13th Parliament · 1st Session
The President (Senator the Hon. P. J. Lynch) took the chair at 3 p.m., and read prayers.
– Can the Minister representing the Minister for Commerce inform me whether instructions have been issued to Commonwealth butter graders in Queensland that Queensland hoop pine is not to be used in the manufacture of butter boxes for butter exported overseas, although the Queensland Agricultural Department has been informed by reliable authorities’ that there is no justification for rejecting hoop pine for butter boxes on the ground that it taints the butter contents, and will he see that full inquiries are made before any such prohibition is issued?
- Senator Brown asked a similar question last week and I have a statement on the matter from the Department of Commerce. It is as follows : -
USE OF QUEENSLAND HOOP PINE FOR THE MANUFACTURE OF BUTTER BOXES.
In referring to the suggestion that it is proposed to prohibit the export of butter in hoop pine boxes, the Minister for Commerce wishes it to be distinctly understood that there is no desire or intention on the part of his department to introduce any such prohibition.
The point is that Queensland butter submitted for inspection for export is sometimes found to be timber tainted because of a peculiarity which is associated with certain classes of hoop pine. Where the butter is practically free from taint, and this occurs with thousands of boxes, the department is eager not to restrict export in any manner. On the other hand taint may be detected to such an extent that the value of the butter is considerably depreciated, or it may be obvious from the class of timbers from which the boxes are made that the taint is likely to increase before the butter reaches its overseas destination.
The official butter graders of the Department of Commerce have ill certain instances insisted on butter being repacked into more suitable boxes before shipment was permitted. Samples of affected boxes have been inspected by State forestry officers and box manufacturers in Queensland, and these interests have admitted that the action taken by the department was fully justified.
It is of paramount importance to the Queensland butter industry that the export of boxes affected with wood taint should be prevented. Queensland produces approximately 40,000 tons of butter annually, and last year no less than 1,271,600 boxes (over 31,000 tons, or approximately one-third of Australia’s total butter export) were consigned overseas from Queensland. Complaints from London regarding wood taint in butter have been frequently received, and the Department of Commerce must necessarily endeavour to check the trouble. If Queensland butter acquired a bad reputation because of wood taint, this would be reflected on butter exported from the other States, and would undoubtedly result in a decline in the value all round of Australian butter compared with that of other countries.
Experiments in connexion with Queensland hoop pine are being carried out at the present time by the Council for Scientific and Industrial Research and the Department ‘of Commerce. Specially treated Queensland hoop pine boxes are now on their way to Great Britain where they will be inspected on arrival and a report furnished regarding their con dition. If the results are satisfactory, sub ‘ stantial benefit will accrue to thetimber industry, and the butter industry in Queens land.
I am now in a position to inform the honorable senator as follows : -
Is the statement appearing inlast Sunday’s Sun to the effect that the Communists have been cleared out of the Northern Territory, and that many of them have been given boat tickets to Perth, correct?
How many (a) Communists, and (b) unemployed have been given tickets to ( 1 ) Western Australian, and (2) ether ports during the post eighteen months 3.What arrangements does the Commonwealth make for their sustenance on arrival in Western Australia, or other States?
Under whose authority are these persons transferred from the Northern Territory to the States?
I am now in a position to advise the hon orable senator as follows: -
No. 2. (a) 2; (b) 56 to Western Australia; (1) 10; (2) 122 to other ports.
The Commonwealth makes no arrangements for the sustenance of these men on arrival in Western Australia or the other States. The men in question are not permanent residents of the territory. They have been resident in the territory for only short periods, and all arrived from the various Status.
The men are given passages at theirown request to the State from which they came. The Administrator has been given authority to issue passages in such cases.
The following papers were presented : -
Arbitration (Public Service) Act - Determinations by the Arbitrator, &c. -
No. 9 of 1932- Amalgamated Postal Workers Union of Australia; Australian Third Division Telegraphists and Postal Clerks Union; Commonwealth Postmasters Association; Fourth Division Postmasters, Postal Clerks and Telegraphists Union; and Federated Public Service Assistants Association of Australia.
No. 10 of 1932- Postal Overseers Union of Australia.
No. 11 of 1932- Fourth Division Postmasters, Postal Clerks and Telegraphists Union.
No. 12 of 1932- Australian Third Division Telegraphists and Postal Clerks Union.
No. 14 of 1932 - Federated Public Service Assistants Association of Australia.
No. 16 of 1932- Amalgamated Postal Workers Union of Australia.
No. 17 of 1932- Commonwealth Public Service Clerical Association.
Defence Act - Regulations amended - Statu- tory Rules 1932, No. 92.
Post and Telegraph Act - Regulations amended - Statutory Rules 1932, No. 86 - No. 91.
Tariff Board - Reports and Recommendations -
Crude Oil Engines.
Residual oils, Solar oils, and Crude Petroleum for use as fuel.
Iron and Steel Products Bounty Act - Return for 1931-32.
Senator Sir GEORGE PEARCE.Information is being obtained, and will be furnished as soon as possible to Senator E. B. Johnston, with reference to the number of persons deported from the Commonwealth and its territories during the regime of the Scullin Government.
SenatorRAE asked the Minister representing the Attorney-General, upon notice -
Is the statement attributed to Mr. Latham that over50 personshad been deported from the Commonwealth by his Government correct?
If so, will the Government state the nature of the offences with which the deportees were charged?
Were all or any of such persons given a public trial’?
Is it the practice of the Government to deport alleged offenders without trial or after a secret trial, where no adequate defence is possible?
Will the Government undertake to conserve the liberties of the individual in accordance with British traditions, by granting a public trial to all alleged offenders against Commonwealth laws?
I and 2. Yes. From 1st January, 1932, to 31st August, 1932, 80 persons were deported from Australia under the Immigration Act on account of illegal entry, health reasons, and other causes. 3and 4. The deportations were effected in conformity with the provisions of the Immigration Act.
It is the Government’s intention to carry out the laws of the Commonwealth, which provide ample protection for the liberty of the individual.
asked the Minister representing the Minister for the Interior, upon notice -
Senator Sir GEORGE PEARCE.The Minister for the Interior supplies the following answers: -
Average Costs tick Train Mile.
asked the Minister representing the Minister for the Interior, upon notice -
What was the average cost per ton per train mile for goods carried over the trans-Australian railway (Port Augusta-Kalgoorlic) for the years ended 30th June,1930,1931, and 1932, respectively?
– The Minister for the Interior supplies the following answer: -
As it is not the custom in railway systems to record the average cost per ton per train mile for goods carried, as distinct from other traffic, the information is not available.
Beer and Returned Empty Casks
asked the Minister representing the Minister for the Interior, upon notice -
Senator Sir GEORGE PEARCE.The Minister for the Interior supplies the following answers: -
South Australia: - £1 15s. l1d.
Common wealth - £410s.1d.
asked the Minister representing the Minister for the Interior, upon notice -
– The Minister for the Interior- supplies the following answer: - 1 and 2. The rates referred to were fixed under the provisions of the Commonwealth Railways Act 1917-1925. The rates from Melbourne to Kalgoorlie were fixed by theRail ways Commissioners of Victoria, South Australia, and the Commonwealth,and those from Adelaide by the Railways Commissioners of South Australia and the Commonwealth. The honorable senator’s attention is invited also to answer furnished on the 7th September to item (2) of his question No. 4 - asked on the 2nd September.
asked the Minister representing the Minister for Trade and Customs, upon notice -
If he will have lime used for spraying included in the list of articles that the Government intends to be free from sales tax and primage duty?
– The Acting Minister for Trade and Customs supplies the following answer: -
Lime for use in agricultural, horticultural, and viticultural spraying is exempt from primage duty. The question of its exemption from sales tax is receiving consideration.
Motion (by Senator Sir George pearce) agreed to -
That Senator Herbert Hays be discharged from the Standing Orders Committee, and that Senator E. B. Johnston and Senator Kingsmill be appointed tofill the vacancies on the committee.
Motion (by Senator Sir George Pearce) agreed to -
That Senator Foll be appointed to fill the vacancy now existing on the House Committee.
Motion (by Senator Sir George Pearce) agreed to -
That Senators Herbert Hays and Lynch be discharged from the Printing Committee, and that Senators Cox. Hardy, Lawson, andReid be appointed to fill the vacancies on the committee.
– Pursuant to Standing Order No. 38, I hereby appoint Senator Thomas William Crawford to be a member of the Committee of Disputed Returns and Qualifications, to fill the vacancy existing on the committee.
Bill received from the House of Representatives.
Standing and Sessional Orders suspended.
Bill (on motion by Senator Greene) read a first time.
Bill received from the House of Representatives.
Standing and Sessional Orders suspended.
Bill (on motion by Senator Greene) read a first time.
– I move -
That the bill be nowread a second time.
As honorable senators are aware, when Parliament adjourned before ‘the close of the last financial year, Supply was granted to carry on the services of the Common-wealth for the first two months of this year, and to meet the first pay day in September.
