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Thursday, 10 July 1930

Senator Sir GEORGEPEARCE (Western Australia) [8.0]. - I move -

That, in order to assist Australia to redress the overseas trade balance, the Senate is of opinion that the Government should give con sideration to the formulation of proposals, by which the manufacturing industries of the Commonwealth could be encouraged to export manufactured goods to overseas markets.

In the ministerial statement made at the commencement of the session, the Government invited Parliament to constitute itself into an economic committee. I do not know that we have done' very much in that direction so far, hut I ask honorable senators to spare half an hour for the consideration of one phase of our economic problem. Various people have appealed to the farmers to grow more wheat; in fact, there has been a general appeal to the primary industries to produce more in order to assist Australia to overcome its overseas trade balance; but, so far, no one has appealed to our manufacturing industries to take part in the endeavour to put the ship of State on an even keel. . Our manufacturers have had 30 years of protection for their industries under the Commonwealth) and, in the case of those established in Victoria, another 30 years prior to federation. That is to say, some of them have had 60 years in which to reach maturity. Surely they ought now to be in a position to stand the cold blast of the competition under which Australia's primary industries have to stagger in the markets of the world. It cannot be said that there are no markets available within easy reach of our shores. The East Indies, the Pacific Islands, New Zealand, South Africa, Egypt, China, and Malaya are some of the countries one calls to mind in which we ought to be able to place our manufactured goods. At any rate, our sister dominion, Canada, is selling her manufactured goods in those countries. Although Canada has had a protectionist policy for quite a number of years, its tariff is by no means as extreme as that of Australia. I understand that its highest duty is 35 per cent., and that the bulk of the duties are lower than that. Of course, it may be said that there is a great home market alongside Canada; but, in order to reach that market, Canadian goods have to cross a tariff wall very much higher than that which goods produced in the United States of America have to cross in order to get into Canada. It is a protectionist doctrine that a country should he prepared to sell its surplus output on the world's markets at less than cost. At any rate, that practice is adopted by both the United States of America and Canada. Manufacturing industries in Australia are doing little or nothing towards assisting in Australia's endeavour to restore its overseas trade balance. Why should all the responsibility to do so be placed on the primary industries? They have had no particular assistance from governmental policy, either Federal or State, and at no time have had any protection. Surely the favoured industries which have had the blessing of protection showered upon them, and all the advantages of a sheltered home market, should be able to do something at a time like this to assist Australia. It is a matter well worthy of the Government's consideration, and it is, I think, within the region of practical politics. If Canada, employing white labour, paying wages, and giving conditions of labour very similar to our own, and like Australia, peopled by a British race, can export manufactured goods, we ought to be able to do so. If we cannot, there must be some reason for it. It is the responsibility of the Government to ascertain what that reason is and see if it cannot find some means of overcoming the difficulties, if there are any, that stand in the way of our exporting manufactured goods. If monetary assistance is required to enable our manufacturers to get their goods on to the markets of the world, surely these people, who have had the advantage of a sheltered home market for so many years, should be able to raise the money themselves. I do not see why something in the nature of an excise duty or levy should not be imposed upon them for the purpose of raising a fund which could be used to assist those who would be willing to come out from behind the shelter of the tariff and go on the markets of the world in competition with other countries.

The Commonwealth Year-Booh for 1929, classifies Australia's exports. The term "manufactured goods" needs some explanation, and I shall quote the classification in the Tear-Booh to show what I mean by it. They are of two classes. For instance, we produce primary products such as wheat and milk, and the former is made into flour and the cream from the latter into butter. But for the purposes of classification neither flour nor butter comes under the heading of manufactured goods. The classification is set out on page 230 of the Year-Booh as follows : -

The following table gives an analysis of the exports of Australian produce according to the main classes of industry, in which the goods were produced. In certain cases in which the produce has been subjected to some initial process of manufacture, opinions may differ in regard to its classification, but in preparing the tabulation the method adopted generally has been to credit to the primary industry those products in which the value of the primary element is appreciably the greater. Thus, such commodities as flour, jams and preserved fruits, chaff and prepared fodders, &c, have been treated as the produce of agriculture; butter, cheese, preserved milk, and bacon and hams have been credited to the dairying industry; canned meats, tallow and fell.mongered skins have been credited to the pastoral industry, but leather has been classed as a product of manufacturing; minerals and metals, which have been smelted or otherwise refined, but not further manufactured, have been included as the produce of mining; and sawn timber as the produce of forestry.

