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Tuesday, 15 May 1928

Mr PATERSON (Gippsland) (Minister for Markets) .- The honorable member for Hume (Mr. Parker Moloney) said that by reducing the bounty, the Government is inflicting an injustice upon the growers. The honorable member for Adelaide (Mr. Yates), on the other hand, said that while the growers have received some benefit, the bounty was really a boost to big business, and that four-fifths of it -went to swell the profits of wine- makers who are already well off. I do not know whether the honorable member regarded that assertion a? an argument for the continuation of the old rate of bounty. The honorable member for Hume (Mr. Parker Moloney) said that any reduction of the bounty would be immediately felt by the growers. The Government has stipulated that the bounty shall be paid only on condition that the winemakers pay a fair price to the growers for their grapes. That the price stipulated by the Government is fair to the growers can be easily proved. When I was in Mildura eighteen months ago a deputation of doradillo growers requested that the then minimum price of £5 per ton should be increased to £6 a ton. The Government has actually fixed a price which is 10s. in excess of that for which the deputation asked. The price of doradillo grapes is £6 -10s., and, of better quality grapes, correspondingly higher. We have been told by the honorable member for Wakefield that following the reduction of the bounty wine-makers will pay the fixed price in respect of the export trade only, and cut the prices for grapes to be converted into wine for the local market.

Mr Foster - I said that the Government's action was a distinct inducement to the wine-makers to do that.

Mr PATERSON - The honorable member for Angas (Mr. Parsons) went so far as to say that some makers might restrict themselves to manufacturing for the local trade only, so that they might be free, to pay whatever price they thought fit for grapes. I remind the commitee that the wine industry is very handsomely protected against importations. The duties are from 12s. 6d. to 14s. per gallon on wine in bulk, and from 15s. to 18s. per gallon on bottled wine. The dried-fruits industry is able to obtain a payable price for that portion of its produce which is sold in Australia. There is no reason why the wine industry should not do likewise, and be able to pay a fair price to the growers of grapes used for the manufacture of wine for consumption in Australia. Sheltered by a high-tariff wall, the wine-makers have the market to themselves, and are selling a commodity the price of which has not to be cut to the bone as if it were a necessary article of food. A payment of an additional £2 per ton for grapes is equivalent to an increase of Id. per bottle of sweet wine. If the difference between the fixed prices for grapes and prices formerly prevailing, is set down at £2 per ton, will any one say that the Australian market can not carry the necessary trifling increase amounting to Id. per bottle on sweet wine and less still on dry wine. The Commonwealth Government would be surprised if the wine-makers took the action that some honorable members have suggested is threatened. The whole purpose of this legislation has been to help the growers, and if the threatened action were taken, the Government would have to review the position and safeguard them in another way.

Mr Foster - How could it do that?

Mr PATERSON - "When the winemakers do what the honorable member has suggested they will do, it will be time enough for the Government to decide what further steps it shall take ; but I do not believe that they contemplate any action of that kind. The honorable member for Angas challenged me to name the gentlemen who, I said, had admitted that the industry could carry on profitably with a bounty of ls. per gallon on the wine exported. I did not say that the wine-makers were enthusiastic about the reduction; human nature being what it is, that was not to be expected; but I said, and repeat, that some of them admitted that the industry could make a reasonable profit - "not easy money" as one remarked - with a bounty of ls. per gallon as soon as the London market readjusted itself to the changed conditions. I do not feel called upon to mention their names.

Mr Parsons - On behalf of the lot of them I deny that statement.

Mr PATERSON - The honorable member is practically challenging my veracity ; surely he is carrying his championship of the wine-maker3 beyond the bounds of good taste. When men come to me and discuss their business frankly I should not be acting fairly by them if I divulged their names. But I again assure the committee that more than one wine maker has admitted that the industry can carry on profitably on the basis of the new bounty and the existing price of grapes.

I shall briefly reiterate the main points upon which the Government bases the reduction. The alteration of the British tariff has given a substantial advantage to our wine-makers. Continental unblended wines against which ours have to compete were formerly dutiable at 2s. 6d. per gallon; the duty is now Ss., an increase of 5s. 6d. per gallon. The duty on Australian wines has been increased from 2s. to 4s., leaving our winemakers with an advantage of 4s. per gallon. Previously their actual advantage over continental competitors was only 6d. per gallon; to-day it is 3s. 6d. per gallon more than it was then. Of course, wines from South Africa or any other British dominion are on the same footing as our own. In regard to blended wines, the latest advice I have is that the efforts to mix 2 or 3 gallons of low-strength wine with 1 gallon of highstrength wine have been a failure, and have been abandoned. If any blending is done now it is confined to the mixing of 1 gallon of low-strength wine with 1 gallon of highstrength wine. If 1 gallon of 25 degrees strength, dutiable at 3s., is blended with 1 gallon of 42 degrees strength, dutiable at 8s., the average duty of 5s. 6d. still leaves our wines of greater strength with an advantage of ls. 6d. a gallon. A little over twelve months ago, when .the bounty was reduced to ls. 9d., our winemakers had an advantage of only 6d. per gallon. Even if low and high strength wines can be blended successfully in equal parts, and assuming that the blending costs nothing, the Australian exporter is ls. per gallon better off than he was a year ago with his continental competitors. That in itself is a justification for a reduction of the bounty by 9d. a gallon. A good deal has been said to-day concerning the position in regard to British wine. The honorable member for Hume (Mr. Parker Moloney) stated that I had failed to deal with that matter on Friday last. As a matter of fact I spoke on it at some length, and to-day I was accused of having made a second-reading speech on the subject. Reference was made by one honorable member to-day to a letter which had been received from Mr. Walker, who urged that the excise on so-called British wine should be at least as high as the duty on dominion wines. What is the position? Rather less than a month ago the excise on British wine raised from la. to ls. 6d. a gallon. We have been informed that the ingredients for the blending of that wine pay a duty of 6d. a gallon, and Australian wine is one of those ingredients. If we add this amount to the new rate of excise of ls. 6d., we find that the new excise on British wine up to 27 degrees is equivalent to 2s. a gallon. We are informed that in almost all cases British wine is of 27 degrees strength or lower, so that the taxation on it very closely approximates the duty on dominion wines of a similar strength. The additional excise on British wines, plus the duty on ingredients, practically places them on the* same taxation footing, strength for strength, with wines produced in the dominions. These facts, then, fully justify the alterations in the bounty which have been made. With regard to the amendment submitted by the honorable member for Henty (Mr. Gullett), I desire to say that the Government is prepared to accept it.

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