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Thursday, 30 April 1936

Senator BRENNAN (Victoria) (Acting Attorney-General) . - I shall not detain the Senate very long and my remarks will be general rather than particular. I had intended to say a few words in answer to some observations made by Senator Leckie, who yesterday told us that the Ottawa agreement had not been of material advantage to Australia, but as that point was dealt with adequately and admirably by Senator DuncanHughes and other honorable senators, I do not now purpose discussing it further. As the Ottawa agreement was subjected to so much criticism in this debate, one would have thought that its critics would have mentioned some particular injury which it had done to Australian industries. When Senator Leckie was descanting in this fashion yesterday, he 'was invited by my leader (Senator Pearce) to give one instance of injury to an Australian industry under the agreement. That was not an unreasonable request, having in mind the language employed by Senator Leckie, but the honorable gentleman did not accept the invitation, and he did not cite one instance of injury following the application of the principles contained in any of the articles of the Ottawa agreement. The honorable senator had to content himself with a criticism in general terms, saying, in effect - " Well, if we cannot point to a definite instance of harm having been done, at least, we can console ourselves with the reflection that if the agreement had not been made, we should have been better off than we are." It is fitting, therefore, that I should say a word or two in answer to the enfilading to which we were subjected from some government supporters and a few words also in reply to the bombardment from Senator Collings and his colleagues opposite. The general criticism of the Government's tariff policy took the line of " what might have been ". Our critics did not attempt to deny the patent facts. They admitted, for instance, that there had been a general improvement of the conditions of Australian industry. This is evidenced in the rise of share values of manufacturing and commercial concerns, the decline of unemployment figures, the increase of factory employment, the tremendous increase of the value of factory output, the great increase of savings-bank deposits and the enormous increase of building permits in all our capital cities.

I do not suggest that the whole of the improvement of Australian conditions is due to the tariff policy of the Government. Some part of it is due to the recuperative powers of the people and the general improvement of world conditions. But I do say that as a Government, we are justified, following the example set by our critics, in replying in general terms, by suggesting what would have happened if they had been in power. Senator Leckie told us that he was elected to support the general policy of the Government. No unbiased person in Australia will deny that the mere fact that this Government has been in power has had much to do with the advancing prosperity of all sections of the people.

As might have been expected from our friends opposite, when a commonsense observation was made by, I think, Senator Guthrie about the effect on the people of the restoration of confidence in the Government, it was met with the usual sneer, Senator Brown remarking somewhat sarcastically that we were trotting out " the same old confidence ". Need I remind the Senate that other citizens, besides Government supporters, realize that confidence is of some importance in the material progress of a country? The last number of that wellknown publication, Current Politics, contains an excellent article written by Mr. Aldrich, president of the Chase National Bank of New York, a financial institution with a world-wide reputation. I take from it the following: -

The first important factor in the current business revival is the lessening of fear. From the latesummer of 1933 to the slimmer of 1935 business was depressed far below the point which was justified by the existing economic facts. This situation was created, to a large extent, by fear. "Fear ", I suggest, may also be read as "want of confidence".

This fear emanated from the plans and policies of the so-calledNew Deal. It was fear which existed not only in the minds of business men, and financiers, but was widespread throughout the population, that the very nature of our Government was about to be changed.

The Leader of the Opposition, so I understand, would change the nature of our government to-morrow if he had his way.

It was fear that we were to have imposed upon us a system in which edicts from Washington, promulgated on the initiative of the executive and representing the personal will of the President, would replace the system of laws of general and definite application, to which we had become accustomed.

The writer says that that fear was removed partly by the decision of the Supreme Court of the United States of America, with reference to the National Recovery Act and other drastic legislative proposals that had been passed, and partly because the people realized that the Souse of Representatives and the Senate of the United States of America were not going to accept tamely anything which the President liked to put before them.

Senator Collings - Has confidence been restored in the United States of America ?

Senator BRENNAN - Not fully, but, according to the article which I have read, it has been restored in a very large measure. The people trust the Government, and know that it will not undertake revolutionary measures, and if it does there are constitutional limitations which prevent it from going too far.

