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Thursday, 5 December 1935

Senator BROWN (Queensland) . - I have been keenly waiting for Senator Johnston, who is the last surviving opponent in this chamber of the sugar industry to defend his attitude, which is that of a number of good but misguided Western Australians; but apparently he has become shy lately. Perhaps he contemplates voting for this measure. If so, there is a possibility of unanimity at last being achieved in the Senate; every honorable senator will be voting solidly in favour of this national agreement. Perhaps Senator Johnston will change his mind-

Senator E B Johnston -I shall not change my mind on this subject.

Senator BROWN - Such stubbornness is not a great attribute to possess, because if persuasive and irrefutable argument is laid before a person, the honorable senator should be intelligent enough to be able to change his mind. I consider that supporters of the sugar agreement can produce intelligent argument to convince Senator Johnston that the agreement is unassailable.

Senator E B Johnston - I shall listen to the honorable senator with interest.

Senator BROWN - I shall speak to the honorable senator as charmingly as I can in an endeavour, if only by my manner, to win him to my side. In participating in this discussion upon the sugar agreement I propose to state the position from the workers viewpoint. Senator Johnston is a worker, I know. Front my knowledge of Western Australia he has done splendid work for that State, but when I refer to workers generally I do not include Senator Johnston in that category. In approaching the discussion from the angle of the workers I am actuated by a desire to dispel a misunderstanding which has been created among the workers of certain other States by misleading propaganda. We do not deny that opponents of the sugar agreement have been most energetic.

Senator Herbert Hays - Surely the honorable senator is not suggesting that the seamen have been misled !

Senator BROWN -I am speaking of the sugar industry, not of the seamen. So much propaganda has been launched against the sugar industry that even some of the workers have been misled, and they have been persuaded to regard this industry as something parasitical. Even in Western Australia - that land of sunshine and secessionists - a number of workers have been grossly misinformed upon this matter. Therefore, I consider that it is essential to endeavour to explain the attitude of the workers, who are anxious to change the economic system in order to bring about stability, and guarantee a livelihood to every one. Stabilization, in my opinion, is a splendid principle. I have my own opinions of what should be done economically and politically, and I assert that stabilization is a step in the right direction towards the full and complete organization of our economic structure in the interests of the nation. Therefore the organized workers of Australia should support to the utmost any industry that has been thoroughly organized and stabilized. I do not maintain for one moment that the mere stabilization of an industry under present condition is a panacea for the economic troubles of Australia; but I do believe that it is desirable that attempts should be made in the various industries to stabilize prices and payments to the various producers engaged in them. That is in line with that evolutionary development to which Senator, Hardy referred yesterday in regard to the payment of pensions to " burnt-out " soldiers. Those persons who are foolish enough to attack or impede this movement, I place in the category of troglodytes - mental cavedwellers who do not understand the need for keeping pace with social and economic evolution. In what way will the position of the workers of Australia be improved by a reduction of the price of sugar, such as has been agitated for by certain honorable senators? I believe that an amendment was moved in the House of Representatives, and may be moved in this chamber, with the object of effecting such a reduction. It is part of the Marxian doctrine - now I am addressing the students of economics - that the workers are exploited as producers, and that there is practically^ no exploitation in the realm of distribution. The Marxian school contends that, at all times, it is essential to organize business in such a way as to increase the purchasing power of the workers; this will offset any efforts which may be made to increase prices, and will thereby maintain a decent standard of living. According to this theory, if an effort is made to increase prices, it is essential for us thoroughly and completely to organize all production in order to offset this tendency. In the final analysis, however, it is contended that it is not in the area of distribution that the workers are exploited, but in that of production. However, I dp not propose to follow out that argument, which is a technical one advanced by students of the Marxian school, who state that the activities of the workers' should be concentrated on the maintenance of their purchasing power; and that they should not be continually worried in regard to prices.

