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Wednesday, 4 May 1921

Senator PRATTEN (NEW SOUTH WALES) . - No ono will regret a discussion on the wool question. My only complaint is that, through the Leader of the Senate (Senator E. D. Millen) the Government have this afternoon told us what they propose to do, before honorable senators have had an opportunity of expressing their opinions, and having them considered by the Government. I do not approach this matter in a panicky frame of mind. Things are bad all over the world, and the wool position in Australia is in this respect no worse than the metal position, or the position with respect to the world's commodities which has been reached everywhere as a result of the deflation of prices which has so rapidly taken place.

Senator Fairbairn - The difficulty is that we cannot shut down upon it. The evil grows in the night.

Senator PRATTEN (NEW SOUTH WALES) - No one is more sympathetic with the troubles of the woolgrower and with tho troubles generally of the man on the land than I am, but I regret that tho Government bas made the decision it has made, because in my opinion there was a better alternative. As I understand it, the decision of the Government is subject to its ratification by Parliament, that a prohibition under the Customs Act shall be enforced by regulation, so that no wool can or shall be exported from Australia, or sold to any part of the world, at a lower price than a flat rate of Sd. per lb. In the first place, I most strongly object to the Customs Act being used in this way. I do not think it was ever intended that it should be so used.

Senator de Largie - Oh, yes, it was.

Senator Fairbairn - By direction of Parliament.

Senator de Largie - What about the "new Protection" proposals?

Senator PRATTEN (NEW SOUTH WALES) - The Customs Act gives power to the Minister for Customs to prohibit the export of any commodity that is harmful to Australia. I do not think that by any stretch of the imagination it can be argued that the export of wool is harmful to Australia.

Senator Fairbairn - At too low a price it would be.

Senator Gardiner - The honorable senator must concede that the people who have wool to sell are Australians.

Senator PRATTEN (NEW SOUTH WALES) - I point out that this introduces an extremely dangerous feature into our legislation. Most of us are sick and tired of goverment by regulation. We are tired, also, of the various experiments we have had in the direction of. State Socialism, and yet we are now asked, as the decision of the Government practically applies to the whole of the wool industry, to place it again under bureaucratic administration, and to go back to the times of war when so many sections of the community who dealt in wool, and made their living out of the pastoral industry were so dissatisfied. That is what is proposed by the Government.

Let us examine what the real Bawra position is. About twelve months ago, when it was seen that the wool control must end on the 30th of last June, and that there was a carry-over on that date of wool jointly owned by the British Government and the Australian woolgrowers to the extent of about 2,000,000 bales the Prime Minister (Mr. Hughes) suggested to the Central Wool Committee that this carry-over should be locked up for an indefinite period, and the new clip allowed to go into pre-war channels of trade, and be sold under world's conditions without restriction.

Senator Fairbairn - We could not do that. The British Government would not allow it.

Senator PRATTEN (NEW SOUTH WALES) - That was' the suggestion made by the Prime Minister twelve months ago in regard to the accumulation of wool.

Senator GUTHRIE (VICTORIA) - That was with respect to Australia's share ; but the British Government owned 850,000 bales, and they should have some say in the matter.

Senator PRATTEN (NEW SOUTH WALES) - I am perfectly well aware that the British Government had a share in the accumulated wool. * I wish to make my points one after another. I have stated the suggestion made by the Prime Minister, and i*> was turned down by the Central Wool Committee, now the directors of Bawra.

Senator GUTHRIE (VICTORIA) - No. Only two out of nine of the directors of Bawra were, members of the Central Wool Committee.

Senator PRATTEN (NEW SOUTH WALES) - The chairman of the Central Wool Committee was Sir John Higgins, and the same gentleman is chairman of Bawra. The Prime Minister's suggestion was turned down by the wool advisers of the pastoralists of Australia; but if it had been adopted by those wool quidnuncs there would have been 2,000.000 bales of wool in London and Australia that would practically have cost us nothing, because they had been paid for out of the surplus profits gathered from wool that had been sold.

