Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Wednesday, 18 March 1936

Senator HARDY (New South Wales) . - If my memory is correct, a wise man once declared that criticism was rarely constructive and generally destructive. Those who listened to the speech of the Leader of the Opposition (Senator Collings) on this bill this morning must be satisfied that that declaration was sound. The honorable senator did not contribute one constructive suggestion for the solution of the difficulties of the wheatgrowers.

Senator Collings - We are supporting the bill.

Senator HARDY - That is true; but the honorable gentleman used the occasion to declare that the policy of the Government in respect of the wheat industry was barren, whereas if the policy of the Labour party could be brought into operation the problems of the industry would be rapidly solved.I have found considerable difficulty, however, in ascertaining from the members of the Labour party in this chamber what the policy of their organization is in respect of the wheat industry. I even interjected while the Leader of the Opposition was speaking to ask him to state the policy of his party, but I elicited no useful information. The honorable gentleman occupied his time in setting up Aunt Sallies and knocking them down - doubtless to his own satisfaction. I ask him whether, in his opinion, the recommendations of the Wheat Commission which investigated the problems of the wheat-growers at great length - and also at great cost, for I understand that the. Commission cost the country nearly £50,000 - would adequately meet the situation if put into effect , but he merely fitted on his roller skates once more and circled round the question. The members of the Labour party in this chamber have no policy for the assistance of the wheat industry.

Senator Brown - Our policy has been stated time and time again by ex-Senator O'Halloran and others.

Senator HARDY - We have been told that the Labour party favours a compulsory wheat pool. I ask now whether the honorable gentlemen of the Opposition believe that if a compulsory wheat pool could be put into operation it would solve all the problems of the wheatgrowing industry overnight?

The burden of the complaint by the Leader of the Opposition seemed to be that the Government had done nothing to help the wheat industry and, in fact, had no long-range policy on the subject.

Senator Collings - I did not say that the Government had done nothing.

Senator HARDY - The honorable gentleman criticized the bill at great length and the whole burden of his speech was the inactivity of the Government. During the luncheon hour I took the opportunity to refresh my mind concerning certain statements made by the Leader of the Opposition at the end of last year when he was discussing the Wheat and Wheat Products Bill in this Chamber. The honorable gentleman said on that occasion -

I can see no valid reason why we could not meet next week to consider this business under more comfortable circumstances both mentally and physically, instead of putting through legislation by a process of exhaustion. However, I am not complaining very much.

A reasonable deduction from that statement and from the speech of the honorable gentleman this morning would be that he has changed his view. There was a wide difference between what he said last year and what he said this morning. In the course of his speech last year he also said -

Frankly I do not like this bill. but he went on to say -

I am glad that something is being done for the wheat-grower.

Senator Collings - I am in the same position to-day.

Senator HARDY - The honorable gentleman gave me the impression while ho was delivering his speech this morning that he thinks that nothing is being done for the wheat-grower and, in fact, the only thing that could be done to help the industry would be to apply to it the policy of the Australian Labour party. But I ask again, what is the policy of that party?

Senator Collings - A compulsory wheat pool.

Senator HARDY - I expected to get that reply. I myself am a believer in a compulsory wheat pool, but do honorable members of the Opposition believe that its establishment would solve all the problems of this industry throughout the Commonwealth ?

Senator Collings - Not that alone. The wheat jugglers. would have to be got rid of.

Senator HARDY - I cannot, in the time at my disposal this afternoon, go into all the aspects of this subject that occur to me, but I again assert that neither the Leader of the Opposition nor his colleagues have enunciated any comprehensive policy to rehabilitate the wheat industry. I have heard the Leader of the Opposition and also ex-Senator Daly and ex-Senator O'Halloran, speak at length in advocacy of a compulsory wheat pool, but when we have asked them, as we have done on numerous occasions : " Show us how a compulsory wheat pool can be established constitutionally ", they have had no reply for us.

During the course of the debate on the Wheat and Wheat Products Bill towards the end of last year some of us made specific inquiries from Labour senators to ascertain whether they could show us some constitutional means of establishing a compulsory wheat pool, but they could not do so. We have to face the fact, however, that there are other than constitutional difficulties in the way of a compulsory wheat pool. Such an organization could not be established without the full consent and co-operation of the State governments unless a change were effected in the Constitution, and the States are not unanimous on the subject. During the wheat conference held some time ago, Mr. Bulcock, Minister for Agriculture in the Queensland Labour government, said that if a referendum were held with the object of securing an alteration of the Constitution to make the establishment of a compulsory wheat pool possible, the main issue would undoubtedly be obscured and the decision turn actually upon what would be the effect of such an alteration on the price of bread. I remind honorable senators that this wheat conference was representative of the industry in every respect, and was not simply a clique gathered together under the patronage of this Government. It was generally agreed at that conference that it would not be practicable to secure an alteration of the Constitution at present to make a Commonwealth pool possible yet in spite of that fact, honorable senators of the Opposition continue to attack the Government for not taking steps to set up a compulsory pool. Even if the constitutional situation were clear we have no guarantee that all the State governments would favour the establishment of a compulsory pool. I invite the attention of honorable senators to the following extract from a speech which I delivered in this chamber on this subject on the 6th December last: -

The possibility of this was revealed by the lack of unanimity among the delegates at the conference. New South Wales, an exporting State, was agreeable to support the compulsory pool; Queensland, which is not an exporting State, and Victoria were also prepared to support it. But the Western Australian representative said: "We cannot pledge ourselves to a compulsory pool. All that we can do is to promise to consider it". And the Tasmanian representative said : " I am personally in favour of a compulsory pool, hut if I submit it to my growers they will want to shoot mc off the planet." Mr. Butler, the Premier of South Australia, definitely stated his opposition to a compulsory pool.

