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Thursday, 20 November 1986
Page: 2608

Senator BROWNHILL —My question is directed to the Minister for Finance. I recall the Minister's statement earlier this week, in remarks he made on a recent study by the Livestock and Grain Producers Association of New South Wales on rural debt, that there is no widespread rural crisis. Does the Minister consider average net farm incomes of less than $4,000 a year for two years in a row to be crisis level? Further, does he accept that the Government's reluctance to act to bring down interest rates by the estimated 5 per cent which the LGPA believes arises from Labor's monetary policy is wreaking immense damage amongst farmers? Does he agree that a 5 per cent cut to interest rates would save farmers more than $8m a week? What action has the Minister taken to correct what he must see as the misstatement made in Bangkok by the Minister for Primary Industry that it is not possible to say that Australian farming is in crisis?

Senator WALSH —The answer I gave to the question on Monday consisted almost entirely of quotations from the Livestock and Grain Producers Association newsletter. If Senator Brownhill wants to dispute the accuracy of the LGPA's assessment he should take it up with the LGPA rather than with me. I welcomed the emergence from the LGPA of a more rational and accurate assessment of the condition of agriculture than one is accustomed to getting from the LGPA, let alone from the National Party of Australia or the various other propagandist groups which purport to speak on behalf of the agricultural sector. It is well known that the net farm income figure, as defined by the Bureau of Agricultural Economics, which Senator Brownhill cited is not an accurate measure of the net cash flow farmers receive from their farm income, let alone from any non-farm income they may have. Net farm income as defined by the BAE includes an allowance for depreciation on machinery which for wheat farmers, if I remember correctly the most recent figures, is $27,000 a year. That is a notional expense and not a cash expense in many cases.

It is well known by anybody who has made a serious study of agriculture or of comparative farm analysis that wheat farmers, in particular, have a propensity to overinvest grossly in plant and equipment. That propensity has been encouraged from time to time by stupid taxation laws introduced by tory coalition governments, which have encouraged farmers to do more of what they should not have been doing in the first place. To the extent that farmers overinvest in equipment which is too expensive and has a larger capacity than they need, it also has a very high propensity to be imported. The plain fact for anybody who knows much about wheat growing in Australia is that wheat farmers in general can get by for many years without any significant new purchases of plant.

Finally, the principal point of the LGPA article was an assessment of the level of equity in farms. It showed that over 80 per cent would be in a sound position even if there were a significant increase in their debt and a decline in land values. What various National Party coalition governments have screwed their Liberal partners into doing--

Senator Siddons —You should be pointing at them.

Senator WALSH —I am sorry. I did not mean to point at the Democrats, if I was. The National Party has screwed coalition governments into finding the odd case in which there is some genuine poverty or need and using that as an excuse to provide massive handouts to the wealthy section of the agricultural community that it represents.

Senator BROWNHILL —I ask a supplementary question. Does this mean that the Minister for Finance does not agree with the Minister for Primary Industry that there is a farming crisis?

Senator WALSH —I do not know what `crisis' means in this context, let alone in the context in which Mr Kerin put it. On the authority of the LGPA I am stating that the equity situation for the overwhelming majority of farmers is very sound.

Senator Messner —They still have to have cash to pay their debts.

Senator WALSH —I am glad that the honourable senator raised that question.

The PRESIDENT —Order! The Minister will ignore the interjections and answer Senator Brownhill's supplementary question.

Senator WALSH —Certainly, Mr President. Farm commodity prices are low, as they have frequently been before. `Crisis' literally means something like `turning point'. I am not sure that we have yet reached the turning point where agricultural commodity prices will, in the main, go up.