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Wednesday, 18 November 1936

Senator McLEAY (South Australia) . - In order to view the problem of marketing in its true perspective and in the light of modern interstate and international trade and world conditions, we should approach it with our minds concentrated, not on things as they should be, but on things as they are. During this discussion reference has frequently been made to " the power which the Government or the Parliament assumed ithad". In my opinion that term should not be used, because the High Court, which is the highest tribunal in the land decided in 1920 that this Parliament had the power which the recent decision of the Privy Council took away. That decision of the High Court guided this Parliament in passing legislation in 1928 to help South Australia and Victoria to control the marketing of dried fruits. It is clear that the framers of the Constitution intended that the National Parliament should control interstate trade ; for what other reason did they insert in the Constitution section 51 which reads -

51.   The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to: - (i.) Trade and commerce with other countries, and among the States:

It has been said frequently that the men who played such an important part in the framing of the Constitution were legal and political giants; but I draw attention to the views expressed by legal authorities of a later day, namely, the judges of the High Court who, in 1920, delivered judgment in theMcArthur case. Amongst them was Sir Isaac Isaacs,who, honorable senators will agree, played a very prominent part in the federal conventions. It might be interesting, then, to refresh our minds as to what some of these learned men have declared. In reply to the assertion that " the giants framed the Constitution, and the pigmies to-day are trying to destroy it ", I submit mat it would be well for every honorable senator who holds that view to pernse the McArthur judgment, which is reportedin the Commonwealth Law Reports for 1990. On page 562, Mr. Justice Higgins is reported as having said -

On the first reading of section 92 the generality of the words " Trade commerce and intercourse among the States shall he absolutely free " might seem to indicate that inter - state trade was to be free from all restrictions, whether State or Federal.

Such a conclusion would leave an awkward gap intheConstitution, for it would mean that no authority in Australia, whether State or Commonwealth,could regulate any abuses of interstate trade.

Their Honours Sir Isaac Isaacs and Mr. Justice Knox and Mr. Justice Starke said -

If section92 applies to the Commonwealth it would, inour opinion, practically nullify section 51.

On page 567 the same judges are reported in these terms -

Then comes a cluster of provisions designed to place the control of the foreign and interstate trade and commerce of Australia ultimately in the hands of the Common wealth as representing the whole nation, and to remove that trade andcommerce from the hands of the States whose jealousies and local policies had occasioned so much antagonism and inconvenience. Their inability, from the nature of the subject, to deal severally with interstate transactions in their entirety, was a legal truism.

Those remarks are in accordance with the view advanced in this debate by the Postmaster-General (Senator A. J. McLachlan). I do not propose to refer at length to the proposed new section 92a other than to say that it is quite obvious that, if the proposed new section is approved by the people and becomes part of our Constitution, the power thereby given to the Commonwealth will not be so great as that which the High Court in 1920 ruled that it possessed at that time. This fact should be borne in mind by those honorable senators who are somewhat afraid that if this proposal be carried too much power might be given to the Commonwealth, with the result that some industries in this country would be placed in a very serious position. I waa particularly impressed by the argument of Senator Guthrie that the Commonwealth has exercised the power now to be sought from the people since 1920, when the High Court ruled that the Commonwealth was not bound by section 92, and could control interstate trade. In that period has any government, Nationalist or Labour, while possessing this power, done anything to injure the interests of the States? No. We find that Nationalist governments, when so requested by the States, have agreed to legislate in order to assist certain industries which were suffering disabilities, owing mainly to world economic conditions, over which the producers had no control.