The bill before the Senate seeks to appropriate the sum of £3,285,350 for the purpose of providing for the continuance of the different services pending the passage of the Estimates. That amount will meet requirements for two months, and it includes the following sums for ordinary services: -
The items making up these sums are based on the respective provisions in the Estimates for the current- year. In addition, the usual provisions are made for “ Refunds of Revenue “ and “ Advance to the Treasurer.” The amount set down for the former is £300,000, and for the latter £750,000. The latter sum is required mainly to carry on additions and new works pending the passage of the Estimates for new works, buildings, &c, and to meet exchange on remittances to London.
As the financial position was fully explained on the motion for the printing of the budget papers, there is no occasion to make a further financial statement at this time.
.- I understand that this is the usual provision for carrying on the services of the country pending the passing of the Esti- mates, and I have no wish to debate the matter.
– I desire to draw attention to a problem that, I think, I can class as of particular and paramount importance to the nation- I may, perhaps, lay myself open to the allegation that I am introducing into the political arena a matter that should be left solely in the hands of the Commonwealth Bank. But the early discussion of the budget, and the imminence of the export season, remove from my mind the minor fear that any misinterpretation may be placed on my remarks.
It is necessary to deal separately with the various phases of this subject. I do not wish that my comments should be interpreted as an attack upon the Government, but prefer the kinder interpretation that, under the stress of maintaining our national stability, the importance of the factors to which I shall allude has not been given due recognition.
It may, perhaps, be advisable to reiterate certain facts that already are known to honorable senators. I speak with deep conviction when I say that our main industries are steadily going to the wall. The causes of the present position must be re-affirmed, and emphasis laid upon them, so that we shall be able to compare our existing domestic economy with the trend in world . conditions. ‘I submit as a fundamental principle that the policy which should be adopted by the Government is one that will restore prosperity to our export industries.
– I rise to a point of order. I hope that the honorable senator will not misunderstand my motive. I am quite sure that he wishes a discussion to take place on the questions that he is raising. That, however, I submit, would be out of order on this bill. The questions of exchange and the position of our primary industries might have been discussed on the motion for the first reading of the bill. Any debate on the motion for its second reading must be relevant to the subject-matter of the bill itself, and that is the ordinary annual services of the Government. I point out to the honorable senator, however, that he is not shut out from a discussion of the subjects that he wishes to bring forward. The motion for the printing of the budget papers will afford him an opportunity of raising the question of exchange and the relations of the Commonwealth Bank to it. I have raised this objection in no unfriendly spirit. Had I been aware of the intention of the honorable senator, I should have advised him to address himself to the first reading of the bill, at which stage questions that are not relevant to the measure may be discussed.
The PRESIDENT (Senator the Eon. P. J. Lynch). - It is my duty to sustain the point of order that has been raised by the right honorable the Leader of the Senate. As the right honorable gentleman has rightly said, Senator Hardy’s special opportunity to raise questions that are not relevant to the subject-matter of the bill presented itself on the motion for its first reading. For the moment, that OPPOtunity is lost to him; but it will recur when the order of the day for the printing of the budget papers is called on.
Question resolved in the affirmative.
Bill read a second time, and passed through its remaining stages without requests or debate.
– I move -
That the hill be now read a second time.
The bill proposes that the sum o’ £963,000 be appropriated for the purposes of additions, new works, buildings, &c. This amount is made up as follows: -
The actual expenditure last year was £832,622. The new estimates, therefore, provide for an increase of £130,378. The items on the Estimates are similar to those for which provision was made last year. I do not think that there is any item that calls for special mention, and I commend the bill to the attention of the Senate.
Question resolved in the affirmative.
Bill read a second time, and passed through its remaining stages without amendment or debate.
Debate resumed from the 1st September (vide page 72), on motion by Senator Sir George Pearce-
That the papers be printed.
– I appreciate the action of the Leader of the Government (Senator Pearce) in arranging for the postponement of orders of the day Nos. 1 and 2 so as to enable me to deal at once with the questions I was precluded from discussing on the second reading of the Supply Bill, and I desire also to thank the Leader of the Opposition (Senator Barnes) for allowing me to speak first although he had secured the adjournment of the debate on this motion.
The subject which I propose to discuss is one of the utmost importance to the nation. I realize that I may have to face au allegation that I am introducing into the political arena a matter which should be left in the hands of the Commonwealth Bank; but the imminence of the export season, and other factors, remove from my mind the minor fear that my action may be misinterpreted.
I propose to deal with various subjects in some detail. I do not desire that the comments I have to make shall be construed as an attack upon the Government. Rather should I prefer the kinder interpretation that the facts which I shall stress have been regarded as of less importance than others in the attempt to maintain our financial structure and prevent default. Some of those which I propose to emphasize may already be well known to honorable senators; but, as I have the deep conviction that our main industries are being steadily forced to the wall, I reaffirm them, so that we may compare our domestic economy with the existing trend in world conditions.
A fundamental principle which should guide the Government at the present time is the necessity of restoring prosperity to our export industries. Failure to do so will necessarily involve the nation in complete collapse, resulting in ultimate default. Its policy should be to restore to the nation, without distinction as to classes of industry, its purchasing power, which I term the money national income which it enjoyed up to the year 1928. Any other action, such as unemployed relief, inspiring the community to absorb its local unemployed, is at best only a palliative. A policy directed towards a reduction of costs, with a view to enabling Australia to compete in the world’s markets on a parity basis, unless coupled with a compensating policy to increase our national income, is doomed to failure. Knowing that we cannot get costs down to a level which will enable us to compete with other coun-tries, we, like many Biblical characters, yet go on hoping that a miracle will take place.
As a basis for my argument I propose to compare the Australian production in primary industries, including not only those of wool and wheat, but also other industries allied with that group for the decade 1920 to 1930, with that of the manufacturing industries. Statistics reveal the interesting fact that primary products represent about 66.8 per cent, of the total Australian production, as compared with 33.6 per cent, for the manufacturing industries. When -I reflect on those figures I cannot but wish that in another place representation were based on productivity, particularly, when I remember some of the harassing legislation which has been passed, and has adversely affected the larger .group. Notwithstanding, that since June, 1928, export prices have fallen by approximately 47 per cent., as expressed in terms of Australian currency, the primary producing group has not only maintained an increased volume of exports, but has averaged 61.6 per cent, of the nation’s receipts from its production, while the manufacturing industries, despite a steady price level in most quarters, and increased price levels in other quarters, average only 38.4 per cent. Those figures indicate to any unprejudiced observer the importance of the primary production group in formulating an export policy. An analysis of our export figures for the same decade reveals that the primary production group has been responsible for 96.43 per cent., as against 3.57 per cent, by the manufacturing industries, which are so ably represented in another place. It may be that the constant reiteration of these figures will produce a. feeling of nausea in the minds of honorable senators already acquainted with the facts; hut in justification of my action I claim that our primary industries are the mainspring of the nation and that our future action must be guided by fundamental principles.
It cannot be gainsaid that should disaster overtake our export industries, Australia must default. At various times it lias been said in this chamber that the primary producers of Australia are in a process of collapse. As one who has an intimate knowledge of primary production, I repeat that that is so. The primary producers of Australia are not on the brink of collapse; they are actually in the process of collapse. One has only to go through the wool and wheat districts of this country to realize that the primary producers are engaged in the unequal battle of trying to carry on with production costs greater than the prices they realize for their products. I warn honorable senators that, unless some hope is held out to the primary producing section of our community that internal prices will be harmonized with export prices, primary production, already forced, to its knees, will ultimately collapse. We cannot solely by a policy dedicated to cost reduction bring down our costs to a level that will equal the world’s parity to-day. I have already indicated that our pastoral and agricultural industries provide 76 per cent, of the total value of our exports, but I draw special attention to the wool industry which is the spearhead of our export trade. Over the ten-year period I have already mentioned, the value of our wool exported averaged 44 per cent, of the total value of our export trade, and even last year, expressed in Australian currency, the value of our wool exported was 37 per cent, of the total export trade. I see no possible hope of success in the Government’s policy for restoring the wool industry to a profitable basis.
A great deal of hope was based on the Imperial Economic Conference at Ottawa, but I do not think that any honorablesenator can -say with authority that the agreements reached at that conference will materially increase the price levels of Australian exportable commodities. I do not for one moment decry the value of the work done at Ottawa; the leader of the Australian delegation put up a splendid fight for Australia; but even before his departure ‘he said that those concerned in the wool and wheat industries could not expect any material advantage from the conference, because the majority of the products of those industries are sold outside the British Empire. The Ottawa Conference certainly has done a great deal to establish British reciprocity, and there is no doubt that Empire reciprocity is a goal at which Ave should more and more aim. But, in support of my statement, I point out that England takes only 32 per cent, of our wool, whereas countries in Europe buy 48 per cent, and America and Japan together buy 16.8 per cent. Those figures show how foolish it is to base our hopes on Imperial preference raising the price of wool. Those, however, are the facts with” which we have to contend. We cannot expect a rise in price levels from Ottawa.
It must be remembered that our greatest export industry is in dire distress. The people engaged in* it have now no working capital, and the day is not far distant when they will not be able to continue production. What would the failure of the wool industry mean to the financial plans of the Government, and its announced national policy of preventing default? Unless some other constructive policy is allied to the present policy of bringing down the cost of production, disaster must ultimately overcome us as a nation.
