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Thursday, 4 June 1970

Mr SPEAKER -Order! Is the amendment seconded?

Mr Davies - 1 second the amendment and reserve my right to speak at a later stage.

Dr PATTERSON - The effect of the amendment is the same as that which I put forward on behalf of the Opposition on 23rd October 1968. There arc some additional words which cover any increase in the home consumption price. The principal reason for the amendment is that under the two-price system that exists today the subsidy burden is thrown on to the consumers of wheat. Some might argue that is as it should be, but we have never argued in that way previously in respect to wheat. We have argued that the general taxpayer should pay the subsidy. The shifting of the subsidy burden to the lower income groups is deliberately penalising the bread consuming section of our nation. As we know, those in this section are the lower income earners, the men with low incomes who have to provide for large families. However, this whole matter was fully debated some time ago. From memory 1 think the honourable member for Wimmera (Mr King) at that time supported our proposition. lt is accepted, of course, that complementary legislation has been introduced and that if we accepted this amendment it would mean going right back to the beginning of stabilisation. That is accepted, but this is the Opposition's expression of its disapproval of the two-price system which is operating today under the stabilisation scheme. I believe, and I think events have shown, that the artificially high price, particularly for feed wheat - as this amendment demonstrates - is not in the best interests of the wheat industry. In fact the amendment introduced by the Government has for its purpose the reduction of that high price. So T think that the Opposition and those Government supporters who vote with the Opposition on this matter are fully justified because we see in this amending legislation an actual reduction of stock feed prices, which of course reduces the average domestic price. However, I will say no more about that because it was explained earlier in full.

What is going 10 happen this year? Th:st is the important thing in respect to the wheat industry. I would like to hear the views of the Minister for Primary Industry on this because I think this goes to the crux of the seriousness of the situation. What is going to happen this year, firstly in terms of quotas? I suppose one can always argue that quotas are domestic arrangements of the States themselves. But it is important to find out what is going to happen in the forthcoming season. What are the estimate-:?

As at 1st December 1969 there was a carryover of 266 million bushels. I have some figures here based on the best estimates that 1 could obtain. I have said that I wanted the views of the Minister for Primary Industry because he may have some better figures than the ones I have been able to get. On these figures it would seem that this year there may be a crop of about 420 million bushels. New South Wales will have a reasonably good average season with 7 million acres under crop. Victoria will have a pretty good season with about 2.75 million acres. South Australia will have a good average season with 2.75 million acres. Western Australia also will have a reasonably good season with 6.25 million acres. Queensland will have a disastrous season with a little over 1 million acres.

All this will give a total of about 20 million acres. To estimate the yield is like pulling something out of a hat, but one can look at the projections of the agronomists and others working in this field. Their projections in the past have been pretty accurate. On that basis one can assume an average of 20 bushels an acre which would give about 420 million bushels. I think this is a reasonably conservative figure. If we allow for seed wheat retained on the farms and for the sale of 250 million bushels in 1970 we arrive at a figure of about 400 million bushels at the end of the 1970 harvest. This means we will be about 130 million to 140 million bushels worse off than we were at the start of the season, say at 1st December 1969. As I have said, these figures are based on the best estimates I was able to obtain. What they show is that there is a continually deteriorating condition as far as wheat stocks are concerned. This gives one cause for alarm because we must solve this problem of surpluses.

I want to speak briefly on the quota system because, after all, it is .something that is inherent in this legislation. I have always argued in this House that there are 2 great deficiencies in the quota system. It is not equitable and it is inefficient in terms of resource use. I cannot accept the proposition, and nobody should accept it, that the flat reduction which has been employed by some States is equitable.

Mr Maisey - It is inequitable.

Dr PATTERSON - I cannot accept the argument that a 10% reduction on a crop of 50,000 bushels carries the same burden as a 10% reduction on a crop of 8,000 bushels. This is the system that has been adopted today and it is completely wrong in any moral or economic sense. A small producer of, say, 8,000 bushels might suffer a reduction of, say, 20% and he would finish up with a quota of 6,400 bushels. Despite his efficiency he could be bankrupt because he simply is not big enough in terms of his gross income and net income to survive over a period of time. There should be introduced in all States a differential or a sliding system of quotas as far as production is concerned giving preference to the small producer. In other words, there should be a minimum level. We should not go, for example, below a figure of say, 10,000 bushels. This should be the bedrock. Surely there should be some minimum quota limit here which pays some respect to the small traditional farmer or the small new farmer. Under the quota system many small farms must go bankrupt. They are just not big enough in terms of the quota and net income. This is wrong in every sense of the word.

The second prong of the criticism of the quota system is that it does not allow the most efficient use of resources. If there are 2 farms, 1 may have distinct comparative economic advantage in the production of wheat over the other in respect to alternatives. A flat rate reduction of, say, 10% does not give the same burden. In fact, what has happened is that we are getting a more inefficient use of resources by a fixed percentage reduction because it might pay the one farmer to sell his quota or part of his quota and produce another crop and the better farm could produce more at lower cost. There is no need for me to point this out because it has been pointed out time and time again by people who have made specific studies on it.

Another point on the quotas should be considered. I believe there should be some provision for the transferring of quotas in some circumstances because a nontransferable quota actually fixes a frozen base and from that frozen base, irrespective of efficiency, that is where quotas are formulated. It could easily be that by the transference of quotas from the inefficient use of resources to the more efficient use of resources the wheat industry itself will gain because the average cost of production overall is reduced. This has been pointed out frequently by people who have made specific studies of the subject.

One of the main principles behind this amending legislation to allow a reduction in the domestic price of wheat for stock feed and industrial use is to put wheat sold to the owner of starving stock on a more equitable footing, in Australia anyhow, with the same type of wheat being sold overseas. As I have said, I think this is a very sound move because supply and demand will soon determine the correct level for feed wheat. lt could be that in many seasons to come this price could be well above the guaranteed price or that in some seasons it could be below the guaranteed price. This is where the basic difference between the Opposition and the Government is - the scheme should be flexible in that if it goes beyond the guaranteed price, and this is the market price, then this is the price at which it should bc sold if it cannot be stored. We should not just stop at $1.45 and then have to store the wheat.

In the prolonged drought which is still affecting Queensland silos in the Clermont area were choc-a-bloc with wheat. Within miles of them thousands of sheep were starving and dying and the -farmers were cutting the throats of lambs because they could not get at this wheat because it was too dear for them to buy. Whether they could afford to pay $1.45 1 do not know. But certainly there was a reasonable economic price they could afford to pay. The point I make is that, under the Stabilisation Act, they could not get at this wheat. This situation is being altered. The surpluses of grain - whether wheat or coarse grain - is a pretty vital matter in respect to drought. I have said in this House - and I have said it pretty strongly I suppose - that the Government has adopted a negative attitude with respect to trying to put forward a national drought plan based on these periods of great surpluses. I suppose one could say, with some exceptions, that most of the Cabinet Ministers live in areas in which they very rarely ever see or experience a drought.

Mr Kelly - Ha, ha.

Dr PATTERSON - How many droughts, has the honourable member for Wakefield had in the last 25 years?

Mr Kelly - Piffle.

Dr PATTERSON - You have had one. You do not call the drought you get in your area a real drought. Victoria has had 1 real drought in 25 years.

Mr Turnbull - That is wrong.

Dr PATTERSONWell, how many have you had?

Mr Turnbull - Three droughts in the last 25 years.

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