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Thursday, 14 May 1936

Senator BROWN (Queensland) . - A few days ago, considerable discussion took place in this chamber on exchange. Some honorable senators declared that 25 per cent. exchange does not give 25 per cent. protection to manufacturers. Senator Johnston pointed out that according to the formula in the schedule, if the rate of exchange fell there would be a pro rata increase of duty. Carrying that contention to its logical conclusion I suppose that if the exchange returned to par, the duty on that particular item then referred to would be increased by 25 per cent. Further, it was contended that because the Tariff Board recommended a formula to cope with fluctuations of exchange, that was conclusive proof that the manufacturers were getting the benefit of the exchange at the present time. The Opposition denies that assertion and I believe that economists will agree that it is impossible for manufacturers to obtain the full benefit of the 25 per cent. exchange rate. In this connexion I have a document, presumably prepared by those who are interested in the glass industry, although no specific names are mentioned in it. It says -

In determining the present rates of duty there has been an assumption that "exchange" is equivalent to a protective duty of 20 per cent. This assumption is not in line with actual experience. " Bartering " by Germany, depreciated currency values of Japan, and special export allowancesby other countries frequently reduce the landed cost of goods, in Australian currency, below the level of what they were when exchange was at par. Drastic duty cuts, therefore, on the assumption that local industries will be protected by exchange, leave the industries open to a competition that is detrimental to the best interests of Australia. If the assumed protective valueof exchange were halved, and placed at 10 per cent. instead of 20 per cent. and the rates of duty increased accordingly, the position would not be so unsatisfactory. The subsequent increases in duty rates as * exchange moved towards parity could then be . 4 per cent. instead of . 8 per cent, for every £1 advance so that the same rate of duty would eventually be reached as under the 1935 proposals, but the Australian industries would be safeguarded in the process of returning to normal financial conditions.

Sitting suspended f rom 12.45 to2.15 p.m.

Senator BROWN - Evidently some manufacturers think that the protective value of exchange is only half what the Tariff Board assumes, and that the duties should be increased accordingly. I am pleased that the limelight of publicity has been directed to the profits of various companies. There is a tendency among Tory parties to favour the limitation of profits. I, in common with other members of the Labour party, am in complete agreement with those who say that the exploitation of the people should be restricted. This Government, by its bitter attacks upon the Australian cement and glass industries, shows that similar assaults may be expected upon other local industries ; but Ministers and their supporters would deeply regret it, if companies in which they have financial interests, were similarly treated. This committee is evidently unanimously of the opinion that excessive profits should not be allowed. Therefore, we should at least be fair, and should not discriminate between different industries. Even in the worst years of the depression, 15 per cent. dividends were paid, and millions were placed to reserves by wealthy banking corporations. But the Minister in charge of this bill did not get hot under the collar over that matter. Immediately Labour men advocate the nationalization of banking, a frontal attack is made upon them by the Government and its supporters.

The TEMPORARY CHAIRMAN.The honorable senator should confine his remarks to the item.

Senator BROWN - I am told that the profit, made by Australian Glass Manufacturers Company Limited out of glass products is 8 . per cent. Senator Badman has made out a good case for the limitation of profits, but he failed to differentiate between profits on glass and those derived from other investments. It is said by honorable senators opposite that the prices of goods have often been reduced as the result of the development of Australian industries, and I am sure that the prices of certain goods have been considerably lowered by the competition of the local manufacturers. In regard to one glass product, I could give an instance of a reduction of the local price by 35 per cent. as compared with the rate charged before the manufacture of the article in Australia was commenced. I am extremely pleased to learn that public opinion is tending towards the limitation of excessive profits.

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