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Thursday, 2 June 1921

Mr GREGORY (Dampier) .- The honorable member for Kooyong (Sir Robert Best) based his argument upon wrong assumptions.In the first place, he ascribed the development of the steel and iron industry in the United States of America to the assistance given by the Tariff. Those who know anything about the industryare aware that both the Broken Hill works and the foundry of Hoskins and Company were started without any fiscal protection.

Sir Robert Best - But they had prohibition throughout the war.

Mr GREGORY - The industry was started before the war, but during the war, and since, they were fed on such rich cake, in theform of high profits, they are now reluctant to come back to plain bread and butter.

Mr Riley - How much assistance did they get from the Commonwealth in the form of bounties?

Mr GREGORY - Then let us return to the bounty system, by which everybody in the community bears his share of the burden. The enormous development of the iron and steel industry in America is due, not to Protection, but to the marvellous resources of the country and the remarkable increase in population. I answer the honorable member for Kooyong by quoting the same author as he quoted. Taussig, writing in 1909 on the subject of Protection in relation to the steel industry, said -

The Tariff was felt to need overhauling because it was believed, rightly or wrongly, to promote combinations, or, at all events, to increase the profits in great protected industries. The huge fortunes acquired in some protected industries, the Carnegie fortune most conspicuously of all, brought feeling against monopolies andtrusts to hear against the . high duties. As has already been said, the trend towards combination is . essentially a consequence of increasing large-scale production. But it has been intensified in some casesby Protection, and the profits of some trusts have been greatly swelled. The two things - . trusts and Tariff - are much associated in the public mind, and 'hostility to the combinations has bred hostility to extreme Protection. Hence theRepublican party, in. its campaign platform of 1908. gave a . promise of revising the Tariff. .. . The doctrine was laid . down as follows: - "In all . protected legislation the true principle ofProtection is best maintained by the imposition of such duties aswillequal the difference between the cost of production at home and abroad, together witha reasonable profit to American industries." .... Yet Tittle acumen is needed to see that, carried out consistently, itmeans -simple . prohibition and complete stoppage of trade.

Anything in the world can be . -made within a country if the producer is assured of" cost of production, together with reasonable profits."

And he went on to quote Adam Smith as having said that grapes can be grown in a cold climate with the aid of a hot house.

Mr JAMES PAGE (MARANOA, QUEENSLAND) - The honorable member's quotation only confirms what the honorable member for Kooyong said.

Mr GREGORY - Does the honorable member for Maranoa (Mr. James Page) desire to build up in Australia fortunes like that of Carnegie? Taussig wrote, also -

To connect high wages with the effectiveness anil productiveness oflabour; to consider whether it is worth -while todirect labour into industry where it is not affected; to reflect what it really means to. " equalize " a high domestic cost of production with the lower foreign cost; in fact, to reason carefully and consistently on the Tariff question, all this, unfortunately, is almost unknown. The average employer and the average labourer alike accept the familiar catchwords and fallacies. Let us stimulate employment, make demand for labour, create the

C03t of production, .preserve American industries, and the American standard of living.

The latter portion of this quotation is about the only argument we have heard during the debate upon, this Tariff.

The honorable member for Corangamite (Mr. Gibson )r quoted some interesting, statistics in regard to- the present prices of imported goods. The Acting Deputy Leader of the Opposition (Mr. Charlton) made much of the argument that the low rate of exchange in France and Belgium, from which countries all our imported steel is coming at the present time, enabled those countries to sell to us at lower prices than the local' manufacturer ca'n quote. The Minister, too, fell' into the same error. As a matter of fact, the prices quoted by France and Belgium ever since the war have been in pounds sterling. The figures quoted by the honorable member for Corangamite to-night were correct, and showed the exact rate of exchange between here- and. London, and the prices that had to be paid by McKay and others because the Broken Hill Company could not supply them with raw material.

Mr GREENE (RICHMOND, NEW SOUTH WALES) - Does the honorable member suggest that because the quotation is- in pounds sterling for foreign trade the existing exchange position is affected?

Mr GREGORY - I say that the prices quoted by Belgium and France were in pounds sterling.

Mr GREENE (RICHMOND, NEW SOUTH WALES) - But that does not affect the exchange position.

Mr GREGORY - If a man buys 10 tons- of Belgian material at £10 per ton he pays £100. The price would probably be on the basis of the exchange, but the importer would have to pay the full pound's worth.. The whole point of the argument is that the present prices are quoted on a pound sterling basis.

Mr GREENE (RICHMOND, NEW SOUTH WALES) - If that is so, can the honorable member explain why the House of .Commons is now dealing with the- exchange position ?

Mr GREGORY - I cannot, and neither can the Minister.

Mr GREENE (RICHMOND, NEW SOUTH WALES) - I can; it is quite clear.

