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Friday, 14 September 1906

Senator CLEMONS (Tasmania) . - When I remember the time spent and the trouble taken by members of the Tariff Commission in collating all the possible evidence bearing on this very complicated and extensive subject, I admit that I feel dismayed in making an effort to place before honorable senators an intelligible summary, so far as I can make it intelligible, in the short space of half-an-hour. The subject is so complicated and extensive that I shall not, in a second-reading speech, attempt to say all that I think ought to be said by a member of the Tariff Commission.

Before referring to the work of the Tariff Commission, I desire to make a few general observations on the subject. I think I may venture to say, without fear of contradiction by any honorable senator, no matter what views he may hold, that it is still desirable for the Commonwealth to get as much revenue as possible from narcotics and stimulants. Further, I believe that it is the opinion of every honorable senator that it is even our duty, if we can, to extract as much taxation as possible from those luxuries, indulgence in which, I think. may be fairly described as bordering almost upon a vice. Recognising the fact, as every observer of Federal politics must do, that the time seems to be rapidly approaching when, for various causes, the whole question of our finances will have to be re-adjusted, I believe it is a proper thing that possibly the only remaining item from which we can expect to extract much revenue in the future, no, matter what our financial arrangements may be, should receive close attention when we are asked to impose certain duties or to remove others. I do not wish to dwell upon that aspect of the question, because I believe it is recognised by every man in the Chamber, who, like Senator Trenwith, honestly believes in such a measure of protection as would inevitably diminish our revenue, or who, like others, is inclined to think that free-trade - which I admit would produce a similar result - is going to be the policy of Australia. Every one who has considered the state of the finances must recognise that the time is coming, I think very rapidly, when the whole of the revenue derived from Excise and Customs duties will no longer be adequate for the requirements of the Commonwealth itself, or probably for those of some of the States. 0

Senator Trenwith - The honorable senator means the total revenue derived from the scale of duties now proposed?

Senator Playford - The Tariff Commission did not consider that point, but made proposals which, if adopted, would have reduced the revenue.

Senator CLEMONS - The Minister of Defence has now touched me in a very tender part.

Senator Playford - The honorable senator did not protest against the recommendation to reduce the revenue.

Senator CLEMONS - The Minister is really rubbing it in. I do not adhere to everything that the Tariff Commission re commended ; but I have this loop-hole, that the Ministry have not done so.

Senator Playford - We have tried to' stop the loss of revenue involved.

Senator CLEMONS - I did a good deal out of loyalty to my colleagues on the Commission - to four protectionists, as well as three free-traders. I did, perhaps, more than I ought to. have done. If the Minister blames me for that I am prepared to accept the blame; but I am not going to deny that I am in that position.

Senator Higgs - That rather absolves any one from paying very much attention to what the Commission agreed to, because, perhaps, there was loyalty on both sides.

Senator CLEMONS - The Minister will agree with me at once that it was desirable that the members of the Tariff Commission should endeavour to meet one another as much as possible. If I am challenged by any one with having abandoned a principle which I still dearly cherish, and have always held, I shall accept the blame, and say that I did swerve, and, out of loyalty, give in to my seven colleagues on the Commission.

Senator Trenwith - It would not be a fair challenge if made.

Senator CLEMONS - Then I shall dismiss the subject, and proceed to discuss the Bill. However much the ordinary question of protection or free-trade may affect us, I believe that it is recognised by everybody that, desirable as it may be from the point of view of many honest believers in protection that we should adopt such a policy as would increase production in the Commonwealth, whether by way of manufacture or in any other form, we ought to pay some attention to the question of the labour which is involved in such production. I stand here as a free-trader to say that I have paid that attention to it. I gladly recognise the fact that under the new scheme of protection .much more attention is being paid to that very important point than was paid in the old days in, say, Victoria. I desire to emphasize not only the part which is played by labour in the production of spirits, but also the importance which any one can rightly attach to the industry. I am willing to put labour into a position to derive a certain amount of benefit from the profit which necessarilv accrues from the production of spirits. I leave myself a very wide margin of safety when I say that the total quantity of spirits; locally-made and imported, consumed in the Commonwealth, may be put down at about 1,500,000 gallons, and that it could all be produced here by the employment of 150 men.

Senator Best - Does that represent only the employment in the distilleries?

Senator CLEMONS - Yes. Do not let any one assume that' I am saying that 150 men would represent all the labour which would be employed, because labour would also be employed in growing grain, making casks, and producing bottles. Suppose that we were dealing with the bottle-making industry, we could not say employed 1,000 men if we had already taken credit for the employment of that number in the distilling industry; and it is just the same with . the cask-making industry. I do not think that I should be side-tracked into a consideration of the various industries which are associated with the distilling industry. ' It is really impossible for any honorable senator to properly allocate to any particular industry the amount of .labour to which it gives employment. For instance, during the debate, reference has been made to the Colonial Sugar Refining Company of New South Wales. So far as we know, it manufactures far more spirits than does any other distillery in the Commonwealth. According to the last year's figures available, the output of silent spirits from its establishment was 660,000 odd gallons, while the total consumption of spirits imported and locally made is only 1,500,000 gallons.

