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Wednesday, 29 April 1942

Mr DEDMAN (Corio) (Minister for War Organization of Industry) . - by leave - In November, 1941, the Prime Minister (Mr. Curtin) announced the establishment of the Production Executive of Cabinet to supervise the industrial aspects of the war effort, and the Department of War Organization of Industry became the secretariat of the Production Executive. On taking over the portfolio, I had found that my department, despite its existence for five months under the previous Ministry, had no office, no staff, and no departmental organization. In consequence, it is only during the months since November of last year that the work of the Production Executive and of my department has gone effectively ahead. Even by the end of February, despite all our efforts to retrieve the time lost during 1941, it had proved impossible to push the work on beyond the early stages of development. We had secured the active co-operation of employers and of the trade unions in the preparation of plans for the re-organization of industry on a war basis; we had built up a departmental organization capable of handling the problems raised; and we had made some contribution to the release of resources urgently needed for war purposes, by prohibiting the manufacture of certain products obviously unessential in war-time. In fulfilment of the responsibilities of the Production Executive in the administrative sphere, machinery to co-ordinate the work of the production departments had been introduced, and plans had been formulated for a uniform man-power authority for the Commonwealth. All these were important achievements. But already the work that was done two months ago can be seen in true perspective as no more than preliminary to the thorough-going reconstruction of industry which is now under way.

This reconstruction is dictated by the exigencies of national survival. Social and political objectives have no part in it, except to insist that unnecessary sacrifice be avoided. We have here, not the promised land of post-war reconstruction, but. the wilderness of total war. Moreover, the pressure of events has forced us to crowd into a few weeks activities which might well have been the work of many months. I must ask honorable members to keep these facts in mind as I review the course of our policy and actions.

The task of war organization has two principal aspects, in both of which substantial progress can be reported. In the first place, there is the specific duty of setting in motion a transfer of the nation's resources into those uses in which they will go furthest towards victory. For this duty, my department is immediately responsible. Some important, measures we have already put into effect; others we are holding in readiness for operation at the proper time; and detailed plans now nearing completion will ensure over the next few months an increasing flow of man-power, materials and productive equipment into the main Stream of the war effort. In the second place, the task of war organization raises more general questions with which my department is concerned as the secretariat of the Production Executive. These broader questions are derived chiefly from the obligations imposed on the Production Executive to maintain a general review of our war commitments in relation to our productive capacity, and of the activities of the various departments concerned in fulfilling those commitments. In this aspect, attention has been chiefly concentrated on problems arising out of the growing difficulty of fitting war commitments and essential civil needs into the one limited capacity, and on the implications for our war economy of substantial accessions in Australia of strength from allied sources.

For reasons of national security, it is not possible to give to the House a complete account of this second aspect of war organization. But I propose to outline briefly what we have done in the first aspect, that of diverting all available resources to essential purposes. It became clear at an early stage that no single method of achieving this diversion would be suitable in all circumstances. We decided, therefore, on three methods, which would allow a choice of technique according to the conditions of the industry and the urgency of the demand for the particular resources involved. These methods may be labelled 'briefly rationalization, prohibition of production, and prohibition of employment.

Rationalization is the method which promises eventually the most satisfactory results, though on a comparatively longterm basis. The opportunity exists, by this means, to release very great quantities of man-power and other resources from non-essential employments with a minimum, of hardship to the community. As soon as we considered the problem, we realized that the co-operation of industry itself, both employers and employees, was indispensable if successful results were to be achieved in double-quick time. Accordingly, representatives of the Associated Chambers of Manufactures and of Commerce were called together and informed of our plans. Each section of industry was asked to make a comprehensive survey of its activities, and to submit rationalization plans to my department as soon as possible. I am pleased to say that our proposals were unanimously endorsed by the representatives of employers and employees, and that, this co-operative attitude has 'been maintained generally throughout the de- partment's work. Up to the present, more than 200 plans have been submitted to mv department, where officers with wide experience in business and industry are available to deal with them. These plans cover the activities of nearly 90 different industries, ranging from soap-making to cycle manufacture and from flourmilling to insurance. In some instances independent rationalization plans have been submitted by trade unions, and in many more cases the department has widened the scope of its information by discussing its problems with trade union officers as well as with employers. The department's procedure is to collect submissions on as representative a basis as possible from within the industry. These submissions are considered by the department, and discussed informally in detail with the interests involved: An official plan is then evolved, and referred to an industry review committee consisting of equal numbers of representatives of employers and employees. After any necessary changes have been (made, the plan is forwarded to the Production Executive for approval before being put into effect. All this procedure is essential if the completed proposals are to take account of conditions within the industry and of their implications for the work of other departments. All the plans are pushed on from stage to stage as quickly as possible, but the problems, both of policy and detail, are such that overnight results are out of the question. This is a good reason for using methods other than rationalization in many instances. Nevertheless, some important rationalization plans have already been completed, and have been, or are being, put into effect.

