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Tuesday, 19 May 1936

Senator Sir GEORGE PEARCE (Western Australia) (Minister for External Affairs) [9.0]. - If honorable senators had made an inspection of a tobacco factory they would realize some of the difficulties in the way of giving effect to Senator Gibson's proposal. I was a member of a royal commission which inquired into the tobacco industry some years ago, and I remember observing the manner in which the leaf is manufactured. I understand that when Australian leaf is bought by manufacturers it is not immediately manufactured into smoking tobacco. It has first to go through a process known as maturation. I understand that, in some instances, leaf that was bought two years ago is still being matured. American leaf, on the other hand, has, for the most part, undergone that process before arriving here. It comes into the manufacturer's factory as matured leaf. In the process of manufacture, the leaf is stripped of the stem before it is pressed into the block from which the cut tobacco is made, and, during that time, I take it, the blending in of Australian leaf takes place. Obviously, it would be impracticable to levy excise on the amount of Australian leaf then or at any one time, because, as I have explained, there may be a two years' supply on hand, whereas the American leaf is taken out of bond, day by day as required. I should think it would be extremely difficult for any excise officer to say what the differential excise should be on the Australian leaf in any particular block. It is because of that difficulty that Governments have adopted another method of favouring the Australian leaf. American leaf is subjected to an import duty of 3s. 6d. per lb., a duty which the Australian leaf does not pay. Therefore, at the outset the Australian leaf enjoys an advantage of 3s. 6d. per lb. over the imported leaf. That is an easier and simpler way to give preference to the Australian leaf than to try by an intricate process to determine how much Australian leaf is in any particular blend. If Parliament wishes to give a greater advantage to the Australian leaf it can do so by increasing the duty on imported leaf.

Senator Collings - But the Government will not do that.

Senator Sir GEORGE PEARCE - I am not now arguing whether there is a sufficient import duty on American leaf or not. I am merely pointing out that, if it is desired further to assist the Australian industry, that is the easy and natural way to do it.

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