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Wednesday, 9 October 1991
Page: 1594

Mr LINDSAY(8.51 p.m.) —-This year's Federal Budget contains a number of welcome initiatives which will be of significant benefit to many Australian farmers suffering financial hardship as a result of the current rural downturn. A number of important positive measures in support of primary producers are in accord with a number of concerns listed by the National Farmers Federation. Benefits in this year's Federal Budget include changes to family assistance in recognition of the need to extend family assistance to farming families who are asset rich but income poor. In respect of Austudy and assistance for isolated children, this Budget provides that the assets test will not apply where the parents or spouse of a student receive a social security or veteran's pension or benefit or household support under the rural adjustment scheme.

These special initiatives are welcome. Nevertheless, there is one issue which I wish to bring to the attention of honourable members. This issue concerns the crisis presently confronting the Australian sugar industry. I have had a long interest in the sugar industry. I am from a canefarming family in the Tully district. My electorate is a key cane producing area. At present the Australian sugarcane growing industry is fighting for its very survival. The canegrowing season this year is the worst for at least 30 years, caused in the main by a combination of drought and other poor weather conditions. Bad weather is not the only adversary of sugarcane farmers. They have coped with drought, floods and cyclones since the industry was established in Queensland more than 100 years ago. Many canefarmers claim that a lot of the problems of the Australian sugarcane growing industry stem from government interference, particularly in the area of deregulation.

Just over a decade ago deregulation was made to sound a good idea. Economists, political leaders and industry spokesmen told us that, if the dead hand of regulation was replaced with open, free market practices, we would all be better off--sugarcane producers, consumers, and, indeed, the whole nation. Various studies were produced irrefutably confirming that deregulation would be the best thing that could happen to the Australian sugarcane growing industry. The phrase `if the Government would get off the backs of sugarcane farmers, it would be the salvation of the industry' was often heard.

Governments, including the Federal Government, embraced these new ideas. The sugar embargo was removed and a process of lowering tariffs was introduced. It was said that these steps would help achieve a level playing field for international agricultural trade and that the Australian sugarcane growing industry had nothing to fear. Canefarmers were told over and over again that deregulation would increase annual export revenue and that annual net income would rise. The story was touted that deregulation would even result in higher employment and increased land values.

The truth is that deregulation of the raw sugar industry is potentially disastrous for canegrowers. The reduction in tariff levels and other deregulatory measures introduced over the last few years has ignored the reality of a corrupted world market for agricultural commodities which is dominated by the United States and Europe. Eighty per cent of Queensland's sugar production is sold on the world market at a corrupted price that bears no relevance to the cost of production by Australian sugar producers, who are among the world's most efficient producers.

In response to recommendations made by the Industries Assistance Commission, now known as the Industry Commission, tariff protection on sugar was unilaterally cut by the Government from $95 a tonne to $76 a tonne before the Industry Commission inquiry was even put in place. This was despite the industry being assured that the existing tariff would remain until the inquiry reported to the sugar industry in March 1992. Despite Australia's valiant efforts to exert a strong and persuasive influence on world trade issues, the task of convincing the European Community and the United States to adopt fair trading practices has so far been elusive. Australian primary producers are being seriously hurt as a consequence of the international trade debate. The European Community and the United States are following their own agenda on trade policy and taking whatever steps are necessary to help protect their primary producers from economic ruin.

The overwhelming evidence is that the so-called free trade efforts by Australia are not protecting the interests of Australian primary producers. No major sugar producing nation has been without some form of production regulation. Even countries such as Thailand, one of the so-called Asian economic tigers, is increasing its level of regulation. The latest United States decision to slash sugar imports from Australia from 168,000 tonnes to 109,671 tonnes during 1991-92 will cost the Australian sugar industry about $18m. I have been told that this amounts to $1,500 for every Australian canegrowing family. It is another burden to bear for individual canegrowers already struggling to survive on reduced farm incomes caused by drought and low world prices.

The current world market price for sugar is $US230 a tonne, which barely covers the cost of production. Honourable members should bear in mind that 80 per cent of Queensland's sugar production is exported. Therefore, many canegrowers will not make a profit this season despite working long hours and being amongst the most efficient canegrowers in the world.

I remind honourable members that the Australian sugar industry is a major export earner for Australia. For example, in 1989 the sugar industry generated $1.3 billion in export income. This season, due to the poor crop and corrupted world prices, the sugar industry income will drop to less than $1 billion.

Compared to Australian sugar growers, the United States sugar producer benefits from a subsidised price of $US550 a tonne that their Government and consumers pay for them to remain viable. The European situation is even more ridiculous with sugar producers there getting a subsidised price of about $US650 a tonne. In Australia, canefarmers are puzzled by the headlong rush to deregulate the sugar industry. The sugar industry has stood the test of time based on the principles of regulatory support in the form of acquisition by a central agency--the Queensland Sugar Corporation--and assignment, that is, assigning land for cane production.

Sugar regulation has not inhibited expansion of the canegrowing industry. Despite the not inconsiderable costs of expansion, the industry will be 30 per cent larger in 1996 compared to 1989 based on regular increments of expansion contained in the new sugar legislation enacted in Queensland, remembering that Queensland produces 95 per cent of Australia's sugar. Northern New South Wales produces the other 5 per cent but this is entirely used for domestic consumption.

A regulated Australian sugar industry over the past 100 years has allowed the raw sugar industry to fund its own development from its own resources. Infrastructure such as ports and sugar storage facilities have been paid for by the Australian sugar industry. The $56m bulk handling sugar facility at Lucinda near Ingham was paid for by the millers and growers of the Australian sugar industry.

Furthermore, the sugar industry has always been conscious of the need to protect and sustain the environment. The very principle of assignment, which critics wish to deregulate out of the industry, has ensured that only suitable land is used for cane production. Marginal land is not moved into production to make a short term gain at a long term cost to the nation in the form of land degradation, which is one of the major environmental problems facing Australia.

I plead with honourable members of this House to adopt a sympathetic attitude towards the Australian sugar producers. They need the help of government. They do not want government fragmenting the Australian sugar industry. (Time expired)