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Wednesday, 13 May 1936

Senator A J McLACHLAN (SOUTH AUSTRALIA) (Postmaster-General) . - I have no wish to be dragged into this interesting controversy regarding the effect of the exchange rate. The report of the Tariff Board speaks for itself. The Australian manufacturers are obtaining their steel at the. same rate as are the manufacturers in the United Kingdom, so that the British manufacturer enjoys no advantage in that respect. The Tariff Board took pains to examine the cost of steel to the manufacturers in each country. The other headings under which costs were tabulated were the cost of manufacture and packing, manufacturers' profit, and cost of delivery c.i.f. and e. at main Australian ports. Senator Leckie regards the figure 1.6 as the ratio applying to the raw material used in this industry. The fact is that, as far as steel is concerned, it applies not at all. The report of the board states -

After a close examination of the particulars, obtained at the special investigation into the cost of manufacturing bolts and nuts in Australia and the available evidence regarding costs in the United Kingdom, the board is of the opinion that the adoption ofa l.6 to 1 ratio as applying to the "'costs above steel" would be slightly to the advantage of the local manufacturer. In this connexion itshouldbe pointed out that the local manufacturer's estimates tendered in evidence were that labour costs are 50 per cent. higher in Australia than in the United Kingdom, and that " expenses " other than labour and raw materials are 50 per cent. higher in Australia, -the weighted average for " costs above steel " being 53 per cent. The beard is of the opinion that a. duty of 35 per cent. applied to the "' coats above steel ". if practicable, would provide adequate protection to the local industry. This duty - with the statutory 10 per cent. added to the value for duty - would amount to 38½ per cent. of the "costs above steel " and supplemented by the exchange rate of 25½ per cent. would permit the local manufacturers to gain the whole market if the " costs above steel " were kept within the ratio of 1.64. to1.

Local manufacturers and overseas producers purchase steel on the same basis, and as the 25 per cent. exchange advantage benefits the local manufacturer this formulahas been applied by the Tariff Board. Should exchange fall by 10 per cent. or 20 per cent., the degree of protection afforded would be increased.

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