12th Parliament · 1st Session
The President (Senator theHon. W. Kingsmill) took the chair at 3 p.m., and read prayers.
– A copy of the report and balance-sheet of the Commonwealth Oil Refineries Limited for the year ended the 30th June, 1931, has been placed on the table of the Library.
– Following on the representations by Senator Pearce last week, a further cablegram has been sent to the Prime Minister of New Zealand, requesting him to forward 50 copies of the report of the select committee which inquired into the prices of petrol and oil in that dominion.
SenatorFOLL. - I ask Senator O’Halloran, as deputy chairman of the Public Accounts Committee, whether he read the recent newspaper forecast of the report to bo made by the committee upon the basis of evidence tendered to it in camera?Will the committee take steps to ascertain whether any leakage of confidential information has occurred ?
– So far as I am aware, the information upon which the newspaper statement was based was not received from any member or official of the committee, but at the next meeting of the committee the matter will be brought before it with a view to ascertaining whether any leakage of confidential information has occurred.
Minister representing the Minister for Defence, upon notice -
– The answers to the honorable senator’s questions are as follow : -
asked the Minister representing the Minister for Works, upon notice -
In view of the statement made by Senator Dooley, Assistant Minister, that William Patrick Foley, of Belmore-road, Hurstville, was the successful and highest tenderer for federal accommodation premises situated at Jervis Bay, Federal Territory, will the Minister concerned state how many persons were tenderers for the property, what were their names, and their places of residence, and what was the amount of each of their tenders ?
– The answers to the honorable senator’s questions are as follow : -
asked the Minister representing the Minister for Home Affairs, upon notice -
– The answers to the honorable senator’s questions are as follow : -
The following papers were presented : -
National Debt Sinking Fund Act - National Debt Commission - Eighth Annual Report, year ended 30th June, 1931.
Ordered to be printed.
Seat of Government Acceptance Act and Seat of Government (Administration) Act - Public Health Ordinance - (Regulations amended (Meat).
Financial Emergency Acts - Regulations - Statutory Rules 1931, No. 138.
Assent to the following bills reported : -
Supplementary Appropriation Bill 1927-30.
Supplementary Appropriation (Works and Buildings) Bill 1927-30.
Debate resumed from the 6th Novem ber (vide page 1524), on motion by Senator Daly -
That the bill be now read a second time.
Senator Sir HAL COLEBATCH (Western Australia) [3.12]. - Since the Senate adjourned on Friday last, references have been made in the press to certain statements of mine regarding the probable effect of this tariff on the standard of living in Australia, and I express my pleasure at learning that this matter is to be referred for report to the Government Statistician. In the meantime, there are one or two other phases of the tariff and the standard of living, to which I should like to direct the attention of the Senate. In a letter that I have before me from the secretary of the Pastoralists Association of Western Australia, the following passage occurs: -
We, in this State, are so disgusted with the fiscal policy, that we have determined to cease purchasing any further materials for developmental purposes. A number of our members have, where needed, erected scrub fences, which will be quite serviceable for three or four years with very little upkeep. We already have operating in this State a body called the Primary Industries Council, upon which are represented the Primary Producers Association, Mining Association, Chamber of Mines, Saw-millers Association, and this organization.
Is that not an indication of the measure of resentment that the tariff policy of this Government has excited? It is causing resentment among whole communities to the extent that they are employing the altogether objectionable and destructive weapon of the boycott, which does harm, not only to those who are manufacturing and sitting under a moderate tariff, but also to those who use that objectionable weapon. Reprisals of that kind can never do good to anybody. These people are going to employ inferior substitutes, because they cannot afford the best materials, thereby retarding the development of their properties, and the production of wealth. It can have no other effect than to reduce wealth production in Australia, and inevitably to bring down the standard of living.
Australia has enjoyed a high standard of living in the past, not -because of the tariff, but in spite of it. This high standard has been due to the big prices realized by our primary producers, who have borne the burden of the tariff, and it has been attributable, also, to governments borrowing extensively abroad, an altogether unstable feature on which to base a standard of living. It is well known that the standard of prosperity in every country, without exception, depends on the prosperity of its export industries. That always has been, and always will be, the case. If, to-day, there is a glimmer of hope on the horizon, if things look brighter than they did a few weeks ago, it is for that reason only; not because of this tariff, but because the circumstances suggest that there may be, again, some measure of prosperity among our export industries. That alone is responsible for the improved outlook, and is in keeping with the experience of all countries throughout the centuries that it is the prosperity of the basic export industries that dictates the measure of prosperity of the people as a whole. One direction in which the tariff policy is utterly wrong is that it taxes the basic export industries, and, through them, lowers the general prosperity of the community. It is idle to point to high wagesand short hours in certain protected industries, and say that these demonstrate the maintenance of a high standard of living. Nobody can question the statement that the general standard of living in Australia is deplorably low in consideration of the enormous resources . of the country, and the sparseness of the population, particularly when -regard is had to the calibre of the people of Australia compared with those of other lands. For this low standard, we have to blame the tariff. Taking the people generally, in no direction can it be claimed that the tariff supports a high standard of living.
The idea that tariffs are necessary to support living standards has been disputed by economists in every country. The Chase Economic Bulletin, which is edited by Benjamin M. Anderson, who is regarded as one of the world’s foremost authorities on this ‘ subject, recently stated -
There are those who fear the lowering of the tariffs because they believe that the
American standard of life is dependent upon the tariffs, and particularly because they believe that’ high tariffs make high wages. This doctrine has very little standing among economists. Wages do not depend upon tariffs, and standards of life do not depend upon tariffs. Wages depend upon the productivity of labour per man, and the productivity of labour per man depends, other things equal, upon the abundance or scarcity of the land and capital with which labour works. The country which has a comparative abundance of land and capital, and a comparative scarcity of labour will have high wages, as is true of the United States. In a. country like China, where men are abundant, capital scarce, and land scarce, land rents will be very high, interest rates will be very high, and wage rates will be very low, tariffs or no tariffs. American labour is high, in comparison with European labour, because land and capital are relatively abundant with us, and men relatively scarce, whereas in Europe land and capital a.re relatively scarce and labour relatively abundant.
All the natural circumstances that make for a high standard of living prevail in Australia, and if we have not so high a standard as we ought to have, it is because of errors in public policy, one of the worst being the extremities to which the protective policy has been allowed to go.
I made reference the other day to a telegram that I had received from South Australia. It reads as follows : -
Hope duty twelve by six Oregon revert back to June schedule as recommended by Tariff Board. Eight shillings, present duty, and cost transport equals six times cost at port of shipment. Impossible find substitute Oregon for Australian purposes. Greatly increased cost of buildings - Executive, South Australian branch of Australian Labour Party, F. F. Ward, Secretary.
That is one of the many instances in which the Government is fooling the workers by trying to persuade them that the present fiscal policy is good for them, although the Government knows quite well that it is bad for them. Obviously, it will not improve the standard of living to increase greatly the costs of building, for that increases the cost of homes. Canada has a higher wage standard than has Australia, and. there the tariff is infinitely lower than in this country. This matter has already been mentioned and it will be more appropriate to deal with it when we are in committee. The last two tariff schedules introduced in Canada are trifling compared with those introduced in Australia. In spite of the higher cost of labour in Canada, we find that industries established in Australia, like the McKay Harvester Company, have transferred their men and brains to Canada so as to enable them to supply the markets of the world. That is a convincing argument that this tariff is doing nothing for the workers.
Reference has been made to the evidence given before the Tariff Board by Mr. Foletta, the general manager of Prestige Limited, one of the leading hosiery manufacturers. He spoke of the great economic loss caused to Australia through the tariff, because we have imported quite 50 per cent, more knitting machinery than can ever be used in Australia. He added -
What is far more serious is to think that we have trained thousands of hands who will have no opportunity of ever getting back into the knitting trade. This has come about because every one said, “This is a good thing; let us get into it,” and they were off before we knew where we were.
Senator Sir HAL COLEBATCH.Yes. Not only the knitting industry and the boot-making industry, but also others are in the same pickle. We are faced with the fact that thousands of people who have been trained in certain occupations can never hope to .secure employment in those occupations.
Instances came under notice where requests had been made for increased duty, or support had been given to increases embodied in tariff proposals, by manufacturers earning abnormal profits. One manufacturer in an industry supplying goods to the value of £100,000 per annum was making 100 per cent, per annum on the capital employed in his business. Another company with an output of £50,000 per annum had paid dividends ranging from 224 per cent, to 124 per cent, over the four years preceding the inquiry. In another industry a company having an annual turnover of over £1,000,000 made over a period of seven years profits ranging from 37 per cent, to 13) per cent, on the capital employed.
What does that imply? It implies one thing only, and that is that this tariff does give excessive profits in certain directions, and does make it possible for excessive wages to be paid in other directions, but that those excessive profits and wages must be made up elsewhere. We cannot give a. person - whether he be an employer or an employee - more than the value of the article which he produces, without robbing some one else. A tariff which enables a manufacturer to make excessive profits must inflict a hardship on some one else.
Senator Sir HAL COLEBATCHThe honorable senator has made several interjections about the cost of living. How is it that the cost of living has declined despite tariff increases? To begin with, the cost of living in Australia is still much higher than it is in almost every other country of the world. The reasons why the cost of living here has declined are not far to seek. Bad times inevitably bring down the cost of living, because those people who have goods for sale cannot sell them at the price which they expected to get for them. Therefore, much of the decreased cost of living has been due to forced sales, and selling al less than cost has been common. If the honorable senator will study the balancesheets of any big emporium, he will find that it has made big lasses, and has “maintained its position out of reserves. Its stocks have been reduced; it has been selling its stocks, which for the most part constitute its reserves, at less than cost. That is one reason for the decline in the Cost of living, and it is something that cannot be continued. It certainly does not establish the argument that this tariff has not increased the cost of living.
Senator Sir HAL COLEBATCH.This further point has, probably, not occurred to the Minister. The fall in the cost of living has been entirely in respect of primary products. The Official Record of the Stock Exchange of Melbourne draws attention to the disparity of the movements of the prices of farm and industrial products in Australia. It is well known that our primary industries have suffered a remarkable and critical fall in price. It is not so well known that our secondary industries are manag- ing to increase their prices. Yet it might be expected that with the reduction of cost of raw materials, prices of secondary products would be brought into closer conformity with the decreased spending power of the farming community. The figures given by the Official Record, taking the wholesale prices in Australia in 1913 as 100 for both farm and industrial products, are as follow: -
A return published since these details were announced gives the present figure for industrial products at something like 200, so that there has been an increase in the cost of manufactured articles, an increase directly attributable to, and one which would have been impossible bad it not been for, the tariff. Some of the propaganda that has been circulated by the advocates of this tariff is intensely amazing.
Senator Sir HAL COLEBATCHMy honorable friend is quite at liberty to quote the propaganda issued by the freetraders, and if he can quote anything issued by freetraders which is as stupid as the statement of the advocates of this tariff, I shall be surprised. This statement is issued by the Australian Industries Protection League of New South Wales, and is dated the 1.3th October, 1931. It points out that the importers from other countries had been able to gauge the lines on which they could get in under the HughesMassy Greene tariff of 1921. During the eight years succeeding that tariff - 1922-29 - we had an excess of imports over exports to the value of £111,000,000, and the statement points out that that difference was due to the fault in the tariff. The author of that statement, had he acted honestly, would have taken a previous period, not the war period, which would show the same result, because the circumstances were different, but the period from 1905 to 1912, when there was a much lower tariff. Under that tariff every year showed a big excess of exports over imports ranging up to 50 per cent. During those eight years the value of imports was £441,000,000, and-of exports £562,000,000. There was, therefore, an excess of exports of £121,000,000 under a low tariff, as against an excess of imports amounting to £111,000,000 under a high tariff during the period 1922-29, The sole reason for the excess of imports during those eight years 1922-29 inclusive was the borrowing policy of Australia. The issue of such a circular, claiming that it was due to the tariff being too low, indicates absolute ignorance of the whole position, crass Stupidity, or downright dishonesty. Then we have the following priceless gem of propaganda : -
The belief of certain legislators that more revenue will accrue to the Government if import customs duties are reduced is not borne out by the figures we reproduce -
Merchandise Only. 1929- 30.- Imports, £130,813,471; duty (collected, f 31, 530,750, or about 24 per cent, of the value of the imports. 1930- 31.- Imports, £00,000,000; duty collected, £19,000,000, or about 34i per cunt, of the value of the imports.
They say that a high tariff gives a bigger revenue because, although the imports are cut down by one-half, the percentage on the value is greater. Could stupidity go further? It might as well be argued that if there were a 500 per cent, duty on all imports, and their value amounted to only £30, on which the amount collected was £100, you would have a bigger revenue than would be received from n reasonable tariff with big imports. Would any fourth form schoolboy dare to make such a statement as that? It is obvious that if your tariff is high, the percentage that the collection bears to the value of the imports must be greater than if your tariff i3 low. Any child knows that. Yet this is sent out as a deliberately considered piece of propaganda - that because the percentage of customs duty was 34^ per cent, of the value of the imports when heavy duties had knocked our imports, down to practically nothing, therefore it must be more advantageous to the country, and yield a bigger revenue, to have a higher tariff.
In conclusion, I wish to make a reference to what I regard as by far the most important aspect of this question.; that is, its international bearing. We may think that everything can be decided from a purely Australian standpoint. We cannot do anything of the kind. To my mind, the international aspect is beyond comparison the most important of all. I defy honorable senators supporting the Government, or, for that matter, any supporter of this tariff, to produce a single economist of high standing in any country in the world who does not condemn high tariffs as being largely, if not chiefly, responsible for the delay in recovering from the losses of the Great War.
Senator Payne made reference to our trade figures with Belgium, Prance, Italy, and Germany. I took the responsibility some time ago of moving the adjournment of the Senate to expose the folly of slamming our door in the face of people who purchased from us annually goods valued at £40,000,000, and sold us goods valued- at only £10,000,000. I confess, however, that I do not regard that aspect as of supreme importance. Nor do I think that any very great benefit can accrue from proposals in the direction of empire preference. A most ridiculous statement was published by the Minister for Trade and Customs (Mr. Forde) the other day on the question of empire preference. He said that the value of our purchases from Great Britain at the present time was £23,000,000 annually; and he had the audacity to claim that the value of the preferences given, to Great Britain was £10,000,000. The Committee of experts which investigated this matter said that when trade with Great Britain was in full blast the value of the preferences which we gave her was not more than £1,000,000. It is questionable whether to-day it is more than £400,000. Any one who has had the slightest experience in business knows that it is much easier to drive customers away than to bring them back. We are driving away our customers. But I do not base my argument on that aspect of the case. Trade is not a duet; it is, dr it ought to be, a world-wide chorus. What does it matter if John Brown, buys direct from us or from Smith who has purchased the goods from us?
