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Thursday, 9 May 1985
Page: 1610


Senator BROWNHILL(10.38) —I am delighted to hear that Senator Macklin agrees with some of the amendments proposed by Senator Collard to the Wheat Marketing Amendment Bill 1985. Senator Macklin agrees with grower control. Being a wheat grower I believe that wheat growers make a reasonable contribution to the wheat industry and the country. Grower control is something that wheat growers hold dear to their hearts. We also believe that expertise is needed in the Australian Wheat Board because of the problems that will be encountered in the future with the export of wheat. However, I do not agree with Senator Macklin's statement that the industry is in great shape at the moment. If he talked to many wheat growers he would realise the problems they have at the moment, problems which I may allude to a little later in my speech.

As Senator Collard has said, the wheat industry is a most efficient industry. It is probably as efficient as any rural industry in Australia. As I have already said, it is under terrific pressures and threats at the moment. The wheat industry does not receive its share of help as far as its rate of protection is concerned. Secondary industries in the manufacturing sector receive protection. The figure they currently receive is about 24 per cent. The wheat industry receives only about 5 per cent, down to a negative amount.

Crops are increasing. As Senator Collard has said, average wheat production has increased to some 15.3 million tonnes compared with the average for the five-year period ending 1979-80 of only 13.2 million tonnes. Hence we need a top board, a board with the expertise to export our increasing crops. In the same five-year period, average wheat exports increased by approximately 1.2 million tonnes a year. That is a great deal of wheat. Eighty per cent of our wheat is exported. Again, the necessity for the top board is all the more needed. For the year ended June 1984, wheat exports were Australia's second largest export earner. Many people in Australia do not realise the importance of this industry to Australia. The fact that coal is our largest exporter and wheat our second largest is well known, but I think we should recognise that the Australian wheat farmer is producing a great deal for our economy and is doing something for the country at large. The statistics indicate the importance of our wheat industry to the Australian economy.

I think the point should be noted that the rapid increase in Australia's international debt and the need to service that debt, the rapid decline in the value of the Australian dollar relative to the value of other currencies, and the importance of the export income from wheat and the wheat industry to the Australian economy cannot be over-emphasised. I have probably laboured the point, but I think we should take full note of it during the debate on the Bill. The fact that the growers deserve to have a say in the running of their industry has to be recognised. At the moment Australia's current account deficit is something like $7.6 billion, which is $3 billion more than for the corresponding period last year. The current account deficit for the year is expected to be about $11 billion, which is 30 per cent higher than last year and 50 per cent higher than the year 1983-84. Over 20 per cent of our export revenue, or over double the amount earned from wheat exports, will be required just to pay interest on that foreign debt alone. Again, this indicates the importance of the wheat industry to the Australian economy. I repeat that because we export so much wheat we require a Board which has the necessary expertise to be able to oversee those exports.

The reason I talk about grower control is that the wheat grower is a price taker. He is not a price maker. The only option which we have available to increase international competitiveness and farm profitability is to take every step that we can to reduce the costs of production, storage, handling, transport and the marketing of wheat, and to ensure that adequate resources are available for an effective market development and promotional program for Australian wheat on the world market. Hence the need, again, for a top Board to look after our product and a Board with top expertise. The next few years will be difficult years for the Australian wheat industry. Senator Macklin believes-I agree with a lot of the things he said-that at the moment the industry is at a crossroads because there has been a rapid increase in wheat production in China and the overall world outlook for wheat is a matter of great concern. I quote from a report entitled 'Wheat: Situation and Outlook 1985':

There is, however, some prospect of increased import demand arising from income growth in developing countries . . .The need for good marketing performance with a price decline continuing.

The permit system for stock feed wheat may encourage increased high yielding varieties although quantities of this production may not be great.

Increasing handling and marketing charges may encourage increased production of higher protein and higher value wheats which may give better net returns.

The analysis in the report stated:

With the security of record supplies, importers are unlikely to provide any demand stimulus for prices. However, should the economic situation (particularly the effects of economic recovery and the US dollar exchange rate) alter to favour a better demand outlook, the currently projected record stocks could be reduced. The size of the 1985 world crops would then have a greater bearing on price in the second half of the year.

The report then refers to the limited prospects for international trade growth. I repeat that the wheat industry will need every bit of help and expertise it can get in the coming years. I agree with the amendments foreshadowed by Senator Collard. Obviously we will discuss these further in the Committee debate.

