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Wednesday, 9 June 1926

Senator CRAWFORD (QueenslandHonorary Minister) (Honorary Minister) . - I hope that the committee will not agree to the request submitted by Senator McLachlan. The South Australian Railways Commissioner has stated that it is impossible to manufacture the heavier types of locomotives in Australia. I am informed that, although the duty on the engines has been paid, the case is not yet closed.

If it can be demonstrated by the South Australian Railways Commissioner that locomotives of a similar type cannot be commercially manufactured in Australia, a refund of duty will be made. An officer of the Customs Department is, I understand, visiting South Australia with the object of fully investigating the position. It should be remembered that a number of the State Governments are either manufacturing locomotives in their own workshops, or are having them constructed by Australian manufacturing firms, and that no complaints have been made concerning their' suitability. There appears to have been a strong inclination on the part of the South Australian Railways Commissioner to place large orders for locomotives and rolling-stock abroad, because at the time this large order for locomotives was placed in Great Britain a very much larger order for trucks was placed in America. The order for locomotives amounted to a little over £400,000, but that for trucks to over £1,000,000. Although the South Australian Railways Department obtained these trucks and locomotives somewhat cheaper than they could have been purchased in Australia, the transaction involved sending nearly £1,500,000 out of the Commonwealth, with a consequent decrease in the employment of Australian artisans. What makes the position still more surprising is the fact that the most favorable Australian tender for the supply of trucks was submitted by an Adelaide firm. The State Governments should set an example to firms and individuals by purchasing Australian-made machinery.

Senator Thompson - The Minister must admit that there is a limit.

Senator CRAWFORD - Yes, but at the same time some of our State Governments, and quite a number of our local governing authorities, seem to think that they ought to obtain special concessions on orders which they place abroad ; whereas instead of asking for such concessions they should set an example to private firms and individuals in matters of this sort. According to the figures quoted by Senator McLachlan, the correctness of which I do not doubt, the saving effected by the South Australian Government was considerable, but that is largely accounted for by the substantial nature of the order. The percentage of saving on the order is not particularly great, and there is no doubt that the placing of this work in other countries has involved a direct loss to Australia. If that money had been expended in the Commonwealth, the indirect gain would have more than compensated for the extra price paid for the locomotives and trucks. It has been said that this railway equipment was ordered abroad because the Australian firms could not give delivery as early as the British or American manufacturers ; but surely a railways commissioner can foresee his requirements more than twelve months in advance? If the re-organization of the system had been taken in hand in time, doubtless the Australian manufacturers would have been able to supply both the locomotives and the trucks by the time the department required them. Manufacturers of railway equipment in Australia are not carrying on their undertakings on such an extensive scale as are manufacturers in Great Britain and America, and therefore more time is needed in which to give delivery. Honorable senators will remember that some time ago the Commonwealth Government accepted an Australian tender for the supply of a number of locomotives at a cost higher than that at which they could have been obtained abroad. The British and foreign tenders were very illuminating; the lowest British tender was at. a price which could not possibly give a profit to the manufacturer. At that time the British engineering trade was in a very depressed condition, and, in order to keep their staffs together, many British firms were accepting orders from within Great Britain and from abroad at a price which would not show any profit. It is against competition of that kind that the Australian manufacturer has to contend. The duty proposed in this instance is not excessive. As the committee has passed a number of items providing for protection to the extent of 40 per cent., and as Senator McLachlan has not given any valid reasons why the proposed duty should be reduced to 27½ per cent., or, in fact, to anything below 40 per cent., the Government cannot accept the requested amendment.

Senator Sir HENRYBAR WELL (South Australia) [3.27]. - I do not intend to allow the Minister's statement, which shows that he does not know anything about the subject, to pass without comment. The honorable gentleman said that apparently there was a strong inclination on the part of Mr. Webb, the South Australian Railways Commissioner, to place these orders abroad; but Mr. Webb had nothing whatever to do with the matter. It was settled by the South Australian Government, and if one man in that Government had more to do with it than another, it was I.

Senator Foll - Was it a Liberal government ?

