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Tuesday, 30 April 1957

Mr ADERMANN (Fisher) .- The honorable member for Scullin (Mr. Peters) has a queer sense of logic. He criticizes the Government for having allowed imports in 1951 and 1952 at a level that resulted in the using up of our overseas credits. He then claims that Britain would not buy the goods that we wanted to put on to the United Kingdom market because it would cause unemployment in that country. It is obvious that he meant that Britain would not buy our primary products to the same degree as formerly because of the expansion of its own agricultural production. The honorable member forgets the Ottawa Agreement, which is binding, and which was entered into in pre-war days when Britain was not engaged in agriculture to the same extent as she is now. Because of wartime necessity, Britain increased her areas under agricultural production and has kept those additional areas under agricultural production since the war; indeed, she is now heavily subsidizing the agricultural industries in order to keep them going.

The honorable member for Scullin went on to say that if Australia is to succeed she must develop her secondary industries because they are the industries which provide employment, and he slighted our primary producers. I remind the honorable member that it is the earnings of the primary producers which enable us to achieve economic balance. If he cares to deduct from Australia's total income the earnings from primary production, he will find that our secondary industries are responsible for very little of the income derived from exports. The secondary industries of Australia have failed miserably to contribute to our export earnings. In other words, the figures as published at 30th June of last year disclose that 86£ per cent, of Australia's overseas credits was built up by the export of primary products. Does the honorable member for Scullin suggest that our secondary industries can expand and sell their products? Where can they sell them if it is not to the primary producers and to consumers in the towns?

Mr J R FRASER - The home market is a very good market for primary products.

Mr ADERMANN - Obviously, it is. But our economy depends on our exports of primary products, and I remind the honorable member for Scullin, who attacks the primary producers, just how valuable our primary products are. The honorable member hardly discussed this agreement.

Instead, he dealt with the Australian economy and the likely effects of the agreement on employment.

This agreement preserves the principle of mutual preference established in the Ottawa Agreement and, in particular, it retains for our exports the protection thai the existing preferences and rights of dutyfree entry to the United Kingdom market gave. When one considers the total of Australian exports to the United Kingdom and the total of our imports from that country, one finds that the trade favours the United Kingdom. The position would have become materially worse for Australia and even more favorable for the United Kingdom had the arrangements under the Ottawa Agreement continued, as the Minister for Trade (Mr. McEwen) pointed out. Perhaps some of us wonder why Britain does not buy more from Australia. The reasons are to be found in world history, in the situation in countries offering goods for export to the United Kingdom, and particularly in the conditions of sale offered by those countries. Dollar funds also enter into the picture, I suppose. I have not been able to obtain figures indicating purchases by the United Kingdom from the dollar area in 1956, but in 1955, the United Kingdom bought from the United States of America f 42 1,006,000 sterling worth of goods, and from Canada £343,598,000 sterling worth. The dollar area trade most keenly competitive with Australian commodities is in cereals, of which, in 1955, the United Kingdom bought £47,874,000 sterling worth from the United States, and £97,948,000 sterling worth from Canada.

Since dollar funds are very difficult to get, I suppose that there must be an important reason for this. Obviously, it is that the United Kingdom is buying better in Canada and the United States. I read in one of to-day's newspapers an explanation of the reasons why the United Kingdom is able to buy better from Canada, in particular. It is because of the heavy subsidy that the Canadian Government pays to Canadian wheat-growers. In the United States, the Government guarantees prices to farmers under its farm price support programme, as it is termed, and assures producers of a favorable price regardless of the selling price of the commodity. This is, in effect, a subsidy given to producers. These measures enable Canada and the

United States to sell on the world market M highly competitive prices and to undercut ihe prices of commodities offered for sale by Australia.

Doubtless, these are the reasons why the sales of Australian wheat to the United Kingdom fell as low as 13,000,000 bushels in one year. The Minister has explained that, over the last five years, sales of Australian wheat to Britain averaged 23,000,000 bushels annually. Under this agreement, he has been able to obtain an assurance that the United Kingdom market will take 28,000,000 bushels of f.a.q. wheat annually. This figure does not include high protein wheat for which we may be able to find a market in the United Kingdom. But I cannot visualize any sales of high protein wheat to the United Kingdom from Australia, because the British market obtains its high protein wheat from Canada, which, as I have already mentioned, subsidizes its exports to that market. In addition, only Queensland and Western Australia produce any considerable quantity of high protein wheat. If there is a world market for wheat of this type, it is up to growers in the other States that are growing the softer wheats to meet the requirements of the market and not to continue producing inferior wheat that is difficult to sell. The wheat-growers must take account of the requirements of the market.

