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Thursday, 7 February 1929


Mr KILLEN (Riverina) .- The surprising feature of this debate is the silence of honorable members opposite. The only speaker from the Opposition was the leader (Mr. Scullin), whose very brief remarks were confined to abuse of the Government's proposals, and contained no indication of what he and hia party would do if they were in office. In the circumstances, one is forced to the conclusion that honorable members opposite cannot suggest anything better than the programme set forth in the Governor-General's speech.

I am glad that His Excellency referred to the fact that Australia was one of the original signatories of the treaty for the renunciation of war. I believe that the scourge of war can be, and eventually will be, stamped out by the League of Nations, and I am proud that Australia was one of the first countries to declare its adherence to the Kellogg Peace Pact.

Another paragraph refers to the tariff and the operations of the Tariff Board. We have heard a good deal about the need for a scientific tariff; we certainly need a lower tariff. Many of the customs duties should be reduced, and I believe that a scientific investigation would prove that they are doing to Australia more harm than good. For many years the customs duties have been steadily mounting, and every increase has added to the cost of production. Because of the higher cost 'of living, the workers have gone to the Arbitration Court and asked for increased wages. With the awarding of higher wages the cost of production has further increased, in consequence . of which the manufacturers have obtained from Parliament still higher protective duties. Again the workers have obtained from the Arbitration Court higher wages, and again the cost of production has risen. This vicious circle benefits neither the workers nor the manufacturers, and hits hardly the primary producers. It is obvious that although the worker handles each week a larger sum of money, his effective wage is no greater if it will not purchase any more of the necessaries of life than he obtained formerly. A worker whom I have known for many years told me recently that although he is earning in Canberra 28s. 2d. a day, he cannot save as much money as when he was receiving 10s. a day before the war. The effect of the high tariff is to place the primary producer at a disadvantage. Every increase in duties recoils upon him, because he has to buy in a highly protected market and to sell his produce competitively in the markets of the world.


Mr Gregory - The manufacturer can pass on increased costs, but the primary producer cannot.


Mr KILLEN - That is so, and unless we break the vicious circle of rising costs, it will break us. The cost of production in Australia is mounting continuously, whereas in other countries it is being reduced. We shall have to alter our fiscal system. It has been truly said that the sheep is carrying Australia on its back, wool being the only product that can be marketed abroad without government aid.


Mr Bowden - What about wheat?


Mr KILLEN - The wheat-growers are in a precarious condition; much wheat land is going out of cultivation, and that retrogression will continue unless something is done to reduce the cost of living and production. Although the woolgrowers are now receiving for their product a price twice as great as that which they received prior to the outbreak of the war, their income is very much less, on account of the higher costs of production and the largely increased taxation that they are obliged to pay. The high tariff under which our industries are working is not conferring a benefit upon any section, but on the contrary, is having an adverse effect upon all classes, because the effect has been to increase the cost of production and to cause thousands of persons to be thrown out of employment. The Economic Conference has a good deal to say in its report with respect to the closely related subjects of the tariff and our arbitration system. I again remind honorable members that the prosperity of Australia is dependent mainly upon the success of our primary industries, which are responsible for 96 per cent, of our exports, and which represent 73 per cent, of the wealth of Australia. It appears to me that the practice has been not to advance, but to retard the development of those industries. The imposition of increased duties, and the application of our arbitration system, are having a most adverse effect upon them, and unless the existing conditions 'are altered, the result is likely to be disastrous. From the report of the

Economic Conference, I make the following quotation in relation to the necessity for a full scientific inquiry into the operation of the tariff.

We are aware that much of the information necessary for a scientific revision of the tariff is not available anywhere, but we are confident that it is urgently necessary that a full scientific inquiry and investigation should forthwith be instituted by the Commonwealth Government into the wide question of the economic effect of the tariff and the incidence of its duties, with the particular object of furnishing reliable advice to the Government as to the removal of any extravagances and anomalies which it may be found to contain, as to the confinement of its benefits to industries which may reasonably be regarded as efficient, and as to the reduction of its total cost to the community.

