Senate
19 May 1936

14th Parliament · 1st Session

  1. Senate
  2. 14th Parliament
  3. 1936

The Deputy President (Senator Sampson) took the chair at 11 a.m., and read prayers.

page 1804

QUESTION

SENATE SITTINGS

Personal Explanation

Senator FOLL:
Queensland

.- by leave - I desire to make a personal explanation with reference to a statement which appeared in the Melbourne Age on Saturday last. The statement mentions a conversation, which, it is alleged, took place between theRight Honorable W. M. Hughes and myself, and in its usual manner, the Age attempts to belittle this chamber. It is stated that, in reply to a question by Mr. Hughes as to how one could tell when the Senate was sitting, I replied that when he saw a Hansard reporter sitting at the table he would know that the Senate was at work. In fairness to myself and to Mr. Hughes, I wish to say that I did not have a conversation with the right honorable gentlemanlast week. In fact, I do not know that I saw him during the whole of that time. The Age statement is therefore a deliberate lie circulated for the sole purpose, apparently, of belittling this chamber.

page 1805

PAPERS

The following papers were presented : -

Commonwealth Public Service Act - Appointment - Department of Commerce - F. C. Avdall.

Contract Immigrants Act -Return for 1935.

Nationality Act - Regulations amended - StatutoryRules 1936, No. 48.

Seat of Government Acceptance Act and Seat of Government (Administration) Act- Ordinance No. 17 of 1936- Wild Flowers and Native Plants Protection.

page 1805

QUESTION

HUME HIGHWAY

Destruction of Trees

Senator GUTHRIE:
VICTORIA

– Will the PostmasterGeneral take steps immediately to prevent the further destruction of beautiful trees along the Hume Highway in Victoria ?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I am not aware that there has been any wilful destruction of trees along that highway. The policy of my predecessorhas been continued by myself, and, in addition, following representations from members of the State Parliament and others, instructions were issued recently that no trees were to be removed unless this was absolutely essential for the efficient . working of the telegraphic and telephonic services. Furthermore, local governing bodies are to be consulted before any trees are felled. We have had repeated representa tions on this subject, and I am informed that any alleged destruction of trees has been caused, not by the Postal Department, but by some other department outside my control.

page 1805

QUESTION

ASSISTANCE TO WHEAT -GROWERS

Senator E B JOHNSTON:
WESTERN AUSTRALIA

asked the Minister representing the Prime Minister, upon notice -

  1. Has the attention of the Government been drawn to a statement by the Honorable A. Macallum, chairman of the Agricultural Bank Commission (Western Australia), reported in the West Australian of the 8th inst., that “ the drought in the wheat areas is the most serious position the agricultural districts have faced since 1914 “ ?
  2. In view of the increased gravity of the drought, is it the intention of the Government to comply with requests made by the Premier of Western Australia that the grant for drought relief in that State should be substantially increased?
  3. If not, what action (if any) does the Government intend to take for the relief of these settlers?

Senator Sir GEORGE PEARCE.The right honorable the Prime Minister has supplied the following answers: -

  1. Yes.
  2. It is not proposed to make further provision beyond that already approved for wheat-growers’ relief - i.e., £392,850, of which £161,600 has been allocated by the State for drought sustenance. The balance - £231,250 - will be paid to all wheat-growers on an acreage basis.
  3. The Commonwealth Government has already made provision for relief to wheatgrowers in Western Australia to the extent of approximately 3s. 3d. an acre. Any further relief is, therefore, a matter for the State Government.

page 1805

QUESTION

TASMANIAN SHIPPING SERVICES

Senator HERBERT HAYS:
TASMANIA

asked the Postmaster-General, upon notice -

What action, if any, has been taken by the Government to arrange for a steamer to assist on the Bass Strait services whilst the Taroona is undergoing repairs as a result of the recent fire?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I hope to be able to inform the honorable gentleman within the next day or two. Temporary steps have been taken and negotiations are in progress for a more definite arrangement.

page 1806

QUESTION

WHALING INDUSTRY

Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932

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

In view of the position of the whaling industry in Antarctica, will he inform the Senate when the expected regulations dealing with whaling within the sphere of the Commonwealth’s territories will be promulgated?

Senator Sir GEORGE PEARCE:

– The regulations have been drafted, and are now receiving the consideration of the Parliamentary Draftsman.

page 1806

GOVERNMENT BUSINESS

Motion (by Senator Sir George Pearce) agreed to -

That unless otherwise ordered, government business shall, until the 29th May, 1936, take precedence of all other business on the noticepaper, except questions and formal motions.

page 1806

CUSTOMS TARIFF 1936

In committee (Consideration resumed from the 15th May, vide page 1804) :

Division 5. - Textiles, Felts and Furs, and Manufactures Thereof, and Attire

Postponed item 105 -

By omitting the whole of sub-paragraph (b) of paragraph (1) of sub-item (a) and inserting in its stead the following subparagraph . - “ (b) Cotton piece-goods and piece-goods containing a mixture of fibres in which cotton predominates (excepting piece-goods enumerated in sub-items (aa) and (f) and piecegoods ordinarily used as linings or interlinings) -

Dyed or coloured- woven, of types which are principally used for manufacture into men’s or boys’ overcoats (other than dustcoats), coats vests trousers knickers (not being underwear) or overalls, viz.: -

Canvas drills duck dungarees and jeans, weighing more than 6 ounces per square yard but less than 18 ounces per square yard; other, weighing more than 3 ounces per square yard - Per square yard, British 7d.; intermediate,1s.1d.; general,1s.1d.; and ad valorem, British, 30 per cent.; intermediate, 50 per cent.: general, 50 per cent.; or ad valorem, British, 50 per cent.; intermediate, 70 per cent.; general, 70 per cent., whichever rate returns the higher duty “.

Senator PAYNE:
Tasmania

– On the 5th May the committee accepted my amendment to postpone the further consideration of this item. Honorable senators will recall that I had stated my intention to be to move for the elimination from the sub-item of piece-goods, except cotton tweeds, with a view to having these goods dutiable at 5 per cent. British, and 25 per cent. general. I do not propose to recapitulate what I then said. I hope that there will not be opposition to the proposal, because the committee, on the last occasion, was definitely in favour of it.

Senator Brown:

– No!

Senator Foll:

– The committee, out of courtesy to the honorable senator, agreed to postpone further consideration of the item.

Senator PAYNE:

– I made it clear that my sole purpose in moving that further consideration of the item be postponed, was to submit a request to make the British duty on cotton piecegoods, except cotton tweeds, 5 per cent. as hitherto. I now move -

That the House of Representatives be requested to amend sub-paragraph (b) (2), paragraph (1), sub-item (a), to read -

Cotton piece-goods and piece-goods containing a mixture of fibres in which cotton predominates (excepting piece-goods enumerated in sub-item (aa)) ordinarily used for manufacture into outer clothing for human wear, which in pattern design or appearance resemble woollen piecegoods used for the same purpose and which weigh more than 3 ounces per square yard - Per square yard, British, 7d:; intermediate,1s.1d.; general, 1s.1d.; and ad valorem - British, 30 per cent, (net) ; intermediate, 50 per cent.; general, 50 per cent.; or ad valorem - British, 50 per cent.; intermediate, 70 per cent.; general, 70 per cent.

I have no desire to interfere with the rates applying to what are known as cotton tweeds. My opposition to the item in its present form is directed to the exceptionally high rates on denims, dungarees, drills and materials of that kind. If the committee agrees to my request, and the House of Representatives makes the alteration, the manufacturers of cotton tweeds will have the same protection as they enjoy to-day. My request will not interfere with the industry, but it will restore the schedule to the form in which it was ratified by Parliament a couple of years ago, and piece-goods such as dungarees, denims and drills, which are so largely worn by working men in Australia, will be dutiable at 5 per cent. British.

Senator Brown:

– If we agreed to the request would it prevent goods of that description from being manufactured in Australia by Australians?

Senator PAYNE:

– The honorable senator may put what meaning he likes on my request. I have made out my case and do not wish to repeat the points of it at this stage, though I may have to do so later. I propose now to wait to see what opposition there may be to the proposal.

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

– I take it that when the committee agreed to the postponement of this item, it did not in any sense commit itself to the proposition which Senator Payne has just submitted. I would have opposed any such request at that stage, as I opposed the postponement of the item, for I was anxious for the committee to complete its consideration of the schedule without delay. However, now that the request has been moved, I wish to put the issues plainly before the committee. The object of Senator Payne is to secure a return to the form of duties of the 1933 schedule in regard to these textiles. If honorable senators will refer to page 5 of the memorandum, they will see that the wording of the request follows in practically every regard the wording of item 105 a 1 b of the 1933 schedule. If it is adopted, such items as cotton denims, drills, duck, dungarees and jeans will be eliminated from the item and will therefore come within the n.e.i. provisions, which will mean that the rate of duty on them will be British preferential 5 per cent., intermediate 25 per cent., general 25 per cent.

The request strikes at the very root of the cotton policy of the Government, the details of which I do not wish to recapitulate at the moment, particularly as the Senate has adopted it. I remind honorable senators, however, that the Government formulated its policy following an exhaustive review of the cotton industry by the Tariff Board.

The Government’s policy aims in the first place at the absorption of the whole of the Queensland cotton crop, which the protection previously afforded on cotton products did not provide. The second object of the Government was to bring idle spinning and weaving machinery into operation again.

Senator Payne has made calculations to show that the public will be asked to pay £200,000 more for certain garments as the result of the imposition of the protective duties on cotton denims, drills &c, contained in the schedule. The factors which the honorable senator employed in arriving at his calculations were : -

  1. Annual usage of 4,000,000 yards of single width material.
  2. 21/2 yards of material used to make a pair of trousers.
  3. 1,600,000 pairs of trousers made from the 4,000,000 yards of material.
  4. Increased cost of 2s. 6d. a pair of trousers owing to increased duty.

While these figures undoubtedly suited Senator Payne’s argument, I must, respectfully, dispute them. In the first place, the Tariff Board estimates the requirements of denims, drills, &c, at 3,000,000 yards single width. Secondly, the investigations of the Customs Department show that, on an average 23/4 yards of cloth would be used in a pair of trousers, so that 1,090,000 pairs would be made from 3,000,000 yards of cloth. Thirdly, the excess cost of 2s. 6d. a pair mentioned by the honorable senator is about 25 per cent. greater than that shown by the department’s investigations made some time ago. The excess cost to the community on the basis of the Customs Department’s figures would be approximately £110,000, or about Half of the total arrived at by Senator Payne.

However, as I have already said, the whole of the Government’s cotton policy is involved in the question before the committee. Certainly, for some time at least, the new duties will involve the users of garments made from denims and drills in heavier costs for these garments, but the Government’s proposals in respect of cotton goods generally will not affect the public in the same manner. For instance, the protective duties in force on cotton yarns prior to August, 1934, have been reduced by half. These duties affect mainly hosiery and knitting yarns, the requirements of which were estimated by the Tariff Board at 5,000,000 lb.

It is estimated that by reason of this reduction of duty the public will benefit by well over £200,000 as against the department’s estimate of an extra £110,000, which would be paid by users of garments made from denims and drills on account of the increased duties on these materials. What I have said demonstrates clearly that, although the public may be obliged, for the time being, to pay a slightly extra cost for denims, drills and dungarees, the Government’s cotton policy will not in the abstract increase the burden on users of cotton goods, but will actually decrease it.

I come now to a consideration of the effect which the honorable senator’s proposal would have on both the primary and secondary branches of the cotton industry. According to the Tariff Board the potential demand for denims, drills, &c., in Australia is 1,500,000 yards of double width, 54 inch, material. About 1,666,000 lb. or 3,333 bales, of raw cotton would be required to make this cloth. Expressed in terms of seed cotton the total would be approximately 5,000,000 lb. Last year growers’ returns averaged 4d. per lb. of seed cotton. The value of the market for denims, drills, &c, to the Australian cotton-growing industry is thus more than £83,000. Under normal conditions this branch of the industry affects 1,100 acres of cotton land, and the output of nearly 600 growers, not to mention the labour involved in cultivating and harvesting the crop.

It is opportune to mention here that the Commonwealth Bank has advanced £160,000 to the Queensland Cotton Board for the purchase and modernizing of cotton ginneries and oil mills. Further, the bank makes advances against the purchase of the crop. It is expected that such advances will reach £180,000 in respect of this season’s crop. No doubt, in making these advances, the Commonwealth Bank felt assured that the Government’s cotton policy, as connoted in the measure now before the committee, and in the Raw Cotton Bounty Act of which Parliament approved nearly two years ago, would be adhered to. If the part of its policy represented by the tariff item under discussion is rejected, cottongrowers might reasonably ask how they are to be expected to meet their obligations to the bank. Similarly the Queensland Cotton Board might ask how the advance made by the bank for the purchase and modernizing of the ginneries and oil mills can be repaid if these activities are to be unduly restricted.

The secondary side of the industry also will be detrimentally affected if Senator Payne’s proposal is adopted. Since the item was last before the committee, investigations have been made by the Customs Department to ascertain the effect of the proposal on the cotton spinning and weaving industries of Australia. The figures I am about to cite were obtained as the result of those investigations, and should give honorable senators some food for thought. I stated at the time this item was previously before the committee that, if protection were not granted on denims, drills, &c., the market for the yarns for these piece goods would disappear. Accordingly the figures I now give relate to denims, drills, &c., and the yarns for making them -

Value of plant and buildings employed - £300,000.

Number of employees - 433.

Wages paid per week - £1,011 or £50,550 per annum.

These figures tell their own tale, but, in passing, I draw attention to the £300,000 invested in plant and buildings. Over 400 hands are already employed in this branch of the industry, and when a firmer hold of the market is secured by the local manufacturers this figure should considerably increase and, with it, the wages bill.

Honorable senators should not overlook the fact that in agreeing to the increased duties on yarns for denims, drills, &c, when item 392a was before the committee, they agreed to the principle upon which the Government’s proposals for consequent increases of duty on the denims and drills were based. Surely, having agreed that increased duties were necessary on the yarns, honorable senators must in common logic, agree to the higher duties recommended by the Tariff Board to offset the duties on yarns.

The salient points which I have just dealt with at some length may he stated briefly as follows : -

  1. The duties on denims, drills, &c., are an important part of the Government’s policy.
  2. They materially assist in the disposal of the Queensland cotton crop, for which they were primarily imposed.
  3. The higher duties on denims and drills are far more than offset by lower duties on cotton yarns for the knitting and hosiery trade.
  4. Over 400 hands are employed in the manufacture of denims, drills, &c, and in making the necessary yarns, while nearly 600 cottongrowers as well as pickers and others would be affected if the duties were removed.
  5. The value to the grower of the potential market for the goods affected by these duties is estimated at £83,000 per annum, while the value to the spinners and weavers would be many times this amount.
  6. The Queensland Cotton Board is committed to the Commonwealth Bank for about £160,000 advanced for mill machinery and for a considerable amount represented by advance payments to growers against the sale of their crop.
  7. On the secondary side of the industry, some £300,000 has been invested in plant and buildings for the manufacture of the goods affected by the item under review.
  8. By agreeing to the increased duties on yarns for denims, drills, &c, the committee has already agreed to the principle on which the duties on denims, drills, &c., are based.

Honorable senators should give full consideration to the points I have just made, and reject Senator Payne’s proposal, which, if adopted, can be regarded only as a retrograde step that would undermine the whole structure of the Government’s cotton policy that was formulated only after the most searching examination of the industry by the Tariff Board.

Senator PAYNE:
Tasmania

– I thank the Postmaster-General (Senator A. J. McLachlan) for the way in which he presented a very bad case. As he endeavoured to show that my figures were wrong, I rise to explain that they did not originate in my own mind, but were obtained from sources which I regarded as reliable.

Senator Brown:

– British manufacturers ?

Senator PAYNE:

– The Minister also said that I had overestimated the quantity of this class of material used in Australia. I mentioned 4,000,000 yards of material 28 inches wide, but, as the PostmasterGeneral said that the quantity did not exceed 3,000,000 yards per annum, I draw the attention of the committee to the last report of the Tariff Board on denims, drills, &c. The figures which I cited were not even those of some one who favours reduced duties on cotton piece goods, but–

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Mr. Treacy submitted some figures to the board.

Senator PAYNE:

– Yes. In his evidence, Mr. B. H. Treacy, director of the Bradford Cotton Mills Limited - a man who, I imagine, would be a strong opponent of my request, said -

The annual consumption in Australia of denims, drills, &c., is about 4,000,000 yards, 27 to 28 inches wide.

He went on to say -

The approximate annual consumption in Australia of cotton tweeds is from 3,000,000 to 4,000,000 yards . . .

I wish to emphasize that, whereas the figures of the Minister are in respect of cotton tweeds, my figures relate, not to cotton tweeds, but to denims, drills, dungarees, &c. I find, further, from a study of the Tariff Board report, that the figures which I have given were accepted by the representatives of the British manufacturers. The average annual consumption of that class of material is about 4,000,000 yards, and, on that basis, my calculations are approximately correct. These duties are supposed to be British preferential duties, but they are so prohibitive that it is mere camouflage to say that they give any preference to British manufacturers. The lowest ad valorem duty would be equal to 65 per cent., whilst, in some instances, the rate would be as high as 170 per cent. I am not content to call such rates British preferential duties; I regard them as amounting to a prohibition of British goods. The only result of the imposition of such exorbitant duties will be a heavier burden on the working men of this country.

Senator Brown:

– The duties in the schedule were recommended by the Tariff Board.

Senator PAYNE:

– The Minister admitted that, for a time, the wearers of garments made from these materials would have to pay higher prices for their requirements. Some years have passed since I first heard a similar statement in this chamber. On many occasions we have been told that higher prices will be charged “for the time being”. I ask whether there has been any reduction of the cost of these goods during recent years. I am not referring to the cottontweed industry which has been established in this country, although at a price which has pressed heavily on the people of Australia.

Senator Brown:

– That industry would not have been established if the honorable senator had had his way.

Senator PAYNE:

– I would be the last man to injure any existing industry in this country. I repeat that my proposal does not affect cotton tweeds; it relates only to fabrics which hitherto have been manufactured in Australia in very limited quantities. The making of denims, drills, and dungarees is not yet an established industry in Australia.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Give the young industry a chance ; it started only in 1934.

Senator PAYNE:

– We heard the same story when the manufacture of cotton tweeds was commenced in Australia. It is uneconomic to impose additional burdens on the working class, and not to gain some compensating advantage for the whole community. I can prove every statement that I have made. I have with me samples of both the materials covered by this sub-item and the garments made from them, as well as correspondence which proves that I have not made any extravagant charge. On the contrary, the evidence shows that my utterances have been most conservative. I have received unsolicited letters from manufacturers in Melbourne, Adelaide, and Sydney in support of my statements.

Only this morning I received a letter from one of the largest manufacturers of these goods in Sydney, enclosing a letter from a client which also supports my stand. Although not a member of the Labour party, I am acting in the interests of the workers of Australia. I stand for every section of the community. I have always been ready to fight against injustice to one section of the community in order to confer a supposed benefit on the community as a whole.

Senator E B Johnston:

-What would the effect of the honorable senator’s request be, if agreed to ?

SenatorFoll. - It would destroy this Australian industry.

Senator PAYNE:

– The industry is practically non-existent in Australia. The figures cited by the Minister as to the capital expended on buildings and plant relate to buildings and plant erected for the manufacture of cotton tweeds. As the same plant is utilized for the making of drills, denims and dungarees, it is not correct to say that £300,000 has been expended on establishing mills for the manufacture of those textiles. I have” here a document which, while answering the question of Senator Johnston, will, I imagine, be an eye-opener to most honorable senators. It is the original customs entry for a consignment of cotton drills dated the 9th December, 1935. It relates to a consignment of cotton drills imported from Great Britain. The landed cost in Adelaide was £34 7s. 5d., yet the duty payable on that consignment under the schedule which the committee is now asked to accept was £28 15s. 8d. It is called a British preferential duty! That consignment had to be imported because similar material was not available in Australia.

Senator Cooper:

– The first amount mentioned was given in sterling.

Senator PAYNE:

– Yesterday I had a telephonic communication from a dealer in cotton textiles, in which he told me that he frequently found difficulty in obtaining necessary supplies of cotton piece goods of Australian manufacture. The industry is not yet established in Australia ; and if it is established on the basis of this tariff schedule, it will impose a heavy burden on one section of the public without giving to the community any recompense. The heavy duties on these materials add considerably to the price of garments made from them. I have here a book containing samples of British drills, the prices of which are as low as 41/2d. a yard f.o.b. London. This material, invoiced at 41/2d. a yard, would be subject to a duty of5 per cent. ; but similar material of greater weight would bear a duty of at least 125 per cent. The material is used in the first case for the making of shirts, and in the other for trousers, which may be worn by the same man. That is an extraordinary anomaly in the tariff schedule. Material of ordinary quality, which could be landed in Australia at 9d. to1s. a yard, is quoted here at1s. 3d. or 1s. 6d. a yard by those who are attempting to establish this industry in Australia. Those who wear garments of these materials have either to obtain goods f roan material made in Australia or brought here from overseas. In either case, they pay more for them than if the duty were not so high, because the Australian price is always just below the landed cost of British goods, which are subject to a heavy duty under the tariff the committee is now being asked to accept. I shall not traverse the whole of the ground which I covered previously. During the week-end I consulted several people who are not interested in the importation of any goods.

The TEMPORARY CHAIRMAN (Senator J B Hayes:
TASMANIA

– The honorable senator’s time has expired.

SenatorFOLL (Queensland) [11.46]. - My only object in speaking at this stage is to reply to the statement made by Senator Payne, that no plant has yet been erected in Australia for manufacturing material of this type. That statement is inaccurate.

Senator Payne:

– I said that the values of plant quoted by the Minister in that respect were too high.

SenatorFOLL. - The honorable senator gave the committee to understand that no special plant has been erected in Australia for manufacturing cloth of this type. I point out that, with the limited market available for cotton tweeds, it is impossible that the whole of the existing plant has been erected solely for the production of such material.

Senator Payne:

– Why?

Senator FOLL:

– For the simple reason that the market could not absorb the output if the whole of the plant were used for manufacturing cotton tweeds only. From Senator Payne’s remarks one would imagine that we were just about to impose these duties, whereas they have been in operation for some time, and were originally imposed, as the Minister has explained, to foster the cotton-growing and cotton spinning industries. If this request is adopted and these duties are removed, we might as well put “ paid “ to the account of those industries. Furthermore, I point out that if we lost this trade it would not go to Great Britain; the importations would come from Japan, because this is a market of the type which is being secured by Japanese weavers. Thus, this trade, which is now giving employment to Australian operatives and Australian cotton-growers, would go to Japanese operatives. I am informedthat, since these duties were imposed on goods of this particular class, one firm in Melbourne alone has spent over £250,000 on machinery and plant for the purpose of manufacturing them.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Approximately £300,000 has been spent.

Senator FOLL:

– Yes, that is allowing also for plant and machinery necessary for the spinning of yarns for the manufacture of these goods. I repeat that these duties have been in operation for a considerable time, and, as the Minister pointed out, were originally imposed as the result of one . of the most thorough and careful examinations yet conducted into any industry. The Tariff Board made certain recommendations, and, after endeavouring to see in what way it could hold the scales evenly between the manufacturers and the importers concerned, the Government itself decided that here was a particular line that could be manufactured in Australia. As the result of the imposition of these duties, Australian manufacturers were encouraged to enter this field; and I suggest that if this committee, by a snatch vote, based on misleading statements made by Senator Payne, carries this amendment, we shall be breaking faith with these manufacturers. As a representative of Queensland, in which State the industry is established, I point out that cottongrowing has developed promisingly, and will become a still greater primary industry if further encouraged. At present it employs the following numbers: Cottongrowers, 3,500; cotton-pickers,’ intermittent and seasonal, 3,500; cotton-ginnery and oil mill, general seasonal, 200; cotton chipping, thinning, &c, intermittent short periods, 300 ; spinning, weaving and knitting mills, 3,700, or a total of 11,200 employees. The industry can very well be extended to other parts of Australia. As I have already said, much of the existing cotton area is suitable only for cotton growing, and, if the industry is jeopardised, this land will simply revert to grazing paddocks, and the men now employed will be thrown out of work. When the Leader of the Opposition (Senator Collings) was speaking on this matter the other day, he referred to a statement by a leading American authority on cotton on the prospects of expanding the industry in Australia. If authorities in other countries recognize the suitability of our conditions for this industry, surely we should not do anything to retard its growth. It is both a primary and a secondary industry. To-day, our cotton mills are turning out excellent cloth; both in Sydney and Melbourne the mills have bought spinning machinery of the very latest type overseas, and their goods compare favorably with goods that can be imported from any other country, whilst, in many, instances the Australian article is of a higher quality. Not only as a representative of Queensland, where many people are directly interested in this industry, but also as one who is anxious to see Australian industry as a whole developed, I urge the committee not to bo led away by the arguments advanced by Senator Payne.

