Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Wednesday, 19 October 1904

Mr LONSDALE (New England) - Ever since I have been a member of the House, I have stood against giving privileges to any section of the community. I am against giving privileges to capitalists in this, just as in the case of other Bills we have had before us. I have been against giving privileges to men who labour. I refuse to enable any persons to put their hands into the pockets of the people, and make their circumstances worse for their own especial benefit. It has been said here, of course, that the iron industry would be of very great benefit to the Commonwealth. Nobody denies that it would. If an industry, such as this, could be established naturally, and without being artificially propped, it would be a good thing for the Commonwealth. There are a large number of industries which, if established, would advantage the Commonwealth, but we do not propose to offer any assistance in those directions. In the past we have had a section of the community whose one idea has been to establish industries by some artificial means, their plea being that they would find employment for the people. A trial has been made in Victoria, and if there has been one failure greater than another in this State it has been the attempt to find employment for men by artificially building up industries. Nobody can recall what has been done here without realizing that fact. We cannot read the reasons which are being put forward for the failure of some of the industries which have been propped so long without realizing the absolute failure of any artificial means to establish an industry. If there are natural advantages and natural opportunities, and there is a demand for the product, the industry will naturally establish itself. But if those natural advantages do not exist, and there is no demand for the product of the industry no attempt of ours will succeed in establishing it by artificial means. It has been alleged here that all the world has given bonuses for the establishment of industries, but that statement is not correct. America did not establish her industries by means df bonuses. It is said, of course, that she established them by other artificial means ; but that statement is not correct. England did not give bonuses for the establishment of her industries. Germany and France established their industries by means of export duties. The only country which has given a direct bonus for the establishment of iron industries has been Canada. We are told that the successful establishment of its iron works was due to the bonus. If honorable members who quote that instance as a success have looked into the matter I do not know what they would call a failure. For twenty odd years bonuses have been given in Canada, and only within the last few years did the industry develop to any extent. During the last four years there has been some degree of development. In 1901, 150,339 tons of iron were produced, namely, 50,581 tons from foreign ores, and 99,758 tons from Canadian ores. In 1902, 341,654 tons of iron were produced, namely, 268,553 tons from foreign ores, and 73,101 tons from Canadian ores. In 1903, 321,191 tons of ore were produced, namely, 274,741 tons from foreign ores, and only 46,450 tons from Canadian ores. The mill which produced the greater quantity of that iron was that of the Dominion Iron and Steel Company. Last year it produced 205,000 tons, but from foreign ores. We have been told1 that that .mill was established by means of a bonus. Its construction was started in the autumn of 1899 - that is, in the very year when the Canadian Government had decided to reduce the bonuses year by year, commencing in 1902, until they ceased to exist in 1907. It should be perfectly clear to honorable members that it was not the bonus which induced the capitalists to put their money into the industry. The reason why they started was not because of the bonus, but because of the natural opportunities which they possessed They started their works at Port Sydney, in the midst of large deposits of iron ore. Not only where the mill was erected, but across the channel, on Bell Island, they had deposits of iron ore of the highest quality. On the coast of Newfoundland and Labrador they also had large quantities, of which they could avail themselves. They started their mill where they had not only deposits of ore, but also large deposits of coal of the highest coking qualities, and limestone could be brought from the water-side by water carriage to the mill. They started the industry at Port Sydney, which is 1,300 miles nearer to Liverpool, 1,000 miles nearer to the Mediterranean, and 700 miles nearer to Cape Town than Pittsburg, the great iron manufacturing centre of America, and even 200 miles nearer to Cape Town than Liverpool itself. Having all these natural advantages and natural opportunities for the production of iron, the capitalistsstarted their mill with the markets of the whole world before them. That was one of the great reasons which induced them to erect their mill at that point. In the autumn of 1899, as I said, they determined to erect the mill, and commence operations. One of the efficient causes in bringing about its construction was the formation of, the great American Steel and Iron Trust in March, 1901. The Canadians established their mill at Port Sydney for the purpose of becoming a competitor with that great trust. So far from the bonus being one of the efficient causes, in my opinion it was not, because, before the industry was started, the Government had resolved that the bonuses should decrease year by year until they ceased in 1907. Of course, like a large number of gentlemen who have influence upon legislators, the shareholders of the Dominion Iron and Steel Company had some influence on the Dominion Parliament, and, in 1903, they succeeded in getting an alteration of the bonus arrangement made. They got an additional bonus of $6 per ton for rolled wire nail-rods, of $3 per ton for rolled shapes, and of $3 per ton for rolled plates, and they got an extension of the time for the payment of the bonuses by one year. That is all the advantage they got in that direction, and it seems to me that instead of a bonus having had any beneficial, it had just the reverse effect. It is said - "If we establish these industries by means of a bonus, what a magnificent thing it will be for the Commonwealth. We shall be able to build our own navy. It will be unnecessary for us to continue our contributions to the British Navy, because this will enable us to build a- navy of our own at reduced cost. We shall be able to manufacture our own armour plates as the result of granting bonuses for the establishment of mills for the production of pig iron and steel, and shall receive other benefits in the same direction. We shall be self-contained as soon as this industry is established - we shall be able to make for ourselves all those things of which pig iron is the basis." That is pure bathos.

