CUSTOM FRAUDS

Dunstan Times, Issue 1259, 16 April 1886, Page 3

CUSTOM FRAUDS

(Sydney Morning Herald.)

Amongst the o' jections rnised against ad valorem duties, the allegation' that they offer peculiar temptations tojtho commission of fraud has always occupied a front place. People were told the other day by a high judicial authority that it is hypocrisy to talk of i his. But, whether it be or he not hypocrisy to make the charge, the a\ykward fact remains that it has been abundantly proved ; and the proof stands [for a great deal more than any vain attempt of that sort to divest attention from it. Another illustration of the working of the system-hss just been brought forward by the secretary of the Preetrade Association in a letter addressed to him by tho Commissioner of Trades and Customs, Melbourne. Mr Pulsford makes specific statements, and undertakes to produce evidence in support of them should a general inquiry be instituted. Three of tho cases are in connection with tho soft goods trade. Strange to relate, it appears that tweed from New South Wales is sent to Melbourne to be made up into slop clothing, and this is then sent back and sold in New South Wales. At tho first glance it seems to be a marvel that this can be done, seeing that the tweed pays duty on cntering YictOria. But the mystery is easily explained, A drawback is allowed in Victoria upon the export of imported goods that paid duty on importation. If the drawback received by the exporters upon their slop clothing represented the exact amount paid on the imported tweed, tbere would simply be the question whether the Melbourne clothing manufacturers could work up these mated ils more cheaply than the manufacturers in Sydney. If they could, the difficulty caused by having to pay the duty on the tweed, and to recover it in the shape of drawback, might be surmounted. But the fact appeals to be that the transactions with the Cus f oms Department are actually a source of profit instead of being an impediment to trade. The sum received in drawback exceeds the sum previously paid as duty ; and then it is possible that, even if not a farthing were gained upon the manufacture of tho goods, the trade could still he carried on profiiably. We need only to give one of the examples produced by Mr Pulsford to show the operation of the system. Men’s suits, imported from Melbourne, are sold in Sydney at LI 14s 61. The suits, with duty added, cost the Melbourne manufacturer LI 7s Cd. This would have left a margin of 7s per suit to cover expenses and provide a profit. But drawback was paid on L 3 2s 01 so that the exporter was really enabled to look for profits to a direct contribution from the Victorian revenue. To put the case another way : The duty paid on the material was is lid, the drawback paid was 4s 8 I, and the State therefore gave the exporter a bonus of 2s 9.1 per suit to enable him to compete with the Sydney manufacturer.

In another case some plain "lass tumblers costing 91 per dozm in London, were imported at Melbourne. They were in twenty five dozen packages, and paid a package duty of ISs per package. On being shipped to Sydney from “open stock ” twenty five dozen were invoiced as fifty dozen, and, being valued at Os per dozen, the exporter received a drawback of 30s. Thus the Go varnment received 18s and paid 30s, and the Melbourne trader got from tbo State 12s over and above tbe prnti* he could have obtained legitimately from the difference between the London and Sydney values. The people of Victoria are taxed to piy these bonuses to traders whose ingenuity and honesty have not been developed in an equal degree. But that is not the whole of the case. Imported woollens are taken in Victoria to stimulate and suppert the Victorian manufacture of woollens ; and yet this very protective tax is, by means of the necessarily accompanying drawback, made to pro note the use of imported woollens in place of Victorian woollens in Victorian clothing factories. The use of imported wo dlens gives scope for manipulating the drawback system ; but the use of Victorian woollens would con'er no right to do so. Bat this raises another question. Tne es tablishment of drawbacks gives scope for cheating, but not a right to cheat; and it is nc.t unfair to presume that men who will cheat in one way will not scruple greatly about cheating in another. It is, then, impossible to imagine that drawback is obtained (by men sufficiently clever to work the oracle) upon goods of local production that never paid import duties? Two things are required—a close resemblance between the local material and the imported, and an elastic conscience to pull the scheme through. There are departments of trade, where, perhaps, the two requisites may be found iu happy conjunction. This is not a matter of mere suspicion on our part. More than a year ago this very question of drawback allowances on Victorian goods on their importation into this Colony was raised by Mr Poole in the Assembly ou the streng'h of information which the bon. m rnbsr believed to be trustworthy. The House and the Government at the time paid little attention to the matter. Their minds were engrossed by business of a more pressing kind. But it will be interesting to see whether “the \ ictoriau Commissioner of Customs will take more effective notice of Mr Pulsford’a communication, and whether he will institute inquiries that may lead to disclosures to which even Mr P.i!sfoi\l’s information does not directly point. One thing is clear, namely, that where practices of this kind are carried on it is not the Victorian revenue only that suffers. The Victorian revenue is employed to undermine the industry and enterprise of NewSouth Wales. The man who rots a bonus in the disguise of a drawback can easily undersell the man who has no bonus, if iu other respects the two compote on an equal footing. This should ba remembered when we hear of Victorian goods in our markets, and of what Victoria gains by Protection. It is pioposed that tho Melbourne Chamber of Manufacturers shall ask their Government to place intercolonial reciprocity mi their programme. Do they want us to do by them as they have done by us? Wc doubt it.

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