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Tuesday, 16 July 1946

Mr DEPUTY SPEAKER - What is the point of order?

Mr Mulcahy - The honorable member for Warringah is the most offensive member of the House.

Mr DEPUTY SPEAKER - There is no point of order.

Mr SPENDER - It is a poor commentary upon honorable members opposite claiming to represent wheat-growers that so few of them should be present when this important bill is being debated. The bill involves important principles. The first is the assumption that wheat production costs will remain static for five years. No more fundamentally stupid assumption could be made. The billpretends to stabilize wheat prices on the basis of 5s. 2d. a bushel f.o.r. for five years. I shall hot deal with the equity of that price at this stage, but shall have more to say on that aspect later in my speech. At the moment, I propose to deal with a fundamental economic fallacy, namely, that, in a world of rising costs, the cost of production in the wheat industry will remain constant for a period of five years. One does not need to be a wheat-farmer to realize that that it not a sound foundation for any legislation. In order to show that that is not my view alone, I propose to direct attention to a report by Professor Copland, whom the Government has appointed as Australian Minister to China. In a report on economic conditions in the United

Kingdom, the United States of America and Canada, Professor Copland, writing in his capacity as Economic Consultant to the Government, draws attention to the fact that in those three countries stabilization schemes are based on the possibility of changing costs. I should like the Minister for Commerce and Agriculture (Mr. Scully) to correct mo ifI am stating wrong premises when I say that the Government's scheme is based on the assumption that costs will remain static. The guaranteed price is not to vary for the whole five years for which the scheme will operate. In his report, at page 15, Professor Copland states -

In Great Britain, the Minister for Agriculture has announced a four-year plan under which a review of the financial position of representative farms will be made each. February in consultation with representatives of the farming industries. On the basis of this review, and after discussion with the representatives of the industry, a guaranteed price will be announced which the Government will maintain for the products of the industry concerned for that year . . .

It is important to note that the method of guarantee is to a certain extent subject to frequent adjustment according to' changing conditions.

In other words, he emphasizes the clear economic truth that we are living in a world of economic change. Any sound stabilization scheme for the next five years must have regard to the fact of changing costs. Professor Copland's report continues -

It is not the intention of the Government slavishly to adopt any figure that may be arrived at merely on the basis of costings.

Costs must be a prime consideration.

Mr Conelan - Everyone knows that.

Mr SPENDER - I wonder whether it was known to the members of caucus when this bill was presented for approval. If so, the Government's inability to . express itself clearly in legislative langauge is revealed in this measure, because it makes no provision whatever for any variation should costs rise, as they assuredly will. I pass on to quote from Professor Copland's report in relation to the United States of America -

In the United States of America the arrangements for guaranteeing prices are much more complicated, though to a large extent automatic in their operation. . The Stabilization Act of 1942 as amended in 1944 provides that no maximum price shall be established for farm produce below a price which would return to the producer the higher of the following: -

(a)   the parity price or comparable price;

(b)   the highest price received by producers between 1st January and loth September, 1942 ....

Parity is itself the ratiobetween farmers' costs and prices in the period 1909-1914.

It will be seen that in that great country also costs are recognized as a determining factor in fixing prices. In Canada a board purchases all the wheat that is grown. The price paid for the wheat depends upon conditions which vary from time to time. In Canada, also, costs are a prime consideration in fixing prices. During this debate we have heard many political speeches, but not much has been said regarding the real problem with which the bill seeks to deal. Regarding the approach to the problems of the wheat industry in this country, Professor Copland said -

It would also be desirable to emulate the British or Canadian plan of fixing the prices from time to time according to changing conditions, and using the guaranteed price mechanism to promote the distribution of resources among the farming products which were most actively demanded. It is sometimes contended that a system of guaranteed prices has the effect that the control of production is required if it is to be successfully operated. That is not necessarily true. If the administration . is flexible, it is possible to vary the minimum price in such a way as to encourage or discourageproduction according to the relative demand for the different products. This would still leave price as a principal determinant of output in the long run, but would offer farmers the opportunity of transferring from the less to the more profitable of farming operations with a reasonable assurance that they would get a minimum income in the process.

