Senator WRIEDT (Tasmania) (Leader of the Opposition) - This Bill is to obtain approval of the Parliament for an agreement between the Commonwealth and Queensland governments to regulate the availability and the pricing of sugar. It contains the text of the Sugar

Agreement 1979 and provisions to implement the Commonwealth's responsibilities under the agreement. We, in the Opposition, will not be opposing what is in fact an important Bill. It renews the previous Sugar Agreement Bill which expired on 30 June this year and which was extended for a period of three months.

The Agreement deals with the setting of the domestic price for sugar and the terms and conditions under which it will be sold. The Agreement is between the Queensland and Australian governments which resulted in delays to the presentation of this legislation. The Queensland sugar industry could be fairly described as highly institutionalised and because of the monocultura nature of sugar production and the long history of legislative and industry control, it is a peculiar example of private ownership and government control. The Industries Assistance Commission was asked last year to conduct a special inquiry into the industry. That inquiry was headed by Mr McKinnon, the Chairman of the IAC, with a Commonwealth and Queensland Government representative. The report was available earlier this year and on the question of domestic pricing arrangements the commissioners were divided.

This legislation represents a compromise between the Commonwealth view which coincides with the minority report of Mr McKinnon and the Queensland view which supported the majority report. The latter wished to see the domestic price adjusted entirely in relation to movement in cash costs and the former wished to see international prices taken into account. A compromise formula which takes limited account of movements in cash costs and export prices will now be used under this arrangement. It is important for the sugar industry that price adjustments are now to be made on a regular basis. This will avoid the position where prices were adjusted irregularly and no account was taken of the continual inflationary effects on the industry's returns. Whilst there has been some criticism that the arrangements for the present Agreement entrench what is a restricted industry, it cannot be forgotten that the sugar industry has an obligation under this Agreement to supply the Australian market with raw sugar. At a time of depressed prices and of surpluses that guarantee might seem meaningless, but when prices rise and supplies are short that guarantee becomes significant.

We should also note that some of the major critics of the current pricing arrangements are the major soft drink and confectionery manufacturers. Whilst the costs of their products are often factors in the inflationary process, we cannot ignore the fact that companies such as the Coca Cola company- a good example I suppose- and the Cadbury-Schweppes company are large international companies which have made no attempt to introduce even a limited degree of local equity. There must also be some suspicion that even if the price of sugar to these users were reduced there would not be a reduction in the prices of their products. Had the major soft drink manufacturers and confectioners shown a genuine attempt to Australianise their operations, the Opposition would be more sympathetic to their pleas. But in contrast the sugar cane milling and exporting industries are owned and controlled by wholly Australian-owned organisations.

The other pertinent question that I would just touch on is the impact upon this Agreement if the Western Australian Government proceeds with its announced intention of growing 200,000 tonnes of raw sugar on the Ord River in the north of Western Australia. This Agreement runs for a period of five years and there is no provision for any agreement with the Western Australian Government should it proceed with its proposal. It is highly unlikely that that State Government would agree to have its sugar production controlled by the Queensland Government and there is a very real prospect that the balance in the existing sugar cane industry would bc destroyed by possible action by the Western Australian Government. It would be helpful if the Australian Government could indicate what might happen if Western Australia decided to proceed with its plans, because the impact on the stability which is part of this Agreement would almost certainly be quite dramatic.

We on this side of the chamber are also pleased that, rather belatedly, the International Sugar Agreement has started to take effect and that the international price of sugar is now above the ISA minimum. This in itself will minimise the possibility of income transfers between sugar consumers and producers. But we note that the Government has not pursued very actively the United States Government in an attempt to have it ratify the International Sugar Agreement. The consequence is that the $27m which is included in the Budget and which the Government has borrowed from the International Monetary Fund in accordance with the International Sugar Agreement will have to be repaid by the sugar industry. Of course, had the United States ratified the Agreement the stock financing fund would have come into operation and in the current circumstances the overseas sugar users would be bearing some of the costs of storing sugar stocks. We express some concern that the Government has not been as active as it might have been in attempting to influence- I suppose that is the proper word to use- the United States to ratify the Agreement.

We are not opposing the legislation. It has been an historical development over many years supported by governments of different political persuasions to maintain the stability which we have seen in the sugar industry in this country. We believe that this agreement takes that stability one step further and for that reason we are not opposing it.