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Tuesday, 23 May 1939


Mr CASEY (Corio) (Minister for Supply and Development) . - The sub-clauses of clause 5 are in broad terms, for the simple reason that it is not possible in a measure of reasonable dimensions first to anticipate and then to state precisely what powers the new department will need. Honorable members will note two important provisos, one at the beginning and the other at the end of the clause, which limit the exercise of the proposed powers.Sub-clause 1 provides that the matters to be administered shall be subject to the directions of the GovernorGeneral and to the next succeeding sub-section; whilst sub-clause 2 provides that the Governor-General may, from time to time, determine the extent to which or the conditions upon which any of the matters specified in the section may be administered by the department.


Mr Gregory - That gives very wide powers.


Mr CASEY - It does; but under the conditions that I have outlined, that is inevitable.

Mr.Brennan. - Sub-clause 2 extends rather than limits the powers.


Mr CASEY - It places on the Government the onus of determining the extent to which the Minister shall exercise these particular powers.

The point behind paragraph c is specifically the possibility of the extension or development of the annexe proposal as time goes on. The Assistant Minister (Mr. Holt) has already stated at the second-reading stage that it is neither the intention nor the wish of the Government to override the Tariff Board Act, the Customs Act, or the Ottawa Agreement, under any power taken under this legislation. The policy of the Government in regard to the extension of industries in this country is well known.

The honorable member for Balaclava (Mr. White) referred to profits and their control. It may be as well if I give to the committee a sketch of the conditions under which materials, armaments, and goods generally have been purchased by the Defence Department in the past, and will be purchased or acquired for that department by the Department of Supply and Development in the future. There are three main heads, under the first of which are the government workshops. There can be no suggestion of profit in their case, except possibly in respect of the purchase of raw materials.


Mr White - That was my principal point.


Mr CASEY - I say with respect that it is impossible to select one or two raw materials and make a specific rule in regard to them. I repeat that there can be no question of profits, apart from the purchase of raw materials, in connexion with government workshops. Then there are the annexes, in respect of which the mat)ter of profits is dealt with in the agreement made between the Government and the industry to which each annexe is attached. In almost all cases, the profit is limited to 4 per cent. The third method . is purchase on tender by the Contracts Board. At the present time, the greater part of the defence requirements is purchased by the board on public tender. During the short existence of this department, the Assistant Minister and I have had numerous conversations with all of the senior officers of the Contracts Board. From the evidence placed before me, I believe that the system of contracts militates in itself against the possibility of excessive profits being made. In almost all instances there is very keen competition. Members of the Contracts Board, particularly the senior members, have through years of association with the problem become very closely acquainted with the prices of raw materials and finished goods, not only in the various capital cities of Australia, but also abroad. I am assured that there is little if any opportunity to make profits in respect of goods purchased by the Contracts Board. The matter of raw materials also is involved. Whenever the Contracts Board notices that a successful tenderer is getting away with what the board believes to be a high price, even though the tender be the lowest submitted, it inquires into the costs on which the tenderer has made up his price. If its investigation shows that the price of raw materials is too high, the board inquires as to the reason for this high price of raw materials.


Mr White - Has the board done that with regard to metals?


Mr CASEY - I spoke to members of the board only this afternoon, and found that on many occasions it had investigated costs of raw materials and other costs making up tender prices.


Mr Anthony - What is done when an overcharge is made?


Mr CASEY - The board pursues the matter through the Customs Department or any oilier appropriate department. On several occasions this matter has been followed up through the Tariff Board. When the price of an article that has been the subject of tariff protection enters into the cost of finished goods tendered for, the Contracts Board has frequently referred the matter to the Customs Department in order to see whether the privilege of tariff protection has been abused. Raw materials, of course, cover many things besides metals. The honorable member for Balaclava (Mr. White) has asked how the price of metals is determined. I think that the case put by him is that a ton of copper is sold at a price which is, in effect, the London price, plus the exchange between Australian currency and sterling. I understand him to say that there is a limiting factor of £60 odd a ton for first grade electrolytic copper. I, myself, believe that there is a limiting factor in the price pf copper, zinc or any other metal subject to this same condition. It may well be that a horizon of cost is established in respect of each metal which is, I should imagine, somewhere about the cost of production of that. metal in Australia. When the world price is below that, there is this loading in respect of exchange.


Mr White - No.


Mr CASEY - That is a matter to be established, and I shall try to discover the true position.


Mr White - I said that the London price is quoted and exchange is added to it.


Mr CASEY - The honorable gentleman read from a document, and I shall be most interested to peruse (he full text »f it.


Mr White - Here, is a copy. Read it out.


Mr CASEY - It contains proof of what I have just said. It states -

The price quoted is based on a price of electrolytic copper wire bars of £60 18s. 9d. a ton made up of the London market price of £48 15s. per ton plus bank buying telegraphic transfer rate of exchange, and is to be varied up or down ....

Reading that document, I should think that the price of copper, and, presumably, the prices of other metals concerned, have some definite relationship to whether this practice is invoked or not. As to the cost of raw materials, I suggest that it is quite impossible, by striking some arbitrary rate of 6 per cent, to control profits generally. Who could say in respect of timber, various metals, glycerine, copper sulphate, or the thousands of other things purchased-


Mr Brennan - I rise to a point of order. The Minister has been quoting from a document which, as I understand the position, was surreptitiously passed into his hands by my friend the honorable member for Balaclava (Mr. White). I ask the Minister, with the utmost politeness, the nature of the document from which he was reading. I wish to know whether it is in the possession of the committee. This is not a private debate between the honorable member for Balaclava and the Minister.







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