Many of those persons who seek to cause bitterness among the workers towards the sugar industry contend that the purchasing power of the employees in the sugar industry is grossly inflated. This propaganda has been circulated throughout Australia with the intention of causing a division in the ranks of the workers, by suggesting to them that, because in Queensland the workers are receiving a greater measure of purchasing power through high wages, there is a secondary exploitation of workers in other parts of Australia. This propaganda has been employed by opponents of the sugar industry to win the support of workers in other States for a campaign to effect a reduction of the price of sugar. But the workers of Queensland must submit to the awards of the Arbitration Court; they appeal to properly-constituted tribunals, which formulate awards in accordance with the evidence submitted. If all the facts of the case are taken into consideration, it must be admitted that the workers of Queensland are not participating in a secondary exploitation of the other workers of Australia. I made it my business to interview the leader of one of the greatest organizations in Queensland, and discuss with him the sugar industry iii the light of this statement. After a full discussion of the facts we came to the conclusion that the workers are not living in the lap of luxury, as has been contended by so many of the opponents of the sugar industry. Only last year the Arbitration Court of Queensland heard an appeal on behalf of the employees of the sugar industry, and, after argument, granted an increase of 4s. to mill hands; but I ani informed that it was impossible to grant an increase to the cutters, because the industry could not bear this additional burden. In ' spite of that fact, many people continue to maintain that the workers in the sugar industry, and the growers themselves, are receiving unduly high returns, because of the fixed price of sugar, and that there is a secondary exploitation of workers in other States. I am informed that the cutters receive 7d. a ton less to-day than when sugar was £30 6s. 8d. a ton. If that is so, the contention that, the price of sugar is too high is certainly refuted. I have collected some information about wages from Mr. Fallon, who has the evidence submitted to the Arbitration Court, when application was being made for a variation of the sugar workers' award. Spencer Lewis Johnson, a mill hand of Babinda, gave evidence in regard to the wages that he received. The following table shows his income for each of six years: -


Senator ALLAN MACDONALD (WESTERN AUSTRALIA) - What period did that cover?

Senator BROWN - The figures include the slack season. A man who works in a district where the sun is so hot that it nearly cooks his liver is not overpaid at the rates shown. I cannot understand how any person can say that the price of sugar is high as a result of the workers in the industry receiving excessive wages. Another man who gave evidence was J. MacDonald, a returned soldier, who, during the slack season worked as a general labourer, effecting repairs to trucks. He told the court that his wages were -


When repairing trucks he received11s. a week more than as a cane-cutter. His income included payment for overtime two Sundays out of three. I give these facts in the hope that they will offset some of the absurd statements of those who speak of the excessive wages paid to workers in the sugar industry. Mr. A. R. Rex gave evidence on behalf of the employers. It may be well if I explain that, whilst Queenslanders of all political parties are unanimous in regard to the sugar agreement, there are times when the various sections of the industry are opposed in the courts. There is a certain amount of economic antagonism between the workers, who are trying to get as much as possible for their labour, and the employers, who wish to keep their profits at what they claim to be a reasonably high level. Mr. Rex told the court that he had received £192 6s. during the year. According to Mr. Fallon, a sugar boiler is paid £6 10s. a week. In the north of Queensland a sugar boiler works for about 22 weeks in a year. An income of £6 10s. a week for 22 weeks in a year surely is not excessive. There is no certainty that a man engaged in this seasonal occupation will receive other employment during the rest of the year, and yet opponents of the industry continue to speak of the wonderful time enjoyed by the parasitical workers in the sugar industry! It was admitted by Mr. Dutton on behalf of the employers that the cutters were not well paid. Mr. Young, who represented the fruit-growers at the inquiry, also agreed that they were not paid more than they earned. If honorable senators who think that these men are overpaid were to see them at work in the cane-fields, they would quickly admit that, far from being overpaid, they are grossly underpaid. The work demands great physical strength. Instead of the price of sugar being decreased on the ground that the workers in the industry are overpaid, the workers should receive more, even if it means a higher price for the commodity which they produce. ' Last year the growers of sugar received £15 10s. 9d. a ton for their product - a price which does not make possible any considerable increase of wages to their employees. I appeal to Senator Johnston, who has always advocated the claims of the primary producer, to remember that this agreement affects a number of primary producers who are experiencing great difficulty in meeting their commitments. Senators Collings and Hardy have shown that the number of liens and mortgages has increased, and that the number of growers of sugar who pay taxes to the Queensland Government has decreased. Such a valiant champion of the primary producers as Senator Johnston undoubtedly is, should vote for this agreement.

