Senate
3 December 1936

14th Parliament · 1st Session

  1. Senate
  2. 14th Parliament
  3. 1936

The President (Senator the Hon. P. J. Lynch) took the chair at 11 a.m., and read prayers.

page 2755

PAPERS

The following papers were presented : -

Audit Act - Finance - Treasurer’s Statement of Receipts and Expenditure for the year ended 30th June, 1936, accompanied by the Report of the Auditor-General.

Australian Imperial Force Canteens Funds Act - Sixteenth Annual Report, for the year ended 30th June, 1936.

Northern Australia Survey Act - Copies of Appendices to the Report of the Committee appointed to direct and control the Aerial, Geological and Geophysical Survey of Northern Australia, for the period ended 31st December, 1935.

Sugar Agreement Act - Fifth Annual Report of the Fruit Industry Sugar Concession Comurittee, for the year ended 31st August, 1936, in substitution of Report laid on, the Table of the Senate on 13th. November, 1936.

Bankruptcy Act - Eighth Annual Report by the Attorney-General, for the year ended 31st July, 1936.

Commonwealth Public Service Act - Thirteenth Report on the Commonwealth Public Service by the Board of Commissioners, dated 30th November, 1936.

Lands Acquisition Act - Land acquired at Carramar, New South Wales - For Postal purposes.

Northern Territory Acceptance Act and Northern Territory (Administration) Act - Ordinance No. 17 of 1936 - Jury.

page 2755

AUSTRALIAN PARLIAMENTARY COUNTRY PARTY

Senator HARDY:
New South Wales

– by leave - I desire to announce that Senator E. B. Johnston, having expressed regret for the incident associated with the severance of his relations with the Australian Parliamentary Country party, has applied for re-admission, and is now a member of that party.

page 2755

QUESTION

MILITIA FORCES

Senator SAMPSON:
TASMANIA

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

  1. What was the strength of the Commonwealth Military Forces (Militia) on 30th September, 1936?
  2. What was the strength of the Commonwealth Military Forces (Militia) on 31st October, 1936?
  3. What was the strength of the Commonwealth Military Forces (Militia) on 30th November, 1936?
Senator Sir GEORGE PEARCE:

– The Minister for Defence has supplied the following answersto the honorable senator’s questions : -

  1. 29,066.

    1. The strength on the 28th October, 193 fi, was 30,830, plus 2,340 enrolments awaiting medical examination and enlistments.
    2. The strength on the 25th November, 1030, was 32,708, plus 1,400 enrolments awaiting medical examination and enlistment.

page 2756

QUESTION

YAMPI SOUND IRON ORE DEPOSITS

Senator COLLINGS:
QUEENSLAND

asked the Minister representing the Prime Minister - upon notice -

  1. Has the Prime Minister seen the statement from Perth in the Sydney Sunday Sun of 22nd November, 1930, to the effect that a party of engineers and geologists under Mr. Koichi Fujimura, and including four Japanese geologists, will .begin developmental surveys in Yampi Sound early in December?
  2. Will he give an assurance to this Senate that only Australian and/or British labour will be allowed to work these iron ore deposits at Yampi Sound and Koolan?
  3. Will lie give an assurance to this Senate that only Australian and/or British capital will be allowed investment in these schemes T 4.. Does he think it Tight and proper - that subjects of any foreign power should be allowed to carry out survey work at Koolan or any other part of the Commonwealth?
Senator Sir GEORGE PEARCE:

– The Prime Minister has supplied the following replies to the honorable senator’s questions : -

  1. Yes. Permission has been given for the admission, under exemption, for a period of twelve months of four Japanese experts and one interpreter for the purpose of grading and analysing iron ore at Koolan Island, Yampi Sound, Western Australia. The leader of this party is Mr. Koichi Fujimura, of the Nippon Mining Company. Mining leases were’ granted by the Government of Western Australia in respect of certain iron ore deposits at Koolan Island to Messrs. H. A. Brassert and Company Limited, an English company, which is in negotiation with the Nippon Mining Company of Tokio, Japan, for the provision of capital in an Australian operating company which will provide plant and machinery necessary tq work the deposits, it being understood that the Nippon Mining Company will take the whole of the output. Provision is being made for the sale of the ore at the operating company’s works at Koolan Island and not on delivery in Japan, so that it is necessary for a limited number of Japanese experts to remain on the island to satisfy themselves as to the proper grading and analysis of the ore, and thereby eliminate a great many difficulties and possibilities of disagreement. These experts will not be engaged on developmental work of any kind, and the position will be reviewed at the end of twelve months with a view to determining whether the work of grading and inspection can satisfactorily be carried out by Australians. The entry of Japanese experts for this purpose is not dissimilar from the admission into Australia of representatives of other countries for the purposes of inspecting, evaluating and purchasing the wool clip. ‘

    1. As mining, except within the territories controlled by the Commonwealth, is a State function, the Commonwealth Government has no power over the granting of leases at Yampi Sound or in connexion with the development of these iron ore deposits. These are matters entirely within the province of the Government of Western Australia, as are the conditions of employment in this undertaking. It would seem unlikely, however, that development will be carried out under other than recognized Australian conditions of employment.
    2. ’ It is understood that the Nippon Mining Company is providing capital by way of loan to ah operating company to be formed in Australia for the purpose of developing the deposits. This operating company will not, I am informed by the Government of Western Australia, have any interest in the leases. See reply to (2).
    3. See reply to 1.

page 2756

QUESTION

PRIMAGE DUTIES

Senator LECKIE:
VICTORIA

asked the Minister representing the Minister for Trade and Customs upon notice -

  1. Has the remission of £170,000 of primage duties forecast in the budget been brought into effect?
  2. If so, what are the commodities and the estimated annual amount of remission in each case?
Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– The Minister for Trade and. Customs has furnished the following answers to the honorable senator’s questions : -

  1. The principal remissions of primage duty forecast for the current financial year will begiven effect to concurrently with the operation of the trade agreements with Belgium,. Czechoslovakia and France.
  2. The commodities and the extent of thereduction of primage- are set out- in the explanatory memoranda circulated in connexion with the trade agreement bills in respect of Belgium, Czechoslovakia and France. Thegreater part of the remissions covers raw materials and capital goods.

page 2756

TRANS-AUSTRALIAN RAILWAY TIME-TABLE

Senator Sir GEORGE PEARCE.On the S6th November, Senator E. B. Johnston asked the following questions of the Minister representing the Minister for the Interior, upon notice: -

The Minister for the Interiorhas furnished the following replies to the honorable senator’s questions: -

No.

There were two distinct schedules prior to the reduction of the service to two trains a week -

providing for departure from Perth on Tuesdays, Thursdaysand Saturdays, and

which replaced (a) in September, 1930, providing for departure from Perth on Sundays, Tuesdays and Fridays.

It is a fact that the Western Australian Railways Commissioner stood up strongly for the (a) schedule, hut the South Australian Railways Commissioner stood up strongly for the (b ) schedule. if. The Commonwealth Railways Commissioner prefers the time-table desired by Western Australia, that is, leaving Perth on Tuesdays, Thursdays and Saturdays.

Trains leaving Perth on Thursday involve Sunday running on the South Australian system and the South Australian authorities will definitely not agree to this.

page 2757

BRITISH SHIPPING PROTECTION BILL 1936

Motion (by Senator Sir George Pearce) agreed to -

That leave be given to introduce a bill for an act to provide for the protection of British shipping against competition from certain foreign shipping in the carriage of passengers and goods between the Commonwealth of Australia and the dominion of New Zealand.

Bill brought up and (on motion by Senator Brennan) read a first time.

Standing and Sessional Orders suspended there being an absolute majority of Senators voting and no dissentient voice.

Second Reading

Senator BRENNAN:
Assistant Minister · Victoria · UAP

– I move -

That the bill be now read a second time.

This bill is designed as a contribution towards maintaining the supremacy of the British mercantile marine as a vehicle of communication between Australia and New Zealand, and as a safeguard in times of emergency. During recent years British shipping companies trading across the Pacific have found difficulty in competing with subsidized American ships. The British lines affected are not only those carrying on the service between Australia and North America, via New Zealand, but also those trading solely between Australia and New Zealand. The Matson line previously ran three old vessels - the Sierra, the Sonoma and the Ventura - but in 1932 they were replaced by three modern luxury vessels, the Monterey, the Mariposa and the Lurline, the first two of which are engaged in a regular four-weekly service between the United States of America and Australia, via New Zealand. For the construction of those vessels the Government of the United States of America advanced threequarters of the cost at low rates of interest, said tobe 2 per cent. in respect of the Mariposa, about 1 per cent. for the Monterey, and three-eighths of 1 per cent. for the Lurline. For the construction of the Mariposa and the Monterey, $11,700,000 was advanced. Assuming a saving of 3½ per cent. against borrowing in the open market, the annual saving of interest on loans for those two vessels would amount to $409,500, or £105,000 in Australian currency at the present rate of exchange.

Apart from loans on construction, the Matson company receives a subsidy of $10 a mile on each outward passage of 7,607 miles from San Francisco to Sydney, plus 575 miles from Sydney to Melbourne. As a four-weekly service is maintained, this subsidy amounts annually to $1,063,660 or £273,000 in Australian currency. The total government aid received in respect of the Mariposa and the Monterey therefore amounts’ to about £378,000 per annum.

The American vessels trading between the United States of America, New Zealand and Australia also have another advantage over British vessels in that, whilstup to the present they have not been debarred from participating in the trade between Australia and New

Zealand, non-American vessels are, by legislation, not allowed to engage in the lucrative trade between Hawaii and the United States of America.

The vessels of the Matson line do not carry cargo between Australia and New Zealand, but have a substantial and increasing share of the passenger traffic. During 1933 this line carried 3,297 passengers between the two dominions, amounting to 11.2 per cent. of the total passenger trade. The figures for subsequent years were : - 1934 - 4,182 persons or 10.9 per cent. of the total passenger traffic; 1935 - 5,108 persons, or 13.3 per cent. of the total passenger traffic; January to June, 1936 - 3,128 persons or 13.5 per cent. of the total passenger traffic. If the Matson line is prevented from carrying passengers between Australia and New Zealand the earnings of the British vessels engaged in that service will be increased by at least £50,000 per annum. The subject of foreign shipping competition in the Pacific, including the best means of protecting British shipping against it, has been under consideration ‘between the British and Dominion Governments for some years. In September, 1934, the Governments of Australia and New Zealand made a joint statement drawing attention to the unfair competition of the Matson line, and stating that the two dominions were in consultation with a view to common action for safeguarding the mutual shipping interests of the dominion and the Commonwealth. The governments took the view that the existence of adequate and efficient local shipping services in the trade between Australia and New Zealand and the future improvement of such services by the construction of further new vessels would be jeopardized by a continuance of the subsidized competition of the Matson liners in the passenger traffic between the two dominions. This view is still held by the Government’s of Australia and New Zealand. Following upon the joint government statement of September, 1934, the Union Steamship Company of New Zealand proceeded with the construction of the Awatea. In October last the New Zealand Government passed an act enabling it to exclude from the passenger and cargo trade between Australia and

New Zealand the ships of any country to which it is applied on any of the grounds mentioned in the act, namely: -

  1. That by the operation of the laws of that country British ships are prohibited from carrying passengers or goods between ports of that country orbetween that country and any territory or territories belonging to that country; or
  2. That by the operation of the laws of that country restrictive conditions, that are not applicable to ships of that country, are imposed on the carriage by British ships of passengers or goods between any ports or territories of that country; or
  3. That the ships of that country receive from any sourceany subsidies, concessions, rebates, allowances, or other valuable privileges whatsoever which enable them to compete on unequal terms with British shipping in the carriage of any passengers or goods. A section in the act prevents its application to any country if rights conferred on that country by any treaty or convention would thereby be infringed. The bill now before the House is based upon the New Zealand legislation and differs from it only in minor details. The British services and vessels available at present for the passenger trade between Australia and New Zealand are: - Union Steamship Company of New Zealand Limited - Awatea, 14,800 gross tons; Monowai, 10,900 gross tons; Makura, 8,100 gross tons; Maunganui, 7,500 gross tons; Marama, 6,500 gross tons. Huddart Parker Limited - Wanganella, 9,600 gross tons. Canadian-Australasian Line Limited - Aorangi, 17,500 gross tons; Niagara, 13,400 gross tons. The two vessels of the Canadian-Australasian Line Limited are on the VancouverSydneyAuckland service. In addition to the passenger services, about twenty British cargo vessels are regularly engaged in the trade between the two dominions. In the Awatea the Union Steamship Company has provided for the Australian-New Zealand passenger trade a modern liner superior to the vessels of the Matson line. This vessel has accommodation of the latest type for 550 passengers and is fitted with the latest radio-telephone and electrical equipment. The speed of the Awatea is 23 knots. Of the existing ocean-going vessels capable of a speed of 22 knots or over, only six are owned in the British Empire. If the “ crosschannel “ steamers are excluded, the only British vessels faster than the Awatea are the Queen Mary and the Empress of Britain. The prohibition of the vessels of certain countries from engaging in the trans-Tasman trade does not mean that passengers travelling between Australian and New Zealand or shippers of cargo between these countries will be exploited, nor does it mean that the passenger service will be carried on by antiquated vessels. The power of the Government to revoke the act at any time will prevent exploitation, and it is in the interests of the shipping companies themselves to provide an up-to-date service. Modern conditions demand such a service. The shipping companies realize this and have provided two luxury liners - the Wanganella and the Awatea. Up to the present the companies have hesitated to expend large sums on the construction of new vessels which may incur heavy losses from the competition of vessels of certain foreign countries whose governments are determined to expand their merchant marines regardless of cost. With the reservation of the trans-Tasman trade, however, the shipping companies of Australia and New Zealand engaged in that service may look to the future with confidence.

Debate (on motion by Senator Collings) adjourned.

page 2759

DISTINGUISHED VISITOR

The PRESIDENT (Senator the Hon P. J. lynch). - I observe Mr. Leslie Blackwell, a member of the Parliament of the Union of South Africa, in the public gallery, and, with the concurrence of honorable senators, I request him to come forward to take a seat on the dais and witness the proceedings of the Senate.

Honorable Senators. - Hear, hear!

Mr. Blackwell thereupon entered the chamber andwas seated accordingly.

page 2759

LONDON NAVAL TREATY BILL 1936

Second Reading

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

[11.25].-I move-

That the bill be now read a second time.

The object of the measure is to enable effect to be given to a Treaty of Naval Disarmament signed at London on the 25th March last, on behalf of His Majesty and certain; powers to replace the Washington Treaties of 1922 and the London Treaty of 1930. The Washington naval treaties were two in number -

  1. A five-power treaty limiting naval armaments. This described the capital ships to be retained by each contracting power and determined the ratio of capital ship replacement, which was to be - 525,000 tons for the United States of America and Great Britain; 315,000 tons for Japan; 175,000 tons for Prance and Italy, or the ratios of 5:5:3:1.66. It also limited the tonnage of individual capital ships to 35,000 tons and the calibre of guns to 16 inches. Individual cruisers were limited to 10,000 tons and their guns to 8 inches. Aircraft-carriers we’re limited in general to an individual tonnage of 27,000 tons, with a total tonnage of 135,000 for the United States of America and Great Britain, 81,000 for Japan, and 60,000 for France and Italy. To maintain the tonnage ratios, the three major powers scrapped about 40 per cent. of their capital-ship strength and fixed a 20-years age limit, which halted battleship construction up to 1931.
  2. A five-power treaty relative to the use of submarines and noxious gases in warfare.

By the London Naval Treaty of 1930, the United States of America, Great Britain and Japan consented to further scrapping of existing capital ships, and agreed to prolong thebattleship holiday for another six years by renouncing replacement rights under the Washington Treaty. Limitation was extended for the first time to smaller vessels such as cruisers, destroyers and submarines, with a maximum total tonnage and qualitative limits fixed for each category. These two treaties wereundoubtedly effective in preventing unrestricted competition in naval armaments, and constituted the most important contribution to disarmament in the post-war period, especially as all proposals for military and air disarmament failed. Both these treaties are due to expire on the 31st December, 1936, with the exception of Part IV. of the’ London Treaty of 1930, relating to rules of submarine warfare. Consequently, early action was initiated by the United Kingdom with a view to obtaining renewal or agreement for a new treaty. Under the 1930 treaty, the powers had undertaken to meet in conference in 1935 to frame a new agreement, and preliminary bi-lateral conversations were initiated early in 1934 by the United Kingdom Government with the governments of the United States of America, Japan, France and Italy. These were followed by tripartite conversations in the closing months of 1934, between the United Kingdom, United States of America and Japan. The Japanese attitude was that an agreement should be reached on general naval limitation, comprising both qualitative and quantitative limits, and they were unable to agree to consider qualitative limits only. As honorable senators are. aware, qualitative limits are limitations as to individual tonnage, size and number of guns, &c, while quantitative limits cover total tonnages and numbers of the various categories of vessels. The British proposal of declared building programmes was unacceptable to the Japanese, and at the termination of the preliminary conversations it appeared that m> substantial measure of agreement would ?)»’ obtained at the main conference. On the 29th December, 1934, Japan gave notice of termination of the Washington treaties. As the parties to those treaties had agreed to meet within one year of the date of such notice of termination, this was a second reason why it was necessary to summon a conference in 1935. Great Britain was determined that a final effort should be made to prevent unrestricted naval competition. Therefore, despite the inauspicious atmosphere which prevailed, it issued the necessary invitations, and the conference was opened in London on the 9th December, 1935. The powers represented were all the members of the British Commonwealth of Nations, United States of America, Japan, France and Italy. At the opening of the conference the United Kingdom representative stated that the greatest importance was attached by his Government to a continuation of limitation in both the quantitative and qualitative fields. He pointed out that an international agreement on these lines would undoubtedly lead to great economy in future naval construction throughout the world. In regard to quantitative limitation, the Government of the United Kingdom had ‘been forced to the conclusion during the preliminary conversations that agreement on any system of limitation based directly on a ratio or definite relationship of naval strength, such as that on which the Washington and London naval treaties were founded, would prove difficult of attainment. In order to preserve some measure of quantitative limitation, it proposed as a middle way, that the quantitative side of the treaty should consist of uni-lateral and voluntary declarations by each of the powers limiting its construction over a period of, say, six years. Agreement on any form of quantitative limitation, however, proved to be impossible.

At the opening of the conference Japan tabled a proposal for a “ common upper limit “, insisting on naval parity with the United States and Great Britain in substitution for the ratio system. After considerable discussion, this proposal remained unacceptable to all the other delegations and Japan withdrew its delegation from the conference, but left observers to watch its progress. The further efforts of the conference were directed to achieve the maximum measure possible of qualitative limitation. There was considerable disappointment at the actual results, but in two respects something definite was achieved. First, the treaty defines the categories of certain classes of vessels, in particular limiting capital ships to a maximum displacement of 35,000 tons as in the Washington Treaty, and guns to a maximum calibre of 14 inches, a reduction of 2 inches on the Washington limit. Secondly, the treaty provides for advanced notification of construction or acquisition of war vessels and exchange of information on their principal characteristics. The principle of advance notification of construction was entirely new, as under neither the Washington nor the London Naval Treaty were there any arrangements of this nature. These provisions are regarded as the most satisfactory feature of the treaty, and it is considered that they will be preventive of wholesale competition in naval armaments.

Complete agreement on these points was reached in London between the members of the British Commonwealth of Nations possessing sea-going naval forces - the United Kingdom, Australia, Canada, India and New Zealand - the United States of .America and France. Provision was made for direct adherence to the treaty by Japan and Italy, while other States may join in by means of bi-lateral pacts with Britain. If the Powers outside the treaty were to go ahead and build capital ships of over 35,000 tons and guns of over 14 inches, the whole basis of agreement would, of course, be wrecked.

On the day on which the treaty was signed, a copy of the text was transmitted to Japan with an invitation to accede to it. The Japanese Government, however, decided not to adhere to the treaty “ under present conditions “, and informed the British Government accordingly in June. The British Government replied that it hoped that a change of conditions would permit of Japanese accession in the future. While the treaty was still in draft form, the German Government announced its agreement in principle, though it made certain observations with regard to the age-limit of battleships, and at a later date, negotiations were commenced for a bi-lateral treaty between the United Kingdom and Germany. They were, however, interrupted during the Rhineland crisis, and definite conclusion hinges on completion of a similar agreement with Russia. Discussions with Russia were commenced in London on the 20th May, and have been continued at intervals subsequently. In September, discussions also took place between representatives of Denmark, Finland, Norway, Sweden and the United Kingdom. Italy has not yet signed the treaty, one of its objections being to the size of the capital ship, which, it con sidered, should be less than 35,000 tons. It is, however, anticipated that Italy will accede.

The object of this hill is to implement the treaty signed on the 25th March. On behalf of Australia it was signed by the Right Honorable S. M. Bruce, to whom full powers had been given. The procedure followed that adopted at the Washington Conference in 1922, and at London in 1930. On each occasion, Parliament subsequently passed acts similar to the present bill. This measure is designed to ensure the ob’servance on the part of the Commonwealth of the obligations contained in the treaty, which are not, as far as Australia is concerned, of a very active character. Most of the obligations contained in the treaty relate to acts by the high contracting parties themselves. There is, however, an obligation by the high contracting parties in respect of the construction of vessels of war within their jurisdiction. It is necessary, therefore, to have legal authority for’ exercising control within the jurisdiction of any high contracting party over such vessels which may be built by private interests. This proposed legislation, which proceeds on the lines of that proposed in the United Kingdom, prohibits the building -of any vessel of war by any person unless he holds a licence from the Minister for Defence. The alteration, arming or equipping of any ship in order to adapt it for use as a vessel of war, and the despatch or delivery of any ship built, altered, armed or equipped, are also matters which require a licence from the Minister. The bill provides that a licence shall not be refused by the Minister unless it appears to him necessary to do so for the purpose of securing the observance of the obligations of the treaty. The bill, therefore, is designed to assure to private builders the grant of a licence to cover their operations if those operations do not involve a contravention of the treaty. The bill confers upon the Minister necessary powers of entry and inspection which will be exercised in relation to any dockyard or shipyard. Such powers will be utilized to ensure that no ship is being built, altered, armed or equipped in contravention of the proposed law. Any person to whom a licence has been granted under the proposed law is required, upon demand, to furnish to the Minister such designs and particulars as the Minister requires, relating to the construction being carried out in pursuance of the licence in order to enable the obligations imposed by the treaty to be observed. The bill contains the necessary penalties forfailure to comply with the conditions of any licence granted under the act, and any vessel in respect of which an offence is committed is made liable to forfeiture to the King.The bill contains machinery provisions for the seizure, detention and disposal of any ship which so becomes liable to forfeiture. Where a ship has been detained in pursuance of the proposed law, the provisions of sections 414 and 415 of the Navigation Act, are applied to that ship. Those sections impose a penalty upon the master of any vessel which is detained if the master takes that ship to sea or if he takes to sea any official performing duty under the act unless that official consents.

The Washington Treaty and the London Treaty of 1930, expire on the 31st December, 1936, and it is desired to bring the new treaty into effect on the 1st January, 1937, by which date ratifications are to be deposited. As in the case of the Washington and London Conferences, naval armaments are regarded as being imperial in their scope, for the various categories cover the whole Empire. The passing of the legislation is of a formal character, but the authority of Parliament is desired before the Government proceeds to ratify the treaty.

Although I have given a somewhat lengthy exposition of this bill, it was necessary to do so in order to avoid subsequent debate. Honorable senators will realize that this measure breaks no new ground, and I hope that they will expedite its passage.

Question resolved in the affirmative.

Bill read a second time, and reported from committee without amendment or debate.

Standing and Sessional Orders suspended; report adopted.

Bill read a third time.

page 2762

QUESTION

CUSTOMS TARIFF (No. 2) 1936

In committee (Consideration resumed from the 2nd December, vide page 2672) :

Clause 2 agreed to.

Clause 3 (Rates of duty to be fixed by proclamation in respect of certain goods).

Senator DUNCAN-HUGHES:
South Australia

– This would appear to be the appropriate clause on which to raise the subject of delegating to a Minister the power to fix an arbitrary rate of duty. I protest against the introduction of a provision which allows a Minister to determine what goods shall or shall not be permitted to enter Australia, and if they are admitted, the rates of duty to be imposed. I believe that if the members of this Parliament expressed a genuine opinion, an overwhelming majority would object to the imposition of embargoes, yet by this clause we are reverting in a comprehensive way to a most undesirable system which was discarded several years ago. Under this provision we are taking away from the Parliament the power to impose duties in respect of imports from any foreign country, and placing exceptional discretionary authority in the hands of a Minister who will be able to determine what goods shall be admitted, and the duties to be imposed.

Senator Dein:

– Would not a. Minister exercising such discretionary power take his instructions from the Cabinet?

Senator DUNCAN-HUGHES:

– Possibly, but does the honorable senator suggest that all matters of minor importance are referred , to Cabinet for decision? Judging from recent experiences, I imagine that Cabinet has a number of important points to determine quite apart from deciding whether imports from, say, the United States of America, Czechoslovakia, or France, shall be admitted on a preferential basis.

Senator Dein:

– Does the honorable senator regard this as a minor matter?

Senator DUNCAN-HUGHES:

– Perhaps not; but it is a most objectionable procedure to delegate to the Minister the power which the Parliament should exercise.

Senator Hardy:

– Even in the event of a crisis?

Senator DUNCAN-HUGHES:

– In war-time, the position is different, because definite action may have to be taken.

Senator Hardy:

– Suppose the currency of one country depreciated heavily, enabling it to dump goods into Australia ?

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– HUGHES. - I have never felt that we can point the finger of scorn at other countries in the matter of dumping.

Senator Collings:

– Does the honorable senator suggest that the Parliament should be continuously in session?

Senator DUNCAN-HUGHES:

– No ; but the Parliament, and not a Minister, should decide the ratesof duty. We have been able to carry on for some years without the embargoes which were brought into force during the depression period. I have never heard any person, except, perhaps, one who would benefit by the imposition of embargoes, say that he favoured them. Although embargoes have been discarded, we are practically re-introducing the system by placing discretionary power in the hands of a Minister in a way that should not be tolerated in peace times. It seems to me to be an unnecessary delegation of the authority which should be exercised by the Parliament. It cannot be said that it is being done because the system gives widespread satisfaction. I do not want this measure to pass without placing on record that I am intensely opposed to such extensive powers being placed in the hands of any Minister, regardless of the political party to which he belongs.

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

– The criticism of Senator DuncanHughes might, in certain circumstances, be justified ; but I remind the committee that this clause has been inserted for the specific purpose of giving effect to decisions which may be reached between the Commonwealth and a country with which the Government is now negotiating in accordance withits trade diversion policy. Moreover, a proclamation has to be issued by the GovernorGeneral, and such a proclamation can be assented to only by the GovernorGeneral in Council. On matters of major importance minutes are not submitted to His Majesty’s representative without the previous approval of Cabinet. When it has been my responsibility to preside at meetings of the Executive Council I have at times found it necessary to return minutes which had not received Cabinet approval. I direct the attention of the committee to the clause, a portion of which reads -

The Governor-General may, by proclamation, fix a date on and after which the rates Of duty in respect of those goods shall be such as are specified in the proclamation. . . .

Honorable senators will see that it is for only a limited period. There is also a further safeguard in sub-clause (3) which reads -

Nothing in this section shall be deemed to authorize the specifying of any proclamation, under this section of a rate of duty higher than the corresponding rate appearing in the schedule to this act in respect of the goods to which the proclamation relates.

The clause also provides that the duties -

  1. . shall remain in force until nine o’clock in the forenoon … on the day following

    1. the expiration of fifteen days after the first meeting of the House of Representatives in the year One thousand nine hundred and thirtyseven; or
    2. the introduction into that House of a tariff proposal imposing duties of customs on the goods covered by the item or portion of the item whichever first happens.

In the somewhat unusual circumstances that have arisen, there must be some provision to enable the Executive to act should it be necessary when Parliament is in, recess.

Senator Duncan-Hughes:

– The position has not arisen ; it has been created by ministerial action.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– If this provision be not inserted, it might be necessary to summon Parliament to give effect to the Government’s decision.

Clause agreed to.

Clause 4 agreed to.

