14th Parliament · 1st Session
The PRESIDENT (Senator the Hon. P. J. Lynch) took the chair at 3 p.m., and read prayers.
The following papers were presented : -
Land Tax Assessment Act - List of Applications for Belief from Taxation dealt with during the year 1935.
Nauru - Ordinances of 1935 -
No. 1 -Licences Amendment.
No. 2 - Native Co-operative Societies.
No. 3 - Nauru Antiquities.
No. 4 - Criminal Code Amendment.
No. 5 - Laws Repeal and Adopting.
No. 6 - Aliens.
Arbitration (Public Service) Act - Determination by the Arbitrator, &c. - No. 2 of 1936 - Fourth Division. Officers’ Association of the Trade and Customs Department; and Commonwealth Public Service Artisans’ Association.
Commonwealth Public Service Act -
Appointments - Postmaster-General’s Department- R. W. M. Boswell, N.
Lake andE. H. Palfreyman.
Regulations amended - Statutory Rules 1936, No. 55.
Seat of Government Acceptance Act and Seat of Government (Administration) Act-Ordinance No. 14 of 1936 - Companies (Liquidation).
Australia and the Leagueof Nations.
SenatorFOLL. - Is the Leader of the Senate aware that simultaneously with the evacuation of his palace at Addis Ababa by the Emperor of Abyssinia, the League of Nations has moved into its new £1,000,000 palace at Geneva! If so, does the Government consider that the activities of the League of Nations during the last twelve months justify Australia in remaining a member of the League ?
asked the Minister representing the Minister for Commerce, upon notice -
Is the report correct that, owing to constitutional difficulties, the States have been compelled by the Commonwealth Government to distribute the whole of the amount of the grant to wheat-growers on an acreage basis; if so, does the Government propose to continue making payments to sowers of wheat whocannot grow it efficiently or economically.’
SenatorBRENNAN- The Minister for Commerce has supplied the following answer : -
No. It is true there are constitutional difficulties associated with the distribution by States of a bounty on production, but they may distribute funds in any other manner they consider necessary. The methods adopted by the States have already been furnished in a reply given by me to Senator Uppill on the 24th April.
In committee (Consideration resumed from the 1st May (vide page 1117)):
Division 5 - Textiles, Felts, and Furs, and Manufactures thereof and Attire.
Item 105 (Cotton piece goods).
.- On Friday last I intimated my intention to move that consideration of the item he postponed in order , to give the Government an opportunity to reconsider it. I directed attention to the marked differ- ence in the wording, of sub-paragraphs b 1 and b 2, as compared with these sub-paragraphs in the previous schedule. The duties now proposed previously applied only to one class of cotton textile fabric, namely cotton tweeds, which were subjected to a heavy impost some years ago, because it was felt that, being manufactured in similar patterns, they were competing with woollen tweeds. I also explained on Friday afternoon that, as the result of the heavy duties which had been imposed, the manufacture of cotton tweeds in Australia had grown to such an extent that the manufacturers were supplying practically the wholeof our needs of that material, but the higher costs to the working classes of articles of wear made from this material more than offset the advantages to the community through the establishment of the industry. Although they are not mentioned, the item now includes such textiles as denims, dungarees, jeans, and drills, which bear exceptionally high rates of duty. The articles of wear made from these materials are used exclusively by wage earners. All waiters and assistants in smallgoods establishments, as well as butchers, wear white drill; and jeans, denims, and dungarees are used exclusively by other workers and harvest hands. We should hesitate before we place an exceptionally heavy burden on a large section of the community in the interests of another section which is not nearly so large. Hitherto these goods which are now included in this item have been imported from Britain under a 5 per cent. tariff, but they will now be subject to an impost of 6d. a square yard if undyed, and 7d. a square yard if dyed, plus, in the case of British goods, an ad valorem duty of 22½. per cent. That will mean additional cost to the wearers of garments made of these materials. At this stage I shall confine my remarks to the principles which have actuated me in taking a definite stand in this connexion. If my proposed request is granted by Parliament, and the item withdrawn and remodelled, no injury will be done to any existing Australian industry. The manufacture of cotton tweeds is well established in Australia, and local factories are turning out cloth equal in quality to that imported from Britain. But in order to establish a new phase of the industry the working men of this country have been penalized. Parma tweed trousers, which previously could be bought for about 7s., now cost 10s. or11s. We should hesitate before accepting duties which impose heavier burdens on the workers of this country. I hope to show that this proposal is not sound economically. Australian manufacturers of cotton tweed are hard pressed to meet the demand for this textile, but in regard to denims, dungarees, drills and jeans the position is different. The production of these materials in Australia is small indeed. The Tariff Board’s recommendation is based on the assumption that the production of this class of fabric in Australia will be as successful as has been the manufacture of cotton tweeds. But before we accept that argument as a justification for greatly increased duties, we should consider the effect on the community as a whole. I propose to show that the community will be at a disadvantage if the pro. posed higher duties are allowed to remain. For that reason alone my proposal should receive the support of the committee, and especially of the Labour party, which professes to act always in the interests of the workers.
I have read with care the Tariff Board’s report on this subject. The board makes it clear that the request for additional duties came from one Australian mill- the Bradford cotton mill. I wish to refer to the evidence given by the manager of that mill.
– The honorable senator’s time has expired.
– In order that the committee may understand the policy of the Government in regard to this item, I suggest that subparagraphs b, c, and d be taken together. The classes of goods covered by those subparagraphs are similar, and my remarks in regard to one will, to a great degree, applY to the others also. The two main classes of cloths concerned are a cotton tweeds for men’s or boys’ outer clothing, and b denims, drills, dungarees, jeans, and canvas and duck for men’s and boys’ outer clothing. Honorable senators will be able to make their own comparisons of the small increases of duties over the 1933 rates.
Prior to the introduction of the tariff proposals of August, 1934, cotton tweeds were the only cotton fabrics produced locally. The Government’s proposal to extend the protective duties to cotton drills, denims, jeans, duck and dungarees, was influenced by two main factors - first, the absorption of greater quantities of Australian-grown cotton; and, secondly, the utilization of idle weaving looms in weaving the cloth, and of idle machinery for spinning the yarns to be used in such cloth.
The manufacture of cotton tweeds has been in progress in Australia for a considerable number of years, and local producers have captured practically the whole of the market for this classof fabrics. Australian production in 1933-34 was 2,617,000 square yards, valued at £254,000. Imports, which in that year were approximately 85,’000 square yards, fell to 60,000 square yards in 1934-35. The local industry is, therefore, catering for about 98 per cent, of the market. In the past, however, the value of this industry to Australia waa limited to the employment it gave in the weaving of cotton tweeds from imported yarns admitted at rates of free British, and 15 per cent, general tariff. Under the present proposals, protective duties have been imposed on cotton tweed yarns in order to promote the use of greater quantities of locally-grown cotton. The position to-day is, therefore, that the cotton tweed industry is of three-fold value; it has to do with the growing of cotton, the spinning of cotton into yarns, and the weaving of the yarns into cloth.
The Tariff Board’s recommendations show that if yarns were still admitted at rates of free British, and 15 per cent, general tariff, a lower protection . than that which existed under the 1933 tariff would be necessary. But, consequent upon the imposition of protective duties on yarns; the board considered that higher duties were necessary on cotton tweeds in order to offset the higher cost of yarns.
As already explained, the manufacture of denims, drills, dungarees, and similar cloths, was not commercially undertaken in Australia prior to the introduction of the protective duties of 1934. The Tariff Board pointed out that in the past Queensland crops have contained a large proportion of the inferior grades of cotton, and that with regard to both the cotton tweeds and denims groups of cloth, the cotton mostly used is inferior to that necessary for spinning into yarns foi’ the knitting industry. The board consequently came to the conclusion that the manufacture of yarns for tweeds, denims, &c, presented an outlet for the consumption of these lower grades of cotton. Moreover, it was thought that numbers of idle looms could readily be adapted to the weaving of drills, denims, and similar cloths, and that in addition to utilizing the inferior cotton, the economic waste .represented by idle machinery could be obviated by extending the protective field to drills and similar coarser types of cloths. The imposition of protective duties on these fabrics, besides creating employment in .their manufacture, also causes additional employment in the production of the necessary yarns, and brings idle spinning machinery into operation. In regard to the goods covered by item 105 Alc and d, the Tariff Board’s recommendation for protective duties on drills, &c, was designed to apply only to such cloths weighing 6 oz. or more a square yard when of the types principally used for certain classes of men’s or boys’ outerwear. In order that such piece goods for other purposes - such as shirts and pocket.ings and the manufacture of waterproofed cloth - should not be saddled with the substantial duties provided under subparagraph b provision has been made in sub-paragraph d for the continued admission at rates of 5 per cent., British preferential tariff, and 25 per cent, general tariff, of such cloths when used for these other purposes. Undyed sheetings were not intended to be subject to the protective duties; these also have been included in sub-paragraph d. The provision of fabrics for these purposes in subparagraph d is in accordance with the board’s intention and is concurred in by that body. Sub-paragraph c covers drills, dungarees and jeans weighing 6 oz. or less a square yard or 18 oz. or more a square yard. The board intended that cloths in these weights should not be sub- ject to protective duties and the rates proposed are the same as those which operated under the Customs Tariffs 1933 on drills, &c, in the weights specified.
The Government feels that the manufacture of cotton tweeds, denims, drills, &c, from locally spun yarns will provide a greater avenue for the disposal of surplus Queensland cotton and bring into use some idle spinning and weaving machinery, and thereby increase employment. It would be idle to suggest, however, that local manufacturers can capture the whole of the trade within a few brief months. Neither the Government nor the
Tariff Board visualized an immediate capture of the local market. On page 10 of its report the board stated -
It is possible that for a time after the imposition of the protective rates either weavers may not be able to supply all the variety required in sufficient quantities or spinners may not be able to supply weavers with the quantity or variety .of some particular yarns.
Thinking back over a number of years to the time when protective duties were imposed on cotton tweeds, honorable senators will recall that a considerable time elapsed before the local industry could claim that it had secured a substantial proportion of the Australian market. The fact remains that protective duties are’ now proposed to. be extended to a class of fabrics previously admitted at low revenue rates and, in the words of the Tariff Board -
Grower*, spinners and weavers should be placed on their mettle to ensure efficiency in every branch of the industry and so secure the extensions with as little added cost to the community as possible.
This statement of the position is in accordance with the policy of the ‘Government with regard to the cotton industry, with which honorable senators, having passed legislation dealing with the matter some time ago, are familiar. In regard to this matter the board made a most exhaustive examination, and the Minister for Trade a.nd Customs, after going through these items thoroughly with officers of the department, was satisfied that what is proposed is in the best interests of the community as a whole, and will not harshly affect that section of the workers on whose behalf Senator Payne spoke.
.- I know that the Tariff Board went into this matter very carefully, but 1 do not agree with its recommendation, because in its report it distinctly forecasts a very heavy additional burden on the wearers of these garments, whilst, it was unable to say how this burden could be compensated for, except by an increase of the number of factory employees. Giving evidence before the board, Mr. R. N. Treacy, a director of Bradford Cotton Mills Limited, said that drills, denims and dungarees should be included in this item. I am not arguing so far’ as cotton tweeds are concerned, as this . is au established industry, but I ask whether it is advantageous to include drills, denims and dungarees in this item? I contend that it is not. Mr. Treacy stated that the annual use in Australia of denims and drills totals 4,000,000 yards of 27-28 inch width material. All the evidence given before the board, on this point, including that of a British manufacturer, confirms this estimate. I have estimated, on a basis of 2J yards a pair, that from that quantity of material, 1,600,000 pairs of trousers can be made. The previous duty on this material was 5 per cent. British, and the Government now proposes to make the duty 6d. a square yard, plus 22^ per cent, ad valorem. The price of British material of average quality is about 8d. a square yard. After paying all charges, including import duty and primage, &c, the landed cost would be from 11 1/2 d. to ls. a yard. I am informed that the Australian manufacturers quote for this cloth of similar quality ls. 6d. a yard; to-date they have made only a small quantity of this material. On these figures the proposed duty would mean that the landed cost of the British material would be between ls. 7d. and ls. 8d. a yard. I have no doubt, that, as happened with cotton tweeds, the cost of the Australian-made article from this cloth will be kept slightly below that of the British-manufactured article, which bears the heavy duty. This, of course, will be done to enable the Australian manufacturer to capture and retain the trade. Working on the Australian mill price of ls. 6d., allowing a wholesale profit of 25 per cent, or 4-id., and a retail profit of one-third - that is, onethird of ls. I0d., or 7 1/2 d. - the additional cost of each pair of dungaree trousers, after allowing for duty, will be at least 2s. 6d. Applying this figure to the 1,600,000 pairs of trousers which could be manufactured from the 4,000,000 yards of this material used in Australia annually, the total additional cost would work out at over £200,000. This is the price which the people of Australia are asked to pay for the establishment of this industry. Mr. Treacy stated that working under such a duty his company could immediately treble its staff. I have worked out the wages that would be paid at his company’s mills, allowing £3 a week for all classes of operators. This estimate of £3 is rather high, as it assumes that girls at any age would receive this wage, although, in actual practice, many of them would receive less. On this estimate the total wages bill would be under £50,000, but doubling this so as to assume a still larger number of employees, I allow £100,000. I do think that even the greatest optimist will anticipate that, as a result of the establishment of this industry, the wages-sheet will be increased by more than that amount The figures I have given regarding the effect of the increased duties show that on this item alone the working men of Australia will have to pay an additional £200,000 annually, which is distinctly uneconomic.
– Does the honorable senator know that they actually buy 1,600,000 pairs of trousers.
– To simplify the calculation I have assumed that the whole of these materials used in Australia are made into trousers. But it matters not to my argument that some of the material is made into overalls. I have seen a further calculation made with regard to another type of garment, which requires 3 yards of material, and which, under the proposed duties, will cost the wearer 3s. 3d. more than the price paid under the old tariff. This works out at an aggregate cost to .the wearers of £216,666 per annum. Surely that is uneconomic from the viewpoint of the manufacturers, and unnecessarily penalizes those who wear these garments. Is it suggested that £200,000 should be expended to gain ari alleged advantage of £100,000? The Tariff Board, after stating that the present price of blue denim, 28 inches wide, is 7 3/4 d. a yard, f.o.b., went on to say that -
In respect to both the “ cotton tweeds “ and the “ denims “ groups, it might be stated at the outset that if the industries are to be of any real economic value to the Commonwealth the cloths should be produced wholly in Australia. It is futile to suggest that this can be done without considerable added cost to industries using the .product and consequent added cost to the consumer.
That supports my contention.
– The Tariff Board’s figures, as to the additional cost to the users, on page 29 of the report, do not agree with those of the honorable senator.
– I am quoting from the board’s report of the 25th July, 1934, on denims, drills, and dungarees. Prior to the Ottawa Conference the duty on these materials, ratified by Parliament, was, British preference, 5 per cent. ad valorem, but on the schedule now before us, the British preferential rate on average grade material has been increased to 65 per cent. In these circumstances, the Government may be within the letter, but not the spirit of the Ottawa agreement. On the lower grade material the duty has been increased to 175 per cent.
SenatorFoll. - There has not been any protest from Great Britain.
– That has nothing to do with the matter. The figures I have quoted, which have been compiled by a person who has gone very closely into the subject, disclose that on material invoiced at 4¾ d. a yard f.o.b. British port, the landed cost in Australia under the old tariff was 7¼d. a yard, whereas under the proposed tariff it is 13d. a yard, or approximately 175 per cent. of the f.o.b. cost as against 5 per cent., which previously obtained. The duty is so high that British manufacturers cannot export cotton tweeds profitably since the higher duties “became operative. A few thousand yards of British cotton tweeds have been imported, because some users of this material believe that it is superior to the Australian product. Reasonable protection should be afforded to Australian industries, but we have no right to exclude British products by imposing unnecessarily high duties.
SenatorFoll. - If the Tariff Board has recommended these duties, it cannot be said that by adopting them we are committing a breach of the Ottawa agreement.
– I am justified in dissenting from a recommendation of the board. As I have handled large quantities of this material, I am in a position to understand the actual position. I have studied the subject from the viewpoint of the consumer, who is not always considered by the Tariff Board.
– The honorable senator’s time has expired.
.- Senator Payne overlooked the fact that these duties are imposed for a dual pur pose - to assist not only the cotton manufacturing industry, but also the cottongrowing industry in Queensland. The Tariff Board thoroughly investigated the primary phase of this industry; the Minister for Trade and Customs (Mr. White) visited the areas where cotton-growing is being carried on under most difficult conditions on land which would be totally unsuitable for any other form of agriculture. Protection was granted to the manufacturers of cotton goods to assist the consumption in Australia of the local cotton production. Last year this crop totalled approximately 14,000 bales; most of which was marketed in Australia at a low price, but one which with the bounty gave some return to the growers. This is the result of an arrangement entered into with the cotton manufacturers in Australia.
– Is any portion of the cotton crop exported?
SenatorFOLL. - Only a small portion. Last year a quantity was purchased by Japan. The exportable portion is disposed of at a very low price,but the remainder naturally fetches a better figure on the home market, because the bounty is paid on local requirements plus 20 per cent.
– How much raw cotton can be used in Australia?