Let us consider for a moment a few of the experts and bodies that have reported on this question. Locally we have the committee of economic experts to which reference has been made. Then there is the Tariff Board; and, in addition, the committee with which Senator Daly was associated in some way, the object of which was to find employment for those who are out of work, they did not uphold the idea that the tariff would do everything for us. I refer to the’’ report of that committee with considerable diffidence, because I would not like it to be thought that I agree with it to any extent. Then, looking abroad, we have the League of Nations, upon which we place so much reliance that we have almost abolished our defence system. We believe that it is going to protect us against, all war. What is the view that it holds? Prom start to finish it has said that the only way in which we can be secure against war in the future is ‘by the nations trading with each other. A readjustment of tariffs all over the world is the only thing which can rescue us from the possibility of war. A committee of British and continental bankers, and the Gold Delegation of the League of Nations, have expressed the same view. The Macmillan report, to which favorable reference has been made by honorable senators opposite, says that “ The growth of tariffs is one of the outstanding causes of continued and severe depression “. The British Committee of the International Chamber of Commerce has expressed the following view: -
The post-war ‘ policy of high customs tariffs is one- of the prime causes of upsetting economic equilibrium.
One after another, leading economists in every part of the world, not excepting America, which has placed so much reliance on tariffs in the past, have expressed similar views. The chairman of the biggest bank in the world has said–
Stripped of technicalities, the restoration of credit in Europe and the revival of the United Status of America’s business depend upon a rapprochement between France and Germany and reductions in reparations, inter-allied debts, and tariffs.
What authority can be produced in opposition to those opinions? Sir George Paish, an authority of unquestioned standing, makes the following point, par.ticularly in relation to America, but it has equal application in Australia: -
Distress and poverty to nations accustomed to them are less painful and less dangerous than to a nation accustomed to comfort and luxury.
If we pursue a policy that will bring distress and poverty upon the people of Australia, it will be a much more serious matter to us than would be the case in countries where those conditions are the common lot of the people. It has hitherto been almost impossible for politicians to realize that there are practically no limits to the possible production of the world or to the possibilities of transport, and consequently no limit to the standard of human well-being, if countries will only trade Avith each other. Are we to revert to the dark ages, when there was no possibility of trade? Are we to condemn ourselves to the standard of living that alone is possible to a country that lives unto itself? I do not think that the Australian people will agree to anything of the kind. Only by the maintenance of trading relations between different countries is it possible for the peace of the world to be preserved, or for there to be anything like a general standard of prosperity.
The rights of property are fundamental to the very existence of civilized society; now to interfere with the freedom of exchange is to attack one of the rights of property; therefore protection and civilization are incompatible.
– I do not think it necessary to indicate my position with respect to the rival policies of freetrade and protection, because every one knows upon which side of the fiscal fence I stand. Nobody has ever accused me of sitting upon a rail in connexion with customs duties or other matters which have come before this chamber for decision. Before proceeding further, I desire to congratulate Senator Colebatch on the most excellent freetrade speech he has just delivered. At this juncture I should like to have a word to say in connexion with a remark which the honorable senator is reported to have made when addressing the importers’ section of the Victorian Chamber of Manufactures in Melbourne. I am well aware that the honorable senator has said that his utterances on. that occasion, although correctly reported, have, nevertheless, been misconstrued, and that a sentence in the report attributed to him was really a quotation from a publication. I do not think Senator Colebatch will contend ‘that he took the following words from any book, and will admit that they were his own. He said -
Queensland is the key state of polities and apparently, it is a matter of contention between the parties which can offer the most for the Queensland votes.
If those words mean what they are generally understood to mean, the votes of representatives of Queensland in this Parliament are for sale, and the parties in this chamber are competing against each other.
– We resent that statement.
-Yes. I suppose we should be comforted by the thought that there is at least one just man in what the honorable senator considers a political Sodom and Gomorrah.
– Who is that man?
– The honorable senator who used the words I have just quoted. But he has to prove his statement.
Quotations have been made from a publication entitled The Australian Tariff - An Economic Inquiry, and compiled by certain professors of economics in Australia, assisted by Mr. E. C. Dyason, of the Melbourne Stock Exchange, and Mr. Wickens, the Commonwealth Statistician. I intend to preface my remarks with a few quotations from this publication, which is very useful to public speakers upon tariff questions, because they can obtain from it support for whatever policy theyadvocate, whether it be freetrade or protection. On pages 32 and 33 the following appears: -
By increasing the scope of employment and the number of industries which can be developed within the country, protection creates a greater diversity of employment. The benefits to be derived are partly non-economic, and as such they are worth some degree of the inevitable costs associated with the tariff. But they are also economic, for without the prospect of employment for diverse human aptitudes, we should lose a good many of our ablest young men. The diversity of industry also reduces the risks of sudden dislocation, and enables adjustments to bo made more easily to changing conditions. In Australia the tariff has been a beneficial influence in promoting greater stability in the national income.
– That is stale, is it not?
– It may be stale to such a student of political economy as the honorable senator, but there arc some who have not read that particular paragraph, or who, having read it, may not have grasped its full significance. There are some who regard this publication as a complete vindication of the policy of freetrade. On page 70 this paragraph appears -
It is quite certain that without the tariff it would have been possible to have obtained a larger national income per head - but for a considerably smaller population. The maximum income per head for Australia would probably be obtained by reducing it to one large sheep run, with the necessary subsidiary and sheltered industries, and a few rich mines - and a population of about 2,000,000 people.
That is, a population of 2,000,000 people in a country with an area of 3,000,000 square miles, and there would be no hope of any increase except as the result of the establishment of protected industries. Dealing with what might take the place of our protected industries, they say -
We think, on the whole, that wool (and sheepskins) would not have contributed very much to fill the place of protected production. Hides and tallow are considerable items of export, but they are for the most part byproducts of home consumption, and home consumption would not have been increased. Increase would come only from increased exports of meat. But the export of meat is not in a condition that suggests expansion.
At page 87, they include, among their conclusions, when dealing with the effect of the tariff on national income, the following observations : -
Though full data are not available it appears very unlikely that under freetrade conditions any form of alternative production could have been found to take the place of protected industry which would give the same national income as at present.
Even if it could be found, it could not practically be made to maintain the same population, except by the re-introduction in some form of the methods of tariff protection.
So much for the findings of the economic committee which inquired into the Australian tariff, findings which have been so often used to reinforce and buttress freetrade arguments.
In considering this tariff, we have, I think, to take into account the position of the country when the schedule was formulated. We know that, as a people, we were practically in a condition of insolvency, because insolvency occurs when it is impossible for a debtor to meet his obligations. That, unquestionably, was the position in which Australia found itself eighteen months ago. It was with the greatest difficulty that we were able to pay the debts duo to our creditors in other countries, and if we had continued to import at the old rate, default would have undoubtedly occurred, and the position of Australia would have been very much worse than it is to-day. I repeat that, in the circumstances, the Government could have taken no other course to maintain national solvency. It was necessary to take prompt and drastic action, and, as a result, there may be just a little crudity here and there in the tariff schedule before us, but these matters can be easily remedied in committee. They certainly do not justify the wholesale condemnation of the tariff which we have heard from some of those who have spoken on it.
It is a very significant coincidence that we should be considering this tariff just after an election in Great Britain in which the vote was overwhelmingly in favour of a protectionist policy for that country.
– It is not our fault that we are considering it now ; we should have dealt with it long ago.
– I do not agree with Senator Carroll that we should have considered this tariff earlier. The proper course, in my opinion, would be to pass this tariff as it is, regarding it as an emergency measure, limited in operation to a year or two, in the hope that before its term expired, conditions would have become normal, and we should then be able to frame a tariff policy satisfactory to normal times.
– It would then have been in operation for four years, which is a fairly protracted emergency.
– This tariff has, during the period of its operation, been of immense advantage to Australia, and so far no speaker in this chamber has been able to demonstrate that it has been of any real disadvantage to the country. For one thing, it has helped us to balance our trade account overseas.
– Cessation of borrowing did that.
– No, I do not think so. If we had borrowed 20,000,000, £30,000,000 or £40,000,000 a year, as we had been doing previously, that would have helped us to balance our accounts overseas, but it would have been disastrous for the country-
– Has the exchange, rate had no influence?
– Yes, the exchange rate has had something to do with it, but had it not been for the high duties and the embargoes, it is quite likely that the exchange would be double what it is at the present time. Of course, some may think that such a thing would be impossible, but ‘I remind them that the exchange rate on the United States of America is at present 60 per cent, and it might quite easily have been as high with Great Britain >also. Before I was interrupted by interjectors, I was pointing out the significance of the British elections, which resulted in the return, by the biggest majority ever obtained in Great Britain, of a government practically pledged to protection.
– A “ brutal majority “ in fact.
– I do not think that its power will be exercised in a brutal manner. The British elections show what a marked change of political opinion has taken place in the Mother Country owing to the force of circumstances.
– Does the honorable senator believe that the members of the new British Government are “ hitthesky “ protectionists ?
– I do not know exactly what is meant by “ hit-the-sky “ protectionists; but I believe in effective protection, and the effect of a high tariff in this country has been, generally speaking, to reduce prices, because it has brought about so rauch internal competition. In many instances it has induced overseas manufacturers .to establish manufacturing branches in Australia. I hope that that tendency will develop, particularly among British manufacturers. It is far better that the commodities that we purchase should be made by Australians in Australia, rather than by people overseas. The resultant employment of persons in the production of those commodities brings about an improved market for both our secondary and primary products.
It must be within the knowledge of honorable senators that a number of our primary industries find their principal and most remunerative market within the Commonwealth. On that point, the following extract is of interest. It is taken from a speech that was delivered to a meeting of the shareholders of Bovril Limited by Lord Luke, of Pavenham and reads : -
When in Australia in the latter half of 1929, I spoke on this subject in Queensland, New South Wales, Victoria and Western Australia. I pointed out that the best present markets of those States for beef lay in their own great cities; that they have only a very small surplus, if any, for outside, and that if they are to develop an export market for good quality beef it will take years to build up their herds.
Just imagine what the position of our cattle industry would be if we had a population of only 2,000,000, which is the limit set by the compilers of that book on the Australian tariff, from which I have quoted. There was a time when we had only 2,000,000 persons in the Commonwealth, and then cattle and sheep owners had to boil down the carcasses of their stock for tallow, as they possessed no other commercial value. I am convinced that, with our present population and our anticipated increase through the employment that will be provided by our secondary industries, those who are engaged in primary production in the Commonwealth will be much more prosperous than they would be under a policy of freetrade. What is the use of a protectionist tariff unless it is high enough to protect? We have to safeguard our manufacturers from the products, not only of European, but also of Asiatic countries, which have lower standards of living than those which obtain in the Commonwealth; countries in which the wages per month are less than those paid per day in Australia, where we seek to establish a decent standard of living. It must be borne in mind that operatives in Asiatic factories are able to produce articles in as great a quantity and just as good in quality as those turned out by the operatives of European countries, because in many industries to-day, it is merely a case of “ Touch the button and the machine does the rest “. Recently a conference of Bradford manufacturers and their operatives was convened in an endeavour to arrange that each operative should attend to four looms. At the same time, there were machines in operation in Japan that enabled one operative to attend to fourteen looms ! British and American capitalists have established large factories in both India and China, and in the course of time those countries will be as highly industrialized as are Japan and the western parts of Europe.
Reference was made to resolutions that were passed recently by the Council of the League of Nations. To me those resolutions seem to be very little more than pious aspirations, because none of the countries represented on the League of Nations has yet reduced its tariff. The tendency has been in the opposite direction. Europe, omitting European Russia, has a much smaller area than has Australia, yet it has 25 different tariffs in operation. The United States of America, which is unquestionably the wealthiest country in the world, has a population of 122,000,000, but its overseas trade is only £15 per capita, while, according to the 1929 figures, the latest available, the Commonwealth has an overseas trade of £50 per capita, and Belgium one of £35 per capita.
– How much of that represents the product of secondary industries?
– I am unable to say; but I contend that the reduction of our imports.by£l has exactly the same effect upon the trade balance as the addition of £1 to our exports.
– Not quite.
– Not with the present heavy exchange, but that will not continue indefinitely. So long as we export sufficient to meet our public obligations overseas, our principal concern should be to keep our people employed in the production of goods for home consumption. There is no greater value in a sovereign from overseas than in an Australian sovereign.
Frequent reference is made to the large accumulation of gold in the United States of America and France, the consequent dislocation of international trade, and the undermining of the prosperity of many countries. But America and France obtained the gold they possess merely by selling more than they bought. Competent authorities have estimated that in the five years 1924-1928 inclusive, the purchases by the United Kingdom, the British dominions and colonies from the United States of America exceeded the purchases by the latter from the Empire by an amount greater than the £800,000,000 worth of gold held by America at that time. Gold can he accumulated only by internal production, or by selling goods overseas for gold. America and France have been selling more than they bought, and obtaining gold in payment. If Australia had been selling £10,000,000 or £20,000,000 worth of goods more than it had been purchasing, the gold reserve would be much greater than it is to-day.
– Has the position of the gold reserve improved since the trade balance was adjusted?
– No, because
Ave are not yet exporting more than we are importing, having regard to our large public obligations overseas, and the heavy exchange payments thereon.
We are told that two causes are responsible for the unsatisfactory position of the primary producers - the tariff and high wages. It is interesting t’o test that assertion by a consideration of what is happening iu other countries. The Melbourne Argus, which is by no means a protectionist journal, published, on the 19th September, the following statement from its London correspondent: -
This harvest will finish all arable land, said a British farmer this week in answer to questions regarding the crop prospects. There ure agricultural experts who believe that the present harvest will finish all British farmers unless . drastic steps are taken to e”nd the cruel competition from which grain growers arc suffering. The failures in farming are more numerous than in any other occupation in the country.
That indicates the state of affairs in Great Britain, which, until recently, was the only freetrade country in the world. The Melbourne Age, of the 22nd August, dealing Avith the position of farmers in South Africa, which has abundance of cheap labour and only a moderate tariff, said-
The Hertzog Government is concentrating upon hh effort to save the farmers. It has put up £5,000,000 which it is prepared to lend to agriculturists in danger of being forced off their land. It has bolstered up the wheatfarmers by practically prohibiting the importation of flour or wheat until the entire local crop has been bought by the millers. It has just passed an act making compulsory the holding up of all surplus maize for export, and by thus arbitrarily limiting the local supply it is trying to force up prices to a figure which will give the growers an adequate return. It is relief “to ‘be obtained at the expense of the local consumers, including the mines, and it is uncertain how it will work out in practice, but the Government is prepared to go to any length rather than allow the farming industry to collapse still further.
At the same time, something is being done” to provide against the day when the goldmining industry will begin to diminish. Some £5,000,000 is to be risked on establishing a State-financed iron and steel industry near Pretoria. Preparations are being made tcn build a great deal more railway rolling-stock in the Union. Money is to be expended om giving the fishing industry better harbour - facilities. There is higher protection for secondary industries.
In other countries where wages and tariff duties are lower than in Australia, the primary producers, particularly the wheat-growers, are in a bad way.
– decline in mining to the t’ariff. Surely he does not ask us to believe that if there were still mines in Western Australia as rich as those of Kalgoorlie and Coolgardie were 25 years ago they would not be operated as diligently.
– Very rich mines could be operated.
– Would Senator Thompson contend for a moment that if Mount Morgan still held ore as rich as Avas mined there for many years, the works would be closed down now? Those two honorable gentlemen know that the decline in gold-mining is due to the exhaustion of the rich ore bodies. Poorer ore has to be mined at greater depths.
