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Thursday, 18 October 1984
Page: 1946

Senator Sir JOHN CARRICK(11.59) —Before the Senate are some 20 Bills, all dealing with agricultural matters; all of them important. A number of these Bills impose extra burdens upon the agricultural community. The Government has decided that the 20 Bills should be dealt with in one overall debate in the last weeks of the Senate. As Senator Kilgariff indicated, that reflects the total disregard that the Hawke Labor Government has for the rural industry, indeed its complete overlooking of the vital difficulties that rural industry faces today. It is a contempt for the Parliament and a contempt for the rural community, both the townspeople and the people on the land, that the Government should debate together these 20 Bills. The Bills involve major subjects-wheat, wheat marketing, wheat tax, dried fruits, canned fruits marketing, fisheries licences levy, meat export charges, dairy products, eggs and livestock slaughter . Each of them deserves some hours of detailed debate in the Senate, but that is not to be.

The Government has very good reason for wanting to hurry these Bills through the Senate. It does not want to have exposed in detail its own failures in the whole of the field of agriculture. The Prime Minister, Mr Hawke, made great play last year of the claim that he would be the saviour regarding the world marketing of our agricultural and mineral products. Those of us who have reasonable memories will remember the brave statements made by Mr Hawke when he went to Japan and his assurances to the Australian people that the decline in the export of our products to Japan, and specifically our percentage of the beef market, would be resolved by him. Of course, the Minister for Trade, Mr Lionel Bowen, has said the same thing. I want to produce evidence-not my own evidence, but government evidence; factual evidence-to show that in fact there has been failure wherever the Government should have accepted some responsibility. In looking at these Bills I want to do so against the overview of agriculture and the overview of the Australian economy.

Last year the recession in Australia, which had been experienced world wide, had some temporary and small uplift because, firstly, the drought had broken; secondly, the Fraser Government had had the courage to bring in a wage freeze-I pause here to say that it was a wage freeze which the Australian Labor Party attacked violently and criticised violently but accepted gratefully when in office-and, thirdly, there was an uplift in the American economy. That gave some temporary relief to Australia, but it was against a background of decline in almost everything else. There was a decline in production, a decline in earnings and a decline in employment. Only in the last year has there been an uplift in employment in government-that is, in the Public Service-and temporarily in the building industry. There has been a very serious and continuing decline in investment, employment and output in the manufacturing and mining industries. Against that we are looking today at one industry which has offered some solace, some hope for Australia; that is, primary industry. For many years primary industry provided something like 94 per cent of the export earnings of Australia . Gradually mining came alongside it to share the position. In the last few days the Bureau of Agricultural Economics issued a paper which has been before the Senate. That paper says:

The net value of rural production in 1984-85 is forecast to be $3,680m, down some 25 per cent on the previous year's figure and representing a decrease in real terms of 29 per cent.

I repeat: There has been a decrease in real terms of 29 per cent. In March of this year the Department of Primary Industry supplied additional information in answer to a question I had asked and said that the expected decline would be 24 per cent. So we have evidence that the Department has now upgraded its estimate of that decline. That decline affects not only rural industry but also the whole of Australia. If there is to be a fall in real earnings of the rural industry at a time when it can least afford it, Australia itself will suffer. There are already significant indications of further decline in employment in the rural industry.

Those who think that because of the breaking of the drought some great prosperity comes to rural industry fail to understand the significance of the long and painful years of rising debt structures within the industry and the need for some good, quiet years of some profitability in order to overcome the bad years and to put the debt structure into true perspective. What is happening is that there will be a very significant fall in the value of rural production. That fall, taken with the fall in mining, manufacturing and investment, is very severe. This severity of the situation is reflected in the Westpac Banking Corporation's latest Review of September 1984, which states:

Recent statistics of retail sales indicate that consumption spending is very weak, not even keeping pace with the underlying rate of inflation.

This statement is a reflection of the malaise spreading across Australia which is becoming more chronic under the policies of the Labor Government.

