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Thursday, 29 October 1964

Senator O'BYRNE (Tasmania) .- The Bill provides for the raising of £4i million for capital required for war service land settlement in the States of Tasmania, Western Australia and South Australia. An amount of £1,113,000 will be allocated to Tasmania, £2,302,000 to Western Australia and £1,085,000 to South Australia. During his second reading speech the Minister for Defence (Senator Paltridge) said that the overall war service land settlement scheme has reached the phase where the development of projects was drawing to a close. That is a most important announcement. Most applications for war service land settlement assistance were made in the early 1950's and it is now 1964, so it must be conceded that it is time an announcement was made that the development of projects throughout Australia is drawing to a close.

The Minister mentioned specifically that development is still proceeding on King Island and Flinders Island and in the Montagu Swamp. The Minister also stated that development was still proceeding to a lesser degree on holdings in the Hundreds of Borda and Gosse on Kangaroo Island and at Loxton in South Australia. They are exceptions. The Minister also stated -

Most of these settlers started with little, if any, capital and under the cost-price relationships which have existed over some more recent years, it is taking them longer than may have been envisaged to finance the ensuing years' working expenses without recourse to borrowing. Although the Commonwealth has no desire to compete in the sphere of rural credit with established institutions, until the settlers' financial affairs improve to a stage where some farm assets can be freed from a security charge to the Crown, the Commonwealth has no alternative to providing finance to meet the settlers' reasonable requirements for credit.

I shall concentrate my remarks on King Island. The project there is not drawing to a close because it has reached a secondary stage where re-development is necessary. This goes back to the choice originally of King Island as a war service land settlement project. After the First World War, a certain number of dairy farmers were settled successfully in the Yambacoona district in the north of the Island. Over the years through hard work, ability and perseverence they made a success of dairy farming. They took their butter fat to a local factory and worked in well with the rest of the King Island community. But after the Second World War, the project was developed on a much wider scale and has come up against problems that have never been fully appreciated.

The major problem of King Island is its isolation. It is virtually in the middle of Bass Strait between Victoria and the north west coast of Tasmania. It is separated from large centres of population by Bass Strait. In earlier days, farming was conducted on relatively large areas of grass land which could be bought cheaply. The working of this land required a lot of local knowledge. Because of what were called coastal conditions, cattle could be fed on the coastal strip only for limited periods. Then they had to be moved. Cattle which became " coasty " fell into very poor condition. Even so, the older farmers made a reasonable living if they had sufficient area of land.

As the war service land settlement scheme developed, it brought about intensive farming requiring more labour and materials. The problem was still one of easy access to markets because most of the produce had to be marketed in Tasmania or Victoria. In the year ended 30th June 1963 only 10 per cent, of the calves, 4 per cent, of the cattle, 13 per cent, of the sheep and lambs and 11 per cent, of the pigs raised on King Island were consumed on the Island. The remainder went to Melbourne. Of the 975 tons of butter produced in 1963, only 45 tons or 4.6 per cent, was consumed locally. I quote these figures to illustrate that freight is the big factor affecting King Island and has a major bearing on the success or failure of the war service land settlement scheme. Of the population of King Island, 2,800 are associated with farming. About 2,800 are engaged in business including the retail trade. There is some scheelite mining and fishing, but it is predominantly a farming community.

The main problems are the high cost of living and the high cost of producing and marketing produce. As farming has become more intensive, the land has been subdivided, farmers have applied fertilisers such as superphosphate and copper sulphate and the construction of dairies and various buildings and the provision of amenities have become necessary. All those matters have added to the high costs that soldier settlers have had to meet.

Senator Cormack - Surely that was foreseen by the Tasmanian Government.

Senator O'BYRNE - I do not think so. For Senator Cormack's benefit and to illustrate my point, I shall refer to costs on the island over a period of 10 years. In 1953, the freight rate was 93s. per ton. In 1963 it was 128s. per ton. The cost of freighting a fat steer from King Island to Melbourne rose from 121s. in 1953 to 181s. 6d. in 1963, an increase of 50 per cent. The cost of freighting yearlings and vealers rose from S9s. 6d. to 134s., an increase of 50 per cent. In 1953 it cost 12s. 6d. to send a woolly sheep to the Victorian market. The cost now is 20s. 5d. each, an increase of 64 per cent.

Senator Lillico - The cost now is about £9 a beast.

Senator O'BYRNE - That is right. I have that figure. In 1953-54 the farmers received 4s. 6id. per lb. for butter fat. In 1962-63 they received 4s. 4d. per lb., which meant a reduction of 2£d. per lb. over that 10-year period In 1953-54 their wool averaged 81.5d. per lb. and in 1962-63, 58.96d. per lb. Their lambs averaged 82s. in 1953-54 and 48s. 6d. in 1962-63. In 1953-54 their cow beef sold for 115s. per 100 lb. and for 125s. per 100 lb. in 1962-63. Those figures show that the prices they have received for their products have either remained very close to the prices prevailing 10 years before or have fallen. I have here a list showing that the price of butterfat has fallen by 2d. per lb., of wool by 3.79s. per lb., of lambs by 13s. per head and that the price of cow beef has risen by Hd. per lb. Pig meat has risen by Id. per lb. Those figures illustrate that the returns to the farmers have remained very steady or have declined over the 10-year period.

