14th Parliament · 1st Session
The President (Senator the Hon. P. J. Lynch) took the chair at 3 p.m., and read prayers.
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[3.1]. - by leave - After a thorough review of all sources of production and of technical reports bearing upon flow oil, shale oil and oil from coal, the Government has decided to make available a sum of £250,000 for advances by way of loans to approved companies or persons on a £1 for £1 basis, for the purpose of drilling operations in connexion with the search for flow oil in Australia. This fund will be administered by a sub-committee of Cabinet, consisting of the Minister for Defence (Mr. Archdale Parkhill), the Minister for the Interior (Mr. Paterson), and the Minister in charge of Development (Senator A. J. McLachlan). The sub-committee of Cabinet will, in turn, bo advisedby a technical committee consisting of Dr. W. G. Woolnough, Commonwealth Geological Adviser; Dr. L. Keith Ward, Director of Mines of South Australia; and Dr. Arthur Wade. Dr. Woolnough will act as executive officer.
The Government is determined to investigate every means of giving to Australia some independence in oil supplies. To that end it will obtain definite information concerning the possibilities of well oil production in Australia and New Guinea. If the result is negative, it will at least serve to obviate the further expenditure of large sums of money in the search for oil. If, on the other hand, oil is found, it will add immeasurably to the prosperity of Australia and will supply an essential defence requirement.
Information in the possession of the Government indicates that the prospects of finding well oil in commercial quantities in Australia and New Guinea are now rated more favorably than had hitherto been the case.
It is necessary again to emphasize that the moneys, which it is proposed to provide, will be for the purpose of drilling for oil, and not for preliminary geological surveys. While it is recognized that geological surveys are pre-requisites to drilling, it is felt that a good deal of this work has already been done and that the immediate need is to drill favorable areas. It is recognized, also, that the major expenditure associated with the search for oil is in connexion with drilling.
In connexion with the shale oil industry, very full technical information is available regarding the economics of production. It has become evident that, in order to establish the industry, it will be necessary to exempt it from the payment of excise duty over a period of years. This would involve substantial inroads upon revenue. The Government has, however, examined the position from every angle and, in the light of more recent world developments, it feels that it is compelled to ignore the economical aspects of production and make the defence requirement paramount.
Newnes is capable of producing at least 7,250,000 gallons of petrol per annum, and production can, in case of national emergency, be changed over immediately to fuel oil or to fuel oil and petrol. It can, with some expansions, which can be arranged at short notice, produce at least the nucleus of the Commonwealth’s basic requirements of oil and petrol for the defence services.
In view of this, it has been decided that petrol production from shale in Australia, up to a maximum of 10,000,000 gallons per annum, shall be granted, for a period of twenty years, protection over imported petrol to the extent of the customs and excise duties at present operating. The effect of this would be that, ifthe present customs duty of 7d. a gallon on imported petrol, or the excise duty of 51/2d. a gallon on petrol produced from imported crude oil, are reduced during the next twenty years, a subsidy equivalent to the amount of such reduction will be paid on petrol produced from Australian shale up to the maximum of 10,000,000 gallons per annum.
Offers will be publicly invited from companies or persons desirous of operating the Newnes shale oil undertaking on this basis. The Commonwealth Government at present holds the option over plant, machinery, &c, at Newnes, which originally cost considerably more than £1,000,000 and can now be secured for £34,500.
In connexion with this invitation, it should be clearly understood that the Governments of the Commonwealth and New South Wales regard it as essential that any company selected to operate Newnes must have personnel with high engineering and technical qualifications in addition to substantial capital resources. The .Newnes Investigation Committee has set down capital requirements at £600,000.
The position to-day is that coal petrol in England enjoys protection of Sd. a gallon; shale petrol has never paid excise duty and has been protected by customs duties for a period of years. In Germany coal spirit enjoys preference over the petroleum product in the form of remission of taxation of approximately ls. 8d. a gallon.
There are two known methods for the production of oil from coal. These are low temperature carbonization, and hydrogenation.
In connexion with the low temperature carbonization process, certain investigations are now -taking place. The Government will have something more to say on this when these investigations are complete.
With regard to the production of oil from coal by the hydrogenation process, approximately twelve months, or possibly longer, will elapse before Imperial Chemical Industries Limited will be in possession of sufficient experience of the working of the demonstrational unit at BillinghamonTees to determine whether it would be practical and desirable to establish a similar unit in Australia. The construction of such a unit would occupy some time, so nothing can be expected from this source of supply in the near future.
The Government regards the production of oil from coal as of such importance that it is determined to obtain the best first-hand scientific advice about it. Therefore, arrangements have been made for Sir David Rivett, Chief . Executive Officer of the Council for Scientific and Industrial Research, who is also chairman of the Commonwealth Hydrogenation Committee, a body representative of the Commonwealth and the States, to leave- Australia next month for the purpose of going closely into the processes now operating in England and Germany for the production of oil from coal by both hydrogenation and low temperature carbonization. Sir David Rivett is eminently fitted for this work.
While in England, Sir David will discuss with Imperial Chemical Industries Limited the whole subject of the establishment of a hydrogenation unit in Australia. This organization has promised its fullest co-operation.
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asked the Minister representing the Prime Minister, upon notice -
– The Prime Minister has supplied the following answers: - 1 and 2. A communication was received on the 2.1st April, 1936, from the United Kingdom Government expressing concern that the recommendations of the Tariff Board on cement and sanitary earthenware have not been adopted. The United Kingdom Government also expresses its confidence in the Commonwealth Government to take the necessary steps to secure the adoption of the Tariff Board recommendations.
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asked the Minister representing the Minister for Repatriation. upon noti.ee -
– The Minister for Repatriation states that the information desired by the honorable senator is being obtained.
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SenatorCOLLETT asked the Minister representing the Minister for Repatriation, upon notice -
Concerning the benefits allowed by the Australian Soldiers Repatriation Act 1935 -
What number of service pensions in each State have been (a) applied for”; (b) granted; (c) refused, since the act came into force?
Similarly, how many tubercular exsolilarly in each State have been granted pensions and treatment?
What is the approximate total annual financial commitment so far incurred ?
– The Minister for Repatriation states that the information desired by the honorable senator is being obtained.
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Second Reading
Debate resumed from the 29th April (vide page 944) on motion by Senator A. J. McLachlan -
That the billbe now read a second time.
– I congratulate the Government upon the wonderful improvement which has occurred in trade and employment during the last few years. During the regime of the Scullin Government, when embargoes and prohibitive customs duties were the order of the day, the percentage of unemployed unionists in Australia was 31, whereas the latest figures show that including members of the Australian Workers Union and unionists employed in rural industries, the percentage has decreased to 13. An analysis of the figures covering those employed in factories and shops shows that the position is now at least normal. There are move factories and factory employees in Australia to-day than at any period in the history of the Commonwealth. Taking the figure of 100 as the index number we find that in Victoria in 1931-32 the factory employees numbered 80, whereas for 1934-35 there were actually 108 employed. For the whole of Australia in 1931-32 the figure was75, and for 1934-35 it was 100. The number of factory employees during the regime of the present Government has increased by over 25 per cent., and employment figures are the best index of the prosperity of any country. “What are the reasons for these extraordinarily satisfactory figures? The main reason is the Government’s policy, including its tariff policy and the removal of embargoes which destroy trade. When the Scullin Government was in office no fewer that 80 embargoes were imposed upon importations from other countries, including Great Britain. Embargoes have been lifted and prohibitive duties reduced, and Australia is now operating under an efficient protectionist policy. The closing of trade channels by the imposition of prohibitive tariffs necessarily interferes with the prosperity of any country. I realize that while the primary industries produce great wealth and provide overseas credit, our secondary industries are just as essential. For that reason I have always been a staunch protectionist. I am opposed to prohibitive duties, and cannot be regarded as a fanatic in fiscal matters. The larger the number of persons employed in Australia at relatively high wages the better it is for everyone, including primary producers. The home market is the best market in which to sell many of our products, but the greater proportion of our principal primary products, wool and wheat, has of course to be sold overseas at world’s parity. Secondary industries are essential to our development, and are also necessary to defence. Instead of British manufacturers protesting against the customs duties imposed upon their products in Australia, they should establish factories here and also bring operatives from Great Britain to work in them. Many British manufacturers find that the taxation in Great Britain is increasing alarmingly, due largely to the special imposts to provide sustenance for the unemployed.
– Taxation is not low in Australia.
– It is not. I would like to see it reduced as soon as we can alford to do so; but income tax should be the last tax to be reduced. It is fortunate for us that it is not higher in view of the amount which should he expended on defence. More British factories should be established in Australia.
– Where would be the market for their products?
– The same market in which Australian manufacturers sell their products. We have not reached saturation point. As this country needs population, British manufacturers should establish factories in Australia and bring suitable British migrants to work in them. Is there any other way by which we can increase by migration the population of this vast and rich, hut dangerously empty, continent? I have suggested at least one way to encourage migration. If migrants are brought to Australia and we are not able to employ them in secondary industries, it is doubtful whether we can settle them in sufficient numbers on the land. There have been many failures in the past.
– To-day Australia manufactures four-fifths of its total requirements.
– The other onefifth provides a field for expansion. Can honorable senators suggest any other way of encouraging migrants to this country? Undoubtedly we need more people in Australia ; particularly do we need Britishers.
Regarding the Ottawa agreement, I pay tribute to the splendid work done by Australia’s representatives at the Ottawa Conference, particularly Mr. S. M. Bruce and Sir Henry Gullett. At that time markets for most of our primary products, particularly meat, butter and fruit, were low. Indeed, in respect of beef, mutton and lamb, it looked as though markets would collapse with a consequent collapse of prices for those very important products.
– The same was the case in respect of dried fruits.
– Yes, and also wine. One could enumerate many other benefits accruing to Australia as the result of the Ottawa agreement. Great Britain is practically the only market for our primary products, excepting wool, which we export to 38 countries, and wheat. It is practically the only market for our meat, wine, fruit, butter, eggs and . many other commodities. We should always hear in mind that the prosperity of Australia depends on the export of our primary products. These account for 97 per cent, of the total value of our export trade. Let us see what benefits the Ottawa agreement has conferred upon Australia. Some people are apt to under-estimate them, and also the liberal treatment of this dominion by the old Mother Country which to-day, as it has done in respect of all its agreements, carries out both the spirit and the letter of the Ottawa agreement. In 1931-32, just prior to the Ottawa Conference, Great Britain took from Australia £1,600,000 worth of beef and £2,8S2,000 worth of mutton and lamb, or a total of £4,482,000. In 1935, Great Britain took from Australia £2,900,000 worth of beef and £4,800,000 worth of mutton and lamb, or an increase in the value of raw meat products of £3,300,000 annually. This does not include tinned meats. Some industries may have reached their limit, but the fat lamb industry is yet capable of enormous expansion. This year Australia will have exported between 3,000,000 and 4,000,000 lamb carcasses valued at about 25s. each f.o.h., whereas little New Zealand will have exported approximately 10,000,000 lamb carcasses. Contrasting our advantages for the development of this industry with those enjoyed by New Zealand, I point out that Australia has a. large area with a rainfall as favorable as that of New Zealand, whilst the soil in many of the coastal districts around Australia is quite a.s rich as that in the dominion. I can visualize that through scientific research into soil conditions, the use of fertilizers, and the sowing of better pastures, Australia may produce up to 10,000,000 fat lambs annually. The southwest of Western Australia, the southeast of South Australia, the whole of Victoria south of the Dividing Range, and the coastal areas of New South Wales and Queensland, could easily be turned “into” rich pasture land, which can be divided into comparatively small holdings. Such a development from the point of view of closer settlement is of vital importance to Australia. Where conditions favour such, the fat lamb industry offers room for expansion, and this expansion should be undertaken as soon as possible. Honorable senators naturally will ask where we are to find markets for this increased production of fat lambs. I point out that the British market is a huge market. I do not suggest that we should displace the sister dominion of New Zealand on that market, but we should bear in mind that the British people to-day are turning from beef to lamb. Some people say this development is due to the advent of the motor car; it is pointed out that the old British predilection for roast beef is disappearing, because the British people spend more time to-day out of doors, and on their motoring tours provide themselves with preserved meats, pies, &c. For these reasons the consumption of beef in Britain is falling off, whilst the consumption of almost universally young meats is increasing. We should make sure of retaining this market. One way to do this is for Australia to honour the Ottawa agreement, not so much in the letter as in the spirit, and thus enable the Mother Country to give definite preference to Australian goods, and at the same time limit its imports from Argentina. Great Britain has already decreased its imports from Argentina. This trend will continue if we do everything in our power to safeguard and extend the Ottawa agreement. At present Ministers of this Government are in London negotiating along these lines, not only for the continuation of the Ottawa agreement, but also for the expansion of the benefits which that agreement confers on Australia. Great Britain buys practically every class of Australian primary products. In 1933-34, since the Ottawa agreement, the value of Australia’s exports to Great Britain was £63,000,000 sterling, Britain taking 51.7 per cent, of our total exports, including wool and wheat. Once again, I repeat that Great Britain last year took 51 per cent, of all our exports. Despite the fact that sheep products were responsible for over 50 per cent, of those exports, and that Britain was our best customer for wool, it is by no means our only customer for wool and wheat. On the other hand, what does Australia import from Great Britain? In the same year we imported from it £25,000,000 worth of goods, representing 42.6 per cent, of our total imports. Britain bought nearly all our meat and eggs. I might mention here that egg production is becoming one of our most important industries, and our exports of eggs to Britain this year will be valued at nearly £1,000,000. Britain also purchased the bulk of our sugar, fruit and wine. Yesterday, Senator Leckie referred to a protest by British manufacturers in relation to the importation of manufactured goods.
– They asked for a duty on manufactured goods.
– Unfortunately, Australia does not export manufactured goods.
– Yes, it does.
– The manufactured goods which are exported represent only 3 per cent, of Australia’s total exports, and of that proportion only about one-third is sent to Great Britain, the balance being disposed of in countries bordering the Pacific. The home market is very valuable indeed, but it cannot absorb all our wool and wheat. Australia must export 90 per cent, of its wool and 75 per cent, of its wheat. Honorable senators may ask why Australia does not manufacture all its wool here. I point out that even if every person in Australia were compelled to wear woollen goods manufactured in Australia of Australian wool, it would still be necessary for this country to export 85 per cent, of its wool production. My tariff policy has never varied. I have always been in favour of effective protection for all economically sound and reasonably efficient industries.
– That is a broad generalization.
– I have always opposed, and always shall oppose, embargoes, combines, and profiteering. I have no sympathy with those who, under the protection of a high tariff, take advantage of the consumer by charging for their goods more than they ought to charge.
Australia has many splendid secondary industries which are economically sound and efficiently conducted. For instance, it has about 50 woollen mills equipped with up-to-date machinery and employing thousands of Australian workers. Although those mills are adequately protected - .1 do not think that they are overprotected - they have never taken advantage of that protection to make excessive profits. It is difficult to say “what protection would be necessary against the cheap labour and long hours worked in the textile factories of Japan. Australian woollen mills are turning out every variety of woollen goods, from knitted underwear to heavy cloths for overcoats. I have seen a good many of their balancesheets, but I have not yet seen one which revealed that the shareholders received excessive profits. I have known of dividends at the rate of 10 per cent., 7 per cent., or 6 per cent., but, in my opinion, those rates are not excessive for a manufacturing concern. The competition between the several knitting and woollen mills in this country is so great that the wholesaler is able to buy all classes of woollen goods at prices which are extraordinarily cheap considering the relative cost of raw wool. The great iron and steel industry also is efficiently managed. I am sure that no honorable senator desires that this key industry, or the Australian textile industry, should be placed in jeopardy. Other efficiently-conducted industries are those which produce wine, dried and preserved fruits, and biscuits. Australia has a considerable export trade in these commodities. I do not know how dried and preserved fruits are classified, but, in my opinion, they are secondary industries. Moreover, most of the locomotives and rolling-stock in use on Australian railways are made locally, and give entire satisfaction. Australia also produces large quantities of leather goods, and makes most of its own furniture, motor-car bodies, and tyres. These secondary industries are worthy of adequate protection. They should at least receive sufficient protection to ensure to them the home market.
