1 June 1939

15th Parliament · 1st Session

The President (Senator the Hon. J. B. Hayes) took the chair at 3 p.m., and read prayers.

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– Will the Leader of the Senate state when it is anticipated that the judgment of the

High Court will be delivered in respect of the validity of the excise duty now imposed on flour? Will the judgment be given prior to the approaching parliamentary recess, and, if not, will the Parliament be recalled if further legislativeaction is necessary to ensure continuance of a home-consumption price for wheat?

Senator McLEAY:
Minister for Commerce · SOUTH AUSTRALIA · UAP

– I appreciate the importance of this question. It is uncertain when the decision of the Court will be given, but I shall consult the Government regarding the matter, and furnish the honorable senator with a reply at a later hour to-day or to-morrow morning.

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Re-imposition of Embargo.

Senator McLEAY:
Minister for Commerce · South Australia · UAP

by leave - On the18th May last Senator Herbert Hays asked me whether the Government intended to permit the importation of potatoes into the Commonwealth after the end of May. The Government has recently given much consideration to the economic position of the Australian potato industry, with special reference to the fact that the arrangement made by the previous Government in regard to the admission of New Zealand potatoes into Australia expired on the 31st May. The Government has decided not to renew that arrangement, which, in fact, did not result in the importation of any potatoes other than a special experimental shipment of under 2 tons. I am communicating with the Prime Minister of New Zealand, and informing him that the prohibition of the importation of potatoes will be continued pending a complete and prompt investigation of the position. The Federal Potato Advisory Committee has been invited to make suggestions to the Government regarding measures designed to stabilize the potato industry. It is anticipated that representatives of the advisory committee will visit Canberra for this purpose, and will confer with the Commerce Department in regard to the matter. The suggestions made by the committee willbe considered by the Government, in consultation with the Agricultural Council. From time to time citrus growers in Australia have complained that the continuance of the prohibition has adversely affected their industry. I have informed the chairman of the Federal Citrus Advisory Committee that I shall receive a deputation from the citrus growers, and give them an opportunity to state their case. “When these steps have been taken, the permanent policy to be adopted will be considered and announced.

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– Will the Minister for the Interior state what benefits are received by residents of Canberra who contribute hospital tax at the rate of’ 1s. 6d. fortnightly, in accordance with the provisions of the Canberra Hospital Ordinance?

SenatorFOLL. - I shall obtain for the honorable senator a complete list of the payments made and the benefits received.

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– Does the Government intend to make available, through agricultural societies and other organizations, quantities of rabbit virus for experiments in the destruction of rabbits?


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Senator BROWN:

– Has the Minister for the Interior seen a report in the Sydney Morning Herald of the 17th May which contains the following paragraph : -

When all the fantastic upside-down stories are recounted of Darwin’s hotel accommodation, drinking habits, beach combing; and red tape, there obtrudes itself ever as the apogee of absurdity, the invincible obstacle to any reform of waste, inefficiency and stagnation - the Darwin wharf. Volumes of press comment have been written about it. Canberra’s archives are stuffed with reports of committees of inquiry. But the jetty of to-day, the archaic, dog-leg, composite structure built by the South Australian government in 1916, “improved” by the Commonwealth in 1910. and still cursed by every shipmaster who must use it, has outlived almost the memory of proposals to replace it.

Can the Minister say whether the Government agrees with that statement, and will he see that early action istaken to provide Darwin with a new jetty?

Senator FOLL:
Minister for the Interior · QUEENSLAND · UAP

– I do not know whether or not the Government agrees with the statement, but, having seen the structure at Darwin, I personally entirely agree with it. Recently, representations were made in connexion with the matter, and at the present time soundings are being taken in order that the layout of the wharf may be altered. The present structure is not satisfactory.