A good deal has been said about the Colonial Sugar Refining Company. Many Labour supporters outside Queensland are inclined to think that those who support the sugar agreement support the Colonial Sugar Refining Company also. So far as the Labour party is concerned, that company stands in exactly the same position as does any other company. It is strange, indeed, that so many advocates of private enterprise should be so antagonistic to this company. They have no objection to a brewing company paying a dividend of 10 per cent, or 12 per cent., but they are loud in their condemnation of the Colonial Sugar Refining Company if it does the same. When it wa3 announced recently in the press that the Colonial Sugar Refining Company had taken action to reduce the wages of some of its employees, I was greatly incensed, because, as a member of the Labour party, I am opposed to any reduction of wages. It is particularly hard that a rich company like this ono should attempt to take a few shillings from its employees. Unfortunately, the Colonial Sugar Refining Company is used as a stalking horse to defeat the sugar agreement. According to its latest balance-sheet that company has the following assets in Australia : -


The Sugar Inquiry Committee, which investigated the affairs of this company in 1931, reported that its Australian profits were £609,000 per annum, and that nothing had happened since then to increase its profits. The Jd. per lb., by which the price of sugar was lowered in 1933, reduced the revenue of the company by £75,000 per annum. If that be true, I ' shall shed no tears of sympathy for such a rich company; but I do say that the opponents of the sugar industry have no right to attempt to defeat the sugar agreement by using arguments which have relation only to the company. But even if the profits of the company on its Australian transaction are £609,000 per annum, that amount represents. 6 per cent, profit on its capital, and is reducible by taxation by approximately £135,000 a year, leaving a final net return of about £474,000 a year, or practically 5 per cent, on the company's capital. As has been mentioned, the company has assets in Fiji and New Zealand. According to its balance-sheet, those assets are valued at £3,396,000, made up as under -


Last year the company's entire profits amounted to £852,000 after paying taxes. If the Australian final net profit of £474,000 is deducted from that amount a final net profit of £378,000 on its foreign transactions is arrived at. That represents a profit of nearly 11 per cent, on the related capital of £3,396,000. The conclusion arrived at by the committee was that the company's Australian final net profit is 5 per cent, and its external profit 11 per cent. When a company is making too much profit, it should be put on the same footing as individuals in. regard to income tax, and be forced to pay a graduated income .tax. The Opposition would support the Government in any effort it might make to extract a little more in taxes from this wealthy company. But our opponents endeavour to connect the Colonial Sugar Refining Company with the sugar agreement and by so doing seek to destroy the living standards that have been established in Queensland. That is what we, on this side, have to fight against.

Senator Collings - The Colonial Sugar Refining Company is not a party to the agreement.

Senator BROWN - That is so, but opponents of the agreement use that argument as propaganda against it. They point to the huge profits which the Colonial Sugar Refining Company has made and pay no attention to the position of the hard-working employees of the industry in Queensland. They attack the agreement because, forsooth, the Colonial Sugar Refining Company is making profits ! Those who have studied the position know, of course, that large profits are made by the Colonial Sugar Refining Company from its activities abroad. The company practically owns the whole of the sugar produced in Fiji where it is refined and sold at remunerative prices in New Zealand. The total output in Fiji is about 130,000 tons per annum, and it should be borne in mind that the whole of it is produced by cheap, black labour^ I hope that Senator Johnston is listening, because I feel sure that he would not like to see cheap, black labour introduced into Australia.

Senator E B Johnston - Certainly not.

Senator BROWN - Nor, I hope, would he like to see our White Australia policy endangered by subjecting any Australian industry to the unfair competition of countries producing similar products under cheap black labour conditions.

Senator Gibson - Does not the honorable senator think that a man is " dead " lucky to be white?

Senator BROWN - I am very glad that I am not a nigger, though I admit that there are some very fine characters among the negro populations of the world. In advocating the maintenance of a White Australia policy, we cast no aspersions upon the coloured races on moral grounds. All we' say is that black labour in industry is a definite menace to the living standards of the white race and no encouragement should bc given to proposals likely to endanger our White Australia policy.

