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Thursday, 14 November 1935

Senator BRENNAN (Victoria) (Assistant Minister) . - Senator McLeay proposes to take a very important step when he asks the Senate to disallow Statutory Rule No. 30 under the Dried Fruits Export Control Act. The whole subject of the regulation-making power has been under discussion a great deal of late, including the honorable senator's speech on this subjectand the discussion in the Senate upon cognate subjects a few days before. The regulation-making power has gone through two stages - first, the actual and admitted growth of regulation-making power; and, secondly, the reaction in the public mind against the growing exercise of that power. The latter phase dates, I venture to think, from the publication some years ago of Lord Hewart's book, The New Despotism. As the Leader of the Senate (Senator Pearce) said, the noble lord and his book have been working overtime recently. This growth of the regulation-making power has been treated as an aggression on the part, of the bureaucracy, but the bureaucracy has not usurped the functions which it exercises. Whatever powers it exercises have been granted it by a superior power - the Parliament - -which, in turn, has been granted such power by the people. How does it some about that Parliament has granted these extensive and extended powers to what, in a rather derogatory sense, has been termed a bureaucracy? That question is not difficult to answer. It has come about owing to the fact that to-day Parliament is itself performing functions more of n business and industrial character than it performed a generation ago. It has entered directly into business until to-day there is scarcely a primary industry, in Australia which has escaped its maternal attention. Let us go back another stage. Are these extended powers on the part of Parliament proof of aggression by Parliament? That drives us back a stage further. Parliament, as I have said, is responsive to the wishes of the people, and these incursions into the realms of business and industry have been under the pressure of the people themselves. They demand something, and repeatedly one party bidding for support will bring forward proposals for government intervention, and another party will submit more roseate proposals, and, as in the matter of currency, had politics drive out good politics, and we soon reach the stage when there is nothing occupying the political platform except such proposals as would have made our ancestors of a generation or two earlier turn in their graves. The deduction is that this cry of oppression of the people by a bureaucracy really means that the people themselves have raised up a bureaucracy and have endowed it with powers which they wish it to exercise. It may he that like Frankenstein they have raised a monster which is in process of devouring them. It has to be remembered that we are passing through very serious and difficult time3. Let us consider what is happening in industry to-day. Governmental assistance is afforded to our dried fruits, wheat, butter and other industries, and even our protective policy itself, in so far as it is not merely for reven'ue-raising purposes, is a phase of that. policy. These extensions .and incursions of the State into industry have rendered it necessary that there should be a bureaucracy - by that we mean nothing more than a government service - to look after the interests of the Government, for the one part, and of the people, for the other part.

Senator Collings - Because the Government can no longer trust private enterprise.

Senator BRENNAN - It can, and I myself would be perfectly willing to trust it. I merely point to the Leader of the Opposition (Senator Collings) and members of his party as persons who bid for political support by promising the moon, knowing full well that they cannot fulfil their promises. No better illustration of what I have said can be found than by reviewing what has happened in the very industry which is under discussion to-day. The Dried Fruits Export Control Actwas passed in 1924 at the request, almost unanimous, of the industry. At that time the industry was at a very low chb. More was being produced than could be consumed in Australia, and the surplus production cost more to deliver at the seaboard than it could realize when sold overseas. That state of 'affairs, of course, could not go on for very long. At the time this act was passed the total annual production of the industry was 30,000 tons. Assistance had 'been granted by Parliament on more than one occasion in response to the overwhelming request of those engaged in the industry. If ever an experiment was justified by results, such an experiment was the intervention of the Government in the dried fruits business. No other primary industry in Australia has had such a record of success ; production has reached as much as 75,000 tons a year. Present production is not so high, but on several occasions during recent years it lias reached the figure I have mentioned.

Senator McLeay - If that rate of increase of production continues, would the Assistant Minister say that the industry was economically sound?

