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Thursday, 14 October 1971
Page: 2363


Dr PATTERSON (Dawson) - I move:

That all words alter That' be omitted with a view to inserting the following words in place thereof: whilst not declining to give the Bill a second reading the House is of opinion that -

(1)   the one-year emergency grant moneys available under the Bill should be directed only to those bona fide wool producers, big or small, who are genuinely in need of emergency finance, and

(2)   the emergency finance should be complemented by legislation to (a) establish a single statutory marketing authority to acquire, appraise and market the entire wool clip, and (b) implement a progressive reconstruction and rehabilitation programme to apply to those areas of wool production and marketing which are in urgent need of improvement and assistance'.

The great majority of bona fide wool growers will receive little tangible benefit from the Government's 1-year wool subsidy which will cost at least $100m. This $100m grant should be devoted exclusively to those bona fide wool growers, big or small, who are in a desperate financial position with the principal objective being centred on progressive reconstruction and the alleviation of local debts. Most of this money will finish up with the banks, the pastoral houses and hire purchase companies which are already exerting pressure on growers to honour their debts. Indirectly, of course, the Commonwealth will also regain a share of these funds through taxation. A significant proportion of this money will be paid to affluent wool, wheat and cattle producers including companies whose financial position and assets do not justify the receipt of this one-year Commonwealth financial assistance. I stress all along that this is financial assistance for one year; it is not a long term subsidy, which would have quite different principle from those that I am enumerating now. This is at least $100m being given to the wool producers of Australia as an emergency grant with no strings attached. The principles are quite different from accepted principles of stabilisation or subsidies for a longer period.

These funds will be paid to the thousands of professional and non-bona fide primary producers who are engaged in running sheep as a sideline for the purpose of major income tax benefits. The Government in effect is forcing the general faxpayers, especially those on lower incomes, to pay extra taxation this year to enable this money to be given to many people who are in an extremely affluent financial position. Under this legislation the Government will be giving taxpayers' money to people who are recognised as established millionaires and just as outrageous is the fact that the large amounts of money which will be paid to rich foreign owned companies engaged in wool production will finish up in the pockets of shareholders living in other parts of the world. A very serious consequence of this legislation is that a large proportion of the funds which will be paid indirectly to the banks, the pastoral houses and the hire purchase companies will be lost forever to country areas. This money will certainly not be re-loaned again to primary producers in country areas. It is more likely that it will be invested in, say, real estate in the middle of the cities.

It is claimed, for example, that Dalgety Australia Ltd controls approximately 1 million sheep. This overseas owned company will receive a total cash subsidy which could be as high as $600,000. In addition, this company has first lien on wool sales, including the subsidy paid to thousands of producers, because the definition of a producer under this Bill is the person who owns the wool; he need not be the wool grower. If he has first lien on those wool sales, he is the legitimate producer, as defined in the Bill, and he will have direct access to this subsidy money. I believe that this is a blatant miscarriage of social justice. If Dalgety's were in desperate need of this cash subsidy, as is the case with large numbers of desperate wool growers and their families, then this company would He entitled to financial assistance. I do not argue against that, but it is reported that the company has just made a profit before taxation of $5m.

The cash subsidy will also be paid to other rich and affluent companies, such as Elder Smith and Co. Ltd and the British Tobacco Co. (Aust.) Ltd, just to name two which run large numbers of sheep. I said previously that some millionaires would also be entitled to this cash subsidy. One individual interest in South Australia is alleged to control 12,000 bales of wool each year. The cash subsidy which will be paid to this person, or to his interests, will be at least $300,000. The total cash payment to be made by this Government only to those interests to which I have referred is equivalent to the total income tax paid by 2,000 married men and their families earning the average Australian wage. I believe that the Government is guilty of gross deceit and even political fraud. The Opposition fully supports the payment of this oneyear cash grant to those bona fide wool growers who have a genuine need of financial assistance to overcome a desperate financial position.