Senator Trenwith - Is the honorable senator taking into account the quality?

Senator CLEMONS - The question of proof, I admit, modifies my statement a little, but I do not wish to load my remarks with details. The total output of silent spirit from that one establishment is 660,000 gallons a year.

Senator Playford - The honorable senator must deduct so much for methytation

Senator CLEMONS - The Minister asks me to go into details. I admit frankly that an allowance must be made for that purpose; but the quantity would be small. I do not want to load my statement with details, or to take any unfair advantage. I propose to make a quotation from the evidence of Mr. Edward W. Knox, manager of the Colonial Sugar Refining Company, with regard to the amount of labour which it employs to produce 660,000 gallons of silent spirit - 19694. How many men have secured employment as the result of the establishment of your distillery in this State? - We employ about a dozen, apart from coopers, in our distillery.

Is it necessary for me to enlarge on the subject when we have sworn evidence that a distillery which turns out 660,000 gallons - more than one-third and approximating to one-half of the total consumption! of spirits in the Commonwealth - is run by twelve men?

Senator Dobson - Does not the company distil any spirits in Queensland1?

Senator CLEMONS - Practically all the distillation is done by the company at its establishment in New South Wales. That quotation ought to satisfy honorable senators that I left myself a very wide margin of safety when I said that 150 men would represent all the labour which would be employed in producing the 1,500,000 gallons of spirits consumed in the Commonwealth. I could not add to the force of that evidence by mere repetition. If it is of any value, I have not any hesitation, if I ever had, in stating that the amount of labour employed in distillation is in proportion smaller than the amount of labour employed in any industry which is carried on in any country where the British language is spoken. If ever there was a case where the .element of labour does not, and should not, enter for a moment into the consideration of a subject, it is that of the distilling industry. Let honorable senators give to this industry such protection as in their judgment it deserves, but let them absolutely dismiss from their minds once and for all the idea that by giving protection to it they are doing anything for the cause of labour.

Senator Trenwith - Does the honorable senator know the aggregate value of those 660,000 gallons of spirits?

Senator CLEMONS - Yes. That. is a most important question, and I will answer it. At the present time the Colonial Sugar Refining Company can produce silent spirit at as cheap a rate as that at which it can be produced under any circumstances from any substance in any part of the world. That is a fact of which I, as an Australian, am very proud, and which I .am pleased to acknowledge. Mr. Knox, the manager of the company, made no attempt to conceal facts from the Commission. It was a very delicate thing for him to do; but he was a very good and decent witness. Honorable senators can well understand the reluctance shown by many witnesses to state facts of this kind. But Mr. Knox assured us that he could produce silent spirit for 6d. per gallon. So far as we could ascertain, there is no country in the world which can sell silent spirit to Australia for that price. The Colonial Sugar Refining Company can make spirit at as cheap a rate as any country^ no matter whether its labour be black or white, and no matter what the material from which it is produced.

Senator Trenwith - Is 6d. the manufacturer's cost of production?

Senator CLEMONS - Yes ; that is what it costs the company.

Senator Trenwith - But that is not the selling price?

Senator CLEMONS - No. I will give the selling price directly, But let me divert.

This question of distillation largely affects Messrs. Joshua Brothers. A trade agreement was made in about the year 1 901 between the Colonial Sugar Refining Company in New South Wales and Messrs. Joshua Brothers, Melbourne, who had the biggest distilling establishment in Victoria, bv which the Colonial Sugar Refining Company bound itself that the whole of its output of silent spirit sold in Victoria should be sold to one firm only. That firm was Joshua Brothers. At the present time the Colonial Sugar Refining Company cannot sell a single gallon of its silent spirit to any other firm in Victoria except Joshua Brothers. The price paid by the firm for that spirit distilled by Mr. Knox's company at a cost of 6d. per gallon is 9d. per gallon. Since I am dealing with Joshua Brothers, let me point out a matter which is very important in its relation to this question. I do not wish to place the matter in an unfair way, but it is right to point out that spirit distilled from the ordinary materials for whiskymaking - malt and grain, or the cheapest form of grain - costs, roughly speaking, not less than '2s. 9d. per gallon. To produce whisky from pure malt is more expensive. To produce whisky from malt and' grain mixed costs a little less. To produce it from grain only the cost is the lowest in the scale so far as concerns what are regarded as the ordinary proper methods of producing whisky. But in taking as. 9d. as the cost, I am taking a very fair rate. To produce whisky from malt alone costs 4s. ; to produce it from malt and grain mixed would cost less. I am' taking the lowest cost of producing whisky from such materials as are usually regarded as proper for its production. I think the Senate will see at once - I have seen it all along, and have not the slightest doubt about it - that the position of the distilling industry in. Victoria is not due to the Tariff at all. The Colonial Sugar Refining Company in the year 1901 decided, for some reason which I do not think it necessary to. discuss now, to enter upon the distillation of silent spirit. They distilled, it from stuff which they had hitherto thrown into the rivers of New South Wales to get rid of it. It was not molasses in the ordinary acceptation of the term, but was a by-product for which the company had up to that time had no use.