It is my purpose to make a comparison between Canada and Australia in the matter of manufactured goods. It is interesting to note what a small proportion of manufactured goods is comprised in Australia's export trade. In 1913, the value of primary produce exported from Australia was £72,833,454 whereas the total value of manufactured exported goods was only £2,304,693. In 1927-28, the latest figures given in the Year-Booh, the respective figures were £134,158,348 and £4,789,099. The value of primary produce exported in 1927-28, exceeded the va'lue of that exported in 1913 by £61,324,894. Even if we allow for the increased price levels the increase over 1913 price levels was over £9,000,000. In the same period the increased value of manufactured goods exported was only £2,484,406. The percentages are striking indeed. Primary products represent 95.71 per cent, of our export trade and manufactured goods only 4.29 per cent. I have compiled a list of certain manufactured goods, Canadian and Australian, showing the value of the Canadian exports of those lines in 1906 and 1928, compared with Australia's exports in 1928-29. I have taken the year 1906, because the population of Canada was then about the same as that of Australia today. Australia's population in 1928 was 6,336,786, and Canada's in the same year, was 9,650,000. The list I have compiled is of manufactured goods, which have been heavily protected under the Commonwealth, and in some cases for 30 years prior to the establishment of federation. The table is as follows: -

Of these highly-protected and in many cases bounty-fed goods, Australia exported, in 1928-29, £1,406,280 worth, while Canada, in 1906, with a similar population and with lower duties, exported £2,742,000 worth in 1906. In 1928, her exports of these manufactured items had increased to £31,400,413. The population of Canada is one and a half times greater than that of Australia, but in these items alone Canadian exports in 1928 were 22 times more than those of Australia in the same year, while in 1906, when Canada had the same population as we have at present, she exported a little over twice the quantity that Australia exported. There must be some reason, and surely it should be determined. Should we not be able to follow the Canadian example ? If we did so we would not have to adjust our adverse trade balance. Why should not the manufacturing industries of the Commonwealth play their part in solving this important problem? In 1928 the Canadian exports of raw material were 47.2 per cent., that of partly manufactured goods 15.4 per cent., and of fully manufactured goods 37.4 per cent. Those figures are to bc found on page 48S of the Canadian Year-Booh for 1929. It is interesting to note that while Canada exported 37.4 per cent, of manufactured goods, Australia exported only 4.29 per cent. The Hon. Charles Dunning, Minister for Finance in the Canadian House of Commons, in delivering his budget-speech on the 1st May, 1930, said-

While nature, in no small way, influences the volume of produce grown, the same does not apply to the output of our factories. A short time ago a distinguished former Minister of Finance, Sir Thomas White, in addressing the shareholders of a corporation of which he is an officer, made the interesting comment that Canada now ranks seventh in the world's manufacture, and that the value of industrial production during ]!»20 was around 4,000 millions of dollars, an increase of about 200 million dollars since the close of 1028.

That is the way in which to overcome an adverse trade balance. He further stated that -

The statistics of value added by manufacture per worker show that the industrial efficiency of Canada-

Here is where the secret lies - is close to the level established in the United States of America, which is regarded as the highest in the world. Industrialists recognize that scientific research, coupled with ingenious mechanical inventions, has played an important part in bringing about this increase in per capita production, and it is evident from the figures just quoted that Canadian industry is more than keeping abreast of world developments in that respect.

Further on he says -

The outlet for our manufactured goods increases as their reputation grows, finds favour both at home and abroad.

