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Thursday, 14 October 1971
Page: 2368

Mr KELLY (Wakefield) - Before the suspension of the sitting the honourable member for Dawson (Dr Patterson) was spelling out the fact that he did not think the money ought to be paid in the form of a deficiency payment to wool growers because it would be grabbed by the money lender. I was interested in this point of view, particularly as he ended his speech with a stirring appeal to the Government to do all it could to prevent a run on the banks, as he called it - panic stations in the industry - which would mean that credit would he quickly withdrawn from the industry. One has to only put those 2 propositions down clearly side by side to see that they are obviously self contradictory. I can think of no quicker way to lead to a run on credit in the industry than to say that the industry is not obliged to take all proper steps to repay debts when incurred. Let us take this a little further. The honourable member put up the proposition that rural industry should not have to pay debts to big companies or overseas companies. Those 2 groups were mentioned particularly.

I am interested to see whether this is to be Labor Party policy in the future because if it is, it represents a very important and serious departure from the beliefs that the Labor Party used to hold in Chifley's day. Speaking for myself as a wool grower, I have an old fashioned belief - I am glad to say most of my fellow wool growers have it too - that if I promise to repay a debt I take all proper steps to repay it when I can. If this money comes into the wool growers' possession and they are not expected to repay their debts, and if the Labor Party does not ask them to repay their debts, I think this is a very grave departure from the position as we used to know it. In legislation similar to this the point is usually made that we should not pay a subsidy to the big growers. I know the Labor Party did not put this forward but it is commonly put forward in the industry. That is pretty popular political stuff because there are, as you would know, Mr Deputy Speaker, far more small 'growers than big growers, and so to kick the big growers makes one popular with the small growers. So it is, I suppose, politically attractive. Of course, when one looks at it closely it becomes nonsense.

One of the basic facts of life - I hope the honourable member for Dawson realises it - is that wool branding stencils are cheap. One of the easiest things I know is to split a clip. If we are to limit the subsidy to 35 bales the way is wide open for that to be done, lt would not be done by the electors of Wakefield and perhaps not by the electors of Canning, as you would know, Mr Deputy Speaker, but other growers all over Australia would have a very real temptation to split their clip. We have an open door for private selling so we could have 35 bales going out to the broker, another 10 bales going to the private buyer when he came one day and another 5 bales a week later. It just makes nonsense of the proposal. It may be a politically attractive idea, but the only problem is that one could not make it work. Otherwise it would be all right. I know that the Labor Party has not put it up on this occasion but it has been put up frequently before that the chap who has a lot of cattle and a few sheep - this is if the subsidy is to go to the small grower - and Ls really making money, will get the full subsidy for his wool.

When one puts it like that people say: Oh, well, we do not really mean that'. The chief problem is that this will encourage the grower to be small when he really ought to be bigger. When it is spelt out clearly like this everybody can see that it is a silly idea and the Labor Party wisely turned from it. Now the Labor Party says that there will be a means test, but what is really meant, is that a person will get the subsidy only if he is poor. There is known to be a minority of wool growers - I have none of these people in the electorate of Wakefield - who do not work very hard and spend a lot of time in the pub. They are the ones who will get help under this scheme. The harder a chap works, the better he is at his job, the less he gets. Is that the way it is to work? I can see no other way.

Mr Foster - How do you work that out?

Mr KELLY - If a man gets it only if he is poor - one way a man becomes poor is to stay in the put) - then 1 say that it is a direct encouragement to the bad farmer. Is this nonsense or not? This is the way it will work.

The honourable member for Dawson went on to talk about acquisition. He ought to be careful to spell out his terms. What did he mean by 'acquisition'? There are 2 basic kinds of acquisition. One is acquisition of the whole clip to be sold by auction, and the other is generally regarded as compulsory acquisition but with the wool to be sold by the Commission in the position of a strong seller.

Dr Patterson - Nominations?

Mr KELLY - Nomination of prices and so on. They are the 2 kinds. I have no philosophical difficulty in accepting acquisition. I have only one stipulation - before anybody takes away my right to sell my wool where I want to sell it I have to be asked. There has to be a referendum. I do not think anyone would disagree with that as a proper philosophy and a proper way to tackle the problem. So we have to be asked. That is the only philosophical question I have about acquisition.

But let us look at the effects of the 2 kinds of acquisition that are put forward. Firstly, there is acquisition and then auction sale. There will be some advantages in this. There will be economies of scale that come through a big organisation handling the whole clip because it will be able to marshal the clip. But immediately one runs into the problem of having an organisation in a large solid lump. It will not then be able to respond quickly to the changes that we know the industry has to make in the future. That is my own opinion. I think there has to be competition to get the industry to change practices to meet the changing situation. A clear illustration of this is the success of Economic Wool Producers Ltd which set out earlier in literature and now has shown by demonstration that there are better ways of selling. One can sell by core testing, by objective measurement, by tender. We have all been talking about it. Everybody has been paying lip service to it. At last EWP has come forward and shown that it can be done.

If we had compulsory acquisition we would not have this yeast of EWP or anything of a similar nature working in the industry to bring about the changes to which the honourable member for Dawson so rightly referred. 1 think that with compulsory acquisition the most we could expect would be a very marginal benefit. We would not get any increased demand for wool because it would be sold in the same way, but there might be some economies in handling. We would run the risk of having a monolithic selling structure which I would think, on balance, would be a risk that I would not be prepared to recommend. Then we have acquisition with sale a fixed price; we will nominate the price; we will be a strong seller; we will not sell by auction. The authority will hold the market. This has a great deal of attraction for a lot of people. They quickly illustrate how the Australian Wheat Board has demonstrated that there are benefits in this method of selling, but let us have a look at it. lt is not much good holding stocks of wool and demanding a certain price and that the buyer will have to pay 35c per lb and will not be able to buy wool under that price. I do not know but 1 think the buyers are very likely to say: Thank you very much but we can go around the corner buy from either another country or from a synthetic source'.

