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Thursday, 25 November 1971
Page: 3658

Mr LLOYD (Murray) - This debate so far has been quite interesting not so much from the subject matter itself as from the attitudes that have been expressed. Opposition speakers have questioned the courage of the honourable member for Angas (Mr Giles), as a member of the Government, in talcing certain action. I for one congratulate him on the courage he has shown in moving this motion and enabling a debate to ensure. But I also congratulate the Government for being a tolerant, democratic and responsible Government and allowing a motion critical of the Government's performance to be moved by one of its members. Some honourable members opposite have been making statements about courage, but when one looks at their own activities this is something which seems, to be very lacking. There are few, apart from the honourable member for Grayndler (Mr Daly), who have had the courage publicly to question any of their Party's policies. Of course, the honourable member for Grayndler questioned his Party's immigration policy and he had very good reason to question it in view of some of his Party's policies which seem to be shunted around at the present time. The Opposition has also raised the point of outside influence on the Government, lt should be the last to talk about outside influence. I can remember some talk only recently, about penal sanctions and other matters relative to the arbitration system, that was immediately shut up by a very little bit of outside influence.

Mr Bryant - I rise to order. With deference to your recent remarks on points of order, is it in order for the honourable member for Murray to divert from the subject under discussion to discuss industrial policy? Will you pull him back into gear?

Mr DEPUTY SPEAKER -Order! I suggest to the honourable member for Murray that he make no more than a passing reference to this subject, as has been done by other honourable members.

Mr LLOYD - It was only a passing reference because that is all it deserves. The question involved here is one of rural policy because it relates to excise duty on a product of a rural industry. The point made by the honourable member (or Angas as to what the Australian Labor Party would do if it was in Government is a very interesting point, because what some honourable members opposite say as members of the Opposition could be completely different from what they would say if the Labor Party were the Government. A statement by the leading spokesman for the Opposition on rural affairs, the honourable member for Dawson (Dr Patterson), after the Australian Labor Party conference in Launceston should make people think a little more about this matter of what the Labor Party would do or be capable of doing in regard to rural policy matters, such as the wine excise, if it were in government.

Mr Kelly - Could you give us details of that?

Mr LLOYD - I do not think it is worth giving details about because the Opposition never gets down to specific matters such as the wine excise; it just waffles on. As the honourable member for Dawson has said, the majority of members of his Party are against rural affairs altogether. The honourable member for Sturt (Mr Foster), who is interjecting, should look at some of the statements made by his colleagues in the Senate about too much support being given to the wool industry.

Mr Foster - So it is, too. You are not giving any support at all; you are ruining it.

Mr Turnbull - 1 rise to order. This is a legitimate point of order which I have raised in (his House on many occasions. No honourable member should be put in the position in which I am of having interjections shouted into his ear all the time.

Mr Foster - He is at it again.

Mr DEPUTY SPEAKER -Order! The honourable member for Sturt will cease interjecting.

Mr Turnbull - He is the one who is at it again yelling out in my ear, as he is doing all the time. I will not put up with it and I will raise points of order every time I can. I wish he would keep quiet.

Mr Foster - I have not interjected.

Mr DEPUTY SPEAKER -Order! The honourable member for Sturt will cease interjecting.

Mr LLOYD - The only support which the Opposition would give to wool would be to use it to pull over the eyes of its members.

Mr Kirwan - I rise to order. The honourable member has spoken for 5 minutes and has not made reference once to the wine industry. He should be made to address himself to the motion before the House.

Mr DEPUTY SPEAKER -I would suggest to the honourable member for Forrest that the honourable member for Murray is relating the tax matters involved here to other subjects. I would suggest also to the honourable member for Murray that he do not make these other matters the subject of his speech.

Mr LLOYD - In deference to you, Mr Deputy Speaker, rather than anybody else, I will relate my remarks to this debate in more detail. Before doing so, I wish to make a couple of comments on the speech made by the right honourable member for Higgins (Mr Gorton). The right honourable member did quote some of the price increases that had occurred since the excise was introduced. He referred to the mark up that took place on bottles of wine and on certain half flagons of wine. He said that it was not only the excise which had increased prices. The first point that I make on his speech is that the moment taxes are increased or an excise is imposed the possibility for retailers to increase their margins is opened up. While this may help the retailer, at the same time, it certainly does not help the grower. In this debate I would speak for the grower rather than for the retailer. The point was made that the price of half flagons increased by a certain amount. I think that, if checks are made as to what the grower who actually produces the flagon wine receives, particularly where the grower is selling at his own door or is selling to somebody else for retailing, they will reveal that he is not receiving any mark up and that the mark up occurs further along the line in retailing.

