural machinery has had. It is the first time that I have had an opportunity to peruse the report of the directors of the Commonwealth Bank, and when I endeavoured to obtain a copy, I was told that it was the only one available. I suggest that all honorable sena tors should be furnished with a copy of the report.
– Hear, hear! The honorable senator should have received a copy.
Senator Sir HAL COLEBATCH.This one is rather out of date; but I suppose another report will be available shortly. We were informed by two or three honorable senators that the countries to which reference has been made did business with us only because they could obtain better goods or secure them at a lower price in Australia than elsewhere. But the fact of the matter is that our goods are as cheap and of a quality equal to similar goods of other countries. That is all. Competition is extremely keen. The3½ years’ experience I had as AgentGeneral for Western Australia in London, showed me how difficult it is to secure and retain markets. Most of the countries mentioned trade with Australia because we trade with them. It is not because our goods are better ; they are only as good and as cheap as similar goods of other countries. When other nations have, to choose between two countries offering articles of the same quality and at the same price, they naturally trade with the country which does business with them. They do not do it for sentimental reasons, but because the shipping freights and exchange rates are more favorable. It is not a question of whether one is a freetrader or a protectionist. It is the duty of honorable senators to bring before the Government the dangers of imposing excessive customs duties against good customers. Attention having been drawn to this matter the Government now says that it recognizes the position and intends to modify its policy when the time is opportune. The high protective policy which has been adopted by Australia for many years has not given very brilliant, results. I do not think it can be contended that our policy of protection has brought Australia to a state of prosperity, or that an extension of such a policy is likely to get us out of - our troubles. I am more inclined to accept the views of responsible economists in this country who say that our policy of protection and the payment of bounties must be reasonable, formulated with the idea of helping those industries suited to the country, and which do not suffer a maximum disadvantage as against other countries. The Government should not impose exorbitant customs duties or absolute prohibition without considering the effect that such a policy will have on other industries. That is my attitude. It is entirely reasonable and not inconsistent either with the policy of assisting Australian industries or giving reasonable preference to the Mother Country. 1 do not propose to detain the Senate in discussing this subject further. I repeat and emphasize that the views I have expressed are not only my own, but those of thousands of people throughout the country who believe that by imposing high customs duties, and prohibiting certain imports without reference to Parliament, the Government has abused the confidence of the people of Australia.
– I would not say that the Government has abused the confidence of the people.
– The Senate having been given an opportunity by this means to express its opinion on this important subject, I ask leave to withdraw the motion.
Motion, by leave, withdrawn.
asked the Minister representing the Minister for Trade and Customs, upon notice -
– The information is being obtained as far as possible.
The following papers were presented : -
Audit Act - Regulations amended - Statutory Rules 1930, No. 74.
Commonwealth Bank Act - Regulations amended - Statutory Rules 1930, No. 72 -No. 73.
Lands Acquisition Act - Land acquired at Forrest, Western Australia - For Defence purposes.
Navigation Act - Regulations amended - Statutory Rules 1930, No. 59.
Seat of Government Acceptance Act and Seat of Government (Administration) Act - Ordinance No. 8 of 1930 - Leases (Special Purposes).
Additions, NewWorks, Buildings, etc.
– I lay upon the table of the Senate by command -
Estimates of Expenditure for Additions, New Works, Buildings, &c. for the year ending 30th June, 1931.
The Budget, 1930-31 - Papers presented by the Right Honorable J. H. Scullin, P.C.. M.P., in connexion with the Budget of 1930-31 (Preliminary issue).
I move -
That the papers be printed.
In formulating the budget for the year 1930-31 the Government was faced with a financial depression without parallel in the thirty years’ life. of the Commonwealth. The causes of this depression have been the subject of a great deal of comment and discussion with which honorable senators are familiar. In order, however, to focus attention upon the real nature of the problem, it is proper to review again the main factors that are reacting so adversely upon our financial position.
The severe economic disturbance at present prevailing in nearly all countries has been preceded or accompanied by a disastrous collapse in commodity values. Its effect on the prices of wool, wheat, metals and other products, which constitute the major portion of Australia’s exportable production, are well known. Concurrently with the decline in the value of exports there has been a cessation of the flow of loan moneys from overseas. Drought conditions in many districts during recent seasons also have had their adverse effect by reducing the volume of primary production. The loss in Australia of real income consequent upon these factors is variously estimated for the year just closed at between £50,000,000 and £70,000,000.
An inevitable result of the reduced local spending power is reflected in curtailment of credit, reduced trade, increased unemployment and derangement of governmental finance
The ultimate effect upon Commonwealth finance has been accentuated owing to the necessity for restricting importations with the resultant sacrifice of a large proportion of the customs revenue. The fiscal and- monetary policy of Commonwealth Governments in recent years has been ill-adapted to withstand any serious upset in the trade equilibrium except by an increased dependence on the overseas loan market. The failure of the London loan market as a supplementary source of national income precipitated the monetary stringency from which the whole country is now suffering.
Upon the flow of oversea loan money becoming interrupted we were faced with a shortage of London funds with which to meet our external commitments, and to pay for services and goods purchased abroad. This was the most critical problem facing the present Government when it came into office. “We have contrived to meet the position temporarily by arranging short-dated accommodation from the bill market, advances from the Australian banks, and by overdrafts in London from the Commonwealth and Westminster Banks. But a more permanent solution of the London position must be found.
The Loan Council must secure overseas, by a long-dated loan or other means, not less than £30,000,000 in the near future in order to clear up the London position. Failure to make such provision will bring about an embarrassing situation. The difficulty arises entirely from our temporary inability to secure command of funds in London.
This situation has been causing the Commonwealth Government and the Loan Council grave concern for some time past and has been the subject of intimate negotiations with London financial houses. I am hopeful that these negotiations will prove successful and that the meeting of our London commitments will be arranged on satisfactory terms at an early date.. I have referred to the subject in plain terms and with complete candour in order that honorable senators will appreciate the gravity of the problem.
The volume of imports to this country has amounted to colossal figures in recent years, reaching the peak of £164,000,000 in 1926-27. Excluding bullion and specie, these imports exceeded exports by approximately £70,000,000 during the last six years.
When the adverse trade balance could be made good by raising long-dated credits in London the needs of the moment were met. It is clear, however, that British investors were not indifferent to the unsound economic position that had developed in Australian affairs, and equally clear that they had become unwilling to provide loan moneys for us with the same promptness and facility as before.
The opinion in Great Britain that Australia was over borrowing was greatly assisted by the fact that Australia was issuing new loans in London or New York at frequent intervals. In 1927 Australian Governments floated eleven loans overseas for a total of £69,706,000; in 1928, five loans for £30,500,000; in 1929, up to the change of government, three loans, including treasury-bills, for £25,403,000; a grand total, in less than three years, of nineteen loans for £125,609,000. That is to say, Australia during the three year period referred to put out loans at an average rate of £6,600,000 in every two months. Tt matters little. when considering the effect of this upon the public mind that, of the total above-mentioned, £36,400,000 was for conversions.
The last new money loan issued for Australia in London was a 5 per cent. 46-yenr loan issued at 98 in January, 1929. Only 16 per cent, of that loan was subscribed by the public, the balance being left with the underwriters. From the time of that issue to the present the London market has gone steadily against us. Although the necessity of new loans became more and more acute and the Loan Council sounded the position in London many times during 1929 and again in the early months of this year, no opportunity has occurred to approach, the market with an issue upon acceptable terms.
The serious decline that has taken place in the market value of Australian securities in London is indicated in the following statement. For purposes of comparison, the quotations are shown in juxtaposition with the prices of the comparable stocks of New Zealand and South Africa.
In the period from the beginning of 1929 to 30th June, 1930, Australian stocks declined in value 12f points while those of New Zealand declined only If and those of South Africa 4 points.
Taking into account the improved figures for this week, Australian stocks, in the full period covered by this table, declined in value 9£ points whilst those of New Zealand declined by 2 and those of South Africa 4£ points.
It has, I think, been brought home to all of us that the time is long overdue when borrowing abroad should be reduced to a minimum, and that the domestic market should be relied upon to provide the bulk of the moneys necessary for developmental works. To revert to the overseas market for borrowing on the scale which obtained during the last few years, even if the market were accessible to us, would be merely postponing the day of reckoning, and, now that we are facing that reckoning, it should be done resolutely and with a fixed determination to arrive at a satisfactory and permanent solution of the problem.
The objective to be aimed at is to so adjust Australia’s overseas trade that the surplus of exports over imports together with the reduced borrowing that may be possible on the London and New York markets, in the future, will be sufficient to meet the requirements of the Commonwealth and State Governments for commitments abroad.
To this end, the Government has materially increased the customs tariff on luxuries and non-essential articles, has rationed the imports of some articles and placed an absolute prohibition on the import of certain other articles.
The Australian banks have also given valuable assistance in this direction by rationing London exchange to their importing clients. In addition, the increase in the rate of exchange on London is an important factor which will operate towards restoring the balance of trade. In July last, £101 in Australia would buy a telegraphic transfer of £100 to London; to-day it would cost £106 10s. for the same purpose. The additional cost of London funds, whilst operating adversely to the importer, replaces to some extent the reduced returns to the primary producer from the sale of his exported products.
In December last the Government brought down a measure, which was approved by Parliament, authorizing the mobilization of the gold resources of the Commonwealth. By this means, gold, which had been lying idle in the vaults of the banks, became an active influence in assisting the London exchange position. During the financial year, gold to the value of approximately £27,000,000 was transferred overseas, but obviously this cannot become a recurring operation on so large a scale. When the gold holdings of the Commonwealth Bank are reduced to such an amount as is necessary for the seasonal expansion of the note issue and the statutory gold reserve, the gold available for export will be limited to new production approximating £2,000,000 per annum.
It may be necessary in order to make sure of future government requirements in London being met to invite the trading banks to pool their external exchange and give the Commonwealth and State Governments first call upon their London funds.
It is not claimed that a permanent settlement of our financial difficulties can be obtained by the methods outlined. At the best, they are temporary, and, in some cases, drastic expedients imposed to meet an emergent situation. In due course, when they have fulfilled their purpose, these temporary expedients will be removed. It is confidently expected that, in the meantime, Australia’s secondary industries will have so expanded that much of the manufactured goods imported in the past will be replaced by goods of local manufacture resulting in a substantial permanent reduction in the volume of imports.
Sitting suspended from 6.15 to 8 p.m.
– On coming into office in October last, the Government found the following position : -
The accumulated deficit at 30th June, 1929, was £4,987,718.
An examination of the Consolidated Revenue position as at the date of the change of government disclosed that’ a further deficit in the current year’s accounts would be inevitable. Towards meeting this, the present Government imposed additional taxation, but due mainly to the reduced volume of imports the year finished with a deficit of £1,470,164.
At the end of September, 1929, the Commonwealth Government cash balances showed a credit balance of £420,000 in Australia, but a debit balance of £3,370,000 in London - thus a net debit balance in the Commonwealth cash accounts of nearly £3,000,000.
The total new money required for the 1929-30 loan programmes of the Commonwealth and the States, and to cover arrears of borrowing and deficits to be funded, was £42,000,000. In addition, the Government was faced with the task of providing within one year of assum ing office, for the conversion or redemption in Australia, of £71,000,000 of maturing Commonwealth loans.
The transactions of the financial year 1929-30 resulted as follows : -
As against this deficit, it should be remembered that during the year £4,164,032 was provided from Commonwealth revenue for the redemption of Commonwealth debt and £994,433 was provided from Commonwealth revenue for the redemption of States’ debts.
Last year the present Government budgeted for revenue of £64,589,000. The actual revenue shows a shortage of £1,542,697, a sum approximately the same as the deficit for the year.
Of the total revenue, £58,187,777 came . from direct and indirect taxation, whilst other revenue totalled £4,858,526. Customs and excise revenue was £2,675,609 less than the estimate. This loss of revenue was largely due to the restrictions imposed on imports, which have already been referred to. From direct taxation, we received £968,386 more than was estimated, the chief increase being £535,030 under income tax.
It was anticipated that the business undertakings would show a surplus of £176,601 for the year. Instead, however, there was a loss of £125,683. This was due to the diminution of postal receipts and of Trans-Australian railway earnings.
The expenditure on the departments and general services was £340,759 less than the estimate. The chief item of decrease was interest and sinking funds on war loans, which was £603,455 less than the anticipated payments. Under the war conversion operation of March last, interest on converted holdings of the December, 1930, loan became payable in September and March of each year instead of in June and December. Whilst there was no loss of interest to the bond owners, one result of the conversion wa3 to relieve last year’s Commonwealth accounts of three months’ interest on the converted holdings.
Last year it was necessary to increase the amount provided by the former Government for invalid and old-age pensions from £10,300,000 to £10,600,000. Even this increased amount proved to be inadequate, the final expenditure being £10,791,326. There was a large increase in the applications for pensions, due to lbc extent of unemployment.
A saving of £91,432 was secured under the ordinary votes of departments, the expenditure being £2,950,4’59, as against the estimate of £3,041,891. The expenditure for the year was less than that for 1927-28 and 1928-29.
Under miscellaneous services there was an increase of £232,667, the expenditure being £619,504, as compared with the estimate of £3S6,837. Of the increase, £17.1,000 was for interest on overdrafts in London and £S5,000 represented exchange on the remittance of funds to London. It is necessary for the Government to secure all possible London exchange despite the fact that the exchange rate is over £6 per £100.
The accumulated deficit of £4,987,718 at 30th June, 1929, has now been increased to £6,457,882. In view of the abnormal financial conditions at present existing, the Government does not propose to provide for the reduction of the accumulated deficit during the current financial year. To raise additional taxation for this purpose in a year when the income of Australia is greatly depleted and ordinary revenue yields much less than it would in a normal year, would be to place too great a burden on the nation. With a return to normal conditions, and a substantial increase of exports, it should be possible to provide for the liquidation of the deficit o’ver a relatively short period of years. In the meantime, the deficit will he temporarily covered by means of a loan appropriation of £7,000,000, which was voted “ to be paid to the Consolidated Revenue Fund.”
Parliament must recognize, however, that no further drift in Commonwealth finances can be permitted, and that the balancing of the budget is an essential step for the restoration of the credit of Australia. The Government proposes to watch the financial position closely throughout the year, and without waiting until the end of the financial year, will not hesitate to take immediate steps if such action appears to be necessary in order to prevent any serious disturbance in the budgetary position.
In any examination of the financial difficulties of the Commonwealth, we must not overlook the enormous annual burden attributable to the war. The Commonwealth must raise more than £30,000,000 per year in taxation to pay the direct and inescapable charges for interest and sinking fund on war debt, and for war pensions and repatriation services. In addition there are other indirect war charges which contribute to the cost of government in many ways. The war has laid a heavy burden upon all the combatants. In times of financial stress such as the present the crippling effect of our increasing war obligations is grievously felt.
