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Thursday, 11 June 1970

Mr DALY (Grayndler) - It is quite refreshing to see the old warrior, the honourable member for Wakefield (Mr Kelly) back on his tariff hobby horse again. 1 could not help but think as he spoke that he has given credit to a long list of people, starting with the Vernon Committee for its 2 great achievements. He says, firstly, that everyone has now come around to agree with him and secondly that they all want to reduce, costs and believe that they can do this by adopting a bench mark tariff. The point I make is that wc do not all know about it, and the Tariff Board does not, either. The Board, like the honourable member for Wakefield, is assuming that it knows without having a proper and full investigation. It is possible for anyone to assert that a tariff must be lower; that is a simple process. That is all the Tariff Board has done in this case of man-made fibres. All that the Tariff Board has said is what the honourable member for Wakefield has said - 'We will reduce these tariffs and see what happens! As the honourable member for Lalor (Dr J. F. Cairns) quite affectively mentioned, the Board does not know the facts, and I submit that a more extensive inquiry should be made with a properly equipped staff, which Labor will give the Board when it comes to office.

I join those on this side of the Parliament in opposing that section mentioned by the member for Lalor in regard to the manmade fibres and yarn, tyre cord and tyre cord fabric. As the member for Lalor said, we shall vote against 13 items and against the third reading of the Bill. I see from the Tariff Board report - it is interesting that the member for Lalor mentioned this, too - that the Tariff Board somewhat complimented the industry in these terms:

The producing industries stressed their importance to the economy in terms of employment, funds employed and value of production with particular emphasis on the high value of production per employee in man-made fibre extrusion compared with Australian manufacturing industry generally.

The member for Lalor stressed the great productive capacity of that section. I quote further from this report:

In terms of persons employed (over 5,000) and funds used (over $70 million) the industries under review are large users of productive resources.

The value of their production is certainly large although that, in itself, is not a measure of an industry's contribution to economic growth.

Evidently there was no doubt in the Board's mind that it was contributing to the welfare of the nation by development and things of that nature. The Board, of course, does make some startling statements in respect of a submission. Further down, it says:

In the Board's view economic size in itself is not a measure of economic worth.

To me that seems rather a strange argument. It continues:

Similarly a high value of production per employee, particularly in a capital intensive industry, is not necessarily indicative - from the national point of view - of the efficiency with which labour and other resources are being used. 1 find it difficult to subscribe to that point of view, because I would believe that, per man production plus those other factors, the industry certainly must have been on a very efficient basis.

I now go over to a section of this report on page 24 and refer to the paragraph limiting recommendations on raw nylon yarns until 30th June 1971. On page 24 this is done in connection with this section of the report, which says:

Because of the short period of this assistance, the floor price will not insulate the industry against the long term downward trend in world prices. The Board will recommend that the following f.o.b. floor price apply to raw c.f. nylon yarns until 30th June 1971 and that it be removed then without review.

Then are quoted the rates applying. I want to place my views before the House in respect of what I consider to be a new and dangerous proposal - that is, in limiting the time when this benefit will apply. I have already placed a question on the notice paper to the Minister for Trade in respect of this matter. The report by the Board suggests that by the expiration of a period of 18 months a most critical part of its proposed protection should cease to be operative. In accepting the Board's report, does the Government also accept this suggestion or, if not, is this action to be permitted without a public hearing by the Board to determine whether the circumstances at such time warrant it being taken?

The issue is one not only of importance to a very wide range of industry but serves to demonstrate a marked departure by the

Board from the hitherto carefully guarded policy of not attempting to commit either its-elf or the Government to forward decisions which could well be influenced strongly by an unproductive economic climate such as that at present existing. The normal practice of the Board is to call in its report for a review of its decision at a date in the future if such a course is thought to be desirable. This review would be conducted in the form of a public hearing and a decision would be taken having regard to the circumstances at the lime. But this course has not been followed on this occasion. If the report is adopted in its present form the future of an extremely efficient Australian industry and its thousands of employees will depend entirely on whether an anticipated industrial and competitive climate will materialise 18 months hence.

