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Wednesday, 13 May 1936

Senator A J McLACHLAN (SOUTH AUSTRALIA) (Postmaster-General) . - The Tariff Board was divided in its opinion as to the specific duties which should be applied to sparking plugs. Two members favoured an immediate reduction of the rates, with a further reduction on and from the 1st July, 1936, in order to afford local manufacturers ample time to consolidate their position, whereas the remaining two members favoured an immediate reduction, but recommended lower specific duties. The only difference between the recommendations of the two sections of the board as to the duties which under the present exchange conditions should operate after the 1st July, 1936, is that one section favours a reduction of the specific rate under the British preferential tariff by 3d. more on each plug than does the other section. TheGovernment decided to accept the recommendation of that section which favoured, the higher specific rates, as it considered, that too great a reduction might have the effect of increasing importations considerably, with a consequent severe loss of trade to local manufacturers. The general tariff rates recommended were, however, re-adjusted to permit of a margin being available for treaty negotiations.

The sparking plug industry operates under conditions different from those which obtain in most other industries. Sales are divided into two distinct sections, namely, plugs used as original equipment for motor cars, and sales for replacement purposes. It is common practice in the trade for plugs used as original equipment to be send at prices much lower than those for plugs for replacement purposes. That practice is followed in overseas countries, and the board reports that in both the United Kingdom and Canada equipment plugs can be purchased at one-sixth of the lowest price paid by large distributors for plugs for replacement purposes. The board is of opinion that sales on that basis cannot return a profit, and that overseas manufacturers, therefore, place great value on the equipment business as an advertising medium. Generally, sales of plugs for equipment purposes are made at cost or even below cost, whilst replacement plugs are sold at prices which represent a profit which is considered to be above normal, so that the total sales yield a reasonable return to the manufacturer. The board considers that rates of duty which would be more adequate for the replacement trade would be inadequate for the equipment business. It is also of opinion that the retention of a large share of the equipment business now held by local manufacturers is necessary if the industry is to 'progress in this country. Rates of duty which did not take into account the equipment business would, therefore, leave local manufacturers distinctly vulnerable. Under the old rates of duty, importations of sparking plugs increased from about £14,700 in 1930-31 to over £44,450 last year. As the imports for the first six months' of the current financial year are practically on the same basis, I do not think that wo need fear any great injury to the local industry. I assure the honorable senator that the Minister -for Trade and Customs (Mr. White) is watching the position carefully.

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