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Thursday, 2 August 1906

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) . - In the Bill now before us,' we have a proposal to grant bounties for the production of a variety of articles, some of which already receive considerable encouragement under the Tariff Others receive a. smaller measure of encouragement from that source, whilst others again are on the free-list. I may say at once that I much prefer the granting of bounties to the imposition of protective duties as a means of encouraging production. In the first place, a bounty is not usually as permanent as a duty, nor does it increase the cost of the article to the user, although, in almost every instance, that is the effect of a protective Customs duty. My objection to bounties - and there is an objectionable side to the system - is that they often reach the wrong person, that they do not often effect their purpose, for even the production of articles after the determination to grant a bounty in respect of them is not always the direct result of the assistance so offered. Then, again, there is a danger of a bounty being followed by the imposition of heavy duties, which, when applied to materials entering into other manufactures, may necessitate an increase in the measure of protection granted to those manufactures. Honorable members, whether they favour or oppose the system, or are doubtful as to its efficacy, will have to consider on their merits the proposals of the Minister. They will have to examine this measure to discover whether the products which it is proposed to encourage are such as it is desirable to produce in Australia; whether the production of other articles might not be more worthy of encouragement ; whether the proposals will be effective; and finally, whether, the encouragement proposed will be as effective as other methods might be. In dealing with this question, I feel that we are indebted to the honorable member for Echuca, who made an admirable, interesting,, and instructive speech, on the motion for the second reading of the Bill. His recent visit to the United States of? America enabled him to give us first-hand information as to the latest methods adopted for the encouragement of production in that vast territory. The information he gave us as to the success of some of these methods, and the desirableness of introducing them here, should cause us to give very careful consideration to his recommendations. The question of the establishment of a Federal Agricultural Bureau, to which the honorable member referred, was debated at an earlier stage in the history of this Parliament. I quite agree with the honorable member that such a bureau, properly established, would be of great service to the Commonwealth, and would do more to encourage production - and especially the raising of products yet new to Australia - than would anything else. We should have to act in association with the States ; I should not be in favour of a Federal Department of Agriculture which would duplicate the work of the States. The field operations, as well as the work of practical cultivation, subject, of course, to scientific instruction, would have to be left to the experimental stations, under the control of the States. But the results obtained in the United States furnish us with an illustration of what can be accomplished in addition to the practical work by means of a highly scientific central staff dealing with matters that are not purely local. The difficulty with some of the States is that, whilst they have experimental stations and instructors to attend to the practical work of their Departments of Agriculture, some of them are unable to deal with the higher scientific work, which requires the attention of a considerable staff fully versed in the science of agriculture. Some of the States are either unable to add such a branch to their Departments of Agriculture or to employ a sufficiently large staff of high-class officers. Even if they were, the position would be- that we should have six separate staffs established at great cost, whereas one central staff could do the work which is not purely local, at much less expense. I think that the Commonwealth should assist the States in searching the world for trees and plants, not now growing in the Commonwealth, which would be likely to increase our productive assets, and largely benefit our producers. That would be a useful work, and the Commonwealth could undertake it. We could introduce such trees and plants, and send them to the experimental stations throughout Australia, where the results secured in different climates and in different soils could be noted. But, whilst the Parliament has indicated fairly strongly its desire that the Ministry should move in this direction, we find that the old method of granting bounties has been brought forward, and is to anticipate, at all events, a movement along the lines I have indicated. I do not think that any honorable member will say that the encouragement of the products mentioned in the Bill is undesirable, but I think there will be a difference of opinion on the question of whether or not their production is more desirable than that of other things, and whether some of really greater importance have not been neglected. In the report which the Minister has furnished the House, and on which, he has informed us,, the Bill was largely framed, there are some remarks about other products, one or two of which are of even greater importance than some of those which are to be the subject of bounties. For instance, we find, in regard to the introduction and planting of foreign timbers, the statement that " This might stand over for the present." There is nothing of more pressing importance to the Commonwealth than the replacing of those assets which we are so extravagantly sacrificing, first of all by the restoration of our Australian timbers, and secondly, by the introduction of foreign timbers which are yielding large revenues to the people of other lands. The fact that nothing has been done in that direction is a reflection on Australia, and if the Commonwealth Parliament can do anything to remove that reflection it should do so in conjunction with the States. It is a reflection on Australia that, in the course of settlement - and I admit that it cannot always be avoided - we destroy large quantities of magnificent and valuable timber, and that whilst we lose that timber and part with our asset in the shape of the land, we do nothing in the direction of replanting with similar timbers other lands of little use, so' that our forests may be maintained for the use of future generations. Further than that, I think there is a vast field in Australia for the introduction of trees that have been found very valuable in other countries, and the products of which we are importing to a very large extent.

