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Wednesday, 11 December 2002
Page: 7777

Senator McLUCAS (5:23 PM) —From the outset, we have to recognise some of the facts in this debate. Firstly, let me make it absolutely plain that Labor recognise that the sugar industry needs assistance and needs it now—in fact, it needed it six months ago. Today, Labor are not blocking the sugar industry assistance package. Today, what we are saying to the Howard government is: fund this package from your budget. The recently released mid-term economic statement confirmed what we all know: this government is the highest taxing government in history. I will come to the detailed figures in a minute, but it is clear from that statement and the huge sums of money that this government is continuing to waste that there is no need for a new tax on sugar.

In the lead-up to the last election the Howard government spent over $170 million of taxpayers' money on advertising—and that was in the election year alone. Nothing has changed. The government has $50 million earmarked for advertising the Pharmaceutical Benefits Scheme changes; $27 million is allocated for a terrorism education campaign; and $20 million every year is spent on so-called lifestyle benefits, including payments for things like CDs, golf clubs and camping tents, through the private health insurance rebate. Managing a budget is about managing priorities. It is clear to me, and to the people in the sugar industry and in sugar towns in Queensland, that there is no priority being placed on the sugar industry by this government.

Not only does the government collect record amounts of money, it wastes record amounts. I am fearful that there will be significant amounts of money wasted as part of the sugar industry package as it is currently structured. I am pleased that Senator Ian Macdonald has acknowledged my involvement with the sugar industry. I thank Senator Cherry and recognise that he acknowledged my involvement too. I know that the industry is also concerned about the package and the way it is targeted. Like me, they are concerned that large sums of money will be wasted on more committees and consultants. The package allocates $10 million for the administration of the industry and regional guidance groups, there is $5.6 million for administration in federal government agencies and $6 million is set aside for viability tests and business planning for those applying for interest rate subsidies. There is only $8 million set aside for those subsidies. That is a total of $21.6 million for committees, administration and consultants to be funded by a sugar tax. There does not seem to be much money in this package for farmers or local communities.

The Howard government does not seem to understand that what the industry needs now is confidence—confidence to plant next year's crop, confidence to participate in discussions about innovative uses of sugar, confidence to embrace better farming practices—but there is not much in this package to build that confidence. I want to register my concern about the time frame for delivery of assistance to industry through industry adjustment through the regional guidance groups. I am concerned that when it comes time for planting in June-July next year we will still be talking about what we might do—we will still be having a committee meeting. These people need assistance and they need it now. We do not want large numbers of committees to talk for another six months to make decisions about what might happen in the future.

I have visited sugar growing areas across North Queensland on many occasions this year and found that most regions already have established regional groups involving millers, growers, harvesters and the local community. Many of them are well advanced in terms of planning for diversification and new industries. Mossman is a great example of where growers, millers and the local community are working together. They are well advanced with plans to develop an ethanol plant and are working together to ensure the industry is environmentally sustainable through the Douglas Shire's Sustainable Futures project. The federal government package, however, fails to recognise the work that is already occurring and, instead of building on the efforts of local communities and local structures, seems set to impose another level of bureaucracy—another level of very expensive bureaucracy.

Like the industry, Labor are not happy with elements of the package but, in the interests of getting some support to the industry in a timely way, we will support it. But we will not support another tax. I, like the industry, am also concerned about what the federal and state governments will do with the single desk arrangements for marketing sugar. The Prime Minister insisted that the Queensland government reassess the single desk when, on 4 September this year, he said:

The other thing that has got to be on the table are the provisions of the Queensland Sugar Act which provide some fairly restrictive monopoly trading conditions for the mills and some growers.

Mrs Kelly, the member for Dawson and the Chair of the government's Sugar Task Force, fleshed this out further in the Mackay Mercury on 14 September, outlining her support for the dismantling of the single desk. She said:

Domestic refiners will be able to enter into arm's length contracts with farmers, through their mill, for the purchase of raw sugar for the domestic market.

Clearly Mrs Kelly is supporting her Prime Minister in calling for the abolition of the sugar single desk. I therefore found it somewhat amusing to read in Monday's Mackay Mercury an article where Mrs Kelly claims, I think somewhat illogically, that Labor is supporting the big end of town in disallowing the sugar tax. It is Mrs Kelly and the Howard government—and now, it seems, the Democrats—who are pandering to the big end of town, not Labor.

