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Tuesday, 28 April 1987
Page: 2135

Mr PETER FISHER(10.36) —This House has been told on many occasions of the conditions within rural Australia and that a major and widespread financial crisis is becoming more likely unless immediate action is taken at the Federal Government level which is of major significance not only to rural people but to people throughout Australia. It is important for this House to note that the current rural crisis affects not only the primary producer but also the entire rural economy, including small business in country towns. As many people already know, country town businesses, as well as our farming community, are feeling the pressure of the current economic downturn. Assistance objectives by any government should, therefore, be to enhance the viability of country centres by maintaining the viability of the agricultural industries on which the centres' economic and social welfare is dependent.

Any government that allows large numbers of primary producers to become bankrupt must recognise that it will have devastating national social and economic effects. As well as the loss in crucial export income by such farmers there would be a vast increase in social welfare costs to support producers forced to leave their properties. The nation simply cannot afford a further drift from the rural sector. Financial support for the rural community promotes productivity and lessens the pressure on an already stretched social welfare system.

We have heard many times how rural indebtedness today is estimated at over $10 billion. In many cases, predictions for the next 12 months are much higher. This figure represents institutional debt only. Non-institutional debt such as hire purchase, private loan arrangements, trust funds, leasing, et cetera, is estimated to comprise at least 20 per cent of institutional debt. An increasing number of farmers are experiencing difficulties in servicing their debts.

The problem is that the combination of negative income and low equity is putting farmers at risk of bankruptcy. In 1985-86, some 7 per cent of Australian farmers were reported by the Bureau of Agricultural Economics as being at risk in the sense of having negative income and equity rates of less than 70 per cent. Average indebtedness in the wheat industry is currently estimated at around $250,000 per property. Interest rates are the critical cost factor. As I have said, it is not only farms that are now at risk; it is small business and home borrowers who cannot afford to pay interest rates and principal repayments. That is impacting very much on the rural work force.

Tonight I want to raise three real issues-interest rates, inflation and petrol prices. I say to honourable members on the Government benches that this Government has done absolutely nothing to try to impact on those three critical factors that are affecting rural Australia. In 1985, the Prime Minister (Mr Hawke) said in an address to a business lunch in Adelaide:

At present, the outlook for interest rates is as bright as it has been for more than a decade.

Australia and Australians will during 1985 reap the interest rate rewards that are flowing from successful policies of the past 20 months.

We've ploughed the fields and sown the seeds. In the near future we will harvest the crop.

I believe that that quotation is very appropriate today in view of the way that the rural community, particularly the farming community, recognises the dismal attempts of this Government to do anything about its predicament. We know that interest rates have risen to record or near record levels.

Mr Milton —They are coming down.

Mr PETER FISHER —While there has been some movement down, I severely doubt that trend will continue. Interest rates are still so high that many people have no hope of getting out of the present predicament in which they find themselves. The same situation applies to inflation. In 1984, the Prime Minister also said: `We expect inflation to be less than 5 per cent in the year ahead, and we are determined to keep it below 5 per cent'. We know what the present inflation rate is. Inflation rates in this country are 400 per cent higher than those applying to our competitors overseas. Of course, the same thing can be said about petrol prices. The Treasurer (Mr Keating) said on 5 March 1982: `Any fall in Saudi prices will be passed on to Australian motorists in lower petrol prices'. What has happened? World oil prices have fallen by over 50 per cent. The full flow on of this fall should have reduced petrol prices by 18c per litre, but what has happened is that the Government has introduced a new excise of 10c per litre, so that consumers and business owners meet half-

Mr DEPUTY SPEAKER (Mr Leo McLeay) -Order! The honourable member's time has expired.