I now wish to pass on from these general observations and to comment upon some of the remarks of Senator Leckie concerning the Tariff Board. I regret very much the expressions he used, and the only consolation I take from them is that inadvertently he used expressions which literally conveyed more than he intended. For instance, he said' that the Tariff Board deliberately pursued a policy in favour of big business. In other words, its policy is to assist large industries and not necessarily to assist the small industries or to help Australia. I trust that what the honorable senator meant to convey was that the members of the board are pursuing a policy, not with a deliberate intention, which in his opinion has had that effect. He went on to say that, while he did not accuse the members of the board of bias, their practical knowledge of business affairs is positively childish. In answer to that I may point out that the experience in business of one member of the board is much greater than that of Senator Leckie. Another member has a wide knowledge of rural affairs, another is an engineer, and one member was for a long time an experienced officer of the Department of Trade and Customs. All the members of the board have now had a great deal of practical experience in the work on which they are engaged.

Senator Collings - No one denies that. We contend that the board has not the right to dictate the fiscal policy of this country.

Senator BRENNAN - I intended to deal with that point later ; but, in answer to the honorable senator, I may say that the Tariff Board was appointed to check the scandal in political life of tariff logrolling. To-day the board stands higher in the estimation of the people, who know anything of it and its work, than it has ever done. Its judgment commands greater respect, and I venture to suggest that no person can say a word against its. disinterestedness, and the calm, patient and industrious way which it undertakes its work. The only persons who do not want such inquiries as are conducted by the board are those who favour silence rather than investigation. The Tariff Board is an integral part of the Ottawa agreement, but there have been complaints that its powers are greater than those of the Parliament which appointed it. But the powers which it enjoys are those which were granted to it; they have not been usurped. One way of exercising power, whether of an individual or an institution, is to confer it upon others. If we confer powers upon others we are not then entitled to complain. The time to complain is before the conferring takes place. I may own a house; I have complete lordship over it. I have the right to do what I like with it, including among other things, the leasing of it for a term of five years.

Senator Collings - The Assistant Minister could not do what he liked with it.

Senator Arkins - Not in New South Wales.

Senator BRENNAN - I am speaking of what can be done in civilized communities. I can lease a property I own for say five years.

Senator Collings - If it is insured he cannot set it on fire unless he wishes to go to gaol.

Senator BRENNAN - If it is not insured, I can do what I like with it.

Senator Collings - I said if it were insured. We cannot do what we like to-day. The law prescribes what we shall and shall not do.

Senator BRENNAN - My illustration will appeal to other honorable senators if not to the Leader of the Opposition. A. man who leases a house cannot complain if he is not allowed to wander over it during the period of the lease. We delegate powers in several respects. In the administration of the law, civil and criminal, we delegate power to the judiciary. Parliament could set aside every verdict obtained in a court of law, and annul every sentence passed by any court, but it does not do so. The whole administration of justice is carried out by the judiciary in its various branches. Parliament recognized that it was an unsuitable body to conduct the inquiries necessary for the proper carrying out of the criminal law, and, similarly, Parliament recognized that the imposition of customs duties was a matter which required the most searching inquiry. That is why the Tariff Board was established, and it has been doing the work upon which it has been making its investigation and reports prior to and since the adoption of the Ottawa agreement. Parliament has, to a certain extent, at any rate, but not entirely, acted upon the results of the painstaking inquiries which the Tariff Board has made, and which Parliament itself is not in a position to make. It has also been said that the Ottawa agreement is a bad agreement, and it seems to be argued that that affords some grounds for repudiating or renouncing it. That is not the question at all. The question is - have we made an agreement? Some honorable senators, including the Leader of the Opposi- tion, may remember that many years ago Max 0'Rell delivered a lecture entitled " England, Ireland and Scotland ". When dealing with Scotland and the high character of the Scottish people he concluded by saying : " Whenever you make a bargain with a Scotsman, you can always be sure of two things. The first is that it will be carried out to the letter, and the second is that you have the worst of the bargain". Even if that were so, in this instance it would not be a valid reason why the agreement should not be honored. All honorable men will carry out an agreement into which they have entered, even if they realize that they have received the worst of the deal.

Senator Collings - We should get out of it. It is not an Australian trait to go on with a thing when we know that we have been " taken down ".

Senator BRENNAN - Does the Leader of the Opposition mean that if we are gettting the worst of a deal into which we have deliberately entered we should get out of it?

Senator Collings - In this case, as soon as we can.

Senator BRENNAN - Does he suggest that we can renounce an obligation entered into ? If he wishes to convey the idea that we are entitled to dishonour the agreement, regardless of our obligations, he is counselling loose conduct in our public engagements.

Senator Collings - Canada has got out of it, New Zealand will not have anything to do with it, and South Africa is dubious over it.

