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Tuesday, 21 March 1961


Mr KING (Wimmera) .- On the resumption of this debate, which was adjourned some few days ago, I wish to congratulate the honorable member for Higinbotham (Mr. Chipp) and the honorable member for Calare (Mr. England) on the way in which they moved and seconded the motion for the adoption of the AddressinReply. I feel quite sure that honorable members generally will agree with me that in the not too distant future we shall see and hear quite a lot from those two honorable members. In discussions of such matters as the development of Australia, and particularly the northern areas, I feel that these two gentlemen will be a source of considerable inspiration to the Parliament.

From the inception of the debate on the adoption of the Address-in-Reply comments have been made on Australia's economy. We heard the motion proposed by the. Leader of the Opposition (Mr. Calwell), which was debated at considerable length. It is my intention this afternoon to give some facts concerning the overall economy of this country. I could commence by saying that the most important development connected with the economy has been the fall in the price of wool. Let me say at the outset that thewool industry may be said at the present timeto be at the cross-roads. It could turn to the right or to the left; it could turn for the better or for the worse. There are many reasons, of course, for the low prices received in recent years for our wool, and I cannot discuss fully all of them. It appears to me that the most obvious reason is the inroads that have been made by synthetics and various man-made fibres. The annual increase in world use of such materials is of an amount equivalent to 1,500,000 bales of wool. When we consider that although Australia exports more wool than any other nation, but still exports fewer than 5,000,000 bales a year, is it any wonder, having regard to the increase in the production of synthetics, that the wool industry in this country is slumping?

Let me say also that wool research and wool promotion have not been as successful as we would have liked them to be. In fact, it is my belief that wool promotion has failed miserably. To take one country as an example, the United States of America in post-war years has been using about 40 per cent. less wool than it used in earlier years. This decline in the use of wool is of vital importance to the Australian wool industry, to the economy generally and, I believe, to this Government. If action is not taken in the very near future, the industry as a whole will be in a hopeless mess.

I would like to congratulate the Government on its initiative in setting up a committee to inquire into the wool industry. However, I am afraid I cannot give the Government full marks, because although it decided many months ago that this investigation should be undertaken, it is only within recent weeks that the committee has had its first meeting.

It is interesting to consider comments that are made from time to time concerning the wool industry, particularly in the daily newspapers. When I first came into this chamber, about two years ago, the wool industry appeared to be of no great interest to many honorable members. To-day I am happy to see that those members have become concerned about the industry. Various comments have been made by economists about the position of the wool industry. I think it was the Treasurer (Mr. Harold Holt) who said this afternoon that economists do not agree on certain issues. Perhaps it is as well that they do not. We have even seen honorable members of the Opposition taking an interest in the industry in recent times. I was rather tickled to hear the honorable member for Wills (Mr. Bryant) making some remarks the other day about means of improving the position of the industry.


Mr J R Fraser - The members of the Country Party themselves wear silk ties and nylon socks.


Mr KING - It is most amusing to hear the comments of persons who do not understand the industry, and it is regrettable that on the Opposition benches there are so few with any knowledge of the industry. I do not know any honorable member of the Opposition, except the honorable member for Lalor (Mr. Pollard), who really understands it.

Let us consider the various ways in which we might improve the position of the wool industry. First, there is the aspect of marketing. We can, if we wish, continue the present free auction system. Alternatively, we could initiate an appraisal system, or a floor-plan system. Again, we could increase our activities in research or in promotion. The maintenance of the free-auction system has been advocated by many growers for a very long time. Let me remind the House of prices that have been received over the last ten years for our wool. Since 1950-51 the average prices received have been, as follows: -

 

In 1958-59 the price dropped to 48.59d., and I note that in that year there was an increase of some 320,000,000 lb. in the amount available for export, or about 1,000,000 bales. In 1959-60 the price was 57.78d., while for the first eight months of the current year, 1960-61, the average price has been 51. Old.