I want to put what I have said to the test-that these measures reveal the total failure of the Hawke Labor Government and specifically of the Prime Minister and his Deputy Prime Minister to maintain overseas markets for Australia, to maintain prices and to seek and develop more markets-and I will quote as my authority the Hansard of Estimates Committee C of 3 September of this year. I will refer to my questioning of the Secretary to the Department of Trade, Mr Menadue, and of his senior officers. One would accept that their information would be factual. I asked Mr Menadue, the head of the Department, about the decline in beef exports. Honourable senators will recall that the Prime Minister had given an assurance that he and his Government would stop the percentage decline in Australia's share of the Japanese beef market. Mr Menadue said:

The Australian position in the market has deteriorated consistently. In 1976 Australia obtained 83 per cent of beef imports within the Japanese quota. That fell, with one or two exceptions, in following years and now in 1983 it stands at 67 per cent.

I asked him:

And is it likely to fall below that percentage?

Mr Menadue answered:

We would anticipate that, yes.

Just to make the situation clear I later asked:

As I understand it, what you are saying is that for the future and for the foreseeable future, the percentage share of the Australians is falling and is likely to fall?

I was referring to Australia's share of the Japanese beef market. Mr Menadue answered:

I would think that was a fair prognosis, yes.

That is the picture in regard to the Australian share of the Japanese beef market. I pressed on and looked at the individual markets around the world. Mr Menadue pointed to the fact that we were now having difficulties in Singapore because Singapore had relaxed its quarantine controls on foot and mouth disease and other countries were competing for that market. He pointed out that we had falling markets in Korea, and said:

Our principal concern is, of course, to keep subsidised European beef out of our own region in particular.

I questioned Mr Hall, one of Mr Menadue's senior officers. With respect to the European Economic Community and its effect on the beef market, Mr Hall said:

. . . it is expected that beef in store intervention stocks in the European communities could amount to 450,000 tonnes-that is surplus beef overhanging the market-and that this year the Community could become the world's biggest exporter of beef.

So that is another threat. Mr Hall indicated that South American beef was now gaining-to use his own words-'good acceptance in Singapore'. I asked Mr Hall a question about the overall tonnage of Australian meat exports. He had pointed out that in years gone by our total meat export figure was about 630,000 tonnes a year. It varied between that high figure and 500,000 tonnes. He cited two figures and said:

This year total exports from Australia should be about 470,000 tonnes . . .

I asked this subsequent question:

Has a projection been made of our export tonnage for the financial year we are now in?

Mr Hall replied:

It will be 420,000 tonnes.

That is a huge decline in exports. I pressed the question as to whether the decline was purely seasonal or whether the problem resulted from a lack of markets for Australia. I asked whether as we built up our herds we could expect more markets. Mr Hall said:

If we build up our herds and the markets are not there, our competitors may have them.

This is the answer of a senior officer and reflects the Department's despair of its chances of gaining new markets. There has been a decline from 630,000 tonnes of meat exports to 420,000 tonnes. This decline, as Mr Menadue said, has left Australia with a 67 per cent share of the Japanese beef export market and he predicted it is likely to fall and to continue to fall for the foreseeable future. I contrast that with the promises of the Prime Minister and Mr Bowen. I will continue to use not my words but the words of members of the Department of Trade, spoken while the Minister for Resources and Energy was presiding. No challenge was made to their figures. I asked Mr Menadue about wheat. He said:

In respect of wheat, in particular, internationally we face a position of oversupply and the lowest real prices of wheat since the Second World War.

That in itself is a gloomy situation. Mr Hall said:

Again as the Secretary mentioned, prices are probably, in real terms, at the lowest level since the Second World War and any further downward movement of prices would make the situation even worse.

These facts which have come from the Department are in contrast with the illusion created by the Prime Minister and Mr Bowen that things are good and getting better. I asked about sugar, and Mr Hall said:

As I think you said in your introduction, the sugar price is about US4c a pound , which in real terms is the lowest level ever.

What a situation! I asked whether this problem was temporary and whether it was likely to be overcome. I probed further and asked:

Why should there be any optimism at all amongst the cane growers of Australia- not just for the next season, but for the next five or 10 seasons in sugar?