We consider that while the investigation is proceeding legislative or administrative action to increase duties or impose deferred duties should, so far as is consistent with the continued effective working of the existing tariff, be avoided, in order that the investigation may proceed so far as possible untroubled by disturing changes in its subject-matter.

The report goes on to say -

But all measures designed for the increase of Australia's wealth production and power of absorbing new population tend to be defeated if there are strong forces within her which operate so to raise her costs of production that she cannot sell her products in the markets of the world, and is restricted within the limitations of her own home market. . . . We could not fail to be impressed, throughout our travels in Australia, with the fact of which we wore continually reminded, that, notwithstanding the magnitude of the interest on her external debt and of her imports for which payment can only be made in goods or services or, temporarily, by fresh borrowing, Australia exports only an almost negligible quantity of the products of manufacture, unless we include therein minerals such as lead, silver and zinc; while, broadly speaking, the only primary products which she exports in important quantities and which are not directly assisted by tariffs or bounties, though they may be assisted indirectly by government expenditure from taxation on roads, railways, water schemes and the like, are wool, hides and skins, meat and tallow, wheat and timber. Of these, wool and wheat are by far the most important, and it has often, though somewhat loosely, been said to us that the primary industries concerned with these products are the only industries in Australia which stand on their own feet and sell their goods at the world's price; or even, still more loosely and with a change of metaphor, that all Australia is riding on the sheep's back. Without committing ourselves to full acquiescence with these broad expressions of opinion, we may say that we have been strongly disposed to the view that the combined operation of the tariff and of the Arbitration Acts has raised costs to a level which has laid an excessive and possibly even a dangerous load upon the unsheltered primary industries, which, having to sell in the world's markets, cannot pass on the burden to other sections of the Australian community, and, consequently, as between the various States, upon those, notably Western Australia, South Australia and Tasmania, which are poor in manufactures and are principally concerned with primary production. These States, and Tasmania probably most of all, are further handicapped by the high costs of freight in interstate trade which result from the operation of the Navigation Acts along with the other causes which we have mentioned. . . . We have felt much force in the oft-repeated complaint that successive increases in the tariff which affect prices and the cost of living, following upon, or being followed by, successive advances in the cost of labour as the result of decisions under the Arbitration Acts have involved Australia in a vicious circle of ever ascending costs and prices, and that this condition of affairs is crippling Australia's progress and her power of supporting increased population. There lies no task before the Australian people more urgent than that of in some way breaking the vicious circle and of bringing down costs of production, as is being done in the other industrial countries of the world, without lowering *he standard of living of the workers as measured not by money but by real wages, which are the reward of labour in the form of goods and services.

The report quotes the opinion of the Tariff Board in the following terms -

Our views have merely been strengthened by our study of the reports of the Commonwealth Tariff Board, who, we observe, in their report for the year 1925-20, say that they are - " strongly of the opinion that the industrial unions of the Commonwealth should be induced to realize the critical position into which the Commonwealth is drifting and the absolute necessity for preventing the wages gap from becoming still wider between the United Kingdom, the Continent of. Europe and the Commonwealth, otherwise, the Tariff Board, placed as it is in the position to take a comprehensive and intimate view of all Australian industry, can see nothing but economic disaster ahead, and that at no very distant date "

It proceeds -

The seriousness of the position lies in the fact that the cost of production in competing countries has declined while costs in Australia generally have risen - thus increasing the already wide margin of difference between the costs in overseas countries and those in Australia.

The following quotation deals with our arbitration law -

By workmen's representatives, not less emphatically than by representatives of the employers, it has been consistently represented to us that the Arbitration Courts are not achieving their purpose and that a system designed to arrive by judicial decisions at fair and prompt settlement of industrial disputes such as could be freely accepted by both sides must bc held to have failed.

