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Tuesday, 19 April 1966

Mr MAISEY (Moore) .- Mr. Acting Speaker,in this debate on foreign affairs speakers have ranged over a wide variety of subjects. Sales of Australian wheat to China have been the subject of some criticism. Let me say that on this subject

I fully support the remarks of the Prime Minister (Mr. Harold Holt), who said -

We have made it clear that we hove considered this matter fully. We have come to the conclusion that, these commodities are in free supply on world markets arid could be secured by Communist China from those markets, Australia, which has its own economic problems in providing for its defence and its development, on a balance of national advantage, is able to go forward with this policy. lt would indeed be difficult to find a subject that has been discussed against a background of emotionalism and prejudice to a greater extent than sales of wheat to the People's Republic of China by the Australian Wheat Board. An objective discussion and dispassionate analysis of this subject should be preceded by a recognition of the early history of the circumstances under which this trade began and a recognition of the problems that at the time faced an important and basic export industry. That the basic elements of those problems are still with the Australian wheat industry will readily be recognised by any person with an understanding of the ramifications of the industry and an appreciation of its vital role in the internal development of Australia and of the need to earn export income.

The first wheat sale to the People's Republic of China was made in December 1960. The contract was for a relatively small sale of 300,000 tons for cash. This sale was quickly followed by another cash sale of 750,000 tons. The next contract, which was signed in Peking in May 1961, was the first of the many contracts on deferred payment terms that have now taken total sales to China to 1 1 .75 million tons. On 1st December 1960, the Australian Wheat Board had a carry over of old season's wheat in excess of 60 million bushels and there was in process of being harvested a crop deliveries from which eventually exceeded 251 million bushels. This meant that marketable stocks at the beginning of the wheat year commencing on 1st December 1960 had reached the then all time record of 312 million bushels. This was the picture facing the Board when the first sale was made to China in December 1960. The background to the picture was one of disinterested and resentful customers overseas and vast stocks of carry over grain in the systems of State handling authorities being devastated by weevils to an extent fully appreciated only by those whose responsibility it was ultimately to find export markets for this grain. Import restrictions designed to protect manufacturing industries and overseas balances had done little to create goodwill and the sort of climate conducive to export wheat contracts. The tariff wall, which was designed to protect secondary industry, had always generated hostility to Austraiian primary products in export markets. The balance of payments position, owing to excessive imports, was already disturbing those whose responsibility it was to maintain overseas funds at safe levels, and Australia was rapidly approaching the situation that brought about what history has recorded as the credit squeeze of 1961.

Carry over stocks at 1st December I960 and receivals from the crop being harvested at that time created a problem that had to be considered against the background of the experience gained in 1954 when the Australian Wheat Board had a carry over of 93.5 million bushels and an incoming crop of 152.7 million bushels. The storage crisis created by this situation led to the need for the Loan (Emergency Wheat Storage) Act 1955 under which the Commonwealth Government found it necessary to guarantee to the Commonwealth Bank the repayment of a loan of $7 million for the construction of emergency storages. The next crisis in the wheat industry occurred in 1957, when Sir John Teasdale, who was then Chairman of the Australian Wheat Board, was prompted to issue a Press statement recommending the reduction of acreages to limit the annual crop to 150 million bushels. It is interesting to look back and see the views stated by Sir John on that occasion. They were reported in one newspaper in these terms -

Australia's wheat industry faced a crisis unequalled since the depression of the 1930's, the Chairman of the Australian Wheat Board (Sir John Teasdale) said today.

Wheat growers should turn to stock raising more than they had previously, he added.

World overproduction of wheat had restricted markets for Australian wheat and flour, Sir John said.

The factors affecting immediate overseas marketing prospects for Australian wheat were:

Large surpluses in most producing countries. " Bargain " prices offered by the United States.

The possibility of a 2i million tons exportable surplus in France.

Sir Johnwent on

The crisis is no passing phase.

The only remedy is to reduce Australian wheat production. . . .

He was supported by the " Sydney Morning Herald ", which in a leading article, in its issue of 26th April 1957, stated-

The advice given by the Chairman of the Australian Wheat Board, Sir John Teasdale, to Australian growers to limit annual production to about 150 million bushels, to meet both home and export needs, is grave but not surprising.

To continue Australian wheat production on a scale which would build up still bigger hard to quit stocks is clearly foolish.

It is not surprising, of course, to find that Sir John's advice was deeply resented in other quarters. The " West Australian ", for instance, declared that his fears could be unfounded but it would be foolish to ignore them, and that any idea or bureaucratic control of wheat acreages would be repugnant. The " West Australian " had to admit that there is no point in growing appreciably more wheat than we can sell abroad competitively.

It was the large carry over stocks of this period in the history of the wheat industry that led to the successful negotiation of the Japanese Trade Agreement in July 1957, an Agreement that was bitterly opposed by manufacturing and trade union circles and, of course, by many others. The sale of wheat by the Australian Wheat Board to China has always been, from the Board's point of view, strictly a commercial undertaking and political considerations have not been permitted to interfere in any way. It is true, of course, that politics and commerce simply do not mix. Although the legislation supporting the Board provides for the Minister to have the power to direct the Board, this is a power that no Minister has yet seen the need to exercise and it is to the credit of the Board that in all its activities it has been particularly careful to avoid any action that would be likely to give rise to a necessity for the Minister to use this arbitrary power.