Mr Ewing - As for instance?

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - As for instance, the corkwood of Spain - a most valuable tree. We have a native cork of a similar species. The Spanish cork tree grows well in gardens and plantations in Australia, and we have, in various parts, a climate and soil similar to those of the districts of Spain in which it flourishes. The tree is one of the most valuable assets which the Kingdom of Spain possesses, and by its introduction here we could, in the course of time, not only supply our own needs, but also export largely to -other parts of .the world. The demand for cork is growing. The present supply is not more than equal to the demand, and bids fair to be unequal' to it in the future. Then we import a large quantity of soft timbers. Why should we not plant on some: of our less valuable land the trees, from which these can be cut? B,y doing so, we should not only gain an advantage in not having to import our supplies of soft timber, but if the: trees were grown in the interior, close to towns, should also save the cost of conveying from the sea-board. In this way, we should obtain within twenty-five or thirty years an asset of enormous valueBut, instead of building up valuable resources, with a view to meeting our liabilities, we are parting with our assets, and piling up debts.

Mr Ewing - There is a difficulty in the way of doing what the honorable member proposes; because the Commonwealth does not control the administration of land' ' matters.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - The Government of the States, being the owners of the land of Australia, must, of course, aid in the action necessary to carry out the policy which I suggest. But the Commonwealth, by the establishment of a . central agricultural bureau, might give encouragement to the proposal, and- assist in carrying it into .effect by arranging for the importation of trees, and by providing for experiments in different places. There is no direction in which a central agricultural bureau could more profitably turn its energies than in endeavouring to replace our disappearing forests with useful timber trees. At Ballarat, the water reserve was, years ago, planted with pinus insignis, a tree of very little value as timber ; but when it was recently thought well to call for tenders for thinning out the forest which had sprung up, and purchasing the surplus timber, a firm of manufacturers in this State, of whom we have heard a great deal lately, gave, I believe, £6, 000 for it, and used it to their ownprofit for the making of packing cases, it being hardly suitable for other use. That is an instance of an advantage gained: by making a small plantation of trees POSsessing little- value as timber. If we successfully encourage the planting of really valuable timber trees, we shall do moregood for the Commonwealth than can. be hoped for from any of the. bounty proposals of the Government. An asterisk is placed before some of the articles- mentioned inthe report,, and. a note attached tothe effect that they are mostly tropical products, the giving of a bounty for whose production might be better left for consideration until the conditions of the Northern Territory and New Guinea are receiving special attention. That is rather a curious reason for omitting certain products, and giving preference to others which are equally tropical. Some of the products which have been omitted would better have been inserted than some of those which appear. The next question to consider is whether. the encouragement offered bv the measure will be really effective in establishing industries. I am afraid that in many cases it will not. I do not anticipate much from the giving of small bounties for the production of cocoa, coffee, cotton, canned fish, condensed milk, rubber, and rice. It is proposed to give a bounty of id. per lb. for the production of cocoa and coffee, which is small in comparison with the cost, the bounty offered for coffee being only one-third of the present duty. If coffee cannot be grown profitably under the present duty - I do .not say that it cannot - I do not think that a bounty of id. per lb. will make coffee- -growing a profitable industry. A bounty of £d. per lb. of seed1 cotton is offered for the production of cotton!; but, if I were favorable to the offering of bounties, I would propose a larger inducement.

Mr Hughes - The proposed. bounty is equal to about 10 per cent.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - Yes ; but it must be remembered that cotton-growing is a new industry in Australia, and that comparatively low prices rule in other parts of the world. The bounty offered for the production of some of the articles mentioned will be given for only a year or two.

Mr Ewing - That does not apply to the proposed bounty on coffee.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - The proposed bounty on coffee not yet .grown will have effect for about six years, but the proposed bounty on rubber will have effect for only a year or two, and I do not think that it will be a sufficient inducement for the establishment of the industry.

Mr Ewing - A bounty of 10 per cent, is surely something. I should like to hear the honorable member discuss a proposal to impose a duty of 10 per cent.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - I might approve of 10 per cent, as a rate for a revenue duty, but I might not regard it as a. protective duty, and any one who advo cated it as a protective dutv would have to show that it would be sufficient to bring: about the establishment of an industry here.

Mr Hughes - There is no analogy. A bounty is a direct incentive, and is givento the producer, while a duty may not goto the producer.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - Bountiesdo not always reach those for whom they are intended, and are temporary, whereas,, although duties may be temporary, if the policy of a country is protective they arelikely to have force so long as- that policy remains unchanged. A bounty of Jd. per lb. is to be given for the production of canned fish. I am acquainted with thecircumstances under which the canning of fish was undertaken: in New South Wales,, and I know that the cost exceeded what could be obtained for the fish by morethan Jd. per lb-

Mr Ewing - Still, it amounts to 10 percent.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - Yes ; but I fear that the Ministry will find that thev have frittered away a great deal of money,, and have obtained very little practical result.