I can best describe the progress that has been made in this direction by giving the House some examples of the results which particular rationalization schemes can produce. I must emphasize, however, that most of the plans I shall mention have yet to receive the consideration of the Production Executive, and in many cases important difficulties have still to be cleared up- Accordingly, none of the details 1 mention should he interpreted as a final commitment to any particular course of action. It has been found that one' of the most important sources of industrial waste from a war-time viewpoint is the production within an industry of a multiplicity of varieties, articles of every size, grade and colour, varying in degrees of usefulness from staple necessities to the objects of passing fancy. By insisting that an industry should concentrate on a minimum number of products of standard design, we can often achieve great increases in the simplicity and efficiency of production, and avoid throwing away resources on things that can well be done without in war-time. The confectionery industry, for example, used to produce many hundreds of varieties of chocolates and sweets; these numbers can without hardship be cut by 90 per cent, or more. The confectionery firms have already gone a long way towards standardization, and plans are now afoot for further reductions. .This will enable manufacturers to concentrate on staple lines suitable for the services and essential civilian needs, and effect important economies in man-power, paper, packaging, and in the use of imported cocoa beans. Many other industries could be named as instances of the wide scope for rationalization of this kind. Pharmaceutical products, bicycles, cosmetic and toilet preparations, radio sets, building materials, smallgoods and clothing of all kinds - these are a few examples, and in respect of each, our rationalization plans provide for the appropriate degrees of standardization, though problems of detail remain to be settled.

This aspect of rationalization is by no means always a negative one. In some industries the objective is not merely to eliminate unnecessary articles, but also to ensure that the industry shall attend fully to the production of articles which are essential. This must be done irrespective of the relative profitability of alternative lines. In one industry, for example - that of woollen and worsted textiles - investigation revealed that firms were producing classes and grades of material for civilian purchase which bore little relation to the real needs of the community. Thus, when my department took up the question, there had been no production for three months of greys and blues for boys' wear. With the cooperation of the manufacturers and of the Textile Workers Union, we were able to allocate production in suitable proportions to a number of standarized lines which are essential. The executive control necessary to ensure this was delegated by the Production Executive to the Department of Supply and Development, which had substantial dealings with the industry in connexion with service requirements, and already the manufacturing programme is operating to schedule. Another example of positive rationalization is provided by the boot and shoe industry, in which plans are now well advanced to ensure that manufacturers shall devote their capacity to a minimum number of utility types for the services and essential civil requirements. In this case, special attention has bad to be given to ensuring that children's shoes shall be produced in reasonable quantities. In both these instances rationalization has been designed, not to divert resources from the industry, but to ensure that the resources employed in the industry shall be used to make the things we really need. It is not surprising that anomalies of the kind revealed should occur, since, however good a manufacturer's intentions may be, he cannot always be aware of changes in the production programmes of other manufacturers. A. general oversight of the industry, such as is provided by our rationalization inquiries, is necessary to detect the anomalies as they arise.

A different type of rationalization, often associated with, but sometimes independent of, plans for the elimination of unnecessary varieties, is that which provides for the concentration of output in a smaller number of factories or other productive units. If, for example, a particular plant is specialized to the manufacture of a variety considered to be non-essential, then some degree of concentration is already implicit in the elimination of that variety. This is a special case ; but in every instance in which an industry, for whatever reason, is obliged to curtail its total output during the war, it is necessary to inquire carefully whether the spreading of the restricted output over the existing number of plants will mean a waste of resources. This is a very probable result if a considerable number of plants are all working well below capacity. If, on the other hand, production can be concentrated in a limited number of plants all working at or near capacity, important economic? may be achieved. Output can be concentrated in the most efficient plants; the cost in resources of producing each unit of output is generally lower as capacity output is approached; key-workers, foremen and managers are released for urgent tasks ; and floor space can be used for war or other essential purposes. In planning for concentration where it promises such benefits as these, my department is not unmindful of the need to provide for the possibility of future necessary increases in the scale of output, and to ensure that production shall be located with an eye to the saving of transport and the dangers of destruction by enemy attack.