The wheat trade with China has expanded as a result of the Board's promotional activities and the necessity for the Board to continue to find markets for expanding wheat acreages and a rapidly expanding industry. The prices paid by the Chinese have been world parity prices at the time the contracts were made. China has purchased vast quantities of off grade wheat, which has been sold by the Board at a discount on the f.a.q. price. The discount offered by the Board has been arrived at after a careful analysis and scientific testing of the wheat in order to determine precisely its value relative to the f.a.q. wheat of that season. The Chinese, being regular buyers of Australian wheat, will naturally purchase their requirements from Australia at a time that they calculate to be a buyer's market. The Board's transactions with China have always been on normal business trading bases and have, in the case of contracts on deferred payment, provided for interest to be paid on the outstanding amounts. The Chinese have meticulously met their commitments either on or before the due date. There is every reason to believe that China will continue to be a major customer for Australian wheat for many years to come, and there has never at any time been any suggestion by the Chinese to the Australian Wheat Board that the continuation of the trade will in any way be conditional on some form of diplomatic recognition.

Some efforts have been made, mainly for party political purposes, to create the impression that the sale of Australian wheat to China is making an important contribution to the Chinese economy and is assisting China to engage in foreign adventures to the detriment of Australian security. In examining this question it should be remembered that Australia has two major competitors in the Chinese market - France and Canada. Without a doubt, any withdrawal by Australia from the Chinese market would be hailed by these two competitors, and it is significant that neither France nor Canada is involved in any way in any of the conflicts presently taking place in South East Asia. An Australian withdrawal from the market would, therefore not reduce the Chinese importations of wheat by a single ton.

An assessment of just what the Australian sales have contributed to the availability of food to China reveals an interesting situation. From 1st December 1960 to 30th June 1966, Australia will have sold and shipped to China 11.75 million tons of wheat or wheat equivalent in the form of flour. A ton of wheat will make approximately 2,200 1 lb. loaves of bread. A 1 lb. loaf of bread, when thinly sliced will give approximately 14 slices, including crusts. On 1st December 1960, the Chinese claimed a population of 715 million people, rising at a rate of 15 million per annum. Any person with a leaning towards mathematics can calculate just how much bread Australia has provided for each Chinese person since 1st December 1960. My guess at the answer to this interesting exercise is that it is something less than 2 thin slices of a 1 lb. loaf per person per week. One of these slices could well be a crust.

So much for. the contribution that sales of Australian wheat have made to the ability of China to feed her people. To suggest that this is any real, significant contribution to the solution of the food problem is, therefore, quite ridiculous and, as wheat is a highly perishable commodity, to suggest that it has made any significant contribution to the ability of China to engage in foreign adventures is equally fallacious. But against this assessment of benefit to China must be measured the importance of this trade to Australia and the contribution it has made to our development and to the maintenance of our vigorous migration programme. The sale of wheat to China has avoided the need for acreage control and the restriction of production of wheat. It has enabled the development of millions of acres of virgin country, amounting to about one million acres a year in Western Australia alone. It is quite illogical to suggest that this land could and would have been developed in the face of production controls and acreage restrictions. Any suggestion that alternative markets could have been found in non-Communist countries is contrary to all the experience of the Australian Wheat Board and, at best, these markets could have been secured only on the basis of reciprocal trade agreements. The hostile reaction to the Japanese Trade Agreement alone shows how unrealistic this approach would be. This being so, it is important to ensure that the commercial relationships between the Australian Wheat Board and the People's Republic of China are kept in their proper perspective.

Let us recognise that we are a race of people of fundamentally European origin and background, 11 million in number, residing in an island continent which, even if it is not considered to be a part of Asia, must be accepted as being part of the Asian complex. In Asia today many people of European and American origin are endeavouring to bring order and stability to many millions of Asian people and to assist them in their progress towards a better life. But it is important for us to remember that all these people of European and American origin can leave Asia at any time and go home. Australia, however, with its relatively small population and its vast island continent, must remain a part of the Asian complex forever. If at any time in the years ahead Australia were in immediate danger from the vast masses to our near north, we could reasonably expect that powerful friends and allies would come to our aid, provided, of course, that we had done all we could to live in peace with our neighbours, had not irresponsibly excited their hostility and enmity and had tried to develop, populate and strengthen our own country. It has already been explained that our wheat trade with China is a valuable adjunct to our developmental and migration programme. Should we say to the Chinese that, because we do not approve of the political medium that the Chinese people are using in an effort to raise their standards, we will not sell them some of our surplus wheat? Should we say this not withstanding their proven ability to pay for it and the absolute integrity they have displayed in all their commercial relationships with the Australian Wheat Board? Should we do this and it led to a need to slow down our developmental and migration programmes, would this be consistent with our responsibilities to strengthen our country and to try to live in peaceful co-existence with our neighbours?

As the living standards of the Asian people improve and their standards of health and hygiene advance, the population of our Asian neighbours must continue to rise rapidly. Even an effective system of birth control will not offset population increase due to longer life expectancy. Because of the increasing demands for food in this transitional period by these emerging people, there must be increasing opportunities for Australia to assist its own development programme and at the same time earn goodwill by a readiness to trade with Asia. The adoption of the opposite attitude and a refusal to trade could well mean that we would have to restrict food production and the development of food producing land and, because of the effect this would have on our economy, slow down migration. In effect we would be adopting a dog in the manger attitude. In this sort of situation, if eventually a powerful Asian neighbour decided to come and take a slice of this lightly developed country and produce its own food, would Australia have either the moral right to object or the moral right to call on European or American friends for help? Mr. Acting Speaker, my answer is: 1 think not.

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