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Wednesday, 3 June 1970

Dr Everingham asked the Prime Minister, upon notice:

Will he give immediate consideration to the adoption, as from New Year's Day 1973, of The Perpetual Calendar which has been approved by the legislatures of Hawaii and Massachusetts and which could eventually replace, among other calendars, the 15 calendars of India, the 3 of Thailand, the 5 of Jerusalem, and which would have the advantage of equalising and regularising the same pattern of 13 weeks in every quarter, with each monthly and half monthly period starting on a constant pattern of weekdays, intercalating New Year's Day (January zero) and in leap years, a Leap Year Day (July zero) as holidays apart from the weekly cycle.

Mr Gorton - The answer to the honourable member's question is as follows:

No. However, I have asked that developments in other places be examined and T shall bring the honourable member's question to the attention of the State Governments.

Mr Turnbull - This is the way Labor used to run it.

Dr PATTERSON -I am not interested in the way Labor used to run the government 20 years ago. I am interested in the way the Government is being run now. The expenditure of $25m and the reconstruction of one of the most important industries is being considered at 12.50 a.m. This is not the way a government can run any country efficiently. The principal objective of this Bill is to give effect to the Government's policy and intention, made some years ago, to make available a sum of money over a period of years for the amalgamation and diversification of certain types of dairy land. When the Minister for Primary Industry (Mr Anthony) introduced this Bill some days ago it was stated that he intended to make available up to $25m over a period of 4 years for the implementation of the Commonwealth marginal dairy farms reconstruction scheme. Up until the time when the Bill was introduced only 1 State - Western Australia - had agreed in total to the provisions of the Bill.

Before commencing on the actual consideration of the provisions of this Bill I would like to say that the Minister dealt at some length with economic conditions in the dairy industry itself. There can be no doubt that it is in fact quite true, as the Government has said, that there is a very serious economic condition prevailing in the dairy industry today. The latest available figures suggest a rather rapid increase in the production of dairy products. It seems that unless some brake is put on production about 230,000 tons of butter will be produced in 1970-71. That is an estimate on the latest projections. At the same time there is a degenerating average price being paid to the producers and we can see the rising costs spreading at an increasing rate throughout the economy of Australia. In the last 15 years costs on rural properties have increased in excess of 40% and although productivity has increased it has not done so with the same rapidity. And the average price has been reduced. This, of course, is due to shrinking world markets on the one hand and the application of the equalisation pri nciple on the other hand. It is not the fault of the equalisation principle at all It is simply that the more we produce with our 2 sets of prices, the world price and the domestic price, the weighted average price is correspondingly reduced.

The world situation in the dairying industry issomething which must give rise for concern. Huge surpluses estimated at 300,000 tons are held by European Common Market countries. We are faced with a limited market as far as quotas are concerned in the United Kingdom, and there are the increasing practices of lobbying, etc., being displayed in the United States of America as regards imports of primary products not only from Australia but from all countries. All these things are matters for concern. At the same time we have increases in dairy production, in New Zealand, Ireland and other countries which are in competition with Australian exports. We also have the problem of butter substitutes, not only on the Australian market but also on other markets. Substitutes are being dumped by Common Market countries. Butter oil for reconstitution is an example of this. Taken by and large the position of the dairy industry in Australia is rather grim.

The farmers themselves, like all farmers when the average price is reduced, work a little harder, and consequently either through technology, improved management or simply through harder work, they increase production. This is what has happened in terms of per cow or per acre, or whatever the measurement may be. The dairy industry has responded in what might be called a magnificent fashion in terms of increased production to try to beat adversity, but the only result has been and will continue to be a downward movement in the average price paid because the markets are stagnant. What has this meant? It has meant that in this season there is probably a carryover of about 5,000 tons of butter. If the projection that has been made - of $230,000 tons of butter in the 1970-71 season - is correct, we could be faced with something like 20,000 tons of butter in stocks on hand in June 1971.

From my study of the position, I believe that one State - Victoria - is not playing the game. It is quite obvious that there has to be a reduction in production. That is the only way out for this industry. Dairy products are unlike wool, for which we have a market. We know that there are markets for wool at a price. But there are just no markets for surplus dairy production over a certain limit. It would seem that a beggar my neighbour policy is being followed by the Victorian Government in increasing production with gay abandon. Today 85% of our total butter exports are from Victoria and 64% of our total production comes from Victoria. The figure has increased from about 45% in 1960.

Tasmania is contributing to this increase in a minor way, but Victoria is the State of Australia which today, with its beggar my neighbour policy, is causing grave misallocation in the dairy industry. To what degree the Victorian Premier and his Cabinet will take any notice of the danger signs I do not know. But surely the Victorian Premier must realise that what he and his Government are doing is simply reducing the average prices of dairy products, particularly butter, for all States. If the other States are willing to play the game and to see the danger signals that indicate that they must do something about restricting production, Victoria should do the same.

Under the stabilisation arrangements, if the Commonwealth is to underwrite the agreed equalisation price the Australian taxpayers could be up for a very heavy sum of about $20m for the 1970-71 season, in addition to the $27m per annum that is paid under the stabilisation arrangements. I understand that the Minister for Primary Industry has warned the dairy industry that the Government will not underwrite it to that figure. The unfortunate part of the matter is that it will not be Victoria that will suffer; it will be the rest of the Australian States.

I mentioned in passing that one of the great problems is the cost-price squeeze. There can be no doubt that, whether we are speaking of the dairy industry, the wool industry, the beef industry, the sugar industry or whatever industry it might be, this insidious increase in costs in the major export primary industries is having the effect of eating out the very heart of them. What is the remedy? I suppose that a number of things could be done. Whether they are practical, of course, depends on Government policy. The first is reconstruction, which we are considering now, to make the industry more efficient in terms of resource use. Price control of essential goods and services may be one method that will have to be given serious consideration. If prices of essential goods and services continue to rise, it is quite obvious that greater subsides will have to be paid to the export primary industries.