SenatorFOLL. - Last year the manufacturers were supplied with about 13,000 bales, leaving 900 bales to be exported. When speaking on the second reading of this bill, Senator Guthrie expressed the opinion that the resumption of migration in Australia depended to a large extent on whether overseas manufacturers could be induced to establish factories in the Commonwealth. That was an excellent thought. Senator Payne referred to the Bradford Cotton Mills. I point out that these mills were established in Australia under conditions identical with those to which Senator Guthrie referred. Practically a complete plant for the manufacture of cotton was transferred from Yorkshire to Sydney by the Keightley Brothers; to-day it is one of the most up-to-date cotton spinning plants in the world. It is absolutely necessary for a certain amount of protection to be given to the produce of this enterprise to enable it to survive.
I believe that, when Sir Henry Gullett was Minister for Trade and Customs, an invitation was sent to overseas manufacturers of cotton piece-goods to establish their- factories in Australia. I well .remember the debates which have taken place on the manufacture of cotton tweeds, back to the time when the late Mr. Pratten was Minister for Trade and Customs. The duties imposed by him enabled this industry to be established in Australia. Cotton tweeds have been manufactured in Australia for many years at a reasonable price, and the goods themselves have been of praiseworthy quality. If one industry above all others has been thoroughly investigated by the Tariff Board, it is the production and manufacture of cotton in Australia. After that complete investigation it would be most serious for the Senate, now that the industry is established, and in view of the fact that no protests against the duties have : been made by overseas manufacturers, alleging a violation of the Ottawa agreement, to take any action which might be injurious to the industry.
– For subtle ingenuity, the speech made by Senator Payne was one of the finest pieces of special pleading that I have heard.
– Somebody has to plead for the persons whom the honorable senator is elected to represent.
– The honorable senator’s belated interest in the cost of the workers’ wearing apparel nearly moved me to tears. He quoted figures, for which he gave uo authority, with a freedom amounting almost to recklessness. Some gentleman who “ knew the business “ had supplied him with certain statistics.
– They were my own figures.
– The honorable senator very adroitly did not give us the name of his informant. He said that he had. obtained them from some gentleman who “ knew the business “. No honorable senators are more vitally interested in the welfare of the cotton industry than are the members of the Opposition, all of whom represent the State of Queensland. The cotton duties are of vital importance to that State and Senator Payne need have no illusions as to how the Opposition will vote on his proposal to postpone the item. We strongly object to its postponement for the purpose that he has indicated. If there be one primary industry in which room for expansion exists, it is the cotton industry in Australia, which, really means the cotton industry in Queensland; that is where the crop is produced and where cotton will be grown to an increasing extent, provided that the present demand is materially increased. The way to achieve that objective is not to adopt the courseadvocated by Senator Payne. Because we are aware that we can obtain no increase of protection for this industry from the Government, we certainly shall not join with Senator Payne to demand a reduction of the duty.
The country that is best versed in the intricacies of cotton production is the United States of America, with which, as we have been recently reminded, Australia has an adverse trade balance. Although the debate on this tariff has proceeded only a short distance, I have already drawn attention to numerous opportunities of rectifying that unsatisfactory position. By developing the growing of cotton, and the secondary industry of spinning and weaving, including the manufacture of materials to which Senator Payne referred, we can supply our own requirements, and thus contribute largely towards reducing that adverse balance. I draw the attention of the committee to an article in the American Mercury entitled “ The South Faces Disaster “, alluding, of course, to the cotton producing areas of America. The prediction is made that very soon Australia will become the world’s greatest producer of cotton. I am sure that everybody will be delighted with that good news, with the possible single exception of Senator Payne, who represents Tasmania where no cotton is grown. This is what the writer says -
Domination by the United States of the world’s cotton market is a thing of the past. Soon, dangerously soon for the southern States - the centre of gravity of the world’s annual cotton supply will have shifted to the Antipodes.
In 1858 the United States was producing 95 per cent, of the world’s cotton. At the beginning of the world war in1914 the cottonimporting nations were consuming approximately 72 per cent. of the American crop. The tremendous demand for cotton during the warsent prices soaring, which in turn stimulated the output in Asia, Africa and South America. During the postwar decade, foreign production outpaced the American, while the total world consumption reached a new high level. The determined struggle of the 40 cotton-producing countries outside 6f the United States to break that country’s monopoly is nearer its objective during the 1924-25 season, when for the first time the total acreage sown by those nations exceeded that of the United States by nearly 1,000,000 acres. Since 1858 the American contribution to the world’s cotton output declined from95 to 55 per cent.
Since 1931 production outside America has increased by nearly 4,500,000 bales, while American production has decreased by nearly 5.000,000 bales.
Germany, which normally purchases between 800,000 and . 1,000,000 bales bought only 370.000 from the United States last year, whilst its imports from Brazil have soared from 12,000 lb. in 1933 to99,022,440 lb. last year. Great Britain, ‘France, Japan, Italy, Poland and Czechoslovakia - the largest importing nations - have reduced their purchases from the United States, and expanded them elsewhere. Brazil has trebled production within five years. China has doubled its volume in the same time. Russia has gone from 1,843,000 bales in 1925 to 2,300,000 bales last year. Every cotton-growing country in the world, except the United States, is exerting intense efforts to increase production.
Yet Senator Payne advises us to adopt a course which will curtail Australia’s ability to produce cotton -
Foreign producers have long known that if a successful picking machine were developed they would be able to break the back of the American stranglehold on world cotton. The advent of the cotton-picker now will serve to accelerate the growth of South American and Australian cotton culture to an unheard-of degree.
The big battle for the cotton markets of the world is about to begin. According to its official Year-Book, Australia possesses 375,(580,000 acres of potential cotton land. This represents 25 per cent. more than the average acreage of the American cotton belt. Australia has ample rainfall for cotton, fortunately little or none during the picking season. The cost of transportation to Liverpool is only slightly higher than from American ports. The Australian crop ripens some six months later than the American crop, so that it arrives on the English market when supplies from America are more or less depleted.
Because of the shortage of cheap farm labour in Australia, the cost of picking cotton represents from 50 to 60 per cent. of the total cost of production - in the United States picking costs only 20 to 25 per cent. of the total Amechanical picker which would pick for1d. per lb. would revolutionize the industry in
Australia, whereas in the United States it would be a complete failure, because the negroes there receive only one-half to threequarters of a cent per lb.
I suppose Senator Payne knows that experiments are being carried out with mechanical cotton-pickers -
Professor Saunders discussing the problem before a conference of growers at Dallas, Texas, United States, last year declared - “ If greater mechanization of cotton production conies in the future, Australia offers a better opportunity for keen competition with the United States than any other region. Australia is the only area where the human resources for using complicated power and picking machinery will compete with those of the United States. All other areas have peasant or peon types of cotton-farmers whose illiteracy is rarely under 70 per cent.Not so with the Australian farmers - they are even better users of the combined harvester than American farmers. Australia has the human resources, climate and soil for profitable cotton production. We are now giving her the golden opportunity to prove the merits of her cotton resources.”
An almost immediate revolution in cotton produced is at hand; the mechanical picker, when introduced in Australia, will destroy the American small producer, wipe out the southern tenant farmer, cut production costs from 50 to 80 per cent., and throw millions of the south’s most helpless population out of the only employment which they understand.
I ask the committee not to agree to the postponement of this item. We should stick to the business in hand, and continue the discussion until we have disposed of all the items in the schedule. Senator Payne’s amendment is antiAustralian, and if carried, would do much damage to our primary and secondary industries.
– Senator Payne cited figures to be found in the report of the Tariff Board, dated the 25th July, 1934. I remind the honorable gentleman that the industry was under review by the board as far back as 1933, and that the Government’s cotton policy was guided largely by the recommendations of the board in November of that year.
– I used the figures that are to be found in the latest report.
-A close examination was made by the board of the extra burden which would be placed on the community by the implementation of the Government’s policy, and also the benefit which would accrue to the community in general by the encouragement of the industry. In its report of the 30th November, 1933, the board stated -
An indication that cotton-growing is expected to be relatively profitable is indicated by the recent steady increase in acreage. The areas sown arc as under -
lt will be seen- that the area sown has been quadrupled in the last four seasons.
The board realizes that cotton-growing in Australia was deliberately encouraged by the Commonwealth Government, and that to Unduly expose the industry at a time when the world price of cotton is so low (on the 29th September, 1933, Liverpool middling spot was 5.60d. per lb.) would jeopardize it after heavy costs, both public and private, have been incurred. On the other hand, the board cannot ignore that standards generally have altered, and that many of our major export industries face a future filled with uncertainty. The present is no time for the community to be generous to any one section. All that the community should be called upon to do is to assist the cotton -growers at this period of low prices to such an extent as to enable efficient growers who are farming on suitable areas to hold their position until such a time as the world’s price of lint shall rise.
The Government took this opinion into consideration when framing its new policy with regard to cotton. “Whilst increased rates of duty are proposed on cotton yarns for the manufacture of tweeds, denims, drills, &c, blankets made of wool and cotton, cordage and twines, and on cotton-piece goods, such as tweeds, denims, drills, &c, substantially lower duties are proposed on cotton yarns previously protected, such as hosiery and knitting yarns, and preparation yarns for towels. The proposed increases are therefore very largely offset by the proposed decreases.
This leads me to the cost to the community of the Government’s proposals. The board stated that the cost under the system of seed cotton bounty and higher protective rates operating previously was £262,000, on a production of 5,000,000. lb. of cotton yarn. The board, however, recommended an extension of the protective duties under which it was estimated that production of cotton yarns would increase to 7,650,000 lb. Under the old system, the cost to the community of the extended production would have been £450,000, or ls. 2d. per lb. of yarn. Under the new system of protective duties and bounty on raw cotton, the cost would be £319,000, or 8£d. per lb. of yarn, after allowing for the fact that the bounty rate adopted is Id. per lb higher than that recommended by the board.
It will thus be seen that the cost to the community of the extended industry is lower by £131,000, or about 6d. per lb. of yarn, than the cost would have been had the industry been extended under the old duties and seed cotton bounty. Moreover, under the new scheme, the extended industry will cost the community only about £57,000 more than if the industry had remained stationary under the old scheme. As against this, there are the benefits accruing to the cotton-grower in the disposal of the whole of his crop at remunerative prices, and to the cotton-spinner by bringing into operation idle machinery which, in addition to creating additional employment, allows of a wider distribution of overhead costs. It will, therefore, be appreciated that, if the protection on denims, drills, &c, which is an important part of the Government’s scheme, be removed, the opportunity for the cotton-grower to dispose of his crop will be considerably lessened. The Government’s proposals will enable Australian spinners to operate to the full. An increased output will reduce overhead charges and help them to meet overseas imports of cotton yarns, previously protected at higher rates of duty. Seeing that the Tariff Board has given this matter careful consideration, and has taken into account, not only the details mentioned by the honorable senator, but also the larger aspects of the subject, and seeing also that this Parliament has adopted the bounty system and agreed to the principle of supplying manufacturers with cotton at an import parity price, the proposal before us is merely a corollary of something which has already been done. Even if the result be an additional cost of £57,000, that money will be well expended in the development of an industry which will be of benefit to the country as a whole.
.- Figures supplied to me indicate that Australia produces about 14,000 bales of cotton annually, of which about 13,000 bales is manufactured into cloth locally, and the balance exported. If the duties set out in the schedule are agreed to, instead of 13,000 bales being woven into cloth in Australian factories, not half that quantity will be manufactured locally. I was amazed that the Postmaster-General (Senator A. J. McLachlan) could quote so freely from the Tariff Board’s report, thereby giving the impression that the Government was following its recommendations, without intimating that in regard to this item it was not doing so. The action of the Government has resulted in Australian manufacturers having accumulated large stocks of textiles of which they cannot dispose. On page’ 13 of its report, the Tariff Board recommended that the British preferential tariff on cotton-piece goods weighing more than 6 oz., but less than IS oz. a square yard should be 4d. a square yard, or 25 per cent, ad valorem; but in the schedule the rates are 6d. a square yard, or 45 per cent. The schedule does not contain the rates recommended ‘by the Tariff Board, but the Minister has not given any explanation of the departure from the board’s recommendation. That old scurvy rogue, the Australian manufacturer, who is guilty of using 90 per cent, of the cotton produced in Australia, and of employing about 1,000 .operatives, has been out-manoeuvred by that bland, childlike and innocent person whom we know as the importer! What was the result of the introduction of this schedule which imposed a certain duty on material weighing 6 oz., and over, a square yard, and a lower duty on material of 3 oz. ov Over? Whereas previously 80 per cent, of Australia’s requirements of material weighing 6 oz. and over was made in Australia, as soon as the new rates became operative, importers brought in material, either undressed or unbleached, had it dyed locally, and made up to the greater weight by the addition of size dressing. In that way the Customs Department was circumvented. The Minister has not told us these things. Although I am more acquainted with the iron and steel industry than with the textile industry, I know something about the latter. In the House of Representatives one honorable member stated thatmaterials which could be imported for about 2s. 2d. a yard, cost about three; times that amount in Australia. But he compared material 28 inches wide with other material twice that width. I submit that that, is not fair pleading. ‘ I desire to know, first, why ‘the Government departed from the recommendation of the Tariff Board in regard to this item; and, secondly, whether it is aware that importers are bringing in lighter material, and having it sized and dressed here, thereby making up the weight, but avoiding the higher rate of duty.. ‘
– From which countries do most of the imports come?.
– They come from Great Britain, but chiefly from Japan. Honorable senators know that in Japan operatives are paid about 7d. a day, plus their keep, whereas in Australia .the wages are about 35s. 3d. a week, plus 15. per cent, for piece-work. Great Britain, although the leader of the world in the manufacture of cotton-piece goods, produces <no. cotton, but is dependent on other countries for its raw materials. Australia, .on. the . other hand, grows most of its own cotton. The Government should rectify its mistake and provide for a higher duty on materials weighing 3 oz. or over a square yard. If that were done, importers .would not be able to circumvent the. ‘Customs Department as they are now doing, , and operatives would not be thrown,, out. of employment. The importer is so innocent that he could have evaded the higher ‘duty in the way that I have indicated only, by some rascal of an Australian manufacturer telling him how to do so ! The action of the Government is placing’ the cotton-growing industry in jeopardy and endangering the employment of- thousands of operatives.
– I rise to oppose the proposal that ‘the item be postponed. As a representative of a cotton-growing State, I am concerned for the success of this great primary industry. The Labour party can always be relied upon to support the primary industries of this country. Recently the cotton-pickers of Queensland approached the Arbitration Court of that State for higher wages, and were granted a slight increase of their previous rates. That brings trie to the point mentioned by Senator Payne, namely, that increased duties lead to higher prices. I remind the honorable senator that in these matters there is generally a time lag. Should the duty on articles be increased, and the cost of living rise in consequence, the position of the workers is, for a period, affected, although ultimately wages are adjusted by the Arbitration court. Therefore, the crocodile tears of the honorable senator, because the workers may be called upon to pay a little more for their overalls, leave me unaffected.. I also point out to the freetrader from Tasmania that the Tariff Board had something to say in its report regarding the prevention of injustice in the event of this country not being able to produce its requirements of denims, drills and dungarees. It also said that the quality of locally produced textiles was equal to that of imported cloth. I direct attention to that statement because we are continually being told by freetraders that Australia cannot produce goods equal to those produced overseas. A few days ago the Leader of the Opposition (Senator Collings) cited a number of goods which, a few years ago, we were told Australia could not produce, but which are now being made here and compare more than favorably with similar articles made in other countries. In its report of the 25th July, 1934, the Tariff Board said-
Similar materials and processes to those used in the manufacture of cotton tweeds are employed in the production of the piece goods now being considered, and the board considers that if protection be afforded Australian manufacturers in respect of denims, drills, dungarees, &c., they should be able to turn out in a short time a product equivalent to that produced overseas.
The Tariff Board is of the opinion that the manufacturers can do this. The opportunity must be given. I endorse the statement of Senator Leckie that the Government has not carried out the recommendation of the Tariff Board, which we are told consists of a number of experts. The board’s proposal related to goods weighing more than 3 oz. a square yard. But this schedule specifies goods “ undyed, whether bleached “or unbleached, weigh- ing more than 6 oz. per square yard.” Undoubtedly the Tariff Board desired to give an impetus to the local production of denims and dungarees, and it made its recommendation. with that object in view. However, because the Government has not carried out the. desires of the Tariff Board, we find that there is a grave danger of consequences in this industry similar to those which occurred in regard to the manufacture of diesel engines by Messrs. Walker Brothers, of Maryborough, Queensland. A little over two years ago, when we were discussing duties on diesel engines, members of the Opposition pointed out that if the distinction were made as between engines of 100 horse-power, and those of less than 100 horse-power, it would he possible for the British manufacturer to send free into Australia engines just under 100 horsepower, which would compete with those of 100 horse-power manufactured in this country, thereby destroying the local industry. When I last visited Maryborough I saw a number of these engines which the company was unable to sell because of this distinction having been made in the tariff. I suggest that a similar position will arise in respect of the manufacture of denims and dungarees if the recommendation of the Tariff Board to make the weight 3 oz., instead of 6 oz. as now. proposed by the Government, is not carried out. In the summary of its report on page 13, the board recommended that -
Cotton piece goods, dyed in the piece or coloured woven, ordinarily used for manufacture into men’s or boys’ overcoats, coats, vests, trousers, knickers or overalls, and weighing more than 3 oz. per square yard . . .
