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Tuesday, 14 May 1985
Page: 1910


Senator BUTTON (Minister for Industry, Technology and Commerce)(5.52) —I begin by saying that, not being thoroughly familiar with all the shapes of the particular dried fruits we are discussing and things like that, I believe there are some general principles that have to be addressed. The first principle came up in Senator Collard's latest remark that the situation should be reviewed in 1988. I make it quite clear that, irrespective of any instructions I have, I tend to oppose that on general principle because if there is anything an industry needs in looking to its future it is some degree of predictability and continuity. The prospect that the situation is to be reviewed in three years time opens up all sorts of uncertainties which I think are undesirable.

The second principle of general application which I swing in from my own portfolio relies very much on two statements made by Senator Macklin. The first statement he made-and I think I quote him correctly-was that the Australian Democrats are advancing what he called the preferred position of the industry. Later on he referred to the Government proposal as exposing the industry to an unacceptable level of pressure. I connect those two statements together from the point of view of my argument and assure honourable senators that if one accepts the preferred position of an industry one will get a result which is nothing but an acceptable level of pressure. It is not necessarily desirable that an industry be the judge in all respects of the degree of pressure to which it ought to be exposed by any government legislation and any consequent plan for the industry.

In the Dried Vine Fruits Equalization Levy Amendment Bill the proposal by the Government, of course, is to phase down over effectively a period of five years, to 15 per cent in respect of each of the fruits concerned. The Opposition says: 'Let us stop that process at the end of three years; irrespective of whether it is a nice comfortable level, stop it at the end of three years and have a look at it again'. I reject that simply for the reasons of predictability and certainty, which I think are very important. Secondly, of course, the Democrats say in a sense: 'Well, we have an arbitrary level of 25 per cent which we determine on the basis that that is the preferred position of the industry'.

The Government's view is that the assistance proposed by equalisation in the Government package will continue to provide a very significant consumer transfer and thus significant assistance to this industry. I illustrate that by way of an example which illustrates the amount by which the equalisation arrangement could enable domestic prices to be above average export prices at the 15 per cent level. The point I seek to make by way of example is that at the 15 per cent level there is a considerable consumer transfer involved and a considerable level of assistance to the industry. Assume that Australian production is 65,000 tonnes, of which 45,000 tonnes are exported and 20,000 tonnes are sold on the domestic market. Those figures are similar to the expected 1985 season situation. If one also assumes that the average export return is $1,000 per tonne, at the 15 per cent level the maximum equalised return would be $1,150 per tonne. This would enable a domestic return of $1,488 per tonne-almost 50 per cent above the average export return.

One can structure other examples of the same kind, but that is a simple example that is based on the anticipated 1985 season results, calculated at the 15 per cent level, and indicating the level of assistance that remains to the industry. The Government very strongly believes that the amendments which have been moved, both by the Opposition and by the Democrats, would considerably dampen market signals and would inhibit the ongoing adjustment necessary to put the industry on a stronger footing. As I said earlier, accepting the assessment of Senator Macklin about the degree of pressure that is regarded as necessary and accepting the view of the industry is, in our view, not even in the interests of the industry because it would dampen the market signals, and thus prospective new entrants to the industry would not get the right signals.

The review of the arrangement in two or three years, as proposed by Senator Collard's amendments, would create uncertainty, impair investment and marketing decisions and inhibit adjustment. The industry, in our view, must have the benefit of a stable policy environment and market signals at the same time, which would enable decisions to be made on a sound basis. The market signals, of course, are the best indicator to the industry, and in the circumstances of the example which I cited they are not insubstantial at a 15 per cent level, where market signals would still be available to the industry but the levels of assistance would be still substantial. In periods of extremely low prices for sultanas, growers will receive considerable protection from the new underwriting arrangements, which will be more sensitive to price changes. It is just not realistic for non-viable producers to expect a guarantee that they will stay in the industry, irrespective of change in market circumstances. Not only is it unrealistic, but also it may not be kind to create that anticipation.

We simply make the point that we are very conscious of the need for a restructuring process to take place in this industry. We do not think the 15 per cent figure has been calculated without regard to the consumer transfer involved and the level of assistance which is accorded the industry. As the example I have given shows, that assistance is quite substantial. More than anything else-I am addressing Senator Collard's amendment rather than Senator Macklin's amendment in saying this-we think it desirable that the industry should have this scheme, as it were, available to it for a period of five years. The industry cannot sit back and assume that this scheme will be reviewed in 1988 on the negative side and therefore that it does not have to worry about things or, alternatively, that it will be reviewed on the positive side and that it therefore cannot make investments and so on because of uncertainty about the future. For those reasons the Government cannot accept the amendments. We do not regard them as being in the best interests of the industry as a whole, for the reasons I have indicated.