Senator Trenwith - That is to say, they converted a nuisance into an article of profit.

Senator CLEMONS - Precisely. Senator Trenwith has exactly hit the point. The consequence, of this was that Messrs. Joshua Brothers, of Melbourne, instead of being compelled, as they had previously been, to go to the cost of producing spirit for 2s. 9d. per gallon, as a minimum, were enabled, by virtue of the trade agreement which they .made with the Colonial Sugar Refining Company, to obtain as much silent spirit as they required at a cost, not of 2s. 9d., but of. 9d. per. gallon.

Senator Higgs - If that be correct, Messrs. Joshua Brothers will not distil spirits any more?

Senator CLEMONS - I do not believe that they will. Unless we in this Parliament, by means of the Tariff, enable them to make a better profit by distilling spirit from grain, or from malt and grain, than they can do bv purchasing the spirit for 9d. per gallon, it is my 'belief that this firm will never touch the business again. I think I am on fairly sure ground in making that statement.

Senator Best - Did they not ask for extra protection?

Senator CLEMONS - Of course thev did, and what would have been the result if thev had got it?

Senator Millen - Did they ask for the protection recommended by the Commission or for more?

Senator CLEMONS - They asked for more.

Senator Millen - More than the Commission has recommended?

Senator CLEMONS - Much more. I will read some answers given by Mr. Joshua to the Commission dealing with this point.

Senator Drake - Is that shown in the digest of the evidence?

Senator CLEMONS - No, it is not in the digest. The digest was prepared for the use of the Chairman of the Commission.

Senator Higgs - That is rough on the digest !

Senator CLEMONS - Does not Senator Higgs agree with me in the statement which I have made? It was a perfectly fair remark. I ask him, as a member of the Commission, if I have said anything in the least degree unfair, or anything with which he does not agree?

Senator Higgs - I should like to see the Hansard report of what the honorable senator did say.

Senator Millen - The statement was thatthe honorable senator would quote from fuller evidence than appears in the digest.

Senator de Largie - It is only natural that a digest should boil down the evidence.

Senator CLEMONS - Perfectly reasonable, I think.

Senator Millen - Can the honorable senator tell us what quantity of spirit was supplied under the agreement by the Colonial Sugar Refining Company to Messrs. Joshua Brothers?

Senator CLEMONS - Yes, I can. If honorable senators will refer to the Progress Report No. 2 of the Commission they will see that the first part of it consists practically of a summary of the evidence which was agreed to by the protectionist members of the Commission as well as by the others. So that it has no party aspect. The protectionist members of the Commission agree, at any rate, that Mr. Joshua - handled practically the whole of the 182,000 gallons of Australian spirits which came to Victoria in 1903.

Senator Besthas asked why Messrs. Joshua Brothers want more protection, seeing that they can get the spirit for9d. per gallon. It is obvious, under the circumstances which I have explained, that as long as Messrs. Joshua Brothers can buy spirits produced by the Colonial Sugar Refining Company at9d. per gallon, additional protection will give more profit to them. Let me quote from a portion of the evidence given before the Tariff Commission - 1047. You have told us that your greatest trouble is prejudice? - That is so, and all countries have had it. 1048. If you will allow me to say so, I am in full sympathy with you as to that. You say that you can produce spirits just as cheaply as they can be produced in England? - Yes. 1049. And of just as good a quality ? - Quite. 1050. I had intended to ask you certain questions in regard to wages, but I take it that your last answer embraces the whole question? - It does. 1051. What you really ask the Royal Commission to do is to protect you, not against production elsewhere, but against local prejudice? - Yes; I am asking the Commission to give me the protection that is necessary to carry on the industry, or to buy my industry out; either one or the other - compensation - I am not particular which.

Senator Guthrie - That is good Socialism.

Senator CLEMONS - It may or may not be Socialism, but we are not discussing that question now.

Senator Sir Josiah Symon - It is much better individualism.

Senator CLEMONS - I am putting the case fairly, at any rate. The series of questions and answers which I have quoted is important, because it contains the clear and distinct admission that the question of labour, in the opinion of the man who asks for more protection, does not enter into the matter in any way whatever. I had intended to ascertain from Mr. Joshua whether he wanted more protection because of any inequality in respect of labour, but he himself freely and frankly admitted that the question of labour had nothing whatever to do with the matter, and that he could produce as cheaply as anywhere else in the world spirits of as good a quality as could be produced elsewhere. I hardly think that it is necessary for me to corroborate such statements as I have made as a member of the Commission with regard to labour by any other references to the evidence, but I do not wish the Senate to imagine that I have by any means exhausted the subject. I think it will be agreed that the one incident which I have given furnishes a complete proof that the cost of labour has no material effect upon the question of production.

Sitting suspended from1 to 2 p.m.

