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Tuesday, 10 November 1959

Mr CLAY (St. George) .- The bill has been discussed at some length this afternoon, but there are some matters associated with it which ought to be mentioned. Therefore, I want to make some reference to the unusual qualities of rayon fibre. Once it is woven or knitted into a fabric, it is able to exclude the harmful rays of the sun while admitting the beneficial rays, such as ultra-violet and infra-red rays. I have often wondered why manufacturers in the knitting industry have not taken advantage of this unique property to knit cocoons of rayon so that Australians who like to bask in the sun on our beaches could safely encase themselves and acquire a nice shade of brown without being burnt by the sun, with the danger of suffering skin cancers. However, no one seems to have thought of doing this, and I commend the idea to any manufacturer who may be listening. This unique fibre enables the weavers and knitters to produce most beautiful fabrics for the adornment, may I say, of the Creator's last and best gift to man - woman.

In asking overseas manufacturers to establish industries here, we have never acted as supplicants crying for alms. Whenever we have asked manufacturers to come here, we have always shown our willingness to pay. At no time did we ask Courtaulds (Australia) Limited, a company of international stature, to establish the rayon industry here at its own expense. We made it quite plain that we are not beggars, but were asking the company to come here because we realized the enormous value of rayon production to the textile industry. We gave the assurance that, if the industry were established here, we would give some assistance, in the form of either a tariff or a bounty. As a result, the Courtaulds organization established a factory in Australia, and the value to the textile industry as a whole has been incalculable. The amount of bounty paid on the production of rayon fibre is infinitesimal when compared with the butter subsidy paid to the dairying industry. I can say with -certainty that the amount of all other subsidies paid in Australia vastly exceeds the trifling sum paid as a bounty on the production of rayon fibre.

In his second-reading speech the Minister for Air (Mr. Osborne) said -

The purpose of this bill is to amend the Rayon Yarn Bounty Act 1954-1959 to extend the operation of the bounty to sales of continuous filament acetate rayon yam up to 30th June, 1962.

He made a few brief and cursory references to the main points in the bill, and concluded with a disinterested kind of commendation in these terms -

I commend the bill to honorable members. It merely extends the period of bounty without any change in the rates of bounty of 6d. per lb. of yam sold, or in the provisions relating to payment.

In fact, there has been a great change in the rate although, on paper, it may appear to have remained unchanged. The original 6d. per Tb. has declined considerably since it was first paid, and although in no section of the report of the Tariff Board can I see any reference to complaint by the company concerned about the drastic fall in the real value of the bounty, I notice that the board, on page 15 of its report, refers to what it calls an error in judgment by the company. I should like to direct the attention of the House to what the Tariff Board chooses to call an error of judgment. It states -

In accordance with information given earlier in this report in regard to present and prospective plant utilization, the board feels it would not be appropriate to recommend a bounty to cover all the disabilities being suffered by the company when, in fact, part of these disabilities have been brought about by what, in retrospect, appears to have been an error in judgment by the company as to the likely level of demand for its product in relation to the plant and capacity needed to meet this demand. In saying this, the board is by no means critical of the company but is merely taking into consideration the unavoidable fact that the company's situation has -developed because of changes in the relative market for different textile fibres.

While I was perusing that report I realized that the board possessed a poor understanding of both the company concerned and the industry as a whole.

The honorable member for Lalor (Mr. Pollard) praised the extent to which the Tariff Board had inquired into the rayon spinning industry, and I agree with him that the board made very extensive investigations, but unless one has actually lived in and breathed the atmosphere of the textile industry it is impossible to appreciate fully what is involved in the issue now before this House.

We of the Australian textile industry, who have something more than mere theoretical knowledge acquired secondhand at Tariff Board inquiries, declare that there has been no error on the part of the company. It knew full well what it wasdoing. It had measured the market in Australia long before it came here and,, unlike some English companies, did not bring obsolete plant to Australia in the hope of extending its life behind a tariff barrier. That is something which I have known several companies in the textile industry to do. They have brought to Australia quite a large quantity of plant, especially in the weaving field, when its newness has worn off in the country of its origin - I am thinking of Great Britain now - and the Australian textile operatives have been expected to produce, with that obsolete plant, textiles to compete with those produced in the Mother Country. The manufacturers who have indulged in that practice have tended to support applications to the Tariff Board for additional protection for the product of that obsolete machinery.