– The ore values are reduced, and the costs are much higher.
– A big reduction ha3 occurred in the prices of industrial metals, including lead and zinc, while silver is not worth to-day more that] a quarter of the price it commanded only a few years ago. Yet the biggest mining venture ever undertaken in Australia is now operating in North Queensland, where a company, acting upon the advice of leading experts, spent nearly £4,000,000 before producing any metal for the market. The company can produce profitably because it is mining a large body of ore having a high metallic content. The decline /of the mining industry is not due so much to increasing costs as to the unavailability of ores of the grade of those that were worked a few years ago.
The action taken by the Commonwealth Government to restore the trade balance has been adversely criticized. Great
Britain, confronted with a similar problem, applied the remedy in a different way - through the banks. The imports into Great Britain for the first eight months of the current year were £248,000,000 in excess of the exports, and Mr. Thomas, amongst others, has said that Great Britain’s expenditure abroad was greater than the value of her exports, plus the income of those engaged in the ocean-carrying trade, and the returns upon all British investments abroad. Notwithstanding the tremendous liability incurred by the Mother Country during the war, it is still a creditor nation, but Australia is in a very different position. Being a debtor nation, it cannot afford to take the same liberties with its trade as can a country more favorably situated. To, set our house in order we must provide employment for our people, and that can be done only by producing a greater proportion of the requirements of the home market. The publication from which I have already quoted states that an expansion of wheat production is possible; but, unfortunately, an expansion of production does not necessarily mean increased employment on the land. The primary production of Australia to-day is greater than it was a few years ago, but the number of people employed on the land is much smaller. A similar change is noticeable in every other comparable country. The North American Review of October last states -
Before tlie world war, Montana had 35,000 wheat farmers. Now 14,000 plant a larger area, and produce a greater quantity. In the wheat belt 0,000 corporations are now engaged in farming. Several corporations are operating farms ranging from 40,000 to 75,000 acres each. Tn Montana one such corporation farms 05,000 acres. There are many Russian farina of 500,000 acres.
The following figures show that, since 1926, the city population of the United States of America has increased to the extent of nearly 3,000,000 at the expense of the rural districts: -
Even with increased production of wheat there will be fewer people employed on the land in Australia four or five years’ hence than there are to-day. Although no great reduction has taken place in our flocks and herds, and our production of wool will be greater this year than ever before, there are fewer persons employed in the pastoral industry now than there were twenty years ago.
– That argument may be applied to the secondary industries, owing to improved machinery.
– Undoubtedly ; the mechanization of industry is displacing manual labour in every country, and that is an effect from which there is no escape. How can we find employment for the boys and girls who are leaving school every year, if we do not expand our present industries and establish new ones?
– Where is the market for increased production ?
– There is the same market in Australia for Australian products as there is for a similar quantity of goods imported from abroad.
– We have a very limited local market.
– I know that; but, if we can find work for only 75 in every 100 who are unemployed, is thai any reason why we should allow the whole 100 to remain idle? If tcn men were drowning, and Senator Sampson could save only five of them, would he not attempt to rescue that five? Many persons believe that the way to prosperity is to buy in the cheapest and sell in the dearest market. I have my own ‘ views on that matter; but the opinion of a man well known in Empire affairs will carry more weight. Lord Lloyd, at a luncheon given recently to the chairman of the British Empire Producers Organization, said -
We have recently been witnessing one of the most remarkable economic and political phenomena of our age. We all remember how the doctrine of cheapness was preached from every platform and from the columns of every paper; at last the doctrine of cheapness has reached its apogee. All those who believed in cheapness as such can sec its results to-day in the ruin of more industries, of more producers, of more living men and women than in any previous time;, and now that even commodity is at bedrock prices we have seen mure people in every country of the world living on charity than we have ever seen before in the world’s history.
What impresses mc most is his reference to “ living men and women “. We should all endeavour, in considering the effect of this tariff, to visualize the hundreds of thousands of Australians who are unemployed to-day.
– The tariff will not help them.
– It has not assisted them so much a3 it might have done, because, before the increased duties became operative, the warehouses and retail establishments were packed from floor to ceiling with goods from overseas. Then the purchasing power of the people decreased, and it took a considerable time to dispose of the stocks of imported articles. Nevertheless, there are industries in Australia which are giving greatly increased employment to our own people, and one of them is in Tasmania. J. am told that a manufacturer in Launceston, engaged in the production of knitting wool, has trebled the number of his employees since the imposition of the present duties.
– I should like to know his name.
– It could easily be obtained. The representatives of Tasmania in this chamber are under a great misapprehension if they think that because there are few secondary industries in their State, they are not greatly concerned about the prosperity of Australian manufactories. In every mainland State avenues are being explored for the provision of work for the unemployed. Unless encouragement is given to manufacturers, those efforts will have to be increased, and will probably result in commodities being produced on the mainland which are now purchased from Tasmania.
There is need for much higher duties than were imposed under the 1929 tariff, because conditions in Australia to-day, and in the world’s markets, are very different from those obtaining even two or three years ago. There is no danger, I think, as the result of high duties, of the people being asked to give more than they have been accustomed to pay for Australian goods which have taken the place of those hitherto imported. In that valuable book, The Austraiian Tariff, it is stated that, after a comprehensive investigation, it was agreed that Australian manufacturers had not taken advantage of the tariff to a greater extent, on the average, than 50 per cent. In some industries they had taken advantage of it only to the extent of 20 per cent. ; in others, 30 per cent.; and, in some, SO per cent.
– In that case, a reduction of the present duties would do no harm.
– It would do much harm in Tasmania,
– Unquestionably, it would. The reason manufacturers have not taken advantage of a greater proportion of the tariff is that-
– They are too modest.
– No. Reflections have been made on them, but, from my knowledge of many manufacturers and their employees, I can say that those engaged in secondary industries, whether as employers or employees, are equal in all respects to those associated with other classes of industry. Australia is under a great obligation to those who have risked their money in an endeavour to supply the people of this country with goods, in competition with overseas manufacturers.
– At a price!
– Certainly at a price. Are not members of this chamber rendering service to Australia at a price? Can we expect persons to engage in business without any return on the capital they invest, and for the time they devote to their various undertakings? Why sneer at them? [Extension of time granted.’]
Under the 1929 tariff, the duty on glucose, which is a product of maize, was ,£15 a ton; on bacon and ham, British £28, intermediate £37 6s. 8d., and foreign £37 6s. 8d. per ton; on cheese, £56, £60 15s. 4d., and £67 6s. 8d. per ton; on chicory, roasted or ground, £56 per ton; on egg albumen dried, £280, £392, and £560 per ton; and on eggs in shell, 6d., 8d., and 9d. per dozen.
– What opportunity is there for importing eggs?
– Many years ago we imported eggs and egg albumen from China and other Eastern countries. I now wish to refer to a duty which is supposed to have affected seriously our trade with another part of the Empire, and that is the duty on bananas, which is Id. a lb., British, intermediate, and foreign. The duty on citrus fruits is - British, id. per lb., intermediate, Id. per lb., and foreign lcl. per lb. I have never heard of oranges being grown to any extent in Great Britain. It is frequently alleged that the imposition of the duty Of Id. per lb. on bananas has cost Australia most of its trade with Fiji, but, as a matter of fact, it did not interfere to any great extent with our trade with that country.
– That is why New Zealand has now all the trade with Fiji.
– It has not, nor has Australia lost all that trade. In 1920, our trade with Fiji amounted to between £700,000 and £800,000, but an. investigation shows that half of that was transhipping trade. The shipping service which was dislocated during the war had not been restored, and the exports of goods of Australian origin during that year were little more than they have been since. In 1920, Australia imported from Fiji bananas to a total value of £93,000. To-day, the other States of Australia buy from Queenland bananas to a value of over £1,000,000 a year. Surely that trade within Australia is of more value than any trade, which we had, or are likely to get, with Fiji. Bananas, like sugar, are paid for with the products of the other States. For example, in Queensland there are five small boot factories, but in Melbourne there are over 300 such factories. Respecting the advantage which it is said Queensland receives under the tariff, let me quote from the evidence of Professor Brigden, whose name appears at the head of those who compiled the Australian Tariff. In reply to a question from the chairman - of the Sugar Inquiry Committee, he said that he thought that the cost of the sugar embargo to the Commonwealth was balanced by what Queensland had to pay for protection in the other States, because the protection given to the manufacturing industries represented about £36,000,000 a year, of which Queensland’s share was roughly £5,500,000.
– More than that of any other State.
– No. The honorable senator’s statement is not borne out by Professor Brigden’s evidence. Let me refer briefly to the honorable senator’s reference to the overgrown cities of the Eastern States. Senator Colebatch is one of the representatives of a State which has nearly half of its population in its metropolis.
– Thai depends on what is termed the “ metropolis”.
– It is the “ metropolis “ in. the sense that it is used in the Commonwealth Year-Booh with respect to every State. ‘
– The metropolis in Western Australia comprises two cities - Perth and Fremantle.
– Melbourne is composed of about a dozen cities. What holds good in one case must hold good in another. I hope, that honorable senators will not construe my remarks as being opposed to the interests of primary industries. I go so far as to say that they are of first importance to Australia. But our primary industries need to be buttressed and reinforced by secondary industries, otherwise there will be great difficulty in finding a market for our primary products. For some .years we have been consuming 60 per cent, of the butter, produced in Australia.
– Today we are consuming 50 per cent.
– That may be so. Hitherto, we have been exporting 40 per cent, of our butter. Another dairy product which we consume in large quantities is fresh milk. We also consume condensed milk and powdered milk.
– And beer!
– We consume beer manufactured from hops grown in Tasmania and sugar made in Queensland. The more self-contained we become, the more prosperous will Australia be. One drawback, so far as primary production is concerned, is the seasonal nature of the occupation it affords. Few wageearners to-day obtain anything like permanent employment in our primary in- dustries. But the position is quite different in respect of many of our secondary industries. The tendency throughout the world is towards selfcontainment. Practically every country has raised ite tariff walls. Some little time ago, when the United States of America imposed increased duties, Canada swiftly followed suit. Now, apparently, Great Britain, which has been freetrade for more than a century, finds it necessary to protect its industries against foreign competition.
I recently read in a British magazine a most illuminating article by the head of a large firm engaged in the manufacture of earthenware in Great Britain. He stated that his firm thought that it would be to its advantage to establish a factory in some European country. Upon inquiry, it found that a factory could be erected and operated in a continental country at half the cost of a similar installation in. Great Britain. But, having obtained that information, it was learnt that the European country in question, and in fact every other European country, was already over-supplied with the product which it was proposed to manufacture, and that the only free market was in Great Britain itself. We would be in exactly the same position in regard to any secondary product which we desired to export.
I have read the speeches’ of the members of the Opposition in this chamber and in another place, to the effect that the cost of production in our secondary industries must be reduced to enable them to export. It is worthy of remark that all these references to bringing down the cost of production come from persons who, during the whole of their lives, have never produced anything but words, words, words; yet they pose as authorities respecting the cost of producing manufactured goods. In considering the question of the export of the products of our secondary industries, we must bear in mind the fact that, not only must we be able to produce at a lower cost than other countries, but also that that cost must be so much lower that we shall be able to pay a high customs duty and still compete with the products of those countries to which we propose to export. If we take these factors into consideration, we shall see that it is impossible for us to export more than a very limited quantity of the products of our secondary industries.
When we consider the costs of production in the light of their effect upon our capacity to export, we must take into account the wages that have to be paid to Australian workmen, the higher cost of buildings, equipment and raw material, and, perhaps, more than anything else, the very heavy taxation that is imposed by both State and Federal authorities. In my opinion, the last-named needs very careful consideration at the present time. I have always held the view that the land tax is a most unjust and iniquitous form of taxation, and I believe that the people generally are now beginning to regard it in that light. That it imposes a very heavy burden upon our rural industries cannot be questioned. In my opinion, it is one of the first taxes that should bo reduced, and as soon as possible removed.
-The land tax can scarcely be said to have any connexion with the tariff.
– I have referred to it merely as one of the handicaps against a reduction of the costs of production to an extent that would enable us to export an appreciable proportion of the products .of our secondary industries.
Reference has been made to the literature that we are receiving from those who are engaged in protected industries. I expect that I have received my share of that literature; and I have read the greater part of what I have received. So far I have not found anything to which I have felt that I could take exception. Those who have communicated with me are fighting for the existence of the industry in which they are engaged, and in those circumstances some little latitude may be allowed them.
– They are interested parties.
– I admit that they are interested parties. But as a legislator am I not also interested in their means of livelihood, because of its effect upon the prosperity of this country, and the welfare of my constituents? But I do resent communications such as those that I have received from the Town and Country Union, camouflaged under the name of the Tariff Reform Association.
– Because the honorable senator holds opposite views.
– That is not the reason for my resentment; it is that these people are financed by foreign capital. Had I my way I would make it a penal offence for any one to expend in Australia money obtained from overseas, for the purpose of influencing Australian legislation. Associated with the Town and Country Union is, I believe, the British Manufacturers Association. I do not believe that the principals overseas are aware of the part which their representatives in Australia are playing in the controversy that is now taking place in regard to this tariff. I have heard reflections cast upon Australian manufacturers, but not a single word regarding the conduct of the representatives of British manufacturers in Australia. Before the tariff goes through I shall take action in this chamber that will . bring the matter to the notice of the principals overseas. I believe that they are men of common-sense, and that they have no desire to seek to interfere with the fiscal policy of this country. What is more, if they knew where their interests lay they would realize that a prosperous country offers a far better market than one in which the people are too poor to purchase imported goods extensively. L. hold that the establishment of prosperous and expanding industries in this country is of as much interest to overseas manufacturers who desire to trade with us as it is to the people of this country. I am convinced that it is only by adopting a schedule similar to that which is now before us that we shall be able to provide employment for our people, increase our population, and expand our trade with other countries. The measure of a country’s prosperity is to a considerable extent dependent upon its trade with other nations. We know that at the present time our capacity to purchase from overseas is very limited, and that the only way in which we can increase it is to find work for our people. That can be done only by protecting existing industries and making it possible to establish new ones.
– During the present debate there has been a tendency, which I confess it is somewhat difficult to resist, to stray into more or less academic avenues of discussion and to view this measure not so much from the real as from the altruistic stand-point. But I venture to affirm that in the final analysis members of this Senate will have to consider the real facts and the stern realities that confronted the Government prior to the drafting of this schedule, and that have been responsible for what it contains, before they decide whether the schedule shall be maintained intact, increased, reduced, or changed in any way. It is my intention this afternoon to place before honorable senators some of those facts, in such a way that they will have an influence upon the votes that will be cast during the later stages of the bill.