I appreciate the need for a review of decisions from time to time, but only by way of a complete and public investigation. I. would be extremely disturbed if the Government were to agree to a procedure which may be described at the very best as a not highly responsible piece of crystal ball gazing by a group of people who have limited knowledge of the real manner in which industry and labour must conduct themselves if success is to be achieved and who seem to place more weight on the opinions expressed by our foreign competitors than on the opinions expressed by our own industrial leaders.

I wish to utter a word of warning in connection with this section of the report. The honourable member for Lalor who led for the Opposition on this Bill, quoted an advertisement which was inserted in practically all newspapers throughout Australia by the Textile Council of Australia in relation to the findings of the Tariff Board in regard to this industry. It is interesting to note that the textile and apparel industries, which employ 150,000 people, have asked that the satisfactory level of activity which is now present throughout their industries be maintained. These industries employ a lot of people. In other words, a lot of families are dependent on these industries. I do not intend to refer to the various sections of the Board's report because this was done very effectively by the honourable member for Lalor. But I do stress that it has been pointed out that other countries are much more strongly and highly protected in regard to these items than Australia is. lt is quite clear, however, that if these amendments are implemented they will have an extremely detrimental effect on the textile industry. As well as affecting its employing capacity these amendments will place the industry at a great disadvantage in respect to overseas competitors. I think the Government should take note of this advertisement in the newspapers. The members of the Textile Council of Australia are listed as being the Cotton and Manmade Fibres Federation, the Cotton and Allied Textile Manufacturers Association of Australia, the Wool Textile Manufacturers of Australia, the Australian Knitting Industries Council, the Australian Wool Board, the Carpet Manufacturers Federation of Australia, Courtaulds (Australia) Ltd and Fibremakers Ltd. In other words, the Council consists of a wide ranging group of organisations which are interested in the textile industries throughout Australia. The submissions which have been made by the Council in its newspaper advertisement are in some detail and appear to me to be not only very factual but also well based and deserving of consideration. The Opposition will vote against the Thirteenth Schedule to the Bill as well as the third reading of the Bill because it believes that the section of the Tariff Board's report which deals with the textile industry is detrimental to the industry.

I wish to make a few broad comments in respect to tariff policy generally. Proposals for a change in tariff policy were advocated recently by the Tariff Board and certain other sections of the community. It has been suggested that certain ceilings should be placed on protection and also that industry should be sectionalised in regard to the varying degrees of protection to which industry should be entitled. The Australian Labor Party, with its traditional background of having established and protected Australian industry has a very practical interest in a continuance of the policy and the development of Australian industries on an economic and efficient level, lt appears that the Australian manufacturing industries employ about 30% of the work force. Estimates indicate that the employment of 50% of the work force was due to manufacturing industries and that almost H million people are employed in those industries. It is my understanding that approximately 320,000 people are employed in the building and construction industry.

The Australian Labor Party believes in a high standard of living, full employment, an expanding economy and a continuation of the immigration programme, lt is the Labor Party's belief also that workers are entitled to good conditions, long service leave, annual holidays and adequate wages. My Party believes that we should have strong manufacturing industries, protected against competition from cheap labour countries, and that our own people and capital should be employed in these industries. Provided these conditions are met it is my belief that Australian industries are entitled to a full measure of tariff protection. There is a tendency to blame protection exclusively in some cases for high prices. This may be true to an extent, but there are many contributing factors, such as excess profit in many cases, by those who control the distribution of the goods, and, in the case of primary producers, the carriage costs imposed by shipping companies.

My concern is to see that Australian workers are fully employed. I see little satisfaction in being able to buy cheap Japanese, British or American cars or products if our own workers are idle because of lack of tariff protection for our secondary industries. I have seen the day when there were plenty of cheap goods available but nobody was in employment and wages were not available to buy them. Our first obligation is to our own people, and tariff protection affords us the opportunity to protect their welfare. It is true that some review or changes are necessary, as was instanced a few moments ago by the honourable member for Lalor in respect of the functions of the Tariff Board. But any changes contemplated or suggested by the Board or by any other interests should not be allowed to destroy the basic principle underlying tariff policy in this country, and that is the establishment and the development of Australian industries manufacturing our raw materials and providing work and employment and security for Australian workers. I believe tariff pro tection provides a practical solution to our economic problem of employment, at the same time maintaining a high standard of living. The Labor Party's policy on this matter is as follows:

Effective tariff protection of Australian industries and import embargoes in favour of Australian industries capable of supplying the home market - in each case subject to control of prices, to protection of Australian working conditions and to due efficiency in production.

