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Wednesday, 26 March 1941

Senator GIBSON (VICTORIA) - I do not think that New South Wales has any ground for complaint in this matter.

Senator ASHLEY - I shall endeavour to show that New South Wales has very good reason for complaint. Shortly after the outbreak of the war, the Government established the Supply and Development Department, under the direction of the then right honorable member for Corio (Mr. Casey). Mr. Casey's first action was to wire to the manufac turers in all of the States to meet him in Melbourne. Many manufacturers proceeded, at their own expense, to Melbourne, and there attended a meeting at which a Mr. Smith presided, and the present Minister for Labour and National Service (Mr. Holt) was also present. As chairman of the meeting, Mr. Smith requested the manufacturers in attendance to co-operate with the Government in the manufacture of clothing for the military forces, and urged them to abandon their civilian work,if necessary, in order that the needs of the Defence Department could be supplied. He made the following promise to those manufacturers -

Those who will come to the assistance of the department at this crucial moment would notbe forgotten by the Government when the Army was fully equipped and would receive preferential treatment for future orders as the preference they would be giving to the Government orders would militate against them in the civilian trade and therefore would have to receive the full protection of the Government by the supply of military orders to keep their plants going.

The position to-day is that many, who were not manufacturing clothing material at that time, have now come into the business and are being given orders in preference to many manufacturers who, in response to the Government's appeal and promise of protection, turned over their factories to the manufacture of military clothing. I also draw attention to the following statement which was made by the Acting Prime Minister (Mr. Fadden) in reply to criticism by me of the Government in regard to the allocation of military clothing contracts -

So long as 1 remain TreasurerI will not agree to the granting of defence contracts on a basis merely of distributing them widely among the States.

I made no suggestion that the Government's defence expenditure should be distributed among the States on a £1 for £1 basis. I said, and I still contend, that, having regard to sound business principles, and recognizing the claims of particular States which enjoy certain advantages over others, in addition to the severity of unemployment in different States, it is the duty of the Government to allocate its defence expenditure between the States as fairly as possible. The Acting Prime Minister went on to say -

In many instances firms in other States cannot compete in price with the Victorian firms to which contracts have gone.

I refute that statement. Mr. Fadden said -

I will not be a party to allocation of contracts, possibly at a price of 60 to 80 per cent, higher than we can get the work done for, simply to see that the work goes to a certain State.

Towards the end of last year several small contracts were let by the department, the following being typical: Life jackets, S. Plotkin, 68 Wentworth-avenue, Sydney, contract price £853 ; McWhirters, Brisbane, £141 ; cooks caps and aprons, Pioneer Softgoods Industry Proprietary Limited, New South Wales,' £125. I shall not weary the 'Senate with the whole list. We were told that employment of union labour at award rates and award conditions was to be a condition of all contracts. Yet, I have been told by the secretary of the union that Pioneer Softgoods Industry Proprietary Limited and Pelaco Limited, Victoria, employ non-union labour and that Murdoch's Manufactories Proprietary Limited, New South Wales, employs at least, in the manufacture of shirts, girls who are non-unionists. The latest figures obtainable show that in the last few months Victorian firms have received service clothing contracts to the value of £87,765 as against £52,425 worth of contracts given to firms operating in New South Wales. The amounts allocated to other States are too insignificant to mention. As I have already said the Acting Prime Minister claimed that to distribute contracts more widely among the States would result in a loading of costs by from 60 per cent, to 80 per cent. In rebuttal I present the following official tabulations showing the contracting firms, locality, quantities, and accepted prices. The tenders were invited in all States late in . 1940-


It will be seen that the price quoted by the Sydney firm was lower than the price of any of the Melbourne firms which shared in those contracts. Thus the excuse offered by the Acting Prime Minister is refuted in that particular instance. The next table shows the following : -


That table also proves conclusively that the argument adduced by the Acting Prime Minister is entirely misleading.

Senator Gibson - Were not the lowest tenders accepted?

Senator ASHLEY - Those are the accepted prices. The other tables are as follows : -


Another matter to which I wish to direct attention relates to the manufacture of jackets for theRoyal Australian Air Force. Two contracts were let to two manufacturers in Sydney - the Chief Clothing Company and Esquire Proprietary Limited. The price tendered by one company was £17 17s. a dozen, whilst that tendered by the other was £19 3s. 6d. a dozen. Those companies were supposed to be manufacturing articles of the same quality, yet there was that great disparity in price. Obviously, either the company which quoted £17 17s. was making an inferior article, or the other concern which quoted £19 3s. 6d. was being paid an excessive price for the work. It is apparent that something is wrong. It is also rather significant that the firm which is doing the work at the higher price has, as one of its directors, a brother-in-law of a Cabinet Minister. I do not suggest that great significance should be attached to that fact, but it is something which causes immediate suspicion. Not only is that company receiving preference in the matter of contracts, but it is also securing a higher price foi" the goods produced. I should like the Minister for Supply and Development to explain the disparity in the contract prices for identical goods.