Schedule -

Division 2. - Tobacco and Manufactures Thereof

Item 18 -

By omitting the whole item and inserting in its stead the following item : - “ 18. Tobacco, unmanufactured, n.e.i., per lb., British 10s.; Intermediate 10s.; General 10s. “

Senator BADMAN:
SOUTH AUSTRALIA · CP

. -Will the Minister in charge of tlie bill state why the duties imposed under item 18, have been increased from 8s. 6d. per lb. to 10s. per lb. - an increase of 17½ per cent. ? The Government should give some consideration to those users of tobacco, who prefer the imported product instead of taxing them unnecessarily as is proposed under this item. Is it the desire of the Government to compel tobacco smokers to purchase tobacco of a type which has not been properly prepared? In view of previous increases, the rate now proposed is exorbitant. Tobacco-growers in Australia have received considerable assistance, and the interests of those who prefer to smoke imported tobacco are being totally disregarded. I understand that the tobacco experts associated with the Council for Scientific and Industrial Research have discovered a method by which blue mould in tobacco leaf can be prevented, and therefore, Australian tobacco-growers do not have to contend with the difficulties which confronted them some time ago. As the increase of duty appears to be unnecessarily high, perhaps the Minister will explain why the rates have been increased.

Senator A J McLACHLAN:
Postmaster-General [12.0] . - The rates of duty under this item have been increased by1s. 6d. per lb. by reason of the corresponding increase under Item 19. Under the item increases of duty are proposed on tobacco leaf as follows : - (a · SOUTH AUSTRALIA · NAT

1s.6d. per lb. on leaf used in the manufacture of tobacco, which contains less than 13 per cent. by weight of Australian-grown leaf; (b)1s. 5d. per lb. on leaf used in the manufacture of cigarettes which contains less than2½ per cent. by weight of Australian -grown leaf;

These increases will act as a penalty against manufacturers who use less than the prescribed percentage of Australian leaf in their products. The rates have been fixed with a view to allowing a retail price margin between tobacco and cigarettes manufactured wholly from imported leaf, and such products manufactured from imported leaf, plus the required percentage of Australian leaf. The Government’s policy up to the time of the intro duction of the proposals now before the committee had resulted in a steady increase of the use of Australian leaf and the purchase of all consumable leaf grown locally. In the explanatory memorandum prepared for honorable senators it will be seen that in the year 1935-36, tobacco factories used 4,737,000 lb. gross, or 3,734,000 lb. net, of Australian-grown leaf, and that, whereas the percentage of local leaf to the total leaf used was less than 6 per cent. in 1927-28, it was over 20 per cent. in 1935-36. The position appears in a much more favorable light if leaf used in cigars and cigarettes is disregarded, as only a relatively small quantity of Australian leaf is at present used in those commodities. Satisfactory as has been the progress made up to the present in the use of Australian leaf, the Government has an eye to the future. There is no disputing the claim that Australian leaf has improved in quality over the last few years, entirely owing to the tariff policy of the Government, and the grant of £20,000 for research purposes. The settling down of the industry and the experience which growers have acquired have undoubtedly assisted in bringing about quality improvements. A further improvement of the quality of the leaf is expected as a result of the successful experiments which have been . conducted in connexion with the diseases and pests which attack tobacco; I refer particularly to experiments for the prevention of blue mould. With this prospective improvement of quality, the problem of the future is to provide an avenue for the disposal of good quality leaf, and it is to this end that the Government has introduced the present proposals. The majority of the tobacco leaf imported into Australia is the product of the United States of America. Accordingly, in submitting these proposals for increased duties, the Government does so with the knowledge that no harm is being done to the trade of any good customer countries. A question which may be on the lips of honorable senators is why there should not be a total exclusion of imported tobacco leaf. I reply to that by saying that the Government’s policy with regard to tobacco aims at bringing about a gradual, rather than sudden, conversion to the use of locally-grown leaf.

After all, the smoker is the final arbiter as to the class of tobacco he will smoke, and he would react unfavorably to a sudden change of quality.

Senator Badman:

– If the duties are made prohibitive, competition will be destroyed.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– The Australian tobacco growing industry is not yet in a position to supply the full requirements of quality leaf to suit the tastes of the smoker of the present day; although quality has improved, there is still a considerable quantity of inferior leaf produced. Moreover, the industry is not yet in a position to supply the quantity required. Tobacco leaf must still be imported for blending purposes. Even the United States of America, despite its huge production of tobacco, follows this practice. That, I think, is sufficient explanation of the reasons actuating the Government in increasing the duties.

A further point which I desire to make is that the effect of the proposals will be seen from the fact that, during the first four months of their operation, 350,000 lb. gross, or 260,000 lb. net more Australian leaf has been used than in the corresponding period of last year. This indicates that in a twelve months’ period a market will have been made available for an additional 1,050,000 lb. of Australian leaf, representing an increase of 22 per cent. on the 1935-36 figures. It is obvious, therefore, that the course followed has been productive of good results, so far as the tobacco industry is concerned.

Senator BADMAN:
South Australia

– I am not at all satisfied with the answer given by the Minister; he has failed to show why the duties imposed in respect of Items 18 and 19 have been increased by 42 per cent. Imported unstemmed tobacco leaf provides more employment in Australia than is provided by the importation of stemmed leaf. Therefore, the increase of the duty by 42 per cent. in respect of both stemmed and unstemmed leaf is very unjust. I am at a loss, therefore, to understand why the duty in both cases has been increased by the same percentage.

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

– Unless manufacturers use the prescribed percentage of Australian leaf, they will be involved in the payment of increased duty. If, however, the prescribed percentage is used, they will get the advantage of the lower duties.

Item agreed to.

Items 19, 20 and 21 agreed to.

Item 22 (Cigarettes)

Senator MARWICK:
WESTERN AUSTRALIA · CP

– The duties imposed under item 22 appear to me to constitute a vicious form of taxation. Duties are collected not only on the weight of the tobacco in the cigarettes, but also on the weight of cards and mouthpieces contained in inside packages. That, in effect, makes the duty on cigarettes considerably higher than is stated in the schedule. I ask the Minister if he does not consider that the duties are excessive. I recognize, of course, that if the cards and mouthpieces were manufactured in Australia a considerable amount of employment would be provided for Australian workmen. But as a smoker, I think I am entitled to defend the rights of my fellow smokers. I ask the Minister to give further consideration to the duties imposed under this item.

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

– The honorable senator has taken objection to the levying of a duty on the cards and mouthpieces contained in inside packages. Duty has been levied on such importations for a considerable number of years. Although the duty appears to be rather harsh, it is imposed as part of the protection afforded to the local producers. I do not think the honorable senator queries the increase of the duty; however, I inform him that the proposed increase under this item has been made in order to preserve the margin of protection granted for the encouragement of the manufacture in Australia of cigarettes and fine cut tobacco suitable for the manufacture of cigarettes, which was affected by the increase of duty, under item 19, on imported tobacco leaf.

Item agreed to.

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

Item 105 (Cotton piece goods, &c.).

Senator E B JOHNSTON:
Western Australia

– This is a very long and comprehensive schedule, and, under it, most of the increases have been made by the application of specific duties instead of duties on an ad valorem basis. I am opposed to all of these increases for reasons which I dealt with fully in my second-reading speech last night, and particularly because they have not been referred to the Tariff Board. I do not propose to repeat the other reasons now. I think that the Government made a great mistake in imposing heavy duties on textiles, the product of a neighbouring powerful nation in the Pacific, in a manner which has acted to the detriment of our export industries. To show my disapproval of the Government’s action, I move -

That the House ofRepresentatives be requested to leave out the item.

Senator DUNCAN-HUGHES:
South Australia

– I am of the same opinion as Senator Johnston in regard to this matter; although we have spoken on this subject on two occasions recently there has been no very great response to our representations. I shall vote for the amendment as an indication of my disapproval of not only the duties imposed under this item, but also the action taken by the Government in bringing in its trade-diversion policy in the manner it adopted.

Question - That the request (Senator E. B. Johnston’s) be agreed to - put. The committee divided. (Chairman - Senator B. Sampson.)

AYES: 8

NOES: 24

Majority . . . . 16

AYES

NOES

Question so resolved in the negative.

Request negatived.

Item agreed to.

Items 120 d and 130 b agreed to.

Division 7. - Oils, Paints and Varnishes

Item 229e agreed to.

Division 10. - Wood, Wicker and Cane

Item 291-

By omitting the whole of paragraph (2). of sub-iten (c) and inserting in its stead the following paragraph: -

Douglas fir (Pseudotsuga Douglasii) , per 100 super. feet (Brereton measurement) - British, 4s.6d. ; intermediate, 4s.6d.; general. 5s. 3d.

N.E.I., ad valorem - British, 10 per cent.; intermediate, 30 per cent.: general, 30 per cent.”

And on and after 27th November, 1936 - “ (2) Other-

Douglas fir (Pseudotsuga Douglasii) ; hemlock (all species of Tsuga) ; Larch (all species of Larix) ; spruce (all species of Picea) and white fir (all species of Abies), per 100 super. feet (Brereton measurement) - British, 4s.; intermediate, 4s.6d. ; general, 4s.6d.

N.E.I., ad valorem - British, 10 per cent.; intermediate, 30 per cent.; general, 30 per cent.”

By omitting the whole of sub-item (d) and inserting in its stead the following sub-item: - “(d) Spars in the rough -

Douglas fir (Pseudotsuga Douglasii) . per 100 super. feet (Brereton measurement) - British, 4s. 6d. ; intermediate, 4s. 6d. ; general. 5s. 3d.

Other, ad valorem - British, 10 per cent.; intermediate, 30 per cent.; general, 30 per cent.”

And on and after 27th November, 1936 - “(d) Spars in the rough -

Douglas fir (Pseudotsuga Douglasii) ; hemlock (all species of Tsuga) ; larch (all species of Larix) ; spruce (all species of Picea) and white fir (all species of

Abies), per 100 super. feet (Brereton measurement) - British, 4s.; intermediate, 4s. 6d.; general, 4s.6d.

Other, ad valorem - British, 10 per cent.; intermediate, 30 per cent.; general, 30 per cent.”

Item proposed to be amended - 291 (c) Logs not sawn, vis.: -

Other, ad valorem. - British, 7½ per cent. (net); general, 30 per cent.

Spars in the rough, ad valorem. - British,7½ per cent. (net) ; general, 30 per cent.

Senator McLEAY (South Australia) 1.12.21].- I move-

That the House of Representatives be requested to make the duty Item 291 (c) (2) (a) (second occurring), British, 3s.

The amendment refers principally to Oregon logs. Those honorable senators who have read the report of a commission which some years ago inquired into the effect of the tariff will remember the praise that it bestowed on the Tariff Board. I, too, have a high opinion of that body. The board’s report on the duties on Douglas fir, known in Australia as oregon, was signed in November, 1933, but it was not placed before honorable senators until November, 1936. In such circumstances, reference to the board becomes almost a farce, particularly when we reflect that, notwithstanding that the board’s recommendations followed a careful inquiry, they have not been accepted by the Government. I do not advocate strict adherence to the recommendations of the Tariff Board in every instance, but I do say that its recommendations should guide us in arriving at decisions on difficult tariff problems.

Senator McLEAY:
SOUTH AUSTRALIA

– The Government should explain why it refused to accept the Tariff Board’s recommendation that the duty on oregon logs should be 10 per cent., or about 6d. per 100 super. feet, and, instead, imposed a duty of 4s. 6d. per 100 super. feet and recently reduced it to 4s. Practically the whole of the oregon imported into Australia this year has been imported as logs, not as sawn timber. The value of the oregon imported from Canada during 1935-36 was £264,304, and from the United States of

America, £10,988. Practically 96 per cent of the oregon brought into Australia during that period came from Canada. In 1930, following a report by the Tariff Board, numbers of Australian timber merchants installed machinery for the sawing of logs in this country, instead of importing the timber already cut into sizes. One such establishment at Port Adelaide gives employment to a large number of men, many of whom will he thrown out of employment if the duty be not reduced.

Senator Hardy:

– How many men are employed in that mill?

Senator McLEAY:

– A few months ago the factory employed 150 men. That, however, is not the most important aspect of this matter.

Senator Collings:

– Because it will not bear inspection.

Senator McLEAY:

– Such a great increase of the duty on oregon must affect the cost of building in Australia. Evidence tendered before the Tariff Board by architects and builders made it clear that, whatever its cost,oregon is essential in house construction, particularly in South Australia. Some explanation of the Government’s action in increasing the duty so enormously is due to the Senate. In several of the States progressive house building programmes are in operation, with a view to providing cheaper homes for workers with small incomes; but if the duty on oregon be not reduced, there will be nothing to prevent those engaged in the hardwood trade from exploiting the people of Australia and making it more difficult for wage-earners to own their own homes. The principle is laid down in the very excellent report of Professors Brigden, Copland, and Giblin, and is quite recognized by all economists, that excessive protection has a demoralizing effect upon self-reliant efficient industries in all forms of production whether primary or secondary. It is our duty, as supporters of the Government’s policy of building up Australian primary and secondary industries, to see that the rate of duty is not excessive in either class. The cheaper the timber can be supplied to the builder the more work will be created in the building industry and the better it will be for all sections of the community. In order to impress upon honorable senators what this increase means on 100 super. feet of oregon I may tell them that, according to a customs return recently published in my State, the duty was1s. 4d. per 100 super. feet of oregon under the old rate on the log, whereas under the new rate the duty is 6s. 5½d. per 100 super. feet. That is excessive, in comparison with the rate recommended by the Tariff Board. If those engaged in the Australian timber industry want so much protection, there is something radically wrong with the efficiency of their organization. The Tariff Board recommended a duty on logs of 10 per cent., which is equivalent to 6d. per 100 super. feet, but the Government has now fixed the rate at 4s.

Senator Collings:

– The honorable senator’s calculation is wrong about the new rate per 100 super. feet.

Senator McLEAY:

– I do not propose to debate that point now. If I am wrong, the honorable senator can put me right when he speaks. The principle involved in this matter is so important that it should be the subject of a general discussion. If the Senate in its wisdom requests the House of Representatives to reducethe rate from 4s. to 3s. per 100 super. feet, it will be doing something to correct the detrimental effect of what has happened upon the people engaged in the timber industry and the building trade generally. The Tariff Board made a report on the the duties on Douglas fir on the 9th November, 1933. I propose to stick fairly closely to what the Tariff Board said, because its members had the opportunity to hear the evidence for and against, are free from political control, and have no interests of their own to serve. In the debate in the House of Representatives we find that all parties were divided on this issue; therefore, the conclusions of the board should be some guide to the Senate in coming to a decision. On page six of its report the principal arguments in favour of the reduction of duty were stated briefly as follows : -

  1. Douglas fir isusedformanypurposes for which Australian timbers are unsuitable;
  2. Despite high cost due to adverse exchange, the imposition of high fixed rate duties and of primage duty, Douglas fir is still being imported in large quantities.

Whatever the price, apparently they must bring it in.

Senator Hardy:

– In what form?

Senator McLEAY:

– In the logs. To provide employment for men in Australia the Tariff Board said it was better to import the oregon in the logs and have it sawn in our own country, than to have it sawn in America. The statement of the arguments in favour of the reduction of duty continued: -

  1. High duties on Douglas fir add materially to costs in the building industry without giving compensating benefits;
  2. Statistics over a period of years show that notwithstanding variations in comparative costs of the timbers concerned the consumption of Douglas fir has been parallel to the consumption of Australian timbers, and that in the filling of Australian requirements the timbers are complementary rather than competitive.
Senator Hardy:

– Tell us where they are complementary.

Senator McLEAY:

– I do not propose to go into details now. The honorable senator knows a considerable amount about the industry, but I am prepared to place a great deal of reliance on what has been recommended to Parliament by the Tariff Board.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– The last quotation made by the honorable senator is not the recommendation’ of the Tariff Board.

Senator McLEAY:

– No; I said those were the principal arguments used for the reduction of duty, as summed up in the board’s report. On page 11 the report stated -

Tasmania in normal years produces timber in excess of its own requirements. At the present time 75 per cent. of the output of boards and scantlings is sold outside the State. Scantlings are sold at prices from 10s. to 11s. per 100 super. feet f.o.b. and the freight to Adelaide is 7s. to 8s. per 100 super. feet. This means that Adelaide merchants can obtain Tasmanian hardwood at a c.i.f. cost of less than 20s. per 100 super. feet. Canadian Douglas fir in the junk size usually imported into South Australia costs 25s. 7d. per 100 super. feet, to which has to be added the cost of sawing to scantlings. In view of this difference in costs it is difficult to believe that only prejudice prevents increased sales or hardwood. The weight of evidence is that climatic and other conditions have led to the adoption of Douglas fir as the most suitable constructional timber in South Australia.

The CHAIRMAN:

– Order ! The honorable senator has exhausted his time.

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

– Senator McLeay no doubt willhave an opportunity to continuehis interesting review of this subject after I have made a few observations. Like the remainder of the items covered by this schedule, the amendments to the duty onoregon logs were made for trade diversion purposes, and the avenue to which it was thought that the trade would be diverted was, in this case, the Australian saw-milling industry. Representations had been made by Australian hardwood millers with regard to the competition which was being experienced from the large importations of oregon logs. The protection afforded to Australian timber interests by the Parliament in the form of duties on sawn oregon was being avoided by merchants who installed log breaking-down plants, and imported the logs, which were dutiable at a nominal figure. Until I saw the view of the other people, this breaking-down machinery rather appealed to me as a means whereby considerable employment would be given, and much timber saved, but what I am putting now is the departmental statement, and expresses the views of both sides on the subject. The extent to which the protection has been avoided is exemplified by the importation figures, which show that, in the financial year 1931-32, over 86 per cent. oforegon imports were represented by sawn timber, whilst during the years 1935-36, only 12 per cent. was represented by sawnoregon and 88 per cent. was imported in the log. In 1931-32, imports oforegon log were 3,800,000 super. feet, whilst in 1935-36 they had increased to 137,000,000 super. feet. On those figures, of course, was based the argument that these gentlemen who had failed, after a strenuous fight, to get the duty on oregon reduced, had found a hole in the tariff net. In the past, Australian governments have expressed their determination to preserve the use of Australian timbers as against oregon. They have given practical effect to this by imposing high duties on sawn oregon timber. When those duties were placed at their highest, logs were omitted from the schedule. This is the way in which the intention of Parliament, it is suggested, was circumvented: Certain timber merchants then installed the necessary machinery to break down the logs. Althoughoregon log cutting is quite uneconomic in Australia, it has been established by taking advantage of the protection afforded to the hardwood sawmiller. Oregon can be cut and sold at a lower price than sawn timber could be imported, after payment of the protective duty. As I have indicated, the change from sawn oregon to logs has been simply amazing. It has also resulted in a lower selling price fororegon than would be the case if it had been imported as junk, cut and sold in Australia. Importation oforegon logs was defeating the protective duties approved by Parliament. The new duties are designed to place the cost of oregon on approximately the level which was intended by Parliament when the duties on sawn oregon were imposed. The duty change was initially strenuously opposed by importing interests which had invested in log-cutting plants. The main points of attack were that: (1) the tariff had been so framed as to encourage them to install log-cutting plants with water frontages; (2) capital losses; (3) unemployment - by-law entry of all logs en route and in store was demanded, otherwise it was claimed that the industry must close down; and (4) the argument with which we are familiar, that oregon is complementary to, and not competitive with, hardwood.

Sitting suspended from 12.45 to 2.15 p.m.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Before lunch, I was pointing out the attitude of the importing interests in regard to the Government’s proposals. Subsequently, their attitude changed considerably. They now, in effect, admit that the basis of the Government’s proposals is sound. In letters, they have stated that there is a case for an increase to 3s. per 100 super. feet Brereton measurement, equivalent to 3s.10d. per 100 super. feet Hoppus - an increase of 2s.10d. over the old ad valorem rate of 10 per cent. Their agreement to such a great increase is remarkable; their objection to government policy is now only one of degree. Apparently it is to give effect to this altered view that Senator McLeay moved his amendment. As to the claim of the importers that they were encouraged to install log-cutting plants, the fact is that these were established in order to defeat the protective duties imposed by Parliament in 1930, on the recommendation of the Tariff Board. At that time no importation of oregon logs occurred or was contemplated. The Tariff Board, in framing a schedule of revised duties, did not, therefore, include logs in the list. .Subsequently, as the result of the increased duties recommended and imposed on sawn oregon, the cutting of oregon logs took place in Australia. A gap in the tariff is now being claimed to constitute definite encouragement by the Government of the installation of plant by these importers. Representatives of the industry did not consult either the Minister or the department before committing themselves to the expenditure. The claim that increased employment has been given by log-cutting in Australia is to a limited extent true. The larger portion of the employment prior to the introduction of oregon log treatment in Australia, would have taken place in timber yards in the city, suburbs, and country, in the cutting up of imported sawn Oregon - 12 inch x 10 inch size. The concentration of log-cutting in waterfront timber yards, has given the appearance of a large increase of employment. Proof is obtainable from a comparison of costs. The costs for labour in sawing from the log into small sizes is approximately 3s. 6d. per 100 super, feet; the labour cost, of sawing up the same quantity from 12 inch x 10 inch imported sawn oregon is approximately 2s. The contention that Oregon is complementary to, and not competitive with, Australian hardwoods has been advanced on every occasion that the timber duties have been considered by Parliament. It is generally accepted by importing interests ; it is rejected by Australian hardwoodmillers. The argument is irrelevant at this stage, because Parliament has rejected it on every occasion on which it has been advanced. If accepted in respect of duties on oregon logs, it must be accepted in respect of duties on oregon sawn timber. Parliament has, on several occasions, insisted upon the imposition of higher duties on oregon than the Government of the day was prepared initially to recommend to it. Whilst high duties are imposed on sawn oregon, it would be illogical to have practically no duty on logs. The claim of . the importing interests that the present duty will prejudice their capital investment and Australian employment can only be proved or disproved by ascertaining the margin which exists between the cost of importing logs and sawn junk, and having these sawn into small sizes. The department has obtained the costs of all the major companies possessing log-cutting plants. It has’ been ascertained that under the May schedule a margin of ls. 2d. per 100 super, feet existed in favour of the timber cut from the imported log as against oregon cut from sawn 12 inch x 10 inch Oregon. That is the case made out by the department. The honorable senator who moved this amendment has not been present on every occasion “that discussion has taken place in this chamber in regard to timber ; but an overwhelming majority of members in both Houses of the Parliament are in favour of keeping the duty on oregon at a high rate.

Senator BADMAN:
South Australia.

– I was unavoidably absent when Senator McLeay moved his amendment; but I desire to add my opinion, and the result of my observations in regard to the importation of Douglas fir. As has been stated on several occasions, I have found that the climate of South Australia and probably other parts of Australia is not at all conducive to the use of local timbers for the construction of houses, and particularly for roofing purposes. The great difficulty is to find a suitable substitute for oregon. A protective duty operates in favour of indigenous Australian timbers, which makes the imported timber costly to people who are compelled to use oregon in the erection of buildings. The Minister has stated that if it be right to impose a duty on sawn oregon, it would be illogical not to have a duty on logs. Prior to the installation of the machinery, which is being used by saw-millers at Port Adelaide at the present time for the cutting up of logs, honorable senators from South Australia were constantly approached by timber importers with the request to support a lowering of the duty on oregon. The 12 inch x 10 inch sawn timber being admitted into

Australia was being used not only by the building trade, but also for underground mining purposes. The mining industry is able to procure 12 inch x 10 inch oregon on a duty free basis; but miners in dry climates, such as are experienced at Broken Hill, and other sections of the community, are obliged to pay an exorbitant duty on this timber when used for constructional purposes. Honorable senators from .South Australia have been requested, therefore, to endeavour to have the duty reduced as low as possible. “When the Government refused to accede to our requests, Douglas fir and similar logs of the type from which oregon was sawn were admitted at about 6d. per 100 super, feet under the Hoppus measurement; but to-day, because South Australian saw-millers have installed machinery costing £24,000 for the purpose of cutting up the logs to small lengths, the Government finds that the customs revenue from this source has declined, and the duty on logs has been increased to put such timber on the same basis as the sawn timber. Thereby the Government is keeping up the revenue which was formerly obtained from the importation of sawn timber.

Senator Collings:

– It is quite ingenious.

Senator BADMAN:

– That is an instance of the ingenuity of the Customs Department directed by the Government, in obtaining revenue. I am surprised that the Leader of the Opposition (Senator Collings), who constantly urges us to “ give the poor man a chance “, is not prepared on this occasion to give him a chance to build his home in States where climatic conditions would cause Australian timber to warp.

Senator Collings:

– I shall have something to say on that matter later.

Senator BADMAN:

– Unfortunately, the fact remains that, through these duties, the cost of building nouses is made higher than is necessary. In regard to this matter, the advice of the Tariff Board has been ignored by the Government. Not that I contend that Parliament should always accept the advice of that body; upon occasions we do not agree with its finding; but the Tariff Board has reported that this duty is excessive, and indicates that it should be reduced in respect of logs. Ignoringthat recommendation, the Government proceeds to collect the same amount of revenue as formerly on Douglas fir. By the use of oregon in Australia, the milling and cutting of indigenous timber is not affected. In spite of the fact that the price of oregon is so high, it will still have to be imported in quantities as great as previously.

Senator Herbert Hays:

– A certain amount of oregon must be imported, but not for general purposes.

Senator BADMAN:

– There are few woods with such a tensile strength, as oregon. Honorable senators, including Senator Collings, should be aware of that fact. Saw-milling companies in South Australia urged the reduction of the duty on sawn timber, and I was prepared to support them. When I found later that the same companies were urging that the duty should remain on sawn timber, I investigated the cause. They had installed machinery and thereby given considerable employment ; they even managed to reduce the price. until the Government took this action.

Senator Hardy:

– How many men lost their jobs through the imposition of this duty?

Senator BADMAN:

– I am concerned for the men w”ho found employment through the installation of the machinery.

Senator J B Hayes:

– Some of the Australian hardwood mills were closing down.

Senator BADMAN:

– Can the honorable senator cite an instance of men having to be discharged through the increased use of imported, timber?

Senator Hardy:

– The timber mills were going to the wall.

Senator BADMAN:

– Some Australian timber is not so suitable for certain purposes as is oregon. When it is claimed, that Australian timber will serve as a substitute for Oregon, I should like to know why it is not holding its position 1

Senator Hardy:

– It is improving its position.

Senator BADMAN:

– No Australian timber can equal oregon for certain purposes. I support Senator McLeay’s request.

Senator COLLINGS:
Queensland

– I feel that it is essential for some honorable senator to rebut the statements made by opponents of this item. I was intensely interested to hear both Senator McLeay and Senator Badman use exactly the same term this morning when discussing this item, although Senator Badman was absent from the chamber when Senator McLeay was speaking. Both honorable senators said : “ Not that I always believe that we should accept the Tariff Board’s report “. Such a statement causes me some amusement.

Senator Duncan-Hughes:

– There is nothing original about that.

Senator COLLINGS:

– Of course, there is nothing original about it; but while honorable senators are unanimous that they do not always believe that the Tariff Board’s reports should be accepted, each reserves to himself the right to select the time when he will not accept the recommendation. Personally, I am in a different category, because I do not believe that Parliament should allow the Tariff Board to be superior to the sovereign authority which created it; and I regret that Parliament has done so. The Tariff Board’s reports should not be taken too seriously; they are valuable only to the extent of the information they contain. Unfortunately, in some respects, the Tariff Board possesses greater powers than are possessed by this Parliament, and in consequence of the decisions leached at the Ottawa Conference the board now exercises more extensive fiscal power than was originally intended.

Senator Badman suggested that I have the unfortunate habit of always posing as a friend of the poor. There is nothing wrong with the poor, excepting their shameful poverty for which they are not responsible. This morning Senator Badman, who complained that he could not get his taste accustomed to Australian tobacco, suggested a reduction of the duties on the imported leaf. This afternoon, he complains of the quality of Australian timber. We have had debates on timber in this chamber on previous occasions, and the subject is very interesting to everyone, and particularly the representatives of Queensland. Surely it is not seriously contended that we can scientifically plan to relieve the distress of the poor by varying the duties on timber provided in this schedule? The honorable senator suggested that if oregon timber were used instead of Australian hardwoods the inconveniences, difficulties and poverty which the poor are subjected to might be relieved. If thepeople of this country were sufficiently intelligent to realize the way in which to relieve the sufferings of the poverty stricken, such futile suggestions would not be made. What does the timber industry really mean to Australia? In previous debates on this subject it was urged that oregon possesses special virtues, but the only virtue that would stand up to a test - I do not think it would do that if it were impartially considered - is that it is indispensable in mines because it gives an earlier warning to the men working underground of a creep or possible collapse. The Government has recognized its alleged superiority in that respect by admitting, free of duty, oregon used for mining purposes. I recognize that South Australia is in a somewhat peculiar position in the matter of timber supplies, and I understand the position in which senators representing that State find themselves. But their last condition will be worse than their first if those controlling South Australia’s activities fail to recognize the value of the native timber, not only to that State, but also to the whole Commonwealth. The following survey of the world timber situation is interesting : -

Perhaps more than any other primary product, timber shows great promptness in contracting output in face of declining demand. Forests will keep. Similarly it expands output less rapidly when demand rises. It is particularly liable to increasing competition from innumerable substitutes. Rational forestry methods are liable to increase the readiness of timber supplies to contract with declining demand. Water transport is an essential for the carriage of timber and is in fact the only economical means. This largely explains the advantage which North America possesses in the export timber trade. North America is the only net exporter of timber, for Europe’s exports are almost balanced by her imports. Russia, Finland and Sweden supply the exports -Great Britain, Hol laud and Germany buy the imports. Asia has much timber, but icebound rivers prevent export. South America is too far from Europe to compete with North America, and can export only valuable cabinet woods. Of the producing countries to-day, all except Russia are consuming annually almost double their annual growth. Russia is only in the early stages of exploitation of her timber resources, and consumes one-third of her annual growth, but any expansion of her timber trade is likely to be in the direction of her own internal market. Australia is capable of supplying her own hard and soft woods, but difficulties of transport give her very little protection against North America.

