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Wednesday, 29 November 1944

Mr GUY (Wilmot) .- It is scarcely necessary for me to say that I am anxious to see the aluminium industry established in Tasmania. At the same time, I desire to ensure that it shall be established on a firm and satisfactory basis. An unanswerable case has been made for an independent investigation in order that honorable members may better inform their minds regarding the proposal. Many people are gravely concerned about the alleged satisfactory nature of this proposed undertaking. There is a definite lack of reliable information regarding the technical and economic aspects of the industry. The Minister for Supply and Shipping (Mr. Beasley), who introduced the bill, gave little or no information to honorable members about the proposal, and it is no wonder that a good deal of confusion and doubt exist regarding the practicability of establishing the undertaking on a satisfactory basis. I do not blame the Minister. Doubtless he gave to the House all the information in his possession, exceedingly limited though it was. Honorable members should ask themselves, not what Tasmania or Australia will gain from this industry, but what disabilities Tasmania and Australia may suffer if the industry be established on a false foundation. I shall support the request for an independent investigation of the proposal in order that honorable members may obtain a better knowledge of it. An exceptionally strong case was submitted by the honorable member for Gippsland' (Mr. Bowden) for this inquiry. He proved conclusively that neither the Minister nor his advisers had. much knowledge of the technical side of the industry.

As the honorable member for Reid (Mr. Morgan) declared, Tasmania welcomes Commonwealth expenditure in the State, because it has received very little money from the Commonwealth in the past. Towards the establishment of the aluminium ingot industry, the Commonwealth proposes to expend at least £1,500,000. As a Tasmanian and an Australian, I am undoubtedly entitled to make an effort to ensure that the money shall be wisely expended in such a manner as to give some reasonable assurance of success. I must be certain that Tasmanian taxpayers will not be committed to pay interest on borrowed money for generations to come. I require all the information that I can secure on this subject in. order that I may cast an intelligent vote upon this most important proposal. If the House in its wisdom - or lack of wisdom - decides that it does not want an inquiry, I shall support the motion for the second reading of the bill.

Mr Daly - The honorable member believes in having a few shillings each way.

Mr GUY - But the honorable member for Martin (Mr. Daly) never wins. I am somewhat unhappy about the fragile promises that were made for the establishment of this industry in Tasmania. As has already been pointed out, a definite promise was made just prior to the last election. No strings were attached to it. When the Minister for Supply and Shipping was in Hobart on the eve of the last election, he stated definitely that the industry would be established in Tasmania and that the Government would set aside the sum of £3,000,000 for that purpose. Undoubtedly the Minister dangled an electioneering bait. Huge advertisements were published in the Tasmanian press bearing the words, "Vote Labour and secure the aluminium industry ". But people were not told that Tasmania would be obliged to provide one-half of the capital. Now, with the election a matter of history, Tasmania is called upon to find £1 for £1.

Mr Frost - The Government of Tasmania agreed to do so.

Mr GUY - It did. I do not deny that. The first instalment of £1,500,000 is provided ' in this bill. I use the words " first instalment " advisedly, because I am informed that the two Governments will not establish aluminium smelteries at the cost of £3,000,000. As I may be wrong, I ask for an inquiry to be held into the Government's proposal, in order that honorable members may inform their minds. If the establishment of the industry is to cost more than £3,000,000, another call for money will have to be made on the Commonwealth and the State of Tasmania.