Canada has no favoured position in this respect. As I have already pointed out, whatever advantages Canada, has in the matter of markets, the United States of America has similar advantages. Canada has to meet the competition of the United States of America, and in doing so has, by the figures I have quoted, produced a wonderful record. Further on, in dealing with primary production, the Minister of Finance in Canada states -

On the export side three groups show a peculiar depreciation. Grains were down $243,000,000; flour exports decreased by 120,000,000, and dairy products by $8,000,000.

On the other hand, among the increases in exports are: Farm implement exports, which increased by $2,300,000; exports of paper and its products were up $3,000,000; aluminium and its products, $0,800,000; copper and its products increased by $11,000,000 and precious metals by nearly $22,000,000.

If Canadian manufacturers had been content to shelter behind a tariff wall, and not to export their goods, Canada would be, and for the same reason, in exactly the same position that we are in to-day in respect to trade balance. Canada has, however, extended her secondary industries and they have taken a fair share of the responsibility of meeting the overseas trade balance.

Senator Plain - To which countries were Canadian manufactured goods exported ?

Senator Sir GEORGEPEARCE.To all parts of the world, including Australia. Canadian machinery manufactured by white labour is imported into Australia, notwithstanding the high tariff we impose.

It is interesting to notice in this speech that while, as I have pointed out, Canada has a tariff which in Australia would be regarded by protectionists as almost a revenue tariff - the highest duties being 35 per cent, and most of them in the neighbourhood of 20 to 25 per cent. - there is a whole list of goods on which decreased duties by way of British preference are imposed. These include: wire rope or cable, galvanized wire, covered wire, wire cloth, wire netting, springs for railway vehicles, wire fencing of certain gauges. Among the implements now free under the Canadian British preferential tariff are the following: milking machines, pasteurizers, ploughs, rollers, spraying and other horticultural equipment, hay loaders and tedders, grain and hay grinders and crushers, potato diggers and planters, incubators and brooders, hay presses, scythes, sickles, rakes and forks, separators, fanning mills, corn huskers, windmills, and electric power generators. Although the Canadia n Minister of Finance announces that Canada is decreasing duties on certain lines or making them free to GreatBritain, we are faced with the position that we are enormously increasing duties on almost every one of the items I have mentioned. Does not this suggest that we are on the wrong track, and that we should learn something from Canada? An economic committee such as the Prime Minister suggested should be formed to study these facts and to endeavour to put us on the right road. If we look through some of the items in our tariff we find such articles as confectionery, which to-day are on the prohibited list, and which have been protected by an extremely high duty. Notwithstanding this, we find in Bulletin No. 26 for 1928-29 that we exported only £90,000 worth of confectionery. Other exports were as follows : - Pickles, £8,735 ; ale and beer, £44,607 ; and manufactured tobacco, £495,629 ; I understand that the great bulk of this tobacco goes to New Guinea and the Pacific Islands. Other exports are apparel and attire, on which we have imposed duties up to 60 per cent., valued at £101,499. Although the boot and shoe industry in Australia has been a close monopoly, Australia was able, in that year, to export only £11,671 worth of leather boots and shoes.

Senator Ogden - Where do they go?