The members of the commission offer the following objection to compulsory arbitration, and with them I cordially agree : -

The most important of the reasons which have been advanced for this view are that experience has shown that there arises between the two parties who appear before the Arbitration Court Judge or Arbitrator the spirit of antagonism inseparable from litigation, and that the object of prompt settlement is defeated by the delay occasioned by the necessity for the collection and presentation of detailed evidence in a form acceptable to a court. It is complained that the procedure of the court occasions the expenditure of much time and money by the litigants and involves very long absences from their ordinary occupations for a large number of persons whose time might be more profitably employed; that the subject matter of the questions . which are brought before the courts is not of a nature with which judicial tribunals, necessarily unversed in the practical problems of industry or in the economic questions to which they give rise, are best fitted to deal; and that the overlapping jurisdictions of the Federal and State Arbitration Courts have led to an almost inextricable tangle of conflicting decisions so complicated that large staffs have to be maintained to keep track of them and to endeavour to guard against involuntary contravention of any of them in the course of every-day business.

The indictment of the system of the Arbitration Courts which we have heard is a heavy one; and we feel that it is well founded on' many grounds, and particularly on the ground that the system has tended to consolidate employers and employees into two opposing camps, and has lessened the inducement to either side to resort to round table conferences for that frank and confidential discussion of difficulties in the light of mutual understanding and sympathy which is the best means of arriving at fair and workable industrial agreements.

They go on to say -

A change in the method prevalent in Australia of dealing with industrial disputes appears to us to be essential, and we hold that there should be a minimum of judicial and governmental interference in them except in so far as matters affecting the health and safety of persons engaged in industry may be concerned.

They then deal with the basic wage -

Further, a system of wage fixation resting upon a basic money wage which rises or falls with a varying index figure of the cost of living is open to the gravest criticism, as tending to deprive employees of any interest in the prosperity of the industry with which they are connected. Let us assume that by better, more energetic, and more willing work on the part of all concerned from the highest to the lowest, the output of Australian industries were increased with no increase in overhead cost. The natural economic effect would be that prices all round would fall and that consumption and profits would rise; but as the cost of living would fall the basic wage would also fall, and with it all wages fixed by the Arbitration Courts in relation to the basic wage with margins for especial skill and the like. Thus the system is such as to give the worker in industry no interest in a cheaper cost of living, and no inducement to that increased efficiency which would tend to bring it about. In such a case as we have imagined it would be only right that wages should rise and that the workmen should share in the increased prosperity so largely attributable to them. It is only if all concerned in industry genuinely feel that their own fortunes are bound up with its success or failure that that solidarity in industry 'which is essential to its prosperity can be achieved.

No person wishes to see wages fall. I contend, as do these gentlemen also, that the real wage would be higher, and that the workers would be better off than they are now, under a system of payment by results, such as that which is enjoyed by workers in the United States of America. The output of our industries . also would be very much greater than it is at the present time.

Our Mission was honoured by two of its members being asked to take part in an industrial conference held in Melbourne during December last. At that conference the necessity for closer and more friendly relationship between all concerned in industry was fully recognized by the delegates present, and the discussions were of so frank a nature that at subsequent meetings there should be no obstacle to the candid exposition by all the delegates of their difficulties and their aspirations. We hope and believe that from future sessions of the conference there will result the formulation of agreed alternative methods for fixing wages and laying down conditions of employment, which may render the present functions of the Arbitration Courts unnecessary, and substitute for them a system of settlement of industrial problems by industry itself on practical and acceptable lines in an atmosphere of mutual confidence and goodwill.

We even venture to hope that the spirit generated from this conference will be such as to facilitate the task, which after investigation such as we have recommended we trust that the Government will undertake, of tariff revision. The problem of the tariff is, as we have said, closely interlocked with that of the fixation of wages, and a happy solution of the latter problem should do more than anything else could to make possible the solution of the former under the indispensable conditions of freedom from class or political strife and bitterness.

