2nd Parliament · 3rd Session
The President took the chair at 10.30 a.m., and read prayers.
– I desire to ask the Minister of Defence, without notice, if he can undertake to give the Senate at least three clear days in which to discuss the Appropriation Bill before the date of prorogation is announced?
– I really cannot answer the question, because I do not know what may take place. The Senate might wish to rise at an earlier date; but I shall give as long a period as I possibly can, because I recognise the importance of the matter.
– Arising out of the answer, I desire to ask the honorable senator if he cannot see his way - even if, in order to achieve that object, it should become necessary to bring forward the Appropriation Bill before the rest of the Government business has been completed - to give the Senate at least three clear days in which to discuss that important measure ? I ask the honorable senator to consider the matter, and give a reply to my question at the earliest possible date, either on the motion for adjournment this afternoon or next week.
SenatorPLAYFORD. - I cannot bind myself very well ; but I shall consider the matter and confer with my colleagues, and perhaps I may be able to give the honorable senator an answer next week.
Message received from the House of Representatives, stating that it had agreed to the Senate’s amendments in this Bill.
Message received from the House of Representatives, stating that it had agreed to the Senate’s amendments in this Bill.
Bill read a third time.
asked the’ Minister representing the Treasurer, nf on notice -
When we federated it was distinctly understood that the Braddon section would prevent the Federal Treasurer from using for Federal purposes more than one>fourth of our net Customs and Excise Revenue, and that at least threefourths of it would be returned to the State. Two years ago the Federal Treasurer retained £28,811 from our three-fourths, and this year he proposes to retain £83,877 of our three-fourths, which we understood section 87 guaranteed to us….. The financial .safeguard which induced Queensland to accept Federation turns out to have been so badly drafted that it is no security whatever. Under those circumstances it might have been expected that an attempt would be made at least to carry out the spirit of that understanding as far as possible; but, instead, we find the Federal Treasurer, knowing that lie will be unable to return Queensland the stipulated threefourths of the net Customs , and Excise Revenue, making fresh proposals which must further encroach upon the State revenue.”
– The answers to the honorable senator’s questions are as follow : -
Section 87 of the Constitution only requires that the States in the aggregate shall get threefourths of the net Customs and Excise revenue. This constitutional obligation has been met in every year. Indeed, the States have received during the past five and a half years, in addition to the three-fourths of Customs and Excise, a sum of £4,922,363, which might constitutionally have been spent by the Commonwealth.
Before Sir Edward Braddon introduced his historical amendment, a clause had been dealt with by the Convention, which provided that “ the aggregate amount to be paid to the States for any year shall not be less than the aggregate amount returned to them during the year last before the imposition of such duties.” Sir Philip
Fysh moved an amendment, with a view to giving that guarantee to each individual State. The matter was debated at length (pages 1053 to 1067 of Adelaide Convention Reports.)
From the debate on Sir Edward Braddon’s clause perhaps nothing conclusive on the question under consideration can be drawn ; but seeing that the interests of the individual States had been so prominently under notice in connexion with a guarantee proposed at an earlier stage, it is only fair to assume that they were still kept in view when Sir Edward Braddon’s guarantee was being dealt with. It would appear, therefore, that the wording, of section 87, as finally agreed to, is intentional, and not accidental.
The expression by the Treasurer of Queensland that’ the Commonwealth Treasury proposes “to retain £83,887 of our three-fourths” is apt to be misleading, as the Commonwealth never has “ retained “ one penny of revenue. The whole of the revenue collected in a State, after the State’s share of the Commonwealth expenditure has been deducted, is handed over at the end of every month to the State Treasurer. The reason why the payment to the Queensland Treasurer has thrice fallen below her own threefourths is solely due to the large expenditure in that State, which was inherited bv the Federal Government on the establishment of Federation.
Debate resumed from 13th September (vide page 4560), on motion by Senator Playford -
That the Bill be now read a second time.
– I do not think that the Government are to be much congratulated upon the way in which they have cut up their financial business this session. The Budget ought to contain all the financial proposals of the year, and it is very much to be regretted. that at a time when Parliament has, shall I say, the death rattle in its throat,, proposals affecting materially the revenue should be submitted. I do not .think that Members of Parliament generally - certainly not in the other House, and I very much doubt whether in the Sen. ate - are fully seized of their importance to the revenue, and I shall have to direct the attention of honorable senators very strongly to certain details. I need hardly say to those who are anxious about the finances of their respective States that it is their duty to carefully watch all proposals, which bear in any way upon a revenue of so important a character as that derived from the spirit duties, amounting as it does to considerably over . £2,000,000 a year. The revenue involved is shown by a return which is given in a report of the Tariff Commission. In 1902, the total revenue was £2,015,000, while in 1905 it was £2,125,000, showing an increase of £110,000. But there is something worth pointing out in this matter. The increase is not less than 25 per cent. on the proportion which comes under Excise, while it is only 3 per cent. on the proportion which comes under Customs. Naturally this indicates that there is a growth of the proportion paying duty on the lower scale, and a tendency to lessen the expansion of the proportion paying duty on the higher scale, and that means a gradual tendency to deplete the revenue of the Commonwealth. We have before us proposals which the Minister admits are calculated by the Customs officers to involve a loss of from £75,000 to £90,000 ; but I feel that, while the estimate might cover the loss in the first year, it would only be the preliminary to further losses, and that the proposals, if adopted, would involve an ultimate loss of probably not one penny less than , £300, 000 to the revenue of the Commonwealth.
– That is by the gradual substitution of the locally-made article for the imported article.
– By the substitution of articles paying duty on the lower scale for the articles now paying duty on a high scale. On this point let me direct attention to what is taking place with regard to bottled spirits. As honorable senators are aware, bottled spirits are about 16 under proof, but when they are imported there is no allowance made for that. Therefore, in addition to the ordinary protection which the State distillers enjoy, they have a further protection in the form of an allowance. The position is as follows : A case of Hennessy’s or Martell’s pure grape brandy, which is 16 per cent. under proof, pays 14s. per liquid gallon; that is, 28s. on the case. A case of Australian pure grape brandy, 16 per cent. under proof, pays 10s. per gallon, less 16 per cent. allowance, which comes to1s. 7d. This equals a payment of 8s. 5d. per liquid gallon. So that the colonial case only pays 16s.10d. against the imported case, which pays 28s. - a difference of11s. 2d., which is enormous. The effect of this may easily be seen, and I direct the special attention of honorable senators to the facts. From bottled brandy in the year 1903 there was received by the Customs arevenue of £89,945. In 1904 the duty on bottled brandy imported dropped to £84,123. Last year it dropped to £79,000. From bottled whisky the revenue received in 1903 was £260,729. In 1904 only £226,000 was paid; and in 1905, only £209,000. So that the tendency is to bottle locally, and there is consequently a gradual loss in the revenue received. Instead of paying 14s. on 16 per cent. of water, the importers naturally prefer to bring in proof spirit and break it down here, thus entailing a further loss to the revenue. The consequence is that there is going on a gradual loss of revenue, which will be considerably accelerated under the new proposals. This is a matter which deserves the serious attention of honorable senators. We were told last night that the Government had practically adopted the recommendations of the Tariff Commission. That is not the case. In the first place, the Tariff Commission recommended -
No change in existing rates of duty on imported spirits; but if the foregoing set of Excise duties be adopted, we recommend that bulk spirit imported into the Commonwealth, and imported bulk spirit reduced and bottled in bond within the Commonwealth, should be entitled to an allowance for under proof, similar to the allowance of Excise duty on spirits produced in Australia, upon evidence being given to the satisfaction of the Minister that a period of at least two years has elapsed since the distillation of the same, provided no such allowance shall be made on any strength less than 16.5 under proof.
The Minister did not refer to that point last night.
– I had it upon my notes, but overlooked it. The reason for not adopting the recommendation is that it would involve a loss of revenue.
– Undoubtedly it would mean a loss of revenue.
– We think we are losing quite enough as it is.
– Then why does not the Government deal differently with the local distillers, who are running away with the revenue fast enough as it is, and who in future are to be allowed to run away with it faster than ever? What I have quoted is the first recommendation of the Tariff Commission, which the Government has ignored, and which, if it had been adopted, would have, to some extent, curtailed the advantages which are conferred on the local distillers. On the last page of the recommendations are some supplementary proposals. There is a recommendation signed by the four freetrade members of the Tariff Commission to the effect that if the duties of Excise proposed be adopted there should be a reduction of is. per gallon on the pure spirit imported. This was followed by a recommendation by the two protectionist senators who were members of the Commission - Senator Higgs and Senator McGregor - that there should be a reduction of 6d. per gallon. So that it was proposed by six out of eight members of the Commission that there should be a reduction of 6d. in the amount of protection conferred upon the local distillers, while four out of eight members of the Commission believed that the difference should be reduced by a whole is. This is a very important matter, and, having, regard to the large amount of revenue involved, it justifies me in submitting, as I shall do in Committee, some proposals for lessening the extravagant amount of protection which is proposed to be bestowed upon the Australian distillers. I should like to draw attention to some important facts with regard to the local position. In 1899 the quantity of spirits produced in Australia was 737,000 gallons. In 1905 the quantity had increased to j. 505,000 gallons.
