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Wednesday, 28 April 1965

Senator O'BYRNE (Tasmania) .- The Senate has before it Customs Tariff Bill (No. 1) 1965, Customs Tariff (Canada

Preference) Bill 1965 and Customs Tariff (New Zealand Preference) Bill 1965. I hope that it will be accepted that while we debate Customs Tariff Bill (No. 1), references may be made to the other Bills and that the three Bills may more or less be taken together. In this way we may cut down the time spent in the debate.

The Tariff Bills before us cover quite a wide variety of commodities, each of which has a bearing on the overall economy. For instance, in the First Schedule, the tariff changes arising from recommendations by the Tariff Board apply to the expanding ginger growing industry in Queensland. It is of interest to note that in 1954 in the Buderim area of Queensland about .103,000 lb. of ginger was grown. By the end of 1960 production had increased to about 654.000 lb. The latest information available shows that about 290 acres are under cultivation in the production of an estimated 2,295,000 lb. of ginger. In a period of 10 years the industry has increased the acreage under production from 17 acres to 290 acres, while production has increased from about 103,000 lb. to about 2,295,000 lb.

Adequate protection is being given under this measure to sponsor the industry. Those who are in favour of the protection put forward the case that despite great difficulties, the quantity produced in 1963 was sufficient to supply slightly more than half the total market. It was expected in 1964 to be able to supply 80 per cent, of the market. Complaints were made by a cordial maker using ginger flavouring ('hat the Australian product was not of sufficiently high quality. However, the Tariff Board found that those people who drank the particular brand of ginger ale of the manufacturer lodging the complaint could afford to pay the extra tariff duty if their palates required the better quality. We do not oppose this legislation which affords protection to a primary industry which seems to be well on its way to becoming an important part of the Queensland economy.

I turn now to discuss dental chairs and units. This industry tried to establish itself in Australia but because of the limited demand here it was found uneconomic to employ the more modern techniques of manufacture. The Australian Dental Association gave evidence at the inquiry that although it was in favour of protection of

Australian industries, the difference in costs did not warrant the maintenance of tariff protection for dental chairs and the protection that previously was granted is to be withdrawn.

Senator Ormonde - Where do the dental chairs come from now?

Senator O'BYRNE - From Japan. There was a small industry in Australia. The Australian Dental Association said that it supported the claims of the Australian dental manufacturers for tariff protection against (he importation of dental units and chairs of equivalent design. It said that this support was based on the assumption that (he Australian industry is at present, and will continue to be, conducted in an efficient and economic manner and is therefore worthy of protection. The Tariff Board, in ils report, stressed this point -

In the present circumstances of the industry, it seems that no acceptable increase in the level of tariff assistance would enable the Australian manufacturer to achieve an economic volume of production. Moreover, the Board considers that the industry has not taken full advantage of the tariff protection afforded to it for many years and, in general, has not demonstrated that its standards of production and managerial efficiency are such as to merit a continuance of tariff assistance.

We of the Opposition have no argument wilh that finding. The next item in the First Schedule relates to narrow woven fabrics of cotton, in relation to which increased duties of 324 per cent, are to be imposed, adjustable shoulder straps and hook and eye tape.

Senator Wright - What undertaking confines itself or any branch of its activity to adjustable shoulder straps on women's clothing? When we deal with such minutiae as that in the National Parliament, we are reaching the point of absurdity.

Senator Prowse - Women are wearing topless garments today and doing away with straps.

Senator O'BYRNE - I understand that is true. I am all in favour of these things being thoroughly examined. We must conduct a lot of detailed research in order to be able to understand the nature of tariff proposals. It is very important that we should know what is happening. One of the practices upon which we insist is that the various boards that have been established should report back to the Parliament.

The Second Schedule deals with emery stones, oilstones and whetstones. The Tariff Board has proposed that the present combined ordinary and primage duties should be replaced with new protective duties of 10 per cent. British preferential tariff and 221 per cent, most favoured nation tariff. In practice, the only change in incidence will be an increase of 5 per cent, ad valorem in the British preferential rate.

For a few moments I wish to address myself to the recommendation of the Board in regard to continuous filament man made fibre yarns. Over the years this industry has been the subject of quite a few reports by the Tariff Board. The Board's latest report, which is dated 8th October 1964, followed a report made on 5th February 1962 and a report by the Special Advisory Authority on 7th June 1963. In the first report that was made the Board found that the Australian processing industry had grown in recent years and that most of the growth had been in the nylon and terylene yarns. The Board went on to say that there was no evidence to suggest that there should by any increase in the duties on other types of processed yarn, but it considered that various duties should be imposed on particular types of yarn.