In my opinion, this is a most valuable expression of opinion with which every one who has studied the subject must agree. It coincides to a large extent with the view expressed by the delegation which the Government sent to the United States of America last year to inquire into industrial affairs there. I submit that this document proves conclusively that the system of payment by results greatly increases the prosperity of the workers and of the community generally. We should adopt the system in Australia.

I am glad that His Excellency the Governor-General sympathetically referred in his Speech to the necessity for encouraging co-operation between employers and employees. Personally, I think that we shall have to abolish compulsory arbitration before we can expect a proper spirit to be displayed in industry. What is needed is more roundtable conferences, where the problems of industry can be discussed in a friendly spirit away from the atmosphere of a law court. We could- very well learn a lesson from the United States of America in this connexion. It will be remembered that during the war the people of the United States of America experienced a time of remarkable prosperity. They obtained high prices for all their products, and the employers paid high wages to the workers. But after the war prices fell, and for a considerable time the industries of the nation were dislocated. When the employers suggested that wages should be reduced the workers strenuously resisted the proposal. However, the time soon came when both parties realized that something had to be done. This conclusion was forced upon them by the distress which existed throughout the country. At that stage the Government took a hand and called the parties to " a round-table conference with the object of devising ways and means of remedying the troubles which were afflicting the people. The employers on their part admitted that the workers had every right to a reasonable wage which would enable them to live in comfort. The workers on their part admitted that industry could not pay good wages unless it yielded good profits. The result of the conference was that a system of payment by results was adopted. This led to an increase in wages of from 30 to 40 per cent, in the case of energetic workers, and a new era of prosperity was ushered in for the nation. Many of the workers in the United States of America own motor cars to-day. The more thriftyones hold shares in the industries in which they are engaged or in other industries. The workers of America actually own 25 of the banks operating in the country. How different is the situation in Australia! Here we have strike after strike. During the last six years between £6,000,000 and £7,000,000 have been lost through cessations of work. Our workmen do not own shares to any great extent in the industries which employ them, and generally there is a lack of co-operation between employers and employees. I cannot understand why honorable members opposite do not agitate for the introduction of the system of payment by results. Perhaps they are afraid that it would upset the slow and lazy worker, or might offend some of the unions which champion the go-slow policy and penalize the energetic employees. At any rate I have never heard one honorable member opposite speak in favour of the adoption of the system here. It would appear that their desire is to reduce the first-class worker to the level of the slow and lazy workers. Do honorable members opposite intend to sit quietly by and allow our industrial situation to drift from bad to worse? The experience of America is an object lesson to the world. If the American method of dealing with industry were adopted in Australia the workers and the community generally would be far better off. It must be remembered that good wages .and good conditions, like all good things, can bc had only at a price. The price of good wages is work. It is of no use for us to imagine that we can prosper under the prevalent go-slow policy. I am afraid that a big crisis will occur in Australian industry in the near future unless steps are taken to alter our methods.


Mr Blakeley - It is usual for men who have never done a hard day's work in their lives to talk as the honorable member is doing.


Mr KILLEN - I have in my lifetime worked harder than the honorable member for Darling (Mr. Blakeley). I worked far more than 44 hours or even 48 hours a week.


Mr Blakeley - The honorable member was born with a silver spoon in his mouth. He does not know what hard work is.


Mr KILLEN - The honorable member is quite wrong. I worked as hard as any man for many years.


Mr Blakeley - I know the honorable member's history.


Mr SPEAKER - Order !


Mr Blakeley - The honorable member for Riverina should not talk as he is doing about the conditions of the worker, for he knows nothing about them.


Mr KILLEN - I know as much, and probably more, about them than the honorable member for Darling. I know very well that we must reduce our cost of production, and cost of living, and increase our efficiency before we can expect to prosper. The Tariff Board has told us that. Nothing but hard work and efficiency will remedy our present troubles. I do not desire to reduce wages. I am anxious to see them higher than they are ; but I know that we must obtain value for the wages that we pay,We cannot afford to pay wagesthat are not earned.


