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Thursday, 14 May 1936

Senator A J McLACHLAN (SOUTH AUSTRALIA) (Postmaster-General) . - The duty on these articles under the 1921-28 tariff was - ad valorem, British, 10 per cent.; intermediate, 20 per cent.; and general, 30 per cent. Their importation was practically prohibited in 1931-32. The duties were 7s. 6d., or ad valorem 10 per cent., until the Tariff Board inquired into this item. I have not separate information in relation to the importation of watches and chronometers, but in the peak year of importation the value of such articles obtained from Switzerland represented £60,000, out of a total of £85,000. In 1934-35, when the tide had turned somewhat, Australia, imported from Switzerland watches and chronometers to the value of £17,000, and from Canada similar articles to the value of £13,000, the total importations in that year being valued at £43,000. The United Kingdom does scarcely any business with Australia in wristlet watches and cases; almost all of the importations come from Switzerland. Out of importations valued at £21,166 in 1933-34, wristlet watches and cases from Switzerland represented £20.014. Wristlet watches and cases have been included in the proposals as a result of Tariff Board inquiries, and watches and cases of nickel plate, nickel alloy, chromium plate' and steel are covered by the board's report of the 14th August, 1933, and its addendum of the 14th November, 1934. The inquiry showed that the production in Australia of nickelplated cases is negligible, and probably non-existent. The cheapest case manufactured locally is made from nickel alloy, and plating in the cheaper lines is confined to chromium plating. The board's report covered the cheaper classes of wristlet watches and cases which are competitive with the nickel-plated article. These include chromium-plated cases and those of nickel alloy and steel. The report states that the imposition of the high specific duty of 7s. 6d. each had a disruptive effect on the local trade. The usual channels of supply were cut off by the operation of the duty, which amounted to a prohibition of the cheap Continental types of wristlet watches and watch-cases. Watch movements are not manufactured in Australia. The object of the high duty was to protect the local manufacturer of the cases into which the imported movements are inserted. Conflicting evidence was given at the inquiry as to the quality and adequacy of the supply of locallymanufactured cases. The board stated that it was apparent that the suddenly increased demand imposed on local manufacturers, as a result of the prohibitive duty, led to many delays in the filling of orders. The board is of the opinion that the local case manufacturers have exerted every effort, to meet the difficult situation imposed on them, and that, 'with reasonable co-operation of the wholesalers and the exercise of foresight in placing orders, no delay should be experienced in the future. Movements for insertion in nickel-plated, nickel alloy, chromiumplated or steel cases of Australian manufacture are admissible at rates of free British and free general, under item 404a.

The Australian industry consists solely of manufacturing the case and enclosing the imported movements therein. Evidence showed that the export price in Switzerland of the cheapest nickel-plated brass watch case of reasonably reliable quality was from ' 4d. to 6d. sterling, which price would include the charge for enclosing the movement. The cost in 1933 of encasing the movement in "Australia, plus the charge for any minor adjustment, was from 5d. to 6d. a watch, and the great bulk of Australian-made cases were sold at 2s. 6d. each, which included the cost of encasing. Prom the figures in its possession, the board concludes that reasonable and adequate protection would be afforded the efficient local manufacturer of nickle alloy and chromium-plated watches by reductions of the specific duties to ls. 9d. each, British; and 2s. 9d. each, general, for present exchange.

The alternative ad valorem duties of 10 per cent. British and 30 per cent. general, should, in the opinion of the board, he allowed to remain unaltered, and should provide ample protection in respect of the higher range of cheap cases.

Theboard considered that the reduction of duties should have no detrimental effect on employment ; on the contrary a reduction of local prices should promote increased employment. In the report of 1933, it was estimated that 80 employees were engaged in the manufacture of cases and the assembly of the complete watch. This figure also included those engaged in distribution. The industry has made surprising progress since that date, and the designs are most comprehensive in the range of plated or other cases. One factory which employed 30 hands in 1931 now employs 232 persons. This is in addition to the local industry at Bendigo, which also provides employment for many people.

The board's report of the 9th July, 1935, dealt with the necessity for the retention of the duty of 7s. 6d. each on the other wristlet watches and cases, which are principally those of precious metals. It stated that the protection given by the duties is largely offset by the duty of 15 per cent., general, which is payable on the Swiss movement. Although the trade at the previous inquiry keenly contested the continuance of the specific duty of 7s. 6d. each, in respect of the cheaper watches, at this inquiry the witnesses almost unanimously supported the maintenance of a duty of 7s. 6d. each, under the general tariff, in respect of watches and watch cases of precious metals. From all sections of the trade the need for stabilization was stressed, and, in view of all the circumstances, the board was of the opinion that the alternative specific duty of 7s. 6d. each, under the general tariff, should be retained.

The trade from the United Kingdom is small ; the manufacturer there is at a disadvantage, because the encasing of a Swiss movement in a Britishmade case might cause the complete watch to be ineligible for admission under the British preferential tariff. The duty is the same on the watch case as on the complete watch; therefore, in comparison with the Continental suppliers of watches to the Australian market, the United Kingdom case manufacturer suffers the disadvantage of the duty of 30 per cent, general, payable on the Continental movement imported for insertion in his case in Australia.

The board was of the opinion that the disadvantage of the United Kingdom manufacturer would be reasonably met by a reduction of the specific duty under the British preferential tariff to 3s. 6d. each. This explanation, I think, meets the point raised by the honorable senator.

Item agreed to.

Items 319 and 320 agreed to.

Division 12. - Hides, Leather and Rubber.

Items 324 and 325 agreed to.

Item 328 (Goloshes, rubber sand shoes and plimsolls).

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