There is also the question of tariff compensation for the major export primary industries. There can bc no doubt that they are suffering a greater disability as each year goes by, with the apparently high tariffs that are being imposed to protect secondary industry. It has been estimated on the best figures I can obtain that, taking into account total cash and imputed costs, the wool industry is at a disability of something like 19% or 20% of total costs, even allowing for the bounties being paid on inputs such as superphosphate. It is not cash cost but cash cost plus depreciation and other imputed cost - a total of an estimated 20% disability. Of course, the only other way is to reduce production. I would think the only way this could be achieved would be by licensing or registering dairy production in Australia as is done in the sugar industry. This, of course, is a matter entirely for the States. It is relatively easy to do this in the sugar industry because only one major State is concerned - Queensland. Northern New South Wales comes into this in a minor way. But production can be controlled in the case of sugar most effectively.

Prices control is a matter of State policy but the wage earner has often been blamed for the increase in costs in Australia. However, the wage earner has to go to arbitraton to gel his increase in wages to offset the increase -in living costs. The export farmer in the main has to do one major thing - hope that world prices will rise or that world markets will expand. Contrast that with one of the main reasons for increased costs in our manufacturing sector - tariffs. We see in this area that the major manufacturing industries are either monopolists or oligopolists and. irrespective of the level of profits, are able to increase the pr-ces of their commodities without any reference to arbitration or any authority. We can cite for example the record profits of the Broken Hill Pty Co. Ltd. Despite these profits the company can go ahead and still increase the price of steel. Niether the wage earner nor the export farmer can do this.

The dairying industry is striving desperately to expand its markets throughout the world. This is a pretty tough battle because most of the developing industries have particular policies of self-sufficiency and when they produce above that self-sufficiency they engage in all sorts of practices which amount to dumping of their surplus production. One of the markets which Australia is trying to break into is Japan. Some measure of success has been achieved in this direct on in regard to the export of cheese. But it would seem that the growing influence of Japanese policies on the viability of the Australian economy must be given pretty careful consideration because almost every industry is trying now to break into the Japanese market in a major way. Whether we like it or not Australia is becoming more and more dependent on Japanese markets in order to earn our vital export income which is essential for economic growth. Whether th:s be export income from minerals or primary industries we are becoming more and more dependent on Japanese policies. The one compensating factor is that we know that Japan wants our products just as much perhaps as Australia wants Japan to buy its products. The shrinkage of world markets is not only in dairy products.

The downward trend in commodity prices is causing very serious repercussions throughout Australia in the rural sector and this Bill is a positive move not only to get greater efficiency in primary industry in terms of resource use but also to set up machinery which I hope will be followed by other industries in Australia because I think that in time if primary industries do not improve their economic character in terms of income earned it might be necessary to set up a Federal reconstruction Board. For example, one-quarter of Queensland today is devastated by a drought that has lasted for 3 years in many areas. Goodness knows how many bankruptcies are imminent in Queensland. I am, oi course, taking an extreme case. There is one thing in relation to the question of the expansion of markets in the dairy industry which 1 cannot understand. 1 notice that the Minister for Primary Industry is sitting at the Table. 1 wish to direct a question to him. The dairy industry is in serious trouble, lt is expanding. The industry is desperately in need of a market for all its cheese. Perhaps Japan could provide that market. But why in heaven's name have we to put up wilh cheese imports? At present close to $5m worth of cheese is imported.

Dr PATTERSON - Because wc can make it as good. The honourable member for Bradfield is about the biggest knocker in the Parliament. Last night when I was talking about the Bundaberg irrigation scheme we had to listen to him knocking it. He is now walking out of the chamber. As soon as we speak about primary industry he moves out.

Dr PATTERSON - 1 will admit that he is a Liberal member. I ask in all seriousness: What is the reason for imposing a 5c duty? Why should we not impose a complete embargo on the importation of foreign cheese? Surely this is one way in which we can help the dairy industry? I do not accept the fact that Australia cannot produce cheese of a quality which is equivalent to the cheese produced in Scandinavia, Czechoslovakia or the Baltic states. Even if we are not able to produce cheese which satisfies the eating habits of some people, as far as I am concerned as an Australian and one who supports the dairy industry in Australia, I can see no reason why the Government should not alter the policy which has been in force for something like 30 or 40 years. The Government should, for the time being at any rate, place an embargo on the importation of cheese. Only $5m might be involved, but $5m is important to the dairy industry at present.

The main purpose of this Bill is the amalgamation or diversification of dairy lands in the so-called marginal dairy producing areas of Australia. These marginal areas have been defined in general as being in the southwest of Western Australia, the southeast of Queensland and northern New South Wales. These areas have been defined as marginal areas for a number of reasons. From a physical or land use point of view the land itself is inferior in terms of dairy efficiency. The farms on this land may be highly efficient in terms of, say, production per cow, or lactation per acre, but they are too small. As a result, they are subject to what the Government has rightly called economic strangulation. There may be something wrong with the management of these farms or there may be a lack of finance. Whatever the conditions may be, there are in these marginal areas farms which have been defined as 'marginal farms'.

The principal objective of the Bill, as defined, is to enable the low income dairy farmers who voluntarily wish to do so - the word 'voluntary' is, of course, of extreme importance to the whole working of this Bill - to leave the industry and receive a fair price for their land and improvements. Then, after writing off redundant assets, the land and useful improvements will be made available to other farmers so that those other farmers can build up their properties to a viable farm level regardless of whether it be for more efficient dairying or beef cattle purposes, afforestation or whatever it may be. That is the basic purpose of the Bill. It is a good objective. A marginal dairy farm has of course, to be defined within the terms of the agreement whichwas signed. In the case of the agreement which was signed between Western Australia and the Commonwealth it must be a rural property and have a minimum of at least 20 lactating cows. At least half of the gross income of the farm must be derived from the production of milk and, in the opinion of the Stale authority operating the scheme, the farm, if used wholly for dairying or purposes incidental thereto, is not really capable of producing to the level agreed between the Commonwealth and the State. In the Western Australian agreement the maximum level, in terms of this criterion, is taken as 12,000 lb of butterfat per farm per annum. Given this objective, and given the definition of a marginal farm, the operation of the scheme is then a matter ofa reentent betweenthe State andthe Commonwealth. Of course, I should think that each agreement with each State would be different, depending on circumstances.