In support of my claim, that we must have more than a policy of cost reduction, I submit no greater authority than the opinion given by the committee of economists recently appointed by the Government. The report of those economists has not yet sunk into the minds of the public. Those who comprised the committee have no peers in Australia as economists, yet their advice has not been followed. Did they claim that we can force down our production costs to a level that will save our export industries? Most decidedly not. They took into consideration the cuts in costs already achieved, for instance, the 10 per cent, cut on real wages made by the Federal Arbitration Court, but -went on to say that, in order to reduce costs - to bridge the gap which now exists between internal price3 and export prices - we must bring about a reduction of a further 50 per cent. The following extract from their report confirms what I say: -
With the present trend of oversea prices, the cut in costs required to restore the balance if this way alone were followed, would involve reductions in nominal wages and interest rates of the order of 50 per cent. The attempt to do tl:is would threaten social and financial stability.
That is the considered opinion of admittedly the finest group of economists Australia possesses. Yet the Government is not carrying out their advice. 1 do not think that we shall put this nation back on a firm footing by acting contrary to the report of those experts who advise against the cutting of costs to the extent of GO per cent. Would any honorable senator gladly joint in an attempt to reduce wages by a further 50 per cent.? Undoubtedly it would endanger the financial stability of the country. If a move were made in that direction, I should gladly join my friends t opposite in voting against it, believing, as I do, that it would not be in the interests of the nation. No one could visualize the tremendous adjustments that would have to be made, not only in wages, but also in interest rates, transport charges, and so forth.
I may seem to be unduly emphasizing this question of cost reduction, but I have analysed the data at my disposal, and think I should remind the Senate that the experts have calculated that 20 per cent, is the gap between internal costs and selling prices which we have to bridge to-day, and that the . Premier of New South Wales -is reported to have said recently in Melbourne that it is nearer 30 per cent. Those figures justify my claim that our export trade is in a very definite stage of collapse. The working capital of the men who produce our commodities for export has been steadily diminished over a period of three year’s, and unless some method is adopted with a view to lifting price levels, disaster will be the lot of this country, and the inevitable sequel will be default. I think it is generally recognized that a definite rise of commodity price levels is essential for the restoration of our economic health. That is borne out by a statement issued at Ottawa that there is need for “ a rise in commodity prices to a height that would be more in keeping with the level of costs, including the burden of debt, and also fixed and semifixed charges “. When we analyse cost productions in Australia, we place them in two divisions - fixed costs and adjustable costs. Have we been successful in reducing our fixed costs? The object of the internal conversion loan recently successfully concluded by the Government was to reduce the burden of internal interest by 22-J per cent, in accordance with the Premiers plan, and in the end it brought about 8 saving of £6,500,000 per annum. Bui before that saving was made, our interest burden was a little under 5 per cent, of our national income, whereas, to-day, in spite of the fact that we have effected that annual saving of £6,500,000 in our interest burden, our interest payments represent over 6 per cent, of our national income. That is an actual instance of the inflexibility of fixed costs in Australia ; yet, according to the committee of economists, a further 50 per cent, reduction has to be made.
It is impossible to show how the fixed costs borne by the wool industry can be reduced. If I examine the accounts of a grazier, I find that rates and taxes have not been reduced. On the contrary, in many instances, they have actually been increased. Adjustable costs in Australia were perhaps found a little more flexible than at first believed. Under the Premiers plan, there has been a reduction of 22^ per cent, in interest charges on money advanced by financial institutions and rents. These are adjustable to a degree; but .it is the fixed costs in Australia that constitute the big obstacle to be overcome. Since April, 1928, our export prices, expressed in Australian currency, have fallen 47 per cent., whereas our retail prices’ have fallen only 19 per cent. Gould we have a better index figure as to the inflexibility of costs and an instance of the “ drag “ in cost reduction? The wholesale prices have fallen only 21.3 per cent. Up to March last, wages had fallen 14.4 per cent. The purchasing power of the nation, expressed in money income, has fallen from £106 per head in 1927 to £S2 per head in 1932. These .figures I am sure will show the Senate that costs are dragging a long way behind export prices, and support my argument that some policy other than that of solely reducing costs production must be evolved. The rural landscapes today do not reflect prosperity. I cannot be taken into any district in the Commonwealth and shown any property that betokens prosperity, or any farm that is. not beginning to be overrun with suckers or bracken. Owing to the deterioration of fences, rabbits are beginning to make their appearance where they were not seen before. All this has come about within three years. During those three years, the people engaged in the export trade have been pyramiding their losses, but the time during which they will be able to continue doing so is growing very short. With the complete collapse of our export trade, the tremendous and very fine work which has been done by the Government in maintaining our national integrity, will be wiped out fit a single blow.
I maintain that the Government, by following the course which it has adopted, is virtually thrusting a fire-stick into the structure which it has so carefully built up. Its policy is shortsighted, and is not allied with any constructive action to try to lift the price levels I have mentioned.
I am aware that, when I say that the only policy that should be followed is a policy of exchange management, designed to lift and keep up the price of our exports - to prevent them from being forced down by movements overseas- my intentions will, possibly, be misinterpreted. We can divide the issue under discussion into four separate headings. First, whether the management of the exchange means political control of the Commonwealth Bank; secondly, what is the true position of our London funds; thirdly, shall internal costs rise; and fourthly, the question of cost of remission. As to the first of these I have heard the charge made from hundreds of election platforms throughout the State of New South Wales, and I am well aware that the policy of this Government is entirely opposed to anything in the nature of political control of the Commonwealth Bank. I am going to be quite* frank about the matter. - Since the views of honorable senators opposite on this subject are well known, T should like to make it clear, at the outset, that any proposal which I may suggest will not imply political pressure” on the management of the Commonwealth Bank, because I regard that institution as the true bulwark of the nation’s safety, and I should be the last to do anything that might make it a shuttlecock of irresponsible politicians. If that, state of affairs obtained, there would he no hope for the nation. I contend, howover, that the management of the exchange position in respect of which the Commonwealth Bank has asked for a definite pronouncement from the Government, cannot be interpreted as meaning the exercise of political control.
This may be thought to be open to question, and in order to remove any possible doubt, I propose to read extracts from a letter written by Sir Robert Gibson, the chairman of the Bank Board, to this Government. The import of that communication is not, I believe, generally recognized, especially in view of repeated statements made by the Prime Minister on the subject. The letter, I may add, was considered at a conference of Commonwealth and State Ministers on the 28th January last. Dealing with the exchange position, Sir Robert Gibson stated -
Tlie question of exchange and the policy connected therewith lias since November last assumed a somewhat different complexion from that in existence prior to that date. So long as the demand for exchange for governmental and trade obligations exceeded the amount available, the ordinary law of supply and demand functioned in a natural way to maintain the price which had been reached last year, viz., £130 buying and £130 10s. selling. When, however, the restriction of importations, coupled with some improvement in export prices together with increased volume, began to come into evidence, the question immediately arose as to whether the exchange market was to be allowed to take its course downward or whether some effort to stabilize the position should be made.
The trading banks, or some of them, adopted an attitude that they were not prepared to support the exchange rate unless the Commonwealth Bank undertook to purchase all surplus exchange from them, ‘or, in other words, insisted on the Commonwealth Bank undertaking to find any loss incurred through a falling exchange market. The Bank Board suggested the difficulty might be overcome by a co-operative arrangement between the Commonwealth Bank and the trading banks on a pooling basis, each bank to share in any loss accruing from lowered rates upon a predetermined factor. This proposal was not acceptable to the trading banks as a whole, and the Bank Board therefore decided, so as to prevent a complete collapse of exchange, to determine the rate of exchange itself, from time to time, and buy or sell all exchange offering at these rates.
I come now to a most important portion of the letter -
This arrangement came into operation as from the 30th November, 1931, with the consequence that the Commonwealth Bank is now accumulating London funds, purchased upon the basis of 25 per cent, premium. So long, therefore, as the present policy is maintained, and there is an excess of funds available in London over the demands, the Common wealth Bank must continue to accumulate London funds. With the exchange at par there would be no risk to the Commonwealth Bank in such an accumulation, and, indeed, it would be in accordance with the policy of the bank to accumulate funds under such conditions. It will be obvious, however, that the Commonweal th Bank cannot take the risk of accumulating large funds in London at a high premium, unless it has a reliable prospect of being able to dispose of them without serious loss.
The present position in regard to exchange becomes one of more than a mere banking question, and. indeed, impinges on national policy. For the purpose of illustrating this, the following aspects of the matter might bo considered : -
I particularly desire to direct attention to this statement-in Sir Robert Gibson’sletter. He says -
There are those to-day who openly advocate the devaluation of our currency now, a coursewhich could certainly not be justified until the future in regard to world currencies and some stability in price levels is in sight.
I come now to the keynote of the communication -
If the matter is to be left entirely with theCommonwealth Bank Board, it is surely obvious that it must confine its policy to that of protecting the position of the bank and endeavouring to rehabilitate the currency in accord with the present act.
