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Thursday, 28 March 1957

Mr DAVIDSON (Dawson) (PostmasterGeneral and Minister for the Navy) . - The honorable member for Lalor (Mr. Pollard) engaged in something in the nature of a- historical survey of the cotton industry when dealing with this bill, but I want to point out that his survey was not completely correct. This bill provides further evidence of the fact that this Government is preparedto do all it possibly can to assist, develop, stabilize and increase the production of the cotton industry.

The honorable member for Lalor pointed out that in 1949, when the Government in which he was a Minister was in power, the Tariff Board made an inquiry into the cotton industry and made certain recommendations as the result of an application by the industry for a bounty of 9½d. a lb. He pointed out, quite corectly, that the board's report was unfavorable to the industry's application and simply recommended that an amount of £68,000 owing by the Queensland Cotton Marketing Board to the Commonwealth Bank be waived. The honorable member seemed to suggest that the recommendation of the board justified the refusal of the then government to assist this industry, but I point out to honorable members generally that when this Government came into power late in 1949, in spite of the recommendation of the Tariff Board, it agreed to grant the growers' request for a bounty of 9½d. a lb. because it considered that the board was not required to determine policy. Under this Government's policy, the board was simply required to make a factual survey of the industry and to give the Government the benefit of that survey. It then became the function of this Government, as it should be the duty of any government, to determine policy. The difference between the previous government's policy and that of this Government in matters of this sort is that this Government saw fit to disregard the report of the Tariff Board and, purely as a matter of policy, to grant 9½d. per lb. bounty for the purpose of stabilizing the industry.

The honorable member for Lalor also said, if I remember correctly, that it took this Government a couple of years to do that. My distinct recollection, which I think will be shared by the honorable members for Fisher (Mr. Adermann) and Capricornia (Mr. Pearce), and the former honorable member for Wide Bay, Mr. Corser, is that early in 1950 those honorable members whom I have just mentioned, inconjunctionwithmyself,waitedonthe then Minister for Trade and Customs (Senator O'Sullivan) and discussed with him the granting of this bounty; and it was then decided, early in 1950, that a bounty would be granted. It will be seen, therefore, that the implementation of this policy, which has been pursued ever since, was one of the early acts of the present Government and that it did not wait for a couple of years before it put that policy into effect.

Generally speaking, the object of that policy was to give stability to the industry so that there would be increased production. The honorable member for Lalor has made the amazing statement that such action constitutes some form of socialism. That is a weird definition of socialism. Possibly, the intention behind his claim is to persuade people generally to believe that the socialism about which the Labour party is talking now is a brand of which the people need not be afraid; but that is not the particular form of socialism of which we had some experience when honorable members opposite were in power. Actually, the object of the Government in providing this assistance is simply to endeavour to establish a set of circumstances under which the industry can prosper, go ahead to further production and produce wealth in this country which will ultimately far more than repay the small amount of subsidy necessary for the initial development of the industry.

It is conceded that this objective has not yet been fully realized, but it cannot be contended that the fact that there has not been the production anticipated when the bounty was first discussed is due to any fault in the Government's policy, or to any defect in the bounty which has been paid or to any fault on the part of the growers. Unfortunately, in recent years, there has been a series of poor seasons. There have been floods, or, alternatively, droughts, with the result that time and again there have been partial crop failures in the areas in which most of the cotton is produced; and those areas happen largely to be within my electorate. Because of that, the anticipated development has not as yet come about. Unfortunately again, even in this season which, is now developing, prospects are not good. When travelling through my electorate and. the cotton-growing areas recently, I saw many indications that a bumper crop cannot be expected this year; in fact, the crop will probably not be any larger than that harvested last year. Nevertheless, in spite of the fact that the anticipated increased production has not yet been fully realized, I point out that there has been very considerable development in the industry since we introduced this bounty in 1949. That is evidenced by the fact that in 1949 there were only 263 growers, but last year the number had grown to 849. Further evidence is that the acreage under cotton rose from 2,272 in 1949 to 15,269 in 1955, the last year for which records are available. So it will be seen that, as the honorable member for Capricornia (Mr; Pearce) said by interjection when the honorable member for Lalor (Mr. Pollard) was speaking, the acreage under cultivation now has increased considerably. It is at least six times the acreage that was under crop in 1949. In spite of this lack of marked improvement the Government still has faith in the capacity of the industry to contribute in no small measure to the economy of Australia. It is the type of industry which will blend well with other primary industries in certain areas of Australia, particularly, of course, Queensland, in that it can be carried out in rotation with other industries such as dairying and grain-growing, and so assist in improving the general economy of those areas, where the soil and the climate are suitable for this diversified type of agriculture. So the Government, having faith in the industry's capacity, particularly in view of the fact that cotton is about the only primary product for which there is, as yet, an unlimited market in Australia so that the industry is not forced to rely on exports, intends to continue the assistance it has given.

This bill may be regarded as only one more step forward in the assistance already granted, and it does not by any means go all the way to meet the requests that have been recently made to the Minister by the Cotton Marketing Board and the growers themselves. It is, in effect, an interim measure designed to deal with certain defects in the Cotton Bounty Act which have become evident in the last twelve to eighteen months. For instance, the act as it stands provides for the bounty to be paid on cotton, produced in Australia which has been sold for use in Australia. In previous years, until this last season, the board, which was responsible for taking over the cotton from growers, selling it and paying the growers, has been able to finance each crop without any particular difficulty by obtaining advances from the Rural Credits Department of the Commonwealth Bank.