When Senator McLeay was quoting allegedly startling figures, and referring to the extravagant protection afforded under this schedule, he overlooked the fact that America, and especially North America, has wonderful natural protection against Australia, in that after the timber is felled in the forest it is placed in the rivers and conveyed practically free of cost to the seaboard, whereas in Australia roads have to be constructed into the forests, and the timber felled has to be hauled at great expense to the sawmills.

Paper pulp imports into Australia amount to some £4,000,000 annually, and most of the coarser paper could well be produced at home. I understand that a pulp factory has been established in Tasmania by the Murdoch newspaper group for the supply of their “ Fine Printings “,. but this industry is yet in its developmental stages.

Surely honorable senators who are opposing these duties do not believe in strangling an important Australian industry. I have shown the vital importance of the timber industry to Australia, than which there are few countries which could more readily accomplish what is desired. Some honorable senators suggest, in the first place, that oregon should be admitted free of duty, and then ask for concessions on other timbers, and generally endeavour to whittle down by degrees the protection which the Government desires to afford to the Australian limber industry. Those supporting a reduction of duties overlook the damag ing effect of their action upon the industry and upon the livelihood of me.n engaged from the time the timber . is felled in the forest until it passes to the saw mills. In striking a blow at the Australian timber industry they are affecting most seriously our policy of re-afforestation which is so essential to this country, and thereby causing, amongst other things, soil erosion which adds so very seriously to the disabilities of primary producers. Notwithstanding this, there are some honorable senators who, owing to a lack of sympathy with the people engaged in timber-getting, disregard basic facts, and in doing so act to the detriment of an industry which is essential to the welfare of this nation.

Senator HARDY (New South Wales) [2.43 J. - As I am connected with the industry, the existence of which would bc seriously jeopardized if the request moved by Senator McLeay were adopted, I submit that I have a right to express my views on this subject, although I do not propose to exercise my vote. I agree with the Leader of the Opposition (Senator Collings) who said that the timber industry is entirely different from any other industry established or encouraged under our tariff policy. For instance, if a. colliery closes down, the raw material remains in the ground for hundreds of years, and does not deteriorate. The same can also be said of iron and steel, and some of the components of . cement; but in the timber industry the position is entirely different because a crop which is the sole raw material of the industry has to be gathered each year. If we do not assist those engaged in the handling and production of timber, we shall be adopting as a part of our national protective policy a course which will ultimately lead to the destruction of our forest areas. If honorable senators visited some of our big forests they would see the benefits of re-afforestation and realize the force of my words. The timber matures, and as maturity is reached the undergrowth increases. If the forests are not cut, or, in other words, if the crop is not garnered, fires spread throughout the timber areas, reafforestation ceases, erosion takes place in the catchment areas, resulting in the silting up of the rivers, and, finally, disaster faces the country. The Government itself has recognized the danger of -this by appointing an .erosion committee and allocating for its use the sum of £500,000. The various State forestry departments throughout the Commonwealth have also given a good deal of attention to this subject. Now this is the point that must be stressed : If the saw-milling industry in Australia is destroyed owing to the lack of reasonable protection, no State in the Commonwealth can carry out its forests projects; the result will be the ruination of national forest assets. That aspect alone justifies the continuance of the existing duties. Apart altogether from the recommendations of the Tariff Board, we must make sure that the native forests upon which the saw-milling industry depends can expand each year. Figures show that the collection of royalties over the whole of the States last year amounted to £6S0,000. If the States are deprived of that revenue there will he a complete cessation of all State forestry operations, because no State can possibly carry out its programme. I urge honorable senators to remember that it is not simply a matter of discussing whether, for construction purposes, a piece of oregon is more suitable than a piece of hardwood; they should take a national view of the timber industry, and decide whether they are prepared to continue to protect our national assets. There is one point I wish to make in reply to a question by Senator McLeay, as to whether the industry can carry on under lower duties without hardship and consequent restriction of forest development. The industry could not carry on under those conditions. The information contained in the Tariff Board’s reports of 1932 is not worth a snap of the fingers to-day, because the board then based its recommendations on an entirely different set of facts and conditions. To-day, the great majority of the importations of oregon are in the log, whereas, in 1933, only an insignificant quantity of logs was imported. If honorable senators carefully peruse the evidence given by the Tariff Board in 1932, as I have done, they will be in a better position to discuss this subject. I challenge any honorable senator to produce any evidence, whether from softwood interests, or from South Australia’s interests, to show that the Tariff Board considered the effect in any way of the entry of oregon logs into Australia when it was recommended that a 10 per cent, ad valorem duty be imposed. The growth of importations of Oregon logs is shown very definitely in the following figures: In ‘1930-31, only 4,000,000 super, feet of oregon logs was imported into Australia - that was a mere bagatelle; in 1931-32, when the Tariff Board was considering the duty on such importations, 3,861,000 super, feet of oregon was imported. In 1933, the year in which the Tariff Board’s report was made available to the Government, 11,000,000 super, feet of oregon was imported; but in. 1934, the importations rose to 54,000,000 super, feet. What was the reason for this large increase of imports? The only reason was that the duties imposed on

Oregon logs were so low that importations which, up to date, had been economically impossible, became economically possible. The next year, importations of logs rose to 106,000,000 super, feet, an increase of over 100 per cent. Again I ask, what was the reason for this rapid increase and the sudden departure of traders from their practice in previous years? The only reason is that the duty of 10 per cent, ad valorem was so low and so insignificant that it became possible to import logs in large quantities. In 1935-36, a record quantity of 136,000,000 super, feet of oregon was imported. Before the Government took action to increase the duties on logs, honorable senators could have seen in any capital city in the Commonwealth, the floods of Oregon logs coming in. Band mills were erected, and the timber sawn from Oregon logs was being dumped on the market at prices against which the Australian sawmillers could not compete. The death knell of the Australian sawmiller was being sounded. It is not a question of comparing a piece of 4-in. by 2-in. oregon with a piece of 4-in. by 2-in. hardwood; where the Australian saw-miller balances his budget is in the clear product of the log that goes into the floors, or is made into weatherboards, sashes, doors, and mouldings. Oregon logs, imported allegedly for construction purposes, are cut up into clear grades, and this timber, which does not cost more than 15s. or 16s. a 100 super. feet, is sold in cut-throat competition with the product of the hardwood mills. That is not reasonable competition. I listened to the debate on this item in the House of Representatives, where I heard the allegation made that thousands of men had been thrown out of employment as a result of the imposition of the new duties on logs. In spite of all the installations of band mills, the total number of men actually engaged inbreaking down round logs into squareflitches would not be more than 200. If anybody . can toll me of one man who has, through that cause, lost his job in a bandmill since the Government imposed the new duties, all that I can say is thatI have no right to be interested in the timber industry. The new duties are reasonable. I have no objection to the matter being referred back to the Tariff Board again, but I do object to the duties being reviewed by this Senate without first placing before the board the true facts in relation to this matter. In 1932-33, when the Tariff Board’s report was made, winch has enabled certain honorable senators to indict the Government because it raised the duty by 400 per cent., logs, which are the major part of the import trade to-day, had not oven been considered.

Senator McLEAY:
South Australia

.- Until the 22nd May last the duty on oregon logs was 20 per cent., which meant approximately1s. per 100 super. feet. Underthat duty the industry had been making headway. On the 22nd May an increase took place from1s. to 4s. 6d. per 100 super. feet.

Senator Hardy:

– What was the duty on sawn timber before that date?

Senator McLEAY:

– I am not concerned about that because 90 per cent. of theoregon comes in as logs. In replying to the Leader of the Opposition (Senator Ceilings), who referred to the use oforegon in the United States of America, I stated that the thing that pleased me most of all was that for the year ended the 30th June, 1936, 96 per cent. of Australia’s importations oforegon came from

Canada. I have official statistics to prove the truth of that statement. I have no desire to see any Australian industry hampered. I invite the Leader of the Country Party (Senator Hardy) to attend with me any meeting of the Chamber of Manufactures and say that so far as the industry in Australia is concerned its protection is not excessive; it is as high as that of any secondary industry in Australia.

Senator J B Hayes:

– It is higher.

Senator McLEAY:

– The Leader of the Opposition referred to the employment given to persons engaged in the log industry. For the year ended the 30th June, 1936, the imports of oregon logs totalled 137,000,000 super. feet. Did not that create employment for men in this country? Senator Hardy has said that the Tariff Board did not consider the subject of logs before it recommended an increase of the duty to 10 per cent. ad valorem. Did not the Tariff Board encourage the importation of logs into Australia so that employment would be created for Australian workmen in cutting up the logs? The Tariff Board considered this matter in 1930, 1932 and 1933, and, with the evidence before it, brought, forward a recommendation that the duty on logs should be 10 per cent. I refer Senator Hardy to the following paragraph at page 14 of the Tariff Board’s report of 1933-

The consumers obtain no benefit from the lower duty on logs; all the evidence tendered in this connexion leads to the conclusion that the ultimate cost of timber sawn in Australia is practically the. same as the cost of the sawn timber imported. It follows, then, that there is a loss of revenue amounting to 9s. 6d. for each 100 super. feet sawn in Australia. The only compensatory advantage is the employment given in the sawing of logs locally and as this amounts to less than 3s. 6d. per 100 super. feet of output, the maintenance of the existing margin is obviously uneconomic.

That is why the Tariff Board suggested that the duties on logs should be 10 per cent., and on sawn timber 6s. per 100 super. feet. I desire to see Australian industries flourish but this Parliament, by excessive protection, is doing definite injury to Australia. I say that the increase of the duty from 6d. to 4s. per 100 super. feet is ridiculous.

Senator Badman:

– That is 800 per cent.

Senator McLEAY:

– The f.o.b. price of oregon logs in Canada is 3s; 4d. per 100 super, feet. To that must he added freight, exchange, wharfage and duty amounting to 4s. per hundred super, feet, and primage of id. per 100 super, feet. Under the Brereton system of measurement, which we use in Australia to-day, 25 per cent, of the log is wasted, hut the importer is charged duty on the full amount. That brings his account from the Customs Department up to 5s. 11-Jd. per 100 super, feet, to which must be added all other costs. I conclude by saying that I regret that although this matter was referred to the Tariff Board the board’s report was not made available to honorable senators, and its recommendations were ignored by the Government. Honorable senators should keep clearly before them what Professors Copland, Brigden and Giblin said at the inquiry -

Excessive protection has a demoralizing effect upon self-reliant, efficient industries in all forms of production.

My object in moving that a reduction be made from 4s. to 3s. per 100 super, feet, is to see that those who have invested in the industry will not lose their money, and that the men engaged in cutting up the 137,000,000 super, feet of Oregon logs imported into Australia will still be employed. It is essential that the importation of oregon should continue for building purposes, and the timber should be permitted entry into Australia at a more reasonable rate; if we can reduce prices we shall be able to increase employment and reduce construction costs, and those engaged in the industry will not suffer.

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

– I remind Senators McLeay and Badman that the Government has decided that Australia buys too much from the United States of America, and that country too little from Australia.

Senator Badman:

– Ninety-two per cent, of the imported log timber comes from Canada.

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

– Australia should endeavour to supply its own requirements of tim’ber, and, indeed, of all commodities. Nature has been good to us,, in that the Australian timbers which constitute the first crop of the land, are equal to the best imported timbers. It may be that Oregon is better than hard wood for mining purposes, but I point out that oregon used in mines is admitted free of duty. It has been said that the retention of these high duties will throw out of work about 200 men now engaged in sawing logs, but thousands of Australian workers will be without jobs if the duties be reduced, as suggested. When I have seen huge stacks of imported timber on the banks of the Brisbane River 3” have never been able ,to understand why, in, a country so well supplied with timber, it should be thought necessary to bring other timber 6,000 miles from other countries for use here.

Senator Cooper:

– The imported timber, moreover, comes here in foreign vessels.

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

– I have never held that trade should not flow both ways - to and from Australia - but I always objected to the importation of those things with which nature has richly endowed this country. In the past hundreds of millions of super, feet of the best timbers in the world have been destroyed to make way for increasing settlement. I cannot understand why honorable senators from South Australia, should become so heated about what is, after all, a comparatively small matter, particularly when those who stand togain most from their efforts are American suppliers of timber. I have here a letter from the Australian Federated Sawmillers Association, dated the 2nd November, 1936, in which the association asksmembers of this Parliament to giveearnest consideration to the question of the ratification of the increased duty onoregon logs, as set out in the tariff schedule introduced in May last. The association’s letter states -

We are in the happy position of being able to say that every promise and undertaking made to the Government and to the Tariff Board by us have been kept and honoured 100 per cent, and our obligation to the public, as a protected industry, has been fulfilled to the letter …

It is, perhaps, the only primary industry that ha3 never asked for, or received, any form of government assistance other than the tariff protection to which it has a rightful claim . . .

Once the old prejudice against the use of Australian timbers is broken down, builders will realize that better Australian timbers are available at cheaper prices than imported, oregon.

It has been contended that the competition of oregon does not mean much to the Australian timber trade, but, on that point, the Australian Federated Sawmillers Association, says -

Those badly-informed people who contend that Oregon does not compete with our Australian timbers are only proving their ignorance of the prevailing conditions in Australian timber production.

A proof of this is in the fact that before the log duties were imposed in May last our mills were slack of orders and stocks could not be cleared, whereas, to-day, every mill is working full-handed and sales are good.

We claim to have made a first-class industry in a remarkably short space of time, and we now confidently appeal to our Federal Parliament to demonstrate their faith in our industry by passing this very necessary tariff amendment.

This is not a party question. On a previous occasion, a Labour senator from South Australia voted against other members of the party in this chamber when the duties on oregon were being considered. All honorable senators favour a reasonable measure of protection for Australian industries, and are, I am confident, desirous of doing their best for Australia. I have shown what is best in the interests of Australia. The Queensland Timber Protection League has also written to me, and I suppose to other honorable senators, regarding the duties on oregon. In its letter to me, the league states -

We have every reason to thank the Government for the service they rendered to the timber industry of Australia on the occasion when the duties on log timber were advanced to the present rates. Prior to that event, we were aware of more than one project to establish saw-mills on the Brisbane waterfront to take advantage of the lower duties then prevailing.

This would have created serious competition with established Queensland industries. The successful exploitation of the timber trade with imported log timber would have been nothing short of a national disaster, as the operations would have been supplemented by many other saw-millers in Brisbane at the expense of a large number of timber operatives, and of our own timber resources.

We feel confident that the representations of interested importers will not be allowed to do this incalculable injury to the timber industry of this State, when the tariff schedule comes before Parliament.

The Government’s proposal is sound, and, when the vote is taken, I hope that SenaMcLeay’s amendment will be defeated.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– Despite all the warmth that this debate has engendered, one aspect of this question appears to have been almost overlooked. The duties on oregon were referred to the Tariff Board in 1933. At that time there was a demand fororegon, and, in order to meet it, sawn oregon was imported. It was thought, however, that Australia would reap an advantage if theoregon, instead of being imported already sawn, were brought here in logs and cut up into the required sizes by Australian workmen. As the result of inquiry, fir logs were subject to a duty of about1s. 4d. per 100 super. feet. As it would have been useless to bring in oregon as logs unless Australian sawmills could cut those logs into useful sizes, many timber merchants in South Australia, and probably in the other States also, established plants to cut up the logs. Those plants have been in use for only about three years, and are still too good to be scrapped.

Senator Hardy:

– If the oregon were imported, not in logs, but in squares those plants would still be required.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– The plants which were installed were designed to deal with logs. The trifling reduction of the duty on oregon made in the House of Representatives is evidence that the Government is convinced that an injustice was being done to those engaged in cutting imported logs into the sizes required by builders. Out of consideration for the people who have established this sawing industry and those who are employed in it, the Government should make some concession. Senator Hardy said that he did not believe that more than 200 men are employed in the work. I do not know whether there are 200 or 2,000, but I do know that in my own State it is a very useful little industry, in which a great amount of money has been expended by the timber merchants in providing the machinery and other apparatus for the sawing up of the logs. It would be a gracious act on the part of the Government if they agreed to bring the rate down to 3s., thus making a concession of1s. 6d., instead of making what is nothing more than an empty gesture by offering a. reduction of only 6d.

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

– The reason why the report of the Tariff Board was not tabled earlier is that it was held back pending negotiations with Canada. The rate on logs was increased in order to bring the relation between the duties on logs and sawn timber into line with that recommended by the Tariff Board, and to close up the hole in the tariff net, to which I have already made reference. Taking advantage of that gap sawyers of

Oregon logs were defeating the protection given to the Australian hardwood industry. The work of sawing the logs will not go overseas, as more than sufficient margin is allowed for the log-sawing plants to continue operations. I draw the attention of Senator James McLachlan especially to that fact. The Brereton measurement arrives at the full amount of timber in the log. The Hoppus measure is an attempt to arrive at the approximate amount of sawn timber which is obtainable from the log. Oregon logs are always invoiced and purchased on the Brereton measurement. In arriving at the duty under the Brereton measurement, an allowance has been made for waste. Finally, to show the sympathy with which the Government viewed this position, I point out that the Tariff Board recommended that the margin between the duty on logs and the duty on sawn timber should be 5s. 6d. per 100 super. feet, whereas the margin is now 5s. 7½d., representing a difference of 1½d., as the result of the alteration made in the House of Representatives. I mention these facts because they serve to correct some of the wrong impressions that have arisen in the discussion.

Senator BADMAN:
South Australia

– The statement of the Leader of the Opposition (Senator Collings) that we would smash the Australian industry by a reduction of the duty on logs by1s. per 100 super. feet is preposterous and ridiculous. The honorable senator becomes all hot and bothered, as though the very vitals of Australian industry were being cut out by such a request as is now before the committee. We in South Australia are fully aware of the value of afforestation to the saw-milling industry. We have in South Australia the finest saw-mill in Australia. It is a government saw-mill, situated at Mount Burr, and turns out a tremendous amount of sawn timber, principally pinus insignis and radiata, in the shape of shooks for cases and light laths. Even at the present time it cannot cope with the demand from Victoria and New South Wales for shooks. We, therefore, know something about the industry in our State. I have been over the whole of that mill, and have seen it in operation. It is an illustration of the value of the industry to Australia, but there is no thought in this request of interfering with an Australian industry. Senator Hardy said a little while ago that there was an increase of the importation of oregon logs during 1934 and 1935, after the Government had given the local timber merchants the opportunity to saw the timber up under the low tariff duties. In 1931 and 1932, as the Leader of the Opposition and other honorable senators will remember, the building trade was at the lowest ebb that it has reached for twenty years, but in 1934 and 1935 there was a great increase of building, which we are thankful to know has continued up to the present time. There has been a demand for timber, and I warrant that, if figures were obtainable with regard to the use of Australian timber, a tremendous increase of the output from the saw-mills and of the use of Australian timber in local industries would be revealed. The Leader of the Opposition said that we should conserve Australian industries as much as possible and re-afforest, and otherwise look after the timber reserves. All that is very well, but not many years ago complaints were made in Western Australia and New South Wales of the exportation of our hardwoods, immense quantities of which were being purchased by India and South Africa for use as sleepers. It was thought that it might become necessary to impose an export embargo, and I am inclined to think that that should be done in some cases. Those who oppose the amendment say that we should not import timber, and at the same time they tell us to conserve Australian timber. If the rest of the world is being denuded of its forests, and we denude our own forests to any great extent by exporting timber, we shall soon find ourselves in trouble. During the last two years, we have exported about 80,000,000 super, feet of timber, valued at over £1,000,000. We have not imported in the same period as much oregon. Of course, we may have imported quite a large quantity of other timbers. Other countries want a great deal of Australian umber for ornamental purposes. For instance, Queensland maple, which at the present time is being converted into veneers in works at Sydney, is now finding its way to America and beating the American .timber, because of its beauty, durability, and other good qualities. On the other hand, American timber, including oregon, is valuable to us for use in oilier directions; the interchange of timbers thus brought about is quite fair. The Leader of the Opposition spoke of the use of oregon in mines. The very fact, that Oregon used in mines warns the miners of danger long before Australian timber does, exemplifies its value for every other purpose. Australian timber does not give warning, because the grain is so short that it snaps easily. The grain of the oregon is longer. Cases have been quoted where Australian timber has been tried and found wanting for mining purposes. If those statements are correct, then in such cases oregon timber must be used. Imported timbers are valuable to us for specific purposes, just as Australian timber is valuable for other specific purposes.

Senator Abbott:

– What place outside South Australia uses pine for mining?

Senator BADMAN:

– The great Broken Hill Proprietary Company does so. The Leader of the Opposition said that Australian timbers were at a disadvantage for lack of transport facilities from the forest to the mills.

Senator Collings:

– I said the Canadian timber had a great advantage.

Senator BADMAN:

– Australian timber should have a great advantage in sea freights over Canadian timber, but we can land a cargo from the north-west of Canada on the Australian coast cheaper than we can carry the same quantity from Tasmania to Adelaide. Our navigation and transport legislation handicaps the carriage of timber sawn in Queensland or Tasmania to other parts of Australia. We can import from Canada cheaper than we can from Queensland, although the distance is much greater.

I agree that we should give some protection to the local timber industry, which is a primary one, but that already given to it is greater than is being given to secondary industries, as Senator McLeay pointed out. We should be able to import the timbers that we require here at rates much lower than those now collected, even if we have to export in return some Australian timbers, which are valuable overseas. The interchange in that respect is doing us no harm. The export trade may, for a time, tend to denude Western Australia and South Australia of their’ hardwood timbers, but other countries have shown that they require our woods, for certain specific purposes, whilst we require Oregon for other purposes. For these reasons I support the amendment.

Senator HARDY:
New South Wales

– Senator McLeay mentioned that 137,000,000 super, feet of logs had been imported and asked if this did not create employment. We do not deny that it does, but we say that employment would still have been created if 137,000,000 super, feet of sawn oregon timber had come in, because the actual process of converting the round log into the sawn flitch is a very small one indeed. That is where Senator J. V. MacDonald goes astray. The usual sizes of the flitches imported into this country for the past few years have been 12 in. x 6 in. and 12 in. x 10 in. The only’ difference that would be necessitated in the sawing plants that have been erected is that the first headsaw would go out of action. Every other machine in the plant would be necessary, and has been necessary, for the culling of the 12 in. x 10 in. flitches into scantlings and clear products. That is why we said that only 200 men were employed in the actual process of breaking down the round log into the square flitch. The duty on the square flitch was between 10s. and 12s., per 100 super, feet, but the actual duty on the log as fixed by the Tariff Board, always remembering that this was done after evidence had been put before it, -was only ls. 6d., or a margin of from 8s. 6d. to lOd. 6d. Do not honorable senators think that margin too great, seeing that any oregon log mill in Sydney will definitely offer to cut up imported logs at a contract price of 2s. 6d. to 3s. per 100 super, feet? If that is the established contract price for converting the round into the square, and there is a difference of from 8s. 6d. to 10s. 6d. between the duties on the round and the sawn, it is obvious that a duty on logs of 10 per cent, ad valorem is extremely wide of the mark. Even a heavy diminution of the importation of oregon logs would not have a serious repercussion on the allegedly expensive machinery installed by sawmillers in the capital cities. Honorable senators should not overlook the fact that such plants have not been erected solely for the purpose of sawing oregon logs, as South Australian senators would have us believe; many other kinds of imported logs are sawn by this machinery. All kinds of timbers from Queensland, and Borneo cedar, hemlock, &c, milled in 1931-32, totalled 2,000,000 feet; in 1932-33, 3,630,000 feet; in 1933-34, 6,000,000 feet; and in 1935-36, nearly 7,000,000 feet. If the importation of the oregon logs into Australia were prevented, there would be reason to assume that their place would not be taken by hemlock. Hemlock does not compete with Australian joinery timbers, but is used principally in conexion with the manufacture of fruit packing cases, and is now imported in the sawn flitch. I should also like to stress that the real development of the Australian sawmilling industry did not begin before 1932. Hp to that time, it was more or less a scantling industry with a certain output of clear air-dried boards. Certainly some wide boards were sawn to compete in the joinery section, but generally the great majority were scantlings. With the advent of the depression, dry-kiln treatment, under the guidance of the Council for Scientific and Industrial Research, made its appearance, and for the first time the Australian industry was able to market a product which would not warp or shrink, but would stand up to the most harsh climatic conditions. As the result of that development, Australia is now manufacturing the highest class of joinery timber, which will resist the driest climates, in which imported timber would fail. The .dry kilns are an indication of the fact that the real development of the Australian timber industry has occurred since the Tariff Board made its report on this matter. In 1930, only 50 kilns were in existence. The average capital value of a battery of kilns is £3,000 - not a very substantial sum of money. The 50 kilns were turning out dry timber to compete in the joinery trade. In 1931, the number of dry kilns increased to 60. In 1932, when the industry first began to get its opportunity, the number increased to 138. In 1933, it was 202; in 1934, 224; and in 1935, 31S. This progress was one of the greatest romances in Australian industrial development. Each battery of kilns is composed of from 6 to 24 chambers. As 1 informed .Senator Leckie, the actual production of dry-kiln timber, which is required, not for constructional purposes, but for the manufacture of fittings such as those which have been installed in this Senate,- rose in Victoria alone from 1,000,000 feet to 50,000,000 feet in approximately five years. Surely we must make every endeavour to maintain that progress, because it has a substantial hearing upon the unemployment situation. The competition of oregon, which enters Australia under- the guise of being intended for constructional purposes, must be avoided. Whereas oregon is easily dried, Australian hardwoods require up to 21 days for this purpose. Tour or five years ago I informed the Minister in charge of this bill that if we could ensure that long lengths of oregon, say over 30 feet in length, would not be used for other than constructional purposes, I would vote for the admission of such timber ; but I know that immediately the long lengths of oregon are imported, the timber trad« cuts them into clear grades; this timber is then converted into sashes and boards and sold as moulds and floors in competition with the Australian timber.’

Senator LECKIE:
Victoria

.- Most of the opposition to this duty appears to emanate from South Au3- tralian senators. Apparently that State has notawakened to the immense development which has taken place in the process of seasoning Australian timber, to which Senator Hardy referred. In connexion with this process, I have secured official figures relating to Victoria; they support Senator Hardy’s statement. Whereas kiln seasoning in 1930 was responsible for the production of only 1,000,000 feet of timber, the figure last year was 50,000,000 feet. That is a remarkable increase. A peculiar point about the objection of South Australian senators is their assertion that Australian kiln-seasoned timber will not withstand the climatic conditions of that State; but in the Mallee and the Wimmera, with similar climatic conditions, over 90 per cent. of the timber used by the building trade is hardwood.

Senator Badman:

– The timber so used is for walls, not for roofs.

Senator LECKIE:

– No; it is also used for roofing purposes. I understood Senator Badman rather to gibe at the Leader of the Opposition (Senator Collings), asserting that he had no sympathy with the poor classes. Everybody must be aware of the fact that the cheaper class of dwelling is built entirely from Australian woods. Oregon is not used in this type of construction, because it is too expensive. For that reason, there is no justification for the contention of Senator Badman that the duty on oregon logs will increase the cost of constructing a workman’s home. A better realization by architects and builders of the general value of Australian timbers, as turned out at the present time, would be justified, because they are eminently satisfactory for constructional purposes. Unless Australian timbers are used, they become a disappearing asset. The trees reach maturity at a certain age, and if not used, they go to waste and have to be burned. For that reason, Australian timbers should be used wherever possible, in order to save hundreds of thousands of pounds of the natural forest wealth. Senator Badman also referred to the fact that Australia enjoyed an export trade in timber. In my opinion, this controversy in regard to oregon relates only to timber designed for constructional and joinery purposes. The timber to which

Senator Badman referred as being exportable hardwood, such as jarrah, is employed as railway sleepers and road blocks.