This, I repeat, is the keynote of the letter - that pending any definite statement of national policy by the Government, Sir Robert Gibson is bound to place his own interpretation on the provisions of the act governing thebank’s- functions. And the guiding principle of that act and the policy he adopts under it will be that he must protect the bank. If he is to protect the bank, obviously he cannot continue to accumulate London funds at a high rate of exchange. If he wishes to rehabilitate currency in accordance with the act, it is only reasonable to assume that he must force the rate of exchange down, or, at all events, allow it to follow a downward trend. Sir Robert Gibson, continuing, stated -
In this connexion, it must, therefore, be obvious that important issues are involved which will require most careful consideration from the point of view of national policy, and upon which it will be necessary for the Bank Board to have the views of the Government.
Could anything be clearer than that request? And can it be said that, since the letter was considered by the Government on the 28th January last, there has been any definite pronouncement of government policy with regard to exchange? I noticed recently a statement made, in answer to a question put to a prominent member of the Ministry, that it was hoped that the exchange policy would be determined and announced at the April conference of Commonwealth and State Ministers. That, as we know, was not done. There have been a number of nebulous statements by the Prime Minister, based mostly on the Government’s view that there must be no -interference with the Commonwealth Bank; but, as I have stated, we have looked in vain for a pronouncement from the Government, and a definite lead on this point is, I submit, fundamental to the restoration of prosperity to our export industries. We are entitled to expect, the Government to set up a guiding post for the chairman of the Commonwealth Bank Board. Unfortunately, no action in this direction has yet been taken.
In his budget speech the Prime Minister, referring to the exchange position, said that it was dealt with in the report of the committee of experts, and that the Government “ concurred “ in the views therein expressed. Are honorable senators aware that the financial and economic experts definitely recommended to the Premiers Conference that a middle course should be followed in order to bridge the gap between price levels and costs? The Prime Minister wont on to say that it was the belief of his Government that “the rate of the exchange should not be a matter controlled by governments.” I find it impossible to reconcile this statement with the very definite views expressed in Sir Robert Gibson’s letter to which I have referred, and again urge that, by the management of the exchange, we shall not be bringing political pressure to bear on the Commonwealth Bank.
As we are now approaching the export season, it is advisable to examine a little more closely the condition of our London funds, concerning which a number of loose statements are being made to-day. It is asserted, for example, that our funds in London are accumulating to an unheard of degree. From information which 1 have been able to extract from the Commonwealth weekly balances - I admit quite frankly that it is not possible to estimate them accurately, owing to the reluctance of the Australian trading banks to disclose the complete amount of their London funds - it appears that the amount now held by the Commonwealth Bank in London does not exceed £9,500,000. It has also been stated that our funds there are becoming top heavy. On this point,I remind the Senate that, in 192S, our funds in London totalled, not £9,500,000, as to-day, but £24,500,000, and that, in other years, they have amounted to £50,000,000, together with approximately £30,000,000 surplus in gold reserve. Some authorities argue that, unless Commonwealth funds in London are to become top heavy during this export season, the exchange rate must come down. Let us examine the position in the light of last season’s export figures. Our total exports to London last year, expressed in sterling, reached £7S,000,000, and our imports, expressed in sterling, amounted to £44,000,000. If we subtract the value of our imports from our exports, we find that we had a surplus of, roughly, £34,000,000, which was more than sufficient to meet our obligations overseas in that year. I question what is going to happen this year, because we have based our export figures on a particularly bountiful season. In other words, we have had a succession of good seasons for three years, and on the law relating to averages and cycles of droughts, we cannot expect that, volume of exports to be maintained. On this account I say that it is essential for the Government to express its policy. If it short-sightedly allows Sir Robert Gibson to lower the exchange rate, it will bring nearer the possibility of default.
A calculation of the probable volume of our exports for this year shows that the position is not at all reassuring. I admit that there may not be any reduction in the quantity of wool exported ; but my investigations have led me to the belief that, as a result of the drought which at the present time is stalking the back country of New Sou,th “Wales and a large portion of Queensland, the agricultural division of our exports may be expected to fall to the extent of 25 per cent. Consequently, over the whole of our export field it may be estimated that there will be a reduction of probably 10 per cent. What will that mean? Even if the price rules that we enjoyed last year, the total amount available from our exports in Loudon at the end of the year will be only £70,000,000 sterling- a decrease of £8,000,000. But the tragedy lies in the fact that there is no assurance that we shall enjoy the price level that ruled last season. If we secured the price that may now be obtained, we should suffer a reduction of 5.5 per cent. Assuming that there is that reduction in price, and a 10 per cent, reduction in total volume, it is only reasonable to suppose that an increase in price levels of 17 per cent, will have to occur to enable us to obtain from our exports £78,000,000 sterling. That is the position which has to be faced within the next few months. It is for that reason that I say that it is essential for the Government to announce definitely its policy on what up to date has been a most controversial question.
The position is accentuated when we consider imports. Herein lies the most disturbing factor. It will be remembered that I stressed the fact that last year our imports totalled £44,000,000 sterling. Will they reach that figure this year? Already there has been a distinct upward, trend, due mostly to the depletion of stocks as a result of our having been starved in connexion with imports. According to the July figures of the Commonwealth Statistician, and they are the latest available, there are definite signs of increase, as the imports that month were valued at £4,500,000 expressed in sterling. Accepting that as an average - and there is no reason to believe that the figure will be lowered - if the average is maintained the value of our imports this year will be £54,000,000 as against £44,000,000 last year. The result will be that, even with an increase of 17 per cent, in export price levels, which will have to occur if we are to obtain £78,000,000 sterling, there will be the very definite shortage of at least £6,000,000 if our exports reach that value. As our overseas obligations are calculated at a little below £30,000,000 a year, if our imports are maintained at the present rate our exports to balance will have to total the huge sum of £84,000,000. That is impossible. Failure to reach that total, and the maintenance of imports at the level indicated by the July, figures, make default the logical re3u.lt.
Again, it must not be forgotten that Sir Robert Gibson, in the absence of a policy expressed by the Government, has to interpret the act ; and as these funds accumulate in London, reductions must be effected in order to protect the Commonwealth Bank.
– Would not further tariff reductions give an impetus to imports ?
– They would; but not nearly as big an impetus as would be given if London balances commenced to come down, and exchange dropped. The policy of the Government will have to be one of a restriction of imports, not as to volume, but as to the value. That can be achieved only by the policy that I have been expounding. The question of London funds is, I maintain, the most vital that the Government has to consider. I do not decry the very fine work that it has done in preserving our national honour, nor its efforts to balance the budget. Those are principles which I uphold. I suggest, however, that the Government is adopting the role of a gambler at Monte Carlo who, having won on his past throws, risks the whole of his winnings on a final desperate throw in the hope of winning again.
There is only one policy that can be followed - that of exchange management to raise price levels in export trade. The Government must indicate its desire to the Commonwealth Bank. Export prices, expressed in terms of Australian currency, must be allowed to rise, so as to enable our exports to be continued. Members of the Government may say that a rise in exchange would not add one penny to sterling in London at the present time, nor increase the stimulus to our export industries that exists at the moment. I admit quite frankly that it would not add to the amount of our ster- ling. The second statement, however, ia open te question, notwithstanding the imminence of the export season. But what will be the result if the exchange rate fails, which assuredly it must, and no policy is expressed? The whole of our export industries will receive a rude psychological shock, and that certainly will not inspire them to continue production. I say frankly that it will remove the last prop that to-day is holding up our export industries. Last year, I believe, we averaged about 8.7d. per lb. for our wool. If we had gone back to sterling the price that the wool-grower would have received would have been about 7d. ; and had we still been worshipping at the shrine of gold there is no doubt that the figure would have been about 5.3d. I believe, although it is very hard to obtain confirmation, that the net cost of producing a pound of wool is about 12d. Honorable senators will thus see that the gap in this particular industry is infinitely greater than in others, and the position is more dangerous.
I should like now to deal with the question of the possible additional cost of remission, and that of internal costs. It is natural that honorable senators should feel reluctant to consider the position in its true light, and without prejudice, on account of the belief that internal costs will probably rise and minimize the advantage gained by the primary producer. There is also - and I can well understand it - a natural reluctance on the part of Treasurers to consider the additional cost of remission, because their principal object -is the balancing of budgets. This is considerably accentuated when it is realized that remission costs £7.66 million in Australian currency. I say frankly that, if the policy involved a substantial rise in our internal costs, it would become abortive. But is there not some method by which internal costs may be prevented from rising? I maintain that, if we were to adopt the principle of a reduction of the tariff simultaneously with any increase in exchange, internal costs would not rise, and we should achieve the desired result.