– That is the total of all kinds of spirits?
– Yes. In 1899 New South Wales produced no spirits, Victoria 64 per cent, of the total, Queensland 19 per cent., South Australia 17 per cent. But last year New South Wales produced 43 per cent, of the total, whilst Victoria produced only 11 per cent., Queensland 26 per cent., and South Australia 20 per cent. There have been some verv remarkable and significant changes in the interval. The production of spirits from grain in Victoria has immensely fallen off, while the production of spirits from molasses in New South Wales and Queensland has assumed considerable proportions, and the production of spirits, mainly ‘brandy, in South Australia has greatly increased. The proposals that are brought before us undoubtedly originate in the fact that there has been a falling off in Victoria in the production of spirits from grain. Regarding the fact that there has teen a very large increase in the aggregate production, one would have thought that there was no call for this radical change. But our friends in Victoria, are adepts in the art of bringing forward their claims, and they have managed to secure concessions which I very much doubt would have been proposed if the falling off in spirit production had occurred in other States. I ask honorable senators to notice some figures which I have cast out, and which, I venture to suggest, are very important, and suggestive of what may happen to the revenue under the new proposals. I have taken the revenue received by the Commonwealth last; year from brandy, gin, rum, and whisky. I have not included liqueurs, but have taken the four great branches of the spirit trade. The duty on imported spirits under those four headings amounted to ;£i, 800,000. Of the total revenue received, 11 per cent, represented duty paid on brandy. That means that the future expansion of the South Australian spirit industry must mainly be with a view to export. There is only a very limited ground on which to play in the Commonwealth. With regard to gin, the total imports were 18 per cent, of the total; the imports of rum, 11 per cent. But the imports of whisky amounted to 6,i per cent. That is the great feature of the figures. In the year 1905, of the entire Customs revenue from spirits, 61 per cent, was obtained from whisky; and whisky is the special line towards which this new Excise Bill is directed. It is intended to enable the local distillers to enlarge their production, and to obtain a material proportion of the trade which is now done by importers. Are we not likely to Le approaching the position with which New Zealand was faced in 1874, when she said, “ We are paying too much for our distilleries - too much for an industry which’ employs so little labour. Our revenue is becoming so greatly depleted that we will close all .the distilleries.” New Zealand in 1874 closed every one of her distilleries. I do not know how many there were, but I do know that from 1874 to the present year New Zealand has never thought of re-establishing the distilling industry, despite the fact that she is a protectionist country. The question is whether we in the Commonwealth have not a duty before us in regard to this matter - certainly not a duty to wipe out protection on the present occasion, but a duty to see that the proposals which we are asked to carry will not too greatly lessen the revenue now derived from imported whisky.
When honorable senators note that of the total quantity of imported spirits 61 per cent. is whisky, they will appreciate the importance of the fact that the great reduction in the Excise duties now proposed applies to that spirit. It is this large import of whisky which yields so much to the revenue - considerably over £1,000,000 - that is now attacked by the proposals of the Excise Tariff Bill.
– The honorable senator must admit that the local distilleries were very harshly dealt with by the Federal Tariff.
– Speaking of the distilleries of Australia as a whole, it is not so, but speaking of the distilleries of Victoria only it undoubtedly is so. So long as there is a protectionist policy in vogue, I do not think that free-traders in Parliament are inclined to object to some concession. What I ask is, that we should be careful that the protection afforded is not so large as to unduly imperil the revenue, which is important alike to the richest as well as to the poorest States in the Commonwealth. That local distillation is increasing, and increasing rapidly, I have already shown. The total quantity of spirits imported last year was 2,500,000 gallons, and during the same period the quantity made in Australia was 1,500,000 gallons. That is to say that out of a total of 4,000,000 gallons, imported spirits represented 63 per cent. and Australianmade spirits 37 per cent. Honorable senators will see that even to-day the total production of Australian-made spirits has assumed very important proportions under the limited protection afforded by the Tariff of 1901.
– Do the figures quoted by the honorable senator represent thequantity manufactured or the quantity sold?
– The figures I have given represent the total quantity locally manufactured and imported. Of the spirits made in Australia, a certain quantity is used for fortifying purposes, and a certain quantity is methylated.
– What is the percentage of Australian-made brandy as compared with imported brandy?
– I have not that information. Brandy appears to have gone into disfavour of late years. It is important to remember that with regard? to brandy there is only a very limited trade to deal with, whilst there is a gigantic whisky business, which is specially aimed at by this Bill.
– Does the honorable senator propose to give us the result in respect to the effect of the spirit duties now proposed - the proportion applicable in regard to the 63 per cent. ?
– Before Senator Symon entered the chamber, I said that the Government first of all put the loss of revenue at from £75,000 to £90,000, and I believe that the loss will continue to increase until it reaches £300,000. By the making of methylated spirits there is an absolute loss at once of over £6,000. Then in the loss of half the duty on spirits used for fortifying purposes, there is an absolute loss of many thousand pounds. Perhaps Senator Play ford could say what it amounts to.
– I gave the figures covering a number of years since the operation of the Federal Tariff. The amount received was £40,000, and the amount spent in wages to men employed in supervising was £20,000.
– Those figures cover five years, so that on these two items there is an absolute, loss shown of £12,000 per annum, and there is then the loss on spirits consumed. Taking all things together, I think it will be found that the total loss will reach £300,000. Every one knows that there is a good deal of prejudice with regard to spirits, and the operation of changes is slow. People do not quickly turn from a brand of spirits which they like to another, but a change comes about in time if there is money behind it. When before the Tariff Commission, Mr. Saul Joshua said -
I propose to work my plant or plants to supply the whole consumption of Australia - 2,000,000 gallons.
If Mr. Joshua succeeds in that, it will at once involve a loss of about £300,000.
– How many men would he employ ?
– I shall have something to say about the labour employed in the industry directly. Employment in the distilling industry is very light. I suppose there is no industry in Australia in which, in proportion to its importance, the labour employed is so light.
I direct the attention of honorable senators to this statement -
It has been shown that the labour is fractional, and distillation on these grounds justified less consideration than the bottling of imported spirits, where ten times the number are engaged. Outside wine and molasses, distilleries use only such products as can be exported with equal saleable results to farmers; thus a bushel of wheat exported for 3s. 6d.,. no loss of revenue; if locally distilled at 3s. 6d., producing 2^- gallons of proof spirit at a 3s. differential protection, loss of revenue 7s. 6d. per bushel.
That does not look like good business.
– Then it would pay us to send grain home, and get it back as whisky ?
– The fanner might send has grain abroad and get 3s. 6d. a bushel for it. Selling it here to the distillers he gets 3s. 6d. for it, but the distiller turns it into brandy, and gets from the Government a protection of 7s. <5d. on the quantity of spirit produced.
– I - If the grain is exported, and is sent back here as whisky, what should we get?
– If it comes back as whisky the importer pays the 7s. 6d. Bv the method adopted here we do not benefit the farmer, but we take 7s. 66. from the revenue in respect of each bushel of barley.
– And leave 20s. in the pockets of the people of Australia.
– When introducing the Federal Tariff Mr. Kingston felt the same need for caution in regard to this matter, and he said -
We feel as regards Excise and encouragement to local spirits it is very necessary to proceed cautiously. Various States have had various experiences of the result of too much encouragement of local distillation. We must in this connexion be careful lest we create a vested interest which cannot exist on the terms granted without serious injury to the public.
– Experience has proved that he was too careful.
– I said that, in 1874, New Zealand abolished the distilleries in that Colony by buying out the owners. I should like to quote one or two statements which were made at the time by public men in New Zealand. The Colonial Treasurer of New Zealand said -
From the commencement of the operations of the distilleries the quantity of spirits distilled from all sources was 294,460 gallons, and from grain alone 268,689 gallons. The quantity of grain used in the manufacture of these spirits was 134,966 bushels. This return showed that for every bushel of grain that had been consumed in the distilleries, the Colony had been paying a bonus, of a little over ns. n?d. The probable loss to the revenue during the operations of the distilleries up to the 31st March last (1S74) consequent on the manufacture of spirits, made a total loss of ?86,842 15s. id. Now the committee must not lose sight of the fact that the longer the distilleries enjoyed their present advantages, the greater would be the progressive loss to the revenue, and I would not be at all astonished if, during the next 12 months, the loss were to reach about ?50,000, and possibly during next year it would amount to ?75,000
Sir Francis Dillon Bell asked
Was it worth while to continue a system which inflicted so much loss upon the revenue of the country ?