The Colonial Sugar Refining Company by efficient organization is able to earn large profits from its operations. But it also gets a very generous measure of tariff protection in the British market. Personally, I would like to see workers in the Queensland sugar industry obtaining a larger share of the profits from the Australian operations of the company. The Colonial Sugar Refining Company enjoys a preference in the United Kingdom market of £6 15s. a ton on about two-thirds of its output, and £3 15s. a ton on the balance. This represents an average of about £5 10s. a ton on 130,000 tons, or an advantage of £715,000 above the world's free market price, which is admittedly well below the cost of production in black labour countries. But, when £5 10s. a ton average benefit from the British preferential tariff is added to the world's price the total net return, with exchange, is " about £10 or £11 a ton, which gives the Colonial Sugar Refining

Company a net profit of about £2 10s. a ton in Fiji. This is more than the company earns in Australia. The company's profit on refining and distribution in Australia - an entirely different phase of the sugar business - 'lias been 14s. 9d. a ton or one-twelfth of a penny per lb. since 1915, when the first sugar agreement was made by Mr. Hughes on behalf of the Commonwealth and the late Mr. Ryan on behalf of the Queensland Government. Honorable senators who have in mind the £5,850,000 of bonus shares distributed last year should remember that during and for two years after the war, and also in 1923 and 1924 the company made tremendous profits from buying cheap black grown sugar and selling it at exceedingly high prices. Some of these profits were distributed as dividends, but a considerable sum was placed in various reserve funds. Thus, the Colonial Sugar Refining Company is doing very well indeed. I am sure that all honorable senators would like to have a few thousand shares in the concern. If honorable gentlemen opposite were in the happy position of drawing dividends from shares in this company, there would be no trouble about the agreement, because everybody would be satisfied. Possibly the day will come when, by a radical alteration of our economic and financial system, there will be benefits for all, and none shall endure the pangs of hunger.

The Labour party says that the time has come when this sort of thing must cease; that instead of huge sums going to the pockets of those who do no useful work in the community - the people who are merely coupon clippers - a greater proportion of the wealth that is produced shall go into the pockets of the people. It must be remembered, however, that the millions of pounds which the Colonial Sugar Refining Company made during and immediately after the war did not all come from its Australian business, but it is unfair that tory governments should have allowed the company to escape the taxes which should have been levied upon its huge total of undistributed profits.

Senator E B Johnston - Mr. Lang made a speech quite recently about the Colonial Sugar Refining Company.

Senator BROWN - Mr Lang made a number of statements concerning it, and I have no doubt that much of what he said was true. What I am objecting to is that workers, mill-hands and sugargrowers should be in any way harmed by the propaganda that has been issued in opposition to the agreement. The people who are engaged in this stabilized industry play an important part in the defence of Australia. They are in effective occupation of the Queensland tropical belt, and should not be adversely affected economically by interested opposition to the renewal of the agreement. According to figures supplied by the Commissioner of Taxation, of the total profits made by the Colonial Sugar Refining Company 57 per cent. is earned from its major operations in Australia, and 43 per cent. is earned from its minor operations outside the Commonwealth. In Australia the company produces 140,000 tons of raw sugar each year at its mills, and refines and distributes 320,000 tons. In Fiji it produces 130,000 tons of sugar, employing cheap black labour, and refines85,000 tons for sale to New Zealand.

In examining the operations of the company I have endeavoured to distinguish between its profits made in Australia, and profits made in Fiji, and I repeat that it is grossly unfair that the Queensland sugar industry should be in any way affected by criticism of the agreement on the ground merely that the Colonial Sugar Refining Company is making such huge profits from its operations. I hope that as a result of what I have said Senator Johnston will be persuaded to vote with us in favour of a renewal of the agreement.It has been urged that action to renew the agreement has been taken too early. On that point I remind the Senate that the British Government has intimated its intention to give eighteen months' notice to the dominions and colonial possessions of any proposed alteration of the measure of preference given in the British market. Another argument - it was also employed during the discussion of the Ottawa agreement - is that it would be grossly unfair to attempt to alter any of the terms of the agreement, because the parties to it had taken all relevant factors into consideration.

Senator Duncan-Hughes -There is provision in the agreement that it will not come into force until ratified by Parliament.

Senator BROWN - The honorable senator will no doubt recall that when the Ottawa agreement was under discussion certain honorable senators urged that it was competent for the Senate to alter the schedule without in any way interfering with the general form of the agreement itself. Others contended that it was not competent for Parliament to alter any of the terms of a document of that nature. This agreement is fair, particularly when we realize that the future for sugar is dark; there is no immediate possibility of an increase of the world's price. All sugar exported at world parity affects the growers as a whole, their last payment, as I pointed out, being £15 10s. 9d. a ton. Owing to the influences of economic nationalism, every country to-day is seeking to provide its own primary products, and some are producing sugar. According to F. O. Licht, it is estimated that the free market for sugar had dropped from 5,900,000 tons in 1928-29 to 3,100,000 in 1933-34. It has now to be considered whether the market promises to expand and whether the price is likely to increase in the near future. So far as I can see, no such prospects exist. I would like to see the world price increased, because it would help to relieve of heavy burdens many people engaged in this industry in northern Queensland. However, efforts are being made by certain countries at. the moment to increase the world price.