The Government may contend that it could not constitutionally establish this industry without entering into partnership with the State of Tasmania. That assertion will not bear examination. Last February, the Minister for Supply and Shipping stated that the bill had been printed and was ready for presentation to this Parliament, and no obligation had then been imposed on Tasmania to subscribe a proportion of the capital cost. Under the Constitution, the Commonwealth may grant any sum of money that it sees fit to any State, and may attach thereto any conditions that it chooses. Under that provision, the Commonwealth could and should accept the whole of the responsibility for establishing this industry, as Tasmanians understood the Commonwealth would do when the promise was made prior to the last election. But what do we find? Tasmanian taxpayers will now be called upon to bear one-half of the financial responsibility for this undertaking, and a huge interest bill for many generations to come. 1 cannot understand why the Commonwealth asked Tasmania to accept a share of the responsibility, because the Commonwealth did not find it necessary to enter into an agreement with the State of Victoria, where the other section of the industry has been established. Without the Government of Victoria providing one penny, a part of the aluminium industry has been established in that State. If it is constitutional to erect fabrication works in Victoria, why is it unconstitutional to build a smelting plant in Tasmania? Tasmania can provide both the bauxite and the hydroelectric power for the industry. Huge quantities of high grade bauxite occur in Tasmania. In the Ouse district alone two million tons is in sight, and valuable deposits are also found in the Tamar and Campbelltown districts, and I am anxious to see it established on a sound foundation. Consequently, we must consider some of the points mentioned by previous speakers.

We must ascertain whether the aluminium industry has an established future in the markets of Australia and the rest of the world ; whether the development of magnesium and plastics offers a serious threat to aluminium ; and whether the fact that the world's productive capacity has been multiplied several times to meet the demands of war will have any influence on the future of the Australian industry. Are there not, in those doubts, excellent reasons for an inquiry into the Government's proposal? We must also consider whether Australia can produce aluminium which will be able to compete in price and quality with that produced elsewhere; whether Australian requirements are sufficient to keep the Australian industry going; and what protection will be required to ensure that no imported aluminium shall enter this country. We must not and cannot afford to depart from sound business principles.

A new world is in the making. If we are to share in its benefit which we all hope it will have to offer, our industry must be founded on a firm basis. I hope that the Government has examined the effects of international contracts and agreements upon this industry. What is the position of Australia in relation to the Aluminium Company of Canada? Early in the war, the Commonwealth Government, together with the Government of the United Kingdom and the Government of Canada, entered into an agreement to erect an aluminium plant in Canada. Australia provided £1,000,000 for the work, and the money could be regarded as an advance payment for aluminium to be supplied to this country. I believe that 20,000 tons of aluminium was to be provided during a period of six years. One-half of that period has already expired. How much more of that 20,000 tons still has to come to Australia I do not know. Advice that I have received from a Tasmanian Government official is thai in 1938-39 only 1,320 tons had been imported. At pre-war consumption rates it would take a long time to absorb 20,000 tons, but with the war emergency conditions of the last few years the situation may have altered completely. I desire more information on the subject.

The Minister, in his second-reading speech, said that after the war Australia would require approximately 6,000 tons of aluminium per annum. That envisages a consumption four and a half times greater than our post-war importations. Many new uses for this metal will undoubtedly be found, but whether they will require four and a half times our previous importations is another matter. We know, too, that magnesium is superseding aluminium for many purposes, but here again lack of information prevents us from exercising sound judgment. In these circumstances it would be highly advisable for the Government to order an independent investigation of the whole subject by a competent authority, including the future of magnesium. It is beyond question that the world production of aluminium at present exceeds world demand. American Government plants, apart from those operated by private enterprise, are producing as much aluminium as was used throughout the world prior to the war. Allied production of aluminium is now six times greater than the pre-war world demand. The plant at Arvida, in Canada, in respect of which the Commonwealth Government has expended £1,000,000, produced 340,000 tons of aluminium in 1942. Last year it was producing at the rate of 1,000 tons a day, and provided 40 per cent." of total Allied requirements. Over-production in the United States has resulted in two plants, which cost £23,000,000 to establish, being closed down before reaching the production stage. To-day's output of aluminium is far greater than the demand, and unless many more uses can be found for this metal the new industry is not likely to be the success we would desire.

We know, of course, that the aluminium industry is the basis of the aircraft industry and that that industry is basic to national defence; but with the cessation of hostilities, which we hope will not be long delayed, the demand for aluminium will shrink greatly. I should like to know whether there is any truth in the statement which has originated in America that magnesium is being used as an alloy to the degree of 80 per cent, or 90 per cent, of the finished metal. The plain fact is that we have not sufficient information on this subject to register an intelligent vote. It is particularly import tint that we should obtain reliable information concerning the increasing use of magnesium. No honorable member of the House has given us dependable information on this point.

