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Tuesday, 25 November 1986
Page: 2689

Senator BOSWELL(4.59) —Before the debate on the Bounty and Subsidy Legislation Amendment Bill (No. 2) 1986 and cognate Bills was adjourned on Thursday night I was addressing the Senate on the Opposition's position on the Fertilisers Subsidy Bill 1986. I will just recap a little on my contribution. I was making the point that the Opposition would not support the Bill for various reasons, one of the main reasons being that the Opposition is concerned that the average $33 a tonne subsidy on the di-ammonium phosphate and mono-ammonium phosphate fertilisers would be transferred to the manufacturers of fertilisers and ultimately would not go to the farmers. I also drew the Senate's attention to the fact that we, in Australia, use 423,000 tonnes of MAP and DAP fertilisers but we produce only 67,000 tonnes, which means that there is a shortfall of 356,000 tonnes, which has to be imported. The Opposition believes that the fertiliser manufacturers in Australia would not be able to produce that additional 356,000 tonnes. Therefore large amounts of fertiliser would still have to be brought into Australia which would not attract the subsidy if this Bill were to pass through the Senate.

I also pointed out that the Australian farming sector received Government subsidies of only 10 per cent, whereas the Australian manufacturing sector received something like 28 to 30 per cent in Government subsidies. I make this point because a number of people think that Australian primary producers are featherbedded and greatly assisted by government subsidies. This is not the case. Every Australian farmer pays something like $9,000 on average to support the jobs of workers in secondary industry-this is $9,000 in the form of tariff subsidies. The Fertilisers Subsidy Bill if passed would take away one of the few remaining subsidies left to primary industry.

If the Government is genuinely concerned with the plight of the secondary industry worker it will have to bite the bullet and make some pretty hard decisions. The Government will have to face these decisions. Taking subsidies from primary industry and allocating that money to secondary industry will give only an artificial propping up of secondary industry jobs in Australia. The real concerns faced by Australian manufacturers are the 38 hour week, the automatic wage adjustment tied to the consumer price index, the redundancy issue, and the national superannuation issue. All these things add to the costs of the manufacturing secondary industries. Those concerns are costing jobs in secondary industries. They will also cost jobs in the fertiliser industry. They are making Australian fertilisers dearer to buy than the imported fertilisers. Taking the subsidy from the farmer and giving it to the manufacturer will make the farmer uncompetitive. We will have a lame duck farming industry as well as an uncompetitive fertiliser industry.

We are told in the second reading speech of the Minister for Community Services (Senator Grimes) that one of the reasons the Government wants this legislation passed is that it will save $16m-I think that is the figure I come up with-on the balance of payments figures, and that it will meet Australian fertiliser needs. The Minister in his second reading speech fails to explain where the Australian manufacturer makes up the 356,000 tonnes of DAP and MAP. The phosphatic rock will have to be imported from the island of Nauru, or Florida or Morocco. The Australian National Line has a monopoly on carrying freight on these commodities. This adds a further $20m to the costs of Australian farmers. It is cheaper to bring in fertiliser from America or from Morocco than to bring in phosphate from Christmas Island which is only a third of the distance. It is $10 a tonne cheaper to bring in phosphatic rock from America than it is to import it from the closer places of Christmas Island and Nauru. So we also have to consider the additional freight and how that will affect the balance of payments. We also have to take into consideration that sulphur is imported from Canada. These two expensive items have to be considered in terms of our balance of trade payments. The statistics I have indicate that it takes two tonnes of phosphatic rock to manufacture one tonne of DAP or MAP fertiliser. So for every tonne of fertiliser manufactured in Australia two tonne of rock has to be imported. It would make it difficult for Australian fertiliser manufacturers to compete with their overseas competitors.

Another statistic I have regards the manufacture of superphosphate. It takes only 0.58 tonnes of phosphatic rock to make one tonne of superphosphate. The cost of freight into Australia, the cost of the phosphatic rock, and the cost of the sulphur to manufacture DAP and MAP must be taken into consideration when the Minister says that it will save $16m in the balance of payments.

The other factor that we must take into account is the capacity of the factories to manufacture MAP and DAP at the moment. Most of them are working to full capacity. Seventy-three per cent of the excess capacity of DAP and MAP manufacturing is in Western Australia. The cost of internal freight is extremely excessive. Imported fertilisers can be taken, for example, to ports nearest the wheat fields or the sugar cane fields in Queensland. On a recent visit to Geraldton in Western Australian I saw a ship unloading fertiliser. Ships also unload fertiliser in Townsville in Queensland and in Portland in Victoria. It is a very significant saving to bring the fertiliser into the ports that are nearest the fields where they will be used. It costs $19 a tonne to freight fertiliser from Brisbane to Dalby, a distance of only 200 kilometres. One has to ask what the cost will be of freighting fertiliser from Western Australia, Sydney or Newcastle to the canefields in Queensland. It would be excessive. It would be a disaster.

If the Fertiliser Subsidy Bill were to pass the Senate it would add tremendous cost to primary industry when Australia needs primary industry desperately. Primary industry must have access to the cheapest possible inputs to be competitive. As I explained in my speech the other night, Australian farmers are competing not against a free market but against a very corrupt overseas market where we are caught in a trade war between the European Economic Community and America. If we are to be competitive in our primary industries we need to have the cheapest inputs to meet the world markets. I cannot support the Bill. I will be voting against it.