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Tuesday, 15 March 1966

Mr WENTWORTH (Mackellar) . -Mr. Speaker,I think the House will agree that the New Zealand- Australia Free Trade Agreement now before us brings some economic advantages to the countries on both sides of the Tasman. I say " economic advantages " because added to them in the future there will be some prospect of added political security and added security against aggression. Because of our situation both Australia and New Zealand need to get closer to each other. I will talk about this matter in a moment. In the meantime, let me speak of some of the economic aspects of this Agreement. Looking forward, there should be a closer integration of the economies of New Zealand and Australia. Both of us are too small to be fully viable. We will both be stronger if we are together. For New Zealand's purposes, this may be a more urgent problem than it is for Australia because New Zealand as the smaller country depends more not only on exports but also on a much more limited range of exports and because of this might be in a more vulnerable position than Australia regarding changes in the pattern of world trade. Indeed, some of these changes, while not inevitable, are foreseeable. For example, Great Britain has been tinkering for some time with the idea of getting closer into the

European Economic Community. This may or may not happen but at least it is possible. If so, the position of New Zealand might be very much disadvantaged.

There are advantages in achieving this greater integration as soon as possible; otherwise inside both countries a hardening of vested interests, which will have a tendency to oppose this further desirable union, will be growing up. One of the things that we have to think about also is that Australia and New Zealand have very much the same kind of exports and that, therefore, a common policy in our approach to our markets might be of advantage to us both. A greater degree of economic integration might not only help internal trade for both countries but also it might help both countries in the marketing of their common products in some third country or groups of countries. This agreement that we have before us is one for phasing in. It has in it a built in kind of adjustment. This adjustment means that although some sacrifices will have to be made by industries in both countries these sacrifices will not be heavy on any individual industry. Their effect on or their disadvantage for various industries will be more than counterbalanced by the advantage to be gained by the respective economics as a whole.

Exports from New Zealand are, of course, non-diversified whereas Australia's exports are much more diversified. Hence it follows that the first advantage of any agreement such as this would prima facie seem to be in our favour. But I am by no means certain that this is the type of thing contemplated by the Agreement. Actually, I think the Agreement will operate in the initial stages more in New Zealand's favour than in ours. Particularly will this give us the chance to get from New Zealand a much higher proportion of our forest products than we are taking at this moment. Only in the last few days the Minister for National Development (Mr. Fairbairn) has told the House about his very desirable plans for the future development of the Australian forestry industry, but we will, I think, be dependent for a long time - perhaps for all time - on imports of softwood products from overseas. There seems no reason why we should not take these products from New Zealaand which is a good customer of ours. Let us show ourselves, in this matter, a good customer of New Zealand.

New Zealand manufacturers will feel no doubt that in some respects this agreement bears hardly upon them, but this may be an illusion rather than a reality. It may be that, in both Australia and New Zealand, certain industries, which are uneconomic because they are too small, will find it difficult to maintain their position, but on the other hand there is no reason at all why some industries should not be concentrated in New Zealand rather than in Australia. One example that comes to mind, of course, is the possibility - it now seems a more remote possibility than it did a few months ago - of higher integration in the aluminium smelting industry whereby Australia might produce the bauxite and the alumina and the reduction of the metal itself could take place in the southern island of New Zealand. Even in the manufacture of light consumer goods, there are instances where the Australian manufacturer is not as efficient as the New Zealand manufacturer. Although this agreement might well bring about some kind of redistribution of secondary industries I do not see why, on the whole, the balance should be in favour of either Australia or of New Zealand. It might be that New Zealand will lose some industries. It might be that Australia will lose some industries. The total number of industries lost by either country may not be the same but the total value is likely to be the same.

As the House knows, the big impediment to the expansion of our imports from New Zealand is the position of our dairy industry. I, for one, would not like to see anything done to hurt the Australian dairy farmer but, looking ahead, it may be that we can make readjustments which will be to his advantage. After all, the world market for meat is expanding. The value of meat is going up. This may prove a real bonanza to Australian meat producers. It so happens that Australian pastures with the exception, perhaps, of some areas in Gippsland, are better suited for meat production than for dairying. It may be that we could obtain greater riches for farmers on the north coast of New South Wales by changing to some extent, the character of their production. This would not want to be done overnight, but I do suggest that the adjustment over the last 20 years has been much too slow. We have contrived, in a way, to keep the north coast of New South Wales, which should be a very rich area, in a state of non-affluence. I was about to use the words " comparative poverty ", but perhaps that would have been a hard expression to use. The average dairy farmer works very hard and gets very little. While it may not be possible to make a quick adjustment, as that would cause hardship, it should be possible, by means of a gradual adjustment, to enable our dairy farmers to become richer by changing to some extent, and gradually, the character of their production.

It may well be that New Zealand's advantage in terms of butter tat is greater than ils advantage in terms of milk protein because of its colder climate and better spread rainfall. But, on the whole, one would think that the Austraiian farmer would be better off by gradually changing his emphasis from dairying to meat production. As I have said, this cannot be done quickly. There are impediments because of vested interests in the structure of production. We would not want to be too hard or to go too fast. Nevertheless we come back to the position where we want the Australian dairy farmer to be a richer man, living more prosperously. You do not always promote the patient's recovery by keeping him dependent on crutches. It may be that this is what we have done with the Australian dairy industry. It may be that some of the money we have spent on subsidies would have been better spent - I do not mean just in relation to the economy but from the point of view of the dairy farmer himself - if we had spent more of it in helping the individual dairy farmer with finance and by other structural alterations to enable him to switch his production to meat and to the products for which his country is more suitable. It is notable, for example, that in Gippsland, where conditions are comparable to those in New Zealand, the dairy farmer is very prosperous. This is illustrated by the hundreds of pounds an acre he is able to pay for Gippsland dairy farming land at current Australian prices. He is a very prosperous person, living in a different kind of world from that of the north coast dairy farmer of New South Wales whose land is not quite as suitable for dairying, but is, I think, very suitable for meat production, which could become a bonanza.

For all these reasons, one welcomes this phasing-in agreement. It is a good agreement. In matters such as this a government has to start slowly but at least this Government has started. It has made a greater advance than any previous government has made and the House should give support and encouragement to what has been done. This is not the end of the line but at least a very good' start has been made. The advantages, as I have said, are economic. The Agreement will help to bring about a bigger and more efficient economy on both sides of the Tasman. Integration will mean economic help. Co-ordination in the marketing of common exports will help both countries, but, in addition, it will draw the people of Australia and New Zealand closer together. That, after all, is the basic reality of the situation. New Zealand and Australia are isolated communities. We can no longer depend on the invulnerable might of the British Navy. We have to get together to plan our common defence and our common foreign policy if we are to survive.

These questions of national survival are paramount even over economic considerations. One hopes, therefore, that there will be a closer integration of all policy following this agreement; not only economic policy but eventually some kind of political union. Sentiments are now being expressed in opposition to this on both sides of the Tasman. New Zealand feels that it does not want to be swallowed up by Australia. There is no question of that; but surely under the stress of defence necessity that kind of feeling will diminish. Australia feels that certain of her highly protected primary industries should not be exposed to the sharp south eastern winds from across the Tasman. This may be a more impractical nut to crack. However, under the force of our common necessity to get together for survival, surely these differences will be resolved. One welcomes the agreement which the Government has put before the House.

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