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Wednesday, 4 May 1921

Senator E D MILLEN (NEW SOUTH WALES) (Minister for Repatriation) . - I ask permission to make a statement regarding the wool position; and, if leave is granted, I propose, in order that the matter may be discussed, to lay a paper on the table, and to conclude by moving that it be printed.

Leave granted.

Senator E D MILLEN (NEW SOUTH WALES) - I donot know that it is necessary to detain the Senate for long since the matter to which I arn about to refer has occupied public attention somewhat acutely for the past few weeks; and I am convinced that all honorable senators have made themselves fairly conversant with the various aspects of the subject. Neither is it necessary for me to refer, except briefly, to the gravity of the position. The wool industry is - one may say - the king-pin in our industrial and commercial waggon;, and, obviously, that pin cannot be disturbed, much less destroyed, without bringing about serious consequences to all sections of the community. I pass from that reference with a statement in regard to which I anticipate there will be general concurrence, namely, that nothing can seriously affect the wool industry which does not also affect every individual, every section, interest, trade, occupation and institution in this country, ' and - necesarily also, and very seriously - the finances of the country itself. The Government, in approaching this problem, did so very firmly convinced of the desirableness of allowing trade, as far as possible, to revert to uncontrolled, normal pre-war conditions. But, at the same time, it feels that it could not stand by, idle and' unmoved, when the most i important of our national industries - most important because of its magnitude - is threatened with what I am bound to describe as disaster. The Government kas had to consider whether it is not bound, in the circumstances, to see if any help which it can render may do something, if not to avert the trouble, then, at least, to minimize it. I do not propose to worry honorable senators with figures. Statistics have been quoted very freely by almost all who have participated in the discussion of the wool position ; but figures, after all, merely express facts. The facts of the problem, as I view them, are these : During the years of war there have been accumulations of wool, representing very many millions of pounds, and in addition there is growing, every day of every week, additional supplies of wool which are coming into the market in a continuous if an irregular stream. At the same time there is, in consequence of the waxstricken condition of Europe primarily, and the world generally, a considerably reduced world-purchasing power. It may be doubted if the purchasing power of the world to-day is equal to the absorption of the daily production of wool. It is quite clear, therefore, that it is not ©quai to the absorption of the accumulations to which I have referred. In a communication which he submitted to the Government, Sir John Higgins, the Chairman of the British- Australian Wool Realization Association, summarizes the position thus : -

If the wool market were to be flooded with the present surplus, financial institutions and wool houses that have advanced on grazing properties, sheep, and wool clips, would find that their securities had, to a great extent, disappeared. We could expect failure and insolvencies all over the Commonwealth. Sheep breeding and wool growing would cease to be practicable as commercial enterprises in Australia, except under special conditions. This fact must be faced, viz.: - That it will take some years to absorb the large surplus of wool, together with current production, hence the initiation of the scheme for restoring confidence must be founded upon absolutely sound principles. The only solution of the problem appears to be in the direction of so stabilizing the industry as to give the grower a reasonable price, based on production costs, and the manufacturer security as to the requirements of raw wool, regularity of deliveries, and moderate market rates.

That, I submit, in a terse form, sketches the position to-day. It is obvious that if the whole of this accumulated wool, plus the current production, is thrown upon an unregulated . market the inevitable result must be that the market will fall to pieces, or to use a common phrase, the bottom will drop out.

Senator PRATTEN (NEW SOUTH WALES) - I think it has dropped out already.

Senator E D MILLEN (NEW SOUTH WALES) - There is a semblance ' of some bottom to the market yet, and. an attempt has been made to stabilize the market by the formation of the British.Australian Wool Realization Association, popularly known as "Bawra." The scheme upon which the association was founded is breaking down. I do not know that I would be going very far beyond the truth if I said it had broken down, but whether it has or not, it is quite clear that it is on the verge of breaking, and it? failure primarily, at any rate, arises from the fact that a few individual wool-growers in Australia declined to cO-operate with Bawra. They are very few in number. It is well that honorable senators should know how few. They represent 6 per cent, of the growers, and are responsible for 10 per cent, of the wool involved. Although the percentage, expressed in this way, is very small, it is obvious that with wool as with any other commodity, a few producers coming into the market can disturb, and indeed destroy, the very underlying principle upon which Bawra was instituted. Many solutions for the difficulty have been offered - solutions ranging all the way from the grotesque to the impracticable. The Government as far as it is able, has examined all these proposals. I am not aware of any scheme submitted which has not had close attention. But in examining these proposals the Government also felt it to be its duty to consider the standing of those responsible for them, their knowledge of the problem, their intimacy with the trade, and their competency to' tender adVice. Having done all this, the Government ha, come to the conclusion that the scheme formulated by Bawra is open to the least objection, and carries behind it the largest volume of opinion of those whose judgment is entitled to respect. At a conference held some time ago of the various bodies which are supporting the Bawra proposal the following were represented : - The Central Wool Committee; the Pastoralists, Graziers and Farmers Association; Wool-Growers Association; National Council of Wool Selling Brokers; Meat Exporters Association; Fellmongers Association; and the Associated Banks of Victoria. These bodies represent a very wide range of interests and, it may be presumed also, they include large numbers of those who are especially competent to tender advice.

Senator PRATTEN (NEW SOUTH WALES) - Can the Minister give the names of the gentlemen who represented those bodies ?

Senator E D MILLEN (NEW SOUTH WALES) - The honorable senator will find the names in the paper which I am laying on the table of the Senate. I must say that the Government does not pretend that it accepts the proposal submitted by Bawra with any robust confidence.