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Senator ALLAN MacDONALD On the 17th May, I asked the Minister for the Interior, without notice, a question regarding a published statement that the Commissioner of Police in South Australia had made a report to the Premier of that State containing suggestions for improvement of the methods of registering aliens upon entry into Australia. Has the Minister received a copy of that report from the Premier of South Australia? If so, has the matter received consideration, in view of the fact that the Aliens Registration Bill is still before the House of Representatives?

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Senator AYLETT:

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

  1. Can the Minister give any reason why light horsemen do not receive compensation when their horses are injured on the way to camp, in the same way as they do when in camp?
  2. Can the Minister give any reason why a light horseman should be mulcted 5s. per day because his horse was injured going into camp, both he and his horse having been accepted into the camp?

Senator FOLL. - The Minister for Defence has supplied the following answers : -

  1. . A light horseman may be granted compensation if his horse is injured at any time after he has reported for duty until he is dismissed from thai duty. Compensation is frequently awarded for horses that have been injured while on their way to camp.
  2. If a light horseman reported at the place of assembly with a horse fit for duty, he would not have 5s. a day deducted because his horse was injured going to camp.
Senator CAMERON:

asked the Minister representing the Prime Minister, upon notice - 1.’ Was a public statement made by the Premier of Victoria, Mr. Dunstan, on Thursday, the 5th May, to the effect that it was pathetic to see thousands of youngmen walking the streets, looking in vain for work, because their technical education had been neglected ?

  1. If so, is the Government prepared to consider taking any action in the matter, whereby such young men will be provided with employment under conditions which will enable them to qualify as skilled workers, and which at the same time will protect other skilled workers already in employment against loss of status or employment?
  2. If not, would the Government be prepared to give consideration to the matter of making a grant of money to State governments sufficient for the purpose of enabling them to provide technical education free of cost for all young men requiring same?

Senator McLEAY. - The Prime Minister has supplied the following answers : -

  1. The Melbou rne press of the26th May contained a report of a statement by Mr. Dunstan on the lines mentioned by the honorable senator., 2 and 3. Early in 1937, the Government proposed to the States a scheme for the training of those youths who had missed the opportunity for equipping themselves during the depression years. The Commonwealth proposed to contribute £400,000 on the understanding that the States would contribute a total amount between them of the same order. Actually the total expenditure on this scheme will probably amount to over £800,000. For Victoria, the Commonwealth and State Governments are each finding £110,000, a total of £220,000. The schemes, which took some time to organize, are now in full operation.
Senator AYLETT:

asked the Minister for Commerce, upon notice -

  1. Is it a fact that if lighthouse-keepers complain to a member of Parliament or any other organized body for improvement in their conditions it means instant dismissal to them ?
  2. Is it a fact that lighthouse-keepers are on duty 70 hours a week?
  3. Is it a fact that lighthouse-keepers have to work sometimes from6.30 a.m. to 11 p.m. without overtime pay?
  4. If so, does the Minister consider a man can give just service when on duty for such long hours?

Senator McLEAY.-The answers to the honorable senator’s questions are as follows : -

  1. No. It is open to lighthouse keepers to seek improvements of their conditions through the same channels as are available to other sections of the Commonwealth Service.
  2. At certain stations, lighthouse-keepers are required to perform station duties and to be in attendance up to 70 hours a week. These officers work on a seven-day week basis. Their duties comprise station work, attendance at stations, and keeping a watch on the light. Little or no active duty is performed during attendance and watch-keeping periods. Hours of duty and duties of lighthouse-keepers are now under review with a view to reducing hours of attendance and watch-keeping from the 4th July next.
  3. It would be in exceptional circumstances only that a lighthouse-keeper would be called upon to be on duty for a period of such duration. Such circumstances would be likely to occur only in an emergency or perhaps at a periodical visit of the lighthouse steamer. Lighthouse-keepers are not eligible for overtime when employed on station duties, but are paid an allowance when they perform extra duties during the incapacity of a member of the station staff.
  4. The occasions on which lighthousekeepers are required to be on duty for such long hours are rare, and, as the normal duties of these employees at the majority of lighthouses are comparatively light, the working of additional hours on such occasions would not prejudicially affect either their health or their efficiency.

