NO SAFETY MARGIN

Evening Post, Volume CV, Issue 124, 28 May 1928, Page 8

NO SAFETY MARGIN

SIR L. RAWS WARNS NO SHELTER FOR SHIRK TARIFF FOE THE FIT The following statements appeared side by sido in. a recent issue of a prominent Australian paper;—■ "Australia did not seem to have set up a standard of the best organised and most efficient industry as the one that should determine the amount of protection; its "standard seemed to be set to suit the ayerage i firm, or even, lower. New Zealand's policy, on the other hand, was to encourage the resourcefulness of manufacturers by insisting that the protective tariff should be based on the needs of the best organised industry."—The Hon. W. D. Stewart, Minister of Finance, New Zealand. "The object of Governments should be to stimulate the efficient, not shelter the. inefficient. He suggested that if Australian Governments had' to make a choice between the two it should not be the efficient who suffered."—Sir Lennon Raws, 'a well-known Australian commercial leader, of Elder Smith and Co. Mr. Stewart's speech was delivered in Auckland, and was cabled to Australia; That of Sir Lennon Raws was delivered in Sydney, to the Millions Club. TWO GUIDING PRINCIPLES. . , Sir Lennon Eaws said that there were two fundamental facta which Australians could not disregard. The first was that their-prosperity was closely linked with seasonal conditions and world's prices, neither of which they could con- ' trol. The second was that Australia must be for some years to come an exporting country and a debtor country, and that, therefore, its internal price levels must conform to outside price levels if the country was to prosper and expand. Directing attention to the result of Government efforts to regulate and control trade and industry by tariffs, arbitration courts, and marketing boards, ' Sir Lennon Eaws said that the main endeavour in such measures was to maintain and increase1 prices. The measure of their success was that nominally production, as measured by official price figures, had increased 50 pcr3 cent, a head since 1917. Actually, however, measuring in terms of quantity, production per capita' had declined. Goods and services were real wealth, and not the prices attached to them. The New South Wales coal industry provided an . illustration. The value of ■ production- of coal a head had increased between 1928 and 1926 from £208 to £377, but how illusory was this increase was shown by the fact that the output of coal had fallen ia the same time from 549 tons for each, miner employed to 429 tons. Therefore, although a large nominal increase in the value of coal production was shown, actually the community was definitely, the worse off,to the extent of 120 tons of coal a year for each man employed.' "The only way in which the community as a whole can permanently benefit," added Sir Lennon Eaws, "is by an increase in production. Heavy oversea borrowings by our Governments have had an inflationary effect, and their high taxation has rendered less profitable those industries which rely on export trade. No Government has attempted to restore that margin of safety which should exist in normal . times between taxation and production to meet the demands of a crisis. Such a margin of safety does not exist at present.' . ■ ' POWER-COST PtTITDAMENTAL. An example of the Australian plan of following the protective principle to a conclusion is seen in the demand for protection for Australian-made turboalternators, generators, motors, and switches. Now Zealand is" developing hydroelectrical power as a key industry, and the Government is spending on it many millions, thus bringing public works borrowing to a peak that temporarily embarrasses the Treasury.^ Victoria also has spent much money in devoloping*the brown coal industry as a source' of electrical and other power, but the State Electricity Commission now' finds itself faced by a demand that it buy the Australian made turbo-alternators, generators, etc., at 'a cost greatly in advance of that of the foreign article. The question is whether the key industry ds to be allowed to generate its power in the cheapest way so as t6 keep down the power-cost of other industries, or whether the key industry shall pay extra for the dearer goods supplied by; the local Australian makers, at an excess cost which (according to Sir John Monash) would make it more profitable to buy up "the local makers and compensate their employees than continuo to buy. their expensive wares. Mr. "W. H. Myers, chief electrical engineer for the New South • Wales Bailways and Tramways, told the Australian Tariff Board that the Railway Commissioners had endeavoured, probably to a greater extent than any other public electricity supply authority in the Commonwealth, to encourage Aus« tralian manufacture by giving substantial orders to Australian firms by supplying technical information from their expert officers and testing laboratories, by experimental manufactures in their own factories, and by giving special preference to local firms. As a result of the practical, encouragemnt so given, a number of works had been established in the State, dealing with heavy power equipment, switch gear, and auxiliary; apparatus. It was not always practicable, safe, or reasonably economical to place orders in Australia, and, in such circumstances, the commissioners considered that, although a relatively few employees engaged in the manufacture of certain electrical apparatus had benefited by the placing of orders in the Commonwealth, a far greater number of employees in other directions had suffered losses, either directly or indirectly. The commissioners and theii; responsible officers could hot possibly take the responsibility in many cases for the purchase of comparatively untried, locally manufactured machinery or equipment, oven when the prices of the tenders appeared to be otherwise very satisfactory.' The time was not ripe for Australia to engage, in the manufacture of turbo-alternators, and Australian manufacturing firms should concentrate on the gradual building up of those manufactures which offered a far greater field for local development. The Tariff Board heard other evidence and adjourned. '