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Wednesday, 20 March 1985
Page: 545

Mr HUNT(10.04) —Whilst the Opposition will not oppose the Sugar Agreement Bill 1985, I intend to move an amendment because of the failure of the Hawke Labor Government to fulfil its commitments to the Australian sugar industry. I will return to the amendment shortly, but firstly I wish to deal with some of the comments made by the Minister for Primary Industry (Mr Kerin) in his second reading speech. The Bill contains as its schedule the new five-year agreement reached between the Queensland and Federal governments and signed on 28 June last year. The new agreement commenced on 1 July. The agreement has been presented to Parliament in line with a practice dating back to the 1920s. In 1923 the first agreement was finalised. By 1927 there was concern over the legal standing of some provisions, especially those relating to trade and embargos, and the agreement was formalised in Commonwealth legislation.

There are several important aspects of the agreement. The embargo applying to imports of sugar into Australia will be eased for specialty sugars following consultation with the Queensland Government and industry represent- atives. Specialty sugar imports may now arrive in packs of up to five kilograms or five litres and in consignments of up to one tonne or one thousand litres. This will ease the administrative difficulties associated with the former arrangements under the old agreement. In some cases large shipments were delayed through Customs due to the presence of perhaps one or two small packs of specialty sugars in the bottom corner of a shipping container. This was clearly a waste of resources.

However, I am aware that the sugar industry is acutely conscious of repercussions that imported sugar may have on the domestic market when we are exporting about three-quarters of our total production. The industry and the coalition parties will be monitoring the administration of clause 16 of the agreement to ensure that abuse does not occur due to this change to the embargo provisions.

The legislation also indicates that a new pricing mechanism will be used to fix the domestic sugar price. This mechanism has been developed by the industry in consultation with the governments and should prove acceptable. The other two principal aspects relate to the domestic and export sugar rebates. The domestic sugar rebate is discontinued under the new agreement. In 1983 it was set at $15 per tonne. The rebate was payable to fruit processors using sugar in the manufacture of certain fruit products. To qualify for the rebate processors had to meet a range of conditions, including that they pay not less than specified minimum prices for fresh fruit. Those minimum prices were determined by the Fruit Industry Sugar Concession Committee. The rebate was internal to the industry. Therefore, its abolition has no impact on government funds.

Secondly, the export sugar rebate is to continue although it is subject to review. The rebate is operated by the Export Sugar Committee, which pays a rebate to manufacturing exporters where the home price is higher than the world price. Again, it must be stressed that this rebate is financed by the sugar industry. Under the new agreement Queensland will administer the system through the State Sugar Board, with the exception that the Committee Chairman will be a representative of the Federal Department of Primary Industry.

These new provisions within the renegotiated agreement have been settled by the two governments in consultation with the industry and will now be closely monitored to ensure that each change will be for the betterment of the industry as a whole. I turn now to the Opposition's amendment to the second reading motion and move:

That all words after 'That' be omitted with a view to substituting the following words:

'whilst not declining to give the Bill a second reading, the House is of the opinion that the sugar industry and the communities dependent on the industry face a serious economic downturn due to the failure of the Government to honour its pre-election promises to assist the depressed sugar industry'.

I have moved this amendment because of the very great difficulties now facing the Australian sugar industry. We cannot underestimate the serious social problems that are starting to emerge, from Cairns right down the Queensland coast, in most of the provincial cities and to a lesser extent in the Tweed River district and in Grafton in New South Wales.

I was very pleased to attend the recent annual conference of the Queensland Cane Growers Council in Brisbane and to hear first hand of the very great problems that lie ahead over the next two years.

