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Wednesday, 17 May 1939

Mr PROWSE - There will be a big scope for the operations of profiteers.

Mr BEASLEY - The Government hones to deal with them. The honorable member for Forrest (Mr. Prowse) has some doubts concerning that, and so have I. I think that we ought to be given some idea as to how the Minister proposes to meet the position as it is affected by the inquiries of the Tariff Board, and the operations of the Ottawa Agreement and other trade agreements in which Australia is involved. If the Tariff Board is to consider in the light that I have suggested the matters that are referred to it, power will be conferred on it which no board should possess - power which only 'this Parliament should exercise, and which it should not delegate to a subordinate authority. High military authorities say that for every man placed in the field seven men are needed in the workshops. Therefore, everything hinges on workshop activity and development. This is not confined to the manufacture of implements of war alone, because everything that we need in peace time we need also under war conditions. That position will become more apparent under the changed conditions of warfare.

The Minister referred to certain factories that are to he taken over by the new department, including the factory at Maribyrnong, the Lithgow Small Arms Factory, the cordite factory, the harness factory, and one or two other factories. That seemed to be the only definite statement in the honorable gentleman's secondreading speech of what is actually to be done in regard to particular industries. I cannot imagine that there the matter will rest. If that were all that was to happen there would be no need for this department.

The Minister next turned to the matter of controlling the annexes which the Government proposes to set up. Some of them have already been set up in a number of places, which were mentioned in answer to a question asked by the Leader of the Opposition (Mr. Curtin), on the 4th May last. So far we have not been given very much information in respect of the degree to which the Government is involved financially in these annexes, and what power or authority it exercises over them. I believe that some of the buildings are now in course of construction, and that others have been equipped with certain classes of machinery. A great deal of interest, therefore,' is being taken in the establishment of these annexes. What we wish to know is exactly what costs are being incurred by the Government, and what power of supervision and control will be exercised? My colleagues and I are unanimously hostile to the adoption of this method of providing material for defence purposes. [Leave to continue given.'} We are distinctly antagonistic to the private manufacture of armaments and we think we have good reason for our hostility. The establishment of these annexes is the thin end of the wedge in the introduction of the private armament ring to Australia. In our opinion, government workshops and semigovernment and publicly-owned enterprises could have been used to provide the additional manufactures needed. If annexes had to be established we very definitely affirm that they should have been established in association with these publicly-owned utilities. We are not satisfied with the Government's proposal, in any sense, in this regard. We fail to see how costs can be supervised and profiteering prevented if the manufacture of armaments is allowed to get into the hands of private companies in. any degree whatever. The need for the supervision of costs and the control of profits was demonstrated beyond all question during the last war. I direct the attention of honorable members to certain statements made by Mr. Lloyd George in the House of Commons in 1919 in a survey that he made of armament manufacturing and of the need to control and supervise all private activities. After revealing that the huge sum of £440,000,000 had been saved to the country, he referred to the original profiteering price of the armaments firms. He said -

The 18-pouiidcr, when the ministry wa.started, cost 22s. (id. a shell. A system of costin mid investigation was introduced, and national factories were set up which checked the prices, and a shell for which the 'War Office, at the time the ministry was formed, paid 22s. Cd. was reduced to 12s. When von have 85,000.000 of shells, that saved £35,000,000.

There was a reduction in the price of all other shells, and there was a reduction in the Lewis gun. When wo took them in hand they cost £105, and we reduced them to £3.r> each. There was a. saving of £14,000,000, and. through the costing system and the checking of the national factories we set up, before the end of the war there was a saving of £440,000,000.

Surely it is clear from that statement that costs must be supervised effectively. We feel that the Government with its exact knowledge, in consequence of its own activities, of the costs incurred is the only body that should undertake this work. It was only by the setting up of its own factories, which operated alongside the factories of private manufacturers, that the British Government waiable, during the later years of the war, to reduce the cost of Lewis guns from £165 to £35 each, and the cost of shells from 22s. 6d. to 12s. 6d. each.

