HC Deb 29 March 1956 vol 550 cc2411-9

3.4 p.m.

Mr. A. Fenner Brockway (Eton and Slough)

I am reluctant to interrupt the theme which we have just been discussing as it is a matter of human liberty, of justice and of race. I do not want to express empty sympathy, since that seems worthless, but I assure the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) of the deep concern which many of us feel about the issue he raised.

Now I want to turn the mind of the House to a distant Colony, North Borneo, away in the Pacific Ocean. On 29th February, I put a Question to the Secretary of State for the Colonies which was answered by the Minister of State for Colonial Affairs. The right hon. Member for Llanelly (Mr. J. Griffiths) intervened and I had hoped that he would have been able to make some comment after the speech of the Minister of State. However, my right hon. Friend has indicated to me that it has been necessary for him to attend another engagement.

North Borneo has been one of those Colonial Territories where there has been little discontent or disturbance. Now the danger of disturbance and discontent is spreading. For the first time the Native Chiefs Conference, a body that has co-operated closely with the British Administration, has unanimously and emphatically carried a resolution deploring the changes which I will describe as "pro-European and anti-native". I shall submit to the Minister of State that when such a body adopts a resolution of that character, it is time that this House, and particularly the Colonial Office, paid very close attention to its causes.

The subject I shall discuss is the timber industry, which is so strong an element in the economy of that Colony. Those who conduct this industry can be classified in two categories. There is, first, the category of big business, dominated by European capitalist firms. It has long-term agreements with the Government. There are seven firms in that category, four of which are European. To be strictly accurate, three are British and one is financed from the United States of America. In addition, as an afterthought—and, I would say, obviously as a face-saving device—three smaller Chinese companies were added. There is not the least doubt that this first category is European-dominated, controlled by big business, and is so regarded. The other category is that of the small traders. They have annual licences to carry on the timber trade. They are Chinese and native. There are 90 such annual licensees.

On 1st January of this year a Legislative Council Paper No. 34, a photostat copy of which I have in my hand, was issued restricting the right of the smaller men, the annual licensees, to export timber. When I raised this matter on 29th February, the Minister of State said that the Chinese and native producers— the annual licensees,…will be able to export direct much more timber than they exported in 1954."—[OFFICIAL REPORT. 29th February, 1956; Vol. 549, c. 1169.] The Minister would have had to give a very different answer if he had referred to the year 1955. I have in my hand a letter from the Secretary of State for the Colonies which states that in the present year, 1956, under these restrictions, the Chinese and native timber growers will be able to export only 80 per cent. of what they did last year. The expectations of the growers themselves are at a much lower figure than that. Their own statement is that they exported 2½ million cubic feet of timber in 1955 and that their allocation for this year has been reduced to 1,200,000 cubic feet.

There is no doubt that in this matter the interests of the large European companies have been placed above those of the small producers, both Chinese and native. Under the new system, the small traders, not having the liberty to export their timber, must sell to the large European companies, and they are compelled to sell at prices which are much less than the prices in the open market. I give one example. The British Borneo Timber Company is now buying selected logs of S.Q. quality at 2s. l½d. per cubic foot, whereas the price in the open market is 3s. 7d., f.o.b.

Indeed, this White Paper, in the clearest possible terms, says that the justification of the new policy is that the annual licensees are selling their timber cheaper and are so affecting the interests of the big companies. I quote from the photostat copy which I have here: Unfortunately, and as was not foreseen, production by annual licensees now constitutes a threat to the large scale operators and to the long-term interests of the timber industry as a whole. With no appreciable capital outlay "— here I miss out some words, because it is a long sentence— the annual licensees' costs of production are very significantly lower than thost of the operators under standard agreements. In other words, because the small producers are able to produce their timber at lower costs, the large European companies are to have this privilege and preference in exports, at the expense of the smaller Chinese and native producers. May I say, incidentally, that the annual licensees deny that they are underselling, and this is one of the reasons why they are making the demand for an inquiry.

Why are the European companies' costs higher? It is because there are two types of land. As is explained in some detail in the letter from the Secretary of State for the Colonies, the land which is operated by the large European companies is occupied by permanent forests, is difficult of access, rail and road tracks are necessary, staff quarters are necessary and heavy equipment is necessary. One accepts all that, but why should the monopoly in the exploitation of these permanent forests be handed over to these European companies? Why should it not be a scheme under the Colonial Development Corporation? Why should we not have the imagination to see that these native peoples and the large Chinese immigrant population should have the opportunity to develop this natural industry on the soil of North Borneo? Why should there not be cooperative schemes for timber production, similar to the co-operative schemes in other Colonies, with British technicians, and with the native and Chinese producers, who live on the spot, feeling that it is their enterprise and not exploitation by external European companies?

