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Friday, 5 May 1939

Mr GREGORY (SWAN, WESTERN AUSTRALIA) - Surely the honorable member would not expect the honorable member for Henty to be of the same opinion for two years in succession ?

Mr FORDE - Yes, I would. For instance, the honorable gentleman once said that the right honorable member for Cowper (Sir Earle Page) was the most tragic Treasurer that Australia has ever had. I believe that he would say that again to-day. As he is a member of the present Government, I expect him to take definite steps to bring to fruition the proposal upon which he waxed so eloquent in this Parliament on a number of occasions. In the past he assured us that if Australia embarked upon the production of motor engines at the rate of 35,000 annually, which he said was the number the trade could absorb, direct employment would be provided, for 10,000 people and the industry would support, directly and indirectly, 40,000 people. In May, 1936, in a speech which I greatly admired, and which was favorably commented upon by the press of Australia as a whole, the honorable gentleman said' -

In the opinion of the Government, reached after considerable investigation, there is room in the Commonwealth for the profitable working of at least three separate units of motor manufacture.

That statement reveals the opportunities now offered to the young and energetic honorable member for Macquarie in his new position as Minister for Trade and Customs, working in collaboration with his colleague. The honorable member for Henty went on to say that in Great Britain numerous factories were manufacturing from 10,000 to 20,000 units annually at a profit, and concluded that if we manufactured 35,000 out of the 88,000 engines required by the Australian market, our factories could be run at a profit. Some of us were in doubt as to whether the Government seriously contemplated proceeding with these proposals, but the honorable member dispelled that doubt when he made the following emphatic statement -

There was not a detail in my speech in the way of fact that had not been agreed to by the Ministry. The whole of it had been submitted to, and approved by, the Prime Minister.

As recently as the 16th November last, the honorable member said -

If the Government will not establish this industry then there is some sinister and mysterious influence stopping it, arid it is well for one to speak plainly on this subject.

No statement could be more direct, or challenging, and, whilst I do not accuse the honorable member of going back on anything he advocated in the past, I say that time will tell whether this Government intends to carry this scheme to fruition. I appeal to the new Minister for Trade and Customs to give consideration, at the earliest possible date to the proposal made by the honorable member for Henty for the manufacture of motor cars in this country. An early further extension of secondary industry is urgently needed in order to open up fresh opportunities for our tradesmen, apprentices and labourers. We must remember that 80,000 children, including 50,000 boys, leave our schools annually and seek employment. Many thousands are disappointed because they cannot find places in the various trades. Here is an opportunity to establish a great engineering industry which would absorb a large number of these youths. I ask the Government to consider the political morality of the action of its predecessor in continuing to' collect a dutyof ,7d. per lb. on all imported motor car chassis over a number of years, until the fund to-day amounts to the colossal figure of £1,250,000, while failing to implement the scheme for which this money was collected.

Mr Scullin - What has become of that money?

Mr FORDE - That is what- we wish to know. When we asked that a trust fund be created in this connexion, we were told that this was unnecessary, and were assured that the money would be available as a subsidy to encourage the manufacture of motor engines. If the Government does not intend to go on with that proposal, surely it will not continue to levy this unfair impost. In view of the success attending our endeavours to establish a huge enterprise for the manufacture of the complete aeroplane, including engines, in Australia, surely we are capable of establishing the motor manufacturing . industry, including the manufacture of engines, on a scientific and efficient basis. Eighty per cent, of the value of cars in use in Australia to-day is represented by parts and materials produced in this country.

Reverting to the Minister's reference to trade agreements, I recall a' very important mission which visited England last year. We were greatly disappointed over the result. The speech of the right honorable member for Cowper, and the articles which appeared in the press from time to time, emanating from him and from the present Prime Minister, represented a big effort to hide the complete failure of the mission. Possibly some of the recent happenings in this Parliament have their origin in the personal animosities engendered in the course of that ministerial trip overseas: but, of course, I cannot speak on that matter with absolute knowledge.

