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Thursday, 13 May 1965

Senator McKELLAR (New South Wales) - I move -

That the Bill be now read a second time.

The Australian poultry industry, through its principal producer body, the Council of Egg Marketing Authorities of Australia, has drawn the attention of the Government to the critical economic situation that has developed in the industry, and has submitted proposals to the Government which will introduce a measure of stability into the industry - a stability which so far this industry has been unable to obtain under State government legislation. In order that honorable senators will fully understand the situation, which is rather complex, I propose to touch briefly on the egg marketing system practised in Australia, and then to explain the problems that have arisen and the action that the Commonwealth Government proposes to take to rectify the situation.

The marketing of the eggs produced in Australia is primarily the responsibility of the State egg marketing boards which are constituted for this purpose under State legislation. In an endeavour to assist the producers with the disposal of that portion of their production which is surplus to local demand, the Commonwealth Government has established the Australian Egg Board to market export surpluses. All State egg boards are enabled to use the facilities of the Australian Egg Board, to avoid export competition amongst themselves, if they so desire. The net prices which the boards pay producers for their eggs are normally comprised of two components. These are the relatively high returns from local sales and low returns from export sales. All producers who market through their State egg boards incur deductions, commonly called equalisation levies, from their gross payments to meet the losses experienced from sales by the boards in export markets. In recent years export prices have been very low

Indeed and in some years production surpluses have been high. A high surplus means high equalisation levies and a lowering of the net returns to producers.

When equalisation levies are high, many producers avoid paying their levies by illegally selling their eggs intrastate or legally selling them interstate under the protection of section 92 of the Constitution. This means that any losses from export sales have to be met by those producers who market through their boards. Obviously, the greater the number of producers Who avoid paying the levy the higher the unit rate of levy has to be on the remainder. The effect of this higher levy is to encourage even greater numbers to trade outside their boards and this in turn necessitates a further rise in the levy. The chairman of one of the State egg boards recently stated that his board had lost one-third of its local market to interstate operators.

The end result of this type of situation will be chaos in the egg marketing system and the State egg boards themselves will be forced to trade interstate in competition with their own producers if they are to survive. No board or individual will be prepared to sell on the export market, and cut throat competition on the Australian market will force prices down until eventually they are at approximately the same level as the export prices. The industry as we know it today could not possibly survive under these conditions, and only some of the very large operators would be able to carry on in the hope that their losses could be recouped at a later date when there was a general famine in eggs. The egg industry would be a speculator industry with recurring gluts and famines and consequent violent fluctuations in prices to consumers. The quality of eggs would also suffer.

It was with these facts in mind that the Council of Egg Marketing Authorities of Australia, known as C.E.M.A., approached the Commonwealth Government with its stabilisation proposals, which are designed to ensure that all producers bear their share of the losses experienced in the disposal of the export surplus which they help to create. The purpose of this Bill is to impose a levy in respect of hens which are kept for commercial purposes and which have reached six months of age. This is the means sought by the industry as the most practical way of achieving an equal contribution by all producers towards the losses mentioned above, and it is the principal feature of the stabilisation proposals submitted by C.E.M.A.

Other legislation is necessary to implement these proposals. This other legislation concerns the collection and distribution of the levy, and I shall deal with these aspects in two other bills which I propose to introduce in conjunction with this Bill. However, I would like to emphasise now that all the proceeds of the levy will be repaid to the industry through the State egg boards. The boards will use the proceeds to meet trading losses on exports in place of the proceeds they had previously obtained from their equalisation levies.

The levy proposed is to be applied at the end of each fortnight at a rate to be laid down by regulations, after recommendations in this respect by C.E.M.A. have been considered. The rate may be no higher than that recommended by C.E.M.A. The President of C.E.M.A. has foreshadowed that the rate it will recommend to operate from 1st July 1965 will be 3£d. per fortnight, which on an annual basis is. approximately 7s. per hen. There is provision for a maximum levy of 10s. in any financial year. The levy is not to be applied to the first 20 hens. This number of hens is chosen as it is considered adequate to provide sufficient eggs to meet the need for a producer and his family. The levy is payable by the owner of the hen and there is provision for exemption from the levy of prescribed classes of hens, with specific exemption for owners of broiler-type breeding hens in respect of the national proportion of their broiler type hens whose production is used solely for hatching broiler type chickens.

As the introduction of this Bill implies, the Commonwealth Government has endorsed the C.E.M.A. stabilisation plan; however before doing so, State Governments were canvassed to ascertain if they would be prepared to implement a basically similar scheme. The States, after examining this proposition by the Commonwealth, declined to undertake the implementation of such a scheme on the grounds that a levy similar to that proposed held legal problems for the States, and in any event, the industry needed stabilising on a Commonwealth rather than a State basis. After endorsing the C.E.M.A. scheme, the Commonwealth

Government agreed to prepare draft legislation for the State Governments to examine and the Commonwealth also gave an undertaking that if the States supported the draft legislation, it would be placed before the Commonwealth Parliament for consideration at the earliest opportunity. All State Governments have now indicated their support for this legislation.

The industry itself has shown its support for the scheme which was unanimously endorsed by the Council of Egg Marketing Authorities. The Council is a body comprised of all the members of all the State Egg Marketing Boards and a substantial majority of its membership consists of producers elected by their fellow producers. The Bill, together with the other two Bills 1 have mentioned previously, gives an important Australian industry the opportunity to stabilise itself. It places the affairs of the industry virtually in its own hands but does not involve the Commonwealth in any residual financial liability. It is a measure devised by the industry for the industry, and, if passed, its successful continuation rests with the industry. I commend the Bill.

Debate (on motion by Senator 0'Byrne adjourned.

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