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Wednesday, 17 May 1939

Mr LAZZARINI ("Werriwa) .- The introduction of this bill to create a Ministry of Supply and Development, mainly for war purposes, indicates that in the mind of the Government there is necessity for putting this country on a war basis. I view with fear and trepidation the creeping into this country of all of those horrors which are associated with war and preparation for war in the older countries of the world, in which armaments, and the piling up of armaments, have become a natural part of their economic arrangements. It is because I believe that this bill does not provide in any adequate way for dealing with the important matters of supply and development that I want to address myself to it briefly to-night. We are told that this bill is complementary to another; but, as a measure affecting the very lives of the people, it stands out in bold relief in lacking provision 'for the extraction of the great wealth of detail usually asked for in other measures of this sort. In these other measures .the Government pries into the private lives of the people, into the most intimate recesses of the home, in its search for information, but in regard to detail this bill leaves everything to the imagination. In an ordinary census of any nation the searchlight is directed on everything that pertains to the individual, but when it is a matter of eliciting information from profit-makers and large property-owners, their business is regarded as sacrosanct; they must not be touched or inquired into. That principle, however, does not apply when the Government is dealing with thu human family generally. We are told that matters of real consequence in this hill 'in respect of detail will all be left to regulation. The control of profits will be left to regulation; it will be left for regulations to lay down the details as to how the inquiry into profits will be conducted ; in effect, it will be left to the profiteers themselves to provide the Government with information as to how to deal with themselves. We cannot but view with alarm the power placed in the hands of the Minister in this bill. We know the type of men he will select. We ha vo already seen the type of men he has selected . for his war council. He has chosen .representatives of some of the biggest profiteering firms in this country, one of them a representative of the Broken Hill Proprietary Company Limited, which, the very morning after the announcement was made that we were to increase our armaments, advanced the price of iron and steel from 5s. to 20s. a ton. Yet it is these people that the press is constantly supporting, while at the same time attacking and traducing the party to which I belong. The profiteer, the usurer, the banker, and all who provide the political propaganda of the Government, are the very men who will assist it to regulate profits and control armaments. Why is there not included in the bill a schedule limiting the rate of profit? Will the Minister say now whether it should be 5, 10, 15, 20, 50, 100,- or 200 per cent. ? Will he say that he will take into consideration the watered stock, the bonus shares, and the piling up of fictitious capital of every one of those big industries' which he will consult? Will he say what profit the Colonial Sugar Refining Company, the shipping companies, the Broken Hill Proprietary Company Limited, and- the mine-owners, should be allowed to make? If their stock were de-watered to-morrow and brought down to its original amount, they would be able to supply their commodities at a quarter of the price charged to-day, and still make an excellent profit. Why does not this bill provide for the circulation of a questionnaire? I should like to ask those who control these big businesses what wealth they have; how much of it they would be prepared to give to the nation in time of stress ; what contribution they would be prepared to make to-day if they were asked. How could their contribution compare with that of a man who sells his life in the defence of his country? You see no profiteers and war-mongers in the firing line; the capitalists and profiteers are far behind the firing line in every country in the world. During the last war we saw the capitalists of every country in the world congregated at Geneva, and busily engaged in making calculations one with the other all the time the war was going on.

