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Tuesday, 19 July 1921

Senator KEATING (Tasmania) . - I shall be as brief as the circumstances will allow in supporting the second reading of the Bill. I do not expect to have to depend upon the courtesy of honorable senators for an extension of my time. This is not the first discussion of a Tariff with which I have been associated in the Senate. Like Senator de Largie, I well remember the time when the first Protectionist Tariff was introduced in this Parliament. The honorable senator was slightly in error in his references to it. He seemed to imply that in that first Federal Tariff provision was made for a preference to Great Britain. That was not the case. It was a general Tariff, applicable equally to imports from all countries. It was not until some years later that we adopted the principle of giving a preference in the Tariff to goods imported from Great Britain.

Senator de Largie - How long afterwards?

Senator KEATING - In 1907-8. The first Federal Tariff was discussed at great length in both Houses of this Parliament, and reciprocity of trade was very strongly advocated at the time in Parliament, in the press, and on public platforms. It was foreshadowed by Ministers, but no definite proposal to give it effect was then introduced. I am very glad to welcome this particular measure, not, perhaps, in all its details, but gene rally speaking. First of all, it purports to give protection to all Australian industries by the imposition of a general Tariff upon goods coming into the Commonwealth from abroad. Provision is made for a preference to Great - Britain. That preference was first introduced as a feature of our Tariff legislation in the Tariff of 1907-1908. It was introduced by a Government of which I was a member, and I had the honour, in conjunction with a fellow senator, of piloting that measure through this chamber. That was the first instance of the granting by us of a preference to the Old Country. Although at the time we were ridiculed, especially by the Free Trade press, because it was alleged the extent of the preference was insignificant, the preferences set out in the Government proposals were carried. Notwithstanding that Senator de Largie's experience in Scotland leads him to conclude that quite a number of persons there were unaware of the fact that British goods received a preference upon entry into the Commonwealth, I know that in the United Kingdom the circumstance was not entirely unknown. Plenty of people there were only too eager to take advantage of that preference. They thoroughly appreciated it. But quite apart from those who were commercially interested, many of the press organs in the United Kingdom referred from time to time to : this preference, and actually advocated what Senator de Largie has suggested this afternoon, namely, that there should be something in the nature of reciprocity. They argued that inasmuch as Australia had given a preference in Tariff matters to goods from the United Kingdom, and that Canada had acted similarly, it was the duty of Britain so to arrange its Tariff as to reciprocate that preference. However, we have now recognised the advantages arising from this system of preference. Should the system ultimately result in reciprocity, I shall welcome that. But we ought not to hesitate to extend a preference to tho United Kingdom until we are assured that we shall receive reciprocal treatment. Free Trade has been in vogue in the United Kingdom for the better part of a century - for something like eighty years - and, con* sequently, it has become second nature to the people there. The large mass of public opinion there which has accepted Free

Trade as axiomatic is very difficult to move. There are other questions which agitate the public mind of Britain beside the fiscal question. There are, " for example, matters affecting the Empire ae a whole, matters affecting the domestic concerns of the United Kingdom as a whole, and matters affecting the domestic concerns of the component parts of the United Kingdom. Those questions are very close to the inhabitants of Britain. They are very important and vital, and when they are present to the mind of a public which- has accepted Free Trade as an axiomatic principle, it is very difficult to divert attention from them to a fiscal question, which, to many persons, seems to be a purely academic matter. For that reason I think that we ought to continue to grant a preference to Great Britain instead of waiting until the people of that country have considered the problems to which I have directed attention, and have resolved to re-adjust their fiscal relations with other portions of the Empire. If they do so re-adjust their fiscal relations, it will only be under the stress of some great necessity. That the war has contributed to some such result is undoubted. Through it, public attention has been directed to the isolated position in which Great Britain has stood in relation- to Tariff matters. Perhaps more attention is now being given to the subject than was ever devoted to it previously. It is true that some twenty years ago attention was directed to it, but that fact was wholly due to the advocacy' of a very forceful and prominent personality - I refer to Mr. Joseph Chamberlain. With his death a great deal of the interest which had been stimulates? in the subject waned, and almost disappeared. Since then the war has re-awakened interest in it. But the war has also awakened interest in other questions, and it is the measure df importance and vitality which the British public attribute to each of these which will determine the order in which they will receive consideration. I cannot believe that other issues, particularly of a domestic character, will be subordinated by the people of Great Britain to the question of Free Trade versus Protection. But whether they are or not, we are quite justified by past experience, and by our hope of future results, in perpetuating the principle of granting a preference to goods entering

Australia from the United Kingdom. As. far back as 1897, Canada, under the leadership of Sir Wilfrid Laurier, adopted the principle of preferential trade with the United Kingdom. Broadly speaking, that preference- was founded upon the principle that there should be a reduction of 33$ per dent, of the duty upon all goods entering Canada from the United Kingdom.

