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Wednesday, 4 May 1994
Page: 186


Senator LEES (Deputy Leader of the Australian Democrats) (1.13 p.m.) —I again highlight the crisis facing rural Australia. I question whether, unless there is a commitment from government now in mid-1994, there is any future for many farming families. Last session my colleague Senator Woodley and I detailed the dire situation being faced by many rural communities where farmers have high levels of debt and very low incomes. Indeed, in many cases they have no income at all, with commodity prices at record lows.

  Today I would like to look particularly at the experience of the wheat and barley growers in my home state of South Australia. The majority of these farmers are in areas where they cannot diversify due to the various geographic features of their location. Many of these growers have experienced two very good years, particularly in the Mallee. Two very good seasons have seen record levels of production, better than anything they have ever achieved before. However, the financial hardship continues thanks to the incredibly low incomes. In other words, the incomes that have been generated, even by these record crops, have not met the basic costs of production.

  If we look at the average farm figures across Australia, we see that we are looking at incomes for many of about $50 a week if they are lucky. The unsustainably low levels of income are placing huge stresses on farm families. They are the direct cause of many suicides. The low levels of income are also impacting on machinery investment. In many regions the lack of machinery investment is creating problems with both efficiency and productivity. Low incomes also impact on environmental programs and lead to land use patterns that are not sustainable. They threaten the excellent work being done by landcare programs.

  I will look at machinery problems. These are being experienced by many farmers in the Mallee. They simply cannot get the job done quickly enough with the old machinery that they are forced to continue to use. In marginal farming areas, the timing of planting is crucial. If there are continuing machinery problems, the results can simply be that the acreage planted is less than it should be. Therefore, productivity drops and there is less grain for the export markets.

  Low incomes are forcing many farmers in 1994 to look at what they are going to plant, and many farmers are reducing their plantings substantially. I have a couple of examples, again from the Mallee. Two brothers, who two years ago sowed 3,300 acres of barley, will this year sow only 1,400 acres, as their finances simply do not permit anything more. At the other end of the scale, on a much smaller property another farm family, which normally sows around 800 acres, will this year sow only around 500 acres due to the low commodity prices.

  One finds from talking to farming groups throughout this region of South Australia, and indeed across South Australia, that this situation goes on and on. The suggestion is that we may see some 30 per cent less grain being planted this year than should be planted. If this trend continues, there will not be enough grain produced to service the export markets that have been built up over many years. In the 1990s, farmers are having to cope with grain prices lower than they were in the 1970s, but the input costs, of course, are in 1990 figures. In other words, the prices of Australian wheat and barley have fallen to levels far below the cost of production.

  The lower prices have been caused by the protracted trade war between the United States and the European Union. They have nothing to do with the effectiveness of our farmers. They are the most productive farmers in the world. If we could level the playing field tomorrow, we would do very nicely. Unfortunately, as the government has found to its cost and to the cost of our farmers, a level playing field is a myth, and I doubt whether we will ever get anywhere near that situation. Subsidised sales from both sides—from the European Community as well as from the United States—have slashed world prices.

  The farmers I spoke to believe that basically they have three options. The first is that they can go ahead and plant, knowing that the current prices will mean that they will lose money, much of which is borrowed, unless seasonal conditions are so favourable for a third year in a row that they get absolutely extraordinary levels of production yet again. The second choice is to go ahead and plant and hope that prices will rise by harvest time, but they do that in the knowledge that the final GATT agreement cleared the way for more subsidised grain from the US and the European Community to flow on to the world market. The third choice is not to plant at all and watch the United States and Europe take over Australia's traditional markets, with Australian becoming known on the international market scene as an unreliable supplier.

  Unfortunately, the only response the farmers seem to be getting from the government is, `GATT is going to solve everything. Don't worry. Everything will be fine.' The farmers believe that, from the year 2000, there may well be benefits, but how do they get to the year 2000? Once those benefits begin to flow, they see a future. But until we get there, between 1994 and the year 2000 all the indicators point to grain growers having the hardest time of their lives just to survive. They do not have anything spare to draw on to get them through these years.

