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Wednesday, 10 May 1939

Mr WHITE (Balaclava) .- The present discussion relates to a tariff schedule every item of which originated with a report of the Tariff Board. As I supported the items in cabinet, I am naturally in accord with the rates of duty printed in the schedule. The time is appropriate, however, for some observations, particularly in view of certain criticism by Opposition members. I hope that with the advent of a new Government there will be no weakening of a forthright protectionist policy, and that Australia's economic development will continue. It is easy to criticize tariff practices. There are some who would dogmatize in favour of prohibitive duties, whilst others advocate low duties. A tariff has to be considered item by item; the new Minister will soon realize that a different procedure has to be followed in almost every instance. Sometimes prohibitive duties cause retaliation ; at other times, as a previous Government discovered, they cause unemployment. On the other hand, excessively low duties may mean that' Australian products will not be able to compete with those of cheap labour countries. Tariffs are necessary as a kind of differential or a. gear to enable our economy to fit in with that of other countries. Duties have to be carefully considered if the triple role of a tariff is to be carried out. A tariff can be used as a means of adjusting the trade balance ; it can be used for the economic development of a country and to provide employment; or it can be utilized, as in Australia, particularly, as a means of obtaining revenue. As the Australian tariff produces two-thirds of the revenue of the Commonwealth the rates of duty have to be very carefully watched. To a great extent duties must be placed upon a revenue basis, but they must not be too heavy or they will cause a diminution of imports. They must be so carefully calculated that sufficient imports will be received to ensure a certain amount of revenue. On the protective side, the duties must be weighed, and, wherever possible, investigated by a tariff board. In an open court that body hears sworn evidence from conflicting interests, and afterwards submits a report and recommendation to the Government. Infant industries are provided with sufficient protection to enable them to survive against competition, but after they have become established, and can meet competition, it may sometimes be desirable to reduce the measure of protection. The Deputy Leader of the Opposition (Mr. Forde) said that the Lyons Government had made over 1,000 reductions of duty. Those reductions were made when I was Minister for Trade and Customs, and paradoxical though it may seem, I am a staunch protectionist. Many of the items, however, in respect of which duties were reduced were raw materials and revenue items. In other instances, duties were reduced in order to force down prices. Honorable members will recollect the discussion which took place in this chamber on the proposed reduction of the duties on cement. The lower duties resulted in reduced prices being charged for cement. It will be seen that the tariff is an economic weapon as well as a revenue producer and a creator of employment. I am proud that during the six years that I was in charge of the department the number of employees in Australian factories, as the honorable member for Moreton (Mr. Francis) pointed out, increased by 209,000 over the number employed in 1932.

Mr Holloway - Lower duties caused unemployment in the glass industry.

Mr WHITE - The honorable member should not attempt to side-track me; he can plead a special case at any time. But in answer to his interjection I remind him that no previous Minister for Trade and Customs ever forced the monopoly companies to face investigation by the Tariff Board. I submitted to that body the duties in respect of paper, rubber, glass and cement. As the result the rates of duty were reduced in some instances, but the industries concerned were not injured ; on the contrary, they flourished more than formerly.

Mr Nock - They are still paying good dividends.

Mr WHITE - The honorable member for Melbourne Ports (Mr. Holloway) knows that the lowering of the duties on cut glass was partly due to a trade agreement that had been entered into with Czechoslovakia.

Mr Holloway - I know that.

Mr WHITE - The company which the honorable member has in mind launched out more ambitiously in one section of its industry than in others. Although one department may not be paying as well as others it is paying good dividends on its operations as a whole. The honorable member is wrong when he says that the glass industry suffered because of the reductions of duty. That industry is now employing more workers than formerly, and prices are sounder.

Mr Holloway - The honorable gentleman cannot deny that 400 workers were put off.

Mr WHITE - There are to-day 4,000 more factories in Australia than in 1932. The establishment of those factories is evidence of the confidence of employers in Australia and in their employees ; it must mean some good for Australia. This country has become more self-reliant as the result. It is true also that millions more is paid each year in wages to factory employees than in 1932, and that compared with that year, the value of secondary production has increased by over £70,000,000. There are now more employees in secondary industries than in primary industries. A further result of the establishment of these factories is that Australia is better prepared to meet the exigencies of a world war should such an event unhappily occur.

Mr Mahoney - There are still many unemployed workers in Australia.

Mr WHITE - That may be, but the fact remains that there are 209,000 more employees in Australian factories to-day than in 1932. I exhort the Government not to mark time, or to adopt any policy which might check that expansion. The prudent conduct of tariff making will mean also the development of our manpower so that Australia will attain to that economic strength that is necessary if we are to hold this country. I have always looked on secondary industries as the best means of obtaining migrants for Australia. When our factories are prosperous and artisans are scarce, Australia will attract the hest migrants because no better migrants than British artisans and their families can be obtained. If we can encourage more of such people to come to Australia this country will develop along the lines upon which it began. That has been happening in a small measure.