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Aircraft Strength

Senator BROWN:

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

  1. Has the Minister’s attention been called to an article in the Sydney Sun, on the 20th May, under’ the caption “ Australia’s Air Force has had no modern planes for eight years “ ?
  2. Is this statement true?
  3. If not, what number of modern planes are part of Australia’sAir Force and what is their designation?

Senator FOLL. - The Minister for Defence has supplied the following answers : -

  1. No.
  2. No. 3.It is not in the public interest to disclose the numbers and types of aircraft held by the Royal Australian Air Force. The approved first-line strength is at present 132 aircraft, which will be built up to 212 on the completion of the expansion programme. When a new type of aircraft is purchased, themost modern procurable is obtained, but it will be realized that, owing to the rapid progress continually taking place in aeronautical development, improved types of aircraft follow one another in quick succession. It is therefore impossible for an air force to be completely up-to-date in all types at any particular date.
Senator McLEAY:

– (South Australia Minister for Commerce). - by leave - I suggest, Mr. President, that the sitting be suspended until the ringing of the bells, hut not earlier than 7.30 p.m. It is anticipated that a statement will be made this afternoon by the Prime Minister (Mr. Menzies) on the subject-matter of the motion before the Senate. I may add that the Government expects that the Supply and Development Bill will reach the Senate this evening and intends that it be proceeded with as far as the moving of the second reading, after which I shall ask the Senate to adjourn until 11 a.m. on Wednesday next.

Senator McLEAY:

.- No.

Senator Collings:

– For a definite and urgent reason, I object to anything being done at this stage which willprevent the continuation of the debate.


.- The matter cannot be debated. I am anxious to facilitate the despatch of business, and naturally am disposed to accede to the request of the Leader of the Senate, but as the Leader of the Opposition is opposed to the suspension of the sitting, I suggest that he should confer with the Leader of the Senate, and thus avoid placing me in the position of having to decide the matter.


.- I shall do so.

Sitting suspended from3.32 to3.37 p.m.

Motion (by Senator Leckie) put -

That the debate be now adjourned.

Senator McLEAY:

– (South Australia Minister for Commerce). - by leave - I desire to read the following statement which the Prime Minister (Mr. Menzies) proposes to make this evening in the House of Representatives: -

Yesterday in answer to a question by the honorable Leader of the Opposition (Mr. Curtin) in relation to the proposed additions to the Sydney General Post Office, I said -

The possibility of some speedy investigation of the matters raised in relation to the tenders is now being investigated by me. I have had the advantage of some tentative conservations on the subject with the leaders of the other two parties in this House, and i shall make ft statement to-morrow. In the meantime, I. assure honorable members that no contract will be signed.

I do not need to tell honorable members that this undertaking was given by mc in good faith, and with the intention that it should be honoured. I was amazed to discover last evening that, in point of fact, the contract in relation to these works was actually signed at about 4.20 yesterday afternoon, after I had made my statement to Parliament.

I at once put in hand inquiries, not only as to what had occurred, but also iis to whether the contract had assumed a final and binding form. As to the latter point, I am advised that the contract is complete and .binding. As to the former point, the facts as I know them are briefly as follows : -

Last week departmental instructions were given by my colleague, the Assistant Minister (Mr. Perkins) representing the Minister for the Interior, to the effect that no contract was to be signed until the discussions in Parliament in relation to this matter had been concluded. Yesterday morning my colleague the Minister for the Interior (Senator Foll) pursuant to my request and a discussion in Cabinet, specifically renewed these instructions. There is, I understand, a difference of view between the Director-General of Works and. the Works Director for New South Wales as to whether these instructions, which were undoubtedly received by the Director-General, were passed on to, or clearly understood by, the Works Director. I offer no opinion as to what the true position is, but I do know that the deplorable fact is that after I had given my undertaking to this House that undertaking was violated by the signing of the contract. It may very well bo, and indeed there is no reason to doubt, that the whole incident arises from either a confusion of instructions or from some negligence somewhere in the- department. But I feel the matter very keenly. I am. convinced that, in justice to every body concerned, the whole affair must be promptly and impartially investigated, and that the questions which had already arisen in Parliament in relation to the acceptance of a tender should at the same time bc examined.