Senator PRATTEN (NEW SOUTH WALES) - What proposal is that?

Senator E D MILLEN (NEW SOUTH WALES) - The one submitted by Bawra; and, notwithstanding the honorable member's question, I feel sure he is as familiar with it as I am. The Government, as I have said, d'oes not pretend to accept the proposal with any very lively confidence, but any doubts it has on this point are intensified regarding the alternative proposals. It is not submitted that the Bawra proposition represents any royal road to success, but it is the most promising of the many schemes that have been submitted'. The Government is also influenced by the fact that behind tha Bawra scheme is a large number of those whose direct interests are involved, who may be credited with some special knowledge concerning the problem, and who have certainly given it continuous and prolonged study. These are factors which the Government cannot ignore in endeavouring to shape its own judgment as to the proper course of action. The proposal submitted by Bawra is that, while any wool-grower may do as he likes with his product, subject to the condition that if he exports he must agree that it shall not be sold abroad except under condi tions prescribed by Bawra. These conditions involve limitation as to the supply to be offered from time to time, and some limitation as to the minimum price at which the wool may be sold.

Senator Earle - It does not interfere with local sales?

Senator E D MILLEN (NEW SOUTH WALES) - No. But it is not much good selling in a free market here, if outside Australia sellers are tied up. The Bawra proposition was that the reserve price under which export would be allowed should not be less than a figure represented by a flat rate of 9d. per lb. The Government is not at all. disposed to exercise any power with which it may be vested with the idea of enabling even such an important industry as wool growing to exact an unfair and unreasonable profit from the consumer. It felt that the price at which growers should be asked to sell should bear some reasonable relation to the cost of production. From inquiries made, and examination - of statistics, it appears thai the cost of production in Australia is in excess of 9d. Bawra put up a proposition that- the reserve price be 9d. The Government, however, in ,view of all the circumstances, and with a desire to pay due regard to the consumer's point of view, recommended that the Bawra price should be 8d. This is the proposition which the Government ask the Senate to consider and, I hope, approve.

Senator Foster - Did I understand the Minister to say that the Conference indorsed this scheme?

Senator E D MILLEN (NEW SOUTH WALES) - It indorsed the main proposition. I may add that the Associated Banks of Victoria - not all the banks - were represented, and subsequent negotiations with the banks have drawn this statement from them : They say, in effect, that they have no objection to this proposal, but are not disposed to do anything in the way of coercing their clients to fall in with such an arrangement, because they must please themselves. I am submitting this as the proposal of the Government, and trust we shall be able to secure the co-operation of the Senate in giving effect to it by indorsing the policy.

Senator Crawford - Will legislation be necessary?

Senator E D MILLEN (NEW SOUTH WALES) - No, but it is competent for the Senate to express an opinion by signifying its assent to or dissent from the -motion I am about to submit.

Senator PRATTEN (NEW SOUTH WALES) - How do the Government propose to exercise their powers ?

Senator E D MILLEN (NEW SOUTH WALES) - By regulating and prohibiting export except under these conditions.

Senator PRATTEN (NEW SOUTH WALES) - Through the Customs ?

Senator E D MILLEN (NEW SOUTH WALES) - Yes. It is an extraordinary use of power to meet an extraordinary situation.

Senator PRATTEN (NEW SOUTH WALES) - It is a very dangerous precedent.

Senator E D MILLEN (NEW SOUTH WALES) - Every precedent is dangerous when one seeks to do something that some one else does not like. It is a dangerous precedent to pull down a house, but it may be necessary to save one adjoining from burning. All the objections I have mentioned apply to the other alternatives submitted with the exception of one.

Senator THOMAS (NEW SOUTH WALES) - Why not do this by Act of Parliament instead of by regulation ?

Senator PRATTEN (NEW SOUTH WALES) - Hear, hear !

Senator E D MILLEN (NEW SOUTH WALES) - The Senate can discuss that phase of the question.

Senator Keating - That is what was done in connexion with the- Butter Pool last year.

Senator E D MILLEN (NEW SOUTH WALES) - The Senate can discuss such a proposal, and the Government will pay every respect to its views. But time is a very important factor indeed.

Senator Fairbairn - What is the difference between an Act of Parliament and a regulation?

Senator THOMAS (NEW SOUTH WALES) - There is very great difference. The Minister of Customs, under regulations, can prohibit the import or export of certain commodities.

Senator E D MILLEN (NEW SOUTH WALES) - I appeal to Senator Thomas, who is usually so amiable, not to disturb the situation.

Senator THOMAS (NEW SOUTH WALES) - I am amazed at Senator Fairbairn making such a suggestion.

Senator E D MILLEN (NEW SOUTH WALES) - The honorable senator has great aptitude for developing amazing situations. I am submitting the proposal of the Government so that the question may be fully considered, and in the hope that we shall have the co-operation of the Senate.

Senator Rowell - Is any time stated?

Senator E D MILLEN (NEW SOUTH WALES) - The proposal is that this regulation shall apply for six months. What happens after that must be determined by the circumstances as they develop. I want to stress the importance of the fact that whatever steps the Senate decides to take, every day is of great consequence to Australia. We have already lost one series of sales owing to the disturbed condition of the market, and, if it is decided to do anything, the sooner our policy is known the better. If nothing is to be done, even as a palliative, the sooner we apply that palliative or remedy the better it will be for every one concerned. I move -

That the paper be printed.

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