Senator BRENNAN - Australia need not have anything to do with the agreement after it expires. The time to consider, our future attitude to it will be when the agreement expires next year. We are not speaking of what can happen next year, .but what is likely to happen within the next few days in respect of the duty on a particular commodity. Criticism has been levelled largely against articles 9 to 12 of the Ottawa agreement.

Senator Arkins - The Assistant Minister is not inferring that Australia has had the worst of the bargain?

Senator BRENNAN - No. I am glad to be reminded of that. I said at the outset that I proposed to deal with the point raised by Senator Leckie, that Aus tralia derived no benefit from the agreement, but that that aspect had been adequately dealt with by Senator Duncan-Hughes and other honorable senators. I am one of those who think that we are obtaining very marked, distinct and demonstrable advantages under the agreement. The main criticism has been directed against articles 9 to 12, but I would remind honorable senators that the agreement does not commence at article 9. Like other contracts entered into it is usual to have a quid pro quo ; but there are certain members of this Parliament who are quite willing to take the quid, but unwilling to give the quo. Their criticisms commence at article 9 and they leave out of consideration altogether articles 1, 2, 3 and 4, which give definite concessions to the Commonwealth. That point was dealt with by Senator DuncanHughes and Senator Gibson. I direct the attention of those who think that we have surrendered, in what they term a somewhat degraded way, some of our powers, to what the British Parliament has done under article 4 of the agreement, which reads -

His Majesty's Government in the United Kingdom undertake that the general ad valorem duty of ten per cent, imposed by section 1 of the Import Duties Act 1932, on the foreign goods specified in schedule D shall not be reduced except with the consent of His Majesty's Government in the Commonwealth of Australia.

The British Government definitely and precisely says that it undertakes that it will not reduce below 10 per cent. the. duties on the list of commodities set out in the schedule without the consent of the Commonwealth Government. From the point of view of the critics of this agreement there is nothing in it quite so degrading to Australia as article 4 is to the government of the United Kingdom. But the British House of Commons is not likely to degrade itself.

The next question is, what are our obligations under the Ottawa agreement? We must bear in mind, first of all, that they are not legal obligations, that the agreement as a whole is not justiciable - that is, it is not triable in any court. If it is broken, the persons who commit the breach cannot be brought to justice in any court. However, that is not to say that there are no sanctions - to use a word which has lately come into general use - to the agreement. There are. If Australia enters into an agreement and then breaks it, it degrades itself in the eyes of the peoples of the world. Of course, some people contend that they did not enter into this agreement, that they had no part in it; that they belong to a new generation; or they advance other such contentions. 1 recall that the Leader of the Opposition (Senator Collings), at the time the Ottawa agreement was being considered by this Parliament, said that he did not consent to it, because he had not been consulted about it. I point out that a country can speak only through its government.

Senator Collings - I said that Parliament was not consulted.

Senator BRENNAN - Parliament was consulted. We adopted the only course possible; we sent delegates accredited by Parliament to the Ottawa Conference; Parliament could not go to Ottawa. The agreement entered into by its delegates was brought before both Houses of Parliament and was ratified, article by article, although Parliament then had the power to reject it, if it so desired.

Senator Brown - But Parliament could not amend the agreement.

Senator BRENNAN - No, because Parliament itself did not enter into it.

Senator Collings - That shows that we, as members of Parliament, were not consulted-; we did not see this agreement until it was brought before Parliament.

Senator BRENNAN - The position is as clear as daylight, although it has been the cause of a good deal of agitation during the last three years. An agreement is entered into between people on the spot, and, whether it is between individuals, governments, or nations, nobody, except one of infantile mentality, could contend that a third party can come in and alter that agreement. The agreement can be rejected or accepted as awhole, but to alter it is to make other people say something which they did not, and really could not. say. Thus, the point raised by the Leader of the Opposition has nothing whatever to do with the Ottawa agreement, because Parliament either had to accept the agreement as a whole or reject it as a whole. Both Houses considered it, and, bearing in mind that the agreement had a currency of five years - a very short time in the life of a nation - accepted it.