Time will not permit me to discuss at greater length the details of this situation, but I have a mass of authentic information which I could submit to honorable members. I shall have to content myself, at the moment, with referring to an experience of the British Governmentduring the September crisis of last year. The private armaments manufacturing firms of Great Britain took advantage of that crisis to increase the price of air raid precautions material by 500 per cent. This matter was referred to in a cablegram in the Australian press in the following words : -

The Daily Mail states that the Home Office has called a conference of contractors to consider the 500 ner cent, increase in cost of air raid precaution materials, which occurred at the peak of the crisis.

Manufacturers will assist the Government to avoid a repetition of this retail profiteering.

The trade, unions arc prepared to adjust labour charges to new figures, but some authorities have already paid bills which have saddled the municipalities with fabulous sums.

This happened, lot, me remind honorable members, at a time when the whole nation was on its tip-toes, and when the people were in great anxiety owing to a general state of unpreparedness. This increase of the price of air raid precautions material by 500 per cent, was made by firms which prated about their loyalty. I have noticed that it is always people who prate about their loyalty who take advantage of circumstances to demand greater profits for the goods they have to sell which the nation is forced by special circumstances to buy.

Mr Gregory - But was that statement correct?

Mr BEASLEY - The records are available for examination. The mattei was discussed in the House of Commons and an inquiry was made into the allegations. It was established that the state ments were substantially true. If any honorable member wishes to wade through all the evidence that can be produced to demonstrate that private firms arc in the habit of making large profits out of the manufacture of armaments, bc will find plenty of scope for his investigations, not only in relation to Great Britain, but also in relation to the United States of America.- We know very well that the big armaments firms engaged in lobbying in an extraordinary way during the disarmament conference at Geneva presided over by the late Mr. Arthur Henderson. One firm in the United States of America was sued by a person it engaged to do this work, because it failed to remunerate him at the scale that he alleged had been agreed upon. I assure honorable members that ample evidence is available to substantiate every statement I am making.

I have no doubt that other honorable members on this side of the chamber will develop these points, for it is common knowledge that profiteering in armaments manufacture is rife in every country where armaments are manufactured by private firms. This Government must be aware of these facts, for in a speech which the Prime Minister delivered in the Town Hall, Sydney, on Monday night, he made a special reference to the subject. He said -

We have a positive function to make a real contribution to the problem of employment in Australia.

I take that statement to mean that the Government intends to stimulate activity in secondary industries. The right honorable gentleman also said -

We also have a negative function to see that in these years of crisis no people will grow rich in the defence preparations of Australia.

That means, in plain language, that the' Government is aware that profiteering occurs. Every sensible and well-informed man and woman in the community knows that it is so. The Labour party fears and believes that 'the establishment of -these annexes under the control of private firms, which should never have been allowed in a young country like Australia, will enable private manufacturers here to make profits out of the manufacture of war materials. Surely the events that have occurred in the old world should have been sufficient to warn us against the danger of taking this risk in Australia.

As the Government is, admittedly, bearing the major share of the cost of establishing these annexes, and is paying for the machinery that is being installed, it would have been far better to have arranged for the machinery to be installed in railway workshops and other government and semi-government establishments. The electricity undertakings owned and controlled by various municipalities could also have been used for the purpose. On all counts it is a sorry mistake to establish annexes to private factories. All of the supplies that we are likely to need in making preparation for defence could have been obtained in some other, and better, way. Unless the Government actually engages in the manufacture of the articles needed, it will be impossible to check costs and control profits. If the annexes had been attached to government and semigovernment workshops costs and profits would have been entirely under control. It would not have been necessary, then, to have made provision for special accounting systems. I do not wish to cast reflections upon the members of any profession, but undoubtedly there are accountants and accountants. Skilled accountants discover all kinds of ways to hide costs.