The sheep breeders' association of King Island made a survey of the cost of production and found, in the year of its survey, that the average cost of producing a fat lamb on King Island was £1 19s. Id. The survey pointed out that the present sea freight on fat lambs equals 56 per cent, of their cost of production. The same survey produced comparative figures for the freight costs of fat lamb producers at King Island and Kerang, Victoria. Kerang was chosen because it is the same distance from Newmarket, Melbourne, as is King Island - 180 miles. A fat lamb producer at Kerang has an annual freight cost of £542, compared with an annual freight cost of three and a half times that amount - £1,887 - to a King Island fat lamb producer. The figures represent the comparative costs of getting the same stock to Newmarket. On present sea freights, it is less expensive to ship woolly lambs by air from King Island than by sea. The point I am making is that the success of the King Island war service land settlement scheme is subject to the ruling freight rates. I repeat that they constitute 56 per cent, of the cost of production.

The Government has invested a total of over £4,250,000 in the war service land settlement scheme on King Island. Of 164 farms on the island, 100 are dairy farms and 64 are sheep farms. It is very sad to say that the majority of the settlers are in a serious financial position. Many are unable to meet their commitments and 85 soldier settlers have left their farms, most of them for financial reasons. At present 15 war service land settlement farms are vacant. In this morning's Tasmanian newspapers a report appeared that the matter was raised at the Returned Servicemen's League conference. Mr. Lee, the President of the R.S.L., advised the delegates that they should return to their States and advertise that war service land settlement farms are available for settlement, particularly on Flinders Island. The present adverse, uneconomic conditions prevailing against successful farming on these islands mean that a man would have to give very serious consideration to going there. Full allowance has to be made for the fact that there are good and bad farmers, wherever you find them and whether they are ordinary farmers or war service land settlers. It is a very sad state of affairs that so many of them have left their farms. Quite a number are still working on their farms but are also taking part-time work outside so that they may be able to meet their commitments. The King Island Council has made very strong representations to the Minister for Shipping and Transport (Mr. Freeth) that, unless relief is given, the war service land settlement scheme on King Island could fail because of the high and rising freight rates.

Senator Cormack - Why cannot the Tasmanian Government grant subsidies?

Senator O'BYRNE - It does, to a degree. It is subsidising superphosphate. In a moment, when I can find them, I shall give the honorable senator the figures on superphosphate. There are subsidies. The "King Islander", the new ship trading there, is the equivalent of a roll-on roll-off vessel and is ideal for operations in the shallow waters around King Island. Unfortunately, the high cost of its construction - it was built at Devonport, Tasmania - and its running costs have made it imperative that its captain-owner, Mr. Houfe, increase the freight rates to the scale I have mentioned. Representations have been made to the Australian National Line to take over the "King Islander" in the hope that the booking and other facilities of the Line, both in Melbourne and in Tasmania, could perhaps reduce overhead expenses to the point where the operations of the " King Islander " could show a profit and also provide for King

Island the service that is so important to the residents there.

Senator Cormack - That would only produce the conditions of a hidden subsidy instead of those of an overt subsidy.

Senator O'BYRNE - I suppose that would bc true, but an obligation rests on both the State and the Commonwealth now that these people have been induced to go there, to build their homes and to take their families there and settle. They just cannot afford to walk off the place. They should not have to do so. There should be a thorough survey of the financial potential and of the feasibility of farming successfully.

The Tasmanian Auditor-General has made quite a few comments about the war service land settlement scheme. He said -

The total written oft as at 30th June 1964 on account of the excess cost of holdings amounts to £1,531,002, as detailed below, of which the State's contribution amounts to £610,784.

He pointed out that the estimated losses were as follows: At Pegarah, £438,548; at Furneaux, which is on Flinders Island, £273,979; at Waterhouse, which is on the north east coast of Tasmania, £301,311; and at Montagu, which is the Montagu swamp on the north west coast of Tasmania, £187,500. The total is £1,201,338. He said further -

Funds supplied for making advances to settlers ave made available to the State under the provisions of the Commonwealth Constitution in such circumstances as to become in effect State funds until such time as repayment is made to the Commonwealth.

After referring to a further increase in the arrears on settlers' accounts, he said -

The figures are subject to credits arising from concessions still to be determined by the Committee of Investigation but it is pointed out that at present only the settlers on the major projects and a few smaller estates are apparently intended to benefit from the scheme.

In making that statement, the AuditorGeneral has really summed up the situation. Many of the farmers on the areas I have mentioned have not very much chance of success. The Auditor-General further said -

Settlers' accounts are still in a very satisfactory position and many have shown further considerable deterioration. Perusal of a cross section of files gave the impression that there was not much in the way of a steady drive towards reducing arrears, but that on the contrary little of a positive nature was seemingly being done to persuade settlers to improve the position of their accounts. Perhaps as a consequence, it was noted that many settlers did not even bother replying to the Board's letters.

