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Thursday, 12 November 1936

Senator DUNCAN-HUGHES (SOUTH AUSTRALIA) - Is not that the position of every secondary industry ?

Senator HARDY - To a certain extent, but the majority of the secondary industries receive reasonable assistance as the result of the operation of the tariff and are subjected to a special investigation before they receive this protection. What the producers do not want is to be absolutely dependent on the whims of Parliament. They want the' stability which organized marketing will bring to their industries; they ask for security. Can any honorable senator say that organized marketing would be possible under a subsidy system? An industry would be prosperous one day and in the " doldrums " the next. Once the foundation of orderly marketing is removed from an industry it is reduced to a condition of chaos. In the butter industry, for instance, what would happen if the Commonwealth Government ' were not able to restore the legislative powers which have been taken from it by the Privy Council? Chaos would reign, particularly after the expiration of the existing contracts which are at the present time more or less holding the industry together. Once those contracts expired, butter producers who had been selling in the overseas markets would try to sell on the home market, and the result would be that every pound of butter that they sold locally would displace another pound of butter produced by some other person. The result would be that competion on the local marketing would be intense and price? would fall so rapidly and steeply that the producers would soon be forced down to starvation levels. I repeat that the rural producers are asking not for subsidies, but for a sound foundaton upon which they can be assured of receiving reasonable returns for that portion of their output which is sold on the Australian market.

Senator Sir Walter Massy-Greene - Will the honorable senator give his views on the excise proposal?

Senator HARDY - The same objection applies to excise as to the subsidies. If an excise were placed on these products the net result would be that the Government would have to distribute the proceeds to the industries. Who would decide in what way the amount should be distributed? The honorable senator, for instance, might suggest that the butter industry should receive £4,000,000.

Senator Sir Walter Massy-Greene - C am not advocating an excise duty.

Senator HARDY - No, I understand that; but there would be the same annual scramble for largesse under an excise scheme as there would be under the other proposals that I have mentioned. Moreover, an excise scheme, like a subsidy scheme, would not permit in any way the advantages of organized marketing. The problems of primary industries differ largely from those of secondary industries. A fundamental characteristic of secondary industries is that the very nature of their products enables organized marketing to be practised. If a market for a secondary product becomes glutted, the producer goes to the factory and issues orders either for a slowing down or a complete cessation of production, the basic principle being that goods are not produced unless they can be sold. How different is the position of primary industries! When a grazier turns his sheep out into the paddocks he cannot stop them from growing wool, and when a farmer plants his grain lie cannot stop the crops from growing, especially in the' Riverina where the rainfall is generally good. It will be seen, therefore, that conditions operate in the primary industries that are entirely different from those which operate in secondary industries. In my opinion, the only basis upon which we can assist primary production to attain stability through organized marketing is that which was agreed to in this Parliament in 1933 when the butter stabilization legislation creating the equalization scheme was passed. I further consider that only a scheme such as this would be agreed to by the people. If this legislation, which seeks to perpetuate the butter legislation is not approved by this Senate, or, if, in the event of its receiving the Senate's approval, it is rejected by the people when it is placed before them by way of a referendum- as a proposal for the alteration of the Constitution, drastic results will follow. An inescapable conclusion is that the returns to primary producers from the sale of products within Australia will be less than equal to the returns from sales overseas. In other words, the export prices will dictate the returns from local sales. The full significance of that statement is not generally recognized. Let us remember that the producer does not get the full price for the goods sold in the markets of the world. He "receives the export price less the cost of freight, insurance, and other charges incidental to the carriage of goods from one country to another. For instance, freight on dried fruits is approximately £15 a ton; therefore, if the dried fruits legislation is destroyed through the failure of this Senate or the people of Australia to agree to the Government's proposal, the producers of dried fruits will receive a return for the whole of their crop which will fall below the export parity by more than £15 a ton, and I venture to say that would mean the absolute ruination of every producer in the industry.

Senator Sir George Pearce - It would mean the end of the settlement on the Murray.