Senator CLEMONS - I think that if I can give honorable senators direct information derived from Mr. Knox's evi dence on this subject, it will facilitate their work as well as my own. Before I do so, it is right that I should say that I think I made a slight mistake in quoting the figures of the consumption of spirits within the Commonwealth. The mistake made did not materially affect my argument, but I wish to be accurate. I have looked up the facts in the interval for lunch, and I find that the quantity I stated, 1,500,000 gallons, as consumed in the Commonwealth, is the quantity produced in the Commonwealth. I did not take into account the total consumption, which I believe is about 4,000,000 gallons. I have stated, and I think we should take some pride in the fact, that we can make silent spirit in the Commonwealth at a lower price than that for which it can be made in any other part of the world. I refer honorable senators to the evidence given before the Commission by Mr. Knox, at question 19547 -

Making all allowances, is the cost of distillation 6d. or 9d. per gallon? - i should say under 6d, per gallon proof.

Here is another question, 19549, to which a very frank answer is given -

Where does it go to? - It is distributed all over the Colonies ; but how much is used for furniture polish, and how much for whisky i cannot say. It is equally useful for both purposes.

I am gradually approaching the matter introduced by Senator Drake - the question really of the competition of Queensland and New South Wales spirits distilled from molasses, and from refuse, with other spirits previously distilled in the Commonwealth. Here is a series of questions from Mr. Knox's evidence which seems to me to be very relevant to this subject : - 19570. Do you think that the tendency will be for spirits from molasses to displace or reduce the production of spirits from malt or grain? - I do, for the reason that molasses spirits can be produced so much cheaper than can other spirits. 19571. An enormous quantity of spirit from molasses seems to have been introduced from New South Wales into Victoria, under the Federal Tariff - since the introduction of InterStale free-trade? - That is merely because the distillers in Victoria found it much cheaper to buy the spirit from us than to make it themselves.

Senator Playford - They tried to make whisky out of spirit obtained from Queensland, and failed.

Senator Drake - Where is that stated? Let us have the number of the question.

Senator CLEMONS - I promise Senator Drake that I shall deal with that remark, but I must ;a.t present be allowed to observe some sort of continuity in my statement - 19572. Before Inter-State free-trade, then, the distillation 'of spirits from molasses went on to some extent in Victoria? - Yes. 9573- Now the distillers get their spirits from New South Wales free of duty? - Yes, because the cost of handling molasses is very 'serious. Molasses must be carried in casks, and the further it is carried the more one has to pay by way of freight, and the greater is the cost of the spirit produced from it.

That had reference to the fact which was notorious to members of the Tariff Commission that, prior to the distillation of this enormous quantity of spirits in New South Wales, these very people in Victoria - and we had sworn evidence on the point - used to supplement their distillation from grain, malt, and grain and malt mixed to a considerable extent by distillation from molasses. They did the mixing themselves. Mr. Joshua's evidence will supply ample proof of that. The Commission extracted from him evidence giving the quantity of molasses he used for the purpose at a certain time. Now, the fact is obvious that they no longer distil spirits from molasses in Victoria, because thev find that it is much cheaper for them to buy spirit distilled from molasses in New South Wales than to bring the molasses from New South Wales to Victoria, and distil the spirit from it here. I shall confine 'myself at present entirely to Mr. Knox's evidence, which I think is very valuable. I refer honorable senators to question 19689 -

Prior to the Federation you poured a quantity of molasses into the rivers of New South Wales? - We did, and we have to do the same with some at the present time, as we have no use for all of it.

Then, there is this evidence dealing with the agreement with Joshua Brothers - 19707. Does not your agreement with a certain firm in Victoria to supply them, and no others in that State, with spirits, amount to a combine restricting trade ? - I do not think so. That is not the view we take of it. Our arrangement with Messrs. Joshua Bros, is due to the fact that in the first place they found that they could buy from us at a lower price than that at which they could make the spirit, and, secondly, to the fact that we found that they had a connexion with the trade in Victoria which would enable them to distribute the spirit more effectively than we could.

I think there is a wealth of information in that answer. Honorable senators will see that what it means is that Joshua Brothers sold spirits, presumably manufactured spirits, and consequently were in a much more favorable position to distribute spirits, such as whisky and brandy, derived really from the silent spirit distilled by the Colonial Sugar Refining Company than that company was. Then there is this evidence - 19709. If another Victorian firm wished to buy spirits from you, would you sell to them ? - No. 15710. They would have to buy it from Joshua Brothers? - Yes.

Senator Higgs - What is the object of the honorable and learned .senator's remarks in this connexion? What does he desire to show?

Senator CLEMONS - That would be a strange question coming from any member of the Senate, but it is much more strange coming from a colleague of mine on the Tariff Commission.

Senator Higgs - I wish to know whether the honorable and learned senator is against the protection we proposed ?

Senator CLEMONS - That is a matter for the Senate to decide. My duty, which I am endeavouring honestly to discharge, is to put the whole of the facts of the case before honorable .senators, irrespective of their views. I submit the sworn evidence given to the Tariff Commission, and each honorable senator will be able to put his own interpretation upon it, and to act as he thinks fit. I conceive that to be not only my duty, but the duty of Senator Higgs when he addresses the Senate on the subject.

