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Wednesday, 3 October 1956

The CHAIRMAN - Order! The honorable member for Kingsford-Smith will please remain silent.

Mr McEWEN - Because of its huge dimensions, there is a nationwide interest in this whole dilemma associated with import licensing. This is the first occasion upon which I have attempted to give a fairly comprehensive explanation to the committee of the dimensions of this problem as I see it, and I had hoped that the members of the Labour party would have allowed the listening public the opportunity to hear, without continual interruption, what the responsible Minister is trying to outline. It seems to me that what I have already said in explanation of the necessity for import licensing and of what is being done about it, and the Government's policy approach to it, is so unpalatable to honorable members opposite that they are endeavouring by a mass of interjections and constant interruption to spoil the reception for the interested listening public of what I am trying to describe. It would be much more to the credit of the Labour party if its members were a little more reticent so that the interested listening public might hear what I have to say. It would be more to their credit if they did not engage in this gross, deliberate and constant interruption which is designed to prevent the people's obtaining a clear understanding of the position.

The CHAIRMAN - Order! During the day I have heard repeated requests from the Opposition to the Minister to make a statement. Since he began speaking, I have heard nothing but interruptions from members of the Opposition, and I ask them to remain silent.

Dr Evatt - Will the Minister deal with trafficking?

Mr McEWEN - The Leader of the Opposition (Dr. Evatt) has asked me to refer to trafficking. If he can control his enthusiastic followers, perhaps T shall be able to get along a little better.

Mr Curtin - Take an Aspro.

Mr McEWEN - I have expressed concern about the fact that there is what may be termed trafficking in licences, lt has been my lot for some years to administer various departments in which permits are issued and it has been my policy always to endeavour to ensure that any pieces of paper issued by me, or on my authority, in the form of permits, could not be sold for profit. So far as I am able to control the situation, no one will be able to sell for profit any document issued under my jurisdiction as Minister.

Mr Ward - They are selling them every day. They are advertising them for sale.

Mr McEWEN - The honorable member for East Sydney (Mr. Ward) says they are selling them every day, but he has never stood up in this chamber or written to me pointing to one case of which he has knowledge.

Mr Ward - What would be the use?

Mr McEWEN - That is completely typical of the general allegations that are made in this Parliament for sheer political smearing purposes.

Mr Ward - They are advertised every day in the press.

Mr Haylen - They are advertised in the " Herald ". Every day we see the advertisement, " For sale, B class category licences ".

Mr Webb - That stunned the Minister.

The CHAIRMAN - Order! If the honorable member for Stirling (Mr. Webb) wants to go outside the chamber, he is going the right way about it.

Mr McEWEN - What I am trying to say is in answer to an invitation by the Leader of the Opposition, and I intend to lake advantage of the Standing Orders which permit me to speak for as long as 1 wish during this debate. The more members of the Labour party interrupt me, the less time they will have to participate in the debate. They alone will be responsible for that. Furthermore, 1 will not be pushed around by honorable members opposite.

Mr Curtin - Do not get upset.

Mr Ward - I do not think he has got anything to say.

Mr McEWEN - The phrase, "Trafficking in licences ", is used in a general sense and not with any common interpretation. I should imagine that it would mean, in its most sinister sense, the sale by one person to another of a right to import. In my view, such action is completely indefensible, and whenever such a case is brought to my notice, I will cancel the quota. In recent times, 100 quotas have been cancelled in Sydney alone. When I say " recent ", I do not mean during the last few weeks; I go back to the administration of the department prior to my being placed in charge of it. 1 repeat that, in Sydney alone, more than 100 licences - the figure is, perhaps, nearer 150 - have been cancelled because of the sale of rights to import. There is no defence for selling a right to import.

On the other hand, there is a borderline which, I do not hesitate to admit, is difficult to define. The business of importing has, historically, a variety of forms. For instance, there is the simple case of the persons or companies who import for their own use. Then there is the importer who buys, who assumes all the risks of importation, and then looks for some one to buy the goods after they are landed and are in his possession. But there is also the importer who conducts something more in the nature of an indent business. That is valid in the eyes of all the business community and has never been condemned by any political organization in this country. That type of importer does not involve himself in the act of import until he has achieved the certainty of a final transaction by bringing together the overseas seller and the intending and committed local purchaser. In my language, he could be described, to some extent, as an agent, but he is a very valid element in the business community.

Because it is a well established business of importing, quotas are held by such people. The impact of import licensing on some businesses of that character has been such as to diminish quite drastically the volume of business that they can do. 1 should think that where the volume of business has been arbitrarily curtailed, it is completely normal for an attempt, capable of being translated into action quite easily these days, to be made to charge a higher fee, if fee is the correct description, for the services performed. That is about as natural a thing in business and in human life as ever occurs. So we have a situation in which some one, who previously performed a service for, say, a 10 per cent, or a 15 per cent, profit expectation - if 1 may use some illustrative figures - now, out of a circumstance of curtailment of overall activities and a clamant demand from others for goods that he is able to import, feels the need to charge a higher rate.

I do not say that the claim for a higher level of profit by some people who find themselves in this situation should be condemned in principle, described as sinister or regarded as trafficking. 1 rather feel that some people who find themselves called upon to pay a rather higher charge for the service are loosely describing this activity as trafficking in import licences. In my judgment, it is nothing of the kind. The people involved are human beings, and there is a variant between the person who raises his charge from a traditional 10 per cent, or 15 per cent, to 25 per cent, and a person who raises it to 75 per cent, or, if he can screw it out of some one, to 100 per cent. That is the range of things. The test that 1 apply is not a test of a refined judgment on the last single per cent, of profit that a person should be entitled to levy. But where a clearly unconscionable exploitation has occurred by reason of the holding of an import licence, then as 1 have said publicly, 1 am prepared to take the responsibility of cancelling the quota and putting an end to those activities.

