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Wednesday, 2 December 1936

Senator GUTHRIE (Victoria) . - I shall deal first with Senator Collings tirade against the British Empire and the efficiency of the British people. The honorable senator laid great stress on the fact that his policy was preference to Australia first, preference to Great Britain next, and preference to customer countries in the third place. With that I quite agree. It has always been my policy and I think it has been the policy of the Government. The honorable senator tried to make it appear that it was the policy not of the Government, but of the Labour party, and that the Government had done nothing to increase employment in Australia or to better the conditions of the workers. His statements were far from the truth. There is no better indication of the efficiency of a government than the employment figures. When this Government took office, the number of registered unionists out of employment in Australia was the largest in our history, namely, 30 per cent. At the end of October last it was down to 8.5 per cent., which is actually below normal. It was 14.1 per cent, in January of this year, and at the end of October it was only 8.5 per cent.

Senator Badman - Those figures do not correspond with the figures given to me to-day.

Senator GUTHRIE - My figures are official. There has been a great increase in manufacturing and employment in Australia during the regime of the Government, which is .a protectionist administration, giving preference, just as I do, first to the Australian people, secondly to Great Britain, as it should, thirdly to customer countries, and fourth in order come non-customer countries. The weekly wages paid in the factories of Australia had risen at the end of September, 1936, to £790,000, which is an Australian record. The employment figures are better than they have been at any other time within my recollection. As regards the benefit that we have received from Great Britain and the Ottawa agreement, I would remind honorable senators who talk so much about the benefit to Australia of having Japan as a market - and I admit that Japan is our second best market for wool - that the old Mother Country is far and away our best customer, now as always. It is still our best customer for wool and also for wheat, and irrespective of those two great primary products, it .actually buys from Australia over 90 per cent, of all our other exports. As regards the intention of the Government to establish further factories in Australia, thus giving additional employment, to show the Senate how enthusiastic and genuine Ministers are in that direction, I point to the steps they are taking to encourage the building of aeroplanes in Australia. These machines are necessary for the national well-being. I also point to their desire and almost determination to have motor cars built in Australia. Even if the industry be not economically sound, it is from the point of view of defence essential to build both aeroplanes and motor cars within our own borders. We have the raw products here, we have the wherewithal to do the work, and we have the skilled Australian workmen. I am glad that the Government has, although almost at the eleventh hour, seen the wisdom of amending the reference to the Tariff Board of the motor car building policy by including the economic aspect. The Tariff Board is constituted of unbiased men, sound protectionists, who can take expert evidence from all sides and present to honorable senators a summary of the facts. This enables us to form a proper judgment, because members of Parliament cannot possibly be experts in all these matters. In the last resort, we have to decide on the desirability or otherwise of establishing an industry, and on the sacrifices which it is politic to make in the way of imposing high tariff rates, which naturally increase the cost of a commodity, or by paying a high bounty.

I arn pleased that the Government has not precipitately attempted to force people to build motor cars here. Desirable as it is that we should make our own chassis and engines, we should ascertain first whether it is an economic possibility ; but even if it costs the country something, it is most advisable for defence reasons alone that we should build aeroplanes, motor cars and motor trucks in Australia. Meanwhile the Government would be unwise to attempt to force the manufacture of motor cars in Australia because, from inquiries I have already made, I do not think that such firms as General Motors - Holdens Limited, or the Ford Company would be agreeable to risk the investment of huge sums of money necessary to produce the relatively small number of motor vehicles used in Australia. Companies such as those I have mentioned, consider that a bounty of £30 on each engine in the first year diminishing until it vanished in, I think, five years, is insufficiently attractive to warrant the outlay of the huge amount of capital required to undertake production on an economic basis. .1 understand that this subject has been referred to the Tariff Board for investigation and report, and doubtless its observations and recommendations will be of interest. I do not think that the Government has received a definite assurance from any company that if the duties in this schedule be imposed, it will undertake the construction of complete motor vehicles in Australia.

The establishment of economic secondary industries in the Commonwealth is of vital importance, not only because they provide additional employment, but also from a defence view-point. Important as is the encouragement of such secondary production, it is over-shadowed by the necessity for producing oil from coal or from shale. Even if fuel oil cannot be produced economically for commercial purposes, a determined effort should be made to produce it for aeroplanes and motor vehicles used in time of emergency.

The PRESIDENT (Senator the Hon. P. J. Lynch). - Does the honorable senator propose to connect his remarks with the subject-matter of the hill?

Senator GUTHRIE - The production of fuel oil is essential, more particularly for defence purposes.

The trade diversion policy, which came into operation on the 22nd May last, has been commented upon by many influential authorities, more particularly as it has a direct bearing on that great and friendly country of Japan. I realize that the Government is fully aware of the fact, that Japan is the second best customer for our wool which is our most important primary product. The Prime Minister (Mr. Lyons) in an excellent speech over the air said -

Let no one think for a moment that we have lost sight of the dominating importance of wool in our national affairs. The Government is in a special position to know how profoundly wool prices affect Australia's wellbeing.

Senator Duncan-Hughes - This schedule does not support that contention.

