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Thursday, 20 October 1904

Mr REID (East Sydney) (Minister of External Affairs) . - There is no doubt that the subject of this measure was submitted by the Deakin Government to the electors at the last election as a matter within their programme of public policy. Therefore, there can be no objection to this matter being dealt with by this Parliament. There can be no suggestion that it was not submitted as a matter of public policy by the then Government, or that the electors have had no opportunity of expressing their opinion upon it. The Deakin Government introduced (the measure when they met this new Parliament, and it became the property of the House. The Government went out of office, but an immaculate Ministry took their place - a Ministry that was incapable of ever doing wrong, and which therefore furnished the highest public standard for imperfect- humanity to follow. That Government, at the request of a private member, allowed him

Mr HUME COOK (BOURKE, VICTORIA) - The Bill was in the name of the honorable member for Hume.

Mr REID - That is, I hope, a matter of profound consolation to the honorable member, but it is one of no importance to me.

Mr HUME COOK (BOURKE, VICTORIA) - Except that it gives the right honorable gentleman's case away.

Mr REID - I hope that this most affectionate tenderness for the honorable member for Hume will not seriously affect the health of some honorable members in this House. I have often noticed that this affection of regard for honorable members is exhibited merely when they are being used as a screen for political hostility and manoeuvring. All this affectation of sympathy for the honorable member for Hume comes from about the hardest specimens of humanity in this House - from men who are the least capable of any feeling of humanity towards any living being but themselves, and whose political misfortunes of late have so upset their mental balance that they are now incapable of looking at any question in a calm and philosophical fashion. Passing from the somewhat insignificant topic to which I have been referring to the very important matter now before us, I have come to the conclusion 'that although the second reading of this B,11 will be carried by an overwhelming majority, a very large number of those honorable members who will vote for the second reading have no sort of benevolent intentions towards it when it reaches the Committee stage. My attitude is a very simple one. I am utterly opposed to the Bill, and I intend to vote against the second reading and the third reading, T oppose it in every shape and form, and I think I have very serious reasons for taking that course. The honorable member who preceded me made one of the strongest speeches that could be made against the Bill, but in view of the statements he made, many of which I think are entitled to very great weight, I could not appreciate the conclusion at which he arrived to vote for the second reading of the measure. I was very much struck by one remark of the honorable member for Darling, and I heartily sympathize with it. If we are to be moved by feelings of consideration in reference to proposed enterprises on the part of private individuals, I agree with the honorable member that we should adopt as objects of our solicitude, not rich syndicates or speculators, but those struggling persons who are trying to make their way here in developing equally valuable industries throughout the length and breadth of our interior. If the principle of the Bill is a right and proper one, and public money is to be expended in large sums to promote private enterprises, I should infinitely prefer to devote; those large sums to assisting our struggling settlers of the bush, who are laying the foundations of the true nation under all sorts of difficulties. I would sooner help 10,000 of such persons than assist the rich syndicates who are ready to risk their money if the State will guarantee them to the extent of £200,000 or £300,000 - because that is the proposition now before us. Most people, whenever they enter upon an enterprise, however genuine it may be, and however much it is to be encouraged, have to fight their own way. Their enterprise is exposed to the risk of mistakes and misfortunes, and if they make mistakes, or misfortunes overtake them, they have to pay the penalty. Under the proposal embodied in the Bill, however, the country would have to bear the burden - in other words, the