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Thursday, 18 August 1960


Mr SPEAKER - Order! The honorable member will have an opportunity to deal with that at the conclusion of the speech of the honorable member for Barker.


Mr Calwell - He is completely misrepresenting the honorable member for Scullin.


Mr FORBES - I listened to what the honorable member for Scullin had to say and I believe that the text of his speech will show that he at least understands the feelings that led to the expropriation of overseas investments in the countries that I have mentioned.

The honorable member for Scullin used half an hour of the time of the House talking about the dreadful situation in which we would be placed should we fail to bridge the gap between our exports and imports in this current year. He painted a fearful picture. By implication, he suggested that if in any one year there is a deficiency in our trade balance, the Government has neglected its duty. The honorable member was trying to suggest that we should so arrange trade in every year that the value of our imports would correspond with the value of our exports. It is exactly that mentality, translated into policy, which created the situation that existed when Labour was in office. That was the reason for the shortages and the frustration people felt when they were not able to obtain the goods they needed. It was also the reason for the imposition of controls. Why do we have international reserves? Why have we gone to such great lengths to encourage our export industries and to create substantial reserves in London and New York? We have done this so that we can meet the situation which arises when, because of varying prices or other factors, we are not able to cover the gap between imports and exports in any one year. This enables us to prevent the complete dislocation and stagnation of our economy. This Government has planned to meet such a situation. The people who would suffer most if the overseas reserves were not available would be the workers, whom the honorable member for Scullin claims to represent. The vast majority of them depend for their employment upon the import of raw materials and producer goods to keep the wheels of industry turning.

I welcome this bill because it brings the orderly and expert procedures of the Tariff Board to bear in all instances in which we want to restrict or cut off the flow of imports. It is vitally important that this is done because tariffs, besides bringing manifest advantages to the economy, impose burdens on it. And it is precisely that which honorable gentlemen opposite fail to recognize. They will not admit that the tariff imposes burdens as well as confers advantages on the Australian economy. It is precisely for that reason that we have the Tariff Board - so that decisions as to restrictions on imports into this country shall be arrived at by orderly methods and orderly procedures and on a basis of criteria which do not impose too great a cost on the economy of this country. It is worth remembering in this respect that the Brigden committee, which was the last committee to report on the economic effect of the Australian tariff, found that, even allowing for Government assistance to compensate the export industries for the costs imposed on them by the tariff, the cost of production in the export industries is raised by 9 per cent, by protection. That was in 1928-29. Since then there has been an enormous increase in industrial growth in this country, and I think that the cost to the export industries would be very much greater now than it was then.

As the Minister for Trade (Mr. McEwen) pointed out when he introduced this bill, it can be manifestly demonstrated that not all protection imposes additional costs. This appears to me to emphasize the vital importance of protecting industries by orderly and regular procedures which take into account the cost of protection, the efficiency of the industry, and so on, and of getting away from procedures which are based on political and other expediencies and on arbitrary decisions by officials, such as the import licensing that of necessity we have had to endure in the last eight or nine years has been. For that reason I support this legislation. As the result of the abandonment of import licensing we were left in a situation in which we could not impose a quick restriction on the importation of goods into this country in circumstances which justified it; and this bill, as 1 understand it, does no more and no less than remedy that deficiency. 1 cannot understand the Opposition's opposition to this bill. In my experience in the four years I have been in this House members of the Opposition squeal like stuck pigs every time it looks as though an Australian industry is being injured, whatever the merits of the case and whatever the circumstances; and yet when we take measures to ensure that, if that happens, we can act quickly, the Opposition opposes such legislation.

When I say that I support this legislation, I have to add one qualification. I believe the bill will increase the burden of work placed on the Tariff Board, despite the provision for an additional deputy chairman of the board. I cannot see how the measure can fail to increase the already heavy burden of work which the Tariff Board has; and this is happening at a time when, in my view, the board is just not able to cope with the work it should be doing, despite the excellent reform and the streamlining of the board which was carried out by the Minister a year or two ago. The inability of the Tariff Board to cope with the tasks it should be doing has two very important consequences, and I want to say a word or two about them. The first of these consequences is that the Tariff Board is so snowed under by demands for new determinations for new and higher tariffs that it has no time to look at determinations it has made in the past. This is an extremely serious matter.

I have already stated that the costs of the tariff are high so far as our export industries are concerned. We cannot lightly accept a situation where the costs imposed on the export industries are any higher than they need to be, given the general requirements of the Australian economic situation. Yet we manifestly have a situation in which the Tariff Board, because it is overworked, never has an opportunity to review the protection which it has provided to many industries, ten, fifteen, twenty or even 30 years ago. Often this protection is asked for on the " infant industry " argument - the argument that as a new industry starting off, it would like tariff protection to cover its losses while it becomes established. That is an excellent idea, and has played a great part in helping Australian industry to become established, but one of the difficulties in the present situation of the Tariff Board is that these industries remain infant forever; they never grow up. Long after the original five, six or seven years for which they asked protection have passed, they continue to enjoy the protection because the board never gets round to reviewing that protection.

