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Wednesday, 4 July 1906
Page: 998


Mr JOHNSON (Lang) .- The suggestion of the honorable member for Bland to overcome the difficulty which has presented itself in connexion with this clause is one which many honorable members will feel disposed to support, as being less objectionable than the original proposal. With regard to the clause itself, I should like to point out that it is selfcontradictory in character. It aims ostensibly at the repression of monopolies, and so far as the first portion of it is concerned, an attempt is made in that direction. But in paragraph b we find that the effect, if not the intention, of the clause will be to establish monopolies instead of repressing them. Let us examine the provision as it stands. It says -

Any person who wilfully, either as principal or as agent, makes or enters into any contract, or is a member of or engages in any combination to do any act or thing in relation to trade or "commerce with other countries or among the States -

(a)   in restraint of trade or commerce to the detriment of the public.

That is aimed at preventing persons who are so engaged from combining for that purpose, and it fs made a punishable offence to combine for the purpose of restraining or doing anything that would tend to restrain trade or commerce with other countries. With that purpose I am in accord ; b.ut when we pass on to paragraph b of the clause, we find that it contains these words -

Or with the design of destroying or injuring by means of unfair competition any Australian industry the preservation of which in the opinion of the jury is advantageous to the Commonwealth, having due regard to the interests of producers, workers, and consumers.

It will be seen that the first part of the clause is directed to outside combinations having for their object the attempt to restrain trade or commerce with other countries or between the States. But the second part makes it a penal offence for persons to combine to do exactly the opposite to that, and to facilitate free competition among industries within the States. Because any person who combined for the purpose of destroying or injuring any industry by means of what is loosely termed unfair competition would be liable to the penalty. What is unfair competition? I suppose that if it could be shown that any competition had the effect of lessening the profits of those engaged in the industry or lessening the price at which the article could 'be sold to the consumer, it would be deemed to be unfair competition ; at any rate, competition which would prejudicially affect the industry concerned would undoubtedly be so regarded. Whilst under the first part of the clause any attempt to restrain or to interfere with trade or commerce is made a penal offence, under the second part any attempt not to do that, but to do' something which would facilitate and extend trade and commerce and cheapen the prices of commodities is treated in a like manner. In other words, whereas the first part of the clause is really aimed at me repression of monopolies, the second part, though it might not have been so intended, would unquestionably facilitate the establishing of monopolies, and, certainly, it would make in that direction, because if any combination of persons is to be penalised for entering into or intending to enter into competition with an established industry, then the inevitable result would be to establish a monopoly so far as that industry was concerned, by penalizing and preventing competition. O'f course, I know that those who are responsible for the Bill will answer that what is meant is unfair competition. But what is unfair competition ? It ought to be clearly defined in the Bill. But we cannot drag from the Minister any positive, tangible definition of the words " unfair competition." Every one must recognise that any competition which reduced the price of an article, or ousted from the market the manufacturers, producers, or sellers of any article connected with an established industry in Australia, would be deemed to be unfair competition. In other words, all successful competition would be deemed to be unfair competition, and, in the circumstances, punishable as prescribed in this clause. I submit that this is topsy-turvy legislation. While the first part of the clause makes it a punishable offence for any combination to do anything to destroy or injure trade or commerce with other countries or among the States by means of restriction - to do anything in restraint of commerce or trade-


Mr Isaacs - To the detriment of the public !


Mr JOHNSON - All restrictions upon trade or commerce, whether by private combination or by Tariffs, are detrimental to the public. The second part of the clause has an absolutely contrary effect, because it makes it a penal offence for persons to promote competition.


Mr Isaacs - It follows a great number of the American State laws, which make it penal to enter into combination with a wicked intent - either to increase or reduce the price of goods.


Mr JOHNSON -- Will the! AttorneyGeneral say that a reduction in the price of goods would be to the detriment of the public ?


Mr Isaacs - Taken by itself, it would not, but taken in conjunction with other circumstances, it might.


