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Wednesday, 13 May 1936

Senator COLLETT (Western Australia) . - I intend to deal with this matter principally from the point of view of the industry in Western Australia. I am not able to speak with first-hand knowledge of the manufacture of cement as an Australian-wide industry. But the industry has assumed, in the press at any rate. political significance which is not justified, and ha3 also attained a prominence which its real importance does not warrant. All of us are aware that intensive propaganda has been indulged in by every party interested in this matter. In that propaganda, however, there has not been a strict adherence to facts. For instance, it was stated in a Western Australian publication that the abolition of the duty on British cement would cause, through the closing down of the Swan Portland Cement Company, the unemployment of 700 hands. Actually that company claims to employ at the most 250 men and youths. In view' of these circumstances, I have been impelled to examine this matter calmly for myself.

First of all we must give credit to the Tariff Board for its comprehensive investigation of the industry, and for the care with which it prepared its report and findings. On page 3 of its supplementary report, the board said -

Much less can it (the board) subscribe to the view that because one company's costs are so far out of stop with the others, it should recommend a duty which would protect such costs.

In Western Australia I have identified myself with the movement for preference to local products; consequently, in this instance, I remind myself that I stand in this chamber as a representative of a State. With many other honorable senators, I desire to sec a supply of cement available to industry at a reasonable price. I am aware of the importance of this product in building construction and to local governing bodies for the construction of better roads. In many ways also, it is of great value to the man on the land. Therefore, I do not desire to see the local cement industry unduly hampered in it3 operations through the total abolition of the duty of 20s. a ton, before such time as it will be enabled to adjust itself to the new conditions. Nor can I accept without protesting vigorously, any proposal, that may jeopardize the means of livelihood of 250 people. The Tariff Board stated clearly that at the present time the excess cost of local cement over that of dutyfree imported cement is lower in Western Australia than in any other mainland State; at Perth, the difference is only 3d. a ton. .Disregarding for the time being, the issues of over-capitalization, excessive reserves, and under-production, I point out that, although the board may have been compelled to pass judgment upon the average cost of output, there are nevertheless several factors with which the Western Australian company has to contend, which are not common to the other companies.

It may not be generally known that approximately 1§ tons of raw material have to be processed to produce one ton of cement. In this connexion the percentage of lime content of the stone available in the vicinity of the Swan Portland Cement company's factories is too low and variable for the company's purposes; decayed shell which is dredged from the adjacent river is used as a substitute. The cost of recovering and washing this shell is much greater than the usual limequarrying process, and varies according to the amount of over-burden to be removed, and the length of haulage from the shell bed to the factory. Over a certain period of last year the average consumption of this basic material was 1.75 tons to a ton of cement. The actual average cost, together with the necessary mixture of clay being 12.07s. a ton of cement, or 4s. 6d. a ton above the figure accepted by the Tariff Board. Furthermore, this company uses Collie coal, which has to be hauled over 120 miles to Perth, the railage alone averaging 12s. a ton. Together with this cost the invoice price, shunting and handling charges, bring the total cost to 23s. a ton landed at the company's factory. The calorific value of this slock - and this is an important point - is very low and consequently a larger consumption for burning is essential; .65 tons is used in the kilns alone to produce one ton of cement clinker, the average cost of which is 14.97s. a ton of cement, as compared with the board's estimate of 8s. Id. a ton. Furthermore this company does not generate its own power, but draws its electric current from the public supply. The average cost of this item, over the period which I have already mentioned was 9.9s. a ton of cement. The Tariff Board's report is not clear upon the point as to whether or not its estimated cost of coal covers the cost of power. If it does, then this cost to the Swan company roust be added to the 14.97s. already mentioned for this item. lt will be seen, therefore, that the cost of raw material, coal and power, to this company totals over 21s. in excess of the actual average cost set down by the board. Furthermore, as the supply of coal and power is outside the control of the company, the costs of such items are virtually fixed. I do not desire to convey the impression that this company is in a bad way; on the contrary, it appears to have been well managed. It has a nominal capital of £150,000 of which £148,737 has been called up. In its last financial year it made a net profit, of £19,492, out of which it paid dividends at the rate of 10 per cent. It reserved £3,000 for taxation and placed £4,000 in its general reserve fund, and carried, forward £728. That, I suggest, is quite a modest performance. Among its assets, fixed deposits and bonds amount to £22,697; it has also £10,032 in current account. On an output of approximately 45,000 tons for the year it was content with a profit of less than 8s. a ton, and during the last five years it has made voluntary reductions on accepted Government tenders aggregating 27s. a ton.

Personally, I believe that the position of the industry in Australia as a whole, fully warrants a reduction of the duty of 20s. a ton; but I am loath to see that protection disappear altogether at present. These companies need time to adjust themselves to new conditions. It is well known that railway freights in Western Australia are unduly high, and that the price of Collie coal could well bo reduced, with a not inconsiderable advantage to the local cement company. Until adjustments can be arranged the industry should be protected. Western Australia, needs this industry, and the local company, as the Minister has indicated, so long as it does the fair thing in meeting local demand, is entitled to continue in existence. The Tariff Board made it clear that the object of its recommendations is not to permit importations of cement but to bring about a reduction of local prices. Such a method of adjustment, I suggest, must be applied with the greatest caution. Last week I received a telegram which led me to put question upon the notice-paper. Doubtless, all honorable senators have heard Mie answer to that question. I believe that, the actual position of the cement manufacturing industry is not yet fully understood; nor is the answer to my question fully appreciated. In the circumstances, therefore, a further inquiry should be made. I shall vote on this item in accordance with the facts which I have just described to the committee.

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