An examination of the report makes it clearthat in the three countries that I have mentioned costs are a fundamental consideration in determining what the guaranteed price of any product shall be. It makes clear also that in the opinion of the Government's economic adviser a similar course should be pursued in this country rather than a policy which limits production. Both these principles have been ignored in the scheme of the Government, and I desire to know the reason. Although there are only about 60,000 or 70,000 wheat-growers in this country, they constitute an important section of the community. Moreover, whatever is done in connexion with the problems associated with the wheat industry must have its influence on the economy of the nation as a whole. As one who does not represent a wheat-growing community, but has taken the trouble to study Professor Copland's reports and recommendations, I want to know why his recommendations have been disregarded, and why the scheme submitted to us makes no provision whatever for any variations of costs during the next five years. Will any honorable member say that he believes that costs will remain static for the next five years? No one with a pennyworth of sense would deny that costs will move either upward or downward - probably upward. Further, will any honorable member deny thatthis stabilization scheme proposes to place . limits on production? It purports to fit in with a State scheme, under which I have no doubt wheat-growers will be required to apply for licences, which will be granted only if certain instructions regarding production be observed. I desire to refer to that particular type of legislation, and I speak as one who has had some experience from the legal stand-point. It is not a new kind of legislation. In respect of quite a number of primary products, we have State legislation which provides that no producer shall engage in the production of a certain commodity unless he has been granted a licence, and usually, the framework of the State acts is to grant or refuse a licence without showing cause. I have known many occasions when men have been compelled to follow a policy, which is not in legislative warrant, merely because administratively they have been told that, " Unless you do this, you will not be given a licence ". The Government should not ask this Parliament to consider a bill which cannot be considered except as a part of a total scheme. We do not know what the State legislation will contain. For my part, I voice my strong objection to all legislation of this kind. I have only one part of the picture. The Government informs the Parliament : " This is the Commonwealth bill ". I ask : " May we see a copy of the State legislation, because it must he a part of the one scheme? ". We do not know what it may be. The State legislation may contain important and objectionable features of legislation, and this Parliament will not have an opportunity to express an opinion about them.. Because this scheme assumes static costs in this industry over a period of five years, I assert that the plan must be condemned.

The second ground of objection may now be considered. This is a stabilization scheme, and it includes the 1945-46 crop. It is well that the growers should know the legal position. When their crop was taken from them - this fact cannot be disputed - they were entitled in accordance with the terms of the Constitution to fair, just and proper compensation for their wheat. What does the Government propose to do now? It does not. deny that the wheat is worth more,- hut proposes to take away the* additional money by way of a levy. I cannot imagine anything more immoral than seeking to justify a wheat stabilization scheme by taking out of the pockets of the wheat-growers the money which really belongs to them. I shall repeat- the proposition, because the. Government should reply to it. My proposition is that, when 'the 1945-46 crop was taken from the wheat-grower, he automatically had a claim against the Government for full and proper compensation for his product. That cannot be denied. The claim will -not be satisfied, but by an indirect means and perhaps by means which might even be challenged in a court of law, the Government says, in effect, - " It is true that that was the amount of money which we should have paid to you, but now we propose to impose retrospectively a charge upon it so as to support the stabilization scheme in future". What moral justification can there be for that act? Yet every honorable member opposite who has spoken in this debate has not faced that problem.

Mr Lemmon - That is not true. I dealt with it.

Mr Conelan - The honorable member for Warringah was not here.

Mr SPENDER - I have been in the House during the whole of this debate. If the honorable member for Forrest (Mr. Lemmon) did deal with the problem, he failed to make his meaning clear.

Mr Lemmon - The honorable member would not understand even the clearest explanation.

Mr SPENDER - That type of comment will not help save the issue. Let us examine the proposition. I shall repeat it for the benefit of the honorable member for Forrest. When the wheat was taken from the farmers, they were entitled to full compensation for it. No one can deny that. I contend * that, morally, they are still entitled to it.