Mr JOHNSON - I can understand that an increase in the price of commodities would be to the detriment of the public. I can also understand the need and the desirability of legislation which aims al preventing any combinations that would tend to keep up the price of goods to the detriment of the public.


Mr Isaacs - The honorable member is acquainted with the old practice of running a coach off the road. In the same way, a combination might run the Australian industrial coach off the road.


Mr JOHNSON - When a State runs a railway from one part of the country to another, does it not have exactly the effect which the honorable and learned gentleman points out?


Mr Isaacs - That is a public railway.


Mr JOHNSON - Whether it be a public or private railway, the effect is the same, the coach is run off the road, and nobody complains, because it is recognised to be to the public advantage.


Mr Isaacs - The State does not put up the price again to the public as the successful rival of a coach proprietor would do.


Mr JOHNSON - The running of a coach off a road by a rival does not neces sarily mean an increase of the fares afterwards. During the period of rivalry, of course, the effect is to reduce the fares and freights.


Mr ISAACS (INDI, VICTORIA) - For the time being.


Mr JOHNSON - Admittedly, for the time being, and probably permanently,, though perhaps not to the same degree, because, as soon as the successful competitoracquired a monopoly and started to increase the fares or freights, it would naturally excite other persons to compete, with the result that the fares and freights would' be brought down again to the proper level.


Mr Isaacs - That is Adam Smith'sdoctrine, but it is not borne out in practice.


Mr JOHNSON - I disagree entirely with the Attorney-General in that regard,' because it is a natural law inseparable from competition. As soon as a firm has started in an industry which shows a good1 opening for the investment of capital, then we immediately find that others are willingto emulate that example, and try to establish a rival trade, and the natural result of the competition is to bring down the prices- Where there is only one person in possession the price can be kept up as high as the public will stand it, because the public have no alternative but to submit ; but assoon as a competitor appears, then, in order to secure any trade, the first man must lower his prices to the level of his competitor. That is the only means by which he can acquire a fair share of the trade. On the other hand, if his prices were kept up, hewould be run off the market, and the business would be left to his rival. In thisBill, however, we are attempting, bv artificial means, to interfere with natural laws, and the result must inevitably lead to nothing but confusion and disaster. I cannot conceive how the public could be hurt or injured by any competition amongproducers or importers, which would have the effect of lessening the cost df goods to them. Any competition which reduced the cost of goods ito them, must mean an increase in the purchasing power of their money, and I am astounded to find the Labour Party, and especially its free-trade section, supporting such monstrous proposals, inflicting untold hardship on the poorer classes. Paragraph b of this clausedeals with three conflicting; sections of the community whose interests have to be regarded. I admit at once that the producers, workers, and consumers may be perhaps alT the same people, but not in their capacities as producers, workers, and consumers. Every producer, like every worker, is a consumer. But still this paragraph deals with them in their separate capacity as producers, workers, and consumers. I can conceive of a combination - in fact, such combinations are known to be in existence - for the purpose of preserving alike the interests of the producers and workers in the way of profits and wages. The only way in which those interests could be' preserved would be by regulating the output of an article, and keeping up prices. But the very process of doing that would have a detrimental effect so far as the consumers were concerned, because they would have to pay more for the product than otherwise they would be called upon to do. A combination of this kind therefore, while it would have a beneficial effect upon the producers and workers, would have an injurious effect upon the consumers. How then would it be possible to conserve alike the interests of the producers, the workers, and the consumers when two of them were in conflict with the third? The only result of such an attempt would be to give one section an advantage at the disadvantage of the others, or two sections an advantage at the expense of the third, or to deprive them of an existing advantage in order to equalize matters by giving an advantage to the one which in other circumstances would be at a disadvantage. Undoubtedly in its operation the clause would override any provision in regard to the Tariff, because it would throw into the hands of an irresponsible tribunal - that is, one irresponsible to the people - absolute power to prohibit imports, and restrict trade and industry also within our own borders. As the honorable member for Perth pointed out on the second reading, this provision amounts to " protection run stark, staring mad." The provision aims at doing something which Parliament itself has refused to do, and which Parliament would, I believe, always refuse to do, namely, to interfere with trade and commerce to the extent of absolute prohibition. Any such proposal ought to be resisted bv every honorable member, irrespective of the political party to which he may belong. It would fake out of the power of Parliament the control of matters which should come properly and solely within its jurisdiction, and give the control into the hands of a tribunal not responsible, either directly, or indirectly, to the people. For that reason, I am strongly, opposed to the latter portion of this clause. As to importations, no doubt a number of commodities come into the country under specially favorable conditions of transit. We know, for instance, that there are Australian pianos sold at a certain .price, and that there are other pianos made by firms in other countries which are better, I am informed, than the locally-made articles, and which could be landed here at a much lower cost.