Mr GREGORY - We are not fully aware of the difficulty. Last night I told the Committee that I would not consider natural protection in connexion with iron and steel, but the figures which were supplied by the honorable member for Corangamite, the authenticity of which I can guarantee, show that the natural protection increases the prices of many articles to the extent of 50 per- cent, and 60 per cent. The- present price of pig iron is £5 7s. 3d. f.o.b. The freight is £3 per ton-, and' there is a further 8s. 3d. for insurance and exchange, making a total natural protection of £3 8s. 3d. upon material that costs. £5 7s. 3d.

Mr Watkins - Does it cost nothing to distribute the local product in Australia?

Mr GREGORY - The honorable member for Kalgoorlie (Mr. Foley), pointed out the position in which Western Australia would be placed, and how some honorable members are attempting, to destroy all. possibility of. establishing industries in that- State in order to give a further advantage to* the industries in their own States.. I have- not: advanced that argument,, but there is a good, deal in it, because if it is- to cost the people of Western Australia £3. 2s. 6d. to get goods from Newcastle to Fremantle, it will be cheaper to get the goods from London. The protection that is being given at the present time on these, articles amounts to about, 1,00 per cent.

Mr Considine - I thought it was a question of. developing the country and making it self-contained, and not of buying in the cheapest market.

Mr GREGORY - I, too, wish to see this industry developed in Australia.

Mr West - The- honorable member is going about it in a peculiar way.

Mr GREGORY - I desire to show that the statement made by Mr. Delprat before the Inter-State Commission, that his company did not require any protection or assistance from the Government, was correct. The company were prepared to establish the steel industry with n© greater assistance than was supplied by the natural resources of the country and the great facilities at their disposal.

Mr West - That is different from the statement which Mr. Delprat made to me.

Mr GREGORY - The evidence he gave before the Inter-State Commission was published, and his directors knew of it. Every shareholder in the company knew that enormous sums of reserved capital and borrowed money were being invested in this huge industry under the conditions stated by Mr. Delprat, namely, that the company wanted no protection or assistance from the Government in any shape or form.

Mr Considine - They knew what they were doing.

Mr GREGORY - I do not think they knew there would be in power a Government who would be so kind and considerate to them as are the present Government. The company's works made a magnificent start ; they jumped off a spring board, and they have had a wonderfully good time.

I have here an official Government statement showing the prices of rails, fishplates, fishbolts, and dogspikes. Australian rails delivered at Port Augusta prior to the war cost £8 16s. The price in 1918 - the maximum war-time quotation - was £19 5s.; but the price today, also for delivery at Port Augusta, is still as.high as £17 15s., an increase over the pre-war price of more than 100 per cent. Similar prices in respect of fishplates are: - £11 2s. delivered at Port Augusta prior to the war; £23 5s., the highest war-period price; and £21 15s. to-day. The cost of fishbolts before the war was £21 6s. ; the maximum war-time price was £66; the price to-day is £56 10s., nearly 300 per cent. above the prewar quotation. And still there is the cry for protection ! The pre-war quotation for dogspikes was £15 16s. ; the. maximum war-time price was £40; to-day, dogspikes cost £38 10s.

Mr Riley - The same argument might be applied to wheat, the price of which is three times what it used to be.

Mr GREGORY - We are not asking for the protection of wheat. We are dealing with an industry which controls nearly every manufacturing activity in this country. If a manufacturer were to indent from the Old Country, say, a 200-ton line of various steel products, there would probably be more than 100 items in that indent. The Broken Hill

Company will not accept such orders except under conditions providing that the firm shall be given six months or twelve months before it can put in the machinery to make many of the minor lines which are not frequently ordered in the Australian trade. As for other lines, the Australian firm will not undertake to supply them at all. I quote the following from Hardware and, Machinery of 4th April last: -

The Broken Hill Pty. Co. Ltd. have advised the trade that no new contracts will be accepted during the next six months, and that buyers wanting to effect forward contracts during that period should look to oversea sources. Further advice of the position of the company in regard to forward contracts is promised in May or June. C.i.f.e.- quotations for Belgian mild steel are freely made at from £13 5s. to £15 per ton, with sales at £15 10s. for immediate shipment.

That state of affairs was due to the strike. The Australian enterprise could not supply orders. I have heard recently that, in, connexion with the Morwell electrification scheme, in which there is required an enormous quantity of angle iron, the Broken Hill Proprietary Company could not quote for it. Indents have had to be, or must be, sent to the Old Country for these lines;

Has any evidence been advanced to show that the Broken Hill Proprietary Company need protection ? I hold in my hand a statement setting forth the amount of capital which has been put into that company, and indicating its net profits. For the past three years these have amounted to about £600,000 per annum. The Broken Hill Proprietary mine has been closed for a considerable time, so that all the indications are that the company has been doing remarkably well at Newcastle. It has had a very fair start, and I am glad of its prosperity, because one naturally wants to see flourishing industries in Australia. It may be argued that it does not matter much if wo add acouple of pounds a ton on items for example, such as steel bars; but I point out that they go into every blacksmith's shop in the land, and are used by almost every Australian manufacturer. Before a manufactured product reaches its ultimate purchaser there are various additional profits to be added; and it is theman on the land, who wants to fence a holding with wire netting to keep out vermin from his crop, who has to bear the brunt of it all. The cost of wire netting has gone up by about 300 per cent. All these burdens inevitably tell on the man who is struggling to build up the primary industries of Australia.