I am not prepared at this stage to explain the whole of the detailed principle or machinery of my proposal. because the subject is too involved; but, before concluding my remarks, I hope to be able to show a reasonable way out. I should like to emphasize the statement that we must not permit our internal costs to rise. That can probably be done by an amendment of the Customs Act, empowering customs officials to reduce the tariff involved in any item by an amount that would counteract the additional fiscal barrier represented by the exchange. 1 admit that the question of remission is a difficult one. But, if we raised the, exchange by ten points, the additional sum. would not exceed £2.6 million. Considering that every five points of the exchange restores to our money national income an amount that has been calculated at between £10,000,000 and £12,000,000, the taxable income of the people would - more than compensate the Government for the additional cost of remission. Take the case of our railways. The restoration of the purchasing power of the people would play a very big part in reducing the deficits on our railways, which have accumulated to something like £60,000.000, to which last year contributed £9.6 million. The railways are the greatest factor that has to be considered in connexion with budget equilibrium. By looking at the matter through a telescope, and fastening our eye on the item “ remission “, we are not displaying the broad vision that is necessary in approaching this subject.
I propose that the Government should take constructive action; that it should recognize the justice of my contention that an indication of national policy would not in any way be an exercise of political influence on the bank. The subject is so technical and comprehensive in its scope that it would be impossible for honorable senators to arrive at a reasonable and sound conclusion upon it without expert advice. “We should follow the example of Great Britain, and appoint a currency commission, similar to the Macmillan Commission, to investigate the subject in detail. Only in that way will the whole of the facts connected with a high or a low level exchange policy be made available. I propose that a commission should be appointed consisting of a group of prominent Australian economists. There could be on it a nominee of the Commonwealth Government, such as Professor Melville. Professor Giblin, the Commonwealth Statistician, could be the chairman. Other names that suggest themselves are those of Professors Copland, Mills, and Hytton. These gentlemen would play on this highly technical subject the searchlight of analysis and knowledge, which I maintain, we in this Parliament do not possess.
The commission should be asked to determine the London and Australian exchange rate, which, in present conditions, would restore the equilibrium betweencosts and prices in the export industries; and also to determine the changes in the rate of exchange required to be made from time to time in order to maintain equilibrium between costs and prices in the export industries, as export prices rise and fall. Further, it should examine the relationship existing between the exchange and the tariff, with the object of determining variations in the tariff coincident with changes in the exchange rate, and finally it should be invited to inquire into the relationship between London reserves of the Australian banks and of domestic credit conditions. The appointment of such a commission is the only logical course that the Government can follow. What other course could it follow?
I think it would be right to inquire where the path we are now treading is going to lead us. I put it. to honorable senators that the figures 1 have emphasized show that a tremendous effort on behalf of Australia is necessary to avoid the stigma of default in the coming year. Do not let us forget that our export industries, by which we hope to maintain our national prestige, are now experiencing their third year of adversity, andI again stress the fact that if we are to secure a restoration of the price levels which we enjoyed in 1928 we shall find, if we calculate in terras of sterling, that we require a rise of nearly 130 per cent, to bring usback to the old conditions.
It may be said that there is already an upward trend. I have seen it stated in the press that we have “ turned the corner “. Butwhat justification is there for saying that world prices in terms of gold have actually taken an upward trend ? There is no justification for such a statement. That upward trend has been experienced only for the last few weeks, and it may take months to establish whether it is or is not permanent. It is generally believed that this upwardtendency is not a true reflex of world tendencies, but is due to the action of the Federal Reserve Bank in America. Honorable senators are aware that the Federal Reserve Bank of the United States of America is to-day conducting an open-market policy, that legislation there with respect to commercial discounting has been widened considerably, and that this is reflected in the inflationary movement caused by the deliberate expenditure of many millions of dollars. This, it is said, is largely responsible for the upward trend.
– There has been no increase in American buying.
– That is so; but there has been an alteration in American domestic conditions. There is no justification for saying that an upward trend in world prices has commenced. This Government cannot bring forward anything to prove it. This is the third year in which our export industries have struggled to continue producing. What is to be the reaction on Australia if these export industries fail, as most assuredly they will fail unless action be taken? We are not as the widow’s oil. We cannot possible continue to produce at an infinitely higher price than we are selling. I urge the Government to realize that we must have a national policy to deal with this national problem.
The PRESIDENT (Senator the Hon. P. J. Lynch). - The honorable senator’s time has expired.
– I have nothing further to add.
Debate (on motion by Senator O’-Halloran) adjourned.
Debate resumed from the 8th September (vide page 315), on motion by Senator Greene -
That the paper be printed.
– When such wide and important ques- tions as those which have just been discussed by my colleague, Senator Hardy, whom I desire to congratulate on having brought them before the Senate, were opened up, I expected that the debate on the budget would be continued to-day, and that I would not be called upon so soon to resume the debate on this motion. That may not be altogether an unmixed blessing,, in that it will mean that what I shall have to say on this occasion will, perhaps, be shorter than it would otherwise have been.
I am glad to speak from this side of the cb. limber in appreciation of the work of those who represented Australia at Ottawa. I recognize, as, I nin sure, every honorable senator must, the difficult task that they had to perform, and T recognize, also, as I think we can claim to do from what we know of the subject, that they have successfully carried through the task which lay before them. They had a difficult duty in two ways : In the first place, as representatives of this part of the farflung British Empire, they must have recognized that, at a conference representative of the whole of the British dominions - I include in that term Crown colonies and every other type of British possession - it would be impossible that the advantages should be all the one way, and that there would be no give and take. When our delegates were considering that aspect of the matter, I am sure that they would take into account the fact that here at home there would be watching them various interests and political parties which would be only too glad of an opportunity to criticize their actions. I am sorry to say that it appears to be recognized in all these matters that it is the first duty, of an opposition to oppose. Consequently, every effort will be, and, indeed, already has been, made to place in the worst light the efforts of the delegation on behalf of Australia.
– Even before the results are known.
– Yes. The Government is attacked for not having disclosed more fully the results, when it is almost an established principle that tariff changes should be regarded as confidential until the Administration is in a position to take whatever steps are necessary to protect the revenue and to minimize the difficulties in business occasioned by them.
– Is not discussion from every point of view somewhat premature ?
– We must limit the discussion, I suppose, to those points on which we have some knowledge. It is open to us, I take it, to discuss the matters raised by the Assistant Minister (Senator Greene), who opened the debate, and al30 to offer some comment upon the remarks of honorable senators opposite who criticized his statement. Reverting to the thread of my remarks, with respect to the criticism that has been indulged in, I call attention to one, which I saw in a leading Melbourne newspaper only two or three days ago, in which the Prime Minister. (Mr. Lyons) was represented as doling out, scraps of unimportant information in order to keep the public in check until Mr. Gullett “ takes up his hopeless task of deluding it into the belief that his tariff smashing and industry wrecking efforts have been in the public weal ! “ It is regrettable that the representatives of this important part of the British Empire, who have been chosen, if not directly, at any rate indirectly by the people of Australia, to represent us at Ottawa, should be described as having been engaged in a tariff-smashing and industry-wrecking effort, and as now coming back with an intention to befool the public into the belief that what they have done is in the public weal. Simultaneously with the Ottawa resolutions, the whole question of. the tariff proposals of the Government has been raised. They have been linked together, and the Government has been represented as, not out of mere folly, I take it, ‘ but out of innate wickedness, doing its best at the bidding of some interests not disclosed to smash the whole tariff.
It is very interesting in that connexion to study the history of our Australian tariff. If we leave out of account that, at the end of last year, when the other House was about to be dissolved, a validating act was put through - which meant that the details of the tariff proposals of the late Government had never been discussed in this chamber - we find that the tariff actually in force up to that time was the Bruce-Page tariff of 1928.
But on that there had been no fewer than four separate tariff proposals by the Scullin Government. I need hardly say that every one of those tariff proposals was in an upward direction. There has been too much of a tendency to regard these mere proposals of the late Government as being the actual existing tariff authorized or approved by the Parliament for the people of Australia. When the government of that ‘ day appealed to the country, it received its answer. The undertaking given by the then Opposition was not that the tariff would not be revised, but that in fiscal matters it would, if placed in power, be guided largely by the reports of the Tariff Board. The result of the election shows how the people felt on this matter; the late Government was routed and the political seas are strewn with the wreckage. Some bitter critics of the present Government say that it fooled the public by promising not to touch the tariff and then, having gained office, attempting to smash it.
In view of the criticism of the attitude of our delegates at the Ottawa Conference, it is well to reflect on what this newspaper said on the loth October, 1931, regarding the proposals of the Scullin Government. I shall read a few extracts -
The nation’s fiscal policy and this tariff schedule have no common identity . . .
Its basic purpose is not to protect local industry, but to correct the dangerously adverse trade balance . .
As framed no protectionist would seek to defend it . . .
It is futile to describe the. schedule as protection run mad when every intelligent observer knows that many items are no integral part of the protectionist creed, but as a permanent element in our fiscal arrangement, a great deal of the schedule is unthinkable. In framing it the Ministry has done many things which in normal times would be intolerable. The motives arc patriotic, not fiscal.
On the assurance that it will be transitory, it is deserving of the Senate’s approval.
The Senate was asked to accept the schedule on the assurance that it would be transitory. Now that the Government is regarding it in that light, in the sense that it is carefully reviewing the tariff, it is charged with attempting to wreck the protectionist policy of Aus- tralia.