I am at a los3 to understand how the Government proposes to ascertain production costs in enterprises such as those of the Broken Hill Proprietary Company Limited, which has a dozen and one subsidiary organizations, with all manner of means to manipulate figures. Accountants can shift entries from this place to that, and from that place to some other place, in such a way as to make it impossible for outside investigators to follow what has been done. The deeper they go, the more intricate become the accounts. I have grave doubts whether it will be possible to evolve any system of accounting that will satisfy ordinary men and women that large profits are not being made by private firms which manufacture armaments. It is extremely dangerous to allow any of this work to be done by private firms. The private manufacture of armaments invariably leads to profiteering and to the fomenting of wars. The armaments firms are mainly controlled by those who also control high finance. Unfortunately for the people of the world, those who control high finance are more interested in profits than they are in human welfare. In the circumstances which face us to-day, while many nations speaking many languages and separated in so many different ways are dominated by the very same financiers, who have no concern or interest in anything but high profits, and who work on the same principle in all the countries of. the world, there is slender hope for the preservation of peace. Under such conditions, in the course of the years an immense amount of evidence has been accumulated to demonstrate be yond all question the evil machinations of those who engage in the manufacture of armaments for profit. Mr. Hugh Dalton, a soldier during the war, and afterwards the Under Secretary for Foreign Affairs in the British Labour Government of 1929, voiced, in moving language, in the House of Commons, on the 11th March, 1926, his view of the morality of this bloody traffic. He said - Vickers had been supplying the Turkish artillery with shells which were fired into the Australian, New Zealand and British troops as they were scrambling up Anzac Cove and Cape Helles. Did it matter to the directors of these armament firms, so long as they did business and expanded the defence expenditure of Turkey, that their weapons mashed up into bloody pulp all the morning glory that was the flower of Anzac - the youth of Australia and New Zealand and our own country?

The Labour party has definitely decided that it will not countenance the setting up of private instrumentalities for the manufacture of arms in this country. It will be impossible to ascertain the profits made by such organizations as the Broken Hill Proprietary Company Limited, the Colonial Sugar Refining Company and the glass manufacturing interests which have been enumerated by the Government. A Labour government will in no circumstances whatsoever permit private organizations to manufacture munitions. We voice our views on this subject firmly and frankly. We are bitterly disappointed that, in spite of the history of this and other lands, this Government should lend itself to the procedure now being adopted. In view of the trouble that we have had to face in the past, and that which, apparently, we shall have to face in the future, the Government's outlook on this subject is deplorable.

Mr Casey - We are setting out to avoid the very thing that the honorable member fears.

Mr BEASLEY - If that is so, all I can say is that I am astonished at what the Government is doing.

Mr Casey - I shall develop this aspect of the subject a little later.

Mr BEASLEY - Time will tell whether my view is correct. I believe that it is and I base it on specific knowledge in my possession. I have not exaggerated in any degree whatsoever in my remarks. The Minister for Supply and Development (Mr. Casey) knows, as every man who takes an interest in current events must know, that urgent need exists to avoid every measure of profiteering in the manufacture of armaments. Time will tell whether the Government has acted wisely or not. I am very much afraid that the very thing that it is setting out to avoid is the thing it will accomplish.

The Minister gave us to understand, in tlie course of his speech, that the functions of this new department were not likely to broaden. I think it inevitable that they will expand to such a degree that it, will become one of the largest departments of the Government. This is no small enterprise that the Government is setting its hand to, and, although the Minister said that it was not intended to enlarge the personnel of the department, it seems to me to be inevitable that a very large number of officers will need to be employed.

Mr Makin - The Government will not be able to help itself.

Mr BEASLEY - That is my feeling. If this department does not grow, the Government will not be undertaking this work seriously. If this job has to be done, and if the material resources of this country have to be explored and regimented, as the Government says they must be an extraordinary quantity of work is being undertaken. It is a big job. A survey of the whole of this country in all its aspects is the biggest job any government could undertake, but the concluding remarks of the Minister on this point indicate that the Government is merely tinkering at the subject, and does not intend to go far. I am not unkind when I say to the Government, "You are being pressed by the public adequately to prepare for 4 defence and you put this forward as a means of appeasement for the moment ".

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