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Wednesday, 19 May 1920

Mr LAIRD SMITH (Denison) (Honorary Minister) [9.45L - The Committee is deeply indebted to the honorable member for Flinders for his speech, which was exceedingly clear, so that we quite understand his position. What he has said will receive the consideration that it deserves, not only here, but in another place. The honorable member for Grampians (Mr. Jowett) asked on what authority the practice of the Customs Department is based. That authority^ is section 154a of the1 Customs Act, which says that 'the value of goods shall be taken to be the fair market value of such goods in the principal markets of the world whence they were exported, in the usual and ordinary acceptation of the term, and f.o.b. at the port of export in such country, with an addition of 10 per cent, to such market value. The action of the Department was contested by Goode and Company, of South Australia, and the Chief Justice of that State gave judgment against the Department, but the High Court reversed that judgment, and the Privy Council subsequently decided that there was no ground for an appeal.

Mr Richard Foster - The question in that case was as to the value of goods; quite a different point.

Mr LAIRD SMITH - I wish to give, in answer to the honorable member for Flinders (Mr. Bruce), the view of the Customs Department. The value on which duty must be paid is the fair market value of the goods when sold for use or consumption in the country of export. But the purchasing power of money has fallen in other countries as it has fallen in Australia. Here £1 now buys only as much as could have been bought for 13s. in 1914. Goods bought in France and Italy are invoiced for export at their sterling value, which we have reason to believe is arrived at on the basis of 50 francs or 50 lire to the pound, or at a still greater depreciation. I shall give an illustration or two to show what happens under this practice. A motor chassis of a certain type was imported from Italy. The pre-war home consumption price of that type of chassis was 12,000 lire, which, on the basis of 50 lire to the £1 sterling, would be £480. Notwithstanding the substantial advance in wages and the increase in the price of raw material iri Italy, this particular type of chassis was invoiced to a buyer in Australia at £320 sterling, based on an exchange value of 50 lire to the £1, that is, it was invoiced at £160 less than what would have been its pre-war price. After an investigation by our officers abroad, it was found that the home consumption price of that type of chassisin Italy was 16,000 lire, or £640.

Mr Bruce - Then the invoice was a dishonest one.

Mr LAIRD SMITH - If the Italian exports value had beeen accepted, an injustice would have been done to British manufacturers. An importer of a British chassis whose pre-war price was, say, £400, and whose present price was £600, would have to pay duty on the higher amount, while the importer of the Italian chassis, if the Department accepted the invoice price, would gain a distinct advantage. A case like that shows how hard it is to make a law which will give the concession that the honorable member for Flinders asks for and still protect the Department. Let me give another case. In 1913 fancy soap was sold in Paris for 120 francs a dozen boxes, or on an exchange of 25 francs to the £1, for £4 16s. The same line was sold in 1919 for 166 francs, or at an exchange of 25 francs to the £1, £6 12s. 9d. If the 1919 price had been standardized on the basis of 50 francs to the £1, the goods would have been invoiced at £3 6s. 5d., although their domestic price had been increased by 39 per cent., and thus their export price would be £1 9s. 7d. less than the pre-war price. This country has a'dopted a policy of Protection, but of what value would our Tariff be to our manufacturers if we accepted invoices in which the exchange had been reckoned at 50 francs or 50 lire to the £1.

Mr Bruce - How is the Australian manufacturer protected against Japan under the present system ?

Mr LAIRD SMiTH - The honorable member there opens up another questionHonorable members will see that the Department has a most difficult problem to deal with. I have ascertained that in Paris in one day the rate of exchange has altered three or four times. How could we be advised here of such changes, and pay consideration to them in the assessing of duty ? I may mention that one of the biggest business men in Melbourne, whose name I am not prepared to give the Committee, called at the Customs House, and, as a result of an interview, went away apparently satisfied that the Department was dealing with this matter in the only way in which it could be dealt with.

Mr Bruce - Has the Cabinet determined that it will not go into the matter ?

Mr LAIRD SMITH - I was careful to preface my remarks with the statement that, no doubt, the honorable member's speech would receive the consideration that it warranted, and I paid great attention to it because of the experience he has had in the world of commerce.

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