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Friday, 14 September 1906

Senator HIGGS (Queensland) .- I have listened very carefully to the instructive speech delivered by Senator Clemons, but I found it very difficult, except in one instance, to discover what the honorable senator's real views are with regard to the Bills now before the Senate. The instance to which I refer was the honorable senator's reference to industrial alcohol, which he says - and we agree with him - should be made free. With regard to his statements concerning his having signed the recommendations of the Tariff Commission, because of his loyalty to the members of the Commission, I would say that it appears to me that that is hardly a sufficient explanation of his action. In view of what he has said, I direct attention to the fact that the honorable senator signed the Second Progress Report, which includes conclusion No. 8, which will be found on page 42, to the following effect : -

That the distillers of spirits in Australia are, in competing with imported spirit, at a great disadvantage in the following respect : -

(a)   In the higher price which they have to pay for labour in Australia, compared with labour in European countries, although labour does not enter largely into the actual process of distillation.

Senator Clemons - There is a reason why. The insertion of the latter part of the paragraph seemed to justify me.

Senator HIGGS - The conclusion continues -

(b)   In the local prejudice against Australian products with which they have to contend.

(c)   In their inability to dispose of the byproducts of distillation to advantage.

(d)   The larger output and constant working of distilleries in Great Britain and on the Continent, enabling their owners to reduce the average cost of production, and to send their surplus stock to Australia.

(e)   British allowance and German bonus on export of spirits.

(f)   Competition of spirits made from the best and most expensive materials in Australia, with spirits made from potatoes, beet, and other cheap and inferior materials in other countries.

Having arrived at this conclusion, the Tariff Commission recommended a scheme of duties and of. regulations, having in view the protection" of the Australian spirit industry. To judge by the major portion of Senator Clemons' speech, which was an attack upon Joshua Brothers--

Senator Sir Josiah Symon - Not an attack, surely?

Senator HIGGS - I think that Senator Clemons will admit that it was an attack.

Senator Sir Josiah Symon - I hope the honorable and learned' senator will not admit it. He simply read us the evidence.

Senator Clemons - I do not admit it. Surely I tried to be fair to them?

Senator HIGGS - However that may be, the inference to be drawn from the major portion of the honorable and learned senator's speech, was that although there had been a diminution in the production of a certain class of spirits in Australia, there had Been a very large increase in the production of molasses spirit, and that that to some extent compensated for the decreased distillation in Victoria and elsewhere.

Senator Sir Josiah Symon - A change of venue of production.

Senator HIGGS - And, therefore, it was not necessary to introduce a scheme of duties which would have a protective incidence. In fact, Senator Clemons told us in the latter portion of his speech, that he did not think any protection at all was necessary ; that already the industry was safely in the hands of the people of the Commonwealth, and did not require to be assisted.

Senator Clemons - What did the witness Knox say? Did he not say that he could produce spirit as cheaply as it. could be produced in. any part of the world? And he is the largest producer of spirit in Australia.

Senator HIGGS - I agree that the statement was made that molasses spirit can be produced very cheaply - under 6d. per gallon. But the Tariff Commission had something more in view than the mere production of cheap spirit. The Tariff Commission had in the first place the health of the community to consider.

Senator Drake - There is nothing to show that molasses spirit is injurious to health.

Senator HIGGS - What the Tariff Commission had in view is shown by the scheme of regulations which they have recommended. A great deal of controversy has arisen concerning rectified spirits. Members of the Tariff Commission, who are not experts, discovered that there are two methods of distilling spirits, one by a patent still, known as a "Coffee" still, and the other and older method by what is called the pot still. By the use of the Coffey Still, it appears that pure alcohol, any highly rectified spirit, can be obtained from potatoes, beet, molasses, grapes, sour wine or beer, or anything containing sugar. I think that in the opinion of the majority, the rectified spirits so obtained are not to be differentiated one from the other. That is to say, a highly rectified spirit obtained t rom potatoes cannot be distinguished from a highly rectified spirit obtained from molasses or from grain. Medical opinion, as I propose to show bv quotations from the evidence, is very much divided as to whether this highly rectified spirit is as wholesome as spirit obtained by the use of the pot still, from grape wine, pure malt, molasses, or potatoes. The Tariff .Commission, in their recommendations and reports, have shown that they believe that the most wholesome spirit is that obtained by the use of the pot still, and that brandy distilled from wine, and whisky distilled from pure malt, is far more wholesome than are spirits distilled from potatoes or molasses. I think that we are supported in that view by medical testimony.