Having regard to the nature of the questions involved, I propose that there shall be a special committee consisting of three members pf the Public Works Committee, together with an architect and a builder, selected as representative of the appropriate federal body in each case, and that such committee shall be invited to inquire into and report upon the circumstances in which a tender was accepted for such additions, and a contract signed in relation thereto.

The successful tenderer, H. G. Whittle and Sons Proprietary Limited, has a binding contract obtained by it in open competition, and not unnaturally insists upon its performance.

I greatly regret what has happened in this matter, but I think that the House will agree that we are taking the right course. It is of the essence of the relation which should exist between a Prime Minister and Parliament thatundertakings given by him should be scrupulously observed, or that, where an undertaking is broken, the reasons for such breach should be plainly stated and adequately examined. It is in the interests of the relations which should exist between public departments and those who offer to become’ contractors with them, that the whole of the circumstances of this case should be impartially examined and publicly reported upon. It is in that spirit that I will, in due course, propose to the House that the- committee of investigation be set up.

Senator COLLINGS (QueenslandLeader of the Opposition). - by leave - 1 am sure that all honorable senators regret this latest development in connexion with this matter. I shall reserve any criticism which I may have to offer until the motion for the appointment of the proposed committee is before this chamber. I content myself now with saying that obviously what happened subsequently to the issuing of these instructions by the Prime Minister (Mr. Menzies) confirms the worst fears that I had, and fully justifies the action taken by the Opposition in this chamber.

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Proposed Additions: Motion for Inquiry by Public Works Committee.

Debate resumed from the 31st May (vide page 973), on motion by Senator Collin as -

That in the opinion of this Senate, the proposed work of the erection of additions to the General Post Office, Sydney, should be at once referred to the Parliamentary Standing Committee on public works, for early inquiry and report, and in the meantime no action should be taken to enter into any contract in relation to the work. upon which Senator Allan MacDonald had moved, by way of amendment -

That the words “ in the opinion of this Senate” be left out; that the words “the Parliamentary Standing Committee on Public Works “ be left out with a view to insert in lieu thereof the words “ a Select Committee of the Senate consisting of Senators A. J. McLachlan, Keane andE. B. Johnston “.

Senator Collings:

– What about the motion now before the Senate; is that not to be gone on with?

Senator Collings:

– I do not know what the procedure should be now, and I therefore place myself in your hands, Mr. President. I think it is only fair, however, that the Opposition should have been acquainted through me by the Minister as to what the statement by the Prime Minister is to be. It may be anything regarding the subject of my motion.

The PRESIDENT (Senator the Hon. J. B. Hayes). - I am anxious to facilitate the business of the Senate with out doing an injustice to any one. I propose to suspend the sitting of the Senate to the time mentioned by the Minister unless the Leader of the Opposition (Senator Collings) can give a very definite reason why that should not be done.

Senator Allan MacDonald:

-I have moved an amendment to the motion of the Leader of the Opposition, which I regard as of greater importance than the motion, and, regardless of what the Prime Minister may have to say on the subject, I should like a vote to be taken on my amendment.

Senator Collings:

– Will you, sir, be agreeable to suspend the sitting for five minutes in order to enable me to confer with the Leader of the Senate?

The Senate divided. (President - Senator the Hon. J. B. Hayes.)

AYES: 18

NOES: 15

Majority . . 3



Question so resolved in the affirmative. Ordered -

That the resumption of the debate be an order of the day for 7.30 p.m. this day.

Sitting suspended from S4A P-m. to 7.S0 p.m.

