14th Parliament · 1st Session
The President (Senator the Hon.P. J. Lynch) took the chair at 11 a.m., and read prayers.
The following paper was presented: -
Northern Territory - Report by the Administrator on the Administration of the Northern Territory for the year ended 30th June, 1935.
SenatorMcLEAY. - Seeing that the duty on foreign bitumen is only 10 per cent., andthat millions of hundredweights of bitumen are imported annually, will the Government consider raising the duty on that commodity considerably in order to give the manufacturers of cement an opportunity to have their product used in the construction of roads?
– An answer to the honorable senator’s question would involve the disclosure of Government policy. That is not generally done in answer to a question.
asked the Minister representing the Minister for Trade and Customs, upon notice -
In the event of the Government finding it necessary to exercise the powers of the “ dumping act” in regard to cement, would the domestic price be. defined by the local selling quotation, or by a price determined by the TariffBoard?
– The Minister for Trade and Customs has supplied the following answer to the honorable senator’s question: -
For the purpose of determining detriment to an Australian industry the selling price of locally-produced cement would be that recommended by the Tariff Board after investigation as a reasonable selling price, which would not necessarily be the price quoted by Australian manufacturers.
Senator DEIN, through Senator Arkins, asked the Leader of the Senate, upon notice -
Can he inform the Senatewhen the British experts who are to assist the Govern ment in the introduction of national insurance are due to arrive in Australia?
Will he furnish the names of such experts ?
asked the Leader of the Senate, upon notice -
– The answers to the honorable senator’s questions are as follows: -
– On the 24th
April, Senator Uppill asked the following questions, upon notice: -
I am now in a position to furnish the honorable senator with the following information : -
New South Wales. - Distribution to be made on an acreage basis with provision for increased payments to those wheat-growers who suffered losses on account of adverse seasonal conditions, and whose yield of wheat was below the normal average yield for the State.
Victoria. - £50,000 for relief of wheatgrowers in respect of losses sustained on account of drought, hail, storm andflood. Approximately £200,000 for payment of ls, 8d. an acre of wheat sown. The balance by means of a contribution towards transportation and freight charges incurred by growers in the sales of their wheat.
Queensland. - Approximately £32,000 to be distributed on an acreage basis and the balance in the form of a graduated payment to compensate growers whose yield an acre was less than the average yield for the State owing to adverse seasonal conditions or other circumstances beyond the grower’s control.
South Australia. - The bulk of the money to be distributed on an acreage basis with provision for special payments to growers who have suffered hardship as a result of reduced yields during the 1935-3G season.
Western Australia. - Approximately £232,000 to be distributed on an acreage basis, the balance of £161,000 to be used for sustenance to distressed farmers particularly in those areas which have boon seriously affected by drought.
Tasmania. - The whole of the money to bts distributed on an acreage basis.
Motion (by Senator Sir George
Pearce) agreed to -
That leave be given to introduce a bill for an act to amend the New Guinea Act 1920-1935, and for other purposes.
Bill brought up, and read a first time.
In committee (Consideration resumed from the 30th April vide page 1040) :
Division 3. - Sugar
Item 27 -
By omitting the whole item and inserting in ite stead the following item: - “27. Glucose - per cwt., British, 10s.; intermediate, 17s.. Gd.; general, 20s.
And for each £1 by which the equivalent in. Australian currency of £100 sterling is less than £125 at the date of exportation -
An additional duty of - per cwt., British, 2.4d.; intermediate, 2.4d. ; general, 2.4d”.
Upon which Senator Duncan-Hughes had moved by way of amendment -
That the House of Representatives be requested to add at end of item - “ And for each £1 by which the equivalent in Australian currency of £100 sterling is more than £125 at the date of exportation -
A reduced duty of - per cwt., British, 2.4d.; intermediate, 2.4d.; general, 2.4d.”.
– I have had an opportunity to look at the somewhat voluminous report of the Tariff Board on this subject, made in April, 1933, and also the annual report of the board for the year ended the 30th June, 1934. To certain interests the suggestion of senator Duncan-Hughes will possess attractions because, as he pointed out, the present position allows for only one-way traffic. But if his amendment were carried, there would still be only one-way traffic. In its general report on exchange adjustment, the Tariff Board adopted as a basis for exchange adjustment the then current opinion that the present exchange would continue indefinitely. At the inquiry, Professor Giblin said -
I think we must regard ourselves as on this 125 basis, with comparatively alight variations one way or the other, almost indefinitely - certainly indefinitely from the present point of view.
In making its recommendation for the application of general exchange adjustment, the board said -
The board considers that, in the event of exchange moving not more than 5 per cent. in either direction-, the absence of immediate adjustment would have no serious effects.
There are many hundreds of items still subject to the general exchange adjustment, which is based on an exchange rate of 25 per cent. It will be apparent that it would be illogical to take the 25 per cent. basis for the general exchange adjustment - that is the actual exchange operating at present - whilst adopting a different basis for those items which are subject to the new methods of exchange adjustment. In short, the Tariff Board, in its recommendation, has adopted the general principle which Parliament embodied in the Exchange Adjustment Act. It applied the same principle specifically and with greater accuracy of detail. On this point the board also made the following statement in its report: -
The finding of the board is not intended to convey the belief that, should the Australian exchange further depreciate, there should necessarily be a further adjustment of duties. In this connexion, the board considers that no decision should be arrived at until the occasion calls for it, when action would be determined upon after proper inquiry.
The board has warned Parliament against taking, without further examination of the position, the very step which the honorable senator suggests. The amendment of Senator Duncan-Hughes raises a question of policy which has not been decided by the Government. The present exchange rate has achieved a number of objectives, chief “ among them being financial and trading stability. It has been a matter of high policy to keep the rate at its present level. If that level were increased, a decision would have to be made as to whether or not it was desirable to maintain the higher rate or revert to the now current level in the public interest. If the latter decision were made, the amendment of the honorable senator would delay a return to that level. The question can be decided if and when the exchange rate ‘increases. The adoption of the amendment in its present form, if applied throughout the tariff, would, if the exchange rate rose sufficiently high, reduce the margins of preference which under the Ottawa agreement we are obliged to maintain in favour of the United Kingdom.
To give an illustration I will quote item 380. Under this item we are obliged to maintain a preference of 25 per cent, to the United Kingdom. The present rates and exchange corrective are : - Exchange corrective: British preferential tariff, 10 per cent. - .8 per cent.; intermediate tariff, 35 per cent. - .8 per cent.; general tariff, 35 per cent. - .8 per cent. With exchange at £100-£138 the intermediate and general tariff rates would be 24.6 per cent., or .4 per cent, less than the agreed-upon margin. With exchange at £100-£169 no duty would be collected under the intermediate or general tariffs. There are many other examples which could be quoted. I assure honorable senators that should the exchange go higher the question as to whether further deductions should be made from protective duties will engage the attention of the Government’ and the Tariff Board.
Under these circumstances I cannot accept the amendment proposed by Sena tor Duncan-Hughes. I refer honorable senators to reports of the Tariff Board in which the matters of exchange and general stability of currency are dealt with. Those pronouncements are well worthy of study. On page 4 of its report dated the 13th April, 1933, the board, after dealing with this subject in the manner which I have just indicated, said -
For more Ulan a year now the rate with sterling has been kept stable at 125, and the board can see no features in the present situation which are likely to influence those in control of the rate to depart in the near future from their policy of stability. The board’s recommendations in respect of protective duties would, therefore, be based on false premises if it continued to accept the view that the considerable depreciation of Australian currency is a factor which may foe safely ignored.
Earlier in this report the board pointed out the difficulty of calculating the effect of exchange on protective duties. Instead of adhering to the somewhat technical language used by the board, however, I shall put the matter as it appears to me personally. Take* the case of an Australian manufacturer who imports, either from Britain or foreign countries, some of the components of the articles he produces. These components have to bear the protective burden of our depreciated currency; that is, the effect of the exchange rate. That burden, which is calculated upon the proportion of the component parts imported, varies in every case, and that is why the Tariff Board, as Senator Duncan-Hughes has pointed out, has inserted a special calculation in respect of each of the hundreds of items so affected. That calculation represents the appropriate corrective to allow for variations of exchange in respect of the imported parts of each article.
– If, because of drought conditions the wool industry collapsed, would not the exchange rat« rise?
