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Wednesday, 26 May 1926

Senator CRAWFORD - Does the honorable senator suggest that the present Commonwealth Government is composed entirely of city members?

Senator OGDEN - It is dominated by city interests. Of course we have the big city newspapers influencing public opinion, members of Parliament, and Governments. The result is that we have reached a position where we ought to call a halt and see if, instead of increasing duties, we might not with advantage, in some directions, reduce them. I do not intend to deal to-day with the various items of the tariff, because they can be discussed more advantageously in committee, but I propose to refer to the taxation of machinery. Honorable senators know that the United States of America can compete successfully in the markets of the world, and pay higher wages than obtain in Australia, not because of increased efficiency in man-power, but almost entirely because of improved organization. This is due perhaps to some extent to the American method of payment by results, but it is chiefly brought about by the application of science to industry - one aspect of our protectionist tariff that seems to have escaped the attention -of the Tariff Board, Ministers and honorable senators. I was reading recently the report of a speech delivered by Mr. G. A. Julius, the new president of the Institute of Science and Industry, who pointed out Australia's disabilities owing to the high taxation of machinery. He said that the metropolitan district of New York, with a population of 8,000,000, was using more electricity a year than the whole of. Great Britain; and whilst there wasasteady improvement in the rate of increase of electrical power supply in Great Britain, British engineers now recognized that the increase was not nearly rapid enough. Then Mr. Julius pointed out that the workman of the United States of America adds a value of £600 in the process of manufacture if provided with 33/4 h.p., whilst the wageearner in Australia having less than h.p, to assist him, adds a value of £322. For every £1,000 spent in wages in the United States of America, approximately £2,400 is added to the value of the product, as against £1,750 in Australia, despite the fact that American wages are materially higher than those ruling in this country. To put it in a different way, the increased productiveness under American factory conditions,- as a result of which over £2,400 is added in value for each £1,000 spent in wages, enables the workmen of the United States of America to receive higher wages than the workmen of Australia. Some people may say that this is not the result of an increased use of machinery.

Senator Crawford - It is not the result of free trade.

Senator OGDEN - It is due to an increased application of science to the methods of manufacture. Some will contend that the American is a better workman than the Australian, but I do not hold that view. Mr. Julius pointed out clearly that the Australian workman- was really more efficient considering the horsepower with which he was provided. He remarked -

The " added value " figure that we have reached, with 1.4 horse-power per employee, much exceeds that realized in America with the same horse-power..... Our " added value" at 4 horse-power per employee should, when it arrives, exceed that realized to-day in America.

Thus Mr. Julius pointed out that, man for man, the Australian workman was superior to the American, and that the only reason why the production per employee was greater in the United States was the application of science to machinery. Personally, I believe that considerably more than Mr. Julius mentions depends upon the system of payment in America. The workman in the United States of America is paid by results, while the Australian is remunerated by the hour. I know as a working man that better results are obtained from the piece-work system than from the system employed in Australia. I believe in piece-work, and I think that it would solve many of our troubles if it were applied in the industrial field in Australia. The following table from the London Labour Gazette of September last, shows the comparative rates of real or effective wages for various part of the world in 1925: -


America therefore is able not only to compete successfully in the markets of the world, and turn out more goods, but also to pay. the highest effective wage.

SenatorCrawford. - Do not those figures apply to some goods only. What does America do with respect to textiles, for instance ?

Senator OGDEN - She has not largely exported textiles up to the present time. I suppose the figures I have quoted apply mostly to hardware. The Minister interjected a few moments ago that the result was not due to a freetrade policy. Neither is it due to a prohibitive tariff, since America applies a lower tariff than Australia. The tariff in the United States of Americaw orks out roughly at 19s. 5d. per head of the population, while in Australia it is £4 8s.

Senator McLachlan - That is not a logical comparison - the United States with a population of 110,000,000 as against our 6,000,000.

Senator OGDEN - It may not be.I shall put the position in another way. I shall give the amount of taxation on the total importation. In the United States of America in 1924, 60 per cent, of the total imports were admitted duty free. whereas in Australia in that year the duty free imports were only 30 per cent. If the honorable senator desires further information, I may tell him that the United States of America in 1924 collected duties to the extent of 15 per cent, of the value of her total imports, while Australia for the same period collected 18 per cent. Thus, whichever way we look at the position, the duties in Australia are higher than those ruling in the United States.

