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Tuesday, 5 May 1936

Senator PAYNE (Tasmania) .- I know that the Tariff Board went into this matter very carefully, but 1 do not agree with its recommendation, because in its report it distinctly forecasts a very heavy additional burden on the wearers of these garments, whilst, it was unable to say how this burden could be compensated for, except by an increase of the number of factory employees. Giving evidence before the board, Mr. R. N. Treacy, a director of Bradford Cotton Mills Limited, said that drills, denims and dungarees should be included in this item. I am not arguing so far' as cotton tweeds are concerned, as this . is au established industry, but I ask whether it is advantageous to include drills, denims and dungarees in this item? I contend that it is not. Mr. Treacy stated that the annual use in Australia of denims and drills totals 4,000,000 yards of 27-28 inch width material. All the evidence given before the board, on this point, including that of a British manufacturer, confirms this estimate. I have estimated, on a basis of 2J yards a pair, that from that quantity of material, 1,600,000 pairs of trousers can be made. The previous duty on this material was 5 per cent. British, and the Government now proposes to make the duty 6d. a square yard, plus 22^ per cent, ad valorem. The price of British material of average quality is about 8d. a square yard. After paying all charges, including import duty and primage, &c, the landed cost would be from 11 1/2 d. to ls. a yard. I am informed that the Australian manufacturers quote for this cloth of similar quality ls. 6d. a yard; to-date they have made only a small quantity of this material. On these figures the proposed duty would mean that the landed cost of the British material would be between ls. 7d. and ls. 8d. a yard. I have no doubt, that, as happened with cotton tweeds, the cost of the Australian-made article from this cloth will be kept slightly below that of the British-manufactured article, which bears the heavy duty. This, of course, will be done to enable the Australian manufacturer to capture and retain the trade. Working on the Australian mill price of ls. 6d., allowing a wholesale profit of 25 per cent, or 4-id., and a retail profit of one-third - that is, onethird of ls. I0d., or 7 1/2 d. - the additional cost of each pair of dungaree trousers, after allowing for duty, will be at least 2s. 6d. Applying this figure to the 1,600,000 pairs of trousers which could be manufactured from the 4,000,000 yards of this material used in Australia annually, the total additional cost would work out at over £200,000. This is the price which the people of Australia are asked to pay for the establishment of this industry. Mr. Treacy stated that working under such a duty his company could immediately treble its staff. I have worked out the wages that would be paid at his company's mills, allowing £3 a week for all classes of operators. This estimate of £3 is rather high, as it assumes that girls at any age would receive this wage, although, in actual practice, many of them would receive less. On this estimate the total wages bill would be under £50,000, but doubling this so as to assume a still larger number of employees, I allow £100,000. I do think that even the greatest optimist will anticipate that, as a result of the establishment of this industry, the wages-sheet will be increased by more than that amount The figures I have given regarding the effect of the increased duties show that on this item alone the working men of Australia will have to pay an additional £200,000 annually, which is distinctly uneconomic.

Senator Brown - Does the honorable senator know that they actually buy 1,600,000 pairs of trousers.

Senator PAYNE - To simplify the calculation I have assumed that the whole of these materials used in Australia are made into trousers. But it matters not to my argument that some of the material is made into overalls. I have seen a further calculation made with regard to another type of garment, which requires 3 yards of material, and which, under the proposed duties, will cost the wearer 3s. 3d. more than the price paid under the old tariff. This works out at an aggregate cost to .the wearers of £216,666 per annum. Surely that is uneconomic from the viewpoint of the manufacturers, and unnecessarily penalizes those who wear these garments. Is it suggested that £200,000 should be expended to gain ari alleged advantage of £100,000? The Tariff Board, after stating that the present price of blue denim, 28 inches wide, is 7 3/4 d. a yard, f.o.b., went on to say that -

In respect to both the " cotton tweeds " and the " denims " groups, it might be stated at the outset that if the industries are to be of any real economic value to the Commonwealth the cloths should be produced wholly in Australia. It is futile to suggest that this can be done without considerable added cost to industries using the .product and consequent added cost to the consumer.

That supports my contention.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - The Tariff Board's figures, as to the additional cost to the users, on page 29 of the report, do not agree with those of the honorable senator.

Senator PAYNE - I am quoting from the board's report of the 25th July, 1934, on denims, drills, and dungarees. Prior to the Ottawa Conference the duty on these materials, ratified by Parliament, was, British preference, 5 per cent. ad valorem, but on the schedule now before us, the British preferential rate on average grade material has been increased to 65 per cent. In these circumstances, the Government may be within the letter, but not the spirit of the Ottawa agreement. On the lower grade material the duty has been increased to 175 per cent.

SenatorFoll. - There has not been any protest from Great Britain.

Senator PAYNE - That has nothing to do with the matter. The figures I have quoted, which have been compiled by a person who has gone very closely into the subject, disclose that on material invoiced at 4¾ d. a yard f.o.b. British port, the landed cost in Australia under the old tariff was 7¼d. a yard, whereas under the proposed tariff it is 13d. a yard, or approximately 175 per cent. of the f.o.b. cost as against 5 per cent., which previously obtained. The duty is so high that British manufacturers cannot export cotton tweeds profitably since the higher duties "became operative. A few thousand yards of British cotton tweeds have been imported, because some users of this material believe that it is superior to the Australian product. Reasonable protection should be afforded to Australian industries, but we have no right to exclude British products by imposing unnecessarily high duties.

SenatorFoll. - If the Tariff Board has recommended these duties, it cannot be said that by adopting them we are committing a breach of the Ottawa agreement.

Senator PAYNE - I am justified in dissenting from a recommendation of the board. As I have handled large quantities of this material, I am in a position to understand the actual position. I have studied the subject from the viewpoint of the consumer, who is not always considered by the Tariff Board.

The CHAIRMAN (Senator Sampson - The honorable senator's time has expired.

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