I congratulate the Government on its policy in regard to oil. as enunciated this afternoon by the Leader of the Senate (Senator Pearce). I am glad that a sum of money is to be made available for the encouragement of the search for flow oil, but I regret that the Government has not also decided to develop more rapidly this country’s shale oil deposits and the production of oil from coal. Australia is not immune from attack; and should an enemy approach our coast, the British Navy may not be at hand. We should help ourselves by building up our own means of defence. Without an adequate air force, and mechanized transport, this country would be unable to defend itself from attack. But what chance would it have to defend itself, even with the most up-to-date fleet of aeroplanes and moto]lorries, if it were without oil? How would Australia obtain oil were the British Navy not in control of the Pacific? I urge the Government to develop this country’s shale oil deposits and to store in Australia huge quantities of oil for defence purposes. Australia should also manufacture its own aeroplanes. I realize that there are difficulties in the way, but honorable senators will agree that this island continent, with a coastline of 12,000 miles and a population of less than 7,000,000, needs, as its first line of defence, a sufficient number of fighting aeroplanes, first to locate an attacking force, and then to prevent transports from landing troops on Australian soil. Some honorable senators may contend that aeroplanes cannot be constructed in Australia. I understand that orders lodged in Great Britain by the Defence Department for bombing machines which are urgently required, cannot be delivered within the specified time owing to the disturbed European situation. British factories are working day and night making aeroplanes to supply the pressing needs of the British Government. If Britain is not able to supply the Australian requirements, the Government should make every possible effort to have the machines constructed within the Commonwealth. If this cannot be done, then, until we can construct them, or until we can secure our requirements from Britain, why should we not buy from a customer country like Germany? ‘I propose now to deal briefly with trade treaties-. The ‘Commonwealth Government, in addition to - implementing the Ottawa agreement; which has been of enormous advantage to Australia, has negotiated satisfactory trade treaties with Belgium and New Zealand. The treaty with Belgium was long overdue; honorable senators will remember that the Commonwealth Government was so foolish as to put an embargo on glass from Belgium, which previously had purchased considerable quantities of Australian wool, meat, and barley. I favour the extension of reciprocal trade with our sister dominion, New Zealand ; there remains some lines which have not been satisfactorily adjusted. The more the two dominions co-operate and trade with one another, the better it will be for them and the British Empire.
Japan has been a good friend to, and customer of, Australia; but the negotiation of an agreement between the two countries must of necessity be very difficult, especially in regard to the entry of portion of the huge Japanese output of rayon and competitive woollen textiles; these materials are produced under most efficient working conditions, but with hours of labour and scales of wages which would never bo tolerated in this country. For those reasons it is most difficult to negotiate a satisfactory trade agreement with Japan; but whatever we do, we must bear in mind that Japan is our second best customer for wool. This year alone it bought 700,000 bales, and is expected’ in the near future to increase that purchase “to 1,000,000 bales. Japan also buys large quantities of Australian wheat. In. those circumstances I admit that it is not easy for any Minister to negotiate a trade treaty with that country. Some years ago Germany was Australia’s second best customer for wool; to-day, to all intents and purposes, it is a dead market. The reason is to be found in the fact that it cannot establish credits in Australia, because we are not buying German goods. Every year Australia has an adverse trade balance of £8,000,000 to £10,000,000 with the United States of America, and unless a satisfactory trade agreement can be negotiated with that country, some of the present trade should be swung over to customer countries. The
United States of Ameria is a great democracy of English-speaking people with whom we should be on the most friendly terms ; I would regret any action by Australia which might jeopardize that friendship, and I suggest that we must strain every nerve to negotiate a satisfactory trade agreement with it. If the United States of America is unwilling to negotiate and we are unable to bridge the huge gap in our trading with Germany and Japan, I suggest that some of the trade which now we give to the United States of America should be given to the countries which buy from Australia. I have always adhered rigidly to the policy of first preference to Australia in all things; secondly, preference to Great Britain ; and, thirdly, preference to countries which buy from us.
– Could the honorable senator persuade the Government to exchange Australian wool for German aeroplanes ?
– I see no objection to that proposal. German motor cars and aeroplanes are soundly constructed. As Australia stands in urgent need of bombing machines for purposes of defence, I consider that it would not be detrimental to British or Empire interests if the Commonwealth arranged an exchange on the barter system, as South Africa did, with Germany and with Japan in respect of commodities which Great Britain cannot supply and which cannot be made in Australia.
I urge upon the Government the necessity for legislation to ensure that the component parts of various goods are truthfully described. An Australian manufacturer is compelled to set out the proportions of wool, cotton and other materials which might be included in a garment; the law applying to foodstuffs is also very strict; but evidently these precautions are not taken with regard to imported materials. I found that some garments purchased by a friend from a leading Melbourne emporium were not made of wool, but of the German material “ woolstra “. Yet no label was attached to them to indicate that fact, and the average purchaser would not be able to discern the difference. I admit that the country of origin was set out, as demanded by the law, but there was nothing to show the composition of those garments. In ray opinion the Government might well legislate to ensure that a truthful description of the component parts of materials, particularly clothing and commodities, is shown.
I was elected to the Senate to support this Government and advocate my policy of adequate protection for economically sound and efficient industries. The Tariff Board is composed of Australian protectionists, who are appointed to hear and sift evidence for the imposition of duties; they supply their reports to the Parliament, and I consider that this body must be better informed about the details of various industries than any honorable member can possibly hope to be. Therefore, honorable senators should surely be guided by the reports of those experts in regard to the amount of duty, if any, which may be necessary under the present, exchange conditions. The exchange not only gives a natural protection to manufacturers, of 25 per cent., but also is beneficial to the primary producers. I am determined to support the Government, whom I was elected to sUpport and, naturally, in regard to any details as to the amount of duty that should be imposed on various items I bow to the superior knowledge of the expert and unbiased board. I emphasize that I believe in the adequate protection of secondary industries within the Commonwealth, the development of which I shall continue to support.
.- I should not have taken part in this debate if doubt had not been expressed yesterday by one honorable senator that the Ottawa agreement had been of any real benefit to Australia. No propaganda to the contrary will convince me that that agreement has not been of immense advantage to us. I go about the country districts of Victoria a great deal, and have the opportunity to obtain first-hand information of the effect of the agreement upon the man on the land. I meet many small farmers who, with their wives and children, have, in so many instances, worked like galley slaves to make ends meet, and I knowthat the preferences given to Australia in the British market under that agreement, with the possibility of an extension of
Empire markets, lias given these men new hope and a much brighter outlook. On Monday last, I visited the Bed Cliffs dried fruits settlement in Victoria, and met a number of small block-holders. A few years ago this settlement was in a flourishing state, because of the abnormally high prices then ruling for dried fruits. Then came the depression with the downward trend of prices. At that time the outlook for those engaged in the industry was not at all bright, but the Ottawa agreement saved them, and, instead of being forced to abandon their holdings, they were able to carry on, and, as the result of the preferences given to primary producers in Empire markets, many of them are again on a sound footing. Despite certain imperfections inseparable from such a big experimental Empire negotiation, the agreement has lifted Australia from seventh to second place amongst the countries exporting to Great Britain - second only to the United States of America with twenty times our population. This gratifying result should convince all critics of the Ottawa agreement that their opposition to it is not justified. As a direct result of the provision for the imposition of foreign duties, embodied in the agreement, many overseas enterprises have been established in Australia, principally in Melbourne and Sydney, and are now giving employment to hundreds of Australian workmen. The latest addition is an American hosiery factory at Essendon, established at. a cost of approximately £30,000, and giving employment to nearly 200 Australian workers. I, like Senator Guthrie, am a protectionist, with, I hope, an unbiased outlook. Senator Guthrie this afternoon mentioned that unemployment in Australia had fallen to 13 per cent., and that the employment of 459,000 registered trade unionists in Australian factories was the highest on record. That is most gratifying, but there is yet much to be done. There is still much unemployment. A few weeks ago a Melbourne citizen advertised for a gardener and caretaker - a one-man job - and no fewer than 500 men presented themselves at his home early in the forenoon. Many of them were young or middle-aged able-bodied men, who, it is to be regretted, have so far not been able to secure regular employment, because the development of modern machinery has eliminated the man-power from so many of our factories. J. hope that the Government will proceed with its negotiations for an inquiry into the 40- hour working week. I do not suggest that this will be a solution of our present difficulties, but I feel sure that if our friends in Opposition in this chamber will use their influence to induce the Trades Hall authorities to appoint representatives on the proposed inquiry, valuable evidence will be tendered, and the public will have the advantage of knowing the arguments from both sides. I shall reserve any further remarks, which I may have to make, until we reach the committee stage of the bill.
– I should not have risen to speak this afternoon but for the fact that when the bill is in committee I shall be in the chair and unable to express my views on tariff policy. Of all debates, those relating to the tariff are the most futile and, perhaps, the most monotonous. I have been a member of the Senate for about ten years. During the whole of that time [ have not heard any member of this chamber break fresh ground with regard to tariff matters, or enunciate opinions that are new. A debate on the tariff reminds me of the title of the popular comedy, “ Aren’t We All ?” Whenever any member of this chamber or the House of Representatives refers to his protectionist leanings or his fiscal beliefs, we would be wise to take what he says with a grain of salt, because however sound a man may appear to be in theory, either as a freetrader or protectionist, I am afraid that he is deceiving himself. For any honorable senator to declare his fiscal belief dogmatically is, to say the least, a trifle risky. Later his positiveness may be somewhat embarrassing, because every member of this Parliament is elected to safeguard the interests of his constituents and not infrequently tariff duties on particular items, by reason of their effect on his constituents, influence his views and vote.
Having thus cleared the ground, I purpose touching briefly upon the position of an Australian key industry - that of the manufacture of cement. For n number of reasons this is a most important key industry as we should discover if, unfortunately, this country were embroiled in war. As some of us know only too well, if in wartime we were dependent on supplies of . cement from outside, Australia, would be in a very serious position. I am afraid that, on this subject of cement duties, I am a geographical protectionist. I think the same may be said of nearlyall senators in respect of particular tariff items. This is only natural, because, as I have stated, we represent different constituencies in our respective States, and any action that is likely to injure the interests of those who send us here pur-, us on the qui vive to protect them.
The establishment of the cement industry in Tasmania has been difficult and, for those who invested their money in it, an unfortunate experience. I well remember the flotation in 1920, of a company with a capital of £600,000 to exploit the limestone deposits on Maria Island, off the east coast of Tasmania. The venture ended in absolute disaster. It was sponsored by a famous Australian soldier and engineer, the late Sir John Monash, who later left the board of directors to become chairman of the Victorian Electricity Commission. A considerable number of Tasmanian civilians, myself included, invested money in the proposal. The bulk of my deferred pay - I had recently returned from the war - absolutely vanished in the undertaking. I mention this because of the recent hostile criticism of the Australian cement companies which have been charged with profiteering and amassing colossal- profits. Following the failure of the scheme to develop the limestone deposits on Maria Island, there was a proposal to work the shale oil deposits in conjunction with the limestone deposits, the idea being to use shale oil as fuel for the manufacture of cement and also to extract oil from the shale. It was to be a big combined venture - shale oil and cement. Unhappily thu company lost about one-third of its capital. I wa3 not until Dorman, Long and Company commenced construction of the Sydney Harbor bridge that another attempt was made to work the limestone deposits in .Tasmania. Dorman, Long and Company became interested in the’ project, hut the company had to struggle against great difficulties, and for many years the ordinary shareholders were on the “ outer.” It is only in recent years that the company has been able to show a profit and give to shareholders some return on their investment.
– Why did Dorman, Long and Company come into the matter ?
– Because they wished to be assured of supplies, and to have some voice in fixing the price. They did not wish to be embarrassed for supplies while engaged on such a gigantic undertaking. The adoption of the recommendations of the Tariff Board will mean that British cement will be imported .into Australia duty free, thus threatening the continuance of the Tasmanian cement manufacturing industry. The admission of British cement free of duty would seriously affect the Tasmanian company, because, owing to the relatively small market for cement in Tasmania, SO per cent, of its output has to be disposed of principally in Victoria and in Queensland. The amendment carried in the House of Representatives which provides for a duty of 6d. per cwt., a 50 per cent, reduction of the existing duty of ls. per cwt., actually amounts to only 4$d. per cwt. when allowance is made for exchange adjustment, and is the absolute minimum of protection which should apply to the industry. I do not wish the Australian cement-making industry to be left totally unprotected by allowing British cement to be landed in Australia free of duty. I have always been a “ barr acker “ for the Tariff Board, because I am convinced that the members of this Parliament have insufficient time to make the exhaustive, inquiries that are made by the board into the rates of duty imposed on the numerous items in the schedule. That responsibility has been deputed to the Tariff Board, which, I am afraid, owing to overwork and the hurried manner in which it has to do its job, cannot always do justice to the investigations entrusted to it. I have read both reports of the Tariff Board on this subject, which are excellent, theoretically, but from a practical standpoint are defective. I do not think that the cement companies in Australia can oper ate successfully on the figures, set out in the board’s reports. For instance, the board states that the reasonable selling price at factories should be : Queensland, £2 18s. 2d. a ton; New South Wales!, £2 16s. od.; Victoria, £3 0s. 2d.; South Australia, £3 0s. 2d.; and Tasmania, £2 16s. 5d. It then gives the prices at which it considers Australian cement should be sold in the capital cities, and also the landed cost of imported cement. The reasonable maximum selling prices are estimated by the board as Brisbane. £3 3s. 10d.; Sydney, £3 16s. 3d.; Mel: bourne, £3 Ss. 7d.; Adelaide, £3 8s. 2d.; and Hobart, £3 10s. lOd. The board also sets out the duty-free landed cost of imported cement on the c.i.f. price of 51s. 6d. a ton. which is : Brisbane. £3 lis. 8d.; Sydney, £3 10s. 3d.; Mel: bourne, £3 lis. lOd. ; Adelaide, £3 lis. 10d.; and Hobart, £3 lis. 2d. These figures show the margin between the prices at which the board considers cement should . be sold in capital cities, and the duty-free landed cost of imported cement. It will be noted that the selling price of locally manufactured cement stated by the board is merely the works selling price, plus the freight to capital cities. It overlooks the various agency and merchants’ charges, which are inevitable in connexion with distribution. Distribution is a. big problem, as we in Tasmania know to our cost. Importers can always short circuit such charges by selling on an indent basis, and; if forced into such competition, the returns to the Tasmanian manufacturers would be reduced much below the figure allowed by the Tariff Board, thus making profitable production impossible. Quite apart from these aspects, the allowance of 10s. a ton mentioned by the board is entirely inadequate when it is realized tha* that amount has to cover taxation, depreciation of plant, building up reserves, and contingencies. As the Tasmanian company has to ship to the mainland approximately 80 per cent, of its production,” it has received no consideration whatever. The inference from the board’s report is that the Tasmanian cement manufacturers should confine their activities to that State, because, on the board’s own figures, the markets on the mainland would be quite beyond their reach. The Tasmanian industry, which has an output of about 60,000 tons annually, cannot possibly carry on if it is lo be limited to the local market. Recently a member of this Parliament said to me, “ Surely you are not going lo hold up the whole of Australia to high prices for cement because there is a tu’penny ha’penny cement show in Tasmania. It would be better if the industry in that State went out of business “. lt is easy for a representative of a mainland State to make such an observation, but the township of Railton depends almost entirely upon the operations of this company. If British cement is imported duty free, the works will have to close down and a large number of highlyskilled men will be thrown out of employment. What is to be done with them ? Are they to go on the dole? Moreover, Devonport would also be seriously affected, as practically every interstate vessel leaving that port takes from 200 to 400 tons of cement. From 100 to 150 tons weekly is shipped .to Brisbane, Mackay, Townsville, and Cairns. The freight on 1 ton of cement from. Tasmania to Queensland is much higher than it is on a similar quantity from Great Britain to Australia. Although cement manufacturers have been accused of profiteering, there has been a steady fall in prices during the last twelve years. Cement which was once £6 10s. a ton is now a little over £4 a ton. Even during the last few months the Tasmanian company has reduced its price by from 5s. to 10s. a ton, and that on the basis of last year’s production represents about £15,000. These reductions, however, are insufficient to allow the Australian product to compete with imported cement. If the British product is to be admitted free of duty, the Tasmanian industry will be seriously threatened. Yesterday Senator Foll referred to a circular issued by the Tariff Reform Committer of the Sydney Chamber of Commerce. I received a copy of the circular, and I do not think we .can object to its contents, because the representatives of various interests are entitled to be heard. I asked a representative of the cement manufacturers to let me have some comments on the points set out in this semi-official document issued in Sydney. I have nothing to say concerning the portion that is said to contain threats, because members of this Parliament are accustomed to threats and consequently are not likely to be intimidated in any way. The replies read -
Page 1, paragraph 2. - The duty on cement (British preferential) before the 29th November was not I/is. ; it was 10s. M. Even the Minister for Customs has continually referred to it as 15s., but the formula; for exchange is one-fourth of the duty, or 12½ per cent, of the “value for duty”, whichever is the less. In the case of £1 duty, the latter operated and reduced it to His. 9d.; now that the duty has been reduced to 10s. per ton, the former operates and reduces it to 7s. Od. per ton, so the manufacturers have lost 0s. 3d. per ton.
