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Wednesday, 29 April 1936

Senator JAMES McLACHLAN (SOUTH AUSTRALIA) . - There is a great diversity of opinion regarding the fiscal policy of this country, and, therefore, it behoves all honorable senators to express their views in relation to it. Having listened with much interest to the speeches which have been made, especially by the leaders of the various parties in the Senate, I assure the Leader of the Opposition (Senator Collings) that I am in accord with him in that I am an Australian and a protectionist. I am a protectionist, to the extent that I should like to adhere strictly to article 9 of the Ottawa agreement, which provides that His Majesty's Government in the Commonwealth of Australia undertakes that protection by tariffs shall be afforded only to those industries which are reasonably assured of sound opportunities of success.

Senator Collings - We all agree with that.

Senator JAMES McLACHLAN (SOUTH AUSTRALIA) - I have always noticed a difference between the duties imposed in order to protect our industries and those levied for the purpose of increasing the revenue of the country.

Senator Collings - The Government penalizes successful industries.

Senator JAMESMcLACHLAN.That may be so in some cases. I am glad that the Country party has changed its views somewhat and is now becoming reasonably protectionist. lu speaking to this measure honorable senators should voice their opinions, not only in regard to individual items and the country's fiscal policy generally, but also in regard to the methods of applying that policy and its far-reaching effects on other aspects of government. I am safe in saying that probably 90 per cent, of the discontent of our people in regard to the tariff is due to the method of applying it. There is discontent regarding much of the legislation on the Statute Book which imposes taxation, but the fiscal policy is an outstanding illustration of the fact that the importer has little option but to pay up and look pleasant. The customs authorities reign supreme, in regard to the interpretation (to be placed on a tariff schedule.

During the last few weeks when I endeavoured to secure some information and advice from importers in South Australia, I was astounded to learn that they are almost entirely in the hands, and,, indeed at the mercy, of the customs house officials. I do not wish to be misunderstood, and do not insinuate that the officials apply undue pressure on importers, but the tariff schedules are so worded and are hedged about with so many provisos and conditions, and are divided into so many headings which are liable to different interpretations, that it is almost imperative that the officials be given, autocratic powers. During the regime of the Scullin Government thethen Minister for Trade and Customs (Mr. Forde) prepared a book entitled

The Official Tariff Guidefor the convenience of importers. It dealt with practically the whole of the tariff schedules then in force, but the ink was scarcely dry before alterations became necessary. These alterations were printed on slips which could be pasted in the book. Had that method been kept up to date, every business house of any size would soon have required, not only an extra employee to keep record of the alterations, but also another youth with a wheelbarrow to hold the book. The result was that the majority of importers took the line of least resistance; they paid the dues and charged the extra cost to the consumers.

I may be as a voice crying in the wilderness, but I am confident that the time is not far distant when our laws will be simplified in language and consequently will be less bulky, and capable of being understood by the average citizen who has availed himself of our free education facilities.

Senator Hardy - Is the honorable senator of the opinion that our tariff laws are more complicated than our income tax laws?

Senator JAMES McLACHLAN (SOUTH AUSTRALIA) - I am far from being alone in my desire for reform in draftsmanship. Recent decisions in various law courts are gradually convincing the general public that the phraseology of our laws and of amendments, additions, and deletions made to acts of Parliament and regulations, instead of making them legally watertight, simply open avenues for litigation; so that even members of the legal profession are becoming somewhat confused. In this connexion, I call attention to the Australian Legal Convention held in Melbourne last year. A perusal of a paper submitted to that gathering would convey, even to the lay mind, that there are really more antidotes than snake bites. During the conference, Mr. D. C. Ligertwood, K.C., of South Australia, in pleading for greater simplicity in statute law, said -

From day to day, and it almost seems from hour to hour, a steady stream of regulations, orders, and by-laws pours forth to overwhelm the citizen.

Like their British ancestors, Australians glory in their freedom. They resent undue control, and like to regard their home as their castle; they will not do things, or stop doing them, merely because an official says they must or must not. They want their laws so framed that it will be unnecessary to engage legal advice in order to interpret them. They resent being doubly taxed by having to pay taxation agents to assess the amount of their liability. Not only is difficulty experienced in ascertaining the amount of duty payable on the arrival of goods, but also the methods employed are complicated and obsolete, particularly in the event of there being a rise of duties while goods arc in transit, and in respect of goods damaged in transit. It is far more difficult to adjust trade arrangements with the customs officials than it is to adjust trade relations with exporters. As an illustration, I mention that, just prior to the last Christmas season, an importer in South Australia received from overseas a shipment of material for the making of Christmas stockings. He took delivery of the goods and paid the customs dues, but on opening the packages found that the material was almost useless. He got in touch with the suppliers, who acknowledged their liability, and agreed to forgo payment; but when he approached the customs officials, asking that the goods should be destroyed under their supervision and the duty refunded, he was informed that the only means whereby he could obtain a refund was by returning the material to the merchants from whom he obtained it. As the material was bulky, and freight was charged on bulk, not weight, he did not do so, with the result that, whereas the duty he paid represented a dead loss to him, the revenue of the country was enriched by a similar amount at his expense. In my investigations I have found that a similar position has sometimes arisen in regard to foodstuffs which have had to be destroyed. Surely these matters could be so arranged that this waste, which, in view of the needs of many in our midst, is almost criminal, could be avoided.

As honorable senators have no doubt received pamphlets from the secretary of the Tariff Reform League, they will be conversant with the instances cited, so that there is no necessity for me to quote them. While admitting that they are extreme cases, naturally seized upon by an organization whose objective is tariff relief, I point out that they at least demonstrate that our tariff schedules are so arranged as to be practically unintelligible to the ordinary individual and, in some instances, so extreme that even a Philadelphian lawyer might fail to unravel them.

