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Wednesday, 14 October 1931
Page: 732

Mr PATERSON (Gippsland) .- I do not desire to deprive the Government of any credit which may be due to it for the completion of the Canadian trade agreement; but it is fair to remember that the treaty was first negotiated by the late Mr. Pratten. The Government is to be commended for having continued and extended the scope of the arrangement he made.

It is remarkable that men who are apparently of normal intelligence should imagine that they have explained the trade balance completely when they have struck a balance between imports and exports. The Minister for Trade and Customs stated that, during the period 1023 to 1929, Australia's accumulated adverse trade balance was £78,000,000. No doubt the honorable gentleman totalled the imports and exports in that period, and convinced himself that the whole case had been completely stated. Other factors have to be taken into consideration when determining whether a country is going backward or forward economically. In connexion with the annual stocktaking of a business it would be ridiculous for a proprietor to attempt to determine the prosperity of the enterprise merely by comparing sales and purchases. He must take into account the extent to which stocks and plant have increased or decreased during the year. It is possible for a business to i,are been really profitable during a particular period despite the fact that its outgoings were greater than its incomings, if it has built itself up by additions of stock and plant which make it capable of conducting its operations more efficiently and extensively. That applies also to a farm. A fanner may find at the end of a year that his receipts from sales total less than his purchases. Yet he may have done quite well during the twelve months ; he may have increased his stock and plant to such an extent that his enterprise is in a much stronger position than it previously occupied. In considering the financial position of the country also, we have to take into consideration not only sales and purchases, but another very important factor: additions to stock and plant. Only a few days ago the right honorable member for Cowper (Dr. Earle Page) pointed out that during the last seven years about £100,000,000 worth of machinery had been imported into Australia. That is productive plan t which enables this country to produce more, and better, than it did before. Obviously, when extensive borrowing takes place over a long period, an adverse trade balance cannot be avoided, because the loans come to us in the form of imports. During the seven years 1923-29 the States of Australia, not the Commonwealth, increased the national debt by £207,000,000. The amount borrowed. came to us, not in gold, but in the form of machinery. and other imports. We have to bear that factor in mind when reckoning whether the country has gone forward or backward. The national prosperity cannot be gauged by merely setting the amount of exports against the imports during a given period. Some of the greatest' industrial nations had long successions of adverse trade balances, while building themselves up industrially. The United States of America, while progressing from a debtor country to one of the principal creditor nations, had a long and unbroken succession of adverse trade balances. During those years it was strengthening itself by purchasing abroad machinery and other means of production. Australia has been doing the same during the last decade. I do not contend that all the money borrowed was wisely expended, but the importation of £100,000.000 worth of machinery during the last seven years is an item to he entered on the credit side of the ledger. It is manifestly unjust to blame the Government of the Commonwealth during the years 1923-29 for the increase in importations that resulted from the extensive borrowing by the States. The Minister for Trade and Customs only half stated the case, and reached an erroneous conclusion when he said that because the Commonwealth had had a series of adverse trade balances, it had necessarily retrogressed. In any case, borrowing has now ceased, and I believe that the adverse trade balance would have been rectified automatically without resort, to those extreme measures to which the Minister attributes the reduction of imports. Even had no embargoes or surcharges been imposed importations would have been substantially diminished. The principal factor in redressing the adverse trade balance has been the reduced purchasing power of our people. After the boom and collapse of 1893, New South "Wales, which was a freetrade State, had a long succession of favorable trade balances, because its people were too impoverished to import. That is the position of Australia to-day. I believe that if the tariff wall were to fall to-morrow there would be an incentive to certain people to import, with the result that a further demand would bc made upon exchange, the effect of which would be to raise it to whatever point was necessary to prevent our importing more than we could afford. That exchange would take the place of these duties.

Mr McNeill - Of what benefit would that be?

Mr PATERSON - It would be of very great benefit to many of the Minister's constituents who export largely, because exchange would rise to its natural level instead of being prevented to a certain extent from doing so by high import duties.

I merely wish to add that I have little objection to offer to surcharges on what are actually luxuries. There are many articles in these items, however, which cannot be so described, and it is quite time that the 50 per cent, surcharges were removed from them. At the appropriate time I shall avail myself of the opportunity to vote against the proposals of the Government with respect to them.

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