unfortunate struggling settler, who is endeavouring to lead a life of industry and enterprise. The principle of the Bill should not be made to apply specially to the production of iron, or spelter, or reapers and binders. If it be a proper one, it would be infinitely better to apply it to other industries. That is the view taken by my honorable friend, with which I heartily sympathize. No one wishes to - underrate the importance of the great iron industry, and any one would, I am sure, rejoice to see it well founded and flourishing. But can there be the slightest doubt that, in conferring a bonus, the State would give the benefits of profit to a syndicate, with a certainty that if there were no profit, the country would have to bear the burden to all eternity. We talk about granting a bonus of ^250,000. If that were to be the end of it, the amount involved would demand serious consideration at the present time, even if the object were a good one. But what this proposal means is that, after the bonus has been expended, a burden will be placed upon all the manufacturing and producing interests of Australia, in the way of duties of Customs, upon an article which is the basis of all industrial expansion. There are two aspects to this matter, and 1 think I might fairly - even if I were a protectionist - hesitate to handicap our great factories, our foundries, and our ironworks, by exposing them to the danger of greater difficulties than they already experience. What is the cry now?. For more protection and for higher duties, to save certain industries from ruination. Would it help our manufacturers if we limited their freedom in the choice of the raw materials, without which they could not run their factories? Would it help them to place Tariff restrictions upon the articles which they must buy in order to carry on their businesses? Is it not a fact that most of the manufacturers of Australia look upon this'' Bill with great suspicion and uneasiness, because they know that, whilst it has as good an object as the encouragement of a new industry, it will inevitably in the future, so far as can be seen, place further difficulties in the way of establishing other industries on a sound foundation. If anything would make one hesitate in regard to a Bill of this kind, it is the singular fact that twelve most intelligent members of this House, as members of the Iron Bonus Committee, met, carefully considered this matter, heard a great deal of evidence, and as a result were equally divided. Six of them took a much more cautious view of this matter than when it was first broached, whilst the other six, including the present leader of the Opposition - who is a sincere protectionist - reported absolutely against the Bill, and absolutely against this bonus system. As for the six who had reported in favour of it, they expressed an opinion in favour of bonuses as a necessary encouragement, and in paragraph 15 of the report, took up an extraordinary position, which puzzles me. I have always understood that the object of a protective duty was to bridge over the time whilst an industry was being planted, and was struggling in the earliest phases of its existence. That has generally been the argument which has appealed most to the sympathies of the great mass of the people. " Here is a valuable seed, which may grow up into a stately tree. In the moment of its germination, and in the moments of its first struggles for existence, whilst it is acquiring firmness of root in the soil - during those trying periods - we want to impose a duty in order to shelter, encourage, and protect it." That has been said again and again. But the five protectionist members of the Commission, whilst they are in favour of granting a bonus for the encouragement of this great national enterprise, deliberately deprecate the establishment of a duty to assist it, until it has overtaken the requirements of the home market. What more strength does this plant of industry want than the strength of existence which has enabled it to overtake all the wants of the Australian market. What I wish to point out is, that the industry will have risen to that strength and vigorous life which will have enabled it to overtake the whole demands of Australia. That is not the time at which it should need a protective duty. It will have arrived at a period when it needs no protection and no shelter. But the protectionist, section of the Commission gravely made the following observation in paragraph 15: -

