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Wednesday, 10 June 1970


Mr KING (Wimmera) - It is a pity the hour is so late because I would have liked to spend quite a considerable amount of my allotted time in answering some of the questions raised tonight, firstly by the honourable member for Dawson (Dr Patterson), secondly by the honourable member for Riverina (Mr Grassby) and finally by the honourable member for Wilmot (Mr Duthie). Time is not on our side so I will not go into a lot of detail. I was surprised to hear the honourable member for Wilmot indicate to the House that the honourable member for Dawson had explained in detail the Opposition's policy on the wool situation. I listened fairly intently to the honourable member for Dawson and I was amazed at that statement by the honourable member for Wilmot because I could not detect a great deal of Opposition policy that we did not already know about. The honourable member for Wilmot made great play of the Japanese car problem we had some 2 years ago and that the price of wool dropped by 4c. A little later he went on to indicate that we had a 2 to 1 favourable balance of trade with the Japanese and that the reverse was the situation with the United States of America. 1 am not too sure what he wants. On the one hand he does not want to see motor cars coming in and on the other hand it appears to me that he does want to see motor cars coming in. I suggest before he makes speeches along those lines he should sort himself out on his subject.

I must say, in fairness to the honourable member for Dawson, that whenever a change in the wool industry is suggested someone always comes along and throws a spanner in the works. I cannot remember the verbiage he used, but it meant that there were people outside the industry interfering with the growers' interests. I agree with him on that point. It is a pity these do-gooders do not keep their thoughts to themselves and let the industry make up its own mind. We see plenty of reports in the Press from individuals, who perhaps are in no way concerned with the industry, trying to persuade growers what they should do in such matters as referendums. I agree with the honourable member. (Quorum formed.) 16521/70- ft R-[121]

I am amazed at the response of members of the Opposition to the call for a quorum by the honourable member for Chifley (Mr Armitage). A quorum has been formed by the entry of honourable members on the Government side of the chamber. On the opposite side of the chamber are only the honourable member for Dawson who is at the table, and the honourable member for Chifley. They are the only 2 members of the Opposition in the chamber. I think the Opposition is showing great discourtesy and the colleagues of the honourable member for Chifley should be ashamed of their failure to respond to his call for a quorum.

It is very clear to me, and no doubt to my colleagues on this side of the chamber, that members of the Opposition have not the slightest interest in the wool industry. I said earlier that I could not understand the Opposition's new policy for the wool industry. It seems that there just is not one. There is certainly no support on the Opposition benches at this time. If it is good enough for supporters of the Government to be present, it should be good enough for members of the Opposition also to be present. It appears that they are deliberately trying to count out the House this evening. This should be remembered by people outside this place. I realise that it is early in the morning. Nevertheless, we have business to do and the Opposition should take part in it. The response of the Opposition is a matter of great shame for the honourable member for Chifley.

I have no doubt that in the minds of many people this is a relatively minor piece of legislation, but it is of great importance to the wool industry. It is further evidence of assistance by the Government to an industry which is in trouble. The Government is carrying out what we call election promises, but this measure is not intended to be the be-all and end-all which will completely solve the troubles of the wool industry. It is certainly a move in the right direction. The Government is to provide a greater share of funds needed for wool research and promotion. The contribution by growers to those funds will be reduced by 50%; that is from 2% of gross returns to 1%. The Government is increasing its contribution from $I4m to $27m a year, to be averaged over a 3-year period.

As the Minister indicated in his second reading speech, this Bill deals with a num- ber of minor matters. It will give the Minister and the Government more say in dealing with wool research and promotion. The Bill will also change the position as to the appointment of the chairman of the Australian Wool Board. The chairman will in future be appointed by the Minister for PrimaryIndustry after consultation with the Board. At present the chairman is appointed by the Minister on the nomination of the Board. There will not be a great deal of difference in the manner of appointing the chairman but when one considers that the Government will contribute much more finance it is natural for it to have more say in the industry.

With the price of wool at its lowest since perhaps the 1930s it has never been more important to look closely at research and promotion than it is today - research not necessarily on the production side but rather into the use of wool. Only a few days ago mention was made of the possibility of wool being used in the filter tips of cigarettes. If this idea were successfully implemented no doubt it would mean a huge contribution to the consumption of wool. Honourable members have heard it said that if we could sell a pair of socks to every person in mainland China the wool industry would certainly not be in trouble.

Despite comments to the contrary it is my belief that wool promotion by the Australian Wool Board and the International Wool Secretariat has had a great beneficial effect on our sales of wool, but unfortunately it has not affected the price. However, we hope that continued promotion will assist wool prices. It is obvious that because of the present low prices being obtained for wool the wool growers are certainly in difficulties.I do not propose this evening to give a full solution to their problems. To be honest, I personally have not a complete answer to the problems facing the wool industry at the present time. For that matter I do not think that the industry knows what its real trouble is, nor does it know how it can get out of its present difficulties. It is absurd for members on the Opposition benches to say that the trouble which the industry is in at the present time is the fault of this Government. The honourable member for Wilmot referred a few minutes ago to the duty on wool entering the United States of America.

I wonder what the honourable member would think if an outside source wanted to dictate to us what duty we should apply on goods coming into this country. To my mind this completely cuts across the views of members of the Opposition.

