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Thursday, 10 March 1966

Mr HALLETT (Canning) .- In my opinion, the Vernon Committee's report which is now under discussion is a very useful, constructive and informative document. The members of this Committee who were brave enough to tackle such a tremendous task as this and who have been responsible for compiling so much information for our benefit have my heartiest congratulations, because I feel that they have done a service to this country. It is true that not every Australian will agree with all the findings and conclusions contained in the report. It is also true that the members of this House and indeed the Government itself do not agree with all the findings and conclusions contained in- the document. But it would be a strange world if we all did agree with everything contained in the Vernon Committee's report.

The fact of the matter is that we now have available to us much information that we did not have previously in the comprehensive form of a report. Whether we agree or otherwise with all the matters contained in the report, we are now in a better position to examine the situation in which we now find ourselves. Although I agree that we should always look to the future in order to know as nearly as possible exactly where we are going, I submit that we must at the same time examine our past performances. The Vernon Committee has done this to some extent by examining the position as it has existed in the post war period.

The Committee has also stressed the importance of increasing both our production and our exports. Of course, we are continually striving to do these things, and the Committee makes certain recommendations relating to them. In the main, the Committee refers to economic growth and full employment. These are matters which the Government has been striving to promote. No doubt it will continue to do so in the best interests of not only Australians but also other people throughout the world.

In order to achieve this, we must at all times strive to make the best use of the natural resources, all available skilled manpower and all other resources within Australia. This is one field to which I wish to address my remarks in speaking to this report. We are living in an age in which great skill and knowhow are required in industry. Conditions have changed rapidly in the last few years. In all our industries, both primary and secondary, research and capital are playing a greater part in promoting our well being. Indeed, if we do not make the best use of the results of research throughout the world and within Australia and if we do not make available the amount of capital necessary to enable us to take advantage of the results of research and to make the best use of the skills available to us, we shall not make the progress which is required for a number of years ahead.

The development of practically every project in Australia today, regardless of where it is, requires the application of capital and knowhow if it is to be successful. As an example, I point to the rapid development that has been taking place in the establishment of new factories in Australia in an endeavour to fulfil orders obtained within Australia and to export products to various parts of the world on a comparable basis with other countries. All the evidence available to us today emphasises that if we are to achieve this level of production adequate capital must be poured into the new factories. For example, the only way that I can see to develop the iron ore and steel projects in Australia, especially those in Western Australia, is to pour adequate capital into them. If this is done - and it is being done throughout Australia today - then I am sure that we shall be able to compete with other countries and to capture overseas markets. In fact, we have already captured some overseas markets and thereby established that these industries can succeed.

What I have said applies not only to secondary industries and to mining; it applies equally to agriculture. We are living in a new age. The statement made by the Prime Minister (Mr. Harold Holt) on rural credit last Tuesday evening was a very important one. As I see the position, it represented the first step towards making long term credit available to our agricultural industries. In my view this long term credit is extremely important. The Prime Minister indicated to the House that, together with the Treasurer (Mr. McMahon), we will be having talks with the banks in the near future on how rural credit is to be distributed. The method of distribution is of the utmost importance.

A difficult set of circumstances exists in eastern Australia today due to the present severe drought. Let us not underestimate the importance of some of the remarks contained in the Vernon Committee's report on this position. Governments can make certain amounts of money available, but that money can only alleviate the position, not solve it. The solution of the problem is one for nature itself. In the meantime, this country cannot afford to continue losing the number of livestock it has been losing over the last year or two. I have mentioned previously in the House that at this point of time we should be in a position at least to hold our breeding stock in the country. Apparently we have not been able to do so under the conditions obtaining recently. I know that to achieve this position is extremely difficult, but its achievement is not impossible if we embark upon a programme of long term planning. We must do this. When dealing with credit, the Vernon Committee has this to say at paragraph 8.93 of its report - . . we doubt whether credit institutions are fully adjusted to the needs of the new farm technology. We see less merit in or need for interest-rate concessions than for development credit, long and intermediate in term, with repayment conditions adjusted to current land-development programmes.

The final conclusion at which the Committee arrives is that a further study of this particular problem is required. I take it that in speaking of credit the Committee is referring not only to credit to agricultural industries, but also to the need to provide credit generally throughout Australia. I can see from reading the report that in delving into the matter the Committee experienced great difficulty in trying to analyse the exact position in which we find ourselves today. I would not be surprised to learn that the greatest need will be found to exist, not in the secondary industries, but in the rural industries because the whole question of rural production is most complicated today.

The Prime Minister's statement is really a welcome one, but the important consideration today is the manner in which the credit is to be made available. We are living in a completely different age. We are past the horse and cart age. We are at the stage where the only way by which agriculture can be made successful is by making sufficient capital available for its development. If adequate capital is not made available, then the limited amount of money that has been invested in agriculture will simply be wasted. We are simply wasting the skills and ability of the men engaged in agriculture if we simply tackle the problem in a half hearted fashion and do not produce the goods we need so badly.

