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Wednesday, 30 November 1938

Mr NOCK (Riverina) .- We have before the House a bill that has been brought in by this Government at the request of the six State governments of Australia. The object of the bill, as outlined in the preamble, is by the cooperation of the Government of the Commonwealth and of the governments of the States to put into operation a scheme to ensure to the wheat-growers greater stability by the provision of an improved average, price on all wheat they produce. Before federation we had the position that, with cheap machinery, cheap labour, cheap transport and cheap living, it was possible for the farmers of Australia to compete with the world. They could produce their wheat and sell it profitably in the markets of the world in competition with any other country.

Since the consummation of federation, the situation has entirely changed. A high tariff policy has been adopted, which is regarded as stable, and is not likely to be altered ; our Arbitration Court system has increased wages and added to costs in many directions; and social services are now involving the country in heavy increases of taxation. These factors, which have undoubtedly and considerably added to the cost of growing wheat, are admitted to be important aspects of our national policy. That they have also increased costs to other industries no one will deny; but in relation to secondary industries, such extra costs are included in overhead and are added to the sale price of products so that the burden is spread over the whole community. That policy, however, cannot l>e applied to our wheat, most of which must be sold on the world's market at world prices. Tariff protection has been effective in encouraging secondary production, but unfortunately it has had the reverse effect by adding to the burdens of primary production. For many years, the farmers of Australia have been seeking relief from this anomaly.

The honorable member for Forrest (Mr. Prowse) pointed out that on frequent occasions the wheat-growers of Australia had provided wheat for home consumption at ls. a bushel less than it would have cost to bring wheat to this country from overseas. It is futile to suggest that tariff which has proved effective in assisting other industries, could be applied successfully to wheat. The one method which offers some prospects of success in this respect is the fixing of a home-consumption price.

The honorable member for Gwydir (Mr. Scully) has referred, once again, in enthusiastic terms, to the possibility of establishing a compulsory wheat pool, but he, and every other honorable member of the House, must realize that this is impossible because of constitutional limitations. A vote was taken on this subject in New South Wales not so long ago and the farmers themselves rejected the proposal because they realized how ineffective it would be if applied in only one State, for wheat from across the Victorian border could be sent into New South Wales and sold in competition ' with wheat offered at a price which the pool might fix. No one has travelled greater distances in Australia, I believe, or addressed more meetings, than I have, in endeavouring to persuade the farmers to form a compulsory pool. But six years ago I had to admit that constitutional limitations made this impossible. We have had voluntary pools and can learn lessons from experiences in five States. Queensland succeeded because it consumes its total crop. The great difficulty in connexion with the establishment of a State compulsory pool is that producers across State borders could break the price and make the scheme futile. Admittedly, such a pool, even if voluntary, could receive wheat from the farmers, charter ships, trade on the overseas markets, and do all the things that wheat merchants, referred to by the Opposition as speculators, can do; but in consequence of inability to enforce a reasonable homeconsumption price its operations would have a trifling effect compared with the risks taken. A wheat pool operated in New South Wales for about four years, anc! handled the farmers' wheat just as the wheat merchants did; but ultimately it ceased to operate. A wheat pool has been operating in Victoria for a considerable time, but its business has dwindled so that to-day it is handling only about 2,000,000 bushels of wheat out of an average yield of about 40,000,000 bushels. Much the same position exists in connexion with the South Australian pool. Its affairs were conducted enthusiastically twenty years ago, but whereas one time it was receiving nearly 15,000,000 bushels of wheat a year, last year it was down to 1,000,000 bushels. I am sure that if a home-consumption price could be fixed which the wheat pools could enforce, they would prosper, but that procedure is not practicable. The pool in Western Australia has been more successful because in that State, the portion used for homeconsumption is so small. The great bulk of the wheat grown in Western Australia is exported. But, in other ways, the situation there is more satisfactory. The management of the pool has an amicable arrangement with the millers throughout the State and with its bulk handling and mass charters, it is able to conduct its affairs on a competitive basis. Still, what matters to the farmer is the price he receives for his wheat, and a comparison of the market reports published in the press of Western Australia with those in the press of the eastern States, shows that the farmers of Western Australia seldom receive within 2d. a bushel of the price paid for wheat in Victoria and New South Wales, and I am of the opinion that even if the pools were able to control the whole of the export trade, they would not be able to do very much for the farmers unless they could also secure a homeconsumption price for wheat. Some honorable members of the House prate about the Government being clothed with greater power to organize pools, but I am quite satisfied that, until the Constitution is amended and means devised to enforce a home-consumption price, the advantages from such schemes will be small.