We have to remember, Sir, that to some extent any tariff system - certainly ours - creates certain degrees of monopoly and gives an advantageous position to particular industries. Although it creates monopolies, or a semi-monopolistic situation for certain industries, in this respect the Tariff Board does not, so far as I can see, ever accept any responsibility for controlling the operations of such monopolies. You do not often find the Tariff Board looking at the profits an industry has made or attempting to determine whether an industry is in any way abusing the monopolistic position which has been given to it under the tariff. I would like to see the Tariff Board very much strengthened to enable it to perform this vital function of reducing the cost to the export industries which comes from its present inability to review the tariff structure. The other reason why I feel alarmed about the present inability of the board to cope with the demands that are made on it is that the pressure on the board is so great that it never has time to sit back and have an objective look at its procedures and where they are taking the Australian economy. 1 and other members of this House - the honorable member for Gwydir (Mr. Ian Allan) expressed the same view in his speech last night - have grave doubts as to some of the criteria and procedures adopted and developed by the Tariff Board in the performance of its functions.

Let me give a few examples of what I mean. One of the things which the board does is to look at comparative costs, the costs in Australia and the costs in overseas countries which are likely to compete with the Australian product. Let us suppose that a product is produced in Australia at a cost higher than the price of the imported product, and that cost includes a reasonable rate of profit and a return on capital. In those circumstances the higher Australian price might be due to any one of four different factors, or a combination of any two or more of them. It might be due, first, to a higher general cost level in Australia. It might be due, secondly, to higher particular costs in a particular industry. For example, the labour employed might be more expensive or less efficient, or raw materials might be dearer. Thirdly, it might be due to an inability, because of the nature of the industry, to benefit from economies of large-scale production. Fourthly, the higher price might be due to the relative inefficiency of Australian management. As I say, the higher Australian price might be due to any one, or a combination of any two or more, of those factors.

The cost comparisons that the Tariff Board makes between Australian and overseas firms seem to aim at isolating only the last of those- four factors, the relative inefficiency of Australian management. The Tariff Board isolates that factor in its inquiries so that the tariff can then offset the other three factors. The tariff offsets not only the higher cost level, but also the particular costs in the industry concerned and the inability of the industry to benefit from economies of large scale production. I believe, however, that in the economic circumstances of Australia to-day the correct approach is to offset only the first factor, the higher general cost level in Australia. The tariff should not be fixed at a level designed to offset the other three factors I have mentioned.

I should now like to pose the following question: To what extent has the Tariff Board considered what should be the desirable pattern of Australian manufacturing industry? From its existing procedures, as I understand them, and from a perusal of its reports, it would appear that the board does not consider this broad question at all. If an industry is efficient by Australian standards in the Australian environment, then it gets protection almost irrespective of the cost consequences. I believe that in' a country with our wage standards we should be considering the building up, by means of the tariff and by other means, of what I might describe as capital intensive industries, such as the motor vehicle and the steel industry, and exporting the products of those industries to Asia, particularly SouthEast Asia. We have a much greater opportunity of operating efficiently, and at a cost level comparable with that obtaining in other countries, in capital intensive industries than in what might be described as labour intensive industries. My suggestion involves the proposition that we should import the products of labour intensive industries, such as textiles and fancy goods.

It seems to me that this would give better balance and a more desirable pattern of development in manufacturing industry in a country with very high standards of living and very high wage standards. Such a policy would appear to achieve all the desirable objectives of protection while, at the same time, guiding our manufacturing efforts into channels in which there is a possibility of exporting on equal terms with our competitors. At the same time it would remove part of the very great burden which falls on our existing export industries.

But I repeat that there is nothing in the existing procedures of the board, as I understand them, to lead us to believe that this objective will ever be achieved. This may well be because the board has too much work to do and is not able to stand back occasionally from its work, as it should, and see where its procedures and determinations are taking us. It may well be that this is not a job for the Tariff Board itself. Probably the most suitable body to undertake a review of this kind would be an independent committee of inquiry set up in the way that the Brigden Committee was established, as was suggested by the honorable member for Gwydir last night.

Such a committee could stand back and, considering all the circumstances of the Australian economy in the early 1960's, take another look at the procedures of the Tariff Board. I cannot imagine anything which would be of more value and give greater confidence to us in our attempt to go forward with our development at a pace as fast as, or even faster than, that at which we have been proceeding in recent years. Above all, it would assist, I believe, in enabling us to adjust our tariff procedures according to the necessity to protect Australian industries and employment, while at the same time easing the almost intolerable burden that such procedures sometimes place on our export industries.







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