Senator GUTHRIE (VICTORIA) - The honorable senator will excuse me. Only half of the 2,000,000 bales belongs to Australia, the other half belongs to the Imperial Government.

Senator PRATTEN (NEW SOUTH WALES) - I am quite aware that the 2,000,000 bales were jointly owned by the Australian wool-growers and the British Government. I have already said so. As .they were jointly owned, 1,000,000 bales only would belong to Australian wool-growers, and, roughly, 1,000,000 bales would belong to the British Government. The suggestion made by the Prime Minister was turned down, and, in conjunction with the representatives of the Munitions Department, through the Director-General of Munitions, Sir Arthur Goldfinch, and the Wool Committee here, the Bawra arrangement came into being. It provided for salaries, to Sir John Higgins and other directors appointed to control the marketing of our wool, amounting to the equivalent of £35,000 a year. The scheme that was fixed up by Sir John Higgins and his associates was to so control the wool industry of Australia as to limit the offerings of the new clip in order to sell pro raid quantities of Bawra- wool. That has been mentioned by Senator Guthrie. I have pointed out that the scheme suggested by the Prime Minister was turned down, and that representatives of the pastoralists and the Central Wool Committee created the Bawra scheme, and a week or two ago Sir John Higgins was reported throughout the press of Australia as having discovered that the Bawra scheme to stabilize the market was in peril of utter collapse. That has been admitted by Senator E. D. Millen in the statement he made_ to-day, and it has been confirmed by Senators Guthrie' and Fairbairn.

The position to-day is that the Bawra scheme, as created by the wool advisors of the pastoralists, has broken down, and is in a state of utter collapse, without any responsibility on the part of the Government or Parliament of Australia.

Senator Fairbairn - Does the honorable senator not desire to help it ?

Senator PRATTEN (NEW SOUTH WALES) - I am coming to that point. They now come to the Government and Parliament for help. That, I think, is the position.

Senator GUTHRIE (VICTORIA) - That has to be acknowledged.

Senator PRATTEN (NEW SOUTH WALES) - I am glad to ' have the admission from Senator Guthrie that that position has to be acknowledged. I say that this Parliament has a right to give what help it can, not to the wool industry as the only industry in Australia, but as the most important of the industries of Australia.

Senator Fairbairn__The Government own half of it.

Senator De Largie - Just as we shall have to come to the help of the manufacturers when the Tariff is before us.

Senator PRATTEN (NEW SOUTH WALES) - It has to be acknowledged that the present position, and all that has led to if,- must be the responsibility only of Sir John Higgins and his associates. I want to make that, quite clear before passing on to what I think to be the remedy. Sir John Higgins seeks to throw the responsibility on to the banks, but Senator Fairbairn has adequately replied to that. The Prime Minister's original suggestionwas to hold Bawra wool indefinitely, and sell it on the Continent of Europe for internal consumption on long terms, and then set the whole of the rest of the world's wool trade absolutely free. I submit that, if that scheme had been accepted, the present very acute position could not have arisen. The acquiescence of the British Government, I admit, would have been necessary for the scheme.

Senator Fairbairn - It could not have been obtained.

Senator PRATTEN (NEW SOUTH WALES) - Had the Australian interests been in favour of such a course, the accomplishment of that scheme would not have been difficult if it had not met with bitter opposition from this end.

Let us see what has been going on in connexion with the administration of Bawra, which has led to the tragic state of affairs with which the Parliament is now faced. Senator Fairbairn stated that the Victorian Wool-buyers Association consisted of men of tremendous ability. Senator Guthrie, remarked that the association comprised men who had shown their patriotism throughout the war, and had not exhibited selfish interests, but had tried to do what was best for the wool industry in Australia.

Senator GUTHRIE (VICTORIA) - I have nothing but good to say of them.

Senator PRATTEN (NEW SOUTH WALES) - I am glad to have that admission, as I will now read what this combination of excellent gentlemen associated with the wool trade in Victoria have said in connexion with the operations of Bawra during the past six months.