Mr Blakeley - They have reduced wages in Great Britain, and the honorable member has heard something of the conditions that still prevail there.


Mr SPEAKER -.- Order ! I must ask the honorable member for Darling to cease interjecting. He will have an opportunity to reply to the speech of the honorable member for Riverina. It is distinctly out of order for him to keep up a running fire of interjections while another honorable member is addressing the House.


Mr KILLEN - I wish to make some reference tothe Tariff Board. Australia is mainly dependent upon her primary industries and our primary producers contend that it is only reasonable that they should have a direct representative on the Tariff Board. I understand that a fresh appointment is to be made to the board in the near future. I trust "that the Government will give consideration to the claimsof the producers for direct representation.

Some reference has been made in the House to-day to the sale of the Commonwealth Government line of steamers. Honorable members opposite have indicated that they believe that the disposal of these vessels has led to the threatened rise in shipping freights.


Mr Stewart - Has that not been proved ?


Mr KILLEN - In my opinion it is an entirely wrong inference to draw from the facts of the case. The ships of the Commonwealth Government Line only carried a little over 2½ per cent. of the exports of Australia, and it cannot be seriously suggested that the influence of that line was sufficient to affect freights. We know that New Zealand, which has had no government line of steamers, has always enjoyed lower freights than those ruling in Australia. The Commonwealth Government Line was nothing but a burden on the taxpayers, because it cost them over £500,000 a year to keep the vessels running.

Reference has been made in the Governor-General's Speech to the development of the Northern Territory. The honorable member for Angas (Mr. Parsons) advocates that the north-south railway should be continued to Darwin, but he has never seen that country. Before I visited it I held the same opinion as that expressed by him and other honorable members; but I challenge anybody who knows the value of different kindsof country to say that more than from 10 per cent. to 15 per cent. of good land is to be found along the route of the proposed railway from Oodnadatta through Alice Springs to Port Darwin. I believe that from 85 per cent. to 90 per cent. of that country is not worth developing. If that line were completed at an additional cost of at least £6,000,000 or £7,000,000, it would prove the greatest white elephant with which Australia has ever been saddled.


Mr Stewart - If that is so, we ought to cease talking about our great heritage in thenorth.


Mr KILLEN - It is unfortunate that the railway was ever built beyond Maree.


Mr Fenton - Where would the honorable memberhave the terminus of the railway?


Mr KILLEN - At Oodnadatta, which has been connected with Adelaide by rail for the last 36 years. More white people were living in that district before the railway was built than are to be found there at the present time. To within a short distance of Alice Springs, the country is not capable of carrying more than from one to three cattle per square mile, and it is useless to spend millions in trying to develop it. I know a gentleman who has been a large holder of land along the route of the railway for the last thirteen or fourteen years. I saw him on my return from the Northern Territory, and he imagined that the object of my visit was to acquire cheap land. As a matter of fact, nothing was further from my mind. I went there simply to discover whether or not the construction of the railway was justified. He remarked that he was prepared to sell me some good stations up there. He offered me 8,000 square miles of country along the route of the railway between Oodnadatta and Alice Springs for £5,000 with all improvements. I replied that I would not have that country at a gift. He then said, " You are right. I have had it for thirteen or fourteen years and have not made a shilling out of it." What hope, therefore, would there he for small settlers? It would be a pure waste of money to continue the line northward. The tragedy of it is that while this poor country is being opened up, good country on the Barkly Tablelands, which could have been developed very much more cheaply, is being left idle.


Mr PRICE - How could the north be developed without a railway ?


Mr KILLEN - I advocate its development by means of a line from Borraloola, which could be later extended to connect with the Queensland system on the east and with Wyndham on the west. There would also be the line from Pine Creek to Daly Waters.

I hope that the Government will give serious consideration to the matters referred to by the Economic Commission and by the Industrial Delegation to the United States of America. If heed were given to the recommendations of those bodies, much could he done to improve conditions in Australia. It is essential that this be done if we are to. progress as a nation.







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