Mr Ewing - The money cannot be spent: unless the articles for which the bounty is claimed are produced.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - The production may cease when the bounty ceases,, or even before. The proposed bounty on riceis to be £1 a ton. The present duty on undressed rice amounts to about £3 15s. per ton, and, as that duty has not encouraged the production of rice in Australia, I donot think a bounty which amounts to an increase of one-fourth will, have the effect of doing so. A considerable quantity of rice was produced in Queensland, but theindustry was commenced under a duty of about £9 per ton, or id. per lb. Cheaplabour was employed, because the work was taken in hand by Chinamen. I believe that the industry is now beinggradually abandoned. I am told that in spite of the duty of £3 15s. per ton, theproduction is decreasing. Therefore, a bounty of £1 per ton is not likely to afford any great encouragement. In respect to some of the items dealt with in the Bill, it seems to me that the bounty is; hardly needed. I think that it has already been proved that condensed milk can be produced profitably in Victoria - I understand1 that it has also been produced in other States.

Mr Ewing - The local production is very small. We import £200,000 worth of condensed milk, and produce locally between £20,000 and £30,000 worth.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - I thought that we produced more than that. However, if the production is profitable, and I presume that it is, the difficulty of establishing the industry has apparently been solved, and the work of the original producers only needs to be followed up to result in an extension of trade. Then in regard to New Zealand flax, that commodity is being produced to some extent in Victoria. I believe that about 1,500 acres are under cultivation. It is also produced in New Zealand. It is known that it will grow satisfactorily in Victoria, and the growers are well acquainted with the processes followed in the production in New Zealand. Surely, therefore, a profitable industry can be carried on here as in New Zealand without a bounty. Then I notice that abounty is proposed to be given for the production of sisal hemp, which is supposed to be a very profitable article. It is now being grown in Queensland. According to the officer who has reported upon, the subject the crop is so profitable in Mexico that the growers there have all become enormously wealthy, many of them being millionaires. He says -

Roughly speaking, . what cost $1 to produce, sells for $4.

Thai is thereport presented to us by the Minister of Trade and Customs, and it shows that the crop yields a. bounteous result. That being so, I cannot see the necessity tor any bounty. Certainly in rela tion to the alleged profits, the proposed bounty is trifling.

Mr Ewing - That report merely goes to show that sisal hemp is a marketable and valuable commodity in other markets of the world.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - There should be no necessityfor the payment of a bonus to encourage farmers to grow such a profitable crop. Olive oil, coffee, and rubber, are in somewhat the same category. Coffee has already been grown here, and olive oil is being produced successfully. I believe the imports of olive oil are decreasing, and as the olive tree grows exceedingly well here, there should be no difficulty in meeting the requirements of our markets by means of local production. The success ful production of rubber depends entirely upon the suitability of climate - and there is no doubt that our climate is suitable - the use of proper varieties and the adoption of proper methods of cultivation. Rubber is now being grown in Queensland, and as the price of rubber is high, and likely to increase, there should be no question as to the profit to be derived. Some of the articles in respect to which it is proposed to pay a bounty, will occupy ten years in production. In the case of rubber, fifteen years may elapse before any appreciable amount can be claimed by way of bounty. The Bill is intended to extend over only ten years and, therefore, the rubber industry cannot be benefited to any great extent by this measure. I am glad to see that one item has been eliminated fromthe measure. The very fact that it was included in the first instance, indicates the carelessness with which some of these measures are drafted. I suppose that the Minister acted upon the reports of his officers, although I see no allusion to chicory in the documents before us. For many years that article has been locally produced to an extent sufficient to meet all our local requirements. Therefore, if a bounty had been offered it would have passed into the pockets of men who have been carrying on the industry profitably for a long time. I believe that chicory was first produced here forty years ago.

Mr Reid - Is all the chicory we require produced in Australia?

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - Very nearly all. A small quantity is imported for use in bond when mixed coffees are prepared for export. If duty is paid on the imported chicory, drawback is allowed upon its exportation. It is astonishing to me that any one should have thought of including chicory within the scope of a measure of this kind, and I am very glad that the Minister has withdrawn the item. Then I notice that the reports are contradictory in many respects. I shall not refer to that matter any further at this stage, but may allude to it in Committee. The last point with which I wish to deal is. whether better results could not be obtained by other means than that of offering bounties. I have no hesitation in saying that, in regard to some ' articles, and especially those that are difficult of growth and have to be produced in the more tropical parts of Australia, the offer of a bounty does not often result in successful production.

