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Thursday, 28 March 1968

Mr DUTHIE (Wilmot) - I want to speak briefly this afternoon about trade relations between Australia and Japan. The conflict between the Treasurer (Mr McMahon and the Minister for Trade and Industry (Mr McEwen) reached boiling point at question time this morning when questions were asked about the attitudes of these two Ministers to Mr Maxwell Newton and his ideas. In answering a question the Treasurer expressed complete disagreement with the ruthless assessment of Mr Maxwell Newton given yesterday in an outburst by the Minister for Trade and Industry. When asked today whether Mr Newton, while on an overseas trip to Japan with the Treasurer, gave any evidence of being a Japanese secret agent, the Treasurer said no, thus contradicting the Minister for Trade. That completely contradicted what the Minister said yesterday in his attack on Mr Newton. Although this is not the main issue it is a very interesting political question and shows the vast differences between these two leaders on the Government side - the Leader of the Australian Country Party and the Deputy Leader of the Liberal Party. The Opposition could make a lot of this and it will do so because this violent contradiction in attitudes could have serious consequences for the stability of Australia's economy.

At the moment the Minister for Trade and Industry is standing on two stools in regard to his support of the automobile industry and the support from primary industry and these stools are slipping further and further apart as he tries to keep one foot on each. He is trying to allay the fears of the primary producers as to what would happen if Japan sought reprisals against us and reduced its imports of our primary products. At the same time he is trying to keep in the camp of the big car manufacturers of Australia. In my opinion he cannot satisfy both interests with his present tactics.

The Australian automobile industry is not languishing. It is one of the best organised and strongest industries in Australia. It employs a great number of people and is a vital unit in our economy. The facts and figures that I am about to give to the House make me wonder what all the fuss is about. Why does the Australian automobile industry want to cut down so drastically on Japanese cars? Japanese cars totalling 35,000 were imported last year. Admittedly that was an increase of 29% on the previous year, but the Ford Motor Company of Australia Pty Limited showed a profit before tax of over $12m in 1967 and its profit after tax was $9,690,590. Its profit in 1966 was under $lm. Therefore it increased its profit by nearly $9m in one year. Factory sales in 1967 were a record for the Ford Company. It sold 94,502 units last year compared with 76,483 units in 1966, an increase of 23% in one year. This does not look like a languishing company to me. The total sales of all cars and trucks in Australia in 1967 was 414,000, which was an increase of 9% on the previous year. Ford received 21.1% of the Australian car market last year.

In 1966 General Motors-Holden's Pty Limited secured 37.8% of the new vehicle registrations in Australia and it paid $1 1.9m to its shareholders that year. This was an increase on the figure of $10m that was paid in the previous year. The average profit each year of GMH runs between $10m and $12m. These facts about the two biggest automobile manufacturers in Australia make me wonder why there is all of this concern.

The advice that I give to these two companies is that they should reduce the price of their product if they arc so concerned about Japanese competition. This could be done quite easily. Year after year GMH has been churning out a profit of around $10m but it will not reduce the price of its vehicle to the consumer. This would be the best answer I know to any Japanese competition. The Japanese manufacturers have a 45% tariff duty to overcome, but in spite of this they have increased their sales in Australia. This must be due to good workmanship and to a good car.

I think that the fears that the Japanese manufacturers will make great indentations into our automobile industry are quite groundless, even though the Department of Trade and Industry is conducting an inquiry at the moment on behalf of the Australian automobile manufacturers to examine the impact of Japanese vehicles. If we did anything drastic in this matter and Japan decided to take reprisals these reprisals could very well have grave effects on our primary producers who, after all, are still producing 70% of our total exports. I mention this fact because at the moment Japan is our best buyer of primary products, especially in regard to meat, cheese, wool, sugar and wheat. Many of our graziers are very concerned that Japan may take reprisals. A resolution was passed in Melbourne yesterday by the Victorian division of the Australian Primary Producers Union, condemning the Government's threat to increase tariffs on imported Japanese motor vehicles. Mr R. Carty, of Lake Bolac, is reported in the 'Sun' this morning as having said:

As i. see it, the economy of this country is geared to the proliferation of the motor industry.

This threat to restrict further the entry of Japanese cars is a vicious suggestion.

The article continues, again referring to Mr Carty:

He said Australia could not afford to 'prop up the local motor industry' indefinitely.

How long are we expected to go on subsidising the colossal profits of General Motors and Ford?' he said.

These are the profits that I have just outlined to the House. The article continues:

The meeting said that it was 'incensed' by the Federal Government's threat to increase the present savage tariff on Japanese motor vehicles, as we are acutely aware of the incalculable benefits flowing to Australian primary industry through reciprocal trade between these two nations. lt said that if the Federal Government decided to change the tariff on Japanese vehicles it should be lowered.

I do not agree with that. I think that, with the present tariff levels, Japanese and Australian car manufacturers could learn to live together in this vicious, competitive world of car manufacturing.

But why should our own industry, which is so strongly entrenched and making such tremendous profits, be so afraid that it wants a special inquiry to try to alter the system that the Minister introduced in 1966 when he went against the Tariff Board's recommendations and suggested the 95% Australian content scheme over a period of 5 years7

I think that the car manufacturers have largely themselves to blame for this problem, if it is a real problem. Motor transport is vital to Australia because of the size of this continent. No other people are slugged harder in transport costs than we are. The Labor Party's policy is for a bigger and better automobile industry in Australia, but I do not believe that this should be accomplished at the expense of exports of our vital primary production to Japan. In 2 years, Japan's share of the Australian market has risen from 8% to 11%. That is not a great increase. I think that under the present tariff of 45% and the 95% component plan Japan could keep its imports to around 11%, 12% or 13% of our market without greatly interfering with the stability of our industry. 1 do feel that our own industry should reduce the price of its vehicles in an honest endeavour to meet competition from Japan.

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