Senator de Largie - Sir Wilfrid Laurier was a Free Trader, and it was quite consistent for him to reduce duties.

Senator KEATING - It is quite true tha he gave his allegiance to Free Trade principles. But he knew too much to attempt to give practical effect to those principles in the form of a policy. Probably he succeeded in reconciling his poli-' tical conscience with the retention of his office as Prime Minister, by reducing the Canadian Tariff all round to the extent of one-third upon goods from the United Kingdom. It was not until 1907-8 that we followed his example, although we did not adopt his particular method. Instead we made specific reductions in favour of Great Britain upon specific items. But we had the .advantage of the experience of Canada in that connexion, and Senator de Largie and others who were here at the time will confirm"" my statement that one of the matters which we had then to consider was the possibility of outside countries sending their goods to Australia through the United Kingdom. Whilst that particular Tariff was before Parliament it was found necessary to insert in it a provision that the preference should apply only to goods which were the product " pf the United Kingdom. This Bill goes further than that. It contains an intermediate Tariff - a Tariff which, under certain circumstances, may be applied to goods imported into Australia from other parts of the British Empire, or, indeed, from other countries. I think that that is a very desirable provision. A Tariff containing only one column is a very inelastic Tariff. It may become desirable, for example, to extend specially favoured treatment to particular countries, and it -may be inexpedient or inconvenient for the matter to be brought before Parliament and dealt with specifically. If, therefore, when passing a Tariff of this character, Parliament chooses, having regard to the industries of the country as a whole, to invest the Governor-General in Council or some other authority with.1 power- to make the duties set out in the intermediate Tariff applicable to goods from British Possessions or from some other country, it has" the right 'to do- so.

Senator Russell - The provision in the Bill is- a little bit wider than that. The duties set out in the Tariff' may be applied to goods from any portion of the British Empire.

Senator KEATING - It is' open to the Minister' to apply the British preferential' Tariff' or the - intermediate Tariff to1 goods coining from another British country-

Senator PRATTEN (NEW SOUTH WALES) - But the British; preferential Tariff' cannot be applied to -goods' from foreign countries.

Senator KEATING - It is open to the Minister to apply the British preferential1 Tariff, either wholly or in part, to' any portion of the British Dominions.' Similarly, the intermediate Tariff maybe applied, either wholly or in- part, to any portion- of the British Dominions or to any foreign country.

Senator PRATTEN (NEW SOUTH WALES) - But the British preferential Tariff' cannot be applied to goods from any foreign country.

Senator KEATING - Exactly. There is" a Bill dealing with the creation of a Tariff Board which, I understand, we shall shortly be invited to consider, and still' another- measure relating to the Tariff has been foreshadowed. Reference was made to the latter by the VicePresident of the Executive Council (Senator Russell) by way of interjection during the concluding portion, of Senator de Largie's speech this afternoon. He mentioned the. matter of exchange. Before we have finally dealt with Tariff legislation, we shall be asked to consider a Bill' which purports to overcome what may be regarded as abnormalities due to fluctuations in exchange. We know that the world has been considerably disturbed by the war, and in no countries more than in those which were actual participants. Our Allies have all been considerably disturbed, and their exchanges have been prejudicially affected; but neutral countries like- Switzerland, Holland, Sweden, and Norway have not been affected in their exchanges, while one - of the' results of the. war to both the 4united -States of' America and Japan has been that their currency or exchange has appreciated instead of depreciating. When

I saw originally that there was in these proposals an intermediate Tariff column that was to be applicable, in certain circumstances, to foreign countries, I hoped that it was to enable the Commonwealth, through its Tariff, for the future to reciprocate the sentiments of alliance and brotherliness-in-arms with us which had characterized the British, French, Italian, and other allied nations, during the war. I entertained that hope until quite recently; but now I understand that a Bill has been introduced to' Parliament which has for its object not that at all, but the very opposite to what I conceived to be the purpose of the intermediate column in the Tariff schedule.

