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Wednesday, 2 December 1936

Senator PAYNE (Tasmania) . - Every tariff schedule is important but the one now before us is especially so. My mind goes back to April last when we dealt with a tariff schedule which fixed the duties on certain British cotton textiles at such prohibitive rates that it was impossible for British manufacturers of these plain textile fabrics to trade with Australia. To-night we have before us a schedule, the object of which is said to be to enable British manufacturers to retain their trade in textiles with Australia. Yet, a few months ago we rendered it impossible for some of that trade to continue! In this respect the Government has shown a complete reversal of form.

I was pleased with the concluding portion of Senator Hardy's speech, inwhich the honorable senator expressed regret that the Tariff Board had not been consulted in regard to the proposed alteration of duties. I go further, and say that I bitterly resent being asked to consider a schedule of tariff items, not one of which - I refer to textile fabrics-has been referred to the Tariff Board for report. I resent being asked to be a party to a violation of one of the most important laws on the statute-book. It was placed there in 1921, only after the fullest consideration, in order that alterations of the tariff should not be made at the whim or fancy of a party or a Ministry, but should be the outcome of careful consideration and investigation following the taking of evidence by a duly constituted body, which would report not only to the Minister but also to Parliament. That law, which is still on the statutebook, has been broken on two occasions - once by a previous government, and once by the present Government. I shall not be a party to violating that law and. therefore, I shall refuse to support any item in the schedule which has not been referred to the Tariff Board for report.

Senator Dein - The honorable senator does not always follow the Tariff Board's r ecom mendations.

Senator PAYNE - Of course not. There is no compulsion to accept the board's recommendations. Section 15 of the Tariff Board Act of 1921 provides -

The Minister shall refer to the board for inquiry and report the following matters -

(d)   The necessity for new, increased or reduced duties, and deferment of existing or proposed deferred duties, and shall not take any action in respect of any of those matters until he has received the report of the board.

There has been no report by the Tariff Board on the proposal to increase the duty on the textiles which are included in this schedule.

Senator Dein - The honorable senator did not accept the board's report on cement.

Senator PAYNE - I have never suggested that we must necessarily accept the board's recommendations, but I do say that we are required by law to wait until the board's report is to hand before we allow duties to be altered.

Senator Dein - If the board's report is ignored, it cannot be of much value.

Senator PAYNE - The honorable senator's interjection suggests that he places the Tariff Board above Parliament. We are not necessarily wrong in rejecting a recommendation of the board. To do so is not to act illegally. But we do act illegally if we take action either to reduce or increase duties before the board's report has been received. I cannot see how the Government can justify its action. I shall not be a party to breaking a law that I have helped to make. In this respect the Government and the Parliament should set an example to the community. Laws should be just as binding on the Government as on the community.

I come now to the trade dispute with Japan. I had hoped that before this tariff schedule came before us, a trade agreement between this country and Japan would have been amicably arrived at. I hope that that will yet come to pass.

Senator Duncan-Hughes - It is a matter of hours now!

Senator PAYNE - The Government has been indiscreet for it could have adopted another course. In the special circumstances, a short measure could have been introduced to suspend, temporarily, the Tariff Board Act. That has not been done, and consequently a breach of the law has been committed.

Senator Hardyhas shown the value of Australia's trade with Japan, but there are other considerations which should weigh with us, particularly at this critical time, in the history of the world. Australia's relations with Japan have always been most friendly; and surely the Government should have hesitated before taking action to provoke such a good customer. Already Australia had fairly heavy duties against Japanese goods. The tariff on artificial silk textiles was 20 per cent. British, and 40 per cent. foreign. That was a fairly substantial margin of preference, but had it been thought necessary to increase it, the proper plan would have been to call a conference and to start on the basis of the amicable relations which had existed for a number of years. I am convinced that if that had been done there would have been no dispute with Japan at all. In order to inform my mind regarding the trade dispute with J apan, I have read various articles in Australian newspapers and other publications, and in addition, publications issued in other countries. Probably there are no more reliable journals in relation to trade matters than the Economist and the Statist published in London. The Economist, of the 29th August, 1936, in an editorial, under the title "Australia's Real Interests", contained the following: -

