Senate
24 April 1936

14th Parliament · 1st Session

  1. Senate
  2. 14th Parliament
  3. 1936

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

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PAPERS

The following papers were presented : -

Commonwealth Public Service Act - AppointmentDepartment of Commerce- D. T. Curdie.

Seat of Government Acceptance Act and Scat of Government (Administration) - Act - Ordinances of 1936 -

No. 10- Tobacco.

No.11- Apprenticeship.

Advisory Council Ordinance - Regulations amended.

Post and Telegraph Act - Regulations amended - Statutory Rules 1936, No. 50.

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QUESTION

MIGRATION

Senator COLLINGS:
QUEENSLAND

asked the Minister representing the Prime Minister, upon notice -

  1. Whether it is true, as stated in the public press, that in an address to the members of the Commonwealth Club in Adelaide on Tuesday, the 24th March last, the Prime Minister said: “ We have reached a stage of recovery when we must, not only permit, but invite our own kith and kin from Britain to come out here “.? 2.If the report be true, will he give an assurance to the Senate that no scheme of immigration will be initiated or permitted by the Government until Parliament has been first consulted?
Senator Sir GEORGE PEARCE:

– The Prime Minister has supplied the following answers : -

  1. The Prime Minister did express the views to which the honorable senator refers, but the sentence which he quotes if divorced from the context of the Prime Minister’s speech conveys an entirely wrong impression of the Prime Minister’s views. These remarks were preceded by the following: “The Commonwealth Government had no scheme in mind for the indiscriminate dumping of migrants into Australia “ . . . “ The Government wish to examine the position to see what could be done without lowering the standards which had been built up”.
  2. See reply to 1. I can give the honorable senator an assurance that Parliament will be consulted before any scheme for the resumption of migration is entered into. The present view of the Government, after examining the position from every angle, is that it would be premature to embark upon any scheme of migration until there is some further substantial abatement of unemployment within Australia. In any case, as settlement, except within the territories controlled by the Commonwealth, is a matter for the State governments, schemes of migration will not be entered into without the co-operation of the States.

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WHEAT BOUNTY

SenatorUPPILL asked the Minister representing the Minister for Commerce, upon notice -

Has the Federal Government agreed with all the States as to the method of distribution of the 1935 season wheat bounty?

If so, what is the basis of distribution in each State?

Senator BRENNAN:
Minister without portfolio assisting the Minister for Commerce · VICTORIA · UAP

– The information sought by the honorable senator is being obtained, and will be furnished to him later, probably at the next sitting.

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QUESTION

MILITIA

Senator SAMPSON:
TASMANIA

asked the Minister representing the Minister for Defence, Upon notice -

  1. What was the strength of the Commonwealth Military Forces (Militia) by arms, on the following dates, namely - 30th . June, 1932, 30th June, 1933, 30th June, 1934, 30th .June, 1935?
  2. What were theenlistments in those years, and the resignations?

  3. What is the present strength by arms of the Commonwealth Military Forces (Militia) in -

    1. Officers;
    2. Non-commissioned Officers;
    3. Other ranks?
  4. What is the percentage of strength to establishment?
  5. What in the percentage of efficiency to strength ?
  6. What is the strength, by arms, other than Staff Corps, of the Permanent Military Forces?
  7. How many Staff Sergeants-Major are there in the Australian Instructional Corps?

  8. What is the personnel of the Royal Australian Air Force -

    1. Permanent;
    2. Citizen?

Senator Sir GEORGE PEARCE.Inquiries will be made, and a reply will be furnished to the honorable senator as soon as possible.

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QUESTION

MANDATED TERRITORIES

Senator BROWN:
QUEENSLAND

asked the Leader of the Government in the Senate, upon, notice -

  1. Has the Government’s attention been drawn to a statement by the British Chancellor of the Exchequer, Mr. Neville Chamberlain, that Britain was ready to consult the League of Nations for the transfer of territories, held under mandate, to their former owners?
  2. Has the Government any information on this matter?
  3. If so, will such information be given to the Senate?
Senator Sir GEORGE PEARCE:

– The answers to the honorable senator’s questions are as follows: -

  1. The Commonwealth Government has seen a personal statement attributed to Mr. Neville Chamberlain reportedin the press on the 8th April, to the effect that a “ transfer of mandated territory could only be accomplished with the assent of the mandatory power concerned and of the League Council “.
  2. The views of the British Government and of the Commonwealth Government were set out in the statement whichI made on this question in the Senate on the 13th March. In this respect, 1 would refer to a further statement by the Right Honorable . J. H. Thomas, Secretary of State for the Colenies, in the House of Commons on the 22nd April, to the following effect: - “If the question of transferring any mandates ever arises, it will not be a question for us alone. Australia, New Zealand and South Africa have mandates, and, so far as the British Government is concerned, it will not consider the handing over of any mandates unless the whole question of Empire mandates is also reviewed. There is also the question of mandates affecting France and Belgium. We are not considering the question at present. It has not arisen, and will not be raised by us.”
  3. See answers to 1 and 2.

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LEAVE OF ABSENCE

Motions (by Senator Foll.) agreed to-

That one month’s leave of absence be granted to Senator Crawford on account of absence overseas.

That one month’s leave of absence he granted to Senator Grant on account of absence overseas.

That one month’s leave of absence be granted to Senator Allan MacDonald on account of ill health.

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FLOUR TAX ASSESSMENT BILL 1936

Second Reading

Senator Sir GEORGE PEARCE:
Minister for External Affairs · “Western Australia · UAP

[11.7]. - I move -

That the bill be now read a second time.

The purpose of the bill is to provide for refunds of flour tax paid by bakers, storekeepers, and other persons, who are not flour-millers, on flour held in stock as at the date of the termination of the tax, namely, the 24th February, 1936.

The bill contains provisions which were originally enacted for a similar purpose, but were repealed in December, 1935, when the law was amended to provide for the continuance of the flour tax after the 6th January, 1936, the original terminating date of the tax.

The reason for the repeal of the refund provisions was that it was contemplated at the time that the flour tax would continue until the inauguration of the plan for securing a home-consumption price of wheat. The refunding of tax on flour accumulated at a point of time marking both the termination of the flour tax and the commencement of the wheat plan would have resulted in the freeing of such flour, not only from the flour tax, but also from the burden of the increased price, under the plan, of wheat sold for home consumption. This would have led to a serious dislocation of the wheat and flour markets as the time of transition approached, and also to serious competitive anomalies in the marketing of wheat products after the inauguration of the plan.

By dissociating the termination of the flour tax from the inauguration of the wheat plan, these considerations have now lost all significance, and it becomes necessary to restore the original character of the tax as a levy on flour consumed in Australia during the period of its operation, that is, from the 7th January, 1935, to the 24th February, 1936. To do this it is essential to provide for refunds in respect of tax-paid stocks of flour held on the 24th February, 1936; otherwise, the tax would amount to a levy on flour consumed after that date to the extent of the tax paid on stocks so held.

Honorable senators will realize, also, that failure to provide for the refund of tax paid on stocks held on the 24th February, 1936, would impose serious competitive burdens on bakers holding considerable stocks of flour on that date, as such bakers, until they had exhausted those stocks, would be forced to sell bread made from tax-paid flour in competition with bread made from tax-free flour by bakers having little or no accumulation of flour at the termination of the tax.

In addition to restoring the repealed refund provisions, the bill contains other more or less related provisions. In the first place, paragraph a of clause 2 is designed to prevent a miller’s refunds in respect of bad debts exceeding the tax passed on by him to his purchasers. Again, there are other provisions so drawn as to prevent the making of two refunds in respect of the same flour, namely, a refund to a baker who held flour in stock on the 24th February, 1936, and a refund to a miller who had written off the sale price of the flour to that baker as a bad debt. It is also desired to obviate, as far as possible, the necessity to hold up refunds until the miller is fully paid for flour purchased from him by persons who held it in stock on. the 24th February, 1936. This is made possible by providing for millers to give undertakings not to claim refunds for bad debts, and, in other cases, for refunds to. be proportionate to the amounts paid off the miller’s account for the flour. The necessary legislative provision is made in paragraph d of new sub-section 8 of section 24.

The final matter in the bill to which I wish to refer is contained in paragraphs el and e of clause 2. These paragraphs provide for an amount due as a refund to any person to be set off against any amount owing by that person for tax or penalty under either the Flour Tax Assessment Act 1933-1934, or the Flour Tax Assessment Act 1934-1936, or under any Sales Tax Assessment Act.

In conclusion, I desire to inform honorable senators that it is estimated that the refunds provided for by the bill will amount to £100,000.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clause 1 agreed to.

Clause 2 -

Section 24 of the principal act is amended-

by inserting after sub-section (6.) the following sub-sections : - “ (7.) Subject to this section, the Commissioner shall pay to any person who, at the close of business on the twenty-fourth day of February, One thousand nine hundred and thirty-six, holds stocks of flour which is chargeable with tax under this act, an amount which represents the tax so chargeable upon the quantity of that flour in excess of one thousand pounds in weight:

Provided that where the flour so held in stock, by that person has been purchased by him at a price which includes portion only of the tax chargeable thereon, the amount payable to him shall not exceed an amount equal to that portion of the tax included in the purchase price. “ (8.) Apayment shall not be made to any person under the last preceding sub-section in respect of flour held in stock by him unless the Commissioner is satisfied that -

that person has paid the tax chargeable under this act in respect of that flour;

that person has purchased that flour from a vendor who has not paid, and is not liable to pay tax thereon at a price which includes the tax, or a portion of the tax, chargeable thereon ;

where that person has purchased that flour from a vendor who has paid, or is liable to pay, tax thereon at a price which includes the tax, or a portion of the tax, chargeable thereon - he has wholly or partly paid that price; or

where that person has purchased that flour from a vendor who has paid, or is liable to pay, tax thereon at a’ price which includes the tax, or a portion of the tax, chargeable thereon - the whole or part of that price is unpaid and that the vendor of the flour has given to the Commissioner an undertaking not to make a claim for a refund under sub-section (5.) of this section in respect of the tax so paid or payable by him.

Amendment (by Senator Sir George Pearce agreed to -

That the words “ holds stocks of flour which is”,proposed sub-section (7.), paragraph (c), he left out with a view to insert in lieu thereof the words. “ held stocks of flour “.

Senator Sir GEORGE PEARCE:
Minister for External Affairs · Western Australia · UAP

[11.14]. - I move -

That the proviso to proposed new subsection (7.) be left out with a view to insert in lieu thereof the following proviso: - “Provided that where the flour so held in stock by that person consisted of -

flour, other than self-raising flour, which had been purchased by him at a price in which a portion only of the tax chargeable in respect of the flour had been included; or

self-raising flour which -

had been purchased by him, or

had been manufactured by him from flour purchased by him, at a price in which a portion only of the tax chargeable in respect of the flour used in the manufacture thereof had been included, and in respect of which the Commissioner is satisfied that any person has received or will receive from any State government a payment by way of relief in respect of that tax, the amount payable under this sub-section shall not exceed an amount equal to the portion of the tax included in that price.”

The proviso which it is proposed to omit by this amendment imposes a general condition that the tax to be refunded shall not exceed that part of the tax included in the purchase price of the flour held at the cessation of the tax. The object of this condition was to meet the position in Tasmania, where provision was made by the Government of that State for a rebate of £21s. a ton on all flour consumed in Tasmania. At that time the conditions under which self-raising flour was marketed had not been brought under notice. Manufacturers of self-raising flour fix the price of their product according to the price of flour, the minimum adjustment that can be made being1/2d. per 2-1 b. packet. As the tax on a 2-lb. packet is an amount which comes out to four places of decimals of1d. - . 6048d. to be exact - it was not possible for them to increase their prices by the precise amount of the tax. Different manufacturers of self-raising flour had passed on varying amounts of tax to purchasers of their products and these amounts varied even with the size of the container in which that flour was marketed.