If this SI 00m cash grant were distributed on the basis of real need, the Vast majority of wool growers would receive far greater benefits than they will now receive under this Government's scheme which so blatantly discriminates against the smaller family-owned wool property. Supplementary to this subsidy scheme should be the implementation of a progressive reconstruction and rehabilitation programme to apply to those producers and areas of production and marketing which need reconstruction and assistance. The Opposition also believes, as stated in the amendment, that the third part of this scheme should be complementary to the establishment of a single marketing statutory authority - a strong buyer and a strong seller which would be given the authority to acquire, appraise and market the entire wool clip. This authority would operate within the provisions of a reserve price scheme, and I will talk about that later.

So far as the overall Bill is concerned, it is not my intention at the second reading stage to debate at length the various clauses of the Bill, or the implementation of those clauses, because after all the Government's plan is different from that of the Opposition, and most of the clauses really are irrelevant when I am arguing in this way. But, nevertheless, at the Committee stage I should like to ask the Minister for Primary Industry (Mr Sinclair) certain questions. For example, with respect to private buying, I find it difficult to understand how the Government can discriminate against private buyers and the auction system. The Government is discriminating when one considers that the subsidy which could be 20 per cent or 25 per cent is actually levied, in the one instance - that is, the auction system - on gross sales and, as regards private selling, it is levied at the farm gate.

Of course, it is argued that the costs of selling are significantly less under the private buying scheme than under the auction system, and that is true. It is argued also that under this system producers selling under the private buying scheme could receive more than the amount received by producers selling under the auction system, and this is true. But the . fact remains that there is discrimination in the payment of the subsidy, and this is an essential part of the Bill. Why is there this discrimination against private buyers. If the Government does npt like private buyers, then it should establish a statutory authority which has powers of acquisition. But the Government should not sit on the fence and have it both ways. It should not discriminate against any section of the community.

I want to say a few words about the problems facing the wool industry itself. It is quite clear that the United States of America is the key in the immediate future to the progress of the wool industry in Australia. It is the largest consumer of wool in the world. Although relatively, it does not import large quantities of raw wool it does import very large quantities of woollen products, particularly from Japan, Italy, Europe and the United Kingdom. It is quite clear that the international monetary problem has an effect on our exports directly to the United States, on the one hand, and on the other hand, it has an effect on our exports to the countries which manufacture consumer goods for sale to the United States. It is clear that on these 2 counts Australia is heavily dependent on America both directly and indirectly because Australia is exporting raw wool to the other countries.

The Americans have imposed a tariff on our greasy wool. In addition, an extra 10 per cent surcharge has been imposed on those commodities which bear this tariff, and greasy wool is one of them. There is also a 10 per cent surcharge on the importation of woollen textiles into America. Thus Australia is affected in both ways. There is the effect on the one hand, on demand from Japan and the other manufacturing countries and, on the other hand, on direct sales of raw wool to America. In addition, we have the problem that large contracts are made in American dollars. Contracts in relation to our greasy wool sold to Japan are in United States dollars. Contracts in relation to our greasy wool which is shipped to Europe are in United States dollars. Everybody knows that with a time lag of, say, 9 to 15 months before raw wool is converted into the finished product, the wool buyer himself is in a quandary in knowing what price he should pay under the auction system, as we have it today and which is the basis of this whole scheme, and with the international monetary problem which makes it difficult to know what is the true level of the dollar in relation to other currencies. Is it any wonder that we have problems with respect to the price and the quantity of wool bought. It is obvious that buyers are buying as low as possible in terms of quantity and price. In addition, of course, the entire world textile industry covering synthetic products as well as woollen products, is facing degrees of difficulty.

Let me deal with the organisation of the wool industry itself. The organisation of wool marketing and wool administration can be described only as archaic and inefficient. In fact, it is a disgrace. Wool growers have been led by the nose by this Government and, I am sorry to say, by a lot of industry leaders, to the brink of economic disaster through sheer and gross inefficiency in wool marketing and administration at high levels. Let us look at the position. We have the International Wool Secretariat whose function is to promote wool throughout the globe - with very little power other than that. We have the Australian Wool Board which also has the responsibility for promoting wool throughout the world. It has some powers in respect of research and periodical investiga- tions in relation to marketing. We have the Australian Wool Commission which has certain powers. It is obvious that the most constructive move which can be made is to bring the management or the powers directing the production and marketing of wool in Australia under one head in one coherent body. The only way this can be done is by means of a single statutory marketing authority. Such an authority has proved successful in every other major industry marketing primary products. But, of course, the Government is tied so much to the pastoral houses, the private banks, the hire purchase companies and the brokers, and there is such violent vested opposition to this scheme, that it does nothing but procrastinate.