S'enator Drake.- What is exactly meant by the phrase " pot still or similar processes " ? -Senator HIGGS. - The Commission had in view the fact that a patent still can be so operated as to produce a similar distillation to that of the pot still. Dr. Fiaschi, a well-known medical man of high' reputation in Sydney, gave evidence before the Commission, and, according to the digest of the evidence, stated -

Alcohol is more a stimulant of the heart; it is the ethers which stimulate the brain (Q. 21160). Dr. Fiaschi did not believe in doctoring whisky or brandy; he believed in getting the best spirit by means of the pot still, and then ageing it (Q. 21 186). Although he thought the establishment of a standard would conduce to the stability of the industry and the public health, he did not think we possessed an absolute standard yet.

That .is to say, the medical experts of the world have not yet been able to decide on an absolute standard of pure brandy.

In time, science might be able to suggest it, but not yet (Q. 21190-4). Alcohol used temperately is an excellent stimulant, both in health and disease. He would be sorry to have to do without it (Q. 21263-5). Brandy prescribed in cases of disease should be the pro- duct of the grape, and is more beneficial than brandy the product of other materials (Q. 21268-9). A true malt whisky is' a good spirit, and he would have no hesitation in using it for sick persons (Q. 21280). Highly rectified alcohol is hygienically quite harmless, but it has not the stimulating properties of the lower alcohols (Q. 21306). He himself would not think of drinking any spirit unless ten years old (Q. 21322), but thought three years would be the furthest limit of age fixed by the legislation.

It will be observed that Dr. Fiaschi condemns as less wholesome the highlyrectified spirit to which I have referred.

Senator Drake - Dr. Fiaschi says that highly-rectified alcohol is hygienically quite harmless.

Senator HIGGS - I take it that Dr. Fiaschi there refers to the opinion that might be passed by any chemical analyst on rectified spirit - the opinion that it does not contain certain impurities which otherwise might be harmless. I should have said that the distillation from the pot still leaves with the alcohol certain esters, or ethers, and oils, which an analytical chemist would call impurities. These, however, are impurities only in a scientific sense. Distillation from the pot-still leaves with those impurities all the ethers which certain medical men claim to be wholesome and beneficial to persons in health or disease ; though, of course, Ave know that there are other medical mer. who declare that alcohol in any .form is deleterious. In Great Britain, during the last few years, an attempt has been made to protect the public against certain spirits which are called brandies and whiskies, but which are shams. I here refer to the evidence of Mr. Arthur Holmes, as reported on page j 04 of the Minutes of Evidence. That witness produced an extract from a supplement to the Wine and Spirits Trade Record, of 1st May, 1904, containing an account of a prosecution at the North London Police Court, on the 15th April. The extract was as follows: -

The' magistrate would first of all have to decide what brandy is, and then whether the article supplied on this occasion could be called brandy. The label described the contents as "Fine Old Pale Brandy." His point was that the article was not genuine brandy, as it contained upwards of 60 per cent, of spirit other than grape spirit. It might be either malt or grain spirit, or it might be potato spirit; and, therefore, such an article was to the prejudice of the purchaser.

In that prosecution, Dr. Henry McNaughton Jones, a well-known specialist, of

Harley-street, London, was called as a witness, and the report of the case proceeded -

When the case was resumed on April 25, Dr. Henry McNaughton Jones, a well-known specialist of Harley-street west, stated that he was well acquainted with the medicinal virtues of brandy. By brandy, he meant pure brandy, which he often prescribed in cases of failure of vitality and exhaustion, after serious operations, and in the crises of fever. Brandy was also helpful in assimilating all kinds of foods, such as milk, beef-tea, &c. Under all circumstances, where there was a danger of life failing, they had to revert to a pure stimulant to sustain the vital powers. It was administered to people of all ages, even to newly-born infants. For those purposes it was absolutely necessary that the brandy should be pure, and derived only from the grape. It was upon that that doctors relied in prescribing brandy. The ethers in brandy were of the greatest importance, owing to their stimulating effect upon the heart, as v/ell as upon the nervous system generally. He would certainly not administer whisky or rum in preference to brandy, as other spirits had not the same effect as brandy. He would never prescribe rum under any circumstances, but he might on occasion prescribe whisky if the patient by his habits in life could tolerate it better than brandy. That would have to be pure malt whisky, and not the blended article.

A composite spirit made from potatoes, beet, or grain, flavoured with a small quantity of cognac, would not have the same effect. He preferred old brandy to new. He was not aware that the ethers in brandy increased with age.