Let us consider the trend in tariff matters during the last twenty years. About eighteen months ago, a petition, known as the Graziers’ Petition, was presented to the Senate. In my opinion, that petition did not receive, either from Parliament or from the country generally, the attention it deserved. An examination of it shows that in 1908 there were only eight items in the tariff schedule which bore a duty of over 40 per cent, ad valorem; only two of those were over 45 per cent. Twenty years later, there were 259 items or sub-items bearing ad valorem duties of over 40 per cent. The four tariff amendments of the Scullin Government added 582 items or sub-items of over 40 per cent. duty. In addition, the importation of 78 items or sub-items was prohibited. It is true that in the case of a few items the duties were reduced at the request of this chamber. Had these increased duties benefited the country generally, one could understand any objection to a downward trend in duties; but, bearing in mind the increase in unemployment, concerning which I gave figures in this chamber last year, and the definite issues placed before the electors by the two principal parties at the last election, it is surely not too much to say that the present Government received a mandate to bring about a reduction of duties. In this connexion I associate myself with the remarks of Senator Hardy.
As Senator Duncan-Hughes has indicated, the tariff is a notable instance of the way in which the appetite grows on what it feeds. The tariff is a splendid example of the way in which things, which at first are regarded as privileges, come to be taken as rights, and a basis for further privileges in the “future. The match-making industry may be taken as an illustration. Figures, which have never been questioned, show that, judged as a commercial proposition, the matchmaking industry does not pay. Indeed, from that point of view, it would be in the interests of Australia to close down the industry, to allow every employee in it to remain in idleness at his present wages, and permit matches to enter this country free.
– That is not the way to build up a nation.
– A nation cannot be built upon an uneconomic foundation. You cannot build up a nation by constantly taking from the whole of the people something which you give to certain sections, losing a little of it, maybe, in the process.
– The country has subsidized a number of primary industries.
– Our primary industries would require no subsidizing if they were left alone. It is true that, occasionally, a sop is thrown to a primary industry to keep those engaged in it quiet, but honorable senators know that our protective policy cannot be applied to any industry which lives by exporting.
– The dairying industry is doing well with the assistance it receives.
– Our primary industries are the only ones which are able to export . Ninety-seven per cent. of our exports are primary products. Recently, I have been almost inundated with pathetic letters from employees in Australian match factories; this morning, I opened over 50 such letters. In addition, we are told through the newspapers that 50 employees in those factories have already been discharged and that many more are soon to follow them. I suggest that this propaganda is part of a deliberate attempt to browbeat members of Parliament, with a view to deter them from doing what they believe to be their duty. Certain interests are thrusting women and girls into the fighting line to bear the brunt of the battle which they themselves ought to bear.
– The honorable senator would force them into the starving line.
– Notat all. Those who are indulging in this kind of propaganda would be honest were they to say that the measure of protection already granted is not sufficient for them to carry on. In the case of the match-making industry, and some other industries also, the combined effect of the tariff, primage duty, the statutory 10 per cent., and the rate of exchange, added to landed costs, is to give them an effective protection of quite 100 per cent. If that is not sufficient, I submit that, so far from being a ground for granting further protection, it is a reason why we should consider whether such industries are worth protecting at all.
The secret of the present trouble is that this industry wishes to retain the embargo on the importation of matches imposed by the Scullin Government. In this connexion, I desire to make my position clear. I have every sympathy with the workers who have written to* me and to other honorable senators, but I have no sympathy whatever with those who would make them pawns in the game, and seek to browbeat members of this Parliament. In the recent election campaign, the party now in office made it abundantly clear to the electors that in fiscal matters, if returned, it would rely largely on the Tariff Board. An examination of the act under which the Tariff Board was constituted reveals that the very purpose of the board was to prevent log rolling - the setting of supporters of one set of duties against the other on the principle of “ You support us, and we will support you “. The Tariff Board was established in order that an independent investigation should be made in all tariff matters, and it has faithfully carried out that duty. Its members now possess a greater knowledge of fiscal matters than when they were first appointed. They have no axe to grind. Most of them are probably somewhat biased in favour of what is called the settled policy of the country. They have realized, however, that it is their duty to consider the interests of the community as a whole rather than those of any particular section. It is well that honorable senators should be reminded that not one of the proposals of the present Government seeks to reduce the duty below the recommendation of the Tariff Board. That being plain to everybody, the latest device is to attack the Tariff Board. “We often hear of those who quarrel with the umpire; but they are not regarded as sportsmen of the highest type.
Senator O’Halloran says that we should produce everything we can. It seems a simple sentence; but I should like to know what it means. We can produce anything in Australia. We could produce icebergs in the tropics if we went to enough expense. Does the honorable senator mean that everything we use in this country we should produce ourselves?
– I neither meant nor said such a thing.
– With great respect to the honorable senator, I think that, if he looks at the report of his speech, he will find that he did say it. But, if he means only that we should produce here everything we can economically produce, there is no difference between us. The point is, however, what we can economically produce. The honorable senator and those who are allied with him take the view that it is a disadvantage to us that imports are still coming into Australia. So long as exports go out of Australia, imports will come in, and, once exports cease to go out, this country will cease to hold its place among the civilized nations of the world.
– The exports and imports of the United States of America are about the smallest per capita in the world.
– Speaking from memory, the value of the import and export trade of the United States of America is over £1,000,000,000 per annum.
– In the aggregate their figures are high ; but the population of the United States of America is 130,000,000.
– And America has the largest unemployed ratio in the world.
– We all agree that we are passing through times of very special stress, the reason for which no one is able exactly to say, and the cure for which no one can offer ; but the people of the United States of America particularly,” and of Australia in a small way, have learned that the cure is not a constant raising of the rates of protective duties.
– Great Britain has recently discovered that freetrade is not a cure for unemployment.
– That may be; but I venture to say that, having turned in. the direction of protection, Great Britain will find, as Australia has found, that interested parties, will bring very strong pressure to bear to see that the generally mild rate of a 10 per cent, pro tective duty is not left in operation very much longer.
– Great Britain is starting with her eyes open.
– Yes, and with the history of the world before her. Her representatives have gone to Ottawa .with the knowledge that this great fiscal change has come about in Great Britain, and one of the advantages to Australia is that the Mother Country has been able to give us something which she would not have been able to give without that change in her fiscal policy.
From the summary of the results obtained at the conference, it seems perfectly plain that, as a whole, advantage will accrue to Australia, but not unless in some respects there is an easing off of tariff barriers against the Mother Country. I hope that my friends, like Senator Crawford, who is a sort of voice crying in the wilderness on this side of the chamber, will realize that our delegates at Ottawa arrived at the conclusions at which they did arrive after full consultation with the representatives of other dominions, and that all the parties at that conference were concerned in doing, not necessarily the best for the countries they represented, but the bes for all parties in attendance at the conference. I hope that what has been done will be endorsed by both Houses of this Parliament, and that the decisions arrived at will not only be an advantage to Australia and to the British Empire, but also a definite contribution towards the advancement of the whole world.
– I have difficulty in speaking on this subject, because of the indefiniteness of the statement put before us as to what happened at Ottawa. I disagree with Senator Brennan that the decisions reached at Ottawa are likely to be of benefit to Australia. With a protectionist government in power, we might have gained some advantage for this country, but, unfortunately, our delegation represented the importing interests largely. Senator Duncan-Hughes appeared to consider that in weighing the value of our relations with Great Britain, wo should keep in our mind the great value to us of the British Navy, without which, he said, this Senate would not be sitting.
That is beside the question. In another part of the world a nation, formerly British, has been able to keep its congress sitting without the protection of the British Navy, though when it hived off it had less than half our present population. Most of. us are of British race, and for sentimental reasons, we want to keep our place in the British Empire; we want the Empire to be united ; but I hope that we are not to be expected to submit to being lectured by representatives of the Old Country. “We Jo not want it to be thrown up at us that because we do certain things we are unmindful of the actions of the British Government in the past.
Many writers find considerable fault with many of the past actions of the British Government in regard to its colonies. Of course, like Thomas Paine of over a century ago, I distinguish the British Government from the British people.” .For instance, in regard to the Argentine trade, we can readily *ee that financial and commercial reasons actuate the British Ministers. During the war, Argentine gave little assistance f,o the Allies. When this Parliament was sitting in Melbourne, I heard one of the most extreme conservatives in Australia complaining that, during the Avar, Australian products were being sold at great loss compared with the products of Argentine. We must look after ourselves and see that the old man does not treat us rather rudely; we must see that the good, faithful and loyal son gets better treatment than the outsider.
I noticed at the Queensland Agricultural. Show not long ago, that Australia’s meat export trade was going down in competition with Argentine. It is time we closely scrutinized Great Britain’s reasons for this decline in our trade. I understand that, as a result of the Ottawa Conference, the Argentine meat quota has been reduced by about 50,000 tons, still leaving it with 400,000 tons, which Avas about the quantity it exported to Great Britain in the previous year. Queensland has the largest meat export trade in the Commonwealth, and has derived no advantage from the Ottawa Conference. A Brisbane daily which does not support Labour has expressed considerable disappointment that of three items of moment to Queensland, tobacco, cotton and sugar, Australia got nothing out of Ottawa. In my view that is also, the opinion of Australia generally. It is, however, very difficult to discuss this matter in detail without the full statement before us.
