THE ARAPUNI CONTRACT.

Otago Daily Times, Issue 19251, 15 August 1924, Page 2

THE ARAPUNI CONTRACT.

FOREIGN MACHINERY. BRITISH AGENTS’ COMPLAINT. WARM WORDS AT A DEPUTATION. (Fbom On® Own Correspondent.) WELLINGTON, August 14. There wore plain words and a very, heated atmosphere at times when a deputation ot British manufacturers’ agents to the Prime Minister to-day were protesting against portion of the contract for machinery and equipment for tne Arapuni power-house and heau-works being carried out by a Swedish firm. Mr G. H. Scott (president of the British Manufacturers’ Agents’ Association) was the spokesman of a deputation of hve that waited on the Prime Minister “This is the most serious thing that has ever happened to British industry,’ said Mr Scott in introducing his subject. The result in New Zealand to the British manufacturer will bo loss of prestige, and the general effect is going to be more serious than anybody can see at present. As to the result in England, well, it is very hard to s-y how far-reaching it will be.” “Wo are not concerned because some ot our members are affected,” ho continued, “and the tenderers arc members of the association and of the federated British industries. The successful tenderer, Messrs Armstrong, Whitwortn, and Co., is one of our members. Wo wish to make it clear that wo are dealing with tfi© principles involved, and the departure of the Government from its settled policy in 'be past. The Prime Minister: 1 want you to prove that. It is ft very serious statement to make. . ■ Mr Scott; If you are going to let it to foreign people that will lie so. Mr Massey; How do you make that out" Mr Scott: Included in the successful, tender is a Swedish firm for a large proportion of the machinery. Mr Massey: The successful tenderer is Messrs Armstrong, Whitworth, and Co., a reputable English firm. Mr Scott: That is a splendid smokescreen Mr Massey (very warmly); You will please understand that there is no smoke-screen about our doings. We don’t adopt tactics such as you suggest. We are quite in the ° P Mr Scott: lam speaking perhaps with feeling. We know what the position is. I want to point out quite clearly that the fact of the Government accepting a tender that largely includes foreign manufacture when it could have accepted one of entirely British manufacture, reflects to some extent on the Government’s declared policy in the past if it can be roved that the Government could not accept any other tender. The Minister of Public Works: We would have had to call for fresh tenders. Mr Scott; Wo have now some important information before us. The Government, after opening the tenders, finds one which includes foreign manufacture to the extent of £3OO,OCC. That is the Minister’s statement to the press. Mr Coates; Not foreign material Mr Scott: Material that is involved in two contracts, No. 1 and No. 2. Mr Coates: I made no such statement, because I know it is wrong. Mr Scott: At any rate, it was stated that >t was to be done excepting £64,000 of foreign manufacture. Mr Coates: No. 1 contract is all British. Mr Scott: The total plant is to tost —

Mr Coates: £400.000. Mr Scott: I think steps have been taken since to .have machinery made in Great Britain to the value of £236,000. Mr Coates: No; you are all at sea Mr Scott: You made that statement to me, and your statement is definite, that all except £64,CCO is to be of British manufacture.

Mr Coates: That is quite correct. The Prime .Minister: Let us'Stand'on that. That is definite.

Mr Scott : The tenders received by the Government included tenders of three of our members. Two of them were for £604,000 for No. 2, and another was for £640,000. They were entirely British. Included in Armstrong, Whitworth and Co.'s was one for just under £600,000 for No. 2, in which was included the plant and machinery to bo supplied by the Swedish Electric Company.

Mr Massey: You had better stick to one point, not the offers made to us. . but the offer we have accepted. You have it now down to the fact that is admitted by the Minister, that the foreign manufacture is £64,000, and that ail the rest is British,

