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Thursday, 4 June 1970


Mr DAVIES (Braddon) - I should like to make a couple of comments on the remarks made by the honourable member for Macarthur (Mr Jeff Bate). First of all, he said that the equalisation scheme was a voluntary scheme. I do not think it is entirely a voluntary scheme because most of the manufacturers of dairy products in this country are, with one or two exceptions, signatories to the scheme. I have no desire to name the factories - the one in Queensland and the one or two which operate in Victoria - but 1 will say that they are cheese manufacturing concerns which are not signatories to the equalisation scheme. I am sorry that the honourable member is leaving the chamber because I was anxious to direct these remarks to him. The signatories to the equalisation scheme are part and parcel of it. Before signatories can withdraw they must give 6 months notice. As I have said, I disagree with the honourable member when he says that this is an entirely voluntary scheme.

The purpose of the industry Bills that we are discussing tonight is to tighten and bolster the equalisation scheme. The honourable member referred to the referendum and cast gloom and doubts about it, but J would remind him that there was a referendum 35 years ago when the equalisation scheme got off the ground. On that occasion 49,000 producers voted for the equalisation scheme and 1,000 voted against it. In other words, 98% of the producers at that time voted in favour of equalisation. The honourable member pointed to my colleague, the honourable member for Dawson (Dr Patterson) who led for the Opposition in this debate, and referred to the dictatorial powers that could possibly be exercised under this legislation should the Opposition come to power. Of course, there are no dictatorial powers under this legislation that any government could use. The legislation is simply an attempt to buttress up the industry and for that reason we on this side of the House give the legislation our entire blessing. We are very pleased indeed to see it brought in.

In effect the purposes of the Bills introduced by the Minister for Primary Industry (Mr Anthony) is to give statutory support to the Australian dairy industry's equalisation plan that has operated, as I indicated, from 1934. Under this plan all factories receive lbc same value for their butter and cheese irrespective of whether these products are sold in Australia or exported. The lower prices received on the export market are pooled with the higher returns from the home market :n Australia and a figure is struck by the Equalisation Committee. Then this is made available to the factories producing butter and cheese in this country. This equalisation plan is the greatest stabilising influence that we have in the industry.

I do not intend al this hour of the night to go into the benefits of this great industry. It has a great decentralising influence on this country; a tremendous number of people in country towns depend upon it both directly and indirectly for a living; and has been of great benefit to the economy of this country in earning income from exports. For the $27m we spend on the industry we get over SI 00m in return by way of export earnings. In bookmakers language this is equivalent to odds of 3 to 1 . If a punter could lay out money on a horse knowing he could get these odds it certainly would be a good investment for h'm. As a national Parliament we should be happy to lay out money on a proposition like this. I am always pleased to support a bounty payment of some S27m because 1 know that this will result, as I indicated a moment ago, in a return of some 3 to 1 in export earnings for this country.

Reference has been made to the plan submitted by the Council of Egg Marketing Author' ties of Australia. 1 understand that some 10 years ago an attempt was made by the industry leaders to bring some more stability to the industry by buttressing the equalisation plan that was introduced some 35 years ago. lt was only after the industry leaders had considered the implications of the CEMA plan and had' waited until they had seen the effects of the High Court challenges to CEMA that they realised that here was an opportunity to convince the Government that it had some opportunity for legislative machinery to carry out a scheme for the great dairy industry of this country. The success of the plan depends upon the I009f co-operation and particpalion of the manufacturers of dairy products throughout this country. As I indicated in reply to the honourable member for Macarthur who spoke before me in the debate, there are some sections which have not signed the plan. I also indicated that a provision allows a manufacturer to terminate his agreement by giving 6 months notice of his intention of withdrawing from the scheme. The matter at issue boils down to this: If any of the large manufacturers were to withdraw and to concentrate only on the home market to get the benefit of the h 'grier prices chaos would result in the industry. There can be no doubt that the incentive to break away from the present marketing arrangements for dairying products is now more pronounced than it has been at any other time in the history of the industry.