Great Britain at last has adopted in a measure the Australian policy of protection. It has been forced upon her. Twenty years ago, as a journalist, I visited Great Britain. I had served on one of the great freetrade journals of Australia, but had not formed very definite opinions upon fiscal matters. A relative, who Avas assistant editor of a London paper called the Agricultural Economist, introduced me to a Mr. Owen Greening, the editor. This gentleman was about 70 years of age, and a distinguished man in other spheres besides journalism. He buttonholed me, and demanded to know why Australia had adopted a policy of protection. Being rather unprepared, I felt a bit humble before this august gentleman, and I did not make an effort to defend the policy of protection per se, but said quite calmly that Ave in Australia could appreciate Great Britain’s reasons for having a freetrade policy. She had a vast overseas trade and had been the workshop of the world. Her invisible exports, in the form of interest on overseas investments, which were stated to be approximately £4,000,000,000, placed her in such a position that she could afford the luxury of freetrade. I did not tell, him what England ought to do, but, as an Australian, I said I Avas convinced that there was good reason why we should adhere to our policy of protection for this country. Thereupon he delivered to me a lecture on freetrade, telling me of the great advantage it would be to every country under the sun, which. of course, was a paradoxical statement to make. He also asked me if I knew anything about real wealth, and did I know that money was merely a medium of exchange, and so on. At that distance of time Mr. Owen Greening’s arguments failed to convert me, and after twenty years of much writing and reading of political and economic subjects, I am firmly convinced that protection is the policy for Australia. That it is also the policy for
England in her altered economic circumstances, is evident from the fact that the Mother Country has lately imposed customs duties on certain commodities. Actually, Britain was forced to adopt protection because she was no longer the workshop of the world, and was finding it increasingly difficult to market her products in other countries. I believe that, in trade relationships, even with sister dominions, we cannot afford to abandon the policy of protection. Because stabilization in industry is essential we imposed a duty on the importation of New Zealand butter.
– The duty is 6d. per lb.
– The protection against New Zealand butter is substantial, and, as we all know, we are dumping our surplus production on the British market. I well remember the arguments employed during one or two election campaigns in which I took part in northern Queensland, as far back as 1922, when the embargo on the importation of foreign sugar was a very live issue. At about that time a certain quantity of black-grown maize had been imported from South Africa, and when I was asked for my views on that matter, I said, quite logically, that as I was opposed to the importation of blackgrown sugar from any part of the British Empire, I also objected to the importation of maize grown by black labour in South Africa or anywhere else. In all our economic and trade relationships with any of the sister dominions we should adhere- to the same principle.
Reference has been made to inquiries made by the Tariff Board, and the attitude of the Government and Parliament towards that body. Let me recall what happened in 1922. In that year the Tariff Board was instructed to inquire into and report upon the sugar industry in Queensland. In its recommendations to the “ Bruce-Hughes “ Government - I thus describe the administration led by Mr. Hughes at that time because of the strength of the forces behind Mr. Bruce, who has dominated all cabinets of which he has been a member - it suggested a certain course for the Government to follow.
– No one has been a better friend to the sugar industry than Mr. Bruce.
– I propose, before I resume my seat, to show what sort of a friend he was to the Australian sugar industry. The Tariff Board, in 1922, recommended the abolition of the agreement which had been entered into in 1915 between the Federal Labour Government led by Mr. Fisher, and the Labour Government of Queensland, and the lifting of the embargo against the introduction of black-grown sugar. This meant that the industry would have to depend entirely on a protective duty, .and a duty of £9 6s. 8d. was recommended. I may add that the conservative elements in the community at one time considered that a duty of £6 per ton was sufficient. It was therefore apparent that, if the agreement were abolished and the embargo lifted, the sugar industry of this country would bf at the mercy of a totally inadequate protective duty of £9 6s. 8d., because, owing te -frequent and violent fluctuations in world prices, sugar grown in blacklabour countries often floods the market. On that occasion the “ Bruce-Hughes “ Government adopted an attitude similar to that taken by this Government to-day in respect of Tariff Board reports. It urged that as the board was an independent body, free of political control, and had made its recommendation -with regard to the sugar industry after an examination of the position, the agreement and the embargo, which were wartime measures, should be abolished and the industry required to depend upon tariff protection. The Government accepted the recommendation of the board, but in order possibly to reassure some of its Queensland supporters it raised the proposed duty from £9 6s. 8d. per ton to £11 6s. 8d. For a very good reason that proposal was defeated in the House of Representatives The Townsville Bulletin in a leading article showed that a protection of £13 6s. Sd. a ton was totally inadequate; that because of frequent fluctuations in the world prices a duty of £20 per ton would not be sufficient to save the Australian industry from extinction. The embargo, of course, was £1,000 a ton duty and more. Feeling in Queensland on this subject was so _strong that we very nearly defeated the Government Senate candidates in Queensland.
– What we did then was nothing to what we will do next time.
– Despite my personal friendship with several Queensland representatives in this chamber, I am sure that there will be a feeling of relief among all those connected with the sugar industry when we have another three Labour senators from Queensland on this side. But let me return to the point from which I digressed a moment or two ago. In addition to increasing the duty, the Bruce-Page Government contemptuously threw aside the Tariff Board’s report and extended the period of the embargo. This Government has lately acted similarly with regard to an award of the Public Service Arbitrator, aud as I should be out of order if I attempted, in this debate, to discuss that matter, I hope soon to have an opportunity to say something about the ethics of a government’s attitude to awards of tribunals properly constituted under the laws of this country.
I am not entirely satisfied with the decisions of the Ottawa Conference. On the information available we cannot expect ‘to get much advantage from the preferences agreed upon. If the right honorable the Leader of the Opposition in another place (Mr. Scullin), Mr. Forde, the former Minister for Trade and Customs, or Senator Barnes, the Leader of the Opposition in this chamber, had attended the conference on behalf of Australia, we could have expected a good fight to be put up for Australian industries. The conservative newspaper in Brisbane has admitted that, as regards tobacco, cotton and sugar, Australia can hope for nothing from Ottawa, and from what I have read of the decisions reached, I am of the same opinion. I say so with much regret.
.- The remarks of Senator MacDonald, who has just resumed his seat, interested me, as did those of Senator Brown last week. It would appear that honorable senators opposite consider that Australia wa3 represented at the conference held at Ottawa solely for the purpose of extracting from Great Britain and our sister dominions every possible advantage for our industries without offering anything in return. During the course of Senator Brown’s speech last week, Senator Collings interjected that, when it was a question whether Australia or the Empire should come first, the Empire must at all times give way. I fail to see how it is possible to adopt a doctrine under which the whole must occupy a position subsidiary to that of a part. How can we argue that what is good for the Empire a3 a whole may not be good for the individual parts of it? The prosperity of the Empire must be reflected in that of every portion of it, including Australia.
I was rather forcibly struck by what appeared to be a complaint by Senator MacDonald that a higher price than that which rules at the present time is not being paid for our products in Great Britain.
– I did not say anything about a higher price.
– The attitude adopted by the honorable senator was that we should receive a higher price.
– I argued that we were not being given the consideration that we should receive, compared with countries that are outside the* British Empire; for example, the Argentine.
– The honorable senator referred particularly to meat, and said that a higher price was paid for what was purchased from the Argentine than for that purchased from Australia.
– I spoke about quotas.
– I do not think that there has ever been any general complaint regarding the market for our primary products in Great Britain, with, perhaps, a few exceptions. Apart from dried and tinned fruits, there has never been in Australia a surplus of primary products for which a market could not be found. We have not had the huge carry-over .of wheat that the United States of America have had, nor a big cotton surplus like that which was experienced in Egypt a few years ago. Up to the present, our only difficulty, and I agree that it has been a very real difficulty, has been our inability to secure for our ‘ products sufficient to enable them to market at a profit. The London parity for sugar to-day is so low that we are unable to sell that commodity at a profit in the world’s markets. That applies, also, to butter, and to the bulk of our other primary products, especially wool, to which Senator Hardy referred in the course of his very able speech. Apparently Senator MacDonald is nursing a grievance against the Motherland because of her attitude towards the primary products of the dominions. I should like to know what that particular grievance is. I take it that he regrets our inability to obtain from the people of Great Britain higher prices for the goods that we produce.
– We do not get our rightful share of the trade.
– I have already shown that we are able to sell in the markets of the world practically the whole of the goods that we produce. If we were able to produce more, there is little doubt that we would be able to dispose of it.