I point out that if a compulsory pool such as suggested were possible, the amount and source of the money - from the bread-eaters of Australia - would be exactly the same as if the money needed was raised by the means now proposed by the Government.

The contention of the Leader of the Opposition (Mr. Curtin) would be amusing if it were not so pathetic. The honorable gentleman says, in effect: " We have always advocated a homeconsumption price for wheat, but we suggest that the money for this purpose should be provided by an additional tax on income or by an additional land tax and called a home-consumption price for wheat. As the honorable member for Gippsland (Mr. Paterson) has said, a distribution to farmers on that 'basis would be neither more nor less than a dole, which the farmers do not want.-

Mr Rosevear - What else is this?.

Sir Henry Gullett - I also would like to know what this is? ,

Mr NOCK - It is compensation from the community of Australia as a set-off against the effects of national policy which has added at least 6d. a bushel to the cost of the growing of wheat in' this country. Even the honorable member for Henty has admitted that 4s. 8d. a bushel is not an unreasonable price to pay for the wheat used in Australia. He said he would not object to a flour tax on the proportion of the crop consumed locally. This is exactly what the bill provides. No tax will be imposed on the wheat that is exported, but the money raised by means of the tax will be distributed to the farmers in relation to the whole of the wheat produced. That, I submit, is not an unreasonable procedure. We protect all our secondary industries, and it is high time for us to similarly protect our primary industries. That is the Commonwealth Government's obligation, not to make wheat-growing pay. We know that production varies with different farmers. Some wheatmen are more efficient than others ; some own their own land and have no need to borrow money; some are in better rainfall districts than others, and some farm better land. In view of_ these varying circumstances, I contend that the only effective way to distribute the proceeds from this tax is in accordance with the wheat grown. Surely, it must be realized that the Commonwealth Government cannot control rainfall or soil conditions; nor can it control the methods of the farmers, yet the responsibility to compensate for the ill-effects of our national policy on the wheat-growers rests upon the whole community. This scheme can correct the position. I appreciate the fact that the honorable member for Gwydir (Mr. Scully) did not oppose the imposition of a sales tax on flour.

Not very long ago, a royal commission made a thorough investigation into the whole circumstancesof the wheat industry. I do not think that any honorable member would suggest that the commissioners shirked their job in any way. They travelled throughout the length and breadth of the Commonwealth, and investigated every detail of the industry. In its report, it stated - 1.As protection is the confirmed policy of

Australia, the wheat industry should not carry the burden of that policy, but share it.

2.   In view of the impossibility of the tariff providing such protection for an industry exporting so large a portion of its production, a home-consumption price was the way to put the industry on a similar basis to secondary industries.

3.   If a compulsory wheat pool could not be established to secure such price, a flour tax should be imposed on a sliding scale, and the proceeds distributed to growers by way of bounty.

Any one who takes the trouble to examine the provisions of this bill mustadmit that the whole scheme is soundly based on these recommendations of that commission. The House is asked, in effect, to endorse the commission's findings. Only in this way can we compensate the wheat industry for the disabilities from which it is suffering in consequence of national policy. It would be of no use to impose a tariff of 5s. a bushel on wheat, for that would not add one farthing to the banking accounts of farmers. In my opinion, this is the only practicable scheme that has been devised to compensate the farmers for the anomalous position which exists, and to adjust the balance between them and other sections of the community.