Complaints have been made concerning the unsatisfactory position in Victoria. I. have been reliably informed, and my information has been supported by reports in the press, that unless a manufacturer is financed by a certain person in Victoria who has been financing some clothing manufacturers, orders cannot be obtained. Perhaps that is one reason why the New South Wales manufacturers are being discriminated against. The New South Wales manufacturers are able to finance their own contracts, and as a result they have not received a fair share of the defence orders. I have received from Victoria a statement in which it is claimed that at least 50 per cent, of all clothing contracts for uniforms, greatcoats, shorts and shirts, have been placed with foreign-controlled firms presided over by a Mr. Rabinor. No doubt honorable senators have heard of that gentleman, and I understand that the department has made some inquiries concerning his activities. Perhaps the Minister, in his reply, will let the Senate know the result of the inquiries in that regard. Some firms which have obtained contracts were on the verge of bankruptcy when the war started. Mr. Miller, of Miller and Clark, of Flinders-street, Melbourne, a firm controlled by Mr. Rabinor, admitted that he was paying £100 a week to Mr. Rabinor. being his share as a sleeping partner in the business. The statement also discloses that although a greatcoat can be made for 29s., and return a profit to the manufacturer, the price charged to the Govern ment recently for greatcoats was 39s. 6d. each, representing a profit of 40 per cent. The Government supplies all materials and the firms do not even have to seek the business. There are no losses; only huge profits. An air force greatcoat costs the Government at least 47s. 6d., but the cost of manufacture is actually less than that of a military greatcoat. Air force shorts are sold to the Government at 6s. lid. a pair, yet only three-quarters of a yard of single width cloth, costing only ls. 9d. a yard, is required. The ordinary Australian Imperial Force jacket can be made profitably for 19s., but the Government is paying as high as 22s. 6d. The attention of the press has been directed to the activities of Mr. Rabinor. Last week, the following paragraph appeared in Smiths Weekly: -

Last week Smiths Weekly was asked by a clothing manufacturer, who has an oldestablished business of high standing in the trade, to visit his office in Flinders-street, Melbourne.

This man had a strange story to tell. " I would ask you please not to mention my name in anything you write ", he said, at the outset, " for I know that, if it came to the cars of certain people that I had appealed to Smiths I would be cut out of any further defence clothing contracts I might seek.

At the moment, I have not got any such contracts, and I am puzzled about what is happening. " For a considerable time, I was a successful tenderer. Here are my vouchers to prove that what I say is correct. In all, I have made up approximately 15,000 garments for the military. " I tell you this so that you may be sure that I know my business.

In May of last year, I tendered for 500 air force jackets, drab khaki drill. Contracts Board increased my order to 2500 jackets at £13 13s. a dozen. "Just about that time I also received an order for 4000 khaki shorts at 81s. 2d. a dozen. " There were no complaints concerning my work on those orders. In fact, although I have made up, as I told you, at least 15,000 military garments, I have not had one rejected. " Last November, a young man called to see me, produced a notebook, and was able to tell me just how much I had to do before finishing the contract I was on. " I thought he was from the Contracts Board - an inspector, maybe - so I said ' Yes, that's right '. " Then he asked, ' You want further contracts ' ? "I told him I did. He said, 'Well, you let us finance you, there will be more contracts. If you don't your tenders will be turned down '. " I said to him, ' What does this mean ? Are you from the Contracts Board'? "'No', he replied, 'I am not. I represent private financiers, and we have plenty of money '. " I told him I did not want to have anything to do with him . . . that I could finance my own contracts. He went away, and I heard nothing further. " It is significant that my subsequent tenders for air force clothing have been turned down, though I know that the air force authorities were pleased with my work. As a matter of fact, when I told them what had happened they were most surprised. There is no nonsense about that, for the other day I was asked by them if I would supply them with some model garments for use as patterns for contractors in other States ".

That statement shows that there is dissatisfaction in Victoria concerning the carrying out of orders for army requirements. I do not claim that all the allegations made against the Department of Supply and Development are true, but I maintain that the figures submitted by mc concerning the contracts are accurate because they were obtained from the department. It is not proper for the Acting Prime. Minister (Mr. Fadden) to make misstatements deliberately. I have proved that certain articles of clothing are being made at lower cost in New South Wales than in Victoria. Surely the Minister of Supply and Development will regard this matter as one of great public importance, and I contend that it is so important that it demands investigation by a select committee of the Senate. Our forces at home and abroad should he supplied with articles of the best material; and the taxpayers should not be called upon to pay more than a reasonable price. As the Department of Supply and Development has been established for a long period, its officers should now be qualified to check the cost of all articles required. Therefore the officers should have sufficient authority to tell contractors that, in the event of their not manufacturing articles at such and such a price, they will not be given a contract. The graft involved in the subject of my speech should not be permitted. It is a public scandal, demanding the most searching investigation. Every avenue where there is suspicion of graft or overcharging on army contracts should be fully investigated. I appeal to the Government to have regard to the best interests of Australia when allocating defence expenditure. If it is more economical to place an order in New South Wales or Queensland or Tasmania, then it is the duty of the Government ito place the order there.

The PRESIDENT - The honorable senator's time has expired.

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