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Wednesday, 6 August 1930

Senator DALY (South Australia) (VicePresident of the Executive Council) (2:20 AM) . - I move -

That the bill be now read a second time.

I feel sure that this bill will commend itself to honorable senators. It is an attempt to overcome a serious difficulty which has arisen in Tasmania in connexion with the marketing of hops. To convey to honorable senators some idea of the magnitude of the problem, I propose to quote briefly from statistical data which will be of some assistance in the consideration of this measure. The average quantity of hops used annually by brewers, bakers, and others in Australia during the last ten years was 10,548 bales, each bale weighing 240 lb. The estimates of the Tasmanian and Victorian crops for the 1929-30 season just closed were 8,750 bales and 1,580 bales respectively, or a total of 10,330 bales. The area under cultivation is approximately 1,200 acres in Tasmania and 300 acres in Victoria.

The quantity of hops exported during 1928-29 was 2,083 bales. Of this quantity, 73 per cent, was shipped to the United Kingdom, and 26 per cent, to the Irish Free State. During the last two years, the Tasmanian Hopgrowers Limited has sold 3,000 bales of hops to Messrs. Guinness of Dublin, but its offer this year of 2,000 bales at the low price of 6d. per lb. was refused by Guinness without any reason being assigned. From inquiries made by the High Commissioner's Office, London, it appears that the refusal was due to an abundant surplus of hops in the home market caused by an over-production in England and on the Continent with consequent, low prices, Belgian hops being quoted at ll/d. per !b., and Polish at 1-id. per lb. f.o.b. Antwerp. English low and medium grade hops were quoted at from 2 l-7d. to 2-id. per lb. Imports of hops to Australia during 1928-29, amounted to 427 bales, and the average quantity imported annually during the last three years has been 640 bales. Of the total imported during 1928-29, approximately 85 per cent, came from New Zealand, 8 per cent, from the United States of America, and 6 per cent, from Czecho-Slovakia.

Since March, 1922, an arrangement has existed between the hop-growers of Tasmania and the Australian brewers, whereby the latter have restricted their importations of hops to 15 per cent, of the annual consumption of each individual brewer. That arrangement is still in force. Following a meeting held in May last, certain Tasmanian hopgrowers wrote to the Government asking that an embargo be placed on the importation into Australia of foreign hops and substitutes for hops, and also that the Commonwealth Parliament should enact legislation to regulate the interstate trade in hops. Following these representations, the Federal Government requested the Hon. J. Gunn, Director of Development, to proceed to Tasmania and inquire into the position of the hop industry there. Mr. Gunn has presented his report which has been tabled in both Houses of Parliament.

There are in Tasmania about 150 growers producing 8,750 bales of hops per annum, and in Victoria about 25 growers producing 1,600 bales. It is estimated that there will be in the Commonwealth a carry-over of 4,000 bales to next season. For some years prior, to the last crop 1929-30, the marketing of the major portion of the hops produced in Tasmania was carried out by a pool called " The Tasmanian Hop-growers Limited." but owing principally to the lack of support by the growers, the pool found itself" unable to continue beyond the season mentioned. Victorian .growers have not entered into any pooling arrangements, each grower disposing of his hops by private contract.

Mr. Gunn'sreport states that in anticipation of the termination of the pool, and of a difficult situation after 1930, H. Jones & Company, and other buyers of Tasmanian hops, made contracts towards the end of 1929 to supply brewers with approximately 7,000 bales of hops per annum during the years 1931, 1932, and 1933. Having made these contracts, the buyers then negotiated with a certain number of selected growers whose hops, it is alleged, are acceptable to the brewers, and made contracts with them for the purchase of their hops during the three-year period mentioned. The exact quantity which these growers have contracted to supply is 6,910 bales per annum - 27 growers have made contracts. Both, the brewers' and the growers' contracts are for three years, with the right of renewal for a further period of two years. The price to be paid by the brewers for brewers' quality hops is 2s. per lb., and the price to be paid to growers is, in most cases, ls. 9d. per lb. These contracts cover practically the whole of the brewers' requirements in Tasmanian hops for the period in question. One other firm in Tasmania has also made contracts with growers, and with small mainland brewers, but these contracts would not cover more than approximately 500 bales of hops. The effect of these contracts is practically to exclude the majority of growers without contracts from participation in the Australian market for hops. In making their contracts in Tasmania, the brewers have not purchased their total Australian requirements, a margin apparently having been left to allow of purchase of hops produced in Victoria.

