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Thursday, 26 February 1987
Page: 689

Senator KNOWLES(1.16) —Much has been said over the last couple of weeks-sadly I suppose only by the Opposition and not the Government or the media-about the plight of the Australian economy. I wish to make it quite clear today that the plight of the farmer is not better, in fact, it is sadly worse, than that of many other sectors of the nation, in particular in my State of Western Australia. Just some brief facts: Farm terms of trade have fallen disastrously. The debt burden on broadacre farms remains horrific. In Western Australia such farms are in worse crisis, the figure being higher than that of the national average. Farm incomes continue to deteriorate, all thanks of course to the economic and industrial policies of this Hawke socialist Government. That is the sad thing about it. Nothing is being done at the moment to alleviate the plight of the farmer by way of this Government initiating further policies.

Bureau of Agricultural Economics statistics provide some very sobering facts. The terms of trade declined by 8.1 per cent in 1985-86. In 1986-87 they are predicted to decline by a further 2 to 3 per cent. That might sound bad, but in Western Australia farmers are looking down the barrel at an 11 per cent figure. Overall crop prices declined 0.6 per cent nationally, but in Western Australia they declined 3.7 per cent. Livestock returns declined by less than one per cent nationally but in Western Australia they declined by more than 3 per cent. Total slaughterings were down nationally by 3.6 per cent but in Western Australia they were down by over 10 per cent. In respect of prices paid, the index for Western Australia was slightly above the appalling national average but in terms of prices received we were 3.4 per cent worse off. Western Australian farmers paid significantly more for fertilisers, for services and for overheads, each of these costing nearly 2 per cent above the national average. I just do not consider that good enough. It is not good enough for the Australian farmers but, as I say, more particularly the Western Australian farmers are really having a battle.

In 1985-86 Australian farmers paid an extra 13.6 per cent for fertiliser, 11 per cent for machinery and over 10 per cent in rates and taxes. The biggest hike, of course, has been in interest payments-a massive 28 per cent increase. Twenty-eight per cent! As we now know, interest rates of any kind are not likely to be going down in the near future. If interest rates had not been kept so high by this Government in order to protect the dollar, the decline in farm terms of trade would have been less than 2 per cent. That, of course, equates to a cut of about a quarter. An extra 8 per cent cut in interest rates, taking them to the levels enjoyed by our major trading partners, would save each Australian farmer $6,400 per annum.

Let us look at the total debt of Australia's 170,000 farmers. This totalled $8 billion in 1986, up from $7.2 billion in the previous year but, more drastically, $3.7 billion in 1980. That is a disgraceful record for this Government. How the farmers can ever hope to survive and earn a decent living, I am blowed if I know. No government should be proud of this achievement, least of all this Government and, as I have said, I wish that it would take some initiatives to reduce the total debt suffered by farmers at the moment. In 1984 the average farm paid $6,000 per annum in interest. In 1985 the figure was up to over $11,000. At the same time there was a drop of over 22 per cent in farm incomes. It should be a real concern to this Government, and to all of us, that the ratio between long term and short term debt has changed. In June 1984 26 per cent of borrowings was in such short-term areas as overdrafts. But the figure rose to 43 per cent in 1985, suggesting a shift away from borrowing for expansion, to purely and simply borrowing money for survival. That is a drastic situation for any business to be in.

Some 15 months ago the general economics manager of the National Australia Bank stated that 35,000 farmers were caught in a spiral of rising debt and of falling, if not static, income level. How can they continue to cope with that? That gentleman went on to say that a quarter of those 35,000 were in deep trouble. Nothing has changed in that 15 months since, except that the number has grown. Western Australian producers carry a debt burden far above the national average as well. On 17 October 1986 in the West Australian it was stated that 20 per cent of Western Australian farmers were in crisis. According to a survey by the Pastoralists and Graziers Association, 3,000 producers had debts averaging over $200,000. In December the conference of the PGA was told that Western Australian farmers' debts were 70 per cent above the national average, the average debt carried by grain growers rising to $230,000 and the average interest bill being $41,000. A week later the President of the Western Australian branch of the Association of Agricultural Consultants stated that 1,500 Western Australian farmers were in serious financial trouble and would have to quit the industry within five years. The picture painted in the Weekend Australian on 14 February, describing the slow death of the wheat belt community of Mollerin, shows all too well what is happening to our farming communities throughout Australia.

