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Thursday, 5 December 1974


Mr DEPUTY SPEAKER -Is leave granted? There being no objection, leave is granted. (The document read as follows)-

 


Mr SINCLAIR - This table shows that the area topdressed to superphosphate increased by approximately 1,000 per cent in the period under review. The amount of superphosphate used increased by more than 1,000 per cent. The undeflated price of superphosphate per ton increased by approximately 70 per cent and at the same time the application rate, expressed in cwts per acre, increased by approximately 24 per cent. These tables show that Australian farmers recognise the importance of superphosphate as an essential tool in their management practices as a means of improving productivity. The Government's denial of assistance of the bounty to farmers is regarded by the Opposition parties as a totally retrograde step and even more so at a time of record inflation. The denial of the bounty, as I will now show, will undoubtedly result in a significant decline in the rate of superphosphate usage, a decline in the productivity of Australian farmers, and a reduction in the fertility levels of Australian soils. Ultimately this must result in higher costs of farm produce to consumers, wherever they live in Australia or overseas, and it must result in a lower quality of production. So the inevitable result of this Government's policies is an increase in price for the consumer and a decline in quality, and yet this is a government which is asserting that it is important that the consumers in the city or in the country, wherever they live, should be cared for.

Currently the bounty payment paid to fertilizer manufacturers is approximately $11.81 per tonne. The price per tonne of single superphosphate ex works in bulk from either Port Kembla or Newcastle between 3 1 July 1 973 and 30 June 1974 was $17.88. Between 1 July 1974 and it is estimated 31 December 1974, the date the bounty ceases, the price per tonne ex works is $34.87, after deduction of the bounty payment of $1 1.81. Although the figures are not available for 1 January 1975 the price of single superphosphate per tonne must be at least $53.28 after allowing for an increase of $6.60 for increases in the price of rock phosphate, and $ 1 1 .8 1 for the non-payment of the bounty.

Although labor costs have made a significant contribution to the increase in prices, the major cause of increased prices of single superphosphate, double superphosphate and triple superphosphate is largely increases in the price of rock phosphate. Honourable members will be aware that Florida and Morocco, the two major world sources of phosphate rock, from which Australia does not draw significant supplies, have increased dramatically this year the price of rock phosphate. From Australia's traditional sources of supply- Ocean Island and Nauru- the price has also increased significantly. In fact, in the past 6 months rock phosphate prices have increased by more than 130 per cent. The cost insurance freight price of phosphate rock to Australian manufacturers has moved as follows: (i) 1 July 1973-30 June 1974, $17.43 per tonne; (ii) 1 July 1974-31 December, 1974, $36.00 per tonne; (iii) 1 January 1975 $46.98 per tonne. That is the cost insurance freight price of phosphate rock to Australian manufacturers. It is no use the Government saying 'But we are about to assist the establishment of significant new phosphate rock deposits up in Cloncurry and that is going to reduce in the very short term the cost of phosphate rock to Australian consumers. ' Of course we all hope that ultimately it will do that, but there is no prospect of that phosphate rock being available immediately to Australian agriculture. There is an inevitable time lag in the development of those phosphate rock deposits, and the cost of extraction, the freight from their fairly remote situation and the cost of processing the rock is such that the landed cost for southern consumers of superphosphate and for the manufacturers using phosphate rock is still not determined.

I should like to point out that approximately 0.6 of a tonne of phosphate rock is required to make one tonne of" single phosphate. The major additive is sulphuric acid, which is used to degrade the phosphate to superphosphate. The price of sulphuric acid has also increased significantly The major reason for the increase in the average price of the rock phosphate has been significant increases in the price of Nauruan and Ocean Island rock phosphate, which have increased from approximately $13 to $14 per tonne fob up to the end of February 1974 to the anticipated price of $55 to $56 per ton fob from 1 January 1975. That is an increase from $13 to $14 per tonne at the end of February 1974 to an anticipated price of $55 to $56 per ton fob from 1 January 1975, yet the Government is not going to renew the superphosphate bounty. The price of Nauruan phosphate has been related to the world price of Florida rock phosphate. The price of Florida rock phosphate, as I have already mentioned, has also increased dramatically this year. The fob cost of Christmas Island phosphate has increased only marginally in this period.

Before continuing, I should like to draw to the attention of honourable members an article in the 'Quarterly Review of Agricultural Economics' published by the Bureau of Agricultural Economics in January 1974. That article- 'The

Use of Superphosphate on Australian Pastures: An Exploratory Analysis'- by E. J. Warring and J. G. Morris, reports the results of an exploratory analysis of the influence of a number of factors on the use of superphosphate for application to pastures in Australia. I believe it is quite material in considering this Bill to quote from one section of that article. The article states:

The effect of the bounty was to induce primary producers to top dress significantly greater acreages than would otherwise have been the case.

In other words, there was a direct relationship between the policy which the Liberal-Country Party Government introduced and the consumption of superphosphate. The article goes on to calculate price and demand elasticity of superphosphate usage for improving pastures.

