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Wednesday, 2 December 1936


Senator JAMES McLACHLAN (SOUTH AUSTRALIA) . - I join with the Leader of the Opposition (Senator Collings) in protesting against the introduction of a bill of this importance during the dying hours of the session; it was worthy of a better position on the notice-paper. Tariff -making has two objectives, one to protect the Australian manufacturers, and the other to produce revenue. The schedule we are now considering, I take it, imposes duties of a protective rather than a revenueproducing character. The object behind its introduction has been to foster trade with Great Britain, the dominions and goodcustomer countries, and also to give to Australian engineers an opportunity to manufacture some of the articles which at present are imported. Although the duties have been in operation for six months, in my opinion, it is too early yet to form any reliable opinion as to their ultimate effect. It is ridiculous to say that we could establish the motor car industry in Australia in such a short period. It is also too early yet to attempt to judge the advantages or disadvantages of this drastic attempt to divert to good-customer countries trade which formerly went to Japan and the United States of America. By the intense competition which it was able to offer in the Australian market, Japan was gradually filching from Great Britain a large share of its trade in textiles and cotton piece-goods.


Senator A J McLACHLAN (SOUTH AUSTRALIA) - Not very gradually !


Senator JAMES McLACHLAN (SOUTH AUSTRALIA) - That was the real reason behind the formulation of the trade diversion policy. Great Britain has always been regarded as Australia's best customer, and it seems likely to continue to enjoy that preeminence. Therefore, we cannot afford to allow Japan to encroach unduly on the British manufacturers' market in Australia. It was not only what Japan sold to Australia which agitated the mind of the Government; a weighty consideration was that Japan was destroying the market which Australia had in Great Britain. There has been much controversy over the new duties, and I think the people of Australia are to be . congratulated upon having taken it in good spirit. I feel sure that the people generally believe that the Government acted in the best interests of the nation as a whole. Most of the criticism of the Government's policy has come from people engaged in trade in Australia; very little of it has come from the section most concerned, the buying public. Although perhaps our traders have had some cause for complaint, I do not think that the manufacturers in the United States of America have been treated unreasonably. Honorable senators will remember that when the new duties were first tabled, Australian traders were promised that goods ordered before a certain date and goods absolutely necessary for Australian requirements could easily be granted admission under licence. I have brought before the Government several requests for the issue of licences to import certain goods, but without much success. Traders who have been importing from the United States of America for the last ten or twelve years certain lines for which they have built up a market in Australia, have been treated rather unfairly. The Go vernment should have been content to reduce their total imports by one-third or one-half; but complete prohibition of the importation of such goods is, in my opinion, dishonouring the promise made when the new duties were tabled, that certain goods could be imported into Australia under licence.


Senator HARDY (NEW SOUTH WALES) - Did the United States of America do that in regard to wool ?

Senator JAMESMcLACHLAN.Two wrongs do not make a right. Goods ordered from overseas countries before the 22nd May and shipped before the 30th June were allowed to come in. There has, however, been some difference of opinion as to what constituted an order. Australian traders generally held that if their orders left Australia before the 22nd May, they were entitled to have the goods admitted, but in some instances, it has been held that the order had to be in the hands of the foreign exporter by that date for the undertaking to apply. The different interpretations have caused confusion and inconvenience. A legitimate trader who pays cash for an article in the United States of America and, in addition, freight and insurance on it, suffers hardship if, only because his order was not in the hands of the supplier on the other side of the world before the 22nd May, the article purchased by him is refused admission.

In articles in the press and elsewhere it has been contended that the Government's action was inspired by the people of Great Britain, supported by the government of that country. I do not think so. Australia had to impose some restrictions.


Senator Duncan-Hughes - It could have acted in a number of different ways. For instance, it could have removed primage.


Senator JAMES McLACHLAN (SOUTH AUSTRALIA) - It chose this way.


Senator Duncan-Hughes - It acted unwisely in doing so.

Senator JAMESMcLACHLAN.That is a matter of opinion. Britain is Australia's best customer, and is likely to remain so. It is, therefore, our duty to assist Britain as far as possible.


Senator Duncan-Hughes - Britain would not have cared if Australia had acted otherwise.


Senator Sir George Pearce - Britain did the same for Australia in connexion with Argentine meat.


Senator JAMES McLACHLAN (SOUTH AUSTRALIA) - I do not think that any honorable senator will deny that Australia gained a distinct advantage from the Ottawa agreement.


Senator McLACHLAN (SOUTH AUSTRALIA) - Textiles were largely the basis of the Ottawa agreement.


Senator JAMES McLACHLAN (SOUTH AUSTRALIA) - Senator Johnston quoted an extract from a speech by Mr. Menzies in which that honorable gentleman said that there was danger of placing too much reliance on the British market, because it was a contracting market. Statistics, however, do not support Mr. Menzies, for whereas Britain took 38 per cent, of Australia's export produce in 1931, the proportion grew to 45 per cent, in 1932 and to 48 per cent, in 1935. The figures for the current year are better still.