In all proposals for concentration of production, the fate of enterprises ousted from the industry is a matter of concern. In this connexion, we are examining the policy adopted by the United Kingdom Board of Trade, which protects as far as possible the interests of suppressed firms by arrangements for the pooling of profits in one form or another, so as to minimize the advantages of the firms kept in production. Profit adjustments should at the least provide for the maintenance of the machinery and other equipment of suppressed firms where more essential use3 cannot be found for it. It should be remembered that concentration, by reducing costs, will itself often provide extra profits from which provisions of this kind can be made. Moreover, in some instances firms forced for national reasons to leave one line of production can transfer their attention and much of their equipment to some form of essential production.

There are very difficult problems in this sphere, not all of which have yet been solved. But in some industries where obvious waste would otherwise result, plans for the concentration of production are being thoroughly worked out. One of these is the flour-milling industry, which has a total gristing capacity of nearly twice the quantity of flour that is likely to be needed for a long time to come. Another is the dry-cleaning industry, in which concentration is supported by trade associations and trade unions. In this case, the special objective is to avoid the waste of cleaning solvent, which is in very short supply, since some types of plant are much more wasteful than others. In respect of motor-garages and service stations, we have plans under way which envisage the concentration of tools and skilled labour, according to a zoning plan, in units which will provide for the repairs and servicing of essential vehicles and undertake munitions production. The industries manufacturing windmills, bicycles, and electrical appliances provide further instances of the many industries in which possibilities for concentration are being given serious consideration. Another fruitful field for concentration is that of wholesale and retail distribution, and this is not being neglected.

The rationalization plans for the banking system, now well advanced, include provision for a special form of concentration. This is to be effected by closing one or more bank branches in the many localities in which banking facilities are greatly in excess of the community's needs. This planned concentration of branches is essential if the banks are to carry on their necessary activities while meeting the demands of the Services for man-power. But I am afraid that I must repeat the statement that I have had to make on more than one occasion in the past: to date, no branch of any bank in Australia has been closed in terms of plans formulated by my department. It is true that the banks have closed some branches in towns where only one bank was in operation, but this was done without my sanction. My department at once took the matter up with the banks, which have now undertaken that no further branches will be closed pending the completion of our rationalization plans. They have agreed, in addition, at my request, to provide at least agency facilities in localities left without banks by unauthorized closings.

In some cases it is possible to arrange for the concentration of some of the activities of industry without sinking the identity of individual firms or concentrating the whole of the productive process in a few firms. An obvious example is that of the delivery systems which have been organized by the master drapers in the principal cities. Another instance, in which it is hoped to effect concentration of this kind, occurs in the flour-milling industry, in which there is a possibility of some sort of central organization to control the business of selling flour as distinct from milling it.

A third broad class of rationalization is designed to ensure the utmost economy in transport facilities and in the labour and fuel used in deliveries of all kinds. I need not describe at any length the measures taken by my department in this regard, since typical arrangements are already in operation and have been given wide publicity in the press. The retail delivery of all commodities other than milk and bread was covered by an order gazetted on the 10th April. This prohibited retail deliveries throughout the Commonwealth, except where the weight of the commodity to be delivered is more than 4 lb., or its length more than 3 feet, and then delivery may be made only once a week. A special exception was made in respect of meat, which may not be delivered if the consumer lives less than 1 mile from the nearest retail butcher's chop, but which may be delivered three times weekly if the distance be more than 1 mile. Provision was made also to meet the needs of hospitals, restaurants, boarding-houses and other large establishments. In relation to milk and bread it appeared undesirable to apply such drastic restrictions, and accordingly arrangements are being made for zoning systems in the principal metropolitan areas. The administration of those systems is being delegated, as far : as possible, to existing State authorities. As examples of the saving of man-power which zoning schemes of this kind can effect, I cite an estimate that bread zoning in the metropolitan area of Melbourne will release about 500 carters. I nm not unmindful of the economies that zoning will secure and have taken steps to see that the Prices Commissioner is kept informed, so that all cost reductions will be passed on to the consumer in the form of reduced prices.

But our attention has not been confined to saving labour and transport in retail deliveries. The rationalization plans for all industries ensure that, wherever the opportunity exists, all unnecessary crosstraffic and transport of every kind will be eliminated. Sometimes transport from one end of the continent to the other can be avoided by a few relatively simple adjustments of markets as between manufacturers. It would be pointless to quote examples of rationalization plans which devote attention to this sort of economy, since it is a feature of the vast majority of those which my department is handling. In this aspect of our activities we are working in close collaboration with the Department of Land Transport.

