Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Tuesday, 3 June 1902

Sir WILLIAM McMILLAN - Still, when the sums involved are very small, and the mistakes cannot benefit the importer who makes them, it is surely ridiculous to charge him with fraud, and subject him to the unpleasant ordeal of being dragged before a court of justice and having the case blazoned in the newspapers. The Tariff contains an enormous number of items, some of the duties having a protectionist incidence, and others being merely of a revenue producing character, and the classification is not of the best. Many firms have had to increase their staff of clerks in order to satisfactorily makeout the entries required, and, while it is all very well to say that mistakes should not be made, I contend that if some of the best Customs officials were placed in the various importing warehouses they would make mistakes similar to those which have been made.

Mr Thomson - The Customs officials are making mistakes every day.

Sir WILLIAM McMILLAN - The Minister's reputation for firmness, if not for obstinacy, which we have occasionally seen confirmed by his actions in this Chamber, would prevent people from trespassing upon his leniency : but he should recollect that the strong man is most powerful when he knows how not to abuse his strength. The Government, with its practical irresponsibility in the matter of expenditure, has no right to put into operation against the private citizen the great engine of the law, unless a case of fraud is made out. In thousands of cases, citizens, although in the right, will not face the expense of fighting the Government. I believe that a very much stronger remonstrance would have been made against the provisions of the Customs Bill if it had been thought that the drastic measures which it enables the Minister to take would be taken in cases of pure error. But I have heard of no case in which an error has been condoned, and I want to know from the Minister if he takes up the position that the moment an error is committed, no matter how unintentional, the offender must be dragged into court nolens volens. I have already referred to a case in which there was an error of description, turning upon the difference between toweling in the piece and towels as separate articles - a very easy mistake to make. It must be remembered that small importers cannot exercise the same supervision in regard to the goods which they indent, or perhaps, import direct, as is exercised by the large importing warehouses. He cannot tell from the invoice whether it is exactly in order or not, but he takes it for granted that the contents are properly described, and he has no means of ascertaining the contrary tillthe cases areopened. Now, take the case of a man named Chapman, a draper in Brisbane, which seems to be a very glaring case. An entry was made out by a boy, and an error occurred, as one might expect under the very ridiculous provisions of the Tariff. Instead of placing flannelette on the free list with cottons, the Minister for Trade and Customs insisted that as it was an imitation of a certain article - although that principle did not apply -it should be subject to aduty of 15 per cent. This line of goods was invoiced under a certain name - these goods are continually changing names - and as the price was very low - something like 41/2d. per yard - the boy thought that the goods could not be anything else but cotton, and he put them in the free list. The very next morning, when the father of the boy found out the error, he sent down to the Custom-house, before the goods were even out of the ship, to amend the entry, but this was not allowed.

Mr L E GROOM (DARLING DOWNS, QUEENSLAND) - Was there a conviction?

Sir WILLIAM McMILLAN - No, the case is coming on.

Mr L E GROOM (DARLING DOWNS, QUEENSLAND) - Then anything that is sub judice should not be discussed here.

Sir WILLIAM McMILLAN - It did not strike me in that way. I will not take that particular case, but will speak generally. I understand from this and other cases that even if there is a desire shown to amend an entry, the Customs authorities will not allow that course to be taken.

Mr Kingston - Not after they have been bowled out.

Sir WILLIAM McMILLAN - No, I mean before. Attempts have been made to amend entries even before the goods were bonded.

Mr Kingston - They want to amend them when they know we are going to examine them.

Sir WILLIAM McMILLAN - The position taken up by the Minister is that every man who makes a mistake is acting fraudulently, and, in fact, that all the importers are dishonest.

Mr Kingston - The honorable member has no right to say that.

Sir WILLIAM McMILLAN - It is unfortunate that a Minister so entirely opposed to the freedom of our ports should nave had the administration of this Act. The Minister requires to have an intimate knowledge of commercial matters in order to satisfactorily administer the Customs department.

Mr Watson - There have been too many back-door settlements in the past.

Sir WILLIAM McMILLAN - The honorable member is a protectionist, and he, like the Minister for Trade and Customs, apparently believes that every importer is dishonest.

Mr Watson - It is not a question of free-trade and protection.

Sir WILLIAM McMILLAN - The whole Act has been administered against importers.