What are the rights and wrongs of the unfortunate Australo- Japanese controversy? Australia argues that although Japan buys more than she sells, the Australo-Japanese trade is carried in Japanese ships, financed by Japanese bankers, and organized by Japanese merchants. This comes near to the heart of the matter, which is more political and nationalistic than economic. It is true that Mr. Lyons, the Commonwealth Prime Minister, says that Australia is not acting in any unfriendly spirit, but merely desires " progressive two-way trade on an equitable basis ". Two-way trade is no self-evident virtue; but even if it were it would surely imply in the present case, that either Japan must sell more to or buy less from Australia, and neither result would really please Australia in her present mood. At the bottom of the controversy seems to be the desire to hold back the Japanese at all costs. That Australia realizes this to be a difficult attitude to maintain is evident from her recently expressed desire to revive British emigration. But even British emigration cannot change the physical characteristics of the country, and in the nottoolong run Australia's tariff policy can only aggravate the very Japanese characteristics which she seems to fear. Great Britain, in turn, should be the first to recognize that her present policy of restricting imports of food supplies, in the interests of her own agriculturalists, does not make Australia's problem any the easier. High tariffs and restriction ist policies, indeed, are doing more to restrict trade, and the world's standard of living, than any increase in trade which would follow relaxation of discriminatory measures against the Japanese, whose right to live and do business is at least as fundamental as that of the Australians and the British. The world might well go to school again to re-learn the forgotten lesson that international trade is beneficial to all parties, not a gain for one country at the expense of another; and that its merit does not reside in trade restricted to a two-way channel.

Senator ALLAN MACDONALD (WESTERN AUSTRALIA) - That is elementary.

Senator PAYNE - There is nothing elementary about it; it is very practicable. Under the heading of "AustraloJapanese Trade War", the editor of the Economist writes -

Last May Australia introduced higher tariffs and a licence system on certain imported commodities (cotton, . rayon, tobacco, motor chassis, &c.) with the avowed aim of increasing British preference, aiding domestic manufacturers and diverting trade to "good customers ".

That term " good customers " has been used to-night by several honorable senators. The extract continues -

The Japanese, who were the principal potential sufferers, retaliated promptly by implementing their trade protection law, which had earlier been used against Canada, when she discriminated against Japanese goods. They threatened to cut their imports of Australian wool by two-thirds and to make up one-third of the difference by buying from other producers, and the other third by using artificial fibre. Manchuria faithfully followed suit. Wheat, wool and flour may now be imported into Japan only under licence, and certain other Australian imports ore subject to an additional duty of 50 per cent. ad valorem. Neither party has yet seen fit to sign a truce in this unhappy war, although both profess to be willing to negotiate. The position is the more regrettable because Japan and Australia are eminently fitted, by natural endowment, to do a complementary trade to their mutual benefit. Japan lias a densely crowded population, very little agricultural land, and a deficiency of certain types of foodstuffs and raw materials which Australia can profitably supply. Australia has large territories suited only for pastoral and agricultural uses. Japan must live by manufacturing, Australia by producing raw materials. In past years Australia has found her Japanese trade highly profitable, and, although Japanese exports to Aus.l, al ia have made rapid progress in recent years, her purchases from Australia have increased by a greater absolute amount. If, by a good customer Australia means a customer who buys more than he sells, then Japan can justly claim to be one of Australia's very best customers. It is, of course, part of the Australian claim that Japan has adopted underhand means to increase her sales, particularly of rayon, in Australia, and that the Japanese are undermining the Australian standard of living, taking trade away from Great Britain. Although the terms of trade are moving in Australia's favour, giving her more imports for a given quantity of exports, she complains of " unfair Japanese competition ". The competitive position in the Australian import market between Japan and Great Britain is illustrated for two groups of commodities by these figures: -


The most striking point about these returns is the great reduction in the total value of sales, rather than any great increase in the Japanese figures.

These opinions are written by nien who make a life study of such matters as honorable senators have been discussing tonight. Authorities, such as librarians and economists, regard this journal as being second to none in the British Empire for reliability on economic subjects.