One of the basic differences between the wheat industry and the wool industry, besides the numbers of classes, is that wheat is buttressed by the International Grains Arrangement. There is also an international agreement relating to sugar. The price for wheat can be maintained far better. But if we try to sell wool as we sell wheat without any such international arrangement other countries will undersell us. While we are saying that the minimum price for our wool will be 35c per lb the Argentinians may come in and start selling wool at 30c per lb and we will be really in a mess. I know that acquisition is the popular plea nowadays. I know that in a time such as this there is a tendency for the farming community to chase after every marketing hare that jumps up. I know that if I wanted to get votes now - I hope the honourable member for Dawson will listen to this - I would recommend acquisition; but I think we have to ask ourselves whether it is wise.

We have done too many things in this place - I take part of the blame - because of a feeling that we must do something because industry is asking for it. These times have passed. The position in the wool industry is so desperate that the next step we take must be wise even if it is unpopular. I say categorically that anybody who says that he knows that acquisition will solve the industry's problems is either very brave or very foolish, because no-one knows what will solve the problems. Some of us think that a solution can be achieved one way; some of us think it can be achieved in other ways. I will come back to the importance of being right later on. But do not let us kid ourselves. Chiefly, let us not kid the industry that acquisition is automatically the cure.

I come back to the Bill. Let us call the deficiency payments a subsidy and be frank about it. No-one is opposing the fact that the subsidy should be paid. It is justified this year. It is probably only justified, I will admit, because we have left it rather too late, as we usually do. But it is introduced at a time when we have to do something, and this is what we have done. There is no doubt about the need for it. It is quite clearly demonstrated. There is also no doubt that if the subsidy is continued for too long it will harm the industry in the end. It will discourage change. It will stop people like myself from changing over to other ways of using their land. I know that it is not easy to find other ways of using land but I also know that if we accept the fact that there is no other use for our land that is indeed the kiss of death. There are other ways we can use our land.

A subsidy that is continued for a long time will destroy the incentive to change. A short term subsidy is acceptable and desirable, but I beg the House, the industry and the Government to realise that this legislation will cease to have effect at the end of this financial year and between now and then we have a very short time in which to really think about what we are going to do. We know in our hearts that if we continue this method of subsidy payment indefinitely we will damage the industry in the end, and none of us wants that, Maybe we will have to extend the subsidy for one more year but we know that if we continue it for too long we will damage the industry.

Let us look at the opportunity that presents itself. We are spending under this Bill about $100m. I do not know the exact amount. No-one seems to know, and of course we cannot tell because we do not know what wool prices will be. But let us say we are spending $150m all told. We have a unique opportunity to work out ways of spending the same amount of money to do far more good. I am sure that the Government will continue to be generous about the way it treats the industry, but it is more important to be wise than it is to be generous. We have a duty as a House not to pick at one another across the table but to get down and work out ways of spending this amount of money wisely because if we do not, we will damage the industry in the end.

I do not have any easy solution to offer, and I am not holding myself up as an authority; but there are lots of things I would like looked at not because I know they are going to work but because I think they should be examined. I know that a lot of other honourable members with more knowledge than I have will come up with their own ideas also. But for the sake of the industry as well as for the sake of the Australian economy let us bend our will to working out ways of using $150m wisely to help the industry.

What are some of the things I think should be looked at? I have been saying frequently that I can see no real part for semi-processing of wool because freight charges would go up and sometimes trade barriers would be put in your way. But I am beginning to change my mind on that. I think that if we were employing modern machinery in a big processing plant there would seem to be opportunities for economies of scale that may help us to put wool on the market in a more attractive form. There is the obvious exploration of the benefits and methods of core testing. Everybody will speak about that. All I say is that this is another course we should examine with all vigour. One of the really exciting prospects is the possibility of mechanical shearing. When I came into Parliament I think the proportion of my clip that went to pay shearing and selling expenses was about 7 per cent. I think this year the proportion will be 18 per cent. This proportion that goes into the labour intensive shearing process will become an increasing burden unless we can beat this cost and think of other ways of doing the shearing. If we cannot it will put us out of business.

Very promising processes are opening up. I am not saying that I know they will work. I am saying that we should be looking at them with great care. 1 think we should be looking too at the benefits which would follow the use of long term credit for helping wool sales. I think that perhaps - I cannot categorically say that I know - there are opportunities for selling wool by methods other than auction. Selling woo) by auction will be a thing of the past before long. It will be sold by other means. We may have a system of agents going round the country and setting it as the fibre makers sell their products. Some of these things offer opportunities; all of them offer a challenge. I hope that the industry in particular and this House will, with a real urgency, try to work out ways to help the industry without hurting it.

This brings me back to an old hobby horse of mine. I have always pressed for the establishment of a rural industries board that could do for the rural sector what the Tariff Board does for the secondary industry sector. It could examine matters publicly, hear sworn public evidence, make a public report and give the Government economic advice on which it makes political decisions. It seems so sensible to me that we should plan carefully to assist rural industry. Our record of government help to the rural sector has not been good. It is not easy to help an industry wisely and in a popular way. I look with considerable suspicion at any honourable member from a rural electorate who claims his people regard him with great affection because, if that is true, usually he is not telling them the truth. We have a pre-eminent responsibility as a House, as a Government and as an industry to get down to the bare bones of our problem. We should not be slinging off at one another across the Chamber.

Mr DEPUTY SPEAKER (Mr Hallett)Order!The honourable member's time has expired.

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