Page 1, paragraphs 3, 4 and 5. - The writer of the circular has evidently not studied the secund report of the Tariff Board, which showed that the 70s. 3d. on trucks Darling Harbour, Sydney, would certainly not leave New South Wales manufacturers 10s. per ton, as the cost of landing English cement was 70s. 3d. per ton, so the New South Wales companies would only have a return of 3s. 10d., out of which taxation, reserves, &c, have to lie provided. Further, the freight of 14s. 8d. to Darling Harbour is comparatively not low, as the works to which this freight applies is not situated at the quarries, and they have to luina; their raw materials (of which they consume 1½ tons to every ton of cement) a distance cf some 30 odd miles. Had the works been erected at the quarries, the freight would have been between 18s. and 10s.
Page 2, paragraph 3. - The British manufacturers were invited to give evidence, but declined; they were also invited to produce their costs, and declined. There is no comparison between the costs of making cement in Britain and in Australia. It is the one industry in which the United Kingdom stands supreme owing to her having raw materials of a very soft nature located on the se;iboard, whereas the Australian article i3 made from a hard crystalline material requiring nearly double the plant and involving heavy freight charges for transport to the coast. However, as the British manufacturers did not give any evidence of their costs it is pure assumption for the writer of the circular to say Hint the 23s. Od. (sterling) f.o.b. England includes all costs and profits. The facts are that England sells for home consumption at 38s., and has been selling for export below 20s. If the writer were correct in saying that all overhead. &.C., and profit were included in the 23s. 6d. as England made about 5.000,000 tons last year her profit must have been nearly £1 per ton or between £4,000,000 and £5,000,000, which of course is absurd. The important thing is that England has a market for over 4,000,000 tons on her own kingdom and this can hear all the overhead, and, like nearly every country in the world, she can afford to sell her excess for export without any overhead loading. There is nothing new in this system of marketing, and, us is well known, Use same is done by Australia with butter, sugar, and other commodities.
Page 2, paragraph 4. - The Australian manufacturer has not taken advantage of the tarriff to force up prices. Evidence was given before the board that one of the leading: companies in New South Wales, and also the only other company in existence in 1921, reduced the price of cement by 13s. per ton in one instance, and by 21s. per ton in the other case, between 1921 and 1931, and this reduction in prices has been made practically each year up to the time of the depression (1931). For the past three years, owing to the considerable slump in trade, it was not possible to make further reductions,but in1936 a reduction was made of as. per ton, and since then of a further 2s.6d. per ton.
It can quite safely bo said that no other building material in Australia has shown such a marked full in price.
Regarding “over-capitalization”, the figures given to the board were based on the depreciated value of the plant as certified to by leading city accountants, and, actually, the works cost considerably more than the figures given to the board. Production of cement is in “units” and although with the introduction of the rotary kiln in 1900 a “unit” would be 10.000 tons a year, kilns are now so large that no works would install one under 80,000 tons per annum. In fact kilns are being made in some parts of the world which will give double this output.
In conclusion, some of the remarks referred to in the circular were extracted from the board’s first report, when the board estimated the cost of landing English cement at 70s. 3d. per ton. as they would not accept the evidence of the manufacturers that cement could be landed (is. cheaper than this. However, they had ample evidence before them when they dealt with the matter on the second occasion, and, instead of saying that the companies could make reasonable profits at the cost of landing English cement, the board, in conclusion, stated that they “ do not suggest that every cement manufacturer can make a reasonable profit by felling at import parity.” The board did not inspect any works: had they done sowe think their report would have been on a different basis as they would have appreciated the difficulties of the Australian manufacturer as compared with the English. Admittedly, some of the works did well in the “boom years “. but it must not be overlooked that one company (the National) after many years of struggling went into liquidation and was sold for a pittance and the machinery dispersed: the predecessor of the Goliath Company was the Tasmania Company, which also failed, and was reconstructed under its. present style. The Goliath Company had to write off one-third of its capital last year. The Western Australian Company was the successor to a works which failed. The newest New South Wales company, operating since 1929, has never paid a dividend. The truth of the matter is that the older companies, when making good profits, put these back into plant improve ments and have only paid moderate dividends. This is the only way any industry can succeed. It must not be overlooked that the board fixed 10s. per ton (equal to 10 per cent, gross, and 8 per cent, after paying taxation) as the maximum profit to be made on the maximum output and distinctly said that if manufacturers did not reach their maximum they should not make more than 10s. per ton. As the same overhead would apply, the 8 per cent, net would be reduced more than correspondingly with the reduction in output.
At present, as senators are aware. Australian companies are working on about60 per cent, of their maximum output.
Last: night Senator McLeay stressed the importance of encouraging new efficient industries as one means of rectifying our adverse trade balances with certain countries. Would any one be encouraged to run the risk of establishing new industries in this country when the maximum profit allowed by the Tariff Board, as in the case of cement companies, is 10 per cent, gross or, after taxation has been provided for,8 per cent, net? What new industry would be likely to start under those conditions? From the barrage of “ pros “ and “ cons “ on this subject, which, a little while ago, did not loom so important as it appears to-day, several new factors have emerged. For instance, we have been informed officially that the Deputy Prime Minister (Dr. Earle Page) and the AttorneyGeneral (Mr. Menzies) are being seriously embarrassed in the trade negotiations which they are now conducting in London, by the refusal of the House of Representatives to . leave Australian cement entirely unprotected against British competition. That may be the position, but I, for one, doubt very much the truth of that statement.
– It is just a racket.
– I think it is a bogy; it may be bluff. However,I would not like to think that any government ‘ would try to bluff its supporters. On tariff matters honorable senators are supposed to enjoy the privilege of voting according to their individual judgment. That may be so in theory, but is it so in actual practice? I have grave doubts about it. The Government has got out the whip ; in fact, whips of various kinds are being wielded. Some of them are not very effective, but any old stick will do to beat the dog on occasions. We have been told, and I do not doubt it, that the Government has received a communication from the British Government expressing the view that the decision of the House of Representatives in respect of the duty on cement constitutes a breach of the Ottawa agreement. The Commonwealth Government concurs in that view. I do not say for one moment that this Government asked the British Government to make such a protest, but I submit that the discussion, which took place in the House of Representatives was an invitation to the Government of the United Kingdom to make its protest. Any one who reads the Hansard report of that debate will agree with my statement. In this instance the Parliament of Australia is being charged - and I say unjustifiably - with breaking a treaty. There are merits in the case for some protection on cement, and it is the right of Parliament to amend or impose new tariff duties as it thinks fit. In this matter the Government is sheltering behind’ the Tariff Board, but in doing so it is acting inconsistently, because, when it does not agree with a recommendation of the board, it simply says that the board is in error, whilst, on the other hand, when it favours a reduction of any particular duty as recommended by the Tariff Board, it immediately accepts the board’s word as infallible and its reports as divinely inspired. Members of the Tariff Board, are not infallible; they are simply human beings who, to the best of their ability, deal with the evidence put before them. The board is absolutely free and independent, and carries out its work according to its lights. The proposal to adopt the recommendation of the board to make the duty on cement - British, free; intermediate, ls. a ton; general, ls. 4-Jd. a ton - is far too drastic. On examination, many of the charges of profiteering which have been made against Australian cement companies will bc found to be most extravagant. Those who voice such charges apparently ignore the initial losses suffered by these companies in launching this comparatively new industry. In pioneering this industry some of these companies suffered colossal losses, and had to pass through a long and trying period, as was the case with the Tasmanian company, before they showed a profit. We should be proud of the pluck and perseverance of those who established and maintained the various enterprises, in spite of the difficulties which confronted them until comparatively recently, when the lifting of the depression enabled them to reap some reward for their earlier efforts. I suggest that the compromise duty of 6d. a ton on’ British cement, as was decided upon in the House of Representatives, is fair and should be accepted by honorable senators. Parliament has to decide, whether it is to be the supreme governing authority, or whether it is to ‘ be merely a creature of its own creation - the Tariff Board. It is for Parliament to decide, and Parliament will no doubt do so. This morning I was told that Australia’s national honour is involved in this matter, and I was appealed to, presumably as a man of honour. But is our national honour involved ? I say emphatically that it is not. At the time of the Ottawa Conference the duty on cement was ls. per cwt. With slight fluctuations, that had been the rate for about .20 years. The House of Representatives proposes to make the duty on cement imported from Britain 6d. per cwt.- a reduction of 50 per cent. That proposal is denounced, in extravagant language, as illegal and immoral. As to its legality, I cannot offer an authoritative opinion, because I am not a lawyer. I have, however, read the opinions of counsel, and as far as a layman can understand, the views expressed by eminent counsel and others, it appears to me that the proposal is not illegal. The letter of the agreement has not been broken. But it is a poor look out if we have to depend on the letter of an agreement. We are told that we must remember the spirit of the agreement - the “ spirit of Ottawa “ must be kept sacred. When all is said and done, what was the spirit of Ottawa? John Bull was there with his sons in an endeavour to enter into a trade agreement. The spirit of Ottawa was the spirit of bargaining. Australia wanted something; John Bull wanted something; the other dominions wanted something. I do not say that the spirit of Ottawa was one of huckstering or haggling, but it was a spirit of bargaining.
– Mutual advantage.
– That is the sort of term that a lawyer would use; it sounds good, and takes a lot of interpreting. I can imagine the representatives at Ottawa arguing about “ mutual advantage “. They went to Ottawa to bargain. [ know something about bargaining, for, on the many occasions on which I have gone into country districts to buy timber, I have always endeavoured to make the best bargain I could for those whom [ represented. The other fellow did the same. This is a commercial age ; the proposals discussed at Ottawa were business proposals. It is all very well to talk about sentiment - the “ spirit of Ottawa “ - but, after all, the whole conference was a bargain hunt. One delegate said to another : “ You give us so much and we will give you such and such.”. “Who really knows what was said at Ottawa? Those who were there have not told us anything about the discussions. All we know is that an agreement was entered into, and that this Parliament accepted it.
I apologize to the Senate for having talked at such length on the spirit of Ottawa, but the duties on cement are a matter of concern to me and to my State. I know the business almost inside out, and am to some extent interested in every ton of cement that is shipped from Devonport. I should like to know what there was in the spirit of Ottawa that was different from what I have tried to outline this afternoon. I should not be surprised if my friend for over twenty years, the Minister directing negotiations for trade treaties (Sir Henry Gullett), would himself experience difficulty in defining the spirit of Ottawa. I content myself by saying that it was a bargaining match. To suggest that it was anything else is to insult our intelligence, to put it mildly.
The House of Representatives now proposes to make the duty on cement imported from Britain 6d. per cwt. Par from that proposal being illegal and immoral, it is sound commonsense and a fair compromise. I shall not be a party to throwing an efficient key industry to the importing wolves, and, therefore, I shall support the duty agreed to by the House of Representatives.
.- Senator Sampson said that he did not want to see the cement industry stripped naked. I remind him that many industries are more healthy in the nude than when clothed in tariff garments. In its report for 1935, the Tariff Board, after ref erring to the number of items the duties on which had been reduced, stated -
The foregoing review shows clearly how important have been the reductions of duties on goods entitled, to admission under the British preferential tariff. In a number of cases the rates have been reduced by half and generally the new level of ad val. duties ranges from 10 per cent, to 25 per cent. Moreover, as has been shown, a great deal of important plant used in Australian secondary industries, which was formerly dutiable, is now admitted free of duty.
It is gratifying to be able to record that this realignment of the tariff levels has been secured with but slight disturbance of local industries. Generally, the effect has been beneficial, although individual manufacturers have been forced to adjust to the new level. When important tariff reductions are made, it is inevitable that some interests should be forced to curtail the range of their operations and that others should be compelled to reduce prices in order to meet the lower price level of imported goods, The interests of the individual and of the community are not always in common and the board is aware that frequently the adoption of its recommendations may restrict the activities of individual manufacturers to the advantage of the community as a. whole.
Whenever reference is made to a reduction of duties, we hear a woeful tale of disruption, unemployment, empty factories and ruined shareholders. But can any honorable senator give an instance of a reduction of duties having had those dire results? As the Tariff Board, has said, industries have adjusted themselves to the altered conditions. In tariff matters the Scullin Government had only one eye; it saw only the Australian manufacturer, and ignored Australia’s great primary industries. In this discussion no one seems to have considered the interests of the consumers.
– Are not the manufacturers and their employees also consumers ?
– The Scullin Government placed embargoes on the importation of a number of goods which previously entered this country.
– The honorable senator knows that that was necessary in order to save Australia from bankruptcy.
