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Thursday, 25 October 1956

Mr DAVIDSON (Dawson) (PostmasterGeneral and Minister for the Navy) . - I was very interested to hear the final remarks of the Leader of the Opposition (Dr. Evatt). He referred, quite correctly, to the great achievements of the sugar industry on the north-eastern coast of Australia, and to their great value in developing that area and increasing our defence potential. The honorable member described the history of the industry as a romance. As one who has been associated, ever since 1 can remember, with this particular romance. I feel that I can contribute something of value to the debate and can suggest to Tasmanian representatives who have been somewhat critical of certain aspects of the agreement, a way in which Tasmanian producers could derive much greater advantage than they could from the proposals that have been put forward on their behalf to-day.

I was very surprised to hear the Leader of the Opposition say that my colleagues of the Australian Country party should really be hostile to this proposal because the industry provides an example of controls and socialization. That is a theory that one hears expressed from time to time by people who do not understand how the sugar industry works. I suppose that I have been associated with the industry for more than 30 years. It is one of the finest examples of co-operative farmer organization formed for the purpose of looking after the farmers' interests. The controls, which have operated to such good effect, have, before their adoption, been discussed thoroughly by the rank and file, approved by a majority vote, and adopted in a way that is not socialistic, but democratic. Indeed, the great success of this co-operative effort, as compared with the results obtained under the burdensome system of socialistic controls, could well engage the attention of honorable members opposite.

Most of the reaction to this bill has been favorable. No real opposition has been expressed to it but, as 1 have said, one or two criticisms have been voiced by honorable members from Tasmania. Let us look, to begin with, at the relationship between the two primary industries, which have been mentioned by both the honorable member for Franklin (Mr. Falkinder) and the honorable member for Wilmot (Mr. Duthie). Since before 1915 there has been a close relationship between the southern fruit industry and the northern sugar industry. Any suggestion by those honorable members that the relationship has favoured the sugar industry is not well founded, because the actual position is that the relationship has been almost entirely in favour of the fruit industry. I shall not go into a lot of detail on this matter, but it is contended that as a result of the operations of the fruit industry the sugar industry has been provided with a very considerable market. Well, we in the sugar industry value our markets. From time to time, we have had some difficulties in respect of markets, but let me assure the House that, as a result of the excellence of our organization, we have always been able to market our product, and would have been able to do so even without the support of the fruit industry.

Another fact that is not generally known is, that during the period from about 1943 to 1953, the sugar industry made available, by way of domestic rebates to the fruit industry, a total of approximately £1,300,000 at a time when sugar sold to the fruit industry for fruit processing could have been sold on overseas markets at prices from £10 to £30 a ton higher than those received from the fruit industry. We do not begrudge that loss. That was part of the economic set-up of the industry, but the point should be explained in rebuttal of any suggestion that the sugar industry has gained a great deal from its association with the fruit industry.

The economy of the sugar industry is based on the embargo on the importation of sugar, to which reference has been made, and on the fixed price for sugar consumed in Australia. This bill proposes to extend the embargo and to increase the home con sumption price. The increased home consumption price has been in operation during the present season. That arrangement, which has existed for many years, is now not only an important and integral part of the economy of the sugar industry, but is also of great importance to the national economy, and will undoubtedly be supported without question by the Parliament. The sugar industry has voluntarily accepted certain obligations to offset the benefit it gains from the fixed home consumption price and the embargo on importation. One of those obligations is accepted in the form of export rebate in respect of sugar used by Australian manufacturers who export goods containing sugar. The sugar industry has undertaken to make sugar available to Australian manufacturers at the minimum price at which the manufacturer could obtain sugar from overseas after paying world parity rates and such charges as freight. In other words, the manufacturers are able to obtain the sugar component of the goods they produce at a price competitive with the price paid for sugar by manufacturers in other parts of the world who are producing the same kind of goods. So the export rebate offsets the effect of the embargo on the manufacturer. We in the sugar industry have no desire to evade that obligation, and I shall point out in a few moments that the proposals in the bill, which were suggested by the sugar industry, give ample evidence of the fact that the industry is prepared to do all it can to improve the existing situation.

Then there is the domestic rebate, around which some of the criticism uttered here to-day has revolved. The domestic rebate is entirely designed to assist fruit-growers in the southern States. When this system was initiated, I think by the honorable member for Cowper (Sir Earle Page), it was made plain that it was a temporary expedient only, and was not to be regarded as part and parcel of the economy of the fruit industry for all time. It was felt that the fruit industry required some assistance, and that this was the right way to provide that assistance, so that that industry, which was then in a parlous condition, could be put back on its feet and enabled to support itself thereafter. The method of operation of the domestic rebate has already been dealt with at length, and I need not expand much on the explanations already given.