Senator Sir HENRY BARWELL - Yes, of which I was the leader, and I personally saw that its policy was given effect to. What was the position? We came into power and saw that the railways in South Australia needed reorganizing and rehabilitating'. We decided that the first thing to do was to obtain the services of a thoroughly competent officer to properly undertake the work, and, after scouring the world, we selected the man whom we considered most suitable for the task. He then submitted to the Government a scheme for re-organizing and rehabilitating the South Australian railway system, involving the expenditure of £5,000,000 spread over a period of five years. Of the £5,000,000, £3,500,000 was to be spent in South Australia, and £1,500,000 was to be expended on rolling-stock. Directly I, as Premier of South Australia, announced the policy of the Government for reorganizing and rehabilitating the railway system, involving the expenditure of large sums of money on rolling-stock, I was waited upon by a deputation representative of the Chamber of Manufactures and the Trades and Labour Council. I was asked whether I would receive a deputation on this subject, and I fixed the time to receive it. The first person who walked into my office was the president of the Chamber of Manufactures, and he was followed by the president of the Trades and Labour Council. I raised my eyes when I saw these two together. I thought it was a peculiar combination. Then came the secretary of the Chamber of Manufactures, followed by the secretary of the Trades and Labour Council. And so they all came in mixed up in that way. I thought to myself that it was the most unusual deputation I had ever received, two bodies as a rule entirely antagonistic coming as a joint deputation. I was naturally interested in hearing what they had to say. They said, " We see that you have announced that you intend to launch out on a big programme for the re-habilitation of our railways. The request we have to make is that every call for tenders in connexion with rolling-stock shall be limited strictly to Australia." That was the joint request of the Chamber of Manufactures and the Trades and Labour Council. Of course, my reply was " The policy of the Government is to get this work done in Australia if it is reasonably possible to do so, but I say definitely that it must be done in a business-like way, and the call for tenders will not be confined to Australia, but will be world-wide. Then we shall see what the position is." First of all we tried to test the matter by calling for tenders for five engines, 100 gondola trucks, and some boilers. When the tenders were opened we found that Australian tenders were a little over 70 per cent, higher than the prices received from Great Britain and America, although all tenders were on the same basis, namely, free on rails at Islington. So anxious were we to get the work done in Australia that we did not accept any tender at that stage, but called for fresh tenders for the whole of the rolling-stock we required - engines, passenger cars, freight cars, and the various other material which' was necessary to carry out our programme. Those tenders were called for world-wide again, and when the prices were received we found the same percentage of advance in the Australian over the English and American tenders. We announced that it was quite impossible for us to get the work done in Australia under those conditions, but we gave all the tenderers an opportunity, within a limited time, to reconsider their tenders. As the result, all tenderers, overseas and Australian reduced their prices, but when we came to look at them finally we found that the Australian tenders were from 51 to 93 per cent, higher than the overseas tenders on the same basis, namely, free on rail at Islington, allowing for the payment of the highest duty under the Commonwealth Customs tariff. Were we, as a Government, responsible for carrying out this programme in a proper and businesslike way, and responsible for looking after the interests of the taxpayers of the State, to let these contracts to Australian firms under those conditions? Would any one with a sense of responsibility have done so? One judges from the remarks of the

Minister (Senator Crawford) that he would have been prepared to do so. It was not a matter for the decision of Mr. Webb, the Commissioner. He was told all matters in connexion with this undertaking had to be submitted to Cabinet. He was told that it was the part of the Government to decide the policy in this respect, and that the Government was determined that every pennyworth of work that could be carried out in Australia would be done in Australia, but that everything must be undertaken on a business-like footing. As the Government was prepared to allow the Australian firms a. margin over and above the protection afforded by the tariff, I was asked to name what that additional percentage should be, and I said that I thought 15 per cent, would probably be high enough, but that we would consider a margin of even 20 per cent, over the protection afforded to the local manufacturers by the duty, plus all the other charges imposed on the overseas manufacturers in the shape of freight and insurance. We were prepared to make that allowance, because we recognized that if the work could be done in Australia it would afford employment for Australian workmen. There would be the additional work of procuring the raw material, the wages of the men employed would be paid in Australia, and the Government would benefit by the additional income tax paid.

Senator Duncan - Was the honorable senator prepared to allow a margin of 15 per cent ?

Senator Sir HENRYBARWELL.Yes ; we were even prepared to go as high as 20 per cent.

Senator Duncan - Mr. Lang, the Premier of New South Wales, has made a great song about his offer of a margin of 5 per cent.