Senator Sir GEORGEPEARCE.Many of them go to the Pacific Islands and to the Malay States. The fur from which felt hats' are made is produced in Australia, but it is sent to England and then back to Australia. We have been able to export only £12,732 worth of hats and caps. Other items of export are blankets, £1,790; piece goods, silk, &c, £44,931; woollen piece goods, £12,355; cordage and twines, £16,064. Of agricultural implements of all kinds we have exported only about £4'0,000 worth. The item of electrical machinery is fairly large, as it amounts to £107,328. I could go on through the list and include such items as wire-netting, £4,347; pipes and tubes, £2,492 ; rails, fish bolts and plates, £2,932. Although we have substantial iron deposits, and an abundant supply of coal, we have only been able to export iron and steel goods of comparatively small value. The value of glassware, bottles, &c, exported in that year was £15,584, and rubber tyres, £44,542. We export tallow all over the world, but in that year we were able to export only £4,553 worth of candles. The wood match-making industry, which is held up as a model Australian industry, and which has enjoyed a prohibitive tariff ever since I have been a member of the Federal Parliament, has been able to export only £3,142 worth of wooden matches. I have selected only those items that are highly protected, and the total of the list from which I have selected only certain items amounts to £3,238,397. When we come to the secondary stage of primary production, which includes fertilizers, butter, dried fruits, flour, meats, milk and cream, sugar, tallow, wine, &c, we find that the value of these commodities exported in 1928-29 was £37,111,748. On most of these items there is little or no protection. Dried fruits are protected to some extent, but for the most part the protection is low. With goods manufactured from primary products and common to both countries, we more than hold our own with Canada. In 1906 Canada exported these commodities to the value of £10,469,555, and in 1928, £22,152,468, while during 1928 the value of Australia's exports of the same commodities was £31,34S,S00. What is the lesson to be learnt from those figures? Australia is able to hold her own with Canada in the export of the articles on which we do not impose prohibitive duties. To enable those industries to live, the goods that they manufacture have to be exported and have to withstand the cold blast of world competition, but those industries that we coddle and shelter, and to which we have given prohibitive duties for the last 30 years, cannot show their noses outside the tariff wall. A paltry £3,238,397 is all they can contribute in the way of exports to assist this country in itS terrible depression. If Australia did what Canada is doing, our main problems would be solved.

Senator Sir Hal Colebatch - The unemployment problem, too.

Senator Sir GEORGE PEARCE - Yes. The population of Australia does not contain as great a percentage of persons of foreign extraction as that of Canada. We are essentially a British community. We enjoy a better climate than that of Canada. In the winter months the Canadian countryside is frozen, and outside work is brought to a standstill. We have a range of products far greater than that of Canada. We can produce everything that Canada grows, and cane sugar in addition. Canada can produce only maple sugar;

It might be wise for us to consider whether we should not call a halt and see whether we have not taken the wrong track.

Senator Ogden - We should produce the goods that can be most profitably exported.

Senator Sir GEORGEPEARCE Yes. Canada has succeeded without prohibitive duties, and, to-day, it has no adverse trade balance. In all seriousness, I ask the Government to consider whether it would not be worth while setting some body of persons to work to formulate a plan by which manufacturers would be encouraged to produce for export. We have the remarkable instance of the McKay Harvester Company going to Canada to manufacture implements for the foreign market.

Senator Dunn - While Massey Harris machines are coming into Australia !

Senator Sir GEORGE PEARCE - H. V. McKay and Company manufacture in Australia only for the Australian market, but this Australian firm goes to another country to manufacture for the foreign market. Why should not agricultural machinery be made in Australia, and sent out to the markets of the world? I challenge contradiction of the facts that I have presented. They are to be found in our official publications.

Senator O'Halloran - What did the honorable senator do when he was a Minister to bring about the realization of this ideal?

Senator Sir GEORGE PEARCE - I spoke a great deal on this subject,and some persons imagined that I was somewhat of a crank upon it. The honorable senator has done me the honour at times of reading my speeches in Hansard. He will find, on referring to the records, that when the first tariff was brought down, I spoke on this subject in this chamber and took somewhat the same view as I have expressed this evening. I have never changed my opinions on this matter, and I am more convinced to-day than ever that we are on the wrong track. Canada, by adopting a moderate tariff, has built up industries that have had to withstand a certain amount of competition with the rest of the world, and that has enabled them to become hardy. We haveso sheltered many of our manufac turing industries that they have never had to face efficient world competition. We have been actually subsidizing inefficiency, and, consequently, these industries cannot stand up to overseas competition. I realize that the Government is anxious to find a way by which the adverse trade balance can be corrected, and I submit the motion with the sincere hope that it will assist the Government.

Debate (on motion by SenatorDaly) adjourned.

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