Senator GUTHRIE (VICTORIA) - They may be very excellent men, but their sympathies and those of the growers are not identical. They want cheap wool.

Senator PRATTEN (NEW SOUTH WALES) - I have endeavoured to make plain the opinions of Senators Fairbairn. and Guthrie in regard to this organization. I will proceed now to read what these gentlemen say of Bawra, and will criticise them afterwards : 1- - In July last, when local manufacturers were prepared to purchase large quantities of surplus wool, prices were fixed so high that only small quantities were purchased.

2.   - Wool was passed in, at the London sales in August last year, at 18d. to 20d., and similar wool was sold in Melbourne last month at 31/2d. to 5d., and as a result of advice given by those connected with the scheme now proposed.

I repeat that this association has made a specific statement that wool was passed in by Bawra, or its representatives-

Senator Fairbairn - Not by Bawra at all.

Senator PRATTEN (NEW SOUTH WALES) - Well, by the Central Wool Committee, or those controlling the wool interest in Australia. It was passed in at 18d. to 20d., while similar wool was sold in Melbourne last month at 3£d. to 5d.

Senator GUTHRIE (VICTORIA) - Probably the owner instructed his broker to pass the holdings in at the price. Many owners did give such instructions, and they are sorry for it now. I had owners instruct me to pass in at 40d.

Senator PRATTEN (NEW SOUTH WALES) - The association proceeds : -

3.   Wool was offered for sale in Adelaide in October last and withdrawn when prices highly remunerative to the growers were offering; was sold subsequently at a reduction in some . cases of 50 per cent.

Senator GUTHRIE (VICTORIA) - The growers were greedy. Some of them made me withdraw lots at the figure I have just indicated.

Senator THOMAS (NEW SOUTH WALES) - And they fell in.

Senator GUTHRIE (VICTORIA) - Yes; I have no sympathy for them. But the honorable senator is accusing Bawra of having done this, which is not correct.

Senator PRATTEN (NEW SOUTH WALES) - The Victorian Wool-Buyers Association further asserted : -

4.   During the same month large buying orders were in Australia, but, owing to the small quantity offering, and excessive reserves, the orders were not executed, and the buyers bought elsewhere.

5.   During January of this year, buyers representing oversea manufacturers received urgent orders for large quantities of wool, but, as the advertised sales for January were cancelled, the orders were withdrawn and diverted to other countries.

Senator GUTHRIE (VICTORIA) - That was a grave mistake on the part of the National Wool Council. That body fixed no sales for January.

Senator PRATTEN (NEW SOUTH WALES) - That was Bawra.

Senator GUTHRIE (VICTORIA) - It had nothing whatever to do with Bawra.

Senator PRATTEN (NEW SOUTH WALES) - At any rate, someone connected with the advising of the growers on wool matters is making grave errors of judgment. This association further says -

Owing to the anticipated American Tariff, specially large orders at prices ranging from 20d. to 40d. were in the hands of Victorian buyers during that month. The same wool today would be worth approximately l0d. to 20d.

This association, which has been so lauded by Senator Guthrie and Senator Fairbairn, proceeds further to say in a circular letter -

The buyers do not wish to take up an antagonistic position to any proposed scheme, but they feel that their views should at least be given due weight. They fully agree that, as the quantity of Bawra wool is, rightly or wrongly, so huge, its disposal must be a matter of special arrangement As the individual growers have been paid the full appraised value of this wool, and, in addition, have received small bonuses, the buyers think that, instead of forcing the sale of Bawra wool, together with the present clip, it should be held over fora definite period of, say, two years, to enable the world's markets and woollen manufacturers to settle down, when every bale could be absorbed.

That practically gets the Victorian Wool Buyers Association - these very estimable gentlemen - into line with the Prime Minister's proposal, made twelve months ago.

Senator Duncan - They said then that he knew nothing about it.

