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Wednesday, 25 March 1987
Page: 1318

Senator MacGIBBON(4.33) —The Senate is debating as a matter of urgency `the need for the Government to bring down the crippling interest rates, record levels of taxation and the other costs which are devastating Australian farmers and small businesses in country towns'. Since we are on rural matters, it may not be inappropriate to start with the biblical quotation `by their fruit shall you know them'. You know damn well that the fruits from the Australian Labor Party are total neglect and ignorance and lack of any caring or support at all for rural Australia-the most vital section of Australia which is responsible for our big export earnings.

Senator Tate —Mr Acting Deputy President, I take a point of order. I am sorry that I am a little slow to my feet but I am sure the expression `you know damn well' is not normally heard in this chamber, and I ask that it be withdrawn.

Senator Peter Baume —What is the expression complained of?

Senator Tate —`You know damn well' was said in reference to some aspect of the Labor Party's stance.

The ACTING DEPUTY PRESIDENT (Senator Morris) —Senator MacGibbon, do you wish to withdraw?

Senator MacGIBBON —If it upsets the sensibilities of the Labor Party, if we are in the fantasy world, I will be quite happy to withdraw it. I want to get on with my speech about the Labor Party's shortcomings. This Government simply does not care about rural Australia. This is being proven every day of our lives as a result of what has taken place during the four long and painful years of its administration.

At the outset I would like to declare a personal interest in rural Australia because I derive an income, meagre though it might be because of the vicissitudes of this Government, as a grazier and a cattle producer. The Australian rural economy is absolutely vital to Australia. Last year it produced in aggregate $16,350m. It provides 38 per cent of our exports. Australia is the world's largest exporter of wool, beef, veal and live sheep. We are in a crisis at the moment because of the profligacy of this Government. The Government has trebled the indebtedness of this nation. The burden of paying the huge debt of over $100,000m that this socialist Government has run up with its reckless financial policies is going to fall on rural Australia. The ability of the rural producers of this country to produce efficiently and earn money abroad is absolutely vital to us. But what is happening? Rural Australia is weighted down with unreasonable costs and the Government is doing nothing to maintain the markets that we have. One only has to go into the supermarkets to find that the fruit on the shelves comes from countries such as New Zealand. We even find that oranges, which we leave to rot on the trees and which could be kept in cold stores if we had some decent rural policies, are imported. Sunkist oranges are being imported from California.

Senator Maguire led for the Government in this debate. He was followed by Senator Bolkus. The simple question I put to them is this: If their policies are so good, why is there not a vote for Labor in the bush? I can tell them that not one Labor member will hold his seat in rural Australia after the next election. I have always had a high regard for Senator Maguire. However, he told us quite succinctly that we had to have high interest rates; that it was impossible to cut interest rates because they were the only way back to economic health. When he said that, I wondered what galaxy he came from. All of my friends in business tell me that if the interest rates imposed by this Government on the commercial world are maintained for the next two or three years, they will be out of business and on the dole because they will not be able to survive. I will come back later to Senator Maguire's aberration about the fringe benefits tax. Senator Bolkus simply made no intelligent contribution to the debate at all.

The first part of the motion deals with interest rates. Interest rates in Australia are now running at record levels, as are inflation rates. The Bureau of Agricultural Economics maintains that this year the average interest rates for rural Australia are 19.4 per cent. Last year they were 17 per cent. They have risen by 14 per cent in a year. Interest rates are crucially important because rural Australia is in debt. The BAE estimates that the level of rural indebtedness to institutional lenders was of the order of $8,000m in June 1986. The number of overdrafts has gone up 14 per cent. The rural debt under Labor rose by 21 per cent between June 1984 and June 1985, and 7 per cent of farmers are now estimated to be in trouble of maintaining their viability in the short term and 20 per cent in the longer term. It is estimated that 70,000 Australian farmers will be forced off their land by the end of the century if the present policies of this Government are continued. Most critically in relation to this debt position, only 25 per cent of Australian farms have debts below $2,000 but a staggering 25 per cent of all Australian rural producers have a debt position in excess of $84,000.

Farming is not lucrative. The average farm income-I am referring not to the farmer but to the farm income-is one-third of average weekly earnings in Australia. How many members of the Labor Party, who tout for higher returns for their unionists, would be prepared to accept a 50 per cent cut in what unionists in urban areas are receiving? Yet the average farm income is one-third of average weekly earnings. The farming community is receiving a return of 1.5 per cent on capital invested compared with about 9 to 13 per cent for mining, manufacturing and the tertiary sector. One of the key reasons why this return is so low is high interest rates which are the result of the tight money supply policy of this Government to keep money in this country to try to shore up the collapse of the Australian dollar that it engineered, and, most importantly, the big deficits that have come from the Government's big spending, big taxing and big borrowing programs. When the Labor Government came to power in 1983-84 the deficit for the first year of operation was $7.9 billion. The year after it fell to $6.7 billion and this year the Government hopes to get it down to $5 billion. It has sold the mythology to the Australian community that if we have a $4 billion deficit-that is, if we spend $4,000m a year more than we get in-we are managing the economy well. Compare that with the Fraser years, when the average deficit was about $2.2 billion and we will see why the country is in a mess.