Stockholders have not furnished with their claims for refunds information as to the brands of self-raising flour held by them or the nature of the containers in which that flour was held, and it is not practicable at this stage to obtain this information. In the absence of such information, it is not possible for . the Commissioner of Taxation to compute the amount of tax refundable as being passed on to the stockholder. This amendment authorizes refund to be made of the full tax paid on the flour used in the manufacture of self-raising flour, without inquiring whether the full amount of that tax has, in fact, been passed on to the stockholder. It is pointed out that the full tax of £2 12s. 6d. a ton has been paid to the Commonwealth on all flour used in the manufacture of self-raising flour, and that the amount involved in granting a full refund instead of a partial one is negligible.

The tax borne by self-raising flour manufacturers in Tasmania was only 11s. 6d. a ton, as rebate was granted by the Tasmanian ‘Government of £21s. a ton on all flour used in the manufacture of self-raising flour for consumption in that State. The amendment authorizes a rebate of the full amount of11s. 6d. a ton in respect of all self-raising flour held in Tasmania where the whole of that amount was actually passed on.

Amendment agreed to.

Senator Sir GEORGE PEARCE (Western Australia - Minister for External Affairs) [11.18]. - I move -

That after the word “him”, paragraph (d), proposed new sub-section (8.). the following words he added:– “or

in the case of self-raising flour - tax has ‘been paid or is payable in respect of the flour used in the manufacture thereof “.

This provision is complementary to the second amendment, and authorizes refunds in respect of self-raising flour made from tax-paid flour, without attaching any conditions as to whether tax was, in fact’, passed on to the stockholder.

Amendment agreed to.

Clause further consequentially and verbally amended, and, as amended, agreed to.

Title agreed to.

Bill reported with amendments.

Standing and Sessional Orders suspended; report adopted. “Bill read a third time.

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CUSTOMS TARIFF 1936

Second Reading

Senator A J McLACHLAN:
Postmaster-General · SOUTH AUSTRALIA · NAT

. -I move -

That the bill be now read a second time. .

The schedule to the bill which is now before the Senate covers the tariff proposals introduced into the House of Representatives on the 28 th November, 1935, together with the proposals of the 20th March and the 1st April, 1936. Incorporated in the proposals of the 28th. November, 1935, were the schedules introduced on the 6th December, 1934,- and the28th March, 1935. A memorandum which has been circulated to honorable senators gives a comparison between the proposed rates of duty under each item and the rates imposed by the 1933 tariffs.’ As the new duties have been in operation for some considerable time, honorable senators will have been able to judge their effect. The economic effect of the tariff on the community is so great that it is fitting that the Senate should give the closest consideration to the proposed alterations of the schedule.

I desire to recall to honorable senators that the tariff policy of the Government, as enunciated by the Prime Minister in 1931, is, briefly -

  1. Efficient industry as an essential qualification for tariff shelter.
  2. A reasonable, as distinct from a prohibitive, tariff level.
  3. Tariff making, after public inquiry, through the Tariff Board, and not by arbitrary ministerial action.

The Ottawa agreement, entered into in 1932, dovetails with the policy enunciated in 1931. To this policy have been added two new features, namely, provision for treaty-making, which was endorsed at the last election, and the adjustment of protective duties to exchange. These new features are not contrary to, but are parallel with, the policy enunciated in 1931.

In 1931-32, when the Lyons Government came into office, the number of persons employed in factories in Australia was 337,000. This number rose steadily until, for the quarter ended December, 1935, it reached 459,000- the highest factory employment figure in the history of Australia. Concurrently, the percentages of unemployment among members of trade unions has consistently declined from 30.0 per cent, in May, 1932, to 13.4 per cent, in February, 1936.

The value of output from Australian factories - that is, the selling price at the factory of all products manufactured during the year - increased from £282,000,000 in 1931-32 to £360,000,000 in 1934-35. The value added by factory treatment was £111,000,000 in’ 1931-32 and rose to £140,000,000 in 1934-35. Other indices, such as value of new buildings, savings bank deposits, share values and company reports, all tell the same story of greatly increased prosperity. While it would be idle to claim that the Government’s tariff policy has been the sole cause of this return to prosperity, I do claim that it has been no mean factor. A continuation of the previous Government’s policy of prohibitive duties would, doubtless, have benefited a number of Australian manufacturers, but at a price to the consumer.

A comparison of our exports to United Kingdom in 1928-29, and in 1934-35 shows that chilled and frozen meat has risen in value from £3,500,000 to £6,700,000; butter from £6,400,000 to £8,900,000-, eggs from £200,000 to £1,100,000; and wine from £400,000 to £700,000. Reciprocity in trading is a truism, and we could not hope to export at the greatly increased levels unless we fixed our import duties at a level which would permit of reasonable competition by goods from the United Kingdom.

Much has been heard_recently of a great increase of imports, and apprehension has been expressed regarding the trade balance. I am happy, therefore, to -be able to say that the preliminary figures regarding overseas trade for the period 1st July, 1935, to 18th April, 1936, show a favorable balance of trade amounting to £21,650,000 sterling, which, I am sure, honorable senators will agree is very satisfactory. It should be remembered that only about 14 per cent, of the total imports represents goods competitive with Australian products; the balance, consisting mainly of capital goods, raw materials, tools of trade, motor chassis, and oils, provides employment for our Australian workmen.

As I previously mentioned, the Government’s tariff policy provides, inter alia, for tariff making, after public inquiry, through the Tariff Board, and not by arbitrary ministerial action. This system of tariff-making has proved an unqualified success, and manufacturers and importers alike give testimony to the skill and impartiality of the Tariff Board. Not one Australian industry, other than a few industries which were clearly uneconomic, has been prejudicially affected by the recommendations of the board. It has acted as a public watchdog, ensuring that manufacturers, while receiving sufficient protection to enable them to secure a liberal return on capital invested, are prevented from charging excessive prices to the public. The result has been to reduce the cost to dependent industry, and likewise the cost of living generally, and to stimulate the volume of trade and, consequently, of employment. Criticism has been made recently that the Tariff Board, while requiring full information regarding factory costs and profits from local manufacturers, has not asked for similar information from overseas manufacturers. In this regard I may say that, wherever such information is necessary to arrive at a decision, the board obtains it through the customs overseas representatives, or by other means. It should be remembered, however, that the measure of protection which is required by an Australian industry depends, not upon the cost or domestic selling, price of the overseas article, or the percentage of profit obtained, but upon the export price which determines the landed cost of the competitive article. Further, the board’s recommendations are not based solely upon the information published in the report, but are largely founded on information regarding both local and imported goods, which the board has to treat as confidential.

In the House of Representatives, on the 17th June, 1930, the Right Honorable J. H. Scullin, then Prime Minister, made the following statement: -

It is no doubt equitable that a trader should be able to obtain a reasonable profit on the sale of goods, hut what the Government has to guard against is that manufacturers are not taking undue advantage of the protection afforded by the tariff by charging unnecessarily high prices, acting in restraint of trade to the detriment of the public, or acting in a manner which results in unnecessarily high prices being charged to the consumer for his goods. Under paragraph [h) of sub-section 1 of section 15 of the Tariff Board Act, these questions can be investigated by the Tariff Board, and if it bo found that an Australian industry is taking undue advantage of the tariff in any of the manners set forth, the Government can then consider what action should bc taken against the particular industry. With the limited powers the Commonwealth has in regard to internal trading, it would appear that the only manner whereby salutary action could be taken against the offenders would be by removal of the protection afforded by the’ tariff.

I admire that expression of opinion, and heartily endorse it. The Senate, in the course of the debate, will be asked to deal with one item in regard to which the Tariff Board has advised that the industry is monopolistic in character, and has brought, the charge of undue profit-taking. Where the board has recommended reductions of duty which may possibly be regarded by some as drastic, 1 would emphasize that it is the wish of the board and of the government, not to cause increased imports, but to force the price of the locally-produced article down to a reasonable level.

A new feature of the present schedule is the provision of rates of duty based on the present Australia-London exchange, with a corrective for use as such exchange moves towards parity. In ite investigations, the Tariff Board has ascertained the protection necessary under existing conditions, and has also estimated in each case the protective value of exchange, which varies according to the proportion of imported or exchange-affected material utilized in making the local article. It will be appreciated that this method of dealing with exchange is much more exact and satisfactory than the former method of basing rates of duty on par exchange, and allowing a deduction of one-fourth of the duty or one-eighth of the value for duty, whichever is the less, as an offset to the protective effect of exchange. The new method extends the exchange adjustment, as a rule, to the British preferential, intermediate and general tariffs with the necessary adjustments consequential upon the Ottawa agreement to maintain the formula margins of preference, whereas the old method was applied to the British preferential tariff only.

Another new feature of the schedule is the intermediate tariff. It has been re-introduced to provide a convenient avenue for expressing the level of duties which the Government proposes should form the basis for trade treaties. The rates proposed under the protective items of the intermediate tariff express, in every case, a protective level for Australian industry, as well as preserving the margins of preference required under the Ottawa agreement.

As a general rule, the rates of duty appearing in the general tariff column of the schedule represent a level midway between the Tariff Board’s (a) findings for present conditions and its (4) findings for normal exchange conditions. This practice enables the Government to offer countries with which a trade treaty is contemplated a more favorable rate under the intermediate tariff.

In the case of certain items, where the bulk of the imports is from a country with which Australia has a greatly adverse trade balance, the Government has deemed it advisable not to make any reduction under the general tariff, but to retain the 1933 tariff rates.

The Government believes its tariff policy to be of the utmost benefit to the community in general, and I trust that the Senate as a body will support this policy.

Senator COLLINGS:
Queensland

– I took the opportunity afforded me yesterday, on the first reading of the bill, to discuss the tariff generally, and I have few comments to offer on the speech made by the Minister in charge of the measure (Senator A. J. McLachlan) in moving the second reading. He referred to the fact that the number of employees in factories in Australia in 1931-32 was 337,000, and with obvious pride he stated that at the end of 1934-35 the total had increased to 459,000. ~No semblance of fairness was displayed in making that comparison, because 1931-32 was a depression year. Where did the Minister expect to find the employees, when half of the factories were closed owing to the declined purchasing power of the people?

On the one hand we are told that the wonderful Lyons Goverment has restored prosperity to such an extent that it is now prepared to consider schemes of migration into Australia, whilst on the other hand we are asked to believe that the increase of the number of factory employees in the Commonwealth is entirel y due to the excellent policy of that Government.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– We have done fairly well. The figures to-day in regard to factory employment are higher than they have ever been.

Senator COLLINGS:

– That story may have a ring of truth in it until it is told in the homes of the hungry unemployed. Another, phase of the speech of the Ministerwhich appealed , to me as deserving of criticism is in connexion with our export trade; In order to enjoy the doubtful privilege of . exporting to the other side of the world our surplus primary products and selling them in foreign markets at a much lower price than we pay for them in Australia, we are told by the Minister thatwe must, give the manufacturers of the United Kingdom an opportunity to compete, on. a reasonable basis with Australian manufacturers. Otherwise, we are told, we shall not be able to pay for our imports. I repeat that the Government is slipping into a Serbonian bog of difficulty, from which it will be increasingly hard to escape.,

Senator Arkins:

– Could we have oneway traffic?

Senator COLLINGS:

– In order to overcome some of the traffic problems in the capital cities of the Commonwealth, the system of one-way traffic was introduced and now it is unavoidable. I venture to say that before we escape fromour difficulties we shall have to investigate some avenues of one-way trade. The Minister read with a great deal of satisfaction, which was heartily endorsed by Senator Hardy, and with which the Opposition agrees, a statement made by the Right Honorable J. H. Scullin during his term as Prime Minister, to the effect that manufacturers must not be allowed to profiteer behind the tariff wall. But the Scullin Government was displaced amid paeans of rejoicing on the part of the m embers of the present Ministry and their supporters ; and if profiteering and exploitation of the public have been practised behind the protection afforded by the tariff, surely I have the right to ask what action the present Government has taken to prevent it. The Tariff Board, for example, has given a knock to the cement industry, because it considers that the price of cement has been excessive. We shall have an opportunity to deal with that matter during the discussion on the various items; but if this profiteering does exist, why has the Government delegated its responsibilities in this matter to the Tariff Board ? Why does it not state definitely that profiteering by a highly protected industry in Australia is a crime ?