Mr Kingston -For the protection of the honest against the dishonest importer.

Sir WILLIAMMcMILLAN . Honorable members who are expressing their dissent are introducing party spirit, which I refrain from doing.

Mr Kingston - The honorable member suggested that my fiscal faith influenced my administration.

Sir WILLIAM McMILLAN - The Mr. Chapman to whom I have referred is a man of high character, and character has to be taken into account in the administration of the Customs.

Mr Kingston - High character is not to be regarded as an excuse for laxity.

Sir WILLIAM McMILLAN - The Minister takes up the position that if he shows favour to one, he must show it to all, and he will not discriminate. In that case no administration is required. All the Minister has to do is simply to refer the slightest error to the Crown Law department, and to let them take the necessary action in the courts. That is the spirit, apparently, in which the department is being administered. Mr. Chapman is an honest trader of long standing, and he says that immediately the mistake was discovered on the morning following the day on which the entry was made he sought to amend the entry, but was told that it was too late.

Mr Kingston - Yes, it was too late, because the mistake had been found out.

Sir WILLIAM McMILLAN - Now I will take the case of a man named Kirkland. I have given the Minister the benefit of the decision of a police magistrate with regard to one case; now I will give him the opinion of a J udge in the case of the Collector of Customs versus Kirkland, in Queensland. Mr. McGregor, in addressing the jury on behalf of the Collector of Customs, argued that a bona fide mistake did not relieve the defendant from the consequences of his act. In other words, even if the Customs authorities felt that a bond fide mistake, whatever that may mean, was made, they would still have a right to go on with the prosecution for the sake of justice and equity. Mr. McGregor was speaking as the mouthpiece of the Collector of Customs. The jury had to answer the following questions : - 1.Did the defendant on February 10th, 1902,. make a false entry with intent to defraud the revenue ?

The answer to that question was " No." The jury were not allowed to say whether the entry was made in error, but they must say whether in the words of the Act the entry was false, that is, not absolutely true. The second question was -

Did the defendant makea false entry within the meaning of sub-section (d) of section 234?

The answer to that was " Yes." Of course he did, because any error is false according to the Act. The other questions and answers were as follow : -

3.   Did the defendant make an untrue statement in a document, within the meaning of sub-section (e)of section 234, with intent to defraud ? - No.

4.   Did the defendant make an untrue statement in a document within the meaning of sub-section (e) of section 234 ? - Yes.

Thoseanswers were inevitable, because everything is untrue if it is not absolutely correct. His Honour said that the jury really found that there was no fraud on the part of the defendant ; yet he was obliged to inflict a fine. They found expressly that the defendant was more a victim than otherwise, and that fraud was alleged but not proved. The report proceeds as follows : -

His Honour. - I find for ?10.

Mr. McGregor.It makes it a farcical Act.

Mr. Blair.They could not deliberately wreck people's reputations.

His Honour.- They failed.

So far as I can gather from what His Honour said, the Customs authorities knew that there was no fraud, and yet they deliberately went on with the case. He said that there was nothing but the merest breach of the Act, and that if a reasonable inquiry had been made into all the circumstances the case would have been otherwise dealt with. This Judge was not a member of the Opposition, and he had no grudge against the Government. Then the report continues -

HisHonour said it was quite clear that costs were within his discretion. Therewas nothing but the merest breach of the Act, and the matter could have been adjusted in another way if reasonable inquiry had been made intoall the circumstances. It could have been adjusted by the Collector of Customs.

Mr. McGregor.He has no power.

His Honour. - He has power to recommend.

Mr. McGregor.He did that.

His Honour said it seemed that a case of the least possible gravity had been made out against the defendant, so he would allow no costs except those of four witnesses.

