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Thursday, 28 November 1974
Page: 2979

Senator LAUCKE (South Australia) - Mr Acting Deputy President,there are 5 customs and excise Bills and I was wondering whether the Minister for the Media (Senator Douglas McClelland) desires to have a cognate debate.

Senator Douglas McClelland (NEW SOUTH WALES) (Minister for the Media) - I am handling these Bills on behalf of my colleague, the AttorneyGeneral and Minister for Customs and Excise (Senator Murphy). With the concurrence of the Government and the Opposition, it is desired that there be a cognate debate on the Customs Tariff Bill 1974, the Customs Tariff Bill (No. 2) 1974, the Customs Tariff Validation Bill (No. 2) 1974, the Excise Tad Bill 1974 and the Customs Bill (No. 2) 1974.

The ACTING DEPUTY PRESIDENT (Senator Georges)- Is leave granted? There being no objection, leave is granted.

Senator LAUCKE - We are now considering the 5 customs and excise Bills, the passage of which will not be impeded by the Opposition. The Customs Tariff Bill 1974 establishes in a consolidated new schedule tariff rates and tariff changes implemented by this Government since it came to office. The tariff changes arose from the 25 per cent tariff reduction introduced on 19 July last year and the adoption by the Government of certain recommendations made in reports by the Tariff Board, the Special Advisory Authority and the Industries Assistance Commission. The first Bill also covers changes to the schedule of goods included in the New ZealandAustralia Free Trade Agreement, together with changes resulting from the revised expanding system of tariff preferences for imports from developing countries which came into effect on 1 January this year.

The Customs Tariff Validation Bill (No. 2) is a supplementary machinery measure to the Customs Tariff Bill. The Customs Tariff Bill (No. 2) contains tariff changes arising from decisions made by the Government on recommendations made to it by the Tariff Board and the Industries Assistance Commission. It also provides for increases in customs duties on potable spirits and manufactured tobacco products which form part of the Government's budgetary program. The Excise Tariff Bill 1974 amends the Excise Tariff Act 1971-73 in accordance with excise tariffproposals introduced on 23 July 1974 and 17 September 1974. The July excise tariff proposals gave effect to measures which increased the excise duties on potable spirits and manufactured tobacco products and operates from the evening of 23 July. The September proposals operated from the time of their unfortunate announcement and increased the excise duties on brandy as a further stage in removing the duty differential between brandy and other potable spirits. Customs Bill (No. 2) 1974 provides for amendment of the Customs Act in respect of rules of origin for goods from New Zealand and from developing countries, and valuation provisions for imported goods.

I want to refer first to the 25 per cent tariff reduction introduced on 19 July 1973. This across the board reduction has sparked off a huge flow of imports. I want to speak this evening in particular in regard to the impact on South Australia of this precipitate action of the Government, which was most detrimental to the long term interests of the industrial base of Australia and, I believe, of South Australia in particular. I am not averse to well considered, selective variations in tariff rates, but a large scale reduction, irrespective of its impact or the condition of the industry to which it applies, is highly dangerous and most undesirable. I believe in reasonable protection for local industry. I do not believe in feather-bedding but in a system whereby there is a progressive hardening- in other words, lesser protection- to ensure that there is efficiency in our secondary industries.

The industrial base of South Australia- it is pretty narrow- depends very largely on the motor vehicle industry, the manufacture of household durables- that is refrigerators, washing machines, air conditioners, and such likeelectronics and textiles. It is no wonder that the Premier of South Australia has been so trenchant in his criticisms of this Government, when one takes into account the impact of the tariff variations and the huge flood of imports. As I say, a narrow industrial base marks industry in our State. We have today also to meet the burden of an increase in the price of petrol in South Australia. A Bill was passed in the Upper House of the South Australian Parliament today which will lead to the licensing of petrol retailers, which will add about 6c to the cost of a gallon of petrol.

As we look at the South Australian industrial or manufacturing scene we note that our capacity to produce those goods to which I have referred and on which we are so dependent hinges to a very large degree on our ability to take into South Australia the raw materials, by road transport in many cases- there is a lot of rail transport, too, but road transport does play a very prominent part- and then to send out the finished products mainly back to the populous States of Victoria and New South Wales. An increase in transport costs, together with the disabilities which have been felt and are being felt by the industries in our State, is causing quite a serious problem. Although this is not quite relevant to the legislation before the chamber, I was going to refer to the land tax system in our State, which is a further burden. South Australia is the only mainland State which has land tax. The impact of government policies upon industries and the announcement of the Premier of South Australia that he had to introduce a charge on petrol because he was not receiving sufficient financial accommodation from the Commonwealth add up to a situation which is of great concern for South Australia as it views its industrial background.

The Bills we are considering tonight put into legal form, as it were, those actions which were taken by this Government and which I believe were ill conceived and precipitate. Insufficient consideration has been given to which industries can stand certain pressures upon them. The Government has failed to realise that unless we do maintain our industrial base in good, efficient heart, with active production in increasing volumes- not decreasing volumes- the horrible employment situation will certainly be aggravated far beyond that which now applies. I say that many of our present ills are due to the Government's policies which are being put into effect by means of these measures we are considering tonight. They are government policies and they give us great concern.