Senator McLeay:

– When the Government does take that step, the honorable senator will not support it.

Senator COLLINGS:

– I realize that Senator McLeay is not the least efficient senator in this chamber, but how he is able to be sufficiently clairvoyant to know what I should do in circumstances that have never yet arisen passes my comprehension. I assure him that the Labour party will range itself side by side with the Government if it develops the courage to take a stand against predatory interests which have been bleeding the country white. I do not propose to detain the Senate at this stage. The Opposition will fight stage by stage every duty which it considers inflicts an injustice upon an Australian manufacturer, regardless of whether the injustice is done by a manufacturer of the United Kingdom or a foreign manufacturer.

In conclusion, I draw the attention of honorable senators, and particularly the Postmaster-General, to the remarkable and deplorable state of affairs that arises whenever adiscussion on the tariff takes place in the Senate. The Australian manufacturer is invariably put in the prisoner’s dock; he is always on the defensive; and definite, deliberate and destructiveblows are delivered not against some, foreign industry but against the Australian manufacturer and to the detriment of the Australian workers and the public. As a member of this national Parliament, I register my emphatic protest, and shall continue to do so on appropriate occasions, against the practice of continually putting the manufacturers of Australia on the defensive when dealing with the fiscal policy of this country.

Senator HARDY:
New South Wales

– On the first reading, the Leader of the Opposition (Senator Collings) seized the opportunity to launch a tirade against the tariff policy of the Government and pointed out very definitely in a speech lasting one and a quarter hours, that if that policy were continued, nothing but chaos and ruination could be the lot of Australia.

Senator Collings:

-When did I use those words?

Senator HARDY:

– I paid close attention to the remarks of the Leader of the Opposition and in my opinion two paramount facts emerge from his speech: first, that the honorable senator is the most ardent disciple of economic nationalism in the Commonwealth; and secondly, that there is a tremendously wide gulf separating the fiscal policy of the Labour party from the fiscal policies of other honorable senators. Before I deal with these facts, I point out that at least one of my prophecies has proved to be correct. Some time ago I prophesied that when the fiscal policy of the Govern- ‘ ment would be debated, the Leader of the Opposition would not hesitate to attack the Country party and indict it on the ground that it was a free-trade party satisfied to allow foreign manufacturers to overthrow Australian industries. I affirm that the Country party is a good protectionist party; that its fiscal policy is as sound and as beneficial to Australia as that of any other political group in the Commonwealth. But there is a tremendous difference between the interpretations that can be placed on the word “ good “. Likewise there is a tremendous difference between the various interpretations of what constitutes adequate protection. I emphasize that the Country party stands for the reasonable protection of all classes of industry throughout the Commonwealth, irrespective of whether they be primary or secondary.

Senator Brown:

– What is the honorable senator’s explanation of the word “ reasonable “ ?

Senator HARDY:

– I shall deal with that in the course of my speech; I am sure that the explanation will be illuminating and beneficial to the Labour party. The attacks launched by the Labour party upon the fiscal policy of the Country party and the attachment of the label of “ the f reetrade party “ to it are entirely undeserved.

Senator Collings:

– The honorable senator should peruse the free-trade speeches delivered by Senator Johnston before he succeeded him to the leadership of the Country party.

Senator HARDY:

– I realized that it would not take long to make the Leader of the Opposition wriggle in his seat. While his speech was most interesting, I consider that it possessed one serious defect: it was based on neither logic nor fact. In an endeavour to bring conviction to the minds of honorable senators, the Leader of the Opposition did not worry about several important considerations which I shall proceed to elaborate. Dealing with the difference that exists between the fiscal policy of the Labour party and the fiscal policies of other honorable senators, it seems to me that, whereas others believe fervently that a recovery of international trade will play a large part in the economic recovery of the Commonwealth, the Labour party bases its theories on economic rehabilitation solely on a policy of isolation. I submit that the one dominant characteristic of the Labour party’s political platform is isolation.

Senator Brown:

– ‘That is absolute nonsense.

Senator HARDY:

– I repeat that the Labour party’s platform is isolationist from beginning to end. We discovered that when we were dealing with sanctions.

Senator Collings:

– Australia is a good country to be isolated in.

Senator HARDY:

– We found it also in regard to foreign affairs generally. In fact, the creed of isolation is apparent in every item of the Labour party’s policy. I shall cite, presently, certain passages from speeches delivered by the Leader of the Opposition in our tariff debate in 1933, which will brand him as one of the most prominent and determined isolationists in the Commonwealth.

I desire to reaffirm, on behalf of the Country party, its belief that a recovery in international trade is essential to general world economic health. In these days of embargoes, quotas, and uneconomic production - an aspect on which I shall touch presently - it is only right and fitting that a nation like Australia should at least, by the removal of international barriers, give a lead to other nations. For that reason I welcome the schedule contained in ,this bill, for I consider that it can be interpreted as a downward revision of the tariff. It is, in fact, Australia’s contribution to international recovery, and should be approved by all who believe that international recovery is essential to the restoration of the economic health of the world. That Australia is responsible for only a comparatively small proportion of world trade and production is no reason why this country should not have the courage to set an example. We must not confine our considerations to international trade alone. We must also consider its repercussions; for the implications that follow from such trade carry us right on to considerations df war. I venture to say that no greater incentive to war is to be found in the world to-day than the trade barriers which the nations have so painstakingly built. The Labour party talks of international brotherhood, but does its best to destroy such a principle by preventing international trade.

Senator Collings:

– At any rate, we 70 ted against sanctions.

Senator HARDY:

– Nothing feeds the fierce flames of international and racial jealousy more effectively than retaliatory trade measures by one nation against another. There can be no possibility of misinterpreting the Labour party’s fiscal policy. The object of the Labour party is, undoubtedly, to make Australia selfcontained, and, through an isolation policy, to develop a kind of modern Utopia, from which our people may watch the world go by.

Senator Arkins:

– It is a policy of eat your own butter and other things.

Senator HARDY:

– That is so, but unfortunately we produce too much butter to consume it all ourselves. I hear the Leader of the Opposition interjecting, but by the time I have finished reminding him of things that he said during the tariff debate here in 1933, 1 think he will be silenced. The first of his remarks which I shall cite as pledging him to a self-contained economy is as follows : -

The party on this side of the chamber will put forward every effort in its power in accordance with the Standing Orders to force the Government to increase duties; but we shall not in any circumstances support those who desire to reduce them.

I emphasise the word “ any.” The honorable senator went on to say: -

Our objective is slowly but surely to make Australia a self-contained country.

Senator Collings:

– Hear, hear!

Senator HARDY:

– The honorable gentleman’s interjection shows that he must still be branded as an isolationist, although he denied such an impeachment only a few moments ago.

Senator Collings:

– I did not deny it.

Senator HARDY:

– Again I submit that the policy of the Australian Labour party rests on isolation. The honorable senator also said in the same speech -

Prosperity will never return to Australia unless wo adopt a prohibitive fiscal policy, and [jlii.ee around this continent a tariff wail which will make it self-contained and enable the people at least to live under decent standards, and free altogether from the frightful and horrible competition of Japan, Great Britain, Denmark, the Argentine, Czechoslovakia, and other countries which are pouring their products into this country. f ask honorable senators to bear that remark in mind, for, in view of the prosperity that has already returned to Australia, it is abundantly obvious that the view of the Leader of the Opposition in 1933 was wrong.

Senator Collings:

– Can it be said that prosperity has returned when we still have a basic wage of only £3 14s. a week?

Senator HARDY:

– The isolationist policy which the Labour party is trying to implement in Australia has been no more successful in other countries than it has been here. I shall ask honorable senators to consider, on this submission, statements made by leaders of other great countries in which it is being realized that there must be a big change in the present blind creed of uneconomic internationalism

Sir Frederick Stewart, who has only recently been commended by the Labour party for his advocacy of a 40-hour week, dealt with the. policy of isolation, and its effect on the United States of America in particular, in the report on unemployment which he presented to the Commonwealth Government not long ago. He said -

The international nature of this problem is amply demonstrated by the experience of the United States of America, the greatest exponent of the isolationist policy among the nations. Notwithstanding her tremendous home market and seemingly well-balanced industrial and agrarian productivity, America to-day has a greater industrial problem than any other major country, with 11,000,000 of unemployed, equivalent to 20 per cent, of wage earners. If a nation so anxious to stand alone as America, and seemingly so well equipped to do so, can do no better than this, it ought to bt; accepted as conclusive proof that the remedy lies in multilateral, rather than unilateral action.

I ask the members of the Labour party to consider whether their present fiscal views will not lead us along the same track as that which the people of the United States of America have followed. I have another opinion to bring under the notice of honorable senators which shows that a complete change of front has been shown by the Government of the United States of America since the HawleySmoot tariff of 1930 was implemented in that country - a tariff, I remind honorable senators, which was very similar to the Scullin tariff of 1932. ‘ The Honorable Cordell Hull, Secretary of State of the Government of the United States of America, speaking at a world trade dinner on the 1st November, 1934, said - 1,1.- appalling repercussions of the 1030 Tariff Act upon our own domestic prosperity brings home the lesson that in this day and agc the tariff is no longer a purely domestic issue. We learned that a prohibitive protective tariff is a gun that recoils upon ourselves. Thu time was when we could fix the tariff to suit ourselves without serious injury to our exports, then consisting largely of raw materials of which we were the chief source of supply. That day is gone. We now face vigorous world competition in both our agricultural and our industrial products. Slammum the door shut against foreign products, we have found the door shut against our own products. Other countries were forced to raise their tariffs as a means of protection in retaliation for our own exclusive attitude. At last, with most countries frantically building barriers of tariffs, quotas, import licences, and exchange restrictions against their neighbours, international trade has been choked down to a fraction of what it was.

I remind honorable senators that America is a creditor country -

With a cessation of our foreign lending, we have found that we cannot continue to export without importing goods. The blocked balances which our exporters are now facing in various parts of the world are the conclusive proof that exports cannot continue indefinitely without an expansion of interest. Foreign countries do not have the purchasing power with which to pay for our goods. They cannot borrow indefinitely. They cannot send us any appreciable additional quantity of gold. We have reached the end of the road. The frail stage of our play-acting has collapsed, and our dream world dissolved.

This statement, following upon America’s experience of an isolationist policy, should indeed be a lesson to the Labour party of Australia. So much for the operation of such a policy in foreign countries. I shall now submit a statement on this matter made by the Tariff Board in its report in 1933. This is an Australian body which deals with affairs as they exist locally, and, judging by its report, it sees the dangers of trying to make Australia self-contained. It says -

There remains, however, another important section of the community comprising the exporting industries, whose interests demand increasing consideration.

And I draw the attention of the Leader of the Opposition (Senator Collings) particularly to the following remark -

The level of Australia’s national dividend depends very largely upon the volume and value of her exported commodities.

This fact, however, does not worry the Leader of the Opposition, because he advocates that Australia should do without an export trade.

Senator Collings:

– I did not say that.

Senator HARDY:

– I shall show the honorable senator that he did. The Tariff Board goes on to say -

The movement of to-day towards extreme economic nationalism is causing many ports to be closed to our products. This tendency to curtail international trade must react towards a lower standard of living throughout the world. The effect on Australia would, however, be particularly severe. A large proportion of our more fertile lands is peculiarly suited to the production of wool and wheat. Whereas we labour under natural disadvantages in respect to many products of the land, as regards the production of wool - particularly line wool - Australian conditions stand out as supreme. It has been due to this economic advantage that

Australia has made so much progress during the last century, and this progress has been possible because of the world’s steady demand for our main product.

Senator Collings:

– Of course!

Senator HARDY:

– How can the honorable senator say “ of course “ to such a statement, when he advocates that we should do away with our main exportable product?

Senator Collings:

– I said nothing of the kind. In any case, whose essay is the honorable senator reading?

