Senate
9 June 1933

13th Parliament · 1st Session

  1. Senate
  2. 13th Parliament
  3. 1933

The President (Senator the Hon P. J. Lynch) took the chair at 11 a.m.. and read prayers.

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QUESTION

SIR HENRY GULLET T AND SENATOR CARROLL

Senator DUNN:
NEW SOUTH WALES

– The following is published in to-day’s Canberra Times: -

Sir Henry Gullett yesterday challenged Senator Carroll, Leader of the Country party in the Senate, to repeat on oath outside Parliament, his statement confirming Senator Hardy’s allegations concerning his (Sir Henry Gullett’s) remarks at the now famous deputation. . . “I challenge Senator Carroll to emerge from the privileged shelter of Parliament and swear on oath that the deputation took place after my return from Ottawa, and that I used the words quoted by Senator Hardy in the Senate “, said Sir Henry Gullett.

Will the Leader of the Government confer with the President of the Senate, with a view to requesting Sir Henry Gullett to appear at the Bar of the Seriate?

Senator Sir GEORGE PEARCE:

– No.

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QUESTION

RUMOURED CABINET VACANCY

Senator DUNN:

– Is it. the intention of the Government to give effect to its declared policy of preference to returned soldiers, when filling the impending vacancy in the Cabinet due to the proposed retirement of Senator Greene?

Question not answered.

Senator DUNN:

– Am I not entitled to an answer?

The PRESIDENT:

– I have no power to compel an answer.

Senator DUNN:

– Is it the policy of the Government to grant preference to returned soldiers, and has it declared in favour of such preference inside and outside of this chamber?

Senator Sir GEORGE PEARCE.The policy of the Government is preference to returned soldiers, other things being equal.

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PERSONAL EXPLANATION

Senator MacDONALD:
Queensland

– by leave - Yesterday, on the motion for the adjournment of the Senate to discuss the abolition of the federal land tax, I mentioned that I understood Sena tor Kingsmill to have said that that tax did not take into account the capacity of land-owners to pay it. I was challenged by Senator Brennan, who, in his usual hair-splitting way, apparently wanted to show that I was wrong.

Senator Brennan:

-i did not. I simply called attention to the fact that in my opinion it was Senator Guthrie who had made the statement, and that he was in the chamber.

Senator MacDONALD:

– The honorable senator was quite wrong, and would not accept my statement that the remark had been made by Senator Kingsmill.I consulted other honorable senators, who supported me in that belief. Were I to leave’ the position where it stood last night, it would appear that I was inaccurate, and that I had done Senator Kingsmill an injustice, whereas, I always endeavour to avoid misquoting or twisting the remarks of honorable senators. I object strongly to the attitude adopted by Senator Brennan, who at times displays a propensity to act the schoolmaster in this chamber. If he is not yet satisfied that I am right, I advise him to peruse Hansard. Because of his legal attainments, he may desire to be elevated to the Bench; but I shall not permit him to anticipate promotion by treating this chamber as a judge might treat persons appearing in his court.

Senator Sir George Pearce:

– I rise to a point of order. On a personal explanation, by leave, is an honorable senator entitled to criticize another honorable senator’s legal attainments? Must he not confine his explanation to the matter in regard to which he has been misunderstood or misrepresented?

The PRESIDENT:

– The purpose of a personal explanation is to correct misrepresentation, or to remove misunderstanding. In the making of it. an honorable senator may not impute improper motives to other honorable senators, nor aggravate that of which he complains.

Senator MacDONALD:

– I have no wish to attack the legal attainments of Senator Brennan. I merely point out that he has developed the habit of acting the part of a schoolmaster in this chamber. In regard to accuracy, and fair dealing towards other honorable senators, my conduct compares favorably with his. I. hope that, in future, he will exercise greater care in his criticism of, and his attacks on, the accuracy of his fellow senators.

Senator BRENNAN:
Victoria

. - by leave - I am sorry if anything that I said yesterday, which was not in the least intended to be critical, has been so regarded by Senator MacDonald. In the course of his remarks, the honorable senator referred to Senator Kingsmill as having made a certain statement - what it was is of no present importance - and expressed regret that Senator Kingsmill was not present. I interjected, “ That does not matter ; it was, I think, Senator Guthrie who made the statement, and he is present.” The honorable senator denied that. I had not the slightest intention of reflecting on the honorable senator’s accuracy, of provoking him in the slightest degree, of criticizing him, or of acting as a schoolmaster towards him. [ merely called attention to what I believed to be a fact - that it was Senator Guthrie who had made the statement, and that that honorable senator was in the chamber at the time. I admit that I may have been mistaken.

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AUSTRALIAN RAILWAY SYSTEMS

Formal Motion for Adjournment

The PRESIDENT (Senator the Hon. P. J. Lynch). - I have received from Senator Rae an intimation that he desires to move the adjournment of the Senate for the purpose of discussing a definite matter of urgent public importance, namely, “ The proposal to transfer the railway systems of the Commonwealth and the several States to a private corporation to the detriment of the general public.”

Four honorable senators having risen in support of the motion,

Senator RAE:
New South Wales

.- I move-

That the Senate, at its rising, adjourn till to-morrow, at 10 a.m.

This is the first occasion upon which I have submitted such a motion. My object is to have discussed a matter that I believe will be admitted to be of very great importance to the whole of the people of Australia. I wish to comment particularly upon the fact that, at a conference now being held in Melbourne, a member of the Commonwealth Government submitted a proposal of the most far-reaching character in regard to the railway systems of Australia - a proposal that, I presume, has the approval of the Cabinet as a whole - without having first placed it before the elected representatives of the people in this Parliament. That proposal aims at the transfer of the railway systems of the States and the Commonwealth from public ownership to partly public and partly private ownership, the governments of Australia to maintain nominal control by holding stock to the extent of 51 per cent, of the estimated value, the balance of the stock to be taken up by the general public at an interest rate that would make the investment a gilt-edged security. Although, according to the press, the proposal has been rejected by the States, it is not likely that it will be abandoned at the first rebuff. Therefore, it is only right and proper that the members of this chamber, who represent the whole of the States of Australia, should debate the matter.

What is the nature of this proposal? It aims at the writing down of the capital value of the railway systems of Australia, which is estimated in round figures at £352,000,000, by £112,000,000, the balance of £240,000,000 being assumed to be the real capital value. According to the advocates of the proposal, those who became preferential shareholders would be guaranteed an interest return of 4 per cent.

There is no doubt that, within recent years, the Australian railway deficits havebeen considerable. They have been caused, not only by the prevailing depression, but also by the competition of motor transport, and other factors. It is assumed that, by handing over the railways to the proposed corporation, the public of Australia will be relieved of an enormous burden which is being constantly added to, because of the growth of railway deficits. It has been alleged that the failure of our railway system has been due to certain causes, but when we examine the facts we find that the excessive’ interest charges have largely brought about the huge deficits with which the various States are faced. Since 1929, the working expenses of the railways have been reduced from £14,978,000, to £12,582,000, and the interest and exchange bill has increased from £6,158,000 to £7,832,000. Although the working expenses have been reduced on every railway system in the Commonwealth, the interest bill has increased to such an extent that for every £1 of revenue collected, 10s. 2¾d. is absorbed in interest and exchange payments. Manifestly it is the huge interest bill which is strangling our railway systems. During the last ten years, according to the Auditor-General, interest and exchange has increased by 74.55 per cent. That huge increase is enough to cripple any undertaking. We are asked to believe that something inherently vicious in State ownership is causing the heavy loss on the railways, and justifies the proposal to write down the capital of the railways by £112,000,000. If that proposal were agreed to, that amount, which would have no assets to represent it, would be wholly lost to the people of Australia, who would be compelled to pay interest on it for all time. It is proposed to write down the capital of the railways by £112,000,000, that amount to be funded, and to become part of the national debt repayable in instalments over a term of 50 years. If that were done the railway bonds would become gilt-edged security, and the banks and other big financial institutions would, gladly, find the proposed private capital amounting to over £100,000,000.

SenatorCollings. - Another bonus to the exploiters.

Senator RAE:

– The project would work out in that way. What advantage has this country received from the ownership of and its controlling interest in the shares of the Commonwealth Oil Refineries Limited? We are still being exploited, as we have been for many years, in regard to our fuel supplies, and the company does not seem to be capable of doing anything to break down the petrol monopoly. Are we to assume that, by merely writing down the capital value of our railways and handing them over to some one else, they will become a valuable asset? Is it not a fact that, as shown by figures certified to by the AuditorGeneral, it is the huge interest andexchange burden which is really crippling our railway administration? Of course, the overhead expenses might bereduced as a result of the proposed change, but there is no guarantee of that. In support of this proposal it is urged that the various railway systems of Australia involve a huge overhead expense, but no facts havebeen adduced to show that expenses would be reduced to any considerable extent by the change. The railways of Great Britain and those of the United States of America are privately owned. At one time there was keen competition between the rival companies in both countries. In’ some instances two or three lines traversed virtually the same territory, and that, undoubtedly, resulted in heavy losses; but those losses have, to a large extent, been eliminated by a process of amalgamation, and aconsequent reduction of overhead expenses. But in’ Australia we are not faced with a similar problem, because our systems are not competitive. I admit that some railway lines have been constructed, mainly because of political influence, through country’ which does not provide a traffic sufficient to cover working expenses. Last year the interest and exchange bill was greater by £3,345,000 than it was ten years ago. From 1923 to 1933 that liability has been very nearly doubled. It is clear that the crippling of our railway system has been due to that tremendous burden. It is estimated that the average interest rate on the whole railway debt, ofboth the Commonwealth and the States, is £5 12s. 2d. per cent. In view of that enormous rate of interest, how can we expect our railways to show a’ profit? In what way would the handing over of our railway system to private enterprise relieve the people of that burden? It would be a surprising thing if the proposed railway corporation were able to secure capital at an interest ratelower than that obtainable by the Commonwealth Government. Even if the corporation could make a payable asset of the railways as a result of the writing down of their value ‘ to £240,000,000, in what way would that relieve the people generally ? In any case they would be responsible for the interest and sinking fund payments on the amount written down. Facts cannot he altered by the mere juggling of figures. Until the enormous interest bill on our railways has been drastically reduced, they cannot show a profit. Proposals were made and scouted in this chamber; and in another ;,1 ar,4 to reduce compulsorily our interest rates generally. An attempt was made to reduce the interest rate on internal loans 1 per cent, lower than the actual reduction. The party to which I belong considered that that was a perfectly fair proposition, and that it could have been given effect as easily as the reduction which actually took place. The British bondholder cannot now obtain on his investments half the interest rate that we arc paying on our railway system. Clearly, therefore, what is wanted is combined action on the part of the Commonwealth and the States, not to hand over their railways to some other authority, but to secure a reduction of the interest rate. There can be no doubt whatever that, were such a reduction effected our railways would, even during the present depression, still pay expenses, and despite the advance in other methods of transport, it has not been shown that the railways can bc scrapped altogether. Therefore, while they remain necessary for the transport of passengers and heavy goods, no effort should be spared to place them on a payable basis. For the ten years ending at the beginning of this current year, the surplus of income over expenditure, excluding interest and exchange, amounted to £4,296,400. That is to say. the railways during every year of the depression, excepting 1930, paid more than working expenses, and the excessive rate of interest alone has prevented them from showing a surplus. If the interest rate were reasonable there would be nothing to prevent the railways from paying in the future as they did a few years ago. The principle of State ownership of the railways is dear to hundreds of thousands of the electors of Australia who are not by any means socialists. It is advisable that any enterprise or any social service which, in its nature, must be a monopoly, should be owned and controlled by the people as a whole through their representative institutions. If we allowed our railways to be privately controlled, it would mean that the corporation handling this enormous asset would have a political pull which no government could resist. The history of the private ownership of railways in America and other countries shows that governments are eventually largely, if not absolutely, at the mercy of these huge corporations which control vast capital, and that the influence of such corporations is frequently detrimental to the nation. The socialization of railways is not in question in this instance, for, after all, the government ownership of monopolies has nothing in common with real socialism. Even such conservative and reactionary governments as those in office during the czarist regime in Russia placed certain valuable industrial enterprises under State monopolies. In many other countries, also, where it has been found advisable to check the power of corporate capital, state monopolies have been formed, irrespective of the political leanings of the governments concerned. I, therefore, affirm that it has been proved by experience in almost every civilized country in the world that the State ownership and control of services which, in their nature, are of a monopolistic character is desirable in the interests of the people generally. The main facts in regard to the Australian railways are incontestable. I believe that in this debate it will be shown beyond dispute that the railway systems of Australia are, in their nature, an asset of great value which should be retained under the full and absolute control of the people. There is room for argument, of course, as to whether the control of the railways would best be concentrated in one authority, especially now that the responsibility for the debt incurred in the construction of r,hem has been assumed by the Commonwealth Government through the Loan Council. The arguments that were adduced during the federation campaign 30 odd years ago in favour of the placing of the railways under federal control seemed powerful at that time, but have since been considerably weakened because so much railway construction has now been done. Many of the advantages which the federal control of both construction and management might have conferred during the last 30 years have now been lost beyond recovery. As to the unification of railway gauges, it will be agreed, I think, that our gauges should be unified; but common ownership is not necessary to effect this reform. What is required is the financial ability to handle the proposal. That might, or might not, be obtained by federal control.I have, therefore, endeavoured to keep the question whether our railways would be better under Federal control or State ownership, distinct from the main question whether they should or should not be retained under government ownership and control.