Mr Watson - Why were those pianos not landed at a lower cost before local instruments were produced1? Pianos are cheaper .to-day than ever before.


Mr Tudor - The ring must have been burst up.


Mr JOHNSON - I was not aware that there was a ring. Nor do I believe there was one ; but what is very clear is that pianos came here cheaper, not because of local competition., but because of outside competition, which is still going on. 'But who gets the benefit of the cheapness ? Is it not the purchaser? Why should the purchaser of a piano be debarred from getting his instrument at the cheapest possible price ?


Mr Watkins - The honorable member apparently wants to revert to the old conditions under which importers could demand high prices for pianos.


Mr JOHNSON - In the face of active competition, unduly high prices cannot be obtained; but this clause will, if carried, at once put up prices to ai monopoly level. All I assert is that we ought to have a free and open market. If locally-made pianos can be produced as good and as cheaply as instruments can be imported, by all means let the local industry go in and win. The locally-made article would, under such circumstances, be more readily purchased than the imported article.


Mr Tudor - The honorable member would like to see Australians reduced to the sweating conditions which prevail abroad.


Mr JOHNSON - Abroad ! Yes; in protectionist countries. The honorable member is talking pure clap-trap - no other word could be more fittingly applied to the utter nonsense to which he and his fellow protectionists so frequently give utterance. The honorable member for Yarra knows that the cost of producing an iceberg on the. equator would be infinitely greater than getting natural ice from the Arctic zone, but the labour and capital' involved could be employed to much better advantage in an industry more natural to a tropical climate.

The ACTING CHAIRMAN (Mr. Mauger). - How does the honorable member connect his remarks with the proposal in regard to the word " wilful " ?


Mr JOHNSON - I submit that" I am not bound to confine my remarks to that proposal.

The ACTING CHAIRMAN (Mr. Mauger). - Will the honorable member address the Chair, and connect his remarks with the matter under discussion?


Mr JOHNSON - Certainly. I am referring to the honorable member for Yarra in the third person; and- what I understand bv " addressing the Chair " is not to directly address an honorable member. I know that the Acting Chairman has certain fiscal proclivities, but I hope he will forget them while he is in the Chair.


Mr Tudor - That is a reflection on the Chair !


Mr JOHNSON - If I am to be called to order when I am dealing with an economic law affected by this clause, I think I am not being treated quite as I ought to be treated ; however, let that pass. What I was saying was that it is much easier and cheaper to produce ice under natural conditions favouring its production than to produce it in equatorial regions.


Mr Watkins - The honorable member is making a big jump from pianos to ice !


Mr JOHNSON - It is only by way of illustration. If articles can be locally manufactured as well and as cheaply as they can be imported, there is no reason why local manufacturers should not proceed to work. But when local manufacturers ask us to prohibit the importation of goods, in order to give them' a monopoly, and to enable them to increase the price to the purchaser, we have no right, in the interests of the public, to grant such a request. That is the application of my illustration. The purpose of the second part of the clause is to give a monopoly to certain people in Australia who have industries already established, by preventing others in Australia from establishing other industries likely to come into competition with them. Special mention has already been made of a certain harvester company. Under the Bill, if any combination of manufacturers of harvesters were to be brought into existence for the purpose of producing harvesters which could be sold at a cheaper price than those of the Sunshine Company, that company could take action with a view to prevent any such proceeding on the part of their intended rivals. It is not even necessary to await the establishment of a rival industry. Any persons who enter into a combination with the design of establishing another industry of the same character are liable to penalties under the Bill.