There is a suspicion in North Borneo that the European capitalist companies are being favoured, placed in a privileged position and given special protection, and I am not surprised at that suspicion. Before 1952, the British Borneo Timber Company, Ltd., had a monopoly of rights of timber exploitation in North Borneo. When it was compensated in 1952, the company was presented with £350,000, and compensation was also given for its reduced profits over the next three years. This amounted to £1 million. I say frankly that it is a scandal that that vast sum should be paid in compensation to a European company in North Borneo at the expense of the poverty-stricken people who live in that British Colony.

When I last raised this matter, the Minister of State replied that the matter was still open. It was still to go before the Legislative Council. If I may say so, I think that reply was a little misleading, because the Legislative Council has no powers whatsoever. The Attorney-General in North Borneo said the Paper No. 34 was being placed before the Legislative Council only for information. In the first place, the Legislative Council is dominated by the official element; in the second place, it has no power at all to amend this paper. Therefore, I do not think it was enough to say that the matter was left open. By decree, it was applied last January, and it is in operation now.

I always like to be constructive in my speeches, as well as negative and denunciatory. I make this proposal for the very serious consideration of the Minister of State. The argument is that the Chinese and native timber growers must be kept out of the export market because their prices would undercut the big British capitalist companies. That was the suggestion of the Minister of State. I now put some questions to him from the experience of other Colonial Territories.

Why should there not be a pool of the timber grown both by the native and Chinese producers and by the European companies, just as there is a pool of cocoa in the Gold Coast, just as there is a pool of cotton in Uganda? Why should there not be a pool of that kind, and the timber grown, both by the native and Chinese producers and the British companies, be sold from that common pool at a single price? I should very much like to hear the comments of the Minister of State on that proposal, because it is a proposal which is successfully operating in many other Colonies at the present time.

I have had to be brief, but I hope I have said sufficient to show that there is justification for the demand for an inquiry into this situation, as demanded by the native and Chinese growers in North Borneo. I hope that the Minister will agree to suspend the operation of this privilege and protection to the European companies until such an inquiry has been held.

3.19 p.m.

The Minister of State for Colonial Affairs (Mr. John Hare)

I am sure that the hon. Member for Eton and Slough (Mr. Fenner Brockway) has raised this matter with every genuine intention of giving as fair a picture as possible of the timber industry in North Borneo. However, although he has been accurate in many points, I am afraid that he has not been able to give that picture, because he has not been entirely accurate on some other points which, as I shall try to point out, are very vital to the argument which he has put forward.

As the hon. Member quite rightly says, the British Borneo Timber Company was granted a monopoly of the timber production in the Colony in 1920. This concession could have run until 1965, with an option for the Government to break it in June, 1955, ten years before the ultimate date. As part of the terms of the bargain under which the concession was given, the Government were required to take over the concern on termination of the concession at a fair value and to pay a sum for goodwill equal to the total net profits in the last three years.

It should be remembered that in 1920 capital was urgently needed, and every encouragement was given to this company to go to Borneo to do this work. Those were the terms on which the company went to Borneo to operate, and for the hon. Member to say that it was scandalous to pay compensation is hardly relevant when, in fact, that was the bargain entered into by the Government and the company.

Mr. Brockway

It was a wrong bargain.

Mr. Hare

I dare say the hon. Member thinks so, but the bargain was made and in the opinion of some people a bargain must be kept.

As a result of special negotiations with the company, however, agreement was reached to terminate the concession in June, 1952, three years earlier than the Government had a right to end it. Quite frankly, the effect of this monopoly has been in the past to restrict the exploitation of the Colony's rich timber resources—and here I am being perfectly frank with the hon. Gentleman; I agree with him here. In order that these resources should be exploited on a sound basis, capital investment was needed to provide for the building of roads, rail tracks and quarters for the labour force and also for the provision of expensive heavy equipment.

As part of the termination of its concession, a new agreement was entered into with the North Borneo Timber Company which enables this company to operate over a limited area for a period of twenty-one years, with conditions imposing modern large-scale methods of afforestation and silvicultural control providing for a true regeneration cycle of about eighty years. These are heavy conditions. Under the same conditions agreements were also made with three other oversea companies and three local companies. The hon. Member may sneer and say that that is a face-saving device, but out of the seven concessionaires three are Chinese. For him to say that that is a face-saving device is not very generous.

I hope hon. Members will note the fact that strong sanctions can be employed against all seven of these concessionaires if they fail to live up to these principles of good forestry and provide for the regeneration of those areas in which they have felled their timber.