I refer now to another area of impact on industry in South Australia; it is a serious area. I wish to use 2 instances in my remarks. I have referred already to secondary industry, and now I refer to those sections of rural industry which are concerned with viticulture, wine making and brandy making in South Australia. By way of background, there are 180 commercial wine making complexes in South Australia, Victoria and New South Wales. There are 2 public companies which are completely Australian owned involved in this industry. There are 7 predominantly foreign owned companies and there are 171 Australian owned private companies or individuals involved in the industry. So we have a base for decentralised industry. It is a base which at the present time is very strongly privately owned and, in my opinion, it must remain so if it is to be the industry which we have known it to be for so many years now.

The impact of Government charges on the grape growing and wine making industries has been very severe indeed. To indicate the severity of the increases let me cite figures in relation to excise charged on brandy since the 1973 Budget. Prior to the 1973 Budget- last year's Budgetthe excise on brandy was $3.08 per litre of alcohol, but the 1 973 Budget increased the excise to $6 per litre of alcohol. The mini-Budget which was introduced increased the excise to $8.55. The 1 974 Budget- that is the Budget which is just behind us- increased the excise further to $8.95 per litre of alcohol. In May 1973 a bottle of brandy cost $3.13; in September 1973 it cost $4.23; in August 1974 it cost $5.26; and in November 1974 it costs $5.64. 1 cite these figures because it is many years since a wise and understanding government gave a differential in favour of brandy on which the excise at that time was 30s a gallon. The purpose of that was to give a fillip to the grape growing industry at that time.

We were suffering from an inability to dispose of our grape production in non-irrigated areas, and particularly in irrigated areas of South Australia. Pools, co-operatives and organisations of a temporary nature were being formed in South Australia. These organisations hired premises on which excess grapes could be crushed, transformed into brandy and that brandy sold in due time. At that time the proceeds would be paid back to the providing growers for their grapes delivered a couple of years earlier. That was the situation in the industry about 18 years ago. The fillip given to the industry at that time by the differential gave that spirit, brandy, an advantage or a better competitive situation in comparison with other potable spirits, particularly whiskey, gin and vodka which are not made from the same background or raw material which cannot be used in any other form but through crushing or drying. The resultant brandy made from those crushings and dryings is a really important part of the industry. The impact on the industry of the huge increase in excise made by this Government in the last 2 years is such that there is now very serious questioning as to whether the general buoyancy which has marked the viticulture industry can be maintained beyond the coming vintage.

Senator Jessop - Mr Dunstanis worried about it too.

Senator LAUCKE - Mr Dunstanis most worried, particularly as he is the one who had assured the wine industry of Australia at the time there was a 25c per gallon excise on unfortified wines that that would be taken right off if his Party gained government. He promised to those from whom he sought financial assistance for his Party that there would be no replacing charge on the industry. We then find the situation to which I have referred which is so violently adverse to the whole industry. It is no wonder that the Premier of South Australia hides his face in shame, as he says, when he sees what has been done to the industry that he had guaranteed would be looked after with reasonable care and attention, not have imposed upon it charges which we have found in the past have been so detrimental to its interests.

Senator Jessop - He is thinking of voting Liberal next time.

Senator LAUCKE - Mr Dunstandoes some things at times which show that he has some degree of brightness. I would not be surprised if he were to say that he will vote Labor at the next South Australian election but that he will vote Liberal in federal politics. The clearances of brandy are down 24 per cent now when compared to a year ago. The stocks are remaining at a high level. In a situation such as this, it is only natural to expect the vigneron not to purchase beyond replacement of stocks which would be required for sale in 2 years time. The Income Tax Assessment Act, section 31a, has a very heavy bearing on the industry in regarding to valuation of stocks. This is making a demand upon the wine-making organisations in a very worrying way, particularly on the individually owned wineries- the impost of taxation based on current values rather than the value of materials and costs to the point of evaluation at the end of the financial year. This new system presents a major threat to the financial stability and liquidity of many of these small companies to which I have referred. It could lead to a reduction in the numbers of large overseas interests taking a greater share of the wine making and distributing facilities of our country. It is a serious matter indeed.

I know that the allowance of brandy to come into Australia in the last 18 months to 2 years, is of concern to the Minister for Customs and Excise (Senator Murphy). The Minister in reply to a question recently asked by Senator Jessop said that he realised the effects of the flood of imports on the viability of the local industry. He indicated that there should be a greater charge made on the imported article to assist in the more buoyant flow of sales of the local product than is the case now. I had hoped that a more sympathetic attitude would have been taken towards this industry generally than has been shown by this Government to date.

I do not wish to speak at length this evening. I have indicated that I am deeply concerned personally about this matter but it goes far beyond that. It is a widely held view throughout the community that the impact of governmental policies which has emanated from these excise and customs provisions has led to the adverse situation which has arisen. While condemning the Government for this, the Opposition at this stage will do nothing to impede the passage of this legislation as undesirable as many of the consequences which will flow in the wake of it may be.

Question resolved in the affirmative.

Bill read a second time and passed through its remaining stages without request or debate.

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