Senator BRENNAN - That is a matter for the industry; it will have to adjust itself to conditions, otherwise it may reach a position, as has happened in some other industries in certain States, where the more that is produced, the less is the return to the producer. At the moment I am dealing only with the present position of the industry and with the attack made by the honorable senator upon the regulations under which it has been enabled to attain its present position. How was this excellent result brought about? It was achieved by creating a board and endowing it with very far-reaching powers, which are exercised by means of these regulations which are now being attacked. The board was set up under section 13 of the act. The regulations may be attacked upon two grounds. It might be said that they are not authorized by the act. That view apparently was expressed by Senator Hardy by interjection when Senator McLeay was speaking. With the greatest respect, I do not think that Senator !McLeay is obliged to show that these regulations go beyond the authority of the act. That is purely a legal question ; if they go beyond that authority then on the first occasion on which they are attacked in the courts, they will be set aside. As a matter of fact this very question was raised in the courts and only within the last few weeks the High Court decided 'by a unanimous judgment that not only have these regulations been framed within the regulation-making power conferred by the act, but also that every portion of this act and every regulation in it is strictly legal. The second ground on which the regulations may he attacked is that they are politically unwise. I take it that this is the ground on which Senator McLeay bases his Attack.

I do not intend to go into details on this matter. It is sufficient to say that the board which was set up under this act consists of eight members, three of whom are nominated by the Government and the remaining five elected by the industry. The three Government nominees are not men with any special knowledge of the dried fruits business, but they are men of the very highest standing in the commercial world and have had the greatest experience in business generally. As to the elected members, every one of them is, or has been, associated with the Australian Dried Fruits Association which is shortly called the A.D.F.A. However, there is nothing remarkable in that fact, because if any body of men propose to elect representatives to deal with a particular business, they will naturally elect men who have had experience in that business or industry. And it seems that at the time the board was first elected every man of any standing in the industry was a member of the voluntary organization known as the A.D.F.A.

Senator Hardy - Has the personnel of the board changed much since its inception ?

Senator BRENNAN - I am coming to that point. If elected representatives do not give satisfaction to the growers as a whole - and one of the fetishes repeatedly put forward to-day is that each industry should be allowed to control its own destiny - the growers have ample opportunity to replace them. The first election was held, in 1925, and elections have been held every second year up to 1935, and there has scarcely been any change in the personnel of the board during that period. At any rate, I do not think any such change has been brought about by an actual vote of the growers.

Senator Hardy - That proves that the growers are satisfied.

Senator BRENNAN - Exactly ; the great majority of the growers are satisfied. There has been dissent of a minor character in South Australia and perhaps because of this Senator McLeay has moved in this matter. Let us now examine the depth of that discontent. Mr. Howie, whose name has been mentioned in this discussion - I am glad that Senator McLeay has withdrawn the allegations against him - had to submit himself for election so recently as last year. He was opposed by a nominee of the Independent Fruit Growers Association, whose cause Senator McLeay appears to champion. In that election Mr. Howie obtained 970 votes as against 238 cast for the nominee of the Independent Fruit Growers Association. Let us now examine the position of the Independent Fruit Growers Association as judged hy the contribution of its members to the total production of dried fruits. The seven firms which constitute the Independent Growers Association were licensed to ship 1,698 tons of sultanas, currants and lexias up to the 30th April, 1935, and from that date up to the present time

Many times during his speech, Senator McLeay said that the board was dominated by the Australian Dried Fruits Association. His remarks are resented by the " commercial " members of the board. I propose to read some passages from n statement prepared by the vicechairman of the board (Mr. Bell), in order to show how little ground there is for the suggestion that the hoard has acted other than in a strictly judicial way in carrying out its duties. In paragraphs 4 and 5 of his statement, Mr. Bell says -

It is to be conceded that the elected members of the board have, in the case of tho representatives in Victoria and South Australia, been prominent members of the great voluntary organization known as the Australian Dried Fruits Association, and, hud growers resented in any way the association of those members with that voluntary organization, which has done so much for the dried fruit industry in Australia, they have had frequent opportunities of replacing such leaders of the industry as Messrs. Howie. Johnstone and Malloch from the other candidates who have stood iu opposition to these candidates but who have been overwhelmingly defeated from time to time.

It has been asserted that tha policy of the board has hee" unduly influenced by the Australian Dried Fruits Association, but, as a matter of fact, tho general outlines of the policy followed by the board and more particularly' the principles applicable to the control of the export and sale abroad of Australian dried fruit have been conceived and proposed by the commercial members of the board who were appealed to by the Government to lend their commercial experience for the benefit of the .industry.

Senator Duncan-Hughes - What are the names of the commercial members of the hoard?

Senator BRENNAN - They are Messrs. Bell, Thomas and Malloch.

