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Wednesday, 10 May 1939

Mr FRANCIS (Moreton) .- In spite of the difficult international conditions through which the world has been passing in recent years, and certainly in the last two or three years, which have seriously affected the trade and commerce of most countries, Australian secondary industries have made substantial progress. The output of our factories for 1937-38 was valued at £502,000,000. This total is at least 20 per cent. greater than the maximum figure recorded in any year prior to the depression. I am glad to advance this evidence that the sound and sane policy of the Government in dealing with our secondary industries has resulted in steady and sustained improvement, and also in the development of new industries. I shall examine briefly the figures relative to our secondary industries in 1931-32, when the Lyons Government assumed office, and compare them with those for 1937-38, which are the latest available. The comparison shows a substantial increase of the number of our factories, 5,000 new establishments having come into being. More new factories are at present in the course of erection. Prominent among the new industries is that of pulp and paper making, which is represented by an immediate capital provision of £3,750,000. Plans have also been made for the expenditure of an additional £1,250,000 at a later date. These allied industries are entering a field in which we are making importations valued at more than £3,000,000 a year, and they have every prospect of ultimately gaining the bulk of that trade for Australia. The industries will utilize Australian timbers, as will also another new company, capitalized at £300,000, which will produce fibre board. Our iron and steel industry also has made extraordinarily rapid progress. Important extensions of this industry involve the investment of some millions of pounds for the purpose of producing more iron and steel, and also steel sheets, pipes, bent and shaped tubes for use in aircraft construction, and materials for the motor car and cycle trade. The manufacture of refrigerators too, has been undertaken. Imperial Chemical Industries is employing capital to the amount of £1,250,000 in establishing the large-scale production of soda in South Australia, and it is installing another plant at a cost of at least £400,000 in Victoria. Another strong company, capitalized at £500,000, is establishing extensive plant at Geelong for the manufacture of agricultural implements. Moreover, 1938 saw the beginning of aircraft manufacture in Australia, and a large modern plant installed in Victoria is supplying large orders of modern planes for the Royal Australian Air Force. Another new company is being established for the manufacture of bombing machines and other aircraft for the Royal Australian Air Force, and possibly for the East and for New Zealand. A capital outlay of £7,000,000, which has been obtained from British and Australasian sources, is involved in this new development, which will provide employment for thousands of additional workmen, who will use Australian materials valued at hundreds of thousands of pounds. The following table gives an interesting summary of the position of Australia's manufacturing industries : -


Whilst I appreciate the extraordinary progress that is being made by our secondary industries, and am very happy to know of their steady and sustained development, I must point to one serious weakness in our tariff policy to which I urge the Government to give attention. I refer to the interpretation that is being placed upon articles 9 to 13 of the Ottawa Agreement. I support the broad principles of the Ottawa Agreement. I believe that the future well-being, progress and prosperity of the United Kingdom and the dominions are involved in their mutual co-operation and support, and in the preferential exchange of both primary and secondary products. Australia has willingly accorded preferential treatment to Great Britain almost since it first began to impose tariff duties as far back as 1906. This was done by Australia of its own free will without any request for reciprocal action by Great Britain, and the policy has been maintained without interruption throughout all the years. The Ottawa Agreement is, in fact, mainly the application by the United Kingdom and the other dominions of a policy which Australia has followed for the last 33 years. But I must again express my opposition to the interpretation given by the Lyons Government to articles 9 to 13 of the Ottawa Agreement. I hope that this Government will review the matter. I know that the present Minister for Trade and Customs (Mr. John Lawson) has been weak in his attitude on this subject, but I trust that, in his new environment, he will find it possible to adopt an interpretation of these articles which, I contend, cannot be successfully challenged. The interpretation of these articles hitherto has been such as to place Australian secondary industries in an unsafe position. If it had not been for the stand taken by certain private members of this Parliament, I believe that our industrial position would be much less secure than it is. What I object to is the interpretation of these articles which places the Tariff Board in a position superior to that of Parliament itself. I contend that Parliament should be the supreme authority in all tariff matters. It alone should be able to declare what degree of protection is necessary for Australian industries. The Tariff Board was created by Parliament to investigate, by public inquiry, and report upon, the degree of protection considered desirable for Australian industries. Its reports were intended only for the information of the Parliament. In spite of the most definite opinion of four of our leading constitutional lawyers - I refer to Messrs. Wilbur Ham, K.C., W. K Fullagar, K.C., D. Maughan, K.C, and G. E. Flannery, K.C. - the Lyons Government persisted in an interpretation of these articles of the Ottawa Agreement which I contend is quite unwarranted. There are signs that the late Government relented in respect of the attitude it had adopted. The recent Australian delegation to the United Kingdom appears to have discussed this subject while overseas. Speaking in this chamber before the delegation departed from Australia, the then Prime Minister (Mr. Lyons) declared that the object of the Australian delegation was to discuss with British Ministers the Ottawa Agreement and its revision in relation to changes of the Constitution since 1932, and in particular -

1.   To revise articles of the Ottawa Agreement insofar 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 would enjoy the extended market in the United Kingdom.