Senator LECKIE:

.- This motion raises >a knotty problem, but, as the matter has been clarified to a certain extent, I ask leave to continue my remarks at a later hour.

Leave granted; debate adjourned.

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Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Poll) read a first time.

Second Reading

Senator FOLL:
Minister for the Interior · Queensland · UAP

– I move -

That the bill be now read a second time.

The necessity for the legislation embodied in this measure is made manifest when I state that, in 1932, the defence expenditure for the Commonwealth totalled £3,200,000, and for the present financial year it is estimated at £26,000,000. The veryexpenditure of this amount is, in itself, an indication of the determination of Australia adequately to equip itself to face whatever emergency may present itself. It is an expression of Australia’s self-reliance, and records a sacrifice and a determination on the part of our young, energetic country as brave as it is remarkable. This immense expenditure, however, has imposed upon the defence administration, as now constituted, an increasingly heavy burden, which has been carried up to the present time by Ministers for Defence and by the department in such a manner as to evoke the unstinted admiration of this Parliament and of the people. But the point has been reached when relief has become a paramount necessity in the interests of continued efficiency, and in order to cope with the rapidly expanding programme.

Similar circumstances have impelled the British Government to create a Department of Supply. The realization for the need of such a department has prompted the people of the United Kingdom to acclaim its inception, and I am convinced that the people of Australia welcome this, bill as a practical indication of the Government’s intention to implement the Prime Minister’s declared policy of economic preparedness. Thus is the case made for the need for a Department of Supply and, concurrently, of development, for to supply is to plan. Therefore, the function of this associate department to the Department of Defence will be not only to supply munitions and allied equipment, as required by the fighting services, but also to co-ordinate the industrial development, and, indeed, to survey and develop to the maximum the great resources of our continent. The scope of this measure is necessarily wide, for the legislation has been evolved in times and circumstances as unusual as they are complex; its object is efficiently, urgently, and adequately to equip this country for defence. Since, therefore, the task is not an easy, rigidly defined, and precise one, it was considered desirable to draft this measure in hoard and general terms in order to leave the fullest possible scope for development.

The field of administration to be covered by the Department of Supply and Development is appreciated upon reference to clause 5 of the bill, which shows that one of the first objects will be the provision or supply of munitions. The new department, therefore, will control all munition factories established under the Defence Act, together with the personnel of those establishments. This arrangement will continue so long as this legislation remains in force, and the period of operation provided in .the bill is five years. The staffs to be transferred to the new department will carry with them all the rights and privileges accruing to them, and, at the end of the period of operation of the act, will be taken back upon the strength of the Defence Department. The defence establishments which will be taken over are - The Ammunition Factory, Footscray, Victoria ; the Commonwealth Clothing Factory, South Melbourne, Victoria ; the Explosives Factory, Maribyrnong, Victoria; the Ordnance Factory, Maribyrnong, Victoria; the Small Arras Factory, Lithgow, New South “Wales ; and the Munitions Supply Laboratories, Maribyrnong, Victoria.

The capital investment in the factories and establishments administered by the Munitions Supply Branch exceeded £4,000,000 on the 30th June, 1937, and since then has been launched a programme of further extensions to cost £3,000,000. During the last twelve months, progress has been so rapid that production of munitions has been doubled, and this is hut a promise of the productive capacity when the contemplated works are completed.

At the Ordnance Factory, Maribyrnong, where are manufactured high-calibre shell, practice projectiles and artillery shell, all of the steel used is of Australian manufacture. At the Small Arms Factory, Lithgow, the new building for the production of the Bren machine gun has been completed, and machines are now being installed. In the meantime, many thousands of tools, jigs and gauges have been ordered, both in England and Australia, and, as fast as they come to hand, the actual manufacture of the machine guns will be undertaken. The interesting feature of this effort is the disclosure of unexpected’ resources in Australia for the manufacture of mass production equipment of a high degree of precision. Similarly, with regard to cartridge-making machinery for the Ammunition Factory, more than 200 machines are being made in various Australian engineering shops. The number of employees engaged upon munitions production under the Munitions Supply Board has increased by about 60 per cent, during the last twelve months, and now exceeds 5,000 persons. Wages costs have increased proportionately, and the expenditure for wages during the present financial year, will approach £1,000,000. Next year it will be about £1,500,000.