In part 1 of the Consolidated Revenue Fund - that is, departments and services other than business undertakings and territories - the total expenditure for 1929-30 was £52,302,742. The following expenditures included in that total are almost wholly payable under statutory appropriations which are not controllable by the administration: -
Of the balance, £7,186,372, more than £4,000,000 is absorbed by the Defence
Department and about £3,000,000 by the ordinary departments. Those who talk of cutting millions out of this expenditure have not sufficiently considered the problem.
Drastic cuts have been made in the Defence Department. A reduction of £150,000 was made in the appropriations for the year just closed and a further reduction of £500,000 is being made in this year. It will be impossible to make further reductions without resorting to drastic retrenchment of the personnel and seriously impairing the whole defence organization.
By the reorganization of the work of the Development and Migration Commission a substantial (saving in administrative and other contributory expenses has been secured. The expenditure from revenue this year will be £50,709 less than the amount appropriated last year, and £60,746 less than the actual expenditure in 1928-29. As the reorganization was effected during the course of the year 1929-30, the expenditure for that year was £16,880 less than the amount appropriated. In addition to the savings on revenue votes, passage money appropriations, which were formerly met from the Loan Fund, have been reduced by £80,000- from £100,000 last year to £20,000 this year.
Administrative expenses in connexion with the Federal Capital Territory have been reduced by £30,000.
The ordinary votes of the Government Departments have been subjected to the closest scrutiny. The total appropriation is lower now than it was in any year during the last four years, notwithstanding the increased cost of living allowances payable to officers of the Public Service.
It must be remembered that there is always a natural increase in administrative expenditure due in part to an extension of existing services, as well as to the demands of a growing population. Notwithstanding this natural increase the Government, by careful control, was enabled to keep the expenditure last year £91,432 below the amount appropriated.
The Government has been in office only eight months and it has been impossible in that short period to exhaust all possibilities of reducing expenditure. Earnest efforts have been made to cut out unnecessary expenditure. It is the intention of the Government to continue a close scrutiny of departmental expenditure throughout the. year and it is confidently hoped that the result will be a substantial reduction in expenditure as compared with the amount estimated.
A careful examination of departmental expenditure shows that any large saving can be achieved only at the expense of salaries, and other emoluments and by retrenchment of staff, which, as a result of rigid control, is not at present overloaded.
The extra cost of living allowance which has been awarded to the public servants and is incorporated in the current year’s Estimates, is the result of arbitration awards. It may seem anomalous that at a time when commodity costs are falling the Public Service should enjoy increments in salary owing to “increased cost of living”. It must be remembered that the computation is based upon the twelve months’ figures for the period prior to March in each year and that, therefore, there’ is always a lag between the increase in the cost of living and the automatic increase in salary enjoyed by the Government employees. If the cost of living continues to decline the Public Service will, next year, by the operation of the same awards, be subject to an automatic reduction of salary.
Invalid and Old-age Pensions.
Increased numbers of claims for invalid and old-age pensions have resulted in heavy additions to the annual expenditure under this heading, the figures being - ‘
During 1929-30 the number of pensions in force increased by 13,959, which constituted the largest addition in any one year. This heavy increase may be attributed to the present industrial depression. On the 30th June, 1930, there were 155,196 old-age and 63,304 invalid pensions in force.
The estimated expenditure on war pensions in 1930-31 is £7,957,000, as compared with £7,897,289 in 1929-30. It will thus be seen that the peak period for war pensions has not yet been reached, though it was generally considered that 1930 would be the peak year. It is estimated that the number of pensioners will increase from 278,318 on 31st May, 1930, to 284,000 on 30th June, 1931, owing chiefly to the increasing number of pensioned wives and children and to pensions granted by the Appeal Tribunals. General repatriation expenses are expected to increase from £1,044,000 in 1929-30 to £1,125,314 in 1930-31. These figures represent the net expenditure, after allowing for repayments of loans and other miscellaneous receipts.
Excluding war pensions, the principal items in the gross expenditure for 1930-31 may be compared with those for 1925-26 as under : -
It will be seen that the cost of administration has decreased by £9,336, but the benefits to ex-soldiers and their dependants have increased by £249,054.
Despite the lapse of time since the conclusion of the war, repatriation expenditure continues to grow.
In view of the present adverse position of Commonwealth finances, the Government has found it necessary to reduce financial allotments for defence purposes for 1930-31 to £3,767,000 from revenue and £129,800 from loan fund, as compared with £4,267,000 and £246,500 respectively in 1929-30. The revenue savings thus total £500,000 and the loan £116,700.
As a result, curtailment of certain activities in the Royal Australian Navy is necessary, the ships in commission being reduced to H.M.A.S. Australia, H.M.A.S.
Canberra, cruisers; H.M.A.S. Albatross, seaplane carrier, and H.M.A.S. Anzac, flotilla leader ; the following ships having been paid off into reserve during 1929-30 - H.M.A.S. Swordsman, H.M.A.S. Success, H.M.A.S. Moresby, H.M.A.S. Oxley, and H.M.A.S. Otway, these factors enabling reduction of establishments of seagoing personnel by 61 officers and 639 men, including five officers and 76 men on loan from the Royal Navy who have been returned to England. Of the total establishment of the sea-going forces, Royal Naval personnel now approximate 3 per cent, only - the lowest percentage yet recorded.
Reductions in the personnel of the Permanent Military Forces total 92, representing the abolition of vacant positions. The change from compulsory to voluntary enlistment, combined with the consequent reductions in establishments from 47,500 to 35,000 militia, and senior cadets from 16,700 to 7,000 leaves the Permanent Forces over-staffed to a certain extent. To obviate hardship that would result from dismissals, a scheme of enforced leave - not to exceed eight weeks per annum - has been introduced as a temporary expedient, but no member will receive less than the basic wage under this scheme. Royal Australian Air Force establishment has been reduced by three officers and 34 airmen, but as this force has been working below establishment, no dismissals will be involved.
Approximately 100 employees have been discharged from munitions establishments - a substantial proportion of these discharges being due to completion of the development programme. By extension of the policy of acceptance by factories of orders from commercial firms, further dismissals of any magnitude appear improbable.
For purposes of economy it has been decided to transfer the Royal Naval College from Jervis Bay to Flinders Naval Depot where it will function as from the end of July, while, for similar reasons, the question of transferring the Royal Military College from Duntroon to military buildings available elsewhere is at present receiving consideration.
Civil Aviation. - All subsidized services functioning in 1929-30 - with the exception of those carried out by the-
Larkin Aircraft Supply Company Limited in Victoria, New South Wales and South Australia, which were discontinued at date of expiration of agreement on 9th June, 1930, owing entirely to passenger traffic, mails and freight not justifying their continuance - will be maintained during 1930-31, while an extension of the service through the Kimberley district of North-West Australia from Derby to Wyndham, 600 miles, will commence in July, 1930 - such service to be operated during the “ dry “ season only, eight months per annum.
General. - As the result of sums available for defence purposes in 1930-31 being £616,700 less than those appropriated in 1929-30, all defence activities have been very carefully investigated and reviewed. With the object of maintaining the existing high standard of efficiency of the Forces, the necessary economies have been effected in the least essential services.
During the last four years, the Commonwealth has paid the States £2,000,000 per annum under a ten-year agreement relating to Federal Aid Roads. Under this agreement the States were required to contribute 15s. for each £1 provided by the Commonwealth, and conditions were laid down as to the classes of roads on which the money should be spent. The Commonwealth also had the right of supervision.
The present Commonwealth Government has no desire to exercise any control over the activities of the States in relation to roads. It is, however, prepared to continue to contribute £2,000,000 per annum to the States for roads expenditure.
As the result of conferences on this matter a general agreement has been reached. Under it, the Commonwealth will pay to the States, during a period of 10J years as from 1st July, 1926, £2,000,000 per annum. The States will undertake to spend this money on the construction, reconstruction, maintenance, or repair of roads. They will not, however, be under any obligation to contribute any particular sum for roads expenditure from their own funds, nor will the Commonwealth exercise any supervision over the work of the States in this connexion.
A formal agreement on these lines has been submitted to the States, and will, at a later date, be placed before Parliament for ratification.
The number of unemployed workers in the Commonwealth has grown steadily during the last eighteen months. Rut for the additional protection to local industry afforded by the recent tariff adjustments, the position to-day would undoubtedly have been much worse.
A sound national insurance scheme extended to unemployment, if it had operated a sufficient length of time, would have gone a long way towards mitigating the distress endured by the workers in the present crisis. Such schemes, however, imposing as they do additional charges upon industry, should be initiated only in normal times, when there is a reasonable prospect that through a succession of prosperous years insurance funds will be built up with sufficient strength to withstand the heavy drain in times of stress.
The Commonwealth Government, however, recognizing the dire straits of many of the workers and their families throughout the country, has done what is practicable, with the limited resources available, to afford some relief. In addition to the assistance to industry granted through the protective duties, arrangements were made with the Commonwealth Bank to extend credits through State institutions and the trading, banks for the stimulation of primary and secondary production. It is hoped that when the central reserve bank is established, and commences operations, the credit resources of the Commonwealth will be better mobilized and made more readily available for the legitimate trade and industrial needs of the community, thus opening up new avenues of employment as well as extending existing avenues.
The Government has undertaken to distribute among the States a grant of £1,000,000, to be used for the purposes of immediate relief of unemployment. This will be in addition to the amount of £1,000,000 provided from Commonwealth revenue for road construction purposes, some months ago. Additional funds were provided for the Postmaster-General’s Department enabling employees, who would otherwise have been dismissed, to be retained to the number of 1,720. In addition, expenditure is being specially incurred in the Federal Capital Territory and in North Australia with the object of providing work for the unemployed.
As a result of adverse financial and business conditions, telephone installations fell from 29,000 in 1928-29 to 15,000 last year. The total number of telephones now in use in the Commonwealth is 521,000. Australia occupies sixth place in the world in the number of telephones per head of the population.
Progress has been made in the establishment of automatic exchanges, eleven having been brought into service during the year, and tenders have been invited for apparatus necessary for further extensions of the system in rural areas.
Developments in long-distance telephony during the past year have been striking. Most prominent is the inauguration, on the 30th April last, of the service between Australia and Great Britain. Extensions of this over-ocean service have been and are now being made to many other European countries, and investigations are in progress regarding a service with New Zealand. In Australia, about 8,000 additional miles of trunk telephone lines were added to the system last year, and the method of superimposing several channels of communication upon an existing line has resulted in the equivalent of a further wire mileage of 10,000 miles. The linking up of capitals will be advanced by the Perth-Adelaide service, which it is anticipated will be opened before the end of 1930, and proposals for the telephonic linking of Tasmania with the mainland will be submitted to Parliament at an early date.
The rates for- telephone services were recently increased, as the service was being conducted at a loss. Notwithstanding the increase, telephone facilities cost less in Australia than in other parts of the world; many facilities in country districts are provided below cost.
He-organization in regard to the Telegraph Branch has resulted in a reduction of £170,000 in working expenditure over the two financial years to 30th June, 1930, but, notwithstanding this, the decline in earnings still prevents the branch from showing a profit. Technical improvements have also been made in many directions during the year, amongst which may be mentioned the abolition of a number of repeating stations in favour of direct communication between the country towns and capital cities, and provision of additional facilities for intercapital communication. At the end of 1930 it is expected Perth will be in direct communication with all other State capitals except Hobart.
National broadcasting services are now in operation in every State except Tasmania, which will participate on the expiration of the existing licence on the 18th December next.
The Government is anxious to improve the service throughout the Commonwealth as widely and rapidly as conditions will allow. Our programme includes installations in selected country districts of subsidiary stations to improve reception. It is expected that five such stations will be completed before the end of 1930-31, and provision is being made in the Estimates for still further stations. The number of licences continues to increase, there being 311,322 at the end of May, 1930, as compared with 298,551 at that date in 1929.
Working expenses and interest on Commonwealth railways absorbed £1,108,423 last year. The revenue was £418,037, so that there was a loss of £690,386, after providing for interest.
The position is expected to be slightly better this year, the estimated loss being £630,200.
These railways were provided to fulfil obligations arising out of federation.
Apart from two issues of short-term treasury-bills, the only loan operation conducted overseas during the year just closed was the conversion of £3,781,700, 3$ per- cent. Queensland stock which matured in London on 1st July, 1930. This conversion was effected by the issue of Queensland securities guaranteed by the Commonwealth and bearing interest at 5 per cent, per annum, the issue price being £97, and the currency six years, with a right to the Government to redeem the loan after four years.
As regards Australian borrowing, two public flotations of £10,000,000 were authorized by the Australian Loan Council to provide funds for public works for the Commonwealth and the States. The first loan was raised in November last, the terms being 54 per cent, at £98, the loan maturing in 1934. The second loan is now on issue; the interest rate is 6 per cent, at par, and the loan matures on 15th November, 193S. A satisfactory response is being made by the public to this loan.
The most important operation during the year was the conversion and redemption of the £10,362,000 6 per cent, loan, which matured on 15th March last, with which was associated a conversion offer to holders in the 6 per cent, war loan for £60,000,000 odd maturing on 15th December next.
The new terms offered were 6 per cent, at par for a period of seven years.
Of a total of over £70,000,000 maturing in March and December of this year. £48,000,000 was covered by this operation. Allowing for available sinking funds, the balance of the December loan to be provided for later in the year will be approximately £18,000,000.
In February last, when the conversion offer was made, there was some apprehension as to our power to deal with this huge sum, without at least some assistance from the oversea market. The result of the conversion offer has proved the operation to be within the capacity of our own resources, and we confidently look forward to making satisfactory arrangements in regard to the balance of the loan when it matures in December next.
The estimated and actual expenditure compare as follows: -
The net loan expenditure for 1929-30 was £2,872,850 less than the corresponding expenditure for 1928-29, and £1,009,185 less than the amount provided in 1929-30 for debt redemption.
The loan expenditure of the Commonwealth and the States, which had averaged £43,000,000 for some years, was reduced last year to less than £30,000,000. In view of the general financial situation, the Loan Council decided that further drastic reductions were necessary in the loan expenditure for 1930-31. Appropriate reductions are accordingly being made in the loan programmes of the Commonwealth and of each State. The policy of the Loan Council is to confine its borrowing in the future almost wholly to the Australian market instead of relying, as in the past, mainly on the overseas market.
The estimated expenditure represents less than half the average annual Commonwealth loan expenditure for the four years 1925-26 to 1928-29.