I have never held the view that it is the duty of the Government to make wheat-growing pay, any more than it is its duty to make boot-making, or oatgrowing, or fruit-growing, pay. No government could accept such an obligation. What I have contended is that the wheat-growers should be compensated for the special burdens they have to carry in consequence of national policy. The wheat-growers' organization in Sydney, with which I am connected, also holds that view.

Mr Rosevear - What about the position of farmers who are able, because of their particular circumstances, to grow wheat at a profit at 3s. a bushel?

Mr NOCK - Even those farmers are adversely affected by national policy, which has increased the price of their plant, their fencing materials, their galvanized iron, and, in fact, almost every commodity they use. There is no tariff discrimination between the efficient and the inefficient manufacturer. Surely honorable members must appreciate that the purpose of this bill is to provide a homeconsumption price for wheat, and not simply to assist necessitous farmers. 1 frankly admit that, under the scheme of this bill, some farmers will get nothing this year and others will get a good deal ; but, with the turn of the wheel of fortune, the farmers who get nothing this year will get something next year, and those who may get a good deal this year may get nothing next year. A pool distribution would have the same effect.

I congratulate the Government upon having adopted this plan to stabilize the wheat industry. Of course, I shall vote against the amendment of the Leader of the Opposition to withdraw the bill; the farming community should no longer be regarded as the catspaw of politicians.

Mr Beasley - But any legislation passed by this Parliament can be repealed.

Mr NOCK - That is possible, but this is a democratic country, and if a government tries to repeal legislation that is in harmony with the wishes of the people, that government will get what it deserves. I submit that practically all the arguments of the Leader of the Opposition for withdrawal were mere excuses against the passage of the bill, and were not directed against the merits of the Government's proposal. He even accepted the proposed price of 4s. Sd. a bushel at country sidings as reasonable, but he made complaints against the millers, the bakers and the speculators. As the honorable member for Gippsland pointed out, the wheat-grower will get 2d. for the wheat that he supplies to make a loaf of bread, and that is the home-consumption price which he would receive for about one-quarter of the crop this year. For the remainder he will have to accept the export parity price.

The Leader of the Opposition referred to the price of wheat in New Zealand. If the price of wheat in that country of 5s. 8d. a bushel is relevant at all, 1 think it confirms our claim that the price proposed to be fixed in Australia is not excessive. I can tell him, however, for his information, that his statement that the price of wheat in New Zealand is the highest in any dominion was not correct. In South Africa it is 6s. 10-Jd. a bushel, as against 5s. 8d. or 5s. 9d. in New Zealand.

The honorable member for Gwydir referred to the advances on wheat in Canada and in the United States of America. It is true that the governments of both Canada and the United States of America, as well as the government of Argentina, have taken action to stabilize conditions for the growers. Whether their costs are as heavy as ours, or as inflated as ours are by high tariffs, arbitration, workers' compensation, and, as they will be shortly, by national insurance, I do not know; but the governments of those countries have found it necessary to assist the industry. In the United States of America 60 cents is being advanced to the farmers at railway sidings, which is equal in Australia to 3s. 4d. a bushel. In Canada, the price advanced is about 80 cents at ports, . or about 3s. net to farmers at country sidings. Here the farmers will receive, when the export parity price is ls. lOd. or ls. lid., a return of 2s. 6d. or 2s. 7d. a bushel. No one will suggest that that is a payable price. I am advocating, not that the Government should guarantee a payable price on the whole crop, but merely that the grower should be guaranteed a stable return for that part of his crop which is consumed, in Aus-' tralia. The Government can go no further than that.