It is the Howard government which is leading the charge for the abolition of the domestic single desk and in effect handing market power to the Coca-Colas of this world. Let me make it clear: it is the Howard government that put the single desk on the table as a condition of this package. I also know that some millers and growers would like increased flexibility in the way the single desk operates. But I do not think anyone in the industry is arguing for a complete abolition of the domestic single desk. Let me make it absolutely clear that I understand the importance of the single desk to the sugar industry.

Sugar is not like any other primary industry commodity. You cannot load up a truck full of sugar cane and sell it. There are over 6,000 cane farmers growing sugar that is eventually marketed to 20 or so large refineries. Australia exports between 80 and 85 per cent of that crop, of which the majority is grown in my state of Queensland. So it is quite simple: the single desk provides these 6,000 growers with some market power in what we all recognise is a corrupt world market for sugar. I am concerned that the Howard government will use the current crisis in the industry as an excuse to press for the complete deregulation of the sugar industry. The impact of this would be devastating not only for farmers but also for the associated sugar communities.

I find it quite strange that Australia is looking to get rid of its single desk marketing arrangement, through the pushing from the Howard government, when I am told by industry that Brazil is currently looking at establishing one. The industry certainly needs to investigate every possible means to make itself more efficient and, where appropriate, diversify. It is important to recognise, though, that Australia's sugar industry is one of the most efficient, if not the most efficient, in the world. At this stage, however, it is not clear to me how the abolition of the single desk domestically is going to achieve improved efficiency, given that we market 85 per cent of our sugar overseas and most domestic consumption is marketed through a few large companies. We need to be very careful that we do not throw out the baby with the bathwater if there are going to be changes in the marketing arrangements for domestic sugar.

The industry has a long history in North Queensland. It is a major driver of our region's economy. In November 2002, a report commissioned by Advance Cairns found that the industry supported 15,000 jobs and generated $300 million in income in Cairns and Far North Queensland. The report did not look at other sugar areas, including Townsville and Mackay and surrounds, but suggested that the industry is even more important to those economies. In the past decade, however, the industry has faced growing uncertainty about its future. The industry has faced growing financial pressures following a series of bad seasons caused by weather, pests and diseases. On top of this, the industry, as we all know, is competing in a corrupt world market. The industry recognises that there is some need for change and is looking for assistance from the government to assist it through that change. But it is not time for the government to abandon the industry. We need to get in and work with this industry so that it has a profitable and sustainable future.

So let me make it absolutely clear that Labor supports assistance to the sugar industry, despite what some of the members of the Howard government might say. I note that Mr Peter Lindsay, the member for Herbert, gave a speech to that effect on 4 December, just last week. It is quite novel to see Mr Lindsay taking an interest in the sugar industry, given its importance to the Townsville economy. This was only Mr Lindsay's second speech dealing specifically with the sugar industry since he was elected in 1996. His first speech about the industry was on 16 August 2000. It took Mr Lindsay four years in government before he spoke about the sugar industry at all. Now we find him having something to say about the industry for a second time, and I wonder whether it has got anything to do with the 3,000 people that walked down the streets in Townsville a couple of weeks ago.

If we look at the record of Mr Entsch, the member for Leichhardt, in speaking about the sugar industry, I have got to say that it is worse than Mr Lindsay's. Since his election in 1996, he has not dedicated one speech in parliament to this important industry. Mr Entsch has mentioned the industry in passing on a couple of occasions, but at no stage has he spoken specifically about the sugar industry since his election in 1996. Yet he has the sugar town of Mossman in his electorate, with the Mossman mill right at this moment facing severe financial difficulties.

The Prime Minister had to be dragged to the table before he met with the industry when he visited Cairns earlier this year—

Senator Boswell —That is not true.

Senator McLUCAS —only on the urging of Labor through the media—and you know it, Senator Boswell. Contrast this with Labor. Labor's shadow minister for primary industries and resources has travelled extensively in North Queensland on two occasions this year to meet with growers and communities to discuss the difficulties facing the industry. The Leader of the Opposition, Simon Crean, met with Canegrowers leaders recently during his visit to Cairns. Labor, unlike the government, is prepared to sit down and work with the industry so that it has a future. Labor does care about the industry and Labor supports assistance to the industry.