Senator Best - Does the honorable and learned senator propose to put both sides?

Senator CLEMONS - I propose to go to the root of the matter as honestly and as straightforwardly as I can, and I intend to put both sides.

Senator Best - In order to justify the recommendations which the honorable and learned senator signed ?

Senator CLEMONS - In order to justify my position as a senator.

Senator Best - I think the honorable and learned senator should justify his recommendations.

Senator Sir Josiah Symon - Suppose he has changed his view?

Senator Best - If he has, the case is different.

Senator CLEMONS - I s I submit that this is scarcely generous of Senator. Best.

Senator Best - I do not intend to be otherwise than- generous.

Senator CLEMONS - I consider that, as a member of the Senate, I have a duty which is above any recommendations which I or any other member of the Tariff Commission may Save signed.

Senator Sir Josiah Symon - It is still more the duty of .the honorable and learned senator, if he doubts the wisdom of the recommendations, to explain the whole matter to the Senate.

Senator CLEMONS - So far as I know, the Senate, in considering the Bill, will consider the recommendations of the Tariff Commission and their report, but honorable senators will not tie themselves down to a complete adoption of the Tariff Commission's report. They would not adopt such a course in dealing with any report submitted to them. We are prepared to give favorable consideration to the reports of Commissions, but, as senators, we decline to tie ourselves down to the recommendations of any such body.

Senator Best - Surely" the honorable and learned senator will advise the Senate to adopt the recommendations he has signed ?

Senator CLEMONS - My duty, and I shall discharge it to the best of my ability, is to enable honorable senators to get at the real value and truth of the evidence as we took it.

Senator Best - What is the object of the Tariff Commission's recommendations?

Senator CLEMONS - I have not the time to refer to that subject any further. I had nearly finished with Mr. Knox's evidence. I refer honorable senators to the following - 19777. By Fowler. - What quantity of molasses did your company throw away last year? - We made about 30,000 tons of molasses containing about 12,000 tons of sugar. For distilling purposes we used 7,000 tons of molasses ; for horse feed, between 4,000 and 6,000 tons ; for fuel, 3,000 tons; we sold, perhaps, between 2,000 and 3,000 tons ; and we threw away between 10,000 tons and 13,000 tons. 19778. I suppose that you merely used molasses as fuel to avoid throwing it away? - Is there any advantage in using molasses as fuel, as compared with wood ? - Molasses has a calorific value, but it has to be burnt in very expensive furnaces. At the place where we use it as fuel there is no river or water into which refuse can be drained, and consequently there is only one way of getting rid of it. 19779. You believe that the distilling industry has a good opportunity for expansion? - Certainly, if a sale can be provided for its products.

I stop there, so far as the evidence given by Mr. Knox is concerned. I have taken the evidence given by Mr. Joshua and by Mr. Knox together, and before I pass on, I would ask every honorable senator who desires to arrive at the truth of the matter to consider the evidence of either of these witnesses in conjunction with that given by the other.

Senator de Largie - Before the honorable senator passes from thatpart of the subject, I should like to ask him whether the Tariff Commission obtained any evidence comparing the quality of spirits made from sugar products, from a health stand-point, with the quality of spirits made from grain?

Senator CLEMONS - I am coming to that very point now. Let me refer honorable senators to the evidence given by the owners of other distilleries in Victoria, and in this connexion, I say at once, without the slightest hesitation, that my sympathies were largely enlisted in favour of a witness named Brind.

Senator Best - From Ballarat?

Senator CLEMONS - From Warrenheip, in Victoria. He gave his evidence in a straightforward and intelligent way, without attempting any evasions. The position he disclosed was that he had been distilling for a long time In Victoria, and that it had been his object to distil whisky in the way in which, in the opinion of everybody, it ought to be distilled, and that is either from malt, malt and grain, or from grain. Mr. B rind's tale, to a certain extent, was one to enlist pity. Differing from Joshua Brothers, he did maintain an honest effort, to produce whisky from malt, or from malt and grain mixed ; but he found, in the year 1901 and onwards, that the competition was too much for him. He informed us that his business was a failure - as I am certain it was - and that he could no longer carry it on profitably. Honorable senators may sympathize with that gentleman, and I think they ought to; but it is a serious question how far that sympathy can be given practical effect to. The position disclosed by Mr. Brind was that, in view of the enormous amount of silent spirit which came from Queensland and elsewhere, it was no longer possible for him to compete ; and the reason is obvious. This witness's efforts may not have been the best ; he may have lacked capital, or, possibly, energy; but, at any rate, he was an honest man.

By his method of distilling his spirits cost him about 3s. 6d. per gallon.

Senator Playford - The witness put the blame on the Tariff, and said that with a protection of 4s., the other spirit would not come in.

