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Tuesday, 8 November 1910

Senator PEARCE (Western AustraliaMinister of Defence) . - I thank honorable senators for allowing the debate on this Bill to proceed this afternoon, and thereby facilitating the passage of the measure. A few points call for a word or two in reply. It has been said, on the one hand, that we are proposing to pay too much by way of bounty for the production of oil. Another section of our critics seems to think that we are not ' proposing to pay enough. Those conflicting views may be taken to indicate that the Government have struck a happy medium. Senator Stewart was the first to voice the complaint that we are not proposing to pay enough. I would point out, in reply to him, that there are two things to be taken into consideration in deciding on the amount to be paid. One is : How does the amount of the bounty compare with the economic value of the article that we are proposing to feed by the bounty? The figures at my disposal relating to the import value of kerosene show that the value is somewhere about 7d. or 8d. per gallon. The bounty which we propose to pay is 2d. per gallon. Taking the value at the highest figure - 8d. per gallon - it will be seen that the bounty is equal to one-fourth of the import value of the article. If we look at the matter from that point of view, it cannot be said that the bounty is not sufficient. If, next, we take the total quantity of kerosene imported, we may ask ourselves to what extent we can reasonably anticipate that the bounty is likely to be availed of? We have one bounty in operation in Australia to-day, and the particulars with regard to it afford a remarkable illustration of my point. Under the Bounties Act, about £250,000 has been allocated by Parliament for various purposes. I venture to say that by the time that Act expires not one-fourth of the sum will have been spent, because the production of the various articles enumerated has not proceeded sufficiently to enable those producing the goods to take up the bounties provided by Parliament. Let us look at this proposal from that point of view. The total product of kerosene oil from all sources in Australia is 300,000 gallons. In this year - 1910-11 - we are providing bounties 'sufficient for 960,000 gallons, or more than three times the total present product of last year. I think that when honorable senators take those two factors into consideration, they will not say that the bounty is not sufficient in amount, or that the total quantity provided for is not adequate. Senator E. J. Russell has raised a point with regard lo the wages conditions and the power of the Minister with regard to them. I draw attention to the fact that we have some experience in connexion with the sugar bounty as to how these provisions will work out. What takes place is this : The Min- ister has not to wait until the bounty has been paid for any given period before inquiring whether the wages paid in the industry are fair and reasonable. What happens is that those who intend to claim the bounty during the next year come to the Minister, and, in order to make sure that they are on perfectly sound ground, submit their schedules of wages to him. Then the Minister says whether the wages are fair and reasonable. If they are, the bounty will in due course be paid when, at the end of the period, it is claimed. When the claim is made, if the employes in the industry say that the company has not fulfilled its undertakings in certain respects, the matter will be considered by the Minister, lt may be proved that in some respects - perhaps, through a misunderstanding - the wages conditions have been varied. The Minister, in the exercise of his judgment may say that, although the company have varied the conditions somewhat, it would not be a fair thing to refuse to give them any of the bounty voted by Parliament. He might say that the case would be met by imposing a penalty for the infraction of the labour conditions. That is how these conditions work out in actual practice, as we have seen in the Lithgow incident and the sugar case.

Senator E J RUSSELL (VICTORIA) - When a private employer 1 Teaks wages conditions he is dragged before the Court. In this case, however, the employer can break the conditions and still get some part of the bounty.

Senator PEARCE - The other employer gets the value of his work. But we have no power to fine an employer. We attempted to do that in the case of the manufacturers of agricultural machinery by means of Excise duty, and the High Court ruled that we could not. So that we have to proceed in this way. We cannot penalize an employer in the ordinary way as can a State. But it is within our power to impose these labour conditions.

Senator E J RUSSELL (VICTORIA) - An unsympathetic Minister could pay the whole of the bounty even where the labour conditions' were not fulfilled.

Senator PEARCE - The honorable senator is surely contemplating a state of affairs which may exist in the dim and distant future. Senator Ready regretted that no bounty is proposed in respect of other oils. If he will turn his attention to the Tariff of 1908 he will find that lubricating mineral oil bears duties of 3id. and 3d. per gallon, mineral oils such as naphtha, benzine, benzoline, petrol and turpentine substitutes, duties of fd. and Jd. per gallon, solar and residual oils, which are the cheapest kind of oils, a duty of Jd. and id. per gallon respectively. There is, however, no duty on kerosene. It will be seen that the cases which the honorable senator mentioned are met under the ordinary Tariff. What I said in my opening speech was that, if the Government were convinced that the articles were not properly protected, we should be prepared to reconsider the duties when the time came to revise the Tariff. Senator Gardiner raised a very interesting point when he said that we should deal with the people's money as if we were handling our own. ' At the same time, he practically admitted that, in dealing with the affairs of government we cannot draw exactly the same parallel as we can do if dealing with our own. While an Individual is only bent on earning a profit, a Government is fulfilling its highest function when it is enabling individuals to gain a profit. It is also carrying out its duty when it provides work for the people of the community, and sees that adequate payment is made. This bounty is thought to be a means to that end. Senator Gardiner has said, and Senator Rae has confirmed the statement, that we ought to provide that, when the companies reach the profit-making stage, the Commonwealth shall get -back its money, or a share in the profits. There is nothing to prevent a State or Federal Government imposing a dividend tax. In its early days Western Australia made huge grants for the development of mining, but to-day it levies a dividend tax on mining companies. There is nothing to prevent the Commonwealth from resorting to that course whenever it thinks fit. Of course, the tax could be confined, if necessary, to the companies which had been stimulated by means of the bounty. At any rate, the people will always have it in their power to take a share of the profits earned whenever they wish. Senator St. Ledger wants a guarantee - he is strong on guarantees - and wishes to inculcate the prophetic spirit in the occupants of the Ministerial bench - he wants a guarantee that if the bounty is paid success will be insured.