We have seen this happen. It has happened to some extent in Western Australia. It was stated quite recently - I take it that the statement was correct - that something like 20 million acres has been developed in Western Australia and that another 20 million acres of land is still to be developed. When we realise that $50 million is now to be expended and in the next 15 years in one State of Australia a programme to develop 20 million acres of land is to be undertaken, we appreciate how enormous the project is. At the moment, an area of one million acres is being developed each year in Western Australia, but not sufficient money is being poured into the area each year to obtain from the project the income and exportable surplus that such an undertaking should return. To achieve the return that is possible from this project, in the next 15 or 20 years, the amount of capital that will be required will be tremendous. Nevertheless the fact that $50 million is now to be made available is some indication of the development planned at this point of time. Of course, other moneys are being invested in these fields throughout the whole of Australia, but we have still to survive the present drought. The important point is that greater quantities of money must be made available if we are to achieve the returns we require. I agree with the recommendation contained in the Vernon report concerning further economic studies. In recent years the United Kingdom, United States of America, Canada and New Zealand have found it necessary to gain further information on economic matters by additional study. This is such an important matter that we cannot ignore it.

Our balance of payments situation and the development of this nation have relied and will rely on our primary industries. If the drought position in eastern Australia continues, our situation will deteriorate. We have to improve the situation. How we do it depends on how we utilise our skills and the credit available to us. Agriculture nowadays depends on engineering and research. Figures contained in the Vernon report indicate that the percentage of money spent on our agricultural research in relation to the overall economic situation is as good as, if not better than, that spent in America and most other countries. The same cannot be said of our secondary industries. Having acquired the skills and the factories to produce the necessary machinery within Australia we must move into the credit field.

Money must be made available to develop the country and to enable farmers to use the facilities available to them. If we do not do this we are not doing the work we should be doing.

During the Budget debate last year I suggested that the banking world was not in line with modern agricultural techniques. I find that this situation applies in all the agricultural areas I have visited throughout this Commonwealth. Why should we be timid about advancing money for agriculture? Where money has been devoted to developmental projects in Western Australia success has been achieved. In some areas of Western Australia developed in recent years with war service land settlement funds about four sheep will be carried to the acre. This is the sort of thing that can be achieved, but when we look at the areas where sufficient capital has not been provided we find an entirely different picture. We cannot afford this situation. When capital is poured into a project the return benefits not only the individual, who exists for only a limited time, as do we all, but the nation as a whole. We develop a national asset through making credit available. If $50 million is made available on the terms that we understand it will be made available - finance of the kind which the Australian Country Party has been seeking ever since I have been in this House - it will relieve the situation in the eastern States and will assist farmers in the early stages of developing property.

Australia is a young country and we must develop it. This is our obligation. We have no other choice, and we have the resources to do the work. It has been frequently said - and I do not agree with this - that the world is over supplied with wheat. Never yet to my knowledge has Australia produced a bushel of wheat that it has not been able to sell. The present world situation indicates a decline in wheat production. We must carefully examine the world's requirements and the world's production. Wheat is an important grain for human consumption. When we look at South East Asia, Africa and other parts of the world and then study wheat production generally we realise we cannot ignore the facts. In England and in America, for instance, huge tracts of good agricultural land are being taken over for home build ing, roads and factories. I do not suggest that this should not happen, but we must realise the effect it is having on primary production. Figures relating to the use of agricultural land in Britain for purposes other than primary production are rather startling. It is obvious that this trend must continue and that production must decline. In 1965 world wheat stocks were estimated at 44.4 million metric tons, but the forecast for 1966 is 38.7 million metric tons. Australia is in a position to do something about the situation. We have vast areas not yet in production. We are in a position to make huge quantities of foodstuffs available to other parts of the world. We are in a position to supply South East Asia and other countries with wheat and other foodstuffs. This is one of the most humane things Australia can do. We can maintain our production by applying our skills and by making credit available.

The Vernon report will be worth while if nothing more comes from it than a study of the credit situation as it relates to Australian industries. We cry out about too much foreign capital coming to this country. Let us use some of our own capital in our primary producing areas to enable us to achieve greater exports, then the earnings coming back to Australia will be our own money and not foreign capital. We have the ability, skills, raw materials, good land and research facilities to accomplish this. Much of our land is starved of credit. It is in the Government's hands to remedy the situation and I hope that when the Prime Minister (Mr. Harold Holt) and the Treasurer (Mr. McMahon) confer with the banks and credit is made available it will be the first and not the final step in this field. I believe the availability of credit will enable us to progress and to get on with the job in hand.

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