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Thursday, 30 April 1987
Page: 2291

Mr HUNT(2.55) —Although the most recent Bureau of Agricultural Economics surveys suggest that there has been a slight upturn in the prospects for the rural industries, mainly due to the increased prices for wool and meat and a better situation in the livestock industries, a serious financial and social crisis exists throughout large areas of agricultural Australia. The average income per farmer for this financial year will be about $9,300, which is up from $7,100 last year, but is down from $9,700 in 1984-85. That is still less than half average weekly earnings in this country. Our farmers have suffered throughout the 1980s with four years of drought followed by four years of low income. This year half our farms will have incomes of less than $12,000 and 25 per cent of Australian farm families will lose at least $4,700-a minus income of $4,700. This will occur in significant parts of regional Australia. The real rate of return on capital will be minus 6.9 per cent on average across all farm industries.

Problems are especially serious for the wheat and cereal growers. Last year land values fell 30 per cent on average across the entire wheat-sheep zone. I accept that there have been falls in world commodity prices, especially for grains. I welcome the decision of the Prime Minister (Mr Hawke) to send an all-party delegation to Washington, but I just hope that it is not too late. I am concerned that the delegation will not be led by a Minister. That is no reflection upon the honourable member for McMillan (Mr Cunningham) as a member of this House, but at least there should be a ministerial head of this delegation.

It is time for this Parliament to accept the real cause of the crisis that is plaguing the Australian economy-and that is the domestic economic policy being conducted by this Government. We have seen farm debt explode from $5.5 billion in 1983, when this Government assumed office, to $12 billion today. Interest rates are now treble those of our competitors. The prime rate is now 10 per cent above that of the United States of America and in 1981 it was 5 per cent below. I think that that speaks volumes for what is going wrong in this country and how this Government is leading us to a crisis. I refer not only to the farm sector, but also to small business and those people who have to rely on borrowings in this market.

Government-induced inflation and record high interest rates are discriminating not only against farmers but also against people generally in rural areas. In our country towns we have young people who are struggling to buy homes at record interest rates. We have had a prolonged farm downturn and high interest rates are strangling small businesses in these regional areas. In my own electorate and in those of most honourable members who represent rural constituencies in this Parliament, we are seeing a record number of bankruptcies, of service industries going broke and closing down and farm machinery firms having to close their doors.

Mr Braithwaite —Absolutely scandalous.

Mr HUNT —It is a scandalous state of affairs. We have immense job insecurity and high unemployment in our towns. In fact in rural areas we have some of the highest unemployment levels and for many thousands of workers existing jobs are insecure. The independent survey which was conducted by the Land newspaper earlier this year underlines severe economic problems that many farmers are experiencing, especially in the wheat and cereal growing regions. The survey revealed grave facts about the ability of farmers to cope with record debt, record interest rates and inflation. There is no doubt that thousands will not survive. So 1987 will be one of the most critical years since the Great Depression in the sheep-wheat belts of this country. Earlier this year I laid down a farm survival strategy. I had hoped in all sincerity that the Government would have picked up at least some of the points of that strategy, but it chose to ignore it. It chose to ignore the call I made for a joint debt crisis meeting between the banks, those Ministers responsible for rural adjustment agencies and representatives of the farmer organisations. There have been some ad hoc meetings, but there is no strategy.

The mini-Budget is awaited with some interest. Those people who are suffering from these crippling interest rates are hoping for large cuts in government expenditure to enable substantial falls in interest rates. Indeed, the National Farmers Federation's call for spending cuts of $10 billion this year should not be dismissed. I heard today that the National Farmers Federation sought an interview with the Treasurer (Mr Keating) and other Ministers responsible for economic policy in this country and has been refused the opportunity to speak to them. If that is true, it is an outrageous state of affairs. It is a slap in the face, not just for the Farmers Federation but also for the hundreds of thousands of people whom it represents as a peak council body. The Government today virtually rubbished the Industries Assistance Commission's findings and the National Farmers Federation's proposal for the abolition of, or at least a substantial reduction in, fuel excise. Even if two-thirds of the present excise were slashed it would not bring excise back to what it was when the Hawke Labor Government came to office in 1983.

Mr McGauran —That is how bad it is.

Mr HUNT —That is how bad it is. I remind honourable members and the people of Australia that when this Government came to office in 1983 the level of fuel excise was 6.1c a litre but today it is nearly 19c a litre. This Government has increased its revenue receipts from excise on fuel from $1.3 billion to $5.6 billion and has intercepted the fall in world fuel prices. Heavy cuts in fuel excise would address the central problem of farming in country areas generally, with the twin devils of inflation and interest rates. In November last year the IAC concluded that excises are too high and should be reduced. A further quotation from its report states:

This implies forgoing a significant amount of government revenue . . .

