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Monday, 16 September 1985
Page: 600


Senator WATSON(9.43) —I have concern about the impact of the costs involved in this legislation on the farming community. In relation to the value of production, costs might appear to be minimal; but in relation to the net return, I think they are fairly significant. The great worry in the primary industries today is those costs which are beyond the farm gate, in addition to the rapid escalation of on-farm costs. Our rural production is extremely important to the continued growth and development of this country. We recognise that our farmers are amongst the most efficient in the world. It has been estimated that the average Australian farmer produces enough for 70 people. In this decade, agriculture earned around 43 per cent of Australia's export earnings-an unrivalled contribution to our economy. The 1984-85 record return of $14.5 billion will be passed on this financial year and the cash flow from that could be significantly greater because of the devaluation of the dollar.

Agriculture, both directly and indirectly, provides employment for more than three million Australians and, in addition to exports, it produces the raw materials for a considerable part of Australia's manufacturing industry. The quality of our agricultural production is of world-class standard and we can boast of a renowned skill in agricultural research and techniques, developed by individuals and other bodies, including the Commonwealth Scientific and Industrial Research Organisation. Why then, if we are doing so well, do we need new legislation such as the Rural Industries Research Bill? It is because appearances are deceiving. Our rural economy is really in a very poor position. Our farmers are fighting a seemingly endless and unwinnable battle against the pressure of rising costs, on the one hand, and despair in the face of stagnant commodity prices in often over-supplied markets on the other. Despite the record value of our rural production, farm incomes are again expected to fall by about 17 per cent this financial year and by a further 20 per cent next year, despite the effects of devaluation. I think that those who attended the rally of farmers in Canberra were very impressed by the sincerity of their utterances and their concerns. Judging from the number of placards, one of their major concerns was the big increase in fuel costs.

Our ability to compete on world markets, unfortunately, is declining. Over the last 10 years, our share of world exports has fallen from 1.7 per cent to 1.3 per cent and, therefore, we should be concerned that our penetration of most overseas markets, especially in South-East Asia, has declined. In my view, our declining competitiveness is not a reflection on our primary producers today. We have been the victims so often of unfair and, at times, unscrupulous competition from such centres as the European Economic Community. Its massive over-production has had disastrous effects on world markets, and has kept commodity prices low. Subsidies to farmers cost the EEC taxpayers $70 billion in 1984, and their mountains of surplus beef, butter, wine, fruit, cereals, sugar, vegetable oil and potatoes have been literally dumped on many of our traditional markets, at prices with which we cannot compete. Aggressive marketing programs by the United States, which include subsidies, export benefits and bonuses for new sales, will deal further blows in both income terms and lost marketing opportunities for our primary producers. It would not matter how efficient our farmers were, they would not be able to compete without similar subsidies.

However, we cannot blame the EEC for all our problems. New Zealand, with better marketing strategies and often-as in the case of sheepmeat-with a better product, has captured some of our markets. New Zealand recognised changing consumer demand years ago, and, through research, developed products that would meet these changing needs. The fact that the New Zealanders have plant variety rights legislation must give them a distinct advantage in the horticultural field. They are already producing new varieties of fruit and vegetables which are very acceptable to South-East Asian and Pacific markets. If we are to reverse our present uncompetitiveness, we must put more money and expertise into research and the development of new products and new markets. I wholeheartedly support the move to co-ordinate rural research and development, and to develop a more sound administrative structure to do this. I agree that it is of the greatest importance that those who administer and undertake research are accountable to both the Government and the industries and that the greatest possible returns are made from each dollar spent on research.

The 11 industries coming under the umbrella of this legislation will be encouraged to take a much greater part in the development of their products and the direction of rural research. Australia's economic advancement in the future will largely depend on our rural industries' ability to remain competitive and profitable, and attuned to changing market demands. Thus, the development of a progressive and constructive five-year plan for rural research, in addition to an annual research and development program, I believe, is a step in the right direction. However, the best scientists, with the best marketing team and the greatest agricultural production experts in the world, will be a waste of time and taxpayers' money if there are not enough farmers left to produce the goods in the long run. Unfortunately, many farmers are being forced to sell their farms because farming can no longer offer a family a reasonable standard of living, a reasonable return on investment or even a reliable income.

World-wide investigation by the National Farmers Federation has shown that Australian farmers pay up to three times the price paid for basic farm inputs by American and New Zealand farmers. The Australian farm cost problem is mainly a function of five government activities; namely, excessive tariffs on many imported goods, excessive borrowing and spending at all levels by governments, a rigid labour market, over-regulated service industries, particularly transport, and government charges and taxes on imports. Research and development are vital. Until this problem and other problems are resolved, I am afraid that our rural returns will continue to decline in real terms.