Mr Scott; I am trying to make this statement, that since opening the tenders— Mr Massey; Is there any such discovery? Mr Coates: The_ attitude of Mr' Scott is wiprtg in . its entirety. When the tenders were opened cur first concern was what amount of the plant would be British made and what amount foreign. We considered that foreign plant, was no use to the British workmen. We asked them to state where the plant was to be manufactured. and to specify anv portions that would be of foreign manufacture. In the tender there was the provison, as I have said; for £64,000 worth from the Swedish Electric Company. Mr Soott is trying to make the point that we did wrong in ascertaining where the plant was to be made. Mr Massey: We need not consider that. We are responsible to the people of New Zealand. > Mr Coates; Exactly. Mr Scott; The responsibility is that after the Government opened the tenders it arranged with Armstrong, Whitworth, and Co. that the value of foreign work in their tender would be £64,000. Mr Coates: That is wrong. Why do you keen on saying that? Mr Scott: Supposing I decrease the figures. Mr Coates: You need not do that. Whv continue to make misleading statements? Why mislead the public? Mr Scott: Let us leave the figures out. Mr Coates: Don’t leave anything out The Government asked the contractors, as I have said Mr Scott: After opening fhp tenders. Mr Massey: How could they know until they had opened them? Mr Scott; But it included machinery made by a Swedish firm, and it was going to be made there until it was decided Mr Contes: How do you know that the tender did not say that? Mr Scott: We claim that the other tenderers should have been approached at the same time for the purpose of allowing them to quote for foreign material. The Government has hopes to bring this loan under the terms of the British Trade Facilities Act. That is a matter for the Government., but wc, as citizens, are interested in this matter. We are interested because the funds of the Trade Facilities Act are very largely supplied by taxation from British manufacturers and members of our association. Wc consider that it is utterly wrong for any taxation of our manufacturers at Home to bo used in the manner suggested. We claim that it is creating competition that is not fair. In dealing with this matter the Minister stated that, he would not give preference of 20 per cent, to British manufacturers. When asked if he was giving 10 per cent, ho still said : “No.” I want to remind him— Mr Coates: Fortunately, 1 have got a copy by mo of what I said. That is not the case. Mr Scott: Some of the members of the deputation are here. Mr Coates: I can’t help that. The statement is not correct. Mr Scott; Please tell me where I am wrong. Mr Coates (consulting the shorthand port of the deputation): I did not say wo would not give 10 per cent. Mr Scott: Did you refuse 20 per cent. ?

Mr Coates: Yes, under the Customs Act. Mr Massey (to Mr Scott); You came here to see me this morning. Go ahead. Mr Scott: There was a refusal on the part of the Public Works Department. We can’t get any indication if there is any means of deciding whether British plant will bo included in the accepted tender. Wo say it can be arranged. We claim that the plant to be used by the successful tenderer is within £IO,OOO of the tender of one of onr members for British manufacture. Wo were told that the British plant complied with the specifications of the Government. Wo were told also that the Government specification included such items us a provision that the plant would completely use up the water power available in the pipe line, and that the machinery therefore, if the British plant wore suitable, would have done that. Mr Coates: That is not correct. Mr Scott: Another point is that Mr Coates has told us that the extra value of efficiency in the Swedish plant, combined with some difference in the price, was what led to a recommendation that the plant should bo used. Wc say that if the British plant were going to fulfil the requirements and specifications it ahoidd bo used. Maogahao

is entirely British, and we cannot understand anything else. There is £82,000 involved in the Trade Facilities Act. Surely if there were room in that figure— Mr Massey: Will you guarantee ' that we shall get that money ? Mr Scott:And use foreign plant? Mr Massey (very warmly); Keep to the point. Not a copper of the money loaned by the British Government will go into foreign plant or workmanship, and you know it. Mr Scott: I don’t know it, but the Trade Facilities Act will not allow the money to bo used for foreign plant. Mr Massey: That is exactly what 1 have said.

Mr Scott: Wo feel that even supposing the contract is carried on as suggested inspection should bo arranged for in England, and that certificates of origin should be secured. Mr Coates: Wo have arranged that, the invoices must bo submitted to the High Commissioner for New Zealand and approved by him. Mr Scott: That is not a technical inspection. There are two bodies that can function at Home to safeguard us and the Government- —the organisation known as “Beaver,” and the Federated British Industries. Both will certify technically to the origin of the plant the Government gets. In regard to our position here we feel that if the matter has not gone too far it might be looked into by a sub-committee.