– The honorable senator visualizes an alarming possibility, and of course the exchange corrective will have to be applied if we are unable to export sufficient products with which to get money to meet our obligations overseas. This operation of exchange on protection is only of recent development. I recall that when I was a member of the Oppositionin this chamber, I voiced somewhat strong ideas regarding the confusion of these two elements. Tariff for the protection of industry is one thing, whilst the overseas trade balance, as reflected in the exchange rate, is another thing entirely. Similar confusion arises to-day in respect of calculations of the trade balance because in such calculations allowance has to be made at times for capital imported or exported. On this point I referred last night to a calculation regarding exports in which allowance had to be made for exportations of gold. Such factors are a thing apart from the tariff; nevertheless they must be recognized in calculations directly affecting the tariff. I am of the opinion that thefinances of the country are something entirely apart from its tariff policy and the exchange rate is entirely a matter of finance. On page 15 of its report of the 30th June, 1934, the Tariff Board expressed itself thus -
It is mathematically impossible to choose rates of duty that will satisfy legal obligations after making thereductions allowable under the Customs Tariff (Exchange Adjustment) Act,and still provide reasonable protection should the Australian currency approach nearer to parity with sterling. An actual example will illustrate this fact. In one industry the board found that under existing conditions a duty of 5 per cent, would be reasonable, but that as far as could be estimated, a duty of 30 per cent. would be necessary with exchange at par. Obviously the rate of duty (62/3 per cent.) which when adjusted by the reduction of one-fourth would provide adequate protection (5 per cent.) at present, would expose the local industry if exchange suddenly became normal, for instead of an estimated necessary duty of 30 per cent., there would be only62/3 per cent. On the other hand, the imposition of 30 per cent., subject to one-quarter reduction or 22½ per cent, net would result in over-protection by17½ per cent., while exchange remains at 25 per cent. In a monopolistic industry, the operations of which had been characterized by excess profit- taking, such a duty rate would have given a protection permitting; the continuance of excess profit-taking while the currency remained depreciated.
– The honorable senator has exhausted his time.
– The Minister’s explanation has not enlightened me. The Tariff Board says that this matter must be referred to it before Parliament deals with it, and it thus places itself above Parliament. Are we not stressing the calculation on exchange solely in the relation of British currency to Australian currency? On glucose, for instance, the amount is 2.4d. per cwt. under all three headings, and the Minister claims for this mathematical precision. Let us assume that we are dealing with German currency or the currency of any of the present gold bloc countries. What is the value to-day of Australian currency in Germany? I think the Australian pound is worth about 9s. in Berlin. In other words, it would require over £200 to buy £100 worth of goods in Germany, as against £125 to purchase £100 worth of wares in Britain. It is obvious that the Tariff Board did not give the subject very full consideration. The Minister persists in telling us that there is not going to be any variation. It may be that no variation is likely to take place in relation to British currency, but certainly there will be a continual movement in relation to foreign currencies. Yet we are told that the Tariff Board has worked out its calculation on a basis which is mathematically accurate. I submit that the Board could not have arrived at a completely accurate calculation in respect of any currency other than British currency. Therefore, it is ridiculous to claim that this matter has been gone into very carefully. Indeed, the Government is accepting the Tariff Board as a fetish; it adopts the attitude that the Tariff Board’s word must be accepted as. final. I strongly support the amendment proposed by Senator Duncan - Hughes.
.- Honorable senators who are preparedto support the amendment apparently do not realize its real effect. I shall give a concrete example of how it would operate. Much of the raw material used by the Australian manufacturers is imported, and on this material they have to pay not only exchange amounting to £25 on goods purchased for £100 sterling, but also in some cases primage duty. Goods costing in the United Kingdom £100 sterling cost a manufacturer in Australia £125 in Australian currency; in Great Britain such goods cost an English manufacturer exactly £100. Assuming that the cost of the raw material imported by an Australian manufacturer is one-third of his total cost, he will require, to expend £375 to produce goods from materials bought for £100 sterling. The English manufacturer buys hia raw materials for £100, and they represent one-third of the cost of the finished article. Therefore, he produces his goods at £300 sterling, as against the Australian manufacturer’s cost of £375. When the English manufacturer exports his goods to Australia they are subjected to the 25 per cent, exchange. That makes the landed cost exactly the same as the cost to the Australian manufacturer, namely, £375. Allowing for the 10 per cent, duty on £375 the Australian manufacturer has tin advantage of £30. However, if that duty is reduced as the rate of exchange rises to, say, 50 per cent., as Senator Duncan-Hughes proposes, the result will be that instead of the Australian manufacturer paying £125 for his raw material he will have to pay £150, and articles manufactured from those goods will cost him £450. If exchange were increased to £150, the cost of living would necessarily increase ind wages would rise accordingly. If 1 were to land British goods in Australia costing £450, a British exporter would have to pay the same amount; but, According to the formula suggested by Senator Duncan-Hughes, the British manufacturer should not have to pay the duty, because an amount equivalent to it would be collected under the formula.
– Oan the honorable senator state approximately what proportion of the goods manufactured in Australia are made from imported raw material ?
– It would be very difficult to form an estimate.
– The proportion varies with each commodity.
– In my business I handle only Welsh tin plate, on which primage duty of 4 per cent, is paid; but my competitors do not have to pay primage. The ultimate result of the adoption of the proposal of Senator Duncan-Hughes would be disastrous to Australian manufacturers and employees, find honorable senators should hesitate before considering it seriously. In these circumstances, I urge Senator DuncanHughes to withdraw the request until its effects upon Australian industry can be more accurately determined.
[11.33]. - I appeal to Senator Duncan-Hughes not to press his request at this juncture. ‘The matter raised by the honorable senator is interesting, but it needs more consideration than this committee can give it at present.
– This is our only opportunity.
– This matter has already been considered by the Tariff Board, which is more competent to deal with it than we are; the quotations which the Minister read from the board’s report clearly indicate that it decided that it would not recommend any alteration of duty on a variation of exchange by 5 per cent., and I believe that that is the attitude which it would adopt to-day. Is it at all probable that, in the near future, say within a year or two, there will be a greater variation than 5 per cent.?
– The Commonwealth Bank Board admitted that it cannot always control the exchange rate.
– The Commonwealth Bank Board fixes the rate.
– There is a big difference between fixing the rate and controlling it.
Senator Sir GEORGE PEARCE.Experience has shown that it is easy to maintain the present rate of 25 per cent. If the Tariff Board were asked to reconsider this matter, it is safe to assume that it would not suggest any variation of duties if the exchange rate were increased by 5 per cent.
– Would not an increase of 5 per cent, affect our position under the Ottawa agreement?
Senator Sir GEORGE PEARCE.- It is not the exchange rate which affects the Ottawa agreement, but the variation of duties caused by an altered exchange rate. The Postmaster-General has already stated that, if the request suggested by Senator Duncan-Hughes were adopted, the present ratio between the British preferential and general tariffs would be affected. An increase of the exchange rate would be made only if our overseas trade figures were more unsatisfactory than they are to-day. If such a position should arise it would be due to the fact that the quantum of our exports had seriously fallen, or that our imports had increased. It is obvious that, in such circumstances, the position would have to be met by increasing the value of our exports or by decreasing our imports.
– We have not the power to increase the value of our exports.
Senator Sir GEORGE PEARCE. - Obviously, we cannot increase the value of our exports by artificial means, and we would therefore have to deal with our imports. Senator Duncan-Hughes suggests that, if the exchange rate increases, additional protection to that extent should not be given to the Australian manufacturers. Such protection has an effect upon imports, and is it not that at which we would be aiming in raising the exchange rate? Therefore, if what Senator Duncan-Hughes visualizes should happen, the effect of leaving the item as it is would be to accentuate the limitation of imports. I suggest that it would be unwise to adopt the formula suggested, but, if the necessity should arise, the Tariff Board will be asked to give the matter further consideration. On those grounds I appeal to Senator Duncan-Hughes not to press his. request.
– I understand that the object of the request is to establish some means of regulating the protection of industry in accordance with the variations of the rate of exchange. As the Minister has stated, there are recognized means by which that can be accomplished. One is by the duties imposed upon imported goods, .and another is by regulating the ‘basis on which payment is made. This subject has been considered by Parliament on previous occasions, with particular reference to Germany. The Government has power under its anti-dumping legislation to prevent the importation of goods offered for sale in Australia at prices which, as a result, of a depreciated currency, are below the cost of manufacture. We can prevent the importation of goods from countries with depreciated currency. Legislation to thiseffect was passed by this Parliament years ago. We are discussing this formula in the schedule.
And for each £1 by which the equivalent in Australian currency of £100 sterling is lessthan £125 at the date of exportation -
An additional duty of, per cwt’.’: British,. 2.4d.; intermediate, 2.4d.;. general, 2.4d.
That applies to British goods, and not to German exports, unless German currency is adjusted to sterling.
– It does apply to importations from Germany.
– That being so, there is no room for argument.
– Germany does not obtain any advantage over Britain.
– Why should it?
– The countries on gold are at a disadvantage compared with Great Britain.
– Decidedly. On the one hand there is Japan, whose currency is depreciated in comparison with our own. On the other hand there are countries with an appreciated currency, and they come in the opposite, category to Great Britain; therefore, the dumping provisions should apply to them. It seems to me that we shall penalize Great Britain if we allow the countries with depreciated currencies to go scot-free, unless the antidumping legislation is still operative. I emphasize that very definite provisions have been rigidly laid down in connexion with Great Britain, but, as I see the position, the same measure of caution has not been taken with regard to the others.