Senator Hardystated that Australia could not stand idly by and watch Japan " mop up " the British textile industry. Other statements have also been made to-night in regard to the possibility of J apan " mopping up " the trade that Britain does with Australia in cotton textiles. Ever since last May statements of that character have been made ad nauseam. In connexion with this subject I have obtained comparative figures showing the imports of textile materials from Great Britain and Japan in 1934-35. The ordinary cotton textile materials in which every housewife is interested - the grey unbleached cotton textiles, white bleached cotton textiles, and dyed or printed cotton textiles - are included in these statistics. For 1934-35, the imports into Australia of these classes of goods totalled 157,250,853 yards. Of that quantity, 103,569,068 yards were imported from the United Kingdom and only 50,372,322 yards from Japan.

Senator Guthrie - The position has altered since 1934-35.

Senator PAYNE - .That was only a year ago.

Senator Guthrie - But since that time Japan has swamped the Australian market with cheap textiles.

Senator PAYNE - Japan has not done so ; moreover, it cannot do so with many lines. British manufacturers can put on the' market cotton textiles of such value that they would not be superseded by the Japanese article. In this respect, Great Britain can always maintain its trade with Australia in plain cotton textile fabrics because of their superior quality.

Senator Brown - That is textiles of the finer quality.

Senator PAYNE - The difference of price between Japanese and British textiles, as the result of the British preferential tariff, is almost infinitesimal. I refer now specifically to sheetings and calico bleached goods. Who dares to say that Great Britain is becoming so decadent that it cannot manufacture for export, with a reasonable measure of protection, textile fabrics of fine quality?

Senator Guthrie - It cannot do so against the price of the goods with which Japan was swamping the Australian market.

Senator PAYNE - Apparently, the honorable senator has not sufficient sense to discriminate between cheap rayon materials and cotton fabrics. He refers to rayon priced at 4£d. a yard.

Senator Guthrie - Why does not the honorable senator obtain up-to-date figures instead of quoting old information?

Senator PAYNE - Figures relating to 1934-35 are not old.

Senator Guthrie - In this instance they are old, because it has only been in the last year that Japan has flooded the Australian market.

Senator PAYNE - The market has been flooded only with cheap rayon materials. Has that been disastrous to Australia ?

Senator Sir George Pearce - It was very nearly disastrous to Great Britain.

Senator PAYNE - The rayons imported from Great Britain were totally different in quality from the Japanese materials. They come within an altogether different category; that is well known to the trade. The British manufacturer of a good type of rayon can always command a satisfactory trade in Australia. The enormous quantity of cheap rayon imported during the last few years into Australia furnished for the first time in our history an opportunity to the poorer classes to clothe themselves decently and attractively. On that material a customs duty of 50 per cent, was collected.

Senator Duncan-Hughes - Apparently, the poorer classes are not to be considered in this matter.

Senator PAYNE - When this cheap rayon material was brought within their reach, their standard of living was improved. Is it a crime for the poorer classes to be able to clothe themselves decently, and for the younger people to gown themselves attractively when attending a party?

Senator Sir George Pearce - What would have happened if Great Britain had employed that contention in . regard to Australian butter and other commodities?

Senator PAYNE - The ability to purchase these cheap materials has proved a. boon to our poorer classes. Moreover, Australia was not losing by the importation of these fabrics. Actually, our trade expanded and our customs revenue increased.

Senator Dein - Does the honorable senator apply that contention to all Japanese manufactures ?

Senator PAYNE - I am referring to these two special items.

Senator JAMES McLACHLAN (SOUTH AUSTRALIA) - How long should that trade last?

Senator PAYNE - For a reasonable time. I bring under the notice of honorable senators, particularly Senator Guthrie, an enlightening fact. Quite recently I learnt, not from Japanese but from British sources, that Lancashire mills are now using more efficient looms manufactured in Japan. By this means they are able to turn out articles of better value and retain their trade in these materials with Australia.

Senator Leckie - What is the honorable senator's authority for that statement ?

Senator PAYNE - British newspapers. Honorable senators should not overlook the fact that the Japanese are human like ourselves. A population of 70,000,000 is living on a land only one and a half times the size of New Zealand and only 20 per cent, of it is arable. In order to live they must manufacture; they have no alternative. Incidentally, the white races were the cause of the Japanese becoming an industrial nation.


Senator PAYNE - Before they became manufacturers for export they limited their population. They desired to have no contact with the outside world ; they wished to live unto themselves. But at the point of the gun they were compelled to open their ports to the white races, who wanted new and bigger markets for their products. In selfdefence, the Japanese were then obliged to take up manufacturing. I hold no brief for Japan as against Australia or the United Kingdom.