Nevertheless, the policy of the Government is not to establish large munitions factories which in normal times would be idle, or, on the other hand, to allow unrestricted development of munitions factories by private enterprise, but to adopt the middle course of bringing, the existing government-owned defence establishments to the stage of the highest possible output, and to establish annexes associated with suitable existing private industrial establishments to supplement the production of tlie government factories.

These annexes are similar to the shadow factories that have been established in Great Britain, and represent the well-considered policy of the Government in extending the production of munitions with the least possible delay and minimum of difficulty in the event of outbreak of war. Arrangements have been made for the erection of approximately 2.4 of these annexes. A prerequisite of the allotment of an annexe to a firm is that the firm shall possess certain precision tool equipment.

In all cases the manufacturer will make the land’ available; in nearly all cases the Government will erect the building, but in some isolated instances the manufacturer will do so. In practically each instance the Government will provide the machine tools. Depending upon the nature of the arrangement, agreements will be made whereby the annexe will remain under government control for a period of ten years, and nothing may be manufactured in those annexes except upon government order. At the end of the ten-year -period, the contract may be renewed at the option of the Government. If the contract be not renewed, the buildings and equipment may be taken over ‘by the company at valuation; alternatively, the Government may dismantle and re-erect the buildings and equipment, or otherwise dispose of them. In respect of annexes to State Government workshops, the agreements will, provide for these workshops to take over the annexes at an agreed va.lua.tion when they are no longer required for the purposes for which they were erected.

As each annexe is established, a trial or educational order will be given to test out the equipment and to train the operatives in the manufacture of the munitions components to he undertaken at that particular factory. On completion of the educational order, the annexe will he closed down until such time as it becomes necessary to proceed with further government .orders. This intention has met with some criticism, but the reasons for closing down these annexes on completion of educational orders should be perfectly obvious. These annexes will be reserve factories designed to meet a future extraordinary demand for munitions ; they are required to supplement the production of government munitions establishments only when it becomes necessary to do so. Furthermore, unwarranted expense would be involved in proceeding with the manufacture of munitions in excess of the immediate requirements of the armed forces, if these requirements can be met hy the existing munitions establishments. It may be unfortunate from an economic viewpoint to have to maintain these annexes virtually in a state of idleness once the educational orders have been fulfilled; yet, viewed from another angle, it is really the price of the insurance premium we must pay against unpreparedness. It cannot be too strongly emphasized that the establishment of these annexes will not place in the hands of the firms concerned any control of the manufacture of munitions, for not only will the annexes remain government property, but also at no time will a firm manufacture a complete unit of munitions. Any one firm will manufacture components and then only upon government order. The components will be taken over by the Government munitions factories and there assembled and filled with the necessary explosives, which the Government alone manufactures in Australia.

Reference to clause 5 of the bill will also impress upon honorable senators the intention of the Government fully to inquire into costs, and to control profits of those people engaged in the manufacture and supply of goods for defence purposes. The Government is determined to exercise to the full all of its powers in this connexion, and in this endeavour will, I am convinced, win the approval of the whole community. In the first place, all purchases from Australia for the Defence Forces are arranged through the Contract Board, which is a statutory body. The usual method adopted is the open tender, which ensures competitive prices. As an example of the competition, I may state that for the supply of clothing for the militia - 60,000 garments - no fewer than sixty-four tenders were received. As tenders are on an f.o.b. basis, manufacturers in all States are placed on an equal footing. Where competition is not available, as in respect of copper, zinc and lead, supplies are purchased in bulk from manufacturers on the basis of world price, plus exchange. Steels are purchased from Broken Hill Proprietary Company Limited at appreciably lower prices than supplies could be landed from overseas. In materials such as toluol and glycerine, care is exercised to see that the prices paid are in line with movements in overseas rates. In many cases the prices paid for supplies are lower than the wholesale rates for similar commercial supplies. I could give concrete examples of this, but I refrain from so doing in the interest of maintaining these satisfactory prices.