Senator Sir GEORGE PEARCE:
Minister for Defence · Western Australia · UAP

[11.36] . - Before proceeding to discuss the proposition which the Minister for the Interior (Mr. Perkins) placed before the meeting of transport Ministers in Melbourne, I shall refer to several of the statements of Senator Rae. The honorable senator endeavoured to show that the deficits on the State railway systems are mainly due to the cost of exchange and what he called exorbitant rates of interest. I direct the attention of the honorable senator to the fact that huge deficits had been incurred in connexion with the State railway systems before exchange became of importance in our financial affairs. As to the huge interest charges - again using an expression of the honorable senator - I know that much of the money expended on our railways was borrowed at less than 4 per cent. In the early days of railway construction in Western Australia, when the Kalgoorlie line and other main lines of that State were being built, money for the purpose was borrowed at 3 and 3½ per cent.

Senator Rae:

– What about the renewal of the loans as they matured?

Senator Sir GEORGE PEARCE.Many of the loans have not yet been renewed. It is true that the average rate of interest on money borrowed for railway purposes is 5.60 per cent., taking into account the whole indebtedness. Senator Rae argued that if the railway debt were charged a reasonable rate of interest the railways would pay. I take it that a reasonable rate of interest is that now payable on the Australian consolidated debt, namely, 4 per cent. The total interest payable on our railway debt is £16,000,000 per annum. A reduction of 1 per cent., which would bring the rate down to 4 per cent, approximately, would represent a reduction in interest of about £3,000,000 per annum. The loss on the operation of the railways of Australia last year, excluding the railwaysoperated by the CommonwealthGovernment, was £8,798,000. If a reduction of that amount by £3,000,000 were effected, the loss on the operation of the railways would still be more than £5,750,000.I point out that the honorablesenator was careful to exclude the Commonwealth railways from his argument,although the losses incurred by the Commonwealth Government have been heavier than those incurred by the State Governments. The’ difference between working expenses and earnings is larger on the Commonwealth railways than on the State railways.

An interesting circumstancethat should be borne in mind in the discussion of this subject is that the privately owned railway running from Geraldton, into the north of Western Australia, to Midland Junction, Perth - the only privatelyowned railway of any consequence in Australia - has been able to pay its way even in the last few years. That railway runs through exactly the same kind of country as that through which the State railways run, and it depends for its passenger traffic and freight on rural industries. Yet, even last year, the management was able to pay interest on its debentures and capital, and also provide some money for sinking fund and depreciation. I remind Senator Rae that the Midland Railway Company has to pay interest on its capital just as do the State railway departments. This privatelyowned railway runs in the network of government-owned railways, and yet it wasable last year, after making the provisions that I have mentioned, to show a slight credit balance - and it has done so for several years.

Senator Brown:

– What is the length of that railway?

Senator Sir GEORGE PEARCE.Speaking from memory, it is about. 300 miles. Both passenger and goods traffic are handled. An interesting fact about that railway, which should give us cause to think seriously, is that the gentleman who is to-day the general manager of it, was at one time a leading official of the Commonwealth Railways Department. During the time that he was connected with the Commonwealth railway system, its operations were carried on at a loss, not through any fault of his, but through other causes. I know this gentleman very well, and, on one occasion, just after the company’s balance-sheet had been published, he and I were fellow passengers travelling from Perth to the east on the transcontinental train, and we got into conversation. I said to him, “ Mr. Poynton, how. is it that you, formerly a Commonwealth railway official, and now the general manager of a privately-owned railway, can make the privately-owned railway pay, but could not make the Governmentowned railway pay? What conditions apply to privately-owned railways that do not apply to State-owned railways,?” He replied, “If I were managing a State-owned railway to-day, I would be unable to make it pay. I am able to mak& the privately-owned railway pay because I am free from political control, and can do- many things which I could not do if I were managing a Stateowned railway “. I said, But you. have to pay the same rates of wages, and are subject, to- the same arbitration awards as the State railway systems?” He- said, “Yes; but I have infinitely greater liberty in connexion with the general management of the privately-owned railway than, I would have with the management of a State-owned railway. I am positive that if I were managing this line as a State-owned railway, I should not he able to make it pay. I am? able to make the privatelyowned railway pay because I am able to do; many things which, for political reasons, I would not be able to do if I were, in control of a State-owned railway.” I suggest to honorable senators that there is food for thought in these statements.

I shall now refer to the remarks made by the Minister for the Interior at the Transport Conference in Melbourne. The Minister pointed out that the aggregate loss on the railways’ of Australia up to 193.1-32, was £343,883 more than the whole of the income tax collected by the States in which they operate. This is a staggering fact. Whatever may be the merits or faults of the- proposal made by Mr. Perkins, n& one can be satisfied with the present state of affairs. Mr. Perkins went on to say that the losses on the Australian railways had amounted, in the last eighteen, years’, to £78,000.000. A further staggering fact is that that £78,000,000 had to be provided by the taxpayers of Australia. After directing attention to these facts, the Minister for the Interior informed the conference that- .

The Commonwealth believed that the solution, lay in the amalgamation of- Australianrailways under one control, in. the form of a national railway corporation, free of all political control, but responsible to a body comprising representatives of the States, and of the Commonwealth. An- appropriate body would be the Federal Transport Council reconstituted by agreement. If that were decided upon, the railways should be handed over to the corporation on their exploitation- value (£240,000,000, at 30th June, 1032), and reorganized in detail on an economic basis. If such a corporation were established, the stock would be the property of the State and Commonwealth Governments. Provided that the controlling interest was retained by the Governments, the balance of the stock, which would amount to more than £100,000,000, would be available for issue to the public, and it should offer a means of liquidating in part the public debt. To. liquidate the £112,000,000 “ dead “ capital that would have to be written off the following amounts should be allocated each year: - Super tax on passenger transport, £1,550,000; registration and licence revenue from- road transport, £1,131,000; customs duty on motor spirit, £900,000; customs duty on motor vehicles, £375,000; making a total of £3,950,000. An impartial investigation is suggested with a view to deciding whether the amalgamation of the various railway systems under” one control would be in the best interests of the people, and what form that control should’ take.

Honorable senators will note that the Minister put that forward as a suggestion. He then went on to say that -

If not, what system of control should be adopted, and what amount should be written off the capital of the railways, and what means should be employed for the liquidation of the capital written off ; also with the object of improving railway finances of indicating on broad, general lines, the economic sphere of railway operations.

At a later stage, he said -

The Commonwealth does not desire to usurp any of the functions ot responsibilities of the States in the realm of transport. It does not wish to control transport in any way, but it does feel that much can be done by concerted action to place- the transport services of Australia on a sound financial basis. The Commonwealth is anxious to do everything possible to assist the State Governments, and to help to give the taxpayers the best passible transport service.

When dealing with the financial position in detail, he said -

The actual railways deficit for all systems in 1931-32 was £8,417,099, compared with £11,508,446 in 1930-31. If proper allowance were made for depreciation, however, the real government loss on railways in the more recent period was £12,658,765.

The figures quoted by Senator Rae from the Commonwealth Year-Book make no provision for depreciation. The Minister continued -

The interim report of the Australian Railways and Transport Authorities Conference (1932) stated that -the depression caused a loss of gross revenue of £9,631,000 in 1930-31. and £11,209,000 in1931-32.

The Minister also quoted the following table showing how alarmingly railway deficits had affected State taxation : -

In 1931-32 railway deficits swallowed 28.8 per cent, of total State taxation revenue, and 11.1 per cent, of all Australian taxation.

If honorable senators consider these figures, they will see that our railways provide the greatest problem of Australian finance, and whatever may be said as to the merits of the scheme put forward by the Minister for the Interior, I submit that these staggering figures show that we cannot continue to drift as at present.

SenatorCrawford. - Railway administration seems to be a world problem.

Senator Sir GEORGE PEARCE.It is; but in most countries the railways are privately owned, and losses incurred fall upon the shareholders of the companies controlling them, and not upon the taxpayers as is the case in Australia where the railways are owned by the State. In our case, the loss becomes more serious, because it affects public finance and taxation. In Australia the loss on our railways has to be met by taxing the people. The Government is not proposing to hand over our railway systems to private enterprise, but is suggesting that the problem, as revealed by the figures I have quoted, is so serious that some change is needed in thecontrol, so that the loss can be checked, and the taxpayers relieved of the tremendous burden now placed upon their shoulders.

