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Thursday, 16 November 1905

Senator STANIFORTH SMITH (Western Australia) - The Senate is under an, obligation to Senator Givens for the very able and informative speech he delivered on the difficult sugar question. No doubt the honorable senator has studied the matter carefully, and the valuable information he has supplied will aid us in coming to a decision, not only on the motion under review, but in dealing with the question of the continuation of the bounties to Queensland sugar-growers. Senator Walker has received his information from the manager of the Colonial Sugar Refining Company, and therefore, of course, from an impartial source.

Senator Walker - From an authoritative source.

Senator STANIFORTH SMITH - In spite of that, I venture to think that the evidence we have had shows that the Colonial Sugar Refining Company is a monopoly. In the first place, it is admitted that they refine 80.6 per cent, of the sugar produced in Australia. It is an undoubted fact that they not only fix the price at which sugar is sold, but the prices at which sugar-cane is bought, and therefore rule the whole sugar industry of Australia. To give a little illustration in opposition to the statement made by Senator Walker, I am able to inform the Senate that when the Tariff was under discussion, certain storekeepers in Western Australia wrote in the ordinary way to the Colonial Sugar Refining Company to forward their half-yearly supplies of sugar. The company wrote back to say that at the time their stocks were very low, and though they could let the storekeepers have a little to go on with, they could not forward their ordinary half-yearly supplies. Directly the Tariff was passed, the company put up the price of sugar -£1 01 £2 P61 ton, and wrote these storekeepers to explain that they now had stocks of sugar on hand, and could let them have all they required.

Senator Walker - The honorable senator will admit that if he knows a duty is going to be imposed on a certain article he has for sale, if he is a sensible man, he will keep his goods in stock, until he learns what the duty is to be.

Senator STANIFORTH SMITH - I do not say that the Colonial Sugar Refining Company were not justified in taking that advantage if the laws of the Commonwealth permitted them to do so, but I do say that my illustration is a proof of the fact that they do fix the price of sugar. I have said that they refine 80.6 per cent, of the total sugar production of Australia, and they are able to control not only the buying price, but the selling price of refined sugar. At present the price of sugar in Australia is something like £"20 15s. pelton. From the Times of last month I find that the price of sugar in England is £"17 10s. per ton for the best white Indian sugar, and for beet sugar, 83 per cent., undefined, £"8 1 8s. per ton. We may fairly say that the present price of sugar in Australia is £3 ios. per ton above the world's price. That is unfortunate, not only for the ordinary consumers of sugar, but for the jam, fruit- preserving, confectionery, and biscuit industries which are springing up and expanding in the Commonwealth. The annual consumption of Australia is approximately 170,000 tons, and our people have to pay for that sugar something like .£595,000 more than they would have to pay if they could buy it at the world's price. Members of the Federal Parliament do not object to ask the people to make some sacrifices in order to assist the growers of sugar. But it seems to me that the money which the people are paying in this way is going into the pockets of only two classes of persons. First of all, the landlord who rents land to the sugar-growers - and, as Senator Walker has pointed out, the Colonial Sugar Refining Company are large land-holders - and in the second place the Colonial Sugar Refining Company. We know that the company have paid 10 per cent, dividends, but my experience of these companies is that very often their declared dividend does not indicate the enormous profits they make. I had occasion to investigate the balancesheet of the Eastern Extension Company very thoroughly. I pointed out the enormous profits they made. They had watered their stock, had bought repairing boats, and built up huge reserves, and their profits were enormous, although their declared profit, expressed in percentages may have been only from 8 to 10 per cent, per annum. The bounties which we are paying go into the hands of the Colonial Sugar Refining Company and the landlords, to too great an extent' by far. When I was in Bundaberg I found that there were landlords there who had bought land for £"i per acre, and were actually renting it to the sugar-growers at £"i per acre per annum.

Senator Walker - Was it cleared land?


Senator Walker - What did it cost per acre to clear it ?

Senator Givens - For growing sugar I would pay more for land with the scrub on than for cleared land.