The point stressed by Senator Hardy this afternoon - and it is the most important that Australia, has’ to face - is that we are not receiving a payable price overseas for our products. But we must consider “ihe attitude of a country such as Great Britain when we are represented at a conference like that which was held at Ottawa. Let us compare the average worker in England and Australia. Honorable senators opposite are never tired of emphasizing the benefits that have accrued to the Australian worker as the result of the activities of the Australian Labour Party. They always point, with a good deal of pride, to the high standard of living and the attractive wages in Australia, compared with those in Great Britain. Yet, apparently, they are grieved because the workers in Great Britain, who receive only £2 10s. a week, do not pay a higher price for Australian meat! That is the attitude which underlies the attack, that, throughout this debate, has been ma”de by honorable senators opposite on the results of the Ottawa Conference. I say quite frankly that nobody would be better pleased than I if our wheat, wool, beef, butter, and other primary products brought a consider a bUy higher price on the London or any other market. But surely it is not argued that we should ask the Government of Great Britain to , place high tariffs on all goods that are sent there from other countries, and thus deliberately increase the cost of the food to its workers, so that we might benefit?
There are many directions in which Great Britain might assist in developing the trade of her dominions, and, generally speaking, she has already shown an inclination to do so. While I was overseas a year or two ago, the British Parliament made available to the Empire Marketing Board a grant of something like £1,000,000 for the purpose of advertising Empire goods. Competitions were held, and there were displays of purely Empire products in the leading stores, particularly in big centres like London, Manchester and Birmingham. Travelling throughout Great Britain, one saw on almost every hoarding the injunction, “ Buy Empire Products “. The goods of Australia, New Zealand, Canada, and other parts of the Empire were advertised extensively, at the expense of the Imperial Government. Consequently, I do not think it can fairly be said that our kinsmen overseas are apathetic in regard to Australian products.
An analysis shows that the bulk of our goods are consumed in Great Britain. A very large proportion of our wool goes there. Before the Ottawa Conference was thought of there was a move on the part of the Conservative party and the British Labour Party to extend to the dominions what is known as the “ quota “ system, so as to ensure the consumption in Great Britain of a larger quota of dominion wheat. Considering the standard of living in, and the wages that are paid to the workers of, Great Britain, compared with those that are received by Australian workers, the effect upon them of increasing substantially the cost of their food would be very serious.
– The cost of living in Great Britain has to be taken into consideration.
– If one takes the main items of food, such as meat, bread and butter, one finds that there is very little difference between Australia and Great Britain. There is very little difference between the retail price of Australian butter in Loudon and that charged in Australia.
– Will the honorable senator give the figures?
– I am referring to the price per lb. to the retailer and not to the quotations at per cwt. as published in the press. I do not think the difference would exceed 2d. or 3d. per lb. Meat is considerably dearer in Great Britain than in Australia.
In these circumstances, I do not see that honorable senators opposite have any cause to complain of the attitude adopted by Great Britain towards Australia at the Ottawa Conference. I recognize that it is easy to hurl bricks at a political opponent; but those of us who gave consideration to the gigantic task of the Australian delegates arc surprised that they have been able to accomplish so much. If it becomes a question of a grievance between Great Britain and Australia, there is a good deal to be Sf with respect to the attitude of Australian governments towards British presets. Although complaints have been made by Senator MacDonald and others that, compared with other dominions, Australia is not receiving a fair quota of British trade, we have to consider the way in which we have treated imports from Great Britain in recent years.
– What further considerations does the honorable senator suggest ?
– I wish to be fair. I do not wish Australia to be a mendicant country asking favours on bended knees. I wish Australia to take her stand as a nation and to play her part in world affairs. There is always an immediate howl on the part of some persons in Australia when efforts are made to encourage the importation of manufactured or semi-manufactured British goods. If a small manufacturing concern is established at, say, Camperdown, those controlling it immediately ask the Government to impose a duty of 100 per cent, to 200 per cent, on the commodities produced whether production is or is not, as Senator Brennan said, economically sound. When the late Government was in power any person could go to the then Minister for Trade and Customs (Mr. Forde) and secure the imposition of a high duty irrespective of whether, as a result of it, the consuming public would be obliged to pay an unnecessarily high price for the goods being manufactured.
– That is an inaccurate statement.
– It is absolutely correct. . Such action was taken without obtaining proper advice. Senator MacDonald contends that, during the last two or three years, we have received an unfair deal from Great Britain. But what has been our attitude towards Britain? Honorable senators who have been members of this chamber for the last few years know that the Labour party has strenuously opposed the admission of our own kith and kin into this empty continent, although its further development would increase our national income by many millions.
– Who has taken up that attitude?
– The Labour party. Moreover, the importation of certain British goods was prohibited and customs duties piled up to such an extent by the late Government that it was impossible for many British manufacturers t,o profitably market their products in Australia. Although the importation of certain British goods has been prohibited, complaints have been made with respect to the decisions reached at the Ottawa Conference.
It has been said that our delegates should have extracted greater benefits from the Motherland.
– What about, cotton?
– I take up the same stand on cotton, tobacco and sugar as Senator Brennan, when he says that our primary industries must be safeguarded at all costs. The only regret I have is that when Senator Brennan was championing the primary industries he was not a little kinder to one of Australia’s most important primary industries - the sugar industry. If the honorable senator is really desirous of assisting primary production he should do all in his power to assist that industry.
– I assist it to the extent of 3d. per lb.
– I hope that the honorable senator who has declared himself a champion of primary production will, in future, assist Australia’s great primary industry.
I may remind Senator Hoare that the Government has provided for the payment of a bounty on cotton, the production of which is confined largely .to Queeusland. I do not see how Senator Hoare can have any complaint to make against the Government in this respect, seeing that it has been notified by the Queensland Cotton Board that it is satisfied with the agreement entered into between the Commonwealth Government and the Queensland Cotton Growers Association. The manager of the Cotton Board has expressed his appreciation of the work done by the present Government.
I am quite prepared to justify my fiscal attitude with respect to secondary industries. The primary industries have already shown that they are the backbone of the nation, particularly in periods of depression such as we have experienced during the last three, years. Senator Brennan quoted some amazing figures showing that 97 per cent, of our exports consist of primary products for which the producers receive only world’s parity, and that our secondary industries ‘have exported only 3 per cent, of our total exports. This country exists on its exports-, which bring money into the country to assist its further development. Notwithstanding this, our primary producers, on whom the whole nation depends, have been severely hit by tariff burdens imposed by the late Government. I am willing to support any duties, however high, to safeguard primary industries that can be economically conducted in this country, even to the extent of embargoes; but it is not my intention to support every little tin-pot industry established in Australia, and which is quite incapable of producing economically quite apart from manufacturing for export.
– Can the honorable senator mention such an industry?
– There have been some remarkable examples of the propaganda of interested parties during the last few weeks. Honorable senators have doubtless noticed the statement made by the manager of a sheet glass manufacturing concern in Sydney, that he has found it necessary to dispense with scores of hands and close down a portion of his factory.
– That has been denied.
– I believe I am correct in saying that the reduced duty on sheet glass will not become operative until the tariff schedule has been passed by both Houses of Parliament.
– In the case of sheet glass the reduced duty is already operative.
– I discussed the subject with the Assistant Minister, who informed me that in most cases the reduced duties do not become operative until the schedule has been passed by both branches of the legislature ; but I am now informed that in the case of sheet glass, the lower duty is already operative. I believe that the Customs Department had previously been notified that this glass manufacturing concern is closing down portion of its works in order to clean out a tank used in the process of manufacturing sheet glass, but the workmen, I understand, have been informed that the dismissal of men is due to the reduced duty.
– The manager of the company has denied in the press that he made any such statement.
– I prefer to accept the statement of the officers of the Customs Department. It is lamentable that manufacturers should pursue these tactics. Should they continue to do so, the outlook for Australia will be poor indeed. The effect of high duties has been felt as much, if not more, in Queensland than in any other State, since primary producers form the bulk of its population. Queensland has not many big secondary industries, such as the Broken Hill Proprietary Company’s steel works, or Bryant and May’s match factory, and since most of its revenue is derived from those who produce wheat, wool, butter,- and other primary products, the high duties on agricultural implements and on machinery used in mining, have affected Queeusland in much the same manner that they have hit Western Australia. It behoves the representatives of Queensland to do their best to lighten the burden which now falls on the shoulders of the primary producers of that State. During recent years, not only have low prices ruled for our primary products : some of the best dairying districts in north-west Queensland have suffered from severe droughts.Cattle have died in thousands, the production of cotton has fallen, and, generally, the primary producers have faced great odds. It is said that the wool-growers of Australia will benefit from the recent rise in the price of wool; but an increase of even 20 per cent, on 7d. per lb. will not mean much to them.I ask leave to continue my remarks at a later date.
Leave granted; debate adjourned.
[6.5].- In moving -
That the Senate do now adjourn,
I point out that since nearly all the legislation to be introduced this session will deal with financial matters, and must therefore originate in another place, we must perforce wait for it to reach this chamber. In the circumstances, I suggestthat it would be well if honorable senators were, to avail themselves of the opportunity to discuss, in the meantime, matters arising from the Ottawa and Lausanne Conferences, because when those bills come before the Senate there may not be an opportunity for a full discussion of these matters.
Question resolved in the affirmative.
Senate adjourned at 0.11 p.m.
Cite as: Australia, Senate, Debates, 14 September 1932, viewed 22 October 2017, <http://historichansard.net/senate/1932/19320914_senate_13_135/>.