One of the most important provisions in the Bill is to enable marginal dairy farms, within the definition, in the whole milk zone to qualify. 1 suppose that in theory and in practice even in the highest dairy production areas in Australia one will still find some degree of marginality. This is usually the case in respect of most agricultural pursuits. On the perimeter there are farms that should not be engaged in dairy production but would be better employed in, for example, beef production, forestry operations or something else. One of the criteria for defining marginal farms in the whole milk area relates to the value of the milk at manufactured prices. It is important that this be stressed. Low income producers within the fluid milk sector are eligible to participate in the marginal dairy farm reconstruction scheme. At one stage there was some doubt that the possession of a milk quota might exclude a person from the scheme. I am glad to see that if this doubt had any substance it is removed in the Bill. If a dairy farm is marginal, the farmer voluntarily can sell out under the provisions of the legislation.

Another important provision relates to the disposal of assets which are redundant. The incoming farmer will not be burdened with redundant assets. It is easy to criticise, but I would suppose that the most important criticism of the Bill is that it is not going to solve or even scratch the surface of the problems of the dairying industry today. I do not think it was designed to try to solve the great marketing problem. It was designed for one objective - to make more efficient use of resources that are employed either for the dairying industry or some other industry. If we can get greater efficiency in primary industry in terms of resource use surely we are achieving something positive. For many years Western Australia has been a net importer. Although it is claimed that one of the deficiencies of this legislation is that it may result in increased dairy production in Western Australia one cannot blame Western Australia for wanting to be self-sufficient in dairy production, even though in respect of the whole of Australia there may be an increase in production.

My specific criticism of the Bill is that it does not make provision for finance for the incoming farmer; it provides only for the outgoing farmer who can voluntarily sell his cattle and plant and receive a fair market value for his property through acquisition and compensation. But if his property is amalgamated with another property, what guarantee have we that the incoming farmer to whom he sells his property has the development finance to build up the farm? This is probably the main criticism that I can fire at this legislation. On the one hand the Bill is objective, but on the other hand it does not provide, other than through normal banking channels, sufficient money to enable a farm to be built up to a viable unit, whether it be for beef cattle, more dairy production or even, let us say, forestry.

I feel, however, that the Bill makes a positive step in the right direction. Some people say there should be no reconstruction schemes, that the dairying industry should be allowed to look after "itself, that the normal laws of supply and demand will in themselves straighten things out. I do not share that view. I feel that the primary producers, particularly the dairy farmers and their families in marginal areas, are so entrenched in dairy production, which is their way of life, that even with this voluntary system it will be very difficult to entice many of them from their farms. We should not criticise- them for wanting to remain on their properties because this is their way of life. They want to live in this way. Although possibly they may not receive as much as the basic wage, many of them are happier than other people who work in the city. A good point about the Bill is that it provides for the voluntary surrender of a property.

We must recognise that in marginal areas there are very large tracts of land that with known technology and within the known economics of dairy production simply will not be able to yield the required productivity per acre or per milking cow to provide a family with a reasonable living. I refer as an example to the south west of Western Australia, an area which has had a chequered history. It has never been much good in terms of efficiency so far as dairy production is concerned, although I hesitate to use the word 'efficiency'. The dairying industry in that area has not been able to use resources efficiently - put it that way. In fact the land resources in the south west of Western Australia have been grossly exaggerated in terms of soil fertility and productivity. There has been an underestimation in relation to the difficulties and cost of clearing and maintaining land in that area. Dairying was established in the south west of Western Australia before the introduction of phosphatic fertilisers and the subterranean clovers. Much of. the land is bad enough now even with the use of phosphate and subterranean clover, so one can only imagine how bad it was when the producers relied on native pastures in the sandy, light texured country before the pasture revolution came in. Scheme after scheme has failed in the south west of Western Australia. After the first World War the British Government financed migrants to come to the south west of Western Australia and a group scheme was started in 1921 at Manjimup. That scheme failed. I suppose the basic problem in that area now is that there is simply not enough good pasture on each dairy farm.

I suppose that would be the simple way of defining it. There is just not enough feed over the 12 months of the year, tak:ng into account the seasonal nutritional stress, to give the required high plane of efficiency necessary on a good dairy farm. In northern New South Wales and south eastern Queensland we have the other 2 marginal areas of dairy production. In these areas the problems are reasonably well known. They are nutritional deficiency and, in south eastern Queensland, there is often the water problem. I suppose the best indicator of the marginality of these areas is the big scrub area of the northern part of New South Wales where on many farms there is a very low lactation period of around 5 months, according to the New South Wales Department of Agriculture, with an average butter fat per lactation of only 200 lb. Translated into production per acre, this is around 78 lb per acre per annum. In the Maclean-Clarence area it is approximately the same.

South eastern Queensland is a major marginal dairying area, I cannot understand why the Queensland Government has not been part of the scheme because this is one area that will greatly benefit by the introduction of this reconstruction scheme. In south eastern Queensland there are large tracts of country which, no matter what technology is applied, are simply not dairying country. The quicker the dairying industry realises this the better because with a dry winter and dry spring and the recurring droughts and with known technology and water conditions there is just not the spread of lactation to make dairy farming efficient. On the other hand, there are large areas of south eastern and central coastal Queensland where marginal dairy farms exist which are capable of achieving high levels of dairying efficiency through reconstruction. This is what is needed. We need to be able to achieve larger farms, to have access to finance and to put the level of efficiency in south eastern Queensland on a higher plane.