Senator STANIFORTHSMITH.Land that had been bought for £1 per acre was being leased for £"i per acre per annum. That appreciation in price had been brought- about largely by the bounties which the people of the whole of Australia are contributing for the assistance of the sugar industry. As an illustration of what might happen in the future in- connexion with the development of the Colonial Sugar Refining Company, I should like to give the Senate some information about the Cartel system which obtains in Germany and Austria. That huge combine is composed of sugar-growers, sugar-millers, and refiners. In Germany, previous to the last Tariff, there was an import duty of £20 per ton and an excise duty of £"io per ton on sugar. The people represented in the Cartel came together; and they said : " We have £"10 per ton to work upon - the difference between the excise and the import duty - and if we can only control the whole supply we can raise the price of sugar in Germany by £8 per ton." That is what they actually did. That Cartel - and the Colonial Sugar Refining Company is assuming similar proportions in Australia - was able to increase the price of sugar in Germany by £"8 per ton, to the injury of a great many manufacturers and of the poorer people, who look upon sugar as one of the necessaries of life. The action they took made it necessary that they should throw upon the world's market all their surplus sugar. While thev were able to sell their sugar in "Germany at £8 per ton above the real market price they sold it at less than cost price outside. Beet sugar. 88 per cent., at Hamburg was sold as low as from £6 to £7 per ton, and the action of the Cartel had the effect of practically ruining every unprotected cane-sugar industry outside. We know that the British Government had to vote ,£250,000 to assist the starving sugar-growers in the West Indies. In India, the United States, Canada, and Australia countervailing duties were put on to prevent the introduction of sugar at the extremely low price brought about by the action of those interested in the industry in Germany. We .know that as a result of the Brussels Convention the bounties, which I think amounted to 30s. per ton, were removed. I believe that by the new Tariff in Germany, if the import duty on sugar is not reduced, the excise duty is increased, and consequently the Cartel has to some extent been broken up, and the price of sugar is lower in Germany than it has beensince its institution. This has been followed by an increased consumption of sugar. Whilst the consumption in Germany was previously something like 40 lbs. per head, and in Great Britain 1.00 lbs. per head, now that sugar is cheaper the consumption per head in Germany has greatly increased. There is less German sugar thrown on the markets of the world, and that fact has had the effect of increasing the world's price for sugar. My reason for mentioning these facts is to suggest that in dealing with the Colonial Sugar Refining Company we should do well to take a warning from the operations of the Cartel system in Germany and Austria. Exactly the same conditions prevailed in Germany as are growing up in Australia, where, as I have said, the Colonial Sugar Refining Company now regulate the buying and selling price of sugar. If tlie increased price which we are paying for sugar at the present time were directed into proper channels, so that the growers might receive the major portion of it, there would not be so much to object to. What we have to fear is not the present conditions, but the conditions likely to arise when we have renewed our bounty obligations for another five years. I have pointed out that the price of sugar in London is £17 ros. per ton, and in Australia £20 15s. per ton. We have imposed an import duty of £6 per ton on 'sugar, and as soon as the Colonial Sugar Refining Company are guaranteed another five years of their present monopoly it will be possible for them to immediately raise the price of sugar by £2 per ton throughout Australia without bringing it up to the price at which foreign sugars can compete in this country. The great danger does not lie in the prices we are paying at present, because the company will be careful not to show their hand until the agreement is renewed. Then, however, the company, composed, as it is, of business men, will undoubtedly take advantage of the opportunity to immediately raise the price to the highest point at which they can sell to the Australian people. We have nationalized! the railways, post and telegraph, and similar services, and in every case the administration has redounded to the credit of the community. We have not, however, nationalized any industries, unless it may be a gold-mine in South Australia, and two or three hotels in Western Australia.

Senator Walker - Have the Government or the municipalities taken over the hotels in Western Australia?

Senator STANIFORTH SMITH - The Government. The position I take up is that if we find we have exhausted all legislative means to control an industrial monopoly, so as to prevent it becoming oppressive to the people, we are justified in considering the advisableners of nationalization.

Senator Walker - Does the honorable senator think that the Constitution permits us to nationalize any industry ?

Senator STANIFORTH SMITH - I do not wish to enter into any discussion on the Constitution, the difficult points of which I do not feel myself competent to decide. This is an abstract motion, which I shall support. It might be advisable, though not, perhaps, absolutely necessary, for the Queensland Government, if they would consent to do so, to buy out the Colonial Sugar Refining Company. But the less expensive way, perhaps, would be for the State Government, who finance the Central Mills, to establish refineries at one or two of the big centres, and there have a fixed price which would, doubtless, govern the trade price in Australia. We must, in some way, renew the agreement with Queensland in regard to the sugar bonus. The time will come when we must decide one way or another whether the contract shall be renewed, s.ay, for five years. I do not object' to the renewal, which means the payment of thousands of pounds by my constituents in Western Australia, if we are sure that the money finds its way to the growers who are producing the cane. But I have been looking into this matter somewhat carefully, and I observe that the tendency is to appreciate the value of sugarcane lands in Queensland, and increase the rents claimed by the landlords, or, on the other hand', to increase the profits of the company. I think I am correct in saying that the money taken from the various States, and handed1 over in the shape of a bonus, goes principally into the pockets of the Colonial Sugar Refining Company, and of the landlords. If we renew the agreement for five years, without imposing legislative safeguards, there will be nothing to prevent the company from immediately raising the price of sugar by ,£2 per ton, and thus imposing a hardship, not only on the poorer classes, who use sugar daily, but also on jam-makers, fruit-preservers, confectioners,, and others. The object and intent of the bonus is to benefit the sugar-growers, and not the Colonial Sugar Refining Company, or the owners of the cane lands.

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