§
Motion made, and Question proposed,
That a Supplementary sum, not exceeding £246,990 be granted to His Majesty, to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1931, for Expenditure arising out of Contracts dated 9th April, 1918, and 3rd March, 1922, entered into with the Zinc Producers' Association Proprietary, Limited, to give effect to agreements made in 1916 and 1917 for the purchase of Zinc Concentrates.
§ Lieut. - Colonel Sir A. LAMBERT WARDOn a point of Order. In view of the fact that a Vote under this head has not been debated for a considerable time, I wish to know if it is possible to allow the discussion on this Supplementary Estimate to take a rather wider course than usual, so that we may obtain from the Parliamentary Secretary to the Board of Trade fuller information as to the position of this country in relation to these unfortunate contracts, the amount which the country has definitely lost while these contracts have been in operation, and other information which, I think, would be of the utmost service to the Committee as well as of the greatest interest to the electorate outside. I ask that question, Sir William, in view of the fact that your predecessor in the Chair some years ago, on an exactly similar Vote ruled that the widest latitude in debate was allowable in order that the facts of the case might be ascertained.
§ The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. W. R. Smith)In my opening statement, I may give some of the information which the hon. and gallant Member seeks. Perhaps that intimation will simplify the proceedings.
§ Sir A. LAMBERT WARDThe Chairman in his wisdom may refuse to allow those statements to be made. It rests entirely with him whether the hon. Gentleman will be allowed to make those statements which the Committee and the electorate are, I am sure, anxious to hear.
§ Mr. A. M. SAMUELMay I reinforce the appeal of my hon. and gallant Friend. The agreement under which we are paying this large sum of money is about to come to a close and this appears to offer a convenient opportunity to hon. Members of the Committee who would like to review this matter thoroughly and even, to some extent, to go into questions of policy. A very large sum of money has been lost by the taxpayers in connection with this agreement and it is a matter on which I think the widest discussion ought to be allowed.
§ Mr. DIXEYMay I reinforce that appeal? I have a Motion on the Paper for the reduction of the Estimate, as this is a subject which concerns a large number of people in my own division, and as the contract is coining to an end it is essential that the Minister should allow a full discussion. I think it was in 1923 that the fullest laxity was allowed in Debate, and I suggest that the Minister in charge should now allow the fullest possible information to be placed at the disposal of the Committee.
§ Mr. PERRYOn that point of Order. Has not your predecessor in the Chair, Sir William, on repeated occasions earlier in the evening definitely ruled against questions of policy being discussed on these Supplementary Estimates?
The TEMPORARY-CHAIRMANWe cannot deal with original policy on a Supplementary Estimate. I think it would be better to see how far the Minister is able to give information as to whether we can agree to allow the Debate to continue. I hope it may not be necessary to rule harshly in the matter.
§ Sir A. LAMBERT WARDI am much obliged.
§ Mr. W. R. SMITHThis Estimate arises out of certain obligations that this country incurred with Australia, entirely arising out of a war condition. It was in 1916 that Australia found themselves in a difficulty so far as the disposal of their zinc concentrates was concerned, because previously their market had been almost entirely in Germany. This country found itself in a difficulty also, in so far as there was likely to be a great shortage of supplies, whereby the smelting of spelter in this country would be seriously handicapped. As a result, an agreement was entered into between this country and Australia in 1916, a further one was entered into in 1917, and then those agreements were confirmed in a letter-contract in 1918, and finally embodied in a definite contract in 1923.
Under the terms of that contract this country obligated itself to take practically the whole supply or output of zinc concentrates in Australia, and made itself responsible for the selling of that for the purposes of manufacture into spelter and ultimately into zinc. I am glad to say that this contract is now coming to an end. Our obligations so far as the purchase of concentrates is concerned finished in June of last year, but on the selling side our obligations do not finish until June of this year, and the difficulty in which we find ourselves at the moment is that this Estimate is very largely due to the fact that we have had an excess of expenditure during the period to which the Estimate relates, due to three causes. The first is that we have to pay railage from the mines to the port, secondly the cost of assay and agents' commission, and thirdly there is the fact of the companies taking more deliveries than was expected in the period. That explains why the expenditure has been so under-estimated. The receipts are down because the price of spelter has fallen, and we have not received what was anticipated in that respect for that reason.
