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Tuesday, 6 December 1938

Mr PERKINS (Eden) (Monaro- Minister for Trade and Customs) .- The tobacco duties now before the committee are penal duties imposed! in instances where less than the prescribed percentages of Australian leaf are used. This policy of imposing penal duties on tobacco leaf was initiated by the Government in May, 1936. From that date, increased duties were imposed on imported tobacco leaf used in conjunction with less than 2½ per cent. of Australian leaf in cigarettes, and less than 13 per cent. of Australian leaf in manufactured tobacco. The action of the Government had the effect of forcing all manufacturers to use the required proportion of Australian leaf, whereas previously some manufacturers were disinclined to incorporate local leaf in their blends. The result has been much keener competition for Australian leaf, and has made practicable the purchase of all marketable leaf grown locally at prices considerably in excess of world parity.

Some months past, a review of the Australian tobacco industry was undertaken, and having regard to the increased production of Australian leaf, combined with the remarkable improvement of quality, the Government decided to raise the minimum percentages of Australian leaf used in the manufacture of cigarettes and tobacco. Accordingly, steps were taken in September last to raise the required percentage from 2½ per cent. to 3 per cent. in cigarettes, and from 13 per cent. to 15 per cent. in the case of tobacco. This can be regarded as a second step in the implementation of the Government's policy to ensure the purchase and consumption of all usable tobacco leaf grown in Australia.

Since the Lyons Government took office in 1932, there has been a continued increase of the use of Australian-grown leaf. During 1937-38 a quantity of 5,400,000 lb. was used by manufacturers, which offers a remarkable contrast to the 1931-32 consumption of 2,600,000 lb. Financial assistance provided by the Government for research, experimentation and instruction has brought about an improvement of the general quality of leaf produced, which is reflected in remunerative prices to growers of the right type of leaf.

Items 20, 21 and 22 refer to manufactured tobacco and cigarettes. The duties on manufactured tobacco and cigarettes were increased in May, 1936, coincidental with the imposition of the penal duties on imported tobacco leaf. Subsequently, the old duties were reverted to on manufactured tobacco and cigarettes of United Kingdom manufacture, provided the required percentages of Australian-grown leaf were incorporated, namely, 13 per cent. in manufactured tobacco and 2½ per cent. in cigarettes. The Government proposes under the tariff resolution now before the committee to require such manufacturedproducts imported on and after the 1st January, 1939, to include a larger percentage of Australian leaf - 15 per cent. in manufactured tobacco and 3 per cent. in cigarettes.

Item agreed to.

Preliminary paragraph.

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