Mr Thomas - It was twaddle of that description that brought about Federation.

Mr LONSDALE - Exactly. I shall not say that those who speak in this way believe that they are talking bathos. It may be due to ignorance on their part. Any man of common sense must know that such results are not likely to follow the granting of these bonuses. Canada affords us a practical illustration of what would happen. If these bonuses would do for Australia all that has been claimed for them, the adoption of a similar system in Canada surely should have done the same for that country, but it has not.

Mr Hutchison - Are not the conditions different ?

Mr LONSDALE - Probably they are; but all the natural advantages are on the side of Canada. The mills which produce the great bulk of the pig iron there have the markets of the world at their doors.

Mr Hutchison - Does the honorable member know that they have to import a large proportion of their ore?

Mr LONSDALE - I have already said that they do. They obtain it from Newfoundland, and receive a bonus in respect of pig iron made from foreign ore.

Mr Webster - Why do they use the foreign ore?

Mr LONSDALE - Perhaps because it is the best.

Mr Webster - I thought that the honorable member said that there was an abundance of suitable ore in Canada.

Mr LONSDALE - I distinctly stated that there were immense deposits of iron ore on the coastline of Newfoundland and Labrador, but ore obtainedfrom those districts is spoken of as " foreign ore," just as anything that we might obtain from New Zealand would be classed as foreign. During the last five years, in which the larger developments to which reference has been made have taken place in Canada, the value of imports of the higher manufactures of iron and steel into the Dominion has increased by 10,000,000 dollars, while the value of imports of the lower classes of manufactures - such as pig iron, railway rails, and iron and steel goods of lower qualities, has increased to the extent of 20,000,000 dollars, or a total increase of 30,000,000 in the value of imports. What was the increase of exports during the same period ? If this is such a magnificent scheme - if it will lead to the establishment of so many industries, as has been suggested - surely it should have led in Canada to something in the direction of an export trade. What has happened? The increase in Canada's exports of all kinds of manufactured iron and steel during this period represents only a value of 2,560,000 dollars. That is the so-called success which has attended the granting of these bonuses in the Dominion. If it be a success, I do not know what honorable members opposite would write down as a failure. The very works to which I have referred have produced about 205,000 tons out of the total of 321,000 tons, so that honorable members will see that this great advance has depended solely on the efforts of one mill. I was informed a few days ago that even the company conducting those works had found it necessary to reconstruct - that they had spent too much money, and had to a large extent to restrict their operations. That may account for the falling off which has taken place during the last year, and there will probably be a still greater reduction in the output. The iron consumed by Canada is about double that which is used in Australia. From 800,000 to 820,000 tons are used in Canada every year, while we do not import more than about 350,000 tons per annum. One of the large blast furnaces in the United States would produce all that would be necessary to satisfy the requirements of the Commonwealth, even if we captured the whole local trade - a contingency of which there is no likelihood. If a capitalist were prepared to invest his money in this direction, I should not interfere with him, but we certainly should not put our hands into the pockets of the people to subsidize any one to start an industry that must fail. The evidence of the representatives of various capitalists is that the industry must succeed, and that a large profit will be made. If that be so, let them invest their capital in this direction, but do not let us encourage them to do so. If a man of his own free will chooses to start any industry in the Commonwealth, we should not stand in his way, but when a capitalist says to this House, " You must take £320,000 out of the pockets of the people, and give it to me in order that I may start these industries," I feel it my duty to stand between him and the people, and to refuse to be a party to anything of the kind. I would not be a party to giving a privilege to any one. I have always voted against the granting of privileges, and shall always vote against them in this Parliament. It has been said by the right honorable member for Swan, that an outlay of £500,000 would be necessary to establish these works.

Mr Robinson - But the right honorable member is an enthusiast.