Your Commissioners do not lose sight of the fact that the bonus system in Canada was accompanied by a duty on imports.

As the other section of the Commission has pointed out, the Canadian experience, when closely examined, is not a very encouraging one. But let us assume that it was. The Canadian offer was one of a bonus and a duty, which is not the present proposal. Speaking of that question, the protectionist members of the Commission say -

Your Commissioners, however, do not recommend the immediate imposition of a Customs duty, as, pending a local supply sufficient for Australian requirements, the result might be to temporarily raise the price to the consumer, which should be avoided.

That is the free-trade talk I like to hear. These gentlemen shrink even from temporarily increasing the price to the consumer in the. early days of this industry. Do not the protectionists frankly tell us that in the struggling days of a protected industry there must be an increase in the price of the commodities which it produces, owing to the operation of the duty, if that duty is to accomplish any good whatever? But the effect of the evidence given before the Commission was to drive my protectionist friends from their chief position, and to compel them to take u|p the attitude - which, from their point of view, is an exceedingly weak one - that in the early and struggling days of the iron industry no duty must .be imposed, because its operation would temporarily increase the cost to the consumer. I think the reason for that expression of opinion is, after all, a very good and a very wise one, altogether apart from fiscal consistencies or inconsistencies. These honorable members realized what we all know - without going to the trouble of collecting evidence - that if we increase the cost of iron and steel in Australia, we are not encouraging native industries, but hurting them in their most sensitive and vital part. There is not an industry - irrespective of whether it be a primary or manufacturing industry - which is not concerned in obtaining a cheap and plentiful supply of these materials. Even, the protectionist members of the Commission realized that so keenly that they shrank from the task of further handicapping our producers even on behalf-of a grand industry like the iron industry. We know that that industry is one of the most difficult to establish. Honorable members talk about producing pig iron, bar iron, and steel as if we merely had to turn out some simple article of ordinary use. Why, in the finer manufactures in which steel and iron are employed the most scientific care has to be exercised as to the precise quality of the iron and steel used. One would think that we had only to tap an iron deposit, rush the ore into a furnace, and employ some of the methods of industrial change to turn out the very article which our manufacturers require in all their varied enterprises. The very reverse is the fact. A large number of our factories have to obtain the best material in the world. Some of the Victorian manufacturers declare that even the best American steel is not good enough for them. They have to import a special class of steel from a particular portion of the United Kingdom. Consequently this is one of the most critical enterprises in which any individual can embark, despite the advantages which we enjoy in possessing vast quantities of the raw material. Let me deal briefly with the question of freights. In the first place the project is that this industry shall be established in New South Wales. I must admit that that is a feature of it which puts a certain glimmer of satisfaction into the minds of representatives of that State. What 1 am about to say, however, makes the location of the works immaterial to my argument. As has been pointed out, the freight from London to any port in Australia is less than the freight from one port in Australia to another - -many times less.

Mr HUME COOK (BOURKE, VICTORIA) - I wish that the Prime Minister would remember that fact when we are considering the Tariff.

Mr REID - At any rate, I am remembering it upon the present occasion. If I had to remember everything about the honorable member I should lose my reason. The moment the proprietors of the projected great national iron works had to send their iron from Sydney to Melbourne, Fremantle, Adelaide, or Brisbane, they would have to struggle with the difficulty that they would be called upon to pay three times as much freight as is charged for conveying English iron from London to Adelaide. Is not that a big handicap to Australian iron ? It is a tremendous handicap, and it is destined to increase, because we are about to pass legislation which will make the navigation of the Australian coast dearer than ever. It is a remarkable thing that rich ship-owners, who have made large fortunes on the Australian coast out of the producers of the Commonwealth, should desire to see this poor, struggling industry nurtured by further public Bounties, whilst they offer one of the most serious obstacles to the development of Australia. All these things seem to bang together. Here we have an industry which is so inseparably intertwined with all the industries of Australia that if we increase the cost of its raw material, whilst we shall be doing a good thing in one direction, we shall be bringing into existence a multitude of difficulties in regard to all the other industries that we possess. The report of the protectionist members of the Commission - as I have said - puts forward one of the strongest reasons why we should hesitate to engage in this enterprise at the present time. The other half of the Commission, including my honorable friend the leader of the Opposition, were opposed to the passage of a Bill providing for the payment of bonuses to assist in the establishment of the iron industry. Half of the Commission were opposed to the Bill without any qualification. They say -

The "Bill provides for the payment of ,£324,000 of the people's money to private individuals engaged in an enterprise for their private gain.

That may seem a harsh statement to make, but is it not exactly what every struggling man in Australia is doing to-day? The "private gain " of our struggling producers is really the liberty to live and to maintain their families in decency, and some comfort upon some little selection, perhaps in the far bush.

Mr Robinson - That report was drawn up by the honorable member for Bland.

Mr REID - It is worthy of consideration. It continues -

There can be no guarantee that the bonuses proposed would permanently establish the industry, though it is probable 'the inducements offered might be instrumental in forming speculative companies.