Senator COLLINGS:
Queensland

– I listened very attentively to the remarks made by Senator Payne when a few days ago he moved for the postponement of this item, and this morning I listened with still greater .astonishment to the manner in which he supplemented his previous remarks. On both occasions he made it abundantly clear that his only ostensible interest in this matter is his overwhelming concern for the working men of this country. He said that he did not belong to the Labour party. I can assure the honorable senator that the Opposition is intensely grateful for that fact; we should not welcome into the ranks of Labour a gentleman who holds Victorian ideas on these masters; that is, that the old-fashioned methods of the Victorian period should be applied to the solution of present-day problems. Effective though they may have been in days gone by, such methods are obsolete now. Senator Payne had quite a good deal to say on this matter the other day, and members of the Opposition have no desire to prolong the discussion. We believe that the good sense of the committee and the Australian sentiment of honorable senators will provide an effective answer to the honorable senator’s proposal. However, in his previous speech, the honorable senator made so reckless a use of figures that I deem it my duty to inform the committee that those figures were not reliable in a single instance.

Senator Payne:

– Will the honorable senator show me where they were inaccurate ?

Senator COLLINGS:

– I shall do so. I was astounded when I realized the import of his statement to the effect that, if the committee did not agree to his request, the working men of Australia would have to continue to submit to an additional impost of 2s. 6d. on each pair of dungaree trousers. I do not know how his estimate in this respect would work out in regard to overalls, but apparently his estimate of the additional impost would be equivalent to the total original cost of such articles. There is not, however, the slightest foundation for his figures. In passing, I might mention that such sympathy on the part of Senator Payne with the working men of Australia, in regard to the cost of their trousers, is somewhat belated, because when we desired to cheapen goods for them in other directions he violently opposed us. The honorable senator, 1 think, has been the victim of a form of malady, known as self-hypnotism. I cannot account for his wild utterances and extravagant figures in any other way. Of course, we know that he would not deliberately try to mislead honorable senators. I have no fault to find with his estimate that 1,600,000 pairs of dungaree trousers are made from the total importations of 4,000,000 yards of this material, but I dispute his figures which lead him to the conclusion that the working men of Australia, because of existing duties, are being bled by an amount of 3s. 6d. on each pair of dungarees. Since Senator Payne made his speech last week, one of the largest firms in this business has been asked to enlighten honorable senators in this connexion. (Wo find, first of all, that the honorable senator, in making his calculation, has confused square yards and lineal yards.

Senator Payne:

– I have not done so.

Senator COLLINGS:

– I am making that statement very definitely. The actual average cost of these goods - I am taking overalls, which, I think Senator Payne will agree, offer a fair basis of comparison. - would be ls. for garments of a particular style, and ls. 4d. for garments of two better styles.

Senator Payne:

– I said ls. 6d.

Senator COLLINGS:

– Even that cost would not give the honorable senator’s estimate of the additional impost at 2s. (id. The statement supplied to me then reads -

Jit will bc seen that, on these three styles, the actual extra cost to the public works out at ls. 2-id., as compared with the estimated figures quoted above of ls. Id. The difference of 1½., is accounted for by the wholesaler’s and retailer’s profit percentage being based on a slightly higher-priced garment.

These figures also refute the statement that £200,000 was the additional cost to be borne as a result of the duties. Actually the total additional cost amounts to’ about £66,000.

This is the real difference between the arguments of Senator Payne and those of the Opposition; we say that it would not matter if the working man were given his trousers for nothing if he did not have a job. If he had no job he would probably not have a pair of boots, which would prevent him from venturing out of doors to look for a job. This difference, T suggest, reveals the tendency of pro posals of the nature of that which we are now considering; that is, to reduce the standard of the Australian working man, of which every honorable senator, except, apparently, Senator Payne, feels proud. Bad and all as it is, our standard of living is above that of all other countries, and we are determined to maintain it against every opposition. We do not want to see inroads made into this industry. Senator Foll has quoted figures to show its importance, and the Tariff Board’s report contains no suggestion whatever that the industry is exploiting the community, or that it is not efficiently conducted. I suggest that Senator Payne’s statement that his request, if adopted, will not do harm to any existing Australian industry, means that it cannot be of any benefit to any other form of industry in this country; and, as I shall show, it will not be of any benefit to British manufacturers.

Senator Foll referred to the extensive plant which has been erected for the manufacture of these goods. The Minister for Trade and Customs (Mr. White) has stated that if they desired to retain the duties, Australian manufacturers must proceed immediately with the manufacture of these cloths; that if this were not done pending discussion by Parliament, the cloths would be allowed in duty free, under by-law. Senator Foll is a member of the Government party, and he has elaborated the Government’s policy in respect of the cotton industry. Although we feel that the Government has not done its job thoroughly in .this respect, members of the Opposition are prepared, nevertheless, to take a broad Australian outlook. Although we feel that sometimes justice is not done to Queensland in connexion with this industry, wy. are prepared to support the Government whenever it endeavours to do something for the good of the industry. Consequently, we are prepared to join forces with it against proposals such as that now advanced by Senator Payne. I have every sympathy with the wearers of denims, drills, and dungarees. In my younger days it was my lot to have to wear this class of clothing, and I am glad that to-day I am able to escape that necessity. I know that it is essential that thousands of workers throughout Australia, who are engaging in manufacturing industries, should have these articles, but the suggestion that the percentage of manufacture of these materials in Australia is very low indeed is not in accordance with facts. Senator Payne must have relied on figures relating to a period when the duties were not as highly protective as they are now. If that is so, they form no fair basis for comparison. The honorable senator must know that the manufacturers are doing their best, and that there is a reason, which will be dealt with thoroughly after this request is disposed of, why, up till now, the pathway of successful manufacture of all Australian requirements is made difficult. The industry is doing its job, but it needs not less but more encouragement by the National Government. It is neither necessary nor wise to prolong this discussion. I hope the Senate will have regard to all the facts concerning this industry, and will rule out without hesitation the proposal now before the Chair. I endorse what Senator Foll has said - what Senator Payne desires to accomplish by his request will not have the effect of benefiting the British manufacturers of these cloths. The honorable senator produced a set of samples to back up his arguments; if I thought it worth while - and I am not sure that it is too late to do so now - I could have produced samples of cloth to show that the acceptance of the honorable senator’s suggestion would send the trade, not to Great Britain, but, on the contrary, to a dangerous competitor of Australian industries, a country which we sometimes have under discussion in this chamber.

Senator BROWN:
Queensland

. There is an old saying, which has been frequently heard in this chamber, “An old trog for a hard road “. I think my honorable friend–

Senator Hardy:

– By “ trog “ the honorable senator means?

Senator BROWN:

– Troglodyte. Our friend from Tasmania is padding along a very hard road indeed. I should like to see a great deal more frankness displayed by the honorable senator, because we, on this side of the chamber, are perfectly frank and straight forward.

Senator Payne:

– I wish the honorable senator would be a little more courteous. What right has he to insult another senator?

Senator BROWN:

– There is nothing discourteous in what I have said. If the honorable senator regards my remarks as discourteous and insulting to him, I withdraw every word of them.

Senator Payne:

– The honorable senator has done that before, only to repeat his insulting remarks. He knows it. But let him get on with his speech.

Senator BROWN:

– Is the honorable senator chairman of this committee thai he should direct me to proceed? I have no desire to be discourteous to the honorable senator; he and I are very old friends.

Senator Payne:

– I know the honorable senator too well.

Senator BROWN:

– If the honorable senator regards my remarks as discourteous, I withdraw them, as I do not wish him to bear ill will towards honorable members of the Opposition.

The duty on cotton piece goods is a serious matter, not only to Queensland, but also to the whole of Australia, and honorable senators on this side appeal to those who may be inclined to vote for the somewhat anti-Australian request proposed by my honorable friend from Tasmania to weigh the facts carefully. As I said at the outset, I wish the honorable senator would be a little more frank, and state clearly his position in regard to this matter. He said that he desires that the old rates of duty should be reverted to. If his proposal were given effect it would undoubtedly mean the killing of the industry developed by the manufacturers of Australia. The honorable senator who has accused me of discourtesy is discourteous enough to engage in a conversation with another honorable senator. Why does he not frankly admit that, because there is no textile industry established in Tasmania, he is out to kill an industry established on the mainland? Only the other day he voted in favour of the duty on cement, and rightly so, because he was anxious to maintain cement works established in Tasmania. I think the aims of Australian industry generally would be best achieved if manufacturers combined to establish certain sections of their industries in Tasmania, because then we should have Senator Payne’s support for Australian industries generally. The honorable senator has been an ardent advocate of increasing the population in Australia and has spoken on several occasions in this chamber of the troubles confronting this country because of the diminishing of the natural increase of population. The honorable senator is all for more babies for Australia and has frequently said “Let us increase the number in the family “. Now, when we are dealing with a baby industry, and the opportunity is presented to him to put his theories into practice, he neglects to take advantage of it. While we on this side of the chamber are anxious to see an increase of the population of Australia, we are also anxious to conserve the interests of Aus tralian industries in the infant stage. That is where we differ from the honorable senator. Not only do we want to see more population–

The TEMPORARY CHAIR MAN. - The honorable senator must confine his remarks to the discussion of item 105.

Senator BROWN:

– I am trying to point out to the honorable senator who is so discourteous as to refuse to listen to me, and to other honorable senators, that this is a question of applying the recommendation of the Tariff Board. My discourteous friend from Tasmania has said time and time again that we should support the recommendations of the Tariff Board, because the members of that board have given full attention to the matters submitted to them, and their recommendations have been made in the light of the inquiries conducted by them. In this instance, however, the Tariff Board has even gone further than the Government and has said that we must do everything possible to safeguard the interests of this particular industry. The board made certain suggestions which the Government rightly acted upon because they coincided with national policy. Honorable senators on this side are behind the Goverment in its efforts to establish the cotton industry in Australia, but we should like it to go even further than it has done. It is a pity that an honorable senator possessing the high intelligence of my discourteous friend from Tasmania should endeavour to mislead the Senate in regard to this industry, in an endeavour to influence the vote of other honorable senators. I point out to honorable senators who might be influenced by the oratory of the discourteous senator from Tasmania that the figures which he has supplied demonstrate him to be a most untrustworthy witness. The legal gentlemen in this chamber will admit that in a court of law not much notice is taken of untrustworthy witnesses. This discourteous senator is untrustworthy.

The TEMPORARY CHAIRMAN.Order! The honorable senator is merely endeavouring to provoke Senator Payne. He has made use of the word “ discourteous “ several times. Although the use of that word may not be unparliamentary, the honorable senator is indulging in tedious repetition, andI ask him to confine his remarks to the item before the Chair.

Senator BROWN:

– If my repetition of the word is against the Standing Orders I defer to your wishes, Mr. Temporary Chairman, but “ discourteous “ is the correct term to apply in this instance, because all the time I have been endeavoring to convince Senator Payne of the error of his ways; he has been conversing with another honorable senator. He hopes to get the support of the committee by the foolish assertion that the industry is not yet established in Australia. I point out, however, that efforts are being made by the pioneers in secondary production to establish further industries. An argument similar to that used by Senator Payne might have been advanced when the first attempts were made to manufacture cotton tweed in this country. I could quote from the report of the Tariff Board, and I could submit figures relating to the industry, to show that the honorable senator’s remarks were misleading, but I shall not do that. This is a serious matter to Queensland, and to Australia as a whole, and we should carefully weigh the words of the Minister in charge of the measure and those of the Leader of the Opposition. I trust that honorable senators will vote solidly for the development of industry, not only in Tasmania, but also in every other part of Australia.

Senator PAYNE:
Tasmania

– I shall deal briefly with some of the criticisms offered by Senators Foll and Collings. I do not think that Senator Foll intended to be discourteous to me, but he made a remark that cut me rather keenly.

Senator Foll:

– I certainly did not mean to be discourteous.

Senator PAYNE:

– I have no axe to grind in this matter. I am actuated by one motive only; I desire to do the best I can for the people of Australia. I am not financially interested in these duties, and, even if I were, it would not alter my attitude to them. I should take a stand similar to that which I assumed on a former occasion in regard to certain companies, in which I was financially interested, that have bled Australia white in recent years. I have always opposed the granting of prohibitive protection.

Senator Foll:

– I hope that the honorable senator does not think I suggested that he is financially interested in this mat tcn-.

Senator PAYNE:

– Not at all. Senator Foll said that if my request were carried we should be breaking faith with certain people in Queensland. I know that he was thinking of the cottongrowers, because he specially mentioned them soon afterwards; but we should not be breaking faith with them. The cotton industry has been established in Queensland for a considerable period, and has not been dependent, to any extent whatever, on the manufacture of dungarees, drills, denims, and goods of that description.

Senator Foll:

– Yet the bounty is based on the Australian requirements.

Senator PAYNE:

– That may he so; but a primary industry may so outgrow its value to the community that the only way to keep it going is to place on the people an everlasting burden which they find difficult to bear. Some industries arc so uneconomic that their operations have to be restricted to certain areas, and their output has to he limited, because, the more they produce, the greater becomes the burden imposed on the people. Senators Foll and Collings both said that to accept my proposal would be to play into the hands, not of Great Britain, but of Japan. Senator Collings did not actually mention Japan, but as he made a relevant reference, I have referred to it. I say without hesitation that my request would have no such effect. The British manufacturers, who have been engaged for centuries in the manufacture of textiles, are giving such good value that they can hold the Australian trade which they have always had.

Senator Foll:

– We are now dealing with a section of the trade in which Japan has beaten Great Britain.

Senator PAYNE:

– But it is not suggested that we should place Japan on the same tariff basis as Great Britain. Senator Collings gratuitously suggested that I must be ignorant, because I based my calculation as to the extra cost of material under the Government’s proposal, not on the running yard, but on the square yard. I did nothing of the kind. My calculation was based on material 28 inches in width. After having said that my figures were all astray, the honorable senator admitted that the actual additional cost of material might reach ls. 4d. - I said ls. 6d. - -for a pair of trousers. I based my calculation on . ls.. 6d.5 and I am prepared to stand by it. I conferred in Melbourne yesterday with more than one manufacturer and distributor, and I was assured that ls. 6d. was a fair assumption to make as to the additional cost of the material. But the increased cost to the purchaser does not end with the increased cost of the material. The wholesaler makes his profit, and, if we estimate it as 25 per cent., Ave have the cost increased by 4£d., which brings it lip to ls. 10½d. On that amount the retailer gets a profit of one-third, which is 7£d., which makes the additional cost to the purchaser 2s. 6d. Yet, Senator Collings contends that my figures are wrong. Why does he not make a calculation of his own, or admit his ignorance of the whole matter? The honorable senator is silent. That is my answer to the charge that I have over estimated the additional cost to the wearer.

Senator Collings:

– The honorable senator’s assumption is so impudent that it staggers me.

Senator PAYNE:

– I support my statement with figures supplied by a business man in Sydney, who, referring to a different kind of garment, states that the price to the purchaser under the former duties was 5s. 6d., whilst, under the present duties it is 8s. 9d.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– To what style of garment does the honorable senator refer?

Senator PAYNE:

– I suppose the reference is to an ordinary pair of trousers with a bib and brace. The business man, to whom I have just referred, estimates that the additional cost of each article is 3s. 3d., which approximates my estimate of a total increase of the retail price of a somewhat similar garment by 2s. 6d. I have received a letter from Sydney which is very informative. I do not know the writer, but he is evidently in a large way of business. He states -

Having read your commonsense view as to why item 106 should be remodelled, as shown in Hansard No. 10, we are taking this opportunity to convey our thanks for your interest in this item. Honorable senators seem to have lost sight of the fact that these garments are worn to protect outer clothing, but with the excessive duty they become the dearer article, so in tho end they will have to buy some other garment, and this branch of the clothing trade will have to shut its doors.

When this tariff matter was explained at the elections the main reason given was that it would absorb a great deal of unemployment, but the poor workers ‘were not further told that their garments were going to cost at least one-third to 50 per cent, more on their same wages. How much unemployment has been absorbed? It would be interesting to have an analysis taken ….

I have referred to this matter again solely because of the criticism levelled against me by Senators Foll and Collings. I cast no reflection upon any Australian manufacturer.

Senator Leckie:

– Then do not indulge in inuendoes

Senator PAYNE:

– I have merely stated the facts of the situation. I produce two pairs of drill trousers concerning which I have received the following communication : -

We have forwarded you by passenger train “to-day as samples, one size six B and B made from Australian material, and a size six made from tho same material washed. This will give you an idea of the shrinkage in the length, and also the fastness of the dye. The garment itself has shrunk in the length 4* to 5 inches., and the dye will speak for itself. ‘ We hope that we are not burdening you too much with our troubles, but we thought that having concrete evidence may help you in the course of your debate.

Honorable senators can see for themselves that the article which has been washed has shrunk about 4 inches, and the colour has faded.

Senator Foll:

– The honorable senator should have brought down similar samples made from imported material to show how these stand up to similar treatment.

Senator PAYNE:

– I produce, for the benefit of honorable senators, a sample of British drill, which has been subjected to the water test, and also a sample of Australian material of similar grade, which has undergone the same process. I should not have made these comparisons, had I not been accused of extravagant statements. I think it is clear that I have been most moderate in my observations. If the committee accepts the Government’s proposal, it will impose upon the purchasers of these goods one of the heaviest burdens that has ever been inflicted, upon any section of the community. I stand for a fair deal for the working man ; let us have it. The writer says truly that this matter was brought before the electors during the last election, but the workers were not told the additional price that they would have to pay for their garments. They were told that the higher duties would provide more employment, and so they will; but at what a price? I think I have made out a case for my request, and I am prepared to answer any objection. I have demonstrated that the arguments I put. forward ten days ago were sound. Had they not been sound, it is unlikely that the motion for the postponement of the item would have been carried by so many votes. I now ask the Senate to ratify that vote by agreeing to my request. Let us show that there are in this Senate public men prepared to consider these matters, not in a narrow, sectional way, but with intent to do what is best for the community as a whole.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– This is a matter upon which I feel that I would not be justified in giving a silent vote. Senator Payne made much of the fact that the postponement of the item was carried by a considerable majority, but I do not think that he should assume that all honorable senators who voted for the postponement are necessarily in agreement with him. They merely voted for delay, so that they would have further time for consideration. During the interval I have given the matter close consideration, and now I must congratulate Senator Payne upon having put up a convincing case. During this debate many figures have been quoted for and against the request, and, remembering the old adage about figures and the truth, one may be pardoned for being a little doubtful about the way in which some of the figures have been handled.

This item closely affects the cotton industry, and it is natural, therefore, that those honorable senators who represent Queensland should be anxious to maintain a high rate of protection. If we look back over the pages of Hansard, we find that, when the sugar agreement was under discussion, honorable senators from Queensland declared that there were great areas of land in that State which, if not devoted to sugar-growing, would not be of use for anything else. Now we are told that there are other large areas of land in Queensland which, if not devoted to cotton-growing, would be useless for anything else.

Senator Foll:

– I did not say that the land would be useless. I said that it would be of no use for any other form of agriculture, and would have to revert to grazing.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– I am convinced that Senator Payne has made out a sound case, and I intend to support his amendment. I am strengthened in that determination by the majority report dealing with this subject presented by Mr. W. S. Kelly, a member of the Tariff Board. All honorable senators, except those who happen to come from Queensland, must be impressed by that report.

Senator Brown:

– What about the majority report?

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– Majorities rule, hut minorities are very often right. That is a saying which is frequently quoted by members of the party to which the honorable senator belongs.

Senator Brown:

– It does not apply in this case.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– I commend Mr. Kelly’s “report to the consideration of honorable senators. The figures used by him in support of his findings are, I believe, substantially correct. He had the advantage of hearing all the evidence tendered to the board, and he has analysed that evidence very closely. I know Mr. Kelly fairly well, and know him to be a level-headed, clearthinking man, who would not be easily deceived.

Senator COLLINGS:
Queensland

– I should not have risen but for Senator Payne’s suggestion that by my silence I was consenting to his assertions. I interjected at the time that his assumption was so impudent that I was incapable of a reply. I have already said that Senator Payne was using figures which were not based upon the facts, and I also said that I believed he was not doing so intentionally. I am not sure now whether I wasnot too charitable in saying that. He deliberately stated that to the figure of1s.1d. which I gave as the extra cost of a suit of overalls, had to be added wholesale and retail profit, and finally he arrived at his own figure of 2s. 6d.

Senator Payne:

– I rise to a point of order. . I am not going to have put into my mouth words that I did not utter. I I did not start off on the honorable senator’s basis of1s.1d.; I started from my own basis of1s. 6d., which makes all the difference in the world. I said that Senator Collings had quoted the difference in price as being between1s.1d. and1s. 4d., and went on to point out that that was getting fairly close to my own figure of1s. 6d.

The TEMPORARY CHAIRMAN.No point of order is involved.

Senator COLLINGS:

– My only desire is to correct the honorable senator. I am sure that he does not wish to be guilty of quoting figures that are not correct, especially when they will be published in Hansard, to be read by those interested persons who have followed his speeches so closely. The honorable senator’s speeches have already been read, and he has been commended for the stand he has taken. The actual facts in regard to this matter are that, before the introduction of the present schedule, a fair, average price for overseas material was 6d. a yard f.o.b., and this material used to be landed under the old tariff at approximately 9d. or 91/4d. a lineal yard. An equivalent quality of Australian manufacture is to-day being sold in bulk quantities of1s.1d., making a difference of about 4d. a yard, which, on a pair of trousers, allowing 21/2 yards for the garment, would be approximately10d. The bulk of cotton drills, excluding denims, is turned into various kinds of overalls which, on the average, need 31/4 yards of 28-in. material to each garment. Thus the extra cost, working on a difference of 4d. a yard, would be about 1s.1d. a garment.

I have here a statement showing both the retail and wholesale selling prices of three lines of overalls, before and after the introduction of the new tariff. For these garments, the actual extra cost to the public is as follows : -

Overall No. 1 (Style 111) - Extra 2s. per garment.

Overall No. 2 (Style 113)- Extra 1s. 4d. per garment.

Overall No. 3 (Style 102)- Extra1s. 4d. per garment.

It will be seen that, of these three styles, the actual extra cost to the public works out at1s. 21/2d., as compared with the estimated figure of1s.1d. The difference of11/2d. is accounted for by the wholesaler’s and retailer’s profit percentage being based on a slightly higher-priced garment. I particularly direct the attention of honorable senators to the following table, compiled by an Australian firm which deals in both Australian and imported material: -

That is the price to the consuming public, to the members of the working class, for whom Senator Payne has discovered a belated sympathy, and the extra cost is 1s. 4d. The figures cannot be refuted, because the goods are being sold at these prices to the public to-day. Still Senator Payne persists in his parrot cry of 2s. 6d.

Senator ARKINS:
New SouthWales

– I was surprised at the attitude that Senator Payne has seen fit to take up in regard to this matter. The cotton industry, although in its infancy in this country, is one of the great primary industries of the world. The Cotton Board first came into existence in 1927, in which year there were 2,080 growers, the acreage under cotton was 20,100, the seed cotton grown amounted to 7,000,060 lb., and the quantity of lint produced was 2,311,000 lb., which made up into 4,824 bales. . In 1935, the industry had expanded until there were 3,223 growers, the acreage was 61,000, and the quantity of seed cotton produced was 2,766,000 lb.

Sitting suspended from 12.45 to 2.15 pm.

Senator ARKINS:

– From 1927 to 1935 the number of cotton-growers increased by 1,143 and the area under cotton by 41,000 acres. At present about 65,000 acres in Queensland are under cotton, and the actual quantity of seed cotton produced has trebled. I appeal to Senator Payne to realize that the cotton industry is only in its infancy, and that of the 188,000,000 yards of cotton materials used annually in Australia only 4,000,000 yards, or 3 per cent. of the total, are used in making the goods covered by his request. As Senator Payne has always advocated the encouragement of primary production, for the sake of a paltry 3 per cent. he should not do anything to injure the cotton-growing industry. In other countries cotton production is regarded as of great importance, and I believe that every Australian is willing to make some sacrifice in an endeavour to place the industry in this country on a sound commercial basis. At present, about 65,000 acres of land in Queensland are under cotton and on this area 3,500 cottonpickers are employed. Many growers are engaged in mixed farming, and others are devoting their energies solely to the production of cotton. Under present conditions cotton production gives intermittent and seasonal employment to 3,500 cotton-growers and pickers. ‘ Employment is also provided in cotton ginneries, oil mills for 200 persons and in shipping and thinning work is found for an additional 200. Employment is also provided for a large number in spinning and weaving in the knitting mills. In Queensland, the industry, which owns its own cotton ginneries and an oil mill, is conducted on a co-operative basis, and the cotton seed, apart from a small quantity retained for planting purposes, is crushed in the mill. The by-products are cotton seed oil, linters, cotton seed meal and cotton seed cubes used for feeding sheep. Although this industry was established only eight years ago, or more accurately the year when the Cotton Board came into being, it has developed to such an extent that its products are valued at £500,000 annually. There has been remarkable development in the production of cotton in some of the minor Sotith American Republics, and in Japan and China. By developing the cotton industry we are increasing our national wealth,’ and from a defence viewpoint, making our position more secure. The Tariff Board, in its report of the 25th July, 1934, stated-

The importance of the cotton-growing industry from the standpoint of national defence, which was stressed in the hoard’s previous report might here be reiterated. As previously pointed out, cotton is a most important, in fact, an indispensable commodity in a time of national emergency, seeing that, not only does it play a vital part in the manufacture of munitions, but it is also essential to so many phases of defence equipment.

