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Friday, 1 May 1936

Senator LECKIE (Victoria) .- Honorable senators who are preparedto support the amendment apparently do not realize its real effect. I shall give a concrete example of how it would operate. Much of the raw material used by the Australian manufacturers is imported, and on this material they have to pay not only exchange amounting to £25 on goods purchased for £100 sterling, but also in some cases primage duty. Goods costing in the United Kingdom £100 sterling cost a manufacturer in Australia £125 in Australian currency; in Great Britain such goods cost an English manufacturer exactly £100. Assuming that the cost of the raw material imported by an Australian manufacturer is one-third of his total cost, he will require, to expend £375 to produce goods from materials bought for £100 sterling. The English manufacturer buys hia raw materials for £100, and they represent one-third of the cost of the finished article. Therefore, he produces his goods at £300 sterling, as against the Australian manufacturer's cost of £375. When the English manufacturer exports his goods to Australia they are subjected to the 25 per cent, exchange. That makes the landed cost exactly the same as the cost to the Australian manufacturer, namely, £375. Allowing for the 10 per cent, duty on £375 the Australian manufacturer has tin advantage of £30. However, if that duty is reduced as the rate of exchange rises to, say, 50 per cent., as Senator Duncan-Hughes proposes, the result will be that instead of the Australian manufacturer paying £125 for his raw material he will have to pay £150, and articles manufactured from those goods will cost him £450. If exchange were increased to £150, the cost of living would necessarily increase ind wages would rise accordingly. If 1 were to land British goods in Australia costing £450, a British exporter would have to pay the same amount; but, According to the formula suggested by Senator Duncan-Hughes, the British manufacturer should not have to pay the duty, because an amount equivalent to it would be collected under the formula.

Senator Guthrie - Oan the honorable senator state approximately what proportion of the goods manufactured in Australia are made from imported raw material ?

Senator LECKIE - It would be very difficult to form an estimate.

Senator Sir George Pearce - The proportion varies with each commodity.

Senator LECKIE - In my business I handle only Welsh tin plate, on which primage duty of 4 per cent, is paid; but my competitors do not have to pay primage. The ultimate result of the adoption of the proposal of Senator Duncan-Hughes would be disastrous to Australian manufacturers and employees, find honorable senators should hesitate before considering it seriously. In these circumstances, I urge Senator DuncanHughes to withdraw the request until its effects upon Australian industry can be more accurately determined.

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