That is a serious statement, and one which is well founded, because if the difference between the Australian rate of wages and the English rate is so great - although happily the wages paid in England are much higher than those which obtain in Belgium - when this bonus is withdrawn, if the iron industry is not to become a miserable, struggling industry, in which the .employes will be paid upon a scale which is absolutely incommensurate with Australian conditions, we shall have to impose a stiff protective duty. When the stimulus of this bonus has disappeared, and the industry is compelled to face competition without any help, we shall have a number of honest, good artisans - probably amongst the best in Australia - whose position will be imperilled, and an appeal will then be made to us to save them from utter ruin, and to save from ruin also an industry upon which ,£300,000 has been expended. Is the House likely to allow that great undertaking to go down and perish? No, we shall have to keep it alive. If we plant this great enterprise it is a guarantee on the part of this Parliament that we will not allow it to perish, if only to prevent the waste of this public money. I cordially agree with those members of the Commission, including the honorable member for Bland. He is the only protectionist amongst the six members who signed the particular report to which I refer. The rest were freetraders. I cordially agree with him that if this syndicate is to be given different- terms from those which people have to endure all over Australia we shall not only be required to grant a bonus of £250,000, but to become an insurance against difficulties for all time to come. That is a big contract to enter into, considering the difficulties to which our people, who are not members of a syndicate, are exposed from day to day. The Commission point out -

The Canadian experience is not encouraging. The bonus system for iron production was first instituted there in 18S3. Subsequently a Bill was passed in 1897 further continuing the system.

That is fourteen years afterwards -

Another Bill was carried in 1899 -

That is sixteen years subsequently - providing for the diminution of the bounties by a sliding scale expiring in 1907. In July of this year the Dominion Government decided to postpone the operation of this sliding scale for one year, which practically means a further increase in the bounties paid.

So that in Canada, twenty years after this industry had been started, it was still in a precarious position. Then the Commissioners make another important observation. They say -

Nearly all the witnesses examined before the Commission agreed that the payment of bonuses would be useless unless followed by. a duty. Experience shows that if the payment of bonuses be commenced the liability of the Commonwealth will not be limited to The sum proposed under the Bill, but that 'further Government aid will be sought.

WL see exactly what that means. We cannot place upon .the manufacturing industries of Australia further difficulties and burdens. I am sure that no one wishes to do that. As one of the witnesses said, " We do not mind a duty upon iron if you will impose a higher duty upon the articles we produce, because we shall have to pay more for our raw material." Consequently, this proposal amounts to the imposition of a burden in one direction, which will have to be equalized by levying a burden in another direction, and one which will handicap all the industries in Australia in which certain manufactured articles are used. This enterprise is a noble enterprise. The iron, industry is a grand industry. But we have other grand industries. Surely our natural industries come within that category - industries which were begun and which are being carried on by private enterprise without any bonus or State assistance whatever. Surely they are worthy of as much sympathy and help as are those gentlemen in a large way, who desire to indulge in a national speculation. I cannot understand this method of scattering £250,000 in the direction of one syndicate, when we might scatter it over 10,000 homes upon the lands of Australia.

Sir John Forrest - Do not say that it is only one syndicate.

Mr REID - Even if two syndicates were formed that would not make much difference to my argument. Our settlers in the wilds of Australia cannot come to this Parliament and say, " Give us a start by making us a grant of ,£100 or £200." If we are to begin by granting bonuses to struggling industries and struggling settlers, let us start on a small scale, in connexion with the still more pressing problems of Australian industry - the industry of men who are already settled on the soil, who are already struggling to maintain themselves in decency and in comfort.

Sir John Forrest - I hope that we shall do that.

Mr REID - Let us begin with them, and by the time that we are done we shall not have any money to hand over to a big syndicate. There will be a sufficient number of claims on us before we come to Mr. Jamieson, if we are going to follow that line of business. I do not for a moment deny the grandeur of this industry. I feel sure that it is one that we are bound to have; but, like many other industries, it is a question of time. It is the very essence of profitable enterprise that the right time and the right conditions shall be chosen; but in reference to this industry we are asked to disregard time and all conditions, and to put £250,000 at the disposal of some enterprising gentlemen, in order to solve all these troubles. But that would not be the end of it. If we passed this Bill we should take the responsibility of maintaining the syndicate for all time, or of taking over the works at a valuation when they had proved to be a failure. What a fine enterprise that would be for a State to engage in ! Evidence was given before the Commission by Mr. Jamieson, the gentleman to whom I have referred, and I shall refer briefly to a portion of it. Mr. Jamieson is a worthy and enterprising gentleman, but I simply regard him as I regard every other member of the community. The following 1; an extract from his examination : - .