I direct the attention of Senator Payne to the following -

Having in view the place which cotton holds in the domestic, industrial, economic and national life of the country, the board has no hesitation in expressing the view that the development and successful establishment of the cotton-growing industry in Australia, is not only desirable, but is vitally essential to to welfare of the Commonwealth.

In view of that statement, is the honorable senator willing to throw the cotton industry to the commercial wolves?

Senator Payne:

– Who are the commercial wolves?

Senator ARKINS:

– The honorable senator is seeking a reduction of the duties proposed, which he knows are not so high as those recommended by the Tariff Board, and in that way endeavouring to retard an Australian industry which the board saYs is vitally essential to the welfare of the Commonwealth. This important primary industry, which has developed to a remarkable extent in the last eight years, and employs such a large number of persons, should receive the support of every honorable senator. I appeal to Senator Payne and Senator Sampson to reconsider the position, and to remember that the Tariff Board has said the industry is vitally essential to the welfare and defence of the Commonwealth. We know that many of our primary industries experienced considerable difficulties in the initial stages of their development. I understand that the annual cost to the community of maintaining the very important sugar and butter industries amounts to £5,000,000 and £6,000,000 respectively.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– Does the honorable senator suggest that we should spend £7,000,000 on establishing the cotton industry ?

Senator ARKINS:

– The expenditure of such a large sum is unnecessary and not even suggested, but in view of its importance and of the quantity of the cotton goods being produced in Australian factories, every opportunity should be afforded to enable the industry to continue. In the interests of the Commonwealth generally, I trust that Senator Payne will withdraw his request.

Senator FOLL:
Queensland

.- Earlier in the discussion, Senator Payne produced two pairs of overalls made from Australian material, one pair in its natural state and another pair which had been washed, which in the honorable senator’s opinion, was practically useless. I now produce two samples of cloth made in the factory mentioned by the honorable senator, one in its original state and the other after being boiled in soap and soda for two hours.

Senator Arkins:

– Is the material identical with that produced by SenatorPayne.

Senator FOLL:

– These are samples of material used by Commonwealth and’ State government departments for making uniforms. I am informed that theauthorities are quite satisfied with the quality of the material which has been submitted to the most severe tests.

Senator Payne:

– That is not ordinary grade material.

Senator FOLL:

– This is ordinary grade material produced in an Australian mill. I also produce samples of blue cloth from the same mill, one in its natural state and another after being boiled in soap and water for half an hour. Tests have been made under proper supervision, and as honorable senators will see, the quality and colour are equal in every way to the imported article.

Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932

. - Senator Payne, having expressed his own opinion, and the views of those pecuniarily interested in these duties, should withdraw his request. Cotton is produced in Queensland, but the cotton mills are established in Sydney and Melbourne. The cotton industry is of national importance to Australia. The cotton industry has been accepted for several years and, as the Minister has pointed out, its existence has become a matter of Government policy. If we were to take away the protection that we have given it - the manufacturers are afraid that we may do so - we should open the field to other countries, and the employees in the Australian industry would be thrown on to an already overcrowded labour market. Take the instance of Britain itself! Many British cotton manufactures are made from cotton grown in other parts of the world, under coloured-labour conditions, which enables them to compete with Australian goods, even with the protection of the Australian industry at its present level. Australian cotton is grown under whitelabour conditions, which is, of course, a handicap to the manufacturers. We members of the Australian Labour party, and of the Australian nation, admit that, and we also admit that some sacrifices have to be made. But Senator Payne, if he thought for a moment, and took into consideration the difference between the costs of white-grown and blackgrown cotton, would know that the adoption of his policy would result in the closing down of every cotton factory in this country. If the honorable senator’s attitude were spread over the whole of the secondary industries of this country and were given effect to, Australia would be merely an agricultural and pastoral country, depending for its population on agricultural and pastoral industries. The British cotton manufacturers are already favoured with a preferential tariff, and there is danger that, if coarse cotton materials were allowed into this country on the basis suggested by Senator Payne, the country would be flooded with imports from Japan, where the conditions of production are so different. At the public inquiry by the Tariff Board the cost of production was considered, and it was shown that the local industry could not compete owing to the low rate of wages paid overseas, particularly in Japan, where the wages for females is only 7d. a day plus keep as against 35s. 3d. a week plus 15 per cent. for piecework in Australia. I have worn dungarees myself, and I know the conditions under which they are worn. They are worn by working men, it is true, but in my experience the worker is willing to make a sacrifice here and there, if a grand national policy of giving as much employment to our own people as is possible is followed. Although Senator Payne has been criticized before on account of his apparent preference for Japanese goods, I do not think that he really intends to provide a loophole for the Japanese.

Senator Payne:

– The honorable senator may think what he likes, but I have never suggested such a thing.

Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932

– It has been said by competent authorities that if we continue importing goods which we can make ourselves, the countries from which we import them will want more and more, and one day we may have to defend ourselves against them. That has been said about more than one country, apart from Japan.

If price were to be made the god of national policy, which is the main argument advanced by Senator Payne, this country would be reduced to a coolie level because we should have to compete against other countries under conditions which would not be in the interests of this country. We should become a coolie nation in spirit as well as in fact. I do not think Senator Payne wants to drive the Australian, workers down to the level of workers in India, Japan and China, but that is the logical conclusion to be reached from his request.

Senator James McLachlan, in referring to the Queensland aspect of the cotton industry, said that when anything grown in Queensland was threatened the same cry was raised that if the land were not used for the purpose for which it was being used it would go out of cultivation. That has been said with truth about the sugar lands. The land on which sugar is now grown could be used for very little else if the sugar industry were smashed. It is very hot coastal land, and it could not he used, for instance, for the production of wheat. Perhaps that is just as well, because if the sugar industry were abolished and the land which it is at present occupying were turned to wheatgrowing, Queensland would become a serious competitor with New South “Wales, Victoria, South Australia and Western Australia in the wheat markets of the world. The Commonwealth would thus face an even more difficult task in meeting the wheat position than faces it to-day. In respect of the cotton,- however, the case is different. I know very little about the land in South Australia whence the honorable senator comes, but I do know a great deal about Queensland. I have been all over it on many occasions, and I have written a good deal about it. Before the production of cotton was entered upon on a large scale in Queensland, the land which it occupies was utilized for grazing. It is only secondclass grazing country, being not so good as that in Western Queensland or in the south-eastern coastal belt, but it is fairly good land, and before the introduction of cotton-growing it was carrying a fair number of cattle. If cotton-growing were to cease the land could be used again for grazing areas on which cattle would be raised on large holdings which maintain very few people. From the view-point of closer settlement which is essential to the defence of Australia, the maintenance of the cotton industry is necessary. It is my belief, and I consider that it is the belief of all- thinking Australians, that the more people there are on the land the better it will be for this country. Goldsmith pointed with very great force in his fine poem The Deserted Village to the need for settlement. What he said concerning “ the .deserted village “ could be extended to a deserted countryside. When cotton-growers are concentrated in great numbers more land is being brought under closer settlement. That is a good thing for the country, and it should meet with the approval of every advocate of primary producing interests in this chamber. The necessity for the development of the cotton industry has been realized by every Commonwealth Government in the last ten years. Each has made it a matter of national concern.

The growing of cotton could not flourish without the existence in Australia of factories to spin the raw material into cloth. If the Australian cotton- growers were forced to ship their products under world parity conditions to other parts of the world they could not compete with countries which are producing the product under coloured-labour conditions.

Senator Guthrie:

– They would have no hope of doing so.

Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932

– As the honorable senator says, it would be a hopeless prospect. The honorable senator is an authority on wool. The wool industry is fortunate in that it is the one industry which has not been generally in competition with colouredlabour products. In no tropical country, where the workers toil for bare sustenance, does the production of wool flourish. Australian cotton, however, does have to compete with cotton grown under cheap-labour conditions. We, in Queensland, do not wish to wipe the British manufacturers out of existence on the Australian market, but we do wish to have a substantial industry. There are not many areas in Queensland where cotton can he grown. The cotton plant is a sensitive plant, and it requires not only a certain amount of rainfall but also rainfall at certain periods. Suitable soil is also essential”. If these conditions do not exist, the cotton plant cannot flourish. Accordingly, there is no need to fear a destroying of the existing two-way trade between this country and Great Britain. We do not ignore the fact that Britain takes a certain amount of our products. For the present, at least, we are satisfied with the industry as it is to-day, and with the number of cotton mills in existence.

Replying to criticism, Senator Payne said that the duties he proposes to remove cost the Australian workers £200,000 a year. Other estimates better based than iiia put the figure at about £60,000 a year. We, on this side of the chamber, speak with authority on behalf of the workers, and I venture the opinion that no worker is opposed to the Government’s proposals for the protection of the cotton industry. I think Senator Payne also said that the industry encouraged by these duties was small, and he scouted the idea that from the point of view of the manufacturers it was worth saving. The point is that millions of yards of cloth produced from Australian-grown cotton are being made in Australia at present, and proof that the duties as proposed by the Government are necessary is provided by the fact that nearly 1,000,000 yards of cotton goods are in stock at the present time, and this quantity needs to be cleared.. The employees in the cotton industry are in full-time employment depending, of course, on the endorsement of the Government’s proposed duties. But both ends of the industry, the growers and the manufacturers, would be stifled by the carrying of Senator Payne’s request, and the result would be disastrous. There i3 material in the subject of cottongrowing for many speeches, but I do not think that Senator Payne and other honorable senators who have grown a little to think with him, including Senator James McLachlan, take a broad national view of this matter. We often say what a wonderful country we have, but other people outside are inclined to say that we are not making the fullest use of if, that we are not developing it, and do not deserve to have it, and that the hundreds of millions of other countries should have access to this fair Australia of ours to do the job that we will not do ourselves. The cotton industry is one of the industries which are doing the job. We are growing something that this country can produce, and thereby bringing about closer settlement. The acceptance of Senator Payne’s request would be tantamount to destroying this industry. If the Australian cotton industry had to meet open competition it could not be maintained. If Senator- Payne will not be persuaded to withdraw his request, I appeal to him to take his few supporters outside the chamber, and have a hearttoheart talk with them, thus achieving the result that his would be the only voice raised in support of his request.

The TEMPORARY CHAIRMAN (Senator J B Hayes:

– The honorable senator has exhausted his time.

Senator DEIN:
New South Wales

.The question that I first ask myself is, whether this particular industry is worth preserving. In order to answer it, I have considered whether in past years the Government has assisted it. I find that for a number of years encouragement has been given to it by the payment of a very considerable bounty to . the cotton-growers. This convinces me that, from the viewpoint of the Government, at least, the industry is worth while, and should be preserved. I take it that, when the Government decided to grant a bounty, it was actuated by two motives, the first being that it desired the settlement of extensive areas in the northern portion of Australia, which are eminently suited to cottongrowing, but do not lend themselves to other forms of production. In this respect, cotton-growing is in the same category as the production of sugar. Having grown the cotton, the question that arises is, what shall be done with it? As it cannot he exported for purposes of manufacture, the manufactured article must be produced in Australia. At the present time, there are 61,000 acres under cotton cultivation. If Senator Payne wishes to strike a blow at the industry, and I contend that ho does, he should show the use to which those 61,000 acres could be otherwise put, and, also, in what avenues the 3,22-S persons who are engaged in cottongrowing could be absorbed. People must be encouraged to settle in the north of Australia. As the development of this industry provides one means whereby the empty spaces of that portion of the continent may be filled, the Government should give to the industry whatever assistance lies within its power. Senator Payne mis-stated the case, when he said that the workers are asked to bear the whole of the burden of this tariff protection. I point out that the cost of clothing is taken into account by industrial tribunals in the fixing of the basic wage. It is reasonable to assume, therefore, that, if the imposition of a duty makes necessary articles of clothing more expensive, the extra cost is borne, not entirely by the basic-wage earner, but by the community generally. The honorable senator also conveyed the impression that the manufacturing side of the industry, is not worth persevering with, on the ground that it has not been properly established. I understand that only about 3 per cent, of local requirements are manufactured in Australia. Thus, a very big field has still to be exploited. Comparing the report of the Tariff Board with the form in which the matter is set out in the schedule, I find it difficult to understand the true significance of the provision in regard to the 6-oz. material. If I am competent to pass judgment upon the material which is made in Australia, it is considerably above 6 oz. in weight, probably ranging from 7 oz. to 9 oz., and this weight is necessary for heavy and hard wear. I am somewhat afraid that if the 6-oz. weight is accepted, overseas manufacturers will attempt to market a cloth slightly below that weight at a reduced price. The weight should be so fixed that the purchaser would realize immediately whether or not it was of the right quality. The weight 6 oz. would cause considerable confusion, and place an added burden on the purchaser. It should be reduced, in order that the simplest mind could determine its wearing qualities. The Government, having decided that the industry is worthy of preserving, let us assist it. To assist the grower alone would be inadequate; we must also assist those who are prepared to make a commercial use of his product.

Senator GUTHRIE:
Victoria

– Senator Payne, as usual, has prepared his case very well, but some not quite fair comments have been passed upon his efforts, which at least have the merit of genuineness. I cannot, however, vote for his request. The policy of the Government has wisely been to encourage cotton-growing, particularly in Queens land, where there is a large area suitable for still another primary industry that lends itself to closer settlement. If there is one thing that Australia needs more than another, it is closer settlement and a larger population. Over 3,000 growers are engaged in the production of cotton, and last year 7,000,000 lb. was produced, of an average value of about 4d. per lb. for seed cotton. Any primary industry which encourages closer settlement, provided the attempt is not farcical - and this is not - has my support. The cotton industry may become of considerable value to Australia. The foundation has been laid for its development along those lines. As one honorable senator has already said, in addition to being a primary product which promotes closer settlement, it would be an essential commodity should Australia be attacked, and, at a critical period, be unable to obtain supplies for the manufacture of explosives. For defence purposes,’ therefore, as well as from a manufacturing view-point, the growth of our requirements is definitely advisable. I understand that the weights and duties suggested by the Government will not damage the Mother Country. A vast- quantity of cotton goods is imported into Australia from Great Britain free of duty.

I wish to disabuse the mind of Senator J. V. MacDonald of the idea that the wool industry in Australia excels, and is able to meet the competition of the world, partly because it has not to compete with the production of countries that employ black labour. I admit that the cotton industry is in that category, because all the cotton grown outside of Australia is produced by black labour. I would point out, however, that the principal competitor of Australia in connexion with fine merino wools is South Africa, which employs cheap, black labour almost exclusively in its production, while other great competitors, the States of South America - Argentina, Uraguay, Paraguay, Chili, and Peru - pay less than one-half of the rates of wages paid in Australia. The industry excels in Australia because it is sufficient unto itself, and also because the Almighty has given to us a country that i3 particularly suitable for its development. ‘

Senator Payne has asserted that the secondary branch of the cotton industry is of no particular account. I believe that he is labouring under a wrong impression. I know of one firm in Melbourne which employs just on 1,000 hands, very largely in the manufacture of the very articles from which the honorable senator would withdraw a certain measure of tariff protection. Although it is mainly concerned in the production of woollen goods, the cotton side of its activities has made great strides. I do not pretend to be an expert appraiser of the value of cotton goods, but I consider that the materials of which I have seen samples are most satisfactory, and suited to the uses of our people. Australia needs secondary as well’ as primary industries to increase employment and enlarge its population. A considerable amount has already been invested in this industry, and good progress is being made by it. My policy has always been to give first preference to Australian primary and secondary industries. For the reason that I believe this to be a good primary industry with promising prospects, and one that is likely to develop into a good secondary industry, I wish to preserve it. We should adopt a broad national outlook, and agree to its receiving the support which the Government has already accorded and now proposes to continue.

Senator PAYNE:
Tasmania

.- I stress the need for honorable senators to concentrate upon the object of my request, which is to avoid placing an undue burden upon the working class. Some time ago, Senator Collings considered that he had made a very strong point against my request when he stated that I had mentioned that 1,600,000 pairs of trousers, each requiring 2^ yards of material, would absorb the quantity of material used annually in Australia. To indicate the danger of the acceptance of my amendment, he said that the manufacture of these 1,600,000 pairs of troupers at lOd. a pair for making up would amount to the enormous sum of £6,666 13s., and that I desired to deprive Australian workers of that labour. Does not he realize that whether the material were made in Australia, Britain, or elsewhere, employment would still be provided here in manufacturing the material into garments? If the material could enter the Commonwealth at a much cheaper rate, more labour would he required to manufacture it into garments. That is my definite answer to the irrelevant contentions of Senator Collings.

Senator Collings:

– What about the mills in Australia? Should we not be making the material instead of buying it from Japan? I refer not to the garments, but to the material.

Senator PAYNE:

– I have made no mention of Japan. Apparently the Labour party’s enmity is just as keen against Great Britain as against Japan; its objective is to prevent the admission of the material regardless of the country of origin. I appreciate that the cotton industry may be of value to Australia, but what justification exists for any honorable senator endeavouring to lead people to believe that the cotton industry has been built up on the manufacture of khaki drill, dungaree, and denim materials? Only eighteen months ago, the present heavy duties on these goods were imposed, not by the consent of this Parliament, but by resolution. The manufacture of this material was then commenced; but honorable senators have been led to believe that khaki drills, dungarees and denims have been the lifeblood of the cotton-growing industry in Australia.

Senator Collings:

– That is not correct. We stated that the honorable senator desired to insert the thin end of the wedge in order to facilitate the introduction of other classes of cotton goods into Australia.

Senator PAYNE:

– The Opposition is endeavouring to insert the thin end of the wedge to prevent the importation of any British goods. The duties set out in the schedule are prohibitive. How can it be claimed that they give preference to Great Britain, when the lowest rate would be 65 per cent, ad valorem, and the highest in regard to the cheaper materials would exceed 150 per cent.? Sufficient ha3 been said to warrant my reading a letter which I received yesterday from Adelaide -

In the Adelaide Advertiser of the 5th instant you are reported in having succeeded in postponing the final decision upon the duty of “d. a square yard, plus 30 per cent., upon British preferential tariff. Having imported khaki and white drills, it will probably interest you to examine the enclosed customs entry of an actual transaction between our principals and ourselves.

I submitted that entry this morning and informed the committee that the duties exceeded 80 per cent. ad valorem on khaki cotton drill.

The f.o.b. price of this khaki drill, of which we enclose you a sample, is 91/2d. a yard.,. You will notice from the customs entry that the actual duty and primageupon this entry amounted to exactly 75/8d. a yard. We think you will admit that this duty can be classed as an attempt to prohibit the entry of such goods, instead of being a protective tariff, designed to give assistance to the Australian secondary industry. We believe you are quite right in your statement that this duty results in increased cost of clothing, and that, naturally, of the working man. It must be fairly obvious that such cotton piece goods are used almost exclusively by the working classes, and the only exception we know, in South Australia at all events, where drills are used in the manufacture of clothing to be worn by working people, is the small quantity used for the manufacture of surgeons’ and dentists’ coats. As the local manufacturers who are making such cloths are situated in Melbourne or Sydney, it follows necessarily that their productions are fully taken by the demands of the larger States, and the smaller States, such as South Australia, Western Australia, and Tasmania, are placed in the position of either having to go without these goods or import them and pay these prohibitive duties.

Any industry which requires such exorbitant protection indicated by the present duties cannot be regarded as economic and of advantage to the general public, and legislation in such matters should be for the benefit of the people in general. We can cite one occasion where a large public body in South Australia has had to pay the increased duties indirectly in order to find suitable overalls for its working men, and they are again ordering these goods to meet their requirements. Notwithstanding this high duty and primage, quite a number of our customers have ordered these goods, for the simple reason that they have not been able to secure their requirements made in Australia.

We trust that the information we are putting before you may be of assistance to you, and we wish you every success in your effort to keep down the cost of living to the working man who is to-day fighting for his livelihood under most difficult conditions.

I have received another letter, in which the writer states -

It is now eighteen months since the duties in question were put into operation, and the Australian manufacturer has had ample time in which to get his plant into working order. We have gone exhaustively into the present position with firms whose business is solely that of manufacturing various classes of goods from denims, dungarees, and drills, and also with firms who are both wholesalers in a general way, and who also manufacture a portion of their requirements of the garments which are under discussion.

I have been careful to refrain from casting any reflection on the quality of Australian cotton goods. Only when I was compelled to defend myself did I deal with that aspect of the matter this morning. The letter proceeds -

Clothing manufacturer No. 1, at the time the duties were put into operation, was very definitely inclined to the opinion that the Australian manufacturers could supply the requirements of his firm at prices which would not be materially different from the then existing overseas prices, and, further, thought that the quality would be satisfactory.

The first order was placed with an Australian manufacturer, and on receipt of the goods the quality was so bad that he was doubtful about using the material. Eventually he did so, and had about 25 per cent. of the garments returned to him as not up to the required quality. Although the material looked all right, on washing it was found to be full of size, and the dyes were not fast. He was forced to cease ordering from this firm. It might be mentioned that other firms had the same experience, and to-day it is doubtful if there is one user of the materials who is prepared to buy from the Australian manufacturer in question. The price which No. 1 clothing manufacturer paid for the Australian cloth was just about equal to the price of imported cloth of a better quality, after the existing duties, exchange, and all other charges had been paid.

The third attempt of this No. 1 manufacturer to obtain suitable material was from another weaving mill in Sydney, from whom the firm purchased several pieees of every quality they were weaving, both in navy and khaki. Although the quality and dyes were more satisfactory than those supplied by the weavers referred to previously, the garments made from materials supplied by this third firm are now starting to come back as unsatisfactory.

In addition to this correspondence I have information from at least four or five firms which deal extensively in these materials. They state that it is absolutely impossible to obtain from Australian mills as much as 50 per cent. of their requirements; one writer stated that he could not be supplied with 30 per cent.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I point out that when the material could not be supplied locally, it has been admitted under by-law. The honorable senator, I presume, has seen the recommendations of the Tariff Board?

Senator PAYNE:

– Those manufacturers were never obliged to go without their supplies, but they had to import them.

Many honorable senators have exaggerated the importance of this industry to Australia. I ask them to decide whether they are justified in voting for a proposal which will place a heavy additional burden upon the working man, because an industry may be established in the Commonwealth. Surely some action, short of complete prohibition, might have been taken in respect of these British goods, while at the same time enabling this industry gradually to develop. I object to the heavy duty which it is proposed to place upon these imported materials. I remind honorable senators that the request does no,t contemplate any interference with the stable manufacture of cotton tweeds; this industry has been firmly established in the Commonwealth. The request applies only to other materials, the manufacture of which commenced in the Commonwealth only eighteen months ago, and the duties on which have never been ratified by the Parliament. If my proposal he carried it will restore the rate of duty to what it was eighteen months ago. At the same time it will enable the working man to obtain certain wearing apparel at a reasonable cost. I am not decrying tho value of the Australian-made materials as compared. with the British; I am actuated solely by a desire to enable the British manufacturer still to trade with Australia. If the experience in respect of cotton tweeds should occur in regard to these materials, it will mean that for all time the British manufacturer of these goods will be excluded from the Australian market. That would not be fair. Surely the Australian industry can be established upon a more reasonable basis than that.

Senator Guthrie:

– Is not a considerable quantity of British cotton goods admitted either at a very low rate or free of duty?

Senator PAYNE:

– Yes, but I am dealing only with one particular class of material. I admit that other lines of material are admitted to Australia at a very low rate of duty; but I feel that Australia is gradually whittling away the importation of a variety of goods from Britain, so that eventually the Mother Country will have practically no export trade to Australia.

Senator Guthrie:

– We shall never come to that stage.

