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Tuesday, 13 October 1970

Mr GILES (Angas) - I have not found myself so much in agreement with the honourable member for Riverina (Mr Grassby) before. I do not alter the remarks that J made on this subject during the Budget debate. The effect of this excise on the industry is out of all proportion to the amount of revenue that can be raised from it. The maximum that can be raised, if my memory serves me rightly, is $ 15.2m in 1 year. I go a long way with the honourable member for Riverina when he says that it is quite a ridiculous situation to risk a viable industry by putting it in jeopardy or in need of tariff protection against imports. I am always unhappy if I have to be rude to the honourable member for Riverina and 1 do not intend to be rude tonight. But I do think there are other aspects of his remarks which, despite my general agreement, I must try to correct. First of all, this tax has been levied by way of excise. This has been spelt out previously by me and other honourable members. The effect of this excise is a tax on quantity so that the higher priced wines - a champagne, an old burgundy or a claret - are taxed precisely the same per volume as are the cheap, big selling wines such as sweet and medium sherries, muscats, ports and other types of lesser quality wines.

So the question we must ask ourselves is: If this excise on the wine industry is to detract from sales, allowing for a protection to growers, which wines will it affect? The answer is that a tax at the rate of 5 per cent on champagnes and expensive clarets and burgundies will not affect the sales of those types of wines. But 38 per cent tax on sweet sherries in flagons, medium sherries, muscats and ports, could very well affect their sales. If it does what type of grapes will be hard to sell? The answer is - I have not personally been involved in growing grapes for a good many years - that it will affect the palominos, pedro zimines, gordos, sultanas, grenache and those types of grapes that on the whole make the cheaper wines sold in flagons in Australia today. If it does affect these sorts of grapes what areas will it affect? It certainly will not affect McLaren Vale in my State; it certainly will not affect the Barossa Valley; it certainly will not affect Tea Tree Gully; and it certainly will not affect the Hunter River. The irrigation areas that grow the grapes at high bearing capacity to which I have referred are the areas of the honourable member for Riverina and myself in the Upper Murray because these are the areas that supply the bulk wines to the industry in Australia. Demand will always exist in dry areas but not necessarily in irrigation areas.

There are many wines in the dining room that carry as an ingredient wine from my Upper Murray electorate. Any worthwhile Sydney brand one can lay one's hands on, apart from special bins produced in special areas of New South Wales, is in one degree or another made from the irrigated juice that comes from my area and, 1 suppose, to a marginally important degree, from the area of my friend, the honourable member for Riverina - to an infinitesimal degree. But these are the areas that are supplying not only bulk wines of this nature but also the spirit for the entire brandy production. For instance, I believe it is true to say there is one name area in Australia that produces quality wines for sale to the brandy trade, but the fact is that there is not one bottle or vat of brandy made in this area. In that case all of the brandy is taken from my electorate and sold under another label. So far what have we said? We have said that if there is a decrease in sales what area will it affect? If there is a decrease in sales what grapes will it affect? If there is a decrease in sales what are we to do about it? The honourable member for Riverina in his erudite fashion tonight pointed out all sorts of unusual things. For instance, he pointed out that some important wines with exotic labels catch peoples eyes and get their support.

Mr Grassby - And their pockets.

Mr GILES - I was thinking of politicians, ls this your forte? ls this how you operate? 1 can see the distinct resemblance between the exotic label and the colour of the honourable member's shirt, as though it were dyed in wine. He also said that it came as a great shock to the wine industry when this excise was applied. My foot it did! My memory is a little bit longer than that of the honourable member for Riverina. It goes back 3 years to a time when a member of this House debated whether there should be an excise on table wines. I very well remember that about H pages of Hansard consisted solely of a running tirade between me and the honourable member for Lalor (Dr J. F. Cairns) or, as he then was, the honourable member for Yarra. For some reason or other it seemed that he did not want my remarks to get into Hansard. All I was trying to do was protect the wine industry and point out the facts of life - the fact that beer is made of water, which even in South. Australia is not that expensive yet; barley, which has not exactly gone up in price or for which there has not been a much higher demand; and sugar, which we know the shadow Minister for Primary Industry, the honourable member for Dawson (Dr Patterson), is trying to sell to Australian industry. The beer industry is paying $1.2m per day to Federal coffers whereas prior to this excise the drinkers of champagne, clarets and other wines were paying nothing. How very well they played their cards. It was this sort of exercise I was trying to do - to point out that the people growing the grapes have to find a market for them. Until 3 years ago in my State the growers could not do so. Around the corner we have a two-fifths greater yield of grapes coming into bearing. What will happen? 7here is no doubt that when small growers from your area and my area cannot place their grapes they will blame the Federal Government's excise on wine. It is axiomatic, but it is unjustifiable. I think I made the point some time ago when I was on my feet that I would not hold myself responsible if a surplus existed that had nothing to do with the application of an excise on wines. I stick to that. If, allowing for a growth factor, wine grapes cannot be easily placed and if, according to statistics, the excise has not altered the sales volume of wine, then the Government's action on excise has not been responsible for that state of affairs. I think L made this very plain a little while ago. But the point 1 am leading up to is this: Running right through my speech up to this point and through the whole of the speech of the honourable member for Riverina are phrases like 'if this', 'if that', 'if it hits this area', 'if there is a decrease in sales'. Let us be quite plain about this. All of us up to this point of time are procrastinating, making up theories, crying hysterical woes and being prophets of doom. We do not know whether the Government's action will decrease sales or not.

