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Wednesday, 25 March 1987
Page: 1311

Senator MACKLIN(3.48) —We are debating today a motion brought forward by Senator Crichton-Browne which reads:

That, in the opinion of the Senate, the following is a matter of urgency:

The need for the Government to bring down the crippling interest rates, record levels of taxation and the other costs that are devastating Australian farmers and small businesses in country towns.

On any analysis of the problem of agriculture in Australia today, one would have to say that the two major difficulties facing Australian farmers are the extraordinary collapse in markets and the price squeeze from which they are suffering. Given that collapse in markets, to which I will refer later, high production costs, particularly the cost of borrowing within Australia, have imposed a crippling burden on many farmers-not on all farmers, but on many. Unfortunately, many of those farmers who are now suffering from crippling borrowing costs are the farmers who are either new to farming-younger farmers who have had to borrow very heavily to buy new farms-or those who have in recent years sought to expand their operations and buy, say, the farm next door or extra land in order to increase their production. Those people have been hit not only by the cost of the money that they borrowed, but also, of course, by the massive reduction in markets and in the value of their product.

Senator Crichton-Browne referred in his motion to interest rates. An explanation, presumably, must be given as to why those interest rates are so high. The major problem with interest rates, quite frankly, is that to attract foreign investment in order to offset our overseas debt, we have had to borrow, and borrow heavily. Why, then, is the overseas debt so high? It is high for a number of reasons. Unfortunately, there has not been much discussion in the debate of the distribution of that overseas debt. For example, in June 1985 terms, which is the last available breakdown, the figure was 26 per cent Commonwealth debt and 15 per cent State debt, making a total of 41 1/2 per cent for governments and government instrumentalities, and 58 per cent private sector debt. In the following 18 months our debt rose from $40 billion to over $100 billion. Who borrowed that money? An extra $12 billion was borrowed by the public sector and an additional $20 billion by the private sector. That seems to me to be at the heart of the problem that we are facing. The Australian Labor Party adopted the conservative view about deregulation of money markets. The markets, once deregulated, operated under their own steam and to the detriment of this country. That is the reason why, under Menzies for example, there was a great deal of regulation of the financial markets in Australia. Our type of economy needs that regulation. When this Government adopted that conservative policy of deregulation, the market certainly took over with a vengeance.

The overseas debt, of course, was pushed up very strongly by the extraordinary collapse in our terms of trade. Indeed, between $6 billion and $8 billion per year has been wiped off this country's income by the collapse in the terms of trade. That has been caused by a host of things. I give one example: $640m has been lost by our wheat farmers in the last financial year. Why has that happened? It has not happened because we did not sell our wheat. Interestingly enough, we sold more wheat than we have ever sold before, but compared with the previous financial year, we lost $640m because the international price of wheat had not only gone down but had collapsed. The Green Paper on the cost to the Australian population of the European Community's policies puts the cost at over $1 billion. What about Japan? Japan, of course, in terms of agriculture, has denied us access to its markets, at enormous cost to our community which has not yet been quantified by the Bureau of Agricultural Economics. But it is certainly substantial and runs into hundreds of millions of dollars. Those three items alone-that is, wheat, the common agricultural policy of the European Community, and the denial of access by the Japanese by tying up their markets-represent a loss to our farmers of over $2 billion, despite the fact that they have sold more.

If we do not address that issue, if we do not understand the operation of those international markets, we are deluding our population into thinking, `At the next election we will put somebody else in, it does not really matter who, and it will all be right'. Quite frankly, it would not matter who wins the next election; the isolationist and protectionist policies of the United States will continue to cripple this country. It is interesting that recently Ian McLachlan of the National Farmers Federation said:

When friends like the United States are prepared to crucify you economically, what confidence can you have that they will defend us in a time of military threat.

I say to Senator Crichton-Browne that that is a statement by the person who is leading the farmers in this country. At least he knows what is going on.

Senator Crichton-Browne —Run that past me again.

Senator MACKLIN —If he did not listen, he missed out.

Senator Crichton-Browne —I have a great deal of difficulty comprehending what you are saying, but I am listening.

Senator MACKLIN —All right. He has a great deal of difficulty comprehending what I just said. I will repeat it slowly, so that he can comprehend it. This is what Mr Ian McLachlan said:

When friends like the United States are prepared to crucify you economically, what confidence can you have that they will defend us in a time of military threat.

The interesting thing that Ian McLachlan pointed out is the crucifying of our economy by the United States and the European Community.

Senator Crichton-Browne —Next he will want to close the bases.

Senator MACKLIN —He does. Their will is broken. An omnibus trade Bill will be presented to the United States Congress which will further crucify our exports. What have we done about that? Almost nothing. Currently, we have in Washington no more than two people who can operate in this area. We have appointed the ex-Ambassador to Mexico as a special envoy in this area. But what is that person confronting? What are we expecting of him? He is confronting over 70 congressional trade committees. On every one of those congressional committees there are at least four congressman or senators. They all have at least seven to 10 staff. We are looking conservatively at having to cover over 2,000 politically important figures on the Hill with regard to trade-and with how many people? Two or three. We have more military people there, discussing purchases of hardware, than people trying to sell goods to the United States. I have said before, and I will say it again, that we need to beef up the Cairns free trade group of 14 countries. At least if those 14 countries operated together on the Hill in the United States and each assigned five people, one person could be assigned to each committee. At the moment three people are assigned to 70 committees, which is obviously an impossibility and is to the incredible detriment of our agricultural community.

Let us talk about realities. The realities are that we are operating in a vastly corrupted market. In fact, it is corrupted by the United States and the European Community for their own internal political purposes. We can produce efficiently but if we remove every add-on cost from both Commonwealth and State governments from the wheat sales that we make and then seek to sell that wheat-that is, without one cent added by government charges-the United States would go into the market and undercut us by a dollar. The United States authorities are currently supporting their agricultural community to the tune of $35 billion, half of Australia's entire Budget. They can drop that price, and they will do so. The United States agricultural spokesperson and indeed the Secretary of State recently indicated in a major speech in the United States that they intend to go into the Community and sell everything they have, no matter what the price. Let us talk about agricultural realities, for they are the realities that our farmers have to face around the world.

The Government has to face the fact that, having removed controls, which is also Opposition policy, there has been an enormous flow of investment out of Australia which in the last 12 months amounted to $7,000m. That is, the outflow of investment dollars, caused by deregulation, pushing up the interest rate. For every Australian dollar that goes out we have to attract another dollar back to be able to do anything with it. I repeat that $7,000m, mainly from life offices and superannuation funds, is invested outside this country. That is the problem of deregulation, set in train by this Government, which took over the policies of the Opposition parties. Once the operation is deregulated, the market will take over-and it took over with a vengeance. That is the basic absurdity of trying to operate our type of economy in that type of deregulated way as though we are a major player on the world stage, when in fact we are a minor player and need to protect ourselves against that type of predatory operation of the United States and the European Community. Unless we put into place some type of regulation in governing our economy and in protecting ourselves-not in the way we did in protecting the secondary industries for so long under conservative governments under National Party Ministers, not that type of protection but the type that protects our dollar-interest rates will not go down. Not only will our farmers continue to be crippled in their borrowings, but when they get their product to market and try to sell it overseas they will be crippled by the corruption of the international market. They are the factors which are pressing in on our farmers. If people want to come up with simplistic solutions, let them do so, but those simplistic solutions will not work-they will not work under a coalition government as they have not worked under this conservative Hawke Government.

The ACTING DEPUTY PRESIDENT (Senator Morris) —Order! The honourable senator's time has expired.