Mr Lemmon - Yes, and the growers made a bargain-

Mr SPENDER - They are still entitled to it. What the Government seeks to do is, by a levy operating retrospectively - and retrospective levies are in any ' event objectionable - to take from the grower a portion of the compensation and put it into a stabilization scheme. Those objective facts cannot be disputed. It is a wholly immoral process. If the Government seeks to stabilize the industry, its scheme, should operate from now. The Government has no right to apply it retrospectively. If this policy be defensible, the Government has as much right to go back to 1943-44 and impose a levy for that season. But its plan cannot be justified at all.

The third ground on which this bill should be condemned is the limitation of production, which is. inherent in this scheme and must be contained in the State legislation. I make no comment now upon whether this scheme will find constitutional support, having regard to section 92 of the Constitution. I note that clause 10 of the bill purports to give to the board, for the purposes of the export of wheat and wheat products, complete control over the interstate marketing of wheat. I assume that the State legislation will seek to take complete control over infra-state' wheat. By those means, the Government seeks to cover the whole of the wheat field. But I point out that, not so long ago, the Attorney-General (Dr. Evatt) declared that in the absence of an alteration to section 92 of the Constitution, the Commonwealth could not effectively deal with any primary product. He made that statement not once but many times. His views are contained in official publications of the Government. Therefore, I should like to hear the Government attempt to reconcile its plan with the view expressed by an eminent jurist that a stabilization scheme such as this is legally incapable of being carried into effect. I express my' objection to any scheme which has as its basis the limitation of production, and I support all that was said by the honorable member for Barker (Mr. - Archie Cameron) on that aspect.

