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Wednesday, 26 March 1941

Senator DARCEY (Tasmania) . - Much has been said about the disabilities of Tasmania in regard to defence expenditure and war contracts. Two statements have been made which appear to indicate bribery and corruption in connexion with these contracts. One statement was that a certain contractor in Melbourne was approached and told by a financial firm that, if he would use it in order to finance a contract, it would see that he got the work, I have already submitted a scheme to this chamber which would obviate any possibility of that kind of thing happening.

The PRESIDENT (Senator the Hon. J. B. Hayes). - The honorable senator may discuss the allocation of war expenditure but not the means by which the money is to be provided.

Senator DARCEY - I have been referring to the allocation of war expenditure. I heard of a case in Sydney this week, which, in my opinion, shows poor business acumen on the part of the Government with regard to a certain contract. The firm to which I am referring had not been in the habit of making a particular article required by the Government, but it put in a tender which was accepted. There is an axiom of economics and production that all costs incurred by the manufacturer of an article should be recovered by means of the price charged for it. This firm had to make dies, jigs and various small machines to enable it to complete its first order of 100 articles, and the cost of the jigs, &c, was covered by the price paid. It was delighted later to get an order for a further 1,000 articles at the same price, although it should have immediately occurred to the Contracts Board that the price should have been much lower than on the first order.

Senator MCBRIDE - The honorable senator is entirely mistaken in assuming that all costs were covered by the price paid on the first 100 articles.

Senator DARCEY - Not at all. I obtained my information from the manufacturer concerned, who also received a further order for several thousands of these articles at the same price. If proper inquiries were made with regard to contracts of this kind, a considerable saving could be effected. I have shown that the danger of corruption in regard to these contracts could be eliminated by inserting a clause in all contracts providing that the successful tenderers should if necessary be financed through the Commonwealth Bank. This would bring hundreds of thousands, if not millions, of pounds to the Government in revenue. It should be the first concern of the Government to obtain all the revenue it can, in order that taxes might be reduced. When I asked a question on this matter in the Senate, I was informed that the Government would not consider my suggestion, which I regard as a most businesslike one.

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