There has been a general downward trend. Prices received by the grower have been by no means stable, and in fact have ranged from 144d. down to about a third of that amount, 48d. 1 know that there are some growers, and there are many people engaged in other industries, who will say that the average price overall is all right. It may be all right for the established producer, but not for the soldier settler nor the small farmer, trying to pay off his property. With the high rates of interest that he has to meet, it is almost impossible for him to get an existence from the industry. As I said, I agree that the farmer who has his property completely paid off may not be in such a bad position. However, there is a good deal of truth in the suggestions that are made from time to time that the industry is in need of some assistance, and that in present circumstances producers generally cannot grow wool as a payable proposition.

The introduction of a floor plan selling system has been advocated by the Victorian Wheat and Wool Growers Association and by the Australian Wool and Meat Growers Federation. Such a system would, I believe, have some kind of a stabilizing effect, although there would, perhaps, be a tendency to keep the price at a moderately low level. The system would be based on a minimum price rather than on a maximum price. However, the main objective of such a plan would be to ensure a stabilized price. Of course, before a plan such as this can be brought into existence a terrific amount of research is required. No doubt, the present wool inquiry will provide a great deal of information. Possibly, the Commonwealth will have to give some form of guarantee, and before any plan is put forward the growers will have to give the green light because primary producers are very definite on having a voice in the sale of their commodities.

No doubt the appraisal system which was used at the latter end of the war would be readily appreciated by Opposition members because that system is very close to their aim of socialization. There is no doubt in my mind that such a system could be a stepping stone to communism in this country. I believe that actions speak louder than words. There are all sorts of opinions in this regard but one has only to look at Victoria to see what not only wool-growers, but also wheat-growers, pig raisers and other farmers, think of this socialistic plan. Tn Victoria, there are twelve rural seats of which ten are occupied by Liberal Party or Australian Country Party representatives. Ten out of twelve! It is interesting to note that of the two seats that are not held by the Government, one is a near metropolitan seat with a very high percentage of metropolitan dwellers and the other includes the City of Bendigo. To my way of thinking, that proves beyond all doubt that the growers are not interested in socialism.

The next matter that I want to mention is promotion as advocated by the Australian Wool Bureau. The bureau is made up of three members each of the Australian Woolgrowers and Graziers Council and the Australian Wool and Meat Producers Federation, with one nominee from the Commonwealth Government. At present, the growers are contributing at the rate of 5s. per bale to the bureau's funds. There is a proposal that this be increased by 13s. per bale, making a total of 18s., plus 2s. for research, a total of £1 to be collected in the year 1966-67. Needless to say, this is not a popular move with the growers for very obvious reasons. First, the industry is suffering financial difficulties and its costs of production are high. Every extra £1 paid bv the growers increases the cost of production. That is one of the reasons why they are opposing the suggestion.

Another reason is that some growers want a floor t>rice plan. They are using the proposed increased levy as a lever, as it were, and saying, " We will support promotion if you give us a floor price plan ". So there are many reasons why these people are not happy. Another very obvious reason is this: Two years ago, the grower was paying 4s. per bale which was increased to 5s., but since the increase the price of wool has deteriorated. This deterioration is rather surprising, but it has occurred. Again, some growers feel that promotion is not helping the industry. A substantial percentage of promotion finance has been used in Australia. As honorable members are aware, Australia exports the biggest percentage of its wool. Whilst our consumption of wool is amongst the highest in the world per capita, because of our small population, promotion in Australia is not having as much effect as it would have if the money were used in countries where the population is very much greater. The grower generally feels that promotion is more or less wasted in Australia and should be used at an international level - in countries where large sales would be possible.

The Australian Wool Bureau, of course, is affiliated with the International Wool Secretariat. This is where money can be readily used for various countries. As I mentioned earlier, the consumption of wool in the United States of America has dropped at a very rapid rate. It is obvious to all who have studied this problem that if we do not use promotion in places such as America, Europe and Asia, the trend of consumption in those countries will be similar to that which has occurred already in the United States of America. So it is not a case of expanding our wool industry so much as of retaining what we hold at the present time.

