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Thursday, 5 December 1935

Senator DUNCAN-HUGHES (SOUTH AUSTRALIA) -HUGHE S . - Other primary producers are faced with difficulties in paying income taxes, and there are many who have not any income upon which to pay any tax at all. In comparison with other great industries the sugar industry is comparatively small. According to figures quoted by the Minister for Trade and Customs (Mr. White) in the House of Representatives, there are only 32,000 employed in it, while the number engaged in the dairying industry, for instance, is about 169,000, quite apart from the number engaged in the wheat-growing industry. Moreover, the sugar industry was established on an artificial basis and it does not employ an abnormal number of persons. It is supported by governmental and other forms of assistance to a greater extent than any other primary or secondary industry. Professor Giblin, who was quoted this afternoon by Senator Crawford, calculated early this year that the cost of the industry to the community was £5,100,000 annually.

Senator Arkins - Possibly the butter industry is receiving greater assistance than the sugar industry.

Senator DUNCAN-HUGHES - The figures which I propose to quote are taken from a recently published memorandum compiled in South Australia under Government supervision. The work was carried out by the Auditor-General of South Australia, a member of the Statistical Department, and an auditor, under the control of, and for, the South Australian Disabilities Committee. The statistics relate to the year 1932-33. Honorable senators may ask why I have not obtained later figures. I have no sinister reason for quoting these particular figures; 1932-33 is the only year for which the figures are in existence. They are extraordinarily interesting and should be informative to Senator Crawford among others. They show the estimated cost of sheltering Australian primary and secondary industries by tariffs or bounties against foreign competition in home and foreign markets in that year; and they disclose the net burden or benefit, if any, accruing to each State as a result of the Commonwealth's policy of protection.

Senator Crawford - But the excess cost of sugar in Australia is compared with the bankrupt stocks in Cuba and Java.

Senator DUNCAN-HUGHES - Before I proceed to quote the figures, the definition of " excess costs " may be of interest - " Excess costs " means the extra amount of the sale price of Australian-produced goods in Australia over and above the sale price of such goods that would have obtained without Commonwealth legislative action.

I am quite aware that since 1932-33, all or any of these figures may have varied, but I think that the period may be regarded as a fair specimen year. The excess cost of butter, according to this calculation is £2,430,027, and sugar, nearly £5,800,000.

Senator Crawford - The price of sugar has since been reduced.

Senator DUNCAN-HUGHES - This excessive cost of sugar is nearly three times the burden on the Australian consumer that any other industry, primary or secondary, imposes.

Senator Foll - Has the honorable senator ever tried applying those figures to motor bodies?

Senator DUNCAN-HUGHES - If motor bodies are included in this memorandum, I shall be pleased to disclose the information. The excess cost of wheat was £2,000,000.

Senator Crawford - I have no hesitation in saying that the honorable senator is comparing the price of refined sugar with that of raw sugar.

Senator DUNCAN-HUGHES - These "excess costa" are due to protection. Referring now to secondary industries, I find that the excess cost in regard to chemicals is very high, being £927,120; boots and shoes, £1,097,734; engineering and other metal works, £1,035,989; tailoring and slop clothing, £1,266,466. These are the only items, primary or secondary which in the year under review had an excess cost, as it is defined by the committee, of over £1,000,000, the cause being protection. The excess cost of sugar was more than double that of butter, and nearly treble that of wheat.

Senator Crawford - Is the . price of imported sugar stated ?__

Senator DUNCAN-HUGHES - The following reference to sugar appears: -

Customs tariff £9 Cs. 8d. per ton, preferential and general. Data supplied by the Export Sugar 'Committee shows that the basic value of raw cane sugar used for refining for the domestic market for the 1932 season was £25 per ton, while the return from exports was £8 5s. 9d. per ton. The difference of £10 14s. 3d. roughly represents the excess cost of raw cane sugar per ton.

Further details are given, but I shall not delay the Senate by quoting them.

Senator Cooper - Are freights included in those figures? The difference would be about £4 a ton.

Senator Millen - Freights cannot be taken into account, because this relates only to the activities of the Commonwealth Government.