The method to be employed in annexes is usually termed the cost plus basis. Under this plan the manufacturer is to be paid the actual cost of materials and labour and so much of his overhead expenses as are directly attributable to the work he undertakes. Certain charges usually included in overhead will be specifically excluded under the agreement, viz., interest on capital, selling expenses, advertising expenses, bad debts, income taxes, debenture interest, reserves, commissions, and insurance premiums on life policies. These annexes are being placed alongside important established enterprises in order that when war breaks out - which we hope will never happen - there will be an effective organization immediately at hand and ready to manage the annexes as going concerns. The proprietors of these enterprises are to provide various facilities, such as management, accountancy and banking, technical and draughting office, storekeeping and provision of stores and supplies, maintenance services such as electric supply, supervision, foremen, and employees; tout the . arrangement with the proprietors or contractors provides only for reimbursement of their actual expenditure upon labour, materials used, and the overhead expenditure actually concerned with the works undertaken for the Government. No .arrangement has been made for payment for tangible services rendered, such as the readiness to commence the business of manufacturing, the general oversight of administration and management, and the utilization of staff and offices and accountancy facilities. All these are costs which the management has to bear, but they have been grouped together under the general description of “profit”, although, strictly speaking, they are more in the nature of an “allowance to cover general management facilities and other incidentals not included in the agreed costing item “. Certainly, if the Government had to provide all the facilities that the contractors will provide without charge, the cost would be more than the profit allowance to provide them.

I should like to impress upon honorable senators two further points in connexion with manufacture in these annexes. First, the trial- order will necessarily be a small one, designed solely to test the plant and train the personnel in the process of manufacture. In view of the limited nature of the order, the opportunity to make any profit will accordingly be strictly limited. Secondly, with regard to manufacture during time of Avar, the annexes will be equipped for definite outputs. For example, annexes equipped for turning out shell bodies - the highest-priced articles to be produced by them - will be capable of producing 50,000 of these articles in a year, working one shift, at a cost of about £50,000, or less in war time, under conditions of intensive production; but many of the annexes would produce articles the cost of which would be only about one-fourth that of shell bodies. For various reasons, the Government has allowed for the working of only two shifts, and the most, therefore, that would be payable in respect of any one annexe would be approximately £100,000, which, on a 4 per cent, basis for profit; would allow £4,000 for profit. That sum for profit on shell manufacture might conceivably be too much, although it would not be too much to allow -to the South Australian annexe for making tools and gauges, notwithstanding that the output at that annexe might also be £100,000. From the foregoing it will be seen that the rate of profit cannot he arbitrarily fixed, hut must be arranged from time to time according to the circumstances.

The Government believes that the methods it proposes to adopt will prove adequate and satisfactory for the proper control of profit. However, in order to ensure that the necessary control shall be made as effective as possible, an advisory accountancy panel, consisting of recognized leading accountants, has been formed. Its function will be to report on the existing method of Government costing, examination, and price control, and to offer constructive suggestions, the adoption of which will make certain that the Commonwealth will pay no more than reasonable cost for munitions and other goods which may be purchased under the “ cost plus profit “ system. In the complicated and urgent task which confronts the Government, it is appropriate to mention that the best available advice in the community will be at the disposal of the Minister. On behalf of the Government, I take this opportunity to acknowledge the generous manner in which men of business and science, although already burdened with responsibility, have offered their services as advisors and consultants, generally in an honorary capacity. Several advisory panels and committees, which have already been formed, have furnished valuable advice to the Minister for Defence. The bill provides for the continuance of the committees already established, and for the setting up of others as may become necessary. Those already established, which will become consultative bodies in the new department are: the Advisory Panel of Industrial Organization, the Economic and Financial Committee, the Standing Committee on Liquid Fuels, and the Accountancy Panel, to which I have already referred. Other committees which have already been formed will be attached to the Defence Department, but since the closest possible liaison on matters of mutual interest will be maintained, -both departments will reap the benefit of the counsel of these committees.

