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Tuesday, 5 May 1987
Page: 2617

Mr WRIGHT(8.14) —The Sugar Cane Levy Bill and the Sugar Cane Levy Collection Bill are part of this Government's five-year strategic plan for rural industry research. The goal is to increase investment in research to more than 0.5 per cent of gross value of product. We all appreciate that that will have to depend on budgetary considerations but clearly with this legislation and other measures undertaken by the Government, that plan is well under way. I note from the speech of the Minister for Primary Industry (Mr Kerin) when he introduced this legislation that the initial contribution from the Commonwealth for the sugar industry will be about $1.25m, which will match industry money dollar for dollar. Therefore, I welcome this Government's initiatives in the area of research, not only in the sugar industry but also within the primary industry area generally.

I note the criticisms made by the honourable member for Dawson (Mr Braithwaite). I noted the years which he used in his criticism, and these were mostly years of the Fraser Government. While he tried to score points against this Government in the last minutes of his speech, clearly he could not have been very pleased with the Liberal-National Government of which he was part for its lack of support, not only for the sugar industry, but also for primary industries generally.

I readily acknowledge the work that has been done by the Sugar Research Institute in Mackay and also the Bureau of Sugar Experiment Stations. I acknowledge the work these organisations have done for farmers and mills but when one considers what is being proposed in this legislation, it is clear that the new scheme will complement the existing research structures. It will allow for wider scope in research, for research activity in those areas where it is not being undertaken because of lack of funds or expertise or simply because they are not seen as worthwhile objectives or goals. This is part of the Labor Government's national approach under the rural industry research fund program-the RIRF program. Probably many farmers out there have wondered what is really happening, because they do not see this money. Research is an unknown area because one does not actually see the dollar spent. However, we must understand that our country has trailed behind other developed countries in research for years and years. If one looks at Australia's efforts up to, say, 1983, one sees that we compared poorly with other countries. There has been a long term recognition by this Government of the need for greater investment of resources in primary industry research. That is why we have said that we will not just try to do something about it over the next 20 years, but will tie ourselves down to a specific plan over a five-year period to boost those resources and that investment so that the money is spent.

Many people like to think that tomorrow we will wave a magic wand and Australia will become a great manufacturing country. But those who are realistic realise that Australia will still be dependent for export earnings on the commodity industries, the primary industries, for many years-in fact for decades-to come. It is clear that primary industries will remain vital to our world trade for the future, despite all the efforts being made by this Government to broaden our manufacturing base. It is also clear that many people are recognising the reputation of this Government as a proponent of research in industry, not only in the primary industry areas but also in industry generally. We now have a proven record as a supporter of industry research and development and now we are seeing this research take place to a greater extent in the sugar industry.

I hark back to the support that we have given particularly to the sugar industry in the sugar industry plan that will run for three years until June 1989. As honourable members will appreciate, there are three elements to this plan and this is some indication of our support for those on the land, those farmers, particularly in the far north of Queensland, who have their total investment and total livelihoods tied up in the sugar industry. We have a price underwriting scheme to which we have already contributed $14m. The States-that is, New South Wales and mainly Queensland-have contributed another $7m. We have a grower adjustment support scheme and a mill adjustment scheme. The honourable member for Dawson also mentioned the amalgamations that are taking place. Thus we see that the plan for the sugar industry is beginning to work.

We must understand why the commitment is here. It is not just a political commitment, it is an economic commitment because the sugar industry is vital to Australia and to Queensland, particularly north Queensland. In Queensland, my own State, we have some 5,500 growers and there are another 500 in New South Wales. One should consider the numbers employed by the industry. Tens of thousands of people are directly and indirectly involved in the sugar industry-farmers and their families, those involved in harvesting, those who work in the mills, those involved in transport, those who work in the cane towns, those in the support industries, including those involved in the supply of fuel, machinery sales and repair and maintenance, and general community aspects of employment which arise because of the location of a major industry. I noticed that the honourable member for O'Connor (Mr Tuckey) also raised the question of the value of the industry to Australia. My figures show that over some 10 years we have seen some fluctuations but the earnings for Australia have varied between $600m and $800m. That is an enormous amount of money. That is the value of that industry to Australia in respect of its earning capacity internationally. The reason for that is that we export almost 80 per cent of our sugar products. We produce 3 1/4 million tonnes of raw sugar. It is no wonder it is such a vital industry and that governments, regardless of their political persuasions, have had to come together, sit down and work out an industry plan, to underwrite the price, to back up the growers and to bring about a restructuring of the mills.