Senator Crawford - The honorable senator is referring to Customs collections, which may be very small because the rate of protection is high. The percapita value of imports into the United. States of America is very much below that of Australia.

Senator Thompson - The American tariff was extremely high. It has had to be modified.

Senator OGDEN - Yes. It is gradually diminishing, whereas the Australian tariff is on the increase.

Senator Reid - America is a selfcontained country.

Senator OGDEN - I am trying to show the reason why she is self-contained today - that she is able to undersell the manufacturers of Australia and Great Britain, because of the application of science and machinery to her manufacturing activities.

Senator Thompson - Does not piecework stand out in bold relief?

Senator OGDEN - I have already mentioned that fact. Mass production is also a strong factor. Under our Australian tariff we tax almost every article that is used in the development and distribution of electrical power, as well as every electrical appliance used for domestic purposes. If there is one factor in this or any other country that will stimulate manufacturing enterprise and increase production, it is surely the application of electrical energy. It is useless to encourage schemes for the supply and distribution of electrical power if, time after time, almost prohibitive duties are imposed on electrical appliances.' For instance, turbines developing thousands of horse-power, although they are not now, and probably never will be, manufactured in Australia on a commercial basis, are heavily taxed. Perhaps not more than a dozen of them ai-e imported in a year.

Senator Findley - Do not say that they will never be manufactuerd in this country.

Senator OGDEN - Only firms that can afford to establish plants for the manufacture of these appliances on a large scale can supply them. It would not pay an Australian firm to install the necessary plant, and I think that I am safe in saying that machinery of this class will never be manufactured here on a commercial basis.

Senator Grant - Is it not being made at the present time at Cockatoo Island for the power-house in Sydney ?

Senator OGDEN - Has the honorable senator become a protectionist? I am not in a position to contradict his suggestion; but I know that the seven or eight high-powered turbines used in Tasmania have all been imported.

Senator Thompson - They are all of British manufacture.

Senator OGDEN - Yes. Let us consider whether it is worth while protecting such an industry. Here, again, Mr. Julius gives some interesting facts -

In the manufacture of electric light and power, the total investment is very neaTly £21,000,000, with approximately £4,000,000 in land and buildings, and nearly £17,000,000 in plant and machinery. In 1923-4, Australia paid nearly £S59,00'6 in duty on electrical apparatus, nominally to protect electrical manufacturers in this country, and this amount in 1921 was nearly £933,000. Three thousand six hundred and forty-one persons were employed in the electrical factories, with an average wage of £174 per annum, but the total cost to Australia - that is, wages and ' duty added together - was £521 per employee; whereas the value added per employee by the manufacturing process in this industry was only £243.

The figures I have just given, carefully selected and compiled by a most capable man, furnish a complete answer to the question whether it is worth while protecting an industry such as this.

Senator Findley - He is evidently not a protectionist.

Senator OGDEN - Let me finish the extract. It proceeds -

Taxation to support this industry is therefore far in excess of the entire wealth produced by the industry. This, in itself, is bad enough, but the taxation undoubtedly retards the introduction of power into other industries, and so " slows up " our progress in all those industries. An analysis of the Customs revenue figures goes to show that, since 1907, an amount of £6,500,000 has been paid as duty on electrical work exclusive of any duty paid on wires and cables. Interest and sinking fund on this amount must be provided, which can be assumed at 10 per cent., and this means that those who generate and those who use power are carrying an overhead burden of £650,000 per annum, in respect of duties which have been paid, and this burden is now increasing at the rate of £85,000 per annum.

That is what Mr. Julius says in regard to an industry we are protecting with a ' 60 per cent. duty. We are not only bolstering up an artificial industry, but also penalizing industry in general, by raising the cost of electric power, when our object should be to make it as cheap as possible, and induce its use in every home. For every ten locally made domestic electrical appliances, a hundred must be imported. It seems to me that we are pursuing an entirely wrong policy. It is certainly not a scientific policy. We are supposed to have a scientific protective tariff, and I should be prepared to accept such a policy, but, when I find that we are penalizing one of our most important industries, and retarding production generally, I think it is time we called a halt.

Senator Reid - Does not the honorable senator regard this as a scientific tariff?