T propose now to deal with the position of the dried fruits industry, and the system of marketing control at present operating in that industry through the Commonwealth Export Control Board, which was formed in 1924. That scheme has been taken as the basis of marketing organization in other industries. If the dried fruits producers were asked to-day for their opinion of the effectiveness of this system, 99 per cent, of them would reply that it has been a decided success, and that they prefer it to any scheme of assistance based on the payment of a bounty from excise. The fundamental difference between these two proposals is that the scheme at present in operation in the dried fruits industry is based on producer control. The Commonwealth Export Control Board consists of eight members, six of whom are directly elected by the producers, whilst the other two, an accountant and a commercial man, arc appointed by the Government. This scheme gives producer control, in contrast to political control. Whatever scheme is evolved on the basis of the payment of a bounty out of excise, we cannot lose sight of the fact that it would be based on political control. Furthermore, we are aware that, under such a scheme, we cannot prevent dumping or regulate interstate trade, unless the proposal embodied in this measure is carried by referendum. Nor could we maintain a home-consumption price which, I submit, must be a vital factor in any practical scheme for the marketing of primary products. An excise and bounty scheme would be very costly. In this respect I point out that to-day a board consisting of eight members practically controls the dried fruits industry, whereas, I venture to suggest, we would require hundreds of excise officers to police an excise and bounty system. Thus the latter scheme must prove expensive and irritating. From our commercial experience we know that customs or government regulations must be framed so rightly in order to catch, not the 99 per cent, of honest citizens, but the remaining 1 per cent, who wish to defeat the law. In view of these facts, I submit that honorable senators must come to the conclusion that the system which has worked so well in the dried fruits industry for the last twelve years, and on which marketing systems in other industries have been based,has been proved, to the absolute satisfaction of the producers, to be better than any excise and bounty system. Furthermore, it is clear- that the producers desire this Parliament to help them to maintain the present system. We arc aware of the lack of stability in any excise and bounty scheme, and we know of the objectionable political features to which it would give rise. As I meditate on this problem and realize the importance of its solution to the States of South Australia and Victoria, and weigh the interest of thousands of men, including many returned soldiers who are dependent upon the dried fruits industry. I submit that we would make a mistake if we did not continue the present system. If we abandoned it, we shall place these men in a very awkward and unfortunate position. In order that honorable senators may appreciate more fully the importance of such a decision, so far as the interests of the smaller States are concerned, I propose, at the risk of wearying the Senate, to quote official statistics dealing with the production and exports of certain primary industries. The value, in Australian currency, of currants and raisins exported during the five years ended the 30th June, 1936, from the various States was as follows: - Victoria, £'7,000,000; South Australia, £3,000,000; Western Australia, £312,000 ; New South Wales, £1S1,000; Queensland, £583; Tasmania, nil. I am particularly gratified to find that honorable senators from Queensland support this measure, particularly when some honorable senators from the smaller States oppose it. Once again I ask honorable senators - " Are we going to surrender the substance of a home-consumption price and an orderly marketing scheme to grasp at the shadow of a political excise and bounty scheme?" In the wheat industry, which particularly affects the States of Western Australia and South Australia, this Parliament, in its wisdom, has also approved of the principle of a home-consumption price. In order to help the States in that respect it has passed certain legislation which would enable the wheat-growers to protect themselves in the event of -any fall of wheat prices in the future. Including flour, as expressed in terms of wheat, the exports of wheat from the various States during the five years ended the 30th June, 1936, were as follows: - New South Wales, 165,000,000 bushels ; Western Australia, 150,000,000 bushels; 'South Australia, 149,000,000 bushels; Victoria, 148,000,000 bushels; Queensland, 72,000 bushels; and Tasmania, 72 bushels. A glance at these figures will enable honorable senators to appreciate the importance of this problem to the States of South Australia and Western Australia.

The production .of barley is an important industry in South Australia and its handling and marketing should also lie controlled. The climatic conditions in that State are eminently suitable for the production of barley, and only a few weeks ago the South Australian producers were pleased to learn that they had succeeded in winning three important competitions at an exhibition in Great Britain. To enable honorable senators to appreciate the importance of the barleygrowing industry I quote the fiveyear export figures of the various States: South Australia, 14,000,000 bushels; Victoria, 1,000,000; Tasmania, 75,000; Western Australia, 30,000; New South Wales, 2,000, and Queensland nil. During the same period the excise on beer collected by the Commonwealth amounted to £25,092,000. Owing to a misunderstanding with Belgium and the depressed state of the barley market the barley-growers have been receiving, for their product, a price as low as ls. 9d. a bushel. When the maltsters were compelled to pay 4s. 9d. a bushel for barley the price of beer was 6d. a glass, but to-day when they are taking advantage of the depressed price, the price of beer is still the same. I trust that the Government will seriously consider the giving of some assistance to barley-growers by the establishment of a home-consumption price. Had 6d. a bushel on exports been paid over the fiveyear period mentioned the South Australian barley-growers would have received £358,000, which would have been a considerable help, and surely we could have afforded that assistance, particularly when we consider that during the same period over £25,000,000 was collected in excise. According to the

