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Monday, 11 November 1991
Page: 2829


Senator BJELKE-PETERSEN (4.36 p.m.) —I wish to add a few words to the discussion of the report of the Industry Commission on the Australian dairy industry. I note that one of the main arguments in the report is that Australian consumers would get cheaper milk if controls in the Australian dairy industry were removed. Indeed, it contends that consumers paid $280m more for fresh milk and dairy products in 1989-90. I also note that the report states:

Further reductions in assistance must take place if the dairy industry is to maximise its contribution to national welfare.

It adds that the Australian industry has to prepare for increased competition from New Zealand dairy products.

  In addition, the report also recommends that assistance to the industry should be phased out in the next two to 10 years and that the Commonwealth should phase down maximum market support payments from 20 per cent of average export prices to 5 per cent by 1996. I also note that the report states:

Under current policies, excessive resources are retained in the dairy industry and the costs of doing so are borne by the whole community. It would be more appropriate for the dairy industry to bear costs.

However, I ask honourable senators whether they honestly believe that the whole community would benefit if, in the long run, these proposed changes were to result in decreased production, a significant reduction in jobs and the industry being unable to compete on world markets.

  The Industry Commission seems to believe that it is acceptable for Australia to become a dumping ground for European dairy products. It is asking Australian farmers and manufacturers once again to accept as right and proper prices which are based on the world market's dumped prices. We have seen this asked of producers in other rural industries. These prices are the result of political decisions in Brussels and Washington. They do not reflect retail prices in the exporting countries where consumers are paying more for their produce than consumers in Australia.

  The Australian dairy industry is alive with innovation, technical progress and a driving will to compete. Our dairy foods are as good as, and in many cases better than, anything in the world. Dairy food exports earn more than $700m each year. The industry's major investments in research, technology and market development will see these export earnings grow. Dairy farm productivity is increasing by 5 per cent per year, as it has for the past decade. The industry's willingness to adapt to change means that it will benefit from even minor reforms in the international trading environment. Australians already buy premier quality dairy foods at prices which are as low as anywhere in the world—although sometimes, when one sees that the price of milk has gone up each time one goes to the supermarket, one cannot always agree with that.

  However, Australian dairy farmers produce milk at a lower cost than farmers in Europe, the USA, Canada or Japan, thanks to our pasture based farming. In fact, few countries can produce quality dairy products as cheaply as Australia. More than 100,000 Australians have jobs thanks to the dairy industry. The industry provides about 20 per cent of employment in a number of important dairying regions. This is especially important in light of the particularly difficult times that rural Australia is now experiencing. Studies show that, for every 100 jobs in dairy factories, an additional 110 jobs are created in associated regional activities while the flow-on effects beyond the region are about as large again.

  Dairying is indeed a very real industry. It is close to the people it employs, its products are part of everyone's day to day life, and it earns export dollars for all Australians. Currently, Australia's dairy industry manufactures many specialised products for markets here and overseas and its farmers currently produce milk valued at $1.7 billion each year, all of which is processed within Australia. On top of this, processed dairy foods are valued at about $4.5 billion a year, an added value of $3 billion annually.

  Representations to me from the Australian dairy industry indicated that it recognises that neither regulation nor protection offer a panacea for the problems created by unfair trade policies. However, the industry does advocate a thoughtful and cautious approach to addressing the future. The Australian dairy industry, with minimal assistance, competes in corrupted world markets and against subsidised imports and, importantly, it funds its own marketing arrangements. (Time expired)