Senator HARDY:

– I am quoting from a report of the Tariff Board, which continues -

Should the tendency for each country to live upon its own products increase to an extreme degree, the living standards of all will be affected, but by reason of her peculiar circumstances, Australia would suffer most. It is of the utmost importance, therefore, that in the decision as to what tariffs should operate, this consideration should never be overlooked. For obvious reasons, the board seldom makes reference to this issue in preparing individual reports, but it is an issue that is ever in the mind of members of the board.

From the remarks I have cited by Sir Frederick Stewart, Mr. Cordell Hull, Secretary of State in the United States of America, and the Australian Tariff Board, it is convincingly clear that, if we are to be guided by actual experience, we must abandon for ever the idea of adopting an isolationist policy, with the object of making Australia selfcontained. Repeatedly, the Leader of the Opposition has claimed in this chamber that, under divine guidance, one of his main missions in life is to protect the worker, because, he says, he and his colleagues are the only people who have really got the interests of the worker at heart.

Senator Collings:

– I have never made such a claim.

Senator HARDY:

– Only last night the Leader of the Opposition said that the people of Australia were divided into two sections, namely, those who do the work, and those who “ do “ the workers, and he obviously assumed the role of one who does the work. But, if he had his way, and a high fiscal wall were erected around this continent, he would be doing the greatest possible disservice to the Australian workers, because a high tariff immediately causes a rise of prices, and in turn this rise decreases the purchasing power of the workers. I can submit many instances showing that in countries which have established a prohibitive tariff, particularly the United States of America, the consequent rise of prices has been exceptionally high. In support of this contention I shall now quote from the report on unemployment made to the Commonwealth Government by Sir Frederick Stewart, in which he deals with agricultural protection and its consequent price disparity in Europe, and I want the Leader of theOpposition to consider these facts carefully. Sir Frederick Stewart said -

As an illustration of the price disparity, there are given in the table below, the domestic wholesale prices of butter in various European markets in December, 1934: -

In a similar way, wheat prices have been maintained in Italy, Germany, France, and Switzerland at many times the price at which imported wheat could be obtained. (8s.6d. to11s.6d. a bushel, against a “ free “ wheat price of 2s.6d to 3s. a bushel).

Beef prices also have been 40 per cent, to 50 per cent, higher in some European countries than in Great Britain.

On this point I shall also quote from a report of the Tariff Board, a body which is often sneered at by the Leader of the Opposition as being inefficient.

Senator Collings:

– I have not sneered at it.

Senator HARDY:

– I am glad to bear the honorable senator say that, and shall substitute the word “ criticized “ for the word “ sneered.” I shall bear his remarks in mind when we come to deal with duties on cement. Dealing with the increase of price levels in 1933, the Tariff Board said -

Tariff duties which exclude external competition may tend to stabilize unduly high prices and encourage heavy profit-making, or, by taking away the pressure of competition, may reduce efficiency.

Analyse for one moment the reason for Labour’s so-called “ new protection “ policy, which the Leader of the

Opposition expounded in his firstreading speech on this bill. This drastic revision of tariff policy has been forced by the realization that high profits for the manufacturer do not mean higher wages for the worker. The failure to secure for the worker the high wages which the Labour party contended should have been the result of a high tariff, has forced this party to change its fiscal policy within the last two or three years. The extract continues -

Even where such results are not likely because of keen local competition, the imposition of prohibitive rates has frequently had a disruptive effect on the local industry itself by inducing over investment of capital in manufacturing plant thus dividing output and increasing overhead, the reduction of which was the professed objective when the prohibitive rates were imposed.

A high prohibitive tariff means increased prices and does a disservice to the community. It is impossible to reconcile a high tariff and low prices. Personally, I can never understand why the Labour party should claim that Australia should be self-contained, for, in my opinion, that objective is neither logical nor sensible. Even a cursory survey of the economic structure of the Commonwealth will show that it would be impossible to dispense with Australia’s export trade. The re-adjustment that would be necessary for Australia to become self-contained could not be made without ‘appalling results to the nation.

Senator Collings:

– The honorable senator is merely setting up bogies.

Senator HARDY:

– I am. not. The honorable senator has said that it would only be necessary to export sufficient goods to service our overseas debts. In order to do that, exports to the value of only £28,000,000 a year would he necessary. Does the honorable senator advocate that Australia’s exports, which are valued at £80,000,000 per annum, expressed in sterling, should be reduced to £28,000,000?

Senator Collings:

– I have never suggested that.

Senator HARDY:

– Although I do not intend to give to the Senate a mass of figures, I point out that 45.9 per cent, of Australia’s total primary production during the ten years from 1924 to 1934 was exported. Therefore, any re-adjustment along the lines which I have suggested would have to deal with practically half of our total primary production. When we reflect that approximately two-thirds of Australia’s total production is represented by primary products, any re-adjustment along the lines mentioned, even if spread over a period of years, would be impossible. When the Leader of the Opposition advocates a limitation of exports, does he realize that 36.76 per cent, of Australia’s total agricultural production is exported?

Senator Collings:

– I have never advocated a limitation of exports.

Senator HARDY:

– On page 2,331 of Hansard for 1933, Senator Collings is reported as saying : -

In my opinion the sooner wo concentrate on exports for the purpose only of discharging existing liabilities and not for the purpose of buying abroad goods which can be produced in Australia, the better it will be for all of us.

Senator Collings:

– That is different from what the honorable senator said that I had said.

Senator HARDY:

– The report proceeds : -

How long do we intend to produce tons and tons of goods much of which we consume ourselves . . .

I should like to see the honorable senator get the Australian population to consume our surplus butter; it would be impossible- if we were given the opportunity but which now in the final analysis have the effect merely of reducing the standard of living of primary producers.

Does the honorable senator realize that 66.68 per cent, of Australia’s total pastoral production, 21.35 per cent, of its dairy and farmyard products, 51.1 per cent, of its mining production, and 14.69 per cent, of its forestry and fisheries products are exported. If the honorable senator knows these things, and also that Australia’s exports to-day are valued at over £80,000,000 expressed in English sterling, he must realize that it would be impossible to reduce that production to sufficient merely to service our overseas debts.

Senator Collings:

– The honorable senator is merely setting up a number of bogies; so far he has not made one truthful statement.

Senator HARDY:

– The honorable senator may reflect at leisure on what I have said, and I invito him to prove me wrong. The figures I have given have been taken from official publications.

Senator Collings:

– The honorable senator knows that I have already spoken.

Senator HARDY:

– When I entered the Senate the President offered me some good advice. He said, “Whatever you do, Hardy, make sure of your facts when you speak in the Senate “.

Senator Collings:

– Evidently he knew the honorable senator.

Senator HARDY:

– I come now to the subject of imports. In the House of Representatives, as well as on public platforms throughout the country, the statement is frequently made that the flood of imports is becoming so serious that Australia will not be able to meet its overseas obligations. As the Minister has already pointed out, the position is improving day by day. That improvement, which is a credit to the Government, is an indication of a revival of Australia’s export industries. Australia’s favorable commodity trade balance for the period July, 1935, to February, 1936, was £9,931,000 compared with £4,575,000 for the same period of the previous year. The total balance on the 18th of April was £21,650,000 expressed in sterling in favour of Australia as the Minister has already stated. In other words, there was a surplus of exports over imports valued at £9,266,000 in 1934-35, and at £16,054,000 in the following year. But one cannot place too much reliance on the balance-of-trade figures. That the Government cannot pay too much attention to the balance of trade payments is clearly illustrated by the experience of two countries which recently endeavoured to enter into a bilateral trade agreement. When they got together and submitted figures, each was astonished to find that it had a favorable balance with the other. The figures submitted to the Senate to-day do not take into account a. number of invisible items, as for instance, tourist expenditure overseas, repatriation of money overseas, and capital invested in this country by overseas interests. Therefore, whenever I discuss the subject of imports and exports, I never take too seriously the figures relating to ordinary commodity balances, because it is impossible to get them on an accurate basis.

Senator Collings:

– The honorable senator takes only those figures which suit his purpose.

Senator HARDY:

– I greatly deplore the tendency on the part of leading men in this country, and also members of the Senate, to discuss trade matters on a bilateral basis. It is just as wrong to do that as it would be for one retailer to refuse to buy from a wholesaler because he sold goods to another retailer. The guiding principle that we should adopt in our trade policy is that of multi-lateral trade agreements. It is most entrancing for a negotiator to set down the estimated trade of his country with that of another country in order to arrive at the balance of trade in somewhat the same way as Noah counted the animals as they entered the Ark, two by two; but if the system of bi-lateral agreements is carried to its logical conclusion, it means that every country would have an exact trade balance with every other country with which it dealt. In that event, international money would not be required, because barter would take its place. Such a position would be both fantastic and ridiculous. The making of multilateral trade agreements and the adoption of . their principles are worthy of the serious consideration of the Senate. Only yesterday an attack was made on an eastern country with which Australia has a favorable trade balance. Are we to argue with that country that its adverse trade balance with Australia is purely illusory, and then take up an entirely different attitude so far as the United States of America is concerned because with that country we have an adverse trade balance? We cannot make flesh of one and fish of the other. I admit frankly that there are certain instances in which we can depart from that principle, and apply, as this Government has done, what is known as the most favoured nation treatment, and I would recommend that this basis be adopted as far as the United States of America is concerned. The United States of America, of course, is one of the most wonderful examples of a nation, one moment asking for multilateral agreements, and the next negotiating on a bi-lateral basis. I submit again, that whatever we do, Ave should not try to regiment our trade on a bi-lateral basis. We should look at the whole principle of international trade.

I want to refer again to statements made by the honorable Leader of the Opposition about “ frightful and horrible “ imports.

Senator Collings:

– Can the honorable senator not be reasonable? I have never used those terms.

Senator HARDY:

– Let us check this statement about “frightful and horrible “ imports of which the chief instigators are Japan and Great Britain. In 1934-35 our imports from Japan, expressed in sterling, amounted to £4,624,000, but we sold to that country goods worth £12,095,000, making a profit of £7,471,000. Does the honorable senator not call that profitable trade? Does he claim for one moment that that trade should be eliminated? He believes that it should be all one-way traffic! Let us also consider the “ frightful and horrible “ imports from Great Britain. In 1.934-35 imports from Great Britain were valued at £30,78S,000 and we sold to Great Britain goods to the value of £63,569,000, making a profit of £32,781,000. These are economic facts not taken into consideration by the Leader of the Opposition because he is pledged to a self-contained Australia. He and his party are pledged to producing only enough exports to service our overseas debt. He believes in one-way trade.

While on this question of “frightful and horrible” imports, I shall deal with an extract from a report by the Tariff Board in 1935 on increased importations. The board reported -

The significance of increased importations is often exaggerated. Frequently, the increase is merely in line with the general increase in trade consequent upon a partial return to prosperity.

What is really the matter with the Leader of the Opposition? In actual fact it is not the fiscal condition of which lie is complaining. His complaint is against the fact that over the last three years this Government has been successful in bringing to Australia a great degree of returned prosperity. I was particularly interested when I listened, in another place, to the debates on this question of prosperity. I could produce for the consideration of the Senate to-day many figures, such as company returns, share indices and unemployment statistics, showing that prosperity is returning to Australia, but those figures are well known to us all. If, however, the Government requires any facts supporting the contention that the downward revision of the tariff has been beneficial to Australia, they can be found in the additional factory hands in employment at present. The Minister in charge of the bill has already said that factory hands numbered 336,65S in 1931-32 ; 370,727 in 1932-33 and 504,909 in 1933-34. To-day they stand at 459,000.

Senator Collings:

– The Minister selected the depression year.

Senator HARDY:

– Yes; but he did not hide the fact that the depression year was handicapped by the Scullin prohibitive tariff, which, instead of putting men in work, drove them out of work.

Senator Collings:

– That is not correct; factory employment went up by leaps and bounds.