The pool price for this year is S3S per cwt. The bounty is $5.58 per cwt and this will return $43.58 per cwt. The cost of production to factories will be subject lo a Commonwealth guarantee of 34c per lb. The simple fact is this: The poo! price has been falling over recent years because of the low prices being received overseas, lt has fallen from as much as $42 per cwt a few years ago to $38 per cwt this year. 1 refer the House to the thirty-fifth annual report and balance sheet of the Commonwealth Dairy Produce Equalisation Committee Ltd for the year ended 30th June 1969. The equalisation rate for butter for past years is set out at page 6 of the report. In 1965 the rate per cwt was about S42. In 1966 it dropped to $40: in 1967 to S39; in 1968 to $39; in 1969 to $39; and in 1970 to $38, the lowest figure since 1952.

This situation has been brought about by competition from the European Common Market countries and difficulties experienced in recent years in trying to sell butter overseas. I remember indicating in this chamber why in recent years there has been a tremendous increase in butter stocks held in

Common Market countries, from about 100,000 tons in 1962 to about 300,000 tons now in cold storage. An estimate has been made that by 1975 the Common Market countries will hold a surplus of about 500.000 tons of butter in cold storage. This position has come about simply because the dairy industry in Common Market countries is heavily subsidised, lt has been able to increase production tremendously since 1961-62 to the extent that those countries now engage in dumping practices in most countries in the world. In the Middle East they have been offering commercial butter for 21 c per lb. This is well below the cost of production in Common Market countries and of course no Australian manufacturer could produce butter at that price. The Common Market countries have also been dumping butter in countries into which the Australian Dairy Produce Board has attempted to gain entry for our products.

I pay a tribute to the Australian Dairy Produce Board and to the Commonwealth Scientific and Industrial Research Organisation. CSIRO developed a process for reconstituted milk by mixing butler oil wilh sweetened condensed milk. The Australian Dairy Produce Board has been using that formula. Through use of old acquisition payments from World War II it has been able to sei up factories in South East Asia. For a while they were very profitable ventures for the Australian dairy industry. But nothing succeeds like success and imitation is lbc greatest form of flattery. The dairy industry in the Common Market countries has certainly imitated our advances in this field, lt was nol long before they made inroads into the South East Asian countries' dairy produce markets. They have now set up reconstituted milk factories in South East Asia and the buller oil they are using is one of the base ingredients for reconstituted milk. This is sent to South Fast As:in countries al give away prices. The ultimate product that comes from the milk powder and (he butter oil - the sweetened condensed milk - is very popular and a great money spinner in South East Asia. We find now thai the main constituent, hillier oil. is being pui into South East Asia by thc countries from the Common Market at prices wilh which we cannot compete.

So this indicates the reason why the equalisation rule for butler has been falling rapidly. It is because we have been unable to keep up the price of overseas butter in export markets. As has been pointed out already, we have to take the price we get overseas and pool this with the price we get on the home market and this has resulted in an ever decreasing rate for the full price. The bounty rate also has fallen and from the report of the Equalisation Committee we find that in 1952 the bounty rate on butter was a little over bil 2 per cwt. In 1953-54 it dropped to some SS and then S7 and for many years was running at S6. In 1970 the bounty rule for butler is S5.58 per cwt. The simple reason for this is thai we are over producing in this country. The production rate this year is some 220,000 tons of butter which has to be divided into the S27m bounty. This substantially reduces the amount of bounty available.