Dr PATTERSON - I agree with the Minister. I deal briefly with south-eastern Queensland finally because this is an area of some importance to me, being a Queenslander, and an area which I know reasonably well. As I said before, from my knowledge of the area and the work with which I have been associated in the area, I know that there have been very important breakthroughs with respect to pastures. The main emphasis over the years in pasture research in this area has been the search for tropical legumes which would produce a cheap source of nitrogen for pasture improvement. The dairying areas did not have this. Unlike Victoria, South Australia and Western Australia they did not have the tropical or subtropical legumes which are essential to sound dairy production in this area. First of all. a legume has to be found. It is necessary then to know the fertiliser requirements of that legume. It has to be nodulated with effective bacteria for the nitrogen fixation and it has to be grazed efficiently. Research is now showing this and given this knowledge and this type of scheme in Queensland there can be a very marked improvement in the plane of efficiency.

I would like to deal briefly with this problem because it is most important to reconstruction in Queensland. Queensland has a small scheme for trying to promote increased production through pasture work. But I have a feeling that nitrogen will be one of the most important sources of pasture growth in these areas of Queensland in the future, particularly now that large plants, such as Austral Pacific, are coming into stream. Research has shown that even in the worst soils in Western Australia, clovers will fix something like 40 lb to 200 lb of nitrogen per acre. Research in Queensland, which before was most sceptical of finding any tropical legumes which would fix nitrogen, is now showing that this can be done. In fact, it was only recently that serious doubts about the value and efficiency of symbiotic nitrogen fixation was expressed. But the breakthrough now in the Departments of Agriculture and the Commonwealth Scientific and Industrial Research Organisation is such that there is tremendous potential with sub-tropical and tropical legumes. 1 will mention a few of the legumes which I saw only a few days ago in some of the dairying areas. I saw these legumes in areas Where at the present time one farmer will have a lactation period of approximately 4 months, while his neighbours who have capital, imagination and management have a lactation period of approximately 84 to 9 months. This has happened through the introduction of such legumes as desmodium, indigofera. glycine, centrosema and stylosanthes. The CSIRO is now developing a strain of perennial Townsville lucerne. With the siratro and setaria pastures there is a revolution going on in some of these areas which previously were pronounced marginal dairy farms and which will remain marginal dairy farms until we can get some semblance of sanity in the Queensland Government by its accepting positive and sound schemes like these.

Pasture research in grasses is just as impressive. I would say that at the present time in the coastal areas, the most important and spectacular grass is the pangola grass. With heavy application of nitrogen, experimental work is showing yields of dry matter ranging, on the latest experiments, between 3,000 lb and 23,000 lb of dry matter per acre.

Dr PATTERSON - It could be used for beef cattle. This is possibly more efficient. The aim of this Bill is to encourage a more efficient use of resources. If we can get efficient use of resources, surely we are on the right track. I was talking about the pangola grass. In theory, anyhow, it means that 20,000 lb of dried matter per acre is equal to 3 beasts per acre. You are not going to get anything like that under commercial conditions. But this was land that previously was carrying 1 milking cow to 15 to 20 acres.

I do not want to say anything more than that because I am in favour of the Bill. I think it is a positive step in the right direction. But I regret that it has taken 3 years to come to the party, for example, so far as the State of Western Australia is concerned, but at least it has now come to the party. After all, the terms and conditions provided in this Bill are favourable, so far as any State is concerned. No doubt the States are holding out for more money, but I would think that now that the agreement with Western Australia has been signed, if the other States have any sense at all they will come to the party very fast and get their share of the money before the period of 4 years expires. There is a limit to the time that any government can wait.

Dr PATTERSON - The Minister for Primary Industry has informed me that Tasmania has agreed. I hope that Queensland will hurry up and agree, because it is one State that will benefit from this legislation. No Government can wait forever until the States negotiate and play behind the scenes to try to get a better deal from the Commonwealth, when in fact they have probably got the best deal possible. Surely they do not want the whole lot as a grant. After ail, they are getting half of it, if not more than that, in the long term as a grant. The main criticism that 1 have from the point of view of this specific Bill is that I believe it should have made some provision for the development of the resources for the incoming farmer. The Minister did mention the possibility of rehabilitation or retraining. This is an argumentative subject. Dairy farms are not cheap to buy even in the marginal areas. I do not know what the average price would be; prices would vary. But if a dairy farmer voluntarily sells his farm, unless he is heavily in debt, he and his family walk out with a substantial amount of money. What is the difference in principle between the position of the dairy farmer and that of the coal miner when the mine closes down, or the shop keeper in the corner shop, or whatever the case may be? If the dairy farmer voluntarily decides to sell his farm under favourable conditions and then a government is going to train him, surely it could be argued also that a government should train everybody who is forced out of a job. There is a limit on how far one can argue on this score.

The main arguments I have with the Bill are, firstly, that it does not solve the main problems of the dairy industry. It is not designed for that. We admit that those problems are concerned with marketing. Secondly the Bill does not provide any finance to develop the resources efficiency on the flow-through of the incoming farmer. Mr Deputy Speaker, the Opposition supports the Bill as a positive move to overcome the sort of problems that we find in Western Australia. It is up to New South Wales, Victoria and Queensland to do something objective in respect of this matter in order to achieve at least greater efficiency on marginal dairy farms.

Mr Robinson (COWPER, NEW SOUTH WALES) - That is not true.

Mr GRASSBY - Mr Deputy Speaker,I am not quite sure that there is total comprehension at this hour of the morning by all honourable members present. I refer them to the Hansard report of the debates in the Legislative Assembly in New South Wales. 1 suggest they study them.