I cannot believe that such an extreme step was taken without fully informing the Minister for Tradeand Customs of the circumstances. But here is a case which the Judge said need never have been brought into court, and which only required a little consideration and the exercise of that elasticity of administration permissible under every Act. In the next case I come to what is no doubt a difficulty with the Minister. I am quite willing to admit that we have made difficulties ourselves, both in the Constitution and in this Act. The provision to keep on the Inter-State arrangements for two years is very ridiculous. Six months would have answered all purposes, and it might have been better from a common sense business point of view if no provision of the kind had been introduced into the Constitution. The provision was introduced for a certain 'purpose, which I venture to say has never been carried out. It was introduced to avoid the danger of importers in free-trade States, or in States where the duties were lower than any others, importing largely and flooding the local markets. That has not been done, and there has never been any danger of the slightest interference with trade and commerce in this connexion. Some of the items in the Tariff, especially when they are manufactured articles, are so complicated with the products of the States, that it is very difficult to discriminate, and when we have discriminated, the sum involved is so small that a wise administration would practically let it go. Another complication is caused by the fact that during the bookkeeping period we have to allocate certain duties to the different States. In large matters, where goods can be traced, it is possible that a State might be injured financially, though not to a very greatextent, by even purely accidental errors in the making out of invoices or certificates.

Mr Kingston - Does the honorable member propose that we should overlook all small cases?

Sir WILLIAM McMILLAN - A wise administration would not deal in a drastic way with such cases as arose in Sydney the other day, when an article worth about 2s., and another worth only1d., were in dispute. The man with the1d. article asked the Customhouse officer to calculate the 20 per cent. on that amount, as he found it beyond his arithmetical ability. There is a business, common-sense way of dealing with such cases. We all havehigh respect for the law, but this is a law that applies to the everyday business of the people throughout Australia. There should be some consideration shown, especially in States where import duties had been levied for years past, and paid by firms who have never had cast on them the reproach of attempting to deceive or defraud the Customs. There should be an all-round business administration of the department, and not a purely technical, drastic administration, especially in this early period, when errors must arise out of absolute ignorance of the Tariff and its conditions. I will now take the case of Alcock and Co., in regard to which I have received the following : -

We beg to furnish you with particulars as under, and also enclose copies of certificates con- . cerning Customs case re goods exported per s.s. Talune to Tasmania : -

We supplied to the order of Mr. E. Emmett, of Hobart, a miniature billiard- table, which was manufactured by us at Russell-street, and when entered for export was enumerated as Victorian manufacture. Our customer, on presenting this certificate, was requested to furnish further particulars ; and we then sent him an amended certificate, specifying the slates, cloth, and rubber, which our clerk omittedin the first certificate.

I know how difficult it is for a Minister to get his officers to intelligently carry out his behests, but such a Minister ought to be a little careful that he is not unfair to other people who have also to employ agents. It is not the matter of the money, but the sting of the public prosecution, and the allegation of fraud, which these people feel very keenly.

Mr Kingston - No charge of fraud was levelled against them.

Sir WILLIAM McMILLAN - I can only give the committee the information which I have. This firm is worth plenty of money, and any trader would trust them to ten times the amount of which the Customs could have been defrauded. The letter I have received proceeds : -

In consequence of this clerical error the table was seized, and we were accused of wilfully misleading the Customs authorities, which we consider a most scandalous imputation on a firm of half a century's standing.

This firm has paid all the heavy duties in Victoria without, I presume, finding any stigma cast upon their name.

The oversight, if it may be termed as such, in no way benefited us, nor our client, and considering the complications that existed, and still exist, in connexion with these certificates, it being almost impossible at times to collect the information required by the authorities, in all fairness we think the Customs should try to facilitate trade being conducted amicably, and not raise all kinds of petty obstacles against firms with whom they come in contact. The annoyance is so great that it almost prohibits us from doing business with our Tasmanian customers.

Is that equality of trade, or free-trade throughout Australia 1 Trade is being absolutely obstructed by an unbusinesslike, drastic, and cruel administration of the Customs law. The case of Robert Reid and Co. is very much on all fours with those to which I have already referred. The newspaper report of this case contains the following : -

In one of the certificates the value of the imported goods was set down at £3 2s. Hd., and the whole of goods of Australian manufacture at t'13 ls. lcl., and in the other the imported goods were valued at £(> 18s. 7d., and the goods of Australian manufacture at .-£!) 3s. 3d.

Mr Kingston - One is the Inter-State certificate as rendered, and the other is the certificate as correct.

Sir WILLIAM McMILLAN - The newspaper report proceeds -

In reply to Mr. Moir, the witness said that the declarations made no difference to the revenue of ViCki ia, or to Robert Reid and Co., but Tasmania would be entitled to Us. more in the settlement of Customs accounts between the Commonwealth and the States.