I shall refer, briefly, to misleading statements that have been made in regard to these negotiations. On the 4th July last, the then Prime Minister said that satisfactory progress had been made, and it was hoped that a definite agreement would be reached. He denied reports of a deadlock, and, on the 5th July, after a conversation with the then Minister for Commerce, said that that Minister had assured him that there was no hitch. He added that the work of the delegation was proceeding smoothly, and that there was every prospect that the new agreement wouldbe completed shortly. Despite those statements, it is known that a deadlock did occur, and that the mission was a complete failure from the point of view of the Australian people. The following press paragraphs, published in the Melbourne Age of the 22nd July, 1938, bear out this contention : -

London, July 21. - It is admitted that agreement has been found to be impossible. and thata deadlock, which at the time was so strenuously denied, actually occurred.

All hope of agreement vanished weeks ago.

The Times and Telegraph devote leading articles to the report. All the papers admit failure.

I refer to this in order to show the public how they were misled by the Commonwealth Government. Spurious propaganda was put forward in order to cause the people to believe that the mission was a success. The then Prime Minister said that Sir Earle Page had assured him that the new agreement would be completed shortly. There is no new agreement, and, by way of excuse for its nonexistence, the then Attorney-General stated-

He had always entertained some doubts about the wisdom of creating precise written contractual obligations between various portions of the Empire.

There is nothing definite in any of the statements made by the Government or in the memorandum of conclusions. The first paragraph of this memorandum states -

Not only have the existing preferential arrangements between the two countries been examined, but Empire problems have, in a spirit of mutual sympathy and goodwill, been considered in their widest aspects, with a view to ensuring the maximum co-operation between the United Kingdom and Australia in their solution. Ministers have reviewed the broad principles which should, in their opinion, be regarded as the character of United KingdomAustralia trade relations.

The then Minister for Commerce stated that he was happy to say that mutually satisfactory arrangements had been made. There is nothing satisfactory in the report of the leader of the delegation. Nor has he accomplished anything of a specific nature which will be of practical benefit to Australian industries, either primary or secondary. On the contrary, he failed to arrive at any arrangement that will provide for the marketing of our surplus primary products or the permanent establishment and progress of our secondary industries.

The then Prime Minister declared that the objectives of the Australian delegation were to discuss with British Ministers the Ottawa Agreement and its revision in relation to changes in the situation since 1932, and in particular -

(   1 ) To revise articles of the Ottawa Agreement in so far as might be necessary to facilitate the progressive development of sound secondary industries and industries essential to defence;

(2)   To ensure that Australian exports should continue to receive preferential access to the United Kingdom markets on the basis of free entry and that as far as practicable they should enjoy the extended market in the United Kingdom;

(3)   To arrange for co-operation which would facilitate entry into trade treaties with foreign nations.

With regard to the objective outlined in the first paragraph the delegates failed completely. As to a portion of the second paragraph they also failed, and their only success was in regard to the lesser considerations contained in the third paragraph. Regarding the first objective relating to Articles 9 to 12 of the Ottawa Agreement, the mission was a complete failure. As to securing a greater portion of Britain's trade, it also failed. Its only success, if it can be termed a success, was in regard to foreign trade.

From the first day the terms of the Ottawa Agreement were made public the Opposition strenuously opposed the provisions contained in Articles 9 to 13 of the agreement. We as a party contended then, and still maintain, that Parliament and not the Tariff Board, must be given the sole right to determine Australia's fiscal policy. Australian manufacturers have also strongly opposed these provisions of the agreement, and on many occasions have criticized the attitude of the Government to fiscal matters. If I remember aright, the former Minister for Trade and Customs (Mr. White), speaking at a Nationalist conference at Bendigo, admitted that it was necessary to have the agreement reviewed. Up to the 6th December, 1938, the Lyons Government made reductions in 1,340 items in the British preferential tariff and 710 items in the general tariff, a total of 2,050. Altogether the reductions of tariff items made by the Lyons Government to the 6th December, 1938, as compared with the Scullin Government's tariff, numbered 2,125. The Opposition is not alone in its belief that the backing and filling of the Government has been prejudicial to the progress and development of our secondary industries. I notice that Mr. Eady, an ex -president of the Victorian Chamber of Manufactures, in criticizing the frequent changes made in the tariff, said -

With these changes, mostly reductions, it was impossible for manufacturers to feel secure.

Mr. Sanderson, chairmanof the Victorian Chamber of Manufactures, remarked -

Admittedly, secondary industries in Australia as a whole had not substantially lost ground. In many industries progress bud been made, but that progress had been made in spite of the Ottawa Agreement, not by reason of it; because, fortunately, during the currency of the agreement, the Commonwealth, in common with other parts of the world, had been passing through a period of prosperity.

