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Friday, 26 May 1939

Mr SCULLIN (Yarra) .- I desire to make a few observations in order to put the position of the Opposition more fairly and honestly before the committee than it has been put by the honorable member for Indi (Mr. McEwen). Usually I have found that honorable member very fair, but he has not been so to-day. In the first place I should say that the discussion on this clause, which has proceeded for some days, has demonstrated to me and to the country most definitely the soundness of the general policy of the Labour party that, so far as is humanly possible, there should be no profit making during war time or in preparation for war. Preparations for war should be made in government factories and government workshops and not in establishments conducted by private enterprise. Numerous speakers have said that we cannot control profits. Whilst that is true to some degree, it is not entirely correct. We can have some control, but it is very difficult, particularly in time of war. In the absence of a complete government enterprise the only really effective control a government can exercise is by possessing at least a nucleus of equipment and staff and in that way have a check on the prices charged by private manufacturers. The Minister said to-day that there were no examples of profiteering - I may have misunderstood the right honorable gentle.manduring a war.

Mr Casey - I said that I had seen no evidence that there was profiteering in Australia in the supply of munitions today. I did not mean during war time.

Mr SCULLIN - The Minister referred to profiteering overseas which would apply not to to-day but to the war period. The point stressed by the honorable member for Melbourne Ports (Mr. Holloway) was that profits had been wrung from the people during the war period.

Mr Casey - I do not deny that.

Mr SCULLIN - I am glad to have that admission. It proves that we must now take every precaution. The position of the Labour party is this: This bill is not our responsibility ; it is the responsibility of the Government'. We say, as a general principle, that the Government should do more of this work, and leave less of it to private enterprise and profitmaking. The Government chooses to adopt another method; our responsibility as members of this Parliament is to try to tighten up this measure as far as is possible in the circumstances in which we find it. The honorable member for Indi says that we have connived with the Government. We have done nothing of the kind. We have brought down an amendment to the Government's proposition that the Minister has accepted, That the Government has enabled, the drafting officer to redraft the clause to contain the principle of our amendment does not constitute connivance. Any honorable member who says that, does not know the first rudiments of parliamentary procedure; unless he wants to misrepresent. What is the honorable gentleman's trouble? He supported an amendment yesterday to fix the rate of profit at 6 per cent.

Mr McEwen - I did not.

Mr SCULLIN - What did the honorable gentleman suggest should 'be done with this bill?

Mr McEwen - I have said many times that something definite, and not just a mere statement of policy with regard to the control of profits, should be included in the bill.

Mr SCULLIN - What does the honorable member suggest?

Mr McEwen - I said that that is not for a private member to suggest; that is the responsibility of the Government.

Mr SCULLIN - Very well, that is exactly our amendment. With respect to the proposal to limit profits to 6 per cent., we say first that that profit might be considered to be too high in some cases, whereas it might approach reason In other cases. But no member of this committee, and, I believe, no private individual in the community, can stay off- hand that any figure represents a proper profit to be made in connexion with the manufacture and production of munitions. Every case must be examined in detail. Consequently, we are not prepared to put ourselves in the absurd position of fixing a figure ; but we say, as the honorable member for Indi agrees^ that something ought to be done. Our objection to the bill was that, as originally drawn, it placed no mandate on the Government to do anything with respect to profits. The relevant clause simply laid it down, that the government " may " do something in that regard. We drafted an amendment to provide that it " shall " be done, and thus placed the responsibility upon the Government to say how it should be done, and also made the Government responsible to this Parliament if its action in this direction does not prove effective. It ill becomes the honorable gentleman to talk about connivance. I know the 'history of profiteering in the Great War; I followed it closely and I know how our people suffered in paying, not only for munitions, at overcharged rates, but for everything they wore and ate, in order to satisfy the shameless and ruthless profiteering that went on. One of the very few checks which the Government had, in the midst of war, on profiteering in connexion with supplies to our Defence Department, was the Commonwealth Woollen Mills, which was set up by the Labour Government of 1910-13. What happened to that mill after the war? It was practically given away to the friends of the government of the day, and the Deputy Leader of that Government is, to-day, the leader of the honorable member for Indi. Yet the honorable member talks about connivance. I knowthe fight which the Labour party put up when that mill wasbeing sacrificed ; and, indeed, that mill was sacrificed at a time when the Government had in its possession all of the facts. It was parted with in 1922 or 1923, when the Government had at hand the report of the Inter-State Commission of 1919, which was a damning indictment of profiteering by the textile mills of Australia. The summary of that, report shows that the industry, on a total capital of £1,144,385, over a period of three years made a net profit of £1,197,095. On supplies, for instance, of blankets and flannels, it made up to 41 per cent, on capital, land up to 16 per cent, on turnover, whilst on supplies of serges and tweeds, its profit was up to 37 per cent, on capital and up to 20 per cent, on turnover. Figures in respect of ten manufacturing firms in Victoria, showed a profit of up to 49 per cent. and in respect of five firms in New South Wales, up to 36 per cent, on capital.

Mr McCall - What does the right honorable member think would be a reasonable profit?'

Mr SCULLIN - You cannot lay down a figure. We saw last night how even honorable gentlemen opposite backed and filled on the proposed limitation of 6 per cent. The first amendment proposed was to apply this limit, presumably in respect of turnover, although the basis on which the profit was to be calculated was not made clear.

Mr White - It was on the basis of the net cost of the item.

Mr SCULLIN - That is on turnover. The honorable gentleman, who has had some experience in matters of this kind, must know that it is very difficult to make such a calculation. For example, one article may involve 50 per cent, labour costs and 50 per cent, material costs, whilst on another article labour costs might be 10 per cent, and the cost of materials 90 per cent. One is practically the turnover of raw material, and a profit of 6 per cent, on the turnover, repeated about twelve times a year, would yield a total profit of from 60 to 70 per cent. Then, in another amendment, it was proposed that the profit should be calculated on the assets employed. I point out that a big firm might have a million pounds' worth of assets employed for a short period. Who is to check for what period the whole of those assets are employed? Such a company might employ only a portion of its assets on particular work, and yet indicate on its return that the whole of its assets were so employed. On the other hand, we might have smaller firms specializing in a particular field. Thus, a big firm might be profiteering on a basis of 6 per cent., whereas a smaller firm showing the same per cent, of profit on assets of less value might not be profiteering. We cannot, therefore, fix an arbitrary figure.

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