Regarding the proposal of the Government to distribute £500,000 among the States this year for the relief of necessitous farmers, I agree with certain members of the Opposition that it is wrong in principle for the proceeds of the sales tax to be devoted to this purpose. However, it sometimes happens in politics that one must compromise in order to get the bigger thing, and in this instance the bigger thing is the permanent stabilization scheme. I hope that the Government will accept an amendment limiting this allocation for the relief and removal of stranded farmers to a period of not more than five years. Only a little while ago this Government agreed that £12,000,000 should be set aside for the rehabilitation of these same farmers, and for those engaged in rural industries generally, who were in a serious financial position. As half of that sum of money has still to bc expended, the Government should "agree to limit the application of the provision in this bil. to the period I suggest. The amount for 1938, £500,000, has been allotted to the States in reasonable proportion, but the period should be limited to five years. At the end of that time we shall have a real, home-consumption price scheme for which the farmers have been pleading with successive governments for the last fifteen years.

Mr Lane - The honorable member for Riverina has always advocated that farmers who are unable to pay their way should be put off their land.

Mr NOCK - The honorable member for Barton ( Mr. Lane), with his obsession, " ruralitis ", frequently puts words into other people's mouths that they have not spoken. Some other honorable members, I believe, have advocated that policy, but I certainly have not done so. The States have some obligations.

The Leader of the Opposition said that contracts had been made by farmers for the sale of their wheat; that speculators had already bought part of the crop. Well, why should that prejudice the scheme? That fact makes no difference whatever. The excise duty will be collected through the millers as the flour is sold and goes into consumption. There is a provision that the excise must be paid in cash. When there was a sales tax on flour on the previous occasion some millers, in competition for trade, rather unwisely gave credit for the excise, and later found it very difficult to collect the amount. It is a wise thing to insert this provision in the act in order to protect the millers.

There has been much talk about the price of bread. The honorable member for Henty even put in jam, and referred to the excessive cost of " bread and jam ", but what jam has to do with it I do not know. I happened to bo at the conference in Sydney, and I remember the representative of Western Australia, as well as others, saying that provided the scheme could be put into effect without raising the price of bread beyond 6d. a loaf, he would support it. The Gepp report points out that, with the price of wheat at the figure suggested in this scheme, namely, 4s. 8d. a bushel at country sidings, there should be no need for the price of bread to go beyond6d., even when delivered throughout the suburbs of the capital cities.

Mr Green - They are charging too much for bread now,with wheat at only 2s. a bushel.

Mr NOCK - I agree. In country towns in New South Wales the price of bread has been kept at 6d. a loaf, which is too high; but the Leader of the Opposition went to the other extreme when he said that with wheat at 4s. a bushel, bread should be sold at 3½d. I asked him if he was relying on the Gepp report for that statement, land he replied that he was. I have the report here, and it shows that with wheat at 3s. 6d, a bushel a reasonable price for bread would be 4.8d.

Sitting suspended from 6.15 to 8 p.m.

Mr NOCK - I point out to the Leader of the Opposition that his assertion is in conflict with the conclusions reached by the Gepp Commission which investigated the bread industry and allied industries. It would be wise if honorable members checked the figures before accepting them as being free from error. Sir Herbert Gepp reported that, with wheat at 4s. 8d. a bushel, and flour ranging in price from £11 10s. to £13 10s. a ton - I think that most people know that the value of the offal affects the price of flour - a reasonable price for a loaf of bread would be aid. cash, over the baker's counter, and 6d. cash, delivered. With wheat at 4s. a bushel, or, to get the exact fraction, 4s.1d. a bushel, the value of wheat in a loaf of bread is1¾d. So at 3½d. a loaf, all that would be left for all of the other charges, except milling, which is covered by the value of the grist, would be l¾d., whereas Sir Herbert Gepp reported that 5½d. was a fair price for a loaf of bread containing 2d. worth of wheat, leaving 3½d. for such charges.