On 7th June 1963 the Special Advisory Authority recommended that a temporary duty of 25 per cent, ad valorem be imposed on processed continuous filament yarns of polyamides or polyesters or a combination of both. The case for increased duties was put forward mainly by people from Victoria where this industry is centralised. The various mills, or throwsters as they are called, that spin this man made fibre are B.L.B. Corporation of Australia, Johnson Bros. Pty. Ltd., Peerless Silk Mills Pty. Ltd., Qualitaire Mills and Viel & Co. Pty. Ltd. Representatives of those firms gave evidence before the inquiry. Their argument was that the Australian industry until October 1962 received considerable protection from import licensing and a little from the operation of patents on nylon and terylene yarns. They said that import licensing now has been removed from processed yarns and the patents in question, with one exception, have expired. Their further argument was that overseas manufacturers have advantages in the cost of labour, materials and overheads, and because of the larger scale of operations they are able to spread overhead costs more widely. Other arguments were put foward by the people who supported the increased duties.

From the time of the report in February 1962 the industry attained a rapid rate of growth. In 1959-60, there was a production of 3.8 million lb. with funds to the extent of £2.8 million. There were 784 persons employed in the industry. By December 1963 there were 730 persons employed, or 54 fewer. The funds employed amounting to £2.5 million, were about the same as previously, but production had reached 5 million lb. of man made fibre. The industry was becoming more efficient by producing a greater amount of the fibre although fewer persons were employed.

I come now to the question of costs. From the costs submitted by the representatives of the Australian industry, selling prices which were returning a reasonable rate of profit were calculated. These were compared with the landed duty free costs of imports for which invoices were available. It would appear that the Tariff Board had difficulty in getting really accurate and up to date information about this industry from the sources from which it usually gets information in inquiries of this kind.

The Board found that if the Australian producers had been selling at notional prices in competition with earlier imports, the local producers would have been at some apparent disability, but in comparison with the more recent imports, however, the lower cost producers would have had virtually no disability. That recommendation of the Tariff Board creates an element of doubt as to whether the findings were based on really factual information or whether there was a certain amount of supposition in them. The Board said -

It is apparent, however, that there has been pressure from imports in the not far distant past, and evidence by witnesses suggests that this could bc repeated in the future.

There again the Tariff Board has shown an element of doubt as to whether this industry has reached a level of stabilisation. The Board continued -

Substantial increases are at present taking place in overseas capacity. If these increases are not matched by increased overseas demand, there could be a downward pressure on overseas prices. However, it is not possible to predict the extent of any future price movements of processed yarns.

Similarly, no prediction 'cun be made In respect of raw yarns, the prices of which will affect the competitive position of processed yarns.

It. is. the opinion of the Opposition that, with these doubtful factors being expressed by the Tariff Board, no alteration should be made to the recommendations of the Special Advisory Authority at the present time. We believe that not only should the 25 per cent, tariff protection rate continue, but also there should be a more permanent protection for this industry to give it the measure of stability that it requires. The Board has not been able to give an indication that the industry has stabilised itself. The report states -

The Board considers that the processing of continuous filament yarns in Australia is a worthwhile industry which would warrant assistance if such were necessary and could be afforded at reasonable cost. The local producers are, however, in no immediate need of assistance and :he Board is unable to assess their possible future needs. It notes that provisions exist for urgent action which could be used to counter a sudden adverse change in the position of the Australian industry.

The debate that took place in another place highlighted some of the background factors relating to this industry. We protect the basic materials from which these man made fibres are processed. Of course, the processing' provides another industry for this country. But on the other hand, at the present time our balance of trade is causing quite a deal of concern and heartsearching in the Treasury Department and some of the main trading nations. At a time like this, when an industry is trying to justify its existence and produce commodities at a cheaper rate than we can import them from overseas, there is very strong argument for the retention of the protection to keep the industry stable and developing.

