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Thursday, 28 August 1941

Senator McBRIDE (South Australia) (Minister for Munitions) . - in reply - I appreciate the brevity of the speech of the Leader of the Opposition (Senator Collings), but I am unable to say that the good example which he set was closely followed by some of his colleagues; although, in the main, their contribution to the debate was quite worth while.

I agree with Senator Keane that Mr. Craig's application to the Capital Issues Advisory Board might very well have been expedited; however, as the matter is now approaching finality, nothing further can be done.

I have also noted the suggestion of the honorable senator that some slight explanation of the budget might be made.

I shall bring the matter to the notice of the Treasurer (Mr. Fadden), and feel sure that, if possible, his desire will be met. I have also noted the reference of Senator Clothier to the federal members' rooms in Perth. I shall bring that matter to the notice of the appropriate authorities, in order to see whether additional accommodation may be provided for senators and members who represent the State of Western Australia.

Senator Brownmade certain remarks in respect of invalid pensions. A committee is at present engaged upon the investigation of the social services of this country, and I suggest that the points raised might very well be referred to it. The Government expects to receive from it a report dealing with the removal of the anomalies and hardships that exist under the present system.

Senator Amourwas rather illogical, in first complaining of the prevalence of unemployment, and then making the further complaint that women are being employed and towns are being entirely denuded of their manpower. It must be admitted that the unemployment position is better at present than it has been previously in our history. The time is fast approaching when more extensive use will have to be made of female labour, in order that industries which are essential to the war effort may be carried on effectively.

Senator Cameronmade a typical speech, containing statements which, if he makes them often enough, he will believe to be true. So far he has not, I suggest, convinced many persons of the soundness of the allegations he has made from time to time.

The cost-plus system is operating very successfully in my department, from the standpoint of both production and the cost to the Government. Honorable senators must, I am sure, recognize that, because of the variety and number of the activities which the Government was called upon to undertake, in many cases without any previous knowledge, some difficulties were bound to arise. The Government had to ascertain, first where certain articles should be made; and, secondly, the cost of making them. It was deemed advisable, indeed necessary, therefore, that some system should be introduced other than the contract or fixedprice system. After full consideration had been given to the matter by persons who were considered competent to deal with the subject, it was decided to add to the fixed-price system the target-price and cost-plus system. The cost-plus system is used only in connexion with those forms of production of which we have had no experience. Had manufacturers been asked to tender in the ordinary course of their business, not knowing the cost, the figure tendered would have included a generous allowance to cover all contingencies. It was felt that, in fairness to the manufacturers themselves, and to the Government in particular, it would be better to operate what has become known as the cost-plus system. It was never intended that that system should continue to operate for any great length of time ; the idea was that, so soon as the approximate cost of producing a given article had been ascertained, contracts should be let on a fixed-price basis, which would be fair to both the manufacturer and the Government. As an illustration, I refer to a particular component which is being made in an annexe in Sydney. When the annexe was completed, and operations were about to commence, negotiations were instituted with the firm which was to exercise control. Commonwealth executives felt, in view of the experience they had had in making somewhat similar components - under quite different circumstances, I admit - that the manufacture of this particular component would cost 18s. The firm was not prepared to undertake the contract at that price, and it was let to it on a cost-plus basis. Under that system costs are checked periodically, and in this instance a check has been made every three months. At each check considerable reductions in the cost of making this particular component were effected. That is only natural, because the workers become more adept at their various jobs and the production rate increases.

Senator Cameron - How are the overhead charges assessed?

Senator McBRIDE - They are assessed on a fixed basis. Certain overhead charges are allowable, but others, which normally would be included in the production costs of the firm, are disallowed. We have set out very fully the overhead costs which are allowable under the cost-plus system. The operation of that system in regard to the particular component to which I have referred was very gratifying. Whereas the price originally fixed as being fair 18s. a unit, production costs have been reduced progressively until when the last check was made, the price was 8s. a unit, and I am authoritatively informed that with a few minor alterations to the machinery, the price will be reduced eventually to 6s. a unit - one-third of the original price. I mention that matter to assure honorable senators that in the many and varied forms of manufacture which are being undertaken a few abuses may occur, but in the main many items have been produced much quicker than would otherwise have been the case, and at a lower cast.

The Government has not fallen down on its war effort, as. has been suggested by Senator Armstrong. Indeed, in the House of Representatives last night one of the honorable senator's colleagues expressed a view diametrically opposed to that of the honorable senator. He said in effect - and I am in entire agreed ment with him - that Australia had nothing to apologize for with regard to its war effort. Indeed, I think that this country has given one of the finest examples that could be cited of what can be done by industrial organization, even with a limited population. Not only has the Government not fallen down on its job, but with the full co-operation of industry, and of the workers, generally, it has also done something which was not thought possible before this war occurred.

Question resolved in the affirmative.

Bill read a first time.

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