Sir Julius Vogel said
There can be no two opinions as to the advisability of ceasing spirit manufacture, as there were very few honorable members who would not be of opinion that it would be desirable to do’ away with the Distillation Act altogether.
The result was that the House of Representatives in New Zealand was ‘Unanimous on the subject, .and the distilleries were abolished. With regard to employment in the industry, the greatest number of hands employed at any one time in Victoria was 143. That! included clerks, travellers, carters, coopers, bottlers, &c., and each of these classes of employe’s might to a larger extent have been employed in the bottling of imported spirits were the local distilleries not in existence. Honorable senators will agree that in respect to the employment of labour there is not very much to be gained by the encouragement of local distilleries. With regard to the capital involved, I believe I am correct in saying that Joshua Bros. ‘ distillery in Victoria is practically a British concern, since nearly the whole of the capital invested is British capital. If we establish duties which will enable that firm to make gigantic profits, the bulk of those profits will be exported.
– Then the honorable senator does not believe in British capital being invested in Australia?
– I do; but I do not believe in protecting British capital. I ami not asking that we should do away with all protection, but that, in affording protection, we should be careful not to throw away tool much revenue.
– The argument is that protection keeps the money in the country ; but if it be British capital that is invested, the profits and the bonuses go abroad.
– Mr. Joshua is in Australia.
– The individual may be, but the money is not.
– From a list of the shareholders in the Joshua Proprietary Company Limited, I find that the capital held in Australia amounts to £8,000, while in London the amount is £78,000-, in addition to, I believe, £100,000, or thereabouts, in the shape of debentures. It will be seen, therefore, that the amount actually invested by Australian shareholders is very limited. That is another reason why we should hesitate in affording an enormous protection to an industry which employs so little labour.
– Are not the shareholders in England Australians who have gone home after making a competency?
– That may be.
– In any case they are absentees.
– One reason for one of the Joshuas going abroad was that he was driven home to England’ to sell his stuff.
– Who would not have joined Mr. Joshua in trying to make an export trade?
– Joshua’s brandy may be bought in’ the House of Commons, but it cannot be bought in this House.
– Honorable senators should devote a little thought to the character of the proposals now submitted. In the first place, an effort is successfully made to prevent consumers, who wish for a cheap spirit, from enjoying it. The theory has been accepted that if spirit can be produced at a low cost, there must be an Excise dutv to bring the cost up to that of high-class “spirit. Is that! the kind of policy to commend itself to a. democratic community? It appears to me to be a strong blow aimed at the weakest classes in the community. Rum is, I believe, largely regarded ‘as a poor man’s spirit.
– Is it not the theory that the spirit is of inferior quality and injurious ?
– No; what is regarded is the cost of production, and not the quality.
– I am afraid, as Senator Drake says, that the proposal is based entirely on the cost of production.
– On both the cost of production! and the quality ; and wine spirit is the best.
– If we place an Excise duty of several shillings more on rum and the commoner sorts of spirits-
– These spirits are also given protection.
– Yes, but the cost is increased; and what is the effect to the consumer. What is the effect in New South Wales and Queensland?
– If people drank less they would’ be better off.
– That may be; but I am not sure that the proposals before us do not a little infringe the Constitution, which declares that the legislation of .the Commonwealth shall be uniform. It may be said that these duties affect equally all the States, and in a sense that is true. But I think honorable senators will admit that the proposed duties in their incidence involve great hardship to certain States, as compared with other States.
– That is because some States happen to be making commoner spirits.
– And because those States happen to be manufacturing certain commodities, the Commonwealth Government, as at present constituted, seek to interfere with the industry.
– More protection is given now than before.
– And the States in which rum is manufactured enjoy big bounties on sugar, paid by the rest of the Federation.
– Is that the reason for the increase of duty?
– It is merely an incidence.
– Then I think the incidence had better wait until a later hour in the day. The duties as proposed are not quite uniform - are not equalized as they should be. For instance, I see that the Excise duty on spirits, n.e.i., is 13s. I suppose that means ordinary grain spirit.
– Or potato .spirit.
– If, however, 25 per cent, of pure brandy is blended with the spirit I have mentioned, the Excise duty is 1 is.
– It must be distilled from grain to bear a duty of us. ; and we keep out inferior spirits made from potatoes and other rubbish.
– And make the spirits ourselves from refuse !
– I remind Senator Clemons that, as a member of the Tariff Commission, he is one of the authors of this proposal.
SenatorPULSFORD. - I should like to draw attention to the extent of the protection proposed. We may take it that wine spirit costs about 4s. per gallon.
– It costs 4s. 6d. per gallon.
– On a cost of 4s. the present protection equals 75 per cent. If the cost is 4s. 6d., then, of course, the protection is not quite so much. The proposed protection on this spirit, n.e.i., really equals 100 per cent. On malt whisky the existing protection is 32 per cent., reckoning the cost at 3s. 2d., while the proposed protection is 126 per cent. On grain spirit the present protection is 57 per cent., and the proposed protection 171 per cent.; and on molasses spirit, which costs only about 6d. per gallon, the present protection is 200 per cent., and the proposed protection 400 per cent. I have here some figures which show that in the cost of producing wine spirit labour represents 5 per cent. ; in the case of malt spirit 22 per cent. ; in the case of grain spirit 1 7 per cent. ; and in the case of molasses spirit 10 per cent. So that the expenditure on labour, as I have said, is very limited, while the proposed protection is enormous ; and we ought to be very careful that the protection is not so great as to deprive us of too much revenue. When the Bill gets into Committee I shall suggest the desirability of increasing the Excise duties by1s., which will still leave an immense protection, and make the Bill more in accord with the findings of the majority of the Tariff Commission.
– The Bill is based on the findings of the Tariff Commission.
– As I have pointed out, four members of the Tariff Commission were willing toreduce the projection on pure imported spirit by1s.
– Only two of the members.
– And two other of the members were willing to reduce the protection by 6d. It will be seen that six members, at any rate, were agreed as regards 6d., and that of those six members four were prepared to accept a reduction of another 6d. It may be that honorable senators, when they have considered the important revenue and other factors I have mentioned, will be inclined to reduce the rate of protection to that which would have satisfied the majority of the Tariff Commission. I direct attention to the fact that, although the Tariff Commission recommended that spirits, n.e.i., should bear a certain duty, and also be matured in wood for a certain time, that recommendation is carefully omitted from the Bill. We have had no explanation of the omission, the effect of which is that grain spirit now produced in Australia may be delivered for consumption forthwith. With regard to the storing of gin, schnapps, and rum in wood, I want to submit that, instead of improving the quality of the spirits, it would be calculated to do them an injury.
– Does it not improve the quality of rum?
SenatorPULSFORD.- No. I have in my hand a certificate from Messrs. Dixon and Byrn, analysts under the Public Health Act of New South Wales, which is addressed to Messrs. Moses Moss and Company, the Australian agents of Wolfe’s Schnapps, who assure me that upon their importation of that article they pay over £92,000 a year to the Customs. The certificate reads as follows: - 97 Pitt-street, Sydney, 3rd September, 1906.
Messrs. Moses Moss and Co., Wynyard-lane,
From many analyses we have made of Wolfe’s Schnapps we can say with certainty that it has been made from a highly purified alcohol, which will not be improved in any way by storage in wood.
The impurities which are removed from whisky and such spirits by storage in wood are not present in Wolfe’s Schnapps.
Storage in wood will make the Schnapps yellow and probably make it unmerchantable, as with Schnapps and gin a colourless spirit is desired.
Yours faithfully, dixonandbyrn.
The same firm also handed to me a certificate from Messrs. Dunn and Stone, of the Melbourne Analytical Laboratory, 193 Collinsstreet, Melbourne, which is datedthe 1 2th September, and reads as follows: -
Under our supervision a sample of Wolfe’s Schnapps was obtained from bulk on behalf of Messrs. M. Moss and Co., 386 Flinders-lane, Melbourne.
An examination of the sample shows that it is practically a colourless spirit, and in our opinion if stored in wood would, like gin and other spirits, become more or less discoloured, and therefore unmarketable.
Dunn and Stone.
I have here a copy of a telegram which was sent about a fortnight ago from Messrs. Moses Moss and Company, of Sydney, to the Minister of Trade and Customs, and which is in these terms -
We, the sole representatives of Wolfe’s Schnapps, respectfully submit that this spirit, which, being highly rectified, cannot without deterioration, be kept in wood, and for forty years has been imported into Australia in glass bottles only, should, with other spirits such as Geneva, &c, be exempt from the time limit. A total prohibition of imports of this class of bottled spirits unless this clause is revised is almost a certainty. The duty on our sales of Wolfe’s Schnapps in the Commonwealth averages ^92,000 per annum. We would guarantee to re-export any shipments that your Government Analysts determined to be unwholesome or deleterious to public health.
