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Thursday, 7 June 1984
Page: 2757

Senator WATSON —My question is directed to the Minister representing the Minister for Primary Industry. I refer to media reports concerning the impending crisis in the dairy industry which could result in employment losses of up to 80 ,000 people, and a description of Government assistance to the dairy industry as a pathetic 16 per cent compared with 80 per cent for the clothing industry and 57 per cent for the motor vehicle industry? I ask the Minister: Will the Government rescue the industry with increased assistance and give consideration to the formation of a national marketing plan for dairy products which would allow dairy farmers to regulate voluntarily their production to suit both domestic and export demands through a system of production levies and entitlements?

Senator WALSH —Leaving aside claims such as the one that Senator Watson has made about the employment of 80,000 people being in jeopardy, it is a fact that there are major economic problems in the dairy industry which can be attributed to two main causes: Firstly international prices have either declined or it has become impossible to sell products at the General Agreement on Tariffs and Trade minimum price; and, secondly, because of the dairy industry policies of the previous Government producers within the manufacturing sector were paid an average price instead of a marginal price for their product. Under those arrangements some dairy farmers found it quite profitable to increase production whereas had they been receiving a marginal price for marginal output an increase in production, would not have been attractive. Because of that, production has increased by something like 20 per cent in the last few years. So compounding the world market difficulties we have the substantial increase in production within Australia because of the inept marketing arrangements applied by the previous Government and inherited by this Government. I attended a meeting the other night with Mr Kerin and others at which a proposal was discussed to ensure that the price received for product was the marginal market price instead of the average price, under what is commonly referred to as an entitlement scheme. I understand there is substantial opposition from some States to the introduction of that sort of marketing scheme. In general terms, it is favoured in Tasmania and Victoria and opposed in the other States. I will see whether Mr Kerin has anything to add to what I have said.