Senator PRATTEN (NEW SOUTH WALES) - They did ; but it seems to me that he knew more about it than all the wool quidnuncs put together.

Senator THOMAS (NEW SOUTH WALES) - Was Sir John Higgins one of these?

Senator PRATTEN (NEW SOUTH WALES) - Yes. This association goes on, again -

We regret that Sir John Higgins sees fit to use his control over the Bawra wool as a " pistol " to the heads of growers and others interested in wool to force them to adopt his " scheme." It is assumed from his remarks that if power is not given to fix reserves, he threatens to throw Bawra wool upon the market, thereby causing a debacle. Probably he forgets that the position he now holds is one of trust, and he should not use it to menace any interested section of the trade.

The wool position is one that deserves our most serious and most sympathetic consideration. Statistics seem to show that Australia and. New Zealand have only about 20 per cent, of the world's sheep.

Senator GUTHRIE (VICTORIA) - But 25 per cent, of the wool, and it is wool we are dealing with, not sheep.

Senator PRATTEN (NEW SOUTH WALES) - I accept that statement. I believe, with my honorable friend, who touched upon the point, that the wool to-day is growing twice as fast as it is being sold, and probably faster than it is being used. I am inclined to think that this wool matter cannot be finalized until the Prime Minister gets to London.

Senator GUTHRIE (VICTORIA) - We do not want that. Parliament should deal with it.

Senator PRATTEN (NEW SOUTH WALES) - As far as I can estimate, the proposal of the Government is unsound, is temporary, and cannot permanently stabilize the position. The only proposal that can do that, in view of the statistics, is to take the Bawra wool right off the market for a. specific time. Senator Guthrie stated that within the next six or nine months there will be 6,000,000 balesincluding Bawra wool - of Australian and New Zealand wool off the shears. As far as I can ascertain, the world's normal annual consumption of Australian and New Zealand wool is. approximately 2,500,000 bales. Consequently, 6,000,000 bales- would be considerably over two years' supply, and on to the third year's normal supply, of the world's requirements of this wool. But, in addition, -we have the under-consumption that has been created by European conditions; and I do not think it can be safely estimated that more than 2,000,000 bales of Australian and New Zealand wool will be normally consumed by the world's customers for that commodity during the next twelve months. So, if we attempt to sell Bawra wool bale for bale, or two for one, or One for three-

Senator GUTHRIE (VICTORIA) - But the suggestion is two of Bawra and four of new wool; which makes all the difference.

Senator PRATTEN (NEW SOUTH WALES) - If the proposal is to sell Bawra wool simultaneously, with the new clips which have come in and will come in, and if. six months ahead, the world will have a three-years' supply - under present conditions - of Australian and New Zealand wool off the shears, then where are we? When is the position going to be righted? I submit that nothing but a catascropne, both in Australia and New Zealand, which would not permit the export of any wool at all for a year, would right the market under those conditions. If we have 6,000,000 bales of wool - a three-years' supply, including the Bawra wool- surely the sensible thing would be to keep the Bawra holdings off the market, so that matters may have a chance to settle down to normal.

Senator GUTHRIE (VICTORIA) - With such a weight of wool hanging over their heads, are the buyers going to operate with any confidence ?

Senator PRATTEN (NEW SOUTH WALES) - In July or August the Australian wool-growers who are shareholders in the Bawra wool are due for the payment of about £5,000,000 as a further dividend. Whether that is on account of Bawra, or the new clip, I do not know.

Senator Fairbairn - The Bawra wool.

Senator PRATTEN (NEW SOUTH WALES) - That makes my argument the -clearer. The wool-growers of* Australia are due for a dividend of £5,000,000, either in July or August, from Bawra wool. I believe that that 900,000 bales of wool-

Senator Foster - Does that £5,000,000 represent excess profits over and above the 15½d.?