Let us now consider Australia's fiscal policy generally. As somewhat more than a casual student of this subject, I am convinced that it is necessary for a country to protect its people against the surplus production and, in some cases, the cheap labour of its neighbours. I am also of the opinion that the main objective of protection should be to foster local industries, rather than to provide revenue. That applies particularly to our island continent. Australia is young in comparison with many European countries, and yet it has set a standard of civilization which is higher than that of other nations. As we are anxious to maintain that standard we must admit that our chances of building up an export trade in manufactured articles are negligible. A century of experience has taught us that Australia's wealth lies in its primary production, and, therefore; its fiscal policy must balance evenly the living standard of the people with their opportunities, irrespective of the source of their livelihood. I may be premature in referring in this connexion to the relation between this country's fiscal policy and the proposal to establish a shorter working week.

Senator Arkins - A shorter working week would be all right if it were universal.

Senator JAMES McLACHLAN (SOUTH AUSTRALIA) - In certain cases conditions may warrant the innovation, but the position is complicated in Australia, because of its high tariff wall. According to newspaper reports, Bryant and May, match makers, recently decided to adopt a shorter working week. Every time a match is lighted in this country, whether in a palatial suburban residence or to light a Capstan cigarette for a tired worker on the basic wage, doing his full eight hours with a pick and shovel, assistance is given to this firm to remain in business. I am strongly of the opinion that any industry in this country that can afford to adopt a working week of less than 48 hours is not entitled to protection, which is a form of subsidy from the people who use or consume the article it manufactures. Under present conditions, not only in Australia, but also in other countries, such treatment savours of that Utopian state which, to contemplate, is like a beautiful dream, but which may prove in practice a horrible nightmare.

Senator Collings -Would the honorable senator have machinery continually improved and working hours remain the same?

Senator JAMESMcLACHLAN."We are here to legislate, not for any particular section of the community, but for the people of Australia as a whole. Take, for instance, the case of railway employees. If this concession were granted, all would justly be entitled to a share in the privileges offered. Have we a railway of any magnitude which to-day is not losing money? If hours are reduced it necessarily follows that in order to maintain the existing service the number of employees must be increased. For instance no train runs to Adelaide from Melbourne on Saturday night, and no train runs from Adelaide to Melbourne on Sunday night. I approached the Railways Commissioner in South Australia and asked if it would not be possible to restore this service on trial. He replied that it would cost about £8,000 a year. If that would be the cost of running one train weekly for a year, honorable senators can easily understand what increases of fares and freights would be required to pay for the institution of a shorter working week in the railway service.

Senator Hardy - The honorable senator should not forget that we advocated an increase of the exchange rate, which increases our internal costs.

Senator JAMES McLACHLAN (SOUTH AUSTRALIA) - Surely we would not want to shoulder both increases.

Senator Hardy - No; I mentioned the increase of exchange as a precedent.

Senator JAMESMcLACHLAN.During the consideration of the cement duties in the House of Representatives a discussion took place on certain articles of the Ottawa agreement. Anything I may have to say in respect of cement duties will be reserved until the item is reached. Here, however, I voice my opinion of the Ottawa agreement in relation to this matter. I am convinced that the most ardent supporters of the agreement expected allegiance to it only in the spirit and not in the letter. Its very phrasing supports that view. One notes the recurring use of the words " reasonable," " consideration," and " recommendation." Without a doubt this phrasing gives the agreement a flexibility without which it would be unworkable. I am well aware that two wrongs do not make a right, but if it is suggested that the agreement is being violated in this instance, I ask - have we not been guilty of far greater violation in the past? Article 14 reads -

His Majesty's Government in the Commonwealth of Australia undertake insofar as concerns goods the produce of manufacture in the United Kingdom -

(c)   to reduce or remove primage duty as soon as the finances of Australia will allow.

In 1935-36 the primage collected by the Commonwealth was estimated at approximately £4,000,000. The United Kingdom's contribution to this was about £1,300,000, of which only £45,000, or less than 4 per cent., has been remitted. Was that concession to the United Kingdom reasonable, or in keeping with either the letter or the spirit of the Ottawa agreement? In comparison with primage, the duty on cement is insignificant. The duty collected on cement in 1934-35 totalled only £3,8S6 9s., of which amount the British contribution was £3,175 4s. This year the duty collected amounted to £2,269, Britain's contribution being £1,623. These amounts are very small when compared with the receipts from primage duty. However, I do not think that the Government is dealing with the Ottawa agreement in this instance in tie light of the amount of money involved ; rather is it concerned with the principle at stake. I readily admit its wisdom in adopting that course. Like other honorable senators I have been supplied by eminent counsel with opinions regarding the effect in relation to the Ottawa agreement of the restoration of duty on British cement after the Tariff Board had recommended its removal. These learned gentlemen hold the view that there is nothing in the Ottawa agreement to suggest that the decision of the House of Representatives is a violation of that contract. I have already said that I am an Australian ; I am also a Britisher, and if the people in Britain believe that we are in this instance infringing any provision of the Ottawa agreement I shall have to consider the position very seriously. Meanwhile, I await with interest a statement by the Government regarding the official opinion in Britain in respect of this matter. Ministers of this Government are now negotiating trade agreements, and I do not think that any honorable senator would do anything which would seriously interfere with those negotiations, should the government of the United Kingdom hold the opinion that the action taken in the House of Representatives in respect of the duty on cement offends against the spirit of the Ottawa agreement. I shall defer further comment until we reach the item in committee.

Possibly some of the matters to which I have referred may appear irrelevant to a debate on a tariff schedule, but I submit that it should be the aim of every legislator to frame the fiscal laws in such language that the layman may have some chance of interpreting them without being doubly taxed through being forced to procure legal opinion.

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