In spite of all these circumstances, honorable senators of the Labour party in this chamber and their associates elsewhere, still try to make political capital out of this proposal and indict the Government for its alleged failure to establish a pool. When their charge against the Government is analysed it is shown to be completely ineffective, for they cannot indicate how a compulsory wheat pool could be established.

Before the adjournment of parliament for the Christmas recess a measure was passed which provided for a homeconsumption price of wheat. It required however, the collaboration of the State governments to make it effective. I do not wish to weary honorable senators by discussing various aspects of the constitutional position, as the issue will shortly come before the Privy Council, but I desire to put this whole subject in a clear light. It is easy to demand, in broad and vague terms, as the Leader of the Opposition has done, that a compulsory pool shall be established, but it is quite a different matter to indicate how it can be done. After all, we must live within our Constitution.

The Leader of the Opposition has said that this Government has done nothing to assist the wheat-growers, but let us remind ourselves for a moment or two of what has happened in the last few years, and consider the probable effect of a restoration of the price level as a contribution to the solution of the difficulties of this industry. Since the beginning of the depression, when the price of wheat fell so badly, the Commonwealth Government has provided £12,52S,000 in grants and otherwise for the assistance of the wheat industry. 1 feel sure that even honorable senators of the opposition will agree that that is very liberal assistance, which, I am convinced, was not undeserved. It was, in fact, a due recognition of the perilous plight of the industry. Instead of occupying time in dealing with the details of these various grants, I wish to point out that the tendency revealed in this bill which comes before us at a time when the price is less depressed than it has been for some time, is to taper off financial grants in aid of the industry as the price of wheat rises. I believe that a reduction of the amount of assistance offered is being effected because prices have recovered to some extent.

Senator E B Johnston - But that will not help farmers in drought stricken areas.

Senator HARDY - I am aware of that, but I leave that issue on one side for the moment. I ask whether a restoration of prices will enable the wheat-growers to recover their position, and in doing so, I am not attempting in any sense whatever to decry the work of the Government in assisting the industry. We must face the fact, however, that since the partial recovery of prices a tapering off has occurred in the financial assistance granted to the industry. Carrying this consideration to its logical conclusion, we must assume that when price levels again become normal, financial assistance to the industry by bounty and otherwise will disappear. We have excellent grounds for that assumption. In 1933-34, when the price was 2s. 8&d. a bushel, relief to the amount of £3,053,000 was granted to the wheat industry ; whereas in 1935-36, when the price is estimated at 3s. 6d. a bushel, the relief to be granted is £1,800,000. That undoubtedly justifies the conclusion that, as the price recovers, financial relief to this industry will taper off until it ultimately disappears. Comparing the price this year with the price last year, the recovery of gross revenue to the industry represents approximately an additional £5,000,000 to £6,000,000. I particularly ask the Government and honorable senators to consider whether such an increase of the gross revenue earned by the industry will put it back on its feet. I mentioned earlier that the royal commission which inquired into the wheat industry made a careful investigation which cost the Commonwealth £45,000. One of the most alarming features of its findings - a feature that should perturb all who study the industry - was its analysis of the debt structure of the industry, which really controls the industry's economic value. The commission found that the debts owed by the industry totalled £150,000,000. The commission, working on a hypothetical production of sheep to the acre, also found that the assets of the industry totalled only £135,000,000. Applying a business test, we can say, on these figures, that the industry is bankrupt by an amount of £15,000,000. For these reasons I ask whether the restoration of a high price is going .to put the industry back on its feet. The commission also found that £10,000,000 would be required to restore the plant and equipment necessary for the carrying on of the industry. Even at prices which would give the industry an increase of revenue of roughly from £5,000,000 to £6,000,000 a year, two years will be required for the industry to re-establish its plant from earnings, even without touching its debt structure, and this must be done before we can say that it is able to carry on economically. An examination of these facts must raise in the minds of honorable senators very serious problems, because we must deduce from them that the slightest reverse suffered by the wheat-growers in respect of prices will mean that the industry will be forced again to approach this Parliament as a mendicant. Because of the economic recovery during the last few years, due mainly to the wise administration of this Government, interest rates are beginning to harden. This was bound to happen, through the operation of the law of supply and demand. In other words, the value of money is going to rise on account of the increasing demand for it. But it must be remembered that while it is evidence of returning prosperity, the hardening of interest rates will increase the costs of production for the wheat-grower. Dealing with the effect of interest rates on the industry, the royal commission disclosed an alarming position. It showed that 21.5 per cent, of the farmers have to pay an interest charge of 3d. or less a bushel; 25 per cent., an interest charge of between 4d. and 6d. a bushel; 14.6 per cent., an interest charge of between 7d. and 9d. a bushel; and 14.4 per cent, an interest charge of between lOd. and ls. a bushel. While the nation generally may possibly be able to stand a hardening of the interest rates, which is bound to come as a consequence of returning prosperity, we have to realize that such a develop- ment will increase the production costs of the wheat-grower. Therefore, I submit, we have to watch very closely the future of the wheat industry in Australia.

Senator Brown - .What does the honorable senator suggest the Government should do?

Senator HARDY - If the Leader of the Opposition had proposed a policy of a planned economy to control the production of industry, or sought a stabilized price, he" would not have been accused of indulging in non-constructive criticism. We must realize and take cognizance of the facts which I have just pointed out. While we congratulate ourselves on the upward trend of prices at the present time, and while, in consequence, it is not necessary to give as much assistance to the industry as we have done in the past, we must still realize that major problems, those represented in the debt structure of the industry, remain to be tackled by this Government.

Suggest corrections