Senator PAYNE:

– But we are coming to that stage. One honorable senator has already stated, “I shall not be here, but I want to vote for the highest duty that can possibly be imposed.” In my opinion that is not a fair attitude to adopt in the interests of Australia. I could produce communication after communication, not only from manufacturers, but also from average citizens and working men, protesting against the exceptionally high prices which they have had to pay for apparel owing to the imposition of excessive duties.

The TEMPORARY CHAIRMAN.The honorable senator’s time has expired.

Senator UPPILL:
South Australia

– Although the Tariff Board has recommended that drills, denims, dungarees and jeans should be included in the list of goods carrying the impost of 6d. a yard undyed, and 7d. a yard dyed, plus an ad valorem duty of 22£ per cent., it behoves this committee to take into consideration the negotiations which are proceeding in England at the present time in connexion with the sale of Australian primary products. I have a great respect for the findings of the Tariff Board, and I believe that sooner or later we shall be in a position to manufacture these materials, but I am of the opinion that they should not be subject to such a severe impost. Nor can the cost of this apparel, which is worn principally by the labouring classes and primary producers, be disregarded. Figures which I have obtained practically substantiate those already cited by Senator Payne. The landed cost in Australia of these materials, including import duty and primage, is about lid. a yard. If the proposed duty be imposed, the cost will rise to ls. 7d. or ls. 8d. a yard, which is approximately Id. more than the price quoted by the Australian manufacturer. It is estimated on that basis, that approximately 4,000,000 yards of this material would be used in the Commonwealth each year, and the additional cost to the people would be between £150,000 and £200,000. This burden is too heavy to place on the working classes. About 2,500 persons would be engaged in the manufacture of these goods, and the total wages would be not more than £75,000. There is little support for the argument that the goods cannot be manufactured in Australia. I say this because the manufacture of cotton tweeds, a kindred industry, is well established, and local factories are producing cloth equal to the British article. But the manufacture of the goods affected by the request is not, at the moment, a sound economic proposition. It would be better to relieve the users of these materials of the higher cost, by removing the duties, and negotiating with the British Government for the sale of additional primary products in exchange for these lines of manufactured materials. Senator Dein mentioned that the additional cost would be spread over the entire community. That is one reason for my opposition to the sub-item in its present form. It would increase the cost of goods used by the working classes and indirectly increase costs of production in primary industries. For the last ten years, we have been promised that adequate protection to secondary industries would so enlarge the home market as to absorb all our primary products. But still we have to sell overseas the great bulk of our primary production. Already we have too many industries, secondary and primary, that require artificial aid.

Senator LECKIE:
Victoria

.- I hope that Senator Payne will not yield to the blandishments of those honorable senators who are endeavouring to persuade him to withdraw his request, because if it is pressed to a division, it will show the people of this country where all honorable senators stand on the Government’s policy of protecting Australian industries. Up to the present stage in this debate the only thing that can be said for some senators of this chamber, is that they are consistent in their inconsistency. Without in any way wishing to offend Senator Payne, I would say his is what one might call the retailer’s mind.

Senator Payne:

– The retailers are in touch with the people; that cannot be said of wholesale manufacturers.

Senator LECKIE:

– I do not wish to give offence to the honorable gentleman by appearing to belittle his attitude to this sub-item. There are many others who think, with him, that the profit of a farthing on this or that article is of greater moment that the expansion of the nation’s industries. These people in their minute survey of the underground economics of industry, are apt to lose sight of big national issues that are involved in the tariff. As this debate has developed, and as the attitude of some honorable senators has been more clearly defined, I have, in fancy, visualized the lynching of the last Australian manufacturer, and have endeavoured to imagine what would be the reactions of some honorable senators at the final result of their determined onslaughts on Australian industries. I can see Senator Duncan-Hughes, for instance, his life’s work accomplished, chivalrously turning his face from the unhappy scene, so that he might not witness the dying agonies of the victim.

Senator Duncan-Hughes:

– I see no evidence of the manufacturers’ dying agonies.

Senator LECKIE:

– I also can see Senator Gibson, determined to be present in the last hours of the Australian manufacturer, and I have a mental picture of Senator Payne dressed in. a long black suit of jeans made in Japan, with a lotus flower in his buttonhole, complaining bitterly that the victim is taking such a long time to die; and of Senator Johnston jumping on the corpse for hours after the execution, to make certain that it is really dead. Others in this .scene are the PostmasterGeneral (Senator A. J. McLachlan), dressed in a long white suit of duck, made in Japan, reading innumerable pages of the Tariff Board’s report to prove that the victim is not dead after all, and his ministerial colleagues, Senator Sir George Pearce and Senator Brennan, offering a thanks that the spirit of Ottawa still lives! Having said this in jest, I now remind honorable senators that Canada, with a population of 10,500,000 people, is actually manufacturing into cotton piece goods, of one sort or another, 200,000 bales of cotton annually, whereas

Australia, with nearly 7,000,000 people, is utilizing an insignificant proportion of Australian-grown cotton.

Senator Payne:

– Where do the Canadian manufacturers get their cotton?

Senator LECKIE:

– Prom foreign sources, whereas Australian manufacturers obtain their supplies from Australian cotton-growers. Does not Senator Payne think that is a good thing? During this debate the persistence with which Queensland senators have fought for industries affecting their State, has been equalled only by the solidarity of Tasmania’s senators when the cement industry was threatened by the Government’s proposals. I again express the hope that Senator Payne will not withdraw his request, because the division will show the people of this country where honorable senators actually stand in relation to this industry.

Senator ARKINS:
New South Wales

– When this sub-item was under discussion earlier in the debate, Senator Payne asked me to sit down with him and have a little chat about the industry affected by it.

Senator Payne:

– Does the honorable senator propose now to disclose what took place in a private conversation?

Senator ARKINS:

– I accepted the honorable gentleman’s request and sat down, as it were, at the master’s feet to listen to his words of wisdom. He produced, for my inspection, some samples of twills, denims, dungarees and -jeans which had been washed, scoured or treated. One sample was, I believe, a khaki drill.

Senator Payne:

– How many did I say had been washed?

Senator ARKINS:

– One only. But my complaint is that the honorable gentleman showed me a sample of what must have been absolute rubbish.

Senator Payne:

– I did not.

Senator ARKINS:

– It must have been rubbish, because he will recall I remarked on its obviously inferior quality, saying that I waa not concerned whether the British duty made a difference of ls. 6d. or 2s. 6d. in the cost of a pair of trousers, but I certainly was interested in the quality of the material. The sample which the honorable gentleman showed me reflected gravely on the important Australian industry of cottonmanufacture. After it had been washed it had gone almost white. Senator Foll has sin?e placed in my hands a sample of material manufactured in Australia, and I feel sure that the information which Senator Payne gave me was coloured - no doubt the same could be said of the information given by Senator Foll - by the interests concerned. The position is impartially stated in the following official comment : -

The State Governments of Queensland ami Now South Wales have made extensive purchases. Their standards are high and tests severe. The reports of the Government Analysts say that the cloths are everything that could be desired so far as quality and fastness of dyes are concerned.

Thi3 report definitely contradicts Senator

Payne’s statement. The honorable gentleman showed me a sample in which the dye was of no value whatever. I do not suggest that Senator Payne deliberately attempted to mislead me, but the sample which he showed to me was not fair to the Australian manufacturers. The following letter written by Overall Servis Limited, Paddington, Sydney, to the Bradford Cotton Mills Limited, 77 York-street, Sydney, is also conclusive evidence of the value of Australian material : -

We have over the past six months used approximately 4,300 yards of your cotton drill, described as 14/D quality, and wish to state that the material has given complete satisfaction.

As you are aware, we are using your unbleached drill and more recently your khaki drill. The latter has proved a fast colour, having so far stood up to six severe launderings, and in between times, hard wear in the motor trade. We feel that at this stage we can definitely describe 14/D khaki drill as a. fast colour.

We might mention that we were opposed to the use of Australian drill and criticized severely the original samples which you submitted. Since then, the improvements of quality, &c, fully justify the use of your material in our business.

I feel certain that if this industry is given a chance, it will prove its worth to Australia. In the initial stages of the development of every secondary industry in. Australia ‘difficulty has been experienced in producing goods of the required quality. This was so in connexion with the jam manufacturing industry of Tasmania. At one time, people who wanted the best jam bought Lazenby’s or Moreton’s products, but now nobody in Australia wishes for anything better than the I.X.L. jams manufactured by Henry Jones Limited, of Tasmania. If the Australian manufacturers are given the opportunity to turn out goods in substantial quantities, they almost invariably produce a good article.

Senator Payne:

– The Tasmanian jam manufacturing industry did not ask for a very high protection in order to establish itself.

Senator ARKINS:

– I should have to study political history to say whether that is so or not. The honorable senator’s recent political history makes it extremely difficult for us to know where he stands. A few days ago, when the cement duties were under consideration, he stood solidly against the adoption of the Government’s proposal, and, incidentally, against the recommendations of the Tariff Board and the provisions of the Ottawa agreement. I believe it was he who took great pains to tell us that he was at least consistent in his inconsistency. I do not know why he should glorify himself on that account. I have no desire to labour this subject unduly, and am, in fact, making only my second speech on it, whereas Senator Payne has, I believe, occupied the full time allowed him under the Standing Orders. The State Stores Board of Queensland has indicated very clearly that it regards the quality of Australian cotton piece goods as satisfactory. A communication on this subject from the board’s office reads -

With reference to your letter of the 3rd October, 1934, regarding khaki cotton drill, I have to advise that, with the exception of weight, the material is suitable for our requirements. The dye is satisfactory as regards resistance to sunlight, perspiration and washing.

Senator Payne would have had us believe that the quality of the Australian article was seriously inferior.

Senator Payne:

– I did not say anything of the kind.

Senator ARKINS:

– If we give our manufacturers the opportunity to produce a sufficiently large quantity of cloths of this class, we shall have no need to complain of the quality. I hope that this amendment will be defeated. The proposal of the Government will undoubtedly help to preserve a primary industry, which is of major importance to the Commonwealth. Every other great country of the world takes care to encourage the cotton industry within its borders. To my mind, a conclusive reason for supporting the Government on this issue is that the establishment of the cotton industry within Australia is of vital concern for defence purposes. The Tariff Board has inquired into every aspect of the subject, and we may safely accept its recommendation, for it has made it abundantly clear that the cotton industry is essential to the well being and national safety of Australia.

Question - That the request (Senator Payne’s) be agreed to - put. The committee divided. (Temporary Chairman - Senator J. B. Hayes.)

AYES: 12

NOES: 17

Majority . . . . 5

AYES

NOES

Question so resolved in the negative.

Request negatived.

Senator FOLL:
Queensland

.- I move -

That the House of Representatives be requested to amend sub-paragraph (b) (2). paragraph (1), sub-item(a) by leaving out the figure “6 “ with a view to insert in lieu thereof the figure “ 3 “.

My principal object in moving this amendment is to assure to this industry the degree of protection which the Tariff Board recommended. One reason why the board’s proposal was not accepted to the full extent when the previous schedule was under consideration was that a good deal of feeling was being engendered at that time because it was felt that Lancashire interests would be likely to be jeopardized if the full protection recommended were given to 3-oz. cloths. It has since become apparent that this particular class of cotton goods is not of great concern to the Lancashire interests, for the trade has been almost entirely captured by the Japanese weavers. An additional reason for support of my request is that the Tariff Board’s recommendation is being evaded because goods of the class involved weighing about 5.95 oz. to the square yard are now being marketed here, with the result that the protection intended for the Australian spinning and weaving industry is not being accorded it. The Tariff Board report of the 25th July, 1934, specifically referred to 3-oz. cloth. It has been demonstrated beyond all question recently that the Australian spinning and weaving industry, because of the encouragement given to it by Government policy and the high degree of efficiency it has attained, is capable of producing high quality lightweight cloths. In the early stages of the manufacture of cloths of this class, difficulties were experienced in regard to dyes and other factors, but the installation of the most up-to-date machinery and the improved skill of the artisans have overcome them all. If protection be given as I propose to lighter weight cloths it will be quite possible for the spinners and weavers of Australia to absorb an additional 4,000 bales of cotton annually. It may be argued that our endorsement of this amendment would involve the Government in a heavier outlay in bounty than that provided for under existing legislation, but that is not likely, for up to date the maximum amount of bounty payable under the act has never been claimed in any one financial year. As the cotton industry has been fully considered in the course of to-day’s discussion I shall not speak at greater length, but shall content myself by appealing to honorable senators to support my request.

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

– I take it that the request is based on the ground that a weight of 3 oz. per sq. yd. is shown in the board’s findings in regard to undyed materials. In examining the duties on tweeds, drills, &c., the board was confronted with the problem of framing an item which would, as far as possible, be devoid of administrative difficulties. In the past, trouble was experienced with items providing for protective duties on cotton tweeds. The term “ cotton tweeds “ has such a varied implication in the trade that it was found impossible to name the classes of goods covered by it. In an endeavour to overcome the difficulty, the board prescribed the uses which determined the liability of dyed or coloured woven cotton piece goods to protective duties. The weight limit of 3 oz. suggested by the board had previously applied to cotton tweeds, which are woven from dyed yarn, whereas drills, duck, dungarees and jeans are dyed in the piece. The weight limit which the board intended should apply to drills, duck, dungarees and jeans is revealed by its recommendation that protective duties be imposed on bleached or unbleached materials, weighing over 6 oz., and less than18 oz. per sq. yd.

Had the weight limit on cotton drills, &c., been established at 3 oz. for dyed materials, and 6 oz. for undyed materials, merchants could have imported bleached or unbleached material in the heavier weights at the low revenue rates, and had the dyeing done locally, thus defeating the protection. The same position would apply were the weight for dyed materials established at 41/2 oz. Moreover, experience has shown that most of the cloths weighing 6 oz. or less per sq. yd. are in demand for the manufacture of garments which cannot be termed outerwear, and that local production has been almost wholly confined to materials weighing over 6 oz. per sq. yd.

The Tariff Board reported that canvas, drill, duck, dungarees and jeans weighing 6 oz. or less per sq. yd. should be admitted at the low revenue rates which applied under the Customs Tariffs 1933, and, accordingly, in the interests of administration, I cannot agree to the request. If there is anythingin the contention of Senator Foll regarding the transposition of trade, the Government will take that point into consideration.

Senator LECKIE:
Victoria

I am disappointed that the Minister has not seen fit to agree to a compromise. When previous items have been under consideration, the Government has urged the committee to stand by the report of the Tariff Board ; but, in this instance, it has departed from the board’s recommendations. The Minister speaks of administrative difficulties, but he has not specified them. It would appear that the cotton spinners and weavers of this country are to be wiped out of existence, because the department cannot overcome some administrative difficulty!

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Nor can the Tariff Board.

Senator LECKIE:

– The board got over the difficulty.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– When the board gave the matter further consideration it could not overcome the difficulty.

Senator LECKIE:

– The effect of the lower duties on lightweight materials has been that, whereas previously 80 per cent. of the importations of the goods covered by this sub-item were of materials weighing more than 6 oz. per sq. yd., and 20 per cent. represented materials under 6 oz., the position is now reversed. A further result is that, whereas hitherto the cotton spinners have been able to take almost the whole of the cotton grown in Australia, their orders this year will not, represent more than half the crop. Yet the Minister says that if lower duties are found to be harmful, the Government will come to the rescue.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I did not say that. I said that, if there, was any transposition of the trade, the Government would take other steps.

Senator LECKIE:

– That transposition has already taken place. On the shelves of the Australian manufacturers is half a million yards of materials weighing more than 6 oz. per sq. yd., which cannot be sold. In anticipation of a continuance of trade, the local factories proceeded with the manufacture ofthe heavier materials, only to find that, out of a quarter of a million yards made during the last six months, the gross sales did not exceed 20,000 yards.. What further proof of the detrimental effect of these lower duties does the Minister require? The Government should admit that it has made a mistake in not adhering to the Tariff Board’s report in this instance. Acceptance of the board’s recommendation would relieve the Government of the responsibility for destroying the cotton-growing industry, which is of great value to this country. If the existing position is not sufficiently serious for the Government to take “ other steps”, I cannot imagine the state of affairs which must exist before it will take action. If the Minister thinks that the proposal to substitute 3 oz. for 6 oz. is too drastic, he should consider a compromise of, say, 41/2 oz. Under the existing duties, importers bring in material weighing 5.8 oz., or even more, to the square yard, and dye and dress it in Australia, thereby making it over 6 oz. per sq. yd. Much of the material from which doctors’ white overalls are made weighs 5.8 oz. per sq. yd. when imported from Japan. During this tariff discussion, I have, at times, criticized the Government severely; butI realize that it has consistently followed the recommendation of the Tariff Board, and that, apart from “ the three musketeers “ of the Labour party, it has been more protectionist than the majority of its supporters. I, therefore, ask the Minister to adopt the board’s recommendation in this instance, thereby saving not only the industry, but also the Government itself. Surely the supporters of the Government are entitled to some concessions. The Government should not insist on the bond, and nothing but the bond. It should not expect the committee to accept itsproposals without question, even to the extent of the crossing of a “ t “or the clotting of an “ i “. Now is the time to remedy an already serious situation; but, if action be not taken promptly, the position will be irretrievable. It would appear that the Minister for Trade and Customs (Mr. White) has misread the Tariff Board’s report. I do not blame him for that, because this is a most complicated subject. The Tariff Board recommended two duties - one to apply in the event of cotton yarns being admitted free, and the other if a duty were imposed on yarns. The Minister has, I think, misunderstood the board’s recommendation. I ask the PostmasterGeneral to consult with his colleague, the Minister for Trade and Customs, with a view to agreeing to a compromise. I assure him that the situation is indeed serious. A great amount of capital has been expended in an attempt to build up the cotton industry in Australia. It is a natural industry, and, therefore, entitled to some consideration. Acceptance of a compromise, by which the duty would apply to materials 41/2 oz. per sq. yd. and over, would not cause the Government any loss of dignity. 1 appeal to the Minister to give the industry a chance. Already 125 operatives have been thrown out of employment because of the lower duties.

Senator DEIN:
New South Wales

– In my opinion, the line of demarcation between heavy and light materials, which has been fixed at 6 oz. to the square yard, is not well chosen. I have here a piece of imported cloth which weighs 5.95 oz. per sq. yd. It was manufactured at that weight in order to defeat the Australian tariff. The material is not suitable for manufacture into articles requiring hard wear, although, when dressed, it could easily deceive inexperienced people. Far from being as satisfactory as material of 7 to 9 oz. per sq. yd., it is by comparison, merely rubbish. I am afraid that a weight limit of 6 oz. will spell injury to the manufacturers of the heavier materials - such as white and khaki drills - that are required for special purposes. I do not agree, however, with the request moved by Senator Foll, as I believe that 3 oz. is too low; neither do I favour a limit of 41/2 oz. suggested by Senator Leckie. I suggest that even a limit of 5 oz. would enable purchasers to decide at a glance whether materials of this class would serve the particular purposes for which they required them. I ask Senator Foll to amend his request to make the weight limit 5 oz. instead of 3 oz., and I appeal to the Government to yield a little in this matter, because by doing so it will injure no one, but will greatly help our manufacturers.

Senator COLLINGS:
Queensland

– In order to avoid unnecessary discussion, I ask the Minister at this stage whether he is prepared to adopt any of the suggestions made by the last three speakers, who, like members of the Opposition, are fearful of the effects of the Government’s proposal on the industry. If the Minister will give us a satisfactory assurance we can let the item go through immediately.

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

. - I regret that I cannot give any such assurance. The matter was remitted to the Tariff Board for its consideration, and I assure honorable senators that in its memorandum the board concurred with the opinion expressed by the ComptrollerGeneral of Customs regarding the administrative difficulties, which will arise if the weight limit be reduced below 6 oz.

Senator Brown:

– Has the board’s memorandum been published?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– No. The board’s report is received by the Comptroller-General of Customs, and if he notes in it anything which may give rise to administrative difficulties, he refers such points to the board, which is then asked to express its views thereon. Frequently proposals are framed by the board in such a way that the department knows from previous experience that they cannot be operated. This item was such an instance, and I explained the circumstances in the remarks I made a few moments ago. This point was taken up with the Tariff Board which after further consideration concurred in the Government’s proposal. The only assurance I can give to honorable senators is that if the transposition of trade,at which Senator Foll hinted, is found to be taking place - and we have some departmental evidence that it is - steps will be taken to rectify the position. I ask honorable senators not to press me to promise more than that. The Minister for Trade and Customs (Mr. White) expressly wishes that the weight shall remain as set out in the schedule.

Senator COLLINGS (Queensland) given me the assurance for which I asked. I am afraid that his decision means danger to an industry in which we. are all vitally interested both from the primary and secondary aspects. Whatever may be the virtues or shortcomings of members of the Opposition, we are continually saving the Government from defeat on this bill when its proposals are in line with our own policy of protection. In the last division taken in this committee, the Government would have been defeated but for the fact that the Opposition stood to its faith in the declared fiscal policy of this Commonwealth. Speaking on a previous item, the Minister put up the bugbear of administrative difficulties as he has done this afternoon. On both occasions he gave no inkling whatever of what those administrative difficulties are. Obviously they are difficulties experienced by Customs House officials. I am not suggesting that these officials are overpaid; as a matter of fact, we can take it for granted that generally the public servants of this country are not being paid salaries commensurate with the work they do. I contend, however, that this Parliament should not be asked to modify its protectionist policy merely because certain Customs House officers find themselves up against some administrative difficulties; their job is to overcome those difficulties. As I intimated previously, I know something of the nature of such problems, because, for many years, I was a clerk in the Customs House. I know something of the tricks which are put over officials, who very often fall victims to administrative difficulties, and allow things to happen which in the opinion of outsiders should not happen. One administrative difficulty under which they are labouring to-day is that the people to whom Senator Leckie and Senator Dein referred are defeating the real purpose of the duties by importing materials that the Tariff Board intended should be made in Australia. Honorable senators supporting an amendment of the item are not wedded to any definite weight limit. Senator Foll suggested 3 oz., and Senator Leckie is prepared to compromise on 4^ oz., whilst Senator Dein suggests a limit of 5 oz. This is an occasion, I submit, on which the Government cannot afford to be adamant; it ought to meet those who are helping it to pilot this schedule through the Senate. However, let us consider the statements of the Minister on the matter of weight limit. On the 30th November last, this item was fully debated in the House of Representatives. The Tariff Board recommended the imposition of duties on all dyed cloth weighing 3 oz. and over, but the Government, in this schedule, does not propose to impose duties on drills and dungarees unless they weigh more than 6 oz. This is a departure from the recommendation of the board. It would be useless for me to suggest that we should worship at the feet of the board; on several occasions I have objected to the fact that the Government created the board, and finally endowed it with powers which made it superior to its creator. The Government cannot have it both ways; it cannot, on one occasion, command our support because the Tariff Board recommended its proposal, and, on another occasion, command our support on the ground that its proposal has not been recommended by the board. Had I- the opportunity, I could very easily find in the pages of Ilansard instances to show that in these matters the Government, and even the Minister, has not always been consistent. On one point to-day the Minister in charge of the bill was consistent in his adherence to the board’s recommendations, because he explained that the change by the Government in this instance, because of some administrative difficulty, had been endorsed by the board. It is obviously unfair, however, that all sections of the cotton industry - growers, spinners and manufacturers - should be endangered by the importations that are at present taking place because of administrative difficulties. I urge honorable senators to -visualize what this industry embraces; first in Queensland, where, with the assistance of Commonwealth and State Governments, cotton-growing is now an established and vital industry. Let honorable senators think of the numbers of men and women and their families who are engaged in the planting, tilling and picking of cotton, and then transfer their thoughts to the great cotton-spinning and weaving mills in the manufacturing centres of Australia. I am assured by the manager of one of these mills that if this weight limit be not reduced, the trade in these goods will continue to goin increasing quantity to Japan. There is no hearsay about this. The business is going to Japan because the weight specified in the item is too high. This firm states that it expects to use 8,000 bales of Queensland cotton this year, and that it could use a great deal more were it not for the fact that much of the trade, which Parliament obviously intended Australia should have, is now going to Japan. Actually, the Government, in persisting in its present course, is largely destroying its own protectionist policy. We do not press this request out of obstinacy; we have no desire to secure a victory over the Government; our only desire is to do the best thing possible f or this great national industry in both its primary and secondary branches. The Minister seems to be under a misapprehension. He said that had the weight of cotton drills been fixed at 3 oz. for dyed material, and 6 oz. for undyed material, it would have been possible for merchants to import 6 oz. bleached or unbleached material, and have the dying done locally, thus defeating the object of the tariff. As a matter of fact, that is still possible; it is, in fact, being done now. What, I ask, is the Government doing to overcome that menace? The Minister stated that if we submitted definite examples, instead of offering flimsy evidence, action would be taken, but I should like to know what he would consider satisfactory evidence. We have placed before him the evidence of one of the largest manufacturers in the Commonwealth to the effect that this item in its present form is operating detrimentally to the industry; that this firm would use thousands of bales more of Queensland cotton were this restriction removed. It is most unreasonable of the Minister to stand so fixedly by his decision, and refuse to consider the representations of the Opposition, or of those members of his own party who agree with us on this subject. The industry is prepared to face overseas competition if it is given a chance, but this the Government refuses to give it. I know this industry, and what it means to Queensland, but I am not concerned solely with the interests of my own State; and I am prepared to help the industry because it means a great deal also to the manufacturers of New South Wales and Victoria. I trust that the request moved by Senator Foll will be agreed to. I was most surprised to find the Minister taking up so firm an attitude, and was particularly surprised that he declined absolutely to consider even a reasonable compromise.