In addition to these arrangements, large areas became available for exploitation in parts of Borneo which experts consider are not suitable for conservation as permanent forests—areas which would ultimately be better suited for agricultural development. It is in these areas that annual licences have been issued to individuals and firms.

In the operation of these annual licences very little capital investment and machinery is required. Communications do not present a problem, because in most of the areas labour is obtainable from nearby villages and communications are fairly good. It is, therefore, not surprising that operations of this type can be carried out far more cheaply than is the case with the seven major concessionaires whom I have already mentioned. I am sure the hon. Gentleman can see the reason for which these operators can function more cheaply.

I would also stress that no sanctions of silvicultural control are placed upon these annual licensees; they do not have to replant or to see that where they cut trees, new trees are available for future generations. Last year, 40 per cent, of the total timber export frum North Borneo went to Japan. The Japanese timber market was flooded and at the moment is depressed. Japanese importers have been able to beat down prices, amend contracts and on occasions even refuse delivery. It was, therefore, essential to do something to protect the long-term interests of the Borneo timber industry, and because of this a measure of control has been introduced.

The hon. Member is wrong when he says that only 1,200,000 cubic feet of timber is estimated as going to be exported in 1956. Admittedly, the figure has been cut from 2,600,000 cubic feet in 1955 to 2 million cubic feet in 1956, but not, I assure him, to 1,200,000 cubic feet. I think he was incorrectly informed.

Mr. Brockway

May I draw the hon. Gentleman's attention to the last paragraph in Paper 34, which I have in my hand, and which says: The total of export rates to be made available to annual licensees in 1956 in accordance with the arrangements outlined above has been assessed at 1,200,000 cubic feet."?

Mr. Hare

I think that the hon. Gentleman is talking in the wrong terms. The total amount of timber exported last year was 2,600,000 cubic feet, and it is estimated that the total amount of timber to be exported this year will be 2 million cubic feet. That is the latest information I have, and I can assure the hon. Member that it is accurate.

The problem was to ensure that the long-term concessionaires should be able to operate and maintain their efficiency. At the same time, it was equally important that the new policy should not be unjust to the smaller operators. At the end of last year strong pressure was being brought to bear both at home—by the hon. Member amongst others—and against the Borneo Government, based on the assumption that annual licensees would be forced out of business. I can only tell the House that to date no annual licensee has closed down—I have a telegram from the Governor dated 26th March to that effect—and no labour is reported to have been laid off.

The hon. Member might also like to note that no representations against this new policy have been made to the Government since the end of January. There have been no official representations. I have had this confirmed in the telegram and it perhaps shows that the hon. Member has been somewhat misinformed on the point. It is also utterly wrong to imply that racial discrimination has been used. I have touched on this already and the hon. Member was fair enough to say that of the licensees the majority were Chinese; there are some Europeans, some Dusuns and some Malays, and I have said that three out of the seven concessionaire companies are Chinese.

The whole matter is being discussed at the end of the month in the Borneo Legislative Council. It is no use the hon. Member for Eton and Slough saying that the Legislative Council has no power. It is probably true that it has no power, but he must not assume that governors and governments are unreasonable people. I can assure him that every consideration will be given to sound and sensible points of criticism raised in that debate and I am quite certain that the Governor and we at the Colonial Office will always listen to sensible suggestions made by the hon. Member and, indeed, by all hon. Members on either side of the House.

Here, we are advocating what I should have thought would have met with the approval of the hon. Member. We are, in fact, trying to do long-term planning. We believe that the conservation and exploitation on a scientific, self-renewing basis of the forests of Borneo is essential to the welfare of the Colony. I should have thought that the hon. Member would be fair enough to admit that the Borneo Government policy is, in fact, one of long-term planning. By controlling exploitation of their natural resources, they are aiming to preserve them and, indeed, improve them for prosperity.

They have, as I have tried to explain, to obtain a fair balance between the larger firms, with all this capital locked up, and the smaller operators. I hope that the hon. Member will accept my assurance that I will pay attention to any useful criticism that he puts forward and he can certainly rely on the Governor to listen to any useful criticisms brought out in the Legislative Council debate. I must disappoint the hon. Member by saying that I do not think that his criticisms this afternoon have been justified. I hope that he will be big enough to admit that I have been able to add something to a knowledge which was not quite perfect when we started our debate today.

Mr. Brockway

I made two constructive proposals. The first was that long-term planning should include co-operative schemes and the second was a pool sale of exports as there is in other Colonies. Is the Minister ready to submit those to the Governor for his consideration?

Mr. Hare

I am sure that the Governor will be given every opportunity of reading the hon. Member's points; but it would be very premature to condemn a scheme before it has had a chance to be tried out and, therefore, quite improper for me to say at this juncture that we can accept either of the hon. Gentleman's two suggestions.