What amazes me is that when we are out on the stump we hear that the Country Party is all for a single statutory marketing authority, but when its members are in Parliament, as we have seen in the last 18 months, they remain silent about it. If the Country Party believes in a single statutory marketing authority surely it has the numbers when voting with the Opposition to get what it wants, but it will not do this, lt annoys me to hear Country Party members of this Parliament speaking to farmers in their own electorate - I have heard them - indicating that they are 100 per cent behind a statutory marketing authority when they will not say a word in favour of such an authority in this Parliament. It is obvious that the Australian wool industry is in a very serious economic condition. No-one in this Parliament will refute that. Does the Government really believe that this scheme, which will cost the taxpayers of Australia at least $100m, is the bes) way to achieve the most constructive and progressive measures for the wool industry? 1 do not think anybody can argue legitimately that it is.

In reply to questions I have asked in the Parliament and in other places, it has been argued that the reason this $100m scheme could not be directed solely to those wool producers who are in desperate need - whose need is bona fide in every sense of the word - is that we cannot tell who are those in need and who are those not in need. Does this Government believe that an accountant looking at the balance sheet of a foreign or Australian company which is running sheep in this country, could not tell whether the company's assets or liquidity justified its sharing in this subsidy? This is what the Government is trying to tell us. No-one could possibly agree with it because when we look at the proposed distribution of this money we find that approximately 170 producers in Australia who are running over 20,000 sheep will get $4m. Will anybody tell me that the Government could not look at the balance sheets of those producers to determine whether they are entitled to this one year grant? Will anybody say that the Government could not look at the balance sheets of British Tobacco Co. (Aust.) Ltd, Dalgety and New Zealand Loan Ltd, or Elder Smith Goldsborough Mort Ltd and in 5 minutes know whether they are entitled to a subsidy? This is what the Government is saying it cannot do.

Surely if there is any economic justice in this country the payment of a one year emergency cash grant with no strings attached should be made to those producers who need it most providing - I stress this - that there is some direction from the Government regarding reconstruction. I emphasise that it should not be the aim of the Government to reduce the wool industry of Australia to the equivalent of the dairying industry by granting long term subsidies and increasing the number of marginal producers throughout Australia. That is what we must guard against. What I am emphasising here is that this $10Om should be concentrated on those producers who need it most while at the same time we should apply the principles of reconstruction and rehabilitation, which are just as important. I cannot see how the Government can argue logically against that proposition.

There are many clauses in this Bill which we can deal with in the Committee stage but there is one matter, which I touched on before, that I must emphasise and that is the propriety of the first lien. It is proposed that any body or person, whether it be a bank, hire purchase company or a back alley money lender, shall have a first lien on the sales of a producer. Under this Bill they are protected by definition and entitled to have the full subsidy paid to them providing, of course, the producer's debt to them is greater than the total value of his wool sales.


Mr Sinclair - Would you treat the payments differently from the ordinary wool receipts?


Dr PATTERSON - I have already told the Minister that I would incorporate in the legislation a provision relating to specific, not general moratoria, to stop large money lenders who have loaned at exorbitant rates of interest to producers who had no option but to borrow from them, and then let the Government make a judgment, as it did during the depression years, on individual cases. The Government will not in this way, as it has suggested, tie up the industry. It will not do this. This was made clear from the investigations of the reconstruction commission after the war. Specific moratoria are quite different from general moratoria. I, and I think most people, believe that if companies have been guilty of lending to primary producers irrationally at high rates of interest those companies, not the Australian taxpayer, should bear some proportion of the national loss. That is the basic principle behind specific moratoria. It has worked before in Australia and it has worked in other countries.