Senator PRATTEN (NEW SOUTH WALES) - I believe it is so, and I thank my honorable friend for his suggestion, because it takes me one step further in my argument. The £5,000,000 which the Australian woolgrowers are due to receive in July or August represents excess profits over and above the flat rate of 15½d. I understand that 900,000 bales of the Bawra wool belong to the British Government, and the other $00,000 to the Australian wool-growers. Why cannot the 900,000 bales held by the British Government be bought by the Australian wool-growers? It could probably be bought for £4,000,000 or £5,000,000- the amount of the dividend - and then, if necessary--

Senator GUTHRIE (VICTORIA) - They will never get it at anything like that price.

Senator PRATTEN (NEW SOUTH WALES) - I think that, if this problem were tackled in the right way, they would get it at a much lower price than some honorable senators think. If they could buy that proportion of Bawra wool, they could do anything they liked with it.

Senator GUTHRIE (VICTORIA) - How do you know the British Government would sell at that price?.

Senator PRATTEN (NEW SOUTH WALES) - I do not know; but we are asked by the Government to make some concrete suggestions, and this is the first suggestion I have to make.

If the Australian wool-growers could ge$ this 900,000 bale3 for the £5,000,000 surplus profits coming to them, they could, as I have said, do anything they liked with the wool. They could sell it, or hold it off the market.

Senator Vardon - The British Government would have to agree.

Senator PRATTEN (NEW SOUTH WALES) - They would; but I do not think Great Britain would do anything to throttle the Australian wool industry. Great Britain has already done very well out of the wool deal. She got all the wool she wanted for military requirements and for. her Allies at a flat rate of 15-Jd., and she will also get £5,000,090, I understand, as so far her share of the excess profits on this Bawra wool. Altogether out of the wool she would get from £15,000,000 to £17,000,000 on a turnover of about £150,000,000 if her interests were sold at my figure now.

Senator Foster - Will the Australian wool-growers also get £10,000,000 to £15,000,000 over and above the flat rate?

Senator PRATTEN (NEW SOUTH WALES) - Their profit will be the same as the profit of the British Government.

Senator Fairbairn - But it has been distributed. ,

Senator PRATTEN (NEW SOUTH WALES) - No. The coming surplus profit which the Australian woolgrowers are to get out of this Bawra wool should enable them to do as I suggest.

The 'second suggestion is that the Government should come to the rescue, and do practically the same thing by buying the British Government's share of the Bawra wool, taking control of it, and locking it up.

Senator E D MILLEN (NEW SOUTH WALES) - That is not the Government's proposal.

Senator PRATTEN (NEW SOUTH WALES) - If the Prime Minister's suggestion had been adopted twelve months ago, the market would have been sustained, and probably we would not have experienced a drop in values to the extent of from £25,000,000 to £50,000,000. The second, or either of the propositions, presumes that the Bawra wool will be locked up for a certain period, and that sales will be made on long terms to European countries for internal consumption.

Senator GUTHRIE (VICTORIA) - At what price?

Senator PRATTEN (NEW SOUTH WALES) - At a price to be determined when we know what the position really is. At present nobody but Bawra directors are in a- position to indicate the pounds, shillings and pence aspect of the problem.

I believe that the proposal submitted by the Government is unsound. It certainly follows the line of least resistance, but it will not and cannot solve the present difficulty so long as we have three years' supply in sight. The law of supply and demand must operate. I feel, therefore, that the course I have suggested is far more practicable, and will be much more . beneficial in the long run.

Senator Fairbairn - You can't keep it out of sight by hiding it.

Senator PRATTEN (NEW SOUTH WALES) - But it will keep Bawra wool out of the way, and it will help if the world's wool-buyers know that for at least twelve months or two years it will not be available through the ordinary trade channels.

Senator Crawford - I understand the proposal is to feed the market as required.

Senator GUTHRIE (VICTORIA) - Of course, it is.