Mr Hall said:

There is a whole host of factors and it is difficult to say why anyone could be optimistic.

This will be the case for the next five or 10 seasons. I pressed him again, and he finally said:

The outlook is not optimistic at all.

I said:

The cane growers of Australia at this moment facing those world markets would be selling below cost, would they not? They would be facing a very severe depression.

Mr Hall answered yes to that question. I have built up a picture of the response of the Department of Trade to the problems relating to the volume and the price of rural sector products which are exported to the rest of the world to earn money for Australia. Honourable senators should bear in mind that we are talking about the one industry that offers any real hope for Australia now, that has been the backbone of Australia's earnings, an industry which has been efficient and which, year by year, has increased its efficiency to keep ahead of the developing countries. Of course, there is a basic limit to that. Problems emerge in many areas.

If I turn to the paper issued by the Bureau of Agricultural Economics I find that the price of wool has fallen. I find that the same situation applies to coarse grains and that the production of oats, for example, is forecast to fall by 40 per cent. I find a deplorable situation in regard to meat. It is not a question of blaming the residual effect of the drought but of looking at world markets. The evidence of the Department of Trade is that virtually wherever we turn, whether it is to Japan, Korea, Singapore or other countries of South East Asia, comparatively our trade position is falling. Nothing is being done to overcome it. The evidence is quite clear that what the Prime Minister and the Minister for Trade promised and what they did were totally different. That is the background against which they now, as a government, seek to impose more burdens.

Let us look at what has happened and at why no person living in a rural community should support this Government. If ever there was a government that set out to penalise the rural community it is the Hawke Labor Government. It indexed excise. Everybody knows that transport, and thus fuel, are vital to the rural community. Everybody knows that something like 40 per cent of rural costs are transport costs. Therefore, whether on-farm or off-farm, this Government has penalised the rural community throughout. Eighty per cent of all farm costs are incurred off-farm by the penalties that are imposed by others and have to be borne. In this case the Hawke Government made sure that it would catch both the on-farm and off-farm areas. Do honourable senators remember the Australian Labor Party when in opposition sitting in this chamber and bleating that when it got into office it would stop the import parity pricing of petrol and oil and that it would reduce the price of petrol? One of the first things it did was to defy the fall in world prices of oil. In fact, it raised the price of oil and kept it up. What did the Government do then? The shades of Senator Walsh and others should be with us now. The Government said: 'We will reduce the price of petrol. It is wicked'. Yet the first thing it did was to index the excise on such things as beer, cigarettes, tobacco and fuel. It looked at freight equalisation costs from the point of view of its own self-interest. It attacked those basic things. Therefore, it has increased the costs to the community.

I am fascinated to read that the Bureau of Agricultural Economics says that the expected rise in farm costs for this year will be 7.5 per cent, a rise which is heavier than the inflation cost of any of our main competing countries. In other words, the costs will be such that they will increase the burden of external competition. There is a limit to what the farmers can do to absorb this burden. What has happened now is a further attack upon farmers. Could there be an uglier attack on members of the farming community or an uglier destruction of their way of life than the so-called pay-as-you-die assets test? Can anyone think of an uglier threat to the elderly farmer who now faces not an income test, such as was the case under the Fraser Government and which he could easily survive, but an assets test? His only way of getting a pension is to pay-as-you-die, to run up a debt to the Government, in other words, to have an indirect death duty thrust upon him. That is the way this Government helps the farmer.

Both today and yesterday statements from the Minister for Industry and Commerce (Senator Button) and the Treasurer (Mr Keating) exposed the possible threats of extra burdens on a community that cannot afford an attack upon its resources, particularly its capital resources. If ever there was a danger it is the danger of the former death duties and pressures on farmers which bore down on them and forced them to sell and to subdivide. Australia cannot afford that in any way at all. Both Mr Keating and Senator Button have said quite clearly that the Government has in mind a total review of all taxes. Both of them have said unequivocally that that review will include capital taxes, that is, capital gains taxes, death taxes and wealth taxes. The fact is that no government sets out to review such taxes unless there is some understanding within itself that the government's accepting all those taxes is a possibility. If there were no possibility that the Government would accept them, if it would not dream of doing so, it would have excluded them as it did belatedly when, after the Gruen report of the Panel of Review of Proposed Income and Assets Test was released and it was said that the Government was attacking people's homes, it excluded homes from the assets test. Do honourable senators remember that?