Without any protection, do you consider that you would be subjected to severe competition? - There can be no doubt about that at all. The freightage rates are nothing in our favour. For example, if we establish ironworks at Sydney, those rates would benefit only that particular port. The freightage from Sydney to Queensland would be heavier than it" is from Condon to Sydney.


Mr REID - Mr. Jamieson ought to know something about the matter.

Mr HUME COOK (BOURKE, VICTORIA) - The statement is quite true.

Mr REID - There must be some truth in it. I do not know whether my honorable friend is an authority on this subject.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - There is abundance of evidence in the report to show that the average cost of importing pig iron is ,£1 per ton.

Mr HUME COOK (BOURKE, VICTORIA) - It can be brought from America for 7 s. 6d. per ton.

Mr REID - It would be a revelation to me to be told that the freights between, say, Melbourne and Fremantle are not more than those between London and Fremantle.

Mr Conroy - That is right.

Mr REID - Then I shall take that case as an example, in order to be on safe ground. There can be no dispute about that. Western Australia is one of the rising States of the Commonwealth.

Mr Frazer - Does the right honorable member represent it?

Mr REID - I think that I do on this occasion. I suppose that iron is one of the most indispensable commodities used by the people of Western Australia; but it would cost more to send Australian iron from Sydney to Fremantle than it would to carry iron from the United States or Great Britain to Western Australia.

Mr Austin Chapman - There are iron deposits in Western Australia.

Mr REID - Are we going to establish any State iron works there? I do not know why we should not do so as well as in some of the other States, if this course is to be adopted.

Mr JOSEPH COOK (PARRAMATTA, NEW SOUTH WALES) - South Australia has an Iron Knob.

Mr REID - If they could halve it between the two States,' the difficulty might be solved.

Mr DAVID THOMSON (CAPRICORNIA, QUEENSLAND) - We have the iron and coal in Queensland.

Mr REID - Let me quote the evidence of a gentleman who certainly ought to be a practical man. I refer to Mr. Middleton, the manager of the Phoenix Foundry, at Ballarat, which I believe is a great concern.

Mr Watkins - He is a good freetrader in some respects, and a protectionist in others.

Mr REID - I am sure that whether he be a free-trader or a protectionist, he said what was true when before the Commission.

Here is a question that was put to him, and the reply that he gave -

Have you considered what would be the effect of those proposals if put into operation? - The effect would certainly t>e to increase the cost of our manufactures. Bar-iron and steel are amongst our raw materials, and that is one of the reasons why they have always been admitted free of duty.

Mr Watkins - Will the right honorable gentleman read the witness's reply to a question as to whether he would be in favour of the removal of the duty on machinery ?

Mr REID - I do not know anything about that matter, but I shall comment on the fact mentioned by "him, that even in this rabid protectionist State - and I admit that there was a sensible reason for it, because there are no local pig-iron works - the Legislature had the sense to realize the importance of the supply of iron to local manufacturers, and did not even impose a revenue duty on it. Iron was admitted free of duty.

Mr Watkins - That remark does not apply to the Commonwealth.

Mr REID - I am speaking of Victoria, and Mr. Middleton came before the Commission as the representative of a Victorian industry. The Government of Victoria did not even impose a revenue duty on pig iron. Why ?

Mr Watkins - Because there was no local production.

Mr REID - It is in such circumstances that revenue duties are put on. But the State Parliament did not even impose a revenue duty - a perfectly legitimate one in the opinion of all of us - on iron. The Victorian Legislature knew that if they were to do their best to assist their manufacturers in the State, the raw material should not be made unduly expensive by any action on their part. The passing of this Bill would create a condition of things quite the reverse of the policy of the Victorian protectionists in reference to this material. If the duty is to be eventually imposed - after the bonus has worked out - we know that it must tend to hamper to some extent all factories using iron as their raw material, and that they will require a higher duty upon their manufactured products, to put them in something like the same position that they occupied before. I believe that a bonus of £1 a yard was once offered in Victoria for the local manufacture of 5,000 yards of worsted. The 5,000 yards were made, and the bonus, amounting to £5,000, was paid, but not another yard of worsted was ever made in Victoria after the bonus was exhausted.