– The Tariff Board, which was appointed by a protectionist government to carry out a protectionist policy, views the matters referred to it from the standpoint of a protectionist. The Scullin Government referred many items to the Tariff Board for consideration, but it did not give much heed to the recommendations of that expert body. As a matter of fact, in some instances in which manufacturers asked for a duty of 40 per cent., that government said : “ Forty per cent, is no good to you ; you want 50 per cent.” It frequently gave more protection than was sought. The duties imposed by the Scullin Government were so high that they led to inefficiency in industry and unemployment. Senator Leckie has told us that the manufacturers of this country do not stand for high duties. It appears to be a matter of degree. Every honorable senator who has spoken in this debate has styled himself a protectionist, but the protectionists have not seen eye to eye; some want 10 per cent, protection, others 50 per cent., whilst the Opposition would have 100 per cent., or more. I ask honorable senators to remember that practically all the manufactures of this country were established under that lower tariff of 1928. Profits were made and reserves built up under it, without any benefit to Australian manufacturers from exchange or primage. The opportunities for profit increased when the duties were raised. Senator Guthrie and others have urged that the balance of our requirements should be manufactured in Australia. They ask why British manufacturers do not come here and establish factories, thereby making it unnecessary to import goods. It may not be generally known that already Australia manufactures four-fifths of its requirements. If factories to supply the remaining one-fifth were established, the population of this country would not be materially increased. Our only hope is in the expansion of our primary industries side by side with the growth of our secondary industries. That leads me to consider the Ottawa agreement. Unfortunately, Senator Leckie stated that the benefits of the agreement were greatly exaggerated. I am afraid that, since he left the country and went to the city, he has got out of touch with the sentiments of the primary producers. The Ottawa agreement has been of vast importance to them; it gave them a market at a time when no market could possibly be available to them otherwise.
– Great Britain had always purchased those commodities, even before the agreement was made.
– That may be true ; but to-day the position has altered, and quotas have been introduced for beef and mutton. Already we are supplying the full quota of beef. If our production of this commodity increases, we shall not be able to export it, and we certainly shall not be able to eat it.
– We can still export lambs.
– I remind the honorable senator- that an export quota exists even for lambs; this year it is lower than hitherto, but we are not yet supplying the full quota. It is quite possible that ultimately we shall be wanting to export 10,000,000 carcasses of lamb as compared with only 4,000,000 carcasses to-day; and Britain will not be able to take that number unless it excludes all Argentina lamb. Will Great Britain be prepared to do that? That will depend on the spirit of the Ottawa agreement, to which Senator Sampson took exception.
– Can Great Britain afford to exclude all Argentina meat?
– That is the point. If Argentina is prevented from selling its produce on the British market, it will be unable to pay its interest on the money borrowed from British investors. In this respect it occupies much the same position as Australia. We are fast approaching the time when a quota will be imposed on the importation of lamb into Great Britain, and that will put a limit to the expansion of the lamb-export industry. Australia sells to Great Britain wheat, meat, and wool. The Mother Country is in a position to manufacture the wool and perhaps develop markets overseas for the finished article; but it can take no meat in excess of its domestic requirements. I remind honorable senators that Great Britain is also building up its rural population, and is giving its farmers the support to which they are entitled. Apart from Britain, no other country buys Australian lamb. In those circumstances, Australia is bound to carry out the spirit of the Ottawa agreement. Senator Sampson stated that the agreement was merely a matter of commercial bargaining. I disagree with that opinion. Australia, in return for concessions for its primary products on the British markets, agreed to give British manufacturers a reasonable opportunity of competing with industries in the Commonwealth. That could be done only by a reduction of duties. The Ottawa agreement incorporated a provision that the tariff should be reviewed by the Tariff Board. When the review had been completed, was the board’s recommendation not to be accepted? “Of course it was. In return for the concessions on the British market, a reduction of the tariff was- the only tangible concession that the Commonwealth could extend to Great Britain. I regret that Australia has not carried out that agreement in full. I desire greater opportunities for the. placing of Australian produce on the British market. There can be no expansion of exports without an expanded market, and there can be no expanded market unless Great Britain is prepared to exclude all importations from Denmark and Argentina. I have no doubt that some honorable senators have perused the agreement, which Great Britain has made ‘ with Denmark and Argentina. They contain provisions, which are laid down as definitely as this tariff schedule in regard to what each of the contracting parties shall do. The Anglo-Argentina agreement declares that, in return for purchasing so many million tons of articles from Britain, the Argentine shall have opportunity to sell certain quantities of beef and mutton on the British market. The agreement with Denmark is equally specific, and legally binding: It declares that Denmark shall buy so many million tons of coal, and so many hundred thousand tons of iron and steel in excess of its previous purchases from Britain, which, in turn, shall take additional quantities of primary produce. I emphasize that the only concession that the Commonwealth can offer
Great Britain is a reduced tariff to enable the manufacturers of the Old Country to compete on the Australian market.
At this juncture I do not propose U> make any extensive reference to the duties on cement. The cement industry is essential to Australia, but the Tariff Board considers that it may be more healthy if the protective duty on the British article is removed.
While the policy of the Government has been to accept the recommendations of the Tariff Board, I regret that, m some instances, that has not .been done. I refer specifically to farming machinery. I do not contend that Australia should permit the United States of America, to export farming implements to compete with Australian machinery, but I do consider that some consideration should be extended to Canada, a sister dominion. It has practically a monopoly of the manufacture of farming machinery throughout the world, and the industry there pays higher wages than are paid in Australia. It appears to me that something must be wrong with the Australian industry - either the profits are too great, or the costs of distribution are too high. The Tariff Board has recommended that the protective duty on imported farming machinery should be reduced; the Government has not accepted the recommendation. In my opinion, the Government should explain why it has taken that course. When the individual items of the tariff are under discussion, I may have something further to say in this connexion.
– This is my first opportunity since entering the Senate of listening to a debate on the important subject of the tariff. Honorable senators have approached the subject from different angles; the extremes of high duties and low duties have been propounded, and the middle course, which the Government is endeavouring to follow, has been advocated. I congratulate the Tariff Board upon the efficient reports that it has supplied to the Parliament. Many facts and figures have been quoted by both the high tariffists and the low tariffists, and many definite statements for and against the continuance of the Government’s policy have been made. I propose to deal with the tariff from a practical angle. The Ottawa agreement has frequently been mentioned in the debate. I have not had a training which would enable me to express a view on the legal effect of”t.bf agreement; therefore my interpretation of it shall be a practical one. According to Senator Dein, the agreement was intended to be carried out in the spirit, rather than in the letter, of the instrument, and he quoted a provision which, in effect, requires a downward revision of the tariff. To the mind of a layman there was something in what he said, but 1 was not entirely convinced. Submitting the agreement to the test which u business man would apply to a commercial agreement, I came to the conclusion that the action taken by the House of Representatives in regard to the duty on cement must be very embarrassing to the Ministers of this Government, who arccarrying out trade negotiations on the other side of the world. Senator Dein endeavoured to convince honorable senators that, in certain respects, Australia was observing the agreement in spirit m. well as in the letter. But I consider that he proved that the Commonwealth is taking one step when it should be taking two. From the practical standpoint, 1 am not in accord with his interpretation, and I propose to support the Government. I have perused many legal opinions on the Ottawa agreement, and I am aware that eminent counsel have stated that the action of the House of Representatives in restoring the cement duty did not constitute a breach of the agreement. I assume that these opinions were based upon an exact reading of the agreement. They may be correct, but if we a”re to be governed by the strict letter of the agreement, I remind honorable senators that other legal opinion has been given to the contrary.
Both Senator Johnston .and Senator Gibson referred to the duties on farm machinery. I regret that the Government was unable to accept in full the recommendation of the Tariff Board, but J understand that it had a reason for not doing so. If the duties had been varied, the principal benefi- ciaries would have been Canada and th, United States of America - the two countries with which Australia has adverse trade balances. The United States of America, which is not a member of the British commonwealth of nations, adopt-?’! a most unfavorable attitude towards Australia when approached for a trade agreement. I believe that this i** the reason why the Government has departed from the recommendation of the Tariff Board. As only a limited quantity of imported machinery is suitable to Australian conditions, and locally manufactured machines are far stronger, and stand up to the work more efficiently, a big importation of machinery might not have resulted even had’ the duties been lowered. Nevertheless, the maintenance of high duties on machinery might have a serious effect on industry and on the purchasing power of the people, by increasing the price of farm machinery and the “ cost of rural production. En my opinion, Senator Leckie did not fully appreciate the effect that high tariff exerts upon many of our primary industries. Australia still has to export about 70 per cent, of its primary commodities, and there is no prospect of this surplus being absorbed in Australia in the near future. It must be admitted that the export industries, both primary and secondary, give a great deal of ern.ployment, and any mishandling of the tariff will have serious consequences on every section of the community. Any advance in the cost of production immediately puts the exporters in a worse position to compete with other countries. I would not ask the Government to take any action which would prejudice *thu position of manufacturers of machinery at the same time we must not jeopardize the position of our primary producers, many of whom are still selling their com modities below the cost of production. Even if wheat in South Australia realized an average price of about 3s. 5d. a bushel, it would still be Id. a bushel below the cost of production. If farmers could purchase their agricultural machinery at lower prices and thus reduce their costs of production, the effect on the community, due to the increased spending power in the hands of primary producers, would be felt immediately. South Australia, as honorable senators know, is almost entirely a wheat-growing State, fu the ‘nineties it passed through a depression very similar to, and as acute as, that from which this country is now emerging. On that occasion the recovery of wheat-farmers was attributed largely to the use of artificial fertilizers, which revolutionized the farming practice in that State. So rapid was the recovery that within the short space of three years, instead of there being large numbers of unemployed throughout the State, it was difficult for farmers to secure the services of men to take off their crops. The recovery of the farming community was reflected almost immediately in the improved business outlook of manufacturers and all sections of the people. I do not suggest that we can expect the same results to-day, but I impress upon honorable senators that a prosperous farming community means prosperity for the country as a whole. If, for example, the 14,000 wheat-growers of South Australia were once more on a sound economic basis, it would be possible for every farmer to give employment to at least one individual of working age and thus relieve the unemployment situation in that State. Every farmer should be encouraged to keep his property in a good state of repair. Our industries, primary and secondary, must go hand in hand. We cannot expect Australia to be developed to its fullest extent if one section of industry is encouraged at the expense of another. This would lead to stagnation and failure. There is wisdom in the policy that encourages economic industries and exercises supervision over those that are not economic.
– Every Australian industry, when it started, was weak and needed encouragement.
– I admit the truth of the honorable senator’s interjection, but we now have to consider how long the community can afford to carry industries that are uneconomic. Some wheatfarmers I know in South Australia would be unable to carry on even if they received 9s. a bushel for their output.
– The honorable senator knows, surely, that the wheat commission said that about 25 per cent, of the wheat-farmers are inefficient in their methods.
– I agree that there are inefficient men in primary as well as in secondary industries, and I repeat that this country cannot carry them on indefinitely. This is one of the difficulties with which we are confronted and it is one which will have to be dealt with eventually.
– I shall not detain the Senate very long and my remarks will be general rather than particular. I had intended to say a few words in answer to some observations made by Senator Leckie, who yesterday told us that the Ottawa agreement had not been of material advantage to Australia, but as that point was dealt with adequately and admirably by Senator DuncanHughes and other honorable senators, I do not now purpose discussing it further. As the Ottawa agreement was subjected to so much criticism in this debate, one would have thought that its critics would have mentioned some particular injury which it had done to Australian industries. When Senator Leckie was descanting in this fashion yesterday, he ‘was invited by my leader (Senator Pearce) to give one instance of injury to an Australian industry under the agreement. That was not an unreasonable request, having in mind the language employed by Senator Leckie, but the honorable gentleman did not accept the invitation, and he did not cite one instance of injury following the application of the principles contained in any of the articles of the Ottawa agreement. The honorable senator had to content himself with a criticism in general terms, saying, in effect - “ Well, if we cannot point to a definite instance of harm having been done, at least, we can console ourselves with the reflection that if the agreement had not been made, we should have been better off than we are.” It is fitting, therefore, that I should say a word or two in answer to the enfilading to which we were subjected from some government supporters and a few words also in reply to the bombardment from Senator Collings and his colleagues opposite. The general criticism of the Government’s tariff policy took the line of “ what might have been “. Our critics did not attempt to deny the patent facts. They admitted, for instance, that there had been a general improvement of the conditions of Australian industry. This is evidenced in the rise of share values of manufacturing and commercial concerns, the decline of unemployment figures, the increase of factory employment, the tremendous increase of the value of factory output, the great increase of savings-bank deposits and the enormous increase of building permits in all our capital cities.
I do not suggest that the whole of the improvement of Australian conditions is due to the tariff policy of the Government. Some part of it is due to the recuperative powers of the people and the general improvement of world conditions. But I do say that as a Government, we are justified, following the example set by our critics, in replying in general terms, by suggesting what would have happened if they had been in power. Senator Leckie told us that he was elected to support the general policy of the Government. No unbiased person in Australia will deny that the mere fact that this Government has been in power has had much to do with the advancing prosperity of all sections of the people.
As might have been expected from our friends opposite, when a commonsense observation was made by, I think, Senator Guthrie about the effect on the people of the restoration of confidence in the Government, it was met with the usual sneer, Senator Brown remarking somewhat sarcastically that we were trotting out “ the same old confidence “. Need I remind the Senate that other citizens, besides Government supporters, realize that confidence is of some importance in the material progress of a country? The last number of that wellknown publication, Current Politics, contains an excellent article written by Mr. Aldrich, president of the Chase National Bank of New York, a financial institution with a world-wide reputation. I take from it the following: -
The first important factor in the current business revival is the lessening of fear. From the latesummer of 1933 to the slimmer of 1935 business was depressed far below the point which was justified by the existing economic facts. This situation was created, to a large extent, by fear. “Fear “, I suggest, may also be read as “want of confidence”.
This fear emanated from the plans and policies of the so-calledNew Deal. It was fear which existed not only in the minds of business men, and financiers, but was widespread throughout the population, that the very nature of our Government was about to be changed.
The Leader of the Opposition, so I understand, would change the nature of our government to-morrow if he had his way.
It was fear that we were to have imposed upon us a system in which edicts from Washington, promulgated on the initiative of the executive and representing the personal will of the President, would replace the system of laws of general and definite application, to which we had become accustomed.
The writer says that that fear was removed partly by the decision of the Supreme Court of the United States of America, with reference to the National Recovery Act and other drastic legislative proposals that had been passed, and partly because the people realized that the Souse of Representatives and the Senate of the United States of America were not going to accept tamely anything which the President liked to put before them.
– Has confidence been restored in the United States of America ?
– Not fully, but, according to the article which I have read, it has been restored in a very large measure. The people trust the Government, and know that it will not undertake revolutionary measures, and if it does there are constitutional limitations which prevent it from going too far.
I now wish to pass on from these general observations and to comment upon some of the remarks of Senator Leckie concerning the Tariff Board. I regret very much the expressions he used, and the only consolation I take from them is that inadvertently he used expressions which literally conveyed more than he intended. For instance, he said’ that the Tariff Board deliberately pursued a policy in favour of big business. In other words, its policy is to assist large industries and not necessarily to assist the small industries or to help Australia. I trust that what the honorable senator meant to convey was that the members of the board are pursuing a policy, not with a deliberate intention, which in his opinion has had that effect. He went on to say that, while he did not accuse the members of the board of bias, their practical knowledge of business affairs is positively childish. In answer to that I may point out that the experience in business of one member of the board is much greater than that of Senator Leckie. Another member has a wide knowledge of rural affairs, another is an engineer, and one member was for a long time an experienced officer of the Department of Trade and Customs. All the members of the board have now had a great deal of practical experience in the work on which they are engaged.
– No one denies that. We contend that the board has not the right to dictate the fiscal policy of this country.
