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Opposition's strategies if returned to Government- address at opening of Gippsland field Days



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R t ta B. M. SNEDDEN Q α μ I ■·.■·'■'· ■ ■ · . . ■ · : . · ' / · · - ■ · ' .. . . . . . . . . . 1 , I : ■ ■ ■ ■ ■ ■ ■ 75/23 y:· ' : ■

February’ 1975. : VT .

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Official Opening, Gippsland Field Days 1975» Lardner, , Victoria

' · · · Address by Rt Hpn B M .Sneddon t . r . - . ' ,v··

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The Labor Government has created great difficulties for Australii smd its citizens. But it has done something wors^e, £han that; something which could take even longer to repair, than the damage done to our economy arid our internatioriel standing..

They have divided our nation in a way which would, have been , . .qojasidered impossible until Labor came to poyer, > They have .^rehiAdled the dead embers of the old feelings o f . distrust, : : ..sometimes even hostility, between our urban^ and ;rural.,,compunitie

Feelings which disappeared Over 20 year's of sound, responsible government have re-appeared, and are a potentially highly^ disruptive element in " our n a t i o n . ^ . · · . o-r , . · . . · r.i. w S ' . i . '<·Ï„Πί;:.ΐ" " ' . . : ·â–  . "■f". . i ■■...({· ' ' '" . . ··â– ;*.■., . . v :/ .> . . M ' ‘ '

A; moment ago I referred-to urban arid rural communities. All too often we hear the word "sector" used - the urban sector, the.rural sector, the -mariufacturirig"sector and so on. But this creates the impression or assiimes that we can be put into

separate compartments f- that our prosperity or otherwise can be .considered in isolation.1 ’The real truth is of course that we ; are all part of orie economy, just as We are all citizens of one

?! . nation. That is why I refer to our urban and rural communities, because neither can be judged in isolation. .

Just over 900,000 Australian men, women and children live on farms, i They fried, arid to a large extent clothe our population. .A further 2 million, at a conservative estimate, depend jfor t^pir jobs and well-being on those 900,000. Therefore;, qpite

apart from the fact that we all have to eat, approximately a quarter of our population is directly and vitally concerned in .whatr happens t.o; Our rural ■ ■ industries. . . , . . . . ? .

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These people canriot'be disadvantaged for any length of time ; without, disadvantaging ttie couritry as a whole. Each, community has a vital interest in the prosperity of the other. They are interdependent. . . . :· . < . . . . .

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The·Liberal Party completely rejects the concept that there is any conflict between the urban and rural communities in this country. We condemn the policies .of the Labor Government Which, ! > . . .eitheir through igrioranc'e or design, $ave...greated this rift;:

which · A s'widening and deepening, every week this; Government, stays in power; which has generated frustration and anger in country areas. Country people are angry becavisj.e tjhey are convinced - and there is· plenty of evidence. to show,. L^y'.jire right - that

the present Government just does not understand the problems of country areas. Even worse, that they do not care.

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So far I have ref-etirired only to the importance of rural industry on the 'domestic:' -icetie, but its role internetionally is equally significant, perhaps even more so. Until about 30 years ago, primary produce accounted for about 80% of all Australia1s ί export income. The figure, today is. .-still about, 50%, with, the

balance almost equally divided between minerals' and manufactured products.. Without" primary industry'1 s: major ' contribution to ™ export" earningsT^^usliralfa vovild not" be able to af furd-"to— import the consumer and capital goods required to raise our

standard of living and to develop our mining and manufacturing industries, rx s i i. o x

It is >

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clothes more people, .than his counterpart anywhere else iii the world, and by a substantial margin. Whatever'iher1crit used, the efficiency of pur primary producers.compares more than favourably yith those of any. other', countiyV' foil·1 example,

our mUch-pritieized dairy-industry's performance i s 2 stiverior ,,j T i to any, other, except. New Z e a l a n d ’s· arid, our more*:favoufritiKareas , 'can .more than hold their own, even with that country.: ' : : ' " ' ’ · ■ ■ ' ■ · - · ■ ' - · * ·7>τ.:·.< - . · · ί

- r . ; . : . . · . 1 ■ > · : . . ■ ■ : · . · - ... Another useful yardstick for. comparison is the productivity record of primary industry; that is riot merely the production achieved, but ..the efficiency with which resources are used,

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Since th,e end,of World War. II, Australia's national productivity has risenuby about 2% a year. ‘ But primary industry's . f:" . .productivity has increased-by about 4% a year, or double the . / . .national average. If . all our industry had been'able to match ; ; that performance, many of bur present economic problems wOuld

■ , not have arisen, or would be ‘ far less acute than they are1 today.