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

[4.20]. - I can assure honorable senators that the Government has noted what they have had to say on this item, but I remind the committee that the policy of the Government on this matter,’ and the duties embodied in the schedule, were not .arrived at hurriedly, or in a haphazard way. They were decided upon after long Cabinet meetings, where all the interests involved were considered. More than one interest is involved. We have to consider the interests of the growers as well as those of the manufacturers, for whom Senator Leckie is so concerned. I ask honorable senators to recall that, when these tariff resolutions were laid on the table of the House of Representatives, a considerable stir was created, and much hostile comment was forthcoming, most of it due to misunderstanding. Honorable senators will remember the agitation that arose in Lancashire, also largely due to misunderstanding. When the position came to be examined in the cold light of reason, rather than in the passion excited by the first mention of the proposals, it was realized by Lancashire interests that the amount of trade likely to be taken away from them was very small.

Some honorable senators have expressed surprise that the Minister in charge of the tariff has declined to accept a request brought suddenly before him. Honorable senators must remember that it is necessary for the Minister to consult with his colleagues, because the arrangement of these duties was a matter of Cabinet decision, involving Government policy. No Minister can, on the spur of the moment, accept a farreaching request of this kind, or agree to a compromise regarding it. The Minister, therefore, very properly said that the statements of honorable senators would be investigated, and full consideration given to them. He cannot be expected to do more.

The Government cannot accept this request, and asks the committee not to accept it. It would be foolish of us to agree to a request of this kind without knowing what there is to be known about its likely effects. Obviously, one of the things that must be done is to test the statements which honorable senators have put forward. I do not say that the statements are inaccurate, but they have certainly been made by interested parties. The manufacturers say that, whereas it was expected that they would get 80 per cent. of the Australian market, they are, in fact, getting only 20 per cent. That may, or may not, be true, and it is the duty of the Government to find out.

SenatorFoll.- - Those are the figures supplied by the Customs Department.

Senator Sir GEORGE PEARCE:

– I do not know whether they are, and the Government must have time to investigate them. The difference between 6 oz. and 3 oz. was fixed after a full consideration of all the issues involved, and the Government is not prepared to depart from its decision without good reason, and without fully considering the possible effects. We must consider the reaction on our imports, and on our overseas trade generally. We remember the storm that arose over the first proposal, and do not intend lightly to make an alteration without full investigation. There is not time this afternoon to make that investigation. The Government will consider the statements which have been put before it, but it cannot accept the proposed request, which I hope will not be pressed.

Senator COLLINGS:
Queensland

– No one understands better than I do that the Minister in charge of the tariff cannot be expected to accept this proposal on behalf of the Government without consulting his colleagues. To my own knowledge, however, the manufacturers long ago made representations to the Minister for Trade and Customs (Mr. White) along, the lines of those we are now submitting. The Government should be aware, on the information of the Minister for Trade and Customs, that the manufacturers have been voicing complaints, and it has had time to determine whether or not those complaints are justified. The statement that this request has been sprung suddenly on the Minister in charge of the tariff may be true so far as he is concerned, but it cannot be true of the Government.

Senator Foll:

– I told the Minister this morning that I was going to move this request.

Senator COLLINGS:

– We know that matters of this kind must be determined by Cabinet, but Cabinet meetings are held fairly frequently, and the Government could have come to some decision, following upon the representations of the manufacturers. A very real complaint has been voiced in this chamber, and we have moved in the only way possible to us, that a request be made to the House of Representatives for an amendment of the item. There is no need for the Minister to refuse absolutely to accept it at this stage. The request could be passed on without any danger, and Cabinet would have an opportunity in the meantime to make up its mind about it. We have offered the Minister a compromise : we have said that, if the Government cannot accept the 3-oz. limit, let us consider fixing it at 41/2 oz. That, surely, is reasonable. .

Senator BROWN:
Queensland

– Of course, the Leader of the Senate (Senator Pearce) must offer some reason for the Government’s refusal to accept the request which we of the Opposition strongly support. It was evident, when the Senate voted on the previous request, that it was anxious to support the industry. Those familiar with it point to the grave results that have followed upon the action of the Government in fixing the weight at 6 oz. I have a document here, in which it is pointed out that this 6-oz. limit is injurious in its effects. The document states -

It is obvious that, unless a reduction of weight is granted, the position will be such that Australian manufacturers cannot hope to obtain the share of the trade which itwas originally intended should be given to them.

If the Tariff Board was desirous of giving the trade to the Australian industry, and if the Senate supported that view, why is the Government now so determined to oppose the recommendations of the board and the desire of this committee? The Minister in charge of the tariff stated that the board had issued a memorandum dealing with this subject. I asked specifically whether that memorandum had been distributed, and he said that it had not. We who are concerned for the welfare of the industry took notice of the Tariff Board’s report. The Board strongly recommended that protection should be given to this industry, and specifically mentioned the reduction of the limit of weight, above which piece goods are dutiable, from 6 oz. per sq. yd. to 3 oz. If the Tariff Board was anxious to preserve and assist the Australian industry, and deliberately recommended the reduction to 3 oz., why should it later issue a memorandum - as the Minister says it has done - which puts an entirely different complexion on the matter? That memorandum is not available to honorable senators, but, on page 7 of its report, the Tariff Board stated -

In respect toboth the cotton tweeds and the denims groups, it mightbe stated at the outset that if the industries are tobe of any real economic value to the Commonwealth the cloths should be produced wholly in Australia.

The Tariff Board is anxious that this industry should be developed for many reasons. I point out to the Leader of the Senate that the board presented its report in July, 1934, subsequent to the signing of the Ottawa agreement. The manufacturers, who have had actual experience in weaving these cloths, merely asked that the board’s recommendation should be put into operation and that the Government should carry out its stated policy of accepting, whereover possible, the recommendations of the board. The report continued -

The board commences the question of determ ination of the duties on cotton tweeds and denims by accepting as a fact that it has been made clear that it is the policy of the present Government, and has been the policy of past governments, to proceed with the development of the cotton-growing industry in Queensland. Encouragement, given byhigh rates of duty, has Ted to heavy invest ments for spinning machinery beyond the capacity needed for knitting yarns and for weaving machinery beyond the needs of the demand for cotton tweeds only. It follows, therefore, that every sound and reasonable opportunity should be taken to extend the volume of goods which can be produced in Australia from Australian-grown cotton.

I have no desire to labour the question. The Tariff Board’s opinion in regard to this industry is clearly set down in black and white, and we on this side urge that its recommendation in this instance be carried out. If the Government were keenly interested in. this matter, and were anxious to provide for 3 oz. or 41/2 oz. instead of the present 6 oz., I am satisfied some means could be devised to overcome the so-called administrative difficulties to which the Minister has referred. I ask the Minister, as a fair-minded man, to look into the matter, and to realize that, after all, the policy which the Government is anxious to put into operation is being deliberately frustrated by the raising of the limit of weight to 6 oz.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– If that is so, why do not interested parties approach the Tariff Board and ask for an inquiry to be undertaken?

Senator BROWN:

– I can assure the honorable senator that if this request be turned down and the Government continues adamant, interested parties will certainly approach the Tariff Board. The item reads “ weighing more than 6 oz.” ; it follows, therefore that inferior clothsup to and including 6 oz. may be admitted. Senator Payne will recognize that there is always a desire to put cheaper cloths on the market, and by leaving the item to read as it stands an incentive will be given to the importation of cloths of a quality inferior to those ordinarily used, and the door will be opened for other than British manufacturers to participate in the trade.

Senator ARKINS:
New South Wales

– I realize that there is quite a lot in what the Minister says; nevertheless, I agree with Senator Dein’s suggestion that Senator Foll should accept 5 oz. instead of 3 oz. I understand that, although the Tariff Board recommended 3 oz., the Government, after consultation with the board, altered the limit to 6 oz. I presume the reason for the alteration was that the Government desired to give a portion of the trade to Manchester. With this I agree, but is this trade going to Great Britain? It is not. There must be some line of demarcation. Out of a total of 188,000,000 square yards of cotton piece-goods imported into Australia, only 4,000,000 square yards come under sub-paragraph b 1. The Tariff Board has stressed the fact that if the cotton industry is to be successfully established in Australia, the heavier weights of drills, denims, dungarees and jeans should be protected^ not only by a duty, but also by a weight limit. It has been amply demonstrated that other countries are exporting to Australia material within a few decimal points of the specified weight of 6 oz.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– If the weight were reduced to 44 oz., what would happen?

Senator ARKINS:

– Material imported under this item is largely used for the making of uniforms. It is also used by sporting folk - cricketers, tennis players, &c. - and workers of all kinds, both male and female, and has a wide range of uses in the tropical part3 of Australia. The Tariff Board recognized that, and desired to preserve the interests of the Australian industry. Immediately interested parties sought to overcome the protective duty by sending to Australia goods just below the 6-oz. limit; these materials are now coming into active competition with the Australian product. Material weighing only 3 oz. a square yard might be too light, but if the limit were reduced to 5 oz., the ordinary man in the street would be able to differentiate between it >and the 6-oz. material. Senator Foll has merely asked that the Tariff Board’s recommendation shall be upheld, and I am anxious to test the feeling of the committee on. this matter. As a matter of fact, it is our duty to record a vote on a matter of such importance. The Tariff Board having recommended a limit of 3 oz., the Minister cannot go far wrong if he accepts a limit between that weight and 6 oz. There is a vast difference between 3 oz. recommended by the board and 5 oz. suggested by Senator Dein, but the latter weight will still distinguish between the better class of drills, denims, dungarees and jeans, and the shoddy, light materials that are being imported to compete with the Australian product and defeat our tariff policy. If Senator Foll is prepared to accept the higher figure, the local manufacturers of these particular goods will be given a chance to compete successfully against their overseas rivals.

Senator FOLL:
Queensland

.- I am prepared to meet the wishes of other honorable senators, and, at the conclusion of my speech, I shall ask leave to’ amend my request, by inserting the figure 5 in place of the figure 3. The latter figure was suggested by the Tariff Board. The point which the Minister seems to lose sight of is that this item was included in the Tariff Schedule for the purpose of dividing cotton goods, into two classes, one consisting of heavy materials that can be made locally and the other of lighter materials which have to be imported. But the foreign manufacturers who were given the market for the lighter materials have sent to Australia heavy materials which come into active competition with the very products which the Government sought to protect. Honorable senators must recognize the significance of this. My point is illustrated by the experience of one firm. Whereas the bulk of its orders last year was for Australian materials, for the first six months of this year it has ordered 210,000 yards of material of 6 oz. and under from overseas, and 54,200 yards of Australian material of over 6 oz. This is the very market which it was anticipated would be gained by Australian weavers using Australian cotton. If this sort of thing goes on, the overseas manufacturers will simply monopolize the market in respect of heavy drills and denims, and there will be no market left for the Australian weavers. I assure the Leader of the Senate (Senator Pearce) that, in submitting my amendment, I had no intention to be discourteous. The Minister for Trade and Customs (Mr. White) was visited last week by Parliamentary representatives and others interested in the duties on cotton goods, and this matter was discussed with him. The opinion left on the minds of those who were present at the interview was that the Minister was not averse to the weight being approximately 5 oz. to the square yard in order to protect the local industry. If the Minister in charge of the bill (Senator A. J. McLachlan) will give an assurance to the committee that the difficulty will be remedied, if governmental investigation shows that the policy of the Minister is being thwarted, I shall be quite willing to withdraw my request, which I submitted after most careful consideration of the matter from the viewpoints of both the grower and the local manufacturer. The figures which I have presented were supplied to the Deputy Comptroller of Customs in Victoria, who sent an officer to investigate the position of a company interested in the manufacture of this cloth in that State. I fully recognize the difficulty of the position that has arisen in regard to imports from Lancashire.When I was in Lancashire last year I discussed this aspect of the matter with leading men in the spinning industry, and they told me that much of the talk about a boycott of Australian goods had resulted from a misunderstanding. If the largest Lancashire manufacturers were consulted about the amendment I have requested, they would say that it would not affect their trade in the slightest degree; but it would affect importations from Japan, which is seizing an opportunity to compete with Australian manufacturers with regard to a class of goods which the Government has stated that it believes should be reserved to the local industry. I am not particular as to the precise figure to be employed regarding the weight of the material, so long as we can be assured that the anomaly will be rectified. I ask leave to amend my request by substituting “ 5 “ for “ 3 “.

Request - by leave - altered to read -

That the House of Representatives be requested to amend sub-paragraph (b) (2), paragraph (1), sub-item (a) by leaving out the figure “ 6 “ with a view to insert in lieu thereof the figure “ 5 “.

Question - That the figure proposed to be left out be left out (Senator Foll’s request) - put. The committee divided. (Temporary Chairman - Senator J. B. Hayes.)

AYES: 10

NOES: 19

Majority . . . . 9

AYES

NOES

Question so resolved in the negative.

Request negatived.

Item agreed to.

Title agreed to.

Bill reported with requests; report adopted.

page 1839

INCOME TAX ASSESSMENT BILL 1936

Second Reading

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

– I move -

That the bill be now read a second time.

Honorable Senators, I am sure, will welcome this measure, though it may be regarded by some as a belated step in securing the simplification and harmonization of the income tax laws of the Commonwealth and the States. It marks a milestone in the history of our taxation law, and gives effect to principles which are gratifying to me personally, and which, I am confident, will strongly appeal to honorable senators. It has always appeared to me that our income tax law should be as simple as possible. It touches every section of the community. Few amongst those who are highly skilled in business have really understood the complexities of Federal and State taxation, and some of us, at the bar, reaped rewards in consequence.

Honorable senators are aware that the introduction of this bill is the outcome of the work of the Royal Commission on Taxation. Prior to its appointment, insistent requests had been received from all sections of the taxpaying community that something should be done to harmonize, and simplify, as far as possible, the taxation laws of the Commonwealth and the States. To this end, Sir David Ferguson, a former justice of the Supreme Court of New South Wales, and Mr. E. V. Nixon, C.M.G., a chartered accountant, of Melbourne, accepted a commission to make the inquiry on behalf of the Commonwealth and the States. The results of the royal commission’s labours are contained in the four reports published at different dates during 1934. The first three reports cover the subject of income tax, whilst the fourth and final report relates to land tax and estate duty. The Government has already, more than once, made public acknowledgment of its appreciation of the work performed by this commission, and, on the occasion of the introduction to this chamber of such an important bill as this, I should be lacking in my duty if I failed to .acknowledge again, the thanks of the Government for the thorough investigation conducted by these gentlemen into this difficult and complicated legislation, and for the clear and excellent report and sound recommendations that they have put forward.

To win acceptance by the States as well as the Commonwealth of the recommendations embodied in the royal commission’s reports, several conferences were held during 1934 and 1935. These were attended by Ministers, as well as taxation commissioners and their officials, to discuss the recommendations of the royal commission, as’ affecting the various income tax laws. The bill now before the Senate represents, generally speaking, the principles that have been agreed upon at these conferences, and accepted by the Commonwealth Government. In the interests of uniformity, the royal commission went out of its way to submit a model draft bill for the acceptance of the Commonwealth and the States. The bill, after consideration and amendment to meet the detailed requirements of the

Commonwealth and the States, it has been reviewed at the various conferences so that the clauses in this measure may be said to have the imprimatur of the taxation experts and the royal commission. The Government is hoping tha t no departure will be made by the States from the principles and the drafting adopted in the various uniform bills now before the various parliaments without prior consultation and agreement. Having arrived at what is regarded as the maximum uniformity attainable at the present juncture, it is earnestly desired that all possible means shall be used to retain that degree of- uniformity, and even to increase it in the immediate future.

The royal commission, and the delegates at the various conferences, have kept in mind the ideal of one return and one assessment for each taxpayer. While this ideal is not attainable for all taxpayers, because of constitutional limitations and necessary variations in the respective States owing to peculiar local conditions, as well as revenue needs, a great advance in the standardization of returns and assessments, generally, has been achieved.

Honorable senators will gauge, perhaps more adequately, the value of the work accomplished and embodied in this bill by comparing it with a similar attempt, that has been made in the United Kingdom in connexion with Great Britain’s income tax problems. According to a recent cable published in the Australian press, it appears that an Income Tax Codification Committee, appointed in 1927, under the chairmanship of Lord Macmillan, which has been sitting continuously ever since, has been able to bring its work to a conclusion only this year. The purpose of the committee was to make the British law as intelligible as possible to the taxpayers, and it has now produced two blue books of 826 pages. The report concludes “ A simple code, intelligible to the layman, is a vain hope “. The second volume includes a draft bill, the largest ever submitted to the British Parliament. The fact that the royal commission in Australia had to deal with the laws of six different States as well as that of the Commonwealth makes its achievement even more meritorious and creditable.

There is a proposal, following upon a recommendation by the royal commission, for the Commonwealth and States to establish an appellate tribunal, to he presided over by a single judge of Supreme Court status, to deal with appeals for Commonwealth and State purposes. Such a tribunal will supersede the present Federal Income Tax Board of Review, as well as the various State courts to which, at present, State appeals* are referable. I am aware that, from time to time, honorable senators have been receiving representations from various bodies in the community which are opposed to the abolition of the Federal Income Tax Board of Review. The bill before the Senate does not make any alteration in that direction, and simply repeats the present Commonwealth provisions with regard to that board. Honorable senators, who desire to debate this proposal will have the opportunity to do so when the bill, to give effect to that recommendation of the royal commission, is brought before the House. For the information of honorable senators, I may state that the constitution of the proposed appellate tribunal has yet to be finally agreed upon with the States, and, until an agreement is reached, it will be impracticable to substitute an appellate tribunal for the Board of Review. Meanwhile, the Commonwealth Government proposes to extend for a further twelve months the term of appointment of the present members of the Board of Review, which expires in June of this year.

The first report of the Royal Commission on Income. Tax dealt mainly with proposals for the simplification of the provisions relating to the taxing of companies and dividends. These proposals were made the subject of the 1934 amending Income Tax Act, and are already in operation with general benefit to the taxpaying public and the department. The amendments were peculiarly Commonwealth matters, and do not affect the States. This bill contains a repetition df those sections since no alteration in the principles embodied in them has been found necessary.

The second report of the royal commission dealt, in the main, with subjectmatters peculiar to the States, and particularly with the vexed problem of apportionment between the States, of profits derived from a trade or business carried on in more than one State. The Government regrets that one of the principal objects for which the royal commission was appointed was not achieved, and that one of the main recommendations on which it was peculiarly fitted to make a decision was not accepted by one of the States. As it is specifically a State concern, the Commonwealth Government feels that it is unable to carry the matter any further, but it feels deeply disappointed that a disability under which the trading and business community generally suffer at the hands of the States should continue. However, as the various Chambers of Commerce are still pursuing the matter, there is yet hope that a solution acceptable to all. the States will ultimately be reached.

The alterations and amendments being effected in the Income Tax Assessment Act by the present bill are mainly the outcome of the recommendations of the third report. This report deals in detail with the main general provisions of the income tax laws - for example, classification of exemptions, defining the assessable income, and the specification of the trading and business deductions. In addition to these three main divisions, there is the review and standardization, in conjunction with the States, of the provisions dealing with such matters as the assessment of live-stock, and carrying forward of losses, the treatment of leases, partnerships, trustees, the general machinery clauses of the act, and the special sections required in connexion with the assessment of shipping, insurance, banking, mining and co-operative companies.

I shall mention some of the more important alterations contained in the bill, but in respect of the numerous minor matters, I refer honorable senators to the explanatory memorandum issued to them by the Treasurer (Mr. Casey). This memorandum gives a ready reference from the clauses of the bill to the present sections of the Income Tax Assessment Act, that are being replaced, amended or adopted in their entirety..

The explanatory notes are designed to give honorable senators a ready comprehension of each amendment of any substance. The bill represents a re-draft of the wording of the existing law to meet both Commonwealth and State requirements, and an attempt to express, in the simplest and clearest language possible the various provisions of the law. There would be no advantage in explaining what are merely alterations in the verbiage of the act, designed only to clarify and simplify expression.

An important virtue of the bill is the arrangement of the various divisions. This permits of subjects being dealt with in a common sequence for Commonwealth and State purposes, and has eliminated the weaknesses of existing acts, as to the arrangement of the various liabilities for assessment or concessions . by way of deduction. These are sometimes provided for in disconnected clauses and in the most unexpected places. The royal commission has attempted to make each division self-contained, so that, for example, the division on leases or partnerships, trustees, &c, will give in itself comprehensively the whole of the provisions relating to that particular phase of taxation. Even though the necessary variations between the Commonwealth and State provisions, prevent an exact sequence of clauses with the 3ame corresponding numbers, comparisons by taxpayers dealing with the same subject of taxation for Commonwealth and State purposes will be greatly facilitated by reference to -the divisions covering the same subjects in the same sequence of clauses.

At the first glance, honorable senators might be somewhat perturbed by the large number of clauses in the bill, namely 266, compared with 100 sections in the present act. The volume of printed matter in the bill, however, is no greater than that contained in the present act. The increase of the number of clauses is a drafting arrangement, whereby the reading of the bill is made easier and the interpretation more obvious.

Without traversing every division in the bill, I desire to give honorable senators a general idea of the comparatively major alterations made in this measure. The draft uniform bill has not been framed for the purpose of increasing or reducing taxes. Actually the concessions embodied in the bill will bring about a definite reduction of revenue during the next financial year, but in achieving’ uniformity with the States, a spirit of give and take has been’ adopted, and it is quite possible that in a particular case, or in particular circumstances, a slight increase of taxes may result, or on the other hand, there may be a# slight decrease. There has been a levelling up and levelling down. I am sure, however, that in view of the very considerable benefit to be derived by the community, as a whole, honorable senators will not cavil, at the results achieved.

Taking the subjects in the order in which they appear in the bill, I should mention an important factor which has arisen, in connexion with those carrying on operations abroad, namely, the rate of exchange. The variation of that rate between Australia and Great Britain, as well as other countries, is of such importance as to affect, quite considerably, the calculation of the taxable income. When the exchange rate approximated par, the difference between the £1 sterling and the Australian £1 had no particular significance, but with the increase of the exchange rate to 25 per cent, and 30 per cent., the department has found it necessary to insist upon the conversion of the £1 sterling into the £1 Australian before applying the rate of taxation. Although the department considers that it has power under the act to do so its right has been challenged unsuccessfully in the Australian courts in the Payne case. The decision of the High Court in that case has been carried to the Privy Council, where it is now awaiting hearing. In order to remove the anomaly that would be created by an adverse decision of the Privy Council, it has been thought advisable to express the right of conversion in a specific clause in the bill so that, in the future, the’ liability will be definitely known.

There has been considerable argument as to whether wives and divorcees should be taxable upon moneys received as separation allowance or as alimony, in view of the fact that such moneys have previously been taxed in the hands of the separated or former husband. It has been argued that if husbands and wives are called upon to pay a tax upon what is regarded as .the same assessable income, such a liability is in the nature of a double tax. In 1932, the Government incorporated an amendment in the Income Tax Assessment Act, exempting separation allowances paid to a wife living apart from her husband, pursuant to a decree of the court. Subsequent representations have been made that the same consideration should be extended to all alimony paid to a woman by her divorced husband. The royal commission which inquired diligently into this subject held that a strict legal line of demarcation was to be drawn between these two classes of women, and that the grounds for the exemption of alimony were not sound. Notwithstanding this, the Government has, in this bill, placed both classes of women in the same category, and in their cases, exempted the income from tax, preferring to recognize, not the legal difference between these two classes, but rather the actual similarity, according to popular understanding.

Following a recommendation of the royal commission, an alteration has been made in the act whereby there is to be taken into account the value of any residence or quarters provided by an employer for the use of his employee. Under the present act, an- employee is not liable in respect of such an allowance, except in specific circumstances. The view of the royal commission is that, when two employees receive the same amount of wages or salary, the one who enjoys, as an additional benefit, the occupation of a residence, rent free, or the enjoyment of free quarters, is the better off and able to bear a higher incidence of tax. In the same manner, allowances in the form of meals and sustenance, which, under a recent High Court ruling, had been found not to be assessable in particular circumstances, have been now made liable under all circumstances.