As I have said, we, like many in the industry, are not happy with the package in its entirety that the government has put forward. We do recognise that there is a need for assistance and we will not block this package. However, we will not support a tax to fund it. We will not support another tax on consumers to raise $25 million a year when the government is wasting so much money on so many other things. The government should fund this package through the budget and not slug consumers, manufacturers and their workers further down the supply chain.

I believe it is a sign of the weakness of the National Party that they could not get Mr Costello to find $25 million a year for the sugar industry out of a budget surplus of $2,100 million. The Howard government can find $200 million for the car industry from the budget, and I support that, but not one cent for the sugar industry. The government has announced another $368 million for drought affected farmers from the budget. I do not begrudge drought affected farmers this money, and I support the allocation of extra funds to farmers in drought. But I am disappointed that the government effectively can find no money for the sugar industry. Every cent earmarked for the sugar industry through this package paid for by the federal government is raised through a tax.

The Howard government, as I have said, are the highest taxing government in history, but they cannot find $25 million a year for five years for the sugar industry. When the Howard government came to power in March 1996, taxpayers paid $82.4 billion, or 16.4 per cent of GDP, in income tax. This increased to 17.9 per cent of GDP in 2000. We have since had the GST and the Howard government's so-called tax cuts. This financial year, taxpayers can expect to pay $127.3 billion, or 17 per cent of GDP, in income tax alone. The total tax, including income tax and GST, paid to the Howard government has soared to $187 billion, or 24.9 per cent of GDP. Mr Howard and his government have broken the promise they gave in 1996 when they said that there would be no increase in the overall tax burden from 1996-97 levels.

Australians not only pay more income tax but now live with the government's hands in their pockets every day through the GST. On top of this, we have had a raft of other taxes, including the milk tax, the gun tax, the ticket tax and the stevedoring tax. No doubt we will have a war tax on top of the proposed sugar tax. Like the GST, this tax, as Senator O'Brien clearly said, is going to be an administrative nightmare. I know that farmers and small business people struggling with new computer systems following the introduction of the GST will understand what an administrative burden a new tax will create. It is not a simple case of taxing all sugar produced at 3c a kilo. That 3c is compounded when it goes into manufactured goods. It has the GST applied to it. If the food is exported the manufacturer can apply for a rebate. The domestic food manufacturing industry is a strong exporter, and this tax will be an administrative nightmare for food manufacturers. A strong domestic manufacturing industry is good for the sugar industry, and we should not be penalising this industry through a complex and unnecessary tax.

No doubt the government will say this is good financial management and no doubt as part of that argument it will trot out the stories about how it has reduced foreign debt. The Howard government mantra of $61 million in debt repayments loses its charm when you look at the figures in detail. The Howard government has financed its debt repayments by selling assets—assets like Telstra. The government finance statistics released by the Australian Bureau of Statistics reveal that that debt reduction is almost entirely attributable to the sale of assets. The figures show that $58 billion worth of assets—including financial assets like Telstra and non-financial assets like the sale and lease-back deals for government buildings—is how they paid off great debt. The Howard government has fabricated around itself a myth on economic management. The government is a big taxer and a big waster of government funds.

Before I conclude, I want to say that I am going to be watching very closely the deal that the Democrats seem to have stitched up with the government. Senator Cherry seemed to be saying very proudly that he has got $16 million out of the Commonwealth for a range of things—environmental programs and a couple of other things—to add to the package. But we have to be really clear—and Senator Ian Macdonald made it quite clear— that $8 million has been allocated and $7.5 million is conditional on the support of the Queensland government. That is not $16 million in my book. The Queensland government are playing their part in terms of the industry assistance package. They are not putting in a new tax to fund their contribution to the sugar industry package. I do not know what the negotiations with Queensland have been, and I think that for the Democrats and the government to be trumpeting $16 million at this point in time may be somewhat premature.

Managing a budget is about managing priorities. The sugar industry, farmers, harvesters, millers and mill workers, along with the communities in which they are based, recognise that the Liberal-National government place no priority on this important industry. The sugar tax is unnecessary. If the government placed any priority on the sugar industry, they would have found the money from consolidated revenue.