Senator Badman:

– But that industry gives employment to many hands.

Senator LECKIE:

– I admit that it does; but such timber does not compete with the constructional timbers that are under discussion. The labour costs in regard to the milling of Douglas fir logs range from 2s. to 2s. 6d. per 100 feet, whereas the Australian labour used in connexion with the hardwood timber industry costs four times that amount. Royalties must play a large part in the finances of the various States which produce hardwood. The wilful reduction of a large portion of their revenue, which for the most part, is devoted to the work of re-afforestation, would be a most illadvised action. I sympathize with South Australia in that it lacks within its borders areas of timber suitable for milling purposes. The timber to which Senator Badman referred is not indigenous to South Australia; it was introduced into the State through the foresight of a past government, and tribute should be paid to that administration for its vision in that respect. At the same time, such timber does not enter into the controversy in regard to constructional timber. As a consequence ofthe new duties imposed last May, the price of Australian timber has not been increased; the price of scantlings has actually been reduced by 15 per cent.

Senator Herbert Hays:

– Reduced below cost price.

Senator LECKIE:

– The sawmills make their profits from flooring boards, weatherboards, and the better classes of timber used for constructional purposes. For that reason, they are able to make a reduction of 15 per cent. below cost price in regard to scantlings. In view of all of these circumstances, I consider that Senator McLeay might, at this stage, withdraw his request. The honorable senator has carried out his duty in pointing out the dissatisfaction existing in South Australia in regard to this impost ; but at the same time he should now be aware that his request, if accepted, would inflict hardship upon the native timber industry. The majority of honorable senators appear to have made up their minds that that industry is most valuable to Australia, and must be preserved.

Question - That the request (Senator McLeay’s) be agreed to - put. The committee divided. (Chairman - Senator B. Sampson.)

AYES: 7

NOES: 24

Majority . . 17

AYES

NOES

Question so resolved in the negative.

Request negatived.

Senator FOLL:
Queensland

.- The Government has apparently overlooked the fact that a considerable quantity oforegon logs imported into Australia for use in the manufacture of veneers and plywoods does not come under the duties provided in this item. Logs used in the manufacture of plywood are being imported at the old rates of duty, whereas the duty should have been increased in order to protect the Australian plywood industry. It is hardly necessary for me to point out that during recent years the veneer and plywood industry has played an important part in construction work, particularly in connexion with office fittings.

Senator Leckie:

– Are not plywoods used very extensively in cheaper classes of furniture?

Senator FOLL:

– They are used extensively because they have a good grain and an attractive appearance. The Queensland manufacturers of plywood and veneers have established at considerable expense some of the most modern manufacturing mills in any part of the world, and not only have developed a considerable trade in Queensland, but are also exporting considerable quantities of plywoods to the other States, particularly better class timbers which can be made up into beautiful veneer work. Although the industry has developed to a remarkable extent cheap oregon logs, which are not dutiable at the same rates as other oregon timber, are being imported, with the result that some of the plywood mills are working their plants for only halftime, while others have been compelled to close down. This industry is established also in Victoria and New South Wales, where it uses Tasmanian and Victorian ornamental timbers. The importation of cheaporegon logs has severely damaged the industry which is worthy of greater encouragement. I trust that the Minister (Senator A. J. McLachlan) will ask the Minister for Trade and Customs to refer this matter to the Tariff Board for investigation and report, in order to see whether the anomaly which now exists can be removed.

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

– The wonderful eloquence and terrific speed of the honorable senator prevented me from intervening earlier to intimate that this subject cannot be discussed under this division. At present logs for the manufacture of plywoods are admitted under departmental by-law. I assure the honorable senator that this complaint will be brought under the notice of the Minister for Trade and Customs.

Item agreed to.

Division 14. - Vehicles.

Item 359-

By omitting the whole of paragraph (4) (twice occurring) of sub-item (d) and inserting in its stead the following paragraph : - “ (4) Chassis, including lamps but not including rubber tyres and tubes, storage batteries, shook absorbers (excepting steering dampers), bumper bars, sparking plugs and springs -

Unassembled, viz.: - Car, and car type capable of use for commercial vehicles, per lb. - British, free; intermediate, 5d. ; general, 5½d.

) Unassembled, viz. : - Truck omnibus or other commercial vehicle, per lb. - British, free; intermediate, 4¼d.; general 4¾d.

Assembled, per lb.– British,1¼d.; intermediate, 6½d. ; general 7d. and in respect of sub-paragraphs (a), (b) and (c) - An additional duty of per lb. - British, 7d.; intermediate, . 7d.; general, . 7d.

Provided that for the purposes of subparagraphs (a) and (b) the classification shall be as determined by the Minister and the Minister’s decision shall be final.”

Senator E B JOHNSTON:
Western Australia

– I move -

That the House of Representatives be requested to make the duties, Item 359 (d) (4) (a), intermediate, 32½ per cent.; general, 32½ per cent.

I wish to make the duties in the intermediate and general tariff 32½ per cent. I understand from a paragraph published in the press that the Government has referred the manufacture of motor chassis, motor engines, the quota of importations of cars from foreign countries which has been fixed on last year’s quota, and also a bounty of £30 on engines, to the Tariff Board for investigation and report. If my request be adopted the duties in operation prior to the 22nd May will operate while investigations are being conducted by the Tariff Board. I do not propose to interfere with the special duty of . 7d. per lb. imposed on chassis, which, I understand the Government is earmarking for the payment of a bounty of £30 each on locally manufactured engines. In amending these duties without reference to the Tariff Board the Government has acted contrary to the law. When the present supporters of the Government were in opposition they opposed the action of the Scullin Government in imposing duties without reference to the Tariff Board, but they are now supporting a policy which then they so strenuously denounced. I am not prepared to support this Government in a. policy similar to that which we all condemned when it was operated by the Scullin Government. The amended duties have resulted in a substantial increase of duty on cars of the cheaper types, and I believe a very slight reduction of the duties on the higher priced American cars. If concessions are to be given they should be on the cheaper cars. I am informed that the increase in respect of the lower priced cars is about 15 per cent.

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

– The special duties to which the honor able senator’s request relates have been imposed to give increased preference on chassis manufactured in the United Kingdom. Previously the duties were on an ad valorem basis. Owing to the lower cost of chassis produced in North America the duties were not very effective. They have now also been adjusted to include the primage of 10 per cent. previously payable on all chassis. Primage has been removed and chassis produced in North America now carry under the ordinary duties the primage previously paid on United Kingdom chassis.

A review of the importations over the last four years shows that the proportion of the Australian trade in motor chassis held by the United Kingdom fell from 46 per cent. to 19 per cent., whilst the proportion held by the United States of America rose from 28 per cent. to 40 per cent. Honorable senators are well aware that our trade balance with the United States of America is considerably adverse to Australia; they know also to what extent Australia depends upon the purchases of Australian products by. the United Kingdom. During the last financial year the United Kingdom purchased Australian produce to the value of £A68,000,000, whilst purchases by the United. States of America were valued at £A9,300,000. I can see no other object in the honorable senator’s proposal than to assist a bad customer country to the detriment of Australia’s main customer. As we have debated this matter at length, and as it is to be the subject of further inquiry and report by the Tariff Board, I suggest, to honorable senators that we take an early vote on Senator Johnston’s request.

Senator GRANT:
Tasmania

– The Minister has not given the slightest explanation of the reason for the alteration from an ad valorem duty to a fixed rate per lb. It is all very well to say that the intention is to increase the preference to the United Kingdom.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– What I said was that on an ad valorem basis preference was not effective for Great Britain as against imports of low-priced chassis from North America.

Senator GRANT:

– I take it that the Minister means that that would be an easy way of justifying the alteration. The honorable senator’s explanation does not carry much weight because we have already in the tariff schedule duties ranging up to 500 per cent. The proper way to deal with this matter would be to impose an ad valorem duty sufficient to afford effective protection to British manufacturers. As the matter has been referred back to the Tariff Board for further inquiry and report, the ad valorem duties should stand until that board’s report has been presented. I support the request moved by Senator Johnston.

Senator DUNCAN-HUGHES:
South Australia

– With the general policy of trade diversion from the United States of America to Great Britain, I am in agreement ; I think it is justifiable, and I would certainly vote in favour of it. But, at the moment, I find myself restrained from doing so by the conviction which I have already expressed, that these new duties should not have been imposed without reference to the Tariff Board. The procedure adopted by the Government is thoroughly undesirable. I think, therefore, that the only consistent attitude I can adopt - and I admit I have only a choice of unpleasantnesses - is to support Senator Johnston’s request to restore the duty to what it was before the 22nd May, leaving it for the Tariff Board to report whether this trade diversion policy is economically sound. I draw attention to the fact that the most important portion of the motor chassis proposals is not before us in the bill now before the committee - and, in fact, it will not come before us in any of these tariff bills - that is, the establishment by ministerial decision of the quota which is to be allowed to different countries. That, surely, is the most essential part of the whole proposal; yet, so far as I can see, the Senate is to have no chance whatever to discuss it, or, what is even more important, the question of what the quota should be. In my view the quota laid down by the Minister might have been more stringent, so far as American cars are concerned. In arriving at the quota, an exceptionally high figure, based on the imports of a peak year, was selected. I would certainlybe prepared to vote for a lower quota from the United States of America and for a higher one in respect of cars from Great Britain and Canada than those laid down by the Minister ; but apparently we are to have no say in that matter at all; it is not to come within our purview. I propose to support Senator Johnston’s request. I wish to restore the original position, not because I think that this portion of the trade diversion policy is unwise or undesirable - my own personal view is that it is fair - but because the Government has failed to carry out the provisions of the Tariff Board Act, which requires that before existing duties may be varied or new duties imposed, the matter must be referred to the Tariff Board for inquiry and report. All nationalist governments had adhered to that provision, until the Government took certain action in May last. Therefore, I believe that the only consistent thing I can do is to cast my vote in favour of Senator Johnston’s request to restore the original duties.

Senator MARWICK:
WESTERN AUSTRALIA · CP

– I think it is only fair that the Minister should reply to the charges made by Senators Johnston and DuncanHughes.

Senator Duncan-Hughes:

– I asked a question rather than preferred a charge.

Senator MARWICK:
WESTERN AUSTRALIA

– Senator Johnston said that the Government in imposing the new duties acted in contravention of the Tariff Board Act.

Senator E B Johnston:

– The law was broken and the matter was not referred to the Tariff Board.

Senator MARWICK:

– In view of the fact that the Government has thought fit to refer the matter back to the Tariff Board for report as to whether the motor car industry can be economically established in Australia, I am prepared to reserve my criticism. If that promise had not been made, I would have had a good deal to say in regard to this matter. I suggest to the Minister that he should elaborate his reply to the points raised.

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

– I suggest to Senator Marwick that Senator Johnston did not discuss the legality or the illegality of the matter at all.I point out to honorable senators that this is an attempt to divert trade from the United States of America to British channels. It is on this point that I join issue with Senator Johnston. The Government, rightly or wrongly, in altering the basis of the duties from an ad valorem rate to a fixed rate per lb., acted upon specific advice. We know that, because of the low value at which American cars are invoiced, American manufacturers are getting an advantage.

Senator Duncan-Hughes was quite right when he said that quotas are not under consideration to-day. They will have to be discussed, however, at some future time; but surely that time will only arrive when we have received a report from the Tariff Board as to whether the Government’s proposal is the best means of implementing its trade policy.

Senator Duncan-Hughes:

– Should not the old duties remain until that time has arrived?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– No. The Government desires to establish the motor car industry in Australia as early as possible. Furthermore, this matter is of vital consequence to the trade between Australia and Great Britain. As Senator Duncan-Hughes has remarked, the Government might well have fixed a more drastic quota restriction in respect of American cars; in not doing so, it was actuated by a desire not to impair the motor facilities for our own people to carry on their business inside Australia.

Question - That the request (Senator E.B. Johnston’s) be agreed to - put. The committee divided. (Chairman - Senator B. Sampson.)

AYES: 12

NOES: 18

Majority . . 6

AYES

NOES

Question so resolved in the negative.

Request negatived.

Schedule and title agreed to.

Bill reported without requests; report adopted.

Bill read a third time.

page 2785

CUSTOMS TARIFF (EXCHANGE ADJUSTMENT) BILL (No. 2) 1936

Second Reading

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

– I move -

That the bill be now read a second time.

This bill is similar to one with which the Senate dealt a few days ago, and is consequential on the measure which the Senate has just passed. It is a purely machinery measure, and arises out of the alterations made to the previous tariff schedule.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2785

CUSTOMS TARIFF (CANADIAN PREFERENCE) (No. 2) 1936

Second Reading

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

– I move -

That the bill be now road a second time.

This also is a machinery bill which is complementary to the major bill passed a little while ago. It simply gives effect to the duties on oregon logs and spars, and motor chassis, when of Canadian origin, and is consequential on alterations made to the previously existing tariff.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 to 3 agreed to.

Schedule -

Senator E B JOHNSTON:
Western Australia

– Division 14 deals with the chassis of Canadian cars. The position probably is the same as in respect of a similar item which we discussed this afternoon in connexion with another bill, but I should be pleased if the Minister would say what difference the alteration has made.

Senator GRANT:
Tasmania

.- Can the Minister say why it has been necessary to include the words “ provided that for the purpose of paragraphs a and b the classification shall be as determined by the Minister and the Minister’s decision shall be final”?

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

– The duty of 2½d. per lb. proposed by the Government on Canadian car chassis averages only½d. per lb. more than the previousduty which was equivalent to 2d. per lb. More cars enter Australia from Canada than from the United States of America, and if the fixed duty be applied only to the United States of America chassis, the object of the fixed duties, which is to make effective the preference given to the United Kingdom, will not be achieved. The increased duty represents only 1 per cent. of the selling price of the car to users, and consequently from their point of view, the ultimate effect is not material. Investments by Canadian firms in Australia will not be affected by the Government’s proposals should those firms fit in with the Government’s scheme and establish factories in Australia. That additional preference is required by the United Kingdom against Canada is shown by the following figures which indicate the extent to which Canadian chassis have entered the Australian market : -

There has been a falling off of imports of chassis from the United Kingdom from 46 per cent. to 19 per cent. during the last four years, whilst imports of Canadian chassis have risen from 26 per cent. to 41 per cent. during that period. Under the proposed duty, Canada has a preference of 3d. per lb. over the United States of America, whereas the United Kingdom has a preference of only 2½d. over Canada. Any alteration of the proposed Canadian rate would throw the Government’s scheme out of balance. When a long-range view is taken, it will be seen that the Government’s scheme is to divert trade, not to the United Kingdom, but to Australian manufacturers.

As to the point raised by Senator Grant, the position is that, at times, a decision has to be made as to whether a chassis is that of a truck or a car. Some discretionary power must be vested in the Minister, who will be guided by his expert officers. Difficulty has arisen on occasions in the administration of the duties, and in order to facilitate the administration of the item it is advisable to embody the words referred to in the schedule.

Senator DUNCAN-HUGHES:
South Australia

– It might be well if the Minister were to make clear the basis on which a decision is made as to how chassis belonging to trucks and cars may be exchanged.

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

– I regret that the departmental officers have not that formula with them, but the practice has been pretty well settled within the department. Honorable senators can rest assured that the officers who are familiar with the administration of this part of the customs schedule have had experience, and endeavour always to do even-handed justice between the importer and the Crown.

Schedule agreed to.

Title agreed to.

Bill reported without requests; report adopted.

Bill read a third time.

page 2786

CUSTOMS TARIFF (No. 3) 1936

Second Reading

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

– I move - :

That the bill be now read a second time.

Its object is to give effect to the tariff alterations which have become necessary consequent upon the trade agreements with Czechoslovakia and Belgium, which agreements have already had the approval of this chamber. The principal alteration is the provision of intermediate tariff rates under certain items for the benefit of those two countries. However, where an intermediate tariff rate has been provided in relation to goods subject to protective duties, it is at a level which is not lower than that which the Tariff Board considers necessary for the protection of Australian industry against importations from foreign countries. In a small number of cases outside the scope of the trade agreements with Czechoslovakia and Belgium, items have been amended. These were instances in which the items were included in the same Tariff Board report as items under the trade agreement in question. Special notation has been made of these cases in the memorandum circulated for the information of honorable senators. As the Senate has already agreed to the bills relating to the trade agreements with Czechoslovakia and Belgium, it is necessary to invite honorable senators to agree to the present bill in order to enable the Government to give effect to the agreements as approved. In passing this bill, therefore, the Senate will be only carrying out that which it has already approved.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clause 1 agreed to.

Clause 2 (Amendment of tariff).

Senator PAYNE:
Tasmania

– I understand that certain items in the schedule have nothing to do withCzechoslovakia or Belgium. When the schedule is reached, will the Minister draw special attention to them and give an explanation of them?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– They are specially noted in the memorandum that has been circulated for the information of honorable senators.

Clause agreed to.

Clause 3 agreed to.

Schedule and title agreed to.

Bill reported without requests; report adopted.

Bill read a third time.

page 2787

CUSTOMS TARIFF (EXCHANGE ADJUSTMENT) BILL (No. 3) 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 will recollect that the Customs Tariff (Exchange Adjustment) Act of 1933-36 provides in certain cases for a deduction from the amount of duty payable under the British preferential tariff in respect of items having a protective significance. This deduction was intended to compensate for the protectective value of exchange. In recent reports, the Tariff Board has based rates of duty on present exchange conditions with a corrective increasing the rates gradually as exchange moves towards parity. A number of these reports was adopted in connexion with the Customs Tariff Bill (No. 3), which gave effect to the treaty with Czechoslovakia and the trade agreement with Belgium. The purpose of the Exchange Adjustment Bill now before the House is to eliminate from the operation of the Customs Tariff (Exchange Adjustment) Act those items and parts of items for which provision for exchange fluctuation is now made in the items themselves. It is really only a machinery measure, complementary to the alterations that have been made in relation to exchange in Customs Tariff Bill (No. 3), which has already been approved by the Senate. Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2787

CUSTOMS TARIFF (INDUSTRIES PRESERVATION) BILL 1936

Second Reading

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

– I move -

That the bill be now read a second time.

The principal purpose of this bill is to amend section 7 of the Customs Tariff (Industries Preservation) Act 1921-1933 with a view to providing to Australian industry the full measure of protection which was contemplated when the act was originally framed. The existing section provides for the imposition of dumping freight duty on goods exported to Australia, which are of a class or kind “produced or manufactured in Australia, and which have been, or are being, carried either free of freight charges or at rates of freight which are lower than the prevailing rates for such goods. These concessions may be on account of the goods being carried in subsidized ships or as ballast, or they may take the form of rebates, which are granted in certain circumstances. Under the section as it at present stands, the dumping freight duty payable on goods coming under its provisions is 5 per cent, of the fair market value of such goods at the time of shipment. Honorable senators will appreciate that a dumping duty calculated on this basis bears no direct relationship to any freight concession which has been granted, or may be granted, in respect of goods imported under conditions which bring them within the provisions of the section. In respect of goods the fair market value of which is high in relation to their weight or bulk, dumping freight duty calculated on the 5 per cent, basis at present set down in the act has proved more than sufficient to give the desired protection to Australian industry. On the other hand, there are goods of low value in comparison with their weight or bulk, as for example, coke, cement and steel. It has been found that, in some instances, the dumping duty payable under the existing section is not nearly sufficient to provide the protection necessary on account of freight dumping.

The position may be illustrated by a shipment of cement which was recently imported in a new vessel, which was brought to Australia to engage in trade. The cement was carried as ballast at a freight charge of 15s. 2d. sterling per ton, whereas the normal rate of freight on cement is approximately 26s. sterling per ton, the difference of 10s. lOd. sterling per ton representing the actual freight concession allowed on the shipment. Under the existing section 7, however, a freight dumping duty of only ls. 6d., Australian currency, can be collected. Even after this freight dumping duty is collected, the importer is still advantaged to the extent of 12s. Id., Australian currency.

The object of the Customs Tariff (Industries Preservation) Act is to protect Australian industries from goods exported to Australia in circumstances which constitute unfair competition. It is obvious that section 7 of the act, as it stands at present, does not achieve this objective, seeing that, in some instances, the amount of dumping freight duty which can be charged is quite inadequate to bridge the difference between the concession freight at which goods are not infrequently carried, and the ‘ normal freight. Furthermore, the present method of calculating dumping freight duty is unsound, in that the amount of dumping freight duty chargeable on a shipment of goods carried freight free would be the same as that on a similar shipment in respect of which an appreciable proportion of the normal or prevailing rate of freight was paid.

In this bill it is proposed that dumping freight duty, instead of being 5 per cent, of the fair market value, shall be the difference between the actual freight paid or payable and the normal rate of freight. The Minister will determine the normal rate of freight in respect of any goods, but the amendment provides that he cannot determine a rate higher than the highest rates of freight payable on similar goods carried by general cargo vessels trading regularly with Australia. A necessary condition of the operation of section 7 in regard to any class or kind of goods is that the Minister shall be satisfied, after inquiry and report by the Tariff Board, that, by reason of the low freight, detriment may result to an Australian industry. “Where the Minister is so satisfied, he publishes a notice in the Gazette specifying the goods concerned, and, thereupon, all importations of such goods come within the operation of the section, provided in each case the charges of dumping and detriment to local industry are established. In practice, however, action under the section is not always delayed until the receipt of a report by the Tariff Board. In cases where the information available indicates the possibility of dumping to the detriment of local industry and there appears to be need for immediate action, the importer is required to lodge a cash deposit to cover any dumping duty which may, subsequently, be found to be payable. If, as the result of the Tariff Board inquiry, the goods are gazetted by the Minister, the deposit is then adjusted by retaining the amount found to be payable and refunding the balance, if any, to the importer. On the other hand, if the Minister does not consider that the circumstances justify the gazettal of the goods, the full amount of the deposit is refunded. The great restraint which Ministers have exercised in using section 7 is evident from the fact that, during the fifteen years the act has been in existence, only three classes of goods have been dealt with under this section, viz. : Portland cement, calcium carbide, and certain types of grease. Nevertheless, it is essential, in the interests of Australian industry, that proper provision be made to meet cases in which goods are carried freight free or at concession rates, and it is considered that the proposed amendment, as set out in the bill, will achieve this purpose.

A further amendment proposed to the act is the insertion of new section 12a providing for conversion of the amount of dumping duty under sections 4, 5 and 7 to Australian currency. The reason for this addition is that, owing to depreciation of Australian currency in relation to sterling since the act was passed, Australian manufacturers are not receiving the protection against dumping which was intended. I should explain that section 4 relates to goods which are sold to an importer in Australia at an export price which is less than the fair market value of the goods in the country of export. The amount of dumping duly under this section is the difference between the fair market value of the goods at the time of shipment and the export price. Section 5 covers goods which are sold to an importer in Australia at a price which is less than a reasonable price. The amount of dumpingbelowcost duty under this section is the difference between a reasonable price of the goods at the time of shipment, based on cost of production, and the export price of the goods. Section 7 is the provision for dumping freight duties, the amend ment of which is provided for in this bill.

The following example based on goods gazetted under section 4 will illustrate the necessity for the provision in the bill for conversion of the amount payable as dumping duty into Australian currency: Assuming the fair market value in: the country of export to be £5 sterling, and the selling price to the Australian importer to be £4 sterling, the difference is £1 sterling. As the act stands at present, however, the dumping duty actually paid is £1 Australian currency, and as £1 Australian currency -represents considerably less than £1 sterling, it is obvious that under present conditions the amount of dumping duty paid is not the actual extent of the dumping. The act envisaged that Australian manufacturers would be protected against dumping to the full extent of such dumping, and proposed new section 12a in this bill ensures this protection by providing for the ‘conversion into Australian currency of amounts of dumping duty calculated in any other currency. The amendments are equitable to all interested parties. They give no additional protection- to Australian industry, but they ensure that the protection intended by this Parliament shall be a reality.

Senator COLLINGS:
Queensland

– The Postmaster-General (Senator A. J. McLachlan) laid special stress on the fact that certain articles had been dealt with under the Customs Tariff (Industries Preservation) Act, and in a spirit of challenge he threw the subjects of cement and carbide across the chamber. If effect is to be given to the latest report of the Tariff Board on cement, a dumping duty will, I understand, be imposed upon this article. I should like to know whether the subject of cement comes within the compass of the bill, and, if so, whether I should be in order in referring to the suggested duty.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– No: This bill simply relates to dumping. In this measure are contained the general principles which may be applied in the event of dumping, and under which the Minister must act.

Senator COLLINGS:

– Whilst I shall support this bill, I should like to know whether we shall be given an opportunity to discuss the duty on cement before the approaching recess. As the result of the new regulation, introduced only two days ago, the very existence of the cement industry is threatened.

Senator Sampson:

– The door is wide open now for the admission of imported cement.

Senator COLLINGS:

– Of course it is.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– This bill deals not with cement, but only with money.

Senator COLLINGS:

– Every honorable senator from Queensland has received a telegram from the cement interests of ‘that State, stating that the introduction of the latest duty threatens the industry with extinction. Probably the cement interests of every other State have also notified their representatives in this chamber of the danger with which their industry is threatened. In my opinion, this bill provides a fitting opportunity for a discussion of the latest report of the Tariff Board. If the board’s recommendation for the imposition of a dumping duty of only 51s. 6d. a ton be given effect, the Queensland cement industry will be ruined. There is no indecision or vagueness about that statement. Some months ago I warned honorable Senators of the outcome of a reduction of the duty on cement, but my warning was disregarded. ‘How long will the prophetic character of the Opposition fail to be recognized by this Government? Repeatedly we have forecast the repercussions which would follow the Government’s fiscal policy.

Senator Hardy:

– I thought the honorable senator stated that he supported this bill.

Senator COLLINGS:

– I support the bill, because, if it were defeated, the Government would be without legal authority to impose a dumping duty. I am merely remarking on the nervousness of the Government in regard to the size and extent of this duty. The Queensland Cement Company, which has, on more than one occasion, reduced the price of its products in accordance with the suggestion of the Tariff Board and the Government, sent the following telegram to me in. connexion with the new duty on cement : -

Tariff Board recommends basis 51s. Cd. c.i.f. British cement. If carried will have disas trous effect. Queensland industry unable meet English competition and ensure continuous existence our company. Please make strong protest do utmost for further protection.

If the Minister in charge of the bill can re-assure me that the interests of the cement industry will be safeguarded, I shall be satisfied; but otherwise I am prepared to stonewall the bill until Christmas.

Senator E B JOHNSTON:
Western Australia

– Owing to the rapidity with which these measures are being introduced, it is difficult to grasp the full implication of this bill, but I feel that it may constitute another barrier in connexion with the high protective policy of the Commonwealth to which I am opposed. Undoubtedly there is alarm not only in Western Australia but also in Queensland in regard ro the cement industry.. I have received the following telegram from the Swan Cement Company, Perth-

Advise Tariff Board recommends gazettal cement under sections 4 and 7 on basis 51b. 6d. c.i.f. sterling. This figure definitely too low and impossible for us to meet competition. Nothing less than 50s. c.i.f. sterling will give us fighting chance. Please make strong protest in Parliament remembering our prices to public only bettered by two States in the Commonwealth. We rely on your active cooperation to ensure our existence.

I commend that message to the Minister, and I earnestly trust that in administrating the measure now under consideration he will give to it his most sympathetic consideration.

Senator SAMPSON:
Tasmania

– The introduction of this bill would have been unnecessary had Ministers listened to what was said last April when the cement duties were under consideration. If this measure has been introduced in pursuance of the Government’s protective policy it does not say much for the policy which it then so strongly supported. It is useless to say to the Government : “ We told you so “, but when the cement duties were under consideration we stated most definitely what was likely to happen to the Australian cement industry if inadequate duties were not imposed. At that time our protests were ridiculed. We were told that our protests were reducing the debate to a very low level; but we were fighting strenuously for the interests of those engaged in the cement industry. Instead of supporting a protective policy the Government, which was all wind, told us that the duties then proposed had to be adopted otherwise we would he interfering with the spirit, if not the letter, of the Ottawa Agreement. In effect we were informed that the recommendation of the Tariff Board was sacrosanct. What we asserted so definitely in April last has proved to be true, and it is now the responsibility of every honorable senator to do his best to safeguard this important key industry. I do not profess to know the effect of this measure upon the cement industry; but it is the responsibility of the Government to protect it, and if it does not do so effectively it will deserve all that may come to it.

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

[5.3]. - I take the strongest exception to the tone of the speech delivered by Senator Sampson, who has entirely misrepresented the position.

Senator Sampson:

– I have not.

Senator Sir GEORGE PEARCE:

– The last debate on this subject was on whether a duty should or should not be imposed on imported cement.

Senator Collings:

– We told the Minister that cement would be dumped here.