We have heard a good deal of criticism and condemnation of the action of the Government in relation to this schedule; but although I have listened intently throughout the debate, I have not heard one concrete suggestion which was possible of adoption at the time, or is possible to-day, as a means of overcoming the difficulties that confronted Australia when the present Government took office. It is true that the right honorable the Leader of the Opposition (Senator Pearce), in opening the attack upon the policy of the Government, as exemplified by this measure, quoted the decision of a meeting of certain members of the party which he has the honour to lead in this chamber. He then said -
Let mo say at the outset that the issue involved in this debate is not one of freetrade versus protection. Rather is it one of ) prohibition as opposed to moderate and discriminating protection. Some little time ago, honorable senators on this side of the chamber held a meeting and carried a resolution which, I think, fairly indicates the general view of a majority of honorable senators on this side of the chamber with respect to the tariff. That resolution read -
That this meeting of senators .representing a majority of the Senate, affirms it* intention to endeavour to secure amendments of the present tariff schedule by reduction of excessive duties, and by such further reduction of duties against British imports as will foster Empire trade and lead to the adoption by Britain, Australia, and the other dominions, of effective reciprocal trade agreements benefiting every unit of the Empire.
The right honorable gentleman claimed that the issue was not one of freetrade against protection, but of moderate protection as against prohibition. I venture to assert that the tone of the remarks of those honorable senators who have spoken in opposition to this measure could lead an unbiased observer outside this chamber to no conclusion other than that they believe, in the main, in freetrade. It is true that when it comes to the real test, it is found that practically every honorable senator has some industry whichis domiciled in his State, and which he regards as the only industry . in Australia that is worthy of protection. When the industries to which the protection is to apply are in other States, and have no influence upon his political destiny, however, the view taken is that they are not entitled to protection, that they are inefficient, their management is bad, and the workers engaged in them are not doing their job. The difference between the Leader of the Opposition and the other honorable senators to whom I have referred, and me, is that I believe in real protection. My conception of a protective policy is one that will foster Australian industries, enabling them to get on their feet and to become capable of supplying the needs of the Australianpeople so far as that is possible of achievement. Would honorable senators who profess to believe in moderate protection argue in favour of moderation in the safe working of our railways, in the conduct of maritime transport, or in laws to restrict the criminal tendencies of that small section against whom laws are passed to protect the rights and privileges of the great majority of the people? Would those honorable senators who believe in moderate protection favour moderation in education, and carry this role of moderation into all other spheres of activity controlled by this and the other Parliaments in Australia? I venture to say that they would not. Just as they believe in real safety in railway and maritime transport, a real system of education, and effective measures to protect law-abiding citizens from . the activities of lawbreakers, so should they believe in the real protection of Australian industries to enable them to supply the requirements of the Australian people.
We have been told that the action taken by the Government to correct the adverse exchange position, and to rectify our trade balance, was unnecessary. We were told, too, by Senator Colebatch this afternoon that some years ago Australia made greater progress and exported commodities of greater value than she imported. In support of that contention, the honorable senator quoted the years 1922-23 to 1927-28, but conveniently overlooked many important factors which should be considered in connexion with the comparison he made. When the honorable senator was speaking on Friday last he endeavoured to compare the development of the industries in New South Wales prior to federation under freetrade with similar industries in profederation days in. Victoria under protection. The honorable senator was in error in his deductions. I have an interesting quotation from an Australian newspaper which does not support the political party of which I am a member, but which, in one respect, has been consistent throughout its career in its support of the establishment and maintenance of Australian industries. It is, therefore, an Australian journal which can be quoted with comparative safety in debates of this nature. I refer to the Sydney Bulletin, which in the article, a portion of which I propose to quote, gives an effective reply to many of the arguments adduced by honorable senators during the course of this debate. In its issue of the 15th July last, it states -
In the pre-federation days of mixed tariffs, New South Wales, as the State which was intoxicated with importing ideas, tended to import its debt; while Victoria, inclining more and more to protection, leaned towards the locally-manufactured article. The other States tookno very definite stand. As a result, there are striking variations in the oversea interest bills of the various States. These are the six of them at the end of June 1930, apart from the unknown quantity, interest on casual overdrafts, cadges, misappropriations and steals -
It goes on to quote the total internal and external interest payments in respect of all the Australian States, but the only two States concerned with my argument are New South Wales and Victoria. We have been told during the debate that in pre-federation days the industries in New South Wales progressed under freetrade equally with those in Victoria under a protective tariff. This article proves conclusively that New South Wales, in comparison with Victoria, has been an important factor in increasing external debts as against internal debts. The figures are -
It goes on to show that an external debt, even though at the time it was contracted it may have appeared to be unimportant, may prove costly as the years go on and the course of events change. It continues -
The London or New York interest has ,to be paid by the export of gold, of which the local supply is now only a drop in the bucket of the demand (the drop is nearly exhausted and the bucket has grown out of all knowledge), or by the export of goods which oversea people can be persuaded to buy for gold. Sometimes they are very hard to persuade, especially people in New York. In a time of adverse exchange, like the present, £100 borrowed oversea at 0 per cent, cost really 8 per cent., the extra £2 being exchange, brought about by the excessive importing habit. A 6 per cent, imported debt may cost £8 net for the use of £100 for one year, as it is doing now. A 6 per cent. Australian-made debt may cost £4 net for the use of £100 for one year, being the nominal £6 less ‘ taxation. There is always some taxation to come off the local £6, for the Australian bondholder is a lawfully taxable Australian subject, and in bad times the lawful taxation may be heavy.
New South Wales, as the .State whose political fossils stood for the freetrade and importing idea, is naturally the State with far the largest oversea debt, the largest oversea interest bill, and the largest calamity to face by reason of the lamentable exchange problem. Also the State with the braggart freetrade tradition is the first and only one to go basely and shamefully bankrupt and leave its burden to its neighbours, the five non-repudiating
States of the Commonwealth, and especially to Victoria, the State with protectionist traditions. On the other hand, protectionists were naturally the first to realize that it is worth while to keep such an industry in the hands of our own people. Not only do our own people take £4 net in these hard times when others demand £8, but they accept payment in a currency which London and New York despise, and which even the half-way nigger at Colombo regards with a sniff.
That puts the position in a nutshell. The article shows how an accumulation of mistakes in national policy created a position which required desperate remedies. After mature consideration the Government introduced the tariff schedule which we are now asked to ratify as one of the necessary remedies. In the face of these facts, it will be difficult for any honorable senator to justify a vote against the duties imposed in respect of a substantial number of the items incorporated in the schedule.
Let us consider the result of the application of this policy. The position has been very concisely put in an article published in the Melbourne Age of the 23rd October of this year, headed “ Australia’s Financial Position - From Insolvency to Solvency - Is There a Favorable Trade Balance “. All that concerns me and all that should concern other honorable senators are the imports and exports, and the variation in the trade balance over a period of years. These figures are so interesting, and have such an important bearing upon the subject we are now considering, that I intend to place them on record for the benefit of honorable senators and others who may be interested in this discussion. It is interesting to remember that governments supported by many honorable senators who are opposing the Government’s tariff policy were in complete control in both Houses for the whole of the period under review, but they did not submit any corrective measures or endeavour to solve the difficulties which were piling up year after year. The Age article sets out that -
The tables given below show the position as disclosed by a study of the figures since 1922. The first column gives the loss or gain on exports by comparison with imports (bullion and specie transactions being taken into account) ; the second, the total payments made by the Commonwealth and the States- in respect of interest on overseas loans; and the third the net balance for or against Australia., after considering both factors -
For the greater part of those eight years there was in office a government which received the support of honorable senators opposite who are now criticizing this tariff, and, as the Minister (Senator Daly) reminds me, during the same period Australia was enjoying a succession of remarkably good seasons, when the prices of her exportable produce were higher than ever before. Notwithstanding this, however, during those eight years Australia’s adverse trade balance was no less than £62,380,000. During the same period Australia had to meet interest payments overseas to the extent of £193,445,520. These payments could be met only by the export of our surplus produce in ‘goods, or by further borrowings overseas. We find, therefore, that the Australian nation, in its dealings with the outside world, went to the bad during those eight years to the extent of £255,825,520.
Is it any wonder that when this Government took office it found that the world had lost confidence in the stability of Australia? It found that people at home and overseas were not prepared to lend money to Australian Governments.*’ It was necessary to export huge sums out of Australia’s gold reserve, accumulated as a backing for her note issue, so that we might meet immediate payments overseas ; so that we might, in fact, pay for those articles which had been so lavishly imported, but the importation of which has been stopped as a result of the policy of this Government. Their importation would have been stopped years ago if the last Government had been capable of evolving a policy in the best interests of the nation.
Let us compare that record with what has occurred since the present Government took office. The situation has been improved enormously and that, notwithstanding the fact that, during the last year, wheat touched the lowest price ever recorded in the history of the world, and easily, the lowest price ever recorded in the history of wheat exports from this country. During the same year wool touched prices lower than the average price for the last two decades, and much lower than the average price for the eight-year period I have just reviewed. Similar low prices prevailed for most of the primary products which make up Australia’s exportable surplus. Yet for the year 1930-31, Australia had a favorabletrade balance of £41,480,000. Her overseas interest bill amounted to £28,672,006, leaving a credit balance of £12,807,994. That result was accomplished, however, by exporting approximately £13,000,000 worth of bullion and specie, representing our national savings. It was exported to meet a temporary difficulty, and, of course, that sort of thing can only be done once. The point I desire to make, however, is that despite all the difficulties of low prices, and excluding the £12,000,000 odd of bullion and specie which was exported) Australia has, as a result of the Government’s policy, been able to square its accounts overseas for the year, and, due to the fortunate increase in the price of our primary products, she is now in a position to pay every penny she owes to the world. As a result of this policy, confidence is returning both at home and abroad, and Australian securities, both here and overseas, are improving in price from day to day. Indeed., they have made substantial, and even sensational, advances during the last month or so. The steps taken by the Government to correct the position which it inherited have been drastic, but they have been successful, and not one honorable senator who has criticized the Government’s policy- has submitted a workable alternative.
– The honorable senator has been very consistent with that interjection and I have an effective reply to bini, which I shall furnish in good time.
It lias been suggested that Australia’s difficulties in the way of overseas trade balances might have been solved by raising the rate of exchange. In order to see whether or not that was feasible, let 113 examine some of the tariff items in this schedule with a view to learning whether or not their importation would have been materially affected by the exchange rate. Take piece goods in knitted tubular form and otherwise. For the year 192S-29, which was the last year of -office of the Bruce-Page Government, Australia imported £296,037 worth of these goods, while during the year 1930-31 our imports amounted to only £56,65S. Another item is artificial flowers, fruits, plants. &c. “What in the name of goodness do we want to import these things for at any time, and more particularly during a period of depression? Because the Government took steps to discourage the importation of such goods, it has been criticized in this chamber, in another place, and in the public press. In 1928-29 artificial flowers, fruits, plants, &c, to the value of £151,350 were imported, while for the present year only £17,118 worth came in. Then there are articles of apparel, mostly woollen goods; mostly, as a matter of fact, goods which can and should be made in Australia. Similar goods are now being made here, and sold at prices from 18 per cent, to 40 per cent, less than the prices prevailing a few years ago. In 1928-29 we imported goods of this description to the value of £.1,281,361, while our imports for 1930-31 amounted to only £209,127. For 1928-29 we imported parasols, sunshades, &c, to the value of £15,054, while our imports for the current year amounted to only £2,239. Some people may say that we cannot make parasols or sunshades in Australia; but T remind such critics that a gentleman who has occupied a very eminent place in the political life of this country began his career in Australia as a mender of umbrellas. Blackings, dressings, polishes for boots, &c, to the value of £63,389 were imported during 1928-29, but this total was reduced to £12,591 for the current year. Perhaps some honorable senators believe that satisfactory boot polishes cannot be made in Australia.
– The reason for the decline in importations is that many people cannot afford to polish their boots these hard times.
– During 1928-29 Australia imported furniture worth £254,050, and that despite the fact that Australia grows the finest timber for furniture-making that can be procured anywhere in the world. In fact, we export large quantities of furnituremaking timber in the log to the United States of America and other countries. Of precious stones, including pearls, we imported during 1928-29, £’642,283 worth, but that amount was reduced for the current year to £61,442. These huge importations went on, although only recently the Government had to take action to protect the Australian, pearl industry by regulating production so that the market would not bc glutted, and so that those engaged in the industry might be able to make a living. I remind honorable senators that the importation of precious stones would not have been affected by increasing the rate of exchange, nor would the importation of jewellery, of which over £250,000 worth was imported in 1928-29. Those who can afford to buy such articles would not be deterred by an increase in the exchange rate. They would insist upon having, them, irrespective of the cost. Such things are not sold to the great bulk of the Australian people, who would have suffered if national default had occurred, as it certainly would have but for the action of the Government.
During 192S-29, goloshes, rubber sand shoes, &c, to the value of £33,812 were imported, but during 1930-31 only £2,017 worth came into the country. Boots, shoes, slippers, &c, worth £339,679, were imported in 192S-29; but, as a result of the action taken by the Government, only £38,123 worth were imported during 1930-31. Just imagine .the in- congruity of the situation. We produce in Australia the finest hides, we have available the best quality bark for tanning purposes, and in addition, enjoy natural conditions wholly favorable to i lie production of boots and shoes. Yet, in 1.929-30, under the regime of the BrucePage Government Australia imported boots and shoes to the value of £339,679 ! Take another item of leatherware, “ Bags, ladies’ hand and purses, wallets, travelling bags,” &c, which wo imported in 1928-29 to the value of £338,426. Fortunately for the nation, this Government assumed office, and in 1930-31 the importations had shrunken to £74,435. Leather bags are being made and sold here at lower prices than those asked for the imported product. Only recently a South Australian firm secured a contract to supply a large London retail shop with leather handbags made in my State. There are 53 items in this schedule duties, the comparative importations of which were £14,213,963 in 1928-29, and £3,084,675 in 1930-31, a reduction of £.13,129,288, brought, about as a result of the policy of this Government.
I now turn to another aspect of our tariff schedule, which ‘has also been attacked during the course of this debate, that covering goods that are either totally or partially prohibited. In that list appears glucose, of which £9,531 worth was imported in 1928-29, but only £28 worth in 1930-31. As Senator Crawford pointed out, glucose is a product of maize, and it provides a market for an Australian primary product. I am given to understand that some of our maizegrowers have had considerable difficulty in recent years in finding a market for their grain. Many of their difficulties have been brought about by the importation of by-products such as glucose.
– No deputations have waited upon the Government to protest against its action in connexion with the duties imposed on glucose.
– The honorable senator is quite right. In 192S-29, we imported biscuits to the value of £39,081. Thanks to the tariff policy of this Government, the amount was reduced to £2,849 in 1930-31. I regret that there is only one honorable senator representing Tasmania now present in the chamber, as the subject is of considerable importance to that State. As is well known,. Tasmania produces a wheat which, because of the peculiar climatic condition.* under which it is grown, is the finest, wheat in the southern hemisphere for biscuit making. It finds a ready sale on the mainland for that purpose, at a higher price than is realized for the harder wheat. I am told that, figuratively speaking, Tasmanian growers exchange the softer -grain for the harder products, which are grown on the mainland, and that they make a very fair profit on the transaction. If it had not been for the action of this Government in reducing the importation of biscuits intoAustralia, this industry would not be in its present thriving condition in the Commonwealth. In this list there are also items covering caudles, confectionery, and a host of other commodities. Confectionery is extensively manufactured in Tasmania, yet the Bruce-Page Government sanctioned importations of this item to the amount of £137,524 in 1928-29. The figure fell to £9,482 in 1930-31, afterthe advent to office of this Government. Despite that, last week we heard Senator Payne taking this Government to task,, condemning this tariff lock, stock and barrel, and strenuously advocating a freetrade policy. In Australia we have a large area capable of producing the finest lemons to be found in the world. Yet in 1928-29, the Bruce-Page Government permitted the importation of lemons to the value of £6,709. Through the action of this Government, only £78 worth was imported iu 1930-31. Again, we imported oranges to the value of £5,956 in 1928-29. In Australia we produce a splendid type of orange, and only recently sent a responsible Minister to Canada to negotiate a trade treaty with our sister dominion, incidentally securing preference for Australian oranges, to enable us to market our surplus production!