– I intended to deal with that point later ; but, in answer to the honorable senator, I may say that the Tariff Board was appointed to check the scandal in political life of tariff logrolling. To-day the board stands higher in the estimation of the people, who know anything of it and its work, than it has ever done. Its judgment commands greater respect, and I venture to suggest that no person can say a word against its. disinterestedness, and the calm, patient and industrious way which it undertakes its work. The only persons who do not want such inquiries as are conducted by the board are those who favour silence rather than investigation. The Tariff Board is an integral part of the Ottawa agreement, but there have been complaints that its powers are greater than those of the Parliament which appointed it. But the powers which it enjoys are those which were granted to it; they have not been usurped. One way of exercising power, whether of an individual or an institution, is to confer it upon others. If we confer powers upon others we are not then entitled to complain. The time to complain is before the conferring takes place. I may own a house; I have complete lordship over it. I have the right to do what I like with it, including among other things, the leasing of it for a term of five years.
– The Assistant Minister could not do what he liked with it.
– Not in New South Wales.
– I am speaking of what can be done in civilized communities. I can lease a property I own for say five years.
– If it is insured he cannot set it on fire unless he wishes to go to gaol.
– If it is not insured, I can do what I like with it.
– I said if it were insured. We cannot do what we like to-day. The law prescribes what we shall and shall not do.
– My illustration will appeal to other honorable senators if not to the Leader of the Opposition. A. man who leases a house cannot complain if he is not allowed to wander over it during the period of the lease. We delegate powers in several respects. In the administration of the law, civil and criminal, we delegate power to the judiciary. Parliament could set aside every verdict obtained in a court of law, and annul every sentence passed by any court, but it does not do so. The whole administration of justice is carried out by the judiciary in its various branches. Parliament recognized that it was an unsuitable body to conduct the inquiries necessary for the proper carrying out of the criminal law, and, similarly, Parliament recognized that the imposition of customs duties was a matter which required the most searching inquiry. That is why the Tariff Board was established, and it has been doing the work upon which it has been making its investigation and reports prior to and since the adoption of the Ottawa agreement. Parliament has, to a certain extent, at any rate, but not entirely, acted upon the results of the painstaking inquiries which the Tariff Board has made, and which Parliament itself is not in a position to make. It has also been said that the Ottawa agreement is a bad agreement, and it seems to be argued that that affords some grounds for repudiating or renouncing it. That is not the question at all. The question is - have we made an agreement? Some honorable senators, including the Leader of the Opposi- tion, may remember that many years ago Max 0’Rell delivered a lecture entitled “ England, Ireland and Scotland “. When dealing with Scotland and the high character of the Scottish people he concluded by saying : “ Whenever you make a bargain with a Scotsman, you can always be sure of two things. The first is that it will be carried out to the letter, and the second is that you have the worst of the bargain”. Even if that were so, in this instance it would not be a valid reason why the agreement should not be honored. All honorable men will carry out an agreement into which they have entered, even if they realize that they have received the worst of the deal.
– We should get out of it. It is not an Australian trait to go on with a thing when we know that we have been “ taken down “.
– Does the Leader of the Opposition mean that if we are gettting the worst of a deal into which we have deliberately entered we should get out of it?
– In this case, as soon as we can.
– Does he suggest that we can renounce an obligation entered into ? If he wishes to convey the idea that we are entitled to dishonour the agreement, regardless of our obligations, he is counselling loose conduct in our public engagements.
– Canada has got out of it, New Zealand will not have anything to do with it, and South Africa is dubious over it.
– Australia need not have anything to do with the agreement after it expires. The time to consider, our future attitude to it will be when the agreement expires next year. We are not speaking of what can happen next year, .but what is likely to happen within the next few days in respect of the duty on a particular commodity. Criticism has been levelled largely against articles 9 to 12 of the Ottawa agreement.
– The Assistant Minister is not inferring that Australia has had the worst of the bargain?
– No. I am glad to be reminded of that. I said at the outset that I proposed to deal with the point raised by Senator Leckie, that Aus tralia derived no benefit from the agreement, but that that aspect had been adequately dealt with by Senator Duncan-Hughes and other honorable senators. I am one of those who think that we are obtaining very marked, distinct and demonstrable advantages under the agreement. The main criticism has been directed against articles 9 to 12, but I would remind honorable senators that the agreement does not commence at article 9. Like other contracts entered into it is usual to have a quid pro quo ; but there are certain members of this Parliament who are quite willing to take the quid, but unwilling to give the quo. Their criticisms commence at article 9 and they leave out of consideration altogether articles 1, 2, 3 and 4, which give definite concessions to the Commonwealth. That point was dealt with by Senator DuncanHughes and Senator Gibson. I direct the attention of those who think that we have surrendered, in what they term a somewhat degraded way, some of our powers, to what the British Parliament has done under article 4 of the agreement, which reads -
His Majesty’s Government in the United Kingdom undertake that the general ad valorem duty of ten per cent, imposed by section 1 of the Import Duties Act 1932, on the foreign goods specified in schedule D shall not be reduced except with the consent of His Majesty’s Government in the Commonwealth of Australia.
The British Government definitely and precisely says that it undertakes that it will not reduce below 10 per cent. the. duties on the list of commodities set out in the schedule without the consent of the Commonwealth Government. From the point of view of the critics of this agreement there is nothing in it quite so degrading to Australia as article 4 is to the government of the United Kingdom. But the British House of Commons is not likely to degrade itself.
The next question is, what are our obligations under the Ottawa agreement? We must bear in mind, first of all, that they are not legal obligations, that the agreement as a whole is not justiciable - that is, it is not triable in any court. If it is broken, the persons who commit the breach cannot be brought to justice in any court. However, that is not to say that there are no sanctions - to use a word which has lately come into general use - to the agreement. There are. If Australia enters into an agreement and then breaks it, it degrades itself in the eyes of the peoples of the world. Of course, some people contend that they did not enter into this agreement, that they had no part in it; that they belong to a new generation; or they advance other such contentions. 1 recall that the Leader of the Opposition (Senator Collings), at the time the Ottawa agreement was being considered by this Parliament, said that he did not consent to it, because he had not been consulted about it. I point out that a country can speak only through its government.
– I said that Parliament was not consulted.
– Parliament was consulted. We adopted the only course possible; we sent delegates accredited by Parliament to the Ottawa Conference; Parliament could not go to Ottawa. The agreement entered into by its delegates was brought before both Houses of Parliament and was ratified, article by article, although Parliament then had the power to reject it, if it so desired.
– But Parliament could not amend the agreement.
– No, because Parliament itself did not enter into it.
– That shows that we, as members of Parliament, were not consulted-; we did not see this agreement until it was brought before Parliament.
– The position is as clear as daylight, although it has been the cause of a good deal of agitation during the last three years. An agreement is entered into between people on the spot, and, whether it is between individuals, governments, or nations, nobody, except one of infantile mentality, could contend that a third party can come in and alter that agreement. The agreement can be rejected or accepted as awhole, but to alter it is to make other people say something which they did not, and really could not. say. Thus, the point raised by the Leader of the Opposition has nothing whatever to do with the Ottawa agreement, because Parliament either had to accept the agreement as a whole or reject it as a whole. Both Houses considered it, and, bearing in mind that the agreement had a currency of five years - a very short time in the life of a nation - accepted it.
What are the obligations imposed upon Australia by the Ottawa agreement? I raise this question in connexion with the duty on cement, although, in doing so, I do not suggest that any individual, or any legislative body, has done anything which it consciously believed to be a repudiation of a treaty, contract, arrangement or convention which had been entered into on behalf of the Commonwealth. I deprecate the speech made by Senator Sampson, who usually maintains a high standard in debate; it was quite unworthy of him to have sneered at the Ottawa agreement in the way in which he did. Of course, it is quite true that both parties to the Ottawa agreement - the British Government and the Government of the Commonwealth - expected that the advantages flowing from it would be mutual, and, according to the very best opinion obtainable, that has proved to be the case. It is one of the advantages of intercourse in the world in which we live, that it is so ordained that a bargain may be made, in which advantages may be reaped by both sides. With regard to the obligations imposed by the Ottawa agreement, we know that article 9 prescribes that tariff protection shall be afforded only to those industries which are reasonably assured of sound opportunities for success. Article 10 is based on the principle of full opportunity of reasonable competition, on the basis of the relative cost of economical and efficient production being given to United Kingdom goods, with the ‘further proviso that special consideration may be given to industries not fully established. Under article 11, the Commonwealth Government undertakes to have all existing duties reviewed by the Tariff Board in accordance with the principles laid down in article 10. That implies a lowering of existing duties. It is also provided under this article that, when the Tariff Board has so reviewed duties and recommends reductions, Parliament shall be invited to vary the tariff accordingly on goods of United Kingdom origin, in order to give effect to the principles of the agreement which I have just mentioned
– Vary “ wherever necessary “ ?
– Yes, of course.
– That leaves to Parliament the option, of varying such duties?
– I submit that it does not. The board may have made a recommendation already to lower the duties. From the point of view of the other party, this step may not be necessary.
– Article 11 lays down what Parliament may or may not do.
– Yes, in accordance with the provisions of the agreement.
– Not in accordance with its own desires.
– The words “ wherever necessary “ are extremely important.
– I do not think that they have the slightest bearing on the aspect of the agreement with which I am now dealing.
– If these words did not appear in the agreement it would be obligatory on the Parliament to vary duties in accordance with every recommendation of the Tariff Board.
– The honorable senator has no reason for uneasiness on that point, because I concede that in this particular instance it might well be contended that there was no breach of the Ottawa agreement up to that stage. In regard to the words “ Parliament shall be invited to vary “, I remind the Senate that constitutionally the signatories to this agreement did not and could not bind the Parliament; the Government bound itself. That applies also in respect of the Government of the United Kingdom. There were certain things which both governments could bind themselves to do, and they did so. But the sting is found in article 12, which reads -
His Majesty’s Government in the Commonwealth of Australia undertake that no new protective duty shall be imposed and no existing duty shall be increased on United Kingdom goods to an amount in excess of the recommendation of the tariff tribunal.
– 4What is the existing duty on cement?
– Certain persons contend that the existing duty is the duty existing at the time the agreement wa3 signed. But suppose - as was a fact - that duties had been raised abnormally high and a new government reduced every item in the schedule by half, what would be the “ existing duty “ under such circumstances? Would it be the. duty existing at the time the agreement was signed, that is, the duty that had since been wiped out of existence? To use another expression which also occurs in this article of the agreement, the existing duty must be the “ new “ duty.
– No; because it has never been legalized.
– I am assuming that, after a review of the tariff by the Tariff Board, the Government reduced by half all the duties. The new duties would be the “ existing “ duties. I am aware that an imposing array of learned counsel has given a different opinion, which has been published in doublecolumn advertisements in most of the leading newspapers in Australia - a wonderful tribute to the very straitened circumstances of the cement industry.
– Suppose that this bill is not ratified by the 28th May, what will be the duty on the 29th May ?
– It will come back then to some other duty.
– ‘But suppose the duty had never been varied?
– I shall deal with both aspects of the matter. At the moment I am dealing with the existing duty and I point out that if a government reduced the duties in the schedule as a whole, then the existing duties are not those existing at the time the agreement was signed, but those existing at the particular time when they were under review. I point out also that article 12 is being interpreted as though it read “No duty which existed at the time of Ottawa shall be increased, &c. “. But the article does not say that. If the article stood by itself, “existing duty “ is capable of being read as the duty existing at the relevant time, namely, the time at which the Tariff Board’s inquiry takes place. It does not mean the duty existing at the time of the signing of the Ottawa agreement, but that which was in force when the Tariff Board undertook its investigation.
– What is the existing duty on cement?
– At one time the duty was1s. per cwt. Later, the Tariff Board recommended that cement from Britain should enter this country free. At the time of the investigation1s. per cwt. was the existing duty. In pursuance of the spirit of Ottawa, the Government tabled a resolution by which the recommendation of the Tariff Board was given effect. In reply to Senator Dein’s interjection, I now state that the existing duty is the duty under the resolution.
– Then its ratification by Parliament does not matter?
– The duty is that which is de facto being collected.
– Should the bill not be passed by the 28th May, what would be the duty on the 29th May?
– The enforceable duty.
– What is that?
– The duty which is actually being collected under the powers of Parliament. It has to be paid, and the Government can enforce payment.
There is a well-known story of a man who had been placed in the stocks. When a friend saw him there and inquired the reason, he was told “I did so and so, and here I am.” The friend said “They can’t put you in the stocks for that”, whereupon the offender replied “But they have done so!” Let me bring the story up to date. Certain articles are imported, and the duty on them is paid. A friend comes to the importer and says “They can’t make you pay duty on them”, but the importer replies “ They have done so.” The duty collected was the enforceable duty. Yesterday Senator Dein, apparently with the object of relieving the weariness of the debate, brought Webster’s International Dictionary into the chamber. I turned over its pages in order to ascertain the meaning of the word “duty” and found it to be “Any payment, service, or other render imposed and recoverable by law or custom.” The duty which is imposed by the resolution is recoverable by a custom which has prevailed in English-speaking countries for many generations. The simple fact is that from the date of the tabling of the resolution that duty was recoverable by law, and according to Webster’s International Dictionary, and, I think, according to the understanding of the ordinary business man, that is the duty on the article at that time.
– Has the duty been imposed by resolution?
– A schedule, varying the duties in accordance with the recommendations of the Tariff Board, was tabled in November of last year, and since that time the duties set out therein have operated.
– Then why ask Parliament to ratify them ?
– It is necessary in order to safeguard the revenue. I have shown that an “ existing duty “ means the duty in force at the time when the Tariff Board made its inquiry, not the duty existing when the Ottawa agreement was signed. The proposal of the House of Representatives would be a breach of the Ottawa agreement. I now take the words, “ No new protective duty shall be imposed “. Let us project our minds a month or two ahead, and assume that the amended duty as agreed to in the House of Representatives has found a place in the schedule of the Customs Tariff The people of England would look at it and say, “Here is a duty on cement”. It would be a new duty. Cement is not a new subject of duty, but every variation of the rate is a new duty. It was1s. per cwt.,. but is now 6d., or 3d. per cwt., as the case may be. If it is a new duty, the people of England would naturally ask whether it is higher than the Tariff Board recommended. Every one can see that it is. Therefore, I say that it is a new. protective duty, imposed at a rate higher than that recommended by the Tariff Board ; that the “ existing duty “ is not the duty which existed at the time of the Ottawa Conference, but thatwhich was in force whenthe Tariff Board made its investigation; and, therefore, I submit that the proposal of the House of Representatives constitutes a breach of the Ottawa agreement.
– Was it not a new duty when “ free “ was substituted for “1 s. per cwt.” ?
– Certainly it was.
– Apparently, a breach occurs only if the duty is raised.
– It is a breach of the Ottawa agreement if the duty is higher than that recommended by the Tariff Board. I am not accusing any one of dishonesty, or of dishonorable conduct, or even of a light regard for obligations entered into. I admit that there is great difficulty in interpreting the Ottawa agreement, especially from a legal point of view. It is for that reason that an appeal is made to observe the spirit of Ottawa. The agreement contains expressions which indicate that it was intended to be regarded, not as a legal document, but as one to be interpreted in the spirit in which it was entered into. At the time of the Ottawa Conference the Australian tariff imposed duties which were higher than those previously in force. Great Britain desired that those duties should be reduced. If articles 9 to 12 of the agreement are interpreted in the light of those facts, it will be seen that there is much to be said for interpreting the agreement in the spirit of Ottawa. The more the proposal of the House of Representatives is viewed in that light, the more clearly it will be seen to be a breach of the Ottawa agreement. What the consequences of such a breach may be, I do not profess to say. I do not think that Great Britain would make a great fuss about it, but that is not the point. We should be careful to see that obligations entered into are not lightly ‘regarded. We must, at least, concede that Britain has kept its part of the agreement.