Even poor little Tasmania could well afford to let Cs. go for the sake of unrestricted trade. As showing further difficulties, I may read this further extract from the report in the Melbourne Herald : -

In cross-examination by Mr. Moir, the witness said that before the Commonwealth Tariff came into force dungaree was duty free in Victoria. The defendants had worked up dungaree into garments and then exported it. At the time of the transaction the inter-State certificates were quite new and were not well understood.

This is a highly respectable firm, and we can only conceive that what is at the bottom of the mental attitude of the Minister is the fear - " If I do not prosecute Robert Reid and Co., what will be said by other persons whom I know to have committed fraud ? " Whether rightly or wrongly, the Minister feels that he cannot make " fish of one and flesh of another," although there is overwhelming proof that there is no fraud on the part of the "fish." The newspaper report continues -

Mr. Manncontended that a corporation could, be prosecuted, and that it was sufficient to show knowledge on the part of its officers. There was no necessity to show intent. In this instance! it was a matter of carelessness.

I do not know what became of that case.

Mr Kingston - There was a fine which was upheld on appeal.

Sir WILLIAM McMILLAN -There may be carelessness or blunders, but why cannot these cases be met by some administration in the department? If necessary, such offenders might be fined in the department, though I know that Ministers will say that a bad system has been in vogue for years past.

Mr Kingston - So it has.

Mr Watson - And in Sydney, especially, where back-stairs influence was used.

Sir WILLIAM McMILLAN - It does not follow that because a man should be fined he should also be prosecuted ; and, I am afraid, the honorable member for Bland has a rather suspicious mind. We have had a set of circumstances in which it was impossible for any man, no matter how honest, not to occasionally err. Another case presents great difficulty because the question lies between the hard swearing of the landing surveyor and the hard swearing of the importer. But the case shows the difficulties which importers experience owing to want of knowledge, and their great liability to place themselves in a false position. The information I have in regard to this case is as follows : -

Indent agent receives invoice for wardrobe and drawer handles (copper), and, to insure entry of goods being correct, asks landing surveyor to decide whether goods are free or dutiable. Landing surveyor decides goods are free. Entry is passed accordingly, but landing waiter at wharf, in view of Tariff proposals exempting brass handles only from duty, reports matter to collector. Collector then demands explanation from importer. Full explanation is given. Landing surveyor now denies having given any decision as to copper handles being free.

Mr Kingston - The honorable member is suggesting falsity upon the part of the Customs officer.

Sir WILLIAM McMILLAN - I am merely pointing out the difficulty under which the importers labour. I do not say that the landing surveyor told a lie, neither do I suggest that the other man did. Similar cases are constantly arising in the administration of this very intricate and difficult Tariff. For example, brass handles are exempt from duty, whilst copper handles are not. As the former are admitted free, what is more natural than for a man to imagine that the latter come within the same category? I will instance another case which I think proves the objectionable character of the Customs administration. The case to which I refer is that of a man in Adelaide who imports cigarettes for his own use. He says -

I have the honour to bring the following matter before you. Per Himalaya there arrived for my private use 2,000 cigarettes. The case was shipped in the ordinary way, as cargo, properly entered and reported by the captain at the Customhouse. On desiring to clear the package, to my intense surprise, our collector, Mr.Ringwood, declined to allow me to do so. I now ask that you will kindly allow me to pay the customs duty, so that delivery can be granted me. As previously mentioned, the cigarettes are solely for my own personal use. I have imported these cigarettes in same sized lots for years.

From the Customs department he received the following reply : -

Referring to your letter of the 1st instant, requesting delivery of 2,000 cigarettes imported for your personal use,Iam directedby the Minister for Trade and Customs to reply that the Act and Regulations are imperative, and without power of relaxation.

That is the whole principle involved. The Minister can do nothing, even where a palpable error occurs, or where the case calls for the administration of the Act with a certain amount of elasticity. I do not suggest that the statute should be trenched upon, but in a case of that kind I hold that there was no necessity for the Minister to exercise the full power vested in him. I would further point out that in the Customs Act particularly the most drastic provisions are embodied. Those provisions were intended to prevent smuggling, and to apply toan altogether different state of affairs from that which I have described. There is another matter in which I find a very curious decision on the part of the Minister. Mr. Butler, a member of the firm of Sargood and Co., in addressing some of his fellow merchants, says -

In the first instance, when his own firm had been affected by this altered condition of things, they wrote to the Commissioner, and even paid over a cheque as deposit for the amount in dispute to a Customs officer. An answer was afterwards received stating that no money would be accepted on deposit.

