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Friday, 26 May 1939

Mr FROST (Franklin) .- It would appear that the further the debate proceeds the more involved it becomes. Numerous amendments have been circu- lated, and one proposed to be moved by the honorable member for Deakin (Mr. Hutchinson) provides that private companies tendering for defence contracts shall not be entitled to receive a profit in excess of 4 per cent, on the capital invested. It was suggested that if the amendment were adopted a profit of 4 per cent, would be added to the price of the tender accepted. I was a contractor for many years, and I would have considered myself very fortunate had 4 per cent, been added to my tender in which provision had already been made for a margin of profit. If the procedure suggested were adopted, the profit allowed by the Government would be additional to that for which provision had been made by the contractor. Very little information has been given concerning the buildings and annexes which the Government proposes to erect. We have been informed that £1,000,000 is to be expended for that purpose. Does the Government propose to charge private enterprise interest on the expenditure incurred in the establishment of these annexes, in the event of their being used in the filling of government orders, or will private enterprise be allowed to use these plants entirely free of charge? No explanation has been given on that point.

Mr Holt - It has been fully explained about three times. Private enterprise will not use the annexes during peace time.

Mr FROST - Why?

Mr Holt - Because we shall not allow them to do so. The annexes will be separate buildings.

Mr FROST - Then why does not the Government take control of them? Furthermore, will the Government provide the raw material required by these factories ?

Mr Holt - No.

Mr FROST - Then it is useless for the Government to put up these buildings.

Mr Holt - The 4 per cent, is fixed: - on materials, wages and administrative cost.

Mr FROST - Another point is whether contractors will be obliged to specify where these goods are to be manu- factured? For instance, factories in Melbourne, which use generated power, will be competing with factories in Tasmania, which have available cheap hydroelectric power. Despite the different costs in respect of this item, will the Tasmanian contractors receive 4 per cent.? In order to facilitate the manufacture of munitions, the Government of Tasmania, which controls the hydroelectric power supply in that State, would be prepared to make power available to these factories at a concession rate, -as it already does' in connexion with a number of industries. In that case the Tasmanian factories would be enabled to compete unfairly with factories on the mainland. In view of these circumstances, will the Government oblige tenderers to state where these goods are to be manufactured ? The further we proceed with this measure the worse muddle we get into. We should decide at once that the whole of these annexes shall be controlled by the Government. The Government should undertake to buy the whole of the raw material and handle the complete process of production. Only by that method will it be able to abolish profiteering. Even at this late hour the Government should withdraw this measure with a view to redrafting it. I have here a sheaf of amendments, one contradicting another. The Prime Minister (Mr. Menzies) has said that the Government hopes to conclude the session by the 9th June, but it will be extremely lucky if this clause has been disposed of by that date.

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