It is no coincidence that it is owner-operated enterprises ,..which have .been responsible for this remarkable record of -:v;, achievement. By far the greater proportion of Australia's •primary, production comes from farms which are owned and operated

- by a farmer , and his family, or sometimes a group of related , famf iie§.,.. . . ... . 2.... - « . . . . , z , . . - . . . , . ,,

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Some of these enterprises, are small, some- large. Some are partnerships, some private companies. J BUt common t o 1 all of them-.is :the essential element that the owner, or owners are - j ^directly concerned with the day tor day working^ decision making . . . . . and management of the enterprise.' ' · . - · . r ■ '

Experience here and overseas has shown that' · without any doubt, the,most efficient users of rural resources are the economic sized and efficiently managed owner-operated farms, -The Liberal Parity has therefore decided that it is in Australia's , . irrational economic rind social' interests'that such'enterprises

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l·' : ‘ ■ " · ' ■ : -.-r··.: : ·\τ should form the basic U n i t of Australian agriculture,' "· ■·â– â– ·" l;' : ■ " ■ ■ · . · ■ ---r··.:·: . . ' . . ,

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. ; Accordingly our policies are desigried' to -encourage these: farms to produce effectively and efficiently. r ' · ■ ' ■ ■

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If the Labor Party has its way, the days of the owner-operated farm are numbered. There is no doubt in my mind that a Capital Gains Tax in the form fore shadowed by the former Treasurer, would eventually destroy this.qoi^ of enterprise.

The Liberal Party would not allow any\ Capital bains Tax to become a "third tier" of death duties.»...on top of Proibate arid Estate Duty, nor would it allow it to tie a tax on inflation.

In evolving our rural policies, we kept in mind two major factors, The first is that primary producers have to sell a large proportion of their output pn.unprotected world markets» while they have to b u y ;a large proportion of their inputs on a

relatively.,highly;,protectecj home market. The second is that wide fluctuations in seasonal conditions and world markets· inevitably result in equally wide fluctuations in farmers* incomes. rv: . . . ...

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I ’m afra.id that many people do riot appreciate the burdens imposed nn. primary producers by having to sell :'dti unprotected markets, and buy on a protected one 5 by being1price’takers: and not price, makers. Manufacturers and' other employer's can go- to

the P. J.T., or the industries Assistance Conimissioh;· employees can go to tb,e. Conciliation and Arbitration Commission,- or iState wage tribunals 1 but until recently, when primary industries came within the jurisdiction of the Industries Assistance Commission, primary producers had nowhere to go. In the national game of

economic mdsiba'l bha'irs, ‘ 'primary producers were the ones left without a seat. , ...

'incidentally» ^this was one of. the .reasons why we s.upiported the 'establishment oof the I.A^C. ;- to try and ,ensure that there should tie -a consistent approach to all Australian industries, whether primary, secondary or tertiary.. In time, we hope this objective

will be attained. . 1 ·

When the Liberal Party, was examining all facets of primary industry policy, we came to the conclusion that while there were a large number of institutions involved in financing the Operations of primary industry,». none were designed tip .„deal specifically with

the problems peculiar to that industry., Further,'! we found that of all developed western countries, Australia was almost alone in not having a lending facility which took-account of the problems of financing primary industry in a highly'developed, high cost

economy. : ' : · · .

Accordingly, we decided that part Of our policy.would be to fill this gap, by establishing an institution t,o finance the operations of primary industry, at bank interest rates, and on terms appropriate to the purposes to which .the. loan would be put. For example, finance for the purchase of. land, would ,be long term, say

20-30 years, while that for plant or breeding stock would be for a shorter term, say in the region .of 5, years.·.

It would be essential to gain.. the. co-ioperation of' existing lenders in the field, and to maintain the normal client-lender relation­ ship. In these circumstances what would probably emerge would be a "Bankers’ Bank". In the initial stages, a large part of its

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function would probably be to re-finance existing loans on more appropriate terms, but in time it would become'more involved in new lending for development projects and land purchase.

The Liberal Party then turned its attention to the problem of wide variations in farmers' incomes. The income averaging provisions have been available for many years, but are deficient in some important respects. In particular, income averaging

offers no income security in low income1 years, when in fact the primary producer has to find more tax then he would if he were not on income averaging.

To overcome these problems, the Liberal Party would establish a Farm income Reserve Fund. Primary producers could tilect to subscribe to the Fund, or remain with income averaging, but could not do both. . . . .