– In reply - On the whole, I suppose that the Government should congratulate itself on the reception that the tariff has received from honorable senators. When the Government is carrying out what it believes to be its obligations under the Ottawa agreement, and, as it were, is walking down the middle of the road, it is likely to have brickbats thrown at it from either side. When it pursues its policy of evolving an evenly-balanced tariff, which it hopes ultimately to achieve, it has to take kicks from both sides. I shall not engage in an examina tion of the detailed criticism by honorable senators; I believe that the proper time and place to consider them will be in committee. Nor do I propose to wander in those strange realms of Aristotle, as Senator Collings did, and I shall not hold an inquiry as to who does the work and who “ does “ the workers. I suggest, however, that the honorable gentleman had better walk warily lest he find, after inquiry, that those “ doing “ the workers are more closely associated with himself than perhaps he knows.
I desire to refer, in passing, to an observation made by Senator Brown. He was impressed with the nature of the Tariff Board’s report on this sticky, mixed subject of cement, and he SUKgested that punitive steps should be taken against an industry which had comported itself in the manner exposed by the Tariff Board. I pointed out in my second-reading speech that this phase was amply covered by the suggestion which the Right Honorable J. H. Scullin made in the House of Representatives a few years ago. In explanation, I state that the Harvester judgment, which was referred to, was based not on a customs law, but on the Excise Tariff of 1900. It was the attempt to do something beyond the scope of that act that was held to be unconstitutional by the High Court. There can be no question regarding the powers of the Commonwealth Government under section 15 of the Tariff Board Act and the appropriate steps that should be taken if this chamber comes to the conclusion that the cement industry is making excess profits and is taking too great an advantage of the protection which it has received for so many years. If it be considered, in the light of modern conditions, that this protection has been too high, if will be for the committee of this Senate to take the necessary action. I suggest ‘that it would be the most agreeable action to the industry concerned.
Some of the observations which fell from Senator Leckie’s lips reflected to some extent on the Mother Country in respect of its protest against what it considers to be a violation of the Ottawa agreement. In all of my relationships and negotiations with representatives of Great Britain I have never experienced the slightest discourtesy, and although
Ihave not seen it, I am quite sure that the protest is couched in most courteous language. The facts may be simply stated. There are two parties to a certain agreement - Australia, which is a member of the British Commonwealth of Nations, and the Mother Country. They entered into certain obligations, with which I shall deal later, and one of the parties to the agreement now says to the other, “ Your parliament is refusing to discharge its obligation “. A protest is of no avail after the act has been done. But if the protest is made while there is still an opportunity to remove the cause of objection, it is likely to lead to more beneficial results and smooth the way for future dealings. I feel that Senator Leckie was moved by a desire to create prejudice in this regard, rather than by any conviction that the Mother Country had been discourteous. So far from being discourteous, my experience is that such protests are couched in most courteous terms. In this instance, it is not designed to influence honorable senators; the intention of the British Government is merely to point out certain facts.
I do not propose to deal with the details which Senator Leckie and other honorable senators introduced in regard to the cement industry.When the appropriate time arrives in committee I shall place before the Senate certain considerations, apart altogether from Ottawa, which, I maintain, will fully justify the attitude adopted by the Government.
The Assistant Minister (Senator Brennan) has already explained the functions and duties of the Tariff Board, which, I reiterate, is a statutory body created by this Parliament. In regard to Senator Leckie’s suggestion that the Government is seeking to “ biff “ certain industries, I assure honorable senators that the Government will safeguard to the utmost all industries that are comporting themselves in such a manner as to deserve assistance. There is no reason to believe that the Government will adopt a pugilistic attitude towards them, when they are operating for the benefit of Australia. One function of the Tariff Board is to protect efficient industries which arc conducting themselves in the best interests of the country.
– Will the admission of British cement duty free be beneficial to the Australian industry?
– The Leader of the Opposition will later hear a dissertation on that industry from its inception until the present day; if, after that, he can justify his action in supporting the re-imposition of the duty to the great body of people whom he represents, I shall be very much surprised. Certain honorable senators have declared that the Ottawa agreement has been of no substantial advantage to the Commonwealth. In reply to that contention, I ask those honorable gentlemen to consult the grazier, the cattle-raiser, the sugar-grower, the apple-grower, the honey producer, and the egg producer; I ask them to question the dried fruit-growers on the river Murray and the wine producers in South Australia. Among those people they will find their answer. They have only to study the schedule of concessions to Australia to which Great Britain gave immediate effect, in order to realize the benefit that the Ottawa agreement has conferred upon us. If I could express those benefits in £ s. d. I would willingly do so; I can furnish details of the increased exportation of commodities which has resulted from that agreement. These matters are carefully weighed by the Department of Commerce. When I inform honorable senators that in every department of the export trade there has been an increased sale of goods to the one country that is apparently prepared to take them on terms most generous to us, they will agree that Ottawa has Been of enormous advantage to Australia. I ask them to consider what would have happened to the surplus production and what would have happened to the price levels of those commodities in Australia if the Ottawa agreement had not been made and Great Britain had not been prepared to accept an increased proportion of our primary commodities.
Sitting suspended from 6.15 to 8 p.m..
– The prosperity that has accrued to Australian primary industries as the result of the Ottawa agreement, is reflected throughout the community and particularly in the
Customs SENATE, j
Tariff 1936. condition of our secondary industries. The following official figures, showing the increase of exports of primary products in 1934-35, as compared with the exports in 1931-32 are informative: -
Senator J. V. MacDonald endeavoured, by a process of reasoning which is common to honorable gentlemen opposite, to make a comparison between the exports and imports of the Commonwealth in particular periods. The honorable gentleman culled his material from bulletin NO. 2, which has been in circulation for some time and, I have no doubt, has been placed in the hands of other honorable senators. If they have studied it, they will see how misleading it is to make the comparison for the’ years mentioned, because in the base year, which Senator J. V. MacDonald selected, the exports of gold from this country amounted to £14,000,000. Therefore, results were the reverse of those indicated by the honorable gentleman. When making any computation regarding exports and imports, it is desirable to take into account what is really capital export. The honorable gentleman did not do that.
It has been urged by some critics that we have not given full effect to the spirit or the letter of the Ottawa agreement. One of the charges made is that we have not honored our undertaking to remove the primage duty on British goods. The existing primage is 5 per cent. In 1932-33 we remitted primage duty to the amount of £50,000; in 1933-34 we remitted an additional amount of £585,000; in 1934-35 another £400,000, and the budget provision for this year gives additional relief amounting to £4-5,000. Tints the total remissions of primage on British goods amount to about £1.080,000 annually, so it cannot be said with truth that we have not endeavoured to fulfil our obligations. I understand that no complaint has been received from the mother country about our lack in that regard.
The references made by a number of honorable senators to the duties on agricultural machinery have been noted, and I shall deal with them when the bill is in committee. Senator James McLachlan spoke of the need for simplification of the tariff classification. On a previous unhappy occasion in my existence, when I was saddled with the responsibility of piloting the tariff somewhat hurriedly through this chamber, I promised that a reclassification of tariff items would be made as soon a3 possible. That has been engaging the attention of the Minister and the department, and the result is seen in the greatly simplified schedule which is now before honorable senators.
My friend and colleague, Senator Duncan-Hughes, and Senator Leckie chided the Government for the delay in presenting the schedule for the consideration of Parliament. Our excuse is that many distressful things have happened during the last eighteen months to keep Ministers in all portfolios very fully occupied. We had hoped to be able to fulfil our promise to review the tariff before the end of last year, but I regret to say that that was impossible.
Criticism has been directed against liu schedule from different angles bs Senator Duncan-Hughes and Senator Leckie. One honorable gentleman complained that we are imposing higher duties, and the other that we are imposing lower duties. Everything that has been done is part and parcel of the tariff policy of this Government. The department is heavily charged with work, and the Government is doing its best to bring the tariff up to date, as well as to give effect tq the suggestion of Senator James McLachlan for the simplification of the - classifications. It is hoped that, having regard to the diminishing schedules, there will not be much further delay.
I turn now to the observations of a number of honorable senators regarding the true interpretation of the Ottawa agreement. My friend and colleague, Senator Brennan. this afternoon illuminated the subject, and I do not propose to add another blend to the colourful picture which he presented. I approach the subject from a point of view of two honest nations desiring to achieve something for their mutual benefit. One has complete liberty to give effect to its undertakings without the intervention of an outside tribunal ; the other, by reason of its policy and its statute law - Senator Payne, will, I think, agree with me on this point - is not in a position to implement any undertaking which it gives until some other tribunal has spoken. That, briefly, was the plight in which the Australian delegates found themselves when they assembled at Ottawa. The representatives of Great Britain had full liberty to negotiate and to give an undertaking that the British Government would invite the Imperial Parliament to do certain specific things - to retain existing preferences, and to impose certain duties in the interests of Empire producers. This undertaking is to be found in article 1 of the agreement. Article 3 states that His Majesty’s Government in the United Kingdom will invite Parliament to pass the necessary legislation to secure to Australian goods of the kind specified in the schedule the margins of preference indicated over similar foreign goods. The British Government, I repeat, is not hampered by any outside body. Consequently its delegates to the Ottawa Conference were able to promise that, subject to the approval of Parliament, certain things would be done. If the Imperial Parliament had withheld its approval, and if it had declined to give to Australian primary producers the benefits of preferences for beef, lamb, butter and other commodities, what would have been the fate of the agreement? “Would we have carried out our part of the contract? Every agreementimposes obligations on the respective parties. That of the British Government was to invite the Imperial Parliament to do certain things. That was done. Now the British Government is asking what counterbalancing consideration Australia intends to give for the concessions which we are enjoying in the British market, and which we appreciate so highly. There is implicit in the agreement an undertakingthat we shall not impose on
British goods duties in excess of those recommended by the Tariff Board, and in article 11 we give an undertaking that the Tariff Board will undertake a review, as soon as possible, of existing protective duties in accordance with the principles laid down in article 10. Some confusion appears to have arisen concerning the obligations of the Commonwealth, because reference is first made to the principles upon which the agreement is based. The obligation of the British Government was fulfilled when it asked the British Parliament to adopt the agreement, and similarly the obligation of the Commonwealth Government was honoured when it invited the Commonwealth Parliament to accept the proposals. Parliament has accepted the dominating principle expressed in article 12, which may or may not be interpreted as it was by the Acting AttorneyJGeneral (Senator Brennan). The agreement provides that the duties must first be considered by the Tariff Board, and its decisions accepted, so that the obligation rests upon the Commonwealth Parliament, and not upon the Government.
– The Government has not accepted the recommendation of the Tariff Board in every instance.
– When has it not done so?
– On agricultural machinery, for instance.
– It has accepted the recommendations of the Tariff Board in respect of British preferential duties; the honorable senator is referring to the duties imposed under the general tariff. The British Government undertook to accept the decisions of the Tariff Board, and the Commonwealth Parliament is not to increase the duties beyond those recommended by the board.
– The Minister has exhausted his time.
Question resolved in the affirmative.
Bill read asecond time.
In committee:
Clauses 1 to 6 agreed to.
Schedule
Prefatory note.
– A similar paragraph to the prefatory note now proposed, with the exception of the added words “Unless the tariff otherwise provides “, appeared as a preface to Division 6 of the tariff - metals and machinery. The practice observed by the department with regard to motive power, &c, not integral to machinery covered by Division 6, was to charge duty at the rates applicable to the motive power, and not as part of the machinery for which such motive power was intended. While this was the practice obtaining in connexion with Division 6, motive power for machinery falling under other divisions of the tariff, e.g., Division 11, kinematographs (item 320 b), Division 14, cameras (item 384), centrifuges (by-law item 418 f), was classifiable according to the same rates as the machinery. Thus, opposite principles were observed with regard to motive power for machinery, classified under different divisions of the tariff. The provision of the paragraph as a prefatory note to the whole tariff will remove this anomaly; The words “Unless the tariff otherwise provides “ have been added in order to except any item in which it is provided that the motive power shall be admitted as part of a machine or machine tool, such as item 176 n, air compressors.
Prefatory note agreed to.
Division 1. - Ale, Spirits and Beverages.
Items 6 and 11 agreed to.
Division 2. - Tobacco and Manufactures Thereof.
Item 19 (Tobacco, unmanufactured).
– The Opposition does not intend to oppose this item. Tobacco-growing is an industry of considerable importance to some of the States, including Queensland, which I represent. Whilst we are glad that the Government does not propose to do anything worse than is represented by this duty, I take this opportunity of expressing the hope that at some future date it will make a more serious attempt to benefit the industry. Naturally, the Opposition has to be satisfied with what it can get.
– An extra 6d. per lb. is not a crumb, is it?
– No; but it is not so good as a duty of1s. per lb. If it were competent for me to do so, I would test the feeling of honorable senators with a proposal to increase this duty considerably. This industry is of great importance to Australia. It is relevant here to discuss generally the object of customs duties. They are, of course, used, first, for protective purposes, and, secondly, for revenue purposes. The Tariff Board has said that £6,500,000 should be quite sufficient to the Government as a total annual levy on this particular industry. Since 1928-29, the annual revenue derived from excise and import duties on tobacco has been as follows : - 1928-29, £6,000,000 ; 1929-30, £6,637,000; 1930-31, £6,138,000; 1931-32, £6,484,000; 1932-33, £6,280,000; 1933-34, £7,483,000; and 1934-35, £7,769,000. I point out that the increase of revenue collected since 1933 resulted from the duties imposed by this Government. It will be noted that the total revenue of £7,769,000 collected in excise and import duties on tobacco in 1934-35 is roughly £1,250,000 more than the amount which the Tariff Board considered a reasonable impost on this industry. As the Government has the numbers, I realize that the Opposition can* do nothing to remedy this position.
I shall now review the growth of this industry as the result of the protection given to it. About half a century ago tobacco-growing was fairly well established in Queensland. I am not aware whether, at that time, tobacco was grown in any other part of Australia. However, the industry in Queensland was entirely in the hands of Chinese. That industry faded out, and in 1929, when a definite attempt was made by certain people to resuscitate it, 372 persons were engaged in tobacco-growing in the Commonwealth, and by 1932, as the result of protection, that number had increased to 4,032. I am aware that, if I do not qualify this statement, supporters of the Government will refer me to a report of the Tariff Board issued about the time the industry was improving as the result of protection. At that time the Tariff Board got scared and I have no doubt that its fear was inspired. In that report, it said -
It will be seen therefore that unless the present protection is reduced sufficiently to such an extent as will jeopardize the Australian tobacco-growing industry, the revenue to be derived from customs duties will be very seriously reduced in the future.
Iiic board has already pointed out that the quantity of Australian-grown leaf will continue to increase unless the industry is exposed to crushing competition by the removal of the duty or its reduction to a figure which will not constitute adequate protection.