Senator PRATTEN (NEW SOUTH WALES) - Does not the honorable senator believe in such a thing as reciprocity?

Senator KEATING - Yes.

Senator PRATTEN (NEW SOUTH WALES) - Then why give without taking?

Senator KEATING - That is the reason why I said I understood that the intermediate Tariff was to establish, continue, and perpetuate reciprocity.

Senator PRATTEN (NEW SOUTH WALES) - What do we get in return ? Do we get . preferential trade arrangements with those countries?

Senator KEATING - I presume we shall ; but -this is not simply confined to trade. We offer preference to Great Britain without asking for anything in return. I believe that this is a good principle, and as I was a member of the Government that was first responsible for applying such principles to our Tariff legislation, I shall support it. Even if it took Great Britain fifty years to change its fiscal faith, I would still support preference to the United Kingdom in any Tariff that came -before me for consideration.

Senator PRATTEN (NEW SOUTH WALES) - We are with you - there.

Senator KEATING - Then, I say, let us have reciprocity if it comes, and let us welcome it when it does come; but let us give preference whether reciprocity follows or not. I thought at first that the motive for the introduction of the intermediate column in the schedule was to give consideration to those who had recently been ' brothers and Allies in arms with us, because of what they are suffer? ing in their currencies to-day in consequence of their participation shoulder to shoulder withus in the recent war. I think, however, that it is not so inteifded, because I hear of a Bill which is being introduced inanother place, and which will have precisely the opposite effect. I probably could not refer to that Bill at all if it were not that the intermediate column 'in this schedule wouldseem to indicate- the extension to allied countries of some such treatment as we are offering to Great Britain;

SenatorCrawford. - In return for a preference.

Senator KEATING - That, I presome is the object.

Senator PRATTEN (NEW SOUTH WALES) - Is not the intermediate Tariff an instrument of reciprocity?

Senator KEATING - No doubt; but I thought when I first saw it that it would go further than mere reciprocity, and enable the Government of the Commonwealth to say to othercountries, " Your position is rather a difficult one,and that difficulty has been brought about because you and we have been fighting together for civilization, right, and justice. We have power under the intermediate Tariff column to enable you to trade with us under advantageous conditions." I am afraid, however, that that is not the way in which the power is going to be exercised. There is nothing in the Bill to prevent it being done, but the ominous sounds of the approach of anotherBill make me feel that it is not one of the purposes of the intermediate column.

I have said that broadly, generally, and in the main, I support this Bill. I do not go so far as the Minister, and support it. on the claim that it is an expression of scientific Protection. I very much doubt if we can ever put forward here or elsewhere, any particular Tariff schedule, and say with confidence, " This is an expression in Tariff form of scientific Protection." The question of the Tariff is too complicated, extensive, and detailed to enable us to say, as we can of a general principle, that it is scientific.

Senator Benny - And industry is always altering.

Senator KEATING - That is so. It would be almost impossible at any stage to lay down what has been called, for want of a better phrase, byardent advocates of Protection, both in the press and on the platform, a " scientific " schedule.

SenatorRussell. - I never used thoser words, but when Senator Gardinerasked ifthis wasa scientific Tariff, I was nob going to say " No," so I said" Yes."