The Minister (Mr. Casey) has talked about the services, of accountants in making these inquiries. I should like to ask these big companies that are to be interrogated if they have two sets of books, one for the Taxation Commissioner, and one for their own private information. A very eminent gentleman, Mr. Portus, a member of the Workers Educational Society, recently stated that he had taken under his wing a youth who, having passed his accountancy examination with honours, sought a position in the commercial world. Mr. Portus succeeded in getting him a job with what he thought was quite a good firm in Sydney. Six months later the young fellow returned and told Mr. Portus that he could not continue in the job. He said, " They want me to keep two sets of books, one set to be specially locked in the safe for themselves, and another for the Taxation Commissioner ". Possibly the Broken Hill Proprietary Company Limited is also carrying on this racket; yet the Government will have accountants from the Broken Hill Proprietary Company Limited, and, no doubt, from the Colonial Sugar Refining Company Limited to help it conduct these inquiries to disclose the secrets of the businesses to be interrogated. During the last war the Wartime Profits Tax Act was placed on the statute-book. A firm with which I was dealing told' me that their accountant had been sacked because he had got away with £2,000 of the firm's money. I asked if the firm knew where he was. The reply was " Yes, he is living in North Sydney ". I said, " Why not prosecute him ?" The reply was : " He fixed our books so that we could evade the payment of £5,000 wartime profits tax. He only got away with" £2,000. It would not pay us to have him arrested". That sort of thing is going on all the time. There is nothing more immoral or degrading -than big business; the bigger the business the more degrading it is. In the libraries of the world to-day .are to be found blue books, green books and red books containing sworn evidence relating to the trade that went on between the allies and enemy countries all the time during the Great War.

Now that we are to have an enlarged defence programme we shall need something more than is provided in this shell of a bill to convince me that the Government really means to prevent the ghoulish profiteering that has occurred in every - war since the campaigns of Marlborough - who probably began it - right down to the present day. The Government proposes to make regulations from time to time to control profits, but it has not waited to define by regulation the information that it wants from the men of the nation. That is all set out in another bill. In order to determine what would be a fair profit, the Government should make the armaments firms disclose how much watered stock they have.. A nominal profit of 5 per cent, might really be a profit of 50 per cent, on the actual subscribed capital. I know of one company on the northern coal-fields of which the original capital was £150,000. Not one penny of new capital has ever been subscribed, but to-day the capital of that company stands at £3,000,000 and the company wants the miners to work in such a way as to provide a profit on the whole £3,000,000, when they ought to be providing profit on £150,000 only. The Broken Hill Proprietary Company Limited, and the other steel companies, have also watered their stock. These companies make such huge profits that they dare not distribute them all at once to their shareholders in dividends, because there' would be' a public outcry against them. Therefore, they pile up their profits for four or five years, and then distribute them as bonus shares. That is what happens under the limited liability system, the most callous and brutal manifestation of the capitalistic system that has yet been seen. The Government should not pay profits on watered stock, and it should make that clear from the start. If this bil] does not make an honest attempt to limit profits on the manufacture of defence requirements it is all bunkum, and there is no need for it at all. When a Minister was making another speech, I asked, by way of interjection, what was being done to limit profits, and he said that we could discuss that matter when we came to this bill. The bill contains nothing in that way except a provision for the creation of a committee to consider what profits should be earned, and the persons who are to comprise that committee are the profiteers themselves.

According to a message published in the Sun newspaper, this is what happened when the Chancellor of the Exchequer first announced Britain's new expanded defence programme, which involved the expenditure of something like £1,000,000,000 over a period of three years -

The value of British armament shares has risen £128,000 per business hour on the Stock Exchange since 10th February, the Daily Herald states.

The values of the ordinary shares of nineteen ship-building, aircraft, armament, and steel firms have risen by £4,640,000 to £68,168,000.

Mr Nock - How long did the shares take to rise?'

Mr LAZZARINI - Three months. We know, of course, .that the honorable member for Riverina (Mr. Nock) is always trying to protect the profiteers. He will fight harder than any one against us in our endeavours to check profiteering. In 1916, when it was doubtful whether Britain would be able to continue the war much longer because of the tremendous financial drain involved in the purchase of armaments, Mr. Lloyd George called representatives of the armaments firms into conference. They told him that it was impossible to reduce prices; that they were already at bedrock, and could not be reduced. Of course, the stock of those companies was watered just as is the stock of Australian firms. Then Lloyd George, under the Defence of the Realm Act, assumed control of the armaments firms. He established a costing system, and checked the prices of all materials, and in twelve months saved £500,000,000. The 18- pound shell for which the firms had been charging the Government 22s. 6d., the Government was able to make for itself for 12s. It made 85,000,000 of them, and saved £35,000,000. Yet the ar.maments firms had sworn that they were unable to reduce prices ! The same firms had been charging the Government £165 each for Lewis guns ; the Government was able to make them for £35. We know that in point of fact, there are not English armaments firms, and German armaments firms, and American armaments firms. It is simply one great armaments ring which operates firms in various countries. According to a white paper issued by the American Government it has been proved that the armaments firms in the various countries do not compete against one another. Prices are fixed, and all the firms charge the same. When this Government proposes to permit the manufacture of arms by private firms it is placing itself at the mercy of the international armaments ring. When the American Government called tenders for war contracts worth £100,000,000 from firms in America, Britain, Germany, France and Italy, there was not one-half cent difference in the quotes from any of those countries. The following table shows how the profits of armaments- firms have increased in England since the Government embarked upon its increased defensive programme: -