Senator DUNN:
New South Wales

– I support the remarks of my colleague, Senator Rae, with respect to the suggestion to hand over the railways of Australia to a semi-private body made at the recent Transport; Conference in Melbourne. In view of the action taken by Senator Guthrie yesterday with respectto the abolition of the federal landtax, and the suggestion put forward at that conference, it would appear that the watchdogsof vested interests, who are very active at present, are making every effort to improve their positionat the expense ofthe taxpayers in Australia. The responsibility has been placed upon honorable senators on this side of the chamber to bring the facts clearly before the people, and to show them what may result if the requests of the capitalists are acceded to: If I have a guilty mind in these matters I cannot help it;but it does appear to me that there is a “getrichquick Wallingf ord scheme “ in the air, in the interests of certain wealthy people in this country. A good deal of time was occupied yesterday in discussing the alleged claims of the wealthy land-owners of Australia to be relieved of taxation, and now anattempt is being made to hand the railways over to private control, to the detriment of the general community. We have had enough of this “ sobstuff “ on behalf of vested interests, and it is time that a definite stand was taken on behalf of those who are being exploited. The Leader of the Government (Senator Pearce) referred to the fact that a privaterailway between Geraldton and Midland Junction in Western Australia, conducted under similar conditions to government railways in the same State, is meeting its working expenses, providing for depreciation, and showing a profit. The right honorable gentleman did not, however, tell the Senate that the company controlling that railway, with the sanction of the Dominion Office, received huge grants of land free of cost from the Western Australian Government before the construction of that line was undertaken. As a result of the construction of the line, townships and villages sprang up, and the land in the vicinity of. the railway improved in value, which enabled the company to sell at high prices. The development of this territory has been of great benefit to the shareholders in the Midland Railway Company, and whatever prosperity it enjoys to-day is due to the activities of the settlers along that railway system, and not. to the business ability of those control- ling the railway. It will, therefore, be seen that the conditions obtaining with respect to that railway are not the same as those associated with Commonwealth or State railways. Moreover, during drought periods or times of financial depression the settlers in that locality did not appeal to the Midland Railway Company for assistance, but, in common with other . producers throughout Australia, appealed to the Commonwealth or to the State Government for assistance. The directors of the Midland Railway Company havenever been asked to assist the settlers, and had such a request been made to them it would have been ignored. The Leader of the Government quoted the losses which have been incurred on Commonwealth and State railways. The right honorable gentleman knows that the railway connecting the eastern States with Western Australia was constructed not as a commercial proposition, but as part of Lord Kitchener’s scheme for the defence of Australia. That scheme provided for the unification of the railway gauges of this country.

Senator Foll:

– There have been many changes in defence policy since then.

Senator DUNN:

– What is behind this scheme to amalgamate the railway systems of Australia, and to give to private enterprise 49 per cent, of the total shares inthe controlling body? Had that scheme been accepted by the Transport Conference, comrade Sir Keith Murdoch of the Melbourne Herald, representing the mechanised press of Victoria, who recently was knighted in recognition of services rendered, in co-operation with Sir Hugh Denison, the chairman of the Associated Press of Sydney, New South Wales, would have banged the commercial drum in their exultation, knowing that the Baillieu group would buy a majority of the shares offered to the public. The proposal to dispose of the railways of Australia in that way brings to my mind the sale, for £500,000, of the Australian Commonwealth Line of Steamers, which cost the taxpayers of Australia £7,000,000. The sale of that line was detrimental to the interests of the down-and-out farmers of Australia on whose behalf Senators Guthrie, Hardy, Carroll, and that “ rebel “ from Western Australia, Senator

Johnston, pleaded so eloquently yesterday, with tears running down their cheeks. The Government which sold the Commonwealth Shipping Line also practically gave away the Commonwealth Woollen Mills.

The PRESIDENT:

– Does the honorable senator intend to connect his remarks with the subject before the Chair?

Senator DUNN:

– Yes, Mr. President. It is astounding to read that the Minister for the Interior (Mr. Perkins), as the representative of the Commonwealth Government, attended a transport conference in order to arrange for the transfer of the railways of Australia to private enterprise. I am reminded also that this Government recently leased the Cockatoo Island Dockyard, representing £1,000,000 of Commonwealth assets, to private enterprise for about £1,000 a year - a sum which a few years ago would have sufficed only to buy a fish-and-chips shop in Sydney.

If I appear to honorable senators opposite to have a guilty mind - I speak politically - I can only say that the proceedings at the Transport Conference are responsible. Why did not the Government take Parliament into its confidence before sending the Minister for the Interior to Melbourne with his proposal? I know that the Leader of the Senate would reply that it is not usual to make public matters of government policy in that way; but I remind him that the railway systems of Australia are supposed to be removed from political control. They belong to the whole of the people of Australia - the taxpayers. It would be interesting to know what happened in that mysterious chamber - the Cabinet room. Can it be that the Minister for Commerce (Mr. Stewart), who gained a. knowledge of transport matters in his capacity as the chairman of directors of the largest private road transport system in Australia - the Sydney bus system - was responsible for the proposal placed before the Transport. Conference in Melbourne? Or was it the outcome of the general atmosphere created around the Cabinet table by a knowledge of the proposal of the Sydney political “bosses” to sell the Sydney tramways to private enterprise? It’ would be interesting to get to the root of these things. Those of whom the present Government is representative are at all times -willing to dispose of any asset which is controlled by the State. They would sell the post office to-morrow if they could. These interests are out to slash at the conditions of the employees of the Australian railway system, notwithstanding that these men have, on numerous occasions, proved their loyalty to Australia. Among the railway employees of Australia are man;.’ highly-trained men, whose workmanship, ability and courteous demeanour are household words in the community.

The PRESIDENT:

– The honorable senator has exhausted his time.

Senator BROWN:
Queensland

– I wish to say a few words in defence of the railway systems of Australia. Had the proposals which were submitted to the transport conference in Melbourne been accepted, the greatest ramp in the history of Australia would have been perpetrated. An ex-Premier of Queensland, with whom I discussed the private control of railways, told me of a deputation which once waited on him to urge the construction, by the Government, of 40 miles of railway to open up some scrub country. Three weeks earlier one of the most loud-mouthed members of the deputation had, at a public meeting, attacked the Labour Government of Queensland because the government railways of that State did not even meet the interest bill on their capital cost, and had urged that they should be placed under private control. I can imagine how Mr. McCormack replied to that deputation; because the construction of the railway referred to would have resulted in a financial loss to Queensland. Many honorable senators on the other side are like that loud-voiced man ; they decry government ownership, but, when it is a matter of serving their own interests, or the district which they represent, they are foremost in arranging deputations to governments to construct railways and other works. In his reference to the railway from Perth to Geraldton, in Western Australia,’ the Leader of the Government in the Senate (Senator Pearce) was most unfair. Any of us could indicate districts in which a privately -con trolled railway would return tremendous profits. We must, however, consider the subject of railways from the stand-point of Aus- tralia as a whole. In referring to the transport conference, the Leader of the Government in the Senate did not read the following extract from the report of the proceedings there, as published in the Sydney Morning Herald of the 7th of June : -

At this stage the conference decided to sit in camera for the remainder of its sessions, which will probably last until the end of the week. . Ministers representing the various States made brief statements on transport policy generally. .Some of them stated that a wrong impression had been created by statements that rail losses constituted the chief burden on government finance. The enhancement of community values, and the development of the productivity and population of many districts had to be “entered on the credit side of the railways’ accounts.

The people of Australia should bear that statement in mind when financiers seek to obtain control of their railways. Although many mistakes were made in the early days of Australian railways, the chief of which was the construction of lines of different gauges, the railways of Australia have, been of great service to thi3 country. They certainly have been the means of opening up thousands of acres of good country, and of rendering much assistance to our primary producers. Queensland has 6,000 miles of railway : but many of the lines which have been constructed do not pay. Had the construction of railways in that State been entrusted to private enterprise, many hundreds of miles of railway would never have been laid down, and, although the result would probably have been better railway finance, the primary producers would have suffered. The advocates of private enterprise would close those railways. Those who support the Government always regard these matters from the point of view of finance; they would have these utilities merely in order to produce profit. We, on this side of the chamber, regard the subject from what I. may term the physical, rather than the bookkeeping point of view, and we consider our government-controlled railways to be the greatest asset possessed bv Australia, despite the fact that millions of pounds may have been lost it operating them, and they may not have paid interest. As a matter of fact, the Queensland railways have paid their way for many years, although I do not. claim that they have provided the interest paid to those by whom our railways are held in bond.

We know that in all the civilized countries- of the world the railways have now to face serious competition from motor traffic. In- the only public debate in which I have participated, I had to support the case of the railways against motor traffic, and I prepared myself for it by exhaustively investigating the subject, and was surprised to find that every country in the world has its railways problem. Therefore, the mere handing over of the railways to private enterprise would, not end our trouble. I was in Canada for a number of years, and worked on the railways there, and I was interested when I found that the railway companies in the sister dominion were in difficulties, and were applying to the government for relief. It is notable that, whenever private enterprise is in difficulty, it falls back upon the taxpayers for relief.

Senator Collings:

– And gets it.

Senator BROWN:

– Yes; because its friends are so strongly entrenched in the different legislatures. I do not blame honorable senators opposite for fighting on behalf of those’ whom they represent ; I am only sorry that those who represent the Labour party do not fight as strongly for their side.

The railway companies operating in the United States of America have also been troubled by competition from motor transport, and, with typical adaptability and thoroughness, they have set about overcoming it. They realize that it is futile to bump one’s head against a brick wall or to attempt to set back the economic clock, and have re-organized their railways by increasing the power of locomotives and the number of wagons which they haul, catering particularly for the transport of heavy or cumbersome goods. In Australia, there is a tendency to endeavour to stem economic progress when confronted with financial problems; to that extent we are out of step with the times. While it is generally recognized that motor traffic has come to stay, and is remarkably efficient in operation, our governments refuse to re-adapt our railways to- the- circumstances. I know of cases in which government authorities have deliberately declined to build or repair roads in certain localities because of the ‘ existence of a railway in the district, with which motor traffic would compete. We must keep in line with modern development, and, if our railways do not pay, re-organize them. But we should not pay much regard to the cries which are continually raised about losses on our railways.

Senator Foll:

– Are there not many who are at present served with railways who could be better served by motor transport ?

Senator BROWN:

– There are. I believe that there should be a conference of all interested, and that an endeavour should be made to co-ordinate and organize our railway systems so that they would give the best possible return, not from a monetary point of view, but to afford service to the people. Unfortunately, there is too much bickering by pettifogging interests, which obtrude themselves in these problems. That is why many incline towards the view of “the Cromwell of the Riverina “, Senator Hardy, who aspires to a dictatorship in order to re-organize and build up Australia. But the Labour party believes that the objective can be more easily attained by sane government control rather than by selling to private industry essential services such as our railways, in order that they may be used to provide greater profits for the financiers who already have Australia in their grip.

I admit frankly that State Governments have, from time to time, been pressed to retain in the service of their railways, men who would have been discharged had the service been controlled by private enterprise. On one occasion, a State Premier said to me “ If these men were dismissed from the railway, as could be done by intensified organization, they would be thrown on the dole.” The Labour party contends that our railways should be centrally controlled and re-organized; then, their worth to the community would increase, the hours of the workers would be fewer, their pay would be larger, and men would be kept, in work rather than thrown on the dole.

The PRESIDENT:

– The honorable senator’s time has. expired.

Senator COLLINGS:
Queensland

– Once again, by the discussion to which we have listened this morning, the deliberations of the transport conference which is sitting in Melbourne, and the speech of the Leader of the Government in the Senate, it has been made manifest that the real things that matter in connexion with the Government of the Commonwealth do not originate in this chamber. I have always been a keen student of political economy, and I have been consistently opposed, openly and publicly, to those in the community who believe that economic salvation can be brought about by short cuts. Y. have ranged myself definitely on the side of those who believe that it is possible for Australia to work out its destiny as a progressive and democratic nation by constitutional parliamentary reform.