That is referring to the matter of d«uo to which honorable senators will need to direct their attention. There is an unfairness between the date with regard to the treatment of imported and local spirits. I have in my hand a report with regard to the rectification of spirits, which was ordered by the House of Commons to be printed on the 30th April, 1.891:, and which contains this passage -
About 6,000,000 gallons of the patent spirits made in this country, and an unknown quantity of foreign spirits of the same kind, is distilled by rectifiers to remove the small percentage of fusel oil and by-products which they contain in order that the purified spirit may be converted into gin and other beverages.
The basis of these is nearly pure alcohol, to which is added approximate flavouring materials.
Patent spirits distilled in London are chiefly sold to rectifiers, and contain only minute quantities of by-products; and this is true also as regards foreign spirits of a like kind, which approach still more nearly pure diluted alcohol.
With regard to spirits of this chemical purity, there is no improvement, but rather a deterioration by being kept in bond for the purpose of ageing.
I think it may be accepted as certain that the condition that spirits of that character should be kept in wood will not bear examination, and I hope that in Committee honorable senators will see their way to make an alteration. I confidently commend to their consideration the facts, figures, and arguments I have put forward with regard to the general scheme of taxation in the measure, and trust that they will see their way to support my views.
– I have been trying to understand this very complicated matter, and the conclu sion I have come to is that the proposed change of duties would be disadvantageous to the State I “represent. I have, therefore, risen at this stage in the hope that when a member of the Tariff Commission speaks he will deal particularly with the aspect of the question as it presents itself to me. In the first instance, I want to know what was the object in view in proposing this alteration of the duties. I come back to the agitation which was commenced in Victoria about twelve months ago with regard to the effect which the Tariff had had upon the industries of Australia, more particularly upon those of Victoria. It will be remembered that the industry which was to the front in that agitation, and attracted most attention, was the industry of distilling in Victoria. It was in consequence of that agitation to a great extent that the Tariff Commission was appointed. Its members addressed themselves, I think, first to that particular subject. They took a great deal of evidence, and their report on that branch of their work was, I think, the first one to be presented.
– They addressed themselves to the distilling industry because “ stimulants “ is the first division in the Customs Tariff. They went through the Tariff in the order of the items.
– If the Minister of Defence gives me that assurance I must accept it. But it appeared to me that it was the agitation, particularly on behalf of the distilling industry in Victoria, which caused the Tariff Commission to take it in hand first, and hurry on with the presentation of its report.
– That is quite incorrect. If “Spirits” had been item 125 in the Tariff it would have been considered last.
– That is not quite the. point.
– Yes, it is. We commenced with the first division in the Tariff, and went through the items.
– Let it remain at this - that the agitation with regard to the distilling industry in Victoria was very prominent when the Tariff Commission was appointed, and by a coincidence, spirits happened in the first division in the Tariff.
– That is a perfectly fair statement.
– What was the case presented by the representatives of the Victorian distilling industry? It was that in consequence of the operation of” the
Tariff their distilleries had been thrown out of use, and persons put out of employment. We may assume, therefore, that the proposals of the Government are intended to rectify that, and no doubt if accepted by the Parliament, they would have that effect. But, as I shall show by the figures very clearly, the falling off in distillation in Victoria since Federation, has been entirely compensated by increased activity in distillation in other parts, notably in New South Wales and Queensland. Therefore, if by means of the proposed change in duties, the industry in Victoria were again put into a state of activity, it would necessarily be by depressing, to a corresponding extent, the activity which has been evinced in other States. It is possible to show that the different incidence of the duties contained in the schedule to the Excise Tariff Bill would have the effect of neutralizing the advantage which the uniform Tariff gave to the people in New South Wales and Queensland.
– Would not the increased protection compensate for that?
– No. I shall show that the alteration which the Government have made in the findings of the Tariff Commission will have an effect injurious to the State I represent. With regard to the object in view, let me turn to page 41 of its second progress report and see what the findings were.
Your Commissioners find as follows : -
The result has been a cessation, of whisky distilling in Victoria, with a corresponding increase of distillation in two other States.
It is clear from the evidence that, to a large extent, spirits are manufactured from one common basis - a highly rectified spirit called silent spirit, which is tasteless and odourless, and is practically the same article from whatever material it may be made. I ask honorable senators to bear that fact particularly in mind; because if they can show that this spirit, which is the basis of the brandies, whiskies, and rums produced in Australia, is, when manufactured from molasses, inferior to basic spirit when manufactured from other ingredients, my case has, to a large extent, gone. I take my stand on this fact - it is the central point of my argument - that the silent spirit which is the basis of the various spirits which go into consumption, is equally wholesome and quite indistinguishable whether made from grain or molasses. I believe that one or two of the witnesses have condemned potato spirit as being in some way inferior, but my argument deals with molasses spirit only.
– Has the honorable senator evidence in support of his contention ?
– Yes. I will quote from evidence given before the Tariff Commission. Some honorable senators in, interjections continually refer to “cheap inferior spirit,” their idea apparently being that spirit must be inferior because it is cheap.
– All spirit is equally good if it is rectified up to a certain point. It is absolutely flavourless and colourless. But we say that grain spirit and wine spirit when not rectified up to that high point retain their natural ethers.
-I will quote from witnesses who make my point particularly clear, and who show that spirit made from molasses is as wholesome and as good for the purposes of the manufacture of brandies, whiskies, and rums as is spirit distilled from any other ingredient. No potato spirit is made in Australia, so we need not trouble about it. On page 8 of the Digest of Evidence it is reported -
Mr. Joshua does not believe that a gallon of potato spirit comes to this country. Beet and molasses spirit - if they did come in - are excellent spirits, and would not hurt anybody.
– It was well for him to say that molasses spirit would not hurt anybody. He had a good reason for saying it.
– I know that. Senator Fraser has asked me whether authorities support my statement. I will quote plenty. On page 16 of the Digest of Evidence it is related under the heading of “Silent Spirit” - “ Rectification” means separation of the spirits from the aqueous parts - the concentration of the alcohol itself. If a spirit contained no impurities it was practically featureless; it had no character, and was neutral in taste. When once spirits had been distilled and rectified to a high degree it was impossible to say what was their origin. Alcohol if pure would have no injurious effect than that due to alcohol, no matter what its origin.
These statements are taken from the evidence of Mr. Wilkinson, the Government Analyst of Victoria. On page 20 of the digest of evidence of Mr. Henry Duncan Brown, Inspector of Excise, Customs House, Sydney, is summarized. He said -
Spirit production from molasses meant utilization of a by-product for which, unless in some special time, such as a time of drought, there would be no other demand. Figures showed a great rate of progress made in the distillation of molasses since 1901. … A tremendous portion of that spirit went to Victoria. A great deal of it went to one firm - Joshua Bros. - who used to get their molasses from the Colonial Sugar Refining Company, but when the company started making spirits they needed all their own. There is no doubt this spirit went into competition with others in Victoria.
On page 22, the evidence of the same witness was summarized under the heading “ Silent spirit.”
Mr. Brown did not think that an analyst, upon examination, could determine what silent spirit had been derived from. Mr. Brown said, “ We are led to believe that silent spirit is absolutely pure.” It consists only of alcohol and water.
On page 26, Mr. Knox, general manager of the Colonial Sugar Refining Company, is reported as - inclined to believe that silent spirit flavoured is just as wholesome as brandy or whisky ; that a large proportion of the whisky from Scotland is potato or grain spirit ; and that the tendency will be for molasses spirit to displace or reduce the production of other spirits from malt or grain on account of its cheapness.
On page 30, Mr. Thomas Henry Norrie, analytical and pharmaceutical chemist, examining officer, Customs Department, Sydney, is reported to have said -
It was analytically impossible to determine the source of a spirit in its highly rectified state. Spirits of wine was simply a rectified spirit. It might not be so highly rectified as silent spirit. It was usually sent out at about 60 per cent over proof.
On page 34, Mr. George Harker, of the Sydney University, reported to have said -
He was not prepared to offer an opinion upon the point whether highly rectified spirit simulating brandy would be as wholesome medicinally as pure grape brandy or whisky made from malt, because some of the most eminent medical men differed upon it. If a blend of wine spirit and molasses spirit, both highly rectified, with the addition of esters, were submitted to him for analysis, and the esters were present in the proportion necessary in a true brandy, he could not determine the origin and proportion of the constituent parts.
– Do not several of the analysts say that molasses spirit is less wholesome than grain spirit?
– No ; not one of them. The honorable senator may look through the report for himself. It will’ be very valuable if he can find any such statement in it. On page 48, Mr. Despeissis, horticultural and viticultural expert, Department of Agriculture, Perth, is reported to have said -
Highly rectified spirit, whether made from wine, potatoes, or malt, had practically no chemical characteristics.