Ageof the 17th November, 1936, Mr. L. R. MacGregor, Australian Trade Commissioner in Canada, speaking of Australia's trade relations with Canada, said -

In the case of some Australian products marked progress could be recorded. The most noteworthy case was that of dried fruit. Australia had, this year, sold more dried fruit in Canada than was consumed in Australia. The Canadian market was of vital importance to the irrigation areas. The sales this year would probably reach, 17,000 tons. The success which had been met with was due to the sound progressive policies of the Commonwealth Dried Fruit Control Board and its practice of meeting the exigencies of the Canadian market iia distinct from those of other markets where markedly different conditions obtained.

If marketing can be effectively controlled by that board it is unnecessary for me to occupy the time of the Senate in directing attention to the advantages of such a system which prevents gluts and provides stabilized prices. When Senator Guthrie was speaking I asked the honorable senator if wool is marketed in an orderly manner and .he admitted that it is. A study of the manner in which the woolgrowers have ' organized their industry and disposed of their product discloses that their system is the finest example of orderly marketing that one could conceive. Wool delivered in November sometimes is not sold until February or March; frequently: it is withdrawn instead of being sold on a glutted market. This essential control can be exercised under an orderly marketing system with great advantage to the producers.

Senator Duncan-Hughes - There i-i no restriction upon wool passing from one State to another.

Senator McLEAY - Certainly not. But we cannot compare wool which is our number one asset with, say, apples. The disposal of different products presents different problems.

Senator Sir George Pearce - We have also to remember that we have to seek buyers of our butter, whereas the woolbuyers come to Australia.

Senator McLEAY - Exactly; I thank the Minister for mentioning that fact.

I propose to quote exports of butter to the United Kingdom during the year ended the 30th June, 1936, in which Great Britain purchased about 93 per cent. of our exports. I quote these figures in connexion with the problem of checking dumping, which concerns the weaker States of Western Australia, South Australia and Tasmania. During that year Victoria exported 35,000 tons; Queensland, 33,000 tons; New South Wales, 13,000 tons; South Australia, 3,500 tons; Tasmania, 2,000 and Western Australia 1,000 tons. Under the scheme in operation the price in Australia last week was 140s. a cwt., but that in the United Kingdom was 110s. a cwt. Restrictions in respect of interstate trade having disappeared, there is nothing to prevent a Victorian producer from dumping his product in Western Australia, South Australia, New South Wales or Tasmania.

Senator Sir GEORGE PEARCE (WESTERN AUSTRALIA) - That has already started.

Senator McLEAY - Is it reasonable to ask butter producers in Victoria or Queensland to sell their products at 110s. a cwt., the price at which it is sold in the United Kingdom, if they can obtain 140s. a cwt. in South Australia? The. problem of dumping will have to be considered from the viewpoint of the weaker States, which will be asking the Commonwealth Parliament for protection from the dumping operations of the stronger States. If State parliaments cannot control interstate trade and the people of Australia decide that the Commonwealth Parliament shall not control it, there will be chaos in the butter industry and other important industries. If the schemes now in operationare not continued what are we to have in their place? Some honorable senators are justifiably afraid that if this proposal is carried certain injustices will arise. Those supporting the Government's proposal respect their fears and opinions. We should, however, remember that the three weaker States are represented in this chamber by eighteen honorable senators, and no legislation can pass this chamber should eighteen honorable senators oppose it. Are not the interests of the weaker States protected by their representation in this chamber? The South Australian Government would not be associated with the butter scheme because it did not suit that State; but as a South Australian, I contend that if we wish the handling and marketing of wheat, dried fruits, barley and other products to be controlled we must support the control of the handling and marketing of butter, which suits Victoria and Queensland. It is not only the weaker States which have States rights. We are all fighting for our rights, and representatives of the stronger States of Victoria, New South Wales and Queensland have their rights. One of the things that impressed me when I first became a member of this chamber was that when financial grants were being paid to the weaker States we always had the support of the representatives of the stronger States. For the last five years South Australia has received £6,050,000 in special grants, which could have been withheld had the representatives of the stronger States opposed the payment. In the Sydney Morning Herald of the 14th November of this year the following paragraph appeared -

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