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Wednesday, 26 May 1926

Senator McLACHLAN (South Australia) . - There appears to be little to add, from my point of view, to what has been said by honorable senators who have preceded me. Australia seems to have become irrevocably protectionist, and apparently for the two very sound and sane reasons that nearly every other country has adopted protection, and that protection is essential for the defence of Australia. There are, however, some aspects that should occasion alarm. There is, for instance, the danger of over-production.

Senator Sir Henry Barwell - Overproduction in certain industries.

Senator McLACHLAN - Exactly.I do not mean over-production generally, but in certain specific industries that have been developed by our policy of protection. When we make glib comparisons between the United States of America and Australia, we are apt, sometimes, to forget that the United States of America has a population of 110 millions, and, therefore, has a huge home market. American manufacturers, with whom I have been in touch, have informed me that they rely mainly upon the home market, and not upon the export trade, which, owing to the adoption of antidumping provisions by countries to which the surplus is exported, is now seriously jeopardized.

Senator Thompson - The motor car and picture film industries are not suffering.

Senator McLACHLAN - Apparently not ; but I believe that every country that concerns itself with its secondary industries will provide, as we are providing, anti-dumping provisions to check imports of surplus products from other countries. These anti-dumping laws will seriously affect Australian industries, because we have a population of only 6,000,000 people, and if, by tariff duties, we encourage too greatly the expansion of certain secondary industries, we shall have either to export the surplus in order to stabilize the position or be faced with financial difficulties. I have no desire to mention any particular industry. All I wish to say is that, just as the forced liquidation of one banking institution will shake the whole financial fabric of the State, so will the forced liquidation of one important manufacturing concern, owing to over-production and its inability to dispose of its surplus products, prejudicially affect every manufacturing industry in the same line.

Senator Sir Henry Barwell - How many manufacturing industries can successfully export their surplus now?

Senator McLACHLAN - I should say that, with our present standard of living, which, of course, no one desires to see lowered, we cannot engage in any considerable export trade in manufactured products, and I put it to Senator Guthrie, who so strongly advocates the development of certain secondary industries, that in some of those there are indications that over-production is imminent. I have no desire to name any of these industries, but I know of one which would probably be capable, if its machinery were in full operation,of manufacturing sufficient to satisfy the requirements of the whole of the Orient. It is manifest, from his speeches, that the Prime Minister (Mr. Bruce) is fully alive to the danger of over-production in certain industries that have grown up under the protection of the tariff. The solution appears to be to bring more people to Australia so as to widen the home market. I am sensible that, in many industries, there is no immediate danger of overproduction, but there are others, and, since we are charged with the fiscal affairs of Australia, it behoves us to walk warily.

Senator Elliott - How could a reduction of the tariff improve the position where there is a tendency to overproduction ?

Senator McLACHLAN - I am not quite sure, but the danger I see is that if we impose high duties on certain commodities, we immediately attract capital into those channels, and we run the risk of over-production. The people who are so encouraged to embark their capital in such industries enjoy a false sense of security. They are not likely to survey the field and ascertain for themselves the possibility of over-production. Proposals are being made frequently for the establishment of new ventures, and not infrequently a too-credulous public is asked to find money for manufacturing concerns which, before long, are capable of supplying the whole of the requirements of the. Commonwealth. As more than one hon orable senator has shown, it is impossible in every instance to dispose of surplus secondary products overseas, because of the high cost of production and the imposition of anti-dumping provisions by the Governments of other countries. It seems to me that, if we are to embark upon a policy of high protection, it is essential that we should consider future possibilities from this point of view. I should like a calculation to be prepared - I am not sure that it has not already been made - regarding the loss that has occurred to this country in the last few years through industrial turmoil. Many industries are suffering on that account. I am in entire accord with Senator Barwell concerning the reduction of the volume of production in secondary industries, some of which I attribute to the fact that there is no industrial . peace in them. If these industries are to be protected they must give Australia of their best from every point of view - not only the best per capita output, but also a continuity of production. The only other note I desire to strike - for, like other honorable senators, I am a protectionist - is that I should like to see a greater measure of Imperial or inter-Empire preference embodied in our tariff. I have been greatly shocked to find on the tables of various hostelries in the neighbouring dominion of New Zealand oranges and dried fruits imported, not from Australia, but from California. It seems to me that we should endeavour to foster a spirit of interEmpire preference, and I, for one, should like to see a larger measure of preference given to Empire products. This Empire stands to-day in the forefront of civilization.

Senator Grant - What did Canada do with our butter?

Senator McLACHLAN - If the statement made on behalf of Canada be correct, she probably acted in a proper manner; but that is a matter upon which we have not yet been fully enlightened. Whatever Canada may do is too small a matter to consider in dealing with such an important subject as Imperial preference. The greatest force in the world to-day is the British Empire; and it is our duty, in dealing with fiscal matters - because tariffs produce wars as well as help to prevent them - to make every endeavour to strengthen the bonds of empire in the interests of world peace, . and of civilization generally. If an opportunity is afforded me, I shall vote for an increase in the quantum of preference given to British goods.

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