Among the National Party members of parliament who accompanied me in Brisbane were the honourable member for Dawson (Mr Braithwaite) and the honourable member for Kennedy (Mr Katter). I know also that the honourable member for Wide Bay (Mr Millar) was very much involved and concerned. Indeed, the honourable member for Fairfax (Mr Adermann) is also very seriously concerned with this problem. The honourable member for Dawson has been a tireless worker on behalf of the sugar industry and, in representing the major centre of Mackay, is very closely involved with its welfare. The honourable member for Dawson and I were the first two members of parliament for many years to be invited to attend a special session of the full council of the Queensland Cane Growers Council. While in Brisbane I met leaders of the milling and other organisations within the sugar industry. These discussions confirmed the very urgent need for the Hawke Labor Government to stop trying to fob off the industry and to initiate effective action which will overcome the pending market downturn. It is high time this Government recognised that primary industries such as the sugar industry are the starting point for an economic multiplier effect which sparks off new rounds of activity along a chain of related industries. There are, for example, about 6,600 sugar cane growers in Australia. They are mostly in Queensland. The industry chain directly supports 20,000 jobs and indirectly supports another 100,000 employees. About 80 per cent of sugar production is exported. In 1983 the industry grossed $617m in overseas earnings. Two years earlier it grossed more than $1.1 billion. It is no small industry by any standard.

The industry, including growers and millers, has sought time and again to instil within the Hawke Labor Government a sense of urgency over its looming cost-price crisis. The industry has predicted that the number one pool price for the 1984 season will be around $235 a tonne, yet $240 is the bare minimum floor price for existence.

In the 1985 season the pool price is expected to decline further to about $180 a tonne and in 1986 will have plummeted to around $140 to $160 a tonne. The industry is being caught between rising costs of labour, fuel and other inputs on the one hand and depressed export returns on the other. The average income per sugar cane farm in 1983-84 was $5,622. I think that demonstrates the seriousness of the crisis facing not only the industry but also the families involved in this industry. Many of them today are living in poverty.

At this month's market sugar prices, the net return to the raw sugar industry is about $100 per tonne of sugar or about $9 per tonne of cane to the grower. That $9 is about half the price of a tonne of cow manure and a quarter of the price of a tonne of firewood in Brisbane. That price absolutely stinks. It is no wonder that the sugar growers of Queensland are in dire difficulties. Today the world prices are at their lowest level, in real terms, in recorded history. To this I would add that consumers in Australia have received a net transfer of payments from the sugar industry over the past decade of more than $300m.

I strongly urge the Hawke Labor Government to guarantee immediately a minimum average price for cane based on $240 a tonne of sugar for the 1984, 1985 and 1986 seasons. It is not too much to ask for aid which may amount to about $80m to an industry which, as I have said, has subsidised consumers by more than $300m in one decade. As a longer term solution, the Government must also inject substantial funds into research towards alternative uses of sugar, looking in particular at the production of ethanol for fuel. These aid measures should be associated with reconstruction assistance to growers and to the mills.

It is quite clear that although the industry is relatively efficient we must ensure it continues to move towards maximum efficiency in the production and distribution of sugar. I believe that someone with knowledge of the industry should be appointed as a matter of urgency to inquire into the long term need to restructure the mill operations and the industry generally. This inquiry should recommend long term measures which the Commonwealth and Queensland governments can take to place the industry on a more competitive and profitable basis. It should seek out those areas where deregulation can be instituted to the advantage of the industry. It will be interesting to see whether the honourable member for Leichhardt (Mr Gayler) and the honourable member for Herbert (Mr Lindsay), who I know are concerned about this industry, will support these initiatives or whether their pledges to support the sugar industry become meaningless platitudes because of the Party to which they belong. I do hope that they will rise and fight for the sugar growers, as the National Party members will, on the coast right down to the electorates of Richmond and Page.

The main factor causing the slump in world prices is the excessive, unrealistic subsidies paid to beet producers, especially in the European Economic Community, which encourage overproduction and mountainous stockpiles. Due to this subsidisation and immense carryover stocks, the world price for 1983-84 slumped to an average of $165 a tonne, and to $100 a tonne today, as I mentioned earlier. In a recent bulletin, the Queensland Cane Growers Council said that world overproduction was like the weather; everybody talks about it but nobody does anything about it. So far it seems as impossible to reduce that protection as it is to control the weather. It was pleasing that the Prime Minister (Mr Hawke) and the Minister for Primary Industry responded to industry calls and sought the EEC's endorsement of a proposed meeting between the four largest world producers-Australia, the EEC, Brazil and Cuba. I await with interest a detailed statement to this Parliament on the outcome of those recent talks in Brussels. I call upon the Minister to make a statement to this Parliament.