Senator CLEMONS - That is no answer. This witness was making his whisky honestly, and he had no chance to compete with Joshua Brothers, who bought silent spirit at 9d. per gallon ; and if Joshua Brothers did not do so some other firm would. No business man would for a moment say that it is possible to make whisky at 3s. 6d. a gallon, and compete with others who use silent spirit purchasable at 9d. per gallon. This is in no way traceable to the operation of the Tariff, because the competition comes not from abroad, but from within the Commonwealth. What figures could be more eloquent in regard to the progress of the industry since Federation than those given in the report of the Tariff Commission? Those figures disclose clearly and unmistakably the enormous increase of distillation in South Australia, New South Wales, and Queensland, coupled with an enormous decrease in Victoria.However eloquently they may speak of competition, they have no reference to competition from abroad. The position of Mr. Brind may enlist sympathy, but if it is desired to help him, we cannot do so by interfering with importations. Let honorable senators help Mr. Brind if they think they ought to do so, but they will have to help him by dealing with internal competition - by grappling with the question of cheap spirit, as opposed to the spirit produced by his methods. Now I come to Senator de Largie's question, which is very material, and enables me to deal with the point very properly raised by Senator Drake this morning. That is whether it necessarily follows that a whisky made from silent spirit is, therefore, under Australian conditions, inferior in quality. Senator Drake's complaint is that the proposals of the Tariff Commission differentiate against an article which is most easily and cheaply produced, and to which, to a certain extent, a stigma is attached, because it is cheap.

Senator Drake - I was speaking of the proposals of the Government; the Tariff Commission do not make any discrimination.

Senator CLEMONS - That is the point to which I was coming, but I shall answer

Senator deLargie first. The evidence we had from men of the highest scientific attainments in the Commonwealth, and from men who may be described as practical experts as distinguished from scientific experts, varied considerably. On the 'Whole, if I had to form a balanced judgment, I should say that it was a fact, no longer in dispute, that if the process of distillation, or rather rectification, is carried to a sufficient extent, there is produced a spirit from which all impurities are removed. I firmly believe, after striking a balance in regard to the evidence, that if spirits be distilled highly enough, there can be produced a spirit in which no impurities remain.

Senator Best - What extra expense does that involve?

Senator CLEMONS - As a matter of fact, the question of expense is not very material on this point. However, the Tariff Commission came to the conclusion which I have just indicated. But the Tariff Commission then had to face another question. Granted that a spirit may be produced from the scourings of the street, and may be subject to a process of high rectification, would a distiller who put such a production on the market be supplying to the people the whisky which they desire, and which, they would regard as being as good as the ordinary whisky of commerce? The Tariff Commission ascertained that the very properties which, so to speak, gave whisky its excellence are in themselves impurities - that is, are impurities from the point of view of the analyst, or of the man who rectifies. The process of rectification, while it may remove every impurity - using the word in its ordinary sense - also removes those essences and that flavour which, in the opinion of every whisky drinker, gives the spirit its high quality. I think that Senator Playford will agree with me as to that.

Senator Playford - That is the position as we found it.

Senator CLEMONS - I do not profess to be a connoisseur", but I can quite understand that such a person would be able to say that whisky produced as the result of the highest rectification was not equal to whisky produced from malt or from malt and grain. That was the conclusion arrived at. I believe, bv the Commission as a whole, and I think it is a conclusion which the Senate may accept as being on the right lines. The Tariff Commission practically decided to offer a kind of premium to those who, either within or without the Common wealth, would produce an article of the highest grade; that is to say, those who would devote their attention to quality. Of course, it is open for any senator to differ from that point of view. I make no appeal one way or_ the other, but simply state the fact; 'and Senator Drake will see that this is an answer to his remarks this morning. In regard to whisky, putting aside brandy for the moment, I' believe the Tariff Commission unanimously agreed that the highest quality could only be obtained if distilled from malt. As I have already said, the next best quality is probably that produced from a mixture of malt and grain. It will be seen from the recommendations that the Tariff Commission proposed to impose a less Excise "duty on whisky distilled from malt, no matter where produced, and a higher Excise duty on whisky distilled - as unfortunately it will be in Queensland and New South Wales - largely from some other substance than grain, or grain and malt - that is to say, from molasses.

Senator Fraser - Could not those who distil from molasses still hold their own?

Senator CLEMONS - Possibly they could.

Senator Fraser - It looks like it.

Senator CLEMONS - From one aspect of the case it does. It is true that under the Excise proposals a higher Excise duty will be charged on whisky produced from molasses, but there is the compensation that whisky can be produced at a much lower cost from molasses than it can be produced, whether in South Australia, "Victoria, or elsewhere, from malt, or malt and grain.

Senator Drake - That is the point.

Senator CLEMONS - That is my answer to Senator Drake. I do not propose to go into the question whether it is advisable, from Senator Drake's point of view, to impose a higher rate of duty when larger quantities can be produced at a cheaper cost. Senator Drake's argument is, at any rate, worthy of serious consideration. The honorable senator points out that, according to the evidence given before the Tariff Commission, there is- an industry in the Commonwealth which offers enormous opportunity for expansion. Senator Drake asks that distillers shall bc allowed to rectify this spirit from molasses, the refuse of molasses, and other by-products of the sugar-cane of Queensland and New South Wales ; and contends that there is the possibility of a great and expanding industry being established within the Commonwealth. Why, Senator Drake asks, is it proposed to impose a special disability on this industry?