Senator OGDEN - I do not. Any little industry that makes tin tacks in a back yard can get a duty if it secures the ear of the Tariff Board.

Senator Sir Henry Barwell - There is no proper discrimination shown.

Senator OGDEN - There is not. Very often, I think, we ought to protect some of our primary industries. I do . not think we are devoting enough attention to them. We' are trying to build up a manufacturing country, and yet we cannot export a single manufactured article. What is the position of the boot industry? Boots have become cheaper. There is an over-production of them. The Australian manufacturer makes a very good boot, but if you ask him why he does not find a market overseas for his surplus product, he will tell you very plainly that it is impossible for him to export. And it will never be possible for him to do so. Under existing industrial conditions in Australia, the best he can hope to do is to supply the requirements of Australia.

Senator Sir Henry Barwell - That is the position of most of our manufactures.

Senator OGDEN - Our policy ought to be to allow things to come in free of duty that will assist in the development of our big activities. Mr. Julius sums up the position as follows: -

A careful study of the foregoing data must, I think, lead one to certain very definite conclusions, as follows: - The vital factor in the efficient development- of industry - whether primary or secondary - is the provision of " power " at the lowest possible cost. And by the word " power " I mean not merely the supply of electrical energy at the switch, but also the whole of the apparatus that has to be installed by the user of power, to enable him to use it effectively in his manufacturing processes. Attention has in the past largely been focussed, in Australia at least, upon means -for providing an adequate' and cheap supply of electricity. Very little thought appears to have been given to what, I believe, is a more important factor; namely, the supply to the user, at the lowest possible cost, of the apparatusthat is to enable him to use this power.

He concludes with this most pregnant remark : -

In America, the electric power station is now regarded as the heart of the national structure of prosperity. In a few years that country has nearly trebled its utilization of electrical power. This has enabled wages to increase faster than the cost of living, so that the workers are receiving the highest " real wages " ever paid in history. Larger possibilities of comfort and enjoyment are opening up for every fireside, and the opportunities for intellectual development are extending to a rapidly widening circle. This is the happy, human result of the electrical revolution for which the early years of the twentieth century will always be notable.

This is one of the industries we are penalizing by an excessively high tariff.

Senator Reid - How does America generate that power; by water or otherwise?

Senator OGDEN - Almost wholly by water. In Tasmania we use electric power fairly extensively. The other day I inquired about a vacuum cleaner, and ascertained that the landed cost was £6, yet the charge to the user was £18.

Senator Crawford - Under this tariff vacuum cleaners will be admitted free.

Senator OGDEN - I am very pleased to hear that, and I hope that a lot of other items will be admitted free. If I can, I shall make them free. I want to give a little illustration of what the duty on electrical appliances means. I have a letter from Mr. C. B. Davies, of Hobart, who is consulting engineer to one of the municipalities in the southern part of Tasmania. The municipality called for tenders for the supply of transformers, and the lowest tender received was from the Metropolitan- Vickers Electrical Company of England. When tenders were called these transformers were carrying a duty of 27^ per cent., but between the date of the giving of the contract and the delivery of the goods, the duty was increased to 35 per cent, under the present tariff. After paying a duty of 35 per cent, the cost of the English tender was £697 14s. 2d. as against the Australian tender of £1,019, a difference of £321 5s. lOd. in favour of the English tender. After paying a duty of 35 per cent, and all charges from the Home country to the Hobart wharf, the English transformer was approximately 56 per cent, cheaper than the local article. But the Customs authorities - I do not know how they have the temerity to do these things, but I have no doubt they were prompted by some local manufacturers - decided to impose a dumping duty in addition to the duty of 35 per cent., and they charged another £105 duty, which brought the total cost of the British transformers to £803 12s. 2d. But even after this imposition the English tender was approximately 26^ per cent, cheaper than the Australian -made article, and, according to Mr. Davies, had the additional advantage of the greater experience of the English manufacturer. The invoice cost of the transformers landed in Hobart was £497 3s., and, subtracting this sum from £803 12s. 2d., the Commonwealth collected from the municipality duty amounting to £306 9s. 2d. The council, in trying to develop the municipality by distributing electric power throughout, contributed £306 9s. 2d. for the protection of the Australian manufacturer, and was still unable to give him the order for the apparatus. If that is not a clear illustration of a ruinous policy, I do not know what it is.

