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Wednesday, 8 December 1976
Page: 3477

Mr LLOYD (Murray) -The States Grants (Rural Adjustment) Bill enshrines the Government's new rural adjustment scheme. As such it is one of the most important developments in the implementation of a comprehensive rural policy. The Government has been criticised for having no grand strategy for rural industry and for not immediately implementing such a strategy. This is an ignorant and naive view of the complex interaction of local and international economic policies and politics, not to mention the weather and pests which would almost immediately negate any such policy. Further, a generalised policy does not allow for the detailed and particular problems of individual industries, particularly with stabilisation. The Australian Labor Party through its shadow Minister has an equally simplistic view. The shadow Minister implied that the returns which farmers should receive are going to the middle men. He forgets that it is the wages and inflation in this country which are sending up the rates of pay of the employees in the various sectors of the processing industry. There is also the suggestion of virtual nationalisation of rural industry. One can also throw in the attitude of the Victorian Australian Labor Party of doing away with freehold land titles in that State.

Rural industry policy cannot be isolated from general economic policy. In fact, it is due to the failure of the Labor Government's economic policy, with its consequent inflation, which to a certain extent makes necessary the present adjustment scheme. I shall give 2 examples to highlight this suggestion. The Bureau of Agricutural Economics net farm income figure, to which the previous speaker, the honourable member for Darling (Mr Fitzpatrick) referred, indicates that for this financial year farm income will be about half what it was 3 years ago. Even with devaluation, it will be $40 a week less than average weekly earnings. Taken over the full 12 months, it probably will work out at about 25 per cent less- and that has to take into account return on capital, managerial skill and the long hours required in farming.

The second example is that provided by the Minister for Business and Consumer Affairs (Mr Howard) in his tariff statement last night. He said: . . in the last 6 years wages in Australia's manufacturing industry increased by 130 per cent compared with S3 per cent in the United States and 70 per cent in West Germany.

If wages have increased in the manufacturing industry, they certainly have increased at least equally in tertiary industry in this country. So one can see the cost-price problem which agriculture in Australia faces. Because of this, adjustment has been forced on the rural industry to a greater degree than that required by change, which is always taking place in agriculture, and also by the special circumstances following Britain's entry into the Common Market. The industry is deserving of government assistance because it is government action, or lack of action, in its economic policy that has forced this adjustment upon rural industry. In the past, agriculture has not been assisted with its adjustment and cyclical problems to the same extent as secondary industry has been assisted. Employers in secondary industry can always reduce the number of employees, knowing that the Government will provide for those employees automatically through unemployment benefits and knowing that those people will be available in the labour pool when those same employers or other employers once again can take on labour. Tariff assistance measures also are of greater value to manufacturing industry in controlling the adjustment process.

So, adjustment policy is an essential part of an agricultural policy. However, for a complete adjustment policy more emphasis has to be put on retirement from agriculture, which the Government is now beginning to accept through its household support arrangements, and entry into agriculture. I will refer to this matter again later. The second aspect of a complete package of agricultural policies is welfare policy. In the past, Liberal and National Country Party governments have not placed sufficient emphasis on welfare policy, and I acknowledge the criticism that has come from Labor spokesmen in this regard. But, even though the Labor Party said that it would do more in regard to welfare policy in agriculture, it did not do it. In our 12 months in government we have introduced 2 significant policy proposals for welfare in agriculture. The first has been the extension of unemployment benefits to farmers and the second has been the abolition of the property test for pensions, leaving only an income test, which will be of tremendous assistance to farming people. This was recognised by Professor Henderson in his report on poverty as one of the major social injustices in our present social security arrangements.

The third aspect of an agricultural policy must be a credit or finance policy. Already we have term loans arrangements, farm development loans, the Commonwealth Development Bank and rural credits advances to marketing boards. The carry-on loans, which will be broadened by this new adjustment scheme from just the beef and dairy industries to a general carry-on situation, will overcome the short term liquidity problems for which there has been a gap in our credit policy in this country. It is hoped that it will provide a similar service to that which the Production Credit Associations have provided for agriculture in the United States of America for many years. It is hoped that the introduction of the rural bank and the young farmer establishment scheme will fill other very large and important gaps and provide a better credit and finance policy. The young farmer establishment scheme will provide a more complete adjustment policy by assisting entry into agriculture as well as retirement from agriculture.