Dr. Harris,Medical Officer of Health for the Borough of Islington, said he had been a public analyst, and was for twelve years in charge of a fever hospital. The ethers in beet spirit would not have the same effect upon the stomach as the ethers from wine spirit. The ethers from the beet might be as stimulating, but they would irritate the stomach. Fictitious brandy was much more likely to upset and irritate the stomach than the genuine article. Brandy was sometimes given as a sedative in cases of chronic alcoholism.

Senator Drakewas asking for some evidence that the brandies and whiskies which it is proposed to protect are more wholesome than the spirit made from molasses ; and I think I have given evidence of a very valuable character to that effect. Dr. Jones said that spirits blended by distillation from beet, potatoes, or molasses would not, in his opinion, have the same beneficial effect as would spirits obtained from pure grape wine or from malt.

Senator Drake - That was because Dr. Jones desired that his patients should have the benefit of those ethers to which he refers. He said he wanted to stimulate the heart as well as the nervous system.

Senator HIGGS - Dr. Jones desired to use certain brandies and whiskies, because he was of opinion that the ethers to which he referred were not present in the spirits obtained from molasses.

Senator Millen - Was not Dr. Jones then referring to alcohol as a medicine, and not as a beverage?

Senator HIGGS - It will be remembered, however, that Dr. Fiaschi holds that the moderate use of spirits as a beverage is beneficial.

Senator Lt Col NEILD (NEW SOUTH WALES) -Col. Gould. - But Dr. Fiaschi does not believe in using spirits unless they are at least ten years old.

Senator Drake - What I am objecting to is the Government departing from the recommendations of the Tariff Commission.

Senator HIGGS - There is no doubt about the departure referred to by Senator Drake; and it would appear that the Government desire to exclude rectified molasses spirit from use in blending.

Senator Best - But Senator Higgs has told us that the Commission were clearly of opinion that the more wholesome spirit is malt spirit.

Senator Drake - The Commission differentiate so far as wholesomeness is concerned.

Senator HIGGS - Pure wine brandy and pure malt whisky each have a protection of 4s. ; the Commission considering that it costs about as much to make a gallon of one as a gallon of the other, and also that such spirts are more desirable for human consumption. Blended wine brandy, on. the other hand, has a protection of only 3s.

Senator Drake - The Commission did not differentiate against molasses spirit, but the Government have done so.

Senator HIGGS - Blended whisky also has a protection of 3s. The rum distilleries which Senator Drake has taken under his special care-

Senator Drake - Not at all.

Senator HIGGS - From the honorable senator's speech, I thought he regarded it as a great injustice that any should be made to exclude spirit distilled from molasses.

Senator Drake - To differentiate against molasses spirits.

Senator HIGGS - Pure rum, made in the pot-still, is protected to the extent of 2s. per gallon, instead of is. as before, and that was asked for by Mr. Klein- schmidt, of Beenleigh, in Queensland, amongst other witnesses. As a companion to these proposals, the Commission has recommended a copyright in the term "Australian Standard Brandy " for pure brandy,, as well as a copyright in the term " Australian Standard Whisky," and a provision to that effect is embodied in the Bill.

Senator Best - Is it founded on the English case?

Senator HIGGS - No. The Commission, I think, was influenced more by the Canadian practice, where, in the case of whiskies produced locally, Government officers give certificates, to be sent out on the bottles, casks, and packets. Clause 7 of the Bill deals with that question. It says -

An officer may, at the request of the distiller or blender of any spirits, give a certificate in the prescribed form, certifying that the spirits are "Australian Standard Brandy," or "Australian Blended Wine Brandy," or "Australian Standard Malt Whisky," or "Australian Blended Whisky," or "Australian Standard Rum," as the case requires.

The Commission is of opinion that if that clause be enacted the use of the labels will go a great way towards establishing those two industries upon a very firm basis, and, in the course of a very few years, to give to Australia a name throughout the world for the production of the best spirits. Senator Drake has referred to the probable diminution in the revenue. That, I agree with him, is a most important question. Senator Playford has estimated the loss at from £60,000 to £80,000, while Senator Pulsford thinks that ultimately it will amount to ,£300,000 a year.

Senator Best - With a full knowledge of the subject, the Commission was of opinion that it would be about ,£70,000 or £80,000?

Senator HIGGS - The Commission felt that it was largely 'a matter of guesswork.

Senator Trenwith - It will largely depend upon how protective the Tariff may prove to be.

