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Thursday, 18 October 1984
Page: 2016

Senator MACKLIN(8.56) —The proposition I was putting concerned profit margins. The Interim Inspection Policy Council, a body appointed by the Government, made an identical proposition. It is not one that I alone am putting forward. The body which looked into this matter, which took submissions and examined the industry, came up with a solution which gained wide acceptance by all meat growers. I go further than that, as I did in my speech at the second reading stage. Not only the Council but also the Minister for Primary Industry ( Mr Kerin) holds this view. In my speech at the second reading stage I quoted from a response which the Minister gave to a question he was asked at a Cattle Council of Australia conference on 15 September. A part I did not quote in my speech makes another very interesting point, and it is this:

Treasury and Finance basically have the view that inspection costs should be charged, the user pays. There should be a 100% recoupment-that's always their position. So in other words in any budgetary situation a person in my position is fighting to hold the line. There was no way they-

He was referring to the Cabinet-

would wear a two year moratorium . . .

The other problem was the political hazard. 84 per cent of the abattoirs weren' t paying at the time I was being threatened with High Court action and the Senate was obstructing even on a validation Bill . . . quite frankly, this is the first time I have said it, the political hazards of me going forward with a recommendation of a two year moratorium in those circumstances, wasn't very inviting to success . . .

So I quite happily admit it . . . It is a decision that I have to live with. I think people who say that this isn't really facilitating exports are perfectly correct.

It is not facilitating exports. The essence of the whole proposition is: How are we to facilitate exports? When I suggested the downstream effect, the Minister did not seem to think that there was one. Page 7 of the Interim Inspection Policy Council report refers to a works in Western Australia. It states that the cattle kill of that works will be reduced by an estimated 60,000 per year since the increase in charges of which 15,000 could be directly attributed to diversion resulting from the increase in export inspection charges. That diversion was to the domestic kill. The report states:

For each 15,000 head, $405,000 in net revenue . . . had been lost from by- product operations. The failure to earn this revenue was a loss to the community at large as domestic plants in the area could not recover by-products . . .

The report seeks to state what the effect will be as it goes down through the community. We are not talking about something that can be overcome. I know that when one talks about fractions of a cent it sounds as though one is not talking about very much. But in a fixed currency, which is what one is operating with when one gets an export deal going, one is not talking about fluctuations in currency at all. Fluctuations are built into the deal itself. We are talking about fractions of a cent. It is all very well to think that we are talking about $160 for a beast to go through the various processing stages. When one has gone through all of that one still has to deal with a profit margin in terms of fractions of a cent. In a tight export market one has to look at every saving which one can make. If one cannot make any savings in terms of costs-farm costs, input costs-one has to look at other charges which are imposed.

The industry is not saying that it will not pay these inspection charges: It is simply asking for a two-year moratorium. It is hoping in that time to be able to establish those markets and to convince the Government of the viability of the operation, to show the Government what happens when the export market is increased and to show the rest of the community that it is actually gaining revenue and not losing revenue. If we look at this situation in isolation we see a $14m a year loss: But we cannot look at any of these items in isolation; we have to look at them in the totality of the economic situation. My proposition is that there would be a net gain to the community if we did not impose those charges.