Senator Sir GEORGE PEARCE.Am I to be allowed to proceed. .

The PRESIDENT (Senator the Hon. P. J Lynch). - Honorable senators must not interject.

Senator Collings:

– It depends upon how provocative the Minister is.

The PRESIDENT:

– Order !

Senator Sir GEORGE PEARCE:

– Whether a duty should or should not be imposed is one matter, and the competition from overseas manufacturers, who were shipping cement as ballast at a low rate of freight, is another. The latter subject was raised but it was not, as Senator Sampson suggests, the main topic of debate. It was only one phase of the discussion which was replied to by the Minister at the time. The Government then said that if it could be proved that cement was being dumped owing to the freight at which it was being carried, action would be taken under the Customs Tariff (Industries Preservation) Act. That was stated plainly and definitely, and it is most unfair of Senator Sampson to suggest that that undertaking was not given. The honorable senator has not a defective memory, and he knows that the main debate was on the point of whether an import duty should or should not be imposed. The Government said that it would protect the cement industry from dumping. The Government having reviewed the subject has introduced this bill, but that is not an admission that the attitude which it then adopted in respect of the duty on cement was wrong. There is no such admission. The Government is carrying out its intention to honour effectively the promise given to the Senate on that occasion.

Senator Sampson:

– Let us hope it will be effective.

Senator Sir GEORGE PEARCE:

– Tho honorable senator has my assurance that the Government is honest in this matter - he” seems to have some doubt.

Senator Sampson:

– I see the difficulty of protecting the industry under this bill.

Senator Sir GEORGE PEARCE.The Government said quite honestly that it would not tolerate dumping in this or any other industry.

Senator Payne:

– Will we have a further opportunity to debate the matter ?

Senator Sir GEORGE PEARCE.The honorable senator will have an opportunity to speak later. This bill has been introduced in consequence of a review by the Minister of the power he possesses under the Customs Tariff (Industries Preservation) Act, and the Government has decided that its powers in that respect are inadequate. The measure having been introduced in an honest attempt to overcome those difficulties, it is most ungenerous and unfair of honorable senators, under cover of making demonstrations’ on behalf of the Australian cement industry, to attack the Government by saying that it is not doing what it promised to do. Whether the finding of the Tariff Board is or is not right, as is suggested in the telegrams quoted, has nothing to do with this bill. The wisdom or otherwise of the recommendation of the Tariff Board is not affected by this measure. This bill is the machinery under which the Government is giving effect to the finding of the Tariff Board. I, therefore, trust that in the subsequent discussion honorable senators will confine their remarks to the bill, and not endeavour to revive the attacks made upon the Government some months ago, when the cement duties were under consideration. Under the cover of this bill, they should not endeavour to challenge the finding of the Tariff Board as to what is, or is not, dumping in particular circumstances.

Senator PAYNE:
Tasmania

.- I regret that the Leader of the Senate (Senator Pearce) became so irritable when, by interjection, I attempted to ask a simple question.

Senator Sir George Pearce:

– There was an avalanche of interjections.

Senator PAYNE:

– I recognize the necessity for the introduction of this bill and I merely endeavoured to ask whether the Senate will have an opportunity before the present sittings terminate to debate the figure recommended by the Tariff Board. I have the following telegram from the Goliath Cement Company in Tasmania -

Tariff Board’s recommendation that local cement manufacturers be prevented from dumping by amendment of Industries Preservation Act on basis price of 51s.6d. sterling c.i.f. Australian ports will not afford us adequate protection particularly in view our transport costs. Price adopted is not based on fair domestic value English cement. Urgently request your support increase basis valuation to minimum of 56s.6d. ton otherwise our industry seriously threatened.

I ask for an assurance that we shall be given an opportunity to discuss the rate of 51s. 6d. a ton c.i.f. Australian ports adopted by the Government. That is a reasonable request, and I trust that it will be granted.

Senator SirGeorge Pearce:

– The honorable senator can raise the subject on the motion for the adjournment.

Senator PAYNE:

– Is another bill to be introduced?

Senator Sir George Pearce:

– Not concerning the decision of the Tariff Board.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Representations can be made to the Minister, who will then decide if they should be brought under the notice of the Tariff Board. There is no need to make such representations, because I know the matter has been discussed, and I am actually responsible for the introduction of this measure.

Senator PAYNE:

– I have also received representations from the Cornwall Coal Company showing the extent to which that company and its staff is dependent upon the operations of the Goliath Cement Company. Its work is so closely allied with that of the cement company that if the production of cement is seriously interfered with the Cornwall Coal Company will also be affected. I trust that the Government will reconsider the subject and reach a decision satisfactory to the cement industry.

Senator LECKIE:
Victoria

.- I congratulate the Government upon introducing this measure in an endeavour to protect the Australian cement manufacturers. If the measure be passed, the Minister will by administrative act and without reference to Parliament decide what shall be done.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Yes, if the power provided in this measure be found to be inadequate.

Senator LECKIE:

– I recognize that an honest attempt is being made to correct a position which has unfortunately arisen in the cement industry. I have perused the Tariff Board’s report, and I am surprised to find that the rate of 51s. 6d. a ton c.i.f. Australian ports is based on an export price of 25s. a ton, freight 26s. 4d. and insurance 2d. On the facts now available, it is clear that the export price of 25s. a ton is a dumping price, and that a fair f.o.b. market price for British cement is 30s. 5d. The amount recommended by the board should be increased to 56s. 6d. a ton. It is difficult to’ understand on what basis the Tariff Board made its recommendation. I believe that if the Government considers all the facts of the case it will grant a fair measure of protection to the cement industry.

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

. - in reply - By way of interjection, I pointed out that this legislation has resulted from certain facts which I personally brought under the notice of the Minister for Trade and Customs (Mr. White). To cite only a portion of the Tariff Board’s report, as Senator Leckie has done, is not quite fair. The whole paragraph upon which the honorable senator based his remarks, reads as follows : -

On the facts now available it is clear that the export price of 25s. sterling per ton is a dumping price-

The honorable senator stopped there, but the paragraph continues - but the board would not consider shipments invoiced at this price as detrimental provided the c.i.f. cost was not below 51s. 6d. per ton. Similarly, a freight of51s.6d. per ton could be regarded as a dumping freight but shipments carried at this rate could not be considered as detrimental if the export price wore the same as the fair market value of 30s.5d. per ton. For these reasons the board is of the opinion that shipments of cement purchased at an export price below the fair market value or carried at a freight below the prevailing rate of freight should not beregarded as detrimental to the local industry unless the c.i.f. price at main Australian ports is below 51s.6d. sterling per ton.

Senator Leckie:

– I ask the Minister to read the preceding paragraph.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– It is-

At the time of the inquiry into the question of duty on cement there was some doubt as to the fair market value in the United Kingdom, the evidence indicating figures from 30s. to 38s. sterling per ton. Since then, investigation by representatives of the Customs Department in London have established that the fair market value is 30s. 5d. per ton. This figure was generally accepted by witnesses at the inquiry.

I do not know what the board’s recommendation was.

Senator Collings:

– The board recommended 51s. 6d. a ton.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– That recommendation has been the subject of representations to the Minister for Trade and Customs who has to determine this matter. The position, as represented by Senator Leckie, seemswrong, and surely the Minister will refer the matter back to the Tariff Board, or will take such action as seems desirable, because he is not bound to accept the board’s recommendations. He is merely seeking full information on the subject.

Senator Sampson:

– Has the Minister any information that this bill will actually prevent dumping?

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I give to honorable senators the assurance that that has been looked into. The full facts of the matter were represented to me, and I passed them on to the Minister who discussed them with the officers of the Trade and Customs and AttorneyGeneral’s departments. It was then found that the weakness in the act, to which I have referred, existed. The Government is endeavouring by this legislation to curtail the operations of those engaged in dumping on the Australian market.

Senator Collings:

– All we ask is thai the Government shall close the door absolutely, and not leave a margin of 5s.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– The Government is anxious only to see that justice is done to the producers of this country, whatever the nature of their production. By this legislation the Government is merely making effective protection which has been found to be ineffective.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2793

SALES TAX AMENDMENT BILL 1936

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Sir George Pearce) read a first time.

Second Reading

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

[5.25]. - I move -

That the bill be now read a second time.

This bill, which was forecast in the budget, is designed to alleviate some of the disabilities and difficulties of sales taxpayers, to simplify the sales tax law, and to remove certain weaknesses in the law that now make evasion possible. It will be observed that the measure is of a somewhat lengthy character. I may explain, however, that this is due to the fact that many of the amendments are repetitive in substance because of the necessity for amending each of the nine Sales Tax Acts, and also the Sales Tax Procedure Act. The amount of wheat in the bill is not to be judged by the quantity of chaff that accompanies it.

The first provision to which I desire to draw attention is clause 60, which provides for the curtailment of retrospective taxation. Briefly, the proposals of the bill in this connexion are -

  1. that a three years’ time limit is to be set on retrospective taxation; and
  2. that no retrospective taxation is to be payable where taxpayers act in accordance with departmental rulings and advices.

The general effect of the first proposal is that sales taxpayers will not be called upon to pay tax more than three years after the close of the month in which a taxable transaction took place, unless they receive a specific notice from the department to pay tax on those sales, &c., within that period. The present law requires the Taxation Department to seek to collect the tax for a period reaching back to the date of the coming into force of the sales tax law, if it finds that a taxpayer has not complied with the full requirements of the law during that period. It may be that this requirement causes serious hardship to taxpayers who, through inadvertence, have not appreciated the incidence of the sales tax law on their business, and who, when required to pay the additional tax, are not in a position to recoup themselves by passing it on to their customers. For that reason, the Government takes the view that a time limit upon the retrospective application of an indirect tax, such as sales tax, is justifiable. As a necessary complement of this proposal, the bill provides for a three years’ time limit upon the making of refunds to taxpayers.

The effect of the second proposal is that taxpayers who accept and act upon the rulings and advices of the Taxation Department will be absolved from any liability to pay retrospective taxation when those rulings or advices are subsequently altered. I think that point was raised when the sales tax legislation was discussed in this chamber some time ago.

A proposal contained in clause 11 of the bill, to empower the Taxation Department to enter into an agreement with a taxpayer for a specified period regarding the method of ascertaining his sales tax obligations, will, it is anticipated, eliminate much of the present cost and inconvenience in connexion with the collection of sales tax.

Clause 17 provides for the making of refunds to effectuate exemptions. Many exemptions are conditional upon the character of the ultimate consumer of the goods, whether government departments, public hospitals, or others. When the taxpayer, whether a manufacturer or wholesaler, sells the goods to a retailer, neither he nor his purchaser is aware that the goods will eventually be sold to a person or authority intended to receive them free of tax. Consequently, the manfacturer or wholesaler, when he sells the goods to the retailer, pays tax which is passed on to the government department, &c., and there is no provision in the law to authorize a refund of the tax. The result is that many hospitals are dealing directly with wholesalers or manufacturers, and cutting out their local retailers. The bill authorizes a refund, or payment equivalent to the amount of the tax, to be made -

  1. To the retailer where he sells the goods free of tax to the person, or authority, intended tobe exempt ;
  2. To the actual person, or authority, intended to be exempt where it is shown that tax was passed on to such person or authority.

The proposal is to enable cases to be prescribed, according to circumstances, in which such refunds or payments may be made.. It is necessary to limit this relief to cases to be prescribed by regulations, because a general statutory provision for that purpose would impose an impracticable task upon the Taxation Department. Only practical experience can determine the cases in which the intended relief can be given without the creation of insuperable administrative difficulties. The cases cited are only a few of those which can be provided for. One other important case is that of the taxpayer who either inadvertently, or unavoidably, pays, or bears, tax on goods which he uses as raw materials for the production of other goods. The general intention of the law is to exempt raw materials, whether used to produce either taxable or exempt goods. The existing regulations to prevent double taxation authorize refunds of tax paid on raw materials for the production of taxable goods, but they do not authorize refunds of tax paid on raw materials for the production of exempt goods. The bill will authorize regulations designed to correct that anomaly.

The granting of relief to certain retailers is provided for in clause 5. The proposals exclude from the category of wholesale, and include in the category of retail -

  1. Sales of goods, to consumers, at a trade discount; and
  2. Sales, by established retailers, of school requisites or sporting equipment to school authorities, or of sporting equipment to sporting clubs, for resale by the school authorities or clubs to their students or members.

Under the existing law, all sales of goods to consumers are retail, unless made at a trade discount. The exception is anomalous, and has proved to be the cause of many difficulties and of serious competitive anomalies. The bill makes provision for the removal of these difficulties and anomalies. It also makes provision for the exemption of goods manufactured wholly or principally from second-hand materials and sold as secondhand goods.

Under clause 14, refunds of tax are to be permitted where registered taxpayers have inadvertently failed to quote their certificates as required. Tax is payable wherever a registration certificate is not, in fact, quoted. Many taxpayers fail to quote their certificates because they are not aware that they are obliged to do so. Consequently, they have to pay, or bear, sales tax which they are not intended to payor bear; because the law contains no provision to authorize refunds of tax in such cases. The bill will authorize the making of refunds in these instances provided that the claimants have not passed the tax on to their customers.

Clause 51 provides for refunds where bad debts are incurred on the leasing of goods. The existing law authorizes refunds where bad debts are incurred in connexion with the sale of goods. Bad debts on leases of goods are equally deserving of this concession.

There are a few other minor provisions for the alleviation of the disabilities suffered by taxpayers. Other provisions relate to purely formal amendments, the curing of obvious defects in the law, and the ratification of the intention of the law in cases in which doubts have arisen.

It will be seen that the bill is substantially in the interests of taxpayers. Numerous complaints by taxpayers and others have been investigated, and the various amendments are now brought forward in order to remove genuine causes for complaint against the law imposing sales tax.

Question resolved in the affirmative.

Bill read a second time and passed through its remaining stages without amendment or debate.

page 2795

STATES GRANTS (UNEMPLOYMENT RELIEF) BILL 1936

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

[5.46]. - I move -

That the bill be now read a second time.

During the last four years unemployment has been decreasing, and the great bulk of the people will, at this Christmastide, enjoy much better conditions than they have of late years. Nevertheless there are still many persons out of employment, and during recent weeks the Government has been giving consideration to the matter of providing them with some measure of Christmas relief. It therefore asks Parliament to grant £150,000 to provide assistance to those whose lot is still difficult because of the lack of employment. It is proposed that this grant shall be distributed amongst the States on a population basis in the following proportions : - New South Wales, £59,200; Victoria, £40,900; Queensland, £21,700; South Australia, £13,000; Western Australia, £10,000, and Tasmania, £5,200. As the Commonwealth Government has no detailed records of the names of persons out of employment in the various States, it is impracticable for the Commonwealth to undertake the distribution of a grant of this nature through its own departments, but the States have labour agencies and all the necessary records to enable them to distribute it equitably. It is therefore proposed that the Commonwealth grant shall’ <be. made to the States, the governments . of which have been asked to . undertake the distribution. It .. is- the intention of the Commonwealth that the States shall be at liberty to distribute the grant either in cash or in kind, and that the basis of distribution within each State shall be left to the discretion of the State government concerned. No provision is , made in the bill for assistance to the unemployed of the Northam Territory, Norfolk Island or the Federal Capital Territory. These territories are under the control of the -Commonwealth, and inquiries are now being made with a view to determining what measure’ of assistance should be given in them. The amount involved for iti territories will not be large, but it may be assumed that assistance will be given in the territories on a basis at least as generous as will be possible in the States under the grant now proposed. It is well known to honorable senators that every State does make some special provision within its ‘ own borders for its own unemployed, and it is not pretended that this measure represents the whole assistance which will be given. The vote now proposed is supplementary to what the States themselves- will provide. I commend the bill to the sympathetic consideration of the Senate.

Senator COLLINGS:
Queensland

– The Opposition welcomes this bill. If it has any regret at all it is that the amount is not larger, but we are glad to. see. even this gesture made by the Government towards these unfortunate people who happen to be unemployed. Will legislation be necessary to authorize the grants which, the Minister indicated, will be made in the territories, or can the matter be handled administratively?

Senator Sir George Pearce:

– No legislation will be necessary in those cases.

Senator COLLINGS:

– The Opposition will be pleased to expedite the passage of the bill.

Senator E B JOHNSTON:
Western Australia

.- The Country party welcomes this bill. The only complaint t have to make is that the vote is not larger. In view of the approach of the Christmas season - even now the Christmas spirit prevails in this chamber - the Government might well have made the amount £250,000, and I ask it, even at this late hour, to consider whether that can be done. I recall that in 1930 in quite different circumstances the Scullin Government provided £500,000 for relief at Christmas time, and £275,000 in the following year. It may be that under the wise guidance of this Government, or because of the improved economic conditions, the necessity for such relief is now much less. I support the measure, whilst reiterating my personal opinion that the amount should be increased to £250,000.

Senator BADMAN:
South Australia

– I think the Government has done a generous act in providing this amount for the unemployed. It is interesting to review the unemployment figures prevailing at different times during the regime of the Lyons Government. In 1932, when it first occupied the Treasury bench, it found 30 per cent, of the registered trade unionists of Australia unemployed. The day before yesterday I inquired of the Prime Minister’s Department for the latest figures, because statements have been made recently that much unemployment still exists, and that the amount provided by this bill is far from sufficient, amounting probably to less than £1 a head. Those assertions are not supported by the facts. I find that in September, 1935, only 15 per cent, of the registered trade unionists of Australia were unemployed, whilst at the end of the September quarter of this year the percentage had fallen to twelve. These figures show a great decline of unemployment. Evidently the rising tide of prosperity is bearing us back to the conditions of 1928, in which year the percentage of such unemployment was only 9.3. I consider that the Government has done quite a good deed on this occasion. By means of its administration it has done much towards the restoration of that confidence which is so necessary in order to create full employment in the community.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2797

TRADE AGREEMENT (FRANCE) BILL 1936

Second Reading

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

– I move -

That the hill be now read a second time.

I have pleasure in submitting this measure, which is designed to approve a trade agreement with France. This agreement is the third which has been entered into with a foreign country in pursuance of the Government’s trade agreements policy. The considerations which moved the Government to enter into negotiations with foreign countries were stated in this chamber on the occasion of the submission of the recent agreements with Czechoslovakia and Belgium, and I shall, therefore, limit my remarks to-day to the trading position with France, and the provisions of the agreement with that country. France’s demand for wool is exceeded only by that of the United Kingdom and the United States of America, and, with the exception of the United Kingdom, France imports more fleece wool than any other country. Up to 1933 France’s imports averaged over 1,600,000 bales annually, but imports declined considerably in later years, this being partly due to exchange difficulties. In addition to its great import of fleece wool, France imports large quantities of woolled skins, the annual imports of wool in this form being . equivalent to about 170,000 bales. Although direct imports of Australian wool to France have declined greatly since 1933, France has for a long time been one of the largest consumers of Australian wool and the greatest buyer of sheepskins. Australian trade with France, which is confined almost entirely to wool and sheepskins, is overwhelmingly in Australia’s favour. Since 1913, when Australia withdrew from the Anglo-French commerci(al agreement of 1826, Australia has not been entitled to most-favoured-nation treatment in respect of its goods exported to France. Owing to the absence of an agreement, Australian products have thus for many years been liable to the maximum duties in France, which are two or three times the minimum rates, with a few exceptions such as wool and sheep skins. According to Australian statistics, exports to France during 1935-36 were valued at £5,137,000 sterling, and imports at £790,000 sterling. The French statistics reveal a much greater balance in favour of Australia, due to large indirect imports of wool. The French figures for 1935 show imports from Australia equivalent to £8,890,000 sterling, and exports to Australia of £600,000 sterling. It is the accepted practice in trade treaty negotiations to use the import figures of each country as the measure of the trade between them, and on this basis the trading position with France is more than eleven to one in Australia’s favour. Our purchases from France have declined very considerably during the last few years, despite the expansion of our total imports due to Australia’s economic recovery. In 19=28-29, imports from France amounted to over £4,000,000; in 1935-36, they were £790,000, a decline of 80 per cent. The most noticeable fall is in respect of silk and artificial silk piece goods, from £1,000,000 to £40,000. The recent decision of the French Government to devalue the franc is welcomed, as it is considered that the French monetary policy, which made French goods relatively dear in the Australian market, was mainly responsible for the decline of French imports. The devaluation was accompanied by a general reduction of duties and the abolition of certain import quotas. Although the products affected are not of great interest to Australia, it is hoped that,, as the international monetary position becomes stabilized, the quota restrictions will gradually disappear and there will be a freer flow of trade between France and Australia.

The maximum duties, the exchange surtax of 15 per cent., the high import tax - equivalent to the Australian primage tax - and the exclusion of Australia from quotas on many classes of goods amounted in effect to prohibition of all but a few Australian products. This was the position prior to the negotiation of the agreement with France, which was signed last week. Under the terms of the agreement the Commonwealth Government undertakes -

  1. To accord France mostfavouredforeignnation treatment with respect to customs duties. .
  2. The grant of the Australian intermediate tariff rates on 96 tariff items or sub-items.
  3. A reduction of primage duties on 72 tariff items or sub-items.
  4. To refer sixteen items to the Tariff Board for public inquiry and report.
  5. A consolidation for one year of the duties on high-power insulators for use in the manufacture of electric switchgear and transformers.
  6. To use its best endeavours with the Australian viticultural industry to ensure the marketing of Australian wines in a manner which will proclaim their Australian origin.

The intermediate rates to be accorded to France are supported except in a few minor instances in which special circumstances obtain, by recommendations from the Tariff Board. In return for concessions granted by Australia, full details of which are given in the explanatory memorandum circulated for the information of honorable senators, the French Government has agreed to accord the following benefits to Australian exports : -

  1. The grant of the French minimum tariff duties on twenty items; that is to say, the lowest rates of duty accorded to any other country. Wool, hides and skins, wheat, barley,, apples, meat, metals and a number of other products are included in the list.
  2. The abolition of the special retaliatory duties of 200 per cent. of the French maximum tariff on butter and wheat.
  3. The abolition of exchange surtax of 15 per cent. ad valorem on all Australian goods.
  4. The reduction of the import tax on Australian products to a flat rate of 2 per cent.

There are some items on which France, although granting the minimum tariff, has been unable to grant quotas. In such instances, the French Government has undertaken to examine with goodwill any request which the Commonwealth Government may make to France for a percentage of the global quota. Definite quota allotments have been obtained for barley and apples. These will permit an annual importation of 20,000 quintals of Australian barley, equivalent to about 88,000 bushels, and about 64,500 bushel cases of Australian apples. The agreement is for one year, and will continue thereafter subject to termination on two months’ notice from either party.

Honorable senators will see that in the notes constituting the agreement the question of wine appellations has been mentioned. The French Government has for many years, in its commercial negotiations with other countries, endeavoured to obtain from them undertakings that the use of wine names bearing the names of French districts shall be prohibited. The efforts of the French Government in this direction have been successful in a. number of instances, the most notable exceptions being the agreements with Great Britain and the United States of America. The insistence of the French. Government on some measure of recognition of its demands in this direction for some time jeopardized the prospect of an agreement with France; but, as the result of personal discussions at Paris between the Minister directing negotiations for trade treaties (Sir Henry Gullett) and the French authorities, the French demands on this subject were withdrawn. The French view has already been placed before representatives of the Australian viticultural industry, who have signified their willingness to co-operate with the Commonwealth Government in the matter of labelling Australian wines in such a manner as will clearly indicate their Australian origin.

The bill to approve the agreement will do much to improve the commercial relations of the Commonwealth with a great wool-buying country. I, therefore, ask honorable senators to support the measure.

Senator HARDY:
New South Wales

– On behalf of the Country party in the Senate I welcome this trade treaty with France as a sign of an increased export trade, although I am reluctant to see trade expressed in terms of actual law, and in the numerous articles which form the foundation of this treaty.

Although I admit the necessity, I regret that Australia has found it necessary to enter into bi-lateral trade agreements. Such agreements appear to me to degenerate gradually into haggling and bargaining; because, in weighing up trade between two countries, setting credits against debits, we must ultimately make another contribution towards the principle of economic nationalism. “Whilst I do not criticize the action of the Government in this particular agreement, I believe that every effort should be made to attack the problem on a much wider basis. Admittedly, the scope of the Government in this matter is limited. One of the greatest factors encouraging trade between nations to-day is the stabilization of currency. This agreement has become possible because France has devalued the franc, with consequent advantage to, not only itself and other nations, but also Australia. I had the opportunity to-day to check up certain figures in regard to world trade; they disclose that the volume of international trade has steadily increased during the past three years. One of the most encouraging factors in this connexion is that, for the first time since 1929, there has been an increase, not of the volume, but of the value, of world trade. Last year was the first occasion since 1929 that the value of world trade rose. Although a good deal has been said about stabilization, a further analysis of world trade shows that, in 1934, only 40 per cent, of the total volume was conducted, on a basis of stable currencies. Last year the position had considerably altered, and the figure rose to HQ per cent. That was a wonderful improvement. With the devaluation of the currency of the gold bloc countries, ir is anticipated that over 90 per cent, of world trade will be carried out on a stable currency. The explanation of our inability to increase out trade with gold-bloc countries, such as France - and the Minister in charge of the bill (Senator A. J. McLachlan) showed how that trade had depreciated - is that the currency barrier of those countries operated to cause trade restrictions, quotas, &c. The devaluation of the franc by France, followed by similar actions by Switzerland and Holland, is not only one of the brightest international events of the year, but is also an encouraging factor in regard to our external trade relations. The annual report of the directors of the Bank of New South Wales deals with the devaluation of the currency of these countries, and its likely repercussions in Australia. Honorable senators are apt to overlook the barriers which are raised through the medium of different and fluctuating currencies. One has only to analyse the Overseas Trade Bulletin to ascertain how much greater was the trade that France enjoyed a few years ago than it is to-day. What is the reason for the decline % The average person will contend that the explanation lies in the fact that France placed a number of quotas on imported goods, or hedged itself around with restrictions which other countries found impossible to break down. However, honorable senators must seek a further reason than that. They should ask themselves why these quotas were introduced in order to restrict imports. The action of France in imposing quotas is linked with currency itself. By its adherence to the gold standard, France followed a definite deflationary policy. That, in turn, meant a decrease of its exports, and, in order to prevent social unrest within their borders, the French, whether they liked it or not, were compelled to tread a path of economic nationalism. In 1925-26, exports from Australia to France exceeded £18,000,000; in 1934-35 they had declined to £4,000,000. Certain honorable senators have decried the failure of the World Economic Conference held in 1933; but I sometimes think, when people speak glibly of restoring international trade, that the effect, of stabilized currency is not truly appreciated. It is the actual foundation which must first be created, if trade is to be permitted to flow freely between nations. T have shown that, in 1934, 40 per cent, of the world’s trade was conducted on a stable exchange rate, and, on this basis, it rose in the following year to 80 per cent. Without hesitation, I hail the decision of France to devalue the franc as one of the greatest events in world history during the last two years. It is particularly interesting to note that tha devaluation was carried out with the cooperation and assistance of two grim/. countries, Great Britain and the United States of America. Both of them are pledged to the principle of international trade, and both realize the value of that trade as the medium for world recovery. Their policies havebeen based on a realization of the fact that world recovery cannot be achieved until international trade is made to flow freely. In effect, Great Britain and the United States of America assured France that if it devalued the franc, they would not take any action designed to offset the advantages of that devaluation.

I direct attention to a. paragraph in the annual report of the Bank of New South Wales-

As measures likely to promote world trade still further, the depreciation of the French and Swiss francs, the guilder and the lira, and the accompanying stabilization agreement, are the most hopeful events of the past year. The countries which have devalued will reap obviousbenefits. Their export industries will be able to compete on better terms in foreign markets.

That is most important. France’s export trade has steadily dwindled during the last ten years. In 1925 Australia imported nearly £4.000,000 worth of French goods; in 1934-35 that trade had decreased to less than £1,000,000. The paragraph continues -

Home industries will be relieved of the deflationary pressure, which was made necessary by the over-valued state of the currency, and will also share any increased prosperity accruing to the export industries. Capital willbe repatriated and used for productive purposes. Tourist traffic will be restored.

The tourist traffic means a good deal financially to France -

Government revenues will increase, lessening the difficulties of balancing budgets. The effects upon the economies of the gold bloc will be essentially the same as the advantages accruing to Australia and New Zealand through the raising of their exchange rates early in the depression, which was a similar step.

Sitting suspended from 6.15 to 8 p.m.