Loan expenditure of the Commonwealth has now been reduced to a sum considerably less than the amount applied by the Commonwealth towards the redemption of its public debt. Thus, though we are continuing to provide considerable sums for revenue producing assets such as post office works and war service homes, the gross public debt is being definitely reduced each year.
As against loan expenditure of £4,127,000 estimated for the current year, the amount available for debt redemption will be £6,792,363.
The proposed loan expenditures in 1930-31 compare with the expenditure in 1928-29 and 1929-30 as follow:-
Works under the Migration Agreement are expected to absorb £800,000. This sum is included in the loan programmes of the States.
The amount applied towards the redemption of Commonwealth debt in 1929-30 was £6,367,482. The sources from which these funds came were -
The amount which will be available for 1930-31 is estimated at £6,792,363.
The amounts made available from the National Debt Sinking Fund for the redemption of State debts in 1929-30 were -
The amount to be provided in 1930-31 is estimated at £3,429,000.
Combining the Commonwealth and State figures, the total amount made available last year for the redemption of Australian debts was £9,537,259. The actual payments in redemption of debt during 1929-30 totalled £7,021,205 in Australia and £3,466,483 overseas. These sums included balances brought forward from the previous year.
For 1930-31, the amount which will be available for the redemption of Commonwealth and State debts is estimated at £10,221,363.
In 1927 the Commonwealth, with the concurrence of the States, appointed Mr. Justice Pike to investigate soldier land settlement, the chief object being to secure a correct account of the losses incurred, and a basis for a financial settlement as between the Commonwealth and the States.
On receipt of Mr. Justice Pike’s report, the late Government asked the States to agree to a settlement on the basis proposed by him, subject to the condition that the interest concession made by the Commonwealth to the States in 1925 be varied so that after 31st December, 1930, the States and- the Commonwealth should share equally any liability in excess of 5 per centum per annum for interest payable on the Commonwealth loans from which the money due by the States to the Commonwealth for soldier land settlement was provided.
The position was discussed at a recent conference of Commonwealth and State Ministers, and it was agreed that a settlement be made based solely on the recommendations of Mr. Justice Pike, the Commonwealth undertaking not to vary the interest concession referred to.
Such a variation would have given considerable relief to the Commonwealth, but inasmuch as it was a departure from the recommendation of the investigating authority, the Government felt that to insist on it was inconsistent and unfair to the States. Moreover, this concession which provided that, after 31st December, 1930, interest should be paid by the States at the rate of 5 per cent, per annum on all loans outstanding on that date, had been included in an agreement which had been ratified by four State Parliaments. The terms of settlement are -
The arrangements now made will involve the Commonwealth in the payment of arrears of interest totalling £284,000.
A new agreement is now being drawn up, and legislation will be introduced by the Commonwealth and each State for its ratification.
In 1925, the Commonwealth agreed to assume responsibility for £5,000,000 of soldier settlement loans owing by the States. By the adoption of Mr. Justice Pike’s basis of settlement, the Commonwealth will assume liability for a further sum of £2,600,000 of soldier settlement loans owing by the’ States, making the total of this debt adjustment £7,600,000. Under the original arrangements, the Commonwealth contributed £4,735,000 by allowing the States a rebate of interest on loan moneys raised for them by the Commonwealth. In addition, the Commonwealth paid sustenance allowances to soldier settlers of approximately £500,000.
As against this decrease of £4,914,293 in the recorded debt there was a net overdraft of an approximately similar sum in Commonwealth Bank accounts at 30th June, 1930.
The debt at 30th June, 1930, is domiciled as follows : -
The London debt includes the amount due under the war funding arrangement with Great Britain, which originally was £92,480;156, and now stands at £81,294,582.
War debt was reduced during the year by £5,723,345, while works debt increased by £809,052.
Of the gross Commonwealth debt of £372,707,279, due at 30th June, 1930, loan balances in hand and sums repayable to the Treasury amounted to approximately £23,000,000, leaving the net debt at £349,707,279, as against £349,356,349 on 30th June, 1929.
Iu accordance with the provisions of the Financial Agreement, the Commonwealth, on 1st July, 1929, took over the outstanding debt incurred by or on behalf of the States, and assumed, as between the Commonwealth and the States, the liabilities of the States to bond-holders. The debt at 1st July, 1929, amounted to £726,406,490. On 30th June, 1930, debt on account of the States stood at £727,643,712, an increase during the year of £1,237,223.
At 30th June, 1930, Commonwealth and State public debt combined aggregated approximately £1,100,350,991, as against £1,104,028,062 on 30th June, 1929.
At the recent Hague Conference a final settlement of the problems of German reparation was effected, based on a plan recommended by a committee of experts and known as the “New Plan.” Under this settlement Australia will receive an average annuity of £864,000 for 37 years.
On the 17th January, 1930, an agreement relating to the liquidation of exenemy property was signed at the Hague by Australia and Germany. Under this agreement, Australia has ceased the liquidation of German property in Australia and New Guinea, but retains the proceeds of past liquidations. It is estimated that these liquidations will eventually realize about £4,000,000, which will be applied towards the redemption of Commonwealth debt. The value of the property to be handed back to former German owners is estimated at about £266,000.
Proposals are now before Parliament for the establishment of a central reserve bank for Australia. It is intended that this new bank shall undertake all necessary central banking functions, including those now performed by the Commonwealth Bank. A bill to remodel the Commonwealth Bank on the establishment of the central reserve bank has also been introduced.
The profits of the bank, excluding the note issue, during the last two calendar years, were as follow: -
The profits of the general bank increased by £105,425 and those of the Rural Credits Department by £14,920, whilst the savings bank profits fell by £78,183, this decrease being due to the higher rate of interest now being paid to depositors.
The profits of the Note Issue Department for the year ended 30th June, 1930, were £938,225, of which £703,669 wai paid to Commonwealth revenue and £234,556 was transferred to the Rural Credits Capital Account of the bank.
The notes in circulation and the gold reserve at the 30th June, 1930, were respectively £44,914,326 and £19,931,102. At the corresponding date in the previous year these totals were £42,408,226 and £22,651,496.
During the year, the value of the notes held by the public fell by about £2,200,000, while the value of the notes in the hands of the banks increased bv approximately £4.700,000.
The charges to be borne by the general revenue in 1930-31 compare with those for 1929-30 as under :-
Under departments and general services, the principal increases are -
It is quite impracticable for the Commonwealth to avoid the increases above set out.
The payments to the States include an additional amount of £1,000,000 to cover the grant to the States for unemployment to which reference has already been made.
After exhaustively reviewing the expenditure for 1930-31 and making all possible reductions therein, the Government found that, allowing for the expected yields of taxation and other revenue on the present basis, it would be faced with a shortage of revenue in the present year of £14,038,770.
The details of the shortage are as follows : -
It was obvious that such a wide gap could not be bridged without increased taxation, and moreover it is necessary that such increased taxation should operate as early as possible in the new” year. To enable the taxation measures to be proceeded with immediately it was decided to bring down the budget, based on group totals of estimated expenditure for 1930-31. The approximate expenditure for 1929-30 in the same groups is also supplied for the purpose of comparison.
It is hoped that it will be possible to present the main estimates in a fortnight’s time, when the usual full set of budget papers will be circulated. For th* present I am distributing, for the information of honorable senators, such of the budget papers as are essential to the general budget debate.
In determining the necessary new taxes and charges, the Government has exercised great care with a view to spreading their incidence as fairly and as widely as possible so that an undue burden may not fall on any one section of the community and there may be the least possible disturbance of industry. Regard was paid also to the existing State taxes which preclude the Commonwealth from imposing heavy additional taxes in fields in which the States also operate.
It being essential that the budget should be balanced, the Government has adopted the following proposals to cover the shortage of £14,038,770:-
With this new revenue, the budget for 1930-31 will be balanced.
The expected yield of customs and excise duties for 1930-31 under the present tariff is £34,000,000. This represents a loss of £7,774,391 as compared with the yield of these revenues in 1929-30.. This loss inevitably followed the restrictions recently placed on imports with a view to correcting the adverse balance of trade. Towards making good this loss of customs and excise revenue, the Government proposes to impose new revenue duties estimated to yield during the present year the sum of £5,700,000. This will bring the estimated revenue from customs and excise to £39,700,000, which is approximately £2,000,000 less than the yield last year. The proposed new customs and excise duties are -
Customs duties -
A primage duty of 2½ per cent.
Increases in existing duties -
Petrol - 3d. per gallon.
Tobacco -6d. per lb.
Cigarettes -1s. per lb.
Cigars - 2s. per lb.
Films -1d. per foot.
Newsprint - £1 per ton.
Wireless valves - 10 per cent.
Excise duties -
Increases in existing duties -
Beer - 2d. per gallon.
Petrol - 3d. per gallon.
Cigarettes - 3d. per lb.
It is proposed to collect additional revenue amounting to £5,000,000 during the current financial year by means of a sales tax of 2½ per cent, on the sale prices of commodities sold in Australia other than, those which are to he exempted. A full year’s revenue from this source is estimated at £6,250,000 on a total taxable field of £250,000,000.
The tax will not apply ‘ to any sales made by primary producers, or to any sales of goods for export from Australia, or in respect of goods exported before sale abroad.
Sales of the following goods will be exempt from the tax in all circumstances : -
Milk, butter, cheese, condensed milk, meat, wheat, flour, sugar, bread and pastry, potatoes, market garden produce, orchard produce, eggs, poultry, other dairy produce, fish, grapes, hay and straw, sundry other crops, coal, articles covered by the new special revenue duties, and manufactures of government workshops.
The field of taxable sales includes all imported goods sold for consumption in Australia and all goods produced or manufactured in Australia other than those specified as exempt.
The tax on imported goods will be payable at the time the goods are being cleared from customs control, unless the importer is a wholesaler or a manufacturer who is licensed under the law relating to the sales tax. Licences will he issued to approved wholesalers and manufacturers in order that they may pay the tax upon imported goods at the time they sell them to a retailer or to the public direct. This will enable manufacturers to obtain necessary materials and articles for purposes of their factories without paying sales tax at the time of importation. When these materials and articles have been wrought into or attached to other articles made by the manufacturer, thus forming part of that article, their selling value will form part of the total sale price upon which the manufacturer will be required to pay the sales tax.
Licensed wholesalers and licensed manufacturers who sell to other licensed wholesalers or licensed manufacturers will not pay the tax on such sales, as the tax will be subsequently paid by the purchasing licensed wholesaler or manufacturer when he sells to the retailer or to the public.
The basis of the scheme of this tax is similar to that of the sales tax at present in force in the Dominion of Canada.
It is intended that vendors who make taxable sales shall render monthly accounts to the Commissioner of Taxation and shall send with those accounts a remittance of the tax payable in respect of those sales.
Provision will be made to allow adjustments in regard to bad debts in respect of which sales tax has been paid.
It is not intended to allow a refund of sales tax in respect of imported goods which are subsequently exported unless and until a drawback of customs duty, if any, payable on the goods, has been certified to by the proper authority. If goods which are free of customs duty are exported from Australia outside customs control a refund of sales tax will not be granted.
The alterations in postage contemplate reversion to the 1923 rates so far as letters and postcards are concerned, excepting that the unit of weight for letters will be 1 oz. The postage on letters and lettercards will therefore be 2d. per oz. and on postcards 1-Jd. each. Minor adjustments are being made in regard to certain other classes of mail matter.
The estimated additional revenue is £1,000,000.
It is proposed to raise a total amount of £10,100,000 from income tax during the present financial year. Qf this amount £850,000 will be secured by increases in the existing rates of tax, and £150,000 from amendments in the Income Tax Assessment Act as contained in the bill now before the Parliament.
The proposed increases in rates and the estimated additional revenue from the increases aTe: -
The accumulated income arising from the liquidation of ex-enemy properties was invested from time to time in Commonwealth securities. During 1929-30 steps were taken to liquidate these securities, and it is expected- that by the end of 1930-31 a sum of £1,500,000 will be available from these sources for payment to the Commonwealth revenue. This sum will assist in balancing the budget for the present year.
Although the additional taxation and charges involve a sum of £12,550,000, it is proper to regard a great proportion of this as imposts to replace, and not to supplement, the taxation of previous years. The following table setting out the Commonwealth taxation per head for the last six years in comparison with the estimated tax for the new financial year will illustrate this fact: -
It will be seen that notwithstanding the increased taxation imposed for the current year, the per capita taxation will be less than that of 1927.
I have now placed before honorable senators a full and frank statement of our finances - withholding nothing and exaggerating nothing.
Our loan expenditures have been cut practically in half and can now be provided almost wholly by our own people.
Our sinking funds are sound. Through t hem, Australia is providing over £10,000,000 per annum for debt redemption.
Effective steps have been taken to reduce imports and encourage local manufactures and action has been taken to stimulate exports. With the co-operation of the Australian banks in the matter of exchange, the balance of trade should t urn in our favour, thus providing means for meeting our future oversea com mitments.
Difficult though our position is, there are definite signs of improvement. Australia has recently demonstrated its capacity to manage its huge local war conversions without oversea assistance, and the present £10,000,000 loan promises to be a complete success.
The Government is determined to balance the budget and to take all measures necessary to ensure the honoring of our obligations, both at home and abroad.
Debate (on motion by Senator McLachlan) adjourned.
Consideration resumed from 2nd July (vide page 3506) on motion by Senator Daly -
That the bill bc now reada second time.
– Honorable senators, I am sure, deplore with the Leader of the Government (Senator Daly) the necessity for this measure, because of the increase in the bankruptcy business throughout Australia. The Government has seen fit to second a judge of the Arbitration Court for the purpose of administering the Bankruptcy Act. There is no objec tion to the bill. Representations havebeen made to some honorable senators in respect of certain urgent amendmentswhich are considered necessary to the act. in addition to the proposals of the Government. I shall content myself by outlining the nature of those amendments.. A slight technical defect has been found, in section 91 of the act which deals with the bankrupt’s property. Objection is also taken to the exclusive character of section 158 which prevents proceedingsunder part 12 of the act once a meeting is called under part 11. Part 11 of the act is similar to the South Australian legislation. Part 12 of the act is similar to New South Wales legislation. Another difficulty arises under section 197 in respect of the execution of deeds. I shall explain these amendments fully in the committee stage. I give my wholehearted support to the measure.