That is undoubtedly a continuation of the sound policy of the Labor Party. At this stage I think I should say that the Labor Party has a long history and a proud record in providing the basis for the establishment md development of Australian industry from the t me of the Scullin Government The reason is that we believe in using out resources for manufacturing purposes instead of sending them abroad for manufacture. It is interesting to note that the basis underlying tariff policy was expressed in these words:

Protection and assistance for Australian industries, both primary and secondary, has been long established policy. It is one of the methods used by the Government to help to ensure the achievement of its national objectives, namely, economic growth and national security, increasing work force including migration, full employment, rising standards of living.

That has been the basis upon which tariff protection has been built. I say regretfully at this stage that I am becoming a little disappointed in the Minister for Trade and Industry (Mr McEwen). 1 must confess that I have admired the statements he has made from time to time in connection with protection and tariff policy. I look with some pleasure at changes in Country Party policy towards tariffs, which have been brought about by the Minister for Trade and Industry as time has gone on. Some of this contributions on this question to the Parliament and to other organisations have indeed been masterful. From the adoption of this report on man-made fibres I cannot help but think that not only the Minister for Trade and Industry but also the Prime Minister (Mr Gorton) have capitulated to the Tariff Board's experimental changes in tariff policy, and that is indeed to be regretted. I am not unmindful that the Deputy Prime Minister in a splendid speech to this Parliament on 28th November 1968 laid down the fundamentals of a tariff policy. Complimentary copies of that speech ought to be given to the honourable member for Wakefield, because 1 think it was a statement that would have brought a great deal of pleasure to Austraiian . industrialists.

The Deputy Prime Minister followed that up not very much later with another speech to delegates of the Chambers of Manufactures at a luncheon at the Hotel Canberra on 28th April 1969. The speeches were basically the same, but each of them incorporated all the sound principles, I would say, of a good tariff policy. But where does the Minister for Trade and Industry now stand on the issue before us? Does he believe in this sectionalising of industries, the limit of 50% on tariffs, the taking away of protection and the new academic and intellectual look being given to the Tariff Board, not on comprehensive but on limited inquiries in respect of changes of policy? The Deputy Prime Minister said in his speech to the Parliament on 28th November 1.968: lt is important that it be recognised that Australia is, so far as I can discover, the only industrialised country which relies on the tariff almost exclusively to provide protection for its industries.

He mentioned that other countries have devious and many devices. He referred to the European Economic Community countries, Japan, even Great Britain, and the United States. But Australia, he said, relied exclusively on tariff protection and not quantitative protection for our goods. He went on to refer to the growth of industry and he dealt with the question of costs, in a way which the honourable member for Wakefield might well study. He said:

If seeking lower costs completely dominates our thinking, lower wages would be the most obvious area to turn to, with unemployment and a slower rate of development. There has been much talk lately about the effect of tariffs on costs. We ought to get this into perspective. There are many things that affect costs other than tariffs. The pressures of our development are reflected throughout our economy. Wages are forced up and this results in a great increase in over-award payments.

The Minister went on to refer to transport costs, both internally and for our overseas trade, interest rates, hire purchase, costs of land and buildings and other tertiary costs. He said that these are all important elements of the cost of production in primary and secondary industry. So that to blame tariffs exclusively as the basis for cost problems, as the honourable member for Wakefield does, is completely wrong. The

Minister for Trade and Industry went on to say something which 1 hope he will repeat in this Parliament. He said:

The Tarin" Board's recent decision to break new ground by classifying industries according to existing levels of protection, with all the implications that are contained in this, might be regarded as a departure from the traditional method of judging each industry's need for protection and whether the industry is economic and efficient. Indeed, let us remember that it can be regarded as the determination of a far reaching, total, economic policy embracing all industries both primary and secondary.

