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Thursday, 1 September 1994
Page: 825

Senator CRANE (5.00 p.m.) —I move:

  That the Senate—

  (a)notes that the suffering and hardship of people in severely drought affected areas has been exacerbated by policy decisions made by Labor governments during the 1980s, particularly as a result of:

    (i)abolishing the initial Income Equalisation Deposits scheme, which ran from 1976 to 1984, and replacing it with a series of schemes which are disincentive to farmers and pastoralists becoming self-reliant,

    (ii)the massive increase in fuel excise from 7 cents in 1983 to 32 cents today, and

    (iii)the multitude of increases in sales taxes; and

  (b)calls on the Government:

    (i)due to the length and severity of the current drought, to immediately introduce a fodder subsidy scheme, and

    (ii)to suspend the assets test on the various educational and social benefits and apply only the ordinary income test while the drought continues.

I would like to make a couple of points very clear at the outset. This motion is aimed at those people who are suffering what has been described to us as the worst drought in living memory, or the worst drought in Australia's history, and its impact on agricultural areas. This motion is targeted at those areas; it is not targeted at everybody in the community, and I wish to make that absolutely crystal clear.

  In dealing with part (a) of the motion I will talk about the things I have highlighted and also the distribution effects of those policies. I will deal with that in more detail in a moment or two. On the matter of income equalisation deposits, everyone in this parliament supports farmers and pastoralists becoming self-reliant, but to become self-reliant they must have the conditions, the circumstances and the policies in place.

  In 1992, the Standing Committee on Rural and Regional Affairs produced a report in relation to the impact of drought in Australia. That report dealt with the ongoing seasonal situation which occurs in Australia from time to time. What we are looking at now is something beyond what the committee could assess in 1992. Maybe there is a case for the committee going out and having a look at some of those areas to see what has occurred since 1992 because many of the areas we went to have been in constant drought since then. This has exacerbated the problems.

  I say categorically that this government did not give farmers an opportunity to become self-reliant during the 1980s. I say that for a number of reasons, one of which is the high interest regime. I will not deal with that matter today, other than to mention that it existed, and it existed for everybody.

  I wish to deal with income equalisation deposits, and I will quote from what Mr Howard said in the other place in the debate in 1984. It is constructive when looking at this matter to see how people in the bush have not had the opportunity to become self-reliant. At the time Mr Howard was speaking the IED scheme had been changed from what existed between 1976 and 1984. He said:

Our concern is that the changes that have been made by the Government and which are proposed to be implemented by this legislation have the effect of virtually destroying the income equalisation deposits scheme as a useful aid to Australia's primary producers.

He then went on to move an amendment that:

`the Bill be withdrawn and redrafted to provide for—

(1) deposits to be deductible in full;

(2) interest to be payable on the investment component only of deposits where the investment component is equal to the balance of the deposit as if tax had been payable in the year of deposit at the rate applicable to a producer's average income; and

(3) interest to be payable at the rate of 9.5 per cent per annum.'

  We in the Opposition believe that if the income equalisation deposit scheme were changed along those lines it would regain its attractiveness to primary producers but, at the same time, it would not provide avenues for unfair exploitation and avenues that confer unfair advantages on primary producers.

I reassert that those words are as true today as they were then. One of the problems with the exacerbation of the current situation is that from 1984 to 1990 many farmers in this country had high incomes—particularly in the wool industry—but they did not have the opportunity to set aside what has been called a `haystack of money'. Had the government taken that advice at that time we would not have had the situation that we have today. It is inexcusable that the government did not take heed of that advice.

  I will deal now with fuel excise. Since 1983 fuel excise has risen from 7c to 32c. The government might say that that is fine because everybody pays it, and that is true. However, the problem is distribution. The further people live from the centre of activity and action the more it hits us and the harder it becomes. It hits rural people significantly harder than people who live in our capital cities. It affects the price of bread and milk. It affects the price of shifting livestock.

  Transport operators have told me that the fuel excise constitutes between 10 and 20 per cent of their operating costs—the longer the haul, the greater the cost. One operator in the Northern Territory estimated that the cost of the fuel excise to him in his operation was 23 per cent of the total cost of carrying cattle.

  The third point I want to refer to is the expansion of the sales tax base. Someone may stand up on the other side and say, `But farmers are exempt'. That is quite true if they get a sales tax exemption number. But that is not the problem. The problem lies with the contractors and the impact it has on their operating costs. The distribution effects are similar to those encountered with the fuel excise. It hits harder the further people live from the centre of action. It affects livestock transporters, fencing contractors, water and windmill contractors, water carriers, and fodder carriers—all the services people utilise and rely on when there is a serious drought.

  I want to give one example. A four-decker stock crate costs $85,000. The sales tax on that is $17,850. That militates against destocking, which has a consequent environmental impact. Milk-tanker owners do not pay sales tax on their trucks. I argue that the stock carriers should be given exactly the conditions as the milk-tanker operators.

  I will briefly make a couple of comments on the question of `severe drought'—and no doubt the report that we had today will be quoted back at me. I think I could say quite categorically on behalf of all members on the Senate Standing Committee on Rural and Regional Affairs that, firstly, it was a very difficult question and, secondly, we did not and could not come up with a proposition which would deal with this particular aspect. We wrestled with it. There is no scientific answer; there are no guides which can be used conclusively. The effect of rain distribution, wind, temperature and all of those things make it virtually impossible. But there comes a time when people have to make a decision, and that decision has to be made by using one's eyes, ears and brain. I believe we have reached that situation, particularly in Queensland and New South Wales in so far as this drought is concerned.

  I will deal with the calls on the government with regard to the fodder subsidy scheme. I believe we have reached a point where the government needs to step in for the sake of holding what breeding stock is left in the cattle and sheep industries. It can be done in such a way that it does not distort the market. Once again, I know it will be claimed that it will distort the market, but the evidence does not support that—

Senator Collins —I believe it does.

Senator CRANE —I do not believe it does. If we look at the prices and the impact, we see that the situation is not very different from that of the 1980s. But there are mechanisms to get around that problem, particularly when people have to start moving grain interstate. When people have to start moving grain interstate and they are buying feed grain from the grain pool of Western Australia, the grain handling authorities in South Australia or the Wheat Board, the price is set by the export market price. That is the basis it is sold from.

  There are many ways in which assistance can be given to moving grain. We have to separate this from freight subsidies in the stricter sense because freight subsidies have always been associated with the movement of stock. So it can be utilised there in terms of freight. It can be brought into an area, put in central points and sold at a particular price, and it can be targeted to those people who are in the drought affected areas.

  My last point relates to the assets test. We call on the government to suspend the assets test on people in drought affected areas for Austudy and the various forms of support they receive. I want to highlight one problem we have—

Senator Collins —For everybody, Senator? Your motion is not clear on that.

Senator CRANE —The claim I make is for drought affected areas.

Senator Collins —That's not what it says.

Senator CRANE —I am making that point here. The assets test should be suspended for those in drought affected areas and I made those points at the start of my speech. Even though their assets might be above the upper limit, these people are running into the problem that, because they have no income and they are in a situation where they cannot sell the back paddock, they are unable to borrow any more money. It does not matter whether their debt on top of that is $100,000 or $500,000, no financial institution will lend finance to anybody who cannot service that debt.

  So the point is that this is targeted at drought areas, particularly those severe drought areas which have been identified in Queensland and New South Wales. It is not targeted in the broad sense. We believe it is absolutely essential at this time that the government take further steps to alleviate the pain and hardship that are being suffered in order to protect our breeding flocks and to give those people just a little bit of hope.