– I took considerable interest in the original bill when it was before the Senate, with a view to the inclusion of some of the useful provisions of the Queensland Insolvency Act, brought into existence by that great lawyer, the late Sir Samuel Griffith. My efforts were opposed by lawyer senators who, I am afraid, had had little practice in bankruptcy matters, with the result that a measure of many defects, which are now being exemplified, came into operation. Quite recently I received a letter from a mercantile friend from which I quote as follows : -
Where the Bankruptcy Act is invoked its uselessness is exemplified. I told you previously of the difficulty in serving any documents in connexion with the operation of this net. The last . experience we had in connexion with preferential payments showed that the act provides thatyou have to go before a court and prove your case. The payment can be judged good if the bankrupt says the payment, was made on legal advice and that it was made in good faith. In a particular case we are interested in, months have elapsed since proceedings were taken with the result that it would be almost impossible to recover now. There were two important payments made in this matter which were undoubtedly preferential, and every day of delay makes recovery less likely, even should judgment be favorable in one case, and in the other a payment was made to the bankrupt’s mother who is now somewhere in Victoria, and it would be hard to estimate what the expenses would bc to endeavour to recover from her. These are only two of the many obstacles, occurring in the act. 1 offer no objection to the present proposals, but suggest that the Government should later on give an opportunity to amend this act to make it a better working piece of legislative machinery.
– That is in contemplation at the present time.
– I am glad to hear it. I suggest that a committee of the Senate, not a select committee, nor a committee based on States’ representation, but one whose members would have some knowledge of the subject, should be appointed to assist in improving the bill.
Senator Sir HAL COLEBATCH (Western Australia) [‘8.13]. - I do not intend to offer any obstacle to the bill nor to delay the Senate for more than a few minutes, but I cannot allow this opportunity to pass without expressing my deep regret, which I am sure is shared throughout Australia, that past governments and past parliaments, having waited for more than a quarter of a century before exercising Commonwealth power in regard to bankruptcy, failed to devise means of giving Australia a uniform bankruptcy law without increasing the cost of administration. During the sitting of the Royal Commission on the Constitution I questioned distinguished lawyers in every State of the Commonwealth, hut not one of them was able to give a single satisfactory reason why the Commonwealth should not have passed a uniform bankruptcy law leaving the administration entirely to the States, a process which would not have meant an increased cost to the community or to the unfortunate people engaged in bankruptcy litigation. There is a very common practice in other countries enjoying a federal or semifederal constitution, which might with advantage bo followed by Australia. In regard to a large number of matters it is considered tha.t absolute uniformity of legislation is necessary. The legislation is passed by the central authority and the administration is left entirely to the States. In regard to another large group of subjects iu respect of which a fundamental law is considered necessary, fundamental pieces of legislation are enacted by the central authority leaving to the States the enactment of the details to fit their own peculiar circumstances which must, of course, be in conformity with the fundamental principles laid down by the central authority. In that case the States carry out the whole of the administration. What was the position in Australia with regard to bankruptcy? Every State had its bankruptcy laws, and the chief defect was they were not uniform. Each State had its administrative machinery, and carried on at a small cost. Why could not the Commonwealth have remedied the defects that existed, provided uniformity, and still have left the administration to the States, at a comparatively small cost?
– That was dis- ‘ cussed in 1912.
– It was discussed many times, and no satisfactory reason was given why it should not be done. It was the insatiable lust for power and the desire for appointments that was responsible for the course taken. As a result new departments were built up and new offices created at enormously increased expense - an increase so great that in many instances the charges are now fourfold what they were under the old State system. I have it from every State in the Commonwealth that the inconvenience is great, and that the advantage that might have been derived through a uniform bankruptcy law has been dissipated by this increasing inconvenience, and entirely destroyed by the greatly increased cost.
The same argument is applicable to ;i great number of other activities. I do not believe that there is a single instance in which the Commonwealth has taken over administrative activities previously carried on by a State in which the cost has not been increased by 30 per cent. Every industry in the Commonwealth is at present sick to death, groaning under the excessive cost of government. No other single cause has so adversely affected our industries as the excessive cost of government. It is an enormously difficult matter to handle, and tremendously difficult to put down once you put it up. I have no hesitation in saying that that is, in some measure, due to bills like this, in which the Commonwealth Parliament might so easily have given Australia a uniform law and left the administrative details to the States. The policy of the Commonwealth has led to an enormous inflation of the Civil Service. I have nothing to say against civil servants. As one who held ministerial office for seven years, I know with what ardour and earnestness civil servants, as a rule, perform their tasks. But an inflated civil service is likely to threaten the stability of a country, and may very readily threaten it in the case of Australia.
Other matters of a similar nature will occupy the attention of the Government now, or in the future - for instance an endeavour to bring about uniformity in our marriage and divorce laws. I trust that, when that subject is considered, we shall have a government in power with sufficient judgment to ensure that it is possible to give Australia uniform marriage and divorce laws without taking the administration away from the States, creating new appointments, and piling up costs. I am prepared to see this measure go through. If any honorable senator is able to improve it, well and good. I hope that, when the Government is considering a comprehensive bill on the subject, it will again explore the possibility of giving Australia a uniform bankruptcy law, and allowing it to be administered in a most expeditious and inexpensive way by the States themselves.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 to 4 agreed to.
– I move -
That the following new clause be added: -
Section ninety-one of the principal act is amended by inserting in paragraph (e), after the word “registered”, first occurring, the words “ and kept registered “.
It was found under the New South Wales system that when registration had to be renewed the provisions of sub-section e of section 91 were not wide enough to cover that renewal. Section 91 relates to the property of a bankrupt divisible among his creditors, and stipulates what that property “shall not include”. The amending clause provides the protection desired.
Senator DALY (South AustraliaVicePresident of the Executive Council)
Senator McLachlan in this matter. The Government is prepared to accept the honorable senator’s amendment.
Proposed new clause agreed to.
.- I move-
That the following new clause be added: -
Section one hundred and fifty-eight of the principal act is amended by adding at the end thereot the following words: “ except by resolution passed, at any meeting of creditors duly convened, by a majority in number and value present thereat either in person or by proxy, and assented to by the debtor “.
That provision is necessary owing to the exclusive character of section 158 of the principal act, which provides that if a meeting of creditors is held in relation to the affairs of a debtor no proceedings in relation to his affairs shall be taken under part 12 of the act. Part 12 of the act is really the old common law method of assigning an estate. In New South Wales the provision was found to work adversely,’ both to the debtor and creditor. Usually the solicitor would call a meeting of creditors under part 11 of the act, whereas all parties might desire to take action under part 12. The amendment now allows that action to be taken by common consent. I commend it to the Senate.
– This provision was under consideration by the Government but was not embodied in the amending bill. As Senator McLachlan deems its inclusion advisable the Government is willing to accept it.
Proposed new clause agreed to.
.- I move-
That the following new clause be added: -
After section one hundred and ninetyseven of the principal act, the following sec tion is inserted: - “ 197a. If the debtor has made a conveyance or assignment of his property under a deed of arrangement to a trustee for the benefit of his creditors generally, and the same has been registered in accordance with the provisions of this part, the trustee shall, in the event of a bankruptcy petition being presented against the debtor founded on the execution of the deed or on any other act committed by the debtor in the course or for the purpose of the proceedings preliminary to the execution of the deed as an act of bankruptcy, receive from the Registrar a notice of the hearing, and may appear and show cause for the dismissal of the petition, and if it appears to the court that it will be for the advantage of the creditors that the estate should be administered under the deed the petition may be dismissed.”.
There is urgent necessity for such a clause as this. “When a deed is executed under part 12 of the principal act it is not effective against any person who stands out, and any creditor having the necessary amount of debt can levy toll upon the estate by refusing to become a party to the deed or otherwise threaten to throw the person’s affairs into bankruptcy. This amendment will give the person an opportunity to be heard before bankruptcy is granted.
– On behalf of the Government I accept the amendment.
Proposed new clause agreed to.
Title agreed to.
Bill reported with amendments.
Debate resumed from 4th July (vide page 3698), on motion by Senator Daly -
That the bill be now read, a second time.
Senator Sir GEORGE PEARCE (Western Australia) [8.30]. - I propose to support the second reading of the bill. To obtain a proper perspective of the subject it is necessary to go back some years, to the time when the previous Government, acting on representations made by the Government of Western Australia, appointed a royal commission to investigate the disabilities from which that State was allegedly suffering as a result of federation.. That commission found that certain industries in Western Australia were suffering as a result of federation, one being the gold-mining industry. The report clearly set out the reason why that industry was singled out, and made a recommendation that the Commonwealth Government should grant an amount of money to the State of Western Australia in consequence of the disabilities suffered. The report was not unanimous as to amounts of compensation, but was unanimous as to the fact that the gold-mining industry had suffered as a result of federation. The first Commonwealth Government which dealt with that report made a special gran’t to Western Australia of £300,000. Subsequently, the grant was extended over a period of five years. However, I wish particularly to direct attention to the fact that one of the conditions attached’ to the special grant of £300,000 was that it was to be used by the State Government to assist those industries which, in the opinion of the commission, had suffered as the result of federation. Acting in accordance with the views expressed by the commission, the State Government set aside a definite portion of the grant for the assistance of the gold-mining industry.
It is interesting to note that the money was distributed among certain mines on the Golden Mile and the Sons of Gwalia Mine to the north of Kalgoorlie, the object being to assist those companies to extend their plants. In the case of the Sons of Gwalia Mine, the money was used to rehabilitate the plant, which was antiquated and not efficient. The company was enabled to put in a new plant, and, as a result, was able to show better results in working the ore bodies. I take it that this proposal is on somewhat the same lines, in that any claim made on the Commonwealth Government will be regarded as a grant, not to the mining companies in Western Australia, but to the State Government to compensate the State for the disabilities suffered by its industries as the result of federation. It is on this understanding that I support the bill.
I agree with the Vice-President of the Executive Council (Senator Daly) that this proposal contains a slight element of risk; but, having perused carefully the report which the honorable the Minister made available to me, I am convinced that the Wiluna Mining Company is a bona fide concern with excellent prospects. It has established its bona fides by the amount of capital which its shareholders have contributed, and by the way in which the directors have expended money on its development. The reports of experts who have examined the mine justify the claim that if additional capital is introduced the company will be able to extend its operations and show a good return on the expenditure. The Wiluna. Mining Company is not like a number of other ventures that have been floated simply on the strength of a prospectus, lt has a property which has been worked for a number of years, and lias demonstrated its value by the returns that have been received for the work done. Its value has been further established by a number of exhaustive tests carried out by competent experts. If honorable senators will take the trouble to peruse the report of Mr. Alexander Montgomery, the State Government Mining Engineer, they will agree that no more exhaustive examination could have been made to satisfy the State Government o rhat the mine is a genuine proposition.
I wish to refer briefly to one or two features in thu reports of mining experts who examined this property. In the first place, there is a statement by Mr. Wall, the consulting engineer of the Wiluna Gold Mining Company. Mr. Wall states that £1,000,000 capital has been subscribed and spent in the purchase, development, and equipment, of the mine. I understand that the greater part of this expenditure lias been on development and equipment, and that it is proposed to extend the plant so as to be in a position to treat 40,000 tons of ore per month. The company now requires an additional £550,000, but owing to the condition of ibc money market, it is not able to raise this amount. The company is, however, increasing its capital by £250,000, which it 13 obtaining from existing shareholders, and it is getting £300,000 from the Midland Bank. The State Government has agreed to guarantee this amount on the understanding that the Commonwealth Government will stand behind the guarantee. As evidence of its confidence in the value of this mine, the State Government has extended the railway to Wiluna. I f the mine proves a failure, that railway will be a white elephant, because the traffic on it would not pay for axle grease for the rolling-stock. Naturally the State Government, before committing itself to this expenditure, went to considerable trouble to be sure that the mining proposition was a sound one.
Senator Sir GEORGE PEARCE.No; it is part of the State railways system.
Senator Sir GEORGE PEARCE The directors of the company are satisfied that the mine can be made to pay. It has abundance of ore, which can be treated on a big scale at a profit. It may be of interest to note that the people who have contributed the greater part of the capital to this company also own mines on the Golden Mile and in South Africa. They are not members of the ordinary public, who speculate in mining propositions on the strength of brilliant prospectuses. On the contrary, they are men who have had long experience in mining, so we may rest assured that before they risk their capital, they seek the advice of competent experts to guide them. The main shaft is down 407 feet, and a number of other shafts have been sunk on the various lodes. In addition, the mine has been tested to a great depth by diamond drilling, which has demonstrated that the great body of ore and the values are fully maintained. It is also interesting to remember that this company will pioneer mining methods hitherto unknown in Australia, and it is confident that production costs will be reduced. I do not suggest that the methods to be employed have not been adopted in other countries, but ‘so far as my knowledge goes, they have not hitherto been tried in Australia.
The reports by the general manager, Mr. Prior, and Mr. Vail, also a consulting engineer, confirm the general opinion as to the value of the property.- Both of these experts agree as to the policy to be adopted. The main shaft, as I have stated, has been carried down to 407 feet, and crosscuts have been run out and worked down to provide for operations on a big scale. The present company, I should add, took over a mine which had been partially developed by another company some years ago, and the ore returns and other information concerning the operations of the mine are on record in the State Mines Department of Western Australia.
Probably the report by Mr. Montgomery, the State Government Mining Engineer, will be regarded as of more importance than the report of Mr. Wall, consulting engineer to the Wiluna Mining Company. Mr. Montgomery was : liked to say whether or not the State would be justified in constructing the railway to Wiluna. He is a man of wide experience, and is well trusted by the mining community and the people of Western Australia. His report is a very elaborate one. I hope honorable senators will read it. Ho checked the company’s estimates of values with a competent inspector of mines, and carried out his tests through the Wiluna State Battery ;ind the Government Minerologist and Analyst’s Department, so it was an absolutely independent examination of the company’s asset. He made 133 assays which gave an average value of 33s. per short ton. He also supplied full details is. to how those assays were made and i he values determined. In his report, he slates -
When the levels have been .extended throughout the whole length of the lodes known to be ore-bearing, there will probably l>u not less than 1,000,000 tons of ore above the levels on the west and east lodes at 200 foot and 200 feet, respectively, of somewhere a bout 40s. value per short ton.
– This is one of the most amazing measures that has been placed before the Senate for its consideration. It is described in its title as a bill to ratify an agreement to grant financial assistance to the State of Western Australia and for other purposes. The “ other purposes “ are apparently to send good money after bad. It has been said that “ a gold-mine is a hole in the ground owned by a liar.” This particular hole has already swallowed up £1,000,000 and the Commonwealth now proposes to guarantee the payment of a further £300,000, which may be expended without any beneficial results. We have been informed by the Leader of the Opposition (Senator Pearce) that the money which it is proposed to expend will assist a company which is carrying on a bona fide mine in connexion with which the most exhaustive examination has been undertaken, and on which practically £1,000,000 has been spent. I understand that this expenditure has been incurred in the acquisition of leases, in developmental work, and in working expenses. I submit that if Parliament is going to support proposals of this kind I could trot out one or two good tin and gold-mining propositions in Tasmania, which are equally worthy of assistance. Subscribing, as I do, to certain political principles I find it impossible for me to support the second reading of this bill.