In this debate, it has been said that the Government undertakes a re'al risk. I shall examine that statement. It is a wise policy for honorable members to. speak to the bill, and not around it. We shall see what risk the Government takes. I venture to say that it will be obvious that the Government bakes no risk at all, but that the wheat-farmer will not only stabilize his industry at his own expense, but also give a hidden subsidy to all who consume bread and use wheat for fodder! Honorable m embers" on this side of the House have been accused of not doing anything to assist wheat-growers. I am impelled to say, as the Minister who was administering the Treasury at the time when the Menzies Government introduced its wheat stabilization scheme, that a comparison of the two plans will show that our scheme, if it were now operating, would be infinitely better for the wheatgrower than this Government's plan. I shall cite a few facts, because I believe in keeping to facts, instead of indulging in general political speeches. 'The price of wheat has risen by 6s. 6d. a bushel since 1940. The stabilization scheme of the Menzies Government in 1940 was based upon a price of 3s. 6d. a bushel compared with 10s. a bushel, its present export value. The present Government's 1946 scheme guarantees,, as I shall show, only 2d. a bushel extra for the 1945 crop, compared with the 1940 stabilization scheme, notwithstanding increased costa of production in the meantime. As I shall also show, that small apparent advantage is more than counterbalanced by the greater amount of money which, under our scheme, would have gone to stabilization. This is the .Government's scheme: For the 1945-46 crop, the wheat-farmers are to receive 6s. 7d. a bushel for 123,000,000 bushels,, a total of £40,487,500. There is to be a tax of 2s. 2d. a bushel on 63,000,000 bushels, a total of £6,825,000, which is to be paid into the stabilization fund. In short, the total to be paid to the farmers and to the fund will be £47,312,500. Under the 1940 stabilization scheme introduced by 'a government of which I was a member, which was criticized bitterly by honorable members opposite to-night without any regard to the facts, this would be the position: The export value would be 10s. a bushel, less a maximum of ls. a bushel wheat tax, leaving 9s. a bushel. The guaranteed price, plus half the excess, namely, 2s. 7d. a bushel, would be 6s. 5d. a bushel, compared with 6s. 7d. a bushel. On 123,000,000 bushels, at 6s. 5d. a bushel, the farmers would receive £39,462,500, and the payment into the stabilization fund on the same quantity, at 2s. 7d. a bushel, would be. £15,8S7,500, a total payment to the farmers and the fund of £55,350,000, compared with a payment under the present scheme of £47,312,500. Those figures are either correct or incorrect. I claim that they are correct. If any honorable member disputes them, let him show me where they are wrong. Therefore, under the 1940 scheme the wheat farmers would have received 2d. a bushel less in cash, but their payments and equity would be £8,375,000 greater than under the present proposal. Therefore, what grounds are there for honorable members opposite to direct criticism against those who Sit on this side of the House? In the long run, the 1940 scheme would give infinitely more protection to the wheat-grower. There are some figures which I should like to have recorded in Hansard. I take as my basis figures which the Minister for Commerce and Agriculture (Mr. Scully) gave to this Parliament, and I place them under a number of headings. First, I assume that for the next four years the value of wheat on the export market will drop progressively by ls. a bushel a year. That is a fair assumption; because, as the honorable member for Maranoa (Mr. Adermann) has pointed out, Canada has been negotiating with Great Britain on the basis of an export value of 6s. od. a bushel over four or five years. The figures that I now give show the average to be 5s. lid. a bushel. Therefore, the assumption that I make is a fair one, namely, that the export value will drop from 10s. a bushel to 6s. a bushel in the next four years. The record of present prices, taken in conjunction with what occurred after the last war, and the negotiations that have' taken place between the Governments of Canada and Great Britain, as reported, give fair support to those figures. The crop value, based on the export value of the present crop, that is the 1945-46 harvest, and the four succeeding crops, would be £61,500,000, £55,350,000, £49,200,000. £43,050,000 and. £36,900,000, a total crop value for the whole period of £246,000,000. How much is the wheatfarmer to get? He is to receive a total of £182,287,500. There is a deficiency of £63,712,500 over that period. Where does that go? Of the total, £21,525,000 goes into' the stabilization fund, and £42,187,500 goes to subsidies to consumers and stock feeders. How, then, can one justify this as a stabilization scheme? That is about the last term that I would apply to it. A scheme. of this description which extracts from the wheat-grower the large amount of £63,712,500 cannot be justified. The amount may be less than that ; but it would not be les3 than £40,000,000. The farmer gets only one-third, and the balance goes towards the payment of subsidies in respect of those who consume bread and those who use wheat for fodder. I say, first, that this is not a stabilization scheme; and secondly, that it is a mere pretence to claim that the Government will run any risk at all. Indeed, the Government has worked out what seems to me to be nothing but a political programme, and proposes to make the wheatfarmer pay for himself and others for a period of five years, during which, there can be no doubt whatever, the scheme will more than pay for itself. The scheme cannot be justified, on these grounds: first, the payment of 5s. 2d. a bushel will be insufficient, for we cannot assume that the coat of production will remain static ; secondly, the inclusion of the 1945-46 crop is morally without justification; thirdly, the adoption of the principle of limitation of production is objectionable from an economic viewpoint; and fourthly, the extraction of-" nearly £64,000,000 from the wheat-grower imposes a very heavy burden upon the wheatgrower.

I have said enough to direct attention to what appears to me to be the principal features of the bill. The matter upon which I feel most strongly is the need for the Government to ' justify before this country the principle of extracting, in the guise of a tax, what really belongs to the wheat-grower. I can only say, as. a lawyer, and as one who considers the principle involved, that if property be taken from a man the one clear obligation is to pay him what it is worth. Even though it may be justified legally, there is no moral right to seek to extract from him a substantial portion of the real value of his compensation by means of a tax. If that be correct, there is no end to which this manoeuvre, or this intrigue - if one may use that expression - can be employed; because it simply means that one can take from a person wheat or any other property, and then, in flagrantdefiance of at least the spirit of the Constitution, introduce in this House a bill imposing a levy, thus preventing him from getting that which the Constitution clearly states he is entitled to receive. The bill should be withdrawn, as it does not provide for a proper and sound stabilization scheme. The wheat-farmers would indeed be infinitely better off during the next five years if allowed to go oh a free market. The scheme is designed simply as ,a pre-election dodge to enable the Government to say to the farmers " We have given you a guarantee of 5s. 2d. a bushel for the next five years". It is clear that there is no chance whatever of the Government during that period being called upon to pay one penny in support of the scheme.

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