Mr McDonald - In the same way-, a bonus of £5,000 was offered in Queensland for the establishment of the cotton industry.

Mr REID - And something was done to earn the bonus?

Mr McDonald - Yes; but as soon as the parties in question obtained the bonus, they did not make another yard.

Mr REID - It is only fair to say that the rate of bonus proposed to be given under this Bill is such that it would secure the absolute establishment of these works. It is onlyfair to admit that with a bonus of 12s. per ton. it would be necessary for those engaging in the industry to have really good works in existence before they could secure much of the money proposed to be paid away in this manner. But once we start these works, practically under our guarantee' we shall have to run them for all time. The suggestion that 10,000 men would find employment in the works to be established is the wildest rubbish in the world. Labour-saving appliances have been brought to such a high state of perfection that a man. visiting one of the great ironworks of the world can see a boy touch a burton, and in that way exercise a force equal to the strength of 100 men. Factories employing twenty men and boys are able to turn out 2,000 or 3,000 tons of steel rails every day. The machinery does all the handling, the transferring, and the lifting. Mr. Mephan Ferguson, who, I think, is regarded as an eminent engineer, told me that he went all over the great foundries in England, and he was the first to open my eyes to the absurdity of the suggestion that the manufacture of 10,000 or 20,000 tons of steel rails per annum would set a local factory going. He said that he visited works in Glasgow where a mere handful of men and boys, so to speak, were able, owing to the perfect machinery employed, to turn out immense quantities of steel rails. .

Mr Austin Chapman - One witness gave evidence before the Commission that a factory in Germany gave employment to 13,000 persons.

Mr REID - That would be an enormous factory.

Mr Austin Chapman - He included, or course, those employed in contingent industries.

Mr REID - He referred to iron-works in a great Empire comprising a population of 60,000,000, to say nothing of the foreign trade which it enjoys.

Mr Maloney - Works at which guns are manufactured.

Mr REID - Probably they make guns for the army and the navy in this factory.

Mr Maloney - For the armies and navies of the world.

Mr REID - Mr. Middleton was further examined as follows : -

Have you considered the possibility of successfully establishing the iron industry in Australia? - I have always looked upon the proposal as very nearly impracticable.

For what reason? - Because of the increased cost of production.

Arising from what? - From the difference between the rate of wages -

This is no moonshine. The facts are stated - and the hours of labour in Australia as compared with those which obtain in English factories. In Victoria and New South Wales the wages paid are practically double those which obtain in England for skilled labour.

We hope that that state of affairs will go on for all eternity.

Mr Webster - Nominally, but not actually.

Mr REID - We should like it to actually exist. No one desires to reduce the rate of wages. When we are told that the rate of wages is an obstacle, we are inclined to say that we rather believe in those industries which pay a high rate of wages, and that we do not wish to create any that would give only a low rate of pay. Those are not the kind of manufactures that we desire to encourage. That has been my view of the matter from the first. I have always been careful about giving an artificial start to any industry, because the natural industries can support the Australian rate of wages, while artificial industries, for the very reason that they are artificial, cannot do so. The difference has to be made good by drawing on some fund or other, and always from the pockets of the people.

Mr Webster - But how much goes back to the people?

Mr REID - Do not we derive more from the man who receives high wages than from the individual who is in receipt of a low rate of pay?

Mr.Webster. - But what if men are getting low wages ? What if they cannot find employment?

Mr REID - I suppose that we cannot go on indefinitely creating industries in which the rates of wages are so low that it is necessary for the State to supplement them in order to bring them up to the required standard. We may do that to a certain extent. If we can get the money out of the rich, it may not be a matter of such great moment ; but this money would have to come from the poor, who have not much money to circulate.

Mr Webster - We propose to get the sum required by direct taxation.

Mr REID - That seems an easy plan, and might be freely adopted, especially when we have no land. Now, this is what Mr. Middleton says with regard to the point that I have just mentioned. He was asked -

Do you think that if the industry were established by means of the payment of a bonus, it would be able to carry on successfully?