Mr Street - It would be more helpful if the percentage increases were given in relation to capital.

Mr Holt - The honorable member should say what increases of capital have taken place.

Mr LAZZARINI - If the capital has been increased, then it has been done by watered stock. The Broken Hill Proprietary Company Limited has increased its capital four times within the last two or three years, and it has not taken in a pennyworth of new stock. It has all been done by means of bonus shares, and that makes the position much worse than if they had not put watered stock in at all. The firms mentioned in the table which I have quoted are some of the organizations with which the Government is dealing in connexion with its defence requirements. At the conclusion of the ItaloAbyssinian war, the chairman of Imperial Chemical Industries Limited stated on behalf of the company that sanctions had not operated so far as his firm was concerned, and that right through the conflict materials for the manufacture of poison gas had been shipped to the Italians. Will this bill give the Government power to deal with profiteers who seek to sell war material to an enemy country in time of war? . Much has .been said by the Minister for External Affairs (Sir Henry Gullett), the Prime Minister (Mr. Menzies) himself, and others, and statements have appeared in the press, regarding the position of Italy and Germany. We have been told that these countries arc armed to the teeth. But who armed them? The answer is that they were armed by the countries which were allied during the Great War. Much of the equipment now possessed by these nations was supplied by profit mongers outside Germany and Italy. Left to their own resources, these countries could never have reached the stage of armament that they are in to-day. The profit mongers of Britain, France and even Australia, have poured material into Italy and Germany, thus permitting these nations to become a menace to the rest of the world. I ask again, is this bill going to deal, not only with the supply of munitions to the Commonwealth Government, but also with the supply of war material to enemies or potential enemies? I submit that it will no,t, and cannot. Japan, which has been suggested as a potential aggressor so far as Australia is concerned, could not have reached the state of armament which it is in to-day, without securing material from other countries associated with Great Britain, and even from industrial organizations in this country such as the Broken Hill Proprietary Company Limited. If the Government is to permit the export of large quantities of war equipment and material to possible enemy countries, which in the future might shower bombs and poison gas from aircraft, then it is lacking in its duty to the people of Australia. It is well known that Japan is lacking in natural resources for the manufacture of war materials. That country can only build battleships because the profiteers of this country and other countries, whom it is alleged Japan is preparing to fight, allow the export of the necessary equipment to. Japan. That is not all. It is not only in times of peace that this sort of thing is carried on. It was shown in evidence at a trial iri France that 1,000 tons of cyanamide was shipped from France to Italy and that Italy re-shipped it to Germany. The defendants pleaded that they did not know that Germany was using it for the manufacture of explosives and were acquitted. The International Chemical Syndicate formed before the war, operated right through the war, and sold to all belligerent countries, dividing its profits between England, France, Germany and Italy by way of Switzerland, a neutral, country. In 1912, Krupp's made 53,000 cannon, of which 23,600 were for Germany and 27,300 for countries which afterwards became enemies of Germany. And so this business goes on. I should like . to know if this state of affairs is to occur in Australia? I state plainly and flatly that I shall not bc satisfied that profiteering will not be indulged in in Australia merely by being told that regulations are being formulated to deal with it. This bill must be as specific in its reference to profiteers, as other legislation introduced recently is specific in regard to human flesh and blood. We are told that the bill relates to "the supply of munitions and the survey, registration and development of Australia, and for other purposes ". The bill also provides that " The Minister may, in relation to all or of any of the matters specified in this act or in relation to such other matters as are prescribed, constitute committees and appoint persons to be members of those committees to advise the Minister ". I ask : Who will be the people who will secure membership of these committees and 'be responsible for making the contracts? They are the people who will make the profits, and will be members of big manufacturing companies such as the Broken Hill Proprietary Company Limited.