Senator GUTHRIE - I am quoting the words of the Prime Minister, who has emphasized from time to time the overwhelming importance of the wool industry to Australia. Senator Payne, who said that the action of the Government in imposing unnecessarily high duties on Japanese piece-goods and rayon is unjustified, endeavoured to show that Japan has not flooded the Australian market with its products. Every one knows that, during the last twelve months, Japan has reduced the price of its cotton piece-goods and rayon by more than one-half, and has therefore made it absolutely impossible for Great Britain to compete in the Australian market. During the last twelve months, Japan has secured 90 per cent, of the Australian trade in silk, but that is not surprising in view of the fact that that country excels in the production and manufacture of silk. Japan has also captured 83 per cent, of the Australian rayon trade and a tremendous proportion of the trade in cotton piecegoods. This has been achieved not at the expense of foreign countries, but to the detriment of British manufacturers. If we discontinue importing cotton piecegoods from Great Britain - a most important item of export to Australia, amounting to over £3,000,000 per annum - what are we to buy from Britain? Japan will flood this market with goods manufactured under conditions and at wages totally different from those prevailing in Australia. How can Great Britain continue to give the liberal preference to our primary products if we cannot continue to purchase its manufactures? Apart from wool and wheat, Britain purchases over 90 per cent, of our exports. British interests which have invested as much money in Argentina as they have in Australia have given absolute preference to Australian frozen and ' chilled beef, mutton and lamb. Since the adoption of the Ottawa agreement, the volume of trade in that respect has increased considerably, and last year 4,000,000 carcasses of lamb were exported to Great Britain at prices ranging between 17s. 6d. and 20s. a carcase. It is expected that this year a similar number of carcases will be exported, and that the price will be nearer 30s. than 20s. a carcase. Great Britain extends substantial preference to Australia in respect of butter, dried fruits, and other primary products, and it is only reasonable that it should expect some of our trade in return. Some of the statements made by Senator Payne were incorrect, as the flooding of the Australian market by Japan became accentuated only during the last twelve months. Throughout the whole of the trade negotiations with Japan, the Commonwealth has objected not so much to the quantity of imports from Japan as to the reduction of values. I understand that the Government has provided for a reasonable quota for goodcustomer countries, and will deal with, them on the most liberal terms. I agree with Senator Payne that Japanese manufacturers and operatives are extraordinarily efficient, and work very hard regardless of the wages they are paid, or the conditions under which they labour. Moreover, their mechanical equipment is highly efficient, and a Japanese has recently invented a Toyoda cotton loom which has been pronounced to be the finest in the world. The Japanese are particularly efficient in converting raw materials into finished products, and as they have been so proficient in producing cotton piece-goods and rayon at ridiculously low prices, before long they could commence producing woollen piece- goods, and in that way compel Australian woollen manufacturers to close their doors. The freight on wool from Australia to Japan is comparatively low, and when allowance is made for the wages paid and the conditions of labour, the Japanese could buy larger quantities of our wool, manufacture it into woollen textiles, and export .them to Australia where they would enter into most serious competition with similar goods manufactured in Australia.

Senator Duncan-Hughes - Who supplied Australia with woollen goods before they were manufactured here?

Senator GUTHRIE - Great Britain and other countries; but I do not think Senator Duncan-Hughes suggests that the protective duties imposed to assist the development of the Australian woollen manufacturing industry have not been of inestimable benefit to the Commonwealth. Local woollen manufacturers purchase up to 300,000 bales annually of our total wool clip, employ thousands of operatives, and produce woollen goods from women's light-weight dress goods to the heaviest rugs equal to those manufactured in any factories in the world. In view of the customs duties imposed upon Australian products in Japan, I am surprised that Senator Payne considers that the duties we impose upon Japanese manufactures are too high. The Japanese rates are, in some cases, at least double those which we impose. If we exported some of our manufactured goods to Japan we should soon find out how they would be treated. Although the duty imposed by the United States of America on Japanese textiles is heavier .than those which we impose, the American market was invaded with cheap woollen overcoatings. Within two years, the export of woollen textiles from Japan to the United States of America increased fourfold. An extract from the Literary Digest, published in the United States of America, reads -

Elsewhere in the world the industrial revolution has meant a general rise in the standard of living which has meant in turn a general increase in wage scales which has meant higher costs. But in Japan it has not. The agricultural half of the population too numerous to live fatly upon Japan's limited farm lands and long habituated to extreme frugality, has been held nearly at the level it knew 400 years ago. And it has held down tho living standards of the rest of the country since it makes constantly available a vast reservoir of extremely cheap labour eager to work in industry at any wage above the bare subsistence level of the farms.

Cheap labour is available in Japan owing to the fact that half of the Japanese live on farms where the standard of living is no higher than it was 400 years ago. The efficiency of the Japanese people cannot be denied. The article continues -

Again there is Japan's efficiency in the use of machinery in producing textiles, her biggest export. She has developed the Toyoda loom*, one of the world's best. Japan's durable and economic formula for mixing American cotton and cheaper Indian cotton in textiles is a secret which weavers throughout the world have been anxious, and found it impossible, to learn. It would be entirely false to think that Japan's industries are all large scale. In fact 60 .per cent, of her industrial workers are in tiny factories employing less than five souls. Unknown hundreds of thousands of little wooden factories in the home where cash wages as low as 30 cents a month are paid or where father, mother, sons and daughters labour unremittingly for a most meagre return at all times much less than 64 cents a day average to the industrial factory worker. Japan has thus an industrialization which must sell its goods abroad since her domestic market is incapable of buying her industrial products.