When we read that many of the settlers are leaving their farms, it is no wonder that they do not bother to answer the letters. They are simply unable to meet their financial commitments.

When the scheme was introduced in 1945, it was emphasised that no man should be placed on the land unless he was assured that the ultimate value of his holding would enable him to meet his commitments and to enjoy the Australian standard of living. The position now is that not only are these men not able to enjoy the standard of living that it was hoped they would be able to attain but also that they are under very great stress- because of their inability to meet their commitments. They have advanced in years. Some of them have been working on their properties for twelve years without knowing where they are going. During that time many of them have raised families and are now committed to their education.

In my view, a more realistic approach must be made to this problem. A solution will cost a lot of money. In view of the agreement that has been made between the Commonwealth and the States whereby the Commonwealth provides the finance and the three agent States undertake the administration, a decision must be made as to whether the farmers are to have the same standard of living as that of the average farmer or the average citizen of Australia.

Senator Cormack - May I interrupt for a moment? I am interested in what the honorable senator is saying. Let us suppose that no capital charge had to be met in the profit and loss account for the year. Could these people then make a profit?

Senator O'BYRNE - I thought that I had some figures which I could cite as an example, but I am afraid I cannot find them just now. The capital needed -

Senator Cormack - Do not worry about the capital needed. I have worked that out. It costs £28,000 without stock.

Senator O'BYRNE - That is right. The cost of a dairy farm on the Mawbanna swamp works out at about £270 an acre, or £33,000 to £34,000 for a little over 100 acres.

Senator Cormack - Would it be a solution of the problem if the Crown were to become the owner of the land and these people were to be given a straight out lease?

Senator O'BYRNE - That might be a solution, but most of the farmers believe that the harder they work the more they should be building up their own equity. Without the incentive of knowing that eventually it would become their own property they would say, "Why bother working hard when it will never be ours? " They might then do what other people have done; they might go to the local town and the picnic races and not be good farmers.

Senator Cormack - That is a possible solution of a seemingly insoluble problem.

Senator O'BYRNE - Yes. It could be solved only if an acquisition authority, leaning on the side of generosity, were to say to a farmer: "This farm is now at a stage of production where, with a reasonable amount of attention, it can give you a good standard of living. Prom now on you can take it on at an economic price which will allow you to go ahead under your own steam."

Senator Cormack - The other agent State, South Australia, runs this system. There is no freehold title in that State. All soldier settlers there are on leasehold and pay an annual rent.

Senator O'BYRNE - Yes. It would appear that that is what will have to be done regarding the difficult areas of King and Flinders Islands and even at Mawbanna and Waterhouse, although Waterhouse is perhaps a little better because the settlers have bigger areas.

Senator Lillico - Would you not say that there was a pressing urgency for the report of that committee to be finalised and released as soon as possible?

Senator O'BYRNE - I should say that was of the utmost importance. The State Government has referred the report to the Minister for Primary Industry, who has it under consideration, but he and the Department do not seem to feel any sense of urgency in relation to this matter. Month by month the situation becomes aggravated. The fact that the committee was making inquiries built up hopes for a complete review. The hopes of the settlers were raised to a stage where, I suppose, a certain nervous stimulation was produced.

Senator Lillico - It is two years since the committee started.

Senator O'BYRNE - Yes, and week by week, and month by month the secondary frustration is becoming greater. I ask the Minister to use his good offices in pressing the Minister for Primary Industry to expedite not only the release of the report but also action upon it. The men who were appointed to investigate the problem were capable, practical people. During their investigation they established a tremendous amount of goodwill amongst the settlers. None was criticised as being neither practical farmer nor accountant. Each considered various aspects of the inquiry. The stage was set for something to be done to bring finality at last, yet there has been a long period of investigation, followed by the presentation of the report to the State Minister, and now to the Commonwealth Minister. The thought in the minds of the settlers is: " How long can they continue to push us around? " That is a very bad state of affairs.

Many aspects of war service land settlement could be discussed. I have specially stated the case of the King Island people and I have mentioned the situation at Flinders Island. Recently, during the debate on the estimates of the Department of Primary Industry, I raised the matter of the eight farmers at Preolenna, a small settlement on the north west coast of Tasmania who received an oral assurance - they called it a promise - from Tasmanian officers administering war service land settlement that they would not have to make repayments in the first year, that repayments in the second year would be only 33 per cent, and in the third year only 66 per cent., of the annual figure, and that thereafter they would make full repayment. Now, in their second year, they are being required to make full repayments. This requirement is upsetting their budgeting to the extent of causing financial embarrassment. It would not be difficult to rectify this duality of orders, so that instead of full repayments beginning this year, repayments would increase progressively over a period of three years. I hope that departmental officers will be able to provide a way for the Minister to give his authority for the honouring of an oral undertaking by State officers.

I hope that by the time legislation to amend the Act comes before us again, instead of referring to development projects drawing to a close in Western Australia and South Australia the Minister will be able to say that the continuing frustration of the settlers to whom I have referred has been solved. It would be a wonderful thing to see the position cleaned up and to have the men released from the very heavy burden of worry that they are carrying at present. We support the measure.

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