The point I make at this stage concerns the problem of costs for the wheat industry. In the last few years wheat pool costs have risen by something like 18 per cent and handling and storage charges have gone up by about 10 per cent. Rail freight charges have increased by around 11 per cent, header costs by 15 per cent, wages by about 12 per cent, and fertiliser costs by 10 per cent. Interest rates have increased by approximately 6 per cent. There has been only a small increase in chemical costs but fuel costs have increased by about 50 per cent. In the last five years or so the price of wheat has gone up by only 2 per cent while cash costs have increased by 17 per cent. Hence my worry about the situation of the wheat industry. Something has to be done about this Government's fuel pricing policy. For example, in the last 14 years, which covers a number of governments, the cost of diesel fuel for use on my property has increased by some 700 per cent while the price of wheat has increased by only some 300 per cent. A harvester I could buy two years ago for $92,000 now costs something like $140,000. I am told that later this year as a result of the devaluation of the Australian dollar the cost of that harvester will be around $165,000.

There are problems in the wheat industry that are yet to manifest themselves. The devaluation of the dollar really has not helped it. As I have already said, the world is over-supplied with wheat. The chickens will come home to roost in our industry in the near future because of the devaluation and the increased input costs to which we will be subjected. What will happen when wheat growers find the situation too bad? What will happen if we do not have a good wheat board and a market that will sustain us? We will stop the use of fertiliser on our properties. Obviously, by using fertiliser we increase yields and we increase profitability, but we also look after the soil, thus ensuring that it is good for future generations. We will reduce our labour. Chemical usage will decline, machinery will not be replaced, and repairs will be reduced. In order to keep up with our costs, wheat acreage probably will be expanded or there will be diversification, resulting in a major move away from the wheat industry. As wheat is this country's second largest export, that is something we cannot afford.

Another problem for the wheat industry since the election of the Hawke Labor Government has been the increase in fuel prices that takes place every two months. There have also been delays in the diesel fuel rebate, and the 100 per cent deductibility for on-farm fuel storage has been removed. The Government has dropped the accelerated depreciation on primary production plant. The Hawke Labor Government has stopped the income equalisation deposit tax incentive scheme introduced to cover bad seasons. It has imposed a 15 per cent rise in tariffs on imported grain harvesters, which will cost the grain industry around $14m. It has slashed Federal funding for the rural adjustment scheme by some 40 per cent. It has reduced depreciation allowances, removed the sales tax exemptions for oils and lubricants, and increased Telecom Australia and Australia Post charges substantially. Further the Government has tried to snatch prime agricultural land for defence purposes.

Industrial disputes in New South Wales have cost the wheat growers enormous sums of money. That brings me to another part of the Bill. Members with special expertise in finance, marketing or industrial relations will be appointed to the Board. I believe that the terms of reference of the Grain Handling Authority of New South Wales, which has a member with special expertise, have not been absolutely carried out. The wheat industry for years has had to contend with droughts and floods. Now it must contend with droughts, floods and industrial problems.

The thing that concerns me about this Bill is the fact that the growers may lose control of their industry. I think that the amendments foreshadowed by Senator Collard will solve that problem. I believe that we do not want a bureaucratic monolith running our wheat industry. The second reading speech of the Minister for Industry, Technology and Commerce (Senator Button) representing the Minister for Primary Industry states that an alternate grower member is to be appointed from each mainland State to the Australian Wheat Board. I think that person will have difficulty in keeping up with the current problems of the Board. I think that that person will only be somebody who votes at meetings. I think that that person will have trouble in keeping up with the expertise of other members of the Board. If we read the second reading speech carefully, the Minister seems to have the responsibility for determining the selection criteria against which the selection committee can objectively assess the suitability of prospective appointees and which must be addressed by the committee before it puts forward its nominations. That is contained in proposed new section 33H. I do not know whether such a provision is contained in other legislation. But it is obvious that the Minister of the day could keep sending back nominations and asking the committee to look again at its selection criteria if he did not like the person who was nominated.

I worry about the accountability of this new Board to the wheat growers. I believe that in the past the Wheat Board, even though it has sometimes suffered from a lack of expertise-I am in agreement with this new Board having such expertise-has always been accountable to the growers and its members have travelled to country areas to visit the growers and explain the problems of the industry. This provision for accountability could perhaps be looked at during the Committee stage.

I support the Bill as it will be amended by Senator Collard at the Committee stage. I think the wheat industry is at a stage at which it needs help and expertise. I trust and hope that the Board, by way of the amendments suggested by Senator Collard, will do something for the wheat growers for the future of Australia and will make sure that the wheat industry is not only the second largest exporter of Australian produce in the future, but also that it will make a worthwhile contribution for the good of all Australians.