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Thursday, 19 March 1987
Page: 1009

Senator BROWNHILL(5.16) —This debate is about Senator Parer's motion which condemns the Hawke Labor Government for its mismanagement of the Australian economy, which has resulted in many things that have been very detrimental to everyone who lives in this very good country of ours-or it was a very good country prior to 1983. The debate is about the high cost of living, the highest interest rates in the Western world and it is about the rise in the cost of motor vehicles. For example, in 1983 a farmer could sell 35 steers to the local butcher and buy himself a utility but in 1987, even with the rise in the price of beef, it takes 52 steers to buy a utility for use on his property. This debate is about falling disposable incomes, the lack of growth in employment that the Hawke Labor Government is foisting on us, continuing high current account deficits, low levels of investment and rapidly increasing foreign debt. The motion of Senator Messner calls on the Government to lower and flatten the tax rate, reduce government expenditure and abolish the fringe benefits tax, capital gains tax and tax on lump sum superannuation.

The consumer price index in this country is running at 9.2 per cent or worse, which is four or five time the rate of those overseas countries with which we trade. Food prices have gone up in the last 12 months by some 8.6 per cent. A survey conducted recently by my office in Tamworth showed that, while the national food prices rose by an average of 2.6 per cent over the previous three months, in Tamworth the food prices rose by 8 to 10 per cent. That is a lot more. Rural Australians have had to suffer, because of high freight and the fact that they choose to live outside metropolitan areas.

Let us look at interest rates, which concern and affect everyone in the community. They affect you, Mr Acting Deputy President, in purchasing a motor car or paying off a house. Just recently we have had another rise in interest rates of some 0.75 per cent. That has a direct effect on the soaring CPI, which is disturbing to us all. This Federal Government has intervened in the money market, which it said was a free money market. By propping up the dollar it has contributed in no small manner to this escalation of interest rates. Interest rates for the ordinary farmer are running at about 20 per cent. That is a completely unsustainable level of interest rates for people who are producing an income off the land which gives us and everyone else a certain standard of living. The rural community is having many problems coping with high interest rates. We can see how unfavourably our interest rates compare with those of other countries. For example, the long term interest rates in Japan are 5 per cent; in West Germany, 5.6 per cent; in America, 7.2 per cent; in France, 8 per cent; in Canada, 8.7 per cent. How can we compete on the overseas markets with countries which have interest rates like that when our Australian Labor Party Government, led by Mr Hawke, is foisting upon us interest rates in excess of 20 per cent?

I think it was mentioned here earlier that the interest rate for people buying machinery on hire purchase is something like 26 per cent. There is no hope for the rural communities if high interest rates continue. The Housing Loans Insurance Corporation, the largest mortgage insurer in Australia, has had a 150 per cent increase in claims. The HLIC is a last resort after lending authorities have tried all other avenues to accommodate borrowers who are finding housing repayments difficult. Therefore, for the HLIC to have a 150 per cent increase in claims means that an alarming number of Australian families are simply handing their house keys to the banks and walking away homeless. People who were paying $500 a month are now paying something like $600 a month in repayments. How can anyone aspire to the Australian dream of owning a house with interest rates so high and so unremitting every month?

The number of approvals for new homes fell by 6.3 per cent in the three months to last November. That is no wonder with interest rates as high as they are. The Bureau of Agricultural Economics indicates that 25 per cent of farmers are in real debt. The are in real trouble. That percentage represents some 30,000 farmers. The number of farmers at risk at the beginning of 1986 was 12,000. Therefore, the problem has increased dramatically in the last year. These producers, these farmers, who raise income which gives everyone a certain standard of living in our country, are having trouble meeting their interest, lease and hire purchase commitments. They are, therefore, losing equity. As well, they are suffering from stress.

Just recently we heard of people committing suicide and of other persons walking off their properties. In fact, just the other day I visited a property in New South Wales where the farmer had got to the stage where he did not have any more equity in his property. It was not as if he was not a good farmer-he was a very good farmer-but over the last three years his debt had escalated to such an extent that he could no longer meet his repayments. That particular farmer has three young children and will have to walk off his property if he can. One of the problems, of course, is how he can get off his property. Does he walk into his bank and say, `I can't do any more' after the bank has already told him that it will no longer give him an extension of his overdraft? Does he declare himself bankrupt? What does he do? Many people do not understand the problems and traumas which this Government has caused good young people with the high interest rate policy it has followed since 1983.

Senator Kilgariff —Is that happening to many?

Senator BROWNHILL —Yes, it is happening to many farmers. It is happening to farmers all over New South Wales and I think the banks are now starting to understand the problem. The Government, however, is very unsympathetic and does not understand the problem whatsoever. The average farm debt has risen to 71 per cent in the last three years. Fifty-one per cent of farmers are not generating enough income to service their debts, and 22 per cent are not able to meet their interest bills. A survey conducted recently by the agricultural consultancy group Hassell and Associates Pty Ltd in central western New South Wales shows that in only two of the last five years farmers have had net cash returns. During the drought of 1982-83 average farm debt was about $73,000, and net cash returns showed a loss of $27,000. In 1986-87, despite improved seasonal conditions, farm debt had increased to an average of $110,000 per farm, and net cash returns now show a loss of $32,000.