In the same report the board referred to the inflation of land values as the result of speculation. Undoubtedly speculation did take place, but that is not new to this country, and is not opposed to the policy of this Government which believes in private speculation rather than in government control of industry. The fact remains, however, that there was very little gambling in land values in connexion with the tobacco-growing industry. On hundreds of blocks of land at Mareeba, in Queensland, tobacco of a quality which is better than that of any grown elsewhere in Australia and comparable with any tobacco grown in any part of the world, is produced. Another tobacco-growing centre has been developed at Sarina where a better quality leaf is now being produced than was produced at Mareeba in the early stages of the development of that centre. Undoubtedly in Queensland the light coloured leaf, which is so much in demand, can be produced. In order to encourage this industry, which is of very great importance to Australia, the Queensland Government made available to purchasers many blocks of land at Mareeba at 2s. 6d. an acre. During the second reading debate on this measure much was said about our adverse trade balance with the United States of America. “We members of the Opposition have our own .opinion on this matter and we shall state it unhesitatingly at the proper time. But if the Government is serious in its desire to rectify Australia’s adverse trade balance with the United States of America, here is an industry which it can encourage with that object in view, because Australia is eminently suitable for the cultivation of tobacco. In 1934-35, 17,000,000 lb. of tobacco valued at £1,300,000 was imported into Australia, and of this 16,333.000 lb., valued at £1,242,000, was of American origin. I submit that the bulk of this tobacco could be grown in Australia and the money which we now pay to the United States of America for tobacco leaf could be kept in the Commonwealth, directly and indirectly creating employment. As it is not the intention of the Opposition to oppose this item I do not purpose to make a long speech, but I earnestly suggest to the Government that if it wants to reduce our adverse trade balance with the United States of America, and to give encouragement to Australian industry; if it is anxious to honour not only the Ottawa agreement, but also the agreement made between the electors of this country and the Prime Minister on the hustings at the last general election, it will further help the tobacco-growing industry. If the Government believes as much in a home-grown agreement as in one made with a country overseas; if it believes that the problem of unemployment must be and can he tackled effectively by the development of our primary and secondary industries, it can commence to. put such beliefs into practice by encouraging the tobacco industry.
– “What does the honorable senator suggest the Government should do?
– I suggest that while we accept the duties set out in this item we hope the time will come when the Government will repent of its sin of neglecting primary industry and will come to the political penitent form and announce that it will increase the import duty on tobacco by at least another 6d. per lb.
– I was very interested in the suggestion made by the Leader of the Opposition (Senator Collings) that the Government should repent of its political sins in regard to the tobacco industry by increasing the import duty by 6d. per lb., in order to afford reasonable protection to the industry. Had I been asked what I regarded as a certainty in connexion with this debate, I should have answered that the Leader of the Opposition would move for higher duties on tobacco. I am astounded at the change of attitude on the part of the Labour party since 1933. In that year the then
Leader of the party in the Senate (ex- Senator Barnes) in moving for a restoration of the Scullin duties said that unless a duty of 5s. 2d. per lb. was placed on tobacco the industry would go to the wall. The present Leader of the Opposition has not moved for a restoration of the higher duty, but has practically agreed that the existing protection is reasonable. I admit that it was a big temptation to the members of the Country party to vote for a higher duty on tobacco in 1933, because, at that time, the growers were in serious straits. Throughout Australia, men in the grip of the depression tried to recoup their fortunes by growing tobacco, with results that are well known. On that occasion I said -
Throughout the debate on the tariff I have consistently taken up the attitude that I am not prepared to support the increasing of any duty, because I believe that what Australia requires to-day is a gradual scaling down of the tariff.
When a division was called, the attempt to restore the Scullin duties was defeated. The Country party thereupon moved that the then existing duty of 3s. per lb. be retained, with a different excise in favour of Australian tobacco, namely, 3s. as against 4s. 6d. per lb. Members of the party went to some pains to show that its proposal would not mean any loss of revenue to the Crown. Ex-Senator Bae of the Labour party recognized that the arguments of the Country party were logical, because he moved a further amendment that the Australian excise be 3s. 7d., and the excise on imported tobacco 4s. 3d. per lb. - a difference of 8d. per lb. His amendment, which was supported by tb, Country party, was lost, but I am glad to say that, subsequently, the system which we then advocated has been adopted by the Government, with beneficial results, to the industry. Although it is now proposed to increase the duty by 6d. per lb. above the recommendation of the Tariff Board, and to reduce the excise in favour of Australian leaf by 8d. per lbthere is still a serious anomaly which should be removed. The recent small reduction of the excise on tobacco made wholly from Australian leaf is really of little benefit to the Australian industry, because Australia is no exception to the general rule that practically all countries in which tobacco is manufactured have found it necessary to blend different kinds of leaf in order to get the best results. Therefore, by confining the reduction to tobacco which is 100 per cent. Australian, a large quantity of good Australian leaf which is blended with imported leaf is excluded. If the Government wants to make this preference effective, it should extend it over the whole field, and not debar Australian tobacco, which is used for blending purposes. The Australian tobacco-growing industry is gradually getting on its feet, and the percentage of Australian leaf to the total consumption is steadily increasing. Moreover, thai increase is along sound lines. If, however, the Government wants to do the industry a service without penalizing the consuming public, it should make the Sd. preferential duty apply not only to tobacco which is 100 per cent. Australian, but also to Australian tobacco used for blending.
– Senator Hardy chided the Leader of the Opposition (Senator Collings) with not having moved for an increase of the duty on unstemmed and stemmed tobacco.
– We are converting the honorable senator to our policy.
– -Not at all. I still have an open mind, and so long as I do not suffer from mental senility, I hope to be capable of conversion. I confess, however, that Senator Hardy’s arguments have not greatly influenced me. The Labour party did move in the direction indicated, but its amendment was not- accepted because when the tariff schedule was before the House of Representatives the honorable member for Capricornia (Mr. Forde) moved that the duty be increased from 3s. 6d. to 4s. on unstemmed tobacco, and from 4s. to 4s. 6d. per lb. on stemmed tobacco. The Labour party in the Senate knew that it would not get any assistance from the Country party to secure higher duties. Had it known that the Country party was really desirous of assisting the tobacco-growers, the Opposition would have put forward a request for higher duties. The Scullin Government placed an adequate duty on tobacco.
– Tin1 result was that the industry nearly went out of existence.
– In order to show the effect of those duties, I point out that, whereas in 1929 Australia produced 1,836,000 lb. of tobacco, in 1930 the production was 1,702,000 lb.; and in 1931, about 1,000,000 lb. After the Scullin duties had been in operation for about a year the production grew to 10,160,000 lb. Yet the Minister says that the Scullin Government’s duties practically destroyed the tobacco industry.
– The honorable senator has not referred to the quality of some of the tobacco.
– Australia is such a prolific country that were its people to exercise greater self-reliance it could supply all its own requirements of tobacco. The members of the Country party should be great fighters for the development of the tobacco industry. Senator Hardy says that tobacco-growing in Australia is now established on a sound foundation. During the last two or three years numbers of men who previously grew tobacco have again taken up its cultivation. In 1932 there were 1,616 growers in Queensland, but to-day the number has dwindled to below 300, The Minister may be able to explain the deplorable diminution of the number of growers in Queensland.
– Perhaps an attempt was made to grow tobacco on unsuitable land.
– Many honorable senators have spoken well of the cementmaking industry. If they are prepared to fight for that industry I cannot understand why they are not prepared to fight for the tobacco industry also. You, Mr. Chairman, have told us that you lost all your deferred military pay in the cement industry. I could tell of hundreds of men in North Queensland who lost in the tobacco-growing industry every penny they possessed because of the action taken by the Government which preceded the present one. Whether or not the Scullin Government was right, its policy resulted in a great increase of the number of tobacco-growers. No government should practically sweep an industry out of existence merely because it thinks that the existing duties are too high.
– Why . did not the Opposition move for an increase of duty?
– It did not do sp because it knew that the pscudo Country party would not support it. I do not know whether the dinkum . Country party, of which Senator E. B. Johnston is leader, deputy leader, whip and secre.tary, would support it. The pseudo Country party led by Senator Hardywould not support the Labour party in this matter because it backs the Government in everything that it attempts. The Government has no need to apologize for. what it does, or leaves undone, because an apology is always forthcoming from the. Country party.
– Would the honorable senator apply the same principle to the. cement schedule?
– I am astounded that our good friends who are . troubled, about the adverse trade balance with the United States of America have not fought valiantly for increased duties on tobacco. Recently in the House of Representatives ‘ the honorable member for Flinders ((Mr, Fairbairn) made an eloquent plea for action to reduce Australia’s adverse trade balance with the United States of America. Senator Duncan-Hughes and other honorable senators have also ventilated this matter in this chamber, but I notice that they are silent at this juncture. The greater part of the tobacco imported into Australia is grown by black labour in America, and is eon- ‘ trolled by one of the greatest trusts in industrial history. Yet there is a significant silence among honorable senator* when an opportunity awaits them to. assist the development of Australian tobacco-growing, which would mean, the reduction of extensive imports from the United States of America.., Senator Hardy is opposed to bi-lateral trade agreements, with the exception of the agreement between the Commonwealth and Great Britain. He has shown ;quite reasonably the folly of attempting to bring about equality of trade between one country and another. The Right Honorable S. M. Bruce-
– One of the most able men- who has ever sat in this Parliament.
– Although Mr. Bruce opposed the Labour party, we acknowledge him to be one of nature’s gentlemen. A few months ago he said that it was the height of folly to expect to bring about equality of trade between two countries, and he condemned those persons who advocate it. I emphasize that Australia has the opportunity of overcoming those difficulties, which have been enlarged upon by honorable senators from time to time, in regard to the adverse trade balance with the United States of America. The Leader of the Opposition (Senator Collings) has shown that in 1934-35 nearly 17,000,000 lb. of tobacco leaf, valued at £1,300,000, was imported into Australia. This country should have grown the lot.
– Australian tobacco already enjoys a protection of 220 per cent, ad valorem.
– Australia has the land, the men, and the capital to produce every type of tobacco required by smokers ; but Senator Hardy ‘ apologizes because we are not attempting to supply the whole of our own requirements. He professes to expound the policy of the Country party, and to support the interests of the man on the land. I remind him that the Leader of the Country party in the House of Representatives (Dr. Earle Page) said, on the 29th February, 1932-
The tobacco industry has been sacrificed in favour of a luxury import from America.
– What duty was in operation in 1932?
– It was the duty imposed by the Scullin Government; it gave a great impetus to the growing of tobacco. I do not desire to labour this subject; I feel that I am only beating the wind; but I impress upon those individuals who are continually complaining about the adverse trade balance with the United States of America, that an excellent opportunity awaits ‘ them to make possible the production in Australia of tobacco valued at over £1,000,000, which is now imported. In reply they advance all manner of excuses. The Labour party hopes that one day Australians will supply their own requirements of tobacco; when they do, the problem of unemployment will be largely solved.
– Does the honorable senator smoke tobacco?
– I have not smoked for sixteen years. I am reminded by the interjection that several years ago, when I was discussing the subject of pipes in this chamber, Senator Sampson asked me whether I smoked. I replied that, owing to the depression in my household, I could not afford to smoke and to drink beer; so I gave up smoking. Only a few weeks afterwards I received a copy of the Prohibitionist which said, in effect - “Senator Brown made a statement that he had to give up smoking because he could not afford to buy tobacco and beer. The Prohibitionist now advises him to give up beer for other reasons than economy.” That joke therefore recoiled on me.
– The honorable senator’s time has expired.
– Senator Brown indicated that he was beating the wind; I have come to the conclusion that he did that most effectively. In reply to Senator Hardy’s observations, I shall ask the Minister to consider his suggestion. Senator Collings urged that Australia should supply its own requirements of tobacco, but difficulty arises from the fact that growers are not producing bright leaf in quantities sufficient to meet the local demand. Apart from disease, there are a thousand and one reasons why Australia is not in the position to grow the whole of the tobacco it requires. The Leader of the Opposition (Senator Collings) also commented upon the fact that the Government collects from the industry £6,500,000 in excise. This phase was touched upon by the Tariff Board on one occasion, but it was investigating the advisability of increasing the excise beyond 4s. 6d. The Government ha3 decreased the excise duty and the amount of money it is now yielding is well within the Unfit suggested by the Tariff Board.
– In view of the extensive nature of tobacco-growing, I was surprised that some honorable senators from
Victoria have not spoken on this item.. Considerable propaganda upon tobacco has been circulated among honorable senators, and I produce from the Melbourne Age, of the 2nd October, 1935, a statement by Mr. P. Jones, secretary of the Australian Tobacco Growers Association -
The slight reduction o£ 8d. per lb. excise duty . . . applied only to tobacco in which all the leaf used was Australian grown. The reduction should not only bo increased but m’ade to apply to all Australian leaf used in manufacture, whether in 100 per cent. Australian or in composite brands with a provision as suggested for maintaining the revenue required from tobacco. Failing this, an allround -reduction of excise duty of, say, ls. per lb. with an increase of the import duty on leaf sufficient to maintain the required revenue, would meet the position and give economic stability to what should be a flourishing industry.
From this statement it is quite evident that the Victorian tobacco-growers were not in a flourishing condition so recently as last October. Mr. Jones proceeded -
In Victoria in. 1932 there were 1,980 registered producers; in July this year, 1,413. In Queensland in July last year there were 2,043 registered producers; in July this year, 1,525.
I am aware that the number of growers in Queensland has been considerably reduced. Last August I visited the Mareeba district in the Cairns hinterland. I was not making an examination of the industry, and the officials with whom I had conversations were not necessarily members of the Labour party. In fact, I received a rating because I did not seek out officials of the Labour organization; I acted as an ordinary visitor might act between catching trains. I was informed that the tobacco industry had received a severe setback through the reductions of the Scullin duties, and through the present Government’s action in regard to excise. In the Mareeba district alone the number of growers has been reduced from 800 to 400. I asked the president of the local Tobacco Growers Organization what price would be necessary to put the industry on a sound footing without enabling the growers to make exorbitant profits. He informed me that if the price of leaf were increased by ls. per lb., it would enable the growers to produce without loss, and would encourage them to feel that better days were ahead. Quite evidently, the increased duty of 6d. per ib. will not meet the wishes of the tobacco-growers at Mareeba; I conclude that the growers in Victoria also will be dissatisfied. During the previous tariff debate, the Government, was forced to depend upon the Labour senators for support to pass many tariff items; on one memorable occasion its majority depended on the support of two members of the New South Wales Labour party. Senator Hardy, who is now a fervent supporter of the Government was most free in his criticism on that occasion, and showed no anxiety to assist it. In fact the Country party embarrassed the Government at every opportunity.
– The Country party believes that the present tariff policy is suitable for Australia.
- Senator Hardy has stated that the Government is so influenced by the Country party Ministers who were included in the Cabinet in the last reconstruction that it has framed its tariff policy in accordance with the desires of that party.
– I rise to a point of order. Senator J. V. MacDonald has deliberately misrepresented me. I stated that the policy enunciated by the present Government is acceptable to the Country party as being the most suitable for Australia. I never hinted that the Country party had influenced the Government in any way. Senator MacDonald’s misrepresentation is merely political propaganda.
- Senator Hardy objects to my statement, but I consider it a fair inference from what he has said in this chamber. Members of the party to which Senator Hardy belongs are Ministers in the present Government, and my remarks were intended to mean that a very substantial alteration of the tariff policy of the Government has resulted from their inclusion. Will Senator Hardy deny that?
– I do not deny it.
– The honorable senator has stated that my leader in this chamber (Senator Collings) on this item holds views quite different from those of his predecessor. I remind the honorable gentleman that, in an earlier tariff debate, Senator Barnes, who was then’ Leader of the Opposition, moved a request that the duty on tobacco be increased, and intimated that, when the excise tariff was before the Senate, he would move for a reduction of the excise in the interests of Australian growers. Senator Hardy and’ other extreme freetraders of the Country party were not at all pleased with that genuine attempt to do something for our primary producers. I doubt that he voted for the request.