Senator McLeay - What ave their salaries?

Senator BRENNAN - Each member receives an allowance of three guineas for each sitting day, an amount which does not adequately compensate them for the time and effort devoted to the interest of the industry. Mr. Bell's statement continues -

On no occasion has the policy or the principles enunciated by the commercial members of the board been dissented from by tile elected members of the board who have found the views and experience of the commercial members wholly acceptable and beneficial to thu industry.

So far from any charge of undue influence by members of the Australian Dried Fruits Association,' the principal responsibility for the drawing up of the plans of tho board has rested on those gentlemen who were co-opted to the board as Government nominees in order that their commercial experience might be applied to the difficulties of tho industry. On no occasion has there 'been a dissentient minority in the board and the recommendations have been unanimous as being necessary to the well-being of the industry and to ensure equal treatment for every individual grower whether a member of any organization or a grower acting independently of the Australian Dried Fruits Association. Each grower wherever situated or whatever his acreage or production has obtained absolute equity in regard to thu sale of his produce when exported from Australia.

It is a remarkable fact that, so intent have been the principal commercial members of the board on absolute fairness, on no occasion have these gentlemen even entered the offices of the Australian Dried Fruits Association.

Realizing the delicate nature of their duties, these gentlemen have taken care to leave no room for scandal.

Senator McLeay - Oau the Minister see the humour of that statement?

Senator BRENNAN - I cannot. It certainly is not the type of humour which Punch would be disposed to pay for. I had hoped, that the honorable senator, having had time for reflection, would not have persisted with his motion to destroy something which has proved a success only because of the painstaking efforts and self-sacrifice of those responsible for it. I do not know whether he realizes that the whole industry would be thrown into a state of chaos if his motion were carried. Yesterday, the honorable senator indicated that he intended to seek leave to amend his motion, and I had expected that he would do so this afternoon. As the motion has not been amended, the situation is unaltered and the Senate is asked to disallow the whole statutory rule.

Senator McLeay - The PostmasterGeneral said that the Government would agree to the motion.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - I said that the Government would place no obstacle in the way of its amendment.

Senator BRENNAN - Although the honorable senator is proceeding with the motion as it is set out on the notice-paper, the Government realizes, partly from information that he has himself given and partly from statements collected from private sources, that his objections are principally to sub-regulations 3, 4, 5, 6 and 16 of regulation 7. The honorable senator, I understand, seeks to have them set aside, if he can, without disallowing the whole resolution.

Senator Mcleay - Sub-regulation 6 of regulation 7 is the most important.

Senator BRENNAN - Regulation 7 is very long, containing seventeen subregulations, but it contains actually the whole of the important provisions of the regulations. The remaining provisions are merely formal or of a machinery character. Of regulation 7, sub-regulations 3, 4, 5, 6 and 16 are the vital parts; hence they are actually the vital parts of the whole of the regulations. They set out the terms and conditions upon which licences to export dried fruits may be granted. sub-regulation 3 reads -

That the licensee shall ship all dried fruits through and to such agentsas are authorized by the board.

This does not differ very much from the powers which were contained in the regulations passed in 1927, in which the board was empowered to limit the agents in the United Kingdom and New Zealand to whom dried fruits could be shipped by licensed exports. The intention of the present clause is to give the board power to control the shipments of dried fruits to all export markets. The board considers that this provision is necessary, so that restriction may be placed on the number of agents handling Australian dried fruits in overseas markets, in order to prevent underselling and unfair competition, and in order that the fixed price which has been agreed upon shall be observed. The difference that exists between the regulation passed in 1927 and the present one is twofold - (a.) that the board has now authorityto control, not only the agents through whom fruit must be sold, but the agents to whom they must be shipped to foreign markets; and

(6)   the application of this extended authority to all foreign markets, and not to the United Kingdom and New Zealand alone.

It will be seen that control of export here would be of little avail if the board did not control in some way the agents through whose hands this fruit passed overseas.

Senator Badman - How could the selling agents in the receiving countries be controlled?