Senator HIGGS - It can only be proved by the operation of the new Tariff. Of course it will largely depend upon the extent of the decrease in the use of imported spirits, carrying a duty of 14s. per gallon, and of the increase in the use of Australian spirits, carrying a duty of 10s., us., or 12s. a gallon. I think it will- be necessary to wait for a year, or two to see how much revenue will be returned. But certainly the revenue question is a most serious one. By our scheme of duties in connexion with wine we are going to throw away a revenue of at least £20,000; by the prohibition of opium we have done away with a revenue of £60,000 ; and now it is proposed to introduce penny postage at a cost of £200,000. So that there is a most serious problem confronting the Parliament. I believe that we shall have to do as is done in Canada, which raises twice as much revenue from the distillation as from the importation of spirits. By means of the differential duties and the certificates it has got control of nearly the whole of the spirit industry.

Senator Best - It is only a matter of time when we must follow the example of Canada.

Senator Lt Col Gould - The honorable senator is looking forward to the time when he thinks that we must make our Customs and Excise duties equal?

Senator HIGGS - Yes; provided always that Australian distillers do not require protection against foreigndistillers. But, owing to the distillation which is going on in other parts of the world, I am inclined to think that that time will hardly ever arrive. Great Britain raises four times as much revenue from Excise duty on spirits as from Customs duty. The United States raises twenty times as much revenue from the former, as from the latter, and I may explain that the import duty is equivalent to 12s. 9d. per gallon, while the Excise duty is equivalent to 6s. 2¾d. per gallon, thus leaving a protective difference of 6s. 6¼d. to the local distiller. We are only recommending a protective difference of 4s. per gallon to the Australian distiller, but, of course, there is the natural protection in the way of freight and other charges which may bring our protection somewhat near the American protection. It has been contended by Senator Clemons that the question of labour does not enter into the consideration of the distilling industry. It is regarded by him as a kind of side-track. He says that 150 men could produce all the spirits required for consumption in the Commonwealth. One might as well say that, because, comparatively speaking, there are only a few men engaged in attending to the machinery used in making butter, we should not take into consideration the number of men engaged in the dairying industry throughout Australia. On that very point, Mr. Joshua gave the following evidence - 811. In your letter to the Commission you say that between £30,000 and £40,000 per annum was disbursed for labour? - That is directly and indirectly. 816. Does that amount include not only the money spent on actual distillation, but also that paid to men engaged in associated trades? - Yes ; such as bottlemakers, casemakers, coopers, printers, farmers, and others. When before the last Tariff Commission, I was asked . if our business was of any importance to the farming industry, and I said not much; but the question caused me to look into the matter, and I have since ascertained that our operations do affect the grain market. In this connexion, I would like to read the following letter which we received on the 13th November, 1901, from our grain-brokers, Messrs. H. R. Carter and Co. : - "In reply to your inquiry as to the average price of F.A.Q. maize and thin English barley suitable for malting during the last six years, we beg to advise that the average price for maize for the last six years has been 2s.10¼d., and barley for the last six years2s.2¾d. This average has been carefully made up from Messrs. Dalgety and Co.'s weekly report, which they guarantee to be correct, and we are prepared to substantiate this if challenged. We may state, as representing a very large number of small sellers in the country, that your purchases of barley for distilling have been of great assistance to the farmers, often sustaining a falling market and helping to steady the price. This was proved last year, when there was a considerable quantity of thin barley carried over from the previous year, which caused a considerable accumulation of stock. Had you not taken the 7,000 or 8,000 bags of barley off the market as you did, we have no hesitation in saying that there would have been a complete collapse in the market." 817. So far as you know, are the statements there made true? - Absolutely true. 818. They represent in concrete form your information on the subject? - Yes. 819. Can you say how much you have spent per annum in the purchase of raw materials? - The following table shows the quantity of raw materials actually used by us in each year, from 1893 to 1904 : -



820. What was the actual cash value of those materials? - Our expenditure on raw material was from £15,000 to £20,000 per annum. 821. Then what did you pay to associated industries? - We have paid as much as £3,000 a year for bottles alone, and we have been offered a certificate by the bottlemakers, to the effect that two-thirds of the money paid to them is spent in labour. It is, however, the barley market which indirectly gets the largest advantage from our operations. I believe that there have been years when we have been worth £50,000 to the growers of barley, by reason of the influence of our purchases in keeping up prices. Then we have consumed from 3,000 to 5,000 tons of coal per annum. The production of that coal gave employment to a large number of miners, and its transport from Newcastle to a large number connected with the shipping industry.

Surely that quotation disposes of the contention of Senator Clemons that if we give the protection to the distilling industry outlined by the Commission, we shall only help labour to the extent of giving employment to 150 men. I now propose to refer to the contention of Senator Drake that the Tariff Commission was appointed mainly to aid the spirit industry in Victoria, and that it deemed that industry to be so important as to demand investigation at once.