Where are those Tasmanians who talk about the disabilities of their primary industries, and of the difficulties under which their berry and other fruit growers labour? One of those difficulties was brought about by the Bruce-Page Government allowing the importation of canned fruits to the value of £48,502 in 1928-29. In 1930-31 that figure had fallen to £2,329. To that extent, the demand for locally-produced canned fruit has been stimulated. Here is an item “ Meats, preserved in tins or other air-tight containers.” That should interest Senator Glasgow, who represents a beef-producing State. In 192S-29 Australia imported tinned meats to the value of £78,212. As a result of the operation of the tariff schedule introduced by this Government, that amount was reduced to £7,456 in 1930-31. Next I see “Pork, preserved by cold process.” All around our seaboard we have land admirably suited for dairying and intense cultivation, and for producing any ‘quantity of pork, bacon and hams. Yet in 1928-29 we imported chilled pork to the value of £76,141. That figure was reduced to £1,492 in 1930-31. During 1928-29 we imported pickles, sauces and chutneys to the value of £80,403, a figure which fell to £14,797 after this tariff came into operation. Of soap and soap substitutes, we imported £116,050 in 192S-29, but only £13,288 in 1930-31. Is it any wonder that the people of London and New York lost confidence when Australians were not even able to make sufficient soap with which to wash themselves. In 1928-29 we imported blankets and blanketing to the value of £51,621, which was reduced to £6,764 last year, as a result of the policy of this Government. “We have in Australia the finest wool that is available in the world, and machines and operatives ready to make splendid blankets. Of “Rugs, except floor rugs,” we imported £33,5.76 worth, in. 1928-29-
-A mere flea-bite !
– I shall demonstrate to the right honorable senator that the so-called “ mere flea-bite “ produced a great festering sore which promised ‘to demoralize the community. Fortunately, this Government was elected, and it promptly set about counteracting the affliction, with the result that only £917 worth of these articles was imported in 1930-31. There are made at Lobethal, in South Australia, rugs which are, on the admission of overseas experts, the finest procurable. That factory is capable of supplying Australia’s requirements. The next item that I see is, “ Stump-jump ploughs.” The man who invented this type of plough was a South Australian named Smith, who is now dead. He would turn in his grave if he could read that in 1928-29 Australia, the country that pioneered their: manufacture, imported stump-jump ploughs to the value of £16,11S ! A “couple of years ago we passed legislation to assist the winegrowing industry. Yet in 1928-29, while the Bruce-Page Government was in office, we imported vinegar and acetic acid to the value of £32,016. We bonused the wine industry to send our wine abroad in exchange for by-products of the industry! As a result of this Government’s policy those commodities are now being manufactured in the Commonwealth. Now I come to the choicest item of all - onions, which we imported to the extent of £22,699 worth in 1928-29. In 1930-31 our onion imports were nil, to the great benefit of many of our primary producers. There are 69 total or partial prohibitions, the imports of which were valued at £6,512,097 in 1928-29, but which fell to £1,147,868 in 1930-31- a reduction of £5,364,229. The reduction amounted to £5,364,229. The total imports in 1928-29 of the 122 items covered by the high duties which have been criticized, and the prohibitions and partial prohibitions which have b*een anathematized, amounted to £20,726,060, but as a result of the policy of the present Government, the value of the imports in 1930-31 was reduced to £4,232,543, a reduction of £16,493,517.
The Government’ has been charged with having imposed high duties and restrictions without full and mature consideration. Having regard to the figures I have quoted, what consideration was necessary before determining upon the course that was adopted ? The policy of restricting imports has been largely responsible for the improvement of Australia’s trade relations with the outside world.
In regard to the allegation by Senator Lynch and Senator Foll that the tariff policy is largely to blame for the. increase of unemployment, the estimated value of agricultural production in 1929-30 was £77,109,000, and of pastoral and dairying production, £38,881,000. The total production in that year, including value added by manufac- ture, was about £450,000,000. The value added to Australian product’s by the processes of manufacture was £156,364,432. It will be seen therefore that the secondary industries made a substantial contribution to the aggregate wealth production of the Commonwealth.
– And used a large quantity of primary products.
– That is so. In 1928-29, the number of persons employed in the manufacturing industries was 450,000; in 1929-30, it had fallen to 419,000. In other words, the secondary industries contributed not more than 30,000 to Australia’s large army of unemployed. The others have been recruited from the primary industries and the transport group, including railways and shipping.
– Most of the unemployment is due to the reduction of expenditure on capital works.
– Only a small proportion of the unemployed lost their jobs because the manufacturing industries failed to support them. But what would have happened if the present tariff had not been imposed, and those industries had been subjected to the full blast of overseas competition and dumping by countries that were in difficulties? Australia is not the only country that has been in financial difficulties during the last two years ; it is not the only country whose manufacturers have found it necessary to resort to dumping in order to liquidate their stocks. The growth of imports in the later years of the BrucePage regime indicated that a dumping policy was being pursued by manufacturers abroad who were seeking an outlet in the Australian market. With the subsequent change of world economic conditions, that policy would have been accentuated, and half of the present employees of the manufacturing industries, who are earning every penny of wages they get, and are producing goods worthy of this nation, would be out of work and living on the dole provided by taxation. [Extension of time granted.]
Senator Payne declared that by increasing duties without previous reference to the Tariff Board, the Government had flagrantly broken the law. What inquiry or recommendation was necessary to prove that action should be taken to arrest the drift which had been taking place for years before the present Government assumed office? Senator Payne overlooked one important point. He mentioned that the Tariff Board was constituted by a statute of this Parliament in 1921, but he did not disclose what took place between that year and 1928. I remind the Senate that the 1928 tariff included more duties that were not based upon tariff board inquiries and recommendations than does the present schedule.
The second charge is that the manufacturers have not benefited by the tariff. If that be so, why has every manufacturer’s organization been circularizing members of the Senate, and urging them to ratify the duties? Senator Colebatch, in his opening remarks, dramatically tore up a leaflet that he had received from such an organization, and threw it on the floor ; but I could see nothing wrong with the statements in the circular. It contained nothing but argument from the view-point of the interested party, which had every right to place its views before the public, and before the members of this chamber. Infinitely weaker arguments than anything I have read from manufacturers’ organizations have been adduced on behalf of the freetrade sections of the community.
We are told that the tariff has added to the cost of the requirements of the primary producers; that the policy of protection is making it increasingly difficult for the export industries to carry on. That was the effect of the utterance of Senator Colebatch and other honorable senators opposite. Letus consider the first point - the increased cost of the farmers implements - and compare the prices ruling to-day with those of 1920, when the party with which honorable senators opposite are associated was in power.
– A few popular items will not fill the bill.
– They will, because they are the things that the farmer must have; I refer to harvesters, harrows, ploughs, &c.
– In 1920, peak prices ruled for materials all over the world.
– The following table indicates the prices of various implements in 1920 and 1930: -
I may remark that £69 18s. lid., the price in 1930 of the combined 16-row drill and cultivator, is the lowest figure at which that implement has been sold in Australia since it was patented and marketed. On the average, the selling price in 1930 of all Australian-made agricultural implements was 28 per cent, less than in 1920.
– The general price average in 1930 was 70 per cent. less than in 1920.
– Take the figures for the year 1914,
– A Labour Government was then in office, and the primary producers were getting a fair spin. Taking the prices of imported farm implements, it will be seen that they have been reduced to not quite the same extent, the reduction over the period to which I have referred being 27 per cent. Honorable senators opposite claim that duties have increased the cost of farming implements; but I am showing that under a high tariff the average selling price in 1930 of the long list of agricultural implements from which I have read a few items was 28 per cent, less than in 1920, when a Nationalist government was in office.
The primary producer not only supplies the home market, but also produces a surplus which must be sold abroad at world prices. Honorable senators have been critical, argumentative and positive in their assertion that the primary producer is being driven off the land owing to the tariff policy of Australia. Nobody knows better than I what our producers have suffered during the last two years, and, as I pointed out in my earlier remarks, their disabilities are due, not to the tariff, but to the unprecedented slump throughout the world in the prices of primary products, which has seriously diminished the income derived from the sale of our export production. Is Senator Colebatch or any other honorable senator prepared to say that it is possible so to reduce the prices of agricultural implements, or any other farm necessity, that the men on the land may produce at a profit at the world prices that prevailed until six weeks ago ? I contend that that could not be done, even if the men in the industry worked for nothing. This fact should be borne in mind in considering the tariff. We should not be guided by the experience of one or two years in which the circumstances were abnormal, but we should apply sound reasoning to a normal set of circumstances, and note the effect of our fiscal policy on the two branches of industry in Australia which go hand in hand. I refer to the primary and secondary industries, and I shall proceed to show that there is a definite relationship between them.
Sitting suspended from 6.15 to S p.m.
– -The primary producer has two markets in which to dispose of his products - the home market and the export market. The home market is the better market, and every expansion of secondary production leads to increased employment among the workers, thereby providing sustenance for other dependants and increasing the home market for. primary products. It is interesting to note that, according to the Commonwealth Statistician, the employment in our secondary industries has, since 1911, materially increased. The number of employees in secondary industries in 1911 was 311,710; in 1921, 378,540; and in 1930, 419,194. If we take the primary industries we shall probably find that employment has decreased because of the remarkable advance in the mechanization of industry that has taken place since 1911. The growth of our secondary industries, in consequence of the increasing protective policy, has resulted in a substantial increase in the number of employees, despite the improvement in, and greater use of, machinery, with a consequent loss of man-power per unit of production. Since 1911 the number of employees has increased by 108,000, and to that, of course, is attributable the increase in our consuming power in respect of primary products. 1 wish now to quote figures relating to primary production for 1907, the year before the first real attempt was made to protect and encourage secondary industries. I shall take the four groups which represent products from the land. They can be readily compared, whereas some difficulty may be experienced in comparing the mining industry because of the exports of gold and bullion during certain years complicating the position. The four groups of production are agricultural, pastoral, dairy and farmyard, and forestry and fisheries. In 1907 the value of agricultural production was £30,323,000; pastoral production, £54,771,000; dairy and farmyard production, £15,667,000; forestry and fisheries, £3,940,000; or a total of £104,701,000. Take the home consumption figures for those periods: In 1907 the value of agricultural production for home consumption was £23,384,000, and exports about £6,939,000. The value of pastoral production for home consumption was £18,881,000, and exports £35,890,000. The value of dairy and farmyard production for home consumption was £12,720,000, and exports £2.947,000. The value of forestry and fisheries’ production for home consumption was £2,661,000. and exports £1.279,000. In 1929-30, the total value of production included in those four groups was £222,541,000. Of that great increase a substantial proportion was consumed locally. Whereas in 1907 the home consumption was approximately 55 per cent., in 1930 it was well over 70 per cent. In 1930 the total value of products consumed locally was £138,748,000, as against £83,685,000 worth of products exported.
A particularly striking example is furnished in respect of dairy and farmyard production. This production is a useful adjunct of mixed farming, and in many districts it is the small profit from that production which enables the farmer to carry on. The production from dairy and farmyard products increased from £15,667,000 in 1907 to £49,398,000 in 1930. As the result of the increased demand created by the stimulation of secondary industries a market was found in Australia in 1930 for £40,855,000 worth of these products, whereas only £8,543,000 worth was required to be exported, and in respect of exports the local consumers, by means of the Paterson butter scheme, provided a bounty of over £2,000,000. Had it not been for the development of secondary industries in Australia, the primary producers would have had to seek an export market for the increased volume of production. That market was not then so profitable asthe home market. For the benefit of primary production it is essential that we should establish well ordered and efficient secondary industries in order to maintain a maximum of population and local consuming power for our primary products.
The wisdom of this Government in instituting a protective policy early in its career has been borne out by recent events in Great Britain. The result of the elections there and what it implies has been referred to by other honorable senators, and I shall not recapitulate what they have said. But there is one point which has received publicity in Australia for the first time, and it is worthy of placing on record. It is the following decision of a national union of manufacturers in Great Britain, as published in the Argus of last Friday: -
The National Union of Manufacturers has passed a resolution demanding the immediate introduction of an emergency tariff in order to restrict present wholesale dumping of foreign goods, which, it is said, is likely to increase if not checked.
In Great Britain, two years after this Government took steps to rectify the trade balance in Australia, this great organization has requested the British Government to take similar action in Great Britain. As has been pointed out by other honorable senators, there has been a’ plethora of dumping in Great Britain by foreign manufacturers, to the detriment of the British nation and the British industrialists generally. It is vitally necessary for Australia to protect its secondary industries. There are many classes of goods and commodities for which there is a seasonal demand in this country, and that demand coincides with the slack period in the northern hemisphere. Mr. Fisk, the managing director of Amalgama’ted Wireless (Australasia) Limited, has pointed out that, while his firm can, under existing conditions, compete with imported wireless products of various kinds in Australia, New Zealand, the South Sea Islands, and other legitimate trading territories, it could not withstand the dumping of foreign wireless products into Australia. The demand for wireless products in the United States of America, as in Australia, occurs mostly in the winter months, and there is a slackening off in the summer months. Therefore, the surplus products of American manufacturers would be available for dumping in Australia at the end of the winter, coincident with the beginning of the demand in Australia. Similar conditions apply with respect to many other industries. If the altruistic view which Senator Colebatch expressed this afternoon could be realized throughout the world, there would be no need for protective tariffs; but we have to deal with nations, not under ideal conditions, but under conditions as they exist to-day, and the protection afforded by this measure is undoubtedly necessary in the interests of Australia.
Frequent reference has been made to the inquiry into the economic effects of the Australian tariff which was carried out by a committee of eminent economists. I believe that those gentlemen gave of their best, and came to their findings with an open mind. But the fundamental error in the composition of that committee, which resulted in grave mistakes being made in its recommendations was the exclusion from its personnel of a representative of the Customs Department. The Public Accounts Committee, during its investigation into the disabilities of South Australia, inquired into that matter, and, after hearing the evidence of Professor Giblin, who was a member of the tariff committee, and of Mr. Abbott, the Deputy ComptrollerGeneral of Customs, expressed the opinion that the finding of that committee should be interpreted with a good deal of caution. It was the evidence of Mr. Abbott which caused the committee to come to that conclusion ; I shall quote one or two portions of it. He said -
We have all read the report of the economic committee, and certain fundamental errors in the committee’s calculations do not inspire confidence in its .conclusions.