– I would like some further explanation from the Minister on this matter. I tried to get it from him last night, when I asked whether the duty in the general column applied to the countries forming the “ gold bloc “. If honorable senators consult the Exchange Adjustment Act they will find that the adjustment was extended to give a certain preference to British imports, but it was not clear whether the act was extended to cover countries which are included in the general column, particularly those countries with currencies depreciated to sterling. If my interpretation of the schedule is correct, 1 believe that the Government has already taken this action under the Exchange Adjustment Act; if so, I would like to know the date of such action, and whether it applies to countries such.as Japan. But I submit that that does not get over the difficulties of those countries with currencies based on gold. Prominent leaders of our nation, including Mr. Abbott, the president of* the Graziers’ Association of New South Wales, have pointed out the difficulties of trading with, countries in the gold bloc. Mr. Abbott also stated that, where the currencies were appreciated in relation to sterling, the only action that the Government could take to encourage trade would be to revise duties in regard to them, because the Exchange Adjustment Act obviously could not operate except with countries outside the gold bloc. I was particularly interested in the remarks of Senator Pearce on the subject of exchange. Every honorable senator will agree that stability of the exchange rate is essential to the welfare of the commercial community. But has the Commonwealth Bank the power to control exchange? It is often stated in this chamber that the Commonwealth Bank fixes the rate, and it is assumed that this power lies with the bank, but upon analysis I find that that assertion is not quite correct. In his evidence before the Royal Commission on Banking, the chairman of the Commonwealth Bank Board, Sir Claude Reading, frankly admitted that the Commonwealth Bank was not able, in certain circumstances, to control the exchange rate and the mobilization of London funds, which, of course, affects the rate. If that is so, there is a weakness in the financial structure of Australia and the Commonwealth Bank, acting as a central bank, which Parliament should remedy at the earliest opportunity; because it is obvious that the proposed amendment of Senator Duncan-Hughes has been inspired by the possible instability of the exchange rate. In other words, he envisages this instability rendering the present formula inadequate in the future.
– The Tariff Board seems to have assumed that the exchange will never rise above £25.
– An implication that could reasonably and logically he read into that is that it is expected that the exchange rate will gradually revert to par with sterling. Such a trend under existing conditions I would strongly oppose. The exchange rate is a subject of supreme national importance; for the information of honorable senators, I shall quote briefly from the evidence given by Sir Claude Reading before the Royal Commission on Monetary and Banking Systems. It may assist honorable senators when they discuss thematter of London funds.
– Why does not the honorable senator discuss the point at issue ?
– The stability of the rate of exchange and the possibility of the London funds affecting that tate are the point at issue ; otherwise where is the necessity for the adjustment formula which has been so clearly prepared by the Tariff Board? The report reads -
By the Chairman. - I do not know whether you could, perhaps, describe to us a little more fully the voluntary arrangements for pooling the London funds ? - It is what is known as the “ mobilization scheme “. It is very simple. There is a certain amount of oversea credit necessary to meet government commitments, interest, and other invisible imports, amounting in all to about £28,000,000; I think that is roughly the total of the figures; and to arrive at that amount an arbitrary amount is fixed which shall be collected each month, viz. £2,400,000 each month, and the trading banks as well as the Commonwealth Bank (they bear their proportion) hand over to the Commonwealth Bank that amount in the proportion to which they acquire London funds. That gives the necessary fund upon which the Commonwealth Bank can work and meet the external commitments of the country.
Then it comes to this, that the various banks according to the funds in their hands in London, share in this collection ? - Tes, it is the monthly contribution towards the fund. /);/ Professor Mills. - It is done by arrangement? - Yes.
By Mr. Chifley. - Is that arrangement purely voluntary? - Yes.
The arrangement between the Commonwealth Bank and the trading banks is purely voluntary ? - Yes.
It was entered into at a time when there was a crisis in affairs abroad? - Yes.
And it continues as the result of their goodwill in co-operating with the Commonwealth Bank? The Commonwealth Bank is not in a position to absolutely compel or demand that money from the trading banks, nor is the Government? - No. We have no power to do that.
Has the Commonwealth Bank come to regard itself as having absolute power in control of the exchange rate? - No.
It has not?- No.
The whole position is uncertain, if somebody chooses to break away? - Yes.
As 171 fact they did at one period, break away, in spite of the protests of the Commonwealth Bank* - Yes, they did. What we call a “ black “ market developed, that is an outside market, and the banks had to follow them,
At present the control of the exchange rate by the Commonwealth Bank is only the result of mutual arrangements between themselves and the private banks, and it has not complete power in any sense? - Yes; you may express it in that way.
These are admissions of weakness in our financial structure which sooner or later this Senate must endeavour to amend. One of the greatest values of the formula which is incorporated in this tariff is the assurance of exchange stability to the commercial community.
– I rise to a point of order. Are Senator Hardy’s remarks relevant to the request now being considered bv the committee?
The “ CHAIRMAN.- As Senator Hardy’s remarks have a bearing on exchange, they are quite in order.
– I appreciate, as do Senators Leckie and DuncanHughes, the protective incidence of exchange. Therefore, I submit that any information that can be presented on this subject, particularly as external and internal price levels are involved, is of vital interest to honorable senators. I suggest that the Minister should explain more clearly the disadvantages of those countries which form the gold bio-.’. The vital question is: Are we going to extend any preferential treatment to them in view of the disabilities with which they are faced?
Senator BROWN (Queensland) 1 11. 55]. - According to Senator Millen, the Tariff Board has fallen very much from its high estate and reputation as a most intelligent body, which delves deeply into economic subjects, and presents logical conclusions. He has pointed out that the rate of additional duty is 2.4d. in each of the three columns, and he referred to the position of a foreign country whose currency has so appreciated that in relation to it the Australian fi is worth only 10s.
– It takes £180 Australian to equal £100 German.
– To simplify the argument, I shall assume that in relation to German currency, an Australian £1 is worth only 10s. Would the Tariff Board resolve the German mark into terms of sterling for the purposes of its computations?
– That is the vital point.
– The Customs Department does that.
– I agree with the assertion of the Postmaster-General that the exchange should be something apart from the tariff. But I consider that Senator Millen is incorrect in his contention, if the Tariff Board resolves an appreciated currency into terms of sterling.
– The Customs Department does it. Every currency is converted into sterling for the calculation of duty.
– Then there can be no argument on that point; but I desire to explain the attitude of the Labour party on this matter. It contends that exchange should not enter as fully as it does into the tariff arrangements between Great Britain and Australia. It has been used by the Country party to force the ‘Government to reduce the advantage enjoyed by the Australian manufacturer under the protective tariff. Some time ago I asked the Minister whether the exchange rate between Australia and the Old Country was a natural one. It is pertinent to ask how long our currelief will be depreciated, because economists generally are in agreement that after the lapse of a certain time conditions governing the transmission of goods become normal, and the earlier advantages enjoyed from the depreciated currency are lost. The Government is compelled to tax the people in order to confer this exchange benefit on our export industries. In effect, it is taking money from one section of the community and placing it in the pockets of another. It is true that, for some time, this process may assist, our primary producers, but if continued over several years the tendency for conditions to become stable will deprive our primary producers of some portion at least of the advantage which at present they enjoy. What would be our position if suddenly we returned to a gold basis? Clearly there is need for some control of banking functions. Since the conditions governing the exchange of goods have approximated the normal the exchange provisions in the schedule are of little advantage to this country.
– Under existing conditions they give us no advantage.
– I am glad that Senator Leckie is in agreement with me on this point, because he is an intelligent business man and understands the position. I resent the suggestion that members of this chamber are not capable of discussing intelligently this intricate problem and arriving at sane conclusions. It is time that we discarded the idea that the members of the Tariff Board are the Alpha and Omega of economic intelligence.
– What is the honorable senator’s attitude to the amendment?
– Unlike Senator Millen, I am opposed to it. I shall not support it because I know that Senator Dun can -Hughes is desirous, at all times, of reducing any advantage which Australian manufacturers may enjoyunder the tariff.
– Shall we say the “ excessive “ advantages which they enjoy?
– No, because I do not consider that they are enjoying excessive advantages. The Labour party would eliminate from the schedule all provisions relating to the protective incidence of exchange because it believes that the exchange rate is now thenormal rate.
– Does the honorable senator believe that exchange should act as a fiscal wall?
– I know that the governments of some countries have deliberately depreciated their currencies in order to invade foreign markets and establish credits for the purchase of raw materials, and I admit that their action has given them some temporary advantage in world trade; but if a government deliberately depreciates its currency for the purpose of assisting the export industries, the advantage to the manufacturing section of the community may be only temporary. In the long run the producers of commodities and services do not gain any advantage. I am convinced that any juggling with the exchange will do a disservice to Australia, and particularly to a large section of the community which is worthy of support. All the members of the Tariff Board would need to be Einsteins in order to determine exactly what percentage of exchange should, at any given time, be added to the duties imposed.
– The honorable senator has exhausted his time.
