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Thursday, 25 October 1973
Page: 2740


Mr DUTHIE (Wilmot) - I always have been opposed to consideration of the Estimates being interrupted by the introduction of Bills. I opposed it when I was Whip and I am opposed to it today. Bills should be introduced at the end of discussion of a group of Estimates, not half way through that discussion when honourable members are prepared to speak. I am very opposed to this.

I do not share the paranoic pessimism of the Australian Country Party about the future of our Australian rural industries. Members of the Country Party are outdoing Jeremiah, the most pessimistic prophet of the Old Testament. They are having a field day in poisoning the minds of the farmers against us by making misleading and outrageously exaggerated statements and in sowing the seeds of misunderstanding in the rural areas. Members of the Country Party are prophets of doom today. It was fantastic, for instance, to hear the speech of doom this afternoon in this debate by the honourable member for Fisher (Mr Adermann). He said that the rural man and rural industry were doomed. This is unadulterated rubbish. As proof I remind the Committee that the estimated rural export income for Australia for the next 12 months will be $3,900m, the highest in history and over $500m better than the exports for last year. The total income of farmers will rise by 30 per cent this financial year. To talk about doom in the industry is just utter rot, and I wish to emphasise that word. To say in this place that primary industry is doomed, or to go out into the country and say it, or to proclaim it through the medium of Country Party newspapers, is to tell those in the industry a great big lie.

I want to refer to the rise in the butter fat price. The Australian Dairy Industry Council has been before the Prices Justification Tribunal seeking to lift the wholesale price of butter by 5c a lb. May I point out that in my opinion an increase in the price of butter to the consumer would be suicidal for the dairy farmers of Australia. My reasons are, firstly, that the dairy man would receive only a minimal share of the increased price and, secondly, that the drastic and dramatic fall in butter consumption in Australia over the past 12 months should startle the dairy industry into some intelligent reaction. The fall in the consumption of butter in the past 12 months is absolutely staggering. If this fall continues the industry will be forced into a serious reduction of its butter fat price to the producer. In Sydney, for instance, the decline in butter consumption in the 12 months from June 1972 to June 1973 was 20.4 per cent to an all time low of 42.8 per cent of Sydney's total consumption of commodities of this kind. In Melbourne the decline amounted to 18.1 per cent, down to 66.7 per cent. In Brisbane the decline in the consumption of butter has been 14.5 per cent, down to 49.9 per cent of total consumption of butter and margarine. These are frightening and disastrous figures for our industry. If there is a rise in the price of butter an accelerated buyer resistance will occur until the industry will have thousands of tons of butter on its hands to sell overseas at the ridiculously low price of about 25c per lb. Because the equalisation scheme averages the price received overseas and the home consumption price, it is easy to see that an increase in sales overseas, with a commensurate decrease in sales on the home market, will reduce the average price for the dairy farmer. There can be no other result. To talk of an increase at this stage is absolutely suicidal.

Let me illustrate what happens when the price of butter is increased. The last price increase in the price of butter was 3c per lb in the wholesale price in August 1971. In the next 12 months after that increase was announced there was a reduction in butter consumption of 3,000 tons throughout Australia. That sort of thing will happen again if the price of butter rises. This time there could be an even greater reduction in consumption of 8,000 tons, according to one estimate, if the price of butter is increased by 5c per lb wholesale and 7c per lb retail. This would eventually reduce the farmers' total income. In fact, if the price rises by 7c per lb retail, it is suggested that the reduction in farmers' incomes will amount to $7. 98m. If we increase the price of butter, the domestic butter usage could fall from 88,000 tons a year to 69,700 tons a year, displacing about 1 8,000 tons of butter from the local market to be sold on the low price export markets.

This is a disastrous situation, and I am amazed that the leaders of the industry are even suggesting such a ridiculous thing as an increase in the price of butter. Already the dairy farmer is squeezed by cost increases. The manufacturing and transport costs, of course, are passed on to him. A further increase in the wholesale or retail price of butter will ruin the producers' best market - their home market. A price rise for butter also will increase the demand for margarine and other substitutes and give them a field day. I believe that the present price should remain as it is or even be reduced by up to 3c per lb in order to increase the sale of butter in Australia. This would result in an increase in butter consumption and would mean that less butter would have to be sold on the cheap export market and more on the better home market. In due course this trend would result in a better equalisation price being received by our dairy farmers in the long term, and the home market would be saved and expanded. I am quite sure that a price increase would kill our home market.

In respect of the dairying subsidy, there is a piece of history I want to give to honourable members. As you know, Mr Deputy Chairman, the subsidy will be phased out over the next 2 years. During the 31 years of its existence, $77 3m has been paid to our producers, and $5 18m of it went to Victoria - to one State. Queensland received 8.5 per cent of the total butter subsidy; New South Wales, 9.6 per cent; Victoria, 69.9 per cent; South Australia, 2.5 per cent; Western Australia, 2.7 per cent; and Tasmania, 6.8 per cent. In spite of this subsidy, which was introduced as a wartime measure, 25,000 dairy farmers have gone out of butter production in the last 5 to 7 years throughout Australia - 12,000 of them in Queensland in the last 10 years. No one could ever convince me that the subsidy was designed to keep men on dairy farms. It has not done that and the money has now been built into the price of land and becomes a part of the economy of the farm. It has built up a sense of false security. It was never meant to be a permanent feature of dairy farmers' existence.

I have had a look at the history of the subsidy. It was introduced in the Federal Parliament as the Dairying Industry Assistance Bill 1942 on 8 October 1942 by the Honourable Ben Chifley who was then the Treasurer in the Curtin Government. The reference to this is in Hansard, volume 172, page 1541. From 1 October 1942, $4m a year was allocated. Features of the subsidy were: Firstly, it was to be paid to producers of butter and cheese at 1.25d per lb for butter and 1.5d per lb for cheese. Secondly, it was a wartime measure and was paid to prevent a rise in butter prices to the consumer - a consumer subsidy. Thirdly, it was designed also to help dairy farmers to pay award rates to their workers, with the rates to be fixed by the Conciliation and Arbitration Court. Fourthly, the subsidy was to be paid on a differential scale according to the relative disabilities of the producers in different parts of the country and to assist drought areas. Fifthly, it was paid to stabilise the industry and to increase the production required to try to help the United Kingdom, which wanted 60,000 tons of butter from Australia and also to supply with cheap butter the Australian consumer and the American armed forces that we were feeding.

The subsidy was criticised by the Liberal Party-Country Party Opposition when it was first introduced, although it finally voted for it. Most of the critics wanted a price rise in butter of 3d per lb, instead of a subsidy. Some suggested that it was a dole payment. Other speakers said that the subsidy should be paid on a flat rate basis to all producers. This course was finally adopted. Mr Paterson the then member for Gippsland, as reported at page 1594 of Hansard of 1942, said:

One unfortunate effect of this proposal is that it will keep the problem of the dairying industry in the political arena year in and year out, and . . . that is undesirable.

The DEPUTY CHAIRMAN (Mr Martin)Order! The honourable member's time has expired.







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