It may have the effect of causing the abandonment of an industry that might otherwise be carried on with profitable results. For instance, men who embark upon enterprises with a view of earning a bounty are not, as a rule, possessed of much capital. Those who acquire money by following agricultural pursuits generally devote their attention to the production of articles with which they are well acquainted, and in the cultivation of which they have made their money. They are very rarely prepared to enter upon experiments, particularly in tropical latitudes, for the purpose of earning a comparatively small bounty. The consequence is that the new growers who are attracted into an industry by the offer of a bounty very often find themselves in difficulties at an early stage. In the first place, they are not acquainted with the methods of production, but have to gain their knowledge from others or from books ; and secondly, the methods that are successful in other countries are not always adapted to our conditions. A system of cultivation has to be adopted that is suited to our climatic and labour conditions, and to the differences in soils and seasons

Mr Wilkinson - Sometimes the methods adopted here prove more successful than those followed elsewhere.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - Very likely, but success is often not achieved until after numerous experiments have been made and liability to failure has1 been overcome. The abandonment of an industry by men not fully equipped very often gives the industry a set-back that it otherwise would not have received. I believe that, in connexion, with some of the articles the production of which it is proposed to encourage, we might make use of the experimental stations now carried on by the States Governments with a greater probability of success than would be the case if we offered a comparatively trifling bounty.

Mr Kennedy - Which of the products mentioned have not already been tested?

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - I am not aware. If they have all been tested, there should be no necessity for offering a bounty. If, however, they have not been tested, and the bounty is to be offered for the purpose of ascertaining whether they can be grown here, I say that better results might be achieved by arranging with the

States Governments to conduct experiments at their farms.

Mr Hughes - Products are not grown under ordinary conditions at the State experimental farms. The farmers constantly say, " You can grow the products at your farms; but that is nothing. We cannot grow them under ordinary commercial conditions. ' '

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - To some extent the honorable and learned member may be right. I think, however, that he will .admit that the experiments made at these stations have, in many cases, resulted in the adoption of methods which our farmers are now following with advantage. No doubt, in the first instance, the experiments conducted at the farms were carried out irrespective of the cost of production, but I think that those who are now in charge of the establishments in New South Wales, and, I presume, also in other States, recognise that they must be able not only to produce, but to produce on marketable lines. They must adopt processes which Will enable farmers not merely, to produce an article, but to produce it profitably. I think that thev have assisted - even where farmers had abandoned the idea of cultivating certain commodities - to establish the fact that certain commodities can be profitably grown by the adoption of certain methods.

Mr Hughes - I do not think that there is anything which cannot be produced here.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - -I should not like to say that there is anything that we cannot produce in Australia. The question is whether it can be profitably produced.

Mr Hughes - That is a thing which has to be demonstrated by persons who endeavour to produce it upon a commercial basis.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - I think that if tests were made at these experimental stations, a good many persons, after seeing them, and satisfying themselves that am article had been profitably produced, would be led to embark upon the cultivation of some of the commodities enumerated in the Bill. I would rather have seen our first efforts directed to working in association with the experimental stations of the States. I would have preferred to see, say, half the amount which is specified in , this Bill devoted to that purpose, and the other half utilized to establish a central agricultural bureau. This Bill proposes that we shall expend £500,000 in ten years by way of bounties. We know that the Treasurer has told us that we are rapidly absorbing the balance of our one-fourth of the Customs and Excise revenue. Within a very short period we shall expend the whole of that sum. If we are to pay £50,000 annually by way of bounties for ten years, that amount must come out of the proportion of our Customs and Excise revenue which we have a right to retain, but which, at the present time, is toeing handed back to the States, and the amount required for the establishment of an agricultural bureau will not be available. I am very much afraid that the expenditure of £50,000 per annum by way of bounties will have very little effect indeed. Even if it finds its way into the pockets of those whom it is intended to benefit, it will be distributed over so many items that the result yielded will be very trifling. In other words, I claim that we shall be spending in the aggregate a very large sum without securing any sufficiently favorable result. That is my opinion. I hope that it will not prove to be correct. I should like to see the articles which are enumerated in the Bill successfully produced in Australia, and above all I should like to see them successfully produced under natural conditions. If the payment of these bounties establishes the fact that they can be produced here profitably, and that such of them as are used in our own manufactures can be produced at a cost which will not increase the price of those manufactures, I shall be gratified. However, I fear that the results will not justify the expenditure proposed. I also fear that in. incurring that expenditure we may postpone the more effective assistance which would be afforded by the establishment of a central agricultural bureau, and the dissemination of knowledge, advice, and instruction, in association with the States - thus increasing the profitable production of Australia.

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