I know of some industries in which there is a definite shortage of skilled labour. I regard this as a good sign. If it were not for the fact that Great Britain is heavily engaged in rearmament, there would be a greater migration of skilled British workers to this country. At the present time there is a certain volume of .alien migration which is better than no migration at all, hut it would be better for us if, instead of an exodus of British stock, more people of British origin were coming to this country. The best way to encourage them is to push on with the development of Australian industrial enterprises.

The Deputy Leader of the Opposition (Mr. Forde) made some reference to the overseas trade mission last year, of which I was a member. So also did the honorable member for Moreton (Mr. Francis), but as there is an item on the businesspaper under which that matter may be discussed it is not my intention to deal with it at length this afternoon. I would, however, remind the committee that British Ministers who met us around the conference table last year were out to secure the best bargains possible for British industry. They have a world market and naturally they want to keep it, and so maintain employment in Great Britain. As might be expected, the Australian view was not quite so well appreciated in British industrial circles as it is here. Nevertheless, after long discussions proposals contained in the White Paper presented to this Parliament show that we have retained our preferences in British markets. This, T think, was an achievement worthy of acknowledgment. The fact that Great Britain has also acknowledged the desirability of the further development of secondary industries in Australia, is a welcome, if rather belated, admission that Australia's future is not now bound up in primary production solely.

May I also remind the committee that many indirect benefits accrued to Australia from that mission? At this stage, I need mention only two. The honorable member for Moreton spoke of the desirability of an immediate expansion of aircraft manufacture in this country. It may interest honorable members to know that the recent visit of the Air Mission to Australia had its genesis in a proposal which I put to the British Air Ministry that it should examine the possibility of aircraft manufacture in Australia. I suggested that, as we now have our own aircraft industry functioning in a small way, we should at first manufacture simply parts for some machines at present in use, but later we might be able to build aircraft in sufficient numbers to supply Singapore and other British stations in proximity to Australia. I was prompted to make that proposal by the suggestion put tome by a Canadian manufacturer that Canada should manufacture air frames in Canada and that Britain should supply the engines. The British Air Ministry promised to examine the proposal, and the visit to Australia of the British Air Mission will, without doubt, lead to the expansion of the industry here. There is also, I believe, some likelihood of considerable development by the establishment of associate feeder industries.

I hope also that the Government will give close attention to proposals for the manufacture of complete motor cars in Australia. There is no reason why we should not manufacture the chassis. At the present time we are manufacturing 80 per cent. of the components of motor cars; there is no reason why we should not manufacture the remaining 20 per cent. Whilst in England I occupied every spare moment of my time in inspecting motor manufacturing establishments, and was greatly assisted in my inquiries by the representatives of leading British firms. Some of them were quite frank in the statement of their attitude to the proposals for the manufacture of the complete motor car in this country. Their interest in some cases is of an export nature only. Some showed interest while others feared the effect of American competition. The possibility of setting up establishments in this country was to be explored by another, and as a result of my investigations I made a statement to this Parliament, indicating that manufacturers of motor cars had been invited to make known the terms upon which they would be prepared to manufacture motor chassis in this country. The time within which these proposals were to be made expired on the 31st March last. At the present time we are sending abroad £5,000,000 yearly for the purchase of motor chassis.

Since Australia is a debtor country to the amount of £1.200,000,000, of which half is owed abroad, it is essential, having regard to the total of our overseas interest bill, that we should limit importations, as much as possible, to raw materials, capital goods and essential requirements that we cannot manufacture. If we could manufacture motor chassis in Australia we should bf. able to save at least £5,000,000 a year, which amount could better be expended on th». importation of essential goods. Incidentally the development of this industry would lead to a greater volume of employment. There are no insuperable obstacles to the establishment of the enterprise, but adequate safeguards should be taken to prevent the creation of a monopoly. The Tariff Board made an investigation of the proposal, but the principal companies that were represented at the inquiry were not greatly interested in it, and, therefore, they did not come forward with any very helpful suggestions. The Government might note what was done by the British Government. It approached one of the big insurance companies to see if it would assist the further development of the Rootes Limited Company which manufactures the Humber and Hillman cars and many aircraft engines. That company is now one of the biggest manufacturers of motor car and aircraft engines in the world. Alternatively, the Government might entertain the idea of the Commonwealth becoming a co-partner in the industry. We have precedent for this course in connexion with Amalgamated Wireless (Australasia) Limited, which is functioning very well, indeed, and Commonwealth Oil Refineries Limited. This is an alternative which, I suggest might with advantage be considered if private enterprise does not come forward soon with a concrete scheme. It is desirable that something should be done without delay because, as honorable members will appreciate, should war occur the existing motor vehicles in Australia would soon become worn out and useless, and we should not have the means to replace them.

