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Tuesday, 15 March 1966

Mr ARMSTRONG (Riverina) .- The New Zealand-Australia Free Trade Agreement is between two countries with the closest racial and economic and political ties. They have small populations, and are adjacent to countries with large populations and a much lower standard of living. It is in Australia's interests, both in the short run and the long run, to assist New Zealand in her trade arrangements. I should like to deal with a couple of the items to which the honorable member for Capricornia (Mr. Gray) referred. He mentioned the pig meats industry and also the dairy industry. I say most emphatically that if either of those industries believes itself to be in peril because of this agreement, that belief is based on fear and not on fact. The fact of the matter is that pig meat prices in Queensland dropped in September last, four months before this Agreement came into operation, and have since risen slightly. It would be very hazardous to suggest that this Agreement had anything to do with the price of pig meats. In fact since April 1965 no pig meat has entered Australia because of trichinosis. It is true that trichinosis, a glandular disease, does not affect pigs to a great extent, but is conveyed to human beings who consume the infected meat. This condition in relation to the Agreement is likely to last well into the foreseeable future.

The Agreement has nothing to do with any dairy products except cheese. Under the Agreement the tariff restriction is removed and a quantitative restriction replaces it. To my way of thinking, this arrangement is probably advantageous to the Australian dairy industry. Under the Agreement 400 tons of cheese will come into Australia in the first two years, 800 tons in the third and fourth years and 1,000 tons at the end of five years. Our population should increase by 500,000 a year. If our consumption of cheese per capita were 6.6 Jb., we would need to increase our population by only 370,000 a year which is less than the expected increase, in order to consume all the cheese. But if we exported the whole of the 1,000 tons of cheese at the present price it would mean only 1/1 0th of a cent per lb., of butter fat to the dairy men of Australia, which would represent $3 per annum to the dairy men in the north and 55 per annum to those in the south who receive at present $500 per annum and $1,000 per annum respectively in subsidy. This 1,000 tons would be less than 2 per cent, of our production. At the moment we consume 54 per cent, and export 46 per cent, of our cheese.

The honorable member for Capricornia said that New Zealand dairymen were at an advantage compared with their Australian counterparts by reason of cheap money supplied for marketing by the Government of New Zealand. The Government supplies this money at an interest rate of 1 per cent, only in certain circumstances. The Dairy Produce Marketing Board in New Zealand fixes the price each season at a figure as near as can be assessed to world parity. The dairyman in New Zealand is not subsidised. The subsidy of 8d. per lb. on butter fat is paid to the dairy companies and the advantage is given to the consumer. The dairyman receives the export price, but the consumer receives his. butter at 2s. sterling per lb. The interest rate of 1 per cent, which helps the industry is paid only when the price assessed falls below the export price and the industry requires the subsidy in that year. But when the assessed price rises above the export price the Government does not come into the matter at all. In any case, it subsidises the industry only during the currency of that financial year in order to help it over that period. It is, in fact an equalisation fund. The Dairy Produce Marketing Board of New Zealand at present has a credit of about £7 million sterling, so the arrangement is not an advantage to dairymen.

The honorable member for Capricornia is quite mistaken about the degree of benefit that he feels the New Zealand dairy industry enjoys at the expense of its Australian competitor. We export annually to New Zealand about £15,500,000 worth of primary products, including £5,800,000 worth of wheat, so that of £22 million worth of imports from New Zealand, such as we had in the last full financial year, 70 per cent, or 75 per cent, is actually represented by the primary products that we export to that country. It would be unreasonable to expect any country not to endeavour to achieve a better basis of trade for industries that are suffering hardship. In recent years we were exporting something like £18 million worth of goods a year to New Zealand and were buying some £22 million worth from it. It is quite right to suggest that no industry or part of an industry should be placed at a disadvantage, but the Opposition cannot have it both ways. The honorable member for Yarra (Dr. J. F. Cairns) said on 10th December last that this Agreement was nothing more than the squeak of a mouse, and did not mean anything. The Opposition both here and in New Zealand are against it. They cannot have it both ways.

Mr Gray - They are both right.

Mr ARMSTRONG - They obviously cannot both be right but anything which will improve and extend mutual trade is of benefit to all of us, as honorable members opposite know perfectly well.

Mr Gray - Why does the Government not give the dairy farmers a fair go?

Mr ARMSTRONG - They are not affected by this Agreement at all. The honorable member for Capricornia said that the safeguards written into the Agreement were not of any value at all, but each participant has the right to withdraw any item on giving 182 days' notice of intention. It has also been said that there is not enough in this Agreement to be of any value, but 60 per cent, of the trade between the two countries comes under it and that percentage, by world standards, is accepted as a reasonable amount on which to establish a free trade agreement.

Mr Hayden - Does the honorable member realise that 182 days is approximately six months?

Mr ARMSTRONG - That may be so, but under the Agreement any item can be withdrawn. The Agreement contains a great many other protective clauses. Anti-dumping action can come into operation immediately. Emergency action can be taken if necessary. The whole operation of the Agreement is based on mutual trust between two countries which are endeavouring to enlarge the trade between them. It is true to say that if we could enlarge our trade with New Zealand, even if we only doubled our exports while New Zealand quadrupled hers, we would still be better off because we would be building up New Zealand's volume of trade.

Mr Turnbull - We should not forget that these are Anzac countries.

Mr ARMSTRONG - That is perfectly true. We probably have a greater bond of race and blood with New Zealanders than with any other people on the face of the earth. It is quite wrong to suggest that either of the industries that have been singled out by the Opposition in this debate could in any way be detrimentally affected. The lowering of the tariff on lamb has been referred to. An endeavour was made on a couple of occasions to bring New Zealand lamb into Australia but as it had to be frozen, Australian producers enjoyed an advantage. The imported product could not compete in quality with local fresh lamb. This in itself is a quite adequate protection for our own industry. However I have no doubt that importations of lamb would be investigated in the proper way.

Mr Gray - The honorable member can bet his life that they would.

Mr ARMSTRONG - Of course they would. The records of the appropriate department over a number of years will certainly support that statement. I have mentioned frozen green vegetables. It is true that this is an item on which there could be some conflict of interest because vegetables from Tasmania and New Zealand become available in the same season, but surely this can be overcome, particularly when we are already importing large quan tities from other countries including United States of America.

Mr Gray - Whose fault is that? It is this Government's fault - not ours.

Mr ARMSTRONG - It is not the

Government's fault; it comes about because of the requirements of the market. The Agreement offers Australia an unrestricted market for its sugar, and wheat and an opportunity to increase its sale of hardwoods. It is based on a sound Australian economy.

Mr Gray - Not a sound primary production economy.

Mr ARMSTRONG - Yes, a primary production economy. I am quite confident that any disadvantage to the pig industry or the dairy industry would be negligible. The Agreement offers great possibilities for expanding trade with a country that we must help. As a Western nation in this area we cannot afford to allow New Zealand trade to be depleted in any way. Anything that we can do to expand New Zealand's trade with us will be of mutual benefit. I repeat that this is a genuine attempt between two countries with common economic aims and racial ties to improve their trade relations. Nearly everything that I have studied of what has been said against the Agreement regarding dairy products and pig meats has been misleading and not founded on fact.

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