– The committee should consider the effect of the amendment on the commercial community, particularly those engaged in secondary industries. Any move to increase the rate of exchange would cause a great deal of inconvenience. Those who have read the evidence given by representatives of banking institutions before the Royal Commission on Monetary and Banking Systems will know that this problem has been engaging serious attention. Capital is extremely afraid of the capriciousness of governments ; it is fearful of sudden changes. We learn from the discussion this morning that already Senator Leckie is apprehensive of the effect of the amendment, and we can readily understand that people outside will be asking if the intention is to increase the rate of exchange. If this were done, what would be the attitude of the Senate, and what would be the effect of the amendment on people who have invested their capital in secondary industries? It is undesirable to cause any section of the community to be suspicious or uncertain about the trend of monetary policy. I was interested to note that several prominent bankers, in evidence before the Royal Commission on Monetary and Banking Systems expressed the opinion that it would be preferable to correct trade balances by means of the tariff rather than by interference with the rate of exchange. This opinion from leading bankers is worthy of consideration. I was rather surprised that the Postmaster-General (Senator A. J. McLachlan) was not prepared to give some information with reference to the Government’s attitude to the duty on bitumen. The problem of trade balances is linked with the request moved by Senator DuncanHughes. It is the considered opinion of those who are anxious to see our present unfortunate trade positionrectified that the Government should take definite action against the United States of America, which is the cause of all our troubles. If our trade balance with that country were rectified, we should not have much to worry about. I sympathized with Senator Brown this morning, when he was endeavouring to secure information concerning this intricate problem, and I deprecate the attempt by Senator Arkins to dissuade the honorable gentleman from giving to the Senate the benefit of his views. It is astonishing to note that the duty on bitumen, asphalt, natural pitch, petroleum and bone pitch, which come into this country in millions of hundred-weights for our roads, is so low.
– I ask the honorable senator to connect his remarks with the request before the Chair.
– In the consideration of the exchange rate we can scarcely avoid referring to the trade balance. Rather than follow the suggestion of Senator Duncan-Hughes, we should adopt another attitude.
– The committee is dealing with glucose, not bitumen.
– I thought, Mr. Chairman, that the discussion had gone beyond glucose to a consideration of exchange, tariff and trade balances, all of which are inter-related. Last night the Postmaster-General (Senator A. J. McLachlan) advised honorable senators to make themselves familiar with these problems and with the Tariff Board’s reports thereon. Having listened to the Postmaster-General, I return the compliment, and advise him to make himself thoroughly acquainted with the highly technical points upon which the board has reported. I conclude by saying that the misunderstanding which exists is likely to cause manufacturers to become suspicious that there is a sinister move against the secondary industries of this country, and to make people afraid to invest money in manufacturing concerns. I shall support the Govern ment, and Istrongly suggest that, at this stage, we should be careful not to do anything which might make the misunderstanding greater and create further difficulties.
– It may be well if I attempt to make clear some of the points which have arisen. I remind Senator Hardy that the Exchange Adjustment Act affects only goods under the British preferential tariff, whereas under the new system which the Tariff Board first introduced in 1934, the principle is applied, in respect of specific items, to not only British goods, but also those which come under the intermediate and general tariffs.
– That is what I wanted to know.
– Moreover, the calculations made by the customs officials are based on all values having teen converted into sterling.
– That does not alter the position at all.
– It so happens’ that, in the case of glucose, the calculations result in an additional duty of 2.4d. per lb.; hurt if honorable senators will look at item 94, they will see an adjustment on an ad valorem basis, which provides for . 6 per cent. British and . 8 per cent. intermediate and foreign. Obviously, the Tariff Board had to exercise great care before submitting its recommendations to the Government. In preparing the schedule the department has followed the recommendations of the board.
Australia’s trade balance has been referred to. In this connexion I desire to express strong disapproval of any discussion in Parliament which might encourage speculation in the exchanges of other nations. We know what has happened in other countries. I myself have been invited to deal in the currencies of various nations in respect of which falls or rises have been expected. Such speculation produces the very evil against which we desire to protect ourselves. We should approach with great care the consideration of currency matters. A suggestion that Parliament might interfere to make the rate 30 per cent., would cause every gambler in Australia and Britain to get busy, with the result that what happened in France and Germany might be repeated in Australia. The Government has a responsibility in connexion with the country’s trade balance. When I indicated the prospects this year in this connexion, Senator Guthrie interjected that the position might be different if Australia experienced a drought. The extracts read by Senator Hardy, from a report by the Commission on Monetary and Banking Systems, indicate that Australia is amply secured. I say that deliberately, in reply to the observations which have fallen from the lips of some honorable senators. The Tariff Board has accepted the position that exchange was stabilized at 25 per cent., and has based its recommendations on that assumption. It has reported that a fluctuation of 5 per cent. either way would not necessitate an alteration of the duties it recommended.
– Did the board visualize an increase of duties?
– No. On page 9 of its report, dated the 13th April, 1933, the Tariff Boardsaid
The finding ofthe board isnot intended to convey the belief that, should the Australian exchange further depreciate, there should necessarily be a further adjustment of duties. In this connexion, the board considers that no decision should be arrived at until occasion calls for it, when action would be determined upon, after proper inquiry.
– The board provided for a fall of the exchange rate?
– Yes. It was careful to examine every conceivable argument, pro and con, and to estimate the effect on the exchange, and on the fiscal policy of this country. I may be pardoned if I read oneor two extracts from the board’s report. On page 5 it referred to the evidence of Mr. Latham Withall, who said -
The direct and indirect implications of a depreciated currency place very heavy burdens upon manufacturing industries. In every element of production costs the exchange factor is discernible. It is, perhaps, not generally recognized that the operation of exchange adds to the cost of locally-produced, as well as to the cost of imported, raw materials. This inflation in prices of locally-produced raw materials is not limited to the exportable primary products such as wheat, flour, and wool, which have a world price basis, and the Australian domestic-consumption prices which are determined by overseas parity, plus the premium on exchange. On the con trary, exchange prices also inflate the price level of local goods, which are wholly consumed within Australia, for it is a truism, and not a matter for argument, that the depreciation of a currency results in a general increase of commodity values calculated or measured in the terms of that currency.
Yet the Tariff Board found that that had not taken place in Australia to’ the extent that it anticipated ; there had not been the increase of internal prices that it expected.
– What was the relation between the prices in Australia and. in England?
– On. page 4 of this report the board made the following observation -
It follows that, for a local product ofa type which includes nothing imported or readily exportable, an adverse exchange increases the total protection by the full exchange rate on the c.i.f. figure; hence the protection intended to be provided by the tariff would be maintained if the duty were decreased by the full amount due to exchange. Generally, the manufactured product includes imported or exportable materials: then the protective effect of a. duty is not increased by the full amount of exchange payable, but by a proportion of it dependent upon the relation between the value of the exchange affected materials and the whole.
The board’s report proceeded -
The board is, therefore, faced with the position that the added cost of landing imported goods has been materially increased by reason of the exchange, while over the same period Australian costs have fallen substantially. The exchange, therefore, has increased the protection afforded local industry well above the rates which must have been considered reasonable when adopted by Parliament.
In examining this subject in 1934, the board in its annual report said -
The board, therefore, decided to change the basis of its recommendations, and for the greater part of the year under review has shown its findings under three headings, viz. : -
The rates which will prove reasonable and adequate under existing conditions of exchange ;
an estimate as closely as can be made of the rates which would be reasonable and adequate if exchange suddenly reverted to par:
the scale of adjustments necessary to meet conditions of exchange between parity and the present adverse rate of 25 per cent.
The board concluded that it should base its prime finding on the facts as they now actually exist, instead of assuming that costs of local production and costs of importations were different from what they are. Some of the complications involved in arriving at reasonable selling prices have already been set out, and consideration of these will show how difficult it is to estimate what the position would be under an entirely different set of circumstances.
That is the view which I endeavoured to put to honorable senators last night. The report continued -
The board could have concluded, its reports with this finding, and left with the Government the responsibility of providing the same total protection if exchange should fall suddenly. The board considered, however, that an estimate should be made of the duty necessary at par exchange so that steps could be taken to provide for the increase of the rate automatically in .proportion as the value of local currency improved.
The board’s recent findings may appear at first glance to be involved,, but the complication, if any, is merely to safeguard local industries in case exchange should suddenly fall. No complication occurs, and no calculation is involved until there .is a movement towards exchange parity. If, as appears quite probable, Australian currency remains as at present for a lengthy period, or stabilizes at its present valuation, all apparent complications would disappear.
We do not know what the future holds, but at present, at any rate, an increase of the rate of exchange is not likely.’ Every trend to-day is towards the stabilization of industry in this country; money is flowing into Australia. Having regard to events of recent years, there is a disinclination on the part of the financiers of the world to invest their money outside the British Empire. I am convinced that, as we axe now on the road to prosperity, there should be no artificial expansion of the exchange rate, and I sec no immediate necessity for that to occur for commercial reasons.
– I noted with interest the concluding remarks of the Minister. This matter is of the greatest importance to the mass of the people. I do not claim to know all about the intricacies of exchange and currency; but I am convinced that, when Australia commenced to raise the exchange rate, it was the mass of the people who paid the piper, whilst those who were benefited most were the primary producers. Thus, the Labour party, in the view it takes of this matter, is again proving itself a friend of the primary producers. With other honorable senators, we realize that this rise in exchange benefited the community generally. That step had to be taken because we could not stand by and see the farmers driven off the land-.
