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Tuesday, 8 March 1932

Mr HAWKER - The proposals of the Government differ from those of the Tariff Board only to the extent of increased protection for Australian tobacco suitable for cigarette making, and that is a class of tobacco the production of which it is most desirable to encourage. Both the Country party and the Opposition have put forward suggestions which they say will safeguard the revenue if the duties are altered as they propose. In the opinion of treasury, customs and excise officials those proposals will not result in the same revenue being obtained. In the event of certain estimates of the Australian crop proving correct, the revenue received will be very much reduced. The burden of their argument is that the additional revenue can be obtained by still further raising the duty on imported leaf, either in the form of customs duty as proposed by the Labour party, or by an additional excise dutywhich is in effect the same proposal in a more complicated form - as put forward by the Leader of the Country party (Dr. Earle Page). Either of these proposals, if adopted, would result in the aggregate tobacco bill to the consuming public being increased. Various estimates, ranging from a little under1s. to1s. per lb. have been made of what it costs to land American leaf in Australia. Last year the price paid to the Australian growers averaged 3s. per lb. The Tariff Board had access to the actual accounts of the buyers, and it ascertained that the price paid was in the region of 3s. per lb. averaged over the whole crop.

Dr Earle Page - The growers admit that.

Mr HAWKER - If the protection remains the same, and there is an increase in the use of Australian leaf, the public will have to pay approximately 2s. per lb. more on every additional lb. of Australian tobacco used. The idea in both amendments is to keep the total revenue approximately the same as it was last year, and over and above the revenue which the Australian consumers must find, there will be paid for the Australian-grown leaf 2s. per lb. more than is being paid, including exchange and freight, for the imported leaf to the American exporters or, as the honorable member for New England (Mr. Thompson) said, to the negro growers. I do not think, however, that many pence find their way to the negroes. Assuming that the consumption of Australian tobacco increases from 2,000,000 lb. to 6,000,000 lb., the consumers will have to pay an additional £400,000 for their tobacco. That is the extra cost of protection as distinct from the revenue impost, assuming that consumption remains the same, although it is almost certain that the additional cost will result in some reduction.

The right honorable member for Cowper pointed out that the Australian tobacco-growers were not taking full advantage of the protection amounting to 5s. 2d. per lb. Whether the quality of their tobacco is good enough to enable them to do so is, of course, open to debate ; I do not offer any opinion on that, not being a smoker. It is quite evident that there is a considerable margin on which to come and go. Of course, a reduction of duty will naturally force down the price to some extent, but according to the estimates given by the Tariff Board, and by the Minister for Trade and Customs (Mr. Gullett), there would be a certain limit to the reduction in price, probably from 8d. to 9d. per lb., which is not a smashing reduction. What is important from the point of view of a representative of the primary producer is whether that reduction is so severe that it will put the industry out of existence, or whether the industry cannot stand a relatively smaller protection of 3s. per lb. which still secures to it a price two and a half times the value of the leaf landed in Australia, certainly much in excess not of the negrogrown leaf only, but also of the Canadiangrown leaf. We have also to consider whether the amount of employment that the protection provides is really worth .the additional tax upon the community generally. There is abundant evidence in the Tariff Board's report to the effect that over a period of years a price of 2s. per lb. would be quite profitable in districts suited for tobaccogrowing. There is in the report a great deal of evidence showing that people are rushing into this experiment in a great many places in which nothing has beer done up to the present to demonstrate that the land is suitable for tobacco-growing. In those districts there will be failures whatever the price may be. The growers cannot expect to make a success of tobacco cultivation in every district and it is unfair to the taxpayers and consumers to impose a duty in an attempt to make this possible regardless of cost. If that were possible they would hopelessly overproduce.

Mr Thompson - We could then export.

Mr HAWKER - How on earth does the honorable member think that we can build up an exporting industry if it cannot carry on to-day under a duty three times greater than that operating in Canada, a country which is right alongside of the United States of America ?

Mr Thompson - We are exporting today to New Zealand and the South Sea Islands.

Mr HAWKER - -It must be under the dumping system or one similar to that of marketing sugar produced in Australia. We could export almost any product if it were subsidized heavily enough. We must reduce costs, not only in this industry but also in all industries. I appeal particularly to members of the Country party to reconsider this proposal. Surely they do not contend that because an industry is a rural industry it is fair to give it extreme protection to enable it ito raise its price even to three times its world value. In that event what chance would we have of bringing do"wn the Australian cost level? If that level is not brought down, what chance is there for this industry to build up an export trade? What chance is there for our exporting industries to continue to export ? What would be the position of the wheat-growers if they were able to raise their price, not three times, but merely one-third, above world parity? This year the wheat industry has been passing through a difficult period of reconstruction. The bounty of 4£d. a bushel is undoubtedly of some help. It is about 12 per cent, of the world price. We cannot afford to increase bounties to the big industries, yet their claim is infinitely greater than that of this industry, because if those industries were given the assistance asked for by this industry, they would absorb nearly all our unemployed. For instance, if mixed farming were subsidized by trebling the price of meat, the additional work in fencing and effecting water improvements would absorb a huge number of unemployed. I appeal particularly to the members of the Country party not to turn from the one road which does hold some hope of recovery to Australia, particularly to the wheat, wool, and dairying industries, the bigger industries that are worth while.

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