Senator HARDY:

– One very ingenious supporter of the Labour party in another place said that the recent increased factory employment was due solely to the increase of population. That statement has been made, and is being made by supporters of the Labour party; but it is easy to disprove. The excess of births over deaths in this country in 1931-32 was 61,449. Even the most optimistic person could not say that that excess could affect factory employment. The only additions to the population that could affect factory employment would be the excess of arrivals over departures, but in the year under discussion there was no excess - the departures exceeded the arrivals by 10,094.

Senator Leckie:

– Did not 61,000 persons become adults in that year?

Senator HARDY:

– Yes; but it is at the school-leaving age, and not when they become adults, that persons enter industry, and moreover deaths of persons between the ages of 20 and 60 in this country in 1934 numbered 18,935. It is only reasonable to assume that their departure for another world made some provision for other persons to succeed them in industry. Let us recognize the facts. Prosperity came to the country because the present Government put forward a wise fiscal policy, which suited both sections of production, secondary and primary. If honorable senators want to know why more factory hands are employed, they should look at the statistics of factories, for therein lies the true story of increased factory employment. The total factories in 1931-32 were 21,657, whereas in 1933-34 they were 23,297.

I want briefly to deal with the statement made so often in the Seriate that the population engaged in primary pursuits is decreasing, and that the industrial population is increasing tremendously. Those who make those statements do so in the hope that the conclusion will be drawn from figures such as were submitted yesterday by the Leader of the Opposition, that the destiny of Australia lies in secondary, and not primary, industry. The Production Bulletin from which Senator Collings took his figures, does not take into account seasonal labour, whereas the census does so. I venture to say that the men who pass on from station to station, and the farm hands who go from one property to another are important factors, which are not taken into consideration in the Production Bulletin. Moreover, proprietary interests and proprietors are not recorded in that publication. The census figures are, therefore, more reliable than those contained in the Production Bulletin.. If we refer to the census figures of 1933, it will be found that the swing of the population from primary industries, and the increase of the number employed in secondary industries is not nearly so great, as issuggested by the figures submitted yesterday by the Leader of the Opposition. In 1911, the percentage of the total population engaged in primary production was 13.1, and in 1921 it had decreased to 10.6, but from 1921 to 1933 the drop was only to 9.6, or only 1 per cent, in the 12-year period. According to. the Leader of the Opposition, the industrial figures show a tremendous swing, but between 1921 and 1933, when there was considerable expansion in the industrial arena, according to the census figures which are more reliable than those contained in the Production Bulletin, the percentage of the total population engaged in industrial undertakings in 1921 was 8.2 and in 1933 it was 7.7. While I do not deny that there has been a swing towards the secondary industries, which I do not decry, the swing has not been so great or as significant as the Leader of the Opposition suggests.

Senator Duncan-Hughes:

– Has not that occurred mainly since 1933?

Senator HARDY:

– I have not analysed the position sufficiently to say whether that is so.

As the matter is linked with our general export policy, I now desire to deal briefly with the Ottawa agreement, which the Leader of the Opposition referred to as a useless agreement that has operated to the detriment of Australian interests generally. In 1933, he said-

I expected nothing from Ottawa. I got nothing from Ottawa, and Australia has got nothing from it. It does not matter how much honorable senators opposite may try to deceive themselves and persuade the primary producers that they got something out of Ottawa. The producers themselves know that they got nothing out of it.

Let us analyse the position briefly in order to determine the accuracy of that statement. In 1932-33, when the Ottawa agreement was adopted, Australia sold to the United Kingdom 47.66 per cent, of the whole of its exports, and in 1934-35, the figures for which are the latest at my disposal, the percentage had increased to 52.11, showing that under the preferential provisions of the agreement the primary producers of Australia have been able to increase their sales to Great Britain. Is it still to be contended that the primary producers of this country have received no benefit from the Ottawa agreement? I could also mention numerous examples showing where higher prices have been obtained as the result of the operation of thatagreement. It is well to realize the importance of the British market, because, as I have said on previous occasions, we cannot afford to do anything that will weaken our preference in that market. In order to show to the Senate the importance of that market, I quote the following extract from the Economic Trade Conditions in Australia of July, 1935 -

The United Kingdom is still by far the largest single purchaser of Australian products, her share in 1933-34 amounting to 51.7 per cent, of the total or more than four and a half times as much as Australia’s next best customer - Japan. Leaving out wheat, wool, and flour, the purchasing of which by foreign countries is essential, by reason of the special nature of the product, the United Kingdom takes over 70 per cent, of the balance of Australia’s exportable products.

That statement is likely to be of some significance during this debate. The following table shows the percentages of exports of Australian primary products sold in the United Kingdom -

Senator Collings:

– What is wrong with that? Why should not Great Britain purchase our products?

Senator HARDY:

– That trade depends largely upon the preferences extended by the United Kingdom to Australia, and if we discredit the Ottawa agreement we are endangering a most valuable market.

Senator Foll:

– I suppose the honorable senator recognizes that Great Britain is glad to purchase our raw materials.

Senator HARDY:

– It could obtain raw materials from other countries, and in many cases at a cheaper price, but I should not like to say what the result might be to Australian industries. I believe that every member of the party to which I belong will support me when I say that it is essential that, as a nation, we should not do anything likely to weaken our preferences in the British market.

I now wish to speak on the definition of “reasonable” duties. The members of the Country party have always advocated the imposition of reasonable duties to protect Australia’s secondary industries. We have always said that Australian secondary industries are closely related to the local market for primary products, and we recognize that the local market consumes more than one-half of our primary products. The definition of a reasonable duty is closely related to the Ottawa agreement, because article 10 provides that there must be “ full opportunity of reasonable competition”. The Tariff Board, in its report for 1933, interpreted that article in these terms -

The Board considers that a reasonable duty to protect an efficient economic industry should be high enough to raise the landed cost of an overseas product to the level which will -

Compensate the local manufacturer for the higher cost (if any) of Australian labour-

I ask the Leader of the Opposition: Can there be any controversy with respect to this principle? -

  1. Offset the higher cost (if any) of raw materials and overhead charges-

Every one engaged in commerce knows how important it is to consider this item -

  1. Provide a marginal advantage in favour of the Australian manufacturer.

Concerning those three guiding principles there is no valid reason to challenge the view of the board. Even the keenest protectionist could not, in fairness, ask for more consideration, and these are the principles which govern the schedule now before the Senate. It should be noted further that article 10 of the Ottawa agreement provides that, in the application of this principle, special consideration may be given to industries not fully established.

I trust that I have given honorable senators a clear outline of the fiscal policy of my party. We believe that, in making a downward revision of the tariff, the Government has taken the right course, because we are firmly convinced that the economic health of the world cannot be restored until legislative measures, including such tariff revision, are taken in all countries to make international recovery possible. We, therefore, believe that it is the duty of all Australians to endorse the principles which have been laid down by the Tariff Board and which are contained in the hill now before the Senate.

Senator BROWN:
Queensland

– Senator Hardy lias just made a violent attack upon my leader (Senator Collings) and the Labour movement to which I have the honour to belong. He has grossly misrepresented not only the views of Senator Collings, but also the policy and platform of the Labour party. I trust that in the time allowed to me in this debate I shall be able to prove to the satisfaction of all honorable senators that the honorable gentleman has handled the truth very carelessly.

The Labour party is not a party of isolation. It is not- so stupid as to approve any action that will impede international trade. It does, however, believe that no fiscal action should be taken to undermine any Australian industry. Labour has always fought strenuously for the protection of Australian primary and secondary industries. Since this Government has been in power it has reduced the duties on over 1,000 tariff items, and in attempting to meet its obligations under the Ottawa agreement it has encouraged the importation into this country of goods which clash with Australian products. This is in direct opposition to Labour’s policy to protect the Australian market for Australian producers. We contend that it is foolish to encourage competition in basic materials and basic industries. The best way to improve international relationships is to raise the standard of living in all countries, and thus promote world trade.

Sitting suspended from 12.J/S to 2.15 p.m.

Senator BROWN:

– We of the Opposition approach this matter with no vested interests to serve. The majority of those who have risen from the ranks of Labour have no investments in manufactures, breweries, or pastoral properties, and, generally speaking, represent a large section of the community which does not derive any portion of its income from profits. Therefore, we are without bias. The tariff should be dealt with from a national viewpoint. Private manufacturing interests and the interests of those who are engaged in primary production should be subordinate to the national welfare. That, those who have large vested interests of any kind should desire to foster governmental action that will bring to their coffers greater returns than they have hitherto enjoyed, is quite understandable. A private person cannot be condemned for assisting to effectuate that, to him, desirable state of affairs. On the Government side of the Senate are men who not only have big interests, but also represent big interests. Consequently, their efforts towards the implementing of a tariff policy designed to promote national interests, must be somewhat vitiated. That is not a derogatory remark, but merely the statement of a fact which cannot be gainsaid. Any class or section of the community which advocates a particular tariff policy because it will improve its balance-sheet, will naturally support a party which will achieve that particular object. Our aim is, not to give an impetus to one particular industry so that it may improve its financial position, but to advance the interests of Australia as a nation in relation to the economic position of the world. When the time arrives for the Labour party to implement its tariff policy, it will have to take full cognizance of what is happening in the world. Senator Hardy, and other honorable senators, would ignore that factor. They prefer to hark back to the good old days; they would put back the hands of the clock. But the economic system operates inexorably, and no government in any part of the world can stay the march of time. We recognize that fact, others do not; therein lies the difference between the Labour party and the tory party, which at present is charged with the administration of the affairs of this country. I admit that governments can assist in some measure the development of a country. A wise government keeps abreast of evolutionary development, and so shapes its policy as to give impetus to it. The members of the party to which I belong have been charged with having continually bolstered up or assisted the manufacturing industries. One section of the community regards the manufacturers as industrial vampires who suck the lifeblood of the community. Senator Johnston holds that view. On the other hand, some manufacturers imagine that they are industrial innocents who are being slaughtered to make a freetrade holiday. These and many other views are held by members of this chamber. Senator Johnston expresses the view of the real Country party, while that of the official conservative Country party is sponsored by Senator Hardy, who espouses his cause without real regard for the truth. There is also the policy of the Government as enunciated by Senator A. J. McLachlan. A Jew other honorahle senators have personal policies. This multiplicity of policies may be a good thing, because in the multitude of counsellors there is wisdom, and among them may be found some common denominator or some principle which embraces the greatest measure of truth.

Senator Dein:

– Would vested interests approve of the honorable senator’s tariff policy ?

Senator BROWN:

-Some would. They are naturally anxious to do their utmost to promote their own welfare, and recognize that a party which is free from bias and desires to improve the position of Australia in accordance with world happenings, is worthy of support. I have nothing to hide. I wish to be quite frank. Some industrialists who have had a fair deal from the Labour party have shown their appreciation by giving it a kick in the political pants. They have placed their trust in this Government, which, during the last twelve months, has effected reductions in over 1,000 items of the tariff. The following statement was made recently by Mr. Curtin, the Leader of the Opposition in the House of Representatives: -

  1. Henceforward, manufacturers could not take the Labour party’s support on tariff matters for granted. (2) Greater vigilance would he exercised by the party to ensure that manufacturers provided satisfactory conditions for their employees. (3) Protection would depend also upon the consumers being given a fair deal by the manufacturers. This did not mean that what might be called the new economic policy of the Labour party was a weakening of the Labour party’s policy of protection, as the national policy. It really meant that it had been strengthened.

Mr. Curtin is the very able leader of a very able party, which some day will be in control of the government of this country.. There are some who say that the Government has not the power under the Constitution to implement - a muchabused word - the new protection policy. During his second-reading speech the Minister made a statement in regard to the powers conferred by section 15h of the Tariff Board Act. I draw his attention to the fact that the board has the power to call before it and deal with any manufacturers who take undue advantage of the protection afforded to them by the tariff. Section 15 of that act states, inter alia -

The Minister shall refer tothe board for inquiry and report -

Any complaint that a manufacturer is taking undue advantage of the protection afforded him by the tariff, and in particular in regard to his -

charging unnecessarily high prices for his goods; or

acting in restraint of trade to the detriment of the public; or

acting in a manner which results in unnecessarily high prices being charged to the consumer for his goods.