Senator BRENNAN - They may be controlled by the issue to the exporter of a licence containing certain stipulations. Such a licence is granted only under certain conditions. The honorable senator may consider it remarkable that an extraterritorial power could be given by Australian legislation, but we must bow to the decision of the High Court judgment that such a provision is quite legal. The section under which that provision was made is -

For the purpose of enabling the board effectively to control the export and the sale and distribution after export of Australian dried fruits, the Governor-General may by proclamation prohibit the export from the Commonwealth of any dried fruits, except in accordance with a licence issued by the Minister, subject to such conditions and restrictions as arc prescribed after recommendation to the Minister by the board.

The point raised by Senator Badman was expressly dealt with by Mr. Justice Starke who, in his judgment, said -

But the power of self-governing dominions to make laws having extra-territorial operation was considered by the Judicial Committee inCroft v. Dunphy, 1933 A.C. 156. Once it is found, as I gather from that case, that theparticular topic of legislation is with respect of one of its powers enumerated in section 51. of the Constitution, upon which the Commonwealth Parliament may competently legislate for the peace, order and good government of the Commonwealth, then no reason exists for restricting the permitted scope of such legislation by any other consideration than is applicable to the legislation of a fully sovereign State.

The licence did contain those provisions which put some check upon what the exporters might do, even in a foreign country, and the courthas decided that this lies within the power of the board. Another portion of regulation 7, to which particular objection is taken by Senator McLeay, is sub-regulation 4 -

That the licensee shall ship all dried fruits through such person as the board determines.

The only alteration made in this instance is that the word " company " which was originally included in the regulation, has been deleted and the word "person" substituted for it. Strange though it may seem, " person " here has a wider application than "company". This sub-regulation to which exception is taken, has been in operation for many years, and, so far as the board is aware, nas not met with any opposition from the industry. The reason for the alteration will appeal to honorable senators. An attempt was made on one occasion to ship goods by an American line. The control board had entered into an arrangement with the shipping companies to consign its goods by particular lines and a breach of the agreement would have been committed if any of its products had been consigned by an American line. When we remember the privileges extended to Australian ships in American waters, nobody will say that, if we curtail the privileges granted to American ships operating in Australian waters to the advantage of our own vessels, we shall have done anything wrong. The effect of the arrangement entered into by the control board with the shipping companies resulted in a saving of £40,000 per annum to the industry.

Sub-regulation 5 relates to insurance -

That the licensee shall insure each shipment of dried fruit3 with such person as the board determines.

The board received overtures from a large insurance company which desired to obtain some of the business. The board replied that it had made arrangements with other companies. As a result of the wholesale bargaining power given to the board by this arrangement, the saving to the industry in respect of insurance alone is conservatively estimated at £10,000.

But the sub-regulation to which the honorable gentleman directed his chief criticism was 6, which reads -

That the licensee shall soil all dried fruits on such terms and conditions iia are approved toy the board, and to such /purchasers through such agents and in such quantities as the board determine.").

A perusal of the 1927 regulations will show that precisely the same set of conditions applied to both New Zealand and Canada, and although a specific pro- vision such as that to which objection is now taken was not inserted in the conditions governing the export to the United Kingdom, the general terms of export to that market were very, similar. Clause 4 of the 1927 regulations, which has reference to export to the United Kingdom^ governs insurance, shipment, appointment of agents, commission, storage, production of documents and completion of sale, only after the board's approval has been obtained. It will be seen, therefore, that similar power was vested in the board by virtue of the general clauses governing the issue of licences to that market. They were not, however specified in such a particular manner as in the clauses governing the issue of licences to New Zealand and Canada. 'The matter is one of draftsmanship alone, and the intention of the draftsman in framing the regulation in its present form was to give effect to the wishes of the board by embracing in one licence form the conditions which were formerly spread over the three markets, and for which there were three separate licence forms. Furthermore, the board's power to restrict the licensees to such purchases through such agents and in such quantities as the board determines, has been exercised with decided advantages to producers generally in respect of fruit exported to New Zealand.

It would appear to be unreasonable to expect the board to control prices in overseas markets by means of a simple clause confining the licensees to fixed prices, if there were no over-riding regulation governing such important factors as commission, discounts, &c. The fixation of prices may be evaded if some one can say, " We sell at such and such a price, less such and such a commission." This kind of business is really what the clause seeks to prevent. Without this proviso the fixation of a minimum price could be defeated, and the objects and intentions of the industry, as carried out by the board, would be completely nullified. I do not propose to go further into a detailed examination of other paragraphs unless Senator McLeay wishes me to do so.

