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Thursday, 30 April 1936

Senator DUNCAN-HUGHES (South Australia) . - I do not feel satisfied with the explanation given by the Minister. In order to make allowance for a possible change in the rate of exchange, it is provided that if exchange falls compensating addition to the duty shall he made automatically. But suppose exchange rises. The Minister says that we shall deal with: such an eventuality when it arises, but as we are now dealingwith one side of this problem, why should we not deal with both sides of it?.' Believing that what is sauce for the goose should be sauce for the gander, I move -

That the House of Representatives be requested to add at end of the item - " And for each £1 by which the equivalent in Australian currency of £100 sterling is more than £125 at the date of exportation -

A reduced duty of - per cwt., British, 2.4d; intermediate; 2.4d.; general, 2.4d."

SenatorA. J. McLACHLAN (South Australia - Postmaster-General [9.58] . - The matter of exchange has been the subject of considerable discussion. Honorable senators will recollect that we passed an Exchange Adjustment Act, the object of which was to maintain a ratio between the rates of duty and the rate of exchange. I myself cannot say, and I do not think the Tariff Board could calculate without making a very detailed investigation, what the effect on duties would be if the rate of exchange went to £30.

Senator Gibson - The board might possibly have to make such a calculation.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - Yes, that is possible, but I think it highly unlikely. In that event, however, it will be the duty of the Tariff Board to make the necessary calculations. The only reasonably accurate computation we had when drafting the exchange adjustment legislation, was a rough and ready one, by which we arrived at a deduction of one-fourth of the amount of duty or 121/2 per cent, of the value for duty. The Government later asked the Tariff Board to investigate this matter more fully and in its various reports it has worked out such calculations to correspond with fluctuations of the Australian pound in relation to sterling. As honorable senators will see,' it applied the results of this calculation to the duties on various items individually, because every item is not affected to the same extent. For instance articles in respect of which this calculation has to be made, may include locally manufactured components. There were also many other considerations to be taken into account, and these factors made the Government's earlier formula of onequarter or 121/2 per cent, unsatisfactory as a means of regulating the amount of duty in relation to exchange variations. The Tariff Board has now worked out these figures on an accurate basis, for individual items. I repeat that I am unable to say what the effect upon these duties would be if the rate of exchange went to £30. The calculation of Senator Duncan-Hughes is, I think, wrong. Right throughout the schedule the variations are tremendous, and the calculations vary in almost every case. I should he sorry to think that we might adopt a loose method in framing a tariff. In the old. days the duty was fixed at par, but to-day, when there is a depreciated currency, it is fixed on the basis of that currency. Should exchange return to par, local industries would require additional protection.

Senator Hardy - Does not the Exchange Adjustment Act apply only to the British preferential tariff, whereas in this schedule the exchange formula appears to apply to the general tariff also?

Senator A J McLACHLAN (SOUTH AUSTRALIA) - It is all arranged on the basis of sterling.

Senator Duncan-Hughes -I have accepted the department's own figures.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - If the honorable senator pursues his argument, I shall be compelled to refer the matter back to the Tariff Board. I confess that I was anxious to arrive at a formula, but when any suggested formula was applied to the various items, it proved unsatisfactory. What the effect of the honorable senator's suggestion would be I cannot say at the moment, but it might work out entirely differently from what either he or I would desire.

Progress reported.

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