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Wednesday, 29 August 1973
Page: 590

Mr GILES (Angas) - The Leader of House (Mr Daly) who, by self-confession, has said that his time is limited, has once again tried to suggest to honourable members that their seats can be held on 17 per cent or 21 per cent of the vote. If I might instruct the Leader of the House, who is meant to be in charge of these matters, the whole idea is that under the preferential voting system nobody is elected until he has gained 50 per cent of the vote. If the Leader of the House had his way, he would have the first past the post system of voting. Under that system people would be elected left, right and centre without receiving 50 per cent of the vote, so let us not be carried away with this nonsense that he goes on with every time there is a crowd in the gallery during school holidays. At least they get some fun, even if we are getting a bit bored by it all. We on this side of the House do not worry about a redistribution. We are anxious to see the colour of the Government's money. Is it or is it not game to go to the people? A good many people on this side of the House itch for that to occur. It is of no earthly use the Leader of the House shouting to bolster his own confidence. That seems to be the only way in which he can generate force. We are ready when he is, and we are not necessarily waiting for any redistribution to occur.

I rose tonight to discuss a very important matter affecting my electorate, that is, the increase in excise duty on brandy. This increase constitutes a most sectional, vicious attack on the grape growing industry. In order to convince, if I can, those on the Government side who are prepared to listen, might I point out that the amount of money the Government now intends to take from the growers of grapes going into the production of brandy under new legislation that is yet to come down, is$794 a ton. The only person who wins under these circumstances is the Treasurer (Mr

Crean). At the same time, if I might strike a comparison, if those grapes went for wine making purposes they would not attract any duty. I think I can be forgiven in those circumstances for pointing out to the House that a sectional, vicious attack has been made on that one section of the grape growing industry. It will hit, in particular, South Australia where 91 per cent of the brandy of the nation is produced. From that State it will hit primarily the Riverland area of my electorate and the cooperatives, not the big internationally owned distilleries, which the farmers themselves operate there. It will hit Renmark, Loxton, Berri, Waikerie, the proprietaries of Mildara in the electorate of one of my Country Party colleagues close to Mildura, and Angove's Pty Ltd at Renmark. It will affect one winery in the electorate of my colleague the honourable member for Wakefield (Mr Kelly) and it will affect 2 more co-operatives and several proprietaries in the electorate of my colleague the honourable member for Barker (Dr Forbes).

The industry has been disadvantaged in four major ways. First of all, with other Australian produced spirits, it has suffered an increase in sales tax; secondly, it has suffered the big increase in excise duty to which I have referred tonight; thirdly, it has had the traditional method of valuation which copes with the peculiarities of the brandy industry altered to its disadvantage, and fourthly, the proprietary firms, contrary to the co-operatives, have suffered a reasonably steep increase in private company tax. I intend in a minute or two to quote some figures from a typical private firm to show the House how it has been disadvantaged. I am not at this stage quoting industry figures. It has not yet been able to compile the degree of hardship. But I think it is fair that, in case the Treasurer or the Government has not seen the degree of hardship this has caused, I should take advantage of putting one or two of these facts before them.

Firstly I wish to deal with the duty increase. The pre-rise rate of duty per litre of alcohol was$3 08. The post-rise rate is $6, which gives a percentage rise of 94.8 per cent. The pre-rise sales tax was $1.15. The post-rise level of sales tax is $1.65, which represents a percentage increase of 43.5 per cent. This gives a total increase of both sales tax and duty of 80.9 per cent. If we take this as a typical firm, the liability would go up from $3.4m to $6.4m - approximately an increase of $3,209,831.

This calculation is based on the average stock of spirit held to make brandy. This stock is held in a good average proprietary where 3 star brandy is stored for a period of between 3 and 4 years. Therefore there is $3.2m increase for one private company to find. The amount of duty to be paid each year will increase from S750.00O in round terms to 31,471,000, an increase of $750,000 in round terms.

Mr O'Keefe - They are devastating.

Mr GILES - Indeed they are. The cost of financing this, based on a 6-week-out period, is $13,500 for interest alone. The capital sum must be raised- The biggest producer of brandy in Australia today tells me that he needs S5.5m in the next 3 years in order to remain in a liquid state.

Mr Cohen - I will write you a cheque.

Mr GILES - He will want something a bit better than a bounce from the honourable member's area. The smallest firm, whose figures I am quoting tonight, needs $1.5m in the next 2 years to remain solvent. The percentage of the price that the Government now takes from brandy is 62.4 per cent.

Mr O'Keefe - They are socking the sick.

Mr GILES - I suppose that there is an element of truth in that too. They are socking more than the sick, more than just the users of medicinal brandy. This firm feels that within a period of years it will have 2 alternatives. I remind the House that I am talking about a major producer of brandy in this nation. This firm can either go broke or it can sell. If the firm is sold it will almost certainly have to sell to an overseas firm. What would the Government do next? I suppose that it would try to stop a foreign investor taking over the company. Then where would be the equity of the person who has struggled all his life to set up a first class firm of this nature?

I believe that there are areas in which the Treasury has not yet made up its mind firmly about some of the problems concerning the collection of this tax which will be phased in. I am on my feet tonight to put to the Treasurer - and I believe that someone on my behalf let him know that I was going to speak on this subject tonight - as forcibly as I can an argument to stop this legislation coming before the House until such time as the full implications are apparent to everybody. I believe that the advice which perhaps the Treasurer has had has not sensed the enormity of the problem that is now foisted on the shoulders of the brandy industry. I will have another occasion on which I can be more factual and more statistical about this matter. But I thank the House for allowing me to put this sad tale of woe on behalf of the brandy industry tonight.

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