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Monday, 26 May 1997
Page: 3961

Mr NEHL —I address my question to the Minister for Primary Industries and Energy and refer to the coalition's primary industry policy last year which undertook:

. . . to provide responsible economic policy, to maintain low inflation and interest rates, to reduce growth in input costs and to boost international competitiveness.

I ask the minister: are primary producers in my electorate and across Australia now reaping real benefit from the coalition's responsible economic management, particularly with regard to interest rates?

Mr ANDERSON —I thank the honourable member for his question. It is a very important one for a lot of Australians. I well remember the commitments that we took to the last election and they did indeed focus on creating an improved economic environment in which farmers might have the opportunity to recover and prosper. They were very appropriately directed policies given the mess the primary industry sector was left in by the previous administration. We are delivering, we will continue to deliver and it is very important that we do.

The Prime Minister has been reminding people of the interest rates that housing borrowers suffered under the previous administration. The farm sector remembers paying even more. They remember paying interest rates in excess of 20 per cent for around 20 months getting on to two years at the worst. The damage that that did is almost impossible to estimate. You know, there was a total farm debt left behind when we came to power of $18 billion. We will never really know, but I reckon a very large proportion of that was nothing more and nothing less than capitalised interest. They had to borrow to pay their interest under you. So bad were things that for many there was no choice. If they wanted to continue, they had to go back to the bank and say, `We have to borrow more money to pay your interest bills.'

Friday's interest rate cuts, assuming they are passed on in full—there is a challenge—by this nation's financial institutions, could slash a further $80 million from farm costs in this country. That would take us to something in the order of $350 million in savings to the farm sector since we came to power as a result of better economic management and declining interest rates. It is reaping the benefits of sound policy. Those benefits are enormous.

Already there is evidence that that farm sector debt is being wound back, particularly in the cropping sector. Profitability—albeit that we would all like to see it happen more quickly—is at least now starting, to some extent, to be restored, with huge numbers of our farmers now finding that they are in a better position to extract some sort of return from their operations. Nothing helps that more than an improvement in interest rates. Furthermore, cuts in interest rates for the farm sector stimulate investment.

This vitally important sector has remained internationally competitive only by cutting costs and boosting investment traditionally, but there is now a desperate need out there for investment in new capital equipment, in new technology, in order to ensure not only boosted productivity but also—this is a very important point—to substantially improve the sustainability of what is happening on our farms. This can be done, for example, through the purchasing of sometimes quite expensive conservation tillage equipment. In that regard I note that environmentalists everywhere should be delighting in better economic management producing better results for farmers.

It is worth noting too that that other great investor and employer in rural Australia, the mining sector, also sees its future improved through lower interest rates together with low inflation, because that helps it to create a better investment climate and a greater confidence. So I think it is very important indeed that the banks register the urgent need for them to pass on quickly and in full the latest reductions in interest rates.