Mr GRASSBY - I am glad to see that the honourable member for Mallee is awake. What do the dairy farmers say? At. the Victorian Dairyfarmers Association conference held in Melbourne the Minister for Primary Industry in fact called for voluntary restriction on dairy production. There was a special report on this matter. It was pointed out, of course, that the call for restriction was too close to the 1970-71 season and was an extremely difficult operation for the dairy farmer himself to undertake. Surely this is another example of a crisis being allowed to develop and then a panic button being pressed. The Minister has brought into the House a measure to act as a guide to the dairy farmers and in effect to say to them: 'Well now, let us restrict. Let us now cut back. We have to do it. You are going too far.' I am wondering whether the panic is justified. What are we talking about? We are talking about 5,000 to 10,000 tons as against 230,000 tons of production. Is this a reason for panic at this stage?

This panic has emerged from a background of extensive imports of cheese and other products, of some milk factories looking for products and of doubt as to whether the maximum effort is going into overseas sales and export activity. Let us have a look at some of the overseas challenges. One example that comes to mind is a possible market in Peru. Not so long ago it was reported that New Zealand had rushed a team to Peru for exploratory talks last September. The General Manager of the Australian Dairy Produce Board visited Peru in October last. There was obviously a race for the market there. The interesting thing is that the Reserve Bank apparently did not heed the need for some flexibility and supporting credit to enable us to get orders which we could have obtained with support at government and banking levels.

Are we doing all we could do as a nation to support the export of products which we can produce very efficiently in many areas? We have seen the spectacle of overseas products hitting hard at our local products. Government credit policies are hamstringing overseas sales. Some processors have ben saying that they are short of dairy products. We have unlimited markets in Asia for processed products provided there is some government enterprise and efficient supporting services to enable us to exploit them. Instead, there is no talk by the Government of doing more in that regard. In fact there is talk of a cutback.

It is true that some reconstruction must take place. Surely it is an abdication of national leadership that we have State and Federal schemes that appear to be diametrically opposed in their objectives. Surely it is time that we had some real national leadership in this industry. We could begin by recognising that we want and need the industry. We should review the whole of the support programme in relation to market needs. There is also a need to consider the restructuring of the total support to ensure that there is maximum production not only of what we need at home but also of exports that we could develop with proper government backing and enterprise. In other words the desire of the industry should at least be matched by the enthusiasm of the Government.

We should certainly resolve the conflict between State and Federal programmes and, above all, there should be long term planning to replace the panic button pressing operations. If honourable members tonight need an example of confusion of planning at State and Federal level, surely we have it in the tuberculosis and brucellosis eradication programme agreed to by the Australian Agricultural Council. The scheme completely overlooked the southern Riverina, an area which is recognised everywhere as being amongst the most efficient dairy areas in Australia. That area was ignored. What kind of national decision is that? It is quite typical of the fragmented approach.

Mr GRASSBY - There is a certain amount of levity in the House, lt is approaching 2 a.m.

Mr GRASSBY - I suppose we could be excused for the levity because the measures debated this evening - Commonwealth-State relations and the reconstruction of the dairy industry - are considered of such minor importance that they have been debated after midnight and not before. Therefore I can understand some levity. At present the problems facing the industry are not a cause for levity. There is a case for coordinated national decisions not bom of panic but based on sound integrated planning with both Federal and State authorities playing their parts.

Mr GRASSBY - I welcome back the honourable member for Angas, who has awakened at 2 a.m., to the land of the living. I point out very bluntly and very seriously to him that at present, instead of talking eternally of cutbacks, we should talk in terms of expanding exports and of more active support by the Government. Honourable members opposite can say what they like about the industry at present, but it is able to do only a certain amount.

Mr GRASSBY - That is right. If their approach to dynamic overseas selling and improvement in supportive services is that it is a complete joke, I think I agree with them that their efforts are a joke. Many honourable members opposite rise in the morning with Queen Victoria's concepts of trading and with that the timing of aproaches to matters that the Government has under discusion. I think it would be a very good exercise to look at the conflicts, to which I have referred this evening, between the State and Federal authorities - conflicts which are made obvious by the fact that it took the Government years to bring this legislation into the House. Many people in the dairy industry have resented being treated in a cavalier and a casual fashion when in fact, they have made a major contribution to the economy of the country. I have great pride in representing some of the people who have made that contribution. I suggest that the measures before the House tonight are part of a fragmented and disorganised approach to an industry which should enjoy a high priority in the considerations of government. I do not regard this measure as at all adequate. My colleague, the honourable member for Dawson (Dr Patterson) and I accept it as an instalment on something that should be done and certainly as only a step and not an entire programme. We will await the next series of measures which will surely recognise that there is a' future to an industry which has contributed so much, in which so many people are involved and on which they depend.

Mr Grassby - Why?

Mr GILES - The honourable member for Riverina was a member of the New South Wales Legislative Assembly. He should know more about the subject than to ask why. The reason was that the States could not see that such an agreement had benefit for them at that time. I will1 touch in a little while on one of the reasons why my own State was a bit negligent in getting into the act. lt is totally unfair for anyone to rise in this House as the honourable member for Riverina has done tonight and to try to pretend that this Government has been tardy in introducing this legislation. That is just about as dishonest as his latest effort with the provincial Press some time ago. He cannot hold his head very high in this place as long as he adopts these sort of tactics. I invite honourable members to look at the conditions laid down in the second reading speech delivered by the Minister for Primary Industry (Mr Anthony). This speech also covers the agreement. I want to get straight the objectives of the scheme. Let me remind honourable members that this is the matter that we should be discussing, not some of the other things that have been raised. I will read the objectives. They are:

To enable low income dairy farmers who voluntarily wish to do so, to leave the industry and to receive a fair price for their land and improvements: and, after the writing off of redundant assets, to make the land and useful improvements available lo other farmers so as to build up their properties to a viable family farm level and, where possible, diversifying the pattern of land use.

Those are the points of the scheme which should be considered in this debate. But underneath these points there are conditions that apply to this scheme and to this agreement.