Senator DUNCAN-HUGHES (SOUTH AUSTRALIA) - HUGHES. - Senator Crawford made a verbal trip along the Murray river and referred, for instance, to the subject of dried fruits. He may be interested to learn that, in respect of dried fruits, the burden on South Australia is £19,000 and the benefit is nearly £55,000. That is to say, the net benefit accruing to South Australia in respect of dried fruits is £35,000. Senator Crawford said, in effect, " "We assist South Australia with its dried fruits industry; why should South Australia object to protection .being afforded to Queensland's sugar?" However, the figures show that the excess cost of sugar to Australia is £5,78S,659, whereas the dried fruits' industry is beneficial to South Australia to the amount of £35,000. The burden imposed by sugar on South Australia exceeds £500,000; the burden of wheat on Queensland is about £284,000, and on South Australia £168,000; so that there is not very much difference in that respect. Without going further into statistical details, I have shown that a tremendous load is placed on the community by granting excessively high protection to industries. This report is most interesting and I shall be pleased lo lend it to honorable senators.

Senator Foll - Put it in the museum.

Senator DUNCAN-HUGHES - That interjection does not answer the argument contained in this document. I hope that Senator Foll can produce a better defence than that for the protection of the sugar industry.

Senator ALLAN MACDONALD (WESTERN AUSTRALIA) - Was this report submitted to the Commonwealth Grants Commission on behalf of South Australia?

Senator DUNCAN-HUGHES - It was prepared by the South Australian Disabilities Committee for the Commonwealth Grants Commission. The sugar industry has been petted and favoured to a greater extent than any other industry in Australia. That policy may or may not have been right, but honorable senators should not be prevented from exercising their own opinion as to whether this agreement should be continued. I am averse to attempts to stabilize artificial prices in any industry. It may be within the memory of honorable senators that in 1933, a bill was introduced to pay a bounty on a number of iron and steel products with a view to stabilizing prices. In my opinion that policy was unsound ; it is a hopeless business to select certain. lines of manufacture and attempt to stabilize the prices for them. In any case, I moved in this chamber for the omission of galvanized iron, fencing wire, and wire netting from the scope of that particular bill. Two divisions were taken, and in each instance my motion was carried by a majority of one vote. I am pleased to think that I had something to do with the rejection of that proposal. Wool has no stabilized price; in fact, nobody ever suggests that the price should be stabilized.

Senator Crawford - The price was stabilized under Bawra.

Senator DUNCAN-HUGHES - No, Bawra never controlled the Australian wool market or the wool clip.

Senator Crawford - It fixed the minimum price.

Senator Foll - Wool does not face the same competition as sugar does.

Senator DUNCAN-HUGHES (SOUTH AUSTRALIA) - HUGHES. - When assistance cannot be given to the wool industry, I am not prepared to participate in any effort to fix a high disproportionate price for certain other industries.

Senator Arkins - The development of the synthetic wool industry may eventually necessitate an effort to stabilize wool prices.

Senator DUNCAN-HUGHES - The sugar industry has been favoured by the fact that this agreement, after having been in existence for three years, will now be extended for another five years, but no reduction of price is contemplated.

Senator J V MACDONALD (QUEENSLAND) - A reduction was made only eighteen months ago.

Senator DUNCANHUGHES.Sugarhas been a favoured industry, and I conceive it to be my responsibility, and the duty of honorable senators, to see that a sense of balance is preserved, so that industries will not receive disproportionate benefits. I remind senators who are new to this chamber that in 1930-31 the price of sugar was £21 a ton. The Right Honorable W. M. Hughes appointed a royal commission, of which Mr. Piddington was the chairman. Mr.

Hughes fixed the price of sugar at £30 6s. 8d. a ton - nearly £7 a ton more than the industry asked for.

Senator Crawford - No; the industry asked for £30 6s. 8d.

Senator DUNCAN-HUGHES - The price asked for was £23 10s. a ton. The price fixed by Mr. Hughes was £8 6s. 8d. a ton more than the Royal Commission had recommended and £9 6s. Sd. a ton more than the then prevailing price.

Senator Crawford - That charge against Mr. Hughes is absolutely without foundation.

Senator DUNCAN-HUGHES - In the light of those figures, can it be suggested that this industry has not been treated with consideration? Yet, when we suggest that there has perhaps been a little too much consideration, we are treated almost as if we were making a ferocious attack on the industry.

Senator Collings - The honorable senator previously suggested a scaling down.