Senator Sir WILLIAM GLASGOW (Queensland) [8.50].- The Wiluna goldmine is similar to other large mining propositions which are at present being developed. There is, for instance, the Lake George mine, within 40 miles of Canberra, the Mount Isa mine in Queensland, and the Rosebery mine in Tasmania, all of which are being developed by the most modern methods. I had the pleasure of visiting the Lake George mine, and it would be an eye-opener to honorable senators to see the extraordinary care that is being taken there in sampling the ore body and in testing it out at different levels.
– Will it pay ?
Senator Sir WILLIAM GLASGOW.In the case of low-grade ore enormous sums have to be spent in testing operations before the actual work of mining can be undertaken. I understand that other mining companies are now adopting the most modern methods, and that at Lake George the ore is being extracted by the flotation process, which is the most modern system known. In connexion with the Lake George mine the New South Wales Government has undertaken to provide railway communication, and the Queensland State Government also constructed a railway to Mount Isa. I understand that those controlling the Mount Isa mine made a request to the Federal Government for financial assistance, but were informed that, under the Constitution, it could not be given.
– That is so.
Senator Sir WILLIAM GLASGOW.It appears to me that this money is being granted under the guise of rendering assistance to a necessitous State.
– Queensland has not suffered any disabilities under federation.
Senator Sir WILLIAM GLASGOW.We do not know that this will be of any assistance to Western Australia. The possibilities are that this mine will open up satisfactorily, and that there will not be any necessity for this guarantee to be met. The Government has taken over the liability from the State Government, and there is no indication that there will be any necessity for the Federal Government to meet the liability. But I should like to know why this can be regarded as a grant to a necessitous State. If it is surely there should be some inquiry by the Commonwealth authorities as to the disabilities which the State concerned is experiencing. Inquiries were conducted in connexion with the financial position of Tasmania and South Australia.
– And also in connexion with Western Australia.
Senator Sir WILLIAM GLASGOW.After that inquiry was completed assistance was granted on the recommendation of the Western Australian Disabilities Commission.
– Certain recommendations were made.
Senator Sir WILLIAM GLASGOW.Yes ; but there was no recommendation on these lines. The commission recommended that certain payments should be made to Western Australia because of its disabilities under federation. In the same way grants have been made to Tasmania and to South Australia.
– But Western Australia received only two-thirds of the amount recommended.
Senator Sir WILLIAM GLASGOW.If, as a result of that inquiry, it is considered that further assistance is necessary I should be pleased to favour granting help; but I refuse to support a bill which provides that the Commonwealth shall guarantee a liability which the State undertakes on behalf of a mining company. Moreover, this guarantee, I understand, was given shortly prior to a State election.
– It was given months before the State election.
– The report read by the Leader of the Opposition was made in March. Further, this mine is in the electorate represented by a Minister. I realize that every assistance should be given in the direction of developing mineral resources, but such assistance should be rendered by the States which have through their departments of mines all the necessary facilities to conduct a proper inquiry. The State Government should accept the responsibility.
– Is the honorable senator aware that the State of Western Australia is a party to this guarantee?
Senator Sir WILLIAM GLASGOW Yes; but the Commonwealth Government has accepted full responsibility. If the company defaults, who is to pay?
– The Commonwealth.
Senator Sir WILLIAM GLASGOW.In those circumstances the Commonwealth has accepted full liability. It is the duty of the States, and not of the Commonwealth, to assist mining ventures of this kind. When proposals have been made in connexion with advances to the States under the £34,000,000 agreement, officers of the Development and Migration ‘Commission, who were Commonwealth officials, conducted an inquiry, but, in this instance, the Commonwealth has utilized the services of State officers. I do not think that this is an instance in which Commonwealth assistance should be given. If this measure is passed, every similar mining concern will be approaching the Commonwealth Government for assistance. As I have said, the Mount Isa Company asked the Commonwealth Government to assist it, and its request was turned down.
– Did the Queensland Government approach the Commonwealth ?
Senator Sir WILLIAM GLASGOW.I could not say.
– It was the Western Australian Government and not the Wiluna Gold Mining Company that approached us.
Senator Sir WILLIAM GLASGOW.I am well aware of that.
– If the Premier of Queensland were to make a similar request it would receive careful consideration.
Senator Sir WILLIAM GLASGOW.On a previous occasion when the Mount Isa Company wished to obtain financial assistance it was told that it could not be constitutionally given. While I believe that this proposition may be of immense benefit to Australia, I regret that in the circumstances I cannot support the bill.
– How honorable senators opposite love one another when they find that the Government is prepared to give assistance to a State which they do not happen to represent! We know that one of the principal factors in the development of Australia has been gold-mining, and the researches of German industrial chemists have shown that there is a possibility of millions of tons of low grade goldbearing ore now lying untouched in Australia being worked at a profit. At Mount Morgan there are millions of tons of ore which if the Wiluna process proves successful can be worked once again. There is a great mineral belt in the North-west of Queensland running from Cloncurry to Mount Elliott. It contains copper, silver and gold, and in the shallow workings some of the ore produced as much as 88 per cent, of copper. There is every prospect that the Wiluna process, if it proves successful, may lead to the treatment of the gold in this great belt of mineral country. Again, at Captain’s Flat in New South Wales the State Government is co-operating with a British mining company for the development of an immense body of ore. The assistance given by the State Government is in regard to the provision of railway communication. Western Australia, which was once known as the Golden West, has contributed largely to the wealth of Australia, and there is every hope that as the result of scientific research, it will once again be one of the greatest gold producers in the world. Queensland has been given assistance to the extent of millions a year for sugar production, and only last week this Parliament granted it further assistance in the shape of a bounty on cotton, amounting to £260,000 a year, diminishing on a sliding scale for six years. But because Western Australia has also asked for assistance, Senator Glasgow like
Senator Thompson, has complained, advancing as a reason for declining to give this assistance to Western Australia the fact that other parts of the Commonwealth will be compelled . to contribute towards it. The people of Western Australia contribute to the Commonwealth revenue and have every rightto seek assistance for their great primary industry of gold-mining. At any rate I think that Queensland senators on principle should support the bill.
– I am not prepared to subscribe to the doctrine expounded by Senator Dunn that because one State receives assistance we should support propositions brought forward for giving assistance to other States. I know the risk involved in making advances to mining companies. The usual result is that the State is left to carry the baby. The banks have advanced certain sums to the Wiluna Gold Mines on the guarantee of the State, and now the Commonwealth has been asked to accept the responsibility assumed by the State. If the company defaults, the Federal Government will be responsible for meeting the obligation to the banks. It is an entirely new departure. We are branching out in another form of assistance to an industry which the Commonwealth has not the proper machinery to investigate, and, therefore, must depend entirely on investigations made by State officials. I should like to know if the reports quoted by Senator Pearce were made prior to the intimation by the Federal Government that it was willing to enter into this agreement.
– Two reports were furnished by Mr. Montgomery, the State mining engineer, one before and the other after the Commonwealth came into the matter.
– It is all very well for a State official to make reports when the responsibility is not resting on the State.
– The State Government decided to build 115 miles of railway on the strength of those reports.
– That may be so, but it does not justify the Commonwealth rushing into the matter if it does not seem to be a sound proposition. I have no doubt that there are reports as to the quantity of ore and the assay value of the ore, but the real security the Commonwealth will have is the fact that the company can extract the value from the ore body. Are we satisfied that the process is all right? It is useless to make comparisons with the Lake View mine and other mines which, to a large extent, are free milling propositions.
– The Kalgoorlie mines are sulphide propositions.
– Sulphide ore is always refractory and difficult to deal with. I should like to be satisfied thai the process gives the mine a fair possibility of success, and that we are not merely guessing. At any rate, the bank was not prepared to take the responsibility and thrust it on to the State Government.
– And now it has been thrust on. to the Commonwealth Government.
– The report of the State Mining Engineer deals with the matter of the treatment of the ore.
– I have not read it. The only security the Commonwealth has for the repayment of the advance is that the process will satisfactorily solve the problem of dealing with this particular ore body. An 8 dwt. proposition is a pretty low one. There are very few mines in the world which are profitably working at loss than S dwts. It is done in South Africa on 6 dwt. ore, but there black labour “is em ployed.
– -In Canada, with white labour, low grade ore is made to pay.
– In Canada, it may be free milling ore, which is quite u different proposition from refractory ore, such as the sulphides of Wiluna. I do not want it to appear that I am opposing the bill merely for the sake of factious opposition. My opposition is due to the fact that I dread the Commonwealth entering into this new field which will” only lead to encouraging another body of men to approach the Federal Treasurer for assistance. There are gold-mines in Queensland and Tasmania; there are dozens of them all over the country, and the people who are working them would very readily come along and seek assistance from the Federal Government if they could get it. I cannot support the bill, because it is setting up a dangerous precedent and will mean that the Commonwealth is launching out upon an expenditure which should be a State responsibility. In view of the financial statement just presented, I cannot see that it is desirable that we should embark, at the present time, upon an expenditure of £300,000 on a purely speculative undertaking.
– I should have been glad to support this bill, but I feel that its title is a misnomer. The history of the Wilu na transaction is summarized in a letter written by Mr. H. E. Vail, consulting engineer, and addressed to the Hon. P. Collier, when he was Premier of Western Australia. It is dated 16th January, 1930. As one honorable senator has already pointed out, the suggested grant to Western Australia is only a guise under which a guarantee is to be given for the purpose of supporting the bank overdraft of the Wiluna gold-mines. It is obvious from Mr. Vail’s letter that the approach was made, in the first place, to the Prime Minister (Mr. Scullin) and the ex-Treasurer of the Commonwealth (Mr. Theodore). Mr. Vail wrote -
The first instructions I received were that
I approach the Federal Government for an advance of a very substantial nature; alternatively to request the State Government to provide a bank guarantee of £300,000. On interviewing the Prime Minister (Mr. Scullin), and the Commonwealth Treasurer (Mr. Theodore), I was informed that it was absolutely impossible for the Government to comply with our request as they themselves were much in need of cash. It then occurred to me to request them to guarantee our bankers rather than to approach the State Government, realizing as I do that the State Government has at all times shown a disposition to assist mining as far as their resources would permit, and that in regard to Wiluna they have gone very far in providing a rail”way for our convenience. I therefore requested the Commonwealth Government to guarantee our bank for £300,000, and while they expressed their sympathy and desire to assist us, they pointed out the inadvisability of making such a grant to an individual company,
That is excellent logic and one pauses to ask, Why this change? but suggested that if your Government would make the guarantee which I desire they would guarantee your Government against loss.
What does that mean? I suppose that the Commonwealth Government felt that there was a difficulty under the Constitution. But let me go a little further back and see what Mr. Vail had in his mind when he sought a governmental advance. Presently, I shall refer to the paucity of information supplied to the Senate. Mr. Vail, in an earlier part of his letter to Mr. Collier, wrote -
The original capital of £1,000,000 provided for the purchase of development and equipment of the mines is now exhausted.
How much of the £1,000,000 really went into the mines does not emerge from any papers placed at my disposal. The report continues -
And according to the estimates provided by our general manager, we require a further £550,000 to complete our undertaking. My principals advise me that this sum is absolutely beyond their ability to raise. They have, however, intimated that if the Government will provide a bank guarantee for £300,000 it will not be beyond their ability to raise a further £250,000 of fresh capital’, in view of the confidence which will be inspired by the Government’s action in responding in this practical manner.
The Government is really being asked to guarantee this company £300,000, and if it is given, the public will then be asked for the further £250,000 on the ground that the Government has already seen fit to assist the company. The Commonwealth is to be used as a decoy. On the face of that one statement alone, it is evident that the request of the company needs the closest investigation. The Leader of the Opposition (Senator Pearce) stated this evening that an investigation has already been made. An investigation has been made by Mr. Montgomery, a man, I believe, of great competence, who, in the course of his duty furnished a report to his own State Government, so soon as there was a possibility of securing the backing of the Commonwealth..
– No, the honorable senator is reading the wrong report.
– On the 16th January, 1930, Mr. Vail, in his report, set out the whole position, and it is as I have indicated. Instead of playing with a guarantee of £300,000, we should take a broad national outlook, and come to some arrangement that would benefit the gold-mining industry as a whole. Why pick out the Wiluna company for special treatment? This Parliament is being asked to make the Commonwealth liable for £300,000 in the event of the failure of this company. We hope that it will not fail. Mr. Montgomery’s first report was made in 1927, and this arrangement was suggested to the Federal Government in 1930 on the reports of Mr. Vail and Mr. Prior, two gentlemen who are intimately associated with the company.
– I ask the honorable senator not to misrepresent my position. Mr. Montgomery’s report was made in 1927, prior to the arrangement being made between the Commonwealth and Western Australia.
– The report of 1927 was made to the State Government, and concerned the building of a railway to Wiluna. I accept it as an exceedingly valuable report; but the report upon which we are asked to act is the special report of March, 1930.
– It is a supplementary report.
– That is all the more reason for rejecting the bill. I fail to see why this Parliament should be asked to commit the taxpayers of Australia to a payment of £300,000, without the Commonwealth Government being in possession of one scrap of information from its own responsible officers.
– The honorable senator wanted to commit this country to the expenditure of millions to provide a bounty on gold of £1 an ounce.
– The Leader of the Senate is trying to draw a red herring across the trail. If the Government would only take a broad national view of the gold-mining industry there would be no necessity for peculiar transactions of this kind, which cannot but end in a muddle. Are honorable senators prepared to vote blindly without having before them a report of one responsible Commonwealth officer? The services of Mr. Gepp and Mr. Gunn, recently of the Development and Migration Commission, are still at the disposal of the Commonwealth, but the Government has made no attempt to investigate this request on its own behalf. This new process of treating ores may be successful, or it may not. I understand that Mr. Vail himself refers to the methods that are to be employed as pioneering methods. Western Australia may require assistance, but to bring the request for a grant before the Senate under the guise of a guarantee to an individual company strips it of all its merits, and I shall vote against the second reading of the bill. The State reports may be perfectly accurate, but one of them was made over three years ago.
– The honorable senator would not question the honesty of the gentlemen concerned?
– I am not questioning their honesty, but have we not frequently been misled by wellmeaning and honest men who have been carried away by their enthusiasm? This is a question, not of the magnitude and value of the lode formations at Wiluna, but of a special treatment of refractory ore which is said to be a pioneering method, and which has not yet proved to be a success. Under those circumstances, surely it is the duty of the Government to insist upon the erection of a pilot plant, with which to test the treatment. Many processes have been tried at various times for treating refractory ores and, in this case, failure may result as before.
– The success of the treatment has already been demonstrated.