Senator HARDY - Yes, and all industries engaged in the export trade would be affected similarly. The butter producer to-day receives for choicest butter within Australia approximately ls. 3d. a lb. in Australian currency, which is equivalent to ls. sterling. Who would wish to reduce arbitrarily the local price of butter below that level? But it will be reduced to a lower level if this legislation be not approved, or if the people of the Commonwealth refuse their consent to the proposed alteration, because the export prices will dictate the local price. This will not be the price which is actually secured in London for the sale of Australian butter. It will be the London price, less freight, insurance, and other incidental charges, and, it should be noted, the existing freight on butter is £12 10s. a ton.

Let us consider a further aspect of the fairness and equity of this proposal. Are we prepared to allow our primary producers who are engaged in export industries to compete with nations in which the workers are amongst the lowest paid in the world ? Are we prepared to allow the standards of such nations to govern the standards of our producers? The majority of our dried fruits producers are competing with exporters, not in the United States of America, or in countries where the standard of living is high, but in Turkey and Greece. In Greece, in order to assist exporters to " dump " their products at low costs, the currency has been depreciated to a much greater extent than it has in Australia. Is that classed as reasonable competition? Nobody can fairly say that our producers of dried fruits should receive a price on the Australian . market lower than, that received by producers in Turkey. In some parts of Turkey the rate of wages is from ls. to ls. 6d. a day! Is it considered that our producers should be satisfied with such a return? The question we have to consider is whether the producers in these industries in Australia should receive a reasonable living wage, the equivalent of which is a fair price for that portion of their output which is sold on the Australian markets. The issue is clear. If the desire of honorable senators is to ruin many of our primary producers, they should reject this bill. If they -wish to destroy completely some of the most important primary industries in this country they should urge the people to vote " No " at the proposed referendum. To my mind, the issue is quite clear, and I cannot understand why any honorable senator should oppose this measure. Why should we go back to the days of disorganized marketing, when the producers were forced to accept less than world parity prices? Why should we attempt to reduce the producers' returns? Surely Australia has an unquestionable right to maintain its domestic economy. A principle recognized by all parties is that our secondary industries should be protected. If primary industries are to be thrown to the wolves, why should not the secondary industries share a similar fate? Why continue the. protection of the tariff? If the primary producers are to be denied a reasonable amount of protection, the only logical course to pursue will be to revert to the policy of freetrade for all sections of production in Australia.

A charge often levied against primary producers in Australia is that under the cover of marketing schemes considerable exploitation has occurred. It has been argued by certain interested persons who desire the proposed alteration of the Constitution to be defeated at the referendum that the tariff should afford sufficient protection to the primary industries. I point out that for eight years the dried fruits legislation has been in force, and that no exploitation of the people has resulted from it. The duty on dried fruits is 6d. per lb., but during the whole of that period of eight years the Australian price has been only Jd. per lb. greater than the export parity price. Is there any evidence of exploitation in these facts? The position with regard to butter is similar. The local price is ls. 3d. per lb., Australian currency. Who will say that exploitation has occurred in regard to this commodity? The experience of the past should be our guide in determining future policy. The primary-exporting industries are merely asking for a right which is clear and unchallengable. Whether the words employed in the bill provide adequately for the desired alteration of the Constitution may be open to question, and this possibly requires a decision by the High Court, but the intention is merely to revert to the position that was thought to obtain prior to the recent decision of the Privy Council.

Senator Herbert Hays - Does the honorable senator think that that is clearly provided for in the bill?

Senator HARDY - It seems to me that the powers proposed to be sought are of a more restricted nature than those assumed to have been conferred in 1931. Powers are now to be asked for only in regard to marketing, but the assumption previously was that section 92 applied to the whole of the economic life of the Commonwealth. I have no doubt that the subject will be discussed from many angles. Doubt will be expressed as to whether the interpretation of the courts will be in harmony with the intention of the Government. The clear intention is merely to revert to the position that existed prior to the decision of the Privy Council in the James case.

Senator Grant - That may be the intention.

Senator HARDY - I think that the words of the bill provide for that. We shall have an opportunity to discuss the matter in detail in committee, but on behalf of the primary producers who are anxiously watching the progress of this bill, I appeal to the Senate to give it whole-hearted support. On this national issue it is highly desirable that there shall be a united front, so that orderly marketing may be restored and producers may be assured of a reasonable standard of li ving.

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