As a result of the introduction of the tobacco industry in Australia, there are now 27 factories in the Australian colonies, involving an investment of some £900,000 capital.

The crop is estimated at 2,731,344lbs, and the approximate value is £70,000 per annum. From the fiscal point of view I wish to say that some people hold that the protection of this industry would seriously interfere with the revenue derived from the duty on imported tobacco; but, in reply to that, I might say that such has not proved to be the case in the Australian colonies, because, after allowing for the increase in population, the cheapening of the article leads to a more extensive and liberal use of it. To illustrate this, I may say that while in 1885 the import of tobacco into New South Wales from America was 350,000lbs, in 1893 it was about 975,000lbs, notwithstanding that the local factories produced about 2,000,000lbs per annum. Similar results have taken place in Queensland, where tobacco manufacturing was commenced as late as 1889. Previous to that practically no tobacco was grown in Queensland, but today the actual value of the tobacco crop is estimated at £30,000 per annum. In Victoria, where they have a duty of 3s per lb. on imported tobacco, 1s duty on American leaf, and 6d excise, the imported tobacco has held its own; and I would page 12 suggest, to prevent any falling-off of revenue, the following tariff, which I feel would increase the present returns, and allow ample protection for the pioneering of an industry employing so many workmen:—A duty of 4s per lb on American manufactured tobacco; a duty of 2s 6d per lb on American leaf going into bonded factories (this duty to last for three years); then an excise of 6d per lb to be imposed at the end of this period. In suggesting this to you, I would like to impress the fact that it would take fully 12 months after the passing of the Act to thoroughly build and equip a factory with machinery, and we would have only two years to introduce the locally-grown leaf in a smokeable form. To illustrate by figures the result of the above suggestion, the only New Zealand Government figures available are those contained in the Blue Book of 1893. In this year l,239,597lbs were consumed by a little over 700,000 inhabitants, yielding a revenue of £216,929. This additional 6d would increase this revenue by £30,990, being an adequate amount to compensate for any loss during the second two years of actual work done by the factories under the protection suggested, which bears the same differential duty as the present Victorian tariff. At the end of three years, when the local growth of tobacco is thoroughly accomplished and understood, an excise could be imposed of 6d. per lb., which would make American-manufactured leaf in New Zealand pay a duty of 3s. per lb., which is at present the case; or if the local leaf manufactured became so formidable to the tariff, which I have no doubt it will, it should be necessary to impose a heavy excise duty to compensate for any loss that might be sustained by a local article supplanting a foreign one. Of course you will thoroughly understand that there is always a strong prejudice against a local manufacture, which it takes hard work as well as skilful manufacture to overcome, and at the same time an investment of capital necessary to the commencement of operations, which are always attended by considerable initiatory expenses, and a certain amount of protection is therefore required. There should also be considered the fact that annually about £100,000 goes away from New Zealand to be distributed in labour and materials in other countries; this money kept in circulation here would materially increase the revenue by the purchases and consumption of other dutiable articles by those who work in and benefit by such industry.