Two industries deserve separate reference, although in these our rationalization inquiries have only just begun. These are the wool and the meat industries, which my department is examining at the special request of the Central Wool Committee and the Australian Meat Board. It is intended to evolve rationalization plans for the pastoral industry in all its aspects, right to the killing and processing of meat and the transport of wool to the spinning factory or the docks. Spinning and weaving are, as previously mentioned, covered by other rationalization plans. The wool and meat plans, when complete, will ensure that the manpower engaged in two of our greatest industries will be concentrated where it will be of mast use. Moreover, our inquiries will enable us to advise the man-power authorities with respect to the appropriate policy to be pursued in the granting or the withholding of protection and the reservation to man-power within the industries.

The account that I have given of rationalization plans now in progress should provide honorable members with a general picture of the activities of my department at the stage which we have now reached. There is, however, a problem, on which I have not touched, which is common to many rationalization schemes, and has made necessary much careful thought. This is the implication of rationalization plans in relation to brands and trade marks, and to the goodwill which is associated with them. If rationalization is to succeed, it cannot be prevented from affecting the use of brands and trade marks. Elimination of these, to some degree at least, is almost always implied by the elimination of fancy and luxury varieties of products. It is difficult to find a place for the fine distinctions between products signified by many brands and trade marks when an industry is devoting its whole capacity to the production of a few standardized lines for essential purposes. If, moreover, some firms are required to specialize in service requirements while others supply essential civil needs, there is an element of inequity in the arrangements, for they enable the firms supplying the civilian market to gain a definite advantage in keeping their names before the public. Or again, if production be concentrated in a few firms to serve the overriding needs of the present, it would not be equitable to allow these enterprises to acquire a permanent goodwill out of the nation's misfortunes. These facts, together with the consideration that brands and trade marks in themselves use up valuable resources in printing and packaging, must give rise to the query whether competitive product.markings oan be permitted to continue in those cases where a standardized product would obviously promote both efficiency in production and equity as between producers. This does not. mean that we are planning a general offensive against brands and trade marks; but it does mean that I shall not, hesitate to move, in every case, for the most effective rationalization plan, irrespective of the interests of particular firms in productmarkings of one kind or another. As the Prime Minister said in a recent forceful statement, we cannot allow 40 different brands of toothpaste to stand in the way of releasing men and materials for the war effort.

If my review of our rationalization plans does nothing else, it should at least show the difficulty of the problems involved. Whilst I have no doubt that in all cases effective solutions can be found, it is of no use to pretend that this can be done with all the speed that the present emergency demands. Accordingly, we have made use of the two other methods of diverting resources to essential purposes which I listed earlier, namely, prohibition of production, and prohibition of employment.

The great virtue of the outright prohibition of the production of specified articles is the speed with which the restriction can be imposed. It is, however, only practicable to issue a general prohibition if the community can clearly do without further supplies of the products concerned. Nevertheless, three orders have already been issued, covering a substantial range of non-essential articles, and further orders may be expected in the near future. These orders will embody the results of a comprehensive departmental inquiry which will enable us to extend the range of prohibition to the full limit within which the technique can operate satisfactorily, and at whatever speed may be dictated by the growing demands for labour, materials, and other resources employed in the industries affected.

The order which prohibited the manufacture of a large number of cosmetic preparations is & good example of the relationship which may exist between rationalization plans and prohibition orders. In that case, the co-operation of the industry had been secured in formulating rather drastic rationalization plans, and discussions were still proceeding when it was learned from the Medical Equipment Control Committee that the restriction of cosmetic production was an urgent necessity in order to conserve scarce supplies of oils and chemicals for medical purposes. It was found that the majority of the prohibitions or restrictions desired by the Medical Equipment Control Committee were already incorporated in the industry's tentative plans for rationalization. Prohibition orders were therefore issued in order to effect urgent economies pending the completion of plans for the full rationalization of the cosmetics industry.

Some of the early prohibitions were applied to non-essential production in only South Australia and Victoria, but plane were made to extend the prohibitions to other States as soon as it became clear that the man-power shortage, already obvious in South Australia and Victoria, had become more widespread. Tasmania and Western Australia have now been brought within the scope of the prohibitions. The date of the extension to any State has been, and will be, governed by reports from the Minister for Labour and National Service, and other sources on the employment situation in each State.