Senator HARDY:

– The extract continues -

As far as its wider aspects are concerned, the effect of the devaluation should be equally beneficial to the rest of the world. I think the rather narrow-minded view that, because currency depreciation gives a country a trading advantage, it must of necessity injure other countries, has been proved to be wrong. Ithas been a significant fact that British trade with countries that have allowed their currencies to depart from the old gold parity has improved, while trade with the gold bloc countries has steadily deteriorated. The reason is that the deflation thathas been necessary in the gold countries has so exhausted the purchasing power of these countries that they cannot afford to buy abroad. This in turn has led to trade restrictions in an endeavour to retain for local industry an increasing share of the shrinking local market, since export has become difficult.

I think that in the welter of adjustments which have occurred amongst the nations in the last few years the most outstanding has been the contraction of trade in the gold bloc countries. The contraction has been to an extent greater than we can realize in Australia, and it has been more directly responsible for the introduction of high tariffs and other trade restrictions than has any other factor. The effect of that trade contraction was felt in France, I think, more than in any other country. It is only recently that France has departed from the gold standard. The following is an authoritative table showing the economic position of France as one of the gold bloc countries in the last few years : -

Senator Collings:

– What bearing has that on this?

Senator HARDY:

– It has a definite bearing on the agreement which we are discussing. We are discussing trade with France, and I have advocated repeatedly in this Senate that the only way in which we can increase our export and import trade with that country is to remove currency disabilities. Many honorable senators would say that an ordinary Australian tariff rate of 25 per cent. British and 50 per cent. foreign does not create a barrier, but, if they work it out by comparision of the gold standard with the Australian currency, they will see that it does. The duty on that basis against goods imported would be 63.5 per cent. from Britain, 91 per cent. from the United States of America, 12.6 per cent. from Japan, which has a depreciated currency in relation to the Australian pound, and 211 per cent. from France, Switzerland and Belgium. Is it any wonder then that we have advocated constantly stabilization of currency by means of a resumption of trade on the basis of the 1925-29 figures. There is no reason to contend that because a “world economic conference failed once it would fail again. Last year 80 per cent, of the world trade was carried out under stabilized currency arrangements, and I trust that the day is not far distant when the currencies of the whole world will be stabilized.

Senator Brown:

– Does the honorable senator think that that would solve trade difficulties ?

Senator HARDY:

– It would solve some of them.

Senator Collings:

– Does the honorable senator want the world to return to the gold standard?

Senator HARDY:

– I do not, but the agreement shows that the result of the devaluation of the franc has been beneficial to the trade, not only of Trance itself, but also of all. other countries which trade with it. Its action has not only caused domestic expansion but has also removed the shackles on international trade which were imposed by its adherence to the gold standard. Immediately after the devaluation of the franc Prance removed the whole of the surtax of .15 per cent, which it had imposed on imports in order to make up tin; differences in exchange. I contend that France has done the right thing. It is interesting to note from the agreement that, prior to its departure from the gold standard, France had imposed a quota on 750 classifications of goods. Because of its operation, we were unable to participate in its trade in barley and several other primary products of which Australia, is a supplier. These classifications have now been reduced to 104. The French policy of reducing the number of classifications does not apply particularly to Australia, but is a part of the most-favoured nation treaty clause, and applies to all countries with which France is able to trade. This matter cannot be weighed in terms of actual trade- That is why I did not speak on the Trade Agreement (Belgium) Bill or the Trade Agreement (Czechoslovakia) Bill, because, the total trade concerned in those agreements was : Exports 6 per cent, and imports 1.7 per cent, of Australia’s total trade. The significance of this agreement is that the volume of international trade is increasing, and I urge the Senate to consider the matter in that light. I point out to the Leader of the Senate (Senator Pearce) that this is the appropriate time to extend the application of the exchange adjustment legislation to remove the very great disability that exists in trade with foreign countries. A formula exists which gives the benefit of exchange . adjustment to British countries but not to foreign countries, and I contend that that is wrong in principle, because it represents a barrier to trade which must come down. If the Commonwealth acted as I have suggested, it would be making a gesture to foreign countries which would be appreciated.

Senator E B JOHNSTON:
Western Australia

– I congratulate the Government and the Minister directing negotiations for trade treaties (Sir Henry Gullett) upon the completion of this trade agreement. I have had occasion to criticize the Government very severely in connexion with its trade policy directed against another nation, but I commend it for the spirit it has shown in the negotiation of this very satisfactory agreement - a spirit which it should emulate in its dealings with other good customer nations. France is one of our best European markets for a large number of our primary products. l.t has agreed to accord the minimum tariff duties on twenty items of Australian exports, including wool, hides and skins, wheat, barley, apples, meat, metals and a number of other products. This is an entirely satisfactory provision. It has been pointed out that, according to the Australian statistics, Australian exports to France last year were valued at £5,157,000 sterling, whilst imports were valued at only £790,000 sterling. However, the “French statistics show rather a different picture, and one more favorable to Australia, because they reveal that, largely clue to indirect imports of wool, Australian exports to France were valued at the equivalent of £8,S90,000 sterling, whilst imports of goods into Australia from France were worth only £600,000 sterling. These figures are typical of the favorable trade balance which Australia has had with France for several years. I think that the balance has been more than eleven to one in Australia’s favour. The Minister has pointed out that, under the treaty, the Commonwealth undertakes, amongst other things, to accord France the mostfavored foreign nation treatment with respect to customs duties. In view of the satisfactory trade balance that we have with France, that is a very proper action to take. But when I peruse the schedule, which shows the benefits which we are giving to France, I am struck with the treatment which it receives from us with regard to spirituous liquors which are made in France and exported to Australia. As a matter of fact, we are according France, in regard to its liquors, much more favorable treatment than we afford to Great Britain in regard to spirituous liquors which are made in that country and exported to Australia. I am always glad to see a reduction of duties, even when, as in this case, what are regarded as being necessary revenue duties, have been lowered. Under the agreement, the duty on French brandy is reduced from 41s. to 36s. a gallon, and primage is reduced by 3s. a gallon when the product is valued at 30s. a gallon and by 4s. when the product is valued at £2 a gallon.

Senator Hardy:

– ‘What is wrong in that?

Senator E B JOHNSTON:

– I am not complaining, but I wish to see the reductions of duty and the remissions of primage extended to Great Britain.

Senator Collings:

– Then why labour it?

Senator E B JOHNSTON:

– Because I want to know whether the Government intends to extend this policy by giving similar relief to British and Australian distilleries. The total reduction of duty on French brandy is at least 9s. a gallon. -The excise charged on brandy of Australian manufacture, from the product of the Australian grapegrower, is 26s. a gallon. We have given a reduction of 9s. to France if the liquor is worth £2 a gallon. I want to know whether a corresponding reduction of excise is to be granted to the Australian manufacturer of this product-

Senator Collings:

– There is nothing in the bill dealing with Australian brandy.

Senator E B JOHNSTON:

– That is so, but I have a right to draw attention to the fact that we are making a big remission of duty to France, and to ask that a similar excise concession of 9s. a gallon on spirits be given to Australia. I want to see the existing protection for the Australian producer retained. Brandy is necessary for the protection of the health of our people, and I do not want to see the Australian trade suffer through any alteration of the existing position. The duty on French liqueurs has been reduced from 42s. to 31s. a gallon, in addition to which primage of 6s. a gallon, on an average price of £2 15s. to £3 a gallon, is” also waived. Therefore a concession of 17s. a gallon is being granted to the producers of the many high class French liqueurs. Are the Australian manufacturers who produce an excellent range of liqueurs also to receive a concession on the excise of 28s. a gallon now paid to the Commonwealth ? Are they to receive a reduction equivalent to the 17s. a gallon granted to the manufacturers of French liqueurs in order to assist the development of the local industry? I urge that this should be done. The average value of French sparkling wines for customs purposes is 30s. a gallon. Excise of 20s. a gallon is charged on artificially sweetened wine. Under this agreement the duty on French sparkling wines is to be reduced from 38s. to 30s. a gallon and primage of 3s. a gallon is also to be remitted, thereby conferring a benefit of lis. a gallon on French manufacturers or exporters. Champagne is a luxury consumed only, I believe, by the wealthy, and from which the Government receives a considerable revenue. As it is forgoing some .of this revenue, I trust that it will extend similar sympathetic consideration to the manufacturers of British spirits, which are not perhaps the same type, but subject to similar duties. The remissions which the Government has made in this agreement will create extraordinary anomalies, particularly when revenue duties are compared with those imposed on spirituous liquors imported from Great Britain. For instance, the duty on British whisky is 40s. a gallon and primage 10 per cent., which may be 3s. or 4s. a gallon according to the quality of the spirit. When we compare the duty on Britishwhisky of 40s. a gallon, plus 4s. primage, with the duty of 36s. a gallon imposed on French brandy, it will be seen that unless the duty on British whisky is reduced to an amount equivalent to that imposed on French brandy and the primage is also reduced, we shall be encouraging the Australian people, on the basis of price if not of taste, to transfer their patronage from the product of the Motherland to the product of France. We should compare the duty of 40s. a gallon on British gin and primage of 10 per cent. with the duties imposed on French liqueurs which have been reduced by 17s. a gallon. On blended rum a duty of 37s. a gallon is imposed and primage of 10 per cent. when imported from Empire countries. The concessions given to France under this agreement should be given in the form of reduced excise on Australian spirits, which have to compete with the French products. Under the Ottawa Agreement we agreed to reduce the primage on British exports as soon as the finances permitted. Under this measure we are reducing substantially the duty and wholly abolishing the primage on French liquors, but so far have failed to reduce the primage, or the duty on the spirits produced in the Motherland. If primage was waived as it has been on French brandy, champagne and wines, it should not be imposed on British whisky and gin, particularly when we remember that the Ottawa Agreement provides that primage should be reduced on British products so soon as the Government could afford to do so. Had the financial position of the Commonwealth not been satisfactory these concessions could not have been given to France. In these circumstances, I trust that the Government will extend similar consideration to the distillers of British spirits. French brandy which has been treated so generously competes with the Australian product in this market, and unless the Government acts in the direction I suggest, what is its object in reducing these duties? This agreement will assist to popularize the consumption of French brandy at the expense not only of Australian brandy, but also of Scotch and Australian whisky and British gin. The policy of the Go vernment of waiving revenue obtained from French luxury items should be extended to the British distillers, and to the Australian distillers, and grapegrowers. To be consistent the Government should reduce the duty and primage on British whisky and gin to the rates it has agreed upon in respect of French brandy and liqueurs. I urge the Government to reduce the excise of 26s. a gallon on Australian brandy to correspond with the reduction of 5s. a gallon and 10 per cent. primage, which represents a reduction of 9s. a gallon on French brandy. Although these duties have been regarded primarily as revenue dutiesthe protective incidence of the tariff should be retained. The excise on Australian brandy and liqueurs, which will meet with intense competition from French brandy and liqueurs, should be reduced by 9s. a gallon, which would be equivalent to the reduction granted on the French product. If these reductions were made the revenue would not suffer; when the excise on beer was reduced by 3d. a gallon the revenue from that source actually increased. A reduction of excise does not necessarily mean a reduction of revenue, and the benefit would be passed on by the retailers to the consumers, as was done in connexion with beer. I support the measure, but I protest against a higher duty being imposed on Scotch whisky than is to be imposed on French liqueurs and brandy. I trust that the relief of 8s. a gallon given in respect of French brandy will also be made in respect of the excise on Australian brandy, whisky, and other spirits.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

.- I should like the Minister to explain why these concessions have been granted to France. A large number of persons engaged in the production of grapes and in manufacturing wine, brandy and whisky, particularly in South Australia, are struggling to place their products on overseas markets, and it seems strange that we should be extending concessions to French distillers, who are our greatest competitors. As similar concessions are not extended to manufacturers in Great Britain and in Australia, perhaps the Minister will explain why the duties on the French products have been reduced.

Senator MARWICK:
Western Australia

– I congratulate the Government upon having entered into this satisfactory trade agreement with France, because its adoption will be the means of restoring to a certain section of our primary producers the valuable market they had until the lamentable Scullin tariff was introduced. When Senator Hardy was debating this subject from the viewpoint of the primary producers the Leader of the Opposition asked if he was stone-walling the bill. I listened patiently to the speech of the Leader of the Opposition, but it appeared to me that he was merely blowing political bubbles. The three trade treaties into which the Commonwealth Government has entered should be of great benefit to our primary producers. I look upon trade wars as being hardly less . destructive than military wars, only they are not so ghastly. I hope that the conclusion of these trade treaties will mark the beginning of an era of better international understanding.

SenatorCollings. - Is the honorable senator quite sure that this sort of thing is not likely to create more trade wars?

Senator MARWICK:

– No, not if there is a reasonable spirit of give and take. As a result of this agreement, France will once more admit, on favorable terms, our wool, hides, barley, wheat, &c. Australia, which is naturally a primaryproducing country, and inhabited by the finest people in the world, will haveno difficulty in holding its own in the markets of the world if the trade barriers are swept away. We shall then be able to show that we can produce as cheaplyas can any other country. Ifwe are able to confine imports from France to luxury items, very little harm will be done to our own industries. Up to the time when the trade dispute began with France a few years ago, that country was one of our best customers, and I am glad that it has now been found possible to make a satisfactory arrangement with it.

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

. - in reply - Honorable senators need not be apprehensive that the Australian wine and spirit industry will be injured as the result of this agreement. In the case of brandy, the import duty will still be 10s. a gallonmore than the excise on Australianmade brandy. Bearing in mind the excellent quality of the brandy produced in Australia, particularly in the State from which I come, I have no doubt whatever that 10s. a gallon will be sufficient protection. On wine in the bottle, the margin of protection will be 12s. a gallon, equal to 2s. a bottle, which, I am convinced, will provide adequate protection for wine of the excellent quality produced in Australia. If we are to reap the benefits from this agreement which we all desire, we must be prepared to give something away. If France is unable to sell anything to us, it is not likely to go on taking our barley, sheepskins, wool, wheat, &c. The wineproducing industry in Australia is in quite a satisfactory condition. This is a bargain between Australia and France, and does not affect our fiscal arrangements in regard to other countries. I have no doubt that many benefits will be derived, because I know of no nation which responds more quickly than does France to a. friendly gesture, even so small a one as this.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2804

AUSTRALIAN SOLDIERS’ REPATRIATION BILL 1936

Assent reported.

page 2804

CUSTOMS TARIFF (No. 4) 1936

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator A. J. McLachlan) read a first time.

Second Reading

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

– I move -

That the bill be now read a second time.

The object of this bill is to give effect to the tariff alterations which are necessary consequent on the trade agreement with France. The principal alteration is the provision of intermediate tariff rates for the benefit of France.

However, where an intermediate tariff rate has been provided in relation to goods that are subject to protective duties, it is at a level which is not lower than that which the Tariff Board considers necessary for the protection of Australian industry against importations from foreign countries. In a small number of cases outside the scope of the trade agreement with France, items have been amended. These were instances in which the items were included in the same Tariff Board report as items under the trade agreement in question. A special note has been made of these cases in the memorandum circulated for the information of honorable senators.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without requests or debate.

page 2805

CUSTOMS TARIFF (EXCHANGE ADJUSTMENT) BILL (No.4) 1936

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on. motion by Senator A. J. McLachlan) read a first tune.

Second Reading

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

– I move -

That the bill be now read a second time.

The purpose of this bill is to eliminate from the operation of the Customs Tariff (Exchange Adjustment) Act those items and parts of items for which provision for exchange fluctuation is now made in the items themselves. It is really only a machinery measure, complementary to the alterations that have been made in relation to exchange in the Customs Tariff Bill No. 4, which has just been approved by the Senate.

Question resolved in the affirmative.

Bill read a second time and passed through its remaining stages without amendment or debate.

page 2805

PAPUA AND NEW GUINEA BOUNTIES BILL 1936

Second Reading

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

– I move -

That the bill be now read a second time.

This measure merely has the effect of extending for a period of one year the existing bounty legislation. In 1926, an act was passed to provide a bounty on certain tropical products produced in Papua and New Guinea and exported to the Commonwealth, the object being to encourage a diversification of agricultural production. Honorable senators will, I am sure, agree with me, when I say that it is economically unsound for the prosperity of the territories to depend upon one or two crops.

The products on which bounty is payable under existing legislation are cocoa beans, manila and coir fibre, sisal hemp fibre, sago, vanilla beans, kapok, unground spices, and bamboos and rattans. Unfortunately the results of the legislation have been extremelydisappointing. Of the total amount of £250,000 provided in 1926 for payment of bounty over the ten-year period, only £8,783 was claimed during the nine and a half years ended the 30th June last.

Many reasons have been advanced for the failure of planters in the territories to take advantage of the rather generous bounty provisions. It is proposed, during the extended period provided for in this bill, to set up a small committee of investigation to examine the position. The committee will operate under the direction of the Comptroller-General of

Customs, and will consist of an officer of the Customs Department, an agricultural expert of the territorial service, and a representative of each of the territorial administrations. A report and recommendation as to the form and nature of assistance most likely to encourage the production of subsidiary crops will be submitted to the Government. The Government is disappointed at the lack of success of the existing legislation, and feels that the proposed procedure offers the most promising means of arriving at some more satisfactory result. The extension of the period of the bounty legislation to cover the time necessary for the committee to carry out its investigations is proposed in order that those planters who have been encouraged by the bounty to invest capital and set up plantations may not suffer loss or hardship through the cessation of bounty payments. I commend the bill to the approval of honorable senators.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2806

CUSTOMS BILL 1936

Second Reading

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

– I move -

That the bill be now read a second time. This bill embodies an amendment of the machinery for administering the tariff, that has been rendered necessary by the reinstatement of an intermediate column in the Tariff Schedule and the grant of the intermediate tariff to certain foreign countries in pursuance of the trade agreements recently submitted to the Parliament for approval.

Section 151a of the Customs Act lays down in a general way the amount of United Kingdom labour and material to lie contained in goods, and other conditions to be fulfilled before goods imported from the United Kingdom are deemed to be goods produced or manufactured in the United Kingdom for purposes of entry under the British preferential tariff.

The bill inserts a new section in the Customs Act empowering the GovernorGeneral to make regulations prescribing the conditions to be fulfilled before goods imported from a country granted the benefits of the intermediate tariff rates shall be deemed to be the produce or manufacture of that country. Owing to the great and varying range of goods imported from many countries under different circumstances, it is a practical impossibility to envisage what conditions should be reasonably and appropriately applied to cover all circumstances. To meet this difficulty it is proposed in the initial stages of administration to commence with liberal requirements, accepting goods which are substantially pro duced or manufactured in those countries as being the product of those countries. At the same time, it is necessary, as a protection against abuses, that flexibility should exist in the early stages of administration while working principles are being established.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2806

CUSTOMS TARIFF (PAPUA AND NEW GUINEA PREFERENCE) 1936

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator A. J. McLachlan) read a first time.

Second Reading

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

– I move -

That the bill be now read a second time.

The principal object of this bill is to remove a minor anomaly which has long existed in the tariff relations of the Commonwealth and the territories under its jurisdiction. Preferential tariff treatment was first extended to the territories in 1926, when provision was made for free admission of all the major products of the territories. In the absence of special legislation covering other territorial products they became technically dutiable at general tariff rates. It thus happens occasionally that some products of the territories are subject to higher rates of duty than are payable on similar goods imported from neighbouring British colonies. It is sought to remove this anomaly by providing that all goods not specified in the schedule shall be subject to the duties in force under the British preferential tariff. It is anticipated that the change will have very little practical significance. The value of imports of dutiable goods from Papua in 1934-35 amounted to only £70 in a total value of imports of £115,926, whilst in the case of New Guinea they were valued at £244 in a total value of imports of £76,684.

The Government is also availing itself of this opportunity to consolidate in a single schedule all the duties relating to

Papua and New Guinea. At the present time duties are imposed on some territorial products under the main customs tariff schedule. Other items are provided for in the Papua and New Guinea preference tariff. This bill brings all items together in a single schedule. Apart from the proposal to apply the British preferential tariff to commodities not specified in the schedule, the duties at present applicable to Papuan and NewGuinea goods remain unaltered with a single exception, namely the duty on tea. With regard to tea, the Administrator of Papua is impressed with the possibility of successfully producing tea in that territory. The Government proposes to encourage the project by according a special rate of1d. per lb. on territorial tea imported in bulk which otherwise would be subject to the duty of 3d. per lb., payable under the British preferential tariff.

A further provision of the bill is designed to. cover goods imported into the Commonwealth indirectly through the territories. This is merely a machinery measure designed to cover a position which has arisen since the development of aerial transport and gold-mining in the territories. Instances have occurred in which goods, which first went to the territories and were subsequently transferred to the Commonwealth, have been required to pay the general tariff duty, although they would have been correctly dutiable at the British preferential tariff had. they first been landed in the Commonwealth. A similar arrangement applies to goods landed first in New Zealand and subsequently transferred to the Commonwealth. No good reason exists for not extending a similar arrangement to goods imported indirectly into the Commonwealth through the territories.

Question resolved in the affirmative.

Bill read a second time and passed through its remaining stages without requests or debate.

page 2807

AIR NAVIGATION BILL 1936

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Sir George Pearce) read a first time.

page 2807

COLONIAL LIGHT DUES (RATES) BILL 1936

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

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

page 2807

WINE OVERSEAS MARKETING BILL 1936

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

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

page 2807

COINAGE BILL 1936

Second Reading

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

[9.16].- I move-

That the bill be now read a second time.

The Government has decided to issue a crown-piece to commemorate the coronation of His Majesty King Edward VIII., and as our Coinage Act does not provide for the issue of an Australian coin of this denomination, it becomes necessary to amend that act in order to implement the decision of the Government. The proposed amendment of the act for that purpose also presents an opportunity to alter the remedy allowance in connexion with the minting of our silver coins. This is the first occasion on which a crown-piece has been issued in our currency. It is. of course an old coin in England, having been issued first in 1551, during the reign of Edward VI. The English crown-piece has, since the time of Charles II., generally had an inscription on the edge, the practice of edge lettering having been adopted in those earlier days to prevent clipping of the coin. That practice was changed in 1927, when the British crown was issued with a milled edge. The Government proposes to adopt the milled edge for the Australian coin. The obverse design will, of course, be the King’s head.For the reverse, a crown has been chosen as the most suitable design. The crown will be surrounded for three-quarters of the periphery of the coin by the lettering “ Commonwealth of Australia “ and underneath the crown will appear the words “ one crown “.

The alteration proposed in the remedy allowance will bring our practice into line with that of European countries, and with that adopted for the new coinage recently minted for the Mandated Territory of New Guinea. The remedy allowance, as honorable senators probably know, is the amount by which coins are legally allowed to vary above or below the standards of weight or fineness. Under the existing law, the remedy applies to individual coins, so that coins which are only barely heavier or barely lighter than the weights allowed by the remedy have to be melted down. The amendment now submitted, which has been suggested by the Deputy-Master of the Royal Mint, Melbourne, will enable the remedy to be applied in bulk, thus saving individual coins which are only slightly outside the remedy at present prescribed. It is proposed to apply this bulk remedy to the minting of silver and bronze only. The gold coins will be tested for weight and fineness in regard to each coin, as at present provided for in the Coinage Act.

The bulk remedy allowance as set forth in the schedule which, as I have said, will apply to silver and bronze only, means, for example, that instead of weighing individual coins, the coins will be weighed in bulk. In regard to, say, the florin, the allowable variation in weight will be the weight of one florin in 175 such coins. The bill is a simple measure, and I believe its main purpose will appeal to honorable senators.

Question resolved in the affirmative.

Bill read a second time and passed through its remaining stages without amendment or debate.

page 2808

COMMONWEALTH RAILWAYS BILL 1936

Second Reading

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

[9.23].- I move-

That the bill be now read a second time.

The need for the amendment of the Commonwealth Railways Act has become apparent in order to clarify the position of the Commonwealth Railways Commissioner in relation to railway lands, and to meet conditions as they exist to-day in regard to competition from motor traffic. The bill now before the Senate contains amendments dealing with those subjects, and also several other amendments relating to staff and general railway matters. The bill is mainly of a machinery character; but a few observations on the various clauses will give to honorable senators an idea of the reasons which prompted the Government to submit the measure for the approval of Parliament.

Clause 2 is designed to ensure that all Commonwealth railways and rolling stock shall be vested in the Commonwealth Railways Commissioner, and, in respect of the lands, provision is made for an estate in fee simple. This is actually the position at the present time with respect to Commonwealth railways, except for a small portion of the railway between Katherine and Pine Creek, in the Northern Territory. The object of clause 2 is, therefore, to ensure that the property rights in respect of that portion will be similar to other sections of the Commonwealth railways.

The next clause deals with the competition between the railways and motor transport. For some time, the Commonwealth railways, in common with other railway systems, have been subjected to motor competition, particularly on the Trans-Australian Railway. The object of clause 3 is to enable the Commissioner to combat that competition. It will enable special rates to be quoted to customers who use the railways for the whole of their traffic as against those who patronize the road-motor services also. The proposed amendment of the act is on the lines of an amendment recently made to the New South Wales Railways Act.

The other amendments to which I shall refer at this stage are contained inclauses 4. 5, 6, 8, 10 and 11. The amendment proposed by clause 4 will provide that continuity of employment shall not be broken unless more than twelve dayselapse between the termination of the prior permanent employment of an employee and the commencement of his employment with the Commonwealth Rail ways. The present provision allows only three days for a new appointee to take up his position.

Clause 5 and paragraph a of clause 6 provide that the plant and stores suspense account established by section 55 of the Commonwealth Railways Act and the railway accident and insurance fund, established by section 56, shall be trust accounts within the meaning of section 62a of the Audit Act. Section 56 also provides that the railway accident and insurance fund shall he kept at the Treasury. In each case, however, the transactions of these special funds are dealt with in the Treasury accounts in the same manner as if they had been trust accounts established under section 62a of the Audit Act, and, in effect, the balances remaining to the credit of the funds have been dealt with as if they formed part of the trust fund referred to in section 62a (3) of the Audit Act. This procedure, whilst in conformity with the general practice in dealing with trust accounts and funds of this nature, is not strictly correct in a legal sense, and the amendments proposed by clause 5 and paragraph a of clause 6 have been designed to place the matter on a proper legal footing.

The object of paragraph b of clause 6 is to provide for a greater sum being set aside from Consolidated Revenue for the purposes of the railway accident and insurance fund, the present amount of 5s. for every £100 of the revenue of the railways not being sufficient to maintain the fund in a financial condition.

The purpose of paragraph b of clause S is as follows: - Under section 63 of the act in its present form, the Commissioner may acquire private lands, Crown lands of a State, and lands which have been dedicated, reserved, or set apart for any public or other purpose. There is no power, however, for the Commissioner to acquire lands vested in the Commonwealth. It is not considered desirable to give to the Commissioner power “to acquire any Commonwealth lands, other than lands which have been reserved for the purposes of a railway. Accordingly, the proposed new sub-section provides for that to be done. Every acquisition under the sub-section is to be subject to any law of the Commonwealth or of a territory governing the disposal of lands.

Under the existing act persons offending against the provisions of the act can be brought before a police, stipendiary or special magistrate. The purpose of clause 10 is to provide that offenders may, under certain conditions, be brought before a justice of the peace. The reason for the amendment is that, in a vast area like the Northern Territory, persons who are charged with offences against the act have to wait for long periods before they can be brought before an appropriate court. Clause 11 provides for the termination of the application of the Commonwealth -Workmen’s Compensation Act 1912 to employees. I propose to move in committee for the substitution of a new clause in place of clause 11. Consequently, I shall postpone any further remarks on that clause until the committee stage is reached.

Honorable senators will observe that, for the most part, the amendments contained in this bill are of a formal nature. I commend the measure to the favorable consideration of the Senate.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 to 10 agreed to.

Clause 11 (Application of Commonwealth Workmens’ Compensation Act 1912 to employees).

Senator Sir GEORGE PEARCE (Western Australia - Minister for External Affairs) [9.32]. - I move-

That clause 11 be left out, with a view to insert in lieu thereof the following new clause: -

Section eighty-five of the principal act is repealed and the following section inserted in its stead: - “ 85. The Commonwealth Employees Compensation Act 1030 shall apply to employees of the commissioner as if they were employees within the meaning of that act “.

The object of this clause is to bring employees of the -Commonwealth Railways Commissioner under the provisions of the Commonwealth Employees Compensation Act 1930. The provisions of the 1912 act originally applied to them, but, as that measure was repealed by the act of 1930, it i3 proposed that Commonwealth Railways employees, in common with employees of the Commonwealth generally, shall come within the purview of the 1930 act.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 12 agreed to.

Title agreed to.

Bill reported with an amendment; report adopted.

Bill read a third time.

page 2810

INCOME TAX ASSESSMENT BILL (No. 2) 1936

Second Reading

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

[9.37].- I move-

That the bill be now read a second time.