I do not know that it is possible to say more in regard to it, because it is not a matter which the Government of the day nor indeed this House can in any way alter. It is a contract made under the conditions and at the time I have already stated. It was then, I anticipate, made in very good faith and in the belief that a good bargain was being made for ourselves as well as for Australia, but unfortunately things have not turned 2239 out as was hoped. The price of spelter has fallen to about half what was contemplated, and therefore we find ourselves in the position of having to ask for a further sum of £246,990 in order to carry out our obligations under the terms of the contract. I can only repeat that the one consoling feature of the whole position is that this is practically the last sum that will be asked for, apart from the fact that for the first three months in the next financial year there will be a small sum possibly that will have to be estimated for in order to meet the cost of delivery from the dump of zinc concentrates to the ports in order to carry out our selling obligations under the second part of the contract.
§ Mr. DIXEYI beg to reduce the vote by £100.
I have listened to what the hon. Gentleman has had to say, and I think he is right in referring to this as a very bad contract. It is not only bad from the pecuniary point of view, but from an employment point of view. When this contract was first brought before the House, it was prophesied in no uncertain way by, I think, my hon. Friend the Member for Rushcliffe (Sir H. Betterton) that there would be a very serious financial loss resulting to the Exchequer of this country. Every word he said has been proved to be true. The deplorable thing is that it has thrown out of occupation a large number of men and employers of labour in this country. There are in my own division two mines which were quite successful before this contract was made. Those mines to-day are closed and the people who were employed there have no occupation. The responsibility for those men being out of employment rests upon the Government of this country, although not perhaps upon this particular Government, and therefore, when the contract comes to an end, I think it proper to draw the Parliamentary Secretary's attention to the fact that there may come the question of resuscitating these mines which have been put out of existence by this contract.
How many tons of concentrates are represented by this Estimate, and further, what is the amount of tonnage that the Government have themselves got, irrespective of the amount represented by this figure? As I understand it—I may be entirely wrong—there is a consider- 2240 able quantity still in the possession of the Government. If this contract had any excuse at all, it was that it would benefit Australian trade. The export of zinc pre-War from Australia was, I believe, something like £500,000. Has this contract increased the exports of zinc from Australia? If not, it seems to me that the contract, so far from doing any good, has resulted in nothing but harm. Could the hon. Gentleman give us approximately the amount of our future liability so far as the selling price is concerned? I understand that this Estimate concludes the liability so far as the buying side is concerned, but that there is a further financial responsibility on the selling side. I would like the hon. Gentleman to give me an approximate figure of that responsibility.
§ Sir A. LAMBERT WARDThis Vote discloses a truly disastrous state of affairs from the point of view of British revenue and the British taxpayer. I have nothing to say with regard to the policy which prompted these contracts, as that would be out of order. All I would say on that subject is that those who occupy the Front Government Bench have nothing to do with it, nor had those who occupy the Front Bench on this side. The responsibility for these contracts, which were made in 1916, is the responsility of the Liberal party, whose benches are significantly empty, as they usually are when an expenditure of this kind comes under discussion. I at once absolve the present Government of all responsibility for these disastrous contracts. All they have had to do, and all successive Governments have had to do since 1918, is to make the best of a thoroughly bad job.
§ Mr. LEIF JONESNone of these contracts was made under a Liberal Government.