Why do farmers need to borrow money? It is very simple: They do not get paid until their crops are taken to market. They have to borrow money for wages, fuel, equipment and stock and to pay the taxes that this Government imposes on them. We have record levels of taxation which have a two-handed effect. There is the direct effect of paying tax when a farmer has a good season, and there is also the indirect effect of on-costs on everything bought on a property. One of the most iniquitous of those in recent times is the fringe benefits tax. I am sorry that Senator Maguire does not understand what is going on. He is partially right when he says that there is no free lunch for farmers. They do not go into town and have dinner in air-conditioned luxury. That is true. But where rural employers differ from other employers in the country is that rural awards provide that certain things shall be provided for employees. They cannot pass that cost on to the employee and they cannot compensate for it in any other way.

Many of the rural awards provide that an employee shall be provided with food and accommodation. The unions demand that. So Mr Keating and the Treasury make a fringe benefit assessment on this obligatory payment by the employer to the employee. They assess that a meal is worth $2, but of course it costs the employer a lot more. They impute a 46 per cent fringe benefit to that expense-$2 a meal, three meals a day, seven days a week-which means that any employer in the country has a fringe benefit tax liability of at least $1,000 a year for the privilege of giving someone gainful employment. It is absolutely iniquitous.

On top of those costs for the rural producer we have had the brilliant policies of Senator Gareth Evans in this Government as a result of which we pay the same price for all the hydrocarbon fuels that we use here as we did when crude oil was twice the price it is today. World prices have halved and rural producers in other countries have got the benefit of that, but we have not got it in Australia.

The value of the dollar has collapsed. While that has aided exports-it has made them cheaper on world markets-machinery is vitally important for most rural enterprises and spare parts are essential. The cost of buying and maintaining equipment on the farms has doubled in the last couple of years.

We come to tariffs, which is an area in which the Australian Labor Party in its sectional way looks after its friends in the union movement. It is not interested in rural Australia; it is interested only in the great masses of suburbs to the west of Sydney and around Melbourne where it gets its votes. So it puts very high tariffs on the motor industry to protect it. It puts a tariff of 150 per cent on the clothing, footwear and textile trade. Those costs are all added on to the rural producers' costs. Every tariff imposed on anything bought in Australia automatically gets transferred across to the price of the product when we sell it on the world market.

It is even more pernicious than that, because when we argue with the European Common Market and the Americans on their rural subsidies, they say: `Look at your protection of your manufacturing industry, which is 50 per cent or greater for the motor industry and 150 per cent for the textile industry. You cut those tariffs and then come back and talk to us about our subsidies for our rural products'. So it bites both ways on the Australian farmer.

Among the biggest imposts on the rural community are transport costs. Everything in Australia has to be moved, and it has to be moved over vast distances. Very few Australians realise that 20 per cent or more of the Australian gross domestic product is involved in transport. We must have efficient low cost transport. To compete, we must have the most efficient transport in the world. Instead we have some of the most inefficient and certainly the most expensive. We need low cost and efficient sea, land and air transport. One of the reasons we have not got that is the degree of regulation that this Government supports and encourages, and the monopoly position that it supports with respect to union labour in the transport industries. The consequence of all of this is that it costs so much to move things from the farm gate, down the countryside to the wharf and on to the ships.

As an example, I give the cost of moving scrap metal from the wharfside in three different countries. At Greenock in Scotland the cost is 64c a tonne to get it off the dockside on to the ship. At a United States port it is $3 a tonne and in Australia it is a staggering $15 a tonne. Fifty per cent of the value of a product at the farm gate is absorbed by off-farm costs. Farm costs have gone up 44 per cent in the last four years while prices have gone up about only 12 per cent.

What does the farmer get in return for all this regulation and taxing imposed on him? Very little. Research has gone down. Australian productivity in the rural sector can be shown to be declining because of the lack of research to keep the competitive position which Australian producers formerly enjoyed. We once had a great benefit in the fact that we were efficient, low cost producers. But there is good evidence now that our position is being eroded because of the high costs imposed by government and because of lack of research.

One of the other reasons why those in the rural areas are in difficulty is that the support that we are entitled to expect overseas in maintaining and developing our markets through the Department of Foreign Affairs has not been provided. I am sorry that I do not have time to go into that today, but that is a story all in itself. What does Australia need? We need low cost inputs for rural industry and we need to have those markets overseas maintained and developed. We need to have fuel available at the world price and to have a deregulated transport industry. We need an improvement in rural research and we need marketing promotion. But this Government has only taxed and taxed and taxed. It has set up a committee of rural back bench members from marginal seats, and that committee has not earned one vote for the Labor Party, least of all ameliorated the conditions for rural Australia. This industry is vitally important to Australia because it supports the standard of living that we all enjoy. It must have the highest of priorities, not the shabby treatment that it has got from this Government.