The Opposition recognises that the Government can do only so much to initiate world action to reduce stockpiles and to halt dumping practices. Yet this is no excuse for the apathetic attitude that seems to have overcome this Government in facing up to the real social and economic crisis facing the Australian sugar growers and the industry as a whole. The position is clear: We have a short term crisis on our hands, and if action is not taken at government level to assist the industry over the next two years, we can say goodbye to thousands of jobs, to millions of dollars in export income and, importantly, to the price stability which has kept sugar down to very favourable domestic price levels. The major centres of Cairns, Townsville, Mackay, Bundaberg and Grafton are largely dependent on the viability of the sugar industry.

The Prime Minister and the Minister for Primary Industry have so far given cane growers no hope since the election. They gave them plenty of hope and bait before the election. Now they have their chance to prove their credentials and honour on 1 April at the sugar summit. There is no point in the Government arguing that the industry should take care of itself. There is no point in the Government turning a blind eye to this serious problem. It did not treat either the motor industry or Broken Hill Proprietary Co Ltd in this manner. Clearly, the sugar industry has already rationalised and improved its productivity. This point cannot be overemphasised. Productivity is up and assistance is low. The yield achieved by sugar cane growers is now an average 80 tonnes of cane and 11 tonnes of raw sugar per hectare-double the yield of 60 years ago.

When considering the case for aid, it is essential to look not only at the general rates of assistance to agriculture but also to the actual assistance applying to the industry at present. The Industries Assistance Commission report 'Assistance to Australian Agriculture', published in 1983, reveals a downward trend in assistance to sugar growers. It is an alarming figure. I ask people to listen to it. The effective assistance to sugar growing in 1970-71 was 38 per cent. By 1972-73 this was down to 13 per cent and another two years later was minus 19 per cent. Since 1974-75 the minus rate has continued and it stood at minus 13 per cent in 1980-81.

The Australian industry is being forced to compete under these circumstances against the heavily supported and subsidised industry in the European Economic Community. Put simply, the glut of sugar beet was considered the easiest short term solution to a huge agricultural problem of the Community's own making. Why should our industry be allowed to pay for the failure of EEC politicians to bite the bullet?

The Hawke Labor Government should not allow the EEC to 'pick off' our industries, thus ensuring for itself larger shares and greater power over the world agricultural markets. If the Hawke Government lets this happen to the sugar industry, who will be next-the dairy industry, the beef industry, the wheat industry, the dried fruits industry and so on? Indeed, Australia, which is one of the most efficient agricultural producing nations, could well have to retreat from and vacate markets one by one. These markets would be taken over by the EEC which has subsidised stockpiles of agricultural products. This would mean an increase in the price of food to consumers worldwide and a drop in the living standards of Australians to a Third World status. The Hawke Government would stand condemned in the history of this nation if it allowed this to happen to the sugar industry. It would set a very serious precedent that no government should allow to occur.

At current price trends and costs of production, the Queensland Cane Growers Council believes that we risk losing every one of Australia's long term sugar contracts by 1987 with the possible exception of the United States contract. Even the United States contract would be under immense pressure. We risk sliding into a supply-demand abyss from which we will never emerge.

I place on record the actual response of this Government to the challenge to undergird the sugar industry. To date we have seen nothing more than a disgraceful series of pre-election promises and post-election let-downs. The patience of the industry is wearing very thin. The industry firmly believes that it achieved its long-awaited breakthrough when the Prime Minister went to Brisbane on 22 November, a week before the election. The lack of a meaningful follow-up since polling day suggests that the industry was given a load of 'Hawke-talk' and that there was never any real intention on the part of the Government to honour its commitments.

The long, sorry saga dates back to the 1983 election campaign when Labor promised in its policy speech the following:

. . . in the current crisis, to give sympathetic consideration to an industry loan to the established Queensland and N.S.W. industry.