The first condition deals wilh the definition of a marginal dairy farm. In what I might suggest is a rather flashing glimpse of the obvious the second reading speech states:

1.   lt must, of course, be a rural property. The conditions continue:

2.   It must have at least some minimum number of cows. It is proposed to use as a minimum 20 lactating cows.

This eliminates those farmers who are merely running a small number of cows as a sideline.

That does not seem to me to be a satisfactory definition although it maybe in the agreement. Whether '20 lactating cows' means 20 potential milkers or 20 cows with half a dozen dry. I do not know, lt is not spelt out here. Nor indeed, if I could get on to a practical issue, does that definition indicate whether a forward springing heifer is or is not a lactating cow. 1 presume that these are details which can be fixed in the agreement and are part of the rights and responsibility of the State to introduce to the Commonwealth Government as part of the agreement between those 2 parties.

The conditions as set out in the second reading speech continue:

3.   At least half of the gross income of the farm must be derived from the production of milk or cream sold at the manufacturing price.

Now, I am not quite so amused by this part of the agreement. Perhaps the House would not mind if, for a minute, I spoke of the city milk scheme as it applies in South Australia. The first thing that I should say is that of all the schemes that have aimed at producing milk at a low price for ready consumption by people, the South Australian scheme leaves most others well in the lurch. It is a scheme that has benefited the consumer. Secondly, it is a very economic scheme because of the adjustability of the boundaries within which dairies are licensed.

Let me outline as simply and as briefly as I can the basic principles of the scheme. Along any radius from within the boundaries of the scheme, which are in effect adjustable, dairies are licensed according to the standard of hygiene maintained at the dairy by its owner. In times of plentiful milk supply - shall we. say spring in the southern States - milk is drawn from the smallest circumference commensurate with the demand for milk in the city at that time. Although the milk is drawn from a small circumference only, the dairies that are licensed right out lo the periphery of the licensed area all share in the scheme as though they had sent their own proportion of milk into the city market. The price is equalised at that level. In autumn in the southern States when there is a small supply of milk due to seasonal influences and lack of feed the scheme might pull milk from the larger area, of licenced dairies. When spring comes there is a big supply of milk and it is hauled only from the area to meet the demand for milk by the consuming public in Adelaide. The scheme has the economic advantage of hauling milk the minimum distance required and yet it equalises payments for all licenced dairy farmers within that area. But there is another side lo the picture, lt is very important. The scheme is geared to a 4% butterfat component. In effect the percentage test, if it is the same as it was some years ago, is slightly higher than 4%. So it is equalised in another way. A uniform percentage of milk exists in terms of butterfat sold to the consumer. I mention this because I think one matter we should keep firmly in mind is that cheese sales over a 10-year period have been soaring whereas by and large processed milk products have been saleable except for a short period. There is a world surplus of butter amounting to about 500 million tons. 1 think this House has heard me speaking on similar subjects before. We should be looking at ways in which we can dispose of surplus butter. If every capital city in Australia had a similar scheme to that in Adelaide which is based on 4% plus milk most of the surplus butter in this country would disappear within a reasonably short lime. My mathematics are not precise on this but it would make a tremendous difference to the surplus butter sitting in the channels of industry at present. 1 ask the Minister to use what influence it can through the Australian Agricultural Council to suggest the scheme as an economic one, a cheap one which suits the consumers and one that can dispose of some surplus butter. Is this not a viable scheme for this Government to suggest to State governments - not to dictate to them as the Opposition might like to do but to suggest and to point out that it might have advantages for their particular areas.

Condition 3 which I have previously quoted leads me to the real cause of complaint which I want to air tonight. In spite of the fact that there is so much economic sense in the type of scheme- I have just described to the House, those capable of absorbing the facts will readily perceive (hat as the prices are equalised there is not a dairy farmer in the area who is eligible to take advantage of this reconstruction scheme. South Australia is about nine-tenths desert. Our viable agricultural area is not very great and it is logical to suppose that most of the dairy industry exists in the hills and areas surrounding the hills near Adelaide and down in the south eastern area. I maintain that a very large share of the dairy industry in South Australia has been precluded from the scheme. What economic nonsense is this? On the one hand wc have a scheme which is functional, efficient and economic for people who have to buy milk. On the other hand it is a very fair method of equalising payments irrespective of where the milk is drawn from. It is not a method that produces the quite ridiculous returns obtained in the elaborate quota system operating in Sydney, that has done nothing but increase in an artificial fashion the price of milk to consumers to an appalling extent and is not viable under any economic criteria. In spite of the fact that this is a good method it is totally precluded from any of the benefits of the scheme.

I regret to have to say that I hope that the Minister will give me some assurance that he will meet as soon as he can the new South Australian Minister for Agriculture, Mr Casey, who comes from the arid north, so that there will be a chance to explain some of these things to him - to see what can be done about this - because to my way of thinking it is certainly quite a ridiculous situation. The fourth condition as set out in the second reading speech, is: in the opinion of the State authority operating the scheme, the farm, if used wholly for dairying or purposes . . .

That condition makes it quite plain that the Government of a State has the right to negotiate within certain limits with the Federal Government the various conditions applying to that State. I hope that this will happen because if the present Government of South Australia does not succeed in introducing some measure of relief into areas such as the one in which 1 live, where some farmers still have earth floors in their houses, there will be a grave miscarriage of justice because of the fact that a proportion of their income in that area, due to the city milk price being higher than the manufacturing price, takes the ratio beyond the SO-SO set down in this Bill as the minimum condition.

I have not sufficient time tonight to deal with the other factors, but that is one of them. The reconstruction factors must be seriously discussed in relation to the difficulties of the dairying industry in this nation. I applaud the Government for bringing in this one factor. Although there are many other factors I wish to discuss I hope that the difficulties I have highlighted tonight can be resolved for the sake of many marginal dairy farmers within that efficient city milk area and surrounding outlets.

Mr Garland (CURTIN, WESTERN AUSTRALIA) - The Western Australian Government was the first to co-operate with it.