§ Sir A. LAMBERT WARDThey were made in 1916—
§ Sir A. LAMBERT WARD—under a Liberal leader, and those responsible for them—
§ Sir A. LAMBERT WARDI bow to your Ruling, and will not allude further 2241 to that point. The Parliamentary Secretary said that, as far as he could tell, our commitments under these contracts had practically come to an end on the buying side. That means that we have no longer to buy practically the entire output of the Broken Hill and other mines at prices far in excess of the market value of the commodity. On the selling side, however, he said that there still might be some liability. Perhaps he can tell the Committee what stock of these concentrates we still have for disposal in this country, and who is responsible for selling them. If he could let us know that, without impairing the efficiency of the selling organisation, I should be obliged. Have we, ever since the contracts were confirmed in 1922, been taking practically the whole of the output of the various Australian mines, the principal one of which is the Broken Hill mine? If so, what is the total amount that we have taken during that period? The amount which we were compelled to take has been limited to 300,000 tons a year, but I do not know whether the mines have been in a position to supply that amount, or whether we have been fortunate enough to be able to take a less amount than the maximum which we could take under the contracts.
Still more important, what has been the aggregate loss to this country ever since these contracts have been in full swing? In the Geddes Report issued eight or nine years ago, the Committee could not estimate what the loss would be, but said that in all probability it would run into several millions. Has that somewhat pessimistic forecast been justified. When the hon. Gentleman says that the contracts are practically at an end, I take it that it means that we are not to be compelled to take any more of these zinc concentrates, so that it ought to be an easy matter to let the Committee know what the total net loss during that period has been. We must take into consideration that when this contract was entered into, war conditions prevailed and we were all more or less suffering from a disorganised mentality. I cannot help thinking, however, that even under those circumstances, the contract was a most disastrous undertaking from the point of view of the country. It is a sound indication of Government trading at its 2242 worst, and of the unfortunate consequences that are likely to fallow when Government trading is indulged in on a large scale.
§ Mr. A. M. SAMUELI have watched the life of this contract for a good many years, and have a recollection that there was a reserve of £750,000 against fluctuations of price. Could the hon. Gentleman tell us what has become of that £750,000?
§ Mr. LESLIE BOYCEAs the Minister has said, this will probably be the last occasion on which the Committee wilt be asked to approve either an original or a Supplementary Estimate under this head. This item has been with us for a number of years, and in view of the interest that has been shown in it, I should like to take the opportunity of saying how it came among us, why it has been with us so long, and the reason for our bidding it farewell tonight. This Vote is a relic of War days, and a reminder of the fact that modern warfare rests on a metallic basis. On the outbreak of the War, Australia was producing nearly one-fifth of the world supply of lead and zinc, and great quantities of copper. Suddenly we woke up to find that the great metal industry in Australia was completely dominated by German capital and German influence. The Merton group with their headquarters a[...] Frankfort-upon-Main, and operating in Australia under the name of the Australian Metal Company, controlled—
§ Mr. BOYCEI am coming to that, and I am explaining how it was that the company which is mentioned in the Estimate came into being.
§ Mr. BOYCEI am sorry if I have led you astray. The Merton group had its headquarters at Frankfort. The Australian Metal Company controlled the production of Australian metals, the supply of which was vital to us in the life and death struggle which the Empire was carrying on at that time. The only spelter works in this country were also 2243 owned and controlled by Germans. The Australian companies, at the outbreak of the War were tied hand and foot by contracts to sell the whole of their output to agencies of Germany—
The DEPUTY-CHAIRMANIt is not under discussion. The only thing we can discuss on this Estimate is the sum required.
§ Mr. BOYCEI submit, of course, to your Ruling. I only wished to point out that the sum we are paying under this contract was justified.
The DEPUTY-CHAIRMANThe hon. Member is perfectly in order in giving any adequate reason why this extra sum should be granted, but he must not discuss the merits or demerits of the original question. Otherwise I would have to allow a full discussion on that, which is obviously impossible.
§ Mr. BOYCEThe Australian Zinc Producers' Association Proprietary, Limited, entered into an agreement to purchase the whole of the output of zinc concentrates from various mines for 50 years as from 1st July, 1916. During that year the British Government entered into an agreement with the Commonwealth Government to purchase supplies of zinc concentrates. The following year 1917, the Board of Trade—
§ Mr. BOYCEWith all respect, I am referring to the agreements mentioned in this Vote, and giving some of the information for which the Minister was asked and which he apparently could not give.