We have heard many suggestions about what the short term answer should be, but I believe that whatever we do to assist the industry must be considered in the long term, because we must be very, very careful of anything done in the short term that will affect the long term result. It could be a very dangerous decision to make. This is something which the Government and the Minister in particular must look at very closely.I now turn to some of the reasons why I believe that the government should take some action in regard to the wool industry. Under our selling arrangements - the free auction system - the returns to wool growers certainly have not been very bright at all. In recent times we have seen some of the lowest prices for many, many years and they could perhaps be equivalent to the prices paid in the pre-war days. A few weeks ago it was equivalent to the 1949 values.I believe that the price today is coming back to the pre-war values. In those days industry costs were not anything like they are today. It could be said quite rightly that the gap between the costs, returns and profits has so altered that growers cannot keep ahead of their costs.

Profits have turned into losses. The overdrafts held by many primary producers and wool growers have reached a maximum so far as the banking fraternity is concerned. In many instances the banks are refusing extended credit. When it comes to private lending, which is perhaps the main source of finance, interest rates are higher. We have heard of many cases where people have borrowed so much that their equity in their property has disappeared completely because of reduced land values. Because primary producers are paying through high interest rates on properties with an equity they no longer have, they are not able to service their overdrafts. 1 know of some instances where private loans have become due for repayment and the lenders have sought to call the money in. The wool growers have been unable to arrange finance and consequently have had no alternative but to renegotiate a loan at a very much higher rate of interest.

In some instances wool growers are paying up to 9% interest on money borrowed. No wool grower today can afford to pay 9% interest. I assure honourable members that many people in my part of the Commonwealth arc well and truly in trouble with their loans. The price of land is dropping at a catastrophic rate. Many of these people have no equity at all and some owe more than the value of their property. I shall mention the value of some properties and the loans that have been made on them. I have details here of a property which today is reliably valued at $39,000 but in respect of which an overdraft and borrowings amount to §45,000. Another one is a property valued at §44,000 in respect of which there is an overdraft and loans, including private loans, of $46,000. People such as these have no equity in their property. Another property is valued at $43,000 with borrowings of $63,000. The people on these properties cannot go on.

As I said earlier, this legislation will make only a contribution to the wool industry. It will fulfil one of the promises made during the election campaign a few months ago. But what will be the effect of the legislation? Based on some of the earlier prices the reduced levy will result in a saving of about $1.20 a bale to the. wool grower. I think it is well that we should consider some of these prices. Wool as a percentage of our total exports had fallen from 67% at the peak in 1950-51 to 25% in 1968-69. If we take into account the prices that we are receiving today for wool the percentage would no doubt be lower than 25%.

To show how prices have fallen, in 1968-69 the average price was 44.67c per lb whereas today it is about 38c or 39c per lb as an average over the 12 months. In the months of April and May the price was closer to 32c or even 31c per lb. These are shocking prices. Naturally enough, one would not expect any industry to survive for very long in those conditions. The question must be asked: Where do we go from here? If we ask whether the Bill goes far enough the answer must be no, but that it is not intended to. We hope that the Government at some future date will take further action to try to assist the wool industry. I realise that I must not go too far from the subject of the Bill but I suggest that despite all the things that have been said in the past the Government must do something. I am not so sure what it should do. I do not know whether the industry really knows what it wants.

I have suggested to the Minister for Primary Industry and the Treasurer (Mr Bury) that we must look very closely at interest rates. I have heard many comments about the wool industry wanting a subsidy but I have spoken to people in it and according to my observations they do not want a subsidy. They realise that a subsidy is not the long term answer. It might be handy to have it in their pockets for the time being in order to overcome some of the financial commitments of wool growers but in the long term it will not do the industry any good at all. The industry is looking for something permanent. I suggest that in the meantime, because of the huge borrowings in the industry in recent times and the huge interest rates being paid to banks and private enterprise, the Commonwealth certainly should look into some form of rebate to these people.

This is a very important industry. There are something like 100,000 holdings and naturally there are more than 100,000 people directly concerned with the industry. It has been said repeatedly around the track that some 60% of the wool is produced by 20% of the growers. Those figures might be correct but it is also correct to say that 62% of the holdings also supply 50% of the actual wool grown. That is a slightly different setup to 60% owned by 20% of the growers. These figures can be borne out in statistics from the Commonwealth Bureau of Census and Statistics.

I support this legislation. I agree with those honourable members who have spoken tonight about a single marketing authority but in view of the time I will not enlarge on that subject. I realise that we cannot implement such an authority immediately but I appreciate the importance of doing something on an industrial level. 1 am sure that if the Government can assist the industry in implementing any of these proposals it has put forward at a very early date then wool growers will appreciate it.

Mr CREAN(Melbourne Ports) [1.24 a. m. - With all respect, I point out that it is now near enough to i 30 a.m. We are talking about the most fundamental industry in Australia so far as export earnings are concerned. I ask, the Government: Do you really believe that this time of the morning is the right time to be discussing this Bill? This Bill relates to the wool industry which, I understand, in the worst of years, supplies something like a quarter of Australia's export earnings. Over 90% of our wool is sold outside Australia. The main issue is the price we receive overseas and this surely is a significant matter. All I am suggesting is that it is 1.25 a.m. Opposition members are not rising to speak at this stage with the exception that I am making this point. Why do we not call a halt and start again tomorrow?







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