Mr Ward - What percentage is right?

Mr McEWEN - The honorable member for East Sydney has made a not unreasonable request - and that is unusual for him. His interjection shows that he has never had anything to do with business. The legitimate rate of profit in business has an almost infinite variety because of the combination of circumstances of business. All I want to say is that it is enough for the Australian trading community to carry the inconvenience of import licensing without having added to it an arbitrary price control component. The Minister or the Department of Trade should not sit over every transaction and before the licence is issued ask, " What profit do you intend to make? " or say, " If you charge more than the Minister or the department dealing with 700,000 licences regards as valid, then you will not be given the licence ". I will not do that. It would be the final millstone around the neck of the Australian trading community.

The Australian trading community is well able, within reasonable limits, to look after itself, lt is sufficient for me to say that where a flagrant abuse of the right bestowed upon a person by the issue of an import licence has been detected, 1 am prepared to go to the extreme of cancelling the licence. But I say quite openly that, in the tremendous complexity and magnitude of this administration, I will not have anything to do with applying a refined judgment on whether a charge should be 15 per cent, or 17± per cent. 1 do not believe that the business community would wish me to do so.

It may be some comfort to the committee, which, quite correctly, is troubled by the possibilities of this situation, to know that the Department of Trade has been advised by representatives of retailers' associations, chambers of commerce and the like, which are so vitally interested, that they regard the actual volume of trafficking in licences as being literally insignificant. That is not my opinion. Nothing has been drawn to my attention as the ministerial head of this department that is in conflict with that opinion. I am giving to the committee the considered opinion of retailers' associations, chambers of commerce and importers generally that the dimensions of trafficking are really insignificant.

So far as the department and my own policies are concerned, every possible step has been taken, is being taken and will continue to be taken to minimize the opportunities for trafficking and to stamp it out where it is discovered. For instance, from 1st July last a step has been taken which, for reasons that I comprehend, has incurred a great deal of criticism from certain quarters. It was deliberately taken. It was this: The B category items are at the end of essentiality; they are, shall I say, the least essential. Although they include many items that are highly essential, they embrace most of the items that, by any test that could be applied, must be regarded as non-essential. In the earlier simplicity of import licensing, the Government did not wish to tell a departmental store what it could or could not import, and a B class licence entitled the holder to use his own judgment on what he imported within that category.

Mr Clyde Cameron - Even if it could be produced here?

Mr McEWEN - Yes; in the earlier stages, even if it could be produced here. The Government said very plainly that import licensing was not to be a substitute for the Tariff Board system in the protection of Australian industry. If it were, of course the protection of Australian industry would be decided, not as the result of an open inquiry by an impartial and skilled tribunal, but by some departmental official. 1 hope the Parliament would never want that transformation to take place and I am sure that industry would never desire that its protection should be at the whim of a departmental official who, in the nature of things, dealing with 700,000 licences, would not always be a senior and experienced official.

There is no mystery about what happened when importers of B category goods were permitted full choice of selection. People who obtained a B class licence through a history of importing a complexity of fairly essential and non-essential items, tended to import the goods that carried the greatest profit. That is normal enough. To that extent, there was neglect to import some of the important things, particularly in the textile field, that perhaps did not carry so high a profit prospect. This led progressively to some shortages in those less profitable fields, and provided an opportunity for trafficking in the items imported. In that connexion, I use the word " trafficking " in its widest and less sinister sense.

As from 1st July last, B category items have been subdivided into seven subdivisions or sub-categories, so that, for example, exotic foods are in one category and textiles in another. A person who obtained a licence in B category because he needed to import textiles cannot now import potted shrimps to the neglect of textiles, or make an arrangement with somebody else to import potted shrimps or caviar, or something else without which we can survive. That is good for the textile industry, particularly for the maker-up section, but I recognize it is an added inconvenience to other quite valid entrepreneurs in the business field. I should imagine that, probably, it would cause inconvenience to big department stores and organizations of that sort.

That arrangement was made out of a considered judgment that it was desirable. Now that it has been done, criticisms are being received. The representatives of the Associated Chambers of Commerce came to Canberra to see me recently to point out how bad this was. They asked me to abandon the subdivision of the B category. I said bluntly that I would not revert to a situation in which the important textile manufacturing industry could live only on the chance that people would import textiles and not use their quota to import some exotic food or something of that sort. 1 said, however, that I was open to be persuaded if it could be shown that seven subdivisions were too many, and that four or five would be sufficient. I believe that the maintenance of this system of subcategories of B category places a tremendous barrier in the way of what is loosely termed - and not in a sinister manner - trafficking in licences.

That, broadly, is the background to import licensing. It is, broadly, an explanation of the policy considerations that are behind the system of import licensing. It is a clear-cut declaration that, so far as this Government and my administration are concerned, we will not tolerate, for one moment, a situation in which a piece of paper issued by the Government can simply be sold to somebody else for profit. Where it can be discovered that that is being done, the quota will be cancelled. I invite those who believe they can expose any such transaction to communicate details to me, and I give an undertaking that they will be thoroughly studied.

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