Many of the loans that the farmers are now confronted with were negotiated some time ago at rates below 9 per cent. These are vastly different from the rates of over 18 per cent now being experienced. These, in turn, should be compared to rates in Britain of around 11 per cent and in the United States of 7.5 per cent. Western Australian farmers, as I have been able to prove, are the foremost victims of Labor's policy of favouring high interest rates. Not enough Australians, I believe, are aware that many farmers' incomes are lower than those which prevailed during the 1982-83 drought; that during 1985-86 there was a 52 per cent decline in farm cash operating surplus. The average income for Australia's wheat farms in 1983-84, when this Government was busily taking credit for breaking the drought, was $41,000. The figure fell to $17,000 in 1984-85 and, according to last year's annual BAE farm surveys report, was projected to be minus $7,500 for 1985-86. More recent figures from the BAE that include crops other than wheat show a decline from $12,500 to minus $70 in 1985-86, and a projected rise to $2,200 in the current year. That is no thanks, of course, to the Government. It is simply the result of a better season. Again, the average income projected for Australia's 91,000 broad- acre farms was $4,300. That just happens to be less than the social security income of an unemployed 18-year-old who receives benefits for 12 months. A farmer working for a full year cannot earn as much as that young person receives.

Again, the BAE report showed the relative disadvantage that is suffered by 11,700 Western Australian farmers producing crops and livestock in the same category. Their income was projected to be $10,000 less than the national average. It was the incredible figure of minus $5,900. The 3,200 wheat farms in Western Australia were said to be facing an average income of minus $31,000 in comparison with a national average of minus $7,500. Even if the final figures are less drastic, the hardship is clearly inescapable because the average interest bill on these same farms is $27,400 compared with a national figure of $15,300. If we bear in mind that the interest bill on wheat farms in Western Australia is now running at $41,000, the statistics reinforce the evidence of the destructiveness of the Australian Labor Party's interest rate policies. What a lot of people in Australia do not understand is that an Australian farm provides food and fibre for nearly 300 people, compared with a United States farm which supplies 200 people. That in itself is a very solid indication of the efficiency of our rural sector. As a Liberal senator, I believe that no responsible government can stand by and let market forces shake out all of the rural problems. I also recognise that there are limits to what governments can and should do, but we have here a sector of our economy that earns 37 per cent of export income, directly supports half a million Australians and, per farm, subsidises other sectors by, perhaps, $25,000 per year in return for public support that is worth $4,500 a year. It is not the fault of the Government that Australia suffers from world-wide overproduction and rural dumping long practised by the European Economic Community and now copied by the United States of America. But it is the fault of this Hawke Government in that it pursues policies that add to the problems of our rural economy and uses interest rates as a tool of economic policy in preference to enforcing real spending cuts. That is probably the prime example of its failure. The national wage rises that this Government insists on granting all the time are just crippling the rural sector, which simply cannot afford them. That is borne out by the 12 per cent level of unemployment among Australia's 119,000 farm wage workers. Unfortunately, many of those young people are simply vanishing from Western Australian farms because the operators cannot afford to pay them. Low-paid rural workers who are priced out of jobs are as much victims of our wages system as are farmers who suffer greater damage indirectly as wage costs pervade the economy and freight and import costs, which no farmer can possibly hope to escape continue to rise.

Farm taxes and charges have risen by 87 per cent since 1980-87 per cent-compared with the 14 per cent rise in farm prices and the 131 per cent rise in interest rates. If anyone in the Government is really serious about making sure that the rural sector of our community in Australia survives, something obviously has to be done about interest rates. The rise in fuel excise which has occurred under this Government-from 6.1c to nearly 20c a litre-affects 40 per cent of fuel bills on farms where petrol is used instead of distillate. It also naturally increases road and rail transport costs. Government charges and labour costs have since 1981 caused an average rise of 51 per cent in the cost of hauling wheat. Increases in inspection costs of 200 per cent under the Hawke Government have added another unnecessary burden on our rural producers. Despite some moves by this Government to reduce protection, the indirect cost of protection can still be estimated at $9,000 per farmer. Late last year this Government again, in my opinion, showed its lack of concern for farmers by withdrawing subsidies for those important fertilisers that are essential for conditions in the eastern wheat belt of Western Australia, where farmers already face immense financial difficulties. A Liberal government cannot promise to create overseas export markets but it can and will lower interest rates, fight wage rises that destroy international competitiveness and stop taxing the rural sector to death. It will make an effort that the Hawke Government certainly is not attempting to make at the moment and has not attempted to make in the past.