But my short term in this Senate has not in any way confirmed that opinion, [f the great community that is outside could only see and hear what goes on in this chamber, and particularly as newcomers are aware of it, the tremendous difficulties in the way of affording relief from the national calamity that has settled like a blight upon the Commonwealth would be more fully recognized. AVe know perfectly well that the conference of ministers of the Crown and departmental officials assembled in Melbourne is not investigating these proposals with any idea of getting the people out of the mire into which they have foundered. It is merely making another effort to assist the financial magnates in this and other countries, to conserve their interests as opposed to those of the people who really find the wherewithal to carry on the affairs of the nation. The financial interests do not come into the open until the time is opportune. There has been an agitation to hand over lands in the Northern Territory which are among the most fertile in the world, to a corporation whose avowed purpose is to obtain interest on its investment. It is now proposed to exploit our railways in much the same fashion.

Members of the Government appear to be incapable of taking a long view of anything, for again we have the spectacle of a Government sending an accredited representative to a conference - in this case, the Transport Conference, which is sitting in Melbourne - armed with definite instructions, though the matters at issue have not received the consideration of Parliament. I emphasize what I have previously said in this chamber, that the Commonwealth Parliament is becoming more and more an unnecessary body. We have a Tariff Board, royal commissions, and committees of inquiry of all descriptions, and now there is a proposal to establish a transport council. Significantly, none of those proposals are made until the pioneers of the country have done their bit to establish the national asset. Then, when the carcass is ready to be devoured, the vultures come to the feast.

Sir Arthur Duckham, who was a member of the “ Big Four “ which visited Australia in 1929, told the then Premier of Queensland that his trip to Australia had been the greatest educational experience of his life. He expressed amazement that he could entrain at Perth and go by that means right round Australia and up to Cloncurry in the north of Queensland. Now, of course, he could go further-

Senator Sir George Pearce:

– With a few breaks of gauge thrown in for good measure.

Senator COLLINGS:

– Had it been necessary for the Queensland Government to wait until it could afford a 4-ft. 8^-in. gauge railway, the wonderful resources of that State would not have been developed for many decades to come. It was necessary to adopt the gauge that was in keeping with the capacity of the State’s purse. Last night, when Senator Barnes was making his splendid and . spirited Australian speech, I thought of what had been said by Sir Arthur Duckham. He said that no other country in the world, with a population as small as that of Australia, had achieved anything like the same amount of pioneering and development work as we had done. What is the position in regard to the Midland Railway in Western Australia? We know that it has felt the effects of the depression’ in the same way as the other railways, though admittedly it is still carrying on at a profit. I have at home the latest report issued by the company, but when’ I tried to obtain a copy in Canberra, strangely enough, none was available. We have been told that this privately owned railway pays its way, and that Mr. Poynton said that, while he could make that railway pay, he could not do the same for a State-owned railway. The Minister, when discussing this matter, should have submitted all the facts. Surely he must know that, in every State railway system, there are sections of lines which pay their way handsomely. We have them in Queensland, yet we are told that no railways under public ownership can possibly pay. We hear much about this twopenny-halfpenny line 300 miles long in Western Australia, but in Queensland we have over 6,000 miles of railway, the greatest mileage per capita in any country in the world. In Queensland all our railways pay working expenses, and some of them pay interest on capital cost as well. The fact is that the railways of Australia have paid the community well. What would be the state of our development now without our railways? Where would we be had we been left to the tender mercies of private and predatory interests, which would never have built a line until they saw an opportunity of profit? Now we are asked to accept the principle that all railways should be made to pay, from an accountancy stand-point, as if they were under private control. I remind honorable senators that, as soon as a government enterprise begins to make a profit, it shows that it is not doing its duty by the people. There is no sense in taking from the pockets of the people money for services rendered by the Government, when the money could, with benefit to all, be left in the people’s pockets. The duty of a government is not to make profits, but to render service, and the railways of Australia have rendered the country magnificent service. If we are to accept this principle, that government services should pay for themselves, we must be logical, and apply it to all government services. Are we, then, to attempt to make our educational systems pay in the accountancy sense? We know, of course, that our educational systems have paid wonderfully well, because an educated person is a better wealth producer, and a better citizen, than an uneducated one. Then we must apply the same system to our Defence Department, and even to our police departments. In that event, before the sergeant at the watchhouse buckled on his revolver to go out and arresta madman who had run amok in the streets, he would have to look up a scale of rates to find out what it was necessary to charge for the service, in order that his department might be able to pay its way.

Who are the people who, under this proposal, are to take over 49 per cent, of the share capital of the railways? Probably the same people who have already had their pickings from the community-created values arising out of the construction of railways. When a railway is built, it benefits, not only those who use it, but also those whose property is made more valuable. Why should railways be made profitable at the expense only of those who pay freight or travel as passengers? Why should not the railways lose money, and the deficits be made up by income tax paid by those who have benefited from the community-created values? When a railway is built through a district, the value of land immediately goes up. Who gets the benefit of that? Not the community, but the privileged few who have been able to get their greedy, grasping hands on the lands of the country.

The PRESIDENT:

– The honorable senator’s time has expired.

Senator MacDONALD:
Queensland

– I feel that, in discussing this subject further, we are kicking a dead horse, and this proposal to hand our railways over to a body of private capitalists is so unsavoury that, like the dead horse, it should be buried as deeply and as quickly as possible. I came into this Senate from a railway job, so that 1 know something of the feelings of my fellow railway workers in Queensland at any rate. It is bad enough to be exploited by British investors when there is at least the barrier of a State government to protect the public, but it would be a great deal worse to be exploited by a private corporation whose sole object was to make money out of the railways. The Australian railways have lost money because they were built rather for developmental purposes than for profit; to benefit the public, rather than exploit them. I admit that, at one time, it was felt to be necessary to make profits even on State-owned railways.I can remember 25 years ago, when I had business with the Victorian railways, the system was losing money at the rate of £1,000 a day. A Canadian, Sir Thomas Tait, was therefore brought to Victoria to rescue railway finances from their unfortunate condition, and was given almost dictatorial powers. He certainly cut out the losses, and even succeeded in showing a surplus in one year of £250,000. It was remarkable, however, that when the term of his engagement expired, he was not re-appointed. His critics contended that he had obtained his surplus by refraining from incurring ordinary maintenance charges, so that, at the end of his term, many of the engines, and much of the other rollingstock, were practically unserviceable. There was not a Labour Government in power at the time; but the murmurings of the people were sufficiently audible to prevent the Government from renewing Sir Thomas Tait’s appointment.

Manyof Australia’s railways were built in the old days of political jobbery, before the advent of the Labour party, or when it was still numerically weak. Prominent politicians secured the building of railways through the districts of their friends, whose land was thereby enhanced in value.

Senator Rae:

– And under the contract system, also.

Senator MacDONALD:

– Yes, and we know what jobbery that led to. The work was done badly, and the price was frequently too high. The contracts were given to the powerful friends of the politicians of the hour. It is now proposed to write off £112,000,000 of the capital cost of the railways. Unfortunately, the act of writing it off will not get rid of the debt, which will still be like an old man of the sea round the neck of the people. It would be only fair to collect this money from those who made fortunes out of the increase in the price of land due to the building of railways, or, if they are not alive, from their heirs and beneficiaries.

I remember fifteen years ago writing a leading article for the newspaper with which I was then associated, stating that the only way in which the railways could be made to pay was to charge the users a sufficient price for the service rendered to pay running expenses and cost of construction.

Sitting suspended from 12.45 to 2.15 p.m.

Senator MacDONALD:

- Mr. Theodore was then Treasurer of Queensland, and he regarded the suggestion as a good one. Despite the fact that, during that period the Labour party had a number of strong men, who were ready to go to almost any lengths in making innovations, neither political party in Queensland has pressed very hard for railway profits. Mr. Moore was Premier for three years, and I believe that, during that period, £30,000,000 of railway capital was written off. The reason, of course, for that lack of determination on the part of Queensland parliamentarians was the general feeling throughout the country that the railways were intended to serve the people, rather than to earn profits. I rose to continue this debate with some hesitation, because I thought that some members of the Country party, who have been boasting of their regard for the interests of the primary producers, might have been expected to speak on their behalf on this occasion. If there is one section of the community which the railways specially benefits, it is the primary producers. They are naturally interested in cheap rail haulage;but, to my astonishment, no counsel has come from Senator Johnston, of “Western Australia, or from Senator Hardy, of New South Wales.

Senator Duncan-Hughes:

– The proposal has been dropped, so what is the use of talking about it now?

Senator MacDONALD:

– -But the people who are anxious that the railways should remain under State control do not consider the subject dead. A shovelful of dirt placed over the coffin would have come well from those honorable senators who claim to _ represent the primary producers.

Senator Collings:

– They might have assisted at the burial.

Senator MacDONALD:

– Yes, by dropping the body a hundred fathoms deep. Lest some should think that too severe, we might say with Shakespeare -

Full fathom five thy father lies;

Of his bones are coral made.

I am afraid, however, that the subject of placing the railways in the hands of a corporation, whose only object would be to exploit the people, is sure to be revived. Despite the competition of motor transport, which is partly sanctioned by governmental authorities throughout Australia, the railways are still found necessary for long-distance haulage, and particularly for the transport of heavy goods. Motor lorries usually pick out the cream of the traffic, which is easy to handle; but it would be unfortunate if the people lost control of the railways. Of course, the railways are indispensable during spells of very wet weather.

Only this year a proposal was advanced - fortunately, it was subsequently withdrawn - for handing over to a chartered company the construction of a railway from Queensland to the Northern Territory. I am opposed to granting private companies the right to operate -ail ways. There should be a line from Queensland to the Northern Territory; but it should be under the control of the Government, and I hope that we have heard the last of the proposal to construct such a line on the land grant principle. A loss of £78,000,000 in the running expenses of the railways of Australia, since their construction, is not a very great one, when spread over all the States, for we should remember that the railways were built for the benefit of the primary producers and the people generally. I feel certain that the people of Queensland, and particularly the workers, would be bitterly opposed to the railways of that State passing out of government control. The Labour party does not wish that the debts on the railways should be repudiated, but there should be a re-adjustment of interest charges. The Government should stand as a buffer between those whose sole desire is to exploit the people, by making the i I ways earn profits, and those who wish the railways to be operated under government control for the benefit of the community. During the depression the workers have been made to suffer, particularly in Queensland, under the regime of the Moore Government. But, bad as State control of railways, the retrenchment of employees, and the reduction of wages may be, we do not need much imagination to visualize what would happen if the railways were handed over to the control of a financial corporation that would be anxious to make as much profit as possible out of them. Managers would be appointed for the one purpose of pleasing capitalistic directors, and they would use every means in their power to sack employees and reduce their wages. My knowledge of the workers in Queensland leads me to believe that they would protest most strongly against any proposal .to allow the State railways to pass out of government control, and they would be thoroughly justified in their attitude. The Labour party is totally opposed to placing the Commonwealth railways in the greedy grasp of a financial corporation, whose main object would be to operate the lines with as few men ms possible, to make one man do the work which should bc -done by two or three men. and to bring down the standard of living in this country.

