Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Tuesday, 5 May 1936

Senator A J McLACHLAN (SOUTH AUSTRALIA) (Postmaster-General) . - Senator Payne cited figures to be found in the report of the Tariff Board, dated the 25th July, 1934. I remind the honorable gentleman that the industry was under review by the board as far back as 1933, and that the Government's cotton policy was guided largely by the recommendations of the board in November of that year.

Senator Payne - I used the figures that are to be found in the latest report.

Senator A J McLACHLAN (SOUTH AUSTRALIA) -A close examination was made by the board of the extra burden which would be placed on the community by the implementation of the Government's policy, and also the benefit which would accrue to the community in general by the encouragement of the industry. In its report of the 30th November, 1933, the board stated -

An indication that cotton-growing is expected to be relatively profitable is indicated by the recent steady increase in acreage. The areas sown arc as under -


lt will be seen- that the area sown has been quadrupled in the last four seasons.

The board realizes that cotton-growing in Australia was deliberately encouraged by the Commonwealth Government, and that to Unduly expose the industry at a time when the world price of cotton is so low (on the 29th September, 1933, Liverpool middling spot was 5.60d. per lb.) would jeopardize it after heavy costs, both public and private, have been incurred. On the other hand, the board cannot ignore that standards generally have altered, and that many of our major export industries face a future filled with uncertainty. The present is no time for the community to be generous to any one section. All that the community should be called upon to do is to assist the cotton -growers at this period of low prices to such an extent as to enable efficient growers who are farming on suitable areas to hold their position until such a time as the world's price of lint shall rise.

The Government took this opinion into consideration when framing its new policy with regard to cotton. "Whilst increased rates of duty are proposed on cotton yarns for the manufacture of tweeds, denims, drills, &c, blankets made of wool and cotton, cordage and twines, and on cotton-piece goods, such as tweeds, denims, drills, &c, substantially lower duties are proposed on cotton yarns previously protected, such as hosiery and knitting yarns, and preparation yarns for towels. The proposed increases are therefore very largely offset by the proposed decreases.

This leads me to the cost to the community of the Government's proposals. The board stated that the cost under the system of seed cotton bounty and higher protective rates operating previously was £262,000, on a production of 5,000,000. lb. of cotton yarn. The board, however, recommended an extension of the protective duties under which it was estimated that production of cotton yarns would increase to 7,650,000 lb. Under the old system, the cost to the community of the extended production would have been £450,000, or ls. 2d. per lb. of yarn. Under the new system of protective duties and bounty on raw cotton, the cost would be £319,000, or 8£d. per lb. of yarn, after allowing for the fact that the bounty rate adopted is Id. per lb higher than that recommended by the board.

It will thus be seen that the cost to the community of the extended industry is lower by £131,000, or about 6d. per lb. of yarn, than the cost would have been had the industry been extended under the old duties and seed cotton bounty. Moreover, under the new scheme, the extended industry will cost the community only about £57,000 more than if the industry had remained stationary under the old scheme. As against this, there are the benefits accruing to the cotton-grower in the disposal of the whole of his crop at remunerative prices, and to the cotton-spinner by bringing into operation idle machinery which, in addition to creating additional employment, allows of a wider distribution of overhead costs. It will, therefore, be appreciated that, if the protection on denims, drills, &c, which is an important part of the Government's scheme, be removed, the opportunity for the cotton-grower to dispose of his crop will be considerably lessened. The Government's proposals will enable Australian spinners to operate to the full. An increased output will reduce overhead charges and help them to meet overseas imports of cotton yarns, previously protected at higher rates of duty. Seeing that the Tariff Board has given this matter careful consideration, and has taken into account, not only the details mentioned by the honorable senator, but also the larger aspects of the subject, and seeing also that this Parliament has adopted the bounty system and agreed to the principle of supplying manufacturers with cotton at an import parity price, the proposal before us is merely a corollary of something which has already been done. Even if the result be an additional cost of £57,000, that money will be well expended in the development of an industry which will be of benefit to the country as a whole.

Suggest corrections