Senator Sir HENRYBARWELL.We were prepared to go a long way further than that. Would any one with a sense of responsibility contend that the South Australian Government ought to have let these contracts to Australian firms when their tenders were on an average 70 per cent, higher than those submitted by overseas firms? It simply could not be done. The Minister says that the saving seemed large only because the order was large; but what was the saving? On engines and trucks alone it amounted to £430,000, which, with in terest, in fifteen years would amount to £1,000,000. What would the Minister have thought of the Government of South Australia if it had imposed this additional burden, on the railways of the State for all time? Our programme could not have been carried out. I do not understand the Minister's reference to the consideration of time. He said that surely the commissioner could have seen more than twelve months ahead. Bub here was a scheme for the rehabilitation of the South Australian railways-

Senator Crawford - Senator McLachlan based his appeal for a reduction of the duty on the order the South Australian Government had placed abroad for locomotives.

Senator Sir HENRYBARWELL.If the Australian tenderers could not compete unless they had a 70 per cent, margin over the existing duties, they could not compete with these higher duties. As a matter of fact, the firms who make these locomotives in Australia are not abreast of the times. They are not on the basis of efficiency which exists in America, where higher wages are paid than are enjoyed by workers in Australia. Although the American builder of locomotives has to pay these higher wages and insurance, freight and duty, our people's prices are 70 per cent, higher than his.

Senator Reid - But look at the turnover of the American manufacturer.

Senator Sir HENRYBARWELL.Exactly; but are we not to take advantage of that in a case like this ?

Senator Reid - The honorable senator can please himself about that; but it is not fair to compare the Australian manufacturer with his competitor in America.

Senator Sir HENRYBARWELL.To impose a higher duty will be simply to offer a premium to inefficiency. "Under instructions from the State Government - I personally gave them to him - the Commissioner of Railways in South Australia inspected engineering works in South Australia, and in other parts of the Commonwealth. He found that they were not ten or fifteen, but, in some cases, 30 or 40 years behind the times.

Senator Foll - They are never likely to be efficient if they do not get the work.

Senator Sir HENRYBARWELL.The orders they could get in Australia for locomotives would never be sufficient to enable them to reach the basis of em. ciency of works in other parts of the world where they can get big orders for these engines.

Senator Ogden - Nor will they ever become efficient on a higher rate of duty.

Senator Sir HENRY BARWELL - Exactly. Our programme included the reorganization of the Islington workshops, and, in future, South Australia will be able to meet all its railway requirements in the country.

Senator McLachlan - I understand that Victoria is in a similar position.

Senator Sir HENRYBARWELL.Yes. South Australia is installing machinery that will make its workshops as efficient as those in the United States of America, and infinitely more efficient than any in Australia at the present time. We shall be- able to produce at prices that will enable us, even with the lower rate of duty, to compete with American products. To impose these higher duties is to give a premium to inefficiency. Even with the aid of higher duties the local manufacturers cannot get the orders. It simply means penalizing the various States that try to carry on big works in the interests of the people generally, and of the primary producers in particular. Lower railway freights are required, and surely the only way to get them is to re-organize the railway services to enable them to be operated on the most economical lines. Regarding South Australia's claim for a refund of duty on the engines of the Mountain type, the Minister said that an inquiry was being held. But whom has the Government appointed to conduct the inquiry? I think that three gentlemen were selected, and one of them was Mr. Perry, who had tendered for the engines.

Senator Crawford - I am told that that is quite incorrect.

Senator Sir HENRY BARWELL - Mr. Perry was appointed, or was to have been appointed, and I know that a letter of protest was sent to the Minister for Trade and Customs (Mr. Pratten) pointing out that he was financially interested in the matter, and was prejudiced. It was said that he had publicly expressed strong opinions on the matter. Does the Minister contend that this gentleman was not appointed ?

Senator Crawford - Yes.

Senator Sir HENRYBARWELL.I say that he was, although his appoint ment may have been withdrawn. I know that a protest was made. The Minister for Trade and Customs received a strongly-worded protest from South Australia. This set out that the Islington workshops had enlarged their field of operation to such an extent that they must have materially affected Mr. Perry's financial and manufacturing interests. It was also pointed out that the South Australian railways had had serious disputes with his company over the non-performance of contracts ; that he was financially interested in preventing or discouraging the importation of these or any other locomotives; that he had already expressed the view that the South Australian Railways Commissioner was prejudiced against Australian manufacturers ; and that he had made animadversions against that official personally.

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