Senator DUNCAN-HUGHES - I voted with the Government that the existing agreement should be continued. I believe that the sugar industry is efficiently conducted, as, indeed, it should be. There are certain fixed payments, among them being -


Those payments do not appear to be unreasonable. "We are assured that the profits of the company are largely drawn from outside Australia, or from other investments in Australia. I cannot say whether or not that is so. I cannot even say whether these various charges are cut to the bone. But, in any case, I cannot see in them much room for criticism. It has been pointed out, even by speakers who have attacked the company, that it is not directly associated with the agreement, although it might be affected by any change made in the agreement. I fail to see why, in discussing the agreement, so much attention should be given to the Colonial Sugar Refining Company.

Senator Arkins - A somewhat similar case could be made out against the granting of assistance to wheat-growers.

Senator DUNCAN-HUGHES - I am glad to have that interjection because, otherwise, I might have overlooked that point. There has been no attempt to stabilize the price of wheat over a period of years. It is true that the wheatgrowing industry has been assisted year after year by grants, which have fluctuated between £2,000,000 and £4,000,000 a year, but at no time has Parliament fixed a price for wheat for six years ahead. That, in my opinion, is a most material consideration in connexion with the Sugar Agreement. We are asked to stabilize this industry on a hopelessly artificial basis for five years. We have not done that in regard to anything else, with the possible exception of tractor engines. In discussing the sugar industry, which employs a number of good Australians, I desire only to be reasonable and fair, and not to indulge in extravagant language. What has been the result of all the attention given to this industry? First, we have protected it. by an embargo which is a likely cause of annoyance to the people of other countries; secondly, we have inflated the value of sugar lands; thirdly, we have led to the payment to employees in the industry of high wages which, although determined by the Queensland Arbitration Court, are high largely because the money is there to pay them.

Senator Foll - The cane-cutters work for only about five months each year.

Senator DUNCAN-HUGHES - We have also made possible hopelessly disproportionate internal and external prices. The real value of sugar in the eyes of the world is hopelessly out of relation to its price in Australia. That disproportion is not so pronounced in respect of any other product we sell overseas. Then we have caused every inducement to reduce the output. That is a rather lamentable position. I am aware that there have been times when, . in other industries, production has been allowed to proceed beyond what is desirable, and that a check has been found necessary, but what can we think of an industry which reaches a point where every expansion and every increase of production is to the detriment of those already engaged in it ? Is that the sort of industry which this continent hopes to build up by artificial means? Is it likely to be of great benefit to the rest of Australia economically? I do not think so. There is also the fact that certain lands are earmarked for the growing of sugar-cane whilst on adjoining lands sugar-cane may not be grown. That places different values upon lands according to whether or not they are ear-marked for the growing of sugar-cane. I think that I am correct in that statement.

Senator Crawford - That is so.

Senator DUNCAN-HUGHES - Is that a sound policy?

Senator Crawford -Is it soundto grow more sugar than can be disposed of or treated by the mills?

Senator DUNCANHUGHES.Thereis also the definite danger to the cane sugar industry of an increased production of sugar from beet.For some time there have been indications of an extension of the beet sugar industry. When Senator Brown suggested that Senator Johnston might grow sugar in Western Australia, he, perhaps, did not think that the honorable senator might well do so. If beet sugar is grown in South Australia, Tasmania and Western Australia, the growers there will not be like those at Maffra, in Victoria, who I believe had an understanding that if they did not extend their operations, they would be free to sell their sugar anywhere in Australia. I cannot agree with Senator Brand that this agreement will ensure stability for five years. The agreement is hopelessly uneconomic, and Parliament should endeavour to rectify the existing uneconomic condition of the industry. I believe now, as I did three years ago, that there should be a moderate reduction of the assistance granted to this industry which, in my opinion, imposes a tremendous load on the rest of Australia.

Senator Crawford - Queensland has not asked the Commonwealth for a grant of £1,500,000 a year.

Senator DUNCAN-HUGHES - That it has not done so may be due to the fact that other benefits derived by Queensland from Commonwealth legislation have made it unnecessary for that State to approach the Commonwealth in a more or less penurious way. I suggest that an advantage of £5,000,000, or more, a year puts a State in a much better position than that of another State which gets a grant of £1,000,000. or even £2,000,000, a year. I do not claim to have put the case against the agreement adequately, but I hope that I, at least, have shown that there are two sides to this matter. In my opinion, there are far more people in Australia who wish for a reduction of the price of sugar than desire that the agreement be ratified. In committee I shall move for a further scaling down of the benefit to the industry in the interests of the consumers of sugar.

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