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Thursday, 5 March 1942

Cost-plus System :machine Tools - Publicity Censorship : Resignation of Mr.Rorke - Instructions to the Australian Broadcasting Commission - Military Call-up: Rent Allowance - Air Raid Precautions in Australian Capital Territory - Lidcombe Aircraft Factory - Clyde Engineering Works - Munitions Production : Shop Committees - City Mutual Life Assurance Society Limited: Policy of W. R. Archibald.

Motion (by Mr. Curtin) proposed -

That the House do now adjourn.

Mr.MAKIN (Hindmarsh - Minister for Munitions) [10.3].- On the 25th February, the honorable member for Reid (Mr. Morgan) asked me a question regarding the cost-plus scheme which had been in operation in connexion with machine tool production. On that occasion I informed the honorable member that I would make the necessary investigation and supply a full statement. I now inform him that, following upon investigations made recently by the Minister assisting the Treasurer (Mr. Lazzarini) into profits said to have been made by certain munitions contractors or annexe proprietors as the result of costs allowed for the operation of machine tools, the property of the Commonwealth and leased by them, I have approved of changes in the costing system which should remove certain possibilities of exploitation of profits. Generally, the changes will eliminate the making of any profit whatsoever in respect of machine tools hired from the Commonwealth.

I would add that the investigationsby the Minister assisting the Treasurer and inquiries instituted by myself have revealed that there were in fact a certain number of munitions contractors who were obtaining undue profits. Very largely this arose through opportunities for charging man-hour rates calculated on a skilled labour basis, whereas in some cases wages paid were for semi-skilled or process workers operating the machines. The investigations are proceeding and, whilst the transactions of a number of firms have been examined, there are others requiring further investigation. Until the investigations have been completed, it will not be possible to answer questions as to the undue profits which may have been made and the amounts of refund which should be demanded.

The machine hour rates have now been fixed, as from the 1st January, as follows :

(1)   There will be an allowance of 5s. for each hour worked to be divided into two parts, 3s. representing wages, and 2s. overhead charges. If the wages actually paid be more or less than 3s. an hour, the rate will be adjusted up or down accordingly.

(2)   The amount to be allowed to the contractor for depreciation of the machine tools will be limited to the rental actually paid by him. It will therefore be impossible for him to make any profit out of the rental.

(3)   These modifications in the allowance and rental apply to all deliveries of machine and tool equipment made on and after the 1st January, 1942, irrespective of the date on which the order was placed. This will not penalize employers who have not abused the rate by the employment of unskilled or junior labour, but will enable the department to deal with contractors who have done so.

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