In this schedule, however, the distinction proposed is “ more than 6 oz.” This will enable the English manufacturer to send into this country goods not fully treated, and weighing exactly 6 oz., under the lesser duty. “ However, the Government does not propose to carry out fully the board’s recommendations in this respect. I hope that the Minister will answer both Senator Leckie and myself as to why the Government has so acted contrary to the advice of the board. This distinction in weight is a very important matter to the manufacturers concerned. I do not know any of these manufacturers, but from information given to me, I understand that special machinery has recently been installed in Australia for the production of these classes of goods. As the result of the Government’s proposal in respect of weight limit, competition will become very keen; consequently this new machinery will not be used to its full capacity, and employmentwill not be found for many workers who would otherwise be given jobs in these mills. For the benefit of Senator Payne particularly, I shall refer to other statements made by the Tariff Board in regard to this industry. On page 11 of its report, it said -
The boardhas given careful consideration to the likely incidence of the increased cost of both the “ cotton tweed “ and “ denim “ classes of goods covered by its report. Clearly, the board’s findings will tend to increase the cost of these cloths to users as against the cost under present conditions. The adoption of the hoard’s findings, by encouraging the local manufacture of denims, drills, &c, should appreciably improve the load factor of existing cotton fabric weaving plants, thus leading to increased efficiency, and a lowering of overhead charges per square yard of cloth over all classes produced.
This, of course, is a law of economics ; the more machinery is used and the greater the output, the less is the overhead cost per unit produced. The board went on to say-
It is anticipated that the combined effect of the increase in output and the additional employment afforded in the cotton-growing, spinning and weaving industries in the near future will practically offset the increased cost of the finished cloths, and as the industry gains in experience it might with confidence be expected that the advantages to the Commonwealth will outweigh the additional cost accruing on account of the protection under the customs tariff.
– Is this a Tasmanian industry?
– I do not think so; certainly no cotton is produced in Tasmania. However, I believe that if weaving mills were established in that State, Senator Payne, as a good Tasmanian. would be fighting on behalf of the industry. . Some honorable senators, however, are inclined to forget that they must view these matters as Australians; we would like . Senator Payne to view them, not with freetrade narrow Handedness, but in their relation to the welfare of Australian industry as a whole. The members of the Opposition view them in this light. We are not con cerned with financial interests; our policy is to further the interests of Australia as a whole.
– In examining the duties on tweeds, drills, &c, the board was confronted with the problem of framing an item which would, as far as possible, be devoid of administrative difficulties. In the past, trouble was experienced when an item was introduced providing for protective duties on cotton tweeds. The term “ cotton tweeds “ had such a varied implication in the trade that it was found impossible to name the classes of goods covered by that term. In attempting to overcome this difficulty, the board prescribed the uses which determined the liability of dyed or coloured woven cotton piece goods to protective duties. The weight limit suggested was that which had previously applied to cotton tweeds, namely, 3 oz. Cotton tweeds are woven from dyed yarn, whereas drills, duck, dungarees and jeans are dyed in the piece. The weight limit which the board intended should be applied to drills, duck, dungarees and jeans is clearly obvious from the fact that protective duties were recommended on bleached or unbleached materials weighing over 6 oz. and less than 18 oz. a square yard. Had the weight limit on cotton drills, &c., been established at 3 oz. for dyed materials and 6 oz. for undyed materials, it would have been practicable for a merchant to import 6 oz. bleached or unbleached material at the low revenue rates and have the dyeing done locally, thus defeating the protection. Moreover, experience early showed that the majority of the cloths weighing 6 oz. . or less a square yard were in demand for the manufacture of garments which could not be termed outerwear, and the local manufacturers’ production was almost wholly in the lines weighing over 6 oz. The matter of the weight limit was taken up with the Tariff Board, which stated that canvas, drill, duck, dungarees and jeans weighing 6 oz. or less a square yard should be admitted at the low revenue rates which applied under the Customs Tariff 1933.
The Minister has borne in mind the possibility of these duties harshly affecting that section of the community with which .these goods are in most demand. The. Tariff Board touched on this point on page 10 of its report as follows : -
So as to- prevent any injustice to the users qf denims, drills, dungarees, &c, and to render the transition from the use of imported piecegoods , to the” use of locally-manufactured materials ‘as easy as possible, it is suggested that’ the. -Minister, in the early stages of local production, grant any reasonable request as regards .temporary by-law concession put forward by the users of tlie materials. It may surely “be expected of the weavers that they wilt adopt a reasonable attitude to any such action taken by the Minister.
The first action of the Government, in order that trade should, not unduly be dislocated, was to admit under by-law at rates of British, free, and general tariff 15 per cent., any cotton drills, &c, that were on firm- order when the protective duties were introduced, provided that they were entered for home consumption by the 15’fh November, 1934. The date of entry for’ home consumption was subsequently extended to the 1st April, 1935. It was reasonable to expect that local manufacturers would proceed with the manufacture of these cloths and accumulate !a certain stock in anticipation of the demand, and a close and constant survey 6f the manufacturers’ activities was conducted. It transpired, however, that either through difficulties associated with manufacture or an unwillingness to accept the financial obligation involved in the building up of stocks, very little cloth was produced during the first few months. Indeed, in the first three months from the time the protective duties were imposed,’ cloth sufficient to meet only one week’s requirements of Australian user3 had- been manufactured. A census was taken, the by-law admissions were made, and, I understand, the industry to-day is operating satisfactorily.
As tq the allegation that the Governnien,t has varied the rates recommended by the Tariff Board, I point out that in its report on these materials the board offered two classes of recommendations and the Government adopted the course it did, before it had decided on its policy of accepting the existing rate of exchange for duty purposes. The result was that consequential calculations had to be made; hence the variations. Honorable senators may rest assured that these cal- culations have been carefully worked out by the department.
.- I realize that I am under a considerable handicap when so many irrelevant matters are introduced by honorable senators. My proposal is merely that consideration of the item be postponed for a certain purpose. I shall bring honorable senators back to the point which I stressed in my earlier remarks. Senator Poll and Senator Collings expressed the hope that I would not persist in doing something which would injure an Australian industry. I have not suggested any course which would be calculated to injure any existing Australian industry. I endeavoured to make that point clear in my earlier remarks. The point I stress is that I cannot agree with the recommendations of the Tariff Board or the action of the Government in proposing, in order that an additional Australian industry may be established, such exceptionally high duties on materials previously admitted from Great Britain at a very low duty. I think the Minister will agree that my remarks do not apply to any existing industry; I am dealing with the duty on jeans, denims, drills and dungarees which are not manufactured to any great extent in Australia.
– They are. I can produce samples.
– Their manufacture was not really commenced until late last year.
– The Minister and Senator Collings questioned the accuracy of my figures. The figures I have quoted are on a conservative basis, and were obtained from an authoritative source. Before speaking on this subject, I visited a large number of commercial houses to ascertain the prices charged before this heavy duty was imposed, and those which prevail to-day. Prices obtained from retailers show that the cost a yard has increased by 50 per cent.
– How do<;s the quality compare?
– The quality of Australian cotton tweed is good. At the first mill I visited, I complimented the manager upon the quality of the tweed being produced. He asked me if I considered that it was as good as the British product, and I admitted that it was. Having obtained samples, I was informed that the cost of the material was 2s. 6d. a yard, although British material of similar quality had been landed at1s. 6d. a yard. A similar difference existed in connexion with denims and dungarees. The recommendation of the Tariff Board was not unanimous. Mr. Kelly, who has had a good deal of experience in tariff matters, submitted a minority report in which he said -
While I agree with the recommendation in relation to cotton tweeds,I am unable to agree with the majority of the board that the best interests of the community will beserved by imposing a protective duty on denims, drills, dungarees and those types of cloth in the grey. These cloths, which hitherto have carried revenue duties of 5 per cent. (British preferential tariff) and 25 per cent. (general tariff), are chiefly purchased by the working classes for use in garments which in the past havebeen both cheap and durable.
His comments support my view concerning the burden placed upon one section of the community. I do not propose to deal with the production of cotton in Australia, except to say that if the PostmasterGeneral (Senator A. J. McLaehlan), Senator Foll and Senator Collings agree that the Australian cotton-growing industry should be assisted, surely they do not suggest that the whole burden should be placed upon that section of the community which is least able to bear it. If they contend that this duty should bo imposed to assist the cotton industry, it is only reasonable to ask that all sections of the community should contribute. I have endeavoured to discuss the subject from the broadest possible angle, as Senator Brown suggested, and those who take a national view must admit that the cost of assisting the industry should be borne by all sections of the community.
– The industry provides work for a large number of persons.
– That may be so. The larger the quantity of sugar produced, the greater the burden placed upon the Australian, taxpayers. Similarly, if the cotton industry is to rely only upon the local market it can never become an important Australian industry. In these circumstances, I feel justified in asking the Government to postpone- the,’item with the object of affording greater consideration to the consumers.
– I believe that Senator Payne has suggested the postponement of this item with the best intentions. Between 1861 and 1865 some persons attempted the production of tobacco in Australia, but owing to the severe competition from the United States ‘ of America, where it is produced . by coloured labour, the project was abandoned. Many years ago, attempts were also made in some of the States, where the land was considered to be suitable to produce cotton profitably, but, in the absence of protective duties or a bounty, and the difficulty of competing against the product of coloured labour, very little progress was made. About fifteen years ago, areas in Queensland and in parts of New South Wales were utilized for the production of cotton; but, in the absence of adequate protection, the industry languished. At present the, Dawson River Valley and the Clyde Valley are the only two important , centres ‘ where this crop is being produced successfully. ‘When I visited these districts in 1929, there was not any marked indication of prosperity. Many of the settlers, who were living in tin sheds or primitive wooden buildings, found it difficult to grow cotton profitably, unless they also engaged in dairying or maize-growing. According to the latest report of the Registrar-General of Agriculture in Queensland, the value of the cotton produced in that State in 1925 was £379,331, but in 1927 the value had decreased to £144,570. In several . of the subsequent years it was valued at from £150,000 to £200,000;but in 1934, the last year for which figures are available, it had increased to £397,263, including a bounty of £84,024, or an increase of about £18,000, when compared with 1925. Many of those engaged in cotton-growing conduct subsidiary industries, including dairying, which often becomes the principal undertaking. In 1934 the number of farmers growing cotton was 2,679, but many were con ducting other industries on a small scale. But for cotton-growing, the land in the Dawson River Valley and the Clyde
Valley would revert to grazing. The rainfall, which is of particular importance in growing cotton, is satisfactory, and the land can, therefore, be regarded as the most suitable in Australia for the purpose. We have also to consider whether this industry is of national importance.
-hughes. - Is it a natural industry ?
– In that part of Queensland it is a natural industry.
– The industry declined until the Government assisted it?
– Yes. It was first established on a small scale between 1861 and 1865.
– ‘Can it be regarded as a natural industry?
– Yes, cotton can be grown profitably in Australia. The sugar industry is also a natural industry. The Leader of the Opposition (Senator Collings) could also have mentioned that the -production of cotton is of importance for defence purposes. Nor can the preservation of the White Australia ideal be disregarded. The growing of cotton is an industry suitable to a tropical climate; it also keeps a number of persons on small holdings. If the industry were to become extinct, those parts of ‘Queensland now producing cotton would revert to a few sheep stations with an occasional scattered homestead. I emphasize that the population of Northern Australia depends to a large extent upon the continuance of the cotton industry. If it were not for so much opposition, we might also consider as a national duty the growing of tea and coffee and scores of other commodities in those parts.
– Are many persons engaged exclusively in the growing of cotton?
– A tremendous number; their holdings are not suitable for producing any other commodity.
– Apart from those actually engaged in the growing of cotton, Queenslanders, in common with persons in the southern States, are keen to see that they do not pay unduly for the support they accord to any Aus tralian industry. As proof that the cotton industry is not making profits at the expense of the Test of Australia, I point out that a year or so ago the plight of the growers themselves became so parlous that they invited the Government to appoint a commission to inquire into their position. Quite a number of them were disheartened and were leaving the land. The commission investigated their plight, and reports published in conservative papers, as distinct from somewhat prejudiced reports which appeared in the farmers’ newspapers, stated that many of them were living in the humblest circumstances. Appeals were made for assistance to lighten their burden. Many claimed that they could not make a success of their occupation unless the acreage of their holdings was doubled. The Queensland Government, which participated in the migration and development scheme fifteen years ago, undertook to render some assistance; the present Minister directing negotiations for Trade Treaties (Sir Henry Gullett) was one of the officers who reported upon the possibilities of these lands for closer settlement, and the State of Queensland expended very large amounts on these undertakings. In view of this, it is vitally concerned about the continuance of cotton-growing. The evidence taken by the commission, together with the fact that the price of cotton has not increased during a number of years, demonstrates that the industry is not fattening upon the remainder of Australia, including southern Queensland and tlie wool-growing areas.
The manufacture of the coarser grades of cotton has been accepted by the Federal Parliament and the Australian public as a very necessary industry. We cannot yet hope to compete with the finer cottons spun in. Lancashire, and we are not so prejudiced as to think that we should have a monopoly of the cotton trade. There must be a. two-way system of trade; anybody but an extremist will admit that we must trade with our neighbours - a fact of which we are at present receiving rude reminders. I emphasize that the cotton industry must bc encouraged as the settlement of the tropical north and the defence of Australia are bound up with its existence. We can- not overlook that the time may arise when Australia’s communications with the United Kingdom and Europe will be severed, perhaps even for a year or two, making it necessary that we should be able to supply our own requirements. We need not administer a severe kick to Lancashire’s cotton trade or Birmingham’s metal trade by excluding their goods in toto. Nevertheless, we should be more than mere primary producers; oar manufacturing industries should be efficient and fully equipped. I am sure that Senator Payne will agree with mo that, a policy of protection will assist in the achievement of this ideal. The Australian working classes do not become annoyed if, in the national interest, they are obliged to pay an extra ls. for a garment. They are Australian in sentiment, and if they have to give in one direction they get it back in another. There should be fair dealing between one industry and another in the Commonwealth. I hope that Senator Payne will not think that the Opposition has been discomforted by his remarks in connexion with our duty to the persons whom we have been elected to represent.
– The honorable senator’s time has expired.
– I sympathize with the Minister; I realize that he does not administer the tariff, and that he has to obtain his instructions from the Minister for Trade and Customs (Mr. White). Nevertheless, statements have been made to-day which should convince him that the Government is wrong in proposing these duties. I desired an explanation as to why the Government has departed from the Tariff Board’s report in this connexion. In reply the Minister stated that administrative difficulties had been created.
– That statement has been, endorsed by the Tariff Board itself.
– No ; the Minister cannot adduce evidence of that. A portion of these duties has been increased; they are higher than those which the Tariff Board recommended. How does the Minister reconcile that increase with the spirit of Ottawa?
– Is the honorable senator referring to the intermediate tariff?
– No, to the British tariff. The spirit of Ottawa has been invoked in regard to certain items, because of the House of Representatives increased the protection that the Tariff Board had recommended. Although that action still represented a reduction of the original duty, the Government alleged that the spirit of Ottawa had been infringed. I emphasize that a portion of these duties is higher than what the Tariff Board recommended ; the remainder has been reduced below that recommendation. To obviate the disastrous results which have been predicted, the Minister should agree to the alteration of the figure “ 6 oz. “ in sub-item 105 a 1 b to 3 oz. Such an amendment would satisfy me. Nor would that alteration be final. If it should prove unworkable, it can still be reduced ; but if the proposal of the Government is carried, and all the dire results that have been prophesied occur - men .out, of employment and’ the cotton industry seriously prejudiced - the Government will be powerless to increase the protection while the Ottawa agreement persists.
– That alteration would embrace all sorts of goods that are not relevant to these specified purposes.
– No. Cotton shirtings, to which I believe the honorable senator refers, enter Australia under by-law; the duty on them would not be increased at all. Undoubtedly, the duties submitted to the Senate for ratification are different from those recommended by the Tariff Board.
– Will the honorable senator specify where the differences occur?
– Does the honorable senator suggest that they constitute a breach of the Ottawa agreement?
– No ; but according to the view taken by the Government of the action of the House of Representatives on another item, this increase of duty also must surely be a breach of the agreement. Personally I do not believe that the proposal of the House of Representatives was a breach of the Ottawa agreement. I cannot understand the Government’s change of mind. The reason that it gives for breaking the spirit of Ottawa is, not the welfare of Australia, but “ administrative difficulties.” Never in my experience have I heard such an explanation ! The Tariff Board stated-
Under existing conditions, but without primage duty, reasonable and adequate rates of duty would be-
whichever rate returns the higher duty.
Honorable senators will see that the duty in the schedule is 45 per cent, on one portion of the goods and 5 per cent. on another. I ask the Minister not to be too obstinate in this matter. He has been shown where the Government has committed an error of judgment. If this duty is accepted by the Senate, we shall be unable to rectify any detrimental effects to the Australian industry without offending against the canonsof Ottawa.
– Why cannotthe Government alter it again?
– A duty can be reduced, but it cannot be increased beyond the rate recommended by the board.
– What is required is a reduction of the weight of the materials.