Mr Street - Many of them are departmental committees, which are already functioning.

Mr LAZZARINI - Some of them may be. If the honorable member were to tell me the names of these people and have them inserted in the bill I should be satisfied. Every time measures of this kind are brought down and the necessary appointments are to be made subsequently, a blank cheque is given to the Government to do what it likes.

The bill also provides that, "Nothing in this act shall authorize the making of any regulation rendering it compulsory for any person to disclose any secret process of manufacture ". All profitmaking concerns, and organizations associated with wealth and the production of wealth are sacrosanct with this Government. The Government refuses to interfere with them. Similarly, in arbitration courts and the like, business secrets are not to be disclosed, but the courts have power to make the workmen disclose everything about their lives and their homes. This bill is tainted from beginning to end.

I believe from the casual way in which the Minister pushed the matter aside that this measure is only a sop and a cover for the other bill. I do not believe that this bill is intended to do anything comprehensive. Otherwise, it would be necessary to set up another Commonwealth department with ramifications nearly as big as, or bigger than, those of the PostmasterGeneral's Department. It would be necessary to have a vast organization to take stock of all the resources of Australia and to deal even in a casual way with the application of these resources in time of war or in time of peace.

In conclusion, I should like to say something supplementary to the remarks made by the honorable member for West Sydney (Mr. Beasley) in connexion with the supply of oil. A former Leader of the Opposition, Mr. Matthew Charlton, "the former member for Newcastle, Mr. David Watkins, and I were the three representatives of the coal-mining industry who, in 1924, first raised the question of oil supplies. It was then nothing like the burning question it is to-day, particularly in view of the fact that we are constantly being told by those who have at their disposal all the information that there is dire necessity for immediate defence preparation. I am prepared to accept these statements at their face value and to assist in the carrying out of defence works, but I am not prepared to assist with the profiteering which is bleeding this country. It is proposed to build aeroplanes in Australia, and to purchase oil-burning vessels. Oil is also required for many other purposes. Coming to Canberra by train, I was speaking to an engineer at Port Kembla who informed me that the ignition of the big guns just established is carried out by means of petrol. It is apparent to everybody that a huge supply of oil would be necessary to meet war-time requirements in Australia. In my opinion the talk of efforts to extract oil from shale is all so much nonsense. I think that the Newnes project was embarked upon to secure the Macquarie electorate for the Minister for Trade and Customs (Mr. John Lawson) at the last general elections. Nothing has been done since the scheme was inaugurated, and I do. not think anything will be done. It is now some years since the project was embarked upon and if the scheme was a vital necessity then and nothing has since been done, we are entitled to look for some reason. It seems like stressing the obvious to say that aeroplanes will not fly unless they have supplies of petrol. Of what use is it to manufacture aircraft when without fuel they would be useless?

It cannot be denied that if two or three major powers were engaged in war, Australia's supplies might be cut off. Apart from the war aspect, our activities are severely hampered in times of peace. Machinery will not run without fuel. When the former member for Warringah (Sir Archdale Parkhill) was Minister for Defence, he brought down a proposal for the expenditure of £16,000,000 on an oil-burning battleship. He was asked would not a coal-burning ship be better, and the reply given was that a battleshipburning oil was faster. Apparently, he could not get into his head that a ship would not be of any use without a supply of oil. The same thing applies to aircraft.