I think it is clear from this evidence that molasses spirit is not in any way inferior. On page 17 of the second progress report of the Tariff Commission, it is related that Mr. Brown - was asked to explain what became of the 662,000 proof gallons of spirit made from molasses in 1904. He said that 213,661 gallons were used in the distillery for methylating, and that 343,901 proof gallons of white spirit and rum, and 42,190 liquid gallons of methylated spirits were removed under bond for transfer to Customs warehouses in other States. A tremendous quantity of that spirit, he said, went to Victoria. A small’ quantity was exported. A great deal of the spirit sent to Victoria went to the firm of Joshua Bros. Before this immense quantity was sent into Victoria the distilleries there were in full working order. There could be no doubt that this spirit went into competition with the Victorian spirits.
That makes it perfectly clear that the depression in the distilling industry in Victoria was due to the fact that under the scale of duties under which we were working until quite recently, the Victorian distillers were obtaining this silent spirit from Queensland and New South Wales. The reasons are perfectly clear. Under the scale of duties levied by the Commonwealth in 1902, there was a protective incidence upon spirits of 2s. per gallon. I am not talking about grape brandy. This protection of 2s. acted independently of the source of origin of the spirits. Whatever was the material from which they were made, they enjoyed the same protection. The consequence was that it was found more profitable to distil spirits from molasses than from grain, and that is due to the nature of the material from which the spirit is distilled.
– The honorable senator will find that the protection was only is. The Excise duty on spirits n.e.i. was 13s., and the import duty 14s. The honorable senator has said that the difference was 2s.
– That is so. I am obliged to the honorable senator for the correction ; but the protective duty was the same whether the spirit was made from grain or from molasses. Seeing that it could be made more cheaply from molasses’ than from grain, it followed that in the manufacture of blended spirits, spirit made from molasses naturally took the place of spirit made from grain. Bearing in mind mv contention - which I think I have sufficiently supported - that the one article is as wholesale as the other, and is indistinguishable from it-
– Not unless it is rectified up to a certain standard.
– No. I invite the honorable senator to refer to the evidence and mention any witness who said that for these purposes spirit made from molasses is less wholesome than spirit made from any other material. The reason for the differentiation proposed in this scale of duties is not that spirit made from molasses is less wholesome, but simply that the cost of producing it from molasses is less than the cost of producing it from other materials, including grain. I say that that is based on a wrong principle altogether in protection, and I shall put forward some arguments in support of the statement. Honorable senators must understand what the position is, and how this alteration of the scale of duties will tend to revive distilling in Victoria, and depress the industry in other States. Under the new scale, there will be a protection of 2s. per gallon on spirits distilled from grain, and a protection of only is. per gallon on spirits produced from molasses. That, it is calculated - and this is the real object of the alteration - will have the effect of increasing distillation from grain and decreasing distillation from molasses. I say that that is unfair. The reason why spirit can be distilled more cheaply from molasses than from grain is because there is more sugar in molasses than in grain - because molasses is richer than grain in the elements from which spirits are distilled. It is certainly not justifiable to give a higher protection to an article because it is more expensive to obtain the product desired from it. It works out in this way : Seeing that the material from which spirit can be most cheaply obtained is produced in one part of Australia, and the material from which it is obtained at a greater cost is produced in another part of the Commonwealth, this proposal really differentiates between the north and the south of the Commonwealth - to the disadvantage of the north. It is, handicapping the material produced in the genial warmth of the northern climate as against the article produced in the colder south. That is not justifiable, nor is it a right principle on which to act. I shall give an illustration to show how wrong it is. We are producing in Queensland a particular kind of hemp, called sisal hemp, which will not grow in colder climates. It grows abundantly in Queensland and is likely to be an important article of export from that State by-and-by. It is a verv good hemp for rope-making. It grows more abundantly in Queensland than any other kind of hemp will grow in a colder climate, and gives better results. What would any honorable senator say if on that account a heavier Excise duty were imposed on rope made from sisal hemp than on rope made from other sorts of hemp? It would be practically putting a handicap on the bounties of nature, in order that a product from which the required article could not be cheaply manufactured should be put on an equality with the product from which it could be cheaply manufactured. That, I am afraid, is the principle on which the Tariff Commission have acted in submitting one of their recommendations. It is a wrong principle altogether. If it is right in principle to handicap the product from which an article can be most cheaply manufactured, I contend that if another kind of hemp were discovered, the use of which would involve twice the cost to obtain the same results, it should be still further protected to bring it to a level with the article from which the best results can be obtained most cheaply, That is certainly a wrong principle, and I say that we in the north, where sugar is produced, and where molasses is a by-product, practicallycosting nothing, are entitled to the advantage nature gives us. The intention and the effect of the new scale of duties will be to unfairly handicap that article, not because it is unwholesome, but because it is produced in such abundance and so cheaply that spirit can be made from it more cheaply than from the materials to be obtained in the colder south. I direct the attention of the Senate to the way in which the Government in this scale of duties have departed from the recommendations of the Tariff Commission. The departure is made by the alteration of a few words, which, however, are most important in their bearing on the subject. I think that the Minister glanced over this difference without noting that in quoting the scale of duties attached to the Bill he was not following the wording of the re-‘ commendations of the Tariff Commission. At page 4 of their recommendations, subsection 3, the Commission say -
For the manufacture of blended brandy distilled partly from grape wine and partly from other materials.
If honorable senators will turn to the Bill they will sea how that appears in the third item of the schedule -
Blended spirits distilled partly from grape and partly from grain.
There is the substitution of the words “ from grain “ for the words “from other materials “ used by the Tariff Commission, and that is what makes all the difference between the recommendation of the Commission and the proposal of the Government.
– I referred to that.
– Then I beg the honorable senator’s pardon. I had not noticed that he did so. The proposal of. the Tariff Commission is that there shall be an advantage of 2s. protection in the case of blended brandy distilled partly from grape wine and partly from other materials, which of course would include spirit distilled from molasses, and the alteration which the Government have made is to substitute “grain” for “other materials,” giving the benefit of the protection of 2s. to a blended spirit that is partly the product of spirit distilled from grain, and denying it to a blended spirit that is partly the product of spirit distilled from molasses. Another alteration of exactly the same character will be found. In sub-section 5, on page 4 of the recommendations, the Tariff Commission say -
For the manufacture of whisky distilled partly from barley malt and partly from other materials -
If honorable senators will look at the corresponding item in the schedule of the Excise Tariff .Bill they will find that it reads -
Blended whisky distilled partly from barley malt and partly from other grain.
There the same distinction is again . made, and the whole thing is aimed at the use of spirit distilled from molasses.
– The Excise duty proposed in the case to which the honorable and learned senator refers is only ns.
– Yes, but there is an advantage of 3s. there; the Excise duty being 1.1s., and the import duty 14s.
– The Excise duty proposed on blended spirits is 12s.
– Senator Drake is quite right; he is referring to blended whisky.
– Of course I am. According to the recommendation of the Tariff Commission, blended whisky distilled partly from spirit produced from molasses would reap the advantage of the protection proposed, but according to the proposal of the Government, it would not. The departure in the Government’s proposals from the recommendations of the Tariff Commission in these cases is directly aimed against spirit distilled from molasses, which in the past has played such an important part in the making up of the whiskies and brandies of commerce. I propose to read a few figures which summarize the whole thing, and are more eloquent perhaps than anything I could say. I quote from page 13 of the Tariff Commission’s Progress Report No. 2 -
The following figures extracted from a return prepared for the Commission by the Department of Trade and Customs, which appears in the appendix marked “ B “ (shows the quantity of spirits produced in Victoria during the last seven years) :-
From these figures honorable senators will see the decline in the manufacture of spirits in Victoria, from 470,680 gallons in 1899, to 163,841 gallons in 1905. I should now like to refer to the corresponding figures in reference to New South Wales, which appear on page 16 of Progress Report No. 2 of the Tariff Commission. The figures are as follow: -
On page 16 there are statistics which show the effect of the Tariff in Queensland, where the production of spirits, particu larly rum, has largely increased under the operation of the Commonwealth Tariff. The figures are as follow : -
If honorable senators turn now to page 45 of the same progress report they will see that Appendix B consists of a return showing the production of spirits in the several States for the years 1899 to 1905 as follows: -
of that return be analyzed, it will be seen that while in 1899 the quantity of spirits distilled in Victoria was about two-thirds of the whole distilled in Australia, in 1905 the proportion was about one-tenth. The figures are most interesting from a revenue point of view. What is proposed now is to shut out the spirits distilled from molasses, and thus restore the distilling industry to Victoria, while practically killing or very much depressing, the corresponding industry in New South Wales and Queensland.
– Is that a necessary consequence ? Could we not restore the distilling industry in Victoria, and still stimulate it in Queensland and New South Wales?
– Clearly not, because there is a distinction of1s. per gallon in regard to the highly rectified spirit, which is the basis of the spirits of commerce.
– There is a difference of 2s. per gallon in the import duty instead of1s.
– That is only in regard to rum.