Mr Kingston - That was done by a mistake, and was put right as soon as it was brought under my notice.

Sir WILLIAM McMILLAN - Section 167 of the Customs Act says -

If any. dispute shall arise as to the amount or rate of duty, or as to the liability of goods to duty, the owner may deposit with the collector, the amount ofduty demanded, and thereupon the following consequences shall ensue : -

1.   The owner upon making proper entry shall be entitled to the delivery of the goods.

2.   The deposit shall be deemed the proper duty; unless by action commenced by the owner against the collector within six months after making the deposit, the contrary shall be determined, &c.

Yet here is a deposit which is absolutely refused through the ignorance of the Customs officers. What I contend is that in the early stages of the operation of the Tariff, when the importers and their clerks have to become familiar with its provisions, and when the Customs officers themselves are continually making mistakes, some consideration should be extended to the former. Such a state of things as exists to-day never existed before under any Customs administration in Australia, and is it to be suggested that this is the first occasion upon which the law is being properly administered ? I claim that the Minister is simply administering it in a hard legal way, without displayingany business acumen whatever. The merchants desired to meet the Minister for Trade and Customs, but the latter is so easily induced to do anything that he feared his natural pliability would be worked upon if the gentlemen in question waited upon him. Mr. Butler says -

The latter had not always had their way, but they had invariably found the Commissioner of Customs of the day willing to listen to reason. The present occupant of that seat, however, had absolutely refused to see the merchants.

In effect a Minister says - "I administer the law ; and you can thank the law." Mr. Butler adds -

Prior to federation a traveller going to Tasmania had to fill in two sheets of paper, containing a few entries. Subsequently, however, the forms contained 400 lines, each with six or seven divisions, making about 2,400 distinct entries, to get the traveller away.

Mr Kingston - Does not he say that that state of things was altered by us ?

Sir WILLIAM McMILLAN - Yes. But I am pointing out that the Customs officers themselves are continually committing errors. Why, therefore, should they bring other people before the Court for similar slips! It is impossible to avoid making errors under this Tariff. Continuing, the same writer sayS -

No attempt was made by the Customs department to discriminate between a glaring attempt to defraud the revenue and tlie trifling mistakes inseparable from such a great change in the administration and system.

Section 150 of the Customs Act refers to samples. It says -

Small samples of the bulk of any goods subject to the control of the Customs may, subject to the prescribed conditions, be delived free of duty.

There has always been a business-like regulation relating to samples. But in this connexion, I have in my hand a letter from a gentleman, who says -

We herewith give you particulars of the arbitrary way our Customs authorities are acting, not "by statute, but by instructions from Melbourne. We hear complaints about the harsh tyrannical action of the Customs on every hand. No one likes paying taxes at any time, and it appears to us wise and statesman -like, not to make the application of them unnecessarily harsh to honest traders. We took two days to get an Interstate certificate through, the duty in question being 2d. However, the case that riled us most was, with reference to a case of samples sent to us from Austria in the Darmstadt. On arrival, our customs clerk went down with the usual forms, and tendered original invoices and the amount of duty. The entry was refused on the ground that the Customs authorities did not recognise sample discounts." We then asked upon what authority the Customs were imposing a duty upon us above and beyond the amount fixed by the House of Representatives ; the reply was, they simply had to obey instructions. We then sent down the draft drawn for the goods, showing the exact amount of the invoice produced, but it was also equally ineffective. We then wrote our letter of the Kith May, and received reply of 14th, and finally had to pay what was demanded, which we did under protest.

In another case the Customs department were approached by Messrs. George and George of this city in regard to some fringe or something of that kind. The following is a copy of the letter of the Customs department in connexion therewith -

In reply to your letter of the 20th ult., I beg to inform you that the fringes as per sample submitted are free of duty, as minor articles for furniture.

Then there is a footnote as follows -

On receipt of above, our agents endeavoured to get a refund, but were told that no instructions had been received from the superior officers.

