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Wednesday, 7 March 1973
Page: 344


Mr HUNT (Gwydir) - I wish to speak tonight on the effects of revaluation on the wealth producing industries of this country. Measures have been taken by the Whitlam Government to reallocate resources in the economy by 2 revaluations, the first unilaterally against all currencies last December by the Prime Minister (Mr Whitlam), the Treasurer (Mr Crean) and the Deputy Prime Minister (Mr Barnard) without reference to Cabinet, and the second against the United States dollar by not following the United States devaluation. These actions will have far-reaching and detrimental effects upon the economy as a whole. The full impact of these double barrelled revaluations upward of the Australian currency will not be felt fully in the rural sector until the world supply situation for rural exports moves closer to world demand.

There is a shortage of wool in the world at the moment due to the long period of low prices and alternative land usage for grain crops, meat production and, of course, a dramatic change in fashion trends. The world production of wheat, coarse grains, and meat is down largely due. to the unusually bad seasons in most of the agricultural countries, especially the Soviet Union and China. World trade in wheat, for instance, is at an all time high, mainly because Russia has had to import large quantities of wheat. China has been a big importer of wheat from both Canada and Australia. World wheat prices have reached record levels but, when supply comes closer to demand, when better seasonal conditions obtain throughout the world, then we will feel the full blast of these decisions on the economy. At today's exchange rate parities our customers throughout the world can buy Canadian wheat or nickel at about 18 per cent cheaper than the Australian products and United States wheat can be bought at about 18 per cent cheaper than the same level as it could be prior to the December 1972 decision. South African wool, in exchange rate terms, is now 26 per cent cheaper to customers than it was before the August 1971 international currency realignment. What an incredible disadvantage this is to our rural industries after 7 years of difficult seasons, low world prices and international marketing difficulties. More and more evidence is accumulating to demonstrate the cost to Australia's export industries of the recent currency changes.

The most recent appreciation against the United States dollar will cost the mining industry of this country$1 43m annually in gross terms. When one adds the $10Om annual loss due to the December upward revaluation we have a total loss of $243m per year for the Australian mining industry. It is a sad fact that the value of Australian iron ore contracts in the Pilbara have been reduced by $1 12m by these 2 decisions. Mr D. E. Taplin, the President of the Export Division of the Chamber of Manufactures of New South Wales, has expressed the concern of exporters of manufactured goods. On 16th February Mr Taplin said:

Australia's international monetary and trading policies are becoming curiouser and curiouser. Taken in conjunction With the effective revaluation of 6.3 per cent in 1971 and the more recent unilateral revaluation of 7.05 per cent in December 1972, Australian exporters are now faced with the fact that in the worst circumstances their products must be 23.5 per cent more expensive in some overseas markets than similar products exported by the United States.

The situation in our greatest export earner, the rural industries, is little better. The Chairman of the Wheat Board has already announced that wheat growers face a loss of ┬žUS18.5m on outstanding contracts. The Government decision will cost the cotton industry $5m for the full year. The dairy industry also faces severe losses since contracts with South East Asian countries for dairy products were written in United States dollars. These are worth $27m and their value is now reduced by $3m. There is a $20m a year trade with the United States in cheese and other dairy products. Unless these contracts can be rewritten, which is unlikely in a highly competitive market, the loss to the Australian dairy farmers could be $2. 2m a year.

The most recent figures for exports of meat to the United States indicate a loss of $45m to the meat industry. There will be a loss of $4m on the export of fish, $4m on the export of sugar, SI. 5m on the export of wool, and of course the fruit and canning industries face almost annihilation from the export markets. On the figures I have cited, alone, the loss to the Australian fanners from the so called sit pat decision amounts to $79m. These figures do not give a complete picture because other industries, such as the oil seeds industry and the coarse grains industry, are highly dependent upon the export market and will suffer greatly as a result of this revaluation. When the loss of $79m suffered by the few industries that I have mentioned is added to the loss of between $150m and $200m as a result of the December decision, we see that the socialist Government in its unilateral and gratuitous decision has dealt a staggering blow to those industries. We are told that those rural industries will receive adjustment assistance. This is meaningless except in the case of fruitgrowers. This promise is a pitiful and deceitful attempt to cover up the socialists' deliberate policy of downgrading the importance of the wealth-producing industries of this nation.

What is even worse is the deliberate plan to transfer resources from the wealth-producing sector of the economy to other sectors dearer to Labor's heart. In effect it represents a reallocation of resources from the less populated and more export orientated States and the Northern Territory to the cities of Sydney and Melbourne. The export surpluses from Queensland, Western Australia, South Australia, Tasmania and the Northern Territory have been contributing to the import surpluses of New South Wales and Victoria.

Let us examine the trade distribution of the States in 1971-72. In Australian dollars f.o.b., New South Wales imports exceeded exports by S560m; Victoria's imports exceeded its exports by $29 lm; Queensland's exports exceeded imports by $71 lm; the amount for Western Australia is $664m; South Australia's amount was $204m; Tasmania's was $139m and the Northern Territory's was $23m. This policy, of course, must slow down our national growth rate because the greatest growth potential in Australia is in the smaller States.

I believe that the decision taken by this Government will have very serious and detrimental consequences to the nation and will ultimately lead to a great degree of unemployment. This is a decision aimed right at the heart of the rural export industries and the export industries of Australia. Unless the wealth-producing industries are capable of surviving profitably, the essential social welfare policies that have been announced by this Government - the grand dream of the Labor Party for this grand society - will go by the board because the finances to support the objective will not be available. If the people of Australia are put out of work because the industries in which they work have suffered and cannot compete with their competitors overseas, the Government will have to answer to the Australian people for this decision. I believe that by the end of this year the full impact of these 2 crazy decisions, making the Australian dollar the most overrated currency in the world, will make its presence felt in this community.







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