Briefly, it enables manufacturers using Australian fruit for local consumption to pay the fruit-growers a certain definite price, on the understanding that if that price, as determined by the Fruit Industry Sugar Concession Committee, is so paid the manufacturers will qualify for the domestic rebate. As the honorable member for Franklin (Mr. Falkinder) and the honorable member for Wilmot (Mr. Duthie) pointed out, that rebate has been ZZ 4s. a ton for many years, during which there has been no increase in consonance with increases of costs. There is no logical justification, I submit, for expecting one primary industry to support another primary industry in perpetuity. I repeat that the domestic rebate was initiated originally as a temporary expedient, lt has remained in existence because those who speak for the sugar industry have said that although the rebate was not justified they were willing that it should continue, but they were not willing that it should be increased. They told the Government that, whilst they would not seek a discontinuance of the rebate, there should be a new basis on which both the domestic rebate and the export rebate were determined. The Fruit Industry Sugar Concession Committee has received from the sugar industry a statutory annual amount of £216,000, plus an ex gratia amount as determined from year to year by the Export Sugar Committee. I point out that the statement of the honorable member for Franklin that the total amount paid by the industry to the committee for many years was £216,000 is not correct. The statutory amount was £216,000, but for many years before the last war the sugar industry was required to make, in addition to that statutory contribution, an ex gratia payment. It is evidence of the desire of the industry to honour its obligations in this regard that it made this payment each year without any question. The sugar industry was, therefore, providing the Fruit Industry Sugar Concession Committee with up to £300,000 a year. It is considered more desirable, from the point of view of the industry and for the sake of the simplification of accountancy problems in handling the rebates, that this system, in which the ex gratia payment has to be worked out at the end of the season, be altered. Therefore, the industry suggested to the Govern ment that it, the industry, should contribute to the Fruit Industry Sugar Concession Committee for the payment of the domestic rebate an amount of £120,000 a year. At the moment, the payment in respect of the domestic rebate is about £105,000 so the industry's suggestion means that it is willing to continue the present payments, plus £15,000.

The industry also suggested, in respect of the export rebate, that it would be better if it undertook to pay whatever amount was required, as determined from month to month by the Export Sugar Committee, so that the committee itself would not be in the position of running short of cash and having to come to the industry for an amount not previously determined. As a result of that arrangement, which has been accepted by the Government, the industry under this legislation, will be committed to the payment of an estimated amount of £355,000 a year, with export prices as they are, as distinct from the statutory amount of £216,000 provided for in the previous agreement. I want that understood because that is the proposal of the industry itself, put forward in the usual fair and honorable way in which the industry generally puts forward its claims and proposals.

I turn now to the position of the fruit industry. There is no doubt that the jam industry, as distinct from the canning industry, is not in a very happy or successful economic position. What is the reason for that? The reason is that certain costs have increased. We find that, in order to deal with this situation, the fruit industry is immediately flying to the sugar industry for help - probably as a matter of habit - saying that it is getting into a worse and worse position and that, as the sugar industry has given help for many years, it should give more help now. There is no logical justication for such an argument.

Honorable members will find, if they go into the position, that the increases in costs, which have put the jam industry into this position, are not due solely to the sugar content of the product. Here is the actual position: Let us take a 24-oz. tin of plum jam and compare the price in Sydney in June, 1938, with the price in May, 1956, and let us compare the sugar component in that tin in 1938 with the present sugar component. I suggest that that is a fair and reasonable way of determining whether there is any virtue in the claim that the sugar industry should contribute more than the amount of £2 4s. a ton which it previously paid. In June, 1938, the tin of jam could be bought in Sydney for just over 9d. Now it costs about 2s. 6d. The cost of the sugar in June, 1938. was 32.3 per cent, of the price, but .by May, 1945, the figure had dropped to 24.3 per cent. The cost of all the other components rose from 67 per cent, in June, 1938, to 75 per cent, of the selling price. So it is not the sugar component which has caused increased costs in the jam industry. Therefore, the remedy does not lie in attempting to make some minor alteration to the sugar component cost while other components remain untouched.