On Thursday 13th, Mr. George waited on Mr. Stephens, and was told that no refund would be allowed as the Minister's decision was not retrospective.

In other words the Customs department agreed that . Messrs. George and George should not have paid the duty upon tlie goods and yet refuse to refund it. The Minister's ipse dixit made the goods free at one time and dutiable at another. I would further direct attention to the case of an importer who, on the 5th August, 1901, entered as free- eight cases of metal foundry used in manufacture of furniture, as specified in the Victorian Tariff then in force. The landing waiter, however, thought the goods should pay duty, and the case was reported to the collector. Numerous interviews took place between importers and collector. There were also quite a number of letters sent in by tlie importers to which no reply was' forthcoming. In January, 1902, the importers learned that the goods, which were still on the wharf, were being pillaged ; they then notified the Customs department that they would be held liable for any loss in this respect. On 11th February last the Customs informed the importers that they had decided to fine them £10. On the 15th February the importers appealed against the fine and asked the Customs to reconsider the case. On 28th May, beyond acknowledging receipt of the above-mentioned letter dated 15th February, the Customs had done nothing, and the goods were still detained on the wharf, having been landed, in the first instance, in July, 1901. I should like to know from the Minister, when he replies, whether his attitude is that every error must be dealt with through the police court, or some other court ? Is every importer, no matter how honest he may be, to be held in absolute terror because an error has been committed, even although he can satisfy the proper officer that it is only an error? Must the officer in question proceed against the individual owing to the peculiar wording of the Customs Act, and deal with him as a fraudulent importer. I know the difficulty that arises in administration from the risk of making invidious distinctions between one man and another, and I know how difficult it is to thwart the fraudulent importer who strives .to achieve his purpose by all kinds of schemes and machinations. But is it not possible to administer this department as the Lands department, or any of the other big departments of the States are administered, so that the mercantile community will not be in arms against their prosecution for what are admitted by the Supreme Court and by the magistrates as trivial and palpable errors 1 Surely the Minister need not go from one extreme to another. He has evidently found the system in vogue in his department, in "Victoria at least, to be a loose one, but does it follow that he should therefore say - "I shall take advantage of the tremendously drastic provisions of the Act and prosecute all offenders, even where errors are trivial and unintentional " ? Surely not. Surely where an error has been committed by a firm of undoubted reputation, which has never, in the history of its dealings with the Customs, had a black mark made against its name, and its principals make a solemn declaration upon oath, for which, if untrue, they are liable to enormous penalties, explaining the error, the Minister should exercise some discrimination ? Once a case is taken into court it is tried almost wholly upon questions of law, and decided upon technical grounds. But surely there should be some elasticity of administration in- a department whose officials, who are themselves fallible, come into contact with many thousands of clerks ? I am at one with the Minister, as every honest trader must be, in desiring that fraud shall be put down, and therefore I think that his department should be administered so as to strike terror into the hearts of those who attempt to defraud. But it is a scandal to bring before the courts some of the errors which have arisen in connexion with entries under a Tariff which is not yet settled, and which underwent kaleidoscopic changes in this Chamber day after day, and week after week, so that even the Customs officials could not always interpret it, while some of its provisions cannot be satisfactorily interpreted by any one. While the Customs were collected by the States, those who dealt with the departments were, perhaps, better known to the authorities ; there was a tradition which was to some extent observed : there was a greater regularity of judgments and a more systematic knowledge of the Acts, arrived at by long experience of their working. Those facts helped to prevent many of the scandals which have arisen under the Commonwealth Tariff. At the present time there must be great difficulty, first in obtaining thoroughly intelligent Customs officials for the administration of the Commonwealth Tariff, and, in the second place, in making those officials understand its intricacies and complexities. It is also very difficult to leave to distant officials the consideration of questions of equity. The cases which I have put before honorable members, however, demonstrate that there has been harshness of adminstration, and a desire to send every case before the courts, no matter how small and palpable the error concerned. The Minister is well known to be a man of strong character and of great resolution, and his reputation is sufficient to protect him against the attempts of fraudulent importers. Therefore, he might very well conduct his administration with more leniency, and with more consideration for the fallibility of those who have to transact business with his department. ' I trust that in the future he, while in no way playing into the hands of fraudulent importers, will conduct the administration of his department upon broader lines.

Suggest corrections