When the Minister was making his second-reading speech this morning, he quoted something which Mr. Scullin had said on this subject. I asked the Minister, by way of interjection, whether this section of the Tariff Board Act had ever been put into operation, but he ignored my interjection as he was quite entitled to do. My point is that if punitive action is taken against manufacturers in accordance with the provisions of the relevant section of the Tariff Board Act, such action might very well be regarded as a contravention of section 55 of the Constitution, upon which a decision was. given by the High Court in, I think, 1908, in the Harvester case. Section 55 contains the following: -

Laws imposing taxation shall deal only with the imposition of taxation, and any provision therein dealing with any other matter shall he of no effect.

Laws imposing taxation, except laws imposing duties of customs or of excise, shall deal with one subject of taxation only; but laws imposing duties of customs shall deal with duties of customs only, and laws imposing duties of excise shall deal with duties of excise only.

If the High Court was right in 1908 in holding that the New Protection involved the bringing in of foreign matter, it would be equally right, I think, in condemning any government action under section 15 of the Tariff Board Act for the punishment of manufacturers who exploit the public.

The Labour party holds no special brief for manufacturers; we regard these matters from a national view-point, but 1 remind honorable senators that on several occasions the Tariff Board has made direct accusations against certain manufacturers to the effect that they have, under cover of the tariff, exploited the public. Only recently such a case was cited in this Parliament, and no doubt we shall hear more’ of it. When such accusations are made, it is surely only just that the accused persons should be given an opportunity to defend themselves. As things stand now, the Tariff Board seems to be prosecutor, judge, jury and executioner all rolled into one.

I am not convinced that a.11 the facts are being placed before the Tariff Board in regard to English manufacturers who seek to obtain a footing in the Australian market. The Australian manufacturers arc continuously subjected to attacks from certain sections, and the impression is sought to be created that they are, in fact, an economic menace, operating contrary to the best interests of the community. Their competitors in Great Britain, however, are free from such attacks ; they are not brought before the Tariff Board and forced to make a full disclosure of their manufacturing costs, distribution charges, &c. Certain general information regarding British goods and manufacturers is submitted to the board, but we know very well that complete information is never forthcoming. For instance, it is well known that certain commodities suitable for ballasting ships coming to Australia receive the benefit of very favorable freight rates, but that fact is not placed before the board, although it gives to the British manufacturer an important advantage over his Australian competitors. The board calls for invoice prices, freight charges, &c.. in respect of imported goods, and from those figures arrives at its deductions, but the figures do not tell the whole story. Yet, in the terms of the Ottawa agreement, the protection afforded Australian manufacturers is based upon information of that kind, inadequate though it may be.

The Labour party is not opposed to the importation of commodities, but it is opposed to permitting the importation of such commodities as can be produced abundantly and cheaply in Australia. It must be borne in mind that there are hundreds of commodities not produced in this country, and which can with advantage be imported, but it is stupid and foolish to think that we are going to improve the general economic condition of Australia or of the world by entering into a battle for markets in respect of basic commodities. When certain basic commodities can be produced in Australia, the market here should be conserved for them, and there should be no question of admitting such commodities from abroad. Primary and secondary industries have been established in Australia at great cost, and we have had to fight to make it possible for them to succeed. There should be no question of outside competi- tion. We should do everything possible to conserve our primary and secondary industries and so to arrange markets for our export products that the imports,, which we must take in exchange, will raise rather than lower the standard of living. The policy of this and many other governments in the past has brought, about a relative reduction of the standard of living in Australia, whereas, the policy of the Labour party is to use international trade for the general improvement of the standard of living.

I have frequently been charged with-, labouring the subject of self-sufficiency. Senator Hardy enlarged upon this subject, and like a good many others condemned the Labour party because itbelieves in self-sufficiency and selfreliance as a means of world peace; lie”even went so far as to say that such apolicy is the cause of war - a mostridiculous statement. As a matter of fact, I think it can be proved conclusively that the old-fashioned form of international trade, in which there was a constant fight for markets for commodities-, that can be produced in abundance, has be?n one of the chief causes of war. Yet,, we heard the “ Cromwell of theRiverina “, the gentleman who has seen the light, saying that if we can only foster international trade, if we- can only put more butter, more wheat.. and more- wool on the markets of the world, international problems will be solved. Any man who uses his brains must see that a policy of self-reliance and of selfsufficiency, of letting the world generally know frankly and freely that we stand on our own resources, and will not be dependent on reciprocity and bi-lateral agreements, will do more for the preservation of world peace than all the recent efforts in Europe of the Minister directing negotiations for trade treaties (Sir Henry Gullett) to sell an extra hundredweight of meat here, and an extra pound of butter there. The nations of the world will then respect Australia just as we respect European countries, the United States of America and Japan when they say that as they can produce certain commodities, they have no desire to import them. When we have reached that stage in our internal develop ment, we can approach other countries with a view to the exchange of surplus commodities. The world is rapid reaching the stage where the standard of living can be raised, and international trade can be placed upon a far better basis than that of a struggle to sell goods which can be produced in super abundance. War, in the main, is the direct result of the constant conflict which is going on between the various countries to sell commodities which each can produce in abundance. Only yesterday, we listened in this chamber to a discussion on wool. Honorable senators know the difficulties presented to the wheat industry because Canada and other countries besides Australia can produce wheat in such large quantities. We know also of the struggle which is constantly going on between Australia and Argentina because the latter country is flooding the market of Britain with its surplus products, and producing in abundance meat which comes into direct competition with Australian meat.

Senator Duncan-Hughes:

– There is no talk of war because of that.

Senator BROWN:

– But these things lead to international bitterness, and when war comes, some of the small nations will be on the side of the bigger ones which make the best proposition to them. Surely Senator Duncan-Hughes must be fully aware of that. There is talk of war in Europe at the present time.

Senator Duncan-Hughes:

– I am referring to Argentina.

Senator BROWN:

– That country will side with any country which offers it the best trading terms. I think it cannot be denied that the struggle for markets is, to a very large extent, the cause of war. Under our present system the purchasing power of the people does not rise in consonance with our productive power, and the need for one country to sell its commodities . to another which itself produces the same commodities in abundance leads to international antagonism and war.

Senator Duncan-Hughes:

– If the honorable senator said that the exclusion of others from the markets of the world was the cause of war, he would be closer to the truth.

Senator BROWN:

– We should be interested in these basic questions. This is no parish pump affair, but a matterof national policy. Unfortunately, many honorable senators are not interested in these big questions, but we on this side are vitally concerned with them. Some day this Parliament will be forced to take cognizance of them whether we like it or not. Lancelot Hogben, writing in the Australian Highway, says : -

The parties to the left of die-hard conservatism are united in a vague conviction that some sort of world state is a desirable goal. Liberal and Socialist politicians reiterate the dogma that economic nationalism means a general lowering of the standard of life. Since we are largely dependent on other countries, this means that in time of crisis imperialism can always reap the benefit of a situation in which sentimental internationalism offers us the alternatives of war and starvation. Both beliefs rest on a ubiquitous, tacit, and all the more dangerous because never explicit, creed that increased material resources placed at our disposal by advancing scientific knowledge make nations more interdependent. It is only necessary to state it in explicit terms to expose its utter falsity. Our mediaeval wool industry had to import incinerated charcoal from the forests of Eastern Europe as a source of potash. The sixteenth century gunpowder industry relied on the manure dumps of India for nitrates. The entire textile production of the world till the middle of last century depended on natural plant dyes. We can now produce all the alkali we wantby electrolysis of brine … In short, the most significant advances in the application of science to social life during the past two centuries has helped us to find universal substitutes for the endowments which nature distributes in localised areas.

The increased application of science to industry has caused developments in Australia similar to those taking place in other parts of the world. We cannot shoot or imprison the scientists, nor can we prevent the dissemination of their ideas. Yet the modern troglodytes say, “ Let us put back the clock-, and return to the old days of international trade.” According to Senator Hardy, some magic result may be expected from shipping our primary products 10,000 miles or more overseas, and bringing them back to Australia in the form of manufactured goods ; but we have to deal with the facts as we find them. Australia produces large quantities of raw materials, and it has sufficient man-power and intelligence to use them to the best advantage. It is the height of folly to send raw materials overseas, seeing that by manufacturing them in Australia we could develop local industries, which would employ our people in producing the goods they need. We on the Opposition side will continue to denounce the utter absurdity of destroying our own industries merely because a certain section prefers to export our raw materials and import manufactured goods. It would be well for honorable senators to recognize the foolishness of the doctrines advocated by the conservative die-hards. In a pamphlet issued by the Victorian Chamber of Manufactures, the following passage occurs: -

Economic nationalism may be described as a policy with a domestic emphasis. It postulates that the employment of labour and the development of resources are of more importance to a country than the profits of foreign traders. Moreover, many people hold the view that the pursuance of a policy of economic nationalism will eventually make for peace between nations. In this they are supported by the redoubtable Mr. J. M. Keynes, who urges the view that it will “ minimize rather than maximize entanglements between nations.” For that matter, most modern economists readily agree that frectrade is not the harmless dove of peace that it is claimed by some to be. Actually, freetrade is but another name for maximum international competition and strife. As such it is wholly antipathetic to the maintenance of peace between nations.

Moreover, it must be recognized that the growth of the general idea of national selfreliance or economic nationalism is the inevitable corollary of modern technical, agricultural and industrial education, and of scientific research in general. This economic development was therefore inevitable in any case, even had there been no war blockades, submarines, food shortages, and food rationing experiences to hasten it. The lamenting of the inevitable is never a profitable occupation; such, however, occupies a considerable proportion- of the time spent in fiscal controversy. The explorer, Dampier, commenting two centuries ago on some of the natives he saw in the north-west of Australia, described them as “ the most miserablest people in the world.” To-<lay it is not difficult to find a number of Australians who, when contemplating our protective tariff, would place themselves in precisely the same category.

It is clear that science, as applied to industry, has made it essential for a country like Australia to adopt a policy of self-sufficiency. I like to quote from statements made from time to time by the general manager of the Bank of New South Wales. A circular issued by him recently contained some wise observations, among which was the following : -

If, in face of persistent economic nationalism, the typical policy of predepression Australia - namely, ‘ producing raw materials for export and borrowing from abroad for development purposes - has to be modified considerably, the problem which presents itself is how to make further readjustments of our economy to meet the situation. While demanding of private and public enterprise alike a continuance of that increase in efficiency which the depression has occasioned, we shall have to look at some public policies from a new view-point.

It will be no solution of our problem to urge more land settlement, to produce those things which the world refuses to buy. Eather it will be necessary to take thought to facilitate the transfer of some producers from a sphere of activity which has ceased to be profitable to one which offers greater hopes of success. A transfer of this kind on any large scale is a difficult matter to handle. Meantime, some of the resulting unemployment will have to be met by a continuance of public works.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– What is the date of that circular?

Senator BROWN:

– The 17th June, 1935. Some men on the conservative side fail to take due notice of their own leaders.

The Minister for Commerce (Dr. Earle Page) is now in the Old Country, trying to arrange a long-term policy with regard to Australia’s exports, and I wish him good luck in this work. I trust that, with the assistance of the Premier of Queensland, Mr. Forgan Smith, he will be able to do something of great value to the Commonwealth; but the arrangements which he is endeavouring to make cannot be more than a temporary expedient. Sometimes I feel disposed to agree with much of what Dr. Earle Page says. He certainly speaks quite bluntly. Addressing a meeting of the Australian Country party at Grafton on the 18th April, 1934, he attacked Great Britain with regard to its treaty with Russia. He said -

At the same time as Britain is bringing this pressure to bear on the dominions, she signs a treaty with the Soviet in which, though it does not provide for the immediate equalization of direct exports of merchandise between the two countries, sets up a sliding scale that will approximately .balance each other’s exports by easy stages, and in 1938 Russian exports to Great Britain shall be in the ratio of 11 to 10 in terms of British exports to Russia.