I direct attention to the following paragraph, which appeared in an article in the Industrial Australian and Mining Standard of the 15th October, 1944 :-

In our issues of 1st April, 1943, and 1st April, 1944, the likely damage to he done to other industries by saddling them with expensive light metal was pointed out. It was shown that production of the metal in the United States of America, where it can be produced at a fraction of the cost of manufacture in Australia, has increased from 521,106 tons in 1942 to 920,000 in 1943, and that during the last quarter of 1943 production was at the rate of 1,12S,000 tons a year, and has to be reduced. The main argument for the extraction of aluminium in this country during recent discussions was that we should make ourselves secure for defence reasons by having the industry here. The effective answer to this was that an ample stock of the cheap aluminium produced in America could be established here with a very small percentage of the huge sum mentioned in the bill. In any case, petrol has to bc imported, so a local aluminium supply would not make us selfcontained in war-time.

The article proceeded -

With a world glutted with aluminium the proposal bids fair to commit the taxpayers to large losses and the industries which use aluminium as a raw material to unwarranted expense. With the cheapest steel and zinc in the world available in Australia it would be a pity to allow a political stunt to superimpose a high-priced light metal on manufacturers. The alternative is to add the losses of this undertaking to our taxation burden.

I am not able to say whether the statements that I have read are true, 'but they certainly require careful investigation.

I now direct the attention of honorable members to clause 7 of the bill, which reads -

Subject to the provisions of this Act and of the Agreement, it shall be the duty of the Commission, with all possible expedition, in order to promote the naval, military and air defence of the Commonwealth and its territories, to do all such acts and things as arc necessary for the production of ingot aluminium, and for that purpose it shall have and may exercise the powers and functions, and shall perforin the duties and obligations, of the Commission set out in the Agreement.

If the Government were requesting the establishment of this industry as a purely defence measure it would be standing on firmer ground. We all know that in the earlier days of the war the Allied Nations were in . very great need of aluminium, but to-day the market is glutted. The industry cannot be justified, even on defence grounds, if we confine our outlook to the present war; but if Australia ever again became so isolated geographically as it was some time ago, an industry of this description would be of great value to us. We are justified in accepting as our motto, " In our preparedness lies our safety ". Any Australian government is under an obligation to provide for future defence needs, but if the measure is being put forward as a defence project, it is quite unjust to call upon Tasmania to contribute so heavily towards its establishment. In that circumstance there is no justification whatever for requiring Tasmania to contribute half the capital cost.

Mr FRosT - Victoria would accept, this industry very quickly if Tasmania did not desire it.

Mr GUY - Victoria has not been called on to contribute one penny piece towards the establishment of a fabrication plant in that State. Why then should Tasmania be called upon to contribute towards the establishment of the ingot manufacturing industry? The Tasmanian people are being asked to accept a double risk. First of all, our people are being called upon to contribute on a £1 for £1 basis with the Commonwealth ; and, secondly, they are being required to find between £1,000,000 and £1,500,000 to provide additional hydro-electric power for the industry. It is obvious to m( that there is a danger that the Tasmanian taxpayers may be called upon to pay interest, through many generations, on an expenditure of between £3,000,000 and £4,000,000 involved in the establishment of an industry which is required mainly for defence purposes. "We have been told that the Wangaratta fabrication plant is owned by the Government, but will it be controlled by the Government?

Mr Harrison - It will not be so controlled.

Mr GUY - There are grounds for some inquiry into this aspect of the subject. In fact, a great deal of mystery surrounds this whole project. It is unsatisfactory to me that only the smelting plant is to be established in Tasmania. I consider that the whole industry should be located there. Competition will be keen enough, we all realize. I shall be happy if the Government will agree to an independent investigation of the whole proposal, in order to resolve doubts that have arisen in the minds of honorable members as to the justification for the expenditure of this money. Surely honorable members opposite do not desire to launch out on this project before important questions in regard to i its future have been properly considered. After all, we are public trustees. The people rightly expect us to safeguard the expenditure of their money, and to satisfy ourselves that new industries which depend upon Government funds shall have a reasonable assurance of success.

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