– I voted against it.
– The honorable gentleman voted against it because he wished to submit a much weaker proposal of his own, which would not have been appreciated by the primary producers. If Senator Hardy really believes that the present Opposition in this chamber is not so desirous as formerly of assisting the primary producers, 1 1 invite him to submit a request for a higher duty or a reduction of the excise. If he does so, he will have our support.
– There will be no test division on this item.
– I am afraid there will not be. Obviously it would be useless for me, or for either of my colleagues, to move a request, because we can muster only three against 33 Government supporters. But I am confident that the longer we are engaged in a discussion of the tariff the more clearly will our primary producers see who are their genuine friends. When the Scullin Government was in office, it made an arrangement with the tobacco manufacturers for the purchase of the whole of the Australian leaf at an average price of 3s. per lb. When a change of government took place, the duty was reduced from 5s. 2d. to 3s. per lb., and the then Minister for Trade and Customs (Sir Henry Gullett) entered into an arrangement with the tobacco combine for the purchase of the Australian crop at 2s. 3d., per lb. - 9d. less than the price obtained by the Scullin Government. The growers.- having no alternative, were forced to accept the lower price. I do not suggest that every pound of Australian tobacco leaf is perfect. That would not be a fair presentation of the position. But the same may be said of nearly every other Australian industry.’ We were satisfied to accept a commodity that was not quite so good as the imported article in the belief that, as time went on, and with the wholehearted support of the people of Australia, we should eventually be able to produce in Australia everything that we require, and of a standard equal to the world’s best. Senator Collings, who is from fifteen to twenty years my senior, can remember the time when everything that was required in Australia, including even confectionery, had to be imported. We have made remarkable progress since that time, and now produce a very wide range of commodities of a uniformly high standard. Senator Brown referred to our adverse trade balance with the United States of America, and a member of the House of Representatives - one who is by no means friendly to the ‘ Labour party - suggested that we should take drastic action to rectify the position. The Australian tobacco industry provides an opportunity to do that.
– The honorable senator has exhausted his time.
– Although the Queensland senators have had a good deal to say in support of the Australian tobacco industry, I doubt that any of those among them who are smokers support the local industry by smoking purely Australian tobacco. I go further, and say that if an investigation were made of the pockets of all honorable senators who pose as supporters of this Australian industry, it would be impossible to find in them any cigarettes in which there was even a small proportion of Australian tobacco. 1 believe that a majority of the Queensland Labour senators are non-smokers. I understand that Senator Brown was formerly addicted to the weed, but I undertake to say that, like so many other smokers, he favoured the Virginian blend. I have smoked Mareeba tobacco, and consider it quite good.
– I have smoked it also, and I know it is good.
– The facts being as I have stated, it would appear that what is necessary to encourage the Australian tobacco industry is not so much a high tariff on imported leaf or a low excise
On Australian tobacco, as the cultivation of a taste for the Australian product.
SenatorFoll. - There is no difficulty in selling the light leaf tobacco.
– I understand that a certain proportion of the Australian leaf can be used for blending purposes, and that it makes a good tobacco. It may interest some honorable senators to know that the tobacco leaf is not the only Australian plant that is used for the manufacture of cigarettes. The leaf of the eucalyptus is also used, I know, because I have smoked cigarettes made from eucalyptus leaves.
– They would be for medicinal purposes.
– No; I assure honorable senators that if they smoked cigarettes made entirely from the leaves of the eucalyptus tree they would be agreeably surprised. This particular brand of cigarette is manufactured in New South Wales, and is not, as some smokers would believe, sold only for medicinal purposes. One eminent scientist has expatiated on its health-giving properties, declaring that cigarettes made from eucalyptus leaves are superior to those made from the leaves of the tobacco plant. He goes so far as to say that if Sir Walter Raleigh had found the Indians smoking tobacco made from the eucalyptus leaf, he would have taken that plant back to England, it would have become the national smoke, and tobacco would still have been regarded as a weed. The taste for tobacco is acquired. For centuries our forefathers have indulged in the habit and, like Scotch whisky, it has become firmly implanted in the individual. Just as the Egyptian favours cigarettes made from Egyptian tobacco and the Turk prefers Turkish cigarettes, so our forefathers having been accustomed to the Virginian blend, have passed their taste on to us. Ifwe really desire to increase the use of Australian tobacco, we must encourage smokers to cultivate a taste for it. In time they will consider it a perfect blend.
– I take this opportunity to say to my friend, Senator Hardy, who appears to be somewhat distressed because I have not moved a request for an increased duty on this item, that the road is open to him.
If he submits a request he will get some support from the Labour Opposition in this chamber.
– I do not believe in high duties.
– I am aware of that. For a man of my limited intelligence, it is difficult to understand what are Senator Hardy’s beliefs; he changes them so frequently, so easily and so lightly. During the tariff debate three years ago you, Mr. Chairman, made some kindly references to. me in the form of verse, which I have preserved, but which I do not propose to quote. Senator Hardy also made a humorous contribution, and seeing that the honorable gentleman has adopted the role of father to the Leader of the Opposition I intend to return the compliment. On that occasion he said, “ Why arewe expected to tread the fiscal path with our eyes; coveredwith a bandage fixed by the Government and the knot firmly tied by the manufacturing interests “ ? The honorable senator’s youth makes him unduly reckless, and when he attacks me it is only natural that I should retaliate.
– I merely directed attention to the inconsistency of the honorable senator.
– The policy the Opposition intends to adopt during the consideration of the schedule is that, when we know that we cannot influence the Government Ave shall not attempt to do so. Hadwe the remotest idea that the representatives of the primary producers in this chamberwould support a request to increase the duties on tobacco I should have moved a request to that effect. I do not resentwhat Senator Hardy has said, but I wish to remind him that the recklessness of youth may not always be profitable, andwhen he couches a lance against me I shall always retaliatewith the weapons at my disposal.
– I assure the Leader of the Opposition (Senator Collings) that the members of the Country party in this chamber do not intend to support the Opposition by “ pulling the legs “ of the unfortunate primary producers. We know the consequences of the high duties imposed by the Scullin Government not only on tobacco, but also on other primary products. We remember what occurred in connexion . with the production of wheat. Even suburban grocers in Sydney received letters urging them to engage in wheat production, and in consequence of the agitation many persons for whom there were no prospects of making a living responded to the call. In Victoria the speculation in tobacco lands became so rife that land which was worth only 30s. an acre was sold for up to £30 an acre. I asked Senator Brown when he was speaking how much of the 10,000,000 lb. of tobacco produced had actually been sold, but he declined to say.
– Some of it has not yet been sold.
– A neighbour of mine who had 8,000 to 10,000 lb. of tobacco could not get anything like the price which it was said could be obtained, and I believe that he still has some on hand. Similar difficulty has occurred in connexion with other forms of primary production. The Leader of the Opposition has twitted the members of the Country party with inconsistency because under an honorable alliance with the United Australia party, the members of both parties have agreed upon a common policy for Australia, which, as Senator Hardy has said, we regard as the best in the circumstances. It is true that, prior to that alliance, Senator Hardy made some good fighting speeches in this chamber, and I have been told that certain lobbyists who infest this building have a whole list of the remarks made on former occasions by members of the Country party in connexion with certain tariff items. These extracts will, no doubt, be trotted out later on. I have not been ungenerous to the Leader of the Opposition, who once informed me that “those persons who live in glass houses should not throw stones “. I could have reminded him that on previous occasions he has vehemently repudiated any suggestion that the members of his party were associated with another political party in New South Wales, led by a man whom he repudiated as the leader of the Labour party, but with whom his party is now allied. I refer to the man who was responsible for the State Savings Bank of New South Wales closing its doors, compelling many poor widows to sell their pass-books for whatever amount they could receive. I trust that this will be the last we shall hear of the alleged inconsistency of the members of the Country party.
Senator J. V. MacDONALD (Queensland) [9.38 j . - When the South African Government desired to establish the tobacco-growing industry in that country, it imposed an embargo on importations of tobacco-leaf, and the Scullin Government could have acted similarly if it had so desired ; but it did not wish to take such drastic action. Restrictions that arc practically embargoes are imposed on the importation of New Zealand butter and potatoes, and this has led to the New Zealand Government imposing embargoes on the importation of Queensland and New South Wales oranges. The absurd position thus arose that a bounty had to be given to assist orange-growers to find a market in Britain.
– The honorable senator must confine his remarks to the item.
– I remind honorable senators that our unfavorable trade balance with the United States of America could be improved considerably if importations of tobacco leaf from that country were reduced. Senator Hardy and the other members of the so-called Country party in this chamber should endeavour to formulate an effective system of protecting every section of primary producers. If it is logical to afford financial relief to wheat-growers, why should not we assist the tobacco-growers? The duty now imposed on imported tobacco is inadequateThis is a sop which does not provide adequate protection for the industry. If Senator Hardy will move for a higher duty members of the Opposition will certainly support him.
Item agreed to.
Division 3 - Sugar
Item 27-
By omitting the whole item and inserting in its stead the following item: - “27. Glucose, per cwt., British, 10s.; intermediate, 17s. 6d.; general, 20s. And for each fi by which the equivalent in Australian currency of £100 sterling is less than £125 at the date of exportation, an additional duty of, per cwt., British, 2.4d. : intermediate, 2.4d.; general, 2.4d.”
– Like very many more items in this schedule this item has appended to it a paragraph reading “And for each £1 by which the equivalent in Australian currency of £100 sterling is less than £125 at the date of exportation - an additional duty of . . “. In this instance the additional duty is 2.4d. in each column. I ask why provision is made only to meet a fall of the exchange rate below £25. It is highly possible that if the rate were unpegged, or even if it were pegged, it might be at a higher rate than £25. In that event one would expect a corresponding reduction of duty. On one occasion Sir Granville Ryrie said that the Labour party had a sliding scale of wages, but it slid in only one direction ! Such an observation could bc appropriately applied to this exchange formula. Provision is made for a variation of duty, but only when the rate of exchange falls below £25. “Will the Minister explain the reason for this?
Senator A. J. MCLACHLAN (South
Australia - Postmaster-General) [9.45]. - The provisions to cover exchange adjustment have been worked out on the assumption that the rate of exchange will “ remain static at £25. Honorable senators will see that if the exchange rate went to £30 the value of the tariff protection would be automatically increased. Provision is made that, in the event of the rate of exchange dropping below £25, thus reducing the protection, an additional duty shall automatically apply. This is a precaution which’ the Tariff Board has taken in order to maintain the ratio of protection which the board considers to be necessary. Honorable senators will see a simple application of this provision when we arc discussing certain duties later on; in that instance the additional duty is .36d. for every £1 by which the exchange drops, which work.; out at exactly 9d. per cwt. at par. On every item to which the provision for additional duty applies the board has made special calculations. If the rate of exchange goes beyond £25, more protection is automatically given.
– In that event there should be a. reduction of the duty; otherwise the protected industry receives an additional advantage.
– Undoubtedly. However, when such circumstances arise, they will be dealt with. So far we have no such problem, and we are obliged to accept the supposition that the rate of exchange will remain static at £25.
– The Tariff Board recommended that the duty should be a certain amount, and provided that any reduction of the rate ‘ of exchange should be offset by an additional duty, which in this case is 2.4d. per cwt. for every pound by which the exchange drops. That course has been followed to maintain the protection at a definite rate, but Senator DuncanHughes has pointed out that if the rate of exchange rises to say £30, the protection is automatically increased and the manufacturers of the goods concerned then enjoy a greater measure of protection than, I take it, this Parliament intends to give them. Provision is made here to offset a reduction of the exchange, but no provision is made to offset a rise of the exchange. I think the point raised by Senator Duncan-Hughes should be studied carefully.
.- Honorable senators are losing sight of the object of exchange. If the duty remained normal when the exchange rises, exchange would have no effect on the duty, and its value as a regulator of trade between countries would be lost altogether. In ordinary circumstances the only reason for raising the rate of exchange is to regulate international trade. If it does not act as a regulator, goods can come in at the same rate and at the
Fame cost as before. Therefore I think that the Government and the Tariff Board are wise in proposing this provision.
– I do not feel satisfied with the explanation given by the Minister. In order to make allowance for a possible change in the rate of exchange, it is provided that if exchange falls compensating addition to the duty shall he made automatically. But suppose exchange rises. The Minister says that we shall deal with: such an eventuality when it arises, but as we are now dealingwith one side of this problem, why should we not deal with both sides of it?.’ Believing that what is sauce for the goose should be sauce for the gander, I move -
That the House of Representatives be requested to add at end of the item - “ And for each £1 by which the equivalent in Australian currency of £100 sterling is more than £125 at the date of exportation -
A reduced duty of - per cwt., British, 2.4d; intermediate; 2.4d.; general, 2.4d.”
Senator A. J. McLACHLAN (South Australia - Postmaster-General [9.58] . - The matter of exchange has been the subject of considerable discussion. Honorable senators will recollect that we passed an Exchange Adjustment Act, the object of which was to maintain a ratio between the rates of duty and the rate of exchange. I myself cannot say, and I do not think the Tariff Board could calculate without making a very detailed investigation, what the effect on duties would be if the rate of exchange went to £30.
– The board might possibly have to make such a calculation.
– Yes, that is possible, but I think it highly unlikely. In that event, however, it will be the duty of the Tariff Board to make the necessary calculations. The only reasonably accurate computation we had when drafting the exchange adjustment legislation, was a rough and ready one, by which we arrived at a deduction of one-fourth of the amount of duty or 121/2 per cent, of the value for duty. The Government later asked the Tariff Board to investigate this matter more fully and in its various reports it has worked out such calculations to correspond with fluctuations of the Australian pound in relation to sterling. As honorable senators will see,’ it applied the results of this calculation to the duties on various items individually, because every item is not affected to the same extent. For instance articles in respect of which this calculation has to be made, may include locally manufactured components. There were also many other considerations to be taken into account, and these factors made the Government’s earlier formula of onequarter or 121/2 per cent, unsatisfactory as a means of regulating the amount of duty in relation to exchange variations. The Tariff Board has now worked out these figures on an accurate basis, for individual items. I repeat that I am unable to say what the effect upon these duties would be if the rate of exchange went to £30. The calculation of Senator Duncan-Hughes is, I think, wrong. Right throughout the schedule the variations are tremendous, and the calculations vary in almost every case. I should he sorry to think that we might adopt a loose method in framing a tariff. In the old. days the duty was fixed at par, but to-day, when there is a depreciated currency, it is fixed on the basis of that currency. Should exchange return to par, local industries would require additional protection.
– Does not the Exchange Adjustment Act apply only to the British preferential tariff, whereas in this schedule the exchange formula appears to apply to the general tariff also?
– It is all arranged on the basis of sterling.
-I have accepted the department’s own figures.
– If the honorable senator pursues his argument, I shall be compelled to refer the matter back to the Tariff Board. I confess that I was anxious to arrive at a formula, but when any suggested formula was applied to the various items, it proved unsatisfactory. What the effect of the honorable senator’s suggestion would be I cannot say at the moment, but it might work out entirely differently from what either he or I would desire.
Progress reported.
page 1040
Message received from the House of Representatives intimating that it had agreed to the amendments made by the Senate in this bill.
Senate adjourned at 10.6 p.m.
Cite as: Australia, Senate, Debates, 30 April 1936, viewed 22 October 2017, <http://historichansard.net/senate/1936/19360430_senate_14_150/>.