Mr Isaacs - No.


Mr JOHNSON - We have just had a statement to that effect from the Minister of Trade and Customs.


Mr Isaacs - I think the honorable member must have misapprehended the Minister.


Mr JOHNSON - If a combination of persons, willing to invest capital in the manufacture of harvesters, were to come into competition with the Sunshine harvester, with the intention to sell a similar article at a cheaper price, such competition must necessarily injure the business of Mr. McKay.


Mr Isaacs - This is not a Bill for the protection of any particular person's business, but a Bill for the protection of Australian industries as a whole.


Mr JOHNSON - As a whole; but the Minister of Trade and Customs just now gave us the very illustration I have mentioned. The honorable gentleman said that if the competition could be shown to be unfair - that is, that the combination was intended to cut down the price of the article - he would take action to prevent that being done.


Mr Isaacs - If the combination were for the purpose of destroying, an Australian industry.


Mr JOHNSON - If it were for the purpose of injuring or destroying an industry ; and any competition must injure an industry.


Mr Isaacs - No.


Mr JOHNSON - I must differ from the Attorney-General there. ' If I am manufacturing a certain article, and another person succeeds in cutting into my market, he injures me in my industry to the extent of his success ; for the measure of his success must be the measure of my_ failure, and to that extent my injury. I maintain that under this clause, any such competition would be comprehended, and the combination so offending could be mulcted in penalties. Will the Attorney-General deny that ?


Mr Isaacs - That is not correct, I can assure the honorable member. The view of the honorable member is, perhaps, not unnatural, but he is confusing an individual business with an Australian industry.


Mr JOHNSON - The clause deals with persons who combine to do certain things with the design of destroying or injuring, by means of unfair competition, any Australian industry, the preservation of which is advantageous to the Commonwealth.


Mr Isaacs - That shows that the clause does not refer to any individual person's particular business.


Mr JOHNSON - lt cannot be said for a moment that the harvester industry is not an individual business, and yet it is equally clear that it is an Australian industry. At any rate, this point was raised a while ago, and I certainly understood the Minister of Trade and Customs to say that, in a case of the kind, certain steps would be taken under the provisions of the Bill. It would be interesting to know who is right. With all due deference to the Attorney-General's legal knowledge, which I cannot pretend to dispute or impugn, I still think the clause is capable of the interpretation I have placed upon it, and it is an interpretation which the Minister of Trade and Customs has admitted to be correct. It is very confusing to have two Ministers piloting this Bill who give conflicting interpretations as to its provisions, scope, and purposes. I am in agreement with the general purpose of the first part of the clause, but I regard the second part as most dangerous, and in absolute contradition of the first part. The first part aims at combinations in restraint of commerce and trade with other countries, while the second part is aimed at combinations which promote competition, and thus prevent restraint. One part is diametrically opposed to the other, and I understand that the honorable member for North Sydney proposes, therefore, to omit sub-clause ib. I intend to submit a further amendment, but at present will only indicate its purport. My proposal is after the word " of," in sub-clause b. to omit all the words, with a view to substitute " preventing the manufacturer or vendor of goods from freely offering his wares for sale " ; or -

c.   Preventing the consumer or purchaser from obtaining his goods on the most favorable terms offered by fair competition in the open market.

I do not wish to say more at the present' Stage, further than to express the hope that the clause will be drastically amended. To pass the clause in its present form would simply be to empower certain irresponsible persons to seriously injure and paralyze the trade, commerce, and industry of the country.







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