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National Party candidates in Queensland are holding back their support for Fightback, seeking protection for the sugar industry

PETER THOMPSON: In national politics, today, despite agreeing to a truce five months ago, National Party candidates in Queensland's sugar belt, are holding to ransom their support for the Coalition's Fightback reforms. As the price for their support, the Nationals want continuing protection for the sugar industry.

Flying into the eye of the storm, is the Opposition Leader, John Hewson, who's in Townsville on the second of a two-day campaign stop. Andrew Sholl reports that the Queenslanders will probably lose the battle over tariffs, but at some cost to the Coalition.

ANDREW SHOLL: For 15 years, Bob Katter Jr served under successive National Party governments in Queensland. Now he wants his place in the sun, in Canberra, in his late father's old Federal seat of Kennedy, and the way to win it is to appease the sugar belt, and the way to win the sugar belt is to rail against cuts in tariffs.

BOB KATTER: We can't possibly vote for reduction in the sugar tariffs unless there is some other way of preventing or putting an import levy upon subsidised European sugar, and it is subsidised to the tune of 193 per cent. If it's allowed into this country, it will blow our ninth biggest export earning industry clean out of the water.

ANDREW SHOLL: But aren't those countervailing measures pseudo tariffs any way?

BOB KATTER: Look, I .. you know, we can get in semantical arguments here and talk about nuances of difference. The fact of the matter is that there are 6,000 sugarcane farmers out there, and if a product carrying 193 per cent subsidy, namely European sugar - and Europe dominates the world's sugar market almost as much as we dominate the wool market - if that sugar is allowed to come into this country, there is no way that we can successfully compete against it. Now the question becomes for a government 'Do you want to kiss good-bye to the most efficient producers of sugar in the world?' - because it will undoubtedly destroy the sugar industry in this country - 'Or do you want to play genuinely on a level playing field?', and if you want to play genuinely on a level playing field, then you must impose some sort of import sanction. Whether that be a levy or whether that be a quota or whether it be some other terminology, that is for you to put the terminology and the description on. I'm not entering into a semantical argument. I am entering into a substantive argument on whether you allow a 193 per cent subsidised item to come in and destroy the most efficient sugar producers in the world.

ANDREW SHOLL: But Fightback doesn't support Mr Katter's reasoning. It says specifically it won't allow anti-dumping and countervailing to be used as an alternative avenue for tariffs. But is Mr Katter left in the lurch? Well, when John Hewson picks up his copy of this morning's Townsville Bulletin, he'll learn of Mr Katter's plans for a splinter group of north Queensland MPs, who, on arrival in Canberra after the next election, will fight tooth and nail against the cuts to sugar tariffs. And never, says Mr Katter, has there been more unity on one issue.

BOB KATTER: Let me state to you that every single Federal Member of Parliament north of Brisbane, with the exception of the Member for Kennedy and the Member for Hinkler, every single Member, Labor and National Party - and, I might also add, the Liberal candidates - have expressed their total opposition to a reduction in the tariffs unless there is some other compensating benefit.

ANDREW SHOLL: But the Federal National Party Leader, Tim Fischer, admits that while some sugar growers are against the tariffs, in general, the sugar constituency strongly supports them.

TIM FISCHER: Recently, at a very lengthy meeting at Mossman in the heart of far north Queensland sugar country, the chairman of that mill came out at the end of the meeting publicly, and said Fightback is exactly the right way to go. You have explained it. I did not realise you're abolishing all those other taxes. I did not realise the agenda fully on the industrial relations reform. And he supported it, including petitioning a way .. negotiating a way for 25 per cent holiday leave loading that every sugar mill pays, grower mills included, from Mossman to Murwillumbah.

ANDREW SHOLL: When sugar last dominated the headlines just months ago, a bitter war of words broke out between the Queenslanders and an angry Federal Coalition leadership. Frontbencher Ray Braithwaite had to resign because he couldn't justify the tariff policy to his electorate. But whether Dr Hewson or Mr Fischer like it or not, the Queensland candidates see this issue as a vote winner. But as Industry spokesman Ian McLachlan observed in April: divided teams lose.

PETER THOMPSON: Andrew Sholl in Canberra.