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Thursday, 2 December 1965

Mr BUCHANAN (McMillan) . - There are one or two thoughts that I would like to add to the discussion of this clause. I do not quite understand how the Attorney-General (Mr. Snedden) is going to square this up with what he has said on the resale price maintenance arrangements. We are now referring to monopolies. I presume that we are trying to bring these large concerns into line with something, but I do not know what it is. Even if they have a monopoly, if they are in a position of being dominant because they are able to supply a large section of the market, they have the same right as any small manufacturer to nominate the prices at which they sell their goods.

I note that clause 37 (1.) (c) refers to the imposition of prices that a manufacturer would be unable to impose but for his dominant position. How this is going to be decided, I do not know. Let us take a large scale manufacturing concern. It will have heavy capital expenditure. It will be the sort of industry in which a lot of money has been invested. Probably it will have larger plant than is absolutely necessary for the supply of the market, because naturally it will be looking forward to a growing market. But it must have some degree of certainty in marketing its goods. It will have to know what sort of return it is going to get on its investment. I cannot think of any large manufacturing concern which comes within this category and which does not have very keen competition, although it might not be in the particular named product that it happens to produce. A few minutes ago the Attorney-General referred to containers. The point was very well taken. There are glass containers, tin containers, and plastic containers. I hope that before long there will be aluminium containers. I hope that one of these days we will be able to get rid of the old glass milk bottle and have plastic containers, but this is a separate consideration. In this provision we will have to consider somebody who, because of his dominant position - perhaps in the glass industry - is imposing certain prices. This example is peculiar to Australia because we have really only one glass manufacturer. But this does not mean that that manufacturer can impose higher prices for glass containers because of his dominant position in glass; he has to think of the terrific competition that he gets from everybody else who is trying to persuade manufacturers to put their product into some other sort of container.

There is a deadly war on at the moment in baby foods. An attempt is being made to persuade people that they can get less baby food in a glass container than in a tin container, pay more for it and yet be better off. But this does not work out. This is the sort of interference with the conduct of business that I object to in this Bill. We are trying to impose on industry a great cost. If we have in the Bill clauses of this nature which will be so debatable, and if we are to have a tribunal going thoroughly into the whole question and examining it, the firms concerned will be obliged to defend themselves. At this juncture I just mention as an aside that I was told quite recently of an oil firm in the United States of America which employs a legal staff of 45 men, 38 of whom are engaged full time on restrictive practices conditions which are imposed on the company because of its size. This is an unfair addition to the costs that the company has to meet in any event. That may be all right in America. I do not argue about that. But some honorable members have argued that we should follow the British pattern because in Britain a price control is imposed on resale pricing. I am not impressed with this argument. We are legislating for Australia and our conditions are entirely different.

We are trying to attract business people to Australia. We are trying to build up secondary industry. Yet we are putting all these hurdles in front of people to make it more difficult for them to be able to give us the type of secondary industries that we need which will give us the export income that we require. Most businesses that we can attract to Australia will grow to the stage where they can enter the export field and can benefit Australia. But all that we are doing is imposing on them much additional cost.

Mr Turnbull - What about primary industries?

Mr BUCHANAN - I will have a bit to say about primary industries a little later. That question does not come into the matter we are now discussing. At the moment we are dealing with a very important part of the measure- In addition to what I have already put forward, most of the people to whom I have referred have patents or arrangements with overseas manufacturers. They have brought know-how to Australia. Unless they are given some protection in this sphere they really will not know where they stand. If the Tribunal is to have power to examine them and to impose conditions on them, as the honorable member for Moreton (Mr. Killen) has said, telling them at what price they have to sell their goods, I can see that it is going to be very difficult to attract new industries to Australia. If they are conscious of the fact that these conditions are to be imposed, they will not be attracted to Australia.

I can only assume that what the AttorneyGeneral is trying to do by this clause is to reduce the size of the interests coming to Australia and, in the jargon that has been used, to fragment the industry. This is entirely in opposition to our Tariff Board policy. The Tariff Board has spoken unfavorably of fragmentation. In its annual report for 1963-64, it had this to say -

The Board again found in the course of its inquiries that the Australian market for some products had been or was being fragmented among mora manufacturers than the market could economically sustain, and this fragmentation has tended to accentuate the difficulties arising from the scale of production. The Board is hesitant to recommend protective duties at a level which could sustain uneconomic fragmentation of the market. Significant cost savings could follow a decrease in the number of manufacturers in some industries.

That is the policy being followed to meet Australian conditions at the present time, yet the Government proposes introducing an entirely new policy by the imposition of this provision. I submit those few thoughts in the hope that the Attorney-General will realise the importance of keeping costs down. This is one item which could easily bear very heavily on the Australian cost structure.

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