We do have some problems. These problems are not political in terms of Australian politics, they are international in character. There has been overproduction in Europe. I was talking to a senior officer this afternoon and we discussed the sorts of stockpiles that existed. He suggested that stockpiles could total two to three times the total Australian production. When one realises that one begins to understand why prices have dropped to an all time low. The price dropped to something like US2c a pound. Fortunately it has since gone up and is now around 7c to 8c. We hope that it will stay there. There has been overproduction. We face trade problems because of the attitude of the United States, which gives preference to Third World countries. That preference has been given to the Caribbean and the Philippines. I often wonder about this because I sometimes think we get caught in our tariffs. We give special privileges and preferences to these countries when most of the time the real benefit goes to the multinational companies which own all the sugar farms and the various properties that are there. I am not sure that the countries to which we have given preference by way of tariff advantages, or to which the United States of America is giving preference with its Third World approach, are helped in this way. It is certainly not helping Australia, because we have seen the price of sugar go down and we have seen some of our traditional markets closed up, as we have not been able to get there because of the policies of other countries, particularly of the United States.

However, the problem is not just one of over-production. I believe that the real threat is coming in other areas. I cite first of all other natural sweeteners and artificial sweeteners. There is a threat from the natural calorific sweeteners, fructose and glucose that are made from starch from maize. I was given some information this afternoon as to just how far the United States has gone into this. It is developing fructose and glucose industries using corn starch. I suppose that we would not worry too much about that because there are some economic problems in trying to get that product into Australia, as it is mainly in a liquid or syrup form, but we now find that Australian companies are experimenting with getting starch from wheat for fructose and glucose. If that is to happen-and it is starting-we are going to have further problems on our own doorstep. We will have internal problems. It might be wonderful for the wheat industry if it can start developing some byproducts, but I certainly see a dilemma for our own sugar industry, an industry, I remind the House, that is worth $600m to $800m in export earnings alone. The United States threat may not be with us now, but it is certainly a threat of the future. It may not be economic now, but it is going to come. We will have to consider this very carefully. We ban imports of sugar and we are going to have a hard look at these alternatives.

The other threat concerns the artificial sweetener. I understand, too, because of my role in consumerism, that there is a growing support in the community for those allegedly non-fattening sweeteners, despite the fact that they have no energy value. But the threat is real. The cyclamates are coming on the market, using all sorts of names. One of the latest names is Nutrasweet, and people are starting to use these products instead of the dinky-di sugar. As a north Queenslander, that concerns me. I am concerned because of the 6,000 farmers involved. They are family farmers, with massive investments in the north and throughout Queensland. The threat is not just from over-production; it is a threat because of alternatives. The sweeteners are certainly taking the place of natural sugar as an industry, and will be a replacement product in other countries. That is happening in the United States. Today one finds that the United States consumers are talking about the non-fattening products; they do not want anything that is going to make them overweight. When one travels around America one certainly sees a lot of overweight people, so one can probably understand that. They are looking for replacement products, and the fructose and glucose are going to cause some problems there.

This all stresses the need for research, the importance of research. We may get some sort of temporary relief because of the pick-up in world price, and I hope that that will be sustained because not only is it good for the farmers but it is good for the taxpayer. We have locked ourselves in the plan to underwrite sugar by $230 a tonne for the first year, bringing it down to $225 and $220. If we can hold up the price and it stays up, the taxpayers' money is not going to be used, so that is an important point. I know that we have gained temporary relief because of the devaluation of the Australian dollar. These are all very important points, but it does not mean that tomorrow shall be the same. So there is a huge responsibility on the industry now to find markets and maintain them and to retain the markets that they have. The industry simply cannot afford to relax. So often everyone says that conditions are cyclic, that the prices will go up tomorrow, down the next day and up the week after that. We cannot depend on that in this particular industry. It may happen in the wool industry or in the beef industry, and in all these other primary industry areas, but when it comes to sugar, because of the alternatives, because of the artificial replacements, some real problems arise.

There is a need to speed up research, and that is what this Government is doing. That is why we have asked the industry to back the proposal, to come good with a 5c a tonne contribution, which will be matched by the Commonwealth, so that we can get this money and put it into a research thrust. We certainly need to speed up this research. I also envisage that members of the new Council will have major responsibilities. The composition of the Council is going to be vital. We appreciate that already two research structures exist right now, so there will be a need to co-operate, not to compete. There will be a need to mesh in with the existing research. There will be a need to sit down, to think the position through and to find the gaps. There will be a need to get heavily involved in marketing, farm economics and production improvement.