I certainly would agree that the excise that was introduced was wrong, if for no other reason than that it was too severe. To introduce overnight an excise which will increase the price for some bulk flagon wines, leaving aside at all any mark up, by 50 per cent in an industry which is accustomed - and I think rightly accustomed - to a certain growth rate and which is planning on that growth rate, must cause dislocation in that industry. Therefore, if the Government was right in introducing the excise - I am not saying that it was - the excise should have been at a far lower rate than the severe rate which was imposed in the first instance. I know that it would be wrong to say that any industry as large and as varied as the wine industry would not have some problems of its own making and that all blame for current problems could be put on the wine excise. The plantings of superior varieties of wine grapes are certainly a factor which complicate matters in the industry. The vertical integration that has taken place within the industry to a certain extent either by marketing people buying vineyards or by winery operators becoming their own selling agents and increasing their own plantings so that they no longer buy in bulk from a co-operative or from a grower and also the possible over production with increased acreages of vines being planted in such areas as the Hunter Valley, as the honourable member for Paterson (Mr O'Keefe) mentioned, are factors to be considered.

As (he honourable member for Angas pointed out, the wine industry felt that it had this situation in hand because of the growth in consumption which it had every right to expect would continue, and because of the increased advertising which it had embarked upon. I believe that the wine excise has caused several problems. Firstly, it has stopped the upward trend in wine consumption. The figures for last year showed this to be the fact. Secondly, it has damaged and dislocated the structure of the wine industry. It has dislocated the structure in the sense that that section of the industry which sells flagons has been hurt whereas other sections of the industry have not been hurt very much if at all. I refer specifically to the high price table wine section. I think that the honourable member for Angas referred to the fact that the wine excise works out at approximately 5 per cent on a bottle of table wine but up to 50 per cent on flagons. It has dislocated the structure because it has made less competitive with other forms of alcoholic beverages the cheaper forms of fortified wines such as sherries which are sold in flagons. It has dislocated the industry also because of the effect that it has had at grower level. The grower is the person least able at the present time in the industry to take some of these knocks.

I wish to quote from an article entitled Smaller wine firms face a cash squeeze', which appeared in the 'Australian' of 22nd August 1971 and which was written by Mr Jim McCausland. The article reads:

The smaller grape growers face immediate and long-range problems. Australian wine makers grow only 15 per cent of their grapes. The other 85 per cent is grown by independent and usually small companies.

Most of the smaller grape growers, principally in South Australia, which produce 70 per cent of Australia's wine, belong to the large co-operatives, such as Berri, Renmark and Loxton, who process the grapes and market the wine.

But because the excise tas continues and demand slackens, the co-operatives will have trouble selling the wine and will subsequently be unable to accept grapes from the small growers.

Another dislocation caused by the wine excise has been the dangerous build-up in wine stocks. At the present time, allowing for :i 2-year holding period, 3 years wine consumption is in stock. With respect to while wines, one does noi wish to hold white wines for that period, if for any period at all. This stock is held in spite of a poor harvest last year. I am told by several wine growers that by the show of bunches at the present time the prospects are for a big harvest this year. This will complicate the problem because with a good harvest approaching the industry must face the inability of the wineries to take in as much wine because of the buildup in stocks at this time.

The wine industry embarked on a most expensive advertising campaign during the summer months between November and February of 1970-71. I believe that this advertising campaign to promote white table wines cost $150,000. I think that, as the honourable member for Angas pointed out, without this advertising campaign wine consumption figures in Australia would have been lower than they are. The success of this campaign is reflected in the fact that white fable wine sales increased. The fact that they increased means that the drop in projected sales for the other types of wines was even greater than the figures show.

What can this cause? I believe that the result of this excise can be a greater cost to the Government because more rural reconstruction will be forced on grape growers and this will cost the Government more than it will receive in income from the excise. It will cause also further complications because the quantity of sultanas used in wine making dropped from 80,000 tons in 1969-70 to 41,000 tons in 1970-71. The figures that I have quoted come from the annual report of the Australian Wine Board. The use of sultanas could drop even further this season if, as is expected, the United Kingdom enters the European Economic Community. Not only will our wine sales to the United Kingdom drop further than they have already but also dried vine fruit sales to the United Kingdom may be expected to fall because of the associate status of several other dried fruit producing countries.

If the sultana grape cannot be made into wine it could he forced back into dried fruit production at a time when the dried fruits industry is less and less able to accept this further intake of sultanas. I believe that this will complicate even further the situation in which increased reconstruction will be requited by some of these unfortunate growers.. This stale of affairs has been spurred on by the imposition of this excise. I hope that, in the next Budget, the Government will do something to alleviate the present position either by abolishing the excise completely or by reducing it at least to a level which will demonstrate in time that the cost to the consumer has not been increased to such an extent that the result will continue to be a reduction in consumption, because this is what has happened up to the present time with this excise.

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