The present position is that in Tasmania 27 growers have contracted to supply practically the whole of the Tasmanian hops required by brewers for the years 1931, 1932, and 1933, whilst in Victoria the hop-growers have made contracts for the disposal of their hops, and, according to Mr. Gunn's report, they are quite satisfied with existing arrangements. In Tasmania there are approximately 120 growers who have not been able to make contracts. These growers have requested the Federal Government to place an embargo on the importation of hops into Australia, and to introduce legislation to regulate interstate trade and commerce in hops.

Mr. Gunnstates that a number of small growers will not be able to produce a crop next year because of the low return received consequent upon the failure of the pool to dispose of a large portion of the 1930 crop, and their inability to obtain further credit. Notwithstanding the present tariff, hops can be imported at prices below what is profitable for the Australian grower. The large consumers having contracted to obtain their Tasmanian supplies from 27 growers through Messrs. H. Jones & Company, and other buyers, it will be impossible for the great bulk of the remaining 120 growers either to obtain finance for the production of a crop or to market it when produced. This arbitrary method of reducing production is not equitable.

It may be urged that any proposal involving a reduction in production should be left entirely to the State concerned. On this point I remind honorable senators that, as regards the rationing of the market for hops, a State law will be ineffective outside the State itself. Consequently, representations were made to the Commonwealth Government to introduce legislation on lines similar to the Dried Fruits Act. Naturally the Commonwealth Government would not take action without first consulting the States. I have had an interview with the Premier of Tasmania, who, fortunately, happened to be in Canberra attending a meeting of the Loan Council. This proposal was submitted to him, and I have his assurance that it offers the only solution for the present difficulty in that State.

Senator J B Hayes - Has the Premier of Tasmania advised the Minister to that effect?

Senator DALY - Yes. When I asked him if he were in favour of the bill he said that it appeared to him that the method proposed by the Government was the only way in which the difiiculty could be overcome. The Minister for Markets and Transport (Mr. Parker Moloney), who has been in communication with the Tasmanian Government, received a message to the effect that information could be obtained from Mr. McPhee, who was to attend a meeting of the Loan Council in Canberra. I met Mr. McPhee, who informed me that he was meeting a deputation of Tasmanian senators in connexion with the bill, and that he had perused the measure, which seemed to provide the only way out of the difficulty.

Senator Sir George Pearce - What is the opinion of the Victorian hopgrowers ?

Senator DALY - As they sell to the brewers in Victoria they are not affected by this legislation. This measure will affect only those growers who intend to sell their product outside the State in which it is grown. I understand that the Carlton Brewery, in Victoria, absorbs practically the whole of the Victorian production of hops, and, therefore, the licence referred to in the bill would not be applicable to Victoria. Mr. Gunn suggests two alternatives for thefuture control of the industry -

(a)   Enactment of legislation by the Tasmanian Parliament to control the marketing of hops. Such legislation could provide for the State to acquire the hops, and, if that action were taken, the State could control the interstate sale and oversea sale of such hops without the assistance of federal legislation.

(b)   Introduction of legislation by the Commonwealth Parliament to control interstate trade on the same lines as the Commonwealth Dried Fruits Act.

In regard to the first of those two alternatives, the opinion in Tasmania is that, if the industry is to be controlled at all, authority should be exercised by the Federal Government, as any attempt at control by the State would he ineffective. The Commonwealth Government, realizing the precarious position in which the hop-growers in Tasmania are placed, is yielding to their request by introducing this legislation for their protection. This measure, if enacted, will control interstate and overseas trade in hops, and is to give effect to the Government's intention ::: that regard.

The bill provides for the creation of an Australian hop board consisting of three representatives elected by hop-growers in Tasmania, one representative elected by hop-growers in the other States of the Commonwealth, and a Government representative appointed by the GovernorGeneral. The reason it is proposed to allot three growers' representatives to Tasmania is on account of the large production of hops in that State, 8,750 bales having been produced last season, in comparison with 1,600 bales in Victoria, and a negligible production in South Australia and Western Australia. The Australian Hop Board will control the export and interstate trade in hops. This control will be exercised by the issue of licences to growers subject to such conditions and restrictions as are prescribed by regulation.

Senator McLachlan - Does that mean that current contracts will be interfered with?

Senator DALY - It is possible that that will be the case. The Commonwealth Government is concerned with the position of the hop industry generally and not with the interests of individuals.

