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Wednesday, 24 May 1939

Mr FORDE (Capricornia) .- At first glance this clause appears to he impressive, but an examination of it reveals that it is, in fact, valueless. In the opinion of the Opposition, it is only so much window-dressing with the object of making the electors believe that something impressive is being done. It sets out what the Minister may do, but does not make mandatory any of the things mentioned. The Opposition believes that there should be a definite mandatory provision in the bill to compel the Minister to control and limit profits ; it is definitely opposed to profiteering in the making of munitions.

Mr Gregory - Why in respect only of munitions ?

Mr FORDE - The Opposition is definitely opposed to profiteering of any kind. It stands primarily for Government monopoly of the manufacture of munitions, whereas the bill, as drawn, contemplates that the bulk of the work will be done by private enterprise. I admit that the constitutional limitations imposed upon this Parliament make difficult what the Opposition would like to see, namely, a national monopoly of the manufacture of munitions, with provision for switching over to the manufacture of other equipment or undertaking outside jobs when the demand for munitions was slack. The Opposition realizes that, whatever it may do, the Government, with the support of the whole of the members of the Country party, intends to allow the manufacture of munitions by private enterprise. As we are unable to lay down a uniform rate of profits for every transaction, the Opposition believes that in the circumstances the Parliament should delegate to the Government the power to limit profits. It is the opinion that there should be a tightening of this clause. In its present form it is too loosely drawn. For that reason, I give notice of an amendment to insert after sub-clause 2 the following proviso -

Provided that no such determination shall exclude provision for the ascertainment of costs and for the control and limitation of profits in relation to the production of munitions.

Mr Anthony - Is not the honorable member's amendment covered by paragraphc?

Mr FORDE - No; that is not mandatory. The amendment of the honorable member for Balaclava (Mr. White) will he practically worthless if it is inserted where he proposes. Unless an amendment in the form I propose he agreed to, it will be optional for the Minister to act in the direction I desire. It should be mandatory upon the Government to control and to. limit profits made in the manufacture of munitions. Experience in this and in other countries emphasizes the necessity for Parliament to place such matters beyond all doubt, and whenever possible exercise such control as will prevent profiteering by those engaged in the production of munitions.

Mr Mccall - What limit does the honorable member suggest?

Mr FORDE - I realize that it is difficult to state what is a fair rate of profit to be made on every type of article manufactured. That is a matter that will have to be determined after inquiry. We are opposed to all forms of profiteering; but I could not be dogmatic as to what would be a fair return on every article.

Mr McCall - Is the honorable member opposed to a definite limit?

Mr FORDE - It is extremely difficult to say what the definite limit should be. Companies such as the Broken Hill Proprietary Company Limited supply raw materials to subsidiary companies engaged in the manufacture of munitions. Such companies control not only the production of the raw material, but also the manufacture of the finished article. Generally speaking, a profit of 6 per cent, is too high. I believe that many of our large manufacturing industries that have benefited largely from the protectionist policy should be prepared to produce munitions and sell them to the Defence Department at cost price. Some companies should be prevented from receiving that rate, and others would make no great sacrifice if they produced munitions without any profit at all. If it is made mandatory upon the Minister to restrict profits the responsibility will be upon the Government, which can be dealt with by the electors should it fail to exercise due control. A study of the history of the manufacture of munitions and war supplies in this and in other countries shows that, notwithstanding the promises made by governments, profiteering has been carried on. On the 10th September, 1920, ex-Senator Guthrie, speaking in the Senate, said that -

During the years 1015, 1916 and 1917, the existing woollen mills of Australia made a total net profit of £1,197,000 on a total capital of £1,144,000, that is slightly over 100 per cent, profit on the original capital.

A good deal of that profit was derived from contracts entered into by the government for the supply of raw materials and equipment for the Defence Department. Such profits should not be countenanced. The experience in Great Britain has been similar. Speaking in the House of Commons in August, 1919, Mr. Lloyd George stated that -

The profiteering of the armament firms was checked in three ways - first, by a system of costings and investigation; secondly, by the establishment of competing national factories; and thirdly, by the excess profits duty. The huge sum of £440,000,000 had been saved by these means. The 18-pounder, when the Ministry of Munitions was started, cost 22s. 6d. a shell. A system of costing and 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. Gd. was reduced to 12s. Gd. When you have 85,000,000 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 we tooK them in hand they cost £105, and we reduced them to £35 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.