– Yes. The Government provides for a weight limit of 6 oz., but this is circumvented by importing material of 5.8 oz. ; in some cases it is imported unbleached, and dyed here, and size is added to bring it over 6 oz. People are being encouraged by the lower rate of duty to buy inferior cloth at cheaper prices; They are being deceived by the dressing which is put into the material. Before it is too late I appeal to the Minister to heed the warnings that have been uttered; ‘ If there is the slightest truth. In them, the Government should hesitate to., bring about the evils which will, I believe, occur if the proposed duties are accepted-
. - I assure the honorable senator that there is not the slightest truth in his suggestion, and if he will read the recommendation of the Tariff Board he will see that these are only adjustments which hare been made. I. shall deal with the case which he cited. The first rates mentioned in the Tariff Board’s recommendations were to apply if the rates of duty on cotton yarns remained at free, British preferential tariff, and 15 per cent., general tariff; further on the board recommended higher rates in the event of the board’s findings of the 30th November, 1933, on cotton yarn being adopted. The higher rates were adopted in accordance with the larger cotton policy of the Government. The duties have been imposed on these other materials, and, consequently, the necessary adjustments have to be made to the recommendation of the Tariff Board. Nothing else has been done. The matter of weight was taken up by the Tariff Board. Honorable senators appear to imagine that the Department of Trade and Customs is not alive to the tricks of, not only the overseas manufacturers, but also the Australian manufacturers. The department has skilled officers to see that the policy of the Government and the will of Parliament is not defeated by any subtleties. Responsible officers are deputed from time to time to obtain information for the guidance of the Tariff Board. Manufacturers are particularly quick in the uptake, and, no doubt, many of them use some of the provisions in the tariff to their ownadvantage; but it is the duty of the department to see that they do not get behindthe will of Parliament. The board, when examining the duties on tweeds and drills, was confronted with the problem of framing duties which would, as far as possible, be devoid of administrative difficulties. In order to do this, it prescribed the uses which determined the liability of dyed or coloured woven cotton piece goods to protective duties. The weight limit suggested was that which had previously applied to cotton tweeds, namely, 3 oz. Cotton tweeds are woven from dyed yarn, whereas drills, duck, dungarees, and jeans are dyed in the piece. The weight limit which the board intended should be applied to drills, duck, dungarees, and jeans, is clearly obvious from the fact that on bleached or unbleached materials, protective duties were recommended on such materials weighing over 6 oz. and leas than 18 oz. a square yard. Had the weight limit on cotton drills, &c, been established at 3 oz. for dyed materials, and 6 oz. for undyed materials, it would have been practicable for a merchant to import 6-oz. bleached or unbleached material at the low revenue rates and have the dyeing done locally, thus defeating the protection. Moreover, experience early showed that the majority of the cloths weighing 6 oz. or less a square yard, were in demand for the manufacture of garments which could not be termed outer wear, and that local production was almost wholly in the lines weighing over 6 oz. The question of the weight limit was taken up with the Tariff Board, which advised that canvas, drill, duck, dungarees and jeans weighing 6 oz. or less a square yard should be admitted at the low revenue rates which applied under the Customs Tariffs 1933. I have no doubt that the records of the Trade and Customs Department could be made available for the information of honorable senators, but I ask them to accept my assurance that the duties have been imposed in accordance with the Tariff Board’s report. The administration of’ the Customs Act is not in the hands of the Tariff Board ; that responsibility rests on the Customs Department and the Minister, who is answerable to Parliament. Whenever there is evidence of administrative complications, it is the bounden duty of the Minister to confer with the Tariff Board, with a view to having the matter placed on a workable basis. That is all that has been done in this instance.
– Whilst I am sure that’ we are all indebted to the Minister (Senator A. J. McLachlan) for the painstaking manner in which he has endeavoured to dear away our difficulties with regard to the duty on particular classes of materials, his explanation is not satisfactory to Queensland Labour senators. I again emphasize the importance to Queensland of the cotton-growing industry. In 1932, there were 29,995 acres under cultivation for cotton, and in 1933 the area had increased to 68,203 acres. In the five years from 1929 to 1933 the value of the output of Queensland cotton was £1,256,594. The Opposition is of the opinion that a higher rate should be imposed on the lower-weight material. I know something about the industry of cotton-growing in Queensland, but I am not familiar with the business of cotton-spinning, so I rely upon a letter, which I have received from Davies, Coop and Company Limited, cottonspinners, of Melbourne. I do not think that any one will question their right to speak with authority on this subject. In a letter to me, under date the 11th March, 1936, they state -
We desire to advise that we have taken up with the Minister for Trade and Customs the matter of the duties on the cotton piece goods under the above tariff item. We refer to the recommendations of the Tariff Board, dated the 25th July, 1934, where the board recommended that the duties be applicable on cloths weighing 3 oz. a square yard and over. The Government brought down the tariff on these piece goods to apply on cloths weighing 0 oz. a square yard and over. Consequently, all the market is now going to Japan for cloths weighing 6 oz. and under, for the substitution of the heavier cloths.
We request that, in the ratification of the tariff the recommendations of the Tariff Board be adopted as per schedule.
This year we expect to use 8,000 bales of Queensland cotton. The industry would absorb many more bales of Queensland cotton, which are at present going to Japan, if the users could obtain the market they should have, as recommended by the Tariff Board, and also intended by the Government.
If the higher weight limit will have the effect of increasing trade with Japan, instead of providing more work for Australian factories, and encouraging cottongrowing in Queensland, the Government should not continue obstinate, but should agree to impose a higher duty on the low weight materials.
.- The Minister, in his explanation, was not quite fair to honorable senators. Indeed, I am not sure that he did give us a satisfactory explanation of the proposed duties in this item. The present rates are forcing trade out of Australia. I am informed that one Australian mill, during the last six months, produced 250,000 yards of 6-oz. material in anticipation of orders being forthcoming, but has sold only 20,000 yards, or less than one-tenth of the output. Owing to the circumvention by importers of the intention of Parliament, this firm is not able to sell its manufactured product of over 6 oz. in weight. The hulk of its goods remain on its shelves. I am further informed that one order has been sent out of Australia for 150,000 yards, another for 60,000 yards and still another for 200,000 yards. These facts can be established. I therefore tell the Minister that he is on delicate ground, and that the Government should hesitate before it irretrievably commits Parliament to duties which will ruin an important Australian industry.
– These duties have been in operation since 1934, and, so I am instructed, have enabled the Australian industry to make satisfactory progress. The sales of all protected yarns by spinners and the usings in their own fabricating plants of yarns made by spinners from the 1st July, 1935, to the 29th February, 1936, have been at the rate of 8,111,000 lb. per annum. As there is a wastage of about 10 per cent, in the manufacture of raw cotton into yarn, the quantity of raw cotton required for the production of the consumption of protected cotton yarns during .1935-36 will be approximately 9,000,000 lb., which is moro than the maximum production in any one year of the Queensland cotton industry.
Imports of yarns during 1935-36 to the end of February have been at the rate of 1,640,000 lb. per annum, so spinners can be said to be supplying about 83 per cent. if the local demand. This percentage s interesting by reason of the fact that the Tariff Board, in assessing the cost of protecting the cotton and allied industries, assumed that spinners would secure about 81 1/2 per cent, of the local market. Inquiries by the department show that the consumption of cotton yarn represented by sales and spinners’ own usings, was 4,825,000 lb. in 3933-34- -the year before the protective duties were extended te lie new yarns and piece goods - whereas the 1935-36 consumption has been at the rate of 8,111,000 lb., representing an increase of 68 per cent. These figures show that the cotton spinning and weaving industries, as .well as the cottongrowing industry, are reaping considerable advantage from the protective duties which this Government has seen fit to impose. I therefore ask the committee not to disturb them. If, as Senator Leckie has stated, they are doing injury to the Australian industry, the matter should be brought to the notice of the Minister or the Comptroller-General of Customs, and. I can assure him that without loss of time it will be referred to the Tariff Board.
– That would lead to an increase of the duty and therefore would be regarded as an infringement of the Ottawa agreement.
– Not if the Tariff Board, after inquiry, recommended an increase. To say that the Australian industry has been penalized by these duties, ds to entirely misrepresent the position. The matter mentioned by Senator Collings has nothing to do with the British preferential rate. I am not at liberty to discuss the effect on foreign countries.
– Two or three points arise from this discussion with some of which, but not all, the Minister has dealt. The first is that the cotton industry has received perhaps more favorable treatment than any other industry in Australia, for, apart altogether from the tariff, it hasbeen greatly assisted by means of bounties. During the last five years the bounties paid on seed cotton, cotton yam and raw cotton have been respectively £157,000, £158.000, £92,000, £89,000 and £117,000, Those payments might appropriately be remembered when considering the duties on this item.
– The bounty takes tha place of a. home-consumption price.
– Thai may be. The honorable senator’s interjection leads me to ask whether the industry can sell its cotton at a profitable price in any market other than the home market.
– The honorable senator’s question might well be directed to other primary industries also.
– Arcwe to understand that every bale of (otton sent overseas represents a loss on the- actual production cost?
– It would bc a losswithout the bounty.
– Then we get back to the position that the- grower is “worse off for every: bale of cotton that he produces over and above the requirements of the Australian market. There is dancer that we may be stimulating production beyond the industry’s capacity to expand economically, and the question arises whether we should not forthwith apply the quota system and say that the production of cotton shall- not be allowed to proceed beyond a certain total. In that event, Senator Payne’s argument is sound, » for Australia, would be in the same position as regards cotton as it is in regard to sugar. The production of sugar or cotton is all right so long as its sale is confined to Australian consumers, whom we can compel to pay a high price for it; but rather than sell sugar or cotton overseas at prices which involve a loss on every pound exported, it would be better to restrict production.
– It would be better to use in Australia more locally produced cotton. *
– That raises another difficulty. The producer of cotton might contend that more cotton goods should be worn, whereupon he would immediately come into conflict with the grower of wool, who advocates the use of garments made of wool. There is danger that we shall reach a stage when everything that we produce over and above our own local requirements will represent an absolute loss. It does not seem to me that that would be a good position for us to be in.
– With the exception of wool, all our primary industries are in that position.
– A person who gets into a bog usually tries to get out of it ; he does not intentionally “flounder deeper and deeper into the mire. When Senator J. V. MacDonald was speaking I interjected that for over 100 years attempts had been made to grow cotton in Australia. Private individuals, companies, and, I think, governments, tried without success to produce cotton, and it was only when a system of bounties :and protection by tariffs was introduced that the industry flourished. As Senator Leckie said that there was grave danger of this industry being destroyed, I draw ibc attention of the Senate to the figures contained in the Quarterly Summary of Australian Statistics for the quarter ended December, 1935. The imports of raw cotton fibre during the first six months of the financial year 1935-36 were valued at £30,726, compared with £16,S93 for the corresponding period of the previous year, an increase of approximately £14,000. That is a relatively small sum. But. when we come to cottonpiece goods, we find that the imports of canvas and duck have dropped from £301,678 to £279,620. That is a considerable reduction. In cotton and linen the reduction has been about onesixth from £3,017,342 to £2,468,393. Those figures indicate not greater, but less importations of these goods. In respect of cotton yarn the position is even more pronounced, the value of the imports for the first six months of this year having been £194,562, as compared with £300,913 for the same period of the previous year. Far from substantiating Senator Leckie’s argument, those figures contradict it.
– They prove that there is a good home market for cotton goods.
– They prove that, instead of the value of the imports of these items from all sources having increased, there has been a substantial reduction. In the light of those figures, I cannot understand how any one can claim that there is danger of this industry being destroyed.
Coming now to exports, we find that the value of the raw cotton fibre exported dropped from £17,937 for the first six months of 1934-35 to £14,515 in the first half of 1935-36. In regard to these goods, as in respect of others, it is clear that Australia cannot manufacture to export. Senator Payne has presented a carefully prepared resume of the position in regard to this item, and I propose to support his request. I do so with greater confidence because of the opinion expressed by Mr. W. S. Kelly, a member of the Tariff Board, in his minority report -
The rates proposed, were Australian yarn used and with existing exchange, would represent an ad valorem duty of approximately 73 per cent., (British preferential tariff) and 170 per cent, (general tariff) for dyed cloth and even higher for cloths in the grey.
I do not propose to vote for extremely high duties on cotton-piece goods, particularly when I reflect that they are worn principally by the working class. During this discussion it has been stated that the worker will not object to paying an extra 2s. 6d. in order to obtain an Australianmade article. I say deliberately that he cannot afford to pay that extra sum, and I for one, will not do anything to force him to do so.
– In order to make my intention perfectly clear I explain that I propose to move that the item be postponed for the purpose of eliminating therefrom all piece-goods excepting cotton tweeds, the duty on the items eliminated to be restored to 5 per cent. British, and 25 per cent. general. I now move -
That the further consideration of subparagraph (b) (1) and (2) sub-item (a) be postponed.
Question put. The committee divided. (Chairman - Senator Sampson.)
Majority . . . . 4
Question so resolved in the affirmative.
Motion (by Senator A. J. McLachlan) agreed to -
That the further consideration of the remainder of the item be postponed.
Items 106, 110, 114, 115, 117, 119, 120, 123, 126, 130, and 131 agreed to.
By omitting the whole of sub-item (f) and inserting in its stead the following sub-item: - f (1)…
Hoop n.e.i, ad valorem: British, free; intermediate, 15 per cent.; general, 15 per cent.; and in respect of paragraph (2) - a deferred duty as follows: -
On and after 1st January, 1936,
Hoop, n.e.i., ad valorem, British, 10 per cent.; intermediate, 10 per cent.; general 22½ per cent., and per ton, intermediate, 70s.; general, 70s.
Senator A. J. McLACHIAN (South
Australia - Postmaster-General) [5.53] . - I move -
That the House of Representatives be requested to amend paragraph 2 sub-itemf by leaving out “’ 1st Januarv, 1936 “, and inserting in its stead “1st July, 1936”.
On the recommendation of the Tariff Board, the Minister for Trade and Customs has postponed until the 1st July, 1936, the operation of the deferred duty under item 136 (f) (2) - iron and steel hoop, n.e.i. The request is designed to make the date in the bill conform with the date to which the operation of the deferred duty under this item has been postponed by the Minister.
– - A new prefatory note has been added, which reads “ Unless the tariff otherwise provides, motive power, engine combinations, and power connexions, when not integral parts of machines, machinery or machine tools, shall be dutiable under respective headings.”
Request agreed to.
Item agreed to, subject to a request.
Items 137, 138, 139, 140, 143a, and 144 agreed to.
– Item 145 reads - 145. Iron and steel plates and sheet, viz., corrugated, galvanized, galvanized not corrugated, and corrugated not galvanized, per ton : British, 90s.; general, 130s.
I move -
That the House of Representatives he requested to make the duty, per ton: British. 20s.”
The request provides for a reduction of the British preferential tariff on galvanized iron by 70s. a ton.
– I rise to order. As item 145 is not included in this schedule, I submit that it is not competent for the honorable senator to move the request.
– I rise to order. Surely there is some means by which honorable senators who wish to amend existing duties may do so.
The CHAPMAN (Senator Sampson). - The committee is not dealing with the whole tariff schedule.
– It is being amended.
-Only a portion of it.
– When the duties are being amended we should be entitled to move requests relating to any existing duties otherwise our rights of tariff revision are seriously curtailed.
– We cannot initiate items.
– If we cannot submit requests for amendments of existing duties other than those before us, our review of the schedule is futile. Our work is confined to the Government’s sma.ll alterations, and we are unable to reduce the tariff generally. Is it suggested that, even if the committee were unanimously in favour of making the suggested reduction, it could not do so ? I trust that you, sir, will not sustain the point of order raised by the Minister.
– Whether or not the Minister had risen to the point of order, I would not have been able to accept the honorable senator’s motion. In 1908 a similar point arose in connexion with the Excise Tariff Bill. Senator Clemons moved -
That the House of Representatives be requested to insert the following new item to follow the item “Snuff”, viz.: - “Confectionery, containing Glucose, Paraffin Wax or Plaster of Paris . . . per lb., 2d.”.
The Chairman ruled that that proposed request was not in order and, Senator Clemons dissenting in writing from the Chairman’s decision, the Chairman left the chair. The Senate resumed and the matter having been laid before the President, and senators having addressed themselves thereto, the President ruled that the Senate could not ignore the provisions of the Constitution which limited the powers of this House to request amendments to, or the omission of, items already in the bill. The proposal to which exception had been taken was not an amendment of any item in the bill, but was a request for the insertion of a new item. The President, therefore, upheld the ruling of the Chairman.
I refer Senator Johnston to these words in section 53 of the Constitution, specifying the powers of the Houses in respect of legislation -
The Senate may at any stage return to the House of Representatives any proposed law which the Senate may not amend, requesting, by message, the omission or amendment of any items or provisions therein.
That, I take it, is the crux of the matter. The request made by Senator Johnston is in relation to an item not in the bill before the committee. On those grounds I cannot accept his motion.
Items 146, 151, 152 and 154 agreed to.
Item 157 (Barbed wire).
– While I do not intend to move a request, I ask the Minister why, under the British preferential tariff, barbed wire is to be admitted free of duty.
– The report of the Tariff Board of the 3rd February, 1936, recommended that under the present rate of exchange, the British preferential tariff on barbed wire should be duty free ; under par exchange, the duty should be 50s. a ton. Importations of this manufacture are insignificant. In 1934-35 those from the United Kingdom totalled 130 hundredweight, valued at £144, and from Canada, 2,S73 hundredweight, valued at £1,897.