Senator RAE:
New South Wales

– Pew arguments have been advanced by honorable senators on the ministerial side in opposition to the claims of Labour senators. The Leader of the Senate (Senator Pearce) mentioned that a reduction of interest to 4 per cent, would save a sum almost equal to the amount which the railways are losing to-day; but nothing that I said would tend to suggest that we should be content with the rate of 4 per cent. The present price of money on the world’s markets is such that the interest rate for money borrowed on a valuable asset like the railways should not be greater than 3 per cent. 1 suppose that the main argument that would be urged by members of the Country party is that the project has been abandoned; but, whenever a proposal shows promise of profits, those advocating it do not drop it at the first rebuff. Unless the people of Australia are alive to the danger of having such a scheme foisted upon them, State after State may be induced to consent to it.

Senator Duncan-Hughes:

– There is not likely to be a wild scramble to put private money into public railways at the present time.

Senator RAE:

– But a proposal of this kind would offer considerable inducement to private investors. In the first place, it was suggested that the dead weight of the unprofitable lines should be counterbalanced by the writing off of capital to the amount of £112,000,000. There is no doubt that if a private corporation were formed to take over the railways, it would close down many of the non-paying branch lines, which render particularly good service to the primary producers. If this body were freed entirely from political, which means parliamentary, control, it would have a free hand to do as it liked in closing what it deemed to be unprofitable lines, many of which are most, necessary in order that the farming community may be well served.

Senator Hardy:

– A privately-owned railway operating between Chicago and New York conveys wheat thousands of miles for 6d. a bushel, whereas in Australia, on State-owned lines, it can be carried only 450 miles at that rate.

Senator RAE:

– The history of privatelyowned railways in the United States of America is marred by so many scandalous episodes that it would require hours to relate them. In numerous instances, lines were built on the land grant principle, and the producers were given all sorts of freight concessions, to induce them to settle along those railways; but when bad times were experienced, the private companies confiscated the holdings of the farmers, and resold the land when prices rose. Millionaires were created in this way, at rhe expense of the vast majority of the farming population, who deserted their holdings in thousands, because they found it impossible to make them pay.

I think that the Leader of the Senate acted in a politically dishonest manner in referring as he did to the Midland railway. A privately-owned railway in New Zealand, after earning enormous dividends, was sold to the government of that dominion, cash down, for about £3,000,000, the reason being that a particularly valuable strip of country, with a considerable population, had been taken over by the company, which made a big profit as the result of the conditions on which the railway had been constructed. A slashing of wages would inevitably result if any proposal were adopted to hand over the railways to private enterprise. Although, for the time being, the States have declined to assent to the latest proposal, it may be revived in a more attractive form, and the people should protest in no uncertain terms against any proposal to rob them of their assets. After the war, the Allies forced the German Government to hand over its railways to a private corporation, and 12,000 employees were dismissed almost immediately. First of all, as I have stated, the wages of employees would’ be ruthlessly slashed and services, especially on branch lines, curtailed so drastically as to render them practically useless for the farmers except during the harvest season. I venture to say that a thousand good reasons can be adduced against any proposal of the nature to which I have referred. The history of private railway management - in Great Britain, the United States of America, or in any other country where these services are controlled by private enterprise - shows that profits are earned at the expense of the general public, and that when dividends are threatened, the most drastic cuts are made in wages and services. To ensure returns to bondholders the interests of every other section of the community are sacrificed. The time occupied in this debate will not have been wasted if it awakens the people of this country to a realization of the danger, and gives them an opportunity to declare most emphatically that they will not tolerate interference in this way with the social services of this country. The debate having served its purpose,I ask leave to withdraw the motion.

Motion - by leave - withdrawn.

page 2217

PAPERS

The following papers were presented : -

Post and Telegraph Act - Regulations amended - Statutory Rules 1933, No. 84.

Commonwealth Public Service Act- Regulations amended - Statutory Rules. 1933, No.62.

page 2217

SITTINGS OF THE SENATE

Motion (by Senator Sir George Pearce) agreed to -

That the Senate, at its rising, adjourn till Tuesday next at 3 p.m.

page 2217

SALES TAX

Senator O’HALLORAN (through

Sena tor Barnes) asked the Leader of the Government in the Senate, upon notice -

Has the Government received strong representations from the South Australian Friendly Societies Association supporting the removal of sales tax on medicines and ingredients for manufacture of same?

If so, is it intended to grant the request?

Senator Sir GEORGE . PEARCE.The answers to the honorable senator’s questions are as follow: -

The existing law provides for exemption of “ goods being medicines sold by a society duly registered under any Friendly Societies Act of the Commonwealth or a State.” The association in question has urged that exemption be granted in respect of drugs and chemicals used in the compounding of medicines.

lt is intended to consider the matter fully when the budget proposals generally are receiving attention.

page 2218

TRADING BANKS

Senator Sir GEORGE PEARCE Information is being obtained, and will be furnished as soon as possible to Senator Barnes in reply to his questions with reference to the paid-up capital of trading banks in Australia, the amounts of reserves held, the rates of dividends paid ; also the cost of establishing, and the profits of, the Commonwealth Bank and Commonwealth Savings Bank, together with the profits shown on the Commonwealth note issue.

page 2218

QUESTION

PUBLIC SERVICE

Salary Reductions

Senator DUNN:

asked the Minister representing the Prime Minister, upon notice. -

  1. Has the attention of the Government been drawn to the following telegram sent to the members of another place and to senators -

Commonwealth Service surprised and keenly disappointed proposals Government make no provision for restoration of portion excessive salary “cuts” operating since 1031 in addition to cost of living reductions. Consider case presented Government and circulated members unanswerable grounds of equity and justice. Had financial conditions 1931 been comparable financial conditions to-day imposition of “cuts” additional to cost living adjustments unthinkable consequently continuance such “cuts” on emergency basis unjustifiably harsh. Recent increases granted by Arbitration Court further strengthen strong claims submitted for progressive restoration of “cuts” 1931 Financial Emergency Act. Appeal your co-operation honouring promises of all parties for restoration when finances improved.

  1. Is it the intention of the Government to bring about a restoration of salary “ cuts “?
  2. If not, has the Government any statement to make to the Senate on the matter?

Senator Sir GEORGE PEARCE.The right honorable the Prime Minister has supplied the following answers : -

  1. Yes. 2 and 3. Action was recently taken by tho Government to obviate the reduction of iM from 1st July, 1933, which would otherwise have automatically resulted from the cost of living index figure notified by the Statistician. No assurance can be given that other reductions of salaries and wages of Commonwealth public servants in pursuance of the Financial Emergency Act will be restored, but the matter will receive consideration by the Government in conjunction with the budget proposals foi1 1933-34.

page 2218

QUESTION

IMPORTS FROM GREAT BRITAIN

Senator O’HALLORAN:
through Senator Dunn

asked the Minister representing the Minister for Trade and Customs, upon notice -

  1. What percentage of Empire labour or material is required to be contained in manufactured goods imported to Australia, from Great Britain, to enable such goods to be admitted to Australia under the British preferential tariff rate?
  2. Was the practice previously existing varied in any way as the result of the Ottawa agreement ?
Senator McLACHLAN:
Minister in charge of Development and Scientific and Industrial Research · SOUTH AUSTRALIA · UAP

– The Minister for Trade and Customs has supplied the following answers: -

  1. If goods are wholly manufactured in the United Kingdom from United Kingdom materials, or from raw materials prescribed by the Minister for Trade and Customs, such are regarded as eligible for admission under British preferential tariff, irrespective of the percentage of labour and/or material of United Kingdom origin.

If goods contain imported materials not prescribed by the Minister for Trade and Customs, 75 per cent, of their factory or works cost must consist of United Kingdom labour and/or material to qualify for admission under the British preferential tariff. If, however, such goods are of a class or kind not commercially manufactured in Australia, the percentage is only 25.

  1. No.

page 2218

QUESTION

AUSTRALIAN CURRENCY

Senator BROWN:

asked the Minister representing the Treasurer, upon notice -

What are the amount and value of the gold now held in Australia as backing to the Australian currency?

Senator Sir GEORGE PEARCE:

– The Treasurer has supplied the following reply : -

Th is information is in the possession of the Commonwealth Bank. The question will be referred to the bank.

page 2219

QUESTION

COMMONWEALTH CONSTITUTION

NewspaperCriticism.

Senator DUNN:

asked the Minister representing the Attorney-General, upon notice -

  1. Is it a fact that repeated attacks have appeared in the Sunday Times newspaper of Perth, Western Australia, on the Commonwealth Constitution, and also appeals to the federal members representing that. State to disregard their oaths of allegiance to the Commonwealth Constitution?
  2. If so, will the Government take action against that newspaper under the Federal Crimes Act? If not, why not?
Senator McLACHLAN:
UAP

– The AttorneyGeneral has supplied the. following answer : - 1 and 2. If the honorable senator will supply particulars of the statements referred to, consideration will be given to the matter.

page 2219

CUSTOMS TARIFF 1933

Second Reading

Debate resumed from the8th June (vide page 2202), on motion by Senator McLachlan -

That the bill be now read a second time.

Senator HARDY:
New South Wales

. - It, is my intention, in this debate, to deal principally with two matters: one the agreement entered into between the United Australia party and the United Country party, and the other the report in the possession of the Government by the Tariff Board dealing with the protective incidence of the exchange rate and primage duty.

I propose referring in some detail to the agreement mentioned, and I shall endeavour to bring out certain facts in relation to it. I submit that. a. close examination of both these matters will be quite relevant, at this stage, to the bill in its present form. If, however, the Standing Orders preclude a detailed discussion of these matters on this motion, or if the right honorable the Leader of the Senate (Senator Pearce), or the Minister in charge of the bill (Senator McLachlan) does not agree that the discussion would be relevant, I shall be glad if they will, at the outset, raise objection in order that the position may be made quite clear.

In the first-reading debate, much was said about the agreement made between the United Country party and the United Australia party prior to the last general election. I stated then, without hesitation, that such an agreement had been definitely made, and that it had been “ ditched “ by the leaders of the United Australia party. I now repeat that such an agreement was entered into, and that, subsequently, it was dishonoured. Before dealing in detail with that agreement. I wish to make brief reference to certain remarks made by Senator Brennan.

The PRESIDENT (Senator the Hon. P. J. Lynch). - If the honorable senator proposes to refer in detail to an agreement which, he affirms, was entered into between certain political parties, he will not. be strictly in order. That matter was fully discussed on the motion for the first reading of the bill.

Senator HARDY:

– The Senate is asked to pass the bill in its present form. My contention is that if the agreement between the parties had been adhered to it would have been presented in a different form. Of course, I must abide by your ruling, Mr. President, but I respectfully submit that, since adherence to the agreement would have altered the form of the bill, discussion of the agreement must be relevant to the bill.

The PRESIDENT:

– The honorable gentleman would be quite in order in referring to an understanding that might have influenced the form of the bill: but, as he is aware, that matter was fully discussed on the motion for the first reading. If, on the motion for the second reading, I allowed him to traverse the terms of the agreement, he would not be strictly in order, and the discussion might get out of hand.

Senator HARDY:

– I accept your ruling, Mr. President, and as it will be impossible for me to do full justice to my subject, unless I am permitted to mention in detail the terms of the agreement, or the history of events that led up. to the making of that agreement, I shall reserve my remarks under that heading until a later date, when I have another opportunity to address the Senate. I hope to move the adjournment of the Senate next week to discuss this matter.

