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Wednesday, 13 May 1936

Senator GUTHRIE (Victoria) . - AH honorable senators must agree that cement manufacturing is an industry natural to Australia. It should be economically sound and able to produce all of the local requirements of cement. Splendid deposits of lime, clay and coal are at its disposal, and I feel sure that no one would desire to do anything which would jeopardize its future. In considering the competition of British cement we must pay due regard to the cheapness of mining the chalk cliffs of Dover and converting the material into cement ; also, we must recognize the cheapness of coal in Great Britain. For these reasons cement can be manufactured there at a very low cost. We must recognize the efficiency of the British industry when we learn that the companies are selling cement at 30s. a ton in the United Kingdom and showing a huge profit. Before going into the " pros and cons " of the industry in Australia, I wish to make it clear why I intend to vote in support of the Government on this item. One reason - and I suggest that this cannot be lightly brushed aside - is our position as a full partner in the British Empire and a party to the Ottawa agreement. It is all very well for some honorable senators to say that the Ottawa agreement has nothing to do with this matter. The British Government, through its representative in Australia, has very definitely stated its opinion that if we put a duty on cement higher than that recommended by the Tariff Board, we shall be committing a breach of the agreement.

Senator BROWN - Does the honorable senator believe that the reduction of duty agreed to by the House of Representatives, constitutes a breach of that agreement ?

Senator GUTHRIE - -I do not pretend to be nearly so good an authority on the Ottawa agreement as is the British Government, whose representative in this country has conveyed to the Government the opinion of his Government, that a duty on cement above that recommended by the Tariff Board will constitute a breach of the agreement. That view is endorsed by every member of the Commonwealth Ministry, which I was elected to support.

Senator Sampson - What is the honorable senator's opinion ?

Senator GUTHRIE - I think that the retention of the British duty, would be a breach of the Ottawa agreement. Some people, I notice, are inclined to regard the Ottawa agreement as a document of little moment to Australia, whereas it has been of incalculable benefit to this country.

Senator Sampson - 'And to Great Britain.

Senator GUTHRIE - I admit the honesty and sincerity of those who take the opposite view, and I wish to have the opportunity to-night to state, quite dispassionately, my own opinion on this important subject. Honorable senators would do well to remember that the value of our exports to Great Britain has increased from £44,500,000 in 1932, to £51,500,000 in 1935. This increase, I suggest, is definite evidence of the advantage to Australia of the Ottawa agreement. I know, of course, that four eminent King's Counsel have expressed the opinion that the imposition of the British duty of 6d. per cwt. is not a breach of the Ottawa agreement; but I take the view that if it is not a legal breach, it is at all events a moral breach of that arrangement. We all know that members of the legal fraternity thrive on differences of opinion on legal matters, and I assume that the Ottawa agreement is no exception. That contract imposes on the Government of this country a moral, if not a legal, obligation to do certain things, and it should not be necessary to remind those who intend to vote against the Government on this item, that the Government of the Mother Country has at all times scrupulously honoured its moral and legal obligations.

In regard to the cement duties, we should be guided by the Tariff Board, which is an unbiased and experienced tribunal, composed of Australians who thoroughly endorse the pro tective policy of this country. The board has submitted two reports. The second was issued in March of this year, and contains findings which, to my mind, are conclusive. The board stated that users of cement in this country have been charged unnecessarily high prices, which react unfavorably on government departments, local governing bodies, roads boards, builders, and contractors, whose costs are increased, and also penalize the general public through higher costs for dwellings. I should like to see a much larger proportion of Australian roads constructed of cement, instead of imported bitumen. In the United States of America, where wages are higher than in Australia, cement roads can be constructed for one-third of the cost in Australia. If cement were readily available to contractors and builders at a reasonable price, say £3 10s. a ton, as against 30s. a ton in England, and £2 a ton in Canada and the United States of America, much larger quantities of this valuable building material would be used, and there would be a great deal more employment in Australia. The industry is a good one. I have nothing whatever to say against it. I should be exceedingly sorry if, as the result of my vote on this item, any cement factory in Australia had to discontinue operations. If I conscientiously believed that a vote for the Government on this item would damage one cement company, I should seriously reconsider my attitude.

Senator Sampson - If the honorable senator were satisfied that the British duty of 6d. per cwt. was not a breach of the Ottawa agreement, would he vote against it?

Senator GUTHRIE - I should not do anything that would be a contravention of any provision of the Ottawa agreement. It is. true that the cement industry gives employment to 2,000 Australian workers, but the important point to bear in mind is that cheaper cement would mean increased building activity and additional employment in the building trade, which alone provides work for 20,000 Australians. I am advised that the price of cement in Australia is two and a quarter times higher than in any other country.

Senator Sampson - On whose authority does the honorable senator make that statement?

SenatorGUTHRIE.- On what I believe to be very good authority - one of the largest users of cement in Australia. The Australian manufacturers have an unlimited supply of the raw material. Some of the companies have the limestone and coal on the same property. If cement were available at a cheaper rate larger quantities would be used, and there would be a reduction of construction costs generally, to the benefit of the entire community. Some honorable senators appear to be under the impression that if the Tariff Board's recommendation is accepted, British cement will be admitted free of all charges. That is not the case. The Tariff Board stated that exchange is equivalent to a duty of 14s. a ton, to which must be added freight and handling charges, which, in the opinion of the board, would provide an ample margin for Australian manufacturers. The board added that some companies, working in combination, have been charging excessive prices for cement. Another objection urged by the board is that the industry is over-capitalized, and although the companies have not been working at anything like capacity, profits have been high, and, in some cases, excessive. The board states further that five companies during the depression years showed a profit of £2,250,000. There also appears the statement that since last September, when the duty was taken off British cement, two new companies have been formed, and are now erecting buildings and plant with a view to catering for Australian requirements. Their action suggests that Australian manufacturers have nothing to fear.

Senator Hardy - Shares of cement companies on the stock exchange have greatly appreciated in value.

Senator GUTHRIE - Yes ; the prices of many shares are now almost sky-high. The board stated that the profits of the various companies have ranged from 6 per cent. to 32 per cent. The average primary producer would be delighted if he could get a return of 6 per cent, on his capital investment. It should be remembered also that this very satisfactory range of profit has been made by companies with an output ranging from 16 per cent, to 34 per cent, of capacity, the average being only 32½ per cent; this shows that the companies concerned were working to practically only one-third of their capacity. The profit of only one company, according to the board's report, has been less than 10 per cent., and the profits of several companies have ranged from 9s.10d. a ton to £2 0s. 6d. a ton, whilst the weighted average profit was £1 2s. 6d. a ton. These profits, I suggest, are excessive. The industry should be content with the profit of 10s. a ton as suggested by the board. The board went on to state that if cement could be made available at a reasonable price, the output of the companies would be vastly increased, because of the wider demand for the product. Finally, the board advised that the only way in which the manufacturers can be forced to reduce their prices to reasonable levels is by reducing the duty on importations. The high prices which have prevailed for cement in recent years hamper unduly the building, steel, timber, hardware and many other industries. If cement were available at a reasonable price the industries affected by it would be in a position to give employment to a much larger number of men.

The TEMPORARY CHAIRMAN (Senator Badman - The honorable senator has exhausted his time.

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