– Does the honorable senator say that the Labour party raised the rate of exchange?
– I said that no doubt the raising of the exchange was taken as a national step, although the instrumentality which effected it was the Commonwealth Bank.
– The Bank of New South Wales gave the lead.
Senator J. V. MacDONALD Broadly speaking, -the change was effected nationally, and the Commonwealth Bank was the instrumentality through which it was accomplished. As a nation we agreed to an adverse exchange rate of £25 per cent., and it has stayed at that figure for three years. The amendment proposed by Senator Duncan-Hughes implies that an increase of the exchange is likely.
– The Tariff Board’s recommendation on this matter implies that they may be a fall of the exchange rate, why not provide for either contingency ?
– I agree with the honorable senator’s logic on . that point. If, as we are doing in connexion with this item, we provide for a fall, we should also provide for an increase of the exchange. That is fair enough; but, as the Minister has pointed out, the amendment admits, as it were, that an increase is likely to occur at an early date. The experience of the people of this country during the last three years will not lead them to contemplate such a change favorably; they realize that a further increase of the exchange would cause alarm and must impose further burdens on the mass of the people.
– If a serious drought occurred, and export prices fell heavily, an increase of the exchange would soon result.
– That might be. However, we should not take a gloomy view of the position. As the Minister has stated, we are in a stable position to-day, and the future holds brighter prospects. I emphasize the point that it is the mass of the people who bear the burden of a high exchange, and that they will view any further increase in a very serious light.
Whilst I do not intend to go into the various intricacies of this matter, I have been struck by certain happenings in international finance. When Germany’s finances crashed, millions of marks were required to buy a loaf of bread, worth a few pence in our currency. German people have told me that many of their friends who had built up solid fortunes lost everything. However, it appears to me a remarkable anomaly in international finance that to-day the Australian £1 is quoted in Berlin at only 10a., whereas in England it is worth between 16s. and 17s. This is an example of many remarkable anomalies existing in the exchange position throughout tho world to-day.
– It must be remembered that Germany maintains two currencies - one for the settlement of external obligations and one for internal purposes.
– The basic facts governing the exchange position should not be concealed from thu masses of the people who hear the burden of any increase of the exchange. The Minister’s observation as to the improvement of conditions now taking place in Australia, is borne out by the fact that despite the relationship of Australian currency to sterling being as £125 is to £100, the tourist steamers going home this year have invariably had a full list of passengers, whilst many bookings have been refused. This is a sure sign of prosperity and stability. No one would pay £125 to make a trip if there were any likelihood of the same trip costing only £.100. The amendment aims at preventing any increase of benefits to Australian manufacturers which might result from a rise of exchange. However, Senator Leckie has pointed out that our manufacturers gain very little benefit indeed from tho exchange.
– It is of very small advantage to the manufacturer.
– There cun be no doubt, however, that a high exchange is of very great value .to .the exporting or primary producing industries, which reap to the full the benefit of the present rate of £25. I ask the Minister to explain this disparity, as a high exchange should confer a greater benefit on the manufacturers than is the case to-day. An Australian manufacturer at present must pay £125 for raw materials valued in England at £.100. I would be very glad if the Minister would explain the exact amount of protection which the Australian manufacturer receives as the result of the present exchange rate of £25. The amendment moved by Senator Duncan-Hughes predicates a probable increase of the exchange ; and it’ must be considered seriously front that aspect. I hope such an increase will not take place. I agree with what thu Minister has said in connexion with the improvement of conditions generally, and I intend to oppose the amendment, one of my reasons for doing so being that the adoption of tho request would lead the people of Australia to believe that an increase of exchange is likely. Sitting suspended from 12.^6 to 2.15 p.m.
Senator j. V. MacDONALD. - Despite what some of my colleagues have said I regard monetary problems as most difficult to understand, and although laymen should get a broad outline of the subject details should be left to experts. For the reasons given I cannot support the request moved by Senator Duncan-Hughes.
.- Some honorable senators appear to be under the impression that an adverse exchange rate of 25 per cent, gives Australian manufacturers increased protection to that extent, but that is not so. An Australian manufacturer pays the 25 per cent, regardless of whether he is using imported or local material. If he purchases wool for manufacturing locally he pays the English price of wool plus 25 per cent. A biscuit manufacturer pays the English price of flour plus 25 per cent., as also do manufacturers handling other raw materials such as tin, copper and lead. The Australian manufacturers do not pay the Australian prices of their raw material, but the English prices plus 25 per cent. They are paying about £5,000,000 more in wages than they would were exchange at par. Instead of their benefiting to the extent of 25 per cent. in consequence of the exchange, I estimate that the extent of such benefit does not exceed 7 per cent. The quantity of local material used in the manufacture of glucose is. 70 per cent., but the Australian manufacturers are paying the English price of maize plus 25 per cent.
– Maize is an Australian product.
– So is butter.
– Very little maize is exported.
– There is a heavy duty on maize. The English manufacturers of glucose are obtaining maize at 2s. a bushel, but the price of the Australian product is 5s. 4d. The extrabenefit which the Australian manufacturer receives in the. form of duty in this instance is only 5 per cent. or 6 per cent. Fully 80 per cent. of the raw material used by Australian manufacturers is governed by tho British price plus 25 per cent. Raw material, whether obtained overseas or locally, is subject to the rate of exchange, and the Australian manufacturer pays the same as his English competitor plus 25. per cent. The real protective incidence of the 25 per cent. is in some cases not more than 5 per cent. or 6 percent., andthe maximum would not exceed 8½ per cent. to 9 per cent.
.- I cannot follow the arguments aduced by Senator Leckie, particularly concerning glucose manufactured in Australia from locally grown maize. The honorable senator quoted the Australian price of maize as 5s. 4d. a bushel, but according to the Sydney Morning Herald to-day the price is 4s. 4d. a bushel. The honorable senator also said that the Australian manufacturer who purchases Australian wool and manufactures it in this country pays the British price plus 25 per cent. Senator Leckie. - Of course he does.
– He purchases wool in the local market at say, ls per lb.
– The Australian purchaser pays 14½d. and the British buyer 10½d.
– The Australian manufacturer has an advantage in that he does not pay a delivery charge, whereas the British manufacturer pays a delivery charge of one-eighth of1d. and 1¼d. per lb. freight over 12,000 miles, and he then has to pay freight and insurance on the finished products shipped to Australia. I do not suggest that the duty is too high, but I could not understand Senator Leckie’s contention that an exchange advantage of 25 per cent. is equivalent to a duty of only7½ per cent. “We have always assumed that when the Australian pound is depreciated 25 per cent. in relation to sterling, the manufacturer has an additional advantage equivalent to a duty of 25 per cent.
– I am surprised that the Government will not accept the fair and reasonable request moved by Senator Duncan-Hughes. Surely when we provide that if the exchange rate between Australia and Great Britain is reduced by 1 per cent. the duties in the schedule shall be increased by 2.4 per cent. We should also provide that if the exchange rate is increased 1 per cent. there should be a corresponding reduction of duty. This is another of the numerous instances in which the manufacturing interests in Australia are to obtain benefit in both directions. The reqnest is reasonable, and the committee is indebted to Senator Duncan-Hughes for bringing it forward. The Minister has not given any convincing reasons why it should not be accepted.
– I did not anticipate that the request I have moved on this item would result in a debate over such a wide range of topics. Honorable senators have discussed, among other things, high finance, banking policy, gold blocs, inflation, bitumen, our trade balances, the United States of America, and speculation in foreign currencies. Tosome extent the request I have moved may be regarded as a test, and if it is carried a similar request should consequentially be made under certain other items. In 1934- 35, the importations of glucose which were cleared totalled 343 cwt., valued at £326. In 1933-34, our exports were valued at £6, and, in 1934-35, at £18. One would hardly have expected such a lengthy debate on such a comparatively unimportant item, but honorable senators have had an opportunity to expound their views on finance, currency and exchange. I am a good deal strengthened in the opinions I have expressed by the fact that my remarks have the support of Senator J. D. Millen, who, I think honorable senators will agree, is more capable of dealing with such subjects than perhaps any other honorable senator. I congratulate the officer who prepared the first statement read by the Postmaster-General (Senator A. J. McLachlan) this morning, but it resembled only slightly the Minister’s first statement yesterday. “When Senator Brown invited the Minister to elucidate the subject, I could not help thinking that, although he had elucidated it three or four times, he submitted a different elucidation on each occasion.
– To meet different points, if any points at all had been made.
– The first explanation of the Minister was that there is some mathematical catch in this proposal, and that while the difference between 2 and 4 is 2 the difference between 4 and 6 is not 2. I notice that that argument appears to have been dropped to-day; honorable senators are told that there is no problem of higher mathematics involved, and that it is a matter of simple arithmetic. I invite the Senate to descend from the high altitude of finance, currency and exchange, and consider the facts as a common-sense problem.
SenatorHardy. - It is possible that the ratios may change.