I again desire to emphasize that this tariff will not meet with the approval of the rural industries throughout Australia. There is no question about that. There is also no doubt whatsoever in my mind that the United Country party had no intention of countenancing the perpetuation of the Scullin tariff. During the first-reading debate, I dealt with the views of the Opposition in the last Parliament, and showed that its members universally condemned the action of the Scullin Government in regard to tariff matters. I did not hesitate to indict them - quite rightly, I believe - because of the complete change of attitude that is so clearly revealed in the tariff that we are now discussing. I have listened closely to the present debate. One of the most outstanding remarks in it has been mads by Senator Brennan, and I confess thatI am unable to reconcile it with the attitude previously adopted on this subject by that honorable senator. I had always regarded him as the champion of a low tariff. I had always considered that he had an independent and a free-lance mind, and that- he would not hesitate to offer criticism without fear or favour. But he has made the following extraordinary statement, which I quote from the report of his speech that appeared in Hansard: -

I do think that, in the long run, Senator Hardy will realize that although there may be little differences between the party he represents and the party which is in power, they are superficial, and not fundamental, as are the differences which separate the Labour party from the Country party.

I am quite frank when I say that the differences which exist between me and the Labour party are indeed fundamental ; they are as far apart as the North and the South Pole. But does Senator Brennan characterize as little the differences on fiscal matters that exist between the Country party and the party which now comprises the Government? Does he say that the sharply-defined difference of opinion, as to whether a high or a low tariff is required, is smaller than the widow’s mite, and is not even worth discussing ? Yet that is what he assumes. I say that it is a matter of impossibility to reconcile the fiscal views held , to-day by the United Country party with those that are incorporated in this tariff. 1 know that Senator Brennan was endeavouring to confuse the issue before the Senate.

Senator Brennan:

– The honorable senator ought not to say that.

Senator HARDY:

– I think that I ought. I tell the honorable senator quite frankly that I am unable to discover logic in his speech, although I have read it a number of times. I have had visions of the honorable senator scampering across the floor of the Senate with . a lot of red herrings in his trail, and have tried to make out exactly what his objective was when he spoke as he did.I still cannot understand why he considers that only small differences separate the two parties. To me, a vital principle is involved. As a representative of the United Country party who has a keen realization of what, the rural industries are to Australia - they are our main industries - I hope to speak as frankly in the future as I have done in the past.

As I am unable to discuss the agreement between the United Australia party and the United Country party, I wish to refer to the report of the Tariff Board upon the protective incidence of primage and exchange. I have not hesitated to tell the newspapers of this country that it was my intention, if possible, to block this tariff debate. My reason is, that I know that exchange and primage combined, represent, to-day, as great a protection, fiscally, as do the actual customs duties. But there is a further reason. The Government has this report in its possession, and claims that it is under consideration at the present time. I say, quite frankly, that it is only right and just that any document dealing with the fiscal question that the Government possesses should be placed before honorable senators, to enable them to debate this matter with a full knowledge of the exact position. In my maiden speech in this chamber, I urged that the Government should appoint a royal commission to investigate in detail the exact incidence of primage and exchange. My leader, Dr. Earle Page, made a similar request in another place. It is known that we are passing through an era of depreciated currencies, and that exchange manage- ment cannot be dispensed with for many months, possibly years, to come. An additional amount has to be paid for goods that are imported into this country, because of our depreciated currency. At the time of which I speak, I pointed out that the effect was to increase considerably our internal costs. In another place, Dr. Earle Page moved, an amendment to reduce customs duties according to a certain formula, as the rate of exchange rose. Realizing that the great export industries of this country had experienced a severe fall of prices, we both advocated exchange management as a means of maintaining price equilibrium within our domes’tic economy. I quoted letters from Sir Robert Gibson to the Prime Minister (Mr. Lyons), asking the Government to express its views on the matter, because it impinged on national policy. It was not a question of the Government exerting pressure on the Commonwealth Bank. With exchange at £25 10s. per cent. - which represents only the cost of conversion from Australian into British currency, and does not take into account reconversion from British currency into that of foreign nations - it can easily bc seen that a tremendous fiscal burden is imposed which must ultimately have the effect of increasing our internal cost structure. If there is any protective incidence in primage and exchange, and no formula to offset the duties imposed for the protection of Australian industries, our cost structure must necessarily become even more rigid than it is to-day, and internal prices must necessarily rise.

Let us consider the first fiscal argument that caused a “ rift within the lute,” so far as the United Australia party and the United Country party were concerned. It will be found that the first dissension occurred when the Minister for Trade and Customs of the day (Mr. Gullett) issued to the Tariff Board an instruction not to take into consideration in its deliberations the effect of either primage or exchange.

Senator Foll:

– That instruction was afterwards withdrawn.

Senator HARDY:

– That it was issued, is shown by the following paragraph, which appeared in the Sydney Morning Herald of the 15th October, 1932:-

The Minister for Customs (Mr. Gullett) announced in the House of Representatives to-day that he had instructed the Tariff Board not to take primage and exchange into consideration in framing its recommendations.

That meant that the Tariff Board, which was appointed as an impartial and expert body to try to arrive at a scientific tariff, was not to take into consideration the factors of exchange and primage. What is the amount involved in respect of exchange? That can easily be calculated. If we have £50,000,000 worth of imports, and the exchange rate is £25 10s. in every £100, the height of the tariff wall must, of necessity, be increased by 25 per cent., and the amount involved would be 25 per cent, of £50,000,000. That calculation leaves out primage duty altogether, which in 1931-32 amounted to approximately £4,000,000. If ever there was a time when we should have had a declaration of policy from the Government or the United Australia party, as to how it stood on the fiscal question it was when the previous Minister for Trade and Customs gave his instruction to the Tariff Board. It could nol possibly be assumed » from that instruction that it was the desire of the Government to reduce the tariff, nor could it be assumed that the tariff or the total fiscal protection which, after all, is what the Australian manufacturers are interested in, was to be reduced. Every honorable senator, and every representative in another place belonging to the United Country party, did not hesitate to point out the fact that, although the tariff had been considerably increased by the Scullin Government, it had been validated by the Lyons Government despite the fact that there had been a further increase of nearly 30 per cent, brought about by other factors. Yet the Minister, in his speech last night, although I tried to give him a lead, because I did not want to be constantly thundering outside the door of the Government endeavouring to try to show it the correct fiscal policy to follow, said -

Personally, I have never regarded exchange as something that should be considered in connexion with the tariff policy.

How can he reconcile that statement with his previous remarks? After all, we are dealing with extraordinary conditions, and in reviewing them we have- to take into consideration our rigid cost structure, which we are endeavouring to make a little flexible. Our internal costs, together with the fall in the price of farm and export products, are pressing more and more heavily upon the shoulders of those engaged in the export industries. The principle of exchange management was adopted in order to give the primary producers a greater measure of assistance in terms of Australian currency. That was done because we knew that the export industries must be kept alive. We knew that the primary producer had to receive assistance so as to enable him to continue to export and thus permit Australia to obtain London funds with which to pay our way. We knew that by exchange management we would lessen the burden of internal costs that the primary producer had to carry. But. we knew also, and we revealed that fact to the Senate and to the Government, that the exchange, unless checked by reducing the tariff, would probably have the effect of raising internal costs. We therefore immediately pressed for an inquiry, and finally the Government took action. It referred the matter to the Tariff Board for inquiry and report,4 because it believed that the protective incidence of the exchange was vitally connected with the actual fiscal policy of this country. At least it must have recognized that; otherwise the inquiry would have been made by an independent committee of economists. Yet the Minister in charge of the bill now says - and I presume that he speaks for the Government, because he is certainly in charge of the customs tariff so far as this chamber is concerned - that- there is no connexion between the tariff and the two factors of primage and exchange. Let us face the facts. If any honorable senator were in charge of an importing business, would he be able to persuade his board of directors that exchange and primage had had no effect on the internal prices received for the goods imported by his firm? That would be an impossibility. I cannot understand the attitude of the Government in not releasing the report of the Tariff Board in respect of one of the most comprehensive investigations that it ha3 ever made. Why are we expected to tread the fiscal path with our eyes covered with a bandage fixed by the Government, and with the knot, I am inclined to think, firmly tied by the manufacturing interests?

Senator Sir George Pearce:

– I rise to a point of order. The honorable senator’s remark is a direct aspersion on the honour of this Government. It is offensive to me, as a member of the Government, and I ask that it be withdrawn.

The PRESIDENT:

– .Senator Hardy is not in order in making such a reference.

Senator HARDY:

– I withdraw the remark, although I thought that it was particularly apt. The Government is asking the Senate to sign a blank cheque, because it is in a position to make available to honorable senators a vital report, which is absolutely interlaced with the bill that we are now discussing. Why should not honorable senators have an opportunity to peruse that report, so as to enable them to discuss the bill with greater lucidity?

Let me refer briefly to the terms of reference in respect of the Tariff Board’s inquiry into primage and exchange, because honorable senators should have a fuller knowledge of the scope of that inquiry if they are to come to a logical decision on the tariff. The reference to the board was -

  1. The necessity of maintaining protection to Australian secondary and primary industries.

That reference covered practically everything connected with protection.

  1. The necessity of maintaining the margins of preference agreed to tinder the United Kingdom and Australia Trade Agreement Act 1932.

That reference dealt with the whole question of implementing the Ottawa agreement, and was a specific instruction to the board. Yet w7e are now being asked to cast a vote on this bill, although the Government has in its possession a document of which honorable senators should have full knowledge. If we are to legislate judiciously, with consideration, and in a manner which will leave the hallmark of statesmanship on the records in the Library, we should have all the facts before us. The Government seems to be determined not to release this report, because in another place two questions were asked regarding it, and the only answer was that the Government still had it under consideration. Although I cannot give the exact date on which the report was received by the Government, [ believe that it has been in its possession at least six or eight weeks.

Senator McLachlan:

– Does the honorable senator say that we have had it that long?

Senator HARDY:

– I suggest that the Government has had it for that length of time.

Senator McLachlan:

– The honorable senator is surmising.

Senator HARDY:

– Yes. I base my statement on the effect of answers given to questions asked in another place.

Senator Duncan-Hughes:

– The report was received by the Government before the 26th April.

Senator HARDY:

– That is so. The next paragraph in this reference to the Tariff Board reads -

  1. The increase in production costs resulting from, increased charges due to exchange and primage on imported raw materials and the internal effects of exchange and primage duties.

That also indicated that the Government had a full realization that exchange is closely allied with and related to the incidence of the tariff. Yet the Minister has said, without hesitation and with considerable dogmatism, that it has no such connexion. If exchange has no connexion with the tariff, why should the Government have requested the Tariff Board to make an inquiry specifically along these lines? The fourth and fifth paragraphs in the reference read -

  1. The advantages or disadvantages likely to result to primary and secondary industries through the deduction through any allowance from protective duties.
  2. The effect on government finances in relation to interest payments overseas.

Those are vital points which honorable senators should take into consideration. There is considerable doubt among many honorable senators whether the Government is correctly implementing the Ottawa agreement. It is common knowledge in financial circles in Sydney that some of the difficulty that Australia is encountering in proceeding with her conversion loan operations in London, has been caused because the British Treasury is not satisfied with the Australian Government’s methods of implementing the Ottawa agreement.

Senator Sir George Pearce:

– That is not so.