I offer no defence for practices of that kind, in fact I deplore that such a thing has happened. However, Courtaulds (Australia) Limited brought to Australia the best possible plant and set up its organization at Tomago in the coal-fields district of New South Wales. The establishment of this important part of the world's greatest industry rendered vitally necessary the immediate presence of a number of factors such as abundant electric power, abundant water supply and an intelligent labour force. In relation to the necessity for an intelligent: labour force, the management of Courtaulds with which I, in my previous occupation, had a large number of dealings, remarked on many occasions upon the unnecessary expenditure that it had incurred in bringing to Australia highly experienced technicians from Great Britain because it had not realized' the amazing versatility of the average Australian in being able to pick up complex processes, master them, put them into operation and start to produce the goods: The management did not realize that that unique know-how, which is the property of the average Australian, makes it possible to overcome many difficulties, and it' has told me that had it realized before, coming to Australia, how quickly the average Australian can pick up and master a job, it could have saved' tens of thousands of pounds. The organization now is aware of the mistake that it made. It. will never be repeated.

Every State government endeavoured to persuade the company to establish its plant in their own particular State. This in itself should indicate the great importance that was attached to the presence of the company, and its functions, in Australia. Every thinking and politically conscious citizen is aware that in each State may be found the factors that I have mentioned - power, water and, labour. However, after giving full consideration to the claims of each State, the company set up its plant at Tomago in the coal-fields district of New South Wales. The present administration might regard the company's action as a crime for which it should be punished, because the feeling1 has been expressed at frequent intervals that the work force on the coal-fields is. unstable, unreliable, and rebellious. It might be possible- to say. with a. little truth that the last of those three adjectives is true. These people are a little rebellious because they come from fighting stock in the industrial world. In my experience, they, have had great provocation from the coal-owners, both in the country from which they came and in the country to which they have come. The history of hate which surrounded the coal-mining industry in England was brought to Australia not so much by the coal-miners as by the coal-owners. So we found that the work, force of Courtaulds (Australia) Limited' had to be handled very delicately, and it was handled with great- delicacy and great skill by both the unions and. the management, with splendid results.

Practically every secondary industry inAustralia exists- with some kind of assistance from, a protective tariff. The Government? may reply to my remarks on this question by saying- that there is. a tariff on acetate rayon. This is- freely admitted; but what the Government is ignoring is that a similar yarn to acetate rayon - viscose rayon - is admitted to Australia free of duty under British preferential tariff and isi subjected to only 1.2$ per cent, duty under the most-favoured-nation tariff as well as the general tariff. So, the Government closes one door with its left hand and: opens another with its right. The position is, therefore, grievously unsatisfactory.

I am not so much concerned with the financial welfare of Courtauld's as I am with the work force, at Courtauld's, which is considerable. The latest figures reveal that the total number, of Courtauld's employees directly interested in the production of yarn - not necessarily rayon only, but including viscose tyre cord yarn - is 1,600, of whom 1,400 are males and 200 females. I hope it can be fully appreciated what it means to the Newcastle district to have continuous employment for 1,400 males,, most of whom would be married men with families. There would be no comparable district in Australia offering continuous employment for such a large number of people as Courtauld's are providing. As the districts most affected by unemployment are the coal-fields districts, another reason is provided why the Government ought to. regard with the greatest possible favour the existence of this rayon industry in Australia-. I might mention for what it is. worth that the directorate of this company is all-Australian, that its capital is Australian capital, and that the company is severed from the English company, although it has the advantage of the knowhow that comes from the parent company in Great Britain.

Recently, in this chamber, we received a report from the Minister for Trade (Mr. McEwen) about the situation in the rayonweaving industry. I wrote some comments later about the rayon-weaving industry, because the Australian rayon-weaving industry consumes a very large quantity of the. product of the Courtauld's factory at Tomago. I wrote -

The present state of the Australian rayon weaving trade has been thoroughly ventilated in the recent publicized submission to the Minister for Trade as a. result of which imports of piece? goods, of. man.-made. fibres- from Japan, (which includes rayon and synthetics such as nylon and tetoran) have been frozen at a figure of 8 million square yards per annum.

The circumstances which brought about this restriction are well known, but are primarily: -

1.   A marked decline in the production of Australian rayon piecegoods which has resulted in the laying off of a number of workers and the threat of further and more substantial dismissals.