It has been suggested that if the sugar industry is to be called upon to make a contribution which will really help the jam industry, the amount should be of the nature of £13 or £14 a ton instead of £2 4s. That, in itself, indicates that there is some factor other than the sugar component in the price of jam which has to be tackled. What would bc the position if the fruit industry were successful in its submissions and it was decided that the sugar industry must contribute more to the berry-fruit industry in Tasmania to enable it to operate successfully? Let me interpolate that nothing that f am saying now is to be attributed to any desire to see the fruit industry continue in a parlous condition. Certainly, as a primary producer, I want to see it prosper. But we must look at this position: If it were desired to help the fruit industry with a further contribution from the sugar industry, that could be done only by another increase in the price of sugar to the consumer, because the cost of assisting the fruit industry could not be taken out of the present return to the sugar-grower.

This amending bill provides for an increase of Id. per lb. in the price of refined sugar. As has been pointed out by previous speakers, that increase to the sugargrowers and the sugar-millers has already been taken up, practically, in increased costs. Therefore, as the figure determined by this Government has given only a fair and reasonable return to the industry, eating into that return by assisting the fruit industry could only result in a further increase in sugar production costs. Such an increase would mean that the' sugar industry would be required to put up the price of its product in order to enable another industry to obtain a greater return. In effect, the sugar industry would be blamed for increasing the price of its product when in actual fact none of the increased price of sugar would go to the industry. That would be an untenable position.

Let me suggest to those who have been applying themselves to this problem that the remedy for this position lies in adopting the recommendation made about three years ago by the McCarthy committee of inquiry into the sugar industry. This was a committee which went very thoroughly into the conditions in the sugar industry and made certain recommendations. Representations were made to the committee by representatives of the fruit industry. The recommendation of the committee was -

That the amount and conditions of payment of the fruit industry rebate of £2 4s. a ton remain unaltered.

That was the recommendation of an impartial body after it had made a very thorough investigation into the position of both industries. The recommendation of the committee continued -

That any request for an increase of the fruit industry rebate be referred to the Tariff Board or some other competent authority for full inquiry.

I strongly commend to those who are desirous of helping the fruit industry that that recommendation should be put into effect now. The Minister for Primary Industry (Mr. McMahon) has already said that this way is open to the fruit industry, but I do not know of any real approach having been made by the fruit industry to the Government for the holding of such an inquiry. Certainly, I understand that representations have been made to the Minister from the fruit industry for further relief. But the Minister will confirm that no firm proposal, based on need, has been put to the Government for consideration. When the honorable member for Franklin (Mr. Falkinder) was speaking, he referred to this matter and said that the industry had been told to try this other method. He asked whether there was any guarantee that if such an approach were made the Government would consider it. In the first place, the responsibility is surely on the industry itself to prepare a documented case and present it' to the Government. Secondly, 1 point out that this Government has never refused to give urgent and detailed consideration to any proposal that has been put forward authoritatively on behalf of any primary industry.

From time to time, the sugar industry has presented to the Government a carefully documented case. It has argued that case, and has submitted itself to investigation. Finally, as a result of that action, it has achieved the result that it desired. The wheat industry, from time to time, has approached the Government. The dairy industry has approached the Government from time to time. The dried vine fruits industry, recently, through the honorable member for Mallee (Mr. Turnbull) approached the Government. Therefore, why has the Tasmanian fruit industry not approached the Government? What is there to stop it from approaching the Government? What other assurance does the industry need that its case will be given reasonable consideration than the history of this Government in dealing with primary industry organizations in the way that I have outlined?

I sincerely believe that, by this method, the fruit industry would achieve something of far greater value than it would achieve by means of any request to the sugar industry to give it a bit more by way of domestic rebate. If such an investigation is held and if the case of the industry is sound and properly presented, I. feel that the report of any investigating committee would be of such a nature as to place that industry's economy on a far more sound basis than it is at present. It will not then be forced, as it is being forced now and has been forced in the past, virtually to go cap in hand to another primary industry and say, "May we have some more support? "

Mr Duthie - Nonsense!

Mr DAVIDSON - It is not nonsense. I put that to the House sincerely. The honorable member for Wilmot (Mr. Duthie) should say to the people in the fruit industry, " Get moving in a practical commonsense way. Prepare your case and put it up to the Government for investigation by a board and the probable result will be that you will receive assistance, but not at the expense of a sister industry ". I commend that attitude to those who are sincerely trying to help the berry fruits industry.

Question resolved in the affirmative.

Bill read a second time, and reported from committee without amendment or debate; report adopted.

Bill - by leave - read a third time.

Sitting suspended from 5.55 to 8 p.m.

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