The Leader of the Opposition also expressed apprehension as to the prices that would be charged for bread under the scheme. I remind the honorable gentleman that the Government of New South Wales has the power to proclaim a maximum price for bread. What he said about the exploitation of the people by the millers in Western Australia is the responsibility of the State Government and not of the farmers.

Mr.Curtin. - Hear, hear!

Mr NOCK - I have, however, been given to understand that the loading which the millers themselves have placed on the price of flour sold for homeconsumption is a subsidy to themselves to enable them to compete with export flour. It certainly has not been passed on to the farmer, because one can compare the price of wheat atFremantle with other Australian ports, and ascertain that almost invariably when flour was £1 10s. a ton higher in Perth than in other States, the farmers in Western Australia were receiving less for their wheat than were the farmers in the eastern States.

Because of acts of exploitation, and anomalies and other things which the Leader of the Opposition has criticized in the milling industry, the Opposition suggests that the farmers should be robbed of this opportunity to receive justice.

Mr Lane - They should act for themselves.

Mr NOCK - We have heard the same thing year after year from the honorable member for Barton (Mr. Lane), who says to the farmers, " Take control of your own wheat; market it yourselves and charge your own prices ". If the honorable gentleman has any brains he must realize that the result of the recent marketing referendum definitely showed that the farmers have no power to form an organization of the kind under the Constitution.

Mr Curtin - The honorable member for Riverina should do me justice and say that I do agree to find the amount required in order to give the grower the price which he has asked for in this legislation.

Mr NOCK - Yes, I am prepared to admit that, for this year. Indeed, I am pleased to find that every honorable member who has spoken has no quarrel whatever with the reasonableness of the suggested home-consumption priceof 4s. 8d. a bushel at country railway sidings.

Mr Curtin - The only point at issue between us is as to how the money is to be derived.

Mr NOCK - That is the chief point of issue, but a home-consumption price is a price paid by the consumer. Another point at issue is the fact that the honorable gentleman advocates a scheme for one year only, which would mean that the wheat-growers would still be the catspaw of politics, and would still be harangued and promised some future scheme, whereas in this legislation we have a scheme approved by every one of the State governments, and collectively the State governments have asked the Commonwealth Government to co-operate with them and to introduce complementary legislation.

In reply to his comment that Professor Giblin had stated that wheat-growers would be no better off with the home price of 4s.8d. I would say that if Professor Giblin is correct in his assertion thta the farmers will have to bear a huge proportion of the cost of this legislation the converse should be true. We know economists are but theorists. They have told us that the cost of a scheme, such as this, is paid by the farmers them selves. If that were a fact, it should cut both ways, and with wheat at1s.11d. a bushel we should be getting some reduction of costs; but these have not yet arrived. We know that the freight charges on wheat to-day are as high as they were when wheat was 7s. 6d. a bushel. Interest charges are fixed and are above the rates of 1936 when wheat was 5s. 10d. a bushel in Sydney. They still represent half the cost of production.

Mr Curtin - Hear, hear !

Mr NOCK - More than half of the farmers' charges are fixed charges, and it is ridiculous to say that a huge portion of the cost of this legislation will be paid by the farmers themselves. A farmer with 400 acres producing an average crop of 12 bushels to the acre would have a crop of 4,800 bushels, and if the equalization bounty is 6d., as I think it will be, he would receive £120. Would any person say that his costs will be increased by half that amount, that is, £60, because the price of wheat for home consumption is fixed at 4s.8d., when we know that in nearly every country centre the price of bread is 6d., while the price of wheat is only1s.11d. It is not the farmers' fault that this is so, because there is not a pennyworth of wheat in a loaf of bread when wheat is at1s.11d. a bushel; and the farmer should not be crucified because someone else exploits the consumer.

Mr Curtin - The reason whyI wanted a comprehensive review early next year was to take these exorbitant costs into consideration.

Mr NOCK - That is not the responsibility of the farmer.