Mr KIRWAN - That is right. The Minister in introducing this Bill said:

This Bill will give effect to the Government's intention to make available up to $25 m over a period of 4 years for implementation of the marginal dairy farms reconstruction scheme. Tabled with the Bill is an Agreement between the Commonwealth Government and the Government of Western Australia which will come into force immediately this Bill is enacted by Parliament.

The Minister has said what the Bill will do. He went on to say why it was necessary, and I wish to quote a few short extracts from his speech so as to bring them into context with my remarks. He said:

The sum total of a limited home market and an over-supplied world market means that, despite the continuation of the Government subvention of $27m per annum for butter and cheese, the equalised return to producers declined from 47.1c per lb butterfat in 1964-65 to an estimated 41.3c for the current year. Over the same period costs have risen by 161% according to the Bureau of Agricultural Economics, index of prices paid by farmers. The net farm income of producers in the dairying industry has suffered severely.

In order to emphasise the figures I will read part of that again:

.   . the equalised return to producers declined from 47.1c per lb butterfat in 1964-65 to an estimated 41.3c for the current year. Over the same period costs have risen by 16J%. . . ,

The Minister also said: . . there are a substantial number of dairy farmers who. due to inadequate farm size or capital limitation or to a variety of other intractable problems, have not been able to keep pace with the changes that arc going on in the industry. The economic examination of the dairy industry conducted by the Bureau of Agricultural Economics in 1964 shows that the average net farm income throughout the industry in Australia over the period sun-eyed - 1961-62 to 1963-64 - was $2,400. At the time, some 55% of all dairy farmers earned a net farm income of less than $2,000 per annum. In the manufacturing sector of the industry, that is among those producers who do not have access to the higher priced fluid milk market, the situation was even worse.

The Minister went on to outline what the Bill is designed to do in order to effect changes. He said:

The objectives of the Commonwealth scheme are twofold: To enable low income dairy farmers who voluntarily wish to do so to leave the industry and to receive a fair price for their land and improvements-

I believe that that is a laudable aim - and, after the writing-off of redundant assets, to make the land and useful improvements available to other farmers so as to build up their properties to a viable family farm level and, where possible, diversifying the pattern of land use.

The reason why I chose to read those extracts is that they describe very well the situation that, exists in my electorate. The incomes that are described would be very close to the incomes received by people in my electorate. 1 would say at this stage that my electorate is probably the one that is most affected by the Bill as it stands at present. I believe that I have at least 90% of the dairy farmers in Western Australia in my electorate and, as the Bill stands, Western Australia is the only State that has chosen to come in under it.

Mr KIRWAN - This Bill relates just to Western Australia. So, as the Bill stands at this stage, my electorate will benefit more than any other. The honourable member for Dawson (Dr Patterson) has already mentioned the group scheme that started in Western Australia. I believe that there are still many people between Manjimup and Denmark and in the south west corner of the State who suffer from the effects of the group scheme. I refer to those whose parents or grandparents came there from the cities of England, They were enticed to come by the Western Australian Government, through seeing pictures of settled paddocks somewhere other than in the south west. There was no big timber in the pictures.

They were enticed to go there. They were given an adze and an axe and put into groups to clear the karris and jarrahs of that area. Anyone who has been in that area would wonder that those people started at all. Anyone who has read any of the stories of the times know how many of them committed suicide and how many of them were mentally and physically broken and, therefore, will realise that those who continued were most tenacious and also that they must have overcome tremendous difficulties. As 1 have said, many of the people there are still endeavouring to overcome difficulties. it is true to say that their incomes are as low as those described by the Minister in his second reading speech. It is also true to say that many of them, in an effort to clear the land at tremendous cost, as the Minister also said in his second reading speech, go to work in the timber mills. That means that the wife is left at home to do the work on the farm and that the husband, the wife and the children have to milk the cows before they go to school and work and have to milk again when they come home from school and work. One does not have to have a very good imagination to know that the children as they go through school are never able to realise their true potential. We have a grave social problem in that as soon as some of these children turn 14 or 15 years of age they are taken out of school to go on to the farm because that is all they know. They have not been able to get out of this spiral.

I believe that this legislation will mean very much. It will give quite a glimmer of hope to people in this situation who want to get out of dairying but at the present time cannot afford to do so. It will also bring a glimmer of hope to those on neighbouring farms who could not without this legislation buy up the farm that is left. They could not, without this Bill, afford to buy the capital constructions or pay for the houses, the dairies or anything else that was on the property that they would not actually require but would have to buy. I believe that the Bill will benefit those who wish to get out of the industry as well as those who will be able to run an economic unit if they are able to. increase their acreage of cleared land. It is "true that some of these farmers are still trying to dairy on the land that was cleared in the group days. Some of them are trying to subsist on areas of about 75 acres of cleared land. This is why they have to work in the mills and do the things that I have described.

Because of the lateness of the hour I will not say more than that. I repeat that I believe this proposal will be beneficial in assisting people who choose to take advantage of the legislation. I hope that it will be followed by other beneficial legislation which will not take so long to come into this place as has the legislation now before us. I hope also that some thought will be given to rehabilitation schemes for the children who have never been able while living on dairies to develop their true potential and that they may have the opportunities that were given to ex-servicemen after the war to find what they can do in the fields of trades and professions so that they can take a worthwhile and useful place in the community. I hope they will enjoy the benefits that their parents may now be able to enjoy by getting off the farm with some money in their pockets or by taking over a neighbouring farm and so having an economic unit to work on. I look forward to seeing the effects of this Bill. I anticipate that many of the effects will be laudable and I commend the Minister for the quality of his speech and of the Bill and say that the only reservation I have is the length of time it has taken to bring the measure to this point.

Mr Foster (STURT, SOUTH AUSTRALIA) - They passed the buck. They will not accept their responsibilities.

Mr DUTHIE - Yes. The Minister is getting out of it very easily. He is providing the money from this source but he is not having the problems. The problems will be with each Stale department. The Minister in his second reading speech said:

The next feature mentioned in the Bill is that the agreement must include provision that the outgoing man will receive current market value for his land and structural improvements.