Senator HARDY:

– I am glad to hear the right honorable gentleman make that remark.

Senator Sir George Pearce:

– The honorable senator’s suggestion is absolutely incorrect.

Senator HARDY:

– The points which I am discussing are dealt with in the report which the Government has refused to release. The next reference to the board was in the following terms : -

  1. The desirability of any method which may be evolved being readily understood by importers being easy in the application in the preparation of customs entries by importers and being free from administrative difficulties.

Dr. Earle Page, in another place, and I, in this chamber, have said, time and time again, that it should be possible, by a simple amendment of our Customs Act. to incorporate in it a formula by which the rate of exchange could be applied so as to reduce the actual amount of duty payable under the customs schedule by the amount of exchange that is payable.

Honorable senators must surely realize from what I am saying regarding the terms of the reference to the Tariff Board that there is every reason whywe should be furnished with the information for which I am asking. The Government, however, is not only refusing to release the report, but is also asking us to sign a blank cheque. Our assent to this bill would be equivalent to the signing of a blank cheque. I say, quite frankly, that the Government has no right to withhold such vital information from honorable senators. The Executive, in doing so, is taking to itself a responsibility which it has no right to take and, in doing so, is trying to establish the supremacy of the Executive over Parliament itself. The reference to the board proceeded as follows : -

If the board is satisfied that some such method of varying protective duties on account of exchange and primage is practicable the Minister desires a report on the following points.

As the Government asked the board to inquire into these “ following points “, it is only reasonable to assume that the board did so, and reported the result of its inquiry. This, in itself, is sufficient reason why I should demand the tabling of this report before assent is given to this bill. If the bill is assented to in its present form additional burdens will, undoubtedly, be placed on the primary producers of this country. It is, in consequence of legislation of the class now before the chamber, that the primary producers are being forced to the wall. It is no exaggeration to say that they are being “forced to the wall.” This tragedy is due, not only to the drop in prices, but also to the rigidity of our internal costs which is contributed to by the present high tariff. The “ following points “ to which I have referred were : -

The amount of variation that should be made on account of exchange and primage duty.

Whether such variation should be applied to :id valorem, specific, and complete duties.

Whether the exchange variation should be assessed on a sterling or gold basis.

The net effect of the variation of duties on goods imported from countries with currencies having a higher exchange value than Australian currency, and with countries having a lower exchange value than Australian currency.

Whether any special provision would have to be made for the purpose of meeting the progressive adjustments of Australian costs to exchange.

I do not think that even the Leader of the Government will deny that a report furnished in compliance with those terms of reference must be of so comprehensive a character as to embrace every phase of our internal economy. It must deal with exchange management and government finance, and, consequently, relate to our conversion operations overseas; and it must also deal in a most vital way with the whole fiscal policy of Australia. Yet we are expected to approve of a bill which also has relation to these subjects while this report, which should be available, is withheld from us.

Why should the Government withhold this report?

Senator McLachlan:

– What would the honorable senator embody in the bill ?

Senator HARDY:

– If the Minister will release the report, I will tell him what I would em’body in the bill; but the honorable gentleman has already drawn one or two red herrings across the trail, and I do not intend to follow this particularly juicy one. The honorable gentleman said definitely last night, that in view of the economic conditions which existed throughout the world, we would still have to maintain our exchange so that we could get somewhere near equilibrium between our export prices and our cost structure. But what would happen if the rate of exchange should increase? Would the Leader of the Government deny the possibility of such an increase? I do not think so; because he knows from the nature of the weather reports that are being published throughout Australia, that there is a distinct possibility of our having a smaller volume of exports in the coming season. Che margin to-day between the volume of our exports and financial solvency is very slender. If, in consequence of a dry season, there is even a slight diminution in our exports, we shall find it extremely difficult to maintain financial solvency. The first thing to happen, if exports declined, would be that the exchange rate would increase. If there were an increase from £125 10s. to, say, £130, an additional fiscal burden would immediately be placed on the backs of the primary producers.

Senator McLachlan:

– What would the honorable senator put in this bill to prevent that from happening?

Senator HARDY:

– If the Minister will show me the report that I am asking for I will tell him. I make the assertion - the Minister may contradict me if he so desires - that in the report which he possesses, but. refuses to release, there is a definite recommendation from the Tariff Board that primage and exchange should be taken into account in fixing the amount of protection that should be given to the Australian manufacturers.

Senator Sir George Pearce:

– Supposing that that were so, does not the honorable senator see that it would show that, those matters were separate from the subjects dealt with in the bill?

Senator HARDY:

– Not at all; it would show that they were dovetailed into each other. That, of course, is what the terms of reference to the Tariff Board actually show. My assertion is that the report contains a definite recommendation that exchange and primage shall bc taken into consideration by the Tariff Board in fixing the amount of protection that should be given. I make the prophecy in which Senator Crawford may be interested, that there is a general recommendation in the report for a reduction of duties. I also suggest and confidently anticipate that the report recommends a formula which can be applied so as to offset the extra fiscal burden imposed upon us by the exchange.

Senator Collings:

– From where did the honorable senator get his inside information ?

Senator HARDY:

– I warn the honorable senators of the Labour party who saved the Government from defeat on Wednesday night that they had better watch things carefully when the report is made available, for a complete change of policy may be involved.

Senator Collings:

– We should like to see it.

Senator HARDY:

– The honorable senator will have an opportunity to express his opinion on this subject. I sincerely trust that honorable senators representing the Labour party in this chamber will insist upon the production ofthe report which at present the Government refuses to release.

I now propose to direct the attention of the Senate to the actual amount of protection which the present rate of exchange and primage duty represent, and when 1 have finished honorable senators will have an opportunity to debate the point as to whether the Tariff Board’s report on this subject is or is not vital to the discussion of this measure. I do not hesitate to say that an increase of the duties on foreign importations will have an adverse effect on our export trade. For the information of the Senate I quote the remarks of the Minister in charge of the bill (Senator McLachlan) when hereturned from Geneva. Hp said -

Therewas a feeling abroad that we were unwilling to buy the goods of any other country, but desired to pour into Europe and other centres all the primary products which we are capable of exporting, taking nothing whatever in return. That point was stressed in the debate yesterday, and we should not lose sight of it because representations have been made to us from powerful quarters regarding the trade balances between various European countries and Australia’.

What is the position? That statement of the Minister on his return from Geneva contained an excellent warning. He has adopted an entirely different attitude to-day. What is the Government asking us to do? In a nutshell, we are asked to raise the duties on foreign imports. That is how the Government proposes to implement the Ottawa agreement. Instead of reducing the present duties against Britain in order to achieve ideal British preference, the Government says “No”. The result is that the duties have been increased, as the Minister has stated, on at least 400 items. If honorable senators will refer to our trade with foreign countries - I have no intention to deal with it in detail– they will see that, speaking generally, for the years 1929-30, 1930-31, and 1931-32, our imports from foreign countries, excluding British countries or possessions, were as follow : -

If we review the position generally, we find that the total Australian exports for 1931-32 were valued at £107,967,143 in Australian currency, comprised as follows : -

If we are to raise the duties on foreign imports we have seriously to consider whether we can afford to sacrifice trade to the value of £41,530,689. I know that honorable senators representing the Labour party will say that we have no favorable trade balance with foreign countries, but according to the figures, the favorable trade balance on foreign trade in 1931-32 was £22,901,256 in Australian currency, and this bill, if passed in its present form is going to destroy all that trade.

Senator Crawford:

– Why ?

Senator HARDY:

– The percentage of foreign trade to the total of our exports is 39 per cent., and the percentage of British trade to total Australian exports is 61 per cent. Reviewing the position generally, we may assume that out of every £100 worth of goods we export, 60 per cent, is sold to

Great Britain and her possessions, and 40 per cent, to foreigners. Does any honorable senator deny the value of our foreign trade to-day? Is there one who would be prepared to support the prohibition of foreign imports? Of course there is not, because we obtain money in foreign currency, which is converted into British sterling and goes towards helping to pay our debts in Great Britain. Senator Guthrie spoke of our trade with Japan. Let us study our trade position with that country. We should not forget that we have in this tariff raisedthe duties on Japanese imports. Let us consider whether we can afford to offend a customer such as Japan, whether our proposed action is just, quite apart from the principle embodied in the Ottawa agreement, and whether the principle applied is right. In 1931-32, our trade with Japan was valued at £11,575,885 in British currency. The total Australian exports to Japan in that year were valued at £11,659,012 in Australian currency, and our imports from Japan, were represented by the insignificant sum of £2,396,734 in British currency, leaving a favorable trade balance amounting in British currency to £6,782,417.

Senator Brown:

– How much of that was represented by our exports of wool?

Senator HARDY:

– In 1931-32, Japan took £7,357,067 worth of Australian wool in Australian currency. Yet the Minister in charge of the bill suggests that we should assent to a measure which will raise the duties against this particular nation and other foreign countries. If honorable senators will make a general comparison between our imports and exports, they will find that it will not be long before the foreigners will take retaliatory steps.

Senator Sampson:

– Some have already done so.

Senator HARDY:

– Yes, and they will go even further. With respect to importations, and again basing my calculations on the years 1929-30, 1930-31, and 1931-32, I find that we decreased our foreign importations over that period by 68 per cent. In other words, we purchased 68 per cent, less from foreigners during that particular period. On the other hand, our imports from Britain and her possessions have been reduced by 64 per cent. The conclusion at which we arrive from these figures is that our purchases from Britain and her possessions have not been so limited as they have been from foreign countries. If we look at the sales which represent our exports, we find that there has been a decrease in foreign exports of 27 per cent., and in British exports of 39 per cent. In other words, more goods were sold to foreign countries than were sold to Great Britain, although we purchased a smaller quantity of goods from foreigners than from Great Britain. This measure will accentuate the position.

Senator Brown:

– The figures quoted by the honorable senator do not coincide with those submitted by Senator Elliott.

Senator HARDY:

– These figures were taken from the Commonwealth YearBook. The policy adopted by the Government in this respect would not be followed by any commercial undertaking. Notwithstanding this, we are asked to support a bill increasing the duties on 400 items, which represent 40 per cent, of our export trade. I know that statistics are wearying to honorable senators, but it is sometimes necessary to quote them in order to support one’s case. The policy which the Government is following in this particular instance is short-sighted. It will have a boomerang effect. The Government is trying to stop trade with foreign countries, but it is essential that that trade be maintained.

Has any honorable senator, or, indeed, any Minister, calculated the fiscal protection afforded by exchange and primage? It is difficult to transform foreign currency into British currency, and, therefore, I make my calculations on the basis of British sterling and Australian currency. Australia’s total imports in 1931-32 were valued at £44,712,868. Of that sum, the exchange paid by Australian importers amounted to £11,401,781. The latter amount was an additional burden borne by importers, for if we examine their invoices we shall find that they have had to make allowance for exchange. The Minister does not admit that, however; he says that exchange cannot be considered in relation to the tariff.

Senator Sampson:

– It must be.

Senator HARDY:

– The report to which I have referred will, I hope, bear out my contention, and prove the Minister to be wrong.

Senator McLachlan:

– I hope that the honorable senator is not purposely misunderstanding the position. A schoolboy would hardly interpret it as he is doing.

Senator HARDY:

– The Minister said -

I have never regarded exchange as something which should be considered in relation to the tariff.