Another industry which might be considered by the Government is that of ship-building. Some time ago the Tariff

Board made an inquiry into that subject and, when I was Minister, I arranged for a departmental inquiry as well. These reports are in the possession of the department. When the Minister examines them he will find that a practical scheme has been propounded, but at the moment I am not at liberty to mention the details of it. It is time that Australia launched a scheme for ship-building on a much greater scale than at present. During the war we built a number of vessels of considerable tonnage in this country, but that work was done under stress of war conditions. Ship-building in Australia, unlike other secondary industries, has diminished rather than expanded, and only vessels of comparatively small tonnage have been constructed during recent years. As is well known, the governments of most countries have' given their attention to the subsidizing of ship-building. This industry, from a defence point of view, is of fundamental importance. If the Government wishes this country to go forward and not to mark time or retrogress, it must' take definite steps to put the shipbuilding industry in Australia on a satisfactory basis. There are other directions in which the Government could do useful service for the people with a view to getting more men into industry and preventing the increase of unemployment.

One other matter which should engage the attention of the Government is the effect of German penetration in trade during recent years.

Mr Blain - Especially as regards the supply of medical instruments.

Mr WHITE - I do not wish to deal with details. That might well be left to the Minister. It is well known that in many countries Germany recently has conducted important trade drives that are far more subtle and insidious than its political action. The feature of German policy is really the preliminary to political action. Long before the aggressive nature of the attack is appreciated, and long before the threat that troops will be marching, there is the more subtle trade drive. This policy has been directed particularly to a number of smaller countries in the Danube basin and the Balkans. Trade agreements. one might almost say of an unscrupulous kind, are negotiated in the interests of the Reich. I refer particularly to the exchange clearing agreements which Germany has made with many countries, especially those with which it has an unfavorable trade balance. Under th is arrangement, Germany will agree to take the entire export commodities of a particular country under the modern equivalent of the barter sytem of the StoneAge. No payments of cash will pass; only goods will be moved. Between Germany and countries with which it has a favorable trade balance trade flows freely, and Germany uses the accumulations of free exchange for the purchase of raw materials which cannot be manufactured in Germany. The smaller countries which have become the victims of this barter arrangement discover eventually that their credits in Germany have become frozen. They take bills to cover the amounts owing to them. Their financial structure is thrown into a state of chaos, and finally they are obliged to buy goods that are not wanted. Germany has actually exported wheat, tobacco, raisins and timber, which she obtained under the barter agreements from Hungary, Greece, Turkey, Yugo-slavia and other countries. In this way the normal course of world trade has been completely disorganized because these countries which have bartered their entire output to Germany have been forced to accept German goods they did not require. For example, one country, I think it was Greece, was obliged to take hundreds of thousands of mouth-organs to liquidate Germany's debt to it; another took thousands of typewriters; another many tons of aspirins. There is something to be said for barter trade on an equitable basis that will not do injury to the financial structure of one of the parties to the arrangement; but experience has shown that when these small nations come under the spell and thrall of a great nation like Germany, it is not long before the political approach begins. The trading agencies become cells of Nazi propaganda andorganization, and ultimately the tentacles of the Reich stretch out to take over and control those countries. This method of trading has very much distorted world economy.

I mention it in order to emphasize the need for extreme caution. Germany has made many approaches to Australia to conclude barter agreements. If any blame is attachable to any one for the repulsing of those approaches, I am prepared to accept full responsibility. Germany has offered to take Australian wool in return for certain manufactured goods. For example, it might offer to take £1,000,000 worth of Australian wool if this country will take in return £1,000,000 of German manufactured goods. If we had accepted offers of that kind we could not have refused a similar arrangement with France, with whom we have a favorable trade balance of £11,000,000, or with Belgium or Great Britain. The net effect of this arrangement would be to injure British trade seriously. Ultimately our own manufacturing enterprises, and the employment of our people, would suffer.

I revert to the matter of which I was reminded by the honorable member for Watson (Mr. Jennings), namely, dumping below the home-consumption price. It is difficult to learn, in many cases, what is the true home value of German exports. Germany has some 250 values to the mark. It is a most complex and distorted system which, being so centrally controlled and so ruthless, is all to the benefit of that country and to the detriment of the countries with which Germany trades. Were it to trade honestly and fairly we should welcome and appreciate its purchases ; but it is in a most unusual economic position. There are 35 raw materials in the world, of which Germany has only five. Under its five-year plan, it is attempting to manufacture some of those raw materials. I saw in one German factory the attempt to make wool from beech logs. The logs are pulped down, and turned into a staple. Although the product is described as artificial wool, it is merely wood fibre - neither wool nor cotton, although it can be mixed with both. Unmixed, it is more like jute bagging than cloth. Germany is also making rubber, thereby saving certain credits. Cost is no object, because the policy of Germany is "Work is Wealth". Under a highly centralized economic system, Germany is not only employing its own people, but also is working them up to a state of fanaticism for their own form of government and keeping them from access . to information from other countries. It has made an assault on world economy in a most unusual way under a financial wizard - Schacht - who is the reputed author of all of these proposals. Many of them deserve examination, and we could learn a good deal from some of them, but we must beware of listening too readily to proposals regarding a trade agreement with the country which has employed them.

The Minister for Trade and Customs will have to be prepared to face a good deal of criticism. In the Customs Department, any day on which no criticism is received is regarded as a red-letter day. The Minister receives little praise. If he can concentrate, on getting men into work and making Australia stronger economically, and if the Government will promote expansion and attract to this country immigrants of the best type, we shall experience a period of great prosperity.

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