Senator PRATTEN (NEW SOUTH WALES) - I say, most deliberately, that it is economically and fundamentally unsound not to lock up portion of this 6,000,000 bales already in sight, in view of the fact that the consumption may be only 2,000,000 bales per year. This will have to be done sooner or later. It should have been clone twelve months ago. -Unless it is done now,, I feel that the Government will be only paltering with the position, and that, at the end of six months, the position may be worse than it is at present.

I have not very much more to say about this important matter. I am. sure that my remarks will not be construed as suggesting a lack of sympathy on my part with the Australian wool-growers. I have been trying to give some attention to this subject in order to help this country out of its difficulties, and I am sure that, though some of my honorable friends may not agree with me, they will concede that it is in the interests of the woolgrowers themselves that we should ventilate every avenue and every point of view. I urge the Government, if they are going to prohibit the export of wool in accordance with their proposal-

Senator GUTHRIE (VICTORIA) - Their proposal is not to prohibit export.

Senator PRATTEN (NEW SOUTH WALES) - It is to prohibit export except under certain conditions,, and I now urge the Government not to use the authority of the Customs Act - which, in my opinion, was never intended to apply to legislation of this sort - but to bring in an enabling Bill so as to create a precedent, which I believe the Senate wants to create.

I have tried to make it plain that the present wool position has arisen through no act of this Government or of this Parliament; that it has arisen wholly and solely through the breaking down of the Bawra scheme, which is a private arrangement, and is not controlled by the Government in any shape or form.

Senator Gardiner - Is it not more a question of the market breaking ?

Senator PRATTEN (NEW SOUTH WALES) - It is a breakdown of the proposals made by Bawra.

Senator Foster - But really the breakdown is due to the action of the people who control 10 per cent, of the wool.

Senator PRATTEN (NEW SOUTH WALES) - I want to make it clear that the arrangement is one for which neither theGovernment nor this Parliament are responsible.

Senator GUTHRIE (VICTORIA) - Nobody is blaming the Government.

Senator PRATTEN (NEW SOUTH WALES) - I say this because we have been blamed so many times for acts of omission and commission that I want to make it quite clear now that there is no blame attaching to the Government or to this Parliament for the present position.

I have said what I wished to say about this important matter. In conclusion, I want to stress the fact that the Australian wool-grower will only get £1 for every £2 worth of Bawra sold: This, I think, is a further argument in support of locking up the whole of the Bawra wool.

Senator E D MILLEN (NEW SOUTH WALES) - But they have had the other £1.

Senator PRATTEN (NEW SOUTH WALES) - No. For once the Minister has missed the point. The Australian wool-growers will only get £1 for every £2 worth of wool sold from Bawra stocks.- The British- Government will get the other £1, and consequently if there is £2 worth of wool sold from Bawra, it must displace £2 worth of wool from our new clip, and the Australian wool-grower will only get 50 per cent, of the money obtained if we. sold all the Bawra wool, and offered no new clip. This is a very important matter. I am prepared to go a long way to help to stabilize the wool industry, but I cannot indorse a good many of the panicky observations that have been made. It must be remembered that the pre-war average of the total wool clip was in the neighbourhood of £25,000,000 per annum. The average of about £40,000,000 during the war period was due entirely to abnormal conditions, so we should look at this matter, not from the stand-point of £40,000,000, but from the stand-point of £25,000,000, plus the extra cost of production during the years of war.

Senator GUTHRIE (VICTORIA) - And that is very considerable.

Senator PRATTEN (NEW SOUTH WALES) - I want to say, with all the responsibility attaching to my position as a member of the -Senate, that I cannot support-any proposal to use the Customs Act to solve this difficulty. What proposals the Government have to make should take the form of a Bill, so that legislation may be properly laid before members of this Chamber. I would have preferred an opportunity of discussing this matter before, rather than after, the Government announce their decision.

Senator E D MILLEN (NEW SOUTH WALES) - But if the Government bring down a Bill, by that very act they announce their decision.

Senator PRATTEN (NEW SOUTH WALES) - I have said what I had to say in all sincerity, and with the sole and only object pf trying to help the wool-growers to stabilize their industry.

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