A lot has been said to the effect that the biggest wool problem to-day is the cost to the consumers. This may be so, but it is not the primary producer who is getting the benefit of high prices for woollen goods. An ordinary pair of pure wool socks may cost 17s. 6d., but they will contain only about two ounces of wool, or one-eighth of one pound. Even if the price of wool were increased by 100 per cent, the price of that pair of socks would not increase from 17s. 6d. to 35s. It would increase from 17s. 6d. to only 18s. 6d. The remaining 16s. 6d. is taken up in manufacturing costs, commission, freight and related expenses.

The same applies to a suit of clothes or to any woollen material.

There is no doubt in my mind that in research there are terrific possibilities. The scope is unlimited. But here, again, there are many problems. First, there is the money angle. The Commonwealth contributes 4s. to supplement the growers' 2s. per bale. That does not bring in sufficient money to carry out research on a very big scale. Furthermore, man-power is most important in research. Frequently the Commonwealth Scientific and Industrial Research Organization is in dire strife because it has not sufficient scientists. You cannot train scientists overnight. This takes many years. With a shortage of money, it is only natural that the C.S.I.R.O. cannot get all the scientists it requires. Even when the scientists are trained and the money is available, there will not be immediate results. You cannot expect the scientist to start work on Monday morning and have a bright new scheme ready by Thursday or Friday night - pay night. This is a matter of experiment over a period of years, and we cannot afford, under any circumstances, to let research fail. No doubt, all these factors that I have mentioned could contribute to the improvement of the wool situation. The only scheme which, to my way of thinking, we must be very wary of is the appraisal system. I believe that the auction system is the only true and fair way of valuing an article; and wool is no exception. A plan can be operated along the lines of the free auction system and naturally we can carry on with research and promotion to the full extent of our resources. I have had the privilege twice of hearing Sir William Gunn speak on the subject of wool promotion. It was very interesting to hear his comments on the future prospects of the wool industry. Undoubtedly, there is one angle that we must not overlook: Certain responsibilities devolve upon the Commonwealth Government and also upon the growers and their organizations.

One of the biggest problems facing primary producers to-day arises from the cost of production and the fall in prices for their commodities. It is coupled with the very urgent problem of finance and I suggest that the Treasurer (Mr. Harold Holt) look very closely into the financial position of primary producers. Finance must be available at a low rate of interest. I know of numerous cases of financial hardship among primary producers. I know one primary producer who is prepared to pay 8 per cent, for a loan of 50 per cent, of the capital value of his property, and if he does not get it in the next few weeks, he will lose his property. Another man known to me purchased a property but because of certain commitments he could not get the finance he expected. He has called on no less than six of his friends, without any security, to help him with finance. Many honorable members have advocated a subsidy for superphosphate. I have no dobut that this is urgently needed at this time. However, I want to give this warning: In no circumstances are primary producers prepared to accept assistance from governments or any other source on such terms that the primary producer loses all interest in the control of his commodity. I suppose it is an Australian Characteristic that the primary producer likes to have a voice in the sale of his products. He believes in organized marketing and boards but he also believes that the growers should have control of those organizations.

My time has almost expired, and I wish to conclude by referring briefly to the recent sale of wheat to red China which has been mentioned often in the past fortnight. I 'have no objection whatsoever to the sale of wheat to red China when we can be paid for it provided it is not at the expense of regular markets. 1 remind those who are critical of this transaction that Australia was faced with a huge surplus of wheat a few months ago. The situation changed overnight when red China made an approach for the purchase of large quantities of Australian wheat. There has been some objection to the sale on the ground that Australia has not recognized red China. In my opinion, that attitude is completely wrong. So far as I can gather, the producers themselves are behind the scheme.







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