Things are a lot worse for grain farmers. The average debt of grain farmers was estimated late last year at about $250,000. That has escalated very quickly to $280,000. It is all very well for a government to sit back and say, as the Minister for Finance (Senator Walsh) has said at times: `Let some of those farmers go broke. It will be right. Do not worry about them'. But we have to worry about them because they produce export income. They are human, just like some of the people in this Parliament.

Senator Messner —Which side are they on?

Senator BROWNHILL —This side. They produce a certain standard of living for everyone in the community. It is high time this Government took heed of what is happening in the country and did something about it.

The big worry this year is that many people will not be able to afford to sow crops. If they do not sow crops they will not harvest and the land will remain idle. That will affect our current account deficit because we will not have as much produce to export. If there is no commodity price recovery and no interest rate reductions, the lending institutions will not be able to continue to support the growing number of indebted farmers. This is something the Minister for Primary Industry (Mr Kerin) was talking about in the other place. He said yesterday that there was not a great deal of need for extra finance for the rural community. He had better have another look. If assistance were given by this Government in some form or other-and one of the best forms would be the reduction of interest rates with the Government getting its sticky fingers out of our pockets-everyone would be much better off. The Minister would be well advised to look at what is happening in the rural community.

Machinery is being repossessed. The same farmer I was talking about a little while ago actually gave his tractor back. He did not have it repossessed; he gave it back to the hire purchase company and said: `Do what you will with it', and the company did. It did not even try to get the highest price it could for it; it just took a couple of bids and apparently the tractor was sold. This gentleman has not even been told whether the tractor has been sold. The Government should take account of what is happening and do something about it.

This situation has been caused by the high interest rates which this Government has allowed unabated in the last few years. The Land last week stated:

The real solution to the farm debt crisis can only come from lower interest rates resulting from macro-economic reforms, but as that scenario is a long-term one, some immediate stop-gap action is needed.

There are too many good farmers sliding into irretrievable debt, through no fault of their own, for the situation to be allowed to continue indefinitely.

It goes on:

The Federal Government leaders, judging by their lack of response to the NSW Farmers Association's call for a $20 million boost to Rural Adjustment Scheme funding, are evidently content to let events take their course and accept foreclosures as a painful but inevitable part of `restructuring'.

That is all very well, but when we want to drive around the cities in our cars and when we want to have taxes paid by people so that we can sit here in the Parliament and enjoy a salary that the farmers would love to have as a total income to run their big properties, we must realise that if the farmers were not there producing that income for this country we could not enjoy our present standard of living.

The major trading banks have recognised that there is a problem and they are meeting with the National Farmers Federation. They have estimated that the total rural debt is something like $10 billion-and that is without non-institutional debt. With the non-institutional debt the total rural debt would probably reach some $15 billion, and that is a debt crisis that this Government should be well aware of. What is the Government doing about it? Is it suggesting interest rate rebates? Is it suggesting increased rural adjustment funds? Is it offering, particularly to the grain industry, the sort of emergency package that was provided by the Fraser Ministry to the beef producers when they were in financial strife? That assistance allowed the beef industry to capitalise on the present high prices to help the Australian economy. Of course the Government is not offering that.

What other disasters are down the track for the Australian farmers due to this Government's policies? A collapse in land prices is inevitable if something is not done about interest rates. The infrastructure of country towns is under threat. The whole community will come to a halt. Service industries are also suffering financial stress. There has been a terrific reduction in turnover and therefore in staff. Machinery dealers in country towns are having the same problem of financial bankruptcy caused by this Government's policies. The motor vehicle dealers are in the same position. If anyone doubts any of this, he should visit some of the country towns and cities in my home state of New South Wales.

Part of Senator Messner's motion called for the repeal of the fringe benefits tax. Despite Government claims that this legislation is incidental and of little consequence to the majority of honest taxpayers and that it affects only the fat cats, the tax dodgers, the fact is that the tax is hurting a wide range of people in the community. I recently conducted a survey of small businesses in five regional towns and cities in New South Wales. That survey shows that 48 per cent of those businesses have suffered a reduction in turnover, that 36.4 per cent had reduced their staff and that 63.7 per cent had reduced staff benefits. That is not too good for the people who are working in the country communities, and that has been caused by this Government's fringe benefits tax. Only 12.1 per cent of those businesses surveyed assessed the fringe benefits tax as having no direct effect on their business. If this Government wants an early election, it must start talking about the fringe benefits tax and it must try to sell it. I can tell the Government that there are people in the New South Wales country areas who are ready to chop off the heads of Australian Labor Party people as they walk around those areas.

It was interesting that nearly 30 per cent of those businesses had cut out all staff benefits, which in effect means that people now have a package of benefits which contains less than it did 12 months ago. Since the introduction of the fringe benefits tax they have been worse off. Honourable senators must remember that these benefits are not all in the luxury car and expense account bracket. These are just good, honest people working on farms in the country areas. Their benefits include commissions, telephone assistance, rental rebates, and staff discounts.

This motion was proposed a month or so ago, and in that time, while the economy has become sicker, the Government has been remarkably silent about any solutions. We, and the rest of Australia, must now wait for the 14 May economic statement. I recall that last year farmers were in a similar situation and were promised a solution in the April 1986 rural statement-and what a sham it was. They got nothing then, and I cannot help thinking that that is precisely what they will get from this year's Budget re-write. The Opposition condemns the Government for its incompetence. The people of Australia also condemn it for its callous lack of response to those in trouble.