It is absurd for Senator Payne to say that we are not, justified in protecting our local industries in the manner proposed, and that we should not expect to obtain larger quantities of cotton piece-goods and rayon from the Mother Country. I realize, of course, that Japan is one of Australia's best customers. I admit that like all wool-growers I am losing money on my wool at the present time by reason of the fact that the Japanese are out of the Australian wool market.

Senator Duncan-Hughes - So are many people in Australia.

Senator GUTHRIE - It is of no use to say that the wool-growers have not behaved splendidly during the dispute with Japan; they have behaved magnificiently; but everybody wishes to see the trade dispute brought to an end. It is futile for Ministers or anybody else to tell me that, despite the absence of Japanese buyers from the Australian wool market, wool-growers are getting as much for their product as they otherwise would. I have taken the trouble to ascertain the prices obtained for various classes of wool at the sales in South Africa and New Zealand yesterday. When purchasing wool you pay for the wool only and not for the dirt and yoke. Though it cannot be denied that the woolgrowers of South Africa and New Zealand are procuring a higher price than obtains for similar wools in Australia it is not so much higher as some people would have us believe. At the wool sales in New Zealand yesterday and the day before the Japanese buyers were reported to have "stormed the market"; they purchased 7,500 bales out of a total of 15,000 bales offered.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - That was not a very good test.

Senator GUTHRIE - Yes ; it was a very good test of New Zealand wools; but the fact that the New Zealand growers got 26d. for greasy half-bred wools does not mean much. It is the clean cost of wools comparable with similar wools sold in Australia that must be taken into consideration. Though the New Zealand price has been definitely higher, as I have said it has not been anything like what might appear at first glance. The same remark applies to the South African sales. When the Japanese buyers operated in the South African wool market they displaced French buyers who were forced to come to Australia for their requirements; their operations in the Australian market were partly responsible for the maintenance of the price for merino wool in this country. Similarly, the operations of the Japanese buyers in the New Zealand market will drive a lot of Yorkshire orders for cross-bred wools to Australia. There is naturally a certain lag, but it does not matter nearly so much as people think.

I commend the Australian wool-growers for the way they have behaved during the course of the trade dispute with Japan; there has been very little complaining considering that there are 100,000 growers in Australia. Senator Payne has said that we have treated' Japan very badly; from the honorable senator's remarks anybody would think that the Government had singled out Japan for particularly bad treatment. The facts are that the duty imposed by the Australian Government on imports of artificial sills and rayon from Japan is 9d. a square yard, whereas in Canada it is 9Jd., in France 9-£d., in the United Kingdom 10d., and in the United States of America 11½d. Of all the countries I know that import artificial silk goods from Japan Australia imposes the lowest duty. The Government did not suggest the cutting down of the total value of imports of such goods from Japan, but only a reduction of the volume, because Japanese manufacturers are exporting hundreds of millions of yards of artificial silk goods at prices against which nobody can compete. In retaliation for the imposition of the Australian duties on textiles, Japan completely boycotted Australian products; it refused to take either wheat or wool. The wheat trade with Japan does not mean as much as honorable senators believe, because, although Japan buys a certain quantity of Australian wheat, it is gristed and the flour exported to eastern countries where it is sold in competition with Australian flour. Very little wheat is used in Japan for domestic purposes. Japan is, I admit, our second best customer for wool, and there is every probability that, with its 90,000,000 people using wool to a greater extent each year, it will soon become Australia's best customer for that commodity. It is only 30 years ago since I sold on behalf of the firm which employed me 2,000 bales of wool to Japan. It seems likely that in the near future Japan will be purchasing from Australia 1,000,000 bales of wool or 30 per cent, of the total production of wool in this country.

Senator Duncan-Hughes - Will the honorable senator explain why, if this policy is sound, the Government is not standing up to it ?

Senator GUTHRIE - I think the Government is standing up to it. As a wool-grower and a primary producer, I am 100 per cent, behind the Government in this policy.

Senator ALLAN MACDONALD (WESTERN AUSTRALIA) - The honorable senator is about the only one.

Senator GUTHRIE - The Government's policy is Australia first, Britain second, and our good customer countries next. I am not concerned whether the quota in respect of artificial silk goods is fixed at 100,000,000 or 120,000,000 or 125,000,000 square yards; it will enable the Japanese manufacturers to send more artificial silk into this country than comes in from the Old Country. That artificial silk will be imported at a duty lower than that imposed against Japan by any other country. If that is not friendly trading, I do not know what is! What do Honorable senators expect the Government to' do? I arn very anxious for a satisfactory settlement of this dispute; but I do not think that it is the fault of the Commonwealth Government that an amicable arrangement has not yet been reached.

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