The board will allot a share of the business with brewers and others requiring hops outside Tasmania to each grower, according to his production, provided, of course, that the grade and quality of the hops are up to the standard laid down by the board. This will mean that the Australian market for hops will be open to all growers. In other respects the measure is a replica of similar measures introduced in connexion with the canned and dried fruits industries. The Senate has to decide whether the Commonwealth Government should interfere' with the hop industry, and, if so, whether the method proposed is the most effective to ensure some form of stabilization.

Senator Herbert Hays - This measure goes further than that. It affects the industry throughout Australia.

Senator DALY - The real purpose of the bill is to stabilize the industry in Tasmania. It cannot be detrimental to hop growers in Victoria. This is another direction in which the Government is endeavouring to assist Tasmania. It realizes that if assistance is not rendered to this industry the State may have to be compensated by a further financial grant.

Senator Sampson - In view of the low prices ruling for hops overseas, is there any likelihood of importations increasing beyond 15 per cent.?

Senator DALY - There is nothing to prevent that. I understand that at present brewers have not any difficulty in obtaining supplies. They cannot be compelled, under this measure, to purchase Australian hops.

Senator Sampson - Overseas prices are extraordinarily low.

Senator DALY - And the quality of Tasmanian hops is extraordinarily high. As it suits the Australian brewers to purchase Australian hops, I do not think overseas purchases are likely to be made.

Senator Cooper - Were the growers given an opportunity to carry on under the old pool?

Senator DALY - Messrs. Henry Jones and Company made arrangements to purchase the product of a certain number of hop-growers, leaving others, operating on small areas, in an unfortunate position. A big monopoly was actually crushing out a number of small growers.

Senator Cooper - Could not a ballot have been taken ?

Senator DALY - It would have been useless to take a ballot when there were no purchasers of the product handled by the pool. It is now a matter of whether 120 hop-growers shall be allowed to continue in the production of hops or be compelled to discourage production. I understand that the allotments on which the hops are grown are so small that they cannot profitably be utilized for any other purpose. In these circumstances, the Government considers it wise to intervene in their interest. As these proposals have received the approval of the Tasmanian Government, I trust the Senate will pass the bill.

Senator Sir GEORGEPEARCE (Western Australia) [2.43 a.m.]. - The Minister (Senator Daly) has said that this measure is similar to other bills passed in connexion with the control and export of canned and dried fruits. But to enable the dried fruits export control and similar other measures to become operative, State, as well as Federal, legislation was necessary. The Minister has not informed the Senate if the Governments of Tasmania or of Victoria are willing to pass supplementary legislation. After reading Mr. Gunn's report I would be surprised to learn that those Governments will pass such legislation. If not, this measure, if enacted, will be ineffective. Export control boards have handled canned and dried fruit, and butter. In connexion with those products there was an excess of production over local consumption. As the hulk of the surplus production was exported there is an essential difference between those products and that under consideration. At present, I understand, there is no market overseas for Australian hops. Previously, the only overseas buyers were the manufacturers of Guinness's stout, but since the Commonwealth Governmentlias imposed additional customs duties upon imported bottle ale and stout, Guinness's have retaliated by saying that they will not take our hops.

Senator Daly - That is absolute nonsense.

Senator Sir GEORGE PEARCE -It is not. The essential difference between i his product and others over which the Commonwealth Government is exercising control is that in this case there will be no excess production for export. Only about one-third of the dried fruit produced in Australia is consumed in this country; the remainder is disposed of overseas. The position is much the same in the case of canned fruits, butter, and pearl shell. Indeed, practically the whole of our pearl shell is exported. In this case, although the conditions are exactly the reverse, the same machinery is expected to deal with them. Other export control boards were appointed specifically to deal with our export trade. I have read carefully the case prepared by the growers who are asking for the regulation of the hop industry, as well as Mr. Gunn's report on the hop industry. They are depressing documents. There is nothing in either of them to lead us to believe that the industry will benefit from the passing of this bill. At this late hour I shall not quote from those reports extensively; but the case put forward by that section of the hop growers which is asking for this legislation, shows a declining industry, and over production brought about by excessive prices. At one time during the war the price of hops rose to 8s. a lb. That high price led to excessive production. The industry is suffering to-day from that over production. How can we hope to compete in the markets of the world with a product which on the evidence of Mr. Gunn, is sold overseas at 2|d. a lb. as against a production cost of ls. 4d. in Australia? The story of hop-growing is a story of a declining industry. The Hop Industries Defence Committee seeks a remedy for the existing unsatisfactory state of affairs. It maintains that what is needed is a proper system of control. It says that the Commonwealth has protected the hop-growing industry by high tariffs, and that the Commonwealth is now bound to protect both the producer and the consumer. It goes on to say -

It surely cannot allow a combine or a combination of persons to seize all the profits of a primary industry that has been so long established . . . We do not ask for a federal pool, because that would involve the hops grown and disposed of iu Victoria.