This is a measure to amend the Income Tax Assessment Act 1936 in certain respects. The most important matter dealt with is the manner in which Crown leases of land used for primary production shouldbe treated for taxation purposes. During the passage of the principal act through Parliament in May last, the Treasurer (Mr. ‘Casey) undertook to refer that matter to Sir David Ferguson, Chairman of the Royal Commission on Taxation, for further inquiry and report. Sir David Ferguson made the inquiry and furnished his report. Summarized, the report recommends that Crown leases of land used for primary production, which are acquired after the date the proposed amending law comes into operation, should be treated in the same manner as freehold property. On purchase, the purchase price should not be allowed as a deduction, and, on sale, the proceeds of sale should not be taxable. In respect of leases now held, the deduction of the purchase price should be continued as at the present time. Where a person, having bought a lease and having been allowed deductions under the present law in respect of the purchase price, sells the lease, the profit on sale, to the extent of the deductions which have been allowed, should be taxed. The Government, after consideration of the report, has decided to accept Sir David Ferguson’srecommendations, to which effect is given in clauses 10, 11 and 14.

The bill provides in clauses 4, 5, 12 and 13 for four other amendments of the lease provisions of the principal act. The amendments contained in clauses 4 and 5 relate to the basis of valuation of livestock sold on a walk-in-walk-out sale, and arise out of the proposed alteration of the method of assessment of Crown leases. Clause 12 corrects a defect in the principal act in respectof the assessment of a lessor on the value of improvements included in assessable income The amendment in clause 13 relates to the disallowance of the usual deduction allowed to a lessee who erects improvements in which he has no tenant rights, in cases where the lessor is in substantial control of the operations of the lessee. The proposed amendment, whilst retaining the general principle that the deduction should not be allowed where, in effect, the lessor and lessee are the same persons, deletes the specific reference in the section to cases where the lessor is a trustee of the land for the lessee or the lessee is a trustee of the land for the lessor. This provision was found to operate inequitably.

With the removal of the special property tax, the references in the assessment act to that tax are deleted by clauses 2, 6, 9, and18. Owing to a defect in section 23 (s) of the principal act, dealing with the exemption of the income of a company which was formed and is carried on for the purpose of insuring property belonging to a religious institution, it is proposed by clause 3 to delete the provision. The exemption will then be determined in accordance with the usual practice of the Taxation Department that, where the income belongs, in effect, to a religious institution, the exemption will be allowed under section 23(e). Clause 7 extends the deduction of State income and land taxes to income and land taxes imposed by a territory of the Commonwealth. Clause 8 clarifies the intention of the provision relating to the deduction of calls on shares.

Under clause 15, the rebate allowed to a non-resident in respect of income taxed both in the Commonwealth and in the United Kingdom, is extended to a resident. It has been found that a taxpayer, under the income tax laws of the Commonwealth and the United Kingdom, may be deemed to be a resident of both countries in respect of the same year; for example, a resident of Australia visiting England and residing there more than six months would be liable for income tax ob his Australian income both, in the Commonwealth and the United Kingdom, and should be entitled to the relief provided by section 159 of the principal act.

Clause 16 contains a drafting amendment to section 170, relating to amendment of assessments. Under clause 17, the garnishee provisions of the act are amended so as to empower the Commissioner to collect tax by instalments from a person, making payments to the taxpayer. In many cases, payment by instalments under the section would be to the advantage both of the taxpayer and the department. The proposed amendments are to apply to assessments for the current financial year.

This bill has been drafted after consultation with Sir David Ferguson, and such of the provisions as concern State governments as well as the Commonwealth Government, have been discussed with the State governments, which have been asked to adopt them in the interests of uniformity-. I commend the bill to the favorable consideration of honorable senators.

Senator PAYNE:
Tasmania

.- This is my only opportunity to ventilate again what is regarded by a section of taxpayers as a grievance because of the extraction from them of income tax for which they are not liable. Clause IS provides for the repeal of section 253 of the principal act, which provides for the collection of the special property tax. Honorable senators may recall that I have drawn attention to the anomaly that, since 1931, it has been provided by an amendment of the Income Tax Assessment Act, that companies “may” deduct at its source the special property tax from dividends paid to preference shareholders. In companies from which, the tax has been, deducted and paid direct t.o the Commissioner, there must be many preference shareholders who were not even income taxpayers. Instances have been brought under my notice of people whose income was considerably below the exemption fixed in the principal act, and who, therefore, according to law, were not income taxpayers. If their dividend amounted to £20 when the levy for the special property tax was 10 per cent., £2 was deducted by the company under the authority of the amendment of the

Income Tax Assessment Act, and consequently they received only £18, the other £2 going to the Income Tax Commissioner. This is “the last opportunity I shall have of dealing with this matter. The special property tax will go with the passing of this bill, but it is not too late to right the wrong. It can be done by the Government instructing the Income Tax Commissioner that, if he is satisfied on application made to him that the special property tax was paid by a company on behalf of a person who was not an income taxpayer, a refund should be made.

Senator Collings:

– The honorable senator then would make it retrospective?

Senator PAYNE:

– Yes. Every year refunds, going back more than one year, are made in cases where income tax has been wrongly collected or wrongly paid. No exception should be made of the poorest section of people with incomes. I do not suggest, that refunds should be made to those unentitled to them. The whole principle of the administration of the Income Tax Department is that, when the commissioner is satisfied that a person is not liable for the tax collected from him, he is entitled to a refund. In these cases the commissioner has had no direct contact with the individuals. The payments have been made by the company, acting under the law, although the principal act lays it down that in these instances, the shareholders affected are not income taxpayers. I hope the Government, during the recess, will look into the representations I have made on this subject from year to year. If it does, it will be satisfied that an injustice has been clone to many unfortunate people-

Senator E B Johnston:

– Is much money involved?

Senator PAYNE:

– I should say nor a very large sum, but a number of people, who can ill-afford to pay a tax for which they are not liable, are affected. The amount can be ascertained only when all the applications for refunds have been lodged. It is surely reasonable to suggest that, if people have had heavy taxation levied upon them when the law says they are not, liable to income tax, the money taken from them should be refunded, so long as the commissioner is satisfied that the claim is just. I trust that my final representation on this matter will have the effect of causing an investigation to be made.

Senator Sir GEORGE PEARCE (Western Australia - Minister for External Affairs) [9.50]. - in reply - The honorable senator’s pertinacity in this matter is certainly deserving of all praise. He has made the representations many times, and I can assure him that “when I first heard the case put by him I was so impressed that I took the matter up at the time with the Treasurer (Mr. Casey). He told me that he would look into it and discuss it with the Commissioner of Taxation, which I believe he did. He subsequently assured me that he saw no way by ‘ which, without great circumlocution and difficulty, the complaint could be met. He added that there was also a possibility that, in trying to meet individual cases, the way would be opened to evasion of tax by those who should be taxpayers. There was a danger, he pointed out, of creating an incentive for a nominal distribution of shares, so as to bring the income received from them below the statutory exemption. At present the tax is levied on the whole of the income distributed by the company, with the result that no shareholder can escape, but Mr. Casey feared that, if provision were made to meet the cases indicated, collusion would occur, enabling some who ought to pay the tax to escape. Mr. Casey assured mc that he had looked into the matter with all sympathy and with a desire to remedy the grievance, if this could conveniently be done, but he was satisfied, after full investigation with the commissioner, that there was no v ay of dealing with the matter, whilst at the same time protecting the revenue.

Question resolved in the affirmative. .

Bill read a second time.

In committee:

Clauses 1 to 17 agreed to.

Clause 18 (Deduction of special property tax from preference shareholders).

Senator PAYNE:
Tasmania

.- It is necessary that I should reply to the courteous answer given to me by the. Leader of the Senate (Senator Pearce). I cannot understand how my suggestion could lead to difficulties such as the Income Tax Department has apparently imagined. The initiative would have to come from the aggrieved person. If a shareholder found that £10 had’ been deducted from his preference dividends during the last four years, although his total income during that period was within the statutory exemption, he should be able to make application to the Commissioner for a refund. The Commissioner could then cause the claim to be investigated. The very fact that the applicant did not appear on the roll of income taxpayers would be evidence to support his claim for a refund. When the Commissioner satisfied himself that, the applicant had never been an income taxpayer, because his income was too small, he could authorize a refund. The applicant would be entitled to it, because the Commissioner was never entitled to the tax which he collected. The legislation which made it possible was passed without any thought of how it might apply to these unfortunate individuals. I do not suggest that anyone should be allowed to evade the tax if he is legally liable to pay it. It is hard to realize that, under an amendment of the Income Tax Assessment Act, it has been possible to drag into the net many people who were not income taxpayers at all, simply because it was convenient, although not mandatory, for the company to deduct the money from their dividends. The great majority of companies which issued preference shares did not deduct the property tax at its source; but a few companies have taken the opportunity offered to them to do so, and they have paid the money directly to the Commissioner of Taxation. If this were general practice I could understand that there might be a considerable number of applicants; but in view of the fact that this opportunity is availed of by only a comparatively few companies, the number of applicants must be small. If the Commissioner of Taxation is satisfied that this tax should not have been paid, he should refund it.

Clause agreed to.

Clause 19 agreed to.

Title agreed to.

Bill reported without amendment; report adopted.

Bill read a third time.

page 2813

ACTS INTERPRETATION BILL 1936

Bill returned from the House of Representatives with amendments.

In committee (Consideration of House of Representatives’ amendments) :

Clause 6 -

Section 5of the principal act is amended by omitting sub-section (1) and inserting in its stead the following sub-sections: - “ (1.) Every act to which theRoyal Assent has been or is given by the Governor-General for and on behalf of the King on or before the thirty-first day of December, One thousand nine hundred and thirty-six, shall be deemed to have come into operation, or shall come into operation, on the day on which that act received, or receives, theRoyal Assent, unless the contrary intention appears in the act. “(1a.) Every act to which the Royal Assent is given by the Governor-General for and on behalf of the King on or after the first day of January, One thousand nine hundred and thirty-seven, shall come into operation on the twenty-eighth day after the day on which that act receives the Royal Assent, unless the contrary intention appears in the act.”.

House of Representatives’ amendment No. 1. -Omit “Or is”.

Senator BRENNAN:
Assistant Minister · Victoria · UAP

– I move -

That the amendment be agreed to.

When the bill was originally before this chamber, it was intended that it should come into operation during the current year. It has since been decided that it will not be proclaimed, if it is eventually agreed to, until the 1st January, 1937. In consequence the words which the House of Representatives has struck out have become redundant. This explanation applies also to proposed amendments Nos. 2 . and 3.

Motion agreed to.

House of Representatives’ amendment No. 2. - Omit “ , or shall come into operation,”.

Motion (by Senator Brennan) agreed to-

That the amendment be agreed to.

House of Representatives’ amendment No. 3. - Omit “ , or receives,”.

Motion (by Senator Brennan) agreed to-

That the amendment he agreed to.

House of Representatives’ amendmentNo. 4. - After “Act” insert “ (other than an act to alter the Constitution) “.

Senator BRENNAN (Victoria- Assis

That the amendment be agreed to.

It is proposed that these words shall be inserted in sub-section 1a. Honorable senators will recall that the coming into operation of an act was to be delayed for 28 days in order that far-distant States might first have an opportunity to become acquainted with its provisions. It is now proposed that this provision shall not apply to acts designed to secure an alteration of the Constitution.

Motion agreed to.

House of Representatives’ amendment No. 5.

At the end of the clause add the following sub-section : - (1b) Every act to alter the Constitution to which the Royal Assent is given by the Governor-General for and on behalf of the King on or after the first day of January, One thousand nine hundred and thirty-seven shall come into operation on the day on which that act receives theRoyal Assent, unless the contrary intention appears in that act ‘ “. . .

Senator BRENNAN:
Assistant Minister · Victoria · UAP

– I move -

That the amendment be agreed to.

Amendment No. 4 is consequential on amendment No. 5. It deals with a new sub-clause fixing the date of assent as the date of commencement of acts altering the Constitution. The reason for the new sub-clause is that in regard to an ordinary act passed by Parliament it is extremely probable that it has excited no great public interest before coming into operation; therefore its coming into operation might not be known in distant parts of Australia until some considerable time afterwards. But in regard to an act designed to secure an alteration of the Constitution it is thought that sufficient interest will have been aroused throughout Australia for the people to comprehend, even before they see the actual terms of the act, the nature of the proposal contained therein.

Motion agreed to.

Clause 13-

After section 40 of the principal act the following headings and sections are inserted: -

Regulations.

  1. – (1. ) Where an act confers power to make regulations, no regulation shall be made accordingly, unless the Attorney-General or the Solicitor-General, or some officer of the Attorney-General’s Department thereto authorized in writing by the Attorney-Generalor the Solicitor-General, certifies that the regulation, if made, would not be in excess of the power conferred by the act under whichit purports to be made. (2.) Any regulation made in contravention of this section shall be void and of no effect. (3.) The notification in the Gazette of any regulation made after the commencement of this section shall be prima facie evidence that a certificate was duly given in respect of that regulation in accordance with sub-section (1.) of this section.

House of Representatives’ amendment No. 6 - Omit proposed section 48.

Senator BRENNAN:
Assistant Minister · Victoria · UAP

– I move -

That the amendment be agreed to.

Honorable senators will recall that a good deal of discussion took place in this chamber before this proposed section was inserted against the desire of the Government. This is by far the most important of the amendments. I assure honorable senators that the Government has given much consideration to the new section 48 which, with the exception of subsection 3, was inserted in the bill on the motion of Senator Duncan-Hughes. If the new section were to become law, it would super-impose an additional condition to the validity of a regulation. It would thus increase the area of the attack and would, in effect, render a regulation more vulnerable and add uncertainty as to the validity of the regulation. Surely the present methods and grounds for attacking the validity of regulations are ample for all purposes. The idea appears to be current among some honorable senators that the giving of a certificate will result in the regulations being less liable to challenge. The giving of a certificate will be no absolute guarantee that the regulations are not ultra vires the act under which they are made. Indeed, a false impression may be created in some quarters as to the actual effect of a certificate. For example, it may be thought that the regulations in question, when certified to, are valid for all purposes and not subject to appeal. This is, of course, not the case. The regulations will still bo liable to be challenged in the courts. As I stated yesterday we cannot be the interpreters. We can merely pass laws in what we consider a valid form, but in the end the court is the interpreter of any regulation or act of Parliament. It would, we think, be dangerous to suggest that, because a certificate is attached to a regulation, its validity is guaranteed.

Senator Abbott:

– It surely can be only a safeguard. Should we worry what people think about regulations? It is a matter of what the regulations provide.

Senator BRENNAN:

– Yes, but until the court has interpreted them we do not know what they do provide.

Senator Abbott:

– The court would have an assurance that care had been exercised in their preparation.

Senator BRENNAN:

– I shall give the committee an assurance before I have concluded that care will be taken in that direction.

Senator Abbott:

– We do not want only the assurance of the Minister that care has been taken.

Senator BRENNAN:

– I adhere to the point previously made, that the giving of a certificate in relation to a regulation would be calculated to convey to a layman the idea that it was a guarantee in some form that a regulation is intra vires. Another objection to the provision is that, in some emergency, the Government may, by reason of the absenceof a certificate, be greatly hampered by not being able to make a regulation, however simple, from a drafting or legal point of view, and however urgently necessary. Honorable senators who have not had experience of administration may wonder how this would be possible, but I assure them that it is very difficult to forecast the circumstances in which regulations may be urgently required, and it is much more difficult to comply with a multiplicity of requirements. Ministers of State take responsibility for the advice they tender to His Excellency the Governor-General, and it may surely be assumed that they would only advise His Excellency to make regulations, the drafting of which had been thoroughly examined. Great stress has been laid on the views of an honorary committee appointed in South Australia to consider the matter of subordinate legislation. That committee was considering a system that does not exist with respect to subordinate legislation in pursuance of Commonwealth acts. Commonwealth subordinate legislation has, for very many years, been prepared upon uniform lines, and the remarks of the South Australian committee as to the probable effect of the adoption of its proposals with regard to the certifying of regulations have no application to regulations made under Commonwealth acts. One further point is this: there is just the possibility - a possibility which honorable senators will realize is ever present where things are done of necessity - that the requirement of a certificate may come to be regarded as a mere formality and may affect, unintentionally of course, the degree of care which is at present exercised with respect to regulations scrutinized, by the Attorney-General’s Department.

In conclusion, I give honorable senators an assurance that directions will be issued to all the departments to submit all draft regulations for the consideration of the Attorney-General’s Department. In other words, the object of the proposed new section will be attained by administrative action, which will, in practice, bc equally as effective as the proposed certificate. During recent years two members of the staff of the Attorney-General’s Department have been engaged on preparing a consolidation of the Commonwealth acts. This work is now practically completed, and it is anticipated that staff arrangements will permit of all regulations being promptly examined by legal officers early in the new year. When this scheme is in operation, all draft regulations will be examined minutely and according to definite legal principles, both as to the matter and form of the regulations. This is all that honorable senators desire, and I ask them to accept the assurance I have mentioned. This proposal was carefully considered by legal members in the House of Representatives, and they expressed themselves as being in favour of the amendment now before the committee. In these circumstances I earnestly ask honorable senators to reconsider the decision previously given and to agree to the amendment made by the House of Representatives.

Senator DUNCAN-HUGHES:
South Australia

.- I trust that the committee will not agree to the deletion of the clause as suggested by the House of Representatives. When the bill was previously before this chamber it was debated for some days. It is, therefore, unnecessary for me to go into the whole subject again. I should, however, like to remind the committee of one or two salient points which were brought out during the previous debate. On that occasion I was criticized by the Leader of the Opposition for reading a letter from the Solicitor-General to the Clerk of Committees in which it was stated -

With reference to your remarks in the Senate on 17th September, in committee on the Acts Interpretation Bill (Hansard, page 212), I am authorized by the Solicitor-General to say that your statement to the effect that “sometimes regulations are made and put into operation without having been first perused by any legal practitioner “ was quite correct.

When I made the statement referred to itwas denied. The matter was referred to the Solicitor-General, who stated that my statement was quite correct. It was then suggested that I had committed a breach of confidence, but I was able to prove that that was not the case. Before quoting the letter I had asked a second time whether it contained anything of a confidential nature, and had been told that it did not. The letter continued -

Mr. Knowles tells me, for the information, of the committee, that “ more than half “ of the regulations which are made go through his department; but there are many simple changes, such as the alteration of rates of charge, or the designation of positions, about which there could not be any legal question, which have been made without the AttorneyGeneral’s Department being consulted. Steps are being taken, however, to arrange for all regulations to he seen by an officer of the Attorney-General’s Department before they are made, in future.

Therefore, one half of the regulationsis not submitted to the AttorneyGeneral’s Department. We are all awareof the fact that, in recent years, regulations have been upset in the courts, and have also been disallowed by the Senate acting within its power. Moreover, someacts of Parliament have been held by the courts to be invalid, and, in fact, one would not be exaggerating the position by saying that groups of acts have been held to be unconstitutional.

Senator Sir George Pearce:

– Then what would be the value of a certificate attached to a regulation?

Senator DUNCAN-HUGHES:

– It would show at least that it had been drafted by a trained man and, therefore, the possibility of its being held to beultra vires would be reduced to a minimum.

Senator Collings:

– Even then the honorable senator could not protect himself from a decision of the Privy Council.

Senator DUNCAN-HUGHES:

– I agree; but that question is not involved. I do not regard the Privy Council as an enemy as apparently the Leader of the Opposition does. It may be a friend; at any rate, it is able to give an absolutely unbiased legal opinion.

Senator Collings:

– Does the honorable senator suggest that the opinion of the Attorney-General is not unbiased?

Senator DUNCAN-HUGHES:

– I am making no comparison between the AttorneyGeneral and any other authority. I have the greatest respect for the Attorney-General and his department. The Regulations and Ordinance Committee was actuated only by the desire to ensure that regulations ave properly framed. We have seen that the recent form in which regulations have been cast - probably due to the desire to issue them in large numbers - has been unsatisfactory, and the committee has made an attempt to improve matters. The Minister who asks that the amendment made by the House of Representatives be accepted had many alternative defences to submit. He referred to the procedure in the House of Representatives. I was not present in the other House when the discussion on this subject was proceeding, and I do not know whether it was lengthy or otherwise.

Senator Brennan:

– It was a very thorough debate.

Senator DUNCAN-HUGHES:

– On this particular clause?

Senator Brennan:

– Yes.

Senator DUNCAN-HUGHES:

– It was not debated until yesterday. The bill which was passed by the Senate on the 24th September was not debated in the House of Representatives until yesterday. In these circumstances not much time was available for the consideration of any views that were put forward in support of the proposed new section. Although the Minister has stated that it was thoroughly debated, its deletion was not included in the circulated . list of amendments which the Attorney-General (Mr. Menzies) proposed to move in the other chamber.

When I obtained the list of amendments to-day, I was surprised to find that this one was not in the list to be moved- by the Attorney-General or in the list of amendments to be proposed by the honorable member . for Bourke (Mr. Blackburn). This is the only amendment - and admittedly it is the most important - which was not included. I emphasize the point because it appears to be highly probable that this amendment was passed through the House of Representatives without the members of that chamber realizing what it was all about. When the proposal came before this chamber on a previous occasion, it was threshed out in detail. Senator McLeay, Senator Millen, Senator Payne and I supported the proposed new section, and it was opposed by the Assistant Minister (Senator Brennan), who was in charge of the bill, and the Leader of the Opposition (Senator Collings). Twenty voted in favour of it, and it was opposed by nine, including three Ministers, the Government Whip, Senator Brand, Senator Collings, Senator Cox, Senator Dein and Senator Hardy. Senator Guthrie was paired with another honorable senator. This is not a matter of the greatest importance, but the drafting of regulations should be undertaken with the greatest care. No adequate reason has been given as to why this provision should not retain its place in the bill. It appears to me that this is an attempt to override the decision of the Senate, which was reached after most careful consideration had been given to the matter. It is well known, of course, that we have a. regulations committee in this chamber and that there is no such committee in the other chamber. Personally, I think that a regulations committee1 is or should be a valuable adjunct to Parliament. It would be a matter to be deplored if the decision, to which this chamber and, I think, practically the whole of the members of the committee as individuals came, that this would be a useful provision, should be sacrificed by a hasty decision of the House of Representatives. I cannot imagine a state of affairs existing in the Solicitor-General’s Department of such life and death urgency as would make it impossible for a legal man to be called in to attend to the drafting of a regulation. It is not as though he would have to perform a major surgical operation. I can see no justification for omitting this proposed new section which, without being of first-class importance, is a useful one. I accordingly ask tie Senate to stand by its decision.

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

[10.31]. - I assure Senator Duncan-Hughes and honorable senators generally that this clause which was inserted in the Senate has received very close and careful consideration. I took the trouble after the clause had been carried here to draw the attention of the Attorney-General to it. In order to show why it should be accepted, if possible, I told him that it had been carried by a substantial majority. The Attorney-General promised ‘to look into it himself personally and he has done so. His conclusion is that he cannot recommend the Government to accept it. Moreover, he would rather drop the bill than allow it to be passed with this amendment which, he considers, would have a misleading effect on the public.

Senator McLeay:

– I think that it would inspire confidence.

Senator Sir GEORGE PEARCE.The honorable senator is welcome to that opinion, but it is one which neither the Attorney-General nor I shares. I appeal to the committee to agree with what the Attorney-General has decided in this matter. I agree with Senator DuncanHughes that the proposed new section that the committee is now discussing is, in some aspects, not very important, but the bill itself is important. It is a consolidation of the Acts Interpretation Acts. I am informed by the Solicitor-General that the Acts Interpretation Acts as they stand to-day present very great difficulty both to the legal profession and those people who have to conduct business under our Commonwealth legislation, and that, if this bill becomes an act of Parliament, it will be of very great assistance to legal, practitioners and commercial men. The Attorney-General was distrustful of the effects of this provision, and he informed me through the SolicitorGeneral that if it were insisted upon he could not conscientiously carry it out. Is it worth while losing the benefits of the consolidation of the Acts Interpretation Acts for the purpose of insisting upon this new section, even if honorable senators do think that it is an improvement of the bill? The Attorney-General and the Solicitor-General are both men of long experience in the law. The SolicitorGeneral has been engaged in the study of Commonwealth legislation for many years, and it is the opinion of both gentlemen that it would be dangerous to have a section of this nature in the act, and they cannot recommend the Government to accept it. I appeal, therefore, to the committee not to insist upon the amendment.

Senator COLLINGS:
Queensland

– My opinion of this matter is quite well known. It is not very long ago since the whole matter was thoroughly threshed out in this chamber. Senator Duncan-Hughes suggested that the House of Representatives considered this matter in a perfunctory and inadequate manner. I do not know how long the debate occupied or who took part in it, as it only occurred recently, but two legal members of the party to which I belong are incapable of passing a hasty or ill-considered judgment on anything that comes before them. Both honorable gentlemen supported the omission of this proposed new section and that is good enough for ‘me. I am satisfied that the two gentlemen gave this matter full consideration. I have not altered my personal opinion regarding the value of the amendment since we first debated it. Everything that I have heard since confirms my opinion that it is of no value at all. The remarks which were made by the right honorable Leader of the Senate (Senator Pearce) ought to convince everyone of us that no good purpose would be served by pressing this provision. I think that we should not risk the loss of the bill for any reason unless it is indeed vital; to risk its loss merely because we cannot induce the other chamber to accept this proposal would not be wise. I remind the Committee that this bill does not alter the law; it merely consolidates it, and makes it more easily understood.

I think that this would be a fitting occasion to let our personal feelings go by the board.

Senator McLEAY:
South . Australia

– The leader of the Opposition (Senator Collings), it is interesting to note, has great faith in the opinions expressed by two lawyers in another place. It is because we have faith in legal men who are experts that we want to ensure that regulations, which form an important part of the law of this land, are finally drafted by experts.

Senator Collings:

– The honorable senator has faith only in experts whom he favours.

Senator McLEAY:

– The AttorneyGeneral’s department surely is expert enough for anyone. I have no faith in the opinions of the Leader of the Opposition in this matter. We did consider this new section very carefully and, having the words of section 51 of the Constitution “ to make laws for the peace, order and good government “ in our minds and, realizing that it is essential in these modern times to have government by regulations, we decided to insert it. Regulations are produced not in hundreds but in thousands, and we consider that it is just as important for them to have the seal of approval from legal men as it is for the acts under which they are framed to be drafted by legal draftsmen.

Senator Sir George Pearce:

– The honorable senator has the assurance of the Government that the regulations shall be submitted to legal experts.

Senator McLEAY:

– If we have that assurance what is the purpose of this argument ?

Senator Sir George Pearce:

– The objection of the Government is to the requirement that regulations shall be accompanied by a certificate.

Senator McLEAY:

– We desire that regulations shall be certified as having been correctly drafted.

Senator Sir George Pearce:

– Surely the honorable senator is not prepared to risk the loss of the bill for that reason?

Senator McLEAY:

– Cabinet Ministers are not experts in the law. We should not go to a Cabinet Minister to have performed an operation for the removal of an appendix, and we are just as averse to obtaining legal opinion from laymen who happen to be in the Ministry. We wantto be satisfied that when a bill or a regulation goes through this chamber it is legally as near to perfection as it can reasonably be. We can only assure ourselves as laymen on that point if we are satisfied that it has passed through the Attorney-General’s department or the Solicitor-General’s department. I suggest with all respect to the legal men in the House of Representatives that this new section is in the interests of good government, and I trust that the Senate will stand by its previous decision.

Senator DUNCAN-HUGHES:
South Australia

– I think it appropriate at this stage to remind the Senate of what this proposed new section says. It reads -

  1. ( 1 ) Where an act confers power to make regulations, no regulation shall be made accordingly, unless the Attorney-General or the Solicitor-General or some officer of the Attorney-General’s department thereto authorized in writing by the Attorney-General or the Solicitor-General, certifies that the regulation, if made, would not be in excess of the power conferred by the act under which it purports to be made.
Senator Sir George Pearce:

– He might be a junior draftsman.

Senator DUNCAN-HUGHES:

– It would not be creditable to the department if it were to appoint a junior draftsman todo this work unless it were necessary to do so. The wording of the clause continues -

  1. Any regulation made in contravention of this section shall be void and of no effect.

Then there is a third proviso which was put in at the request of the Minister himself, which is quite desirable. As Senator McLeay has said, regulations are poured out in great numbers under the acts whose provisions they purport to carry out. It is obviously desirable that the general public should have some security that the regulations by which they are governed are in accordance with the powers of the acts that they seek to amplify. I could not help being amusedby the argument of the Leader of the Government, than whom no one knows better how to score a point.

Senator Sir George Pearce:

– I assure the honorable senator that I was not seeking to do that. I was trying to warn the Senate.