Unless there is a possibility of Australia's iron and steel interests being injured or, ruined, where is the call for high protection? If there were some actual menace, prompt action could be taken. There has been, a good deal of talk about dumping, but it should- not be forgotten that there has been a huge demand all over the world. There was enormous destruction during the war period, and iron and steel is wanted on every hand. There can be very little if any dumping in Australia for years to come, therefore. I invite those honorable members who have devoted themselves to this point to-day to listen to an important quotation which I am about to make, and which reveals how' easily the Commonwealth Parliament could overcome similar difficulties. Under Article V. of the Japanese Customs Tariff Law, there is the following provision -

When important industries in Japan are threatened toy the importation of unreasonably cheap articles, or the sale of imported articles at unreasonably low prices, the Government may, under the regulations provided by Imperial Ordinance, specify such articles, after submitting the matter to investigation by the Unreasonably Cheap Sale Investigation Committee, and impose upon them during a certain fixed period of time duties not exceeding in amount their proper prices, in addition to the duties provided in. the, annexed 'Tariff.

Then there is a following section specifying how that can be done. The whole scheme is . simple and effective.

If it were proposed to grant a bounty to the iron and steel industry again, the Minister would be under an obligation to furnish estimates informing the general public of what was involved. I have worked out certain figures showing what the rates of duties under the present schedule would mean. These estimates are taken on the basis of importations made in 1913. If we had to import the same quantity now as came in, free of duty, in that year, the imposition would amount to £68,000. In respect of ingots, blooms, and slabs - taking the same basis of comparison - the duty which we would have to pay to-day would be £27,700. On bars, bar-rods, angle-tee bars, and so on, the amount of duty which we would be called upon to furnish to-day, if we were to import the same quantity as in 1913, would be £391,000. On plate and sheet iron, upon which we paid £19,000 in. duty in 1913, and on which duties are suspended, we would have to pay £216,000 more. On those few items which I have indicated, the total amount which we would have to pay would be £704,000. If we add such lines as rails and tubes, and other items of iron and steel required in Australia - supposing that all these were manufactured here - the extra amount which the people would have to pay would be more than £2,500,000. '

Mr Jackson - But the Minister mentioned an actual saving of some £7,000,000.

Mr Richard Foster - And the Minister knows what he is talking about.

Mr GREGORY - I am not insinuating that the Minister does not. The honorable member for "Wakefield . (Mr. Richard Foster) realizes that these figures may reach his constituency, and he rather resents the publicity that I am giving them.

Mr Richard Foster - I can answer them all.

Mr GREGORY - I have already, quoted from the Hardware Journal showing that the Broken Hill Proprietary Company advised purchasers to import their requirements.

Mr Richard Foster - Then,, some one must be a robber or a liar.

Mr GREGORY - The company stated , that owing to a strike they could not supply local requirements. That statement was published, and the honorable member for Wakefield says that it is false.

Mr Richard Foster - I did not sayso.

Mr GREGORY - Certain purchasers were told to indent on their own account, and goods to the extent of 7,000 tons are coming into this country. If the request of the Broken Hill Proprietary Company is acceded to, very heavy duties will have to be paid. It appears that some one has been doing a good deal of " lobbying."

Mr Watkins - Is not this rather late?

Mr GREGORY - Those people who have followed the advice of the Broken Hill Proprietary Company will have to pay additional duties on the goods they have imported.

Mr Blakeley - Has not some one been " lobbying " on behalf of the American Steel Trust?

Mr GREGORY - I have not seen the representative of any such corporation. Has the honorable member?

Mr Blakeley - No. But, apparently, the honorable member for Dampier knows something about it.

Mr GREGORY - In the amendment I have suggested I have asked that the general Tariff rate shall stand, and that the British rate be reduced from 20s. to 15s. I cannot understand the honorable member for Kooyong (Sir Robet Best) opposing such a reasonable proposition.

Mr Blakeley - Is it wrong for me to suggest that some one has been " lobbying." on behalf of the American Steel Trust, when, apparently, it has been, done on behalf of the Broken Hill Proprietary Company?

Mr GREGORY - Representatives of that company did not interview certain individuals, but asked members of our party generally to meet them. They came in a straightforward way, as gentlemen, and asked us to support an extra duty,, to which, however, we did notconsent. It has been stated that they have promised that if these duties are imposed- they will increase wages, and possibly that may have been the means of influencing some honorable members.


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