Bearing the results of that study in mind I draw to the attention of the House the fact that there have been distinct signs of falling off in the demand for superphosphate since 1 July 1974. 1 should also like to point out that presently the single superphosphate plants of Port Kembla and Newcastle are reduced to less than 50 per cent of their operating time and capacity with a consequent reduction in labour employed at these plants. This is expected to continue and perhaps to deteriorate further during the New Year. In other words, it is not only a question of what is happening on the farm, it is also significantly now beginning to affect those who are superphosphate producers. Various attempts have been made to establish the elasticity of fertiliser consumption to price; in other words, the percentage change in consumption for a one per cent change in price. The study by the Bureau of Agricultural Economics indicates an elasticity level of minus 0.52 per cent based on the ex works price after bounty deduction from the period between 1 July 1951 to 30 June 1972 embracing price changes up to 36 per cent. In simpler terms, a 36 per cent price increase of superphosphate ex works is expected to give an 1 8.7 per cent reduction in demand. So that as the price goes up the demand goes down and the relationship is calculated minus 0.52 per cent based on the ex works price. At the University of New England similar calculations have been made. The Agricultural Business Research Institute of the University calculated 2 falls for the elasticity consumption at 2 levels of price increase. These are: minus 0.51 per cent for a price increase of 35 per cent and minus 0.43 per cent when the price is 6 1 per cent. These calculations have been based on the price of fertiliser at the farm gate. They show conclusively that a rise in superphosphate prices leads to a substantial fall in the demand for superphosphate.

I have already pointed out the importance of the usage of phosphatic fertiliser to Australian farmers. Without the use of phosphatic fertiliser many of the farmlands of Australia will regress inevitably to low productivity levels in spite of the nature of the seasons. I have also pointed out the price of superphosphate, mainly due to the increase in rock phosphate price, has risen and will continue to rise significantly and I would draw the Minister's attention to the fact that the purpose of the bounty is to reduce the cost of fertiliser to farmers. The importance then of the bounty cannot be overstated. In other words, what is happening is that the bounty has been a catalyst to induce farmers to use superphosphate. Because farmers use superphosphate the works that produce this product are able to generate employment. There was significant investment in superphosphate plants around Australia. From those there was a chain right through ensuring the quality and quantity of production to the consumer who goes into the greengrocer's store and ultimately buys vegetables for the kitchen table. Overall the change that the Government is imposing will reduce the usage of superphosphate significantly. Of course, if the bounty is to be extended consumption of superphosphate will be maintained at an adequate level, and the maintenance of the consumption of superphosphate is without doubt to the benefit not only of members of the farming community but also of the producers of superphosphate and, of course, ultimately the Australian consumer.

Beyond that, of course, Australia has a commitment to the world. We have a commitment that was expressed by the Minister for Agriculture, (Senator Wriedt) at the recent World Food Conference. The commitment was that Australia should contribute more to the world food bowl particularly to help sustain those who live in the lesser developed countries of the world. The usage of phosphatic fertiliser is one way of achieving that aim. In the past 2 days this House has been debating legislation designed to protect our natural resources. The fertility of our soils is perhaps our most valuable natural resource and the best way to protect it is to make sure that the fertility is maintained and wherever possible improved. The bounty system encourages the use of superphosphate and improves the fertility of our soils. This legislation is designed to continue the bounty.

The Government has initiated an inquiry by the Industries Assistance Commission on the effects of the withdrawal of the bounty to new land farmers in Western Australia. We regard that reference as extremely limited because the withdrawal of the bounty affects not only those farmers on new land farms in Western Australia, although they are critically affected, but also most areas of agricultural production in this country. It affects those who are in the high rainfall pasture zone. It affects so many of the farming community that a narrow reference of the type that the Government has sent to the Industries Assistance Commission denies the opportunity of considering the point of view of those others who are affected.

A group of growers from my electorate who are members of the Glen Innes branches of the United Farmers and Woolgrowers Association and grazier association tendered to the Industries Assistance Commission statistics relating to their dependence on superphosphate. They produced figures which showed the costs to them as consumers of superphosphate and the benefits that flowed from the use of superphosphate. The Industries Assistance Commission, in my view quite correctly, said that this was outside the terms of its inquiry. It is not sufficient for the Prime Minister (Mr Whitlam) to come into this Parliament and say that perhaps out of the Industries Assistance Commission's report, when it comes, there may well be a broadening of the consideration of the need for the bounty to be put back on superphosphate. That is no use because the bounty is to terminate on the 3 1 st day of this month. As from that date the prices to which I referred a moment ago will be the base prices that will be charged to the Australian consumers. We believe that the reference to the IAC is far too limited to take into account the range of needs of Australian agriculture. We believe that the withdrawal of the bounty affects all Australian farmers.

I would like to point out that after the Government decided to cancel the superphosphate bounty it made the decision to continue the nitrogenous fertiliser bounty. The morality of those 2 decisions stands in stark contrast one to the other, particularly in view of the resource we are seeking to protect, a resource which members from both sides of the House acknowledge and a resource for the maintenance of which the Minister for Northern Development and the Northern Territory, has been a principal advocate in other days- the soil fertility of the nation. This resource needs to be protected not just for today or for our generation but for future generations.

I would like to make one final point. In recent months it has appeared that New Zealand farmers and Australian farmers are to be given entirely different systems of support. A law has been introduced by the Labor Government in New Zealand which ensures that the cost of superphosphate to the New Zealand consumer will be no more than $26 per tonne. That subsidy takes into account the rise of phosphate rock prices and the benefits that flow to the New Zealand nation. This is an area where demonstrably there is a community and national interest in the maintenance of an incentive to consumption. We on this side of the House believe that the incentive to consumption given by the phosphate bounty should be preserved. It is for that reason that I have initiated this Bill and I commend it to the House.







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