These returns from the sale of the crop, and in recent years the yield from the amount of bounty paid after the crop had been sold, were such that the board was able to finalize each year's business prior to the commencement of the next season, and so was able to go forward with sufficient money available to it to make a reasonable interim advance to the growers of, generally, lOd. per lb. which was payable shortly after the cotton was delivered to the ginneries. That amount of lOd. per lb. was essential to enable the grower to meet his harvesting costs and provide him with the necessary finance to continue until the final payment became due. But last year, as a result of a combination of circumstances which gave rise to the production of a fairly large quantity of lower grade cotton, the board found itself in the position that the previous year's negotiations with the banks had not been completed, and therefore the money available to it to finance the harvesting of the coming crop was limited, with the result that an advance payment of only 7d. per lb. was payable. The Government was asked to give some financial assistance so that the growers could be paid an interim price high enough to enable them to carry on.

This state of affairs developed quickly, and took some time to rectify, because it was found that, as the act was worded there was no actual authority for that advance payment to be made. Nevertheless, the Minister for Primary Industry, acting in conjunction with the Treasury, was able to make advances to the board which allowed another 3d. per lb. to be paid, and so the growers received the amount of lOd. per lb. necessary to enable them to carry on. But that was something of the nature of a stopgap method. As it is evident that there is a likelihood that the same problem will arise again, action has been taken in this bill to amend the wording of the act so that finance will be available to the board either from an advance payment of bounty or from its actual sales, which will enable the board to make an interim payment to growers, immediately after delivery, sufficient to enable harvesting and all other costs to be met. This action will be appreciated very much by the industry whose main worry for this current season has been whether, following last year's experience, the growers will be able to get sufficient finance out of their interim advance to enable them to pay their way. This proposal will enable the provision of adequate finance.

Opportunity has also been taken by the Minister to deal with another request by the growers that any funds available to the Cotton Marketing Board as a result of operations outside the actual processing of cotton will be able to be paid to the growers as an interim guaranteed return of 14d. per lb. for seed cotton. The sidelines will go to the producer, and will not be taken into account in determining the subsidy payable. This will mean that, as a result of any such operations outside the processing of cotton, growers will receive an increased price for their cotton, because the practice of the board in making such payments from receipts from other sources is to make them on the basis of cotton supplied.

Perhaps I should mention here, as one who is in close touch with cotton-growers, that there are other problems facing the industry with which this bill does not deal. For instance, the industry has asked that the present agreement, which expires in 1958, be continued for another five years. The reason for that request is the obvious one that the more stability a young and growing industry can be assured of the better will be its chances of building up and expending the capital necessary to function efficiently and well. So the industry has asked that an early announcement be made of an extension of the agreement for five years from the time of its termination under the act. I am not in a position to say whether that request will be granted. That is a matter for the Minister, but I know he is investigating the possibility and I feel that I can say with confidence that, judging from the record of the Government in respect of assistance to the industry so far, it can be confidently expected that the Minister will give the sympathetic consideration to the proposal that I think it merits.

The board and the industry point out that, in order to achieve the development of production at which every one is aiming, it is necessary to expend further capital sums on such things, as far as the board is concerned, as more harvesting machines and in bringing its present ginneries up to date. Considerable trouble has been experienced in recent years following the introduction of mechanical harvesting, in that the mechanically-harvested cotton delivered to ginneries is not in such clean condition as hand-picked cotton and, consequently, the grade of cotton, with the ginneries in their present condition, is not as high as it would be if further money were expended in order to bring the ginneries up to the desired modern standard. Some of the equipment is nearly 35 years old. Naturally, the Cotton Marketing Board, before it can embark on considerable expenditure on the provision of new equipment, must know that over a reasonable period of years ahead there will be a continuation of the support that this Government has given to the industry in the past and which, 1 say, it can be expected to continue to give. In addition, if the industry is to expand, new growers must enter it, or, alternatively, the present growers must expand their holdings. That would mean the provision of mechanical equipment on the farms because the cot on industry, in common with many other primary industries, is turning more and more towards mechanization. This, in turn, would mean the expenditure of a considerable capital sum on each farm. The farmer cannot be expected to undertake this unless he knows that he has security for some years ahead. Therefore, I feel sure that the Minister will give very serious consideration to this proposal - and to the fact that the industry needs assistance - in discussions which are still continuing with the spinners over the sale of outstanding bales from last year's crop, and also over the coming crop. I know that already growers' representatives have conferred with departmental officials in order to obtain assistance in their discussions with the spinners. Those discussions have not yet reached a satisfactory conclusion but I feel sure that the Minister will continue his policy of assisting the growers in their representations to the spinners so that ultimately a condition of affairs such as was reached in the tobacco industry will be reached in the cotton industry also. The Government told ihe industry that it expected its representatives to negotiate with the manufacturers' representatives and the purchasers, but that if their discussions with the spinners failed to reach a satisfactory conclusion they would be assisted by the Government. Therefore, I welcome this bill. It is a step towards the accomplishment of the Government's task of assisting Australia's development and stabilizing the cotton industry. I congratulate the Minister upon having met, in this regard, the requirements of the industry as they were put to him by the growers and the Cotton Marketing Board.

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