He went on to say -
The value of the output of galvanized iron for 1926-27 is stated at £5,016,000. I say that the value of the output of galvanized iron in that year was less than £500,000. What the committee has stated is the total value of the output of galvanized iron working and tinsmithing. Galvanized iron working and tinsmithing is responsible for £4,500,000, out of the total of £5,000,000 upon which the committee based their calculations.
Does any honorable senator suggest that if we were living under freetrade conditions we would import galvanized iron tanks and similar products? In country districts that I represent the tanks are assembled on the spot, so as to avoid the cost of transport from the nearest town. They are bought in the state known as broken down, and assembled where they are required. This represents a substantial portion of the total value of the production of that industry. Mr. Abbott also referred to another glaring anomaly. He said -
Again, the economic committee stated the value of the output of paper as £3,638,000. That really represents the value of the output of paper, paper boxes, and other manufactories of paper.
The things that were made here without any protection long before protective tariffs were introduced, and things that should be made here because of the circumstances associated with their manufacture.
– The honorable senator has exhausted his time.
Senator Sir WILLIAM GLASGOW (Queensland) [S.18]. - At the outset, I propose to refer to one or two of the matters that were raised by Senators Crawford and 0’Hallora.n. Both of these gentlemen argued that this was an emergency tariff; and Senator Crawford suggested that it would be wise to ratify it as it stands, and give it a trial for a couple of years. I am not prepared to do that; because we all know that were we to ratify such a tariff and allow it to operate for a couple of years, exotic industries would be established, under it, vested interests would grow up,, and we would be approached by those who were engaged in them for a continuance of the conditions that had been granted.. It would suit admirably those who believe in this very high tariff, to have the conditions so fixed that industries would be established and vested interests created, in the expectation that they would continue.
Both honorable senators also said that this tariff was necessary for the purpose of adjusting our trade balance ; and Senator O’Halloran suggested that the last Government was responsible for the adverse balance that existed prior to the present Government coming into office. Any one who is acquainted with the facts knows that the adverse balance of trade was due to the extensive borrowing policy that had been indulged in -by the Governments of the States. During the six and a half years that the last Government was in power, the loan indebtedness of the Commonwealth itself increased by only £13,000,000, while that of the different States was advanced to the extent of £207,000,000. From 1923 to 1929 inclusive, the imports exceeded the exports by £58,170,152. In addition, approximately £203,000,000 had to be paid by way of interest on our external debt. Thus the total adverse balance of trade for that period was approximately £261,000,000. The greater part of that balance was liquidated by long-term loans floated in London, and the balance of £74,500,000 by way of treasury-bills, overdrafts, &c. Had Australia been unable to raise money abroad during this period, the imports- would have averaged about £35,000,000 a year less. From the 1st July, 1930, to the 30th June, 1931, Australia was unable to raise any money abroad. During that financial year, the total value of our exports in sterling was only £88,800,000, of which £12,273,562 consisted of gold and bullion. About £28,000,000 of that was required to pay interest on our external debt, leaving only £60,526,438 available to pay for imports,, the actual value of which was £60,558,095. They were restricted to that sum because it represented the total amount available for payment on account of imports, out of the sum received for our exports. I make this statement to demonstrate that there was no necessity for this high tariff to adjust our trade balance. Had we not borrowed abroad, the exchange would have adjusted matters, and our exports would have been able to pay for our imports, plus the interest on our external debt.
Senator Crawford also argued that protection was of great assistance to the primary industries of this country, and he instanced the meat industry. The following were the prices received in 1914-15 and 1930-31, for a fair range of our primary products. They relate to Queensland products, my reason for choosing them being that Queensland is an exporting State: -
With the one exception of wool, which was slightly higher, the value of all of those commodities was lower in 1930-31 than in 1914-15. Does any one suggest that the prices of secondary commodities to-day approach in any way the prices of 1914-15 ?
– But a lot more butter was sold in the latter year.
Senator Sir WILLIAM GLASGOW.Very well, then ; let us have a larger output of secondary commodities, if volume and not price is to be the guiding consideration.
An article that is used only by the primary producer is fencing wire. In 1913 the price of No. 8 black fencing wire was £7 5s. a ton, and of No. 8 galvanized fencing wire £8 12s. 6d. a ton. In 1931, the price of No. 8 black fencing wire was £15 12s. 6d. a ton, and of No. 8 galvanized fencing wire £17 0s. 10d. a ton. How is it possible for the primary producer, who is back to the 1914-15 prices for his products, to pay double for an article of that sort? These figures demonstrate to what extent secondary industries are able to assist the primary industries !
I hold that any country should strive to give as good conditions as possible to the employees in its industries. 1 am a protectionist, but not one of the Himalayan variety. The only reward that any country can give to the employers and producers in its various industries, must have as its basis the value of the resources of the country, its population, and the skill, energy, and ability willi which it? people develop those resources. In every country there must surely be some relation between the reward that can be given by industries thai are natural to it, and the reward which is enjoyed by the protected, sheltered, and bonused industries. The point that 1 wish to make is that it is ridiculous to assert that secondary industries are of assistance to primary industries, when those primary industries have an exportable surplus and what the producer receiver is based on the export price.
Senator O’Halloran also asked what sort of a protectionist was one who believed in moderate protection. I am a believer in moderate protection, and 1 ask him whether, in advocating a protective policy for a country like Australia, he expects to protect industries in a State like. New South Wales, or in a State like South Australia. There is a vast difference between the two. Does he expect that we ought to protect the manufacturer in a State like New South Wales? If he does, he would need a much higher form of protection than would be required by a similar industry in a State like South Australia.
– I want real protection for Australian industries, irrespective of States.
– The rewards granted under Arbitration Court awards differ in the various States.
– That can be overcome by unification.
– Such a system would have a detrimental effect upon the State which the Assistant Minister represents, and greater financial assistance would have to be given to South Australia than that State receives to-day.
Senator O’Halloran congratulated the Government upon the fact that, between 1920 and 1930, the price of agricultural machinery had dropped 28 per cent. According to the League of Nations report, the price level, which stood at 100 in 1913, had increased in 1920 to over 200, but in 1930 had dropped to below 100. Between 1920 and 1930 world’s prices had dropped over 50 per cent., or almost double the percentage by which the price of agricultural machinery in Australia has decreased. If prices in Australia dropped to the extent mentioned by the honorable senator, the decrease in other countries was considerably greater. Those in Australia who purchased agricultural machinery at a reduction of 28 per cent., had to sell their products abroad at prices which had’ dropped 50 per cent.
I agree with the contention of Senator O’Halloran that those engaged in our secondary industries’ should work in closer co-operation with those employed, in primary production. But instead of that close relationship which is so essentia], we find one section of the community demanding assistance for those engaged in secondary production, and totally disregarding the claims of the primary producers. Those engaged in primary production have to sell their products at world’s parity, and at the same time are compelled to purchase their requirements at unnecessarily high prices. No one knows better than the Leader of the Government in the Senate (Senator Barnes) that the primary producers of this country, through their exports, are paying for our imports, and interest on our external debt. The conditions granted to those engaged in our secondary industries should have some relation to the conditions of those employed in primary production.
During the last six or seven years various bodies have conducted inquiries into the effect of our protective tariff upon our economic life. On the 3rd September last the Secretariat Committee, appointed by the conference of Commonwealth and State Ministers, submitted a report in para- graph 5, of which, under the heading of “ A Long-range Policy “, the following appears: -
The first aim of the long-range policy must be a reduction of costs of production. Export production at world’s prices is the basis of our industrial organization. We can only continue to compete in the world’s market by reducing the costs of export production, which depends largely on the costs of sheltered and protected production. Our prime need is, then, a reduction in costs of all industry and services.
This policy must hu carried out for the most part not by the Government, but by those concerned in the industry, by employers, and organizations of employers, by all those engaged in the industry, individually and in trade organizations. Now that wages in general have been heavily cut, the responsibility is very heavy on employers to make vigorous and persistent effort to strive for greater efficiency, to write off dead capital, and to seek the co-operation of their employees with patience aud good-will. A permanent round-table of employers and employees in each industry, for discussion of all the facts of each industry, is strongly urged.
On page 3 there is this paragraph -
While rejecting the ideas that wage reduction is in general a cure for business depression, the committee believes that for Australia some general reduction was necessary to maintain export production, in spite of thu immediate bad effects of lower wages. If some wages escape reduction, the burden falls more heavily on the others, and only on thu principle of equal sacrifice can it be hoped that reduction will be accepted without bitterness. If in some industries rates arc maintained unchanged, other industries have to suffer a more severe cut to make the necessary total adjustment. The basic rate varies from £.1 3s. per week of 48 hours, to £4 2s. fid. per week of 44 hours. The wage reduction in most industries fails to lower costs sufficiently to increase employment, because of the high wages still paid in other industries - such us coal or iron - on which they depend.
– Is the honorable senator opposed to the payment of high wages ?
Senator Sir WILLIAM GLASGOW.No; but it is time honorable senators opposite realized that industries cannot pay wages higher than they can economically afford. The report continues -
The dominating fact which the committee must emphasize is that upwards of 100,000 men, formerly employed on loan works and paid from funds borrowed abroad, have now no prospects of such employment in the future. These men, with others in industry generally, dependent on their demands, account for more than half of the total of the unemployed. They cannot be provided for except by their own production, and that production needs to be made possible and profitable. No temporary palliatives can meet this position, and we regard the general reconstruction and the long-range policy suggested at the outset as fundamental to recovery.
I was rather surprised to hear some honorable senators opposite suggest that, under present circumstances, it is impossible for our secondary industries to produce for export. If that is the position our. outlook is anything but promising.
The success of the Australian iron and steel industry depends very largely upon the amount of loan moneys, the supply of which has now been cut off, made available to various governmental authorities. In these circumstances steel works in New South Wales will find it exceedingly difficult to keep their plants going at full capacity. It is essential that these works, and similar undertakings, should reduce their production costs to a minimum, and thus enable them to export to New Zealand, and to other countries in the Pacific. The cost of producing coal should also be reduced. If that were done other secondary industries would also be able to produce for export.
– How does the honorable senator suggest that production costs should be reduced?
Senator Sir WILLIAM GLASGOW.The Minister, who is president of the Australian Workers Union, should know that those engaged in primary production have been compelled to reduce their production costs. If those engaged in pastoral and farming pursuits have, by force of economic circumstances, been compelled to reduce their production costs, those engaged in secondary production should also reduce their costs. Some time ago a special committee, consisting of several economists, Mr. E. O. Dyason, a member of the Melbourne Stock Exchange, and Mr. Wickens, the Commonwealth Statistician, produced a very valuable publication entitled The Australian Tariff - An Economic Inquiry. In this publication, emphasis is laid upon the necessity for observing economic principles, and at page 98, paragraph 173, the authors state -
The next three parts of our report will bo devoted to a bare outline of the economic principles involved and their applications to tariff policy. We appreciate the fact that Australia is committed to such a policy, and wehave found that on the whole the policy has been advantageous. But we have found strong reasons for regarding the present extent and possible future growth of protection with the gravest concern.
This was written before the present tariff schedule was tabled in another place. “ It continues -
The natural tendency of any tariff system is to extend itself beyond economic limits, and there is no natural check such as limits other forms of assistance the costs of which must be raised by taxation. We are aware that criticism of the tariff is growing, and that there is a considerable amount of uneasiness about its future: and we may usefully describe the circumstances which have promoted the growth of the tariff in recent years. Unless the economic limits can be recognized and rigorously applied, we may expect the tariff to extend further, and to become a cause of serious embarrassment, both economically and politically.
At page 98, the following appears: -
We think the tariff may he likened to a powerful drug, with excellent tonic properties, but with reactions on the body politic which make it dangerous in the hands of the unskilled and the uninformed. Although a section of public opinion would not admit it, there can be no doubt that limits exist somewhere to the amount of “ tonic “ which can be applied with advantage. The problems are to convince opinion of that fact, to get some idea of where the limits may be, and to enforce them with resolution. Wo can find no evidence that even the existence of such limits is suspected by the majority of citizens in Australia, or that there is any real resistance in that majority to the subtle complex of interests and patriotic emotion which creates willingness to accept further increases and extensions of the tariff. There is at present no influence to counteract the indiscriminate and indefinite extension of the tariff since the articulate primary producers have adopted a policy of working for the same thing. We feel, therefore, that the ill effects we have described may be intensified unless something is done to inform public opinion on the facts, and to give it that independent evidence which is necessary to sound judgment. We note, however, that the Tariff Board, which in the past has given easy countenance to increases in protection, has for some time expressed grave doubts on the continuance of that policy. We do not consider the grounds given altogether adequate, but we welcome the change of attitude.
That was a note of warning that the tariff, unless checked, would get out of hand, and bring about uneconomic conditions. The British Economic Commission also drew attention to the effect of the tariff.
At page 40 of its report, the following appears : -
These causes collectively have at least contributed in large measure to a state of things in which manufactured articles generally, and. such commodities as sugar, cotton, dried and. canned fruits, wine and butter are either not being exported at all or are only being made exportable by means of a subsidy in one form or another from the public. We have felt much force in the oft-repeated complaint that successive increases in the tariff which affect prices and the cost of living, following upon, or being followed by, successive advances in the cost of labour as the result of decisions under the Arbitration Acts have involved Australia in a vicious circle of ever ascending costs and prices, and that this conditionof affairs is crippling Australia’s progress and her power of supporting increased population. There lies no task before the Australian people more urgent than that of in some way breaking the vicious circle and of bringing down costs of production, as is being done in the other industrial countries of the world, without lowering the standard of living of the workers as measured not by money but by real wages, which are the reward of labour in the form of goods and services.
The Tariff Board, in it’s annual reports from 1925-26 onwards, has, year by year, drawn attention to the ever-increasing demand for higher protection, and to the adverse effect of high duties on exporting industries. In a report issued quite recently there are several paragraphs under the heading “ Excessive duties are dangerous for the following reasons “. The first is as follows : -
They may shelter industry unduly, and tend to lack of efficiency or to undue profit. In certain types of manufacture this effect is largely safeguarded against by local competition, but with a limited market such as exists in Australia, there is frequently room for only one or two factories capable of largescale production. When this is the case prohibitive duties either result in lack of competition with the grave risk of excess profits, or the installation of more plant than is necessary to cater for the requirements of the market.
Paragraph 3 states -
Excessive duties tend also to encourage the local production of certain goods the manufacture of which in Australia under existing conditions is so costly as to make production uneconomic. No doubt most articles can be made in Australia. If, however, goods are manufactured at too high a cost, the burden must fall on other industries and will check rather than aid production. Australia’s future very largely depends upon the solvency of her export industries and on the reduction of costs of production on her more natural secondary industries. Both the primary and the more economic secondary industries are striving to reduce costs to meet the position that has arisen. Every time an industry that requires duties from 75 per cent, to 150 per cent, is established or extended in Australia, an added burden is placed on other Australian industries.
In another portion of its report the board states -
The board suggests that the export trade could bc greatly increased if the manufacturers of articles for export could be given special consideration in regard to the supply of raw materials and by a modification of the industrial conditions.
Reports have also been prepared by the various bodies which have investigated the finances and economic position of “Western Australia, South Australia and Tasmania. All of them indicate that the tariff policy of Australia is very largely responsible for the disabilities those States have suffered.