Senator Sir Josiah Symon - What Senator Clemons says is that the unrectified spirit from malt, or malt and grain, is better than the unrectified spirit from other products?

Senator Best - That is the conclusive answer.

Senator Pearce - But is it any less harmful from the point of view of the consumer ?

Senator CLEMONS - Judging from the evidence given before the Tariff Commission, I say frankly that if the question were put to a connoisseur, he would say that the best quality of whisky can be made only from malt, or malt and grain.

Senator Sir Josiah Symon - Is one as wholesome as the other,

Senator CLEMONS - So far as wholesomeness is concerned, I admit that spirit of any degree of purity can be obtained not only from molasses, but from any re-, fuse, containing the necessary ingredients, by means of rectification.

Senator Millen - I understand the honorable senator to say that the quality depends on the presence of some impurity.

Senator CLEMONS - Certainly.

Senator Sir Josiah Symon - Then if public taste were to change a little, the one whisky would be as marketable as the other ?

Senator CLEMONS -- That may be. But I point out that when an attempt is made to convert this highly rectified spirit, distilled from molasses, into whisky, there has to be added some flavouring; it must not be assumed that this spirit goes directly into consumption as whisky. To use an ordinary phrase, the spirit is " doctored," and the "doctoring" may or may not take a wholesome form. The flavouring which must be added to make the spirit correspond with whisky may. or may not. be injurious ; I do not know how it is flavoured. But I can say that the whisky referred to by Senator Drake, while pure from the point of view of rectification, has to be flavoured before an ordinary man wall drink it.

Senator Drake - Let each spirit stand upon its merits.

Senator Playford - Sell it as silent spirit - it is not whisky.

Senator CLEMONS - But would Senator Playford propose to stop Joshua Brothers, or any one else, from selling this spirit as whisky? Is there any power to do so? I know that it is sold, and will be sold, and while it is easy to say " Stop its sale," we have no possible way of doing so.

Senator de Largie - Then, briefly put, the best class of whisky is that which has the most flavour?

Senator CLEMONS - Not quite' that.

Senator de Largie - And the flavouring is deleterious matter, being, principally fusel oil?

Senator CLEMONS - By no means. Undoubtedly in the whisky derived from malt and grain there remains a flavour, which from the scientists' stand-point is called an impurity - that is, so far as it is compared with alcohol itself.- But that kind of flavour - called by the scientists an impurity, anil by men who appreciate whisky the " real flavour " - is entirely absent from the whisky produced from molasses, unless it is imparted by artificial means.

Senator Sir Josiah Symon - Is not the flavour in Scotch whisky put in by artificial means?

Senator CLEMONS - I do not think so. I am only an ordinary member of the Commission, and, while I have acquired a stock of most interesting knowledge, I do not yet pose as an expert on whiskies.

Senator Best - Does the honorable senator mean that, while whisky produced from molasses may be wholesome, the highest quality of whisky is that which is made from malt, and that it is more wholesome than the other?

Senator CLEMONS - Certainly it is not more wholesome ; but it is the highest quality so far as flavour is concerned.

Senator Millen - It is the highest priced in the market.

Senator CLEMONS - My honorable friend has supplied me with a very apt answer. Owing to the public taste, and, if mv honorable friends like, to the standard of public taste which has been set up, malt whisky is recognised as the highest quality of whisky which can be got. It is, after all, a question of the taste of the drinker.

Senator Macfarlane - It is the age which gives the quality

Senator CLEMONS - Exactly. That is the explanation of the differential Excise, and I justify that recommendation of the

Commission. Let me now come to the question of brandy. The Commission recommended the Government to offer a very large premium - owing to the difference in the Excise duties - upon, the production of brandy from pure grape wine, and there again I think that it did what was right. I believe it is most desirable, if we can, to establish for Australia a reputation for producing brandy of the highest quality, again using the word " quality " in the ordinary trade acceptation of the term. It is a matter of universal agreement everywhere that the best " brandy of commerce " is made from the grape wine.

Senator Sir Josiah Symon - Properly speaking, nothing else is brandy.