Senator Sir Henry Barwell - It is protection run mad.

Senator OGDEN - It is. An article which could be placed on the wharf at Hobart at a cost of £497 eventually cost a small and poor municipality £803.

Senator Grant - But look at the revenue derived by the Commonwealth.

Senator OGDEN - I could understand a tariff of this sort if the Minister would be honest enough to tell us that it is being imposed for the sake of obtaining revenue, but, at the outset of his remarks, he said that there was in this schedule no proposal for revenue duties, and that every duty it imposed was in pursuance of the protection policy. I could pick out dozens of items which are not protective, and can never protect or encourage an industry, but can only result in the raising of an exorbitantly high revenue, giving the Commonwealth Government more money. Already it has difficulty in disposing of the revenue it receives, and is obliged to indulge in a policy of giving large sums of money to the States for work which could be provided for by the States themselves if the Federal Government allowed them a wider field of taxation. I should like to see our expenditure and revenue balance, so that there would be no surplus. Commonwealth Ministers will have to come down to bedrock, financing the commonwealth economically instead of extravagantly as they sometimes appear to be doing. The duty on electrical appliances is the one phase of the tariff I intend to deal with on the second reading. There are many other items in the schedule to which I shall refer in committee. In my opinion, we are pursuing a most vicious and foolish policy in attempting to encourage exotic industries at a tremendously high cost to the consumer. The cost of production goes up, hours of labour are reduced, and wages go up. The manufacturer then comes along and asks for an increased duty, and he gets it. The worker thereupon asks for still higher wages. And so we are following a vicious circle. I doubt whether we are living in such prosperous times as the optimism of some of our Ministers and honorable senators would indicate. I think we are living largely on borrowed money and a fictitious revenue derived from a high tariff. It is time we got to bedrock. The only sound basis for industrial development is efficiency and quality. If an Australian manufacturer can produce an article which compares more than favorably with an imported product, he should not need any protection, because the Australian people will purchase that made in Australia. There is no such thing as prejudice against local manufactures. It is all moonshine. In the other dominions, particularly in New

Zealand, as Mr. Julius pointed out, they have adopted a policy under which electrical appliances and tools of trade and production are admitted duty free. The result is that there is greater prosperity in New Zealand to-day than in any of the other dominions.

Senator Crawford - That is questionable.

Senator OGDEN - In New Zealand they have devoted their energies to the development of their primary industries, and are not endeavouring to build up back-yard manufactories. We are not doing that in Australia. One does not purchase English goods because of a prejudice against Australian products. Why do we buy English tweeds ? Merely because tweed of similar quality is not manufactured in Australia. There is no doubt about that. We cannot get the value. Why do some use Swedish matches? I have a box of Swedish matches in my pocket, and I am not afraid to admit it. Notwithstanding all the nice things said concerning the local match industry, the quality of its product is not equal to the imported. When Australian manufacturers get control of the market there is a tendency on the part of some to say, "Now we have a monopoly, anything is good enough for Australians." That will not do at all. If the Australian manufacturers wish to compete with importations, and build up sound manufacturing industries in this country they must " produce the goods." A very high tariff is only subsidizing inefficiency. High duties have been imposed upon woollen goods for the last 30 or 40 years. What is the result? In many of the woollen mills the machinery is inefficient, and the organization unsatisfactory, merely because they are sheltering behind the high fence of prohibition. If the Australian manufacturers of woollen goods had to compete in the markets of the world on a fair basis they would be compelled to produce a better article. I trust that there will be a measure of sanity in the debate, and that honorable senators will not blindly follow the advice of Ministers or the Tariff Board. The Tariff Board is not a thoroughly representative body. Country interests are not represented upon it.

Senator Findley - Neither are the workers.

Senator OGDEN - The Tariff Board is representative only of city interests. I am strongly in favour of the development of our primary industries, and I trust that, in dealing with the schedule, honorable senators will not depend upon the advice of the Tariff Board, but will use their own judgment. 1 intend to support a reduction of duties on many of the items, and I trust that in considering the schedule honorable senators will not be blinded by prejudice, and influenced by the fiscal madness that has come over Australia, but will use discretion, and support a sane policy.