– That point has not been amplified by the Minister to-day. Therefore, I assume that this contention is no longer regarded as a strong point in his defence. The Minister suggested that the proposed request would cause inconvenience with regard to some of these items, but he had to skip from page 3, item 27, to page 114, item 380, in order to find what he considered to be a typical example. The principal contention of the Minister, as I understood it this morning, was that the exchange is likely to remain almost permanently at the present figure, and he quoted ProfessorGiblin in support of that belief. He said, in effect, that there was no reasonable probability of the exchange moving in any direction. If that be correct, why should this schedule provide on hundreds of items for a fall of the rate of exchange? But having made this provision why not provide also for the possibility of a rise? Either the exchange must remain stationary, in which case the duty in the schedule operates ; or it will fall, in which case the proviso will come into operation-, or it will rise. In those circumstances we should provide for the three contingencies, not for only two of them. If such an alteration is to be made, now is the opportunity to do so, otherwise this proviso will be repeated on hundreds of items in the schedules, and when a change has to be made each one will have to be amended separately. The Tariff Board suggests that provision to counteract any rise of the rate of exchange should be deferred until the need for it arises. If. that course be adopted it will make the amendment of the schedule infinitely more difficult than it will be if done now. I also point out that the formula used in my request has not been drawn up by me; it is the formula of the Tariff Board, the Customs Department or the Minister. I am merely proposing that it be applied both ways to compensate for a rise of exchange as well as a fall of exchange. It should not be a one-sided provision. I recall that the PostmasterGeneral (Senator A. J. McLachlan) said that at present it was a matter of a one-way track, and that my amendment would have the effect of making the track lead in another direction. That is not my object. I desire that the track shall run both ways ; . but on the Minister’s own admission, it runs at present in only one direction. Senator Pearce pointed out that any rise of the exchange rate would accentuate the limitation of imports; that is undoubtedly so.
SenatorCollings. - That is the honorable senator’s objection to it.
– I am sure that Senator Pearce did not mean that the one-way application of the formula had been adopted with that deliberate intention.’ He only quoted that result as one of the arguments in favour of the schedule; he did not suggest that the provision for a rise of the rate of exchange was deliberately omitted so that imports might be further limited.
– I did not suggest it, but that would be the effect.
– I am gratified that that aspect has been clarified. My amendment has been amply justified, in my opinion, in one particular direction. When I delivered a speech on the tariff several nights ago, I pointed out that this schedule tended to lean too heavily towards the industrialists rather than the consumers. Will any honorable senator deny that this discussion has confirmed my contention ?
– Always based on the assumption that the exchange rate will rise.
– If the Government moans to be fair to all sections of the community, it must consider the possibilities of a rise, as well asof a fall, of the exchange rate. The formula laid down by the department can operate equally in both directions, and it is only fair that it should. I shall not withdraw my amendment, and I thank honorable senators for the attention that they have devoted to its consideration.
Senator JAMESMcLACHLAN (South Australia) [2.37]. - If a decision is to be reached on this item, it may be preferable to apply the principle involved to the remainder of the tariff schedule, because the same formula has been devised throughout. Would it be possible to redraft Senator Duncan-Hughes’s amendment in order to give it a general application ?
– The schedule must be considered item by item.
. -There is no uniform formula ; it varies with each item. Of course, if the request be carried, it will be consequentially adapted to succeeding items.
Question - That the request (Senator Duncan-Hughes’s) be agreed to - put. The committee divided. (Chairman - Senator Sampson.)
Question so resolved in the negative.
SenatorLECKIE (Victoria) [2.43].- I am surprised that members of the Country party have not seized the opportunity to point out the extreme value of the glucose industry to primary producers. Every year it uses more than 500,000 bushels of maize, and about 12,500 tons of coal. But more particularly it provides a big market for home-grown maize. The price of maize is now 4s. 4d. a bushel, and is hardening ; it has been higher. English glucose is manufactured from maize, which is largely grown in countries employing black labour, and realizes a price of 2s.; therefore, the value of the glucose industry to the maize-growers of Australia can be appreciated. At the moment British glucose can be landed in Australia at about £36 a ton compared with the £32 12s. 6d. for local glucose - a margin of £3 7s. 6d. in favour of the Australian product. In Englandglucose is manufactured by two American companies - Corn Products Limited, Manchester, and Bush House, Aldridge. London.
– I should like the Minister to tell the committee what was the previous duty. I agree with Senator Leckie that this is an important industry, and that all necessary steps should be taken to protect it. As is well known, glucose is largely used in the manufacture of confectionery, particularly fondants and chocolates; the principal, producer of glucose is MacRobertson, in Melbourne. The chief competitors in the Australian market are the English companies which are financed with American capital, so in essence they are American companies.
– They established themselves in Great Britain to take advantage of the preferential duties in Empire markets.
– That_ is so. Glucose, a by-product of maize, enters largely into the manufacture of barley sugar, a sweetmeat which is much favoured by people suffering from diabetes. It is also claimed that it prevents acidosis in children and adults, and because of its medicinal value, it will, no doubt, be more largely used in the future as a sweetening agent. I agree with other honorable senators that, in the interests of our manse-growers and manufacturers, the situation should be closely watched by the Minister for Trade and Customs, in order to prevent further inroads by overseas competitors.
– For the benefit of Senator Arkins, I may say that the rate of duty against the
United Kingdom in the 1933 tariff was 2d. per lb., subject to exchange adjustment. There need be no alarm about imports, for the simple reason that in 1934 the total importation amounted to only 20 tons, and for the last six months it has been at the rate of 16 tons per annum, whereas the sales of the Australian product amount to 7,000 tons annually.
– The Minister has just stated that the previous rate of duty was 2d. per lb. Now it is 10s. a cwt., which represents a solid reduction.
– The general tariff is still 2d. per lb.
– I am not interested so much in the general rate as I am in the rate governing our actual competitors in this market. My concern is that the protection shall not be so low as to enable overseas competitors to compete .savagely with the Australian industry, and eventually strangle it.
– The price for English glucose in Australia is £36 a ton, as against £32 12s. 6d. for the Australian product.
– I am well aware of that. This business is not quite so simple as it appears to be. Maize is very largely grown on the Atherton Tableland, in Queensland, and I conceive it to be my duty to see that the interests of the growers are not injured. It is not my intention to move a request on this item, because I know that the Government has the numbers to carry the rate of duty specified; but I impress on the committee that these industries of growing maize and manufacturing glucose are worth-while Australian enterprises. Glucose is manufactured in two of the most thickly-populated States - New South Wales and Victoria. In New South Wales, Maize Products Proprietary Limited uses between 500,000 and 600,000 bushels annually, gives employment to over 300 fully-paid hands, and pays in wages approximately £60,000 a year. I agree entirely with Senator Leckie, that the Minister should give us an assurance that the situation will he watched closely, because, as the honorable senator explained, if the price for Australiangrown maize rises to any extent, the present margin in favour of Australian glucose will disappear.
– It would be a good thing if the price for maize increased.
SenatorCOLLINGS.-Of course it would; but, if it increases to any extent, the existing protection of 10s. per cwt. will not be sufficient. We have also to remember that the maize used by overseas competitors in the Australian market is grown by black labour.
– The bulk of it is grown in Argentina.
– Much of it is produced in South Africa.
– Wherever it is produced, we may be quite sure that it is not grown by white labour, and the workers are not paid Australian rates of wages, nor do they enjoy Australian standards of hours and conditions. This morning we had a long and tangled discussion about the rate of exchange, which was raised merely for the purpose of giving a backhanded slap to Australian industries. I hope that the situation will be closely watched, in the interests of both the producers ofmaize and the manufacturers of glucose.
.- I was astonished that Senator Leckie should say that the price of maize in Great Britain was only 2s. a bushel. Evidently he has received information which has not come to me. The price of maize in Sydney ranges from 4s. 4d. to 4s. 6d. a bushel, and is likely to rise. Some years ago, when there was an inquiry into the cost of growing maize, it was stated that in Gippsland the cost was 5s. 2d. a bushel. Maize is a crop admirably suited for closer settlement areas, because, being picked by hand, it requires a lot of labour. The industry is a good one for Australia. Should the price of maize rise in Australia, so much the better for this country; but if the price rises here, it may rise in England also. The price of maize available to manufacturers of glucose in Great Britain will not always be 2s. a bushel, even if it is that now. I support the remarks of Senators Leckie and Collings, because I know that most of the maize imported into Great Britain for the manufacture of glucose is grown in South Africa under appalling black labour conditions. The maize growing industry is of value to Australia from the point of view of both the manufacturers and the primary producers.
. - I give an undertaking that the Minister for Trade and Customs (Mr. White) will keep an eye on this matter. The basis on which the Tariff Board made its recommendations was maize at 5s. 2d. a bushel.
Item agreed to.
Division 4. -AgriculturalProducts and Groceries.
Item 38 (Biscuits.)