Senator KEATING - It is not on those grounds, at any rate, that I would support' it in the main. After all,wet have to put our Tariff -duties upon numerous 'items. ' There are items appearing in a Tariff schedule descriptive of articles -which members have sometimes heard of for the' first time when they have seen them in the schedule. I know thatwas the experience of quite a number of members with the items which! appeared in the first Tariff schedule, and I have no doubt that it is true, so far as' members ofthis Parliament are concerned, of a number of items enumerated in the schedule mow, before us. In dealing with matters so minutely as that, we frequently. and that the finished product of oneindustry is the raw material of another. ' A conflict then arises as to whether that finished article is to be allowed,to be imported as raw material for the second industry without a duty upon it. Thosewho are engaged in its productionor manufacture in the Commonwealth say "No; this is an industry which we (are building up for the Commonwealth. There is a great demand for this particular article for such and such a- manufacture, and we want a duty on it to protect our industry." But those concerned with the second industry, or second manufacture, which uses that product as a raw material, say, "It is true that they are making attempts to produce it in Australia, but, so far, owing to the little experience they have had, and the small demand that has been made upon them, they are not turning out an article such as has been turned out for generations in some country across the sea, audit we are ever expected to manufactureand turn out a finished product that isworthy of our industry, we must get the best raw material, and, therefore, we must be allowed to import this article from abroad." So we have competition between two industries in Australia, and we have to take all the circumstances into consideration and decide whether we shall protect 'both or. sacrifice one ; whether we shall apply Free Trade to what I may call the minor industry, and let its product be looked on when imported as a raw material for the purpose of the second industry. That is a condition of affairs which frequently confronts those who are engaged in preparing or considering Tariffs. So, as every set of circumstances has to be considered, one might almost say, separately, it is very hard to say that the same rule applies ' throughout to each item in the schedule. It is *for that and other - reasons that I hold that one can hardly properly designate a Tariff schedule as scientific. The best- that one can say of a schedule of this character which one is supporting is that, to his mind, -it is of a common-sense and practical character: that is, that it appears to him, as a Protectionist, that it extends and applies Protection in' a commonsense and practical way to the manifold industries of Australia, both those in existence and those which can be reasonably and suitably encouraged to come into existence.

There is one feature of this Tariff which has been remarked upon already : I refer to the question of Protection all round - Protection not merely to the producers or manufacturers, but to the employees, and to the general public. I shall be glad, at any time and all times, tb support any proposals which have for their object, and may reasonably be expected to achieve,, the protection of the manufacturers or producers, the protection of the employees in so far as wages and labour conditions are concerned, and the protection of the general public from profiteering or from unreasonable prices.

Senator Crawford - Don't you think our Arbitration Courts will protect the employees sufficiently?

Senator KEATING - Well, we did not think that they could not do it, but we thought they were not able to do it, in connexion with particular industries and in relation to the Tariff itself, quickly enough. The Ministry Avith which I was associated in 1907-8. announced to Australia, through Mr. Deakin, a policy known as the New Protection, which embraced those three provisions. We as a Legislature endeavoured to achieve that object in the well-known Harvester case. We passed a heavy import duty on harvesters, and then imposed a substantial, but not so heavy, Excise duty upon the locally-made harvester, and by the amount of that Excise duty we lessened the Protection that was given against the imported article. Thus, supposing the imported harvester had a duty on it of £30, and the locally-produced harvester had. an Excise duty on it of £10, the effective Protection was only the difference of £20? We made a further provision that if the manufacturer of the locally-produced harvester satisfied the authorities that he was paying a reasonable wage to his employees and was selling his implements at a fair price, the Excise duty would be remitted. I have quoted these figures from memory, and, although they may not be exact, they give an idea of the form of legislation which was passed at that time. t,

Senator Crawford - We have set up industrial tribunals since then.

Senator KEATING - The Arbitration Court was established and functioning at that period. The validity of the legislation which I have outlined was successfully contested, and for a time those who were interested in advancing New Protection were defeated in their object.

It is not my intention at this juncture to discuss the question of Free Trade versus Protection, because" ' I think our policy has been practically decided. We have had Tariffs since 1901, when moderate Protection was granted ; in 1907 and 1908 more substantial Protection was given, and now we have even a more advanced Protective schedule. I do not think there is very much of a Free Trade school in Australia, as, broadly and generally speaking, the people of the Commonwealth feel committed to a policy of Protection, and I do not think there is much to be gained in discussing, in an academic fashion, the relative merits and demerits of the, two policies.

In speaking of the legislation introduced some time ago, I referred to the consumers, or users, and I think it will be admitted that their point of view must eventually dominate. AH are consumers, even the manufacturers and the producers, because they are the consumers of the ordinary necessaries of life, and, beyond that, they are the consumers , of ihe raw products required in their manufactures. There is not any one in the community, old or young, who is not a consumer. When we segregate the producers from the consumers we put a certain class against the whole community if

We look upon their interests as antagonistic to those of others, and if we segregate proprietors of the producing interests - whether manufacturers or other producers - from the employees we put one class against another. The "consumers, or users, of the harvesters had to be protected ih the specific case to which I have referred ; but it would be almost' impossible to adopt such a cumbersome method for protecting the interests of the consumers generally. Our difficulty in protecting the interests of. the consumers is duc to the form in which our Constitution has been framed.