Senator SirHENRY BARWELL (South Australia) [4.40]. - I listened with a great deal of pleasure to the speech of Senator Ogden, which was full of good, sound common sense. It was in striking contrast to the speech delivered by Senator Grant on the first reading of the bill and that of the Deputy Leader of the Opposition (Senator Needham). After listening to the latter, I had not the faintest idea of what his fiscal faith really is. I do not know whether he is a prohibitionist, a high protectionist, a moderate protectionist, or a freetrader.

Senator Sir Victor Wilson - Then it was a very successful speech.

Senator Sir HENRY BARWELL - It would be if it were not analysed. The fiscal faith, of Senator Needham would be determined by the portion of the speech which one heard. The remarks of Senator Ogden were in striking contrast to those of the other two honorable senators to whom I have referred. The Prime Minister (Mr. Bruce), in his policy speech delivered at the Dandenong Town Hall on the 5th October last, said -

The tariff policy of the Government is based upon the principle of sane and reasonable protection to efficient Australian industries.

With that policy I entirely agree, but, at the same time, I desire to say that the Bruce-Page Government has already gone far beyond the policy then laid down by the Prime Minister on behalf of the Government. The Prime Minister also said -

The Government stands for this principle, hut recognizes that the incidence of a protective tariff, based upon the determination of the Australian people to maintain a high standard of living for our workers, places our primary industries with an exportable surplus at a disadvantage when selling abroad in competition with the cheaper labour production of other countries. This fact renders it necessary that the fullest consideration should be given to the. effect upon our exporting industries of the standard of wages and conditions existing in Australia, with a view to rendering an equivalent measure of assistance to producers selling in external markets as is afforded to those who find a market within our own borders. Only in this way can justice be done to the different sections of our people and a well-balanced development assured.

The question naturally arises as to what the Prime Minister meant by an " equivalent measure of assistance to producers selling in external markets as is afforded to those who find a market within our own borders." So far as I can see, the only reasonable way in which to assist producers, and primary producers in particular, selling in external markets, is to lighten some of the heavy burdens at present imposed upon them by the existing tariff. I approach this subject in much the same way as did Senator Ogden. Australia is essentially a primary producing country, and to ensure full and proper protection of Australian industries our greatest efforts should surely be directed towards the development of our primary industries. A vast agricultural country, such as Australia, ought to produce more than 3 per cent, of the world's wheat. That is all we are doing at present.

Senator Ogden - We have to depend largely upon our primary production.

Senator Sir HENRY BARWELL - Yes, and we should, therefore, not place any undue burden upon our primary industries. The Prime Minister said " that the Government recognizes that the incidence of a protective tariff . . . places our primary industries with an exportable surplus at a disadvantage . . . " What, then, ought the Government to do ? Surely some steps should be taken to minimize, as far as possible, the disadvantages which the Prime Minister says the primary producers are labouring under.

Senator Grant - Why not remove the duties which are harassing primary producers ?

Senator Sir HENRYBARWELL.The Government does not believe in doing that. I have said that the Government may lighten the burdens which fall upon the primary producers by reason of the tariff. They cannot entirely dispose of these disadvantages. A high tariff necessarily means a high cost of living.

The Government could do something towards minimizing the disadvantages of the primary producers, by giving some relief from the duties imposed at present on agricultural machinery and farming implements generally. It could remove or reduce the duty on engines used in connexion with farming operations. I have not the slightest doubt that the reply of the Government to such a suggestion will be that the existing duties are necessary to protect the secondary industries at present engaged in the production of agricultural implements. If adequate protection to our secondary industries necessarily means serious detriment to a primary industry, the question naturally arises as to which is the more important to Australia - the primary industry of agriculture, . or secondary industries which supply implements used in agriculture? There can be only one answer. The primary industries are infinitely more important than the secondary industries.

Senator Findley - The primary industries could not carry on successfully without secondary industries.

Senator Sir HENRYBARWELL.I am not arguing against Australia encouraging secondary industries. I realize that, if this or any other country is to progress, it must, so far as is possible, build up its secondary industries. I am, however, arguing in favour of a proper discrimination. Our primary industries are capable of almost limitless expansion. If we do not cripple them by placing upon them an intolerable burden, we can successfully export our surplus primary products. What is the position in regard to secondary industries? The possible expansion of our secondary industries is limited, because we cannot export our manufactures to any appreciable extent. I agree with Senator Ogden that it is sheer madness to bolster up secondary industries to such an extent as to jeopardize our primary industries. Even Senator Grant does not question such a statement.