The fourth aspect of an agricultural policy must be industry stabilisation. For this to occur, the co-operation of both industry and government is required. Government cannot and should not force a scheme on an industry. An industrybyindustry approach is required, because of the differences among agricultural industries. At the present time we see further developments taking place in the wool industry. The wheat industry for many years has been the best example of stabilisation, but the wheat stabilisation plans suffer from the great weakness of section 92 trading. It is hoped that the levy mechanism in the new dairy plan which is under discussion at the present time will overcome one of the weaknesses of past agricultural stabilisation schemes. There is a great need for further industry stabilisation arrangements for both the canned fruit industry and the beef industry at the present time. An important aspect of industry stabilisation is personal income stabilisation or income stabilisation. The Government's introduction of income equalisation deposits will play an important part in the farmer's stabilisation of his own income. I hope that in the next Budget there will be some overdue improvements to the income tax averaging arrangements for primary producers. This will further assist the farmer to help himself through personal income stabilisation measures.

Another aspect of an industry stabilisation policy is the need for disaster insurance arrangements- this was referred to earlier today- for crop failure, flood, fire and so on. We are told that this matter is being investigated at the present time. I emphasise that what we have in this country at the present time- we have virtually nothing- is certainly much less than the wheat growers in New Zealand have had for about 30 years and is less than what is generally available in the United States under its crop failure scheme. I hope that this Government will come up with better disaster arrangements for agriculture for the future. The fifth aspect of an agricultural policy is international arrangements. We must have access to overseas markets and then stability of and continuing access to those markets at reasonable prices.

The final and most important part of any agricultural policy is general economic policy itself. This is of overriding importance to agriculture. It is more important than any of the other individual aspects I have mentioned, particularly with an agricultural industry which is largely an export industry. For the last 10 years farmers have been complaining about the cost-price squeeze. In the last 2 years, with Australia's runaway inflation, the cost-price squeeze crunch has really hit agriculture in this country. An agricultural policy as a total policy package is essential so that more than the marginally viable farmers can be assisted. Generally, reconstruction measures such as our new adjustment proposals assist only the marginally viable farmers. An agricultural policy is important so that as many farmers as possible can be helped to help themselves and so that the special policies of adjustment are not as necessary as they are at the present time. From the point of view of a rural person, much more is needed than just an agricultural policy. There has to be a general rural policy as well as an agricultural policy. Those who live in rural communities, whether they live on farms or in country towns, need such things as communications, telephones, transport, fuel prices equalisation, reasonable educational opportunities and special health and welfare services.

The new scheme follows on and consolidates several other reconstruction schemes. The first reconstruction scheme of recent times was the marginal dairy farm scheme which commenced in mid- 1970. It was followed by the rural reconstruction scheme in mid- 1971 and the fruit growing reconstruction scheme in 1972. Britain's entry into the Common Market was one of the major reasons for the introduction of those earlier schemes. Up to the end of September 1976 approximately $224m had been advanced under the rural reconstruction scheme, more than $50m for the various dairy schemes including dairy carry-on loans, $4m to $5m for fruit and $26m for beef carry-on loans, making a total of about $305m. I want to make 2 qualifications to that figure: Firstly, some of that money is State money for the States' 50 per cent of the carry-on loan arrangements and, secondly it is mainly loan money, not grant money.

In round figures 18 000 farmers have been assisted under these schemes- 8400 with rural reconstruction, 2700 with beef carry-on loans, 1300 with fruit industry reconstruction or the tree-pull scheme and almost 6000 with the dairy schemes. The Government's commitment for the remaining 6 months of this financial year when the scheme will be operative could go as high as $40m. This will depend on the degree of carry-on loans provided and also the degree of household support which comes from general revenue and is not specifically appropriated under this scheme. That, of course, is additional to what is appropriated for this scheme.