One of the most complicated and difficult problems for which the royal commission sought a solution was the variety of ways in which live stock were brought to account by primary producers under the Commonwealth “ as well as under the various State laws. Uniformity in this connexion was long overdue, and that the necessary reform has been attained and accepted by the Commonwealth and States is a matter for congratulation. I trust that the headaches and irritation induced by taxation matters will be considerably diminished in the future as the result of the uniform provisions that have been adopted. All livestock on hand at the beginning and end of the year are, in future, to be brought to account. At the present time an option exists whereby primary producers, who so elect, may omit to show the natural increase on hand at the beginning and end of the accounting periods, and only bring them into account when realization takes place at the time of sale. In order that the change over to the new system, however, will not adversely affect any primary producer who has hitherto omitted to bring to account the natural increase on hand, he is to be given an opening and closing value for such live stock to correspond with the closing debit. I think it can be assumed, speaking generally, that, in the case of a station property that carries on breeding operations, approximately the same numbers of live stock are on hand at the beginning and end of each year, except, perhaps, when properties have been subjected to drought or other special circumstances have arisen.

In view of the fact that the values for the present Commonwealth and State returns are on a different basis, special provisions have had to be incorporated in order to bring these values into line without prejudicing the taxpayer. The principle followed is to allow the taxpayer concerned the option of adopting either the Commonwealth or the State value for both returns, and where the option involves a reduction of his assessable income, provision is made to spread it over a period of five years. Similarly, if the choice exercised means an increase of the assessable income of a particular year, the increase will be offset by deductions spread over the same period of five years. The provision, however, is not a compulsory one. ‘The taxpayer lias the option of bringing the values into line or not. If he prefers to remain on different bases for Commonwealth and State purposes, thereby incurring the trouble of keeping two separate live stock accounts, he is quite at liberty to do so.

In the uniform draft bill a greater measure of elasticity with regard to live stock provisions is being provided than has prevailed in the past. Taxpayers will be allowed to change from one basis to another, provided that the Commissioner’s consent to the change is obtained. This consent would not be withheld in bona fide cases. The limits within which a taxpayer may select a cost price with relation to natural increase are also being extended so that trustees, in particular, may be able in future to make the figures in their income tax returns harmonize with their trust accounts. Any person, in future, who neglects to exercise his option to select a cost price will automatically be given the lower limit in the various ranges provided. Thus annoying correspondence delays will no longer clog up the assessment work of the department.

In view of the practical difficulty of primary producers separating from their live stock accounts working beasts and beasts of burden, these animals are, in future, to be treated as part and parcel of the ordinary live stock. This will not, generally speaking, adversely affect any primary producer, although the depreciation allowed on such animals may fail lo be allowed in different years.

The profits on the sale of live stock used for breeding purposes are, under the present act, exempted from tax when sold in connexion with a walk-in walk-out sale. Though this concession is being continued in respect df such animals as are at present on hand and are the natural increase bred by the taxpayer, the concession will not be continued in respect of the sale of breeding stock acquired after the new act comes into force. This alteration is the outcome of the recommendation of the royal commission which contended that the differentiation between breeding stock and trading stock was not a. practical one from the taxation point of view. The acceptance of the recommendation by the Commonwealth and the States will tend greatly to simplify livestock accounts in the future. The present provision for separating the value of the wool from the value of the sheep when sheep are purchased in the wool is also being deleted from the act. This particular provision, which existed only in the Commonwealth act, has proved to have a very limited application. lu the past, different treatment has been accorded to merchants, under the respective Commonwealth and State acts, with regard to goods imported into and sold in Australia. .Under the various State taxation laws a non-resident trader is held liable for tax on this class of sale if made through the instrumentality of an agent. The present Commonwealth practice depends upon two out of the following three factors occurring in Australia-: -

  1. place of contract;
  2. place of delivery;
  3. place of payment.

By arranging for two out of the above factors to take place outside Australia, taxation has been consistently avoided by certain classes of non-resident manufacturers and merchants. The adoption by the Commonwealth of the State test of instrumentality should prove to be a more satisfactory basis, and it should prevent, in the future, the leakages ‘ of revenue that have occurred in the past.

There has always been considerable controversy over the classes of deduction allowable under the act in respect of expenditure in’ gaining or producing assessable income. There are many items of expenditure which, though necessarily incurred in carrying on the business, do not come within the existing category of expenditure incurred in producing assessable income. The royal commission has recommended that the clause dealing with this expenditure be widened sufficiently to include this class of outgoing, and this has been done. The bill disallows as deductions expenditure of a capital nature and expenditure of a private or domestic nature, as they are disallowed under the present act.

Honorable senators are probably aware that a considerable amount of controversy has ranged around the use of the word “ necessarily “ in relation to business expenditure deductions, because of the fact that New South Wales has failed to include this word in the corresponding clause of the bill introduced in the Parliament of that State. As the other States concerned, however, are unwilling to run the risk of broadening this clause, to the detriment of revenue, to too great an extent, this Government, in the interests of uniformity, decided to follow the majority of the States. If, as certain sections of the community urge, the inclusion of the word “necessarily “ should lead to any inequities, the Government will not hesitate to reconsider the clause. For the present, honorable senators are asked to accept the wording, as drafted, as a liberal concession, compared with the limitations under the present act.

Although no alteration of substance lias been made . in the principles of depreciation allowed under the act, the Commonwealth and State commissioners, of their own initiative, have taken steps to reconcile their rates of depreciation, with a view to having one common schedule for the whole of Australia. This, I am given to understand, has been achieved. Machinery clauses have been embodied in the act to facilitate, the harmonization of the values of plant and machinery on hand for the purposes of the Commonwealth and State assessments respectively. The principle followed in this connexion is to take the lower of the two values and to allow an extra rate of depreciation in the assessment for the difference between the previous higher value and the value adopted, spread over a term not exceeding ten years. This harmonization of values and rates of depreciation will prove a particular boon to the trading community.

Under the present act, losses by embezzlement or larceny are not regarded as expenses incurred in producing the assessable income and are, therefore, not allowable. To meet complaints in connexion with, this allowance, the Government has consented to a clause being inserted in the bill to provide for a limited deduction under this heading, provided the embezzlement or larceny is of money, and is carried out by an employee in the taxpayer’s business. All losses by embezzlement or larceny, however, are not allowable, as such would cover misappropriations by partners, and also losses and outgoings of a capital nature.

The basis for deduction in respect of subscriptions to associations has been widened in order to lessen administrative difficulties, and to minimize vexatious queries issued to taxpayers in respect of small amounts. It is the practice of the department, under the present act, to analyse the expenditure of an association, and to allow only that proportion of the subscription which corresponds to that part of the association’s expenditure which would properly be incurred by the taxpayer if the activities carried out by the association had been carried out by the taxpayer himself. In future, amounts in excess of £10 10s. only will be subject to this analysis.

Gifts and contributions to public charities and similar bodies have been left in much the same position as under the present act, apart from minor alterations. The only important principle affected by the bill in this connexion is a provision that, in lieu of requiring the payment to be made out of the assessable income of the year - a provision requiring detailed analysis to differentiate between capital and income - the payment is allowable so long as the gift or contribution does not exceed the assessable income of the year.

Honorable senators will appreciate that, at present, there is a variety of concessional deductions under the Commonwealth and State acts. An attempt has been made to bring these into harmony, and in this connexion the Commonwealth’s contribution has been to concede a deduction of £50 to a married man in respect of his wife, or, where the taxpayer is a widower, in respect of a female relative having the care of children under sixteen years of age, provided that the wife or relative is a resident and is wholly maintained by the taxpayer. This concession, it is estimated, will cost the Commonwealth from £300.000 to £350,000 revenue in the next financial year, but it was regarded as a proper deduction to be made in the interests of the married section of the community, as well as in the interests of uniformity.

Previously, deductions in respect of life assurance premiums have been limited to £50. but, in the case of superannuation contributions, to £100. Under the bill before the House these two concessional deductions have been combined, and a maximum amount of £100 has been allowed. Though this, at first glance, might appear to be a restriction of concessional deductions, it is, broadly speaking, a more liberal deduction in respect of the majority of taxpayers, since a larger number of persons will receive the extended benefit of the life assurance premiums from the increase of life assurance premiums from £50 to £100, than will be restricted by the reduction of the present combined total of £150 for superannuation and ‘ life assurance premiums to £100. However, £100 is regarded as a reasonable limit for the combination.

Another important principle followed in connexion with these concessional deductions has been one, recommended by the royal commission, that the deduction should be allowed irrespective of the amount of income. In some cases, both in the Commonwealth and States, the allowance is limited to a taxpayer whose income does not exceed a stated amount. If the allowance is justified, the royal commission considered it should be granted in all cases. The following is an extract from the report in 1920 of the British Royal Commission on Income Tax:-

The amount of tax on the allowances may be a negligible .quantity in the budget of a very rich man, but it is certain that it is an item worth consideration to taxpayers with incomes far higher than those in which the allowances now apply, and we think that the recognition of these family obligations should have a place in the income tax scheme in regard to all incomes of whatever amount. It seems to us evident that the bachelor with £5,000, or even £10,000, a year should be taxed more than a married man with a family who has the same income, and Ave recommend that family allowances should apply to all incomes of whatever amount.

The Commonwealth act is the only one at the present time which can be regarded as making reasonable provision foi* carrying forward losses. The States have been won to an acceptance of the principle, and have agreed to carry forward losses for three years as compared with the losses of four years in the Common-wealth act. It has been agreed that, when the States have implemented the provision, and the carrying forward of the three years’ losses has become fully effective, the Commonwealth, in the interests of uniformity, will, by proclamation, reduce its period of four years to three years.’

The Commonwealth provisions with regard to the taxation of leases have been altered in two important directions only. The first is a provision for taxing the lessor upon the value of the improvements erected under covenant. The argument in favour of this amendment is that, if the lessee is given a deduction for the improvements he is required to make in the interests of the lessor, the lessor should be submitted to a corresponding liability for the value of the improvements as income.

The second important principle affecting the assessment of leases, is an amendment made in the House of Representatives in connexion with Crown leases held by a taxpayer for more than seven years. In such a case the liability of the vendor of the lease is to be limited to such an amount as has been conceded to the taxpayer by way of deduction in respect of the lease. It has been with some reluctance that the Government has accepted this amendment. While it is admitted that there is much to commend the liability in respect of various types of Crown leases to the sympathy of the Senate, the complicated drafting required to cover the various phases of leases is such that, until the full effect of any alteration has been thoroughly investigated and made clear, it is considered inadvisable to make any alteration at the eleventh-hour which would tend to spoil the harmony achieved by the Commonwealth and the various States in the uniform draft bill. In response to eleventhhour representations, the Treasurer had promised that a further investigation would be made in an effort to meet the particular circumstances of all Crown leases, and it is with much regret that the Government has accepted the decision forced upon it by a majority in the House of Representatives before the further impartial investigation promised has been undertaken. It is not improbable that the Parliament will be invited during the next- session to amend further the law with regard to Crown leaseholds. 1 may have to ask the Senate to remodel the provision which was agreed to in the House of Representatives.

In view of the fact that one of the principles of the bill is to abolish the averaging of income for rating purposes after 1938, so far as all classes of taxpayers, other than primary producers, are concerned, it was found necessary to provide for what is known as a “ notional income “ in respect of premiums on leases, to take the place of the averaging provisions. A detailed explanation of the manner in which this notional income is ascertained is set out in the explanatory notes to the bill, circulated by the Treasurer (Mr. Casey) in March of this year. Suffice it to say that, generally speaking, the notional income provides, in an approximate measure, an average rate based upon the unexpired period of the lease.

Honorable senators will notice that separate divisions in the bill are allotted to life assurance companies, co-operative and mutual companies, mining companies, overseas shipping companies, and Australian businesses controlled abroad. None of these divisions, however, contains any provisions which are different in any material respect from the present provisions of the Income Tax Act.

The view of the royal commission in respect of the mining provision was, that the concessions were a peculiar matter for ‘consideration by the respective governments concerned, and that the mining conditions and outlook in each State would probably justify differential treatment.

Some of the States provide for the registration of tax agents. The recommendation of the royal commission was, that all States should make provision for this registration or, alternatively, that the Commonwealth should assume the responsibility on behalf of all the States. Upon examination of the matter, and because of the doubt as to the power of the Commonwealth under the Constitution to legislate in this connexion in the Income Tax Assessment Act, it was thought preferable to leave the matter with the States. Provision is made in the bill, however, for an agent, who prep«7cs a taxpayer’s return, to sign a certi ficate, setting out the sources of information from which the return has been compiled. By this means, an additional check upon the accuracy of the return can be exercised, a check which, I think all honorable senators will agree, is highly desirable.

Very bitter criticism has been expressed in the community from time to time because of the retrospective powers of taxation exercised at times by the department. That such powers are necessary for a department functioning in so many directions as the Taxation Department does, honorable senators will readily appreciate. Retrospective powers are exercised in favour of the taxpayer as well as in favour of the revenue. The general limitation, with respect to amendments due to clerical errors or questions of fact, has always been three years, and this provision is still retained.

There is one type of retrospective amendment which it has been decided to abolish, namely^ that class of amendment which is due to alterations in the interpretation of the law. In future, whenever the High Court makes a pronouncement which has the effect of causing a new interpretation to be applied to any section of the act, assessments will not be re-opened, irrespective of whether the amendment would be in favour of the taxpayer or the revenue. This limitation, it is hoped, will tend to give more general satisfaction. ‘ No limitation has ever been placed upon the amendment of an assessment where fraud or evasion has taken place. This absence of limitation is continued as a feature of the present bill.

There is a type of amendment intermediate between the two types of cases just referred to, namely, the type of case in which a taxpayer has failed to keep proper books of account and has thereby failed to return his correct income. This type’ of case is subject to amendment within a retrospective period of six. years under the present act, and this provision has also been maintained in the bill. The test of keeping proper books of accounts has been changed to one based upon a more satisfactory principle, namely, whether or not the taxpayer has made a full disclosure of all the material facts necessary for his assessment. Ignorance or inadvertence cannot be regarded as a satisfactory excuse for the short-payment of tax within the period of six years stipulated.

A period of sixty days has been generally adopted for the lodgment of objections and appeals. At present there is some disparity in the periods operating in the Commonwealth and State acts, and the standardization of these periods should prove a convenience to taxpayers generally. On the whole, the periods of time adopted represent a liberalization of the present prescribed periods.

The Board of Review has been given the power to review all the decisions and determinations of the commissioner, with one exception. That exception relates to tlie remission of the penalties prescribed in the various sections -of the act for failure by the taxpayer to lodge returns, pay tax, or include income in his returns. Yielding to representations in this regard, however, the Government has conceded the Board of Review the right to review where the amount involved exceeds a penalty of 10 per cent, per annum. Penalties lower than this stipulated amount, usually appertain to minor offences against the act which, from an administrative viewpoint, do not justify consideration by a tribunal higher than the commissioner.

I have refrained from going into further details in this second-reading speech because the minor alterations, although numerous, are of such a nature as to lend themselves more appropriately to discussion during the committee stages.

Honorable senators will appreciate, from a study of the bill, the immense amount of detailed consideration that has been given to almost every clause, and from the knowledge that I personally have of the detailed work involved, in , presiding at one of the conferences of Ministers and officers, I assure honorable senators that the arrangement of the bill and the drafting of it are in them- selves accomplishments of no little importance. The bill represents the hard work and considered opinion of some of the most expert legal and taxation minds in the Commonwealth, and to the many contributors to the bill as it now stands, who have rendered advice and help in an honorary capacity, this Parliament, as well as the people of Australia, is greatly indebted. Of such importance do I regard the drafting work of this bill that I now specially appeal to honorable senators not to interfere in any manner with the wording of it, unless the matter at issue is one of principle or of outstanding importance. Illconsidered phrases and interpolations can undo the work of the best draftsmen, destroy the structure of the bill, and render its application, in intended directions, inoperative.

There are several amendments that the Government desires to introduce into the bill during its passage in the Senate, and these , will be printed and circulated among honorable senators for their prior consideration. The most extensive of them is one which is required to correct the phraseology adopted by an amendment of the House of Representatives relating to leaseholds.

It has also been decided, when the bill has been passed, to print in the margin opposite each section a reference to. the corresponding section of the old act. This will greatly facilitate the work of the legal and commercial community, in connecting the past history and rulings of the High Court with the current law on the various aspects of taxation.

I regret having misled Senator Duncan-Hughes in regard to the reprinting of the memorandum. I am now informed that the original memorandum was so voluminous that it was found impossible to revise it in respect of amendments made by the House of Representatives in time to submit it to honorable senators. I am sure, however, that the material which I have is all that honorable senators will need for the consideration of the measure.

Debate (on motion by Senator Collings) adjourned.

page 1849

EXCISE TARIFF 1936

Second Reading

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

– I move -

That the bill be now read a second time.

The schedule to this bill covers the proposals introduced into the House of Representatives on the 28th November, 1935, together with a further proposal of the 20th March, 1936. The proposals of the 28th November, 1935, incorporated proposals of the 6th December, 1934, the 28th March, and the 23rd September, 1935. A comparison of the proposed rates with the rates under the 1933 tariffs will be found on pages 123 to 125 of the memorandum.

With your indulgence, Mr. Deputy President, I shall refer briefly to the items in the schedule in order to give to honorable senators a general idea of the purport of the alterations, and so facilitate later detailed discussion.

In item 2 d e no alteration has been made of the rates of duty, but the minimum period of maturation for whisky has been reduced from three years to two years, in accordance with the recommendation of the Tariff Board.

The amendment of item 2j is a formal one, the object being merely to express more clearly the meaning of the item.

In item 6, the proposal is for a reduction of8d. per lb. on manufactured tobacco having a wholly Australian leaf content, and a reduction of1s. 4d. per lb. on plug tobacco having a wholly Australian leaf content, for consumption by Australian aborigines.

In item 8, a reduction of 6d. per lb. on cigarettes is proposed, because, on account of increased costs of American leaf, local manufacturers had to reduce the size of cigarettes, and that would have meant a decreased revenue. The reduction of the excise rate is being passed on to the public in the form of larger cigarettes.

The amendment to item 13 clarifies the meaning, and also results in a reduction by 2d. a gallon of the duty provided for concentrated grape must exceeding 15 degrees Beaume.

Item 18 is a new item exempting from excise duty Australian-made ale, spirits, liqueurs, tobacco, cigars and cigarettes consumed on sea-going vessels of the Royal Australian Navy, when such vessels are in full commission.

The last item in the schedule, item 19, imposes a duty of 2s. each on wireless valves. This duty was contemplated when the import duty on wireless valves was increased in May, 1932, to provide additional revenue, but its operation was delayed until the local manufacturer had definitely passed the experimental stage.

I commend the schedule to the favorable consideration of honorable senators.

Senator COLLINGS:
Queensland

– As this bill is essentially one for consideration in committee, I shall not debate it at this juncture. I propose to submit a request on item 6 of the schedule, and I understand that some honorable senators have foreshadowed other requests.

Question resolved in the affirmative.

Bill read a second time.

In. committee:

Clauses 1 to 6 agreed to.

Schedule

Item 2 agreed to.

Item 6-

By omitting the whole item and inserting in its stead the following item: -

In the manufacture of which all the tobacco leaf used is Australian grown, per lb. 3s.10d.

Sitting suspended from 5.50 to 8 p.m.

Senator COLLINGS:
Queensland

– I do not intend to detain the committee very long in discussing the request which I have had circulated. Its purpose, as honorable senators will note, is to give definite encouragement to the tobacco industry. We on this side strongly support the national policy of protection for our great primary and secondary industries, and we are determined to oppose any action which may whittle away the measure of effective protection which the industries receive. It. may not be out of place if, at this stage, I place before the committee figures indicating the importance of this- industry to Australia. It is natural, of course, that the three Labour senators from Queensland, where tobacco has been successfully grown for many years, should be keenly interested in this item. It is estimated that, to supply the full requirements of Australia, and this is something which should be possible in the near future, employment would be provided for 10,000 growers, on small areas, and that the industry would be capable of supporting, directly and indirectly, at least 30,000 people. The tariff imposed by the Scullin Government proved a great incentive to tobaccogrowers, particularly in Queensland, where, for many years, considerable quantities of tobacco leaf had been produced almost entirely by Chinese; but, as the product was often inferior in quality, and manufacturing was in its infancy, much difficulty was experienced in disposing of the leaf, and the industry collapsed. Under the stimulus of the Scullin Tariff the production of Australian tobacco leaf increased to 10,000,000 lb. We shall, of course, be told that, if the request which I have circulated is accepted by the Government, ‘the price of tobacco will be increased. That need not happen, because the Government has in its hands the power, if only it has the courage to use it, to prevent profiteering and the exploitation of consumers.

Senator Sampson:

– Is the honorable senator a smoker?

Senator COLLINGS:

– No. It may give some satisfaction to Senator Sampson, if I add that my remarks on this sub-item are not based on my capacity to judge. I do not use tobacco, and therefore I am not an expert on quality. But I do know what the industry means to Australia.

Senator E B Johnston:

– The effect of the request would be to reduce slightly the cost of tobacco to the consumer.

Senator COLLINGS:

– Of course it would. Price adjustments will undoubtedly be made following any alteration of the excise duty. In asking the committee to support my proposed request, I am not suggesting that Australia should do what other countries have not done. South Africa and New Zealand have gone a great deal further than the Scullin Government went, and further than I am asking this Government to go. In South Africa the industry was given five years within which to supply the whole of the requirements’ of the Union, following the imposition of an embargo upon imports; and in New Zealand the Government has taken effective steps to protect the local industry. An amendment, similar in terms to my proposed request, was moved _ in the House of Representatives when the excise tariff was under discussion, and it received support from members of the Country party in that chamber. The purpose of my request is to provide a margin of ls. 6d. per lb. in favour of the Australian product, the excise on imported tobacco being 4s. 6d. per lb. As . indicating the magnitude of the industry, I may state that in 1934-35 imports reached 17,000,000 lb., valued at £1,300,000. Of that total, 16,340,000 lb., valued at £1,250,000, came from the United States of America. “It should be obvious, therefore, that if by lowering the excise on tobacco manufactured solely from Australian-grown leaf we can reduce imports, we shall be conferring an immense benefit upon Australian growers and manufacturers. The following table, showing the numbers of registered growers, the area under tobacco, and the production value of Australian leaf, will he of interest : -

I have other interesting details relating to the industry, which as the discussion proceeds, it may be necessary for me to furnish to the committee. “We are not asking that the lower excise duty shall apply to tobacco, cigarettes, or cigars in which there is a blending of imported and Australian leaf. We are asking that the benefit of the lower excise shall apply exclusively to tobacco manufactured from Australian-grown leaf.

The TEMPORARY CHAIRMAN (Senator J B Hayes:

– The committee has before it two requests, one circulated by Senator Collings, and another by Senator Hardy who, I regret to state, is unable to be present to-night. The purpose of Senator Hardy’s request is to alter the wording of the item. I propose to put that first to the committee, and when it has been disposed of, to submit the request circulated by Senator Collings.

Senator ABBOTT:
New South Wales

.- On behalf of Senator Hardy, I move -

That the House of Representatives be requested to amend sub-item (b) (1), to read - “(1) In the manufacture of which Australiangrown leaf is used either wholly or part, per lb. 3s. lOd.”

As I said on another occasion recently, members of the Country party desire to help tobacco-growers; but we differ to some extent from Senator Collings, inas-much as we do not approve the principle of offering enormous tariff inducements, which might lead to a recurrence of what happened under the Scullin duties, to which the honorable senator so proudly referred. At that time land increased in price to

a highly speculative figure because people took up tobacco-growing who otherwise probably would not have done so. Everybody was desperately anxious at that time to find some means to make an income, and the prospect of high returns from tobacco offered great allurements to many people who rushed unthinkingly into the industry. . Tremendous speculation took place in tobacco-growing land. But, as I said some time ago, in answer to an interjection by the Leader of the Opposition (Senator Collings), a great deal of the tobacco grown at that time is still unsold. In some instances no part of the crop of individual growers was sold. Senator Collings seems to place more value on price than on sale. It appears to me that the request which he has foreshadowed would not afford any benefit to the Australian leaf blended with imported leaf. That would be a sad result. The Government is proposing a reduction of the excise duty by 8d. per lb. The Country party desires to secure the benefit of that reduction for all Australiangrown leaf, whether used in blend or not. We believe that it would be possible to police the blending of the tobacco. Probably a hundred ways of doing so could be devised. So we urge the Government to give some encouragement to manufacturers to use an everincreasing quantity of Australian-grown leaf, both separately and in blend. Senator Collings directed attention to certain figures in relation to the industry which I had intended to use, so I shall not repeat them. I simply put it to the committee that the request which I have moved on behalf of Senator Hardy is intended to secure a benefit for all Australiangrown leaf, whether used in blend or otherwise.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

[8.20]. - We all regret the absence of Senator Hardy from the chamber this evening. It is impossible for me to accede to the request made in his behalf. I believe that it would have the very opposite effect from that intended. It implies that excise shall be levied on the total output. Therefore it would operate as a reduction from the 4s. 6d., which is now being levied on imported tobacco, to 3s. 10d., to the extent to which imported leaf is used in blend with local leaf.