Senator PRATTEN (NEW SOUTH WALES) - Our distributers and- producers are consumers.

Senator KEATING - We are not all distributers or producers; there are some who generally manage to gloss off a little for themselves, who are neither producers nor distributers. There are also those who are too young; but they are all consumers. We have to consider what attitude we shall adopt when a Tariff duty will not result in establishing an industry in the community. Let us take the Tariff duties imposed by this Parliament upon some particular commodity which is used fairly generally. We hoped that the result of that duty would be to promote the establishment in the Commonwealth of an industry which would furnish a general requirement, and . if it does not do that the duty imposed is not a protective duty, but a revenue-producing one. It really amounts to taxing the community for the purpose of swelling the revenue, and not for the incidental advantage of establishing an industry to create ^employment.

Senator PRATTEN (NEW SOUTH WALES) - Are there not some people who would not pay any taxes at all unless we had a Tariff?

Senator KEATING - Very likely. -But I am sure the honorable senator is not supporting the duties on some items to overcome that. When the Tariff was originally introduced, certain duties imposed on cinematograph films were considerably increased in another place, particularly on films produced in countries outside of Great Britain. Does any one suggest that the imposition of such duties will bring into being in Australia an industry which will produce films to take the place of those which were previously imported, say, from America ?

Senator PRATTEN (NEW SOUTH WALES) - Some say it will have that effect;

Senator KEATING - It is impossible to produce films quite similar to some of those we are importing. Since the duty has been increased, the picture-show proprietors have notified the public that the prices of admission are to be in-: creased. If the additional duties were removed, who would derive the benefit? Would the patrons of the picture shows benefit^ or would the proprietors?

Senator Reid - The public would benefit.

Senator KEATING - If the people would benefit, my views on this particular item would be considerably modified; but, if the proprietors gained the ad; vantage, such a proposal would be a different matter.

In discussing the items in Commitee we may possibly find some duties which will not promote the growth of industries' in Australia, and consequently will only be the* means of imposing a further burden upon the people. We shall, therefore, have to "decide whether it is advantageous or not tb use the Tariff for raising revenue; and if we are satisfied that it is not, but that primarily, as far as we can, we should use it for protective purposes, we shall have to decide what will bo the result of the removal of a duty. These are matters that we shall have to consider in connexion with any requests that we may make.

From time to time I have noticed discussions outside of Parliament as to the duty of the Senate. It has been suggested that this Chamber would not give much consideration to the items in the schedule, and in other quarters it has been said that the Senate has power only to " suggest." I do not know where the word " suggest," which is so frequently used in this connexion, had its origin, because the Senate has power to request .the amendment of an item. I may say, for the benefit of those honorable senators who were not here when the last Tariff was discussed' in this Chamber, in January, 1908, and onwards, that the Senate successfully, and with advantage, exercised its powers and requested increases on a large number of items.

Senator PRATTEN (NEW SOUTH WALES) - What, happens when the two Houses clash?

Senator KEATING - What happens in regard to an ordinary amendment? From my point of view, the effect of a request and an amendment is practically the same. The only difference is that in Bending the' Bill back to another place we do not insert an amendment, but ask the House of Representatives tp do so.

Senator PRATTEN (NEW SOUTH WALES) -We please ourelves as to what action we take. .

Senator KEATING - Exactly. In these circumstances, while supporting, the Protective policy embodied in the Tariff; the, preferential duties, and the intermediate andgeneral rates, I do not hold myself absolutely bound to slavishly follow every proposal of. the Government contained in the schedule, or in any amendment which the Minister may circulate.

Senator PRATTEN (NEW SOUTH WALES) - Or items as amended by another place.

Senator KEATING - Exactly. Ido not think there will be many items oh which there will be a divergence of opinion between my point of view and that of the Government, and with these slight qualifications I havevery much pleasure in supporting the second reading of the Bill.

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