Senator Payne -Is the honorable senator suggesting that the present price of sugar in Australia should be increased ?

Senator BROWN - I am suggesting that the remuneration of those engaged in the sugar industry should be increased, because many of these people at the present time are being forced into the hands of the money lenders. I remind the honorable senator that I opposed the reduction of the Australian homeconsumption price from 4½d. to 4d. per lb. because that reduction meant an aggregate loss to the industry of £1,250,000. However, I realize that so long as the present Government remains in power there can be very little hope of having the price increased again to 4£d. per lb. I have no doubt that the industry has had to fight very hard to get the present price of 4d. ratified. Many growers are not receiving sufficient to meet their commitments; they cannot get an income of the proportions to which they are entitled because the amount being returned to the industry as a whole is insufficient. The Chadbourne agreement was signed by a number of countries, including Australia, in an endeavour to raise the world price of sugar, and I understand that another similar attempt is to be made shortly. ' If such an increase is made, it will add considerably to the wealth of Queensland and Australia generally.

Senator Herbert Hays - It could easily be that the price may be reduced.

Senator BROWN - Tha"t is so, in which case this country would suffer considerably.

Senator Herbert Hays - Could we not anticipate a reduction of the world price by immediately reducing the Australian home-consumption price?

Senator BROWN - If such an argument is justified, the growers could justly claim that we should immediately increase the price, because every reduction of the world price during recent years has meant a loss to them. Reverting to the influences of economic nationalism, I point, out that Great Britain has established a beet-sugar industry, in which eighteen factories are now operating, catering for 46,000 growers of sugar beet. A few years ago this industry did not exist in that country.

Senator E B Johnston - I would like to see a beet-sugar factory established in Western Australia.

Senator BROWN - The actual market value of the produce of these eighteen factories is only 50 per cent, of the amount paid by the British Government in subsidizing the industry, that subsidy, I understand-, being about £6,000,000. In France, Germany, Czechoslovakia, Russia and other European countries attempts are being made to increase the production of beet sugar. If these countries continue such a policy they will very soon, as Mr. John Lawson, M.P., and ex-Senator

Elliott pointed out, become a menace to Australian primary production. On his return from a visit to Russia recently, Mr. Lawson stated that primary produc-tion in Russia is progressing so rapidly that very soon the increased volume of its exports will seriously affect the markets now open to Australian primary producers, and Australian producers will be thrown back upon our own internal resources. In view of these facts, I ask Senator Johnston, " Does he really believe that the price fixed for sugar in this agreement is too high?" I have endeavoured to place before honorable senators the policy of the Labour party so far ah the protection of the sugar industry is concerned, and I have attempted sincerely to appeal not only to the heart but to the mind of -Senator Johnston, who, I hope, will stand, as is done in the Salvation Army, and bear testimony in this chamber to his conversion to the belief that this agreement offers an effective means of preserving the welfare of a rationalized and stabilized industry.

Senator E B Johnston - I find it most difficult to have to disappoint the honorable senator.

Senator BROWN - I feel sure that Senator Johnston will see the error of his ways in this matter and that, as a genuine supporter of the principles of the United Country party, he will realize that, by supporting this efficient and stabilized industry, he will bear a torch among the primary producers of Western Australia, showing them that if the example of those engaged in the sugar industry be followed, every primary producing ind ustry in Australia can be stabilized and rendered most efficient. If he does that, he will render a real service to the primary producers of this country ; he will show them how they can overcome economic difficulties and that the way is wide open for a proper and efficient organization of all industry. He can show, if he will, it is unwise and foolish for any intelligent citizen to criticize adversely the sugar industry as it exists to-day; rather should other primary industries take a lesson from it and complete their organization so that every one engaged in them will receive full and sufficient return for his labours. If Senator Johnston follows this advice

I shall come to the conclusion that he has seen the light and at last is prepared to do something of permanent value to primary production in Australia.

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