I submit that the Government has no real defence policy and is not concerned with one if it is not prepared to make sure that this country has its own oil' supply to propel, its ships, aeroplanes, and machines, in time of war. The present state of affairs shows a lack of sincerity on the part of the Government. The supply of oil stored in this country would be insufficient to last three months, and under present conditions there will never be adequate supplies. The first £10,000,000 of defence expenditure should be used to make this country self-supporting in connexion with the supply of oil. Surely if countries such as Great Britain, which is surrounded by the oil wells of the world and is itself a large shareholder in one of the biggest organizations, finds it necessary to make its own supplies of oil from coal secure, then Australia should do likewise. Unless this action is taken, I submit that the Government is only tinkering with the question of defence. I support the remarks of the honorable member for West Sydney and the submissions made repeatedly by the honorable member for Hunter (Mr. James). I say to the Government that if transport in Australia is to be secured in time of war, steps must be taken to see that adequate supplies of fuel are on hand. I shall not be satisfied with this bill until it lays down the rate of profit that may be made, and demands from the profiteers and the manufacturers of armaments, on pain of much greater penalties, the sama minute information as other persons are to be forced to supply with a view to the possible conscription of human life.

Mi-. PROWSE (Forrest) [10.16].- I compliment the honorable member for West Sydney (Mr. Beasley) on his speech, which contained a lot of " meat ". Whilst I disagree with a good deal of what the honorable gentleman said, I yet admit that he presented his case in a manner which did credit to him.

I wish to refer particularly to the importance of oil supplies to Australia. The Federal Government has done a good deal in the past in the endeavour to discover oil in this country, so that it might be self-contained in respect of that commodity. Flow oil has not yet been found in Australia, nor has oil been commercially produced from any other source in satisf actory quantities. There could, however, be greater storage, in order to ensure a larger supply in time of emergency. I have appealed to the Government to recognize Albany as a strategic point for the storage of supplies. Invariably, oil is now stored in the most conspicuous part of a district. The oil tanks at Fremantle are the first objects visible from a vessel arriving at that port. Storage tanks are also covered with a silver paint, which causes them to glisten in the sun and thus offer an easy target to an enemy. That is a mistake. Storage tanks should be placed in the least conspicuous place, and be painted such a colour that they would be difficult to discern.

I hope that the Government will not use the powers given under clause 5 unduly to force the establishment of new industries without reference to the Tariff Board. I recognize, of course, that in war time the Government must have power over all industries and businesses throughout Australia. But a great mistake will be made if the Government rushes into the establishment of industries without inquiring into their economic possibilities.

The honorable member for West Sydney is very anxious that there shall be no profiteering in the manufacture of munitions and the like. I agree with him. But if he makes an inordinate attempt to have manufactures established in West Sydney he will find that there is just as great a possibility of profiteering occurring there as elsewhere. He has been informed that two ships can be purchased abroad for the cost of one built in Australia. It might be a good thing if, during war operations, Australia could not purchase ships abroad and was obliged to have one made in Australia; but there is an economic limit to which the Government could sanely embark on some pf these enterprises. I hope that these considerations will influence the Government in connexion with the proposal, intimation, of which was given to-day by the Prime Minister (Mr. Menzies) with regard to the building of complete motor cars in this country. I should bo glad to know what has induced the Government to disregard the report of the Tariff Board on that matter. Has it received any further intimation from the board? I should not be inclined to support the proposal if the Government should deliberately disregard the report of the Tariff Board, and not submit to that body any further proposal before action upon it is taken. This seems to have application to the powers to be given to the Government in relation to secondary industries. I remind the House that our great primary industries are the first line, of defence of this country, and that anything which is done to hamper them will injure the whole of the Commonwealth. We should be proceeding in the wrong direction entirely if expenditure were' incurred on the development of secondary industries and primary industries were not given such attention as would enable them to carry on their operations and establish credits for Australia abroad. I should like the Government to show its bona fides more readily in connexion with the action that it proposes to take in respect of our great primary industries. Honorable members know that in respect of the employment of labour the wheat industry is the greatest in Australia ; yet during the years of the depression that industry was a losing proposition to every person engaged in it.

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