Who will decide on the correct current market value for his land? I feel there will have to be tribunals set up within each State to handle some of the vicious financial questions that will arise out of the implementation of the scheme, in that respect there are one or two other interesting features that I noticed as 1 went through the details of the scheme and which the poor old States will have to decide. I think that the Ministers for Agriculture in the States which adopt this scheme will have a great deal of extra work and worry placed on their shoulders when decisions on these questions have to be made. I agree with the provisions in the Bill which have been outlined by the Mininster on pages 9 and 10 of his roneoed second reading speech. They are very good provisions indeed. But the State has to decide some of these very difficult and tricky questions. For this reason the State will be a little wary in accepting the scheme. In conclusion I refer to the following words in the Minister's second reading speech: in the opinion of the State authority operating the scheme, the farm, if used wholly for dairying or purposes incidental to dairying, is not reasonably capable of producing to a level agreed between the Commonwealth and the State.

A standard of about 12,000 lb of butter fat is fixed, and there is a variable between 12,000 lb and 15,000 lb. This is another delicate question that will have to bc decided by the State authority. So, in spite of the fact that the Commonwealth is to provide $25m over 4 years, the State is responsible for implementing the scheme. The Commonwealth is to charge 6% on half the money that is repayable to it, and it is hoping that from the way in which the States handle the scheme, they will receive sufficient for administrative purposes to cover possible losses.

There are a lot of ifs and bum about the scheme, and we will have to see how it operates in Western Australia and Tasmania to find any weaknesses in the scheme. I expect that amendments to the scheme will have to be made within 2 years. That will be all right. Trial and error is a good thing, provided that in the process we improve the lot of the farmer who is in need of assistance. I have a few reservations about the scheme, particularly on the production side. But all in all it is something new to try. I think that we should give it a go and if in 2 or 3 years it is a failure, let us bury it very deep in the earth. However, I commend the Minister for his persistency in advocating the scheme. The overall aim of the scheme is good. That is why the Labor Party has approved of it. But, as I say, we have reservations which are only natural in schemes which are so revolutionary and new as this one is.

Mr Robinson - You are dealing with the wrong Bill.

Dr EVERINGHAM - I am dealing with the right Bill. The honourable member for Cowper seems to think that only sugar, wheat or wool can bc treated in this way. Every primary product can be treated in such a way that a subsidy can be given for a basic amount of production. The subsidy is sufficient to maintain the producer and assure him of a minimum income. It is high time that that was done in the case of dairying instead of subsidising total production. Regional boards can take this action. They can sst a ceiling on quotas and can take into consideration the size of a family depending on the industry, the nature of the region and the type of climate, and anything else that affects the expectation of income and the capacity and commitments of individual producers.

Another proposition I could advance is that the remainder of production be purchased by the national authority to go into a No. 2 pool, to be sold at world equity prices as soon as the subsidy could be abolished. I am sure it could be tapered off in such a scheme in which disincentives will turn rural production from dairying, so long as the subsidy is tied around the necks of the taxpayers and not helping to induce self respect and self reliance in dairy farmers. The producers could be given loans at low interest rates to improve their productivity and to assist them to diversify their production, in addition to the proposal to phase out marginal farms.

I do not wish to engage in glowing eulogies on the good points of the Bill. I accept and support the measure, but I suggest that there should be a co-ordinated approach to this recurring problem in all rural industries. As 1 have said time and again in this House there are basic principles. The small producer should be protected. We do not want the big producer to be oversubsidised. These basic principles should be enunciated by governments and not by producers. If the producers will discuss these points with tha Government and accept them, as I feel sure they will, the blame for not putting them into effect will lie with the Government and not with the industry.

Mr Robinson - Is this the waterside workers' viewpoint?

Mr FOSTER - The waterside workers have faced for a number of years in their industry a problem which is closely related to that which we are discussing tonight. I refer to redundancy. I ask members of the Country Party what they are doing for these people. Are you providing any protection for them in respect of redundancy? You are asking them to commit rural suicide. Members of the Country Party may well laugh. The fact is that you have misguided and misled them. If the trade union movement was confronted with a similar position of having its membership threatened with the loss of their livelihood, it would most certainly be looking after it members better than the Country Party is looking after the people it purports to support. I invite the honourable member for Mallee (Mr Turnbull) to march in Adelaide next month and join the panel of speakers if he wants to do so. He can then go his hardest, and so can the Minister.

The Government is approaching this problem in the wrong way. If you had not suffered from a lousy inferiority complex over the years in respect of overseas trade, and have been almost stupid in not appreciating the bargaining position we had, and if you had not sat as you have sat for almost 20 long years without displaying any initiative at all to gain overseas markets for a whole range of products, we would not need to be discussing this problem ' tonight. Earlier today you talked about freight rates. You have done nothing at all.

Mr DEPUTY SPEAKER (Mr Lucock)- Order! I remind the honourable member for Sturt that he should address the Chair and also that he is tending to get away with remarks that are. unparliamentary.

Mr FOSTER - I was just giving a point of illustration. I was merely indicating that earlier in the day, in the course of questions, honourable members opposite again indicated how they let down another sector of rural industry in regard to freight rates on wool. I come back to the point that the Government has not got ofl' its backside over the years to do. what it should have been doing so far as the rural industries are. concerned, lt should have been selling the products that were produced. Belatedly, some 10 years later, the Government comes along with a proposal such as this. An honourable member opposite asks how long it took me to get here. I do not know how long it took me lo get here, but that is not the point. I. am not prepared to stay here and listen to the claptrap that I have listened to from that side of the House much longer. I have risen to tell honourable members opposite that as far as I, an individual in this Parliament, am concerned, they have let down the people that they are supposed to represent. Honourable members opposite are a pretty sad lot 'from that point of view. 1 end on that note.

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