– None of those investigating bodies could assess the amount of damage which was due to the tariff.
– No; but Parliament itself admitted that they had suffered as the result of the tariff, and made special grants to the States affected as compensation for their disabilities. Since Western Australia, South Australia and Tasmania, which are essentially primary-producing States, suffered as a result of the protectionist policy, it is only reasonable to assume that the same policy adversely affected the primary producers even in the other States, which, as a whole, may be said to have derived some benefit from the tariff.
I believe in tariff protection. I think that in Australia there should be protection so that, we may develop those secondary industries which are natural to the country, and for which we possess special facilities.
– Who is to decide ?
Senator Sir WILLIAM GLASGOW.We have in the Tariff Board an independent body which should be able to determine what industries- are deserving of encouragement. I also believe in protection, because we should try to create diversity of employment. It would be impossible for us to populate the country effectively under a policy of freetrade. Prom the point of view of defence, it is desirable that we should have a suffi cient population and should have in operation certain essential industries which can be established and developed only under a policy of protection. I maintain, however, that in determining the amount of protection to be granted, we should try to maintain some relation between the rewards earned by those engaged in secondary industries and those in primary industries.
– Does the honorable senator mean that both classes of workers should be employed under the same conditions?
Senator Sir WILLIAM GLASGOW.It would be impossible to carry on our primary industries under the same conditions as obtain in the secondary industries.
– The honorable senator would refuse to protect the motor body building industry in South Australia, but he would force us to eat the bananas grown in Queensland.
Senator Sir WILLIAM GLASGOW.I have never .said I would refuse protection to any industry in South Australia, but I would refuse to grant such protection as leads to inefficiency. Every independent body which has investigated our- financial and economic position during the last four or five years has drawn attention to the dangers of high protection, and to the uneconomic result which it has brought about. We have set up a Tariff Board, and before assistance iB granted to any industry, or any duties are increased, Parliament should have before it a report of the board. When a tariff question comes before Parliament we hear the two extreme views of the matter. Obviously, every honorable senator cannot be conversant with all phases of all industries, and moreover, there are special State interests t’o be considered. I propose now to quote an extract from a book written by W. M. Flinders Petrie, entitled Janus in Modern Life. The work refers to the fact that, when dealing with ancient Borne, historians are prone to confine their attention to its military autocracy, and to neglect its economic policy. The extract reads -
The first great step, which bore centuries of bitter results, was the favouring of the townsman as against the countryman. The voter in Borne could push laws to his own advantage in the hurly-burly of the public assembly, while the countryman was working hard in hi3 furrow miles away. The conquered provinces were a great temptation; they had to yield tribute, grain’ came pouring into Rome, and why should not this abundance benefit the citizen by being sold at a low price If They forgot the countryman. His toil was none the less because Carthage or Sicily or Egypt were being plundered. But his pay was much the less if his produce lost its market value. The cheap corn of Gracchus was the knell of thu honest agriculturist, as Professor Oman has pointed out. The only remedy was to try to cheapen production in Italy. This was done by giving up the small farmer altogether, and running only big estates by slave labour, the human machine which was to Rome what machinery is to us. This staved off the evil somewhat. But soon the townsman demanded more and more, and at last free doles of corn were given to him, and agriculture became impossible in Italy. What tribute-corn did to Italy, cheap transport has done to England. The townsman is always favoured at the cost of tlie countryman, and the country is being depopulated. Not only cheap bread, but doles of every kind - hospitals, wash-houses, music, games, libraries- all are given to the townsman, while the countryman cannot possibly share in such doles. A large policy of equivalent benefits to the countryman would be the only corrective to this- one-sided and deleterious favoritism. But the votes carry it, as they did in Rome.
That is just what has happened in Australia. Because of our high protective tariff, it has been necessary to grant assistance to States, and also to certain primary industries, that have been adversely affected by that policy. I am sure that every honorable senator will agree that reasonable protection should be given to city as well as country industries. Protection has been granted to all but our pastoral and base metal industries. How is- it possible, if wool remains at its present price, for persons in that industry to get over their existing financial troubles? We all know the difficult times that they are passing through, particularly in my State, where woolgrowers are now hard pressed. Prices have fallen to the 1914 level, while costs have increased substantially. I heard only the other day of a grower who received £10 a bale for his wool, out of which he had to pay £2 a bale for transport and sale charges.
– Transport charges were lower during the time of the Theodore Government.
– As a matter of fact, they were higher, railway freights having been reduced since the advent of the Moore Government.
I stand for a policy of protection, but it must have some regard for our primary industries. Otherwise, high protection must inevitably react against the secondary industries. Those who favour protection for secondary industries are pleased to say that the consumers employed in them create a market for our primary products. I ask what hope there would be of secondary industries existing without our great primary industries? Why, none at all. When we deal with the items in the schedule we must consider carefully whether the rates of duty are exorbitant. We -must also bear in mind that a rate that is suitable for say, South Australia, is not suitable for New South Wales. Obviously, workers in the secondary industries of South Australia do receive less for their labour than those in similar industries in New South Wales. I think that Senator Daly, Senator O’Halloran, and Senator Kneebone will agree with me in that respect. I hope that, when the schedule comes before us, we shall be able, by reducing certain duties, ‘to render assistance both to our primary and secondary industries.
– I promise not to keep honorable senators long; nor will I worry them with long quotations, or by quoting masses of figures. I noticed that the enthusiasm with which honorable senators opposite greeted Senator Crawford when he rose was not manifest when Senator Glasgow and I began to speak. However, I do not complain about that. I am somewhat concerned about the mass of literature that has been showered upon .me, in common with other honorable senators, by various interests. The case has been so well put from different angles that one wonders at times which is the right one. I cannot complain, as did Senator Colebatch, of the way in which that literature is worded. In most instances the language is courteous. If the language were similarly .couched to that in a circular that we received from a certain savings bank committee, I should treat this literature as Senator Colebatch did a trade memorandum, and throw it in the waste-paper basket. All this propaganda suggests to me that if parliamentarians, and honorable senators in particular, could be spared the trouble of . wading through such a mass of detail by the appointment of an independent commission to deal with tariff matters, it would all be to the good. I do not know whether the scheme would be practicable or not, but such a body might follow the lines’ of the commission which is appointed in the United States of America, and in Canada, to determine railway fares and freights. So well do those commissions function that complaints against their decisions are rare. It would “be necessary for such a body to have a- definite policy, in my opinion, a moderate one. It is true that wc have a Tariff Board, whose object it is to sift evidence and investigate requests for duties, and other matters. That board is at present doing good work, conscientiously and fearlessly; but 1 regret that in quite a number of cases its recommendations have been ignored by the government of the day. Many duties brought down by the Government have not been submitted to the board. That I regard as an unpardonable offence, as it is mandatory that such matters should be submitted to the Tariff Board, the act expressly stating that the Minister “ shall “ do so. I would much rather accept the recommendations of the Tariff Board than the actions of the Minister for Trade and Customs.
In common with other honorable senators, I voice my protest against the embargoes and prohibitory duties, and the delay in getting the Minister’s proposals to the Senate. I presume that I should not be in order in elaborating upon embargoes-
– The honorable senator may deal with the principle, but not with specific items.
– I shall pass on to prohibitory duties, which I think seriously affect our relation with the Mother Country, to whom we owe so many obligations. Already we have preferential treatment with Great Britain, and I hope that under the new MacDonald regime it will increase many fold. We, in Queensland, are favoured in connexion with our sugar preference, which I now hope to see substantially increased.
Australia is also under an obligation to the Mother Country in the matter of our loans, as we; ^ have been granted the inestimable privilege of having them treated as trustee securities. Last, but by no means least, is the constant protection that is afforded to us by the British Navy. Prohibitive duties affect to the point of retaliation our relations with some foreign countries, which are particularly good customers of Australia. Japan, Germany, Prance, Belgium, and Italy buy largely our wool, wheat, and metals, and our favorable trade balance with those countries runs into millions ‘of pounds sterling. I do not include America, because it has a very exclusive tariff policy, which has created a trade balance adverse to Australia, that I would like to see rectified.
The Minister in charge of the bill take3 credit for the present tariff on two counts: (1) that it has righted the adverse trade balance; and (2) that it has created new avenues of employment. I admit that for some years the imports were heavily in excess of our exports, but that was due to over-borrowing, principally by the States. The Commonwealth borrowing during those years was very moderate, but the free use of loan money by the States created a fictitious prosperity. The excess of imports could have been corrected by the cessation of borrowing, and the normal fluctuation of the exchange rate. A pegged rate of exchange is most unusual. I admit that, had it not been pegged, it might have advanced seriously beyond 30 per cent.; indeed, it might have reached 50 per cent., as in Argentina. But a high exchange rate is the normal and proper way to correct an adverse trade balance, and had Australia relied upon it and refrained from further borrowing, our trade balance would have been redressed without our incurring that odium in foreign countries which has resulted from the policy of high duties, embargoes, and prohibitions.
As to the effect of the tariff upon employment, the frequent, prophecies by the Minister” for Trade and Customs, that many thousands of additional hands would be employed in this industry and that industry, have not been realized; on the contrary, employment has decreased. Discussing this matter with me, the head of one of the biggest industrial organizations in Australia, a firm with branches in every capital city of the Commonwealth, stated that the embargoes and high import duties were throwing hundreds of people out of employment, and that whilst the manufacturing branch of his business benefited to some extent, the gains did not equal what it lost in other ways. It is clear that although the tariff policy of the Government may have created some new avenues of employment, its net result ha3 been a disastrous increase of unemployment.
I had the privilege and pleasure of visiting, recently, some factories in Sydney, and I candidly confess that I found there efficiency beyond my expectations. I was gratified to find that most of the employees were Australians, and I was told that once they had learned their jobs, they were, because of their higher average intelligence, preferable to the workmen who had been imported from other countries. Many expert’s had been introduced to establish various techical processes, but when their contracts were completed, they were satisfactorily replaced by Australians who Ifad qualified in the meantime. Some claims advanced by the manufacturers appealed to me strongly. One was that the cost of many of the articles produced was below the previous cost of similar imported goods. That is a development in the right direction and proof of efficiency. Some manufacturers said that they were approaching the time when they would be able to compete with world parity. They pointed out .the difficulty of competing on equal terms with overseas manufacturers, owing to the higher wages and more generous conditions enjoyed by Austraiian workmen. I suggest to Australian manufacturers generally that their aim should be to develop an export trade. Our secondary industries cannot continue to produce only 4 per cent, of our total export’s. Senator Lynch contrasted the position of Australia with that of Canada. “With other senators, I had an opportunity, when in that dominion, to see some of the very fine industries which are exporting millions of pounds’ worth of manufactures each year. We must impress upon our manufacturers the need to produce on the basis of world parity. Many factors are in their favour. They have, first, the natural protection afforded by freight, insurance, packing, and all the other expenses incidental to bringing” goods thousands of miles overseas. In addition, they are assured of at least a reasonable customs duty, and to-day they have the abnormal help of a primage duty and a high rate of exchange. Surely these factors should be sufficient without a tariff of Himalayan altitude to enable them to meet world parity.
Excessively high duties may prove a Nemesis to existing manufacturers, by encouraging overseas competitors to establish branch factories in this country. Whilst that result might be of advantage . to the nation, it will not be helpful to individual manufacturers already well established. The thought has occurred to me that protective duties might be tapered,” expiring at the end of a reasonable period during which the industry should have established itself. I do not know whether such a policy is practicable, but it seems to me to have the virtue of common sense.
– The sugar industry has been in operation for 50 years.
– But it had not always the protection that it enjoys today.
I come now to the principle of charging high duties on goods that can be manufactured in Australia. The present policy should be altered. The test of an industry’s title to protection is its capacity to manufacture commercially. I recollect that a steamer and suction dredge combined, embracing a number of patents, was imported for use in central Queensland. Because some manufacturer urged that the vessel and machinery could be produced in this country, a high rate of duty had to be paid. When the facts were examined, they disclosed that’ the price of manufacture in Australia would have’ been twice the landed cost of the imported vessel. Protection of that kind is not sound. A new type of imported coal pulverizer also embraced several patents, and because a few obscure engineers said that they could make the machine, a large amount of duty had to be paid. Subsequently when the then Minister for Trade and Customs (Mr. Pratten) ascertained the facts, he realized that he had been misled and refunded the whole amount of the duty. The present system is economically unsound; some commercial test should be applied before deciding that an article proposed to be imported shall pay heavy duties because it can be manufactured in Australia.
On a visit to Mount Isa recently, I experienced a great deal of pleasure at seeing on the machinery there the names of such well-known English firms as Ruston and Proctor, Babcock and Wilcox, Fraser and Chalmers, and Bellis and Morcom. Their products contributed very much to the efficiency of the plant. I was also pleased to see that several Australian manufacturers also were represented. The installation of English and Australian plant speaks volumes for the engineers of both countries, because American experts hold leading positions on the mine.
I raise again a vexed question that is as old as federation itself - the request of importers that the alteration of a duty should synchronize at all subsequent ports with the alteration at the first port of call. I have been connected with many conferences of Chambers of Manufactures, at which this matter has been discussed and referred to various governments, but always without result. Apparently, there is some departmental obstruction which can be removed only by special legislation. I understand that the Bruce-Page Government had drafted a bill for the purpose, but it has never been introduced. How seriously the present system affects some of our business people is indicated by the following extract from a letter written to me by one of the leading firms in Brisbane : -
One great feature that needs to be strongly emphasized is the necessity for allowing all goods in bond and on the water, when the new tariff became operative, to be admitted into the Commonwealth at the old rate of duty, as they were ordered in good faith to land at a certain price, whereas in many instances with the new tariff, we could not even get the duty back by way of sale. In fact, consideration ought to be given to all goods on order at the time of the increase, as manufacturers distinctly refuse to cancel any goods we had on order. In odd cases, manufacturers agreed to cancel goods we had on order at a reduction of 50 per cent. which, of course, would ruin us, and the unfortunate importer has to carry the loss.
That anomaly should be rectified ; the obstacles do not seem insuperable. A ship arriving at Fremantle has on her manifest goods for all ports, and Brisbane being the last port of call, is in the worst position. It seems to me that the difficulty could be overcome by making a new duty apply to the whole manifest.
I hope to deal with many individual items of which I have special knowledge, when the details of the schedule are under consideration. A condemnation of high tariffs is contained in the Empire Parliamentary Paper, which reaches us periodically. Referring to the tariff introduced in Turkey in October last, it says -
Increases in the new tariff vary greatly on different kinds of goods. On some, chiefly “ luxury “ commodities, duties of 300 per cent. and 400 per cent. are imposed; on others, such as heavy machinery, only 10 per cent. The average increase may be taken as between 30 per cent. and 40 per cent. An immediate result has been to choke all warehouses and places of storage in Turkish ports with goods imported in order to escape application of the new duties. The ultimate effect of the tariff must be to greatly increase the already high cost of living in the republic.