What is this proposal but a federal pool? If it is not a federal pool it is federal regulation. The case of the Hop Industries Defence Committee continues -

W'e believe that the individual can be sufficiently protected by the Marketing Act provision if rightly applied to the hop industry.

I can only say that I cannot. distinguish between this regulation and a pool. They are asking that Victoria shall be roped in. Coming now to. Mr. Gunn's report we find that the average annual Australian production over a period of ten years is 9,726 bales. Brewers and bakers use 10,548 bales. Our imports total 1,780 bales, and our exports 987 bales per annum. That gives an excess of imports over exports of 793 bales. Here is another doleful note from one point of view, although from another point of view it i3 cheering news -

Present indications arc that the consumption of beer is decreasing, and that the future demand for hops will not be so heavy as it has been in the past. The brewers report a considerable drop in consumption due principally to the existing depression.

Sales of 1930 hops are very slow, and large quantities of this year's crop arc still unsold and in store.

With the increase in substitutes for yeast the demand for hops by bakers and others is also gradually decreasing.

Those are cruel facts which must be recognized. How can we expect by regulation to prop up such an industry? We cannot export hops, and the local consumption of hops is decreasing.

Senator Daly - It is only a temporary decrease.

Senator Sir GEORGEPEARCE.I hope that the decrease is permanent. How oan we maintain production when already there is overproduction, and at the same time maintain the price of an article which is already far above world parity? Yet we are asked to do those two impossible things in this bill. The people have such blind faith in an act of Parliament that they believe that almost anything can be done by legislation. They believe that by legislation we can make the economic sun stand still. It cannot he done. The kindest thing that we can do to these people is to tell them that it cannot be done. The unkindest thing would he to humbug them into believing that by passing this bill we can do the impossible. I have read the report and recommendations of Mr. Gunn and also the report of the Commonwealth Board of Trade, comprising Sir Alfred Ashbolt, Mr. E. Baynes, and Mr. W. J. Mill, and the remedies they suggested in 1925. They recommended a restriction of importations, a restriction of production, and the fixation of prices. Mr. Gunn docs not repeat their recommendation. Nor docs he recommend what the Government proposes in this bill.His conclusions are -

1.   During recent years the supply of bops has exceeded the requirements of the Australian market.

2.   At presentthere is no profitable export market, nor is there any likelihood of one developing.

3.   Itis anticipated that when the 1931 season's crop is harvested, there will be a carry-over from previous years of at least 4,000 bales. 4 In order to stabilize the industry, production must be reduced to Australian requirements, with a safe margin to meet contingencies, such as a short or damaged crop.

5.   A number of small growers will not be able to produce a crop next year because of the low return received consequent upon the pool not being able to dispose of a large portion of the 1930 crop, and their inability to obtain further credit.

6.   Notwithstanding the present tariff, hops can be imported at prices below what is profitable for the Australian grower.

Mr. Gunngives a number of alternatives for the control of industry -

1.   The Tasmanian Parliament could enact legislation similar to the New South Wales Marketing of Primary Products Act, and the Queensland Fruit Marketing Organization Act. Such legislation would provide for the grading of hops so as to eliminate the inefficient grower who produces low grade hops.

2.   The Commonwealth Parliament, under its constitutional powers, could control interstate trade, by enacting legislation similar to the Commonwealth Dried Fruits Act, making it compulsory for interstate traders in hops to be licensed, and could license in such a manner as to assure each efficient grower hisfair proportion of the Australian' market.

In view of the fact that the control of the industry in Tasmania is essentially a matter for the Tasmanian Government, a consultation between the governments concerned should be held before any steps are taken by the Commonwealth to enact legislation.

To make cither Commonwealth or State legislative control effective, it will bc necessary tq restrict importations of hops. This, however, is a matter for consideration and advice by the Customs Department.

Mr. Gunnrefrains from making any recommendation such as the proposal contained in this bill. I see no hope of any useful purpose being served by this legislation, and therefore I shall vote against the second reading.

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