Mr Curtin - It is the responsibility of Parliament.

Mr NOCK - The royal commission made inquiries into every one of these costs and in no instance has the responsibility been placed on the farmer. It is high time that we had this scheme and there should be no further delay. It should not end in a year, as the Opposition demand, but should be permanent.

With the cost of gristing at1s. a bushel when wheat is 4s.8d. at country sidings and 5s. 2d. a bushel at Williamstown, allowing 3s. 4d. extra for bags for the offal, the price of flour should be £1211s. a ton, with offal at £5 10s. a ton. At that price, the royal commission's report says very definitely that there is no necessity for bread to be any more than 5½d. a loaf cash over the baker's counter and 6d. a loaf cash delivered in the suburbs of the capital cities.

Another point referred to by the Leader of the Opposition was the clause which provides for the cancellation of payments to a State if it does not carry out its obligations under the agreement. Naturally, the fanners would put pressure on the Government if that risk existed. It would be the farmers who would suffer from a cancellation of the payment to the State and they would bring such strong pressure to bear on the State government that there would be little risk of its attempting to depart from the agreement.

The honorable member for Gwydir referred to the flour tax as being a sectional tax and said that he preferred to follow his leader and obtain the money necessary for the payment of the bounty to the wheat-growers to be raised either by more income tax or by more land tax. The tax on flour applies to every member of the community who eats bread, whereas the income tax is paid by a few and the land tax by fewer. The taxes suggested by the honorable member are sectional taxes, yet the honorable member says that he is not in favour of sectional taxes.

This year £500,000 is to be allocated for distribution by the States to necessitous fanners, and in subsequent years - I hope in four only - there may be further allocations from the fund. It would be impossible to say what the amounts to be allocated in such subsequent years would be because there might be in any year no tax. Wheat might reach the price it reached eighteen months ago, and the farmers would then be making a rebate to recoup the millers in order to prevent a rise of the price of bread. ' That is a reasonable proposal, and it shows that the farmers are fair.

I would further point out that this legislation will not merely benefit wheatgrowers; it will benefit the whole community, particularly in country towns. It is a more even distribution of the values of production than we have experienced hitherto. It will benefit country businesses and city businesses alike. The railway transport system will benefit, and work will be more plentiful, because without this scheme there would be less wheat produced and less rural cultivation of the farms. The Chief Commissioner of theRuralBank, Mr. McKerihan, has pointed out that this proposed assistance to the industry is not a privilege but is a protection which the farmers in practically every other country have enjoyed for several years. If, after the fifth year, the allocation for special purposes ceases to operate, this scheme will be a consummation of what we have been fighting for for fifteen years - a home-consumption price. I submit the following aspects of this matter for the consideration of the House : -

(1)   Effect on the consumer: The consumer should have a stable price of bread year after year while the scheme lasts of 5½d. a loaf over the counter and 6d. delivered in city and suburbs.

The price of broad is taken into account in the fixing of the basic wage. It is evident, therefore, that there can be no penalty on any workers under industrial awards.

(2)   Effect on the bakers: The bakers are protected because the price of flour will be fixed within a certain range, leaving them a reasonable average profit for their work.

(3)   Effect on the miller: The miller will buy wheat in the open market and will be allowed by the arrangement to obtain a reasonable price for gristing and milling, regardless of fluctuations in the value of offal. He will not be interfered with in his export business, which will be carried on as in the past. If the price of wheat should rise, above the agreed basic rate of 4s.8d. c.s., he will be protected by being recouped from the special fund which will be created to maintain stability in regard to the price of flour.

(4)   Effect on the farmer : The farmer will, for the first time in his existence, have stability in regard to that portion of his crop, whether it be¼th,1/5th orrd, which is consumed in Australia and export parity for the balance. That will assure him, with economic production, a payable price over a reasonable term of years.

I hope that the bill will be passed by a huge majority when the vote is taken.

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