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Friday, 1 May 1936

Senator Sir GEORGE PEARCE (Western Australia) (Minister for External Affairs) [11.33]. - I appeal to Senator Duncan-Hughes not to press his request at this juncture. 'The matter raised by the honorable senator is interesting, but it needs more consideration than this committee can give it at present.

Senator Duncan-Hughes - This is our only opportunity.

Senator Sir GEORGE PEARCE - This matter has already been considered by the Tariff Board, which is more competent to deal with it than we are; the quotations which the Minister read from the board's report clearly indicate that it decided that it would not recommend any alteration of duty on a variation of exchange by 5 per cent., and I believe that that is the attitude which it would adopt to-day. Is it at all probable that, in the near future, say within a year or two, there will be a greater variation than 5 per cent.?

Senator Hardy - The Commonwealth Bank Board admitted that it cannot always control the exchange rate.

Senator Sir GEORGE PEARCE - The Commonwealth Bank Board fixes the rate.

Senator Hardy - There is a big difference between fixing the rate and controlling it.

Senator Sir GEORGEPEARCE.Experience has shown that it is easy to maintain the present rate of 25 per cent. If the Tariff Board were asked to reconsider this matter, it is safe to assume that it would not suggest any variation of duties if the exchange rate were increased by 5 per cent.

Senator McLeay - Would not an increase of 5 per cent, affect our position under the Ottawa agreement?

Senator Sir GEORGEPEARCE.- It is not the exchange rate which affects the Ottawa agreement, but the variation of duties caused by an altered exchange rate. The Postmaster-General has already stated that, if the request suggested by Senator Duncan-Hughes were adopted, the present ratio between the British preferential and general tariffs would be affected. An increase of the exchange rate would be made only if our overseas trade figures were more unsatisfactory than they are to-day. If such a position should arise it would be due to the fact that the quantum of our exports had seriously fallen, or that our imports had increased. It is obvious that, in such circumstances, the position would have to be met by increasing the value of our exports or by decreasing our imports.

Senator Guthrie - We have not the power to increase the value of our exports.

Senator Sir GEORGEPEARCE. - Obviously, we cannot increase the value of our exports by artificial means, and we would therefore have to deal with our imports. Senator Duncan-Hughes suggests that, if the exchange rate increases, additional protection to that extent should not be given to the Australian manufacturers. Such protection has an effect upon imports, and is it not that at which we would be aiming in raising the exchange rate? Therefore, if what Senator Duncan-Hughes visualizes should happen, the effect of leaving the item as it is would be to accentuate the limitation of imports. I suggest that it would be unwise to adopt the formula suggested, but, if the necessity should arise, the Tariff Board will be asked to give the matter further consideration. On those grounds I appeal to Senator Duncan-Hughes not to press his. request.

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