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Tuesday, 19 May 1936

Senator A J McLACHLAN (SOUTH AUSTRALIA) (Postmaster-General) . - I take it that when the committee agreed to the postponement of this item, it did not in any sense commit itself to the proposition which Senator Payne has just submitted. I would have opposed any such request at that stage, as I opposed the postponement of the item, for I was anxious for the committee to complete its consideration of the schedule without delay. However, now that the request has been moved, I wish to put the issues plainly before the committee. The object of Senator Payne is to secure a return to the form of duties of the 1933 schedule in regard to these textiles. If honorable senators will refer to page 5 of the memorandum, they will see that the wording of the request follows in practically every regard the wording of item 105 a 1 b of the 1933 schedule. If it is adopted, such items as cotton denims, drills, duck, dungarees and jeans will be eliminated from the item and will therefore come within the n.e.i. provisions, which will mean that the rate of duty on them will be British preferential 5 per cent., intermediate 25 per cent., general 25 per cent.

The request strikes at the very root of the cotton policy of the Government, the details of which I do not wish to recapitulate at the moment, particularly as the Senate has adopted it. I remind honorable senators, however, that the Government formulated its policy following an exhaustive review of the cotton industry by the Tariff Board.

The Government's policy aims in the first place at the absorption of the whole of the Queensland cotton crop, which the protection previously afforded on cotton products did not provide. The second object of the Government was to bring idle spinning and weaving machinery into operation again.

Senator Paynehas made calculations to show that the public will be asked to pay £200,000 more for certain garments as the result of the imposition of the protective duties on cotton denims, drills &c, contained in the schedule. The factors which the honorable senator employed in arriving at his calculations were : -

(a)   Annual usage of 4,000,000 yards of single width material.

(b)   21/2 yards of material used to make a pair of trousers.

(c)   1,600,000 pairs of trousers made from the 4,000,000 yards of material.

(d)   Increased cost of 2s. 6d. a pair of trousers owing to increased duty.

While these figures undoubtedly suited Senator Payne's argument, I must, respectfully, dispute them. In the first place, the Tariff Board estimates the requirements of denims, drills, &c, at 3,000,000 yards single width. Secondly, the investigations of the Customs Department show that, on an average 23/4 yards of cloth would be used in a pair of trousers, so that 1,090,000 pairs would be made from 3,000,000 yards of cloth. Thirdly, the excess cost of 2s. 6d. a pair mentioned by the honorable senator is about 25 per cent. greater than that shown by the department's investigations made some time ago. The excess cost to the community on the basis of the Customs Department's figures would be approximately £110,000, or about Half of the total arrived at by Senator Payne.

However, as I have already said, the whole of the Government's cotton policy is involved in the question before the committee. Certainly, for some time at least, the new duties will involve the users of garments made from denims and drills in heavier costs for these garments, but the Government's proposals in respect of cotton goods generally will not affect the public in the same manner. For instance, the protective duties in force on cotton yarns prior to August, 1934, have been reduced by half. These duties affect mainly hosiery and knitting yarns, the requirements of which were estimated by the Tariff Board at 5,000,000 lb.

It is estimated that by reason of this reduction of duty the public will benefit by well over £200,000 as against the department's estimate of an extra £110,000, which would be paid by users of garments made from denims and drills on account of the increased duties on these materials. What I have said demonstrates clearly that, although the public may be obliged, for the time being, to pay a slightly extra cost for denims, drills and dungarees, the Government's cotton policy will not in the abstract increase the burden on users of cotton goods, but will actually decrease it.