He proceeded -

It is necessary to do something through closer treaty between Britain and Australia, which gets down to every individual line of merchandise and produce, to make sure that where we can, without injury to our own people, we should admit British goods while Britain gives unrestricted entry to our goods.

Dr. Earle Page is evidently a realist to the extent that he would deal with individual items, and decide whether or not we should enter into trade agreements with regard to them. In my opinion, that policy should be applied to individual items which cannot be produced in Australia. The transitional stage through which we are passing should compel us to be frank with the Old Country and with foreign countries. We should adopt the definite stand that we are determined to preserve Australian industries, but that we are prepared to purchase any commodities which are not manufactured in Australia from Great Britain in preference to any other country. The Opposition maintains that that policy is right ; Australia should trade with its own kith and kin before buying from a foreigner. I urge honorable senators to be realists; instead of taking action which would be detrimental to the existence of Australian industries, we should negotiate in regard to individual lines of merchandise and produce, with a view to admitting only those goods which, as Dr. Earle Page has stated, cannot be manufactured in the Commonwealth. If honorable senators decide upon a course which will destroy an Australian industry, we shall warn the Australian people of what is being done; but if the item concerned is not produced in Australia, every member of the community will welcome its importation from Great Britain, and in exchange for it we shall be pleased to sell our primary products. That attitude does not warrant the stupid accusation by Senator Hardy that members of the Labour party are isolationists. We would be utterly devoid of common sense if we closed outdoors against all importations regardless of their nature or derivation. By all means, let us rely upon international trade to improve our standard of living. The Labour party advocates the preservation of Australian industries, and we shall not tolerate interference from any oversea manufacturer, whether British or foreign. It also considers that Parliament should be supreme; that it should not delegate its responsibilities to the Tariff Board or permit itself to be bound by any agreement whether signed in Ottawa or Timbuctoo. In my opinion, the view that the improvement of trade in recent months justifies the policy of the Government, the signing of the Ottawa agreement, and the recommendations of the Tariff Board, is utterly fallacious. Practically every country reports an improvement of trade; the majority of them have either actually or almost balanced their budgets. Great Britain has recorded substantial improvements, and other countries report that the depression is passing. But latterly a pessimistic note has been struck, many of the leaders in economics stating that the tempo of improvement has been too rapid and that a tightening up of the money market must take place. Honorable senators will realize what that means. The Lyons Government was criticized in the House of Representatives because it did not know what the Commonwealth Bank was doing in regard to the issue of treasury-bills, and because it professed not to know that the interest rate was being increased in order to reduce the purchasing power of the community, and so lessen the volume of imports and safeguard, the London funds. The Prime Minister (Mr. Lyons) contended that there was nothing wrong with the trade balance, but seven days previously, he had informed the National Club in Sydney that he was worried about the trade balance and the depletion of London funds.

In the near future Australia will experience more and more difficulty in finding markets in Europe. Although an improvement of trade has recently -taken place, Britain cannot be flooded indefinitely with primary products. That wonderful old country has done marvellously well to absorb the huge quantity of commodities that have been unloaded upon it, but the saturation point must some time be reached. The Minister directing negotiations for trade treaties (Sir Henry Gullett) recently made a tour of Europe in an endeavour to find markets for Australian meat, and make bi-lateral trade agreements, which have been criticized by Senator Hardy. In an interview upon his return, Sir Henry Gullett said -

Apart from wool, the prospects of the sale of Australian produce in Europe are limited, but a few openings will doubtless be created when treaties are made. We must first obtain the right of admission by quota or under a reasonable tariff. Then the entry of imports will be conditional on the Government’s allocation of sufficient credits.

A few weeks ago in this chamber I asked how many trade treaties had been arranged up to date; the answer was that no trade treaties had so far been signed. Apparently we are still living in hopes, and, like Mr. Micawber, are waiting for something to turn up. Sir Henry continued -

Nothing could bc more complex or more hopeless than European trade. Nationalism has reduced every government to distraction. We encountered teams of treaty-makers of every nationality in every capital, negotiating trade agreements, mostly for a year only. Short-term treaties are due to the constantly hanging conditions, combined with infinite entanglements. Exchange makes the plight of trade tragic. Self-sufficiency madness is deep-rooted in post-war suspicions, fortified by the political power of the peasants, ll would be foolish to anticipate an early return to saner trading.

In a speech recently, I informed honorable senators that the honorable member for Macquarie (Mr. John Lawson) and the honorable member for Eden-Monaro (Mr. Perkins) had expressed the same sentiments. At the Sydney Royal Show recently I had the pleasure of a long conversation with Mr. McCormack, a former. Premier of Queensland, who lately spent a considerable time in Russia and Germany, while making an extended tour of Europe. He referred to the wonderful developmental work that is taking place on the continent, and agreed with the honorable member for Macquarie, ex-Senator Elliott and others, that European states will never return to the old conditions of dependence upon international trade. I stress this matter because I believe that we are living in a fool’s paradise if we imagine that we shall solve our problems by putting back the economic clock. Often I cannot refrain from smiling when honorable senators attack the Labour party’s policy of self-sufficiency. Australians themselves are involved in the development of self-sufficiency, and neither the United Australia party, the Labour party, the Douglas Credit party, the Communists or any other party can escape it. Recently the United Australia Review, which. I believe, is one of the official publications of the United Australia party, came into my possession. I shall quote a passage in it to support my contention that the United Australia party and the Country party, apart from their sneers and foolish antagonism to the development of a self-reliant Australia, are proud that the Commonwealth h .becoming more independent of the other countries of the world. It states -

Question. - What Australian basic industry has shown extraordinary development during the past year?

Answer!- - The iron and steel industry, which, in all producing countries, is regarded as a reliable barometer in general industrial conditions. The Australian production in 1935 was 668,000 tons over the previous year. This is 79 per cent, of the entire Australian consumption. The number of employees increased from 13,243 in November, 1934. to 14,710 in November, 1935. Large extensions have been arranged for. A plant is to be added to manufacture the Australian requirements in tin-plates ( treated iron), last year’s importations of which were 58,82(5 tons. Another plant capable of producing the entire requirements in pipes and tubes (of which the yearly importation has averaged 60,000 tons), came into production dunnar the year. An additional mill to cope with the increasing demand for sheets was laid down. Sheets for motor bodies will be included in the production. It is calculated that in two years’ time 90 per cent, of the tin-plates. pipes, tubes, and sheets used in Australia will be locally produced. Australia will then be in a position. in case of emergency and for all practical purposes, to be practically independent of the world as far as iron and steel products are concerned.

That is only one illustration of what is actually happening in Australia, and we are pleased to know that such progress is being made. Some time ago I mentioned the possibilities associated with, the proper development of the fishing industry, and I suppose that some day the Government will purchase a vessel to conduct research work in Australian waters, when it will be ascertained that we can dispense with the necessity of importing large quantities of fish, as is done at present. There are indications that before long we may be practically independent of supplies from other parts of the world. “We should import those commodities which we know we are not yet proficient in manufacturing, until such time as they can be economically made in this country. Senator Hardy accused the members of the Labour party of wishing to isolate Australia. I am surprised that the honorable senator should be guilty of such asinine stupidity.

The PRESIDENT:

– Order ! I ask the honorable senator to withdraw those words.

Senator BROWN:

– I withdraw them if they are offensive to the honorable senator. Senator Hardy also said that the members of the Labour party wished to build a tariff wall around Australia, and also to prevent migrants from coming to this country. That is not so. If the policy of the Labour party were adopted, the internal development, would be so pronounced that we could open our gates to the best migrants available, knowing that a greater population would he one of the greatest deterrents to an attack upon this country. I understand that the Government proposes to adopt a definite attitude in connexion with one item of the schedule, and to make it a vital issue. It has already been decided that a certain basic industry, which has factories in practically every State in the Commonwealth, including Tasmania and Western Australia, is to be attacked. I shall watch with interest the attitude adopted by Senator Payne and Senator E. B. Johnston when the interests of industries in the States which they represent are involved. If undue profits have been made there is a method by which they can be controlled. It is ridiculous to suggest that the commodity which this industry produces should be brought 13,000 miles over the water to enter into competition with the local product.

The PRESIDENT:

– The honorable senator has exhausted his time.

Senator PAYNE:
Tasmania

.- In listening to the remarks of ‘Senator Brown, I wondered whether he intended to support or oppose the measure now before the Senate. He endeavoured to discredit the present Government for the action it has taken in reducing customs duties, and to justify the unnecessarily high duties imposed by the Scullin Government, of which he was a supporter. I welcome the introduction of the bill, because it represents the first sane attempt to place the tariff on a businesslike basis. For some time Australia has suffered as the result of the action of the Scullin Government which in 1929 illegally and contrary, not only to the letter but also to the spirit of the law, imposed on many items rates of duty which were absolutely indefensible. The honorable senator and those associated with him endorsed the illegal action of that Government taken in defiance of the Tariff Board Act, which is one of the most important measures on the statute-book. Its action in that respect has had a serious effect upon certain small companies relying upon industries which were able to operate only under a prohibitive tariff. I have waited for some time for this anomaly to be removed, and I congratulate the Government upon the schedule which has now been introduced. It will probably be necessary to criticize the duties imposed upon certain commodities, but the measure is a serious attempt to restore sanity in fiscal matters. Many of the rates imposed in 1929 as British preferential duties were so high that it was impossible for any British manufacturer to export profitably to Australia. I am glad that an effort has now been made to remove this anomaly and that the Government realizes the fact that it owes a duty to the Australian people. Moreover, it should set an example to others by observing the laws of this country. I refer honorable senators opposite to section 15 of the Tariff Board Act, which reads: -

Flic Minister shall refer to the Board for inquiry and report . . . the necessity for new, increased or reduced duties, and the deferment of existing or proposed deferred duties.

The last paragraph in that sub-section provides that the Minister

Shall not take any action in respect of any of those matters until he has received the report of the board.

The point I emphasize is that none of these matters was referred to the Tariff Board, and no report on any of them was received from the board before the Scullin Government introduced the schedules imposing the burdens to which I refer. The whole procedure was illegal, and this Government would not have proved worthy of its position had it not taken steps to remove the reproach to Parliament that the Scullin Government had during its term of office deliberately broken the law of the land.

Senator Duncan-Hughes:

– Did the Scullin Government adopt that procedure by virtue of any act passed prior to the Tariff Board Act?

Senator PAYNE:

– I presume not, because any prior law must take second place to the ‘ Tariff Board Act. This is distinctly laid down in that act, and no law has been passed since its enactment to give the Minister power to act as he did during the regime of the Scullin Government. Senator Brown sought to convey the impression that the Tariff Board dictates the fiscal policy of the Commonwealth. The board does nothing of the kind; it simply carries out instructions contained in the Tariff Board Act. It is composed of a body of men, who are selected very carefully, and it is empowered to make inquiries, and, where it sees fit, to call evidence on certain matters. But it has no power at all to carry into effect its own recommendations. The board is simply charged with the responsibility of making recommendations to the Minister, and the Minister must bring such matters before the Parliament for endorsement or otherwise. Therefore the suggestion that the board dictates the fiscal policy of the Commonwealth is groundless.

Senator Brown:

– We must consider the operations of the Tariff Board in relation to the provisions of the Ottawa agreement.

Senator PAYNE:

– The Ottawa agreement has no bearing at all upon the Tariff Board.

Senator Collings:

– Read articles 10 and 12 of the agreement.

Senator PAYNE:

– Neither of those articles gives any instruction to the Tariff Board. They merely provide that duties shall not be increased above the level recommended by the Tariff Board. There is no instruction to the Tariff Board contained in the Ottawa agreement. The Ottawa Conference had no control over the Australian Tariff Board; therefore the articles of the agreement apply on to the governments. We have heard a good deal to-day concerning the desirability of refraining from exporting any of our primary products.

Senator Brown:

– Who said that?

Senator PAYNE:

– The honorable senator advocated that we should retain all our primary products.

Senator Brown:

– I said nothing of the kind.