Senator Duncan-Hughes:

– And a very good thing, too.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I have no doubt that Senator Duncan-Hughes would support the request for very different reasons than those advanced in favour of it. If the request were agreed to, numerous difficulties would arise. I ask Senator Abbott to reconsider the whole subject. I do not wish to reiterate the details of the Government’s tobacco policy, but I remember vividly a previous discussion we had on this subject when a stout fight was made by Senator Rae for a reduction of the excise duty on- Australian leaf. Certain honorable senators among the allies of the Government also moved for a reduction of1s. 6d. per lb. I remind the committee, however, that the Government has made two reductions of excise duty: First, a reduction of 8d. per lb. on tobacco manufactured wholly from Australian-grown leaf; and, secondly, a reduction of1s. 4d. per lb. on plug tobacco made wholly from Australiangrown leaf for use by Australian aborigines. A remarkable consequence has followed these reductions, the object of which was to promote the sale of Australian-grown leaf, which had been lagging. The Government anticipated a loss of £90,000 in revenue in the first twelve months. We have now had some experience of the operation of the new duties. The departmental estimate of the use of Australian-grown leaf for the year following the introduction of the new duties was 1,700,000 lb., but on the present basis of use, the total will be 1,930,000, which will represent a revenue loss of considerably more than £90,000.

I wish to make it quite clear that the Government keenly desires the development of the tobacco-growing industry on sound lines, and will take all necessary steps to encourage the production of smokeable bright mahogany leaf. It cannot, however, see its way clear to go further than it has already gone. In 1931, the whole of the usable leaf grown was purchased at remunerative prices, and prices at a considerable increase on world’s parity have been offered ever since for all usable Australian leaf. Notable advances have been made in the control of crop infestation as the result of the expenditure of £20,000 provided by the Government for scientific research.

The Government cannot accede to either the request moved by Senator Abbott, or the foreshadowed request of Senator Collings.

Senator COLLINGS:
Queensland

– Although the PostmasterGeneral (Senator A. J. McLachlan) says that the Government desires the tobaccogrowing industry of Australia to be placed on a sound basis, he has announced with considerable pride that it has effected certain reductions of the import duty. I cannot see how the figures cited by him can afford the Government any satisfaction. The Labour party, of course, cannot. support the request made on behalf of Senator Hardy, to alter the phraseology of the sub-item, while leaving the rate of duty untouched. We do not wish to do anything whatever to encourage the use of imported tobacco leaf, and we shall strain every nerve to increase the use of Australiangrown leaf. I propose to recapitulate the relatively recent history of the excise duty on tobacco. In September, 1935, the excise on tobacco made wholly from Australian leaf was reduced by8d. per lb. to 3s.10d. per lb., and that on plug tobacco made wholly from. Australian leaf for use by Australian aborigines, by1s. 4d. to 3s. 2d. per lb. At the same time the excise duty on. cigarettes was reduced by 6d. In 1930-31,. as the direct result of the increase of duty on imported leaf, a substantial dropoccurred in the quantity of it used in Australia, and a marked increase occurred. in the quantity of Australian leaf used. Compared with the previous year, imported stemmed leaf used in Australia dropped from 18,000,000 lb. to 13,300,000 lb., and the quantity of Australian stemmed leaf used increased from 1,200,000 to 3,100,000 lb. The Labour party, of course, was delighted with this result. Notwithstanding that the quantity of Australian leaf used in the manufacture of tobacco trebled, the demand for Australian tobacco could not be fully met. The tobacco manufacturers admitted that the supply of Australian-grown leaf was limited, and in 1931-32, a splendid crop of good quality Australian leaf of more than 12,000,000 lb. was obtained, which shows clearly that the Australian tobaccogrower responded nobly to the complaint that insufficient local leaf was available. Happenings at that time show clearly what the Australian tobacco-growers would be capable of doing if a fair measure of protection were accorded the industry. But here we come to the aspect of the subject of which the Minister was so inexplicably proud. In February, 1932, before the first big crop was harvested, the duty on tobacco manufactured from imported leaf was drastically reduced by 2s. 2d. per lb. I have not forgotten a previous debate in this chamber on that subject. The Leader of the Opposition of those days told the then government what would happen as the result of that drastic reduction. His predictions were fulfilled, and the Opposition of to-day knows that similar unsatisfactory results will follow if further protection is taken from the industry. Coincident with the reduction by 2s. 2d. per lb. of the import duty on tobacco leaf in February, 1932. the excise duty on all tobacco was increased by a similar amount. In respect of tobacco made from imported leaf, the increase of the excise duty was offset by the corresponding reduction of the import duty on that leaf, but in respect of tobacco made from Australian leaf it meant an additional impost of 93 per cent. That is the kind of thing which the Minister now says was necessary to put the industry on a proper footing. At the time charges of speculation in land were made. Land “ go-getters “ put on the market land which they said was suitable for tobacco production, and, by dishonest means they sold it at exorbitant prices. If the Government is in agreement with the policy which we on this side stand for, and is prepared to take effective steps to limit speculation in land, the Opposition will enthusiastically support it.

Senator Brennan:

– This Parliament cannot do that.

Senator COLLINGS:

– This Parliament cannot do anything that it does not want to do ! The things that it is inclined to do it can do if it takes its courage in both hands.

Senator Brennan:

– Can this Government legislate to control land values?

Senator COLLINGS:

– The Commonwealth Parliament can, and does, rise superior to all obstacles which stand in the way of its policy and the interests of those who support it. And even if it has not the power which the Government thinks is necessary, why does not the Government tell the people the truth, and seek that power ? The only reason why it does not do so, is that the predatory vested interests of those people from whom the Government draws financial support stand in the way.

Honorable senators interjecting,

Senator COLLINGS:

– I know how difficult it must be for honorable senators who are not vitally interested in the tobacco-growing industry to absorb the facts which the Opposition is placing before them. I have in mind those who are engaged in the growing of tobacco. I have seen them and their families at work; I have seen their barns stacked with leaf; I know how the kilns have to be watched dayand night - and as the temperature within the flue must not be allowed to fall or rise beyond a certain degree, the eye must be kept glued to the thermometer. The colder the night the greater the need to watch. I have also visited the manufacturing establishments in New South Wales and Victoria, and have seen the employees at work. I can visualize those workers in their homes at the end of the day. In short, I have a fair conception of what this industry means to Australia. If the Government were moved by a desire to do what is best for Australia it would give every encouragement to this important industry. The additional impost on tobacco made from Australian leaf materially raised the price of the local product, while not altering the price of the imported tobacco, with the result that the demand which had set in for Australian tobacco was checked, and the use of imported leaf encouraged. Further, these drastic alterations of duties were made at a time when there was a tremendous glut of tobacco leaf in the United States of America, and leaf was sold at prices far below the cost of production.

Senator Brennan:

– Paul Jones told me all that yesterday.

Senator COLLINGS:

– It is essential that I should protect myself from the Minister’s mis-statement. I am not quoting from a document handed to me by Paul Jones.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– The language is the same.

Senator COLLINGS:

– The Opposition opposes Senator Hardy’s request for the reason that it is not interested in what is done with the imported leaf. I admit that many smokers claim not to like tobacco made from Australian leaf, but I am not concerned about that either. If we want this industry to be established, we must give to it effective protection. In South Africa the manufacturers of homegrown leaf were told that they would have five years to conform to legislation, after which no importation of tobacco would be allowed, and if the Commonwealth Government were prepared to adopt a similar policy it could rely on the support of the Opposition. In that way the Australian industry would have a chance, and we should get away from the idea’ that Australian leaf needs to be blended with imported leaf.

Senator ABBOTT:
New SouthWales

– I now see that the request may not adequately express Senator Hardy’s desire. The Leader of the Opposition (Senator Collings) should know that a certain quantity of imported leaf is used for blending with Australian tobacco, and that manufacturers use imported leaf for blending, because blended tobacco is more popular with smokers than is that made entirely from Australian leaf. We are all agreed as to the desirability of encouraging the use of more locallygrown leaf in the blends; but we do not agree that Australian leaf used in blended tobacco should be debarred from obtaining benefits under the excise.

Senator Gibson:

– It must receive the benefit.

Senator ABBOTT:

– The wording of the request does not carry out Senator Hardy’s desire. The Country party does not press for extravagant duties on imported tobacco; it agrees that there should be a uniform reduction of the duty on all Australian leaf used in the manufacture of tobacco. That is all that it has asked for. I suggest that the request be withdrawn, if the Government will give an assurance that it will sympathetically consider the uniform reduction of the excise on all Australian tobacco whatsoever.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I give that assurance unreservedly.

Request - by leave - withdrawn.

Senator COLLINGS:
Queensland

.- I move-

That the House of Representatives be requested to make the duty, sub-item (b) (1), per lb., 3s.

I have already explained that the desire of the Opposition is to encourage this Australian industry. I hope that my request will be agreed to.

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

– I invite the Leader of the Opposition (Senator Collings), to become a devotee of My Lady Nicotine, because it might have a soothing effect upon his nerves. The honorable senator waxed eloquent about what the Scullin Government had done for the tobacco-growing industry. I can only say that the efforts of that Government worked to the undoing of the industry.

Senator Collings:

– No.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– The Scullin Government itself had misgivings as to the effect of its policy. I have come across numerous instances of items being referred to the Tariff Board by Mr. Forde when Minister for Trade and Customs. But we need not go into that, however; it is ancient history. This proposal would give a total protection - import duty plus excise - of 5s. per lb., which would be only2d. less than the 5s. 2d. duty imposed by the Scullin Government, which we all so roundly condemned. This industry may ultimately be of considerable value to Australia. It has. grown steadily under a moderate excise tariff. In 1927-28, the total Australian leaf used in the production of manufactured tobacco was 1,328,970 lb. In the following year it was a little less, but in 1929-30, it rose to 1,674,229 lb.

Senator Collings:

– Those are the figures which I have just given.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I have some figures to add to those given by the honorable senator. In 1930-31, the production of Australian manufactured leaf rose to 3,589,431 lb. In the following year, 1931-32, it fell to 2,573,048 lb., and in 1932-33, under steady and sane administration and with a lower tariff, it rose again to 3,201,158 lb. Yet honorable senators opposite claim that this industry has been badly handled. In 1933-34, the production increased to 3,854,722 lb., and in 1934-35, by careful and steady steps, increased to 4,074,950 lb., whilst the official estimate for this year is 4,600,000 lb. The gross quantity of imported leaf used in the manufacture of tobacco during 1934-35 amounted to 11,805,584 lb.

Senator Collings:

– How shall we overtake that?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Not by the honorable senator’s methods, which would bring catastrophe to the Australian industry. The honorable senator talks spectacularly about the industry; I have had practical illustrations in connexion with it, both officially and unofficially; I know to my loss, financially and otherwise, the effect of the Scullin tariff on this industry.

Senator Collings:

-The industry would now be on its feet if that tariff had been retained.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– On the contrary, it would have been standing on its head long ago. . In 1927-28, the tobacco manufactured in Australia consisted of 91.7 per cent. of imported leaf and 8.3 per cent. of Australian leaf. In 1934-35, the latest period for which figures are available, the percentage of imported leaf in manufactures dropped to 74.3 per cent. and Australian leaf increased to 25.7 per cent. This increase has taken place within a very short period. First of all, it jumped from 9.8 per cent. in 1929-30, to 24.4 per cent. in 1930-31, then to 17.5 per cent., and then, when the industry had the benefit of saner administration, to 21.2 per cent., 25 per cent., and 25.7 per cent. This record speaks well for the improvements which have taken place in the industry, because, as one honorable senator interjected, the great trouble which confronted it was that it has been producing non-usable leaf. To-day it has benefited on the scientific side, and has a chance to develop. If conducted on sound lines, it will, no doubt, develop firmly and steadily instead of experiencing spasms of artificial prosperity.

Senator GIBSON:
Victoria

– I understand from what the Minister (Senator A. J. McLachlan) has said, that if Senator Hardy’s request had been carried, and the total production of manufactured leaf consisted of 99 per cent. imported leaf and 1 per cent. Australian leaf, excise duty would have been paid on the total leaf at the rate of 3s. l0d. instead of 4s. 6d. per lb. But does not the proportion of Australian leaf used in manufacture now pay excise duty at the lower rate of 3s. 6d. per lb.?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Only a small quantity of it.

Senator GIBSON:

– All Australian leaf mixed in manufacture pays an excise duty of 3s.10d. a lb., and all imported leaf pays an excise duty of 4s. 6d. a lb. I take it that the excise duty can be imposed before the manufactured tobacco is mixed.

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

– I understand that no blending takes place after manufacture. Senator Gibson’s statement is correct. But in the process of manufacture the imported leaf cannot be separated from the local leaf. The excise duty of 4s. 6d. is, therefore, imposed on the weight of the manufactured tobacco as blended.

Senator LECKIE:
Victoria

.- Senator Gibson is on the right track. His purpose would be served if an excise rate of 3s.10d. per lb. were charged on all Australian leaf used in manufacture.

Senator Gibson:

– I think that that is done now.

Senator LECKIE:

– No. The Minister (Senator A. j. McLachlan) says that no matter how much Australian leaf is mixed in manufacture, the higher rate of excise duty is charged in respect of the total manufacture. There should be some way of overcoming this difficulty; the quantity of Australian leaf used should, in all cases, be charged at the lower rate of excise duty.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– The imported leaf has already paid import duty.

Senator LECKIE:

– And excise duty is charged later. To-day, possibly, only 5 per cent. of Australian leaf is used in manufacture, but later, this percentage may rise to 50 per cent., and, as the industry advances, and the quality of local leaf improves, the manufactured output may consist entirely of Australian leaf. I cannot see that this difficulty is insuperable; the customs officials should be able to differentiate between imported and Australian leaf for the purpose of levying excise duty. Manufactured tobacco is generally sold already cut, and is probably mixed after the cutting. No difficulty should arise in that case. A similar difficulty is overcome in respect of whisky held in bond. We should work along the lines suggested by Senator Gibson, and I should like to hear from the Minister an explanation of the difficulty which prevents the excise officials from differentiating between imported and Australian leaf used in manufacture.

Senator Gibson:

– If the blend consisted of 90 per cent. Australian leaf, and 10 per cent. imported leaf, it would pay excise duty at the higher rate of 4s. 6d. per lb.

Senator LECKIE:

– Yes; I think the position is unfair, and I suggest that if the Minister cannot now see a way out of the difficulty, he might postpone consideration of the item.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– We cannot do that.

Senator LECKIE:

– Well, then, can the Minister point out to-night what is the insuperable difficulty which prevents the officials from differentiating between imported and Australian leaf, for the purpose of charging excise duty?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– First of all there is a legal difficulty. It was decided in one case, that where tobacco is brought in at one tariff rate, the Government cannot differentiate between that and other tobacco in respect of excise duty ; thus we can deal only with the whole blend.

Senator LECKIE:

– I doubt that legal opinion; it does not seem to ring true. As a matter of fact, in these discussions we have had too much “ hush-hush “. Too frequently has the Minister adopted the attitude that he could tell us quite a lot if he wanted to, but was not in a position to do so. On these matters, I submit, concrete reasons for the attitude of the Government should be given; innuendoes should not be resorted to. There should be a means of differentiating between the percentage of Australian leaf and that of imported leaf used in manufacture and of making the excise charge on the portion of Australian leaf at the rate of 3s. l0d. per lb. and on the portion of imported leaf at 4s. 6d. per lb.

Senator E B JOHNSTON:
Western Australia

– On the last occasion on which the Senate dealt with excise duly on tobacco, I voted with Country party senators in favour of a duty which would give the greatest benefits to the growers. For similar reasons I shall support the request moved by the Leader of the Opposition (Senator Collings). I am surprised to learn from the Minister (Senator A. J. McLachlan) that, on the portion of Australian leaf used in blended tobacco excise duty is not charged at the lower rate of 3s. l0d. per lb. If that is so, it will be easy for this committee to remedy the position, whether or not the request moved by the Leader of the Opposition is carried. If it be carried, the honorable senator can move a further request to make the item read : “ Tobacco, manufactured n.e.i., in the manufacture of which Australian leaf is used in part, on the proportion of Australian leaf used per lb. 3s.”. I would support a proposal on those lines. , On the other hand, if the request moved by the Leader of the Opposition is not carried, the item could be amended to read : “ Tobacco manufactured n.e.i., in the manufacture of which Australian-grown leaf is used in part, on the proportion of Australian leaf used per lb. 3s. 10d.”

Senator Brennan:

– How could that proposal, possibly be carried out from an administrative point of view?

Senator E B JOHNSTON:

– I do not think it would offer any difficulty at all to our excise officials. Already, when Australian leaf goes into a factory, there has to be some check ‘on it to see whether it is used in the manufacture of exclusively Australian tobacco or otherwise. I can see no reason why the Australian tobacco-grower should not get the benefit of the lower excise rate, should, perhaps, three-quarters ‘of the leaf used in manufacture be Australian leaf. Indeed, I believe that the majority of members of Parliament thought that this contingency was now provided for in the way I suggest. I am surprised to hear that this i3 not so. In these circumstances, it is no wonder that the use of Australian leaf has fallen off so rapidly compared with the proportion used in manufacture in 1930-1931. On the last occasion we considered the excise duty on tobacco in company with all Country party senators. I voted in favour of a differentiation of ls. 6d. in excise duty rates in favour of Australian leaf, as against imported leaf. I hope the committee will agree to a proposal on these lines which will effect a slight reduction of some of the heavy taxation imposed on smokers and, at the same time, help a valuable primary industry.

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

[9.0]. - If honorable senators had made an inspection of a tobacco factory they would realize some of the difficulties in the way of giving effect to Senator Gibson’s proposal. I was a member of a royal commission which inquired into the tobacco industry some years ago, and I remember observing the manner in which the leaf is manufactured. I understand that when Australian leaf is bought by manufacturers it is not immediately manufactured into smoking tobacco. It has first to go through a process known as maturation. I understand that, in some instances, leaf that was bought two years ago is still being matured. American leaf, on the other hand, has, for the most part, undergone that process before arriving here. It comes into the manufacturer’s factory as matured leaf. In the process of manufacture, the leaf is stripped of the stem before it is pressed into the block from which the cut tobacco is made, and, during that time, I take it, the blending in of Australian leaf takes place. Obviously, it would be impracticable to levy excise on the amount of Australian leaf then or at any one time, because, as I have explained, there may be a two years’ supply on hand, whereas the American leaf is taken out of bond, day by day as required. I should think it would be extremely difficult for any excise officer to say what the differential excise should be on the Australian leaf in any particular block. It is because of that difficulty that Governments have adopted another method of favouring the Australian leaf. American leaf is subjected to an import duty of 3s. 6d. per lb., a duty which the Australian leaf does not pay. Therefore, at the outset the Australian leaf enjoys an advantage of 3s. 6d. per lb. over the imported leaf. That is an easier and simpler way to give preference to the Australian leaf than to try by an intricate process to determine how much Australian leaf is in any particular blend. If Parliament wishes to give a greater advantage to the Australian leaf it can do so by increasing the duty on imported leaf.

Senator Collings:

– But the Government will not do that.

Senator Sir GEORGE PEARCE:

– I am not now arguing whether there is a sufficient import duty on American leaf or not. I am merely pointing out that, if it is desired further to assist the Australian industry, that is the easy and natural way to do it.

Senator GIBSON:
Victoria

.- I appreciate what the Leader of the Senate ‘(Senator Pearce) has said, namely, that Australian leaf benefits from the duty of 3s. 6d. imposed on imported leaf, but I can hardly imagine that the process of manufacture is as he says. It seems more probable that the Australian leaf and the American leaf are each manufactured into smoking tobacco without any blending. The Australian leaf may be matured for two years before manufacture, but that makes no difference. .Then, after both kinds of leaf have been manufactured, they are blended into the smoking mixture sold to the public. If that is done, the manufacturer could pay 3s. l0d. excise on the Australian proportion of the mixture, and 4s. 6d. on the imported proportion. It may be that 75 per cent. of the mixture is Australian, and only 25 per cent. imported, so that the manufacturerwould evade the payment of an extra 8d. per lb. on 75 per cent. of the completed mixture. I remind honorable senators that the tobacco tins now sold to the public do not bear on them the words “ Virginian Tobacco “ because, in fact, the tobacco contained in them is probably mostly Australian.

Senator GUTHRIE:
Victoria

– Tobacco-growing is quite a good primary industry, which promotes closer settlement, and we should encourage it in every way we can. That can be done either by imposing a higher import duty on American leaf, or by reducing the excise on Australian leaf to 3s. per lb., as Senator Johnston suggested. I cannot see that there is any force in the contention of the Minister (Senator A. J. McLachlan) that it would be impossible to police this provision if it were made necessary to determine what proportion of Australian leaf were used in any mixture. It should present no greater difficulty than that presented by the blending of spirits, and excise officers seem to be able to administer the regulations in regard to them. It should merely be necessary to require the manufacturer to make a sworn statement as to the proportions of American and Australian leaf in the tobacco under consideration, and a lower rate of excise would be paid on the Australian proportion. That would encourage the use of as large a proportion of Australian leaf as possible. We know that when the duty on imported leaf was very high there was an unnatural boom in the planting of tobacco, much of it on unsuitable land. The industry was over-encouraged, with the result that a lot of dark leaf of an unsaleable kind was produced. Lately, development has been along sounder lines, and the Council for Scientific and Industrial Researchhas been successful in discovering methods of control of the various diseases which affect tobacco plants. At the present time, quite good bright leaf is being produced in certain parts of Australia. I do not like the suggestion that we cannot grow good tobacco in Australia. I remember hearing it said, when I was young, that we could’ not produce butter in Australia, and at that time butter was actually being imported from Ireland in barrels. We are too much inclined in Australia to say that we cannot do this, and cannot do that. We have a great variety of climate and soil in this country, and if we make up our minds that we can grow good tobacco we can do it. The industry is deserving of encouragement because, as I have said, it promotes closer settlement, and provides employment in both its primary and secondary branches.

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

– It would be quite a simple matter to administer this provision if the method of manufacture were as Senator Gibson suggests. I am assured, however, that nearly 100 per cent. of the mixing is done during the process of manufacture, and the completed product pays the excise duty of 4s. 6d. per lb. My officers inform me that only small quantities of tobacco are treated in the way that Senator Gibson has outlined. In most instances the leaf is processed and put up in blocks, the blending taking place during the process of manufacture. It is necessary to do this, I am told, in order to do the blending satisfactorily, and to obtain the desired flavour.

Senator FOLL:
Queensland

.- I was under the impression, when the Government made a concession some months ago to. Australian manufactured leaf, that all Australian leaf would obtain the benefit of it, but I understand now that the concession applies only when the tobacco is manufactured wholly from Australian leaf. Regarding the request moved by the Leader of the Opposition (Senator Collings), while I as a Queenslander am anxious to assist the industry, I cannot overlook the fact that the proposal, if agreed to, would involve a loss of revenue amounting to £200,000 a year. This is evident even from the. figures given by the honorable senator himself. I believe that the Government acted wisely in reducing the excise on Australian-grown leaf, but I am not going to vote for a request that would have the effect of reducing the revenue by £200,000 a year.

Senator BROWN:
Queensland

– Senator Follhas put up a specious argument. He knows the severe blow which has been delivered at the tobaccogrowers in the Mareeba district, in Queensland, who had invested their life savings in the industry, only to be turned out to starve by the action of this Government. Yet the honorable senator tells us that the industry is not worth a loss of revenue amounting to £200,000 a year. I am rather surprised at that attitude on the part of the honorable senator, because, generally speaking, he is a good Queenslander.

Senator Arkins:

– What has this to do with putting the industry on its feet?