The DEPUTY-CHAIRMANI think the hon. Member does not understand. The agreement itself is not under discussion. The agreement is an accomplished fact and we cannot discuss whether it is right or wrong. The only thing we can discuss is whether this extra sum ought or ought not to be granted.
§ Mr. BOYCEPerhaps you will tell me if I would be in order in saying what 2244 the agreement was. The purchases under this agreement, which amounted to 250,000 tons of zinc concentrates per annum from the 1st January, 1918, to the 30th June, 1921, and to a further 300,000 tons per annum for nine years from the 1st July, 1921, until the 30th June last, have now come to an end. I regretted to hear from the hon. Member for Penrith (Mr. Dixey) that his constituency has suffered in consequence of the 1918 agreement. The fault lies, not with the Government of the day—
The DEPUTY-CHAIRMANThe hon. Member is out of order. The only argument that the hon. Member can use must refer to this money.
§ Mr. BOYCEI was only proceeding to say that, if the British producer had been included in this agreement, my hon. Friend would not have had cause to make that observation. We have been told by the Minister that the position to-day is that the purchases under this agreement concluded on the 30th June last, and also that the sales by the British Government to the British smelters concluded on that date. Therefore, under this heading we should not be asked in future to vote further sums. But there are still considerable quantities of zinc concentrates at Broken Hill, which are owned by the Government and which the Government are under contract to sell to the Electrolytic Zinc Corporation of Tasmania until 30th June next. This contract, we have been told, has resulted in a serious loss to the Government.
The DEPUTY-CHAIRMANIf the hon. Member persists in discussing the agreement, I must ask him to resume his seat.
§ Mr. BOYCEI am sorry. Every time I refer to what another hon. Member has said, I am told that I am out of order.
The DEPUTY-CHAIRMANI do not attribute to the hon. Member any desire to defy the Chair, but I want to make it clear once more that the merits or demerits of the original contract cannot be discussed now. The only thing that can be discussed is whether the amount of money now asked for should be granted or not. That is the only issue.
§ Mr. BOYCEMy object in rising in my place was to say that, in my opinion, this money should be granted, and that we would not be asked to find this money at all if it were not for the fact that it is solely due to the fall in the price of spelter, which, of course, governs the price of zinc.
§ Mr. W. R. SMITHPerhaps I might answer one or two questions put during the discussion, and I hope I shall not be out of order. The hon. Member for Penrith (Mr. Dixey) asked how many tons were left to be disposed of. There are 127,000 tons, and the prospective liability in that regard during the next financial year is approximately £62,000. The hon. and gallant Member for North West Hull (Sir A. Lambert Ward) asked me what the total tonnage of output is. The total is 2,892,125 tons, and the total loss on the whole transaction up to date is approximately £6,000,000. As to the point raised by the hon. Member for Farnham (Mr. A. M. Samuel) and the reserve figure he mentioned of £750,000, that is merely a paper figure and has nothing whatever to do with the financing of the transactions. Since the net financial result is a loss of £6,000,000, I do not see how there can be a reserve figure other than a paper one.
§ Mr. DIXEYDo I understand the hon. Member to say that 127,000 tons of concentrates is represented by the figure of £246,999? I asked the hon. Member specifically what this figure represented in tonnage.
§ Mr. SMITHI am afraid it would be impossible for me to give the exact figure 2246 in tonnage. The Supplementary Estimate which I am submitting represents an excess of expenditure due to the three causes I mentioned: first, the cost of rail transport from the mines to the ports; secondly, the cost of assays and selling commission; and, thirdly, the fact that we have had to take bigger quantities than was at first anticipated. I can only give the total output from the mines, more than 2,000,000 tons, and the total remaining to be dealt with, 127,000 tons, and the charges that will arise out of meeting our obligations next financial year, £62,000.
§ Mr. DIXEYIt boils down to this, that you have 127,000 tons of concentrates as against your £62,000 of liability?
§ Amendment, by leave, withdrawn.
§ Original Question put, and agreed to.
§ Resolutions to be reported To-morrow; committee to sit again To-morrow.
§ The remaining Orders were read, and postponed.