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Tuesday, 14 May 1985
Page: 1900

Senator MACKLIN(4.34) —The package of Bills that we are discussing today with regard to the dried vine fruit industry in Australia makes one feel that as the various pieces of primary industry legislation are debated in this chamber, which occurs seemingly on a regular basis at the end of each session, the prospects for most of our primary industries in Australia rarely seem bright in the year ahead and that governments have constantly attempted to assist the industries in one way or another by restructuring arrangements and making alterations to the way in which support is provided to those industries. This particular package falls directly within that fairly time-honoured activity.

The problems that arise, however, in regard to the current proposals are many. First, there is contained within the philosophy behind these Bills a rejection of a market entitlement scheme. This particular rejection prevents the formulation of any production targets. I also think that, ironically, it fails to give market signals, and certainly no clear market signals, to growers. That will be one of the arguments that I am sure the Minister for Finance (Senator Walsh), representing the Minister for Primary Industry, will make in a week or so when we discuss the dairy industry.

Senator Collard —I think 'market signals' is the in term.

Senator MACKLIN —Certainly, market signals is the in term. Unfortunately, it is not included in this package of legislation so it is out on this occasion. I believe that all industries would seek to understand their export markets in the clearest possible sense because the people who benefit most from having those clear market signals are the growers. So the growers are very anxious to have those signals made clear to them. I think the only way to do so with regard to the dried vine fruit industry would be by way of a market entitlement system.

Secondly, the greater instability in returns to growers in future years will flow directly from the equalisation levy ceilings which are imposed. The ceilings undoubtedly will cause Australian dried vine fruit prices to fluctuate wildly. I will refer shortly to the history of that exercise. Thirdly, the low prices for any period on the Australian market would be the base for future prices. Looking at the history of this exercise, it would seem to be an exercise in which any loss of return to growers would be unable to be recovered in future seasons; those losses would merely be compounded forward. I have distributed to the Minister and the Opposition spokesperson on primary industry a list which I would seek to have incorporated in Hansard.

Leave granted.

The table read as follows-

Percent Actual

change Per- Aust-

Formula from cent ralion

price/ previous change price/

tonne year CPI tonne

$ $ 1975 761.68 -16.8 +16.9 948 1976 692.04 - 9.1 +12.2 948 1977 1,348.94 +94.9 +13.4 998 1978 1,354.52 +0.04 + 7.9 1,070 1979 1,717.19 +26.8 + 8.8 1,150 1980 2,362.89 +37.6 +10.7 1,270 1981 1,787.74 -24.4 + 8.9 1,430 1982 1,559.24 -12.8 +10.7 1,608.70 1983 1,417.41 - 9.1 +11.2 1,812 1984 1,213.85 -14.4 + 3.9 1,812

Senator MACKLIN —I thank the Senate. If honourable senators look at that list, they will see that I have sought to take the Government's equalisation levy formula and project it to past seasons. If one does so, one comes up with some rather fascinating figures. For example, it is rather interesting to look at the percentage change in previous years. For 1975 the figure is minus 16.8 per cent; for 1976 it is minus 9.1 per cent; for 1977 it is plus 94.9 per cent. There is a wild fluctuation if one applies backwards, in regard to the figures we now know, the formula devised by the Government. I think that that is illustrative of the difficulties that we will face in the future. Those fluctuations historically are present and they will be present in future years.

Of particular concern to me is the fact that if one looks at past seasons one sees that we have had a price increase of about 37 per cent which would have been applied to the Australian market under the Government's formula. In looking at this market we have to take cognisance of what is said by the people who understand the industry. I think there is almost total agreement amongst people in the industry itself to the fact that there is not a great deal of price elasticity in this area, that the consumer of Australian dried vine fruits is unlikely to agree easily to a hike of 37 per cent and continue buying the Australian product.

Senator Button —But just in case the consumer is?

Senator MACKLIN —I am suggesting that the consumer is unlikely to do so. I am trying, using the Government's formula, to say what might happen on the basis of past figures. I think the market would reject a price rise of 37 per cent. Such a price rise forced on buyers by the type of levy which is being suggested in this legislation would undoubtedly result in a dramatic loss of sales and an increased dependency by the industry on the export market. Pressure would be put on the growers to move from the domestic market to the export market. Is that possible? I suggest that it is not possible for a number of reasons, most of which I would like to leave until this legislation is dealt with at the Committee stage, when we will be able to discuss these matters in greater depth. I think it has to be acknowledged that imports will have a ready Australian market if the price of the Australian product is increased.

There is to be no increased protection from imports. The import duty of $200 per tonne has been retained. This figure, of course, is rapidly being eroded by inflation and by movements in the value of the Australian dollar. The Government has sought to assist in some of the problems that it sees will arise by proposing a $5m adjustment program. However, I do not believe that this amount will be adequate in view of what would have been the result had the formula been applied over the last three years. For example, if one expended the whole of that $5m on a vine pull program the result would be a decrease of only 5,000 tonnes of production. That is hardly something that would assist in any way. Therefore, I think that $5m has to be seen as inadequate in terms of the exercise that the Government is seeking to undertake.

As was the case with the old scheme that was introduced by the Fraser Government, this Government's underwriting provisions are planned to apply to sultanas only. I think that as a result currant and raisin growers will be seriously disadvantaged. For example, it is expected that 50 per cent of the 1985 currant crop will be disposed of in the export market. However, it is still not known how much further production will come on stream from the new vines which have been planted in the last two years. It is my understanding that there have been extensive plantings of new raisin varieties in the last couple of years and as a result there could be a fairly large jump in raisin production. I acknowledge that the demand of wineries, for example, for raisins provides at least a diversion from other domestic and export markets. However, I am not at all sure, given the current situation with regard to the wine industry in Australia, that wineries will be in a position to do very much to assist raisin growers.

The positive aspect, of course, of the proposals is that the Government has come up with an improved underwriting scheme for sultanas which will certainly go much further to meet the unachieved aims of the present scheme and provide the type of relief from the fluctuations that I have already mentioned. I think the industry itself is rather mindful of the positive aspects of the Government's proposals and is quite happy to state that it supports the Minister's movements in that area. I think any further comment I have on this legislation would best be made at the Committee stage. In conclusion, I move as an amendment to the motion that the Bill be now read a second time:

At end of motion add: ', but the Senate is of the opinion that comprehensive production underwriting legislation should be enacted for all dried vine fruits'.