A development which will receive the earnest and immediate attention of the department is the manufacture of fighting aircraft in Australia. The railway workshops in the various States will, under contract, arrange for the manufacture of the various components of the air frames, either in the workshops themselves, or through the established factory plants in the respective States, whilst the department will, at its own plants in Sydney and Melbourne, undertake the assembly and completion of the aircraft.

The bill also provides for the acquisition, maintenance and disposal of stocks of goods in connexion with defence. This provision does not necessarily imply the holding of stocks by the Government. Rather will the object be to survey industry generally in order to ascertain the stocks necessary to ensure the continuance of essential industries, and to provide, as far as practicable, that sufficient stocks of imported raw and semi-manufactured goods are held by users against a time of emergency when regular imports could not be relied upon, due fo possible interference with shipping. The survey of industry to which I have just referred will enable the department properly to fortify itself with necessary information regarding the industrial capacity of Australian industry to assist in the manufacture of munitions in a time of emergency, and generally to meet the needs of the civil population in time of war.

The Government is convinced that the information being sought should be furnished. An endeavour has already been made to obtain this information by cil-, dilating to manufacturers, for voluntary completion and return, a questionnaire, but the results have not been satisfactory. Possession of the information being sought will enable the Government do gauge, also, whether the stocks of essential imported materials are sufficient to meet a state of war, when dislocation of shipping would be inevitable, what supplementary stocks would be required, and whether substitutes for imported materials exist in Australia, <ind, if not, whether suitable substitutes may be developed. In the development of substitutes, the Department of Supply and Development will have the benefit of the advice and assistance of the Council for Scientific and Industrial Research, which will be attached to the new department, and will extend its field of investigation to embrace secondary as well as primary industry. I believe that I speak for every honorable senator when I say that Australia has had wonderful results from the work of the Council for Scientific and Industrial Research. There will also be the closest possible cooperation with the Departments of Commerce and Trade and Customs, with the common objective of making Australia selfsufficient in time of war. The fullest co-operation will also be sought with State governments in the matter of the collection of information for the Department of Supply and Development, and in the implementing by State governments of the policy of the Government where such action is necessary.

I firmly believe that, in conjunction with the existing machinery, the bill provides for an effective and necessary combination of armed defence of our country with the civil preparedness of its people. The bill suggests and provides great opportunities for constructive cooperation in a work of great magnitude, involving the mobilization of all the industrial resources qf the country, and their extension in certain directions to meet the needs of the country if we are to be prepared to withstand a state of war. It is a job for Australia, and I commend this bill to honorable senators.

Debate (on motion by Senator Collings) adjourned.

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Contract for Additions : Proposed Inquiry.

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Motion (by Senator McLeay) agreed to-

That the Senate, at its rising, adjourn till Wednesday next, at 11 a.m.

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The following papers were pre sented : -

Arbitration (Public Service) Act - Determination by the Arbitrator, &c. - No. 12 of 1939 - Commonwealth Public Service Artisans’ Association.

New Guinea Act - Ordinances of 1939 -

No. 4 - Petroleum (Prospecting and Mining) .

No.5 - Land.

Contract Immigrants Act - Return for 1938.

Immigration Act - Return for 1938.

Lands Acquisition Act - Land acquired at - Moriarty, Tasmania - For Postal purposes.

Swanbourne, Western Australia - For Defence purposes.

Senate adjourned at 8.4 p.m.

Cite as: Australia, Senate, Debates, 1 June 1939, viewed 22 October 2017, <>.