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Tuesday, 20 October 1931

Mr JONES (Indi) .- The Deputy Leader of the Opposition (Mr. Latham) has drawn attention to the difference between the excise duty on cigarettes and that on cut tobacco, and he said that this disparity was resulting in loss of revenue. He suggested that the excise duty on cigarettes should be reduced from 7s. 6d. to 3s. 9d., but, in my opinion, if this were done the revenue would suffer considerably. In these hard times I believe that we should noi do anything which would result in sacrificing revenue. One of the leading firms of cigarette manufacturers, Carreras, has recently circularized honorable members of this House making curtain suggestions regarding excise duty. T have here an extract from the Melbourne Herald, dated the 15th October, dealing with the operations of this firm. It states -

During the past year, when most share investments have been undergoing severe depreciation of values, the £48,000 preference issue in Carreras Ltd. has been gaining strength, both for dividends and for capital security.

Some years ago, £40,000 of this capital formed portion of the funds of Snider and Abrahams Ltd., a most disappointing, ambitious venture which made losses instead of profits. T.t was reconstructed under tlie title of 0. G. Goode Ltd., the preference dividend was increased from 8 to JO per cent, cumulative, as compensation for unpaid arrears, and 124,902 ordinary shares of£l each had 19s. struck off.

The smaller undertaking was making satisfactory progress, and was earning preference dividends when the opportunity arose, in July last year, to link with the hi,7 English tobacco company, Can-eras Ltd., whose Australian connexion for several popular tobacco lines (including "Craven A" cigarettes) had become seriously handicapped by emergency and general tariffs, unions manufacturing could bc undertaken in Australia.

So G. G. Goode became Carreras, ami the English company supplied large amounts of new funds for its manufacturing and trade expansion.

The big change in operating results is so far visible only in gross profits, and not in net earnings: - £37,241, in part reflecting the difficulties of business, but also representing the expense of vigorous expansion of markets and of developing goodwill for future trade, and meeting interest on large loan funds introduced into the company.

I have not time to read the whole of ihe article, and J. ask leave to have it incorporated iu Hansard.

Mr Latham - I object to the incorporation, without reading, of matter dealing with the finances of a particular company. If honorable members wish to get such matter into Hansard, they ought to read it.

Mr JONES - I have been quoting From an article dealing with the affairs of the company which prepared the brief for the Deputy Leader of the Opposition.

Mr Latham - I have no brief; 1 received a circular, as did the honorable member for Indi.

Mr JONES - If that company has come out here with the idea of making the same phenomenal profits as it has made in the Old Country, it will find that it has made a mistake.

Mr Latham - Will the honorable member deal with the merits of the suggestion which has been put forward, as distinct from its origin ?

Mr JONES - I propose to deal with, its merits. A week ago I went to the trouble of buying several packets of cigarettes, and having them weighed. As honorable members know, cigarettes are sold, not by weight, but by the numberin a packet. I went to the trouble of working out how much per lb. smokers, were paying for some of the standard brands of cigarettes, and the result is set forth in Mie following table: -

Mr Latham - What bearing has this statement upon the duty under consideration ?

Mr JONES - If the excise duty were reduced from 7s. 6d. to 3s. £)d. per lb., as suggested by the honorable member for Kooyong (Mr. Latham), increased profit would be made on cigarettes manufactured from imported leaf.

Mr Latham - I understand that the big organization now has to meet competition.

Mr JONES - The import duty is 5s. 2d. per lb., and the excise is 7s. 6d. per lb., making a total of 12s. Sd. per lb. Since the manufactured cigarettes return £1 10s. -1-d. per lb., the manufacturers should be satisfied.

Mr Latham - I have raised not the subject of the profits of any of the companies, of which I know nothing, but the matter of increased revenue and employment.

Mr JONES - I hope that the honorable member will accept the assurance of the Customs Department, which declares that the suggested reduction would result in decreased revenue. If the present duties are retained, the Australian tobacco industry will be safeguarded, and will continue to prosper. Last November, the excise duty on tobacco manufactured in this country, whether from Australian leaf or from imported leaf, was increased from 2s. 4d. to 4s. 4d. per lb., and this action caused complaints from my electorate, which produces the bulk of the tobacco grown in Australia. When the Select Committee on the Tobacco Industry was making its inquiry, evidence was given by a director of the BritishAustralasian Tobacco Company to the effect that when the import duty was 3s. per lb., the Australian grower was not effectively protected, because it paid the manufacturers to buy American leaf. The present Government increased the import duty to 3s. 6d., and the extra 6d. represented the first effective protection given to the local industry. As a result, the industry prospered, but if the additional excise duty of 2s. per lb. had been retained, it would have sounded the death knell of the Australian industry. At a deputation, which I arranged, to the Minister for Trade and Customs, it was pointed out that the excise duty should remain at 2s. 4d., and any additional revenue required should be obtained by increasing the duty oil the imported leaf. The excise on both the imported and the local leaf was then fixed at 2s.- 4d. per lb., and an additional duty of ls. 8d. per lb. was placed on the imported article. Since then the Australian industry has bounded ahead.

The figures show that in 192S Australia was producing approximately 5 per cent, of its total requirements of tobacco, and, given a favorable season this year, there is every prospect of one-third or, perhaps, even one-half, of the total quantity of tobacco consumed being manufactured from locally-produced leaf. That is one of the beneficial effects of the tariff policy brought down by the present Government, and we should take care r.ot to interfere with the existing duties. In one year we have sent as much as £3,000,000 to the United States of America for tobacco, and £4,500.000 hatbeen transmitted to that country by us for timber, while for motor cars no less than £12,000,000 has gone out of Australia in one year. We have been sending too much money away that should have been used here in providing employment for the thousands of our own men who are out of work. In 1929, Australia had 372 registered tobacco-growers, and in August of this year the number had increased to almost 1,800. If the present total were ascertained it would probably be found to be much in excess of 1,800. We should bear in mind the fact that the local tobacco industry gives a considerable amount of employment indirectly, because the growers need barns, the erection of which provides work for builders and carriers. The makers of implements of various kinds, too, arc experiencing increased trade on account of the prosperity of the tobacco industry. The following table indicates the extent to which the industry has increased under the policy of protection : -


Mr Hawker - 1 submit that the information now being given by the honorable member is irrelevant. It has nothing to do with the duties of excise on cigarettes and cut tobacco.

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