As against this, the hulk home price for butter has been rather stationary and this year it is $53 per cwt. lt is almost SIO per cwt more than the pool and the bounty rate combined, lt must be pointed out that the bounty rate is only applicable to those who are prepared to participate in the equalisation pool and in years gone by this was an incentive to all manufacturers lo participate in equalisation. But as I have indicated. the fall in the full price because of the low prices overseas and in the bounty rate because of the increased production in this country has meant that the gup between the combined pool and bounty prices and the bulk home price has be.-n getting wider each year. Herein lies the difficulty with the industry, lt would only want one large manufacturer to break away and to take advantage of the higher home price and the whole structure of the industry would collapse. These Bills give the acquisition plan the necessary statutory hacking to provide for a stabilised industry. Any manufacturer who attempts to break away would now be brought hack in.o the scheme and would be required to pay any surplus over the full price back into the fund. lt has been called an excise: il has been called a tax. I do not care what il is called. I entirely support [he Government and I entirely .support the dairying industry in this matter. I know of a large chain store that has a great financial interest in a butler manufacturing plant and in a milk producing plant. If any of these large concerns attempt to break away now to take advantage of the home price market and say: We will forget about equalisation and we will embark on the home market entirely,* then the Government must be entirely backed up and the industry must be backed up to bring these people back into equalisation and to have the right of entry into these places and to be able to say to these concerns: 'You are forced back into equalisation and any money you have gained must come back into the pool.' 1 do not care whether the Government gives assistance by way of a bounty or by way of an excise, but it must do something or before long other large manufacturers will break away. This will result in a price cutting war throughout the country, which will cause absolute chaos in the industry. Before we know where we are the many people to whom I have referred in the towns and in the country - who are employed directly or indirectly in this great industry - will find themselves back to bedrock and the days prior to the time when the former Minister for Commerce and Agriculture in the Chifley Government, Mr Reg Pollard, was able to implement a dairy plan in 1947. The industry needs this stabilisation. With the supermarkets engaging in all kinds of price cutting and price war activities and attempting to hoodwink the people on all occasions, this statutory backing is required if the industry is to be protected.

Ever since the disastrous local and export prices received for skimmed milk powder a couple of years ago, I have been an ardent advocate for an equalisation scheme for this dairy product. I was pleased to be advised by the industry leaders who were here this week that as from 1st July the major producers in Tasmania, Victoria, New South Wales and South Australia will enter such a scheme for skimmed milk powder. I think the manufacturers have learnt the lesson of a couple of years ago when there was a surplus. Victorian producers were peddling their skimmed milk powder in New South Wales and Queensland at about $10 a ton below the price prevailing for the local product in the northern States. The price for skimmed milk powder on world markets fell from $180 to $60 a ton. Even South

American countries were dumping it in the United States at fantastically low prices. It is good to see that the price for skimmed milk powder on the Australian market and on the overseas market has taken an upward trend, lt is even more pleasing to see that while these high prices are being received the industry and the manufacturers are prepared to join an equalisation plan.

These Bills will provide greater stability for a very important primary industry which is going through difficult times. I hope the farmers will carry the referendum to implement these measures. The Dairying Industry Equalisation Legislation Referendum Bill makes legislative arrangements for the referendum to be held to decide whether the various dairying industry Acts should be brought into operation. As I indicated when I replied to the honourable member for Macarthur, a similar referendum was last held 35 years ago when the equalisation plan was introduced. At that time 49,331 producers voted in favour of and 1,416 voted against equalisation as a buttress for the industry. That vote represented 97% in favour of equalisation. The referendum provided for in this Bill is important because the associated Bills cannot be implemented unless a simple majority of the votes cast at a poll of producers is in favour of giving statutory backing to the equalisation plan. Under the provisions of the Bills, an opportunity is provided for farmers to be provided with a properly documented case for and against the proposals. It does not matter how much scorn is heaped on this democratic process. If some group or organisation wants to put up another plan, I think it is entitled to do so. The Government has provided for this to be done. The pamphlets for and against the proposal will be sent out with each of the voting papers. From memory, the pamphlets are restricted to 2,000 words, presenting the case either for or against. Clause 8 (c) of the Referendum Bill states that a person is entitled to vote if he: is the owner or one of the owners of cows that are kept wholly or partly for the purpose of the production of milk for supply to a butter factory, or to a cheese factory, in Australia.