But there has been no exclusion at all in the proposed total review of capital gains taxes, wealth taxes, death taxes and so on. That can mean only that the Government is willing to consider that whole range of taxes. That is not good enough. It is certainly not good enough for Senator Button to say that there is no consideration now and no paper work going on with the Government on this matter. The fact is that Mr Keating and Senator Button said that the Government will have a complete review of the matter which will include all these taxes and that they, as reasonable people, will give consideration to the answers. They said: 'We are not excluding those taxes'. If there is one great threat that the agricultural community faces it is the threat of the imposition of any kind of serious capital tax. The assets test is bad enough; it is an evil in itself. It is important for us to understand that the Liberal Party of Australia and the National Party of Australia have said emphatically that they will remove the assets test; that they will not have a bar of it. Lest there be any reverberations or any seismic activities on the Government benches, let me say this: It is not good enough for the Government to say that it will not do things . Its long list of some 120 broken promises proved that what it said and what it did were absolutely and totally different. Right around Australia authoritative people are saying that next year, if this Government is re-elected, its structure of public spending will be such that there must be a crisis. Senator Button said, and I hope I paraphrase him accurately, that there will be very considerable deficit difficulties in the years ahead. Of course there will be. What does that mean? It means something fundamental. If one has very considerable deficit difficulties one has a challenge to interest rates which rates will consequently rise. The Review published by the Westpac Banking Corporation, in regard to the Budget, states:

Indeed, the risks associated with this year's Budget, especially in terms of upward pressure on interest rates, escalate next financial year.

In other words, in old fashioned wording, what Westpac is saying is that interest rates will rise next year. Interest rates will rise. Taxes have risen. What Westpac is saying is that, whichever way we turn there is a very great challenge for the future. In fact Westpac is saying that the one thing that the Labor Government has rested on, this magic of the accord, will not succeed. After all, the accord was not made with the whole Australian community. It was a private agreement between the trade union movement and the Government. It was in fact different from what the Government promised. It is an accord which in the end arose out of option A which, on the Government's own statistics, envisages that unemployment will be higher in the years ahead, not lower.

Of course, if one looks at the participation rate in employment one sees that over the whole of this Government's time in office the participation rate has fallen. This means that in a real sense unemployment has risen, particularly youth unemployment. Westpac makes it clear, to use its own words, that since 'it will have virtually no room in which to provide any further budget sweeteners', the Government will have no means of trade with the Australian Council of Trade Unions and therfore there is no likelihood of the accord succeeding.

What do we have if we pull this together? We have 20 agricultural Bills shoved on us, bundled together, so that they cannot be analysed fully. They are Bills which will add more burdens. Upon exposure we find that primary industry in Australia is in a very serious situation, faced with declining earnings and mounting debt burdens which increase progressively, step by step, under this Government. They are insidious burdens by way of indirect taxes, such as indexed excise, which sneak up on people. There is the insidious burden of the pay as you die assets test. On top of that we have a farm cost rate running at 7 1/2 per cent higher than that of our world competitors. Authoritative economists and observers are saying that next year there will be great pressure on the deficit, a need for a mini-Budget and a need for this Government, with its high public expenditure programs, to increase taxes severely. More and more people are saying that the significant base of those taxes will be capital taxes. I cannot think of an atmosphere which is more threatening to the agricultural community. I cannot think of any greater breaches of promise than the breach of the promise given by the Hawke Government when it said bravely: 'We will go to Japan and slay the dragons. We will make sure that you keep your share of the markets and prices'. In the words of Mr Menadue, that percentage fall will go on year after year in the foreseeable future unless the trends are altered.