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Tuesday, 30 August 1994
Page: 604


Senator TAMBLING (6.07 p.m.) —I rise to speak on the package of bills now before the Senate: the Primary Industries Levies and Charges Collection Amendment Bill 1994, the Horticultural Export Charge Amendment Bill 1994, and the

Horticultural Levy Amendment Bill 1994. These three bills, which have the support of the coalition, enable levies to be imposed on horticultural products at the request of the industry concerned.

  Currently, horticultural groups wanting to raise money to fund research and development can do so through the Australian Horticultural Corporation and receive dollar for dollar funding. They can also call on the AHC to undertake promotion on their behalf. Groups paying and receiving the benefits of dollar for dollar grant arrangements include nurseries and producers of apples, pears, citrus, avocados, cherries, chestnuts, macadamia nuts, potatoes, onions and dried fruit. However, there is talk that the apple and pear growers will withdraw from the AHC. Presumably, those growers will no longer pay levies, undertake promotion or participate in research and development.

  Generally, each industry decides whether it wants to pay a levy. It can then set an amount and decide how that levy will be collected. Some industries charge on a per tray of produce basis, others on a per tonne basis, by the box or even by a levy on pot plants.

  The collected money is split between the Australian Horticultural Corporation and the Horticultural Research and Development Corporation, according to the industry's particular requirements. As I mentioned earlier, the coalition has no argument with these bills. Various industries have asked for more flexibility so that the levies can be collected and disbursed in a more effective and cost efficient manner. However, the importance of these changes cannot be allowed to overshadow the fundamental problems facing the horticultural industry at the moment.

  In May 1993 the then minister for primary industries set up a task force in response to an Industry Commission report to develop an export growth strategy based on the work of the Australian Horticultural Corporation. The task force overview states:

. . . with tariffs on many horticultural products being gradually reduced, and the possibility of satisfying quarantine barriers to further domestic access, domestic producers will face increasing competition from horticultural imports.

With current planting trends and forecast production increases, both here and overseas, Australian horticultural industries will need to concentrate their efforts on developing and maintaining exports markets to remain viable.

The coalition particularly agrees with the task force conclusion, which states:

The opportunities which are developing, especially in the Asia Pacific region, are not limitless and will only be available for a relatively short period of time before the distribution systems are taken up by other countries. Australian horticulture has only a short term window of opportunity.

In the six months since the task force handed down its report, the government has failed to indicate where it is going with this report or what the outcome might be. Basically, the task force believes there is an urgent need for the industry to move away from the juice concentrate end of the market—where, frankly, Australia cannot compete—to the fresh fruit and fresh juice end. Here, Australia has a natural competitive advantage and a capacity to pick up the premiums available at the quality end of the market.

  The task force also recommends that the government exempt fresh orange juice from sales tax and that drinks with more than 25 per cent of juice be taxed at 11 per cent rather than 21 per cent. But, again, the federal government has failed to act.  The industry already has a concessional sales tax rate of 11 per cent on fruit juices with 25 per cent or more local content, but this is to be abolished at the end of the year to comply with GATT. While the industry has accepted this position, it is still calling on the government to announce that from 1 January next year it will adopt the task force recommendation that 100 per cent juice containing no concentrate be exempted from sales tax.

  As my colleague the shadow minister for primary industry, the honourable member for Gwydir (Mr Anderson), told the other place recently, this sales tax is the government's own version of a consumption tax. The major difference is that the coalition was prepared to exempt food, including 100 per cent fruit juice, from its then proposed GST. Unless the government acts, Australians will pay 21 per cent tax on their morning glass of orange juice from 1 January next year. In other words, the existing 11 per cent plus a hefty 10 per cent rise. We still have no idea whether the government intends to adopt the task force recommendations, so we can only assume that the tax will rise.

  Similarly, the government has failed in its duty to undertake effective bilateral trade negotiations to open up new markets for our horticultural products. Too many of our products face obstacles in gaining access to international markets, including many Asian markets. There are bans, tariffs and a range of other barriers.

  Moreover, there are no taxation arrangements, planned or otherwise, to encourage the horticultural industry to reduce its dependence on the domestic market and grow fruit for export. This is a very important point. From a Northern Territory and electorate perspective, I comment on the expanding and growing horticultural market of tropical fruits that has developed in the areas adjacent to Darwin and Katherine in the Northern Territory. I certainly hope that encouragement to these important industries and potential employment areas will be enhanced in the future by government.

  The tree crop industries suffer a major taxation disadvantage compared with their counterparts in other primary industry sectors. New tree plantings are treated as capital expenditure for taxation purposes and therefore costs cannot be claimed. The Industry Commission's 1993 report called on the government to remove this tax anomaly, but again there has been no action or promise of action.

  Our horticultural industries are fundamental to our food processing industry. The food processing industry is our largest manufacturing sector but, to prosper, it needs to compete both overseas and against imports on domestic markets. The importance of exports cannot be overemphasised.

  A major report undertaken for the Australian Chamber of Commerce and Industry indicates that the level at which a country's debt is regarded as being of critical proportions is when that debt reaches 150 per cent of average annual export earnings. Australia's has reached a staggering 230 per cent. The report finds that, despite smugness about our economic performance, it would take only minor disruptions to trigger a financial crisis in this country. The foreign debt continues to grow because of our trade imbalance. Here is a classic example of the government's failure to act in an area where both import replacement and export performance can be significantly boosted by taxation changes.

  During the 1960s Australia was the fifth largest exporter of processed food in the world. Today we are 11th. Unless someone bites the bullet, this decline will continue.


Senator Kemp —Get McMullan to address that.


Senator TAMBLING —It is about time the government reduced import costs, embarked on more effective bilateral trade negotiations, particularly in Asia, and reduced costs and charges for businesses. As Senator Kemp acknowledges, this is an important responsibility on our minister, Senator McMullan. If he fails to pick up the mantle in this area, the consequence for this entire industry will be serious.

  In the context of the bills before us, no matter how good our research and development effort is, no matter how much we spend on promotion, if we are not competitive in terms of costs and efficiencies we will not maximise our international and domestic opportunities. The coalition is determined that Australia will regain its high world ranking as an exporter of processed foodstuffs. We support these bills. However, we want to make it clear that the government is responsible for inhibiting, not enhancing, the capacity of our agricultural and food processing industries.