This, of course, would reduce interest rates and inflation. The NFF has advanced this proposal, and I am amazed that no serious consideration has been given to it. The principal objective of this approach is to cut overall government spending and sources of revenue from the Australian people. The Government must be prepared to forgo revenue in the agricultural area, such as the imposition of the tariff that still remains on a wide range of farm machinery, spare parts and agricultural and veterinary chemicals. This Government has imposed a sales tax on oils and lubricants used on-farm. It has increased export inspection charges to producers by nearly 200 per cent. Surely, in our hour of crisis it should at least abandon export inspection charges and put our producers in a competitive position on the world markets with our competitors who do not have to pay these sorts of charges.

The rural statement of the Minister for Primary Industry (Mr Kerin) of 15 April last year has been a miserable failure. It skirted around the edges of the problem. Now we have the Minister, who I regret is not here today, blaming other nations, previous governments, Cabinet colleagues and farmer groups-everybody but himself and his Government.

Mr Rocher —Scapegoatism.

Mr HUNT —`Scapegoatism' is a good comment. According to a recent article in the Bulletin he said that farmers do not understand the Australian Labor Party's message. He said that farmers prefer simple answers because they are under stress. This is an outrageous state of affairs-treating farmers as fools, showing total contempt for his ministerial constituency. Labor has badly failed the people living in regional Australia. Economic policy strategies have bled the rural areas dry to protect the trade union constituency from the full effect of Australia's devastating loss of competitiveness. The external debt is now probably closer to $110 billion, which has trebled in the four years of the Hawke Labor Government. The debt rests on the shoulders of the Australian people, not the Government.

In the past two years, with the help of Major-General John Whitelaw, we have developed policies designed to relieve farmers of the government-imposed cost burdens. We recognise that farming accounts for 60 per cent of Australia's net foreign exchange. One Australian worker in four depends directly or indirectly on agriculture. The multiplier factor of agricultural production is 4 to 5. Let people not forget that this country still depends very heavily upon the farm sector of the economy. Ninety-three per cent of our farms are family owned. They are efficient, low production cost units-probably the lowest in the world. There is enormous untapped potential, especially for the export markets. We so badly need export income. There is a necessity to encourage investment in the semi-processing and processing of products. It is essential to foster research into alternative cropping systems, the use of new technology, enhanced marketing, packaging, presentation and quality preservation techniques and improvements in transport and handling efficiencies. If there is to be any chance of a rural recovery there must be a more effective balance between monetary, fiscal and wages policies, with an exchange rate that reflects more accurately the financial, trading and market realities.

The nation requires an incentive-oriented taxation policy which eases taxes on essential inputs such as fuel used in primary production, which makes major reductions in marginal income tax and corporate tax rates, and which abolishes Labor's capital gains tax, fringe benefits tax and assets test. There must be an attack on tariff protection, recognising that Australian manufacturing enjoys treble the average protection rate of the Australian agricultural sector. There is a need for an efficient, effective, fast acting, anti-dumping mechanism. There must be an urgent review of the operations of both coastal and overseas shipping to reduce fertiliser costs, for example. There must be a greater flexibility and competition in international air freight services. There is a need to maintain underwriting arrangements where they are appropriate. This Government must commit itself to maintaining the existing arrangements for wool promotion and encourage other industries to promote on the world markets. There is a need for consultation with the banks, the rural adjustment agencies and the farmer organisations to develop more flexible arrangements with States on rural adjustment and to provide additional funds if this is required to meet the crisis.

Country Australia is in crisis. Many farms are unable to cope with record interest repayments on record debt. Farmers are losing equity but are unable to sell because no buyers want to come into the market. There is a tremendous pressure on the small businesses in all our country towns. Employees in country towns are facing increasing uncertainty and are all battling against the huge interest repayments, with the inflation rate four times the world average. Nowhere is the economic crisis being felt more than in rural Australia. Unless urgent actions are taken quickly-I hope they are taken in the May mini-Budget-there will be a major collapse in the farming areas and, therefore, enormous social stress amongst thousands of families that are already wondering whether they have any future.

This Government has a lot to answer for. This Government is destroying the confidence, the will and the incentive of the producing sector of the Australian economy. It is about time it woke up, and it is about time the Treasurer stopped treating the Australian people as fools.

Madam DEPUTY SPEAKER (Mrs Darling) —Order! The honourable member's time has elapsed.