Senator PAYNE:

– The honorable senator distinctly pointed out the foolishness, as he termed it, of Australia exporting its primary products, to be returned as manufactured articles. The honorable senator should have sufficient intelligence to realize that if we adopted his policy, we would need a population of at least 20,Q00,000 people to consume the goods produced.

Senator Brown:

– I did not say that that policy could be carried out right away; I suggested it as an objective.

Senator PAYNE:

– I am fully aware of the honorable senator’s meaning when he objects to the importation of any goods that could be manufactured in Australia, but whichever way he explains himself it should be patent to him and to everybody that the prosperity of this country depends on our finding good markets for our exportable products, and, further, that when we find such markets, we must, of necessity, buy from those countries which buy from us. The adoption by the white race of the policy advocated by the honorable senator - and I am not now referring to Australia - has brought about some extraordinary condition of affairs in world trade. In the sixties of last century, the American Government decided to compel Japan to open its ports to the world, and backed by its powerful fleet it accomplished that aim. Because of that action, however, Japan for its own protection, was compelled to intensify its industrial production. It realized that if it were going to buy commodities from other countries, it must itself turn out commodities in order to be able to trade reciprocally. Thus to-day we find that Japan is a great manufacturing country and, of necessity, is seeking outside markets. I claim, therefore, that the white peoples of the world have themselves to blame for the present Japanese competition in trade. Honorable senators should bear that fact in mind. Originally the Japanese did not desire to trade with the rest of the world; they wanted to live unto themselves, but the white peoples of the world compelled them to open their ports with the result that they were forced to take up industry more intensively. They had not previously contemplated such action.

Frequently I have endeavoured to show that the tariff which has operated in Australia for the last few years has not been framed in the best interests of the Commonwealth. One section of the community - the consumers - was not taken into consideration until quite recently. I can visualize the possibility that a reduction of tariff duties may bring about such a lowering of the cost of living as will more than compensate for any prospective loss of employment. To-day many people in Australia live in comparative comfort, because of reduced costs of goods which, they must have to enjoy reasonable comfort. The cheapening of the cost of living must prove of general benefit to the community, and I am confident that with a. continual increase of efficiency on the part of our manufacturers, we can reasonably anticipate that commodities will be produced in Australia at a gradually diminishing cost. Thus there has been no necessity for the exceptionally high tariff that has prevailed for many years. This tariff has engendered in many countries antagonism to Australia. Many of the duties are absolutely unnecessary and considerably higher than the mere encouragement of industry in Australia would justify. That fact is realized in other countries. Consequently the action of this Government in reducing tariff duties diminishes that ill-feeling which has been engendered abroad by the imposition of the high duties of recent years. I am hopeful that as the result of the passing of this schedule we shall secure a larger measure of trade with other countries. This must of necessity tend to ensure the prosperity and wellbeing of our people as a whole.

Debate (on motion by Senator Leckie) adjourned.

page 899

INTERNATIONAL AFFAIRS

Italo- Abyssinian Dispute - Rhineland Demilitarized Zone: German Reoccupation

Senator Sir GEORGE PEARCE:
Minister for External Affairs · Western Australia · UAP

[3.25]. - by leave - Yesterday, Senator Duncan-Hughes asked for a statement on the international situation. The Department of External Affairs will, in response to several requests, issue periodically summaries covering items of current interest in international affairs. The first of these summaries was issued on the 15th April, and I trust that they will prove of interest and value to honorable senators. If there is any subject which individual senators would like to have reviewed, or on which they desire additional information, I shall be pleased to receive any suggestions whereby the value of the summaries to honorable senators may be increased.

Interest is still centred mainly in the Italo-Abyssinian dispute, and the Rhineland situation. It is evident from the report of the Committee of Thirteen presented to the Council of the League of Nations on the 20th April that negotiations to bring about, by conciliation, a cessation of hostilities in the ItaloAbyssinian dispute, have failed. The position is that on the 15th April, the President of the Committee of Thirteen, M. Madariaga, was informed by the Italian representative, Baron Aloisi, that the Italian Government insisted upon direct negotiations between Italy and Abyssinia, which were not to take place at Geneva. Italy would not allow a representative of the

League to be present, but would report progress from time to time to the Committee of Thirteen. Italy was not propared to disclose its peace terms to any member of the League, but only to Abyssinia. Finally, Italy was not prepared to cease hostilities during the negotiations. The President then saw the Abyssinian representative, who stated that the Italian conditions made negotiations quite impossible. He informed the President that the Committee of Thirteen should declan that Italy had declined to negotiate within the framework of the League, and in the spirit of the covenant, in order that the application of all the provisions of the covenant might no longer be postponed.

On the 17th April, the President reported the position to the Committee of Thirteen, and the Committee agreed that the phase of conciliation initiated by the appeal to the two parties to the dispute on the 3rd March had come to an end. On the 18th April, the Committee adopted the President’s report, which .disclosed the impossibility of conducting negotiations within the spirit of the covenant, owing to the fact that Italy declined, to negotiate with Abyssinia through the agency of the League, and that Abyssinia declined to take any action without the League. The Committee reached no verdict as to the allegations relating to the use of poison gas by the Italians, and to Abyssinian atrocities, butdecided to send to the belligerents copies of the jurists’ report as to those matters.

The report of the Committee of Thirteen was submitted to the Council on the 20th April, and all members, with the exception of Italy, voted for the resolution adopting the Committee’s report. The Council also noted the circumstances in which the present attempt at conciliation had failed, and expressed regret at the continuance of the war. It appealed to Italy to settle the dispute within the framework and in the spirit of tha League, and re-affirmed that both parties to the dispute were bound by the Gas Protocol of 1925. No allusion was made to the imposition of further sanctions, but existing sanctions will remain in force. In the circumstances, this course of action is probably inevitable. An abandonment of sanctions at this stage would strike a fatal blow at the whole principle of collective action. The Council has now adjourned until the 11th May.

Economic and financial sanctions were imposed against Italy in November of last year by fifty-two nations, which have been involved in considerable financial loss owing to their determination to uphold the principle of collective security against an aggressor State. There is no doubt that sanctions have had a serious effect upon the economic and financial situation of Italy; but they have not proved sufficiently drastic, or rapid enough in their operation, to prevent substantial military success on the part of the Italian armies, which are now within striking distance of Addis Ababa. The Abyssinian forces, which are entirely unequipped to contend against modern weapons of warfare, appear, at the moment, to have reached a stage of demoralization, and this must, to a great extent, be attributable to the use of poison gas by the Italians. Many military experts have hitherto considered that it would be impossible for Italy to achieve a decisive military result in the first season of the campaign; but it now seems that the main Abyssinian armies are at the point of collapse.

We are now faced with the position that the machinery which has been set in motion by the League to uphold the principle of collective security has, in the present instance, proved insufficient to prevent an aggressor from continuing to pursue his object, and the situation has been rendered more difficult owing to the fact that the United States of America, Germany and Japan are not members of the League. A decisive effect cannot be achieved by the imposition of sanctions unless they are universally applied. It is possible that had an oil sanction been imposed at an early stage, it would have had a decisive effect; but this is at least doubtful in view of the rapid military success of Italy.

Great Britain and the Commonwealth of Australia have, to the full extent of their obligations, adhered to the principle of collective security within the framework and in the spirit of the Covenant of the League. That such adherence was, and is, a reality is shown by the general support of British and Australian opinion.

One of the most significant aspects of the Italo-Abyssinian dispute was the determined rejection of the Hoare-Laval proposals by the people of Great Britain, showing the extent to which an enlightened public opinion can, in a democracy to-day, influence the conduct of foreign affairs. The people indicated in no uncertain manner that sooner than reward an aggressor with any of the fruits of his aggression - for that appeared to them to be the effect of the proposals - or jeopardize the existence of the League and the principle of collective security they were prepared to accept the risks attendant on preventive action.

The attitude of other saactionist powers, and their degree of support of fresh proposals, are obviously determined by the effect of the League policy on vital national interests, and by their political and economic relationship to Italy. It can, however, be said that all are loyally co-operating in the enforcement of sanctions which have been imposed, despite the fact that some have, as a consequence, incurred considerable loss.

It would appear that the whole system which has been established to maintain collective security demands reexamination. The Commonwealth Government agrees with the views expressed at the meeting of the council on the 20th April by Mr. Eden, and by Mr. Bruce, the President of the Council, and feels that weaknesses and defects of the existing machinery should be completely surveyed in the light of the present dispute and of the general world situa tion. In the course of his speech, Mr. Eden said -

Lot mo state without equivocation that the British Government maintains its confidence in the League as the best instrument at present available to mankind for the preservation of international peace. It is this conviction, and this conviction alone, which has been, and remains, the motive for all its actions in the present dispute. The British Government is prepared to act in accordance with that policy, now and in the future, so long as other nations do and no longer - to the extent that other nations do and no further. If as a consequence of the final outcome, of this dispute, the authority of the League is so shaken that its future utility as to. the best instrument for the preservation of international peace is placed in doubt, then weshall, each of us, have to consider the policy which in that situation it will be our duty to pursue.

Mr. Bruce, in winding up the debate, said -

It may be that in the’ future the ideal, despite all our efforts, may prove impossible of accomplishment, but meanwhile our duty is to persist in the task we have undertaken in attempting to enforce for the first time the provisions of the Covenant. In so doing we must face the weaknesses, difficulties and dangers that this first effort has shown to exist in the machinery provided in the Covenant. In face of the experience of the last six months, it is clear that the whole system we have established for collective security, the maintenance of peace and the rule of law in international affairs must be re-examined. I believe that the public opinion of the world is now insistent that that re-examination should take place and that the stage be set for its being done. To allow nations to be lulled into a false belief in security, where in fact none exists, and to he led to rely on assistance which will not be forthcoming is not a contribution but a menace to the peace of the world.

As regards theRhineland dispute, I have little to add to the. review which was given to honorable senators in the current notes of the External Affairs Department of the 15th April, arid to the subsequent, press reports. It can bo said, however, that there is a considerable decrease of tension, and that a certain amount, of the original uneasiness as to the outcome of the occupation of thedemilitarized zone has been allayed. TheFrench and German governments- have submitted proposals upon which they are seeking to base a definite solution of all points of difference between them. On the 9th April the Locarno powers entrusted Great Britain with a mission of conciliation to Germany, for the purpose of elucidating a number of points in the German memorandum, and the consequent discussions will afford ample opportunity for the re-examination of the entire system of collective security.It is a hopeful sign that all parties are agreed that a peaceful solution should be sought by negotiation, and that is, in large part, attributable to the habit of frequent international conference and discussion which has been fostered and developed during the postwar period.

page 901

ADJOURNMENT

Death of Mr. Edmund Jowett

Senator Sir GEORGE PEARCE (West ern Australia - Minister for External

That the Senate do now adjourn.

Honorable senators will have learned with regret of the death recently of Mr. Edmund Jowett, who for some years represented the Grampians constituency in the House of Representatives. Apart altogether from his parliamentary life, the late gentleman took an active part in public affairs, and was a notable figure in the grazing industry. Amongst other things, he was particularly interested in the affairs of the Empire Parliamentary Association. He was a genial spirit, well liked by all with whom he came into contact during his parliamentary career, and we regret his death.

Senator GIBSON:
Victoria

.- I associate myself with the statements made by the Leader of the Senate (Senator Pearce) . The late Mr. J owett was elected to the House of Representatives seventeen years ago, and remained a member until his electorate was abolished. He and I were for a time the only members of the Country party in this Parliament. He always took a great interest in political and economic matters, and actually addressed meetings on those subjects until about a week before he died. He probably was better known in pastoral and wool circles than any other man in Australia. He was a pioneer of the pastoral industry, and controlled and developed immense properties throughout Australia, many of them in remote districts. My sympathy is extended to his family and others who mourn his death.

Question resolved in the affirmative.

Senate adjourned at 3.40 p.m.

Cite as: Australia, Senate, Debates, 24 April 1936, viewed 22 October 2017, <http://historichansard.net/senate/1936/19360424_senate_14_150/>.

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