What are the obligations imposed upon Australia by the Ottawa agreement? I raise this question in connexion with the duty on cement, although, in doing so, I do not suggest that any individual, or any legislative body, has done anything which it consciously believed to be a repudiation of a treaty, contract, arrangement or convention which had been entered into on behalf of the Commonwealth. I deprecate the speech made by Senator Sampson, who usually maintains a high standard in debate; it was quite unworthy of him to have sneered at the Ottawa agreement in the way in which he did. Of course, it is quite true that both parties to the Ottawa agreement - the British Government and the Government of the Commonwealth - expected that the advantages flowing from it would be mutual, and, according to the very best opinion obtainable, that has proved to be the case. It is one of the advantages of intercourse in the world in which we live, that it is so ordained that a bargain may be made, in which advantages may be reaped by both sides. With regard to the obligations imposed by the Ottawa agreement, we know that article 9 prescribes that tariff protection shall be afforded only to those industries which are reasonably assured of sound opportunities for success. Article 10 is based on the principle of full opportunity of reasonable competition, on the basis of the relative cost of economical and efficient production being given to United Kingdom goods, with the 'further proviso that special consideration may be given to industries not fully established. Under article 11, the Commonwealth Government undertakes to have all existing duties reviewed by the Tariff Board in accordance with the principles laid down in article 10. That implies a lowering of existing duties. It is also provided under this article that, when the Tariff Board has so reviewed duties and recommends reductions, Parliament shall be invited to vary the tariff accordingly on goods of United Kingdom origin, in order to give effect to the principles of the agreement which I have just mentioned

Senator Dein - Vary " wherever necessary " ?

Senator BRENNAN - Yes, of course.

Senator Dein - That leaves to Parliament the option, of varying such duties?

Senator BRENNAN - I submit that it does not. The board may have made a recommendation already to lower the duties. From the point of view of the other party, this step may not be necessary.

Senator Collings - Article 11 lays down what Parliament may or may not do.

Senator BRENNAN - Yes, in accordance with the provisions of the agreement.

Senator Collings - Not in accordance with its own desires.

Senator Dein - The words " wherever necessary " are extremely important.

Senator BRENNAN - I do not think that they have the slightest bearing on the aspect of the agreement with which I am now dealing.

Senator Dein - If these words did not appear in the agreement it would be obligatory on the Parliament to vary duties in accordance with every recommendation of the Tariff Board.

Senator BRENNAN - The honorable senator has no reason for uneasiness on that point, because I concede that in this particular instance it might well be contended that there was no breach of the Ottawa agreement up to that stage. In regard to the words " Parliament shall be invited to vary ", I remind the Senate that constitutionally the signatories to this agreement did not and could not bind the Parliament; the Government bound itself. That applies also in respect of the Government of the United Kingdom. There were certain things which both governments could bind themselves to do, and they did so. But the sting is found in article 12, which reads -

His Majesty's Government in the Commonwealth of Australia undertake that no new protective duty shall be imposed and no existing duty shall be increased on United Kingdom goods to an amount in excess of the recommendation of the tariff tribunal.

Senator Dein - 4What is the existing duty on cement?

Senator BRENNAN - Certain persons contend that the existing duty is the duty existing at the time the agreement wa3 signed. But suppose - as was a fact - that duties had been raised abnormally high and a new government reduced every item in the schedule by half, what would be the " existing duty " under such circumstances? Would it be the. duty existing at the time the agreement was signed, that is, the duty that had since been wiped out of existence? To use another expression which also occurs in this article of the agreement, the existing duty must be the " new " duty.

Senator Dein - No; because it has never been legalized.

Senator BRENNAN - I am assuming that, after a review of the tariff by the Tariff Board, the Government reduced by half all the duties. The new duties would be the " existing " duties. I am aware that an imposing array of learned counsel has given a different opinion, which has been published in doublecolumn advertisements in most of the leading newspapers in Australia - a wonderful tribute to the very straitened circumstances of the cement industry.

Senator Dein - Suppose that this bill is not ratified by the 28th May, what will be the duty on the 29th May ?

Senator BRENNAN - It will come back then to some other duty.

Senator Dein - 'But suppose the duty had never been varied?

Senator BRENNAN - I shall deal with both aspects of the matter. At the moment I am dealing with the existing duty and I point out that if a government reduced the duties in the schedule as a whole, then the existing duties are not those existing at the time the agreement was signed, but those existing at the particular time when they were under review. I point out also that article 12 is being interpreted as though it read "No duty which existed at the time of Ottawa shall be increased, &c. ". But the article does not say that. If the article stood by itself, "existing duty " is capable of being read as the duty existing at the relevant time, namely, the time at which the Tariff Board's inquiry takes place. It does not mean the duty existing at the time of the signing of the Ottawa agreement, but that which was in force when the Tariff Board undertook its investigation.

Senator Dein - What is the existing duty on cement?