Senator ALLAN MACDONALD (WESTERN AUSTRALIA) - It certainly sounds like it.

Senator PAYNE - If, for simply stating certain facts, I am accused of holding a brief for another country, I can only pity the intelligence of the honorable senator who made that interjection. I am honest in the statement that I hold no brief for Japan against Great Britain. I am, and always shall be, a Britisher first, in my attitude to the tariff. No one has protested more vigorously than I have against the cruel -treatment to which British manufacturers have been subjected through the erection of an Austialian tariff wall which it was impossible* for them to climb.

Senator Guthrie - Is not the honorable senator in favour of giving them preference now as against Japan?

Senator PAYNE - Certainly, but not preference to the extent proposed, which is practically prohibition against Japan. I heard the Minister say to-day that the Government did not want to shut the Japanese out, and that all that was aimed at was to raise the price of Japanese textiles to a reasonable figure. I resent statements that have been made in the press and in this chamber regarding the conditions existing in Japan. I heard it said to-night that Japanese conditions were such as neither British nor Australians would tolerate. What do people mean by a statement of that kind ? Do they know what the conditions of factory operatives are in Japan? Have they seen the Japanese factories working? If I could take honorable senators to Japan on a tour of inspection, they would return with a vastly different outlook.

Senator JAMES McLACHLAN (SOUTH AUSTRALIA) - How long was the honorable senator in Japan ?

Senator PAYNE - Sufficiently long to learn much about its factories. In fact, I gained admission to places which very few people are privileged to enter. I have been through the national silk conditioning warehouse of Japan. This is a marvellous place, not only from the point of view of efficiency and cleanliness, and the general conditions under which over 1,000 operatives work, but also for the manner in which inspections are made of this commodity, silk, in the production of which Japan is pre-eminent. Not a ba!?) of silk is allowed to leave Japan unless it is right up to the standard claimed for it. It is subjected to every possible test imaginable to ensure that the buyer can rely upon its quality. With regard to many of the factories in which the textiles are made, I do not think there is a building in Australia which can show better conditions. There are hundreds of factories in Osaka.

Senator ALLAN MACDONALD (WESTERN AUSTRALIA) - What about the difference in the pay?

Senator PAYNE - Their standard of living is different from ours. Their wages purchase for them all that they require, and possibly they have a larger margin at the end of the month than many of our workers can show. They have all that they need, and no one could ask for more. Not only do their wages cover food, clothing, and shelter, but in their factory life they get many additional privileges, such as recreation, educational training, medical attention, and nursing, for which our factory operatives have to pay.

Senator ALLAN MACDONALD (WESTERN AUSTRALIA) - The cannibals of the South Sea Islands have all they need.

Senator PAYNE - The Japanese are not savages. Their standard of education and culture is high. '

Senator ALLAN MACDONALD (WESTERN AUSTRALIA) - I do not doubt it. I did not infer that Japanese were savages. I was simply showing that the honorable senator's argument was not logical.

Senator PAYNE - The wages of the Japanese workers are ample for their requirements. If we give- our people a wage of which that can be said, we consider that we have done well. It is admitted that the Japanese standards of food and drink are not the same as ours. I want to disabuse the minds of honorable senators of the idea that the Japanese factory workers are living under wretched conditions. They are not. They are working under excellent conditions, in up-to-date factories. No machinery is retained which is even approaching obsolescence. If it is not highly efficient it is replaced by something as efficient as human skill can make it. I found the same state of things in the newspaper offices of Japan. There they cannot use the linotype machine, because their alphabet has over 500 characters, but their efficiency is marvellous. I came back from Japan with a very different outlook, realizing that -its people were highly efficient .and industrialized. The units in every industry give their best to the callings in which they are engaged. That was a special feature which I noticed everywhere. Their operatives, male and female, seemed particularly interested in their work, and apparently were very happy. I never saw a scowling face in Japan. I saw no sign of undernourishment, and I never saw a fat, bloated Japanese. I feel that I must speak plainly to the Senate regarding our fiscal policy towards Japan, a country with which we have had for years such happy relations. I shall conclude by repeating my statement that I shall not vote for any item which I consider does not comply with the provisions of the Tariff Board Act. I think I am justified in taking up this attitude, because 1 will not be a party to breaking that law, which was put on the statute-book after much careful consideration.

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