These opinions clearly show the attitude of representative men in the associations of manufacturers throughout Australia regarding the way in which the agreement was administered and its effect upon the Tariff Board. Mr. Holden, managing director of General Motors-Hol den's Limited, and president of the Associated Chambers of Manufactures, was also very outspoken in his denunciation of these clauses of the Ottawa Agreement. He deprecated the statement of responsible Ministers and of the Australian Association of British Manufacturers that the

Ottawa Agreement had provided employment for many operatives who would otherwise have been unemployed. He added -

Such statements were wide of the mark and utterly misleading, the increase in employment being mostly due to improved economic conditions.

It was popular for a time to say that after all the reductions of duties had been made there had been a substantial increase of employment, although, in fact, the increase was due to the expansion of secondary industries and the increase of the prices obtained for the products sold by Australia overseas. The national income practically doubled, and the. people were thus enabled to purchase manufactured products to an increased extent.

I shall now deal with the concessions that the delegation was alleged to have obtained for Australian industries. If those who took part in the mission did not work more harmoniously in England in Australia's interests than did the individual members on their return to this country, it is not surprising that the trip was completely abortive.

Mr White - The honorable member is now referring to two entirely different matters.

Mr FORDE - I am not blaming the former Minister for Trade and Customs (Mr. White), because I have heard no adverse criticism of him in connexion with the trip overseas. I consider that he did all he could to make the mission a success, but the Opposition believes that the right honorable member for Cowper (Sir Earle Page) and the present Prime Minister (Mr. Menzies) were not in complete harmony. Their speeches were not put over the same broadcasting network. While they were political bedfellows in Australia, they were completely divorced from one another overseas.

Mr Brennan - They were on opposite sides.

Mr FORDE - Yes. Australia suffered because the speeches of one queered the pitch of the other. The personal animosity and bickering displayed was most regrettable.

The present Prime Minister (Mr. Menzies) said that the British ministers, iu order to avoid difficulties which presented themselves, were prepared not to press their objection to the interpretation now placed by the Australian Tariff Board on article 10. This was to the effect that article 10 should be treated as providing, not only for equalization of competition between British and Australian manufacturers, but also for an actual margin in favour of Australian manufacturers. The Prime Minister said that adequate protection was provided for Australian secondary industries and that Parliament had the right finally to decide whether sufficient protection was afforded He went on to say that the Parliament would be invited to adopt the recommendations of the Tariff Boa.rd, and that in its hands would remain the final decision. It is difficult to understand how the Prime Minister could make such a statement. How can Parliament be the sole deciding factor in relation to tariff duties while articles 9 to 12 of the agreement remain intact? We have never had an adequate explanation by the members of the mission of why they failed to have those alterations made which they said were inevitable. Article 9 States that the Commonwealth Government agrees that protection shall be afforded only to those industries which are reasonably assured of sound opportunities for success. Who will determine that matter? What will he the actuating motive in reaching a decision? Nearly all big industries that are prosperous to-day were backyard industries at one time, and had to be developed. There was a time when those who desired to encourage importations from overseas would say "Wipe out this uneconomic industry and would probably find specious arguments in support of the suggestion. Article 12, which is, perhaps, the most important of them all, provides that no protective duty shall be imposed, and no existing duties increased, on goods from the United Kingdom in excess of those recommended by the Tariff Board. . These articles prevent Parliament from making any increase of the duties on British goods over and above those recommended by the Tariff Board, and although the British Government has given what it calls a concession in connexion with the Tariff Board's interpretation of article 10, so long as those articles remain in force, Parliament has not complete control over fiscal matters.

It has been said that, by way of compensation, Australian Ministers gave an undertaking to apply article 11 more rigorously. Article 11 stipulates that the Government shall arrange with the Tariff Board to review all existing protective duties which affect British goods, in accordance with the provisions of article 10. This is where the board finds its work very difficult, because it is required to afford equal opportunities in the Australian market to both British and Australian goods. Surely, however, an industry in which Austraiian capital has been invested, which employs Australian workmen at wages sometimes double those paid by manufacturers overseas, and which pays Australian taxes, is entitled to a definite preference, and not merely equal opportunity.

