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Wednesday, 26 March 1941

Senator McBRIDE (SOUTH AUSTRALIA) (Minister for Munitions) - I am sure that the honorable senator would not suggest that the Government is permitting skilled workmen to remain in States where they have no opportunity to employ their skill.

Senator Grant - The Government would not permit industries to be established in Tasmania.

Senator McBRIDE - The honorable senator's interjection is entirely untrue. The Government, instead of preventing industries from being established in States other than New South Wales and Victoria, has endeavoured , to set up industries in such States. I shall quote figures showing that that transference of industry is now proceeding and that there is substantial evidence of it in the production of those States.

I shall refer briefly to some of the difficulties that confront us, particularly in regard to our effort to produce munitions'. At the beginning of the war we had four very efficient factories, but their output was relatively small. Although prior to the war we tried to expand our activities, the war caught us in the transition stage with our programme unfinished.' As we realized early in the war that the call on our capacity to manufacture munitions would be very great, we immediately set about doing some of the things which would obviously be necessary. The bottle-neck in our munitions programme is due, in the first place, to a shortage of the machine tools which are essential to a large output.

Senator Ashley - Are these tools used in the manufacture of clothing?

Senator McBRIDE - The war effort calls for the manufacture of many things besides clothing. Owing to the complexity and the fineness of the work necessary in the manufacture of munitions, the supply of the requisite tools, gauges and jigs constitutes the real bottle-neck. Where we have these things we have to make full use of them, and, in our endeavour to increase the supply we have been confronted by the problem of a simultaneous demand for these tools from Great Britain and other parts of the

Empire, and, latterly, even from the United States of America. Theref ore, the things that we need most are also required by other countries, and this seriously restricts our capacity. We have had to rely on our own engineering capacity to produce many of the tools which, before the war, we should not have dreamed of making in Australia. Whereas, at the beginning of the war, there was only one machine-tool shop in Australia producing lathes and other necessary equipment, in quantity and also, to a lesser extent, we now have over 50 firms producing such equipment which is required most urgently. It may interest Senator Ashley to know that the value of machine tools purchased in New South Wales now exceeds that of the purchases in Victoria. The facts contrast strongly against what has been alleged by some honorable members of the House of Representatives. Figures in my possession show that machine tools delivered from New South Wales were valued at £1,072,000, as compared with tools to the value of £1,034,000 delivered from Victoria.

I point out to Senator Ashley that one of the difficulties confronting the Contracts Board in all States is the urgency of demands frequently received from the services. We have endeavoured to obtain from the various services details of requirements over a long period, so that we could organize the industries concerned and place with them orders that would keep them in operation on a. uniform scale for a period of months . In some directions we have achieved a measure of success, but the results of our efforts have not been entirely satisfactory. We hope to be able to do much better in the near future than we have done in the past. Frequently the Contracts Board receives a demand from one of the services for certain goods, and only a short period is available for delivery. A case in point is the demand for military clothing, which matter was referred to by Senator Ashley. The board is, willynilly, forced to split up contracts among a number of firms irrespective of the price tendered for particular articles, in order to meet, the delivery dates demanded- by the services. Consequently I make no apology, for saying that frequently we accept tenders involving three or four prices from different firms for the same articles. Frequently we have to accept tenders providing for low prices in Victoria and higher prices in New South Wales and Queensland, or the reverse position may obtain; hut there is no discrimination against States. The Contracts Board must be able to get the goods demanded within a stipulated period.

Senator Ashley - The blame is laid on the Army Department.

Senator McBRIDE - My department often is called. upon to supply goods at short notice. In cases where the board considers that a price is not fair and reasonable, it lets the contract on the condition that its accountants may go into the factory concerned and check the costs of production. If these costs are shown to be- such that the manufacturer is obtaining undue profit, the price is accordingly reduced. We have done this on many occasions, and some substantial reductions of prices have been made. The board takes every opportunity to assure itself that undue profits are not secured by contractors. Early last year, complaints were made by suppliers that the department was cutting prices too finely, but, owing to the larger quantities now being ordered, the factories are now able to turn out goods at much lower prices than formerly.

I understand that, as soon as Senator Ashley read a certain statement in Smiths Weekly, he referred the matter to my department for investigation and report. It was -a general statement in which the person responsible for the allegation refused to reveal his name, and, therefore, we were hampered in our investigation. Within the last fortnight I have received a letter from a contractor who is willing to reveal his name and to set out his complaint. I am having this case thoroughly investigated, and I can assure honorable senators that the department does not condone any action such as that alleged in the statements published in Smiths Weekly. If we find the statements to be true we shall take prompt and effective measures with regard to them.

In the early stages of the war, we were forced to use the f acilities at hand, and to build up existing industries, but since then we have endeavoured to spread our manufacturing activities over a much larger area. I have before me particulars of contracts let since the beginning of the war. From the 1st September, 1939, to the 31st August, 1940, contracts let by the Contracts Board for foodstuffs, clothing, &c, amounted to £9,300,000 in New South Wales and £13,288,000 in Victoria. From the 1st September, 1940, to the 28th February, 1941, contracts let in New South Wales amounted to just over £7,000,000 as against £6,700,000 in Victoria. Whereas there was a large preponderance, in the first twelve months of the war, in favour of Victoria as compared with New South Wales, during the last four or five months the contracts let in New South Wales have exceeded in value those let in Victoria.. I also point out that even the figures which I have just given may, to a degree, be misleading, because it does not necessarily follow that contracts nominally let in any one State are carried out in that State. It is impossible to give a complete statement of that aspect by any dissection of contract figures, but a statement which I have had prepared shows that in the first twelve months the war contracts let in Victoria were valued at £16,000,000 and in New South Wales at £9,000,000. Of the Victorian figure, however, contracts to the value of £3,500,000 were fulfilled outside that State, over £2,000,000 worth of the work going to New South Wales, and £1,400,000 to South Australia. The contracts actually fulfilled in Victoria, therefore, amounted not to £16,000,000 but to £12,500,000. I also point out that, probably, a large proportion of the raw material used in the fulfilment of the contracts actually carried out in Victoria was supplied by New South Wales. The claims of New South Wales are receiving the fullest consideration by the Government. I assure honorable senators that the Government has no intention of confining the manufacture of war material to any one State. Its first consideration is to use to the greatest advantage the capacity available regardless of State interests.

Finally, I point out that before we proceed much further it will not be a question of allocating orders as between firms or States; our main problem will be to obtain sufficient manufacturing capacity to complete orders which will be coming to us from abroad. Honorable senators are aware that following the initial conference of the Australian delegation in Delhi the Eastern Group Supply Council was set up a few months ago. Since then we have received orders from that council for materia] which, despite the greatest goodwill and readiness on our part to meet such orders, we were unable to accept owing to our limited capacity. We shall fulfil such orders to the utmost of our capacity. I want honorable senators to realize, however, that the demands that are going to be made upon us of the kind to which I have already referred will undoubtedly impinge upon the supply of civilian requirements. I feel sure that honorable senators generally support the policy of the Government to give preference to the manufacture of defence needs. In carrying out that policy we shall undoubtedly experience, at least, temporarily, some dislocation of the manufacture of civilian supplies. Undoubtedly, we shall experience a shortage of raw materials and labour for civilian needs owing to transfers for the manufacture of defence requirements. Consequently, when complaints are made - and I have already received such complaints - concerning these shortages of civilian requirements, honorable senators, I am sure, will realize that we are doing the right thing in subordinating civilian requirements to defence needs. However, I give the assurance that, although such shortages will undoubtedly cause inconvenience, they will at no time amount to real hardship.

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