The right honourable gentleman was expressing his fear of breaking new ground. I would like to know whether this is still the policy of the Government. The Minister for Trade and Industry rarely, if ever, speaks in the Parliament on the matter of tariffs. It is handled, no doubt efficiently, by the Minister for Customs and Excise (Mr Chipp), who is at the table, but it is a rather weird situation when the Minister for Trade and Industry rarely appears in the Parliament to justify the Government's policy on these matters or at least to give an explanation. The speech on tariffs from which I have quoted is one of the few on that subject that he has made. He put it right on the line when he said:

The Government's established tariff policy can be simply stated. We will give adequate protection, where necessary, to Australian industries which are economic and efficient. We have an independent body, the Tariff Board, to advise the Government on the circumstances of individual industries. We expect the Tariff Board to tender its advice having full regard to the Government's established policies.

I am in complete agreement with that view. At no stage can the Tariff Board properly take from the Government the right to implement its policy. The situation would be completely wrong if a body such as the Tariff Board could tell, for instance, a Labor government pledged to a policy of protection that there was not to be protection for Australian industries. The Tariff Board must certainly have a great degree of independence, but it must also be subject to review by the Parliament of the day. It would be indeed strange if a body outside Parliament forced the Government to implement policies opposed to those it had offered to the electors. The Minister went on:

Indeed, if this advice does not take into account the Government's established policies, it is unlikely to be advice which we can expect to follow.

I have mentioned these matters because the winds of change are blowing through the Tariff Board, to my mind with a detrimental effect for Australian manufacturers. In the policy speech of the Prime Minister during the campaign for the last election he laid great stress on the point that this Government would protect Australian industries. He said it quite clearly and laid it on the line. On 9th October 1968 he spoke in this Parliament about winds of change blowing over the Tariff Board. He said: il will, of course, continue to be the Board's role to advise, and it will continue to be the Government's role, in determining levels of protection, to decide whether or not it will follow the advice given. These have been our policies and they have served us well. We have no intention of changing them.

It is time more extensive inquiries were made into industry. Today those people who wonder where Australian industry is going in respect of these matters should be reassured by the Government. As I said, I am somewhat concerned that such a good advocate for adequate protection for Australian industries in more recent times as the Minister for Trade and Industry, is silent on the man made fibres report, which implies a policy which I believe is detrimental to those industries and contrary to what the Deputy Prime Minister has said were his views in days gone by. The honourable member for Lalor mentioned the need for the Tariff Board to be fully equipped and to investigate completely all the facts associated with primary and secondary industry and inquiries. I believe the 4 points he laid down - the need to improve the Board's composition by research and matters of that nature - are important ones which Labor will give effect to. The Board must extend its inquiry, as he said, through wholesaling, retailing and all aspects of industry.

The question of what is essential and economic is more or less guess work at this stage because of the Board's limited inquiries into these matters. Labour will make the necessary changes in the Board for primary and secondary industry to be investigated on this basis. I rose tonight to express my opposition to the proposals which are contained in the man made fibres report and to endorse the comments made by the honourable member for Lalor in respect to the Opposition's policy on this question. I hope that no government, what ever its political colour, will sacrifice Australian industries and Australian workmen for foreign interests so far as manufacturing is concerned. The Minister for Trade and Industry said in this Parliament on one occasion: 'You can have cheap cars but you will have no motor industry; you can have cheap clothes but you will have no secondary textile industries; you can have cheap everything if you want it, but if you want to be able to afford it you have io make sure that Australians are working and the only way to do it is to see that industries are efficient, economic and adequately protected in coping with the demands we make on them to maintain the workforce in reasonable conditions and, at the same time, to add to the development of the defence potential of the nation'. I express those views tonight. I hope that on the next occasion there is debate in this Parliament on this subject the Minister for Trade and Industry will make a fleeting appearance and reassure the House that he has not changed his views which I commended him for in days gone by. I sincerely trust he still holds those views. I hope the Government also holds those views.

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