The effect of the proposed duties is to reduce the British preferential tariff rate by 51s. a ton’ after deduction for exchange adjustment, for present exchange conditions, and by 18s. a ton. under par exchange. The general tariff rate is reduced by 20s. a ton under all exchange conditions. Barbed wire is manufactured in every mainland State in the Commonwealth, and practically the whole of Australian requirements is supplied by the local industry. The Tariff Board reported that, at the time of its inquiry, locally-made barbed wire was selling at £2 ls. 6d. a ton less than the landed cost of British barbed wire on a duty-free basis, which clearly indicated that, under existing exchange conditions, the imposition of a duty on the British product was not necessary. Since the date of the board’s report, the principal local manufacturers have reduced the price by 7s. 6d. a ton, and thus the margin between the local selling prices and the landed duty-free cost of the British product has been further increased. Barbed wire of Canadian origin is at present entitled to the benefit of the British preferential tariff rate, and the Tariff Board reported that Canadian prices are lower than British. Thus, while the removal of the duty from the British product would have no detrimental effect, the duty-free admission of Canadian barbed wire would seriously affect the local industry. The Tariff Board has accordingly recommended that a protective duty be imposed upon Canadian barbed wire and Customs Tariff (Canadian Preference) Proposal No. 3 has been introduced to give effect to this recommendation. Honorable senators will, therefore, have the opportunity to discuss the Canadian duties at a later stage. The duties now proposed should not have any adverse effect upon the local industry which, I understand, is not at all apprehensive regarding the future.
Item agreed to.
Sitting suspended from 6.13 to 8 p.m.
By omitting the whole of sub-item (a) and inserting in its stead the following sub-item: -
Agricultural, Horticultural and Viticultural Machinery and Implements, n.e.i.; Cane Loaders Cane Unloaders and Cane Harvesters; Channelmaking Graders; Garden and Field Spraying Machines not including Spray Pumps operated by hand or foot; Garden and Field Rollers; Garden Hose Reels; ‘ Horse Road Rollers and Machines; Lawn Sweepers; Road Scoops and Scrapers; Scoops; Stump Extractors; Fibre Scutching Machines; Milking Machines; Potato Raisers orDiggers; Potato Sorters; Root Cutters Pulpers and Graters; Straw Stackers; Sub-surface Packers, ad valorem, British, 5 per cent; intermediate, 30 per cent.; general, 30 per cent.
And in respect of sub-item (a) -
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 ad valorem, British, . 8 per cent. ; intermediate, . 2 per cent.; general, . 2 per cent.
– I move -
That the House of Representatives be requested to make the duties, intermediate, 15 per cent.; general, 15 per cent.
This amendment and other amendments which I have had circulated is intended to bring the duties into line with the recommendations of the Tariff Board. The Government has accepted the board’s recommendations with regard to the British duty, but has allowed the old duties to stand in the intermediate and general tariffs. Unfortunately, prior to depression competition, the bulk of our agricultural implements was imported, not from Great Britain, but from the United States of America and Canada. In its report, the Tariff Board directed attention to evidence given by Mr. Westmore, on behalf of the Joint Committee for Tariff Revision, an organization representing, in tariff matters, the Sydney Chamber of Commerce, the Graziers Association in New . South Wales, the Farmers and Settlers Association and the Fruit Growers Federation. Summarized, Mr. Westmore’s evidence stated : (1) Labour costs in America are 100 per cent. higher than in Australia; (2) costs of materials in America are very little lower than in Australia; (3) mass-production methods are possible in Australia if the industry puts its house in order; (4) prices of agricultural implements in Australia are anything from 25 to 100 per cent. higher than in America; (5) only the removal of the British duty and a reduction of the general tariff to 15 per cent. will force upon the Australian agricultural implement-making industry the necessary adjustments to give the required relief to the users of machinery, and to those employed in the industry a reason- * able chance of continued and increasing employment. Wages. and materials are the principal costs involved in the manufacture of agricultural implements. In its 1934 report the Tariff Board stated that labour costs in Australia were lower than in either Canada or the United States of America, and as regards raw material, it expressed the opinion that the Australian manufacturer suffered little or no disadvantage. In respect of steel it gave the following information : -
These figures relate, of course, to American steel at Chicago, and Australian steel at Melbourne, and show that, in Chicago, in the period mentioned, there had been an increase of Hi per cent., and in Australia a decrease of 27-£ per cent. Steel sheets are the only material for which Australian manufacturers have to pay prices higher than obtain in Canada. In 1934, after inquiry, the board recommended lower duties which led to a reduction of the price of steel sheets. I do not suggest that the Australian industry is taking full advantage of the very high protection afforded to it; but that is by no means the whole of the story. On this subject the Tariff Board stated -
The community cannot afford to be satisfied ti Dlt present prices are not higher than the prices of duty-free imported goods when it is considered that freight, insurance, exchange and landing charges on the latter amount to about 05 “per cent. The time is at hand when Australian manufacturers should be ex-porting on a large scale instead of defending the need for protection on the home market.
This industry provides more direct employment than any other single industry in Australia. No le”ss than .13.022,358 tons of the 23,978,157 tons of cargo, shipped from Australian ports between 1927-28 and 1931-32 was provided by the wheat industry.
In view of the excessive burdens which the wheat-growing industry has to carry, there is definite need for relief. The present state of the industry is indicated by the following paragraph in the report of the royal commission : -
The industry of growing wheat is in a serious financial position. The financial difficulties nf the wheat-growers are producing serious financial difficulties for traders, storekeepers and others who are dependent upon the industry.^
– The honorable senator’s time has expired.
– I shall explain first the Government’s proposals in regard to these items as a group, and then deal with the pointsraised by Senator Johnston. The recommendations of the Tariff Board in regard. to the British preferential tariff have been adopted by the Government, but those dealing with the general tariff rate3 have not been accepted, for the reason that their adoption would benefit only the United States of America and Canada. Australia’s trade balance with the firstmentioned country is so adverse that the Government did not consider it advisable to take any action which might make the position worse. In 1925-26, Australia’s importations from the United States of America were valued at £87,234,257, compared with exports to that country valued at £12,953,877. Of the latter amount, £3,000,000 represented bullion and specie exported to meet our obligations in New York. Our exports of merchandise to the United States of America in that year were valued at £9,748,141, so that the excess of merchandise imports was £27,486,116. In the following year the position was even worse, for Australia exported to the United States of America bullion and specie to the amount of £10,000,060 to meet its obligations there, and the excess of merchandise imports over exports represented £32,971,528. The position improved slightly in the following year, the excess merchandise imports over exports being £28,000,000. In that year Australia exported to the United States of America bullion and specie worth £2,000,000. The trade balance was £29,700,000 .against Australia in 1928-29, and in the following year £26,000.000, after taking into account £1,000,000 sent to the United States of America in bullion and specie. For the five-year period, Australia’s adverse trade balance with the United States of America represented the colossal total of £144,699,833.
– Representing chiefly motor cars and petrol.
– The adverse trade balance in 1930-31 was £8,668,000, and in the following year £5,617.000, after allowing for bullion to the value of £1,685,000 sent from Australia. The trade balance was against Australia by £7,286,000 in 1932-33, by £5,892.000 in 1933-34, and by £8,891,000 in 1934-35. For the quinquennial period the total adverse trade balance amounted to £36,000,000. During that period Australia exported gold bullion valued at £3,465,000. For the first seven months of the financial year 1935-36, our adverse trade balance with the United States of America amounted to £5,368,000, after allowing for an export of gold and bullion valued at £1,666,000. The position this year is worse than it was for the corresponding period last year, when the adverse trade balance was approximately £5,000,000. Those figures show, not only the position which conf ronted tlie Government when it examined the position, but also Australia’s wealth, for a poor country could not have held out so long.
– Has any effort been made towards rectifying the position ?
– The first effort is indicated in this item.
– The schedule merely leaves duties as they were; it does not improve matters.
– The Government is trying to bring about an improvement. Other and more decisive steps may have to be taken.
– Duties have not been raised sufficiently to prevent imports from the United States of America.
– If the duties were reduced the position would become worse. In ordinary circumstances, the Government would have accepted the recommendation of the Tariff Board, but in view of the startling figures relating to the trade balance it had to take the step indicated in this schedule. The Government has decided on a course of action which it hopes will not only prevent the position from becoming worse, but will also relieve the situation, so that we in this country may not become bond slaves to the people of the United States of America.
– What about importing farm machinery from Canada ?
– I shall deal with that subject presently. At this stage I content myself with saying that the British preferential rate is being availed of by some foreign traders to get into Australia goods which are not really the product of the alleged country of origin.
– Is the Minister in favour of American manufacturers setting un factories in Australia, as the Ford Motor Company has done?
– No objection can be taken to the establishment of factories here. If the present unsatisfactory state of affairs continues, Australia will have great difficulty in meeting its interest bill in New York. The Government believes that it is important that the primary producers of this country should be able to purchase, at a proper cost, agricultural implements made in this country. As honorable senators are well aware, Australian brains have led the world in the designing of agricultural machinery. Australian manufacturers not only produce implements suitable to Australian conditions, but they also have ample stocks of spare parts. They have not been making excessive profits. During 1933-34 they gave direct employment to over 3,900 workers to whom they paid £670,000 in wages. The industry consumed Australian raw materials valued at £800,000, and manufactured products worth £1,700,000. The additional employment provided indirectly is considerable, and should not be overlooked in dealing with this industry. It is difficult to believe that Australian agriculturists desire that the equipment they need should come from overseas, when Australian manufacturers with their extensive range of specialized equipment suitable to Australian conditions already serve them well at reasonable prices.
asked why farm implements could not be imported from Canada. Under the Australian-Canadian trade agreement the general tariff rates are applicable to Canadian agricultural implements. In order to give concessions to Canada in this connexion an amendment of the agreement would be necessary. When that agreement comes up for review the matter will be considered. Canadian Ministers are now on their way to Australia in order to negotiate a further trade agreement.
– Could not the Tariff Board’s recommendation be accepted ?
– The Tariff Board’s report was fully considered by. the Government which is convinced that its decision will not adversely affect
Australian primary producers. The board stated that the existing prices of Australian-made agricultural implements are not unreasonable. Had local implement manufacturers been making undue profits, or been producing uneconomically, thereby causing prices to become inflated, the general tariff rates recommended by the Tariff Board might have been adopted ; but the board’s report shows that neither of these things has been occurring.
– The Minister has exhausted his time.
– I suggest to Senator Johnston that he will be unwise to persist with his series of amendments on these items, covering agricultural machinery. During this debate we have heard a good deal about the iniquity of one-way trade. Yet in regard to agricultural machinery, Senator Johnston is continually appealing for one-way legislation. He cannot have it both ways. Practically every form of primary production, with the exception of the important industry of wool-growing, is at present being subsidized in one way or another. Huge grants are made annually to the wheat industry in particular. It has to be remembered that these grants are paid by the taxpayers of this country as a whole ; yet Senator Johnston now wants the Government to lessen the avenues of employment of the thousands of workers now engaged in the production of agricultural machinery. His proposals, if adopted, will have that result. That is a vicious policy which the Senate- should reject. First of all, we are asked to assist these primary industries, because of their difficulties, seasonal and other, with direct grants, and then on every possible occasion Senator Johnston and those in this chamber who support his ultra-freetrade attitude endeavour to curtail the means of livelihood of those who, in a great measure, have to make good these subsidies. Such an attitude is unfair, antiAustralian, and, I suggest, unwise from Senator Johnston’s own standpoint. It may be good electioneering propaganda in the interests of the honorable senator in Western Australia, but I doubt whether it is more than that.
– Like the sugar industry in Queensland.
– In respect of the sugar industry, Senator Badman reveals a mental weakness ; immediately one mentions sugar, he becomes vocally frantic. The point to he remembered is that those interested in the sugar industry do not appeal to this Parliament to curtail the means of livelihood of the consumers of sugar. The Opposition will support every move that is made to benefit the primary producers, unless such moves entail stabbing in the back those engaged in any secondary industry. If we did otherwise we would feel ashamed. Consequently, the Opposition will not support any of the amendments to be proposed by Senator Johnston.
. - The Tariff Board made a very searching investigation of every aspect of the protection of agriculturalmachinery, and the manufacture of such machinery in Australia. It made a comparison between the price of a typical group of locally manufactured implements and the estimated selling price of a similar group of imported implements, based on present costs of importing free of all duty. The result of this examination caused the board to state that the operation of the tariff on agricultural implements involves the Australian farmers in no excess costs. After making allowance for all circumstances which might affect the comparisons, it arrived at the conclusion that, at the present time, the Australian farmers are obtaining their requirements of harvesting implements at prices which are lower than those paid by farmers in New Zealand, where protection is given only in respect of a few lines. The evidence, therefore, indicates that, if the demands for reduced duties on agricultural implements were agreed to, no benefit would accrue to the Australian farmer; the only result would be to jeopardize the local agricultural implement manufacturers, and possibly divert some trade to countries with which Australia has adverse trade balances. For the year 1925-26 and the four succeeding years, our excess of imports from Canada over exports to that country was as follows: -
In the succeeding five years our excess of imports from Canada over exports to that country totalled £7,137,126, or a total excess of imports of £22,423,183 during the last ten years. Honorable senators are aware of what is occurring in regard to Australia’s trade with the United States of America, and I would press them not to take any action which is not in accordance with the accepted policy of the Government on this matter. Thus we shall be given an opportunity to handle this situation in such a way that we may be able to bring about some redress.
The Tariff Board compared the prices of certain agricultural implements in Australia with the prices of similar implements in Canada and the United States of America. It is explained that the implements listed are not fully representative, owing to the difficulty experienced in selecting overseas machinery which could fairly be compared with the Australian product. Nevertheless, this comparison serves to show that the Australian farmer is paying very little more for his machinery than do his Canadian and American competitors on the world markets. Some of the prices shown in this table are as follows : -
This includes duty calculated on the retail price, and yet a machine imported under such conditions would be landed at costs lower than the present retail price of £31 4s. for an Australian machine, and lower than the retail price of £37 charged by the International Harvester Company of Australia for an identical machine.
It is clear that the local manufacturers are using the whole of the existing protection (including exchange) on mowers, and that if the importing interests choose to make an attack, the existing Australian selling price could not be maintained.
From the financial standpoint alone, it is simply impossible for us to continue one-way trading with the United States of America and Canada. Negotiations are now proceeding with a view to remedying the present trade position in the interests of all parties; it must be obvious to the United States of America and Canada that we cannot carry on as we are doing; that there will have to be a little more reciprocity in trade, and that we shall have to get a greater market for our products in those countries, through a revision of their tariffs. At this juncture, I submit, the attitude of the Government is in the interests of Australia as a whole, and this industry in particular. Therefore, I ask honorable senators to endorse the Government’s stand, and not to put it in an invidious position. If the present adverse balances with the United States of America and Canada, are increased, the position will certainly become very grave.
– After hearing the Minister’s talk of millions of. pounds, one would think that we have been importing an enormous quantity of agricultural machinery from Canada and the United .States of America. Figures for the three years 1929-30 to 1931-32, which are given in the Tariff Board’s reports, show these imports to have been insignificant.
– The honorable senator apparently desires that these imports be increased.
– I wish to give the Australian farmer the benefit of a greater measure of competition, which will reduce the prices of his machinery to a reasonable level.
– And in order to do so, the honorable senator wants to strangle this Australian industry.
– I do not. I point out that the alterations I propose have been recommended by the Tariff Board. Before submitting its recommendation the board made allowance for freight, exchange and insurance ; on that basis the natural protection on a duty free basis was 65 per cent. I have not asked that implements should be admitted from these countries free of duty, although the natural protection, equivalent to a duty of 65 per cent., is adequate, but I do ask that ait least the reductions recommended by the Tariff Board should be given effect. The board concluded by saying -
As to the other goods covered by the inquiry, the board finds that under the present conditions of exchange, but excluding primage duty, reasonable and adequate protection would he afforded by the rates of duty as under: -
Then follows the rates recommended which are exactly the same as those I am advocating. The Leader of the Opposition (Senator Collings), who appears to be the main defender of the Government’s policy in this respect, ignores the recommendation of the Tariff Board. All I am asking for is the protection which the Tariff Board says is reasonable and adequate under existing conditions.
– The honorable senator proposes to reduce the duties in the general tariff by one-half.
– Yes, on the recommendation of the board.
– The Tariff Board does not take our overseas trade balance into consideration.
– Does not the board take all factors into consideration? The question is whether those engaged in our important primary industries, who have to sell their products in the world’s markets, shall be compelled to pay inflated prices for their implements. They should not be asked to pay more than a fair and reasonable price.
– Did not the honorable senator hear the Minister give the prices of Australian machines?
– I read the board’s report very carefully.
– Should not our overseas trade balance be considered?
– Why consider it only in respect of agricultural machinery and ignore it entirely in respect of luxurious motor cars, which, although carrying a high rate of duty, are still imported freely into this country.
– Does the honorable senator use an English motor car*
– I have owned one.
– The honorable senator now uses a “Yankee” car.
– The machinery required in secondary industries has received special consideration by being admitted either free or at a very low rate of duty, but that used by primary producers is subject to an unnecessarily high rate of duty.
– The price of wheal has risen.