Butter and cheese factories throughout Australia will be required to supply details of suppliers during the past season who would bc eligible to vote.

I was very interested to hear the arguments advanced earlier today by the Leader of the Opposition (Mr Whitlam) when he introduced his Bill to reduce the voting age from 21 to 18 years. I am very disappointed to note that the Dairying Industry Equalisation Legislation Referendum Bill provides that suppliers of dairy products who are under 21 years of agc will not be able to exercise a vote. We have had the area or farm school system of education in country areas in Tasmania now for some 40 years. I know from experience that in many cases senior boys have commenced to gather up the nucleus of a dairy herd long before they have left school to take up farming. They have become established producers in their own right before reaching the age of 21. I think it is a shame that this stupid and archaic age bar of 21 years should be adhered to. After all, any person should be able to vote on a matter affecting his livelihood, providing of course he is a bona fide producer.

It is obvious from the Government's attitude this morning that we have no hope at present of getting a reduction in the voting age to 18 years. So any result gained at the proposed referendum will of course not represent the views of all the producers in this country. However, I am confident that there will be overwhelming support from the farmers for these proposals. They have enjoyed the benefits of equalisation long enough to realise that any breakdown would be disastrous to them because without equalisation their financial returns would be substantially reduced. The importance of the dairy industry to decentralisation is something of which dairy farmers are keenly aware. They want orderly marketing and they want statutory backing for the equalisation proposals that have been in operation now for some 35 years.

T want to say in conclusion that this legislation does nothing at all to reduce production. This is another matter which the Government must take up very soon, lt was referred to last night in the discussion on the $25m plan for restriction of the dairy industry. It has been referred to again tonight. I point out that these Bills do nothing at all to reduce production. If the Government now wants to do anything at all it must take steps to look after production, as it is doing in the wheal industry, in some form of equitable distribution so that the industry is protected on this side. too. All I say is that these Bills simply give statutory authority to the equalisation scheme which has been of tremendous benefit to the industry. I commend the dairy industry leaders who have promoted the proposals which are embodied in the legislation, and I warmly support the measures introduced by the Minister for Primary Industry.

Mr ROBINSON(Cowper) fi l.49| - I rise lo support the Bill. I believe it is in the best interests of the Australian wheat industry. lt has been very fully debated and 1 do not propose to traverse the ground that has been so adequately covered thus far. Suffice it for me to say that it is a precautionary measure, so far as New South Wales producers are concerned. They would have reason perhaps to imagine that given freedom to sell their production they could capture the more lucrative market. But the dangers of this are well known and well understood by the industry in New South Wales. In the very wide ranging debate both on this measure and on the farms amalgamation proposals which were dealt with yesterday the many problems of the industry have been well canvassed. I do not propose to reiterate them. It is clear that there is a need for this precautionary action because of the trend that is in evidence in some sections of the dairy industry. The possibility exists that substantial commercial interests could take control of a dairy factory and, as a consequence, break the agreements which at this stage are voluntary so far as equalisation is concerned. This is the reason for the legislation with which we are now dealing. Of necessity the industry has been protected. There is justification for the continuation of a situation where butter is not imported into this country.

Many suggestions have been put forward from time to time that consumers would benefit if butter were allowed in, for example, from New Zealand. But this would spell doom for the Australian dairy industry and, in exactly the same way, if equalisation were to break down there could be a serious rift in the orderly marketing of Australian dairy produce in this country. I support the measure because not only is it logica and proper that this action should be taken, but also it is the view of the Australian Dairy Industry Council, the body which is recognised as the focal point of leadership of the Australian dairy industry. On behalf of the many dairy farmers in my electorate I express the view that this is a safeguard in the light of the possibilities that we foresee and in the light of the difficulties which we will encounter in the months ahead. I strongly support the measure and I hope the House will carry it with little further debate.







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