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Thursday, 17 October 1985
Page: 1391

Senator VANSTONE(12.44) —I would like to use the brief time available this afternoon to draw the Senate's attention to a matter of some interest to the rural community and a matter that should be of some interest to all people interested in Australian industry. Broadly speaking, the matter simply is fertiliser. Several weeks ago I was approached by a number of farmers in my State who were concerned about the increased costs that were flowing from anti-dumping measures. Farmers in Western Australia and South Australia are particularly concerned about this issue. I understand that the National Farmers Federation presented to the Australian Customs Service a somewhat technical argument that in the case of the two products we are talking about dumping had not occurred, and that if it had occurred, it had not caused any injury to Australian manufacturers. Nonetheless, the Customs Service was not convinced by this submission and found that dumping had taken place. Farmers have, undoubtedly, some very real fears that relate to their immediate economic plight, but I suggest today that longer term considerations need to be taken into account. We cannot lose sight of what is probably, in this matter, the ultimate question, namely: Does the rural industry in Australia require a constant assurance that fertiliser will be available to it and, if it does require that assurance, does that mean that we must maintain and protect the Australian fertiliser industry?

There are some very simple reasons why farmers want to be able to buy the United States fertiliser. Price is the first one. It was the main reason, prior to the anti-dumping measures being applied. But there is another much more basic reason why they would like to keep purchasing the United States product, namely, its physical characteristics. You may not know, Mr Acting Deputy President, that the American high analysis fertiliser is much more even in size of its pellet shape and, accordingly, is much easier to deal with on the farm, much less hard wearing on machinery and, therefore a lesser cost to farmers using this product. In addition, because it is a high analysis fertiliser, fewer tonnes per acre are required and that again reduces the cost to the farmer of using fertiliser.

The Australian fertiliser industry, on the other hand, would like to have some points put in its favour. I have already flagged to the Senate that I think the most important question we have to decide is whether, in the long term, we want to ensure the supply of fertiliser to the Australian rural community and, if we do, whether that means we need to protect and maintain the fertiliser industry in Australia. But I think we should consider some of the problems facing the fertiliser industry. One problem facing it at the moment is competition from imported United States high analysis fertiliser. Another problem is the requirement that the phosphate it uses be carried from Nauru and Christmas Island by the Australian National Line. Various people in the industry to whom we speak and the farmers agree that this requirement adds at least $16 a tonne to the cost of the raw material product being used by the Australian industry.

A very large capital investment is required to develop phosphate plants and move into high analysis plants. There is a number of deposits of phosphate within Australia. Development of these deposits would save industry in Australia having to use ANL because the resource would be here on the mainland. But, naturally, development of those phosphate deposits requires a high capital investment and industry is concerned that if the rural community wishes to grab at daily cheap prices and not concern itself with the long term future, it should be very cautious about a large capital investment on a day to day basis. Another problem the Australian industry has is that there is a government duty on aspects of its product that does not apply to proportions of the imported product because it is already mixed before it comes to this country.

It is not appropriate to assume that the phosphate industry in Australia is a homogeneous one. The industries are different in several respects. In terms of ownership, there are some private commercial companies and there are also some farmers' co-operatives. I suggest that the fact that there are some co-operatives indicates that farmers have gone into this business venture, not so much with the interest of making a profit, although, undoubtedly, that would be in their minds, but with the interest of having some control over the supply of fertiliser and that indicates that a large portion of the rural community would like to be sure that Australia maintains its fertiliser industry.

The Australian Customs Service received a complaint from manufacturers that American products were being dumped. That complaint indicated that the nature of the injury to industry was as follows: Firstly, a reduction in the sale of like products; secondly, a decline in market share; thirdly, reduced production and capacity utilisation; and fourthly, a reduction in employment. The Customs Service acted upon the manufacturers complaint under the Customs Tariff (Anti-Dumping) Act 1975 and the criteria that it uses for determining whether injury is caused is found in section 5A of that Act. The complaint was lodged in March 1985 and the Customs Service issued a preliminary finding on 24 July this year. That finding indicated that dumping was taking place. The Customs Service proposes to continue imposing anti-dumping measures and has now invited further comments on its findings.

Mr Acting Deputy President, I have highlighted, firstly, the industry; I have very briefly highlighted the farmers' attitude; and I have highlighted some of the problems that are faced by the industry in Australia. But the problem does not stop there. We need to consider the global context. The fertiliser industry in Australia, while not exporting and supplying only the Australian rural industry, in a sense has to compete in the global context because people all over the world in the fertiliser industry are keen to make Australia one of their markets. The American fertiliser industry is facing a massive oversupply. It is reported that several large United States banks are propping up American fertiliser companies and this may not last. The consequences are that these companies, in order to keep their cash flows going, are happy to sell fertiliser at a lower price in Australia than they would sell it in their own country.

We need also to take account of the fact that the increased production of fertiliser in certain Third World countries has added to the increased supply on world markets. Additionally, we should also remember that the raw materials from some overseas countries bring with them production problems; increased costs for Australian manufacturers. We need to ask ourselves whether there is any difference between dumping that comes from foreign government policies such as the European Economic Community's common agricultural policy, and overseas commercial actions. There has been no suggestion that the dumping of this fertiliser on the Australian market is a consequence of government policy in any other country.

In conclusion, having flagged the general problems in this area, I remind the Senate that the rural community in Australia is currently facing enormous cost pressures. The Australian fertiliser industry, while facing cost pressures, is facing other pressures from competition from overseas fertiliser manufacturers. The reason I raise this matter today is not only that Australia has a large rural industry and therefore the matter should be of interest to this Parliament but also that, in the more general sense, there are no simple solutions. In this, as in many other cases, very valid points should be taken into account on both sides. The Government is not here to serve purely the rural community or an industry that is suffering as a consequence of international competition. This is an example of where the role of government co-ordination, or government intervention, plays a very real part in deciding the future of the rural community and of the industry. Because valid points have to be taken into account on both sides we should tread very carefully.

I do not want to say any more than this because I will develop a thorough paper on the matter and distribute it to honourable senators so that, if they are interested, they can read it at their leisure.