Dr. Cairnsstated that this was essentially a Victorian industry, that five of the manufacturers were in the metropolitan area of Melbourne, and that there was one in Bendigo and one in Shepparton. He pointed out that apart from the economics of the matter the fact that the industry was decentralised was a good argument for protection. The industry employs quite a big proportion of female labour. The menfolk go off to work in heavier industries, and in these days when many wives seek employment, an industry of this type is ideal in creating a balance that will encourage people to stay in decentralised areas.

Although the Tariff Board investigates these matters more on the economic level, it should be Government policy to inculcate in the minds of members of the Board the need to consider the economic consequences of drastic changes such as the removal of a 25 per cent, temporary duty. We must advocate decentralisation. Our major cities are sprawling and bursting at the seams. Outer urban areas and rural areas are just sleeping places for people who commute to work in the larger cities. Such industries as this can help in decentralisation.

The smaller undertakings are still in a state of instability. Man made fibres are big business in any language, whether it be Australian economic language or international trading language, and in big business the trend is towards monopoly control. As a matter of national policy, we should watch this matter very closely. Fibremakers Ltd. and Courtaulds (Aust.) Ltd. are the two large producers. By expanding their plants for the production of yarn they might place themselves in a position to take over smaller undertakings which are weakened by the taking away of the protection afforded by the Special Advisory Authority. This would lead to another branch of an international man made fibre monopoly. This aspect should not be overlooked. As we all know, business - national or international - is pretty ruthless. It has no respect for persons or organisations. I suppose that you could call these people the status seekers in the monetary field. With the accumulation of capital and wealth, they gain power and prestige. One of their most important motives is the profit motive, but the profits automatically come when they have a monopoly.

I believe that Victorian supporters of the Government should be especially alert to this situation. In their State is a substantial industry employing 750 people and £2i million in capital. That is not a great amount of money, but there will be a growing demand for these commodities in the increasing use of man made fibres. Victorians should be interesting themselves in the matter from the point of view of pro.tecing their own State. It is their duty to have a very good look at the situation before a decision is made. We shall give them an opportunity to eliminate Item 460, which relates to this particular matter. I do not know whether the Minister for Customs and Excise (Senator Anderson) will make a statement or whether this matter is to be referred back to the Special Advisory Authority in view of the change in circumstances since the report was made. I hope that Victorian representatives will give very close consideration to the effect of this proposal on quite a substantial industry which is based mainly in their State.

We take the view that all is not well with the recommendations of the Tariff Board in relation to this industry. We believe that there has been much difficulty in getting really accurate information, particularly from those persons who have been opposing preference for the Australian product. Amongst the organisations opposed to increased duties was the Australian British Trade Association, of 4 Bridge Street, Sydney, on behalf of the Silks and Man-made Fibre Users Association, of Surrey, England, John Heathcoat and Co. Ltd., of Devon, England, Mutual (Filaments Division) Ltd., of Lancashire, England, British Depa Crepes Ltd., of Lancashire, England, and Sewing Silks Ltd., of Middlesex, England. Others opposed the increased duties, but the main opposition was from the English interests which have a big potential in their own factories and are looking for an opportunity to enter the Australian market. From the research we have made we have found that when a demand exists for their products in other markets they supply those markets and do not worry about the Australian market. At times there are shortages of their products here. They are really capable of using Australia as a market of opportunity, and we should give very close attention to the importance of keeping in operation the factories that are presently established here. At the Committee stage I intend, on behalf of the Opposition, to move for the deletion of Item 460. We believe that there is justification for retention of the 25 per cent, temporary duty that has existed since the recommendation of the Special Advisory Authority. We hope that Government supporters will agree that this course is warranted and will support us at the Committee stage.

The Third Schedule provides for changes in duty based on the Tariff Board's report on 12 gauge shotguns and parts. They are to receive increased assistance by the introduction of duties of IS per cent, ad valorem British preferential tariff and 25 per cent, most favoured nation on guns having a value of £32 or less. This means that the Australian manufacturers of sporting shotguns will be protected to that extent. Following the completion of the international negotiations, the most favoured nation rate of duty on lightweight woollen piece goods is raised to 45 per cent, ad valorem to conform to the level of protection recommended by the Tariff Board in its last report on this industry. There is a reduction of 5 per cent, in the most favoured nation duty on motor scooters and non-electric typewriters as a result of these negotiations.

Other than the recommendation relating to processed nylon and terylene yarns, the Opposition has no objection to the proposed tariff alterations. I formally inform the Senate that during the Committee stage I will propose an amendment on behalf of the Opposition.

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