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Subscriptions could be made in any income year, and would not be taxable.in the year of deposit. Interest would be paid at the short-term bond rate and would be counted in taxable income. Subject to a minimum period on deposit of, say, 6/12 months

(which could be waived in the. event of some natural disaster such as fire, flood, etc.), withdrawals could be made at any time, and would be taxable in the year of withdrawal. this is an en­ tirely self-help scheme, and no Government contribution is involved. ■-:■··· . . . . . . ■ · · · · · ■ · ■ · .... ■··..·..,·

It has many advantages, and they are not confined.. to; prijmary producers, as I shall explain in a moment. : . . v;

1 To the farmer, the main advantage is that it gives him greater flexibility in deciding how to allocate his resources. -He can put aside cash in the years of high income, and make provision for the lean years, which are an inevitable part of farming in Australia.

In other words, he will be able to spread the spending of his : income. This will.have the advantage of evening out spending . in country towns. In recent years we have seen the disastrous effects on country areas of low farmer incomes. The Farm

Income. Reserve Fund would go a long way to alleviating these ■ effects. Again, during the rural recession we saw manufacturers cut down on the production of such farm requirements as fencing materials and other capital items. When prices improved, the

production capacity had been converted to other uses, and as a result there were - and. in some instances still are - shortages of some farm inputs. . ;

By spreading farmers' spending, manufacturers would be encouraged to maintain a more even flow of production. . .·.·â– ·,

Finally, in the odd years of unusally high farm income, the Farm Income Reserve Fund would tend to take money out of immediate circulation and so help to reduce inflationary pressures.

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For all these reasons we believe the establishment of this Fund would be one of the most useful and sensible things which the Government could do for primary industry, and we would do it immediately we return to governmentV" J "

The Opposition Parties have also agreed .to" support the . continuance of the Wool Reserve Price Scheme for the 1.975/76 wool selling season at least. The price should be not less "than the present 250 cents/kilo clean ..for 21 micron wool. ..

To abandon the. reserve;,price scheme npw .w( ould be to abandon, those wool users who have,,; bpught during this last season. . Tp.^llpw their competitiors who had been Hanging out -of the market. to . suddenly obtain wool cheaply could destroy confidence to the extent of

risking the collapse of world wool trade. It would also be abandoning New Zealand and South Africa who have already announced that wool reserve price schemes will continue.

Burdens imposed on primary industry by having to operate in a high-cost economy provide justification for incentives to increase productivity. In this context the continued usage of super­ phosphate at a high level is essential to efficient Australian

pastoral and agricultural production. It is also a major factor in containing food costs and accordingly is a moderating influence on inflation. However the recent 300% rise in price of rock phosphate, will undoubtedly result in a substantial reduction in the use of superphosphate particularly on improved pastures.

In all these circumstances the Labor Government's ad hoc decision to abolish the bounty was nothing short of incredible. Accordingly, the Liberal Party would immediately re-introduce the bounty on superphosphate for a further 3 years, pending a full

investigation and report by the Industries Assistance Commission. By their stubborn refusal to refer the super bounty to the I.A.C., the Labor Government have completely ignored the body which they themselves set up for precisely this sort of investigation.

Apart from the super bounty, there are other ways by which productivity can be increased. Australia is one of the most drought-prone countries in the world, and the wide seasonal variations create special difficulties and uncertainties for primary producers. Accordingly, we believe that through

appropriate taxation concessions for water and soil conservation and fodder storage, farmers should be encouraged to make their farms less susceptible to drought. This would be both in the interests of farmers themselves, and in the national interest?

the farmers' interest because it enables them to reduce the risk of income fluctuations? in the national interest because such policies help to maintain agricultural and pastoral production in bad seasons, reduce demands on government for

emergency assistance and protect our greatest national asset - the soil itself. I

I have outlined some of the positive actions we would take in the primary industry area on our return to government. But

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the greatest n e e d , in our countryside today d.s to restore confidence - confidence which has been shattered by the hasty, ill-considered and ignorant policies of the' Labor Government. We are determined to heal the rift feetween our urban and rural

communities created by Labor's divisive policies, We are determined to restore a sense of national unity and purpose to Australia. ' 1 · · ' Ί/' ' ■ ■ ' '

i . ; : " We can and will succeed in this task, because we are vitally interested in and concerned with our rural areas, the people Who live there and the goods they producei because we recognise

that strong and dynamic rural industries’ must be an essential part of Australia ,rs future development. ' i

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