The primary industry spokesman went a step further and floated the idea of an underwriting scheme when talking with media people in Queensland. Since then the Minister has shown some fancy footwork. For most of 1983 he said the outcome of an Industries Assistance Commission report would have to be awaited. When that report came he rejected the proposal for an underwriting scheme to apply from 1 July 1984. By the end of the year he concentrated on attacking the Queensland Government in a bid to divert attention away from the failures of his own Government. Yet the Queensland Government has contributed $31m while the Hawke Labor Government has contributed only $16.5m.

The Minister ought to realise that he has run out of diversions and that the industry is running out of time. The only aid quoted by the Minister in his statements has been a token $16.5m for carry-on finance and debt reconstruction to support a billion dollar export industry. It is half the payments to date of the Queensland Government. Just this week the Queensland Government injected a further $1.5m to try to help the industry a little further.

The Prime Minister could not avoid taking on some responsibility for Labor's dismal performance in its first term during the 1984 election campaign. The matter came to a head when 1,200 cane growers descended on the cane train to Brisbane to voice their concerns to the Prime Minister. His response was, in part:

I undertake on behalf of the Federal Government to you and to the industry that we will undertake a financial commitment to assist you on the basis that the review-which is accelerated as a result of the co-operation with the State Government-move towards drawing up an overall package which is going to result in a strong and viable industry.

What has happened since? In a negative Press statement of 18 January the Minister for Primary Industry once again backed away from the Prime Minister's undertakings. There were no new initiatives. The only comment worthy of note was:

As the Prime Minister has indicated to the Queensland Government, across-the-board assistance such as was raised before by the industry has shown to be overly expensive, undirected and largely ineffective in helping those growers most in need.

The Prime Minister has recently tried two more tacks in response to the pressure being applied. Firstly, he said he would consider aid further down the track-next year or perhaps, if the industry was lucky, late in 1985. That is three years after his Party committed itself to substantial aid for the industry. I repeat: The matter cannot be pigeon-holed any longer without risking long term industry damage.

The second diversion has been the Prime Minister's suggestion of a liaison committee to oversee the industry's own self-help review. In other words, the industry would lose more of its control over its own destiny. The proposal has been rejected out of hand by the Queensland Cane Growers' Council. It is time the Hawke Labor Government had a good look at its blinkered, sectional interest policies. It is time it had a good look at itself. Its inadequate response to the sugar industry goes to the heart of the greatest challenge facing this country-the will and the ability to tackle Australia's burgeoning national and foreign debt. We simply cannot forsake those established export industries and expect to pay our way out of trouble.

We cannot let Australia's sugar industry, as one of our principal export industries, simply wither away. The industry has heavily supported our sugar consumers in the past years. The Government should not dingo on the industry in its time of need. It would be a disgraceful state of affairs if the Hawke Labor Government allowed an efficient, established industry to fall victim to the aggressive subsidisation policies of the EEC-a community which has failed to bite the bullet of internal rationalisation.

The Prime Minister, the Premier of Queensland and industry representatives are to meet on 1 April. The Hawke Labor Government has its chance to recover some of the credibility it has lost by announcing that it will underpin the floor price to $240 a tonne-the bare subsistence level-as a prelude to that meeting. Should it do so I will be the first to offer congratulations to the Government. The nation as a whole will be the big long term winner from such an action as long as it is associated with further adjustment and reconstruction amongst the growers and also within the milling operations.

If the Government fails to do the right thing it will plunge the sugar industry and those involved in it-the growers, the mill workers and their families, and the thousands of people who are employed indirectly in this industry-into economic and social chaos. If the Government fails to come to the aid of the sugar industry, as it has come to the aid of the Broken Hill Proprietary Co. Ltd and the motor industry, it will treat a section of the Australian community with gross inequity. The representatives on the other side of the House may be fighting that; I do not know. The Minister for Arts, Heritage and Environment (Mr Cohen), who is sitting at the table, is looking at one of the honourable members representing a sugar seat and being cynical about the sugar growers and their problems. I hope that that cynicism does not permeate the ranks of the Labor Government because if it does it will get the condemnation and damnation that it deserves.

Madam DEPUTY SPEAKER (Mrs Child) —Order! Is the amendment seconded?

Mr Braithwaite —I second the amendment.