Senator McLachlan:

– I say so still.

Senator HARDY:

– I cannot read the Minister’s mind. He should put his opinions into words.

Senator McLachlan:

– Exchange is like a movable feast.

Senator HARDY:

– I do not think that even the Minister in charge of the bill will say that the Government has kept faith with Parliament and the people, It would show its bona fides best by making the report available. Most of the discontent which exists in “Western Australia to-day is due to the tariff policy which is in operation.

Senator Sir Walter Kingsmill:

– There is only one other cause.

Senator HARDY:

– The Government refuses to learn its lesson. There is discontent in other States than “Western Australia; it is to be found in the mind of every rural producer. The Senate should not be asked to assent to a bill concerning which it has not the fullest information available. If to the amount paid by importers, by way of exchange, we add primage duty of £3,658,165, we find that an additional burden of £15,059,946 has been placed on the people.

Senator SirWalter Kingsmill:

– What is the percentage?

Senator HARDY:

– It is 311/2 per cent, on the total importations. That is the fiscal wall which exchange and primage have raised.

Senator Sir Walter Kingsmill:

– That is a considerable duty in itself.

Senator HARDY:

– The -Statistician’s figures for 1931-32 show that the average ad valorem duty on imported goods, not taking exchange into account, was 36.14 per cent. It will, therefore, be seen that the import duty and the exchange together represent a total protection of between 60 per cent, and 70 per cent.

Senator Collings:

– Who benefits by the exchange rate?

Senator HARDY:

– The primary producer benefits, as do also the workers in industry.

Senator Collings:

– The honorable senator wants to have it both ways.

Senator HARDY:

– At an earlier stage of Senator McLachlan’s speech, I interjected deliberately, because, having attacked the Government, I wanted to give the Minister in charge of the bill an opportunity to re-assure the Senate on this matter. Because the Government had withheld the report, I did not want to liken it to a broody hen sitting on a number of eggs. I preferred to believe that it. would reconsider its decision to withhold the valuable information in its possession, and would table the report. I wanted the chicks to come out. The report has not been tabled, and I object to dealing with legislation when a report on it is kept behind closed doors. I object to being made a pawn in a ruthless political game. I can only conclude that the Government is afraid to do other than attempt to steer a middle course. It is afraid that the release of this report will rob it of the support which, hitherto has been extended to it by Australian manufacturers. It is also afraid that the report will prove a weapon in the hands of the United Country party. Ultimately, the report must be made public, so why not face the position now? Why should the Senate go blindly ahead, and discuss a subject which has already been thoroughly investigated by the best experts in Australia? The Senate is not composed of school children; its members are here to take an intelligent interest in the legislation brought forward, not to place it on the statute-book without proper consideration. It is not fair that a document of such vital importance should be kept from honorable senators. I make my protest on behalf of the rural workers, who are being crucified. That we should be asked to consider this bill when a valuable report on the subject with which it deals is withheld from us, is infamous. If my statement that the report strongly urges that exchange should be taken into account in fixing duties is not correct, let the Minister say so ; and I shall without hesitation offer my apology, and say that I have been working on wrong information. But the Minister will not do so,’ because he knows that the report bears out what I have said. He knows that it contains the strongest recommendation possible for a reduction of duties, that it in all probability sets out a formula by which the disadvantage of exchange may be overcome, and also that it definitely recommends that exchange be taken into consideration when fixing duties. I do not, want to make political capital out of this subject; I merely want to obtain a fair deal for the primary producers of this country. We cannot treat them fa i,l,when a valuable document containing information which is vital to them is withheld from us. Before honorable senators can give proper consideration to the measure before them, they should have an opportunity to study the contents of the report to which I have referred.

Senator Brennan, in his peroration, said:

–

Even though I may not have said one thing that ninny honorable senators may like to have heard, they will find that my action will bo dictated by the- political tactics that arise when a vote is to be taken upon this question.

I have always regarded Senator Brennan as a man with an independent mind. I have heard him speak on bills with all the calm assurance that distinguishes a skilled surgeon when going to the operating table to perform a difficult dissection, and it is somewhat disconcerting when such a man admits that he will allow his actions to be dictated by political tactics, instead of by his conscience. I should like Senator Brennan, when replying, to deal with that matter. I am not making a personal attack on Senator Brennan, but merely desire him to reassure the Senate that his vote will be governed, not by political tactics, but by his conscience.

Senator Sir GEORGE PEARCE:
Minister for Defence · Western Australia · UAP

[3.37]. - I am sorry that Senator Hardy has endeavoured to make political capital out of the inability of the Government to find time to come to a decision in connexion with one of the most momentous and difficult problems affecting the tariff that has ever been thrust upon any Government. Honorable senators who have given any study to the matter of exchange and the variations in the. fluctuations of currency that occur from day to day, and between country and country, realize how intricate and difficult the problem is. Speaking from memory, the Tariff Board took some months after this matter was submitted to it before it presented its report to the Government. If it were so easy a matter as Senator Hardy would have us believe, it is difficult to understand why such a body, which has been dealing with similar problems for years, and which should be thoroughly conversant with them, should take a considerable time before formulating a report.

Honorable senators are aware that, during the past four or five weeks, every Minister has been living a particularly busy life. The meetings of the Loan Council and the Premiers Conference now being held in Melbourne have entailed a great amount of preparation by the Federal Government, of which honorable senators who have not held office can have no conception. The Commonwealth Government acts more or less as leader at these gatherings, and it must thoroughly investigate all the subjects to be discussed, and determine its policy before it meets the Premiers. In addition, Ministers have had their attention engaged by the conversion loans that have taken place recently in Australia and Great Britain. Although Senator DuncanHughes said that the report of the Tariff Board on this matter was presented to the Government before the 26th April, I assure the honorable senator that Ministers did not then receive it. Senator McLachlan and I received our copies only about three weeks ago, and we have not had the time that is needed for the study of such an important and complex subject.

Senator Hardy:

– Two questions on the subject were asked in the House of. Representatives more than three weeks ago, and the Government replied then that it still had the report under consideration.

Senator Sir GEORGE PEARCE.No doubt the Prime Minister then had the report, but I ask the honorable senator to accept my assurance that it was not then in -possession of Senator McLachlan or myself.

Senator Hardy:

– I accept the honorable senator’s assurance.

Senator Sir GEORGE PEARCE.The matter is listed- for the consideration of Cabinet, and as the Vice-President of the Executive Council has said, it has been referred to a sub-committee for report. iSo far, the report has not been received by Cabinet, but, as soon as it is, it will be considered. 1 desire to make some further remarks on the subject, but I am not prepared to do so to-day, and, therefore, ask leave to continue my remarks at a later date.

Leave granted; debate adjourned.

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ADJOURNMENT

Darwin Unemployed - Wheat Farmers in South Australia

Motion (by Senator Sir George Pearce) proposed -

That the Senate do now adjourn.

Senator DUNN:
New South Wales

– I desire to bring under the notice of honorable senators the answers io questions which 1 addressed to the Leader of the Senate (Senator Pearce) a few days ago, in reference to the administration of relief services at Darwin in the Northern Territory. In times of stress, the States which form our federation should do everything possible to afford relief and sustenance to our unemployed, and I believe that much more could be done by the States in this regard. Certainly, the meagre assistance that is now given to these unfortunate persons does not meet with my approval. This Government has been elected by the people of the Commonwealth with the exception of those who arc resident in the Northern Territory and the Federal Capital Territory, and one of its responsibilities is to provide sustenance to those who are in dire need in the Northern Territory, just as the States do for their citizens. Yet, in answer to the questions that were asked recently by me, the honorable senator said that the Government could do nothing to assist sections of the unemployed in the Northern Territory. 1 know that a number of persons have been conveyed by sea from the Territory to some of the States. Among the unemployed may be bush workers or gold prospectors who, because they lack capital, have been unable to continue their work, and have been forced to return to Darwin and apply to the authorities for assistance. It is all very well for the members of this Senate, whose bellies are well filled, and who have good beds to sleep in, to speak of what the unemployed should do, or of what is being done for them ; -but I challenge them to see at least that the unemployed of the Northern Territory are not allowed to go hungry. At the present time, they are dependent on the charity of Chinese, Japanese, Malays, and other coloured people. Honorable senators attend church on Sunday, with never a thought of those who are in utter want. I am becoming rather fed up with this bunk. I can anticipate the answer of the- Government. I shall be told that nothing can be done. The land-owners can receive tax remissions and other assistance, but the unemployed, who ask only for a feed, are turned down by this’ so-called Christian Government.

Senator MCLACHLAN:
Vice-President of the Executive Council · South Australia · UAP

– During the course of bis address on the first reading of the Customs Tariff Bill on Tuesday last, Senator O’Halloran referred to the difference between the figures in respect of wheat-growers in South Australia for the year 1931-32, contained in the State Statistician’s figures of that State, and the figures supplied by the Commonwealth as to the number of growers for the purposes of the “Wheat Bounty Act 1931. The State Statistician’s figures relate to the number of farms on which wheat is grown in South Australia, and the number of such farms was 14,306 for the year 1931-32. Tlie figures prepared by the Commonwealth Department of Commerce relate to the individual growers, among whom there are many share-farmers. The records of the Commerce Department reveal that about 30 per cent, of the. farms on which wheat is grown are worked on a sharefarming basis, thus making the approximate total number of persons eligible for bounty IS, 600. This explains- the difference referred to by Senator O’Halloran.

Senator RAE:
NEW SOUTH WALES · ALP; LANG LAB from 1931

– I desire to support the appeal of my colleague, Senator Dunn. From time to time I, in common with other honorable senators, have received advice either by letter or by telegram from the unemployed in Darwin, asking that something be done to provide them with sustenance. Some time ago the Government intimated that those unemployed persons who had not been domiciled in the territory for a specified period were to be sent to other States. Some of them objected to being sent away, and advised the authorities of their wish to remain. What has the -Government done in regard to them? Ithas practically sentenced them to death by slow starvation. It has absolutely refused, according to the information I have received, to acknowledge their existence. Not so long ago, a man in Darwin committed an offence so that he might be put into gaol, and thus provided with food.

Senator Collings:

– For many of them gaol is the best place now.

SenatorRAE. - Some have been sentenced to short terms of imprisonment, but some have been denied even that last resource, and have been hunted out of the district. I cannot understand how the Government can condemn people to death from starvation simply because they refuse to live in the place chosen for them, when they know . that, if they go away, as the Government wishes them to do, they will not be able to get any work in the place to which they go. I shall not speak of Christian principles, but surely any government actuated by even common humanity should decline to act in this arbitrary way towards Australian citizens. In answer to the appealsI have received, I have had to reply that, althoughI have made repeated representations, I have been able to get nothing out of the Government; that the authorities refuse to do anything but allow the unemployed to starve.

Senator Sir GEORGE PEARCE:
Minister for Defence · Western Australia · UAP

[4.53]. - Honorable senators will understand that I have no personal knowledge of the conditions regarding the granting of government relief in the Northern Territory, but I shall bring the matter under the notice of the Minister for the Interior.

Question resolved in the affirmative.

Senate adjourned at 3.53 p.m.

Cite as: Australia, Senate, Debates, 9 June 1933, viewed 22 October 2017, <http://historichansard.net/senate/1933/19330609_senate_13_140/>.

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