Senator BROWN:

– We on this side of the chamber are anxious to put all Australian industries on their feet, and we believe that it can be done in the case of tobacco-growing. Good tobacco can be produced in Australia. The Minister (Senator A. J. McLachlan) has informed us that 11,000,000 lb. of foreigngrown leaf is imported, and only 4,000,000 lb. is grown in this country. Surely, then, it is time an impetus was given to the Australian industry by the adoption of the differential rate of excise suggested by the Leader of the Opposition (Senator Collings). If Senator Hardy’s request had been agreed to, it would have meant that, if only1/4 oz. of Australian leaf were blended with imported leaf, the duty on the whole of the mixture would have been reduced to 3s.10d. per lb. No satisfactory statement was made in regard to the proportion of Australian leaf and imported leaf used in manufacture which would bring the blend under the lower rate. The request meant that practically the whole of the blend could be of imported leaf, and the manufacturer would get the advantage of the reduced excise duty of 3s.10d. Naturally, the Opposition could not support such a proposal.

Now the Minister informs us that there is a technical difficulty, inasmuch as excise is charged after the tobacco is manufactured. I do not regard myself as an expert in these matters, but I see no reason why this differentiation should not take place when the leaf enters the factory for manufacture. I agree, however, with the Leader of the Government (Senator Pearce), that it would be better to increase the import duty. But the Government will not do that. On the contrary, it has reduced the import duty, and destroyed the Australian industry, whereas the Labour Government gave an impetus to the industry, and showed clearly what could be done in Australia in the matter of growing tobacco.

Senator Collings contends that an excise duty of 3s. per lb. on Australian leaf used in manufacture would be a practical incentive to the use of Australiangrown tobacco. The margin between 3s. and 4s. 6d. per lb. should be sufficient to assist the Australian industry materially. Some honorable senators have scoffed when we on this side have spoken about the Australian leaf. Senator Sampson may be regarded as a connoisseur in this matter, because he is a tobacco-smoker; but I point out to him that, if an incentive is given to the consumption of Australian-grown tobacco per medium of a differential excise duty, the Australian tobacco-growers would make a bid for the favour of the smoking public by producing leaf which, when manufactured into tobacco, would suit popular taste.

Senator Dein:

– There is an advantage now of 3s. 6d.

Senator BROWN:

– The excise duty is 4s. 6d. on imported leaf, and 3s. l0d. on Australian leaf. The margin is only 8d. per lb.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– The tobacco companies have to pay 3s. 6d. per lb. customs duty. The Government has increased the customs duty by 6d. per lb.

Senator BROWN:

– The committee is now dealing with the excise duty, and not with the customs duty.

Senator Brennan:

– The honorable senator is dealing with the protection of the tobacco industry. The industry may be protected either through the excise or by direct protection through the customs.

Senator BROWN:

– I am discussing the point at issue, which is a request moved by Senator Collings that the excise duty on Australian leaf used in manufacture should be reduced to 3s. per lb. I commend that request to honorable senators because, in my opinion, it will give a fillip to the development of the industry, and will assist in the rehabilitation of hundreds of tobaccogrowers in Queensland. If we are good Australians we shall do everything possible to encourage the tobacco-growing industry in Australia, so that the whole of the tobacco leaf used in this country will be grown by good Australians for good Australians.

Senator LECKIE:
Victoria

.I am not at all convinced that difficulty arises in connexion with the blending of imported and Australian leaf. The procedure adopted in the tobaccomanufacturing industry is very much similar to that adopted in a whisky distillery, where the blending takes place under the supervision of an excise officer, who sees the quantity of imported and Australian whisky which is placed into the barrels. It does not matter what proportion of tobacco is used in the mixture; the manufacturers have to pay 3s.10d. per lb. for the Australian leaf and 4s. 6d. per lb. for the foreign leaf. I have no decided opinion in regard to this matter except that I want, if possible, to help the Australian growers. The Minister (Senator A. J. McLachlan) has raised an objection which I do not regard as a valid one; I do not think the difficulties are so great as he suggests. I confess that I have never seen tobacco grown or manufactured, though I have supplied millions of tins in which tobacco is retailed to the public. It seems to me that the blending of the tobacco could be done under the control of an Excise officer. Some more striking and more valid reasons should be given by the Minister for his opposition to the proposal put forward by Senator Gibson. If it involved the loss of revenue that could be easily overcome by increasing the rates to 3s. 3d. and 4s. 9d., respectively.

Senator Gibson:

– In any event, the proportion of imported leaf used is much greater than that of the Australian leaf.

Senator LECKIE:

– Senator Gibson is on right lines in suggesting that the proportion of Australian leaf used in the blend should pay excise at the lower rate. Manufacturers would be encouraged to use an increasing percentage of Aus tralian leaf. After all, it is only a matter of satisfying the popular taste. Some who smoke cigarettes usually confine their choice to one or two brands. Some buy other brands. It is largely a matter of what we have become accustomed to. I would support the Government if the reasons given were adequate, but I am not at all convinced that they are; I should like to see more valid reasons advanced by the Minister for his refusal to accept the suggestion made.

Senator ARKINS:
New SouthWales

– I fail to see why it is necessary for the display of so much heat on the part of honorable senators from Queensland.

Senator Collings:

– Heat?

Senator ARKINS:

– I cannot tell whether it is heat or passion merely by the sound of the honorable senator’s voice. Both Senator Collings and Senator Brown have said that we have refused to allow the tobacco-growing industry to get on its feet. Does the Leader of the Opposition (Senator Collings) say that the manufacturers of tobacco in Australia are not going to take the advantage which is given to them by the excise of 4s. 2d. per lb. ? They would certainly be foolish if they could obtain tobacco that suits the Australian taste, which would give them an extra 4s. 2d. per lb. Is there any necessity at this stage to adopt a complicated system of imposing, as it were, an increased tax on the actual amount of tobacco used in blending?

Senator Collings:

– I did not propose to do that.

Senator ARKINS:

– No, that is so, but Senator Abbott did so.

The TEMPORARY CHAIRMAN.I remind the honorable senator that Senator Abbott’s request has been withdrawn.

Senator ARKINS:

– Both Senator Gibson and Senator Johnston said that they saw some advantage to the Australian tobacco industry in Senator Abbott’s request. I can assure honorable senators from Queensland that if we can cultivate a market for the particular brands of tobacco in which Australian leaf predominates, I am willing todo all in my power to bring about that desirable result, but the incentive is already there from the point of view of the manufacturers. Do honorable senators contend that if the great tobacco companies like W. D. & H. O. Wills could cheapen the price of tobacco by 4s. 2d. per lb. they would not do so?

Senator Collings:

– The honorable senator’s contention is absolutely wrong.

Senator ARKINS:

– Certain brands of cigarettes marketed in Australia to-day arc sold in packets containing fourteen cigarettes for 6d. Popular brands contain ten to the packet. Why should a man buy a packet containing only ten cigarettes for the price which would procure him a packet containing fourteen? Thereason is obvious; better quality tobacco and higher priced imported tobacco are used in the more expensive cigarettes. It is ridiculous to say that we are preventing this industry from getting on its feet. I cannot believe that the manufacturers would not take advantage of the differentiation that now exists. The tobacco companies know exactly what the public wants. Larger profits are made by the tobacco companies than by any other industry in the world, and the tobacco combine in England and Australia manufacture some of the best tobacco. Anybody who has been in France where there is a government monopoly of tobacco must have realized that wonderful blends are produced in British and Australian factories. I desire to see the use of Australian leaf increased, but I do not think that that can be achieved by the adoption of the complicated method which has been proposed. The Government is already assisting the Australian industry by providing a direct advantage of 4s. 2d. per lb. Encouragement would he given to the local industry, if the public would increase its purchases of tobacco containing a large proportion of Australian leaf.

Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932

.- No difficulty should be experienced in requiring thelocal manufacturers of tobacco to use a large proportion of Australian leaf. No doubt it is desirable to incorporate a certain quantity of imported leaf in order to provide a mixture which is acceptable to smokers generally. The local industry, however, needs greater protection thanit now receives.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Does it require greater protection than 4s. 2d. per lb.?

Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932

– It needs more assistance than it has received from the present Government. I am told that at Mareeba the number of growers has dwindled from 800 to 400, and that they should obtain at least an additional1s. per lb. for their product if they are to make a fair profit. Senator Foll spoke of a loss of revenue to the amount of £200,000 a year, which he fears would result if Senator Collings’ proposal were adopted, but that is a hypothetical figure. If members of the Opposition had their way, the growers would be considerably relieved of the present burden of excise duty, and the local industry would be so benefited that the loss of revenue would not be nearly so great as has been suggested. We desire a reduction of the excise duty in order to bring down the price of tobacco containing Australian leaf. When an article is low in price, the majority of the users will prefer it to the dearer imported line.

Senator Arkins:

– Why do not smokers readily purchase Australian-grown tobacco at the present time?

Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932

– They buy it to a considerable extent, and the amendment submitted by Senator Collings is designed to provide an incentive to its more general use. I should prefer a return to the tobacco duties introduced by the Scullin Government.I should say that 50 per cent, of the men who were growing tobacco a few years ago have had to abandon the industry.

Senator Herbert Hays:

– Because many of them produced leaf of inferior quality.

Senator J. V. MacDONALD.According to Senator Guthrie, it was once said that good butter could not be produced in Australia, and Senator Collingshas recalled the time when certain groceries and confectionery were imported from Britain, because it was supposed that they could not be manufactured in our own country. The Opposition considers that a reduction of the excise duty by l0d. per lb. would induce the publicto look more favorably upon tobacco manufactured largely from Australian leaf, because it would be obtainable at a lower rate than that charged for tobacco made from imported leaf. Senator Arkins has referred to the millionaire tobacco firms, such as W. D. & H. 0. Wills Limited. Seven or eight of the Wills brothers each left fortunes ranging from £2,000,000 to £8,000,000, and derived partly from the people of Australia. Honorable senators who oppose the request are, in effect, standing by people of this type.

The leader of the Country party (Senator Hardy) has told us that he stands for increased primary production. It should be remembered that tobaccogrowing is a primary industry, which was established in Australia during the depression when the cry of “ Get back to the land “ was raised. Yet we are allowing the wealthy tobacco combine to continue to make profits amounting to millions of pounds. The Wills brothers made their huge fortunes by overcharging the people during a period when there was no competition from locallygrown leaf. Most of the imported tobacco used in Australia is produced by means of coloured labour, and the mass production methods employed in Britain and the United States of America, where there are enormous markets, and strong control of -them, tend towards cheap production. For the last 30 years a powerful combine has operated in this industry. The Government should take this matter firmly in hand, and encourage the local industry to supply a large proportion of our own requirements. At the present time we are giving preference, not to Britain, but to the United States of America. We are told that our trade relations with the latter country should be carefully scrutinized, and that it would be to our advantage to correct our adverse trade balance with it. If the present Government will not do so, I have no doubt that, at no distant date, another Ministry will come into power, which will give greater assistance to the Australian tobacco industry by reducing the excise on the local leaf.

Senator COLLINGS (Queensland) [9.431 .- To the extent that the duties imposed on tobacco have been designed to produce revenue, the industry cannot possibly have been protected as it would be under a purely protective tariff. We have been warned that the amendment would involve a serious reduction of revenue. I shall furnish certain figures in regard to that matter. By way of interjection, when the Minister in charge of the bill (Senator A. J. McLachlan) was speaking, I inadvertently made an inaccurate statement, which I now desire to correct. When I was referring to a certain document, the Minister said : “ You have got all that from Paul Jones.” I replied, “ No “. I thought, at the moment, that that answer was correct, but, on looking through the document, I noticed that it was signed by Mr. Paul Jones. The Leader of the Senate, who is most adroit at throwing spanners into the works at what he considers the most opportune time, would be better employed in using an oilcan. For instance, the Minister suggested that the most effective way in which to assist the Australian industry is by increasing the import duty, and not by decreasing the excise duty. We all know that, but the right honorable gentleman did not make that suggestion when the import duties were under consideration. The Government will not increase the importduties, so we have to adopt some other method to achieve our objective.

Senator Herbert Hays:

– By endeavouring to get in at the back door.

Senator COLLINGS:

– Yes ; when we tried to enter at the front door and asked for the duties on imports to be increased we hoped that we would be received in a more friendly manner. The members of the Opposition are so keen to assist the Australian tobacco industry that they utilize every opportunity afforded them to enter at whatever doors are open. In inviting us to enter at the front door when it is closed the Minister is not playing the game. If we thought that the way was still open we would, even at this stage,- endeavour to increase the import duties. The right honorable gentleman also said that it was difficult to impose excise duties on tha quantity of locally-grown leaf actually used for blending purposes. A man who lets a contract for the erection of a building stipulates in the contract the proportions of sand and cement to be used in the concrete. In order to ensure that the proper proportions are adhered to he appoints an inspector, whose duty is to see that the proper proportions are used. I cannot possibly see how there can be any great difficulty in imposing excise on the .actual quantity of Australian leaf used in blending tobacco. An honorable senator had the temerity to suggest that the public determines the popularity or otherwise of tobaccoes. We all know that, but the public taste is more or less artificial, and is often determined by untruthful advertising. Many years ago, when I was working behind a grocer’s counter, we were told that butter could not be produced in Australia. It was then said that the only satisfactory butter manufactured was that in which the beautiful water from the river Liffey, in Ireland, was used. No one now contends that butter of the highest quality cannot be manufactured in Australia, and it is unreasonable to suggest that Australian tobacco leaf is unsatisfactory. As a matter of fact the Australian tobacco manufacturers have admitted that some of the lemon-coloured leaf produced in Australia is equal to the best that is grown in any part of the world. If the Government would increase the import duties on imported leaf or reduce the excise on Australian leaf many of the difficulties now confronting the industry would be removed, and our growers would be in a. position. to supply practically the whole of Australia’s requirements. The following official statistics for Australia for the year 1934-35, will prove that preferential rate of excise duty, giving Australia an advantage of ls. 6d. per lb., could be put into operation without serious loss of revenue : -

It will be noted that in the process of manufacture the loading increased the weight of tobacco by about 19 per cent., and of cigarettes by approximately 3 per cent.

These calculations do not include revenue from excise on cigar leaf or from imports of tobacco, cigarettes and cigars in the manufactured state. The scheme suggested and approved by the Tobacco Growers Association would overcome the difficulties of administration which the Government has alleged as an argument against preferential excise duties. I trust that the committee will support my request which, if adopted, will be of great benefit to the industry.

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

– Perhaps I was somewhat remiss in not informing honorable senators that the Minister for Trade and Customs (Mr. White) said that whatever scheme or schemes were adopted to ensure the consumption of any increased production of Australian leaf which may result from the successful control of blue mould, the Government must protect the revenue, and that that principle is concurred in by the growers’ organization. It is very easy for honorable senators to speak lightly of the loss of revenue, but a reduction of the excise by 8d. per lb. would mean a loss of £90,000. If we add an additional one-fourth of that amount, or £22,500, the total loss on excise alone would be £112,500. We have also to remember that for every additional pound of Australian tobacco used, one pound of imported tobacco on which a duty of 3s. 6d. is collected is displaced. This matter is being carefully watched by the Minister, and the Government will not hesitate to utilize every opportunity afforded to encourage the use of Australian leaf. In these circumstances, I must ask honorable senators to reject the request moved by the Leader of the Opposition.

Question - That the request (Senator Collings’) be agreed to - put. The committee divided. (Temporary Chairman - Senator J. B. Hayes.)

AYES: 4

NOES: 20

Majority . . . . 16

AYES

NOES

Question so resolved in the negative.

Request negatived.

Item agreed to.

Items 8, 13, 18, and 19 agreed to.

Title agreed to.

Bill reported without requests; report adopted.

page 1864

CUSTOMS TARIFF (EXCHANGE ADJUSTMENT) BILL 1936

Second Reading

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

– I move -

That thebill be now read a second time.

Honorable senators will recollect that the Customs Tariff (Exchange Adjustment) Act 1933-34 provides in certain cases for a deduction from the amount of duty payable under the British preferential tariff. The goods to which the deduction applies are those to which protective duties apply, as listed in the schedule to the act. This deduction, while Australian currency is depreciated to the extent of not less than 162/3 per cent. in relation to the British country from which the goods are imported, is one-fourth of the amount of duty, or 121/2 per cent. of the value for duty, which ever is the less. When the currency depreciation is less than 162/3 per cent., but not less than 11 1-9 per cent., the deduction is one-eighth of the amount of duty, or 61/4 per cent of the value for duty, which ever is the less. This deduction was intended to compensate for the protective value of exchange. Since the end of 1933, the Tariff Board, in its report, has recommended rates of duty based on present exchange conditions, with a corrective increasing the rates gradually as exchange moves towards parity. As the protective value of exchange in each individual industry is influenced by the dependence of the manufacturer on imported or exchangeaffected materials this new method provides a much more satisfactory way of dealing with the problem than did the former method.

The purpose of the Customs Tariff (Exchange Adjustment) Bill is to eliminate from the operation of the Customs Tariff (Exchange Adjustment) Act 1933-34 those items and parts of items for which provision for exchange fluctuations is now made in the items themselves. It is really only a machinery measure, complementary to the alterations that we have made in relation to exchange in the Customs Tariff schedule. Until the House of Representatives has dealt with the Senate’s requests on the Customs Tariff Bill, the measure now before us will need to be held in committee, in case consequential amendments to it have to be made.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 to 3 agreed to.

Progress reported.

page 1865

QUESTION

CUSTOMS TARIFF (CANADIAN PREFERENCE) 1936

Second Reading

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

. - I move -

That the bill be now read a second time.

Under the Customs Tariff (Canadian Preference) proposals, provision is made for special rates of duty on the following goods of Canadian origin: Ex. 291, veneers; 32S, goloshes, rubber sand bootsand shoes and plimsolls; 359, chassis for motor vehicles; and 157, barbed wire. Veneers and goloshes produced in Canada were, under the Customs Tariff (Canadian Preference) 1934, admitted at rates higher than the British preferential rate, but lower than the general tariff rate. Alterations have been made in the rates of duty under the British preferential and general tariff rates, and the proposal preserves the relativity of the Canadian duty. In respect of chassis, no alteration of the rate of duty is proposed, but the verbiage of the item has been altered somewhat to agree with the item under the British preferential and general tariffs. Iu regard to barbed wire, Canada has hitherto been entitled to the British preferential tariff. In a recent report the Tariff Board has recommended free admission of barbed wire from the United Kingdom, and in respect of Canadian wire, a rate of 50s. a ton, with a corrective for exchange fluctuations. The present proposal gives effect to this recommendation, and I may say that the Canadian Government has signified its agreement to this departure from the conditions originally existing.

Senator COLLINGS:
Queensland

– What reason underlies the reduction by 50 per cent, of the existing duty on veneers? I am not quite clear whether an agreement has been come to with the Canadian Government on this matter or whether it is simply a preference which we are now asked to ratify. To me it seems that the reduction of duty on this item is serious.

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

– The proposed rate of duty on veneers, the value for duty of which does not exceed 25s. a 100 square feet, is 274 per cent., as compared with 55 per cent, under the 1934 Canadian preference tariff. The duty of 8s. a 100 square feet on a value for duty exceeding 25s. a 100 square feet is equivalent to a duty of 32 per cent, downwards. The proposed rates of duty are higher than the board’s recommendations, by 74 per cent, under paragraph 1, and 3s. a 100 square feet under paragraph 2.

Importations of veneer from Canada refer to yellow cedar, cypress, or Port Orford cedar separator stock, which is imported for use in the manufacture of wet batteries; The’ importations for 1933- 34 and 1934-35 were wholly for this purpose, and by-law admission was given under item 404.

The fancy veneers exported from Australia are admissible into Canada free of duty, and a market was found during 1934- 35 for Australian veneers valued at £4,338. Our veneers are sought after in that dominion. On the other hand, the imports of Canadian separator stock are essential to the successful local manufacture of wet batteries in Australia, our native timber not being the most suitable for the purpose. No competition with the Australian veneer industry is anticipated as a result of this proposal, and there have been no importations of fancy veneers from the dominion within recent years.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 to 3 agreed to.

The schedule.

Senator DUNCAN-HUGHES:
South Australia

– I should like the Minister to state why, in paragraph 1, of item 291 dealing with veneers, the duty is on an ad valorem basis, and in paragraph 2 on a flat-rate basis. I am quite aware that a number of the items in the schedule to the Customs Tariff are stated in this way. But it would be infinitely more convenient to everybody if both were either on an ad valorem basis, or on a flat-rate basis. When the value for duty does not exceed 25s. a 100 square feet there is to be an ad valorem duty of 274 per cent., but when it exceeds 25s. the duty is to be 8s. a 100 square feet. Perhaps the Minister can explain the equivalent of 8s. on an- ad valorem basis, and of 274 per cent, on a flat-rate basis, and wherein lies the need to swing over from the one to the other.

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

– If honorable senators will turn to the schedule to the Customs Tariff, they will find that item 291 is modelled in a certain fashion. In order to preserve harmony, the same method had to be adopted in this case.

Senator Duncan-Hughes:

– What is the reason for it?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– It had to be built on the tariff as it stood. In both cases the recommendation of the Tariff Board has been followed. That body examined the whole subject of veneers, and, at page 7 of its report of July, 1933, made the following comment : -

Veneers -

  1. When the value for duty does not exceed 25s. per 100 sq. ft., ad valorem, British, 30 per cent.: General, 50 per cent.
  2. Otherwise, per 100 sq. ft., British, 7s.6d.; General, 12s.6d.

These rates provide what the board considers to be adequate protection to Australian manufacturers against the lower-priced imported vencers, but will prevent the ad valorem rates imposing a heavy burden on high-grade veneers required by the trade in Australia, and not produced locally. The ad valorem rates will apply to veneers, both British and foreign, having an f.o.b. value below 22s. 9d. per 100 sq. ft., after which the maximum duty provided will apply with a decreasing ad valorem equivalent as the f.o.b. value of the veneer increases.

The aim evidently is to give relief in connexion with the better class of veneers.

Senator DUNCAN-HUGHES:
South Australia

– The importance of this matter lies in the fact that what might be as clear as daylight has been made very difficult for the man in the street to understand. I am not certain that the Minister himself quite comprehends why there should be a swing over from the ad valorem to the flat-rate assessment. If it were desired to keep down the duty on the high class veneers, that object could be achieved by lowering the ad valorem rate or, alternatively, by swinging both on to a flat-rate basis. The Minister’s first point was that there had to be consistency with the old tariff. But if the old tariff was clumsy and difficult to interpret, why not make this easy to understand? If the Minister has any further explanation which will make the matter clearer to my comprehension, I shall be very glad to have it.

Senator LECKIE:
Victoria

.- I am inclined to think that the Minister is right in this matter, although it may. appear to be slightly complicated. It will be realized that the prices of high-class veneers for pianos and certain other articles are considerably greater than 25s. a 100 sq. ft., some of them rising to as high as 80s., 90s. and even 100s. At the flat rate, the duty would be only 8s., but on an ad valorem basis, a duty of 271/2 per cent. would amount to nearly 30s.

Senator Duncan-Hughes:

– Adjustment could be effected by the alteration of the flat rate.

Senator LECKIE:

– I do not think that that would quite meet the position. The Minister has in mind expensive veneers, such as mahoganies, which are not made in Australia. I have known very expensive veneers to be imported for the making of pianos. If the ad valorem duty applied, veneers in that class would pay 30s., whereas at present they pay 8s.

Item agreed to.

Item 328 (Goloshes, rubber sand boots and shoes and plimsolls.)

Senator COLLINGS:
Queensland

.- I shall be glad if the Minister will give the committee some explanation of this item. I confess that I do not understand it.

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

– This item deals with the rates of duty on goloshes, rubber sand boots and shoes, and plimsolls. Importations are negligible, except from Canada which, apparently, has practically the whole of the trade, although during the last two or three years there have been small importations from Japan. Total importations in 1930-31 were 10,000 pairs valued at £2,018, and in 1934-35 7,319 pairs, valued at £867. The purpose of the proposals is to maintain the margin of 9d. a pair, or 121/2 per cent. ad valorem against like articles, which were admissible in the 1933 schedule under the general tariff. Importations from Canada in the five-year period have aggregated 8,421 pairs, valued at £1,940 - a yearly average of 1,684 pairs, valued at £388. In 1934-35 importations were 2,021 pairs, valued at £367, and these paid the fixed rate of duty at1s. 9d. a pair. The value of importations from all countries in 1934-33 at £867 represented less than one-eighth of1 per cent. of the total factory selling price of like articles manufactured in Australia. The incidence of exchange affords additional protection to the Australian industry. With exchange at par, the rates of duty under these proposals would he1s. 9d. a pair or 30 per cent. ad valorem.

Item agreed to.

Item 359 agreed to.

Schedule agreed to.

Title agreed to.

Bill reported without requests; report adopted.

page 1867

HOUR OF MEETING

Motion (by Senator Sir George

Pearce) agreed to -

That the Senate, at its rising, adjourn till to-morrow at 11 a.m.

Senate adjourned at 10.27 p.m.

Cite as: Australia, Senate, Debates, 19 May 1936, viewed 22 October 2017, <http://historichansard.net/senate/1936/19360519_senate_14_150/>.

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