Senator CLEMONS - Of course, in its highly technical application, brandy is derived solely from grape wine, and, further, it is derived from a particular district to which, strictly speaking, the name is only applicable. Here again the Commission, rightly or wrongly, has made an honest effort to introduce into Australia the manufacture of the best quality of brandy which can be made in the world. The Senate will, I think, agree with me that that in itself is a laudable object. So far as it may or may not infringe upon my views as to the duties, I accept it freely and frankly. I am prepared, within reason, . to do whatever is possible to bring about the local manufacture of any article which would take rank with the best of its kind in the wide world. That is the explanation of the differential duties proposed here. I do not quite agree with the action of the Ministry in graduating the duties in that direction and making the differential duties depend upon the amount of blend that the article contains. That, I think, is not too satisfactory. But the Senate will recognise that here the same principle is' followed. The lowest duty is imposed od the pure article of brandy; the next lowest duty is imposed when the brandy is blended, that is, when it is pure so far as a certain percentage goes and the blend represents only a slight adulteration. That is the scheme of duties which the Commission has proposed. Time does not allow, nor do I think that I should be justified, because I am a member of the Commission, in enlarging upon the subject just now. In Committee, I shall be glad to explain any points which may be raised; in fact, it will be my duty to give that information. I desire briefly to refer honorable senators to another report, which, I think, is of the very greatest importance. During the inquiry by the Commission, no question has interested me personally so much as the question of industrial alcohol. I do not think that in its travels through the Commonwealth it has been called upon to consider a more useful and more important subject. It is dealt with in a separate report. It may interest the .Senate to know how it came to engage cur attention. We found out that in Victoria, and possibly in another State, a certain amount of fraud was being practised upon the revenue. The duty on imported spirits was, say 13s. or 14s., while the Excise duty on locally-made spirits ranged from 10s. to 12s. per gallon. We discovered that certain ingenious persons had hit upon the process of demthylation, or, if the other term be preferred, deodorization, with the result that after the methylated spirits had passed out of Excise supervision an ingenious person could purchase a quantity, which, of course, had paid an Excise duty of only is. per gallon, and, by a process of his own, so completely remove all trace and odour of methylation as to put the spirit back practically into the condition of silent spirit. Of course, we were bound to have our attention arrested when we found any trace of a practice of that kind, and to endeavour to check it, because St represented a fraud upon the revenue of about 10s. or more per gallon, and, if carried on to any extent, would have meant a large loss to the Commonwealth.

Senator Millen - Was it carried on extensively ?

Senator CLEMONS - T - That was rather a matter for investigation by the detective officer of the Department of Trade and Customs, but we had every reason to believe that it was.

Senator Fraser - Did it go into consumption ?

Senator CLEMONS - Undoubtedly the whole object was to put it into consumption, not, perhaps, in the form of whisky, but certainly for the preparation of essences.

Senator Best - And scents.

Senator CLEMONS - I feel perfectly certain that its use was not limited to the preparation of essences, but it did to a certain extent go into human consumption. . Pursuing that inquiry, we were supplied \*th very interesting information, not only in Victoria, but especially in Sydney, on the whole question of methylated spirits and the may in which that subject trended upon the use of alcohol for industrial purposes. We learned that in two or the most progressive countries irc the world, Germany and America, a tremendous stimulus had lately been given to the manufacture of alcohol and its use for industrial purposes, such, for instance, as fuel and light. Some samples were shown to the Commission in Sydney, and an experiment was made of its applicability for the purpose of lighting. We followed up the subject, and we found out, especially after we had examined Mr. Knox, that it was quite possible, and, in my opinion, it is still quite possible, for the Commonwealth to develop a tremendous industry in that direction. Nothing that I can do will be left undone to further that object. This industrial alcohol would be produced from Australian substances by, so to speak, Australian men, and the only obstacle in the way of the development of the industry is in connexion with the question of methylation. Of course, it would be absolutely dangerous if the Commonwealth were to allow silent spirit - which, according to Mr. Knox, is produced at a cost of a little under 6d. - to be distributed abroad and used for industrial purposes without check or hindrance to safeguard its being used for human consumption. In order to prevent that result, it is necessary not only to methylate, but to .methyl ate in such a way as to defeat the purpose of those who are trying to cheat the revenue. The Commission took an enormous quantity of evidence on the subject. We examined a most intelligent man in Sydney, and, at my request, he supplied a formula which he thought would get over the difficulty, and, therefore, as the Minister Kas intimated, we recommended the Government to reduce the dutv of is. per gallon-

Senator Playford - To make locallymade silent spirit absolutely free, and to reduce the duty on the imported article to 6d. per gallon.

Senator CLEMONS - Yes; but I am not dealing at present with the question of the imported article. I hope that the Senate will recognise that it is extremely desirable to make the pro duction of silent spirit as free as possible, and, in the interests of Australia, the cost of methylation as low as possible. If it is made possible to put this silent spirit on the market in a methylated form, so that it could not be demthylated at a cost of 9d. per gallon, there is every possibility that it might largely supplant kerosene and many other illuminants, and provide motive power for motor cars. I have every reason to hope that it could be produced in Australia at a price which would enable it to be turned to great commercial and industrial purposes. It may interest the Senate to hear that during the last four or five years in Germany the increase in the production of silent spirit has been tremendous. I think I might safely say that the production has been multiplied by six in a period of six years. Nearly all that spirit has been distilled from potato. In Australia it would be impossible for us to use potatoes for the distillation of silent spirit, but, in connexion with the great sugar refineries of Queensland and New South Wales, it could, I think, be produced. I invite every honorable senator to join with me in making industrial alcohol absolutely free of duty. I certainly hope that we shall hereafter do everything which may be necessary by legislation to make the cost of methylation as cheap as possible, because that is essential to the success of the industry.

Senator Millen - Did the Commission satisfy itself that precautions could be taken to guard against the frauds to which the honorable senator has referred ?

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