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Thursday, 3 December 1936

Senator A J McLACHLAN (SOUTH AUSTRALIA) (Postmaster-General [12.0] . - The rates of duty under this item have been increased by1s. 6d. per lb. by reason of the corresponding increase under Item 19. Under the item increases of duty are proposed on tobacco leaf as follows : -a) 1s.6d. per lb. on leaf used in the manufacture of tobacco, which contains less than 13 per cent. by weight of Australian-grown leaf; (b)1s. 5d. per lb. on leaf used in the manufacture of cigarettes which contains less than2½ per cent. by weight of Australian -grown leaf;

These increases will act as a penalty against manufacturers who use less than the prescribed percentage of Australian leaf in their products. The rates have been fixed with a view to allowing a retail price margin between tobacco and cigarettes manufactured wholly from imported leaf, and such products manufactured from imported leaf, plus the required percentage of Australian leaf. The Government's policy up to the time of the intro duction of the proposals now before the committee had resulted in a steady increase of the use of Australian leaf and the purchase of all consumable leaf grown locally. In the explanatory memorandum prepared for honorable senators it will be seen that in the year 1935-36, tobacco factories used 4,737,000 lb. gross, or 3,734,000 lb. net, of Australian-grown leaf, and that, whereas the percentage of local leaf to the total leaf used was less than 6 per cent. in 1927-28, it was over 20 per cent. in 1935-36. The position appears in a much more favorable light if leaf used in cigars and cigarettes is disregarded, as only a relatively small quantity of Australian leaf is at present used in those commodities. Satisfactory as has been the progress made up to the present in the use of Australian leaf, the Government has an eye to the future. There is no disputing the claim that Australian leaf has improved in quality over the last few years, entirely owing to the tariff policy of the Government, and the grant of £20,000 for research purposes. The settling down of the industry and the experience which growers have acquired have undoubtedly assisted in bringing about quality improvements. A further improvement of the quality of the leaf is expected as a result of the successful experiments which have been . conducted in connexion with the diseases and pests which attack tobacco; I refer particularly to experiments for the prevention of blue mould. With this prospective improvement of quality, the problem of the future is to provide an avenue for the disposal of good quality leaf, and it is to this end that the Government has introduced the present proposals. The majority of the tobacco leaf imported into Australia is the product of the United States of America. Accordingly, in submitting these proposals for increased duties, the Government does so with the knowledge that no harm is being done to the trade of any good customer countries. A question which may be on the lips of honorable senators is why there should not be a total exclusion of imported tobacco leaf. I reply to that by saying that the Government's policy with regard to tobacco aims at bringing about a gradual, rather than sudden, conversion to the use of locally-grown leaf.

After all, the smoker is the final arbiter as to the class of tobacco he will smoke, and he would react unfavorably to a sudden change of quality.

Senator Badman - If the duties are made prohibitive, competition will be destroyed.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - The Australian tobacco growing industry is not yet in a position to supply the full requirements of quality leaf to suit the tastes of the smoker of the present day; although quality has improved, there is still a considerable quantity of inferior leaf produced. Moreover, the industry is not yet in a position to supply the quantity required. Tobacco leaf must still be imported for blending purposes. Even the United States of America, despite its huge production of tobacco, follows this practice. That, I think, is sufficient explanation of the reasons actuating the Government in increasing the duties.

A further point which I desire to make is that the effect of the proposals will be seen from the fact that, during the first four months of their operation, 350,000 lb. gross, or 260,000 lb. net more Australian leaf has been used than in the corresponding period of last year. This indicates that in a twelve months' period a market will have been made available for an additional 1,050,000 lb. of Australian leaf, representing an increase of 22 per cent. on the 1935-36 figures. It is obvious, therefore, that the course followed has been productive of good results, so far as the tobacco industry is concerned.

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