– It is an important fact.
– But the difference of 1s. to which I have referred will have the effect of causing this spirit to be produced in Victoria instead of in New South Wales and Queensland.
– It will be produced in New South Wales and Queensland in contradistinction to the imported spirits.
– What I am endeavouring to show is that an impetus has been given to the distilling industry in New South Wales and Queensland by the operation of the uniform Tariff.
– That is clear.
– What protection was there in Queensland before Federation?
– It was between 10s. and 6s. 8d., or something of that kind.
– How does that compare with the protection which the honorable senator has said has given an impetus to the industry?
– Therewas protection to the extent of 2s. per gallon on rum. What has made the great difference under the operation of the uniform Tariff is that a large quantity of what may be called the natural material required for the production of the spirits of commerce, is produced in. New South Wales and Queensland, and that it is richer in the ingredients required than is the material produced in
Victoria. In any case the protection prior to Federation does not affect my argument. The evidence of witnesses before the Tariff Commission shows very clearly what has given an impetus to the distilling industry in New South Wales and Queensland. I have only a word or two to say now with regard to the revenue. In this respect it, again, unfortunately happens that Queensland is placed at a very great disadvantage. In fact, Queensland is “ hit “ in every way ; andI think Victorians should remember that in the northern State a great many people feel very much hurt, owing to the fact that their industries have suffered in competition with the industries of Victoria under the uniform Tariff. Of course, that is a natural operation of Federation, of which it is, perhaps, useless to complain. We cannot, however, help noticing that Queensland industries have been very much depressed or injured in competition with the industries of Victoria, which have directly benefited from the operation of the uniform Tariff. In this connexion Queensland loses both ways ; she loses her industries, and, in consequence of taking a large quantity of untaxed goods from Victoria, she loses at the Customs House.
– Queensland does not lose in respect to the sugar bonus.
– I am not now dealing with the sugar bonus, but with several of the industries in Queensland which have suffered in the way I indicate. Of course, in a Federation, States must give and take - if a State loses in the case of one industry it gains in the case of another. I am now merely putting the position as it presents itself to many people in Queensland, who see that their industries are depressed in consequence of competition in Victoria, and that, at the same time, the revenue is suffering.
– Queensland has undoubtedly lost revenue.
– We are told that, under the proposed duties, the loss will be from £60,000 to £80,000 per annum. Officers of the Department of Trade and Customs and officers of the Treasury have held a conference, and they have unanimously come to the conclusion that the loss will amount to what I have mentioned.
– That is the loss to the Commonwealth?
– Yes, and that is very severe on some of the States which will not derive any benefit from the duties, and doubly severe to those States which, not only will not derive any benefit, but will be absolutely injured industrially. Representatives of Queensland and New South Wales should observe that, as Senator Pulsfordhas said, this loss of £60,000 or £80,000 is only a commencement - if it means an extension of the substitution of the local article for the imported article, the loss will not stop at that figure, but may reach £300,000. This loss will not be borne by the people of the States on a population basis, but will be measured by the extent to which the local article is used instead of the imported article. Thus it is that Queensland has been losing all along, and probably losing more than any other State, because, as the Inter- State trade returns show, Queensland, to a continually increasing extent, has been taking her supplies from the south, particularly from Victoria, instead of importing them.
– Queensland has been sending Victoria rectified spirit as whisky.
– And that is what it is now sought to stop - it is sought to deprive Queensland of the benefit of this trade by altering the incidence of the duties in order to encourage the production and consumption of local spirits in Victoria. It is probable that Queensland will lose not £8,000 or £10,000 per annum, but probably £15,000 or £20,000, by an alteration of duties expressly designed to injure the Queensland industry. Under these circumstances, the Senate ought to consider the matter very carefully before it adopts the duties in their present form. I shall propose some amendments in Committee ; but unless I have reason to believe that the duties will not operate so injuriously as may be anticipated, I shall feel inclined to vote against the whole proposal.
– 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
– The honorable senator means the total revenue derived from the scale of duties now proposed?
– The Tariff Commission did not consider that point, but made proposals which, if adopted, would have reduced the revenue.
– The Minister of Defence has now touched me in a very tender part.
– The honorable senator did not protest against the recommendation to reduce the revenue.
– 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.
– We have tried to’ stop the loss of revenue involved.
– 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.
– That rather absolves any one from paying very much attention to what the Commission agreed to, because, perhaps, there was loyalty on both sides.
– 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.
– It would not be a fair challenge if made.
– 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.
– Does that represent only the employment in the distilleries?
– 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 that.it 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.
– Is the honorable senator taking into account the quality?
– 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.
– The honorable senator must deduct so much for methytation
– 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?
– Does not the company distil any spirits in Queensland1?
– 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.
– Does the honorable senator know the aggregate value of those 660,000 gallons of spirits?
– 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.
– Is 6d. the manufacturer’s cost of production?
– Yes ; that is what it costs the company.
– But that is not the selling price?
– 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.
– That is to say, they converted a nuisance into an article of profit.
– 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.
– If that be correct, Messrs. Joshua Brothers will not distil spirits any more?
– 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.
– Did they not ask for extra protection?
– Of course thev did, and what would have been the result if thev had got it?
– Did they ask for the protection recommended by the Commission or for more?
– They asked for more.
– More than the Commission has recommended?
– Much more. I will read some answers given by Mr. Joshua to the Commission dealing with this point.
– Is that shown in the digest of the evidence?
– No, it is not in the digest. The digest was prepared for the use of the Chairman of the Commission.
– That is rough on the digest !
– 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?
– I should like to see the Hansard report of what the honorable senator did say.
– The statement was thatthe honorable senator would quote from fuller evidence than appears in the digest.
– It is only natural that a digest should boil down the evidence.
– Perfectly reasonable, I think.
– 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?
– 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 Best has 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.
– That is good Socialism.
– It may or may not be Socialism, but we are not discussing that question now.
– It is much better individualism.
– 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.
– 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.
– They tried to make whisky out of spirit obtained from Queensland, and failed.
– Where is that stated? Let us have the number of the question.
– 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.
– What is the object of the honorable and learned .senator’s remarks in this connexion? What does he desire to show?
– 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.
– I wish to know whether the honorable and learned senator is against the protection we proposed ?
– 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.
– Does the honorable and learned senator propose to put both sides?
– 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.
– In order to justify the recommendations which the honorable and learned senator signed ?
– In order to justify my position as a senator.
– I think the honorable and learned senator should justify his recommendations.
– Suppose he has changed his view?
– If he has, the case is different.
– I s I submit that this is scarcely generous of Senator. Best.
– I do not intend to be otherwise than- generous.
– 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.
– 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.
– 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.
– Surely” the honorable and learned senator will advise the Senate to adopt the recommendations he has signed ?
– 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.
– What is the object of the Tariff Commission’s recommendations?
– 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.
– 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?
– 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.
– From Ballarat?
– 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.
– The witness put the blame on the Tariff, and said that with a protection of 4s., the other spirit would not come in.
– 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.
– I was speaking of the proposals of the Government; the Tariff Commission do not make any discrimination.
– That is the point to which I was coming, but I shall answer
Senator de Largie 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.
– What extra expense does that involve?
– 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.
– That is the position as we found it.
– 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.
– Could not those who distil from molasses still hold their own?
– Possibly they could.
– It looks like it.
– 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.
– That is the point.
– 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?
– What Senator Clemons says is that the unrectified spirit from malt, or malt and grain, is better than the unrectified spirit from other products?
– That is the conclusive answer.
– But is it any less harmful from the point of view of the consumer ?
– 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.
– Is one as wholesome as the other,
– 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.
– I understand the honorable senator to say that the quality depends on the presence of some impurity.
– Then if public taste were to change a little, the one whisky would be as marketable as the other ?
– 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.
– Let each spirit stand upon its merits.
– Sell it as silent spirit - it is not whisky.
– 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.
– Then, briefly put, the best class of whisky is that which has the most flavour?
– Not quite’ that.
– And the flavouring is deleterious matter, being, principally fusel oil?
– 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.
– Is not the flavour in Scotch whisky put in by artificial means?
– 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.
– 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?
– Certainly it is not more wholesome ; but it is the highest quality so far as flavour is concerned.
– It is the highest priced in the market.
– 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.
– It is the age which gives the quality
– 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.
– Properly speaking, nothing else is brandy.
– 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.
– Was it carried on extensively ?
– 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.
– Did it go into consumption ?
– Undoubtedly the whole object was to put it into consumption, not, perhaps, in the form of whisky, but certainly for the preparation of essences.
– And scents.
– 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-
– To make locallymade silent spirit absolutely free, and to reduce the duty on the imported article to 6d. per gallon.
– 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.
– Did the Commission satisfy itself that precautions could be taken to guard against the frauds to which the honorable senator has referred ?
– I may .mention that in America a Bill on the subject has been passed.