It is probably unwise to discuss in detail Australia's trade with Japan while negotiations with 'that country are still in. progress, but I am impelled to speak of wool because it has been mentioned by several other honorable senators. No one can say that wool prices are unsatisfactory, although, naturally, growers would be glad to receive more for their clip. The present prices are good.


Senator Sir George Pearce - Long may they continue so!

Senator JAMESMcLACHLAN.Honorable senators probably know the abstemious habits of the people of Adelaide. In that city numbers of business men, including some wool-brokers, meet for a cup of tea or coffee about 11 o'clock each morning. When in Adelaide some months ago I strolled into a restaurant, where I found that the main topic of conversation was the new tariff schedule which had recently been introduced. On all sides I heard the remark " At the next wool sale prices will be down 3d. per lb." The first wool sale following the introduction of the new tariff schedule was held at Adelaide, and it is to the credit of the pastoralists of that State that they sent along good supplies.' Fortunately prices were satisfac tory ; but still the critics said, " Wait till the September sales, and it will then be found that prices have fallen." At the September sales it was found that prices were a little firmer than in the previous year. The conversation then took a different turn, and when the good prices for wool were mentioned the reply was "Prices would bemuch better if Japanese buyers were in the market." That belief still exists. What the price of wool would be were the Japanese buyers in the market is as much a matter for conjecture as would be the price of ice cream in Hell.


Senator Sampson - Or the price of beer there.

Senator JAMESMcLACHLAN Not all the inhabitants of that region are drinkers of beer, as the honorable senator will find out. If we turn to wheat, we find that in 1933 Australia exported to Japan about 19,000,000 bushels, and in the following year a similar quantity. In 1935 the exports were about 16,000,000 bushels, making a total of about 53,000,000 bushels in three years. Of that quantity, approximately 46,000,000 bushels was gristed for flour and sold in the East Indies. Japan therefore became a competitor of Australia in the flour market of the East.

That brings me to another point. We must maintain our standards of living. Japan, with its abundant supply of cheap labour, was able to buy our wheat, grist it, and sell the flour in our markets at a lower price than that for which we could sell. Of course, the currency had something to do with that. I trust that we shall be able to maintain our living standards. I intend to do my utmost for that end. We ought also to assist Great Britain to maintain its living standards. This being so, I am not prepared to surrender our markets to countries with cheap labour. I do not think it would be fair to do so.

There is one aspect of this tariff which requires some elucidation. I trust that when the Minister replies he will explain the purpose and effect of the timber duties. It will be remembered that the Tariff Board was requested, in 1933, to inquire into the timber industry, but the terms of reference on that occasion must have been lost, for it was 1936 before the board's recommendations reached us. The Tariff Board is our guide in matters of this kind. 1 wish now to refer for a few moments to the proposal to manufacture motor cars in Australia. This is one of the purposes underlying the adoption of the trade diversion policy. I have been astounded to-day to hear practically every honorable senator who has discussed this subject, with the exception of Senator Leckie, assert that motor cars cannot be manufactured in Australia at a price at which our people can buy them. I claim that the Australian workmen are equal to those of any other country in the world. It is a libel upon them to say that they have not sufficient engineering ability to make motor cars. All sorts of engines are already being manufactured in this country, and I can see no reason why motor-car engines should not be produced here. We have the most uptodate motor-body building factory in the southern hemisphere, and probably in the world, and as we can manufacture motorcar bodies so successfully, I cannot understand why honorable senators should imagine that we cannot achieve equal success in the manufacture of motor-car engines. It has been said that motor cars which cost £400 in Australia cost only from £100 to £120 in the United States of America. Surely that would allow us a sufficient margin. If we can successfully establish this industry in Australia, we shall provide a great deal of extra employment for our people. It is useless for honorable senators to place before us a mass of undigested figures, and hope to convince us thereby that motor cars cannot be manufactured satisfactorily in Australia. One honorable senator said to-day that it would be economical for the country to pay £200 a year to all the men who might be engaged in the manufacture of motor cars to enable them to go fishing so that we could continue to import motor cars from abroad.


Senator Duncan-Hughes - At any rate those men might do something to develop the fishing industry !


Senator JAMES McLACHLAN (SOUTH AUSTRALIA) - I think it was intended that they should sit on a wharf somewhere and fish. The development of the fishing industry was not in the mind of the honorable senator who made the suggestion. It is quite within the capacity of the people of Australia to manufacture here the motor cars they need. If the Government's policy achieves that result it will have been well worth while.

In the main, I believe that the new tariff policy will be beneficial to the country, though I agree that it is too early yet to judge its full effects. In this instance, we must " wait and see ". I have no doubt that before very long satisfactory trading relations will be re-established with Japan. I am thoroughly convinced that Japan has been buying Australian wool. I have not attended a wool sale in South Australia this year, but I have attended two sales in other States, and I have seen the Japanese buyers there just as interested in the staple and catalogues as ever they were. It is true that they were not bidding for wool, but I cannot believe that Japanese merchants would send buyers from Japan to Australia simply to look on. I believe that Australian wool has been going to Japan, for those men were not doing nothing; they were busy.







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