Mr LONSDALE - He is anxious to make out as good a case as is possible, from the point of view of the capitalist. He did not believe any more than I did in the recent proposal to grant privileges to certain workers, but, unlike me, he would give privileges to the capitalist. Mr. Sandford, managing director of the Eskbank Iron Works, who ought to know more about the question than does the right honorable member for Adelaide - who was referred to by the right honorable member for Swan as a great authority on this question - said, according to the report of the Royal Commission, that-

He had made an agreement with an English syndicate to spend £250,000 in extending the Lithgow works if the Bill passed. In answer to another question, Mr. Sandford said that to make pig iron he wanted a plant involving an expenditure of from £100,000 to £125,000. This estimate is less than half the sum proposed to be paid in bonuses.

Thus, if this Bill be carried, the capitalists engaging in the industry will receive in bonuses a sum far exceeding the capital cost of the works. There is a good deal of the "heads I win, tails you lose" principle about their demands. They wish to be on the winning side from beginning to end, and if we assist them to establish the industry, pressure will be brought to bear upon us to increase the bonuses as soon as there is any sign of a collapse. We shall have their representatives lobbying honorable members, and urging the Parliament to increase the assistance necessary to keep the industry going. They will tell us that numbers of unfortunate men will suffer if the works be shut down, and if they are unable to secure increased bonuses, they will endeavour to gain the assistance they require by means of Customs duties. In that way, instead of helping our primary industries and manufactures, we shall do exactly the reverse. The right honorable member for Swan, who is now present, told us that he was speaking the truth, according to his lights. He certainly does not know very much about the question, and consequently made statements which would not bear the light of day. We are told by the honorable member for EdenMonaro, that the establishment of the iron industry would lead to the employment of a large number of men. I do not know, by the way, why the honorable member should have been allowed to take charge of this measure? I fail to see why responsible Government. should be dragged in the dirt in this way. The Ministry should be responsible for taxation and for the expenditure of all public moneys. I shall do all that I can to oppose this Bill, but not because I have not at heart, lo the same extent as has the right honorable member for Swan, the interests of the country. I have as strong a desire as he has to see Australia advance ; but, in this matter, I have the interests of the majority of the people, and not of the few, at heart. The honorable member for Eden-Monaro interjected that those employed on the wharfs would be benefited bv the export of iron. That shows how little he really knows about this matter. Our imports must be paid for by our exports, and if we can possibly decrease our imports of iron by producing all that is necessary for our requirements, Ave shall have to decrease our exports. Thus Ave might develop employment in the mills proposed to be established, and yet decrease the chances of employment in another direction. Every one who has studied political economy knows that imports are paid for by exports, and vice versa, so that if Ave decrease the one, Ave must" decrease the other. We ha\*e only to look to New Zealand for an illustration of this. As the exports of that Colony have grown so her imports have increased; the one' has counterbalanced the other. I shall not vote for the second reading of this Bill. I shall not vote for making the iron industry a State concern. If capitalists like to put their money into it, I have no objection, but I have a decided objection to the State having anything to do with it. Even if I believed in the State undertaking such enterprises, I should still oppose this measure, because I have a decided objection to the State taking up a losing concern ; and I am quite satisfied that this industry will never pay, although some people profess to believe that it will. If the measure is to be passed, I shall endeavour . to insert an amendment providing that the capitalists, out of their profits, when they make any, shall return to the Commonwealth the money .that has been granted to them by way of bonus, even if we do not charge them interest for it. I do not believe in this " Heads I win, tails you lose " business. If we are compelled by force of a majority of this House to help the capitalists in this direction, let us get the money back again.

Mr Poynton - Suppose the industry does not pay?

Mr LONSDALE - The honorable member for Melbourne propounded a scheme that I think is a good one in connexion with these iron works. There are a large number of people who desire to see the works established. They are protectionists and Socialists. The honorable member for Melbourne suggested the issuing of paper money for such a purpose. Let those who wish to have the industry established put their sovereigns into the venture, redeeming the notes which are issued out of .the profits from the concern. If the right honorable member for .Swan, and the honorable member for Eden-Monaro are anxious to establish the industry. let them apply their own money to establishing it, issuing the notes for the capital, taking them up themselves, and then redeeming them out of the profits, and as the honorable member for Melbourne said, they will then have the whole concern for nothing. That is the best advice I can give them. In other respects, the measure from beginning to end will receive no assistance from me. I shall seek to prevent this extra burden being placed upon the people. The amounts derived from Customs and Excise, which are returnable to the States, are being reduced year by year, and I object to placing any further burdens upon the people for the sake of a set of capitalists who do hot seem to be prepared .to stake their own money on the venture.

Sir John Forrest - Oh, yes, they are.

Mr LONSDALE - The Commonwealth will' stake no money upon it if I can prevent it.

Suggest corrections