– There is no urgency for this bill, and there is ample time for an investigation to be made by Mr. Gepp or Mr. Gunn. It is unfortunate that the services of Dr. Woolnough, who is absent in America, are not at our disposal. Without some such inquiry I am not prepared to commit, this country to the expenditure of £300,000 merely on the strength of State, reports which I regard as insufficient and unsatisfactory.
. Certain facts appear to me to emerge from this debate. The Senate should hesitate before it refuses to ratify this agreement. We are asked under this bill to ratify an agreement which has been made in “good faith by the Government of Western Australia on the promise of the
Commonwealth Government to indemnify the State in respect of a guarantee to the Midland Bank. Gold- mining is within the constitutional province of a State, and there is no direct constitutional authority for the Commonwealth to make grants to companies for this purpose. It is within the sphere and the function of the States to develop gold-mining in their respective provinces. In all the statute-books of the States there is a” mining development law, and, in. pursuance of ‘that law, the State Governments have power to appropriate sums of money from time to time for the purpose of assisting goldmining. That is done as a matter of Government policy. As far as I know grants are made only after due investigation and inquiry by the expert officers of the State Mines Departments. From the information which has been given to honorable senators, it would appear that these investigations have been made, and that a new process can be applied to the treatment of refractory ore, which, if successful, will give a tremendous impetus to gold-mining, and, indeed, lead to a revival of the industry. I do not wish to speak further on that aspect. In the schedule of this bill is an agreement between Sir James Mitchell, Premier of Western Australia, and the Prime Minister of the Commonwealth (Mr. Scullin). The Commonwealth may have to pay nothing under this measure, but it has given a promise to the Western Australian Government, subject, of course, to Parliamentary approval, to indemnify that State if it gives certain guarantees to the Midland Bank in respect of an advance of £300,000 to be made by the bank to the Wiluna company. In good faith, presumably, the Western Australian Government has entered into this agreement. It has given the guarantee, and it would smack of something of a breach of faith - although it would be quite within our competence to do it - if we refused to carry out the agreement. If we veto this bill Western Australia will have the right to say that we have been guilty of a breach of faith. I find myself in hearty accord with some of the criticism that has been offered to the bill. There is always a. danger in making grants to companies. In this case the Commonwealth is not making the grant to the company, because it is not constitutionally able to do so. Therefore, a guarantee is being given, in the guise of a grant to assist a necessitous State, and that brings it within the four comers of the Commonwealth Constitution. If the Commonwealth Government, or the Commonwealth Parliament, proposes to embark on a programme of this kind, adequate safeguards must be provided ‘to prevent grants from being made for political purposes, and to protect the Minister concerned and the Government from political pressure. This legislation is full of menace and danger. I have seen the principle in operation elsewhere, and I submit that there is the utmost danger in embarking on a policy of this kind. If we persist in it, grants may be given to those sections of the community which are able to exercise the greatest amount of political pressure on the Government.
Grave results may ensue unless machinery is erected that will safeguard the position, and we pass legislation that will absolutely prohibit a .ministry from making a grant without first obtaining expert recommendation. I am not suggesting any impropriety in this instance. I do not know sufficient of the facts. The story appears to be that this gold-field is to be exploited by means of a new process that is likely to be successful. The Government of Western Australia has been appealed to for assistance, and the Wiluna Gold Mining Company has obtained the necessary money from the bank on the guarantee of that Government. A promise was made by the Commonwealth Government that it would indemnify the State of Western Australia. This agreement recites those facts, and we are asked to approve it. Although I do not like this kind of thing, and we may be embarking on a policy that is fraught with certain possibilities of evil, I do not see how we can, without a breach of faith, deny the ratification of the agreement or refuse to pass this measure. Holding that belief, I intend to support the bill, and I urge honorable senators to consider whether our action would not be very seriously misunderstood if the Senate were to say “ no “ to the proposal submitted by the Government. At the same time, I sound i note of warning, that the Government should not make a promise of this kind unless it knows definitely that it has the backing of Parliament. The matter should come to Parliament for decision, so that we may vote untrammelled by any moral obligation. I believe that we should be guilty of a breach of faith if wc vetoed this measure.
Senator O’HALLORAN (South Australia) [9.33 J .- If the creators of the Constitution under which this Parliament functions, and which is responsible for calling us together in this chamber, had been able to re-visit the Senate and listen to some of the debates that have taken place in recent weeks, they would undoubtedly have been pleased with their handiwork! I understand that the Senate was established to protect and further the interests of the respective States. To-night we are discussing a bill to ratify an agreement made by the Commonwealth Government with the Government of Western Australia to guarantee an advance made by that Government with the Wiluna Gold Mining Company. It is somewhat simi1r in its nature to other legislation recently passed by the Senate. It is remarkable that certain honorable senators who supported that legislation which, in the main, was to benefit their States, now turn the glassy eye of suspicion on this measure, because it happens to benefit the far-flung and somewhat afflicted State, so far as federation is concerned, of Western Australia.
– That is unworthy of the honorable senator.
– My observations are less unworthy of me than are the views of the honorable senator, when one considers his attitude towards the Cotton Bounty Bill.
– Does the honorable senator think that the instances are comparable ?
– I consider that; it is the duty of the Senate, while protecting the interests of the respective States, also to regard matters from an Australian point of view. That is why I ask honorable senators to give sympathetic consideration to this measure. Senator Lawson has put the position very capably to the Senate. The Federal Go vernment entered into an agreement with the State Government of Western Australia in a matter involving financial assistance. It will be necessary for me to transgress the Standing Orders for a moment to explain the matter. As the result of an investigation conducted by a royal commission appointed by a previous government, and representative of this Parliament, it was determined that Western Australia was in need of financial assistance. A sum of money has been voted by the Commonwealth Parliament to enable Western Australia to maintain its services and carry on its development. The Wiluna gold-mines are in Western Australia, Senator Sampson referred to the famous epigram of Mark Twain’s about a mine being a hole in the ground, but I shall prove that the Wiluna gold mines are no bogus show or merely a hole in the ground. The field is administered by a company that has sunk £1,000,000 in its acquisition and development. As was pointed out by the right honorable the Leader of the Opposition (Senator Pearce) some of its shareholders are men of international mining fame. Is it likely that they would consent to sink £1,000,000 of hard cash in a field, that was not worthy of serious consideration ? Before taking its action in. connexion, with the Wiluna Goldmining Company, the Government of Western Australia investigated the matter exhaustively, with the aid of its experts. I contend that there are no mining experts in Australia so well qualified to speak on mining subjects generally, and on thai type of gold-mining in particular, as those in the employment of the Western Australian Department of Mines. They have been reared in an atmosphere peculiar to that type of mining, and their knowledge and experience have been gleaned from a lifelong service in connexion with the metalliferous mines common to the western State. It has been claimed by some honorable senators that the Federal Government should have conducted an. investigation with its own officers before entering into the agreement. I ask honorable senators to name any officer attached to a federal department, or one upon whose services this Government could call, who would be capable of conducting such an investigation.
– Mr. Gepp.
– What experience has Mr. Gepp had in connexion with this type of gold-mining?
– He is a highly qualified metallurgist.
– I admit that Mr. Gepp is a highly qualified mining engineer in his own sphere. He is a man lor whom I have the highest regard, one who, in his own class of metalliferous science, has few peers in Australia or, indeed, in the world. But his actual experience has been confined to silver-lead fields, and particularly the smelting side of the industry. So far as I am aware he has never been associated with a goldmining concern in Australia. Mr. Gepp may have acquired a technical knowledge of the industry, but a practical knowledge is necessary before one is properly able to assess the value of a show. I remind Senator Glasgow of the experience of those in charge of the Rosebery mine in Tasmania. That is an old field that has been worked for more than 30 years. We have been told during the course of this debate that the Germans lead the world in metallurgical research. I remind honorable senators that the Rosebery mine was controlled by a German company, that sunk £250,000 in it. It is now being developed by an entirely new process largely the result of the investigation of a couple of Australians who paid particular regard to the peculiar problems nf the mine. They did not rely upon hook knowledge, but by practical experiment evolved a process at Rosebery and Zeehan that warranted their recommending a further expenditure of £200,000 on the field, which would be exploited by the new process.
– Mr. Gepp took an important part in that investigation.
– Because it was a silver-lead show. That indicates that when seeking advice on a subject it is best to obtain it from people who have practical as well as technical experience. The officers of the Western Australian Department of Mines are eminently capable, practically and technically. Senator McLachlan insinuated that in agreeing to this guarantee the Commonwealth Government and the State Government of Western Australia are placing themselves in the position of a decoy to encourage the subscribing public to furnish the £200,000 additional share capital required. I refer Senator Sampson to Senator McLachlan’s statement, because he, by interjection, said that something ought to be done to open the Briseis tin mine in Tasmania, which was dismantled and almost ruined by the regrettable flood that occurred in that State some twelve months ago. I remind the honorable senator that the Tasmanian Government offered to guarantee the Briseis tin-mining company to the extent of £30,000 if the shareholders would provide a like sum for the purpose of re-opening that mine. I do not think that Senator Sampson would claim that in taking that action the Government of Tasmania placed themselves in the position of a decoy, to induce shareholders to subscribe.
I find it difficult to understand the attitude adopted by Senator McLachlan towards this measure, particularly in view of his recent eloquent advocacy in favour of- a gold bonus. The other night Senator McLachlan propounded to honorable senators a scheme whereby not only would our trade balance in his opinion he restored, but our external indebtedness metamorphosed to an internal indebtedness. We have a number of mining propositions which are at present in the non-productive stage, but which, we are assured, will begin production following the passage of this bill. I understand that, as the result of reliable tests, the Wiluna company estimates it will be able to treat monthly 40,000 tons of ore, with values ranging from 24s. to 40s. per ton. On this basis, the tonnage treated per annum will be about 480,000. At a low average value of 30s. per ton, which is less than the average estimated as the result of the investigations that have been made, this will return approximately £700,000 per annum, representing at present prices about 200,000 oz. The reports of the State mining experts indicate that there is sufficient Ore in the property to maintain this volume of production for 25 years, so we may take it that, during the period mentioned, the wealth production of Australia will be increased by from £16,000,000 to £18,000,000 as a result of the development of this mining proposition.
It has been said that Mr. Gepp and the other experts constituting the nuclei of the Development and Migration Commission, whose services are’ being retained by this Government, should be utilized to advise the Ministry on questions of this nature. I remind honorable senators that the Development and Migration Commission conducted an inquiry into the general question of assistance to the mining industry in Western Australia, and made recommendations somewhat on the lines followed in this bill.
– Did the commission make any recommendation with regard to the Wiluna company?
– The Wiluna company was not treated separately. Neither was the Lake View and Star or the Sons of Gwalia, or, for that matter, any other mine in Western Australia. The Development and Migration Commission recommended that the mining industry in Western Australia was entitled to assistance, and that it should be in such a form as to enable certain proved shows to be developed, rather than a bounty on the production of gold from existing mines.
– Did Mr. Gepp recommend this scheme?
– Not in substance, but the recommendation of the Development and Migration Commission was practically on all fours with the proposal contained in this bill.
Since I have been a member of this chamber, I have listened to the representations made by other honorable senators concerning the assistance required for industries peculiar to their States. I take the view that the Commonwealth should pay particular attention to the needs of Western Australia, South Australia and Tasmania, which derive less benefit from federation than, do the more populous States, like New South Wales and Victoria. The Senate now has an opportunity to sanction a measure of assistance being given to Western Australia to assist its mining industry. That State is fully entitled to this financial aid. The fact that it is receiving financial assistance from the Commonwealth demonstrates beyond all doubt that the State Government is not in a position to stand alone in guaranteeing the Wiluna company in its proposal to develop its property. The reports of mining experts, which were quoted by the right honorable the Leader of the Opposition, indicate that there is no reason to fear that the expectations of the mining company will not
De realized. In that event the Commonwealth will not be called upon to find any portion of the sum guaranteed under this bill. The measure is really honoring an agreement made between this Government and the Government of Western Australia. That agreement, I suggest, demonstrates that this Government is not unmindful of the claims of the smaller States to assistance. In this matter we should take the broad Australian view, without regard to whether the assistance is being given to Western Australia, Queensland, Tasmania or any other State.
.- This afternoon the Leader of the Senate (Senator Daly) presented a financial statement, which, I venture to think, is not a good advertisement for Australia. Now, following closely upon that statement, we are asked to endorse the action of the Government in guaranteeing financial assistance to what Senator McLachlan has described as a new industry. In view of the unsatisfactory state of Commonwealth finances, the action of the Government in bringing forward this measure is, to say the least, highly injudicious. I have not the slightest objection to the Commonwealth granting financial aid to Western Australia upon proper lines. That State, as we know, has suffered under federation, and it is already receiving special grants from the Commonwealth. I refuse to vote for this measure on the ground merely that it endorses the action of the Government in making an agreement with the Government of Western Australia to stand behind a private mining company in a scheme to develop its property.
– Then the honorable senator does not believe in private enterprise?
– That question is not involved. Senator O’Halloran just now had something to say about those honorable senators who supported a bounty for other industries, but were reluctant to vote for this bill. I remind him that all proposals for the payment of bounties have been in respect of new or weak industries which, it is hoped, will be developed and eventually become selfsupporting. The same cannot be said of gold-mining, because every day’s working means that the asset is being depleted. All that has been said in support of the Wiluna proposition as a mining venture may be said of many other similar mining shows in the various States, including, in my own State, the Mount Isa mine, upon which a large sum is being expended for developmental purposes.
Senator Lawson, speaking in support of the bill, said we should pass it because the ‘ Government had entered into an agreement, which it would be injudicious to repudiate. I do not agree with the honorable senator. His reasoning, in my judgment, was unconvincing. The honorable senator added that the case for assistance being given to Western Australia would have been strengthened if the Government had had the backing of reports from independent mining experts, and Senator O’Halloran has just told us that this proposal is practically on all fours with certain recommendations made by the Development and Migration Commission. I am not suggesting that the reports obtained by the Western Australian Government from its mining engineers and other experts are not thoroughly reliable, but I feel sure that if this mining company were in another State the senators representing Western Australia would be, to a man, against the bill, because it cuts directly across all the principles which they have been advocating in this chamber. I was not present when the Cotton Industries Bounty Bill was under discussion, but I should have voted for that measure because, as I have stated, it is designed to assist the development of a young industry which, in the course of twelve months or so, should be self-supporting. The same cannot be said of any bounty proposal in relation to goldmining, because, as I have shown, the value of the asset is steadily being re duced with each day’s operations. I, therefore, say that this venture is one upon which the Government should not have entered. The position at Broken Hill amply bears out all that I have said about the uncertainty of mining. At the present time, owing to the decline in the price of metals, there is a possibility of a number of mining properties, which have been in operation for many years, being closed down at an early date. In view of the position which has recently developed at Broken Hill, the New South Wales Government would be justified in approaching the Commonwealth authorities for financial assistance in order to keep those mines in operation. All that has been said in support of this proposition could also have been said in connexion with the Mount Morgan Goldmining Company, which, notwithstanding the assistance it has received, is unable to carry on. I do not intend to support the measure merely because an agreement has been signed. I do not know why the Government should have acted in this way. One is led to believe that it has adopted this course simply because a member of the Cabinet has a certain amount of influence over his colleagues.