– Yes. I am sorry that I cannot answer Senator Millen absolutely, but there is every reason to hope that success will eventually be achieved. I forget the name of the witness in Sydney - I apologize to him for forgetting his name - who produced a formula which would in his opinion produce methylation in such a way that the spirit could not be subsequently demethylated. We also made inquiries, and obtained information with regard to processes in America. We found that manufacturers there have been alive t© the importance of this question, for a considerable time. We were supplied with copies of an excellent American journal - the Scientific American - in many numbers, of which honorable senators will see good articles dealing with this question. I am satisfied that there are enormous possibilities for Australia in the production of industrial alcohol. I believe that it is going to take the place of kerosene, which we do not produce in this country ; and I join with every honorable senator in endeavouring to enable this country to produce something instead of importing it. Now, I desire to ,go back a little, and to make a statement in fairness to Messrs. Joshua Brothers. I make this remark lest I might be accused of holding back a certain amount of information. By no ingenuity of mine, or of any other member of the Tariff Commission, could we ascertain with absolute accuracy how much of the molasses spirit brought into Victoria was subsequently methylated. I expected that some honorable senator would challenge me to show how much was methylated, and how much was used for human consumption-. I say at once that I believe that a very small proportion of it is used for methylation. I have made every endeavour to ascertain the facts, but the only information I could get was that the proportion methylated was very small. The figures I cannot get. Although I make this statement in justice to Messrs. Joshua Brothers, I say openly - and I say it as a challenge - that nothing would give me greater pleasure than to have a statement from them, on oath, as to the quantity of silent spirit that thev have obtained altogether^ not only from the Colonial Sugar Refining Company, but from any other concerns; the quantity that they have put before the public for human consumption, and the quantity that they have used for purposes of methylation. If I could ,get information on that subject I can assure the Senate that I should be delighted.
– Did they refuse to give it? ‘
– I cannot say that they refused; but if Senator Higgs will forgive me for making this reflection upon the Commission, without asking his permission, I have to say that at the time when we took the evidence of Messrs. Joshua Brothers in Victoria very few if any of us were really alive to the significance of this question. It was not until we had heard the evidence pf Mr. Knox in Sydney that I saw how important it was. Honorable senators will well understand that the members of the Commission are not heaven-gifted men who knew all the intricacies of this particular question before they had fully inquired into it. As a matter of fact, I do not believe that the mind of any member pf the Commission became alert, or that any one of us was ready to extract additional information from other witnesses, until we had finished taking evidence in Melbourne. It was not until I had an opportunity of examining Mr. Knox - who did not give evidence voluntarily, because he had no complaint to make - that I saw the whole bearings of the question.
– Could not Mr. Joshua have been recalled ?
– As to recalling Mr. Joshua, I have to say that we had no opportunity. I think I can say, by way of personal explanation also, that after we had examined Mr. Knox, the Commission did not return to Victoria for the purpose of taking evidence. I had decided that nothing would prevent .me from recalling Mr. Joshua if I could induce the other members of the Commission to allow me to recall him when we returned to Melbourne. But after the sittings in Sydney, the members of the Commission went on to Brisbane. The report on spirits was prepared in my absence. Therefore, I had no further opportunity to press for Mr. Joshua’s recall. If, however, Messrs. Joshua Brothers can now prove to the satisfaction of the Senate that a very small percentage of the spirit purchased by them from the Colonial Sugar Refining Companyhas gone into consumption, I shall say that they have done much to refute any arguments that I have used against them. But on the evidence which the Commission has presented, the inference is clear and undoubted. I am certain that no senator, taking the evidence as it stands, can possibly come to any other conclusion than that at which I have arrived, that Messrs. Joshua Brothers’ profits do not depend for a moment upon the Tariff, but that so long as thev can obtain silent spirit from Sydney, Brisbane, and elsewhere, their profits are sure and certain.
– Will the honorable senator deal with the point mentioned in an interjection by the Minister of Defence?
– I have directed attention to a statement of Messrs. Joshua Brothers as to how they have dealt with the spirit that they have received. I think they state that they tried it for the purpose of making whisky, but that it was not found to be satisfactory. They also state that they used it for methylating.
– I can assure the honorable senator without the slightest hesitation, that we have no evidence whatever that any large quantity of the spirit is methylated. We have only a limited amount of evidence that even a small quantity is methylated. I have no doubt whatever, speaking personally, that the vast proportion of this spirit imported into Victoria was sent out for human consumption, and was never methylated at all.
– Will the honorable senator look at question 993 ?
– I will read that question, together with the questions leading up to it - 989. Did you handle the whole of the 182,000 gallons of Australian spirit that came to Victoria in 1903? - Practical ly the whole of it. 990. Where did it come from? - New South Wales. 901. What spirit was it? - Sugar spirit, made by the Colonial Sugar Refining Company, for whom I am agent here. 992. What did you do with it? - It was principally methylated.
It is perfectly true that Mr. Joshua gave that answer.
– Exactly !
– But it is put more or less vaguely.
– Messrs. Joshua Brothers claim to be merely agents.
- Mr. Joshua called himself the purchasing agent. What distinction he intended to convey by that, I do not know. I simply take it to mean this - that he made an agreement with the Colonial Sugar Refining Company by means of which he became the purchaser absolutely.
– He says that the spirit which he bought was “ principally methylated.”
– He does.
– But read on.
– I will read the next answer- 993. And sold? - As methylated spirit. Some of it was rum; some of it was spirits of wine supplied to manufacturers ; and a small quantity was tried in the manufacturing of cheap liquors. For instance, we were trying to make an article by adulterating the whisky with some of this molasses spirit, and selling it very cheap; but it was no good. Nobody would have it.
– Exactly !
– All the expert evidence is to the contrary.
– Honorable senators must attach their own value to this statement. There is the fact admitted, that Messrs Joshua Brothers “ tried “ to carry on the business of making whisky with this still spirit.
– The witness says “Some of it was rum.”
– As to the statement of the witness that “ It was principally methylated “ - I venture to say that that answer was not truthful. I make that statement without the slightest hesitation. If “ principally “ means that over 50 per cent. of it was methylated, I say that that quantity of spirit was not methylated in Victoria.
– But the witness says that it was.
– Senator Best may derive any consolation that is possible from that answer, but I invite him, or any other honorable senator, to supplement the work of the Tariff Commission, and to obtain, if he can, sworn evidence from Messrs. Joshua Brothers as to the exact quantity of the spirit which they methylated. I shall welcome evidence on the subject, whether it confirms what I am saying or otherwise. If I am doing an injusticeto Messrs. Joshua Brothers, I want to be corrected. I have every desire to do them justice. I should hate to make an accusation against them that was not well founded. I should welcome a plain statement from them showing the quantity of this spirit which they have handled, the Quantity which they have methylated, and the quantity which they have sent into human consumption.
– Does the honorable senator say that it is illegitimate to make whisky from silent spirit?
– No. But I say that the manufacture of whisky from silent spirit disposes of the whole Question, whether it is necessary to increase the duties for the benefit of the distilling industry of Victoria. The whole point is that, owing to natural conditions, some States have been able to win in the race for business in this trade.
– Cannot the Government obtain from the Excise officers an exact account of the extent of the methylation done by Messrs. Joshua Brothers ?
– I think the Government could get us that information.
– The- revenue returns would show that.
– I think the information ought to be obtainable, and if I can get it I shall. If the Minister can furnish the information to us, I hope that he will. We want to know the amount of spirit methylated during tha last three years by Messrs. Joshua. Brothers. Nothing would please me more than to know that. I invite the Minister to obtain the particulars from the Department. I think it has an essential bearing upon this question. My own belief is that the evidence will show that the present state of affairs in the spirit industry is not due to the Tariff at all, but simply to Inter-State competition. That is the whole point. It was Inter-State competition that injured the Victorian distilleries, arid that practically shut them up, and it was not the importation of foreign spirits. I have not quoted figures to any extent, because I dislike therm; but it can be shown that, so far from our imports of spirits having increased, they have absolutely diminished since the operation of the Federal Tariff. There has, however, been a tremendous change as to place in local production. There is a matter about which, perhaps,- I have not said enough, because I think other honorable senators will address themselves to it, and that is the financial aspect of the question. It is of very great importance, and I urge honorable senators of all forms of fiscal faith, if they can see their way to avoid any loss of revenue to the Commonwealth in this connexion, to endeavour to do so.
– We tried to do so.
– I give the Minister my assurance that I shall help him all I can in that direction.
– That cannot be done in the Senate in the way Ministers have tried to do it.
– We could make a request.