This is a matter of some importance. We are proposing to expend£250,000, and it is of interest to know whether the project would be a success. Mr. Middleton's reply to the question was -

I am of opinion that it might be established, for afew years; but, if it subsequently had to come into competition with the imported article, it would not be able to stand.

That was the opinion expressed by the experienced representative of a great foundry.

Mr Ronald - With a free-trade leaning.

Mr REID - I hold that if we imposed a duty upon iron we should handicap the manufacturers of Australia, to whom iron is the very staff of life.

Mr Ronald - Not if the works be created here and the money spent in the country.

Mr REID - That is all right, but we cannot do that indefinitely. I admit that the honorable member's answer constitutes one answer to my contention, but as a rule we do not give much encouragement to industries by increasing the cost of their raw materials. That is a piece of homely political economy, which is highly appreciated by persons when 'buying for themselves.We add to the difficulties of a man of business if, in consequence of our actions, what he buys is made dearer. If he can make the difference out of some one else, his position is not so serious; but nevertheless there is a difference. The lower the price at which we can afford to sell the better is the chance of our doing business. I have spoken, I hope, with perfect frankness, because I wish to absolutely clear myself from any responsibility for this great experiment. I desire my position to be clearly understood. I believe that if we pass this Bill we shall have to take the factory established under it into our own hands for all time, either by taking it over as a State concern, or by increasing the duties on the raw material of all the industries of Australia in order to make it a profitable business.

Mr Webster - Shall we hear the opinion of the other half of the Government on this question ?

Mr REID - When the leader of the Opposition is speaking, my honorable friend does not ask such an idiotic question about the honorable and learned member for Indi. I am beginning to understand him, however. I have long ago lost any personal feeling in regard to him, because I know that, although his manner is rather crude now, it will improve with time.

Mr Webster - I should like to hear the honorable member for Gippsland on this subject.

Mr REID - Perhaps the honorable member will hear him. Having criticised the measure thoroughly and clearly, I hope, I wish to say that I have always made a distinction in favour of a bonus as against a protective duty. If I felt that the proposed bonus would be the end of the matter, that no protective duty would afterwards be asked for, I should not feel half the opposition to the Bill that I now feel, because if by the payment of a bonus we established a flourishing industry which would not require further help, we should have made what would notbe a bad investment." But if in the future, there is to be a perpetual drain upon the people, in the shape of a duty, the matter will be much more serious than the proposed bonus. The distinction between a bonus and a protective duty has been drawn scores of times, and is as obvious to every honorable member as it is to me. The great thing to be said in favour of a bonus is that it is known, first, how much money is -to be paid ; and, secondly, where it is going. We cannot say, perhaps, where the proposed bonus will go, because it is uncertain who will take the matter up. If the Bill were passed, it would be a great consolation to me should a man like Mr. Sandford obtain the bonus. Worthy citizen as Mr. Jamieson may be, I draw a great distinction between the promoter of a syndicate and a gentleman like Mr. Sandford, who has been engaged for twenty or thirty years in developing the iron industry in the State of New South Wales. There is a third respect in which a bonus differs from a protective duty. If the establishment of an industry is a national concern, requiring national assistance, the expense should be paid for out of the . national pocket, and not out of the pockets of those who patronize the industry by using what it pro-: duces. My most serious objection to protective duties has been that they take toll of those who are encouraging the protected factories by buying their productions, whereas it is the nation which ouffht to bear the cost of the protection. If a man buys galvanized iron from a protected Victorian or New South Wales factory he should not be specially taxed ; the burden of protecting that factory should be borne by the nation. Therefore, in my opinion, if an industry is a national one, and requires national assistance, it is better to establish it by means of a bonus, which will be paid for by the Commonwealth, than by means of a protective duty. My strongest objection to the Bill, however, is that, although in form if is a bonus Bill, we shall find that after the bonus has been paid, we shall be committed to the imposition of a protective duty upon iron.

Mr Fisher - Will the right honorable gentleman say how the money required to pay the proposed bonus is to be raised ?

Mr.RE ID. - I will leave that matter to the Minister of Trade and Customs.

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