. - This item may serve to illustrate somepoints which will probably arise in connexion with a number of other items. In 1933-34 the imports of biscuits amounted to 48,588 lb., the duty on which was- 3d. per lb. British, less exchange adjustment, and 4d. per lb. general. Although biscuits from the United Kingdom weremade free in December, 1934, the imports for 1934-35 were only slightly higher than for the previous years, the quantity imported being about 53,000 lb. Australia’s exports of biscuits during 1933-34 totalled 2,112,000 lb., and in the following year, 2,678,000 lb. Our manufacturers of biscuits suffer a number of disadvantages compared with their overseas competitors. For instance, butter and sugar which play so important a part in the manufacture of biscuits, are more costly in Australia than in England. That Australia is able to export biscuits despite that disadvantage, is evidence of the efficiency of the industry.
– The concluding remarks of the Minister’s speech are an aggravation of the offence. Previously, the duty on biscuits imported into Australia was 3d. per lb. ; now it is proposed to admit biscuits from the United Kingdom free of duty. The committee should remember the Minister’s statement that butter and sugar cost more in Australia than in England, thereby placing the Australian manufacturer of biscuits at a disadvantage. This industry demonstrates that for the glorious privilege of charging ourselves a great deal more for our own products we send our surplus overseas and sell it at world parity. According to the Minister’s own statement, the manufacturer of biscuits in the United Kingdom is given an advantage over his Australian competitor.
– Yet we beat him.
– The Minister rejoices that, in spite of that disadvantage, Australian biscuit manufacturers can beat their competitors in the English market. The Government now suggests that we shall give to the British manufacturer a further advantage, so that the Australian manufacturer will find it more difficult to heat him. It is proposed to take away the duty of 3d. per lb.
– Does not that show that the Australian industry is efficiently conducted?
– It shows at least two things. First, it demonstrates that the Australian workman is capable and compares more than favourably with the best workmen- of other countries. It also shows that immediately an Australian industry becomes successful beyond the possibility of dispute, the Government proceeds to commit fiscal assault and battery upon it. However, I realize that it is useless for the Opposition to attempt to delay the passing of the item, because the Government has a majority sufficient to pass it. This, however, is an industry which deserves the best that we can give to it.
– Has the Opposition received any protest from the biscuit manufacturers ?
– I can understand an honorable senator with the outlook of Senator Hardy being moved only by kicks from the rear - protests from people behind the scenes. Unlike him, members of the Opposition have an Australian outlook and do not wait for others to point out dangers. They have sufficient perspicacity to realize where the nation ie drifting. Had the Government taken the advice of the Opposition it would not now be occupied most of its time in trying to lift itself by its own boot straps. Senator Hardy asks whether any protests have been received from the biscuit manufacturers. The Opposition has not received any protests from them. It is not affected by protests.
I take this opportunity to reply to a. statement made last night, that the circulation by outside interests of a document drawing attention to statements made by Senator Hardy in other sessions, had prompted me to participate in a cruel persecution of the honorable senator. I have not been moved in that way. When I have thought that Senator Hardy’s treatment of me has deserved it, I have looked up Hansard, feeling certain that I could convict the honorable senator out of his own mouth. I thank the Minister for his assurance that the situation in regard to maize will be watched, and I hope that he will take similar action in relation to biscuits.
.- I should not have risen had it not been for the misconception which might arise from the remarks of Senator Collings in relation to the “ savage competition “ of British manufacturers. The honorable senator has entirely overlooked the fact, if he ever realized it, that the free entry of biscuits from England does not mean that British biscuits can be landed here at the f.o.b. price London. The natural protection is more than 100 per cent, ad valorem.
– Yet 48,000 lb. of biscuits was imported in a year.
– Biscuits are bulky in proportion to their weight. If honorable senators will work out the freight and other charges on biscuits from England, they will find that the Australian manufacturer receives a natural protection of over 100 per cent. I previously opposed the imposition of a duty on biscuits because I considered it to be unnecessary. That my stand was justified is dear from the fact that notwithstanding the increase of the duty, the quantity of biscuits imported did not diminish. The reason is that certain individuals in Australia will always demand well-known British biscuits, such as those made by Peek Frean Limited.
– Peek Frean Limited has now established a factory in Australia.
– The figures quoted by the Minister should satisfy every honorable senator. Notwithstanding that the duty has been removed for some time, there has been no increase of the importation of British biscuits. It is evident that Australian manufacturers have not. been seriously affected because for some time they have been able to export their surplus production at a profit.For that reason the remarks of Senator Collings are apt to create a wrong impression. I am glad that the Government has seen the wisdom of making this reduction, for it is absolutely unnecessary to continue the duties imposed a few years ago.
.- The making of biscuits is an industry which should receive the whole-hearted support of the representatives of the primary producers of this country, for practically all the raw materials used in their manufacture are grown in Australia. Those raw materials - flour, sugar, butter and dried fruits - have to pay the 25 per cent. exchange, and, in addition, butter, dried fruits and sugar have other charges to meet. We are approaching very close to the margin of safety in a big industry. Earlier in this tariff debate I was asked whether Australia was able to export any manufactured product. Here is one. Although Australia exported 73,000 lb. of biscuits in 1934-35, that quantity was exceeded in previous years, when large quantities were sent to Colombo and other Eastern ports. Our export trade in biscuits was practically destroyed by a shipping strike, and only with difficulty is it gradually being recovered. This is an ideal industry to encourage. Possessing efficient plant, it is being properly conducted, whilst the biscuits produced are of a quality comparable with that of any which can be produced elsewhere. Over 3,000 hands are employed in the industry, which pays over £400,000 annually in wages. Thus it is worth encouraging in the interests not only of the manufacturers, but also of the primary producers, whose raw material it uses entirely and purchases at high prices.
– I do not wish to be misunderstood on this matter. In spite of the fact that under the British preferential tariff no duty is imposed on this item, the industry has not been affected.
– But it may yet be affected.
– Figures on that matter can be supplied by the Department of Trade and Customs. I point out that if we can reduce the price of biscuits, the consumption and production will increase, and this will further assist the primary producers. Consequently, all sections interested in the industry will benefit.
Item agreed to.
Item 51 (Crustaceans)
– I take this opportunity to suggest that the Government should do more than it is doing at present to encourage the fishing industry. Unfortunately, the possibilities of this magnificent continent, and the waters surrounding it, are not generally realized. The previous British preferential duty on tinned crab was2½d. per lb. ; it is now proposed to reduce it to 1d. per lb. We shall not develop this phase of the fishing industry by reducing the tariff on its products. Other countries have been able to develop their fisheries to an enormous extent. Of course, I realize that the marketing of crustaceans represents only one phase of the industry. In 1933, the yield of the Californian fishing industry was £2,929,813 ;80 per cent, of the income of the industry, or £2,253,367, was paid out in wages, and it gave employment to 67,236 people. I understand that the Government has taken certain action to investigate the possibilities of Australia’s fisheries, but it can do much more in that direction. I mention the importance of the fishing industry generally to Australia in connexion with this item, merely to suggest that if we do not build up industries which will help very greatly to populate this country, and thus give us security in times of national stress, we shall not accomplish many of our national ideals; we shall certainly fail to do so by reducing duties on items of this nature. If the Opposition, were sufficiently strong numerically, I would have no hesitation in attempting to have this duty increased.
Under the circumstances, however, I must content myself by making this protest.
– I support the contention of Senator Ceilings that it is most desirable that we should expand the fishing industry. Enormous quantities of the very best crayfish are to be found on the Victorian coast, between Barwon Heads and Portland, and also off the east coast of Tasmania, where a great number of fishermen are engaged in this industry. Often the work is hazardous, because the pots are set on very dangerous ledges, and several lives have already been lost. There is a good home market for crayfish in the big cities. Nevertheless, I have seen the market glutted. In fact I have bought good crayfish on the east coast of Victoria at 3d. each. Of course, that is not the rule; when the demand is firm these fish bring from1s. to 2s. each. Undoubtedly, there is room for expanding this industry, by canning crayfish, just as there is room for expansion of trawling in coastal waters, some of which teem with fish. Despite these facts, however, we have so far been content mainly to fish with hook and line in shallow waters. Fishing is a big industry in Canada, and salmon is one of the main products. In Australia the industry has definite possibilities of development, notably in connexion with smoked barracouta and other fish, and in the canning of crayfish; it could be greatly developed, particularly on the coast, from Portland to Mount Grambier, where these fish abound among the enormous reefs. A profitable industry could possiblybe built up there, through the establishment of a canning factory at, say, Portland.
SenatorHardy. - The problem of marketing fresh fish has yet to be solved in country districts.
– I believe that to-day the hauls are deliberately curtailed. I understand that fishermen are limited to a catch of four baskets of schnapper, and from six to eight baskets of barracouta. It is no idle claim to say that a profitable industry could be built up in canning this fish, and the possibilities should be carefully examined. I am not suggesting that a duty higher than1d. per lb., British preferential, is essential, butI would like to see the Government encourage the smoked fish industry and the canning of crayfish.
SenatorBROWN (Queensland) [3.25]. - In answer to a question by me, the Minister informed the Senate some time ago that efforts were being made by the Government to discover the breeding grounds of certain pelagic fish, and we were given to understand that a ship for this purpose was being procured overseas.
– No; tenders will be called for the construction of the vessel within a week or so.