– The honorable senator does not suggest that Sir James Mitchell is a member of the Labour party?
– But this arrangement was entered into by the previous Premier of Western Australia.
– I do not blame the Western Australian Government for signing the agreement; but that Government should be able to protect its interests without the backing of the Commonwealth. This is entirely a State matter, and, seeing that a mining venture is involved, it is one with which the Commonwealth should not be associated. Every one who has any knowledge of the efforts that have been made by various governments to support the mining industry knows that, in the end, the government concerned has to “ carry the baby.” If this measure is passed we shall be establishing a precedent which may be availed of by other States. In view of the present financial position we are not justified in supporting hazardous mining proposals of this nature which may result in placing further financial responsibilities upon the Commonwealth.
– As the debate on this measure has proceeded, I have felt more convinced that I must vote against the bill. This is admittedly a fraud upon the Constitution.
– I rise to a point of order. Senator H. E. Elliott has said that this is admittedly a fraud upon the Constitution. This Government will not inflict upon the Senate any fraud upon the Constitution, and I submit that the honorable senator is not in order in using those words.
– I do not think that such language should be used.
– Then I shall say that it is admitted that, as this Parliament cannot directly make a grant to the company, it is asked to adopt a specious disguise.
– I ask, Mr. President, if the honorable senator is in order in saying that Parliament is asked to adopt a specious disguise?
– The honorable senator is not in order in imputing dishonest motives to any government or to any individual senator.
– This Government
– The proposal which the Government is asking the Senate to accept has been referred to by Senator H. E. Elliott as a specious disguise. I take exception to the use of those words, which I think should be withdrawn.
– I ask the honorable senator to discontinue that line of argument.
– We are asked to adopt this proposal with the idea of assisting a necessitous State. There is not a tittle of evidence on that subject before us, and we know that the grant, if allowed, will go to the company, contrary to the provisions of the Constitution. Such a subterfuge-
– I rise to order. I object to the use of the word “subterfuge.” If the honorable senator would not read his speech he would perhaps be able to employ parliamentary language.
– I may remind Senator H. E. Elliott and other honorable senators that under the Standing Orders an honorable senator is not permitted to read his speech. Some of our standing orders are “more honour’d in the breach than the observance,” and I take this opportunity to remind honorable senators of several of these which relate more particularly to the rules of debate. Standing Order No. 406 provides that “ no senator shall read his speech “. while there are others which set out that no senator shall pass between the Chair and another senator who is speaking nor between the Chair and the table, and that every honorable senator when he comes into the chamber shall take his place and not stand in any of the passages or gangways. I invite the attention of honorable senators not only to the Standing Order which the honorable senator is transgressing, but to these and others which are not infrequently disregarded, and suggest that if they are not to be honoured they should be repealed.
– If persons such as the Abrahams brothers, of whom we . once heard at interminable length, were to attempt to evade the strict terms of the law they would be denounced by the members of the present Government, and measures would be introduced to stop up the loop-holes which had been discovered. This proposal has been submitted in this way to avoid the strict letter of the Constitution. Notwithstanding this, Senator Lawson has told us that our hands are bound.
– He said that we were morally bound.
– If we are morally bound, then we are, in my opinion, absolutely bound. In the next breath the honorable senator told us that this agreement is admittedly subject to the ratification of Parliament. What do those words mean? If on any occasion when the Government chooses to enter into an agreement behind our backs, we are morally bound to ratify it, it is difficult to say where such a system will lead us. It will mean that we shall have handed over the whole of our responsibility and powers to the
Government which -is a course I do not intend to follow. In order to protect the interests of the ‘taxpayers of this country the late Government appointed a Development and Migration Commission, which was denounced throughout the length and breadth of Australia by the supporters of the present Government. But this measure shows the vital need for the existence of such a body. It has been said that the Minister should himself accept the responsibility; but we are being asked to take this step in the dark and to commit the taxpayers of this country to an amount which would have covered the cost of that commission for perhaps ten years. The Minister has no real knowledge of the actual position and is relying upon the reports of experts who are unknown to us. I have had some experience of relying upon the reports of experts. Some two years ago a very old friend of mine wrote to me enclosing a number of reports in connexion with the oil developments at Roma. which he said were so promising that I could “ put my shirt on it.” Some months later, I learned that he had acted on the advice given me, as he wrote asking for a loan to help him out of his difficulties. The “ moral certainty “ had again gone wrong. We all remember the reports received some years ago concerning Bailey’s Reward, Wealth of Nations, Bullfinch, and other Western Australian mines. Some of them were really jewellers’ shops on the surface but were only surface shows.
– But they saved Melbourne.
– I do not think those particular mines did ; hut the general development in Western Australia was of inestimable value to the whole Commonwealth. On what principle are we asked to support this bill? Is it with the intention of assisting the gold-mining industry? If it is I should prefer to support the payment of a bounty on the production of gold, because we would then bo paying only on the actual gold produced. In this instance we are embarking on a scheme of pure speculation.
– The Commonwealth Government may not be asked to contribute fi.
– Any one who has had any experience of mining knows that that is the exception rather than the rule. Why should this mine be singled out from all mines in Australia for particular consideration ? It would appear that the owners of this mine have been able to wield political influence of a rather extraordinary nature, and to rope in both the Labour Government and the succeeding Nationalist Government in Western Australia andthrough those Governments to bring pressure to bear upon the Commonwealth Government to achieve their end. By interjection the Minister was asked whether the Queensland Government had supported a similar proposal in that State. After what we have heard recently of assistance granted to mining in Queensland, we should regard with the gravest suspicion any proposal to render similar assistance to this industry. Whatever may be the actual facts of that case, we cannot disregard the fact that a grave scandal has been created.
– That is not so. I hope that the honorable senator will not ( pursue that subject.
- Senator O’Halloran referred to a report by Mr. Gepp. I rather fancy that the assistance proposed by the Development and Migration Commission was in the nature of a . remission of duties on mining machinery, and a relaxation of some of the conditions which apply to labour.
– But the report we require is on the treatment of ore.
– If the mine is such a good thing there should be no difficulty in raising in Western Australia or elsewhere in the Commonwealth the necessary capital to get on with the job.
– The State having given the guarantee the money has been raised.
– So far from there being any real faith in the venture the bank is apparently very doubtful about its security. At any rate it has gone to the State Government and demanded a guarantee, and then the State Government, in a spasm of anxiety on its own account, has asked the Commonwealth to carry the baby. It all goes to show that there is deep anxiety about the profitable nature of the proposition. We are all agreed that mining is strictly a matter for the States. Mr. Gepp, who is still available, has not been consulted upon this proposal, although k is admitted on all sides that he is a man upon whose advice we can rely. The experts who have reported, as Senator McLachlan has pointed out, are not responsible to the Commonwealth Government, and if it turns out that their reports have been negligently drawn up, the Commonwealth will have no authority over them. Nothing has been said so far to induce me to support the bill.
.- The chief factor that has influenced the Federal Government in bringing forward this proposal is that it is not one to give special consideration to any State. Gold-mining is common to all the States, and there are vast fields in Australia that cannot possibly be worked unless science provides a means by which low-grade ores can be treated at a profit. The Western Australian Government made exhaustive inquiries into the Wiluna Gold Mines proposition, and I suppose that the staff of the Western Australian Mine3 Department is as well qualified and equipped as that of any other Mines Department to deal with gold-mining. The doubt, that some honorable senators appear to have about the ability and integrity of the officials of the Mines Department in Western Australia is quite unwarranted. These officials are there to guide their government with the knowledge they possess, and when they finally reported, as a result of their inquiries, that the Wiluna proposition was a fair and square venture, the State Government decided to back it, not only to the extent of guaranteeing the company’s bank overdraft, but also to the extent of building a railway to Wiluna. There was, of course, every possibility of such a railway opening up a vast area of country capable of being developed in other ways than by mining, but the report of the responsible officers was sufficient to warrant the Government in undertaking the construction of the railway solely because of the possibility of development in the gold-mining area at Wilunua. There is a vast area of mineral country in Western Australia which hitherto has not been worked, because it has been impossible to treat the ores at a profit, but science has now brought into being a plant that is, apparently, capable of doing the job. At any rate, a model plant has been put up at Wiluna, and tested. It has given certain results, and on those results two Western Australian Governments in turn decided to back this venture. The Collier Government took the initial step, but the Mitchell Government has signed the agreement.
– The Mitchell Government could not repudiate what the other Government had done.
– It could have done so if it thought that what the previous Government had done was wrong, just as honorable senators have the right to repudiate this agreement if they think that the Commonwealth Government has done wrong in entering into it. The fact that Sir James Mitchell has attached his signature to an agreement entered into in the interest of his State seems to me to warrant my voting for this bill. But my main reason for supporting it is that there is every promise that the plant which has been established on the Wiluna mine will lead to great mining development in Australia. Because of its financial disability, the State of Western Australia has appealed to the Commonwealth. Clause 2 of the agreement, which seems to sum up the situation pretty well, reads as follows: -
The State and the Treasurer of the Statu shall and will before making any request for payment by the Commonwealth hereunder use its best endeavours to recover from the said The Wiluna Gold Mines Limited payment of all moneys paid by the said Treasurer to the said bank under and in accordance with the said guarantees and failing such payment will in accordance with law exercise and enforce all its rights powers authorities and remedies as mortgagee and grantee under the said mortgage and bill of sale respectively against the said company its undertaking and assets with the intent and for the purpose of recouping itself as far as possible out of the undertaking and assets of the said company and of minimizing the liability of the Commonwealth hereunder :
As pointed out by the Leader of the Opposition, the Wiluna Gold Mining Company has already spent about £1,000,000 in developing its mine and importing machinery for treating lowgrade ore. This machinery is supposed to represent tlie last word that can he said by scientists in regard to mining machinery for the treatment of low-grade ore.
– Was customs duty paid on that machinery?
– I am not quite sure, but I understand that the Commonwealth did make some concession on the importation of certain machinery which could not be manufactured in Australia. If this plant proves successful, it will enable engineering firms in Australia to gain a knowledge of what is required for the production of that class of machinery. If the venture is a success, the plant can bc installed on mining fields all over Australia; but the thing that impresses me most is that two Western Australian Governments, acting on the advice of their mining experts, engineers, and metallurgists, have backed this enterprise, but, because they are like the crippled brother in the family, they have had to come to the big brother, which is the Commonwealth, and say, “ We believe we ave warranted in asking you to back us in this venture, the possibilities of which wo think are undoubted. If you do so the advantage we derive will be of great benefit to the whole family.” For that reason I support the bill.
– At first blush I wa3 very much impressed with Senator Lawson’s view of our responsibility under the agreement contained in the schedule to the bill, but when I thought the matter out it seemed to me that agreements are frequently made between governments with the object of subsequently getting the ratification of Parliament. I had only to think of that colossal agreement with the States which Mr. Bruce brought down, and for which he had to get the ratification of this Parliament and the States. Mr. Bruce took a great risk, greater than that which Mr. Scullin is now taking in connexion with this bill. That satisfied me in regard to Senator Lawson’s advocacy of the measure. The next point was that which Senator Pearce mentioned in connexion with the granting of assistance to Western Australia as a State. I have no objection to granting assistance to Western Australia, but I think that it should be done upon recommendation by proper authorities. Such a recommendation is not before us in this instance, and so the argument of Senator Pearce goes by the board. What should probably weigh with me more than anything else is the promise made by Senator Dunn that Mount Morgan will be the next to receive largesse in this particular regard. As a matter of fact, Mount Morgan ia probably a better proposition than Wiluna, and had I no scruples I daresay that Mount Morgan would receive my support if it came before this Parliament for assistance. It is probable that it will if this bill is passed. I am glad to hear that a new flotation process has been discovered. If all that is claimed for this process is proved in practice, it will be a great discovery and help to solve some of the difficulties that have been experienced in this country in connexion with the treatment of lowgrade ores. With the advantage of a successful treatment, and with good contractual arrangements in respect of labour, I venture to say that Mount Morgan could be made a profit-earning proposition within a very short time, and, as there are proved ores to the extent of between £16,000,000 and £17,000,000 worth - half gold and half copper - at that field, the mine could employ, I suppose, 2,500 men for eight years continuously. That is a proposition well worthy of consideration, and I am thankful to have Senator Dunn’s support in that connexion. With Senator Reid, I think that this is a matter for the States. The Constitution clearly makes assistance to goldmining a matter for State attention. A request for assistance was made to the Federal Government by the Mount Isa Mines Limited, or by the Queensland Government. That company wanted £1,500,000. £1,000,000 had been subscribed in the form of private capital, and a further £500,000 was required from the public. The money was not immediately available from the public, and to enable the company to go ahead the Queensland Government rose to the occasion and guaranteed the money until it was subscribed by the public. I understand that the guarantee is not now necessary. In this case, surely it is the duty of Western Australia to rise to the occasion, and to assist the “Wiluna company. That, State has already given a guarantee to the bank. That is quite sufficient, and if the Senate refuses to support this measure, “Western Australia will still be standing behind the company. That is the proper position. Some mention was’ made of the railway that is being constructed to Wiluna. Queensland is strewn with railways that have been constructed to mines that are now defunct. That should surely be a lesson to any government not to construct railways to mines unless on the redemption principle. I understand from Senator Pearce that the railway to Wiluna is not being constructed on that principle, because other mines are equally concerned. We have had a bad experience in Queensland, and even, the Labour Government of that State insisted on that class of railway being paid off over a period of years. About £1,000,000 is supposed to have been expended on the Wiluna mine. If, under this bill, the company obtains a further £300,000, it will raise another £250,000. The expenditure, therefore, is likely to be £1,550,000 in all. I do not think that there is any proposition on the Witwaters Rand that has cost that amount of money to bring it to a stage of profit-earning. Generally speaking, in South Africa it costs from £500,000 to £1,500,000 to place a big mine on a profitable basis. The money required is found by private enterprise, and I venture to say that, if a mining proposition is good, money will be found even in these bad times, for investment in it. I agree with Senator Reid that the budget delivered in this chamber to-day should be a lesson to us. This is not the time for us to embark upon new ventures, particularly when, if this request is granted, we shall have similar requests from all over the Commonwealth. Indeed, I should certainly encourage a request on behalf of Mount Morgan, if only with the idea that “ another little drink won’t do us any harm.” I intend to vote against the second reading of the bill.
