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Monday, 21 September 1987
Page: 367

Mr SIMMONS —Is the Minister for Primary Industries and Energy aware of Opposition claims that farm incomes are set to decline this financial year? Can the Minister advise the House of the outlook for the rural sector?

Mr KERIN —The Opposition spokesman on primary industry asked me a question last week and pointed out that in Budget Statement No. 2 it was stated that farm production was down by one per cent. He implied that, therefore, the farm sector was in quite a bit of trouble. I thought that was just an innocent mistake, and I did point out the reason why farm production was down. I see that the Leader of the Opposition and the honourable member for Murray keep on repeating that, so I think it is in order that I just correct them and point out to members of the House information that has been around for quite a while.

I refer particularly to the Quarterly Review of the Rural Economy, a publication by the Bureau of Agricultural Economics. It shows very clearly that the index of the real net value of rural production this year is expected to be up by 27 per cent. It is the value of production that counts, it is the farm income figures that count, not necessarily the volume of production itself. All that appears in the Budget Papers is that there will be a drop in the volume of production. I pointed out last week why this was so. We are all aware that the gross value of rural production for the wheat industry is down substantially, but we are also aware that it is up by about 33 per cent for wool and up by quite a large amount, some 23 per cent, for livestock products. All those figures are publicly available and on the record. More importantly, the paper from the Bureau shows that we have had the first improvement in almost a decade in the terms of trade for farmers.

The main economic problem for farmers for quite some time has been interest rates. The economic management of this Government has got and is getting interest rates down. The 90-day bank bill rate is now 11.4 per cent. It was about 19.5 per cent last August. The prime rate is now between 14.25 and 14.5 per cent. The people who do not understand that interest rates are coming down as a result of this Government's policies have another think coming. I just stress the benefits of this Budget for the farm sector. We have here the simple proposition that we are getting the economy right, and nothing so affects real net value of rural production and the real incomes of farmers as good economic management. We have almost a balanced Budget; we are bringing interest rates down; we have the lowest deficit to gross domestic product (GDP) ratio in 35 years; we have the largest real decline in outlays in at least 35 years; we have growth up from 2 to 2 3/4 per cent; we have inflation coming in at 6 per cent, which is getting towards the average rates of all our competitors and, as I have said, interest rates have dropped to the extent that they are now more comparable with those of the countries with whom we compete on world markets. The family assistance package introduced by my colleague the Minister for Social Security will also help low income farmers. That is a marvellous measure for those who are in real trouble in the bush.

On the revenue side, we now have a system that is much fairer. What we are doing is managing Australia's second economic recovery in four years, following the mess we inherited and the terrific terms of trade disaster in 1985-86 of some 10 per cent and in 1986-87 of some 5 per cent. Farmers now face terms of trade improved of 3 per cent. The fiscal imbalance is fixed, public debt as a share of GDP is falling, the inflation imbalance is being fixed and we are bringing interest rates down, and the real net value of rural incomes expected this year should increase by 27 per cent.