This scheme consolidates four separate and existing schemes if we include the carry-on loan arrangements. It provides greater flexibility in administration. Here I completely differ from the Labor Party's approach and amendment of providing more control in Canberra for criterion assessment, etc. I have been closely associated with the previous schemes for some years. To me one of the greatest problems has been the buckpassing that has gone on between State administrations and Canberra. They say that really the decisions were made somewhere else. I believe that we should give as much power as possible to the State administering authorities because they have the framework closer to the farming people than has Canberra. They are also more flexible. I hope that better decisions will follow. The experience of this scheme I believe supports that contention. There is also greater flexibility with interest rates. I make the point that the honourable member for Darling (Mr Fitzpatrick) made, that with a more general and consolidated scheme as problems develop we will not have to wait for something else to be introduced before assistance can be provided. These matters will be picked up under the umbrella of the existing scheme.

This new scheme continues the basic features of the existing schemes. It introduces several new important provisions such as farm improvements, that is, within the existing farm, and household support. It broadens the carry-on loans eligibility to industries other than beef and dairying. I would like to comment on some of these aspects. With farm build-up in particular the importance of inter-family transfers of ownership and their eligibility within the scheme are quite critical. We have to take account of the necessity for continuing the family farm by transferring it from one generation to the other and the shortage of capital which requires the older generation to obtain cash for the farm when the younger generation does not have the cash to purchase it. In some cases the necessary eligibility has not been given to inter-family purchases of farm land within farm build-up or debt adjustment. Other industries certainly will want to be included in the carry-on loan arrangements. I give notice that at least the canning fruit industry will be on the doorstep of the Minister with a request for its inclusion in these provisions as soon as it is possible to do so. I alert the Government to the fact that I think more finance will be required for carry-on loans than was previously allocated.

Household support is one of the major welfare innovations- it does not matter whether it is agricultural or non-agricultural- of this country. It is the closest thing that this country has to a minimum income scheme. As such it is an innovation of major importance to general social welfare policy not only in this country but also in the Western world generally. It complements the availability of unemployment benefits to farmers. I believe it does not contradict or confuse. There is a clear distinction between the 2 schemes. The same income test is used in both cases, but there is no work test for household support. People are eligible for household support only after failure to pass the viability criteria for other forms of adjustment. After 6 months it is available only as a grant to those leaving the industry.

Household support is living assistance to someone with no future in agriculture. The unemployment benefit is subject to a work test. This assistance is for those with a short-term cash problem who still have a future in agriculture but who, because of seasonal work requirements or a critical lack of finance, make themselves available for work. We are looking at distinctly different groups of people. I believe it is essential that the unemployment benefit continues to be available for agricultural people. I believe the need for the unemployment benefit will be just as great this winter for the dairy industry and the fruit industry as it was last year. I believe the income test is unsatisfactory and unfair, but with a greater understanding by both farmers and officers from the Department of Social Security of how the system works, hopefully the scheme will be more successful next winter than last. At the same time I want to compliment the way in which senior social security officers worked to obtain a viable arrangement for the introduction of this assistance.

In conclusion I would like to say that I believe further consideration should be given for a more comprehensive adjustment policy which includes more specific provisions for entry into agriculture and retirement from agriculture as is the case in a number of Western nations. The particular problems of immobility associated with agriculture have side effects such as reduced productivity and perhaps the entry into agriculture of a future generation to maintain a dynamic industry. I believe we should be looking at a more deliberate program as part of the adjustment policy. I believe there should be speedy implementation of this scheme so that the benefits are available from 1 January. I would like to know, if anybody is replying for the Government, whether final approval has been given by the States for the scheme to commence on 1 January. I reinforce the point that several other speakers have made. We need publicity about the provisions of the scheme so that the rural community is aware of what is available to it. I compliment the Minister and the Government for putting together what I consider to be a great improvement in adjustment measures for the agricultural sector of our society and for some very important innovations and developments in social welfare policy.

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