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Wednesday, 3 June 1942

Senator FRASER (Western Australia) (Minister for External Territories) (6:27 AM) .- I move-

That the bill be now read a second time.

This bill is introduced for the purpose of amending the Rabbit Skins Export Charges Act 1940, which imposed a charge on the export of rabbit skins in order to provide funds for the administration of the marketing scheme which it was found necessary to introduce in June, 1940, in order to ensure supplies of skins to Australian hat manufacturers at fixed domestic prices for the production of military and civilian headwear.

Honorable senators may be interested to know how the scheme works. In collaboration with the Prices Commissioner the Australian Rabbit Skins Board, appointed under the National SecurityAct, prepared a list of prices at which the numerous grades of rabbit skins normally used in hat production would be made available to Australian hat manufacturers. At the commencement of each winter buying season - April to September - the board allocates to each hat manufacturer the quantities and grades of skins which he is permitted to purchase month by month under the scheme for his requirements. This phase of the scheme is very closely controlled in order to ensure that hat-makers do not secure an undue advantage. They buy their quotas of skins at open auction, and are paid compensation from the board's funds to the amount of the difference between the fixed domestic prices and the ruling auction market prices on the day of purchase. The export levy imposed under the Rabbit Skins Export Charges Act provides the funds from which the compensation is paid. This modified control of a difficult industry has. functioned smoothly and efficiently under a small organization, whose overhead expenses are light. For some time the board's only real embarrassment has been in respect of finance; and is solely due to the extraordinary heights to which rabbit skin prices have risen.

Last year, with heavy exports and with an increase of the fixed domestic prices of skins, the board managed to balance its budget with the export levy at the maximum rate of 9d. per lb. provided in the existing act. This year exports will be lighter, as supplies are not so plentiful. The main reasons for this are two consecutive years of very heavy trapping, seasonal conditions, and depletion of man-power in country districts. Lessened export quantities mean lower collections at the same rate of levy, and on present indications the board has little possibility of obtaining this year from an export levy of 9d. per lb. sufficient revenue to meet its liabilities for compensation payments. Normally, the extra cost might be passed on to the buyers of civilian hats, and I should not regard that as a great hardship in wartime. However, the demands for military hats are such that our factories are not now making civilian hats. Any additional cost of production of military hats would, of course, become a direct charge on Commonwealth funds. Any deficit in the board's accounts must be made up in one of the following ways : -

(1)   By an increase of the rate of export levy;

(2)   by increasing the cost of military hats at the Government's expense; or

(3)   by a direct grant from Commonwealth revenue.

In view of the great benefits which this industry has obtained under war conditions, it would be impossible at this stage for the Government to countenance any increase of military hat prices, whilst a direct contribution from Commonwealth revenue is undesirable. The alternative is an increase of the export levy. Any increase of that means a corresponding decrease of market values, and ordinarily I should be very diffident about sponsoring a bill which would have that effect. However, after an examination of all the facts, and with the knowledge that the alternative is to impose an additional burden on Commonwealth revenue, I am convinced that the best way to meet the problem is in the manner proposed in the bill.

The rabbit skins industry has enjoyed greater war-time benefits than any other industry. In the immediate pre-war year - 1938-39 - the value of the Australian rabbit skins catch was under £600,000, whilst last year it was over £4,000,000- an all-time record. The figures speak for themselves. A reasonable increase of the export levy will not affect trapping activities as prices are good.

It may interest honorable senators to know that the Government compulsorily acquired rabbit skins during the last war, and, that the highest price paid to suppliers for the best grades was 20d. per lb. Last week, in the Sydney market the price for similar grades was 123d. per lb., even though skins had not reached top winter quality and an export levy of 9d. per lb. operated. When the legislation was introduced in 1940, it was apparently thought that 9d. per lb. was a reasonable maximum, but the heights which skin prices have since reached have upset calculations. The maximum of 2s. 6d. per lb. now suggested is relatively high, but it is not probable that this rate will have to be reached. The actual rate is regulated by the market prices and the quantities available for export. No attempt is made to provide a surplus in the board's fund, the aim being to obtain only sufficient revenue from exports to meet compensation payments and cover the working expenses of the scheme.

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