Senator St Ledger - That is not quite fair.

Senator PEARCE - The honorable senator is so eloquent that, at times, he does not quite realize what he says, but I have given his words according to my note.

Senator St Ledger - Well, let it go - we want a guarantee.

Senator PEARCE - I am sure, now that the honorable senator has got into a calmer mood, he will not ask me to give that guarantee. He knows that I am not a prophet, and I do not know that there is a prophet on this side, unless it be Senator Findley. My honorable and learned friend spoke as if we were giving this bounty as a sort of ticket in Tattersail's sweep.

Senator St Ledger - I think it is.

Senator PEARCE - I would point out that these companies are in active operation. Some honorable senator's spoke as if only one company was at work. There is a company in Tasmania which has got beyond the experimental stage. It is mining, and week by week one can read the report of the development which is taking place.

Senator O'Keefe - And Tasmania has several other companies in the experimental stage.

Senator Rae - That company fears that it cannot get the benefit of the bounty.

Senator PEARCE - It will get a bounty on the paraffin wax which it produces. I understand that it is not producing any kerosene. Senator St. Ledger was very sceptical about this proposal, stating that, so far, only one industry had been establishedby means of a bounty in Australia, and that is the sugar industry. But in Victoria the butter industry was made a success by the bounty system. I venture to say that it is one of her leading industries.

Senator St Ledger - A bounty on export?

Senator PEARCE - Yes.

Senator St Ledger - It did not prevail very long.

Senator PEARCE - It did. The honorable senator was also very anxious about what was going to happen in three years time. This is, of course, a painful subject for us to pursue, but one can well understand the honorable senator's appre-' hension in that regard. Senator Vardon has obtained a reputation for hurling invectives at this side. The other day we had his string of invectives against the Land Tax Bill, and now he refers to this as " tin-pot " legislation, and says that a bounty of £50,000 is absurd. Let us assume for the moment, as he has stated, that it will be paid to one company with a capital of £1,000,000. That will work out at £16,600 a year, and we shall give to the company1½ per cent. on its invested capital. In other words, it will only have to make up by its own exertions 3 or 4 per cent., when it will be able to pay dividends. That will not be a bad investment. I venture to say that if, as Senator Vardon says, the directors are sure that a sum of £16,600 will go into theircoffers every year, they will not look upon it as a " tinpot " proposition.

Senator Rae - It looks rather like greasing the fat pig.

Senator PEARCE - It is assumed that the Commonwealth Oil Corporation is the only company which can get any portion of the bounty, because of its enormous capital. But let me point out that because it has spent £1,000,000 to get to the productive stage, that does not indicate that another company must spend a similar sum to reach that point. If you go to the company's works you will find that it has had to build a very costly railway, and I dare say that a. large proportion of the £1,000,000 is sunk in that work I understand that in Tasmania the deposits of shale are either alongside a railway or near a good harbor. It does not follow by any means that there a company will have to spend anything like £1,000,000 before it reaches the productive stage.

Senator O'Keefe - In one case the deposits are five miles from the sea and the company are talking of laying pipes down to the water's edge. A fourth or a fifth of the expenditure will put that company in the same position as the other.

Senator PEARCE - There has been a desire expressed for information as to how this proposal originated. It has been mooted time after time by other Governments; even in Governor-General's speeches they have hinted at what they were likely to do. Deputation after deputation, composed of members of Parliament, has waited on other. Governments, and received all sorts of promises. But the present Government has the faculty of doing things where other Governments merely talked about doing them. We received a deputation, representative not of one party, but of all parties, and several States, who strongly impressed upon the Government the desirability of providing for a bounty. Representations have also been made by the companies interested about the fierceness of the competition, and the stress put upon them in the pioneer years of the industry. We are all aware that in industrial enterprises it is the first few years which are the most trying, and that once they are tided over those engaged in them are very often able to achieve success.

Senator Chataway - Why did not the Government provide a bounty upon the production of natural oils?

Senator PEARCE - If natural oil were tapped anywhere in Australia to-morrow a bounty would not be needed. You would have to build a fort round the Stock. Exchange to keep the investors away. The well-known fact that the Standard Oil Trust is prospecting at very great cost in several parts of the world to find natural oil is proof enough of that. I am sure that no one who has a knowledge of the subject will say that we ought to offer a bounty.

Senator Chataway - Then you ought to give a bounty for boring.

Senator PEARCE - That may be so. Several State Governments have assisted, but not by way of bounty. In Western Australia the Government have assisted companies by lending a diamond drill and parties of men for a year or more. I have here a number of records showing what has been done in several States. In Queensland, for instance, the Government have lent diamond drills or given assistance to bore for oil, and that work is being continued.

Senator O'Keefe - In Tasmania the Government lend diamond drills to bore for coal, oil, or anything else.

Question resolved in the affirmative.

Bill read a second time.

In Committee:

Clause 1 agreed to.

Clause 2 (Appropriation for payment of bounties).

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