– It has increased a little, but the price obtained by a majority of farmers has not been sufficient to cover the cost of production. Although the price has improved, many farmers in Western Australia, and in some of the other States, have been faced with adverse seasonal conditions. The royal commission on the wheat industry pointed out that no less than £10,000,000 is required by the Australian wheatfarmers to bring their plants up-to-date. The board also said -
In a large number of cases farming plant and equipment has either reached or is reaching rapidly a state of serious disrepair. Many farmers are unable to find finance to replace or even reasonably to maintain their plant and equipment.
I remind the Leader of the Opposition that in my second-reading speech, and again to-night, I referred to the efficiency of the Australian agricultural machinery industry, and said that iff was not taking full advantage of the protection available. The Tariff Board found that the cost of distribution, representing well over 50 per cent, of the factory cost of machines, is most unreasonable, and its recommendation proves my contention tha* the Australian farmer” is entitled to a reduction of the price of his machinery by at least 15 per cent. If effect were given to this recommendation, such a reduction would be possible. I am surprised that the Leader of the Opposition did not have more to say about the rates of wages paid in Australia, which the Tariff Board said are lower than those prevailing in the United States of America or, in Canada.
– The rates of wages are due to the policy of the party to which the honorable senator belongs.
– The duties I advocate were recommended by the same board which recommended the cement duties which the Government has accepted.
– The honorable senator must connect his remarks with the item.
– The Government is giving effect to the recommendations of the Tariff Board in respect of cement, but ignoring its recommendations on agricultural implements. E intend to support the Tariff Board in both instances, and I am sorry that the Government is not sufficiently consistent to do the same.
– I cannot allow the remarks of SenatorJohnston to pass without comment, because the circumstances in the twoinstances he mentions are entirely different. The Government feels that, under the Ottawa agreement, Parliament must accept the recommendations of the Tariff Board in connexion with the cement duties, but the request moved by the honorable senator relates not to the British preferential duties but to certain duties under the general tariff which are not affected by that agreement. If thehonorable senator’s request were adopted benefit would accrue only to the United States of America and Canada, and the effect upon the financial position of the Commonwealth would be serious.
.- In listening to Senator Johnston one might imagine that there was a vendetta on the part of the Government against Australian primary producers, hut I have a clear recollection of bills having been passed by this chamber recently with the deliberate object of assisting those engaged in rural production. Provision has been made f or a reduction of the primage duty on agricultural implements and on plant used for irrigation purposes. I also recall a measure exempting from sales tax practically every implement used by primary producers. This is as it should be. The passage of these and ‘other measures demonstrated the Government’s interest in rural workers. The figures quoted by the Postmaster-General (Senator A. J. McLachlan) show that the prices paid for agricultural implements by Australian farmers compare more than favorably with those charged in other dominions. I understand that the primary producers in New Zealand depend almost entirely upon importations for their requirements. The board in its report of the 5th December, 1934, stated -
After making allowance for all circumstances that might affect the comparison, the board has arrived at the conclusion that at the present time the Australian farmers are obtaining their requirements of harvesting implements at prices which are lower than those paid by the farmers in New Zealand.
Consequently, as the result of the Government’s policy, the users of agricultural implements in this country secure the bulk of their implements at fair and reasonable prices. In view - of the statement of the Postmaster-General concerning our adverse trade balance freer importation of implements from the countries lie mentioned should not be supported.
– I intend to support the request moved .by Senator Johnston, because the prices paid in Australia by the users of agricultural implements are too high. In dealing with reapers and binders the Tariff Board which has recommended the imposition of lower duties stated-
The board has expressed the opinion that, on the basis of equal efficiency, Australian cost of production should not, in general, exceed those of the United States of America. Applied to the binder, this means that Aus tralian costs should not exceed £37 10s.; add 50 per cent, for selling - the board in other parts of the report has taken 40 per cent, for selling - and a retail price of £56 5s. is obtained.
That opinion of the price at which a reaper and binder should be sold in Australia has been expressed by no less an authority than the Tariff Board. But every farmer is ‘aware that the price ranges between £68 and £78. The report proceeded -
Investigation of costs and prices of mowers reveals a somewhat similar position. In a previous table it was shown that the 1934 retail price of a 4J-ft. mower at Chicago, United States of America, is the equivalent of £19 18s. 9d. (Australian), and at Toronto, Canada, £19 10s., compared with the Sunshine price of £31 4s. Following the line of reasoning adopted with binders, and confirming its conclusions by a comparison with present export prices in the United States of America, the board is of the opinion that, under conditions of equal efficiency, Australian mowers should be sold to farmers at a price no greater than £22 10s.
The Tariff Board, having inquired into these particulars, has come to the conclusion that the Australian farmer is paying about 30 per cent, too much for these implements. If the importation of them from Canada and the United States of America is to be restricted, owing to the trade balance, the Australian manufacturer is, in effect, informed that he may charge what he chooses. The manufacturer of the reaper and binder, the plough and other farming implements, grows rich; the man who drives the reaper and binder and uses the various implements becomes poorer and poorer. The report continued -
The present retail price of an 8-ft. hay rake at Sunshine is £14 12s. 6d., and is, roughly, 33h per cent, higher than the 1934 retail prices of similar implements at Chicago and Toronto. The facts available to the board indicate that this disparity is too great, and that the local price should be somewhere in the vicinity of £12.
Again the Tariff Board has carefully considered this position. It has been shown before that the costs of manufacture in Canada ave as dear as those in Australia, but the locally-made implements are more expensive than the Canadian article. I remind honorable senators that the primary products of Australia have to be sold in the world’s market in competition with the Canadian commodities. We cannot compete on an equal basis if our producers are obliged to pay 20 to 30 per cent, more for their tools of trade than do the Canadian farmers.
– A home-consumption price is given to balance that disability.
– Yes ; but the bulk of our commodities have to be exported. If, like the manufacturers, the primary producers could limit their production to the requirements of the home market, their position would be far more satisfactory. But the farmer is not in a position to restrict production ; he is also dependent on the seasons. Moreover, if production were limited, how would the Commonwealth meet its overseas commitments? Although, in some instances, the price is increased to a small extent on the home market, the bulk of the commodities are exported and sold at world parity.
– Sugar and butter alone cost taxpayers over £10,000,000 a year.
– I have heard that contention before; but the amount of money that the taxpayers provide in bounties for sugar and butter is a mere bagatelle in comparison with the huge sums which they pay on account of the increased price for manufactured articles, due to the tariff. I am aware that the farmers cannot be made prosperous by paring down the protective duties; but they can bc materially assisted. If they are to receive a fair deal, the Government must give them more generous treat-, ment than that afforded by bounties. Why should the farmers always be placed at the tail-end? The cities are prosperous. Nobody begrudges them their prosperity; it gives to the farmers a better market for their produce. But the farmers are poor.
– Not all of them are poor.
– Every capital city in the Commonwealth is experiencing a building boom; fine business structures and beautiful residences are being constructed. In my travels for a long time past, however, I cannot recollect having seen any attractive dwellings being erected on a farm. Even the maintenance of the farms is being neglected.
– That is not proof that the farmers cannot afford to build.
– The farmer is just as much entitled to, and just as desirous of owning, a comfortable home as is anybody else in the community, but the reason that the large majority of the primary producers have not these conveniences is -that they cannot afford them. The farmer is as kind-hearted and generous as the employer in the city, but the wages paid to agricultural workers are much smaller than those received by city workers, merely because the farmers have not got the wherewithal to pay higher rates. I venture to say that hardly’ a farm in the country has not work requiring attention, the neglect of which is resulting in a loss to the owner. Why is that work not being done? Because the farmer has not got the money to pay for it. Every effort should be made both by the Commonwealth Parliament and the Parliaments of the States to improve the lot of the farmer in relation to that of the city dweller. The latter enjoys comforts that the farmer has not got; but because -of the trade balance with Canada and America, the farmer is not to be allowed to reduce his production costs by being enabled to purchase his implements more cheaply. If the duties are not reduced it is tantamount to saying that the Australian manufacturers may charge what they like for implements.
– Not what they like.
– I have cited three instances of their charging far more than what the Tariff Board considers to be fair prices. In such circumstances, the Australian farmer cannot compete with other countries. It is the duty of Parliament to endeavour to improve the lot of the primary producer. We do not begrudge the city dweller the amenities he enjoys; he works relatively short hours and enjoys all manner of comforts-
– Some farmers are poor, but not all of them.
– I venture to state that the large majority of the small farmers are not prosperous.
– The wheat commission proved that.
– The very fact that Parliament has to vote large sums of money in order to enable the farmers to carry on their operations proves my contention. I remind honorable senators that the Commonwealth Parliament has voted £12,000,000 for the adjustment of the debts of bankrupt farmers and this along proves their unfortunate position. The primary producers are far from being prosperous, and it is the duty of Parliament to bring their lot nearer to that of the city dweller. The farmer has to work from ten to twelve hours a day - the city man does not - but he accepts that disability as his lot. When, however, an opportunity arises for Parliament to assist the man on the land to obtain his tools of trade at a reduced price, he does think that every effort should be made to do so. I am gratified that Senator Johnston moved this request. The last time he took similar action I supported him, and I propose to support him on this occasion. The farmers are a necessary part of our economic system; but for their efforts we could not meet our overseas commitments. Under existing conditions, they are not getting a fail1 share of the prosperity enjoyed by Australia.
Senator BADMAN (South Australia) 1.9.8]. - I desire to stress “two or three factors in connexion with the reduction of the duty on farming machinery aud spare parts as recommended by the Tariff Board. I was surprised that the Minister should so forcefully cite the trade balance with America as a reason for not adopting the report of the Tariff Board. He must be well aware that the enormous importation of motor chassis from the United States of America during the past few years has given an impetus to employment in South Australia. I refer particularly to the manufacture of motor bodies by General Motors-Holden’s Limited. This enterprise employs from 5,000 to 6,000 persons, and there are a’bout 25,000 to 30,000 persons dependent on this industry alone. The chassis are imported from the United States of America; the process of manufacture is completed in South Australia.
These extensive purchases by persons other than farmers have been responsible for an increased inflow of petrol and oil supplies from the United States of America, and these have accentuated the adverse trade balance.
– Do not farmers have motor cars ?
– Yes, but I am prepared to say that of the importations of new cars not 5 per cent, are purchased by farmers, and most of the cars they own are ten or twelve years old. The farmers to-day are doing their best to repair their old models ; they are also doing their best to keep the obsolete machinery in commission, because they cannot afford to replace it. The Tariff Board has recommended that the duties be reduced by 20 per cent, and 25 per cent. I remind honorable senators that the Government has already voted between £12,000,000 and £15,000,000 during the past four or five years for the assistance of wheat-growers, because low prices and high tariffs have impoverished them. Surely this item affords them another opportunity for aiding the harassed man on the land. The Australian farmers are patriotic citizens ; very few of them do not use machinery manufactured in Australia. The Australian industrialists, knowing local conditions, are able to construct suitable machines, in accordance with the advice of their experts. Moreover the artisans who manufacture the machines put their best work into them ; in my opinion farm machinery manufactured in the United States of America is not equal to the Australian article. . I consider, however, that the Australian farmer should be given an opportunity to purchase his machinery at a cheaper price. The Leader of the Opposition is constantly harping on the subject of employment. I believe in providing as much employment as possible, and I consider that if the cost of producing these machines were reduced, as recommended by the Tariff Board - and the Government should have considered the matter from this angle- sales of them would advance, and employment would be considerably increased in the factories of H. Y. McKay and Company and others.
– Allowing cheaper machines to be imported is a peculiar way of increasing employment in Australian factories.
– The Australian farmer will not buy imported machinery if he can secure the Australian machine at a reasonable price. If the Australian manufacturer is obliged to compete with imported machinery, he must reduce his price, and that will be of benefit to the farmer. The increased demand, which I venture to say would follow, would give more employment in the factories. That is the desire of the Leader of the Opposition. Whenever there is a chance of a factory using greater quantities of raw materials grown in Australia the Leader of the Opposition advocates that Parliament should assist the primary producer. Last week we discussed maize as the raw material of glucose ; to-day we discussed cotton and cotton goods, and the Leader of the Opposition pleaded the case of the primary producer as a reason for maintaining a high tariff. An opportunity has now arisen for us to assist the primary producer as well as the manufacturing industry, and in addition, create more employment. No less an authority than the Tariff Board has recommended the adoption of the course pf action we are advocating. The Government has rejected the recommendation while insisting upon the acceptance of the recommendations of that body on other items. The Minister stated that only two countries, would benefit from the reduction of duties on farming machinery, and spare parts. Does he think that Australia would not benefit if our farmers could reduce their costs of production? The honorable gentleman omitted to mention the total imports of farm machinery from America during the last ten or twelve years. Senators E. B. Johnston and J. B. Hayes reminded us that Australian farmers have to compete with farmers of Canada and the United States of America, and it is therefore to our interest to help them to do so on an equal footing by enabling them to purchase their requirements at a reasonable price. They have to sell their products in the world’s markets.
– That is why we have subsidized them in recent years.
– I wonder if Senator Dein has read the 1929 report of the Tariff Board. If not he should do so, because it contains some interesting information regarding the incidence of the tariff. It shows that the protection to our secondary industries costs the community not less than £5 a head.
– What is the cost to the community of financial assistance given to our primary industries?
– In the five or six years during which assistance has been given to our farmers, the total sum received by them has been nothing like the assistance given to our secondary industries in the form of tariff protection. It has not yet reached £20,000,000, but secondary industries have received a benefit of £30,000,000 per annum for a long period.
– Has the honorable senator endeavoured to work out what Australian consumers pay for the protection of our primary industries?
– There is 6d. per lb. on New Zealand butter to start with.
– .Surely Senator Dein will agree that consumers in Australia should pay for their primary products an amount equivalent to that paid by consumers in other countries? Economists who have examined the position are agreed that the consumer of wheat in Australia has an advantage of ls. a bushel over the consumer overseas, and that the Australian wheat-grower is entitled to receive that ls. a bushel on the wheat used for home consumption. We should remember also that, with the exception of the United States of America, Australian farmers have to pay higher wages than overseas competitors. A reduction of the duties on farm machinery is fully justified in order to give our producers a reasonable chance of competing in markets overseas. I admit that the larger manufacturing concerns stood loyally by our farmers during the distressful years of depression, and I know that many firms lost hundreds of thousands of pounds. No doubt they feel that it would not be unreasonable if they were permitted to enjoy a little longer the existing measure of protection in order to have a chance to recover their losses. But the interests of the users should be considered. If our farmers, through a lowering of the tariff on agricultural implements, can obtain their requirements at a more reasonable price and are thus able to cheapen their costs of production, the people generally will share in the benefit.
– One matter which I omitted to mention earlier was the fact that the United States of America, from which country I assume those honorable senators who favour a reduction of the intermediate and general tariffs hope to obtain cheaper farming implements, has not only point blank refused to negotiate a trade treaty with Australia, but has also imposed heavy duties on imports of wool from Australia. As I have already stated, negotiations are proceeding with Canada. What would be the position if the committee carried the amendment and intimated to the United States of America and Canada that it did not wish the Government to continue its negotiations for trade treaties?
– What about other countries that have a big adverse trade balance with Australia?
– Most delicate negotiations are in progress. According to the Tariff Board’s report the duties proposed are not detrimental to the Australian industry, and the Government does not wish to do anything to prejudice our trade negotiations with the two countries mentioned. I ‘ have already indicated briefly what has happened in Canada during the last few weeks in regard to the marketing of our dried fruits. Therefore, we can well understand what would be the feeling of the settlers along the river Murray if anything done in this chamber prevented the Government from continuing its negotiations. I am, to use a primary producer’s metaphor, leg-roped to a certain extent in this matter, because, as I have explained, negotiations are proceeding with Canada.
– The Tariff Board’s report is nearly eighteen, months old.
– I am well aware of that, and I also remind the honorable senator that eighteen months ago our trade balance with the United States of America was worse than it is to-day. I assure the committee that the Government has deliberately presented this item in its present form in the belief that it is in the best interests of Australia.
– Why should the local manufacturers take advantage of the protection given?
– I do not think that they have done so.
– Everybody knows that they have.
– Senator Johnston told us earlier in the evening that they have not.
– In reply to Senator Herbert Hays, I direct the attention of the committee to the following comments of the Tariff Board in its report of the 5th December, 1934: -
The production costs of the Australian binder submitted to the board give ground for questioning whether the entry of Australian manufacturers into the bindor section of the industry has been wise. It is a fair assumption, however, that this section of the industry has involved farmers in little, if any, excess costs. The price of the locally-made binder in Victoria has been consistently below the price of the imported binder in New Zealand, where it is admitted duty free. At present the Victorian price of the local binder is £68 5s., compared with £71 5s. in New Zealand; in New South Wales, Queensland and South Australia the price of the Australian binder is £73 2s. 6d., and in Western Australia it is £76 10s. Od.
Investigation of costs and prices of mowers reveals a somewhat similar position. In a previous table it was shown that in 1934 retail price of a 4^-ft. mower at Chicago, United States of America, is the equivalent of £19 18s. 9d. (Australian)’ and at Toronto, Canada, £19 10s., compared with the Sunshine price of £31 4s. Following the line of reasoning adopted with binders, and confirming its conclusions by a comparison with’ present export prices in the United States of America, the board is of the opinion that, under conditions of equal efficiency, Australian mowers should be sold to farmers at a price no greater than £22 10s.