The capital cost of the six T.N.T. factories was £1,473,000, but by April, 1917, they had already produced T.N.T., which, as against contract prices hod given a surplus of £2,404,318. They had, therefore, completely wiped out their total cost of provision and had left a balance over of 38 per cent.

In his book, The Bloody Traffic, Fenner Brockway writes -

Before the governments stepped in and checked and limited their profiteering, the armament firms were able to pocket the surplus which they made on their exorbitant, charges.

Even after the introduction of the lowerprices, large" profits were maintained. The armament firms were compelled to contribute to the State the following sums subsequent to. the introduction of the munitions levy, because their profits totalled more than the 20 per cent, allowed: -


Similar profiteering took place in all the belligerent countries during the World War. The armament firms have discovered the secret of how to turn blood into gold.

Quite a number of similar statements oan be found in books of this kind written by men who have made a life study of this subject. *

The CHAIRMAN (Mr. Prowse.)The honorable member has exhausted his time.

Mr.francis (Moreton) [6.6].- I regard clause 5 as the most important in the bill. If the Government hopes to win the confidence of the community in setting up this new Department of Supply and Development, it should give the cleanest possible explanation of each of the proposals embodied in this measure. Each provision of clause 5, at any rate, should be thoroughly explained. In respect of sub-clause 1, paragraph e, which provides that matters to be administered by the department shall include matters relating to " arrangements for ascertaining costs and for the control and limitation of profits in relation to the production of munitions." I am anxious that every possible effortbe made to prevent profiteering in connexion with contracts for supplies to this new department. The amendment moved by the honorable member for Balaclava (Mr. White) proposes that such profits shall not exceed 6 per cent. Because I believe that the Government's powers in this respect should not be restricted in the slightest degree, I cannot support the amendment. Furthermore, the Government has given repeated assurances that it will do everything possible tolimit profits. It is proposed to appoint advisory panelsto assist in all of the matters covered by clause 5. First, a panel of business men was to be set up in connexion with the mobilization of industry in Australia. At a time like the present everything possible should be done to ensure that not only our available man-power, but also our materials and resources, shall be at the disposal of the Government in case of emergency so that every section of the community will be enabled to put all its weight in the defence of this country. Over the next three years, it is proposed to expend a total of £78,000,000 in this direction. While guarding against wasteful expenditure, the Government should bear in mind the necessity for fostering the greatest possible efficiency in the department. I have a very highregard for all of the officers of the Defence Department many of whom willbe transferred to this new department, and in a major undertaking of this character we should give them every possible assistance. On the 6th September last, the then Minister for Defence (Mr. Thorby) stated that an advisory panel bad been appointed to inquire into the principles of supply for the Department of Defence. That panel endorsed the principles on which the Principal Supply Officers' Committee recommended the organization of industry for the production of ammunition components. The Government also decided to invite the gentlemen comprising the advisory panel to make their services available in the following directions: -

(   1 ) A study of the measures necessary for industrial mobilization of secondary industry beyond those contemplated by the Principal Supply Officers Committee, which relate to service requirements only.

(2)   Consultation on all business matters associated with the defence programme. This is of importance in view of the large expenditure now involved.

The Minister thereupon appointed a very useful committee of gentlemen possessing special experience as business executives. I am sure that these gentlemen will do good work. Regarding the statements which have been made concerning the dangers of profiteering. I am of opinion that in Australia we have a large number of public-spirited men engaged in industry. This leads me to believe that profiteering in connexion with the work of this new department is unlikely. However, I wish to make one or two points regarding the personnel of the committee to which I have just referred. As I have already said, I have the profoundest respect for these men, but I point out that four out of the five, namely, Mr. Essington Lewis, Sir Colin Fraser, Sir Alexander Stewart, and Mr. Eady, come from Victoria, whilst, the fifth member of the committee, the Hon. F. P: Kneeshaw, M.L.C., whom I know personally and admire, comes from New South Wales but spends a very great part of his time in Victoria. When I was assisting recently in the Griffith by-election I heard the view expressed time and again that only Victorians seemed to receive any consideration in appointments made by this Government. That allegation does not apply in this particular instance, because, I understand, this committee was appointed in 1937 by a former Minister. However, hearing in mind the prevalence of that view in the community, I urge the Government not to confine the majority of its appointments to persons from any one State. The opinion is widely held in Queensland, at, any rate, that the Ministry is too prone to favour Victorians in making appointments.

Sitting suspended from 6.15 to8p.m.

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