I thought it was a little unfair of the honourable member for Riverina to suggest to me that I should take rapid action before the industry falls into disarray. Nobody can tell at this time what effect the legislation now before us will have. I will continue with the 'if theme, but let us be quite certain that we should recognise it for what it is. 1. am theorising and I will say this: If there is a reduction in sales, allowing for the growth of the industry, one thing I would ask the Government to do immediately is to look into the alternative of sales tax. 1 have already described to the House how there can be an increase of the order of 38 per cent in some instances in the case of low priced wines and how in the case of champagnes the figure may be 5 per cent. I am quite certain that many people in the wine industry realise this very well and realise that high priced wines are well and truly in their top income earning bracket.

But I pointed out also in my following of the 'if theme, in my theorising, that the first areas to be hit will be the area of the honourable member for Riverina and that of the honourable member for Angas in the Murray Valley. If this is to be so - and again we get the ubiquitous 'if - then there is a good deal of justice in applying a sales tax in an ad valorem fashion. In other words, it is applied to the value of the wine. It then does not hit the big bulk suppliers to 7 times the extent that it hits the champagne suppliers. It is applied across the board to the value of the wine. It may be more expensive to collect it. It may be necessary to collect it from many retail outlets. But it would also have in its favour the fact that it would be applied to the Australian product at the same level or at the same stage as it would be applied to the imported wine, and that is not the case at present.

I am not at this time saying that the Government must do this or it must do that. Only time can tell whether this excise will make even one ounce of difference to sales. We will not be able to tell this until the second half of the next financial year and only an idiot would get up at this time and say that the Government has taken an action that will disadvantage a viable industry. Nobody knows. We can have forebodings but until we get a look at accurate statistics we cannot know the actual effect, In this connection T suggest also that the Australian Labor Party should have had a look at the statistics regarding Chowilla and Dartmouth, but it did not go into the matter in sufficient depth and merely played cheap political politics on that issue. If we want to make a case we should wait until we have the full facts accurately set out and then go to the Minister and say: 'Here are the facts, what will we do about it?' There is not a great deal of use just getting up and making noise for the sake of noise.

These are my most sincere and most deeply held feelings on this topic. I have fears just as any other honourable member has, but only time can tell whether the demand for wines in this country has become so cemented as a trend that it will continue to grow. Cigarette smoking has continued to increase even in the face of medical opinion that it is injurious to health. Is there a decrease in the sales of cigarettes when the excise on them is increased? Is there a decrease in the use of petrol when excise on that commodity is increased? Do any more people travel into the capital cities by public transport? I can think of innumerable cases of children of my friends who will not go to work in the capital cities unless they have a car or have a parent to drive them to work. How cheap are these luxuries and what attitude should one take on them?

I will finish up, Mr Speaker, by making one point that is not generally recognised. It is not the industry that bears the cost of excise. Very rarely is it borne by an industry and certainly not in the examples I have just given. It is the consumer who bears the cost. Take the case of a man with a 25-acre vineyard from which he takes 100 tons of grapes for wine and 60 tons for spirits. On a rough calculation he will get a return of $9,600 from that crop and the Government will take $2,400. Let nobody run away with the idea that the wine industry or indeed the grower will carry that load unless sales are depreciated through the Government's action. It is the consumer who carries the load. The consumer is paying for the increase in cost if sales remain at the same level as before. This is the case whether the excise is on petrol, tobacco or on anything else. If the commodity concerned is not one of the essentials of life but is a pleasant luxury then the consumer will pay if he wants that commodity. I hope that my protestations bear fruit and that the prophets of doom will be found to have been wrong. If they are not they will number me among their friends.

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