It is of interest to note that the present retail price of a 44-ft. mower in the United States of America is $79.75, and that if an Australian farmer could purchase it f.o.b. New York at this price, the landed cost in Australia would be approximately as under: -
This includes duty calculated on the retail price, and yet a machine imported under such conditions would be landed at costs lower than the present retail price of £31 4s. for an Australian machine, and lower than the retail price of £37 charged by the International Harvester Company of Australia for an identical machine. lt is clear that the local manufacturers are using the whole of the existing protection (including exchange) on mowers, and that if the importing interests choose to make an attack, the existing Australian selling price could not bc maintained. In the light of these figures, the International Harvester Company’s price for a mower also seems unreasonable, but. as pointed out previously, some lines must be sold on a wide margin to make up for losses or absence of profit on others.
As a final check, the following figures show that excess profits are not now being made, and that present prices are not unreasonably high : - In 1928, the capital employed by six principal manufacturers was £3,000,000; sales amounted to £2,000,000, and the profit was £210,000, representing an average return of 7 per cent. In 1932. the worst year of the depression, the capital employed was the same amount; sales amounted to £1,000,000, and there was a loss of £90,000. In 1933, the capital was reduced to £2,700,000, sales amounted to £1,600,000, and the profit to £6”0,000, represented, a return of 1.S5 per cent, on the capital employed.
These duties have been in force since the 29th March, 1935, and there has been no great outcry ‘against them. I ask the committee not to weaken the position of Australia in its negotiations with the United States of America.
Senator BROWN (Queensland) [9.311. - I desire to reply to some of the false economic arguments of the members of the Country party. We of the Labour party are just as anxious as they are that the farmers of this country should be treated fairly and be able to buy their machinery as cheaply as possible, but we do not believe that, merely by reducing the price of machinery, the problems now confronting the farmers will be solved. Members of the real Country party, led by Senator Johnston, as well as those belonging to the pseudo Country party, which has Senator Hardy as its leader, never seem to tire of telling the farmers of the great prosperity of the people residing in the cities of this country. It is time that propaganda was stopped. There may be isolated instances of profiteering, but even so, the problems of the farmers will not be solved merely by attacking the manufacturers. Even Senator Johnston admits that Australian workers are paid lower wages than the rates ruling in the United States of America, and, therefore, he must agree that the cost of labour is not the reason for the price of agricultural machinery being greater in Australia.
– The average wheat-farmer expends very little money each year on capital equipment. An extra Id. a bushel for his wheat would more than compensate him for the higher price he .pays for Australian machinery compared with the cost in other countries. Australia’s wheat production totals probably 200,000,000 bushels a year.
– It was 177,000,000 bushels in 1933.
– The 1931 crop totalled 213,000,000 bushels.
– That was a record year.
– Let us suppose that the production is 200,000,000 bushels. An extra Id. a bushel on that quantity would represent nearly £850,000. But if the farmer were to get a really decent price for his wheat, and obtain another ls. a bushel for it, it would represent an enormous sum. Honorable senators beat the air and talk of the price of machinery, when their activities should be directed towards increasing prices.
– How are the farmers to obtain an extra ls. a bushel for their .wheat ?
– A good start was made when a home-consumption price for wheat was fixed. The Labour party believes that every worker should be properly rewarded. Under a proper national scheme, the farmers of this country would receive the due reward of their labours, not by injuring the manufacturers through reducing the prices of their goods-
– That is what is done with wheat.
– We have not to make one section of the community poor in order to benefit another. There should be a fair price for the machinery required by the primary producer, and the worker who makes it is also entitled to a fair deal. The Labour party is opposed to those Jeremiahs who continually wail about th.6 high price of Australian machinery, without taking all the facts into consideration. If those who complain were to use their energy towards the organization of the primary industries of this country on a national basis, instead of decrying other industries, they would be helping to solve the problems which confront us.
– The cost of distributing agricultural machinery is 50 per cent., which is too high.
– The system which allows it is stupid. Fancy engaging an army of salesmen to try to force a commodity on the community. A “ Singer “ sewing machine, which, some years ago, cost about £14, now costs about £28. The landed cost of the £14 machine was about £2 10s., the difference representing the cost of placing the machine on the market, and profit. It seems strange that men should be engaged at such a large cost ito try to persuade farmers to buy machines that they need, but cannot afford. The longer I remain in this chamber, the more I realize the absurdity of the system which honorable senators opposite uphold. Their argument is, “Let us put the boot into the manufacturer in order that the farmer may be better off.” When I hear arguments of that kind, I find difficulty in expressing adequately my disgust.
– ‘What system would tha honorable senator advocate.
– Under the system which I advocate, there would be no financiers bludgeoning the people, and no interest mongers; but the producers would receive a fair return for their labour. Some day the farmers of this country will realize how they have been misled. The)’ should be given a fair deal, but not at the expense of the workers in the cities. Recently, I spent a few days in Sydney, where I stayed in the house of a friend. He advised me, however, not to return to the house for dinner, because he could not afford to provide me with a decent meal. Throughout Australia there are thousands of men in that position. The time is not far distant when, through national organization along democratic lines, we shall be able to feed all our people, and give the farmers better conditions, without making others poor in order to do so. The city dweller is not so fortunate as some representatives of the Country party would have the farmers believe. That which presses heavily upon the farmers of this country is not the cost of farming machinery, but the heavy interest rates they have to pay, and the low prices they receive. Is the unhappy position of many farmers to-day due to their having to pay an extra few pounds for their machinery, or is it not rather due to the small price received for their wheat? It is criminal to set the city against the country, and to say to one section of the community : “ Look what the farmers are getting in bounties “, and to another : “ See how the manufacturers are made rich by means of tariffs.” In my opinion, one concession offsets the other. We must get down to bedrock. Unless we do so we shall continue along a path that will lead us nowhere.
– The honorable senator has exhausted his time.
.- I regret that the Minister has put the balance of trade with the United States of America and Canada in the forefront of this discussion. I admit that his arguments on t’his point were very sound, but if any industry can stand on its merits and prove by its own efforts that it is worth having, it is that of the manufacture of agricultural implements. Australian harvesting engineers have practically led the world; it was due to the enterprise and brains of the Australian artisan in this industry that the wheatfarmer was enabled to stop on the land and grow any wheat a>t all. Consequently, I am amazed at the absolute ingratitude of those who claim to represent country interests in this chamber, and yet are “ putting the boot “ into these manufacturers. Why have they adopted this procedure? They say it is because they may get their implements cheaper. The absurdity of such a claim is seen when the prices of Australian agricultural machinery are compared with those of similar machinery in New Zealand, South Africa, and Argentina, into which countries these machines enter free of duty. In every instance, the Australian price is lower. One can imagine what would happen to the farmers of Australia if they were at the mercy of overseas combines; they would soon realize that they .would not get their machinery at cheaper prices than they pay to-day. The makers of agricultural machinery in Australia have saved our farmers. I cannot allow to pass unchallenged the statement by .Senator Badman, that the benefits enjoyed by the Australian manufacturer as the result of the existing duty costs the country £5 a head or £30,000^000 a year. The fact is that of all imports of a total value of £70,000,000, the value of those subject to protective duties is only £9,571,000. The latter figure represents the value of the imports bearing duty and not collections of duty. However, I suppose the misleading statement to which I have drawn attention will circulate among the farmers of Australia, and thus cause a great deal of harm. I advise Senator Badman to revise his figures and not to repeat wild statements of this nature. Obviously such misrepresentation does harm to his own ease because it is so easy to refute. The history of prices of Australian agricultural machinery shows that there has been a continual reduction over a large number of years. Just haphazardly I shall quote figures to verify this statement. A 6-foot stripper harvester, which in 1925 cost £122 10s., now costs £106 15s. 3d. ; an 8-foot header harvester has been reduced from £185 to £144 15s. 6d. ; a stump-jump disc plough, five furrows, from £53 13s. to £44 17s.; and an 8-foot, reaper thrasher from £190 10s. to £152 Ils. 9d. These figures show that in all cases present prices are lower than those ruling nine years ago; yet it is alleged that the manufacturers to-day are making ‘a “ welter “ of it.
– The cost of raw material has come down ; and wages also have been reduced.
– The honorable senator is apparently suggesting that the exchange rate of £2’5 is a protective duty.
– I did not say anything about the exchange; I said that the Australian raw materials are cheaper to-day than they were nine years ago.
– The price the Australian manufacturer has to pay for raw material is the English price plus the £25 exchange.
– The Australian manufacturer does not import all his raw material from England.
– That does not matter ; in any case his costs are as I have mentioned.
– That is nonsense. Timber is one of the raw materials, and the price of it has decreased.
– The honorable senator is wrong if he says that the Australian manufacturer does not pay for his raw material the overseas cost, plus the £25 exchange. Only last week Senator Guthrie quoted figures to show that whilst the Australian manufacturer pays ls. 2-Jd. per lb. for his wool, the English manufacturer gets it for 10d. sterling. Therefore the Australian manufacturer pays the English price, plus the £25 exchange. The net protection advantage of exchange is from 5 per cent, to 8 per cent, according to the proportion of imported components in the manufactured article. I. want to disabuse the minds of honorable senators of the idea that the £25 exchange is equivalent to 25 per cent, duty; its protective effect is very small. “When it is realized that the rise of the exchange rate has increased living and production costs by £5,000,000 annually, it will be seen that the manufacturer has to rely upon any tariff duty this Parliament grants him for the protection of his industry. I repeat that of all industries in Australia the manufacture of agricultural machinery is one of the most successful, and that it has been of greater advantage to the Australian farmer than any other industry. It has reduced the price of his machinery from 30 per cent. to 40 per cent.; it has given him better machinery and it has enabled him to stop on the land, because* without it he would have been unable to compete on the world markets.
Senator Sir GEORGE PEARCE (Western Australia- Minister for External vened in this discussion but for the fact that Senator Leckie deprecated the action of the Minister in raising, on this item, the matter of our trade balances with the United States of America and Canada. I suggest to the committee that this is a most important phase of this item, and no matter what his fiscal beliefs may be no honorable senator can afford to disregard it. At present Australia’s trade balance as a whole is satisfactory, but the seasonal prospects are far from being so. The opening of the present season has not been auspicious; a drought would confront us with a serious adverse trade balance. With some countries our trade balance is favorable, but with others ii is unfavorable. The country with which it is conspicuously against us is the United States of America. The Minister has quoted figures showing that before the depression our excess of merchandise imports from the United States of America over our exports to that country during a period of five years was no less than the staggering figure of £144,000,000. Even during the depression, from 1930 to 1935, our excess of merchandise imports from the United States of America was over £36,000,000, whilst for the seven months of 1935-36, this excess already totals over £5,250,000. With Canada also we have an unfavorable trade balance, although in respect of that country the position is not so serious. Honorable senators cannot afford to disregard this phase. An increase of our imports from the United States at this juncture would intensify one of our most pressing, national problems - a problem that has been causing the Government concern for the last, two years. How would honorable senators face the position were they entrusted with the responsibilty of government and found the trade balance so unfavorable that the country could not meet it’s interest liabilities overseas? Have they ever thought of what the Government must do under such circumstances? It would have the choice of several courses. Our currency could be further depreciated by increasing the rate of exchange. That in itself would have the effect of checking imports in the same way as an increase of the tariff. I do not agree with Senator Leckie’s remarks on exchange ; the incidence of the present rate of exchange is much more protective that he has admitted. If should he faced with a lean season in the coming twelve months, the raising of the exchange rate is one of thecourses we shall have to consider. I ask honorable senators to bear in mind not only the effect of this course in respect ofduties on agricultural implements’ and our trade with the United States of America, but also its effect upon our imports as a whole. An alternative would be the flotation of a loan overseas.Can honorable senators contemplate light heartedly a resumption of borrowing overseas in order to rectify our trade balance? Do they appreciate what would be the effect of that step on Australian credit? Another alternative is that what was adopted by the Scullin Government, namely, the imposition of embargoes and prohibitive duties. Honorable senators must realize that whatever government is in power it cannot repudiate its overseas obligations, and therefore one of the alternatives I have mentioned would have to be adopted. We are now faced with a proposal to assist the United States of America, which is principally responsible for our adverse trade balance, for unless the request contemplates an increase of importations from that country, and a further widening of the margin now existing between our exports and imports from the United States of America, it is meaningless. I appeal to honorable senators, having regard to the responsibility which they must shoulder, the knowledge which they possess of our trade figures, and the delicate position we have been in for the last twelve months, to realize that at any time a drought may come upon us. We have had a long series of good seasons, and according to the normal cycle we are due for a. period of bad seasons. Honorable senators should not lightly disregard these factors. I can assure them that they are real and are pressing upon the Government with a good deal of weight at this juncture.
The other country involved in this connexion is Canada, with which we have a trade treaty. That treaty is more favorable to Canada than it is to Australia, and within the next few months we propose to endeavour to get the treaty amended, to make it more favorable to Australia. We have been informed by the Canadian Government that a delegation will be visiting Australia with the object of entering into negotiations. I ask honorable senators if it is wise, at this stage, to give away something which we may have to give when negotiations are about to commence? All treaties are matters of bargaining, and of concessions by both sides. Is it wise that we should give anything away before we know what Canada is prepared to do? There are many concessions which Canada could give us, and there is no reason why at this stage we should part with any advantages which we enjoy in this respect.
– Those countries are not exporting to Australia large quantities of the implements covered by the request.
– They are exporting agricultural implements.
– The value of those exported to Australia in 1935 was low.
Senator Sir GEORGE PEARCE.Some lines of agricultural machinery, perhaps not those covered by this request, are exported to Australia.
– Will the Minister give the import figures in respect of the implements under consideration?
Senator Sir GEORGE PEARCE.The value of the imports has been considerable. We know that an agreement between one of the largest implement manufacturers in Canada and one of the biggest manufacturers in Australia, has been entered into which has resulted in the two organizations entering into a partnership to manufacture in Australia.
– There is also a trade combination between a manufacturer in the United States of America and an Australian firm.
– I was not aware of that. This is not the time to give an advantage to Canada, which we might be prepared to give later. The committee should consider these points before making a present to the United States of America of decreased duties as is suggested. The attention of the Government of the United States of America has been directed to our tremendous adverse trade balance, and it has been asked to say what it is prepared to do. Some time ago we read speeches delivered by the Honorable Cordell Hull concerning the great blessing that will be conferred upon the world when economic nationalism ends, and tariffs are lowered, but in response to our request to the Government of the United States of America, we have received very cold comfort.
– I have been informed to-night that our request for negotiations has been .refused.
Senator Sir GEORGE PEARCE.That is so. The Commonwealth Government received no encouragement whatever. Some time in the dim and distant future, the United States of America may be prepared to discuss trade matters with Australia. When conditions in that country clear up, its Government may be prepared to do something. The United States of America is conducting trade treaties with other countries where it hopes to obtain greater markets for its manufactures; but so far it has not shown the slightest inclination to meet’ us.
– Why should it, when it is having its own way in every direction ?
– Yes, why should it? Without getting anything from the United States of America, we are asked to grant that country further concessions. What is the United States of America doing with our primary produce? What is the duty on Australian wool entering the United States of America ? It is one of the few countries in the world which penalizes our wool and it imposes a duty of about 15d. per lb. Can any Australian wheat, fruit, or butter enter into that country under saleable conditions? Surely, if we are hoping to find expanding markets for our primary products we should say to the
United States of America, “If we are prepared to admit your agricultural implements at reasonable rates of duty, will you accept some of our agricultural products?” That country will not accept anything from Australia. Australia sells a larger quantity of its wine on the British market than in the markets of any other country; but when the United States of America abandoned prohibition and we asked for a quota, for Australian wine, we were granted a quota which was infinitesimal compared with what we sell in the British market. Before we make concessions to the United States of America, we should bo sure of receiving a quid pro quo. I submit these points to honorable senators for their consideration, quite apart from the fiscal issue and the relative merits of the machinery produced in the United States of America, and the price at which it is sold. The Tariff Board has already shown that there is nothing wrong with the prices at which the locally-manufactured implements are marketed. I again appeal to honorable senators to give due weight to these considerations before supporting a request which, if adopted, would further intensify the difficulties of this country in regard to its overseas trade balance.
– I repeat what I said by way of interjection, that we do not import from the United States of America large quantities of the agricultural implements mentioned in this request, and if the duty were reduced, it would not necesarily follow that larger quantities would be purchased. I would support the Government if, in doing so, I would be assisting to correct the adverse trade balance with the United ‘States of America, but the adoption of the request will not affect the issue. At present we are importing large quantities of other goods from the United States of America, upon which no restrictions have been placed; if imports of those commodities which I have in mind were debarred, we would bc talking business. The Tariff Board, which has considered this subject very carefully, said that a reduction of 15 per cent, or 20 per cent, would not necessarily mean that imports from the
United States of America or Canada would increase, but that local manufacturers would reduce their prices, and enable primary producers, who are having a very difficult time, to reduce the cost of production. I am behind the Government in its attitude towards the United States of America, which is the most selfish of all nations. We should get down to business, and not make ourselves the laughing stock of the world by increasing duties on items which really do not matter and disregarding those which are really important.