The then Minister for Commerce, speaking upon his return from abroad, stated that paragraph 9 of the Memorandum of Conclusions, which deals with article 11, was not an absolute undertaking that Parliament should give effect to the recommendation, but only that Australian Ministers should make every effort to ensure that Tariff Board recommendations were made effective, as provided in article 11. Australian manufacturers will derive little satisfaction from that interpretation, in view of the fact that the delegates gave an assurance to do everything possible to give effect to article 11.

A perusal of article 9 shows that Australian Ministers have definitely undertaken to make every effort to ensure that Tariff Board recommendations under article 11 shall be made effective. So long as these articles remain in force, Australia will not be able to adopt a progressive programme for the development of secondary industries. Probably the present Minister for Commerce, coming to his job with no embarrassing alliance with the free trade party, may be able to bring to bear upon these questions a new. and more helpful scrutiny.

The Prime Minister seemed to attach great importance to the fact that Great Britain officially recognized the essential need for Australia to develop its own secondary industries. Was that a new discovery? Was this recognition brought about by the eloquence of the delegates, or was it something that had been understood for years past by the statesmen of Great Britain? Australia has always recognized the undoubted right of Great Britain to develop its primary industries, in fact, to develop any industry, and yet we are supposed to be elated by the fact that Great Britain has decided to recognize the right of Australia to develop its secondary industries. Although Great Britain makes this so-called concession, at the same time it prevents Australia from following such a course by insisting upon the retention of the disputed articles in the Ottawa Agreement.

The second objective of the Government was mainly to obtain a larger share of the British market, and here, the delegation failed again. The then AttorneyGeneral, and present Prime Minister, pointed out that it was agreed that, subject to the interests of British agriculturalists, oversea traders and consumers, an extended market would, as far as possible, be afforded Australian goods in the British market. Sub-clauses (b) and (c) of section 3 of the Memorandum of Conclusions sets this out -

Australian Ministers recognize -

(b)   The position of the United Kingdom as a great international trader, investor, and ship owner ;

(c)   The consequential necessity that the United Kingdom should maintain the. position as a great overseas trader and in particular as an exporter of manufactured goods to Empire and foreign countries.

This, in effect, is a polite way of saying that Great Britain will not give to Australia a share of its foreign trade, and that we cannot rely upon securing an increased share of the British market. Apparently, the Government has accepted this position because the late Prime Minister stated that Australia had been getting more and more of the markets of Great Britain, but could not expect that to continue.

A perusal of the statistics relating to imports into the United Kingdom from Australia and foreign countries since 1932, when the Ottawa Agreement became operative, shows that, although Great Britain purchased more goods from Australia, the increase of its Australian purchases was proportionately less than the increase of its foreign purchases.

It was stated in the White Paper that Great Britain recognized the necessity for an increased Australian population, and a special commission Avas to inquire into ways and means of bringing this about. Surely there is nothing new in that proposal! All these platitudinous conclusions are merely an attempt to hoodwink the people of Australia into believing that the delegation had made some very important discoveries, whereas, in fact, it appears to have learned nothing that wa3 not known long ago.

The Departmental Committee entrusted with the responsibility of giving consideration to the proposals in the London White Paper that the present Australian tariff making system be changed, and that a schedule of fixed maximum duties be substituted, has, apparently, not yet made much progress in its' work. It appears that considerable time will elapse before the committee's report will be available to the public. It was hoped that the utter impracticability of the proposal was so evident that the whole scheme would be thrown overboard. We should not tie the hands of Parliament in regard to a matter of this kind. Parliament should remain unfettered, retaining the right to vary duties as it thinks fit. Duties should not be fixed for periods of three, five, or seven years, because the rates that are adequate to-day may not be adequate under a new set of conditions in a year hence. Conditions alter so rapidly that an important Australian industry might become vulnerable to overseas competition from low-wage countries without Parliament having the power to protect it. We have in Australia, at the present time, upwards of 100,000 men out of work, men who are fit and willing to work. We have a responsibility to those men, and also to the 50,000 boys who are leaving school every year and looking for employment"\Ve shall" not be able to discharge that responsibility if we limit our freedom of action by fixing maximum rates of duty for years ahead. We must keep ourselves free to act as circumstances dictate.

Progress reported.

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