Senator DUNCAN-HUGHES:

– I did not use the phrase in a critical sense. It was, in fact, intended as a compliment. However, I shall merely say that no one knows better than does the right honorable gentleman where and when to hit. Therefore, it seems strange to me that he should say that this is an unimportant provision in a very important measure, but that if it is carried the bill will be dropped.

Senator Sir George Pearce:

– Because of its danger.

Senator DUNCAN-HUGHES:

– I suggest that there is no danger, either hidden or obvious, to justify the dropping of this new section.

Senator Sir George Pearce:

– Both the Attorney-General and the SolicitorGeneral say that it is extremely dangerous.

Senator DUNCAN-HUGHES:

– If insistence on this section would be regarded by the Gvernment as so serious as to cause it to drop the bill, then all I have to say is that I have no such love for the bill as to be very much perturbed if it is dropped.

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

– I was a member of the Regulations and Ordinances Committee which went into this matter, but I may say that I was appointed to it without my knowledge or consent. However, we did our best, and in the course of our investigations discovered that there was a good deal wrong with many regulations which were in force. Senator DuncanHughes, who is responsible for the Amendment which it is now proposed to drop, drew his inspiration from an honorary committee which sat recently in South Australia to consider subordinate legislation. That committee consisted of an acting judge, a former solicitor-general and a lawyer who was a member of the South Australian Assembly, so that with the two legal members of our Regulations and Ordinances Committee we had five lawyers in agreement as to the advisability of enacting the section which the Senate is now asked to omit. That committee reported as follows : -

It is of the highest importance that all regulations promulgated should be properly drafted. The committee therefore recommends that a system be instituted to provide that before the Governor’s approval be given to any regulations to he made hereafter, the parliamentary draftsman or Crown Law officer be required to certify that they are correctly drafted and in his opinion are not ultra vires. This certificate would undoubtedly tend to prevent the promulgation of badly or loosely drafted regulations and tend to uniformity of drafting in the framing of all regulations.

The lay members of our committee, viewing these matters from a somewhat lower elevation than that occupied by the legal members, were convinced that many regulations had not been properly drafted, and that action was needed to correct the position. Senator Duncan-Hughes said that less than half the number of regulations drafted were ever seen by the Attorney - General’s Department. Although they have the force of law, they i)v:>. in fact, never seen by a lawyer before they are promulgated. They are turned out like sausages from a machine. The object of the clause now under discussion was to ensure that all regulations should come before the Crown Law Department for consideration. The committee went very carefully into this matter, and it was even proposed that the services of a third lawyer should be obtained to study carefully and to advise the committee regarding the effect of regulations. The clause, which it is now proposed to omit, was agreed to by the Senate when the bill was before it on a previous occasion, and I hope it will be insisted upon now. The bill originated in this chamber, and we have a special feeling for it. I am sure that if the Minister is forced to drop the measure he will do so with a certain amount of regret. Senator Brennan did not seem to consider that a safeguarding section of this kind would serve any useful purpose, though in respect of other matters, he has always displayed a tendency to make doubly sure. He reminds me of the story of the Scottish king who. upon coming out of a church, was asked by one of his followers what he had done. The king replied “ I doubt I have slain Comyn “. The follower thereupon went into the church, and he, too, used his dirk upon the victim, saying, “ I will mak’ siccar “. Like the king’s retainer, Senator Brennan generally wants to make sure, but in this instance he has abandoned his native caution. We know that there is a feeling of doubt in the public mind regarding the power of lay officials to draft regulations which have the force of law. It is felt that they should be brought before the Attorney-General’s Department for approval, and that is why this section was inserted. I voted for it before, and I shall vote for it again, and I ask those other honorable senators who voted for it when the bill was previously before the Senate to insist now upon its retention.

Senator ABBOTT:
New South Wales

.- Nothing I have heard this evening will make me vote differently from the way I voted when the bill was previously ‘before us. The Minister said that a certificate from the AttorneyGeneral’s Department would not be any guarantee of the validity of a regulation. That is perfectly true, but it would be a guarantee that care had been taken in the framing of the regulation. I cannot accept the explanation that members of the public would be misled by the certificate into believing that a guarantee of legality had been provided. Does the honorable senator say that the public will read the certificate? Will the public even see it to be misled by it?

Senator Brennan:

– I should think that it would be attached to the regulation.

Senator ABBOTT:

– The only object of this clause is obviously to ensure that the public will have a guarantee that care has been exercised in the framing of a regulation. A very strong case was made out on a previous occasion, when this bill was before the Senate, to show that in the past there has been a good deal of slipshod work in drafting and promulgating regulations. The people would not even consider the certificate, nor would they be interested in it. Our only desire is to give some assurance to the people, but not an absolute guarantee, that a regulation is valid and that due care has been taken in framing it. The Minister went on to point out that the courts are, in the long run, the interpreters of the law : that is perfectly true, but I do not think that that acids very much weight to the honorable gentleman’s argument.

Senator Brennan:

– The AttorneyGeneral in the House of Representatives, and I, in this chamber, have given an assurance that all precautions will be taken.

Senator ABBOTT:

– That is the final point with which I wish to deal. No one would be more ready than I to accept the assurance of both the Assistant Minister (Senator Brennan) and the AttorneyGeneral (Mr. Menzies) ; that assurance carries the greatest possible weight; but I remind the honorable senator that neither he nor the Attorney-General is going to live forever. To-night we are engaged in framing an act of Parliament, in which we are putting not the assurance of even the most honorable and trustworthy and believable gentlemen in the Ministry, but something that will be in the law for future years. I always feel in this matter of legislation - and I have felt it in other legislatures in which I have had the privilege to serve - that this assurance should not be put forward, as it were, as part of the legislative machinery. I accept the Assistant Minister’s sincerity and that of the Attorney-General, but I do not think it bears upon the matter at all. I ask honorable senators to re-affirm the vote given on a previous occasion.

Senator PAYNE:
Tasmania

– This is a very important matter upon which I am not prepared to cast a silent vote. The Minister has said to-night, that unless we back down from the attitude we adopted on a previous occasion, the bill will be dropped. Every honorable senator has experienced, as I have, great difficulty in justifying to their constituents government by regulation to the extent to which it prevails in the Commonwealth sphere; everywhere we go we have it thrown, up to us that we are living under government by regulation. That, to a great extent, is true ; therefore, surely we are justified in doing all we possibly can to satisfy the people of the Commonwealth, that although perforce we have to have government by regulation to a great extent, every care is exercised to see that regulations which are promulgated do not exceed the powers of the act under which they purport to be made. Senator Abbott hit the nail on the head, when he said that that is the only object we have in supporting the amendment of the original act. I cannot see why the Government should object to it. We have had assurances to-night from the Assistant Minister that every care will be exercised, but that is not sufficient to satisfy the electors. We should be able to tell them that provision has been made in the law in black and white that such care must be exercised.

Senator Sir George Pearce:

– That will not become law, because the bill will not be proceeded with.

Senator PAYNE:

– I take no notice of threats of that kind, which make me only more determined to see that our legislation is so plainly worded that those who run may read and understand it. I am sorry that the Leader of the Senate has adopted such an uncompromising attitude.

Senator Sir George Pearce:

– It is only fair that I should do so.

Senator PAYNE:

– I am unable to understand it in view of the fact that we are actuated only by a desire to make the law clear and definite. If the Government accepted our proposal, its prestige would not in any way be injured.

Senator Foll:

– The Senate would be made to look foolish if the Government accepted the section.

Senator PAYNE:

– It makes the Senate look foolish, indeed, when the Government declines to accept an amendment designed to put into the original act in black and white what is really the intention of the Parliament.

Senator Foll:

– I prefer Mr. Menzies’s legal views to those of the honorable senator.

Senator PAYNE:

– It is not a matter of legal views, but of the Senate using its united wisdom to place into the act a provision that any person of ordinary intelligence will recognize as having been put there for the purpose of seeing that regulations never exceed the spirit of the law.

Senator Brennan:

– Does the honorable senator think that a person coming under such a regulation will look at such a provision and gain assurance from it?

Senator PAYNE:

– If that provision were included in the act, the representatives of the people in this Parliament would be able to go to the electors with much more confidence and tell them that they have exercised every care in the wording of legislation which they have assisted to place upon the statute-book.

That would be a great advantage to the community as a whole. The statement is repeatedly made in the press that there is too much government by regulation. We have to have, to a certain extent, government by regulation, but we should be able to satisfy the people that those who are elected to make the laws of the land have done everything in their power to ensure that their intention is carried through all subordinate legislation. I support the retention of the section.

Senator LECKIE:
Victoria

– It seems to me that too much importance is attached to a rather unimportant amendment of an equally unimportant bill. The fetish of using legal language in respect of unimportant things is carried rather to the extreme. I have always found that legal phraseology not only does not simplify the law and make it clear to the people, but rathertends to confuse them. After all, it seems to me that if the suggested amendment is made to the principal act it will be only of small advantage, if any. The loss of the bill for something that is of no great value, however, would be rather silly. Honorable senators, by persisting with this proposed new section, are delaying the deliberations of the Senate in a way which I do not think to be worth while.

Question - That the amendment be agreed to - put. The committee divided. (Chairman - Senator. B. Sampson.)

AYES: 12

NOES: 13

Majority . . 1

AYES

NOES

Question so resolved in the negative.

Progress reported.

page 2822

PETROLEUM OIL SEARCH BILL (No. 2) 1936

Second Reading

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

[11.17]. - I move-

That the bill be now read a second time.

The Petroleum Oil Search Act 1936 appropriated £250,000 for the purpose of advances to persons engaged in drilling operations in connexion with the search for oil, and in payment of salaries and remuneration to persons employed by the Minister under the act. To advise theMinister in connexion with expenditure under the act, a technical committee, consisting of Dr. Woolnough, Dr. Wade and Dr. Ward has been appointed. The committee recommended that, in addition to making advances for drilling operations, moneys should be applied for the purpose of conducting geological surveys in Australia and purchasing drilling plants which could he let out on hire to persons engaged in drilling for oil. The Government approved of the committee’s recommendation, and the bill now under consideration makes the necessary amendments to the original act.

The technical committee was of opinion that the restriction of assistance to deep drilling may defeat the primary object of the legislation, as bores may be sunk at sites without adequate preliminarygeological survey. The drilling of a deep hole without the initial steps designed to supplement superficial data may result in an expensive failure, which might deplete the resources of the companies engaged in the search, and discourage shareholders from further participation in prospecting operations. The committee considered, therefore, that the Government should provide assistance to enable companies to conduct the necessary preliminary geological surveys to justify the sinking of deep bores. Assistance towards geological surveys will be confined to companies operating in Australia. The subsidy will be at the rate of £1 for every £2 provided by the companies. In view of the facts that the majority of the drilling plants engaged to-day in Australia on the work of boring for oil are out of date, and that there is a rapid evolution of such plants within recent years, particularly in America, the committee considers that it would be wise to obtain a few of these plants for hire to companies requiring them, rather than to allow companies to waste their resources in the purchase of unsuitable plant. Provision, therefore, has been made in the bill for moneys to be expended in the purchase of drilling plants, and for the Minister to let the plants out on hire to companies.

For the present, the Government does not consider it necessary to give this new form of assistance to companies operating in New Guinea. The Papua Oil Development Company Limited holds approximately 20,000 square miles under permit for a period of twelve months from the 1st September, 1936. The company must spend at least £15,000 during each of the two periods of six months for which the permits will be in force. The Oriomo Oil Limited holds about 12,000 square miles under permit for a period of twelve months from the 1st November, 1936. The company must spend at least £5,000 during the first six months, and £7,500 during the second six months of the currency of the permit. Island Exploration Company Proprietary Limited has approximately 21,000 square miles under permit, for a period of twelve months from the 1st November, 1936. The company is required to spend at least £15,000 during each of the periods of six months that the permits will be in force.

All of the companies in question will be eligible to apply for financial assistance in connexion with drilling operations, but in view of the large areas granted to them under permits, and the stipulated conditions as to the amounts to be expended, it is considered that there is no necessity at the present time to subsidize them for survey work. The work that must be carried out during the twelve months for which the permits art; in force must be in the nature of survey work. The granting of subsidies for survey work would be tantamount to relieving the companies of a large proportion of the expenditure they must incur in accordance with the terms of the permits. The conditions under which companies are operating in Australia are entirely different from those in force in respect of the three companies in question in Papua. It is the considered opinion of the three geologists of the committee which is advising the Government in this matter that the granting of subsidies for geological survey work in Australia is essential. The Government has decided, therefore, that subsidies for survey work shall be restricted, for the present, to companies operating in Australia.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2823

COLONIAL LIGHT DUES COLLECTION BILL 1936

Secondreading.

Senator BRENNAN:
Assistant Minister · Victoria · UAP

– I move -

That thebill be now reada second time.

The Commonwealth Government collects on behalf of His Majesty’s Government in the United Kingdom, light dues leviable tinder the provisions of section 670 of the Merchant Shipping Act, in respect of ships which, in the course of a voyage to or from Australia, pass and receive benefit from any of the lighthouses or the buoy specified in the schedule to the Colonial Light Dues Collection Act, provided, of course, that such dues have not previously been paid in another part of His Majesty’s dominions. In three recent instances, it was claimed that the voyage on which the ship concerned was engaged at the time it passed the Bahamas lights was not a voyage “ to or from Australia “, and that the vessel was, therefore, not liable for the payment of colonial light dues. The Board of Trade, London, and the Solicitor-General for the Commonwealth, both expressed the opinion that the most satisfactory way to overcome the difficulty was to amend the Colonial Light Dues Collection Act by the deletion therefrom of the words “ to or from Australia “. The bill now submitted for the amendment of the Colonial Light Dues Collection Act 1932-34 provides accordingly.

Advantage is also being taken of the opportunity which the bill provides to delete from the first part of the schedule the names of two lighthouses in the Bahamas Islands, viz., Gun Cay and Cay Sal, which have recently been discontinued. The purpose of clause 4 is to validate payments of dues already made in connexion with which it might be claimed that they had not been levied in respect of a voyage “to or fromAustralia “ of the ships concerned. As the bill is designed for the express purpose of bringing our legislation into conformity with British legislation on a matter which is the concern of His Majesty’s Government in the United Kingdom, I ask honorable senators to give the measure their support.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2823

COMMONWEALTH RAILWAYS BILL 1936

Message received from the House of Representatives intimating that it had agreed to the amendment made by the Senate in this bill.

page 2823

COLONIAL LIGHT DUES (RATES) BILL 1936

Second Reading

Senator BRENNAN:
Assistant Minister · Victoria · UAP

– I move -

That the bill be now read a second time.

This bill is complementary to the other bill with which the Senate has just dealt, and is purely a. machinery measure. It is designed to bring our legislation into conformity with the British legislation on a matter which concerns His Majesty’s Government in the United Kingdom.

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

– What is the reason for retaining the word “colonial”? I thought that that term had been dropped.

Senator BRENNAN:

-It has been dropped in regard to Australia, but this bill covers a number of other places.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2823

PUBLIC WORKS COMMITTEE BILL 1936

Second Reading

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

[11.35].- I move-

That the bill be now read a second time.

The purpose of this bill is to enable the Commonwealth Public Works Committee to be reconstituted. By clause 2, the Commonwealth Public Works Committee

Act 1932,which suspended the operation ofthe principal act, is repealed. The effect will be that the act under which the committee originally functioned will come intofull operation again.

Under the existing act, the committee was requiredto inquire into all public works,theestimated cost of which was over£ 25,000, withcertain exceptions of the kind specified in section 14, such as defence works. One effect was that many inquiries of an almost identical character had to be made into such works as, the provision of automatic telephone exchanges, concerning which the investigations of the committee were unnecessarily repetitive. In order to avoid that repetition in the future, the bill proposes, by amendments to sections 14 and 15 of the principal act, to limit the inquiries of the committee to such works as. are referred to it by resolution of the House of Representatives. To ensure that control in the matter shall rest with the House of Representatives, clause 5 provides that a resolution to refer a certain public work to the committee for inquiry may be moved by the Minister or any member of the House of Representatives.

There are also other minor amendments of a consequential character.

The reason why the House of Representatives is referred to is that the works to be undertaken will be authorized by money bills, and. must be introduced in that House. The members of the Senate who have been chosen for appointment to the committee are Senators Brand, Cooper . and Brown.

Senator COLLINGS:
Queensland

– I have pleasure in announcing that Senator Brown was elected to the committee without opposition.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2824

AIR NAVIGATION BILL 1936

Second Reading

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

[11.42].- I move -

That the bill be now read a second time.

The purpose of this bill is to define more specifically the powers of the GovernorGeneral to make regulations providing for the control of air navigation. Section 4 of the Air Navigation Act 1920 authorizes the Governor-General to make regulations for the purpose of giving effect to the Convention for the regulation of aerial navigation and also for providing for the control of air navigation in the Commonwealth and the territories. The High Court, in the Henry case, upheld the power of the Governor-General in so far as regulations to give effect to the Convention and in relation to the territories are concerned. The purported power as to the Commonwealth generally was considered to be too general, inasmuch as such a power would cover intra-state operations not arising under the convention. It is clear, however, that theCommonwealth has power to enact legislation as to air navigation as incidental to the trade and commerce power in section 51, paragraph 1 of the Constitution. Under that paragraph, the Commonwealth may make laws with respect to trade and commerce with other countries and among the States. The bill proposes that the Governor-General’s regulation-making power should be defined with reference to this power in section 51 (1). In other words, it is proposed that, instead of the power being over the control of air navigation in the Commonwealth, it will be in relation to trade and commerce with other countries and among the States. In future, therefore, it will be permissible for air navigation regulations to be made to give effect to the Convention and in relation to the territories, and also in relation to air navigation having an interstate and foreign trade aspect.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2824

WINE OVERSEAS MARKETING BILL 1936

Second Reading

Senator BRENNAN:
Assistant Minister · Victoria · UAP

– I move -

That the bill be now read a second time.

This bill is designed to effect amendments to the Wine Overseas Marketing Act, in accordance with the provisions of which the Wine Overseas Marketing Board was established in 1929 for the purpose of controlling the export of wine from Australia and regulating the supply of Australian wines on overseas markets. The board’s functions are similar to those of the other export control hoards, dealing with dried fruits, canned fruits, dairy produce and meat. The Wine Overseas Marketing Board consists of one member appointed by the GovernorGeneral as the Commonwealth Government representative, two members elected to represent co-operative wineries and distilleries, and five members elected to represent proprietary and privatelyowned wineries - two for South Australia, one for Victoria, one for Western Australia, and one jointly representing New South Wales and Queensland.

During the last few years there have been many matters associated with wine marketing upon which there have been differences of opinion in the industry, and - it has not ‘been found possible to compose these differences by conferences arranged by the industry itself. In recent months these difficulties, having become more pronounced, special representations were made by the Federal Viticultural Council that steps should be taken with a view to bringing about an improved condition of affairs. Accordingly, a conference was held in Canberra last week which was fully representative of all sections of the industry. This conference considered fully, and came to agreement on, a number of matters closely concerning the industry, including the policy to be followed in regard to the fixation of minimum prices for wine exported to the United Kingdom, the relation thereto of the wine export bounty, the conduct of research and propaganda, and the reconstitution of the Marketing Board.

The purpose of this bill is to give effect to the recommendations of the conference regarding the re-constitution of the board. The only alteration proposed in the bill for the constitution of the Wine Board is the provision for representation of the grape-growers. Formerly grape-growers had no representative on the board, but the conference agreed that the growers should have a representative, and provision for this is made in the bill. This provision will enable the _ primary pro ducers in the industry to keep- in touch with the manufacturing and marketing aspects, and should lead to a better understanding between the growers and the wine makers.

The bill also provides for an alteration of the method of appointment to the board of representatives of various sections of the industry. In the past ‘this has been done by election, whereas it is now proposed that the members shall be appointed by the Governor-General after nomination to the Minister’ by the organizations concerned. The method of election previously provided for’ was considered by the conference to be inappropriate from the point of view of the representation of those who are most vitally interested in the export trade. After considerable deliberations the conference recommended that the various organizations should nominate their representatives. The grape-growers’ representative will be nominated to the Minister by the Federal Grapegrowers Council, and the two representatives of the co-operative wineries will be nominated by the Co-operative Wine Makers Association. Actually, in the past, these associations have never nominated more than two candidates, and it has not been necessary to have an election. It’ is proposed in the bill that the representatives’ of the proprietary and privately-owned wineries shall be nominated by the State organizations affiliated with the FederalViticultural Council. This’ method was recommended by the conference, because the council has in its membership more than 90 per cent, of the wine-makers who are interested in the export trade. The representative of the Commonwealth Government will, as in the past, be appointed by the Governor-General on the recommendation of the Minister. The bill provides for the alteration of the name of the board to the Australian Wine Board. This is in accordance with the practice which has now been adopted in the naming of all export control boards, because it is the desire of the Australian Agricultural Council that all such boards shall become associated with it as advisory bodies in respect of the industries with which they are concerned.

The bill contains few other provisions. Section 13 of the principal act is pro- posed to be amended to provide that in the event of an officer of the Commonwealth Public Service being appointed as secretary or an officer of the newlyconstituted board, he shall preserve his existing and accruing rights in accordance with the Officers’Rights Declaration Act 1928-33. It is also proposed that the board shall be required to submit its annual report in September instead of in July. This is an important proposal in connexion with an important industry, and I commend it to the Senate.

Senator DUNCAN-HUGHES:
South Australia

– I have not had time to read this bill in detail, but it seems to follow very largely the form of the Dairy Produce Act, for instance, which was enacted a. coupleof years ago. Insofar as there is to be one member to represent the grape-growers, I, personally, have no objection. The point I raise is that this organization is called a control board, but does it really control? We have a large number of these organizations, and, no doubt, they are excellent, representing interests of different kinds. The object of this board is to control the sale of our wines outside Australia. It has come to my knowledge during the last few months, and I think it is fairly general know ledge, that this board desired to cut out the minimum selling price in Great Britain. I am not certain whether the members of the board were unanimous in regard to that, but I understand that the recommendation was definite, and that it was turned down by Ministerial decision. The point I stress is this - can we call a control board one which cannot even control the price at which wine is to be sold overseas?

Senator Hardy:

– It might have control of many other factors besides price.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– HUGHES Price is an important factor. I submit that if a control board cannot say whether or not there shall be a minimum price for its commodity it cannot be said to control the marketing of that commodity.

Senator Hardy:

– That wouldbe the case if we defined the word “ control “ in the same manner as the honorable senator defines it.

Senator DUNCAN-HUGHES:

– We all know, for instance, that the Tariff Board has no definite control. Its duty is to advise the Minister and the power of control remains in the Minister - I should like to think that it remains in the Parliament. We are told repeatedly that our producers have control over their products, and, in this instance, that wineproducers exercise that control through this particular board. I hope that the Minister will have something to say on the point which I have raised, because, particularly in view of the approaching marketing referendum, it is definitely a matter of interest to the public as to whether these elaborate boards, which are increasing in number and incurring much expense for their upkeep, exercise real control in respect of their particular commodities. I am prepared to agree that they are composed, in the main, of qualified men, but I raise the point as to whether these men have, in fact, any real control over the product with which they are concerned, or whether it is not rather a case of the last word remaining with the Minister.

Senator BRENNAN:
Assistant Minister · Victoria · UAP

– The new board will have control of marketing, which includes control of the price. The old board possessed that power, but it would take a considerable time if I were to explain to the honorable senator how it was that the old board came to abandon its rights to fix prices.

Senator Duncan-Hughes:

– Are my facts substantially correct?

Senator BRENNAN:

– Yes. Without any authority whatever the board dropped the minimum price, and it did that, I am afraid, because of some difference with the Minister.

Question resolved in the affirmative.

Bill read a second time and passed through its remaining stages without amendment or debate.

Friday, 4 December 1936

page 2826

SPECIAL ADJOURNMENT

Motion (by Senator Sir George Pearce) agreed to -

That the Senate at its risingadjourn tilla day and hour to be fixed by the President, which time of meeting shall be notified to each senator by telegram or letter.

page 2827

LEAVE OF ABSENCE TO ALL SENATORS

Motion (by Senator Sir George Pearce) - by leave - agreed to -

That leave of absence be granted to every member of the Senate from the determination of the sitting this day to the day on which the Senate next meets.

Friday, 4 December 1936

page 2827

ADJOURNMENT

ValedictorySpeechesButterProductionWheatHomePrice.

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

[12.3 a.m.]. - In moving -

That the Senate do now adjourn,

I should say that, in the normal course of events, we shall not meet again this side of Christmas. I take this opportunity of thanking you, Mr. President, the Chairman of Committees, and honorable senators generally for the way in which all haveco-operated with the Government in getting the business through. Also, on behalf of the supporters of the Government, I extend to yon, the Chairman of Committees, honorable senators, officers of the ‘House, the Hansard staff, and others, our very best wishes for a merry Christmas and a happy and prosperousNewYear, and our fervent hope that this mad world will, in the coming year, reach sanity.

Senator COLLINGS:
Queensland

– On behalf of the Opposition,I second the motion, and gratefully acknowledge the kindly expressions of the Leader of the Senate. We, on our part, extend similar good wishes to the right honorable gentleman and his colleagues, to you Mr. President, the Chairman of Committees, all honorable senators, members of the staffs of the House, and members of the Hansard staff, for the services that have been rendered to us. We hope that all sections of the Parliament, on its legislative and administrative sides, will have all the happiness possible over the festive season.

Senator HARDY:
New South Wales

– I desire, on behalf of the members of the Country party, to extend to other honorable senators, including yourself, our appreciation of the courtesies that have been extended to us during the year. I wish every one happiness and a particularly merry Christmas.

Senator BRENNAN:
Assistant Minister · Victoria · UAP

– Although I have risen for another purpose, I desire to associate myself with all that has been said in the way of thanks, felicitations, and good wishes. This morning I was asked questions by two honorable senators, and promised to try to let them have the answers before the sittingconcluded.

Senator J B Hayes:

asked the Minister representing the Minister for Trade and Customs -

  1. What was the total production of butter in Australia for the year ended the 30th June last?
  2. What was the approximate proportion of the output that was made on farms and sold as “dairy butter”?

The Minister for Trade and Customs has supplied the following answers -

  1. Approximately 191,481 tons.
  2. It is estimated that 4 per cent. was made on farms, but no. information is available as to the quantity which was sold as “dairy butter “.

I, as representing the Minister for Commerce, was asked bySenator DuncanHughes -

Has anything been done (and if so, what) concerning recommendation No. 4 on page 9 of the supplement to the First Report of the Royal Commission on the Wheat, Flour and Bread Industries-that an expert committee be appointed by the Government to consider and report whether maintaining a home price in excess of world parity is the best means of assisting primary industries?

The Minister for Commerce has supplied the following answer -

No, but the matter was thesubject of detailed discussion at a conference representative of all sections of the wheat industry, and has also been deliberated on by the Australian Agricultural Council.

The PRESIDENT (Senator the Hon. P. J. Lynch). - Before putting the motion moved by the Leader of the Senate, . and seconded by the Leader of the Opposition, I wish to identify myself with the expressions of goodwill and fraternity that have fallen from the previous speakers. It is well that a season of this kind should occur from time to time, filling the minds of men with feelingsof peace and goodwill towards their fellows. It is good that we should, at times, cast aside the jarring and warring ideas that too often beset out minds. It does us good to indulge even for a few brief moments in kindly feelings towards our fellow creatures. It : must be remembered that in public life, in the discharge of our task of making the laws and rules of the community, a greater tax is imposed at times upon our patience:. than is the lot of the ordinary citizen. The necessity for consideration and forbearance has, in our case, always to be kept in mind, in order that the proceedings of this chamber may be conducted in the most orderly fashion. There is no reason why, whilst we hold conflicting opinions, we should not concede to our fellows - the right to hold - their opinions also: - To my mind the man who arrogates to himself the right to hold an independent opinion whilst denying it to his fellows is the worst kind of ‘tyrant, however much, he may masquerade as a friend of liberty. So far as the staffs of the several departments of the Parliament are concerned, they have acquitted themselves with their usual zeal, good faith, industry and desire for cooperation, whilst doing their best to make the lot of members as easy and comfortable as possible. It is a characteristic of the staffs of Parliament that they have behaved in that way for very many years, and it is but doing them bare justice for us to bear witness to the uniform courtesy, kindness and devotion to duty which it has invariably been our happy lot to experience at .their hands.

Question resolved. in the affirmative.

Senate adjourned 12.10 a.m. (Friday) till a day and hour to be fixed by the President.

Cite as: Australia, Senate, Debates, 3 December 1936, viewed 22 October 2017, <http://historichansard.net/senate/1936/19361203_senate_14_152/>.

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