  If the government does not act now, there could be a number of serious consequences. There could be an increased population shift from rural areas of Australia into the cities. This is occurring now, and it could well increase. While farmers are highly skilled in their particular trades, many of them have no formal qualifications. Many are aged over 40, an age when it is extremely difficult not just to get a job but to get into a whole new career. Most farmers, I imagine, will be destined to spend at least some time in unemployment queues.

  Another probability is that farm families will be displaced, and that will open the door to corporate farming ventures in which profit will be the sole motive. Not only will this mean a continued massive loss of people, if not the loss of towns, in rural Australia, but I believe it will also be an environmental disaster, as they will not take care of that very fragile landscape. Eventually, the cost of repairing that landscape will have to be met by the taxpayers.

  What we could have developing, and this has been put to me by people as I have visited rural Australia over the last few weeks, is a peasant class. Indeed, many argue that that has already been created. Many farm families are hanging on, surviving on a subsistence basis, not even able to sell their farms if they want to because there simply are not any buyers—or there are no buyers with any sort of a price that would leave the farmers with anything with which to move to the city. Then, of course, there is the loss of export markets if we simply do not go ahead and produce the grain. One set of arguments suggests, `No worries, we'll go back in the year 2000 and get back into the markets.' But the fact is that the people with all the infrastructure and the expertise needed to produce those grains simply will not be available.

  As Senator Woodley and I stated in February, there needs to be a commitment from government, a change of political will, a commitment that something will be done about the rural crisis in Australia. The grain growers have been meeting across South Australia and have been calling for a variety of possible assistance measures, most of which are available in other developed countries. They believe that these assistance measures would provide a stimulus for investment, employment and productivity as well as reduce the enormous stress levels on farming families.

  The costings I have seen suggest that these measures would be less costly than funding farmers and their families through the range of support services they are going to need if they do end up in the cities; that is, support through the CES, the DSS, housing support and additional support through the health system. As all the statistics show us, people on low incomes with very high stress levels have a much greater call on the Medicare system than do those people who have a reasonable level of income and far less stress.

  After four years of depression, Australia's farmers, farming families and communities have run down machinery, run down farm infrastructure—fences, et cetera—and very low morale. Public infrastructure such as railways is disappearing, and roads are getting worse as more and more of what was sent on the railways is now going on road. We see local governments not able to recoup part of their costs; we see rates not being able to be paid; we see lower school enrolments; and we see other public and private services disappearing. We see further pressure on the local policeman. Do they even keep one or can they simply operate from a district police centre? We see hospitals under threat and, indeed, some are faced with closure. Even churches are struggling to keep their presence in communities. It is time the government acted to ensure that as many Australian farmers as possible reach the next century so that those benefits that they perceive, those benefits that GATT promises, may actually be able to be delivered.

  The Democrats believe that time is of the essence. We cannot leave this problem another year; we cannot see the government sit on its hands for even another six months. As time is of the essence, the Democrats will be looking at extending the terms of reference of the inquiry that has just been set up to look into the rural adjustment scheme. We believe those terms of reference should be extended along the lines of what the grain growers are requesting. Those extended terms of reference would be as follows:

(a)the current structure and competitiveness of the wheat and coarse grain industry includes the identification of strengths and weaknesses;

(b)an examination of the contribution of the industry to the Australian economy, including its contribution to the further development of regional economies;

(c)the potential for further development of the industry, including the identification of export market opportunities;

(d)identification of any impediments to growth and exports, and any measures which could be undertaken to remove such impediments or otherwise contribute to the growth or export development of the industry, in ways that are consistent with the principles of efficient resource use within the Australian economy;

(e)the appropriate form and level of price structure and subsidy for the industry, taking into account the ability of the industry to achieve its domestic and export potential, and the price support and subsidy regimes applied in other countries and Australian industries;

(f)implementation strategies for any suggested measures;

(g)the effect on the industry, consumers, and the economy in general of any measures recommended.

All of the issues I have raised today have been raised with the minister. As yet, I understand, there has been no formal reply. I look forward to the minister's response and I look forward to hearing that the government is actually going to act.

Sitting suspended from 1.26 p.m. to 2.00 p.m.