– It can be done by an increase of the Excise duties, and that is the invitation I throw out! to every member of the Senate, no matter what his views on the fiscal question may be. Having regard not only to the protection of local manufacturers, and to the question of the interests of labour in the industry, I urge honorable senators to be prepared to consent to such alterations of these proposals as will secure to the Commonwealth, and consequently to the States, the advan tage of some increase of revenue from the taxation of an article indulgence in which- I have more than once referred to as that sort of luxury which borders on a vice. I earnestly ask honorable senators to take that course. To do so will not have the effect of destroying the industry of distillation in the Commonwealth, though it may affect the operations of the industry in a particular State.. I believe that the industry is firmly established. I believe that the changes brought about by Federation, while they may have had the effect of altering the locality of successful local production, have largely benefited the industry in the Commonwealth .as a whole. I say that, even if we increase the proposed Excise duties, we shall not hurt the industry, and if we do increase them, as every honorable senator knows, that will be a source of extra “revenue.
– That is to say, the Excise duties recommended by the Commission will not injure the industry.
– There is no question that they would not injure the industry. I may frankly admit, that, on reviewing them carefully, I am inclined to think that they might be made a source of revenue. At the last moment, speaking not as a Tariff Commissioner, but as a senator, I say frankly that I shrink from doing anything, individually or conjointly with any one else, which will impose a loss upon the Commonwealth of from £60,000 to ,£80,000. I invite honorable senators, if they are concerned, as they should be, in the Tariff on revenueproducing articles, and if they are concerned abouti a possible loss of revenue to the Commonwealth, to consider this matter carefully before this Bill leaves the Senate-
– That isi, to increase both the Excise and import duties?
– If I believed that that would have the effect desired, I should support it. Senator Higgs is aware that, if an import duty is increased to too great an extent, the effect is to destroy revenue. It is difficult to fix an arbitrary duty, and to say that, if we go beyond it, the result will be a loss of revenue; but I invite the concurrence of the Senate in the statement that import duties may be increased to such ani extent as to lead to a loss of revenue. I think that the existing import duties on spirits are high enough, and I am supported in that view by the best Treasurer Australia has produced. I refer to Sir George Turner, who has expressed the opinion that an import duty of 14s. on spirits is as high as it is safe to go, if we desire to secure revenue from this source.
– Revenue has been obtained in some of the States from a duty of 15s. per gallon.
– I have stated the opinion of Sir George Turner. If we desire to increase our revenue from this source, it is important that we should see that the Excise duties are not too low, especially as I believe that Australia is entering upon an enormously increased production of spirits. The prospects of the industry are such that it promises to be amongst the most prosperous industries in the Commonwealth, and I believe that, without a jot of protection, it is in a position to hold its own against competition from any part of the world. It is an industry into which the question of difference in rates of wages does not enter. It is in no way handicapped in the matter of the cost of labour. If the labour engaged required consideration, it should have my sympathy; but I can assure honorable senators that they are free to deal with this industry with a certain knowledge that they will not be injuring labour conditions in Australia, or doing any harm to a class of individuals whom they wish to befriend. There is no industry affected by the Tariff which will have to be considered by the Senate in connexion with which that statement can be accepted more completely than it can in this case. Honorable senators might increase these Excise duties to such an extent as to leave scarcely any difference between them and the import duties, without injuring labour to any extent, and without depriving twenty men in the whole of the Commonwealth of their wages. That is my honest opinion. The wages paid, such as they are, in the opinion of Mr. Joshua himself, are practically the same as those paid in the industry in England and Scotland, the chief competing countries.
– Either that, or they are so insignificant as not to constitute a factor worthy of consideration.
– Precisely. I am glad that Senator Trenwith agrees with me. As he very properly says, they are not a factor worthy of consideration. Finally, I would say, with regard to my attitude on this Bill, that I shall welcome any proposals which the Ministry may, make to provide to secure an increase of revenue from this source, and I shall lend my assistance to any member of the Senate who has any proposals to submit to safeguard our revenue.
.- 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 : -
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.
– There is a reason why. The insertion of the latter part of the paragraph seemed to justify me.
– The conclusion continues -
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–
– Not an attack, surely?
– I think that Senator Clemons will admit that it was an attack.
– I hope the honorable and learned’ senator will not admit it. He simply read us the evidence.
– I do not admit it. Surely I tried to be fair to them?
– 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.
– A change of venue of production.
– 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.
– 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.
– 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.
– There is nothing to show that molasses spirit is injurious to health.
– 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.
– Dr. Fiaschi says that highly-rectified alcohol is hygienically quite harmless.
– 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 Drake was 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.
– 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.
– 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.
– Was not Dr. Jones then referring to alcohol as a medicine, and not as a beverage?
– It will be remembered, however, that Dr. Fiaschi holds that the moderate use of spirits as a beverage is beneficial.
-Col. Gould. - But Dr. Fiaschi does not believe in using spirits unless they are at least ten years old.
– What I am objecting to is the Government departing from the recommendations of the Tariff Commission.
– 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.
– But Senator Higgs has told us that the Commission were clearly of opinion that the more wholesome spirit is malt spirit.
– The Commission differentiate so far as wholesomeness is concerned.
– 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.
– The Commission did not differentiate against molasses spirit, but the Government have done so.
– Blended whisky also has a protection of 3s. The rum distilleries which Senator Drake has taken under his special care-
– Not at all.
– From the honorable senator’s speech, I thought he regarded it as a great injustice that any attern.pt should be made to exclude spirit distilled from molasses.
– To differentiate against molasses spirits.
– 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.
– Is it founded on the English case?
– 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.
– With a full knowledge of the subject, the Commission was of opinion that it would be about ,£70,000 or £80,000?
– The Commission felt that it was largely ‘a matter of guesswork.
– It will largely depend upon how protective the Tariff may prove to be.
– 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.
– It is only a matter of time when we must follow the example of Canada.
– The honorable senator is looking forward to the time when he thinks that we must make our Customs and Excise duties equal?
– 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 : -
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.
– I said that it was in the forefront of the agitation.
– 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.
– That is no reason for handicapping her production now.
– 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.
– But it is economically profitable to save it.
– 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.
– Will the present proposals prevent whisky being made from the spirit to which the honorable senator objects?
– 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.
– According to the honorable senator’s argument, any kind of spirit can be sold for human consumption as blended spirit.
– 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.
– But there is nothing to prevent an inferior whisky feeing put on the market.
-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.
– The honorable senator does not hesitate to advise the Senate to accept the proposals of the Government, rather than those of the Commission.
– 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.
– I suppose the honorable senator is still prepared to come down?
– 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.
– In moving -
That the adjourned debate be made an Order of the Day for Tuesday next,
I wish to ask honorable senators to assist me to pass the second reading of the Bill on Tuesday, and, if possible, to pass it through Committee. We have not very much time at our disposal, and if the Senate will help me I shall be very much obliged.
Question resolved in the affirmative.
Senator PLAYFORD laid on the table the following paper: -
Report by the Inspector-General of the Commonwealth Military Forces, Major-General Finn, dated1st September, 1906.
Ordered to be printed.
Motion (by Senator Playford) proposed -
That the Senate do now adjourn.
– I would like Senator Keating, if he can, to furnish some information with regard to the Tasmanian mail service. The existing contract will expire at the end of this month; tenders for a new service were received about three weeks ago; and I desire to know what the decision of the Government is.
– In answer to the honorable senator, I have to say that an arrangement in connexion with the Tasmanian mail service has been completed so far as the Government is concerned. Tenders were received, with the result that a contract will be entered into with the Union Steam-ship Company of New Zealand and
Huddart, Parker and Company Limited, who, jointly, will be the contractors for the service. I may take the opportunity to read the following statement in regard to it:-
The present contract provides for a three times a week service throughout the year between Melbourne and Launceston by two steamers, one averaging 16 knots, and the other averaging 14 knots, for a subsidy of £11,000 per annum; and for a service between Melbourne and Burnie once a week for eight months in each year, and twice a week for four months in each year, for a subsidy of £2,000 per annum.
As compared with the existing contract, the new tenders at the same rate of subsidy provide -
For the Loongana, averaging 16 knots, to maintain the full service to and fro between Melbourne and Launceston from15th October to 30th April.
For the provision of a steam tender to connect atRosevears with the contract steamer when the tide does not permit of the latter awaiting the arrival of the Hobart express at Launceston.
For two sailings per week all the year round to and fro between Melbourne and Burnie, as against two sailings per week for four months and one sailing per week during the remaining eight months.
For the Oonah, averaging 14 knots, to be substituted for the Flora, averaging 12 knots, before the end of 1907.
For the steamers to connect at Burnie with the trains to and from Launceston.
.- I desire to ask the Minister of Defence whether he will obtain for the use of the Senate, from the Department of Trade and Customs, the information which has been asked for during the debate on the Spirits Bill, relating to the quantity of spirits which have been methylated in Victoria from 1899 to 1905?
– I will obtain that information.
Question resolved in the affirmative.
Senate adjourned at 4 p.m.
Cite as: Australia, Senate, Debates, 14 September 1906, viewed 22 October 2017, <http://historichansard.net/senate/1906/19060914_senate_2_34/>.