Senator Grant - I do.

Senator Sir HENRYBARWELL.Then the honorable senator thinks that our secondary industries ought to be bolstered up to the detriment of our primary industries?

Senator Grant - I question the accuracy of the honorable senator's statement.

Senator Sir HENRY BARWELL - I said that it was folly to bolster up our secondary industries to such an extent as to jeopardize our primary industries, and Senator Grant says that he does not agree with me.

Senator Grant - Does not the honorable senator think that the whole tariff is a piece of folly?

Senator Sir HENRY BARWELL - I am not saying that for a moment. I judge from the remarks of Senator Grant that he is a tariff prohibitionist.

Senator Grant - Did I say that? I said that I believed in our revenue being obtained from land taxation.

Senator Sir HENRYBARWELL.The honorable senator's remarks on the tariff led me to believe that he was a tariff prohibitionist.

Senator McLachlan - He is a freetrader.

Senator Sir HENRYBARWELL.If the honorable senator is a freetrader he is at variance with the other members of his party. I do not think any other honorable senator will argue that it is anything but folly for us to bolster up our secondary industries to such a degree that we seriously hamper and jeopardize our primary industries.

Senator Grant - Is the honorable senator in favour of any import duties to protect secondary industry?

Senator Sir HENRY BARWELL - I am; and I shall make my position quite clear on that point presently. In bolstering up some of our secondary industries we are not showing any discrimination, and we are doing incalculable harm to some of our primary industries. The manner in which the manufacturing of agricultural implements has been bolstered up has been mentioned. I am afraid that the whole tariff tendency is in that direction. In many items of the tariff schedule we have advanced beyond what can be considered as the standard of reasonable protection, and in some of them we have" actually reached the point of prohibition. Some people openly advocate prohibition as the proper tariff standard for Australia.

Senator Grant - There is something logical about that.

Senator Findley - Hear; hear!

Senator Sir HENRY BARWELL - On that point I may ask Senator Findley some questions which he will find it difficult to answer.

Senator Findley - If I cannot answer them to-day I shall ask for notice of them.

Senator Sir HENRY BARWELL - The honorable senator would require very long notice. The Government does not put forward prohibition as its tariff policy; the Prime Minister announced that it favoured sane and reasonable protection for efficient Australian industries. I have no complaint to offer against that policy; I endorse it. But I complain that the Government has departed from the lines laid down by the Prime Minister. In some respects the present tariff is neither sane nor reasonable. Instead of helping certain industries it is seriously restricting them. That is no idle statement. The figures given by the Commonwealth Statistician in the Y ear-Book to indicate the relative productive activity of Australians should cause every thoughtful observer to pause. Taking 1,000 as the index-number of the productive activity of Australia per head of the population, in 1911 the Commonwealth Statistician gives the figure as 944 for 1921-22, 913 for 1922-23, and 893 for 1923-24. That is the latest figure we have available. There has been a steady decline year after year in the production per head of population in Australia. Those figures take into account not the value, but the volume of production. They are surely an unhealthy sign. In these times of improved methods and machinery our production should be increasing instead of diminishing.

Senator Findley - It would be increasing but for the excessive importations.

Senator Sir HENRYBARWELL.I think not. Some people in Australia think that a limitation of production is a blessing rather than otherwise. I should not be surprised if Senator Findley were among the number.

Senator Findley - I do not think that.

Senator Sir HENRYBARWELL.I am glad to hear it. I do not belong to that school. I believe that we should do everything possible to encourage production.

Senator Findley - Hear, hear!

Senator Sir HENRY BARWELL - We should discriminate wisely in protecting industries. Some people seem to think that by a system under which the whole community is taxed for the benefit of a few, a country can grow rich. I do not subscribe to that view either.

Senator Grant - That, is one of the fundamentals of protection.

Senator Sir HENRY BARWELL - I disagree with it. I believe in reasonable protection for certain industries in a country like Australia. There should be a discrimination. We should protect the industries that are essential, but not industries that do not matter. Some of our industries need protection, and some do not. Protection should not eliminate reasonable competition.

Senator Findley - What does the honorable senator mean by reasonable protection ?