Mr Bowden - The climate has something to do with the kind of wheat they grow.

Mr ADERMANN - That is true, but I suggest that they should not neglect research, and that they should try to grow the better wheat for which there is a market. If they do not, they must face the fact that they will find it harder to sell their product. I mention that to show how necessary it is to heed the advice of many men with a close knowledge of the wheat industry who are urging growers to meet the requirements of the world market to a greater degree. If I may digress for a moment to mention Japan, that country is prepared to take all the high protein wheat that Queensland can grow.

This agreement has also provided new bargaining room in trade negotiations designed to obtain benefit for our exports in the markets of other countries. That does not affect our tariff protection for efficient

Australian producers. We needed some tariff flexibility in trade bargaining with other countries. That has become increasingly necessary, not only because of the highly competitive condition of the United Kingdom market, but also because our increased production needs additional markets. We must also consider the need for reciprocal trade. It is all very well for the honorable member for Scullin to say, in one breath, that we should sell our primary products, and, in the next, that we should not import goods and that we must protect our local manufacturing industries. But if we expect to sell, we must of necessity buy. We are on a particularly good wicket in our trade with some countries to which we sell far more than we buy. The balance is very much in our favour. But we cannot expect to continue to sell our products in those markets if we do not buy in return.

Mr Cope - The favorable balance of trade may be only temporary. It will probably not be permanent.

Mr ADERMANN - The favorable balance of trade with some countries may be fairly permanent. We cannot hope to buy from some countries as much as we sell to them. Wool, for example, is the foundation of important manufacturing industries in some countries that do not offer for sale goods that are of equal importance to us. Obviously, we shall sell them more than we buy in return.

I do not think one honorable member would deny the necessity for us to retain the vital British market - the greatest market of all time. We cannot supplant that market with any other, and we must sell a great proportion of our primary products in it. However, we need the flexibility that the Minister has so successfully striven for within the limits permitted by the General Agreement on Tariffs and Trade. Australian butter has to meet very keen competition in the United Kingdom market, which is flooded with supplies from other countries that were originally obtained from the United States which disposed at low prices of very large stocks of butter that were stored under the Roosevelt programme to support farm prices. That quantity of butter still available is not necessarily in direct competition with us, but it still has a detrimental effect on the world's markets and prices. We find that position in relation to wheat, butter, and other commodities, so we look to Malaya, Japan, Germany and other nations, to which we have been successful in selling at least small parcels of butter and other commodities in recent months. Now that this agreement has been signed, we are looking more hopefully to those countries for greater sales in the future.

The Minister mentioned one other matter, namely, the anti-dumping or countervailing duties which the various countries apply to protect each other's trade, and he said that this is one of those matters that do not lend themselves to contractual arrangements. The Minister mentioned other things, such as the United Kingdom's own agricultural policy, shipping, the concessional or aid programmes on American exports, which I have already mentioned, and restrictive business practices. Those are some of the matters that the Minister mentioned out of which one could not readily contract. He has made provision in the agreement that the countries will discuss those matters to try to meet the circumstances prevailing at a particular time.

The honorable member for Lalor referred to shipping freights, but I remind him that our own internal freights have not been a very helpful factor in producing our goods at an economical figure. When the wheat-grower has to pay about 4s. 6d. a bushel to get his product even as far as the metropolitan area of his own State, it can be seen just how heavily the freight impost bears upon the cost of production. While we are, perhaps, disappointed that the agreement provides that we can only have a discussion upon these very vital matters, I hope, and I am sure, that the word of the British Government will be readily honored, and that these matters can be taken up from time to time as circumstances arise. When the surpluses that are available on the American market are depleted and we get a more favorable market, as I feel we will, because an overprovided market such as we have had in Australia and Great Britain in recent years will not necessarily continue, we will get more satisfactory prices for our primary produce. We have had a run of good seasons in Australia over eleven years, but it looks as though we have a more serious prospect with the whole of the eastern States facing dry times. Our economy will be prejudiced if our primary production is lowered as a consequence. Of course, the Government has measured up the necessity of imposing import restrictions to prevent an undue depletion of our overseas credits. We must try to face up to our responsibilities as a buyer who trades with, those to whom he desires to sell.

The Minister is to be commended on an agreement which is very satisfactory in every way, considering the limitations that were imposed on him by prior agreements of this and previous Governments, which, of necessity must be honoured.

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