I come now to a consideration of the effect which the honorable senator's proposal would have on both the primary and secondary branches of the cotton industry. According to the Tariff Board the potential demand for denims, drills, &c., in Australia is 1,500,000 yards of double width, 54 inch, material. About 1,666,000 lb. or 3,333 bales, of raw cotton would be required to make this cloth. Expressed in terms of seed cotton the total would be approximately 5,000,000 lb. Last year growers' returns averaged 4d. per lb. of seed cotton. The value of the market for denims, drills, &c, to the Australian cotton-growing industry is thus more than £83,000. Under normal conditions this branch of the industry affects 1,100 acres of cotton land, and the output of nearly 600 growers, not to mention the labour involved in cultivating and harvesting the crop.

It is opportune to mention here that the Commonwealth Bank has advanced £160,000 to the Queensland Cotton Board for the purchase and modernizing of cotton ginneries and oil mills. Further, the bank makes advances against the purchase of the crop. It is expected that such advances will reach £180,000 in respect of this season's crop. No doubt, in making these advances, the Commonwealth Bank felt assured that the Government's cotton policy, as connoted in the measure now before the committee, and in the Raw Cotton Bounty Act of which Parliament approved nearly two years ago, would be adhered to. If the part of its policy represented by the tariff item under discussion is rejected, cottongrowers might reasonably ask how they are to be expected to meet their obligations to the bank. Similarly the Queensland Cotton Board might ask how the advance made by the bank for the purchase and modernizing of the ginneries and oil mills can be repaid if these activities are to be unduly restricted.

The secondary side of the industry also will be detrimentally affected if Senator Payne's proposal is adopted. Since the item was last before the committee, investigations have been made by the Customs Department to ascertain the effect of the proposal on the cotton spinning and weaving industries of Australia. The figures I am about to cite were obtained as the result of those investigations, and should give honorable senators some food for thought. I stated at the time this item was previously before the committee that, if protection were not granted on denims, drills, &c., the market for the yarns for these piece goods would disappear. Accordingly the figures I now give relate to denims, drills, &c., and the yarns for making them -

Value of plant and buildings employed - £300,000.

Number of employees - 433.

Wages paid per week - £1,011 or £50,550 per annum.

These figures tell their own tale, but, in passing, I draw attention to the £300,000 invested in plant and buildings. Over 400 hands are already employed in this branch of the industry, and when a firmer hold of the market is secured by the local manufacturers this figure should considerably increase and, with it, the wages bill.

Honorable senators should not overlook the fact that in agreeing to the increased duties on yarns for denims, drills, &c, when item 392a was before the committee, they agreed to the principle upon which the Government's proposals for consequent increases of duty on the denims and drills were based. Surely, having agreed that increased duties were necessary on the yarns, honorable senators must in common logic, agree to the higher duties recommended by the Tariff Board to offset the duties on yarns.

The salient points which I have just dealt with at some length may he stated briefly as follows : -

1.   The duties on denims, drills, &c., are an important part of the Government's policy.

2.   They materially assist in the disposal of the Queensland cotton crop, for which they were primarily imposed.

3.   The higher duties on denims and drills are far more than offset by lower duties on cotton yarns for the knitting and hosiery trade.

4.   Over 400 hands are employed in the manufacture of denims, drills, &c, and in making the necessary yarns, while nearly 600 cottongrowers as well as pickers and others would be affected if the duties were removed.

5.   The value to the grower of the potential market for the goods affected by these duties is estimated at £83,000 per annum, while the value to the spinners and weavers would be many times this amount.

6.   The Queensland Cotton Board is committed to the Commonwealth Bank for about £160,000 advanced for mill machinery and for a considerable amount represented by advance payments to growers against the sale of their crop.

7.   On the secondary side of the industry, some £300,000 has been invested in plant and buildings for the manufacture of the goods affected by the item under review.

8.   By agreeing to the increased duties on yarns for denims, drills, &c, the committee has already agreed to the principle on which the duties on denims, drills, &c., are based.

Honorable senators should give full consideration to the points I have just made, and reject Senator Payne's proposal, which, if adopted, can be regarded only as a retrograde step that would undermine the whole structure of the Government's cotton policy that was formulated only after the most searching examination of the industry by the Tariff Board.

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