– I followed closely the remarks of the Leader of the Senate (Senator Pearce), and I am sure that if any one will be delighted with the right honorable senator’s remarks it will be Mr. Scullin, who took similar action to that suggested, when our overseas trade balance was in a serious position. At that time we were not enthusiastic supporters of his views. We have got somewhat off the track, as we have been speaking of the United States of America, a country from which agricultural implements are imported in only small quantities. Those who intend to support the request are not in favour of increasing imports, but are anxious to reduce the prices of locallymanufactured implements, and the only way to do that is by reducing the duty. When duties are increased it follows that prices increase; as the duties are lessened, prices fall. Prices follow duties pari passu- We are anxious to reduce the cost of implements locally manufactured. Heavy customs duties seems to make multi-millionaires of a few, without conferring any benefit upon the artisans. The only way to reduce the profits pf the local manufacturers is by lowering the duty; all this talk of trade balances and increasing imports is only misleading the committee.
– Senator Leckie compared the prices ruling in 1922, when they were temporarily inflated, with those prevailing to-day. For the information of the committee I quote the following prices charged for certain types of agricultural machinery from 1933 to 1936 inclusive -
These figures demonstrate the necessity for accepting the recommendation of the Tariff Board in regard to the duties on agricultural machinery.
In regard to the remarks of Senators Pearce and Collings and other protectionists, I refer them to the first four pages of the Tariff Board’s report on the subject, in which the imports of each line of agricultural machinery from various countries are shown. Those figures prove that the imports from the United States of America and Canada since 1929-30 to the date of this report have been insignificant. I hope that the Senate will be guided by the impartial and unprejudiced report of the Tariff Board.
SenatorJAMES McLACHLAN (South Australia) [10.18]. - Honorable senators have discussed this matter at considerable length, and some have predicted all’ manner of disastrous consequences to Australia should the duties in the schedule be approved by the Senate. I direct attention to the fact that they have been in operation for fifteen months without the catastrophic results which have been prophesied, becoming evident. As regards the price of agricultural machinery the Tariff Board report has been cited by honorable senators representing both sides in the discussion, and figures have been extensively quoted to substantiate their respective contentions. In my opinion the most conclusive figures are set out on page 15 of the report where the price in Melbourne of the principal harvesting machines used in the Commonwealth are compared with those at Chicago and Toronto. They show that on the basis of the Tariff Board’s report, which states that after exchange and other factors are taken into consideration a duty of 60 per cent. is operative, not one of those articles can possibly be sold here in competition with the Australian product. Australian farming machinery is second to none, and I am positive that for economic reasons the South Australian farmers would prefer to purchase it, even though the cost were higher than that of comparable imported machines. The farmer does not buy a stripper and harvester every twelve months.
– But he is obliged to purchase a good many spare parts at. double the price which he should be paying for them.
– Perhaps that is so. In conversation with a reliable farmer recently I learned that he had been using an Australian stripper for four years without requiring a new belt-lace or new pin for it. That speaks volumes, either for the durability of the implement, or for the manner in which it had been treated by its owner.
– Had it been taken out of the shed?
Senator JAMES McLACHLAN.Yes; my informant was not the type of person to permit it to rust in idleness. I regret that I am unable to agree with Senator McLeay concerning the gesture we are making in regard to our trade balance. All things must have a beginning; but we have been very tardy in taking steps to rectify our trade balance with, the United States of America. Corrective action should have been taken years ago; even if the action now contemplated is only a small gesture, it will indicate to the United States of America that unless it is prepared to negotiate a trade agreement with us, we must buy in other markets. One honorable senator referred to luxury imports from America. He cited motor car chassis, and mentioned that General Motors-Holdens Limited in South Australia employed thousands of Australian workers. While admitting the truth of that contention, I fear that the big profits made by that enterprise belong to the United States of America, - and eventually find their way there. In my opinion, the trade balance of the Commonwealth is a far more important consideration than one tariff item.
– I rise to explain my reasons for being unable to vote for the request submitted by Senator Johnston. If the duty under review had related to the Mother Country, or the tariff had been raised against Great Britain or any other part of the Empire, I would vote for a reduction of it. But considering that the request affects principally the United States of America, with which Australia has a seriously adverse trade balance year after year, and which refuses practically point blank to purchase our wool or other commodities, I cannot conscientiously vote for it. The United States of America imposes a prohibitive tariff, if not an embargo, against all Australian goods. When some shipments of fruit were sent there the excuses offered to prevent its sale included statements that the fruit was diseased, and finally it was dumped in the San Francisco harbour. Australia’s adverse balance with the United States of America must be corrected, or, as Senator Pearce explained, a serious position will develop. The Australian farmer with whom we sympathize has had an awful gruelling during the last eight years. In competing with, other countries he is certainly penalized by the tariff policy, taxation, and the comparatively high cost of his tools of trade. The primary producer does not escape the indirect taxes borne by the general community, but in addition, pays an annual class tax upon his capital - the land. The treatment meted out to the farmer has not been comparable with that given to the manufacturer.
– Those are reasons why the honorable senator should support the request.
– I have stated one side of the matter. But have not the Australian manufacturers of agricultural machinery been extremely inventive and efficient? As a wheat-grower, I consider that H. V. McKay and Company and others have led the world, as regards both their inventive genius and the efficient standard of the implements which they manufacture, in reducing the cost of harvesting. In my opinion, the Australian farmer does not pay very rauch, if anything, more for agricultural machinery than is paid in New Zealand, South Africa, or Argentina.
– The Australian farmer pays less.
– I do not agree; but I do not think that he is paying very much more. And certainly he is being provided with a most efficient article.
– Did the honorable senator ever read the profit and loss account of H. V. McKay and Company ?
– I am aware that there is a tendency, under any high protective tariff, to help millionaires to become multi-millionaires. I desire that the price of agricultural machinery shall be reduced; but this request does not deal with that aspect as regards ‘ Great Britain. It proposes to reduce the tariff on American machinery. I cannot conscientiously vote to reduce the tariff on any import from that country. I would go so far as to vote to increase the duty on any American article until the United States of America is prepared to enter into a trade agreement with us, or give us a commercial quid pro quo.
– Would the honorable senator support a request to increase the duty upon American farming machinery, while adopting the report of the Tariff Board in connexion with Canadian manufacturers?
– I understand that the Government is desirous of entering into negotiations for a trade treaty with Canada, which will be more advantageous to Australia than is the present arrangement. In my opinion, that dominion is not treating the Commonwealth with consideration; it does not buy nearly so much from us as it should. I should like to see the adverse trade balance with the United States of America reduced by the purchase of motor cars from countries which are prepared to trade with us. I would far sooner that Australia bought motor cars from Germany than from the the United States of America. Germany desires to establish .credits in Australia in order to purchase our primary commodities. For the same reason, I would prefer that Australia should purchase its oil from the Anglo-Persian Company or from Russia, so that Russia could establish credits here with which to buy Australian goods. The adverse trade balance with the United States of America must be corrected. We should buy first from ourselves, secondly from the British Empire, and thirdly from countries which huy from us. We should take every action possible to restrict the imports from countries which refuse to buy from us. For that reason, I cannot support the request of Senator Johnston for lower duties on American farm implements.
.- I am unable to follow the reasoning of Senator Leckie, when he discriminates between a revenue tariff and a protectionist tariff. Both of them should operate to the benefit of Australian manufacturers. The honorable senator pointed out, on the one hand, that the primary producers of Australia receive a bounty of £10,000,000 per annum. Undoubtedly, he is referring to sugar and butter, for the home prices of these commodities are higher than the export prices. But, notwithstanding Senator Leckie’s assertion to the contrary, the home manufacturer gets the opportunity, if he cares to take it, to reap the advantage of the incidence of protective duties to the amount of £30,000,000 a year.
– How does the duty on petrol assist the Australian manufacturer?
– I did not suggest that it does; but the amount of revenue collected from the protective duties ‘ is certainly more than the £9,000,000 mentioned by the honorable senator. I am gratified that the Government has seen its way clear to reduce the duties applying to British goods from 15 per cent, to 5 per cent. Although Great Britain does not manufacture many lines of agricultural machinery suitable for Australian conditions, it does make certain implements, including mowing machines and hay rakes, which are used by our farmers. I assume that imports of these implements from Great Britain will be substantially increased in future.
The Leader of the Senate (Senator Pearce) and the Postmaster-General (Senator A. J. McLachlan) have explained why the Government has not adhered to the recommendations of the Tariff Board with regard to Canada. I am not so much concerned about the United States of America, but I do- think that the Government should at least have accepted the Tariff Board’s recommendation concerning the sister dominion of Canada. I referred te this matter the other day, but I am satisfied with the explanation given by both Ministers to-night, and it seems to me that we may get some benefit from a revision of the trade agreement with Canada. I object to our manufacturers of farm implements making huge profits under the tariff protection given to them. Most honorable senators have read the Tariff Board’s report closely and they must have noted its comment that it cost £266 to sell £700 worth of farm machinery - this, too, after profits had been taken into account.
– That statement applied also to imported machinery.
– That is explained by the combination to which the right honorable gentleman has referred, between the Massey-Harris Company and H. V. McKay, as the result of which competition in Australia has been definitely eliminated. American manufacturers’ are now making Australian farm machinery. I give full credit to the Australian manufacturers. They certainly make extraordinarily good machinery. I have a considerable amount of machinery on my property, and I think that the whole of it is Australian made. There is nothing better. Our manufacturers have met Australian requirements in every way. In some instances their machinery is an improvement on that which is imported from America. But competition now is completely stifled. I should like to see the general tariff lowered, notbecause I believe it would result in foreign competition, but because it would be a reminder to Australian manufacturers that, if they do not supply local requirements at a reasonable price, they will be faced with competition from overseas.
When I was a member of the House of Representatives some years ago, this bogy of an adverse trade balance was given an airing in every budget debate. It has always been a favorite topic with Labour members. When the Scullin Government came into power it imposed prohibitions and higher duties in order to prevent foreign goods from coming into Australia. I do not regard the tariff as the proper instrument for the regulation of trade balances between countries. If the exchange rate is allowed to appreciate or depreciate we can encourage or discourage imports, and so rectify our balance of trade with other countries. According to statements made by both Ministers to-night our aggregate adverse trade balance with the United States of America over a period of ten years was £144,000,000, but I am not aware that we owe that country anything, except the money which we borrowed and upon which we are paying the agreed rate of interest. Every country must have an adverse trade balance with some other country. On this point it might be enlightening if I remind honorable senators that, when speaking in the House of Representatives on the 23rd February, 1928, the then Prime Minister, the Right Honorable S. M. Bruce, pointed out that, during the years when Germany appeared to be capturing the world’s trade, it had a large adverse trade balance, and that Canada and the United States of America had had adverse trade balances for several years, that for the United States of America in1921 being 228,000,000 dollars; in 1922, 508,000,000 dollars; in 1923, 119,000,000 dollars; in 1924, 212,000,000 dollars; in 1925, 3,000,000 dollars; and in 1926, 509,000,000 dollars.
– The United States of America is not a debtor country; Australia is.
– I am not aware that any one has been able to give a satisfactory explanation of the reasons for a country’s favorable or unfavorable trade balance. Trade seems to adjust itself, as the PostmasterGeneral should know, since he is the head of a department which has dealings with 86 nations. With some there are credits; with others debits. Everything is adjusted at Berne, which is the clearing house for international postal charges. I am inclined to believe that altogether too much is made of the balances of trade between countries, and I am convinced that it is a mistake to attempt to regulate them through tariffs.
.- It would be a pity if Senator Gibson’s concluding remarks about trade balances were allowed to pass without comment. Great Britain has always had an apparently heavy adverse trade balance, which is explained by the huge amount of invisible imports, the result of investments in foreign countries, amounting, prior to the war, to over £4,000,000,000. Great Britain also has always had a vast overseas carrying trade, which returns enormous revenue that does not appear in its statement of imports and exports. Prior to the war the United States of America was a debtor country. Now it is one of the leading creditor countries. It has huge investments in foreign countries, from which it draws a considerable amount of invisible revenue.. I have no prejudice against that country, but I think that nothing should be done to decrease the protection given to our manufacturers against American competition. I know, that for many reasons, we must give the fullest consideration to every aspect of trade balances. In the present acute state of economic nationalism we are being questioned very abruptly by Japan. The government of that country is asking a number of searching questions as to why we do not increase our purchases from Japan, because it buys so heavily from Australia. Competition with Australian-made farm machinery is mainly from the United States of America, which country, as Senator Guthrie has reminded us, buys so little from us and has prohibited the importation of Australian wool, the one Australian commodity that does not require government assistance.
– It is the only industry that stands on its own feet.
– I am not in complete agreement with the honorable senator. State governments have, on many occasions, assisted the wool industry in drought years by reductions of railway freights and free transport of starving stock and fodder, as well as by financial provision for scientific research into pests and diseases that affect rural industries. As the United States of America buys so little from Australia it is not deserving of consideration in our tariff arrangements. Senator Johnston’s amendment, if carried, would really encourage American competition with British manufacturers in the Australian market. As the honorable gentleman is a worthy representative of country interests, I am wondering if he has considered the real effect of his proposal. We on this side represent first the workers and then the consumers, and as the workers are 90 per cent. of the people, they are also the great mass of the consumers.
– Would the honorable senator say that wheat-growers are not workers ?
– Of course they are. The honorable senator should know that fifteen or twenty years ago it was the middle-man who stood between the producers and the consumers, and that it was the Labour party that helped the producers. Having considered, first, the claims of the workers and the consumers, the Labour party then proceeds to inquire whether the fiscal policy is good for the nation as a whole. It has concluded that reasonable protection is in the best interests of Australia. Senator Johnston’s request is merely a sop to that country which is the greatest competitor with Australian manufacturers of harvesting machinery.
– Most of the agricultural implements which are imported come from Canada.
– Many American firms, among them McCormick’s, have established factories in Canada. The supporters of the Government in this chamber and in the House of Representatives should hold a mass meeting to decide on a course of action with a view to avoiding the delay occasioned by the expression of conflicting views. In the House of Representatives there are two representatives of two well-known squatting families, one of whom says that Australia should cease to trade with the United States of America, whereas the other contends that even an adverse trade balance should not be interfered with if that would upset our friendly relations with a nation whose help Australia might need, in the event of serious trouble arising. I hope that Senator Johnston will withdraw his request.
– To suggest the withdrawal of the request is to suggest the equivalent of withdrawing large typeheadlines from a display advertisement in a newspaper.
– If the request be defeated, no doubt the West Australian will have some such heading as “ Senator Johnston debarred from obtaining a reduction of duty on farm implements.”
– What did the Tariff Board recommend after months of inquiry ?
– It is not so much the opinion . of the Tariff Board as the view of hide-bound freetraders that matters.
– The honorable senator has exhausted his time.
Senator DUNCAN-HUGHES (South Australia [10.52]. - The first question which arises is that of Australia’s trade with the United States of America. IfI were convinced that the proposal of Senator Johnston would increase our imports from that country, I should probably oppose it ; but I am very doubtful whether that would be the result. Nor am I convinced that we should attack a major problem in this way’. Australia’s trade balance with the United States of America has been most unsatisfactory for a number of years, but, so far as I know few, if any, attempts have been made by this or previous governments to rectify the position. It is true that the Lyons Government altered the protective incidence of exchange by providing that it should be applicable only to Great Britain, and not to foreign countries. I remember that proposal well, because I was the first person in this Parliament to suggest that course. That was a definite move in the direction of ensuring that foreign countries should be placed on a different footing from Great Britain in regard to goods entering this country. Three years ago, when the Government tried to prevent reprints of cinematograph films from entering Australia, I voted with the Government, but as its supporters on that occasion numbered only seven, the attempt was not particularly successful. The Government will not deal with this problem effectively by maintaining the duty on agricultural machinery at the rate at which it has remained for some years. Even a cursory glance at our trade with the United States of America reveals that each year Australia imports from that country sausage casings valued at nearly £200,000. That trade could be diverted to New Zealand. Moreover, a large proportion of the printing machinery, valued at £130,000 per annum, which enters this country comes from the United States of America.
– It consists chiefly of typewriters.
-Could we not obtain more of that machinery from Great Britain and less from the United States of America ? Again, cinematograph films costing nearly £270,000 are imported each yearfrom the United States of America. That item also could be reduced. Last year Australia imported from the United States of America sulphur (brimstone) to the value of £186,000, and from Japan supplies costing £71,000. Why should we not buy all our sulphur (brimstone) from Japan, which is a good customer of Australia?
– How do we pay the United States of America for the things we buy from that country?
– The Leader of the Senate (Senator Pearce) has expressed the fear that Australia may find difficulty in paying for them. I know that a sub-committee of Cabinet has been appointed to go into this matter, but even acursory glance reveals directions in which trade could be diverted from the United States of America to countries which are good customers of. Australia. Obviously, the Tariff Board, when submitting its report, had no desire to ruin the agricultural, implement-making industry of this country. My view is that the chief effect of Senator E. B. Johnston’s request, if” agreed to, would be to reduce the price of this class of machinery and that the business would still remain in Australia. T. shall therefore support the request.
Question - That the request (Senator Johnston’s) be agreed to - put. The committee divided. (The Temporary Chairman - Senator Badman.)
Question so resolved in the negative.
Item agreed to.
Senate adjourned at 11.4 p.m.
Cite as: Australia, Senate, Debates, 5 May 1936, viewed 22 October 2017, <http://historichansard.net/senate/1936/19360505_senate_14_150/>.