We have to understand, too, as we talk about this that the sugar industry is traditionally a monocultural industry. I know that in Bundaberg, in the area represented by the honourable member for Hinkler (Mr Conquest) some trials have been undertaken to try to spread the wings economically in the horticultural area. In the Burdekin area farmers have gone into kenaf for high quality paper production. In other parts they have gone into cattle. In the Mackay area they have even gone into growing flowers. Whilst it is wonderful to have individuals getting involved in diversification-it is important that they do not have, as they say, all their eggs in one basket-it is very clear that sometimes there is such desperation to get into something alternative that mistakes are made. That mistake was certainly made in the Mackay and Bundaberg districts when a number of farmers, almost 100 of them, went into aloe vera production. I raised this matter in the House recently. The honourable member for Hinkler came to Rockhampton to meet with 50 different growers to talk about their problems. It was not that they wanted to suddenly get into the aloe vera industry, but they were caught up in it because of the way in which the sugar industry had fallen. We know of their plight; we know that some $400m is unaccounted for in the investments that they made.

It can be seen that there is a real problem here, and with such a dilemma facing farmers, it is no wonder that they start looking at alternatives. But those alternatives in terms of crops may not be necessary if our research comes good. I am pleased that this scheme is supported not only by Opposition members but also financially by the millers and the growers. They accept the fact that they need to contribute, and that is important for taxpayers, because funds should not come just from the taxpayers' purse. These types of schemes should be funded wholly or partly by the industry as well. I hope that the endeavours of the research groups will improve the lot of the industry. It is not just a matter of getting growers out of an industry. Too often we have had restructuring; we give money to those in industry and say: `Look, if you can't get out of this or you can't stay in the industry, get out and go into something else'. We try to get them to restructure, but that has not worked too well. We have 170,000-odd farmers in this country but the number is diminishing. We need to ensure that we improve their efficiency, that we improve the economics of the industry they are in.

I hope that as they consider projects for research they can start looking again at refining raw sugar. I have heard all the arguments against it. I realise that we face great problems when it comes to quality. Selling raw sugar is just a matter of selling in bulk. It is not so much a quality issue. It is easier to sell and it is easier to transport. When it comes to refining sugar, one is dealing with an end product. It is an end product that needs high quality packaging. I understand also the problems of distance and shipping, and transportation generally. I know that Australia is disadvantaged when compared with the European Economic Community, where products are mainly land transported. However, the concept must be considered again. We must take on the value-added approach. We must realise that if we are able to refine our raw product we will employ more people. We will get a higher price for our product and I think we will be able to compete better in international markets. Certainly we need to consider at least the idea of going half way down the line into exporting what is called `mill white' quality. I was advised recently that the Papua New Guinea sugar industry is heading that way, that it is selling mill white sugar. It may not be acceptable to Australian consumers at this point, but it appears to me that it would be at least an interim measure.

However, I reiterate the idea that we need to redevelop our attitudes and to rethink them through when it comes to the whole idea of refining our own product. Admittedly, research is needed, too, to find high quality containerisation systems for the export of the refined sugar. It is vital, however, that we break through in this area. I feel that that is one way of securing our markets, of developing new markets and of improving the export earnings of the industry to Australia. It is vital to Australia, it is vital to Queensland, it is vital to north Queensland. We cannot underwrite the industry forever. One hears people in the north saying: `Well, it is up to the Government to back us because of our taxes. We have poured money into the taxpayer's coffers, the tax burden has been upon us, and we have paid taxes all these years'. But, to come back to plain mathematics and compare the situation in Australia with the European situation, the Europeans export only 20 per cent of their product, and they underwrite that 20 per cent with the 80 per cent that they sell on the domestic market. They can underwrite hundreds of thousands of tonnes in terms of price. Our situation is the other way around. We export 80 per cent. How can we possibly underwrite the price of 80 per cent of our production with the 20 per cent which is sold on a domestic market of only 15 or 16 million people? Clearly, if we tried to match the EEC, we simply could not win.

We are dealing with a very expensive industry at this end. It is no wonder that there was so much discussion. It is no wonder it took so long for the Queensland Government and this Government to come together and sort it out. I know that politics was involved; I know that Bjelke-Petersen kept trying to score, kept trying to make out that we were not really interested; but I believe that our Minister proved him totally wrong in that and achieved full credit-credit from people who would not vote Labor, but who have been singing his praises across the north because he stuck to his guns on it, and his commitment was to the sugar industry, not to some sort of political solution. That was certainly achieved with that plan.

But the problems are still ahead of us. As I said, it is very important. It is worth some $600m to our country. It is the life-blood of north Queensland. If the sugar industry dies, not just 6,000 farmers but dozens of small townships as well will cave in. This Government has already proven its commitment to the sugar industry, as it has done to rural industry generally. I only hope that the research money that will be invested-we are talking about millions of dollars of industry money and taxpayers' money-will be spent in trying to solve these problems. It will work not because of money but because growers, millers and government-that brings in the experts-will work together. This legislation achieves that. I therefore welcome it and seek the support of the House for it.