I hope that that warning will be appreciated by Australia. The BrucePage policy of protection, consistent with efficiency, should still, in my opinion, be* our aim, and it is confirmed in a pregnant sentence from Herbert G. Williams’ excellent short work, Politics and Economics -
The ill effects from which protected countries have occasionally suffered have been due invariably to the unwisdom of adopting duties so high that manufacturers and workmen alike began to feel that effort was no longer necessary.
On that note, I conclude.
Debate (on motion by Senator Foll) adjourned.
Communist Procession in Sydney.
Motion (by Senator Daly) proposed -
That the Senate do now adjourn.
.- I direct the attention of the Leader of the Government (Senator Barnes) to what I consider to be a serious matter to the people of Australia. A few days ago a communist procession took place in Sydney, the largest city in the Commonwealth. All kinds of banners, and the usual paraphernalia that characterizes :such processions, were displayed; but the most serious aspect of the affair was that scores of small children marched in the procession under the communist banners. Some years ago this Parliament passed a measure known as the Unlawful Associations Act for the purpose of suppressing organizations such as that of the communists, and the fact that young Australian children have been seen marching in the way that I have described leads one to ask whether sufficient is being done by those in authority, either in the Federal or the State arenas, to remove this cancerous growth. I think that all who witnessed the procession must have been impressed by the sight of children having the noxious doctrines of communism preached to them. Photographs of the children were published in practically all the daily newspapers. It will be a bad advertisement for Australia when people overseas observe the photographs of young children marching in such a procession in Sydney. I am not charging the Federal Government with condoning conduct of this kind ; but there must be some laxity on the part of the authorities, because this movement, is spreading throughout Australia, and little or no obstacle is placed in its path. I ask the Government to have a thorough investigation made, to see whether it can take action under the Unlawful Associations Act, or failing that, to bring this serious matter under the notice of the New South Wales Government. Undoubtedly, the incident that occurred yesterday outside Darlinghurst Police Court leads one to believe that this wretched organization, is growing in Australia, and the evil should be dealt with promptly.
– The honorable senator should know that the policing of the laws of a State is essentially a matter for the State concerned. If an unseemly demonstration occurred outside a police court, it is competent for any resident of the State to lodge a complaint with a view to having the offender brought to justice.
– I merely mentioned that incident to indicate the growth of the communist movement.
– It seems strange that in a chamber which is jealous of the rights of the States, a complaint should be lodged against the Government of a State. If, by moral or other suasion, State governments are not to be coerced or even influenced on taxation and other matters, how can any honorable senator expect the Commonwealth Government, by moral or other suasion, to influence the State to deal with the matter referred to?
– Is the Government agreeable to fight communism ?
– We believe in administering the laws of the Commonwealth, but do not propose to interfere in matters that are essentially within the provinces of the States. If the honorable senator feels that this demonstration constitutes an offence against Commonwealth law, he should either make a complaint under that law, or complain to the State Government. Since this chamber is the champion of State rights, I feel certain that it would not uphold the Commonwealth Government if it attempted to do something which’ infringed the rights of a particular State.
– The administration of the Unlawful Associations Act is the business of the Federal Government.
– Undoubtedly; but Senator Foll desired to know whether the Government would take action in regard to a certain demonstration that occurred outside a police court.
– No; I merely referred to that occurrence incidentally.
– If the communist association, or the New Guard-
– The latter stands for law and order.
– The New Guard is the communist wing of the anti -Labour forces. It is unlawful if -the Communist party is unlawful, and lawful if the communist movement is lawful. If either could be suppressed, and sane politics could be brought about, I would have no objection to using any methods to achieve that object.
.- I am somewhat alarmed ‘because of the turmoil in the mind of my honorable friend from Queensland over the supposed menace of communism. From time to time we read in the public press statements, the purpose of which I do not know, but which appear to me to be printed and published with the object of stirring up “dear old ladies” of both sexes and frightening them over a matter which it. seems to me does not amount to much. Communism does not cut much ice in this country.
– It has just held up our shipping industry for a couple of weeks, anyhow.
– Supposing there are quite a number of adherents to communism in Australia, this, after all, is a free country. I do not know that we should stifle the voice of any prophet who comes along with a thought that may possibly evangelize the world.
– This is an interesting statement to be made by the Leader of the Government in the Senate.
– If we cast our minds back over history we recall that our Saviour was persecuted because He brought forward a now thought. For that He was nailed to the Cross; but His gospel has lived for 2,000 years. Why, then, should I, knowing that historical fact, object to anybody putting forward a thought that may possibly do as much for the world as that did. Mention has been made of the New Guard. I am not fussy about that body; I do not care tuppence about it. I would give even that organization freedom in this free country. If it has a thought, it should have an opportunity of expressing it. Surely liberty to give expression to one’s opinions, whatever they might be, was what our fathers fought for.
– There is a difference between liberty and licence.
– That may be so; but we have laws which distinguish between liberty and licence. When people assume that they are licensed to do things outside the law, the law comes into operation, and there are Commonwealth and State authorities to deal with them. Why (Ml should we make a fuss about this matter? The States, with their police organization, have up to now, so far as I am aware, been able to keep the peace within their respective territories, without federal aid. I remember that on one noted occasion when a request was made by a State that the military forces of the Commonwealth should be made available for the purpose of preserving law and order in that State the Prime Minister of the day replied, “ No ; the State police force is able to deal with the situation “.
– But in giving that answer he neglected his obvious duty.
– In my judgment, he showed great wisdom. The State authority did deal with the situation. I know of no instance where the State authorities were incapable of handling a case of disorder. I agree that order must be preserved ; but I can recall no occurrence in a State that was not capably dealt with by the State authorities. That being sp, I do not know why this matter has been mentioned in the , Commonwealth Parliament. Such a discussion tends to alarm timid people, and lead them to believe that there is a possibility of something dangerous happening to this country when, as a matter of fact, nothing of the kind is likely.
Senator Sir GEORGE PEARCE (Western Australia) [9.45]. - I am astonished at the nature of the replies given by two members of the Government to the remarks made by Senator Foll. Senator Daly, for some reason absolutely unknown to me, misrepresented the point of view put forward by Senator Foll. Senator Foll did not ask the Minister that the Commonwealth Government should take action to deal with the disturbances at Darlinghurst or to prevent the procession in which these children were exhibited a3 a demonstration of the strides which the white-anting of trade unions by the communist movement is making.
– And the New Guard.
Senator Sir GEORGE PEARCE.Senator Foll noted these things as being symptomatic of what is going on in this country, and he reminded the Minister that the Unlawful Associations Act was still on the statute-book. He asked the Minister to see if action could be taken under that law to check the activities of this form of disruptive thought which is in our midst. The Minister entirely evaded that question. While we may have been surprised at his evasion, we were more than astonished at the statement of the Leader of the Government (Senator Barnes), which amounted almost to blasphemy. It is blasphemy to suggest that the principles which underlie the communist movement in any way resemble those which underlie Christianity.
– It is unfair to say that.
– The Vice-President of the Executive Council (Senator Barnes) himself said, in justification of allowing communism to proceed with its deadly work, that if the Government had acted as Senator Poll suggested it would have prevented the Pounder of Christianity from instilling his knowledge in the minds of the people of the time. The Founder of Christianity never suggested the overthrow of society by force, revolution, and bloodshed.
– I was referring to a new thought.
Senator Sir GEORGE PEARCE.Force, bloodshed and violence are not new thoughts. They are old thoughts, as old as the world, and it remains for the communist movement of to-day to put them into practice in a civilized community. Its best friends are the members of a complacent government, who fold their arms and say that the communists are only a minority. I remind him that the communists were, and still are, only a minority in Russia. They govern and act by minority, because a minority using force and terrorism can overthrow a majority that will observe the laws of its country and not use those dirty weapons which the communists look upon as their lawful weapons. I invite those who say that this movement is harmless, because the communists are in the minority, to read in to-day’s newspapers of the attempt to wreck the residence of the Leader of the Opposition in the State Assembly of Victoria, a State which has already had evidence that it has in its midst persons who are prepared touse destructive methods to achieve their ends. It is just the state of complacency shownby this Government which is fruitful ground in whichto sow theSeeds of communism. The Leader of the Government has said that he knows of no instance in which these people have done anything unlawful which cannot be dealt with by the States, but I ask him has he forgotten the history of the last two weeks, when the shipping trade of this country was paralyzed, not by the unions, not by the majority, but by a. minority of communists led by a known and self-declared communist named Schelley, who, using the methods of terrorism advocated by communists, brought the shipping industry of this country to a standstill, and exhibited this Government and the State Government concerned as being absolutely impotent to deal with the position until tremendous damage had been inflicted upon the trade of this country. We cannot deal with this organization as we can with organizations acting within the law. Every person and every body of persons within a democracy is entitled to use its opinion and power within the law, and, by observing the law, to change the form of society. The Leader of the Government (Senator Barnes) has said that this is a new thought. We have no objection to the promulgation of a new thought, but what differentiates communism from any other form of political thought is that it declares that it will bring about, revolution by force, and not by appealing to the reason of the people, and endeavouring to induce them to change their opinions. The communist does not appeal to the reason of the people. If the time is ripe, and if he can accomplish his object, he will destroy existing forms of society, although the movement represents a minority, and a small minority at that. Within the last two weeks we have had demonstrated beyond all doubt that, even in respect of the Seamen’s Union, which is one of the most militant in Australia, the communists, although in a minority, were able to take the control out of the hands of the officials and members, to break up their meetings, and, by methods of terrorism, to compel men who wished to continue to work, to join them in holding up the shipping trade of this country. Is the Government blind to these things ? Why does it permit this evil thing, which has reared its head in this community, to exploit the unemployed in every State? Why does it permit this minority to preach its deadly and damnable doctrine and play on the sufferings of the unemployed, knowing them to be a fruitful field for the sowing of the seeds of revolution? Is Australia to remain complacent while this deadly, work is going on ? The Unlawful Associations Act is upon the statute-book, and can be put into operation. Does not the Government see the danger? We believe that this is a real danger, and that the people of Australia are alive to it.
– The right honorable senator is pulling his own leg.
– I object to that statement, because I am sincere in my belief that this communist movement is a real danger to Australia. There is no country so open as this is to dislocation by communism, because in other countries there are organized forces always at hand to combat communism. There is no such thing in Australia.
– There is the New Guard.
– The honorable senator’s flippant references to the New Guard are no credit to him as a Minister. I am not responsible for the New Guard. I know nothing of it except from what I read in the press. In any case, its activities are confined to one State. I have no sympathy with any organization that acts outside the law.
– I have no sympathy with communists.
– I understand that the New Guard is out to assist the law. It is the known and declared object of the communists to overthrow society by force. We have already had manifestations of their power and activity and will to destroy. What is it that the communists preach? They preach that the quickest’ and most effectual way of destroying society as it is constituted to-day is to make it unwork able by destroying capitalism. The shipping strike has to be repeated only a few times, and the shipping industry will collapse. The destruction of capital and the loss of income will render it impossible for the ship-owners to carry on, particularly if they are subjected to periodical hold-ups, and receive no protection or assistance whatever from the Government.
– That is what happened in respect of the Australian Government Line of Steamers.
Senator Sir GEORGE PEARCE.That is the aim of communism. Its advocates are not disappointed or disheartened because the strike has ended. From their point of view, they have accomplished something by inflicting loss on the ship-owners. They have had a temporary success, and they look upon it as a stepping stone to further success. From their point of view, they have achieved a victory. When they read the remarks of two Ministers in this chamber they must conclude that either this Government does not recognize what it has to deal with, or that it is complacent. I am certain that the men who constitute this Government have no sympathy whatever with communism. I urge them to awaken to the deadly nature of the movement’ in Australia. I should nOt have spoken to-night had it not been for the failure of two Ministers to reply to Senator Foll, and their absolute lack of appreciation of the danger of communism. They seem to think that because the communists are in the minority everything is all right, but I remind them that communists all over the world are in a minority; even m Russia they have always been in a minority. They conquered Russia, and they hold it to-day because of their policy of terrorism. What they do in one country, they can do in another if the conditions are favorable.
– That is a reflection upon the intelligence of the Australian community.
– I regret that two Ministers have seen fit to evade the point of view put forward by Senator Foll.
– I wish to make a personal explanation-. In my reply to Senator Foll, I did not assert that I had any sympathy with the communistic movement in Australia. I made it perfectly clear that I was opposed to it.
– The honorable senator was not charged with that.
– The Leader of the Opposition (Senator Pearce) charged two Ministers, and I wish to make it clear that I have no sympathy with the communist movement, and that 1 shall do everything within my ‘power to suppress it. I also wish it to be understood that I did not connect the Founder of Christianity with that movement.
– I wish to dissociate myself from the statement that any one connected with the communist or any other movement throughout the civilized world can be compared in the slightest degree with the Great Master. I do not think that such a statement ought to have been made. No man living to-day is capable of comparison with the Great Leader of mankind. I consider that the communists are a menace to Australia. Proof of that is furnished almost every day. It is astonishing to me that a handful of men can lead astray a big body of unionists such as the Seamen’s Union. Why the majority of the members of that union cannot stand up against this minority must astonish every person in Australia. Any individual or organization acting outside the law should be punished accordingly. The Prime Minister stated the other day that the Government would do all that lay in its power to maintain law and order in Australia. That is the duty of every government. What is won by force must be held by force, and that is contrary to the doctrine of Christianity. If we want to effect reforms in this world, we must do it by the education of the masses, and not by a display of force.
– I regret that this question has been raised this evening. Perhaps the honorable senator who introduced it wished to stress the seriousness of it. The Government is fully alive to the seriousness of anything that is likely to prove detrimental to the best interests of this country, and will show no consideration whatever to the communists or to any one allied with the communistic movement in this country. That applies also to any other lawbreaking organization. I think it was in about 1914 or 1915 that I first heard warnings uttered by the then Prime Minister (Mr. Hughes) regarding what was termed the socialistic tiger. I should be sorry to think that the Leader of the Opposition (Senator Pearce) on this occasion had endeavoured to get in some propaganda against the Government. If that were his purpose, I assure him that such propaganda is worn threadbare. The Government is fully seised of the importance of the position and realizes that, on account of their desperate condition, the unemployed army offers a fertile breeding ground for communism. We are endeavouring to cure that evil by finding employment for those poor unfortunates who may otherwise be led astray. Their case to-day seems to them to be hopeless. But until we can restore in them a feeling of confidence in the Government of this country, what else can we expect? The position will not be remedied while there is starvation and degradation among large numbers of our people. I know how serious is the position in our organizations, that for years have been built up on sane logical lines in the hope that constitutionally their conditions might be improved. I know how these men are worming themselves into the confidence of those unions. Are we to remedy the position by sending them to gaol, or deporting them? All that we can do is to show our people that there is a betterway of living, and other means of obtaining what they desire. That is what we are endeavouring to do. The Government is adhering to constitutional measures, and so far has succeeded largely in lifting this country out of the awkward situation in which it found itself. We hope that in the near future we shall be able to prove to the workers that we are sincere in our endeavours to better their conditions and that there is no need for them to rely on communism or any similar organization.
Question resolved in the affirmative.
Senate adjourned at 10.5. p.m.
Cite as: Australia, Senate, Debates, 10 November 1931, viewed 22 October 2017, <http://historichansard.net/senate/1931/19311110_senate_12_132/>.