Mr Massey: You mean a sub-committee of the Cabinet, Mr Scott: So long as it was not directly interested. THE PRIME MINISTER’S REPLY. , Mr Massey, after inviting other members of the deputation to speak, said that the matter had been put very' well by Mr Soott. but, he had had occasion to pull him up for matters that were irrelevant. “The position is plain,” said the Prime Minister. “The, whole country knows, and all the British manufacturers know, that we are out to give them every possible assistance •so far as their workshops are concerned. I have said so time and again in England and here, and we have done it. Nobody would have been more pleased than the Government or myself if it had been possible to make certain that every shilling of the contract was to bo spent in British worshops. Wo found that there was some diffiouly with regard to machines and parts of machines of which the Swedish Electric Company has been making a specialty. We have our advisors. I am speaking of the Minister and the officers of the Public Works Department who, I believe, are thoroughly conscientious men, without bias for foreign manufacturers. We liave not forgotten what happened during the war and I want to say that Sweden, while not being antagonistic, showed that if there were a preference, it was against the Allies. I am not going into the ethnological aspect, as we belong to the same family, but that does not come in. The tenders were opened. Matters such as this are generally dealt with by a sub-committee of the Cabinet. It went into the matter exhaustively, and came back with a report that Armstrong, Whitworth, Co. were the lowest tenderers. There was the difficulty about the proportion of Swedish manufacture which they intended to use. After a certain amount of discussion as between the Cabinet and the sub-committee, of which Mr Coates was a member, it. was decided that the advisors of the Public Works Department, who had communicated with the tenderers, could have the original proposals in regard to foreign manufacture cut down in a very material degree.”

Mr Coates: From £160,000 to £64,000. Mr Massey: Yes, it is only a comparatively small proportion of the amount of the tender for this big job. It is expected that machinery to the value of £440,000 will be required, of which, for the reasons mentioned, it seemed impossible to get less ot fijreign manufacture except through Armstrong, Whitworth, and Co. Mr Coates: It would mean calling for fresh tenders.

Mr Massey: That would have meant a very serious delay in the contract.

'T Want to say a word or two about how we have been treated by British manufacturers,” said Mr Massey. “We have a grievance against them. Wo have documentary evidence in our possession that certain British manufacturers have been using the depreciated currency of European countries in getting work done there, and only a sufficient proportion of it in Britain to enable them to secure the preferential rate for British workmanship. That can bo proved. They are not playing the game.” Mr Scott: It is rotten. We agree with you. Mr Massey (smiling): I am glad you agree with ‘me. It would have pleased us very much if the £64,OCX) could have been expended on British workmanship rather than Swedish. Wo have always realised that we could not do better than have British manufactures. Mr Coates ; We have an instance of the satisfaction of British manufacture in the Otira tunnel, which was a first class ioo. “I have never been optimistic about the assistance we are likely to obtain from the money set apart under the British Industries Act,” said Mr Massey. “It has been stated unofficially that the amount of the loan will not exceed £5,000,000 for the whole Empire. We thought we would have got £3,000,000, and if the provisions of the Act were intended to be carried out we would have been entitled to it. We have other important works besides Arapuni. We have received no answer to our application to the Government. I don’t know why.” •. „ Mr Massev went through the tariff item for item to ‘show the deputation the extent of the preference granted by the New Zealand Government on machinery an-i equipment of the typo that would be utibsed in the Arapuni contract. There was a preference, he said, of 10 ner cent, in favour of British against foreign manufactures on electrical appliances, generators, . transfarmers, cable gear, annunciators indicators winches, and turbines, while turbines of over 2CO brake horse-power were admitted free against lOOpcr cent duty charged to foreigners “That is the New Zealand law. and .the principle wc.work on ” said the Prime Minister. So far as Government contracts are concerned, we have always stretched it m favour of British manufacture. ‘We have extended them every possible advantage. We g.vo preference on 425 articles in th ®, ta and we are not going bac*. On the contrary the Government is strongly in favour of increasing from 25 per cent, the proportion of British manufacture necessary to gain the preferential duty. To ensure that more British machinery and workmanship arc utilised I have learned that it will not require legislation, but that it may be done by Order-in Council, and I hope to be able to give effect to it during the next fe '^We°havo kept nothing back.” concluded Mr Massey. “It is not a matter of taking you into our confidence, because it is a matter that the public should know and does know. We regret that it has been necessary to place the order with a Swedish to not directly through us but through JbT contractor indirectly I am afraid there is no help for it.