.- As the Prime Minister (Mr. Scullin) has seen fit to put his name to the agreement under the bill, I am quite certain that he is fully satisfied with the information that has been supplied to him in respect of the Wiluna mine. He was careful to enter into the agreement subject to its ratification by Parliament. I appeal to the Leader of the Government (Senator Daly) to postpone this bill until au investigation has been made by a metallurgist or other officer of the Commonwealth, and his report submitted to thi* Parliament. That, I feel sure, would satisfy every honorable senator. I realize what an enterprise of this kind means to Western Australia, particularly if it should prove successful.
– There are many mines in Victoria that are equally entitled to assistance.
– That may be so. In this case, a huge amount of money has already been expended, and there appears to be a possibility of success. I feel sure that if a favorable report were submitted by ti Commonwealth officer to this Parliament, there would be no difficulty in passing the measure.
– The speeches of honorable senators opposite indicate that no report, however favorable, would influence their objections to the bill.
– Unless the Government is prepared to institute an independent inquiry, I shall not support the bill.
– The Government has acted properly in introducing this measure, and, at the same time, in accordance with the reports of the Development and Migration Commission, which some time ago, inquired into the gold-mining industry. Those engaged in the mining industry in Western Australia had hoped that that commission would recommend a gold bounty as the result of its inquiry, but, although it did not recommend a gold bounty, it did recommend that, in approved cases, direct assistance should be given to the gold-mining industry.
– Did the commission examine the Wiluna mine?
– As far as I know, it did not go to Wiluna, but the Government had at its disposal reports from the highest mining authorities in the Commonwealth in respect of that proposition. I propose later to quote from those reports. In addition, the Western Australian Government was possessed of a proper desire to assist the gold-mining industry. On the reports that have been placed before the Commonwealth Parliament, the Western Australian Government voted £300,000 to £400,000 for the construction of a railway from Meekatharra to Wiluna, a distance of 115 miles. The Commonwealth Government is also aware that the company has expended almost £1,000,000 of its own money in developing the mine and installing the most up-to-date plant that can be obtained. The railway to Wiluna is just about completed.
– The company was assisted to the extent of its machinery being admitted duty free.
– That is not so. I asked a question in the Senate a few weeks ago on that subject, and 1 was informed that no decision had been arrived at, but the most that can be expected is that the company will obtain a remission of portion of the duty. The Western Australian Government, in building the railway, was forced to pay the high duties on the rails and other requisites that were used in its construction, and that practically doubled its cost. It is apparent that some members of the Commonwealth Parliament are prepared to let Western Australia down, notwithstanding the agreement that has been entered into between the Commonwealth and the Western Australian Government. Under that agreement the Commonwealth Government, subject to the ratification of Parliament, promised to indemnify Western Australia if it gave a guarantee to the bank. The company was anxious to install machinery, and it wanted money urgently. The Western Australian Government did not wait for this bill to be passed by the Federal Parliament; it was so anxious that the work should not be delayed that it gave a guarantee to the bank. It is, therefore, only fair that the Senate should pass this measure rather than allow the Western Australian Government to carry the baby if there is one.
– Why should we assist an individual company?
– Because the Commonwealth Government has agreed to assist the gold-mining industry. The Development and Migration Com mission recommended that direct assistance should be given to the industry, and acting on that recommendation, the Commonwealth agreed to assist the Wiluna company subject to the ratification of Parliament.
– There are, in Victoria, mines with prospects quite as good as those of Wiluna.
– Let them ask for Government assistance. There are very “few mines in Australia with claims equal to those of the Wiluna gold-mine. I shall refer briefly to the report presented by Mr. Montgomery, State Mining Engineer of Western Australia, in connexion with the building of a railway from Meekatharra to Wiluna. The mine was situated 115 miles from a railway, and the Government chose the very best mining officer available to report as to whether the construction of a railway was justified. Wiluna is a most interesting place. At the mine there is a huge quarry, 100 feet deep. From it has been taken all the oxidized ore, representing a value of £565,000. Unfortunately, the company that owned the mine before the present company purchased it had not sufficient capital to establish the big plant necessary to deal with the refractory ore that begins 100 feet down, and continues, so far as it can be ascertained, to a depth of at least 3,000 feet.
– Is it a sort of open cut?
– Are the wages there similar to those paid for shaft mining?
– I have not the schedule with me, but, taking the work into consideration, the men in the Western Australian mines are the worst paid industrial workers in the States. For many years the Kalgoorlie mines have been tottering, but the Western Australian union men are very sensible, and have not demanded additional wages, which would probably have been granted had they appealed to the Arbitration Court. Such action would have involved the closing of the low-grade mines. These men are different from their eastern colleagues and realize that the mines are just kept going, and could not afford to pay increased wages.
– What are the average earnings per week of those men ?
– I am unable to give the details, but I can say that the amounts are very reasonable. The open cut is not at present being worked, as the new company is putting down the biggest shaft known in the history of Australia, with the intention of developing the open cut from underneath. The report that I shall quote induced the Government to spend £300,000 to £400,000 on building a railway.
– Does that railway develop anything else but mining country?
– It also develops pastoral country. In addition to the Wiluna gold-mine, there are in the same locality other mines from which over £500,000 worth of gold has been taken.
– That makes so much less to take out. Is it not an argument against the proposal?
– Only the oxidized ore has been taken from the Wiluna mine to a depth of 100 feet from the surface. A vast area remains untouched. Since this report was written I have had the opportunity to read several official reports from the Wiluna Gold Mining Company claiming that new and richer lodes have been discovered as a result of the development work undertaken by the company. The summary to the report by Mr. A. Montgomery,, M.A., F.G.S., State Mining. Engineer to the Mines Department of Western Australia, reads -
This show;s the great value of the mine. There are six more reasons in justification of the scheme, but I shall not read them at this late hour. I commend the whole report to- the consideration of honorable1 senators. The Wiluna goldmining company has already spent nearly £1,000,000 of its own money On development, machinery and plant, the latter being of the latest type, to’ extract gold; from the ore by the oil flotation process.. I was very much impressed with Wiluna when I visited it about the time that therailway was authorized ; so much so that1 I became interested in a small businessthere’.
– Did thehonorable senator buy any shares in thecompany ?
– No. I was so satisfied with the prospects of theplace that I invested money in a business - at Wiluna. In view of the position in which the Western Australian Government is placed by its having guaranteed the advance from the bank,- I- hope thatthe Senate will ratify the agreement.
– I do not wish to deal at lengthwith the bill at this late hour. I purposely refrained from speaking earlier- as I wished to hear the views of Western Australian senators on the subject which directly affects their State. The bill proposes something entirely new in federal finance. I think that I am justified in saying that any assistance granted to mining, whether gold or otherwise, can be placed in the category of extremely shaky finance. There are many mines in the other States of Australia that promise equally as good results so far as mineral contents are concerned, as the Wiluna mine. I should be only too pleased to acquiesce in granting assistance to a sound scheme to stimulate primary production in Western Australia.
– Is not mining a primary industry?
– I shall deal with that shortly. Senator Dunn referred to the Cotton Industries Bounty Bill, recently brought before the Senate, and claimed that it was specifically designed to benefit Queensland. I was very anxious to assist the passage of that measure, and I worked hard for it, but I believe that a great difference exists between granting a] bounty to develop the production of cotton or sugar, and advancing a sums of money to finance a mine. It must be remembered that the latter is a wasting asset, depreciating with every ounce that is taken out of it.
– Did not Charters Towers and Gympie help Queensland very substantially?
– I admit that, but it does not alter my contention. Crops can be grown and re-grown on the same land and increased in volume year after year. They are a definite wealthproducing asset to the country. That is not the case with a mine. Reference has been made to the Mount Isa mine, which I know very well indeed.
– The ore values of Mount Isa are all out of sight.
– A scientific investigation was made into the value of Mount Isa just as was done at Wiluna. Thorough tests were made as to the value of the ore available before large and costly development work was undertaken. I t is said that there is sufficient mineral at Wiluna to keep the company going for 25 years. I remind honorable senators that it is also claimed that there is sufficient mineral at Mount Isa to last for 100 years. While a request was made for Federal aid for Wiluna, application was made to the Government of Queensland for assistance in the form of a guarantee for the Mount Isa mine when there was a shortage of funds in tlie case of that company. I believe that the State Government is the proper authority to approach in such matters. Although the price of minerals was low when the Mount Isa Mining Company required further capital, the Premier of that State (Mr. Moore) did not hesitate to guarantee the company on its own responsibility in the amount of £500,000 and I have no doubt that his action strongly influenced speculators in London to take up the bulk of the shares. Senator Johnston mentioned that the railway line, built by the State Government to Wiluna also opens up a considerable1 area of good pastoral country. That being so, it cannot be argued that the mine is bearing the whole cost of the’ railway. If it ‘ makes possible ‘the development of a fair area of pastoralcountry, the State will he in -the posses-‘ sion of a substantial asset to offset its expenditure on the railway. Similar action has been taken in Queensland in respect of several mining propositions.’ The State Government built the DuchessMount Isa railway entirely for the development of the Mount Isa mine. It appears to me, therefore, that all questions of guarantee in respect of mining proposals should be purely the responsibility of the State Government concerned. I should like to give further assistance to Western Australia, but it should be on legitimate lines. If we endorse this proposal, every low-grade mining proposition throughout the Commonwealth will be entitled to ask for similar assistance from the Federal Government. In view of the difficult state of the Commonwealth finances I must reluctantly vote against the bill.
– There is just one point which I wish to put before honorable senators. I hope it will influence the caustically judicial mind of Senator.
McLachlan. Not long ago a royal commission appointed by the Federal Government, and composed entirely of men from the eastern States, with whom we had no influence whatever, recommended as compensation for disabilities which Western Australia was suffering under federation, the payment by the Commonwealth of a grant of £450,000 a year to that State. As a result Western Australia received £300,000 a year. I suggest that if the Commonwealth be called upon to pay anything in respect of this agreement - this contingency appears to me to be extremely improbable - it should be regarded as some little compensation for the underpayment by the Commonwealth of the grant recommended by the royal commission to which I. have alluded.
Senator Sir JOHN NEWLANDS (South Australia) [11.4.] - To-night we had placed in our hands a financial document which must give all honorable senators good reason to ponder and think very carefully before voting in favour of this proposal. We have been told by the supporters of the bill that the Government of Western Australia has undertaken heavy financial responsibilities in the construction pf a railway line to Wiluna for the development of the Wiluna mining proposition. But building a railway is the first act of any government which desires to open up an approved mineral area. A railway is necessary to transport mining plant to the field, and ore to treatment works. as well as for the convenience of the people who engage in mining on the field in question. It cannot therefore* be argued that, in building the ‘railway to Wiluna, the Government of Western Australia did anything that might not reasonably have been expected of. it. The Wiluna railway, we are told, is 115 miles long. Practically every State government has undertaken similar work for the same purpose, so I do not regard this expenditure by the Government of Western Australia as a reason why we should support the bill. I f the Commonwealth Government wishes to assist the mining industry in this way it has ample opportunity at Broken Hill where, owing to the present low price of silver and lead, several mines are closing and between 3,000 and 4,000 men are being thrown out of work. In South Australia also there are several mining fields which could be assisted in this way. A number of mines urgently need to be unwatered, but this work is never likely to he undertaken unless those controlling the mines receive some form of Government assistance. In Central Australia too there is an important mining field known as the White Range. Prior to the construction of the railway to Alice Springs we were told that it was necessary to enable the White Range field to be developed. That railway has been built for some time now and, so far as I know, the White Range mining area has not been tapped yet. If the Commonwealth Government undertook to guarantee financial assistance I have no doubt that .some philanthropic men would seriously consider the development of that proposition also. I listened carefully while the Leader of the Opposition (Senator Pearce) was speaking in favour of this measure. His utterances reminded one of the prospectus of a mining engineer wishing to induce investors to try their fortunes in mining. I was forcibly reminded of my own experiences as a young man, when I used to read alluring prospectuses an,d would rush along, fearful lest the share list should bo closed, to invest the few pounds which I had in one or other of those mining enterprises. My money is still out, and I am hot likely to see it again. The reports quoted by Senator Pearce were similar to reports issued by every mining manager who desires to interest the investing public in his particular mine. I suggest, however, that the Commonwealth Government has no money to risk in fanciful expenditure of this ‘kind, and that it must stop forthwith. What would the people of Australia say, if, to-morrow morning, they read in the newspapers that, notwithstanding the difficult state of Commonwealth finances, the Senate had agreed to the Government’s proposal to stand behind the Government of Western Australia in its guarantee relating to thisWiluna mining proposal? We should think twice before we vote for this bill. Public money cannot be put into speculative enterprises of this kind. I intend to oppose the bill.
– This agreement cannot be altered by the Senate. It must be either accepted or rejected. No amendment can be made to it without reference to the parties responsible for the agreement. I realize fully the responsibility resting upon all those honorable senators who intend to vote against it, because the Government, through the Prime Minister, has entered into an arrangement with the Government of Western Australia to guarantee the amount advanced by the Midland Bank to the company. There was ample opportunity for the Government to bring this measure before the Senate much earlier in the session. Parliament met in February this year. The Government should have taken the earliest opportunity to inform members of both chambers that it was committed to this agreement, subject to its ratification by Parliament.I am convinced that, in any event, Parliament will be called upon to pay the money if the bill is passed. I know from our experience in Tasmania that the Government always has to foot the bill in connexion with all proposals to assist mining companies, and there is no reason to hope that Wiluna will be any exception to the- rule. Consequently, the Government of Western Australia will have to find the money, and, in pursuance of the agreement made by this Government, the Commonwealth Parliament will be asked to vote money to reimburse the State Government. On the question of principle I intend to vote against the bill.
– I do not propose to reply at length to the arguments advanced by those honorable senators who have spoken against the bill. The right honorable the Leader of the Opposition (Senator Pearce) effectively answered all objections to the measure. I should not have spoken but for the- suggestion made by Senator Plain that this proposal should be referred to mining experts. I take it that those honorable senators who intend to vote against the bill will do so, not because in their opinion sufficient information has not. been supplied, but for the reason advanced by them that the bill is wrong in principle. That being so, no good purpose would be served by postponing it and, therefore, I cannot accede to Senator Plain’s request.
Question - That the bill be now read a second time - put. The Senate divided.
Majority . . 1
Question so resolved in the affirmative.
Bill read a second time and reported from committee without amendment.
Senate adjourned at 11.22 p.m.
Cite as: Australia, Senate, Debates, 9 July 1930, viewed 22 October 2017, <http://historichansard.net/senate/1930/19300709_senate_12_125/>.