– The Government, I take it, intends to adopt this course with the idea of developing the fishing industry. Why go to the trouble of encouraging the catching of fish, when, at the same time, duties on fish products are reduced ? Obviously, it will be impossible to establish a profitable industry under such circumstances.
– I assure honorable senators that the Government is expediting steps to procure a. research vessel, with the idea of exploiting local fisheries. However, the purchase of that vessel is not relevant to a discussion on this item, which is obviously of only minor importance. Our imports of crustaceans come mainly from foreign countries, principally Japan, which, in the last year for which records are available, supplied us with practically the whole of these imports. But the rate of duty under the general tariff will remain at 4d. per lb. In view of these facts, the speech just made by the Leader of the Opposition is futile. Importations of crustaceans in 1934-35 from the United Kingdom totalled 100 lb., valued at £15, and these were of a special character.
Item agreed to.
Item 91 agreed to.
Item . 94 (Soap)
– The previous British preferential duty on this item was 6d. per lb. ; the Government now proposes to reduce it to 4½d. per lb. The duty in the general tariff also has been reduced. What is the reason for this reduction? Is there any kind of soap manufactured overseas which is superior to the product of Australia? I am familiar with all the principal brands made in this country, and I am not aware that any brands are obtainable from the United Kingdom which are in any way superior to the best Australian soaps. Fastidious people, like those who prefer Peek Frean biscuits to the Australian brands, may demand special brands of imported soap. They have a right to obtain such brands, but they can reasonably be asked to pay a heavy duty on them. There has been a deliberate attempt in every tariff schedule introduced by the present government to decrease the protection afforded to local industries. I have not the figures showing the importations of soap, but according to a book entitled Your Money’s Worth, in the Parliamentary Library, there is a good deal of power in advertising. That book mentions the fact that the Parisian women send to America for their requirements of fancy soaps and perfumes, and the American women send to Paris in order to satisfy their needs. If some Australian women wish to purchase fancy soaps not manufactured in Australia I have no objection to their getting them. Instead of reducing duties on this commodity we should increase them, so that we shall not injure the Australian soap industry, which is highly efficient and provides employment for thousands of men and women. Can the Minister state the quantities and values of soap imported from the United Kingdom?
– Local manufacturers of toilet soaps are supplying practically the whole of the requirements of the Commonwealth. In 1933-34 local production was 9,550,768 lb., valued at £432,242, whilst total importations in the same period were 59,763 lb., valued at £6,920 sterling, or approximately £8,650 Australian - the latter figure represents about 2 per cent. of the total consumption of toilet soaps in the Commonwealth. Apart from meeting practically the whole of the Commonwealth’s requirements of soap the industry has developed a considerable export trade,and is competing against United Kingdom manufacturers on their own ground. Under the Ottawa agree ment toilet soaps of Australian origin are admitted into the United Kingdom free of duty and also enjoy, in that market, a preference of 30 per cent. over non-Empire produce. During the past five years the aggregate exports of toilet soap to the United Kingdom amounted to 160,117 lb. valued at £17,667, whilst similar importations into the Commonwealth from the United Kingdom were 260,007 lb., valued at £26,282. This balance as regards toilet soaps is certainly in favour of the United Kingdom, but a review of the soap industry as a whole shows that, in the period referred to, the aggregate exportations from the Commonwealth of all kinds of soap to the United Kingdom were 22,640,116 lb., valued at £511,459, whereas aggregate importations from the United Kingdom were but 1,078,790 lb., valued at £46,208. That is a very satisfactory position. If the duties on certain imported soaps were unnecessarily high we would be causing an undesirable interference with an interchange of products.
Item agreed to.
Division 5. - Textiles, Felts andfurs, andmanufacturersthereof,and Attire.
Item 105 (Cotton piece goods).
.- To show clearly the extent to which amendments have been made in this item I shall have to go back to the time when a British textile fabric known as cotton tweed, which was on the exempt list, was placed in the new schedule under a very high duty. The object of doing so was, to a great extent, to prevent competition with woollen tweeds. Cotton tweeds, although manufactured entirely of cotton, were woven into patterns similar to those used in the manufacture of woollen tweeds. Cotton tweeds, which are more attractive, are used almost exclusively by Australian workmen, and have displaced heavy textiles, such as moleskins and corduroys. In this item these fabrics, dyed and undyed, are dealt with. Certain materials have been imported into Australia recently in what has been called a “grey” or undyed condition, and the process of manufacture has been completed at dyeing and finishing mills.
Ootton tweed, at one time admitted free, but subsequently subjected to a high rate of duty, namely, ls. per square yard, plus an ad valorem duty, does not appear separately in this schedule ; but it is embraced in the item now before the committee. Many other materials, which hitherto had been subject to a British preferential duty of 5 per cent., have also been included in the same item under the general description “ cotton piece goods,” and aro among the materials to come under the impost of 6d. per square yard, plus a 22½ per cent. duty on undyed materials, or 7d. plus 22½ per cent. on dyed materials. Honorable senators will find in a report of the Tariff Board that these two items will include, in addition to the cotton tweed, dungarees, denims, drills and jeans, and all those classes of cotton textiles, which are the foundation of the labourer’s working attire. Exactly the same applies to the cotton tweeds, but hitherto those plain goods - jeans, drills, denims and dungarees - have boen admitted under a tariff of S per cent. British. Up to the present time, very small quantities of these plain materials have been manufactured in Australia. The cotton tweed industry has grown by leaps and bounds, and the manufacturers have practically captured the market but at considerable expense to the users of the garments. I have figures to show that although the manufacture of these articles has increased, it haB not been economically beneficial to Australia ; the increased employment and the addition to thewagessheet do not compensate for the higher prices that the workers are charged for their garments. We have put in our pockets some money represented by tho increased wages earned in Australia ; but we are obliged to take double the amount from another pocket to pay the extra cost of the garments. The same thing will eventuate if we accept the proposals in this schedule, applying to denims, dungarees and drills.
– Does the honorable senator desire the duty to be increased or reduced?
– I desire that plain goods, which have hitherto formed the basis of the working man’s apparel, shall remain at the rate of 5 per cent., thus giving the labourer an opportunity to clothe himself at a reasonable cost.
– What is the use of that, if the labourers cannot obtain employment ?
– If my advocacy is successful, no injury will be done to any existing industry. In my opinion it is unwise to continue a policy which will compel us to pay £1 for goods for every 10s. worth of benefit that accrues from the establishment and expansion of factories in the Commonwealth. The postponement of this item, with a request that the Government reconsider the whole position will not prejudicially affect any existing industry. Nor will it affect the manufacturers of cotton tweeds, because they already have secured the market, although at the expense of considerably increased prices for the garments which they produce. If encouragement is given to the Australian manufacturers of denims, dungarees and drills to the same extent, a similar penalty will be suffered by the persons who wear these garments. Such a policy is not economically sound.
[3.54]. - I move -
That the Senate, at its rising, adjourn till Tuesday next at 3 p.m.
The Senate next week will sit on Tuesday, Wednesday and Thursday, but on the following week will not meet till Wednesday. This arrangement will givethe Tasmanian and South Australian senators an opportunity to return to their homes if they wish to do so.
Question resolved in the affirmative.
Motion (by Senator Sir George Pearce) proposed -
That the Senate do now adjourn.
SenatorMcLEAY (South Australia) [3.55]. - I am most anxious that theimportation of asphalt, bitumen, natural pitch, petroleum and bone pitch from America should receive the immediateconsideration of the Government. I direct attention to the prevailing rates of duty - British, free; general, 10 per cent.,. plus a primage duty of 5 per cent. The following table sets out the importations of these materials from various countries : -
I am aware that the Government is considering Australia’s trade relations with the United States of America, and I hope that the Leader of the Senate (Senator Pearce) is in a position to make a statement on that important problem. Inthe interests of our trade balance, I suggest that, in view of the possibility of getting cheaper cement, and by an increased demand enabling the works to employ more men, the Government should inform honorable senators whether it would be advisable to increase the rate of duty against imported bitumen, thereby possibly increasing the use of cement in the construction of roads. The South Australian Government, for instance, is entering upon a vigorous road-making policy this year. I do not propose to venture an opinion upon the relative worth of concreteand bitumen roads, for I am aware that engineers differ on this matter. I point out, however, that experts have stated that recent experience in America has proved that concrete roads do possess advantages over bitumen-surfaced roads. I hope that the Minister will enlighten honorable senators in respect of the policy which the Government proposes to adopt.
[3.58] . - in reply - Whatever the Government may intend to do in this regard, obviously it cannot publish its intentions; if it did so, they would quickly be defeated by a sudden acceleration of importation. I shall bring the honorable member’s request under the notice of the Government.
With regard to the trade balance with the United States of America, I remind the honorable senator that a subcommittee of the Cabinet is already inquiring into this matter.
Question resolved in the affirmative.
Senate adjourned at 3. 59 p.m.
Cite as: Australia, Senate, Debates, 1 May 1936, viewed 22 October 2017, <http://historichansard.net/senate/1936/19360501_senate_14_150/>.