What was the result ofthat mission as it affected the interpretation of those articles of the Ottawa Agreement? When the Leader of the Country Party (Sir Earle Page) returned to Australia, he pointed out, in a report which he submitted to the Parliament, that Ministers in the United Kingdom were unwilling to agree to the unconditional excision of articles 9, 10, 11, 12 and 13 of the Ottawa Agreement, and that it, therefore, became necessary to consider whether any of the friction which had from time to time arisen in connexion with those articles could be eliminated by some agreement upon interpretation. He went on to say that, after much discussion, two points were resolved, which he thought would go a long way towards removing what were considered to be undesirable limitations upon Australia's tariff autonomy. On that occasion the right honorable gentleman said -

In the first place, honorable members will recall that, when article 10 came before the Australian Tariff Board, the board took the view that it should not be applied so as merely to equate the costs of production in the United Kingdom and Australia, but that, in spite of the words " such a level as will give United Kingdom producers full opportunity of reasonable competition ", the Australian tariff should, in fact, be fixed in such a way as to provide a further margin of a genuinely protective kind. The interpretation was challenged by the United Kingdom Government and was, from time to time, strongly criticized by United Kingdom manufacturers. It has now been agreed, as honorable members will see in paragraph 9 of the Memorandum of Conclusions, that the United Kingdom Ministers are prepared not to press their objection to this interpretation.

He then told the House that the delegation had, on at least two occasions, encountered acute controversy in relation to article 11. He said -

It has been asserted by United Kingdom manufacturers that, wherever under that article a reduced duty has been recommended by the Tariff Board and submitted to the Commonwealth Parliament, that Parliament must either approve of the recommendation or commit a breach of the Ottawa Agreement. Australian Ministers in London contested this view, pointing out that, while the Australian Government was, under the article, bound to invite the Commonwealth Parliament to approve of the recommendation, and was further, no doubt, bound to take every reasonable step towards securing the approval of Parliament, the actual failure of Parliament to approve was not a breach of the agreement. While this matter is still under the technical consideration of the United Kingdom law officers, it will be seen from paragraph 9 of the Memorandum of Conclusions that the Australian view of the problem has been in substance adopted, since the undertaking referred to in that paragraph is not an absolute undertaking that Parliament shall give effect to the recommendation, but that Australian Ministers shall make every effort to ensure that Tariff Board recommendations under article 11 are made effective.

For a long time our industries were in the extraordinary position that, according to the interpretation previously placed on articles 9 to 13 of the Ottawa Agreement, this Parliament was compelled blindly to follow the recommendations of the Tariff Board. I am opposed to any such restriction of the powers of this Parliament, and I am grateful to know that the late Government took the attitude to which I have referred, so that, in future, the British Government will not regard as a breach of the Ottawa Agreement any decision by this Parliament which is not a blind following of the recommendations of the Tariff Board.

According to the report furnished by the right honorable member for Cowper in September, 1938, the British Government no longer expects Australia merely to produce raw materials, but has recognized Australia's right to develop its own secondary industries. Evidently the British Government realizes that the development side by side of both primary and secondary industries in Australia is necessary. In the speech to which I have referred, the then Minister for Commerce also said that the United Kingdom Ministers had recognized -

That, in the interests of both countries, and of the British Empire as a whole, it is desirable for Australia to endeavour to bring about as soon as possible a substantial increase in her population.

That it is impossible to achieve this objective solely or principally by an expansion of Australian primary industries.

That there is, therefore, a necessity to combine with such expansion the sound and progressive development of Australian secondary industries.

It is evident that British Ministers are now viewing this matter from a different angle, and I am grateful that that is so. I am confident that in the future there will be. greater harmony between Australia and Great Britain in the interpretation of the Ottawa Agreement.

Finally, I hope that at an early date the Minister, on behalf of the Government, will make a declaration which will confirm the attitude adopted by the previous Government, so that those engaged in secondary industries in this country may know that their position is more secure than it is to-day under what I regard as an entirely wrong interpretation of the Ottawa Agreement. Australian manufacturers are entitled to such an assurance. I hope also that the progress which has been made during recent years will be sustained, and that Australian secondary industries will go forward to even greater prosperity.

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