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Tuesday, 8 March 1932


Mr BEASLEY - How does all this talk square with the cry that we ought to increase production ?


Mr LYONS - The honorable member for West Sydney is touching quite a different subject. I am giving an instance of the difficulties that arise if unlimited protection is given to an industry. In that case the trouble was confined almost to Tasmania, but we are now facing a situation in the tobacco industry which may cause difficulties in every State in Australia. In the circumstances I am sure that all honorable members must realize that it would be a mistake to establish this industry under a policy of prohibitive protection, for to do so would be to mislead both the growers and the public. Honorable gentlemen who are free in their criticism of the sugar industry should pause before supporting any step which might give rise to similar complaints later about the tobacco industry.

Let me remind honorable members that the present position has arisen chiefly because of the desire of the Government to carry out its undertakings, and also the undertakings of the previous Government, to balance the national budget. We were faced with the almost certain prospect of very heavy revenue losses if we continued to support the tobacco industry on the present basis. I remind honorable gentlemen also that the Government declared during the recent, election campaign its intention to make full use of the expert and independent services of the members of the Tariff Board. Either that policy hud something to recommend it or it had not. It was adopted by the people. The Government, therefore, referred this whole subject to the Tariff Board for investigation. Although we are not compelled to give effect to every recommendation of the Tariff Board we are under obligation to be guided to a large extent by its findings. We felt that we could not regard with equanimity the prospect of losing very large sums of revenue. While we were prepared to encourage the expansion of the tobacco industry in Australia, we had also to take cognizance of the fact that, as larger quantities of Australian-grown leaf came into consumption in Australia the revenue would suffer. The action which the Government has taken, therefore, in conformity with the recommendation of the Tariff Board, is designed to meet and prevent a financial crisis later on.

The Leader of the Country party (Dr. Earle Page) has said that his proposal would give the Government practically the same amount of revenue as the Government's own scheme; but that statement is only partially correct. I do not pretend to understand in detail the proposals of the right honorable gentleman, but even if there would be very little difference between the effect of his proposal and the Government's proposal on a consumption of 6,000,000 lb. of Australiangrown tobacco leaf, there would certainly be a very great difference if the Australian crop should reach 7,000,000 lb., or up to 10,000,000 lb., and the estimates of our departmental officers indicate that it may reach anything from 6,000,000 lb. to 10,000,000 lb. In these circumstances the Government cannot, for revenue reasons, accept the alternativewhich the right honorable gentleman has proposed.


Mr Gibson - The Government will then increase the excise on the local product.


Mr LYONS - That is what we are now doing. As the production of Australian leaf increases, it will be necessary to vary the excise from time to time. Is it not better, in view of the certainty of increased production, to take gradual steps year by year, than to deal with the position now in such a way that next year much more drastic action would have to be taken? The Government will be faced at the end of the present year with another problem in regard to the finances, and I am sure that nobody acquainted with the whole position would hesitate to do exactly as the Government has done in regard to the tobacco industry. If the last Government had still been in office, it would have been forced, in view of the financial circumstances of Australia, to do practically the same as this Government has done. We havegiven the House this opportunity to discuss the position of the tobacco industry, so that all arguments may be placed before us. We have heard the claims advanced on behalf of the growers, and it will be admitted that their case has not been understated. So far as the employment provided by the industry is concerned, it is clear that the case has been absolutely overstated.


Mr Thompson - That is not so.


Mr LYONS - Of course, the honorable member for New England knows everything about the matter.


Mr Beasley - He ought to know more about it than most of us.


Mr LYONS - But he cannot know the exact number of persons employed in the industry, and exaggerated statements have been made on that point.

It was desired to give members generally an opportunity of stating the case for and against the action of the Government. While the criticism has been offered that we have not the tariff schedule before us, did not the last Government let months, and almost years, go by before the House had an opportunity of discussing tariff alterations? Within the next few weeks the Government will bring down the tariff schedule, and then honorable members will be able to consider various tariff matters, including the tobacco duties.


Mr Watkins - Why did the honorable gentleman bring this matter forward for discussion to-day?


Mr LYONS - Because a definite request was made for an opportunity to discuss it. The Government is anxious to encourage the industry generally, and proof of that is afforded by the protection that is being given to it. There is no other industry in Australia that would not be satisfied with the amount of protection that the tobacco industry receives. We have given the growers an assurance that we will watch their interests from time to time, and take care that no opportunity to exploit the producers is given to the manufacturers, who are severely condemned by some honorable members, although the select committee that inquired into the industry did not condemn them. Certain powers are wielded by the Minister for Trade and Customs, and these will go a long way towards preventing any exploitation. So far as the Government can do so, it will insist on the growers receiving an adequate price for their product.


Mr Riley - What is the attitude of the Government to the amendment?


Mr LYONS - The Government has promised to consider the arguments advanced during this discussion; but it will not take directions from either the Opposition or any other section of the House. We have given an assurance to the growers that every aspect of the new duties will be considered fully, and that assurance has been repeated in the House to-day. I will not have the administration of the affairs of this country taken out of the hands of the Government.

Certain honorable members have suggested that by varying the tariff protection, the Government has been guilty of a breach of contract with the tobaccogrowers. There were 60 or 70 items in the schedule recently submitted, and in practically every ease a tariff reduction was provided for. If a reduction of duties cannot be effected without a breach of contract in the case of the tobacco industry, the same argument must be applied to all the other industries concerned in the recent tariff alterations. Is the Government not to be permitted to vary a tariff schedule in a downward direction? If it had not such a power, the policy advocated by members of the Country party could not be put into operation. That policy is being partly carried out bythe Government today in its proposals for a reduced import duty on tobacco. I repeat the assurance already given that the Government will do all it possibly can to encourage and maintain the local industry. There is power in the hands of the Government to provide that the industry obtains a fair deal from those who purchase and manufacture the product of the growers, and this will be used in a proper way.


Mr Gregory - Can the Government give an assurance also that the Tariff Board will at once inquire into the position of the industry generally ?


Mr LYONS - The members of the select committee appointed by this House had an opportunity of investigating the conditions in the industry, and although charges had been levelled against the manufacturers, nothing appears in the committee's report to bear out those charges. The Tariff Board has further investigated the matter, and the Government is acting on its report.


Mr Thompson - There was one charge in the report of the select committee, and that was that the manufacturers were making too large a profit.


Mr LYONS - The tobacco industry is fairly well organized, according to the representatives that recently interviewed the Minister for Trade and Customs and myself.


Mr Beasley - They cannot be blamed for that.


Mr LYONS - I was glad to note that organization. The Government will be only too delighted if the association will keep in touch with us, so that from time to time we may discuss the interests of the industry, and understand the difficulties of the growers. The Government will be prepared to help the industry, so far as possible. The House must realize that reasonable consideration is being given to every aspect, of the case, and that the Government may be relied upon to consider the claims advanced, even the arguments put forward by the Country party.


Dr Earle Page - Does the right honorable gentleman say that these will be further considered?


Mr LYONS - I have said that.







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