Every precaution is being taken to ensure that . man-power and equipment released from non-essential uses by prohibition orders will be utilized to the fullest possible extent for essential purposes. Employers are required to notify my department of the exact types of labour which are released when production ceases. This information is passed on to the Director-General of Man Power, whilst the men and women displaced are being told to report to the appropriate national service office. In addition, details of the machinery, equipment, and floor space that can be made available are circulated to all production departments, who can then determine what use can be made of them. There are, however, difficult problems involved in making sure that the man-power and other resources set free shall be used in the most effective way. I shall have something more to say about that in a moment.

Recently, control over building operations throughout the Commonwealth, with certain exceptions, was transferred to my department from the Treasury, which had been exercising a degree of control arising out of its regulation- of capital issues. Control by my department will involve a special type of prohibition of production. Civilian building operations will be regulated according to principles which will take full account of the need for building labour and materials for essential purposes, including the needs of the services, the housing of munitions workers, and the construction of air-raid shelters.

In some industries, it is impossible to use the method of prohibiting production, 6ince their activities cannot be dispensed with altogether, whilst rationalization plans would take too long to complete or would be impracticable for some other reason. In cases of this kind, we can produce another weapon from our armoury. This is the use of an order prohibiting the employment of certain types of labour in specified industries. By this means, we are able to concentrate our diversion of man-power directly on labour of those types that are most urgently required, whilst care is taken to ensure that the industry has available to it expedients which will enable it to carry on well enough for war-time needs. This technique for withdrawing labour directly from less essential activities was first introduced in South Australia. The need in that State is for a large number of females to staff munitions factories, and it has been decided that retail shops could release young women in considerable numbers without destroying the retail facilities needed by the public. Accordingly, arrangements have been made, in collaboration with the Director-General of Man Power, to require females of specific ages employed in retail shops to register with the National Service Office. When the registrants have been examined, the employment by retailers of female assistants in the specified age groups will be prohibited unless a special permit be granted. Similar steps are being taken in Victoria and Tasmania; and the same method will no doubt be used to divert labour to essential activities in other States as it becomes necessary. We envisage the extension of the method to many more classes of labour. It is perhaps necessary to stress that this technique for displacing labour directly is no different in basic principle from rationalization or prohibition of production; all three release resources which then become available for other purposes.

I have given to honorable members an' outline of the methods we are using to divert every passible item of resources from non-essential activities, and of the measures we have introduced to that end. Not every one will agree with every action that has been taken. But I hope that no one will dispute the urgency of the task, or the need for tackling it without prejudice or sentiment. In the circumstances in which we are placed, wo cannot afford to permit a single non-essential activity to compete with the war effort and our other urgent needs. But merely to release resources from non-essential employment is not enough. There is the further problem of making the most effective use of the resources released. It is with respect to man-power that this problem arises at present in its most acute form. It is all very well, for instance, to prohibit, as we have, the production of fancy leather poods. The next step is just as important : We must ensure that the men and women released from the production of leather goods find their way, either directly or indirectly, into munitions factories or into vegetable production. In considerable degree, the difficulties of this step are lessened by its very urgency, since the demand for even unskilled types of labour in many areas is already almost insatiable. Nevertheless, problems on a significant scale must frequently arise. Here there is need for the highest degree of co-operation with other Commonwealth departments. It may be that the labour released by my department's activities is not suitable for munitions production or farming. This position may be met, to a degree, by training schemes organized by the Department of Labour and National Service. To some degree it may be necessary to organize the transfer indirectly. The men and women from the leather-goods factories may go to other essential industries where they can replace employees who are more suited Jo, r*r can be more quickly trained for, munitions or vegetable production. Problems of this kind are the immediate responsibility of the Director-General of Man Power, whose organization has only recently been built up, but must prove indispensable in arranging for the efficient utilization pf the resources which my department salvages from the rubbishtip of non-essential production. The machinery for the closest co-operation between my department and man-power authorities is being rapidly developed. This is necessary, not only in order to handle problems of the kinds that I have mentioned, but also to ensure that manpower policy does not clash with rationalization schemes in process of introduction by -my department.

Mr Abbott - Is all the assistance desired being given ?

Mr DEDMAN - Yes. I am as prepared as is any person to recognize that, unsettled problems and difficulties remain, both in the release of resources, which is my department's special province, and in the utilization of resources for essential purposes, with which my department is .concerned only as one of a number of departments. But this is merely to say that much remains to be done ; it does not detract from the work that has been done.

Moreover, the task of war organization, in its broadest aspect, is so gigantic, and the movement of events so rapid, that what in normal times might seem to be mountains now justly appear as no more than molehills.

I lay on the table the following paper -

Activities of Department of War Organization of Industry - Ministerial Statement. and move -

That the paper be printed.

Debate (on motion by Mr. Fadden) adjourned.

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