Senator BRENNAN - At one time the duty was1s. per cwt. Later, the Tariff Board recommended that cement from Britain should enter this country free. At the time of the investigation1s. per cwt. was the existing duty. In pursuance of the spirit of Ottawa, the Government tabled a resolution by which the recommendation of the Tariff Board was given effect. In reply to Senator Dein's interjection, I now state that the existing duty is the duty under the resolution.

Senator Dein - Then its ratification by Parliament does not matter?

Senator BRENNAN - The duty is that which is de facto being collected.

Senator Dein - Should the bill not be passed by the 28th May, what would be the duty on the 29th May?

Senator BRENNAN - The enforceable duty.

Senator Dein - What is that?

Senator BRENNAN - The duty which is actually being collected under the powers of Parliament. It has to be paid, and the Government can enforce payment.

There is a well-known story of a man who had been placed in the stocks. When a friend saw him there and inquired the reason, he was told "I did so and so, and here I am." The friend said "They can't put you in the stocks for that", whereupon the offender replied "But they have done so!" Let me bring the story up to date. Certain articles are imported, and the duty on them is paid. A friend comes to the importer and says "They can't make you pay duty on them", but the importer replies " They have done so." The duty collected was the enforceable duty. Yesterday Senator Dein, apparently with the object of relieving the weariness of the debate, brought Webster's International Dictionary into the chamber. I turned over its pages in order to ascertain the meaning of the word "duty" and found it to be "Any payment, service, or other render imposed and recoverable by law or custom." The duty which is imposed by the resolution is recoverable by a custom which has prevailed in English-speaking countries for many generations. The simple fact is that from the date of the tabling of the resolution that duty was recoverable by law, and according to Webster's International Dictionary, and, I think, according to the understanding of the ordinary business man, that is the duty on the article at that time.

Senator Dein - Has the duty been imposed by resolution?

Senator BRENNAN - A schedule, varying the duties in accordance with the recommendations of the Tariff Board, was tabled in November of last year, and since that time the duties set out therein have operated.

Senator Dein - Then why ask Parliament to ratify them ?

Senator BRENNAN - It is necessary in order to safeguard the revenue. I have shown that an " existing duty " means the duty in force at the time when the Tariff Board made its inquiry, not the duty existing when the Ottawa agreement was signed. The proposal of the House of Representatives would be a breach of the Ottawa agreement. I now take the words, " No new protective duty shall be imposed ". Let us project our minds a month or two ahead, and assume that the amended duty as agreed to in the House of Representatives has found a place in the schedule of the Customs Tariff The people of England would look at it and say, "Here is a duty on cement". It would be a new duty. Cement is not a new subject of duty, but every variation of the rate is a new duty. It was1s. per cwt.,. but is now 6d., or 3d. per cwt., as the case may be. If it is a new duty, the people of England would naturally ask whether it is higher than the Tariff Board recommended. Every one can see that it is. Therefore, I say that it is a new. protective duty, imposed at a rate higher than that recommended by the Tariff Board ; that the " existing duty " is not the duty which existed at the time of the Ottawa Conference, but thatwhich was in force whenthe Tariff Board made its investigation; and, therefore, I submit that the proposal of the House of Representatives constitutes a breach of the Ottawa agreement.

Senator Collings - Was it not a new duty when " free " was substituted for "1 s. per cwt." ?

Senator BRENNAN - Certainly it was.

Senator Collings - Apparently, a breach occurs only if the duty is raised.

Senator BRENNAN - It is a breach of the Ottawa agreement if the duty is higher than that recommended by the Tariff Board. I am not accusing any one of dishonesty, or of dishonorable conduct, or even of a light regard for obligations entered into. I admit that there is great difficulty in interpreting the Ottawa agreement, especially from a legal point of view. It is for that reason that an appeal is made to observe the spirit of Ottawa. The agreement contains expressions which indicate that it was intended to be regarded, not as a legal document, but as one to be interpreted in the spirit in which it was entered into. At the time of the Ottawa Conference the Australian tariff imposed duties which were higher than those previously in force. Great Britain desired that those duties should be reduced. If articles 9 to 12 of the agreement are interpreted in the light of those facts, it will be seen that there is much to be said for interpreting the agreement in the spirit of Ottawa. The more the proposal of the House of Representatives is viewed in that light, the more clearly it will be seen to be a breach of the Ottawa agreement. What the consequences of such a breach may be, I do not profess to say. I do not think that Great Britain would make a great fuss about it, but that is not the point. We should be careful to see that obligations entered into are not lightly 'regarded. We must, at least, concede that Britain has kept its part of the agreement.

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