Senator Drake - I said that it was in the forefront of the agitation.

Senator HIGGS - I do not think so. The industries which were in the forefront of the agitation in Victoria were the metal and machinery trades. It was the number of foundries which were either wholly or partially idle, and of men who had been thrown out of work by the operation of the Tariff, which was mainly responsible, at any rate in this State, for that body of opinion which went in favour of the appointment of the Tariff Commission. Although it may appear to Senator Drake that this scheme of duties will have the effect of excluding molasses spirit from certain blends, and is, therefore, against the interests of Queensland, he should remember that Queensland will eventually reap as much benefit from the production of pure brandies and whiskies as any other State in the Commonwealth. That she will do owing to her magnificent resources. She will be not only growing grapes, but will grow in increasing quantities the grain required for the making of whisky.

Senator Drake - That is no reason for handicapping her production now.

Senator HIGGS - The witnesses before the Tariff Commission admitted that molasses spirit is obtained from the refuse of sugar. Surely it is far more advantageous to the Commonwealth that we should consider the vast number of hands which will be required in the grape-growing industry, and the number of farmers who will produce grain for the making of spirits, than that we should consider the manipulation of sugar refuse. The stuff from which this molasses spirit is made is turned into the rivers of New South Wales and Queensland, because people who so dispose of it cannot find a better market for it.

Senator Drake - But it is economically profitable to save it.

Senator HIGGS - So it will be saved, for the production of industrial alcohol. But, so far as concerns the general health and well-being of the community, it is far more important that if the public insists upon using whisky land brandy it should consume spirits that are made from grapes and grain, than that it should use a highly-rectified spirit which can be made for 6d. a gallon.

Senator Lt Col Gould - Will the present proposals prevent whisky being made from the spirit to which the honorable senator objects?

Senator HIGGS - That remains to be seen. Whether the proposals now before the Senate will prevent the blending of molasses spirit with whisky I do not know. But my opinion is that, when the public get to know that we have officers who are applying Commonwealth labels which enable them to distinguish pure from blended spirit, it will be an additional protection to the industry. The public will pay great respect to labels issued on the authority of the Government officers.

Senator Drake - According to the honorable senator's argument, any kind of spirit can be sold for human consumption as blended spirit.

Senator HIGGS - Any spirit that is issued to the public must carry a label stating that it is blended brandy or blended whisky, or that it is pure grain whisky or pure grape brandy. The public will soon learn to differentiate.

Senator Lt Col Gould - But there is nothing to prevent an inferior whisky feeing put on the market.

Senator HIGGS -No doubt it will be put on the market, and some people will drink it. Some people will always buy the cheapest productions they can obtain. I will conclude with a word or two about the Tariff Commission. I believe that its work will be of very great value to the people of Australia. Whatever may have been the motives which led to its appointment, the work of the Commission in collecting evidence and furnishing reports will have a beneficial effect. The advantage which has arisen from the Commission's work does not spring merely from the reports which it has issued, but has also been effective in creating an Australian sentiment. When the Commission has visited various places in this country, the newspapers have reported its proceedings at considerable length., and have made the public of Australia aware that in this great Commonwealth of ours wehave every possible means of producing all that is required for the consumption of our people, and that it is necessary to protect our trade in order to enable our industries to be developed. The people have come to realize that what we require is a protective Tariff, which will give us such security as is essential to enable our primary and secondary industries to prosper.

Senator Best - The honorable senator does not hesitate to advise the Senate to accept the proposals of the Government, rather than those of the Commission.

Senator HIGGS - Well, since Senator Clemons has stated that there were reasons which induced him to sign the report of the Commission - whatever may be the inference which honorable senators choose to draw from that statement - I think it due to myself to say that Senator McGregor and I signed an addendum, stating that we were prepared to allow pure malt whiskies and pure grape brandies to come in at 6d. per gallon less than other brandies and whiskies, and for a very good reason. When we saw that the free-trade members of the Commission were prepared to sign a list of conclusions such as I have read, I considered that if coming down 6d. per gallon in the import duty could bring about that harmony which was necessary to secure unanimity, it was wise to agree to it.

Senator Pulsford - I suppose the honorable senator is still prepared to come down?

Senator HIGGS - No. Since Senator Clemons has stated publicly his reasons, I consider that his statement has absolved me from complete adherence to the recommendations of the Commission, and that I am at liberty to make a statement in favour of increasing the import duties, and, perhaps, also of increasing the Excise duties for revenue purposes.

Debate (on motion by Senator Lt.-Col. Gould) adjourned.

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