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Thursday, 22 November 1973
Page: 2091


Senator LAUCKE (South Australia) - The Sales Tax (Exemptions and Classifications) Bill (No. 2) gives effect to the proposal announced in the Budget to abolish the exemption from sales tax which is applicable to nonalcoholic carbonated beverages which contain not less than 5 per cent by volume of Australian fruit juice or its equivalent in concentrated form. It is a Bill of very great moment and concern to the horticultural industries throughout Australia. This measure is detrimental to the interests of rural industry. It is a direct outcome of the recommendations of the task force set up to review the continuing expenditure policies of the previous Government. I note that in the report of the task force the nature of the expenditure is referred to as follows:

A 'disguised' expenditure directed towards assistance of Australian fruit-growers through an exemption from the general rate of sales tax.

In its comment the task force stated:

There is little doubt that withdrawal of the exemption would have a marked effect on the incomes of apple growers, especially in the face of current adverse market conditions for Australian apples in the Common Market countries. The effect on citrus growers is difficult to measure but it is likely that there would be some falling off in the demand for citrus juice.

It is the reference to the adverse effect which gives concern to members of my Party. At this time of the evening I shall not speak for any longer than is necessary to indicate our attitudes in respect of this matter but I give notice now that I propose to move an amendment to the motion for the second reading of the Bill. The motion I intend to move is as follows:

Leave out all words after ' That ', insert- the Bill be deferred until the Government reports to the Senate on the action it proposes to take on:

(a)   currency revaluation compensation for the sectors of the fruit growing industry affected by the withdrawal of the exemption;

(b)   compensation for unsaleable fruit juice derivatives on hand and the losses due to assets becoming redundant as a result of the Government's decision; and

(c)   assistance for promotion and research into alternative markets for juices.

Fruit growing certainly is the Cinderella of the rural industries. In other sectors we have buoyancy. There is buoyancy in the beef and mutton industries, in the wheat industry and in the wool industry. Fruit growers are the ones who have suffered enormously, particularly from the effects of revaluation. Whilst certain things have been done to assist, they have been palliatives of a degree not at all in accord with the harm and detriment which has been done to fruit growers through the effects of revaluation. There has been only token assistance or compensation given to this industry which is working on extremely fine margins. There is an urgent need for a thorough look at the matter of adequate revaluation compensation for the sections of the fruit growing industry affected by this Bill.

As I see it, there was no consultation with the apple, the pear and the citrus industries, or any other fruit industry or associated industries, before this decision was announced to remove the sales tax exemption. None of those bodies were asked to express an opinion on the effect of the withdrawal. I have no doubt that the industry was not researched in the way it should have been researched before an imposition of this type was placed upon an already struggling industry. Protection not direct but indirect, has been given to the citrus industry- this applies to the other fruit growing industries as well- through the sales tax exemption on soft drinks which contain not less than 5 per cent by volume of fruit juices. This has been a means of creating markets for otherwise unsaleable fruit in many instances and it has taken the pressure off the local fresh fruit markets so as to retain a reasonable stability in price for fruit placed on that market. We have duty on imported juice, sugar rebates and sales tax exemption as part of the pattern of assistance. These are some of the indirect forms of assistance which have been built into the industry as a whole and without which it would suffer very greatly indeed. They are part of an orderly marketing system and any alteration to this support pattern in my opinion should not be taken before the whole subject has been thoroughly examined.

For the Government to damage overnight the props with which the fruit marketing system has been involved over a long period of time, at no cost to the Government or to the consuming public by way of direct subsidies, indicates a failure to understand fully the widespread effects of such action. As far as families are concerned, this action undoubtedly means a rise in the price of soft drinks. In Australia 50 per cent of citrus production goes into juice in some form or other. It is revealing to note how the amount of fruit from the citrus industry which has gone into juice has increased through the years. In 1966, 4,172 tons of navel oranges, 41,900 tons of valencia oranges, 10,000 tons of lemons and 2,063 tons of grapefruit- a total of more than 58,000 tonswere processed by our juicing factories. Last year- that is 6 years later- the total tonnage was 1 86, 1 09 tons. That is an enormous increase in the outlet for citrus fruit via juices. The valencia orange crop particularly has increased- from 41,900 tons in 1966 to 125,000 tons. The lemon crop has increased from 10,000 tons 6 years ago to 19,374 tons. The grapefruit crop has increased from 2,063 tons to 6,735 tons. They are very big increases. The lemon industry has been assisted by the Government in order to meet an immediate situation. But assistance has not been given to the industry overall. Senator Wright proposes to speak on this Bill and he will make reference to its impact on the apple industry which is so vital to the economy of Tasmania.

The need for compensation for unsalable fruit juice derivatives on hand and the losses due to assets becoming redundant as a result of the Government's decision- to which I have made reference in my proposed amendment- is an important aspect of this matter. A not very large organisation with a factory in the apple growing area in the Adelaide Hills had on hand $400,000-worth of apple juice- this is Plaimar Ltd at Lobethal- which, because of the proposals contained in this legislation, does not have any use to which it can be put. The encouragement given to aerated water manufacturers to include fruit juice in their products is not present. Because of that, this very direct hurt is being occasioned to the industry. I give just one instance of the stocks on hand. I know that the Berri Fruit Juices Co-op Ltd in South Australia has big stocks of citrus juice for aerated waters in great danger of not being able to be used. Again the effect flows back to the citrus grower and the inability to sell his product which arises from this legislation.

I have quoted part of the Coombs Task Force report on this matter. There is another part to which I wish to refer in order to be consistent and to give both sides of the question. It states:

.   . looked at purely as a form of assistance to apple and citrus growers, the exemption is rather an uneconomic form of subsidy.

It points out that the benefit of the $25m reduction in the revenue received by the Government does not go to the grower. It suggests that a small portion of it only would go to the grower. Maybe this is not one of the ideal methods of assisting the industry, but no alternative is offered at the moment. The lethargy which has marked the activities of the Government in relation to giving adequate, fair and reasonable compensation to the industry calls for the retention of this exemption until such time as acceptable alternatives are offered. Thus far they have not been offered.

The troubles of the fruit growing industry, be they in the canning section or the fruit juice section, are due largely, as I have said, to revaluation. They are due also to the fine margins on which growers and canning organisations operate when they export their fruit. Their is no tolerance, as it were, to take anything further by way of adversity. Therefore, nothing should be done to the further detriment of the industry; rather should urgent consideration be given to assistance for promotion and research into alternative markets Ibr juices. Assistance should be given by way of currency revaluation compensation in a proper way; compensation should be given to those who have unsalable fruit juices on hand; and assistance should be given in finding alternative avenues for disposal of production. These things could be looked at quickly by the Government. At the point when they are looked at and satisfactorily determined a little justice will have been done to the fruit growers. I move the following amendment:

Leave out all words after 'That', insert- the Bill be deferred until the Government reports to the Senate on the action it proposes to take on:

(a)   currency revaluation compensation for the sectors of the fruit growing industry affected by the withdrawal of the exemption;

(b)   compensation for unsaleable fruit juice derivatives on hand and the losses due to assets becoming redundant as a result of the Government's decision; and

(c)   assistance for promotion and research into alternative markets for juices.'







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