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Thursday, 3 December 1936

Senator A J McLACHLAN (SOUTH AUSTRALIA) (Postmaster-General) . - Senator McLeay no doubt willhave an opportunity to continuehis interesting review of this subject after I have made a few observations. Like the remainder of the items covered by this schedule, the amendments to the duty onoregon logs were made for trade diversion purposes, and the avenue to which it was thought that the trade would be diverted was, in this case, the Australian saw-milling industry. Representations had been made by Australian hardwood millers with regard to the competition which was being experienced from the large importations of oregon logs. The protection afforded to Australian timber interests by the Parliament in the form of duties on sawn oregon was being avoided by merchants who installed log breaking-down plants, and imported the logs, which were dutiable at a nominal figure. Until I saw the view of the other people, this breaking-down machinery rather appealed to me as a means whereby considerable employment would be given, and much timber saved, but what I am putting now is the departmental statement, and expresses the views of both sides on the subject. The extent to which the protection has been avoided is exemplified by the importation figures, which show that, in the financial year 1931-32, over 86 per cent. oforegon imports were represented by sawn timber, whilst during the years 1935-36, only 12 per cent. was represented by sawnoregon and 88 per cent. was imported in the log. In 1931-32, imports oforegon log were 3,800,000 super. feet, whilst in 1935-36 they had increased to 137,000,000 super. feet. On those figures, of course, was based the argument that these gentlemen who had failed, after a strenuous fight, to get the duty on oregon reduced, had found a hole in the tariff net. In the past, Australian governments have expressed their determination to preserve the use of Australian timbers as against oregon. They have given practical effect to this by imposing high duties on sawn oregon timber. When those duties were placed at their highest, logs were omitted from the schedule. This is the way in which the intention of Parliament, it is suggested, was circumvented: Certain timber merchants then installed the necessary machinery to break down the logs. Althoughoregon log cutting is quite uneconomic in Australia, it has been established by taking advantage of the protection afforded to the hardwood sawmiller. Oregon can be cut and sold at a lower price than sawn timber could be imported, after payment of the protective duty. As I have indicated, the change from sawn oregon to logs has been simply amazing. It has also resulted in a lower selling price fororegon than would be the case if it had been imported as junk, cut and sold in Australia. Importation oforegon logs was defeating the protective duties approved by Parliament. The new duties are designed to place the cost of oregon on approximately the level which was intended by Parliament when the duties on sawn oregon were imposed. The duty change was initially strenuously opposed by importing interests which had invested in log-cutting plants. The main points of attack were that: (1) the tariff had been so framed as to encourage them to install log-cutting plants with water frontages; (2) capital losses; (3) unemployment - by-law entry of all logs en route and in store was demanded, otherwise it was claimed that the industry must close down; and (4) the argument with which we are familiar, that oregon is complementary to, and not competitive with, hardwood.

Sitting suspended from 12.45 to 2.15 p.m.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - Before lunch, I was pointing out the attitude of the importing interests in regard to the Government's proposals. Subsequently, their attitude changed considerably. They now, in effect, admit that the basis of the Government's proposals is sound. In letters, they have stated that there is a case for an increase to 3s. per 100 super. feet Brereton measurement, equivalent to 3s.10d. per 100 super. feet Hoppus - an increase of 2s.10d. over the old ad valorem rate of 10 per cent. Their agreement to such a great increase is remarkable; their objection to government policy is now only one of degree. Apparently it is to give effect to this altered view that Senator McLeay moved his amendment. As to the claim of the importers that they were encouraged to install log-cutting plants, the fact is that these were established in order to defeat the protective duties imposed by Parliament in 1930, on the recommendation of the Tariff Board. At that time no importation of oregon logs occurred or was contemplated. The Tariff Board, in framing a schedule of revised duties, did not, therefore, include logs in the list. .Subsequently, as the result of the increased duties recommended and imposed on sawn oregon, the cutting of oregon logs took place in Australia. A gap in the tariff is now being claimed to constitute definite encouragement by the Government of the installation of plant by these importers. Representatives of the industry did not consult either the Minister or the department before committing themselves to the expenditure. The claim that increased employment has been given by log-cutting in Australia is to a limited extent true. The larger portion of the employment prior to the introduction of oregon log treatment in Australia, would have taken place in timber yards in the city, suburbs, and country, in the cutting up of imported sawn Oregon - 12 inch x 10 inch size. The concentration of log-cutting in waterfront timber yards, has given the appearance of a large increase of employment. Proof is obtainable from a comparison of costs. The costs for labour in sawing from the log into small sizes is approximately 3s. 6d. per 100 super, feet; the labour cost, of sawing up the same quantity from 12 inch x 10 inch imported sawn oregon is approximately 2s. The contention that Oregon is complementary to, and not competitive with, Australian hardwoods has been advanced on every occasion that the timber duties have been considered by Parliament. It is generally accepted by importing interests ; it is rejected by Australian hardwoodmillers. The argument is irrelevant at this stage, because Parliament has rejected it on every occasion on which it has been advanced. If accepted in respect of duties on oregon logs, it must be accepted in respect of duties on oregon sawn timber. Parliament has, on several occasions, insisted upon the imposition of higher duties on oregon than the Government of the day was prepared initially to recommend to it. Whilst high duties are imposed on sawn oregon, it would be illogical to have practically no duty on logs. The claim of . the importing interests that the present duty will prejudice their capital investment and Australian employment can only be proved or disproved by ascertaining the margin which exists between the cost of importing logs and sawn junk, and having these sawn into small sizes. The department has obtained the costs of all the major companies possessing log-cutting plants. It has' been ascertained that under the May schedule a margin of ls. 2d. per 100 super, feet existed in favour of the timber cut from the imported log as against oregon cut from sawn 12 inch x 10 inch Oregon. That is the case made out by the department. The honorable senator who moved this amendment has not been present on every occasion "that discussion has taken place in this chamber in regard to timber ; but an overwhelming majority of members in both Houses of the Parliament are in favour of keeping the duty on oregon at a high rate.

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