Senator McLeay - Will the Minister deal with sub-regulation 16? It is very vital, and may conflict with the State act.

Senator BRENNAN - It is sufficient for me to defend the Commonwealth act without offering any comment with regard to the State act, or trying to reconcile any of its provisions with the Commonwealth act. Sub-regulation 16, to which the honorable senator has directed my attention, reads -

That the licensee shall, whenever so required by notice in writing, signed by the secretary or an authorized person withhold from export the whole or any portion of any dried fruits intended for export.

It is admitted that this is a new provision, and that, on the surface, the powers sought to be given to the board are far-reaching.

Senator McLeay -Would the Minister like to buy £1,000 worth of dried fruits for export with that proviso hanging over his head?

Senator BRENNAN - I would rather have the £1,000 in any case. The worst construction that can be put upon the sub-regulation is that it could be misused if the board intended to do an injury to the industry. But, if we consider the constitution of the board - five of the eight representatives on it are growers, and represent the views of 94 per cent. of the producers of dried fruits in Australia - we must, I think, admit that it would have no desire to injure the industry or any section of it. The most severe critics of the board will, I believe, concede that it desires to assist the industry, and to this end it would administer litis sub-regulation conscientiously and in accordance with its terms.

Experience over a period of ten years indicates the necessity for such a provision in the regulations. The board must have power to protect the industry by controlling the destination of exports of dried fruits. It would seem to be futile to charge the board with the administration of the industry and the fixation of prices, and at the same time to deny it the means of achieving those ends. The provision is designed entirely to prevent a glut on the market by the shipment of large quantities of dried fruits at a particular time. It is not suggested that the fruit should be cast into the sea or destroyed. The sole pur pose is to ensure that the production shall be marketed in Canada, New Zealand, or Great Britain in such a way as to prevent a glut with consequent depression of prices. It may be that technically and theoretically the provision will make possible a very great invasion of individual liberty. It cannot be denied, however, that it will be beneficial to those who are engaged in the industry. Throughout the whole of the regulations it would be difficult to find any provision which confers upon the board powers or authority that arc not essential to the well-being of the industry. In fact nothing could better express the necessity for regulations such as these than a comment made by Mr. Justice Dixon in his recent judgment in the case of Crowe v. the Commonwealth.His Honour in referring to the regulations which Senator McLeay now seeks to have disallowed said -

No effective control of the export and sale and distribution abroad of such a commodity couldbe exercised except by close supervision and a detailed direction of the trade.

That was the desire of Parliament when it passed the Dried Fruits Act in 1924 and particularly when it approved of section 13 and the last section giving to the administration regulationmaking power. I admit that the regulation means an invasion by the Government of private enterprise, but the action has been taken under pressure from the people directly concerned, and I submit that where there is intervention bythe Government it is only common senseto concentrate the power of direction in as few hands as possible in order to ensure the most satisfactory results. Those entrusted with this power are experienced business men not professing to have any special knowledge of the dried fruits industry, and men who have had experience in the industry. The board represents an overwhelming majority of those engaged in. the dried fruits industry. If the regulations are disallowed, the effect will be to cause chaos in the industry.

Senator Hardy - Perhaps Senator McLeay will withdraw his motion.

Senator BRENNAN - I hope that he will. The honorable senator may be cherishing the idea that the repeal of these regulations will revive the regulations of 1927. There are two comments to be made on that. The first is that if the 1927 regulations please him, why does he disapprove of these regulations, because the difference between them is so slight as not to be worth quarrelling about. The other is that high legal authorities, including officials in the Attorney-General's Department, are not prepared to say that the repeal or nullification of these statutory rules would revive the 1927 rules.

Senator McLeay - If there is any doubt about the matter, why not remove the doubt?

Senator BRENNAN - I do not know exactly what the honorable senator means by that. Parliament deliberately entrusted control of the industry to the board and the results have amply justified the action taken. I appeal to the honorable senator not to persist with his motion. The carrying of it will serve no good purpose; on the contrary, it may do a great deal of harm. This large and important industry affects a considerable number of producers in that portion of South Australia which abuts on the northwestern districts of Victoria. I warn the honorable senator that, if his motion is carried, the effect may be to bring about a state of chaos and do much harm to a new and important industry.

If the honorable senator persists with his motion and calls for a division, I trust that a majority of honorable senators will oppose it.

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