Senator Sir HENRY BARWELL -I shall refer to one or two industries to show the honorable senator what I mean. Our protective policy should not be applied to bolster up inefficiency. That point was dealt with by the previous speaker. I agree with his remarks on that point. I also agree with what he said about the folly of our giving tariff protection to industries which it is wasteful for us to support. He referred to the match-making industry, and so did Senator Graham. Senator Graham said that he had visited Messrs. Bryant and May's works, and was impressed with the splendid conditions that obtained there. According to a statement made some time ago, on very good authority, it would pay Australia handsomely to wipe out the match-making industry, and to pay a pension for life, at double their present rates of wages, to all the persons employed in it.

Senator Findley - That has been said by freetraders about almost every industry that has been established in Australia.

Senator Sir HENRY BARWELL - -I hardly think that that is correct. It is certainly wasteful for Australia to bolster up any industry of wnich a remark like that could be made. Senator Ogden referred to the duty on electrical appliances. I had prepared some matter on that subject, but he dealt with it so effectively that I shall content myself with saying that it is pure folly, in a country where cheap power may mean such a great deal in the development of primary and secondary industries, for us to put any obstacle in the way of its development. High duties on electrical appliances certainly are obstacles to the exploitation of our power resources.

Senator H Hays - The folly is just as pronounced with regard to mining machinery.

Senator Sir HENRYBARWELL.That is so; and so it is with regard to oil refining. It is economic suicide for us to destroy our natural industries in order to build up artificial industries. We should not place hampering burdens upon industries, which under reasonable conditions could develop markets outside as well as inside Australia. By a fostering system of tariff protection you may build up a home market, but by a fostering system which is unreasonable or illconsidered, you may deprive an important industry of all chance of competition in an outside market. We may build our tariff wall so high that we shall force our people to be content with trading among themselves, and make it impossible to trade with any other country. It must be remembered that a tariff wall that is effective in keeping out the surplus products of other countries is just as effective in keeping in the surplus products of our own country. That danger does not seem to be recognized by some of our so-called economists. While we have so many artificial restrictions hampering our Australian trade and commerce, we cannot hope for that development and expansion which the great resources of the Commonwealth would otherwise render possible. Senator Ogden pointed out that we are living under a more highly artificial system than the people of any other country in the world. We have a high standard of living in Australia, which no one is more anxious than I to maintain, and even improve, but how can we expect to even maintain it by purely artificial means ? Our everincreasing protective duties render necessary an ever-increasing rate of wage. That constantly ever-increasing rate of wage makes inevitable a constantly increasing cost of living. This means that naturally there will be further claims for increases of wages. Nothing else can be expected. On the ground that wages have to be increased still higher protective duties are applied for and granted.

Senator Duncan - That is the vicious circle.

Senator Sir HENRYBARWELL.Yes, indeed, it is vicious with a vengeance. Such a system might work all right for a time, but, in my opinion, the breaking point must be reached sooner or later. One result of the system in Australia is that we are unable to export our surplus manufactures to any appreciable extent; and the other is that our fruit industry is being killed. The system has already partly killed mining ; it has hampered our wine industry, and it is seriously affecting our pastoral and agricultural developments. .

Senator Ogden - It is a sort of living on doles.

Senator Sir HENRY BARWELL - That is so, and that cannot go on for ever.

Senator Foll - Wages axe high, and hours of work are reasonable, in America, where a protective policy operates, and yet a cheap article is produced.

Senator Sir HENRY BARWELL - The honorable senator was not here a little while ago when Senator Ogden showed that that result was achieved largely by the application of science to industry.

Senator McLachlan - There are other reasons.

Senator Sir HENRYBARWELL.Yes, but that is the great contributing factor. The undeniable fact is that Australia is not progressing as she should, having regard to her wonderful and illimitable resources. I have no doubt that the statement will be made here as elsewhere, that during the last 23 or 24 years the population of Australia has increased under our protective policy to the extent of about 2,000,000 people, and that production has also increased to a very great extent. But these increases are not what I think they should have been, and these facts are no argument against the contention I am putting forward. I am not arguing against tariff duties or against the tariffs of 23 or even 13 years ago. I am questioning certain unreasonable increases that have taken place within the last few years, and which are still taking place.

Senator Grant - At what point does the vicious circle start ?

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