I fail to see why this Government should bring in legislation which will simply transfer taxpayers' money straight into the hands of affluent companies, many of them foreign owned, simply because those companies have a first lien on the wool sales. Let nobody try to tell me that the private banking sector in this country is so broke that it could not carry these producers for at least another 12 months until the whole wool marketing system was changed to operate on some rational basis. The Australian Labor Party believes that there is an urgent need for the Commonwealth to take immediate and positive action to restore the wool industry to the former strong and viable financial position it occupied in the Australian economy. The decided comparative advantage enjoyed by Australian woolgrowers over those in other wool producing countries is being eroded at an alarming rate. The deteriorating economic condition of the industry has been caused, on the one hand, by the insidious increase in costs and, on the other hand, by the progressive decline in the average price of wool.

The Opposition recognises that there must be a radical change in the appraisal and marketing of WOOl. We accept the fact that the only way in which a statutory marketing authority could operate as efficiently as possible would be by the complementary use of, say, core testing or objective measurement. We accept that, but let us do something about it to accelerate its introduction. Let us have a plan. If we are going to concentrate in the future on an objective measurement then let us have some legislation and some finance directed towards accelerating this method and let it be complimentary to a statutory authority.

Labor's wool policy embraces, as I keep hammering, a statutory wool authority to acquire, appraise and market the whole of the Australian wool clip, not just parts of it. I have mentioned the reconstruction scheme. Surely all of us will agree that this is fundamental to it. No-one is going to tell this House that the present reconstruction schemes in Australia are either speedy or effective. My friend the honourable member for Riverina (Mr Grassby) asked a question yesterday on the viability of the rural reconstruction scheme in New South Wales. It is pitiful to see what is happening in New South Wales and in other States regarding reconstruction. The machinery is just not there. The Commonwealth has to step in in a big way to assist the States and the wool industry in streamlining not only the production and marketing techniques in wool but also in streamlining reconstruction and rehabilitation at the same time. lt is easy for me or for any other person to put forward schemes. The Opposition knows that. We have been criticised for it. But the present system of producing and marketing wool is archaic and inefficient. I am certain that this legislation will do nothing constructive in overcoming those basic physical problems. Something radical and revolutionary must be done before the whole wool industry collapses to such a degree that it will cost the Australian taxpayer so much money as to be a major drain on the Australian economy. I for one completely support the wool industry. I am not a pessimist who says that it is doomed, although after studying the relationship of wool and synthetics I believe that the position of wool in the future is going to be tougher. It could perhaps finish up, as I have said in this House before, with the same relationship to synthetics as fillet steak has to other beef - an exclusive, high-priced, magnificent product. But there will not be available as great a quantity of woollen goods as there will be of synthetics, as is the case with fillet steak and the cheaper cuts of meat.

We must guard against that situation. I believe that the only way to do it is to have a very strong single statutory marketing authority which would bring under one strong management the management of wool in Australia and our woollen interests overseas. The authority would make the decisions without having to go back to the wool industry all the time and have the wool industry' people fight among themselves, as they have been doing perpetually, before reaching a decision. Often those decisions are not unanimous. We should have competent men running a statutory authority, negotiating shipping rates, writing contracts in the currency most favourable to Australia, actually owning the wool, entering into bilateral agreements with foreign countries by going directly to Russia, China or some other place and trying to sell the type of wool that those countries want. But this cannot be done under the present legislation. The Australian Wool Board has no authority over the wool. Although it is written into the Act, there is some doubt about whether the Australian Wool Industry Commission can negotiate directly with foreign countries. We know that all these things are needed urgently. I do not think anyone would argue against that. The question is: How do we do it, and how do we do it quickly? Time is running out. I can remember saying in this House perhaps 18 months or 2 years ago that time was running out. The only thing is that there is less time now. If a panic started in the wool industry through trustee companies or some other companies starting to put the pressure on and to foreclose, we would see a run in this country, because of the tremendous debt structure, which would parallel what happened in the depression. If we do not have to deal with it, the Commonwealth machinery that we had in the depression, the position of wool will be far worse than it was 40 years ago - unless we do something constructive in the production and marketing fields now.







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