2.   The steep increase in imports of piecegoods of man-made fibres from Japan over recent years - from li million square yards in 1956-57 to 8i million square yards in 1958-59. Moreover, the trend of import licensing shows that imports could be expected to increase to a rate of at least 12 million square yards per annum in the near future.

I do not claim to have any special knowledge about what is going on in the field of import licensing; but there is something going on when import licences are being issued - and I say they are issued - for rayon materials, when at the same time the Japanese Government has proclaimed it will freeze its exports at 8,000,000 square yards for the year. I see in this kind of situation, Mr. Speaker, an unsatisfactory answer to the Japanese declaration. It is quite possible that they will send out something else which contains a proportion of rayon which can be used for the same purposes. As a consequence, the harm done to the Australian textile industry will be just as great despite the Japanese declaration.

My notes on the Australian rayon industry continue -

The figures quoted in the press for the fall in production in Australian-made rayon goods were as follows: -


However, the Monthly Bulletin of Production Statistics, No. 130 of July, 1959, issued by the Commonwealth Statistician shows an even greater proportionate fall in the Australian manufacture of woven piecegoods over 12 inches wide of pure and mixture rayon during the period as follows: -


The fact that imports as revealed in the statistical returns have not varied substantially from a figure of approximately 30 million square yards over these three years does not necessarily imply that the imports have not affected Australian production and this raises the question of duties levied under the Australian Customs Tariff. An instance of how an apparently protective duty can work to the disadvantage of Australian producers is the case of the increase last year of duties on woven piecegoods wholly of rayon. Up to that time, virtually all linings had been manufactured in Australia from rayon yarn, but when a fairly substantial duty was placed on 100 per cent, rayon piece goods in 1958, overseas producers (in particular, Japan) commenced making lining material of 51 per cent, cotton and 49 per cent, rayon which attracts a most-favoured nation duty of only 4d. square yard as opposed to a levy of 2s. 8id. square yard less 15 per cent., or ls. 8id. square yard applicable to wholly rayon piece goods. The result has been a severe decline in orders on local manufacturers for pure rayon linings and a big increase in orders on overseas manufacturers for linings made of the mixture mentioned above.

Another aspect to duties concerns those applicable to rayon yarns which are at present -

Throughout the world, all countries which produce either acetate or viscose yarn, or both, charge duty at the same rate for both types of yarns, but the Australian tariff does not directly protect Australian made acetate from imported viscose yarn. The only instance of protection to the Australian acetate manufacturer is a small bounty, and the incidental protection against viscose yarn from M.F.N, countries afforded by the margin of preference accorded to the British purchaser.

The main exporter of viscose yarn to Australia is the United Kingdom where the duty on both viscose and acetate yarn is 9d. stg./lb. plus 22* per cent ad. val. full rate, while for countries enjoying British preferential status, the rate is 5/6ths of the full rate.

The Australian rayon yarn producing industry has to compete in very many fields with viscose yarn imported from countries which are very large producers. These producers can, with advantage, export their surplus production at cost,, if necessary, or at a very marginal profit since the disposal of their surplus spreads the overhead costs over a greater volume of production and thus increases profitability. This is essentially the main problem faced by an Australian producer and one which invites close study by the Government.

My time is nearly up, Mr. Speaker, and I think only a few more observations by me are needed now. Courtaulds (Australia) Limited could have been in a less favorable position were it not for its command of the tire cord market in Australia - a command that it has richly earned. However, in the very near future there could be an influx of nylon tire cord from the United States of America. I only hope that this does not happen. I believe that it is doubtful whether nylon tire cord is superior to rayon tire cord, but a great and skilful advertising campaign may be launched in order to convince the Australian manufacturers of tires that nylon cord is superior. I have little doubt that if enough money is spent on such a campaign, the rayon tire cord manufacturing business of Courtaulds (Australia) Limited could be further injured. This company manufactures both acetate rayon yarn and viscose tire cord. The production of one helps the production of the other. For quite a long time, the viscose tire cord side of the business has been supporting the acetate rayon side. I think that that is a very undesirable state of affairs. This company took a risk when it came to Australia, and it deserves to receive from the Australian people a great deal more encouragement than it is getting.

In conclusion, Mr. Speaker, I just want to say that the report of the Tariff Board appears to damn the rayon spinning industry with faint praise, and the Government's attitude appears to be a pallid echo of that of the board. I am obliged to support this bill and, accordingly, I will, but I cannot refrain from expressing my disappointment at its deficiencies and inadequacies.

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